SEPARATION AND TRANSITION SERVICES AGREEMENT AND GENERAL RELEASE
This
Separation and Transition Services Agreement and General Release
(“Agreement”) is made and
entered into on July 31, 2020, by and between Liberated Syndication
Inc., a Nevada corporation (the “Company”) and Xxxxxxxxxxx
Xxxxxxx (“Executive”). The Company
and Executive are each also referred to as a “Party” and collectively
as the “Parties.”
RECITALS
WHEREAS,
pursuant to that certain Employment Agreement, dated as of March
15, 2019, between Executive and the Company (the
“Employment
Agreement”), Executive is employed as the Chief
Executive Officer of the Company and its subsidiaries (the
“Subsidiaries”), and is
also a member of the Company’s Board of
Directors.
WHEREAS,
Executive currently holds vested and unvested shares of the
Company’s common stock.
WHEREAS,
the Company intends to announce the results of its strategic
review, that it will be looking for acquisitions and other ways to
enable podcasters to monetize their creative work, and that
financial advisors have been retained by the Company through
December 31, 2020 to complete the strategic review.
WHEREAS,
the Parties intend that this Agreement supersede the Employment
Agreement and any oral agreements and understandings regarding
Executive’s employment with the Company, its Subsidiaries,
affiliates, joint ventures, partnerships and other business
enterprises (collectively, the “Affiliates” and together
with the Company, the “Company Group”), and
shall confirm Executive’s resignation from his position as
the Company’s Chief Executive Officer and a member of the
Board of Directors and set forth the terms of his continued
advisory services to the Company.
AGREEMENT
NOW
THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged by the Parties, the Company and Executive agree
as follows:
1. Resignation and
Transition.
(a) Generally.
Executive acknowledges and confirms that he voluntarily resigns as
Chief Executive Officer of the Company Group and as a member of the
Company’s Board of Directors immediately upon the execution
of this Agreement (the “Resignation Date”).
Executive acknowledges that he is resigning as an officer and
director of the Company and each Subsidiary effective as of the
Resignation Date. Executive understands and agrees that from and
after the Resignation Date he will no longer be authorized to speak
on behalf of, or incur obligations or liabilities on behalf of, any
member of the Company Group. The Parties agree to waive any and all
notice periods that apply to the aforementioned
terminations.
(b) Continued
Employment and Payment. During the period beginning on the
Resignation Date and ending on December 31, 2020 (the
“Transition
Period”), the Company shall employ Executive, and
Executive shall (i)
assist the Company and its financial advisors with the strategic
review and transition plan and provide such other services
commensurate with Executive’s former position as Chief
Executive Officer as may be reasonably required by the Company from
time to time and (ii) devote his full business
time to the Company to fulfill Executive’s duties hereunder.
As compensation for
Executive’s services to the Company during this period of
time, the Company shall pay Executive his base salary at a
rate equal to $400,000
per annum, payable semi-monthly in accordance with the
Company’s regular payroll practices. The Company shall also
reimburse Executive for reasonable travel, lodging, meals and other
reasonable business expenses incurred in accordance with the
Company’s expense reimbursement policy as then in effect in
accordance with Executive’s performance of services, with
such reimbursements to require pre-approval in writing by the
Company to the extent any single expense exceeds $1,000.
Notwithstanding the above, during the Transition Period, the
Company may terminate Executive’s employment and such payments immediately
(A)
upon Executive’s death or disability (which, herein, shall
have the same meaning as in Section 8(d) of the Employment
Agreement) or (B)
Executive’s termination for Cause (as defined
below).
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(c) First
Reaffirmation Payment. Subject to (i) Executive’s employment
not being terminated for Cause during the Transition Period,
(ii)
Executive’s execution of this Agreement, (iii) Executive’s or, in
the event of his death, Executive’s estate’s due
execution and submission of the First Reaffirmation (as defined in
Section 10), and (iv) Executive’s continued compliance with
the terms hereof, Executive or, in the event of his death, his
estate shall receive a single lump sum payment in the amount of
$400,000. Such payment shall be paid during the period January 1,
2021 through January 5, 2021.
(d) Bonus.
Subject to (i)
Executive’s employment not being terminated for Cause during
the Transition Period, (ii) Executive’s execution
of this Agreement, (iii) Executive’s or, in
the event of his death, Executive’s estate’s due
execution and submission of the First Reaffirmation, and (iv)
Executive’s continued compliance with the terms hereof,
Executive will be entitled to a one-time lump sum payment of
$177,776. Such payment shall be paid during the period January 1,
2021 through January 5, 2021.
2. Advisory
Services.
(a) Term;
Services. During the period beginning on January 1, 2021 and
ending on February 28, 2023 (such period, the “Advisory Period”),
Executive shall continue as an employee of the Company and provide
such advisory services as may be required by the Company from time
to time; provided,
that, if not
earlier terminated, the Advisory Period shall terminate
(i) immediately
upon Executive’s death, (ii) upon the Company’s
termination thereof due to Executive’s disability,
(iii) upon
Executive’s termination for Cause (as defined below), or
(iv) upon
Executive’s resignation upon no less than thirty (30)
days’ prior notice to the Company. For the avoidance of
doubt, upon a termination of the Advisory Period pursuant to
(A) Section 2(a)(i)
[death] or Section 2(a)(ii) [disability], all fees and benefits due
pursuant to Section 2(b) and Section 2(c)(i) shall continue in
accordance therewith as though the Advisory Period had not
terminated (provided, that if the applicable group health plans
prohibit such continued coverage following Executive’s death
or disability, in lieu thereof, Executive and/or his eligible
dependents shall be entitled to additional COBRA coverage pursuant
to Section 2(c)(ii) for the lesser of (x) the duration of the Advisory
Period in addition to the twelve (12) months required by Section
2(c)(ii) and (y)
the maximum period COBRA coverage is permitted under applicable
law, provided, in
each case, that COBRA coverage is timely and properly elected) or
(B) pursuant to
Section 2(a)(iii) [Cause] or Section 2(a)(iv) [resignation], all
fees and benefits due pursuant to Section 2(b) and Section 2(c)(i)
shall immediately cease. During the Advisory Period, the Executive
shall devote such portion of Executive’s business time to the
Company as shall be sufficient to fulfill the Executive’s
duties hereunder, but in no event more than eight (8) hours per
month.
(b) Compensation;
Expenses. As compensation for Executive’s services to
the Company during the Advisory Period, the Company shall pay
Executive an advisory fee equal to $215,000 per annum, payable
semi-monthly in accordance with the Company’s regular payroll
practices. The Company shall reimburse Executive for reasonable
travel, lodging, meals and other reasonable business expenses
incurred in accordance with the Company’s expense
reimbursement policy as then in effect in accordance with
Executive’s performance of services under Section 2(a), with
such reimbursements to require pre-approval in writing by the
Company to the extent any single expense exceeds
$1,000.
(c) Benefits.
(i) Advisory
Period. During
the Advisory Period, Executive shall be entitled to
continued participation for Executive and his eligible dependents
in the Company’s group medical benefits generally provided to
the Company’s employees, at the Company’s sole expense
and otherwise in accordance with the terms thereof, as may be
amended from time to time. Executive shall be provided information
concerning Executive’s rights to purchase continued coverage
under such plans in accordance with the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), following the
Advisory Period.
(ii) Post-Advisory
Period. If Executive timely elects COBRA continuation
coverage under the Company’s group medical and dental care
plans, the Company shall reimburse Executive for the full cost of
the premiums for such COBRA coverage for Executive and his eligible
dependents for the twelve months immediately following the
termination of the Advisory Period, payable monthly in arrears;
provided,
that, the Company
shall have no further obligation to provide any such reimbursements
upon Executive’s eligibility for corresponding coverage with
a subsequent employer, with Executive’s spouse or with the
employer of Executive’s spouse, or upon a termination for
Cause. The Company’s reimbursement of such premiums will be
taxable as compensation to Executive if and to the extent such
reimbursements would result in the imposition of penalties or taxes
on the Company for the failure to comply with the nondiscrimination
requirements of the Patient Protection and Affordable Care Act of
2010, as amended, and/or the Health Care and Education
Reconciliation Act of 2010, as amended.
(d) Indemnification
and Directors and Officers Liability Insurance Coverage. The
Company shall indemnify and provide all other indemnification
rights and benefits (including, without limitation, those relating
to the advancement of expenses) to Executive to the maximum extent
permitted or provided in Article VIII of the Company’s
By-laws as in effect on the date of this Agreement, subject to the
requirement that all fees and expenses incurred by Executive in
connection with indemnification hereunder be reasonable. For the
avoidance of doubt, the Company shall provide directors and
officers liability insurance coverage to Executive at the same
level and general terms and conditions as in effect currently for
the period ending on the sixth (6th) anniversary of the
Resignation Date.
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(e) Termination of
Advisory Period. Upon termination of the Advisory Period and
Executive’s services hereunder, the Company shall pay or
provide to Executive (i) Executive’s accrued
and unpaid advisory fees, earned through the last day of the
Advisory Period, which shall be paid on the first payroll date
immediately following the last day of the Advisory Period;
(ii) reimbursement
for any unreimbursed business expenses that Executive properly
incurred on or prior to the last day of the Advisory Period, which
shall be paid in accordance with the Company’s expense
policy; and (iii)
any accrued and vested benefits available to Executive under the
express terms and conditions of any Company Group employee benefit
plan in which Executive participated immediately prior to the last
day of the Advisory Period, in accordance with the applicable plan.
Effective as of the last day of the Advisory Period, Executive
shall not claim any further right to employment by the Company
Group.
(f) Definition of
Cause. For
purposes of this Agreement, “Cause” shall mean
(i) Executive
engaging in dishonesty or other misconduct that, in either case, is
materially injurious to the Company, (ii) Executive’s
commission of, and being charged with the commission of, a felony
involving the Company, (iii) Executive’s failure
to materially comply with Section 7 [Cooperation] of this Agreement
or (iv) a material
breach by Executive of this Agreement, including failure to comply
with the restrictive covenants incorporated herein pursuant to
Section 5(a), that is materially injurious to the Company, provided
that such breach (A) shall not have been cured by
Executive within 30 days after detailed written notice thereof from
the Company to Executive that is delivered to Executive within 30
days after the Board of Directors obtains actual knowledge of such
alleged material breach or (B) is incapable of being cured.
Notwithstanding the foregoing, Cause shall not be based on any
conduct engaged in by Executive that relates to the facts and
circumstances at issue in Securities and Exchange Commission v.
Xxxxxxxxxxx X. Xxxxxxx et al., 19 Civ. 9070 (NRB) (S.D.N.Y.)
(the “SEC
Claim”). Notwithstanding the foregoing, Executive
shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to Executive a copy of a
resolution, duly adopted by the unanimous affirmative vote of the
entire membership of the Company’s Board of Directors at a
meeting of the Board of Directors called and held for the purpose
(after thirty (30) days’ prior written notice to Executive
and an opportunity of him, together with his counsel, to be heard
before the Board of Directors), finding that in the good faith
opinion of the Board of Directors Executive is guilty of conduct
set forth in clauses (i), (ii), or (iii) of this Section 2(f) and
specifying the particulars thereof in detail. The Company covenants
and agrees that the Board of Directors shall be comprised of at
least five (5) members.
3. Equity.
(a) Performance
Shares. Pursuant to the Stock Agreements between the Company
and Executive listed on Annex A hereto, Executive has
been granted an aggregate of 2,600,000 shares of the
Company’s common stock subject to certain performance vesting
milestones and forfeiture provisions (the “Performance Shares”). In
addition to the Performance Shares, Executive owns 228,795 shares
of the Company’s common stock (the “Previously Owned
Shares”).
(i) Vested Performance
Shares and Previously Owned Shares. The Company and
Executive agree that as of the date of this Agreement, 1,125,000
Performance Shares were vested with Executive in accordance with
their terms (the “Vested Performance
Shares”). Executive shall sell the Vested Performance
Shares and the Previously Owned Shares (totaling 1,353,795 shares)
to the Company for a purchase price equal to $3.00 per Share, or an
aggregate of $4,061,385 (the “Vested Share Price”),
payable to Executive by the Company in a single lump sum on the
date Executive executes this Agreement. Following Executive’s
receipt of the Vested Share Price, Executive shall deliver any
certificate(s) registered in Executive’s name representing
the Vested Performance Shares and the Previously Owned Shares, as
well as such other documentation as may be required by the Company
or its counsel to effectuate the transfer, and Executive shall have
no further right, title or interest in the Vested Performance
Shares and the Previously Owned Shares.
(ii) NASDAQ
Tranche. The Company and Executive agree that 225,000
Performance Shares (the “NASDAQ Shares”) shall
vest upon Executive’s execution of this Agreement. Executive
hereby covenants and agrees that Executive shall not, directly or
indirectly sell, make any short sale of, loan, hypothecate, pledge,
offer, grant or sell any option or other contract for the purchase
of, purchase any option or other contract for the sale of, or
otherwise dispose of or transfer, or agree to engage in any of the
foregoing transactions with respect to, the NASDAQ Shares. Such
restrictions on the NASDAQ Shares shall remain in effect until the
first to occur of (i) July 31, 2021, (ii) an uplisting by the Company
to a national exchange, (iii) a Change of Control (as
defined below), (iv) the Company’s
declaration or any public announcement of a stock dividend,
secondary offering or rights offering, and (v) the declaration or
any public announcement of the Company’s raising of capital
in exchange for equity of the Company at below fair market
value.
(iii) $7.00
Shares. Notwithstanding the performance targets set forth in
that certain Stock Agreement dated December 15, 2017, 550,000
Performance Shares (the “$7.00 Shares”) shall vest
upon Executive’s execution of this Agreement. Executive
hereby covenants and agrees that, except for the Put Right (as
defined in Section 3(a)(iv)), Executive shall not, directly or
indirectly sell, make any short sale of, loan, hypothecate, pledge,
offer, grant or sell any option or other contract for the purchase
of, purchase any option or other contract for the sale of, or
otherwise dispose of or transfer, or agree to engage in any of the
foregoing transactions with respect to, the $7.00 Shares. Such
restrictions on the $7.00 Shares shall remain in effect until the
first to occur of (i) January 5, 2021,
(ii) an uplisting
by the Company to a national exchange, (iii) a Change of Control,
(iv) the
Company’s declaration or any public announcement of a stock
dividend, secondary offering or rights offering, and (v) the
declaration or any public announcement of the Company’s
raising of capital in exchange for equity of the Company at below
fair market value.
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(iv) Put
Option. During
the period beginning on the earlier of (A) December 30, 2020 and
(B) any earlier
date on which the Company declares a rights offering and ending on
the one-year anniversary of Section 3(a)(iv)(A) or (B) , Executive
shall have the right to put the $7.00 Shares to the Company at a
purchase price of $2.50 per Share (the “Put Right”); provided, that each and every
exercise of the Put Right by the Executive must be for at least
100,000 of the $7.00 Shares. To exercise the Put Right, Executive
shall notify the Company in writing of his intent to exercise the
Put Right and the number of $7.00 Shares he wishes to sell to the
Company (the “Put
Shares,” together with the Vested Performance Shares,
the “Repurchased
Shares”). Within 30 days following the Company’s
receipt of notice of exercise of the Put Right, the Company shall
pay Executive an amount equal to the product of (i) $2.50 and (ii) the number [minimum
100,000] of Put Shares (such amount, the “Put Price”). Following
Executive’s receipt of the Put Price, Executive shall deliver
any certificate(s) registered in Executive’s name
representing the Put Shares, as well as any documentation as may be
reasonably required by the Company or its counsel to effectuate the
transfer, and Executive shall have no further right, title or
interest in the Put Shares.
(v) Forfeiture of
Nonvested Shares. The Company and Executive agree that
pursuant to that (A) certain Stock Agreement,
dated December 15, 2017, 550,000 Performance Shares were forfeited
without consideration due to the Company’s per share closing
price failing to reach an average of $5.00 per share for any 10
consecutive days by June 15, 2020 and (B) pursuant to that certain
Settlement Agreement, dated on or about October 4, 2019, among the
Company and Camac Fund, LP and its affiliates, Executive agreed to
forfeit 150,000 Performance Shares (such 700,000 forfeited
Performance Shares together, the “Forfeited Performance
Shares”). Within thirty (30) days of Executive’s
execution of this Agreement, Executive shall deliver any
certificate(s) registered in Executive’s name representing
the Forfeited Performance Shares, as well as any documentation as
may be reasonably required by the Company or its counsel to
effectuate the forfeiture, and Executive shall have no further
right, title or interest in the Forfeited Performance
Shares.
(vi) Definition
of Change of Control. For purposes of this Agreement,
“Change of Control” means the occurrence of the
acquisition by any Person or “group” (as defined in
section 13(d) of the Securities Exchange Act of 1934, as amended
from time to time), other than by (A) the Company or any of its
Affiliates or (B)
any employee benefit plan of the Company or any of its Affiliates,
through one transaction or a series of transactions of
(i) more than 50%
of the combined voting power of the then outstanding voting
securities of the Company or (ii) all or substantially all of
the assets of the Company. Notwithstanding the foregoing, a
“Change of Control” shall not be deemed to occur if the
Company files for bankruptcy, liquidation or reorganization under
the United States Bankruptcy Code.
(b) Executive
Representations and Warranties.
(i) Enforceability.
Executive has duly executed and delivered this Agreement and it
constitutes Executive’s binding obligation, enforceable in
accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization or other similar laws
relating to creditors’ rights and general principles of
equity affecting the availability of specific performance and other
equitable remedies, now or hereafter in effect. Except as
previously obtained, Executive does not need to give any notice to,
make any filing with or obtain any approval of any court,
governmental authority or third person in order to consummate the
sale of Shares to the Company contemplated by this
Agreement.
(ii) No
Conflicts. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated
hereby, will (i)
violate any laws or other restriction of any governmental authority
or court to which Executive is subject or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under, any lease, mortgage, loan,
agreement, instrument or other arrangement to which Executive is a
party, by which Executive is bound, or to which Executive’s
Shares are subject.
(iii) Ownership
of Shares. Executive is the record owner of the Repurchased
Shares and holds such Shares free of any encumbrances. Except for
this Agreement, Executive is not a party to any option, purchase
right, warrant or other commitment or contract that could require
Executive to pledge, sell, transfer or otherwise dispose of
Executive’s Shares or any other capital stock of the
Company.
(iv) Capacity.
Executive has the legal power and right to enter into and perform
this Agreement and to sell and transfer good title to the
Repurchased Shares and all Forfeited Shares free of any
encumbrances in accordance with the terms of this
Agreement.
(v) Title. Upon
consummation of the sale transactions this Agreement contemplates
and in accordance with the terms hereof, the Company will acquire
good title to the Repurchased Shares and all Forfeited Shares free
of all encumbrances.
(vi) Disclosure.
To Executive’s actual (and not constructive) knowledge,
(A) the
Company’s financial statements are accurate in all material
respects and (B)
the Company’s financial statements, and all other agreements,
certificates, statements or documents furnished by Executive to or
on behalf of the Company do not (I) contain any untrue statement
of a material fact or (II) omit to state a material
fact required to be stated therein to make the statements therein
not misleading.
(c) Executive’s
Purchased Shares. The Company and Executive agree that,
Executive has acquired an aggregate of 228,795 shares of the
Company’s stock to date (the “Held Shares”), excluding
the Performance Shares. Executive warrants that the Held Shares,
together with the Performance Shares, represent Executive’s
entire equity ownership interest in the Company, and Executive does
not, directly or indirectly, otherwise hold any shares of Company
stock.
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4. Cessation of
Payments and Benefits. Executive acknowledges that the
consideration set forth in this Agreement is not otherwise due to
him, and that the Company is providing such consideration to
Executive in exchange for Executive's agreements and promises set
forth in this Agreement. If Executive (a) materially breaches any
provision of this Agreement, including, but not limited to, the
provisions of the Employment Agreement incorporated herein by
reference pursuant to Section 5(a), and such breach has not been
cured (if curable) within the time periods proscribed under Section
2(f) and results in material injury to the Company, as determined
by final judgment of a court of competent jurisdiction or
(b) fails to
materially comply with the cooperation provisions set forth in
Section 7 of this Agreement, then (c) the Company will not be
obligated to provide such payments or benefits to the extent that
any portion thereof have yet to be paid or provided.
5. Employment
Agreement; Certain Acknowledgements.
(a) Employment
Agreement. The Parties hereby agree that, effective as of
the Resignation Date, the Employment Agreement shall terminate in
all respects and be of no further force or effect. Notwithstanding
the foregoing sentence, Sections 12 and 13 of the Employment
Agreement are incorporated by reference herein and made a part
hereof, and as so incorporated, shall remain in full force and
effect in accordance with their terms. For the avoidance of doubt,
for purposes of the restrictive covenants, Executive shall be
employed by the Company from the Resignation Date until the end of
the Advisory Period. The Parties agree that the consideration set
forth in this Agreement is sufficient consideration for the
restrictions set forth in Section 12 of the Employment Agreement,
and for purposes of Section 12, no payment was or is required under
Section 9 or Section 10 of the Employment Agreement due to
Executive’s voluntary resignation.
(b) Certain
Acknowledgements. Executive hereby acknowledges and agrees
that, except as expressly set forth herein or as required by law,
neither Executive nor his spouse or dependents will be entitled to
or make a claim for any other compensation or benefits from any
member of the Company Group, including, without limitation, any
rights to any bonus payments, separation payments, continued group
health benefits or accelerated equity vesting under the Employment
Agreement or otherwise, and Executive hereby agrees that, except as
expressly set forth herein or as required by law, Executive will
have no further interest, rights or benefits arising out of or in
connection with the Employment Agreement or in respect of
Executive’s employment or separation from employment with the
Company Group.
6. General
Release.
(a) Release of Claims
by Executive. Executive, on behalf of himself and his
family, agents, representatives, heirs, executors, trustees,
administrators, attorneys, successors and assigns (collectively,
the “Executive
Release Parties”), hereby irrevocably and
unconditionally releases, waives, settles, cancels, acquits and
discharges, the Company Group and each of its members’
respective current and former subsidiaries, affiliates, successors
and assigns, and with respect to each of them, their respective
predecessors, stockholders, partners, members, directors, managers,
officers, employees, attorneys, insurers, agents or other
representatives, and each employee benefit plan of the Company
Group (including current and former trustees and administrators of
any such plans) (collectively, the “Company Release Parties”)
from any and all claims (contractual or otherwise), demands, costs,
expenses, rights, causes of action, charges, attorneys’ fees,
debts, liens, promises, obligations, complaints, suits, losses,
damages and all liability of whatever kind and nature, whether
known or unknown, legal or equitable, suspected or unsuspected,
fixed or contingent, that the Executive Release Parties have, may
have or ever have had, or that otherwise may exist or may arise,
against any of the Company Release Parties, by reason of any act,
obligation, transaction, practice, conduct, statement, occurrence
or other matter, from the beginning of time up to and including the
date of this Agreement, in connection with, arising out of, or
relating directly or indirectly to, Executive’s employment or
separation from employment with the Company Group, or in any way
connected with or related to any Company Group compensatory or
benefit plan, program, policy or arrangement, including, without
limitation, the Employment Agreement. Notwithstanding the foregoing
or anything contained in this Agreement to the contrary, and for
the avoidance of doubt, nothing in this Agreement is intended to,
nor shall it be construed to: (1) release or waive any right
of the Executive to enforce Executive’s rights under this
Agreement; (2)
release or waive any claims to the extent such claims cannot be
released by applicable law; (3) release or waive any right
or claim to indemnification and/or contribution Executive may have
pursuant to this Agreement, applicable law, the Company’s
governance instruments or otherwise for acts committed during the
scope of Executive’s employment with the Company and other
affiliations with the Company Group; (4) release or waive any
coverage, if any, under any Company liability insurance policy; or
(5) release or
waive any right Executive may have to a vested benefit under any
retirement or welfare plan of the Company. For the purpose of
implementing a full and complete release and discharge of the
Company Release Parties, Executive (on behalf of himself and the
Executive Release Parties) expressly acknowledges that this
Agreement is intended to include in its effect, without limitation,
all released claims that Executive does not know or suspect to
exist in his favor at the time of execution hereof, and that this
Agreement contemplates the extinguishment of any and all released
claims.
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(b) Covenant Not to
Xxx; Certain Proceedings. Executive, on behalf of himself
and the Executive Release Parties, covenants and agrees not to
institute, or cause to be instituted, directly or indirectly, any
action, suit or proceeding whatsoever (including the initiation of
governmental proceedings or investigations of any type) against any
of the Company Release Parties for any matter or circumstance
concerning which the Executive Release Parties have released the
Company Release Parties under this Agreement. Further, the
Executive Release Parties agree not to encourage or suggest to any
other person or entity that he, she or it institute any legal
action against the Company Release Parties. Notwithstanding the
foregoing, this release is not intended to interfere with
Executive’s right to file a charge or complaint with the
Equal Employment Opportunity Commission, the National Labor
Relations Board, the Occupational Safety and Health Administration,
the Securities and Exchange Commission or any other federal, state
or local governmental agency or commission or self-regulatory
organization (the “Government Agencies”),
and does not limit Executive’s ability to communicate with
the Government Agencies or otherwise participate in any
investigation or proceeding that may be conducted by any Government
Agency, including providing documents or other information, without
notice to the Company Group.
(c) Extent of
Release. This release by Executive is valid whether any
claim arises under any federal, state or local statute (including,
without limitation, Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1991, the Age Discrimination in Employment Act
of 1967, as amended by the Older Workers Benefits Protection Act of
1990, the Equal Pay Act, the Americans with Disabilities Act of
1990, the Employee Retirement Income Security Act of 1974, the Fair
Labor Standards Act, the Family and Medical Leave Act, the
Pennsylvania Constitution, the Pennsylvania Human Rights Act, the
Pennsylvania Wage and Hour Law, the Florida Constitution, the
Florida Civil Rights Act, the Florida Whistleblower Protection Act,
the Florida Workers’ Compensation Retaliation provision
(§ 440.205, Fla. Stat.), and all other statutes regulating the
terms and conditions of Executive’s employment), regulation
or ordinance, under the common law or in equity (including any
claims in tort or under contract for wrongful discharge or
otherwise), or under any policy, agreement, understanding or
promise, written or oral, formal or informal, between the Company
Group or any affiliate of a member of the Company Group, and
Executive.
(d) Release of Claims
by the Company. The Company hereby irrevocably and
unconditionally releases, waives, settles, cancels, acquits and
discharges, Executive from any and all claims (contractual or
otherwise), demands, costs, expenses, rights, causes of action,
charges, attorneys’ fees, debts, liens, promises,
obligations, complaints, suits, losses, damages and all liability
of whatever kind and nature, whether known or unknown, legal or
equitable, suspected or unsuspected, fixed or contingent, that the
Company has, may have or ever has had, or that otherwise may exist
or may arise, against Executive by reason of any act, obligation,
transaction, practice, conduct, statement, occurrence or other
matter, from the beginning of time up to and including the date of
this Agreement, in connection with, arising out of, or relating
directly or indirectly to, the SEC Claim. The Company covenants and
agrees not to institute, or cause to be instituted, directly or
indirectly, any action, suit or proceeding whatsoever (including
the initiation of governmental proceedings or investigations of any
type) against Executive in respect of the SEC Claim. Further, the
Company agrees not to encourage or suggest to any other person or
entity that he, she or it institute any legal action against the
Executive in respect of the SEC Claim. As of the time of its
execution of this Agreement, the Company does not (i) have knowledge of any claim
against Executive or (ii) intend to bring any claim
against Executive.
7. Cooperation.
Following the Resignation Date and continuing until the termination
of the Advisory Period:
(a) Executive agrees to
reasonably cooperate with the Company in effecting a smooth
transition of the duties and responsibilities that Executive
performed for the Company Group. Executive agrees to be reasonably
available to respond to requests or questions (by phone or e-mail)
in connection with any reasonable request by the Company regarding
matters of which Executive has personal knowledge or which were
within the purview of Executive’s job
responsibilities.
(b) Executive agrees to
reasonably cooperate with the Company Group in assisting in the
defense of any existing or future charges, claims, demands,
complaints, subpoenas, government investigations, arbitrations or
lawsuits filed against the Company, including any of its related or
affiliated companies, parent companies, or subsidiaries, or in the
prosecution of any claim, demand, complaint, arbitration or lawsuit
filed by a member of the Company Group against any person or entity
(collectively, “Company Actions”), where
Executive, during Executive’s employment with the Company
Group, had involvement in or knowledge of any decision, negotiation
or other process or procedure that is the subject of any of the
Company Actions, where Executive had previously participated in the
defense of any of the Company Actions, or where it is alleged that
Executive has knowledge of any facts at issue in any of the Company
Actions. Executive’s cooperation shall include, but not be
limited to, meeting with the Company’s counsel and providing
sworn statements and testimony as, where and when reasonably
requested. Executive agrees that Executive shall not be entitled to
any further payments or compensation for providing such
cooperation. In the event of any material failure by Executive to
comply with this Section 7(b), or any instance of Executive’s
material dishonesty or failure to be truthful with regard to any
Company Action or otherwise, Executive will not be entitled to the
payments or benefits described herein.
8. Return
of Company Property; Nondisparagement.
(a) Return
of Company Property. Following the Resignation Date,
Executive shall immediately return to the Company all property
belonging to the Company and all copies of such property in
Executive’s possession or under
Executive’s control, including, but not limited to, all keys,
ID cards or badges, access codes, credit cards, software,
electronically-stored documents or files, physical files, and any
and all other property or proprietary or confidential information
of the Company Group. Executive shall not delete, remove, or
destroy any property or materials belonging to the Company, nor
shall Executive retain any Company property or materials, without
the express written permission of the Company’s Board of
Directors or the Company’s counsel. Notwithstanding the
foregoing or any other provision of this Agreement, Executive shall
be entitled to retain, and as of the Resignation Date shall have
all right, title and interest in, all equipment that the Company
provided to Executive for his personal use during his employment
that is currently in his possession, including, without limitation,
a mobile telephone, a laptop computer, and any other hand-held
electronic devices, provided that Executive shall cooperate with
the Company to remove from all such equipment and devices any and
all data owned by the Company.
6
(b) Nondisparagement.
Executive shall not at any time say, write or cause to be said or
written (including through social media), directly or indirectly,
any statement that may be considered defamatory, derogatory, or
disparaging with respect to the Company or its employees, officers,
or directors whom are known by Executive to serve in any such
capacity. The Company, through its
officers and directors, shall not at any time say, write or cause
to be said or written (including through social media), directly or
indirectly, any statement that may be considered defamatory,
derogatory, or disparaging with respect to Executive, other than in
connection with ordinary performance evaluations. This Section does
not apply to factual statements made in connection with legal
proceedings, governmental and regulatory investigations and
actions, other statements required by law and statements relating
to the Company’s business made in good faith to members of
the Company’s Board of Directors.
9. Consideration;
Legal Advice, Reliance. The consideration provided hereunder
by the Company Group is not required under the Company
Group’s standard policies, and Executive knows of no other
circumstances other than Executive’s agreeing to the terms of
this Agreement that would require the Company Group to provide such
consideration. Executive represents and acknowledges that
(a) Executive has
been given adequate time (at least twenty-one (21) days) to
consider this Agreement (which, by signing this Agreement prior to
the expiration of such period, Executive has expressly agreed to
waive) and has been advised to discuss all aspects of this
Agreement with Executive’s private attorney, (b) Executive has carefully read
and fully understands all the provisions of this Agreement,
(c) Executive has
voluntarily entered into this Agreement, without duress or coercion
and (d) Executive
has not heretofore assigned or transferred or purported to assign
or transfer, to any person or entity, any of the claims described
in Section 6, any portion thereof or any interest therein.
Executive understands that if Executive requests additional time to
review the terms of this Agreement, a reasonable extension of time
will be granted.
10. Reaffirmation.
In exchange for the payments and benefits and other good and
valuable consideration contained herein, Executive shall sign and
deliver to the Company a reaffirmation of his release of claims
(each, a “Reaffirmation”), within
10 days after each of (a) December 15, 2020 (the
“First
Reaffirmation”) and (b) the last day of the Advisory
Period (the “Second
Reaffirmation”), in each case, in the form attached
hereto as Exhibit
B.
11. Miscellaneous.
(a) Interest on Late
Payments. Amounts due to Executive hereunder but not paid on
a timely basis in accordance with of the applicable due date set
forth in this Agreement shall be subject to interest, which shall
accrue at the rate of 6.5 percent (6.5%) per annum (pro rata)
accruing immediately from the due date; provided, that Executive shall
provide written notice to the Company within thirty (30) days
following the due date notifying the Company of such overdue
payment. If the Company fails to pay a material overdue payment
within thirty (30) days after written notice thereof by Executive,
all payments otherwise not yet due hereunder shall become
immediately due and payable on such thirtieth (30th) day and
subject to the interest provisions of this Section.
(b) Board
Consents. The
Company represents that it has obtained the written consent of the
Board of Directors (i) approving the terms of this
Agreement and its execution and (ii) authorizing the President
or the Chief Financial Officer, or any single director, to make or
authorize the making of all payments duly accruing hereunder in a
timely manner.
(c) Taxes. All
payments or benefits provided under this Agreement are subject to
any applicable employment or tax withholdings or
deductions.
(d) Section 409A
Provisions. All payments and benefits under this Agreement
shall be made and provided in a manner that is intended to comply
with, or be exempt from, Section 409A (“Section 409A”) of the
Internal Revenue Code of 1986, as amended (the “Code”), to the extent
applicable. Notwithstanding any provision in this Agreement to the
contrary:
(i) The payment (or
commencement of a series of payments) hereunder of any
“nonqualified deferred compensation” (within the
meaning of Section 409A) upon a termination of employment
shall be delayed until such time as Executive has also undergone a
“separation from service” as defined in U.S. Treasury
Regulation Section 1.409A-1(h), at which time such
“nonqualified deferred compensation” (calculated as of
the last day of the Advisory Period) shall be paid (or commence to
be paid) to Executive on the schedule set forth in this Agreement
as if Executive had undergone such termination of employment (under
the same circumstances) on the date of his ultimate
“separation from service.” Any payment otherwise
required to be made hereunder to Executive at any date as a result
of the termination of Executive’s employment shall be delayed
for such period of time as may be necessary to meet the
requirements of Section 409A(a)(2)(B)(i) of the Code
(the “Delay
Period”) in the event that Executive is deemed at the
time of his “separation from service” to be a
“specified employee” (in each case, within the meaning
of Section 409A) and if such delay is otherwise required to
avoid additional tax under Section 409A(a)(2) of the Code. In
such event, on the first business day following the expiration of
the Delay Period, Executive shall be paid, in a single lump sum
cash payment, an amount equal to the aggregate amount of all
payments delayed pursuant to the preceding sentence, and any
remaining payments not so delayed shall continue to be paid
pursuant to the payment schedule set forth herein.
7
(ii) Each
payment in a series of payments hereunder shall be deemed to be a
separate payment for purposes of Section 409A.
(iii) To
the extent that any right to reimbursement of expenses or payment
of any benefit in-kind under this Agreement constitutes
“nonqualified deferred compensation” (within the
meaning of Section 409A), (A) any such expense
reimbursement shall be made by the Company no later than the last
day of the taxable year following the taxable year in which such
expense was incurred by Executive, (B) the right to
reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit, and (C) the amount of expenses
eligible for reimbursement or in-kind benefits provided during any
taxable year shall not affect the expenses eligible for
reimbursement or in-kind benefits to be provided in any other
taxable year; provided that the foregoing
clause shall not be violated with regard to expenses reimbursed
under any arrangement covered by Section 105(b) of the Code
solely because such expenses are subject to a limit related to the
period during which the arrangement is in effect.
(iv) While
the payments and benefits provided hereunder are intended to be
structured in a manner to avoid the implication of any penalty
taxes under Section 409A, in no event whatsoever shall the
Company or any of its affiliates be liable for (A) any
additional tax, interest or penalties that may be imposed on
Executive as a result of Section 409A or (B) any damages
for failing to comply with Section 409A (other than for
withholding obligations or other obligations applicable to
employers, if any, under Section 409A).
(e) Severability.
If any provision of this Agreement, or any part thereof, is held by
a court of competent jurisdiction to be invalid, void,
unenforceable or against public policy for any reason, this
Agreement shall be construed without such term or condition and the
remainder of the Agreement shall remain in full force and effect
and shall not be affected, impaired or invalidated. If any court
construes any provision contained in this Agreement to be
unenforceable by reason of being overbroad, such court may reduce
the breadth of such provision to the minimum extent necessary to
render it enforceable and, in its reduced form, such provision
shall then be enforced.
(f) Entire Agreement;
Amendment; Waiver. This Agreement constitutes the entire
understanding and agreement between the parties and supersedes and
cancels all previous agreements and commitments, whether oral or
written, in connection with the matters described herein,
including, without limitation, the Employment Agreement (except to
the extent directly incorporated in Section 5(a) above). In
executing this Agreement, Executive is not relying, and has not
relied, upon any oral or written representations or statements not
set forth or referred to herein. No waiver or termination of this
Agreement shall be binding unless it is in writing and signed by
the parties hereto. No failure to insist upon compliance with any
term or condition of this Agreement, whether by conduct or
otherwise, shall be deemed to be or construed to be a waiver of
such term or condition.
(g) Assignment.
The rights and benefits of the Company under this Agreement shall
be assignable to any successor or affiliated entity of the Company.
All rights and obligations hereunder shall inure to the benefit of
and be binding upon the Company’s successors and assigns, but
shall not be assignable by Executive.
(h) Arbitration. The
Parties hereby agree that, to the fullest extent permitted by law,
any and all claims or controversies relating in any manner to this
Agreement (each, a “Claim”) shall be resolved
by final and binding arbitration conducted in accordance with the
Employment Arbitration Rules of the American Arbitration
Association (the “AAA Rules”) and this
Section 11(h). A neutral and impartial arbitrator shall be chosen
by mutual agreement of the parties to the arbitration; however, if
Executive and the other parties to the arbitration are unable to
agree upon an arbitrator within thirty (30) days, then a neutral
and impartial arbitrator shall be appointed in accordance with the
arbitrator nomination and selection procedure set forth in the AAA
Rules. The arbitrator shall prepare a written decision containing
the essential findings and conclusions on which the award is based
so as to ensure meaningful judicial review of the decision. The
arbitrator shall apply the same substantive law, with the same
statutes of limitations and the same remedies, as would apply if
the Claims were brought in a court of law. The arbitrator shall
have the authority to consider and decide pre-hearing motions,
including dispositive motions. All arbitration hearings under this
Agreement shall be conducted in New York, New York. An action may
be brought in any court to compel arbitration under this Agreement
and to enforce an arbitration award. Except as otherwise provided
in this Agreement, no Party shall initiate or prosecute any lawsuit
in any way related to any arbitrable claim, including without
limitation, any claim as to the making, existence, validity, or
enforceability of the agreement to arbitrate. The fees of the
arbitrator and all other costs that are unique to the arbitration
process shall be paid by the Company subject to the arbitrator
reallocating or awarding up to one-half of the costs and fees of
the arbitration to the Company if the Company prevails in the
arbitration.
(i) Attorneys’
Fees and Costs. If Executive brings any action or
commences any proceeding to enforce payment under this Agreement,
the non-prevailing party in such action or proceeding shall
reimburse the prevailing party for all reasonable attorneys’
fees and costs, (including arbitration and court costs and
disbursements) incurred in such action or proceeding, at trial, in
any bankruptcy proceeding and on appeal.
8
(j) Interpretation.
This Agreement shall be construed without regard to any presumption
or other rule requiring construction against the party causing this
Agreement to have been drafted. The language of all parts of this
Agreement shall in all cases be construed as a whole according to
its fair meaning, and not for or against either of the parties. The
Section headings used in this Agreement are intended solely for
convenience of reference and shall not in any manner amplify,
limit, modify or otherwise be used in the interpretation of any of
the provisions hereof.
(k) Further
Action. Each of the
parties shall, for no further consideration, use good faith efforts
to perform all such other actions and execute, acknowledge, and
deliver and cause to be executed, acknowledged and delivered such
other documents or may be reasonably required to effectuate the
intent of the parties as reflected in this Agreement.
(l) Third Party
Beneficiaries. All Company Release Parties and Executive
Release Parties who are not signatories to this Agreement shall be
deemed to be third party beneficiaries of the respective releases
set forth in Section 6 hereof.
(m) Counterparts.
This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which taken together shall
constitute one and the same instrument. A signed copy of this
Agreement delivered by facsimile, e-mail, or other means of
electronic transmission shall be deemed to have the same legal
effect as delivery of an original signed copy of this
Agreement.
[Signature Page
Follows]
9
IN WITNESS WHEREOF,
the parties below have executed this Separation and Transition
Services Agreement and General Release.
COMPANY:
|
By: /s/ Xxxxxx Xxx
Xxxx
|
Date: _7/31/2020
|
|
Name: Xxxxxx Xxx
Xxxx
|
|
|
Title:
President
|
|
|
|
|
|
EXECUTIVE:
|
|
|
|
|
|
/s/ Xxxxxxxxxxx
Xxxxxxx
|
Date: _7/31/2020
|
|
XXXXXXXXXXX
XXXXXXX
|
|
10
EXHIBIT A
EXHIBIT A
Stock Agreements
|
Date of Agreement
|
Target
|
Number of Shares Subject to Award
|
Vested
|
Forfeited
|
Unvested
|
Forfeit Date
|
|
April 13, 2017, as amended on March 15, 2019
|
$25 million
|
375,000
|
375,000
|
0
|
0
|
April 13, 2018
|
|
$50 million
|
375,000
|
375,000
|
0
|
0
|
October 13, 2018
|
|
|
$75 million
|
375,000
|
375,000
|
0
|
0
|
September 15, 2020
|
|
|
NASDAQ
|
375,000
|
0
|
150,000
|
225,000
|
September 15, 2020
|
|
|
December 15, 2017
|
$5/sh
|
550,000
|
0
|
550,000
|
0
|
June 15, 2020
|
|
$7/sh
|
0
|
0
|
550,000
|
December 15, 2020
|
||
|
Total
|
|
2,600,000
|
1,125,000
|
700,000
|
775,000
|
|
11
EXHIBIT B
Reaffirmation
I, on
behalf of myself and the Executive Release Parties, hereby ratify
and reaffirm (the “Reaffirmation”), as of
the date set forth below my name, the release, as set forth in
Section 6 of that Separation and Transition Services Agreement and
General Release, dated as of July 30, 2020 between me and Liberated
Syndication Inc. (the “Agreement”). I understand
that this Reaffirmation means that the matters released in Section
6 of the Agreement shall now apply to all matters through the date
that I sign this Reaffirmation. Terms used in this Reaffirmation
but not defined herein shall have the meanings ascribed thereto in
the Agreement.
/s/ Xxxxxxxxxxx
Xxxxxxx
Xxxxxxxxxxx
Xxxxxxx
Date:____7/31/2020___________
12
