EXHIBIT 10.65
SEVERANCE AGREEMENT AND GENERAL RELEASE
This Severance Agreement and General Release (the "Agreement") is made
and entered into by and between Xxxxxx Xxxxx ("Xxxxx"), and Liquid Audio, Inc.
(the "Company") (each, a "Party" and collectively, the "Parties").
WHEREAS, Xxxxx and the Company desire to settle fully and finally any
and all claims arising out of or related to Xxxxx'x employment with the Company
and/or the fact that such employment relationship is ending;
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained and other good and valuable consideration, receipt of which is
hereby acknowledged, and to avoid unnecessary litigation, it is hereby agreed by
and between the parties as follows:
1. In consideration for Xxxxx'x agreement herein and subject to this
Agreement becoming effective pursuant to Paragraph 4(g), below (the "Effective
Date"), the Company shall:
a. Pay to Xxxxx a lump sum amount equal to six (6) months of his
current annual base salary of $190,000, minus the deductions required
by applicable law, which shall be paid to Xxxxx by check and shall be
mailed to his address last known to the Company, postmarked no later
than the eighth (8th) calendar day following the Effective Date.
b. Pay to Xxxxx an amount equal to six (6) months of his current
base salary, payable in six (6) monthly installments beginning on the
first (1st) business day following the Effective Date, provided that
Xxxxx makes himself available at reasonable times during such six (6)
month period to consult with the Company with respect to matters
concerning the Company that are within his particular area of
expertise. The Company acknowledges that Xxxxx may have other time
commitments during such period which may include, by way of example,
time devoted to seeking or engaging in new employment, and the Company
agrees to reasonably accommodate such competing time commitments of
Xxxxx in its requests for consulting assistance from Xxxxx. All sums
paid to Xxxxx pursuant to this Paragraph 1(b) shall be reported by the
Company to the Internal Revenue Service on a Form 1099, and Xxxxx
agrees that he will pay any taxes determined to be due thereon without
contribution from the Company.
c. Maintain the Company's group health plan for one (1) year after
the Effective Date to enable Xxxxx to continue his coverage and the
coverage of his qualified dependents under the Consolidated Omnibus
Budget Reconciliation Act ("COBRA"), at the Company's expense;
provided that the Company's obligations hereunder shall terminate upon
Xxxxx'x becoming eligible for coverage under any other group health
plan.
Initials:
---------------------- --------------------
Company Xxxxx
d. For a period of six (6) months after the Effective Date, provide
Xxxxx with use of his current office or alternate executive office
space in the Los Angeles area, the location of which alternate
executive office space shall be determined in the Company's reasonable
discretion. Company will also provide telephone and internet services
for Xxxxx'x use at such office facilities, which services shall be at
least comparable in quality to those provided at Xxxxx'x current
office.
e. To the extent permitted by applicable law, assist and facilitate
in the removal of restrictive legends on the share certificates for
shares of Company stock owned by Xxxxx and, for a period of no less
than one (1) year following the date of this Agreement, or such
shorter period as may be necessary until Xxxxx can sell Company shares
under SEC Rule 144(k), maintain adequate current public information as
necessary to allow Xxxxx to sell Company shares under SEC Rule 144.
2. Xxxxx agrees that by signing this Agreement and not revoking his
signature, as the same is permitted by Subparagraph 4(g):
a. He is, without limitation, irrevocably and unconditionally
releasing and forever discharging the Company, its officers, agents,
directors, supervisors, employees, representatives, successors and
assigns, and all persons acting by, through, under, or in concert with
any of them (collectively, the "Releasees") from any and all charges,
complaints, claims, causes of action, debts, demands, sums of money,
controversies, agreements, promises, damages and liabilities of any
kind or nature whatsoever, both at law and equity, known or unknown,
suspected or unsuspected, anticipated or unanticipated (hereinafter
referred to as a "claim" or "claims"), arising from conduct occurring
on or before the date of this Agreement, including without limitation
any claims incidental to or arising out of Xxxxx'x employment with the
Company or the termination thereof; provided, however, that this
release does not apply to the "Excepted Claims", as defined below. It
is expressly understood by Xxxxx that among the various rights and
claims being waived in this release are those arising under the Age
Discrimination in Employment Act of 1967 (29 U.S.C. Section 621. et
seq.), Title VII of the Civil Rights Act of 1964, the Fair Labor
Standards Act, the Equal Pay Act of 1963, the Americans with
Disabilities Act, the Civil Rights Act of 1866, the Age Discrimination
in Employment Act of 1967 (ADEA), the Older Workers Benefit Protection
Act, the Family and Medical Leave Act, the California Fair Employment
and Housing Act, the California Family Rights Act, the California
Labor Code or any other federal, state or local law or regulation.
This provision is intended by the Parties to be all encompassing and
to act as a full and total release of any and all claims, whether
specifically enumerated herein or not, that Xxxxx might have or has
had, that exists or ever has existed on or to the date of this
Agreement, other than the Excepted Claims. Notwithstanding the
foregoing, this
Initials:
---------------------- --------------------
Company Xxxxx
2.
release shall not apply to any criminal conduct or acts or omissions
constituting willful misconduct by the Company.
b. The term "Excepted Claims" shall mean: (i) the right to receive
from the Company all salary earned through November 22, 2002, and to
be compensated for 80 days of unused vacation time, which payments
shall be made within forty-eight (48) hours of the execution of this
Agreement, (ii) rights and claims of Xxxxx under this Agreement and
under the Consultant Agreement being executed by the Parties
concurrently with the execution of this Agreement, (iii) any
indemnification rights Xxxxx may be entitled to as a former employee,
officer and/or director of the Company and/or of the Company's
affiliates pursuant to the Certificate of Incorporation or Bylaws of
the Company or its affiliates or pursuant to any existing
indemnification agreement with the Company or its affiliates, (iv) any
rights Xxxxx may have pursuant to Section 2802 of the California Labor
Code relating to Xxxxx'x actions on behalf of the Company and/or its
affiliates during the course of Employee's employment, and (iv) the
benefit of any directors and officers insurance coverage now or
hereafter maintained by the Company and/or its affiliates that
provides coverage for prior officers and/or directors of the Company
and/or its affiliates.
The words "claim" or "claims" shall include without limitation all
actions, claims and grievances, whether actual or potential, known or
unknown, related, incidental to or arising out of Xxxxx'x employment
with the Company and the termination thereof, other than the Excepted
Claims. All such claims, including related attorneys' fees and costs,
are forever barred by this Agreement and without regard to whether
those claims are based on any alleged breach of a duty arising in
contract or tort; any alleged unlawful act, any other claim or cause
of action; and regardless of the forum in which it might be brought.
c. The foregoing shall constitute an accord and satisfaction and a
full and complete settlement of his claims, shall constitute the
entire amount of monetary consideration provided to him under this
Agreement, and that he will not seek any further payments for any
other claim, damages, costs or attorneys' fees in connection with the
claims being released by Xxxxx in this Agreement.
d. This Agreement, all of its terms, and all of the obligations of
the Company contained herein, other than the Excepted Claims, are
expressly contingent upon the condition that Xxxxx does not exercise
his right of revocation as described in Subparagraph 4(g), below. The
Excepted Claims shall remain the obligations of Company regardless of
whether or not Xxxxx exercises such right of revocation.
Initials:
---------------------- --------------------
Company Xxxxx
3.
x. Xxxxx represents that he has not filed any complaint, claims or
actions against the Company, its officers, agents, directors,
supervisors, employees or representatives with any state, federal or
local agency or court based on any of the claims being released by
Xxxxx under this paragraph 2 and agrees that he will not do so at any
time hereafter.
3. The Company agrees that by executing this Agreement, Company is
irrevocably and unconditionally releasing and forever discharging Xxxxx from any
and all charges, complaints, claims, causes of action, debts, demands, sums of
money, controversies, agreements, promises, damages and liabilities of any kind
or nature whatsoever, both at law and equity, known or unknown, suspected or
unsuspected, anticipated or unanticipated (hereinafter referred to as a "claim"
or "claims"), arising from conduct occurring on or before the date of this
Agreement, other than rights and claims of Company under this Agreement and
under the Consultant Agreement being executed by the Parties concurrently with
the execution of this Agreement. The Company represents that it has not filed
any complaint, claims or actions against Xxxxx with any state, federal or local
agency or court based on any of the claims being released by Company under this
Paragraph 3 and agrees that it will not do so at any time hereafter. The
Company's release of Xxxxx in this Paragraph 3 is expressly contingent upon the
condition that Xxxxx does not exercise his right of revocation as described in
Subparagraph 4(g), below. Notwithstanding the foregoing, this release shall not
apply to any criminal conduct or acts or omissions constituting willful
misconduct by Xxxxx.
4. Xxxxx understands and agrees that he:
a. Has had the opportunity of a full forty-five (45) days within
which to consider this Agreement before signing it, and that if he has
not availed himself of that full time period that he has failed to do
so knowingly and voluntarily.
b. Has carefully read and fully understands all of the provisions of
this Agreement.
c. Is, by this Agreement, releasing the Releasees from any and all
claims he may have against the Company or such individuals, other than
Excepted Claims.
d. Knowingly and voluntarily agrees to all of the terms set forth in
this Agreement.
e. Knowingly and voluntarily intends to be legally bound by the
same.
f. Was advised and hereby is advised in writing to consider the
terms of this Agreement and to consult with an attorney of his choice
prior to signing this Agreement.
Initials:
---------------------- --------------------
Company Xxxxx
4.
g. Has a full seven (7) days following the execution of this
Agreement to revoke his signature, and has been and hereby is advised
in writing that this Agreement shall not become effective or
enforceable until the revocation period has expired, without
revocation.
h. Understands that rights or claims under the Age Discrimination in
Employment Act of 1967 (29 U.S.C. Section 621, et seq.) that may arise
after the date this Agreement is signed are not waived.
5. Xxxxx and the Company both jointly stipulate and agree as a matter of
fact that Xxxxx'x age played no part in any of the Company's decisions or
actions affecting Xxxxx, including but not limited to, the termination of
Xxxxx'x employment.
6. Xxxxx acknowledges that he has been provided with information required
by the Older Workers Benefit Protection Act about the individuals eligible to
receive severance benefits from the Company, eligibility factors for receiving
the severance benefits, the time limits applicable to receiving the severance
benefits, the job titles and ages of the employees designated to receive the
severance benefits, and the ages of the employees with the same job titles who
have not been designated to receive the severance benefits.
7. The Parties have agreed that in the event that the Company requests,
Xxxxx will provide consulting services in accordance with the terms of the
Consultant Agreement, attached hereto as Exhibit A, which is being executed by
the Parties concurrently with the execution of this Agreement.
8. Xxxxx specifically acknowledges that his employment by the Company
created a relationship of trust between him and the Company with respect to any
information of a confidential or secret nature of which Xxxxx became aware
during the period of his employment and which (a) relates to the business of the
Company, or to the business of any customer or supplier of the Company, and (b)
has been created, discovered or developed by, or has otherwise become known to
the Company that has commercial value to the business in which the Company is
engaged (collectively referred to as "Proprietary Information"). By way of
illustration, and not in limitation, proprietary information includes trade
secrets, processes, computer programs, data, know how, strategies, forecasts,
customer lists, pricing, policies, operational procedures, staffing, billing and
collection practices, and contract provisions and philosophies. Proprietary
Information does not include information which (i) is, as of the Effective Date,
generally known to the public; (ii) becomes generally known to the public after
Effective Date, other than as a result of a breach by Xxxxx of his obligations
hereunder; (iii) was rightfully known to Xxxxx prior to the Effective Date
without restriction on use or disclosure; or (iv) is or was disclosed by the
Company to third parties generally without restriction on use and disclosure. At
all times Xxxxx will keep in confidence and trust all such Proprietary
Information and will not use or disclose any such Proprietary Information or
anything relating to it without the written consent of the Company. Xxxxx hereby
agrees that all Proprietary Information shall be the sole and exclusive property
of the Company and its assigns. Xxxxx further acknowledges and agrees that the
Initials:
---------------------- --------------------
Company Xxxxx
5.
Employee Inventions Assignment and Confidentiality Agreement he executed on
behalf of the Company remains in full force and effect and is unaffected by this
Agreement. Xxxxx'x obligations with respect to Proprietary Information under
this Agreement and under the Employee Inventions Assignment and Confidentiality
Agreement will survive for a period of one (1) year following the later of the
date on which Xxxxx'x obligations to provide consulting services under Paragraph
1.b. of this Agreement and under the separate Consultant Agreement being
executed by the Parties concurrently herewith have ended. Notwithstanding the
foregoing, the Company agrees that it will not make any new use of Xxxxx'x name,
photograph, likeness (including caricature), voice, and biographical
information, as otherwise permitted by Paragraph 13 of the Employee Inventions
Assignment and Confidentiality Agreement, after the Effective Date.
9. Xxxxx agrees to use reasonable, good faith efforts to identify all
documents, data and other tangible materials containing any Proprietary
Information of any nature pertaining to the Company or its affiliated companies
that is in his possession or under his control, and to return such materials to
the Company by no later than the Effective Date, or if discovered after the
Effective Date, as soon as practicable following such discovery; provided,
however, that Xxxxx shall be entitled to retain such materials as may be
necessary or appropriate to allow Xxxxx to properly discharge his duties as a
director of the Company. In addition, during the period that Xxxxx is serving as
a director or is providing consulting services to the Company pursuant to
Paragraph 1.b. of this Agreement or pursuant to the Consultant Agreement being
executed by the Parties concurrently herewith, Xxxxx shall be entitled to retain
on the laptop computer currently provided to Xxxxx by the Company electronic
copies of emails and other Company information that is reasonably necessary or
appropriate to allow Xxxxx to discharge his duties as a director and/or to
perform his consulting obligations to the Company. When Xxxxx'x services as a
director and his obligation to provide consulting services to the Company have
ended, Xxxxx shall be entitled to retain ownership of the personal laptop
computer (including the software installed thereon) that is currently provided
to Xxxxx by the Company, but Xxxxx shall promptly delete files containing
Proprietary Information from such computer. Xxxxx further agrees that he will
not take from the Company or its affiliated companies any property or any
documents or data of any description or any reproductions containing or
pertaining to any Proprietary Information, nor will he utilize same, except as
contemplated in this paragraph or as otherwise approved by the Company.
10. Xxxxx agrees not to interfere with the Company's relationship with
current or prospective employees, suppliers, customers or investors. Xxxxx
further agrees that he will not hold himself out as an agent of the Company, or
as having any authority to bind the Company, except to the extent expressly
authorized by the Company in connection with services provided by Xxxxx under
the Consultant Agreement being executed by the Parties concurrently herewith.
11. Concurrently with the execution of this Agreement, Xxxxx will deliver
to the Company a signed resignation letter in the form annexed hereto as Exhibit
B. Thereafter, the Parties agree to provide information about Xxxxx'x
resignation in accordance with the following:
Initials:
---------------------- --------------------
Company Xxxxx
6.
a. The Company will provide to Xxxxx for review and advance
approval, which approval shall not be unreasonably withheld or
delayed, any press release or public announcement issued by the
Company that mentions the termination of Xxxxx'x employment
relationship with the Company.
x. Xxxxx agrees that in the event that he would like the Company to
provide information about his resignation to any third parties, he
will refer such third party to the Company's Vice President of Human
Resources. The Vice President of Human Resources will respond to any
inquiries about Xxxxx'x resignation by indicating that Xxxxx resigned
from his employment in order to pursue other interests but will (as
long as his consulting obligations continue pursuant to this Agreement
and/or the Consultant Agreement) provide consulting services to the
Company and will remain a director of the Company; provided, however,
that the reference to Xxxxx remaining a director will no longer apply
should Xxxxx resign or otherwise cease to serve as a director for any
reason.
x. Xxxxx may provide any third parties inquiring about his
resignation with information that is consistent with Subparagraph
11.b. above.
d. The Company will advise its senior management and the members of
the Company's Board of Directors that any third parties inquiring
about Xxxxx'x resignation should be provided with information that is
consistent with Subparagraph 11.b. above.
12. This Agreement and compliance with this Agreement shall not be
construed as an admission by either Party of any liability whatsoever, or as
admission by such Party of any violation of the rights of the other Party,
violation of any order, law, statute, duty or contract whatsoever. Each Party
specifically disclaims any liability to the other Party for any alleged
violation of the rights of the other Party, or for any alleged violation of any
order, law, statute, duty or contract on the part of the disclaiming Party, or
its or his employees or agents.
13. Each Party represents and acknowledges that in executing this
Agreement he or it does not rely and has not relied upon any representation or
statement made by the other Party or by any of that Party's agents, attorneys or
representatives with regard to the subject matter or effect of this Agreement or
otherwise, other than those specifically stated in this Agreement.
14. This Agreement shall be binding upon the Parties and their heirs,
administrators, representatives, executors, successors, and assigns, and shall
inure to the benefit of said Parties and each of them and to their heirs,
administrators, representatives, executors, successors, and assigns. Each Party
expressly warrants that the Party has not transferred to any person or entity
any rights or causes of action or claims released by this Agreement.
Initials:
---------------------- --------------------
Company Xxxxx
7.
15. Should any provision of this Agreement be declared or be determined by
any court of competent jurisdiction to be illegal, invalid or unenforceable, the
legality, validity and enforceability of the remaining parts, terms or
provisions shall not be effected thereby, and said illegal, unenforceable, or
invalid term, part or provision shall be deemed not to be a part of this
Agreement.
16. With the exception of any agreements with the Company pertaining to
Proprietary, Information and/or the ownership of inventions and any agreement
pertaining to any Excepted Claims (as defined in Paragraph 2), all of which
shall remain in full force and effect and are unaffected by this Agreement, this
Agreement sets forth the entire agreement between the Parties and fully
supersedes any and all prior agreements and understandings, written or oral,
between the Parties pertaining to the subject matter hereof. This Agreement may
only be amended or modified by a writing signed by the Parties. Any waiver of
any provision of this Agreement shall not constitute a waiver of any other
provision of this Agreement unless expressly so indicated otherwise.
17. This Agreement shall be interpreted in accordance with the plain
meaning of its terms and not strictly for or against either of the Parties.
18. This Agreement is made and entered into in the State of California,
and shall in all respects be interpreted, enforced and governed by and under the
laws of the State of California. The Parties agree that any and all disputes
arising out of the terms of this Agreement, their interpretation, and any of the
matters herein released, shall be subject to binding arbitration in Santa Xxxxx
County in accordance with the JAMS/Endispute Arbitration Rules and Procedures
for Employment Disputes. Either Xxxxx or the Company may initiate arbitration,
but the Party demanding arbitration must do so within twelve (12) months of the
time the dispute arose, or else said claim shall be deemed waived.
19. The Parties agree that in any arbitration held to enforce or interpret
the terms of this Agreement, and/or should it be necessary for either Party to
file a petition to compel arbitration, the prevailing party may be entitled to
reasonable attorneys' fees and costs, to the extent determined appropriate by
the arbitrator appointed to hear any such dispute. Said attorneys' fees and
costs may extend to any appeal process related hereto and to the enforcement and
collection of any court judgment and any execution related thereto, to the
extent ordered by the court.
[Signatures on following page.]
Initials:
---------------------- --------------------
Company Xxxxx
8.
20. This Agreement may be executed in counterparts and each counterpart,
when executed, shall have the efficacy of a second original. Photographic or
facsimile copies of any such signed counterparts may be used in lieu of the
original for any said purpose.
Dated: November 22, 2002 /s/ XXXXXX XXXXX
---------------------------
Xxxxxx Xxxxx
For Liquid Audio, Inc:
Dated: November 22, 2002 By: /s/ H. XXXXXX XXXXXX
-----------------------
Initials:
---------------------- --------------------
Company Xxxxx
9.
