EXHIBIT 10.64
SEVERANCE AGREEMENT AND GENERAL RELEASE
This Severance Agreement and General Release (the "Agreement") is made
and entered into by and between Xxxxxx Xxxxxx ("Xxxxxx"), and Liquid Audio, Inc.
(the "Company") (each, a "Party" and collectively, the "Parties").
WHEREAS, Xxxxxx and the Company desire to settle fully and finally any
and all claims arising out of or related to Xxxxxx'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 Xxxxxx'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 Xxxxxx a lump sum amount equal to six (6) months of his
current annual base salary of $245,000, minus the deductions required
by applicable law, which shall be paid to Xxxxxx 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 Xxxxxx 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
Xxxxxx 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 Xxxxxx 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
Xxxxxx in its requests for consulting assistance from Xxxxxx. All sums
paid to Xxxxxx pursuant to this Paragraph 1(b) shall be reported by
the Company to the Internal Revenue Service on a Form 1099, and Xxxxxx
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 Xxxxxx 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
Xxxxxx'x becoming eligible for coverage under any other group health
plan.
d. To the extent permitted by applicable law, assist and facilitate
in the removal of restrictive legends on the share certificates for
shares of Company
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Company Xxxxxx
stock owned by Xxxxxx 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 Xxxxxx can sell Company shares under SEC Rule 144(k),
maintain adequate current public information as necessary to allow
Xxxxxx to sell Company shares under SEC Rule 144.
2. Xxxxxx 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 Xxxxxx'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 Xxxxxx 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 Xxxxxx 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 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 88 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 Xxxxxx under this Agreement and
under the Consultant Agreement being executed by the Parties
concurrently with the execution of this Agreement, (iii) any
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Company Xxxxxx
2.
indemnification rights Xxxxxx 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 Xxxxxx may have pursuant to Section 2802 of the California
Labor Code relating to Xxxxxx'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 Xxxxxx'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 Xxxxxx 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 Xxxxxx 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 Xxxxxx exercises such right of revocation.
x. Xxxxxx 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
Xxxxxx 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 Xxxxxx 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
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Company Xxxxxx
3.
Agreement. The Company represents that it has not filed any complaint, claims or
actions against Xxxxxx 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 Xxxxxx in
this Paragraph 3 is expressly contingent upon the condition that Xxxxxx 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 Xxxxxx.
4. Xxxxxx 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.
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. Xxxxxx and the Company both jointly stipulate and agree as a matter of
fact that Xxxxxx'x age played no part in any of the Company's decisions or
actions affecting Xxxxxx, including but not limited to, the termination of
Xxxxxx'x employment.
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Company Xxxxxx
4.
6. Xxxxxx 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,
Xxxxxx 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. Xxxxxx 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 Xxxxxx 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 Xxxxxx of his obligations
hereunder; (iii) was rightfully known to Xxxxxx 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 Xxxxxx 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. Xxxxxx
hereby agrees that all Proprietary Information shall be the sole and exclusive
property of the Company and its assigns. Xxxxxx further acknowledges and agrees
that the 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. Xxxxxx'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 Xxxxxx'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 Xxxxxx'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.
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Company Xxxxxx
5.
9. Xxxxxx 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. In addition,
during the period that Xxxxxx 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, Xxxxxx shall be
entitled to retain on the laptop computer currently provided to Xxxxxx by the
Company electronic copies of emails and other Company information that is
reasonably necessary or appropriate to allow Xxxxxx to perform his consulting
obligations to the Company. When Xxxxxx'x obligation to provide consulting
services to the Company have ended, Xxxxxx shall be entitled to retain ownership
of the personal laptop computer (including the software installed thereon) that
is currently provided to Xxxxxx by the Company, but Xxxxxx shall promptly delete
files containing Proprietary Information from such computer. Xxxxxx 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. Xxxxxx agrees not to interfere with the Company's relationship with
current or prospective employees, suppliers, customers or investors. Xxxxxx
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 Xxxxxx under
the Consultant Agreement being executed by the Parties concurrently herewith.
11. Concurrently with the execution of this Agreement, Xxxxxx 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 Xxxxxx'x
resignation in accordance with the following:
a. The Company will provide to Xxxxxx 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 Xxxxxx'x employment
relationship with the Company.
x. Xxxxxx 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 Xxxxxx'x resignation by indicating that Xxxxxx
resigned from his employment in order to pursue other interests but
will (as long as his consulting obligations continue pursuant to this
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Company Xxxxxx
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Agreement and/or the Consultant Agreement) provide consulting services
to the Company.
x. Xxxxxx 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 Xxxxxx'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.
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.
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Company Xxxxxx
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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 Xxxxxx 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.
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 XXXXXX
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Xxxxxx Xxxxxx
For Liquid Audio, Inc:
Dated: November 22, 2002 By: /s/ H. XXXXXX XXXXXX
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Company Xxxxxx
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