WAIVER AND RELEASE AGREEMENT
Exhibit 10.4
This Waiver and Release Agreement (the “Agreement”) is entered into by and between Xxxx
Xxxxxxxx (hereinafter “Xxxxxxxx”), on the one hand and True Religion Apparel, Inc. and Guru Denim,
Inc., on the other hand (hereinafter collectively referred to as the “Company”).
Recitals
A. WHEREAS, Xxxxxxxx was employed by the Company as its Chief Operating Officer;
B. WHEREAS, Xxxxxxxx and the Company have decided to end the employment relationship between
them, effective May 31, 2006;
C. WHEREAS, Xxxxxxxx has offered to provide consulting services to the Company for the period
of up to four months following the separation of his employment; and
D. WHEREAS, the Company has agreed to accept Xxxxxxxx’x offer to provide consulting services
to the Company on the terms and conditions set forth below.
NOW THEREFORE, in consideration of the covenants and promises contained in this Agreement and
other good and valuable consideration, it is hereby agreed among the parties as follows:
Agreement
1. Separation of Employment/Termination of Agreements. Effective May 31, 2006 (the
“Separation Date”), Xxxxxxxx shall no longer be employed by the Company in any capacity, nor shall
he serve the Company as an officer or director. On the Separation Date, the Company shall pay
Xxxxxxxx any accrued but unpaid salary through the Separation Date, any accrued but unpaid vacation
through the Separation Date in accordance with the Company’s vacation policy and any unreimbursed
business expenses incurred on or prior to May 19, 2006, subject to submission by Xxxxxxxx of
documentation in accordance with the Company’s reimbursement policy no later than May 26, 2006.
Except for this Agreement, the Proprietary Information and Inventions Agreement, signed by Xxxxxxxx
on May 3, 2006, and as set forth herein under Paragraphs 6 and 7, the provisions of the Employment
Contract dated as of August 13, 2004, by and between the Company and Xxxxxxxx (the “Employment
Contract”), and the Option Agreement (defined below), all other agreements between the Company and
Xxxxxxxx shall terminate and be of no further force or effect as of the Separation Date.
2. Consulting Arrangement. Provided that Xxxxxxxx executes this Agreement and does
not revoke this Agreement as set forth in Paragraph 14 below, the Company shall retain Xxxxxxxx as
a consultant in the manner and for the period of time set forth in Paragraphs 3 and 4, below.
3. Term of Consulting Arrangement. The Company shall retain Xxxxxxxx as a consultant
from the Separation Date until September 30, 2006, unless sooner terminated pursuant to this
Paragraph 3 (the “Consulting Period”). The Consulting Period may be terminated: (a) by Xxxxxxxx
at any time upon 30 days prior written notice to the Company; or (b) by the Company, by written
notice to Xxxxxxxx in the event of a breach of any of the terms of this Agreement by Xxxxxxxx.
4. Scope of Consultant Duties. During the Consulting Period, Xxxxxxxx shall make
himself reasonably available to the Company to consult regarding all aspects of the Company’s
development and operations by telephone, in writing or in person, as needed, in the sole
discretion of the Company. During the Consulting Period, Xxxxxxxx shall not report to the
Company’s offices, nor shall he contact any of the Company’s employees, vendors, distributors,
agents, representatives, suppliers or customers, without the prior written consent of the Company.
In addition, during the Consulting Period, Xx. Xxxxxxxx shall provide his services exclusively to
the Company and shall not provide services of any nature to any other person or entity without the
Company’s prior written consent.
5. Consulting Fee. In exchange for Xxxxxxxx’x agreement to provide consulting
services in accordance with this Agreement and in further consideration for Xxxxxxxx’x other
promises and covenants herein, the Company shall pay a consulting fee to Xxxxxxxx of $15,416.67 per
month, during the Consulting Period, in accordance with the Company’s normal payroll practices.
The payments set forth in this Paragraph 5 shall be referred to as the Consulting Fee. During the
Consulting Period, Xxxxxxxx shall be treated as an independent contractor and the Company shall not
withhold amounts for taxes from the Consulting Fee.
6. Stock Options/No Accrual of Other Benefits.
(a) During the term of his employment with the Company, Xxxxxxxx was granted an incentive
stock option (the “Option”) to purchase shares of the Company’s Common Stock, of which a total of
66,666 shares remain subject to the Option (the “Option Shares”). Such grant was made pursuant and
subject to the terms and conditions of the Company’s 2004 Stock Option Plan, which was subsequently
incorporated into the Company’s 2005 Equity Incentive Plan (as amended, the “Plan”), copies of
which plans were previously provided to Xxxxxxxx. The xxxxx of options was evidenced by and made
subject to an Employee Stock Option Agreement entered into between the Company and Xxxxxxxx on
October 8, 2004 (the “Option Agreement”), which Agreement shall continue in accordance with the
terms hereof.
(b) The Company and Xxxxxxxx agree that pursuant to the terms of the Plan, during the
Consulting Period, the Option Shares shall continue to vest in accordance with the original vesting
schedule in the Option Agreement. Upon the termination, if any, of the Consulting Period prior to
September 30, 2006, such Option Shares shall cease to vest and the Option shall terminate in full.
Any portion of the Option Shares that vests pursuant to the terms hereof shall be exercised
pursuant to the terms and conditions otherwise set forth in the Plan and the Option Agreement, as
amended hereby.
(c) Xxxxxxxx acknowledges and agrees that except as set forth in this Paragraph 6, he is not
entitled to, nor shall he make any claim for, any other equity interest in the Company of any type
whatsoever, including, but not limited to, any other stock option, any shares of any class or
series of capital stock in the Company or any security of the Company. Xxxxxxxx further
acknowledges and agrees that he waives any claim of right to any other equity interest in the
Company not specifically set forth in this Paragraph 6.
(d) Xxxxxxxx agrees: (i) that he shall be solely liable for and shall pay any and all taxes,
costs, interest, assessments, penalties, damages, attorney’s fees or other losses to which he is or
may be subject by reason of the payments by the Company to him identified in Paragraph 5 of this
Agreement, and by reason of the equity interest identified in Paragraph 6 of this Agreement; (ii)
to indemnify and hold the Company Releasees (defined below) harmless from any and all taxes, costs,
assessment, interest, penalties, damages, attorney’s fees or other losses to which the Company
Releasees, or any of them, are or may be subject by reason of such payments, interest,
reimbursements and/or loans, including, but not limited to, any claim or claims against the Company
Releasees, for failure to withhold or under withholding of taxes; (iii) not to seek or make any
claim or claims against the
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Company Releasees, or any of them, for contribution, indemnity, compensation, recompense,
damages, taxes, costs, interest, penalties, attorneys’ fees or other losses, if a determination is
made that withholdings should have been made from any payments to Xxxxxxxx; and (iv) to assume
responsibility for contesting and defending any claim or assertion that withholding should have
been made from any payment or other interest provided, or that the Company Releasees, or any of
them, owe taxes thereon for any reason, and to cooperate fully in the defense of any such claim or
claims which is/are brought against the Company Releases, or any of them.
(e) Other than the continued vesting of the Option Shares during the Consulting Period as set
forth in this Paragraph 6 and the payment of the Consulting Fee set forth in Paragraph 5, above,
Xxxxxxxx shall not receive any other compensation or benefits from the Company of any type
whatsoever after May 31, 2006.
7. Xxxxxxxx’x Ongoing Obligations To The Company.
(a) Xxxxxxxx expressly acknowledges his continuing obligations under Paragraph 5 and all
subparagraphs thereunder of the Employment Contract (Confidential Information) and agrees to abide
by such obligations.
(b) Xxxxxxxx expressly acknowledges his continuing obligations under Paragraph 6 and all
subparagraphs thereunder of the Employment Contract (Inventions and Discoveries) and agrees to
abide by such obligations.
(c) Xxxxxxxx expressly acknowledges his continuing obligations under Subparagraphs 14.2
through 14.7 of the Employment Contract (Non-Solicitation and related provisions) and agrees to
abide by such obligations.
(d) Xxxxxxxx expressly acknowledges his continuing obligations under the Proprietary
Information and Inventions Agreement and agrees to abide by such obligations.
Each of the foregoing obligations shall terminate only in accordance with the terms of the specific
agreements pursuant to which they were made.
8. Release of Known and Unknown Claims by Xxxxxxxx. In exchange for the agreements
contained herein, Xxxxxxxx agrees unconditionally and forever to release and discharge the Company
and its affiliated, related, parent and subsidiary corporations, as well as their respective
attorneys, agents, representatives, partners, joint ventures, successors, assigns, insurers,
employees, officers, and directors (“Company Releasees”) from any and all claims, suits, rights,
actions, complaints, demands, agreements, contracts, causes of action, and liabilities of any kind
or nature which he may now have, or ever have, whether known or unknown, including any claims,
causes of action or demands of any nature arising out of or in any way relating to his employment
with, or separation from the Company on or before the date of the execution of this Agreement.
This release specifically includes, but is not limited to, any claims for fraud; breach of
contract; breach of implied covenant of good faith and fair dealing; inducement of breach;
interference with contract; wrongful or unlawful discharge or demotion; violation of public policy;
assault and battery; invasion of privacy; intentional or negligent infliction of emotional
distress; intentional or negligent misrepresentation; conspiracy; failure to pay wages, benefits,
vacation pay, severance pay, stock options, attorneys’ fees, or other compensation of any sort;
discrimination or harassment on the basis of age, race, color, sex, gender, national origin,
ancestry, religion, disability, handicap, medical
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condition, marital status, sexual orientation or any other protected category; any claim under
Title VII of the Civil Rights Act of 1964, as amended, the Americans with Disabilities Act, the Age
Discrimination in Employment Act, the Older Workers Benefit Protection Act, the California Fair
Employment and Housing Act, or Section 1981 of Title 42 of the United States Code; violation of
COBRA; violation of any safety and health laws, statutes or regulations; violation of ERISA;
violation of the Internal Revenue Code; or any other wrongful conduct, based upon events occurring
prior to the date of execution of this Agreement.
Xxxxxxxx acknowledges that he may hereafter discover facts different from or in addition to
those he now knows or believes to be true with respect to the claims, suits, rights, actions,
complaints, demands, agreements, contracts, causes of action, and liabilities of any nature
whatsoever that are the subject of the release set forth in this Agreement, and Xxxxxxxx expressly
agrees to assume the risk of the possible discovery of additional or different facts, and agrees
that this Agreement shall be and remain effective in all respects regardless of such additional or
different facts.
Xxxxxxxx further agrees knowingly to waive the provisions and protections of Section 1542 of
the California Civil Code, which reads:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF KNOWN BY HIM OR HER, MUST
HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
Notwithstanding the provisions of Section 1542, and for the purpose of implementing a full and
complete release and discharge of the Company Releasees, Xxxxxxxx expressly acknowledges that this
Agreement is intended to include and does include in its effect, without limitation, all claims
which Xxxxxxxx does not know or suspect to exist in his favor against the Company Releasees, or any
of them, at the moment of execution hereof, and that this Agreement expressly contemplates the
extinguishment of all such claims.
9. Indemnification. Xxxxxxxx expressly agrees to indemnify and hold the Company
Releasees, and any of them, harmless from any claim, cause of action, complaint, demand, penalty,
damage, attorney’s fees or other losses to which the Company Releasees, or any of them, are subject
to liability, arising from, related to or any in way connected with any fraudulent, tortious and/or
criminal conduct engaged in by Xxxxxxxx at any time during his employment with the Company. As a
partial remedy hereunder, in the event Xxxxxxxx is found by any body having jurisdiction to have
engaged in any fraudulent, tortious or criminal conduct at any time during his employment, the
consulting arrangement hereunder shall terminate with no further liability or obligations of the
Company whatsoever, and Xxxxxxxx shall thereupon forfeit the Option to the extent not vested. By
this Agreement, Xxxxxxxx expressly waives and releases the Company Releasees, and any of them, from
the provisions of California Labor Code Section 2802, and from any express or implied agreement
between Xxxxxxxx and the Company Releasees, or any of them, that the Company Releasees, or any of
them, will defend and indemnify Xxxxxxxx from any claim concerning or relating to Xxxxxxxx for acts
allegedly arising out of, relating to, or in connection with Xxxxxxxx’x course and scope of his
employment with the Company and any of its subsidiaries. Such termination and forfeiture shall in
no way limit Xxxxxxxx’x obligations under this Paragraph 9 or any other provision of this
Agreement. Notwithstanding the foregoing, the Company will indemnify Xxxxxxxx to the extent
proscribed in the Company’s charter documents. In addition, the foregoing waiver has no effect
under any directors’ and officers’ liability policy, if any, maintained by the Company under which
Xxxxxxxx may be covered; provided, however, that the Company is under no obligation to maintain any
such policy.
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10. Assistance in Legal Actions. In the event the Company is or becomes involved in
any legal action relating to events which occurred or alleged to have occurred while Xxxxxxxx was
rendering services to the Company or about which Xxxxxxxx possesses any information, Xxxxxxxx
agrees to assist in the preparation, prosecution or defense of any case involving the Company,
including, without limitation, executing truthful declarations or documents or providing
information requested by the Company and attending and/or testifying truthfully at deposition(s) or
at trial without the necessity of a subpoena.
11. Standstill. Xxxxxxxx agrees that, without the prior written consent of the
Company, Xxxxxxxx shall not, for a period of five (5) years from the date of this Agreement (the
“Standstill Period”), directly or indirectly:
(a) other than with respect to the Option Shares, acquire or agree, offer, seek or propose to
acquire, or cause to be acquired, ownership (including, but not limited to, beneficial ownership as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”))
of any of the assets or businesses of the Company or any securities of the Company (including,
without limitation, any debt, equity or convertible securities) or any rights or options to acquire
any such ownership from any Person;
(b) make, or in any way participate in, any “solicitation” of “proxies,” as such terms are
used in the proxy rules of the Securities and Exchange Commission (“the SEC”) to vote or consents,
or seek to advise or influence in any manner whatsoever any Person with respect to the voting of
any securities of the Company;
(c) form, join, or in any way participate in a “group” (within the meaning of Section 13d(3)
of the Exchange Act) with respect to any voting securities of the Company;
(d) arrange, or in any way participate in, any financing for the purchase of any voting
securities or securities convertible or exchangeable into or exercisable for any voting securities
or assets of the Company;
(e) otherwise act, whether alone or in concert with others, to seek to propose to the Company,
or any of its stockholders, any merger, business combination, restructuring, recapitalization or
similar transaction to or with the Company or otherwise act, whether alone or in concert with
others, to seek to control, change or influence the management, stockholders, Board of Directors,
or policies of the Company, or nominate any Person as a director of the Company;
(f) solicit, negotiate with, or provide any information to, any Person with respect to a
merger, business combination, exchange offer or liquidation of the Company or any other acquisition
of the Company, any acquisition of securities of or all or any portion of the assets of the Company
or any other similar transaction;
(g) make any proposal to be considered and/or voted upon at any meeting of the stockholders of
the Company;
(h) announce an intention to, or enter into any discussion, negotiations, arrangements or
understandings with any third party with respect to, any of the foregoing matters;
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(i) disclose any intention, plan or arrangement inconsistent with any of the foregoing
provisions; or
(j) advise, assist, encourage or participate with any other Person in connection with action
inconsistent with any of the foregoing provisions.
For purposes of this Agreement, the term “Person” shall mean any natural person, corporation,
association, partnership (general or limited), joint venture, trust, estate, limited liability
company, government or any agency or political subdivision thereof, or any other legal entity or
organization. This standstill provision shall not affect Xxxxxxxx’x ability to purchase interests
in mutual funds or other similar investment vehicles over which he has no ability to direct the
investment or disposition of shares or other equity interests.
12. Knowing and Voluntary. Each party represents and agrees that the party is
entering into this Agreement knowingly and voluntarily. Each party affirms that no promise or
inducement was made to cause the party to enter into this Agreement, other than what is promised to
the party in this Agreement. Each party further confirms that the party has not relied upon any
other statement or representation by anyone other than what is in this Agreement as a basis for the
party’s agreement.
13. 21 Days to Execute The Agreement. Xxxxxxxx expressly acknowledges that he has been
provided twenty-one (21) days to consider this Agreement and that he was informed that he had the
right to consult with counsel regarding this Agreement, and that he has had the opportunity to
consult with counsel. To the extent that Xxxxxxxx has taken fewer than twenty-one (21) days to
consider this Agreement, Xxxxxxxx acknowledges that he had sufficient time to consider the
Agreement and to consult with counsel and that he does not desire additional time.
14. 7 Days To Revoke The Agreement. This Agreement is revocable by Xxxxxxxx for a
period of seven calendar days following the execution of this Agreement. The revocation must be in
writing, must specifically revoke this Agreement, and must be received by Xxxxxxx Xxxxxxx via
personal delivery by messenger at 0000 Xxx Xxxxx Xxxxxx, Xxx Xxxxxxx, XX 00000, prior to the eighth
calendar day following the execution of this Agreement. This Agreement becomes effective,
enforceable and irrevocable on the eighth calendar day following Xxxxxxxx’x execution of this
Agreement.
15. Return of Property. Upon separation of employment, Xxxxxxxx agrees to return to
the Company all property of the Company which Xxxxxxxx has in his custody or control such as office
equipment, forms, manuals, documents of client files, computer disks, personnel files, or other
confidential or proprietary materials of the Company. By signing this Agreement, Xxxxxxxx hereby
certifies that he will not retain possession of any of the Company’s property, including, but not
limited to the original or a copy of the materials outlined in this Paragraph.
16. No Admission of Liability. This Agreement does not constitute an admission of any
kind by the Company or Xxxxxxxx. The parties hereto desire to resolve their disputes in an
amicable fashion and have entered into this Agreement with the desire to forever resolve between
them those matters described in this Agreement.
17. Attorneys’ Fees. The prevailing party in any proceeding brought to enforce the
terms of this Agreement shall be entitled to recover from the other party all damages, costs and
expenses, including with limitations, attorneys’ and arbitrator’s fees, incurred as a result of
said action.
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18. Modification. No amendments to this Agreement will be valid unless written and
signed by Xxxxxxxx and the Company’s President or the President’s designee.
19. Entire Agreement/Integration. This Agreement, the Option Agreement, as amended
hereby, the Proprietary Information and Inventions Agreement, and the ongoing obligations of the
Employment Contract discussed above, constitute the entire agreement between Xxxxxxxx and the
Company concerning the terms of Xxxxxxxx’x employment with and separation from the Company and the
compensation related thereto, and this Agreement constitutes the entire agreement between Xxxxxxxx
and the Company concerning the terms and conditions of Xxxxxxxx’x consulting arrangement with the
Company. All prior discussions and negotiations have been and are merged and integrated into, and
are superseded by, this Agreement and those agreements referenced herein. The parties to this
Agreement each acknowledge that no representations, inducements, promises, agreements or
warranties, oral or otherwise, have been made by them, or anyone acting on their behalf, which are
not embodied in this Agreement, the Option Agreement, as amended hereby, and the Proprietary
Information and Inventions Agreement, that they have not executed this Agreement in reliance on any
such representation, inducement, promise, agreement or warranty.
20. Non-Disparagement. Xxxxxxxx agrees that he will not, either directly or
indirectly, disparage or otherwise make negative remarks to any person or entity regarding (a) the
Company, (b) the Company’s owners, agents, representatives, attorneys, accountants, employees,
officers or directors, or (c) the Company’s current or potential products, services, plans,
strategies, operations, business or financial condition
21. No Assignment. Xxxxxxxx represents and warrants that he has made no assignment,
and will make no assignment, of any claim, right of action or any right of any kind whatsoever,
embodied in any of the claims released herein, and that no other person or entity of any kind had
or has any interest in any of the claims, demands, obligations, actions, causes of action, debts,
liabilities, rights, contracts, damages, attorneys’ fees, costs, expenses or losses released
herein.
22. No Waiver. Failure to insist on compliance with any term, covenant or condition
contained in this Agreement shall not be deemed a waiver of that term, covenant or condition, nor
shall any waiver or relinquishment of any right contained in this Agreement at any one time or more
times be deemed a waiver or relinquishment of any right at any other time or times.
23. Successors and Assigns. This Agreement, and all terms and provisions hereof,
shall be binding upon and shall inure to the benefit of the parties and their respective heirs,
legal representatives, successors and assigns.
24. Severability. Should any portion, word, clause, phrase, sentence or paragraph of
this Agreement be declared void of unenforceable, such portion may be considered and independent
and severable from the remainder, the validity of which shall remain unaffected.
25. Representations and Warranties. Both parties to this Agreement represent and
warrant that this Agreement in all respects has been voluntarily and knowingly executed by them
after having received independent legal advice, if they desired, from attorneys of their choice.
Both parties also represent and warrant that they have carefully read this Agreement and the
contents hereof are known and understood by them.
26. Choice of Law. This Agreement has been negotiated and executed in the State of
California and shall in all respects be interpreted, enforced and governed in accordance with the
laws of
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California. After execution of this Agreement, any dispute regarding enforcement or breach of
this Agreement, or any aspect of Xxxxxxxx’x employment with the Company or the cessation of such
employment, or the consulting arrangement set forth herein, will be submitted to final and binding
arbitration pursuant to the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association (“AAA”) in Los Angeles County, California, as the exclusive remedy
for such claim or dispute. In any such arbitration, discovery may be conducted pursuant to
applicable California law. The arbitrator shall issue a written opinion and shall have full
authority to award all remedies which would be available in court. Judgment upon the award
rendered by the AAA arbitrator may be entered in any court having jurisdiction thereof.
27. Publicity. To the extent the Company issues a press release regarding the
termination of Xxxxxxxx’x employment, it shall provide a copy of such press release to Xxxxxxxx
prior to its release. Xxxxxxxx acknowledges that the Company may file this Agreement with the
Securities and Exchange Commission.
28. Joint Preparation. The parties acknowledge that this Agreement was jointly
prepared by them, by and through their respective legal counsel, and any uncertainty or ambiguity
existing herein shall not be interpreted against any of the parties, but otherwise according to the
application of the rules on interpretation of contracts.
PLEASE READ CAREFULLY. THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.
THE UNDERSIGNED AGREE TO THE TERMS OF THIS AGREEMENT AND VOLUNTARILY ENTER INTO IT WITH THE INTENT
TO BE BOUND THEREBY.
Dated:
May 30, 2006
|
/s/ Xxxx Xxxxxxxx |
|||
Dated:
May 31, 2006
|
TRUE RELIGION APPAREL, INC. | |||
| /s/ Xxxxxxx Xxxxxxx |
||||
Dated: May 31, 2006
|
GURU DENIM, INC. | |||
| /s/ Xxxx Xxxxxx |
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