Re: Separation and Release Agreement
[ATRINSIC
LETTERHEAD]
December
18, 2009
Xx.
Xxxxxx Xxxxx
Dear
Xxxxxx:
As you
have been informed, your employment with Atrinsic, Inc. (the
“Company”) will terminate effective December 16, 2009 (the “Separation
Date”). You are eligible to receive a cash severance payment,
contingent upon certain conditions. One such condition is your
execution and return of this Separation and Release Agreement (the “Release
Agreement”) to the Company.
1.
Regular
Pay. You will be paid all accrued salary, less standard
payroll deductions and withholdings, earned through the Separation Date on the
next scheduled pay date on December 31, 2009. You are entitled to
these payments regardless of whether or not you sign this Release
Agreement.
2.
Severance
Allowance. You will receive a basic severance allowance (the
“Severance Benefits”) in the amount of $192,500,
less applicable federal, state and local taxes and other amounts which
may be required to be withheld. This amount includes a 5% increase in
your Base Salary from July 14, 2009 through the Separation Date. Your
Severance Benefits will be paid in a lump sum form, less applicable federal,
state and local taxes and other amounts which may be required to be
withheld. The Severance Benefits payment will be made on the
Company’s first regular payday after: (a) the Effective Date (as
defined in Section 12); and (b) your return to the Company and the
Company’s verification of your return of the items listed in Section
9.
3.
Paid
Time Off. The Company acknowledges that you are entitled to
receive the cash equivalent of all accrued but unused paid time off through
December 16, 2009, pursuant to the Company’s policy and practice. The
Company agrees to make this payment in the December 31, 2009 payroll in the
amount of $30,770.00, less applicable federal, state and local taxes and other
amounts which may be required to be withheld.
4.
Health
Insurance. The Company will continue your family medical,
dental and vision benefits, if applicable, for a period of up to one (1) year
following the Separation Date, provided, however, that in the event you obtain
employment prior to the expiration of this one (1) year term, and you are
afforded health insurance by your new employer, these benefits will terminate
upon the earliest date substitute benefits become available to
you. In the event you are eligible for alternative medical, dental or
vision plans, you must enroll and notify the Company in writing within fifteen
(15) business days from the date on which you receive alternative medical,
dental and vision coverage. In the event you do not obtain substitute
employment upon the expiration of the one (1) year term, once these medical,
dental and vision benefits, if applicable, cease, you will be eligible for
statutory COBRA continuation healthcare benefits.
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5.
401(k)
Plan. You acknowledge that active participation in the Company’s 401(k)
Plan ends on the Separation Date, and your vested benefits accruing up to the
Separation Date are not
affected.
6.
Other
Compensation or Benefits.
(a) You
acknowledge that, except as expressly provided in this Release Agreement, you
will not receive any additional compensation, severance or benefits from the
Company. You acknowledge and agree that You hold no options to
purchase securities of the Company and that all option agreements entered into
between the Company and You and options granted by the Company to You have been
(or are hereby)
terminated.
(b) The
Company granted You: (i) restricted stock units for 200,000 shares of
common stock on June 25, 2009 and (ii) restricted stock units for 66,667 shares
of common stock on June 25, 2009 (the “RSUs”). You acknowledge and
agree, effective as of the Separation Date, the RSUs, and all of Your rights to
receive shares or common stock of the Company thereunder, are
terminated.
7.
Expense
Reimbursements. You agree that, within fifteen (15) days of
the Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek reimbursement. The Company will
reimburse you for these expenses pursuant to its regular business
practice.
8.
Signing
Bonus. The Company waives any rights that it may have to a
refund by you to the Company of your Signing
Bonus.
9.
Return
of Company Property. Within fifteen (15) days of the
Separation Date, you agree to return to the Company all Company documents
(whether prepared by the Company, the Company’s affiliates, you, or a third
party) in any form including, but not limited to, electronic, digital, and paper
form (and all copies thereof) and other Company property which you have had in
your possession or in your control at any time relating to the Company or any of
its affiliates or any of their businesses or property. The items that
fall within the scope of this Section 9 include, but are not limited to, files,
notes, drawings, records, business plans and forecasts, financial information,
specifications, computer-recorded information, tangible property (including, but
not limited to, computers, credit cards, entry cards, identification badges and
keys); and any materials of any kind which contain or embody any proprietary or
confidential information of the Company (and all reproductions
thereof).
10.
References. You
agree to forward all requests for a reference or employment verification to the
Human Resources Department in New York (“HR”). HR will provide your
dates of service and the last position held at the Company by you, and no
further information.
11.
Confidentiality. The
provisions of this Release Agreement shall be held in strictest confidence by
you and shall not be publicized or disclosed in any manner whatsoever; provided,
however, that you may disclose this Release Agreement: (a) to your
immediate family; (b) in confidence to your respective attorneys, accountants,
auditors, tax preparers, and financial advisors; and (c) as otherwise required
by law.
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12.
Release. In
exchange for the payments and other consideration under this Release Agreement
to which you would not otherwise be entitled, subject to applicable law, you
hereby release and forever discharge the Company, its parents and subsidiaries,
and its respective officers, directors, agents, servants, employees, attorneys,
members, successors, assigns and affiliates, of and from any and all claims,
liabilities, demands, causes of action, costs, expenses, attorneys fees,
damages, indemnities and obligations of every kind and nature, in law, equity,
or otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising out of or in any way related to events, acts or conduct at
any time prior to and including the execution date of this Release Agreement,
including but not limited to: all such claims and demands directly or
indirectly arising out of or in any way connected with your employment with the
Company or the termination of that employment; claims or demands related to
salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law, statute, or cause of action including, but not
limited to, the federal Civil Rights Act of 1964, as amended, including without
limitation claims for attorneys’ fees; the federal Americans with Disabilities
Act of 1990; the federal Age Discrimination in Employment Act of 1967, as
amended (“ADEA”); the New York State Human Rights Law; any provision in the New
York State Labor Law; whistleblower laws; tort law; contract law; wrongful
discharge; discrimination; harassment; fraud; defamation; emotional distress;
and breach of the implied covenant of good faith and fair dealing. As
of the date of this Release Agreement, the Company is not aware of any claims
against you.
You
acknowledge that you are knowingly and voluntarily waiving and releasing any
rights you may have under the ADEA, as amended. You also acknowledge
that the consideration given for the waiver and release in the preceding
paragraph hereof is in addition to anything of value to which you were already
entitled. You acknowledge that you have been advised by this writing,
as required by the ADEA, that: (a) your waiver and release do
not apply to any rights or claims that may arise after the execution date of
this Release Agreement; (b) you have been advised hereby to consult with an
attorney prior to executing this Release Agreement; (c) you have twenty-one
(21) days to consider this Release Agreement (although you may choose to
voluntarily execute this Release Agreement earlier); (d) you have seven (7)
days following the execution of this Release Agreement by the parties to revoke
the Release Agreement, which can be done by sending a certified letter to that
effect to Xxxxxxx Xxxxxxxx, Interim CEO; and (e) this Release Agreement
shall not be effective until the date upon which the revocation period has
expired, which shall be the eighth (8th) day after this Release Agreement is
executed by you, provided that the Company has also executed this Release
Agreement by that date (“Effective Date”). This Release Agreement
excludes your rights arising hereunder and any rights to indemnification arising
pursuant to your employment agreement.
13.
Waiver
of Known and Unknown Claims. YOU UNDERSTAND THAT THIS RELEASE
AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN
CLAIMS.
14.
Acknowledgement
Regarding Existing Claims. You represent and warrant that, to
date, no claim or demand has been asserted, and no proceeding of any kind
against any Releasee has been commenced, instituted or caused to be comments,
based upon any matter released by this Release Agreement, and you covenant that
you will not seek to recover on any claim released in this Release
Agreement. If you violate this Release Agreement by instituting any
such claims, proceedings or lawsuits, you agree to return to the Company all
payments received by you under this Release Agreement, except for your Accrued
but Unused Vacation pay, and any obligation by the Company to provide any
further benefits or payments will immediately cease.
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15.
Non-Disparagement.
We both agree that we will not publicly or privately disparage each
other. Specifically, you agree that you will not publicly or
privately disparage the Company’s products, services, divisions, affiliates,
related companies or current or former officers, directors, trustees, employees,
agents, administrators, representatives or fiduciaries nor will any of the
Company’s current or future officers, directors, trustees, employees, agents,
administrators, representatives or fiduciaries publicly or privately disparage
you.
16.
Confidential
Information. You acknowledge that, as a result of the your
services to the Company, you obtained Confidential Information (as defined
below) as to the Company and that, because of the nature of the information
known to you it is necessary for the Company to be protected by the restrictions
set forth herein.
(a) Following
the Separation Date, you shall not at any time, directly or indirectly, divulge
or disclose, for any purpose whatsoever, any secret, confidential or proprietary
information, knowledge or data relating to the Company, and their respective
businesses, affairs, accounts, products or services (including any confidential
information of customers of the Company) that you obtained during your
employment by the Company and that is not otherwise public knowledge or not
generally known within the Company’s industry (“Confidential
Information”). Unless compelled pursuant to the order of a court or
other governmental or legal body having authority over such matter, you shall
not either before or after the Separation Date, without the prior written
consent of the Company, communicate or divulge any such Confidential Information
to anyone other than the Company and those designated by it, nor use the
Confidential Information for your own benefit or for the benefit of any other
person, firm, corporation or entity. If you are requested or
compelled by order of a court or other governmental or legal body to communicate
or divulge any Confidential Information to anyone other than the Company and
those designated by it, you shall promptly notify the Company of any such order,
and you shall cooperate fully with the Company in protecting such information to
the extent possible under applicable law.
(b) You
acknowledge that this Section 16 is reasonable and necessary for the furtherance
of the Company’s business and for the protection of the business of the Company,
and that part of the Severance Benefits are in consideration for your agreements
in this Section 16. In the event of any breach by you of this Section
16, the Company shall be entitled to immediately cease payment of the Severance
Benefits.
17.
Non-Competition.
The Company agrees to waive Paragraph 2, subsections (i)-(v) and (viii) of your
Non-Competition, Non-Solicitation and Confidentiality Agreement, dated July 14,
2008 (the “Non-Competition Agreement”). The Company also agrees that
its rights pursuant to Paragraph 17 of the Non-Competition Agreement are hereby
terminated.
18.
Injunctive
Relief. In the event of a breach or threatened breach of
Section 16 of this Release Agreement, you acknowledge that the Company will be
caused irreparable harm which is not capable of being calculated and which
cannot be fully or adequately compensated by the recovery of damages
alone. Accordingly, you agree that the Company shall be entitled to
interim and permanent injunctive relief, specific performance and other
equitable remedies to have the provisions of Section 16 of this Release
Agreement enforced, in addition to its other remedies at
law.
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19.
Successors;
Binding Release Agreement. This Release Agreement shall bind
the heirs, personal representatives, successors and assigns of both you and the
Company, and inure to the benefit of both you and the Company, their heirs,
successors and assigns.
20.
Section
409 A. To the extent that the Company and/or you reasonably
determine that any amount payable under this Release Agreement would trigger the
additional tax imposed by Section 409A of the Internal Revenue Code of 1986, as
amended, the Company and you will promptly agree in good faith on appropriate
modifications to the Release Agreement (including delaying or restructuring
payments) to avoid such additional tax yet preserve (to the nearest extent
reasonably possible) the intended benefit payable to
you.
21.
Miscellaneous. This
Release Agreement may not be modified, waived or discharged unless such
modification, waiver, or discharge is agreed to in writing and signed by both
you and a duly authorized officer of the Company.
22.
Entire
Agreement. This
Release Agreement, including Exhibit A, constitutes the complete, final and
exclusive embodiment of the entire agreement between you and the Company with
regard to this subject matter provided, however, that nothing in this Release
Agreement is intended to or may be construed to modify, impair or terminate any
of your obligations under any non-solicitation, confidentiality, non-competition
or intellectual property agreements between you and the Company. This
Release Agreement shall supersede all prior or contemporaneous agreements and
understandings among the Parties and any Releasees, whether written or oral,
express, or implied. It is entered into without reliance on any
promise or representation, written or oral, other than those expressly contained
herein, and it supersedes any other such promises, warranties or
representations.
23.
Severability. If
any provision of this Release Agreement is determined to be invalid or
unenforceable, in whole or in part, this determination will not affect any other
provision of this Release Agreement and the provision in question shall be
modified by the court so as to be rendered
enforceable.
24.
Counterparts. This
Release Agreement may be executed in several counterparts (including via
facsimile), each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
25.
Governing
Law. This Release Agreement is made and entered into and shall
be interpreted, enforced and governed by and under the laws of the State of New
York. The parties in any action arising from this Release Agreement
shall be subjected to the jurisdiction and venue of the federal and state
courts, as applicable, in the State of New York.
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You
should consult with an attorney regarding the terms of this Release
Agreement. Your signature below indicates that you are entering into
this Release Agreement freely, knowingly and voluntarily, with a full
understanding of its terms. If this Release Agreement is acceptable
to you, please sign on the line provided below and return the original to
Xxxxxxx Xxxxxxxx, Interim CEO. The Release Agreement must be returned
twenty-one (21) days from the date that you receive it.
Sincerely,
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Xxxxxxx
Xxxxxxxx
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Interim
Chief Executive Officer
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Agreed:
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/s/
Xxxxxx
Xxxxx
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Dated: December
18, 2009
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Xxxxxx
Xxxxx
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EXHIBIT
A
Name:
Xxxxxx Xxxxx
SEPARATION
ALLOWANCE STATEMENT
Cash
Payments
Severance
Benefits
Entitlement
to Severance Benefits is contingent upon your execution of the attached
Separation Agreement and General Release and return to Xxxxxxx Xxxxxxxx, Interim
Chief Executive Officer, within twenty-one (21) days of receipt and you not
revoking the agreement within seven (7) days after signing it.
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TOTAL
SEVERANCE BENEFITS
|
$ | 192,500.00 |
(Subject to the applicable
actual or hypothetical withholding tax deductions)
I understand my Severance
Benefits. I also understand that my Severance Benefits will be made
payable in the form of a lump sum (Subject
to the applicable actual or hypothetical withholding tax
deductions).
Accrued
Paid
Time Off
|
160
hours.
|
$ | 30,770.00 |
(Subject
to the applicable actual or hypothetical withholding tax
deductions)
|
Total:
|
$ | 223,270.00 |
(Subject
to the applicable actual or hypothetical withholding tax
deductions)
Non-cash
In
addition to the Severance Benefit, you will to be eligible for continuation of
family medical, dental and vision benefits, if applicable, under the Company’s
group medical, dental and vision plans, is applicable, for a period of up to one
(1) year following the Separation Date, provided, however, that in the event you
obtain employment prior to the expiration of this one (1) year term, and you are
afforded health insurance by your new employer, these benefits will terminate
upon the earliest date substitute benefits become available to
you. Upon cessation of medical and dental benefits, you, your spouse,
and your eligible dependents will be entitled to exercise their rights (if any)
under Section 4980B of the Internal Revenue Code of 1986, as amended and
Sections 601–607 of the Employee Retirement Income Security Act of 1974, as
amended (collectively, “COBRA”).
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/s/
Xxxxxx
Xxxxx
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12/18/09 | ||
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Signature
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Date
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