SETTLEMENT AGREEMENT WITH GENERAL UNCONDITIONAL MUTUAL RELEASE
Exhibit
10.1
SETTLEMENT
AGREEMENT WITH
GENERAL
UNCONDITIONAL MUTUAL RELEASE
This
Settlement Agreement With General Unconditional Mutual Release (“the Agreement”)
is entered into this 5th day of November, 2007, by and between the parties
identified below.
PARTIES
The
parties to and beneficiaries of this Agreement (the "Settling Parties") are
XXXX XXXXX ("Plaintiff"), and WINSONIC DIGITAL MEDIA
GROUP, LTD. (the “Company”), its present and former employees,
officers, directors, owners, stockholders and representatives, as well as
any
successors or assigns of the corporate defendant (collectively, the
“Defendant”).
RECITALS
WHEREAS,
Plaintiff filed suit against the Company in Xxxxxx County Superior Court
(the
“Court”), Civil Action No. 2007 CV 128080 (the “Young case”), alleging that
Defendant is liable to Plaintiff for breach of contract, unpaid wages, unpaid
consulting fees and other alleged conduct in violation of state statutes,
and
seeking compensatory and punitive damages and attorneys’ fees and other
relief. Defendant has denied and continues to deny any and all acts
of misconduct whatsoever, alleged or not alleged; Defendant has denied and
continues to deny any and all claims and liability, alleged and not alleged,
and
denies causing damage of any type to Plaintiff. Defendant has further
asserted a counterclaim against Plaintiff, alleging breaches of contract
and
fiduciary duties, as well as asserting a claim for unjust
enrichment. Plaintiff has denied and continues to deny any and all
claims and liability, alleged and not alleged, and denies causing damage
of any
type to Defendant.
NOW,
THEREFORE, in consideration of the recitals, promises and general covenants
contained herein, the Settling Parties agree as follows.
SCOPE
OF SETTLEMENT/RELEASE
1. This
Agreement is intended to and does forever release and settle any and all
claims
and disputes by Plaintiff against Defendant, whether known or unknown, from
the
beginning of time up to and through the date this Agreement is
executed. This release and settlement includes, but is not limited
to, any and all claims which were or could have been asserted in the
Young case. Upon receipt of all agreed-upon monies according
to the schedule described herein, Plaintiff will release and settle all claims,
title and/or interests against any Defendant, including all claims governed
by
federal statute, state statute, or common law, including but not limited
to
claims in the Young case, except for claims that the law does not permit
Plaintiff to waive by signing this Agreement. This release and
settlement includes, but is
not
limited to, any claims for damages which were, have been, or could have been
sought, of any kind, up to the date this Agreement is executed. This
release and settlement includes claims for employee
health, welfare and disability benefits, compensatory damages, punitive damages,
equitable rights and relief of any and all types and description, including
but
not limited to claims for relief arising from alleged discrimination, disability
protections and/or benefits, retaliation, discharge, constructive discharge
or
any other alleged violation of any legally protected status or right and
all
forms of statutory and common law damages. This release and
settlement encompasses rights to employee benefits protected by the Employee
Retirement Income Security Act (“ERISA”), and any rights/entitlements under
Title VII of the Civil Rights Act of 1964 (“Title VII”), Sections 1981 and 1983
of the Civil Rights Act of 1866, the Age Discrimination in Employment Act
of
1967 (“ADEA”), the Older Workers’ Benefit Protection Act (“OWBPA”), the Civil
Rights Act of 1991, the Equal Pay Act, the Americans With Disabilities Act
(“ADA”), and any other labor, employment, or anti-discrimination laws; any
contract, tort, whistleblower, personal injury, or wrongful discharge claim(s);
and any other federal, state, or local constitution, regulation, law (statutory
or common), or legal theory.
2. This
Agreement is further intended to and does forever release and settle any
and all
claims and disputes by Defendant against Plaintiff, whether known or unknown,
from the beginning of time up to and through the date this Agreement is
executed. This release and settlement includes, but is not limited
to, any and all counterclaims which were or could have been asserted in the
Young case. The Settling Parties are intentionally releasing
claims that they do not know that they might have and that, with hindsight,
they
might regret having released. The Settling Parties warrant and
represent that they have not assigned or given away any of the claims they
are
releasing.
3. The
Settling Parties hereby expressly consent to a Consent Mutual Order of Dismissal
with Prejudice and agree to a Consent Mutual Dismissal with Prejudice as
to all
claims which were made or could have been made at any time in the Young
case by either party, upon Plaintiff’s receipt of all agreed upon sums described
herein. Each Settling Party further releases and waives with
prejudice any and all other claims of any nature which they have or may have,
or
could have raised against the other Settling Party known or unknown, up to
the
date that this Agreement is executed, including but not limited to, any and
all
claims arising from or in any way related to Plaintiff’s
employment/opportunity/supervision within the Company.
NO
ADMISSION OF LIABILITY
4. Neither
this Agreement nor any consideration given hereunder constitutes an admission,
nor is it to be construed as an admission of any right, entitlement or fault
or
liability of any kind on the part of any Settling Party. The Settling
Parties agree that each Settling Party denies any and all fault or liability
of
any type and denies any wrongful conduct whatsoever with regard to any
matter.
PAYMENT
AND COMPENSATION TO PLAINTIFF
5. For
and in consideration of the mutual releases, settlements, promises, recitals,
waivers, terms, and conditions set forth in this Agreement, and in consideration
of the dismissal
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with
prejudice of the Young case, in its entirety by the Settling Parties, and
Plaintiff’s binding covenants set forth below, Defendant hereby agrees to
transmit payment (the “Settlement Funds”) in the amount of $120,000.00 (One
Hundred Twenty Thousand and No/100 Dollars), minus applicable federal, state,
and local tax withholdings, to Plaintiff in settlement of his claim for wages
earned and owed; $55,000.00 (Fifty-five Thousand and No/100 Dollars) in
settlement of his claim for consultant fees earned, and $75,000.00 (Seventy-Five
Thousand and No/100 Dollars) in settlement of his claim for intentional torts;
and $5,000.00 (Five Thousand and No/100 Dollars) to Xxxxxxx Xxxxx, Plaintiff’s
attorney, in full satisfaction of all attorneys’ fees, costs, and expenses
incurred by anyone representing Plaintiff against Defendant, according to
the
following payment schedule:
(a)
on
or before November 7, 2007, (i) a check in the amount of $15,000.00 (Fifteen
Thousand and No/100 Dollars), reported as 1099 income, made payable to Xxxx
Xxxxx and (ii) a check in the amount of $1,000.00 (One Thousand and No/100
Dollars) made payable to Xxxxxxx Xxxxx;
(b) on
or before November 27, 2007, (i) a check in the amount of $15,000.00 (Fifteen
Thousand and No/100 Dollars), reported as 1099 income, made payable to Xxxx
Xxxxx and (ii) a check in the amount of $1,000.00 (One Thousand and No/100
Dollars) made payable to Xxxxxxx Xxxxx;
(c) on
or before December 27, 2007, (i) a check in the amount of $15,000.00 (Fifteen
Thousand and No/100 Dollars), reported as 1099 income, made payable
to Xxxx Xxxxx and (ii) a check in the amount of $1,000.00 (One Thousand and
No/100 Dollars) made payable to Xxxxxxx Xxxxx;
(d) on
or before January 27, 2007, (i) a check in the amount of $25,000.00
(Twenty-Five Thousand and No/100 Dollars), reported as 1099 income, made
payable
to Xxxx Xxxxx and (ii) a check in the amount of $1,000.00 (One Thousand and
No/100 Dollars) made payable to Xxxxxxx Xxxxx; and
(e) on
or before February 27, 2007, (i) a check in the amount of $180,000.00 (One
Hundred EightyThousand and No/100 Dollars), minus applicable federal, state,
and
local tax withholdings on $120,000 (One Hundred Twenty Thousand and No/100
Dollars) of that amount, made payable to Xxxx Xxxxx and (ii) a check in the
amount of $1,000.00 (One Thousand and No/100 Dollars) made payable to Xxxxxxx
Xxxxx (the “Balloon Payment”).
6. The
payment of these amounts by Defendant, the issuance to Plaintiff a vested
stock
option to purchase up to three hundred eighty thousand (380,000) shares of
restricted common stock (noted below), and the approved transfer of
the 500,000 restricted shares of Common Stock issued to Plaintiff (also noted
below), will constitute payment in full in exchange for the full, final and
complete
settlement of the Young case as to Defendant and full and final release
of any and all claims, known or unknown, against Defendant that exist or
may
have existed at any time up to the date of execution of this
Agreement. At the time of execution of this Agreement, Plaintiff’s
counsel will provide Tax I.D. for issuance to Defendant’s counsel of an IRS
Form 1099-MISC in connection with payment of Settlement Funds.
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| time of execution of this Agreement, Plaintiff’s counsel will provide Tax I.D. for issuance to Defendant’s counsel of an IRS Form 1099-MISC in connection with payment of Settlement Funds. |
7. Defendant
further agrees to issue Plaintiff by November 5, 2007 a vested stock option
to
purchase up to three hundred eighty thousand (380,000) shares of restricted
common stock, par value $0.001, of the Company (“Common Stock) at an exercise
price of One Dollar ($1.00) per share (the “Stock Options”), pursuant to the
terms and conditions of Plaintiff’s contractual agreement with
Defendant. The Stock Options shall be fully vested upon issuance and
shall have an expiration date of November 5, 2010, in
accordance with WinSonic’s employee stock option plan in effect during Young’s
employment with the Company. The Settling Parties acknowledge that
Defendant has previously issued Plaintiff 500,000 restricted shares of Common
Stock. Defendant agrees to process and approve any transfer of any
restricted shares of Common Stock issued to Plaintiff pursuant to this Agreement
at the earliest possible date, subject to and in accordance with all state
and
federal laws, including, but not limited to, the Securities Act of 1933,
as
amended, the Securities Exchange Act of 1934, as amended, and all rules and
regulations promulgated by the Securities and Exchange Commission.
RIGHT
TO CURE; DEFAULT PROVISIONS
8. In
the event Defendant fails to pay any of the Settlement Funds, deliver the
stock
options due to be paid or delivered by Defendant, and approve the transfer
of
the 500,000 restricted shares of Common Stock issued to Plaintiff, hereunder
in
strict compliance with the terms of this Agreement, and such failure shall
continue for five (5) days after written notice from Plaintiff demanding
cure of
such failure, then and in that event, counsel for Plaintiff shall, without
further notice to Defendant, submit an affidavit to the Court setting forth
the
Defendant's default, the amounts received by Plaintiff under this Agreement,
that portion of the obligations of the Defendant pursuant to this Agreement
which remains outstanding at the time of said default, and upon receipt of
said
affidavit, the Court shall, ex parte, enter final judgment against Defendant
in
favor of Plaintiff for the judgment amount, less all amounts paid pursuant
to
this Agreement, as well as an additional $25,000 (Twenty-Five Thousand Dollars),
plus post-judgment interest at the legal rate. Notwithstanding
anything herein to the contrary, if Defendant cannot pay the Balloon Payment
due
on February 27, 2008, Defendant may make a payment of $15,000 (Fifteen Thousand
and No/100 Dollars) by February 27, 2008 to Plaintiff without being in default,
and shall extend the due date of the Balloon Payment to then be due on March
27,
2008. There will be no other extensions of the Balloon Payment due
date without the express written consent of Plaintiff.
IRS
FILINGS REGARDING SETTLEMENT FUNDS
9. Plaintiff
agrees that Defendant is required to report payment of Settlement Funds to
tax
authorities and to withhold all taxes from payments it makes hereunder that
it
determines it is legally required to withhold. Defendant will issue
an IRS Form 1099 MISC to Plaintiff reflecting
the payment of $45,000 for 2007. Defendant will issue an IRS Form
1099 to Plaintiff reflecting the payments of $85,000 for
2008. Defendant will issue an IRS Form W-2 to Plaintiff reflecting
the payment of $120,000.00 (One Hundred Twenty Thousand and No/100 Dollars),
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minus
25%
for federal taxes (per Circular E Employers Tax Guide Publication 15 for
Supplemental wages), 6% for state taxes (per Georgia Department of Revenue),
and
7.65% for Social Security and Medicare taxes. Defendant will issue IRS Forms
1099-MISC to Xxxxxxx Xxxxx reflecting the payment of $3,000.00 (Three Thousand
and No/100 Dollars) for 2007 and $2,000 (Two Thousand and No/100 Dollars)
for
2008 to Plaintiff’s attorney.
COSTS
AND ATTORNEY'S FEES
10. The
Settling Parties unconditionally and reciprocally release and hold each other
harmless from any claims for attorney's fees, costs, or expenses in any form
incurred by the Settling Parties and/or their respective counsel, less those
fees being paid by Defendant to Plaintiff’s counsel, as otherwise agreed upon
herein. The Settling Parties will each bear their own costs of
litigation and attorney's fees.
WARRANTY
AND INDEMNIFICATION
11. Plaintiff
covenants and agrees that he and/or his lawyer are solely and entirely
responsible for the payment of any and all federal, state, or local taxes
or
assessments due upon the Settlement Funds paid pursuant to this Agreement
(other
than mentioned in Section 9 above). Plaintiff expressly
warrants that he will hold Defendant harmless from any claims, tax, interest
or
penalty, asserted by any taxing authority relating to any tax, arising from
the
payment of any Settlement Fund accrued up to but not to exceed, the actual
tax
consequences to Defendant, plus any reasonable attorney’s fees incurred by
Defendant in responding to such claim.
DISMISSAL
OF ACTION
12. In
consideration of the premises, recitals, general promises and undertakings
set
forth in this Agreement, the Settling Parties stipulate and agree to a Final
Mutual Order of Dismissal, and further consent to dismissal, fully, forever
and
with prejudice of all claims which were or could have been asserted in the
Young case, upon full and final payment of all Settlement Funds due under
the terms of this Settlement Agreement.
NO
ADDITIONAL CLAIMS
13. Plaintiff
warrants and represents that he has not filed and does not have any
administrative claims or complaint of any kind, other than the Young
allegations, against the Defendant in any federal, state, county, municipal
or
local court or agency. Plaintiff further covenants that he will not
file any future administrative claim, charge, or complaint against the Defendant
with any agency or court at any time hereafter regarding any acts, promises,
allegations, utterances, writings, representations, or omissions, relating
to in
any way to all or any of the Defendant, occurring or alleged to have occurred
at
any time up to the date of the execution of this Agreement.
14. The
Settling Parties warrant and agree that the negotiations, agreements, facts,
terms, amounts, and provisions of this Agreement, will remain strictly
confidential. The Settling Parties further agree not to discuss the
allegations in this case, or any negotiations, agreements,
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facts,
terms, amount and/or provisions of this Agreement with any person or entity
except as specifically permitted herein. As the sole exceptions to
this confidentiality requirement, it is not a violation of this Agreement
if
disclosure is made in response to an order of a court of competent jurisdiction,
or if disclosure is made solely for the purposes tax or legal advice, so
long as
such entities/individuals are obliged to maintain such information in strict
confidence. It also is not a violation if disclosure is made as part
of Defendant’s mandatory SEC filings. In the event of any inquiry
concerning this case and/or any allegation set forth therein, any claims
against
Defendant, and/or any term of this Agreement, the parties, will strictly
limit
any response to the fact that “the disputes have been resolved; the case has
been settled.” Each Settling Party further agrees that it will not
discuss the other Settling Party, including the Company or any owner, parent,
subsidiary or successor entity in any disparaging terms. Any request
for references will be limited to Defendant’s supply of dates of employment and
position(s) held.
CONSIDERATION
OF AGREEMENT
15. Plaintiff
acknowledges that, before signing this Agreement, he was given a period of
at
least 21 (twenty-one) days in which to consider this Agreement. If he
chose to sign this Agreement before the end of the 21-day period, Plaintiff
represents that he chose to do so of his own free will, and after he determined
that he did not need the full 21-day period to consider this
decision. Plaintiff waives any right he might have to additional time
beyond the 21-day consideration period within which to consider this
Agreement. Plaintiff further acknowledges that: (1) he
took advantage of this 21-day period to the extent he deemed necessary to
consider this Agreement before signing it; (2) he carefully read this Agreement;
(3) he fully understands this Agreement; (4) he is entering into this Agreement
voluntarily; (5) he is receiving valuable consideration in exchange for his
execution of this Agreement that he would not otherwise be entitled to receive;
and (6) Defendant, in writing, encouraged him to discuss this Agreement with
his
attorney (at his own expense) before signing the Agreement, and he did so
to the
extent he deemed appropriate.
RIGHT
TO RESCIND
16. Plaintiff
may cancel this Agreement for any reason within seven (7) full 24-hour periods
after he has signed it. If Plaintiff decides to cancel this Agreement
and mails his notice of cancellation, the notice must be postmarked within
the
seven (7) day period, sent by certified mail, return receipt
requested. If Plaintiff cancels his release of claims against
Defendant, the notice should be addressed to:
Xxxxxxx
X
Xxxxxxx, Esq.
Paul,
Hastings, Xxxxxxxx & Xxxxxx, LLP
000
Xxxxxxxxx Xxxxxx, XX, Xxxxx 0000
Xxxxxxx,
XX 00000
WARRANTIES
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17. The
Settling Parties warrant and represent, each to the other, that they have
been
represented and advised by counsel and are fully informed and have full
knowledge of the terms, conditions, and effects of this Agreement.
18. The
Settling Parties warrant and represent, each to the other, that they have
either
personally or through their attorneys, investigated facts surrounding this
Agreement and are fully satisfied with the terms and effects of this Agreement;
and that they are legally competent to execute this Agreement.
19. The
Settling Parties warrant and represent, each to the other, that no promise
or
inducement has been offered or made except as herein set forth, and that
this
Agreement is executed without reliance upon any other statement or
representation in connection with this Agreement.
20. If any
provision or term of this Agreement should be declared invalid or unenforceable,
such declaration shall not affect the validity or enforceability of the
remaining terms and conditions hereof. If this Agreement is revoked
or cancelled, Plaintiff will repay the special payment and benefits he received
for signing it.
21. The
terms of this Agreement, and the [Order of Mutual Dismissal with Prejudice]
of
this case in its entirety, constitute the complete understanding and agreement
of the Settling Parties with respect to all matters within the scope of this
Agreement, and no other promise or agreement shall be binding.
22. This
Agreement may not be amended, modified, superseded, canceled, or terminated,
and
its terms and conditions may not be waived, except by a written instrument
executed by the Settling Parties. No waiver by any Settling Party of
any condition or of the breach of any term, covenant, representation or warranty
contained in this Agreement, in any one or more instances, shall be deemed
to be
or construed as a further or continuing waiver of any such condition or breach
in other instances, or as a waiver of any other condition or of any breach
of
any other terms, covenants, representations or warranties contained in this
Agreement.
23. The
rights and obligations of the Settling Parties under this Agreement shall
inure
to the benefit of and shall be binding upon their successors, assigns,
employees, agents and/or legal representatives.
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FULL
AND KNOWING WAIVER
24. By signing this agreement,
the Settling Parties certify that: they carefully read and fully understand
this
Agreement; they consulted an attorney before signing this Agreement; they
agree
to all terms knowingly, voluntarily and without intimidation, coercion, or
pressure. They further warrant that they have no desire for
additional time for consideration and sign this Agreement to be effective
on the
date of execution.
GOVERNING
LAW
25. The
Settling Parties agree that the laws of the State of Georgia shall govern
this
Agreement and all disputes concerning any aspect of this Agreement.
[Signatures
on Next Page]
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AGREED
AND ACCEPTED:
|
_/s/
Xxxx Young_________________
|
__/s/
November 5, 2007______
|
|
XXXX
XXXXX
|
Date |
WITNESSED:
|
_/s/
Xxxxxxx X. Adams___________
|
__/s/
November 5, 2007______
|
|
XXXXXXX
X. XXXXX,
ESQ.
|
Date
|
000
Xxxxxxxx Xxxxxx Xxxx., Xxxxx 000
Xxxxxxxx,
XX 00000
Counsel
for Xxxx Xxxxx
AGREED
AND ACCEPTED:
|
__/s/
Xxxxxxx X. Johnson_________
|
__/s/
November 5, 2007______
|
| XXXXXXX X. XXXXXXX | Date |
Chief
Executive Officer
WinSonic
Digital Media Group, Ltd.
Centennial
Tower, Suite 2600
000
Xxxxxxxx Xxxxxx, X.X.
Xxxxxxx,
Xxxxxxx 00000
WITNESSED:
|
_/s/
Xxxxxxx X. Whitner__________
|
__/s/
November 5, 2007______
|
| XXXXXXX X XXXXXXX, ESQ. | Date |
Paul,
Hastings, Xxxxxxxx & Xxxxxx LLP
000
Xxxxxxxxx Xxxxxx, X.X., Xxxxx 0000
Xxxxxxx,
Xxxxxxx 00000
Counsel
for Defendant WinSonic Digital
Media
Group, Ltd.
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