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SEPARATION AND RELEASE
AGREEMENT
THIS SEPARATION AND RELEASE
AGREEMENT (the "Agreement") is effective as
of December 8, 2006 by and between Yi Ping Chan (the "Employee")
and The Singing Machine Company, Inc., a Delaware corporation (the
"Company").
WITNESSETH:
WHEREAS , the Employee was
employed by the Company on various positions such as Interim CEO,
COO, and a member of the Board of Directors;
WHEREAS , the Company and the
Employee have mutually decided that the Employee will resign and
receive compensation pursuant to the terms and conditions contained
herein;
NOW, THEREFORE
, the Employee and the Company, intending to be
legally bound hereby and in consideration of the promises contained
herein, do hereby agree as follows:
1. Resignation.
The Employee agrees to resign as (i) the Company's
Interim CEO and COO and from any other positions that he holds with
the Company and (ii) a director and from any other positions that
he holds with any of the Company’s subsidiaries, if any,
effective as of the end of the business day on December 31, 2006
(the "Resignation Date"). The Employee acknowledges and agrees that
from the date hereof until the Resignation Date, the Employee will
have the authority to represent or bind the Company or its
subsidiaries as an officer or employee, but only with the requisite
approval from the Board of Directors of the Company. In addition,
the Employee acknowledges and agrees that after the Resignation
Date, he will not have the authority to represent or bind the
Company or its subsidiaries as an officer or employee.
2.
Termination of Employment and Options.
2.1 Employee acknowledges and
agrees that this Agreement shall serve to terminate his employment
and that this Agreement sets forth all the compensation that is
payable to him, effective as of the Resignation Date. The Employee
will continue to receive regular salary pursuant to the Company's
normal payroll practices through the Resignation Date.
2.2 The Company agrees,
and the Employee acknowledges, that any and all unvested options
("Unvested Options") that have been granted to him by the Company
during the term of his employment with the Company will immediately
vest on the Resignation Date. The Employee agrees that he will have
until March 31, 2007 ("Expiration Date"), to exercise any vested
options ("Vested Options"), and any Unvested Options that
immediately vest on the Resignation Date, that have been granted to
him by the Company during the term of his employment with the
Company. The Employee acknowledges and agrees that the only
Unvested Options that he owns as of the date of this Agreement are
as follows: (i) options to purchase 53,333 shares of the
Company’s common stock at an exercise price of $0.60 per
share, (ii) options to purchase 120,000 shares at an exercise price
of $0.33 per share. The Employee acknowledges and agrees that the
only Vested Options that he owns as of the date of this Agreement
are as follows: (i) options to purchase 52,800 shares of the
Company’s common stock at an exercise price of $1.97 per
share, (ii) options to purchase 26,667 shares at an exercise price
of $0.60 per share. The Employee agrees that any of the Vested
Options, and any Unvested Options that immediately vest on the
Resignation Date, which the Employee has not exercised by the
Expiration Date will be deemed to be cancelled, null and void at
the end of the business day on the Expiration Date.
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2.3 The Employee agrees
that he will be bound by the non-solicitation provisions set forth
in Section 3 of the Intellectual Property Right and Confidentiality
Agreement for a period of six months after the date of this
Agreement.
3.
Severance Payments.
3.1 Severance
Payment . In consideration of the
covenants set forth herein, the Company agrees to pay the Employee
a severance payment equal to $72,916 in the aggregate, to be paid
through the regular payroll date beginning on January 18, 2007. In
addition, the Company will pay to the Employee a relocation expense
payment equal to $40,000 on January 4, 2007. The Company will make
the salary payments in the amounts and on the dates set forth on
Schedule 1 attached hereto.
3.2 Benefits.
The Company will provide the Employee with
information regarding any benefits which may be converted to
individual coverage and/or coverage which includes his spouse in
accordance with Consolidated Omnibus Budget Reconciliation Act
(COBRA) regulations. Employee acknowledges and agrees that he will
not be entitled to any perquisites, benefits or other compensation
whatsoever after the Resignation Date, except as described in this
Agreement.
3.3 Amounts Stated Before
Taxes . All amounts stated in this
Agreement are prior to any deduction for applicable withholding
taxes and other amounts that are required to be withheld or
deducted by federal and Florida law
4.
Waiver and Release.
4.1
Employees Waiver and Release. The Employee waives, acquits, forever discharges and
hereby releases the Company, and its directors, officers, agents
and advisors, from any and all claims, demands, actions, or causes
of action, whether known or unknown, arising from or related in any
way to any employment of or past or future failure or refusal to
employ the Employee by the Company, or any other past or future
claim (except as reserved by this Agreement or where expressly
prohibited by law) that relates in any way to the Employee’s
employment, employment contract, any termination, compensation,
benefits, reemployment or application for employment, with the
exception of any claim either party may have for enforcement of
this Agreement. This release includes any and all claims, direct or
indirect, which might otherwise be made under any applicable local,
state or federal authority, including but not limited to any claim
arising under the state or local statutes where the Employee was
employed by the Company dealing with employment, discrimination in
employment, Title VII of the Civil Rights Act of 1964, the Civil
Rights Act of 1991, the Americans With Disabilities Act, the Family
and Medical Leave Act of 1993, the Equal Pay Act of 1963, Executive
Order 11246, the Rehabilitation Act of 1973, the Uniformed Services
Employment and Reemployment Rights Act of 1994, the Age
Discrimination in Employment Act, the Older Workers Benefit
Protection Act, the Fair Labor Standards Act, wage and hour
statutes of the state where employed, all as amended, any
regulations under such authorities, or any other applicable
statutory contract, tort, or common law theories, except that the
Employee does not release the Company from its obligations under
this Agreement, its contribution and indemnification obligations,
if any, or from any coverage under any policy of insurance
providing indemnity and related costs for the benefit of the
Employee.
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4.2 The Company’s
Waiver and Release. The Company waives,
acquits, forever discharges and hereby releases the Employee from
any and all claims, demands, actions, or causes of action, whether
known or unknown, arising from or related in any way to any
employment of the Employee by the Company, or any other past or
future claim (except as reserved by this Agreement or where
expressly prohibited by law) that relates in any way to the
Employee’s employment, Employment Agreement, with the
exception of any claim the Company may have for enforcement of this
Agreement. This release includes any and all claims, direct or
indirect, which might otherwise be made under any applicable local,
state or federal authority, including but not limited to any claim
arising under the state or local statutes where the Employee was
employed by the Company dealing with employment, or any other
applicable statutory contract, tort, or common law theories, except
that the Company does not release the Employee from his obligations
under this Agreement.
5.
No Admission of Liability. Execution of this Agre
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