SEVERANCE AGREEMENT AND GENERAL
RELEASE
This Severance
Agreement and Release of All Claims (hereinafter
“Agreement”) is made and entered into by and between
ACTION PERFORMANCE COMPANIES, INC. , a corporation organized
under the laws of the state of Arizona (hereinafter referred to as
“Employer”), and R. DAVID MARTIN (hereinafter
referred to as “Employee”).
RECITALS
WHEREAS, Employee
has been employed by Employer as its Chief Financial Officer,
Secretary, and Treasurer, and as a Director.
WHEREAS, Employee
has executed the resignation letter attached hereto as
Exhibit A, indicating Employee’s employment and any
other duties with Employer and its subsidiaries have terminated
effective October 8, 2004 (“Cessation Date”);
and
WHEREAS, the
parties, in order to settle and compromise fully and finally any
and all claims and potential claims arising out of Employee’s
employment and the cessation thereof, have agreed to resolve these
matters on the terms and conditions set forth herein.
NOW, THEREFORE, in
consideration of the mutual promises and covenants contained
herein, the parties agree as follows:
1. Recitals.
The recitals set forth above are true, accurate, and correct, and
are incorporated in this Agreement by this reference and made a
material part of this Agreement.
2. Consideration.
A. Severance
Payments. In consideration for Employee’s execution of and
compliance with this Agreement, Employer agrees tender to Employee
severance in the amount of Four Hundred and One Thousand and Seven
Hundred Dollars and 00/100 ($401,700.00) (“Severance
Pay”), which represents one year of (gross) base pay.
Said Severance Pay shall be payable to Employee as follows: (a)
$100,425, minus statutory deductions, by check on the date of
execution of this Agreement; and (b) three payments of $100,425,
minus statutory deductions, payable on each of January 8,
2005, April 8, 2005, and July 8, 2005. The period commencing
on Cessation Date and ending on October 8, 2005 shall be
referred to as the “Severance Period”. The parties
agree that the first installment shall be tendered to Employee
within ten (10) business days of Employee’s execution of
this Agreement and its presentation to Employer, provided Employee
has not revoked this Agreement under Paragraph 11
hereto.
B. Stock
Options. The parties hereto acknowledge that, as of the date of
this Agreement, Employee holds the options to purchase common stock
of Employer (the “Options”), as set forth on
Exhibit B-1. The Options set forth on Exhibit B-2 shall
be exercised by Employee within 90 days of the Cessation Date
or cancelled pursuant to their terms. As further and additional
consideration for Employee’s execution of and compliance with
this Agreement, and notwithstanding any provision of
Employer’s stock option plans or any stock option agreement
with Employee covering such Options to the contrary, Employer shall
extend the expiration date of the Options set forth on
Exhibit B-3 to, and Employee shall have the right to exercise
such Options set forth on Exhibit B-3 until, the date that is
the one year anniversary date of the Cessation Date. All other
Options set forth on Exhibit B-1 that are not set forth on
Exhibits B-2 or B-3 shall be cancelled as of the Cessation
Date.
C. COBRA
Premium Reimbursement. As further and additional consideration for
Employee’s execution of and compliance with this Agreement,
Employer shall reimburse the cost of the premium for continuation
of group health insurance coverage for Employee, his spouse and
dependents, to the extent they were plan participants as of
Employee’s Cessation Date, should Employee, his spouse and
dependents (collectively referred to as Employee’s Qualified
Beneficiaries) elect continuation coverage under the Consolidated
Omnibus Budget Reconciliation Act of 1987, as amended,
(COBRA) until November 1, 2005, or until Employee and
Employee’s Qualified Beneficiaries are covered under another
health insurance plan, whichever is earlier. Employee understands,
acknowledges and agrees that in no event shall Employee continue to
pay the premium for continued group health insurance coverage for
Employee and/or his Qualified Beneficiaries any time after
November 1, 2005 and, thereafter. Commencing with coverage for
the month of December 2005, Employee and his Qualified
Beneficiaries shall be fully and solely financially responsible for
the payment of premiums for the continuation of group health
insurance coverage for themselves under COBRA. Further, Employee
acknowledges and agrees that, if Employee is eligible for such
coverage, he has received a COBRA notice advising Employee of
Employee’s rights to continuation coverage for group health
insurance.
3. Adequate
Consideration. Employee acknowledges and agrees that the
consideration to Employee set forth in Paragraph 2 (including
Subparagraphs) of this Agreement is in addition to anything of
value to which Employee is, as a matter of law, otherwise entitled.
Employee represents and agrees that he is not entitled to and shall
not receive any further compensation, including salary, bonuses,
vacation pay, or employee benefits after the Cessation Date,
provided Employee is not waiving any rights to vested employee
benefits, if any, as provided in applicable benefit
plans.
4. Release.
In consideration of his receipt of the severance package set forth
in Paragraph 2 of this Agreement, Employee hereby fully,
forever, irrevocably, and unconditionally releases and discharges
Employer, including Employer’s past and present officers,
directors, stockholders, subsidiaries, affiliates, agents,
employees, representatives, lawyers, administrators, spouses, and
all persons acting by, through, under, or in concert with them
(collectively, the “Released Parties”), from any and
all claims or damages which he may have against them, or any of
them, which could have arisen out of any act or omission occurring
from the beginning of time to the effective date of this Agreement,
whether now known or unknown, asserted or unasserted. This release
includes, but is not limited to, any and all claims under Title VII
of the Civil Rights Act of 1964, as amended; the Age Discrimination
in Employment Act of 1967, as amended; the Americans with
Disabilities Act; the Fair Labor Standards Act, as amended; the
Arizona Civil Rights Act; or under any other provision or theory of
law, both in tort and in contract, and whether statutory or under
the common law.
5. Covenant
Not to Sue. Employee warrants that he has no pending complaints,
charges, or claims for relief against the Released Parties with any
local, state, or federal court or administrative agency. Employee
understands and agrees that this Agreement may be pled as a
complete bar to any action or suit before any administrative body
or court with respect to any complaint, charge, or claim under
federal, state, local, or other law relating to any possible claim
that existed or may have existed against the Released Parties
arising out of any event occurring from the beginning of time
through the effective date of this Agreement. In the event Employee
acts inconsistent with the provisions of this Agreement, the
Company, at its option, may require Employee to pay Employer the
sum total of all payments made pursuant to this
Agreement.
6. Duty to
Cooperate. Employe
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