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EXHIBIT 10.34
AGREEMENT IN CONTEMPLATION
OF
SEPARATION
THIS AGREEMENT (the "Agreement") in contemplation of separation is
entered into this __ day of January, 1998, by and between RESOUND CORPORATION
("Company") and PETER RIEPENHAUSEN ("Employee").
WHEREAS, Company and Employee have mutually agreed to terminate the
employment relationship and to establish a consulting arrangement between them.
NOW, THEREFORE, IT IS AGREED as follows:
1. Employee's resignation as Chief Executive Officer, President and an
employee of Company shall be effective on the taking of office by a replacement
full-time chief executive officer of Company (the "Resignation Date").
Employee's resignation from any other positions with any other entity which may
be deemed to be an affiliate of Company shall also be effective on the
Resignation Date. For purposes of this Agreement, Employee's Termination Date
shall be the earlier of the Resignation Date or the date on which Employee's
employment relationship with Company is terminated by either Employee or Company
(the "Termination Date"). Company and Employee acknowledge and agree that,
notwithstanding the execution of this Agreement, Employee's employment is and
shall continue to be at-will, as defined under applicable law.
2. In contemplation of the separation, the parties agree:
(a) Company shall retain Employee as a consultant as set forth in
Section 7 below.
(b) During the three month period following the Termination Date,
Employee shall be Vice Chairman of Company's Board of Directors and remain a
member of the Board of Directors. Thereafter, Employee shall continue as a
member of the Board of Directors only at the discretion of the Company's
President and Chief Executive Officer and the Board of Directors. Employee
agrees to submit his letter of voluntary resignation to the Board of Directors
when requested to do so by Company's President and Chief Executive Officer or
the Board of Directors. In all events, Employee's continued service as a member
of the Board of Directors shall be subject to Employee's election to such
position by the shareholders of the Company. Employee shall continue as a member
of the search committee for a replacement chief executive officer at the
pleasure of the Board of Directors so long as he remains a member of the Board
of Directors.
(c) In accordance with applicable law, but in any event within three
days of the Termination Date, Company will pay to Employee all accrued salary
and pay for accrued personal time off (collectively, the "Termination Payment").
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(d) If Company substantially achieves the targets specified by the
Board of Directors with respect to incentive compensation for the position of
Chief Executive Officer for 1998, Employee will be entitled to receive a pro
rata share of the applicable bonus payable for 1998 based upon the portion of
the 1998 calendar year he was employed as Chief Executive Officer of Company.
(e) The Change of Control Agreement between the parties, dated April
24, 1997, shall remain in effect until the Termination Date.
3. Employee acknowledges and agrees that upon payment of the Termination
Payment he will have received all salary, accrued personal time off,
commissions, bonuses, compensation or other such sums due to him. In light
thereof, the parties acknowledge and agree that California Labor Code Section
206.5 is not applicable to the parties hereto. That section provides in
pertinent part as follows:
No employer shall require the execution of any release of any
claim or right on account of wages due, or to become due, or made
as an advance on wages to be earned, unless payment of such wages
has been made.
4. Employee's participation in Company's employee benefit programs,
including without limitation, the long term and short term disability, 401(k),
and employee stock purchase plans, shall cease as of the Termination Date,
except as provided in Sections 5 and 6 below. No additional personal time off
shall accrue following the Termination Date.
5. Employee shall continue to receive Company's standard medical,
dental, vision and life insurance benefits at Company expense until the earlier
of Employee's commencement of a full-time position with another employer or the
end of the Consulting Term (as defined in Section 7). Employee agrees and
acknowledges that the qualifying event contemplated by COBRA shall be deemed to
be the Termination Date.
6. All options granted to Employee under Company's 1988 Stock Option
Plan, including all options previously repriced by Company, shall continue to
vest according to their respective terms set forth in the option agreements
issued to Employee, as modified by the terms of the Option Repricing Agreement
executed by Employee in April 1997 until the end of the Consulting Term set
forth in paragraph 7 below and shall remain exercisable to the extent vested for
a period of sixty (60) days after the end of the Consulting Term. The Board of
Directors may further elect in its sole discretion to accelerate all or a
portion of the remaining options not then vested at the end of the Consulting
Term, but shall not be obligated to do so. All options not exercised during this
period shall expire at the end of such 60-day period. Employee understands and
agrees that if qualified as incentive stock options under applicable tax law
when granted, the options shall retain such status for three (3) months after
the Termination Date and that thereafter such options will be treated for tax
purposes as nonstatutory stock options.
7. Employee will make himself available at reasonable times and places
to perform consulting services for Company during the period beginning on the
Termination Date and ending three months thereafter (the "Initial Consulting
Term"). Employee will be paid a
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consulting fee during the Initial Consulting Term at the rate equal to his
salary in effect on the date of this Agreement per month, payable on Company's
normal payroll dates in accordance with its normal payroll practices. Employee
will also make himself available at reasonable times and places to perform
further consulting services for Company for an additional period of twelve
months after the conclusion of the Initial Consulting Term (collectively with
the Initial Consulting Term, the "Consulting Term"). For such additional
services, Company shall pay to Employee on the aforesaid payroll schedule a
consulting fee at the rate equal to his monthly salary in effect on the date of
this Agreement and, in addition, shall pay to Employee $150 for each hour of
consulting services (which for purposes of this Section 7 shall include any
services performed by Employee pursuant to Section 12 of this Agreement) in
excess of twenty (20) hours per month performed by Employee after the Initial
Consulting Term. All consulting assignments and pertinent terms, including
additional compensation, shall be determined by the Chief Executive Officer of
Company. Company will use reasonable efforts to provide written notice of
consulting assignments for any given month at the beginning of the month. The
Consulting Term and all obligations of Company and Employee to each other under
this Section 7 shall terminate upon Employee's commencement of a full-time
position with another employer. Employee hereby agrees to notify Company of his
acceptance of any such position.
8. Company shall reimburse Employee for reasonable expenses incurred on
behalf of Company during the Consulting Term, provided that such expenses are
substantiated in accordance with Company policies.
9. Employee understands and agrees that his obligations to Company under
his existing Proprietary Information and Assignment of Inventions Agreement
between Employee and Company (the "Proprietary Information Agreement"), a copy
of which is attached hereto as Exhibit A, shall continue through the Consulting
Term and shall thereafter survive termination of his relationship with Company
under this Agreement. Employee agrees that at all times hereafter he shall
continue to maintain the confidentiality of all confidential and proprietary
information of Company as provided by the Proprietary Information Agreement and
that he shall not intentionally divulge, furnish or make available to any party
any of the trade secrets, patents, patent applications, price decisions or
determinations, inventions, customers, proprietary information or other
intellectual property of Company, until after such time as such information has
become publicly known otherwise than by act of collusion of Employee.
10. During the Consulting Term Employee may engage in other part-time
employment, consulting or businesses, provided such activity does not preclude
him from making himself available to provide consulting services to Company as
provided above and further provided that Employee will notify Company prior to
engaging in any such employment, consulting or business with or for the benefit
of any party that is competitive with the present, proposed, or reasonably
anticipated business activities of Company.
11. Until the end of the Consulting Term, Employee will not: (a) divert
or attempt to divert, directly or indirectly, any business of Company; (b)
induce or attempt to induce directly or indirectly, any person to terminate his
or her employment or consulting arrangement with Company or to provide services
as an employee or consultant involving the design, manufacture,
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or sale of acoustic hearing devices to Employee or any other party; or (c)
induce or attempt to induce any customer, supplier, licensor or other business
partner of Company to cease doing business with Company or in any way interfere
with the existing business relationship between any such customer, supplier,
licensor or business partner and Company.
12. Employee will make himself available at reasonable times and upon
reasonable notice to give deposition and trial testimony and otherwise to assist
Company's attorneys in the prosecution or defense of legal proceedings involving
Company. Company will make reasonable efforts to accommodate any other
employment Employee may have. Employee shall receive an additional fee of $150
for each hour of time spent in such matters after the end of the Consulting
Term.
13. Employee will cooperate with Company in providing information with
respect to all reports required to be filed by Company with the Securities and
Exchange Commission as they relate to required information with respect to
Employee.
14. Each party agrees to refrain from (and Company shall take reasonable
steps to cause its executive officers and directors to refrain from) any
disparagement or criticism of the other party (and in the case of Company, its
officers, directors and employees).
15. The parties agree to use their best efforts to maintain in
confidence the existence and terms of this Agreement, except as may be disclosed
in a press release and except for disclosures required by law or necessary to
effectuate the terms of this Agreement. Employee understands and acknowledges
that Company may be required to file a copy of this Agreement with the
Securities and Exchange Commission and to disclose its terms in Company's next
proxy statement. Notwithstanding the foregoing, each party shall be permitted to
discuss the provisions of this Agreement in confidence with its attorneys,
accountants, tax advisors and, in the case of Employee, his spouse. Company will
use reasonable efforts to consult with Employee prior to the issuance of any
press release announcing Employee's resignation. Employee agrees not to disclose
that he has resigned or is going to resign, until Company makes an announcement
thereof or to the extent that such disclosure is specifically permitted by
Company's Board of Directors or its authorized committee. Notwithstanding the
foregoing, Employee shall be permitted to disclose his resignation to selected
individuals if and only to the extent necessary to enable Employee to solicit
new employment, provided any such person agrees in writing or is bound by
professional ethical principles not to disclose such information. Unless
specifically permitted by Company's Board of Directors or its authorized
committee, Employee will not make any such disclosure to any Company employee,
consultant, customer, supplier or present or prospective Company business
partner prior to the date Company makes such announcement.
16. In consideration for the obligations of both parties set forth in
this Agreement, Employee and Company, on behalf of themselves, and their
respective heirs, executors, officers, directors, employees, investors,
shareholders, administrators and assigns, hereby fully and forever release each
other and their respective heirs, executors, officers, directors, employees,
investors, shareholders, administrators and assigns (collectively, the
"Releasees"), of and from any claim, duty, obligation or cause of action
relating to any matters of any kind pertaining to
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Employee's employment relationship with Company, whether presently known or
unknown, suspected or unsuspected, that any of them may possess arising from any
omissions, acts or facts that have occurred up until and including the date of
this Agreement including, without limitation:
(a) any and all claims relating to or arising from Employee's
employment relationship with Company and the termination of that relationship;
(b) any and all claims relating to, or arising from, Employee's right
to purchase, or actual purchase of shares of stock of Company other than as
provided in Section 6 above and pursuant to the specific terms of the stock
option agreements referenced therein;
(c) any and all claims for wrongful discharge of employment; breach
of contract, both express and implied; breach of a covenant of good faith and
fair dealing, both express and implied, negligent or intentional infliction of
emotional distress; negligent or intentional misrepresentation; negligent or
intentional interference with contract or prospective economic advantage;
negligence; and defamation;
(d) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967, the Americans with Disabilities Act of 1990, and the California
Fair Employment and Housing Act;
(e) any and all claims arising out of any other laws and regulations
relating to employment or employment discrimination; and
(f) any and all claims for attorneys' fees and costs.
Company and Employee agree that the release set forth in this Section 16
shall be and remain in effect in all respects as a complete general release as
to the matters released. This release does not extend to any obligations
incurred or specified under this Agreement.
17. Employee acknowledges that he is waiving and releasing any rights he
may have under the Age Discrimination in Employment Act of 1967 ("ADEA") and
that this waiver and release is knowing and voluntary. Employee and Company
agree that this waiver and release does not apply to any rights or claims that
may arise under ADEA after the Effective Date of this Agreement. Employee
acknowledges that the consideration given for this waiver and release agreement
is in addition to anything of value to which Employee was already entitled.
Employee further acknowledges that he has been advised by this writing that (a)
he should consult with an attorney prior to executing this Agreement; (b) he has
at least twenty-one (21) days within which to consider this Agreement; (c) he
has seven (7) days following his execution of this Agreement to revoke the
Agreement (the "Revocation Period"). This Agreement shall be effective upon the
expiration of the Revocation Period (the "Effective Date").
18. The Parties represent that they are not aware of any claim by either
of them other than the claims that are released by this Agreement. Employee and
Company acknowledge that
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they have been advised by legal counsel and are familiar with the provisions of
California Civil Code Section 1542, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
Employee and Company, being aware of said Code section, agree to
expressly waive any rights they may have thereunder, as well as under any other
statute or common law principles of similar effect.
19. Employee and Company covenant and agree that they will never,
individually or with any person or in any way, commence, aid in any way, except
as required by due legal process, prosecute or cause or permit to be commenced
or prosecuted against any Releasee, any action or other proceeding based upon
any claim which is released by the Agreement. This Agreement shall be deemed
breached and a cause of action shall be deemed to have accrued immediately upon
the commencement or prosecution of any action or proceeding contrary to this
Agreement.
In the event of any breach of this Section 18, the aggrieved Releasee
shall be entitled to recover from the breaching party not only the amount of any
judgment which may be awarded against such Releasee, but also all such other
damages, costs and expenses, taxable or otherwise, in preparing the defense of
or defending against, or seeking or obtaining an abatement of or injunction
against any action or proceeding brought in violation of this Section 18, and in
prosecuting any claim, counterclaim or cross-claim based on this Agreement.
20. Employee represents and warrants that no other person had or has any
claims in the claims referred to in Sections 15 and 16 above; that he has the
sole right and exclusive authority to execute this Agreement; that he has the
sole right to receive the consideration paid therefor; and that he has not sold,
assigned, transferred, conveyed or otherwise disposed of any claim or demand
released by this Agreement. Company represents and warrants that the undersigned
has the authority to act on behalf of Company and to bind to this Agreement.
21. Employee acknowledges that upon breach of the provisions contained
in Sections 9, 10, 12 or 14 of this Agreement, Company would sustain irreparable
harm from such breach, and, therefore, Employee agrees that in addition to any
remedies which the Company may have under this Agreement or otherwise, Company
shall be entitled to obtain equitable relief, including specific performance and
injunctions, restraining Employee from committing or continuing any such
violation of this Agreement. Employee understands and agrees that upon his
material or intentional breach of any provision of this Agreement, in addition
to and without limiting any other remedies the Company may have under this
Agreement or otherwise, Employee's benefits as provided in Section 5, his
consulting fees as provided in Section 7, and his option exercise rights as
provided in Section 6, shall immediately terminate.
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22. Each party represents that he or it has carefully read and
understands the scope and effect of the provisions of this Agreement. Neither
party has relied upon any representations or statements made by the other party
which are not specifically set forth in this Agreement.
23. The parties shall each bear their own costs, attorneys' fees and
other fees incurred in connection with this Agreement.
24. In the event that any provision hereof becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision.
25. This Agreement represents the entire agreement and understanding
between Company and Employee concerning Employee's separation from Company and
supersedes and replaces any and all prior agreements and understandings
concerning Employee's relationship with and compensation by Company, other than
the Change of Control Agreement described in Section 2(e) above, the Proprietary
Information Agreement described in Section 9, and the Employee's Indemnification
Agreement with the Company, dated June 11, 1992, a copy of which is attached
hereto as Exhibit B.
26. This Agreement may only be amended in writing signed by Employee and
a duly authorized officer of Company.
27. This Agreement shall be governed by the laws of the State of
California, without giving effect to the principles of conflict of laws.
28. This Agreement may be executed in counterparts, and each counterpart
shall have the same force and effect as an original and shall constitute an
effective, binding agreement on the part of each of the undersigned.
29. This Agreement is executed voluntarily and without any duress or
undue influence on the part or behalf of the parties hereto, with the full
intent of releasing all claims. The parties acknowledge that:
(a) They have read this Agreement;
(b) They have been represented by legal counsel of their own choice;
(c) They understand the terms and consequences of this Agreement and
of the releases it contains; and
(d) They are fully aware of the legal and binding effect of this
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the respective dates set forth below.
RESOUND CORPORATION
By: /s/Rodney Perkins
Title: Chairman
Dated: January 26, 1998
PETER RIEPENHAUSEN, an individual
/s/Peter Riepenhausen
Dated: January 26, 1998
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