Exhibit 2.2
RESIGNATION AND GENERAL RELEASE AGREEMENT
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This Resignation and General Release Agreement ("Agreement"), effective as
of this 31st day of December 1996, by and between Daniel C. Downs, an individual
("D. Downs"), and NTN Communications, Inc., a corporation ("Company"), is a
resignation agreement which includes a general release of claims.
In consideration of the covenants undertaken and the releases contained in
this Agreement, D. Downs and Company agree as follows:
1. D. Downs resigns effective seven days following the complete execution
of this Agreement in all capacities as an officer and as an employee of Company
and each of its subsidiaries and affiliates, such resignations to be effective
as of December 31, 1996. Company hereby agrees to retain D. Downs as a
consultant commencing on January 1, 1997 and ending on December 31, 1999 in
accordance with the terms and conditions of the Consulting Agreement attached
hereto as Exhibit A. In the event D. Downs remains on the Board of Directors of
Company he shall be compensated on the same basis as other outside directors
other than compensation for initially becoming a director.
2. Company and D. Downs agree to the following actions (no payments
hereunder shall be made or other actions taken until seven days following the
complete execution of this Agreement) in full and complete discharge of any and
all of Company's obligations to D. Downs, including, without limitation, all
obligations under D. Downs's Employment Agreement dated January 1, 1990, as
amended on June 19, 1992 (the "Employment Agreement"), the Performance
Associated Senior Executive Retirement Plan and the Deferred Compensation Plan:
a. Company shall pay to D. Downs as severance payments $18,164.16 per
month for the 12 months ending December 31, 1997, $20,616.32 per month for the
12 months ending December 31, 1998, and $23,399.53 per month for the 12 months
ending December 31, 1999, less appropriate withholding taxes, as required. If
any severance payment is not paid by Company for more than 90 consecutive days,
then the severance payments set forth in this paragraph 2(a) shall be
accelerated and become immediately due and payable.
b. Company shall pay to D. Downs an amount of $152,761.69, all less
appropriate withholdings, in payment of accrued vacation to which D. Downs is
entitled under the Employment Agreement, payable one-third on execution of this
Agreement, one-third on January 1, 1998 and the remaining one-third January 1,
1999.
c. Upon completed execution of this Agreement, Company shall pay to D.
Downs cash in the amount of $121,387.35 less appropriate withholdings,
representing deferred compensation to which D. Downs is entitled.
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d. Until December 31, 1999, Company shall continue to include D. Downs
under Company's medical insurance program, without cost to D. Downs.
e. Until December 31, 1999, Company shall use its best efforts to
provide (without extraordinary charges and provided that D. Downs meets standard
insurance company requirements) D. Downs life insurance, payable to D. Downs's
beneficiary, in the amount of $1,000,000, and in the event of accidental death
or dismemberment, in the amount of $2,000,000, without cost to D. Downs.
f. For a period of 36 months commencing on January 1, 1997 and ending
on December 31, 1999, Company will provide D. Downs with a car allowance of $500
per month.
g. D. Downs presently owns warrants to purchase 200,000 shares of
Common Stock of Company and incentive or non qualified options to purchase
1,184,000 shares of Common Stock of Company. D. Downs shall return to Company
for cancellation the following options:
No. of Shares Exercise Price Expiration Date
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50,000 $7.250 8/11/98
185,000 $8.000 11/28/99
200,000 $7.250 8/11/98
15,000 $8.000 11/28/99
234,000 $ 4.75 1/15/98
h. D. Downs is presently indebted to Company in the principal amount
of $629,140.54. Such indebtedness is represented by a promissory note (the
"Note") which provides that if D. Downs is terminated by Company for any reason
other than for "cause" at any time within the three year term of the Note the
balance of the Note and any interest accrued thereon will be cancelled. D. Downs
and Company agree that the Note shall be cancelled and shall be of no further
force and effect. Company shall return such cancelled Note to D. Downs. Company
may withhold from all amounts due to D. Downs herein all payroll taxes, if
required by law, relating to the cancellation of the Note.
i. Company shall execute and deliver to D. Downs the Release attached
as Exhibit B hereto.
3. D. Downs shall return to Company and shall not take or copy in any form
or manner lists of customers, prices, engineering plans, and similar
confidential and proprietary materials or information. D. Downs represents to
Company that all documents pertaining to NTN, inclusive of existing and past
subsidiaries, but exclusive of personal items, in his possession whether located
on Company premises, at D. Downs' home or elsewhere have been returned to
Company and that he has retained no copies in any form. This representation
applies to all forms of written materials, including but not limited to
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schematics, diagrams, formulations, tapes, descriptions of inventions and
products, operator manuals, maintenance manuals, training manuals, software
manuals, software code, technical memoranda, research bulletin, financial
information, marketing plans, identities of customers and vendors, contract
terms and information obtained in confidence from customers and vendors. D.
Downs hereby reaffirms his obligation, as set forth in his employment agreement,
confidentiality and work for hire agreement and any other legal documents that
he signed either before or during his employment with Company not to disclose
any confidential or trade secret information to any third party and not to use
the information for any purpose whatsoever except as expressly authorized in
writing by an authorized representative of Company, and except as necessary or
appropriate in fulfilling his responsibilities as a member of the Board of
Directors of the Company.
4. Company expressly denies any violation of any of its policies,
procedures, state or federal laws or regulations. Accordingly, while this
Agreement resolves all issues between Company and D. Downs relating to any
alleged violation of Company policies or procedures or any state or federal law
or regulation, this Agreement does not constitute an adjudication or finding on
the merits and it is not, and shall not be construed as, an admission by Company
of any violation of its policies, procedures, state or federal laws or
regulations. Moreover, neither this Agreement nor anything in this Agreement
shall be construed to be or shall be admissible in any proceeding as evidence of
or an admission by Company of any violation of its policies, procedures, state
or federal laws or regulations. This Agreement may be introduced, however, in
any proceeding to enforce the Agreement. Such introduction shall be pursuant to
an order protecting its confidentiality.
5. Except for those obligations created by or arising out of this
Agreement for which receipt or satisfaction has not been acknowledged herein, D.
Downs on behalf of himself, his descendants, dependents, heirs, executors,
administrators, assigns, and successors, and each of them, hereby covenants not
to sue and fully releases and discharges Company, its directors, officers,
agents, attorneys, insurers, employees, stockholders, representatives, assigns
and successors, past and present, and each of them, hereinafter together and
collectively referred to as "Releasees," with respect to and from any and all
claims, wages, demands, rights, liens, agreements, contracts, covenants,
actions, suits, causes of action, obligations, debts, costs, expenses,
attorneys' fees, damages, judgments, orders and liabilities of whatever kind or
nature in law, equity or otherwise, whether now known or unknown, suspected or
unsuspected, and whether or not concealed or hidden, which he now owns or holds
or he has at any time heretofore owned or held or may in the future hold as
against said Releasees, arising out of or in any way connected with his
employment or other relationships with Company or his resignation from
employment or any other transactions, occurrences, acts or omissions or any
loss, damage or injury whatever, known or unknown, suspected or unsuspected,
resulting from any act or omission by or on the part of said Releasees, or any
of them, committed or omitted prior to the date of this Agreement including,
without limiting the generality of the foregoing, any claim under Title VII of
the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the
Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the
California Fair Employment and Housing Act, the California Family Rights Act, or
any claim for severance pay, bonus,
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sick leave, holiday pay, vacation pay, life insurance, health or medical
insurance or any other fringe benefit, workers' compensation.
6. It is the intention of Company in executing this instrument that the
same shall be effective as a bar to each and every claim, demand and cause of
action hereinabove specified. In furtherance of this intention, D. Downs hereby
expressly waives any and all rights and benefits conferred upon him by the
provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE and expressly consents
that this Agreement shall be given full force and effect according to each and
all of its express terms and provisions, including those related to unknown and
unsuspected claims, demands and causes of action, if any, as well as those
relating to any other claims, demands and causes of action hereinabove
specified. SECTION 1542 provides:
"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 RELEASES,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR."
D. Downs acknowledges that he may hereafter discover claims or facts in addition
to or different from those which D. Downs now knows or believes to exist with
respect to the subject matter of this Agreement and which, if known or suspected
at the time of executing this Agreement, may have materially affected this
Settlement. Nevertheless, D. Downs hereby waives any right, claim or cause of
action that might arise as a result of such different or additional claims or
facts. D. Downs acknowledges that he understands the significance and
consequences of such release and such specific waiver of SECTION 1542.
7. D. Downs expressly acknowledges and agrees that, by entering into this
Agreement he is waiving any and all rights or claims that he may have arising
under the Age Discrimination in Employment Act of 1967, as amended, which have
arisen on or before the date of execution of this Agreement. D. Downs further
expressly acknowledges and agrees that:
a. He was orally advised by Company and is hereby advised in writing
by this Agreement to consult with an attorney before signing this Agreement;
b. He was given a copy of this Agreement and informed that he has
twenty-one (21) days within which to consider the Agreement; and
c. He was informed that he has seven (7) days following the date of
execution of the Agreement in which to revoke the Agreement.
8. D. Downs acknowledges that by reason of his position with Company he
has been given access to lists of customers, prices, engineering plans, and
similar confidential
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or proprietary materials or information respecting Company's business affairs.
D. Downs represents that he has held all such information confidential and will
continue to do so, and that he will not use such confidential information and
relationships for any business (which term herein includes a partnership, firm,
corporation or any other entity) without the prior written consent of Company.
9. D. Downs agrees that the terms and conditions of this Agreement shall
remain confidential as between the parties and he shall not disclose them to any
other person except for his attorneys and tax advisors or except as otherwise
required by law or in the event of public disclosure of such matters by Company.
Without limiting the generality of the foregoing, D. Downs will not respond to
or in any way participate in or contribute to any public discussion, notice or
other publicity concerning, or in any way relating to, execution of this
Agreement or the events (including any negotiations) which led to its execution.
Without limiting the generality of the foregoing, D. Downs specifically agrees
that he shall not disclose information regarding this Agreement to any current
or former employee of Releasees. D. Downs hereby agrees that disclosure by him
of any of the terms and conditions of the Agreement in violation of the
foregoing shall constitute and be treated as a material breach of this
Agreement.
10. D. Downs warrants and represents that D. Downs has not heretofore
assigned or transferred to any person not a party to this Agreement any released
matter or any part or portion thereof and D. Downs shall defend, indemnify and
hold harmless Company from and against any claim (including the payment of
attorneys' fees and costs actually incurred whether or not litigation is
commenced) based on or in connection with or arising out of any such assignment
or transfer made, purported or claimed.
11. D. Downs and Company acknowledge that any employment or contractual
relationship between them terminated on December 31, 1996, and that they have no
further employment or contractual relationship except as may arise out of this
Agreement.
12. All payments hereunder shall be reduced by federal and state income
tax withholding, if required, and other applicable withholding taxes. D. Downs
shall be exclusively liable for the payment of all federal and state taxes which
may be due as the result of the consideration as set forth herein and D. Downs
hereby represents that D. Downs shall make payments on such taxes at the time
and in the amount required of D. Downs. In addition, D. Downs hereby agrees
fully to defend, indemnify and hold harmless Releasees and each of them from
payment of taxes, interest and/or penalties that are required of them (other
than those payroll taxes which are the Company's obligations to pay) by any
government agency at any time as the result of payment of the consideration set
forth herein.
13. This instrument, the Consulting Agreement and the General Release
constitute and contain the entire agreement and understanding concerning D.
Downs's employment, resignation from the same and the other subject matters
addressed herein between the parties, and supersede and replace all prior
negotiations and all agreements proposed or otherwise,
5.
whether written or oral, concerning the subject matters hereof. These are
integrated documents. This Agreement may be modified only by a writing signed by
the parties.
14. Either D. Downs or Company may revoke this Agreement in its entirety
during the seven days following execution of the Agreement by D. Downs. Any
revocation of the Agreement must be in writing and hand delivered during the
revocation period. This Agreement will become effective and enforceable seven
days following execution by D. Downs, unless it is revoked during the seven-day
period.
15. If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable.
16. This Agreement shall be deemed to have been executed and delivered
within the State of California, and the rights and obligations of the parties
hereunder shall be construed and enforced in accordance with, and governed by,
the laws of the State of California.
17. This Agreement may be executed in counterparts.
18. Company agrees to continue to indemnify D. Downs to the extent set
forth in the existing Bylaws of Company and the Indemnity Agreement between
Company and D. Downs dated April 7, 1988. In the event of a conflict between
the Indemnity Agreement and the Bylaws, the provision providing D. Downs with
the greatest rights and remedies with respect to indemnification shall control.
19. Any dispute or controversy between D. Downs, on the one hand, and
Company (or any Releasee), on the other hand, in any way arising out of, related
to, or connected with this Agreement or the subject matter thereof, otherwise in
any way arising out of, related to, or connected with D. Downs's employment with
Company, shall be resolved through final and binding arbitration in San Diego,
California, pursuant to California Civil Procedure Code (S)(S) 1282-1284.2. The
arbitration shall be before the American Arbitration Association Employee
Dispute Panel and shall be governed by the National Rules for the Resolution of
Employment Disputes promulgated by the American Arbitration Association. In the
event of such arbitration, the prevailing party shall be entitled to recover all
reasonable costs and expenses incurred by such party in connection therewith,
including attorneys' fees. The nonprevailing party shall also be solely
responsible for all costs of the arbitration, including, but not limited to, the
arbitrator's fees, court reporter fees, and any and all other administrative
costs of the arbitration, and promptly shall reimburse the prevailing party for
any portion of such costs previously paid by the prevailing party. Any dispute
as to the reasonableness of costs and expenses shall be determined by the
arbitrator.
20. In entering this Agreement, the parties represent that they have
relied upon the advice of their attorneys, who are attorneys of their own
choice, and that the terms of this
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Agreement have been completely read and explained to them by their attorneys,
and that those terms are fully understood and voluntarily accepted by them.
21. All parties agree to cooperate fully and to execute any and all
supplementary documents and to take all additional actions that may be necessary
or appropriate to give full force to the basic terms and intent of this
Agreement and which are not inconsistent with its terms.
22. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and assigns.
23. In consideration of the payment of $29,545.34, D. Downs agrees that
for a period of 36 months from the date hereof D. Downs shall not, directly or
indirectly, without the prior written consent of Company:
a. solicit, entice, persuade or induce any employee, consultant,
agent or independent contractor of Company, or of any of the subsidiaries or
affiliates of Company to terminate his or her employment with Company, or such
subsidiary or affiliate, to become employed by any person, firm or corporation
other than Company, or such subsidiary or affiliate or approach any such
employee, consultant, agent or independent contractor for any of the foregoing
purposes, or authorize or assist in the taking of any such actions by any third
party; or
b. directly or indirectly own, manage, control, invest, or
participate in any way in, consult with or render services for any person or
entity (other than Company), or any of the subsidiaries or affiliates of Company
engaged in any business in direct competition with the primary businesses
presently conducted by Company, or any of the subsidiaries or affiliates of
Company. Notwithstanding anything in this Section 23b to the contrary, nothing
in this Agreement shall limit D. Downs's right to hold and make passive
investments not in excess of 2 1/2% of the outstanding Common Stock of any
publicly traded entity.
24. This Agreement, the Consulting Agreement and the General Release
embody the entire agreement of the parties and supersede any other prior oral or
written agreements, arrangements or understandings between D. Downs and Company.
This Agreement may not be changed or terminated orally but only by an agreement
in writing signed by the parties hereto.
25. The waiver by Company of a breach of any provision of this Agreement
by D. Downs shall not operate or be construed as a waiver of any subsequent
breach by him. The waiver by D. Downs of a breach of any provision of this
Agreement by Company shall not operate or be construed as a waiver of any
subsequent breach by Company.
7.
26. Each party has cooperated in the drafting and preparation of this
Agreement. Hence, in any construction to be made of this Agreement, the same
shall not be construed against any party on the basis that the party was the
drafter.
I have read the foregoing Agreement and I accept and agree to the
provisions it contains and hereby execute it voluntarily with full understanding
of its consequences.
EXECUTED as of this 31st day of December 1996 in San Diego County,
California.
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Daniel C. Downs
Approved as to form:
By:
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Attorney for Daniel C. Downs
EXECUTED as of this 31st day of December 1996 in San Diego, California.
NTN COMMUNICATIONS, INC.
By:
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Approved as to form:
TROY & GOULD PROFESSIONAL CORPORATION
By:
---------------------------------
Attorney for NTN Communications, Inc.
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ENDORSEMENT
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I, Daniel C. Downs, hereby acknowledge that I was given or took 21 days to
consider the foregoing Agreement and voluntarily chose to sign the Agreement
prior to the expiration of the 21-day period.
EXECUTED as of this 31st day of December 1996, in San Diego County,
California.
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Daniel C. Downs
9.
Dear NTN Communications, Inc.
This is to advise you that effective December 31, 1996, I hereby resign my
position as an officer and employee of NTN Communications, Inc. and as an
officer, director and employee of any subsidiaries or affiliates of NTN
Communications, Inc.
Very truly yours,
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Daniel C. Downs
10.