Exhibit 2.5
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 Michael J. Downs, an
individual ("M. Downs"), and NTN Communications, Inc., a corporation and
LearnStar, Inc. (collectively "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, M. Downs and Company agree as follows:
1. M. 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.
2. Company and M. 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 M. Downs, including, without limitation, all
obligations under M. Downs's Employment Agreement dated November 1, 1995
a. Company shall pay to M. Downs as severance payments $12,500.00 per
month for the 12 months ending December 31, 1997, and $12,500.00 per month for
the 10 months ending October 28, 1998, less appropriate withholding taxes, as
required.
b. Until April 30, 1997, assuming M. Downs elects COBRA coverage,
Company shall pay M. Downs' COBRA premium for medical benefits through April 30,
1997. M. Downs will receive the same coverage as current medical coverage
through April 30, 1997.
c. Company shall pay to M. Downs an amount of $ 19,352.68, payable
$879.67 per month for 22 months, all less appropriate withholdings, in payment
of accrued vacation to which M. Downs is entitled under the Employment
Agreement.
d. M. Downs shall return the following options to the Company for
cancellation:
30,000 options having an exercise price of $7.25 and an expiration date of
8/11/98
35,000 options having an exercise price of $4.75 and an expiration date of
1/15/98
70,000 options having an exercise price of $7.25 and an expiration date of
8/11/98
50,000 options having an exercise price of $5.75 and an expiration date of
4/1/99
25,000 options having an exercise price of $6.375 and an expiration date of
7/5/01
e. M. Downs shall retain 25,000 warrants held by him having an exercise
price of $4.75 and an expiration date of 1/15/98
1.
f. As set forth in paragraph 3.2 of the Employment Agreement, in the
event that M. Downs procures another position as an employee or an independent
contractor at any time from the effective date hereof through October 31, 1998,
severance payments to which M. Downs would otherwise be entitled as set forth in
paragraph 2.a., above, shall be offset by any sums, whether in cash or in kind,
earned by M. Downs by virtue of such other position.
3. M. 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. M. Downs represents to
Company that all documents pertaining to NTN or LearnStar, inclusive of existing
and past parent companies and subsidiaries, but exclusive of personal items, in
his possession whether located on Company premises, at M. 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 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. M. Downs hereby reaffirms his obligation, as set forth in his
employment agreement, secrecy 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.
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 M. 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, M.
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
2.
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, sick leave, holiday pay, vacation pay, life insurance,
health or medical insurance or any other fringe benefit, workers' compensation
or disability insurance. 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, M. 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."
6. M. Downs acknowledges that he may hereafter discover claims or facts
in addition to or different from those which M. 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, M. Downs hereby waives any right, claim
or cause of action that might arise as a result of such different or additional
claims or facts. M. Downs acknowledges that he understands the significance and
consequences of such release and such specific waiver of SECTION 1542.
7. M. 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. M. Downs further
expressly acknowledges and agrees that:
3.
a. In return for this Agreement he will receive compensation at
least equal to that which he was already entitled to receive before entering
into this Agreement;
b. He was orally advised by Company and is hereby advised in writing
by this Agreement to consult with an attorney before signing this Agreement;
c. He was given a copy of this Agreement and informed that he has
twenty-one (21) days within which to consider the Agreement; and
d. He was informed that he has seven (7) days following the date of
execution of the Agreement in which to revoke the Agreement.
8. M. 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 or proprietary materials or information respecting
Company's business affairs. M. Downs represents that he has held all such
information confidential and will continue to do so, and that he will not use
such 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. M. 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, M. 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, M. Downs specifically agrees
that he shall not disclose information regarding this Agreement to any current
or former employee of Releasees. M. 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. M. Downs warrants and represents that M. 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 M. 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. M. 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.
4.
12. All payments hereunder shall be reduced by federal and state income
tax withholding, if required, and other applicable withholding taxes. M. Downs
shall be exclusively liable for the payment of all federal and state taxes which
may be due as the result of the consideration received from the settlement of
disputed claims as set forth herein and M. Downs hereby represents that M. Downs
shall make payments on such taxes at the time and in the amount required of M.
Downs. In addition, M. 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 by any government agency at any time as the
result of payment of the consideration set forth herein.
13. This instrument constitutes and contains the entire agreement and
understanding concerning M. Downs's employment, resignation from the same and
the other subject matters addressed herein between the parties, and supersedes
and replaces all prior negotiations and all agreements proposed or otherwise,
whether written or oral, concerning the subject matters hereof. This is an
integrated document. This Agreement may be modified only by a writing signed by
the parties.
14. Either M. Downs or Company may revoke this Agreement in its entirety
during the seven days following execution of the Agreement by M. 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 M. 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. Any dispute or controversy between M. 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 M. 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,
5.
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.
19. 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 Agreement have been completely read and
explained to them by their attorneys, and that those terms are fully understood
and voluntarily accepted by them.
20. 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.
21. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors and assigns.
22. M. Downs agrees that for a period of 24 months from the date hereof M.
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 competition with the 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 M. Downs's right to hold and make passive investments not in excess of the
outstanding Common Stock of any publicly traded entity.
23. This Agreement embodies the entire agreement of the parties and
supersedes any other prior oral or written agreements, arrangements or
understandings between M. Downs and Company. This Agreement may not be changed
or terminated orally but only by an agreement in writing signed by the parties
hereto.
24. The waiver by Company of a breach of any provision of this Agreement
by M. Downs shall not operate or be construed as a waiver of any subsequent
breach by him.
6.
The waiver by M. 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.
25. 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.
________________________________
Michael J. Downs
Approved as to form:
By: ____________________________
Attorney for Michael J. Downs
EXECUTED as of this 31st day of December 1996 in San Diego, California.
NTN COMMUNICATIONS, INC.
By: ____________________________
Approved as to form:
TROY & GOULD PROFESSIONAL CORPORATION
By: _________________________________
Attorney for NTN Communications, Inc.
7.
ENDORSEMENT
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I, Michael J. 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.
_____________________________
Michael J. Downs
8.
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 LearnStar, a subsidiary of NTN
Communications, Inc. and as an officer, director and employee of any
subsidiaries or affiliates of NTN Communications, Inc.
Very truly yours,
________________________________
Michael J. Downs
9.