DWANGO NORTH AMERICA CORP.
VIA HAND DELIVERY
August 15, 2005
Rick J. Hennessey
Re: Separation Agreement
Dear Rick:
This letter sets forth the substance of the separation agreement (the
"Agreement") that Dwango North America Corp. (the "Company") is offering to you
in connection with your employment separation.
1. Separation Date. You voluntarily resigned from your employment with the
Company effective today, Monday, August 15, 2005 (the "Separation Date").
2. Board of Directors. You will resign as a member of the Company's Board
of Directors ("Board"), effective as of the Separation Date. At the same time
that you return this Agreement, you will provide the form of written notice of
resignation attached hereto as Exhibit A.
3. Accrued PTO. The Company will pay you all accrued and unused PTO,
subject to standard payroll deductions and withholdings, pursuant to the terms
of the Company handbook.
4. Severance Payment. Based on your voluntary resignation, it is agreed
that the Company does not owe you any severance under your March 1, 2005
Employment Agreement (the "Employment Agreement"). Nevertheless, as part of this
offer only, the Company will agree to make a lump sum severance payment to you
equivalent to six (6) months of your base salary in effect on the Separation
Date, with such payment to be made to you within 10 days after you execute and
return this Agreement. This payment will be subject to standard payroll
deductions and withholdings.
5. Equity. The terms and conditions of your ownership of Company stock are
unaffected by this Agreement. Regarding your stock option to purchase 100,000
shares of Company stock (the "Option"), it is agreed that no option shares are
vested as of the Separation Date and that the Option terminated on that date. As
to any other vested but unexercised option shares held by you, they shall be
exercisable according to the terms of your written stock option agreements and
the applicable Company stock option plan(s) pursuant to which such stock
option(s) were granted. It is understood and agreed that all option shares
ceased vesting on the Separation Date and that no acceleration of vesting of any
option shares is owed or will occur as a result of your employment separation,
but rather all unvested option shares will cease vesting as of the Separation
Date.
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6. Health Insurance. To the extent provided by the federal COBRA law or,
if applicable, state insurance laws, and by the Company's current group health
insurance policies, you will be eligible to continue your group health insurance
benefits at your own expense. Later, you may be able to convert to an individual
policy through the provider of the Company's health insurance, if you wish.
7. Other Compensation or Benefits. You acknowledge that, except as
expressly provided in this Agreement, you will not receive any additional
compensation, severance or benefits after the Separation Date.
8. Expense Reimbursements. You agree that, within ten (10) days of the
Separation Date, you will submit your final documented expense reimbursement
statement reflecting all business expenses you incurred through the Separation
Date, if any, for which you seek reimbursement. The Company will reimburse you
for these expenses pursuant to its regular business practice.
9. Return of Company Property. You agree that within ten (10) days of the
Separation Date, you will return to the Company all Company documents (and all
copies thereof) and other Company property that you have had in your possession
at any time, including, but not limited to, Company files, notes, drawings,
records, business plans and forecasts, financial information, specifications,
computer-recorded information, tangible property (including, but not limited to,
computers), credit cards, entry cards, identification badges and keys; and, any
materials of any kind that contain or embody any proprietary or confidential
information of the Company (and all reproductions thereof); provided, however,
that the Company will transfer title to you of the laptop computer you used
while a Company employee (excluding any software under license to the Company
associated with the laptop which shall not be transferred hereby). With respect
to the laptop, you will immediately delete all Company related material and
understand and agree that you are accepting it "as is" without warranty of any
kind, that you will be held solely responsible for any tax assessments made by
any taxing authority based on this transfer of title, and that you will be
solely responsible for the use and maintenance of the laptop and all costs
associated therewith arising after the Separation Date.
10. Ongoing Obligations Under Employment Agreement. Your obligations under
Sections 7 (Non Competition), 8 (Intellectual Property), 9 (Confidentiality), 10
(Remedies) and 19 (Indemnification) of the Employment Agreement will continue to
apply, as applicable, after the Separation Date. The other provisions of the
Employment Agreement are hereby superseded and extinguished.
11. Confidentiality. The provisions of this Agreement will be held in
strictest confidence by you and the Company and will not be publicized or
disclosed in any manner whatsoever; provided, however, that: (a) you may
disclose this Agreement to your immediate family; (b) the parties may disclose
this Agreement in confidence to their respective attorneys, accountants,
auditors, tax preparers, and financial advisors; (c) the Company may disclose
this Agreement as necessary to fulfill standard or legally required corporate
reporting or disclosure requirements; and (d) the parties may disclose this
Agreement insofar as such disclosure may be necessary to enforce its terms or as
otherwise required by law.
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12. Nondisparagement. You agree not to disparage the Company or the
Company's officers, directors, employees, shareholders, parents, subsidiaries,
affiliates, and agents, in any manner likely to be harmful to them or their
business, business reputation or personal reputation; provided that you may
respond accurately and fully to any question, inquiry or request for information
when required by legal process. Likewise, the Company agrees not to disparage
you in any manner likely to be harmful to you in your business reputation,
personal reputation, or businesses, provided that the Company may respond
accurately and fully to any question, inquiry or request for information when
required by legal process.
13. Release of Claims. In exchange for the consideration provided to you
by this Agreement, you hereby generally and completely release the Company and
its current and former directors, officers, employees, shareholders, partners,
agents, attorneys, predecessors, successors, parent and subsidiary entities,
insurers, affiliates, and assigns from any and all claims, liabilities and
obligations, both known and unknown, that arise out of or are in any way related
to events, acts, conduct, or omissions occurring prior to your signing this
Agreement. This general release includes, but is not limited to: (1) all claims
arising out of or in any way related to your employment with the Company, or the
termination of that employment; (2) all claims related to your compensation or
benefits from the Company, including salary, bonuses, commissions, vacation pay,
expense reimbursements, severance pay, fringe benefits, stock, stock options, or
any other ownership interests in the Company; (3) all claims for breach of
contract, wrongful termination, and breach of the implied covenant of good faith
and fair dealing; (4) all tort claims, including claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all
federal, state, and local statutory claims, including claims for discrimination,
harassment, retaliation, attorneys' fees, or other claims arising under the
federal Civil Rights Act of 1964 (as amended), the federal Americans with
Disabilities Act of 1990, the federal Age Discrimination in Employment Act of
1967 (as amended), and the Washington Law Against Discrimination (as amended).
Expressly excluded from this release are any and all claims arising after the
date you sign this Agreement, including, but not limited to, claims relating to
unexercised vested options and claims you may have in the future as a
shareholder of the Company, if any.
14. General. This Agreement, including Exhibit A and the above referenced
sections of the Employment Agreement, constitutes the complete, final and
exclusive embodiment of the entire agreement between you and the Company with
regard to this subject matter. It is entered into without reliance on any
promise or representation, written or oral, other than those expressly contained
herein, and it supersedes any other such promises, warranties or
representations. You have been provided with an opportunity to consult with your
own counsel with respect to this Agreement, including Exhibit A. This Agreement
may not be modified or amended except in a writing signed by both you and a duly
authorized officer of the Company. This Agreement will bind the heirs, personal
representatives, successors and assigns of both you and the Company, and inure
to the benefit of both you and the Company, their heirs, successors and assigns.
If any provision of this Agreement is determined to be invalid or unenforceable,
in whole or in part, this determination will not affect any other provision of
this Agreement and the provision in question will be modified by the court so as
to be rendered enforceable. This Agreement will be deemed to have been entered
into and will be construed and enforced in accordance with the laws of the State
of Washington as applied to contracts made and to be performed entirely within
Washington.
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If this Agreement is acceptable to you, please sign below and return it to me.
Sincerely,
By: /s/ Victor Cohn
-----------------------------------
Victor Cohn
Member, Board of Directors
AGREED:
/s/ Rick J. Hennessey
- ---------------------------------------
Rick J. Hennessey
August 15, 2005
- ---------------------------------------
Date
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EXHIBIT A -- FORM OF DIRECTOR RESIGNATION LETTER
August 15, 2005
VIA PERSONAL DELIVERY
Dear Members of the Board of Directors, Dwango North America Corp.:
I hereby voluntarily resign from my position as a member of the Board of
Directors of Dwango North America Corp. and any of its subsidiaries, effective
immediately.
Sincerely,
Rick J. Hennessey