Separation Agreement

 

March 14, 2003

 

 

Mr. Gary Johnson

Address on file at Portal Player

 

 

Dear Gary,

 

It gives me great pleasure to present to you this formal offer of employment as the Chief Executive Officer at Portal Player, Inc. (“Portal Player”).

 

The position being offered to you is President and CEO. In this capacity you would be the senior member of the Portal Player Management Team and would report to the Board of Directors. The company will nominate you for election by the majority of common shareholders to the Board of Directors. During the term of your employment, you shall devote your full business efforts and time to Portal Player. You agree not to engage in any other employment, occupation or consulting activity for any direct or indirect remuneration without prior approval of the Board of Directors of Portal Player.

 

Your starting base salary will be $300,000 annually. You will be expected to begin work on April 7th 2003. Your base salary shall be subject to annual review by the Board of Directors.

 

As additional cash compensation, you will be eligible for a bonus of $150,000 every 12 months. All applicable withholdings shall be deducted from any bonus payment to you.

 

As a Portal Player employee, you will be eligible for a benefits package that Portal Player offers to all of its fulltime employees beginning on your start date.

 

In addition to the compensation noted above, subject to approval of the Board of Directors, Portal Player will grant to you an incentive stock option to purchase common shares of Portal Player (the “Shares”). The number of shares subject to this option will be 6% (3,086,304 shares) of the current total capitalization of Portal Player. This option grant will vest monthly, contingent on your continued employment with Portal Player on each respective vesting date, over a period of 4 years as follows: shares will vest on a monthly schedule of 2.083% (64,298 shares) of the total grant per month. The exercise price per share of the Shares will be the fair market value of common stock of Portal Player as of the date of grant as determined by the Board of Directors.

 

The Board will also set aside an additional 2% of the Common stock, based on the current capitalization of the Company, as options to be paid to you annually if business plan objectives are exceeded for each calendar year. Accordingly, you will be eligible to receive an additional .5% (257,192 shares) of the Common options based on company performance amounting to a maximum of 2% (over four years) of company Common stock (1,028,768 shares) at the end of the fourth calendar year (2007). These options will vest immediately, and will be subject to

 

3/14/2003


the same restrictions as other options you receive from the company. The exercise price per share of the Shares will be the fair market value of common stock of Portal Player as of the date of grant as determined by the Board of Directors.

 

If you accept this offer, your employment with Portal Player shall be “at-will.” This means that it is not for any specified period of time and can be terminated by you or by Portal Player at any time, with or without advance notice, for any or no particular reason or cause, and with or without Cause (as defined below). This “at-will” nature of your employment shall remain unchanged during your tenure as an employee, and may only be changed by an express writing signed by the Chairman of the Board of Directors of Portal Player.

 

If your employment with Portal Player is terminated by the Board of Directors without Cause, you will receive twelve (12) months base salary (minus applicable withholdings) paid monthly after your departure from the company. If you decide to leave Portal Player voluntarily for any reason save Constructive Termination as the result of an acquisition of the company, no termination pay will accrue to you.

 

Definition of “Cause.” For all purposes under this letter, “Cause” shall mean any of the following, “Cause” shall mean your (i) material misconduct with respect to the business or affairs of the Company or any of its affiliates (meaning material misconduct that rises to the level of, but is not limited to, any action by you constituting embezzlement of the Company’s or any of its affiliates’ property, any uncured (if capable of being cured) breach of his fiduciary duty as an officer or director of the Company or any of its affiliates, or fraud in any material respect in connection with his employment with the Company and its subsidiaries); (ii) neglect of your duties or failure or refusal to perform your duties to the Company and its subsidiaries or to follow the lawful directions of the Board after receipt of a written warning from the Board, including, without limitation, the material violation of any material policy of the Company or any of its affiliates that is applicable to you, if you fail to cure, such neglect, failure or refusal to perform, or failure to follow lawfull directions within thirty (30) days of receipt of written notice thereof from the Board; (iii) material breach of any provision of any written agreement between you and the Company or any of its affiliates that has a material adverse effect on the Company’s business, condition (financial or otherwise), results of operations, assets or properties, public reputation or affairs, or prospects, and, if such breach is capable of being cured, your failure to cure such breach within thirty (30) days of receipt of written notice thereof from the Board; (iv) conviction of a felony (including a plea of nolo contendere) which is to the Company’s material detriment; (v) commission of an act of fraud or financial dishonesty with respect to the Company or any of its affiliates; or (vi) conviction of a crime involving moral turpitude or fraud. If your employment with Portal Player is terminated by the Board of Directors without Cause, or you resign because of a Constructive Termination as defined below) you will receive twelve (12) months base salary (minus applicable withholdings) paid monthly after your departure from the company. If you decide to leave Portal Player voluntarily for any other reason, no termination pay will accrue to you.

 

Definition of “Constructive Termination.” For all purposes under this letter, “Constructive Termination” shall be deemed to occur if you resign your employment within thirty (30) days of any action by the Company (or its successor or acquirer) which (i) substantially reduces the amount of your base compensation or otherwise materially and adversely affects your working conditions, in either case in a manner that disproportionately adversely affects you, as compared to all other Company officers; (ii) reduces the scope of your authority substantially or materially beneath that which it was during the previous six month period; (iii) effectively removes you from any significant decision-making process in which you had been involved during the previous six month period; (iv) directs employees, consultants or other agents of the Company to disregard directives or ignore requests of you regarding matters for which such employees, consultants or other agents of the Company typically would have responded to such directives or requests during the previous six month period; (v) otherwise unilaterally and substantially changes your title and duties; provided, however, that the unilateral change, following a Change of Control, by the surviving or acquiring entity (or its parent) in your title and/or duties to a position that either (A) is comparable in salary, title and responsibilities with respect to the acquired or surviving entity or a division or unit thereof created out of the Company or its assets (whether it becomes a subsidiary, unit or division) to your current position, or (B) does not disproportionately adversely affect you as compared to all other Company officers, shall not constitute “Constructive Termination;” (vi) relocates your work site more than fifty (50) miles without your consent, except as provided in Section 3.4 hereof; or (vii) results in a loss of a seat

 

3/14/2003


on the Board.

 

In the event of a Change of Control at Portal Player, you will vest 100% of the options remaining over the term of this four-year vesting program. These options will be subject to the same investor preference functions as impact the rest of the company, additionally you will be eligible for the Management Retention Plan currently in place. The Management Retention Plan and preference functions work as follows:

 

 

If the Net Proceeds (as defined in the Stock Option Grant) as a result of a Change in Control have a value less than $43,252,628, then you will collect nothing on the value of your options or the Management Retention Pool.

 

 

If the Net Proceeds as a result of a Change in Control are greater than $43,252,628 then you will be eligible to receive the greater of two amounts: (i) a one-third interest in the Management Retention Plan’s Bonus Pool or (ii) the value of your vested options. For clarity, the Bonus Pool Amount shall equal the lower of (a) $8,900,000 or (ii) the amount calculated as 10.0% of the amount of the Net Proceeds in excess of $43,252,628. This amount shall be decreased by the aggregate net amount realized by all such Designated Employees from all options held by them (provided that the amount of reduction of the Bonus Pool Amount in relation to the shares and options held by an individual Designated Employee shall not exceed the amount of the Bonus Pool Amount that has been allocated to such Designated Employee). In any event, provided that the Net Proceeds are greater than the minimum amount required to fully fund the Bonus Pool Amount ($8,900,000) than you will receive at least one-third of $8,900,000.

 

Definition of “Change of Control.” For all purposes under this letter, “Change of Control” shall mean any of the following:

 

(i)

a sale of all or substantially all of the assets of Portal Player;

 

(ii)

the acquisition of more than fifty percent (50%) of the common stock of Portal Player (with all classes or series thereof treated as a single class) by any person or group of persons;

 

(iii)

a reorganization of Portal Player wherein the holders of common stock of Portal Player receive stock in another company (other than a subsidiary of Portal Player), a merger of Portal Player with another company wherein there is a fifty percent (50%) or greater change in the ownership of the common stock of Portal Player as a result of such merger, or any other transaction in which Portal Player (other than as the parent corporation) is consolidated for federal income tax purposes or is eligible to be consolidated for federal income tax purposes with another corporation; or

 

(iv)

in the event that the common stock is traded on an established securities market, a public announcement that any person has acquired or has the right to acquire beneficial ownership of more than fifty percent (50%) of the then-outstanding common stock and for this purpose the terms “person” and “beneficial ownership” shall have the meanings provided in Section 13(d) of the Securities and Exchange Act of 1934 or related rules promulgated by the Securities and Exchange Commission, or the commencement of or public announcement of an intention to make a tender offer or exchange offer for more than fifty percent (50%) of the then outstanding Common Stock.

 

This offer is made to you based solely on your education, skills, and qualifications, and not to obtain improper access to trade secrets or proprietary information belonging to any current or former employer. In connection with your employment by Portal Player, you are to abide by all contractual obligations owed to former employers, including obligations respecting trade secrets and proprietary information. You have assured me, and it is our mutual understanding, that your acceptance of the offer set forth in this letter, and subsequent employment by Portal Player, will not breach any duty or obligation that you may have to any person or entity.

 

This offer of employment is contingent upon signing of the Employee Assignment and Confidentiality Agreement, as well as our receipt of your written acceptance not later than the close of business, local California

 

3/14/2003


time, March 15, 2003.

 

The terms and conditions set forth in this offer letter as accepted by you will be the entire agreement between Portal Player and you with regard to your employment and supersede any other agreements, understandings or representations, whether written or oral with regard to the subject of your employment. The legal name of the employer is Portal Player, Inc., a California corporation. This agreement and any additions or amendments thereto shall be governed in accordance with the laws of the State of California.

 

If you wish to discuss any of tthe details of these conditions or any aspect of your employment, please contact me at 408-521-7030 during normal business hours. I am enclosing a copy of this letter for your personal records and would appreciate your returning the original to me with your signature of acceptance.

 

 

Sincerely,

 

/s/ R.L. Sanquini 3/14/03

Dick Sanquini

Chairman

Portal Player, Inc.

 

Enclosure: Employee Assignment and Confidentiality Agreement

 

ACKNOWLEDGED, ACCEPTED AND AGREED:

 

/s/ Gary Johnson

Gary Johnson

 

3/14/03

Date

 

Start Date: April 7, 2003

 

3/14/2003

 

 

Exhibit 10.1

SEPARATION AGREEMENT

This Separation Agreement (“Agreement”) is made by and between Gary Johnson, an individual (the “Employee”) and PortalPlayer, Inc. (the “Company”), effective seven calendar days after the date this Agreement is signed by the Employee and not revoked.

Recitals

The Company desires to provide the Employee with severance pay after his termination of employment, subject to the terms and conditions of this Agreement, if the Employee provides the Company with the Release set forth in this Agreement and the Release Agreement attached hereto.

Agreement

Based upon the information stated in the above Recitals and the statements, promises and agreements contained below, the parties hereby agree as follows:

 

 

1.

The Employee will continue as an employee of the Company, serving at the pleasure of the Board of Directors of the Company, until the Company appoints a new Chief Executive Officer (“CEO”) or October 16, 2006, whichever is later. Upon the appointment of a new CEO or October 16, 2006, whichever is later, the Employee will cease to be an employee of the Company and will resign as a director. Subject to the provisions of Section 18 below, the Company promises, within 10 days following the Effective Date of the Release (as defined in Section 18), to provide to the Employee with the following severance package:

 

 

a)

The Company will pay the Employee each month an amount equal to his current monthly base salary of $32,917.00 for the 12 months from the Effective Date of the Release. These payments will be subject to all legally required payroll withholdings. In accordance with the provisions of Section 409A(a)(2)(B)(i) of the Internal Revenue Code, the payments to be made under this section shall be accrued but not paid prior to six (6) months from the time the employee ceases to be an employee and director of the Company. The first payment is to be made six (6) months and one (1) day following the date of termination in the amount of $197,502 less applicable payroll withholdings. The remaining payments shall be made on a monthly basis thereafter.

 

 

b)

If the Employee timely elects to continue health insurance coverage under COBRA, then for a period of six months after the Effective Date of the Release, so long as the Employee is paying COBRA premiums, the Company will pay the employee a monthly payment


 

  

equal to the amount that was paid by the Company prior the termination of employment for Employee’s health insurance coverage. The Employee will not be reimbursed for the portion of the premium which had been paid by the Employee prior to the termination of employment or for any administrative fees or increases in premiums. The Employee is solely responsible for filing any necessary paperwork for COBRA coverage and payment of all premiums.

 

 

c)

The Employee’s stock options will be subject to the existing provisions of his stock option agreements as applicable, except that the Compensation Committee of the Board of Directors has approved the amendment of the Employee’s vested options to extend the post-termination exercise period from 90 days following termination of employment to one year from the Effective Date of the Release (or, if earlier, the expiration of the term of the stock option); provided, however, that the extension shall not extend beyond the latest date that would be permitted under Section 409A of the Internal Revenue Code without causing such stock options to become subject to Section 409A. The Employee acknowledges that the amendment of his options may have adverse tax consequences to him, including the treatment of his options as deferred compensation subject to Section 409A of the Internal Revenue Code, and agrees that he is solely responsible (and will indemnify and hold the Company harmless) for any and all tax liabilities (including penalties and interest) which may be imposed in connection with his stock options. The Employee acknowledges that he must make arrangements acceptable to the Company to satisfy any required tax withholding as a condition to the delivery of shares subject to his options, and expressly consents to the withholding of such taxes from any amounts otherwise due him under this Agreement or the option agreement.

 

 

d)

In addition, the vesting of the Employee’s outstanding unvested stock options which would have vested had he remained an employee of the Company until one year from the Effective Date of the Release based on the applicable vesting schedule (but without regard to any events subsequent to his termination of employment, such as a change of control of the Company) will be accelerated to the Effective Date of the Release subject to the condition that the Employee may not sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of any shares (or any interest in any shares) acquired upon the exercise of any such accelerated option until the date on which the option would otherwise have vested (but for this acceleration) pursuant to the original vesting schedule with respect to such option and all such options not exercised before the expiration of the post-termination exercise


 

  

period described in 1(c) shall expire. The Employee’s stock options which have not vested on or prior to the termination of his employment, and which do not become vested on his termination of employment pursuant to this paragraph, will be terminated upon his termination of employment.

 

 

2.

In consideration of the Company’s agreement to continue the employment of the Employee subject to the terms and conditions of this Agreement, the Employee releases and forever discharges the Company and each of its employees, officers, directors, shareholders, agents, predecessors and successors in interest, parents, subsidiaries, attorneys, and assigns (“Company-Affiliates”), from any and all claims, demands, obligations and/or liabilities which arise out of or relate to any action by the Company or the Company-Affiliates or omission to act by the Company or the Company-Affiliates occurring on or before the date this Agreement is signed by the Employee (the “Release”).

 

 

3.

The Release includes, but is not limited to, release of any and all claims arising out of the Employee’s employment with the Company and the termination of that employment. This includes a release of any rights or claims the Employee may have under the Age Discrimination in Employment Act, 29 U.S.C. §§621, et seq., (as amended by the Older Workers’ Benefit Protection Act, 29 U.S.C. §626(f)) which prohibits age discrimination in employment, Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§2000, et seq., which prohibits discrimination in employment based on race, color, national origin, religion, or sex, the Equal Pay Act, which prohibits paying men and women unequal pay for equal work, the Americans with Disabilities Act (42 U.S.C. §§12101, et seq.), which prohibits discrimination against the disabled, the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§1001, et seq., the California Fair Employment and Housing Act (“FEHA”), Government Code §§12940, et seq., the Fair Labor Standards Act, 29 U.S.C. §§201 et seq., (as amended), The California Labor Code, or any other federal, state or local laws or regulations relating to terms and conditions of employment. The Release also includes any claims for wrongful discharge, fraud, misrepresentation, intentional and negligent infliction of emotional distress, harassment, and any claims that the Company or any Company-Affiliate has dealt with the Employee unfairly or in bad faith.

 

 

4.

The Release extends to all claims of every nature and kind whatsoever, whether known or unknown, suspected or unsuspected. The Employee expressly waives the provisions of Section 1542 of the Civil Code which provides:

 

 

  

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

 

 

5.

The Employee promises never to file a lawsuit, claim, or charge with any court or government agency asserting any claims that are released by the Release.

 

 

6.

The Release does not waive any rights or claims that the Employee might have arising after the date the Employee signs this Agreement.


 

7.

The Employee promises and states that the Employee has not given or sold any claim discussed in this Agreement to anyone and that the Employee has not filed a lawsuit, claim, or charge with any court or government agency asserting any claims that are released by the Release.

 

 

8.

The Employee promises and agrees that he will not, except upon written authorization from the Company or as required by law, disclose any confidential or proprietary information belonging to or concerning the Company, and/or Company-Affiliates, vendors, or customers, including, without limitation, financial data, business and marketing plans, budgets, personnel information, product designs and specifications, research and development plans and budgets, technical drawings and specifications, manufacturing methods, technical know-how or other trade secrets. The Employee acknowledges and reaffirms in its entirety the Employee Innovations and Proprietary Rights Assignment Agreement dated October 8, 2003 executed upon commencement of his employment, a copy of which is attached to this Agreement. The Employee acknowledges that Employee is subject to the non-solicitation provisions contained in the Employee Innovations and Proprietary Rights Assignment Agreement.

 

 

9.

Employee agrees not to counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so. However, this Agreement recognizes the rights and responsibilities of the Equal Employment Opportunity Commission (“EEOC”) and the California Department of Fair Employment and Housing (“DFEH”) to enforce the statutes which come under their jurisdiction and is not intended to prevent Employee from participating in any investigation or proceeding conducted by the EEOC or the DFEH; provided, however, that nothing in this section limits or affects the finality or the scope of the Release provided herein.

 

 

10.

Employee agrees to refrain from any disparagement, defamation, libel or slander of the Company or Company-affiliates or tortious interference with the contracts and relationships of the Company; provided, however, that nothing in this Agreement shall prohibit the Employee from making any truthful statement regarding the Company in the course and scope of his employment, consulting or other business endeavors.

 

 

11.

This Agreement is to be governed by California law.

 

 

12.

Payments and benefits provided under this Agreement are taxable under the laws of the United States and the State of California and will be subject to all required withholdings and court ordered wage assignments and/or garnishments.

 

 

13.

If any portion of this Agreement is found to be unenforceable, then both the Employee and the Company desire that all other portions that can be separated from it or appropriately limited in scope shall remain fully valid and enforceable.

 

 

14.

Except as prohibited by law, any legal dispute between the Employee the Company (or


 

  

between the Employee and any Company-Affiliates, each of whom is hereby designated a third party beneficiary of this agreement regarding arbitration) arising out of the Employee’s employment or termination of employment or this Agreement (a “Dispute”) will be resolved through binding arbitration in Santa Clara County, under the Arbitration Rules set forth in California Code of Civil Procedure Section 1280 et seq., and pursuant to California law. THE PARTIES UNDERSTAND THAT BY AGREEING TO ARBITRATE DISPUTES THEY ARE WAIVING ANY RIGHT THEY MIGHT OTHERWISE HAVE TO A JURY TRIAL. This arbitration provision is not intended to modify or limit substantive rights or the remedies available to the parties, including the right to seek interim relief, such as injunction or attachment, through judicial process, which shall not be deemed a waiver of the right to demand and obtain arbitration.

 

 

15.

The statements, promises and agreements in this Agreement may not be contradicted by any prior understandings, agreements, promises or statements. The Employee states and promises that in signing this Agreement he has not relied on any statements or promises made by the Company, other than the promises contained in this Agreement. Any changes to this Agreement must be in writing and signed by both parties.

 

 

16.

If either party files any arbitration, lawsuit, claim, or charge based on, or in any way related to, the Employee’s employment with the Company, any claim that the Employee has released in the Release or the promises and agreements contained in this Agreement, the party that wins the lawsuit or arbitration or prevails on the claim or charge will be entitled to recover from the other party all costs it incurs, in connection with the dispute, including reasonable attorneys’ fees.

 

 

17.

Paragraphs 14 and 16 shall not apply if the Employee asserts a claim under the Age Discrimination in Employment Act, 29 U.S.C. §§621, et seq., (as amended by the Older Workers’ Benefit Protection Act, 29 U.S.C. §626(f)), even though such claim is barred by the Release given by the Employee in this Agreement. This Paragraph does not limit the completeness or finality of Release. It only limits the Company’s remedies in the event that the employee asserts certain claims barred by the Release.

 

 

18.

The Employee will continue as an at-will employee and either the Company or the Employee may terminate such employment, at any time, with or without cause, with no liability except as set forth herein; provided, however, that the Company may terminate the Employee’s employment prior to October 16, 2006, only for “Cause,” as defined in that certain offer letter dated March 14, 2003 between Employee and the Company (the “Offer Letter”). Notwithstanding any provision of this Agreement to the contrary, (i) if the Company terminates the Employee for Cause, whether before, on or after October 16, 2006, no severance benefits will be provided under this Agreement or the Offer Letter, and (ii) if the Employee terminates his employment prior to the Company’s appointment of a new CEO, no severance benefits will be provided under this Agreement, but the provisions of the Offer Letter will remain in effect. At such time as Employee shall cease to be an employee of the Company, Employee agrees to resign as a director of the Company and execute the Release Agreement attached hereto as Exhibit A within thirty (30) days of his termination of employment. The seventh day after Employee executes such Release Agreement, provided the Release Agreement has been executed within such thirty (30) day period and the Employee has not revoked such Release Agreement, shall be deemed to be the “Effective Date of the Release.”


 

19.

In signing this Agreement, the Employee intends to bind himself and his heirs, administrators, executors, personal representatives and assigns.

 

 

20.

Upon effectiveness of this Agreement the Offer Letter shall no longer be in effect, subject to the provisions of Section 18, and except for any rights the Employee may have under the Offer Letter with respect to the acceleration of vesting of stock options upon a change in control of the Company on or before his termination of employment.

 

 

21.

The Employee is advised to consult with an attorney before signing this Agreement. The Employee understands that the choice of whether or not to sign this Agreement is the Employee’s decision and that Employee has sought his own tax and legal advice and is not relying on the Company, its lawyers or accountants for any such advice. The Employee acknowledges that the Employee has been given at least 21 days to consider this Agreement before signing it.

 

 

22.

The Employee may revoke this Agreement within seven (7) days of signing it. Revocation can be made by sending a written notice of revocation to the Company. For such revocation to be effective, notice must be received no later than 5:00 p.m. on the seventh calendar day after the Employee signs this Agreement. If the Employee revokes this Agreement, it shall not become effective or enforceable and the Employee will not be entitled to receive the severance package described in this Agreement.

In order to bind the parties to this Agreement, the parties, or their duly authorized representatives have signed their names below.

 

 

 

 

 

 

 

 

PORTALPLAYER, INC.

 

 

 

GARY JOHNSON

 

 

 

 

By

 

/s/ Richard L. Sanquini                7/26/2006

 

 

 

/s/ Gary Johnson

 

 

 

 

 

 

 

 

 

 

7/27/2006

 

 

 

 

 

 

Date Signed By Employee


RELEASE AGREEMENT

This Release (“Release”) is made by and between Gary Johnson, an individual (the “Employee”) and PortalPlayer, Inc. (the “Company”), effective seven calendar days after the date this Release Agreement is signed by the Employee and not revoked (the “Release Effective Date”).

Recitals

Employee entered into that certain Separation Agreement as of July     , 2006 (the “Separation Agreement”). Employee agreed to execute this Release within thirty (30) days following his last day of employment with the Company in exchange for the severance set forth in Section 1 of the Separation Agreement.

Agreement

Based upon the information stated in the above Recital and the statements, promises and agreements contained below, the parties hereby agree as follows:

 

 

1.

The Employee releases and forever discharges the Company and each of its employees, officers, directors, shareholders, agents, predecessors and successors in interest, parents, subsidiaries, attorneys, and assigns (“Company-Affiliates”), from any and all claims, demands, obligations and/or liabilities which arise out of or relate to any action by the Company or the Company-Affiliates or omission to act by the Company or the Company-Affiliates occurring on or before the date this Agreement is signed by the Employee (the “Release”).

 

 

2.

The Release includes, but is not limited to, release of any and all claims arising out of the Employee’s employment with the Company and the termination of that employment. This includes a release of any rights or claims the Employee may have under the Age Discrimination in Employment Act, 29 U.S.C. §§621, et seq., (as amended by the Older Workers’ Benefit Protection Act, 29 U.S.C. §626(f)) which prohibits age discrimination in employment, Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§2000, et seq., which prohibits discrimination in employment based on race, color, national origin, religion, or sex, the Equal Pay Act, which prohibits paying men and women unequal pay for equal work, the Americans with Disabilities Act (42 U.S.C. §§12101, et seq.), which prohibits discrimination against the disabled, the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§1001, et seq., the California Fair Employment and Housing Act (“FEHA”), Government Code §§12940, et seq., the Fair Labor Standards Act, 29 U.S.C. §§201 et seq., (as amended), The California Labor Code, or any other federal, state or local laws or regulations relating to terms and conditions of employment. The Release also includes any claims for wrongful discharge, fraud, misrepresentation, intentional and negligent infliction of emotional distress, harassment, and any claims that the Company or any Company-Affiliate has dealt with the Employee unfairly or in bad faith.

 

 

3.

The Release extends to all claims of every nature and kind whatsoever, whether known or unknown, suspected or unsuspected. The Employee expressly waives the provisions of Section 1542 of the Civil Code which provides:

 

 

  

A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.


 

4.

The Employee promises never to file a lawsuit, claim, or charge with any court or government agency asserting any claims that are released by the Release.

 

 

5.

The Release does not waive any rights or claims that the Employee might have arising after the date the Employee signs this Agreement.

 

 

6.

The Employee acknowledges that his employment with the Company ceased on or before the date this Agreement is signed by Employee.

 

 

7.

The Employee promises and states that the Employee has not given or sold any claim discussed in this Agreement to anyone and that the Employee has not filed a lawsuit, claim, or charge with any court or government agency asserting any claims that are released by the Release.

 

 

8.

The Employee promises and states that he has returned to the Company all property belonging to the Company or authored by or concerning the Company (other than the Employee’s personal copies of his payroll and benefits records), including, but not limited to, keys and passes, credit cards, computer hardware and software, papers, manuals, records, drawings, and documents.

 

 

9.

The Employee promises and agrees that he will not, except upon written authorization from the Company or as required by law, disclose any confidential or proprietary information belonging to or concerning the Company, and/or Company-Affiliates, vendors, or customers, including, without limitation, financial data, business and marketing plans, budgets, personnel information, product designs and specifications, research and development plans and budgets, technical drawings and specifications, manufacturing methods, technical know-how or other trade secrets. The Employee acknowledges and reaffirms in its entirety the Employee Innovations and Proprietary Rights Assignment Agreement dated October 8, 2003, including his non-solicitation obligations thereunder, executed upon commencement of his employment, a copy of which is attached to this Agreement. The Employee acknowledges that Employee is subject to the non-solicitation provisions contained in the Employee Innovations and Proprietary Rights Assignment Agreement dated October 8, 2003.

 

 

10.

Employee agrees not to counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so. However, this Agreement recognizes the rights and responsibilities of the Equal Employment Opportunity Commission (“EEOC”) and the California Department of Fair Employment and Housing (“DFEH”) to enforce the statutes which


 

  

come under their jurisdiction and is not intended to prevent Employee from participating in any investigation or proceeding conducted by the EEOC or the DFEH; provided, however, that nothing in this section limits or affects the finality or the scope of the Release provided herein.

 

 

11.

Employee agrees to refrain from any disparagement, defamation, libel or slander of the Company or Company-affiliates or tortious interference with the contracts and relationships of the Company; provided, however, that nothing in this Agreement shall prohibit the Employee from making any truthful statement regarding the Company in the course and scope of his employment, consulting or other business endeavors.

 

 

12.

This Agreement is to be governed by California law.

 

 

13.

Payments and benefits provided under this Agreement are taxable under the laws of the United States and the State of California and will be subject to all required withholdings and court ordered wage assignments and/or garnishments.

 

 

14.

If any portion of this Agreement is found to be unenforceable, then both the Employee and the Company desire that all other portions that can be separated from it or appropriately limited in scope shall remain fully valid and enforceable.

 

 

15.

Except as prohibited by law, any legal dispute between the Employee the Company (or between the Employee and any Company-Affiliates, each of whom is hereby designated a third party beneficiary of this agreement regarding arbitration) arising out of the Employee’s employment or termination of employment or this Agreement (a “Dispute”) will be resolved through binding arbitration in Santa Clara County, under the Arbitration Rules set forth in California Code of Civil Procedure Section 1280 et seq., and pursuant to California law. THE PARTIES UNDERSTAND THAT BY AGREEING TO ARBITRATE DISPUTES THEY ARE WAIVING ANY RIGHT THEY MIGHT OTHERWISE HAVE TO A JURY TRIAL. This arbitration provision is not intended to modify or limit substantive rights or the remedies available to the parties, including the right to seek interim relief, such as injunction or attachment, through judicial process, which shall not be deemed a waiver of the right to demand and obtain arbitration.

 

 

16.

This Agreement is intended by the parties to be their final agreement. The statements, promises and agreements in this Agreement may not be contradicted by any prior understandings, agreements, promises or statements. The Employee states and promises that in signing this Agreement he has not relied on any statements or promises made by the Company, other than the promises contained in this Agreement. Any changes to this Agreement must be in writing and signed by both parties.

 

 

17.

If the Employee breaks any of the promises or agreements made in this Agreement, or if any of the representations or statements made by the Employee in this Agreement are discovered to be untrue, the Company may stop providing the severance benefits described in Section 1 of the Separation Agreement and the Employee will return to the company all severance payments which have been made up to that date. All of the other terms of this Agreement will remain in full force and effect.


 

18.

If either party files any arbitration, lawsuit, claim, or charge based on, or in any way related to, the Employee’s employment with the Company, any claim that the Employee has released in the Release or the promises and agreements contained in this Agreement, the party that wins the lawsuit or arbitration or prevails on the claim or charge will be entitled to recover from the other party all costs it incurs, in connection with the dispute, including reasonable attorneys’ fees.

 

 

19.

Paragraphs 15 and 18 shall not apply if the Employee asserts a claim under the Age Discrimination in Employment Act, 29 U.S.C. §§621, et seq., (as amended by the Older Workers’ Benefit Protection Act, 29 U.S.C. §626(f)), even though such claim is barred by the Release given by the Employee in this Agreement. This Paragraph does not limit the completeness or finality of Release. It only limits the Company’s remedies in the event that the employee asserts certain claims barred by the Release.

 

 

20.

In signing this Agreement, the Employee intends to bind himself and his heirs, administrators, executors, personal representatives and assigns.

 

 

21.

The Employee is advised to consult with an attorney before signing this Agreement. The Employee understands that the choice of whether or not to sign this Agreement is the Employee’s decision and that Employee has sought his own tax and legal advice and is not relying on the Company, its lawyers or accountants for any such advice. The Employee acknowledges that the Employee has been given at least 21 days to consider this Agreement before signing it.

 

 

22.

The Employee may revoke this Agreement within seven (7) days of signing it. Revocation can be made by sending a written notice of revocation to the Company. For such revocation to be effective, notice must be received no later than 5:00 p.m. on the seventh calendar day after the Employee signs this Agreement. If the Employee revokes this Agreement, it shall not become effective or enforceable and the Employee will not receive the severance package described in this Agreement.


In order to bind the parties to this Agreement, the parties, or their duly authorized representatives have signed their names below.

 

 

 

 

 

 

 

 

PORTALPLAYER, INC.

 

 

 

GARY JOHNSON

 

 

 

 

By

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Date Signed By Employee