Sample Business Contracts

Severance Agreement - Inc. and Thomas Spiegel

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                                  MP3.COM, INC.
                               4790 EASTGATE MALL
                               SAN DIEGO, CA 92121

March 9, 2000

Thomas Spiegel
9465 Wilshire Blvd., Suite 900
Beverly Hills, CA 90212

Dear Tom:

This letter sets forth the terms and conditions of our agreement (the
"Agreement") regarding your resignation of employment with MP3.COM, INC. (the
"Company") and the consulting services you have agreed to provide to the
Company, effective as of the Effective Date provided in Section 16 herein. You
and the Company hereby agree as follows:

1. RESIGNATION. The Company accepts your resignation as an employee of the
Company as of March 9, 2000 (the "Separation Date").

2. ACCRUED SALARY AND VACATION. You agree and acknowledge that the Company has
paid you all accrued salary, and all accrued and unused vacation benefits earned
through the Separation Date, if any, subject to standard payroll deductions,
withholding taxes and other obligations.

3. EXPENSE REIMBURSEMENT. Within thirty (30) days of your execution of this
Agreement, you agree that you will submit your final documented expense
reimbursement statement reflecting all business expenses you incurred prior to
and including the Separation Date, if any, for which you seek reimbursement. The
Company shall reimburse your expenses pursuant to Company policy and regular
business practice.

4. COMPANY EQUIPMENT AND PERSONAL EFFECTS. The Company agrees that upon the
Effective Date, you may take ownership of the Company owned IBM laptop computer
and related accessories currently in your possession. The Company further agrees
that you may remove from the Company's offices any furniture or other personal
effects that have been paid for by you personally and not reimbursed by the

5. INSURANCE BENEFITS. 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 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. You
will be provided with a separate notice of your COBRA rights.


        (a) You and the Company acknowledge and agree that, pursuant to the
terms of your Early Exercise Stock Purchase Agreement dated May 3, 1999
("Initial Stock Purchase Agreement") for the purchase of an aggregate of 450,000
shares of the Common Stock of the

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Company (adjusted to reflect the Company's 3 for 2 stock split), the term and
vesting of such Common Stock will continue in accordance with the terms and
conditions of the Consulting Agreement attached hereto as Exhibit B and
referenced below in Section 8 hereof. It is understood and agreed for purposes
of this Section 6(a) that your transition from an employee to a consultant under
this Agreement is not intended to be an interruption of your continuous service
within the meaning of the Nonstatutory Stock Option Agreement attached as
Exhibit A to the Consulting Agreement attached hereto as Exhibit B.

        (b) You and the Company acknowledge and agree that, pursuant to the
terms of your Early Exercise Stock Purchase Agreement dated July 7, 1999 ("Stock
Purchase Agreement") for the purchase of an aggregate of 900,000 shares of the
Common Stock of the Company (adjusted to reflect the Company's 3 for 2 stock
split), the term and vesting of 300,000 shares of such Common Stock shall
continue beyond the Separation Date pro-rata on a monthly basis during the
Consulting Period such that all 300,000 shares of Common Stock are vested at the
end of the Consulting Period, subject to the provisions of Section 8(f) herein.
This Common Stock will otherwise remain subject to the terms and conditions of
the Stock Purchase Agreement, a copy of which is attached hereto as Exhibit A.
You understand and agree that the remaining 600,000 shares of Common Stock under
the Stock Purchase Agreement will be repurchased by the Company pursuant to its
repurchase right under the Stock Purchase Agreement on the Effective Date of
this Agreement.

7. OTHER COMPENSATION AND BENEFITS. Except as expressly provided herein, you
acknowledge and agree that you are not entitled to and will not receive any
additional compensation, severance, stock options, stock or benefits from the
Company. You agree and understand that, except as expressly provided herein, all
vesting under any stock compensation award (e.g., incentive stock option,
nonqualified stock option, stock purchase agreement, or restricted stock bonus
agreement) from the Company shall cease upon the Separation Date. Except as
expressly provided herein, any and all rights that you may have in the Company's
Employee Stock Purchase Plan or Equity Incentive Plan are determined in
accordance with the provisions of the applicable plan and any agreements signed
by you.

8. CONSULTING. In exchange for the promises and covenants set forth herein, you
and the Company agree that you shall continue to serve as a consultant pursuant
to the existing Consulting Agreement attached hereto as Exhibit B until April
20, 2000 and thereafter continue as a consultant through December 31, 2000 (the
"Consulting Period") pursuant to the terms herein.

        (a) CONSULTING SERVICES. During the Consulting Period, you shall be
available at reasonable times and upon reasonable notice to consult with the
Company in any area of your expertise, as requested by the Company's CEO or

        (b) NO AGENCY OR EMPLOYMENT RELATIONSHIP. During the Consulting Period,
you will not be considered an agent or an employee of the Company; you will not
have authority to make any representation, contract, or commitment on behalf of
the Company and you agree not to do so; and you will not be entitled to any of
the benefits which the Company may make available to its employees, such as
group insurance, profit sharing, or retirement benefits.

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        (c) TAXES. During the Consulting Period, you will be solely responsible
for all tax returns and payments to any federal, state, or local tax authority
with respect to your performance of services and the receipt of fees or other
compensation and benefits under this Agreement. The Company will report amounts
paid to you by filing Form 1099-MISC with the Internal Revenue Service as
required by law. The Company will not: make withholdings or deductions from your
payment checks; make contributions for Social Security, employment insurance or
disability insurance; or obtain workers' compensation insurance on your behalf.
During the Consulting Period, you shall comply with all applicable state and
federal laws governing self-employed individuals, including obligations such as
payment of taxes, Social Security, disability and other contributions based on
compensation and benefits paid to you under this Agreement. You hereby indemnify
the Company against any and all such taxes or contributions, including penalties
and interest.

        (d) OTHER WORK ACTIVITIES. During the Consulting Period, you may engage
in full-time employment, consulting or other work relationships in addition to
your work for the Company; provided that, you do not violate the provisions of
Section 9 hereof. The Company agrees to make reasonable arrangements to enable
you to perform your consulting services for the Company at such times and in
such a manner so that it does not unreasonably interfere with other work
activities in which you may engage.

        (e) CONSULTING PAYMENT. The Company agrees to pay you an aggregate
amount of three hundred eighty thousand dollars ($380,000) in equal monthly
installments during the Consulting Period.

        (f) TERMINATION BY THE COMPANY. In the event that your consulting
relationship is terminated by the Company for "Cause" (as defined below) prior
to the end of the Consulting Period, you will not be entitled to the payments or
benefits described in Section 6(b) or this Section 8. For purposes of this
Agreement, "Cause" shall mean any of the following: (1) your conviction of any
crime involving moral turpitude or dishonesty, (2) your participation in a fraud
or act of dishonesty against the Company, (3) conduct by you that, based upon a
good faith factual investigation and determination by the Board, demonstrates
your gross unfitness to serve the Company, (4) your intentional, material
violation of any contract with the Company or any statutory duty to the Company
that is not corrected within thirty (30) days after written notice thereof, (5)
any gross negligence or wanton and willful misconduct by you relating to the
subject matter of this Agreement and your rendition of services to and for the
benefit of the Company hereunder, or (6) your material breach of Sections 9, 12
or 13 of this Agreement.

9. NONCOMPETITION AND NONSOLICITATION. You agree that during the Consulting

        (a) you shall not engage or prepare to engage, directly or indirectly,
whether as an owner, employee, officer, director, agent, consultant or
otherwise, in the geographic area of the United States, in a business the same
as or directly or indirectly competitive with any business conducted, or to your
knowledge planned as of the date hereof to be conducted, by the Company,
provided, however, that the ownership of five percent (5%) or less of the stock
of a company whose shares are listed on a national securities exchange or are
quoted on the National

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Association of Securities Dealers Automated Quotation System shall not be deemed
ownership or having an interest which is prohibited hereunder;

        (b) you shall not solicit any business from any customer of the Company
for products or services competitive with those of the Company, or request,
induce or advise customers of the Company to withdraw, curtail or cancel their
business with the Company; and

        (c) you shall not, either directly or through others, solicit any
employee, consultant, or independent contractor of the Company to terminate his
or her relationship with the Company in order to become an employee, consultant
or independent contractor to or for any other person or entity.

10. NO FURTHER EMPLOYMENT WITH THE COMPANY. You understand and agree that, as a
condition of this Agreement, you shall not be entitled to any employment or
re-employment with the Company, its parents, subsidiaries, or affiliates; you
hereby waive any right, or alleged right, of employment or re-employment with
the Company and any of its parents or subsidiaries, and you agree that you will
not apply for any such employment without prior written consent from the
Company, which consent may be withheld for any reason or no reason, and if you
inadvertently apply for or receive any such employment, you shall immediately
withdraw such application or resign such employment upon receipt of notice

11. RETURN OF COMPANY PROPERTY. Within one month of the Separation Date, and
except as otherwise provided herein, you shall 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, notebooks, memoranda, correspondence drawings, books and records, plans
and forecasts, financial information, personnel information, sales and marketing
information, research and development information, specifications,
computer-recorded information, tangible property (including, but not limited to,
and Company information maintained in electronic form), 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).

continuing obligations to comply with your Proprietary Information and
Inventions Agreement, a copy of which is attached hereto as Exhibit C. You
further agree that the terms of the Proprietary Information and Inventions
Agreement will continue in full force and effect during the Consulting Period.

13. NONDISPARAGEMENT. You and the Company agree that neither party will at any
time disparage the other party, and the other party's officers, directors,
employees, shareholders and agents, in any manner likely to be harmful to them
or their business, business reputation or personal reputation; provided that
each party shall respond accurately and fully to any questions, inquiry or
request for information when required by legal process.

14. CONFIDENTIALITY. The provisions of this Agreement shall be held in strictest
confidence by you and the Company and shall not be publicized or disclosed in
any manner whatsoever; provided, however, that: (a) you may disclose this
Agreement, in confidence, to

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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

15. RELEASE OF CLAIMS. In exchange for the promises and covenants set forth
herein, you hereby release, acquit, and forever discharge the Company, its
parents and subsidiaries, and their officers, directors, agents, servants,
employees, attorneys, shareholders, partners, successors, assigns, affiliates,
customers, and clients of and from any and all claims liabilities, demands,
causes of action, costs, expenses, attorneys' fees, damages, indemnities and
obligations of every kind and nature, in law, equity, or otherwise, known and
unknown, suspected and unsuspected, disclosed and undisclosed, arising out of or
in any way related to agreements, acts or conduct at any time prior to the
Effective Date, including, but not limited to: all such claims and demands
directly or indirectly arising out of or in any way connected with your
employment with the Company, the termination of that employment, and the
Company's performance of its obligations as your former employer; claims or
demands related to salary, bonuses, commissions, stock, stock options, or any
other ownership interests in the Company, vacation pay, fringe benefits, expense
reimbursements, severance pay, or any form of compensation; claims pursuant to
any federal, state or local law or cause of action including, but not limited
to, the California Fair Employment and Housing Act, the federal Civil Rights Act
of 1964, as amended; the federal Age Discrimination in Employment Act of 1967
("ADEA"), as amended; the federal Americans With Disabilities Act; tort law;
contract law; wrongful discharge; discrimination; harassment; fraud; defamation;
emotional distress; and breach of the implied covenant of good faith and fair
dealing. Notwithstanding the above, you do not release any claims you may have
(i) under this Agreement, or (ii) for indemnification pursuant to and in
accordance with applicable statutes and the applicable terms of the certificate
of incorporation or bylaws of the Company or under any indemnification
agreements, and any insurance coverage for such claims.

16. ADEA WAIVER. You further acknowledge that you are knowingly and voluntarily
waiving and releasing any rights you may have under ADEA. You also acknowledge
that the consideration given for the waiver and release to which you are
agreeing herein is in addition to anything of value to which you were already
entitled. You acknowledge that you are advised by this writing, as required by
the Older Workers Benefit Protection Act, that: (a) your waiver and release do
not apply to any rights or claims that may arise after the Effective Date of
this release; (b) you should consult with an attorney prior to executing this
release (although you may voluntarily choose not to do so); (c) you may have at
least twenty-one (21) days to consider this Agreement (although you may by your
own choice execute this release earlier); (d) you have seven (7) days following
the execution of this release to revoke your release of ADEA claims; and (e)
this Agreement shall not be effective until the date upon which the revocation
period has expired, therefore making the effective date the eighth day after
this release is signed by you (the "Effective Date").

17. SECTION 1542 WAIVER. In giving the releases herein, which includes claims
which may be unknown to you at present, you hereby acknowledge that you have
read and understand Section 1542 of the Civil Code of the State of California
which reads as follows:

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You hereby expressly waive and relinquish all rights and benefits under this
section and any law or legal principle of similar effect in any jurisdiction
with respect to claims released hereby.

18. NO ADMISSIONS. The parties hereto hereby acknowledge that this is a
compromise settlement of various matters, and it shall not be construed to be an
admission of any liability or obligation by either party to the other party or
to any other person whomsoever.

19. ARBITRATION. To ensure rapid and economical resolution of any disputes which
may arise under this Agreement, you and the Company agree that any and all
disputes or controversies of any nature whatsoever, arising from or regarding
the interpretation, performance, enforcement or breach of this Agreement shall
be resolved by confidential, final and binding arbitration (rather than trial by
jury or court or resolution in some other forum). Any arbitration proceeding
pursuant to this Agreement shall be conducted by American Arbitration
Association ("AAA") in San Diego, California, under the then-existing AAA rules
for Commercial Disputes. If a party brings an action under this Agreement and is
the prevailing party in the arbitration proceeding, such party shall be entitled
to recover from the other party reasonable attorneys' fees, arbitration expenses
and other recoverable costs incurred in connection with such arbitration

20. ENTIRE AGREEMENT. This Agreement, including all exhibits, constitutes the
complete, final and exclusive embodiment of the entire Agreement between you and
the Company with regard to the subject matter hereof. This Agreement is entered
into without reliance on any promise or representation, written or oral, other
than those expressly contained herein, and supercedes any such promises or
representations. This Agreement may not be modified except in a writing signed
by you and a duly authorized officer of the Company. Each party has carefully
read this Agreement, has been afforded the opportunity to be advised of its
meaning and consequences by his or its respective attorneys, and signed the same
of his or its free will.

21. SUCCESSORS AND ASSIGNS. This Agreement shall bind the heirs, personal
representatives, successors, assigns, executors, and administrators of each
party, and inures to the benefit of each party, its agents, directors, officers,
employees, servants, heirs, successors and assigns.

22. APPLICABLE LAW. This Agreement shall be deemed to have been entered into and
shall be construed and enforced in accordance with the laws of the State of
California as applied to contracts made and to be performed entirely within

23. SEVERABILITY. If a court, arbitrator, or other authority of competent
jurisdiction determines that any term or provision of this Agreement is invalid
or unenforceable, in whole or in part, then the remaining terms and provisions
hereof shall be unimpaired, and the invalid or unenforceable term or provision
shall be replaced with a valid and enforceable term or provision that most
accurately represents the parties' intention with respect to the invalid or
unenforceable term or provision.

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24. AUTHORITY. You warrant and represent that there are no liens or claims of
lien or assignments in law or equity or otherwise of or against any of the
claims or causes of action released herein and that you are duly authorized to
give the release granted herein.

25. COUNTERPARTS. This Agreement may be executed in two counterparts, each of
which shall be deemed an original, all of which together shall constitute one
and the same instrument.

26. SECTION HEADINGS. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

Please confirm your agreement to the foregoing terms and conditions by signing
and returning a copy of this letter to me on or before March 30, 2000.



Paul Ouyang
Chief Financial Officer and
Executive Vice-President

Exhibit A - Early Exercise Stock Purchase Agreement
Exhibit B - Consulting Agreement
Exhibit C - Proprietary Information and Inventions Agreement


/s/ THOMAS SPIEGEL                                 Dated:  3/9/00
--------------------------------------------             -----------------------

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                                    EXHIBIT A

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                                    EXHIBIT B
                              CONSULTING AGREEMENT

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                                    EXHIBIT C