GENERAL RELEASE AGREEMENT

 

This Settlement and Release Agreement (the “Agreement”) is entered into by and
between Jeffrey Klausner (hereinafter “Employee”) and Mandalay Digital Group,
Inc. (hereinafter the “Company”).

 

RECITALS

 

A. WHEREAS, Employee is currently employed by the Company in the position of
Chief Financial Officer pursuant to an employment agreement dated November 22,
2013 (the “Employment Agreement”);

 

B. WHEREAS, Employee seeks to voluntarily resign his position as Chief Financial
Officer of the Company, as a result of the planned relocation of the corporate
headquarters more than 60 miles from the current location;

 

C. WHEREAS, the Company has accepted Employee’s resignation as Chief Financial
Officer of the Company;

 

D. WHEREAS, this Agreement shall supersede any and all agreements entered into
between Employee and the Company in connection with Employee’s employment,
compensation, or stock vesting rights, including but not limited to: (i) the
Employment Agreement; (ii) the Notice of Stock Grant and Option Agreement, dated
November 22, 2013 (the “Option Agreement”); and (iii) the Mandalay Digital Group
Indemnification Agreement, dated November 22, 2013. This Agreement shall render
all such prior employment, compensation, and stock related agreements null and
void; and

 

E. WHEREAS, it is now the desire of the parties to compromise, settle, waive and
release all claims of whatever kind or description which Employee may have
against Releasees, as defined herein.

 

NOW, THEREFORE, in consideration of the recitals which are incorporated into
this Agreement and the mutual promises and covenants set forth herein, the
parties do hereby agree as follows:

 

AGREEMENT

 

                                             1.         Separation Date.
Employee’s last day of employment with the Company shall be July 15, 2014
(“Separation Date”). Employee shall not be required to report to work after July
1, 2014, and shall have no authority to act on behalf of the Company after such
date.

 

                                             2.         Separation Pay. The
Company agrees that, upon receipt by the Company of a duly executed original of
this Agreement, and after the expiration of the revocation period described
below, and provided that Employee provides his cooperation as discussed below,
the Company shall pay to Employee a separation amount equal to the gross amount
of nine (9) months of his current salary, i.e., Two Hundred Six Thousand, Two
Hundred Fifty Dollars ($206,250), less applicable payroll deductions (“the
Separation Pay”) in resolution of any claims Employee may have, and in
consideration of Employee’s agreements contained herein. The nine (9) months of
Separation Pay shall begin the eighth day after Employee signs this Agreement.
The Separation Pay will be payable in bimonthly installments consistent with the
Company’s regular payroll schedule, the first payment to be made on the first
payroll run immediately following the expiration of the revocation period
described below. Excepting only such compensation and benefits as may be due to
Employee pursuant to Paragraphs 2, 3, and 5, herein, Employee acknowledges
receipt of all compensation and benefits, including compensation for any accrued
but unused vacation time, due him through the Separation Date as a result of
services performed for the Company with the receipt of a final paycheck.

 

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                                             3.         Continuation of Group
Health Benefits. In addition, the Company agrees that, should Employee elect to
continue his group health benefits through COBRA, the Company will agree to pay
the costs of Employee’s COBRA premiums during a period of nine (9) months after
the Separation Date.

 

                                             4.         Reserved.

 

                                             5.         Vesting of Stock
Options. Employee shall receive acceleration of vesting of the options granted
under his Employment Agreement and Option Agreement, on a pro-rata basis, as if
the vesting schedule had been monthly rather than annual, advanced to July 31,
2014, (i.e., an aggregate of fifty thousand (50,000) options), exercisable at a
price of $2.54. The vested options shall remain subject to the terms of the
Company’s Amended and Restated 2011 Equity Incentive Plan and shall expire 180
days following the Separation Date.

 

                                             6.         Cooperation. Employee
agrees reasonably to cooperate with the Company, at reasonable times, with
respect to making himself available to provide information that pertains to
subject areas for which Employee had responsibility while employed by the
Company for a nine (9) month period after Employee’s execution of this
Agreement. The Company shall reimburse the Employee for any reasonable
out-of-pocket expenses incurred in connection with the Employee’s performance of
obligations pursuant to this Section 6, and if the Employee spends more than
four (4) hours in any calendar month in performance of these obligations, the
Company shall pay the Employee $500 per hour for each part of an hour over four
(4) hours in such calendar month.

 

                                             7.         No Admission of
Liability. This Agreement does not constitute an admission of any kind by the
Employee or the Company. Employee acknowledges that neither this Agreement nor
anything contained herein shall be admissible in any proceeding as evidence of
or an admission by the Company of any wrongdoing or violation of its policies
and procedures, or of any law or regulation. Notwithstanding the foregoing, this
Agreement may be introduced into a proceeding solely for the purpose of
enforcing this Agreement.

 

                                             8.         Release of Known and
Unknown Claims By Employee. In exchange for the agreements contained in this
Agreement, Employee and Company each agrees unconditionally and forever to
release and discharge the Employee, his heirs, and any beneficiary through his
family trust, or the Company and the Company’s affiliated, related, parent and
subsidiary corporations, as well as their respective attorneys, agents,
representatives, partners, joint venturers, investors, successors, assigns,
insurers, owners, employees, officers, and directors (hereinafter the
“Releasees”) from any and all claims, actions, causes of action, demands,
rights, or damages of any kind or nature which he may now have, or ever have,
whether known or unknown, including any claims, causes of action or demands of
any nature arising on or before the date of the execution of this Agreement.

 

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This release specifically includes, but is not limited to, any claims for fraud;
breach of contract; breach of implied covenant of good faith and fair dealing;
inducement of breach; interference with contract; wrongful or unlawful discharge
or demotion; violation of public policy; assault and battery (sexual or
otherwise); invasion of privacy; intentional or negligent infliction of
emotional distress; intentional or negligent misrepresentation; conspiracy;
failure to pay wages, benefits, vacation pay, severance pay, attorneys’ fees, or
other compensation of any sort; retaliation, discrimination or harassment on the
basis of age, race, color, sex, gender, national origin, ancestry, religion,
disability, handicap, medical condition, marital status, sexual orientation or
any other protected category; any claim under Title VII of the Civil Rights Act
of 1964, as amended, the Family and Medical Leave Act, the Americans with
Disabilities Act, the California Fair Employment and Housing Act, the California
Labor Code, or Section 1981 of Title 42 of the United States Code; violation of
COBRA; violation of any safety and health laws, statutes or regulations;
violation of ERISA; violation of the Internal Revenue Code; or any other
wrongful conduct, based upon events occurring prior to the date of execution of
this Agreement.

 

Employee further agrees knowingly to waive the provisions and protections of
Section 1542 of the California Civil Code, which reads:

 

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.

 

This release of claims shall be construed as broadly as possible under
applicable law but shall not include any claim the release of which would
violate California or federal statutory law or the public policy of the State of
California.

 

Nothing in this release of claims shall be construed as prohibiting Employee
from making a future claim with the Equal Employment Opportunity Commission or
any similar state agency including, but not limited to the California Department
of Fair Employment and Housing provided, however, that should Employee pursue
such an administrative action against the Releasees, Employee agrees and
acknowledges that he will not seek, nor shall he be entitled to recover, any
monetary damages from any such proceeding.

 

                                             9.         OWBPA/ADEA WAIVER AND
NOTICE:

 

(a)                Employee, in consideration of the Separation Pay, agrees and
acknowledges that this Agreement constitutes a knowing and voluntary waiver and
release of all rights or claims Employee has or may have against the Company
and/or any of the Releasees as set forth herein, including, but not limited to,
all rights or claims arising under the Age Discrimination in Employment Act of
1967, as amended (“ADEA”), including, but not limited to, all claims of age
discrimination in employment and all claims of retaliation in violation of the
ADEA.

 

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(b)               Employee has read the terms of this Agreement, and Employee
understands its terms and effects, including the fact that Employee agreed to
release and forever discharge the Company and each of the Releasees from any
claims released in Paragraph 8 above.

 

(c)                Employee understands that, by entering into this Agreement,
Employee does not waive rights or claims that may arise after the date of
Employee’s execution of this Agreement, including without limitation any rights
or claims that Employee may have to secure enforcement of the terms and
conditions of this Agreement.

 

(d)               Employee has signed this Agreement voluntarily and knowingly
in exchange for the consideration described in this Agreement, which Employee
acknowledges is adequate and satisfactory to Employee and which Employee
acknowledges is in addition to any other benefits to which Employee is otherwise
entitled;

 

(e)                The Company advises Employee to consult with an attorney
prior to executing this Agreement.

 

(f)                Employee acknowledges that Employee was informed that
Employee has a full twenty one (21) days in which to review and consider this
Agreement. To the extent that Employee chooses to sign this Agreement in less
than twenty-one (21) days, Employee acknowledges that Employee had sufficient
time to consider the Agreement and to consult with counsel and that Employee
does not desire additional time.

 

(g)               Employee may revoke this Agreement within seven (7) days from
the date Employee signs this Agreement, in which case this Agreement will be
null and void and of no force or effect on either the Company or Employee. Any
revocation must be in writing and sent to Robert H. Platt, via email at
rplatt@manatt.com, on or before the close of business on the seventh day after
this Agreement is executed by Employee.

 

                                           10.       Knowing and Voluntary.
Employee represents and agrees that he is entering into this Agreement knowingly
and voluntarily. Employee affirms that no promise or inducement was made to
cause him to enter into this Agreement, other than the Separation Pay promised
to Employee herein. Employee further confirms that he has not relied upon any
other statement or representation by anyone other than what is in this Agreement
as a basis for his agreement.

 

                                           11.       Non-disparagement. The
parties hereto agree not to criticize, ridicule or disparage the other or the
Company’s current or former directors, officers, employees and/or methods or
manner of conducting business, to any person and/or entity, including but not
limited to the public, the media and/or members of the community. The Company
agrees that, if the Company receives any requests for references regarding
Employee, such inquires shall be directed to the Board of Directors or anybody
else designated by the Board of Directors in writing. In response to any
inquiries regarding Employee’s departure, the Parties agree that the Company
state no more than that Employee resigned rather than relocate due to a planned
headquarters relocation, the dates of his employment with the Company and his
title/office at the Company. The Company’s directors, officers and consultants
are likewise bound by these provisions and are prohibited from saying or doing
anything to criticize, ridicule or disparage the Employee; provided however, no
such directors, officers or consultants have personal liability to Employee for
the Company’s covenants in this paragraph, and the Company’s responsibilities in
this paragraph are limited to statements or actions by the Company or by its
officers or its directors or consultants. Notwithstanding the foregoing, it
shall not be a breach of this paragraph to give truthful testimony, responses to
subpoenas or sworn statements before a court of law or arbitrator, or as
required to a government regulator or Nasdaq, on any subject even if it would
otherwise have been prohibited hereby.

 

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                                           12.       Reserved.

 

                                           13.       Taxes/Withholdings. All
payments and consideration given under this Agreement are subject to any
applicable employment or tax withholdings or deductions. In addition, the
parties hereby agree that it is their intention that all payments or benefits
provided under this Agreement comply with Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) and this Agreement shall be interpreted
accordingly. Employee hereby is advised to seek independent advice from
Employee’s tax advisor(s) with respect to the application of Section 409A of the
Code to any payments under this Agreement. Notwithstanding the foregoing, the
Company does not guarantee the tax treatment of any payments or benefits under
this Agreement, including without limitation under the Code, federal, state or
local laws. The parties confirm and acknowledge that Employee shall have the
right to remit all taxes due on option shares and/or restricted stock held by
Employee as a result of lapse of repurchase rights prior to the date of this
Agreement and as result of this Agreement, at Employee’s option either in cash
or in kind by delivery of common stock of the Company. The Company will timely
remit to applicable taxing authorities all withholding taxes or other taxes it
is required by law to remit in connection with the option shares and/or
restricted stock held by Employee.

 

                                           14.       Governing Law And Binding
Arbitration. This Agreement shall be construed under the laws of the State of
California, both procedural and substantive. Any and all disputes or claims
arising out of or in any way related to this Agreement, including, without
limitation, fraud in the inducement of this Agreement, or relating to the
general validity or enforceability of this Agreement, shall be submitted to
final and binding arbitration before an arbitrator of JAMS in the city or county
in which the Employee was last employed by the Company in accordance with the
rules of that body governing employment disputes, and the prevailing party shall
be entitled to reasonable costs and attorney’s fees. Judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. If any portion of this Agreement is found to be illegal or
unenforceable, such action shall not affect the validity or enforceability of
the remaining paragraphs or subparagraphs of this Agreement.

 

                                           15.       Waiver. The failure to
enforce any provision of this Agreement shall not be construed to be a waiver of
such provision or to affect the validity of this Agreement or the right of any
party to enforce this Agreement.

 

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                                           16.       Modification. No amendments
to this Agreement will be valid unless written and signed by Employee and an
authorized representative of the Company.

 

                                           17.       Severability. If any
sentence, phrase, paragraph, subparagraph or portion of this Agreement is found
to be illegal or unenforceable, such action shall not affect the validity or
enforceability of the remaining sentences, phrases, paragraphs, subparagraphs or
portions of this Agreement.

 

                                           18.       Ambiguities. Both parties
have participated in the negotiation of this Agreement and, thus, it is
understood and agreed that the general rule that ambiguities are to be construed
against the drafter shall not apply to this Agreement. In the event that any
language of this Agreement is found to be ambiguous, each party shall have an
opportunity to present evidence as to the actual intent of the parties with
respect to any such ambiguous language.

 

                                           19.       Entire
Agreement/Integration. This Agreement and any confidentiality, proprietary
information, or inventions agreements signed by Employee during his employment
with the Company (all of which survive the termination of the employment
relationship) constitute the entire agreement between Employee and the Company
concerning the terms of Employee’s employment with and separation from the
Company and the compensation related thereto. No covenants, agreements,
representations, or warranties of any kind have been made to any party hereto.
All prior discussions and negotiations have been and are merged and integrated
into, and are superseded by, this Agreement.

 

 

PLEASE READ CAREFULLY. THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND
UNKNOWN CLAIMS. THE UNDERSIGNED AGREE TO THE TERMS OF THIS AGREEMENT AND
VOLUNTARILY ENTER INTO IT WITH THE INTENT TO BE BOUND THEREBY.

 

Dated: July 8, 2014     By: /s/ Jeffrey Klausner             Dated: July 8, 2014
    By: /s/ Jeffrey Karish   Chair   Compensation Committee, Mandalay Digital
Group, Inc.

 

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