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Scott Hessler Separation Agreement

This is an actual contract by WEI Holdings.

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Sectors: Specialty Retail
Effective Date: April 28, 1994
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This Agreement and Mutual General Release ("this Agreement") is entered into between Scott Hessler ("Mr. Hessler") and Where- house Entertainment, Inc. ("WEI").

WHEREAS, Mr. Hessler and WEI have been parties to that certain Employment Agreement between them ("Employment Agree- ment"); and

WHEREAS, Mr. Hessler and WEI seek to terminate the employ- ment relationship between them;

THEREFORE, it is hereby agreed that:

1. Mr. Hessler's Employment Agreement remained in effect through January 31, 1994, and he remained employed under that Employment through that date. Beginning February 1, 1994, WEI will pay Mr. Hessler twelve full months of his final base salary, payable in installments on WEI's regular paydates. Mr. Hessler hereby acknowledges that he has already received the installment payments from February 1, 1994 through the date of his signature on this Agreement.

2. WEI will pay Mr. Hessler an additional $25,000, payable in installments over a twelve-month period, on WEI's regular paydates, beginning February 1, 1994.

3. WEI will continue Mr. Hessler's current medical insurance coverage, including Execucare, at WEI's expense, for a six-month period, beginning February 1, 1994. Mr. Hessler's normal ability to exercise options under the Comprehensive Omnibus Budget Reconciliation Act ("COBRA") will come into effect on the termination of his current medical insurance coverage.

4. For a three-month period beginning February 1, 1994, at WEI's expense, WEI will arrange to provide Mr. Hessler continued benefits under the WEI group life insurance plan in existence as of February 1, 1994 (subject to the limitations described in Mr. Hessler's Employment Agreement).

5. WEI will assign to Mr. Hessler, without charge, any life insurance policy now owned by WEI which insures his life (subject to limitations described in Mr. Hessler's Employment Agreement).

6. The benefits described in Paragraphs 1 through 5, above, are subject to the limitation that if Mr. Hessler becomes employed, otherwise earns income, or becomes covered under a group medical plan, between February 1, 1994 and January 31, 1995, the amount of income that he earns, and any benefits that he is entitled to, will be offset against the benefits described in paragraphs 1 through 5. For example, if Mr. Hessler becomes newly employed and receives a salary of $200,000 per year, the payment schedule described in Paragraph 1, above, will be changed so that Mr. Hessler will receive a bi-weekly sum that equates to the rate of $65,000 per year. Similarly, if Mr. Hessler becomes covered under a group medical plan before July 31, 1994, coverage at WEI's expense under the WEI medical plans will stop; if Mr. Hessler has problems getting coverage during this period for "pre-existing conditions", WEI will consider in good faith the possibility of continuing WEI coverage through July 31, 1994 for the "pre-existing condition". Mr. Hessler agrees that he will inform WEI as soon as he is earning income or is covered under group medical or life insurance.

7. a. Mr. Hessler agrees to sell all of his shares of WEI common stock and incentive options and vested performance options to WEI as of January 31, 1994. Mr. Hessler agrees to accept a gross sale price of $44.00 per share for all shares of his WEI common stock, (1) minus a personal loan (with accrued interest thereon) of $25,000 made to Mr. Hessler by WEI for the purpose of acquiring a portion of this equity, which personal loan of $25,000 (with accrued interest thereon) shall thereby be paid by WEI to itself in full payment of such loan, and (2) minus a personal loan (with accrued interest thereon), if any) of $25,000 made to Mr. Hessler by Scott Young for the purpose of acquiring a portion of this equity, which personal loan of $25,000 shall be paid by WEI directly to Scott Young in full payment of such loan. WEI shall make one payment without interest for such common stock on or before May 15, 1994.

b. WEI shall pay Mr. Hessler a grossed up amount which shall be sufficient after withholding of applicable taxes to allow him to pay the interest due on the loan from WEI described in Section 7(a) above.

8. In consideration of the pro
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