Separation Agreement
EXECUTION
COPY
This
Separation Agreement (this “Agreement”)
is
made as of this 15th day
of
August, 2008 by and between NexCen Brands, Inc. (the “Company”)
and
Xxxxxx X. X’Xxxxx (“Executive,”
and
together with the Company, the “Parties”).
WHEREAS,
Executive has been employed by the Company under terms set forth in that certain
Employment Agreement dated June 6, 2006, by and between the Company and
Executive (the “Employment
Agreement”);
WHEREAS,
Executive desires to voluntarily resign as a director, an officer and employee
of the Company (the “Separation”)
effective as of August 15, 2008 (the “Separation
Date”);
WHEREAS,
the Parties’ rights and obligations with respect to certain incentive equity
interests in the Company held by Executive are set forth in the Employment
Agreement, the Company’s 1999 Equity Incentive Plan (the “Plan”),
that
certain Stock Option Agreement dated June 6, 2006, by and between the Company
and Executive (the “Option
Agreement”),
and
that certain Stock Purchase Warrant dated June 6, 2006, by and between the
Company and Executive (the “Warrant
Agreement,”
and
with the Option Agreement, collectively, the “Incentive
Equity Agreements”);
and
WHEREAS,
the Parties desire to enter into this Agreement in order to set forth the
definitive rights and obligations of the Parties in connection with the
Separation.
NOW,
THEREFORE, in consideration of the mutual covenants, commitments and agreements
contained herein, and for other good and valuable consideration the receipt
and
sufficiency of which is hereby acknowledged, the Parties intending to be legally
bound hereby agree as follows:
1. Acknowledgment
of Separation.
The
Company hereby accepts Executive’s voluntary resignation as a director, an
officer and employee of the Company as of the Separation Date, and from any
and
all other offices which he holds at the Company or any of the Company’s
subsidiaries as of the Separation Date and as a fiduciary of any benefit plan
of
the Company as of the Separation Date. The
Company expressly waives its right to 90 days written notice of such voluntary
resignation by the Executive pursuant to Section 1.4(a) of the Employment
Agreement.
2. Resignation
of Office.
Effective as of the Separation Date, Executive hereby voluntarily resigns his
position as a director, an officer, and employee of the Company, and from any
and all other offices which he holds
at
the Company or any of the Company’s subsidiaries or affiliates and as a
fiduciary of any benefit plan of the Company or its subsidiaries. Executive
hereby waives any grounds that would constitute resignation for “Good Reason”
(as defined in Section 2.1 of the Employment Agreement). Executive hereby
relinquishes his proxy to act as the designated proxy holder pursuant to any
voting agreement under which Executive is currently named as the designated
proxy holder (excluding any shares owned directly by him or for which he is
the
beneficial owner) and designates any authorized officer as the board of
directors of the Company may appoint in his stead without further action.
Executive acknowledges that he will have no authority or right to vote or act
by
written consent any shares covered by such voting agreements.
3. Press
Release.
The
Company and Executive agree that the Company shall issue a press release
substantially in the form attached hereto as Exhibit A promptly following the
execution of this Agreement.
4. Payments
Upon and After the Separation; Other Benefits.
(a) Final
Payment.
On the
next regular payroll date following the Separation Date, Executive shall receive
a lump sum payment of $13,415.69, which is equal to (i) final wages (including
any salary amounts temporarily deferred by Executive, any accrued unused
vacation pay, and any other employment compensation (totaling
$173,557.03)
owned
for services performed for the Company (the “Wage
Payment”)
plus
(ii) expense reimbursement and other credits due and owing to Executive
(totaling
$86,759.53),
less
(iii) $172,058.36
(the
“Net
Executive Reimbursement”),
which
shall be final adjustment and settlement of credits and debits between the
Executive and the Company without necessarily the Executive’s agreement on the
substance thereof;
provided, however, that the Executive acknowledges that the Wage Payment
has
been
adjusted for
applicable federal, state and local tax withholdings before being reduced by
the
Net Executive Reimbursements. Executive represents and warrants that he has
cancelled all accounts used by Executive or any Company employees for the
conduct of Company business. The Company represents and warrants that it has
instructed Company employees to cease using Executive’s accounts and credit
cards for Company business, and has taken commercially reasonable steps to
end
all charges previously being applied to Executive’s accounts. Executive
acknowledges that he is not entitled to any wages or reimbursement other than
as
set forth above.
(b) No
Severance Benefits.
Executive
hereby acknowledges that as a result of his voluntary resignation, he is not
entitled to (i) Severance Payments, pursuant to Section 1.4(b) of the Employment
Agreement, (ii) severance under any other severance plan program or arrangement
of the Company or (iii) any Benefits (as defined in Section 1.3(g) of the
Employment Agreement) after the Termination Date,
except
as set forth in Section 1.4 (g) of the Employment Agreement or as provided
herein.
(c) Stock
Options and Warrants.
The
Parties agree that as of the Separation Date Executive has 1,724,649 vested
options and warrants. Pursuant to the terms of the Incentive Equity Agreements,
vested options and warrants will remain exercisable for 90 days following the
Separation Date. Except for the foregoing, all unvested options and warrants
granted previously to Executive prior to the Separation Date shall be forfeited
immediately.
(d) Medical
Continuation; COBRA and COBRA Premium Payments.
Executive shall be entitled to continue to participate in the Company’s group
medical plan(s) on the same basis as he previously participated for a one-year
period following the Separation Date; provided that if Executive becomes
eligible for health insurance coverage from another employer, any such coverage
by the Company shall cease (the “Medical
Continuation Period”).
Executive shall be required promptly to notify the Company of his eligibility
for health insurance coverage from another employer. Upon termination of the
Medical Continuation Period, as required by the continuation coverage provisions
of Section 4980B of the U. S. Internal Revenue Code of 1986, as amended
(“the
Code”),
Executive shall be offered the opportunity to elect continuation coverage,
at
his sole expense, under the group medical plan(s) of the Company (“COBRA
coverage”).
The
Company shall provide Executive with the appropriate COBRA coverage notice
and
election form for this purpose. The existence and duration of Executive’s rights
and/or the COBRA rights of any of Executive’s eligible dependents shall be
determined in accordance with Section 4980B of the Code.
2
(e) Key
Man Insurance.
The
Company hereby agrees to cancel any “key man” or similar life insurance policy
with respect to Executive of which the Company or any of its subsidiaries is
the
beneficiary, effective as of the Separation Date.
5. Confidential
Information; Inventions and Patents; Return of Corporate Property;
Non-Competition and Non-Solicitation; Enforcement.
Executive expressly acknowledges and reaffirms his understanding of and
obligations under Sections 1.6, 1.7, 1.8, 1.9 and 1.10 of the Employment
Agreement and that such provisions will survive and continue in full force
in
accordance with their terms notwithstanding Executive’s resignation.
Notwithstanding the foregoing, the Parties agree that the Noncompete Period
and
Nonsolicitation Period (each as defined in Section 2.1 of the Employment
Agreement, respectively) shall each be reduced to six (6) months. The Company
acknowledges and affirms that, except as expressly set forth herein, there
are
no other contractual or similar restrictions on Executive’s post-employment
activities. In the event of Executive’s material breach of his obligations under
this provision, the length of the Noncompete Period and/or Nonsolicitation
Period shall be increased by the amount of time during which Executive was
in
breach.
6. Property. The
Company expressly acknowledges that the personal effects located and identified
as such on Exhibit B is the property of Executive and the Parties agree that
such property and Executive’s other personal possessions and personal papers
shall be removed by, or at the direction of, Executive within seven (7) days
following the Separation Date. The Parties acknowledge that the automobile
set
forth on Exhibit C is owned by Executive. Following the Separation Date,
Executive expressly agrees to pay, discharge and perform when due all of the
obligations related to such automobile and to indemnify and hold the Company
harmless from any obligations or liabilities in respect of such automobile
thereafter. The Parties acknowledge that certain computer equipment and
ancillary devices owned by the Company and set forth on Exhibit B will be
purchased from the Company by Executive and that such costs is included in
the
Net Executive Reimbursement amount owed by Executive pursuant to Section 4(a)
of
this Agreement.
7. No
Disparaging Remarks. Executive
hereby covenants to the Company and agrees that he will
not,
directly or indirectly, make or solicit or encourage others to make or
solicit
(publicly or that reasonably could be expected to become publicly
known)
any
disparaging remarks concerning the Company, its subsidiaries, any current or
former officers, directors, employees, or any of its products, services,
businesses or activities. None of the Company, its subsidiaries or their
respective executive officers or directors
(but
only for so long as they are employed by or otherwise serving the Company or
its
subsidiaries) will, directly or indirectly, make or solicit or encourage others
to make or solicit
(publicly or that reasonably could be expected to become publicly
known)
any
disparaging remarks concerning Executive. Notwithstanding anything to the
contrary contained herein, nothing in this Agreement shall prohibit or restrict
any person from providing statements or information that such person believes
in
good faith to be necessary or advisable in connection with (i) any legal
proceeding or any
investigation
conducted by or at the behest of the Company, any governmental or
quasi-governmental authority or any third parties
(ii)
compliance
with any legal
or
regulatory obligations
or (iii)
statements believed in good faith to be truthful that are made or provided
in
order to rebut or clarify statements made about such party.
3
8. Assistance,
Cooperation, Future Litigation. Executive
agrees that for a period of six (6) months following the Separation Date, upon
request by the Company, Executive shall reasonably cooperate with the Company
in
connection with any matters Executive worked on during his employment with
the
Company and any related transitional matters. In addition, from the Separation
Date and thereafter, Executive agrees to reasonably cooperate with the Company
in the investigation or defense of any claims, actions, litigations,
arbitrations, investigations, audits or proceedings, whether initiated by any
governmental authority, private party or the Company, that may be made by or
against the Company that affect Executive’s prior areas of responsibility or
involve matters about which Executive has knowledge, except if Executive’s
reasonable interests are adverse to the Company in such matter, and provided
that such level of cooperation shall be reasonable and shall take due account
of
Executive’s work and personal commitments. The Company agrees to promptly
reimburse Executive for all of Executive’s reasonable travel and other direct
expenses incurred, or to be reasonably incurred, to comply with Executive’s
obligations under this Section
8.
9. Indemnification.
Company
expressly acknowledges and affirms its obligations
as to indemnification,
advancement of legal fees and directors and officer liability
insurance
to
Executive, as and
to
the
extent
set
forth in (i)
Section 1.3(i) of the Employment Agreement, (ii) the Company’s Certificate of
Incorporation, as amended (“Articles”),
(iii)
the
Company’s Amended and Restated By-laws (“By-laws”)
and
(iii) any
voting or registration agreements to which the Company entered into in
connection with acquisitions, or (iv) at law.
Such
obligations will survive and continue in full force and effect in accordance
with their terms notwithstanding Executive’s resignation. Advancement
of expenses pursuant to such letters will be made pursuant to the Company’s
Articles and By-laws, subject to Executive’s obligations to repay the Company
under certain circumstances.
10. Governmental
Filings.
The
Company and Executive each acknowledge and agree that the Company expects it
will be required to disclose in a Current Report on Form 8-K and other filings
with the Securities Exchange Commission the material terms of this Agreement
and
attaching as an exhibit to such filings a copy of this Agreement (including
the
press release), and they each hereby consent to such filings and
disclosures.
11. Complete
Agreement; Inconsistencies.
This
Agreement, the Plan, the Incentive Equity Agreements (to the extent awards
are
vested as of the date hereof) and the Employment Agreement (solely to the extent
provisions thereof are incorporated herein), constitute the complete and entire
agreement and understanding of the Parties with respect to the subject matter
hereof, and supersedes in its entirety any and all prior understandings,
commitments, obligations and/or agreements, whether written or oral, with
respect thereto; it being understood and agreed that this Agreement and
including the mutual covenants, agreements, acknowledgments and affirmations
contained herein, is intended to constitute a complete settlement and resolution
of all matters set forth in this Agreement. For clarity and not by way of
limitation, nothing herein shall impact in any manner the Executive’s equity
interests in the Company (other than the incentive equity interests as
specifically provided herein) or the Registration Rights Agreement dated June
6,
2006; provided that Executive for himself and his affiliates, heirs, successors,
and assigns agree that the Blackout Period (as defined in such agreement) shall
be extended until such time that all filings required to be made by the Company
are current. The Parties acknowledge that the Employment Period (as defined
in
Section 1.1 of the Employment Agreement) is hereby terminated as of the
Separation Date. In the event of any conflict or inconsistencies between the
terms of this Agreement and the Plan, the Incentive Equity Agreements and the
Employment Agreement, the terms of this Agreement shall govern.
4
12. No
Strict Construction.
The
language used in this Agreement shall be deemed to be the language mutually
chosen by the Parties to reflect their mutual intent, and no doctrine of strict
construction shall be applied against any Party.
13. No
Third Party Beneficiaries.
This
Agreement is not intended for the benefit of any person other than the Parties,
and no such other person shall be deemed to be a third party beneficiary hereof.
Without limiting the generality of the foregoing, it is not the intention of
the
Company to establish any policy, procedure, course of dealing or plan of general
application for the benefit of or otherwise in respect of any other employee,
officer, director or stockholder, irrespective of any similarity between any
contract, agreement, commitment or understanding between the Company and such
other employee, officer, director or stockholder, on the one hand, and any
contract, agreement, commitment or understanding between the Company and
Executive, on the other hand, and irrespective of any similarity in facts or
circumstances involving such other employee, officer, director or stockholder,
on the one hand, and Executive, on the other hand.
14. Tax
Withholdings.
Notwithstanding any other provision herein, the Company shall be entitled to
withhold from any amounts otherwise payable hereunder to Executive any amounts
required to be withheld in respect of federal, state or local
taxes.
15. Notices.
All
notices, consents, waivers and other communications required or permitted by
this Agreement shall be in writing and shall be deemed given to a Party when:
(a) delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile or e-mail
with
confirmation of transmission by the transmitting equipment; or (c) three (3)
days following mailing by certified or registered mail, postage prepaid and
return receipt requested, in each case to the following addresses, facsimile
numbers or e-mail addresses and marked to the attention of the Party (by name
or
title) designated below (or to such other address, facsimile number, e-mail
address or person as a Party may designate by notice to the other
Parties):
5
If
to the
Company:
0000
Xxxxxx xx xxx Xxxxxxxx
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn: Xxx
Xxx, General Counsel
Ph:
(000) 000-0000
Fax:
(000) 000-0000
With
a
mandatory copy to:
Xxxxxxxx
& Xxxxx LLP
000
Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx,
XX 00000
Attn: Xxxx
Director, Esq.
Ph:
(000) 000-0000
Fax:
(000) 000-0000
If
to
Executive:
Xxxxxx
X.
X’Xxxxx
c/o
Xxxxxxxxx Xxxx, LLP
0000
Xxxxxxxx
XXX,
XX
00000
Attn:
Xxxxxxx X. Xxxxxx
16. Governing
Law.
All
issues and questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to
any
choice of law or conflict of law rules or provisions that would cause the
application hereto of the laws of any jurisdiction other than the State of
New
York. In furtherance of the foregoing, the internal law of the State of New
York
shall control the interpretation and construction of this Agreement, even though
under any other jurisdiction’s choice of law or conflict of law analysis the
substantive law of some other jurisdiction may ordinarily apply.
17. Severability.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall otherwise remain in full force and effect.
18. Counterparts.
This
Agreement may be executed in separate counterparts, each of which shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
19. Successors
and Assigns.
The
Parties’ obligations hereunder shall be binding upon their successors and
assigns. The Parties’ rights shall inure to the benefit of, and be enforceable
by, any of the Parties’ respective successors and assigns. The Company may and
shall assign all rights and obligations of this Agreement to any successor
in
interest to the assets of the Company, and such successor in interest shall
promptly deliver to Executive a written assumption of the obligations hereunder.
In the event that the Company is dissolved, all obligations of the Company
under
this Agreement shall be provided for in accordance with applicable
law.
6
20. Amendments
and Waivers.
Except
with respect to any non-competition or similar post-employment restrictions,
which shall be subject to modification by a court of competent jurisdiction
pursuant to their express terms (as may be modified herein), no amendment to
or
waiver of this Agreement or any of its terms shall be binding upon any Party
unless consented to in writing by such Party.
21. Headings.
The
headings of the Sections and subsections hereof are for purposes of convenience
only, and shall not be deemed to amend, modify, expand, limit or in any way
affect the meaning of any of the provisions hereof.
22. Disputes.
Except
as set forth in this paragraph or with regard to any rights of indemnification,
advancement of legal fees or directors and officers liability insurance; any
dispute, claim or difference arising out of this Agreement will be settled
exclusively by binding arbitration in accordance with the rules of JAMS. The
arbitration will be held New York City unless Executive and the Company mutually
agree otherwise. Nothing contained in this Section
22
will be
construed to limit or preclude a Party from bringing any action in any court
of
competent jurisdiction for injunctive or other provisional relief to compel
another party to comply with its obligations under this Agreement or any other
agreement between or among the Parties during the pendency of the arbitration
proceedings. Each Party shall bear its own costs and fees of the arbitration,
and the fees and expenses of the arbitrator will be borne equally by the Parties
unless the arbitrator determines that any Party has acted in bad faith, in
which
event the arbitrator shall have the discretion to require any one or more of
the
Parties to bear all or any portion of fees and expenses of the Parties and/or
the fees and expenses of the arbitrator; provided, however, that with respect
to
claims that, but for this mandatory arbitration clause, could be brought against
the Company under any applicable federal or state labor or employment law
(“Employment
Law”),
the
arbitrator shall be granted and shall be required to exercise all discretion
belonging to a court of competent jurisdiction under such Employment Law to
decide the dispute, whether such discretion relates to the provision of
discovery, the award of any remedies or penalties, or otherwise. As to claims
not relating to Employment Laws, the arbitrator shall have the authority to
award any remedy or relief that a Court of the State of New York could order
or
grant. The decision and award of the arbitrator shall be in writing and copies
thereof shall be delivered to each Party. The decision and award of the
arbitrator shall be binding on all Parties. In rendering such decision and
award, the arbitrator shall not add to, subtract from or otherwise modify the
provisions of this Agreement. Either Party to the arbitration may seek to have
the ruling of the arbitrator entered in any court having jurisdiction thereof.
Each Party agrees that it will not file suit, motion, petition or otherwise
commence any legal action or proceeding for any matter which is required to
be
submitted to arbitration as contemplated herein except in connection with the
enforcement of an award rendered by an arbitrator and except to seek the
issuance of an injunction or temporary restraining order pending a final
determination by the arbitrator or as otherwise excepted above. Upon the entry
of any order dismissing or staying any action or proceeding filed contrary
to
the preceding sentence, the Party which filed such action or proceeding shall
promptly pay to the other Party the reasonable attorney’s fees, costs and
expenses incurred by such other Party prior to the entry of such order. All
aspects of the arbitration shall be considered confidential and shall not be
disseminated by any Party with the exception of the ability and opportunity
to
prosecute its claim or assert its defense to any such claim. The arbitrator
shall, upon request, issue all prescriptive orders as may be required to enforce
and maintain this covenant of confidentiality during the course of the
arbitration and after the conclusion of same so that the result and underlying
data, information, materials and other evidence are forever withheld from public
dissemination with the exception of its subpoena by a court of competent
jurisdiction in an unrelated proceeding brought by a third party.
Section
3.12 of the Employment Agreement shall be of no further force or
effect.
7
23. EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
LITIGATION, ACTION, PROCEEDING, CROSS-CLAIM, OR COUNTERCLAIM IN ANY COURT
(WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF, RELATING TO
OR
IN CONNECTION WITH (i) THIS AGREEMENT OR THE VALIDITY, PERFORMANCE,
INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF OR (ii) THE ACTIONS OF SUCH
PARTY IN THE NEGOTIATION, AUTHORIZATION, EXECUTION, DELIVERY, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF.
*
* * *
*
8
IN
WITNESS WHEREOF, the Parties have executed this Agreement effective as of the
date of the first signature affixed below or as otherwise provided in this
Agreement.
DATED:
August 15, 2008
|
By:
|
/s/
Xxxxxx X. X’Xxxxx
|
|
Xxxxxx
X. X’Xxxxx
|
DATED:
August 15, 2008
|
||
By:
|
/s/
Xxxxxxx X. Xxxx
|
|
Name:
|
Xxxxxxx
X. Xxxx
|
|
Title:
|
Chief
Financial Officer
|
Exhibit
A - Press Release
NexCen
Brands Announces
Resignation
of CEO Xxxxxx X. X’Xxxxx
Xxxxxxx
X. Xxxx Appointed CEO
NEW
YORK –
August [_], 2008 –
NexCen
Brands, Inc. (NASDAQ: NEXC), today announced that Xxxxxx X. X’Xxxxx has resigned
as Chief Executive Officer and President and as a member of the Company’s Board
of Directors, effective August 15, 2008. Xxxxxxx X. Xxxx, currently Executive
Vice President, Chief Financial Officer and Treasurer,
has
been appointed Chief Executive Officer.
“We
are
pleased to have Xxx take on the role of CEO,” stated Xxxxx X. Xxxx, Chairman of
NexCen Brands. “We are confident in his ability to lead NexCen as the Company
works to complete a restructuring of its financing arrangements and continues
to
execute the business restructuring plan initiated in May, which focuses on
our
franchising business.”
Xx.
Xxxx
is a seasoned executive with more than 25 years of cross-functional operating,
strategic and financial leadership experience for public and private companies
across a variety of industries. As an executive of middle-market global
companies with revenues up to $1 billion, his experience has spanned all core
operations and market sectors. He has held executive leadership positions with
NYSE and NASDAQ-listed companies as well as private companies, including Global
DirectMail, Icon CMT Corp., the National Football League, and Mercator Software,
where he helped lead its financial turnaround following a financial restatement
and SEC investigation. Prior to joining NexCen, Xx. Xxxx most recently served
as
Chief Financial Officer and Treasurer of Seevast Corp, a leading online-media
holding company comprised of ad networks, Pulse 360 and Kanoodle, as well as
a
domain asset management company, Moniker, for which Xx. Xxxx led a successful
sale process.
Xx.
Xxxx
holds a B.S. in Finance from Lehigh University and a M.B.A. from Golden Gate
University. He is a member of the National Association of Corporate Directors.
The
Company plans to commence a search for a new Chief Financial
Officer.
Exhibit
B
Personal
Effects:
Dog
Theme
Lamp
Polo
Lamp
All
art
and photos in office
Xxxx
Xxxxx and Xxxxx Xxx Photo
Couch
and
pillows
5
chairs
Desk
and
desk chair
Computer
table
Coffee
table
(1)
lamp
end table
(2)
garbage cans (ledger books)
Trolley
(shelf unit)
Umbrella
stand
Xxxxx
carpet
Super
Bowl art
Computer
Equipment and Ancillary Devices:
(2)
Laptop Computers
(1)
Blackberry
Exhibit
C - Automobile
2008
Black Chevrolet Van
VIN
Number: 0XXXX00X000000000