EXHIBIT 10.1
SEPARATION AGREEMENT AND MUTUAL RELEASE
This Separation Agreement and Mutual Release (this "AGREEMENT"), dated
as of October 5, 2007, is entered into by and between People's Liberation, Inc.,
a Delaware corporation (the "COMPANY" or "PARTY"), and Xxxxxx Xxxx, an
individual ("EXECUTIVE" or "PARTY") (collectively "the Parties").
RECITALS
A. The Company and Executive entered into that certain Amended
and Restated Employment Agreement, dated June 19, 2007 (the "EMPLOYMENT
AGREEMENT"), that certain Confidentiality and Non-Disclosure Agreement, dated
January 12, 2007 (the "EMPLOYEE NDA"), and that certain Indemnification
Agreement, dated January 5, 2006 (the "INDEMNIFICATION AGREEMENT"), pursuant to
which the Company retained Executive, as more fully described therein.
B. Executive resigned his employment with the Company and each of
its subsidiaries and affiliates effective October 2, 2007. The Company accepted
Executive's resignation, and the Parties now wish to resolve any and all
remaining issues between them.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
1. RESIGNATION; TERMINATION OF EMPLOYMENT AGREEMENT.
Notwithstanding anything to the contrary which may be contained in the
Employment Agreement, the Parties hereby acknowledge and agree that, effective
as of the date of this Agreement:
1.1 Executive resigned his employment with the Company
and each of its subsidiaries in all capacities, including, without limitation,
his position as Creative Director of the Company, any position he holds with
Versatile Entertainment, Inc., a California corporation, and his position as
Manager of each of Xxxxx Xxxx, LLC, a California limited liability company,
Xxxxxxx Xxxx Sourcing, LLC, a Delaware limited liability company, and Xxxxxxx
Xxxx Licensing, LLC, a Delaware limited liability company effective October 2,
2007.
1.2 The Company has accepted the resignation. The
Employment Agreement is terminated and of no further force or effect. Except as
expressly provided herein, all responsibilities, duties and obligations of
Executive to the Company and of the Company to Executive under the Employment
Agreement shall be terminated and of no further force or effect. Notwithstanding
the foregoing, Executive will still continue to serve in his current capacity on
the Board of Directors of the Company.
2. TERMINATION PAYMENTS. As full and complete consideration for
the covenants hereunder, the Company shall pay Executive the following amounts:
2.1 For the period from the date hereof through and
including December 31, 2007, an amount in cash of $50,000, which amount is equal
to the Base Salary (as defined in the Employment Agreement) that would have been
paid to Executive during such period in accordance with the Employment Agreement
if Executive remained employed with the Company during such period. Such amount
shall be paid to Executive in semi-monthly payments of $8,333 on the Company's
regularly scheduled pay days for the months of October, November and December
2007.
2.2 An automobile allowance of $3,600, of which $1,200
shall be payable on each of October 15, 2007, November 15, 2007 and December 15,
2007.
2.3 For the period from the date hereof through and
including the first anniversary of the date hereof, Company shall continue to
provide Executive and Executive's eligible family members with group health
insurance coverage at least equal to that which would have been provided to them
if Executive's employment had not been terminated (or at Company's election, pay
the applicable COBRA premium for such coverage); provided, however, that if
Executive becomes re-employed with another employer and is eligible to receive
group health insurance coverage under another employer's plans, Company's
obligations under this Section shall terminate and any such coverage shall be
reported by Executive to Company.
2.4 Executive acknowledges and agrees that Executive has
four weeks of accrued but unused vacation days pursuant to the Company's
vacation policy as of the date hereof equal to the total gross amount of
$16,666. Such vacation pay shall be paid to Executive on execution of this
Agreement. Notwithstanding anything to the contrary which may be contained in
the Employment Agreement, Executive acknowledges that the payments set forth in
this SECTION 2 fully satisfy all obligations of the Company to Executive under
the Employment Agreement (whether attributable to salary, bonus payments,
vacation pay, automobile allowance, expenses or other amounts). Notwithstanding
the foregoing, the Company agrees that it shall continue to be obligated to
repay all balances on Company credit cards incurred by Executive to the extent
such amounts represent expenses incurred on behalf of the Company. The Company
will reimburse all such business expenses no later than November 15, 2007 and
such expenses shall include Executive's cell phone xxxx through October 15, 2007
2.5 Company shall allow Executive to transfer his current
cell phone number to a personal cell phone account and will assist Executive
with this process.
3. NO DISPARAGEMENT. Neither Party shall make any statement or
allegation to any third party, nor make any public announcement, press release
or broad-tape release, public speech or permit press interviews, which expressly
or impliedly indicates that the other Party breached or defaulted under any
obligation or commitment to it, or which might reasonably have the effect of
disparaging such other Party or injuring or harming the personal or business
reputation of the other party.
4. EMPLOYEE NDA AND INDEMNIFICATION AGREEMENT. The parties each
acknowledge and agree that the Employee NDA and Indemnification Agreement shall
survive execution of this Agreement. By their signatures below, the Parties
acknowledge and agree that nothing contained in the Employee NDA is intended to
prevent Executive from entering into or becoming employed by a business which is
in competition with the Company and that Executive is free to engage in such
competition. The parties further acknowledge that nothing contained in the
Employee NDA shall limit Executive from soliciting or otherwise conducting
business with any contract vendor or supplier of the Company including without
limitation, sewers, embroiders, silkscreeners, laundries, fabric vendors and
international distributors.
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5. MUTUAL RELEASE.
5.1 EXECUTIVE'S RELEASE. Subject to SECTION 5.3,
Executive, for himself and on behalf of his successors, assigns, agents,
attorneys, representatives, heirs, executors and administrators (collectively,
the "EXECUTIVE PARTIES" and individually, an "EXECUTIVE PARTY"), hereby releases
and forever discharges and agrees to hold harmless the Company and its
successors, assigns, officers, directors, shareholders, employees, affiliates,
subsidiaries, parent corporations, agents, attorneys and representatives, past
and present (collectively, the "COMPANY PARTIES" and individually, a "COMPANY
PARTY") from any and all demands, claims, duties, actions, obligations or causes
of action, assessments, losses, damages, liabilities, costs and expenses
(including attorneys' fees) of any kind, nature or description, whether known or
unknown, suspected or unsuspected, fixed or contingent (collectively, the
"RELEASED CLAIMS"), that Executive or any Executive Party currently has or
possesses, or had prior to the date of this Agreement or at any time may have
the Company and/or against one or more Company Parties, arising out of, based
upon or in any way related to (i) any employment agreement or the Employment
Agreement or any other contracts, express or implied, any covenant of good faith
and fair dealing, express or implied, any theory of wrongful discharge,
negligence, negligent or intentional infliction of emotional distress, negligent
or intentional interference with contract or prospective economic advantage,
negligent or intentional misrepresentation, conspiracy, defamation (including
libel and slander), invasion of privacy, fraud, quantum meruit, failure to pay
compensation of any kind, failure to pay equal compensation for equal work or
any legal restriction on the Company's right to terminate employees; (ii)
Executive's employment with the Company or the cessation thereof, any claims for
wages, compensation of any kind, automobile allowance, vacation pay, severance
pay, bonuses or damages of any kind whatsoever, including without limitation all
claims for or under, among other things, Title VII of the Civil Rights Act of
1964, as amended (42 U.S.C. sections 2000e, ET SEQ.), the Fair Labor Standards
Act, including the Equal Pay Act (29 U.S.C. section 206(d) and interpretive
regulations), the Employment Retirement Income Security Act of 1974 (29 U.S.C.
sections 100, ET seq.), the Family and Medical Leave Act (29 U.S.C. sections
2601, ET SEQ. and 29 C.F.R. Part 825), the Americans with Disabilities Act (42
U.S.C. sections 12101, ET SEQ.), the Age Discrimination in Employment Act,
including the Older Worker Benefits Protection Act (29 U.S.C. sections 623, et
seq.), the Worker Adjustment and Retraining Notification Act (29 U.S.C. sections
2101, ET SEQ.), the California Fair Employment and Housing Act (California
Government Code sections 12940, ET SEQ.), the California Family Rights Act
(California Government Code section 12945.2), the California Labor Code
(expressly including Sections 203, 206, 218.5 and the Equal Pay Act, Section
1197.5), the United States and California Constitutions, and any other federal
or state law, whether statutory or common law; (iii) all matters arising out of
any common law or federal, state, local or other governmental statute,
regulation, ordinance or wage order, including any federal, state or local law
(statutory or decisional) or regulation relating to employment, employment
discrimination or harassment; or (iv) arising out of any principle of contract
law or common law.
5.2 THE COMPANY'S RELEASE. Subject to SECTION 5.3, the
Company, for itself and on behalf of the Company Parties, hereby releases and
forever discharges and agrees to hold harmless Executive and each of the
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Executive Parties from any and all Released Claims that the Company or any
Company Party currently has or possesses, or had prior to the date of this
Agreement or at any time may have against Executive and/or one or more Executive
Parties, arising out of, based upon or in any way related to the Employment
Agreement, the Employee NDA or Executive's employment with the Company, or any
other matter of any nature whatsoever.
5.3 CLAIMS NOT RELEASED. The releases set forth in this
SECTION 5 shall not (i) release obligations incurred pursuant to this Agreement;
(ii) release claims in connection with events occurring after the date hereof
(including without limitation, for any breach of the Employee NDA or any claims
by Executive for indemnification under the Indemnification Agreement); (iii)
release Company from its obligations under California Labor Code ss. 2802; (iv)
preclude any Party hereto from enforcing its rights and remedies hereunder; or
(v) release any right of Executive to any vested benefit under any Company
benefit plan.
5.4 RELEASE OF UNKNOWN CLAIMS. Executive, for himself and
on behalf of the Executive Parties, and the Company, for itself and on behalf of
the Company Parties (collectively, the "RELEASING PARTIES") intend to waive and
release all rights the Releasing Parties may have under Section 1542 of the
California Civil Code, which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT NOW 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."
The Releasing Parties hereby waive the provisions of Section 1542 of the
California Civil Code and any other similar law of any other jurisdiction and
acknowledge that this waiver is an essential and material term of this
Agreement. Executive and Company further acknowledge that his/its counsel has
advised him/it as to the effect of the foregoing waiver.
5.5 PARTIES' ACKNOWLEDGEMENT. Each Party knowingly and
voluntarily, of his/its own free will without any duress, being fully informed
and after due deliberation, accepts the terms of this Agreement, including
without limitation, the releases set forth in this SECTION 5, and signs the same
as his/its own free act. Executive understands that as a result of executing
this Agreement, Executive will not have the right to assert that the Company
unlawfully terminated his employment or violated any of his rights.
5.6 THIRD PARTIES BOUND. Each Party hereto shall cause
each of its successors, assigns, agents, attorneys, representatives, heirs,
executors, administrators, officers, directors, shareholders, employees,
affiliates, subsidiaries, parent corporations, attorneys and representatives, as
the case may be, to be bound by this Agreement to the extent that it has the
power to do so.
6. EFFECTIVE DATE. Executive may take up to twenty-one (21) days
to consider this Agreement. This Agreement shall be come effective upon
Executive's execution of this Agreement.
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7. MUTUAL REPRESENTATIONS AND WARRANTIES. Each of the Company and
Executive (each, a "REPRESENTING PARTY") represents and warrants to the other
that:
7.1 The Representing Party has all necessary power and
authority to enter into this Agreement and has taken all action necessary to
consummate the transactions contemplated hereby and to perform each of their
respective obligations hereunder.
7.2 The Representing Party has duly executed and
delivered this Agreement, and this Agreement is a legal, valid and binding
obligation of the Representing Party, enforceable against the Representing Party
in accordance with its terms.
7.3 None of the execution, delivery or performance of
this Agreement, the consummation of the transactions contemplated hereby, nor
compliance by such Representing Party with any of the provisions hereof, will
violate or conflict with any agreement by which the Representing Party is bound,
and that no notices to, declaration, filing or registration with, approvals or
consents of, or assignments by, any persons or entities are necessary to be made
or obtained by the Representing Party in connection with the execution, delivery
or performance of this Agreement.
7.4 The Representing Party has not assigned or
transferred, in whole or in part, or purported to assign or transfer any claim
or portion of claim against the other party hereto which is covered by this
Agreement which it may now have or claim to have, of whatever kind or nature,
either in its representative or in its individual capacities, to any other
person or entity in any manner including, without limitation, assignment or
transfer by subrogation or by operation of law.
8. COMPANY SECURITIES.
8.1 LOCK-UP. As additional consideration for the Company
agreeing to its obligations under this Agreement, from the date hereof until
November 30, 2007, without the prior written consent of the Company, Executive
agrees not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any shares of the Company's common stock,
par value $0.001 per share ("COMMON STOCK"), or other securities of the Company
beneficially owned (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended) by
Executive ("EXECUTIVE SHARES"). Each Holder agrees that the Company may instruct
its transfer agent to place stop transfer notations in its records to enforce
the provisions of this SECTION 8.1.
8.2 FIRST REFUSAL ON PUBLIC SALES. Executive hereby
grants to the Company a right of first refusal with respect to any proposed
Public Sale by Executive of any Executive Shares. For purposes hereof, a Public
Sale shall mean a sale by Executive of Executive Shares in the open market on
the over-the-counter bulletin board (or other exchange or automated quotation
system on which the Common Stock is then traded) in a "broker's transaction"
within the meaning of Rule 144 of the General Rules and Regulations promulgated
under the Securities Act of 1933. Executive shall give the Company's Chief
Executive Officer notice of Executive's desire to sell shares in a Public Sale
(the "SHAREHOLDER NOTICE"), which notice shall set forth the number of Executive
Shares proposed to be sold (the "OFFERED SHARES") and the minimum price at which
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Executive proposes to sell the Offered Shares (the "OFFER PRICE"). Such
Shareholder Notice shall constitute an irrevocable offer to sell the Offered
Shares to the Company at the Offer Price, and the Company (or any party to whom
the Company transfers its rights under this SECTION 8.2) shall have the right to
purchase the Offered Shares at the Offer Price. If the Company does not conclude
the purchase transaction (including the exchange of funds) for the Offered
Shares within five (5) business days following the Company's receipt of the
Shareholder Notice, Executive shall have the right to sell the Offered Shares in
a Public Sale at a price per share equal to or greater than the Offer Price set
forth in the Shareholder Notice at any time during the 30 day period following
the expiration of such five (5) business day period.
8.3 PRIVATE SALES. The right of first refusal provisions
of Section 8.2 shall not apply to any sale or other transfer by Executive of
Executive Shares to a third party in a bona fide transaction that does not
constitute a Public Sale, and otherwise which is not a scheme to circumvent the
Company's rights under SECTION 8.2 (e.g., a transfer to a third party that
engaged in a Public Sale for the ultimate benefit of Executive). For purposes of
clarity, Executive may sell or otherwise transfer Executive Shares in a
negotiated sale to one or more purchasers whose identity is known to Executive
at the time of the transaction.
8.4 TERMINATION. The Company's rights under Section 8.2
shall terminate and expire on the earlier of (i) January 31, 2008, and (ii) the
date when the Executive Shares represent less than 10% of the Common Stock then
issued and outstanding.
9. MISCELLANEOUS PROVISIONS.
9.1 SEVERABILITY. The Parties hereto agree that if any
term, provision, covenant or condition of this Agreement is found to be invalid,
illegal or unenforceable, then the parties hereto shall renegotiate such term,
provision, covenant or condition in good faith to effectuate its/their purpose
and to conform the provision(s) to applicable law to make such term valid, legal
and enforceable, or if such term, provision, covenant or condition may not be
amended or modified so as to become valid, legal and enforceable, then such
term, provision, covenant or condition shall be deemed excised from this
Agreement, and the remaining terms and conditions hereof shall remain in full
force and effect and shall in no way be impaired or invalidated thereby.
9.2 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement
shall inure to the benefit of, and shall be binding upon, the successors, heirs,
and assigns of the parties hereto. This Agreement may not be assigned by either
party hereto without the prior written consent of the other; PROVIDED, that the
Company and the Company Parties may assign this Agreement in whole or in part to
any person or entity which succeeds to all or a portion of such person's or
entity's rights (whereupon such assignor and assignee shall both benefit from
this Agreement); and the Company may assign its rights under SECTION 8.2 to any
other party.
9.3 THIRD PARTY BENEFICIARIES. The parties hereto
expressly agree that the Executive Parties and the Company Parties shall be
third-party beneficiaries of this Agreement.
9.4 ARBITRATION. In the event of a disagreement or
dispute between the Company and Executive related to this Agreement, the matter
will be finally settled in Los Angeles County, California, by expedited
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arbitration by a single arbitrator in a proceeding conducted under the expedited
rules of the American Arbitration Association or any similar successor body, the
arbitrator also apportioning the costs of the arbitration, including the fees of
the arbitrator. The arbitrator shall be selected by the Company and Executive
each providing the other with a list of five (5) proposed arbitrators within
five (5) business days of notice of arbitration and if one or more arbitrators
appears on each of such lists, the Company and Executive shall provide each
other with a list of an additional five (5) arbitrators within two (2) business
days. If no arbitrator is named on both of such lists (including the previously
provided list), the Company and Executive shall each appoint an arbitrator, who
shall jointly appoint a third arbitrator. Such arbitrators shall act as an
arbitration panel. As used herein, the term "ARBITRATOR" shall include the
arbitration panel, if applicable. The decision of the arbitrator in writing
shall be final and binding upon the parties hereto and will not be subject to
appeal. If either party hereto fails to abide by such decision, the other may
seek the order of a court which shall enter judgment on the decision of the
arbitrator, and the party hereto so failing to abide shall be responsible for
the payment of the expenses of the court proceeding and all resulting
enforcement expenses, including actual attorneys' fees. The Company and
Executive shall instruct the arbitrator that a written decision is to be
rendered within three (3) months of the appointment of the arbitrator and any
party hereto causing unreasonable delay shall be subject to sanctions by the
arbitrator.
9.5 ATTORNEYS' FEES. If any party hereto brings any
action to enforce or interpret any term of this Agreement, the non-prevailing
party in any such action shall pay all the reasonable attorneys' fees, expenses
and costs incurred by the other in connection with any such action.
9.6 GOVERNING LAW. This Agreement and all matters arising
hereunder or in connection herewith shall be governed by and construed in
accordance with the laws of the State of California, without regard to conflicts
of law principles.
9.7 FURTHER ASSURANCES. Upon the terms and subject to the
conditions contained herein, the parties hereto agree (a) to use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement, (b) to execute any documents,
instruments or agreements of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder, and (c)
to cooperate with each other in connection with the foregoing.
9.8 ENTIRE AGREEMENT. This Agreement sets forth the
entire understanding between the parties hereto and, except for the Employee NDA
and the Indemnification Agreement, supersedes any prior or contemporaneous
written or oral agreements or understandings pertaining to the terms hereof and
the termination of Executive's employment relationship with the Company. The
parties hereto agree that, except as expressly provided herein, any prior
agreements and understandings between them, whether oral or written, and of
whatever nature, are hereby cancelled, terminated and superseded by this
Agreement and shall be of no further force or effect. For the avoidance of
doubt, the Employee NDA and Indemnification Agreement shall not be superseded by
this Agreement, but shall be modified if and as provided herein. Executive
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acknowledges that he has not relied upon any representation or statements by any
representative of the Company concerning the subject matter hereof except as
expressly set forth herein. This Agreement may only be modified by a writing
signed by each party hereto.
9.9 NON-ADMISSION OF LIABILITY OR WRONGDOING. By entering
into this Agreement, neither party hereto admits any impropriety, illegality,
wrongdoing or liability of any kind whatsoever, and each party hereto hereby
expressly denies the same.
9.10 TAX WITHHOLDING. All amounts required to be paid by
the Company pursuant to this Agreement shall be subject to reduction in order to
comply with applicable Federal, state and local tax withholding requirements.
9.11 NOTICE. Any notice to be provided hereunder shall be
in writing and shall be deemed to have been delivered (a) the day of delivery,
if personally delivered, (b) three (3) business days after having been mailed
via U.S. mail, registered or certified mail, return receipt requested, postage
prepaid, or (c) one (1) business day after having been sent by national
reputable overnight courier. Notices shall be addressed to the parties hereto at
the addresses set forth on the signature pages hereto. Any party hereto may
change the address for notices hereunder by delivery of written notice in
accordance with the provisions set forth herein.
9.12 FACSIMILE; COUNTERPARTS. This Agreement may be
executed by facsimile and in counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
9.13 HEADINGS. The headings of the sections contained in
this Agreement are for convenience only and shall not be deemed to control or
affect the meaning or construction of any provision of this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto hereby execute this Agreement as
of the date first above written.
PEOPLE'S LIBERATION, INC.,
a Delaware corporation
/s/ Xxxxxx Xxxx By /s/ Xxxxx Xxxx
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Xxxxxx Xxxx Xxxxx Xxxx
Chief Executive Officer
Address: Address:
000 Xxxx Xxxxxxxxx Xxxxxxxxx
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Xxx Xxxxxxx, Xxxxxxxxxx 00000
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Attn: Chief Executive Officer
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Tel: Tel: (000) 000-0000
Fax: Fax: (000) 000-0000
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