Separation and General Release Agreement
EXECUTION
COPY
This
Separation and General Release Agreement (this “Agreement”)
is
made as of this 14th day
of
August, 2008 by and between NexCen Brands, Inc. (the “Company”)
and
Xxxxx 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 and the Company entered into a letter agreement dated May
29th,
2008
deferring salary effective May 16th,
2008
(“Deferred Salary Letter”);
WHEREAS,
Executive desires to voluntarily resign as an officer and employee of the
Company for reasons other than “Good Reason” (as defined in Section 2.1 of the
Employment Agreement) (the “Separation”)
effective as of August 14, 2008 (the “Separation
Date”);
WHEREAS,
the Parties’ rights and obligations with respect to Executive’s equity interests
in the Company 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
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 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. The Parties acknowledge and agree that the Separation
is
effective as of August 14,
2008.
The
Company expressly waives its right to 90 days 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 voluntarily resigns his position
as 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. The parties
hereby confirm, acknowledge and agree that Executive does not have any grounds
that would constitute resignation for “Good Reason” (as defined in Section 2.1
of the Employment Agreement) and that the Company does not have any grounds
for
termination for “Cause” (as defined in Section 2.1 of the Employment
Agreement).
3. Executive’s
Acknowledgment of Consideration.
Executive specifically acknowledges and agrees that certain of the obligations
created and payments made to him by the Company under this Agreement are
promises and payments to which he is not otherwise entitled under any law or
contract.
4. Payments
Upon and After the Separation.
(a) Final
Payment.
On the
next regular payroll date following the Separation Date, Executive shall receive
a payment of (1) reimbursable expenses of $1,522.98 and (2) the salary amount
of
$1,730.77 (reflecting the accrued salary up to and including August 8, 2008
at
the deferred salary rate agreed to in the Deferred Salary Letter), subject
to
applicable federal, state and local tax withholdings. As soon as practicable
but
no later than five business days after the Separation Date, Executive shall
receive a lump sum payment of all amounts deferred in accordance with the
Deferred Salary Letter through and including August 8, 2008, which amount equals
$69,422.74. This sum, payable to Executive, shall be subject to applicable
federal, state and local tax withholdings. Executive acknowledges that he is
not
entitled to any wages or reimbursements from the Company other than as set
forth
above.
(b) Separation
Payment.
The
Company shall pay to Executive payments totaling Two
Hundred Eighty-One Thousand Two Hundred Fifty Dollars
($281,250.00)
(less
standard statutory deductions for federal and state taxes and withholdings),
which shall be paid in substantially equal semi-monthly installments over a
period of nine months, in accordance with the Company’s normal payroll
practices.
(c) Continued
Participation in Company’s Group Medical Plan.
The
Company shall continue Executive’s participation in the Company’s group medical
plan on the same basis as he previously participated, until the earlier of
August
31, 2009
or the
date Executive is provided with health insurance coverage by a successor
employer. Executive shall promptly inform, General Counsel of the Company,
if
and when he is provided with health insurance coverage by a successor
employer. After
August 31, 2009, Executive may continue to participate in the
Company’s group health plans to the extent permitted under the Consolidated
Omnibus Budget Reconciliation Act (“COBRA”). 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.
(d) Severance
Benefits.
In
consideration of the Company’s obligations and undertakings hereunder, Executive
hereby waives and releases any claim for any Severance Payments or Benefits
(each as defined in Sections 1.3(f) and 1.4(b) of the Employment Agreement,
respectively).
(e) Stock
Options and Warrants.
The
Parties agree that, as of the Separation Date, Executive has 387,859 vested
options. Pursuant to the terms of the Option Agreement, vested options and
warrants will remain exercisable for 90 days following the Separation Date.
Except for the foregoing, all unvested options granted previously to Executive
prior to the Separation Date shall be forfeited immediately.
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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 6-months. The Parties further
agree that, during the 6-month Noncompete Period, the Board shall not
unreasonably withhold its authorization or consent to the Executive pursuant
to
Section 1.8(a) to engage in a business enterprise that engages or proposes
to
engage in the Business in the Restricted Territory, so long as such business
enterprise does not directly compete with the Company or its Subsidiaries (each
capitalized term as defined in Section 2.1 of the Employment Agreement,
respectively). In the event of Executive’s 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. General
Release and Waiver by Executive.
(a) General
Release.
In
consideration of the Company’ s performance of this Agreement, Executive, for
and on behalf of himself and each of his heirs, executors, administrators,
personal representatives, successors and assigns, to the maximum extent
permitted by law, hereby acknowledges full and complete satisfaction of and
ABSOLUTELY AND IRREVOCABLY AND UNCONDITIONALLY FULLY AND FOREVER RELEASES,
ACQUITS AND DISCHARGES the Company together with their subsidiaries, parents
and
affiliates, and each of their past and present direct and indirect stockholders,
directors, members, partners, officers, employees, attorneys, agents and
representatives, and their heirs, executors, administrators, personal
representatives, successors and assigns, from any and all claims, demands,
suits, causes of action, liabilities, obligations, judgments, orders, debts,
liens, contracts, agreements, covenants and causes of action of every kind
and
nature, whether known or unknown, suspected or unsuspected, concealed or hidden,
vested or contingent, in law or equity, existing by statute, common law,
contract or otherwise, which have existed, may exist or do exist, through and
including the execution and delivery by Executive of this Agreement (but not
including Executive’s or the Company’s performance under this Agreement),
including, without limitation, any of the foregoing arising out of or in any
way
related to or based upon:
(i) Executive’s
application for and employment with the Company, his being a director, an
officer, or employee of the Company, or the Separation;
(ii) any
and
all claims in tort or contract, and any and all claims alleging breach of an
express or implied, or oral or written, contract, policy manual or employee
handbook;
(iii) any
alleged misrepresentation, defamation, interference with contract, intentional
or negligent infliction of emotional distress, sexual harassment, negligence
or
wrongful discharge; or
(iv) any
federal, state or local statute, ordinance or regulation, including but not
limited to labor laws or discrimination laws such as Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in Employment Act of
1987, as amended by the Older Workers Benefit Protection Act and otherwise
(the
“ADEA”),
the
Family and Medical Leave Act, the Civil Rights Act set forth at 42 U.S.C. §
1981, the Civil Rights Act of 1986, and the Civil Rights Act of
1991.
3
(b) Acknowledgment
of Waiver; Disclaimer of Benefits.
Executive acknowledges and agrees that he is waiving all rights to xxx or obtain
equitable, remedial or punitive relief from the Company of any kind whatsoever,
including, without limitation, reinstatement, back pay, front pay, attorneys’
fees and any form of injunctive relief. Notwithstanding the above, Executive
further acknowledges that he is not waiving and is not being required to waive
any right that cannot be waived by law, including the right to file a charge
or
participate in an administrative investigation or proceeding; provided,
however,
that
Executive disclaims and waives any right to share or participate in any monetary
award resulting from the prosecution of such charge or
investigation.
(c) Effect
of Release and Waiver.
Executive understands and intends that this Section
6
constitutes a general release of all claims except as otherwise provided in
Section
6(a)
above,
and that no reference therein to a specific form of claim, statute or type
of
relief is intended to limit the scope of such general release and
waiver.
(d) Waiver
of Unknown Claims.
Executive expressly waives all rights afforded by any statute which limits
the
effect of a release with respect to unknown claims. Executive understands the
significance of his release of unknown claims and his waiver
of
statutory protection against a release of unknown claims.
7. Executive’s
Representations and Covenants Regarding Actions.
Executive represents, warrants and covenants to the Company that at no time
prior to or contemporaneous with his execution of this Agreement has he filed
or
caused or knowingly permitted the filing or maintenance, in any state, federal
or foreign court, or before any local, state, federal or foreign administrative
agency or other tribunal, any charge, claim or action of any kind, nature and
character whatsoever (“Claim”),
known
or unknown, suspected or unsuspected, which he may now have or has ever had
against the Company. Executive hereby grants the Company his perpetual and
irrevocable power of attorney with full right, power and authority to take
all
actions necessary to dismiss or discharge any such Claim. Executive further
covenants and agrees that he will
not
encourage any person or entity, including but not limited to any current or
former employee, officer, director or stockholder of the Company, to institute
any Claim against the Company.
8. No
Disparaging Remarks.
Executive hereby covenants to the Company and agrees that he shall
not, directly or indirectly, make or solicit or encourage others to make or
solicit any disparaging remarks concerning the Company, or any of their
products, services, businesses or activities. The
Company acting by formal statement or through its officers or directors (while
serving in such capacities), will not, directly or indirectly, make or solicit
or encourage others to make or solicit any disparaging remarks concerning
Executive. Notwithstanding the foregoing, 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 investigation conducted by or at the behest
of
the Company, any governmental authority or quasi-governmental authority or
(ii)
with the Company’s compliance with any of its legal or regulatory
obligations.
4
9. Indemnification.
Company
expressly acknowledges and affirms its indemnification obligations to Executive,
as set forth in (i) Section 1.3(g) of the Employment Agreement, (ii) the
Company’s Certificate of Incorporation, as amended, and (iii) the Company’s
Amended and Restated By-laws. Such obligations will survive and continue in
full
force and effect in accordance with their terms notwithstanding Executive’s
resignation.
10. No
Conflict of Interest.
Executive hereby covenants and agrees that he shall not, directly or indirectly,
incur any obligation or commitment, or enter into any contract, agreement or
understanding, whether express or implied, and whether written or oral, which
would be in conflict with his obligations, covenants or agreements hereunder
or
which could cause any of his representations
or warranties made herein to be untrue or inaccurate.
11. Assistance,
Cooperation, Future Litigation.
(a) Executive’s
Business Assistance and Cooperation.
Executive shall make himself reasonably
available to assist and cooperate with the Company in connection with any
internal and/or independent review of the Company’s financial policies,
procedures and activities in respect of all periods during which Executive
was
employed by the Company.
(b) Executive’s
Litigation Assistance and Cooperation.
Executive acknowledges and affirms his understanding that he may
be a
witness in litigation, arbitrations, government or other administrative
proceedings involving the Company. Executive hereby covenants and agrees to
testify truthfully in any and all such litigation, arbitrations, government
or
administrative proceedings. Executive further covenants and agrees, upon prior
notice and for no further compensation, to make himself reasonably available
to
and otherwise reasonably assist and cooperate with the Company and with its
respective attorneys and advisors in connection with any such litigation or
administrative proceeding. The Company will make all reasonable efforts to
insure that such assistance and cooperation will not materially interfere with
Executive’s employment and business responsibilities. The Company shall
reimburse the Executive for out of pocket expenses incurred in his cooperation
and assistance.
12. Confidentiality.
Executive asserts that he has
not
discussed, and agrees that except as expressly authorized by the Company
he will
not
discuss, this Agreement or the circumstances of his Separation with any employee
of the Company, and that he will
take
affirmative steps to avoid or absent himself from
any
such discussion even if he is
not an
active participant therein.
13. Remedies.
Executive hereby acknowledges and affirms that in the event of any breach by
Executive of any of his covenants, agreements and obligations hereunder,
monetary damages would be inadequate to compensate the Company. Accordingly,
in
addition to other remedies which may be available to the Company hereunder
or
otherwise at law or in equity, the Company shall be entitled to specifically
enforce such covenants, obligations and restrictions through injunctive and/or
equitable relief, in each case without the posting of any bond or other security
with respect thereto. Should any provision hereof be adjudged to any extent
invalid by any court or tribunal of competent jurisdiction, each provision
shall
be deemed modified to the minimum extent necessary to render it
enforceable.
5
14. Acknowledgment
of Voluntary Agreement; ADEA Compliance.
Executive acknowledges that he has entered into this Agreement freely and
without coercion, that he has been advised by the Company to consult with
counsel of his choice, that he has had adequate opportunity to so consult,
and
that he has been given all time periods required by law to consider this
Agreement, including but not limited to the 21-day period required by the ADEA
(the “Consideration
Period”).
Executive understands that he may execute this Agreement less than 21 days
from
its receipt from the Company, but agrees that such execution will represent
his
knowing waiver of such Consideration Period. Executive further acknowledges
that
within the 7-day period following his execution of this Agreement (the
“Revocation
Period”),
he
shall have the unilateral right to revoke this Agreement, and that the Company’s
obligations hereunder shall become effective only upon the expiration of the
Revocation Period without Executive’s revocation hereof. In order to be
effective, notice of Executive’s revocation of this Agreement must be received
by the Company in writing on or before the last day of the Revocation
Period.
15. Complete
Agreement; Inconsistencies.
This
Agreement, the Plan, the 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 Section
6
hereof.
In the event of any conflict or inconsistencies between the terms of this
Agreement and the Plan, the Equity Agreements and the Employment Agreement,
the
terms of this Agreement shall govern.
16. 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.
17. Third
Party Beneficiaries.
Executive’s heirs or assigns also are intended third-party beneficiaries with
respect to the payments set forth in Section
4
of this
Agreement in the event of Executive’s death, and this Agreement may be enforced
by each of them in accordance with the terms of that Section
4
in
respect of the rights granted to such heirs or assigns therein. Except and
to
the extent set forth in the preceding two sentences, 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.
6
18. 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.
19. 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):
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:
Xxxxx
Xxxxx
00
Xxxx
Xxxxx
Xxxxxxxxxx,
XX 00000
Ph.
(000)
000 0000
Fax
(000)
000 0000
20. 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.
7
21. 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.
22. 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.
23. 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
assign all rights and obligations of this Agreement to any successor in interest
to the assets of the Company. 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.
24. 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.
25. 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.
26. Disputes.
Except
as set forth in this paragraph, any dispute, claim or difference arising out
of
this Agreement will be settled exclusively by binding arbitration in accordance
with the rules of the Federal Mediation and Conciliation Service (“FMCS”).
The
arbitration will be held New York City unless Executive and the Company mutually
agree otherwise. Nothing contained in this Section
26
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. Subject to the proviso in this sentence below, 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. 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.
8
27. 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.
*
* * *
*
9
IN
WITNESS WHEREOF, the Parties have executed this Separation and General Release
Agreement effective as of the date of the first signature affixed below or
as
otherwise provided in this Agreement.
READ
CAREFULLY BEFORE SIGNING
I
have
read this Separation and General Release Agreement and have had the opportunity
to consult legal counsel prior to my signing of this Agreement.
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DATED:
August
15, 2008
|
By:
|
/s/
Xxxxx Xxxxx
|
|
Xxxxx
Xxxxx
|
||
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DATED:
August
14, 2008
|
||
|
By:
|
/s/
Xxxxxxx X. Xxxx
|
|
|
Name:
Xxxxxxx X. Xxxx
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||
|
Title:
Executive Vice President, Chief
|
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|
Financial
Officer and Treasurer
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