EMPLOYMENT AGREEMENT
Exhibit 10.24
EXECUTION VERSION
This Employment Agreement (this “Agreement”) is made and entered into as of February 10, 2021, by and between Playboy Enterprises, Inc., a Delaware corporation (the “Company”), and Xxxxx Xxxxx (“Executive” and, together with the Company, the “Parties”).
WHEREAS, the Company, Mountain Crest Acquisition Corp., a Delaware corporation (“Parent”) and the other parties named therein have entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Parent will acquire the Company and adopt the name of “PLBY Group, Inc.”, on the terms and subject to the conditions set forth therein (the “Acquisition”);
2. Title; Services and Duties.
(a) During the Term, Executive will be employed by the Company as its General Counsel, and shall report directly to the Chief Executive Officer of the Company (the “CEO”).
(b) During the Term, Executive will (i) be a full-time employee of the Company and (ii) have such duties, responsibilities and authority as are reasonably prescribed by the CEO or the Board of Directors of the Company (the “Board”) from time to time and normally associated with or not inconsistent with the role of General Counsel. Notwithstanding the foregoing, Executive may (x) serve as a director or advisor of non-profit organizations without approval of the Board and as director or advisor of for profit companies with the prior approval of the Board, (y) perform and participate in charitable civic, educational, professional, community, industry affairs and other related activities, and (z) manage his and his family’s personal investments; provided, however, that, in each case, such activities do not materially interfere, individually or in the aggregate, with the performance of his duties hereunder, do not violate the provisions of Section 6, and do not create a fiduciary or business conflict.
1
(c) During the Term, Executive shall devote all of the Executive’s business time, energy, business judgment, knowledge and skill and Executive’s best efforts to the performance of Executive’s duties with the Company.
(d) The primary place of Executive’s employment with the Company will be the place principal duties are performed by Executive as of the Employment Commencement Date, although Executive understands and agrees that Executive may be required to travel from time to time for business reasons.
(i) Executive will be eligible to receive an annual cash bonus for each fiscal year of the Company during the Term with a target amount equal to 80% of the Base Salary. The actual amount of the annual cash bonus, if any, payable to Executive in respect of any fiscal year during the Term will be based on the achievement of performance criteria which may relate to financial and non-financial metrics as reasonably determined by the Board after consultation with Executive and the CEO.
(ii) Any annual cash bonus that becomes payable to Executive under this Section 3(b) will be paid to Executive, in cash, when annual bonuses are paid to the Company’s other senior executives and as soon as practicable but no later than March 15 following the end of the fiscal year of the Company to which it relates.
(c) Long-Term Incentive Compensation.
(i) Starting in 2022 and for each subsequent fiscal year of the Company during the Term, Executive shall be eligible to receive long-term incentive compensation grants with a target grant date fair value for financial accounting purposes of seven-hundred thousand ($700,000) (“Annual Equity Awards”), including any performance-based grants at the target level which may be earned based on the achievement of such performance criteria as established by the Board or the Compensation Committee of the Board (the “Committee”) on terms no less favorable than those that apply to other senior executives of the Company, generally. On a termination of Executive’s employment by the Company without Cause or by Executive for Good Reason (each, an “Involuntary Termination”), 100% of the then-outstanding Annual Equity Awards will fully vest and become exercisable, with stock options remaining exercisable until the earlier of the end of the term of the stock options or one year after the date of termination (except for those Annual Equity Awards that include performance-based vesting conditions, which will remain outstanding and eligible to vest based on the level of actual attainment of the relevant performance conditions) (the “Annual Equity Acceleration”).
2
(ii) Following the Closing, the Executive shall receive a special long-term incentive compensation grant comprised of: (A) performance-based restricted stock units, with a seven year term, that if earned will settle in a number of shares of Company common stock equal to the target percentage of 0.45% of the fully diluted Company common shares outstanding on the date of grant, determined on a post-money, post-conversion basis (including any equity awards granted to the Executive and other senior level executives in connection with the Closing or within thirty (30) days of the filing of Form S-8 as described below) (“Initial PSUs”) and (B) stock options to purchase a number of shares of Company common stock, with a ten year term, equal to the target percentage of 0.18% of the fully diluted Company common shares outstanding on the date of grant (determined as set forth above for the Initial PSUs) (the “Initial Options”). The Initial PSUs and the Initial Options will be granted no later than thirty (30) days after (and contingent upon) the listing of the shares of Company common stock on the Nasdaq Stock Market and the registration of the offer and sale of the shares of common stock underlying such awards with the Securities and Exchange Commission on Form S-8 (which is expected to occur approximately 60 days following the Closing). In addition, if the fair market value of a share of Company common stock on the date of grant is greater than the fair market value of a share of Company common stock on the Employment Commencement Date, then a portion of the Initial Options will be converted into a number of time-based restricted stock units equal to (x) the difference between the fair market value per share of Company common stock on the date of grant minus the fair market value per share of Company common stock on the Employment Commencement Date, multiplied by (y) the number of Initial Options (determined without regard to the conversion described in this sentence), divided by (z) the fair market value of a share of Company common stock on the date of grant (the “Make-Up RSUs”), rounded down to the nearest whole number of shares. The Initial PSUs will be eligible to be earned 25% upon achieving each of the following thirty (30) day volume-weighted average price milestones for a share of Company common stock, subject to Executive’s continued employment or service on the Board through the applicable vesting date: $20, $30, $40 and $50. Any Initial PSUs that satisfy such vesting terms will be settled within thirty (30) days after the applicable vesting date. Shares of Company common stock received upon the settlement of the Initial PSUs (and, if applicable, the Make-Up RSUs) will be subject to transfer restrictions for twelve-months from the date of settlement of the Initial PSUs (or, if applicable, the Make-Up RSUs), net of a number of shares of Company common stock in respect of the applicable required tax withholding, to the extent that the Company has cash reserves to provide for such net settlement. The Initial Options will vest 1/3 on the first anniversary of the Employment Commencement Date and then monthly in twenty-four (24) equal installments commencing on the thirteenth month anniversary of the Employment Commencement Date. If granted, the Make-Up RSUs will be eligible to vest in three equal installments on each of the first three anniversaries of the Employment Commencement Date, in each case subject to Executive’s continued employment through the applicable vesting dates. Upon an Involuntary Termination, the Initial PSUs will remain outstanding and eligible to vest based on attainment of the share-price milestones set forth above until the earlier of the end of the seven-year term of the Initial PSUs or ninety (90) days after the date of termination, and upon an Involuntary Termination that occurs within 12 months following the Employment Commencement Date, 1/3 of the Initial Options (and if applicable, 1/3 of the Make-Up RSUs) will become immediately vested and exercisable upon the date of such termination (the “Special Equity Treatment”). Upon an Involuntary Termination occurring 24 months after a Change in Control, 100% of the then-outstanding Initial PSUs will fully vest, and the Initial Options will become immediately vested and exercisable upon the date of such termination and remain exercisable until the earlier of the end of the ten-year term or three years after the date of termination (the “Special Equity CIC Treatment”).
3
4
(i) An amount in cash equal to the sum of (A) the Base Salary as in effect immediately prior to the date of termination (without regard to any reduction resulting in Good Reason) plus (B) the target annual bonus for the year of termination, which total amount will be payable in regular installments in accordance with the Company’s normal payroll practices (but in no event less frequently than monthly) over a period of twelve (12) months following Executive’s last day of employment with the Company; provided, however, that the first installment shall not occur until the first regularly scheduled payroll date of the Company that occurs on or following the effective date of the Release as defined in Section 8 of the Release and shall include all payments that would have been made had such installments commenced immediately following Executive’s last day of employment; provided, further that to the extent that the period to consider the Release spans two calendar years, such first installment shall occur in the second calendar year, to the extent that such installment constitutes nonqualified deferred compensation for purposes of Section 409A of the Code;
(ii) An amount in cash equal to the product of (A) Executive’s target annual cash bonus for the fiscal year in which the date of termination occurs and (B) a fraction, the numerator of which is the number of days Executive was employed during the fiscal year in which the date of termination occurs, and the denominator of which is 365, payable on the same date on which annual cash bonuses are paid to executives of the Company generally in respect of such fiscal year (the “Pro-Rated Bonus”);
5
(iii) If Executive elects continuation coverage under the Company’s medical, dental and vision program pursuant to Part 6 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as amended (“COBRA”), reimbursement for the full COBRA premium payments (which reimbursement will be made within thirty (30) days following receipt of evidence from Executive of Executive’s payment of such premiums), or, if it would result in a better after-tax benefit for the Executive, direct payment to the provider for the full COBRA premium payments for the 18 calendar months immediately following the end of the calendar month in which the date of termination occurs (provided that the Company may modify its obligation under this Section 5(b)(iii) to the extent reasonably necessary (and to the minimum extent necessary) to avoid any penalty or excise taxes imposed on it in connection with the continued payment of premiums by the Company under the Patient Protection and Affordable Care Act of 2010, as amended) (the “Health Care Continuation”); provided, further that such contributions shall cease to be effective as of the date that Executive obtains health, dental and vision benefits from a subsequent employer; and
(iv) The Annual Equity Acceleration and the Special Equity Treatment (without duplication).
(i) An amount equal to one-and-a-quarter (1.25) times the sum of (A) the Base Salary as in effect immediately prior to the date of termination (without regard to any reduction resulting in Good Reason) plus (B) the target annual bonus for the year of termination, which total amount will be payable in regular installments in accordance with the Company’s normal payroll practices (but in no event less frequently than monthly) over a period of fifteen (15) months following Executive’s last day of employment with the Company; provided, however, that the first installment shall not occur until the first regularly scheduled payroll date of the Company that occurs on or following the effective date of the Release as defined in Section 8 of the Release and shall include all payments that would have been made had such installments commenced immediately following Executive’s last day of employment; provided, further that to the extent that the period to consider the Release spans two calendar years, such first installment shall occur in the second calendar year, to the extent that such installment constitutes nonqualified deferred compensation for purposes of Section 409A of the Code;
(ii) The Pro-Rated Bonus;
(iii) Health Care Continuation; and
(iv) The Annual Equity Acceleration and the Special Equity CIC Treatment (without duplication).
6
(d) Definitions. For purposes of this Agreement:
(i) “Affiliate” as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities (the ownership of more than 50% of the voting securities of an entity shall for purposes of this definition be deemed to be “control”), by contract or otherwise.
(ii) “Cause” means (in each case, other than due to death or Disability): (A) Executive’s conviction of, or plea of guilty or nolo contendere to, any felony; (B) any material act of theft, dishonesty, embezzlement or misappropriation by Executive against the Company or any of its Affiliates; (C) Executive’s willful or material breach of a fiduciary obligation to the Company or any willful malfeasance or gross negligence in the performance of Executive’s duties to the Company; (D) a material violation by Executive of any written policy of the Company that results in material economic harm to the Company; (E) a willful material breach by Executive of Section 6(b) or (c) of this Agreement; or (F) any continued willful failure by Executive to follow the reasonable and lawful written directives of the CEO or the Board that are related to Executive’s position with the Company. Notwithstanding the foregoing, in no event will the occurrence of any such condition constitute Cause unless (1) the Company provides written notice to Executive of the existence of the condition giving rise to Cause within thirty (30) days following the Company’s knowledge of its existence and (2) Executive fails to cure such condition, if curable, within thirty (30) days following the date of such notice, upon which failure to cure Executive’s employment will immediately terminate for Cause; provided that Executive shall not be provided the ability to cure repeated occurrences of the same event. For purposes of this Section 5(c)(ii), no act, or failure to act, by Executive will be considered “willful” unless committed in bad faith and without a reasonable belief that the act or omission was in the best interests of the Company.
(iii) “Change in Control” has the meaning set forth in the Company 2021 Equity and Incentive Compensation Plan.
(iv) “Disability” means Executive is unable, due to physical or mental incapacity, to perform his duties to the Company under this Agreement, as determined by the Board, for a period of either (A) ninety (90) consecutive days or (B) one-hundred-eighty (180) days in any 12-month period.
(v) “Good Reason” means, in each case without Executive’s consent, (A) a decrease in Executive’s base salary, target bonus or target long-term incentive compensation opportunity, other than a decrease of not less than 10% that is materially consistent with similar decreases required of other senior executives of the Company; (B) a material diminution in Executive’s duties, responsibilities or authority or an adverse change in Executive’s title (provided, however, that any change in duties, responsibilities or authority solely due to the Company becoming privately owned will not constitute Good Reason so long as Executive continues to be the general counsel of the Company following such transaction); (C) a requirement that Executive report to anyone other than the CEO or the Board or, following a Change in Control, the CEO or the board of directors of any successor to the Company or ultimate parent of any successor or surviving entity; (D) a relocation of Executive’s primary office location outside of the greater Los Angeles, California metropolitan area without his express written consent; or (E) a material breach of this Agreement or any other material compensatory arrangement with the Company by the Company. Notwithstanding the foregoing, in no event will the occurrence of any such condition constitute Good Reason unless (1) Executive provides notice to the Company of the existence of the condition giving rise to Good Reason within ninety (90) days following Executive’s knowledge of its existence and (2) the Company fails to cure such condition within thirty (30) days following the date of such notice, and (3) Executive terminates employment within thirty (30) days after the end of the cure period.
7
(vi) “Person” means any individual, corporation, partnership, limited liability company, joint venture, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
8
(d) Discoveries and Inventions; Work Made for Hire.
(i) Executive agrees that upon conception and/or development of any idea, discovery, invention, improvement, software, writing or other material or design that: (A) relates to the business of the Company, or (B) relates to the Company’s actual or demonstrably anticipated research or development, or (C) results from any work performed by Executive for the Company, Executive hereby assigns to the Company the entire right, title and interest in and to any such idea, discovery, invention, improvement, software, writing or other material or design. Pursuant to California Labor Code Section 2870, Executive has no obligation to assign an invention that the Executive developed entirely on his or her own time without using the Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either: (1) relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company; or (2) result from any work performed by the Executive for the Company. Executive agrees that any idea, discovery, invention, improvement, software, writing or other material or design that relates to the business of the Company or relates to the Company’s actual or demonstrably anticipated research or development which is conceived or suggested by Executive, either solely or jointly with others, within one (1) year following termination of Executive’s employment with the Company shall be presumed to have been so made, conceived or suggested in the course of such employment with the use of the Company’s equipment, supplies, facilities, and/or trade secrets.
(ii) In order to determine the rights of Executive and the Company in any idea, discovery, invention, improvement, software, writing or other material, and to insure the protection of the same, Executive agrees that during Executive’s employment, and for one (1) year after termination of Executive’s employment with the Company, Executive will disclose immediately and fully to the Company any idea, discovery, invention, improvement, software, writing or other material or design conceived, made or developed by Executive solely or jointly with others. The Company agrees to keep any such disclosures confidential. Executive also agrees to record descriptions of all work in the manner directed by the Company and agrees that all such records and copies, samples and experimental materials will be the exclusive property of the Company. Executive agrees that at the request of and without charge to the Company, but at the Company’s expense, Executive will execute a written assignment of the idea, discovery, invention, improvement, software, writing or other material or design to the Company and will assign to the Company any application for letters patent or for trademark registration made thereon, and to any common-law or statutory copyright therein; and that Executive will do whatever may be necessary or desirable to enable the Company to secure any patent, trademark, copyright, or other property right therein in the United States and in any foreign country, and any division, renewal, continuation, or continuation in part thereof, or for any reissue of any patent issued thereon. In the event the Company is unable, after reasonable effort, and in any event after ten (10) business days, to secure Executive’s signature on a written assignment to the Company of any application for letters patent or to any common law or statutory copyright or other property right therein, whether because of Executive’s physical or mental incapacity or for any other reason whatsoever, Executive irrevocably designates and appoints the Corporate Secretary of the Company as Executive’s attorney-in-fact to act on Executive’s behalf to execute and file any such application and to do all other lawfully permitted acts to further the prosecution and issuance of such letters patent, copyright or trademark.
9
(iii) Executive acknowledges that, to the extent permitted by law, all work papers, reports, documentation, drawings, photographs, negatives, tapes and masters therefor, prototypes and other materials (hereinafter, “items”) (including, without limitation, any and all such items generated and maintained on any form of electronic media) generated by Executive during Executive’s employment with the Company shall be considered a “work made for hire” and that ownership of any and all copyrights in any and all such items shall belong to the Company.
(i) The Company and Executive agree that the restrictive covenants contained in this Agreement are severable and separate, and the unenforceability of any specific covenant herein will not affect the validity of any other covenant set forth herein. Executive acknowledges that the Company will suffer irreparable harm as a result of a material breach of such restrictive covenants by Executive for which an adequate monetary remedy does not exist and a remedy at law may prove to be inadequate. Accordingly, in the event of any actual or threatened material breach by Executive of any provision of this Section 6, the Company will, in addition to any other remedies permitted by law, be entitled to seek to obtain remedies in equity, including, without limitation, specific performance, injunctive relief, a temporary restraining order, and/or a permanent injunction in any court of competent jurisdiction (each, an “Equitable Remedy”), to prevent or otherwise restrain a material breach of this Section 6, without the necessity of proving damages, posting a bond or other security. Such relief will be in addition to and not in substitution of any other remedies available to the Company. The existence of any claim or cause of action of Executive against the Company, whether predicated on this Agreement or otherwise, will not constitute a defense to the enforcement by the Company of said covenants.
10
11
To the Company:
c/o Xxx Xxxx, CEO
00000 Xxxxxxxx Xxxx.,
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
To Executive:
At the address shown in the Company’s personnel records.
(e) Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction).
12
13
14
PLAYBOY ENTERPRISES INC. | ||
By: | /s/ Xxx Xxxx | |
Name: Xxx Xxxx | ||
Title: CEO | ||
EXECUTIVE | ||
/s/ Xxxxx Xxxxx | ||
Xxxxx Xxxxx |
[Signature Page to Employment Agreement]
15
Exhibit A
Form of General Release of Claims
This General Release of Claims (this “Agreement”) is entered into by and between Playboy Enterprises, Inc., a Delaware corporation (the “Company”), and Xxxxx Xxxxx (“Executive”) on the below-indicated date.
WHEREAS, Executive, and the Company entered into an Employment Agreement dated as of February 10, 2021 (the “Employment Agreement”), that provides Executive certain severance and other benefits in the event of certain terminations of Executive’s employment;
WHEREAS, Executive’s employment has so terminated; and
WHEREAS, pursuant to Section 5(b) or 5(c) of the Employment Agreement, a condition precedent to Executive’s entitlement to certain severance and other benefits thereunder is his agreement to this Agreement.
NOW, THEREFORE, in consideration of the severance and other benefits provided under Section 5(b) or 5(c) of the Employment Agreement, the sufficiency of which Executive hereby acknowledges, Executive agrees as follows:
1. General Release of Claims. Executive, for and on behalf of Executive and Executive’s heirs, executors, administrators, successors and assigns, hereby voluntarily, knowingly and willingly release and forever discharge the Company and all of its past and present parents, subsidiaries, and affiliates, each of their respective members, officers, directors, stockholders, partners, employees, agents, representatives and attorneys, and each of their respective subsidiaries, affiliates, estates, predecessors, successors, and assigns (each, individually, a “Releasee,” collectively referred to as the “Releasees”) from any and all rights, claims, charges, actions, causes of action, complaints, sums of money, suits, debts, covenants, contracts, promises, obligations, damages, demands or liabilities of every kind whatsoever, in law or in equity, whether known or unknown, suspected or unsuspected (collectively, “Claims”) which Executive or Executive’s heirs, executors, administrators, successors or assigns ever had, now has or may hereafter claim to have by reason of any matter, cause or thing whatsoever: (i) arising from the beginning of time up to the date Executive executes this Agreement with respect to (A) any such Claims relating in any way to Executive’s employment relationship with the Company or any other Releasee, and (B) any such Claims arising under any federal, local or state statute or regulation, including, without limitation, the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, each as amended and including each of their respective implementing regulations and/or any other federal, state, local or foreign law (statutory, regulatory or otherwise) that may be legally waived and released; (ii) arising out of or relating to the termination of Executive’s employment; or (iii) arising under or relating to any policy, agreement, understanding or promise, written or oral, formal or informal, between the Company or any other Releasee and Executive.
2. Exceptions to General Release of Claims.
(a) Nothing contained in this Agreement will in any way diminish or impair: (i) any Claims Executive may have that cannot be waived under applicable law, (ii) Executive’s rights to severance, the Accrued Rights and other vested benefits provided under Section 5 of the Employment Agreement, (iii) any rights Executive may have to indemnification from the Company or coverage under any director and officer liability insurance policy or (iv) any rights Executive may have in respect of any shares or other vested equity interests Executive holds in the Company or any of its Affiliates. The Company acknowledges and agrees that this Agreement does not preclude Executive from filing any charge with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Securities and Exchange Commission or any other governmental agency or from any way participating in any investigation, hearing, or proceeding of any government agency. Executive does not need prior authorization from the Company to make any such reports or disclosures and except as may otherwise be required by applicable law, is not required to notify the Company that Executive has made such reports or disclosures. This Agreement does not limit Executive’s right to receive an award for information provided to any governmental agency or entity.
(b) Pursuant to 18 U.S.C. §1833(b), Executive will not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret of the Company that (i) is made (A) in confidence to a Federal, State, or local government official, either directly or indirectly, or to Executive’s attorney, and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. If Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, Executive may disclose the trade secret to his attorney and use the trade secret information in the court proceeding, if Executive (1) files any document containing the trade secret under seal, and (2) does not disclose the trade secret, except pursuant to court order. Nothing in this Agreement is intended to conflict with 18 U.S.C. §1833(b) or create liability for disclosures of trade secrets that are expressly allowed by such section. Further, nothing in any agreement Executive has with the Company will prohibit or restrict Executive from making any voluntary disclosure of information or documents related to any violation of law to any governmental agency or legislative body, or any self-regulatory organization, in each case, without advance notice to the Company.
(c) Executive acknowledges and agrees that he is aware of California Civil Code Section 1542, which provides as follows:
A general release does not extend to claims which the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or settlement with the debtor or the released party.
With full awareness and understanding of the above provisions, Executive hereby waives any and all right he may have under Section 1542, as well as under any other statutes or common law principles of similar effect. Executive intends to, and hereby does, release the Released Parties from claims which he does not presently know or suspect to exist.
2
4. Restrictive Covenants. Executive acknowledges and agree that each of the restrictive covenants to which Executive is subject as of the date hereof (including without limitation, the provisions set forth in Section 6 of the Employment Agreement) will continue to apply in accordance with their terms for the applicable periods with respect thereto.
5. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California without giving effect to any choice or conflict of law provision or rule (whether of the State of California or any other jurisdiction).
6. No Admission of Wrongdoing. The parties agree that neither this Agreement nor the furnishing of the consideration set forth in the Employment Agreement will be deemed or construed at any time for any purpose as an admission by any party of any liability, wrongdoing or unlawful conduct of any kind.
[Remainder of page is left blank intentionally]
3
PLAYBOY ENTERPRISES INC. | ||
By: | ||
Name: | ||
Title: | ||
EXECUTIVE | ||
Xxxxx Xxxxx |
[Signature Page to Release Agreement]