EXHIBIT
10.1
EMPLOYMENT
AGREEMENT
EMPLOYMENT AGREEMENT,
dated as of October 1, 2008, by and between Vertical Branding,
Inc., a Delaware corporation (the “Company”), and Nancy
Duitch (“Executive”).
WHEREAS, the Company
currently employs Executive as Chief Executive Officer;
WHEREAS, Executive and
Company wish to enter into a new agreement memorializing the terms
of Executive’s ongoing employment (the
“Agreement”);
NOW, THEREFORE, in
consideration of the mutual covenants herein contained, the Company
and Executive hereby agree as follows:
1. Term.
This Agreement
shall have a term of two (2) years from the date first written
above (the “Term”). Notwithstanding anything
herein to the contrary, this Agreement and Executive’s
employment by the Company shall be terminable at will by Executive
or the Company at any time and for any reason not prohibited by
applicable law, subject only to the provisions of Section 3(f)
below. Termination of this Agreement and Executive’s
employment shall have no effect on provisions and obligations
included herein which, by their express terms or nature, are
intended to survive termination.
2. Position and
Duties. The Company shall continue to employ
Executive as its Chief Executive Officer (“CEO”), and
Executive shall continue to report to the Company’s Board of
Directors. Executive’s duties shall be those
customarily associated with the role of Chief Executive Officer of
a similarly situated, publicly-traded company of comparable size
and business as the Company, as well as those assigned to Executive
from time to time by the Company’s Board of Directors
provided not inconsistent with the foregoing. Executive
agrees during the term of employment with the Company to commit
substantially all of Executive’s working time, attention and
efforts to the position on a full-time basis and to observe all
Company policies applicable to senior executives of the Company.
This Agreement is personal to Executive and Executive may not
assign or delegate rights or obligations hereunder without the
written consent of the Company.
3. Compensation and
Benefits .
In consideration of Executive’s services to the
Company, Executive shall receive the compensation and benefits
described below.
(a) Base Salary.
The
Company shall pay Executive a base salary at the rate of three
hundred two thousand dollars ($302,000) per year paid in
installments according to the Company’s regular payroll
policy and practices. The Company shall withhold and deduct
applicable federal and state income and employment and disability
taxes from Executive’s base salary as required by applicable
laws. Executive shall be eligible for increases in base
salary in connection with the Company’s annual executive
compensation and performance review conducted by the Compensation
Committee of the Board (the “Committee”), with such
increases, if any, to be made in the discretion of the Committee
and/or the Board.
(b) Annual Incentive
Opportunity. Executive shall be eligible to
participate in an annual incentive plan established from year to
year by the Committee and/or Board, which plan shall provide the
potential for Executive to earn annual bonus compensation in an
amount of up to fifty percent (50%) of Executive’s
then-applicable base salary contingent upon achievement of personal
or Company performance criteria, or some combination thereof, to be
determined in the discretion of the Board of Directors.
(c)
Benefits. As a senior executive employee
of the Company, Executive shall be eligible to participate in (i)
each benefit plan sponsored or maintained by the Company and made
available generally to its senior executives, including group life,
hospitalization, medical (for Executive and two (2) dependents),
dental, health, accident or disability insurance or similar plan or
program of the Company, if any, and (ii) each profit sharing,
retirement, deferred compensation or savings plan sponsored or
maintained by the Company for its senior executives, whether now
existing or established hereafter, and in each instance subject to
the terms and conditions of any such plans and to applicable
policies of the Company and laws and regulations now or hereafter
in effect.
(d)
Vacation. Executive shall be entitled to
accrue up to three (3) weeks of paid vacation each year of
employment on the same basis as the other senior executives of the
Company and in accordance with the terms and conditions of the
generally applicable vacation policies of the Company.
(e) Automobile
Allowance. The Company agrees to
reimburse Executive for the costs of leasing and operation of an
automobile in an amount not to exceed $1,400 per month, subject to
Executive’s accounting for personal use of such auto with
appropriate income tax accountability.
(f) Termination
Benefits.
(1) Standard
Termination Payments. Upon termination of
Executive’s employment by the Company or by Executive for any
reason, Executive shall be entitled to payment of accrued but
unpaid salary and vacation through the date of termination (the
“Standard Termination Payments”).
(2) Payment of
Annual Incentive Compensation Under Certain
Circumstances. In the event of termination of
Executive’s employment by the Company without Cause, by
Executive for Good Reason or due to Executive’s death or
Disability (as such terms are defined in Section 3(g) below), and
provided such termination occurs after the end of a period to which
annual incentive compensation contemplated under Section 3(b) is
applicable, but before the earned portion (if any) of such
compensation has been paid, then the annual incentive compensation
that would have been payable to Executive for such period shall be
paid to Executive (or Executive’s estate if applicable) at
the time such payment would otherwise have been made.
(3) Payment of
Severance Under Certain Circumstances. In the event that
Executive’s employment is terminated prior to expiration of
the Term by the Company without Cause, by Executive for Good Reason
or due to Executive’s death or Disability, then Executive (or
Executive’s estate if applicable), in addition to the
Standard Termination Payments, and provided that Executive (unless
Executive is deceased) executes an effective general release of
claims in a form acceptable to the Company (the
“Release”), shall be entitled to payment of an amount
equal to Executive’s then-current Base Salary for a period of
twelve (12) months, less
applicable withholding
or deductions authorized by Executive or required by law
(“Severance”). Severance shall be paid in equal
bi-monthly installments over a period of twelve (12) months from
the date of execution of the Release; provided, however, should a
termination triggering Severance occur within twelve (12) months
after a Change of Control (defined below), the full amount of
Severance shall be immediately due and payable upon execution of
the Release. For purposes hereof, Change of Control means (i)
the sale of all or substantially all of the Company’s assets,
(ii) the merger of the Company with or into another entity
resulting in the stockholders of the Company immediately prior to
such merger owning 50% or less of the equity interests of the
merged entity, or (iii) the sale of 50% or more of the outstanding
common stock of the Company in one transaction or a series of
related transactions.
(g)
Definitions .
As used in this
Agreement, the following terms shall have the meanings set forth
below:
(1)
“Cause” shall mean:
(i)
Executive’s
refusal or failure (other than due to Disability) to materially
comply with any directive of the Company’s Board of Directors
that is not inconsistent with Executive’s position and
responsibilities and that is otherwise lawful, subject to notice
and a reasonable cure period to the extent curable;
(ii)
Executive’s gross
neglect, willful malfeasance or willful misconduct in connection
with Executive’s employment hereunder and which could
reasonably be expected to result in a material adverse effect on
the business of the Company;
(iii)
Executive’s
willful and material violation of any Company policy or code of
conduct applicable to executives and/or employees of the Company
generally;
(iv)
Executive’s
engagement in any activity that is a conflict of interest or
competitive with the Company, other than any action not taken in
bad faith and which is promptly remedied by Executive upon notice
by the Company;
(v)
Executive’s
engagement in any act of fraud or dishonesty against the Company or
any material breach of federal or state securities or commodities
laws or regulations;
(vi)
Executive’s
engagement in any act of assault or other act of violence in the
workplace; or
(vii)
Executive’s
conviction of, or guilty plea or plea of nolo contendre to,
any felony charge.
(2)
“Disability”
shall mean that Executive is incapable, after reasonable
accommodation, of substantially fulfilling the positions, duties,
responsibilities and obligations set forth in this Agreement
because of physical, mental or emotional incapacity resulting from
injury, sickness or disease for a period of (i) three (3)
consecutive months or (ii) an aggregate of five (5) months (whether
or not consecutive) in any twelve month period. Any question
as to the existence, extent or potentiality of Executive’s
disability shall be determined by a qualified physician selected by
the Company with the consent of Executive, which consent shall not
be unreasonably withheld. Executive or his legal
representatives or any adult member of his immediate family shall
have the right to present to such physician such information
and
arguments as to
Executive’s disability as he, she or they deem appropriate,
including the opinion of Executive’s personal
physician.
(3)
“Good
Reason” shall mean any one of the following without
Executive’s consent:
(i)
requirement that
Executive report to work more than 60 miles from the
Company’s existing corporate offices (not including normal
business travel required of Executive’s position);
(ii)
a demotion or any action
by the Company which results in substantial diminution of
Executive’s position, authority, duties or responsibilities
(other than any action n
