EMPLOYMENT AGREEMENT
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THIS
EMPLOYMENT AGREEMENT (this "Agreement"), effective as of this 12th
day
of January, 2007 (the "Effective Date"), is entered into by and
between People's
Liberation, Inc. ("Company"), and Daniel S. Guez ("Executive").
WHEREAS, Company and Executive desire to enter into this Agreement
to
assure Company of the continuing and exclusive services of
Executive and to set
forth the rights and the duties of the parties hereto.
NOW,
THEREFORE, in consideration of the foregoing and the mutual
covenants,
terms and conditions contained herein, it is hereby agreed as
follows:
1.
Employment Period.
Subject to the provisions for earlier
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termination hereinafter provided, Executive's employment hereunder
shall be for
a term (the "Employment Period") commencing on the Effective Date
and ending on
the third (3rd) anniversary of the Effective Date (the "Initial
Termination
Date"); provided, however, that this Agreement shall be
automatically extended
for one additional year on the Initial Termination Date and on each
subsequent
anniversary of the initial Termination Date, unless either
Executive or Company
elects not to so extend the term of the Agreement by notifying the
other party,
in writing, of such election not less than ninety (90) days prior
to the last
day of the term as then in effect.
2.
Terms of Employment.
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(a) Position and
Duties.
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(i)
During the Employment Period, Executive shall serve as
Chief Executive Officer and/or Creative Director of Company and
shall perform
such employment duties as are usual and customary for such
positions and such
other duties as the Board of Directors of Company (the "Board")
shall from time
to time reasonably assign to Executive. Executive shall report to the
Board of
Directors of Company and shall serve as Chairman of the Board.
During the
Employment Period, Executive shall perform his duties at the
Company's offices
in the Los Angeles metropolitan area.
(ii)
During the Employment Period, and excluding any periods
of vacation and sick leave to which Executive is entitled,
Executive agrees to
devote substantially all of his business time, energy, skill and
best efforts to
the performance of his duties hereunder in a manner that will
faithfully and
diligently further the business and interests of Company.
Notwithstanding
the
foregoing, during the Employment Period it shall not be a violation
of this
Agreement for Executive to (A) serve on corporate, civic or
charitable boards or
committees consistent with Company's conflicts of interests
policies and
corporate governance guidelines in effect from time to time, (B)
deliver
lectures or fulfill speaking engagements or (C) manage his personal
investments,
so long as such activities do not interfere with the performance of
Executive's
responsibilities as an executive officer of Company. It is expressly understood
and agreed that to the extent that any such activities have been
conducted by
Executive prior to the Effective Date and fully disclosed to
Company, the
continued conduct of such activities subsequent to the Effective
Date shall not
thereafter be deemed to interfere with the performance
<PAGE>
GUEZ EMPLOYMENT AGREEMENT
of Executive's responsibilities to Company; provided, however, that
no such
activity shall be permitted that violates any written conflict of
interest
agreement between the parties or prevents Executive from devoting
substantially
all of his business time to the fulfillment of his duties
hereunder.
(b)
Compensation.
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(i)
Base Salary. During
the Employment Period, Executive
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shall receive a base salary comprised of Four Hundred Thousand
Dollars
($400,000) per annum (the "Base Salary"). The Base Salary shall be paid at
such
intervals as Company pays executive salaries generally with the
gross sales
portion to be paid quarterly on the first payroll of each quarter.
During the
Employment Period, the Base Salary shall be reviewed at least
annually for
possible increase (but not decrease) in Company's sole discretion,
as determined
by Company's compensation committee or full Board; provided,
however, that
Executive shall be entitled to any annual cost-of-living increases
in Base
Salary that are granted to senior executives of Company generally.
Any increase
in Base Salary shall not serve to limit or reduce any other
obligation to
Executive under this Agreement. The term "Base Salary" as utilized
in this
Agreement shall refer to Base Salary as so adjusted.
(ii)
Annual Bonus. In
addition to the Base Salary, Executive
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shall be eligible to earn, for each fiscal year of Company ending
during the
Employment Period, an annual cash performance bonus (an "Annual
Bonus")
calculated in the manner set forth on Exhibit A attached
hereto.
(iii) Incentive,
Savings and Retirement Plans. During the
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Employment Period, Executive shall be eligible to participate in
all other
incentive plans, policies and programs, and all savings and
retirement plans,
policies and programs, in each case that are applicable generally
to senior
executives of Company.
(iv)
Welfare Benefit Plans.
During the Employment Period,
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Executive and Executive's eligible family members shall be eligible
for
participation in the welfare benefit plans, practices, policies and
programs
(including, if applicable, medical, dental, disability, employee
life, group
life and accidental death insurance plans and programs) maintained
by Company
for its senior executives. The Company shall pay one hundred
percent (100%) of
the premiums owed by Executive and his family for all applicable
plans or
programs.
(v)
Expenses. During the
Employment Period, Executive shall
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be entitled to receive prompt reimbursement for all reasonable
business expenses
incurred by Executive in accordance with the policies, practices
and procedures
of Company provided to senior executives of Company. The Company shall maintain
appropriate Directors' and Officers' liability insurance to
indemnify Executive
in conjunction with the performance of his duties.
(vi)
Fringe Benefits.
During the Employment Period,
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Executive shall be entitled to such fringe benefits and perquisites
as are
provided by Company to its senior executives from time to time, in
accordance
with the policies, practices and procedures of Company.
Executive shall
enjoy
first class travel in conjunction with all business matters.
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<PAGE>
GUEZ EMPLOYMENT AGREEMENT
(vii) Vacation.
During the Employment
Period, Executive
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shall be entitled to paid vacation in accordance with the plans,
policies,
programs and practices of Company applicable to its senior
executives.
(viii) Legal Fees.
Company shall pay
fifty percent (50%) of
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Executive's legal fees in conjunction with the drafting and
negotiation of this
Agreement.
(ix)
Automobile. Executive
shall be entitled to an
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automobile allowance of Two Thousand Three Hundred Dollars ($2,300)
per month
inclusive of insurance, gas and maintenance on Executive's
vehicle.
(c)
Additional Agreements.
As a condition to Company entering
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into this Agreement, Executive shall concurrently herewith enter
into a
Confidentiality and Non-Disclosure Agreement with Company (the
"Non-Disclosure
Agreement"), a form of which is set forth as Exhibit C hereto.
3.
Termination of Employment.
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(a)
Death or Disability.
Executive's employment will terminate
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automatically upon Executive's death. Executive's employment may be
terminated
if Executive suffers a Disability. For purposes of this Agreement,
"Disability"
means Executive's inability by reason of physical or mental illness
to fulfill
his obligations hereunder for ninety (90) consecutive days or on a
total of one
hundred fifty (150) days in any twelve (12) month period which, in
the
reasonable opinion of an independent physician selected by Company
or its
insurers and reasonably acceptable to Executive or Executive's
legal
representative, renders Executive unable to perform the essential
functions of
his job, even after reasonable accommodations are made by Company.
Company is
not, however, required to make unreasonable accommodations for
Executive or
accommodations that would create an undue hardship on Company.
(b)
Cause. Company may
terminate Executive's employment during
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the Employment Period for Cause or without Cause. For purposes of this
Agreement, "Cause" shall mean the occurrence of any one or more of
the following
events:
(i)
Executive's willful failure to perform or gross
negligence in performing Executive's duties owed to Company, which
is not cured
within ten (10) days following written notice delivered to
Executive by the
Board, which notice specifies such failure or negligence;
(ii)
Executive's commission of an act of fraud or dishonesty
in the performance of Executive's duties;
(iii) Executive's
conviction of, or entry by Executive of a
guilty or no contest plea to, any (x) felony or (y) any misdemeanor
involving
moral turpitude;
(iv)
Any breach by Executive of Executive's fiduciary duty or
duty of loyalty to Company; or
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<PAGE>
GUEZ EMPLOYMENT AGREEMENT
(v)
Executive's material breach of any of the provisions of
this Agreement, which is not cured within ten (10) days following
written notice
thereof from Company.
The
termination of employment of Executive shall not be deemed to be
for
Cause unless and until there shall have been delivered to Executive
a copy of a
resolution duly adopted by the affirmative vote of a majority the
Board at a
meeting of the Board called and held for such purpose (after
reasonable notice
is provided to Executive and Executive is given an opportunity to
be heard
before the Board), finding that, in the good faith opinion of the
Board,
sufficient Cause exists to terminate Executive pursuant to this
Section 3(b);
provided, that if Executive is a member of the Board, Executive
shall not
participate in the deliberations regarding such resolution, vote on
such
resolution, nor shall Executive be counted in determining a
majority of the
Board.
(c)
Good Reason.
Executive's employment may be terminated by
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Executive for Good Reason or without Good Reason. For purposes of this
Agreement, "Good Reason" shall mean the occurrence of any one or
more of the
following events without Executive's prior written consent, unless
Company fully
cures the circumstances constituting Good Reason (provided such
circumstances
are capable of cure) prior to the Date of Termination (as defined
below):
(i)
A material reduction in Executive's titles, duties,
authority and responsibilities, or the assignment to Executive of
any duties
materially inconsistent with Executive's position, authority,
duties or
responsibilities without the written consent of Executive;
(ii)
Company's reduction of Executive's annual base salary or
bonus opportunity, each as in effect on the date hereof or as the
same may be
increased from time to time;
(iii) The relocation
of Company's headquarters to a location
more than thirty-five (35) miles from Company's current
headquarters in Los
Angeles, California; or
(iv)
Company's failure to cure a material breach of its
obligations under the Agreement within fifteen (15) business days
after written
notice is delivered to the Board by Executive which specifically
identifies the
manner in which Executive believes that Company has breached its
obligations
under the Agreement.
(d)
Notice of Termination.
Any termination by Company for Cause,
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or by Executive for Good Reason, shall be communicated by Notice of
Termination
to the other party hereto given in accordance with Section 8(c) of
this
Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable
detail the facts and circumstances claimed to provide a basis for
termination of
Executive's employment under the provision so indicated and (iii)
if the Date of
Termination (as defined below) is other than the date of receipt of
such notice,
specifies the termination date (which date shall be not more than
thirty (30)
days after the giving of such notice). The failure
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<PAGE>
GUEZ EMPLOYMENT AGREEMENT
by Executive or Company to set forth in the Notice of Termination
any fact or
circumstance which contributes to a showing of Good Reason or Cause
shall not
waive any right of Executive or Company, respectively, hereunder or
preclude
Executive or Company, respectively, from asserting such fact or
circumstance in
enforcing Executive's or Company's rights hereunder.
(e)
Date of Termination.
"Date of Termination" means (i) if
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Executive's employment is terminated by Company for Cause, or by
Executive for
Good Reason, the date of receipt of the Notice of Termination or
any later date
specified therein (which date shall not be more than 30 days after
the giving of
such notice), as the case may be, (ii) if Executive's employment is
terminated
by Company other than for Cause or Disability, the Date of
Termination shall be
the date on which Company notifies Executive of such termination,
unless
otherwise agreed by Company and Executive, (iii) if Executive's
employment is
terminated by Executive without Good Reason, the Date of
Termination shall be
the thirtieth (30th) day after the date on which Executive notifies
Company of
such termination, unless otherwise agreed by Company and Executive,
and (iv) if
Executive's employment is terminated by reason of death or
Disability, the Date
of Termination shall be the date of death or Disability of
Executive, as the
case may be.
4.
Obligation of Company Upon Termination.
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(a)
Without Cause or For Good Reason. If, during the Employment
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Period, (x) Company shall terminate Executive's employment without
Cause, (y) if
the Executive shall terminate his employment for Good Reason, or
(z) if (i)
Company shall fail to extend the term of the Employment Period as
provided in
Section 1; and (ii) at any time within six months following
expiration of the
Employment Period, Company terminates Executive's employment
without Cause or
Executive terminates his employment for Good Reason or without Good
Reason:
(i)
Executive shall be paid, two lump sum payments:
(1)
Executive's earned
but unpaid Base Salary and
accrued but unpaid
vacation pay through the Date of Termination, and any Annual
Bonus required
to be paid to Executive pursuant to
Section 2(b)(ii) above for
any fiscal year of Company that ends on or before the Date of
Termination to the
extent not
previously
paid (the "Accrued Obligations"), and
(2)
an amount (the
"Severance Amount") equal to one and
one-half (1.5)
times the sum of (x) the Base Salary in
effect on the Date of
Termination plus
(y) either (A) the
average Annual Bonus received by Executive
for the two complete fiscal years of Company immediately prior to the
Termination Date (or
if less than one year after the Effective Date, the Annual
Bonus for the prior fiscal year), or (B) if the Date of Termination
occurs
before the end of the
first fiscal year after the Effective Date, the amount of
the Pro-Rated
Annual Bonus (defined
below in subsection(iii)) for such partial
fiscal year;
(ii)
The Accrued Obligations shall be paid at the time they
would otherwise have been paid had the Executive's employment
continued and the
Severance Amount shall be paid in twelve (12) equal monthly
payments on the last
day of the month commencing
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<PAGE>
GUEZ EMPLOYMENT AGREEMENT
with the last day of the month in which Executive's employment
terminates,
subject to any delays in payment contemplated by Section 8(k) of
this Agreement;
(iii) At the time when
the Annual Bonus would otherwise have
been paid had the Executive's employment continued, for the fiscal
year of
Company in which the Date of Termination occurs, Executive shall be
paid an
Annual Bonus in an amount equal to the product of (x) the amount of
the Annual
Bonus to which Executive would have been entitled if Executive's
employment had
not been terminated, and (y) a fraction, the numerator of which is
the number of
days in such fiscal year through the Date of Termination and the
denominator of
which is the total number of days in such fiscal year (a "Pro-Rated
Annual
Bonus");
(iv)
For a period of eighteen (18) months following the Date
of Termination, 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;
(v)
All outstanding stock options, restricted stock and other
equity awards granted to Executive under any of Company's equity
incentive plans
(or awards substituted therefore covering the securities of a
successor company)
shall accelerate and become fully vested on the Date of
Termination; and
(vi)
To the extent not theretofore paid or provided, Company
shall timely pay or provide to Executive any vested benefits and
other amounts
or benefits required to be paid or provided or which Executive is
eligible to
receive as of the Date of Termination under any plan, contract or
agreement of
Company and its affiliates (such other amounts and benefits shall
be hereinafter
referred to as the "Other Benefits") to which Executive is a
party.
Notwithstanding the foregoing, it shall be a condition to
Executive's right to
receive the amounts provided for in Sections 4(a)(i)(2) and
4(a)(iii) and (iv)
above that Executive execute, deliver to Company and not revoke a
release of
claims in substantially the form attached hereto as
Exhibit B.
(b)
For Cause or Without Good Reason. Except as set forth in
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Paragraph 4(a), if Executive's employment shall be terminated or
not extended by
Company for Cause or by Executive without Good Reason during the
Employment
Period, Company shall have no further obligations to Executive
under this
Agreement except to pay to Executive the Accrued Obligations when
due under
California law and to provide the Other Benefits.
(c)
Death or Disability.
If Executive's employment is terminated
-------------------
by reason of Executive's death or Disability during the Employment
Period:
(i)
The Accrued Obligations shall be paid to Executive's
estate or beneficiaries or to Executive, as applicable, in cash
within thirty
(30) days of the Date of Termination;
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<PAGE>
GUEZ EMPLOYMENT AGREEMENT
(ii)
A lump sum payment of one hundred percent (100%) of
Executive's then current annual Base Salary, as in effect on the
Date of
Termination, shall be paid to Executive's estate or beneficiaries
or to
Executive, as applicable, in cash within thirty (30) days of the
Date of
Termination;
(iii) The Pro-Rated
Annual Bonus shall be paid to Executive's
estate or beneficiaries or to Executive, as applicable, at the time
when the
Annual Bonus would other wise have been paid had the Executive's
employment
continued for the fiscal year of the Company in which the Date of
Termination
occurs;
(iv)
All outstanding stock options, restricted stock and
other equity awards granted to Executive under any of Company's
equity incentive
plans (or awards substituted therefore covering the securities of a
successor
company) shall accelerate and become fully vested on the Date of
Termination and
Executive, or his Estate, as applicable, shall be entitled to such
stock once
vested;
(v)
For a period of eighteen (18) months following the Date
of Termination, Executive as applicable and Executive's eligible
family members
shall continue to be provided 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; and
(vi)
The Other Benefits shall be paid or provided to
Executive's estate or beneficiaries or to Executive, as applicable,
on a timely
basis.
5.
Full
Settlement. In no
event shall Executive be obligated to seek
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other employment or take any other action by way of mitigation of
the amounts
payable to Executive under any of the provisions of this Agreement
and except as
expressly provided, such amounts shall not be reduced whether or
not Executive
obtains other employment. If any party to this Agreement
institutes any action
or claim for relief against the other party, then the prevailing
party shall be
entitled to recover from the other party all costs and expenses
incurred,
including reasonable attorneys' fees and costs, in bringing or
defending such
action.
6.
Certain Additional Payments by Company. In the event that any
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payments under this Agreement or any other compensation, benefit or
other
amounts payable from the Company for the benefit of the Executive
are subject to
the tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended
(the "Code") (including any applicable interest and penalties, the
"Excise
Tax"), no such payment ("Parac
