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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT
AGREEMENT (this " Agreement ") is
made as of December 11, 2006, by and between NexCen Brands, Inc., a
Delaware corporation (the " Company "), and Charles A. Zona (the " Executive
"), each a " Party "
and collectively the " Parties ."
Unless otherwise indicated, capitalized terms used herein are
defined in Section 2.1 .
WHEREAS, the
Company has determined that it is in the best interests of the
Company and its shareholders to enter into an employment agreement
with the Executive and the Executive is willing to serve as an
employee of the Company.
NOW, THEREFORE, in
consideration of the mutual covenants and agreements set forth
herein, including the Option Grant, as defined below, it is agreed
by and between the Executive and the Company as follows:
ARTICLE I
EMPLOYMENT TERMS
1.1
Employment . The Company will employ the Executive, and the
Executive accepts employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on
the date hereof (the "Effective Date") and ending as provided in
Section 1.4(a) hereof (the " Employment
Period ").
1.2 Position and
Duties .
(a)
Generally . The Executive shall serve as the Executive Vice
President, Brand Management and Licensing, of the Company and, in
such capacity shall perform such duties as are set forth in the
By-Laws of the Company and as are customarily performed by an
officer with similar title and responsibilities of a public company
of a similar size and shall have such power and authority as shall
reasonably be required to enable him to perform his duties
hereunder; provided, however, that in exercising such power and
authority and performing such duties, he shall at all times be
subject to the authority, control and direction of the President
and Chief Executive Officer of the Company.
(b) Duties
and Responsibilities . The Executive shall report to the
President and Chief Executive Officer of the Company and shall
devote his full business time and attention to the business and
affairs of the Company and its Subsidiaries. The Executive shall
perform his duties and responsibilities in a diligent, trustworthy,
businesslike and efficient manner. The Executive shall not engage
in any other business activities that could reasonably be expected
to conflict with the Executive’s duties, responsibilities and
obligations hereunder. During the Employment Period, the Executive
shall promptly bring to the Company or its Subsidiaries, as
applicable, all investment or business opportunities relating to
the Business of which the Executive becomes aware.
(c)
Principal Office . The principal place of performance by the
Executive of his duties hereunder shall be the Company’s
principal executive offices in New York, New York, although the
Executive may be required to travel outside of the area where the
Company’s principal executive offices are located in
connection with the business of the Company.
1.3
Compensation .
(a) Base
Salary . The Executive’s base salary shall be $300,000.00
per annum (the " Base Salary "). The
Base Salary payable for Fiscal Year 2006 shall be pro rated based
on the number of days from and including the Effective Date through
and including December 31, 2006. The Base Salary will be
payable to the Executive by the Company in regular installments in
accordance with the Company’s general payroll practices. The
Executive shall receive such increases (but not decreases) in his
Base Salary as the President and Chief Executive Officer, or the
compensation committee of the Board, may approve in his or its sole
discretion from time to time, provided that the Executive’s
Base Salary will be reviewed for potential upward adjustment not
less often than annually.
(b) Annual
Bonus . Executive will be eligible to receive a
performance-based bonus calculated as a percentage of the Bonus
Pool, as determined by the President and Chief Executive Officer,
based on achieving annual performance goals that may be recommended
by the President and Chief Executive Officer, all of which shall be
subject to review and confirmation by the Company’s
compensation committee or Board of Directors to the extent required
under applicable securities laws and the Nasdaq listed company
requirements.
(c)
Withholding . All payments made under this Agreement
(including Base Salary, bonus payments, and other amounts) shall be
subject to withholding for income taxes, payroll taxes and other
legally required deductions.
(d)
Expenses . The Company will reimburse the Executive for all
reasonable expenses incurred by him in the course of performing his
duties under this Agreement that are consistent with the
Company’s policies in effect at that time with respect to
travel, entertainment and other business expenses, subject to the
Company’s requirements with respect to reporting and
documentation of such expenses.
(e)
Vacation; Holiday Pay and Sick Leave . The Executive shall
be entitled to four (4) weeks’ paid vacation in each calendar
year, which if not taken during any year may be carried forward to
any subsequent year. Executive shall receive holiday pay and paid
sick leave as provided to other executive employees of the
Company.
(f)
Additional Benefits . During the Employment Period, the
Executive shall be entitled to participate (for himself and, as
applicable, his dependents) in the group medical, life, 401(k) and
other insurance programs, employee benefit plans and perquisites
which may be adopted by the Board, or the compensation committee of
the Board, from time to time, for participation by the
Company’s senior management or executives, as well as dental,
life and disability insurance coverage, with payment of, or
reimbursement for, such insurance premiums by the Company, subject
to, in all cases, the terms and conditions established by the Board
with respect to such plans (collectively, the "
Benefits "); provided, however, that the
Board, in its reasonable discretion, may revise the terms of any
Benefits so long as such revision does not have a
disproportionately negative impact on the Executive
vis-à-vis other Company employees, to the extent
applicable.
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(g)
Indemnification . The Executive shall be entitled to
indemnification by the Company in the same circumstances and to the
same extent as the other executive officers and directors of the
Company, which indemnification shall in no event be less favorable
to the Executive than the fullest scope of indemnification
permitted by applicable Delaware law (or any such greater scope of
indemnification provided by agreement or by the terms of the
Company’s Certificate of Incorporation or By-Laws to any
executive officer or director of the Company).
(h) Stock
Options . The Executive shall be granted options to purchase a
total of 250,000 shares of the Company’s common stock
(the "Stock Options" ) on the
Effective Date (such grant of Stock Options being referred to
herein as the "Option Grant" ).
These Stock Options shall have an exercise price equal to the fair
market value of the Company’s common stock on the date of
grant, and a 10-year term. The Stock Options shall be granted
pursuant to and be subject to the terms of the Company’s 2006
Equity Incentive Plan (the "Plan" )
and customary grant agreements. The Stock Options shall vest and
become exercisable in equal tranches on the first, second and third
anniversaries of the Effective Date, subject to the
Executive’s continued employment with the Company on each
vesting date, and further subject to accelerated vesting under the
Plan, the grant agreement and the terms of this Agreement; provided
that in the event of the Executive’s termination by the
Company without Cause, the Executive’s resignation with Good
Reason or upon a Change of Control (as defined below), the
Executive shall immediately be fully vested in all of the Stock
Options. Except as provided in the preceding sentence, any unvested
options shall be forfeited upon termination of Executive’s
employment, and any options that are vested but unexercised upon
termination shall be subject to the terms and conditions of the
Plan or, if applicable, the last sentence of Section 1.4(c)
hereof. In the event that the Company elects from time to time
during the Employment Period to award to its senior management or
executives, generally, options to purchase shares of the
Company’s stock pursuant to any stock option plan or similar
program, the Executive shall be entitled to participate in any such
stock option plan or similar program on a basis consistent with the
participation of other senior management or executives of the
Company.
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1.4 Term and
Termination .
(a)
Duration . The Employment Period shall commence on the
Effective Date and the initial term shall terminate three
(3) years from the Effective Date (the " Term
"), unless earlier terminated by the Company or the
Executive as set forth in this Section 1.4 . The Term
shall renew automatically for one-year periods, unless either party
gives the other party written notice of its intention not to renew
the Agreement no later than 90 days prior to the expiration of
the then current Term. The Employment Period shall be terminated
prior to the then-applicable expiration of the Term upon the first
to occur of (i) termination of the Executive’s
employment by the Company for Cause, (ii) termination of the
Executive’s employment by the Company without Cause,
(iii) the Executive’s resignation with Good Reason,
(iv) the Executive’s resignation other than for Good
Reason, or (v) the Executive’s death or Disability. The
Executive shall not terminate the Employment Period unless he gives
the Company written notice that he intends to terminate the
Employment Period at least (i) 90 days prior to the
Executive’s proposed Termination Date in the case of
termination without Good Reason or (ii) 30 days prior to the
Executive’s proposed Termination Date in the case of
termination with Good Reason. As a condition to Executive receiving
any payments or benefits under Section 1.4(b) or
Section 1.4(c), the Executive shall execute and deliver to the
Company the General Release in the form attached hereto as
Exhibit A .
(b)
Severance Upon Termination Without Cause, Upon Resignation by
the Executive For Good Reason or Failure to Renew Term . If the
Employment Period is terminated by the Company without Cause or if
the Executive resigns for Good Reason, or if the Company fails to
renew the Term (in which case termination of the Executive’s
employment shall be effective at the expiration of the then-current
Term), then the Executive will be entitled to receive (1) any
unpaid Base Salary through and including the date of termination or
resignation and any other amounts, including any declared but
unpaid Annual Bonus, or other entitlements then due and owing to
the Executive as of the Termination Date; (2) an amount equal
to the Executive’s Base Salary (at the rate in effect on the
date the Executive’s employment is terminated) for a 6-month
period following the Executive’s termination of employment as
described in this Section 1.4(b) , payable in
(A) substantially equal installments over the lesser of
(i) a six-month period immediately following such termination,
or (ii) such shorter period that is the longest period
permissible in order for the payments not to be considered
"nonqualified deferred compensation" under Section 409A of the
Code or any regulations, rulings or other regulatory guidance
issued thereunder, or, (B) if such payment terms would not
satisfy the requirements of Section 409A of the Code and the
regulations, rulings and other regulatory guidance issued
thereunder, a lump sum on the date that is six months following the
Executive’s "separation from service" (within the meaning of
Section 409A of the Code) occurring in connection with such
termination and (3) continue to participate in the
Company’s group medical plan on the same basis as he
previously participated or receive payment of, or
reimbursement for, COBRA premiums (or, if COBRA coverage is not
available, reimbursement of premiums paid for other medical
insurance in an amount not to exceed the COBRA premium) for a
one-year period following the Executive’s termination of
employment; provided that if the
Executive is provided with health insurance coverage by a successor
employer, any such coverage by the Company shall cease (each of
(2) and (3) referred to as the " Severance
Payment "). The Executive also shall be
entitled to receive payment for all reimbursable expenses or other
entitlements then due and owing to the Executive as of the
Termination Date. If the Executive breaches his obligations under
Section 1.6, 1.7, 1.8 or 1.9 of this Agreement, the
Company’s obligation to make any Severance Payments and
provide any Benefits shall cease as of the date of such breach;
provided, that if the Executive cures such breach within
10 days of receiving written notice from the Company of such
breach (which notice the Company shall provide promptly to the
Executive after learning of such breach), the Company shall
promptly pay all Severance Payments not made during such period of
dispute and resume making Severance Payments and providing Benefits
promptly following such cure.
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(c)
Severance upon a Change of Control . Anything contained
herein to the contrary notwithstanding, in the event the
Executive’s employment hereunder is terminated within twelve
(12) months following a Change of Control (as defined in the Plan)
by the Company without Cause or by the Executive with Good Reason,
the Executive shall be entitled to receive the Severance Payment as
described in sub-section (b) above; provided, however, that in
lieu of the calculation contained in Section 1.4(b)(2)
, Executive shall be entitled to receive an amount equal to $100
less than two times the sum of (i) the Executive’s Base
Salary (at the rate in effect on the date of termination) and
(ii) the annual bonus paid to Executive pursuant to Section
1.3(b) in the year prior to such Change of Control, if any;
provided, however, that if such lump sum severance payment, either
alone or together with other payments or benefits, either cash or
non-cash, that the Executive has the right to receive from the
Company, including, but not limited to, accelerated vesting or
payment of any deferred compensation, options, stock appreciation
rights or any benefits payable to the Executive under any plan for
the benefit of employees, would constitute an "excess parachute
payment" (as defined in Section 280G of the Internal Revenue
Code of 1986), then such lump sum severance payment or other
benefit shall be reduced to the largest amount that will not result
in receipt by the Executive of an "excess parachute payment." The
determination of the amount of the payment described in this
subsection shall be made by the Company’s independent
auditors at the sole expense of the Company. For purposes of
clarification the value of any options described above will be
determined by the Company’s independent auditors using a
Black-Scholes valuation methodology. If within twelve
(12) months after the occurrence of a Change of Control, the
Company shall terminate the Executive’s employment without
Cause or the Executive terminates his employment with Good Reason,
then notwithstanding the vesting and exercisability schedule in any
stock option or other grant agreement between the Company and the
Executive, all unvested stock options, shares of restricted stock
and other equity awards granted by the Company to the Executive
pursuant to any such agreement shall immediately vest, and all such
stock options shall become exercisable and shall remain exercisable
for the lesser of 180 days after the effective date of
termination of the Executive’s employment or the remaining
term of the applicable option.
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(d) Death
and Disability . In the event of the Company terminates this
Agreement due to the death or Disability of the Executive, the
Company shall pay the Executive or his estate his Base Salary
through the date of termination, at the rate then in effect, any
declared but unpaid Annual bonus, and all expenses or accrued
Benefits, including any arising prior to such termination which are
payable to the Executive pursuant to this Agreement through the
date of termination. Any other rights and benefits the Executive
may have under employee benefit plans and programs of the Company
generally in the event of the Executive’s Disability shall be
determined in accordance with the terms of such plans and programs.
In the event of Executive’s death, any rights and benefits
that the Executive’s estate or any other person may have
under employee benefit plans and programs of the Company generally
in the event of the Executive’s death shall be determined in
accordance with the terms of such plans and programs.
(e) Salary
and Other Payments Through Termination . If the
Executive’s employment with the Company is terminated during
the Term (i) by the Company for Cause or (ii) by the
Executive other than for Good Reason, the Executive will be
entitled to receive his Base Salary through the Termination Date,
as well as any declared but unpaid Annual Bonus, but will not be
entitled to receive any Severance Payments or Benefits after the
Termination Date. The Executive shall be entitled to receive
payment for all reimbursable expenses or other entitlements then
due and owing to the Executive as of the Termination
Date.
(f) Other
Rights . Except as set forth in this Section 1.4 ,
all of the Executive’s rights to receive Base Salary,
Benefits and annual bonuses hereunder (if any) which accrue or
become payable after the termination of the Employment Period shall
cease upon such termination.
(g)
Continuing Benefits . Notwithstanding
Section 1.4(f), termination pursuant to this
Section 1.4 shall not modify or affect in any way
whatsoever any vested right of the Executive to benefits payable
under any retirement or pension plan or under any other employee
benefit plan of the Company, and all such benefits shall continue,
in accordance with, and subject to, the terms and conditions of
such plans, to be payable in full to, or on account of, the
Executive after such termination.
(h) No
Duty of Mitigation . The Executive shall not be required to
mitigate the amount of any payment provided for in this
Article I by seeking other employment or otherwise.
1.5 Confidential
Information .
(a) The
Executive shall not disclose or, directly or indirectly, use at any
time, during the Employment Period or thereafter, any Confidential
Information (as defined below) of which the Executive is or becomes
aware, whether or not such information is developed by him, alone
or with others, except to the extent that (i) such disclosure
or use is required by the Executive’s performance of the
duties assigned to the Executive by the President and Chief
Executive Officer, (ii) the Executive is required by subpoena
or similar process to disclose or discuss any Confidential
Information, provided, that in such case, the Executive shall
promptly inform the Company in writing of such event, shall
cooperate with the Company in attempting to obtain a protective
order or to otherwise limit or restrict such disclosure to the
greatest extent possible, except if the Executive’s
reasonable interests are adverse to the Company with respect to
such disclosure or discussion, and shall disclose only that portion
of the Confidential Information as is strictly required, or
(iii) such Confidential Information is or becomes generally
known to and available for use by the public, other than as a
result of any action or inaction directly or indirectly by the
Executive in breach of this Agreement. At the Company’s
expense, the Executive shall take all appropriate steps to
safeguard Confidential Information and to protect it against
disclosure, misuse, espionage, loss and theft. The Executive
acknowledges that the Confidential Information obtained by him
during the course of his employment with the Company is the sole
and exclusive property of the Company and its Subsidiaries, as
applicable.
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(b) The
Executive understands that the Company and its Subsidiaries will
receive from third parties confidential or proprietary information
(" Third Party Information ")
subject to a duty on the part of the Company and its Subsidiaries
to maintain the confidentiality of such information and to use it
only for certain limited purposes. During the Employment Period and
in the period specified in such confidentiality agreements, and
without in any way limiting the provisions of
Section 1.5(a) above, the Executive will hold Third
Party Information in confidence, consistent with the obligations
applicable to Confidential Information of the Company generally,
and will not disclose to anyone (other than personnel and agents of
the Company or its Subsidiaries who need to know such information
in connection with their work for the Company or its Subsidiaries)
or use, except in connection with his work for the Company or its
Subsidiaries, Third Party Information unless expressly authorized
by the President and Chief Executive Officer in writing.
(c) As used in
this Agreement, the term " Confidential Information
" means information that is not generally known to
the public and that is related in any way to the actual or
anticipated business of the Company, its Subsidiaries, its
Affiliates or any of their respective predecessors in interest,
including but not limited to (i) business development, growth
and other strategic business plans, (ii) properties available
for acquisition, financing development or sale,
(iii) accounting and business methods, (iv) services or
products and the marketing of such services and products,
(v) fees, costs and pricing structures, (vi) designs,
(vii) analysis, (viii) drawings, photographs and reports,
(ix) computer software, including operating systems,
applications and program listings, (x) flow charts, manuals
and documentation, (xi) data bases, (xii) inventions,
devices, new developments, methods and processes, whether
patentable or unpatentable and whether or not reduced to practice,
(xiii) copyrightable works, (xiv) all technology and
trade secrets, (xv) confidential terms of material agreements
and customer relationships, and (xvi) all similar and related
information in whatever form or medium. Confidential Information
shall not include any information that has become generally
available to the public (other than through a breach by Executive
of this Agreement) prior to the date the Executive proposes to
disclose or use such information or general know-how of the
Executive.
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1.6 Inventions
and Patents . Executive acknowledges that all discoveries,
concepts, ideas, inventions, innovations, improvements,
developments, products, methods, processes, techniques, programs,
designs, analyses, drawings, reports, patents, copyrightable works
and mask works (whether or not including any Confidential
Information) and all issuances, registrations or applications
related thereto, all other proprietary information or intellectual
property and all similar or related information (whether or not
patentable) conceived, developed, contributed to, made, or reduced
to practice by Executive (either alone or with others) while
employed by Company or any of its Subsidiaries or Affiliates or any
of their respective predecessors in interest (including prior to
the date of this Agreement) or using the materials, facilities or
resources of the Company or any of its Subsidiaries or Affiliates
or any of their respective predecessors in interest (collectively,
" Company Works ") is the sole and
exclusive property of the Company and its Subsidiaries. Executive
hereby assigns all right, title and interest in and to all Company
Works to the Company and its Subsidiaries and waives any moral
rights he may have therein, without further obligation or
consideration. Any copyrightable work prepared in whole or in part
by the Executive will be deemed "a work made for hire" under
Section 201(b) of the 1976 Copyright Act, and the Company and its
Subsidiaries shall own all of the rights comprised in the copyright
therein. The Executive shall promptly and fully disclose in writing
all Company Works to the Company and shall cooperate with the
Company and its Subsidiaries to protect, maintain and enforce the
Company’s and its Subsidiaries’ interests in and rights
to such Company Works (including, without limitation, providing
reasonable assistance in securing patent protection and copyright
registrations and executing all affidavits, assignments,
powers-of-attorney and other documents as reasonably requested by
the Company, whether such requests occur prior to or after
termination of the Executive’s employment with the
Company).
1.7 Delivery of
Materials Upon Termination of Employment . As requested by the
Company from time to time and in any event upon the termination of
the Executive’s employment with the Company, the Executive
shall promptly deliver to the Company, or at the Company’s
election destroy, all copies and embodiments, in whatever form or
medium, of all Confidential Information, Company Works and other
property and assets of the Company and its Subsidiaries in the
Executive’s possession or within his control (including, but
not limited to, office keys, access cards, written records, notes,
photographs, manuals, notebooks, documentation, program listings,
flow charts, magnetic media, disks, diskettes, tapes computers and
handheld devices (including all software, files and documents
thereon) and any other materials containing any
Confidentia
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