THIS EMPLOYMENT
AGREEMENT, made as of January 24, 2008 (this “
Agreement ”), by and between Castle Brands Inc., a
Delaware corporation (the “ Company ”), and John
S. Glover (the “ Executive ”), an individual
residing at 67 Wendover Road, Rye, New York, 10580.
In consideration
of the mutual covenants set forth in this Agreement, the parties
hereto agree as follows:
1.
Employment . Subject to the terms of this Agreement, the
Company agrees to employ Executive, and Executive agrees to accept
such employment as Senior Vice President — Marketing of the
Company. As such, Executive will have responsibility for such
job-related duties as will be assigned to Executive from time to
time by the Board of Directors or President of the Company or their
respective designees.
2.
Performance of Services . Executive agrees that throughout
the term of his employment hereunder he will devote his full
business time, attention, knowledge and skills, faithfully,
diligently and to the best of his ability, in furtherance of the
business of the Company and its direct or indirect subsidiaries and
will perform the duties assigned to him from time to time pursuant
to Section 1 hereof, subject, at all times, to the direction
and control of the Board of Directors or President of the Company
or their respective designees, and to the policies of the Company
generally applicable to its executives. During the term of his
employment hereunder, Executive will not accept other employment or
permit his personal business interests to materially interfere with
his duties hereunder.
3.
Term . Executive will be employed for a term commencing on
February 4, 2008 (the “ Effective Date ”)
and ending on February 3, 2012 (the “ Term
”), unless his employment is terminated prior to the
expiration of the Term pursuant to Section 6 hereof; provided,
however, that the terms of Section 7 hereof and all provisions
of this Agreement which pertain to the enforcement of
Section 7 hereof shall be effective immediately upon the
execution of this Agreement by Executive. At the end of the term,
if the Company does not offer to renew Executive’s employment
hereunder for an additional four years, on substantially the same
terms, the Company shall continue to pay to Executive his Base
Salary, benefits for a period of six (6) months after
expiration of the Term.
4.
Compensation . During the Term of this Agreement the Company
agrees to pay to Executive:
(a)
Salary . A salary (the “ Base Salary ”)
at the rate of US$250,000 per year, payable in accordance with the
Company’s standard payroll practices for executives as in
effect from time to time. Such Base Salary may be increased (but
not decreased), in the sole discretion of the Compensation
Committee of the Board of Directors of the Company, on the basis of
periodic reviews, which shall occur no less frequently than on an
annual basis.
(b)
Stock Option Grants . Executive shall be entitled to options
to purchase Common Stock of the Company to the extent granted by
the Compensation Committee of the Board of Directors of the
Company.
(c)
Incentive Bonus . In each fiscal year, the Executive shall
be eligible to receive an annual performance bonus equal to up to
60% of the Base Salary in effect on March 31 of such fiscal
year, subject to successful achievement of goals and objectives to
be agreed upon by the Executive and the Compensation Committee of
the Board of Directors of the Company, payable in accordance with
the Company’s standard practices for executives as in effect
from time to time.
(d)
Vacation . Executive shall be entitled to twenty
(20) paid vacation days in each calendar year, plus paid
Company holidays.
(e)
Other Benefits . Executive will be entitled to participate,
to the extent he is eligible under the terms and conditions
thereof, in all profit-sharing, hospitalization, insurance,
medical, disability, or other fringe benefit or executive
perquisite plans generally available to other senior executives of
the Company.
5.
Expenses . The Company will reimburse Executive for all
expenses reasonably incurred by him in connection with the
performance of his duties hereunder and the business of the Company
(including, without limitation, reasonable AICPA membership
expenses and continuing professional education programs) upon the
submission to the Company of appropriate invoices therefor, all in
accordance with the Company’s policies and procedures as in
effect from time to time for senior executives of the
Company.
(a)
Termination by the Company Without Cause . The Company may
terminate the employment of Executive hereunder at any time without
Cause (as hereinafter defined). Notice of any such termination must
be in writing and will be effective upon receipt by Executive. In
the event that the employment of Executive is terminated pursuant
to this Section 6(a) and if Executive fully complies with
Sections 7, 9, 10 and 22 of this Agreement, the Company will
continue to pay to Executive the Base Salary per annum as in effect
on the date of such termination, in accordance with the standard
payroll practices of the Company as in effect from time to time,
for a term of twelve (12) months immediately following the
date of such termination. In addition, in the event that the
employment of Executive is terminated pursuant to this clause (a),
the annual incentive bonus described in Section 4(c) will be paid,
if any, to Executive with respect to the year in which termination
occurs (pro rated for the portion of the year in which Executive
was so employed). If Executive fully complies with Sections 7,
9, 10 and 22 of this Agreement, the Company shall during the twelve
(12) month period immediately following termination of
Executive pursuant to this clause (a), to the extent permissible
under any relevant benefit plans of the Company, continue to
provide participation to Executive in all other benefits provided
for under Section 4(e) hereof, at the Company’s expense. If
Executive fully complies with Sections 7, 9, 10 and 22 of this
Agreement, on the date of termination pursuant to this
Section 6(a), the vesting of any options held by Executive
shall accelerate with respect to the number of shares of the
Company’s common stock that equals (x) the number of
shares that would have vested during the 12 months following
termination of Executive pursuant to this Section 6(a) multiplied
by (y) a fraction, the numerator of which is the number of
full calendar months that have elapsed since the last vesting date
or the original issue date (if a vesting date has not occurred) and
the denominator of which is the number of full calendar months from
the last vesting date or the original issue date (if a vesting date
has not occurred) to the vesting date occurring during the
12 months following termination. Further, if Executive fully
complies with Sections 7, 9, 10 and 22 of this Agreement, any
stock option held by Executive that is vested at the time of
Executive’s termination pursuant to this Section 6(a)
(including any portion of such option for which vesting was
accelerated pursuant to the preceding sentence) will be exercisable
until the earlier to occur of (i) the expiration date of such
option pursuant to its terms and (ii) twelve (12) months
following the date of termination pursuant to this
Section 6(a).
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(b)
Termination by the Company for Cause . The Company may
terminate the employment of Executive hereunder for Cause (as
hereinafter defined). Executive shall be entitled to thirty (30)
days prior written notice of the Company’s intent to
terminate Executive hereunder and the right to address and/or cure
such Cause during such thirty (30) day notice period. Any
notice of intent to terminate for Cause must specify the particular
grounds therefor in reasonable detail. In the event that the
employment of Executive is terminated pursuant to this clause (b),
the Company will pay to Executive the amount of all accrued but
unpaid Base Salary to the date of such termination, but no annual
incentive bonus will be paid with respect to (x) the year in
which termination occurs, or (y) the immediately prior year if
Executive is terminated under this clause (b) prior to payment
of the bonus applicable to such prior year. As used herein, “
Cause ” means Executive’s (i) personal
dishonesty, (ii) willful misconduct, (iii) breach of
fiduciary duty, (iv) failure to substantially perform assigned
duties relating to Executive’s performance hereunder (other
than any such failure owing to Executive becoming Disabled (as
hereinafter defined)) as reasonably determined by a majority of the
entire Compensation Committee of the Board of Directors of the
Company, after consultation with the Chief Executive Officer of the
Company, (v) conviction of, or the entry by the Executive of
any plea of guilty or nolo contendre to, any felony or other lesser
crime that would require removal from his position at the Company
(e.g. any alcohol or drug related misdemeanor) or
(vi) material breach of any provision of this Agreement as
reasonably determined by the Compensation Committee of the Board of
Directors of the Company, after consultation with the Chief
Executive Officer; provided, however, that in any of the foregoing
circumstances, Executive has failed to cure such Cause within the
fifteen (15) day period referenced in the second sentence of
this Section 6(b). In the event Executive is terminated for
Cause solely pursuant to (iv) or (vi) above, any stock
option held by Executive that is vested at the time of such
termination may be exercised until the earlier to occur of
(i) the expiration date of such option pursuant to its terms
and (ii) one year after such termination. In the event
Executive is terminated for Cause other than solely pursuant to
(iv) or (vi) above, any stock option held by Executive
shall immediately expire and no longer be exercisable upon such
termination.
(c)
Termination by Executive . Executive may terminate his
employment hereunder (x) at any time without cause or
(y) for Good Reason (as hereinafter defined). Notice of any
such termination must be in writing and will be effective sixty
(60) days after receipt by the Company or such earlier date as
may be specified by the Company after receipt of such notice. In
the event that Executive terminates employment pursuant to
subclause (x) of this clause (c), the Company will pay to
Executive the amount of all accrued but unpaid Base Salary to the
date of such termination, but no annual incentive bonus will be
paid with respect to the year in which termination occurs. In the
event that Executive terminates employment hereunder pursuant to
subclause (y) of this clause (c) and Executive fully
complies with Sections 7, 9, 10 and 22 of this Agreement,
Executive will be entitled to the same salary, benefits and bonus
payments as would be provided were he to be terminated by the
Company without Cause pursuant to Section 6(a) above. Further, in
the event Executive terminates his employment hereunder for Good
Reason or without cause and Executive fully complies with
Sections 7, 9, 10 and 22 of the Agreement, any stock option
held by Executive that is vested at the time of Executive’s
termination will be exercisable until the earlier to occur of
(A) the expiration date of such option pursuant to its terms
and (B) one year following the termination of
Executive’s employment. As used herein, “ Good
Reason ” means a termination by Executive of
Executive’s employment hereunder within thirty (30) days
after (i) any material diminution in the nature, title or
status of Executive’s job responsibilities from those in
effect on the Effective Date or the most recent anniversary
thereof, (ii) dissolution or divestiture of all or a
significant portion of the Company or other material change in the
Company, which in each case would materially adversely diminish the
nature, title or status of Executive’s job responsibilities,
(iii) relocation by the Company of the Executive’s
office to any location not within fifty (50) miles from
Executive’s principal place of employment as of the Effective
Date or (iv) the Company’s material breach of any
provision of this Agreement which is not cured within fifteen
(15) business days after written notice thereof from Executive
to the Company.
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(d)
Termination Upon Death . This Agreement will terminate
automatically on the death of Executive. In the event that the
employment of Executive is terminated pursuant to this clause (d),
the Company will promptly pay to the representative of Executive
the amount of all accrued but unpaid Base Salary to the date of
such termination, the annual incentive bonus, if any, described in
Section 4(c) with respect to the year in which termination occurs
(pro rated for the portion of the year in which Executive was so
employed), and an amount equal to six (6) months Base Salary.
Further, any stock option held by Executive that is vested at the
time of death will be exercisable by Executive’s personal
representative or estate for a period of two (2) years from
date of death and all unvested stock options held by Executive
shall fully vest and be exercisable by Executive’s personal
representative or estate for a period of two years from date of
death.
(e)
Termination by the Company by Reason of Disability . The
Company may terminate the employment of Executive hereunder after
Executive becomes Disabled. Notice of any such termination must be
in writing and will be effective thirty (30) days after
receipt by Executive. In the event that the employment of Executive
is terminated pursuant to this clause (e), the Company will pay to
Executive or his representative the amount of all accrued but
unpaid Base Salary to the date of such termination less the amount,
if any, received by Executive from any disability insurance
maintained by the Company, the annual incentive bonus described in
Section 4(c), if any, with respect to the year in which
termination occurs (pro rated for the portion of the year in which
Executive was so employed) and an amount equal to one year’s
Base Salary to be paid as a lump sum on termination. Further, any
stock option held by Executive that is vested at the time of
termination for disability will be exercisable for a period of two
(2) years from date of such termination for disability and all
unvested stock options held by Executive shall fully vest and be
exercisable for a period of two (2) years from date of
termination for disability. As used herein, the term “
Disabled ” means Executive becoming physically or
mentally disabled or incapacitated to the extent that he has been
or will be unable to perform his duties hereunder on account of
such disabilities or incapacitation for a continuous period of six
(6) months as determined by a qualified independent physician
or group of physicians selected by the Company and approved by
Executive or his representative, such approval not to be
unreasonably withheld.
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(f)
Change of Control . A “ Change of Control
” shall have occurred if: (i) any person (as such term
is used in Section 13(d) of the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”)) becomes the
“beneficial owner” (as determined pursuant to
Rule 13d-3 of the Exchange Act), directly or indirectly, of
securities of the Company representing more than thirty-five
percent (35%) of the aggregate voting power of the Company’s
then outstanding securities, other
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