EXHIBIT 10.1

 

EXECUTION COPY

 

SEPARATION AGREEMENT AND GENERAL RELEASE

 

This SEPARATION AGREEMENT AND GENERAL RELEASE (the “Agreement”) is entered into
by and between DONALD JONES (hereinafter referred to as “Employee”) and
FREDERICK’S OF HOLLYWOOD GROUP INC., a New York corporation (hereinafter
referred to as the “Company”).

 

Recitals

 

A.              Employee has been employed by the Company since August 22, 2011.
Employee’s last day of employment will be March 15, 2013.

 

B.              Employee and the Company wish to enter into an Agreement to
clarify and resolve any disputes that may exist between them arising out of the
employment relationship and its termination, and any continuing obligations of
the parties to one another following the end of the employment relationship.
This Agreement constitutes the entire agreement of the parties with respect to
their post-employment relationship.

 

C.              In consideration of the Company’s agreement to pay Employee a
termination payment set forth herein, the Company has asked Employee to waive
any and all rights Employee may have in potential claims against the Company.
The Company has advised Employee of Employee’s right to consult an attorney at
Employee’s own expense prior to signing this Agreement and has provided Employee
with twenty-one (21) calendar days in which to consider this Agreement and seek
legal assistance. Employee has either consulted an attorney of Employee’s choice
or voluntarily elected not to consult legal counsel, and understands that
Employee is waiving all potential claims against the Company and its agents.

 

D.              This Agreement is not and should not be construed as an
admission or statement by either party that it or any other party has acted
wrongfully or unlawfully. Both parties expressly deny any wrongful or unlawful
action and enter this Agreement for the sole purpose of clarifying and resolving
any potential issues between them.

 

E.               The Effective Date of this Agreement is defined in Section
10(d) hereof. Each of the covenants and obligations set forth herein is
contingent upon the occurrence of the Effective Date.

 

Agreements

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises contained below, it is agreed as follows:

 

1.                  Employment Ending Date. Employee’s employment with Company
will terminate effective on March 15, 2013 (“Termination Date”). Employee will
have no further employment duties or responsibilities to the Company after the
Termination Date. Should Employee file a claim for unemployment benefits
following the Termination Date, the Company will not contest it.

 

 

 

 

2.                  Separation Benefits. Employee is not eligible for any
payments or benefits by virtue of Employee’s employment with the Company or
termination thereof except for those expressly described in this Agreement.
Employee will not receive the pay and benefits described in Section 2 of this
Agreement if Employee (i) does not sign and return this Agreement, (ii) revokes
this Agreement after signing it during the applicable revocation period, or
(iii) violates any of the terms and conditions set forth in this Agreement. If
Employee timely signs this Agreement and does not revoke it, and complies with
the terms of this Agreement, Employee will receive the following benefits in
consideration of Employee’s releases of claims in favor of the Company, which
are in addition to anything Employee is otherwise entitled to or has been paid
by the Company, including but not limited to any accrued and unused vacation
pay:

 

(a)                The Company shall pay Employee the aggregate gross amount of
$200,000 (six (6) months’ base salary), less applicable withholding deductions
(the “Severance Amount”), which will be paid in accordance with the Company’s
customary payroll procedures commencing with the first payroll date following
the Effective Date, as defined in Section 10(d) of this Agreement, and
continuing until the Severance Amount is paid in full.

 

(b)               Employee’s medical, dental and vision benefits coverage will
end as of the last day of the month in which Employee’s employment terminates,
unless Employee elects to self-pay for health insurance continuation benefits
under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).

 

(c)                The Company currently maintains a $1,500,000 life insurance
policy for Employee’s benefit (Carrier: ING Reliastar Life), for which the cost
of the annual premium has previously been paid for the annual period ended
February 23, 2013. If employee desires to continue coverage under this policy
after the Termination Date, the Company shall transfer ownership of the policy
to Employee. Employee will be responsible for payment directly to the carrier of
all premiums after the Termination Date and the Company will not have any
further obligation to pay any costs or premiums associated with such insurance
plan at any time.

 

(d)               Employee has been covered under a Company group long-term
disability insurance policy (“Group LTD”) and a Company group core life and AD&D
insurance policy (“Group Life” and, together with Group LTD, the “Policies”)
(Carrier: Cigna). In the event Employee elects to continue coverage and convert
the Policies to individual policies after the Termination Date, Employee will be
responsible for payment directly to the carrier of all premiums after the
Termination Date and the Company will not have any further obligation to pay any
costs or premiums associated with the Policies at any time.

 

(e)                Except as expressly provided in this Section 2 or as required
by applicable law, Employee shall not have the right to continue participation
in any Company benefit plan following the Termination Date.

 

(f)                Pursuant to a Stock Option Agreement, dated September 8,
2011, between the Company and Employee (“September 2011 Option Agreement”),
Employee was granted 150,000 stock options with an exercise price of $0.62 per
share under the Company’s 2010 Long Term Incentive Equity Plan (“2010 Plan”), of
which 75,000 stock options have previously vested. In accordance with the terms
of the September 2011 Option Agreement, the 75,000 stock options that would have
otherwise vested on August 22, 2013 will continue to vest as scheduled, and such
stock options, together with the 75,000 stock options that have previously
vested, will continue to be exercisable until September 7, 2021.

 

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(g)               Pursuant to a Stock Option Agreement, dated January 11, 2012,
between the Company and Employee (“January 2012 Option Agreement”), Employee was
granted 42,000 stock options with an exercise price of $0.40 per share under the
2010 Plan, of which 28,000 stock options have previously vested. In accordance
with the terms of the January 2012 Option Agreement, any stock options that have
vested as of the Termination Date will be exercisable for a period of three (3)
months after the Termination Date. Any stock options that have not vested as of
the Termination Date will expire on the Termination Date.

 

(h)               Pursuant to a Restricted Stock Agreement, dated September 8,
2011, between the Company and Employee (“September 2011 Restricted Stock
Agreement”), Employee was issued 80,000 shares of restricted stock under the
2010 Plan, of which 40,000 shares have previously vested and 40,000 shares are
scheduled to vest on August 22, 2013. In accordance with the terms of the
September 2011 Restricted Stock Agreement, the 40,000 shares of restricted stock
that have vested as of the Termination Date will remain vested and outstanding,
and the 40,000 shares of restricted stock that would have otherwise vested on
August 22, 2013 will continue to vest as scheduled.

 

(i)                 Pursuant to a Restricted Stock Agreement, dated January 11,
2012, between the Company and Employee (“January 2012 Restricted Stock
Agreement”), Employee was issued 18,000 shares of restricted stock under the
2010 Plan, of which 12,000 shares have previously vested and 6,000 shares are
scheduled to vest on January 12, 2014. In accordance with the terms of the
January 2012 Restricted Stock Agreement, the 12,000 shares of restricted stock
that have vested as of the Termination Date will remain vested and outstanding,
and the 6,000 shares of restricted stock that have not vested as of the
Termination Date will expire on the Termination Date.

 

(j)                 Employee shall remain subject to the Company’s Insider
Trading Policy and applicable securities laws, which impose limits on when
employees or recently separated employees are permitted to trade in the
Company’s securities.

 

3.                  Other Payments. The Company will pay Employee:

 

(a)                an amount representing all accrued but unused vacation time
as of the Termination Date, less all applicable withholding deductions, payable
in a lump sum on the Termination Date. As of the Termination Date, Employee had
119.38 hours of accrued and unused vacation time; and

 

(b)               subject to presentation of appropriate documentation, all
valid business expenses incurred through the Termination Date, payable as soon
as practicable thereafter.

 

4.                  Return of Company Property. Employee covenants, represents
and warrants to the Company that, on or prior to the Termination Date, Employee
will return to the Company any and all materials and property of the Company of
any type whatsoever (including, without limitation, all computers, computer
equipment, any mobile phones and devices, all credit cards, office keys,
identification badges, access cards, correspondence, tangible proprietary
information, documents, records, notes, contracts, and other confidential or
proprietary materials) that have been in Employee’s possession or control.

 

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5.                  Survival of Certain Employment Agreement Provisions. As of
the Effective Date (defined in Section 10(d)), all rights, obligations and
responsibilities of the parties under the Employment Agreement between the
Company and Employee, dated September 8, 2011 (“Employment Agreement”) are
terminated in all respects, except for Employee’s obligations under Section 6 of
the Employment Agreement relating to non-disclosure of the Company’s
confidential information and non-solicitation, which survive termination of the
Employment Agreement.

 

6.                  Confidentiality of Separation Agreement; Non-Disparagement.

 

(a)                Employee agrees to keep the terms of this Agreement
(including, but not limited to the Severance Amount) and any negotiations
related thereto, completely confidential, and not to disclose any information
concerning this Agreement or its terms except (i) to Employee’s immediate
family, legal counsel, and/or financial advisors, who will be informed of and
bound by this confidentiality clause, (ii) in response to a subpoena issued by a
court of competent jurisdiction or as otherwise required by law and (iii)
Employee may disclose the terms of (but not the negotiations related to) this
Agreement once the Agreement has been publicly filed with the U.S. Securities
and Exchange Commission (“SEC”).

 

(b)               Employee shall refrain from disparaging the Company, its
subsidiaries, its affiliates and their respective officers, directors,
independent contractors and employees.

 

(c)                Management of the Company will respond to any inquiries from
prospective employers of Employee by verifying Employee’s prior dates of
employment, salary and title, without disparaging comment or information.

 

7.                  General Release of Claims. Employee expressly waives any and
all claims against the Company and releases the Company, including, without
limitation, its officers, directors, members, shareholders, managers,
consultants, agents, attorneys, parent and subsidiary corporations, and
representatives (the “Company Releasees”), from any and all claims that Employee
may have against the Company Releasees, or any of them, arising from events that
occurred prior to the Effective Date, including but not limited to claims in any
way connected with Employee’s employment with the Company and the termination
thereof, whether or not such claims are presently known or unknown to Employee.
It is understood that this release includes, but is not limited to, any claims
for wages, commissions, bonuses, employment benefits, or damages of any kind
whatsoever, arising out of contracts, express or implied, any covenant of good
faith and fair dealing, express or implied, any theory of unlawful discharge,
any legal restriction on the Company’s right to terminate employees, or any
federal, state or other government statute or ordinance, including, without
limitation: Title VII of the Civil Rights Act of 1964; the federal Age
Discrimination in Employment Act of 1967 (29 U.S.C. § 621, et seq.); the
Americans with Disabilities Act (ADA); the ADA Amendments Act; the Employee
Retirement Income Security Act of 1974, as amended (ERISA); 42 U.S.C. § 1981;
the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq. (OSHA); Family
and Medical Leave Act, 29 U.S.C. § 2601 et seq, (FMLA); Worker Adjustment and
Retraining Notification Act, 29 U.S.C. §§ 2101-2109 (WARN); the federal False
Claims Act; the Fair Labor Standards Act; the California Fair Employment and
Housing Act, as amended, including, without limitation, 2 California Code of
Regulations § 7287.4(d)(1); California Government Code §§ 12940, et seq, the
California Business and Professions Code; the California Labor Code, the
California Constitution; California Industrial Welfare Commission Wage Orders;
any state laws concerning discrimination or harassment; or any other legal
limitation on the employment relationship.

 

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This waiver and release shall not waive or release claims where the events in
dispute first arise after execution of this Agreement, nor shall it preclude
Employee or the Company from filing a lawsuit for the exclusive purpose of
enforcing Employee’s or the Company’s rights under this Agreement.

 

8.                  No Existing Claims. Employee warrants that neither Employee
nor Employee’s successors, heirs, administrators, executors, assigns, attorneys,
agents, or representatives have (a) filed, or intend to file, any complaints,
charges, grievances or lawsuits against the Company Releasees with any federal,
state, or other court or agency in any jurisdiction inside or outside the United
States or (b) commenced, or intend to commence, any arbitration or other dispute
resolution process, and Employee for himself, his successors, heirs,
administrators, executors, assigns, attorneys, agents, and representatives,
warrants that they will not do so at any time hereafter, and that if any such
other complaint, charge, lawsuit, or arbitration has been filed, it will be
immediately dismissed with prejudice.

 

9.                  Release of Unknown Claims. It is the intention of Employee
and the Company that this Agreement is a General Release which shall be
effective as a bar to each and every claim, demand, or cause of action it
releases. Employee recognizes that Employee may have some claim, demand, or
cause of action against the Company of which Employee is totally unaware and
unsuspecting which Employee is giving up by execution of the General Release. It
is the intention of Employee in executing this Agreement that it will deprive
Employee of each such claim, demand or cause of action and prevent Employee from
asserting it against the Company. In furtherance of this intention, Employee
expressly waives any rights or benefits conferred by the provisions of,
including but not limited to Section 1542 of the Civil Code of the State of
California (or any similar laws of other jurisdictions), which provides as
follows:

 

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”

 

10.              Right of Revocation. In compliance with the Older Workers
Benefit Protection Act (P.L. 101433), Employee does hereby acknowledge and agree
as follows:

 

(a)                That this Agreement does not purport to waive rights or
claims that may arise from acts or events occurring after the date that this
Agreement is executed by the parties;

 

(b)               That this Agreement specifically applies to any rights or
claims Employee may have against the Company under the federal Age
Discrimination in Employment Act of 1967, as amended;

 

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(c)                That the consideration provided for in this Agreement is in
addition to that to which Employee is already entitled;

 

(d)               That this Agreement shall be revocable by Employee for a seven
(7) day period following execution of this Agreement by Employee. Accordingly,
this Agreement shall not become effective or enforceable until the expiration of
the seven (7) day revocation period (“Effective Date”); and

 

(e)                That Employee, having carefully read this Agreement and
knowing the contents hereof, freely and voluntarily consents to all the terms
and conditions herein, understands the final and binding effect of this
Agreement, has been advised of Employee’s right to and has been given a chance
to consult with and review this Agreement with an attorney of Employee’s choice
prior to signing this Agreement, and has been given a period of twenty-one (21)
days within which to consider whether to sign this Agreement. In the event that
Employee chooses to waive this twenty-one (21) day period, Employee acknowledges
that Employee was given a reasonable period of time within which to consider
this Agreement and that Employee’s waiver was made freely and voluntarily and
without duress or any coercion by any other person, including anyone at the
Company or the Company Releasees.

 

11.              Cooperation. Employee agrees to cooperate with the Company, its
financial and legal advisors and/or government officials in connection with any
business matters in which Employee was involved or any claims, investigations,
administrative proceedings or lawsuits which relate to Employee’s employment
with the Company. Any request for Employee’s cooperation will be upon reasonable
advance written notice. All cooperation from Employee will be at mutually
convenient times and locations.

 

12.              Severability. The provisions of this Agreement are severable,
and if any part of it is found to be unlawful or unenforceable, the other
provisions of this Agreement shall remain fully valid and enforceable to the
maximum extent consistent with applicable law.

 

13.              Entire Agreement. This Agreement sets forth the entire
understanding between Employee and the Company and supersedes any prior
agreements or understandings, express or implied, pertaining to the terms of
Employee’s employment with the Company and the termination of the employment
relationship. Employee acknowledges that in executing this Agreement, Employee
does not rely upon any representation or statement by any representative of the
Company concerning the subject matter of this Agreement.

 

14.              Governing Law. This Agreement shall be construed as a whole in
accordance with its fair meaning and in accordance with the laws of the State of
California. The language of this Agreement shall not be construed for or against
any particular party. The headings used herein are for reference only and shall
not affect the construction of this Agreement.

 

15.              Attorney’s Fees. Should legal action be necessary to enforce or
interpret this Agreement, the prevailing party shall be entitled to reasonable
attorney’s fees and costs.

 

16.              Internal Revenue Code Section 409(A). The Company and Employee
intend that this Agreement be fully compliant with the requirements of Internal
Revenue Code Section 409(A), and will take such steps and measures as may be or
become necessary to prevent and avoid the imposition of penalty, excise tax,
interest or other expense to the Company and Employee.

 

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17.              Successors and Assigns. This Agreement shall be binding upon,
and inure to the benefit of, the parties’ respective successors, assigns, heirs
and estates.

 

18.              Agreement Execution. Execution of this Agreement by facsimile
or PDF signature will be acceptable. Additionally, the parties may sign separate
copies of this Agreement, each of which shall be deemed an original, all of
which shall together be deemed the same agreement.

 

19.              Captions. The captions of the sections of this Agreement are
for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.

 

20.              Further Assurances. From time to time, each of the parties
shall execute, acknowledge, and deliver any instruments or documents necessary
to carry out the purposes of this Agreement.

 

21.              Notices. If either party believes the other has failed to honor
its obligations hereunder, it shall provide the other party written notice
thereof, including a written description of the believed default, and then
thirty (30) days in which to cure any such purported default. All notices
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given (i) when delivered personally to the party to receive the same,
or (ii) when sent by a nationally recognized overnight service provider such as
FedEx, UPS or U.S. Postal Service Priority Mail, addressed to the party to
receive the same at her or its address set forth below, or such other address as
the party to receive the same shall have specified by written notice given in
the manner provided in this Section 21. All notices shall be deemed to have been
given as of the date of personal delivery or mailing thereof.

 

 

If to Employee:

    Mr. Donald Jones                       If to the Company:     Frederick’s of
Hollywood, Inc.     6255 Sunset Blvd., 6th Floor  

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement, consisting of
eight (8) pages including this page, as of the dates indicated below.

 

 

  FREDERICK’S OF HOLLYWOOD GROUP INC. Date: March 18, 2013     By:  /s/ Thomas
J. Lynch     Thomas J. Lynch, Chief Executive Officer

 

  EMPLOYEE: Date: March 21, 2013     By:  /s/ Donald Jones     Donald Jones

 

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