Exhibit 10.1

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of January 24, 2017, by
and between Xcel Brands, Inc. a Delaware corporation (the “Company”), and
Giuseppe Falco (the “Executive”), each a “Party” and collectively the “Parties.”
This Agreement supersedes and replaces that certain Second Amended and Restated
Employment Agreement dated as of October 1, 2014 by and between the Company and
the Executive (the “Prior Agreement”). Unless otherwise indicated, capitalized
terms used herein are defined in Section 2.1 of this Agreement.

 

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, 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 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 Chief Merchant of the
Company and Brand President and in such capacity shall be responsible for the
general management and merchandising of the Company’s brands, shall perform such
duties as are customarily performed by an officer with similar title and
responsibilities of a 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 Chairman and Chief Executive Officer of the
Company.

 

(b)       Duties and Responsibilities.  The Executive shall report directly to
the Chairman 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 have such duties, responsibility and
authority as are customary and consistent with his position.  The Executive
shall perform his duties and responsibilities in a diligent, trustworthy,
businesslike and efficient manner and shall use his best efforts during the
Employment Period to protect, encourage and promote the best interests of the
Company and its stockholders.  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. Notwithstanding
the foregoing, nothing herein shall prohibit Executive from (i) serving on
corporate, civic or charitable boards or committees, (ii) delivering lectures or
fulfilling speaking engagements and (iii) managing personal investments, so long
as such activities do not materially interfere with the performance of
Executive’s responsibilities 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
the New York Metropolitan area, 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 performance of Executive’s duties for the Company.

 

1.3       Compensation.

 

(a)       Base Salary.  The Executive’s base salary during the Employment Period
shall be (i) $415,600 per annum for the period from October 1, 2016 through
December 31, 2016, (ii) $550,000, $625,000 and $700,000 per annum for the
calendar years ending December 31, 2017, 2018 and 2019, respectively, and (iii)
$700,000 for each calendar year during the Reward Period (defined below) (the
“Base Salary”). The Base Salary will be payable to the Executive by the Company
in regular installments in accordance with the Company’s general payroll
practices.

 

(b)       Cash Bonus. For the fiscal year ending December 31, 2016, the
Executive shall be entitled to receive a cash bonus of up to $75,000 in
accordance with Section 1.3(b) of the Prior Agreement. For the Company’s fiscal
years ending December 31, 2017 and thereafter, Executive shall be eligible for
an aggregate cash bonus (“Cash Bonus”) of up to: (i) $450,000 for the fiscal
year ending December 31, 2017, (ii) $375,000 for the fiscal year ending December
31, 2018 and (iii) $300,000 for the fiscal year ending December 31, 2019 and
each fiscal year during the Renewal Period, in each case, based upon targets
established by the Company’s compensation committee and ratified by the Board of
Directors each year for Adjusted EBITDA (each, a “Cash Bonus Target”). The Cash
Bonus may be payable to Executive with respect to the Cash Bonus Target for a
fiscal year as follows: (a) 50% of the Cash Bonus for such fiscal year shall be
paid to the Executive if the Company achieves at least 70% of such Cash Bonus
Target for such fiscal year but less than 90% of the Cash Bonus Target for such
fiscal year and (b) 100% of the portion of the Cash Bonus attributable to the
Cash Bonus Target for such fiscal year shall be paid to the Executive if the
Company achieves at least 90% of such Cash Bonus Target for such fiscal year.
The Cash Bonus shall be awarded to the Executive on the date that is the earlier
of (a) the 90th day following the end of the fiscal year to which the Cash Bonus
relates and (ii) the first business day following the date the Company’s annual
report on Form 10-K for the fiscal year to which the Cash Bonus relates is filed
with the Securities and Exchange Commission. Notwithstanding the foregoing, all
payments of Cash Bonuses shall be made on a date that allows such payments to
comply with the requirements of Section 409A of the Code.

 

“Adjusted EBITDA” shall mean for any period, for the Company and its
subsidiaries on a consolidated basis (without duplication), an amount equal to
(a) consolidated net income (as determined in accordance with generally accepted
accounting principles of the United States of America as in effect from time to
time) (“Consolidated Net Income”) for such period, minus, (b) to the extent
included in calculating Consolidated Net Income, the sum of, without
duplication, (i) income tax credits for such period, and (ii) gain from
extraordinary or non-recurring items for such period (including, without
limitation, non-cash items related to purchase accounting), plus (c) the
following to the extent deducted in calculating such Consolidated Net Income,
(i) interest expense and other finance costs (whether cash or non-cash) for such
period (ii) the provision for federal, state, local and foreign income taxes for
such period, (iii) the amount of depreciation and amortization expense for such
period, (iv) all other extraordinary or non-recurring non-cash charges
(including, without limitation, non-cash items related to purchase accounting
and non-cash items related to earn-outs) and (v) non-cash stock or equity
compensation in such period.

 

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(c)       Withholding.  All payments made under this Agreement (including Base
Salary, Cash Bonuses, 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. All expense reimbursement payments pursuant to this Section 1.3(d)
shall be made within thirty (30) days after the date that the Executive notifies
the Company of such expense; provided, however, that the Executive shall notify
the Company of such expenses no later than six (6) months after the end of the
calendar year in which such expenses were incurred.

 

(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.

 

(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).

 

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(h)       Stock Options. On January 1, 2017, the Executive shall be granted an
option (the “Option”) to purchase 500,000 shares of the Company’s common stock
(the “Common Stock”) at an exercise price equal to the greater of (i) $5.00 per
share and (ii) the last sale price of the Common Stock on the date of this
Agreement. The Option shall vest as to 100,000 shares on each of January 1,
2018, 2019, 2020, 2021 and 2022, provided that the Executive remains an employee
of the Company or is otherwise providing services to the Company on such date
and shall expire as to each 100,000 shares on the five (5) year anniversary of
the respective vesting date thereof. The Option shall be granted under and
subject to the terms and conditions of the Company’s Third Amended and Restated
Equity Incentive Plan (the “Plan”). The Executive shall have the right to
exercise the Option on a “cashless” basis to the extent permitted by the Plan,
as in effect from time to time, by delivering to the Company a number of shares
of Common Stock equal to the aggregate exercise price of the portion of the
Option being exercised divided by the Fair Market Value (as defined in the Plan)
of the Common Stock. Notwithstanding anything to the contrary in the Plan, in
the event that the Executive’s employment is terminated by the Company without
Cause or by the Executive for Good Reason, the Option shall (i) remain
exercisable as to those shares as to which the Option vested prior to the
Termination Date and (ii) become exercisable immediately following the
Termination.

 

 1.4       Term and Termination.

 

(a)       Duration.  The Employment Period shall commence on the Effective Date
and shall terminate three (3) years from the Effective Date (the “Initial
Term”), unless earlier terminated by the Company or the Executive as set forth
in this Section 1.4.  The Term shall renew automatically for an additional
two-year period (the “Renewal Period”), unless either party gives the other
party written notice of its intention not to renew the Agreement no later than
30 days prior to the expiration of the then current Term (the “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, with or without Good Reason, unless he gives the Company
written notice that he intends to terminate the Employment Period at least 90
days prior to the Executive’s proposed Termination Date.  As a condition to
Executive receiving any payments or benefits under Section 1.4(b), the Executive
shall execute and deliver to the Company the General Release in the form
attached hereto as Exhibit A.

 

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(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 Termination Date and any other
amounts, including any amounts due for  Cash 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 six (6) month period following the
Executive’s termination of employment as described in this Section 1.4(b),
payable in 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 (provided, however, that an amount
that qualifies for involuntary separation pay exception (within the meaning of
Code Section 409A and Final Treasury Regulations Section 1.409A-1(b)(9)(iii)(A))
and is otherwise permissible under Section 409A and the Final Treasury
Regulations, shall not be subject to such six-month delay and shall be paid to
Executive in a lump sum within thirty (30) days of the Executive’s “separation
from service”) 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 six-month 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 (1), (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 1.5, 1.6, 1.7, 1.8, 1.9, 3.1 or 3.2 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.

 

(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 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)(2)
above; 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 Code), 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.  Upon a Change of Control, notwithstanding the vesting and
exercisability schedule in any stock option or other grant agreement between the
Company and the Executive (other than the Option which shall vest as set forth
in Section 1.3(h) of this Agreement), 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 date of the Change of Control or the remaining term of the
applicable option.

 

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(d)       Death and Disability.  In the event of the death or Disability of the
Executive, the Company shall pay the Executive his Base Salary through the
Termination Date, at the rate then in effect, and all expenses or accrued
Benefits arising prior to such termination which are payable to the Executive
pursuant to this Agreement through the Termination Date.  Executive or his
estate shall also receive the pro-rata portion of the Cash Bonus for the year in
which his employment hereunder terminates, calculated based on the number of
months Executive worked during that year (including the month in which the
termination occurs). 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, 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 and Section
1.3, all of the Executive’s rights to receive Base Salary, Benefits and Cash
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(e), 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 Board of
Directors, (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, 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.  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
Board 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 also
expressly excludes Executive’s general know-how and business contacts contained
in Executive’s rolodex, be it electronic or otherwise, as of the Effective
Date to the extent that the use of such information does not violate or breach
the terms of Section 1.9.

 

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) and within the scope of the Executive’s
employment and duties and responsibilities 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 within the scope of the Executive’s
employment and duties and responsibilities (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).

 

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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 Confidential
Information or Company Works) irrespective of the location or form of such
material and, if requested by the Company, shall provide the Company with
written confirmation that all such materials have been delivered to the Company
or destroyed, as applicable.

 

1.8       Non-Compete and Non-Solicitation Covenants.

 

(a)       The Executive acknowledges and agrees that the Executive’s services to
the Company and its Subsidiaries are unique in nature and that the Company and
its Subsidiaries would be irreparably damaged if the Executive were to provide
similar services to any Person competing with the Company and its Subsidiaries
or engaged in the Business.  The Executive further acknowledges that, in the
course of his employment with the Company, he will become familiar with the
Company’s and its Subsidiaries’ trade secrets and with other Confidential
Information.  During the Noncompete Period, he shall not, directly or
indirectly, whether for himself or for any other Person, permit his name to be
used by or participate in any business or enterprise (including, without
limitation, any division, group or franchise of a larger organization) that
engages or proposes to engage in the Business in the Restricted Territories,
other than the Company and its Subsidiaries or except as otherwise directed or
authorized by the Board.  For purposes of this Agreement, the term “participate
in” shall include, without limitation, having any direct or indirect interest in
any Person, whether as a sole proprietor, owner, stockholder, partner, member,
joint venturer, creditor or otherwise, or rendering any direct or indirect
service or assistance to any Person (whether as a director, officer, supervisor,
employee, agent, consultant or otherwise).  Nothing herein will prohibit the
Executive from mere passive ownership of not more than five percent (5%) of the
outstanding stock of any class of a publicly held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market.  As
used herein, the phrase “mere passive ownership” shall include voting or
otherwise granting any consents or approvals required to be obtained from such
Person as an owner of stock or other ownership interests in any entity pursuant
to the charter or other organizational documents of such entity, but shall not
include, without limitation, any involvement in the day-to-day operations of
such entity.

 

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(b)       During the Nonsolicitation Period, the Executive will not directly, or
indirectly through another Person, solicit, induce or attempt to induce any
customer, supplier, licensee, or other business relation of the Company or any
of its Subsidiaries, or solicit, induce or attempt to induce any person who is,
or was during the then-most recent 12-month period, a corporate officer, general
manager or other employee of the Company or any of its Subsidiaries to terminate
such employee’s employment with the Company or any of its Subsidiaries, or hire
any such person unless such person’s employment was terminated by the Company or
any of its Subsidiaries, or in any way interfere with the relationship between
any such customer, supplier, licensee, employee or business relation and the
Company or any of its Subsidiaries.  The restrictions of this Section 1.8(b)
shall not apply to any customer, supplier, licensee, or other business relation
of the Company or any of its Subsidiaries with whom Executive had a prior
business relationship before he started performing services for the Company. The
Executive acknowledges and agrees that the Company and its Subsidiaries would be
irreparably damaged if the Executive were to breach any of the provisions
contained in this Section 1.8(b).

 

(c)       Executive acknowledges that this Agreement, and specifically, this
Section 1.8, does not preclude Executive from earning a livelihood, nor does it
unreasonably impose limitations on Executive’s ability to earn a living.  In
addition, Executive agrees and acknowledges that the potential harm to the
Company of its non-enforcement outweighs any harm to Executive of its
enforcement by injunction or otherwise.

 

1.9       Enforcement.  If, at the time of enforcement of Section 1.5, 1.6, 1.7,
1.8, 1.9 or 1.10, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the Parties agree that, to the
extent permitted by applicable law, the maximum period, scope or geographical
area reasonable under such circumstances will be substituted for the Noncompete
Period, scope or area.  Because the Executive’s services are unique and because
the Executive has access to Confidential Information and Company Works, the
Parties agree that money damages may be an inadequate remedy for any breach of
Section 1.5, 1.6, 1.7, 1.8, 1.9 or 1.10.  Therefore, in the event of a breach or
threatened breach of Section 1.5, 1.6, 1.7, 1.8, 1.9 or 1.10, the Company or any
of its Subsidiaries or any of their respective successors or assigns may, in
addition to other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce, or prevent any violations of, the provisions
hereof (without posting a bond or other security).  The Parties hereby
acknowledge and agree that (a) performance of the services of the Executive
hereunder may occur in jurisdictions other than the jurisdiction whose law the
Parties have agreed shall govern the construction, validity and interpretation
of this Agreement, (b) the law of the  State of New York shall govern
construction, validity and interpretation of this Agreement to the fullest
extent possible, and (c) Section 1.5, 1.6, 1.7, 1.8, 1.9 or 1.10 shall restrict
the Executive only to the extent permitted by applicable law.

 

 -9- 

 

 

1.10       Survival.  Sections 1.5, 1.6, 1.7, 1.8, 1.9 and 1.10 will survive and
continue in full force in accordance with their terms notwithstanding any
termination of the Employment Period.

 

ARTICLE II

DEFINED TERMS

 

2.1       Definitions. For purposes of this Agreement, the following terms will
have the following meanings:

 

“Business” means the business of acquiring and licensing consumer brands
worldwide.

 

“Cause” means with respect to the Executive, the occurrence of one or more of
the following:  (i) conviction of a felony involving moral turpitude,
misappropriation of Company property, embezzlement of Company funds, violation
of the securities laws or dishonesty, (ii) the willful and continued failure by
the Executive to attempt in good faith to substantially perform his obligations
under this Agreement (other than any such failure resulting from the Executive’s
incapacity due to a Disability); (iii) reporting to work under the influence of
alcohol or illegal drugs, or the use of illegal drugs (whether or not at the
workplace), or (iv) any willful breach of Sections 1.5, 1.6, 1.7, 1.8, 1.9, 3.1
or 3.2 of this Agreement.  Notwithstanding the foregoing, termination by the
Company for Cause (other than pursuant to clause (i) above) shall not be
effective until and unless Executive fails to cure such alleged act or
circumstance within 30 days of receipt of notice thereof, to the satisfaction of
the Chief Executive Officer in the exercise of his reasonable judgment (or, if
within such 30-day period the Executive commences and proceeds to take all
reasonable actions to effect such cure, within such reasonable additional time
period (no longer than 60 days) as may be necessary).

 

“Change of Control” means the occurrence of any of the following (i) a merger or
consolidation to which the Company is a party (other than one in which the
stockholders of the Company prior to the event own a majority of the voting
power of the surviving or resulting corporation) (ii) a sale, lease, transfer,
exclusive license or other disposition of all or substantially all of the assets
of the Company, or (iii) a sale or transfer by the Company’s stockholders of
majority voting control, in a single transaction or a series of transactions.

 

“Code” means the Internal Revenue Code of 1986 and the Treasury regulations
thereunder, each as amended from time to time.

 

“Disability” shall have the meaning set forth in a policy or policies of
long-term disability insurance, if any, the Company obtains for the benefit of
itself and/or its employees.  If there is no definition of “disability”
applicable under any such policy or policies, if any, then the Executive shall
be considered disabled due to mental or physical impairment or disability,
despite reasonable accommodations by the Company and its Subsidiaries, to
perform his customary or other comparable duties with the Company or its
Subsidiaries immediately prior to such disability for a period of at least 120
consecutive days or for at least 180 non-consecutive days in any 12-month
period.

 

 -10- 

 

 

“Effective Date” means January 01, 2017.

 

“Fiscal Year” means the fiscal year of the Company and its Subsidiaries.

 

“Good Reason” means the occurrence, without the Executive’s written consent, of
one or more of the following events:  (i) the Company reduces the amount of
Executive’s Base Salary or Cash Bonus, (ii) the Company requires that the
Executive relocate his principal place of employment to a site that is more than
50 miles from the Company’s offices in the New York area  or if the Company
changes the location of its headquarters without the consent of Executive to a
location that is more than 50 miles from such location, (iii) the Company
materially reduces the Executive’s authority, duties or responsibilities or
removes the Executive from the position of Chief Merchant of the Company other
than pursuant to a termination of his employment for Cause, or upon the
Executive’s death or Disability, (iv) the failure or unreasonable delay of the
Company to provide to the Executive any of the payments or benefits contemplated
hereby or (v) the Company otherwise materially breaches the terms of this
Agreement; provided that no such event shall constitute Good Reason hereunder
unless (a) the Executive shall have given written notice to the Company of the
Executive’s intent to resign for Good Reason within 30 days after the Executive
becomes aware of the occurrence of any such event, which notice shall describe
in reasonable detail the event or events constitute the basis for the
Executive’s intention to resign for Good Reason and (b) such event or
occurrence, if a breach susceptible to cure, shall not have been cured or
otherwise shall not have been resolved to the Executive’s reasonable
satisfaction, in each case within 30 days of the Company’s receipt of such
notice.  In such case the Executive’s resignation shall become effective on the
31st day after the Company’s receipt of the aforementioned notice.

 

“Merger Agreement” means the Merger Agreement entered into by and among
NetFabric Holdings, Inc., the Company and a subsidiary of NetFabric Holdings,
Inc. formed for the purpose of acquiring the Company.

 

“Noncompete Period” means the Employment Period and 6 months thereafter.

 

“Nonsolicitation Period” means the Employment Period and 6 months thereafter.

 

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, or the United States of America any other nation,
any state or other political subdivision thereof, or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
government.

 

 -11- 

 

 

“Restricted Territories” means (i) the United States and its territories and
possessions and (ii) any foreign country in which the Company engages in
Business as of the Termination Date.

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association, or business entity of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers, or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association, or other business entity (other than a corporation), a
majority of  partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof.  For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association, or other business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of limited liability company, partnership, association, or other
business entity gains or losses or shall be or control any managing director or
general partner or manager or managing member of such limited liability company,
partnership, association, or other business entity.  For purposes hereof,
references to a Subsidiary of any Person shall be given effect only at such
times that such Person has one or more Subsidiaries, and, unless otherwise
indicated, the term Subsidiary refers to a Subsidiary of the Company.

 

“Termination Date” means the effective date of the Executive’s termination of
employment with the Company.

 

2.2       Other Definitional Provisions.

 

(a)       Section references contained in this Agreement are references to
sections in this Agreement, unless otherwise specified.  Each defined term used
in this Agreement has a comparable meaning when used in its plural or singular
form.  Each gender-specific term used in this Agreement has a comparable meaning
whether used in a masculine, feminine or gender-neutral form.

 

(b)       Whenever the term “including” (whether or not that term is followed by
the phrase “but not limited to” or “without limitation” or words of similar
effect) is used in this Agreement in connection with a listing of items within a
particular classification, that listing will be interpreted to be illustrative
only and will not be interpreted as a limitation on, or an exclusive listing of,
the items within that classification.

 

ARTICLE III

MISCELLANEOUS TERMS

 

3.1       Defense of Claims. The Executive agrees that, during the Employment
Period, and for a period of six months after termination of the Executive’s
employment, upon request by the Company, the Executive shall reasonably
cooperate with the Company in connection with any matters the Executive worked
on during his employment with the Company and any related transitional
matters.  In addition, during the Employment Period and thereafter, the
Executive agrees to reasonably cooperate with the Company in the defense of any
claims or actions that may be made by or against the Company that affect the
Executive’s prior areas of responsibility or involve matters about which the
Executive has knowledge, except if the Executive’s reasonable interests are
adverse to the Company in such claim or action and provided that after the
Employment Period such level of cooperation shall be reasonable and shall take
due account of the Executive’s work and personal commitments. The Company’s
request for “reasonable cooperation” shall take into consideration Executive’s
personal and business commitments and the amount of notice provided to Executive
by the Company. The Company agrees to promptly reimburse the Executive for all
of the Executive’s reasonable travel and other direct expenses incurred, or to
be reasonably incurred, to comply with the Executive’s obligations under this
Section 3.1.

 

 -12- 

 

 

3.2       Nondisparagement. The Executive agrees to refrain from (i) making,
directly or indirectly, any derogatory comments concerning the Company or its
Subsidiaries or any current or former officers, directors, employees or
shareholders thereof or (ii) taking any other action with respect to the Company
or its Subsidiaries which is reasonably expected to result, or does result in,
damage to the business or reputation of the Company, its Subsidiaries or any of
its current or former officers, directors, employees or shareholders.  The
Company agrees to refrain from (i) making, directly or indirectly, any
derogatory comments concerning the Executive or (ii) taking any other action
with respect to the Executive which is reasonably expected to result, or does
result in, damage to the reputation of the Executive.  Notwithstanding anything
to the contrary contained herein, nothing in this Agreement shall prohibit or
restrict either party from, truthfully and in good faith: (i) making any
disclosure of information required by law; (ii) providing information to, or
testifying or otherwise assisting in any investigation or proceeding brought by,
any federal regulatory or law enforcement agency or legislative body, any
self-regulatory organization, or the Company’s or the Executive’s designated
legal, compliance or human resources officers; or (iii) filing, testifying,
participating in or otherwise assisting in a proceeding relating to an alleged
violation of any federal, state or municipal law relating to fraud, or any rule
or regulation of the Securities and Exchange Commission or any self-regulatory
organization.

 

3.3       Source of Payments. All payments provided under this Agreement, other
than payments made pursuant to a plan which provides otherwise and except as
otherwise provided herein, shall be paid in cash from the general funds of the
Company, and no special or separate fund shall be established, and no other
segregation of assets shall be made, to assure payment. The Executive shall have
no right, title or interest whatsoever in or to any investments which the
Company or its Subsidiaries may make to aid the Company in meeting its
obligations hereunder. To the extent that any person acquires a right to receive
payments from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company.

 

3.4       Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested), sent by reputable overnight courier
service (charges prepaid) or sent by facsimile (with receipt confirmed) to the
recipient at the address or facsimile number indicated below:

 

 -13- 

 

 

 

  To the Company:       Xcel Brands, Inc.   1333 Broadway, 10th Floor   New
York, New York 10018       With a copy (which shall not constitute notice) to:  
    Blank Rome LLP   The Chrysler Building   405 Lexington Avenue   New York, NY
10174-0208   Attn:  Robert Mittman, Esq.   Facsimile: (212) 885-5557

 

  To the Executive:       Giuseppe Falco   330 E 39 Street 25C   New York, NY
10016   (917)-684-1013       With copies to:       Outten & Golden LLP   3 Park
Avenue, 29th Floor   New York, NY 10016   (212) 245-1000   Attn:  Wendi S.
Lazar, Esq.

 

or such other address or to the attention of such other Person as the recipient
Party will have specified by prior written notice to the sending Party.  Any
notice under this Agreement will be deemed to have been given when so delivered
or sent.

 

3.5       Severability.  Subject to the express provisions of Section 1.10
relating to certain specified changes, whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

3.6       Complete Agreement.  This Agreement embodies the complete agreement
and understanding among the Parties with regard to the subject matter hereof and
supersedes and preempts any prior understandings, agreements or representations
by or among the Parties, written or oral, which may have related to the subject
matter hereof in any way.  To the extent that this Agreement provides greater
benefits to the Executive or fewer obligation of the Executive than available or
set forth under the Company’s employee handbook or other corporate policies,
then this Agreement shall prevail.

 

 -14- 

 

 

3.7       Counterparts.  This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

 

3.8       Assignment.  Without the Executive’s consent, the Company may not
assign its rights and obligations under this Agreement except (i) to a
“Successor” (as defined below) or (ii) to an entity that is formed and
controlled by the Company or any of its Subsidiaries.  This Agreement is
personal to the Executive, and the Executive shall not have the right to assign
the Executive’s interest in this Agreement, any rights under this Agreement or
any duties imposed under this Agreement, nor shall the Executive have the right
to pledge, hypothecate, transfer, assign or otherwise encumber the Executive’s
right to receive any form of compensation hereunder without the prior written
consent of the Board.  As used in Section 3.8 and 3.9, “Successor” shall include
any Person that at any time, whether by purchase, merger or otherwise, directly
or indirectly acquires all or substantially all of the assets of, or ownership
interests in, the Company and its Subsidiaries.

 

3.9       Successors and Assigns.  This Agreement is intended to bind and inure
to the benefit of and be enforceable by the Company, the Executive, and their
respective heirs, successors and permitted assigns.

 

3.10       Choice of Law.  This Agreement and the performance of the parties
hereunder shall be governed by the internal laws (and not the law of conflicts)
of the State of New York. Any claim or controversy arising out of or in
connection with this Agreement, or the breach thereof, shall be adjudicated
exclusively by the Supreme Court, New York County, State of New York, or by a
federal court sitting in Manhattan in New York City, State of New York. The
parties hereto agree to the personal jurisdiction of such courts and agree to
accept process by regular mail in connection with any such dispute.

 

3.11       Waiver of Jury Trial.  AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR
EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE
OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE
RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN
ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

 

3.12       Legal Fees and Court Costs.  In the event that any action, suit or
other proceeding in law or in equity is brought to enforce the provisions of
this Agreement, and such action results in the award of a judgment for money
damages or in the granting of any injunction in favor of the Company, all
expenses (including reasonable attorneys’ fees) of the Company in such action,
suit or other proceeding shall be paid by the Executive. In the event that any
action, suit or other proceeding in law or in equity is brought to enforce the
provisions of this Agreement, and such action results in the award of a judgment
for money damages or in the granting of any injunction in favor of the
Executive, all expenses (including reasonable attorneys’ fees and travel
expenses) of the Executive in such action, suit or other proceeding shall be
paid by the Company.

 

 -15- 

 

 

3.13       Remedies.  Each Party will be entitled to enforce its rights under
this Agreement specifically, to recover damages and costs caused by any breach
of any provision of this Agreement and to exercise all other rights existing in
its favor.  Subject to Section 3.12 , nothing herein shall prohibit any
arbitrator or judicial authority from awarding attorneys’ fees or costs to a
prevailing Party in any arbitration or other proceeding to the extent that such
arbitrator or authority may lawfully do so.

 

3.14       Amendment and Waiver.  The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement will affect the validity, binding effect or
enforceability of this Agreement.

 

3.15       Third Party Beneficiaries.  This Agreement will not confer any rights
or remedies upon any Person other than the Parties and their respective
successors and permitted assigns and other than, in the event of the Executive’s
death, his estate, to which all of Executive’s rights and remedies set forth
herein shall accrue.

 

3.16       The Executive’s Representations.  The Executive hereby represents and
warrants to the Company that (a) the execution, delivery and performance of this
Agreement by the Executive do not and shall not conflict with, breach, violate
or cause a default under any contract, agreement, instrument, order, judgment or
decree to which the Executive is a party or by which he is bound, (b) the
Executive is not a party to or bound by any employment agreement, noncompete
agreement or confidentiality agreement with any other Person (or other agreement
with any other person containing a restriction on the Executive’s right to do
business or obligating him to do business with any other Person on a priority or
preferential basis), (c) upon the execution and delivery of this Agreement by
the Company, this Agreement shall be the valid and binding obligation of the
Executive, enforceable in accordance with its terms and (d) upon the execution
and delivery of this Agreement by the Company, Executive shall not be in
violation of clause (i) set forth in the definition of Cause and shall not be
disabled.

 

3.17       Section 409A of the Code.

 

(a)       Compliance.  Notwithstanding anything herein to the contrary, this
Agreement is intended to be interpreted and applied so that the payments and
benefits set forth herein either shall either be exempt from the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), or
shall comply with the requirements of Code Section 409A, and, accordingly, to
the maximum extent permitted, this Agreement shall be interpreted to be exempt
from or in compliance with Code Section 409A.  To the extent that the Company
determines that any provision of this Agreement would cause Executive to incur
any additional tax or interest under Code Section 409A, the Company shall be
entitled to reform such provision to attempt to comply with or be exempt from
Code Section 409A through good faith modifications.  To the extent that any
provision hereof is modified in order to comply with Code Section 409A, such
modification shall be made in good faith and shall, to the maximum extent
reasonably possible, maintain the original intent and economic benefit to
Executive and the Company without violating the provisions of Code Section 409A.

 

 -16- 

 

 

(b)       Separate Payments.  Notwithstanding anything in this Agreement to the
contrary, the right to receive installment payments hereunder shall be treated
as a right to receive a series of separate payments in accordance with Code
Section 409A and Final Treasury Regulation Section 1.409A-2(b)(2)(iii).

 

(c)       Short-Term Deferral.  Except as otherwise specifically provided,
amounts payable under this Agreement, other than those expressly payable on a
deferred or installment basis, will be paid as promptly as practicable following
the date on which they are earned and vested and, in any event, on or prior to
March 15 of the year following the first calendar year in which such amounts are
no longer subject to a substantial risk of forfeiture, as such term is defined
in Section 409A of the Code.

 

(d)       Separation from Service.  Notwithstanding anything in this Agreement
or elsewhere to the contrary, a termination of employment shall not be deemed to
have occurred for purposes of any provision of this Agreement providing for the
payment of any amounts or benefits that constitute “non-qualified deferred
compensation” within the meaning of Code Section 409A upon or following a
termination of Executive’s employment unless such termination is also a
“separation from service” within the meaning of Code Section 409A and, for
purposes of any such provision of this Agreement, references to a “termination,”
“termination of employment” or like terms shall mean “separation from service”
and the date of such separation from service shall be the Termination Date for
purposes of any such payment or benefits.

 

(e)       No Designation.  In no event may Executive, directly or indirectly,
designate the calendar year of any payment to be made under this Agreement or
otherwise which constitutes a “deferral of compensation” within the meaning of
Code Section 409A.

 

(f)       Expense Reimbursement. With regard to any provision herein that
provides for reimbursement of costs and expenses or in-kind benefits, except as
permitted by Code Section 409A, (i) the right to reimbursement or in-kind
benefits shall not be subject to liquidation or exchange for another benefit,
(ii) the amount of expenses eligible for reimbursement, or in-kind benefits,
provided during any taxable year shall not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other taxable year,
and (iii) such payments shall be made on or before the last day of Executive’s
taxable year following the taxable year in which the expense was incurred.

 

[END OF PAGE]

[SIGNATURE PAGE FOLLOWS]

 

 -17- 

 

 

IN WITNESS WHEREOF, the Parties have executed this Employment Agreement as of
the date first written above.

 

  Xcel Brands, Inc.                 By: /s/ Robert W. D’Loren       Name: Robert
W. D’Loren       Title: Chairman and CEO                 /s/ Giuseppe Falco    
Giuseppe Falco  

 

 

 

 -18- 

 

 

EXHIBIT A

 

FORM OF RELEASE

 

 

I, Giuseppe Falco, on behalf of myself and my heirs, successors and assigns, in
consideration of the performance by Xcel Brands, Inc., a Delaware corporation
(together with its Subsidiaries, the “Company”), of its material obligations
under the Second Amended and Restated Employment Agreement, dated as of October
1, 2016 (the “Agreement”), do hereby release and forever discharge as of the
date hereof the Company, its Affiliates, each such Person’s respective
successors and assigns and each of the foregoing Persons’ respective present and
former directors, officers, partners, stockholders, members, managers, agents,
representatives, employees (and each such Person’s respective successors and
assigns) (collectively, the “Released Parties”) to the extent provided below.

 

1.       I understand that any payments or benefits paid or granted to me under
Section 1.4(b) of the Agreement represent, in part, consideration for signing
this General Release and are not salary, wages or benefits to which I was
already entitled.  I understand and agree that I will not receive the payments
and benefits specified in Section 1.4(b) of the Agreement unless I execute this
General Release and do not revoke this General Release within the time period
permitted hereafter or breach this General Release.

 

2.       I knowingly and voluntarily release and forever discharge the Company
and the other Released Parties from any and all claims, controversies, actions,
causes of action, cross-claims, counter-claims, demands, debts, compensatory
damages, liquidated damages, punitive or exemplary damages, other damages,
claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in
law and in equity, both past and present (through the date of this General
Release), whether under the laws of the United States or another jurisdiction
and whether known or unknown, suspected or claimed against the Company or any of
the Released Parties which I, my spouse, or any of my heirs, executors,
administrators or assigns, have or may have, which arise out of or are connected
with my employment with, or my separation from, the Company (including, but not
limited to, any allegation, claim or violation, arising under:  Title VII of the
Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age
Discrimination in Employment Act of 1967, as amended (including the Older
Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the
Americans with Disabilities Act of 1990; the Family and Medical Leave Act of
1993; the Civil Rights Act of 1866, as amended; the Worker Adjustment Retraining
and Notification Act; the Employee Retirement Income Security Act of 1974; any
applicable Executive Order Programs; the Fair Labor Standards Act; Occupational
Safety and Health Act of 1970, as amended, under the Worker Adjustment and
Retraining Notification Act of 1988, as amended, under the Family and Medical
Leave Act of 1993, as amended, under the Fair Credit Reporting Act of 1970, as
amended, and under the Sarbanes-Oxley Act of 2002, under the Civil Rights Act of
1870, 42 U.S.C. § 1981, as amended, under the Civil Rights Act of 1871, as
amended, under the Americans With Disabilities Act of 1990, as amended, under
the Americans with Disabilities Act Amendments of 2008, under the Rehabilitation
Act of 1973, as amended, under the Immigration Reform and Control Act of 1986,
as amended, under the Vietnam Era Veterans Readjustment Assistance Act of 1974,
as amended, under the Uniformed Service Employment and Reemployment Rights Act
of 1994, as amended, under the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”), and any and all claims under the New York State Human Rights
Law, under the New York City Human Rights Law,  and under the New York Labor
Laws, and any and all claims under any other federal, state, or local labor law,
civil rights law, fair employment practices law, human rights law, family and
medical leave law, occupational safety and health law, whistleblower protection
law, and equal pay law; or any and all claims of slander, libel, defamation,
invasion of privacy, intentional or negligent infliction of emotional distress,
intentional or negligent misrepresentation, fraud, prima facie torts or other
tort; or any and all claims based on the design or administration of any of the
Company’s employee benefit plan or program, or arising under any Company policy,
practice, or procedure, or employee benefit plan; any and all claims for wages,
commissions bonuses, vacation pay or other paid time off, employee benefits
equity-based compensation, or other compensation or payments of any kind or
nature, or for continued employment with the Company in any position; or under
any other local, state, or federal law, regulation or ordinance; or under any
public policy, contract or tort, or under common law; or any claim for wrongful
discharge, breach of contract, or infliction of emotional distress; or any claim
for costs, fees, or other expenses, including attorneys’ fees incurred in these
matters) (all of the foregoing collectively referred to herein as the “Claims”);
provided , however, that nothing contained in this General Release shall apply
to, or release the Company from, (i) any obligation of the Company contained in
the Agreement to be performed after the date hereof or (ii) any vested or
accrued benefits pursuant to any employee benefit plan, program or policy of the
Company.

 

 -19- 

 

 

3.       I represent that I have made no assignment or transfer of any right,
claim, demand, cause of action, or other matter covered by paragraph 2 above.

 

4.       I agree that this General Release does not waive or release any rights
or claims that I may have under the Age Discrimination in Employment Act of 1967
which arise after the date I execute this General Release.  I acknowledge and
agree that my separation from employment with the Company in compliance with the
terms of the Agreement shall not serve as the basis for any claim or action
(including, without limitation, any claim under the Age Discrimination in
Employment Act of 1967).

 

5.       In signing this General Release, I acknowledge and intend that it shall
be effective as a bar to each and every one of the Claims hereinabove mentioned
or implied. I expressly consent that this General Release shall be given full
force and effect according to each and all of its express terms and provisions,
including those relating to unknown and unsuspected Claims (notwithstanding any
state statute that expressly limits the effectiveness of a general release of
unknown, unsuspected and unanticipated Claims), if any, as well as those
relating to any other Claims hereinabove mentioned or implied. I acknowledge and
agree that this waiver is an essential and material term of this General Release
and that without such waiver the Company would not have agreed to the terms of
the Agreement.  I covenant that I shall not directly or indirectly, commence,
maintain or prosecute or sue any of the Released Persons either affirmatively or
by way of cross-complaint, indemnity claim, defense or counterclaim or in any
other manner or at all on any Claim covered by this General Release.  I further
agree that in the event I should bring a Claim seeking damages against the
Company, or in the event I should seek to recover against the Company in any
Claim brought by a governmental agency on my behalf, this General Release shall
serve as a complete defense to such Claims. I further agree that I am not aware
of any pending charge or complaint of the type described in paragraph 2 as of
the execution of this General Release.

 

 -20- 

 

 

6.       I agree that neither this General Release, nor the furnishing of the
consideration for this General Release, shall be deemed or construed at any time
to be an admission by the Company, any Released Party or myself of any improper
or unlawful conduct.

 

7.       I agree that this General Release is confidential and agree not to
disclose any information regarding the terms of this General Release, except to
my immediate family and any tax, legal or other counsel I have consulted
regarding the meaning or effect hereof or as required by law, and I will
instruct each of the foregoing not to disclose the same to anyone.

 

8.       Any non-disclosure provision in this General Release does not prohibit
or restrict me (or my attorney) from responding to any inquiry about this
General Release or its underlying facts and circumstances by the Securities and
Exchange Commission, the Financial Industry Regulatory Authority or any other
self-regulatory organization or governmental entity.

 

9.       Without limitation of any provision of the Agreement, I hereby
expressly re-affirm my obligations under Sections 1.5, 1.6, 1.7, 1.8, 1.9, 1.10,
3.1 and 3.2.

 

10.     Whenever possible, each provision of this General Release shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this General Release is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this General Release shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

“Affiliate” means, with respect to any Person, any Person that controls, is
controlled by or is under common control with such Person or an Affiliate of
such Person.

 

“Person” means an individual, a partnership, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization, investment fund, any other business entity and a
governmental entity or any department, agency or political subdivision thereof.

 

“Subsidiary” means, with respect to any Person, any corporation, limited
liability company, partnership, association, or business entity of which (i) if
a corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers, or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association, or other business entity (other than a corporation), a
majority of  partnership or other similar ownership interest thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more
Subsidiaries of that Person or a combination thereof.  For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association, or other business entity
(other than a corporation) if such Person or Persons shall be allocated a
majority of limited liability company, partnership, association, or other
business entity gains or losses or shall be or control any managing director or
general partner of such limited liability company, partnership, association, or
other business entity.

 

 -21- 

 

 

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

(a)       I HAVE READ IT CAREFULLY;

 

(b)       I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT
RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964,
AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF
1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

(c)       I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

 

(d)       I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY (VIA THE AGREEMENT AND
THIS RELEASE) BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING
AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

 

(e)       I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS
RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON _______________ __, _____ TO CONSIDER
IT AND THE CHANGES MADE SINCE THE _______________ __, _____ VERSION OF THIS
RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE REQUIRED 21-DAY PERIOD;

 

(f)       THE CHANGES TO THE AGREEMENT SINCE _______________ ___, _____ EITHER
ARE NOT MATERIAL OR WERE MADE AT MY REQUEST.

 

(g)       I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS
RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR
ENFORCEABLE UNTIL THE EIGHTH DAY FOLLOWING EXECUTION OF THE AGREEMENT;

 

(h)       I ACKNOWLEDGE THAT MY acceptance of any of the monies paid by the
COMPANY as described in sections __ of the employment Agreement, at any time
more than seven days after the execution of this Agreement will constitute an
admission by ME that I did not revoke this Agreement during the revocation
period of seven days; and will further constitute an admission by ME that this
Agreement has become effective and enforceable.

 

 -22- 

 

 

(i)       I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH
THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

(j)       I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE
AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED
BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

 

DATE: ___________ __, ______     Giuseppe Falco  

 

Acknowledged and agreed as of the date first written above:

 

Xcel Brands, Inc.

 

By:       Name: Robert W. D’Loren     Title: Chairman & CEO  

 

 

 

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