EMPLOYMENT AGREEMENT
EXECUTION
COPY
EMPLOYMENT
AGREEMENT (“Agreement”),
entered into January 28, 2008 (the “Signing
Date”)
to be
effective as of January 1, 2008 (the “Effective
Date”),
by
and between Iconix Brand Group, Inc., a Delaware corporation (the “Company”),
and
Xxxx X. Xxxx (the “Executive”).
W
I T N E
S S E T H:
WHEREAS,
the Executive possesses unique personal knowledge, experience and expertise
concerning the business and operations conducted by the Company;
WHEREAS,
the
Employment Agreement by and between the Company and the Executive, dated
effective as of January 1, 2005 (the
“Prior
Agreement”),
expired
pursuant to its terms on December 31, 2007 and the Company desires to continue
to employ the Executive, and the Executive desires to continue to be employed
by
the Company, upon the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS,
effective
as of the Effective Date, the Company and the Executive desire to enter into
this Agreement as to the terms and conditions of the Executive’s continued
employment with the Company.
NOW,
THEREFORE, in consideration of the covenants and agreements hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
AND DUTIES
1.1. Term
of Employment.
The
Executive’s initial term of employment under this Agreement shall commence on
the Effective Date and shall continue until December 31, 2012 (the “Initial
Term”),
unless further extended or earlier terminated as provided in this Agreement.
Unless
written notice of non-renewal is provided by either party at least 180 days
prior to the end of the Initial Term, the Executive’s term of employment under
this Agreement will automatically be renewed for a single one (1) year period
from January 1, 2013 until December 31, 2013,
unless
earlier terminated as provided in this Agreement.
The
period of time between the Effective Date and the termination of the Executive’s
employment under this Agreement shall be referred to herein as the “Term.”
1.2. General.
1.2.1. During
the Term, the Executive shall have the titles of President and Chief Executive
Officer of the Company and shall have the authorities, duties and
responsibilities customarily exercised by an individual serving in these
positions in a corporation of the size and nature of the Company and such other
authorities, duties and responsibilities as may from time to time be delegated
to him by the Board of Directors of the Company (the “Board”)
that
are consistent with the foregoing. If requested by the Board or the Executive,
the Executive will work with the Board to identify a person to serve as
President of the Company reporting directly and solely to the Executive and,
upon the appointment of such person, the Executive shall cease to have the
title
of President and the associated authorities, duties and
responsibilities
of
President shall be exercised by such successor, subject to the authority of
the
Executive as Chief Executive Officer.
The
Executive shall faithfully and diligently discharge his duties hereunder and
use
his best efforts to implement the policies established by the Board from time
to
time. During the Term, the Executive shall be the highest ranking executive
of
the Company and no other officer will be appointed with authority over the
Executive, and the Executive shall report directly to the Board. Subject to
the
foregoing, it is recognized that while the Executive is currently Chairman
of
the Board, the Board reserves the right to remove him as such and to appoint
another member of the Board as non-executive Chairman, with the associated
authorities, responsibilities and duties.
1.2.2. The
Executive shall devote all of his business time, attention, knowledge and skills
faithfully, diligently and to the best of his ability, in furtherance of the
business and activities of the Company; provided,
however,
that
nothing in this Agreement shall preclude the Executive from devoting reasonable
periods of time required for:
(i) serving
as a director or member of a committee of up to two (2) organizations or
corporations that do not, in the good faith determination of the Board, compete
with the Company or otherwise create, or could create, in the good faith
determination of the Board, a conflict of interest with the business of the
Company;
(ii) delivering
lectures, fulfilling speaking engagements, and any writing or publication
relating to his area of expertise; provided,
that
any fees, royalties or honorariums received therefrom shall be promptly turned
over to the Company;
(iii) engaging
in professional organization and program activities;
(iv) managing
his personal passive investments and affairs, and may operate the business
of
NRC Aviation LLC (providing its sole business relates to the utilization and
management of one airplane); and
(v) participating
in charitable or community affairs;
provided
that such activities do not materially, individually or in the aggregate,
interfere with the due performance of his duties and responsibilities under
this
Agreement or
create
a conflict of interest with the business of the Company, as
determined in good faith by the Board.
1.2.3. During
the Term, at each annual meeting of the Company’s stockholders, the Company
shall nominate the Executive for election, and the Board shall recommend the
election of the Executive, by the Company’s stockholders as a
director.
1.3. Reimbursement
of Expenses.
During
the Term, the Company shall pay the reasonable expenses incurred by the
Executive in the performance of his duties hereunder, including, without
limitation, those incurred in connection with business related travel (subject
to Section 4.5) or entertainment, or, if such expenses are paid directly by
the
Executive, the Company shall promptly reimburse him for such payments, provided
that the Executive properly accounts for such expenses in accordance with the
Company’s business expense reimbursement policy. To the extent any such
reimbursements (and any other reimbursements of costs and expenses provided
for
herein) are includable in the Executive’s gross income for Federal income tax
purposes, all such reimbursements shall be made no later than March 15 of the
calendar year next following the calendar year in which the expenses to be
reimbursed are incurred.
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2. COMPENSATION
2.1. Base
Salary.
During
the Term, the Executive shall be entitled to receive a base salary at a rate
of
one million dollars ($1,000,000.00) per annum, which base salary shall be
payable in accordance with the payroll practices of the Company, with such
increases (but no decreases) as may be determined by the Board from time to
time
(as increased from time to time, the “Base
Salary”).
2.2. Sign-on
Bonus.
The
Company shall pay the Executive a lump sum cash bonus in the amount of five
hundred thousand dollars ($500,000.00) within five (5) business days after
the
Signing Date (the “Sign-On Bonus”). In
the
event that the Executive resigns from his employment hereunder without Good
Reason (as defined below) or the Employee’s employment is terminated by the
Company for Cause (as defined below) (x) on or prior to June 30, 2008,
the
Executive shall promptly pay to the Company an amount equal to one hundred
percent (100%) of the Sign-On Bonus; or (y) on or following July, 1 2008, but
prior to January 1, 2009, the Executive shall
promptly pay to the Company an amount equal to one
hundred percent (100%) of the Sign-On Bonus less
a pro
rata portion of the Sign-On Bonus determined
by multiplying $500,000 by a fraction, the numerator of which is the number
of
days during 2008 that the Executive is employed by the Company and the
denominator of which is 365.
2.3. Annual
Bonuses.
In
addition to Base Salary, the Executive shall be eligible to receive an annual
cash bonus (the “Annual
Bonus”)
for
each completed calendar year (subject to Section 5.4 hereof) of the Company
during the Term in accordance with this Section 2.3. The Company shall promptly
establish (subject to shareholder approval) an incentive bonus plan intended
to
satisfy the requirements of Section 162(m) of the Internal Revenue Code of
1986,
as amended (the “Code”),
including as a performance goal thereunder the targets specified in this Section
(the “162(m)
Plan”).
The
162(m) Plan shall be submitted for shareholder approval at the next meeting
of
the Company’s shareholders (and thereafter as required by Section 162(m) of the
Code) and the awards under this Section (except as provided in the last sentence
hereof) shall be conditioned upon such shareholder approval and any required
future approval as required by Section 162(m) of the Code. The Annual Bonus
shall be a percentage of the Base Salary determined based on the level of the
Company’s consolidated earnings before interest, taxes, depreciation and
amortization of fixed assets and intangible assets (“EBITDA”)
achieved for such year against the target level of EBITDA (“Target
EBITDA”)
established for such year by the Compensation Committee of the Board (the
“Compensation
Committee”),
in
its sole discretion, but with prior consultation with the Executive, as
follows:
3
|
Annual
Level of Target EBITDA Achieved
|
%
of Base Salary
|
|
less
than 80%
|
0%
|
|
80%
(Threshold)
|
50%
|
|
90%
|
75%
|
|
100%
(Target)
|
100%
|
|
105%
|
110%
|
|
110%
|
122.50%
|
|
115%
|
135%
|
|
120%
or more (Maximum)
|
150%
|
There
shall be no interpolation between each target level. Any Annual Bonus earned
shall be payable in full in a lump sum cash payment in the calendar year
following the calendar year for which it is earned. Such payment shall be made
as soon as reasonably practicable following the audit by the Company’s
independent public accountants of the Company’s financial statements for the
calendar year for which it is earned, and the certification of the amount due
by
the Compensation Committee, and in accordance with the Company’s normal payroll
practices for the payment of bonuses to senior executives. The Compensation
Committee shall use reasonable business efforts to meet for the purposes of
such
certification within 30 days after completion of the audit for the applicable
fiscal year. Except as otherwise expressly provided in Section 5, any Annual
Bonus payable under this Section 2.3 shall be contingent on the Executive’s
continued employment with the Company through the date such payment is made.
In
the event any necessary shareholder approvals under Code Section 162(m) for
the
Annual Bonus payable for any year is not timely received, the Executive shall
not be entitled to any Annual Bonus for that year pursuant to the aforesaid
formula, but the Compensation Committee may award him a discretionary bonus
for
such year. Notwithstanding the foregoing, if the Executive is employed upon
expiration of the Term, he shall be entitled to the Annual Bonus for such last
year even if he is not employed by the Company on the date the Annual Bonus
is
paid for such last year.
2.4. Sign-On
Equity Award.
Subject
to the next sentence hereof, on February 19, 2008 (the “Determination
Date”),
the
Executive shall receive a one-time grant of equity incentive awards (the
“Sign-On
Grant”)
issued
under the Company’s 2006 Equity Incentive Plan (the “Equity
Plan”),
as
provided below. If, and to the extent that, on the Determination Date the number
of shares of Common Stock (as defined below) available for award under the
Equity Plan, less 75,000 shares, is not sufficient to make the full Sign-on
Grant, a number of PSU’s (as defined below) to be granted pursuant to Section
2.4.2 below equal to the number shares of Common Stock that cannot be awarded
as
a result of such inadequate number of shares shall be reduced from the PSU’s
portion of the Sign-on Grant in reverse order of eligibility to vest. An
additional grant for such number of PSU’s that could not be issued as a result
of the limitation in the prior sentence shall instead be made to the Executive
promptly after, and subject to, approval by the shareholders of the Company
of
an additional number of shares of Common Stock available for awards under the
Equity Plan (or a successor plan). The number of shares of Common Stock required
for any such delayed grant shall be adjusted as the Compensation Committee
shall
deem appropriate to reflect any
change that is made to the outstanding Common Stock by reason of any stock
split, stock dividend, combination of shares, exchange of shares, or other
change affecting the outstanding Common Stock during the period from the
Determination Date through the
date
such delayed grant is made.
The
PSU’s
granted pursuant to any such delayed grant shall be subject to same terms and
conditions as the PSU’s to be initially awarded as part of the Sign-On Award
pursuant to Section 2.4.2 below. If, and to the extent, such delayed grant
is
necessary, the Company shall submit to its shareholders for approval at its
next
annual shareholder meeting an increase in the number of shares of Common Stock
available for awards under the Equity Plan (or a successor plan) sufficient
to
at least cover the number of shares of Common Stock necessary to make such
delayed grant.
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2.4.1. RSU’s.
The
Executive shall receive a grant of restricted stock units of the Company (the
“RSU’s”)
equal
to a number of shares of the Company’s common stock, par value $0.001 per share
(“Common
Stock”)
with a
Fair Market Value (as defined below) on the Determination Date of Twenty-Four
Million Dollars ($24,000,000). The RSU’s shall be subject to the terms and
conditions of the Equity Plan and a Restricted Stock Unit Award Agreement
between the Company and the Executive in the form attached hereto as Exhibit
A,
but which Restricted
Stock Unit Award Agreement
shall
set
forth the following terms and conditions
(and
shall not contain any terms or conditions that are inconsistent with this
Agreement):
(i) Vesting.
Vesting
of the RSU’s shall be time based and shall vest in five (5) substantially equal
annual installments subject to the Executive’s continuous employment with the
Company through each such vesting date, with the first installment vesting
on
December 31, 2008 and each subsequent installment vesting each December 31
thereafter, with the final installment vesting on December 31, 2012 (each a
“Time
Vesting Date”).
Notwithstanding the foregoing, in the event of a Change in Control (as defined
below in Section 5.4.4), one hundred (100%) of the then remaining unvested
RSU’s
shall immediately become vested effective simultaneous with such Change in
Control.
(ii) Distribution.
Subject
to Section 5.4 as to conditions and timing of distribution of Common Stock
with
respect to RSU’s vesting as a result of a termination of employment and Section
9.8.2 with regard to timing of equity distributed as a result of a Separation
from Service (as defined below) as an employee of the Company, any vested
portion of the RSU’s shall be distributed to the Executive in shares of Common
Stock as follows:
(A) The
RSU’s
shall be distributed to the Executive fifteen (15) days after the applicable
Time Vesting Date;
(B) Notwithstanding
anything to the contrary contained herein, other than Sections 5.4.8 and 9.8.2,
all vested RSU’s (including those vested pursuant to the last sentence of the
clause (i) above) shall be distributed in shares of Common Stock to the
Executive simultaneous with the Company’s incurring a Change in Control.
5
(iii) Termination.
Notwithstanding
the foregoing, in
the
event of a termination of the Executive’s
employment with the Company prior to any Time Vesting Date, the
unvested
RSU’s at
the time of such termination shall vest or be forfeited as set forth in Section
5.4 below, as applicable.
2.4.2. PSU’s.
Subject
to the first paragraph of this Section 2.4, the Executive shall receive a grant
of performance stock units of the Company (the “PSU’s,”
and
together with the RSU’s, the “Equity
Units”)
equal
to a number of shares of Common Stock with a Fair Market Value on the
Determination Date of Sixteen Million Dollars ($16,000,000). The PSU’s shall be
subject to the terms and conditions of the Equity Plan and a Performance Stock
Unit Award Agreement between the Company and the Executive in the form attached
hereto as Exhibit B, but which
Performance
Stock Unit Award Agreement
shall
set
forth the following terms and conditions
(and
shall not contain any terms or conditions that are inconsistent with the terms
of this Agreement):
(i) Vesting.
Vesting
of the PSU’s shall be performance based and shall vest based on the achievement
of annual performance goals as described on Exhibit C attached hereto upon
certification of achievement by the Compensation Committee as set forth on
Exhibit C attached hereto. Notwithstanding anything to the contrary contained
herein, in the event of a Change in Control, (x) the unvested PSU’s shall vest
as follows: (a)
with
regard to the PSU’s that could vest in the calendar year of the Change in
Control, based
on
the achievement of the performance goals for the
year
in
which
such Change in Control occurs (including as a result of achieved aggregate
growth), calculated
as of the date of
such
Change in Control (with the date on which the Change of Control occurs being
deemed to be the end of a Performance Period for purposes of the calculations
set forth on Exhibit C attached hereto, but with no adjustment of the level
of
the goals), and (b) with regard to the PSU’s that could otherwise only vest in
calendar years after the Change in Control, based on the achievement of the
performance goals for later Performance Periods that would be deemed to have
been achieved as of the date of the Change of Control (with the date on which
the Change of Control occurs being deemed to be the end of each such later
Performance Period for purposes of the calculations set forth on Exhibit C
attached hereto, but with no adjustment of the level of the goals),
including, in the case of clauses (a) and (b), as a consequence of the price
per
share of the Common Stock (including as a result of a deemed liquidation
following a Change in Control which is a sale of the Company’s assets) being
paid by the acquirer in connection with the Change in Control
and (y)
any portion of the PSU’s that remains unvested on the date of such Change in
Control
after
giving effect to the foregoing clause (x)
shall be
forfeited as of the date of such Change in Control.
(ii) Distribution.
Subject
to Section 5.4 as to conditions and timing of distribution of Common Stock
with
respect to PSU’s vesting as a result of a termination of employment and Section
9.8.2 with regard to timing of equity distributed as a result of a Separation
from Service as an employee of the Company, any vested portion of the PSU’s
shall be distributed to the Executive in shares of Common Stock in the year
following the year of each applicable Performance Vesting Date (as defined
in
Exhibit C) following the Compensation Committee’s certification of the level of
attainment of the annual performance goals. Notwithstanding anything to the
contrary contained herein, except as to Sections 5.4.8 and 9.8.2, all vested
PSU’s (including those vested pursuant to the last sentence of clause (i) above)
shall be distributed to the Executive in shares of Common Stock simultaneous
with the Company’s incurring a Change in Control.
6
(iii) Termination.
Notwithstanding
anything to the contrary contained herein, in
the
event of a termination of the Executive’s
employment with the Company prior to any Performance Vesting Date, the
unvested
PSU’s
at the
time of such termination shall vest
or
be
forfeited as set
forth
in Section 5.4 below, as applicable.
2.4.3. Dividends.
With
respect to the Equity Units, the Executive will have the right to
receive
dividend
equivalents (in
cash
or in kind, as the case may be) in respect of
any
dividend
distributed to holders of Common Stock of record on and after the Determination
Date (or in the case of any PSU’s awarded pursuant to a delayed grant in
accordance with the first paragraph of this Section 2.4, on and after the date
such delayed grant is made); provided,
that
any such dividend equivalents shall be subject to the same restrictions as
the
Equity Units with regard to which they are issued, including without limitation,
as to vesting and time of distribution.
2.4.4. Fair
Market Value.
For the
purposes of this Section 2.4, “Fair
Market Value”
means
the
average
of the last
sale
price reported for the Common Stock for
each
of the ten (10) trading days commencing
on the third trading date following the
Signing Date as reported on the NASDAQ National Market.
The
number of RSU’s and PSU’s to be issued shall be determined by dividing the
required dollar value by the Fair Market Value.
2.4.5. Ownership
Retention.
The
shares of
Common
Stock underlying
the RSU’s and PSU’s shall only be saleable or otherwise transferable by the
Executive prior to termination
of his employment with the Company
(i) as
necessary to pay taxes on the distributed stock, (ii) to
trusts
or other entities established for the benefit of the Executive and/or his
immediate family members, subject to such trusts or other entities agreeing
in
writing to retain such shares of Common Stock during the period of the
Executive’s employment with the Company, subject to sub-section (iii), (iii) if
at the
time
of
such
sale or other transfer, the
value
of the Common
Stock
owned by
the Executive and
by
trusts or other entities established for the benefit of the Executive and/or
his
immediate family members (and
not
subject to forfeiture conditions and not including options) shall, and would
immediately
after
any
sale or other
transfer,
exceed five million dollars ($5,000,000) in value, or (iv)
as
otherwise approved by the Board in its sole discretion.
7
2.5. Additional
Compensation.
During
the Term, in addition to the foregoing, the Executive shall be eligible to
receive such other compensation as may from time to time be awarded him by
the
Board (or the Compensation Committee), in its sole discretion.
3. PLACE
OF PERFORMANCE.
In
connection with his employment by the Company, the Executive shall be based
at
the Company’s principal executive offices, currently located in New York, New
York.
4. EMPLOYEE
BENEFITS AND PERQUISITES
4.1. Benefit
Plans.
During
the Term, the Executive shall be eligible to participate on the terms and
conditions, including eligibility, no less favorable than provided to other
senior executives of the Company in all employee benefit plans, programs or
arrangements (other than equity and incentive plans,
unless
determined by the Board (or the Compensation Committee), in its sole
discretion), which shall be established or maintained by the Company generally
for its employees, or generally made available to its senior executives. The
parties acknowledge that because of the Sign-on Grant, it is currently
contemplated that the Executive will not receive additional equity grants for
a
period of five (5) years following the Effective Date.
4.2. Vacation.
The
Executive shall be entitled to not less than five (5) weeks vacation at full
pay
for each year during the Term. Such vacation may be taken in the Executive’s
discretion, and at such time or times as are not inconsistent with the
reasonable business needs of the Company.
4.3. Life
Insurance Coverage.
Subject
to
Executive’s insurability at standard or better insurance rates and his
cooperating with any required physical examinations, the
Company shall use its reasonable business efforts to obtain and maintain in
full
force and effect during the Term, life insurance issued by an insurance
company(s) with at least an “A” rating by A.M. Best Company covering the life of
the Executive for the benefit of his designated beneficiary(s) in the amount
of
$5,000,000, which amount shall include the current $1,000,000 whole-life policy.
In the event such amount is not available at standard
or better insurance rates, then the
Company shall use its reasonable business efforts to obtain and maintain such
life insurance in the
amount
that is purchasable at the same cost as if such amount could have been purchased
at standard insurance rates. The
remainder of the coverage shall be a term policy.
4.4. Automobile.
During
the Term, the Company shall provide the Executive for his use, at the Company’s
expense, an automobile commensurate with the Executive’s needs as the Company’s
most senior executive officer
and
commensurate with the automobile provided by the Company to the Executive on
the
Signing Date.
In
addition, the Company shall supply the Executive with a Company paid and insured
driver for business purposes only. The Company shall be responsible for the
cost
of insurance, maintenance, gas and other related operating expenses incurred
for
business purposes for such automobile during the Term, including the reasonable
cost of parking near the Company’s executive office. The
Executive hereby acknowledges that he will be subject to taxation for any
personal use of the automobile in accordance with applicable law.
8
4.5. Air
Travel.
During
the Term, the Executive shall be entitled to travel for business purposes by
private aircraft chartered by the Company (including from NRC Aviation LLC
or a
successor thereto) in accordance with the Company’s policies (established by the
Board, or an authorized committee thereof) as in effect from time to
time.
5. TERMINATION
OF EMPLOYMENT
5.1. General.
The
Executive’s employment under this Agreement may be terminated without any breach
of this Agreement only on the following circumstances:
5.1.1. Death.
The
Executive’s employment under this Agreement shall terminate upon his
death.
5.1.2. Disability.
If the
Executive suffers a Disability (as defined below), the Company may terminate
the
Executive’s employment under this Agreement upon thirty (30) days prior written
notice; provided that the Executive has not returned to full time performance
of
his duties during such thirty (30) day period. For purposes hereof,
“Disability”
shall
mean the Executive’s inability to perform his duties and responsibilities
hereunder, with or without reasonable accommodation, due to any physical or
mental illness or incapacity,
which
condition either (i) has continued
for a
period of 180 days (including weekends and holidays) in any consecutive 365-day
period, or (ii) is
projected by the Board in good faith after consulting with a doctor selected
by
the Company and consented to by the Executive (or, in the event of the
Executive’s incapacity, his legal representative), such consent not to be
unreasonably withheld, that the condition is likely to continue for a period
of
at least six (6) consecutive months from its commencement.
5.1.3. Good
Reason.
The
Executive may terminate his employment under this Agreement for Good Reason
at
any time on or prior to the 120th
day
after the occurrence of any of the Good Reason events set forth in the following
sentence. For purposes of this Agreement, “Good Reason” shall mean the
occurrence of any of the following events without the Executive’s
consent:
(i) the
failure by the Company to timely comply with its material obligations and
agreements contained in this Agreement;
(ii) a
material diminution of the authorities, duties or responsibilities of the
Executive set forth in Section 1.2 above (other than temporarily while the
Executive is physically or mentally incapacitated and unable to properly perform
such duties, as determined by the Board in good faith);
(iii) the
loss
of any of the titles of the Executive with the Company set forth in Section
1.2
above (other than the loss of the title of President in connection with the
appointment of another person as the President of the Company in accordance
with
Section 1.2 hereof);
(iv) a
reduction by the Company in the Base Salary or in any of the percentages of
Base
Salary payable as an Annual Bonus as set forth in Section 2.3 hereof (or, for
purposes of determining an Annual Bonus, an increase in any of the percentages
of Annual Level of Target EBITDA that must be achieved to obtain the related
percentage of Base Salary as set forth in Section 2.3 hereof);
9
(v) the
re-location of the Executive to an office outside of New York, New York (Borough
of Manhattan);
(vi) the
failure by the Company to nominate or re-nominate the Executive to serve as
a
member of the Board (other than as a result of the Executive’s death or
Disability, or because of a legal prohibition under applicable law or
regulation);
(vii) the
assignment to the Executive of duties or responsibilities which are materially
inconsistent with any of his duties and responsibilities set forth in Section
1.2 hereof;
(viii) a
change
in the reporting structure so that the Executive reports to someone other than
solely and directly to the Board; or
(ix) the
failure of the Company to obtain the assumption in writing of its obligation
to
perform this Agreement by any successor in connection with a sale or
other
disposition
by the Company of all or substantially all of the Company’s assets or
businesses
within
ten (10) days after such sale or
other
disposition;
provided,
however,
that,
within ninety (90) days of any such events having occurred, the Executive shall
have provided the Company with written notice that such events have occurred
and
afforded the Company thirty (30) days to cure same. The parties hereby
acknowledge that the Executive’s being removed from the position of Chairman, or
another person being appointed as the Company’s Chairman, in accordance with
Section 1.2 hereof, shall not be Good Reason; provided, however, the foregoing
shall not authorize any person other than the Executive serving as Executive
Chairman.
5.1.4. Without
Good Reason.
The
Executive may voluntarily terminate his employment under this Agreement without
Good Reason upon written notice by the Executive to the Company at least (i)
sixty (60) days prior to the effective date of such termination if the Executive
has the title of President, or (ii) thirty (30) days prior to the effective
date
of such termination if the Executive does not have the title of President (which
termination the Company may, in either case and its sole discretion, make
effective earlier than the date set forth in the Notice of Termination (as
defined below)).
5.1.5. Cause.
The
Company may terminate the Executive’s employment under this Agreement at any
time for Cause. Termination for “Cause” shall mean termination of the
Executive’s employment because of the occurrence of any of the following as
determined by the Board:
(i) 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);
provided,
however,
that
the Company shall have provided the Executive with written notice that such
actions are occurring and the Executive has been afforded at least fifteen
(15)
days to cure same;
10
(ii) the
indictment of the Executive for, or his conviction of or plea of guilty or
nolo
contendere to,
a
felony or any other crime involving moral turpitude or dishonesty;
(iii) the
Executive’s willfully engaging in misconduct in the performance of his duties
for the Company (including theft, fraud, embezzlement, and securities law
violations or a violation of the Company’s Code of Conduct or other written
policies) that is injurious to the Company, monetarily or otherwise;
or
(iv) the
Executive’s willfully engaging in misconduct other than in the performance of
his duties for the Company (including theft, fraud, embezzlement, and securities
law violations) that is materially injurious to the Company or, in the good
faith determination of the Board, is potentially materially injurious to the
Company, monetarily or otherwise.
For
purposes of this Section 5.1.5, no act, or failure to act, on the part of the
Executive shall be considered “willful,” unless done, or omitted to be done, by
him in bad faith and without reasonable belief that his action or omission
was
in, or not opposed to, the best interest of the Company (including
reputationally). Prior
to
any termination for Cause, the Executive will be given five (5) business days
written notice specifying the alleged Cause event and will be entitled to appear
(with counsel) before the full Board to present information regarding his views
on the Cause event, and after such hearing, there is at least a majority vote
of
the full Board (other than the Executive) to terminate him for Cause. After
providing the notice in foregoing sentence, the Board may suspend the Executive
with full pay and benefits until a final determination pursuant to this Section
has been made.
5.1.6. Without
Cause.
The
Company may terminate the Executive’s employment under this Agreement without
Cause immediately upon written notice by the Company to the Executive, other
than for death or Disability.
5.2. Notice
of Termination.
Any
termination of the Executive’s employment by the Company or by the Executive
(other than termination by reason of the Executive’s death) shall be
communicated by written Notice of Termination to the other party of this
Agreement. For purposes of this Agreement, a “Notice
of Termination”
shall
mean a written notice which shall indicate the specific termination provision
in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated.
5.3. Date
of Termination.
The
“Date
of Termination”
shall
mean (a) if the Executive’s employment is terminated by his death, the date
of his death, (b) if the Executive’s employment is terminated pursuant to
subsection 5.1.2 above, thirty (30) days after Notice of Termination is given
(provided that the Executive shall not have returned to the performance of
his
duties on a full-time basis during such thirty (30) day period), (c) if the
Executive’s employment is terminated pursuant to subsections 5.1.3 or 5.1.5
above, the date specified in the Notice of Termination after the expiration
of
any applicable cure periods, (d) if the Executive’s employment is terminated
pursuant to subsection 5.1.4 above, the date specified in the Notice of
Termination which shall be at least thirty (30) or sixty (60) days, as
applicable, after Notice of Termination is given, or such earlier date as the
Company shall determine, in its sole discretion, and (e) if the Executive’s
employment is terminated pursuant to subsections 5.1.6, the date on which a
Notice of Termination is given.
11
5.4. Compensation
Upon Termination.
5.4.1. Termination
for Cause or without Good Reason.
If the
Executive’s employment shall be terminated by the Company for Cause or by the
Executive without Good Reason, the Executive shall receive from the Company:
(a)
any earned but unpaid Base Salary through the Date of Termination, paid in
accordance with the Company’s standard payroll practices; (b) reimbursement for
any unreimbursed expenses properly incurred and paid in accordance with Section
1.3 through the Date of Termination; (c) payment for any accrued but unused
vacation time in accordance with Company policy; (d) shares of Common Stock
in
respect of any vested Equity Units with respect to which the Executive has
not
received distribution and any vested, accrued and unpaid dividend equivalents
thereon; and (e) such vested accrued benefits, and other payments, if any,
as to
which the Executive (and his eligible dependents) may be entitled under, and
in
accordance with the terms and conditions of, the employee benefit arrangements,
plans and programs of the Company as of the Date of Termination, other than
any
severance pay plan ((a) though (e), the “Amounts
and Benefits”),
and
the Company shall have no further obligation with respect to this Agreement
other as provided in Sections 8 and 9 of this Agreement. In addition, any
portion of the Equity Units that remain unvested on the Date of Termination
shall be forfeited as of the Date of Termination.
5.4.2. Termination
without Cause or For Good Reason.
If,
prior to the expiration of the Term, the Executive resigns from his employment
hereunder for Good Reason or the Company terminates the Executive’s employment
hereunder without Cause (other than a termination by reason of death or
Disability), and Section 5.4.3 does not apply, then the Company shall pay or
provide the Executive the Amounts and Benefits and, subject
to Section 5.4.8:
(i) subject
to Section 9.8.2, an amount equal to:
(A)
in
the event such resignation or termination occurs on or prior to December 31,
2010, the sum of (x) two (2) times the Base Salary as then in effect
(without
taking into account any reduction therein that constitutes a basis for Good
Reason),
plus
(y) an
amount equal to two (2) times the average of the Annual Bonus the
Executive received from the Company for the two (2) completed fiscal years
prior
to such termination; or
12
(B)
in
the event such resignation or termination occurs on or following January 1,
2011, two (2) times the Base Salary as then in effect
(without
taking into account any reduction therein that constitutes a basis for Good
Reason);
in
either
case with one half of the amount due paid in equal installments on the Company’s
normal payroll dates for a period of one (1) year from the Date of Termination
in accordance with the usual payroll practices of the Company, but off the
employee payroll, and the other one half of the amount due being paid in a
lump
sum on the first anniversary of the Date of Termination, with each such payment
deemed to be a separate payment for the purposes of Code
Section 409A (as defined below);
(ii) any
Annual Bonus earned but unpaid for a prior fiscal year, paid in accordance
with
Section 2.3 (including payment timing) (the “Prior
Year Bonus”);
(iii) in
the
event such resignation or termination occurs following the Company’s first
fiscal quarter of any year, a pro-rata portion of the Executive’s Annual Bonus
for the fiscal year in which the Executive’s termination occurs based on actual
results for such year (determined by multiplying the amount of such Annual
Bonus
which would be due for the full fiscal year by a fraction, the numerator of
which is the number of days during the fiscal year of termination that the
Executive is employed by the Company and the denominator of which is 365),
paid
in accordance with Section 2.3 (including payment timing, “Pro
Rata Bonus”);
and
(iv) subject
to the Executive’s (a) timely election of continuation coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”)
with
respect to the Company’s group health insurance plans in which the Employee
participated immediately prior to the Date of Termination (“COBRA
Continuation Coverage”),
and
(b) continued payment of premiums for such plans at the active employee rate
(excluding, for purposes of calculating cost, an employee’s ability to pay
premiums with pre-tax dollars), the
Company shall provide COBRA Continuation Coverage for the Executive and his
eligible dependents until the earliest of (x) the Executive or his eligible
dependents, as the case may be, ceasing to be eligible under COBRA, (y) eighteen
(18) months following the Date of Termination, and (z) the Executive becoming
eligible for coverage under the health insurance plan of a subsequent employer
(the benefits provided under this sub-section (iii), the “Medical
Continuation Benefits”).
In
addition, subject
to Section 5.4.8, (A)
seventy-five
percent (75%) of the then remaining unvested RSU’s shall immediately become
vested on the Date of Termination and shall
be
distributed
to the Executive in
shares
of Common Stock as provided in, and subject to, Sections 5.4.8 and 9.8.2, and
(B) the portion of the PSU’s subject to vesting in the calendar year in which
the Date of Termination occurs (including, as a result of achieved aggregate
growth) shall immediately become vested on the certification of the Compensation
Committee promptly after the Date of Termination based on the achievement of
the
performance goals for such year calculated through the Date of Termination
(with
the Date of Termination being deemed to be the end of a Performance Period
for
purposes of the calculations set forth on Exhibit C attached hereto, but with
no
adjustment of the level of the goals), and shall be distributed in shares of
Common Stock to the Executive as
provided in, and subject to, Sections 5.4.8 and 9.8.2. After
giving effect to the foregoing, any
portion
of the Equity
Units
that
remain unvested on the certification following the Date of Termination shall
be
forfeited as of the Date of Termination.
13
5.4.3. Termination
Following Change in Control.
Anything contained herein to the contrary notwithstanding, but without limiting
Section 2.4 hereof with respect to the vesting of Equity Units and the delivery
of Common Stock underlying such vested Equity Units (and any unpaid dividend
equivalents) in connection with the occurrence of a Change in Control, in the
event the Executive resigns from his employment hereunder for Good Reason or
the
Company terminates the Executive’s employment hereunder without Cause (other
than a termination by reason of death or Disability) within twelve (12) months
following a Change in Control (as defined below), the Company shall pay or
provide the Executive the Amounts and Benefits and, subject to Section
5.4.8:
(i) subject
to Section 9.8.2, an amount equal to:
(A)
in
the event such resignation or termination occurs on or prior to December 31,
2010, the sum of (x) three (3) times the Base Salary as then in
effect
(without
taking into account any reduction therein that constitutes a basis for Good
Reason),
plus
(y) an
amount equal to three (3) times the average of the Annual Bonus the
Executive received from the Company for the three (3) completed fiscal years
prior to such termination; or
(B)
in
the event such resignation or termination occurs on or following January 1,
2011, three (3) times the Base Salary as then in effect
(without
taking into account any reduction therein that constitutes a basis for Good
Reason);
in
either
case payable in a cash lump sum on the sixtieth (60th)
day
following the Date of Termination;
(ii) the
Prior
Year Bonus;
(iii) in
the
event such resignation or termination occurs following the Company’s first
fiscal quarter of any year, a Pro Rata Bonus; and
(iv) the
Medical Continuation Benefits.
5.4.4. For
purposes of this Agreement, a “Change
in Control”
shall
be deemed to occur
upon any
of the following events, provided that such an event is a Change in Control
Event
within
the meaning of Code Section 409A:
(a) any
“person” as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”)
(other
than the Company, any trustee or other fiduciary holding securities under any
employee benefit plan of the Company, or any company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of the Common Stock), becoming the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing more than 50% of the combined voting
power of the Company’s then outstanding securities;
(b)
during any period of twelve (12) consecutive months, the individuals who, at
the
beginning of such period, constitute the Board, and any new director whose
election by the Board or nomination for election by the Company’s stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the 12-month period
or
whose election or nomination for election was previously so approved, cease
for
any reason to constitute at least a majority of the Board; (c) a merger or
consolidation of the Company with any other corporation or other entity, other
than a merger or consolidation which would result in the voting securities
of
the Company outstanding immediately prior thereto (and
held
by persons that are not affiliates of the acquirer) continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that a merger
or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person (other than those covered by the
exceptions in clause (a) of this Section 5.4.4(iii)) acquires more than 50%
of
the combined voting power of the Company’s then outstanding securities shall not
constitute a Change in Control; or (d) the consummation of a sale or other
disposition by the Company of all or substantially all of the Company’s assets,
including a liquidation, other than the sale or other disposition of all or
substantially all of the assets of the Company to a person or persons who
beneficially own, directly or indirectly, more than 50% of the combined voting
power of the outstanding voting securities of the Company immediately
prior to
the time
of the sale
or other
disposition.
14
5.4.5. Termination
upon Death.
In the
event of the Executive’s death, the Company shall pay or provide to the
Executive’s estate: (i) the Amounts and Benefits, (ii) the Prior Year Bonus, and
(iii) a Pro Rata Bonus. In
addition, (A)
one
hundred percent (100%) of the then remaining unvested RSU’s shall immediately
become vested on the Date of Termination
and
shall be distributed to the Executive’s estate in shares of Common Stock within
sixty (60) days of the Date of Termination and (B) the portion of the PSU’s
subject to vesting in the calendar year the Date of Termination occurs
(including, as a result of achieved aggregate growth) shall immediately become
vested on the certification of the Compensation Committee promptly after the
Date of Termination based on the achievement of the performance goals for such
year, calculated through the Date of Termination (with the Date of Termination
being deemed to be the end of a Performance Period for purposes of the
calculations set forth on Exhibit C attached hereto, but with no adjustment
of
the level of goals), and shall be distributed to the Executive’s estate in
shares of Common Stock sixty
(60) days after the Date of Termination.
After
giving effect to the foregoing, any portion of the PSU’s
that
remain unvested on the certification following the Date of Termination shall
be
forfeited as of the Date of Termination.
5.4.6. Termination
upon Disability.
In the
event the Company terminates the Executive’s employment hereunder for reason of
Disability, the Company shall pay or provide to the Executive: (i) the Amounts
and Benefits, (ii) the Prior Year Bonus, (iii)
a
Pro Rata Bonus
and (iv)
the Medical Benefits.
In
addition, subject
to Section 5.4.8, (A)
fifty
percent (50%) of the then remaining unvested RSU’s shall immediately become
vested on the Date of Termination and
shall
be distributed to the Executive in shares of Common Stock as provided in, and
subject to, Sections 5.4.8 and 9.8.2 and (B) the portion of the PSU’s subject to
vesting in the calendar year the Date of Termination occurs (including, as
a
result of achieved aggregate growth) shall immediately become vested on the
certification of the Compensation Committee promptly after the Date of
Termination based on the achievement of the performance goals for such year,
calculated through the Date of Termination (with the Date of Termination being
deemed to be the end of a Performance Period for purposes of the calculations
set forth on Exhibit C attached hereto, but with no adjustment of the level
of
goals), and shall be distributed in shares of Common Stock to the Executive
as
provided in, and subject to, Sections 5.4.8 and 9.8.2.
After
giving effect to the foregoing, any portion of the Equity Units
that
remain unvested on the certification following the Date of Termination shall
be
forfeited as of the Date of Termination.
15
5.4.7. No
Mitigation or Offset.
The
Executive shall not be required to mitigate the amount of any payment provided
for in this Section 5.4 by seeking other employment or otherwise, nor shall
the
amount of any payment provided for in this Section 5.4 be reduced by any
compensation earned by the Executive as the result of employment by another
employer or business or by profits earned by the Executive from any other source
at any time before and after the Date of Termination. The Company’s obligation
to make any payment pursuant to, and otherwise to perform its obligations under,
this Agreement shall not be affected by any offset, counterclaim or other right
that the Company may have against the Executive for any reason.
5.4.8. Release.
Notwithstanding any provision to the contrary in this Agreement, the Company’s
obligation to pay or provide the Executive with the payments and benefits under
Sections 5.4.2 and 5.4.3 (other than the Amounts and Benefits), and any
distributions with respect to the Equity Units under Sections 5.4.2, 5.4.3
and
5.4.6, shall be conditioned on the Executive’s executing and not revoking a
waiver and general release in the form set forth as Exhibit D attached to this
Agreement (with
such changes therein, if any, as are legally necessary at the time of execution
to make it enforceable)
(the
“Release”).
The
Company shall provide the Release to the Executive within seven (7) days
following the applicable Date of Termination. In
order
to receive the payments and benefits under Sections 5.4.2 and 5.4.3 (other
than
the Amounts and Benefits) and the distributions
with respect to the Equity Units under Sections 5.4.2, 5.4.3 and
5.4.6,
the
Executive will be required to sign the Release within twenty-one (21) or
forty-five (45) days after the date it is provided to him, whichever is
applicable under applicable law, and not revoke it within the seven (7) day
period following the date on which it is signed by him. Notwithstanding anything
to the further contrary contained herein, (i) all payments delayed pursuant
to
this Section, except to the extent delayed pursuant to Section 9.8.2, shall
be
paid to the Executive in a lump sum on the first Company payroll date on or
following the sixtieth (60th)
day
after the Date of Termination, and any remaining payments due under this
Agreement shall be paid or provided in accordance with the normal payment dates
specified for them herein and (ii) all distributions with respect to the Equity
Units delayed pursuant to this Section, except to the extent delayed pursuant
to
Section 9.8.2, shall be distributed to the Executive on the sixtieth
(60th)
day
after the Date of Termination.
16
6. INSURABILITY;
RIGHT TO INSURE
The
Company shall have the right to maintain key man life insurance in its own
name
covering the Executive’s life in an amount of up to fifty million dollars
($50,000,000.00). The Executive shall fully cooperate in the procuring of such
insurance, including, without limitation, by submitting to the required medical
examinations, if any, and by filling out, executing and delivering such
applications and other instrument in writing as may be reasonably required
by an
insurance company or companies to which application or applications for
insurance may be made by or for the Company.
7. CONFIDENTIALITY;
NON-COMPETITION; NON-SOLICITATION; NON-DISPARAGEMENT;
COOPERATION
7.1. The
Company and the Executive acknowledge that the services to be performed by
the
Executive under this Agreement are unique and extraordinary and, as a result
of
such employment, the Executive shall be in possession of Confidential
Information relating to the business practices of the Company and its
subsidiaries and affiliates (collectively, the “Company
Group”).
The
term “Confidential
Information”
shall
mean any and all information (oral and written) relating to the Company Group,
or any of their respective activities, or of the clients, customers or business
practices of the Company Group, other than such information which (i) is
generally available to the public or within the relevant trade or industry,
other than as the result of breach of the provisions of this Section 7.1, or
(ii) the Executive is required to disclose under any applicable laws,
regulations or directives of any government agency, tribunal or authority having
jurisdiction in the matter or under subpoena or other process of law. The
Executive shall not, during the Term nor at any time thereafter, except as
may
be required in the course of the performance of his duties hereunder (including
without limitation, pursuant to Section 7.6 below) and except with respect
to
any litigation or arbitration involving this Agreement, including the
enforcement hereof, directly or indirectly, use, communicate, disclose or
disseminate to any person, firm or corporation any Confidential Information
regarding the Company Group nor of the clients, customers or business practices
of the Company Group acquired by the Executive during, or as a result of, his
employment with the Company, without the prior written consent of the Company.
Without limiting the foregoing, the Executive understands that Executive shall
be prohibited from misappropriating any trade secret of the Company Group or
of
the clients or customers of the Company Group acquired by the Executive during,
or as a result of, his employment with the Company, at any time during or after
the Term.
7.2. Upon
the
termination of the Executive’s employment for any reason whatsoever all Company
Group property that is in the possession of the Executive shall be promptly
returned to the Company, including, without limitation, all documents, records,
notebooks, equipment, price lists, specifications, programs, customer and
prospective customer lists and other materials that contain Confidential
Information which are in the possession of the Executive, including all copies
thereof. Anything to the contrary notwithstanding, the Executive shall be
entitled to retain (i) papers and other materials of a personal nature,
including, but not limited to, photographs, correspondence, personal diaries,
calendars and rolodexes, personal files and phone books, (ii) information
showing his compensation or relating to reimbursement of expenses,
(iii) information that he reasonably believes may be needed for tax
purposes and (iv) copies of plans, programs and agreements relating to his
employment, or termination thereof, with the Company.
17
7.3. The
Executive hereby agrees that he shall not, during the Term and for a period
of
one (1) year thereafter, in any location in which the Company Group or a
licensee thereof operates or sells its products, directly or indirectly, engage,
have an interest in or render any services to any business (whether as owner,
manager, operator, licensor, licensee, lender, partner, stockholder, joint
venturer, employee, consultant or otherwise) (collectively, “Engage”)
competitive with the business activities conducted by the Company Group,
or
the
business activities that the Company Group has plans to conduct, on
the
Date
of
Termination.
Notwithstanding the foregoing, nothing herein shall prevent the Executive from
(i) owning securities in a publicly traded entity whose activities compete
with
those of the Company Group (or any member thereof), provided that such
securities holdings are not greater than five percent (5%) of such entity;
(ii)
Engaging in the business of the ownership and licensing (as licensor) of
trademarks and brands if the products or services carrying such trademarks
and
brands do not compete with the products or services carrying the trademarks
and
brands owned and licensed (as licensor) by the Company, or that the Company
is
actively planning to own or license (as licensor), on the Date of Termination;
or (iii) Engaging in an operating company(s) (including ownership of securities
of such operating company(s)’ holding company)
that
does not compete
with
the
business activities conducted by
the
Company Group (or any member thereof),
or that
the Company Group (or any member thereof) has active plans to
conduct,
on the
Date of Termination.
7.4. The
Executive shall not, except in the furtherance of the Executive’s duties
hereunder, directly or indirectly, individually or on behalf of any other
person, firm, corporation or other entity, (i) during the Term (except in the
good faith performance of his duties) and for a period of two (2) years
thereafter, solicit, aid or induce any employee, representative or agent of
the
Company Group to leave such employment or retention or to accept employment
with
or render services to or with any other person, firm, corporation or other
entity unaffiliated with the Company Group or hire or retain any such employee,
representative or agent, or take any action to materially assist or aid any
other person, firm, corporation or other entity in identifying, hiring or
soliciting any such employee, representative or agent, (ii) during the Term
(except in the good faith performance of his duties) and for a period of one
(1)
year thereafter, solicit, aid or induce any customer of the Company Group to
purchase goods or services then sold by the Company Group from another person,
firm, corporation or other entity or assist or aid any other persons or entity
in identifying or soliciting any such customer or (iii) during the Term (except
in the good faith performance of his duties) and for a period of one (1) year
thereafter, interfere in any manner with the relationship of the Company Group
and any of their vendors. An employee, representative or agent shall be deemed
covered by this Section while so employed or retained by the Company and for
six
(6) months thereafter. Anything to the contrary notwithstanding, the Company
agrees that the following shall not be deemed a violation of this Section 7.4:
(a) the Executive’s solicitation of the Company Group’s customers and/or vendors
in connection with, and directly related to, his Engaging in a business that
complies with Sections 7.3(ii) or (iii); (b) the Executive’s responding to an
unsolicited request for an employment reference regarding any former employee
of
the Company Group from such former employee, or from a third party, by providing
a reference setting forth his personal views about such former employee;
or
(c) if
an entity with which the Executive is associated hires or engages any employee
of the Company Group, if the Executive was not, directly or indirectly, involved
in hiring or identifying such person as a potential recruit or assisting in
the
recruitment of such employee. For purposes hereof, the Executive shall only
be
deemed to have been involved “indirectly” in soliciting, hiring or identifying
an employee if the Executive (x) directs a third party to solicit or hire the
Employee, (y) identifies an employee to a third party as a potential recruit
or
(z) aids, assists or participates with a third party in soliciting or hiring
an
employee.
18
7.5. At
no
time during or within five (5) years after the Term shall the Executive,
directly or indirectly, disparage the Company Group or any of the Company
Group’s past or present employees, directors, products or services. The Company
shall advise its senior officers and the members of the Board (while serving
in
such capacities) not to disparage the Executive during the Term or within the
five (5) year period after the Term, except in the good faith performance of
their duties or fiduciary obligations. Notwithstanding the foregoing, nothing
in
this Section 7.5 shall prevent any person from making any truthful statement
to
the extent (i) necessary to rebut any untrue public statements made about him
or
her; (ii) necessary with respect to any litigation, arbitration or mediation
involving this Agreement, including, but not limited to, the enforcement of
this
Agreement; (iii) required by law or by any court, arbitrator, mediator or
administrative or legislative body (including any committee thereof) with
jurisdiction over such person; or (iv) made
as
good faith competitive statements in the ordinary course of business.
7.6. Upon
the
receipt of reasonable notice from the Company (including the Company’s outside
counsel), the Executive agrees that while employed by the Company and
thereafter, the Executive will respond and provide information with regard
to
matters of which the Executive has knowledge as a result of the Executive’s
employment with the Company, and will provide reasonable assistance to the
Company Group and their respective representatives in defense of any claims
that
may be made against the Company Group (or any member thereof), and will provide
reasonable assistance to the Company Group in the prosecution of any claims
that
may be made by the Company Group (or any member thereof), to the extent that
such claims may relate to matters related to the Executive’s period of
employment with the Company (or any predecessors). Any request for such
cooperation shall take into account the Executive’s other personal and business
commitments. The Executive also agrees to promptly inform the Company (to the
extent the Executive is legally permitted to do so) if the Executive is asked
to
assist in any investigation of the Company Group (or any member thereof) or
their actions, regardless of whether a lawsuit or other proceeding has then
been
filed with respect to such investigation, and shall not do so unless legally
required.
If the
Executive is required to provide any services pursuant to this Section 7.6
following the Term, upon presentation of appropriate documentation, the Company
shall promptly reimburse the Executive for reasonable out-of-pocket travel,
lodging, communication and duplication expenses incurred in connection with
the
performance of such services and in accordance with the Company’s expense policy
for its senior officers,
and for
legal fees to the extent the Board in good faith reasonably believes that
separate representation is warranted. The Executive’s entitlement to
reimbursement of such costs and expenses, including legal fees, pursuant to
this
Section 7.6, shall in no way affect the Executive’s rights, if any, to be
indemnified and/or advanced expenses in accordance with the Company’s (or any of
its subsidiaries’) corporate or other organizational documents, any applicable
insurance policy, and/or in accordance with this Agreement.
19
7.7. Without
intending to limit the remedies available to the Company, the Executive
acknowledges that a breach of any of the covenants contained in this Section
7
may result in material and irreparable injury to the Company, or its affiliates
or subsidiaries, for which there is no adequate remedy at law, that it will
not
be possible to measure damages for such injuries precisely and that, in the
event of such a breach or threat the Company shall be entitled to a temporary
restraining order and/or a preliminary or permanent injunction restraining
the
Executive from engaging in activities prohibited by this Section 7 or such
other
relief as may be required specifically to enforce any of the covenants in this
Section 7. If for any reason it is held that the restrictions under this Section
7 are not reasonable or that consideration therefor is inadequate, such
restrictions shall be interpreted or modified to include as much of the duration
and scope identified in this Section as will render such restrictions valid
and
enforceable.
7.8. In
the
event of any violation of the provisions of this Section 7, the Executive
acknowledges and agrees that the post-termination restrictions contained in
this
Section 7 shall be extended by a period of time equal to the period of such
violation, it being the intention of the parties hereto that the running of
the
applicable post-termination restriction period shall be tolled during any period
of such violation.
8. INDEMNIFICATION/
DIRECTORS AND OFFICERS LIABILITY INSURANCE
During
the Term and thereafter,
the
Company shall indemnify and hold harmless the Executive and
his
heirs and representatives as,
and
to the extent, provided in the Company’s by-laws.
During
the Term and thereafter, the Company
shall
also cover Executive under the Company’s directors’ and officers’ liability
insurance on the same basis as it covers other senior executive
officers
and
directors
of the
Company.
9. MISCELLANEOUS
9.1. Notices.
All
notices or communications hereunder shall be in writing, addressed as follows
(or
to
such other address as either party may have furnished to the other in writing
by
like notice):
|
To
the Company:
|
0000
Xxxxxxxx
0xx
Xxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxxx X. Xxxxxxx
Senior Vice President and General Counsel
|
|
with
a copy (which shall not constitute notice) to:
|
|
|
Blank
Rome LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Attn:
Xxxxxx X. Xxxxxxx, Esq.
|
20
To
the
Executive, at the last address for the Executive on the books of the
Company.
All
such
notices shall be conclusively deemed to be received and shall be effective
(i) if sent by hand delivery, upon receipt, (ii) if sent by telecopy
or facsimile transmission, upon confirmation of receipt by the sender of such
transmission, (iii) if sent by overnight courier, one business day after
being sent by overnight courier, or (iv) if sent by registered or certified
mail, postage prepaid, return receipt requested, on the fifth (5th)
day
after the day on which such notice is mailed.
9.2. Severability.
Each
provision of this Agreement shall 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 prohibited by or invalid under applicable law, such provision
will
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this
Agreement.
9.3. Binding
Effect; Benefits.
Executive may not delegate his duties or assign his rights hereunder. No rights
or obligations of the Company under this Agreement may be assigned or
transferred by the Company other than pursuant to a merger or consolidation
in
which the Company is not the continuing entity, or a sale, liquidation or other
disposition of all or substantially all of the assets of the Company, provided
that the assignee or transferee is the successor to all or substantially all
of
the assets or businesses of the Company and assumes the liabilities, obligations
and duties of the Company under this Agreement, either contractually or by
operation of law. The Company further agrees that, in the event of any
disposition of its business and assets described in the preceding sentence,
it
shall use its best efforts to cause such assignee or transferee expressly to
assume the liabilities, obligations and duties of the Company hereunder. For
the
purposes of this Agreement, the term “Company” shall include the Company and,
subject to the foregoing, any of its successors and assigns. This Agreement
shall inure to the benefit of, and be binding upon, the parties hereto and
their
respective heirs, legal representatives, successors and permitted
assigns.
9.4. Entire
Agreement.
This
Agreement, including the Exhibits hereto, represent the entire agreement of
the
parties with respect to the subject matter hereof and shall supersede any and
all previous contracts, arrangements or understandings between the Company
and
the Executive, including, without limitation, the Prior Agreement and the
agreement by and between the Company (f/k/a Candie’s Inc.) and the Executive
entered into March 29, 2005, each of which shall be deemed to have terminated
on
December 31, 2007. This Agreement (including any of the Exhibits hereto) may
be
amended at any time by mutual written agreement of the parties hereto. In the
case of any conflict between any express term of this Agreement and any
statement contained in any plan, program, arrangement, employment manual, memo
or rule of general applicability of the Company, this Agreement shall
control.
9.5. Withholding.
The
payment of any amount pursuant to this Agreement shall be subject to applicable
withholding and payroll taxes, and such other deductions as may be required
by
applicable law.
21
9.6. Governing
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.
9.7. Arbitration.
Any
dispute or controversy arising under or in connection with this Agreement or
the
Executive’s employment with the Company, other than injunctive relief under
Section 7.7 hereof, but
excluding any dispute or controversy arising out of the administration of
Section 2.4.2 hereof and the related provisions of Exhibit C hereto,
which
shall be resolved as set forth in Exhibit C hereto, shall
be
settled exclusively by arbitration, conducted before a single arbitrator in
New
York, New York (applying New York law) in accordance with the Commercial
Arbitration Rules and Procedures of the American Arbitration Association then
in
effect. The decision of the arbitrator will be final and binding upon the
parties hereto. Judgment may be entered on the arbitrator’s award in any court
having jurisdiction. The parties acknowledge and agree that in connection with
any such arbitration and regardless of outcome (a) each party shall pay all
its
own costs and expenses, including without limitation its own legal fees and
expenses, and (b) joint expenses shall be borne equally among the
parties. EACH
PARTY WAIVES RIGHT TO TRIAL BY JURY.
9.8. Section
409A of the Code.
9.8.1. It
is
intended that the provisions of this Agreement comply with Section 409A of
Code
and the regulations and guidance promulgated thereunder (collectively
“Code
Section 409A”),
and
all provisions of this Agreement shall be construed in a manner consistent
with
the requirements for avoiding taxes or penalties under Code Section 409A. If
any
provision of this Agreement (or of any award of compensation, including equity
compensation or benefits) would cause the Executive to incur any additional
tax
or interest under Code Section 409A, the Company shall, upon the specific
request of the Executive, use its reasonable business efforts to in good faith
reform such provision to comply with Code Section 409A; provided,
that to
the maximum extent practicable, the original intent and economic benefit to
the
Executive and the Company of the applicable provision shall be maintained,
but
the Company shall have no obligation to make any changes that could create
any
additional economic cost or loss of benefit to the Company. The Company shall
timely use its reasonable business efforts to amend any plan or program in
which
the Executive participates to bring it in compliance with Code Section 409A.
Notwithstanding the foregoing, the Company shall have no liability with regard
to any failure to comply with Code Section 409A so long as it has acted in
good
faith with regard to compliance therewith.
22
9.8.2. 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 upon or following a termination of employment unless such termination
is also a “Separation
from Service”
within
the meaning of Section 409A and, for purposes of any such provision of this
Agreement, references to a “resignation,” “termination,” “termination of
employment” or like terms shall mean Separation from Service. If the Executive
is deemed on the date of termination of his employment to be a “specified
employee”, within the meaning of that term under Section 409A(a)(2)(B) of the
Code and using the identification methodology selected by the Company from
time
to time, or if none, the default methodology, then with regard to any payment,
the providing of any benefit or any distribution of equity made subject to
this
Section 9.8.2, to the extent required to be delayed in compliance with Section
409A(a)(2)(B) of the Code, and any other payment, the provision of any other
benefit or any other distribution of equity that is required to be delayed
in
compliance with Section 409A(a)(2)(B) of the Code, such payment, benefit or
distribution shall not be made or provided prior to the earlier of (i) the
expiration of the six-month period measured from the date of the Executive’s
Separation from Service or (ii) the date of the Executive’s death. On the first
day of the seventh month following the date of Executive’s Separation from
Service or, if earlier, on the date of his death, (x) all payments delayed
pursuant to this Section 9.8.2 (whether they would have otherwise been payable
in a single sum or in installments in the absence of such delay) shall be paid
or reimbursed to the Executive in a lump sum, and any remaining payments and
benefits due under this Agreement shall be paid or provided in accordance with
the normal payment dates specified for them herein
and (y)
all distributions of equity delayed pursuant to this Section 9.8.2 shall be
made
to the Executive. In addition to the foregoing, to the extent required by
Section 409A(a)(2)(B) of the Code, prior to the occurrence of a Disability
termination as provided in Section 5.1.2 hereof, the payment of any compensation
to the Executive under this Agreement shall be suspended for a period of six
months commencing at such time that the Executive shall be deemed to have had
a
Separation from Service because either (A) a sick leave ceases to be a bona
fide
sick leave of absence, or (B) the permitted time period for a sick leave of
absence expires (an “SFS
Disability”),
without regard to whether such SFS Disability actually results in a Disability
termination. Promptly following the expiration of such six-month period, all
compensation suspended pursuant to the foregoing sentence (whether it would
have
otherwise been payable in a single sum or in installments in the absence of
such
suspension) shall be paid or reimbursed to the Executive in a lump sum. On
any
delayed payment date under this Section 9.8.2, there shall be paid to the
Executive or, if the Executive has died, to his estate, in a single cash lump
sum together with the payment of such delayed payment, interest on the aggregate
amount of such delayed payment at the Delayed Payment Interest Rate (as defined
below) computed from the date on which such delayed payment otherwise would
have
been made to the Executive until the date paid. For purposes of the foregoing,
the “Delayed Payment Interest Rate” shall mean the short term Applicable Federal
Rate as of the business day immediately preceding the payment date for the
applicable delayed payment.
9.8.3. 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, provided
that the
foregoing clause (ii) shall not be violated with regard to expenses reimbursed
under any arrangement covered by Section 105(b) of the Code solely because
such
expenses are subject to a limit related to the period the arrangement is in
effect and (iii) such payments shall be made on or before the last day of the
Executive’s taxable year following the taxable year in which the expense was
incurred.
9.9. The
Company shall promptly pay upon presentation of appropriate documentation the
reasonable legal fees incurred by the Executive in connection with the
negotiation and documentation of this Agreement in an amount not to exceed
seventy-five thousand dollars ($75,000).
23
9.10. Survivorship.
Except
as otherwise expressly set forth in this Agreement, upon the expiration of
the
Term, the respective rights and obligations of the parties shall survive such
expiration to the extent necessary to carry out the intentions of the parties
as
embodied in this Agreement. This Agreement shall continue in effect until there
are no further rights or obligations of the parties outstanding hereunder and
shall not be terminated by either party without the express prior written
consent of both parties.
9.11. Counterparts.
This
Agreement may be executed in counterparts (including by fax or pdf) which,
when
taken together, shall constitute one and the same agreement of the
parties.
9.12. Company
Representations.
The
Company represents and warrants to the Executive that (i) the execution,
delivery and performance of this Agreement (and the agreements referred to
herein) by the Company has been fully and validly authorized by all necessary
corporate action, (ii) the officer signing this Agreement on behalf of the
Company is duly authorized to do so, (iii) the execution, delivery and
performance of this Agreement does not violate any applicable law, regulation,
order, judgment or decree or any agreement, plan or corporate governance
document to which the Company is a party or by which it is bound and (iv) upon
execution and delivery of this Agreement by the Executive and the Company,
it
shall be a valid and binding obligation of the Company enforceable against
it in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally.
[End
of
Text - Signature page follows]
24
IN
WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
and
the Executive has hereunto set his hand, as of the Signing Date.
|
THE
COMPANY:
|
|
|
ICONIX
BRAND GROUP, INC
|
|
|
By:
|
/s/
Xxxx Xxxxxxxx
|
|
Name:
Xxxx Xxxxxxxx
Title:
Chairman of the Compensation Committee
|
|
|
EXECUTIVE
|
|
|
/s/
Xxxx Xxxx
|
|
|
Xxxx
X. Xxxx
|
|
25
EXHIBIT
A
Form
of Restricted Stock Unit Award Agreement
RESTRICTED
STOCK UNIT AGREEMENT
To:
Xxxx
X. Xxxx
Date
of
Award: _______________________
You
are
hereby awarded (the “Award”), effective as of the date hereof, ________
restricted stock units (“Unit or RSUs”, as the case may be) each of which shall
represent the right to receive one share (the “Share”) of common stock $.001 par
value (“Common Stock”), of Iconix Brand Group, Inc., a Delaware corporation (the
“Company”), pursuant to the Company’s 2006 Equity Incentive Plan (the “Plan”),
subject to certain vesting restrictions specified below (the “Vesting”).
This
Award is made pursuant to Section 2.4.1 of the Employment Agreement (“Employment
Agreement”) entered into between you and the Company effective January 1, 2008.
Pursuant
to Sections 3 and 6(a)(8) of the Plan, for purposes of this Award, the term
“Cause” shall be as defined in the Employment Agreement. Defined
terms that are not otherwise defined in the Plan or this Award, are as defined
in the Employment Agreement. This Award is intended to comply with the terms
of
the Employment Agreement and the terms of the Plan, and in the event of any
inconsistency between the terms of the Employment Agreement and the terms of
the
Plan, the terms of the Plan shall control.
During
the period commencing on the Award date and terminating on the fifth anniversary
of the Effective Date, except as otherwise provided herein, the Units may not
be
sold, assigned, transferred, pledged, or otherwise encumbered and are subject
to
forfeiture as provided herein.
Vesting
The
RSUs
shall vest in five equal annual installments with the first such installment
vesting on December 31, 2008, and each of the four subsequent installments
vesting each December 31 thereafter, with a final vesting date of December
31,
2012 (each a “Time Vesting Date”) subject to your continuous employment with the
Company through each Time Vesting Date.
Notwithstanding
the foregoing, any then remaining unvested RSUs shall immediately become vested
effective simultaneous with a Change in Control (as defined, for the purposes
of
this Award, in Section 5.4.4 of the Employment Agreement).
Notwithstanding
the foregoing, in the event of a termination of your employment with the Company
prior to any Time Vesting Date, your then unvested RSUs as of a Date of
Termination shall vest or be forfeited as follows:
26
|
1.
|
If
Termination upon Death, 100% of the then remaining unvested RSUs
shall
immediately become vested.
|
|
2.
|
If
Termination upon Disability, subject to Section 5.4.8 of the Employment
Agreement, 50% of the then remaining unvested RSUs shall immediately
become vested and the balance shall be
forfeited.
|
|
3.
|
If
Termination is without Cause or for Good Reason, subject to Section
5.4.8
of the Employment Agreement, 75% of the then remaining unvested RSUs
shall
vest and the balance shall be
forfeited.
|
|
4.
|
If
Termination is for Cause or without Good Reason, 100% of the then
remaining unvested RSUs shall be
forfeited.
|
Payment
Except
as
set forth below, any vested portion of the RSUs shall be distributed to you,
or
your successors and assigns, as the case may be, in shares of Common Stock
within 15 days after the applicable Time Vesting Date. Notwithstanding the
foregoing, (i) all vested RSUs shall be distributed to you in shares of Common
Stock simultaneous with the Company incurring a Change in Control; (ii) any
RSUs
that vest by reason of your Death, shall be distributed in shares of Common
Stock to your estate 60 days after the Date of Termination; and (iii) to the
extent that RSUs become vested by reason of termination of your employment
upon
Disability or without Cause or for Good Reason, such RSUs shall be payable
in
shares of Common Stock as provided in, and subject to, Sections 5.4.8 and 9.8.2
of the Employment Agreement.
|
Dividends
|
With
respect to the RSUs, you will have the right to receive dividend
equivalents (in
cash or in kind, as the case may be) in respect of
any dividend distributed to holders of Common Stock of record on
and after
the Date of Award; provided,
that any such dividend equivalents shall be subject to the same
restrictions as the RSUs with regard to which they are issued, including
without limitation, as to vesting (including accelerated vesting)
and time
of distribution.
All such withheld dividends shall not earn interest, except as otherwise
determined by the Administrator. You
will not receive withheld dividends on any RSUs which are forfeited
and
all such dividends shall be forfeited along with the RSUs which are
forfeited.
|
|
Tax
Withholding
|
The
Company shall have the right to withhold from your compensation an
amount
sufficient to fulfill its or its Affiliate’s obligations for any
applicable withholding and employment taxes. Alternatively, the Company
may require you to pay to the Company the amount of any taxes which
the
Company is required to withhold with respect to the Shares, or, in
lieu
thereof, to retain or sell without notice a sufficient number of
Shares to
cover the amount required to be withheld. The Company may withhold
from
any cash dividends paid with respect to RSUs an amount sufficient
to cover
taxes owed, if any, as a result of the dividend payment. The Company’s
method of satisfying its withholding obligations shall be solely
in the
discretion of the Administrator, subject to applicable federal, state,
local and foreign laws. The Company shall have a lien and security
interest in the Shares and any accumulated dividends to secure your
obligations hereunder.
|
27
|
Tax
Representations
|
You
hereby represent and warrant to the Company as follows:
(a) You
have reviewed with your own tax advisors the federal, state, local
and
foreign tax consequences of this investment and the transactions
contemplated by this Agreement. You are relying solely on such advisors
and not on any statements or representations of the Company or any
of its
Employees or agents.
(b) You
understand that you (and not the Company) shall be responsible for
your
own tax liability that may arise as a result of this investment or
the
transactions contemplated by this Agreement.
|
|
Securities
Law Representations
|
The
following two paragraphs shall be applicable if, on the date of issuance
of the Shares, no registration statement and current prospectus under
the
Securities Act of 1933, as amended (the “1933 Act”), covers the issuance
by the Company to you of Shares, and shall continue to be applicable
for
so long as such registration has not occurred and such current prospectus
is not available:
(a) You
hereby agree, warrant and represent that you will acquire the Shares
to be
issued hereunder for your own account for investment purposes only,
and
not with a view to, or in connection with, any resale or other
distribution of any of such shares, except as hereafter permitted.
You
further agree that you will not at any time make any offer, sale,
transfer, pledge or other disposition of such Shares to be issued
hereunder without an effective registration statement under the 1933
Act,
and under any applicable state securities laws or an opinion of counsel
acceptable to the Company to the effect that the proposed transaction
will
be exempt from such registration. You agree to execute such instruments,
representations, acknowledgments and agreements as the Company may,
in its
sole discretion, deem advisable to avoid any violation of federal,
state,
local or foreign law, rule or regulation, or any securities exchange
rule
or listing agreement.
(b) The
certificates for Shares to be issued to you hereunder shall bear
the
following legend:
“The
shares represented by this certificate have not been registered
under the
Securities Act of 1933, as amended, or under applicable state securities
laws. The shares have been acquired for investment and may not
be offered,
sold, transferred, pledged or otherwise disposed of without an
effective
registration statement under the Securities Act of 1933, as amended,
and
under any applicable state securities laws or an opinion of counsel
acceptable to the Company that the proposed transaction will be
exempt
from such registration.”
|
28
|
Stock
Dividend, Stock Split and Similar Capital Changes
|
In
the event of any change in the outstanding shares of the Common Stock
of
the Company by reason of a stock dividend, stock split, combination
of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Administrator deems in its
sole
discretion to be similar circumstances, the number and kind of Units
and
shares subject to this Agreement shall be appropriately adjusted
in a
manner to be determined in the sole discretion of the Administrator,
whose
decision shall be final, binding and conclusive in the absence of
clear
and convincing evidence of bad faith. Any Units or shares of Common
Stock
or other securities received, as a result of the foregoing, by you
with
respect to the RSUs shall be subject to the same restrictions as
the RSUs,
the certificate or other instruments evidencing such shares of Common
Stock or other securities shall be legended as provided above with
respect
to the RSUs, and any cash dividends received with respect to such
Units
shall
be subject to the same restrictions as dividend equivalents with
respect
to the RSUs.
|
|
Non-Transferability
|
Unvested
RSUs are not transferable.
|
|
No
Effect on Employment
|
Nothing
herein guarantees you employment for any specified period of time.
This
means that, except as provided in the Employment Agreement, either
you or
the Company or any of its Affiliates may terminate your employment
at any
time for any reason, with or without cause, or for no reason. You
recognize that, for instance, you may terminate your employment or
the
Company or any of its Affiliates may terminate your employment prior
to
the date on which your Units become
vested.
|
29
|
No
Effect on Corporate Authority
|
You
understand and agree that the existence of this Agreement will not
affect
in any way the right or power of the Company or its shareholders
to make
or authorize any or all adjustments, recapitalizations, reorganizations,
or other changes in the Company’s capital structure or its business, or
any merger or consolidation of the Company, or any issuance of bonds,
debentures, preferred or other stocks with preferences ahead of or
convertible into, or otherwise affecting the common shares or the
rights
thereof, or the dissolution or liquidation of the Company, or any
sale or
transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
|
|
Arbitration
|
Any
dispute or disagreement between you and the Company with respect
to any
portion of this Agreement or its validity, construction, meaning,
performance or your rights hereunder shall be settled by arbitration
in
accordance with Section 9.7 of the Employment Agreement. However,
prior to
submission to arbitration you will attempt to resolve any disputes
or
disagreements with the Company over this Agreement amicably and
informally, in good faith, for a period not to exceed two weeks.
Thereafter, subject to the foregoing, the dispute or disagreement
will be
submitted to arbitration. At any time prior to a decision from the
arbitrator(s) being rendered, you and the Company may resolve the
dispute
by settlement.
|
|
Governing
Law
|
The
laws of the State of Delaware will govern all matters relating to
this
Agreement, without regard to the principles of conflict of
laws.
|
|
Notices
|
Any
notice you give to the Company must be in writing and either
hand-delivered or mailed to the executive office of the Company.
If
mailed, it should be addressed to the [
]
of
the Company. Any notice given to you will be addressed to you at
your
address as reflected on the personnel records of the Company. You
and the
Company may change the address for notice by like notice to the other.
Notice will be deemed to have been duly delivered when hand-delivered
or,
if mailed, on the day such notice is postmarked.
|
|
Agreement
Subject to Plan; Entire Agreement
|
This
Agreement shall be subject to the terms of the Plan in effect on
the date
hereof, subject to “Conflicting Terms” below, which terms are hereby
incorporated herein by reference and made a part hereof. This Agreement
constitutes the entire understanding between the Company and you
with
respect to the subject matter hereof and no amendment, supplement
or
waiver of this Agreement, in whole or in part, shall be binding upon
the
Company unless in writing and signed by the President of the
Company
|
30
|
Conflicting
Terms
|
Wherever
a conflict may arise between the terms of this Agreement and the
terms of
the Plan in effect on the date hereof, the terms of the Plan will
control.
|
Please
sign the Acknowledgement attached to this Restricted Stock Unit Agreement and
return it to the Company’s Secretary, thereby indicating your understanding of
and agreement with its terms and conditions.
|
By:
_______________________________
|
31
ACKNOWLEDGMENT
I
hereby
acknowledge receipt of a copy of the Plan. I hereby represent that I have read
and understood the terms and conditions of the Plan and of the Restricted Stock
Unit Agreement. I hereby signify my understanding of, and my agreement with,
the
terms and conditions of the Plan and of the Restricted Stock Unit Agreement.
I
agree to accept as binding, conclusive, and final all decisions or
interpretations of the Administrator concerning any questions arising under
the
Plan with respect to this Restricted Stock Unit Agreement. I accept this
Restricted Stock Unit Agreement in full satisfaction of any previous written
or
oral promise made to me by the Company or any of its Affiliates with respect
to
option or stock grants.
Date:
_________________
|
Xxxx
X. Xxxx
|
32
EXHIBIT
B
Form
of Performance
Stock Unit Award Agreement
RESTRICTED
STOCK PERFORMANCE UNIT AGREEMENT
To:
Xxxx
X. Xxxx
Date
of
Award: _______________________
You
are
hereby awarded (the “Award”), effective as of the date hereof, ________
restricted stock performance units (“Unit or PSUs”, as the case may be) each of
which shall represent the right to receive one share (the “Share”) of common
stock $.001 par value (“Common Stock”), of Iconix Brand Group, Inc., a Delaware
corporation (the “Company”), pursuant to the Company’s 2006 Equity Incentive
Plan (the “Plan”), subject to certain vesting restrictions specified below (the
“Vesting”).
This
Award is made pursuant to Section 2.4.2 of the Employment Agreement (“Employment
Agreement”) entered into between you and the Company effective January 1, 2008.
Pursuant
to Sections 3 and 6(a)(8) of the Plan, for purposes of this Award, the term
“Cause” shall be as defined in the Employment Agreement. Defined
terms that are not otherwise defined in the Plan or this Award, are as defined
in the Employment Agreement. This Award is intended to comply with the terms
of
the Employment Agreement and the terms of the Plan, and in the event of any
inconsistency between the terms of the Employment Agreement and the terms of
the
Plan, the terms of the Plan shall control.
During
the period commencing on the Award date and terminating on the fifth anniversary
of the Effective Date, except as otherwise provided herein, the Units may not
be
sold, assigned, transferred, pledged, or otherwise encumbered and are subject
to
forfeiture as provided herein.
Vesting
The
PSUs
shall be performance based and shall vest based on the achievement of annual
performance goals as described on Exhibit C
to your
Employment Agreement, which is incorporated herein by reference (“Exhibit
C”),
and
upon certification of achievement by the Compensation Committee as set for
on
Exhibit C.
Notwithstanding
anything to the contrary contained herein or in the Employment Agreement, in
the
event of a Change in Control (as defined, for the purposes of this Award, in
Section 5.4.4 of the Employment Agreement), (x) the unvested PSUs shall vest
as
follows: (a) with regard to the PSUs that could vest in the calendar year of
the
Change of Control, based on the achievement of the performance goals for the
year in which such Change in Control occurs
(including as a result of achieved aggregate growth),
calculated as of the date of such Change in Control (with the date on which
the
Change of Control occurs being deemed to be the end of a Performance Period
for
purposes of the calculations set forth on Exhibit C,
but
with no adjustment of the level of the goals), and (b) with regard to the PSUs
that could otherwise only vest in calendar years after the Change in Control,
based on the achievement of the performance goals for later Performance Periods
that would be deemed to have been achieved as of the date of the Change of
Control (with the date on which the Change of Control occurs being deemed to
be
the end of each such later Performance Period for purposes of the calculations
set forth on Exhibit C,
but
with no adjustment of the level of the goals), including, in the case of clauses
(a) and (b), as a consequence of the price per share of the Common Stock
(including as a result of a deemed liquidation following a Change in Control
which is a sale of the Company’s assets) being paid by the acquirer in
connection with the Change in Control and (y) any portion of the PSUs that
remains unvested on the date of such Change in Control after giving effect
to
the foregoing clause (x) shall be forfeited as of the date of such Change in
Control.
33
Notwithstanding
the foregoing, in the event of a termination of your employment with the Company
prior to any Performance Vesting Date, your then unvested PSUs as of a Date
of
Termination shall vest or be forfeited as follows:
|
1.
|
If
Termination upon Death, the portion of the PSUs subject to vesting
in the
calendar year the Date of Termination occurs (including, as a result
of
achieved aggregate growth) shall immediately become vested on the
certification of the Compensation Committee promptly after the Date
of
Termination based on the achievement of the performance goals for
such
year, calculated through the Date of Termination (with the Date of
Termination being deemed to be the end of a Performance Period for
purposes of the calculations set forth on Exhibit C,
but with no adjustment of the level of goals), and shall be distributed
to
your estate in shares of Common Stock sixty (60) days after the Date
of
Termination. After giving effect to the foregoing, any portion of
the PSUs
that remain unvested on the certification following the Date of
Termination shall be forfeited as of the Date of
Termination.
|
|
2.
|
If
Termination upon Disability, subject to Section 5.4.8 of the Employment
Agreement, the portion of the PSUs subject to vesting in the calendar
year
the Date of Termination occurs (including, as a result of achieved
aggregate growth) shall immediately become vested on the certification
of
the Compensation Committee promptly after the Date of Termination
based on
the achievement of the performance goals for such year, calculated
through
the Date of Termination (with the Date of Termination being deemed
to be
the end of a Performance Period for purposes of the calculations
set forth
on Exhibit C,
but with no adjustment of the level of goals), and shall be distributed
in
shares of Common Stock to you as provided in, and subject to, Sections
5.4.8 and 9.8.2. of the Employment Agreement. After giving effect
to the
foregoing, any portion of the PSUs that remain unvested on the
certification following the Date of Termination shall be forfeited
as of
the Date of Termination.
|
|
3.
|
If
Termination is without Cause or for Good Reason, subject to Section
5.4.8
of the Employment Agreement, the portion of the PSUs subject to vesting
in
the calendar year the Date of Termination occurs (including, as a
result
of achieved aggregate growth) shall immediately become vested on
the
certification of the Compensation Committee promptly after the Date
of
Termination based on the achievement of the performance goals for
such
year calculated through the Date of Termination (with the Date of
Termination being deemed to be the end of a Performance Period for
purposes of the calculations set forth on Exhibit C, but with no
adjustment of the level of the goals), and shall be distributed in
shares
of Common Stock to you as provided in, and subject to, Sections 5.4.8
and
9.8.2. of the Employment Agreement. After giving effect to the foregoing,
any portion of the PSUs that remain unvested on the certification
following the Date of Termination shall be forfeited as of the Date
of
Termination..
|
34
|
4.
|
If
Termination is for Cause or without Good Reason, 100% of the then
unvested
PSUs shall be forfeited.
|
Payment
Other
than as provided in the immediately preceding clauses 1, 2 and 3 as to
conditions and timing of distribution of Common Stock with respect to PSUs
vesting as a result of a termination of your employment and Section 9.8.2 of
the
Employment Agreement with regard to equity distributed as a result of your
incurring a Separation from Service as an employee of the Company, any vested
portion of the PSUs shall be distributed to you in shares of Common Stock in
the
year following the year of each applicable Performance Vesting Date following
the Compensation Committee’s certification of the level of attainment of the
annual performance goals. Notwithstanding anything to the contrary contained
herein or in the Employment Agreement, except as to Sections 5.4.8 and 9.8.2
of
the Employment Agreement, all vested PSUs (including those vested in connection
with a Change in Control) shall be distributed to you in shares of Common Stock
simultaneous with the Company’s incurring a Change in Control.
|
Dividends
|
With
respect to the PSUs, you will have the right to receive
dividend equivalents (in cash or in kind, as the case may be)
in respect of any
dividend distributed to holders of Common Stock of record on and
after the
Date of Award; provided, that any such dividend equivalents shall
be
subject to the same restrictions as the PSUs with regard to which
they are
issued, including without limitation, as to vesting (including accelerated
vesting) and time of distribution. All such withheld dividends shall
not
earn interest, except as otherwise determined by the Administrator.
You
will not receive withheld dividends on any PSUs which are forfeited
and
all such dividends shall be forfeited along with the PSUs which are
forfeited.
|
|
Tax
Withholding
|
The
Company shall have the right to withhold from your compensation an
amount
sufficient to fulfill its or its Affiliate’s obligations for any
applicable withholding and employment taxes. Alternatively, the Company
may require you to pay to the Company the amount of any taxes which
the
Company is required to withhold with respect to the Shares, or, in
lieu
thereof, to retain or sell without notice a sufficient number of
Shares to
cover the amount required to be withheld. The Company may withhold
from
any cash dividends paid with respect to PSUs an amount sufficient
to cover
taxes owed, if any, as a result of the dividend payment. The Company’s
method of satisfying its withholding obligations shall be solely
in the
discretion of the Administrator, subject to applicable federal, state,
local and foreign laws. The Company shall have a lien and security
interest in the Shares and any accumulated dividends to secure your
obligations hereunder.
|
35
|
Tax
Representations
|
You
hereby represent and warrant to the Company as follows:
|
|
(a) You
have reviewed with your own tax advisors the federal, state, local
and
foreign tax consequences of this investment and the transactions
contemplated by this Agreement. You are relying solely on such advisors
and not on any statements or representations of the Company or any
of its
Employees or agents.
|
|
|
(b) You
understand that you (and not the Company) shall be responsible for
your
own tax liability that may arise as a result of this investment or
the
transactions contemplated by this Agreement.
|
|
|
Securities
Law Representations
|
The
following two paragraphs shall be applicable if, on the date of issuance
of the Shares, no registration statement and current prospectus under
the
Securities Act of 1933, as amended (the “1933 Act”), covers the issuance
by the Company to you of Shares, and shall continue to be applicable
for
so long as such registration has not occurred and such current prospectus
is not available:
|
|
(a) You
hereby agree, warrant and represent that you will acquire the Shares
to be
issued hereunder for your own account for investment purposes only,
and
not with a view to, or in connection with, any resale or other
distribution of any of such shares, except as hereafter permitted.
You
further agree that you will not at any time make any offer, sale,
transfer, pledge or other disposition of such Shares to be issued
hereunder without an effective registration statement under the 1933
Act,
and under any applicable state securities laws or an opinion of counsel
acceptable to the Company to the effect that the proposed transaction
will
be exempt from such registration. You agree to execute such instruments,
representations, acknowledgments and agreements as the Company may,
in its
sole discretion, deem advisable to avoid any violation of federal,
state,
local or foreign law, rule or regulation, or any securities exchange
rule
or listing agreement.
|
|
|
(b) The
certificates for Shares to be issued to you hereunder shall bear
the
following legend:
|
|
|
“The
shares represented by this certificate have not been registered under
the
Securities Act of 1933, as amended, or under applicable state securities
laws. The shares have been acquired for investment and may not be
offered,
sold, transferred, pledged or otherwise disposed of without an effective
registration statement under the Securities Act of 1933, as amended,
and
under any applicable state securities laws or an opinion of counsel
acceptable to the Company that the proposed transaction will be exempt
from such registration.”
|
36
|
Stock
Dividend, Stock Split and Similar Capital Changes
|
In
the event of any change in the outstanding shares of the Common Stock
of
the Company by reason of a stock dividend, stock split, combination
of
shares, recapitalization, merger, consolidation, transfer of assets,
reorganization, conversion or what the Administrator deems in its
sole
discretion to be similar circumstances, the number and kind of Units
and
shares subject to this Agreement shall be appropriately adjusted
in a
manner to be determined in the sole discretion of the Administrator,
whose
decision shall be final, binding and conclusive in the absence of
clear
and convincing evidence of bad faith. Any Units or shares of Common
Stock
or other securities received, as a result of the foregoing, by you
with
respect to the PSUs shall be subject to the same restrictions as
the PSUs,
the certificate or other instruments evidencing such shares of Common
Stock or other securities shall be legended as
provided above with respect to the PSUs, and any cash dividends received
with respect to such Units
shall be subject to the same restrictions as dividend equivalents
with
respect to the PSUs.
|
|
Non-Transferability
|
Unvested
PSUs are not transferable.
|
|
No
Effect on Employment
|
Nothing
herein guarantees you employment for any specified period of time.
This
means that, except as provided in the Employment Agreement, either
you or
the Company or any of its Affiliates may terminate your employment
at any
time for any reason, with or without cause, or for no reason. You
recognize that, for instance, you may terminate your employment or
the
Company or any of its Affiliates may terminate your employment prior
to
the date on which your Units become
vested.
|
37
|
No
Effect on Corporate Authority
|
You
understand and agree that the existence of this Agreement will not
affect
in any way the right or power of the Company or its shareholders
to make
or authorize any or all adjustments, recapitalizations, reorganizations,
or other changes in the Company’s capital structure or its business, or
any merger or consolidation of the Company, or any issuance of bonds,
debentures, preferred or other stocks with preferences ahead of or
convertible into, or otherwise affecting the common shares or the
rights
thereof, or the dissolution or liquidation of the Company, or any
sale or
transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
|
|
Arbitration
|
Any
dispute or disagreement between you and the Company with respect
to any
portion of this Agreement or its validity, construction, meaning,
performance or your rights hereunder shall be settled by arbitration
in
accordance with Section 9.7 of the Employment Agreement and to the
extent
provided therein Section 2.4.2 of the Employment Agreement and Exhibit
C.
However,
prior to submission to arbitration you will attempt to resolve any
disputes or disagreements with the Company over this Agreement amicably
and informally, in good faith, for a period not to exceed two weeks.
Thereafter, subject
to the foregoing, the
dispute or disagreement will be submitted to arbitration. At any
time
prior to a decision from the arbitrator(s) being rendered, you and
the
Company may resolve the dispute by settlement.
|
|
Governing
Law
|
The
laws of the State of Delaware will govern all matters relating to
this
Agreement, without regard to the principles of conflict of
laws.
|
|
Notices
|
Any
notice you give to the Company must be in writing and either
hand-delivered or mailed to the executive office of the Company.
If
mailed, it should be addressed to the [___________________] of the
Company. Any notice given to you will be addressed to you at your
address
as reflected on the personnel records of the Company. You and the
Company
may change the address for notice by like notice to the other. Notice
will
be deemed to have been duly delivered when hand-delivered or, if
mailed,
on the day such notice is postmarked.
|
|
Agreement
Subject to Plan; Entire Agreement
|
This
Agreement shall be subject to the terms of the Plan in effect on
the date
hereof,
subject to “Conflicting Terms” below,
which terms are hereby incorporated herein by reference and made
a part
hereof. This Agreement constitutes the entire understanding between
the
Company and you with respect to the subject matter hereof and no
amendment, supplement or waiver of this Agreement, in whole or in
part,
shall be binding upon the Company unless in writing and signed by
the
President of the Company
|
|
Conflicting
Terms
|
Wherever
a conflict may arise between the terms of this Agreement and the
terms of
the Plan in effect on the date hereof, the terms of the Plan will
control.
|
38
Please
sign the Acknowledgement attached to this Restricted Stock Performance Unit
Agreement and return it to the Company’s Secretary, thereby indicating your
understanding of and agreement with its terms and conditions.
|
By:
_____________________________
|
39
ACKNOWLEDGMENT
I
hereby
acknowledge receipt of a copy of the Plan. I hereby represent that I have read
and understood the terms and conditions of the Plan and of the Restricted Stock
Performance Unit Agreement. I hereby signify my understanding of, and my
agreement with, the terms and conditions of the Plan and of the Restricted
Stock
Performance Unit Agreement. I agree to accept as binding, conclusive, and final
all decisions or interpretations of the Administrator concerning any questions
arising under the Plan with respect to this Restricted Stock Performance Unit
Agreement. I accept this Restricted Stock Performance Unit Agreement in full
satisfaction of any previous written or oral promise made to me by the Company
or any of its Affiliates with respect to PSUs.
Date:
_________________
|
Xxxx
X. Xxxx
|
40
EXHIBIT
C
PSU
Performance Goals
A. PSU
Allocation.
The
PSU’s
shall be allocated to each performance goal set below as follows: (i) 50% of
the
PSU’s to the achievement of EBITDA Growth (as defined below) (the “EBITDA
Shares”);
(ii) 25% of the PSU’s to the achievement of Market Capitalization Growth
(as defined below) (the “MCG
Shares”);
and
(iii) 25% of the PSU’s to the achievement of Stock Price Growth (as defined
below) (the “SPG
Shares”).
B. Performance
Goals.
i. Performance
goals established for purposes of the grant of the PSU’s are intended to be
“performance-based” under Section 162(m) of the Code and constitute a
“Performance Criteria” as defined in the Equity Plan.
ii. Except
as
expressly provided in Section 2.4 of the Agreement, with regard to acceleration,
the performance goals for each Performance Period (as defined below) shall
be
based on the attainment of specified levels of the Company’s EBITDA,
Market
Capitalization,
and
Stock Price over
the
Performance Periods.
The
number of PSU’s will be vested
and delivered
based on
the level of EBITDA Growth, Market Capitalization Growth, and Stock Price Growth
achieved, as specified below.
The
Company agrees that
the
Compensation Committee shall
certify
the attainment of EBITDA Growth, Market Capitalization Growth and Stock Price
Growth for
each
Performance Period to
the
extent and in the manner required by Section 162(m) of the Code.
iii. The
five
(5) year performance goals for EBITDA, Market Capitalization and Stock Price
shall be based on the Company’s actual EBITDA for the year ended December 31,
2007 (calculated as set forth in the definition of EBITDA Growth below as if
January 1, 2007 to December 31, 2007 was a Performance Period), the Company’s
actual market capitalization at the close of business on December 31, 2007
(calculated as set forth in the definition of Market Capitalization Growth
as if
December 31, 2007 was the last day of a Performance Period), and the actual
closing market price of the Company’s Common Stock on December 31, 2007 as
reported on Nasdaq. For the five (5) year Performance Periods, the Target levels
for each of the three measures (with such levels being based on the actual
2007
results as aforesaid) shall be compounded annually at 15% over the five (5)
year
period and the Threshold levels for each of the three measures (with such levels
being based on the actual 2007 results as aforesaid) shall be compounded
annually at 12% over the five (5) year period. For avoidance of doubt, and
recognizing that the following numbers are intended to be provided as an example
and are not be based on any projections or actual results, in the event that
the
Company’s actual EBITDA for the year ended December 31, 2007 was $110 million,
then $126.5 million shall be the Target EBITDA Level against which to judge
EBITDA Growth for the January 1, 2008 through December 31, 2008 Performance
Period, and accordingly, the five (5) year Target EBITDA Levels (that is, 15%
increases in respect of the base Target level compounded annually) for each
of
the Performance Periods would be $126.5 million (2008), $145.475 million (2009),
$167.29625 million (2010), $192.39068 million (2011), and $221.24928 million
(2012); correspondingly, the five (5) year Threshold EBITDA Levels (that is,
12%
increases compounded annually) for each of the Performance Periods would be
$123.2 million (2008), $137.984 million (2009), $154.54208 million (2010),
$173.08712 million (2011), and $193.85757 million (2012). The same methodology
shall be used based on the Company’s actual market capitalization and closing
stock price on December 31, 2007.
41
1. EBITDA
Growth:
For
each
Performance Period, one-fifth (1/5) of the EBITDA Shares (the “Annual
EBITDA Shares”),
shall
vest on
the
applicable Performance Vesting Date based upon the achievement of EBITDA Growth
during such Performance Period as provided in Section B(iii) of this Exhibit
(the “EBITDA
Level”)
as
follows:
|
EBITDA
Level
|
Percentage
of Annual EBITDA Shares Vested
|
|
15%
and above (Target)
|
100%
|
|
at
least 12% but less than 15% (Threshold)
|
50%
|
|
less
than 12%
|
0%
|
2. Market
Capitalization Growth:
For
each
Performance Period, one-fifth (1/5) of the MCG Shares (the “Annual
MCG Shares”),
shall
vest on
the
applicable Performance Vesting Date based upon the achievement of Marker
Capitalization Growth during such Performance Period as provided in Section
B(iii) of this Exhibit (the “MCG
Level”)
as
follows:
|
MCG
Level
|
Percentage
of Annual MCG Shares Vested
|
|
15%
and above (Target)
|
100%
|
|
at
least 12% but less than 15% (Threshold)
|
50%
|
|
less
than 12%
|
0%
|
3. Stock
Price Growth:
For
each
Performance Period, one-fifth (1/5) of the SPG Shares (the “Annual
SPG Shares”),
shall
vest on
the
applicable Performance Vesting Date based upon the achievement of Stock Price
Growth during such Performance Period as provided in Section B(iii) of this
Exhibit (the “SPG
Level”)
as
follows:
|
SPG
Level
|
Percentage
of Annual SPG Shares Vested
|
|
15%
and above (Target)
|
100%
|
|
at
least 12% but less than 15% (Threshold)
|
50%
|
|
less
than 12%
|
0%
|
42
C. Catch-Up;
Forfeiture.
In
the
event that any of the performance goals set forth above is not attained for
any
Performance Period, the PSU’s subject to such performance goal shall
nevertheless vest as of any succeeding Performance Vesting Date if, as
determined as of such succeeding Performance Vesting Date, the Company achieves
an applicable
aggregate
performance level as of such succeeding Performance Vesting Date equal to the
attainment of the applicable Target or
Threshold levels
for each of the applicable succeeding Performance Period(s)
and the
applicable prior Performance Period(s)
on an
aggregate basis. If PSU’s scheduled to vest on a Performance Vesting Date have
not vested on such date or on a succeeding Performance Vesting Date or on
the
final
Performance Vesting Date,
they
shall automatically be forfeited.
D No
Interpolation; Fractional Shares.
There
shall be no interpolation between each applicable target level (i.e., the EBITDA
Level, MCG Level, and the SPG Level). Any fractional PSU’s resulting from the
achievement of any of the performance goals shall be aggregated and any
resulting fractional PSU’s from such aggregation shall be
eliminated.
E. Definitions.
“EBITDA
Growth”
means,
with respect to each Performance Period, the percentage
growth in the Company’s
consolidated earnings
before
interest, taxes, depreciation and
amortization (EBITDA),
with
each such component of EBITDA determined in accordance with generally accepted
accounting principles consistently applied, during such Performance Period
as
provided in Section B(iii) of this Exhibit, calculated,
in good faith by the Company, from the Company’s annual audited
financial statements, or,
for
any Performance Period that is not a complete fiscal year, the Company’s most
recently filed Quarterly Report on Form 10-Q, and if so reviewed, as reviewed
by
the Company’s independent certified accountants.
“Market
Capitalization Growth”
means,
with respect to each Performance Period, the percentage growth in the
market
capitalization
of the
Company during such Performance Period as provided in Section B(iii) of this
Exhibit, calculated by multiplying the number of issued
and outstanding
shares of Common Stock (plus
any
shares repurchased by the Company as of the close of the applicable Performance
Period whenever so purchased) on
the
last business day of the applicable Performance Period by
the
closing market price of a share of Common Stock, as reported on
the
principal national securities exchange in the United States on which the Common
Stock is then traded, on
the
last
business day
of the
applicable Performance Period.
“Performance
Period”
means
each period from January 1 through December 31 during the Initial Term,
commencing with the period from January 1, 2008 though December 31, 2008, and
ending with the period from January 1, 2012 through December 31,
2012.
“Performance
Vesting Date”
means
each December 31 during the Initial Term, commencing with December 31, 2008,
and
ending with December 31, 2012. Actual vesting shall occur upon certification
of
achievement of the performance goals by the Compensation Committee.
“Stock
Price Growth”
means,
with respect to each Performance Period, the percentage growth in the Fair
Market Value of Common Stock during
such Performance Period as provided in Section B(iii) of this
Exhibit,
determined by reference to the closing market price of a share of Common Stock,
as reported on the principal national securities exchange in the United States
on which the Common Stock is then traded, on the last business day immediately
preceding the beginning of the applicable Performance Period and to the closing
market price of a share of Common Stock, as so reported, on the last business
day of the applicable
Performance Period.
43
F. Miscellaneous.
With
respect to the each Performance Period, to the extent any provision contained
herein creates impermissible discretion under Section 162(m) of the Code, such
provision will be of no force or effect.
Certification,
other than as to stock price, shall be based on the Company’s audited financial
statements for the applicable Performance Period, or, for any Performance Period
that is not a complete fiscal year, the Company’s most recently filed Quarterly
Report on Form 10-Q and, if so reviewed, as reviewed by the Company’s
independent certified public accountants. Any determination or certification
with respect to EBITDA required under this Exhibit C shall be made in accordance
with the generally
accepted accounting principles (GAAP) in the United States, as applied by the
Company to the preparation of its financial statements, as in effect on the
Effective Date. In
the
event of a change in GAAP, or the Company's application thereof, any
determination or certification with respect to EBITDA as provided in the
Company's financial statements shall be adjusted as required to comply with
the
foregoing sentence. Vesting shall only occur upon the certification by the
Compensation Committee of the achievement. The Compensation Committee shall
meet
for the purpose of certification and,
to
the
extent appropriate, provide the applicable certification promptly (and in any
event within 30 days) after the completion of the audit for the fiscal year;
provided, that in the case of a termination of the Executive’s employment, the
Compensation Committee shall use reasonable business efforts to meet for the
purpose of certification
and,
to
the extent appropriate, provide the applicable certification promptly (and
in
any event within 30 days)
after
the Date of Termination; and provided further, that in the case of a Change in
Control, the Compensation Committee shall meet for the purpose of certification
and,
to
the
extent appropriate,
provide
the applicable certification immediately prior to the Change in Control. The
Company shall cause the foregoing meetings and certifications to occur in a
timely manner, which agreement by the Company the parties agree is a material
obligation and agreement of the Company.
Notwithstanding
anything to the contrary contained in the Agreement or this Exhibit C, any
dispute under Section 2.4.2 and/or this Exhibit C (including in respect of
any
dispute arising following any certification by the Compensation Committee)
shall, at the request of the Company or the Executive, be resolved by the
Company’s independent certified public accountants (with such accountants’ fees
and expenses being paid by the Company).
In
the
event that following the vesting of any PSU’s there is a restatement of the
Company’s financial statements for the period utilized for determining said
vesting, and the Compensation Committee determines in good faith that such
PSU’s
would not have vested based on the restated financials, including as to its
impact on the stock price or market capitalization, the Compensation Committee
may require the Executive to repay to the Company (in cash or by delivery of
shares of Common Stock) the value (determined as of the time of distribution)
of
any shares of Common Stock distributed to the Executive with respect to such
PSU’s, reduced by any un-refundable taxes paid thereon by the Executive, and
upon such demand such amount shall promptly be paid by the Executive to the
Company.
44
EXHIBIT
D
Form
of General Release and Waiver
THIS
GENERAL RELEASE AND WAIVER
(this
“Release”)
is
entered into effective as of ______________ ___, 20__, by Xxxx Xxxx (the
“Executive”)
in
favor of Iconix Brand Group, Inc. (the “Company”).
1. Confirmation
of Termination.
The
Executive’s employment with the Company is terminated as of ________________
___, 20__ (the “Termination
Date”).
The
Executive acknowledges that the Termination Date is the termination date of
his
employment for purposes of participation in and coverage under all benefit
plans
and programs sponsored by or through the Company. The Executive acknowledges
and
agrees that the Company shall not have any obligation to rehire the Executive,
nor shall the Company have any obligation to consider him for employment, after
the Termination Date. The Executive agrees that he will not seek employment
with
the Company at any time in the future.
2. Resignation.
Effective
as of the Termination Date, the Executive hereby resigns as an officer and
director of the Company and any of its affiliates and from any such positions
held with any other entities at the direction or request of
the
Company or
any of
its affiliates. The Executive agrees to promptly execute and deliver such other
documents as the
Company shall
reasonably request to evidence such resignations. In addition, the Executive
hereby agrees and acknowledges that the Termination Date shall be date of his
termination from all other offices, positions, trusteeships, committee
memberships and fiduciary capacities held with, or on behalf of, the
Company or
any of
its affiliates.
3. Termination
Benefits.
Assuming that the Executive executes this Release and does not revoke it within
the time specified in Section 10 below, then, subject to Section 9 below, the
Executive will be entitled to the [payments and benefits (subject to taxes
and
all applicable withholding requirements) set forth under Section [5.4.2]
[5.4.3]
of
the
Employment
Agreement, entered into on January 28, 2008, and effective as of January 1,
2008, between the Company and the Executive (the “Employment
Agreement”)
and]
[the distribution with respect to the Equity Units (as defined in the Employment
Agreement) set forth under Section [5.4.2]
[5.4.3]
[5.4.6]
of the
Employment Agreement] (the “Termination Benefits”). Notwithstanding anything
herein to the contrary, the Amounts and Benefits (as defined in the Employment
Agreement) shall not be subject to Executive’s execution of this Release. The
Executive acknowledges and agrees that the Termination Benefits exceed any
payment, benefit, or other thing of value to which the Executive might otherwise
be entitled under any policy, plan or procedure of the Company and/or any
agreement between the Executive and the Company, except as provided
above.
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4. General
Release and Waiver.
In
consideration of the Termination Benefits, and for other good and valuable
consideration, receipt of which is hereby acknowledged, the Executive for
himself and for his heirs, executors, administrators, trustees, legal
representatives and assigns (collectively, the “Releasors”),
hereby releases, remises, and acquits the Company and its affiliates and all
of
their respective past, present and future parent entities, subsidiaries,
divisions, affiliates and related business entities, any of their successors
and
assigns, assets, employee benefit plans or funds, and any of their respective
past and/or present directors, officers, fiduciaries, agents, trustees,
administrators, managers, supervisors, shareholders, investors, employees,
legal
representatives, agents, counsel and assigns, whether acting on behalf of the
Company or its affiliates or, in their individual capacities (collectively,
the
“Releasees”
and
each a “Releasee”)
from
any and all claims, known or unknown, which the Releasors have or may have
against any Releasee arising on or prior to the date of this Release and any
and
all liability which any such Releasee may have
to
the Executive, whether denominated claims, demands, causes of action,
obligations, damages or liabilities arising from any and all bases, however
denominated, including but not limited to (a) any claim under the Age
Discrimination in Employment Act of 1967, the Americans with Disabilities Act
of
1990, the Family and Medical Leave Act of 1993, the Civil Rights Act of 1964,
the Civil Rights Act of 1991, Section 1981 of the Civil Rights Act of 1866,
the
Equal Pay Act, the Immigration Reform and Control Act of 1986, the Employee
Retirement Income Security Act of 1974, (excluding claims for accrued, vested
benefits under any employee benefit or pension plan of the Company, subject
to
the terms and conditions of such plan and applicable law), the Xxxxxxxx-Xxxxx
Act of 2002, all as amended; (b) any claim under the New York State Human Rights
Law, New York City Human Rights Law, New York Equal Pay Law and N.Y. Lab. Law,
Sections 201-c (adoptive parent leave) and 740 (whistle blower statute), all
as
amended; (c) any claim under any other Federal, state, or local law and any
workers’ compensation or disability claims under any such laws; and
(d)
any claim for attorneys’ fees, costs, disbursements and/or the like.
This
Release includes, without limitation, any and all claims arising from or
relating to the Executive’s employment relationship with Company and his service
relationship as an officer or director of the Company, or as a result of the
termination of such relationships. The Executive further agrees that the
Executive will not file or permit to be filed on the Executive’s behalf any such
claim. Notwithstanding the preceding sentence or any other provision of this
Release, this Release is not intended to interfere with the Executive’s right to
file a charge with the Equal Employment Opportunity Commission (“EEOC”)
in
connection with any claim he believes he may have against any Releasee. However,
by executing this Release, the Executive hereby waives the right to recover
in
any proceeding the Executive may bring before the EEOC or any state human rights
commission or in any proceeding brought by the EEOC or any state human rights
commission on the Executive’s behalf. This Release is for any relief, no matter
how denominated, including, but not limited to, injunctive relief, wages, back
pay, front pay, compensatory damages, or punitive damages. This Release shall
not apply to (i) the obligation of the Company to provide the Executive with
the
Amounts and Benefits and the Termination Benefits and any provision relating
thereto under the Employment Agreement; (ii) the Executive’s rights
to
indemnification from the Company or rights to be covered under any applicable
insurance policy with respect to any liability the Executive incurred or might
incur as an employee, officer or director of the Company including, without
limitation, the Executive’s rights under Section 8 of the Employment Agreement;
or (iii) any
right
the Executive may have to obtain contribution as permitted by law in the event
of entry of judgment against the Executive as a result of any act or failure
to
act for which the Executive, on the one hand, and Company or any other Releasee,
on the other hand, are jointly liable.
5. Continuing
Covenants.
The
Executive acknowledges and agrees that he remains subject to the provisions
of
Section 7 of the Employment Agreement which shall remain in full force and
effect for the periods set forth therein.
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6. No
Admission.
This
Release does not constitute an admission of liability or wrongdoing of any
kind
by the Company or any other Releasee. This Release is not intended, and shall
not be construed, as an admission that any Releasee has violated any federal,
state or local law (statutory or decisional), ordinance or regulation, breached
any contract or committed any wrong whatsoever against any
Releasor.
7. Heirs
and Assigns.
The
terms of this Release shall be binding upon and inure to the benefit of the
parties named herein and their respective successors and permitted
assigns.
8. Miscellaneous.
This
Release will be construed and enforced in accordance with the laws of the State
of New York without regard to the principles of conflicts of law. If any
provision of this Release is held by a court of competent jurisdiction to be
illegal, void or unenforceable, such provision shall have no effect; however,
the remaining provisions will be enforced to the maximum extent possible. The
parties acknowledge and agree that, except as otherwise set forth herein, this
Release constitutes the complete understanding between the parties with regard
to the matters set forth herein and, except as otherwise set forth herein,
supersede any and all agreements, understandings, and discussions, whether
written or oral, between the parties. No other promises or agreements are
binding unless in writing and signed by each of the parties after the Release
Effective Date (as defined below). Should any provision of this Release require
interpretation or construction, it is agreed by the parties that the entity
interpreting or constructing this Release shall not apply a presumption against
one party by reason of the rule of construction that a document is to be
construed more strictly against the party who prepared the
document.
9. Knowing
and Voluntary Waiver.
The
Executive acknowledges that he: (a) has carefully read this Release in its
entirety; (b) has had an opportunity to consider it for at
least
forty-five (45) days; (c) is hereby advised by the Company in writing to consult
with an attorney of his choosing in connection with this Release; (d) fully
understands the significance of all of the terms and conditions of this Release
and has discussed them with his independent legal counsel, or had a reasonable
opportunity to do so; (e) has had answered to his satisfaction any questions
he
has asked with regard to the meaning and significance of any of the provisions
of this Release and has not relied on any statements or explanations made by
any
Releasee or their counsel; (f) understands that he has seven (7) days in which
to revoke this Release (as described in Section 10) after signing it and (g)
is
signing this Release voluntarily and of his own free will and agrees to abide
by
all the terms and conditions contained herein.
10. Effective
Time of Release.
The
Executive may accept this Release by signing it and returning it to Iconix
Brand
Group, Inc., 0000 Xxxxxxxx, 0xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx, Xxxxxxxxx: [•] within [twenty-one (21)] [forty-five (45)]
days of his receipt of the same. After executing this Release, the Executive
will have seven (7) days (the “Revocation
Period”)
to
revoke this Release by indicating his desire to do so in writing delivered
to
[•] at the address above (or by fax at [•]) by no later than 5:00 p.m. EST on
the seventh (7th) day after the date he signs this Agreement. The effective
date
of this Agreement shall be the eight (8th)
day
after the Executive signs this Agreement (the “Release
Effective Date”).
If
the last day of the Revocation Period falls on a Saturday, Sunday or holiday,
the last day of the Revocation Period will be deemed to be the next business
day. If the Executive does not execute this Release or exercises his right
to
revoke hereunder, he shall forfeit his right to receive any of the Termination
Benefits, and to the extent such Termination Benefits have already been
provided, the Executive agrees that he will immediately reimburse the Company
for the amounts of such payment.
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IN
WITNESS WHEREOF, the Executive has duly executed this Release as of the date
first set forth above.
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EXECUTIVE:
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Name:
Xxxx Xxxx
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