ICONIX BRAND GROUP, INC. New York, New York 10018 June 8, 2006
Exhibit
10.5
0000
Xxxxxxxx, 0xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
June
8,
2006
Xx.
Xxxxxxx Xxxxxxxx
0000
Xxxx
Xxxx Xxxx
Xxxxxxxx,
Xxxxxxxxxxx 00000
Dear
Xx.
Xxxxxxxx:
Reference
is made to the Employment Agreement between Iconix Brand Group, Inc. (the
“Company”) and Xxxxxxx Xxxxxxxx (the “Employee”) dated July 22, 2005, (the
“Employment Agreement”).
For
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Employee hereby agree as follows:
1. The
Employment Agreement, and each of the provisions set forth therein, is
terminated and of no further force or effect as of the date hereof.
2. The
Employee is delivering to the Company, simultaneously herewith, his resignation
as Executive Vice President and member of the Board of Directors of the Company,
and President and Chief Executive Officer of its Xxx Xxxxx Division and from
any
and all other positions he holds with the Company and its subsidiaries and
divisions.
3. In
order
to assist the Company in the transition following the termination of the
Employment Agreement, the Employee agrees to act as a non-executive part-time
employee for such period ending on not earlier than the 30th
day from
the date hereof and not later than the 120th day from the date hereof as the
Employee may determine and so notify the Company in writing (the “Transition
Period”), at a salary to be mutually agreed upon between the Employee and the
Company. Upon the expiration of the Transition Period, the Consulting Agreement
between the Company and the Employee, in the form attached hereto as Exhibit
A
(the “Consulting Agreement”) will be executed and take effect and the Warrants
referred to therein (the “Warrants”) will be issued.
4.
4.1 The Company and the Employee acknowledge that in connection with the
services previously performed by the Employee under the Employment Agreement
and
to be performed by the Employee during the Transition Period under this
Agreement, the Employee shall be in possession of confidential information
relating to the business practices of the Company. The term “confidential
information” shall mean any and all information (oral and written) relating to
the Company or any of its affiliates, or any of their respective activities
acquired by the Employee in connection with the services previously performed
by
the Employee under the Employment Agreement or to be performed by the Employee
during the Transition Period under this Agreement, other than such information
which (i) can be shown by the Employee to be in the public domain other
than as the result of breach of the provisions of this paragraph 4, or
(ii) the Employee 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
Employee shall not, during or after the Transition Period, except as may be
required during the Transition Period or during the term of the Consulting
Agreement in the course of the performance by the Employee of his duties
hereunder or thereunder, as applicable, directly or indirectly, use,
communicate, disclose or disseminate to any person, firm or corporation any
confidential information regarding the clients, customers, trade secrets or
business practices of the Company acquired by the Employee, without the prior
written consent of the Company.
4.2. Upon
the
termination of the Transition Period, all documents, records, notebooks,
equipment, price lists, specifications, programs, customer and prospective
customer lists and other materials, in each case, which contain confidential
information and refer or relate to any aspect of the business of the Company
which are in the possession of the Employee, including all copies thereof,
shall
be promptly returned to the Company, provided that such items as are necessary
for performance of Employee’s duties under the Consulting Agreement, as
determined by the Company, may be retained by the Employee pursuant to the
terms
of the Consulting Agreement.
4.3. In
consideration for the Company’s entering into this Agreement, the Employee
hereby agrees that he shall not, during the Transition Period, enter into any
Qualified Employee Acquisition. Notwithstanding the foregoing, nothing herein
shall prevent the Employee from (i) owning stock or other equity interests
in
Windsong Allegiance Group, LLC or any of its affiliates or related entities
(collectively “WAG”) or (ii) from engaging, having an interest in, being
employed by or rendering any services to WAG. For the avoidance of doubt,
nothing set forth in this Section 4.3 shall be deemed to restrict the activities
of WAG in any manner. For the purposes of the foregoing, (x) the term “Qualified
Employee Acquisition” shall mean any direct or indirect investment or
acquisition (by assignment, purchase, merger or otherwise, in a single
transaction or series of transactions), or the entry into any agreement in
respect of any such direct or indirect investment or acquisition, by the
Employee of a greater than 10% voting equity interest in any Competing Entity,
and (y) the term “Competing Entity” shall mean any entity, business, brand,
trademark, license, revenue stream or other asset that is directly competitive
with the Company’s licensing business. In the event that Employee shall breach
any of his obligations under this Section 4.3, the Company shall not be entitled
to any damages or equitable remedies (including specific performance) in respect
thereof, and the Company’s sole remedy in respect of such breach shall be the
right to terminate the payments payable during the Transition Period and not
to
enter into the Consulting Agreement or issue the Warrants.
4.4. In
consideration for the Company’s entering into this Agreement the Employee shall
not, for a period of two (2) years after the date hereof, directly or
indirectly, offer to hire, solicit or in any other manner persuade or attempt
to
persuade any officer or employee of the Company while employed by the Company
(but only such officers or employees existing during the time of the Employee’s
employment by the Company or during the Transition Period, or at the termination
of the Transition Period), to terminate his or her employment with the Company;
provided that the foregoing shall not be deemed to include general solicitations
of employment not specifically directed toward employees of the
Company.
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4.5. At
no
time during or after the Transition Period shall either party hereto, directly
or indirectly, disparage the commercial, business, professional or financial,
as
the case may be, reputation of the other party.
4.6. Without
intending to limit the remedies available to the Company, the Employee
acknowledges that a breach of any of the covenants contained in Sections 4.1,
4.2, 4.4 and 4.5 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
seek a temporary restraining order and/or a preliminary or permanent injunction
restraining the Employee from engaging in activities prohibited by Sections
4.1,
4.2, 4.4 and 4.5 or such other relief as may be required specifically to enforce
any of the covenants in Sections 4.1, 4.2, 4.4 and 4.5. If for any reason it
is
held that the restrictions under this Section 4 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
paragraph as will render such restrictions valid and enforceable.
5. The
Employee hereby permanently waives any obligations of the Company and Xxxx
Xxxx
under Section 9.1(b) of the Asset Purchase Agreement dated July 22, 2005 between
the Employee and the parties thereto.
6. Pursuant
to Section 2.5 of the Employment Agreement and that certain Non-Qualified
Non-Plan Stock Option Agreement, dated as of July 22, 2005, among the Company
and the Employee (the “Option Agreement”), the Employee has heretofore been
granted 1,425,000 options to purchase the common stock of the Company. Each
of
the Company and the Employee acknowledge and agree that, as of the date hereof,
approximately 225,000 (such number to be finalized after the date hereof in
the
manner set forth in the Employment Agreement and Option Agreement) of such
options have vested in accordance with the provisions of the Employment
Agreement and the Option Agreement (the “Vested Options”) and the remainder of
such options have not so vested (the “Unvested Options”). All of the Unvested
Options shall be cancelled as of the date hereof. Notwithstanding anything
set
forth in the Employment Agreement or the Option Agreement to the contrary
(including, without limitation, the provisions of Section 1(c) of the Option
Agreement), the Company hereby acknowledges and agrees that, for the purposes
of
the Option Agreement, during the Transition Period, the Employee shall continue
to be deemed employed by the Company. For the avoidance of doubt,
notwithstanding the transactions contemplated by this Agreement, the Vested
Options shall remain outstanding and the Employee shall be entitled to exercise
such Vested Options until the expiration of the Transition Period. The Company
hereby represents, warrants and agrees that the shares of Common Stock of the
Company issuable to the Employee upon the exercise of the Vested Options are
registered under the Securities Act pursuant to that certain Form S-8 filed
by
the Company with the Securities and Exchange Commission on August 11, 2005
and
the Company will use commercially reasonable efforts to maintain the
effectiveness of such registration statement until the end of the Transition
Period.
7. Except
with respect to any such claims, causes of action, suits, debts, liabilities
or
demands (collectively, “Claims”) arising out of or in connection with this
Agreement or the Consulting Agreement and except for Claims arising out of
fraud
and to the extent permitted by applicable law, the Company and each of its
subsidiaries (collectively,
the “Company Group”) release and forever jointly and severally discharge the
Employee from all Claims of any kind or nature, known or unknown, in law or
in
equity, that the Company Group ever had or now have, against the Employee
relating to, or arising out of or in connection with, any matter from the
beginning of the world to the date of this Agreement. The Company Group hereby
acknowledges that factual matters now unknown to them may have given rise to
Claims which are presently unknown, unanticipated and unsuspected, and the
Company Group further acknowledges that the provisions of this Section 7 have
been negotiated and agreed upon in light of that realization and that the
Company Group nevertheless hereby intends to release and discharge the Employee,
provided, however, that this release and discharge shall not apply to any Claim
the existence of which (whether or not matured) has been fraudulently withheld
by the Employee.
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8. Except
with respect to Claims arising out of or in connection with this Agreement,
the
Option Agreement, as it relates to the Vested Options, or the Consulting
Agreement and except for Claims arising out of fraud and to the extent permitted
by applicable law, the Employee releases and forever discharges the Company
Group from all Claims of any kind or nature, known or unknown, in law or in
equity, that the Employee ever had or now has, against the Company Group
relating to, or arising out of or in connection with any matter from the
beginning of the world to the date of this Agreement. The Employee hereby
acknowledges that factual matters now unknown to him may have given rise to
Claims which are presently unknown, unanticipated and unsuspected, and the
Employee further acknowledges that the provisions of this Section 8 have been
negotiated and agreed upon in light of that realization and that the Employee
nevertheless hereby intends to release and discharge the Company Group,
provided, however, that this release and discharge shall not apply to any Claim
the existence of which (whether or not matured) has been fraudulently withheld
by the Company Group.
9. The
Company hereby agrees that, in connection with any press release or other public
disclosure made by any member of the Company Group with respect to the
termination of the Employee’s employment with the Company, prior to the issuance
or release of any such press release or the making of any such other public
disclosure, the Company shall provide the Employee with a reasonable time to
review and comment on the contents of such release or disclosure and will
consider reasonable changes therein suggested by the Employee.
10. All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the earlier
of
the date delivered or mailed if delivered personally, by overnight courier
or
mailed by express, registered or certified mail (postage prepaid, return receipt
requested) or by facsimile transmittal, confirmed by express, certified or
registered mail, to the parties at their respective addresses set forth above
(or at such other address for a party as shall be specified by like notice,
except that notices of changes of address shall be effective upon
receipt).
11. This
Agreement represents and expresses the entire understanding and agreement
between the parties with respect to the subject matter hereof. This Agreement
may not be modified or terminated except by an agreement in writing signed
by
both of the parties hereto.
12. This
Agreement shall be governed by, and construed in accordance with, the law of
the
State of New York without regard to its choice of law principles. The
Company and
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Employee
hereby irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the New York State Supreme Court, County of New York or the
United States District Court for Southern District of New York for any actions,
suits or proceedings arising out of or relating to this Agreement. The Company
and Employee also hereby irrevocably and unconditionally waive any objection
to
the laying of venue of any action, suit or proceeding arising out of this letter
or the transactions contemplated hereby, in the New York State Supreme Court
or
the United States District Court for the Southern District of New York, and
hereby further irrevocably and unconditionally waive and agree not to plead
to
claim in any such court that any such action, suit or proceeding brought in
any
such court has been brought in an inconvenient forum.
If
the
foregoing reflects your understanding, please sign the enclosed copy of this
letter and return it to the undersigned.
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Very
truly yours,
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| By: | /s/ Xxxx Xxxx | |
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| Title: Chief Executive Officer | ||
ACCEPTED
AND AGREED:
/s/
Xxxxxxx
Xxxxxxxx
XXXXXXX
XXXXXXXX
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EXHIBIT A
AGREEMENT,
dated as of __________, 2006, by and between Iconix Brand Group, Inc., a
Delaware corporation with an address at 0000 Xxxxxxxx, 0xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and Xxxxxxx Xxxxxxxx, having an
address at c/o Windsong, Inc., 0000 Xxxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000
(the “Consultant”).
WHEREAS,
on June 8, 2006, the Consultant resigned as Executive Vice President and as
President and Chief Executive Officer of its Xxx Xxxxx Division and as a member
of the Board of Directors of the Company;
WHEREAS,
in connection with such resignation, the Consultant’s employment agreement with
the Company was terminated;
WHEREAS,
upon the Consultant’s resignation as an executive officer and director, the
Company continued to retain the Consultant as a non-executive, part-time
employee during a transition period (the “Transition Period”) which has now
terminated and the Company now wishes to retain the Consultant, and the
Consultant has agreed to be retained by the Company as a consultant, subject
to
the terms hereof;
NOW,
THEREFORE, in consideration of the promises, covenants and agreements set forth
in this Agreement, and other good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, the parties agree as
follows:
1. Engagement
of Consultant; Duties.
The
Company hereby engages the Consultant, and the Consultant agrees to be engaged,
as a consultant on the terms and conditions set forth below. The Consultant
shall perform services for the Company, from time to time, with respect to
finding, negotiating or otherwise advising the Company regarding potential
acquisition opportunities (which for purposes of this Agreement shall exclude
the pending acquisition of Mossimo, Inc. and the proposed transaction to acquire
certain commission rights of Mossimo, Inc. from Cherokee, Inc.) (collectively,
the “Services”).
2. Term;
Termination.
2.1. General.
The
Consultant’s engagement hereunder shall commence effective on the date hereof
and shall continue until the earlier of (a) the consummation of the third
Qualified Company Acquisition (as defined below) after the date hereof or (b)
the date of termination relative to an earlier termination of this Agreement
as
described in Section 2.2 hereof (the “Term”).
2.2. Early
Termination.
The
Company may terminate the Consultant’s consultancy under this Agreement only for
Cause. Termination for “Cause” shall mean termination of the Consultant’s
consultancy because of the occurrence of any of the following as determined
in
good faith by the Board of Directors of the Company:
(i) the
death of the Consultant;
(ii) the
breach by the Consultant of any of the Consultant’s post-closing obligations set
forth in Section 9.1(a) of the Asset Purchase Agreement dated July 22, 2005
between the Consultant and the other parties thereto;
(iii) the
indictment of the Consultant for a felony or other crime involving moral
turpitude or dishonesty; or
(iv) any
breach by the Consultant of his obligations under Section 4.3
hereof.
3. Compensation.
In
consideration for entering into this Agreement and for performing the Services
hereunder, (a) the Company is issuing to the Consultant on the date hereof
ten-year warrants to purchase 400,000 shares of the Common Stock of the Company
at an exercise price of $8.81 per share, in the form attached hereto as
Exhibit A. A portion of such warrants shall vest upon each of the first
three Qualified Company Acquisitions consummated during the Term as follows:
(x)
to the extent that the term of the warrants shall have not yet expired, 133,334
of such warrants shall vest upon the first Qualified Company Acquisition
consummated during the Term, and (y) to the extent that the term of the warrants
shall have not yet expired, 133,333 of such warrants shall vest upon each of
the
second and third Qualified Company Acquisition consummated during the Term;
and
(b) the Company shall pay to the Consultant a fee in the amount of (x) $333,334
for the first Qualified Company Acquisition consummated during the Term and
(y)
$333,333 for each of the second and third Qualified Company Acquisitions
consummated during the Term, for total fees of up to $1,000,000. The amounts
payable pursuant to the immediately prior sentence shall be paid by the Company
to the Consultant in cash at the time of the closing of the Qualified Company
Acquisition to which such payment relates. A “Qualified Company Acquisition”
shall mean any direct or indirect investment or acquisition (by assignment,
purchase, merger or otherwise, in a single transaction or series of
transactions) by the Company or any of its subsidiaries or affiliates in or
of
any entity, business, brand, trademark, license, revenue stream or other asset
which satisfies any of the following conditions:
(i) such
entity, business, brand, trademark, license, revenue stream or other asset
has
an enterprise value or fair market value equal to or greater than $10,000,000;
or
(ii) the
aggregate purchase price paid by the Company, its subsidiaries or its affiliates
in respect of the investment or acquisition in or of such entity, business,
brand, trademark, license, revenue stream or other asset is equal to or greater
than $10,000,000 (provided, that, for the purposes of determining the aggregate
purchase price so paid, (A) any indebtedness or other monetary obligations
assumed by any of the Company, its subsidiaries or its affiliates shall be
included, and (B) in the event that the acquisition includes an obligation
to
pay any deferred purchase price, earnout or other similar amounts, the purchase
price shall include (x) in the event that such deferred purchase price, earnout
or other similar amount is then determinable, the determinable amount of such
deferred purchase price, earnout or other similar amount or (y) in the event
that such deferred purchase price, earnout or other similar amount is not then
determinable, an amount that is mutually agreed by the Company and the
Consultant in good faith to be equal to the then projected amount of such
deferred purchase price, earnout or other similar amount that will be so
paid);
2
provided,
however, that, the pending acquisition of Mossimo, Inc. and the proposed
transaction to acquire certain commission rights of Mossimo, Inc. from Cherokee,
Inc. shall not constitute a “Qualified Company Acquisition.”
4. Confidentiality;
Noncompetition; Nonsolicitation; Nondisparagement.
4.1. The
Company and the Consultant acknowledge that in connection with the services
previously performed by the Consultant under his employment agreement and to
be
performed by the Consultant under this Agreement, the Consultant shall be in
possession of confidential information relating to the business practices of
the
Company. The term “confidential information” shall mean any and all information
(oral and written) relating to the Company or any of its affiliates, or any
of
their respective activities acquired by the Consultant in connection with the
services previously performed by the Consultant under his employment agreement
or during the Transition Period or to be performed by the Consultant under
this
Agreement, other than such information which (i) can be shown by the
Consultant to be in the public domain other than as the result of breach of
the
provisions of this paragraph 4, or (ii) the Consultant 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 Consultant shall not, during or after
the
Term, except as may be required during Consultant’s consultancy in the course of
the performance of his duties hereunder, directly or indirectly, use,
communicate, disclose or disseminate to any person, firm or corporation any
confidential information regarding the clients, customers, trade secrets or
business practices of the Company acquired by the Consultant, without the prior
written consent of the Company.
4.2. Upon
the
termination of the Consultant’s consultancy for any reason whatsoever, all
documents, records, notebooks, equipment, price lists, specifications, programs,
customer and prospective customer lists and other materials, in each case,
which
contain confidential information and refer or relate to any aspect of the
business of the Company which are in the possession of the Consultant, including
all copies thereof, shall be promptly returned to the Company.
4.3. In
consideration for the Company’s entering into this Agreement, the Consultant
hereby agrees that he shall not, during the period from the date hereof through
June 8, 2007, enter into any Qualified Consultant Acquisition. Notwithstanding
the foregoing, nothing herein shall prevent the Consultant from (i) owning
stock
or other equity interests in Windsong Allegiance Group, LLC or any of its
affiliates or related entities (collectively “WAG”) or (ii) from engaging,
having an interest in, being employed by or rendering any services to WAG.
For
the avoidance of doubt, nothing set forth in this Section 4.3 shall be deemed
to
restrict the activities of WAG in any manner. For the purposes of the foregoing,
(x) the term “Qualified Consultant Acquisition” shall mean any direct or
indirect investment or acquisition (by assignment, purchase, merger or
otherwise, in a single transaction or series of transactions), or the entry
into
any agreement in respect of any such direct or indirect investment or
acquisition, by the Consultant of a greater than 10% voting equity interest
in
any Competing Entity, and (y) the term “Competing Entity” shall mean any entity,
business, brand, trademark, license, revenue stream or other asset that is
directly competitive with the Company’s licensing business. In the event that
Consultant shall breach any of his obligations under this Section 4.3, the
Company shall not be entitled to any damages or equitable remedies (including
specific performance) in respect thereof and the Company’s sole remedy in
respect of such breach shall be the right to terminate this Agreement in
accordance with Section 2.2(iv) hereof.
3
4.4. In
consideration for the Company’s entering into this Agreement the Consultant
shall not, during the period from the date hereof through June 8, 2008, directly
or indirectly, offer to hire, solicit or in any other manner persuade or attempt
to persuade any officer or employee of the Company while employed by the Company
(but only such officers or employees existing during the time of the
Consultant’s employment by the Company, or at the termination of his
employment), to terminate his or her employment with the Company; provided
that
the foregoing shall not be deemed to include general solicitations of employment
not specifically directed toward employees of the Company.
4.5. At
no
time during or after the Term shall either party hereto, directly or indirectly,
disparage the commercial, business, professional or financial, as the case
may
be, reputation of the other party.
4.6. Without
intending to limit the remedies available to the Company, the Consultant
acknowledges that a breach of any of the covenants contained in Sections 4.1,
4.2, 4.4 and 4.5 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
seek a temporary restraining order and/or a preliminary or permanent injunction
restraining the Consultant from engaging in activities prohibited by Sections
4.1, 4.2, 4.4 and 4.5 or such other relief as may be required specifically
to
enforce any of the covenants in Sections 4.1, 4.2, 4.4 and 4.5. If for any
reason it is held that the restrictions under this Section 4 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 paragraph as will render such restrictions valid and
enforceable.
5. Reduction
of Payments.
Anything in this Agreement to the contrary notwithstanding, if :
4
(a) any
payment or benefit to which Consultant is entitled from the Company, any
affiliate, or trusts established by the Company or by any affiliate (the
“Payments,” which shall include, without limitation, the vesting of a warrant,
option or other non-cash benefit or property) are more likely than not to be
subject to the tax imposed by section 4999 of the Internal Revenue Code of
1986
or any successor provision to that section; and
(b) reduction
of the Payments to the amount necessary to avoid the application of such tax
would result in the Consultant retaining an amount that is greater than the
amount he would retain if the Payments were made without such reduction but
after the application of such tax;
the
Payments shall be reduced to the extent required to avoid application of such
tax. The Consultant shall be entitled to select the order in which payments
are
to be reduced in accordance with the preceding sentence. Determination of
whether Payments would result in the application of the tax under section 4999,
and the amount of reduction that is necessary so that no such tax is applied,
shall be made, at the Company’s expense, by the independent accounting firm
employed by the Company immediately prior to the occurrence of any change of
control of the Company which will result in the imposition of such
tax.
6. Severability.
If any
provision of this Agreement shall be held to be invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall
not
affect or render invalid or unenforceable any other provision of this Agreement,
and this Agreement shall be construed as if such provision had been drawn so
as
not to be invalid or unenforceable.
7. Independent
Contractor.
It is
expressly agreed that Consultant is acting as an independent contractor in
performing the Services hereunder. Consultant shall not have the authority
to
obligate or commit the Company in any manner whatsoever.
8. Notices.
All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the earlier
of
the date delivered or mailed if delivered personally, by overnight courier
or
mailed by express, registered or certified mail (postage prepaid, return receipt
requested) or by facsimile transmittal, confirmed by express, certified or
registered mail, to the parties at their respective addresses set forth above
(or at such other address for a party as shall be specified by like notice,
except that notices of changes of address shall be effective upon
receipt).
9. Entire
Agreement.
This
Agreement represents and expresses the entire understanding and agreement
between the parties with respect to the subject matter hereof. This Agreement
may not be modified or terminated except by an agreement in writing signed
by
both of the parties hereto.
10. Assignment.
This
Agreement is personal in nature and shall not be assigned by any party hereto
without the prior written consent of the other party. Any assignment by any
party hereto in violation of this Agreement shall be void and of no force and
effect.
5
11. Governing
Law; Jurisdiction.
This
Agreement shall be governed by, and construed in accordance with, the law of
the
State of New York without regard to its choice of law principles. The
Company and Consultant hereby irrevocably and unconditionally consent to submit
to the exclusive jurisdiction of the New York State Supreme Court, County of
New
York or the United States District Court for Southern District of New York
for
any actions, suits or proceedings arising out of or relating to this Agreement.
The Company and Consultant also hereby irrevocably and unconditionally waive
any
objection to the laying of venue of any action, suit or proceeding arising
out
of this letter or the transactions contemplated hereby, in the New York State
Supreme Court or the United States District Court for the Southern District
of
New York, and hereby further irrevocably and unconditionally waive and agree
not
to plead to claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient
forum.
IN
WITNESS WHEREOF, the parties hereto have set their hands as of the date first
written above.
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COMPANY:
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By:
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Name:
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Title
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CONSULTANT:
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XXXXXXX
XXXXXXXX
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6
EXHIBIT
A
WARRANT
AGREEMENT
ICONIX
BRAND GROUP, INC., a Delaware corporation (the “Company”), hereby grants to
Xxxxxxx
Xxxxxxxx,
a
financial consultant of the Company pursuant to the Consulting Agreement
described below (the “Holder”), as of ______
__, 2006
(the
“Grant Date”), a warrant to purchase a total of 400,000
shares
(the
“Warrant Shares”) of the Company’s common stock, par value $.001 per share
(“Common Stock”). This warrant (the “Warrant”) is being granted pursuant to the
Consulting Agreement, dated the date hereof, between the Company and the Holder
(the “Consulting Agreement”), a copy of which is attached hereto as Exhibit
A.
1. Duration.
(a) This
Warrant was granted as of the Grant Date.
(b) This
Warrant shall expire on [Insert tenth anniversary of Grant Date].
2. Price.
The
purchase price for each share of Common Stock upon exercise of this Warrant
(the
“Purchase Price”) shall be $8.81, subject to adjustment as provide in Section 5
hereof.
3. Non-Qualified
Stock Option.
This
Warrant is a non-qualified stock option, the exercise of which is subject to
Section 83 of the Internal Revenue Code of 1986, as amended (the
“Code”).
4. Written
Notice of Exercise.
This
Warrant, to the extent it is exercisable as provided in Section 11 herein,
may
be exercised only by delivering to the Company, at its principal office within
the time specified in Section 1 hereof or such shorter time as is otherwise
provided for herein, a written notice of exercise substantially in the form
described in Section 11.
5. Anti-Dilution
Provisions.
(a) If
there
is any stock dividend or recapitalization resulting in a stock split, or
combination or exchange of shares of Common Stock of the Company, the number
of
shares of Common Stock then subject to this Warrant and the Purchase Price
shall
be proportionately and appropriately adjusted by the Board of Directors of
the
Company (the “Board”); provided, however, that any fractional shares resulting
from any such adjustment shall be eliminated.
(b) If
there
is any other change in the Common Stock of the Company, including
recapitalization, reorganization, sale or exchange of assets, exchange of
shares, offering of subscription rights, or a merger or consolidation in which
the Company is the surviving corporation, an adjustment, if any, shall be made
in the shares then subject to this Warrant as the Board in its sole discretion
may deem appropriate. Failure of the Board to provide for an adjustment pursuant
to this subparagraph prior to the effective date of any Company action referred
to herein shall be conclusive evidence that no adjustment has been approved
by
the Board in consequence of such action and that no such adjustment will be
made
in consequence of such action.
6. Investment
Representation.
The
Holder agrees that until such time as a registration statement under the
Securities Act of 1933, as amended (the “Act”), becomes effective with respect
to this Warrant and/or the shares of Common Stock underlying this Warrant,
the
Holder is taking this Warrant and shall take the shares of Common Stock
underlying this Warrant, for the Holder’s own account, for investment, and not
for resale or distribution.
7. Transferability.
This
Warrant shall not be transferable.
8. Certain
Rights Not Conferred by Warrant.
The
Holder shall not, by virtue of holding this Warrant, be entitled to any rights
of a stockholder in the Company.
9. Transfer
Taxes.
The
Company shall pay all original issue and transfer taxes with respect to the
issuance and transfer of shares of Common Stock of the Company pursuant hereto
provided that the shares are issued in the name of the Holder.
10. Vesting
of Warrants.
The
amount of shares of Common Stock pursuant to this Warrant shall become
exercisable as follows: (i) 133,334
shall
vest upon the first Qualified Company Acquisition, as defined in the Consulting
Agreement, consummated during the Term, and (ii) 133,333
shall
vest upon each of the second and third Qualified Company Acquisitions
consummated during the Term.
11. Exercise
of Warrants.
(a) This
Warrant shall be exercisable by written notice of such exercise, in the form
prescribed by the Board to the Company, at its principal executive office.
The
notice shall specify the number of shares for which the Warrant is being
exercised and be signed by the Holder. The date such notice, accompanied by
payment as described in subsection (b), is received by the Company shall be
referred to herein as the “Exercise Date”.
(b) Purchase
Price.
Upon
exercise of this Warrant, the Holder shall pay the Purchase Price in one of
the
following manners:
(i)
Cash Exercise. Payment may be made in cash or by certified or official
bank check payable to the order of the Company.
(ii) Cashless
Exercise.
In lieu
of payment of the Purchase Price as provided in clause (i), the Holder may
elect
a cashless net exercise. In the case of such cashless net exercise, the Holder
shall surrender this Warrant for cancellation and receive in exchange therefor
the full number of duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock as is computed using the following formula:
2
X
=
Y
* (A
- B)
A
where:
|
X
=
|
the
number of shares of Common Stock to be issued to the Holder upon
cashless
exercise of this Warrant
|
|
Y
=
|
the
total number of shares Common Stock covered by this Warrant and then
exercisable which the Holder has surrendered at such time for cashless
exercise (including both shares to be issued to the Holder upon cashless
exercise of this Warrant and shares to be canceled as payment
therefor)
|
|
A
=
|
the
Current Market Value as of the business day on which the Holder surrenders
this Warrant to the Company
|
|
B
=
|
the
Purchase Price then in effect under this Warrant at the time at which
the
Holder surrenders this Warrant to the
Company
|
| * = |
multiplied
by
|
For
the
purposes of the foregoing, the term “Current Market Value” shall mean the fair
market value of the shares of Common Stock on the Exercise Date, or if the
Exercise Date is not a trading day, the next trading day after the Exercise
Date, as determined as follows:
(A) if
the
Common Stock is traded on a securities exchange or the NASDAQ Stock Market,
the
value shall be deemed to be the closing price of the Common Stock on such
exchange or market on the trading day prior to the date of
determination;
(B) if
the
Common Stock is actively traded over-the-counter, the value shall be deemed
to
be the mean of the closing bid and asked prices on the trading day prior to
the
date of determination; or
(C) if
there
is no active public market for the Common Stock, the value shall be the fair
market value thereof, as determined in good faith by the Board of Directors
of
the Company.
(c) No
shares
shall be delivered upon exercise of this Warrant until all laws, rules and
regulations which the Board may deem applicable have been complied with. If
a
registration statement under the Act is not then in effect with respect to
the
shares issuable upon such exercise, the Company may require as a condition
precedent, among other things (i) that the person exercising the Warrant give
to
the Company a written representation and undertaking, satisfactory in form
and
substance to the Company, that such person is acquiring the shares for his
own
account for investment and not with a view to the distribution thereof and/or
(ii) an opinion of counsel satisfactory to the Company with respect to the
existence of an exemption from the registration requirements of the Act, in
which event the person(s) acquiring the Common Stock shall be bound by the
provisions of the following legend which shall be endorsed upon the
certificate(s) evidencing his Warrant Shares issued pursuant to such
exercise:
3
“The
shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the “Act”). Such shares may not be sold,
transferred or otherwise disposed of unless they have first been registered
under the Act or, unless, in the opinion of counsel satisfactory to the
Company’s counsel, such registration is not required.”
(d) Without
limiting the generality of the foregoing, the Company may delay issuance of
the
shares of Common Stock underlying this Warrant until completion of any action
or
obtaining of any consent, which the Company deems necessary under any applicable
law (including without limitation state securities or “blue sky”
laws).
(e) The
person exercising this Warrant shall not be considered a record holder of the
stock so purchased for any purpose until the date on which such person is
actually recorded as the holder of such stock in the records of the
Company.
12. Notices.
Any
notice required or permitted by the terms of this Agreement shall be given
by
registered or certified mail, return receipt requested, addressed as
follows:
|
To
the Company:
|
|
|
0000
Xxxxxxxx, 0xx
xxxxx
Xxx
Xxxx, X.X. 00000
|
|
|
Attention:
President
|
|
|
To
the Holder:
|
|
|
Xxxxxxx
Xxxxxxxx
c/o
Windsong Inc.
0000
Xxxx Xxxx Xxxx
Xxxxxxx,
XX 00000
|
|
or
to
such other address or addresses of which notice in the same manner has
previously been given when mailed in accordance with the foregoing provisions.
Either party hereto may change the address to which such notices shall be given
by providing the other party hereto with written notice of such
change.
4
13. Tax
Withholding.
Not
later
than the date as of which an amount first becomes includable in the gross income
of the Holder or other holder for federal income tax purposes with respect
to
this Warrant, the Holder or other holder shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any federal,
state and local taxes of any kind required by law to be withheld or paid with
respect to such amount. The obligations of the Company under this Agreement
shall be conditional upon such payment or arrangements and the Company shall,
to
the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the holder of the Warrant from the Company
or any of its subsidiaries.
14. Short-Term
Deferral.
This
Warrant is intended to constitute a short-term deferral and, therefore, not
result in a deferral of compensation, as those terms are used in guidance
provided by the Internal Revenue Service under section 409A of the Code.
Accordingly, this Warrant may not be exercised at a date that is later than
the
15th day of the third month following the end of the first calendar year in
which the Warrant is no longer subject to a substantial risk of forfeiture,
or
at such other time as may be provided by such guidance.
15. Registration.
The
Company hereby covenants and agrees that it shall take all actions necessary
to
file a registration statement under the Securities Act covering all of the
shares of Common Stock issuable upon exercise of this Warrant on or prior to
the
earlier of (i) the first date following the date of this Warrant on which the
Company shall file a registration statement under the Securities Act of any
other shares of its Common Stock on a form other than Form X-0, X-0 or similar
form, and other than with respect to an underwritten public offering; or (ii)
December 31, 2006. The Company will use commercially reasonable efforts to
cause
such registration statement to be declared effective as soon as practicable
after filing, including responding as soon as practicable to comments of the
Securities and Exchange Commission.
16. Benefit
of Agreement.
This
Agreement shall be for the benefit of and shall be binding upon the heirs,
executors, administrators and successors of the parties hereto.
5
17. Governing
Law.
This
Agreement shall be construed and enforced in accordance with the law of the
State of New York, except to the extent that the laws of the State of Delaware
may be applicable.
|
By:
|
||
|
Name:
Xxxx Xxxx
Title:
President and CEO
|
||
|
Accepted
as of the date
first
set above:
|
|
|
Signature required with return of
document to the Company to
formalize
issuance of agreement.
|
6
