Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement"), entered into July 22,
2005, by and between Iconix Brand Group,
Inc., a Delaware corporation (the
"Company"), and William Sweedler (the
"Executive").
W I T N E S S E T H:
WHEREAS, on the date hereof, the Company acquired
substantially all of the assets of Joe
Boxer Company, LLC and certain of its
affiliates ("Joe Boxer");
WHEREAS
the Company desires to operate the business of Joe
Boxer utilizing all of Joe Boxer's
intellectual property as the Joe Boxer
division (the "Joe Boxer Division") of the
Company; and
WHEREAS, the Executive possesses experience in the apparel
industry and brand licensing and unique
personal knowledge, experience and
expertise concerning Joe Boxer and the
business and operations to be conducted
by the Joe Boxer Division; and
WHEREAS, the Company desires to employ the Executive as an
executive officer of the Company with the
title of (i) Executive Vice President
of the Company and (ii) President of the
Joe Boxer Division, and the Executive
desires to be so employed by the Company,
in each case, upon the terms and
subject to the conditions set forth in this
Agreement.
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 employment under
this Agreement shall commence on July 22, 2005 (the
"Start Date") and shall continue until the fourth
anniversary of the Start Date (the "Term"), unless
such employment is earlier terminated or canceled as
provided in this Agreement.
1.2.
General.
1.2.1.
During the Term, the Executive shall have the title
of (i) Executive Vice President of the Company and
(ii) Chief
Executive Officer and President of the Joe
Boxer Division (provided that Executive acknowledges
the Company may, so as to avoid any potential
confusion with the Chief Executive Officer of the
Company, omit the reference to Executive's Chief
Executive Officer title in any press release issued
by the Company) and shall have such duties as may be
from time to time delegated to him by the Chief
Executive Officer of the Company and as are
consistent and commensurate with his title and
position. The Executive shall faithfully and
diligently discharge his duties hereunder and use his
best efforts to implement the policies established by
the Chief Executive Officer of the Company. During
the Term, no other executive officer of the Company
or other person or entity shall be appointed with
direct authority over the Joe Boxer Division.
<PAGE>
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 Joe
Boxer Division and/or the Company as may be
reasonably requested by the Chief Executive Officer
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 any
organization or corporation involving no conflict of
interest with the interests of the Company and with
the written consent of the Company, which consent
shall not be unreasonably withheld;
(ii)
delivering lectures, fulfilling speaking engagements,
and any writing or publication relating to his area
of expertise;
(iii)
engaging in professional organization and program
activities; and
(iv)
managing his personal and family investments;
provided that such activities do not
materially interfere with the due
performance of his duties and
responsibilities under this Agreement as
determined by the Chief Executive Officer
of the Company.
1.3. Reimbursement of Expenses. The Company
shall pay to the Executive the
reasonable expenses incurred by him in the
performance of his duties hereunder,
including, without limitation, those
incurred in connection with business
related travel or entertainment, or, if
such expenses are paid directly by the
Executive, the Company shall promptly
reimburse the Executive for such payments,
provided that the Executive properly
accounts for such expenses in accordance
with the Company's policy.
2. COMPENSATION
2.1. Base Salary. During the Term, the
Executive shall be entitled to receive a
base salary ("Base Salary") at a rate of
four hundred thousand dollars
($400,000.00) per annum during the first
year of the Term, four hundred fifty
thousand dollars ($450,000.00) per annum
during the second year of the Term,
five hundred thousand dollars ($500,000.00)
per annum during the third year of
the Term, and five hundred fifty thousand
dollars ($550,000.00) per annum during
the fourth year of the Term, which Base
Salary shall be payable in arrears in
equal installments not less frequently than
on a bi-monthly basis in accordance
with the payroll practices of the Company,
with such increases as may be
determined by the Chief Executive Officer
of the Company from time to time.
2.2. Additional Salary. In addition to the
Base Salary, the Company shall pay
the Executive an additional salary during
the first year of the Term of fifty
thousand dollars ($50,000.00) (the
"Additional Salary") payable in one lump sum
payment on the first anniversary of the
date of this Agreement, provided the
Executive is employed by the Company on
such first anniversary.
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<PAGE>
2.3. Incentive Bonuses. In addition to the
Base Salary (and, in the first year
of the Term, in addition to the Additional
Salary), for the period from the date
hereof through December 31, 2007, the
Executive shall be entitled to receive an
incentive bonus for each fiscal year
("Incentive Bonus") equal to ten percent
(10%) of the revenues earned or received by
the Company attributable to the Joe
Boxer Division ("Royalty Revenues") during
such fiscal year, which Royalty
Revenues for any fiscal year shall include,
without limitation, revenues earned
or received by the Company during each such
fiscal year and which are
attributable to the Joe Boxer Division from
international, media or internet
sources and/or operations and which, for
purposes of Incentive Bonus payments
only, shall exclude revenues which are
attributable to the Joe Boxer Division
received by the Company during such period
under the License Agreement between
the Company and Kmart Corporation, dated
August 13, 2001, the License Agreement
between Joe Boxer Canada, L.P. and
Caulfield Apparel Group, Ltd., dated May 1,
2001 and the License Agreement between Joe
Boxer Canada, L.P. and Boys Will Be
Boys Clothing, Inc., dated May 2001
(collectively, the "Licensing Agreements").
For all purposes under this Agreement, the
determination of Royalty Revenues for
any fiscal year shall be made by the
Company and shall be subject to
confirmation in the event of a dispute by
its independent public accounting firm
and shall be final and binding on the
Executive; provided that in determining
Royalty Revenues for any fiscal year, the
Company shall only consider revenues
actually earned or received in such fiscal
year (whether or not paid in such
fiscal year) as Royalty Revenue for such
fiscal year. Royalty Revenues earned or
received for fiscal years after December
31, 2007 shall be included in
determining the Royalty Bonus and vesting
of Unvested Options (as such terms are
hereinafter defined) set forth in Section
2.6.2 hereof for each fiscal year
during which they are actually earned or
received. Incentive Bonuses, if
applicable, shall be due and payable by the
Company to the Executive annually,
commencing with the fiscal year ended
December 31, 2005, within thirty (30) days
after the filing by the Company of its
Annual Report on Form 10-K for the such
fiscal year with the Securities and
Exchange Commission ("SEC").
2.4. Early Termination. Anything contained
in this Section 2 to the contrary
notwithstanding, in the event that the
Executive's employment hereunder is
terminated by the Company without Cause or
by the Executive for Good Reason (as
such terms are defined in Section 5.1
hereof) prior to the end of a fiscal year
and the Executive would have been entitled
to Incentive Bonus under Section 2.3
for such fiscal year but for such
termination, the Executive shall be entitled
to the Incentive Bonus that would have been
payable but for such termination
through the Date of Termination (as defined
in Section 5.3 hereof).
2.5. Stock Options. In addition to the Base
Salary, Additional Salary and the
Incentive Bonus, if any, the Executive
shall receive on the date of this
Agreement, as incentive compensation, ten
year options ("Options") to purchase
up to 1,425,000 shares (the "Shares") of
common stock of the Company, at an
exercise price per share equal to the last
sale price for the Company's common
stock as quoted on the Nasdaq National
Market on the date hereof (the "Exercise
Price"), 225,000 of which shall vest
immediately and 1,200,000 (the "Unvested
Options") of which shall vest as set forth
in Section 2.6, subject to such other
conditions or limitations provided for in
the option agreement between the
Company and Executive attached hereto as
Exhibit A. The Company shall use its
best efforts to file a registration
statement covering the Shares on Form S-8 or
any successor form within twenty (20) days
from the date hereof.
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<PAGE>
2.6. Vesting Schedule. The Unvested Options
shall vest as follows:
2.6.1. With respect to each fiscal year of
the Company commencing with the
fiscal year ended December 31, 2005 through
and including December 31, 2007, for
every $1,000 of Royalty Revenues (as
defined in Section 2.3) generated during
such fiscal year, Unvested Options to
purchase fifty (50) shares shall vest. The
amount of Royalty Revenues generated during
each such fiscal year for purposes
of determining the number of Unvested
Options which shall have vested in respect
of such fiscal year shall be determined in
the manner set forth in Section 2.3.
2.6.2. With respect to each of the fiscal
years of the Company ending December
31, 2008, 2009 and 2010, Unvested Options
shall vest and an additional bonus
(the "Royalty Bonus") shall be paid to
Executive upon the Company generating
Royalty Revenues (including revenues under
Licensing Agreements which have been
renewed or extended), in each case, in the
amounts set forth for such year in
the table below (it being understood that
with respect to each of the fiscal
years ending 2008 and 2009, ten percent
(10%) of the aggregate amount of Royalty
Revenue generated in any such fiscal year
which exceeds the maximum threshold
set forth for such year below, shall
carry-over to the following fiscal year).
Subject to the provisions of Section 5.4.2,
in the event that the Term of this
Agreement shall expire without being
renewed in 2009, Royalty Bonus and Unvested
Options shall continue to be paid and vest
hereunder for the fiscal years ending
2009 and 2010 based upon the Royalty
Revenue actually earned or received in each
of such fiscal years (it being understood
that nothing contained herein shall
imply an obligation by the Company to
extend the Term).
<TABLE>
<CAPTION>
2008
<S>
<C>
<C>
<C>
<C>
Royalty Revenues over
$12 Million up to 13 million
100,000 Options and Royalty Bonus of $100,000
$13 Million up to 14 million
200,000 Options and Royalty Bonus of $200,000
$14 Million up to 15 million
300,000 Options and Royalty Bonus of $300,000
$15 Million or more
400,000 Options and Royalty Bonus of $400,000
2009
Royalty Revenues over
$13 Million up to 14 million
100,000 Options and Royalty Bonus of $100,000
$14 Million up to 15 million
200,000 Options and Royalty Bonus of $200,000
$15 Million up to 16 million
300,000 Options and Royalty Bonus of $300,000
$16 Million or more
400,000 Options and Royalty Bonus of $400,000
2010
Royalty Revenues over
$14 Million up to 15 million
100,000 Options and Royalty Bonus of $100,000
$15 Million up to 16 million
200,000 Options and Royalty Bonus of $200,000
$16 Million up to 17 million
300,000 Options and Royalty Bonus of $300,000
$17 Million or more
400,000 Options and Royalty Bonus of $400,000
</TABLE>
2.7. Payment Direction. The Executive may,
at any time and at his sole and
exclusive option, direct the Company to pay
any part of the Incentive Bonus
and/or the Royalty Bonus and/or issue any
vested Options, in each case to which
the Executive is entitled under this
Agreement, to one or more employees of the
Company working in the Joe Boxer
Division.
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<PAGE>
2.8. Additional Compensation. In addition
to the Base Salary, Additional Salary,
the Incentive Bonus and the Royalty Bonus,
if any, and the Options, the
Executive shall be entitled to receive such
other cash bonuses and such other
compensation in the form of stock, stock
options or other property or rights as
may from time to time be awarded him by the
Board during or in respect of his
employment hereunder.
3. PLACE OF PERFORMANCE.
In connection with his employment by the Company, the
Executive shall be based at the Company's
principal executive offices in the
greater New York metropolitan area
(excluding New Jersey), subject to the mutual
agreement of the Executive and the Company
to relocate him to another office of
the Company. Subject to the foregoing, in
connection with any relocation or
transfer of the Executive outside of the
greater New York metropolitan area, the
Company will promptly pay (or reimburse the
Executive for) all reasonable moving
and moving-related expenses (including any
losses incurred as a result of the
sale of the Executive's personal residence)
incurred by the Executive as a
consequence of a change of his principal
residence in connection with any such
relocation or transfer.
4.
EMPLOYEE BENEFITS
4.1.
Benefit Plans. The Executive shall, during the Term,
be included to the extent eligible thereunder in all
employee benefit plans, programs or arrangements of
general application, including, without limitation,
any plans, programs or arrangements providing for
retirement
benefits, options and other equity-based
incentive compensation, profit sharing, bonuses,
disability benefits, health and life insurance, or
vacation and paid holidays) which shall be
established by the Company or any affiliate of the
Company, for, or made available to, their respective
senior executives ("Benefits"). During the Term, the
Benefits described in this paragraph 4 may only be
reduced as a result of a general reduction for all
senior executives. The Company shall pay for any
expenses related to COBRA until such time as the
Executive is fully covered under the Company's plans.
4.2. Car Allowance.
During the Term, the
Company shall pay Executive a car
allowance of $1,500 per month.
4.3.
Vacation. The Executive shall be entitled to not less
than four (4) 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.
4.4.
Professional Dues. During the Term, the Company shall
reimburse Executive for dues paid in connection with
membership by Executive in one club or professional
association or organization, including the YPO.
4.5.
Equipment. Executive shall be provided with all
reasonable and necessary facilities and equipment to
carry out his duties, including but not limited to, a
laptop computer, cellular telephone and home fax
machine and laser printer.
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<PAGE>
4.6.
Assistant. Executive shall be entitled to share a
full time dedicated secretary or assistant with
Andrew Tarshis or another executive of the Company.
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, as a result of the Executive's
Disability (as defined below), the Executive shall
have been absent from his duties under this Agreement
for sixty (60) consecutive days or any ninety (90)
days in a one hundred eighty (180) day period, the
Company may terminate the Executive's employment 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
that the Executive is unable to perform his normal
and customary duties hereunder as a result of
physical or mental illness.
5.1.3.
Good Reason. The Executive may terminate his
employment for Good Reason at any time. For purposes
of this Agreement, "Good Reason" shall mean:
(i)
the failure by the Company to comply with its
material obligations and agreements contained in this
Agreement;
(ii)
a material diminution of the responsibilities or
title of the Executive with the Company without the
express written consent of the Executive;
(iii)
(y) a reduction by the Company in, (A) the Base
Salary in
any year of the Term, as described in
paragraph 2.1 hereof, or as the same may be increased
from time to time, (B) the Additional Salary, (C) the
Incentive Bonuses or (D) the Royalty Bonus, or (z) a
change that is adverse to the Executive in the
vesting schedule or vesting provisions described in
this Agreement with respect to the Unvested Options,
in each case without the express written conse
