Employment
Agreement
Employment Agreement, dated as of September 22,
2006, by and between Iconix Brand Group, Inc., a Delaware
corporation (the “Company”), and Andrew Tarshis (the
“Executive”).
W I T N E S S E T
H
WHEREAS, the Executive is currently Senior Vice
President, Business Affairs and Associate Counsel of the Company
and Senior Vice President, Business Affairs and General Counsel of
the Company’s Joe Boxer division (the
“Division”); and
WHEREAS, the Company and Executive entered into
a two-year Employment Agreement dated as of July 22, 2005 (the
“Original Agreement”); and
WHEREAS, the Company wishes, among other things,
to continue the Executive’s employment with the Company
beyond the term currently provided by the Original Agreement
pursuant to the terms as provided herein;
NOW, THEREFORE, in consideration of the mutual
covenants and agreements hereinafter set forth, and for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Company and Executive hereby agree as
follows:
1.
Engagement of Executive;
Duties. During the
Term (as hereinafter defined), the Executive shall have the titles
of Senior Vice President and General Counsel of the Company, which
shall be the most senior legal position of the Company, and shall
have such duties as may be from time to time delegated to him by
the 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 Company.
2.
Time.
The Executive shall devote
substantially all of his professional time to the business affairs
of the Division and the Company.
3.
Term.
The Executive’s engagement
shall commence effective the date hereof and shall continue for
three (3) years (the “Term”) unless otherwise
terminated as provided herein. The Company may terminate the
Agreement for cause (“Cause”) in the event that
Executive is convicted of a crime of moral turpitude or dishonesty
which conviction may reasonably be expected to have an adverse
impact on the Company, or for the willful and continued refusal of
Executive to follow the directives of the Chief Executive Officer
of the Company (provided that the Company shall have provided
Executive with written notice of such willful and continued refusal
and Executive has been afforded a reasonable opportunity of at
least thirty days to cure the same), or the breach or threatened
breach by the Executive of the provisions of Section 6 of this
Agreement. Executive may terminate this Agreement in the event
(“Good Reason”) his title, reporting relationship or
job responsibilities are materially or adversely affected or in the
event that Executive is re-located to an office outside the greater
New York metropolitan area (which metropolitan area shall not be
deemed to include New Jersey). In the event the Company elects to
terminate this Agreement for any reason other than for Cause as
specified herein or Executive terminates for Good Reason, Executive
shall be entitled to receive the greater of (i) his current salary
through the remainder of the Term, or (ii) one (1) year of his then
base salary.
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(a)
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Base
Salary . Executive's base
salary for the first year of the Term will be at a rate of not less
than $275,000 per annum and Executive’s base salary for the
second and third year(s) of the Term will be at a rate of not less
than $300,000 per annum, in each case, paid in accordance with the
Company's payroll practices and policies then in effect.
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(b)
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Bonus . Executive shall be entitled to participate in
the Company’s executive bonus program then in effect.
Executive shall be eligible for an annual bonus of up to 100% of
Executive’s salary, to be superceded by the maximum amount
available under the Company’s executive bonus program and any
other bonus program generally applicable to senior executives of
the Company.
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(c)
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Restricted
Stock . The Company shall
issue to the Executive 18,461 shares of Restricted Stock under the
Company’s 2006 Equity Incentive Plan (the
”Plan”), subject to restrictions on the full enjoyment
of such shares set forth in the Restricted Stock Agreement in the
form attached hereto as Exhibit A (the “Restricted Stock
Agreement), such restrictions to lapse with respect to one-third of
such shares on each of the first three anniversaries of the date
hereof, in accordance with the terms and conditions of the
Restricted Stock Agreement.
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(d)
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Fringe
Benefits . Executive
shall receive the fringe benefits given to other executive officers
of the Company including, but not limited to, major medical,
dental, life insurance, pension including any 401 (K) or other
profit sharing plan. Executive shall also be added as an insured
under the Company's officers and directors insurance and all other
polices which pertain to officers of the Company. The Company shall
pay Executive a car allowance of $1,500 per month during the Term
of this Agreement.
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(e)
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Reimbursement of Expenses
. The Company shall pay to Executive
the reasonable expenses incurred by him in the performance of his
duties hereunder, including, without limitation, expenses related
to cell phones, blackberrys and laptop computers and such other
expenses incurred in connection with business related travel or
entertainment in accordance with the Company’s policy, or, if
such expenses are paid directly by the Executive, the Company shall
promptly reimburse the Executive for such payments, provided that
the Executive (i) properly accounts for such expenses in
accordance with the Company’s policy and (ii) has
received prior approval by the Chief Executive Officer of the
Company for major expenses.
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(f)
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Vacation . Executive shall be entitled to four weeks of
paid vacation per year. The Executive shall use his vacation in the
calendar year in which it is accrued.
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5.
Confidentiality. Executive shall not divulge to anyone, either
during or at any time after the Term, any information constituting
a trade secret or other confidential information acquired by him
concerning the Company, any subsidiary or other affiliate of the
Company, except in the performance of his duties hereunder,
including but not limited to its licensees, revenues, business
systems and processes (“Confidential Information”).
Executive acknowledges that any Confidential Information is of
great value to the Company, and upon the termination of his
engagement Executive shall redeliver to the Company all
Confidential Information and other related data in his
possession.
6.
Noncompetition;
Nonsolicitation
6.1 The Executive hereby agrees that during the Term
and, unless the Company does not offer to extend the Term on
comparable terms and conditions after the expiration thereof, for a
period of one year following the expiration of the Term (the
“Non-Compete Term”), he shall not, 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) to William Sweedler or Robert
D’Loren or any entity with which either such person is
affiliated or associated.
6.2 The Executive shall not, during the Non-Compete
Term, directly or indirectly, take any action which constitutes an
interference with or a disruption of any of the Company’s
business activities including, without limitation, the
solicitations of the Company’s customers, or persons listed
on the personnel lists of the Company.
6.3 For purposes of clarification, but not of
limitation, the Executive hereby acknowledges and agrees that the
provisions of Sections 6.1 and 6.2 above shall serve as a
prohibition against him from, during the period referred to
therein, directly or indirectly, hiring, offering to hire,
enticing, soliciting or in any other manner persuading or
attempting to persuade any officer, employee, agent, lessor,
lessee, licensor, licensee or customer of the Company (but only
those suppliers existing during the time of the Executive’s
employment by the Company, or at the termination of his
employment), to discontinue or alter his, her or its relationship
with the Company.
6.4 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 6 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
Executive from engaging in activities prohibited by this Section 6
or such other relief as may be required specifically to enforce any
of the covenants in this Section 6. If for any reason it is held
that the restrictions under this Section 6 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 6 as will render such restrictions
valid and enforceable.
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(a)
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If the Company
terminates Executive’s employment without Cause or Executive
terminates Executive’s employment for Good Reason within 12
months after a Change in Control (as defined in Subsection 7(b)),
then the Company shall pay to Executive in complete satisfaction of
its obligations under this Agreement, as severance pay and as
liquidated damages (because actual damages are difficult to
ascertain), in a lump sum, in cash, within 15 days after the date
of Executive’s termination, an amount equal to $100 less than
three times Executive’s “annualized includable
compensation for the base period” (as defined in Section 280G
of the Internal Revenue Code of 1986); provided ,
however , that if such lump sum severance payment, either
alone or together with other payments or benefits, either cash or
non-cash, that Executive has the right to receive from the Company,
including, but not limited to, accelerated vesting or payment of
any deferred compensation, options, stock appreciation rights or
any benefits payable to Executive under any plan for the benefit of
employees, which would constitute an “excess parachute
payment” (as defined in Section 280G of the Internal Revenue
Code of 1986), then such lump sum severance payment or other
benefit shall be reduced to the largest amount that will not result
in receipt by Executive of a parachute payment. The determination
of the amount of the payment described in this subsection shall be
made by the Company’s independent auditors at the sole
expense of the Company. For purposes of clarification the value of
any options described above will be determined by the
Company’s independent auditors using a Black-Scholes
valuation methodology.
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(b)
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For purposes of
Subsection 7(a), a “Change in Control” shall mean any
of the following:
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(1) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Company’s common stock would
be converted into cash, securities or other property, other than a
merger of the Company in which the holders of the Company common
stock immediately prior to the merger have the same proportionate
ownership of common stock of the surviving corporation immediately
after the merger;
(2) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all or
substantially all of the assets of the Company;
(3) any approval by the stockholders of the Company
of any plan or proposal for the liquidation or dissolution of the
Company;
(4) the cessation of control (by virtue of their not
constituting a majority of directors) of the Company’s Board
of Directors by the individuals (the “Continuing
Directors”) who (x) at the date of this Agreement were
directors or (y) become directors after the date of this Agreement
and whose election or nomination for election by the
Company’s stockholders, was approved by a vote of at least
two-thirds of the directors then in office who were directors at
the date of this Agreement or whose election or nomination for
election was previously so approved); or
(5) (A) the acquisition of beneficial ownership
(“Beneficial Ownership”), within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), of an aggregate of 25% or more of the
voting power of the Company’s outstanding voting securities
by any person or group (as such term is used in Rule 13d-5 under
the Exchange Act) who beneficially owned less than 10% of the
voting power of the Company’s outstanding voting securities
on the effective date of this Agreement, (B) the acquisition of
Beneficial Ownership of an additional 15% of the voting power of
the Company’s outstanding voting securities by any person or
group who beneficially owned at least 10% of the voting power of
the Company’s outstanding voting securities on the effective
date of this Agreement, or (C) the execution by the Company and a
stockholder of a contract that by its terms grants such stockholder
(in its, hers or his capacity as a stockholder) or such
stockholder’s Affiliate (as defined in Rule 405 promulgated
under the Securities Act of 1933 (an “Affiliate”))
including, without limitation, such stockholder’s nominee to
the Company’s Board of Directors (in its, hers or his
capacity as an Affiliate of such stockholders), the right to veto
or block decisions or actions of the Company’s Board of
Directors’ provided however , that
notwithstanding the foregoing, the events described in items (A),
(B) or (C) above shall not constitute a Change in Control hereunder
if the acquiror is (aa) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or one of
its affiliated entities and acting in such capacity, (bb) a
corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of voting securities of the Company or (cc) a person or
group meeting the requirements of clauses (i) and (ii) of Rule
13d-1(b)(1) under the Exchange Act;
(6) subject to applicable law, in a Chapter 11
bankruptcy proceeding, the appointment of a trustee or the
conversion of a case involving the Company to a case under Chapter
7.
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(c)
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Executive shall
not be required to mitigate the amount of any payment provided for
in this Section 7 by seeking other employment or otherwise, nor
shall the amount of any payment provided for in this Section 7 be
reduced by any compensation earned by Executive as the result of
Executive’s employment by another employer or business or by
profits earned by Executive from any other source at any time
before and after Executive date of termination.
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(d)
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If within 12
months after the occurrence of a Change of Control, as defined in
the Plan, the Company shall terminate Executive’s employment
without Cause, as defined herein, or Executive terminates
Executive’s employment for Good Reason, as defined herein,
then notwithstanding the vesting schedule contained in the
Restricted Stock Agreement, all restrictions set forth in the
Restricted Stock Agreement shall immediately lapse.
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8.
Indemnification
. The Company shall indemnify and
hold harmless the Executive against any and all expenses reasonably
incurred by him in connection with or arising out of (a) the
defense of any action, suit or proceeding in which he is a party,
or (b) any claim asserted or threatened against him, in either case
by reason of or relating to his being or having been an employee,
officer or director of the Company, whether or not he continues to
be such an employee, officer or director at the time of incurring
such expenses, except insofar as such indemnification is prohibited
by law. Such expenses shall include, without limitation, the fees
and disbursements of attorneys, amounts of judgments and amounts of
any settlements, provided that such expenses are agreed to in
advance by the Company. The foregoing indemnification obligation is
independent of any similar obligation provided in the
Company’s Certificate of Incorporation or Bylaws, and shall
apply with respect to any matters attributable to periods prior to
the date of this Agreement, and to matters attributable to
Executive's employment hereunder, without regard to when
asserted.
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(a)
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This Agreement
shall be deemed to be a contract made under the laws of the State
of New York and for all purposes shall be construed in accordance
with those laws. The Company and Executive 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 the Southern District of New York for any actions, suits
or proceedings arising out of or relating to this Agreement and
the
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