Document:

Unassociated Document

EXECUTION COPY

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Amendment (the “Amendment”) dated October 7, 2011 (the “Effective Date”) to the Employment Agreement entered into November 11, 2008 (the “Original Agreement”), by and between Iconix Brand Group, Inc., a Delaware corporation (the “Company”), and Andrew R. Tarshis (“Executive” and together with the Company, the “parties”).

 

WHEREAS, the parties have previously entered into the Original Agreement providing for the terms and conditions of the employment of Executive by the Company;

 

WHEREAS, the parties wish to amend the Original Agreement to extend the term of the Executive’s employment with the Company and amend certain other provisions of the Original Agreement as set forth herein.

 

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.           Term.  Section 3 of the Original Agreement is hereby deleted in its entirety and replaced by the following:

 

“3.    Term.  The Executive’s engagement shall commence on the Effective Date and shall continue until December 31, 2015, unless otherwise 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.”

 

2.           Base Salary.  Section 4(a) of the Original Agreement is hereby deleted in its entirety and replaced by the following:

 

“4(a)           Base Salary.  Executive’s base salary from the Effective Date through  November 10, 2011 will be at a rate of not less than $400,000 per annum; Executive’s base salary from November 11, 2011 through  December 31, 2012 will be at a rate of not less than $450,000 per annum; Executive’s base salary from January 1, 2013 through December 31, 2013 will be at a rate of not less than $475,000 per annum; Executive’s base salary from January 1, 2014 through December 31, 2014 will be at a rate of  not less than $500,000 per annum; and Executive’s base salary from January 1, 2015 through December 31, 2015 will be at a rate of not less than $525,000 per annum, in each case, paid in accordance with the Company’s payroll practices and policies then in effect, with such increases as determined by the Board of Directors of the Company (“Board”) or the Compensation Committee of the Board from time to time (such salary, as increased from time to time, the “Base Salary”).

 

  

1

  

3.           Equity Award.

 

3.1   Existing Awards.  All restricted stock units provided for in the Original Agreement (“Existing RSU’s”) shall continue to vest in accordance with the terms and conditions of the Original Agreement, including, without limitation, Exhibit A to the Original Agreement.

 

3.2   RSU’s.  In addition to the Existing RSU’s , on the Effective Date (the “New Award Determination Date”), 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 in this subsection) of One Million, Two Hundred Thousand Dollars ($1,200,000).  For purposes of this Section and Section 3.3, “Fair Market Value” means the average of the last sale price reported for a share of Common Stock for each of the five (5) trading days preceding the date this Agreement is signed by the parties, as reported on the NASDAQ Stock Market.  The RSU’s shall be subject to the terms and conditions of the Company’s 2009 Equity Incentive Plan (the “2009 Equity Plan” or “2009 Plan”) and a Restricted Stock Unit Award Agreement between the Company and the Executive in substantially the form attached to this Agreement as Exhibit A, and which Restricted Stock Unit Award Agreement shall set forth the following terms and conditions:

	
(i)  

	
Vesting. Vesting of the RSU’s shall be time based and shall vest in four (4) 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, 2012 and each subsequent installment vesting each December 31 thereafter, with the final installment vesting on December 31, 2015 (each a “Time Vesting Date”). Notwithstanding anything to the contrary contained herein, in the event of a “Change in Control” (as defined in Section 5(d)(iii) of the Original Agreement), the Executive’s Death or the Executive’s Disability (as defined in Section 5(a)(2) of the Original Agreement) the unvested RSU’s shall immediately vest on the date the Company incurs such Change in Control or upon the Date of Termination, as the case may be, and the shares covered thereby shall be distributed to the Executive, or his estate, as the case may be, within thirty (30) days of the date the Company incurs such Change in Control or Date of Termination, as the case may be.

 

	
(ii)  

	
Distribution.  Subject to Section 3.2(i) hereof, Section 5(d) of the Original Agreement 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 of the Original Agreement with regard to timing of equity distributed as a result of a Separation from Service (as defined in the Original Agreement) 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:

 

  

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(A)  

	
 The RSU’s shall be distributed to the Executive fifteen (15) days after the applicable Time Vesting Date; and

 

	
(B)  

	
 Notwithstanding anything to the contrary contained herein or in the Original Agreement, other than Sections 5(d)(iii) and 9 of the Original Agreement, all vested RSU’s (including those vested pursuant to the last sentence of clause (i) above) shall be distributed in shares of Common Stock to the Executive simultaneous with the Company’s incurring a Change in Control.

 

	
  

	
(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 (other than as set forth in the second sentence of Section (i) above), the unvested RSU’s at the time of such termination shall vest or be forfeited as set forth in Section 5(d) of the Original Agreement, as applicable.

 

3.3   PSU’s.  Subject to the last sentence of this Section 3.3, on the Effective Date, the Executive shall receive a one-time grant of performance stock units of the Company (the “PSU’s”) issued under the 2009 Equity Plan equal to a number of shares of Common Stock with a Fair Market value, as defined in Section 3.2, on the Effective Date of One Million, Two Hundred Thousand Dollars ($1,200,000).  The number of PSU’s to be issued shall be determined by dividing $1,200,000 by the Fair Market Value.  The PSU’s shall be subject to the terms and conditions of the 2009 Equity Plan and a Performance Stock Unit Award Agreement between the Company and the Executive in substantially the form attached to this Agreement as Exhibit B and which Performance Stock Unit Award Agreement shall set forth the following terms and conditions:

 

	
(i)  

	
Vesting.  Vesting of the PSU’s granted pursuant to this Amendment shall be performance-based and shall vest in four (4) equal annual installments of PSU’s with a fair market value of Three Hundred Thousand Dollars ($300,000) each, beginning on December 31, 2012 and ending December 31, 2015, subject to the achievement of annual performance goals as described on Exhibit X attached hereto upon certification of achievement by the Compensation Committee as set forth on Exhibit X attached hereto.  Notwithstanding anything to the contrary contained herein, in the event of a “Change in Control” (as defined in Section 5(d)(iii) of the Original Agreement), the Executive’s Death or the Executive’s Disability (as defined in Section 5(a)(2) of the Original Agreement) the unvested PSU’s shall immediately vest on the date the Company incurs such Change in Control or upon the Date of Termination, as the case may be, and the shares covered thereby shall be distributed to the Executive, or his estate, as the case may be, within thirty (30) days of the date the Company incurs such Change in Control or Date of Termination, as the case may be.

 

  

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(ii)  

	
Distribution.  Subject to the terms of the 2009 Plan as to conditions and timing of distribution of Common Stock with respect to PSU’s granted pursuant to this Amendment and vesting as a result of a termination of employment and Section 9 of the Original Agreement 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 granted pursuant to this Amendment 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 X) 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(d) and 9 of the Original Agreement, 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 incurring a Change in Control. Notwithstanding anything to the contrary contained herein or in the 2009 Plan, except as to Sections 5(d) and 9 of the Original Agreement, if the employment of Executive with the Company is terminated by the Executive for Good Reason then, in addition to retaining any previously earned PSU’s, the Executive  shall be entitled to receive  the pro rata portion of any PSU’s earned during the year of termination, to the extent earned based upon an adjustment of the absolute goals performance goals (as described in Exhibit X attached hereto) for the year of termination after adjustment of such performance goals to take into account the shortened performance period resulting from his termination of employment. Moreover, notwithstanding anything to the contrary contained herein or in the 2009 Plan, upon a termination of the Executive’s employment for Cause (as defined in the Original Agreement) he shall be entitled to retain any PSU’s that vested prior to the date of termination.

 

4.           Scope of Amendment.  Except as specifically amended hereby, the Original Agreement shall continue in full force and effect, unamended, from and after the date hereof.

 

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment, intending to be legally bound hereby, as of the date first above written.

 

  

-4-

  

	  	  
	  	
ICONIX BRAND GROUP, INC.

	  	  
	  	
By:

	
/s/ Neil Cole

	  	  	
Name:           Neil Cole

	  	  	
Title:Chief Executive Officer

	  	  	  
	  	  
	  	
EXECUTIVE:

	  	  
	  	
/s/ Andrew R. Tarshis

	  	
ANDREW R. TARSHIS

	  	  	  
	  	  	  
	  	  	  
	  	  
	  	  
	  	  	  
	  	  	  

  

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EXHIBIT X

 

PSU Performance Goals for PSU’s awarded pursuant to Section 3.3 of the Amendment

 

A.   PSU Allocation.

 

The PSU’s shall be allocated to each performance goal set below as follows:  (i)  33-1/3% of the PSU’s to the achievement of EBITDA Growth (as defined below) (the “EBITDA Shares”); (ii) 33-1/3% of the PSU’s to the achievement of EPS Growth (as defined below) (the “EPS Shares”); and (iii) 33-1/3% of the PSU’s to the achievement of Free Cash Flow (as defined below) (the “Free Cash Flow 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 Measure” as set forth in the 2009 Equity Plan.

 

ii.    Except as expressly provided in Section 2.4 of the Original Agreement or Section 3 of the Amendment, with regard to acceleration, the performance goals for each applicable Performance Period (as defined below) shall be based on the attainment of specified levels of the Company’s EBITDA, earnings per common share (diluted), excluding Extraordinary Items, as defined below (“EPS”), and Free Cash Flow, as defined below, over the Performance Periods.  The number of PSU’s will be vested and delivered based on the level of (x) Absolute EBITDA Growth or Relative EBITDA Growth, (y) Absolute EPS Growth or Relative EPS Growth and (z) Free Cash Flow achieved, as specified below.  The Company agrees that the Compensation Committee, upon confirmation by the Company’s independent certified public accountants, shall certify the attainment of the foregoing metrics for each Performance Period to the extent and in the manner required by Section 162(m) of the Code.

 

iii.    The four (4) year performance goals for EBITDA and EPS (“Absolute EBITDA Growth” and “Absolute EPS  Growth”) shall be based on the Company’s actual EBITDA for the year ending December 31, 2011 (calculated as set forth in the definition of EBITDA Growth below as if January 1, 2011 to December 31, 2011 were a Performance Period) and the Company’s actual EPS for the year ending December 31, 2011 as reported by the Company.

 

For the four (4) year Performance Periods, the Target levels for each of the EBITDA and EPS measures (with such levels being based on the actual 2011 results as aforesaid) shall be compounded annually at 10% over the four (4) year period and the Threshold levels shall be compounded annually at 5% over the four (4) year period.   Payouts for EBITDA Growth or EPS Growth between 5% and 10% shall equal (1) 50% plus (2) (a) 50% times (b) the ratio between (i) the actual EBITDA or EPS, as the case may be, minus the Threshold level for such category, divided by (ii) the Target level for such category minus the Threshold level for such category. The resulting payout percentage is the Absolute Payout Percentage.

 

  

-6-

  

For each of the four (4) year Performance Periods, the Target level for Free Cash Flow shall be $125 Million.

 

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 ending December 31, 2011 is $250 million, then $275 million shall be the Target EBITDA Level, as defined below, against which to judge absolute EBITDA Growth for the January 1, 2012 through December 31, 2012 Performance Period, and accordingly, the four (4) year Target absolute EBITDA Levels (that is, 10% increases in respect of the base Target level compounded annually) for each of the Performance Periods would be $275 million (2012), $302.5 million (2013), $332.75 million (2014) and $366.025 million (2015); correspondingly, the four (4) year Threshold absolute EBITDA Levels (that is, 5.0% increases compounded annually) for each of the Performance Periods would be $262.5 million (2012), $275.625 million (2013), $289.40625 million (2014) and $303.8765625 million (2015).  The same methodology shall be used based on the Company’s actual EPS for the year ended December 31, 2011.

 

iv.    The Relative EBITDA Growth and Relative EPS Growth for each applicable Performance Period shall be determined by reference to where the actual EBITDA Growth and actual EPS Growth achieved by the Company during such Performance Period places the Company in the specified percentile listed below within the group of companies to be determined by the Compensation Committee prior to the beginning of each of the 2012 to 2015 performance Periods, as the same shall be amended annually by the Compensation Committee (the “Comparative Group”).  Selection of the Comparative Group shall be based on companies with Global Industrial Classification Standard (GICS) codes 25203010 – Apparel, Accessories & Luxury Goods and 25203020 – Footwear, with comparable revenue and earnings levels, which shall be comprised of annual revenue between $100 million and $5 billion and EBITDA and diluted EPS greater than zero in the most recent fiscal year. The Comparative Group must include at least 25 companies.  If there are fewer than 25 companies within the revenue range with positive EBITDA and positive diluted EPS, then the Compensation Committee shall use its discretion to expand the qualifying revenue range within the foregoing GICS codes.  If two or more of the listed companies merge during the applicable Performance Period, or if any listed company goes out of business or otherwise ceases to exist as an independent entity during the applicable Performance Period, reasonable adjustment shall be made.  Annex A is a sample Comparative Group based on 29 companies meeting the foregoing specifications.  Calculations shall be made in accordance with Exhibit Y.

 

Payouts for the Relative EBITDA Growth and Relative EPS Growth that is at the 50th percentile or higher shall equal (1) 50% plus (2) (a) the difference between (x) the actual percentile performance of the Company, minus (y) 50th percentile, where each percentile is converted to a percent (for example, the 60th percentile is equivalent to 60%), times (b) 1.25.  The maximum payout for relative performance is 100%.  The resulting percentage is the Relative Payout Percentage.

 

A sample pay for relative performance chart is provided below for illustrative purposes only.

 

  

-7-

  

 

	
Relative Payout Percentage

	
Percentile of EBITDA/EPS 

Growth

 

	
Percentage of Annual Shares 

Vested

 

	
90%

	
100%

	
85%

	
93.75%

	
80%

	
87.50%

	
75%

	
81.25%

	
70%

	
75.00%

	
65%

	
68.75%

	
60%

	
62.50%

	
55%

	
56.25%

	
50%

	
50%

	
Under 50%

	
0%

 

v. The final payout percentage of each target that is based on growth will be the greater of the Absolute Payout Percentage and the Relative Payout Percentage for such target.

 

Notwithstanding anything above to the contrary, if the Company fails to achieve positive EBITDA Growth or EPS Growth during any Performance Period, no more than 50% of the Annual EBITDA Shares or Annual EPS Shares, as the case may be, shall vest as a result of the Company’s achievement of the relevant relative growth levels.

 

1.           EBITDA Growth:  For each Performance Period, the EBITDA Shares allocable to such Performance Period (the “Annual EBITDA Shares”), shall vest on the applicable Performance Vesting Date based upon the achievement of Absolute EBITDA Growth or Relative EBITDA Growth during such Performance Period as provided in Section B(iii) or B(iv) of this Exhibit (the “EBITDA Level”), using the higher percentage vesting arrived at using the formulas above.

2.           EPS Growth:  For each Performance Period, the EPS Shares allocable to such Performance Period (the “Annual EPS Shares”), shall vest on the applicable Performance Vesting Date based upon the achievement of Absolute EPS Growth or Relative EPS Growth during such Performance Period as provided in Section B(iii) or B(iv) of this Exhibit, using the higher percentage vesting arrived at using the formulas above.

  

-8-

  

3.   Free Cash Flow:  For each Performance Period, the Free Cash Flow Shares allocable to such Performance Period shall vest on the applicable Performance Vesting Date based upon the achievement of Free Cash Flow of $125 Million.

C.   Catch-Up; Forfeiture.  With respect to the EBITDA Growth and EPS Growth criteria:

 

1. If, in any year, Absolute Growth within a category does not result in vesting, because (i) the Absolute Growth required for maximum vesting was not achieved, or (ii) vesting was achieved based on Relative Growth, then, in later years, Absolute Growth shall be measured cumulatively to include the Absolute Growth that did not result in vesting, in order to allow vesting of the earlier year’s unvested PSU’s (i.e. those that did not vest based on Absolute Growth or Relative Growth) and then, if available, to those of the later year.

 

2. If, in any year, Absolute Growth within a category exceeds the percentage required for maximum vesting in such category, the excess growth shall be carried back into earlier years (to allow vesting to the extent not previously achieved by virtue of Absolute Growth or Relative Growth) or forward into later years (so that cumulative Absolute Growth in the later year is measured from the point required to achieve maximum vesting in the earlier year).

 

3. If PSU’s scheduled to vest on a Performance Vesting Date have not vested on such date, on a succeeding Performance Vesting Date or on the final Performance Vesting Date, they shall automatically be forfeited.

 

D.   Fractional Shares.  Except as set forth in Exhibit Y, 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  EBITDA, with each  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, consistent with the Company’s reporting of EBITDA. Calculations of relative performance for all companies in the Comparative Group will be based on Standard & Poor’s Research Insight database.

 

“EPS Growth” means, with respect to each Performance Period, the percentage growth in the EPS, as defined in paragraph B(ii) of this Exhibit X, of the Company during such Performance Period as provided in Section B(iii) of this Exhibit, consistent with the Company’s reporting in its 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, adjusted, if applicable, for Extraordinary Items. Calculations of relative performance for all companies in the Comparative Group will be based on Standard & Poor’s Research Insight database, as adjusted pursuant to the last sentence of the definition of “Extraordinary Items.”

 

  

-9-

  

“Extraordinary Items” means items of extraordinary income or loss, which shall be deducted (in the case of extraordinary income items) or added (in the case of extraordinary loss items), as the case may be.  In determining what constitutes extraordinary income or loss, by way of example and not by way of limitation, (a) it is recognized that the Company is engaged in the business of purchasing and selling brands, licenses and other intellectual property and, therefore, any gain or loss incurred as a result of such purchases or sales shall be considered in the Company’s ordinary course of business and therefore not be considered extraordinary, and (b) any gain or loss (other than a remeasurement gain or loss required by generally accepted accounting principles) incurred in connection with the write-off of securities (other than sales related to transactions referred to in (a) above), shall be considered extraordinary. The foregoing calculation shall be made with respect to the companies comprising the Comparative Group to the extent ascertainable from their public filings.

 

“Free Cash Flow” means, with respect to each Performance Period, the Company’s consolidated Free Cash Flow, with each component of Free Cash Flow determined in accordance with generally accepted accounting principles consistently applied, consistent with the Company’s reporting of Free Cash Flow.

 

“Performance Period” means each period from January 1 through December 31 during the Term, commencing with the period from January 1, 2012 through December 31, 2012, and ending with the period from January 1, 2015 through December 31, 2015.

 

“Performance Vesting Date” means each December 31 during the Initial Term, commencing with December 31, 2012, and ending with December 31, 2015.  Actual vesting shall occur upon certification of achievement of the performance goals by the Compensation Committee.

 

F.   Miscellaneous.

 

With respect to 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, except as otherwise set forth herein, 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, diluted EPS, or Free Cash Flow required under this Exhibit X, except as otherwise set forth herein, 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, diluted EPS, or Free Cash Flow based on and/or 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, whose good faith certification shall determine whether such achievement occurred.  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 any 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.

 

  

-10-

  

Notwithstanding anything to the contrary contained in the Agreement or this Exhibit X, any dispute under this Exhibit X (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, if applicable, 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.

 

  

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EXHIBIT Y

Relative EBITDA Growth Performance Measure:

 

The performance measure is a comparison of the percentile ranking of the Company’s EBITDA Growth to the EBITDA Growth performance of selected peer group of companies selected as set forth in Exhibit X.  The formula for calculating percent rank will be based on use of the Microsoft Excel “Percentrank” formula.

 

The percent of the target grant awarded for achieved EBITDA Growth percentiles between  levels shall be determined by interpolation. The exact number of Annual EBITDA Shares vested after multiplication by the appropriate factor (or determined by interpolation) shall be rounded to the nearest whole number of shares.

 

Relative EPS Growth Performance Measure:

 

The performance measure is a comparison of the percentile ranking of the Company’s EPS Growth to the EPS Growth performance of selected peer group of companies selected as set forth in Exhibit X.  The formula for calculating percent rank will be based on use of the Microsoft Excel “Percentrank” formula.

 

The percent of the target grant awarded for achieved EPS Growth percentiles between  levels shall be determined by interpolation. The exact number of Annual EPS Shares vested after multiplication by the appropriate factor (or determined by interpolation) shall be rounded to the nearest whole number of shares.

 

  

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ANNEX A

Preliminary Comparative Group

	
Company Name

	
Ticker Symbol

	
GICS Sub-

Industry

	
GICS Sub-industry (Descr)

	
Sales-2009

	
EBITDA

-2009

	  
	
POLO RALPH LAUIEN CP –CLA

	
RL

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$4,979

	  	
$902 

	
HANESBRANDS INC

	
HBI

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$3,891

	  	
$429 

	
PHILLIPS-VAN HEUSEN CORP

	
PVH

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$2,399

	  	
$314 

	
FOSSIL INC

	
FOSL

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$1,549

	  	
$253 

	
WARNACO GROUP INC

	
WRC

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$2,020

	  	
$253 

	
JONES GROUP INC

	
JNY

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$3,327

	  	
$247 

	
CARTER'S INC

	
CRI

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$1,626

	  	
$245

	
DECKERS OUTDOOR CORP

	
DECK

	
25203020

	
Footwear

	  	
$813

	  	
$192 

	
GILDAN ACTIVEWEAR INC

	
GIL

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$1,038

	  	
$165 

	
QUIKSILVER INC

	
ZQK

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$1,978

	  	
$152 

	
WOLVERINE WOR LD WIDE

	
WWW

	
25203020

	
Footwear

	  	
$1,101

	  	
$137 

	
COLUMBIA SPORTSWEAR CO

	
COLM

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$1,252

	  	
$124 

	
UNDER ARMOUR INC

	
UA

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$856

	  	
$112 

	
LULULEMON ATHLETICA INC

	
LULU

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$454

	  	
$109 

	
TIMBERLAND CO  –CL A

	
TBL

	
25203020

	
Footwear

	  	
$1,286

	  	
$109 

	
SKECHERS USA

	
SKX

	
25203020

	
Footwear

	  	
$1,436

	  	
$92 

	
TRUE RELIGION APPAREL INC

	
TRLB

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$311

	  	
$84 

	
OXFORD INDUSTRIES INC

	
OXM

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$814

	  	
$67 

	
G-III APPAREL GROUP LTD

	
GIII

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$801

	  	
$62 

	
MAIDENFORM BR ANDS INC

	
MFB

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$466

	  	
$58 

	
AMERICAN APPAREL INC

	
APP

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$559

	  	
$51 

	
ELLIS PERRY INTL INC

	
PERY

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$754

	  	
$49 

	
VERA BRADLEY INC

	
VRA

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$289

	  	
$47 

	
EXCEED CO LTD

	
EDS

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$304

	  	
$43 

	
VOLCOM INC

	
VLCM

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$281

	  	
$36 

	
CROCS INC

	
CROX

	
25203020

	
Footwear

	  	
$646

	  	
$30 

	
CHEROKEE INC/DE

	
CHKE

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$33

	  	
$22 

	
DELTA APPAREL INC

	
DLA

	
25203010

	
Apparel, Accessories & Luxury Goods

	  	
$355

	  	
$19 

	
ROCKY BRANDS INC

	
RCKY

	  	
Footwear

	  	
$229

	  	
$16 

	  	  	  	  	  	  	  	  
	  	  	  	
Minimum

	  	
$33

	  	
$16 

	  	  	  	
25th Percentile

	  	
$405

	  	
$50 

	  	  	  	
Median

	  	
$813

	  	
$109 

	  	  	  	
75th Percentile

	  	
$1,493

	  	
$179 

	
[

	  	  	
Maximum

	  	
$4,979

	  	
$902]

  

-13-EXCHANGE AGREEMENT

 

This Exchange Agreement (this “Agreement”) is entered into and effective as of September 29th, 2011 (the “Effective Date”) by and between Global Investor Services, Inc., a Nevada corporation (the “Company”), and Allied Global Ventures, LLC (“Allied”).

 

WHEREAS, Allied and the Company have entered into two Marketing Fund Agreements in April 2010 and September 2010 pursuant to which Allied provided the Company with $900,000 in funding of which $34,300 has been repaid by the Company leaving a balance of $865,700 (“Amount Due”) ; and

 

WHEREAS, the Company and Allied have agreed to  convert the Amount Due into 43,285,000 shares of common stock of the Company, $0.001 par value per share (the “Shares”); and

 

WHEREAS, pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the “Act”), the Company desires to exchange with Allied, and Allied desires to exchange with the Company, the Amount Due for the Shares on the terms and conditions of and as more fully described in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and Allied agree as follows:

 

1.           Exchange of Amount Due for the Shares. On the Effective Date, the Company will issue to Holder the Shares in exchange for the release of the Amount Due plus any and all claims arising out of or relating to the Amount Due, including without limitation any accrued but unpaid interest thereon that may have accrued.  The Amount Due shall be cancelled for all purposes as of the Effective Date.

 

2.           Delivery of Shares.  The Shares shall be duly authorized, validly issued, fully paid, non-assessable and free of any pre-emptive rights.

 

3.           Representations and Warranties of Company.  The Company hereby makes the following representations and warranties to Allied, with the understanding and acknowledgment that Allied will rely on such representations and warranties in effecting transactions in securities of the Company:

 

(a)           Power and Authority.  The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada.  The Company has the corporate power and authority to execute, deliver and perform all of its obligations under the Agreement, and to issue, sell and deliver the Shares.  The execution, delivery and performance of the Agreement have been duly authorized by all necessary corporate action on the part of the Company and the Agreement has been duly executed and delivered by the Company.

 

(b)           The Shares.  The Shares are duly authorized, validly issued, fully paid and non-assessable.  The issuance of the Shares is not be subject to any statutory or contractual preemptive rights of any stockholder of the Company.  The Shares are being issued to Allied by the Company in compliance with all applicable federal and state securities laws and regulations.

 

(c)           No Liens.  The Shares are free and clear of all pledges, security interests, liens, charges, encumbrances, agreements, claims, rights of first refusal, preemptive rights, or other restrictions and options of whatever nature (collectively, “Liens”).  Upon consummation of the transaction contemplated hereby, Allied will acquire good and valid title to the Shares free and clear of all Liens.

 

  

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(d)           No Conflicts.  The execution and delivery of the Agreement by the Company does not, and the Company’s performance of its obligations hereunder will not (i) violate the certificate of incorporation, bylaws, or other organizational or governing documents of Company, as in effect on the date hereof, (ii) violate in any material respect any federal or state law, rule or regulation, or judgment, order or decree of any state or federal court or governmental or administrative authority, in each case that is applicable to the Company or its properties or assets and which could have a material adverse effect on the Company’s business, properties, assets, financial condition or results of operations or prevent the performance by the Company of the Agreement, or (iii) require the authorization, consent, approval of or other action of, notice to or filing or qualification with, any state or federal governmental authority.

 

(e)           No Registration.  The exchange of the Amount Die for the Shares is being consummated without registration under the Act pursuant to the exemption from registration contained in Section 3(a)(9) of the Act.  The Company has not engaged in any general solicitation or engaged or agreed to compensate any broker or agent in connection with the transactions contemplated by this Agreement.   None of the Company, its subsidiaries, any of their affiliates, and any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Shares under the Securities Act of 1933, as amended (the “Act”).

 

(f)           No Integration.  None of the Company, its subsidiaries, any of their affiliates, and any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the exchange transaction contemplated by this Agreement to be integrated with any prior or contemporaneous offerings by the Company for purposes of Act.  None of the Company, its subsidiaries, their affiliates, and any person acting on their behalf will take any action referred to in the preceding sentence that would require registration of any of the Shares under the Act or cause the exchange transaction contemplated by this Agreement to be integrated with any prior or contemporaneous offerings of the Company.

 

(g)           No Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, its affiliates, or any of their respective properties, or the Shares, before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”), which adversely affects or challenges, or could adversely affect or challenge, the legality, validity or enforceability of this Agreement or the Shares.  The Company has not been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company there is not pending or contemplated, any investigation by the Securities and Exchange Commission (“SEC”) involving the Company or any of its officers or directors.

 

(h)           SEC Filings.  The Company is current in its filings of all reports, schedules, forms, statements, and other documents required to be filed by it with the SEC, and all such reports were true, complete and accurate in all material respects on the date of filing thereof, and none contained a false statement of material fact, or failed to state a material fact necessary to make any of the statements therein not misleading.

 

4.           Representations and Warranties of Holder.  Allied hereby makes the following representations and warranties to the Company:

 

(a)           Allied is the sole legal and beneficial owner of the Amount Due and clear of any Liens or any claims of third parties.

 

(b)           Allied is an “accredited investor” as defined in Regulation D under the Act.

 

(c)           Allied has made all investigations that Allied deems necessary or desirable in connection with the transactions contemplated by this Agreement and has had an opportunity to ask questions of and receive answers from the Company and, alone or together with Allied’s advisors, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of Allied’s investment in the Shares.

 

5.           Miscellaneous.

 

(a)           Further Assurances. Each party hereto shall promptly execute and deliver such further agreements and instruments, and take such further actions, as the other party may reasonably request in order to carry out the purpose and intent of this Agreement.

 

  

2

  

 

(b)           Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by facsimile transmission (with subsequent letter confirmation by mail) or two days after being mailed by certified or registered mail, postage prepaid, return receipt requested, to the parties, their successors in interest or their assignees at the addresses that each party has on record.

 

(c)           Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that such party is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

 

(d)           Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement.  In the event that any signature is delivered by facsimile or other electronic transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or other electronic signature page were an original thereof.

 

(e)           Expenses.  Each party hereto shall bear its own costs and expenses, including, without limitation, attorneys’ fees, incurred in connection with this Agreement and the transactions contemplated hereby.

 

(f)           Complete Agreement.  This Agreement, together with the exhibits hereto, contains the entire agreement and understanding of the parties, and supersedes all prior and contemporaneous agreements, term sheets, letters, discussions, communications and understandings, both oral and written, which the parties acknowledge have been merged into this Agreement.  No party, representative, attorney or agent has relied upon any collateral contract, agreement, assurance, promise, understanding or representation not expressly set forth hereinabove.  The parties hereby expressly waive all rights and remedies, at law and in equity, directly or indirectly arising out of or relating to, or which may arise as a result of, any person or entity’s reliance on any such assurance.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

  

3

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Exchange Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Company:

 

GLOBAL INVESTOR SERVICES, INC.

	
By:

	
/s/William C. Kosoff

	  	  
	
Name:

	
William C. Kosoff

	  	  
	
Title:

	
Acting Chief Financial Officer

	  	  
	  	  	  	  
	  	  	  	  
	  	  	
Holder:

	
Allied Global Ventures, LLC

	
 

	  	  	
2945 Pine Valley Drive

	
 

	  	  	
Miramar Beach, Florida, 32550

	  	  	  	  
	  	  	  	  
	  	  	
/s/G. Bart Rice

	  	  	
G. Bart Rice,

	  	  	
Manager

 

  

4

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