Item 1.01 – Entry into a Material Definitive Agreement.
On June 8, 2019, Centric Brands Inc. through its operating subsidiary, Centric Brands Holdings LLC (collectively, the “Company”) entered into an employment offer letter with Andrew Tarshis in connection with the Company’s employment of Mr. Tarshis as its Executive Vice President, General Counsel (the “Tarshis Agreement”).
The Tarshis Agreement provides that Mr. Tarshis will be employed for a term beginning on June 24, 2019 (the “Effective Date”) and ending June 24, 2022, subject to earlier termination as specified in the Tarshis Agreement (such term of employment, the “Term”). If Mr. Tarshis remains an employee of the Company following expiration of the Term and the Tarshis Agreement is not extended, Mr. Tarshis will be an employee “at will.” The Tarshis Agreement provides for Mr. Tarshis to receive an annual base salary of $600,000 per year and for certain other benefits consistent with those provided to other employees of the Company. Also, the Company will reimburse Mr. Tarshis for the cost of obtaining COBRA coverage during the period prior to his eligibility for the Company’s health plan. The Tarshis Agreement provides for a travel allowance of $1,500 per month during the Term. In addition, Mr. Tarshis is eligible to receive an annual cash bonus with a target of 60% of his annual base salary, subject to the achievement of the applicable performance goals (the “Bonus”); provided that for calendar year 2019, the Bonus will be prorated.
The Tarshis Agreement provides for a grant of 250,000 restricted stock units (the “RSUs”) with respect to the Company’s common stock, $0.10 par value (“Common Stock”) under the Company’s 2016 Stock Incentive Compensation Plan (the “2016 Plan”), and subject to the terms and conditions as provided in the 2016 Plan and an RSU award agreement to be entered into between Centric Brands Inc. and Mr. Tarshis.
The RSUs will vest in one-third increments on each of the first three anniversaries of the Effective Date; subject to Mr. Tarshis’s continued employment through the applicable vesting date; provided, if Mr. Tarshis’s employment is terminated by the Company without “cause” or due to death or “permanent disability” or by Mr. Tarshis for “good reason” (each such term as defined in the Tarshis Agreement), then any unvested portion of the RSUs will accelerate and become fully vested on the date of termination. Any vested RSUs will be settled through the issuance of Common Stock.
Upon a termination of Mr. Tarshis’s employment without cause or a resignation by Mr. Tarshis for good reason (as such terms are defined in the Tarshis Agreement), in addition to acceleration of the RSUs as described above, subject to the execution and non-revocation of a general release, the Company will provide Mr. Tarshis with (i) an amount equal to twelve months of Mr. Tarshis’ base salary; (ii) an annual bonus for the calendar year in which the termination occurs; and (iii) the full cost of COBRA continuation coverage for Mr. Tarshis for twelve (12) months following the date of termination of Mr. Tarshis’s employment.
The Tarshis Agreement provides for a perpetual non-solicitation provision, pursuant to which Mr. Tarshis agrees, among other things, not to hire or solicit employees, customers, suppliers and potential customers of the Company.
This brief description of the material terms of the Tarshis Agreement is qualified in its entirety by reference to the provisions of the agreement attached to this report as Exhibit 10.1, which is incorporated by reference herein.