Item 5.02. Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Appointment of Yehuda Shmidman
On November
19, 2012, the Board of Directors (the “Board”) of Sequential Brands Group, Inc. (the “Company”)
appointed Yehuda Shmidman as the Company’s new Chief Executive Officer and a member of the Board. Mr. Shmidman will
serve on the Board as a Class I director for a term expiring at the 2015 annual
meeting of stockholders, or until his successor has been elected and qualified.
Mr. Shmidman, age 31,
until his appointment as Chief Executive Officer, served as the Chief Operating Officer of Iconix Brand Group, Inc. (NASDAQ:ICON)
(“Iconix”) since 2010. Mr. Shmidman joined Iconix in 2005, and held multiple positions of increasing responsibility
during his seven year tenure with Iconix, ranging from head of global business development to direct involvement with corporate
initiatives related to mergers and acquisitions, global joint ventures, corporate finance and investor relations. Prior to joining
Iconix, Mr. Shmidman worked at a start-up licensing agency in New York that launched several direct to retail brands. Mr. Shmidman
earned a bachelor’s degree in political science from Yeshiva University in 2004.
In connection with
his appointment as the Company’s Chief Executive Officer, the Company entered into an employment agreement with Mr. Shmidman.
Pursuant to the agreement, Mr. Shmidman will serve as the Company’s Chief Executive Officer for a term of three years. During
the term of the agreement, Mr. Shmidman will receive a base salary of $600,000 per annum, which is subject to increase, and he
will be eligible to receive an annual cash performance bonus of up to 100% of his base salary based on the attainment of certain
EBITDA targets to be agreed upon by the Company and Mr. Shmidman. Mr. Shmidman will also receive 396,196 shares of restricted stock,
25% of which will be fully vested on their date of grant, with the remaining shares vesting in equal installments on each of the
first, second and third anniversaries of the grant date. In the event of a change of control of the Company, all unvested shares
of restricted stock will immediately vest.
In the event Mr. Shmidman’s
employment is terminated by the Company without cause or by Mr. Shmidman for good reason, Mr. Shmidman will receive all earned
but unpaid base salary and payment for all accrued but unused vacation time through the date of termination, as well as any benefits
to which Mr. Shmidman may be entitled under employee benefit plans (collectively, the “accrued obligations”). Mr. Shmidman
will also receive a severance amount equal to the greater of (i) 1.5 times his base salary then in effect and (ii) an amount equal
to the base salary that Mr. Shmidman would have received for the remainder of the term of the agreement had Mr. Shmidman’s
employment continued until the end of the employment period. In addition, Mr. Shmidman will receive earned bonuses that have not
been paid for prior fiscal years and, in the event such resignation or termination occurs following the Company’s first fiscal
quarter of any year, a pro-rated annual bonus for the year in which his employment was terminated (the “pro-rated bonus”).
In the event Mr. Shmidman’s employment is terminated by the Company without cause or by Mr. Shmidman for good reason, all
unvested restricted stock will accelerate and become fully vested on the date of his termination.
If Mr. Shmidman’s
employment is terminated as a result of his death or disability, the Company will pay to Mr. Shmidman or his estate all accrued
obligations, any earned bonuses that have not been paid for prior fiscal years and the pro-rated bonus. In addition, the restricted
stock award will vest with respect to the portion of such award that was scheduled to vest in the year in which Mr. Shmidman’s
death or disability occurs. In the event of Mr. Shmidman’s death, the Company will also continue to pay Mr. Shmidman’s
base salary to his estate for the remainder of the year in which his death occurs. In the event Mr. Shmidman is terminated for
cause by the Company or Mr. Shmidman terminates his employment without good reason, the Company will have no further obligations
to Mr. Shmidman except to pay Mr. Shmidman all accrued obligations. Mr. Shmidman is also prohibited from competing with the Company
for a period of six months upon the termination of his employment by the Company without cause or a resignation by Mr. Shmidman
for good reason and for a period of twelve months upon the termination of his employment by the Company for cause or a resignation
by Mr. Shmidman without good reason.
Resignation of Colin Dyne
On November
15, 2012, Colin Dyne resigned as Chief Executive Officer, Chief Financial Officer and as a member of the Board of the
Company, effective immediately.
In connection with
Mr. Dyne’s resignation, the Company and Mr. Dyne entered into a separation and release agreement which provides for an aggregate
payment to Mr. Dyne of $2,350,000. The agreement also provides that, subject to certain exceptions, other than the payment of accrued
wages and unpaid vacation time, Mr. Dyne will not be entitled to any other payments or benefits in connection with the termination
of his employment, including those provided for in Mr. Dyne’s employment agreement with the Company dated December 14, 2011.
Subject to certain exceptions, the agreement also provides a release of all claims that each party may have against the other.