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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 18, 1996
DONNKENNY, INC.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
0-21940 51-0228891
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(Commission File Number) (I.R.S. Employer Identification No.)
1411 BROADWAY, NEW YORK, NEW YORK 10018
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(Address of Principal Executive Offices) (Zip Code)
(212) 730-7770
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
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The Registrant has been informed by the United States
Securities and Exchange Commission (the "Commission") that the Commission is
conducting a formal investigation of various matters related to the
Registrant's financial statements and trading in the Registrant's securities.
On December 18, 1996, Donnkenny, Inc. (the "Registrant")
issued a press release, a copy of which is attached hereto as Exhibit 99.1,
relating to the resignation of Richard Rubin as the Company's President and
Chief Executive Officer and the appointment of Harvey Appelle as Chairman of
the Registrant's Board of Directors. On that same date, the Registrant entered
into a Settlement Agreement with Richard Rubin, a copy of which is attached
hereto as Exhibit 99.2.
Item 6. Resignations of Registrant's Directors
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On November 19, 1996, Thomas E. Constance resigned his
position as a member of the Board of Directors of the Registrant.
On December 18, 1996, Richard Rubin resigned his position as
a member of the Board of Directors of the Registrant.
Item 7. Financial Statements and Exhibits
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(c) Exhibits.
99.1 Press Release, dated December 18, 1996, issued by the
Registrant.
99.2 Settlement Agreement by and between the Registrant and
Richard Rubin, dated December 18, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DONNKENNY, INC.
(Registrant)
DATE: December 19, 1996 By: /s/ Harvey Horowitz
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Name: Harvey Horowitz
Title: Vice President
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EXHIBIT INDEX
Exhibit No. Description Page No.
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[S] [C] [C]
99.1 Press Release, dated December 18, 1996,
issued by Donnkenny, Inc.
99.2 Settlement Agreement by and between the Registrant
and Richard Rubin, dated December 18, 1996.
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Exhibit 99.1
DONNKENNY, INC.
Harvey Horowitz
Vice President
(212) 730-7770
Investor Relations:
David Walke/Howard Zar
Press: Stacy Berns/Michael McMullan
Morgen-Walke Associates, Inc.
212-850-5600
HARVEY APPELLE NAMED CHAIRMAN OF DONNKENNY, INC.
-BOARD APPOINTS EXECUTIVE OPERATING COMMITTEE-
New York, N.Y., December 18, 1996--Donnkenny, Inc. (Nasdaq: DNKY) today
announced that Richard Rubin has resigned as the Company's President and Chief
Executive Officer. Mr. Rubin also resigned from the Company's Board of
Directors. Mr. Rubin agreed to serve as a consultant to the Company for a
period of one year while pursuing other business opportunities. At a special
meeting of the Company's Board of Directors held today, Harvey Appelle was
appointed Chairman of the Board. The Company also stated that the Board
created an Executive Operating Committee which will consist of Mr. Appelle,
Harvey Horowitz, Vice President and General Counsel of the Company, Stuart S.
Levy, Vice President and Chief Financial Officer of the Company, Michael
O'Malley and Herbert Kaufman.
Harvey Appelle has been a member of the Donnkenny, Inc. Board of
Directors since 1989. Mr. Appelle was formerly a Managing Director of Merrill
Lynch's Investment Banking Group, which was the major equity owner of
Donnkenny from 1989 until 1993. In that capacity, Mr. Appelle was responsible
for management of Merrill Lynch's investment in Donnkenny. Mr. Horowitz, who
has been a member of the Company's Board since 1994, assumed his management
positions as of October 1, 1996. Mr. Levy joined the Company on November 4,
1996. Mr. O'Malley has been with the Company since 1991 and Mr. Kaufman since
1990.
The Company previously announced that it would be restating its financial
reports for the 1994 and 1995 fiscal years. The Company expects that an audit
of the restated 1994 and 1995 fiscal years will be conducted concurrent with
the audit of the Company's current fiscal year which will end on December 31,
1996.
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Stuart S. Levy, the Company's Chief Financial Officer stated, "Shipments
for the fourth quarter are strong and revenues for fiscal 1996 are
significantly ahead of fiscal 1995."
Donnkenny designs, manufactures, imports and markets women's sportswear
and markets women's, men's and children's sportswear and intimate apparel
featuring various licensed cartoon characters.
# # #
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SETTLEMENT AGREEMENT
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THIS SETTLEMENT AGREEMENT is made this 18th day of December,
1996, by and between Donnkenny Apparel, Inc., a Delaware corporation (the
"Company"), and Richard Rubin (the "Employee").
W I T N E S S E T H:
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WHEREAS, on December 18, 1996 and effective on said date (the
"Termination Date"), the Employee voluntarily resigned from his employment with
the Company as its President and Chief Executive Officer and also voluntarily
resigned from the Board of Directors of Donnkenny, Inc. ("Donnkenny"), a
Delaware corporation, and parent company of the Company.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements hereinafter set forth, the parties, intending to be legally
bound hereby, hereby agree as follows:
1. Payments and Benefits. In connection with the
termination of the Employee's employment as the President and Chief
Executive Officer of the Company, the Company hereby agrees to pay and make
available to the Employee the amounts and benefits set forth in this Section
1.
(a) For the period of time from January 1, 1997
through December 31, 1997, the Company shall make payments to the
Employee amounting to $660,000 at an address or to an account designated by
the Employee, plus a $15,000 non-accountable expense allowance. The payments
provided for in this Section 1(a) shall be made in equal installments on a
periodic basis in accordance with the Company's customary payroll practices
applicable to its executive officers. In consideration for such payments, the
Employee shall provide consulting services to Donnkenny and/or the Company
upon reasonable advance notice and subject to his availability and for up to
10 hours per week during such period. Under no circumstances will the Employee
be entitled to receive bonus payments for 1996 or for any subsequent year.
Employee acknowledges that all compensation due him for the period through
December 31, 1996 has been paid.
(b) Until December 31, 1997, the Company, at
its cost, shall provide the Employee with the present leased automobile.
As promptly as practicable thereafter, the Company shall transfer to the
Employee the lease on said automobile and all costs and expenses after
December 31, 1997 shall be borne by the Employee.
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(c) The Company hereby assigns and transfers to
the Employee or his designee all of its right, title and interest in and
to the life insurance policies covering the life of the Employee that were
held by the Company on the Termination Date. The Employee shall, at his
election, assume and pay any and all premiums and other costs associated with
the continuation of such policies as they become due after the Termination
Date, and after such date the Company shall have no continuing payment
obligations with respect to such policies. The Company shall execute and
deliver any and all appropriate instruments necessary to evidence the
foregoing assignment and transfer as promptly as practicable after the date
hereof.
(d) For the period of time from the Termination
Date through the earlier of December 31, 2000 or the date on which the
Employee and his eligible dependents become eligible for substantially
equivalent coverage provided by a subsequent employer, the Company shall
provide the Employee and his eligible dependents with continued coverage under
all health, dental, medical and hospitalization plans maintained by the
Company or substantially equivalent coverage in the event that the Employee
and his eligible dependents are not eligible to be covered under the Company's
existing health, dental, medical and hospitalization plans, during such time
period on the terms and conditions applicable to other executive officers of
the Company, with the entire cost of such coverage to be paid by the Company.
(e) For the period of time from the Termination
Date through December 31, 1997, the Company shall provide the Employee
with continued coverage under any disability insurance policies applicable to
executive officers of the Company, the entire cost of such coverage to be paid
by the Company.
2. Resignation as a Director and Officer. The Employee hereby
voluntarily resigns as a member of the Board of Directors of Donnkenny and as a
member of the Board of Directors of any subsidiary or affiliate of Donnkenny
(including the Company) on which he serves as of the date hereof, and as an
officer of all such subsidiaries and affiliates effective with the execution of
this Agreement.
3. Non-Solicitation. The Employee agrees and covenants that
for the period of time commencing on the Termination Date and continuing until
December 31, 1997, he will continue to be bound by the non-solicitation
provisions set forth in Sections 9(b) and 9(c) of that certain Employment
Agreement dated as of November 30, 1995 (the "1995 Employment Agreement"), by
and between the Company and the Employee; provided, however, he may employ his
current secretary.
4. Confidentiality; Non-Disclosure. The Employee
agrees and covenants that for the period of time commencing on the
Termination Date and continuing until December 31, 1997 he will continue to be
bound by the confidentiality and non-disclosure provisions set forth in
Section 7 of the 1995 Employment Agreement.
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5. Access to Former Office. Except as set forth in the
following sentence, and effective immediately upon the execution of this
Agreement, the Employee shall have no access to the offices of Donnkenny, the
Company or any of their subsidiaries or affiliates. The Company shall within
seven (7) days after the date hereof allow the Employee to have access to his
former office for the purpose of retrieving his personal property and
documents, furniture and furnishings. The Employee shall have such access after
business hours and with the accompaniment of a representative of the Company.
6. Claims. In the event (i) of a breach by the Company of its
obligations hereunder, or (ii) that the Company or any of its affiliates should
make any claim (a "Claim") against the Employee in any action, suit or
proceeding, the Employee may, without limitation, counterclaim or institute a
separate action, suit or proceeding against the Company for all the benefits to
which the Executive would have been entitled under the 1995 Employment
Agreement, without regard to the last two sentences of Section 1(a), it being
understood that the Company may assert all of its legal or equitable defenses
which it may have against such Claim including that it had the right to
terminate the Employee's employment for "Due Cause" (as defined in such
agreement). Except as set forth above, Employee shall not assert any claim
against the Company for any alleged breach of the 1995 Employment Agreement.
7. Indemnification; Advancement of Expenses.
(a) The Company shall indemnify and hold the
Employee harmless in accordance with Section 10 of the Company's By-Laws.
(b) Expenses (including attorneys' fees)
incurred by the Employee in connection with any matter with respect to
which he is entitled to an advancement of expenses under the Company's By-Laws
(in view of the Employee's undertaking in the next sentence) will be paid by
the Company on a current basis as provided in the Company's ByLaws and
pursuant to Delaware law, it being agreed that the Employee may retain
separate counsel of his choosing. The Employee hereby undertakes to repay all
amounts so advanced if it shall ultimately be determined by a final judgment
of a court of competent jurisdiction that he is not entitled to be indemnified
by the Company.
8. Equitable Relief. The Employee, on the one hand, and the
Company, on the other hand, hereby expressly covenant and agree that the other
party will suffer irreparable damage in the event any of the provisions of
Sections 3, 4 and 9 hereof are not performed or are otherwise breached and that
the other party shall be entitled as a matter of right (without the need to
prove actual damages) to an injunction or injunctions and other relief to
prevent a breach or violation by the other party and to secure its enforcement
of such provisions. Resort to such equitable relief, however, shall not
constitute a waiver of any other rights or remedies which the party seeking
such relief may have.
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9. No Disparagement.
(a) Other than as required by law or in the prosecution or
defense of actions brought by or against the Company, the Company agrees that
neither it nor any of its directors or officers shall make any statement to any
person that disparages, ridicules or criticizes the Employee.
(b) Other than as required by law or in the prosecution of
defense or actions brought by or against the Employee, the Employee agrees to
make no statement to any person that disparages, ridicules or criticizes
Donnkenny, the Company, their subsidiaries, officers or directors.
10. Notice. All notices, requests and other
communications to any party hereunder shall be given or made in writing
and mailed (by registered or certified mail or by overnight courier) or
delivered by hand as follows:
(a) if to the Company, to it at:
1411 Broadway
New York, NY 10018
Attention: General Counsel
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Dennis J. Block, Esq.
(b) if to the Employee, to him at:
920 Park Avenue
New York, New York 10028
with a copy to:
Slotnick & Shapiro, LLP
100 Park Avenue
35th Floor
New York, New York 10017
Attention: Barry I. Slotnick, Esq.
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or such address as such party may hereafter specify for the purpose of notice
to the other party hereto. Each such notice, request or other communication
shall be effective when, if delivered by hand, received by the party to which
it is addressed or, if mailed in the manner described above, on the third
business day after the date of mailing.
11. Successors and Assigns. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and be binding upon
its successors and assigns and any entity to which its assets and business may
be transferred by operation of law or otherwise. This Agreement is personal to
the Employee, and the Employee shall not, without the written consent of the
Company, assign his rights or obligations hereunder other than by will or the
laws of descent and distribution, but the provisions hereof shall inure to the
benefit of and be enforceable by the Employee's heirs and legal
representatives. The parties agree that the Company's obligations pursuant to
Sections 1(a) and 1(d) hereof shall survive the Employee's death and shall be
performed in accordance with the terms thereof (with payments to be made at the
direction of the executor or executrix of the Employee's estate or other
appropriate representative).
12. Governing Law. This Agreement shall be deemed a
contract made under, and for all purposed shall be construed in
accordance with, the laws of the State of New York applicable to contracts to
be performed entirely within such State.
13. Complete Understanding. With the exception of Sections 3,
4 and 6 hereof, this Agreement supersedes any prior contracts, understandings,
discussions and agreements between the Employee and the Company and constitutes
the complete understanding between the parties with respect to the subject
matter hereof. No statement, representation, warranty or covenant has been made
by either party with respect hereto except as expressly set forth therein.
14. Modification; Waiver.
(a) This Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by the Company and the Employee or in the case of a waiver,
by the party against whom the waiver is to be effective.
(b) No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and
shall not be exclusive of any rights or remedies provided by law or at equity.
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15. Headings. The section headings in this Agreement
are for convenience of reference only and shall not control or affect the
meaning or construction of this Agreement.
16. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by the other party hereto.
17. No Reductions. Except as otherwise provided for herein,
the amount of any payment or benefit provided for in this Agreement shall not
be reduced by any compensation earned by the Employee as a result of employment
by a subsequent employer or otherwise or any benefits received by him after the
date hereof from a subsequent employer or otherwise.
18. Further Assurances. At any time or from time to time
after the date hereof, either party shall, at the request of the other party,
execute and deliver any further instruments or documents and take all such
further action as such party reasonably may request in order to consummate and
make effective the foregoing provisions of this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed in its corporate name by one of its officers duly authorized
to enter into and execute this Agreement, and the Employee has manually signed
his name hereto, as of the date first written above.
/s/ Richard Rubin
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RICHARD RUBIN
DONNKENNY APPAREL, INC.
By: /s/ Harvey Horowitz
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Name: Harvey Horowitz
Title: Vice President
