SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1997 Commission File No 1-4506
GARAN, INCORPORATED
(Exact name of registrant as specified in its charter)
VIRGINIA 13-5665557
(State of Incorporation) (I.R.S. Employer Identification No.)
350 Fifth Avenue, New York, NY 10118
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 563-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period than the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this
report.
Class Outstanding March 31, 1997
Common Stock (no par value) 5,069,892 shares
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
03/31/97 03/31/96
____________ _____________
<S> <C> <C>
Net sales $ 37,611,000 $ 26,882,000
Cost of sales 28,458,000 20,907,000
____________ ____________
Gross margin on sales 9,153,000 5,975,000
Selling and administrative expenses 5,597,000 4,951,000
Interest on capitalized leases 27,000 29,000
Interest income (689,000) (658,000)
___________ ___________
Earnings before provision
for income taxes 4,218,000 1,653,000
Provision for income taxes 1,677,000 651,000
___________ ___________
Net earnings $ 2,541,000 $ 1,002,000
=========== ===========
Earnings per share data:
Earnings per share $ 0.50 $ 0.20
Average common shares outstanding 5,070,000 5,070,000
Dividends paid per share $ 0.20 $ 0.20
</TABLE>
<PAGE>
<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<CAPTION>
SIX MONTHS ENDED
03/31/97 03/31/96
____________ _____________
<S> <C> <C>
Net sales $ 68,604,000 $ 59,906,000
Cost of sales 52,369,000 47,457,000
____________ ____________
Gross margin on sales 16,235,000 12,449,000
Selling and administrative expenses 10,973,000 9,834,000
Interest on capitalized leases 52,000 59,000
Interest income (1,384,000) (1,316,000)
___________ ___________
Earnings before provision
for income taxes 6,594,000 3,872,000
Provision for income taxes 2,616,000 1,529,000
___________ ___________
Net earnings $ 3,978,000 $ 2,343,000
=========== ===========
Earnings per share data:
Earnings per share $ 0.78 $ 0.46
Average common shares outstanding 5,070,000 5,070,000
Dividends paid per share $ 0.60 $ 0.60
</TABLE>
<PAGE>
<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
03/31/97 9/30/96
____________ _____________
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 10,577,000 $ 20,587,000
U.S. Government securities - short-term 12,731,000 12,568,000
Accounts receivable, less estimated
uncollectibles of $508,000 at
03/31/97 and $514,000 at 9/30/96 23,405,000 26,041,000
Inventories 31,756,000 28,639,000
Other current assets 4,787,000 5,558,000
Total current assets 83,256,000 93,393,000
U.S. Government Securities - long-term 17,759,000 7,003,000
Property, plant and equipment, less
accumulated depreciation and amortization 13,930,000 14,915,000
Other assets 4,797,000 4,236,000
TOTAL $ 119,742,000 $ 119,547,000
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable $ 4,344,000 $ 4,609,000
Accrued liabilities 10,893,000 11,321,000
Federal and state income taxes payable 1,535,000 1,572,000
Current portion of capitalized leases 124,000 124,000
Total current liabilities 16,896,000 17,626,000
Capitalized lease obligations, net of
current portion 2,893,000 2,937,000
Deferred income taxes 2,876,000 2,843,000
Shareholders' Equity:
Preferred stock ($10 par value) 500,000
shares authorized; none issued
Common stock (no par value) 15,000,000
shares authorized; 5,069,892 issued at
03/31/97 and 9/30/96 2,535,000 2,535,000
Additional paid-in-capital 5,821,000 5,821,000
Retained earnings 88,721,000 87,785,000
Total shareholders' equity 97,077,000 96,141,000
TOTAL $ 119,742,000 $ 119,547,000
============ ============
</TABLE>
<PAGE>
<TABLE>
GARAN, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
SIX MONTHS ENDED
03/31/97 03/31/96
____________ _____________
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 3,978,000 $ 2,343,000
Non cash items included in earnings:
Depreciation and amortization 1,550,000 1,778,000
Provision for losses on accounts receivable 51,000 14,000
Deferred income taxes 33,000 40,000
Changes in assets and liabilities:
U.S. Government Securities - short-term (2,297,000) 1,488,000
Accounts receivable 2,585,000 11,492,000
Inventories (3,117,000) (8,737,000)
Other current assets 771,000 (2,500,000)
Accounts payable (265,000) (2,703,000)
Accrued liabilities (428,000) (930,000)
Income taxes payable (37,000) (463,000)
Other assets (561,000) (95,000)
Net Cash Flows From Operating Activities 2,263,000 1,727,000
Cash Flows From Investing Activities:
Sale of U.S. Gov't securities - long-term 6,028,000 0
Purchase of U.S. Gov't securi-
ties - long-term (14,650,000) 0
Additions to property plant and equipment (576,000) (1,349,000)
Proceeds from sales of property,
plant and equipment 11,000 0
Net Cash Flows From Investing Activities (9,187,000) (1,349,000)
Cash Flows From Financing Activities:
Payment of dividends (3,042,000) (3,042,000)
Repayment of capitalized lease obligations (44,000) (43,000)
Net Cash Flows From Financing Activities (3,086,000) (3,085,000)
Increase in Cash and Cash Equivalents (10,010,000) (2,707,000)
Cash and Cash Equivalents At Beginning
of Period 20,587,000 8,649,000
Cash and Cash Equivalents At End of Period $ 10,577,000 $ 5,942,000
============ ============
Supplemental Disclosures
Cash Paid During The Period For:
Interest $ 52,000 $ 59,000
Income taxes 2,680,000 1,494,000
============ ============
</TABLE>
<PAGE> GARAN, INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. In the opinion of management, all adjustments necessary to a fair
statement of the results of operations have been reflected.
2. Earnings per share are calculated on the basis of the weighted average
number of common shares outstanding during the period.
3. Inventories consist of the following:
<TABLE>
<CAPTION>
03/31/97 09/30/96
____________ _____________
<S> <C> <C>
Raw Materials $ 4,417,000 $ 3,115,000
Work in process 6,013,000 6,837,000
Finished Goods 21,326,000 18,687,000
___________ ____________
$ 31,756,000 $ 28,639,000
=========== ============
</TABLE>
<PAGE>
ITEM 2.
GARAN, INCORPORATED AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At March 31, 1997, working capital was $66,360,000, a decrease of
$9,407,000 from September 30, 1996, working capital of $75,767,000. The
decrease was primarily a result of the $10,756,000 increase in long-term U.S.
Government Securities, which are not included in working capital.
Shareholders' equity at March 31, 1997, was $97,077,000, or $19.14 book value
per share, as compared to $96,141,000, or $18.96 book value per share, at
September 30, 1996.
RESULTS OF OPERATIONS
Three and Six Month Periods Ended March 31, 1997, and March 31, 1996.
Net sales for the second quarter of fiscal 1997 were $37,611,000 compared to
$26,882,000, for the same period last year. Net earnings for the second
quarter were $2,541,000, equal to $0.50 per share, compared to $1,002,000, or
$0.20 per share, last year. The increase in net sales for the quarter was due
to higher unit sales, predominantly in the children's area, partially offset
by a decline in the average selling price due to product mix changes.
Net sales for the first six months of fiscal 1997 were $68,604,000 compared to
$59,906,000, for the same period last year. Net earnings for the six month
period were $3,978,000, equal to $0.78 per share, compared to $2,343,000, or
$0.46 per share, last year.
Gross margin for the three month period ended March 31, 1997, was $9,153,000,
or 24.3% of net sales, compared to $5,975,000, or 22.2% of net sales, for the
comparable period last year. Gross margin for the six months ended March 31,
1997, was $16,235,000, or 23.7% of net sales, compared to $12,449,000, or
20.8% of net sales, for the comparable period last year. The increase in
gross margin was due primarily to improvements in manufacturing efficiency and
absorption of overhead.
Selling and administrative expenses for the three months ended March 31, 1997,
were $5,597,000, or 14.9% of net sales, as compared to $4,951,000, or 18.4% of
net sales, for the comparable period last year. Selling and administrative
expenses for the six months ended March 31, 1997, were $10,973,000, or 16.0%
of net sales, as compared to $9,834,000, or 16.4% of net sales, for the
comparable period last year. The selling and administrative expenses dollar
cost increase occurred in information systems and royalty expenses.
Information systems cost increases are related to improvements to internal
operating systems and development and implementation of systems related to
customer service. Royalty expenses are variable and relate to sales volume of
sports and Disney licensed products.
<PAGE>
PART II. - OTHER INFORMATION
ITEM 4.Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of the shareholders of the registrant held on February
28, 1997, Stephen J. Donohue, Jerald Kamiel, and William J. Wilson
were reelected as directors of the registrant and the selection of Citrin
Cooperman & Company, LLP as the registrant's independent certified public
accountants for the fiscal year ending September 30, 1997, was ratified. The
tabulation of the votes is as follows:
Votes For Votes Withheld
--------- --------------
Stephen J. Donohue 4,361,647 28,246
Jerald Kamiel 4,386,107 3,786
William J. Wilson 4,386,113 3,780
Votes For Against Abstain
--------- ------- -------
Ratification of Accountants 4,381,123 922 8,048
ITEM 6. Exhibits and Reports on Form 8-K.
a. Exhibits
Exhibit 10.1 Employment and Consulting Agreement
amended and restated as of October 1,
1996, between the registrant and
Seymour Lichtenstein
Exhibit 10.2 Employment Agreement amended and restated
as of October 1, 1996, between the
registrant and Jerald Kamiel
Exhibit 10.3 Employment Agreement amended and restated
as of October 1, 1996, between the
registrant and William J. Wilson
Exhibit 10.4 Employment Agreement amended and restated
as of October 1, 1996, between the
registrant and Rodney Faver
Exhibit 27. Financial Data Schedule
b. Reports on Form 8-K
No reports have been filed on Form 8-K during the quarter
ended March 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on it's behalf by the
undersigned thereunto duly authorized.
GARAN, INCORPORATED
BY:Seymour Lichtenstein
Seymour Lichtenstein
Principal Executive Officer
BY:William J. Wilson
William J. Wilson
Principal Financial Officer
DATE: May 14, 1997
GARAN, INCORPORATED
350 Fifth Avenue
New York, New York 10118
January 15, 1997
Mr. Seymour Lichtenstein
791 Park Avenue
New York, New York 10021
Dear Seymour:
We are writing to amend and restate, effective as of October 1, 1996,
the agreement between you and Garan, Incorporated ("Garan") originally entered
into as of October l, 1986, and subsequently amended and restated (the
agreement as amended and now again restated, "Employment and Consulting
Agreement") with respect to your (i) continuing employment by Garan and (ii)
retention by Garan as a consultant. We have agreed that:
l. Position, Duties, and Period of Employment.
1.l. Position.
Garan hereby continues to employ you, and you agree to
accept continued employment, as Chairman and Chief Executive Officer.
1.2. Duties.
During the period of your employment under this Employment
and Consulting Agreement ("Employment Term"), except for vacations, holidays,
and personal days, as each is authorized by and consistent with the practices
of Garan, and absences due to psychological, emotional, or physical reasons,
you shall devote your full business time, skill, and energy to the business
and affairs of Garan, and you shall use your best efforts to promote the best
interests of Garan.
1.3. Period of Employment.
Your employment under this Employment and Consulting
Agreement shall be for a term ("Employment Term") ending September 30, 2000
("Term End").
2. Base Compensation, Annual Bonus, and Executive Employee
Benefits.
2.1. Base Compensation and Annual Bonus.
During the Employment Term, Garan shall pay to you base
compensation ("Base Compensation") in each 12 month period commencing October
1 and ending September 30 ("Fiscal Year") as determined from time to time by
the Board of Directors of Garan ("Board"), but for the Fiscal Year ending
September 30, 1997, and for each Fiscal Year thereafter, such amount shall be
not less than $530,000. [References to Base Compensation in this and
Consulting Agreement shall not give effect to any salary reduction
agreement.] In addition to payment of Base Compensation, the Board may
determine, but is not obligated to, to pay to you an annual Fiscal Year bonus
("Annual Bonus").
2.2. Executive Employee Benefits.
During the Employment Term, Garan shall provide you with
employee benefits determined from time to time by the Board, which employee
benefits shall be at least as favorable as those provided to other senior
executives of Garan, and Garan shall maintain a life insurance policy on your
life payable to your designated beneficiary or beneficiaries in the principal
amount of not less than $1,000,000.
3. Termination of Employment.
3.1. Voluntary Termination After a Change of Control Event.
If a Change of Control Event, as such term is defined in
Annex I to this Employment and Consulting Agreement, occurs at any time during
the Employment Term, within 6 months after such Change of Control Event you
may give notice to Garan terminating your employment. Such termination of
employment shall be effective on a date set by you but not later than 30 days
after you give notice of termination to Garan. In the event of such voluntary
termination, Garan will pay to you cash severance equal to 2.99 times the sum
of (a) the average of your Base Compensation determined by the Board in
accordance with the provisions of Section 2.1 for each of the 5 Fiscal Years
ending with the Fiscal Year preceding the Fiscal Year in which the Change of
Control Event occurs plus (b) the average of your last 5 Annual Bonuses
determined by the Board in accordance with Section 2.1 prior to the Change of
Control Event. Such severance shall be payable to you on the next business
day after the last day you render services under this Employment and
Consulting Agreement. It is expressly agreed that this Section 3.1 shall not
apply if the Change of Control Event is a result of a completed "management
buyout" of Garan in which you participate as an equity investor.
3.2. Termination by Garan Other Than for Cause.
If Garan for any reason other than for Cause as defined in
Annex I to this Employment and Consulting Agreement terminates your employment
prior to October 1, 2000:
3.2.a. Garan shall pay to you an amount equal to (i) the
greater of (x) two times your Base Compensation plus two times your last
Annual Bonus as each was last determined by the Board pursuant to Section 2.1
prior to the date of such termination and (y) three times your Base
Compensation as last determined by the Board pursuant to Section 2.1 prior to
the date of such termination and (ii) three times your Annual Consulting
Payment as determined pursuant to Section 4.2 (assuming the Consulting Term
commenced on the date of termination). Such amount shall be payable in cash,
one-third within five business days of such termination, one-third on the
first anniversary of such termination, and one-third on the second anniversary
of such termination, and
3.2.b. Garan shall continue to provide you with executive
employee benefits as provided in Section 2.2, or alternatively, shall provide
you with life insurance, medical reimbursement, disability, and accidental
death and dismemberment benefit coverage at levels no less favorable than
those in effect for you pursuant to Section 2.2 on the date of termination of
your employment if such executive employee benefits were being provided to you
by Garan immediately prior to the termination of your employment, for a period
equal to the lesser of (i) two years following the date of termination of your
employment or September 30, 2000, whichever comes later, or (ii) until you are
provided by another employer with benefits substantially comparable to the
benefits described in this Section 3.2.b.
3.3. Termination by Garan for Cause.
Garan shall have the right to terminate your employment
under this Employment and Consulting Agreement at any time upon a
determination by Garan to dismiss you for Cause as defined in Annex I to this
Employment and Consulting Agreement. Upon such termination for Cause, Garan's
sole obligation shall be to pay you any accrued but unpaid Base Compensation
and executive employee benefits described in Sections 2.1 and 2.2 as of the
date of the termination of your employment.
3.4. Death.
Upon your death during the
term of this Employment and Consulting Agreement prior to your becoming
Disabled (as defined in Section 3.5), this Employment and Consulting Agreement
shall terminate, and all obligations of Garan under this Employment and
Consulting Agreement shall terminate simultaneously therewith, except that
Garan shall pay to your designated beneficiaries, or if no beneficiaries are
designated, to your estate, any amounts under Sections 2 and 3 which are
unpaid and earned to the date of your death. In addition, Garan shall pay to
your designated beneficiaries, or if no beneficiaries are designated, to your
estate, an amount equal to 150% of the total of your then Base Compensation
and last Annual Bonus as each was last determined by the Board in accordance
with Section 2.1, in 12 equal monthly installments commencing with the first
day of the month following the date of your death.
3.5. Disability.
3.5.a. In the event you incur a Disability, until the
earlier of the date of your death or the date you become Disabled (as such
terms are defined in Section 3.5.e), Garan shall continue to pay to you your
Base Compensation as last determined by the Board in accordance with the
provisions of Section 2.1 and continue your executive employee benefits set
forth in Section 2.2.
3.5.b. If you become Disabled, regardless of your death
after you became Disabled, Garan (i) shall (x) continue to pay you monthly
until the later of the Term End or 18 months from the date that you became
Disabled, but for not more than 36 months, 1/12th of the total of your Base
Compensation in effect at the date you incurred the Disability plus an amount
equal to your last Annual Bonus as each was determined by the Board pursuant
to the provisions of Section 2.1 prior to the date you incurred the Disability
and (y) beginning in the month after the payments pursuant to Section
3.5.a(i)(x) end, for a period of 60 months, an amount equal to 1/12th of 50%
of your Annual Consulting Payment determined pursuant to Section 4.2 (assuming
the Consulting Period commenced on the date you incurred the Disability),
reduced in either case by the gross amount payable as a result of such
Disability under any disability or salary continuation policy or plan, the
cost of which is paid by Garan, and (ii) during the periods set forth in
Section 3.5.a(i), continue your other executive employee benefits set forth in
Section 2.2 as in effect at the first day that you were unable to carry out
your duties because of psychological, emotional, or physical reasons which
resulted in your Disability.
3.5.c. If you become Disabled, (i) Garan can remove you
from the position that you then hold and (ii) the provisions of Sections 3.2
and 3.4 shall no longer apply, provided that neither Garan nor you shall be
relieved of any other obligations under this Employment and Consulting
Agreement.
3.5.d. If you die after incurring a Disability but prior
to becoming Disabled, the provisions of Section 3.4 shall apply in lieu of the
provisions of this Section 3.5.
3.5.e. For purposes of this Section 3.5, Disability shall
mean that you are unable to substantially carry out your obligations under
this Employment and Consulting Agreement because of psychological, emotional,
or physical reasons, and Disabled shall mean that your Disability has
continued for a period of 90 consecutive days or for an aggregate of 120 days
during any period of 360 consecutive days.
3.6. Automobile.
Within 30 days following the last day that you render
services as an employee or consultant to Garan under this Employment and
Consulting Agreement, the date of your death, or the date on which you became
Disabled, you or your Estate shall have the right to elect to purchase from
Garan the automobile then owned and supplied to you by Garan, if any, at the
value thereof on Garan's books at such time. Payment shall be made in cash on
the 30th day after you make such election.
3.7. Parachute Payments.
If any amounts payable pursuant to this Employment and
Consulting Agreement which are deemed to constitute Parachute Payments, as
defined in Annex I to this Employment Agreement, when added to any other
payments which are deemed to constitute Parachute Payments, would result in
the imposition on you of an excise tax under Section 4999 of the Internal
Revenue Code of l986, as amended from time to time, the amounts payable under
this Employment and Consulting Agreement shall be reduced by the smallest
amount necessary to avoid the imposition of such excise tax.
4. Consulting Services.
4.1. Consulting Term.
Commencing with the date after (a) any voluntary
termination by you of your employment pursuant to Section 3.1 or otherwise or
(b) the Term End, and ending 5 years thereafter ("Consulting Term"), Garan
shall retain you to render to it services of an advisory or consultative
nature relating to your prior duties during your employment pursuant to this
Employment and Consulting Agreement so that Garan may have the benefit of the
experience, knowledge, and contacts gained by you as an officer and director
of Garan. You agree to render to Garan such services if and when called upon
in writing in advance by not less than 3 business days by Garan at such time
or times as may be mutually agreed by Garan and you, by telephone, letter, or
in person, provided that: (i) you are not temporarily more than 100 miles of
New York City at the date such notice is given to you at your New York City
residence, (ii) you only shall be obliged to devote an aggregate of 20 hours
in any monthly period during the period of your retention as a consultant
under this Employment and Consulting Agreement to the rendering of such
services, (iii) you are reimbursed for all reasonable expenses incurred in the
performance of such services, including but not limited to, transportation,
secretarial, and office expenses, (iv) you shall not be obliged to travel to
render such services outside of the Metropolitan New York City area, and (v)
your failure to render such services due to prior engagements, vacations,
holidays or the like, or your inability to render such services due to
psychological, emotional, or physical reasons, shall not affect your right to
receive your Annual Consulting Payment under this Employment and Consulting
Agreement.
4.2. Compensation.
During the Consulting Term, Garan shall (a) pay to you
compensation in each 12 month period ("Annual Consulting Payment") in an
amount determined by the Board but not less than 66-2/3% of the greater of (i)
the total of your Base Compensation plus your Annual Bonus as each was last
determined by the Board pursuant to Section 2.1 prior to the Consulting Term
and (ii) the total of your Base Compensation in the last fiscal year of Garan
in which you were employed under this Employment and Consulting Agreement plus
the average of your last two Annual Bonuses as each was determined by the
Board pursuant to Section 2.1, (b) continue to provide you with executive
employee benefits as provided in Section 2.2, or alternatively provide you
with life insurance, medical reimbursement, disability, and accidental death
and dismemberment benefit coverage at levels no less favorable than those in
effect for you pursuant to Section 2.2 on the date of termination of your
employment, and (c) maintain a life insurance policy on your life payable to
your designated beneficiary or beneficiaries in the principal amount of not
less than $1,000,000.
4.3. Termination by Garan Other Than for Cause.
If Garan shall terminate your retention as a consultant prior
to the expiration of the Consulting Term for any reason other than Cause as
defined in Annex I to this Employment and Consulting Agreement, Garan shall
pay you an amount equal to three times your Annual Consulting Payment as
determined pursuant to Section 4.2. Such amount shall be payable in cash
one-third within five business days of such termination, one-third on the
first anniversary of such termination, and one-third on the second anniversary
of such termination.
4.4. Termination by Garan for Cause.
Garan shall have the right to terminate your consultancy under
this Employment and Consulting Agreement at any time upon a determination by
Garan to dismiss you for Cause as defined in Annex I to this Employment and
Consulting Agreement. Upon such termination for Cause, Garan's sole
obligation shall be to pay you any accrued but unpaid compensation and
benefits described in Section 4.2, as of the date of the termination of your
consultancy.
4.5. Death.
Upon your death during the Consulting Term your retention as a
consultant under this Employment and Consulting Agreement shall terminate, and
all obligations of Garan under this Employment and Consulting Agreement shall
terminate simultaneously therewith, except that Garan shall pay to your
designated beneficiaries, or if no beneficiaries are designated, then to your
estate, any amounts under Section 4.2 which are unpaid and earned to the date
of your death. In addition, Garan shall pay to your designated beneficiaries,
or if no beneficiaries are designated, then to your estate, an amount equal to
150% of your Annual Consulting Payment at the date of your death as determined
in accordance with Section 4.2 in 12 equal monthly installments commencing
with the first day of the month following the date of your death.
4.6. Disability.
4.6.a. In the event of your "Disability" as defined in Section
3.5.e during the Consulting Term, except as otherwise provided in Section
4.6.b, Garan shall (i) continue to pay you monthly on and after the date you
incurred the Disability, until the end of the Consulting Term, an amount equal
to 1/12th of 50% of your Annual Consulting Payment determined pursuant to
Section 4.2, reduced by the gross amount payable as a result of such
Disability under any disability policy or plan, the cost of which is paid by
Garan, and (ii) during the period set forth in Section 4.6.(a)(i), continue
your other executive employee benefits set forth in Section 4.2 as in effect
at the first day that you were unable to carry out your duties because of
psychological, emotional, or physical reasons which resulted in your
Disability.
4.6.b. If you die after incurring a Disability but prior to
the end of the Consulting Term, the provisions of Section 4.5 shall apply in
lieu of the provisions of this Section 4.6.
5. Trade Secrets, Non-Competition, Non-Interference, and
Non-Disparagement.
5.1. Trade Secrets.
You acknowledge that: (a) your employment by Garan
throughout the term of this Employment and Consulting Agreement and prior
thereto will bring and has brought you into close contact with many
confidential affairs of Garan, (b) the business of Garan is conducted
throughout the United States and abroad and competes with similar businesses
of other organizations, (c) Garan carries on substantial promotional,
marketing, and/or sales activities throughout the United States and abroad,
and (d) the covenants contained in Sections 5.2 and 5.3 of this Employment and
Consulting Agreement are specific inducements by you to Garan in connection
with the execution of this Employment and Consulting Agreement.
5.2. Non-Competition.
In recognition of the provisions of Section 5.1 and as
consideration for your continued employment by Garan, the payment by Garan to
you of compensation, and Garan providing you with benefits, you agree that:
5.2.a. While you are performing services for Garan
pursuant to this Employment and Consulting Agreement, and at all times
thereafter, you shall not disclose, communicate, or divulge to any person
(other than to officers, directors, or employees of Garan and its subsidiaries
whose duties require such knowledge) or use for your personal benefit or for
the benefit of anyone other than Garan and its subsidiaries, any trade
secrets, specifications, sales or merchandising plans, programs, research, or
other confidential information employed in or proposed to be employed in the
business of Garan and its subsidiaries which comes to or came to your
knowledge in the course of or by reason of your employment by Garan, or your
performance under this Employment and Consulting Agreement.
5.2.b. In the event that (i) your employment or
consulting retention pursuant to this Employment and Consulting Agreement is
terminated by Garan pursuant to Section 3.2, 3.3, 4.3, or 4.4 or (ii) the term
of this Employment and Consulting Agreement ends, for so long as Garan
continues to pay you in accordance with its payroll practices, but for not
more than the 12 month period beginning on the last day you render services to
Garan, compensation if you were an employee at an annual rate equal to the
greater of (x) the total of your Base Compensation in effect at the last day
that you render services to Garan plus your Annual Bonus as each was last
determined by the Board pursuant to Section 2.1, or (y) the total of your
average annual Base Compensation in the 24 month period ending on the last day
that you render services to Garan plus the average of your last two Annual
Bonuses as each was determined by the Board pursuant to Section 2.1 or
compensation if you were a consultant at an annual rate equal to your Annual
Consulting Payment, you shall not directly or indirectly, enter into or in any
manner take part as an employee, agent, independent contractor, consultant,
owner, sole proprietor, partner, joint venturer, member, officer, director, or
shareholder or take part in any other capacity in, for, or with any person,
firm, corporation, association, or business enterprise, or in any manner
render any assistance to any business or endeavor, whose business activities
are the same, similar to, or competitive with any part of the business which
is conducted by Garan and its subsidiaries during the course of your
employment by Garan prior to and pursuant to this Employment and Consulting
Agreement in any state in the United States and in any territory, possession,
or foreign country, provided that the provisions of this Section 5.2.b shall
not preclude you from ownership, as an investor, of less than 5% of the stock
of a publicly owned company which engages in such business activities. The
provisions of this Section 5.2.b may not be invoked by Garan if Garan
terminates your employment upon or after a Change of Control Event unless the
Change in Control Event is a result of a completed "management buyout" of
Garan in which you participate as an equity investor. In the event Garan
determines to pay you for the 12-month period referred to above, it shall do
so for minimum periods of 3 months, and it shall give you notice that it is
invoking the provisions of this Section 5.2.b and that it will compensate you
accordingly. The initial such notice shall be given together with the notice
of termination referred to in Section 3.2 or 3.3, as applicable, or 15 days
prior to the end of the term of this Employment and Consulting Agreement, and,
thereafter, not later than 15 days prior to the beginning of each subsequent
3-month period.
5.3. Non-Interference.
Upon the termination of your services for Garan under this
Employment and Consulting Agreement, until the one year anniversary date of
the last day that you render services pursuant to this Employment and
Consulting Agreement, neither you nor any person, firm, corporation,
association, or business enterprise with which you are affiliated as an
employee, agent, independent contractor, consultant, partner, joint venturer,
member, officer, director, or shareholder shall directly or indirectly induce
or attempt to induce any employee of Garan or any of its subsidiaries to
terminate or alter his or her employment relationship with Garan or any of its
subsidiaries, or directly or indirectly hire any person who is or had been
employed by Garan or any of its subsidiaries. The provisions of this Section
5.3 may not be invoked by Garan if you terminate your employment pursuant to
Section 3.1 or Garan terminates your employment or consulting retention upon
or after a Change of Control Event.
5.4. Non-Disparagement.
During the Employment Term, Consulting Term, and
thereafter, (a) you shall not directly or indirectly, disparage the name,
reputation, or products of Garan and (b) Garan shall not, directly or
indirectly, disparage your name or reputation.
5.5. Additional Provisions.
5.5.a. In the event that the provisions of Sections 5.2,
5.3, or 5.4 should be deemed unenforceable, invalid, or overbroad in whole or
in part for any reason, any court of competent jurisdiction is, or the
Arbitrators appointed in accordance with the provisions of Section 6 are,
hereby authorized, requested, and instructed to reform such sections
consistent with the intent of Sections 5.2, 5.3, or 5.4 to provide for the
maximum restraints upon (i) your activities (including, but not limited to,
time, geographic area, employee solicitation, and disparagement), (ii) and
with respect to Section 5.4, Garan's activities, which may then be legal and
valid.
5.5.b. You and Garan agree that violation by you of the
provisions of Sections 5.1, 5.2, 5.3, or 5.4 or by Garan of the provisions of
Section 5.4 will cause irreparable injury to the other for which any remedy at
law would be inadequate, and that the injured party shall be entitled in any
court of law or equity or in any arbitration proceeding in accordance with
Section 5, whichever forum is designated by the injured party, to temporary,
preliminary, permanent, and other injunctive relief against any breach of the
provisions contained in such sections, and such punitive and compensatory
damages as shall be awarded. Further, in the event of a violation of the
provisions of Sections 5.1, 5.2, 5.3, or 5.4, (i) the period of
non-disclosure, non-competition, employee non-interference, or
non-disparagement referred to therein shall be extended for a period of time
equal to that period beginning on the date when such violation commenced and
ending when the activities constituting that violation shall be finally
terminated, and (ii) Garan shall have the right to suspend your compensation
and benefits and payments made pursuant to Section 5.2.b until the activities
constituting that violation shall be finally terminated.
6. Arbitration and Jurisdiction.
6.1. Arbitration.
Except as otherwise alternatively provided in Section 5.5
relating to the reformation of the non-competition, employee non-interference,
and non-disparagement provisions and obtaining injunctive relief, any
controversy or claim arising out of or relating to this Employment and
Consulting Agreement, or the breach thereof, shall be settled by arbitration
by one Arbitrator in New York, New York, in accordance with the Rules of the
American Arbitration Association, and judgment upon the award rendered by the
Arbitrator may be entered in any court having jurisdiction thereof.
6.2. Consent to Jurisdiction.
Each of you and Garan hereby consents to the jurisdiction
of the Supreme Court of the State of New York for the County of New York and
the United States District Court for the Southern District of New York for all
purposes in connection with (a) the arbitration referred to in Section 6.1 and
(b) this Employment and Consulting Agreement, and further consents that any
process or notice of motion in connection therewith may be served by certified
or registered mail or by personal service in accordance with the provisions of
Section 7, within or without the State of New York, provided a reasonable time
for appearance is allowed.
7. Notice.
All notices provided for in this Employment and Consulting
Agreement shall be in writing and shall be given by registered or certified
mail, return receipt requested, and by regular mail, both with postage
prepaid, or personally delivered, to the addresses set forth below, and shall
be deemed given when sent.
The addresses referred to above are:
Your address: 791 Park Avenue
New York, New York 10021
Garan: 350 Fifth Avenue
New York, New York 10118
Attn: President
With a copy to: Tannenbaum Dubin & Robinson, LLP
1140 Avenue of the Americas
New York, New York 10036
Attn: Marvin S. Robinson, Esq.
Either you or Garan at any time may give notice of another
address in accordance with the provisions of this Section 7.
8. Governing Law, Amendment, and Binding Effect, etc.
8.1 This Employment and Consulting Agreement (a) shall be
governed by and construed in accordance with the laws of the State of New York
as if it were an agreement made and to be performed entirely within such
State, (b) may not be modified or amended except by a writing signed by each
of Garan or its successors and you, (c) may not be assigned by Garan except as
provided in Section 8.2 or by you, (d) shall be binding upon each of Garan and
its successors and you and your distributees, personal representatives,
executors, and administrators, and (e) contains the entire agreement and
understanding between Garan and you with respect to the subject matter hereof
and supersedes all prior agreements, arrangements, and understandings, written
or oral, between Garan and you with respect to the subject matter of this
Employment and Consulting Agreement.
8.2 If Garan shall be merged into or consolidated with
another entity, or another entity acquires substantially all of the assets of
Garan, the provisions of this Employment and Consulting Agreement shall be
binding upon and inure to the benefit of the entity surviving such merger or
resulting from such consolidation or acquiring such assets. Garan will
require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business or
assets of Garan, by an agreement in form and substance satisfactory to you, to
expressly assume and agree to perform this Employment and Consulting Agreement
in the same manner and to the same extent that Garan would be required to
perform it if no such succession had taken place. The provisions of the prior
sentences also shall apply in the event of any subsequent mergers,
consolidations, or transfers of assets.
9. Withholding; Mitigation of Damages.
9.1. Garan, to the extent permitted by law, shall have the
right to deduct from any payment or benefit of any kind otherwise due to you
under this Employment and Consulting Agreement, any Federal, state, or local
taxes of any kind required to be withheld.
9.2. Except as provided in Sections 3.5.a and 4.6.a, all
payments and benefits to which you are entitled under this Employment and
Consulting Agreement shall be made and provided without offset, deduction, or
mitigation on account of income you may receive from other employment or
otherwise.
10. Litigation Expenses.
Garan shall pay all of your costs and expenses, including
attorneys' fees and disbursements, in connection with any legal proceedings
(including, but not limited to, arbitration), whether or not instituted by
Garan or you, relating to the interpretation or enforcement of any provision
of this Employment and Consulting Agreement.
If the foregoing correctly sets forth our agreement, please execute and
return the enclosed copy of this letter.
Sincerely,
GARAN, INCORPORATED
By:_________________________
Jerald Kamiel, President
ACCEPTED AND AGREED:
______________________
Seymour Lichtenstein
<PAGE>
ANNEX I
CERTAIN DEFINITIONS
As used in this Employment and Consulting Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Cause" means willful and gross misconduct on your part that is
materially and demonstrably detrimental to Garan or the commission by you of
one or more acts which constitute an indictable crime under Federal, state, or
local law, as determined in good faith by a written resolution duly adopted by
the affirmative vote of a majority of all of the directors then serving on
Garan's Board of Directors at a meeting duly called and held for that purpose
after reasonable notice to you and opportunity for you and your counsel to be
heard.
"Change of Control Event" means any one of the following:
(a) Continuing Directors no longer constitute at least a majority of Garan's
Board of Directors, (b) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934), together with its
affiliates, become the beneficial owner, directly or indirectly, of at least
40% of Garan's then outstanding Common Stock, (c) the approval by Garan's
shareholders of the merger or consolidation of Garan with any other
corporation, the sale of substantially all of the assets of Garan or the
liquidation or dissolution of Garan, unless, in the case of a merger or
consolidation, the incumbent Continuing Directors in office immediately prior
to such merger or consolidation will constitute at least a majority of the
directors of the surviving corporation of such merger or consolidation and any
parent (as such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such corporation, and such surviving corporation (and such
parent, if any) shall have at least five directors, or (d) at least a majority
of the incumbent Continuing Directors in office immediately prior to any other
action proposed to be taken by Garan's shareholders or by Garan's Board of
Directors determines that such proposed action, if taken, would constitute a
Change of Control of Garan and such proposed action is thereafter taken.
"Continuing Director" means any individual who is a member of Garan's
Board of Directors on October 1, 1996, or who thereafter is designated (before
such person's initial election as a director) as a Continuing Director by a
majority of the then Continuing Directors.
"Parachute Payment" means any payment deemed to constitute
a "parachute payment" as defined in Section 280G of the Internal Revenue Code
of 1986 as amended from time to time.
GARAN, INCORPORATED
350 Fifth Avenue
New York, New York 10036
January 15, 1997
Mr. Jerald Kamiel
2 Sylvan Court
Livingston, New Jersey 07039
Dear Jerry:
We are writing to amend and restate, effective as of October 1, 1996,
the agreement between you and Garan, Incorporated ("Garan") originally entered
into as of October l, l986, and subsequently amended and restated (the
agreement as amended and now again restated, "Employment Agreement") with
respect to your continuing employment by Garan. We have agreed that:
l. Position, Duties, and Period of Employment.
1.l. Position.
Garan hereby continues to employ you, and you agree to
accept continued employment, as President and Chief Operating Officer.
1.2. Duties.
During the period of your employment under this Employment
Agreement ("Employment Term"), except for vacations, holidays, and personal
days, as each is authorized by and consistent with the practices of Garan, and
absences due to psychological, emotional, or physical reasons, you shall
devote your full business time, skill, and energy to the business and affairs
of Garan, and you shall use your best efforts to promote the best interests of
Garan.
1.3. Period of Employment.
1.3.a. Subject to Section 3, your employment under this
Employment Agreement shall be for a term ("Initial Term") ending, as at the
effective date of the restatement of this Employment Agreement, September 30,
1999.
1.3.b. The Initial Term of this Employment Agreement
shall be extended by six months each April l and October l during the term of
this Employment Agreement commencing April l, l997, unless prior to such date
either (i) you notify Garan that you elect to terminate this Employment
Agreement at the end of the Initial Term or the then extended term, or (ii)
Garan notifies you that Garan elects to terminate this Employment Agreement at
the end of the Initial Term or the then extended term. (The end of the
Initial Term or, if the term is extended, the extended term, is hereinafter
referred to as the "Term End.") The intent of this Section 1.3.b is that, for
example, if neither you nor Garan gives such notice of termination on or
before March 31, l997, the term of this Employment Agreement will be extended
automatically to March 31, 2000, and if thereafter either you or Garan gives
such notice of termination on or before September 30, 1997, the term of this
Employment Agreement shall end on March 31, 2000.
1.3.c.1. In the event that Garan notifies you pursuant to
the provisions of Section l.3.b that it elects to terminate this Employment
Agreement at the Term End, Garan shall include in such notice either a request
that you render services or a direction that you are not to render services
under this Employment Agreement after a date not more than 30 days after such
notice, solely at its option.
1.3.c.2. If Garan requests you to render services and you
do not give the notice referred to in the next sentence, thereafter (unless
and until you voluntarily terminate your employment in accordance with the
provisions of Section 3.l) until the Term End Garan shall continue (a) to pay
to you in accordance with its payroll practices compensation at an annual
rate equal to the greater of (i) the total of your Base Compensation in effect
at the date of such notice plus your last Annual Bonus, as each was last
determined by the Board of Directors of Garan ("Board") pursuant to Section
2.1, or (ii) the total of your average Base Compensation in the 12 month
period ending on the date of the notice plus the average of your last two
Annual Bonuses, as each was determined by the Board, and (b) Garan shall
continue to provide you with your other benefits as in effect at the date of
the notice or, at your option, as in effect one year prior to the date of the
notice.
1.3.c.3. If Garan requests you to render services and,
within 30 days after notice is given to you pursuant to Section 1.3.c.1, you
notify Garan that you will not render further services under this Employment
Agreement after a date set by you but not later than 30 days after your notice
to Garan, or if Garan directs you in such notice not to render services, (a)
Garan shall pay to you an amount equal to three times your Base Compensation
as last determined prior to the date of such notice by the Board pursuant to
Section 2.1 plus three times your last Annual Bonus determined by the Board,
and (b) Garan shall continue to provide you until the Term End with your other
benefits as in effect at the date of such notice or, at your option, as in
effect one year prior to the date of such notice. The amount determined in
accordance with (a) shall be payable in cash, one-third within five business
days after the last day you render services under this Employment Agreement,
one-third on the first anniversary of the last day you render services, and
one-third on the second anniversary of the last day you render services. If
Garan requests you to render services and, within 30 days after the notice is
given to you pursuant to Section 1.3.c.1, you notify Garan that you will not
render further services under this Employment Agreement, or if Garan directs
you not to render services under this Employment Agreement, you shall be
relieved of your obligations pursuant to Sections 1.1 and 1.2 after the last
day that you render services under this Employment Agreement, but neither you
nor Garan shall be relieved of any other obligations under this Employment
Agreement. If Garan directs you to render services and you continue to do so,
the provisions of Section 3.1.a shall no longer apply but neither you nor
Garan shall be relieved of any other obligations under this Employment
Agreement.
2. Base Compensation, Annual Bonus, and
Executive Employee Benefits.
2.1. Base Compensation and Annual Bonus.
During the Employment Term, Garan shall pay to you base compensation in
each 12 month period commencing October 1 and ending September 30 ("Fiscal
Year") as determined from time to time by the Board ("Base Compensation"), but
for the Fiscal Year ending September 30, 1997, and for each Fiscal Year
thereafter, such amount shall be not less than $345,000. [References to Base
Compensation in this Employment Agreement shall not give effect to any salary
reduction agreement.] In addition to payment of Base Compensation, the Board
may determine, but is not obligated to, to pay to you an annual Fiscal Year
bonus ("Annual Bonus").
2.2. Executive Employee Benefits.
During the Employment Term, Garan shall provide you with
employee benefits determined from time to time by the Board, which employee
benefits shall be at least as favorable as those provided to other senior
executives of Garan, and Garan shall maintain a life insurance policy on your
life payable to your designated beneficiary or beneficiaries in the principal
amount of not less than $l,000,000.
3. Termination of Employment.
3.1. Voluntary Termination.
If (a) Garan's present chief executive officer ceases to
serve in such position for any reason and within 6 months of such event either
(i) you are not given the opportunity to become chief executive officer of
Garan on terms reasonably acceptable to you and Garan, or (ii) Garan employs
another chief executive officer, then within 30 days after the earlier of the
expiration of such 6 month period or employment of another chief executive
officer, you may give notice to Garan terminating your employment, or (b) a
Change of Control Event, as such term is defined in Annex I to this Employment
Agreement, occurs at any time during the Employment Term, within 6 months
after such Change of Control Event you may give notice to Garan terminating
your employment. Such termination of employment shall be effective on a date
set by you but not later than 30 days after you give notice of termination to
Garan. In the event of such voluntary termination, Garan will pay to you cash
severance equal to 2.99 times the sum of (i) the average of your Base
Compensation determined by the Board in accordance with Section 2.1 for each
of the 5 Fiscal Years ending with the Fiscal Year preceding the Fiscal Year in
which either the current chief executive officer ceases to serve in such
position or a Change of Control Event occurs plus (ii) the average of your
last 5 Annual Bonuses determined by the Board in accordance with Section 2.1
prior to the commencement of the 6 month period after the current chief
executive officer ceases to serve in such position or the Change of Control
Event. Such severance shall be payable to you on the next business day after
the last day you render services under this Employment Agreement. It is
expressly agreed that the provisions of Section 3.1.b shall not apply if the
Change of Control Event is a result of a completed "management buyout" of
Garan in which you participate as an equity investor.
3.2. Termination by Garan Other Than for Cause.
If Garan terminates your employment prior to the Term End
for any reason other than as provided in Section 1.3.c or for Cause as defined
in Annex I to this Employment Agreement:
3.2.a. Garan shall pay to you an amount equal to three
times your Base Compensation plus three times your last Annual Bonus as each
was last determined prior to the date of such termination by the Board
pursuant to Section 2.1. Such amount shall be payable in cash, one-third
within five business days of such termination, one-third on the first
anniversary of such termination, and one-third on the second anniversary of
such termination, and
3.2.b. Garan shall continue to provide you with executive
employee benefits as provided in Section 2.2, or alternatively shall provide
you with life insurance, medical reimbursement, disability, and accidental
death and dismemberment benefit coverage at levels no less favorable than
those in effect for you pursuant to Section 2.2 on the date of termination of
your employment if such executive employee benefits were being provided to you
by Garan immediately prior to the termination of your employment, for a period
equal to the lesser of (i) two years following the date of termination of your
employment or until the date of the Term End, whichever comes later, or (ii)
until you are provided by another employer with benefits substantially
comparable to the benefits described in this Section 3.2.b.
3.3. Termination by Garan for Cause.
Garan shall have the right to terminate your employment
under this Employment Agreement at any time upon a determination by Garan to
dismiss you for Cause as defined in Annex I to this Employment Agreement.
Upon such termination for Cause, Garan's sole obligation shall be to pay you
any accrued but unpaid Base Compensation and executive employee benefits
described in Sections 2.1 and 2.2 as of the date of the termination of your
employment.
3.4. Death.
Upon your death during the term of this Employment
Agreement prior to your becoming Disabled (as defined in Section 3.5), this
Employment Agreement shall terminate and all obligations of Garan under this Emp
loyment Agreement shall terminate simultaneously therewith, except that Garan
shall pay to your designated beneficiaries, or if no beneficiaries are
designated, to your estate, any amounts under Sections 2 and 3 which are
unpaid and earned to the date of your death. In addition, Garan shall pay to
your designated beneficiaries, or if no beneficiaries are designated, to your
estate, an amount equal to 150% of the total of your then Base Compensation
and your last Annual Bonus as each was last determined by the Board in
accordance with Section 2.1, in 12 equal monthly installments commencing with
the first day of the month following the date of your death.
3.5. Disability.
3.5.a. In the event you incur a Disability, until the
earlier to occur of the date of your death or the date you become Disabled (as
such terms are defined in Section 3.5.e), Garan shall continue to pay to you
your Base Compensation as last determined by the Board in accordance with the
provisions of Section 2.1 and continue your executive employee benefits set
forth in Section 2.2.
3.5.b. If you become Disabled, Garan shall (i) continue
to pay you monthly, regardless of your death after you become Disabled, until
the later of the Term End or 18 months from the date that you became Disabled,
but for not more than 36 months, 1/12th of the total of your Base Compensation
in effect at the date you incurred the Disability plus an amount equal to your
last Annual Bonus as each was determined by the Board pursuant to the
provisions of Section 2.1 prior to the date you incurred the Disability,
reduced by the gross amount payable as a result of such Disability under any
disability or salary continuation policy or plan, the cost of which is paid by
Garan, and (ii) during the period set forth in Section 3.5.a(i), continue
your other executive employee benefits set forth in Section 2.2 as in effect
at the first day that you were unable to carry out your duties because of
psychological, emotional, or physical reasons which resulted in your
Disability.
3.5.c. If you become Disabled, (i) Garan can remove you
from the position that you then hold and (ii) the provisions of Sections 3.2
and 3.4 shall no longer apply, provided that neither Garan nor you shall be
relieved of any other obligations under this Employment Agreement.
3.5.d. If you die after incurring a Disability but prior
to becoming Disabled, the provisions of Section 3.4 shall apply in lieu of the
provisions of this Section 3.5.
3.5.e. For purposes of this Section 3.5, Disability shall
mean that you are unable to substantially carry out your obligations under
this Employment Agreement because of psychological, emotional, or physical
reasons, and Disabled shall mean that your Disability has continued for a
period of 90 consecutive days or for an aggregate of 120 days during any
period of 360 consecutive days.
3.6. Automobile.
Within 30 days following the last day that you render
services as an employee to Garan under this Employment Agreement, the date of
your death, or the date on which you become Disabled, you or your Estate shall
have the right to elect to purchase from Garan the automobile then owned and
supplied to you by Garan, if any, at the value thereof on Garan's books at
such time. Payment shall be made in cash on the 30th day after you make such
election.
3.7. Parachute Payments.
If any amounts payable pursuant to this Employment
Agreement which are deemed to constitute Parachute Payments, as defined in
Annex I to this Employment Agreement, when added to any other payments which
are deemed to constitute Parachute Payments, would result in the imposition on
you of an excise tax under Section 4999 of the Internal Revenue Code of 1986,
as amended from time to time, the amounts payable under this Employment
Agreement shall be reduced by the smallest amount necessary to avoid the
imposition of such excise tax.
4. Trade Secrets, Non-Competition, Non-
Interference, and Non-Disparagement.
4.1. Trade Secrets.
You acknowledge that: (a) your employment by Garan
throughout the term of this Employment Agreement and prior thereto will bring
and has brought you into close contact with many confidential affairs of
Garan, (b) the business of Garan is conducted throughout the United States and
abroad and competes with similar businesses of other organizations, (c) Garan
carries on substantial promotional, marketing, and/or sales activities
throughout the United States and abroad, and (d) the covenants contained in
Sections 4.2 and 4.3 of this Employment Agreement are specific inducements by
you to Garan in connection with the execution of this Employment Agreement.
4.2. Non-Competition.
In recognition of the provisions of Section 4.1 and as
consideration for your continued employment by Garan, the payment by Garan to
you of compensation, and Garan providing you with benefits, you agree that:
4.2.a. While you are performing services for Garan
pursuant to this Employment Agreement, and at all times thereafter, you shall
not disclose, communicate, or divulge to any person (other than to officers,
directors, or employees of Garan and its subsidiaries whose duties require
such knowledge) or use for your personal benefit or for the benefit of anyone
other than Garan and its subsidiaries, any trade secrets, specifications,
sales or merchandising plans, programs, research, or other confidential
information employed in or proposed to be employed in the business of Garan
and its subsidiaries which comes to or came to your knowledge in the course of
or by reason of your employment by Garan, or your performance under this
Employment Agreement.
4.2.b. In the event that(i)(x) Garan notifies you in
accordance with the provisions of Section l.3.c.2 that you either (1) are
requested to render services under this Employment Agreement and you then
notify Garan pursuant to the provisions of Section 1.3.c.3 that you will not
render further services or (2) are directed not to render services under this
Employment Agreement, or (y) your employment pursuant to this Employment
Agreement is terminated by Garan pursuant to Section 3.2 or 3.3, or (z) the
term of this Employment Agreement ends, and (ii) Garan notifies you that it
invokes the provisions of this Section 4.2.b within five business days after
its direction to you not to render services or after the date you give notice
that you will not render further services, or not later than five business
days prior to the Term End, or includes such notice in the notice of
termination pursuant to Section 3.2 or 3.3, then Garan shall pay you monthly
in advance for the 12-month period beginning on the last day you render
services to Garan, compensation at an annual rate equal to the greater of (A)
the total of your Base Compensation in effect at the last day that you render
services to Garan plus your last Annual Bonus as each was last determined by
the Board pursuant to Section 2.1, or (B) the total of your average annual
Base Compensation in the 24 month period ending on the last day that you
render services to Garan plus the average of your last two Annual Bonuses as
each was determined by the Board pursuant to Section 2.1, and you shall not
directly or indirectly, enter into or in any manner take part as an employee,
agent, independent contractor, consultant, owner, sole proprietor, partner,
joint venturer, member, officer, director, or shareholder or take part in any
other capacity in, for, or with any person, firm, corporation, association, or
business enterprise, or in any manner render any assistance to any business or
endeavor, whose business activities are the same, similar to, or competitive
with any part of the business which is conducted by Garan and its subsidiaries
during the course of your employment by Garan prior to and pursuant to this
Employment Agreement in any state in the United States and in any territory,
possession, or foreign country, provided that the provisions of this Section
4.2.b shall not preclude you from ownership, as an investor, of less than 5%
of the stock of a publicly owned company which engages in such business
activities. The provisions of this Section 4.2.b may not be invoked by Garan
if Garan terminates your employment upon or after a Change of Control Event
unless the Change in Control Event is a result of a completed "management
buyout" of Garan in which you participate as an equity investor.
4.3. Non-Interference.
Upon the termination of your services for Garan under this
Employment Agreement, until the one year anniversary date of the last day that
you render services pursuant to this Employment Agreement, neither you nor any
person, firm, corporation, association, or business enterprise with which you
are affiliated as an employee, agent, independent contractor, consultant,
partner, joint venturer, officer, director, or shareholder shall directly or
indirectly induce or attempt to induce any employee of Garan or any of its
subsidiaries to terminate or alter his or her employment relationship with
Garan or any of its subsidiaries, or directly or indirectly hire any person
who is or had been employed by Garan or any of its subsidiaries. The
provisions of this Section 4.3 may not be invoked by Garan if you terminate
your employment pursuant to Section 3.1 or Garan terminates your employment
upon or after a Change of Control Event.
4.4. Non-Disparagement.
During the Employment Term and thereafter, (a) you shall
not directly or indirectly, disparage the name, reputation, or products of
Garan and (b) Garan shall not, directly or indirectly, disparage your name or
reputation.
4.5. Additional Provisions.
4.5.a. In the event that the provisions of Sections 4.2,
4.3, or 4.4 should be deemed unenforceable, invalid, or overbroad in whole or
in part for any reason, any court of competent jurisdiction is, or the
Arbitrators appointed in accordance with the provisions of Section 5 are,
hereby authorized, requested, and instructed to reform such sections
consistent with the intent of Sections 4.2, 4.3, or 4.4 to provide for the
maximum restraints upon (i) your activities (including, but not limited to,
time, geographic area, employee solicitation, and disparagement), (ii) and
with respect to Section 4.4, Garan's activities, which may then be legal and
valid.
4.5.b. You and Garan agree that violation by you of the
provisions of Sections 4.1, 4.2, 4.3, or 4.4 or by Garan of the provisions of
Section 4.4 will cause irreparable injury to the other for which any remedy at
law would be inadequate, and that the injured party shall be entitled in any
court of law or equity or in any arbitration proceeding in accordance with
Section 5, whichever forum is designated by the injured party, to temporary,
preliminary, permanent, and other injunctive relief against any breach of the
provisions contained in such sections, and such punitive and compensatory
damages as shall be awarded. Further, in the event of a violation of the
provisions of Sections 4.1, 4.2, 4.3, or 4.4, (i) the period of
non-disclosure, non-competition, employee non-interference, or
non-disparagement referred to therein shall be extended for a period of time
equal to that period beginning on the date when such violation commenced and
ending when the activities constituting that violation shall be finally
terminated, and (ii) Garan shall have the right to suspend your compensation
and benefits and payments made pursuant to Section 4.2.b until the activities
constituting that violation shall be finally terminated.
5. Arbitration and Jurisdiction.
5.1. Arbitration.
Except as otherwise alternatively provided in Section 4.5
relating to the reformation of the non-competition, employee non-interference,
and non-disparagement provisions and obtaining injunctive relief, any
controversy or claim arising out of or relating to this Employment Agreement,
or the breach thereof, shall be settled by arbitration by one Arbitrator in
New York, New York, in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered by the Arbitrator may be
entered in any court having jurisdiction thereof.
5.2. Consent to Jurisdiction.
Each of you and Garan hereby consents to the jurisdiction
of the Supreme Court of the State of New York for the County of New York and
the United States District Court for the Southern District of New York for all
purposes in connection with (a) the arbitration referred to in Section 5.1 and
(b) this Employment Agreement, and further consents that any process or notice
of motion in connection therewith may be served by certified or registered
mail or by personal service in accordance with the provisions of Section 6,
within or without the State of New York, provided a reasonable time for
appearance is allowed.
6. Notice.
All notices provided for in this Employment Agreement shall be
in writing and shall be given by registered or certified mail, return receipt
requested, and by regular mail, both with postage prepaid, or personally
delivered, to the addresses set forth below, and shall be deemed given when
sent.
The addresses referred to above are:
Your address: 2 Sylvan Court
Livingston, New Jersey 07039
Garan: 350 Fifth Avenue
New York, New York 10118
Attn: Chairman
With a copy to: Tannenbaum Dubin & Robinson, LLP
1140 Avenue of the Americas
New York, New York 10036
Attn: Marvin S. Robinson, Esq.
Either you or Garan at any time may give notice of another
address in accordance with the provisions of this Section 6.
7. Governing Law, Amendment, and Binding Effect, etc.
7.1 This Employment Agreement (a) shall be governed by and
construed in accordance with the laws of the State of New York as if it were
an agreement made and to be performed entirely within such State, (b) may not
be modified or amended except by a writing signed by each of Garan or its
successors and you, (c) may not be assigned by Garan except as provided in
Section 7.2 or by you, (d) shall be binding upon each of Garan and its
successors and you and your distributees, personal representatives, executors,
and administrators, and (e) contains the entire agreement and understanding
between Garan and you with respect to the subject matter hereof and supersedes
all prior agreements, arrangements, and understandings, written or oral,
between Garan and you with respect to the subject matter of this Employment
Agreement.
7.2 If Garan shall be merged into or consolidated with
another entity, or another entity acquires substantially all of the assets of
Garan, the provisions of this Employment Agreement shall be binding upon and
inure to the benefit of the entity surviving such merger or resulting from
such consolidation or acquiring such assets. Garan will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business or assets of Garan, by an
agreement in form and substance satisfactory to you, to expressly assume and
agree to perform this Employment Agreement in the same manner and to the same
extent that Garan would be required to perform it if no such succession had
taken place. The provisions of the prior sentences also shall apply in the
event of any subsequent mergers, consolidations, or transfers of assets.
8. Withholding; Mitigation of Damages.
8.1. Garan, to the extent permitted by law, shall have the
right to deduct from any payment or benefit of any kind otherwise due to you
under this Employment Agreement, any Federal, state, or local taxes of any
kind required to be withheld.
8.2. Except as provided in Section 3.5.a, all payments and
benefits to which you are entitled under this Employment Agreement shall be
made and provided without offset, deduction, or mitigation on account of
income you may receive from other employment or otherwise.
9. Litigation Expenses.
Garan shall pay all of your costs and expenses, including
attorneys' fees and disbursements, in connection with any legal proceedings
(including, but not limited to, arbitration), whether or not instituted by
Garan or you, relating to the interpretation or enforcement of any provision
of this Employment Agreement.
If the foregoing correctly sets forth our agreement, please execute and
return the enclosed copy of this letter.
Sincerely,
GARAN, INCORPORATED
By: ______________________________
Seymour Lichtenstein, Chairman
ACCEPTED AND AGREED:
____________________
Jerald Kamiel
<PAGE>
ANNEX I
CERTAIN DEFINITIONS
As used in this Employment Agreement, and unless the context requires a
different meaning, the following terms have the meanings indicated:
"Cause" means willful and gross misconduct on your part that is
materially and demonstrably detrimental to Garan or the commission by you of
one or more acts which constitute an indictable crime under Federal, state, or
local law, as determined in good faith by a written resolution duly adopted by
the affirmative vote of a majority of all of the directors then serving on
Garan's Board of Directors at a meeting duly called and held for that purpose
after reasonable notice to you and opportunity for you and your counsel to be
heard.
"Change of Control Event" means any one of the following:
(a) Continuing Directors no longer constitute at least a majority of Garan's
Board of Directors, (b) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934), together with its
affiliates, become the beneficial owner, directly or indirectly, of at least
40% of Garan's then outstanding Common Stock, (c) the approval by Garan's
shareholders of the merger or consolidation of Garan with any other
corporation, the sale of substantially all of the assets of Garan, or the
liquidation or dissolution of Garan, unless, in the case of a merger or
consolidation, the incumbent Continuing Directors in office immediately prior
to such merger or consolidation will constitute at least a majority of the
directors of the surviving corporation of such merger or consolidation and any
parent (as such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such corporation, and such surviving corporation (and such
parent, if any) shall have at least five directors, or (d) at least a majority
of the incumbent Continuing Directors in office immediately prior to any other
action proposed to be taken by Garan's shareholders or by Garan's Board of
Directors determines that such proposed action, if taken, would constitute a
Change of Control of Garan and such proposed action is thereafter taken.
"Continuing Director" means any individual who is a member of Garan's
Board of Directors on October 1, 1996, or who thereafter is designated (before
such person's initial election as a director) as a Continuing Director by a
majority of the then Continuing Directors.
"Parachute Payment" means any payment deemed to constitute
a "parachute payment" as defined in Section 280G of the Internal Revenue Code
of 1986 as amended from time to time.
GARAN, INCORPORATED
350 Fifth Avenue
New York, New York 10036
January 15, 1997
Mr. William J. Wilson
79 Benedict Hill Road
New Canaan, Connecticut 06840
Dear Bill:
We are writing to amend and restate, effective as of October 1, 1996,
the agreement between you and Garan, Incorporated ("Garan") originally entered
into as of October l, 1986, and subsequently amended and restated (the
agreement as amended and now again restated, "Employment Agreement") with
respect to your continuing employment by Garan. We have agreed that:
l. Position, Duties, and Period of Employment.
1.l. Position.
Garan hereby continues to employ you, and you agree to
accept continued employment, as Vice President - Finance and Administration.
1.2. Duties.
During the period of your employment under this Employment
Agreement ("Employment Term"), except for vacations, holidays, and personal
days, as each is authorized by and consistent with the practices of Garan, and
absences due to psychological, emotional, or physical reasons, you shall
devote your full business time, skill, and energy to the business and affairs
of Garan, and you shall use your best efforts to promote the best interests of
Garan.
1.3. Period of Employment.
Your employment under this Employment Agreement shall be
for a term ending September 30, 2000 ("Term End").
2. Base Compensation, Annual Bonus, and Executive Employee
Benefits.
2.1. Base Compensation and Annual Bonus.
During the Employment Term, Garan shall pay to you base
compensation ("Base Compensation") in each 12 month period commencing October
1 and ending September 30 ("Fiscal Year") as determined from time to time by
the Board of Directors of Garan ("Board"), but for the Fiscal Year ending
September 30, 1997, and for each Fiscal Year thereafter, such amount shall be
not less than $205,000. [References to Base Compensation in this Employment
Agreement shall not give effect to any salary reduction agreement.] In
addition to payment of Base Compensation, the Board may determine, but is not
obligated to, to pay to you an annual Fiscal Year bonus ("Annual Bonus").
2.2. Executive Employee Benefits.
During the Employment Term,
Garan shall provide you with employee benefits determined from time to time by
the Board, which employee benefits shall be at least as favorable as those
provided to other senior executives of Garan, and Garan shall maintain a life
insurance policy on your life payable to your designated beneficiary or
beneficiaries in the principal amount of not less than $500,000.
3. Termination of Employment.
3.1.Voluntary Termination After a Change of Control Event.
If a Change of Control Event, as such term is defined in
Annex I to this Employment Agreement, occurs at any time during the Employment
Term, within 6 months after such Change of Control Event you may give notice
to Garan terminating your employment. Such termination of employment shall be
effective on a date set by you but not later than 30 days after you give
notice of termination to Garan. In the event of such voluntary termination,
Garan will pay to you cash severance equal to 2.99 times the sum of (a) the
average of your Base Compensation determined by the Board in accordance with
the provisions of Section 2.1 for each of the 5 Fiscal Years ending with the
Fiscal Year preceding the Fiscal Year in which the Change of Control Event
occurs plus (b) the average of your last 5 Annual Bonuses determined by the
Board in accordance with Section 2.1 prior to the Change of Control Event.
Such severance shall be payable to you on the next business day after the last
day you render services under this Employment Agreement. It is expressly
agreed that this Section 3.1 shall not apply if the Change of Control Event is
a result of a completed "management buyout" of Garan in which you participate
as an equity investor.
3.2. Termination by Garan Other Than for Cause.
If Garan for any reason other than for Cause as defined in
Annex I to this Employment Agreement (a) terminates your employment prior to
October 1, 2000, or (b) fails to renew the term of this Employment Agreement
on substantially the same terms:
3.2.a. Garan shall pay to you an amount equal to the
greater of (i) two times your Base Compensation plus two times your last
Annual Bonus as each was last determined by the Board pursuant to Section 2.1
prior to the date of such termination and (ii) three times your Base
Compensation as last determined by the Board pursuant to Section 2.1 prior to
the date of such termination. Such amount shall be payable in cash, one-third
within five business days of such termination, one-third on the first
anniversary of such termination, and one-third on the second anniversary of
such termination, and
3.2.b. Garan shall continue to provide you with executive
employee benefits as provided in Section 2.2, or alternatively, shall provide
you with life insurance, medical reimbursement, disability, and accidental
death and dismemberment benefit coverage at levels no less favorable than
those in effect for you pursuant to Section 2.2 on the date of termination of
your employment if such executive employee benefits were being provided to you
by Garan immediately prior to the termination of your employment, for a period
equal to the lesser of (i) two years following the date of termination of your
employment or September 30, 2000, whichever comes later, or (ii) until you are
provided by another employer with benefits substantially comparable to the
benefits described in this Section 3.2.b.
3.3. Termination by Garan for Cause.
Garan shall have the right to terminate your employment
under this Employment Agreement at any time upon a determination by Garan to
dismiss you for Cause as defined in Annex I to this Employment Agreement.
Upon such termination for Cause, Garan's sole obligation shall be to pay you
any accrued but unpaid Base Compensation and executive employee benefits
described in Sections 2.1 and 2.2 as of the date of the termination of your
employment.
3.4. Death.
Upon your death during the term of this Employment
Agreement prior to your becoming Disabled (as defined in Section 3.5), this
Employment Agreement shall terminate, and all obligations of Garan under this
Employment Agreement shall terminate simultaneously therewith, except that
Garan shall pay to your designated beneficiaries, or if no beneficiaries are
designated, to your estate, any amounts under Sections 2 and 3 which are
unpaid and earned to the date of your death. In addition, Garan shall pay to
your designated beneficiaries, or if no beneficiaries are designated, to your
estate, an amount equal to 150% of the total of your then Base Compensation
and last Annual Bonus as each was last determined by the Board in accordance
with Section 2.1, in 12 equal monthly installments commencing with the first
day of the month following the date of your death.
3.5. Disability.
3.5.a. In the event you incur a Disability, until the
earlier to occur of the date of your death or the date you become Disabled (as
such terms are defined in Section 3.5.e), Garan shall continue to pay to you
your Base Compensation as last determined by the Board in accordance with the
provisions of Section 2.1 and continue your executive employee benefits set
forth in Section 2.2.
3.5.b. If you become Disabled, Garan shall (i) continue
to pay you monthly, regardless of your death after you become Disabled, until
the later of the Term End or 18 months from the date that you became Disabled,
but for not more than 36 months, 1/12th of the total of your Base Compensation
in effect at the date you incurred the Disability plus an amount equal to your
last Annual Bonus as each was determined by the Board pursuant to the
provisions of Section 2.1 prior to the date you incurred the Disability,
reduced by the gross amount payable as a result of such Disability under any
disability or salary continuation policy or plan, the cost of which is paid by
Garan, and (ii) during the period set forth in Section 3.5.a(i), continue
your other executive employee benefits set forth in Section 2.2 as in effect
at the first day that you were unable to carry out your duties because of
psychological, emotional, or physical reasons which resulted in your
Disability.
3.5.c. If you become Disabled, (i) Garan can remove you
from the position that you then hold and (ii) the provisions of Sections 3.2
and 3.4 shall no longer apply, provided that neither Garan nor you shall be
relieved of any other obligations under this Employment Agreement.
3.5.d. If you die after incurring a Disability but prior
to becoming Disabled, the provisions of Section 3.4 shall apply in lieu of the
provisions of this Section 3.5.
3.5.e. For purposes of this Section 3.5, Disability shall
mean that you are unable to substantially carry out your obligations under
this Employment Agreement because of psychological, emotional, or physical
reasons, and Disabled shall mean that your Disability has continued for a
period of 90 consecutive days or for an aggregate of 120 days during any
period of 360 consecutive days.
3.6. Automobile.
Within 30 days following the last day that you render
services as an employee to Garan under this Employment Agreement, the date of
your death, or the date on which you became Disabled, you or your Estate shall
have the right to elect to purchase from Garan the automobile then owned and
supplied to you by Garan, if any, at the value thereof on Garan's books at
such time. Payment shall be made in cash on the 30th day after you make such
election.
3.7. Parachute Payments.
If any amounts payable pursuant to this Employment
Agreement which are deemed to constitute Parachute Payments, as defined in
Annex I to this Employment Agreement, when added to any other payments which
are deemed to constitute Parachute Payments, would result in the imposition on
you of an excise tax under Section 4999 of the Internal Revenue Code of l986,
as amended from time to time, the amounts payable under this Employment
Agreement shall be reduced by the smallest amount necessary to avoid the
imposition of such excise tax.
4.Trade Secrets, Non-Competition, Non-Interference, and
Non-Disparagement.
4.1. Trade Secrets.
You acknowledge that: (a) your employment by Garan
throughout the term of this Employment Agreement and prior thereto will bring
and has brought you into close contact with many confidential affairs of
Garan, (b) the business of Garan is conducted throughout the United States and
abroad and competes with similar businesses of other organizations, (c) Garan
carries on substantial promotional, marketing, and/or sales activities
throughout the United States and abroad, and (d) the covenants contained in
Sections 4.2 and 4.3 of this Employment Agreement are specific inducements by
you to Garan in connection with the execution of this Employment Agreement.
4.2. Non-Competition.
In recognition of the provisions of Section 4.1 and as
consideration for your continued employment by Garan, the payment by Garan to
you of compensation, and Garan providing you with benefits, you agree that:
4.2.a. While you are performing services for Garan
pursuant to this Employment Agreement, and at all times thereafter, you shall
not disclose, communicate, or divulge to any person (other than to officers,
directors, or employees of Garan and its subsidiaries whose duties require
such knowledge) or use for your personal benefit or for the benefit of anyone
other than Garan and its subsidiaries, any trade secrets, specifications,
sales or merchandising plans, programs, research, or other confidential
information employed in or proposed to be employed in the business of Garan
and its subsidiaries which comes to or came to your knowledge in the course of
or by reason of your employment by Garan, or your performance under this
Employment Agreement.
4.2.b. In the event that (i) your employment pursuant to
this Employment Agreement is terminated by Garan pursuant to Section 3.2 or
3.3, or (ii) the term of this Employment Agreement ends, for so long as Garan
continues to pay you in accordance with its payroll practices, but for not
more than the 12 month period beginning on the last day you render services to
Garan, compensation at an annual rate equal to the greater of (x) the total of
your Base Compensation in effect at the last day that you render services to
Garan plus your Annual Bonus as each was last determined by the Board pursuant
to Section 2.1, or (y) the total of your average Base Compensation in the 24
month period ending on the last day that you render services to Garan plus the
average of your last two Annual Bonuses as each was determined by the Board
pursuant to Section 2.1, you shall not directly or indirectly, enter into or
in any manner take part as an employee, agent, independent contractor,
consultant, owner, sole proprietor, partner, joint venturer, member, officer,
director, or shareholder or take part in any other capacity in, for, or with
any person, firm, corporation, association, or business enterprise, or in any
manner render any assistance to any business or endeavor, whose business
activities are the same, similar to, or competitive with any part of the
business which is conducted by Garan and its subsidiaries during the course of
your employment by Garan prior to and pursuant to this Employment Agreement in
any state in the United States and in any territory, possession, or foreign
country, provided that the provisions of this Section 4.2.b shall not preclude
you from ownership, as an investor, of less than 5% of the stock of a publicly
owned company which engages in such business activities. The provisions of
this Section 4.2.b may not be invoked by Garan if Garan terminates your
employment upon or after a Change of Control Event unless the Change in
Control Event is a result of a completed "management buyout" of Garan in which
you participate as an equity investor. In the event Garan determines to pay
you for the 12-month period referred to above, it shall do so for minimum
periods of 3 months, and it shall give you notice that it is invoking the
provisions of this Section 4.2.b and that it will compensate you accordingly.
The initial such notice shall be given together with the notice of termination
referred to in Section 3.2 or 3.3, as applicable, or 15 days prior to the end
of the term of this Employment Agreement, and, thereafter, not later than 15
days prior to the beginning of each subsequent 3-month period.
4.3. Non-Interference.
Upon the termination of your services for Garan under this
Employment Agreement, until the one year anniversary date of the last day that
you render services pursuant to this Employment Agreement, neither you nor any
person, firm, corporation, association, or business enterprise with which you
are affiliated as an employee, agent, independent contractor, consultant,
partner, joint venturer, member, officer, director, or shareholder shall
directly or indirectly induce or attempt to induce any employee of Garan or
any of its subsidiaries to terminate or alter his or her employment
relationship with Garan or any of its subsidiaries, or directly or indirectly
hire any person who is or had been employed by Garan or any of its
subsidiaries. The provisions of this Section 4.3 may not be invoked by Garan
if you terminate your employment pursuant to Section 3.1 or Garan terminates
your employment upon or after a Change of Control Event.
4.4. Non-Disparagement.
During the Employment Term and thereafter, (a) you shall
not directly or indirectly, disparage the name, reputation, or products of
Garan and (b) Garan shall not, directly or indirectly, disparage your name or
reputation.
4.5. Additional Provisions.
4.5.a. In the event that the provisions of Sections 4.2,
4.3, or 4.4 should be deemed unenforceable, invalid, or overbroad in whole or
in part for any reason, any court of competent jurisdiction is, or the
Arbitrators appointed in accordance with the provisions of Section 5 are,
hereby authorized, requested, and instructed to reform such sections
consistent with the intent of Sections 4.2, 4.3, or 4.4 to provide for the
maximum restraints upon (i) your activities (including, but not limited to,
time, geographic area, employee solicitation, and disparagement), (ii) and
with respect to Section 4.4, Garan's activities, which may then be legal and
valid.
4.5.b. You and Garan agree that violation by you of the
provisions of Sections 4.1, 4.2, 4.3, or 4.4 or by Garan of the provisions of
Section 4.4 will cause irreparable injury to the other for which any remedy at
law would be inadequate, and that the injured party shall be entitled in any
court of law or equity or in any arbitration proceeding in accordance with
Section 5, whichever forum is designated by the injured party, to temporary,
preliminary, permanent, and other injunctive relief against any breach of the
provisions contained in such sections, and such punitive and compensatory
damages as shall be awarded. Further, in the event of a violation of the
provisions of Sections 4.1, 4.2, 4.3, or 4.4, (i) the period of
non-disclosure, non-competition, employee non-interference, or
non-disparagement referred to therein shall be extended for a period of time
equal to that period beginning on the date when such violation commenced and
ending when the activities constituting that violation shall be finally
terminated, and (ii) Garan shall have the right to suspend your compensation
and benefits and payments made pursuant to Section 4.2.b until the activities
constituting that violation shall be finally terminated.
5. Arbitration and Jurisdiction.
5.1. Arbitration.
Except as otherwise alternatively provided in Section 4.5
relating to the reformation of the non-competition, employee non-interference,
and non-disparagement provisions and obtaining injunctive relief, any
controversy or claim arising out of or relating to this Employment Agreement,
or the breach thereof, shall be settled by arbitration by one Arbitrator in
New York, New York, in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered by the Arbitrator may be
entered in any court having jurisdiction thereof.
5.2. Consent to Jurisdiction.
Each of you and Garan hereby consents to the jurisdiction
of the Supreme Court of the State of New York for the County of New York and
the United States District Court for the Southern District of New York for all
purposes in connection with (a) the arbitration referred to in Section 5.1 and
(b) this Employment Agreement, and further consents that any process or notice
of motion in connection therewith may be served by certified or registered
mail or by personal service in accordance with the provisions of Section 6,
within or without the State of New York, provided a reasonable time for
appearance is allowed.
6. Notice.
All notices provided for in this Employment Agreement shall be
in writing and shall be given by registered or certified mail, return receipt
requested, and by regular mail, both with postage prepaid, or personally
delivered, to the addresses set forth below, and shall be deemed given when
sent.
The addresses referred to above are:
Your address: 79 Benedict Hill Road
New Canaan, Connecticut 06840
Garan: 350 Fifth Avenue
New York, New York 10118
Attn: President
With a copy to: Tannenbaum Dubin & Robinson, LLP
1140 Avenue of the Americas
New York, New York 10036
Attn: Marvin S. Robinson, Esq.
Either you or Garan at any time may give notice of another
address in accordance with the provisions of this Section 6.
7. Governing Law, Amendment, and Binding Effect, etc.
7.1 This Employment Agreement (a) shall be governed by and
construed in accordance with the laws of the State of New York as if it were
an agreement made and to be performed entirely within such State, (b) may not
be modified or amended except by a writing signed by each of Garan or its
successors and you, (c) may not be assigned by Garan except as provided in
Section 7.2 or by you, (d) shall be binding upon each of Garan and its
successors and you and your distributees, personal representatives, executors,
and administrators, and (e) contains the entire agreement and understanding
between Garan and you with respect to the subject matter hereof and supersedes
all prior agreements, arrangements, and understandings, written or oral,
between Garan and you with respect to the subject matter of this Employment
Agreement.
7.2 If Garan shall be merged into or consolidated with
another entity, or another entity acquires substantially all of the assets of
Garan, the provisions of this Employment Agreement shall be binding upon and
inure to the benefit of the entity surviving such merger or resulting from
such consolidation or acquiring such assets. Garan will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business or assets of Garan, by an
agreement in form and substance satisfactory to you, to expressly assume and
agree to perform this Employment Agreement in the same manner and to the same
extent that Garan would be required to perform it if no such succession had
taken place. The provisions of the prior sentences also shall apply in the
event of any subsequent mergers, consolidations, or transfers of assets.
8. Withholding; Mitigation of Damages.
8.1. Garan, to the extent permitted by law, shall have the
right to deduct from any payment or benefit of any kind otherwise due to you
under this Employment Agreement, any Federal, state, or local taxes of any
kind required to be withheld.
8.2. Except as provided in Section 3.5.a, all payments and
benefits to which you are entitled under this Employment Agreement shall be
made and provided without offset, deduction, or mitigation on account of
income you may receive from other employment or otherwise.
9. Litigation Expenses.
Garan shall pay all of your costs and expenses, including
attorneys' fees and disbursements, in connection with any legal proceedings
(including, but not limited to, arbitration), whether or not instituted by
Garan or you, relating to the interpretation or enforcement of any provision
of this Employment Agreement.
If the foregoing correctly sets forth our agreement, please execute and
return the enclosed copy of this letter.
Sincerely,
GARAN, INCORPORATED
By:________________________
Jerald Kamiel, President
ACCEPTED AND AGREED:
____________________
William J. Wilson
<PAGE>
ANNEX I
CERTAIN DEFINITIONS
As used in this Employment Agreement, and unless the context requires a
different meaning, the following terms have the meanings indicated:
"Cause" means willful and gross misconduct on your part that is
materially and demonstrably detrimental to Garan or the commission by you of
one or more acts which constitute an indictable crime under Federal, state, or
local law, as determined in good faith by a written resolution duly adopted by
the affirmative vote of a majority of all of the directors then serving on
Garan's Board of Directors at a meeting duly called and held for that purpose
after reasonable notice to you and opportunity for you and your counsel to be
heard.
"Change of Control Event" means any one of the following:
(a) Continuing Directors no longer constitute at least a majority of Garan's
Board of Directors, (b) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934), together with its
affiliates, become the beneficial owner, directly or indirectly, of at least
40% of Garan's then outstanding Common Stock, (c) the approval by Garan's
shareholders of the merger or consolidation of Garan with any other
corporation, the sale of substantially all of the assets of Garan or the
liquidation or dissolution of Garan, unless, in the case of a merger or
consolidation, the incumbent Continuing Directors in office immediately prior
to such merger or consolidation will constitute at least a majority of the
directors of the surviving corporation of such merger or consolidation and any
parent (as such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such corporation, and such surviving corporation (and such
parent, if any) shall have at least five directors, or (d) at least a majority
of the incumbent Continuing Directors in office immediately prior to any other
action proposed to be taken by Garan's shareholders or by Garan's Board of
Directors determines that such proposed action, if taken, would constitute a
Change of Control of Garan and such proposed action is thereafter taken.
"Continuing Director" means any individual who is a member of Garan's
Board of Directors on October 1, 1996, or who thereafter is designated (before
such person's initial election as a director) as a Continuing Director by a
majority of the then Continuing Directors.
"Parachute Payment" means any payment deemed to constitute
a "parachute payment" as defined in Section 280G of the Internal Revenue Code
of 1986 as amended from time to time.
GARAN, INCORPORATED
350 Fifth Avenue
New York, New York
10036
January 15, 1997
Mr. Rodney Faver
Route 1, Box 260
Starkville, Mississippi 39759
Dear Rodney:
We are writing to amend and restate, effective as of October 1, 1996,
the agreement between you and Garan, Incorporated ("Garan") originally entered
into as of October l, 1988, and subsequently amended and restated (the
agreement as amended and now again restated, "Employment Agreement") with
respect to your continuing employment by Garan. We have agreed that:
l. Position, Duties, and Period of Employment.
1.l. Position.
Garan hereby continues to employ you, and you agree to
accept continued employment, as a divisional officer with the title of Vice
President - Manufacturing.
1.2. Duties.
During the period of your employment under this Employment
Agreement ("Employment Term"), except for vacations, holidays, and personal
days, as each is authorized by and consistent with the practices of Garan, and
absences due to psychological, emotional, or physical reasons, you shall
devote your full business time, skill, and energy to the business and affairs
of Garan, and you shall use your best efforts to promote the best interests of
Garan.
1.3. Period of Employment.
Your employment under this Employment Agreement shall be
for a term ending September 30, 1998 ("Term End").
2.Base Compensation, Annual Bonus, and Executive Employee Benefits.
2.1. Base Compensation and Annual Bonus.
During the Employment Term, Garan shall pay to you base
compensation ("Base Compensation") in each 12 month period commencing October
1 and ending September 30 ("Fiscal Year") as determined from time to time by
the Board of Directors of Garan ("Board"), but for the Fiscal Year ending
September 30, 1997, and for each Fiscal Year thereafter, such amount shall be
not less than $175,000. [References to Base Compensation in this Employment
Agreement shall not give effect to any salary reduction agreement.] In
addition to payment of Base Compensation, the Board may determine, but is not
obligated to, to pay to you an annual Fiscal Year bonus ("Annual Bonus").
2.2. Executive Employee Benefits.
During the Employment Term,
Garan shall provide you with employee benefits determined from time to time by
the Board, which employee benefits shall be at least as favorable as those
provided to other senior executives of Garan, and Garan shall maintain a life
insurance policy on your life payable to your designated beneficiary or
beneficiaries in the principal amount of not less than $500,000.
3. Termination of Employment.
3.1. Voluntary Termination After a Change of Control Event.
If a Change of Control Event, as such term is defined in
Annex I to this Employment Agreement, occurs at any time during the Employment
Term, within 6 months after such Change of Control Event you may give notice
to Garan terminating your employment. Such termination of employment shall be
effective on a date set by you but not later than 30 days after you give
notice of termination to Garan. In the event of such voluntary termination,
Garan will pay to you cash severance equal to 2.99 times the sum of (a) the
average of your Base Compensation determined by the Board in accordance with
the provisions of Section 2.1 for each of the 5 Fiscal Years ending with the
Fiscal Year preceding the Fiscal Year in which the Change of Control Event
occurs plus (b) the average of your last 5 Annual Bonuses determined by the
Board in accordance with Section 2.1 prior to the Change of Control Event.
Such severance shall be payable to you on the next business day after the last
day you render services under this Employment Agreement. It is expressly
agreed that this Section 3.1 shall not apply if the Change of Control Event is
a result of a completed "management buyout" of Garan in which you participate
as an equity investor.
3.2. Termination by Garan Other Than for Cause.
If Garan for any reason other than for Cause as defined in
Annex I to this Employment Agreement (a) terminates your employment prior to
October 1, 1998, or (b) fails to renew the term of this Employment Agreement
on substantially the same terms:
3.2.a. Garan shall pay to you an amount equal to the
greater of (i) two times your Base Compensation plus two times your last
Annual Bonus as each was last determined by the Board pursuant to Section 2.1
prior to the date of such termination and (ii) three times your Base
Compensation as last determined by the Board pursuant to Section 2.1 prior to
the date of such termination. Such amount shall be payable in cash, one-third
within five business days of such termination, one-third on the first
anniversary of such termination, and one-third on the second anniversary of
such termination, and
3.2.b. Garan shall continue to provide you with executive
employee benefits as provided in Section 2.2, or alternatively, shall provide
you with life insurance, medical reimbursement, disability, and accidental
death and dismemberment benefit coverage at levels no less favorable than
those in effect for you pursuant to Section 2.2 on the date of termination of
your employment if such executive employee benefits were being provided to you
by Garan immediately prior to the termination of your employment, for a period
equal to the lesser of (i) two years following the date of termination of your
employment or September 30, 1998, whichever comes later, or (ii) until you are
provided by another employer with benefits substantially comparable to the
benefits described in this Section 3.2.b.
3.3. Termination by Garan for Cause.
Garan shall have the right to terminate your employment
under this Employment Agreement at any time upon a determination by Garan to
dismiss you for Cause as defined in Annex I to this Employment Agreement.
Upon such termination for Cause, Garan's sole obligation shall be to pay you
any accrued but unpaid Base Compensation and executive employee benefits
described in Sections 2.1 and 2.2 as of the date of the termination of your
employment.
3.4. Death.
Upon your death during the term of this Employment
Agreement prior to your becoming Disabled (as defined in Section 3.5), this
Employment Agreement shall terminate, and all obligations of Garan under this
Employment Agreement shall terminate simultaneously therewith, except that
Garan shall pay to your designated beneficiaries, or if no beneficiaries are
designated, to your estate, any amounts under Sections 2 and 3 which are
unpaid and earned to the date of your death. In addition, Garan shall pay to
your designated beneficiaries, or if no beneficiaries are designated, to your
estate, an amount equal to 150% of the total of your then Base Compensation
and last Annual Bonus as each was last determined by the Board in accordance
with Section 2.1, in 12 equal monthly installments commencing with the first
day of the month following the date of your death.
3.5. Disability.
3.5.a. In the event you incur a Disability, until the
earlier to occur of the date of your death or the date you become Disabled (as
such terms are defined in Section 3.5.e), Garan shall continue to pay to you
your Base Compensation as last determined by the Board in accordance with the
provisions of Section 2.1 and continue your executive employee benefits set
forth in Section 2.2.
3.5.b. If you become Disabled, Garan shall (i) continue
to pay you monthly, regardless of your death after you become Disabled, until
the later of the Term End or 18 months from the date that you became Disabled,
but for not more than 36 months, 1/12th of the total of your Base Compensation
in effect at the date you incurred the Disability plus an amount equal to your
last Annual Bonus as each was determined by the Board pursuant to the
provisions of Section 2.1 prior to the date you incurred the Disability,
reduced by the gross amount payable as a result of such Disability under any
disability or salary continuation policy or plan, the cost of which is paid by
Garan, and (ii) during the period set forth in Section 3.5.a(i), continue
your other executive employee benefits set forth in Section 2.2 as in effect
at the first day that you were unable to carry out your duties because of
psychological, emotional, or physical reasons which resulted in your
Disability.
3.5.c. If you become Disabled, (i) Garan can remove you
from the position that you then hold and (ii) the provisions of Sections 3.2
and 3.4 shall no longer apply, provided that neither Garan nor you shall be
relieved of any other obligations under this Employment Agreement.
3.5.d. If you die after incurring a Disability but prior
to becoming Disabled, the provisions of Section 3.4 shall apply in lieu of the
provisions of this Section 3.5.
3.5.e. For purposes of this Section 3.5, Disability shall
mean that you are unable to substantially carry out your obligations under
this Employment Agreement because of psychological, emotional, or physical
reasons, and Disabled shall mean that your Disability has continued for a
period of 90 consecutive days or for an aggregate of 120 days during any
period of 360 consecutive days.
3.6. Automobile.
Within 30 days following the last day that you render
services as an employee to Garan under this Employment Agreement, the date of
your death, or the date on which you became Disabled, you or your Estate shall
have the right to elect to purchase from Garan the automobile then owned and
supplied to you by Garan, if any, at the value thereof on Garan's books at
such time. Payment shall be made in cash on the 30th day after you make such
election.
3.7. Parachute Payments.
If any amounts payable pursuant to this Employment
Agreement which are deemed to constitute Parachute Payments, as defined in
Annex I to this Employment Agreement, when added to any other payments which
are deemed to constitute Parachute Payments, would result in the imposition on
you of an excise tax under Section 4999 of the Internal Revenue Code of l986,
as amended from time to time, the amounts payable under this Employment
Agreement shall be reduced by the smallest amount necessary to avoid the
imposition of such excise tax.
4.Trade Secrets, Non-Competition, Non-Interference, and
Non-Disparagement.
4.1. Trade Secrets.
You acknowledge that: (a) your employment by Garan
throughout the term of this Employment Agreement and prior thereto will bring
and has brought you into close contact with many confidential affairs of
Garan, (b) the business of Garan is conducted throughout the United States and
abroad and competes with similar businesses of other organizations, (c) Garan
carries on substantial promotional, marketing, and/or sales activities
throughout the United States and abroad, and (d) the covenants contained in
Sections 4.2 and 4.3 of this Employment Agreement are specific inducements by
you to Garan in connection with the execution of this Employment Agreement.
4.2. Non-Competition.
In recognition of the provisions of Section 4.1 and as
consideration for your continued employment by Garan, the payment by Garan to
you of compensation, and Garan providing you with benefits, you agree that:
4.2.a. While you are performing services for Garan
pursuant to this Employment Agreement, and at all times thereafter, you shall
not disclose, communicate, or divulge to any person (other than to officers,
directors, or employees of Garan and its subsidiaries whose duties require
such knowledge) or use for your personal benefit or for the benefit of anyone
other than Garan and its subsidiaries, any trade secrets, specifications,
sales or merchandising plans, programs, research, or other confidential
information employed in or proposed to be employed in the business of Garan
and its subsidiaries which comes to or came to your knowledge in the course of
or by reason of your employment by Garan, or your performance under this
Employment Agreement.
4.2.b. In the event that (i) your employment pursuant to
this Employment Agreement is terminated by Garan pursuant to Section 3.2 or
3.3, or (ii) the term of this Employment Agreement ends, for so long as Garan
continues to pay you in accordance with its payroll practices, but for not
more than the 12 month period beginning on the last day you render services to
Garan, compensation at an annual rate equal to the greater of (x) the total of
your Base Compensation in effect at the last day that you render services to
Garan plus your Annual Bonus as each was last determined by the Board pursuant
to Section 2.1, or (y) the total of your average Base Compensation in the 24
month period ending on the last day that you render services to Garan plus the
average of your last two Annual Bonuses as each was determined by the Board
pursuant to Section 2.1, you shall not directly or indirectly, enter into or
in any manner take part as an employee, agent, independent contractor,
consultant, owner, sole proprietor, partner, joint venturer, member, officer,
director, or shareholder or take part in any other capacity in, for, or with
any person, firm, corporation, association, or business enterprise, or in any
manner render any assistance to any business or endeavor, whose business
activities are the same, similar to, or competitive with any part of the
business which is conducted by Garan and its subsidiaries during the course of
your employment by Garan prior to and pursuant to this Employment Agreement in
any state in the United States and in any territory, possession, or foreign
country, provided that the provisions of this Section 4.2.b shall not preclude
you from ownership, as an investor, of less than 5% of the stock of a publicly
owned company which engages in such business activities. The provisions of
this Section 4.2.b may not be invoked by Garan if Garan terminates your
employment upon or after a Change of Control Event unless the Change in
Control Event is a result of a completed "management buyout" of Garan in which
you participate as an equity investor. In the event Garan determines to pay
you for the 12-month period referred to above, it shall do so for minimum
periods of 3 months, and it shall give you notice that it is invoking the
provisions of this Section 4.2.b and that it will compensate you accordingly.
The initial such notice shall be given together with the notice of termination
referred to in Section 3.2 or 3.3, as applicable, or 15 days prior to the end
of the term of this Employment Agreement, and, thereafter, not later than 15
days prior to the beginning of each subsequent 3-month period.
4.3. Non-Interference.
Upon the termination of your services for Garan under this
Employment Agreement, until the one year anniversary date of the last day that
you render services pursuant to this Employment Agreement, neither you nor any
person, firm, corporation, association, or business enterprise with which you
are affiliated as an employee, agent, independent contractor, consultant,
partner, joint venturer, member, officer, director, or shareholder shall
directly or indirectly induce or attempt to induce any employee of Garan or
any of its subsidiaries to terminate or alter his or her employment
relationship with Garan or any of its subsidiaries, or directly or indirectly
hire any person who is or had been employed by Garan or any of its
subsidiaries. The provisions of this Section 4.3 may not be invoked by Garan
if you terminate your employment pursuant to Section 3.1 or Garan terminates
your employment upon or after a Change of Control Event.
4.4. Non-Disparagement.
During the Employment Term and thereafter, (a) you shall
not directly or indirectly, disparage the name, reputation, or products of
Garan and (b) Garan shall not, directly or indirectly, disparage your name or
reputation.
4.5. Additional Provisions.
4.5.a. In the event that the provisions of Sections 4.2,
4.3, or 4.4 should be deemed unenforceable, invalid, or overbroad in whole or
in part for any reason, any court of competent jurisdiction is, or the
Arbitrators appointed in accordance with the provisions of Section 5 are,
hereby authorized, requested, and instructed to reform such sections
consistent with the intent of Sections 4.2, 4.3, or 4.4 to provide for the
maximum restraints upon (i) your activities (including, but not limited to,
time, geographic area, employee solicitation, and disparagement), (ii) and
with respect to Section 4.4, Garan's activities, which may then be legal and
valid.
4.5.b. You and Garan agree that violation by you of the
provisions of Sections 4.1, 4.2, 4.3, or 4.4 or by Garan of the provisions of
Section 4.4 will cause irreparable injury to the other for which any remedy at
law would be inadequate, and that the injured party shall be entitled in any
court of law or equity or in any arbitration proceeding in accordance with
Section 5, whichever forum is designated by the injured party, to temporary,
preliminary, permanent, and other injunctive relief against any breach of the
provisions contained in such sections, and such punitive and compensatory
damages as shall be awarded. Further, in the event of a violation of the
provisions of Sections 4.1, 4.2, 4.3, or 4.4, (i) the period of
non-disclosure, non-competition, employee non-interference, or
non-disparagement referred to therein shall be extended for a period of time
equal to that period beginning on the date when such violation commenced and
ending when the activities constituting that violation shall be finally
terminated, and (ii) Garan shall have the right to suspend your compensation
and benefits and payments made pursuant to Section 4.2.b until the activities
constituting that violation shall be finally terminated.
5. Arbitration and Jurisdiction.
5.1. Arbitration.
Except as otherwise alternatively provided in Section 4.5
relating to the reformation of the non-competition, employee non-interference,
and non-disparagement provisions and obtaining injunctive relief, any
controversy or claim arising out of or relating to this Employment Agreement,
or the breach thereof, shall be settled by arbitration by one Arbitrator in
New York, New York, in accordance with the Rules of the American Arbitration
Association, and judgment upon the award rendered by the Arbitrator may be
entered in any court having jurisdiction thereof.
5.2. Consent to Jurisdiction.
Each of you and Garan hereby consents to the jurisdiction
of the Supreme Court of the State of New York for the County of New York and
the United States District Court for the Southern District of New York for all
purposes in connection with (a) the arbitration referred to in Section 5.1 and
(b) this Employment Agreement, and further consents that any process or notice
of motion in connection therewith may be served by certified or registered
mail or by personal service in accordance with the provisions of Section 6,
within or without the State of New York, provided a reasonable time for
appearance is allowed.
6. Notice.
All notices provided for in this Employment Agreement shall be
in writing and shall be given by registered or certified mail, return receipt
requested, and by regular mail, both with postage prepaid, or personally
delivered, to the addresses set forth below, and shall be deemed given when
sent.
The addresses referred to above are:
Your address: Route 1, Box 260
Starkville, Mississippi 39759
Garan: 350 Fifth Avenue
New York, New York 10118
Attn: President
With a copy to: Tannenbaum Dubin & Robinson, LLP
1140 Avenue of the Americas
New York, New York 10036
Attn: Marvin S. Robinson, Esq.
Either you or Garan at any time may give notice of another
address in accordance with the provisions of this Section 6.
7. Governing Law, Amendment, and Binding Effect, etc.
7.1 This Employment Agreement (a) shall be governed by and
construed in accordance with the laws of the State of New York as if it were
an agreement made and to be performed entirely within such State, (b) may not
be modified or amended except by a writing signed by each of Garan or its
successors and you, (c) may not be assigned by Garan except as provided in
Section 7.2 or by you, (d) shall be binding upon each of Garan and its
successors and you and your distributees, personal representatives, executors,
and administrators, and (e) contains the entire agreement and understanding
between Garan and you with respect to the subject matter hereof and supersedes
all prior agreements, arrangements, and understandings, written or oral,
between Garan and you with respect to the subject matter of this Employment
Agreement.
7.2 If Garan shall be merged into or consolidated with
another entity, or another entity acquires substantially all of the assets of
Garan, the provisions of this Employment Agreement shall be binding upon and
inure to the benefit of the entity surviving such merger or resulting from
such consolidation or acquiring such assets. Garan will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
to all or substantially all of the business or assets of Garan, by an
agreement in form and substance satisfactory to you, to expressly assume and
agree to perform this Employment Agreement in the same manner and to the same
extent that Garan would be required to perform it if no such succession had
taken place. The provisions of the prior sentences also shall apply in the
event of any subsequent mergers, consolidations, or transfers of assets.
8. Withholding; Mitigation of Damages.
8.1. Garan, to the extent permitted by law, shall have the
right to deduct from any payment or benefit of any kind otherwise due to you
under this Employment Agreement, any Federal, state, or local taxes of any
kind required to be withheld.
8.2. Except as provided in Section 3.5.a, all payments and
benefits to which you are entitled under this Employment Agreement shall be
made and provided without offset, deduction, or mitigation on account of
income you may receive from other employment or otherwise.
9. Litigation Expenses.
Garan shall pay all of your costs and expenses, including
attorneys' fees and disbursements, in connection with any legal proceedings
(including, but not limited to, arbitration), whether or not instituted by
Garan or you, relating to the interpretation or enforcement of any provision
of this Employment Agreement.
If the foregoing correctly sets forth our agreement, please
execute and return the enclosed copy of this letter.
Sincerely,
GARAN, INCORPORATED
By:________________________
Jerald Kamiel, President
ACCEPTED AND AGREED:
____________________
Rodney Faver
<PAGE>
ANNEX I
CERTAIN DEFINITIONS
As used in this Employment Agreement, and unless the context requires a
different meaning, the following terms have the meanings indicated:
"Cause" means willful and gross misconduct on your part that is
materially and demonstrably detrimental to Garan or the commission by you of
one or more acts which constitute an indictable crime under Federal, state, or
local law, as determined in good faith by a written resolution duly adopted by
the affirmative vote of a majority of all of the directors then serving on
Garan's Board of Directors at a meeting duly called and held for that purpose
after reasonable notice to you and opportunity for you and your counsel to be
heard.
"Change of Control Event" means any one of the following:
(a) Continuing Directors no longer constitute at least a majority of Garan's
Board of Directors, (b) any person or group of persons (as defined in Rule
13d-5 under the Securities Exchange Act of 1934), together with its
affiliates, become the beneficial owner, directly or indirectly, of at least
40% of Garan's then outstanding Common Stock, (c) the approval by Garan's
shareholders of the merger or consolidation of Garan with any other
corporation, the sale of substantially all of the assets of Garan or the
liquidation or dissolution of Garan, unless, in the case of a merger or
consolidation, the incumbent Continuing Directors in office immediately prior
to such merger or consolidation will constitute at least a majority of the
directors of the surviving corporation of such merger or consolidation and any
parent (as such term is defined in Rule 12b-2 under the Securities Exchange
Act of 1934) of such corporation, and such surviving corporation (and such
parent, if any) shall have at least five directors, or (d) at least a majority
of the incumbent Continuing Directors in office immediately prior to any other
action proposed to be taken by Garan's shareholders or by Garan's Board of
Directors determines that such proposed action, if taken, would constitute a
Change of Control of Garan and such proposed action is thereafter taken.
"Continuing Director" means any individual who is a member of Garan's
Board of Directors on October 1, 1996, or who thereafter is designated (before
such person's initial election as a director) as a Continuing Director by a
majority of the then Continuing Directors.
"Parachute Payment" means any payment deemed to constitute
a "parachute payment" as defined in Section 280G of the Internal Revenue Code
of 1986 as amended from time to time.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF EARNINGS AND BALANCE SHEETS OF GARAN, INCORPORATED
AND SUBSIDIARIES ANNEXED HERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000039917
<NAME> GARAN, INCORPORATED
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1997
<PERIOD-START> JAN-1-1997 OCT-31-1996
<PERIOD-END> MAR-31-1997 MAR-31-1997
<CASH> 10,577,000 10,577,000
<SECURITIES> 12,731,000 12,731,000
<RECEIVABLES> 23,913,000 23,913,000
<ALLOWANCES> 508,000 508,000
<INVENTORY> 31,756,000 31,756,000
<CURRENT-ASSETS> 83,256,000 83,256,000
<PP&E> 33,779,000 33,779,000
<DEPRECIATION> 19,849,000 19,849,000
<TOTAL-ASSETS> 119,742,000 119,742,000
<CURRENT-LIABILITIES> 16,896,000 16,896,000
<BONDS> 2,893,000 2,893,000
<COMMON> 2,535,000 2,535,000
0 0
0 0
<OTHER-SE> 94,542,000 94,542,000
<TOTAL-LIABILITY-AND-EQUITY> 119,742,000 119,742,000
<SALES> 37,611,000 68,604,000
<TOTAL-REVENUES> 37,611,000 68,604,000
<CGS> 28,458,000 52,369,000
<TOTAL-COSTS> 28,458,000 52,369,000
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 27,000 52,000
<INCOME-PRETAX> 4,218,000 6,594,000
<INCOME-TAX> 1,677,000 2,616,000
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,541,000 3,978,000
<EPS-PRIMARY> 0.50 0.78
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</TABLE>
