<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
---------
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission File Number: 0-23214
-------
SAMSONITE CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-3511556
- ------------------------------ ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11200 East 45th Avenue, Denver, CO 80239
- ---------------------------------- -------------
(Address of principal executive offices) (Zip Code)
(303) 373-2000
--------------------------
(Registrant's telephone number, including area code)
------------------------------------
(Former name, if changed since last report)
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 and (2) has been subject to such filing
requirements for the past 90 days.
X Yes No
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
X Yes No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 16,022,463 shares of common
stock, par value $0.01 per share, as of December 9, 1996.
<PAGE>
FORM 10-Q
---------
CONTENTS
--------
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page Number
--------------------- -----------
<S> <C>
Unaudited Consolidated Balance Sheets as of October 31, 1996
and January 31, 1996................................................. 1
Unaudited Consolidated Statements of Operations for the three months
ended October 31, 1996 and 1995...................................... 3
Unaudited Consolidated Statements of Operations for the nine months
ended October 31, 1996 and 1995...................................... 4
Unaudited Consolidated Statement of Stockholders' Equity for the nine
months ended October 31, 1996........................................ 5
Unaudited Consolidated Statements of Cash Flows for the nine months
ended October 31, 1996 and 1995...................................... 6
Unaudited Notes to Consolidated Financial Statements................. 8
Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................ 15
PART II - OTHER INFORMATION
-----------------
Item 1: Legal Proceedings............................................ 25
Item 2: Changes in Securities........................................ 25
Item 3: Defaults upon Senior Securities.............................. 25
Item 4: Submission of Matters to a Vote of Security Holders.......... 25
Item 5: Other Information............................................ 25
Item 6: Exhibits and Reports on Form 8-K............................. 25
Signature............................................................ 26
Index to Exhibits.................................................... 27
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
- ------------------------------
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 31, 1996 AND JANUARY 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
October 31, January 31,
1996 1996
----------- -----------
<S> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents................. $ 3,145 15,179
Trade receivables, net of allowance for
doubtful accounts of $9,636 and $8,152.. 98,186 73,513
Notes and other receivables............... 10,163 17,711
Inventories (Note 2)...................... 139,138 115,736
Deferred income tax assets................ 32,941 38,760
Prepaid expenses and other current
assets................................... 14,349 15,990
Assets held for sale........................ 9,246 9,455
-------- --------
Total current assets.................. 307,168 286,344
Property, plant and equipment, net (Note 3). 138,170 140,912
Investments in affiliates................... 1,236 --
Intangible assets, less accumulated
amortization of $200,834 and
$171,278 (Note 4)........................ 129,874 159,492
Other assets and long-term receivables,
net of allowance for doubtful accounts
of $5,555 and $10,104.................... 22,056 34,695
-------- --------
$598,504 621,443
======== ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 31, 1996 AND JANUARY 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
(CONTINUED)
<TABLE>
<CAPTION>
October 31, January 31,
1996 1996
------------ ------------
<S> <C> <C>
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Short-term debt (Note 5)................... $ 7,329 23,487
Current installments of long-term
obligations (Note 5)..................... 19,475 16,306
Accounts payable........................... 39,280 33,520
Accrued liabilities........................ 118,520 113,512
-------- --------
Total current liabilities.............. 184,604 186,825
Long-term obligations, less current
installments (Note 5)....................... 273,167 294,653
Deferred income tax liabilities.............. 36,784 33,038
Other noncurrent liabilities................. 79,330 79,672
Minority interests........................... 3,795 2,139
--------- --------
Total liabilities...................... 577,680 596,327
--------- --------
Stockholders' equity (Notes 7 and 8):
Preferred stock ($.01 par value;
2,000,000 shares authorized;
no shares issued)...................... -- --
Common stock ($.01 par value;
60,000,000 shares authorized;
16,021,950 and 15,889,450 shares
issued and outstanding, respectively). 160 159
Additional paid-in capital................. 264,584 261,842
Accumulated deficit........................ (238,160) (224,547)
Foreign currency translation equity
adjustment................................ (4,916) (2,338)
Unearned compensation - restricted stock... (844) --
Note receivable............................ -- (10,000)
--------- --------
Total stockholders' equity............. 20,824 25,116
--------- --------
Commitments and contingencies
(Notes 1C and 6)........................... $ 598,504 621,443
========= ========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED OCTOBER 31, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended October 31,
-------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
Net sales (Note 1F)......................................... $203,817 180,284
Cost of goods sold (Note 3)................................. 123,413 110,167
--------- -------
Gross profit.............................................. 80,404 70,117
Selling, general and administrative expenses (Note 3)...... 62,749 50,663
Amortization of intangible assets (Note 4).................. 2,217 15,963
Provision for restructuring operations (Note 9)............. 10,670 --
--------- -------
Operating income.......................................... 4,768 3,491
Other income (expense):
Interest income........................................... 373 388
Interest expense and amortization of debt issue costs..... (9,078) (10,927)
Other, net (Note 6)....................................... 11,921 42
--------- -------
Income (loss) before income taxes and minority interest..... 7,984 (7,006)
Income tax expense.......................................... (4,203) (4,127)
Minority interest in earnings of subsidiaries............... (409) (231)
--------- -------
Net income (loss)......................................... $ 3,372 (11,364)
========= =======
Net income (loss) per common share - primary................ $ .22 (.72)
========= =======
Net income (loss) per common share - fully diluted.......... $ .20 (.72)
========= =======
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 31, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Nine Months Ended October 31,
------------------------------
1996 1995
-------- -------
<S> <C> <C>
Net sales (Note 1F).......................................... $553,124 505,707
Cost of goods sold (Note 3).................................. 335,363 307,458
-------- -------
Gross profit............................................... 217,761 198,249
Selling, general and administrative
expenses (Note 3)........................................... 174,140 153,197
Amortization of intangible assets (Note 4)................... 29,622 47,863
Provision for restructuring operations (Note 9).............. 10,670 --
-------- -------
Operating income (loss).................................... 3,329 (2,811)
Other income (expense):
Interest income............................................ 1,172 4,058
Interest expenseand amortization of debt issue costs....... (27,112) (30,851)
Other, net (Note6)......................................... 18,453 3,357
-------- -------
Loss before income taxes, minority
interest and extraordinary item.......................... (4,158) (26,247)
Income tax expense........................................... (8,603) (7,495)
Minority interest in earnings of subsidiaries................ (852) (428)
-------- -------
Loss before extraordinary item............................. (13,613) (34,170)
Extraordinary loss, net of income tax benefit of $5,589
(Note 5).................................................. -- (8,042)
-------- -------
Net loss................................................... $(13,613) (42,212)
======== =======
Loss per share:
Loss before extraordinary item............................. $ (.85) (2.16)
Extraordinary item......................................... -- (.52)
-------- -------
Net loss................................................... $ (.85) (2.68)
======== =======
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED OCTOBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
Foreign
Currency Unearned
Additional Translation Compensation-
Preferred Common Paid-In Accumulated Equity Restricted Note
Stock Stock Capital Deficit Adjustment Stock Receivable
--------- ------- --------- ----------- ------------ -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1996 $ -- 159 261,842 (224,547) (2,338) -- (10,000)
Issuance of 55,000 shares of common
stock to an officer for cash -- -- 1,004 -- -- -- --
Stock award of 60,000 shares of
restricted common stock to an officer -- 1 1,094 -- -- (1,095) --
Amortization of restricted stock award
to compensation expense -- -- -- -- -- 251 --
Compensation expense accrual for stock
bonus awards (Note 8) -- -- 325 -- -- -- --
Exercise of employee stock options and
related income tax benefits (Note 8) -- -- 319 -- -- -- --
Foreign currency translation adjustment -- -- -- -- (2,578) -- --
Payment of note receivable (Note 7) -- -- -- -- -- -- 10,000
Net loss -- -- -- (13,613) -- -- --
--------- ------- --------- --------- ---------- ----------- ---------
Balance, October 31, 1996 $ -- 160 264,584 (238,160) (4,916) (844) --
========= ======= ========= ========= ========== =========== =========
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 31, 1996 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Nine Months Ended October 31,
-----------------------------
1996 1995
<S> <C> <C>
Cash flows provided (used) by operating activities:
Net loss................................................... $(13,613) (42,212)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Loss from extinguishment of debt........................ -- 8,042
Loss (gain) on disposition of fixed assets.............. (171) 63
Depreciation and amortization of
property, plant and equipment.......................... 16,615 14,849
Amortization of intangible assets....................... 29,622 47,863
Amortization of debt issue costs........................ 1,449 --
Provision for doubtful accounts......................... 2,073 669
Amortization of stock awards............................ 576 --
Adjustment of liability for PBGC claims................. (11,100) --
Changes in deferred taxes, net.......................... 9,565 --
Changes in operating assets and liabilities:
Trade and other receivables........................... (19,079) (23,217)
Inventories........................................... (23,402) (10,845)
Prepaid expenses and other current assets............. 1,850 10,088
Accounts payable...................................... 5,760 (15)
Accrued liabilities................................... 5,008 11,095
Other, net............................................ 5,556 (28)
-------- -------
Net cash provided by operating activities.................... $ 10,709 16,352
-------- -------
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED OCTOBER 31, 1996 AND 1995
(IN THOUSANDS)
(CONTINUED)
<TABLE>
<CAPTION>
Nine Months Ended October 31,
------------------------------
1996 1995
-------- ---------
<S> <C> <C>
Cash flows provided (used) by investing activities:
Purchases of property, plant and equipment........ $(19,689) (15,909)
Net cash from (used by) discontinued operations... 11,511 (1,603)
Cash received from spinoff of discontinued
operations...................................... -- 112,000
Other............................................. 4,601 (15,022)
-------- -------
Net cash provided (used) by investing
activities................................... (3,577) 79,466
-------- -------
Cash flows provided (used) by financing activities:
Net proceeds from (repayment of) short-term
debt........................................... (16,026) 911
Repayments on long-term obligations.............. (14,863) (105,514)
Proceeds from sale of common stock and
exercise of stock options...................... 1,199 --
Payment of note receivable for issuance
of common stock................................ 10,000 --
Premium on retirement of subordinated notes...... -- (18,320)
Other............................................ 1,654 (14,359)
-------- -------
Net cash used by financing activities.......... (18,036) (137,282)
-------- -------
Effect of exchange rate changes on cash and cash
equivalents...................................... (1,130) 864
-------- -------
Net decrease in cash and cash equivalents...... (12,034) (40,600)
Cash and cash equivalents, beginning of period...... 15,179 51,283
-------- -------
Cash and cash equivalents, end of period............ $ 3,145 10,683
======== =======
Supplemental disclosures of cash flow information:
Cash paid during the period for interest............ $ 19,381 43,987
======== =======
Cash paid during the period for income taxes........ $ 1,885 9,842
======== =======
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
A. BUSINESS
--------
Samsonite Corporation and Subsidiaries (the "Company") was formerly known as
Astrum International Corp. ("Astrum"). On July 14, 1995, Astrum merged with
its wholly-owned subsidiary, Samsonite Corporation, and changed its name to
Samsonite Corporation. The Company is engaged in the manufacture and sale
of luggage and related products throughout the world, primarily under the
Samsonite, American Tourister, and Lark brand names. The principal
customers of the Company are department/specialty retail stores, mass
merchants, catalog showrooms and warehouse clubs. The Company's retail
sales consist primarily of American Tourister products sold through Company
owned stores.
B. BASIS OF PRESENTATION
---------------------
On May 25, 1993, the United States Bankruptcy Court for the Southern
District of New York confirmed the Amended Plan of Reorganization (the
"Plan") for Astrum. Pursuant to the terms of the Plan, which became
effective on June 8, 1993, Astrum completed a comprehensive financial
reorganization which reduced debt and annual interest expense (the
"Restructuring").
The Restructuring has been accounted for pursuant to the American Institute
of Certified Public Accountants Statement of Position 90-7, entitled
"Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code" ("SOP 90-7"). SOP 90-7 requires that assets and liabilities be
adjusted to their fair values ("fresh-start" values) and that a new
reporting entity be created. On June 30, 1993, for accounting purposes, the
Plan was consummated and SOP 90-7 was adopted. The consolidated financial
statements include the ongoing impact of fresh-start reporting.
C. INTERIM FINANCIAL STATEMENTS
----------------------------
The accompanying unaudited consolidated financial statements reflect all
adjustments, which are normal and recurring in nature, and which, in the
opinion of management, are necessary to a fair statement of the financial
position as of October 31, 1996 and results of operations for the three-
month and nine-month periods ended October 31, 1996 and 1995. These
consolidated financial statements and related notes should be read in
conjunction with the consolidated financial statements and related notes
included in the Company's Annual Report on Form 10-K for the fiscal year
ended January 31, 1996.
See Note 14 to the aforementioned consolidated financial statements included
in the 1996 Form 10-K for a description of litigation, commitments and
contingencies.
D. USE OF ESTIMATES
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
8
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
E. PER SHARE DATA
--------------
Loss per share is calculated based on the weighted average number of shares
outstanding during the period. The weighted average number of shares
outstanding during the nine months ended October 31, 1996 and 1995 was
15,953,019 and 15,776,294, respectively. The weighted average number of
shares outstanding during the three months ended October 31, 1995 was
15,889,450. Primary and fully diluted net income per share for the three
months ended October 31, 1996 is computed on the weighted average shares of
common stock outstanding plus common equivalent shares using the modified
treasury method for stock options and stock awards which was 17,302,603
shares for the period.
F. ROYALTY REVENUES
----------------
The Company licenses its brand names to certain unrelated third parties as
well as certain foreign subsidiaries and joint ventures. Net sales include
royalties earned of $16,814,000 and $13,233,000 for the nine months ended
October 31, 1996 and 1995, respectively, and $4,821,000 and $4,149,000 for
the three months ended October 31, 1996 and 1995, respectively. Included in
royalties for the nine months ended October 31, 1996 is $3.9 million from
the sale of apparel tradename licenses in certain Pacific Rim countries
during the first quarter of fiscal 1997.
2. INVENTORIES
Inventories consisted of the following :
<TABLE>
<CAPTION>
October 31, January 31,
1996 1996
---------- -----------
(In thousands)
<S> <C> <C>
Raw Materials.................... $ 50,911 35,827
Work in Process.................. 10,848 10,959
Finished Goods................... 77,379 68,950
------- -------
$139,138 115,736
======= =======
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
October 31, January 31,
1996 1996
---------- -----------
(In thousands)
<S> <C> <C>
Land............................. $ 13,429 14,172
Buildings........................ 62,852 62,281
Machinery, equipment and other... 115,900 106,511
------- --------
192,181 182,964
Less accumulated depreciation
and amortization............... (54,011) (42,052)
------- --------
$138,170 140,912
======= ========
</TABLE>
9
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Depreciation included in cost of goods sold and selling, general and
administrative expenses related to adjustments of assets and liabilities to
fair value in connection with the adoption of SOP 90-7 consisted of the
following (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
---------------------- ----------------------
1996 1995 1996 1995
-------- -------- ------- -------
<S> <C> <C> <C> <C>
"Fresh Start" Depreciation in Cost of Goods Sold.............. $ 731 632 2,192 1,887
"Fresh Start" Depreciation in Selling, General and
Administrative Expenses.................................... 162 139 487 417
------ ---- ----- -----
Total "Fresh Start" Depreciation........................... $ 893 771 2,679 2,304
====== ==== ===== =====
</TABLE>
Property and equipment revalued in connection with the adoption of SOP 90-7
are being depreciated over their respective estimated useful lives,
primarily ranging from two to six years.
4. INTANGIBLE ASSETS
Intangible assets, net of accumulated amortization, consisted of the following:
<TABLE>
<CAPTION>
October 31, January 31,
1996 1996
------------ ------------
(In thousands)
<S> <C> <C>
Reorganization Value in Excess of Identifiable Assets........ $ -- 22,947
Trademarks................................................... 116,766 119,549
Licenses, Patents and Other.................................. 13,108 16,996
-------- --------
$129,874 159,492
======== ========
</TABLE>
Amortization of intangible assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
------------------------- ----------------------
1996 1995 1996 1995
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Amortization of Reorganization Value in Excess of
Identifiable Assets.................................... $ -- 14,205 22,947 42,862
Amortization of Licenses, Patents and Other............... 1,289 964 3,891 2,606
Amortization of Trademarks................................ 928 794 2,784 2,395
-------- ------- ------- -------
$2,217 15,963 29,622 47,863
======== ======= ======= =======
</TABLE>
The reorganization value in excess of identifiable assets was amortized over
a three-year period expiring June 1996; licenses, patents and other are
amortized over a period ranging from one to twenty-three years; and
trademarks are amortized over a period ranging from five to forty years.
10
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. LONG-TERM OBLIGATIONS
Long-term obligations consisted of the following:
<TABLE>
<CAPTION>
October 31, January 31,
1996 1996
-------------- ------------
(In thousands)
<S> <C> <C>
Series B Senior Subordinated Notes (a)....... $190,000 190,000
Senior Credit Facility (b)................... 57,500 58,000
Short-term obligations expected to be
refinanced.................................. 5,195 11,394
Capital lease obligations.................... 5,022 4,665
Other (c).................................... 42,254 70,387
-------- -------
Total.................................... 299,971 334,446
Less short-term debt and current install-
ments of long-term obligations.............. (26,804) (39,793)
-------- -------
$273,167 294,653
======== =======
</TABLE>
(a) The Series B Senior Subordinated Notes bear interest at 11 1/8% and have
a maturity date of July 15, 2005.
(b) As of October 31,1996, the Senior Credit Facility provides for a $47.5
million term loan and a $175 million revolving credit facility. The
credit facility matures July 14, 2000.
The following amounts were outstanding at October 31, 1996 under the
Senior Credit Facility:
Term Loan $47.5 million
Revolving Credit Borrowings $10.0 million
Letters of Credit $52.9 million
Available borrowings were $112.1 million at October 31, 1996.
The Senior Credit Facility is secured by substantially all the Company's
U.S. assets, the capital stock of its principal domestic subsidiaries,
and 66% of the stock of its principal foreign subsidiaries. The
agreement contains financial covenants which require the Company to
maintain certain financial ratios and minimum amounts of earnings,
exclusive of interest, taxes, and non-cash charges. The agreement also
contains covenants limiting the amount of capital expenditures,
investments in certain subsidiaries, and dividends, among other
restrictions. The agreement has been amended to exclude the provision
for restructuring operations (see Note 9) from the computation of
lending rates and financial covenants. Under the agreement, the Company
has no amount available for the payment of dividends at October 31,
1996. The Company is in compliance with the terms of such covenants at
October 31, 1996.
(c) Other obligations consist of various notes payable to banks by foreign
subsidiaries aggregating $37.2 million and a $5.1 million secured
financing arrangement with a foreign bank. Included in letters of credit
outstanding is a $43.5 million standby letter of credit issued to secure
the debt of foreign subsidiaries.
In July 1995, the Company redeemed its then outstanding senior subordinated
indebtedness with the proceeds from another issuance of subordinated debt.
The redemption price included a contractual premium of $18,000,000 which,
net of unamortized premium of $4,369,000 and income tax benefit of
$5,589,000, is included in the consolidated statements of operations for the
nine-month period ended October 31, 1995 as an extraordinary loss on the
extinguishment of debt.
11
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. OTHER INCOME (EXPENSE), NET
Other income (expense), net consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
October 31, October 31,
--------------------- --------------------
1996 1995 1996 1995
------- ------- ------- -------
(In thousands)
<S> <C> <C> <C> <C>
Foreign currency transaction income
(losses) (a) ................................ $ 362 (288) 2,469 (2,727)
Rental income................................. 602 474 1,489 1,292
Favorable settlement of claim (b)............. -- -- 3,802 --
Adjustment of liability for PBGC claims (c)... 11,100 -- 11,100 --
Sale of television station.................... -- -- -- 5,368
Other......................................... (143) (144) (407) (576)
------- ---- ------ ------
$11,921 42 18,453 3,357
======== ==== ====== ======
</TABLE>
(a) Foreign currency transaction income for the three months and nine months
ended October 31, 1996 includes $652,000 of unrealized exchange gains
related to open forward exchange contracts entered into to reduce foreign
currency exposure on certain foreign operations.
(b) Other income of $3,802,000 resulted from the favorable settlement on June
13, 1996 for $200,000 of a claim against the Company by a related party.
The Company had previously accrued $4,002,000 for such claim. The claim is
part of the Contingent Liability with Respect to the Old Notes described in
Note 14 to the consolidated financial statements in the 1996 Form 10-K and
relates to the claim for interest on overdue installments of interest
accruing prior to the bankruptcy of the Company's predecessor in 1993. The
Company recorded a liability of $16.4 million for all such claims as part of
the reorganization. The holders of the settled claim were Apollo Investment
Fund, L.P. ("Apollo") and an affiliate of Apollo. Apollo and its affiliates
own 45.78% of the outstanding shares of the Company's common stock.
In a hearing on November 14, 1996, the Bankruptcy Court ruled in favor of
the Company on a motion to disallow these claims on the basis that compound
interest was not allowed under applicable law at the time the bond contracts
were entered into. The ruling is subject to appeal, and the Company has not
made any adjustment to the remaining recorded liability of $12.4 million
pending expiration of the appeal period or completion of the appeal process.
(c) As discussed in note 14 to the consolidated financial statements in the 1996
Form 10-K under Contingent Liabilities to Pension Benefit Guaranty
Corporation (the "PBGC"), the Company recorded a liability of $37.7 million,
as part of the reorganization in 1993, for claims made by the PBGC for
underfunded pension plans (the "Plans") and unpaid insurance premiums for
the Plans, which were sponsored by other companies. The Company and these
other companies were part of a "controlled group", as defined by the
Employment Retirement Income Security Act of 1974, as amended, and as such
the Company had joint and several liability for the Plans. At the time of
the reorganization, the Company entered into temporary agreements with the
PBGC under which the Company agreed to be contingently liable for the Plans
and permanent agreements with the other Companies which gave the Company the
right to assume sponsorship of the Plans should the other companies default
on their obligations under the Plans. These agreements also confirmed the
agreement of the primarily liable companies to the permanent cessation of
benefit accruals and to the making of any plan amendments that would
increase benefit liabilities under the Plans without the consent of the
Company. The right to assume sponsorship of the Plans allows the Company to
avoid having the PBGC terminate the Plans and make a claim against the
Company for the PBGC regulatory prescribed termination value. This
termination value is substantially higher than the liability would be for
the Company to assume sponsorship and fund the Plans over their remaining
lives. Permanent agreements were entered into among the PBGC, the Company,
and the primarily liable companies in June 1996 which became effective on
August 6, 1996 when the Bankruptcy Court entered an order approving the
agreements. The permanent agreements imposed limitations on PBGC actions
against the Company in respect of benefit liabilities under the Plans,
including the requirement that the PBGC proceed against the primarily liable
companies before proceeding against the Company. The primarily liable
companies have continued to meet their obligations to the Plans since 1993,
although these companies remain in reorganization as of October 31, 1996.
12
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The liability originally recorded in 1993 of $37.7 million was recorded on
the basis of a PBGC termination value. As a result of the permanent
agreement giving the Company the right to assume sponsorship of the Plans,
the Company has evaluated the liability as if it were to assume
sponsorship, and has adjusted the recorded liability to $26.6 million. This
amount represents management's best estimate of the contingent liability
based on the pension benefit obligation of the Plans discounted at 7.25%
reduced by the market value of the Plans' assets as of October 31, 1996.
The corresponding reduction in the liability is recorded in other
nonoperating income in the amount of $11.1 million. The Company will
periodically reassess the amount of the liability for the effects of
changes in circumstances and assumptions.
7. NOTE RECEIVABLE
The note receivable deducted from stockholders' equity at January 31, 1996
arises from the sale of 425,532 shares of the Company's common stock to the
Company's former Chairman and Chief Executive Officer in April 1995 for
$23.50 per share. The note was repaid during the third quarter of fiscal
1997.
8. EMPLOYEE STOCK OPTIONS
The Company has authorized 2,550,000 shares for the granting of options under
the 1995 Stock Option and Award Plan. See Note 10 to the consolidated
financial statements included in the 1996 Form 10-K for a description of such
plan. In addition, the Company has outstanding options to current and former
executives in connection with employment agreements and incentive plans.
At October 31, 1996, the Company had outstanding options for a total of
4,402,810 shares at option prices ranging from $10.875 to $35.50 per share.
Options for 1,996,572 shares were exercisable at October 31, 1996. Options
for 17,500 shares were exercised at a price of $11.14 per share during the
nine months ended October 31, 1996.
In addition, the Company has granted stock bonuses for a total of 116,667
shares to certain officers payable if the officer remains continually
employed by the Company through the earlier of May 15, 1999 or one year after
a change of control event. The Company is recognizing compensation expense
equal to the fair market value at the date of the grant ($18.25 per share)
over the three-year vesting period.
9. PROVISION FOR RESTRUCTURING OPERATIONS
The Company recorded a restructuring provision of $10.7 million in the third
quarter of fiscal 1997 as a result of a restructuring program, approved by
the Board of Directors and announced in October 1996, to further consolidate
functions and operations in North America, Europe, and the Far East, and to
reduce or eliminate certain other operations. The restructuring is expected
to be completed by October 1997.
The restructuring plan includes further consolidation of hardside luggage
production to Samsonite's largest U.S. facility located in Denver, CO from
other locations in the Americas, as well as eventual consolidation of many
administrative and control functions, again primarily to Denver. The Company
will eliminate as many as 450 positions worldwide, including approximately
150 manufacturing positions and approximately 300 managerial, office and
clerical positions. Annual estimated pretax cost savings from the
restructuring program are expected to be approximately $12.7 million. The
restructuring provision consists primarily of costs associated with
involuntary employee terminations and includes a cash expense of $9.7 million
and a non-cash expense of $1.0 million, both on a pretax basis.
The foregoing estimate of annual cost savings constitutes a "forward looking
statement" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statement involves numerous assumptions, known
and unknown risks, uncertainties and other factors which may cause actual
estimated cost savings and future performance or achievements of the Company
to be materially different from any future results, performance or
13
<PAGE>
SAMSONITE CORPORATION AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
achievements expressed or implied by such forward-looking information. Such
factors include, among other things, the following: achieving estimated
staff reductions while maintaining workflow in the functional areas
affected; general economic and business conditions; and competition.
10. ADOPTION OF RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of ("Statement 121"), which requires
impairment losses to be recorded on long-lived assets used in operations
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets' carrying
amount. Statement 121 also addresses the accounting for long-lived assets
that are expected to be disposed of. The Company adopted Statement 121 in
the first quarter of fiscal 1997. Such adoption had no effect on the
consolidated financial statements.
In October 1995, the FASB issued Statement No. 123, Accounting for Stock-
Based Compensation ("Statement 123"), which provides an alternative to APB
Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for
stock-based compensation issued to employees. The Statement allows for a
fair value based method of accounting for employee stock options and similar
equity instruments. However, for companies that continue to account for
stock-based compensation arrangements under Opinion No. 25, Statement 123
requires disclosure of the pro forma effect on net income and earnings per
share of its fair value based accounting for those arrangements. The Company
has elected not to adopt the recognition and measurement provisions of the
Statement; however, the required disclosures will be provided for its fiscal
year ending January 31, 1997.
14
<PAGE>
SAMSONITE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ("MD&A")
EFFECTS OF REORGANIZATION ON RESULTS OF OPERATIONS
- --------------------------------------------------
Included in the Company's statements of operations are amortization and
depreciation expenses related to adjustments of assets and liabilities to fair
value in connection with the adoption of SOP 90-7. As a result of the
bankruptcy reorganization of the Company's predecessor in 1993, the Company was
required to adjust its assets and liabilities to their fair ("fresh start")
values and create a new entity for financial reporting purposes. The most
significant fresh start adjustment relates to recording Reorganization Value in
Excess of Identifiable Assets, which was amortized over a three year period
ending in June 1996. In addition, the Company recorded fresh start adjustments
to reflect trademarks, licenses, patents and other intangibles at their fair
values, which are being amortized over periods ranging from one to forty years.
Property and equipment adjusted to fair values in connection with the adoption
of SOP 90-7 is being depreciated over their respective estimated useful lives,
primarily ranging from two to six years.
The effects of the amortization and depreciation of the fresh start adjustments
("Fresh Start Amortization and Depreciation") on operating results is summarized
as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
----------------------- ----------------------
1996 1995 1996 1995
------- -------- -------- ------
(In thousands)
<S> <C> <C> <C> <C>
Operating income (loss)............................. $4,768 3,491 3,329 (2,811)
Fresh Start Amortization and Depreciation........... 2,886 16,734 31,607 50,167
------ ------ ------ ------
Operating income before Fresh Start Amortization
and Depreciation................................... $7,654 20,225 34,936 47,356
====== ====== ====== ======
Fresh Start Amortization and Depreciation consisted of the following:
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
----------------------- ----------------------
1996 1995 1996 1995
------- -------- -------- ------
(In thousands)
Fresh Start Amortization:
Amortization of Reorganization Value in
Excess of Identifiable Assets................. $ -- 14,205 22,947 42,862
Amortization of Licenses, Patents, and Other....... 1,224 964 3,672 2,606
Amortization of Trademarks......................... 769 794 2,309 2,395
------- ------ -------- ------
Total Fresh Start Amortization................ 1,993 15,963 28,928 47,863
======= ====== ======== ======
Fresh Start Depreciation:
Fresh Start Depreciation in Cost of Goods Sold. 731 632 2,192 1,887
Fresh Start Depreciation in Selling, General
and Administrative Expenses................... 162 139 487 417
------- ------ -------- ------
Total Fresh Start Depreciation................ 893 771 2,679 2,304
------- ------ -------- ------
Fresh Start Amortization and Depreciation.......... $2,886 16,734 31,607 50,167
======= ====== ======== ======
</TABLE>
15
<PAGE>
SAMSONITE CORPORATION
MD&A (CONTINUED)
The impact of the fresh start amortization and depreciation on net income (loss)
and net income (loss) per share is summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, OCTOBER 31,
------------------------ -----------------------
1996 1995 1996 1995
-------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C>
Fresh Start Amortization and Depreciation... $ 2,886 16,734 31,607 50,167
Tax Benefit................................. (1,183) (1,037) (3,551) (2,995)
------- ------ ------ ------
After-Tax Impact on Net Income (Loss)....... $ 1,703 15,697 28,056 47,172
======= ====== ====== ======
Impact on Net Income (Loss) Per Share -
Primary.................................... $ .10 .99 1.71 2.99
</TABLE>
RESULTS OF OPERATIONS
- ---------------------
THREE MONTHS ENDED OCTOBER 31, 1996 ("THIRD QUARTER OF FISCAL 1997" OR "CURRENT
YEAR") COMPARED TO THREE MONTHS ENDED OCTOBER 31, 1995 ("THIRD QUARTER OF FISCAL
1996" OR "LAST YEAR")
General. The Company analyzes its sales and operations by the following
categories: (1) "European operations" which consist of its western European
manufacturing and distribution operations whose functional currency is the
Belgian franc, (2) "U.S. operations" which includes activities within the U.S.
from the Samsonite and American Tourister manufacturing and distribution
operations and (3) "International operations" which include exports from the
U.S., manufacturing and distribution operations in countries with operations
which are smaller in size compared to the U.S. and European operations
(primarily Canada and Mexico) and global licensing operations.
Results of European operations were translated from Belgian francs to U.S.
dollars for the three months ended October 31, 1996 and 1995 at average rates of
approximately 30.73 and 29.19 francs to the U.S. dollar, respectively. This
represents a decrease in the value of the Belgian franc of 5.3%, which results
in significant decreases in reported sales, cost of sales and other expenses in
the third quarter of fiscal 1997 compared to last year. The most significant
effects from the difference in exchange rates from last year to the current year
are noted in the following analysis and referred to as an "exchange rate
difference."
Net Sales. Total net sales increased to $203.8 million for the third quarter of
fiscal 1997 from $180.3 million for the third quarter of fiscal 1996, an
increase of $23.5 million or 13.0%. Adjusted for the European exchange rate
difference, sales increased from last year by 15.2%
Sales from European operations increased from $67.4 million last year to $73.0
million in the current year, an increase of $5.6 million. The exchange rate
difference resulted in a $3.9 million decrease in reported sales versus last
year. Excluding the exchange rate effect, sales increased by $9.5 million from
last year, which represents an increase in sales expressed in Belgian francs of
14.0% in the third quarter of fiscal 1997 compared to last year. Despite what
has been a generally weak economy throughout Europe, the Company's European
operations enjoyed a strong summer selling season. The Company attributes the
increase from the prior year to better product availability, the success of
certain new product lines, and signs of economic recovery in certain European
countries.
16
<PAGE>
SAMSONITE CORPORATION
MD&A (CONTINUED)
U.S. operations sales increased from $92.0 million last year to $108.8 million
in the current year, an increase of $16.8 million or 18.3%. The increase is due
to continued broad consumer preference for Samsonite brand products,
particularly lines of upright, lightweight softside luggage which were
redesigned in fiscal 1996 and the beginning of shipments and sales in the third
quarter of the new EZ CART(TM) product. This product has a unique transport
system which features a balanced, 4-wheel system designed to take weight off a
travelers' arm and transfers it to the floor. Sales from the Company's retail
stores increased by $4.5 million from last year, from $15.4 million to $19.9
million, an increase of 29.2%. Same store sales increased by 9.7% compared to
last year. Additionally, during the third quarter of fiscal 1997, the Company
has taken the initial steps to introduce category management principles to its
operations, including multi-brand marketing and advertising programs which
present the three well known Company brands - Samsonite, American Tourister, and
Lark - as a cohesive group.
Sales from the International operations and licensing income increased from
$20.9 million last year to $22.0 million in the current year, an increase of
$1.1 million or 5.3% due primarily to increased sales from the Mexico City
manufacturing and distribution facility.
Gross profit. Total gross profit for the third quarter of fiscal 1997 increased
from last year by $10.3 million. Gross margin percentages were slightly higher
in the current year, increasing by 0.5 percentage point to 39.4% from 38.9% last
year.
Gross margins from European operations were slightly higher than last year,
increasing by 0.4 percentage point to 37.9% from 37.5% last year. However,
margins were lower by 1.8 percentage points than for the previous quarter ended
July 31, 1996. This reflects a strategic initiative to accelerate European
sales and market share through planned product promotion discounts on selected
lines.
Margins from U.S. operations increased from last year by 0.7 percentage point to
40.3% from 39.6% last year. The increase is due to greater retail sales in the
current year, price increases on selected product lines effective October 1,
1996, and product cost improvements.
Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A
increased by $12.1 million from the third quarter of fiscal 1996 to the third
quarter of fiscal 1997. As a percent of sales, SG&A was 30.8% in the current
year and 28.1% last year. Expenses totaling approximately $1.8 million were
incurred in the third quarter of fiscal 1997 in connection with establishing the
restructuring plan (described elsewhere herein), the hiring of new and
additional members of the executive management team, and for expenses incurred
in excess of the original provision for the consolidation of American Tourister
manufacturing facilities. Without such one-time expenses, SG&A would have been
29.9% of sales in the third quarter of fiscal 1997.
European operations SG&A increased by $1.7 million. The exchange rate
difference caused SG&A to decrease by $1.0 million. The remainder, an increase
of $2.7 million, results from an increase in SG&A expressed in Belgian francs of
15.0% from last year. The increase is due primarily to increased variable
selling and distribution costs due to higher sales levels, salaries and employee
benefits from staff additions, increased advertising expenditures, increased
product development expenses, and increased provisions for doubtful accounts.
U.S. SG&A increased from $29.0 million in the third quarter of last year to
$38.1 million in the current year, an increase of $9.1 million. The increase is
primarily due to increased advertising expenses ($2.4 million); increased retail
selling expenses associated with the increase in sales from last year ($3.6
million); increased provision for doubtful accounts due to the bankruptcy of a
major customer ($1.1 million); increased executive compensation, relocation, and
other hiring costs associated with additions to the executive management team
($1.2 million); and consulting expenses associated with the restructuring plan
($0.8 million) (see Provision for restructuring operations included herein).
17
<PAGE>
SAMSONITE CORPORATION
MD&A (CONTINUED)
SG&A for the International operations increased by $1.3 million from last year
primarily due to the expenses incurred in new foreign joint venture operations
in Singapore, China, and India.
Amortization of intangible assets. The Company recorded significant intangible
assets as a result of its reorganization in 1993. See the comparative analysis
of amortization of intangibles included elsewhere herein.
Reorganization value in excess of identifiable assets was fully amortized as of
June 30, 1996, which accounts for the decrease in amortization of intangible
assets from $16.0 million last year to $2.2 million in the current year.
Provision for restructuring operations. The Company recorded a restructuring
provision of $10.7 million in the third quarter of fiscal 1997 as a result of a
restructuring program, approved by the Board of Directors and announced in
October 1996, to further consolidate functions and operations in North America,
Europe, and the Far East, and to reduce or eliminate certain other operations.
The restructuring is expected to be completed by October 1997. The
restructuring plan includes further consolidation of hardside luggage production
to Samsonite's largest U.S. facility located in Denver, CO from other locations
in the Americas, as well as eventual consolidation of many administrative and
control functions, again primarily to Denver. The Company will eliminate at
least 450 positions worldwide, including approximately 150 manufacturing
positions and approximately 300 managerial, office and clerical positions.
Annual estimated pretax cost savings from the restructuring program are expected
to be approximately $12.7 million. The restructuring provision consists
primarily of costs associated with involuntary employee terminations and
includes a cash expense of $9.7 million and a non-cash expense of $1.0 million,
both on a pretax basis. The lenders under the Company's Senior Credit Facility
have agreed not to consider the restructuring provision in the computation of
lending rates or financial covenants.
The foregoing estimate of annual cost savings constitutes a "forward looking
statement" within the meaning of the Private Securities Litigation Reform Act of
1995. Such forward-looking statement involves numerous assumptions, known and
unknown risks, uncertainties and other factors which may cause actual estimated
cost savings and future performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking information. Such factors include,
among other things, the following: achieving estimated staff reductions while
maintaining workflow in the functional areas affected; general economic and
business conditions; and competition.
Operating income. Operating income increased by $1.3 million from last year as
a result of the increases in revenues and increased gross profit of $10.3
million, the decline in amortization of intangibles of $13.8 million, which were
partially offset by increases in SG&A of $12.1 million and the restructuring
provision of $10.7 million.
Interest income. Interest income results from temporary investments of cash on
hand and is consistent with last year.
Interest expense and amortization of debt issue costs. Interest expense
decreased from $10.9 million last year to $9.1 million this year due primarily
to lower levels of outstanding indebtedness in the current year and lower
average interest rates. Current year interest expense includes $484,000 of
amortization of deferred debt acquisition costs.
18
<PAGE>
SAMSONITE CORPORATION
MD&A (CONTINUED)
Other, net. See Note 6 to the consolidated financial statements for a
comparative analysis of other income (expense), net. The Company has entered
into certain forward exchange contracts to hedge its exposure to changes in
exchange rates. Other income for the three months ended October 31, 1996
includes income from such transactions of $0.3 million, $0.7 million of which is
unrealized income at October 31, 1996. The realization of such income is
subject to changes in exchange rates during the period prior to settlement of
the forward exchange contracts. Outstanding forward exchange contracts have
various settlement dates through January 1998.
Other income in the current year includes $11.1 million from the adjustment of a
previously recorded liability. See Note 6(c) to the consolidated financial
statements included elsewhere herein for a discussion of this item.
Income taxes. Income taxes increased from an expense of $4.1 million last year
to an expense of $4.2 million in the current year. The increase in the
effective tax rate from last year to the current year is due primarily to the
combined effects of higher other income in the current year and lower
nondeductible amortization of intangible assets in the current year. The
relationship between income tax expense or benefit differs from that expected by
applying the U.S. statutory tax rate to pre-tax income (loss) primarily because
of (i) the nondeductibility for tax purposes of amortization of reorganization
value in excess of identifiable assets, (ii) foreign income tax expense provided
on foreign earnings, and (iii) state income taxes.
Net income (loss). Net income (loss) increased from a loss of $(11.4) million
last year to income of $3.4 million this year, an improvement of $14.8 million.
The increase in net income is caused by the total of the increases in operating
income, other income, less the increase in income tax expense.
NINE MONTHS ENDED OCTOBER 31, 1996 ("FIRST NINE MONTHS OF FISCAL 1997" OR
"CURRENT YEAR") COMPARED TO NINE MONTHS ENDED OCTOBER 31, 1995 ("FIRST NINE
MONTHS OF FISCAL 1996" OR "LAST YEAR")
General. Results of European operations were translated from Belgian francs to
U.S. dollars for the nine months ended October 31, 1996 and 1995 at average
rates of approximately 30.73 and 29.39 francs to the U.S. dollar, respectively.
This represents a decrease in the value of the Belgian franc of 4.6%, which
results in decreases in reported sales, cost of sales and other expenses in
fiscal 1997 compared to last year. The most significant effects from the
difference in exchange rates from last year to the current year are noted in the
following analysis and referred to as an "exchange rate difference."
Net Sales. Total net sales increased to $553.1 million for the first nine
months of fiscal 1997 from $505.7 million for the first nine months of fiscal
1996, an increase of $47.4 million or 9.4%. Adjusted for the European exchange
rate difference, sales increased from last year by 11.3%
Sales from European operations increased from $200.9 million last year to $207.3
million in the current year, an increase of $6.4 million. The exchange rate
difference resulted in a $9.5 million decrease in reported sales versus last
year. The remainder, an increase of $15.9 million, represents an increase in
sales expressed in Belgian francs of 7.9% from last year. Despite a generally
weak European economy, sales have increased due to increased market share,
increased sales of diversified products, consumer acceptance of new product
lines, and a strong summer selling season.
U.S. operations sales increased from $245.8 million last year to $279.0 million
in the current year, an increase of $33.2 million or 13.5%. The increase is due
to continued broad consumer preference and demand for Samsonite brand products,
particularly lines of upright, lightweight softside luggage which were
redesigned in fiscal 1996. Additionally, the Company began sales in the third
quarter of fiscal 1997 of its new EZ CART(TM) product. Sales from the Company's
retail stores increased by $10.1 million or 25.9%, from $39 million last year to
$49.1 million in the current year. Same store sales increased by 9.3% from last
year.
19
<PAGE>
SAMSONITE CORPORATION
MD&A (CONTINUED)
Sales from the International operations increased from $59.0 million last year
to $66.8 million in the current year, an increase of $7.8 million or 13.2%. Of
the change in revenues from last year, $3.9 million is due to revenue from the
sale of McGregor apparel tradenames in certain Pacific Rim countries. The
remainder is due primarily to increased sales from the Mexico City manufacturing
and distribution company.
Gross profit. Overall gross profit for the first nine months of 1997 increased
from last year by $19.5 million. Gross margin increased 0.2 percentage point,
from 39.2% last year to 39.4% in the current year.
Gross margins from European operations increased by 1.3 percentage points, from
37.5% last year to 38.8% in the current year. The improvement is due to price
increases in selected product lines, declining materials costs, and improving
productivity variances compared to last year.
Margins from U.S. operations decreased from last year by 1.0 percentage point
from 39.8% last year to 38.8% in the current year. The margin decline is
primarily due to lower margins on certain fast selling new product lines, an
increase in sales of obsolete goods at low margins, promotional sales of
selected products, negative productivity variances caused by the startup of
production of new hardside products, and a $0.7 million customer credit given on
certain American Tourister sales which were defective. Through the second
quarter of fiscal 1997, margins were less than last year by 2.1 percentage
points. The improvement as of the end of the third quarter results primarily
from discontinuing a promotional sale of selected products, a price increase
which was effective October 1, 1996, and product cost improvements.
Gross margin percentages from International operations, excluding the effect of
the sale of licenses, decreased from last year for the same reasons given for
the decline in U.S. margins.
Selling, General and Administrative Expenses ("SG&A"). Consolidated SG&A
increased by $20.9 million from the first nine months of fiscal 1996 to the
first nine months of fiscal 1997. As a percent of sales, SG&A was 31.5% in the
current year and 30.3% last year. Expenses totaling approximately $4.2 million
were incurred during the first nine months of fiscal 1997 in connection with
establishing the restructuring plan (described elsewhere herein), the cessation
of the former CEO's employment, the hiring of new and additional members of the
executive management team, and for expenses incurred in excess of the original
provision for the consolidation of American Tourister manufacturing facilities.
Without such expenses, SG&A would have been 30.7% of sales during the first nine
months of fiscal 1997.
European operations SG&A increased by $3.9 million. The exchange rate
difference caused SG&A to decrease by $2.6 million. The remainder, an increase
of $6.5 million, resulted from an increase in SG&A expressed in Belgian francs
of 12.1%. The increase over last year is due to variable selling and
distribution expenses, increases in advertising expenses, increases in salaries
and employee benefits due to staff additions and increases in group insurance
premiums and the impact of credits in the prior year of a reversal of
termination benefits accruals, an increase in the provision for doubtful
accounts due to financial difficulties of certain customers, and increases in
new product development costs.
SG&A for U.S. operations increased by $15.8 million in the first nine months of
fiscal 1997 over the same period last year primarily because of increased
advertising expenses ($4.0 million), increased retail selling expenses
associated with the increase in sales from last year ($6.4 million) , expenses
incurred in connection with the cessation of the former CEO's employment ($2.6
million), the retention of new and additional executive management ($2.0
million), increased provision for doubtful accounts ($0.6 million), and
consulting fees associated with the restructuring plan ($0.8 million), and a net
decrease in various other expenses of $0.6 million.
SG&A for the International operations increased by $1.2 million primarily due to
the expenses incurred in new foreign joint venture operations in Singapore,
China, and India.
20
<PAGE>
SAMSONITE CORPORATION
MD&A (CONTINUED)
Amortization of intangible assets. The Company recorded significant intangible
assets as a result of its reorganization in 1993. See the comparative analysis
of amortization of intangibles included elsewhere herein.
Reorganization value in excess of identifiable assets was fully amortized as of
June 30, 1996, which accounts for the decrease in amortization of intangible
assets from $47.9 million last year to $29.6 million in the current year.
Provision for restructuring operations. See the discussion of this item
included elsewhere herein under Results of Operations for the Three Months Ended
October 31, 1996 Compared to the Three Months Ended October 31, 1995.
Operating income (loss). Operating results improved from a loss last year of
$(2.8) million to income this year of $3.3 million, an increase of $6.1 million.
This increase is a result of higher revenues which increased gross profit by
$19.5 million from last year and the decrease in amortization of intangibles of
$18.2 million, both of which were partially offset by increases in SG&A of $20.9
million and the provision for restructuring of $10.7 million.
Interest income. Interest income decreased from $4.1 million last year to $1.2
million this year. Last year interest income included $2.9 million realized
from a note receivable collected in connection with the sale of an investment in
a television station. Recurring interest income results from temporary
investments of cash on hand and is consistent with last year.
Interest expense and amortization of debt issue costs. Interest expense
decreased from $30.9 million last year to $27.1 million this year due to lower
levels of outstanding indebtedness in fiscal 1997 and lower average interest
rates.
Other, net. See Note 6 to the consolidated financial statements for a
comparative analysis of other income (expense), net. The Company has entered
into certain forward exchange contracts to hedge its exposures to changes in
exchange rates. Other income for the nine months ended October 31, 1996
includes income from foreign currency transactions of $2.5 million, $0.7 million
of which is unrealized at October 31, 1996. The realization of such income is
subject to changes in exchange rates during the period prior to the settlement
of the forward exchange contracts. Outstanding forward exchange contracts have
various settlement dates through January 1998. In the first nine months of last
year, such foreign exchange transactions resulted in a loss of $2.7 million.
Other income includes $3,802,000 from the favorable settlement for $200,000 of a
claim against the Company by a related party. The Company had previously
accrued $4,002,000 for such claim. This claim is part of the Contingent
Liability with Respect to the Old Notes described in Note 14 to the consolidated
financial statements included in the 1996 Form 10-K and relates to the claim for
interest on overdue installments of interest accruing prior to the commencement
of the bankruptcy of the Company's predecessor in 1993. The contingent
liability was recorded as part of the reorganization. The holders of this claim
were Apollo and an affiliate of Apollo. Apollo and its affiliates own 45.78% of
the outstanding shares of the Company's common stock. See "Legal Proceedings"
included elsewhere herein.
Other income in the current year includes $11.1 million from the adjustment of a
previously recorded liability. See Note 6(c) to the consolidated financial
statements included elsewhere herein for a discussion of this item.
Income taxes. Income taxes increased from $7.5 million last year to $8.6
million in the current year. The increase in tax expense is due to amounts of
pretax earnings from European and other foreign operations in the current year
versus last year, less nondeductible amortization of intangible assets in the
current year, and higher other income in the current year. The relationship
between income tax expense or benefit differs from that expected by applying the
U.S. statutory tax rate to pretax losses primarily because of (i) the
nondeductibility for tax purposes of amortization of reorganization value in
excess of identifiable assets, (ii) foreign income tax expense provided on
foreign earnings, and (iii) state income taxes.
Extraordinary loss. The extraordinary loss of $8.0 million last year resulted
from a loss on the early retirement of debt.
21
<PAGE>
SAMSONITE CORPORATION
MD&A (CONTINUED)
Net loss. The net loss decreased from $42.2 million last year to $13.6 million
this year, a decrease of $28.6 million. The decrease in the net loss is caused
by the total of the increases in operating and other income and the decreases in
interest income and extraordinary loss, less the increase in income tax expense.
22
<PAGE>
SAMSONITE CORPORATION
MD&A (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
One measure of liquidity is commonly referred to as Operating Cash Flow.
Operating Cash Flow is defined as operating income adjusted for noncash
operating expenses, including amortization and depreciation. The Company
believes that Operating Cash Flow provides useful information regarding the
Company's ability to incur and service debt, but that it should not be
considered a substitute for operating income or cash flow from operations
determined in accordance with generally accepted accounting principles.
Operating Cash Flow does not take into consideration substantial costs of doing
business, such as interest expense, and should not be considered in isolation to
other measures of performance. Operating Cash Flow for the nine months ended
October 31, 1996 and 1995 was computed as follows:
<TABLE>
<CAPTION>
Nine Months Ended October 31,
-----------------------------
1996 1995
------- -------
(In thousands)
<S> <C> <C>
Operating income (loss).................... $ 3,329 (2,811)
Fresh Start Amortization and Depreciation.. 31,607 50,167
------- ------
Operating income before Fresh Start
Amortization and Depreciation............. 34,936 47,356
Other Amortization and Depreciation........ 14,630 12,545
------- ------
Operating Cash Flow........................ $49,566 59,901
======= ======
</TABLE>
Operating Cash Flow decreased by $10.3 million from last year. Operating Cash
Flow in the current year was negatively affected by the one-time effects of the
restructuring provision of $10.7 million and expenses totaling approximately
$4.2 million incurred during the first nine months of fiscal 1997 in connection
with establishing the restructuring plan (described elsewhere herein), the
cessation of the former CEO's employment, the hiring of new and additional
members of the executive management team, and for expenses incurred in excess of
the original provision for the consolidation of American Tourister manufacturing
facilities. The Company believes that the current level of Operating Cash Flow
is adequate to support its existing credit facilities and service the Company's
Series B Senior Subordinated Notes and other long-term obligations.
Another measure of liquidity is net cash provided by operating activities, as
reflected in the Consolidated Statements of Cash Flows included elsewhere
herein. Net cash provided by operating activities of $10.7 million for the
first nine months of fiscal 1997 and $16.4 million in the first nine months of
fiscal 1996, reflects net cash provided by operations of the Company after
taking into consideration the substantial costs of doing business not reflected
in Operating Cash Flow.
The decrease of $5.7 million in cash flows provided by operations, from $16.4
million last year to $10.7 million this year, resulted from an increase of $11.4
million in cash flow used to support working capital and other operating assets,
and an increase of $5.7 million in cash flows provided by operations, adjusted
for non-operating and non-cash charges.
Cash flow provided (used) by investing activities decreased from $79.5 million
last year to $(3.6) million this year. Last year's cash flow included the
receipt of $112.0 million from the discontinued water treatment business. Cash
flow provided from discontinued operations in the current year resulted from the
collection of accounts receivable related to the discontinued apparel business
and the collection of a receivable under a tax sharing agreement from the water
treatment business which was spun off in fiscal 1996. Cash flows provided by
"Other" investing activities includes $5.0 million received in the current year
from the substitution of a letter of credit for cash previously held under a
contractual escrow arrangement. Capital expenditures were $19.7 million in the
current year and $15.9 million last year.
23
<PAGE>
SAMSONITE CORPORATION
MD&A (CONTINUED)
Cash flows used by financing activities decreased from $(137.3) million last
year to $(18.0) million this year, a decrease of $119.3 million. In the current
year, cash flow from financing activities includes $10.0 million from the
collection of a note receivable from the former CEO which was taken in exchange
for 425,532 shares of the Company's common stock in fiscal 1996. Last year's
cash flow from financing activities included $105.5 million of debt repayment
financed largely by the cash received from the discontinued water treatment
business.
At October 31, 1996, the Company had working capital of $122.6 million compared
to $99.5 million at January 31, 1996, an increase of $23.1 million. Current
assets increased by $20.8 million due to an increase of $40.5 million in
accounts receivable and inventory and a net decrease in cash and other current
assets of $19.7 million. The increase in accounts receivable and inventories is
primarily due to the cyclical nature of the Company's business. Accounts
receivable and inventory at October 31, 1996 are higher than at October 31, 1995
by $7.4 million and $19.0 million, respectively, because of higher sales levels
in the current year and inventory build up for the EZ CART(TM) and other
products in anticipation of the Christmas selling season. Accounts payable are
higher at October 31, 1996 by $5.9 million compared to October 31, 1995 due to
higher cost of sales and expense levels and improved payables management in
current year.
The Company's cash flow from operations together with amounts available under
its credit facilities were sufficient to fund its operations, scheduled payments
of principal and interest on indebtedness, and capital expenditures. At October
31, 1996, the Company had $112.1 million available under its Senior Credit
Facility. Management of the Company believes that cash flow from operations and
available borrowings under its credit facilities and new credit facilities in
emerging markets will be adequate to fund operating requirements and expansion
plans during the next 12 months. In addition, management currently believes the
Company will be able to meet long-term cash flow obligations from cash provided
by operations and other existing resources.
The Company's principal foreign operations are located in Western Europe, the
economies of which are not considered to be highly inflationary. When
appropriate, the Company will enter into foreign exchange contracts in order to
hedge its exposure on certain foreign operations primarily through the use of
forward delivery commitments. During the past several years, the Company's most
effective hedge against foreign currency changes has been the foreign currency
denominated debt balances maintained in respect to its foreign operations.
Geographic concentrations of credit risk with respect to trade receivables are
not significant as a result of the diverse geographic areas covered by the
Company's operations.
24
<PAGE>
SAMSONITE CORPORATION
PART II - OTHER INFORMATION
- ---------------------------
Item I - Legal Proceedings
-----------------
Reference is made to Note 14 to the consolidated financial statements included
in the Company's Form 10-K Annual Report for the fiscal year ended January 31,
1996 which describes litigation, commitments, and contingencies.
Among the items described under Contingent Liabilities to Pension Benefit
Guaranty Corporation in that Note 14 was the Company's expectation that it would
enter into a final settlement agreement with the Pension Benefit Guaranty
Corporation and the sponsors of the Pension Plans (as described therein) to the
effect set forth in the McCrory Settlement Agreement (also as described therein)
during fiscal year 1997. Such a final settlement agreement was made as of June
20, 1996, and became effective when the Bankruptcy Court entered its order
approving the agreement on August 6, 1996. The Company has adjusted the
recorded liability for this matter as described in Note 6(c) to the consolidated
financial statements included elsewhere herein.
Also in that Note 14, under the heading Contingent Liability with Respect to the
Old Notes, reference is made to a claim of approximately $16.4 million for
interest on overdue installments of interest on notes payable accruing prior to
the commencement of the bankruptcy of the Company's predecessor. The Company
recorded a liability of $16.4 million as part of the reorganization. Of this
amount, approximately $12.4 million remains recorded in the consolidated
financial statements as a liability at October 31, 1996 as a result of the
settlement described in Note 6(b) to the consolidated financial statements
included elsewhere herein. In a hearing on November 14, 1996, the Bankruptcy
Court ruled in favor of the Company on a motion to disallow these claims on the
basis that compound interest was not allowed under applicable law at the time
the bond contracts were entered into. The ruling is subject to appeal, and the
Company has not made any adjustment to the recorded liability pending expiration
of the appeal period or completion of the appeal process.
The Company and certain of its subsidiaries are subject to or are defendants in
various other claims and actions arising in the ordinary course of business.
While it is not possible to predict the outcome of such other claims or actions,
it is management's opinion that, after discussion with counsel, the ultimate
disposition of these other claims and actions will not have a material adverse
effect on the Company's consolidated financial position.
Item 2 - Changes in Securities
---------------------
None.
Item 3 - Defaults Upon Senior Securities
-------------------------------
None.
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5 - Other Information
-----------------
None.
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
(a) See Exhibit Index.
(b) Reports on Form 8-K.
Form 8-K dated as of November 8, 1996.
Item 5. Other Events - Restructuring Program.
25
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SAMSONITE CORPORATION
(REGISTRANT)
BY /S/ Thomas R. Sandler
--------------------------------------------
Name: Thomas R. Sandler
Title: Chief Financial Officer and Treasurer
Date: December 9, 1996
-----------------
26
<PAGE>
SAMSONITE CORPORATION
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
- ------- -----------
3.1 Amended and Restated Certificate of Incorporation of the Company./1/
3.2 Certificate of Ownership and Merger dated July 14, 1995./2/
3.3 By-Laws of the Company./1/
4.1 Indenture, dated as of July 14, 1995, between the Company and United
States Trust Company of New York./2/
4.2 Registration Rights Agreement dated July 14, 1995, by and among the
Company, Donaldson, Lufkin & Jenrette Securities Corporation, and
Bear, Sterns & Co., Inc./2/
4.3 Specimen of Notes described in the Indenture./2/
10.1 Fourth Amendment, dated as of October 15, 1996, to Credit Agreement,
dated July 14, 1995, among the Company and the Banks named therein
(excluding schedules and exhibits thereto).
10.2 Employment Agreement effective as of August 1, 1996 between the
Company and John P. Murtagh.
10.3 Employment Agreement effective as of September 16, 1996 between the
Company and Robert P. Baird, Jr.
10.4 Employment Agreement effective as of August 4, 1996 between the
Company and James E. Barch.
10.5 Employment Agreement effective as of September 10, 1996 between the
Company and Gary D. Ervick.
10.6 Stock Option Agreement effective as of August 1, 1996 between the
Company and John Murtagh.
10.7 Stock Option Agreement effective as of September 16, 1996, between
the Company and Robert P. Baird, Jr.
10.8 Stock Option Agreement effective as of August 5, 1996 between the
Company and James E. Barch.
10.9 Stock Option Agreement effective as of August 21, 1996 between the
Company and Gary D. Ervick.
11.1 Earnings Per Share Calculation
21 Subsidiaries of the Company
27 Financial Data Schedule
- ------------
/1/ Incorporated by reference from the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 1996 (File No. 0-23214).
/2/ Incorporated by reference from the Registration Statement on Form S-4
(Registration No. 33-95642).
27
<PAGE>
EXHIBIT 10.1
FOURTH AMENDMENT
TO REVOLVING CREDIT AND TERM LOAN AGREEMENT
Fourth Amendment dated as of October 15, 1996 to Revolving Credit and Term
Loan Agreement (this "Amendment"), by and among SAMSONITE CORPORATION, a
Delaware corporation (the "Company") and THE FIRST NATIONAL BANK OF BOSTON, BANK
OF AMERICA ILLINOIS and the other lending institutions listed on Schedule 1 to
-------- -
the Credit Agreement (as hereinafter defined) (collectively, the "Lenders"),
amending certain provisions of the Revolving Credit and Term Loan Agreement
dated as of July 14, 1995 (as amended by the First Amendment thereto dated as of
December 27, 1995, the Second Amendment thereto dated as of April 30, 1996, the
Third Amendment thereto dated as of July 1, 1996 and as the same may be further
amended, modified, supplemented, and in effect from time to time, the "Credit
Agreement") by and among the Company, the Lenders, THE FIRST NATIONAL BANK OF
BOSTON and BANK OF AMERICA ILLINOIS as managing agents for the Lenders (in such
capacity, the "Managing Agents"), BANK OF AMERICA ILLINOIS as documentation
agent for the Managing Agents and the Lenders and THE FIRST NATIONAL BANK OF
BOSTON as administrative agent for the Managing Agents and the Lenders. Terms
not otherwise defined herein which are defined in the Credit Agreement shall
have the same respective meanings herein as therein.
WHEREAS, the Company and the Lenders have agreed to modify certain terms and
conditions of the Credit Agreement as specifically set forth in this Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
(S)1. AMENDMENTS TO THE CREDIT AGREEMENT. Subject to the satisfaction of the
---------- -- --- ------ ---------
applicable conditions precedent set forth in (S)2 hereof, the Credit Agreement
is hereby amended as follows:
(S)1.1 ADDITIONAL DEFINITIONS. Section 1.1 of the Credit Agreement is
----------------------
hereby amended by inserting the following definitions in the appropriate
alphabetical order:
<PAGE>
Culligan Tax Receivable. The tax-related receivable amount owing to the
-------- --- ----------
Company as of October 15, 1996 from Culligan arising pursuant to the Spinoff in
an aggregate amount of approximately $6,600,000.
Cumulative Special Payments. At the relevant date of determination, the
---------- ------- --------
cumulative, aggregate amount of all Special Payments actually received in cash
by the Company or its Subsidiaries at any time during the period commencing on
October 15, 1996 and ending as of such date of determination.
Fourth Amendment. The Fourth Amendment to Revolving Credit and Term Loan
------ ---------
Agreement dated as of October 15, 1996 among the Company, the Managing Agents
and the Lenders party thereto.
Green Note Receivable. The amount owing the Company from Green in an
----- ---- ----------
aggregate principal amount of $10,000,000 arising from the promissory note
executed and delivered by Green to the Company prior to the Closing Date in the
original principal amount of $10,000,000.
Net Cash Portion of the October 1996 Restructuring Charges. See (S)1.3 of the
--- ---- ------- -- --- ------- ---- ------------- -------
Fourth Amendment.
October 1996 Restructuring Charges. See (S)1.3 of the Fourth Amendment.
------- ---- ------------- -------
Samsonite Tax Refund Claim. The federal income tax refund claim due to the
--------- --- ------ -----
Company from the United States for the 1995 fiscal year in the aggregate amount
of approximately $2,200,000.
Special Payments. Any cash payments made to the Company after October 15,
------- --------
1996 by Culligan, Green or the United States, as the case may be, in respect of
the Culligan Tax Receivable, the Green Note Receivable or the Samsonite Tax
Refund Claim, as the case may be.
Special Payments Credit. At the relevant date of determination, and without
------- -------- ------
duplication an amount equal to (a) the Cumulative Special Payments determined as
of such date, less (b) the Special Payments Deduction.
----
Special Payments Deduction. At the relevant date of determination, and
------- -------- ---------
without duplication, the cumulative, aggregate amount of the Cumulative Special
Payments which, for purposes of determining which portion (if any) of the cash
payments made by the Company in respect of the October 1996 Restructuring
<PAGE>
Charges which should be included in the applicable computations of
Adjusted Consolidated Net Income, EBITDA and Adjusted EBITDA for any
applicable fiscal period pursuant to (S)1.3 of the Fourth Amendment,
is and shall be deemed to have been utilized by the Company and its
Subsidiaries as an offset to such cash payments, during the period
commencing on October 15, 1996 and ending as of the last day of the
fiscal period immediately preceding the applicable fiscal period for
which such determination is being made.
(S)1.2 RESTRICTIONS ON INVESTMENTS. Section 10.3 of the Credit
---------------------------
Agreement is hereby amended by deleting the amount "$7,500,000" which
appears in (S)10.3(h) and substituting in place thereof the amount
"$10,000,000".
(S)1.3 CERTAIN RESTRUCTURING CHARGES. The Company has advised the
-----------------------------
Agents and the Lenders that the Company will incur certain restructuring
charges, not exceeding $12,000,000 in the aggregate, to be accrued as
charges solely during the fiscal quarter ending October 31, 1996, in
respect of certain restructuring matters substantially as set forth on
Exhibit A attached hereto (such specific restructuring charges described
------- -
herein being referred to as the "October 1996 Restructuring Charges"). Any
provisions of the Loan Documents to the contrary notwithstanding, the only
portion(s) of the October 1996 Restructuring Charges which shall be
included in the applicable computations of Adjusted Consolidated Net
Income, EBITDA and Adjusted EBITDA for any particular fiscal period shall
be the cash payment portion(s) (if any) of such October 1996 Restructuring
Charges actually paid by the Company or its Subsidiaries in any such fiscal
period which is in excess of the Special Payments Credit determined as of
the last day of such applicable fiscal period for which such computations
are being made (the "Net Cash Portion of the October 1996 Restructuring
Charges"). The amount (if any) of the Special Payments Credit so
"offsetting" such cash payments made shall be deemed "utilized" by the
Company and its Subsidiaries for purposes of computing the amount of the
Special Payments Deduction in effect from time to time. The Net Cash
Portion of the October 1996 Restructuring Charges for any such applicable
fiscal period shall (without duplication) reduce such applicable
computations for the applicable fiscal period in which such applicable cash
payments in respect of the October 1996 Restructuring Charges were actually
paid.
(S)2. CONDITIONS TO EFFECTIVENESS. This Amendment shall become effective on
----------------------------
October 15, 1996 (the "Amendment Date"), subject to the receipt, on or prior to
the Amendment Date, by the Administrative Agent
<PAGE>
of one or more counterparts of this Amendment signed by the Obligors, the
requisite Lenders, the Issuing Banks, the Swing Line Lenders, and the Agents.
(S)3. REPRESENTATIONS AND WARRANTIES. The Company hereby repeats, on and as
------------------------------
of the date hereof and the Amendment Date, each of the representations and
warranties made by it in (S)8 of the Credit Agreement (except to the extent of
changes resulting from matters contemplated or permitted by the Credit Agreement
and the other Loan Documents, changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and to the
extent that such representations and warranties relate expressly to an earlier
date), provided, that all references therein to the Credit Agreement shall refer
--------
to such Credit Agreement as amended hereby. In addition, the Company hereby
represents and warrants that the execution and delivery by the Company of this
Amendment and the performance by the Company of all of its agreements and
obligations under this Amendment and the Credit Agreement as amended hereby are
within the corporate power and authority of the Company and have been duly
authorized by all necessary corporate action on the part of the Company, and
further represents and warrants that the execution and delivery by the Company
of this Amendment and the performance by the Company of the transactions
contemplated hereby will not contravene any term or condition set forth in any
agreement or instrument to which the Company is a party or by which the Company
is bound, including but not limited to the Subordinated Indenture.
(S)4. RATIFICATION, ETC. Except as expressly amended hereby, the Credit
------------ ---
Agreement and all documents, instruments and agreements related thereto,
including, but not limited to the Security Documents, are hereby ratified and
confirmed in all respects and shall continue in full force and effect. The
Credit Agreement and this Amendment shall be read and construed as a single
agreement. This Amendment shall constitute one of the Loan Documents, and the
obligations of the Obligors under this Amendment shall constitute Obligations
for all purposes of the Loan Documents. All references in the Credit Agreement,
the Loan Documents or any related agreement or instrument to the Credit
Agreement shall hereafter refer to the Credit Agreement as amended hereby.
(S)5. NO WAIVER. Nothing contained herein shall constitute a waiver of,
-- ------
impair or otherwise adversely affect any Obligations, any other obligation of
the Company or any rights of the Agents or the Lenders consequent thereon.
(S)6. COUNTERPARTS. This Amendment may be executed in one or more
------------
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
(S)7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
--------- ---
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REFERENCE TO
CONFLICT OF LAWS).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment under seal
by their respective officers thereunto duly authorized.
[Signature Pages Follow]
<PAGE>
Signature Pages for Borrowers and Guarantors
--------- ----- --- --------- --- ----------
The undersigned Borrower hereby consents and agrees to all of the provisions
of the foregoing Amendment:
The Company: SAMSONITE CORPORATION
--- -------
By: /s/ Thomas R. Sandler
----------------------
Name: Thomas R. Sandler
----------------------
Title: CFO & Treasurer
---------------------
Each of the undersigned Guarantors hereby acknowledges and consents to all of
the provisions of the foregoing Amendment and agrees that its Guarantee dated as
of July 14, 1995, in favor of the Lenders and the Agents, and all other Loan
Documents to which such Guarantor is a party, remain in full force and effect,
and each of the undersigned Guarantors confirms and ratifies all of its
obligations thereunder.
The Guarantors: A.T. RETAIL, INC.
--- ----------
By: /s/ Thomas R. Sandler
----------------------------
Name: Thomas R. Sandler
--------------------------
Title: V.P. & Treasurer
-------------------------
MCGREGOR CORPORATION
By: /s/Thomas R. Sandler
----------------------------
Name: Thomas R. Sandler
--------------------------
Title: President
-------------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
THE FIRST NATIONAL BANK OF BOSTON, as
Lender, Issuing Bank, Swing Line Lender,
Administrative Agent, and Managing Agent
By: /s/Richard D. Hill, Jr.
------------------------------
Name: RICHARD D. HILL JR.
-----------------------------
Title: DIRECTOR
----------------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
BANK OF AMERICA ILLINOIS, as Lender, Issuing
Bank, Swing Line Lender, Documentation Agent, and
Managing Agent
By: /s/Elizabeth R. Borow
-----------------------------
Name: ELIZABETH R. BOROW
---------------------------
Title: Managing Director
--------------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
BHF-BANK AKTIENGESELLSCHAFT
NEW YORK BRANCH
By: /s/Evon M. Contos
-------------------------
Name: Evon M. Contos
-----------------------
Title: Vice President
----------------------
By: /s/Dan Dobrjanskyj
--------------------------
Name: Dan Dobrjanskyj
------------------------
Title: A.T.
-----------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By: /s/Paul B. Clifford
------------------------------
Name: PAUL B. CLIFFORD
----------------------------
Title: DEPUTY GENERAL MANAGER
---------------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
THE MITSUBISHI TRUST AND
BANKING CORPORATION, LOS
ANGELES AGENCY
By: /s/Yasushi Satomi
-----------------------------
Name: Yasushi Satomi
---------------------------
Title: Senior Vice President
--------------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
SOCIETE GENERALE
By: /s/John M. Stack
-------------------------
Name: JOHN M. STACK
------------------------
Title: VICE PRESIDENT
-----------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
THE BANK OF NEW YORK
By: /s/Robert Louk
------------------------
Name: Robert Louk
----------------------
Title: Vice President
---------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /s/Iain A. Whyte
-------------------------
Name: Iain A. Whyte
------------------------
Title: Vice President
----------------------
By: /s/Daniel Touffu
-------------------------------------
Name: DANIEL TOUFFU
-----------------------------------
Title: FIRST VP AND REGIONAL MANAGER
----------------------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
BANQUE PARIBAS
By: /s/Ann C. Pifer
-----------------------
Name: Ann C. Pifer
---------------------
Title: Vice President
--------------------
By: /s/Robert Carino
--------------------------
Name: ROBERT CARINO
------------------------
Title: VICE PRESIDENT
-----------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
CREDIT LYONNAIS NEW YORK
BRANCH
By: /s/Frederick S. Haddad
-----------------------------
Name: Frederick S. Haddad
---------------------------
Title: Senior Vice President
--------------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH
By: /s/Frederick S. Haddad
-----------------------------
Name: Frederick S. Haddad
---------------------------
Title: Authorized Signature
--------------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
GENERALE BANK
By: /s/P. Pollaert /s/E. Matthews
---------------------------------------
Name: P. Pollaert E. Matthews
-------------------------------------
Title: SVP SVP
------------------------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
KREDIETBANK NV
By: /s/Robert Snauffer
--------------------------
Name: Robert Snauffer
------------------------
Title: Vice President
-----------------------
By: /s/Tod R. Angus
---------------------------
Name: TOD R. ANGUS
-------------------------
Title: VICE PRESIDENT
------------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
NATIONAL CITY BANK
By: /s/Barry C. Robinson
----------------------------
Name: BARRY C. ROBINSON
--------------------------
Title: VICE PRESIDENT
-------------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION
By: /s/Sandra A. Sauer
--------------------------------------------
Name: Sandra A. Sauer
------------------------------------------
Title: Vice President
-----------------------------------------
Norwest Bank Colorado, N.A. - Denver
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
UNION BANK OF CALIFORNIA, N.A.
(AS SUCCESSOR BY MERGER TO UNION BANK)
By: /s/Anthony B. Kwee
--------------------------
Name: Anthony B. Kwee
------------------------
Title: Vice President
-----------------------
<PAGE>
Signature Pages for Lenders
---------------------------
The undersigned Lender hereby consents and agrees to the foregoing Amendment:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: /s/Jeffrey W. Maillet
--------------------------------------
Name: JEFFREY W. MAILLET
------------------------------------
Title: Sr. Vice Pres. - Portfolio Mgr.
-----------------------------------
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EMPLOYMENT AGREEMENT EXHIBIT 10.2
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EMPLOYMENT AGREEMENT (this "Agreement"), effective as of August 1, 1996
(the "Effective Date"), by and between SAMSONITE CORPORATION, a Delaware
corporation (the "Company"), and JOHN P. MURTAGH (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to retain the services of the Executive
and to enter into this Agreement as of the Effective Date.
WHEREAS, the Executive is willing to serve the Company on the terms and
conditions herein provided.
THEREFORE, in consideration of the foregoing and of the premises and
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
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The Company agrees to employ the Executive and the Executive agrees to
serve the Company on the terms and conditions set forth herein.
2. TERM
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This Agreement shall have a term (the "Term") beginning on the
Effective Date and expiring on the third anniversary of the Effective Date.
3. POSITION AND DUTIES
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(a) The Executive shall serve as Vice President and Chief
Administrative Officer and shall perform such duties and services prescribed
herein and as may be prescribed from time to time by the President and Chief
Executive Officer (the "CEO") and/or the Board of Directors of the Company or
any duly authorized committee thereof (the "Board"). The Executive shall perform
such duties, under the supervision and direction of the Board, to the best of
his ability and in a diligent and proper manner. The Executive shall report
directly to the President and Chief Executive Officer.
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(b) Except during customary vacation periods and periods of illness,
the Executive shall, during his employment hereunder, devote his full business
time and attention to the performance of services for the Company, and as
determined by the Board.
(c) Nothing in this Agreement shall affect the Executive's duty of
loyalty and duty of care to the Company and its subsidiaries as provided under
applicable state laws.
4. COMPENSATION AND RELATED MATTERS
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(a) Salary. During the Executive's employment hereunder, the Company
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shall pay to the Executive a salary ("Base Salary") in equal installments in
accordance with normal payroll practices of the Company but not less frequently
than monthly. The Base Salary shall be payable at the rate of $200,000 per
annum, starting as of the Effective Date. The payments of Base Salary hereunder
shall not in any way limit or reduce any other obligation of the Company
hereunder, and no other compensation, benefit or payment hereunder shall in any
way limit or reduce the obligation of the Company to pay the Executive's Base
Salary hereunder. The Board, at any time and from time to time, may increase
(but not reduce) the Base Salary payable under this Agreement, and increase in
the Base Salary shall become effective at the time indicated by the Board
without the need for an amendment to this Agreement.
(b) Relocation. It is contemplated that the Executive's office shall
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be in the Company's executive offices in Denver, Colorado, unless, subsequently
during the Term, the Board and the Executive agree that it would be desirable
for the Executive's office to be located elsewhere. Accordingly, the Executive
shall promptly relocate to the Denver metropolitan area and shall own or lease a
residence in the Denver metropolitan area so long as he shall be headquartered
there. To defray the cost of relocating to the Denver metropolitan area, the
Company shall make a lump sum payment of $100,000 to the Executive, payable
within 30 days after the Effective Date, and shall provide the relocation
benefits set forth in the Samsonite Relocation Policy -Transferred Employees
(effective date July 1, 1988), excluding all of the benefits set forth in
Sections II and VI of such Policy. Except as provided in the preceding sentence,
the Company shall have no obligation to reimburse the Executive for any costs
and expenses incurred in connection with the relocation of the Executive and his
family to the Denver metropolitan area.
(c) Expenses. The Executive shall be entitled to receive prompt
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reimbursement from the Company of all reasonable expenses incurred by the
Executive in performing services hereunder, in accordance with the policies and
procedures established by the Company from time to time. The Executive shall
furnish the Company with evi-
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dence that such expenses were incurred as the Company may from time to time
reasonably request.
(d) Stock Option Agreement. As an inducement to enter into this
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Agreement and solely in connection with the performance of services by the
Executive pursuant to this Agreement, the Executive shall receive a grant of
stock options (the "Options") to purchase 150,000 shares of the common stock,
par value $.01 per share ("Common Stock"), of the Company pursuant to and
subject to the terms and conditions of the Stock Option Agreement, dated as of
the date hereof, by and between the Company and the Executive (the "Stock Option
Agreement"). The Stock Option Agreement shall be executed concurrently with this
Agreement.
(e) Other Benefits. From and after the Effective Date, the
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Executive shall be entitled to participate in all of the Company's employee
pension plans, welfare benefit plans, tax-deferred savings plans, or other
benefit arrangements (including any insurance or trust arrangements maintained
generally for the benefit of the Company's directors and officers) and in which
the senior executives of the Company who receive equity-based compensation are
entitled to participate (collectively, the "Company Plans"), on the same basis
as other senior executives of the Company who receive equity-based compensation,
and shall be provided with the use of a Company provided automobile in
accordance with the Company's current policy for executive officers. Without
limiting the generality of the foregoing, if the Board so determines, the
Executive shall be entitled to participate in any supplemental executive
retirement plan or excess benefit plan (a "SERP") that the Company may maintain
from time to time for the benefit of its senior executive officers who receive
equity-based compensation provided that Executive's participation shall be on
the same terms and conditions as such senior executives, all as determined by
the Board. The Company and the Executive agree that nothing in this Agreement
shall preclude the Company from amending or terminating any such employee
benefit plan, policy or practice, whether now or hereinafter in effect.
(f) Incentive Bonus. The Executive shall be eligible to receive an
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annual incentive bonus (the "Incentive Bonus") in respect of each fiscal year of
the Company that ends during the Term, starting with the fiscal year ending
January 31, 1997. The Incentive Bonus in respect of each fiscal year that ends
during the Term (each, a "Reference Year") shall be calculated on the terms
hereafter set forth in this Section 4(f). The Incentive Bonus may, subject to
the conditions set forth below, equal up to 100% of the Executive's Base Salary.
Except as provided in Section 4(f)(v) below, the Executive's Incentive Bonus
shall consist of a Target Bonus and a Project Bonus (each as defined below),
determined as follows:
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(i) A portion of the Incentive Bonus (the "Target Bonus") in an amount
equal to one-half of the EBIT Attainment Percentage (as defined below)
multiplied by the Base Salary of the Executive (with respect to the applicable
Reference Year) shall be payable to the Executive with respect to each Reference
Year, provided that the Target Bonus shall not be paid with respect to any
Reference Year if the EBIT Attainment Percentage with respect to such Reference
Year is less than eighty percent (80%). The "EBIT Attainment Percentage" with
respect to any Reference Year shall mean the percentage that is established as
follows: if the EBIT (as defined below) of the Company with respect to the
Reference Year is
(A) less than the Minimum EBIT Target (as defined below) for such
Reference Year, then the EBIT Attainment Percentage shall equal zero
percent (0%);
(B) equal to the Minimum EBIT Target for such Reference Year, the
EBIT Attainment Percentage shall equal eighty percent (80%);
(C) greater than the Minimum EBIT Target but less than the Annual
EBIT Target (as defined below) for such Reference Year, the EBIT
Attainment Percentage shall equal the sum of (x) eighty percent (80%)
plus (y) the product of ten percent (10%) multiplied by a fraction, the
numerator of which shall be the excess of (I) the EBIT of the Company
over (II) the Minimum EBIT Target for such Reference Year and the
denominator of which shall be the excess of the Annual EBIT Target over
the Minimum EBIT Target; or
(D) equal to or greater than the Annual EBIT Target for such
Reference Year, the EBIT Attainment Percentage shall equal ninety percent
(90%).
(E) greater than the Annual EBIT Target but less than the Maximum
EBIT Target (as defined below) for such Reference Year, the EBIT
Attainment Percentage shall equal the sum of (x) ninety percent (90%)
plus (y) the product of ten percent (10%) multiplied by a fraction, the
numerator of which shall be the excess of (I) the EBIT of the Company
over (II) the Annual EBIT Target for such Reference Year and the
denominator of which shall be the excess of the Maximum EBIT Target over
the Annual EBIT Target; or
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(F) equal to or greater than the Maximum EBIT Target for such
Reference Year, the EBIT Attainment percentage shall equal one hundred
percent (100%).
(ii) The Board shall determine the "Annual EBIT Target" and the "Minimum
EBIT Target", and the "Maximum EBIT Target" for the Reference Years ending
January 31, 1997, January 31, 1998, January 31, 1999, and January 31, 2000,
and promptly after such targets have been determined, the Board shall give the
Executive written notice thereof. The Annual EBIT Targets, Minimum EBIT
Targets, and Maximum EBIT Targets determined by the Board shall be reasonably
achievable in the good faith judgment of the Board. The Board shall have the
right, acting unilaterally and in good faith, to adjust the Annual EBIT
Target, the Minimum EBIT Target,and the Maximum EBIT Target upon the
occurrence of any acquisition, disposition or other significant event that
occurs after such targets have been determined. For purposes of this Section
4(f), "EBIT" shall mean, for any period, the Company's consolidated earnings
(excluding extraordinary gains and losses and gains or losses from the sale of
fixed assets outside of the ordinary course of business) from continuing
operations before interest and taxes for such period, and EBIT shall be
determined on the same basis as the Annual EBIT Target, the Minimum EBIT
Target, and the Maximum EBIT Target. Notwithstanding the foregoing, EBIT for
any Reference Year shall be equitably adjusted by the Board (solely for the
purposes of Section 4(f)(i)) to the extent that the Company's business was not
conducted in the ordinary course in accordance with past practices.
(iii) A portion of the Incentive Bonus in a target amount equal to a
maximum of fifty percent (50%) of the Base Salary of the Executive (with
respect to the Reference Year) (the "Project Bonus") shall be payable to the
Executive to the extent that the Board determines that the Executive has
satisfactorily completed certain projects (the "Annual Projects") established
by the Board with respect to such Reference Year in accordance with this
subparagraph (iii); provided that the Board may award a Project Bonus between
eighty percent (80%) and one hundred percent (100%)of the target amount based
upon its evaluation of the manner in which the Executive completes the Annual
Projects. The Company shall determine the Annual Projects for each fiscal
year during the Term and promptly after such projects have been determined,
the Board shall give the Executive written notice thereof. The Annual
Projects determined by the Board shall be reasonably achievable in the good
faith judgment of the Board. The Executive acknowledges that the Annual
Projects established by the Board may not be measured by financial results or
other quantifiable standards and may depend on subjective judgments by the
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Board, and the Executive agrees that the determination of the Board as to the
extent to which such Annual Projects have been satisfactorily completed shall
be conclusive for all purposes, provided that such determination shall be made
in good faith.
(iv) Each Incentive Bonus (including the Target Bonus and the Project
Bonus) shall be paid not more than 30 days after a determination by the Board
that applicable performance goals have been met, and such determination shall
be made not later than 10 days following the filing of a Form 10-K for the
Company, or if the Company is not required to file a Form 10-K, not later than
10 days following the date upon which the Company's audited financial
statements first become available.
(v) The Executive shall be entitled to receive an Incentive Bonus for
the full Reference Year ending January 31, 1997 as if he had been employed for
the entire fiscal year then ending, in an amount equal to the maximum
Incentive Bonus for such Reference Year, regardless of whether or not the
Minimum EBIT Target or Annual Projects for such Reference Year shall have been
achieved. The Executive shall not be entitled to an Incentive Bonus with
respect to the fiscal year ending January 31, 2000.
(g) Vacation and other Absences. The Executive shall be entitled to
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the number of paid vacation days in each calendar year determined in accordance
with the Company's vacation policy as in effect immediately prior to the
execution of this Agreement, provided that the Executive shall be entitled to at
least four weeks of paid vacation in each calendar year and a prorata amount for
any partial calendar year.
(h) Services Furnished. The Company shall furnish the Executive
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with office space, secretarial assistance and such other facilities and services
as shall be suitable to the Executive's position and adequate for the
performance of his duties hereunder.
5. TERMINATION
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The Executive's employment hereunder may be terminated under the
following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon his
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death.
(b) Disability. If the Board determines in good faith, based on medical
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evidence acceptable to it, that the Executive has become physically or mentally
disabled or
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incapacitated during his employment hereunder for a continuous period of ninety
(90) days to such an extent that he shall be unable to perform his duties
hereunder then, notwithstanding the provisions of Section 2, the Company may,
after the expiration of said ninety (90) day period and during the continuance
of such disability or incapacity, give to the Executive a Notice of Termination
(as defined in Section 5(e) hereof) of the Executive's employment hereunder and
such employment shall terminate on the date provided in Section 5(f) hereof.
(c) Termination by the Company. The Company may terminate the
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Executive's employment hereunder at any time with or without Cause. For purposes
of this Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder upon (A) the engaging by the Executive in willful
misconduct that is materially injurious to the Company, (B) the embezzlement or
misappropriation of funds or property of the Company by the Executive or the
conviction of the Executive of a felony or the entrance of a plea of guilty by
the Executive to a felony or (C) the failure or refusal by the Executive to
devote his full business time and attention (as described in Section 3(b) of
this Agreement) to the performance of his duties and responsibilities hereunder
or any other breach by the Executive of this Agreement in any material respect
if such breach has not been cured by the Executive within thirty (30) days after
the Preliminary Notice (as defined below) has been given to the Executive. For
purposes of this paragraph, no act, or failure to act, on the Executive's part
shall be considered "willful" unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his action or omission was in the
best interest of the Company. The Executive shall not be deemed to have been
terminated for Cause, unless the Company shall have given the Executive (i)
notice (the "Preliminary Notice") setting forth, in reasonable detail the facts
and circumstances claimed to provide a basis for termination for Cause, (ii) a
reasonable opportunity for the Executive, together with his counsel, to be heard
before the Board and (iii) a Notice of Termination stating that, in the good
faith judgement of the Board, the Executive was guilty of conduct set forth in
clauses (A), (B) or (C) above, and specifying the particulars thereof in
reasonable detail. Upon receipt of the Preliminary Notice, the Executive shall
have thirty (30) days in which to appear before the Board with counsel, or take
such oth er action as he may deem appropriate, and such thirty (30) day period
is hereby agreed to as a reasonable opportunity for the Executive to be heard.
(d) Termination by the Executive. The Executive may voluntarily terminate
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his employment hereunder at any time with or without Good Reason. For purposes
of this Agreement, "Good Reason" shall mean, so long as the Executive has not
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been guilty of the conduct set forth in clauses (A), (B) or (C) of Section 5(c)
hereof, (i) a failure by the Company to comply with any material provision of
this Agreement that has not been cured within thirty (30) days after written
notice of such noncompliance has been given by the Executive to the Company or
(ii) the assignment to the Executive by the Company of duties inconsistent with
the Executive's position, duties or responsibilities as Vice President, Chief
Administrative Officer, including, but not limited to, any material reduction in
such position, duties or responsibilities or material change in his title, or
(iii) a relocation by the Company of the Executive's office to a location
outside a 30 mile radius from Denver, Colorado, which relocation is made not as
part of a relocation of the Company's executive offices; (in the case of each of
clauses (ii) and (iii) above, without the consent of the Executive). The
Executive's election to terminate under this Section 5(d) shall be made by
giving Notice of Termination not later than 60 days from, as applicable, the
date that the Company fails to cure under (i) above, the assignment of duties
under (ii) above, and the date that the Executive is advised of the proposed
relocation under (iii) above.
(e) Notice of Termination. Any termination of the Executive's employment
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by the Company or by the Executive (other than termination pursuant to Section
5(a) hereof) shall be communicated by written Notice of Termination to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice that shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances, if any, claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(f) Date of Termination. Except to the extent otherwise herein provided,
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"Date of Termination" shall mean (i) if the Executive's employment is terminated
pursuant to Section 5(a), the date of his death, (ii) if the Executive's
employment is terminated pursuant to Section 5(b) or (c), the date of or a later
date specified in the Notice of Termination, (iii) if the Executive's employment
is terminated pursuant to Section 5(d), the date on which the Notice of
Termination is given and (iv) if this Agreement is continued in effect to the
end of the Term, the last day of the Term. Except as provided in and subject to
Section 6 hereof, the Company shall not have any obligation to Executive for
salary continuation, severance or termination pay upon termination of this
Agreement.
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6. COMPENSATION UPON TERMINATION
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(a) If the Executive's employment is terminated (i) by the Company
for Cause, (ii) by the Executive other than for Good Reason, or (iii) by reason
of the Executive's death or disability (pursuant to Section 5(b) hereof), then
the Company shall pay the Executive his full Base Salary through the Date of
Termination (to the extent not otherwise paid through the Date of Termination)
at the rate in effect immediately prior to the Date of Termination, provided
that if the Executive's employment hereunder terminates by reason of his death,
the Company shall continue to make salary payments at the rate of the Base
Salary then in effect in respect of the month following the date of death. In
addition, notwithstanding any provision to the contrary in this Agreement, the
Executive shall continue to participate in, and shall receive all accrued
benefits to which the Executive is entitled under, all of the Company Plans,
through the Date of Termination, provided that the Executive shall not be
entitled to any portion of the Incentive Bonus unless such bonus shall be
payable pursuant to Section 4(f) with respect to a Reference Year ending on or
before the Date of Termination. With respect to the Incentive Bonus, if the Date
of Termination occurs after the end of a Reference Year and prior to the
determination of whether the performance goals for such Reference Year were met,
such Incentive Bonus shall be payable, if it is determined that such goals were
met, in accordance with the provisions of Section 4(f) hereof.
(b) If the Executive's employment is terminated (i) by the Company
without Cause (other than for disability pursuant to Section 5(b) hereof), or
(ii) by the Executive for Good Reason, then the Company shall pay to the
Executive, as severance pay in a lump sum, not later than the fifth day
following the Date of Termination, the following amounts, which shall not be
discounted to take into account present value:
(A) to the extent not otherwise paid through the Date of
Termination, the Executive's full Base Salary through the Date of Termination
at the rate in effect at the time Notice of Termination is given; and
(B) in lieu of any further salary and bonus or other incentive
compensation payments to the Executive for periods subsequent to the Date of
Termination, the sum of two hundred percent (200%) of the Base Salary of the
Executive.
In addition to the foregoing, until such time that the Executive becomes
eligible for coverage under a program maintained or sponsored by a subsequent
employer of the Executive (not including self-employment), the Company shall, at
the Company's expense, allow the Executive to continue to participate, for the
number of years (including partial years) then remaining in the Term, to the
same extent and upon the same terms as the Executive
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participated in such plans immediately prior to the termination of his
employment, in the Company's medical reimbursement and other welfare benefit
plans in which the Executive was entitled to participate immediately prior to
the Date of Termination; provided that the Executive's continued participation
in such plan shall be continued pursuant to this sentence only to the extent
permissible under the general terms and provisions of such plans and applicable
law.
(c) In the event that this Agreement is continued in effect to the end
of the Term and at or prior to expiration of the Term the Company has not
offered to extend this Agreement upon the same or substantially similar terms
and conditions for an additional term of at least one year, the Company shall
pay the Executive the sum of $200,000; payment to be made within thirty (30)
days from the Date of Termination of employment, and the Company shall have no
further obligations to the Executive, except as may be provided under the
express terms of this Agreement or of any applicable pension or welfare plans or
in accordance with the survivorship provisions of Section 13 of this Agreement.
7. LEGAL FEES; REIMBURSEMENT OF CERTAIN EXPENSES
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The Company shall promptly reimburse the Executive for the reasonable
legal fees and expenses incurred by the Executive in connection with enforcing
or defending any right or benefit of the Executive pursuant to this Agreement or
instruments related thereto; provided that the Company shall have no obligation
to reimburse the Executive for any such fees and expenses unless the resolution
of any action taken by the Executive to enforce such right is in favor of the
Executive. In addition, the Company hereby agrees that the amount of any such
legal fees and expenses reimbursed to the Executive in connection with enforcing
any right or benefit provided to the Executive by the Company pursuant to or in
accordance with this Agreement shall not be taken into account by the Company in
determining the aggregate compensation paid or payable to the Executive under
this Agreement.
8. INDEMNIFICATION
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The Company shall indemnify the Executive (and his legal
representatives), unless expressly prohibited by applicable law, against all
losses, claims, damages, liabilities, costs, charges and expenses incurred or
sustained by him or his legal representatives in connection with any action,
suit or proceeding to which he (or his legal representatives) may be made a
party by reason of his being or having been a director, officer or employee of
the Company (including payment of expenses in advance of the final disposition
of the proceeding). The Company further agrees, upon demand by the Executive,
promptly to reimburse the Executive for, or pay, any loss, claim, damage,
liability or expense, unless
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expressly prohibited by applicable law, to which the Company has agreed to
indemnify the Executive pursuant to Sections 7 and 8 hereof. If any action, suit
or proceeding is brought or threatened against the Executive in respect of which
indemnity may be sought against the Company pursuant to the foregoing, the
Executive shall notify the Company promptly in writing of the institution of
such action, suit or proceeding. Such action, suit or proceeding shall be
defended by and be under the exclusive control of the Company and its counsel;
except that the Executive shall have the right to designate separate counsel,
acceptable to the Executive in his sole discretion, and, to the extent of a
conflict of interest with the Company, the right to direct, control and
supervise the Executive's defense of such action, suit or proceeding.
9. TAXES
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The Company shall deduct from all amounts payable under this Agreement
all federal, state, local and other taxes required by law to be withheld with
respect to such payments.
10. CONFIDENTIALITY AND NONCOMPETITION
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(a) Unless otherwise required by law or judicial process, the
Executive shall keep confidential all confidential information known to the
Executive concerning the Company and its businesses during his employment with
the Company and for the shorter of three (3) years following the termination of
the Executive's employment with the Company or until such information is
publicly disclosed by the Company or otherwise becomes publicly disclosed other
than through the Executive's actions; provided, that the Executive shall provide
notice to the Company in advance of any disclosure required by law or judicial
process in a timely manner to permit the Company to oppose such compelled
disclosure.
(b) The Executive agrees that during his employment with the Company
and for a period of one (1) year thereafter (unless such employment is
terminated by the Company pursuant to Section 5(c) without Cause or by the
Executive pursuant to Section 5(d) with Good Reason, provided that the Company
does not contest that such termination was for Good Reason), he shall not,
directly or indirectly, as a principal, officer, director, employee or in any
other capacity whatsoever, without the prior written consent of the Company,
engage in, or be or become interested or acquire any ownership of any kind in,
or become associated with, or make loans or advance property to any person
engaged in or about to engage in, any business activity that is in substantial
competition (in excess of 15% of net sales of the business) with any of the
businesses engaged in by the Company during the Term in any of the geographic
areas in which such businesses are then conducted
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by the Company or have been conducted by the Company during the twelve months
preceding the termination of the Executive's employment. Nothing in this
Agreement shall prevent the Executive from making or holding any investment in
any amount in securities traded on any national securities exchange or traded in
the over the counter market, provided said investments do not exceed one percent
(1%) of the issued and outstanding stock of any one such corporation.
11. SUCCESSORS; BINDING AGREEMENT
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(a) This Agreement shall be binding upon and inure to the benefit of
the Company and any successor of the Company, including, without limitation, any
corporation or corporations acquiring directly or indirectly all or a
substantial portion of the stock, business or assets of the Company, whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter be
deemed the "Company" for the purposes of this Agreement).
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would be
still payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided hereunder, shall be paid in accordance with the terms
of this Agreement to the Executive's devisee, legatee, or other beneficiary or,
if there be no such beneficiary, to the Executive's estate.
12. NOTICE
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For purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given (i) when hand delivered, (ii) when sent if sent
by overnight mail, overnight courier or facsimile transmission or (iii) when
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
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John P. Murtagh
3511 Northwest 61st Circle
Boca Raton, FL 33496
If to the Company:
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Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239
Attention: Board of Directors
c/o Corporate Secretary
(with a copy to the attention of General
Counsel at the same address)
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. SURVIVORSHIP
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The respective rights and obligations of the parties hereunder set forth
in Sections 6, 7, 8, 9, and 10 of this Agreement shall survive any termination
of this Agreement to the extent necessary to the intended preservation of such
rights and obligations.
14. REPRESENTATIONS AND WARRANTIES
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The Company represents and warrants that (a) it is fully authorized and
empowered to enter into this Agreement and that its Board has approved the terms
of this Agreement, (b) the execution of this Agreement and the performance of
its obligations under this Agreement shall not violate or result in a breach of
the terms of any material agreement to which the Company is a party or by which
it is bound, (c) no approval by any governmental authority or body is required
for it to enter into this Agreement, and (d) this Agreement is valid, binding
and enforceable against the Company in accordance with its terms, except to the
extent affected or limited by applicable bankruptcy laws or other statutes
governing the rights of creditors generally and any regulations or
interpretations thereof. The Executive represents and warrants that his
execution of this Agreement and his performance of his duties and
responsibilities under this Agreement shall not violate or result in a breach of
the terms of any material agreement to which he is a party or by which he is
bound.
15. MISCELLANEOUS
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(a) Entire Agreement. The parties hereto agree that this Agreement and
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the Stock Option Agreement referred to in Section 4(d) hereof contain the entire
understanding and agreement between them, and supersedes all prior
understandings and agreements between the parties respecting the employment by
the Company of the Executive, and that the provisions of this Agreement may not
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by the parties hereto. Nothing contained herein
shall supersede or otherwise modify the rights and obligations of the Company or
the Executive under the Stock Option Agreement. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
(b) Waiver. No waiver by either party hereto at any time of any breach
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by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
(c) Choice of Law. The validity, interpretation, construction and
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performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.
16. VALIDITY
--------
The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement, which shall remain in full force and
effect.
17. COUNTERPARTS
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
14
<PAGE>
IN WITNESS WHEREOF, the Company has caused its name to be subscribed to
this Agreement by its duly authorized representative and the Executive has
executed this Agreement as of the date and the year first above written.
SAMSONITE CORPORATION
By: /s/ R. R. Nicolosi
------------------------------------
Print Name: Richard R. Nicolosi
----------------------------
Title: President & CEO
---------------------------------
/s/ John P. Murtagh
---------------------------------------
John P.Murtagh
15
<PAGE>
EMPLOYMENT AGREEMENT EXHIBIT 10.3
--------------------
EMPLOYMENT AGREEMENT (this "Agreement"), effective as of September
16, 1996 (the "Effective Date"), by and between SAMSONITE CORPORATION, a
Delaware corporation (the "Company"), and ROBERT P. BAIRD., JR. (the
"Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to retain the services of the Executive
and to enter into this Agreement as of the Effective Date.
WHEREAS, the Executive is willing to serve the Company on the terms
and conditions herein provided.
THEREFORE, in consideration of the foregoing and of the premises and
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
----------
The Company agrees to employ the Executive and the Executive agrees to
serve the Company on the terms and conditions set forth herein.
2. TERM
----
This Agreement shall have a term (the "Term") beginning on the
Effective Date and expiring on the third anniversary of the Effective Date.
3. POSITION AND DUTIES
-------------------
(a) The Executive shall serve initially as Vice President and General
Manager Softside Products and shall perform such duties and services prescribed
herein and as may be prescribed from time to time by the President of The
Americas, the President and Chief Executive Officer (the "CEO") and/or the Board
of Directors of the Company or any duly authorized committee thereof (the
"Board"). The Executive shall perform such duties, under the supervision and
direction of the Board, to the best of his ability and in a diligent and proper
manner. The Executive shall report directly to the President of The Americas.
<PAGE>
(b) Except during customary vacation periods and periods of illness,
the Executive shall, during his employment hereunder, devote his full business
time and attention to the performance of services for the Company, and as
determined by the Board.
(c) Nothing in this Agreement shall affect the Executive's duty of
loyalty and duty of care to the Company and its subsidiaries as provided under
applicable state laws.
4. COMPENSATION AND RELATED MATTERS
--------------------------------
(a) Salary. During the Executive's employment hereunder, the Company
------
shall pay to the Executive a salary ("Base Salary") in equal installments in
accordance with normal payroll practices of the Company but not less frequently
than monthly. The Base Salary shall be payable at the rate of $180,000 per
annum, starting as of the Effective Date. The payments of Base Salary hereunder
shall not in any way limit or reduce any other obligation of the Company
hereunder, and no other compensation, benefit or payment hereunder shall in any
way limit or reduce the obligation of the Company to pay the Executive's Base
Salary hereunder. The Board, at any time and from time to time, may increase
(but not reduce) the Base Salary payable under this Agreement, and increase in
the Base Salary shall become effective at the time indicated by the Board
without the need for an amendment to this Agreement.
(b) Relocation. It is contemplated that the Executive's office shall
----------
be in the Company's executive offices in Denver, Colorado, unless, subsequently
during the Term, the Board and the Executive agree that it would be desirable
for the Executive's office to be located elsewhere. Accordingly, the Executive
shall promptly relocate to the Denver metropolitan area and shall own or lease a
residence in the Denver metropolitan area so long as he shall be headquartered
there. To defray the cost of relocating to the Denver metropolitan area, the
Company shall make a lump sum payment of $50,000 to the Executive, payable
within 30 days after the Effective Date, and shall provide the relocation
benefits set forth in the Samsonite Relocation Policy - Transferred Employees
(effective date July 1, 1988), excluding all of the benefits set forth in
Sections II and VI (A), (B), (D) and (E) of such Policy, and except that the
benefits under Section VI (F) shall be limited to three (3) months. Except as
provided in the preceding sentence, the Company shall have no obligation to
reimburse the Executive for any costs and expenses incurred in connection with
the relocation of the Executive and his family to the Denver metropolitan area.
(c) Expenses. The Executive shall be entitled to receive prompt
--------
reimbursement from the Company of all reasonable expenses incurred by the
Executive in performing services hereunder, in accordance with the policies and
procedures established
2
<PAGE>
by the Company from time to time. The Executive shall furnish the Company with
evidence that such expenses were incurred as the Company may from time to time
reasonably request.
(d) Stock Option Agreement. As an inducement to enter into this
----------------------
Agreement and solely in connection with the performance of services by the
Executive pursuant to this Agreement, the Executive shall receive a grant of
stock options (the "Options") to purchase 100,000 shares of the common stock,
par value $.01 per share ("Common Stock"), of the Company pursuant to and
subject to the terms and conditions of the Stock Option Agreement, by and
between the Company and the Executive (the "Stock Option Agreement").
(e) Other Benefits. From and after the Effective Date, the Executive
--------------
shall be entitled to participate in all of the Company's employee pension plans,
welfare benefit plans, tax-deferred savings plans, or other benefit arrangements
(including any insurance or trust arrangements maintained generally for the
benefit of the Company's directors and officers) and in which the senior
executives of the Company who receive equity-based com pensation are entitled
to participate (collectively, the "Company Plans"), on the same basis as other
senior executives of the Company who receive equity-based compensation, and
shall be provided with the use of a Company provided automobile in accordance
with the Company's current policy for executive officers. Without limiting the
generality of the foregoing, if the Board so determines, the Executive shall
be entitled to participate in any sup plemental executive retirement plan or
excess benefit plan (a "SERP") that the Company may maintain from time to time
for the benefit of its senior executive officers who receive equity- based
compensation provided that Executive's participation shall be on the same terms
and conditions as such senior executives, all as determined by the Board. The
Company and the Executive agree that nothing in this Agreement shall preclude
the Company from amending or terminating any such employee benefit plan, policy
or practice, whether now or hereinafter in effect.
(f) Incentive Bonus. The Executive shall be eligible to receive an
---------------
annual incentive bonus (the "Incentive Bonus") in respect of each fiscal year of
the Company that ends during the Term, starting with the fiscal year ending
January 31, 1997. The Incentive Bonus in respect of each fiscal year that ends
during the Term (each, a "Reference Year") shall be calculated on the terms
hereafter set forth in this Section 4(f). The Incentive Bonus may, subject to
the conditions set forth below, equal up to 100% of the Executive's Base Salary.
Except as provided in Section 4(f)(v) below, the Executive's Incentive Bonus
shall consist of a Target Bonus and a Project Bonus (each as defined below),
determined as follows:
3
<PAGE>
(i) A portion of the Incentive Bonus (the "Target Bonus") in an
amount equal to one-half of the EBIT Attainment Percentage (as defined
below) multiplied by the Base Salary of the Executive (with respect to
the applicable Reference Year) shall be payable to the Executive with
respect to each Reference Year, provided that the Target Bonus shall not
be paid with respect to any Reference Year if the EBIT Attainment
Percentage with respect to such Reference Year is less than eighty
percent (80%). The "EBIT Attainment Percentage" with respect to any
Reference Year shall mean the percentage that is established as follows:
if the EBIT (as defined below) of the Company with respect to the
Reference Year is
(A) less than the Minimum EBIT Target (as defined below) for
such Reference Year, then the EBIT Attainment Percentage shall
equal zero percent (0%);
(B) equal to the Minimum EBIT Target for such Reference
Year, the EBIT Attainment Percentage shall equal eighty percent
(80%);
(C) greater than the Minimum EBIT Target but less than the
Annual EBIT Target (as defined below) for such Reference Year,
the EBIT Attainment Percentage shall equal the sum of (x)
eighty percent (80%) plus (y) the product of ten percent (10%)
multiplied by a fraction, the numerator of which shall be the
excess of (I) the EBIT of the Company over (II) the Minimum EBIT
Target for such Reference Year and the denominator of which
shall be the excess of the Annual EBIT Target over the Minimum
EBIT Target; or
(D) equal to the Annual EBIT Target for such Reference Year,
the EBIT Attainment Percentage shall equal ninety percent (90%).
(E) greater than the Annual EBIT Target but less than the
Maximum EBIT Target (as defined below) for such Reference Year,
the EBIT Attainment Percentage shall equal the sum of (x)
ninety percent (90%) plus (y) the product of ten percent (10%)
multiplied by a fraction, the numerator of which shall be the
excess of (I) the EBIT of the Company over (II) the Annual EBIT
Target for such Reference Year and the denominator of which
shall be the excess of the Maximum EBIT Target over the Annual
EBIT Target; or
(F) equal to or greater than the Maximum EBIT Target for
such Reference Year, the EBIT Attainment percentage shall equal
one hundred percent (100%).
4
<PAGE>
(ii) The Board shall determine the "Annual EBIT Target", the "Minimum
EBIT Target", and the "Maximum EBIT Target" for the Reference Years
ending January 31, 1997, January 31, 1998, January 31, 1999, and January
31, 2000, and promptly after such targets have been determined, the
Board shall give the Executive written notice thereof. The Annual EBIT
Targets, Minimum EBIT Targets, and Maximum EBIT Targets determined by
the Board shall be reasonably achievable in the good faith judgment of
the Board. The Board shall have the right, acting unilaterally and in
good faith, to adjust the Annual EBIT Target, the Minimum EBIT Target,
and the Maximum EBIT Target upon the occurrence of any acquisition,
disposition or other significant event that occurs after such targets
have been determined. For purposes of this Section 4(f), "EBIT" shall
mean, for any period, the Company's consolidated earnings (excluding
extraordinary gains and losses and gains or losses from the sale of
fixed assets outside of the ordinary course of business) from continuing
operations before interest and taxes for such period, and EBIT shall be
determined on the same basis as the Annual EBIT Target, the Minimum EBIT
Target, and the Maximum EBIT Target. Notwithstanding the foregoing, EBIT
for any Reference Year shall be equitably adjusted by the Board (solely
for the purposes of Section 4(f)(i)) to the extent that the Company's
business was not conducted in the ordinary course in accordance with
past practices.
(iii) A portion of the Incentive Bonus in a target amount equal to a
maximum of fifty percent (50%) of the Base Salary of the Executive (with
respect to the Reference Year) (the "Project Bonus") shall be payable to
the Executive to the extent that the Board determines that the Executive
has satisfactorily completed certain projects (the "Annual Projects")
established by the Board with respect to such Reference Year in
accordance with this subparagraph (iii); provided that the Board may
award a Project Bonus between eighty percent (80%) and one hundred
percent (100%)of the target amount based upon its evaluation of the
manner in which the Executive completes the Annual Projects. The
Company shall determine the Annual Projects for each fiscal year during
the Term and promptly after such projects have been determined, the
Board shall give the Executive written notice thereof. The Annual
Projects determined by the Board shall be reasonably achievable in the
good faith judgment of the Board. The Executive acknowledges that the
Annual Projects established by the Board may not be measured by
financial results or other quantifiable standards and may depend on
subjective judgments by the Board, and the Executive agrees that the
determination of the Board as to the extent to which such Annual
Projects have been satisfactorily completed shall be conclusive for all
purposes, provided that such determination shall be made in good faith.
5
<PAGE>
(iv) Each Incentive Bonus (including the Target Bonus and the Project
Bonus) shall be paid not more than 30 days after a determination by the
Board that applicable performance goals have been met, and such
determination shall be made not later than 10 days following the filing
of a Form 10-K for the Company, or if the Company is not required to
file a Form 10-K, not later than 10 days following the date upon which
the Company's audited financial statements first become available.
(v) The Executive shall be entitled to receive an Incentive Bonus
for the full Reference Year ending January 31, 1997 as if he had been
employed for the entire fiscal year then ending, in an amount not less
than fifty percent (50%) of the maximum Incentive Bonus for such
Reference Year, regardless of whether or not the Minimum EBIT Target or
Annual Projects for such Reference Year shall have been achieved. The
Executive shall not be entitled to an Incentive Bonus with respect to
the fiscal year ending January 31, 2000.
(g) Vacation and other Absences. The Executive shall be entitled
---------------------------
to the number of paid vacation days in each calendar year determined in
accordance with the Company's vacation policy as in effect immediately prior to
the execution of this Agreement, provided that the Executive shall be entitled
to at least four weeks of paid vacation in each calendar year and a prorata
amount for any partial calendar year.
(h) Services Furnished. The Company shall furnish the Executive
------------------
with office space, secretarial assistance and such other facilities
and services as shall be suitable to the Executive's position and adequate for
the performance of his duties hereunder.
5. TERMINATION
-----------
The Executive's employment hereunder may be terminated under the
following circumstances:
(a) Death. The Executive's employment hereunder shall terminate
-----
upon his death.
(b) Disability. If the Board determines in good faith, based on
----------
medical evidence acceptable to it, that the Executive has become physically or
mentally disabled or incapacitated during his employment hereunder for a
continuous period of ninety (90) days to such an extent that he shall be unable
to perform his duties hereunder then, notwithstanding the provisions of Section
2, the Company may, after the expiration of said ninety (90) day period and
during the continuance of such disability or incapacity, give to the Executive
6
<PAGE>
a Notice of Termination (as defined in Section 5(e) hereof) of the Executive's
employment hereunder and such employment shall terminate on the date provided in
Section 5(f) hereof.
(c) Termination by the Company. The Company may terminate the
--------------------------
Executive's employment hereunder at any time with or without Cause. For purposes
of this Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder upon (A) the engaging by the Executive in willful
misconduct that is materially injurious to the Company, (B) the embezzlement or
misappropriation of funds or property of the Company by the Executive or the
conviction of the Executive of a felony or the entrance of a plea of guilty by
the Executive to a felony or (C) the failure or refusal by the Executive to
devote his full business time and attention (as described in Section 3(b) of
this Agreement) to the performance of his duties and responsibilities hereunder
or any other breach by the Executive of this Agreement in any material respect
if such breach has not been cured by the Executive within thirty (30) days after
the Preliminary Notice (as defined below) has been given to the Executive. For
purposes of this paragraph, no act, or failure to act, on the Executive's part
shall be considered "willful" unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his action or omission was in the
best interest of the Company. The Executive shall not be deemed to have been
terminated for Cause, unless the Company shall have given the Executive (i)
notice (the "Preliminary Notice") setting forth, in reasonable detail the facts
and circumstances claimed to provide a basis for termination for Cause, (ii) a
reasonable opportunity for the Executive, together with his counsel, to be heard
before the Board and (iii) a Notice of Termination stating that, in the good
faith judgement of the Board, the Executive was guilty of conduct set forth in
clauses (A), (B) or (C) above, and specifying the particulars thereof in
reasonable detail. Upon receipt of the Preliminary Notice, the Executive shall
have thirty (30) days in which to appear before the Board with counsel, or take
such other action as he may deem appropriate, and such thirty (30) day period is
hereby agreed to as a reasonable opportunity for the Executive to be heard.
(d) Termination by the Executive. The Executive may voluntarily
----------------------------
terminate his employment hereunder at any time with or without Good Reason. For
purposes of this Agreement, "Good Reason" shall mean, so long as the Executive
has not been guilty of the conduct set forth in clauses (A), (B) or (C) of
Section 5(c) hereof, (i) a failure by the Company to comply with any material
provision of this Agreement that has not been cured within thirty (30) days
after written notice of such noncompliance has been given by the Executive to
the Company or (ii) the assignment to the Executive by the Company of duties
materially inconsistent with the Executive's current level of duties or
responsibilities as a senior executive, or (iii) a relocation by the Company of
the Executive's office to a location outside a 30 mile radius from Denver,
Colorado, which relocation is
7
<PAGE>
made not as part of a relocation of the Company's executive offices; (in the
case of each of clauses (ii) and (iii) above, without the consent of the
Executive). Notwithstanding the foregoing, for the Executive to terminate under
this Section 5(d), the Executive must give Notice of Termina tion not later than
60 days from, as applicable, the date that the Company fails to cure under (i)
above, the assignment of duties under (ii) above, and the date that the
Executive is ad vised of the proposed relocation under (iii) above.
(e) Notice of Termination. Any termination of the Executive's
---------------------
employment by the Company or by the Executive (other than termination pursuant
to Section 5(a) hereof) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination
of the Executive's employment under the provision so indicated.
(f) Date of Termination. Except to the extent otherwise herein
-------------------
provided, "Date of Termination" shall mean (i) if the Executive's employment is
terminated pursuant to Section 5(a), the date of his death, (ii) if the
Executive's employment is terminated pursuant to Section 5(b) or (c), the date
of or a later date specified in the Notice of Termination, (iii) if the
Executive's employment is terminated pursuant to Section 5(d), the date on which
the Notice of Termination is given and (iv) if this Agreement is continued in
effect to the end of the Term, the last day of the Term. Except as provided in
and subject to Section 6 hereof, the Company shall not have any obligation to
Executive for salary continuation, severance or termination pay upon termination
of this Agreement.
6. COMPENSATION UPON TERMINATION
-----------------------------
(a) If the Executive's employment is terminated (i) by the Company for
Cause, (ii) by the Executive other than for Good Reason, or (iii) by reason of
the Executive's death or disability (pursuant to Section 5(b) hereof), then the
Company shall pay the Executive his full Base Salary through the Date of
Termination (to the extent not otherwise paid through the Date of Termination)
at the rate in effect immediately prior to the Date of Termination, provided
that if the Executive's employment hereunder terminates by reason of his death,
the Company shall continue to make salary payments at the rate of the Base
Salary then in effect in respect of the month following the date of death. In
addition, notwithstanding any provision to the contrary in this Agreement, the
Executive shall continue to par ticipate in, and shall receive all accrued
benefits to which the Executive is entitled under, all of the Company Plans,
through the Date of Termination, provided that the Executive shall not be
entitled to any portion of the Incentive Bonus unless such bonus shall be
payable pursuant to Section 4(f) with respect to a Reference Year ending on or
before the Date of
8
<PAGE>
Termination. With respect to the Incentive Bonus, if the Date of Termination
occurs after the end of a Reference Year and prior to the determination of
whether the performance goals for such Reference Year were met, such Incentive
Bonus shall be payable, if it is determined that such goals were met, in
accordance with the provisions of Section 4(f) hereof.
(b) If the Executive's employment is terminated (i) by the Company
without Cause (other than for disability pursuant to Section 5(b) hereof), or
(ii) by the Executive for Good Reason, then the Company shall pay to the
Executive, as severance pay in a lump sum, not later than the fifth day
following the Date of Termination, the following amounts, which shall not be
discounted to take into account present value:
(A) to the extent not otherwise paid through the Date of Termination,
the Executive's full Base Salary through the Date of Termination at the
rate in effect at the time Notice of Termination is given; and
(B) in lieu of any further salary and bonus or other incentive
compensation payments to the Executive for periods subsequent to the
Date of Termination, the sum of two hundred percent (200%) of the Base
Salary of the Executive.
In addition to the foregoing, until such time that the Executive becomes
eligible for coverage under a program maintained or sponsored by a subsequent
employer of the Executive (not including self-employment), the Company shall, at
the Company's expense, allow the Execu tive to continue to participate, for a
period not to exceed six (6) months, to the same extent and upon the same terms
as the Executive participated in such plans immediately prior to the termination
of his employment, in the Company's medical reimbursement and other welfare
benefit plans in which the Executive was entitled to participate immediately
prior to the Date of Termination; provided that the Executive's continued
participation in such plan shall be continued pursuant to this sentence only to
the extent permissible under the general terms and provisions of such plans and
applicable law.
(c) In the event that this Agreement is continued in effect to the
end of the Term and at or prior to expiration of the Term the Company has not
offered to extend this Agreement upon the same or substantially similar terms
and conditions for an additional term of at least one year and reached agreement
with the Executive on such terms and conditions, the Company shall pay the
Executive the sum of $180,000; payment to be made within thirty (30) days from
the Date of Termination of employment, and the Company shall have no further
obligations to the Executive, except as may be provided under the express terms
of this Agreement or of any applicable pension or welfare plans or in accordance
with the survivorship provisions of Section 13 of this Agreement.
9
<PAGE>
7. LEGAL FEES; REIMBURSEMENT OF CERTAIN EXPENSES
---------------------------------------------
The Company shall promptly reimburse the Executive for the reasonable
legal fees and expenses incurred by the Executive in connection with enforcing
or defending any right or benefit of the Executive pursuant to this Agreement or
instruments related thereto; provided that the Company shall have no
obligation to reimburse the Executive for any such fees and expenses unless the
resolution of any action taken by the Executive to enforce such right is in
favor of the Executive. In addition, the Company hereby agrees that the amount
of any such legal fees and expenses reimbursed to the Executive in connection
with enforcing any right or benefit provided to the Executive by the Company
pursuant to or in accordance with this Agreement shall not be taken into account
by the Company in determining the aggregate compensation paid or payable to
the Executive under this Agreement.
8. INDEMNIFICATION
---------------
The Company shall indemnify the Executive (and his legal
representatives), unless expressly prohibited by applicable law, against all
losses, claims, damages, liabilities, costs, charges and expenses incurred or
sustained by him or his legal representatives in connection with any action,
suit or proceeding to which he (or his legal representatives) may be made a
party by reason of his being or having been a director, officer or employee of
the Company (including payment of expenses in advance of the final disposition
of the proceeding). The Company further agrees, upon demand by the Executive,
promptly to reimburse the Executive for, or pay, any loss, claim, damage,
liability or expense, unless expressly prohibited by applicable law, to which
the Company has agreed to indemnify the Executive pursuant to Sections 7 and 8
hereof. If any action, suit or proceeding is brought or threatened against the
Executive in respect of which indemnity may be sought against the Company
pursuant to the foregoing, the Executive shall notify the Company promptly in
writing of the institution of such action, suit or proceeding. Such action,
suit or proceeding shall be defended by and be under the exclusive control of
the Company and its counsel; except that the Executive shall have the right to
designate separate counsel, acceptable to the Executive in his sole discretion,
and, to the extent of a conflict of interest with the Company, the right to
direct, control and supervise the Executive's defense of such action, suit or
proceeding.
10
<PAGE>
9. TAXES
-----
The Company shall deduct from all amounts payable under this Agreement
all federal, state, local and other taxes required by law to be withheld with
respect to such payments.
10. CONFIDENTIALITY AND NONCOMPETITION
----------------------------------
(a) Unless otherwise required by law or judicial process, the
Executive shall keep confidential all confidential information known to the
Executive concerning the Company and its businesses during his employment with
the Company and for the shorter of three (3) years following the termination of
the Executive's employment with the Company or until such information is
publicly disclosed by the Company or otherwise becomes publicly disclosed other
than through the Executive's actions; provided, that the Executive shall provide
notice to the Company in advance of any disclosure required by law or judicial
process in a timely manner to permit the Company to oppose such compelled
disclosure.
(b) The Executive agrees that during his employment with the Company
and for a period of one (1) year thereafter he shall not, directly or
indirectly, as a principal, officer, director, employee or in any other capacity
whatsoever, without the prior written consent of the Company, engage in, or be
or become interested or acquire any ownership of any kind in, or become
associated with, or make loans or advance property to any person engaged in or
about to engage in, any business activity that is in substantial competition (in
excess of 15% of net sales of the business) with any of the businesses engaged
in by the Company during the Term in any of the geographic areas in which such
businesses are then conducted by the Company or have been conducted by the
Company during the twelve months preceding the termination of the Executive's
employment. Nothing in this Agreement shall prevent the Executive from making
or holding any investment in any amount in securities traded on any national
securities exchange or traded in the over the counter market, provided said
investments do not exceed one percent (1%) of the issued and outstanding stock
of any one such corporation.
11. SUCCESSORS; BINDING AGREEMENT
-----------------------------
(a) This Agreement shall be binding upon and inure to the benefit of
the Company and any successor of the Company, including, without limitation, any
corporation or corporations acquiring directly or indirectly all or a
substantial portion of the stock, business or assets of the Company, whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter be
deemed the "Company" for the purposes of this Agreement).
11
<PAGE>
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would be
still payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided hereunder, shall be paid in accordance with the terms
of this Agreement to the Executive's devisee, legatee, or other beneficiary or,
if there be no such beneficiary, to the Executive's estate.
12. NOTICE
------
For purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given (i) when hand delivered, (ii) when sent if sent
by overnight mail, overnight courier or facsimile transmission or (iii) when
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
-------------------
Robert P. Baird, Jr.
5140 Crest Knolls Ct.
Bloomfield Hills, MI 48302
If to the Company:
-----------------
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239
Attention: Board of Directors
c/o Corporate Secretary
(with a copy to the attention of General
Counsel at the same address)
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. SURVIVORSHIP
------------
The respective rights and obligations of the parties hereunder set
forth in Sections 6, 7, 8, 9, and 10 of this Agreement shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
12
<PAGE>
14. REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants that (a) it is fully authorized
and empowered to enter into this Agreement and that its Board has approved the
terms of this Agreement, (b) the execution of this Agreement and the performance
of its obligations under this Agreement shall not violate or result in a breach
of the terms of any material agreement to which the Company is a party or by
which it is bound, (c) no approval by any governmental authority or body is
required for it to enter into this Agreement, and (d) this Agreement is valid,
binding and enforceable against the Company in accordance with its terms, except
to the extent affected or limited by applicable bankruptcy laws or other
statutes governing the rights of creditors generally and any regulations or
interpretations thereof. The Executive represents and warrants that his
execution of this Agreement and his performance of his duties and
responsibilities under this Agreement shall not violate or result in a breach of
the terms of any material agreement to which he is a party or by which he is
bound.
15. MISCELLANEOUS
-------------
(a) Entire Agreement. The parties hereto agree that this Agreement and
----------------
the Stock Option Agreement referred to in Section 4(d) hereof contain the entire
understanding and agreement between them, and supersedes all prior
understandings and agreements between the parties respecting the employment by
the Company of the Executive, and that the provisions of this Agreement may not
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by the parties hereto. Nothing contained herein
shall supersede or otherwise modify the rights and obligations of the Company or
the Executive under the Stock Option Agreement. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.
(b) Waiver. No waiver by either party hereto at any time of any breach
------
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
13
<PAGE>
(c) Choice of Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.
16. VALIDITY
--------
The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement, which shall remain in full force and
effect.
17. COUNTERPARTS
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused its name to be subscribed
to this Agreement by its duly authorized representative and the Executive has
executed this Agreement as of the date and the year first above written.
SAMSONITE CORPORATION
By: /s/ R. R. Nicolosi
-----------------------------------
Print Name: Richard R. Nicolosi
--------------------
Title: President & CEO
-------------------------
/s/ Robert P. Baird, Jr.
--------------------------------------
Robert P. Baird, Jr.
14
<PAGE>
EMPLOYMENT AGREEMENT EXHIBIT 10.4
--------------------
EMPLOYMENT AGREEMENT (this "Agreement"), effective as of August 4, 1996
(the "Effective Date"), by and between SAMSONITE CORPORATION, a Delaware
corporation (the "Company"), and JAMES E. BARCH (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to retain the services of the
Executive and to enter into this Agreement as of the Effective Date.
WHEREAS, the Executive is willing to serve the Company on the terms and
conditions herein provided.
THEREFORE, in consideration of the foregoing and of the premises and
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
----------
The Company agrees to employ the Executive and the Executive agrees to
serve the Company on the terms and conditions set forth herein.
2. TERM
----
This Agreement shall have a term (the "Term") beginning on the Effective
Date and expiring on the third anniversary of the Effective Date.
3. POSITION AND DUTIES
-------------------
(a) The Executive shall serve initially as Vice President and General
Manager Hardside Products and shall perform such duties and services prescribed
herein and as may be prescribed from time to time by the President of The
Americas, the President and Chief Executive Officer (the "CEO") and/or the Board
of Directors of the Company or any duly authorized committee thereof (the
"Board"). The Executive shall perform such duties, under the supervision and
direction of the Board, to the best of his ability and in a diligent and proper
manner. The Executive shall report directly to the President of The Americas.
<PAGE>
(b) Except during customary vacation periods and periods of illness, the
Executive shall, during his employment hereunder, devote his full business time
and attention to the performance of services for the Company, and as determined
by the Board.
(c) Nothing in this Agreement shall affect the Executive's duty of
loyalty and duty of care to the Company and its subsidiaries as provided under
applicable state laws.
4. COMPENSATION AND RELATED MATTERS
--------------------------------
(a) Salary. During the Executive's employment hereunder, the Company
------
shall pay to the Executive a salary ("Base Salary") in equal installments in
accordance with normal payroll practices of the Company but not less frequently
than monthly. The Base Salary shall be payable at the rate of $180,000 per
annum, starting as of the Effective Date. The payments of Base Salary hereunder
shall not in any way limit or reduce any other obligation of the Company
hereunder, and no other compensation, benefit or payment hereunder shall in any
way limit or reduce the obligation of the Company to pay the Executive's Base
Salary hereunder. The Board, at any time and from time to time, may increase
(but not reduce) the Base Salary payable under this Agreement, and increase in
the Base Salary shall become effective at the time indicated by the Board
without the need for an amendment to this Agreement.
(b) Relocation. It is contemplated that the Executive's office shall be
----------
in the Company's executive offices in Denver, Colorado, unless, subsequently
during the Term, the Board and the Executive agree that it would be desirable
for the Executive's office to be located elsewhere. Accordingly, the Executive
shall promptly relocate to the Denver metropolitan area and shall own or lease a
residence in the Denver metropolitan area so long as he shall be headquartered
there. To defray the cost of relocating to the Denver metropolitan area, the
Company shall make a lump sum payment of $50,000 to the Executive, payable
within 30 days after the Effective Date, and shall provide the relocation
benefits set forth in the Samsonite Relocation Policy - Transferred Employees
(effective date July 1, 1988), excluding all of the benefits set forth in
Sections II and VI (A), (B), (D) and (E) of such Policy, and except that the
benefits under Section VI (F) shall be limited to three (3) months. Except as
provided in the preceding sentence, the Company shall have no obligation to
reimburse the Executive for any costs and expenses incurred in connection with
the relocation of the Executive and his family to the Denver metropolitan area.
(c) Expenses. The Executive shall be entitled to receive prompt
--------
reimbursement from the Company of all reasonable expenses incurred by the
Executive in performing services hereunder, in accordance with the policies and
procedures established
2
<PAGE>
by the Company from time to time. The Executive shall furnish the Company with
evidence that such expenses were incurred as the Company may from time to time
reasonably request.
(d) Stock Option Agreement. As an inducement to enter into this
----------------------
Agreement and solely in connection with the performance of services by the
Executive pursuant to this Agreement, the Executive shall receive a grant of
stock options (the "Options") to purchase 100,000 shares of the common stock,
par value $.01 per share ("Common Stock"), of the Company pursuant to and
subject to the terms and conditions of the Stock Option Agreement, by and
between the Company and the Executive (the "Stock Option Agreement").
(e) Other Benefits. From and after the Effective Date, the Executive
--------------
shall be entitled to participate in all of the Company's employee pension plans,
welfare benefit plans, tax-deferred savings plans, or other benefit arrangements
(including any insurance or trust arrangements maintained generally for the
benefit of the Company's directors and officers) and in which the senior
executives of the Company who receive equity-based compensation are entitled to
participate (collectively, the "Company Plans"), on the same basis as other
senior executives of the Company who receive equity-based compensation, and
shall be provided with the use of a Company provided automobile in accordance
with the Company's current policy for executive officers. Without limiting the
generality of the foregoing, if the Board so determines, the Executive shall be
entitled to participate in any supplemental executive retirement plan or excess
benefit plan (a "SERP") that the Company may maintain from time to time for the
benefit of its senior executive officers who receive equity- based compensation
provided that Executive's participation shall be on the same terms and
conditions as such senior executives, all as determined by the Board. The
Company and the Executive agree that nothing in this Agreement shall preclude
the Company from amending or terminating any such employee benefit plan, policy
or practice, whether now or hereinafter in effect.
(f) Incentive Bonus. The Executive shall be eligible to receive an
---------------
annual incentive bonus (the "Incentive Bonus") in respect of each fiscal year of
the Company that ends during the Term, starting with the fiscal year ending
January 31, 1997. The Incentive Bonus in respect of each fiscal year that ends
during the Term (each, a "Reference Year") shall be calculated on the terms
hereafter set forth in this Section 4(f). The Incentive Bonus may, subject to
the conditions set forth below, equal up to 100% of the Executive's Base Salary.
Except as provided in Section 4(f)(v) below, the Executive's Incentive Bonus
shall consist of a Target Bonus and a Project Bonus (each as defined below),
determined as follows:
3
<PAGE>
(i) A portion of the Incentive Bonus (the "Target Bonus") in an amount
equal to one-half of the EBIT Attainment Percentage (as defined below)
multiplied by the Base Salary of the Executive (with respect to the applicable
Reference Year) shall be payable to the Executive with respect to each
Reference Year, provided that the Target Bonus shall not be paid with respect
to any Reference Year if the EBIT Attainment Percentage with respect to such
Reference Year is less than eighty percent (80%). The "EBIT Attainment
Percentage" with respect to any Reference Year shall mean the percentage that
is established as follows: if the EBIT (as defined below) of the Company with
respect to the Reference Year is
(A) less than the Minimum EBIT Target (as defined below) for such
Reference Year, then the EBIT Attainment Percentage shall equal zero
percent (0%);
(B) equal to the Minimum EBIT Target for such Reference Year, the
EBIT Attainment Percentage shall equal eighty percent (80%);
(C) greater than the Minimum EBIT Target but less than the Annual
EBIT Target (as defined below) for such Reference Year, the EBIT
Attainment Percentage shall equal the sum of (x) eighty percent (80%)
plus (y) the product of ten percent (10%) multiplied by a fraction, the
numerator of which shall be the excess of (I) the EBIT of the Company
over (II) the Minimum EBIT Target for such Reference Year and the
denominator of which shall be the excess of the Annual EBIT Target over
the Minimum EBIT Target; or
(D) equal to the Annual EBIT Target for such Reference Year, the EBIT
Attainment Percentage shall equal ninety percent (90%).
(E) greater than the Annual EBIT Target but less than the Maximum
EBIT Target (as defined below) for such Reference Year, the EBIT
Attainment Percentage shall equal the sum of (x) ninety percent (90%)
plus (y) the product of ten percent (10%) multiplied by a fraction, the
numerator of which shall be the excess of (I) the EBIT of the Company
over (II) the Annual EBIT Target for such Reference Year and the
denominator of which shall be the excess of the Maximum EBIT Target over
the Annual EBIT Target; or
(F) equal to or greater than the Maximum EBIT Target for such
Reference Year, the EBIT Attainment percentage shall equal one hundred
percent (100%).
4
<PAGE>
(ii) The Board shall determine the "Annual EBIT Target",the "Minimum
EBIT Target", and the "Maximum EBIT Target" for the Reference Years ending
January 31, 1997, January 31, 1998, January 31, 1999, and January 31, 2000,
and promptly after such targets have been determined, the Board shall give the
Executive written notice thereof. The Annual EBIT Targets, Minimum EBIT
Targets, and Maximum EBIT Targets determined by the Board shall be reasonably
achievable in the good faith judgment of the Board. The Board shall have the
right, acting unilaterally and in good faith, to adjust the Annual EBIT
Target, the Minimum EBIT Target, and the Maximum EBIT Target upon the
occurrence of any acquisition, disposition or other significant event that
occurs after such targets have been determined. For purposes of this Section
4(f), "EBIT" shall mean, for any period, the Company's consolidated earnings
(excluding extraordinary gains and losses and gains or losses from the sale of
fixed assets outside of the ordinary course of business) from continuing
operations before interest and taxes for such period, and EBIT shall be
determined on the same basis as the Annual EBIT Target, the Minimum EBIT
Target, and the Maximum EBIT Target. Notwithstanding the foregoing, EBIT for
any Reference Year shall be equitably adjusted by the Board (solely for the
purposes of Section 4(f)(i)) to the extent that the Company's business was not
conducted in the ordinary course in accordance with past practices.
(iii) A portion of the Incentive Bonus in a target amount equal to a
maximum of fifty percent (50%) of the Base Salary of the Executive (with
respect to the Reference Year) (the "Project Bonus") shall be payable to the
Executive to the extent that the Board determines that the Executive has
satisfactorily completed certain projects (the "Annual Projects") established
by the Board with respect to such Reference Year in accordance with this
subparagraph (iii); provided that the Board may award a Project Bonus between
eighty percent (80%) and one hundred percent (100%)of the target amount based
upon its evaluation of the manner in which the Executive completes the Annual
Projects. The Company shall determine the Annual Projects for each fiscal
year during the Term and promptly after such projects have been determined,
the Board shall give the Executive written notice thereof. The Annual
Projects determined by the Board shall be reasonably achievable in the good
faith judgment of the Board. The Executive acknowledges that the Annual
Projects established by the Board may not be measured by financial results or
other quantifiable standards and may depend on subjective judgments by the
Board, and the Executive agrees that the determination of the Board as to the
extent to which such Annual Projects have been satisfactorily completed shall
be conclusive for all purposes, provided that such determination shall be made
in good faith.
5
<PAGE>
(iv) Each Incentive Bonus (including the Target Bonus and the Project
Bonus) shall be paid not more than 30 days after a determination by the Board
that applicable performance goals have been met, and such determination shall
be made not later than 10 days following the filing of a Form 10-K for the
Company, or if the Company is not required to file a Form 10-K, not later than
10 days following the date upon which the Company's audited financial
statements first become available.
(v) The Executive shall be entitled to receive an Incentive Bonus for
the full Reference Year ending January 31, 1997 as if he had been employed for
the entire fiscal year then ending, in an amount not less than fifty percent
(50%) of the maximum Incentive Bonus for such Reference Year, regardless of
whether or not the Minimum EBIT Target or Annual Projects for such Reference
Year shall have been achieved. The Executive shall not be entitled to an
Incentive Bonus with respect to the fiscal year ending January 31, 2000.
(g) Vacation and other Absences. The Executive shall be entitled to
---------------------------
the number of paid vacation days in each calendar year determined in accordance
with the Company's vacation policy as in effect immediately prior to the
execution of this Agreement, provided that the Executive shall be entitled to at
least four weeks of paid vacation in each calendar year and a prorata amount for
any partial calendar year.
(h) Services Furnished. The Company shall furnish the Executive with
------------------
office space, secretarial assistance and such other facilities and services as
shall be suitable to the Executive's position and adequate for the performance
of his duties hereunder.
5. TERMINATION
-----------
The Executive's employment hereunder may be terminated under the
following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
-----
his death.
(b) Disability. If the Board determines in good faith, based on
----------
medical evidence acceptable to it, that the Executive has become physically or
mentally disabled or incapacitated during his employment hereunder for a
continuous period of ninety (90) days to such an extent that he shall be unable
to perform his duties hereunder then, notwithstanding the provisions of Section
2, the Company may, after the expiration of said ninety (90) day period and
during the continuance of such disability or incapacity, give to the Executive
6
<PAGE>
a Notice of Termination (as defined in Section 5(e) hereof) of the Executive's
employment hereunder and such employment shall terminate on the date provided in
Section 5(f) hereof.
(c) Termination by the Company. The Company may terminate the
--------------------------
Executive's employment hereunder at any time with or without Cause. For purposes
of this Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder upon (A) the engaging by the Executive in willful
misconduct that is materially injurious to the Company, (B) the embezzlement or
misappropriation of funds or property of the Company by the Executive or the
conviction of the Executive of a felony or the entrance of a plea of guilty by
the Executive to a felony or (C) the failure or refusal by the Executive to
devote his full business time and attention (as described in Section 3(b) of
this Agreement) to the performance of his duties and responsibilities hereunder
or any other breach by the Executive of this Agreement in any material respect
if such breach has not been cured by the Executive within thirty (30) days after
the Preliminary Notice (as defined below) has been given to the Executive. For
purposes of this paragraph, no act, or failure to act, on the Executive's part
shall be considered "willful" unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his action or omission was in the
best interest of the Company. The Executive shall not be deemed to have been
terminated for Cause, unless the Company shall have given the Executive (i)
notice (the "Preliminary Notice") setting forth, in reasonable detail the facts
and circumstances claimed to provide a basis for termination for Cause, (ii) a
reasonable opportunity for the Executive, together with his counsel, to be heard
before the Board and (iii) a Notice of Termination stating that, in the good
faith judgement of the Board, the Executive was guilty of conduct set forth in
clauses (A), (B) or (C) above, and specifying the particulars thereof in
reasonable detail. Upon receipt of the Preliminary Notice, the Executive shall
have thirty (30) days in which to appear before the Board with counsel, or take
such other action as he may deem appropriate, and such thirty (30) day period is
hereby agreed to as a reasonable opportunity for the Executive to be heard.
(d) Termination by the Executive. The Executive may voluntarily
----------------------------
terminate his employment hereunder at any time with or without Good Reason. For
purposes of this Agreement, "Good Reason" shall mean, so long as the Executive
has not been guilty of the conduct set forth in clauses (A), (B) or (C) of
Section 5(c) hereof, (i) a failure by the Company to comply with any material
provision of this Agreement that has not been cured within thirty (30) days
after written notice of such noncompliance has been given by the Executive to
the Company or (ii) the assignment to the Executive by the Company of duties
materially inconsistent with the Executive's current level of duties or
responsibilities as a senior executive, or (iii) a relocation by the Company of
the Executive's office to a location outside a 30 mile radius from Denver,
Colorado, which relocation is
7
<PAGE>
made not as part of a relocation of the Company's executive offices; (in the
case of each of clauses (ii) and (iii) above, without the consent of the
Executive). Notwithstanding the foregoing, for the Executive to terminate under
this Section 5(d), the Executive must give Notice of Termination not later than
60 days from, as applicable, the date that the Company fails to cure under (i)
above, the assignment of duties under (ii) above, and the date that the
Executive is advised of the proposed relocation under (iii) above.
(e) Notice of Termination. Any termination of the Executive's
---------------------
employment by the Company or by the Executive (other than termination pursuant
to Section 5(a) hereof) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination
of the Executive's employment under the provision so indicated.
(f) Date of Termination. Except to the extent otherwise herein
-------------------
provided, "Date of Termination" shall mean (i) if the Executive's employment is
terminated pursuant to Section 5(a), the date of his death, (ii) if the
Executive's employment is terminated pursuant to Section 5(b) or (c), the date
of or a later date specified in the Notice of Termination, (iii) if the
Executive's employment is terminated pursuant to Section 5(d), the date on which
the Notice of Termination is given and (iv) if this Agreement is continued in
effect to the end of the Term, the last day of the Term. Except as provided in
and subject to Section 6 hereof, the Company shall not have any obligation to
Executive for salary continuation, severance or termination pay upon termination
of this Agreement.
6. COMPENSATION UPON TERMINATION
-----------------------------
(a) If the Executive's employment is terminated (i) by the Company for
Cause, (ii) by the Executive other than for Good Reason, or (iii) by reason of
the Executive's death or disability (pursuant to Section 5(b) hereof), then the
Company shall pay the Executive his full Base Salary through the Date of
Termination (to the extent not otherwise paid through the Date of Termination)
at the rate in effect immediately prior to the Date of Termination, provided
that if the Executive's employment hereunder terminates by reason of his death,
the Company shall continue to make salary payments at the rate of the Base
Salary then in effect in respect of the month following the date of death. In
addition, notwithstanding any provision to the contrary in this Agreement, the
Executive shall continue to participate in, and shall receive all accrued
benefits to which the Executive is entitled under, all of the Company Plans,
through the Date of Termination, provided that the Executive shall not be
entitled to any portion of the Incentive Bonus unless such bonus shall be
payable pursuant to Section 4(f) with respect to a Reference Year ending on or
before the Date of
8
<PAGE>
Termination. With respect to the Incentive Bonus, if the Date of Termination
occurs after the end of a Reference Year and prior to the determination of
whether the performance goals for such Reference Year were met, such Incentive
Bonus shall be payable, if it is determined that such goals were met, in
accordance with the provisions of Section 4(f) hereof.
(b) If the Executive's employment is terminated (i) by the Company
without Cause (other than for disability pursuant to Section 5(b) hereof), or
(ii) by the Executive for Good Reason, then the Company shall pay to the
Executive, as severance pay in a lump sum, not later than the fifth day
following the Date of Termination, the following amounts, which shall not be
discounted to take into account present value:
(A) to the extent not otherwise paid through the Date of Termination,
the Executive's full Base Salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given; and
(B) in lieu of any further salary and bonus or other incentive
compensation payments to the Executive for periods subsequent to the Date of
Termination, the sum of two hundred percent (200%) of the Base Salary of the
Executive.
In addition to the foregoing, until such time that the Executive becomes
eligible for coverage under a program maintained or sponsored by a subsequent
employer of the Executive (not including self-employment), the Company shall, at
the Company's expense, allow the Executive to continue to participate, for a
period not to exceed six (6) months, to the same extent and upon the same terms
as the Executive participated in such plans immediately prior to the termination
of his employment, in the Company's medical reimbursement and other welfare
benefit plans in which the Executive was entitled to participate immediately
prior to the Date of Termination; provided that the Executive's continued
participation in such plan shall be continued pursuant to this sentence only to
the extent permissible under the general terms and provisions of such plans and
applicable law.
(c) In the event that this Agreement is continued in effect to the end
of the Term and at or prior to expiration of the Term the Company has not
offered to extend this Agreement upon the same or substantially similar terms
and conditions for an additional term of at least one year and reached agreement
with the Executive on such terms and conditions, the Company shall pay the
Executive the sum of $180,000; payment to be made within thirty (30) days from
the Date of Termination of employment, and the Company shall have no further
obligations to the Executive, except as may be provided under the express terms
of this Agreement or of any applicable pension or welfare plans or in accordance
with the survivorship provisions of Section 13 of this Agreement.
9
<PAGE>
7. LEGAL FEES; REIMBURSEMENT OF CERTAIN EXPENSES
---------------------------------------------
The Company shall promptly reimburse the Executive for the reasonable
legal fees and expenses incurred by the Executive in connection with enforcing
or defending any right or benefit of the Executive pursuant to this Agreement or
instruments related thereto; provided that the Company shall have no obligation
to reimburse the Executive for any such fees and expenses unless the resolution
of any action taken by the Executive to enforce such right is in favor of the
Executive. In addition, the Company hereby agrees that the amount of any such
legal fees and expenses reimbursed to the Executive in connection with enforcing
any right or benefit provided to the Executive by the Company pursuant to or in
accordance with this Agreement shall not be taken into account by the Company in
determining the aggregate compensation paid or payable to the Executive under
this Agreement.
8. INDEMNIFICATION
---------------
The Company shall indemnify the Executive (and his legal
representatives), unless expressly prohibited by applicable law, against all
losses, claims, damages, liabilities, costs, charges and expenses incurred or
sustained by him or his legal representatives in connection with any action,
suit or proceeding to which he (or his legal representatives) may be made a
party by reason of his being or having been a director, officer or employee of
the Company (including payment of expenses in advance of the final disposition
of the proceeding). The Company further agrees, upon demand by the Executive,
promptly to reimburse the Executive for, or pay, any loss, claim, damage,
liability or expense, unless expressly prohibited by applicable law, to which
the Company has agreed to indemnify the Executive pursuant to Sections 7 and 8
hereof. If any action, suit or proceeding is brought or threatened against the
Executive in respect of which indemnity may be sought against the Company
pursuant to the foregoing, the Executive shall notify the Company promptly in
writing of the institution of such action, suit or proceeding. Such action,
suit or proceeding shall be defended by and be under the exclusive control of
the Company and its counsel; except that the Executive shall have the right to
designate separate counsel, acceptable to the Executive in his sole discretion,
and, to the extent of a conflict of interest with the Company, the right to
direct, control and supervise the Executive's defense of such action, suit or
proceeding.
10
<PAGE>
9. TAXES
-----
The Company shall deduct from all amounts payable under this Agreement
all federal, state, local and other taxes required by law to be withheld with
respect to such payments.
10. CONFIDENTIALITY AND NONCOMPETITION
----------------------------------
(a) Unless otherwise required by law or judicial process, the
Executive shall keep confidential all confidential information known to the
Executive concerning the Company and its businesses during his employment with
the Company and for the shorter of three (3) years following the termination of
the Executive's employment with the Company or until such information is
publicly disclosed by the Company or otherwise becomes publicly disclosed other
than through the Executive's actions; provided, that the Executive shall provide
notice to the Company in advance of any disclosure required by law or judicial
process in a timely manner to permit the Company to oppose such compelled
disclosure.
(b) The Executive agrees that during his employment with the
Company and for a period of one (1) year thereafter he shall not, directly or
indirectly, as a principal, officer, director, employee or in any other capacity
whatsoever, without the prior written consent of the Company, engage in, or be
or become interested or acquire any ownership of any kind in, or become
associated with, or make loans or advance property to any person engaged in or
about to engage in, any business activity that is in substantial competition (in
excess of 15% of net sales of the business) with any of the businesses engaged
in by the Company during the Term in any of the geographic areas in which such
businesses are then conducted by the Company or have been conducted by the
Company during the twelve months preceding the termination of the Executive's
employment. Nothing in this Agreement shall prevent the Executive from making or
holding any investment in any amount in securities traded on any national
securities exchange or traded in the over the counter market, provided said
investments do not exceed one percent (1%) of the issued and outstanding stock
of any one such corporation.
11. SUCCESSORS; BINDING AGREEMENT
-----------------------------
(a) This Agreement shall be binding upon and inure to the benefit
of the Company and any successor of the Company, including, without limitation,
any corporation or corporations acquiring directly or indirectly all or a
substantial portion of the stock, business or assets of the Company, whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter be
deemed the "Company" for the purposes of this Agreement).
11
<PAGE>
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would be
still payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided hereunder, shall be paid in accordance with the terms
of this Agreement to the Executive's devisee, legatee, or other beneficiary or,
if there be no such beneficiary, to the Executive's estate.
12. NOTICE
------
For purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given (i) when hand delivered, (ii) when sent if sent
by overnight mail, overnight courier or facsimile transmission or (iii) when
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
-------------------
James E. Barch
2043 Mammoth Ct.
Evergreen, CO 80439
If to the Company:
-----------------
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239
Attention: Board of Directors
c/o Corporate Secretary
(with a copy to the attention of General
Counsel at the same address)
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. SURVIVORSHIP
------------
The respective rights and obligations of the parties hereunder set
forth in Sections 6, 7, 8, 9, and 10 of this Agreement shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
12
<PAGE>
14. REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants that (a) it is fully authorized
and empowered to enter into this Agreement and that its Board has approved the
terms of this Agreement, (b) the execution of this Agreement and the performance
of its obligations under this Agreement shall not violate or result in a breach
of the terms of any material agreement to which the Company is a party or by
which it is bound, (c) no approval by any governmental authority or body is
required for it to enter into this Agreement, and (d) this Agreement is valid,
binding and enforceable against the Company in accordance with its terms, except
to the extent affected or limited by applicable bankruptcy laws or other
statutes governing the rights of creditors generally and any regulations or
interpretations thereof. The Executive represents and warrants that his
execution of this Agreement and his performance of his duties and
responsibilities under this Agreement shall not violate or result in a breach of
the terms of any material agreement to which he is a party or by which he is
bound.
15. MISCELLANEOUS
-------------
(a) Entire Agreement. The parties hereto agree that this Agreement
----------------
and the Stock Option Agreement referred to in Section 4(d) hereof contain the
entire understanding and agreement between them, and supersedes all prior
understandings and agreements between the parties respecting the employment by
the Company of the Executive, and that the provisions of this Agreement may not
be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by the parties hereto. Nothing contained herein
shall supersede or otherwise modify the rights and obligations of the Company or
the Executive under the Stock Option Agreement. No waiver by either party hereto
at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.
(b) Waiver. No waiver by either party hereto at any time of any
------
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
13
<PAGE>
(c) Choice of Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.
16. VALIDITY
--------
The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement, which shall remain in full force and
effect.
17. COUNTERPARTS
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused its name to be subscribed
to this Agreement by its duly authorized representative and the Executive has
executed this Agreement as of the date and the year first above written.
SAMSONITE CORPORATION
By: /s/ R. R. Nicolosi
------------------------------
Print Name: Richard R. Nicolosi
----------------------
Title: President & CEO
---------------------------
/s/ James E. Barch
---------------------------------
James E. Barch
14
<PAGE>
EMPLOYMENT AGREEMENT EXHIBIT 10.5
--------------------
EMPLOYMENT AGREEMENT (this "Agreement"), effective as of September 10, 1996
(the "Effective Date"), by and between SAMSONITE CORPORATION, a Delaware
corporation (the "Company"), and GARY D. ERVICK (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to retain the services of the
Executive and to enter into this Agreement as of the Effective Date.
WHEREAS, the Executive is willing to serve the Company on the terms and
conditions herein provided.
THEREFORE, in consideration of the foregoing and of the premises and
covenants herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT
----------
The Company agrees to employ the Executive and the Executive agrees to
serve the Company on the terms and conditions set forth herein.
2. TERM
----
This Agreement shall have a term (the "Term") beginning on the
Effective Date and expiring on the third anniversary of the Effective Date,
automatically renewed for an additional one year term upon such third
anniversary, or the anniversary of the commencement of any renewal term, unless
terminated by either party upon at least ninety (90) days written notice.
3. POSITION AND DUTIES
-------------------
(a) The Executive shall serve as President, Samsonite Distributing
Company and shall perform such duties and services customary with such executive
position and as may be prescribed from time to time by the President of The
Americas, the President and Chief Executive Officer (the "CEO") and/or the Board
of Directors of the Company or any duly authorized committee thereof (the
"Board"). The Executive shall perform such duties, under the supervision and
direction of the Board, to the best of his
<PAGE>
ability and in a diligent and proper manner. The Executive shall report directly
to the President of The Americas.
(b) Except during customary vacation periods and periods of illness,
the Executive shall, during his employment hereunder, devote his full business
time and attention to the performance of services for the Company, and as
determined by the Board.
(c) Nothing in this Agreement shall affect the Executive's duty of
loyalty and duty of care to the Company and its subsidiaries as provided under
applicable state laws.
4. COMPENSATION AND RELATED MATTERS
--------------------------------
(a) Salary. During the Executive's employment hereunder, the Company
------
shall pay to the Executive a salary ("Base Salary") in equal installments in
accordance with normal payroll practices of the Company but not less frequently
than monthly. The Base Salary shall be payable at the rate of $212,000 per
annum, starting as of the Effective Date. The payments of Base Salary hereunder
shall not in any way limit or reduce any other obligation of the Company
hereunder, and no other compensation, benefit or payment hereunder shall in any
way limit or reduce the obligation of the Company to pay the Executive's Base
Salary hereunder. The Board, at any time and from time to time, may increase
(but not reduce) the Base Salary payable under this Agreement, and increase in
the Base Salary shall become effective at the time indicated by the Board
without the need for an amendment to this Agreement.
(b) Relocation. It is contemplated that the Executive's office shall
----------
be in Company's executive offices in Denver, Colorado, unless, subsequently
during the Term, the Board and the Executive agree that it would be desirable
for the Executive's office to be located elsewhere. Accordingly, the Executive
shall promptly relocate to the Denver metropolitan area and shall own or lease a
residence in the Denver metropolitan area so long as he shall be headquartered
there. To defray the cost of relocating to the Denver metropolitan area, the
Company shall provide the relocation benefits set forth in the Samsonite
Relocation Policy - Transferred Employees (effective date July 1, 1988), and if
the Executive's house in Rhode Island does not sell within ninety (90) days of a
Company directed and approved listing for sale, the Company or a third party
engaged by the Company shall take responsibility for the house and its sale.
Regardless of how the house is sold, the Company shall pay the Executive the
difference between the sale price and the Executive's documented purchase price
and reasonable improvements (estimated to be approximately $565,000) less
applicable commission; provided that the Company's obligation in this sentence
shall be net of any mortgage debt on the house. Except as provided in this
Section 4(b), the Company shall have no obligation to reimburse the
2
<PAGE>
Executive for any costs and expenses incurred in connection with the relocation
of the Executive and his family to the Denver metropolitan area.
(c) Expenses. The Executive shall be entitled to receive prompt
--------
reimbursement from the Company of all reasonable expenses incurred by the
Executive in performing services hereunder, in accordance with the policies and
procedures established by the Company from time to time. The Executive shall
furnish the Company with evidence that such expenses were incurred as the
Company may from time to time reasonably request.
(d) Stock Option Agreement. As an inducement to enter into this
----------------------
Agreement and solely in connection with the performance of services by the
Executive pursuant to this Agreement, the Executive shall receive a grant of
stock options (the "Options") to purchase 40,000 shares of the common stock, par
value $.01 per share ("Common Stock"), of the Company pursuant to and subject to
the terms and conditions of the Stock Option Agreement, by and between the
Company and the Executive (the "Stock Option Agreement").
(e) Other Benefits. From and after the Effective Date, the Executive
--------------
shall be entitled to participate in all of the Company's employee pension plans,
welfare benefit plans, tax-deferred savings plans, or other benefit arrangements
(including any insurance or trust arrangements maintained generally for the
benefit of the Company's directors and officers) and in which the senior
executives of the Company who receive equity-based compensation are entitled to
participate (collectively, the "Company Plans"), on the same basis as other
senior executives of the Company who receive equity-based compensation, and
shall be provided with the continued use of the Company provided automobile in
accordance with the Company's current policy for executive officers. Without
limiting the generality of the foregoing, upon confirmation by the Board, the
Executive shall be entitled to participate in any supplemental executive
retirement plan or excess benefit plan (a "SERP") that the Company may maintain
from time to time for the benefit of its senior executive officers who receive
equity-based compensation provided that Executive's participation shall be on
the same terms and conditions as such senior executives, all as determined by
the Board. The Company and the Executive agree that nothing in this Agreement
shall preclude the Company from amending or terminating any such employee
benefit plan, policy or practice, whether now or hereinafter in effect.
(f) Incentive Bonus. The Executive shall be eligible to receive an
---------------
annual incentive bonus (the "Incentive Bonus") in respect of each fiscal year of
the Company that ends during the Term, starting with the fiscal year ending
January 31, 1997. The Incentive Bonus in respect of each fiscal year that ends
during the Term (each, a "Reference Year") shall be calculated on the terms
hereafter set forth in this Section 4(f). The
3
<PAGE>
Incentive Bonus may, subject to the conditions set forth below, equal up to 120%
of the Executive's Qualified Base Salary. For the purpose of this Section 4(f),
the Executive's Qualified Base Salary shall mean 75% of his Base Salary. Except
as provided in Section 4(f)(v) below, the Executive's Incentive Bonus shall
consist of a Target Bonus and a Project Bonus (each as defined below),
determined as follows:
(i) A portion of the Incentive Bonus (the "Target Bonus") in an amount
equal to one-half of the EBIT Attainment Percentage (as defined below)
multiplied by the Qualified Base Salary of the Executive (with respect to
the applicable Reference Year) shall be payable to the Executive with
respect to each Reference Year, provided that the Target Bonus shall not be
paid with respect to any Reference Year if the EBIT Attainment Percentage
with respect to such Reference Year is less than eighty percent (80%). The
"EBIT Attainment Percentage" with respect to any Reference Year shall mean
the percentage that is established as follows: if the EBIT (as defined
below) of the Company with respect to the Reference Year is
(A) less than the Minimum EBIT Target (as defined below) for such
Reference Year, then the EBIT Attainment Percentage shall equal zero
percent (0%);
(B) equal to the Minimum EBIT Target for such Reference Year, the
EBIT Attainment Percentage shall equal eighty percent (80%);
(C) greater than the Minimum EBIT Target but less than the Annual
EBIT Target (as defined below) for such Reference Year, the EBIT
Attainment Percentage shall equal the sum of (x) eighty percent (80%)
plus (y) the product of twenty percent (20%) multiplied by a fraction,
the numerator of which shall be the excess of (I) the EBIT of the Company
over (II) the Minimum EBIT Target for such Reference Year and the
denominator of which shall be the excess of the Annual EBIT Target over
the Minimum EBIT Target; or
(D) equal to the Annual EBIT Target for such Reference Year, the
EBIT Attainment Percentage shall equal one hundred percent (100%).
(E) greater than the Annual EBIT Target but less than the Maximum
EBIT Target (as defined below) for such Reference Year, the EBIT
Attainment Percentage shall equal the sum of (x) one hundred percent
(100%) plus (y) the product of twenty percent (20%) multiplied by a
fraction, the numerator of which shall be the excess of (I) the EBIT of
the Company over (II) the Annual EBIT Target for such Reference Year and
the denominator of
4
<PAGE>
which shall be the excess of the Maximum EBIT Target over the Annual
EBIT Target; or
(F) equal to or greater than the Maximum EBIT Target for such
Reference Year, the EBIT Attainment percentage shall equal one hundred
twenty percent (120%).
(ii) The Board shall determine the "Annual EBIT Target", the "Minimum
EBIT Target", and the Maximum EBIT Target for the Reference Years ending
January 31, 1998, January 31, 1999, and January 31, 2000, and promptly after
such targets have been determined, the Board shall give the Executive written
notice thereof. The Annual EBIT Targets, Minimum EBIT Targets, and Maximum
EBIT Targets determined by the Board shall be reasonably achievable in the
good faith judgment of the Board. The Board shall have the right, acting
unilaterally and in good faith, to adjust the Annual EBIT Target, the Minimum
EBIT Target, and the Maximum EBIT Target upon the occurrence of any
acquisition, disposition or other significant event that occurs after such
targets have been determined. For purposes of this Section 4(f), "EBIT" shall
mean, for any period, the Company's consolidated earnings (excluding
extraordinary gains and losses and gains or losses from the sale of fixed
assets outside of the ordinary course of business) from continuing operations
before interest and taxes for such period, and EBIT shall be determined on the
same basis as the Annual EBIT Target, the Minimum EBIT Target, and the Maximum
EBIT Target. Notwithstanding the foregoing, EBIT for any Reference Year shall
be equitably adjusted by the Board (solely for the purposes of Section
4(f)(i)) to the extent that the Company's business was not conducted in the
ordinary course in accordance with past practices.
(iii) A portion of the Incentive Bonus in a target amount equal to a
maximum of fifty percent (50%) of the Qualified Base Salary of the Executive
(with respect to the Reference Year) (the "Project Bonus") shall be payable to
the Executive to the extent that the Board determines that the Executive has
satisfactorily completed certain projects (the "Annual Projects") established
by the Board with respect to such Reference Year in accordance with this
subparagraph (iii); provided that the Board may award a Project Bonus between
eighty percent (80%) and one hundred twenty percent (120%)of the target amount
based upon its evaluation of the manner in which the Executive completes the
Annual Projects. The Company shall determine the Annual Projects for each
fiscal year during the Term and promptly after such projects have been deter-
mined, the Board shall give the Executive written notice thereof. The Annual
Projects determined by the Board shall be reasonably achievable in the good
faith judgment of the Board. The Executive acknowledges that the Annual Pro-
5
<PAGE>
jects established by the Board may not be measured by financial results or
other quantifiable standards and may depend on subjective judgments by the
Board, and the Executive agrees that the determination of the Board as to
the extent to which such Annual Projects have been satisfactorily completed
shall be conclu- sive for all purposes, provided that such determination shall
be made in good faith.
(iv) Each Incentive Bonus (including the Target Bonus and the Project
Bonus) shall be paid not more than 30 days after a determination by the Board
that applicable performance goals have been met, and such determination shall
be made not later than 10 days following the filing of a Form 10-K for the
Company, or if the Company is not required to file a Form 10-K, not later than
10 days following the date upon which the Company's audited financial
statements first become available.
(v) Not withstanding the forgoing paragraphs of this Section 4(f), the
Executive shall be entitled to receive an Incentive Bonus for the full
Reference Year ending January 31, 1997 based upon the following:
a. Annual Salary of $212,000
b. 60% of Annual Salary if minimum performance levels attained,
75% of Annual Salary if target performance levels attained, and
90% of Annual Salary if maximum performance levels attained.
c. Three-quarters of the award shall be based upon the Incentive
Compensation Plan of American Tourister and one-quarter shall be based on
the Incentive Compensation Plan of the Company and its corporate
Incentive Plan goals.
(g) Vacation and other Absences. The Executive shall be entitled to the
---------------------------
number of paid vacation days in each calendar year determined in accordance with
the Company's vacation policy as in effect immediately prior to the execution of
this Agreement.
(h) Services Furnished. The Company shall furnish the Executive with
------------------
office space, secretarial assistance and such other facilities and services as
shall be suitable to the Executive's position and adequate for the performance
of his duties hereunder.
6
<PAGE>
5. TERMINATION
-----------
The Executive's employment hereunder may be terminated under the
following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
-----
his death.
(b) Disability. If the Board determines in good faith, based on
----------
medical evidence acceptable to it, that the Executive has become physically or
mentally disabled or incapacitated during his employment hereunder for a
continuous period of ninety (90) days to such an extent that he shall be unable
to perform his duties hereunder then, notwithstanding the provisions of Section
2, the Company may, after the expiration of said ninety (90) day period and
during the continuance of such disability or incapacity, give to the Executive a
Notice of Termination (as defined in Section 5(e) hereof) of the Executive's
employment hereunder and such employment shall terminate on the date provided in
Section 5(f) hereof.
(c) Termination by the Company. The Company may terminate the
--------------------------
Executive's employment hereunder at any time with or without Cause. For purposes
of this Agreement, the Company shall have "Cause" to terminate the Executive's
employment hereunder upon (A) the engaging by the Executive in willful
misconduct that is materially injurious to the Company, (B) the embezzlement or
misappropriation of funds or property of the Company by the Executive or the
conviction of the Executive of a felony or the entrance of a plea of guilty by
the Executive to a felony or (C) the failure or refusal by the Executive to
devote his full business time and attention to the performance of his duties and
responsibilities hereunder or any other breach by the Executive of this
Agreement in any material respect if such breach has not been cured by the
Executive within thirty (30) days after the Preliminary Notice (as defined
below) has been given to the Executive. For purposes of this paragraph, no act,
or failure to act, on the Executive's part shall be considered "willful" unless
done, or omitted to be done, by him not in good faith and without reasonable
belief that his action or omission was in the best interest of the Company. The
Executive shall not be deemed to have been terminated for Cause, unless the
Company shall have given the Executive (i) notice (the "Preliminary Notice")
setting forth, in reasonable detail the facts and circumstances claimed to
provide a basis for termination for Cause, (ii) a reasonable opportunity for the
Executive, together with his counsel, to be heard before the Board and (iii) a
Notice of Termination stating that, in the good faith judgement of the Board,
the Executive was guilty of conduct set forth in clauses (A), (B) or (C) above,
and specifying the particulars thereof in reasonable detail. Upon receipt of the
Preliminary Notice, the Executive shall have thirty (30) days in which to appear
before the Board with counsel, or take such other action as he may deem
appropriate, and such thirty
7
<PAGE>
(30) day period is hereby agreed to as a reasonable opportunity for the
Executive to be heard.
(d) Termination by the Executive. The Executive may voluntarily
----------------------------
terminate his employment hereunder at any time with or without Good Reason. For
purposes of this Agreement, "Good Reason" shall mean, so long as the Executive
has not been guilty of the conduct set forth in clauses (A), (B) or (C) of
Section 5(c) hereof, (i) a failure by the Company to comply with any material
provision of this Agreement that has not been cured within thirty (30) days
after written notice of such noncompliance has been given by the Executive to
the Company or (ii) the assignment to the Executive by the Company of duties
materially inconsistent with the Executive's current level of duties or
responsibilities as a senior executive, or (iii) a relocation by the Company of
the Executive's office to a location outside a 30 mile radius from Denver,
Colorado, which relocation is made not as part of a relocation of the Company's
executive offices; (in the case of each of clauses (ii) and (iii) above, without
the consent of the Executive). Notwithstanding the foregoing, for the Executive
to terminate under this Section 5(d), the Executive must give Notice of
Termination not later than 60 days from, as applicable, the date that the
Company fails to cure under (i) above, the assignment of duties under (ii)
above, and the date that the Executive is advised of the proposed relocation
under (iii) above.
(e) Notice of Termination. Any termination of the Executive's
---------------------
employment by the Company or by the Executive (other than termination pursuant
to Section 5(a) hereof) shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination
of the Executive's employment under the provision so indicated.
(f) Date of Termination. Except to the extent otherwise herein
-------------------
provided, "Date of Termination" shall mean (i) if the Executive's employment is
terminated pursuant to Section 5(a), the date of his death, (ii) if the
Executive's employment is terminated pursuant to Section 5(b) or (c), the date
of or a later date specified in the Notice of Termination, (iii) if the
Executive's employment is terminated pursuant to Section 5(d), the date on which
the Notice of Termination is given and (iv) if this Agreement is continued in
effect to the end of the Term, the last day of the Term. Except as provided in
and subject to Section 6 hereof, the Company shall not have any obligation to
Executive for salary continuation, severance or termination pay upon termination
of this Agreement.
8
<PAGE>
6. COMPENSATION UPON TERMINATION
-----------------------------
(a) If the Executive's employment is terminated (i) by the Company for
Cause, (ii) by the Executive other than for Good Reason, or (iii) by reason of
the Executive's death or disability (pursuant to Section 5(b) hereof), then the
Company shall pay the Executive his full Base Salary through the Date of
Termination (to the extent not otherwise paid through the Date of Termination)
at the rate in effect immediately prior to the Date of Termination, provided
that if the Executive's employment hereunder terminates by reason of his death,
the Company shall continue to make salary payments at the rate of the Base
Salary then in effect in respect of the month following the date of death. In
addition, notwithstanding any provision to the contrary in this Agreement, the
Executive shall continue to participate in, and shall receive all accrued
benefits to which the Executive is entitled under, all of the Company Plans,
through the Date of Termination, provided that the Executive shall not be
entitled to any portion of the Incentive Bonus unless such bonus shall be
payable pursuant to Section 4(f) with respect to a Reference Year ending on or
before the Date of Termination. With respect to the Incentive Bonus, if the
Date of Termination occurs after the end of a Reference Year and prior to the
determination of whether the performance goals for such Reference Year were met,
such Incentive Bonus shall be payable, if it is determined that such goals were
met, in accordance with the provisions of Section 4(f) hereof.
(b) If the Executive's employment is terminated (i) by the Company
without Cause (other than for disability pursuant to Section 5(b) hereof), or
(ii) by the Executive for Good Reason, then the Company shall pay to the
Executive, as severance pay in a lump sum, not later than the fifth day
following the Date of Termination, the following amounts, which shall not be
discounted to take into account present value:
(A) to the extent not otherwise paid through the Date of Termination,
the Executive's full Base Salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given; and
(B) in lieu of any further salary and bonus or other incentive
compensation payments to the Executive for periods subsequent to the Date of
Termination, the sum of two hundred percent (200%) of the Base Salary of the
Executive and provided that the Executive also shall receive, after the end of
the Company's fiscal year during which the Date of Termination occurs, a
payment in the amount equal to a pro-rata portion of any incentive bonus which
would have been payable to the Executive, if any, for that portion of the
fiscal year preceding the Date of Termination.
9
<PAGE>
In addition to the foregoing, until such time that the Executive becomes
eligible for coverage under a program maintained or sponsored by a subsequent
employer of the Executive (not including self-employment), the Company shall, at
the Company's expense, allow the Executive to continue to participate, for a
period not to exceed six (6) months, to the same extent and upon the same terms
as the Executive participated in such plans immediately prior to the termination
of his employment, in the Company's medical reimbursement and other welfare
benefit plans in which the Executive was entitled to participate immediately
prior to the Date of Termination; provided that the Executive's continued
participation in such plan shall be continued pursuant to this sentence only to
the extent permissible under the general terms and provisions of such plans and
applicable law.
(c) In the event that this Agreement is continued in effect to the
end of the Term or any one-year renewal term and at or prior to expiration of
the Term or any one-year renewal term the Company has not offered to extend this
Agreement upon the same or substantially similar terms and conditions for an
additional term of at least one year, the Company shall pay the Executive a sum
equal to 200% of the Base Salary; payment to be made within thirty (30) days
from the Date of Termination of employment and, after the end of the Company's
fiscal year during which the Date of Termination occurs, a payment equal to a
pro-rata portion of any incentive bonus which would have been payable to the
Executive, if any, for that portion of the fiscal year preceding the Date of
Termination. The Company shall have no further obligations to the Executive,
except as may be provided under the express terms of this Agreement or of any
applicable pension or welfare plans or in accordance with the survivorship
provisions of Section 13 of this Agreement.
7. LEGAL FEES; REIMBURSEMENT OF CERTAIN EXPENSES
---------------------------------------------
The Company shall promptly reimburse the Executive for the reasonable
legal fees and expenses incurred by the Executive in connection with enforcing
or defending any right or benefit of the Executive pursuant to this Agreement or
instruments related thereto; provided that the Company shall have no obligation
to reimburse the Executive for any such fees and expenses unless the resolution
of any action taken by the Executive to enforce such right is in favor of the
Executive. In addition, the Company hereby agrees that the amount of any such
legal fees and expenses reimbursed to the Executive in connection with enforcing
any right or benefit provided to the Executive by the Company pursuant to or in
accordance with this Agreement shall not be taken into account by the Company in
determining the aggregate compensation paid or payable to the Executive under
this Agreement.
8. INDEMNIFICATION
---------------
10
<PAGE>
The Company shall indemnify the Executive (and his legal
representatives), unless expressly prohibited by applicable law, against all
losses, claims, damages, liabilities, costs, charges and expenses incurred or
sustained by him or his legal representatives in connection with any action,
suit or proceeding to which he (or his legal representatives) may be made a
party by reason of his being or having been a director, officer or employee of
the Company (including payment of expenses in advance of the final disposition
of the proceeding). The Company further agrees, upon demand by the Executive,
promptly to reimburse the Executive for, or pay, any loss, claim, damage,
liability or expense, unless expressly prohibited by applicable law, to which
the Company has agreed to indemnify the Executive pursuant to Sections 7 and 8
hereof. If any action, suit or proceeding is brought or threatened against the
Executive in respect of which indemnity may be sought against the Company
pursuant to the foregoing, the Executive shall notify the Company promptly in
writing of the institution of such action, suit or proceeding. Such action, suit
or proceeding shall be defended by and be under the exclusive control of the
Company and its counsel; except that the Executive shall have the right to
designate separate counsel, acceptable to the Executive in his sole discretion,
and, to the extent of a conflict of interest with the Company, the right to
direct, control and supervise the Executive's defense of such action, suit or
proceeding.
9. TAXES
-----
The Company shall deduct from all amounts payable under this
Agreement all federal, state, local and other taxes required by law to be
withheld with respect to such payments.
10. CONFIDENTIALITY AND NONCOMPETITION
----------------------------------
(a) Unless otherwise required by law or judicial process, the
Executive shall keep confidential all confidential information known to the
Executive concerning the Company and its businesses during his employment with
the Company and for the shorter of three (3) years following the termination of
the Executive's employment with the Company or until such information is
publicly disclosed by the Company or otherwise becomes publicly disclosed other
than through the Executive's actions; provided, that the Executive shall provide
notice to the Company in advance of any disclosure required by law or judicial
process in a timely manner to permit the Company to oppose such compelled
disclosure.
(b) The Executive agrees that during his employment with the
Company and for a period of one (1) year thereafter he shall not, directly or
indirectly, as a principal, officer, director, employee or in any other capacity
whatsoever, without the prior written consent of the Company, engage in, or be
or become interested or acquire any ownership
11
<PAGE>
of any kind in, or become associated with, or make loans or advance property to
any person engaged in or about to engage in, any business activity that is in
substantial competition (in excess of 15% of net sales of such luggage business)
with the business engaged in by the Company during the Term in any of the
geographic areas in which such business is then conducted by the Company or has
been conducted by the Company during the twelve months preceding the termination
of the Executive's employment. Nothing in this Agreement shall prevent the
Executive from making or holding any investment in any amount in securities
traded on any national securities exchange or traded in the over the counter
market, provided said investments do not exceed one percent (1%) of the issued
and outstanding stock of any one such corporation.
11. SUCCESSORS; BINDING AGREEMENT
-----------------------------
(a) This Agreement shall be binding upon and inure to the benefit
of the Company and any successor of the Company, including, without limitation,
any corporation or corporations acquiring directly or indirectly all or a
substantial portion of the stock, business or assets of the Company, whether by
merger, consolidation, sale or otherwise (and such successor shall thereafter be
deemed the "Company" for the purposes of this Agreement).
(b) This Agreement and all rights of the Executive hereunder
shall inure to the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amounts would be still payable to him hereunder if he had continued to live, all
such amounts, unless otherwise provided hereunder, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee, or other
beneficiary or, if there be no such beneficiary, to the Executive's estate.
12. NOTICE
------
For purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given (i) when hand delivered, (ii) when sent if sent
by overnight mail, overnight courier or facsimile transmission or (iii) when
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed as follows:
12
<PAGE>
If to the Executive:
-------------------
Gary D. Ervick
95 Juniper Drive
East Greenwich, RI 02818
If to the Company:
-----------------
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239
Attention: Board of Directors
c/o Corporate Secretary
(with a copy to the attention of General
Counsel at the same address)
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
13. SURVIVORSHIP
------------
The respective rights and obligations of the parties hereunder set
forth in Sections 6, 7, 8, 9, and 10 of this Agreement shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
14. REPRESENTATIONS AND WARRANTIES
------------------------------
The Company represents and warrants that (a) it is fully authorized
and empowered to enter into this Agreement and that its Board has approved the
terms of this Agreement, (b) the execution of this Agreement and the performance
of its obligations under this Agreement shall not violate or result in a breach
of the terms of any material agreement to which the Company is a party or by
which it is bound, (c) no approval by any governmental authority or body is
required for it to enter into this Agreement, and (d) this Agreement is valid,
binding and enforceable against the Company in accordance with its terms, except
to the extent affected or limited by applicable bankruptcy laws or other
statutes governing the rights of creditors generally and any regulations or
interpretations thereof. The Executive represents and warrants that his
execution of this Agreement and his performance of his duties and
responsibilities under this Agreement shall not violate or result in a breach of
the terms of any material agreement to which he is a party or by which he is
bound.
13
<PAGE>
15. MISCELLANEOUS
-------------
(a) Entire Agreement. The parties hereto agree that this
----------------
Agreement and the Stock Option Agreement referred to in Section 4(d) hereof
contain the entire understanding and agreement between them, and supersedes all
prior understandings and agreements between the parties respecting the
employment by the Company of the Executive, and that the provisions of this
Agreement may not be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by the parties hereto.
Nothing contained herein shall supersede or otherwise modify the rights and
obligations of the Company or the Executive under the Stock Option Agreement. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement.
(b) Waiver. No waiver by either party hereto at any time of any
------
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
(c) Choice of Law. The validity, interpretation, construction and
-------------
performance of this Agreement shall be governed by the laws of the State of New
York without giving effect to the conflict of laws principles thereof.
16. VALIDITY
--------
The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision or provisions of this Agreement, which shall remain in full force and
effect.
17. COUNTERPARTS
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
14
<PAGE>
IN WITNESS WHEREOF, the Company has caused its name to be subscribed
to this Agreement by its duly authorized representative and the Executive has
executed this Agreement as of the date and the year first above written.
SAMSONITE CORPORATION
By: /s/ R. R. Nicolosi
-------------------------------
Print Name: Richard R. Nicolosi
----------------------
Title: President & CEO
----------------------------
/s/ Gary D. Ervick
----------------------------------
Gary D. Ervick
15
<PAGE>
EXHIBIT 10.6
------------
STOCK OPTION AGREEMENT
----------------------
AGREEMENT (this "Agreement"), dated as of the 1st day of August, 1996,
by and between SAMSONITE CORPORATION, a Delaware corporation (the "Company"),
and John P. Murtagh (the "Employee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, as an essential inducement to the Employee entering into the
Employment Agreement (the "Employment Agreement"), dated as of August 1, 1996,
by and between the Company and the Employee, the Company desires to grant to the
Employee a right to acquire shares of common stock, par value $.01 per share
("Common Stock"), of the Company according to the terms and conditions provided
herein and to provide additional incentives to the Employee to increase the
long-term value of the Company and further align his interests with those of the
stockholders of the Company.
NOW, THEREFORE, in consideration of the premises and covenants herein
set forth and other good and valuable consideration, the Company and the
Employee hereby agree as follows:
1. Confirmation of Grant of Option. Pursuant to a determination by the
-------------------------------
Compensation Committee (the "Committee") of the Board of Directors of the
Company on August 1, 1996, and pursuant to the Company's 1995 Stock Option and
Incentive Award Plan (as Amended in 1996) (the "Plan"), the Company, subject to
the terms and conditions of this Agreement, hereby confirms that the Employee
has been granted, effective August 1, 1996 (the "Date of Grant"), as a matter of
separate inducement and agreement, and in addition to and not in lieu of salary
or other compensation for services, the right to purchase from the Company an
aggregate of 150,000 shares of Common Stock (the "Options"). The Options shall
vest as provided in Section 4 hereof and shall be subject to adjustment as
provided in Section 6 hereof. The Options shall constitute Nonqualified Stock
Options under the Plan.
2. Exercise Price. The initial exercise price per share (the
-----------------
"Exercise Price") for the Options shall be $18.250.
3. Non-transferability of Options. The Options may not be assigned,
------------------------------
transferred or otherwise disposed of, or pledged or hypothecated in any way, and
shall not be subject to execution, attachment or other process otherwise than by
will or by the laws of
1
<PAGE>
descent and distribution, and the Options may be exercised during the lifetime
of the Employee only by him.
4. Term and Exercise of Options. The Options shall remain outstanding
----------------------------
(subject to the vesting and exercisability provisions provided herein) during a
period of six (6) years beginning on the Date of Grant (the "Option Term"). One-
third (1/3) of Options shall vest on each of January 31, 1997, 1998 and 1999, so
long as the Employee remains continually employed by the Company from the date
hereof through such date of vesting. Except as otherwise provided in Section 5
hereof, Options that have vested shall remain exercisable in whole at any time
or in part and from time to time until the earlier to occur of the expiration of
the Option Term and the expiration of one year after the date of the termination
of the Employee's employment with the Company. The Employee shall not have any
rights to dividends or any other rights of a stockholder of the Company with
respect to any shares of Common Stock underlying the Options until such shares
have been issued to him upon the exercise of the Options.
(a) Accelerated Vesting of Options. Notwithstanding any provision
------------------------------
hereof to the contrary, if a Change of Control (as defined below) occurs at any
time prior to the third anniversary of this Agreement, then, as of the Change of
Control Date (as defined below), all of the unvested Options shall become
vested.
(b) Certain Definitions. As used in this Agreement, the following
-------------------
terms shall have the following meanings:
"Change of Control Date." "Change of Control Date" means the date
----------------------
on which a Change of Control occurs.
"Change of Control." "Change of Control" means (i) any sale, transfer
-----------------
or other conveyance (whether directly, or indirectly through a merger,
consolidation or similar transaction), or series of related sales, transfers or
other conveyances, of the outstanding capital stock of the Company pursuant to
which any person (or group of affiliated persons) other than an Excluded Person,
becomes the beneficial owner of more than 50% of the outstanding Common Stock or
(ii) any sale, transferor other conveyance of all or substantially all of the
Company's assets to any person (or group of affiliated persons) other than to an
Excluded Person. For purposes of the foregoing definition, "Excluded Person"
means and includes (A) Apollo Investment Fund, L.P. ("Apollo"), any of its
affiliates, and, so long as Apollo or an affiliate of Apollo controls the right
to vote the securities in question, any partner, shareholder or trustee of any
of them, (B) any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company and (C) the Company or any subsidiary of the Company.
5. Termination. The Employee's rights with respect to the Options
-----------
upon death or the termination of his employment with the Company are as follows:
2
<PAGE>
(a) Cause. If the Employee is terminated from his employment with the
-----
Company for Cause (as defined in Employment Agreement) in accordance with
Section 5(c) of the Employment Agreement, then all the Options (whether vested
or unvested) shall automatically terminate and be cancelled (without any action
on the part of the Company) on the date upon which Preliminary Notice is given
to the Employee pursuant to Section 5(c) of the Employment Agreement, provided
that the Employee's employment is thereafter terminated in accordance with the
provisions of Section 5(c) of the Employment Agreement.
(b) Disability. If the Employee is terminated from his employment
----------
with the Company by reason of disability in accordance with Section 5(b) of the
Employment Agreement, then all unvested Options shall automatically terminate
and be cancelled (without any action on the part of the Company) on the
effective date of such termination. All Options that have vested prior to such
date shall remain exercisable until the earlier to occur of (i) the first
anniversary of such date and (ii) the expiration of the Option Term.
(c) Death. If the Employee dies while employed by the Company, then
-----
all unvested Options shall automatically terminate and be cancelled (without any
action on the part of the Company) on the date of death. Following the
Employee's death, his executors, administrators, legatees or distributees may
exercise the Options that have vested prior to the date of death until the
earlier to occur of (i) the first anniversary of such date and (ii) the
expiration of the Option Term.
(d) Other Terminations of Employment.
--------------------------------
(i) If the Employee's employment is terminated by the Employee
other than for Good Reason (as defined in the Employment Agreement), then all
unvested Options shall automatically terminate and be cancelled (without any
action on the part of the Company) on the date of such termination. All Options
that have vested prior to such date shall remain exercisable until the earlier
to occur of (A) the ninetieth day following such date and (B) the expiration of
the Option Term.
(ii) If Employee's employment is terminated (A) other than for a
reason described in paragraphs (a), (b) or (c) above, or (B) by the Employee
validly for Good Reason and pursuant to Section 5(d) of the Employment
Agreement, then, as of the date of such termination, all the Options that have
not become vested on or prior to the date of such termination shall become
vested as of such date. All Options that have vested on or prior to such date
shall remain exercisable until the earliest to occur of (C) the ninetieth day
following such date and (D) the expiration of the Option Term.
(e) Termination Date. For purposes of Sections 5(a), (b), (d) and (f)
hereof, the date of termination of the Employee's employment shall be the Date
of Termination (as defined in the Employment Agreement).
3
<PAGE>
(f) Extension After Certain Terminations. If the Employee's
------------------------------------
employment with the Company is terminated other than for a reason described in
paragraph (a), (b), (c) or (d)(i) above, and the Employee dies or becomes
disabled within ninety (90) days after such termination of employment, then the
Employee's executors, administrators, legatees or distributees may exercise the
Options, to the extent vested and exercisable as of the Date of Termination
until the earlier to occur of (i) the first anniversary of the date of death or
disability and (ii) the expiration of the Option Term.
6. Certain Adjustments. The number and kind of securities that may
-------------------
be purchased upon the exercise of the Options and the Exercise Price shall be
subject to adjustment from time to time upon the occurrence of any of the
following events after the date hereof:
(a) Recapitalization, Capital Reorganization, Reclassification,
----------------------------------------------------------
Consolidation, Merger or Sale. In case of any recapitalization or capital
- -----------------------------
reorganization of the Company or any reclassification of the outstanding Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision or combination),
or in case of any consolidation or merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is the surviving corporation and that does not result in any reclassification of
or change in the outstanding Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination)), or in case of any sale or transfer to
another corporation of the property of the Company as an entirety or
substantially as an entirety, the Employee shall thereafter have the right to
acquire upon exercise of the Options, in lieu of each share of Common Stock
theretofore issuable upon exercise of the Options, the kind and amount of shares
of capital stock, other securities, money and/or property receivable in respect
of each share of Common Stock upon such recapitalization, reorganization,
reclassification, consolidation, merger, sale or transfer. The provisions of
this paragraph (a) shall similarly apply to successive recapitalizations,
reorganizations, reclassifications, consolidations, mergers, sales and
transfers.
(b) Subdivision or Combination of Shares. If the Company shall
------------------------------------
subdivide or combine its outstanding shares of Common Stock, (i) in case of
subdivision of shares, the Exercise Price shall be proportionately reduced (as
at the effective date of such subdivision or, if the Company shall take a record
of holders of its Common Stock for the purpose of so subdividing, as at the
applicable record date, whichever is earlier) to reflect the increase in the
total number of shares of Common Stock outstanding as a result of such
subdivision, or (ii) in the case of a combination of shares, the Exercise Price
shall be proportionately increased (as at the effective date of such combination
or, if the Company shall take a record of holders of its Common Stock for the
purpose of so combining, as at the applicable record date, whichever is earlier)
to reflect the reduction in the total number of shares of Common Stock
outstanding as a result of such combination. In the event that an adjustment
pursuant to this
4
<PAGE>
paragraph (b) is made as of the record date for purposes of any subdivision or
combination and such subdivision or combination is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price that would then be in
effect if such record date had not been fixed.
(c) Certain Dividends and Distributions. If the Company shall pay a
-----------------------------------
dividend on, or make any other distribution to the holders of, its outstanding
Common Stock in shares of its Common Stock, the Exercise Price shall be
adjusted, as of the date the Company shall take a record of the holders of
Common Stock for the purpose of receiving such dividend or other distribution
(or if no such record is taken, as of the date of such payment or other
distribution), to that price determined by multiplying the Exercise Price in
effect immediately prior to such record date (or if no such record is taken,
immediately prior to such payment or other distribution), by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution; provided, that if
--------
the foregoing adjustment is made to the Exercise Price as of a record date for
such dividend or other distribution and such dividend or distribution is not so
paid or made, the Exercise Price shall again be adjusted to be the Exercise
Price that would then be in effect if such record date had not been fixed.
(d) Adjustment Number of Shares. Upon each adjustment and
---------------------------
readjustment of the Exercise Price pursuant to paragraph (b) or (c) of this
Section 6, the number of shares of Common Stock then issuable upon exercise of
the Options shall be adjusted, to the nearest 1/10th of a whole share, to the
product obtained by multiplying such number of shares issuable upon exercise of
the Options immediately prior to such adjustment in the Exercise Price by a
fraction, the numerator of which shall be the Exercise Price immediately prior
to such adjustment and the denominator of which shall be the Exercise Price
immediately thereafter.
7. Method of Exercise of Options. (a) Subject to the terms and
-----------------------------
conditions of this Agreement, the Options shall be exercisable by notice (an
"Exercise Notice") and payment to the Company in accordance with the procedure
prescribed herein; provided, that the aggregate Exercise Price with respect to
--------
any one such exercise shall not be less than $100,000 unless such exercise
represents an exercise of all Options that are vested and exercisable as of the
date of such exercise. If the Employee fails to accept delivery of and pay for
all or any part of the number of shares specified in the Exercise Notice upon
tender or delivery thereof, his right to exercise the Options with respect to
such undelivered shares may be terminated in the sole discretion of the Board or
the Committee.
(b) Each Exercise Notice shall: (i) state the number of shares in
respect of which they are being exercised, (ii) be accompanied by payment as
provided in paragraph (c) below, and (iii) be signed by the person or persons
entitled to exercise such Options. If such Options are being exercised by any
person or persons other than the Employee, the Exercise
5
<PAGE>
Notice shall be accompanied by proof, satisfactory to the Company and its
counsel, of the right of such person or persons to exercise such Options.
(c) Subject to Section 11 hereof, payment of the Exercise Price
shall be made by delivering to the Company any one or a combination of the
following: (i) a certified or bank cashier's check payable to the Company or its
order or a wire transfer directly to an account specified by the Company, (ii)
one or more certificates evidencing shares of Common Stock owned by the Employee
immediately prior to such exercise, together with a duly executed stock power,
having an aggregate Fair Market Value (as defined below) on the date on which
the Exercise Notice is given equal to the aggregate Exercise Price or (iii) a
copy of irrevocable instructions to a registered broker/dealer to deliver
promptly to the Company an amount of proceeds from the sale of shares of Common
Stock to be issued pursuant to the Options being exercised or of a loan made
with respect to shares of Common Stock to be issued pursuant to the Options
being exercised sufficient, in either case, to pay the Exercise Price.
(d) The certificate or certificates representing shares of Common
Stock to be issued upon exercise of the Options shall be registered in the name
of the person or persons exercising such Options (or, if such Options are
exercised by the Employee and if the Employee so requests in the applicable
Exercise Notice, shall be registered in the name of the Employee and his spouse
jointly, with right of survivorship) but only upon compliance with all the
provisions of this Agreement, and such certificate or certificates shall be
delivered within 10 days after receipt of payment and completion of such
compliance by the Employee; provided, that in the case of clause (iii) of the
--------
first sentence of Section 7(c), the Company shall not be required to make
delivery of the certificate or certificates until payment is actually received
from such broker/dealer.
(e) The Company shall have no obligation to issue or deliver
fractional shares of Common Stock upon exercise of the Options but may, in its
sole discretion, elect to do so. In lieu of issuing any such fractional share
the Company shall pay to the person exercising the Options, promptly following
such exercise, an amount in cash equal to the Fair Market Value, as of the date
of exercise, of such fraction of a share. The "Fair Market Value" per share of
Common Stock as of any date of determination, shall mean (i) the closing sales
price per share of Common Stock, on the national securities exchange on which
such stock is principally traded, on the next preceding date on which there was
a sale of such stock on such exchange, or (ii) if the shares of Common Stock are
not listed or admitted to trading on any such exchange, the closing price as
reported by the NASDAQ Stock Market for the last preceding date on which there
was a sale of such stock on such exchange, or (iii) if the shares of Common
Stock are not then listed on a national securities exchange or on the NASDAQ
Stock Market, the average of the highest reported bid and lowest reported asked
prices for the shares of Common Stock as reported by the National Association of
Securities Dealers, Inc. Automated Quotations ("NASDAQ") system for the last
preceding date on which such bid and asked prices were reported, or (iv) if the
shares of Common Stock are not then listed on
6
<PAGE>
any securities exchange or prices therefor are not then quoted in the NASDAQ
system, such value as determined in good faith by the Board (or any duly
authorized committee thereof).
8. No Right To Continued Employment. Nothing in this Agreement shall
--------------------------------
confer upon the Employee the right to continue in the employ of the Company or
to be entitled to any right or benefit not set forth in this Agreement or to
interfere with or limit in any way the right of the Company to terminate the
Employee's employment.
9. Withholding Taxes. The Company shall have the right to require the
-----------------
Employee (or such other person, if any, who has the right to exercise the
Options) to pay to the Company in cash the amount of any federal, state, local
and foreign income and other taxes that the Company may be required to withhold
before delivering to the Employee (or such other person) a certificate or
certificates representing shares of Common Stock issuable hereunder.
Notwithstanding the foregoing sentence, subject to Section 11 hereof, the
Employee may elect to cause Common Stock issuable upon the exercise of any of
the Options, having a Fair Market Value on the day immediately preceding the
date on which such certificates are delivered equal to the amount of such
withholding obligation, to be withheld by the Company in satisfaction of such
obligation.
10. Approval of Counsel. Any exercise of the Options and the
-------------------
issuance and delivery of shares of Common Stock pursuant thereto shall be
subject to approval by the Company's counsel of all legal matters in connection
therewith, including compliance with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder, the requirements of
any stock exchange upon which the Common Stock may then be listed and any
applicable state securities or "blue sky" laws.
11. Resale of Common Stock. Upon any sale or transfer of the Common
----------------------
Stock purchased upon exercise of the Options, the Employee shall deliver to the
Company an opinion of counsel satisfactory to the Company to the effect that
either (a) the sale of the Common Stock to be so sold or transferred has been
registered under the Securities Act or (b) such Common Stock may then be sold
without registration under the Securities Act and applicable state securities
laws.
The certificates evidencing the shares of Common Stock issued upon
exercise of the Options shall bear a legend to the following effect (unless the
Company requires otherwise):
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS, IN THE OPINION OF COUNSEL
FOR THE COMPANY, SUCH REGISTRATION IS NOT REQUIRED.
7
<PAGE>
12. Registration Rights. The Company has filed a registration
-------------------
statement on Form S-8 registering the Common Stock underlying the Options, in
order to permit the public resale thereof by the Employee. The Company's
obligation to maintain such registration shall apply only to the extent that an
effective registration statement is then required for the public sale by the
Employee of the Common Stock underlying the Options.
13. Notices. For the purposes of this Agreement, notices, demands
-------
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given (i) when hand delivered, (ii) when
sent if sent by overnight mail, overnight courier or facsimile transmission or
(iii) (unless otherwise specified) when mailed by United States registered mail,
return receipt requested, postage prepaid, addressed as follows:
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239-3018
Attention: Board of Directors
c/o Corporate Secretary
with a copy to each member of the Committee who is not an officer or an employee
of the Company at the address specified by each such director to which notice of
meetings of the Board of Directors is to be sent or to such other address as any
party may have furnished to the others in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
All notices to the Employee or other person or persons then entitled
to exercise the Options shall be addressed to the Employee or such other person
or persons at the then current address of the Employee contained in the employee
payroll records of the Company.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect.
14. Benefits of Agreement. This Agreement shall inure to the benefit
---------------------
of and be binding upon each successor and assign of the Company. All obligations
imposed upon the Employee and all rights granted to the Company under this
Agreement shall be binding upon the Employee and, to the limited extent set
forth herein, the Employee's heirs, legal representatives and successors. No
other person shall have any rights under this Agreement.
15. Severability. In the event that any one or more provisions of
------------
this Agreement shall be deemed to be illegal or unenforceable, such illegality
or unenforceability shall not affect the validity and enforceability of the
remaining legal and enforceable
8
<PAGE>
provisions herein, which shall be construed as if such illegal or unenforceable
provision or provisions had not been inserted.
16. Entire Agreement. The parties hereto agree that this Agreement
----------------
contains the entire understanding and agreement between them, and supersedes all
prior understandings and agreements between the parties respecting the subject
matter hereof, and that the provisions of this Agreement may not be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the parties hereto.
17. Waiver. No waiver by either party hereto at any time of any
------
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
18. Governing Law. This Agreement shall be construed and governed in
-------------
accordance with the laws of the State of New York, without regard to the
conflicts of law principles thereof.
19. Incorporation by Reference. The incorporation herein of any
--------------------------
terms by reference to another document shall not be affected by the termination
of any agreement set forth in such other document or the invalidity of any
provision thereof.
20. Time Periods. Any action required to be taken under this
------------
Agreement within a certain number of days shall be taken within that number of
calendar days; provided, that if the last day for taking such action falls on a
--------
weekend or
9
<PAGE>
a holiday, the period during which such action may be taken shall be
automatically extended to the next business day.
21. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by an authorized officer and the Employee has hereunto set his hand all
as of the day, month and year first above written.
SAMSONITE CORPORATION Employee:
By: /s/ Richard R. Nicolosi /s/ John P. Murtagh
----------------------- -------------------
Name: John P.Murtagh
Title:
10
<PAGE>
EXHIBIT 10.7
------------
STOCK OPTION AGREEMENT
----------------------
AGREEMENT (this "Agreement"), dated the 16th day of September, 1996, by and
between SAMSONITE CORPORATION, a Delaware corporation (the "Company"), and
Robert P. Baird, Jr. (the "Employee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, as an essential inducement to the Employee entering into the
Employment Agreement dated September 16, 1996, by and between the Company and
the Employee (the "Employment Agreement"), the Company desires to grant to the
Employee a right to acquire shares of common stock, par value $.01 per share
("Common Stock"), of the Company according to the terms and conditions provided
herein and thereby to provide additional incentives to the Employee to increase
the long-term value of the Company and further align his interests with those of
the stockholders of the Company.
NOW, THEREFORE, in consideration of the premises and covenants herein set
forth and other good and valuable consideration, the Company and the Employee
hereby agree as follows:
1. Confirmation of Grant of Option. Pursuant to the authorization of the
-------------------------------
Compensation Committee (the "Committee") of the Board of Directors of the
Company, and pursuant to the Company's 1995 Stock Option and Incentive Award
Plan (as Amended in 1996) (the "Plan"), the Company, subject to the terms and
conditions of this Agreement, hereby confirms that the Employee has been
granted, effective as of August 21, 1996 (the "Date of Grant"), as a matter of
separate inducement and agreement, and in addition to and not in lieu of salary
or other compensa tion for services, the right to purchase from the Company an
aggregate of 100,000 shares of Common Stock (the "Options"). The Options shall
vest as provided in Section 4 hereof and shall be subject to adjustment as
provided in Section 6 hereof. The Options shall constitute Nonqualified Stock
Options under the Plan.
2. Exercise Price. The exercise price per share (the "Exercise Price")
--------------
for the Options shall be $18.375.
3. Non-transferability of Options. The Options may not be assigned,
------------------------------
transferred or otherwise disposed of, or pledged or hypothecated in any way, and
shall not be subject to execution, attachment or other process otherwise than by
will or by the laws of descent and distribution, and the Options may be
exercised during the lifetime of the Employee only by him.
4. Term and Exercise of Options. The Options shall remain outstanding
----------------------------
(subject to the vesting and exercisability provisions provided herein) during a
period of six (6) years beginning on the Date of Grant (the "Option Term"). So
long as the Employee remains continually employed by the Company from the date
hereof through the date of vesting, the Options shall vest as
<PAGE>
follows: Options to acquire 33,334 shares shall vest on January 31, 1997,
Options to acquire 33,333 shares shall vest on January 31, 1998, and Options to
acquire the remaining 33,333 shares shall vest on January 31, 1999. Except as
otherwise provided in Section 5 hereof, Options that have vested shall remain
exercisable in whole at any time or in part and from time to time until the
earlier to occur of the expiration of the Option Term and the expiration of one
year after the date of the termination of the Employee's employment with the
Company. The Employee shall not have any rights to dividends or any other
rights of a stockholder of the Company with respect to any shares of Common
Stock underlying the Options until such shares have been issued to him upon the
exercise of the Options.
(a) Accelerated Vesting of Options. Notwithstanding any provision hereof
------------------------------
to the contrary, if a Change of Control (as defined below) occurs at any time
prior to the third anniversary of this Agreement, and the Employee continues to
be employed by the Company through the Change of Control Vesting Date (as
defined below), then unvested Options shall become vested on the earlier of
their normal vesting date or the Change of Control Vesting Date.
(b) Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following meanings:
"Change of Control Vesting Date." "Change of Control Vesting Date means
------------------------------
the first anniversary of the date on which a Change of Control occurs.
"Change of Control." "Change of Control" means (i) any sale, transfer or
-----------------
other conveyance (whether directly, or indirectly through a merger,
consolidation or similar transaction), or series of related sales, transfers or
other conveyances, of the outstanding capital stock of the Company pursuant to
which any person (or group of affiliated persons) other than an Excluded Person,
becomes the beneficial owner of more than 50% of the outstanding Common Stock or
(ii) any sale, transferor other conveyance of all or substantially all of the
Company's assets to any person (or group of affiliated persons) other than to an
Excluded Person. For purposes of the foregoing definition, "Excluded Person"
means and includes (A) Apollo Investment Fund, L.P. ("Apollo"), any of its
affiliates, and, so long as Apollo or an affiliate of Apollo controls the right
to vote the securities in question, any partner, shareholder or trustee of any
of them, (B) any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company and (C) the Company or any subsidiary of the Company.
5. Termination. The Employee's rights with respect to the Options upon
-----------
death or the termination of his employment with the Company are as follows:
(a) Cause. If the Employee is terminated from his employment with the
-----
Company for Cause (as defined in the Employment Agreement) in accordance with
Section 5(c) of the Employment Agreement, then all the Options (whether vested
or unvested) shall automatically termi nate and be cancelled (without any
action on the part of the Company) on the date upon which Preliminary Notice is
given pursuant to Section 5(c) of the Employment Agreement, provided that the
Employee's employment is thereafter terminated in accordance with the provisions
of Section 5(c) of the Employment Agreement.
<PAGE>
(b) Disability. If a Change of Control has not occurred and the Employee
----------
is terminated from his employment with the Company by reason of disability in
accordance with Section 5(b) of the Employment Agreement, then all unvested
Options shall automatically terminate and be cancelled (without any action on
the part of the Company) on the effective date of such termination. On the
other hand, if a Change of Control has occurred and the Employee is terminated
from his employment with the Company by reason of disability in accordance with
Section 5(b) of the Employment Agreement, then all unvested Options shall
automatically vest on the effective date of such termination. All Options that
have vested on or prior to such date shall remain exercisable until the earlier
to occur of (i) the first anniversary of such date and (ii) the expiration of
the Option Term.
(c) Death. If a Change of Control has not occurred and the Employee dies
-----
while employed by the Company, then all unvested Options shall automatically
terminate and be cancelled (without any action on the part of the Company) on
the date of death. On the other hand, if a Change of Control has occurred and
the Employee dies while employed by the Company, then all unvested Options shall
automatically vest on the date of death. Following the Employee's death, his
executors, administrators, legatees or distributees may exercise the Options
that have vested on or prior to the date of death until the earlier to occur of
(i) the first anniversary of such date and (ii) the expiration of the Option
Term.
(d) Other Terminations of Employment.
--------------------------------
(i) If the Employee's employment is terminated by the Employee
other than for Good Reason (as defined in the Employment Agreement), then all
unvested Options shall automatically terminate and be cancelled (without any
action on the part of the Company) on the date of such termination. All Options
that have vested prior to such date shall remain exercisable until the earlier
to occur of (A) the ninetieth day following such date and (B) the expiration of
the Option Term.
(ii) If Employee's employment is terminated (A) other than for a
reason described in paragraphs (a), (b) or (c) above, or (B) by the Employee
validly for Good Reason and pursuant to Section 5(d) of the Employment
Agreement, then, as of the date of such termination, all the Options that have
not become vested on or prior to the date of such termination shall become
vested as of such date. All Options that have vested on or prior to such date
shall remain exercisable until the earliest to occur of (C) the ninetieth day
following such date and (D) the expiration of the Option Term.
(e) Termination Date. For purposes of Sections 5(a), (b), (d) and (f)
----------------
hereof, the date of termination of the Employee's employment shall be the Date
of Termination (as defined in the Employment Agreement).
(f) Extension After Certain Terminations. If the Employee's employment
------------------------------------
with the Company is terminated other than for a reason described in paragraph
(a), (b), (c) or (d)(i) above, and the Employee dies or becomes disabled within
ninety (90) days after such termination of employment, then the Employee's
executors, administrators, legatees or distributees may exercise the Options, to
the extent vested and exercisable as of the date of such termination until the
earlier to occur of (i) the first anniversary of the date of death or disability
and (ii) the expiration of the Option Term.
<PAGE>
6. Certain Adjustments. The number and kind of securities that may be
-------------------
purchased upon the exercise of the Options and the Exercise Price shall be
subject to adjustment from time to time upon the occurrence of any of the
following events after the date hereof:
(a) Recapitalization, Capital Reorganization, Reclassification,
-----------------------------------------------------------
Consolidation, Merger or Sale. In case of any recapitalization or capital
- -----------------------------
reorganization of the Company or any reclassification of the outstanding Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision or combination),
or in case of any consolidation or merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is the surviving corporation and that does not result in any reclassification
of or change in the outstanding Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination)), or in case of any sale or transfer to
another corporation of the property of the Company as an entirety or
substantially as an entirety, the Employee shall thereafter have the right to
acquire upon exercise of the Options, in lieu of each share of Common Stock
theretofore issuable upon exercise of the Options, the kind and amount of shares
of capital stock, other securities, money and/or property receivable in respect
of each share of Common Stock upon such recapitalization, reorganization,
reclassification, consolidation, merger, sale or transfer. The provisions of
this paragraph (a) shall similarly apply to successive recapitalizations,
reorganizations, reclassifications, consolidations, mergers, sales and
transfers.
(b) Subdivision or Combination of Shares. If the Company shall subdivide
------------------------------------
or combine its outstanding shares of Common Stock, (i) in case of subdivision of
shares, the Exercise Price shall be proportionately reduced (as at the effective
date of such subdivision or, if the Company shall take a record of holders of
its Common Stock for the purpose of so subdividing, as at the applicable
record date, whichever is earlier) to reflect the increase in the total number
of shares of Common Stock outstanding as a result of such subdivision, or (ii)
in the case of a combination of shares, the Exercise Price shall be
proportionately increased (as at the effective date of such combination or, if
the Company shall take a record of holders of its Common Stock for the purpose
of so combining, as at the applicable record date, whichever is earlier) to
reflect the reduction in the total number of shares of Common Stock outstanding
as a result of such combination. In the event that an adjustment pursuant to
this paragraph (b) is made as of the record date for purposes of any subdivision
or combination and such subdivision or combination is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price that would then be in
effect if such record date had not been fixed.
(c) Certain Dividends and Distributions. If the Company shall pay a
-----------------------------------
dividend on, or make any other distribution to the holders of, its outstanding
Common Stock in shares of its Common Stock, the Exercise Price shall be
adjusted, as of the date the Company shall take a record of the holders of
Common Stock for the purpose of receiving such dividend or other distribution
(or if no such record is taken, as of the date of such payment or other
distribution), to that price determined by multiplying the Exercise Price in
effect immediately prior to such record date (or if no such record is taken,
immediately prior to such payment or other distribution), by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution; provided,
--------
<PAGE>
that if the foregoing adjustment is made to the Exercise Price as of a record
date for such dividend or other distribution and such dividend or distribution
is not so paid or made, the Exercise Price shall again be adjusted to be the
Exercise Price that would then be in effect if such record date had not been
fixed.
(d) Adjustment Number of Shares. Upon each adjustment and readjustment of
---------------------------
the Exercise Price pursuant to paragraph (b) or (c) of this Section 6, the
number of shares of Common Stock then issuable upon exercise of the Options
shall be adjusted, to the nearest 1/10th of a whole share, to the product
obtained by multiplying such number of shares issuable upon exercise of the
Options immediately prior to such adjustment in the Exercise Price by a
fraction, the numerator of which shall be the Exercise Price immediately prior
to such adjustment and the denominator of which shall be the Exercise Price
immediately thereafter.
7. Method of Exercise of Options. (a) Subject to the terms and conditions
-----------------------------
of this Agreement, the Options shall be exercisable by notice (an "Exercise
Notice") and payment to the Company in accordance with the procedure prescribed
herein; provided, that the aggregate Exercise Price with respect to any one such
--------
exercise shall not be less than $100,000 unless such exercise represents an
exercise of all Options that are vested and exercisable as of the date of such
exercise. If the Employee fails to accept delivery of and pay for all or any
part of the number of shares specified in the Exercise Notice upon tender or
delivery thereof, his right to exercise the Options with respect to such
undelivered shares may be terminated in the sole discretion of the Board or the
Committee.
(b) Each Exercise Notice shall: (i) state the number of shares in respect
of which they are being exercised, (ii) be accompanied by payment as provided in
paragraph (c) below, and (iii) be signed by the person or persons entitled to
exercise such Options. If such Options are being exercised by any person or
persons other than the Employee, the Exercise Notice shall be accompanied by
proof, satisfactory to the Company and its counsel, of the right of such person
or persons to exercise such Options.
(c) Subject to Section 11 hereof, payment of the Exercise Price shall be
made by delivering to the Company any one or a combination of the following: (i)
a certified or bank cashier's check payable to the Company or its order or a
wire transfer directly to an account specified by the Company, (ii) one or more
certificates evidencing shares of Common Stock owned by the Employee immediately
prior to such exercise, together with a duly executed stock power, having an
aggregate Fair Market Value (as defined below) on the date on which the Exercise
Notice is given equal to the aggregate Exercise Price or (iii) a copy of
irrevocable instructions to a registered broker/dealer to deliver promptly to
the Company an amount of proceeds from the sale of shares of Common Stock to be
issued pursuant to the Options being exercised or of a loan made with respect to
shares of Common Stock to be issued pursuant to the Options being exercised
sufficient, in either case, to pay the Exercise Price.
(d) The certificate or certificates representing shares of Common Stock to
be issued upon exercise of the Options shall be registered in the name of the
person or persons exercising such Options (or, if such Options are exercised by
the Employee and if the Employee so requests in the applicable Exercise Notice,
shall be registered in the name of the Employee and his spouse jointly,
<PAGE>
with right of survivorship) but only upon compliance with all the provisions of
this Agreement, and such certificate or certificates shall be delivered within
10 days after receipt of payment and completion of such compliance by the
Employee; provided, that in the case of clause (iii) of the first sentence of
--------
Section 7(c), the Company shall not be required to make delivery of the
certificate or certificates until payment is actually received from such
broker/dealer.
(e) The Company shall have no obligation to issue or deliver fractional
shares of Common Stock upon exercise of the Options but may, in its sole
discretion, elect to do so. In lieu of issuing any such fractional share the
Company shall pay to the person exercising the Options, promptly following such
exercise, an amount in cash equal to the Fair Market Value, as of the date of
exercise, of such fraction of a share. The "Fair Market Value" per share of
Common Stock as of any date of determination, shall mean (i) the closing sales
price per share of Common Stock, on the national securities exchange on which
such stock is principally traded, on the next preceding date on which there was
a sale of such stock on such exchange, or (ii) if the shares of Common Stock are
not listed or admitted to trading on any such exchange, the closing price as
reported by the Nasdaq Stock Market for the last preceding date on which there
was a sale of such stock on such exchange, or (iii) if the shares of Common
Stock are not then listed on a national securities exchange or on the Nasdaq
Stock Market, the average of the highest reported bid and lowest reported asked
prices for the shares of Common Stock as reported by the National Association of
Securities Dealers, Inc. Automated Quotations ("NASDAQ") system for the last
preceding date on which such bid and asked prices were reported, or (iv) if the
shares of Common Stock are not then listed on any securities exchange or
prices therefor are not then quoted in the NASDAQ system, such value as
determined in good faith by the Board (or any duly authorized committee
thereof).
8. No Right To Continued Employment. Nothing in this Agreement shall
--------------------------------
confer upon the Employee the right to continue in the employ of the Company or
to be entitled to any right or benefit not set forth in this Agreement or to
interfere with or limit in any way the right of the Company to terminate the
Employee's employment.
9. Withholding Taxes. The Company shall have the right to require the
-----------------
Employee (or such other person, if any, who has the right to exercise the
Options) to pay to the Company in cash the amount of any federal, state, local
and foreign income and other taxes that the Company may be required to withhold
before delivering to the Employee (or such other person) a certificate or
certificates representing shares of Common Stock issuable hereunder.
Notwithstanding the foregoing sentence, subject to Section 11 hereof, the
Employee may elect to cause Common Stock issuable upon the exercise of any of
the Options, having a Fair Market Value on the day immediately preceding the
date on which such certificates are delivered equal to the amount of such
withholding obligation, to be withheld by the Company in satisfaction of such
obligation.
10. Approval of Counsel. Any exercise of the Options and the issuance and
-------------------
delivery of shares of Common Stock pursuant thereto shall be subject to approval
by the Company's counsel of all legal matters in connection therewith, including
compliance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, the requirements of any stock exchange upon
which the Common Stock may then be listed and any applicable state securities or
"blue sky" laws.
<PAGE>
11. Resale of Common Stock. Upon any sale or transfer of the Common Stock
----------------------
purchased upon exercise of the Options, the Employee shall deliver to the
Company an opinion of counsel satisfactory to the Company to the effect that
either (a) the sale of the Common Stock to be so sold or transferred has been
registered under the Securities Act or (b) such Common Stock may then be sold
without registration under the Securities Act and applicable state securities
laws.
The certificates evidencing the shares of Common Stock issued upon exercise
of the Options shall bear a legend to the following effect (unless the Company
requires otherwise):
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS, IN THE OPINION OF COUNSEL
FOR THE COMPANY, SUCH REGISTRATION IS NOT REQUIRED.
12. Registration Rights. The Company has filed a registration
-------------------
statement on Form S-8 registering the Common Stock underlying the Options, in
order to permit the public resale thereof by the Employee. The Company's
obligation to maintain such registration shall apply only to the extent that an
effective registration statement is then required for the public sale by the
Employee of the Common Stock underlying the Options.
13. Notices. For the purposes of this Agreement, notices, demands
-------
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given (i) when hand delivered, (ii) when
sent if sent by overnight mail, overnight courier or facsimile transmission or
(iii) (unless otherwise specified) when mailed by United States registered mail,
return receipt requested, postage prepaid, addressed as follows:
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239-3018
Attention: Board of Directors
c/o Corporate Secretary
with a copy to each member of the Committee who is not an officer or an employee
of the Company at the address specified by each such director to which notice of
meetings of the Board of Directors is to be sent or to such other address as any
party may have furnished to the others in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
<PAGE>
All notices to the Employee or other person or persons then entitled
to exercise the Options shall be addressed to the Employee or such other person
or persons at the then current address of the Employee contained in the employee
payroll records of the Company.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect.
14. Benefits of Agreement. This Agreement shall inure to the benefit
---------------------
of and be binding upon each successor and assign of the Company. All obligations
imposed upon the Employee and all rights granted to the Company under this
Agreement shall be binding upon the Employee and, to the limited extent set
forth herein, the Employee's heirs, legal representatives and successors. No
other person shall have any rights under this Agreement.
15. Severability. In the event that any one or more provisions of
------------
this Agreement shall be deemed to be illegal or unenforceable, such illegality
or unenforceability shall not affect the validity and enforceability of the
remaining legal and enforceable provisions herein, which shall be construed as
if such illegal or unenforceable provision or provisions had not been inserted.
16. Entire Agreement. The parties hereto agree that this Agreement
----------------
contains the entire understanding and agreement between them respecting the
subject matter hereof, and supersedes all prior understandings and agreements
between the parties respecting the subject matter hereof, and that the
provisions of this Agreement may not be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by the
parties hereto.
17. Waiver. No waiver by either party hereto at any time of any
------
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
18. Governing Law. This Agreement shall be construed and governed in
-------------
accordance with the laws of the State of New York, without regard to the
conflicts of law principles thereof.
19. Incorporation by Reference. The incorporation herein of any
--------------------------
terms by reference to another document shall not be affected by the termination
of any agreement set forth in such other document or the invalidity of any
provision thereof.
20. Time Periods. Any action required to be taken under this
------------
Agreement within a certain number of days shall be taken within that number of
calendar days; provided, that if the last day for taking such action falls on a
--------
weekend or a holiday, the period during which such action may be taken shall be
automatically extended to the next business day.
<PAGE>
21. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by an authorized officer and the Employee has hereunto set his hand all
as of the day, month and year first above written.
SAMSONITE CORPORATION Employee:
By: John P. Murtagh /s/ Robert P. Baird, Jr.
--------------- ------------------------
Name: Robert P. Baird, Jr.
Title: CAO
<PAGE>
EXHIBIT 10.8
------------
STOCK OPTION AGREEMENT
----------------------
AGREEMENT (this "Agreement"), dated as of the 5th day of August, 1996, by
and between SAMSONITE CORPORATION, a Delaware corporation (the "Company"), and
James E. Barch (the "Employee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, as an essential inducement to the Employee entering into the
Employment Agreement dated as of August 5, 1996, by and between the Company and
the Employee (the "Employment Agreement"), the Company desires to grant to the
Employee a right to acquire shares of common stock, par value $.01 per share
("Common Stock"), of the Company according to the terms and conditions provided
herein and thereby to provide additional incentives to the Employee to increase
the long-term value of the Company and further align his interests with those of
the stockholders of the Company.
NOW, THEREFORE, in consideration of the premises and covenants herein set
forth and other good and valuable consideration, the Company and the Employee
hereby agree as follows:
1. Confirmation of Grant of Option. Pursuant to the authorization of the
-------------------------------
Compensation Committee (the "Committee") of the Board of Directors of the
Company, and pursuant to the Company's 1995 Stock Option and Incentive Award
Plan (as Amended in 1996) (the "Plan"), the Company, subject to the terms and
conditions of this Agreement, hereby confirms that the Employee has been
granted, effective as of August 5, 1996 (the "Date of Grant"), as a matter of
separate inducement and agreement, and in addition to and not in lieu of salary
or other compensation for services, the right to purchase from the Company an
aggregate of 100,000 shares of Common Stock (the "Options"). The Options shall
vest as provided in Section 4 hereof and shall be subject to adjustment as
provided in Section 6 hereof. The Options shall constitute Nonqualified Stock
Options under the Plan.
2. Exercise Price. The exercise price per share (the "Exercise Price")
--------------
for the Options shall be $18.375.
3. Non-transferability of Options. The Options may not be assigned,
------------------------------
transferred or otherwise disposed of, or pledged or hypothecated in any way, and
shall not be subject to execution, attachment or other process otherwise than by
will or by the laws of descent and distribution, and the Options may be
exercised during the lifetime of the Employee only by him.
4. Term and Exercise of Options. The Options shall remain outstanding
----------------------------
(subject to the vesting and exercisability provisions provided herein) during a
period of six (6) years beginning on the Date of Grant (the "Option Term").
So long as the Employee remains continually employed by the Company from the
date hereof through the date of vesting, the Options shall vest as
<PAGE>
follows: Options to acquire 33,334 shares shall vest on January 31, 1997,
Options to acquire 33,333 shares shall vest on January 31, 1998, and Options to
acquire the remaining 33,333 shares shall vest on January 31, 1999. Except as
otherwise provided in Section 5 hereof, Options that have vested shall remain
exercisable in whole at any time or in part and from time to time until the
earlier to occur of the expiration of the Option Term and the expiration of one
year after the date of the termination of the Employee's employment with the
Company. The Employee shall not have any rights to dividends or any other
rights of a stockholder of the Company with respect to any shares of Common
Stock underlying the Options until such shares have been issued to him upon the
exercise of the Options.
(a) Accelerated Vesting of Options. Notwithstanding any provision hereof
------------------------------
to the contrary, if a Change of Control (as defined below) occurs at any time
prior to the third anniversary of this Agreement, and the Employee continues to
be employed by the Company through the Change of Control Vesting Date (as
defined below), then unvested Options shall become vested on the earlier of
their normal vesting date or the Change of Control Vesting Date.
(b) Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following meanings:
"Change of Control Vesting Date." "Change of Control Vesting Date means
------------------------------
the first anniversary of the date on which a Change of Control occurs.
"Change of Control." "Change of Control" means (i) any sale, transfer or
-----------------
other conveyance (whether directly, or indirectly through a merger,
consolidation or similar transaction), or series of related sales, transfers or
other conveyances, of the outstanding capital stock of the Company pursuant to
which any person (or group of affiliated persons) other than an Excluded Person,
becomes the beneficial owner of more than 50% of the outstanding Common Stock or
(ii) any sale, transferor other conveyance of all or substantially all of the
Company's assets to any person (or group of affiliated persons) other than to an
Excluded Person. For purposes of the foregoing definition, "Excluded Person"
means and includes (A) Apollo Investment Fund, L.P. ("Apollo"), any of its
affiliates, and, so long as Apollo or an affiliate of Apollo controls the right
to vote the securities in question, any partner, shareholder or trustee of any
of them, (B) any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company and (C) the Company or any subsidiary of the Company.
5. Termination. The Employee's rights with respect to the Options upon
-----------
death or the termination of his employment with the Company are as follows:
(a) Cause. If the Employee is terminated from his employment with the
-----
Company for Cause (as defined in the Employment Agreement) in accordance with
Section 5(c) of the Employment Agreement, then all the Options (whether vested
or unvested) shall automatically termi nate and be cancelled (without any
action on the part of the Company) on the date upon which Preliminary Notice is
given pursuant to Section 5(c) of the Employment Agreement, provided that the
Employee's employment is thereafter terminated in accordance with the provisions
of Section 5(c) of the Employment Agreement.
<PAGE>
(b) Disability. If a Change of Control has not occurred and the Employee
----------
is terminated from his employment with the Company by reason of disability in
accordance with Section 5(b) of the Employment Agreement, then all unvested
Options shall automatically terminate and be cancelled (without any action on
the part of the Company) on the effective date of such termination. On the
other hand, if a Change of Control has occurred and the Employee is terminated
from his employment with the Company by reason of disability in accordance with
Section 5(b) of the Employment Agreement, then all unvested Options shall
automatically vest on the effective date of such termination. All Options that
have vested on or prior to such date shall remain exercisable until the earlier
to occur of (i) the first anniversary of such date and (ii) the expiration of
the Option Term.
(c) Death. If a Change of Control has not occurred and the Employee dies
-----
while employed by the Company, then all unvested Options shall automatically
terminate and be cancelled (without any action on the part of the Company) on
the date of death. On the other hand, if a Change of Control has occurred and
the Employee dies while employed by the Company, then all unvested Options shall
automatically vest on the date of death. Following the Employee's death, his
executors, administrators, legatees or distributees may exercise the Options
that have vested on or prior to the date of death until the earlier to occur of
(i) the first anniversary of such date and (ii) the expiration of the Option
Term.
(d) Other Terminations of Employment.
--------------------------------
(i) If the Employee's employment is terminated by the Employee other
than for Good Reason (as defined in the Employment Agreement), then all unvested
Options shall automatically terminate and be cancelled (without any action on
the part of the Company) on the date of such termination. All Options that have
vested prior to such date shall remain exercisable until the earlier to occur of
(A) the ninetieth day following such date and (B) the expiration of the Option
Term.
(ii) If Employee's employment is terminated (A) other than for a
reason described in paragraphs (a), (b) or (c) above, or (B) by the Employee
validly for Good Reason and pursuant to Section 5(d) of the Employment
Agreement, then, as of the date of such termination, all the Options that have
not become vested on or prior to the date of such termination shall become
vested as of such date. All Options that have vested on or prior to such date
shall remain exercisable until the earliest to occur of (C) the ninetieth day
following such date and (D) the expiration of the Option Term.
(e) Termination Date. For purposes of Sections 5(a), (b), (d) and (f)
----------------
hereof, the date of termination of the Employee's employment shall be the Date
of Termination (as defined in the Employment Agreement).
(f) Extension After Certain Terminations. If the Employee's employment
------------------------------------
with the Company is terminated other than for a reason described in paragraph
(a), (b), (c) or (d)(i) above, and the Employee dies or becomes disabled within
ninety (90) days after such termination of employment, then the Employee's
executors, administrators, legatees or distributees may exercise the Options, to
the extent vested and exercisable as of the date of such termination until the
earlier to occur of (i) the first anniversary of the date of death or disability
and (ii) the expiration of the Option Term.
<PAGE>
6. Certain Adjustments. The number and kind of securities that may be
-------------------
purchased upon the exercise of the Options and the Exercise Price shall be
subject to adjustment from time to time upon the occurrence of any of the
following events after the date hereof:
(a) Recapitalization, Capital Reorganization, Reclassification,
-----------------------------------------------------------
Consolidation, Merger or Sale. In case of any recapitalization or capital
- -----------------------------
reorganization of the Company or any reclassification of the outstanding Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision or combination),
or in case of any consolidation or merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is the surviving corporation and that does not result in any reclassification
of or change in the outstanding Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination)), or in case of any sale or transfer to
another corporation of the property of the Company as an entirety or
substantially as an entirety, the Employee shall thereafter have the right to
acquire upon exercise of the Options, in lieu of each share of Common Stock
theretofore issuable upon exercise of the Options, the kind and amount of shares
of capital stock, other securities, money and/or property receivable in respect
of each share of Common Stock upon such recapitalization, reorganization,
reclassification, consolidation, merger, sale or transfer. The provisions of
this paragraph (a) shall similarly apply to successive recapitalizations,
reorganizations, reclassifications, consolidations, mergers, sales and
transfers.
(b) Subdivision or Combination of Shares. If the Company shall subdivide
------------------------------------
or combine its outstanding shares of Common Stock, (i) in case of subdivision of
shares, the Exercise Price shall be proportionately reduced (as at the effective
date of such subdivision or, if the Company shall take a record of holders of
its Common Stock for the purpose of so subdividing, as at the applicable
record date, whichever is earlier) to reflect the increase in the total number
of shares of Common Stock outstanding as a result of such subdivision, or (ii)
in the case of a combination of shares, the Exercise Price shall be
proportionately increased (as at the effective date of such combination or, if
the Company shall take a record of holders of its Common Stock for the purpose
of so combining, as at the applicable record date, whichever is earlier) to
reflect the reduction in the total number of shares of Common Stock outstanding
as a result of such combination. In the event that an adjustment pursuant to
this paragraph (b) is made as of the record date for purposes of any subdivision
or combination and such subdivision or combination is not so made, the Exercise
Price shall again be adjusted to be the Exercise Price that would then be in
effect if such record date had not been fixed.
(c) Certain Dividends and Distributions. If the Company shall pay a
-----------------------------------
dividend on, or make any other distribution to the holders of, its outstanding
Common Stock in shares of its Common Stock, the Exercise Price shall be
adjusted, as of the date the Company shall take a record of the holders of
Common Stock for the purpose of receiving such dividend or other distribution
(or if no such record is taken, as of the date of such payment or other
distribution), to that price determined by multiplying the Exercise Price in
effect immediately prior to such record date (or if no such record is taken,
immediately prior to such payment or other distribution), by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution; provided,
--------
<PAGE>
that if the foregoing adjustment is made to the Exercise Price as of a record
date for such dividend or other distribution and such dividend or distribution
is not so paid or made, the Exercise Price shall again be adjusted to be the
Exercise Price that would then be in effect if such record date had not been
fixed.
(d) Adjustment Number of Shares. Upon each adjustment and readjustment of
---------------------------
the Exercise Price pursuant to paragraph (b) or (c) of this Section 6, the
number of shares of Common Stock then issuable upon exercise of the Options
shall be adjusted, to the nearest 1/10th of a whole share, to the product
obtained by multiplying such number of shares issuable upon exercise of the
Options immediately prior to such adjustment in the Exercise Price by a
fraction, the numerator of which shall be the Exercise Price immediately prior
to such adjustment and the denominator of which shall be the Exercise Price
immediately thereafter.
7. Method of Exercise of Options. (a) Subject to the terms and conditions
-----------------------------
of this Agreement, the Options shall be exercisable by notice (an "Exercise
Notice") and payment to the Company in accordance with the procedure prescribed
herein; provided, that the aggregate Exercise Price with respect to any one such
--------
exercise shall not be less than $100,000 unless such exercise represents an
exercise of all Options that are vested and exercisable as of the date of such
exercise. If the Employee fails to accept delivery of and pay for all or any
part of the number of shares specified in the Exercise Notice upon tender or
delivery thereof, his right to exercise the Options with respect to such
undelivered shares may be terminated in the sole discretion of the Board or the
Committee.
(b) Each Exercise Notice shall: (i) state the number of shares in respect
of which they are being exercised, (ii) be accompanied by payment as provided in
paragraph (c) below, and (iii) be signed by the person or persons entitled to
exercise such Options. If such Options are being exercised by any person or
persons other than the Employee, the Exercise Notice shall be accompanied by
proof, satisfactory to the Company and its counsel, of the right of such person
or persons to exercise such Options.
(c) Subject to Section 11 hereof, payment of the Exercise Price shall be
made by delivering to the Company any one or a combination of the following: (i)
a certified or bank cashier's check payable to the Company or its order or a
wire transfer directly to an account specified by the Company, (ii) one or more
certificates evidencing shares of Common Stock owned by the Employee immediately
prior to such exercise, together with a duly executed stock power, having an
aggregate Fair Market Value (as defined below) on the date on which the Exercise
Notice is given equal to the aggregate Exercise Price or (iii) a copy of
irrevocable instructions to a registered broker/dealer to deliver promptly to
the Company an amount of proceeds from the sale of shares of Common Stock to be
issued pursuant to the Options being exercised or of a loan made with respect to
shares of Common Stock to be issued pursuant to the Options being exercised
sufficient, in either case, to pay the Exercise Price.
(d) The certificate or certificates representing shares of Common Stock to
be issued upon exercise of the Options shall be registered in the name of the
person or persons exercising such Options (or, if such Options are exercised by
the Employee and if the Employee so requests in the applicable Exercise Notice,
shall be registered in the name of the Employee and his spouse jointly,
<PAGE>
with right of survivorship) but only upon compliance with all the provisions of
this Agreement, and such certificate or certificates shall be delivered within
10 days after receipt of payment and completion of such compliance by the
Employee; provided, that in the case of clause (iii) of the first sentence of
--------
Section 7(c), the Company shall not be required to make delivery of the
certificate or certificates until payment is actually received from such
broker/dealer.
(e) The Company shall have no obligation to issue or deliver fractional
shares of Common Stock upon exercise of the Options but may, in its sole
discretion, elect to do so. In lieu of issuing any such fractional share the
Company shall pay to the person exercising the Options, promptly following such
exercise, an amount in cash equal to the Fair Market Value, as of the date of
exercise, of such fraction of a share. The "Fair Market Value" per share of
Common Stock as of any date of determination, shall mean (i) the closing sales
price per share of Common Stock, on the national securities exchange on which
such stock is principally traded, on the next preceding date on which there was
a sale of such stock on such exchange, or (ii) if the shares of Common Stock are
not listed or admitted to trading on any such exchange, the closing price as
reported by the Nasdaq Stock Market for the last preceding date on which there
was a sale of such stock on such exchange, or (iii) if the shares of Common
Stock are not then listed on a national securities exchange or on the Nasdaq
Stock Market, the average of the highest reported bid and lowest reported asked
prices for the shares of Common Stock as reported by the National Association of
Securities Dealers, Inc. Automated Quotations ("NASDAQ") system for the last
preceding date on which such bid and asked prices were reported, or (iv) if the
shares of Common Stock are not then listed on any securities exchange or
prices therefor are not then quoted in the NASDAQ system, such value as
determined in good faith by the Board (or any duly authorized committee
thereof).
8. No Right To Continued Employment. Nothing in this Agreement shall
--------------------------------
confer upon the Employee the right to continue in the employ of the Company or
to be entitled to any right or benefit not set forth in this Agreement or to
interfere with or limit in any way the right of the Company to terminate the
Employee's employment.
9. Withholding Taxes. The Company shall have the right to require the
-----------------
Employee (or such other person, if any, who has the right to exercise the
Options) to pay to the Company in cash the amount of any federal, state, local
and foreign income and other taxes that the Company may be required to withhold
before delivering to the Employee (or such other person) a certificate or
certificates representing shares of Common Stock issuable hereunder.
Notwithstanding the foregoing sentence, subject to Section 11 hereof, the
Employee may elect to cause Common Stock issuable upon the exercise of any of
the Options, having a Fair Market Value on the day immediately preceding the
date on which such certificates are delivered equal to the amount of such
withholding obligation, to be withheld by the Company in satisfaction of such
obligation.
10. Approval of Counsel. Any exercise of the Options and the issuance and
-------------------
delivery of shares of Common Stock pursuant thereto shall be subject to approval
by the Company's counsel of all legal matters in connection therewith, including
compliance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, the requirements of any stock exchange upon
which the Common Stock may then be listed and any applicable state securities or
"blue sky" laws.
<PAGE>
11. Resale of Common Stock. Upon any sale or transfer of the Common Stock
----------------------
purchased upon exercise of the Options, the Employee shall deliver to the
Company an opinion of counsel satisfactory to the Company to the effect that
either (a) the sale of the Common Stock to be so sold or transferred has been
registered under the Securities Act or (b) such Common Stock may then be sold
without registration under the Securities Act and applicable state securities
laws.
The certificates evidencing the shares of Common Stock issued upon exercise
of the Options shall bear a legend to the following effect (unless the Company
requires otherwise):
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS, IN THE OPINION OF COUNSEL
FOR THE COMPANY, SUCH REGISTRATION IS NOT REQUIRED.
12. Registration Rights. The Company has filed a registration
-------------------
statement on Form S-8 registering the Common Stock underlying the Options, in
order to permit the public resale thereof by the Employee. The Company's
obligation to maintain such registration shall apply only to the extent that an
effective registration statement is then required for the public sale by the
Employee of the Common Stock underlying the Options.
13. Notices. For the purposes of this Agreement, notices, demands
-------
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given (i) when hand delivered, (ii) when
sent if sent by overnight mail, overnight courier or facsimile transmission or
(iii) (unless otherwise specified) when mailed by United States registered mail,
return receipt requested, postage prepaid, addressed as follows:
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239-3018
Attention: Board of Directors
c/o Corporate Secretary
with a copy to each member of the Committee who is not an officer or an employee
of the Company at the address specified by each such director to which notice of
meetings of the Board of Directors is to be sent or to such other address as any
party may have furnished to the others in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
<PAGE>
All notices to the Employee or other person or persons then entitled
to exercise the Options shall be addressed to the Employee or such other person
or persons at the then current address of the Employee contained in the employee
payroll records of the Company.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect.
14. Benefits of Agreement. This Agreement shall inure to the benefit
---------------------
of and be binding upon each successor and assign of the Company. All obligations
imposed upon the Employee and all rights granted to the Company under this
Agreement shall be binding upon the Employee and, to the limited extent set
forth herein, the Employee's heirs, legal representatives and successors. No
other person shall have any rights under this Agreement.
15. Severability. In the event that any one or more provisions of
------------
this Agreement shall be deemed to be illegal or unenforceable, such illegality
or unenforceability shall not affect the validity and enforceability of the
remaining legal and enforceable provisions herein, which shall be construed as
if such illegal or unenforceable provision or provisions had not been inserted.
16. Entire Agreement. The parties hereto agree that this Agreement
----------------
contains the entire understanding and agreement between them respecting the
subject matter hereof, and supersedes all prior understandings and agreements
between the parties respecting the subject matter hereof, and that the
provisions of this Agreement may not be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by the
parties hereto.
17. Waiver. No waiver by either party hereto at any time of any
------
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
18. Governing Law. This Agreement shall be construed and governed in
-------------
accordance with the laws of the State of New York, without regard to the
conflicts of law principles thereof.
19. Incorporation by Reference. The incorporation herein of any
--------------------------
terms by reference to another document shall not be affected by the termination
of any agreement set forth in such other document or the invalidity of any
provision thereof.
20. Time Periods. Any action required to be taken under this
------------
Agreement within a certain number of days shall be taken within that number of
calendar days; provided, that if the last day for taking such action falls on a
--------
weekend or a holiday, the period during which such action may be taken shall be
automatically extended to the next business day.
<PAGE>
21. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by an authorized officer and the Employee has hereunto set his hand all
as of the day, month and year first above written.
SAMSONITE CORPORATION Employee:
By: /s/ John P. Murtagh /s/ James E. Barch
------------------- ------------------
Name: James E. Barch
Title: CAO
<PAGE>
EXHIBIT 10.9
------------
STOCK OPTION AGREEMENT
----------------------
AGREEMENT (this "Agreement"), dated as of the 21st day of August, 1996, by
and between SAMSONITE CORPORATION, a Delaware corporation (the "Company"), and
Gary D. Ervick (the "Employee").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, as an essential inducement to the Employee entering into the
Employment Agreement dated as of September 10, 1996, by and between the Company
and the Employee (the "Employment Agreement"), the Company desires to grant to
the Employee a right to acquire shares of common stock, par value $.01 per share
("Common Stock"), of the Company according to the terms and conditions provided
herein and thereby to provide additional incentives to the Employee to increase
the long-term value of the Company and further align his interests with those of
the stockholders of the Company.
NOW, THEREFORE, in consideration of the premises and covenants herein set
forth and other good and valuable consideration, the Company and the Employee
hereby agree as follows:
1. Confirmation of Grant of Option. Pursuant to the authorization of the
-------------------------------
Compensation Committee (the "Committee") of the Board of Directors of the
Company, and pursuant to the Company's 1995 Stock Option and Incentive Award
Plan (as Amended in 1996) (the "Plan"), the Company, subject to the terms and
conditions of this Agreement, hereby confirms that the Employee has been
granted, effective as of August 21, 1996 (the "Date of Grant"), as a matter of
separate inducement and agreement, and in addition to and not in lieu of salary
or other compensation for services, the right to purchase from the Company an
aggregate of 40,000 shares of Common Stock (the "Options"). The Options shall
vest as provided in Section 4 hereof and shall be subject to adjustment as
provided in Section 6 hereof. The Options shall constitute Nonqualified Stock
Options under the Plan.
2. Exercise Price. The exercise price per share (the "Exercise Price")
--------------
for the Options shall be $18.50.
3. Non-transferability of Options. The Options may not be assigned,
------------------------------
transferred or otherwise disposed of, or pledged or hypothecated in any way, and
shall not be subject to execution, attachment or other process otherwise than by
will or by the laws of descent and distribution, and the Options may be
exercised during the lifetime of the Employee only by him.
4. Term and Exercise of Options. The Options shall remain outstanding
----------------------------
(subject to the vesting and exercisability provisions provided herein) during a
period of six (6) years beginning on the Date of Grant (the "Option Term"). So
long as the Employee remains continually employed by the Company from the date
hereof through the date of vesting, the Options shall vest as
<PAGE>
follows: Options to acquire 13,334 shares shall vest on January 31, 1997,
Options to acquire 13,333 shares shall vest on January 31, 1998, and Options to
acquire the remaining 13,333 shares shall vest on January 31, 1999. Except as
otherwise provided in Section 5 hereof, Options that have vested shall remain
exercisable in whole at any time or in part and from time to time until the
earlier to occur of the expiration of the Option Term and the expiration of one
year after the date of the termination of the Employee's employment with the
Company. The Employee shall not have any rights to dividends or any other rights
of a stockholder of the Company with respect to any shares of Common Stock
underlying the Options until such shares have been issued to him upon the
exercise of the Options.
(a) Accelerated Vesting of Options. Notwithstanding any provision hereof
------------------------------
to the contrary, if a Change of Control (as defined below) occurs at any time
prior to the third anniversary of this Agreement, and the Employee continues to
be employed by the Company through the Change of Control Vesting Date (as
defined below), then unvested Options shall become vested on the earlier of
their normal vesting date or the Change of Control Vesting Date.
(b) Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following meanings:
"Change of Control Vesting Date." "Change of Control Vesting Date means
------------------------------
the first anniversary of the date on which a Change of Control occurs.
"Change of Control." "Change of Control" means (i) any sale, transfer or
-----------------
other conveyance (whether directly, or indirectly through a merger,
consolidation or similar transaction), or series of related sales, transfers or
other conveyances, of the outstanding capital stock of the Company pursuant to
which any person (or group of affiliated persons) other than an Excluded Person,
becomes the beneficial owner of more than 50% of the outstanding Common Stock or
(ii) any sale, transferor other conveyance of all or substantially all of the
Company's assets to any person (or group of affiliated persons) other than to an
Excluded Person. For purposes of the foregoing definition, "Excluded Person"
means and includes (A) Apollo Investment Fund, L.P. ("Apollo"), any of its
affiliates, and, so long as Apollo or an affiliate of Apollo controls the right
to vote the securities in question, any partner, shareholder or trustee of any
of them, (B) any corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of stock
of the Company and (C) the Company or any subsidiary of the Company.
5. Termination. The Employee's rights with respect to the Options upon
-----------
death or the termination of his employment with the Company are as follows:
(a) Cause. If the Employee is terminated from his employment with the
-----
Company for Cause (as defined in the Employment Agreement) in accordance with
Section 5(c) of the Employment Agreement, then all the Options (whether vested
or unvested) shall automatically terminate and be cancelled (without any action
on the part of the Company) on the date upon which Preliminary Notice is given
pursuant to Section 5(c) of the Employment Agreement, provided that the
Employee's employment is thereafter terminated in accordance with the provisions
of Section 5(c) of the Employment Agreement.
<PAGE>
(b) Disability. If a Change of Control has not occurred and the Employee
----------
is terminated from his employment with the Company by reason of disability in
accordance with Section 5(b) of the Employment Agreement, then all unvested
Options shall automatically terminate and be cancelled (without any action on
the part of the Company) on the effective date of such termination. On the
other hand, if a Change of Control has occurred and the Employee is terminated
from his employment with the Company by reason of disability in accordance with
Section 5(b) of the Employment Agreement, then all unvested Options shall
automatically vest on the effective date of such termination. All Options that
have vested on or prior to such date shall remain exercisable until the earlier
to occur of (i) the first anniversary of such date and (ii) the expiration of
the Option Term.
(c) Death. If a Change of Control has not occurred and the Employee dies
-----
while employed by the Company, then all unvested Options shall automatically
terminate and be cancelled (without any action on the part of the Company) on
the date of death. On the other hand, if a Change of Control has occurred and
the Employee dies while employed by the Company, then all unvested Options shall
automatically vest on the date of death. Following the Employee's death, his
executors, administrators, legatees or distributees may exercise the Options
that have vested on or prior to the date of death until the earlier to occur of
(i) the first anniversary of such date and (ii) the expiration of the Option
Term.
(d) Other Terminations of Employment.
--------------------------------
(i) If the Employee's employment is terminated by the Employee other
than for Good Reason (as defined in the Employment Agreement), then all unvested
Options shall automatically terminate and be cancelled (without any action on
the part of the Company) on the date of such termination. All Options that have
vested prior to such date shall remain exercisable until the earlier to occur of
(A) the ninetieth day following such date and (B) the expiration of the Option
Term.
(ii) If Employee's employment is terminated (A) other than for a reason
described in paragraphs (a), (b) or (c) above, or (B) by the Employee validly
for Good Reason and pursuant to Section 5(d) of the Employment Agreement, then,
as of the date of such termination, all the Options that have not become vested
on or prior to the date of such termination shall become vested as of such date.
All Options that have vested on or prior to such date shall remain exercisable
until the earliest to occur of (C) the ninetieth day following such date and (D)
the expiration of the Option Term.
(e) Termination Date. For purposes of Sections 5(a), (b), (d) and (f)
----------------
hereof, the date of termination of the Employee's employment shall be the Date
of Termination (as defined in the Employment Agreement).
(f) Extension After Certain Terminations. If the Employee's employment
------------------------------------
with the Company is terminated other than for a reason described in paragraph
(a), (b), (c) or (d)(i) above, and the Employee dies or becomes disabled within
ninety (90) days after such termination of employment, then the Employee's
executors, administrators, legatees or distributees may exercise the Options, to
the extent vested and exercisable as of the date of such termination until the
earlier to occur of (i) the first anniversary of the date of death or disability
and (ii) the expiration of the Option Term.
<PAGE>
6. Certain Adjustments. The number and kind of securities that may be
-------------------
purchased upon the exercise of the Options and the Exercise Price shall be
subject to adjustment from time to time upon the occurrence of any of the
following events after the date hereof:
(a) Recapitalization, Capital Reorganization, Reclassification,
-----------------------------------------------------------
Consolidation, Merger or Sale. In case of any recapitalization or capital
- -----------------------------
reorganization of the Company or any reclassification of the outstanding Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision or combination),
or in case of any consolidation or merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is the surviving corporation and that does not result in any reclassification of
or change in the outstanding Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination)), or in case of any sale or transfer to
another corporation of the property of the Company as an entirety or
substantially as an entirety, the Employee shall thereafter have the right to
acquire upon exercise of the Options, in lieu of each share of Common Stock
theretofore issuable upon exercise of the Options, the kind and amount of shares
of capital stock, other securities, money and/or property receivable in respect
of each share of Common Stock upon such recapitalization, reorganization,
reclassification, consolidation, merger, sale or transfer. The provisions of
this paragraph (a) shall similarly apply to successive recapitalizations,
reorganizations, reclassifications, consolidations, mergers, sales and
transfers.
(b) Subdivision or Combination of Shares. If the Company shall subdivide
------------------------------------
or combine its outstanding shares of Common Stock, (i) in case of subdivision of
shares, the Exercise Price shall be proportionately reduced (as at the effective
date of such subdivision or, if the Company shall take a record of holders of
its Common Stock for the purpose of so subdividing, as at the applicable record
date, whichever is earlier) to reflect the increase in the total number of
shares of Common Stock outstanding as a result of such subdivision, or (ii) in
the case of a combination of shares, the Exercise Price shall be proportionately
increased (as at the effective date of such combination or, if the Company shall
take a record of holders of its Common Stock for the purpose of so combining, as
at the applicable record date, whichever is earlier) to reflect the reduction in
the total number of shares of Common Stock outstanding as a result of such
combination. In the event that an adjustment pursuant to this paragraph (b) is
made as of the record date for purposes of any subdivision or combination and
such subdivision or combination is not so made, the Exercise Price shall again
be adjusted to be the Exercise Price that would then be in effect if such record
date had not been fixed.
(c) Certain Dividends and Distributions. If the Company shall pay a
-----------------------------------
dividend on, or make any other distribution to the holders of, its outstanding
Common Stock in shares of its Common Stock, the Exercise Price shall be
adjusted, as of the date the Company shall take a record of the holders of
Common Stock for the purpose of receiving such dividend or other distribution
(or if no such record is taken, as of the date of such payment or other
distribution), to that price determined by multiplying the Exercise Price in
effect immediately prior to such record date (or if no such record is taken,
immediately prior to such payment or other distribution), by a fraction (i) the
numerator of which shall be the total number of shares of Common Stock
outstanding immediately prior to such dividend or distribution, and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution; provided,
--------
<PAGE>
that if the foregoing adjustment is made to the Exercise Price as of a record
date for such dividend or other distribution and such dividend or distribution
is not so paid or made, the Exercise Price shall again be adjusted to be the
Exercise Price that would then be in effect if such record date had not been
fixed.
(d) Adjustment Number of Shares. Upon each adjustment and readjustment of
---------------------------
the Exercise Price pursuant to paragraph (b) or (c) of this Section 6, the
number of shares of Common Stock then issuable upon exercise of the Options
shall be adjusted, to the nearest 1/10th of a whole share, to the product
obtained by multiplying such number of shares issuable upon exercise of the
Options immediately prior to such adjustment in the Exercise Price by a
fraction, the numerator of which shall be the Exercise Price immediately prior
to such adjustment and the denominator of which shall be the Exercise Price
immediately thereafter.
7. Method of Exercise of Options. (a) Subject to the terms and conditions
-----------------------------
of this Agreement, the Options shall be exercisable by notice (an "Exercise
Notice") and payment to the Company in accordance with the procedure prescribed
herein; provided, that the aggregate Exercise Price with respect to any one such
--------
exercise shall not be less than $10,000 unless such exercise represents an
exercise of all Options that are vested and exercisable as of the date of such
exercise. If the Employee fails to accept delivery of and pay for all or any
part of the number of shares specified in the Exercise Notice upon tender or
delivery thereof, his right to exercise the Options with respect to such
undelivered shares may be terminated in the sole discretion of the Board or the
Committee .
(b) Each Exercise Notice shall: (i) state the number of shares in respect
of which they are being exercised, (ii) be accompanied by payment as provided in
paragraph (c) below, and (iii) be signed by the person or persons entitled to
exercise such Options. If such Options are being exercised by any person or
persons other than the Employee, the Exercise Notice shall be accompanied by
proof, satisfactory to the Company and its counsel, of the right of such person
or persons to exercise such Options.
(c) Subject to Section 11 hereof, payment of the Exercise Price shall be
made by delivering to the Company any one or a combination of the following: (i)
a certified or bank cashier's check payable to the Company or its order or a
wire transfer directly to an account specified by the Company, (ii) one or more
certificates evidencing shares of Common Stock owned by the Employee immediately
prior to such exercise, together with a duly executed stock power, having an
aggregate Fair Market Value (as defined below) on the date on which the Exercise
Notice is given equal to the aggregate Exercise Price or (iii) a copy of
irrevocable instructions to a registered broker/dealer to deliver promptly to
the Company an amount of proceeds from the sale of shares of Common Stock to be
issued pursuant to the Options being exercised or of a loan made with respect to
shares of Common Stock to be issued pursuant to the Options being exercised
sufficient, in either case, to pay the Exercise Price.
(d) The certificate or certificates representing shares of Common Stock to
be issued upon exercise of the Options shall be registered in the name of the
person or persons exercising such Options (or, if such Options are exercised by
the Employee and if the Employee so requests in the applicable Exercise Notice,
shall be registered in the name of the Employee and his spouse jointly,
<PAGE>
with right of survivorship) but only upon compliance with all the provisions of
this Agreement, and such certificate or certificates shall be delivered within
10 days after receipt of payment and completion of such compliance by the
Employee; provided, that in the case of clause (iii) of the first sentence of
--------
Section 7(c), the Company shall not be required to make delivery of the
certificate or certificates until payment is actually received from such
broker/dealer.
(e) The Company shall have no obligation to issue or deliver fractional
shares of Common Stock upon exercise of the Options but may, in its sole
discretion, elect to do so. In lieu of issuing any such fractional share the
Company shall pay to the person exercising the Options, promptly following such
exercise, an amount in cash equal to the Fair Market Value, as of the date of
exercise, of such fraction of a share. The "Fair Market Value" per share of
Common Stock as of any date of determination, shall mean (i) the closing sales
price per share of Common Stock, on the national securities exchange on which
such stock is principally traded, on the next preceding date on which there was
a sale of such stock on such exchange, or (ii) if the shares of Common Stock are
not listed or admitted to trading on any such exchange, the closing price as
reported by the Nasdaq Stock Market for the last preceding date on which there
was a sale of such stock on such exchange, or (iii) if the shares of Common
Stock are not then listed on a national securities exchange or on the Nasdaq
Stock Market, the average of the highest reported bid and lowest reported asked
prices for the shares of Common Stock as reported by the National Association of
Securities Dealers, Inc. Automated Quotations ("NASDAQ") system for the last
preceding date on which such bid and asked prices were reported, or (iv) if the
shares of Common Stock are not then listed on any securities exchange or prices
therefor are not then quoted in the NASDAQ system, such value as determined in
good faith by the Board (or any duly authorized committee thereof).
8. No Right To Continued Employment. Nothing in this Agreement shall
--------------------------------
confer upon the Employee the right to continue in the employ of the Company or
to be entitled to any right or benefit not set forth in this Agreement or to
interfere with or limit in any way the right of the Company to terminate the
Employee's employment.
9. Withholding Taxes. The Company shall have the right to require the
-----------------
Employee (or such other person, if any, who has the right to exercise the
Options) to pay to the Company in cash the amount of any federal, state, local
and foreign income and other taxes that the Company may be required to withhold
before delivering to the Employee (or such other person) a certificate or
certificates representing shares of Common Stock issuable hereunder.
Notwithstanding the foregoing sentence, subject to Section 11 hereof, the
Employee may elect to cause Common Stock issuable upon the exercise of any of
the Options, having a Fair Market Value on the day immediately preceding the
date on which such certificates are delivered equal to the amount of such
withholding obligation, to be withheld by the Company in satisfaction of such
obligation.
10. Approval of Counsel. Any exercise of the Options and the issuance and
-------------------
delivery of shares of Common Stock pursuant thereto shall be subject to approval
by the Company's counsel of all legal matters in connection therewith, including
compliance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, the requirements of any stock exchange upon
which the Common Stock may then be listed and any applicable state securities or
"blue sky" laws.
<PAGE>
11. Resale of Common Stock. Upon any sale or transfer of the Common Stock
----------------------
purchased upon exercise of the Options, the Employee shall deliver to the
Company an opinion of counsel satisfactory to the Company to the effect that
either (a) the sale of the Common Stock to be so sold or transferred has been
registered under the Securities Act or (b) such Common Stock may then be sold
without registration under the Securities Act and applicable state securities
laws.
The certificates evidencing the shares of Common Stock issued upon exercise
of the Options shall bear a legend to the following effect (unless the Company
requires otherwise):
THE SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNLESS, IN THE OPINION OF COUNSEL
FOR THE COMPANY, SUCH REGISTRATION IS NOT REQUIRED.
12. Registration Rights. The Company has filed a registration statement
-------------------
on Form S-8 registering the Common Stock underlying the Options, in order to
permit the public resale thereof by the Employee. The Company's obligation to
maintain such registration shall apply only to the extent that an effective
registration statement is then required for the public sale by the Employee of
the Common Stock underlying the Options.
13. Notices. For the purposes of this Agreement, notices, demands and all
-------
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given (i) when hand delivered, (ii) when sent
if sent by overnight mail, overnight courier or facsimile transmission or (iii)
(unless otherwise specified) when mailed by United States registered mail,
return receipt requested, postage prepaid, addressed as follows:
Samsonite Corporation
11200 East Forty-Fifth Avenue
Denver, Colorado 80239-3018
Attention: Board of Directors
c/o Corporate Secretary
with a copy to each member of the Committee who is not an officer or an employee
of the Company at the address specified by each such director to which notice of
meetings of the Board of Directors is to be sent or to such other address as any
party may have furnished to the others in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
<PAGE>
All notices to the Employee or other person or persons then entitled to
exercise the Options shall be addressed to the Employee or such other person or
persons at the then current address of the Employee contained in the employee
payroll records of the Company.
Anyone to whom a notice may be given under this Agreement may designate a
new address by notice to that effect.
14. Benefits of Agreement. This Agreement shall inure to the benefit of
---------------------
and be binding upon each successor and assign of the Company. All obligations
imposed upon the Employee and all rights granted to the Company under this
Agreement shall be binding upon the Employee and, to the limited extent set
forth herein, the Employee's heirs, legal representatives and successors. No
other person shall have any rights under this Agreement.
15. Severability. In the event that any one or more provisions of this
------------
Agreement shall be deemed to be illegal or unenforceable, such illegality or
unenforceability shall not affect the validity and enforceability of the
remaining legal and enforceable provisions herein, which shall be construed as
if such illegal or unenforceable provision or provisions had not been inserted.
16. Entire Agreement. The parties hereto agree that this Agreement
----------------
contains the entire understanding and agreement between them respecting the
subject matter hereof, and supersedes all prior understandings and agreements
between the parties respecting the subject matter hereof, and that the
provisions of this Agreement may not be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by the
parties hereto.
17. Waiver. No waiver by either party hereto at any time of any breach by
------
the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
18. Governing Law. This Agreement shall be construed and governed in
-------------
accordance with the laws of the State of New York, without regard to the
conflicts of law principles thereof.
19. Incorporation by Reference. The incorporation herein of any terms by
--------------------------
reference to another document shall not be affected by the termination of any
agreement set forth in such other document or the invalidity of any provision
thereof.
20. Time Periods. Any action required to be taken under this Agreement
------------
within a certain number of days shall be taken within that number of calendar
days; provided, that if the last day for taking such action falls on a weekend
--------
or a holiday, the period during which such action may be taken shall be
automatically extended to the next business day.
<PAGE>
21. Counterparts. This Agreement may be executed in counterparts, each of
------------
which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
an authorized officer and the Employee has hereunto set his hand all as of the
day, month and year first above written.
SAMSONITE CORPORATION Employee:
By: /s/ John P. Murtagh /s/ Gary D. Ervick
------------------- ------------------
Name: Gary D. Ervick
Title: CAO
<PAGE>
Exhibit 11.1
Samsonite Corporation
Earnings Per Share Calculation
Using Modified Treasury Stock Method
Three Months Ended October 31, 1996
<TABLE>
<CAPTION>
Primary Fully Diluted
Calculation Calculation
--------------- ---------------
<S> <C> <C>
Weighted avg common shares outstanding 16,010,157 16,010,157
Common stock equivalents outstanding 4,519,477 4,519,477
20% limit on assumed purchase 3,202,031 3,202,031
Application of assumed proceeds from
exercise of options:
Total assumed proceeds 116,676,085 116,676,085
Share price, average and end of quarter,
respectively 25.218 33.500
Proceeds applied to repurchase stock 80,747,761 107,268,052
Proceeds applied to reduce debt 35,928,324 9,408,033
Assumed interest savings, net of tax effects 423,954 111,015
Actual net income for for the quarter 3,372,000 3,372,000
Assumed interest savings 423,954 111,015
------------- ------------
Adjusted net income used in earnings per share
calculation 3,795,954 3,483,015
============= ============
Weighted average shares outstanding during the
quarter 16,010,157 16,010,157
Net additional shares issuable 1,317,446 1,317,446
------------- ------------
Number of shares used in earnings per share
calculation 17,327,603 17,327,603
============= ============
Earnings per share 0.22 0.20
============= ============
</TABLE>
<PAGE>
EXHIBIT 21
----------
SUBSIDIARIES OF SAMSONITE CORPORATION (Delaware)
Samsonite Europe N.V. Belgium
Samsonite S.A. France
Samsonite Limited United Kingdom
Samsonite B.V. Netherlands
Samsonite Ges.m.b.H. Austria
Samsonite GmbH Germany
Samsonite-Hungaria Luggage Ltd. Hungary
Samsonite Finanziaria S.r.l. Italy
Samsonite Italia S.r.l. Italy
Saturn & Saturn S.r.l. Italy
Bogey S.r.l. Italy
Samsonite Espana S.A. Spain
Samsonite AB (Aktiebolag) Sweden
Samsonite A/S Denmark
Samsonite AG Switzerland
Equipajes Latinoamericanos, S.A. de C.V. Mexico
Samsonite Mexico, S.A. de C.V. Mexico
Samsonite Comercio E Participacoes Ltda. Brazil
Samsonite Industrial E Comercial Ltda. Brazil
Samsonite Canada Inc. Canada
Samson S.A. de C.V. Mexico
Samsonite Mauritius Limited Mauritius
Samsonite India Private Limited India
Samsonite Singapore Pte Ltd Singapore
Samsonite Asia Limited Hong Kong
Samsonite Mercosur Limited Bahamas
Samsonite Brasil Ltda. Brazil
A.T. Retail, Inc. Indiana
Samsonite Pacific Ltd. Colorado
Direct Marketing Ventures, Inc. Colorado
Legacy Luggage Inc. Colorado
Samsonite Service Corporation Colorado
Astrum R.E. Corp. Delaware
Astrum Management Corp. Delaware
KBBL Inc. Delaware
McGregor Corporation New York
Hortex Incorporated Texas
BTK Sales Company Texas
Gilead Manufacturing Corporation Rhode Island
Jody Apparel, Inc. New York
WMI, Inc. Delaware
Wonderknit Corporation New York
McGregor China Corp. Delaware
Bernhard Altmann (CA) Ltd. Canada
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS ENDED OCTOBER
31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 3,145
<SECURITIES> 0
<RECEIVABLES> 98,186
<ALLOWANCES> 9,636
<INVENTORY> 139,138
<CURRENT-ASSETS> 307,168
<PP&E> 192,181
<DEPRECIATION> 54,011
<TOTAL-ASSETS> 598,504
<CURRENT-LIABILITIES> 184,604
<BONDS> 273,167
0
0
<COMMON> 160
<OTHER-SE> 20,664
<TOTAL-LIABILITY-AND-EQUITY> 598,504
<SALES> 553,124
<TOTAL-REVENUES> 553,124
<CGS> 335,363
<TOTAL-COSTS> 335,363
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,073
<INTEREST-EXPENSE> 27,112
<INCOME-PRETAX> (4,158)
<INCOME-TAX> 8,603
<INCOME-CONTINUING> (13,613)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,613)
<EPS-PRIMARY> (.85)
<EPS-DILUTED> (.85)
</TABLE>
