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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) MAY 6, 1997
NORTON MCNAUGHTON, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-23440 13-3747173
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation or organization) Number) Identification No.)
463 Seventh Avenue
New York, N.Y. 10018
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 947-2960
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ITEM 5. OTHER EVENTS
Peter Boneparth has been appointed as the President and Chief Operating Officer
of the company. In connection therewith, the company entered into an Employment
Agreement with Mr. Boneparth providing for a base salary of $500,000 per annum
and a signing bonus of $250,000. The Employment Agreement terminates on November
4, 2000.
As provided in the Employment Agreement, the company has granted options to Mr.
Boneparth to purchase an aggregate of 700,000 shares of common stock of the
company at an exercise price of $5.50 per share, which was the fair market value
of the common stock on the date of grant. Such options vest over the term of the
Employment Agreement, with an acceleration of the vesting if certain target
stock prices are attained. The Employment Agreement provides for 100,000 options
to vest on April 30, 1997; an additional 250,000 options to vest on the earlier
to occur of (i) December 10, 1998 or (ii) the date on which the stock price
equals or exceeds $10.00 per share for twenty consecutive trading days; an
additional 250,000 options to vest on the earlier to occur of (i) December 10,
1999 or (ii) the date on which the stock price equals or exceeds $13.00 per
share for twenty consecutive trading days; and the remaining 100,000 options to
vest on the earlier to occur of (i) November 4, 2000 or (ii) the date on which
the stock price equals or exceeds $20.00 per share for twenty consecutive
trading days. The Employment Agreement also provides that commencing on November
1, 1997, in the event of a change in control involving the company, all
outstanding options shall become vested and exercisable in full.
The company entered into a Separation Agreement with Norton Sperling, the former
President of the company, which provides for a separation payment of $2,500,000
and the termination of his Employment Agreement. Mr. Sperling will remain on the
Board of Directors in the capacity of Vice Chairman. As set forth in the
Separation Agreement, Mr. Sperling agreed that for a period of eighteen months,
he will not engage in any business venture which involves the manufacture,
merchandising, distribution or sale of apparel, except as permitted by the Board
of Directors. In addition, the Separation Agreement provides that commencing on
May 1, 1997 and terminating on April 30, 2007, Mr. Sperling will provide
consulting services to the company through April 30, 2007, with fees to be
determined on a project-by-project basis.
Mr. Boneparth's Employment Agreement, Mr. Sperling's Separation Agreement and
the company's press release issued on May 6, 1997 are filed as Exhibits to this
Form 8-K, and are incorporated herein by reference to Exhibits 10, 10.1 and 99,
respectively.
ITEM 7. EXHIBITS
Exhibit Index
Exhibit 10 Employment Agreement between Norton McNaughton of Squire, Inc.
and Peter Boneparth dated as of April 30, 1997.
Exhibit 10.1 Separation Agreement between Norton McNaughton of Squire, Inc.
and Norton Sperling dated as of May 3, 1997.
Exhibit 99 Press release dated May 6, 1997.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTON MCNAUGHTON, INC.
(Registrant)
Date: May 9, 1997 By: /s/ Sanford Greenberg
------------------------------------
SANFORD GREENBERG
Chairman of the Board and Chief
Executive Officer
(Principal Executive and
Operating Officer)
3
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EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
Exhibit 10 Employment Agreement between Norton McNaughton of Squire, Inc.
and Peter Boneparth dated as of April 30, 1997.
Exhibit 10.1 Separation Agreement between Norton McNaughton of Squire, Inc.
and Norton Sperling dated as of May 3, 1997.
Exhibit 99 Press release dated May 6, 1997.
<PAGE> 1
Exhibit 10
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the 30th day of
April, 1997 by and between NORTON MCNAUGHTON OF SQUIRE, INC., a New York
corporation (the "Company"), and PETER BONEPARTH (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company wishes to retain
the services of the Employee as President and Chief Operating Officer of the
Company, and the Employee wishes to serve in such capacity in the employ of the
Company, upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the
premises and the mutual agreements hereinafter set forth, the parties hereto
hereby agree as follows:
1. Employment, Term.
1.1 The Company agrees to employ the Employee, and the Employee
agrees to serve in the employ of the Company, for the term set forth in Section
1.2, in the positions and with the responsibilities, duties and authority set
forth in Section 2 and on the other terms and conditions set forth in this
Agreement.
1.2 The term of the Employee's employment under this Agreement (the
"Term") shall commence on the date hereof and shall terminate on November 4,
2000, unless sooner terminated in accordance with this Agreement.
2. Positions, Duties. The Employee shall serve in the positions of
President and Chief Operating Officer of the Company. The Employee shall
perform, faithfully and diligently, such duties, and shall have such
responsibilities, appropriate to said positions, as shall be assigned to him
from time to time by the Chief Executive Officer or the Board of Directors of
the Company. The Employee shall report to the Chief Executive Officer and the
Board of Directors of the Company. During the Term, the Employee also agrees to
serve, if elected, as an officer of any parent, subsidiary or affiliate of the
Company. The Employee shall devote his complete and undivided attention to the
performance of his duties and responsibilities hereunder during the normal
working hours of executive employees of the Company. During the Term, the
Company shall cause the Employee to be recommended for election to the Board of
Directors of Norton McNaughton, Inc., a Delaware corporation (the "Parent").
Subject to the prior consent of the Board of Directors of the
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Parent, the Employee shall be permitted to sit on the boards of directors of
other corporations not involving any conflict of interest with the Company.
3. Compensation.
3.1 Salary. During the Term, in consideration of the performance by
the Employee of the services set forth in Section 2 and his observance of the
other covenants set forth herein, the Company shall pay the Employee, and the
Employee shall accept, a salary at a rate of $500,000 per annum, payable in
accordance with the standard payroll practices of the Company.
3.2 Signing Bonus. Upon commencement of the Employee's employment
with the Company, the Company shall pay the Employee a one-time signing bonus in
the amount of $250,000 (the "Signing Bonus"); provided, however, in the event
that the employment of the Employee with the Company shall terminate within one
year of the commencement of the Employee's employment under this Agreement,
other than by reason of a termination by the Company pursuant to Section 6.4 of
this Agreement, the Employee shall repay the Signing Bonus to the Company
immediately upon such termination.
3.3 Bonus. During the Term, in addition to the salary provided for
in Section 3.1, the Employee shall be eligible to participate in any bonus plan
for executives of the Company in effect during the Term.
3.4 Stock Options.
(a) GRANT. The Company shall cause to be granted to the Employee by
the Board of Directors of the Parent as promptly as practicable after the date
hereof, options to purchase an aggregate of 700,000 shares of the common stock,
par value $.01 per share (the "Common Stock"), of the Parent, at an exercise
price per share equal to the fair market value of the Common Stock on the date
of grant (the "Options").
(b) Exercise. Except as provided in Section 3.4(d), the number of
Options which shall be vested and exercisable at any time shall be the greater
of the number of Options determined under clause (i) or clause (ii) of this
subsection (b).
(i) Options as to 250,000 shares of Common Stock shall become vested
and exercisable if the closing price for the Common Stock as quoted on the
NASDAQ National Market System (or such other exchange on which the Common Stock
is listed) shall equal or exceed $10.00 on at least twenty (20) consecutive
trading days subsequent to the date of the grant; Options as to an additional
250,000 shares of Common Stock shall become vested and
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exercisable if the closing price for the Common Stock as quoted on the NASDAQ
National Market System (or such other exchange on which the Common Stock is
listed) shall equal or exceed $13.00 on at least twenty (20) consecutive trading
days subsequent to the date of the grant; and Options as to an additional
100,000 shares of Common Stock shall become vested and exercisable if the
closing price for the Common Stock as quoted on the NASDAQ National Market
System (or such other exchange on which the Common Stock is listed) shall equal
or exceed $20.00 on at least twenty (20) consecutive trading days subsequent to
the date of grant (the foregoing applicable closing prices of the Common Stock
set forth in this Section 3.4(b)(i), the "Target Prices").
(ii) The Options shall become vested and exercisable in accordance
with the following schedule:
<TABLE>
<CAPTION>
Cumulative Number of Options
Vesting Period Vested and Exercisable
-------------- ----------------------
<S> <C>
After April 30, 1997 100,000
After December 10, 1998 350,000
After December 10, 1999 600,000
After November 4, 2000 700,000,
</TABLE>
less the number of Options theretofore exercised.
(c) CHANGE IN CONTROL. In connection with any merger or
consolidation involving the Parent which results in the holders of the
outstanding voting securities of the Parent (determined immediately prior to
such merger or consolidation) owning less than a majority of the outstanding
voting securities of the surviving corporation (determined immediately following
such merger or consolidation), or any sale or transfer by the Parent of all or
substantially all its assets or any tender offer or exchange offer for or the
acquisition, directly or indirectly, by any person or group of all or a majority
of the then outstanding voting securities of the Parent, in each case occurring
during the Term, all outstanding Options shall become vested and exercisable in
full, notwithstanding any other provision hereof, on and after (I) fifteen (15)
days prior to the effective date of such merger, consolidation, sale, transfer
or acquisition or (ii) the date of commencement of such tender offer or exchange
offer, as the case may be; provided, however, that in the case of any merger,
consolidation, transfer or acquisition, or any tender offer or exchange offer
where the effective date or date of commencement, as the case may be, occurs, or
where the Parent
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shall enter into any agreement or letter of intent with respect to any such
transaction, in any case, within six months of the date of commencement of the
Employee's employment hereunder, no additional Options shall become vested and
exercisable.
(d) TERM OF OPTIONS. Except as provided below, the term of the
Options shall be ten years.
(i) In the event of termination of the employment of the Employee
pursuant to Section 6.1 of this Agreement, the Employee's estate shall be
entitled to exercise for a period of two years from the date of the Employee's
death, only that number of Options as were vested and exercisable on the date of
the Employee's death.
(ii) In the event of termination of the employment of the Employee
pursuant to Section 6.2 of this Agreement, the Employee shall be entitled to
exercise, for the Disability Exercise Term (as hereinafter defined), only that
number of Options as were vested and exercisable on the date of termination of
the employment of the Employee. For purposes hereof, "Disability Exercise Term"
shall mean the Disability Salary Continuation Period (as defined in Section 6.2
of this Agreement) plus two years.
(iii) In the event of termination of the employment of the Employee
by the Company for Due Cause pursuant to Section 6.3 of this Agreement, no
Options shall be exercisable.
(iv) In the event of termination of the employment of the Employee
by the Company pursuant to Section 6.4 of this Agreement, the Employee shall be
entitled to exercise, for the Exercise Term (as hereinafter defined), only that
number of Options as were vested and exercisable on the date of termination of
the employment of the Employee. For purposes hereof, "Exercise Term" shall mean
the Salary Continuation Period (as defined in Section 6.4 of this Agreement)
plus two years.
(v) In the event of termination of the employment of the Employee
with the Company by the Employee during the Term for any reason other than
pursuant to Sections 6.1, 6.2, 6.3 or 6.4 of this Agreement, no Options shall be
exercisable.
(e) ADJUSTMENTS. In the event of any dividend or other distribution
(whether in the form of cash, Common Stock, other securities or other property),
recapitalization, stock split,
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reverse stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Common Stock or other securities of the
Parent, issuance of warrants or other rights to purchase Common Stock, the Board
of Directors shall, in such manner as it may deem equitable, adjust the number
of shares of Common Stock (or other securities or property) subject to the
Options, the exercise price with respect to any Options, the Target Prices with
respect to any Options, or all of the foregoing.
(f) LIMITATION ON SALES OF COMMON STOCK. The Employee agrees, for
the benefit of the Company and the Parent, that during the period of his
employment with the Company and at all times thereafter for so long as he shall
beneficially own in the aggregate more than 100,000 shares of Common Stock or
Options and whether or not he is at the time deemed to be an "affiliate" (as
such term is used in Rule 144 under the Securities Act of 1933, as amended) of
the Company, he shall not sell shares of Common Stock in excess of the volume
limitation which from time to time would be applicable to him under Rule
144(e)(1) determined as if he were an affiliate.
(g) REGISTRATION OF SHARES. The Parent shall, as promptly as
practicable following the commencement of the Employee's employment hereunder,
file a registration statement on Form S-8, or any successor to such Form, with
respect to the shares of Common Stock covered by the Options.
4. Expense Reimbursement. During the Term, (i) the Company shall
reimburse the Employee for all reasonable and necessary out-of-pocket expenses
incurred by him in connection with the performance of his duties hereunder, upon
the presentation of proper accounts therefor in accordance with the Company's
policies and (ii) the Company shall pay for the benefit of the Employee all
reasonable and necessary expenses incurred by him in the ordinary and usual
course of business and in accordance with the Company's policies (in any case,
as such policies are adopted from time to time by the Compensation Committee of
the Board of Directors).
5. Benefits.
5.1 Benefit Plans. During the Term, the Employee will be entitled to
participate in all employee benefit plans and programs offered by the Company
(and, to the extent required by applicable law or this Agreement, approved by
the Compensation Committee of the Board of Directors) from time to time to its
employees of comparable seniority, subject to the provisions of such plans and
programs as in effect from time to time.
5.2 Vacation. During the Term, the Employee shall be
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entitled to paid vacation in accordance with Company policy for its executive
employees.
5.3 Life Insurance. During the Term, the Company will provide the
Employee with $2 million term life insurance coverage. The beneficiary of such
policy shall be the Employee's estate or other beneficiary so designated by the
Employee.
5.4 Disability. During the Term, the Company shall provide the
Employee with disability insurance providing the same monthly disability benefit
as provided to the Chief Executive Officer of the Company; provided, however
that the annual expenditure by the Company for disability insurance premiums for
the Employee shall not exceed the annual expenditure by the Company for
disability insurance premiums for the Chief Executive Officer of the Company.
The Company's obligations under Section 6.2 of this Agreement shall be subject
to appropriate reduction for amounts paid to the Employee under disability
insurance during the Disability Salary Continuation Period (as hereinafter
defined), taking into account the tax treatment of such disability insurance
payments.
6. Termination of Employment.
6.1 Death. In the event of the death of the Employee during the
Term, the Company shall pay to the estate or other legal representative of the
Employee the salary provided for in Section 3.1 accrued to the date of the
Employee's death and not theretofore paid to the Employee. Rights and benefits
of the estate or other legal representative of the Employee under the benefit
plans and programs of the Company shall be determined in accordance with the
provisions of such plans and programs. Neither the estate or other legal
representative of the Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in Section 3.4(d).
6.2 Disability. If during the Term the Employee shall become
incapacitated by reason of physical or mental disability and shall be unable to
perform his normal duties hereunder for a cumulative period of six (6) months in
any period of twelve (12) consecutive months, the employment of the Employee
hereunder may be terminated by the Company or the Employee upon notice to the
other. In the event of such termination, subject to Section 5.4 of this
Agreement, the Company shall continue to pay to the Employee the salary provided
for in Section 3.1 (i) if such termination shall occur within one year of the
commencement of the Employee's employment under this Agreement, for one year
from the date of termination of the Employee's employment; or (ii) if such
termination shall occur after the first anniversary of the commencement of the
Employee's employment under this Agreement, for the remainder of the Term (the
applicable period of time during which the Company shall be required to continue
to pay such salary, the "Disability Salary Continuation Period"). Rights and
benefits of the Employee under the benefit plans and
<PAGE> 7
programs of the Company shall be determined in accordance with the provisions of
such plans and programs. Neither the Employee nor the Company shall have any
further rights or obligations under this Agreement, except as provided in
Sections 3.4(d), 7, 8, 9 and 10.
6.3 Due Cause. The employment of the Employee hereunder may be
terminated by the Company at any time during the Term for Due Cause (as
hereinafter defined). In the event of such termination, the Company shall pay to
the Employee the salary provided for in Section 3.1 accrued to the date of such
termination and not theretofore paid to the Employee. Rights and benefits of the
Employee under the benefit plans and programs of the Company shall be determined
in accordance with the provisions of such plans and programs. After the
satisfaction of any claim of the Company against the Employee incidental to such
Due Cause, neither the Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in Sections 3.4(d), 7, 8, 9
and 10. For purposes hereof, "Due Cause" shall mean (a) the Employee's gross
negligence or willful misconduct in bad faith in the discharge of his duties and
responsibilities to any member of the Company Group (as defined in Section 9
below), as determined by the Board of Directors of the Company (other than the
Employee if he is a member of such at the time), (b) the Employee's material and
repeated failure to obey appropriate directions from the Chief Executive Officer
of the Company and the Board of Directors of the Company, (C) any willful or
purposeful act or omission of the Employee taken or omitted in bad faith and
intended to materially injure, and which had the effect of materially injuring,
the business or business relationships of any member of the Company Group or (d)
the Employee's conviction or other adjudication of (1) a felony or (2) any crime
or offense involving fraud; provided, however, that the Employee shall be given
written notice by a majority of the Board of Directors of the Company that it
intends to terminate the Employee's employment for Due Cause under this Section,
which written notice shall specify the act or acts upon the basis of which the
majority of the Board of Directors of the Company intends so to terminate the
Employee's employment, and the Employee shall then be given the opportunity,
within fifteen (15) days of his receipt of such notice, to have a meeting with
the Board of Directors of the Company to discuss such act or acts.
6.4 Other Termination by the Company. The Company may terminate the
Employee's employment at any time during the Term for whatever reason it deems
appropriate or without reason; provided, however, that in the event that such
termination is not pursuant to Section 6.1, 6.2 or 6.3, the Company shall
continue to pay to the Employee the salary provided for in Section 3.1 (i) if
such termination shall occur within one year of the commencement of the
Employee's
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employment under this Agreement, for one year from the date of termination of
the Employee's employment; or (ii) if such termination shall occur after the
first anniversary of the commencement of the Employee's employment under this
Agreement, for the remainder of the Term (the applicable period of time during
which the Company shall be required to continue to pay such salary, the "Salary
Continuation Period"). In either case, the Employee shall be required to seek
subsequent employment in good faith and upon obtaining subsequent employment
shall inform the Company that he obtained such employment and to offset any
amounts earned from such subsequent employment (whether as an employee, a
consultant or otherwise) against such salary continuation by the Company. Rights
and benefits of the Employee under the benefit plans and programs of the Company
shall be determined in accordance with the provisions of such plans and
programs. Neither the Employee nor the Company shall have any further rights or
obligations under this Agreement, except as provided in Sections 3.4(d), 7, 8, 9
and 10.
7. Confidential Information.
7.1 The Employee shall, during the Term and at all times thereafter,
treat as confidential and, except as required in the performance of his duties
and responsibilities under this Agreement, not disclose, publish or otherwise
make available to the public or to any individual, firm or corporation any
confidential material (as hereinafter defined). The Employee agrees that all
confidential material, together with all notes and records of the Employee
relating thereto, and all copies or facsimiles thereof in the possession of the
Employee, are the exclusive property of the Company and the Employee agrees to
return such material to the Company promptly upon the termination of the
Employee's employment with the Company.
7.2 For the purposes hereof, the term "confidential material" shall
mean all information acquired by the Employee in the course of the Employee's
employment with the Company in any way concerning the products, projects,
activities, business or affairs of the Company or any member of the Company
Group or the customers of the Company or any member of the Company Group,
including, without limitation, all information concerning trade secrets and the
preparation of raw material for, manufacture of, and/or finishing processes
utilized in the production of, the products or projects of the Company or any
member of the Company Group and/or any improvements therein, all sales and
financial information concerning the Company or any member of the Company Group,
all customer and supplier lists, all information concerning projects in research
and development or marketing plans for any such products or projects, and all
information in any way concerning the products, projects, activities, business
or affairs of customers of the Company or any member of the Company Group which
is furnished to the Employee by the Company or any of its employees (current or
former), agents or customers, as such; provided, however, that the term
"confidential material" shall not include information which (a) becomes
generally available to the public other than as a result of a disclosure by the
Employee, (b) was available to the Employee on a non-confidential basis prior to
his employment with the Company
<PAGE> 9
or (C) becomes available to the Employee on a non-confidential basis from a
source other than the Company or any of its agents, franchisees, creditors,
suppliers, lessors, lessees or customers provided that such source is not bound
by a confidentiality agreement with the Company or any of such agents or
customers.
8. Inventions. Any and all inventions, innovations or improvements
("inventions") made, developed or created by the Employee (whether at the
request or suggestion of the Company or otherwise, whether alone or in
conjunction with others, and whether during regular hours of work or otherwise)
during the period of his employment with the Company which may be directly or
indirectly useful in, or relate to, the business of the Company, shall be
promptly and fully disclosed by the Employee to the Board of Directors of the
Company and shall be the Company's exclusive property as against the Employee,
and the Employee shall promptly deliver to an appropriate representative of the
Company as designated by the Board of Directors all papers, drawings, models,
data and other material relating to any inventions made, developed or created by
him as aforesaid. The Employee shall, at the request of the Company and without
any payment therefor, execute any documents necessary or advisable in the
opinion of the Company's counsel to direct issuance of patents or copyrights to
the Company with respect to such inventions as are to be the Company's exclusive
property as against the Employee or to vest in the Company title to such
inventions as against the Employee. The expense of securing any such patent or
copyright shall be borne by the Company.
9. Non-Competition. The Employee acknowledges that the services to
be rendered by him to the Company are of a special and unique character. In
consideration of his employment hereunder, the Employee agrees, for the benefit
of the Company, that he will not, during the period of his employment with the
Company and thereafter for the Applicable Period (as hereinafter defined)
commencing on the date of termination of his employment with the Company, (a)
engage, directly or indirectly, whether as principal, agent, distributor,
representative, consultant, employee, partner, stockholder, limited partner or
other investor (other than an investment of not more than (i) one percent (1%)
of the stock or equity of any corporation the capital stock of which is publicly
traded or (ii) five percent (5%) of the ownership interest of any limited
partnership or other entity) or otherwise, anywhere in the United States, in any
activity or business venture which is in competition with the business then
conducted by the Company (presently, the manufacture, merchandising,
distribution and sale of women's clothing), any of its subsidiaries or any of
its corporate parents or affiliates (including, without limitation, Norty's,
Inc. and Norton McNaughton, Inc., each a Delaware corporation) (collectively,
the "Company Group"), (b) solicit or entice or endeavor to solicit or entice
away from any member of the Company Group any person who was an officer,
employee or consultant of any member of the Company Group, either for his own
account or for any individual,
<PAGE> 10
firm or corporation, whether or not such person would commit any breach of his
contract of employment by reason of leaving the service of a member of the
Company Group, and the Employee agrees not to employ, directly or indirectly,
any person who was an officer or employee of any member of the Company Group or
who by reason of such position at any time is or may be likely to be in
possession of any confidential information or trade secrets relating to the
businesses or products of any member of the Company Group, or (C) solicit or
entice or endeavor to solicit or entice away from any member of the Company
Group any customer or prospective customer of any member of the Company Group,
either for his own account or for any individual, firm or corporation. As used
herein, the term "Applicable Period" shall mean, (i) in the case of termination
of employment pursuant to Section 6.4 of the Agreement, the period during which
the Company is obligated to continue to pay salary to the Employee (determined
without regard to the Employee's duty to offset as specified in such Section
6.4), and (ii) in the case of any other termination, three (3) years.
10. Equitable Relief, Etc.
10.1 In the event of a breach or threatened breach by the Employee
of any of the provisions of Sections 7, 8 or 9 of this Agreement, the Employee
hereby consents and agrees that the Company shall be entitled to an injunction
or similar equitable relief from any court of competent jurisdiction restraining
the Employee from committing or continuing any such breach or threatened breach
or granting specific performance of any act required to be performed by the
Employee under any of such provisions, without the necessity of showing any
actual damage or that money damages would not afford an adequate remedy and
without the necessity of posting any bond or other security. Nothing herein
shall be construed as prohibiting the Company from pursuing any other remedies
at law or in equity which it may have with respect to any such breach or
threatened breach.
10.2 The Company and the Employee understand and agree that in any
lawsuit or other proceeding between any of them with respect to Sections 7, 8 or
9 hereof, the prevailing party in such lawsuit or proceeding shall be entitled
to recover from the other party in such lawsuit or proceeding, and such other
party hereby agrees to pay such prevailing party, for all costs and expenses,
including attorneys' fees, incurred by such prevailing party in the defense,
prosecution or investigation of the matters which are the subject of such
lawsuit or proceeding.
11. Successors and Assigns.
11.1 Assignment by the Company. The Company shall require any
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume and agree to perform this Agreement in the same manner and to
the same extent
<PAGE> 11
that the Company would be required to perform if no such succession had taken
place. As used in this Section, the "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law and this Agreement shall be binding upon, and
inure to the benefit of, the Company, as so defined.
11.2 Assignment by the Employee. The Employee may not assign this
Agreement or any part thereof without the prior written consent of a majority of
the Board of Directors of the Company (other than the Employee if he is a member
of such Board at the time); provided, however, that nothing herein shall
preclude one or more beneficiaries of the Employee from receiving any amount
that may be payable following the occurrence of his legal incompetency or his
death and shall not preclude the legal representative of his estate from
receiving such amount or from assigning any right hereunder to the person or
persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to his
estate. The term "beneficiaries", as used in this Agreement, shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative of the Employee (in
the event of his incompetency) or the Employee's estate.
12. Governing Law. This Agreement shall be deemed a contract made
under, and for all purposes shall be construed in accordance with, the laws of
the State of New York applicable to contracts to be performed entirely within
such State.
13. Entire Agreement. This Agreement contains all the understandings
and representations between the parties hereto pertaining to the subject matter
hereof. This Agreement supersedes all understandings and agreements, whether
oral or in writing, if any, previously entered into by the Company with the
Employee in any way relating to the employment of the Employee by the Company,
all of which agreements and understandings are hereby terminated and all rights
and entitlements thereunder are hereby waived and released.
14. Amendment, Modification, Waiver. No provision of this Agreement
may be amended or modified unless such amendment or modification is agreed to in
writing and signed by the Employee and by representatives of the Company (other
than the Employee) who have been duly authorized by the Board of Directors of
the Company to do so (other than the Employee if he is a member of such Board at
the time). Except as otherwise specifically provided in this Agreement, no
waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or condition at
the same or any prior or subsequent time, nor shall the failure of or delay by
either party hereto in exercising any
<PAGE> 12
right, power or privilege hereunder operate as a waiver thereof to preclude any
other or further exercise thereof or the exercise of any other such right, power
or privilege.
15. Notices. Any notice to be given hereunder shall be in writing
and delivered personally or sent by certified mail, postage prepaid, return
receipt requested, addressed to the party concerned at the address indicated
below or at such other address as such party may subsequently designate by like
notice:
If to the Company:
c/o Norton McNaughton, Inc.
463 Seventh Avenue
New York, New York 10018
Attention: Compensation Committee and
the Chief Executive Officer
If to the Employee:
Peter Boneparth
250 Briarwood Crossing
Lawrence, New York 11559
With a copy to:
Richard E. Haftel, Esq.
Haftel & Silverman, P.C.
26 Broadway
New York, New York 10004
16. Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or any breach thereof, shall, except as provided in Section
10, be settled by binding arbitration in accordance with the rules of the
American Arbitration Association then in effect and judgment upon such award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in New York, New York. The arbitration
award shall include an award of attorneys' fees and costs to the prevailing
party as determined by the arbitrator.
17. Severability. Should any provision of this Agreement be held by
a court or arbitration panel of competent jurisdiction to be enforceable only if
modified, such holding shall not affect the validity of the remainder of this
Agreement, the balance of which shall continue to be binding upon the parties
hereto with any such modification to become a part hereof and treated as though
originally set forth in this Agreement. The parties further agree that any such
court or arbitration panel is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing such unenforceable
provision from this Agreement in its entirety, whether by
<PAGE> 13
rewriting the offending provision, deleting any or all of the offending
provision, adding additional language to this Agreement, or by making such other
modifications as it deems warranted to carry out the intent and agreement of the
parties as embodied herein to the maximum extent permitted by law. The parties
expressly agree that this Agreement as so modified by the court or arbitration
panel shall be binding upon and enforceable against each of them. In any event,
should one or more of the provisions of this Agreement be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions hereof, and if such
provision or provisions are not modified as provided above, this Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had never
been set forth herein.
18. Authority. The Company represents and warrants to the Employee
that the execution and delivery of this Agreement by the Company and the
performance by the Company of its covenants and agreements hereunder have been
duly authorized by all necessary corporate action and that this Agreement has
been duly executed and delivered on behalf of the Company.
19. Withholding. Anything to the contrary notwithstanding, all
payments required to be made by the Company hereunder to the Employee or his
beneficiaries, including his estate, shall be subject to withholding of such
amounts relating to taxes as the Company may reasonably determine it should
withhold pursuant to any applicable law or regulation. In lieu of withholding
such amounts, in whole or in part, the Company, may, in its sole discretion,
accept other provision for payment of taxes as permitted by law, provided it is
satisfied in its sole discretion that all requirements of law affecting its
responsibilities to withhold such taxes have been satisfied.
20. Subsidiaries, etc. The Employee shall be deemed to resign as an
officer and director of any parent, subsidiary or affiliate of the Company upon
termination of his employment under this Agreement.
21. Survivorship. The respective rights and obligations of the
Employee and the Company hereunder shall survive any termination of this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.
22. Titles. Titles of the sections of this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
<PAGE> 14
23. Counterparts. This Agreement may be executed in two or more
counterpart copies, each of which shall be deemed to be an original and all of
which taken together shall be deemed one document.
* * *
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date first above written.
NORTON MCNAUGHTON OF SQUIRE, INC.
By /s/ Sanford Greenberg
--------------------------------------
Title: Chief Executive Officer
EMPLOYEE:
/s/ Peter Boneparth
--------------------------------------
Peter Boneparth
<PAGE> 1
Exhibit 10.1
SEPARATION AGREEMENT
AGREEMENT made as of the 3rd day of May,
1997 by and between NORTON MCNAUGHTON OF SQUIRE, INC., a New York corporation
(the "Company"), and NORTON SPERLING ("Sperling").
W I T N E S S E T H:
WHEREAS, Sperling and the Company are parties to the Amended and
Restated Employment Agreement dated November 4, 1995 between the parties (the
"Employment Agreement");
WHEREAS, the parties have agreed to terminate the Employment
Agreement effective as of April 30, 1997;
WHEREAS, the Company wishes to assure itself of the services of
Sperling, and Sperling wishes to provide services to the Company, upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the
premises and the mutual agreements hereinafter set forth, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Term; Performance of Agreement.
1.1 The Company agrees to retain Sperling, and Sperling agrees to
provide consulting services on a project-by-project basis to the Company for the
period commencing on May 1, 1997 and terminating on April 30, 2007 (the "Term").
1.2 The parties hereto acknowledge that the Company may designate
another direct or wholly-owned subsidiary of the Company to engage Sperling and
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform this Agreement and such designee shall be
bound by all the terms and provisions of this Agreement.
2. Consulting Services; Independent Contractor.
2.1 During the Term, Sperling shall provide such consulting and
advisory services as shall be requested by the Board of Directors of the
Company. Sperling shall devote such time and attention to the performance of his
duties and responsibilities hereunder as shall be necessary for the proper
performance thereof; provided, however, that Sperling's performance of such
duties and responsibilities does not materially interfere with any obligations
of Sperling to provide services to any activity or business venture which is not
in violation of Section 13 of this Agreement.
<PAGE> 2
2.2 Sperling shall perform his duties and responsibilities hereunder
as an independent contractor. Nothing herein shall be deemed to create a
partnership, joint venture or employment relationship between Sperling and the
Company.
3. Consulting Fee. During the Term, in consideration of the
performance by Sperling of the services set forth in Section 2 of this
Agreement, the Company shall pay Sperling, and Sperling shall accept, a
consulting fee, in an amount determined on a project-by-project basis by the
Board of Directors of the Company.
4. Medical Insurance. For the period commencing on the date hereof
until the death of Sperling, the Company agrees, at its expense, to provide
Sperling and Sperling's wife coverage under the medical plans of the Company on
the same terms and conditions (including the same Company-paid portions) that
coverage is generally available to employees of the Company. In the event that
the Company is unable to provide the coverage set forth in the preceding
sentence during any month as a result of (a) a change of law or regulation which
restricts the provision of coverage for persons who are not employees the
Company, (b) the failure by the Company's insurance carrier or plan to provide
coverage for persons who are not employees of the Company or (c) a change in the
cost of such coverage such that the cost to the Company to provide such coverage
for any monthly period exceeds the amount set forth on Exhibit A hereto under
the column labeled "Monthly Premium", the Company shall not be obligated to
provide such coverage under its medical plans and shall reimburse Sperling for
any premiums paid by Sperling for comparable medical coverage. Such
reimbursement shall not exceed the amount set forth on Exhibit A hereto under
the column labeled "Monthly Premium" for any monthly period.
5. Split Dollar Insurance. Notwithstanding Section 8 of the Split
Dollar Agreement (the "Split Dollar Agreement") dated as of March 8, 1994 by and
among the Company, Sperling and Norton Sperling, as trustee of a trust
established under a trust agreement between Norton Sperling, as settlor, and
Daniel M. Hirsch and Amanda J. Bokman, as trustees, the Company agrees to
continue to pay premiums on the Policy (as defined in the Split Dollar
Agreement) until payment of the twentieth annual Policy premium, subject to the
other terms and provisions of the Split Dollar Agreement.
6. Disability Insurance. From the date hereof until May 1, 1998, the
Company shall continue to provide Sperling with coverage under the disability
policies under which Sperling was covered on April 30, 1997.
7. Automobile. From the date hereof until September 30, 1998, the
Company shall provide Sperling with use of the automobile currently being used
by Sperling and shall pay or
<PAGE> 3
reimburse Sperling for the costs of insuring, operating and maintaining such
automobile and the costs of a car phone. On or before the expiration of the
lease of the automobile currently used by Sperling and leased by the Company
(the "Leased Automobile"), Sperling shall have the right to acquire the Leased
Automobile for a purchase price equal to the acquisition price of the Leased
Automobile plus all related charges under such lease, payable in cash by
Sperling to the Company on the date of the transfer of title of the Leased
Automobile.
8. Income Tax Preparation. From the date hereof until November 1,
1999, the Company shall provide Sperling with income tax preparation services,
but only if the Company offers such services to the other officers of the
Company.
9. Loan Forgiveness. In the event that, at any time prior to
November 1, 1999, the Company agrees to forgive certain loans made to each of
Sanford Greenberg, Jay Greenberg, Howard Greenberg and Andrew Miller pursuant to
each of their respective Third Amended and Restated Non-Negotiable Limited
Recourse Promissory Notes dated March 27, 1995 and payable to the Company, the
Company shall forgive the loan (the "Loan") made to Sperling pursuant to his
Third Amended and Restated Non-Negotiable Limited Recourse Promissory Note dated
March 27, 1995 (the "Note") and payable to the Company.
10. Registration Rights.
10.1 NOTICE TO SPERLING. In the event that, at any time or from time
to time, Norton McNaughton, Inc., a Delaware corporation (the "Parent"),
proposes to register any shares of the common stock of the Parent (the "Common
Stock") under the Securities Act of 1933 (the "Securities Act") other than
pursuant to a registration statement on Forms S-4 or S-8, or any successor to
such Forms, for the purpose of the sale or other transfer of shares of Common
Stock by either Sanford Greenberg or Jay Greenberg or both (the "Greenberg
Registration Shares"), the Parent shall deliver to Sperling at least twenty (20)
days prior to the filing of the registration statement with respect to the
Greenberg Registration Shares, a written notice (a "Registration Notice") of its
intention so to register the Greenberg Registration Shares.
10.2 NOTICE TO THE PARENT. In the event that a Registration Notice
shall have been so delivered, Sperling, at his election, may deliver to the
Parent a written notice (a "Response") (i) specifying the number of shares of
Common Stock (together with the Greenberg Registration Shares, the "Supplemental
Registration Shares") proposed to be sold or otherwise transferred by Sperling,
(ii) describing the proposed manner of sale or other transfer thereof and (iii)
requesting the registration thereof under the Securities Act; provided, however,
that a Response shall be so delivered by Sperling not more than fifteen (15)
days
<PAGE> 4
after the date of delivery to Sperling of a Registration Notice.
10.3 REGISTRATION OF SECURITIES. From and after receipt of a
Response, the Parent shall use its reasonable best efforts to cause the
Supplemental Registration Shares specified in such Response to be registered
under the Securities Act and to effect and to comply with all such
qualifications, compliances and requirements as may be necessary to permit the
sale or other transfer of such Supplemental Registration Shares, in the manner
described in such Response, including without limitation, qualifications under
the applicable Blue Sky or other state securities laws (provided that the Parent
shall not be required in connection therewith to qualify as a foreign
corporation or to execute general consent to service of process in any state);
provided, however, that if (i) in the case of an underwritten public offering of
securities, the managing underwriter shall advise the Parent in writing that the
inclusion of some or all of such Supplemental Registration Shares would, in such
managing underwriter's opinion, materially interfere with the proposed
distribution of any securities to be issued by the Parent in respect of which
registration was originally to be effected or would materially interfere with
the proposed distribution of all of the Supplemental Registration Shares, then
the Parent may, upon written notice to Sperling, allocate the Supplemental
Registration Shares to be included in the registration statement (if and to the
extent such allocation is certified by the managing underwriter as necessary to
eliminate such interference) pro rata among such holders on the basis of the
number of shares of Common Stock at the time owned by such holders or (ii) any
firm of counsel representing the Parent in connection with such registration
shall advise the Parent and Sperling in writing that in its opinion one or more
of the steps contemplated hereby is not necessary to permit the sale of the
Sperling Registration Shares in a transaction constituting a public offering
within the meaning of the Securities Act, then the Parent shall not be required
to take any action with respect to such step or steps.
11. Termination of Employment Agreement; Release.
11.1 The Employment Agreement and Sperling's employment with the
Company (and the Parent) shall terminate on April 30, 1997 (the "Termination
Date"). The Company shall pay Sperling $2.5 million (the "Separation Payment").
Sperling acknowledges and agrees that $712,500 of the Separation Payment (the
"Enhanced Separation Payment"), which amount exceeds any benefit to which
Sperling is otherwise entitled, shall constitute consideration for the release
of claims set forth in Section 11.2 of this Agreement (the "Release") and for
the agreements set forth in Sections 12 and 13 of this Agreement.
<PAGE> 5
11.2 In consideration of the Enhanced Separation Payment and the
other benefits set forth herein, Sperling for himself and his heirs,
administrators, successors and assigns releases the Company, the Parent, each of
their subsidiary and affiliate corporations and entities, and its and their
respective officers, directors and employees (collectively, the "Releasees"),
from all claims, actions, causes of action, suits, debts, dues, sums of money,
accounts, covenants, contracts, controversies, agreements, promises, damages,
judgments, executions and demands whatsoever, in law or equity, including,
without limitation, all claims and rights under Title VII of the Civil Rights
Act of 1964, the Age Discrimination in Employment Act of 1967, the New York
State Human Rights Law, the New York City Human Rights Law, the Americans with
Disabilities Act, the Civil Rights Act of 1866 (42 U.S.C. Section 1981), the
Civil Rights Act of 1991, the Equal Pay Act, the Family and Medical Leave Act,
the Fair Labor Standards Act and the Employee Retirement Income Security Act of
1974, all as amended, including, but not limited to, the right to the payment of
wages, vacation, pension benefits or any other employee benefits, or any other
rights arising under federal, state or local laws prohibiting discrimination
and/or harassment on the basis of race, color, creed, religion, sex, pregnancy,
marital status, sexual orientation, national origin, age, physical or mental
handicap or disability, alienage/citizenship status or any other basis
prohibited by law, which Sperling ever had, now has or hereafter can, shall or
may have against the Releasees or any of them arising out of or relating to the
Employment Agreement, Sperling's employment with the Company and the termination
thereof from the beginning of the world to the date of this Agreement, except
for (i) any liability or claim arising out of this Agreement, including the
Release, and (ii) any liability or claim related to the Loan and the Note (each,
as defined in Section 9 of this Agreement) and to the Pledge Agreement dated as
of November 5, 1993, as amended (the "Pledge Agreement"). Sperling agrees never
directly or indirectly to commence or prosecute, or assist in the filing,
commencement or prosecution of any action, proceeding or charge against the
Company, the Parent or any of the Releasees with respect to the matters hereby
released.
11.3 The Company has advised Sperling to consult with an attorney of
his choosing prior to the signing of this Agreement, including the Release, and
Sperling hereby represents to the Company that he has been offered an
opportunity to consult with an attorney prior to the execution of this
Agreement, including the Release. Sperling acknowledges that he was offered the
opportunity to consider the waiver of claims under the Age Discrimination in
Employment Act of 1967 for a period of twenty-one (21) days from the time that
he received this Agreement, including the Release, and was advised to review it
with an attorney of his choice. Sperling is further advised that he has seven
(7) days after he signs this Agreement to revoke the waiver of any claims under
the Age Discrimination in Employment Act of 1967 by notifying the Company in
writing. The release of any
<PAGE> 6
claims under the Age Discrimination in Employment Act of 1967 will not become
effective or enforceable until the seven (7) day period has expired.
11.4 Sperling expressly represents and warrants that he has
carefully read and fully understands that the Release is a general release of
all claims, including all claims under the Age Discrimination in Employment Act
of 1967, that he has had a full opportunity to review the Release with an
attorney and that he has executed this Release voluntarily, without duress,
coercion or undue influence and with such advice from his attorney as
appropriate.
11.5 The Company, the Parent and each of the Releasees release and
discharge Sperling and his heirs, executors, administrators, assigns or agents
from any and all claims arising in connection with the Employment Agreement,
Sperling's employment with the Company and the termination thereof, which the
Company and/or the Releasees ever had, now have or hereafter can, shall or may
have against Sperling for, upon, or by reason of any matter, cause or thing
whatsoever from the beginning of the world to the date of this Agreement, except
for (i) any liability or claim arising out of this Agreement, including the
Release, and (ii) any liability or claim related to the Loan and the Note (each,
as defined in Section 9 of this Agreement) and to the Pledge Agreement (as
defined in Section 11.2 of this Agreement).
12. Confidential Information.
12.1 Sperling shall treat as confidential and, except as required in
the performance of his duties and responsibilities as a member of the Board of
Directors of the Company, not disclose, publish or otherwise make available to
the public or to any individual, firm or corporation any confidential material
(as hereinafter defined). Sperling agrees that all confidential material,
together with all notes and records of Sperling relating thereto, and all copies
or facsimiles thereof in the possession of Sperling, are the exclusive property
of the Company and as of the Termination Date, Sperling shall have returned such
material to the Company.
12.2 For the purposes hereof, the term "confidential material" shall
mean all information heretofore or hereafter acquired by Sperling in any way
concerning the products, projects, activities, business or affairs of the
Company, the Parent and any of their subsidiaries or affiliates (including,
without limitation, Norty's, a Delaware corporation) (collectively, the "Company
Group") or the customers of the Company or any member of the Company Group,
including, without limitation, all information concerning trade secrets and the
preparation of raw material for, manufacture of, and/or finishing processes
utilized in the production of, the products or projects of the Company or any
member of the Company Group and/or any
<PAGE> 7
improvements therein, all sales and financial information concerning the Company
or any member of the Company Group, all customer and supplier lists, all
information concerning projects in research and development or marketing plans
for any such products or projects, and all information in any way concerning the
products, projects, activities, business or affairs of customers of the Company
or any member of the Company Group which is furnished to Sperling by the Company
or any of its employees (current or former), agents or customers, as such;
provided, however, that the term "confidential material" shall not include
information which (a) becomes generally available to the public other than as a
result of a disclosure by Sperling, (b) was available to Sperling on a
non-confidential basis prior to his employment with the Company or (C) becomes
available to Sperling on a non-confidential basis from a source other than the
Company or any of its agents, franchisees, creditors, suppliers, lessors,
lessees or customers provided that such source is not bound by a confidentiality
agreement with the Company or any of such agents or customers.
13. Non-Competition. Except as otherwise permitted by the Board of
Directors of the Company, Sperling agrees, for the benefit of the Company, that
he will not, for a period of eighteen (18) months commencing on the Termination
Date, (a) engage, directly or indirectly, whether as principal, agent,
distributor, representative, consultant, employee, partner, stockholder, limited
partner or other investor (other than an investment of not more than (i) one
percent (1%) of the stock or equity of any corporation the capital stock of
which is publicly traded or (ii) five percent (5%) of the ownership interest of
any limited partnership or other entity) or otherwise, anywhere in the United
States, in any activity or business venture which involves the manufacture,
merchandising, distribution or sale of apparel, (b) solicit or entice or
endeavor to solicit or entice away from any member of the Company Group any
person who was an officer, employee or consultant of any member of the Company
Group, either for his own account or for any individual, firm or corporation,
whether or not such person would commit any breach of his contract of employment
by reason of leaving the service of a member of the Company Group, and the
Employee agrees not to employ, directly or indirectly, any person who was an
officer or employee of any member of the Company Group or who by reason of such
position at any time is or may be likely to be in possession of any confidential
information or trade secrets relating to the businesses or products of any
member of the Company Group, or (C) solicit or entice or endeavor to solicit or
entice away from any member of the Company Group any customer or prospective
customer of any member of the Company Group, either for his own account or for
any individual, firm or corporation.
14. Equitable Relief. In the event of a breach or threatened breach
by Sperling of Sections 12 and 13 of this Agreement, Sperling hereby consents
and agrees that the Company shall be entitled to pre-judgment injunctive relief
or similar
<PAGE> 8
equitable relief restraining Sperling from committing or continuing any such
breach or threatened breach or granting specific performance of any act required
to be performed by Sperling under any of such provisions, without the necessity
of showing any actual damage or that money damages would not afford an adequate
remedy and without the necessity of posting any bond or other security. The
parties hereto hereby consent to the jurisdiction of the Federal courts located
in the Southern District of New York and the state courts located in such
District for any proceedings under this Section 14. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies at law or
in equity which it may have.
15. Successors and Assigns. Sperling may not assign this Agreement
or any part thereof without the prior written consent of a majority of the Board
of Directors of the Company; provided, however, that nothing herein shall
preclude one or more beneficiaries of Sperling from receiving any benefits set
forth in Sections 9 and 10 of this Agreement following the occurrence of his
legal incompetency or his death and shall not preclude the legal representative
of his estate from receiving such benefits or from assigning any right hereunder
to the person or persons entitled thereto under his will or, in the case of
intestacy, to the person or persons entitled thereto under the laws of the
intestacy applicable to his estate. The term "beneficiaries", as used in this
Agreement, shall mean the legal representative of Sperling (in the event of his
incompetency) or Sperling's estate.
16. Governing Law. This Agreement shall be deemed a contract made
under, and for all purposes shall be construed in accordance with, the laws of
the State of New York applicable to contracts to be performed entirely within
such State.
17.Entire Agreement. This Agreement contains all the understandings
and representations between the parties hereto pertaining to the subject matter
hereof and supersedes all undertakings and agreements, whether oral or in
writing, if there be any, previously entered into by them with respect thereto.
18. Modification and Amendment; Waiver. The provisions of this
Agreement may be modified, amended or waived, but only upon the written consent
of the party against whom enforcement of such modification, amendment or waiver
is sought and then such modification, amendment or waiver shall be effective
only to the extent set forth in such writing. No delay or failure on the part of
any party hereto in exercising any right, power or remedy hereunder shall effect
or operate as a waiver thereof, nor shall any single or partial exercise thereof
or any abandonment or discontinuance of steps to enforce such right, power or
remedy preclude any further exercise thereof or of any other right, power or
remedy.
<PAGE> 9
19. Notices. All notices, requests or instructions hereunder shall
be in writing and delivered personally, sent by telecopier or sent by registered
or certified mail, postage prepaid, return receipt requested, as follows:
If to the Company:
Norton McNaughton of Squire, Inc.
463 Seventh Avenue
New York, New York 10018
Attention: Chief Executive Officer
Telecopy No.: (212) 563-2766
Telephone No.: (212) 947-2960
If to Sperling:
Norton Sperling
1025 Seawane Drive
Hewlett Harbor, New York 11557
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered or telecopied, and two business days after the date of
mailing, if mailed.
20. Severability. Should any provision of this Agreement be held by
a court of competent jurisdiction to be enforceable only if modified, such
holding shall not affect the validity of the remainder of this Agreement, the
balance of which shall continue to be binding upon the parties hereto with any
such modification to become a part hereof and treated as though originally set
forth in this Agreement. The parties further agree that any such court is
expressly authorized to modify any such unenforceable provision of this
Agreement in lieu of severing such unenforceable provision from this Agreement
in its entirety, whether by rewriting the offending provision, deleting any or
all of the offending provision, adding additional language to this Agreement, or
by making such other modifications as it deems warranted to carry out the intent
and agreement of the parties as embodied herein to the maximum extent permitted
by law. The parties expressly agree that this Agreement as so modified by the
court shall be binding upon and enforceable against each of them. In any event,
should one or more of the provisions of this Agreement be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions hereof, and if such
provision or provisions are not modified as provided above, this Agreement shall
be construed as if such invalid, illegal or unenforceable provisions had never
been set forth herein.
<PAGE> 10
21. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
22. Expenses. Each of the parties hereto shall bear his or its own
costs and expenses, including attorneys fees and disbursements, incurred in
connection with this Agreement and the transactions contemplated hereby.
23. Titles. Titles of the sections of this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
24. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
* * *
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto
have executed this Agreement on the date first above written.
NORTON MCNAUGHTON OF SQUIRE, INC.
By: /s/ Sanford Greenberg
-------------------------------------
Title: Chief Executive Officer
/s/ Norton Sperling
-------------------------------------
Norton Sperling
<PAGE> 12
EXHIBIT A
MEDICAL INSURANCE PREMIUMS TO
NORTON SPERLING
IF COMPANY IS UNABLE TO PROVIDE
COVERAGE
<TABLE>
<CAPTION>
FISCAL PERIOD
BEGINNING ENDED ANNUAL MONTHLY
MAY 1: APRIL 30: PREMIUM PREMIUM
<S> <C> <C> <C>
1997 1998 $ 6,500.00 $ 541.67
1998 1999 6,825.00 568.75
1999 2000 7,166.25 597.19
2000 2001 7,524.56 627.05
2001 2002 7,900.79 658.40
2002 2003 8,295.83 691.32
2003 2004 8,710.62 725.89
2004 2005 9,146.15 762.18
2005 2006 9,603.46 800.29
2006 2007 10,083.63 840.30
2007 2008 10,587.82 882.32
2008 2009 11,117.21 926.43
2009 2010 11,673.07 972.76
2010 2011 12,256.72 1,021.39
2011 2012 12,869.56 1,072.46
2012 2013 13,513.03 1,126.09
2013 2014 14,188.68 1,182.39
2014 2015 14,898.12 1,241.51
2015 2016 15,643.03 1,303.59
2016 2017 16,425.18 1,368.76
2017 2018 17,246.44 1,437.20
2018 2019 18,108.76 1,509.06
2019 2020 19,014.19 1,584.52
2020 2021 19,964.90 1,663.74
2021 2022 20,963.15 1,746.93
2022 2023 22,011.31 1,834.28
2023 2024 23,111.87 1,925.99
2024 2025 24,267.47 2,022.29
2025 2026 25,480.84 2,123.40
2026 2027 26,754.88 2,229.57
2027 2028 28,092.63 2,341.05
2028 2029 29,497.26 2,458.10
2029 2030 30,972.12 2,581.01
2030 2031 32,520.73 2,710.06
</TABLE>
<PAGE> 13
EXHIBIT A
MEDICAL INSURANCE PREMIUMS TO
NORTON SPERLING
IF COMPANY IS UNABLE TO PROVIDE
COVERAGE
<TABLE>
<CAPTION>
FISCAL PERIOD
BEGINNING ENDED ANNUAL MONTHLY
MAY 1: APRIL 30: PREMIUM PREMIUM
<S> <C> <C> <C>
2031 2032 34,146.76 2,845.56
2032 2033 35,854.10 2,987.84
2033 2034 37,646.80 3,137.23
2034 2035 39,529.15 3,294.10
2035 2036 41,505.60 3,458.80
2036 2037 43,580.88 3,631.74
2037 2038 45,759.93 3,813.33
2038 2039 48,047.92 4,003.99
2039 2040 50,450.32 4,204.19
2040 2041 52,972.84 4,414.40
2041 2042 55,621.48 4,635.12
2042 2043 58,402.55 4,866.88
2043 2044 61,322.68 5,110.22
2044 2045 64,388.81 5,365.73
2045 2046 67,608.25 5,634.02
2046 2047 70,988.67 5,915.72
2047 2048 74,538.10 6,211.51
2048 2049 78,265.00 6,522.08
2049 2050 82,178.25 6,848.19
2050 2051 86,287.17 7,190.60
</TABLE>
<PAGE> 1
Exhibit 99
FOR: Norton McNaughton, Inc.
APPROVED BY:Amanda Bokman
Chief Financial Officer
(212) 947-2960
FOR IMMEDIATE RELEASE
CONTACT: Investor Relations:
David Walke\Howard Zar\
Shannon Moody
Press: Michael McMullan
Morgen-Walke Associates
212/850-5600
NORTON MCNAUGHTON, INC. APPOINTS PETER BONEPARTH
PRESIDENT AND CHIEF OPERATING OFFICER
New York, New York, May 6, 1997 -- Norton McNaughton, Inc.
(Nasdaq:NRTY) today announced that Peter Boneparth has been appointed President
and Chief Operating Officer of the Company.
Prior to his appointment, Mr. Boneparth, age 37, served as Senior
Managing Director and head of Investment Banking at Rodman & Renshaw which he
joined in 1994. Prior to that, Mr. Boneparth had been Senior Managing Director
and head of Investment Banking at Mabon Securities since 1990. In both
positions, Mr. Boneparth was responsible for the underwriting, sale and
acquisition of numerous apparel and retail companies. Mr. Boneparth is currently
a member of the Company's Board of Directors and serves on the Board of
Directors of Marisa Christina Incorporated.
The Company also announced that Norton Sperling, co-founder and
President of Norton McNaughton, will assume the newly created position of Vice
Chairman of the Board of Directors of the Company. Mr. Sperling, age 63, has
been with the Company since its founding in 1981.
Sanford Greenberg, Chairman of the Board and Chief Executive
Officer, commented, "We are very enthusiastic about Peter coming on board as a
senior member of management. Since our initial public offering, Peter has
provided
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<PAGE> 2
NORTON MCNAUGHTON, INC. APPOINTS PETER BONEPARTH PAGE:2
PRESIDENT AND CHIEF OPERATING OFFICER
us with ongoing guidance as a counselor and, most recently, as a member of our
Board of Directors, drawing upon his experience with numerous other apparel
companies. Our Company has recently been through a period in which it
experienced both the positive effects and difficulties of dramatic growth.
Bringing aboard someone with Peter's background and experience will allow us to
focus and manage our growth efforts going forward and take our Company to the
next level of sales and profitability. His business acumen and organizational
skills will be an invaluable asset to us as we continue to implement the changes
necessary for future growth, both internally and through possible acquisitions."
Mr. Greenberg continued, "We greatly appreciate the valuable
contributions Norton Sperling has made and recognize that he has been an
integral part of our Company's history and growth. Norty has been a significant
player within the apparel industry for over 35 years, and we look forward to his
continued contributions to Norton McNaughton as Vice-Chairman."
Mr. Boneparth noted, "Norton McNaughton is well-positioned for
future growth. I look forward to being an integral part of realizing the
Company's potential through the challenges and opportunities that lie ahead. My
top priority will be to increase shareholder value through improved operating
performance. As the Company has structured my compensation to be significantly
tied to performance-based options, my future interests are directly aligned to
those of all shareholders."
Due primarily to severance payments resulting from management
changes, the termination of certain lease obligations and the establishment
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<PAGE> 3
NORTON MCNAUGHTON, INC. APPOINTS PETER BONEPARTH PAGE:3
PRESIDENT AND CHIEF OPERATING OFFICER
of reserves for certain contingencies, including the possible closing of the
Norty's retail stores, the Company stated that it would incur a one-time, pretax
charge of approximately $5.7 million during its second quarter ended May 3,
1997. These changes are expected to result in an annualized cost savings in
excess of $1.2 million. Excluding this one-time charge, the Company expects to
show improvement in earnings for the second quarter of fiscal 1997, compared to
the comparable quarter in fiscal 1996. Earnings per share are expected to be a
loss in the range of $0.02 to $0.04, excluding the one-time charge, compared to
a loss of $0.09 reported last year. Net sales for the second quarter are
expected to be in line with expectations, or approximately $53.2 million,
compared to $57.4 million reported during last year's second quarter. The
Company expects to report its second quarter results during the week of June
2nd.
Mr. Greenberg concluded, "This is an exciting time for Norton
McNaughton and we are committed to having the strongest management team in the
apparel industry."
Norton McNaughton, Inc. designs, contracts for the manufacture of
and markets a broad line of brand name, moderately priced women's career and
casual clothing. The Company's product lines include collections of related
separates coordinated by color and style, as well as casual weekend wear and
related knitwear separates. Founded in 1981, the Company markets its products
under its nationally known labels, including Norton McNaughton(R), Maggie
McNaughton(R), Modiano(R), Danielle Paige(TM), D.P.S.(TM) and Norton Studio(TM),
and under private label, including Lauren Alexandra(R) and Pant-her(R).
***
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<PAGE> 4
NORTON MCNAUGHTON, INC. APPOINTS PETER BONEPARTH PAGE:4
PRESIDENT AND CHIEF OPERATING OFFICER
This press release contains forward-looking information about the
Company's anticipated operating results. The Company's ability to achieve its
projected results is dependent on many factors which are outside of management's
control. Some of the most significant factors would be a further deterioration
in retailing conditions for women's apparel, a further increase in price
pressures and other competitive factors, any of which could result in an
unanticipated decrease in gross profit margins, the unanticipated loss of a
major customer, the unanticipated loss of a major contractor or supplier, and
weather conditions which could impact retail traffic and the Company's ability
to ship on a timely basis. Accordingly, there can be no assurance that the
Company will achieve its anticipated operating results.
# # #
