SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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 1-5354
SWANK, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-1886990
(State or other jurisdiction (IRS employer
of incorporation or organization) identification Number)
6 Hazel Street, Attleboro, Massachusetts 02703
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code 508-222-3400
Former name, former address and former fiscal year, if changed
since last report.
Indicate by X whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days Yes X No __
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
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:
Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the latest practicable
date:
Title of Class Shares Outstanding on April 28, 2000
Common stock, $.10 par value 16,569,423
<TABLE>
SWANK, INC.
PART I - FINANCIAL STATEMENTS
Item 1. Financial Statements. CONDENSED CONSOLIDATED BALANCE
SHEETS (UNAUDITED)
(Dollars in thousands)
<CAPTION>
March 31, 2000 December 31, 1999
<S> <C> <C> <C> <C>
ASSETS
Current:
Cash and cash equivalents $ 570 $ 1,258
Accounts receivable, less allowances
of $9,453 and $10,176 19,012 16,328
Inventories
Raw materials $8,035 $7,666
Work in process 7,071 5,924
Finished goods 20,295 35,401 22,803 36,393
Deferred income taxes 5,963 5,963
Income taxes recoverable 897 -
Prepaid and other 1,311 1,329
Total current assets 63,154 61,271
Property, plant and equipment, at cost 28,522 28,577
less accumulated depreciation and amortization 22,862 5,660 22,531 6,046
Other assets 8,011 7,623
Total assets $ 76,825 $ 74,940
LIABILITIES
Current:
Notes payable to banks $23,455 $ 16,762
Current portion of long-term debt 181 181
Accounts payable 2,540 4,162
Accrued employee compensation 2,513 3,296
Income taxes payable - 1,701
Other current liabilities 5,849 4,740
Total current liabilities 34,538 30,842
Long-term obligations 9,806 9,999
Total liabilities 44,344 40,841
Minority Interest in consolidated subsidiary 483 505
STOCKHOLDERS' EQUITY
Preferred stock, par value $1.00
Authorized 1,000,000 shares
Common stock, par value $.10
Authorized 43,000,000 shares:
Issued 16,902,942 and 16,902,942 shares 1,690 1,690
Capital in excess of par value 926 926
Retained earnings 30,072 31,672
Accumulated other comprehensive income 19 15
32,707 34,303
Treasury stock, at cost, 333,519 shares and 333,519 (709) (709)
shares
Total stockholders' equity 31,998 33,594
Total liabilities and stockholders' equity $ 76,825 $ 74,940
The accompanying notes are an integral part of the condensed
consolidated financial statements.
</TABLE>
<TABLE>
SWANK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2000 AND 1999
(Dollars in thousands except per share data)
---------------------------------
<CAPTION>
2000 1999
<S> <C> <C>
Net Sales $ 35,974 $ 37,199
Cost of goods sold 23,084 23,144
Gross profit 12,890 14,055
Selling and administrative expenses 13,800 13,684
Restructuring expenses 1,400 -
Income (loss) from operations (2,310) 371
Interest expense, net 392 348
Income (loss) before income taxes and minority interest (2,702) 23
Provision (benefit) for income taxes (1,081) 90
Minority interest in loss of consolidated subsidiary 22 182
Net income (loss) $ (1,599) $ 115
Share and per share information:
Weighted average common shares outstanding 16,569,423 16,566,627
Net income (loss) per common share $ (.10) $ .01
Weighted average common shares outstanding assuming dilution 16,569,423 16,889,216
Net income (loss) per common share assuming dilution $ (.10) $ .01
The accompanying notes are an integral part of the condensed
consolidated financial statements.
</TABLE>
<TABLE>
SWANK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE QUARTERS ENDED MARCH 31, 2000 AND 1999
(Dollars in thousands)
--------------
<CAPTION>
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (1,599) $ 115
Adjustments to reconcile net income (loss)
to net cash used in operations:
Depreciation and amortization 349 355
Provision (recoveries) for bad debts (26) 13
Minority interest in net loss of consolidated subsidiary (22) (182)
Gain on sale of assets (1) -
Changes in assets and liabilities:
(Increase) in accounts receivable (2,658) (4,797)
Decrease in inventory 992 1,387
(Increase) in income taxes recoverable (897) -
(Increase) decrease in prepaid and other current assets
62 (1)
(Increase) decrease in other noncurrent assets 22 (119)
(Decrease) in accounts payable (1,478) (1,916)
and accrued liabilities
(Decrease) in income taxes payable (1,701) (1,380)
Increase in long-term obligations 54 288
Net cash (used) in operations (6,903) (6,237)
Cash flows from investing activities:
Capital expenditures (205) (361)
Premiums on life insurance (214) (227)
Proceeds from sales of fixed assets 4 -
Net cash (used) in investing activities (415) (588)
Cash flows from financing activities:
Borrowing under revolving credit agreements
23,168 21,971
Payments of revolving credit obligations (16,475) (15,531)
Principal payments on long-term debt (67) (75)
Proceeds from exercise of employee stock options - 9
Net cash provided by financing activities 6,626 6,374
Currency translation adjustment 4 -
Net (decrease) in cash and cash equivalents (688) (451)
Cash and cash equivalents at beginning of period 1,258 757
Cash and cash equivalents at end of period $570 $306
The accompanying notes are an integral part of the condensed
consolidated financial statements.
</TABLE>
SWANK, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(1) The unaudited information furnished herein reflects all
adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary to present a
fair statement of the results for the periods ended March 31,
2000 and 1999. The financial information contained herein
represents condensed financial data and, therefore, does not
include all footnote disclosures required to be included in
financial statements prepared in conformity with generally
accepted accounting principles. Certain amounts from previous
periods have been reclassified to conform with the current
presentation. Footnote information was included in financial
statements included in the Company's 1999 Annual Report on Form
10-K. The condensed financial data included herein should be
read in conjunction with the information in the annual report.
(2) During the quarter ended March 31, 2000, the Company has not
incurred any material changes in commitments and contingencies
set forth in Footnote I of the 1999 Annual Report to Stockholders.
(3) The following table sets forth the computation of net income
(loss) per share for the quarters ending March 31, 2000 and March
31, 1999 (in thousands, except for share and per share data):
<TABLE>
<CAPTION>
Quarter
Ended March 31,
2000 1999
<S> <C> <C>
Numerator:
Net income (loss) $ (1,599) $ 115
Denominators:
Shares used in computing net income (loss) per
common share 16,569,423 16,566,627
Effect of dilutive options - 322,589
Shares used in computing net income (loss) per common 16,569,423 16,889,216
share assuming dilution
Net income (loss) per common share $ (.10) $ .01
Net income (loss) per common share assuming dilution $ (.10) $ .01
</TABLE>
Notes to Condensed Consolidated Financial Statements (Unaudited)
(continued)
(4) Segment Information (in thousands):
Consolidated
Men's Women's Other Total
3 months ending March 31
2000
Revenue from
external customers $23,136 $11,814 $1,024 $35,974
Segment income (loss) before tax (1,493) (1,040) (147) (2,680)
1999
Revenue from
external customers $22,000 $14,164 $1,035 $37,199
Segment income (loss) before tax (186) 537 (146) 205
(5) Restructuring. On March 16, 2000, the Company announced a
plan to cease production operations at its jewelry manufacturing
facility located in Attleboro, Massachusetts ("Attleboro") and
transfer its remaining domestic jewelry production requirements
to its majority-owned subsidiary, Joyas y Cueros, S.A. de Costa
Rica, and certain third-party vendors. Manufacturing operations
at Attleboro will cease following the orderly transition of
merchandise requirements to other resources, which is
anticipated, to be completed on or about May 15, 2000. Management
has concluded that its Attleboro manufacturing facility can no
longer be competitive in light of the increasing pressure to
sustain gross margins at both the wholesale and retail level and
that maintaining a domestic large-scale jewelry manufacturing
operation is not economically viable. In connection with the
closure, the Company recorded a restructuring charge of
$1,400,000 against income from operations in the first quarter of
2000 to cover employee termination benefits. The restructuring
charge has been stated separately on the Condensed Consolidated
Statement of Operations for the quarter ended March 31, 2000.
The restructuring charge consists of payroll and related
costs, including outplacement fees and severance for
approximately 190 production related employees affected by the
closure of the Attleboro manufacturing facility.
Approximately 100 employees were terminated prior to the end
of the quarter. The remaining employees will be involved in
the closing of operations until about May 15, 2000. As of
March 31, 2000, approximately $111,000 of the restructuring
charge had been paid and a liability of $1,289,000 which was
included in Other current liabilities on the Condensed
Consolidated Balance Sheet, remains to be paid. The Company
expects to fully pay the liability by the end of the current
fiscal year.
Item 2. Management's Discussion and Analysis of the Financial
Condition and Results of Operations
Results of Operations
As is customary in the fashion accessories industry, the
Company makes modifications to its lines coinciding with the
Spring (approximately January - June) and Fall (approximately
July - December) seasons. The Company believes that results of
operations are more meaningful on a seasonal basis than on a
quarterly basis. The timing of shipments can be affected by the
availability of materials, retail sales and fashion trends. These
factors may shift volume between quarters within a season
differently in one year than in another. Due to seasonality and
other factors, the results of the quarter are not necessarily
indicative of the results to be expected for the full year.
Net Sales
Net sales for the quarter ended March 31, 2000 decreased by
3.3% to $35,974,000 compared to $37,199,000 for the quarter ended
March 31, 1999. Net sales for Men's Accessories increased by
$1,136,000 or 5.2% and net sales for Women's Accessories
decreased by $2,350,000 or 16.6%, both compared to the quarter
ended March 31, 1999.
The increase in net sales for Men's Accessories was primarily
due to increased shipments of certain branded merchandise
programs for men's belts, offset in part by lower sales of
private label belts to mass merchandising customers. The
Company's John Henry belt and small leather goods collections,
which have been well received by retail customers, first shipped
during the second quarter of 1999.
Women's Accessories net sales decreased during the quarter
principally due to reduced shipments of closeout and discontinued
goods and lower sales of branded merchandise to department store
customers. The Company continued its efforts to refocus its
various women's jewelry programs during the quarter. The Company
also made substantial shipments of its Kenneth Cole women's
jewelry collection, which was first shipped to retail customers
in December 1998, during the quarter ended March 31, 1999.
Gross Profit
Gross profit for the quarter ended March 31, 2000 decreased by
$1,165,000 or 8.3% to $12,890,000 compared to $14,055,000 for the
quarter ended March 31, 1999. Gross profit for Men's Accessories
decreased by $183,000 and gross profit for Women's Accessories
decreased by $955,000, both compared to the quarter ended March
31, 1999.
Gross profit expressed as a percentage of net sales fell to
30.6% for Men's Accessories for the quarter ended March 31, 2000
compared to 33.0% last year. Gross profit expressed as percentage
of net sales increased to 44.4% for Women's Accessories for the
quarter ended March 31, 2000 compared to 43.8% last year. The
decline in gross profit for Men's Accessories was primarily due
to an increase in unfavorable overhead variances at the Company's
domestic jewelry and belt manufacturing facilities in response to
increased global sourcing of the Company's various merchandise
lines. Gross profit for Men's Accessories was also adversely
affected during the quarter by an increase in other manufacturing
variances associated with a reduction in domestic production
levels.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
The increase in gross profit for Women's Accessories expressed
as a percentage of sales was primarily due to a decrease in
product costs resulting from an expansion of the Company's
merchandise sourcing strategy offset in part by an increase in
unfavorable overhead variances associated with lower production
levels at its domestic jewelry manufacturing facility (see Note
5). The Company's Costa Rican subsidiary, Joyas y Cueros de Costa
Rica, S.A. ("Joyas") also substantially reduced its operating
loss during the quarter compared to the quarter ended March 31,
1999. Joyas, which was acquired by the Company on January 8,
1999, incurred significant start-up related expenses during the
first half of 1999.
Customer returns through March 31, 2000 are within the
estimates utilized in establishing the allowance for returns as
of December 31, 1999. First quarter adjustments to the reserve
in 2000 and 1999 include routine accruals for estimated returns
on current period sales and charges for actual returns received
through March 31. The extent of the variance, if any, of actual
2000 returns from the allowance established at December 31, 1999
will be finally determined during the second quarter and recorded
at that time.
Selling and Administrative Expenses
Selling and administrative expenses increased $116,000 or
less than 1% for the quarter ended March 31, 2000 to $13,800,000
from $13,684,000 last year. The increase in selling expenses for
the quarter is primarily due to planned increases in advertising
and promotional expenditures for Women's Accessories offset
partially by reductions in variable selling expenses associated
with lower sales. The Company routinely makes substantial
advertising and promotional expenditures to maintain and enhance
its businesses and in addition, certain license agreements
require specified levels of spending. Total advertising and
promotional expenses totaled 8.9% and 7.0% of net sales for the
quarters ended March 31, 2000 and March 31, 1999, respectively.
Administrative expenses for the quarter ended March 31, 2000
decreased by $422,000 compared to the same period in the prior
year primarily due to a gain of $476,000 recorded during the
quarter resulting from the receipt of common shares associated
with the conversion of a mutal life insurance company to a stock
corporation (commonly known as a demutualization). Selling and
administrative expenses as a percentage of net sales increased to
38.4% for the quarter ended March 31, 2000 from 36.8% last year.
The increase is principally due to lower sales and higher
advertising and promotional expenditures as described above,
offset in part by the gain from the insurance company
demutualization.
Restructuring Charge
On March 16, 2000, the Company announced a plan to cease
production operations at its jewelry manufacturing facility
located in Attleboro, Massachusetts ("Attleboro") and transfer
its remaining domestic jewelry production requirements to its
majority-owned subsidiary, Joyas y Cueros, S.A. de Costa Rica,
and certain third-party vendors. Manufacturing operations at
Attleboro will cease following the orderly transition of
merchandise requirements to other resources, which is
anticipated, to be completed on or about May 15, 2000. Management
has concluded that its Attleboro manufacturing facility can no
longer be competitive in light of the increasing pressure to
sustain gross margins at both the wholesale and retail level and
that maintaining a domestic large-scale jewelry manufacturing
operation is not economically viable. In connection with the
closure, the Company recorded a restructuring charge of
$1,400,000 against income from operations in the first quarter of
2000, to cover employee severance and other
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
payroll related costs. Additional integration expenses
associated with the writedown of certain inventory, currently
estimated at $550,000, are also likely to be incurred during the
remainder of fiscal 2000 as the Company completes the process of
resourcing its remaining merchandise requirement. Integration
costs will be expensed as incurred.
As of March 31, 2000, approximately $111,000 had been paid. The
Company expects to pay the remaining $1,289,000, which has been
included in Other current liabilities at March 31, 2000, by the
end of the fiscal year ending December 31, 2000.
The Company anticipates that the restructuring will generate net
pre-tax annualized savings of approximately $3,000,000 to
$5,000,000 reflecting enhanced gross profit margins from re-
sourcing jewelry products to lower cost suppliers and reduced
manufacturing support costs in Attleboro. The Company will
continue to monitor the progress of closing the plant and, at
this time does not anticipate any material adjustment to the
restructuring charge and expects the restructuring charge accrual
to be adequate.
Interest Expense
Net interest expense increased $44,000 for the quarter ended
March 31, 2000 compared to the same period in the prior year due
to both higher average borrowing levels and increased borrowing
costs.
Provision for Income Taxes
The Company recorded a benefit for income taxes on the
consolidated pre-tax loss for the quarter ended March 31, 2000 at
an effective rate of 40.0% which approximates the blended state
and federal statutory rates. For the quarter ended March 31,
1999, income taxes were provided for at an effective rate of 44%
on consolidated pre-tax income. The decrease in the effective tax
rate resulted primarily from the reduction in operating losses
incurred by Joyas y Cueros de Costa Rica, S.A. during the
quarter. No income tax benefit is anticipated on losses incurred
by the Company's Costa Rican subsidiary.
Liquidity and Capital Resources
As is customary in the fashion accessories industry,
substantial percentages of the Company's sales and earnings occur
in the months of September, October and November, during which
the Company makes significant shipments of its products to
retailers for sale during the holiday season. As a result,
receivables peak in the fourth quarter. The Company builds
its inventory during the year to meet the demand
for the holiday season. The required cash is provided by a
revolving credit facility.
The Company's working capital decreased by $1,813,000 during
quarter ended March 31, 2000 compared to a decrease of $179,000
for the quarter ended March 31, 1999.
Cash used in operations for the quarter totaled $6,904,000
consisting primarily of the consolidated net loss, increases in
accounts receivable balances, decreases in accounts payable and
income taxes payable, offset in part by a reduction in inventory
balances. Accounts receivable increased by $2,684,000 primarily
due to increased sales
Item 2. Management's Discussion and Analysis of Financial
Condition Results of Operations (continued)
during the period and seasonal reductions in allowances. Accounts
receivable allowances decreased due to actual charges processed
for cash discounts, in-store markdowns, cooperative advertising,
and customer returns primarily relating to 1999. These
reductions are partially offset by increases resulting from
accruals associated with current period sales activity. Income
taxes payable declined by $1,701,000 and income taxes recoverable
increased by $897,000 after tax payments made during the quarter
of $1,517,000 and the recording of a tax benefit for the quarter
of $1,081,000. Inventory levels fell by $992,000 reflecting the
Company's efforts to refocus certain merchandise assortments and
dispose of excess and out-of-line merchandise.
Cash used in investing activities was $415,000 for capital
expenditures and insurance premiums, net of proceeds from asset
dispositions. Cash provided by financing activities totaled
$6,627,000 consisting primarily of net borrowings under the
Company's revolving credit agreement.
Year 2000
Management believes that the Company has been able to modify
its significant software systems to make them Year 2000 compliant
without material effects on the Company's business or results of
operations. The identification of date issues associated with key
applications software developed both internally by the Company
and by third-party vendors and the necessary modifications were
completed at December 31, 1999. The Company to date has not
experienced any Year 2000-events that had a material adverse
affect on its operations or business.
As part of its program to identify and remediate
potential Year 2000 exposures, the Company, beginning in
September 1998, began surveying third parties with whom it had
material business relationships to obtain information and
representations concerning the respective readiness of each
relative to Year 2000. Because many of the Company's third party
relationships are with public companies, the Company also began
reviewing the various public filings of these companies to
monitor the status of their representations concerning Year 2000
readiness. Third parties contacted or monitored included major
customers, determined regardless of whether there is an existing
Electronic Data Interchange ("EDI") relationship, major vendors
and suppliers of key services such as utilities,
telecommunications and banking. As described above, the Company
to date has not experienced any material Year 2000-related
disruptions in its operations arising from third party
relationships. The Company installed Year 2000 compliant EDI
software in 1999 and has to date experienced no material
interruption in electronic sales order processing. A significant
disruption in EDI processing could materially impair the
Company's shipments.
Although no material Year 2000 disruptions have occurred to
date, the Company's seasonality provides something of a buffer
against date-related risks that may be as yet unidentified.
Management has not developed a formal contingency plan to with
regard to potential future risks but the Company intends to
continue to monitor its key relationships with suppliers,
customers, and service providers for any Year 2000 issues that
may arise.
Most of the Company's applications software was internally
developed and the necessary modifications were completed in 1999
utilizing existing internal personnel resources. Management does
not believe that use of existing resources for Year 2000
remediation has been or will be materially detrimental to the
completion of other significant IT projects. The Company
purchased specific Year 2000 upgrades with respect to certain
third party software applications. The aggregate cost of these
upgrades through March 31, 2000 was approximately $75,000. In
addition, the total cost incurred to make the Company's network
Year 2000 compliant was approximately $25,000. The Company does
not believe that any future expenditures related to Year 2000
compliance will be significant.
Item 2. Management's Discussion and Analysis of Financial
Condition Results of Operations (continued)
"Forward Looking Statements"
Certain of the preceding paragraphs contain "forward
looking statements" under the securities laws of the United
States. Actual results may vary from anticipated results as a
result of various risks and uncertainties, including sales
patterns, overall economic conditions, competition, pricing,
consumer buying trends and other factors.
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
During the quarter ended March 31, 2000, there were no material
changes in the information called for by this item from the
information contained in Item 7A of the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1999.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. Description
10.0 Stock Option Contract dated as of April 20, 2000 between
the Company and John J. Macht.
10.1 Stock Option Contract dated as of April 20, 2000 between
the Company and Raymond Vise.
10.2 Stock Option Contract dated as of April 20, 2000 between
the Company and Mark Abramowitz.
10.3 Employment Agreement dated as of April 1, 2000 between the
Company and Eric Luft.
27.0 Financial data schedule.
(b)Reports on Form 8-K.
During the quarter ended March 31, 2000, the Company filed a
Current Report on Form 8-K dated March 16, 2000 with respect
to an event reported under Item 5 - Other Events.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SWANK, INC.
Registrant
/s/ Jerold R. Kassner
_____________________
Jerold R. Kassner
Senior Vice President,
Chief Financial Officer
and Treasurer
Date: May 10, 2000
SWANK, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION CONTRACT
THIS NON-QUALIFIED STOCK OPTION CONTRACT entered into as of
the 20th day of April 2000, between Swank, Inc., a Delaware
corporation (the "Company"), and John J. Macht (the
"Optionee").
W I T N E S S E T H
1. The Company, in accordance with the terms and
conditions of the 1994 Non-Employee Director Stock Option Plan of
the Company (the "Plan"), grants as of April 20, 2000 to the
Optionee an option to purchase an aggregate of 5,000 shares of
the Common Stock, $.10 par value per share, of the Company
("Common Stock"), at $.813 per share, being 100% of the fair
market value of such shares of Common Stock on such date.
2. The term of this option shall be 5 years from April 20,
2000, subject to earlier termination as provided in this Contract
and in the Plan. This option shall be immediately exercisable as
to 100% of the number of shares of Common Stock subject hereto.
3. This option shall be exercised by giving written notice
to the Company at its principal office, presently 6 Hazel Street,
Attleboro, Massachusetts 02703-0962, Attention: Treasurer,
stating that the Optionee is exercising this stock option,
specifying the number of shares being purchased and accompanied
by payment in full of the aggregate purchase price thereof in
cash or by check. In no event may a fraction of a share of
Common Stock be purchased under this option.
4. Notwithstanding the foregoing, and without limiting the
provisions of paragraph 11 of the Plan, this option shall not be
exercisable by the Optionee unless (a) a registration statement
under the Securities Act of 1933, as amended (the "Securities
Act") with respect to the shares of Common stock to be received
upon the exercise of the option shall be effective and current at
the time of exercise or (b) there is an exemption from
registration under the Securities Act for the issuance of the
shares of Common Stock upon exercise. At the request of the
Board of Directors, the Optionee shall execute and deliver to the
Company his representation and warranty, in form and substance
satisfactory to the Board of Directors, that the shares of Common
Stock to be issued upon the exercise of the option are being
acquired by the Optionee for his own account, for investment only
and not with a view to the resale or distribution thereof without
the meaning of the Securities Act. Nothing herein shall be
construed so as to obligate the Company to register the shares
subject to the option under the Securities Act.
5. Notwithstanding anything herein to the contrary, if at
any time the Board of Directors shall determine, in its
discretion, that the listing or qualification of the shares of
Common Stock subject to this option on any securities exchange or
under any applicable law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of an option,
or the issue of shares of Common Stock thereunder, this option
may not be exercised in whole or in part unless such listing,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of
Directors, in its discretion.
6. Nothing in the Plan or herein shall confer upon the
Optionee any right to continue as a director of the Company.
7. The Company may endorse or affix appropriate legends
upon the certificates for shares of Common Stock issued upon
exercise of this option and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as
it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from,
the registration requirement of the Securities Act, or (b)
implement the provisions of the Plan or any agreement between the
Company and the Optionee with respect to such shares of Common
Stock.
8. The Company and the Optionee agree that they will both
be subject to and bound by all of the terms and conditions of the
Plan, a copy of which is attached hereto and made part hereof.
In the event the Optionee is no longer a director of the Company
or in the event of his death or disability (as defined in the
Plan), his rights hereunder shall be governed by and be subject
to the provisions of the Plan. In the event of a conflict
between the terms of this Contract and the terms of the Plan, the
terms of the Plan shall govern.
9. The Optionee represents and agrees that he will comply
with all applicable laws relating to the Plan and the grant and
exercise of the option and the disposition of the shares of
Common Stock acquired upon exercise of the option, including
without limitation, federal and state securities and "blue sky"
laws.
10. This option is not transferrable otherwise than by will
or the laws of descent and distribution and may be exercised,
during the lifetime of the Optionee, only by him or his legal
representatives.
11. This Contract shall be binding upon and inure to the
benefit of any successor or assign of the Company and to any
heir, distributee, executor, administrator or legal
representative entitled under the Plan and by law to the
Optionee's rights hereunder.
12. This Contract shall be governed by and construed in
accordance with the laws of the State of Delaware.
13. The invalidity or illegality of any provision herein
shall not affect the validity of any other provision.
14. The Optionee agrees that the Company may amend the Plan
and the options granted to the Optionee under the Plan, subject
to the limitations contained in the Plan
IN WITNESS WHEREOF, the parties hereto have executed this
contract as of the day and year first above written.
SWANK, INC.
By: /s/ John Tulin
Its: President
/s/ John J. Macht
Optionee
The Macht Group
99 High St., 20th Fl.
Address
Boston, MA 02110
SWANK, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION CONTRACT
THIS NON-QUALIFIED STOCK OPTION CONTRACT entered into as of
the 20th day of April 2000, between Swank, Inc., a Delaware
corporation (the "Company"), and Raymond Vise (the
"Optionee").
W I T N E S S E T H
1. The Company, in accordance with the terms and
conditions of the 1994 Non-Employee Director Stock Option Plan of
the Company (the "Plan"), grants as of April 20, 2000 to the
Optionee an option to purchase an aggregate of 5,000 shares of
the Common Stock, $.10 par value per share, of the Company
("Common Stock"), at $.813 per share, being 100% of the fair
market value of such shares of Common Stock on such date.
2. The term of this option shall be 5 years from April 20,
2000, subject to earlier termination as provided in this Contract
and in the Plan. This option shall be immediately exercisable as
to 100% of the number of shares of Common Stock subject hereto.
3. This option shall be exercised by giving written notice
to the Company at its principal office, presently 6 Hazel Street,
Attleboro, Massachusetts 02703-0962, Attention: Treasurer,
stating that the Optionee is exercising this stock option,
specifying the number of shares being purchased and accompanied
by payment in full of the aggregate purchase price thereof in
cash or by check. In no event may a fraction of a share of
Common Stock be purchased under this option.
4. Notwithstanding the foregoing, and without limiting the
provisions of paragraph 11 of the Plan, this option shall not be
exercisable by the Optionee unless (a) a registration statement
under the Securities Act of 1933, as amended (the "Securities
Act") with respect to the shares of Common stock to be received
upon the exercise of the option shall be effective and current at
the time of exercise or (b) there is an exemption from
registration under the Securities Act for the issuance of the
shares of Common Stock upon exercise. At the request of the
Board of Directors, the Optionee shall execute and deliver to the
Company his representation and warranty, in form and substance
satisfactory to the Board of Directors, that the shares of Common
Stock to be issued upon the exercise of the option are being
acquired by the Optionee for his own account, for investment only
and not with a view to the resale or distribution thereof without
the meaning of the Securities Act. Nothing herein shall be
construed so as to obligate the Company to register the shares
subject to the option under the Securities Act.
5. Notwithstanding anything herein to the contrary, if at
any time the Board of Directors shall determine, in its
discretion, that the listing or qualification of the shares of
Common Stock subject to this option on any securities exchange or
under any applicable law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of an option,
or the issue of shares of Common Stock thereunder, this option
may not be exercised in whole or in part unless such listing,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of
Directors, in its discretion.
6. Nothing in the Plan or herein shall confer upon the
Optionee any right to continue as a director of the Company.
7. The Company may endorse or affix appropriate legends
upon the certificates for shares of Common Stock issued upon
exercise of this option and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as
it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from,
the registration requirement of the Securities Act, or (b)
implement the provisions of the Plan or any agreement between the
Company and the Optionee with respect to such shares of Common
Stock.
8. The Company and the Optionee agree that they will both
be subject to and bound by all of the terms and conditions of the
Plan, a copy of which is attached hereto and made part hereof.
In the event the Optionee is no longer a director of the Company
or in the event of his death or disability (as defined in the
Plan), his rights hereunder shall be governed by and be subject
to the provisions of the Plan. In the event of a conflict
between the terms of this Contract and the terms of the Plan, the
terms of the Plan shall govern.
9. The Optionee represents and agrees that he will comply
with all applicable laws relating to the Plan and the grant and
exercise of the option and the disposition of the shares of
Common Stock acquired upon exercise of the option, including
without limitation, federal and state securities and "blue sky"
laws.
10. This option is not transferrable otherwise than by will
or the laws of descent and distribution and may be exercised,
during the lifetime of the Optionee, only by him or his legal
representatives.
11. This Contract shall be binding upon and inure to the
benefit of any successor or assign of the Company and to any
heir, distributee, executor, administrator or legal
representative entitled under the Plan and by law to the
Optionee's rights hereunder.
12. This Contract shall be governed by and construed in
accordance with the laws of the State of Delaware.
13. The invalidity or illegality of any provision herein
shall not affect the validity of any other provision.
14. The Optionee agrees that the Company may amend the Plan
and the options granted to the Optionee under the Plan, subject
to the limitations contained in the Plan
IN WITNESS WHEREOF, the parties hereto have executed this
contract as of the day and year first above written.
SWANK, INC.
By: /s/ John Tulin
Its: President
/s/ Raymond Vise
Optionee
8 El Paseo
Address
Irvine, CA 92612-2907
SWANK, INC.
1994 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION CONTRACT
THIS NON-QUALIFIED STOCK OPTION CONTRACT entered into as of
the 20th day of April 2000, between Swank, Inc., a Delaware
corporation (the "Company"), and Mark Abramowitz (the
"Optionee").
W I T N E S S E T H
1. The Company, in accordance with the terms and
conditions of the 1994 Non-Employee Director Stock Option Plan of
the Company (the "Plan"), grants as of April 20, 2000 to the
Optionee an option to purchase an aggregate of 5,000 shares of
the Common Stock, $.10 par value per share, of the Company
("Common Stock"), at $.813 per share, being 100% of the fair
market value of such shares of Common Stock on such date.
2. The term of this option shall be 5 years from April 20,
2000, subject to earlier termination as provided in this Contract
and in the Plan. This option shall be immediately exercisable as
to 100% of the number of shares of Common Stock subject hereto.
3. This option shall be exercised by giving written notice
to the Company at its principal office, presently 6 Hazel Street,
Attleboro, Massachusetts 02703-0962, Attention: Treasurer,
stating that the Optionee is exercising this stock option,
specifying the number of shares being purchased and accompanied
by payment in full of the aggregate purchase price thereof in
cash or by check. In no event may a fraction of a share of
Common Stock be purchased under this option.
4. Notwithstanding the foregoing, and without limiting the
provisions of paragraph 11 of the Plan, this option shall not be
exercisable by the Optionee unless (a) a registration statement
under the Securities Act of 1933, as amended (the "Securities
Act") with respect to the shares of Common stock to be received
upon the exercise of the option shall be effective and current at
the time of exercise or (b) there is an exemption from
registration under the Securities Act for the issuance of the
shares of Common Stock upon exercise. At the request of the
Board of Directors, the Optionee shall execute and deliver to the
Company his representation and warranty, in form and substance
satisfactory to the Board of Directors, that the shares of Common
Stock to be issued upon the exercise of the option are being
acquired by the Optionee for his own account, for investment only
and not with a view to the resale or distribution thereof without
the meaning of the Securities Act. Nothing herein shall be
construed so as to obligate the Company to register the shares
subject to the option under the Securities Act.
5. Notwithstanding anything herein to the contrary, if at
any time the Board of Directors shall determine, in its
discretion, that the listing or qualification of the shares of
Common Stock subject to this option on any securities exchange or
under any applicable law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of an option,
or the issue of shares of Common Stock thereunder, this option
may not be exercised in whole or in part unless such listing,
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Board of
Directors, in its discretion.
6. Nothing in the Plan or herein shall confer upon the
Optionee any right to continue as a director of the Company.
7. The Company may endorse or affix appropriate legends
upon the certificates for shares of Common Stock issued upon
exercise of this option and may issue such "stop transfer"
instructions to its transfer agent in respect of such shares as
it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from,
the registration requirement of the Securities Act, or (b)
implement the provisions of the Plan or any agreement between the
Company and the Optionee with respect to such shares of Common
Stock.
8. The Company and the Optionee agree that they will both
be subject to and bound by all of the terms and conditions of the
Plan, a copy of which is attached hereto and made part hereof.
In the event the Optionee is no longer a director of the Company
or in the event of his death or disability (as defined in the
Plan), his rights hereunder shall be governed by and be subject
to the provisions of the Plan. In the event of a conflict
between the terms of this Contract and the terms of the Plan, the
terms of the Plan shall govern.
9. The Optionee represents and agrees that he will comply
with all applicable laws relating to the Plan and the grant and
exercise of the option and the disposition of the shares of
Common Stock acquired upon exercise of the option, including
without limitation, federal and state securities and "blue sky"
laws.
10. This option is not transferrable otherwise than by will
or the laws of descent and distribution and may be exercised,
during the lifetime of the Optionee, only by him or his legal
representatives.
11. This Contract shall be binding upon and inure to the
benefit of any successor or assign of the Company and to any
heir, distributee, executor, administrator or legal
representative entitled under the Plan and by law to the
Optionee's rights hereunder.
12. This Contract shall be governed by and construed in
accordance with the laws of the State of Delaware.
13. The invalidity or illegality of any provision herein
shall not affect the validity of any other provision.
14. The Optionee agrees that the Company may amend the Plan
and the options granted to the Optionee under the Plan, subject
to the limitations contained in the Plan
IN WITNESS WHEREOF, the parties hereto have executed this
contract as of the day and year first above written.
SWANK, INC.
By: /s/ John Tulin
Its: President
/s/ Mark Abramowitz
Optionee
Parker Chapin LLP
The Chrysler Building
405 Lexington Ave.
Address
New York, NY 10174
EMPLOYMENT AGREEMENT
AGREEMENT dated as of April 1, 2000 between SWANK,
INC., a Delaware corporation with an address at 90 Park Avenue,
New York, New York 10016 (the "Corporation"), and ERIC P. LUFT,
residing at 15 Fenimore Lane, Huntington, New York 11743
("Employee").
W I T N E S S E T H:
WHEREAS, Employee has been in the employ of the
Corporation for more than 20 years; and
WHEREAS, the Corporation desires to continue to employ
Employee upon the terms and subject to the conditions hereinafter
set forth; and
WHEREAS, Employee is willing to be employed by the
Corporation upon such terms and conditions of employment.
NOW, THEREFORE, in consideration of the mutual cove
nants contained herein and for other good and valuable considera
tion, the receipt and sufficiency of which is hereby acknowl
edged, the Corporation and Employee hereby agree as follows:
1. Employment and Term.
The Corporation hereby employs Employee, and Employee
hereby accepts employment by the Corporation, on the terms and
conditions herein contained, to perform the duties described in
paragraph 2 for a term (the "Employment Term") commencing on
April 1, 2000 (the "Commencement Date") and, subject to the
remaining provisions of this Agreement, ending on March 31, 2005.
2. Duties.
(a) During the Employment Term, Employee shall serve
as a Senior Vice President of the Corporation. Employee will
perform such duties and responsibilities as from time to time
shall be designated in good faith by the Corporation's President
and/or its Board of Directors, which duties and responsibilities
shall be in accordance with past practice, and shall report to,
and shall be subject to the direction and supervision of, the
President of the Corporation. Employee shall serve the
Corporation faithfully and to the best of his ability and will
devote his full business time and attention to the business and
affairs of the Corporation and its subsidiaries except during
vacation periods and periods of illness or incapacity.
(b) The Corporation and Employee acknowledge and agree
that, while the duties of Employee under this paragraph 2 are
presently intended primarily to be performed at the Corporation's
offices located in the metropolitan New York City area (presently
90 Park Avenue, New York, New York 10016), Employee shall spend
such time at the Corporation's other offices, including those
offices located in Massachusetts, and otherwise travel in
furtherance of the business of the Corporation or the performance
of Employees duties and responsibilities hereunder, as the Board
of Directors or the Corporation's President shall deem necessary,
in accordance with past practice.
3. Compensation and Benefits.
(a) During the Employment Term, in consideration for
the full and complete performance by Employee of his duties and
obligations under this Agreement, the Corporation agrees to pay
Employee a salary ("Base Salary") at the rate of $180,000 per
year payable in accordance with the Corporation's regular pay
intervals for its executive officers or in such other manner as
shall be mutually agreeable to Employee and the Corporation. The
Corporation's Board of Directors may, in its discretion, at any
time and from time to time, increase the Base Salary for Employee
and grant Employee other compensation in addition to that
provided for hereby (in that regard, consistent with past
practices, Employee will be considered by the Corporation for a
salary increase and annual bonus compensation at the same time as
the other executive officers of the Corporation are considered
for a salary increase and such bonus compensation). The Base
Salary described herein and other amounts payable to Employee
hereunder are, in each case, a gross amount, and Employee
acknowledges and agrees that the Corporation shall be required to
withhold, and such Base Salary and other amounts shall be reduced
by, deductions with respect to applicable federal, state and
local taxes, FICA, unemployment compensation taxes and other
required taxes, assessments and withholdings.
(b) During the Employment Term, in consideration for
the full and complete performance by Employee of his duties and
obligations under this Agreement, the Corporation also agrees to
pay Employee commission compensation in an amount equal to the
greater of (i) $160,000 or (ii) sum of (A) .0023 times (1) net
sales (as such term is defined in accordance with the commission
arrangement between Employee and the Corporation for fiscal 1999)
of the men's division of the Corporation (other than sales to
Target Stores) and (2) net sales of the Corporation of small
leather goods only to Target Stores, plus (B) .003 times net
sales of the men's special markets division of the Corporation.
Commissions shall otherwise be calculated and shall be payable in
accordance with past practice.
(c) During the Employment Term, Employee shall be
entitled to participate in any retirement, medical payment,
disability, health or life insurance and other similar benefit
plans and arrangements which may be or become available to
executive officers of the Corporation in general; provided, that
Employee shall be required to comply with the conditions
attendant to coverage by such plans and arrangements and shall
comply with, and be entitled to benefits only in accordance with,
the terms and conditions of such plans and arrangements.
(d) Employee shall be entitled to reimbursement for
expenses reasonably incurred by him in furtherance of the
business of the Corporation and in the performance of his duties
hereunder, on an accountable basis with such substantiation as
the Corporation may at the time require from its executive
officers.
(e) During the Employment Term, the Corporation shall
continue to provide Employee with an automobile consistent with
the current arrangement with Employee and, upon the expiration of
the current lease for such automobile, the Corporation shall
lease or otherwise provide Employee with an automobile of equal
value to that currently leased by the Corporation and provided to
Employee.
(f) Employee shall be entitled to four (4) weeks
vacation in each year during the Employment Term. Such vacation
shall be taken at such time or times as may be mutually agreed
upon by the Corporation and Employee and in accordance with the
vacation policies and procedures for employees of the Corporation
as in effect from time to time.
4. Termination for Disability or Death.
(a) If, during the Employment Term, in the good faith
judgment of the Corporation's Board of Directors, Employee shall,
because of physical or mental illness or incapacity, become
unable to perform the duties and services required of him
pursuant to this Agreement for a period of 120 consecutive days
or for a period of 150 days in any 365-day period, the
Corporation may, upon prior written notice given at any time
after the expiration of such 120-day period or 150-day period, as
the case may be, to Employee of its intention to do so, terminate
this Agreement and the Employment Term to such date as may be set
forth in such notice. In case of such termination, Employee
shall be entitled to receive (i) his Base Salary through the end
of the month in which this Agreement and the Employment Term
shall be terminated, (ii) accrued but unpaid Commissions through
the termination date, (iii) bonus compensation, if any, that
shall have been awarded to Employee prior to such termination,
but not paid to him prior to such termination, plus (iv) an
amount equal to the sum of (A) $160,000 plus (B) one year of his
Base Salary in effect on the date of termination (such sum, the
"Severance Base Amount"). The payment of the Severance Base
Amount provided for in clause (a)(iv) shall be payable in
installments in accordance with the Corporation's regular pay
intervals for its executive officers or in such other manner as
shall be mutually agreeable to Employee and the Corporation. The
foregoing amounts shall be in addition to amounts, if any, that
shall be payable to Employee upon his illness or incapacity under
any disability insurance policy or other disability plan of the
Company.
(b) If, during the Employment Term, Employee shall
die, Employee's legal representatives shall be entitled to
receive (i) his Base Salary through the end of the month in which
his death shall occur, (ii) accrued but unpaid Commissions
through the date of his death, (iii) bonus compensation, if any,
that shall have been awarded to Employee prior to his death, but
not paid to him prior to his death, plus (iv) an amount equal to
the Severance Base Amount. The payment of the Severance Base
Amount provided for in clause (b)(iv) shall be payable in
installments in accordance with the Corporation's regular pay
intervals for its executive officers or in such other manner as
shall be mutually agreeable to Employee's legal representatives
and the Corporation. If Employee shall die after the Employment
Term but during any period in which Employee shall be entitled to
receive amounts under paragraph 5(b) hereof, Employee's legal
representatives shall be entitled to receive all amounts that
Employee would have been entitled to receive under paragraph
5(b).
5. Termination by Corporation; Expiration of the
Employment Term.
(a) The Corporation may terminate this Agreement and
the Employment Term, without liability other than for payment of
accrued but unpaid Base Salary and Commissions through the date
this Agreement shall terminate and the Employment Term ends, "for
cause." The term "for cause" shall mean (i) a willful refusal or
failure (after not less than 14 days notice by the Corporation to
Employee that such refusal or failure will result in termination
of this Agreement and the Employment Term) by Employee to
perform, to the satisfaction of the President or the Board of
Directors, determined in good faith, any duties or
responsibilities assigned to Employee, (ii) a breach in any
material respect by Employee of a term or provision of this
Agreement which is not cured within 14 days after notice of such
breach shall have been given to Employee by the Corporation,
(iii) the commission by Employee of an act involving moral
turpitude, dishonesty, theft, misappropriation of assets, or
unethical business conduct, or any other conduct of Employee
which materially impairs or harms the reputation, or is otherwise
to the material detriment, of the Corporation, or any of its
subsidiaries or affiliates, or which could reasonably be expected
to materially impair or harm the reputation, or be to the
material detriment, of the Corporation, (iv) the use of illegal
drugs or prohibited substances, (v) excessive drinking which, in
the good faith judgment of the President or the Board of
Directors, impairs Employee's ability to perform his duties and
responsibilities hereunder, (vi) the conviction of Employee of,
or the pleading of nolo contendere by Employee to, any felony, or
a misdemeanor involving any of the acts referred to in clause
(a)(iii) above, or the admission by Employee thereto, or (vii)
the breach by Employee of a fiduciary duty or fiduciary
obligation to the Corporation or any of its subsidiaries or
affiliates.
(b) The Corporation may also terminate this Agreement
and the Employment Term at any time without cause. In such
event, provided Employee shall not at any time be in violation of
paragraph 6 hereof, the Corporation shall pay to Employee during
the period commencing on the termination date of this Agreement
and the Employment Term and ending on March 31, 2006, in lieu of
all other compensation from the Company (except as otherwise
provided in this paragraph 5(b) or in paragraph 5(c) below), an
amount at the rate of $340,000 per annum (plus such per annum
amount equal to any increase in Employee's per annum Base Salary
over and above $180,000), which amount shall be payable in
installments in accordance with the Corporation's regular pay
intervals for its executive officers or in such other manner as
shall be mutually agreeable to Employee and the Corporation. In
such event, Employee shall also be entitled to receive accrued
but unpaid Commissions through the termination date and bonus
compensation, if any, that shall have been awarded to Employee
prior to such termination, but not paid to him prior to such
termination.
(c) Notwithstanding anything contained in this
Agreement to the contrary, in the event that Employee's
employment with the Corporation and/or its subsidiaries and
affiliates shall terminate and he shall be entitled to receive
amounts under that certain Termination Agreement effective
January 1, 1999 between the Corporation and Employee (as the same
may be amended, modified or supplemented, and together with any
successor agreements, the "Termination Agreement"), at Employee's
option, Employee shall be entitled to receive either (i) the
amounts, if any, to which he may be entitled under this Agreement
in respect of such termination, or (ii) the amounts to which
Employee may be entitled to receive under the Termination
Agreement, but not both amounts. Employee shall exercise his
option by giving the Corporation written notice thereof in
accordance with the terms and conditions of this Agreement not
later than 14 days after such termination; provided, that if
Employee shall not give such notice, Employee shall be considered
to have opted for the amounts referred to in clause (c)(ii) in
lieu of the amounts referred to in clause (c)(i).
6. Certain Covenants and Agreements.
(a) In consideration of Employee's employment
hereunder, Employee agrees that during the Employment Term and
for a period of one year after the Employment Term expires or is
earlier terminated, as the case may be, (and for such additional
period, if any, during which Employee shall be receiving amounts
from the Corporation pursuant to paragraph 5 hereof), Employee
will not directly or indirectly (i) solicit, induce or entice for
employment, retention or affiliation, recommend to any
corporation, entity or other person the solicitation, inducement
or enticement for employment, retention or affiliation of, or
employ, retain or affiliate with, any employee, consultant,
independent contractor or other person employed or retained by,
or affiliated with, the Corporation, or any of its subsidiaries
or affiliates, (ii) engage in any activity intended to terminate,
disrupt or interfere with the Corporation's or any of its
subsidiary's or affiliate's relationship with any customer,
supplier, lessor or other person or entity, or (iii) engage or
participate in, or have any interest in any corporation, person,
or other entity, that engages or participates in any business or
activity engaged or participated in by the Corporation on date of
termination of the Employment Term. For purposes of this
paragraph 6(a), Employee will be deemed directly or indirectly to
be engaged or participating in the operation of such a business
or activity, or to have an interest in a corporation, or other
person or entity, if he is a proprietor, partner, joint venturer,
shareholder, director, officer, lender, manager, employee,
consultant, advisor or agent, or if he, directly or indirectly
(including as a member of a group), controls all or any part
thereof; provided, that nothing in this paragraph 6(a) shall
prohibit Employee from holding less than two percent (2%) of a
class of a corporation's outstanding securities that are listed
on a national securities exchange or traded in the over-the-
counter market.
(b) Employee acknowledges that by his employment he
will be in a confidential relationship with the Corporation and
will have access to confidential information and trade secrets of
the Corporation, its subsidiaries and affiliates (collectively,
the "Confidential Information"). Confidential Information
includes, but is not limited to, customer and client lists,
financial information, price lists, marketing and sales
strategies and procedures, computer programs, databases and
software, supplier, vendor and service information, personnel
information, operating procedures and techniques, business plans
and systems, and all other records, files, and information in
respect of the Corporation. During the Employment Term and
thereafter, Employee shall maintain the strictest confidentiality
of all Confidential Information and shall not use or permit the
use of, or disclose, discuss, communicate or transmit or permit
the disclosure, discussion, communication or transmission of, any
Confidential Information. This paragraph 6(b) shall not apply to
(i) information that, by means other than Employee's direct or
indirect disclosure, becomes generally known to the public, or
(ii) information the disclosure of which is compelled by law
(including judicial or administrative proceedings and legal pro
cess). In that connection, in the event that Employee is
requested or required (by oral question, interrogatories,
requests for information or documents, subpoenas, civil
investigative demand or other legal process) to disclose any
Confidential Information, Employee agrees to provide the
Corporation with prompt written notice of such request or
requirement so that the Corporation may seek an appropriate
protective order or relief therefrom or may waive the
requirements or this paragraph 6(b). If, failing the entry of a
protective order or the receipt of a waiver hereunder, Employee
is, in the opinion of counsel, compelled to disclose Confidential
Information under pain of liability for contempt or other censure
or penalty, Employee may disclose such Confidential Information
to the extent so required.
(c) In the event of a breach or threatened breach by
Employee of any of the provisions of this paragraph 6, the
Corporation shall be entitled to an injunction to be issued by
any court or tribunal of competent jurisdiction to restrain
Employee from committing or continuing any such violation. In
any proceeding for an injunction, Employee agrees that his abil
ity to answer in damages shall not be a bar or be interposed as a
defense to the granting of a temporary or permanent injunction
against him. Employee acknowledges that the Corporation will not
have an adequate remedy at law in the event of any breach by him
as aforesaid and that the Corporation may suffer irreparable
damage and injury in the event of such a breach by him. Nothing
contained herein shall be construed as prohibiting the Corpora
tion from pursuing any other remedy or remedies available to the
Corporation in respect of such breach or threatened breach.
(d) If any term or provision of this paragraph 6 shall
be held invalid or unenforceable because of its duration,
geographic scope, or for any other reason, the Corporation and
Employee agree that the court making such determination shall
have the power to modify such provision, whether by limiting the
geographic scope, reducing the duration, or otherwise, to the
minimum extent necessary to make such term or provision valid and
enforceable, and such term or provision shall be enforceable in
such modified form.
(e) The provisions of this paragraph 6 shall survive
the termination of this Agreement and the Employment Term.
7. Employee's Representations.
(a) Employee represents and warrants that he has full
authority and legal capacity to execute and deliver this
Agreement and perform his duties and obligations hereunder and is
not under any contractual, legal or other restraint or
prohibition that would restrict, prohibit or prevent Employee
from performing this Agreement and his duties and obligations
hereunder.
(b) Employee acknowledges that he is free to seek
advice from independent counsel with respect to this Agreement.
Employee has obtained such advice and is not relying on any
representation or advice from the Company or any of its officers,
directors, attorneys, or other representatives regarding this
Agreement, its contents or effect.
8. Assignability.
This Agreement may not be assigned by Employee and all
of its terms and conditions shall be binding upon and inure to
the benefit of Employee and his heirs, executors, administrators,
legal representatives and assigns. This Agreement may be
assigned, in whole or in part, by the Corporation and shall be
binding upon and inure to the benefit of the Corporation, its
successors and assigns. Successors of the Corporation shall
include, without limitation, any corporation or other entity
acquiring directly or indirectly all or a substantial part of the
assets of the Corporation whether by merger, consolidation,
purchase, lease or otherwise, and such successor shall thereafter
be deemed the "Corporation" for purposes hereof.
9. Notices.
Except as otherwise expressly provided, any notice,
request, demand or other communication permitted or required to
be given under this Agreement shall be in writing, shall be sent
by one of the following means to Employee at his address set
forth on the first page of this Agreement and to the Corporation
at its address set forth on the first page of this Agreement,
Attention: Mr. John A. Tulin, President, (or to such other
address as shall be designated hereunder by notice to the other
parties and persons receiving copies, effective upon actual
receipt) and shall be deemed conclusively to have been given:
(a) on the first business day following the day timely deposited
for overnight delivery with Federal Express (or other equivalent
national overnight courier service) or United States Express
Mail, with the cost of delivery prepaid or for the account of the
sender; (b) on the fifth business day following the day duly sent
by certified or registered United States mail, postage prepaid
and return receipt requested; or (c) when otherwise actually
received by the addressee on a business day (or on the next
business day if received after the close of normal business hours
or on any non-business day). A copy of each notice, request,
demand or other communication given to the Corporation by
Employee shall be given to William D. Freedman, Esq., Parker
Chapin, LLP, The Chrysler Building, 405 Lexington Avenue, New
York, New York 10174. A copy of each notice, request, demand or
other communication given to Employee by the Corporation shall be
given to Joel W. Walker, Esq., Breslow & Walker, LLP, 767 Third
Avenue, New York, New York 10017.
10. No Waiver by Action, Cumulative Rights, Etc.
Any waiver or consent from either party respecting any
term or provision of this Agreement shall be effective only in
the specific instance and for the specific purpose for which
given and shall not be deemed, regardless of frequency given, to
be a further or continuing waiver or consent. The failure or
delay of either party at any time or times to require performance
of, or to exercise any of its powers, rights or remedies with
respect to, any term or provision of this Agreement in no manner
shall affect that party's right at a later time to enforce any
such term or provision.
11. Interpretation, Headings.
The parties acknowledge and agree that the terms and
provisions of this Agreement have been negotiated, shall be
construed fairly as to all parties hereto, and shall not be
construed in favor of or against any party. The section headings
contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
12. Severability.
The invalidity or unenforceability of any provision of
this Agreement shall not affect, impair or invalidate any other
provision of this Agreement.
13. Counterparts; New York Governing Law; Amendments,
Entire Agreement.
This Agreement may be executed in two counterpart
copies, each of which may be executed by one of the parties
hereto, but both of which, when taken together, shall constitute
a single agreement binding upon the parties hereto. This
Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without
regard to principles of conflicts of laws (or any other
principles or laws that would make the laws of any jurisdiction
other than the State of New York applicable hereto). Each and
every modification and amendment of this Agreement shall be in
writing and signed by the parties hereto, and any waiver of, or
consent to any departure from, any term or provision of this
Agreement shall be in writing and signed by the party granting
the waiver or consent. This Agreement contains the entire
agreement of the parties and supersedes all prior
representations, agreements and understandings, oral or
otherwise, between the parties with respect to the matters
contained herein.
IN WITNESS WHEREOF, the Corporation and Employee have
signed this Agreement on the date set forth on the first page of
this Agreement.
SWANK, INC.
/s/ John Tulin
By: __________________________
John Tulin, President
/s/ Eric P. Luft
_________________________
Eric P. Luft
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