EXHIBIT 10.08
TERMINATION AGREEMENT
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TERMINATION AGREEMENT effective as of October 1, 1996 between SWANK, INC.,
a Delaware corporation having its principal office at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ (the "Company"), and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, residing at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Employee").
W I T N E S S E T H:
WHEREAS, Employee is contemporaneously herewith entering into an Employment
Agreement with the Company pursuant to which, among other things, Employee will
be employed as the Company's Chief Financial Officer; and
WHEREAS, the Company and Employee also desire to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and Employee hereby agree as follows:
1. Term and Operation of Agreement. This Agreement shall be effective for a
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term (the "Term") commencing as of the date hereof and ending on the earlier of
December 31, 1998 or the termination of Employee's employment prior to a Change
in Control of the Company (as hereafter defined); provided, however, that if
there is a Change in Control subsequent to the date hereof but prior to the
termination of this Agreement in accordance with the foregoing, then the Term
shall be automatically extended for a period ending on the second anniversary of
the date of such Change in Control.
For purposes of this Agreement, Employee's employment by the Company shall
be deemed to be continuing (i) for any period during which, in accordance with
any contract between him and the Company ("Employment Agreement"), provision
shall be made for Employee to perform services as an employee of the Company and
Employee shall be entitled to compensation from the Company for same, or (ii) if
there is no Employment Agreement, for any period during which Employee is in
fact performing services as an employee of the Company and receiving
compensation from the Company for same.
Anything in this Agreement to the contrary notwithstanding, neither this
Agreement nor any provision hereof shall be operative until a Change in Control
has occurred, at which time this Agreement and all of its provisions shall
become operative immediately.
2. Change in Control-Termination of Employment and Compensation in Event of
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Termination.
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(a) After a Change in Control has occurred, Employee may terminate his
employment within two years after he has obtained actual knowledge of the
occurrence of any of the
following events:
(i) Failure to elect or appoint, or re-elect or reappoint, Employee
to, or removal of Employee from, his office and/or position with the Company as
constituted immediately prior to the Change in Control, except in connection
with the termination of Employee's employment pursuant to subparagraph 3(a)
hereof.
(ii) A reduction in Employee's overall compensation (including any
reduction in pension or other benefit programs or perquisites) or a significant
change in the nature or scope of the authorities, powers, functions or duties
normally attached to Employee's position with the Company as referred to in
clause (i) of subparagraph 2(a) hereof.
(iii) A determination by Employee made in good faith that, as a result
of a Change in Control, he is unable effectively to carry out the authorities,
powers, functions or duties attached to his position with the Company as
referred to in clause (i) of subparagraph 2 (a) hereof, and the situation is not
remedied within thirty (30) calendar days after receipt by the Company of
written notice from Employee of such determination.
(iv) A breach by the Company of any provision of this Agreement not
covered by clauses (i), (ii) or (iii) of this subparagraph 2(a), which is not
remedied within thirty (30) calendar days after receipt by the Company of
written notice from Employee of such breach.
(v) A change in the location at which substantially all of Employee's
duties with the Company are to be performed to a location which is not within a
20-mile radius of the address of the place where Employee is performing services
immediately prior to the Change in Control.
(vi) A failure by the Company to obtain the assumption of, and the
agreement to perform, this Agreement by any successor (within the meaning of
paragraph 8).
An election by Employee to terminate his employment under the provisions of
this subparagraph 2(a) shall not be deemed a voluntary termination of employment
by Employee for the purpose of interpreting the provisions of any of the
Company's employee benefit plans, programs or policies. Employee's right to
terminate his employment for good reason shall not be affected by his illness or
incapacity, whether physical or mental, unless the Company shall at the time be
entitled to terminate his employment under paragraph 3(a)(ii) of this Agreement.
Employee's continued employment with the Company for any period of time less
than two years after a Change in Control shall not be considered a waiver of any
right he may have to terminate his employment pursuant to this paragraph 2(a).
(b) After a Change in Control has occurred, if Employee terminates his
employment with the Company pursuant to subparagraph 2(a) hereof or if
Employee's employment is terminated by the Company for any reason other than
pursuant to paragraph 3(a) hereof, Employee
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(i) shall be entitled to his salary, bonuses, awards, perquisites and benefits,
including, without limitation, benefits and awards under the Company's stock
option plans and the Company's pension and retirement plans and programs,
through the Termination Date (as hereafter defined) and, in addition thereto,
(ii) shall be entitled to be paid in a lump-sum, on the Termination Date, an
amount of cash (to be computed, at the expense of the Company, by the partner of
Coopers & ▇▇▇▇▇▇▇, L.L.P., independent certified public accountants to the
Company, or such other independent certified accountants regularly employed by
the Company (the "Accountants") in charge of the Company's account immediately
prior to the Change in Control, whose computation shall be conclusive and
binding upon Employee and the Company) equal to 2.99 times Employee's "base
amount" as defined in Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the "Code"). Such lump-sum payment is hereinafter referred to as the
"Termination Compensation." Upon payment of the Termination Compensation and all
amounts to which Employee may be entitled under subparagraph 2(b)(i) , any
Employment Agreement between Employee and the Company shall terminate and be of
no further force or effect; provided, however, that (x) if Employee shall, in
terminating his employment with the Company pursuant to paragraph 2(a), include
in his Notice of Termination (as hereafter defined) his election to enforce his
rights under the provisions of his Employment Agreement and not under the
provisions of this Agreement or (y) if Employee shall, within thirty (30)
calendar days after he has obtained actual knowledge of the termination of his
employment by the Company other than pursuant to paragraph 3(a) of this
Agreement, notify the Company that he intends to enforce his rights under the
Employment Agreement, then, in each such case, any Employment Agreement between
Employee and the Company shall remain in full force and effect and the
provisions of this Agreement shall terminate and be of no further force or
effect and Employee shall hold, for the benefit of the Company, any payment on
account of the Termination Compensation theretofore received by him hereunder,
pending the satisfaction of the Company's obligations to Employee under the
provisions of any Employment Agreement between Employee and the company
(whereupon Employee shall return any such Termination Compensation to the
Company).
(c) For purposes hereof, a Change in Control shall be deemed to have
occurred if there has occurred a change in control as the term "control" is
defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 as
in effect on the date hereof (the "Act"); (ii) when any "Person" (as such term
is defined in Sections 3(a)(9) and 13(d)(3) of the Act), except for an employee
stock ownership trust (or any of the trustees thereof) of the Company, becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five (25%) percent or more of the Company's then outstanding
securities having the right to vote on the election of directors; (iii) during
any period of not more than two (2) consecutive years (not including any period
prior to the execution of this Agreement), individuals who at the beginning of
such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clauses (i), (ii), (iv), (v), (vi) or (vii) of
this subparagraph 2(c)) whose election by the Board or nomination for executive
by the Company's stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who were either directors at the
beginning of the period or whose election or nomination for election was
previously approved, cease for any reason to constitute at least seventy-five
(75%) percent of the entire Board of Directors; (iv) when a majority of the
directors elected at any annual or special
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meeting of stockholders (or by written consent in lieu of a meeting) are not
individuals nominated by the Company's incumbent Board of Directors; (v) if the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the holders of voting securities of the Company outstanding
immediately prior thereto being the holders of at least eighty (80%) percent of
the voting securities of the surviving entity outstanding immediately after such
merger or consolidation; (vi) if the shareholders of the Company approve a plan
of complete liquidation of the Company; or (vii) if the shareholders of the
Company approve an agreement for the sale or disposition of all or substantially
all of the Company's assets. However, the foregoing notwithstanding, no Change
in Control shall be deemed to have occurred as a result of any event specified
in clauses (i)-(.vii) of this paragraph 2(c) if ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇
remains the chief executive officer of the Company following such event.
(d) Notwithstanding anything in this Agreement to the contrary, Employee
shall have the right, prior to the receipt by him of any amounts due hereunder
on amounts referred to in subparagraph 2(b)(i) , to waive the receipt thereof
or, subsequent to the receipt by him of any amounts due hereunder, to treat some
or all of such amounts as a loan from the Company which Employee shall repay to
the Company, within ninety (90) days from the date of receipt, with interest at
the rate provided in Section 7872 of the Code. Notice of any such waiver or
treatment of amounts received as a loan shall be given by Employee to the
Company in writing and shall be binding upon the Company.
(e) It is intended that the "present value" of the payments and benefits
to Employee, whether under this Agreement or otherwise, which are includable in
the computation of "parachute payments" shall not, in the aggregate, exceed 2.99
times the "base amount" (the terms "present value", parachute payments" and
"base amount" being determined in accordance with Section 280G of the Code).
Accordingly, if Employee receives payments or benefits from the Company prior to
payment of the Termination Compensation which, when added to the Termination
Compensation and any other payments or benefits which are required to be
included in the computation of parachute payments which have not been waived or
treated as a loan (as contemplated by subparagraph 2 (d)), would, in the opinion
of the Accountants, subject any of the payments or benefits to Employee to the
excise tax imposed by Section 4999 of the Code, the Termination Compensation
shall be reduced by the smallest amount necessary, in the opinion of the
Accountants, to avoid such tax. In addition, the Company shall have no
obligation to make any payment or provide any benefit to Employee subsequent to
payment of the Termination Compensation which, in the opinion of the
Accountants, would subject any of the payments or benefits to Employee to the
excise tax imposed by Section 4999 of the Code. No reduction in Termination
Compensation or release of the Company from any payment or benefit obligation in
reliance upon any aforesaid opinion of the Accountants shall be permitted unless
the Company shall have provided to Employee a copy of any such opinion,
specifically entitling Employee to rely thereon, no later than the date
otherwise required for payment of the Termination Compensation or any such later
payment or benefit.
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(f) Promptly after a Change in Control occurs, or before a Change in
Control occurs if there is a high degree of probability that a Change in Control
will occur in the immediate future, as determined by the Chief Executive Officer
of the Company, the Company shall deliver to a bank, or other institution
approved by Employee, as escrow agent, an amount of cash funds or short term
investments necessary to fund the Termination Compensation and instruct such
escrow agent to make the payments of such employee benefits due Employee in the
amounts and at the time provided in paragraph 2(b). The amount to be delivered
to such escrow agent hereunder shall be sufficient to fund such payments from
principal, and all income on the escrowed funds shall be paid to the Company at
the time the principal is paid to the Employee; provided, however, that any
income earned after the Termination Date on principal not paid to Employee at
the time provided in paragraph 2(b) shall be paid to Employee at reasonable
intervals.
3. Termination by the Company.
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(a) Except as otherwise provided in any other agreement between Employee
and the Company, Employee's employment may be terminated by the Company without
any further liability under this Agreement if Employee shall (i) die; (ii) be
totally unable to perform the duties and services attached to his position with
the Company for a period of not less than 365 consecutive days due to illness or
incapacity, whether physical or mental; (iii) violate any written contractual
covenant of Employee then in effect in favor of the Company prohibiting Employee
from competing with the Company in any manner materially detrimental to the
Company; or (iv) be convicted of a felony involving an act against the Company
and said conviction shall not have been reversed or be subject to further
appeal, it being expressly understood, however, that conviction for violation of
a criminal statute by reason of actions taken in the course of performance of
Employee's duties as an executive of the Company shall not be deemed to involve
an act against the Company for purposes hereof unless involving a theft,
embezzlement or other fraud against the Company or any of its officers,
directors or employees, or unless involving an act of physical harm to any of
such persons.
(b) After a Change in Control has occurred, if Employee's employment is
terminated by the Company pursuant to subparagraph 3(a) hereof, Employee (or his
widow, or if she shall not survive him, any party designated by Employee by
notice to the Company, or Employee's estate, in the absence of such notice)
shall receive the sums (if any) Employee would otherwise have received if a
Change in Control had not occurred.
4. Notice of Termination and Termination Date.
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(a) Any termination of Employee's employment by the Company or by
Employee shall be communicated by a Notice of Termination to the other party
hereto. For purposes hereof, 'a "Notice of Termination" shall mean a notice
which shall state the "Termination Date" (as hereafter defined) and the specific
reasons, and shall set forth in reasonable detail the facts and circumstances,
for such determination and, in the case of Employee' s termination of employment
pursuant to paragraph 2 (a) (iii) hereof, shall state that Employee has made the
good faith determination required by that subparagraph.
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(b) "Termination Date" shall mean the date specified in the Notice of
Termination as the last day of Employee's employment by the Company, which date
shall not be sooner than the date on which the Notice of Termination is given.
(c) If within thirty (30) calendar days after any Notice of Termination
is given, or, if later, prior to the Termination Date (as determined without
regard to this paragraph 4(c)), the party hereto receiving such Notice of
Termination notifies the other party hereto that a dispute exists concerning the
termination, the Termination Date shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties hereto, by
a binding arbitration award or by a final judgment, order or decree of a court
of competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Termination Date shall be extended by a notice of
dispute only if such notice is given in good faith and the party hereto giving
such notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of such dispute, the Company will continue to pay
to Employee his full compensation (including perquisites and other benefits) in
effect when the notice of dispute was given and continue Employee as a
participant in all employee benefit plans and programs in which he was
participating when the notice of dispute was given, until the dispute is finally
resolved as hereinabove provided.
5. Mitigation. Employee shall not be required to use his best efforts to
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mitigate the payment of the Termination Compensation by seeking other
employment. To the extent that Employee shall, during or after the Term, receive
compensation from any other employment, the payment of Termination Compensation
shall not be adjusted.
6. Arbitration. In the event any dispute arises between the parties hereto,
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Employee and the Company shall each have the right to seek arbitration in New
York, New York under the rules of the American Arbitration Association by giving
written notice of intention to arbitrate to the other party. Any award rendered
in any such arbitration proceeding shall be non-appealable and final and binding
upon the parties hereto, and judgment thereon may be entered in any court of
competent jurisdiction. If Employee prevails in any litigation or arbitration
proceeding brought in accordance herewith, or if any such litigation or
arbitration proceeding is settled, Employee shall be entitled, to the extent not
prohibited by applicable law, to reimbursement from the Company for his
reasonable attorneys' fees and expenses incurred in connection with such
litigation or arbitration proceeding.
7. Indemnification.
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(a) The Company agrees that all rights to indemnification existing
immediately prior to a Change in Control and all rights to indemnification
existing immediately prior to the Termination Date in favor of Employee as
provided in the respective corporate charters and by-laws of the Company and its
subsidiaries shall survive the Termination Date and shall continue in full force
and effect for a period of not less than ten (10) years after the Termination
Date. Until the expiration of such period, the Company shall also indemnify
Employee to the fullest extent permitted by the
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Delaware General Corporation Law; provided, that in the event that any claim
shall be asserted or made within such ten-year period, all rights to
indemnification in respect of any such claim shall continue until disposition of
such claim. Without limiting the foregoing, in the event that Employee becomes
involved in any capacity in any action, proceeding or investigation in
connection with any activities involving the Company occurring on or prior to
the Termination Date, the Company will, subject to paragraph 7(b), advance to
Employee his reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith.
(b) Employee shall give prompt written notice to the Company of any
claim and the commencement of any action, suit or proceeding for which
indemnification may be sought under this paragraph 7, and the Company, through
counsel reasonably satisfactory to Employee, may assume the defense thereof;
provided, however, that Employee shall be entitled to participate in any such
action, suit or proceeding with counsel of his own choice but at his own
expense; and provided, further, the Employee shall be entitled to participate in
any such action, suit or proceeding with counsel of his own choice at the
expense of the Company if, in the good faith judgment of Employee's counsel,
representation by the Company's counsel may present a conflict of interest or
there may be defenses available to Employee which are different from or in
addition to those available to the Company. In any event, if the Company fails
to assume the defense within a reasonable time, Employee may assume such defense
and the reasonable fees and expenses of his attorneys shall be borne by the
Company. No action, suit or proceeding for which indemnification may be sought
shall be compromised or settled in any manner which might adversely affect the
interest of the Company without the prior written consent of the Company.
Notwithstanding anything in this Agreement to the contrary, the Company shall
not, without the written consent of Employee, (i) settle or compromise any
action, suit or proceeding or consent to the entry of any judgment which does
not include as an unconditional term thereof the delivery by the claimant or
plaintiff to Employee of a written release from all liability in respect of such
action, suit or proceeding or (ii) settle or compromise any action, suit or
proceeding in any manner that may materially and adversely affect Employee other
than as a result of money damages or other money payments for which the Company
fully pays.
(c) The Company shall cause to be maintained in effect, for not less
than two (2) years after the Termination Date, the then current policies of the
directors' and officers' liability insurance maintained by the Company and the
Company's subsidiaries provided that the Company may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous so long as no lapse in coverage occurs as a result of such
substitution, and shall use its best efforts to provide such insurance for an
additional three (3) years after the expiration of such two-year period, subject
to the availability of such insurance at commercially reasonable rates (or, if
not available at reasonable rates, then the Company shall purchase similar
insurance but with such lower limits of liability, without change in retention
amounts, as may be available for a premium comparable to that paid by the
Company for the last year of such two-year period), with respect to all matters
occurring prior to and including the Termination Date; provided, that in the
event that any claim shall be asserted or made within such period during which
insurance has been or is to be provided, such insurance shall be continued in
respect of any such claim until final disposition of any
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and all such claims. The Company shall pay all expenses, including reasonable
attorneys' fees, that may be incurred by Employee in enforcing the indemnity and
other obligations provided for in this paragraph 7. The covenant in this
paragraph 7 shall survive the Termination Date and shall continue without time
limit (except as expressly provided in this paragraph 7).
8. Assignability. This Agreement may not be assigned by Employee and all of
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its terms and conditions shall be binding upon and enure to the benefit of
Employee and his heirs, legatees and legal representatives and the Company and
its successors and assignees. Successors of the Company shall include, without
limitation, any corporation or corporations acquiring directly or indirectly all
or substantially all of the assets of the Company, whether by merger,
consolidation, purchase or otherwise, and such successor shall thereafter be
deemed the "Company" for purposes hereof.
9. Notices. All notices, requests, demands and other communications
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provided for hereby shall be in writing and shall be deemed to have been duly
given when delivered personally when received, or sent by registered or
certified mail, return receipt requested, or by Federal Express or other
equivalent overnight courier, in each case with the cost of delivery prepaid, to
the party entitled thereto at the address first above written (in the case of
the Company) or to such address as contained in the Company's records (in the
case of Employee) or to such other address as may be designated by notice
pursuant to this paragraph.
10. Modification. This Agreement may be modified or amended only by an
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instrument in writing signed by Employee and the Company and any provision
hereof may be waived only by an instrument in writing signed by the party hereto
against whom any such waiver is sought to be enforced.
11. Severability. The invalidity or unenforceability of any provision
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hereof shall in no way affect the validity or enforceability of any other
provision contained herein.
12. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
13. Captions. The captioned headings herein are for convenience of
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reference only and are not intended and shall not be construed to have any
substantive effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SWANK, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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