-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D8APTBNrWfqcFrHe+g1Wk0JxPQ3X5yKkAm2mx17a8YCd6gxdJF4NJdXz5kP1JFCc U0HbCU8t7S49ZLuXoAKMkg== 0000039917-97-000004.txt : 19970515 0000039917-97-000004.hdr.sgml : 19970515 ACCESSION NUMBER: 0000039917-97-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: GARAN INC CENTRAL INDEX KEY: 0000039917 STANDARD INDUSTRIAL CLASSIFICATION: APPAREL & OTHER FINISHED PRODS OF FABRICS & SIMILAR MATERIAL [2300] IRS NUMBER: 135665557 STATE OF INCORPORATION: VA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04506 FILM NUMBER: 97604818 BUSINESS ADDRESS: STREET 1: 350 FIFTH AVE CITY: NEW YORK STATE: NY ZIP: 10118 BUSINESS PHONE: 2125632000 MAIL ADDRESS: STREET 1: 350 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10118 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1997 Commission File No 1-4506 GARAN, INCORPORATED (Exact name of registrant as specified in its charter) VIRGINIA 13-5665557 (State of Incorporation) (I.R.S. Employer Identification No.) 350 Fifth Avenue, New York, NY 10118 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 563-2000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Class Outstanding March 31, 1997 Common Stock (no par value) 5,069,892 shares PART I. - FINANCIAL INFORMATION GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
THREE MONTHS ENDED 03/31/97 03/31/96 ____________ _____________ Net sales $ 37,611,000 $ 26,882,000 Cost of sales 28,458,000 20,907,000 ____________ ____________ Gross margin on sales 9,153,000 5,975,000 Selling and administrative expenses 5,597,000 4,951,000 Interest on capitalized leases 27,000 29,000 Interest income (689,000) (658,000) ___________ ___________ Earnings before provision for income taxes 4,218,000 1,653,000 Provision for income taxes 1,677,000 651,000 ___________ ___________ Net earnings $ 2,541,000 $ 1,002,000 =========== =========== Earnings per share data: Earnings per share $ 0.50 $ 0.20 Average common shares outstanding 5,070,000 5,070,000 Dividends paid per share $ 0.20 $ 0.20
GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
SIX MONTHS ENDED 03/31/97 03/31/96 ____________ _____________ Net sales $ 68,604,000 $ 59,906,000 Cost of sales 52,369,000 47,457,000 ____________ ____________ Gross margin on sales 16,235,000 12,449,000 Selling and administrative expenses 10,973,000 9,834,000 Interest on capitalized leases 52,000 59,000 Interest income (1,384,000) (1,316,000) ___________ ___________ Earnings before provision for income taxes 6,594,000 3,872,000 Provision for income taxes 2,616,000 1,529,000 ___________ ___________ Net earnings $ 3,978,000 $ 2,343,000 =========== =========== Earnings per share data: Earnings per share $ 0.78 $ 0.46 Average common shares outstanding 5,070,000 5,070,000 Dividends paid per share $ 0.60 $ 0.60
GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
03/31/97 9/30/96 ____________ _____________ ASSETS Current Assets: Cash and cash equivalents $ 10,577,000 $ 20,587,000 U.S. Government securities - short-term 12,731,000 12,568,000 Accounts receivable, less estimated uncollectibles of $508,000 at 03/31/97 and $514,000 at 9/30/96 23,405,000 26,041,000 Inventories 31,756,000 28,639,000 Other current assets 4,787,000 5,558,000 Total current assets 83,256,000 93,393,000 U.S. Government Securities - long-term 17,759,000 7,003,000 Property, plant and equipment, less accumulated depreciation and amortization 13,930,000 14,915,000 Other assets 4,797,000 4,236,000 TOTAL $ 119,742,000 $ 119,547,000 ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 4,344,000 $ 4,609,000 Accrued liabilities 10,893,000 11,321,000 Federal and state income taxes payable 1,535,000 1,572,000 Current portion of capitalized leases 124,000 124,000 Total current liabilities 16,896,000 17,626,000 Capitalized lease obligations, net of current portion 2,893,000 2,937,000 Deferred income taxes 2,876,000 2,843,000 Shareholders' Equity: Preferred stock ($10 par value) 500,000 shares authorized; none issued Common stock (no par value) 15,000,000 shares authorized; 5,069,892 issued at 03/31/97 and 9/30/96 2,535,000 2,535,000 Additional paid-in-capital 5,821,000 5,821,000 Retained earnings 88,721,000 87,785,000 Total shareholders' equity 97,077,000 96,141,000 TOTAL $ 119,742,000 $ 119,547,000 ============ ============
GARAN, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED 03/31/97 03/31/96 ____________ _____________ Cash Flows From Operating Activities: Net earnings $ 3,978,000 $ 2,343,000 Non cash items included in earnings: Depreciation and amortization 1,550,000 1,778,000 Provision for losses on accounts receivable 51,000 14,000 Deferred income taxes 33,000 40,000 Changes in assets and liabilities: U.S. Government Securities - short-term (2,297,000) 1,488,000 Accounts receivable 2,585,000 11,492,000 Inventories (3,117,000) (8,737,000) Other current assets 771,000 (2,500,000) Accounts payable (265,000) (2,703,000) Accrued liabilities (428,000) (930,000) Income taxes payable (37,000) (463,000) Other assets (561,000) (95,000) Net Cash Flows From Operating Activities 2,263,000 1,727,000 Cash Flows From Investing Activities: Sale of U.S. Gov't securities - long-term 6,028,000 0 Purchase of U.S. Gov't securi- ties - long-term (14,650,000) 0 Additions to property plant and equipment (576,000) (1,349,000) Proceeds from sales of property, plant and equipment 11,000 0 Net Cash Flows From Investing Activities (9,187,000) (1,349,000) Cash Flows From Financing Activities: Payment of dividends (3,042,000) (3,042,000) Repayment of capitalized lease obligations (44,000) (43,000) Net Cash Flows From Financing Activities (3,086,000) (3,085,000) Increase in Cash and Cash Equivalents (10,010,000) (2,707,000) Cash and Cash Equivalents At Beginning of Period 20,587,000 8,649,000 Cash and Cash Equivalents At End of Period $ 10,577,000 $ 5,942,000 ============ ============ Supplemental Disclosures Cash Paid During The Period For: Interest $ 52,000 $ 59,000 Income taxes 2,680,000 1,494,000 ============ ============
GARAN, INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1997 (UNAUDITED) 1. In the opinion of management, all adjustments necessary to a fair statement of the results of operations have been reflected. 2. Earnings per share are calculated on the basis of the weighted average number of common shares outstanding during the period. 3. Inventories consist of the following:
03/31/97 09/30/96 ____________ _____________ Raw Materials $ 4,417,000 $ 3,115,000 Work in process 6,013,000 6,837,000 Finished Goods 21,326,000 18,687,000 ___________ ____________ $ 31,756,000 $ 28,639,000 =========== ============
ITEM 2. GARAN, INCORPORATED AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION At March 31, 1997, working capital was $66,360,000, a decrease of $9,407,000 from September 30, 1996, working capital of $75,767,000. The decrease was primarily a result of the $10,756,000 increase in long-term U.S. Government Securities, which are not included in working capital. Shareholders' equity at March 31, 1997, was $97,077,000, or $19.14 book value per share, as compared to $96,141,000, or $18.96 book value per share, at September 30, 1996. RESULTS OF OPERATIONS Three and Six Month Periods Ended March 31, 1997, and March 31, 1996. Net sales for the second quarter of fiscal 1997 were $37,611,000 compared to $26,882,000, for the same period last year. Net earnings for the second quarter were $2,541,000, equal to $0.50 per share, compared to $1,002,000, or $0.20 per share, last year. The increase in net sales for the quarter was due to higher unit sales, predominantly in the children's area, partially offset by a decline in the average selling price due to product mix changes. Net sales for the first six months of fiscal 1997 were $68,604,000 compared to $59,906,000, for the same period last year. Net earnings for the six month period were $3,978,000, equal to $0.78 per share, compared to $2,343,000, or $0.46 per share, last year. Gross margin for the three month period ended March 31, 1997, was $9,153,000, or 24.3% of net sales, compared to $5,975,000, or 22.2% of net sales, for the comparable period last year. Gross margin for the six months ended March 31, 1997, was $16,235,000, or 23.7% of net sales, compared to $12,449,000, or 20.8% of net sales, for the comparable period last year. The increase in gross margin was due primarily to improvements in manufacturing efficiency and absorption of overhead. Selling and administrative expenses for the three months ended March 31, 1997, were $5,597,000, or 14.9% of net sales, as compared to $4,951,000, or 18.4% of net sales, for the comparable period last year. Selling and administrative expenses for the six months ended March 31, 1997, were $10,973,000, or 16.0% of net sales, as compared to $9,834,000, or 16.4% of net sales, for the comparable period last year. The selling and administrative expenses dollar cost increase occurred in information systems and royalty expenses. Information systems cost increases are related to improvements to internal operating systems and development and implementation of systems related to customer service. Royalty expenses are variable and relate to sales volume of sports and Disney licensed products. PART II. - OTHER INFORMATION ITEM 4.Submission of Matters to a Vote of Security Holders. At the Annual Meeting of the shareholders of the registrant held on February 28, 1997, Stephen J. Donohue, Jerald Kamiel, and William J. Wilson were reelected as directors of the registrant and the selection of Citrin Cooperman & Company, LLP as the registrant's independent certified public accountants for the fiscal year ending September 30, 1997, was ratified. The tabulation of the votes is as follows: Votes For Votes Withheld --------- -------------- Stephen J. Donohue 4,361,647 28,246 Jerald Kamiel 4,386,107 3,786 William J. Wilson 4,386,113 3,780 Votes For Against Abstain --------- ------- ------- Ratification of Accountants 4,381,123 922 8,048 ITEM 6. Exhibits and Reports on Form 8-K. a. Exhibits Exhibit 10.1 Employment and Consulting Agreement amended and restated as of October 1, 1996, between the registrant and Seymour Lichtenstein Exhibit 10.2 Employment Agreement amended and restated as of October 1, 1996, between the registrant and Jerald Kamiel Exhibit 10.3 Employment Agreement amended and restated as of October 1, 1996, between the registrant and William J. Wilson Exhibit 10.4 Employment Agreement amended and restated as of October 1, 1996, between the registrant and Rodney Faver Exhibit 27. Financial Data Schedule b. Reports on Form 8-K No reports have been filed on Form 8-K during the quarter ended March 31, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on it's behalf by the undersigned thereunto duly authorized. GARAN, INCORPORATED BY:Seymour Lichtenstein Seymour Lichtenstein Principal Executive Officer BY:William J. Wilson William J. Wilson Principal Financial Officer DATE: May 14, 1997 EX-10.1 2 GARAN, INCORPORATED 350 Fifth Avenue New York, New York 10118 January 15, 1997 Mr. Seymour Lichtenstein 791 Park Avenue New York, New York 10021 Dear Seymour: We are writing to amend and restate, effective as of October 1, 1996, the agreement between you and Garan, Incorporated ("Garan") originally entered into as of October l, 1986, and subsequently amended and restated (the agreement as amended and now again restated, "Employment and Consulting Agreement") with respect to your (i) continuing employment by Garan and (ii) retention by Garan as a consultant. We have agreed that: l. Position, Duties, and Period of Employment. 1.l. Position. Garan hereby continues to employ you, and you agree to accept continued employment, as Chairman and Chief Executive Officer. 1.2. Duties. During the period of your employment under this Employment and Consulting Agreement ("Employment Term"), except for vacations, holidays, and personal days, as each is authorized by and consistent with the practices of Garan, and absences due to psychological, emotional, or physical reasons, you shall devote your full business time, skill, and energy to the business and affairs of Garan, and you shall use your best efforts to promote the best interests of Garan. 1.3. Period of Employment. Your employment under this Employment and Consulting Agreement shall be for a term ("Employment Term") ending September 30, 2000 ("Term End"). 2. Base Compensation, Annual Bonus, and Executive Employee Benefits. 2.1. Base Compensation and Annual Bonus. During the Employment Term, Garan shall pay to you base compensation ("Base Compensation") in each 12 month period commencing October 1 and ending September 30 ("Fiscal Year") as determined from time to time by the Board of Directors of Garan ("Board"), but for the Fiscal Year ending September 30, 1997, and for each Fiscal Year thereafter, such amount shall be not less than $530,000. [References to Base Compensation in this and Consulting Agreement shall not give effect to any salary reduction agreement.] In addition to payment of Base Compensation, the Board may determine, but is not obligated to, to pay to you an annual Fiscal Year bonus ("Annual Bonus"). 2.2. Executive Employee Benefits. During the Employment Term, Garan shall provide you with employee benefits determined from time to time by the Board, which employee benefits shall be at least as favorable as those provided to other senior executives of Garan, and Garan shall maintain a life insurance policy on your life payable to your designated beneficiary or beneficiaries in the principal amount of not less than $1,000,000. 3. Termination of Employment. 3.1. Voluntary Termination After a Change of Control Event. If a Change of Control Event, as such term is defined in Annex I to this Employment and Consulting Agreement, occurs at any time during the Employment Term, within 6 months after such Change of Control Event you may give notice to Garan terminating your employment. Such termination of employment shall be effective on a date set by you but not later than 30 days after you give notice of termination to Garan. In the event of such voluntary termination, Garan will pay to you cash severance equal to 2.99 times the sum of (a) the average of your Base Compensation determined by the Board in accordance with the provisions of Section 2.1 for each of the 5 Fiscal Years ending with the Fiscal Year preceding the Fiscal Year in which the Change of Control Event occurs plus (b) the average of your last 5 Annual Bonuses determined by the Board in accordance with Section 2.1 prior to the Change of Control Event. Such severance shall be payable to you on the next business day after the last day you render services under this Employment and Consulting Agreement. It is expressly agreed that this Section 3.1 shall not apply if the Change of Control Event is a result of a completed "management buyout" of Garan in which you participate as an equity investor. 3.2. Termination by Garan Other Than for Cause. If Garan for any reason other than for Cause as defined in Annex I to this Employment and Consulting Agreement terminates your employment prior to October 1, 2000: 3.2.a. Garan shall pay to you an amount equal to (i) the greater of (x) two times your Base Compensation plus two times your last Annual Bonus as each was last determined by the Board pursuant to Section 2.1 prior to the date of such termination and (y) three times your Base Compensation as last determined by the Board pursuant to Section 2.1 prior to the date of such termination and (ii) three times your Annual Consulting Payment as determined pursuant to Section 4.2 (assuming the Consulting Term commenced on the date of termination). Such amount shall be payable in cash, one-third within five business days of such termination, one-third on the first anniversary of such termination, and one-third on the second anniversary of such termination, and 3.2.b. Garan shall continue to provide you with executive employee benefits as provided in Section 2.2, or alternatively, shall provide you with life insurance, medical reimbursement, disability, and accidental death and dismemberment benefit coverage at levels no less favorable than those in effect for you pursuant to Section 2.2 on the date of termination of your employment if such executive employee benefits were being provided to you by Garan immediately prior to the termination of your employment, for a period equal to the lesser of (i) two years following the date of termination of your employment or September 30, 2000, whichever comes later, or (ii) until you are provided by another employer with benefits substantially comparable to the benefits described in this Section 3.2.b. 3.3. Termination by Garan for Cause. Garan shall have the right to terminate your employment under this Employment and Consulting Agreement at any time upon a determination by Garan to dismiss you for Cause as defined in Annex I to this Employment and Consulting Agreement. Upon such termination for Cause, Garan's sole obligation shall be to pay you any accrued but unpaid Base Compensation and executive employee benefits described in Sections 2.1 and 2.2 as of the date of the termination of your employment. 3.4. Death. Upon your death during the term of this Employment and Consulting Agreement prior to your becoming Disabled (as defined in Section 3.5), this Employment and Consulting Agreement shall terminate, and all obligations of Garan under this Employment and Consulting Agreement shall terminate simultaneously therewith, except that Garan shall pay to your designated beneficiaries, or if no beneficiaries are designated, to your estate, any amounts under Sections 2 and 3 which are unpaid and earned to the date of your death. In addition, Garan shall pay to your designated beneficiaries, or if no beneficiaries are designated, to your estate, an amount equal to 150% of the total of your then Base Compensation and last Annual Bonus as each was last determined by the Board in accordance with Section 2.1, in 12 equal monthly installments commencing with the first day of the month following the date of your death. 3.5. Disability. 3.5.a. In the event you incur a Disability, until the earlier of the date of your death or the date you become Disabled (as such terms are defined in Section 3.5.e), Garan shall continue to pay to you your Base Compensation as last determined by the Board in accordance with the provisions of Section 2.1 and continue your executive employee benefits set forth in Section 2.2. 3.5.b. If you become Disabled, regardless of your death after you became Disabled, Garan (i) shall (x) continue to pay you monthly until the later of the Term End or 18 months from the date that you became Disabled, but for not more than 36 months, 1/12th of the total of your Base Compensation in effect at the date you incurred the Disability plus an amount equal to your last Annual Bonus as each was determined by the Board pursuant to the provisions of Section 2.1 prior to the date you incurred the Disability and (y) beginning in the month after the payments pursuant to Section 3.5.a(i)(x) end, for a period of 60 months, an amount equal to 1/12th of 50% of your Annual Consulting Payment determined pursuant to Section 4.2 (assuming the Consulting Period commenced on the date you incurred the Disability), reduced in either case by the gross amount payable as a result of such Disability under any disability or salary continuation policy or plan, the cost of which is paid by Garan, and (ii) during the periods set forth in Section 3.5.a(i), continue your other executive employee benefits set forth in Section 2.2 as in effect at the first day that you were unable to carry out your duties because of psychological, emotional, or physical reasons which resulted in your Disability. 3.5.c. If you become Disabled, (i) Garan can remove you from the position that you then hold and (ii) the provisions of Sections 3.2 and 3.4 shall no longer apply, provided that neither Garan nor you shall be relieved of any other obligations under this Employment and Consulting Agreement. 3.5.d. If you die after incurring a Disability but prior to becoming Disabled, the provisions of Section 3.4 shall apply in lieu of the provisions of this Section 3.5. 3.5.e. For purposes of this Section 3.5, Disability shall mean that you are unable to substantially carry out your obligations under this Employment and Consulting Agreement because of psychological, emotional, or physical reasons, and Disabled shall mean that your Disability has continued for a period of 90 consecutive days or for an aggregate of 120 days during any period of 360 consecutive days. 3.6. Automobile. Within 30 days following the last day that you render services as an employee or consultant to Garan under this Employment and Consulting Agreement, the date of your death, or the date on which you became Disabled, you or your Estate shall have the right to elect to purchase from Garan the automobile then owned and supplied to you by Garan, if any, at the value thereof on Garan's books at such time. Payment shall be made in cash on the 30th day after you make such election. 3.7. Parachute Payments. If any amounts payable pursuant to this Employment and Consulting Agreement which are deemed to constitute Parachute Payments, as defined in Annex I to this Employment Agreement, when added to any other payments which are deemed to constitute Parachute Payments, would result in the imposition on you of an excise tax under Section 4999 of the Internal Revenue Code of l986, as amended from time to time, the amounts payable under this Employment and Consulting Agreement shall be reduced by the smallest amount necessary to avoid the imposition of such excise tax. 4. Consulting Services. 4.1. Consulting Term. Commencing with the date after (a) any voluntary termination by you of your employment pursuant to Section 3.1 or otherwise or (b) the Term End, and ending 5 years thereafter ("Consulting Term"), Garan shall retain you to render to it services of an advisory or consultative nature relating to your prior duties during your employment pursuant to this Employment and Consulting Agreement so that Garan may have the benefit of the experience, knowledge, and contacts gained by you as an officer and director of Garan. You agree to render to Garan such services if and when called upon in writing in advance by not less than 3 business days by Garan at such time or times as may be mutually agreed by Garan and you, by telephone, letter, or in person, provided that: (i) you are not temporarily more than 100 miles of New York City at the date such notice is given to you at your New York City residence, (ii) you only shall be obliged to devote an aggregate of 20 hours in any monthly period during the period of your retention as a consultant under this Employment and Consulting Agreement to the rendering of such services, (iii) you are reimbursed for all reasonable expenses incurred in the performance of such services, including but not limited to, transportation, secretarial, and office expenses, (iv) you shall not be obliged to travel to render such services outside of the Metropolitan New York City area, and (v) your failure to render such services due to prior engagements, vacations, holidays or the like, or your inability to render such services due to psychological, emotional, or physical reasons, shall not affect your right to receive your Annual Consulting Payment under this Employment and Consulting Agreement. 4.2. Compensation. During the Consulting Term, Garan shall (a) pay to you compensation in each 12 month period ("Annual Consulting Payment") in an amount determined by the Board but not less than 66-2/3% of the greater of (i) the total of your Base Compensation plus your Annual Bonus as each was last determined by the Board pursuant to Section 2.1 prior to the Consulting Term and (ii) the total of your Base Compensation in the last fiscal year of Garan in which you were employed under this Employment and Consulting Agreement plus the average of your last two Annual Bonuses as each was determined by the Board pursuant to Section 2.1, (b) continue to provide you with executive employee benefits as provided in Section 2.2, or alternatively provide you with life insurance, medical reimbursement, disability, and accidental death and dismemberment benefit coverage at levels no less favorable than those in effect for you pursuant to Section 2.2 on the date of termination of your employment, and (c) maintain a life insurance policy on your life payable to your designated beneficiary or beneficiaries in the principal amount of not less than $1,000,000. 4.3. Termination by Garan Other Than for Cause. If Garan shall terminate your retention as a consultant prior to the expiration of the Consulting Term for any reason other than Cause as defined in Annex I to this Employment and Consulting Agreement, Garan shall pay you an amount equal to three times your Annual Consulting Payment as determined pursuant to Section 4.2. Such amount shall be payable in cash one-third within five business days of such termination, one-third on the first anniversary of such termination, and one-third on the second anniversary of such termination. 4.4. Termination by Garan for Cause. Garan shall have the right to terminate your consultancy under this Employment and Consulting Agreement at any time upon a determination by Garan to dismiss you for Cause as defined in Annex I to this Employment and Consulting Agreement. Upon such termination for Cause, Garan's sole obligation shall be to pay you any accrued but unpaid compensation and benefits described in Section 4.2, as of the date of the termination of your consultancy. 4.5. Death. Upon your death during the Consulting Term your retention as a consultant under this Employment and Consulting Agreement shall terminate, and all obligations of Garan under this Employment and Consulting Agreement shall terminate simultaneously therewith, except that Garan shall pay to your designated beneficiaries, or if no beneficiaries are designated, then to your estate, any amounts under Section 4.2 which are unpaid and earned to the date of your death. In addition, Garan shall pay to your designated beneficiaries, or if no beneficiaries are designated, then to your estate, an amount equal to 150% of your Annual Consulting Payment at the date of your death as determined in accordance with Section 4.2 in 12 equal monthly installments commencing with the first day of the month following the date of your death. 4.6. Disability. 4.6.a. In the event of your "Disability" as defined in Section 3.5.e during the Consulting Term, except as otherwise provided in Section 4.6.b, Garan shall (i) continue to pay you monthly on and after the date you incurred the Disability, until the end of the Consulting Term, an amount equal to 1/12th of 50% of your Annual Consulting Payment determined pursuant to Section 4.2, reduced by the gross amount payable as a result of such Disability under any disability policy or plan, the cost of which is paid by Garan, and (ii) during the period set forth in Section 4.6.(a)(i), continue your other executive employee benefits set forth in Section 4.2 as in effect at the first day that you were unable to carry out your duties because of psychological, emotional, or physical reasons which resulted in your Disability. 4.6.b. If you die after incurring a Disability but prior to the end of the Consulting Term, the provisions of Section 4.5 shall apply in lieu of the provisions of this Section 4.6. 5. Trade Secrets, Non-Competition, Non-Interference, and Non-Disparagement. 5.1. Trade Secrets. You acknowledge that: (a) your employment by Garan throughout the term of this Employment and Consulting Agreement and prior thereto will bring and has brought you into close contact with many confidential affairs of Garan, (b) the business of Garan is conducted throughout the United States and abroad and competes with similar businesses of other organizations, (c) Garan carries on substantial promotional, marketing, and/or sales activities throughout the United States and abroad, and (d) the covenants contained in Sections 5.2 and 5.3 of this Employment and Consulting Agreement are specific inducements by you to Garan in connection with the execution of this Employment and Consulting Agreement. 5.2. Non-Competition. In recognition of the provisions of Section 5.1 and as consideration for your continued employment by Garan, the payment by Garan to you of compensation, and Garan providing you with benefits, you agree that: 5.2.a. While you are performing services for Garan pursuant to this Employment and Consulting Agreement, and at all times thereafter, you shall not disclose, communicate, or divulge to any person (other than to officers, directors, or employees of Garan and its subsidiaries whose duties require such knowledge) or use for your personal benefit or for the benefit of anyone other than Garan and its subsidiaries, any trade secrets, specifications, sales or merchandising plans, programs, research, or other confidential information employed in or proposed to be employed in the business of Garan and its subsidiaries which comes to or came to your knowledge in the course of or by reason of your employment by Garan, or your performance under this Employment and Consulting Agreement. 5.2.b. In the event that (i) your employment or consulting retention pursuant to this Employment and Consulting Agreement is terminated by Garan pursuant to Section 3.2, 3.3, 4.3, or 4.4 or (ii) the term of this Employment and Consulting Agreement ends, for so long as Garan continues to pay you in accordance with its payroll practices, but for not more than the 12 month period beginning on the last day you render services to Garan, compensation if you were an employee at an annual rate equal to the greater of (x) the total of your Base Compensation in effect at the last day that you render services to Garan plus your Annual Bonus as each was last determined by the Board pursuant to Section 2.1, or (y) the total of your average annual Base Compensation in the 24 month period ending on the last day that you render services to Garan plus the average of your last two Annual Bonuses as each was determined by the Board pursuant to Section 2.1 or compensation if you were a consultant at an annual rate equal to your Annual Consulting Payment, you shall not directly or indirectly, enter into or in any manner take part as an employee, agent, independent contractor, consultant, owner, sole proprietor, partner, joint venturer, member, officer, director, or shareholder or take part in any other capacity in, for, or with any person, firm, corporation, association, or business enterprise, or in any manner render any assistance to any business or endeavor, whose business activities are the same, similar to, or competitive with any part of the business which is conducted by Garan and its subsidiaries during the course of your employment by Garan prior to and pursuant to this Employment and Consulting Agreement in any state in the United States and in any territory, possession, or foreign country, provided that the provisions of this Section 5.2.b shall not preclude you from ownership, as an investor, of less than 5% of the stock of a publicly owned company which engages in such business activities. The provisions of this Section 5.2.b may not be invoked by Garan if Garan terminates your employment upon or after a Change of Control Event unless the Change in Control Event is a result of a completed "management buyout" of Garan in which you participate as an equity investor. In the event Garan determines to pay you for the 12-month period referred to above, it shall do so for minimum periods of 3 months, and it shall give you notice that it is invoking the provisions of this Section 5.2.b and that it will compensate you accordingly. The initial such notice shall be given together with the notice of termination referred to in Section 3.2 or 3.3, as applicable, or 15 days prior to the end of the term of this Employment and Consulting Agreement, and, thereafter, not later than 15 days prior to the beginning of each subsequent 3-month period. 5.3. Non-Interference. Upon the termination of your services for Garan under this Employment and Consulting Agreement, until the one year anniversary date of the last day that you render services pursuant to this Employment and Consulting Agreement, neither you nor any person, firm, corporation, association, or business enterprise with which you are affiliated as an employee, agent, independent contractor, consultant, partner, joint venturer, member, officer, director, or shareholder shall directly or indirectly induce or attempt to induce any employee of Garan or any of its subsidiaries to terminate or alter his or her employment relationship with Garan or any of its subsidiaries, or directly or indirectly hire any person who is or had been employed by Garan or any of its subsidiaries. The provisions of this Section 5.3 may not be invoked by Garan if you terminate your employment pursuant to Section 3.1 or Garan terminates your employment or consulting retention upon or after a Change of Control Event. 5.4. Non-Disparagement. During the Employment Term, Consulting Term, and thereafter, (a) you shall not directly or indirectly, disparage the name, reputation, or products of Garan and (b) Garan shall not, directly or indirectly, disparage your name or reputation. 5.5. Additional Provisions. 5.5.a. In the event that the provisions of Sections 5.2, 5.3, or 5.4 should be deemed unenforceable, invalid, or overbroad in whole or in part for any reason, any court of competent jurisdiction is, or the Arbitrators appointed in accordance with the provisions of Section 6 are, hereby authorized, requested, and instructed to reform such sections consistent with the intent of Sections 5.2, 5.3, or 5.4 to provide for the maximum restraints upon (i) your activities (including, but not limited to, time, geographic area, employee solicitation, and disparagement), (ii) and with respect to Section 5.4, Garan's activities, which may then be legal and valid. 5.5.b. You and Garan agree that violation by you of the provisions of Sections 5.1, 5.2, 5.3, or 5.4 or by Garan of the provisions of Section 5.4 will cause irreparable injury to the other for which any remedy at law would be inadequate, and that the injured party shall be entitled in any court of law or equity or in any arbitration proceeding in accordance with Section 5, whichever forum is designated by the injured party, to temporary, preliminary, permanent, and other injunctive relief against any breach of the provisions contained in such sections, and such punitive and compensatory damages as shall be awarded. Further, in the event of a violation of the provisions of Sections 5.1, 5.2, 5.3, or 5.4, (i) the period of non-disclosure, non-competition, employee non-interference, or non-disparagement referred to therein shall be extended for a period of time equal to that period beginning on the date when such violation commenced and ending when the activities constituting that violation shall be finally terminated, and (ii) Garan shall have the right to suspend your compensation and benefits and payments made pursuant to Section 5.2.b until the activities constituting that violation shall be finally terminated. 6. Arbitration and Jurisdiction. 6.1. Arbitration. Except as otherwise alternatively provided in Section 5.5 relating to the reformation of the non-competition, employee non-interference, and non-disparagement provisions and obtaining injunctive relief, any controversy or claim arising out of or relating to this Employment and Consulting Agreement, or the breach thereof, shall be settled by arbitration by one Arbitrator in New York, New York, in accordance with the Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator may be entered in any court having jurisdiction thereof. 6.2. Consent to Jurisdiction. Each of you and Garan hereby consents to the jurisdiction of the Supreme Court of the State of New York for the County of New York and the United States District Court for the Southern District of New York for all purposes in connection with (a) the arbitration referred to in Section 6.1 and (b) this Employment and Consulting Agreement, and further consents that any process or notice of motion in connection therewith may be served by certified or registered mail or by personal service in accordance with the provisions of Section 7, within or without the State of New York, provided a reasonable time for appearance is allowed. 7. Notice. All notices provided for in this Employment and Consulting Agreement shall be in writing and shall be given by registered or certified mail, return receipt requested, and by regular mail, both with postage prepaid, or personally delivered, to the addresses set forth below, and shall be deemed given when sent. The addresses referred to above are: Your address: 791 Park Avenue New York, New York 10021 Garan: 350 Fifth Avenue New York, New York 10118 Attn: President With a copy to: Tannenbaum Dubin & Robinson, LLP 1140 Avenue of the Americas New York, New York 10036 Attn: Marvin S. Robinson, Esq. Either you or Garan at any time may give notice of another address in accordance with the provisions of this Section 7. 8. Governing Law, Amendment, and Binding Effect, etc. 8.1 This Employment and Consulting Agreement (a) shall be governed by and construed in accordance with the laws of the State of New York as if it were an agreement made and to be performed entirely within such State, (b) may not be modified or amended except by a writing signed by each of Garan or its successors and you, (c) may not be assigned by Garan except as provided in Section 8.2 or by you, (d) shall be binding upon each of Garan and its successors and you and your distributees, personal representatives, executors, and administrators, and (e) contains the entire agreement and understanding between Garan and you with respect to the subject matter hereof and supersedes all prior agreements, arrangements, and understandings, written or oral, between Garan and you with respect to the subject matter of this Employment and Consulting Agreement. 8.2 If Garan shall be merged into or consolidated with another entity, or another entity acquires substantially all of the assets of Garan, the provisions of this Employment and Consulting Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation or acquiring such assets. Garan will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of Garan, by an agreement in form and substance satisfactory to you, to expressly assume and agree to perform this Employment and Consulting Agreement in the same manner and to the same extent that Garan would be required to perform it if no such succession had taken place. The provisions of the prior sentences also shall apply in the event of any subsequent mergers, consolidations, or transfers of assets. 9. Withholding; Mitigation of Damages. 9.1. Garan, to the extent permitted by law, shall have the right to deduct from any payment or benefit of any kind otherwise due to you under this Employment and Consulting Agreement, any Federal, state, or local taxes of any kind required to be withheld. 9.2. Except as provided in Sections 3.5.a and 4.6.a, all payments and benefits to which you are entitled under this Employment and Consulting Agreement shall be made and provided without offset, deduction, or mitigation on account of income you may receive from other employment or otherwise. 10. Litigation Expenses. Garan shall pay all of your costs and expenses, including attorneys' fees and disbursements, in connection with any legal proceedings (including, but not limited to, arbitration), whether or not instituted by Garan or you, relating to the interpretation or enforcement of any provision of this Employment and Consulting Agreement. If the foregoing correctly sets forth our agreement, please execute and return the enclosed copy of this letter. Sincerely, GARAN, INCORPORATED By:_________________________ Jerald Kamiel, President ACCEPTED AND AGREED: ______________________ Seymour Lichtenstein ANNEX I CERTAIN DEFINITIONS As used in this Employment and Consulting Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated: "Cause" means willful and gross misconduct on your part that is materially and demonstrably detrimental to Garan or the commission by you of one or more acts which constitute an indictable crime under Federal, state, or local law, as determined in good faith by a written resolution duly adopted by the affirmative vote of a majority of all of the directors then serving on Garan's Board of Directors at a meeting duly called and held for that purpose after reasonable notice to you and opportunity for you and your counsel to be heard. "Change of Control Event" means any one of the following: (a) Continuing Directors no longer constitute at least a majority of Garan's Board of Directors, (b) any person or group of persons (as defined in Rule 13d-5 under the Securities Exchange Act of 1934), together with its affiliates, become the beneficial owner, directly or indirectly, of at least 40% of Garan's then outstanding Common Stock, (c) the approval by Garan's shareholders of the merger or consolidation of Garan with any other corporation, the sale of substantially all of the assets of Garan or the liquidation or dissolution of Garan, unless, in the case of a merger or consolidation, the incumbent Continuing Directors in office immediately prior to such merger or consolidation will constitute at least a majority of the directors of the surviving corporation of such merger or consolidation and any parent (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934) of such corporation, and such surviving corporation (and such parent, if any) shall have at least five directors, or (d) at least a majority of the incumbent Continuing Directors in office immediately prior to any other action proposed to be taken by Garan's shareholders or by Garan's Board of Directors determines that such proposed action, if taken, would constitute a Change of Control of Garan and such proposed action is thereafter taken. "Continuing Director" means any individual who is a member of Garan's Board of Directors on October 1, 1996, or who thereafter is designated (before such person's initial election as a director) as a Continuing Director by a majority of the then Continuing Directors. "Parachute Payment" means any payment deemed to constitute a "parachute payment" as defined in Section 280G of the Internal Revenue Code of 1986 as amended from time to time. EX-10.2 3 GARAN, INCORPORATED 350 Fifth Avenue New York, New York 10036 January 15, 1997 Mr. Jerald Kamiel 2 Sylvan Court Livingston, New Jersey 07039 Dear Jerry: We are writing to amend and restate, effective as of October 1, 1996, the agreement between you and Garan, Incorporated ("Garan") originally entered into as of October l, l986, and subsequently amended and restated (the agreement as amended and now again restated, "Employment Agreement") with respect to your continuing employment by Garan. We have agreed that: l. Position, Duties, and Period of Employment. 1.l. Position. Garan hereby continues to employ you, and you agree to accept continued employment, as President and Chief Operating Officer. 1.2. Duties. During the period of your employment under this Employment Agreement ("Employment Term"), except for vacations, holidays, and personal days, as each is authorized by and consistent with the practices of Garan, and absences due to psychological, emotional, or physical reasons, you shall devote your full business time, skill, and energy to the business and affairs of Garan, and you shall use your best efforts to promote the best interests of Garan. 1.3. Period of Employment. 1.3.a. Subject to Section 3, your employment under this Employment Agreement shall be for a term ("Initial Term") ending, as at the effective date of the restatement of this Employment Agreement, September 30, 1999. 1.3.b. The Initial Term of this Employment Agreement shall be extended by six months each April l and October l during the term of this Employment Agreement commencing April l, l997, unless prior to such date either (i) you notify Garan that you elect to terminate this Employment Agreement at the end of the Initial Term or the then extended term, or (ii) Garan notifies you that Garan elects to terminate this Employment Agreement at the end of the Initial Term or the then extended term. (The end of the Initial Term or, if the term is extended, the extended term, is hereinafter referred to as the "Term End.") The intent of this Section 1.3.b is that, for example, if neither you nor Garan gives such notice of termination on or before March 31, l997, the term of this Employment Agreement will be extended automatically to March 31, 2000, and if thereafter either you or Garan gives such notice of termination on or before September 30, 1997, the term of this Employment Agreement shall end on March 31, 2000. 1.3.c.1. In the event that Garan notifies you pursuant to the provisions of Section l.3.b that it elects to terminate this Employment Agreement at the Term End, Garan shall include in such notice either a request that you render services or a direction that you are not to render services under this Employment Agreement after a date not more than 30 days after such notice, solely at its option. 1.3.c.2. If Garan requests you to render services and you do not give the notice referred to in the next sentence, thereafter (unless and until you voluntarily terminate your employment in accordance with the provisions of Section 3.l) until the Term End Garan shall continue (a) to pay to you in accordance with its payroll practices compensation at an annual rate equal to the greater of (i) the total of your Base Compensation in effect at the date of such notice plus your last Annual Bonus, as each was last determined by the Board of Directors of Garan ("Board") pursuant to Section 2.1, or (ii) the total of your average Base Compensation in the 12 month period ending on the date of the notice plus the average of your last two Annual Bonuses, as each was determined by the Board, and (b) Garan shall continue to provide you with your other benefits as in effect at the date of the notice or, at your option, as in effect one year prior to the date of the notice. 1.3.c.3. If Garan requests you to render services and, within 30 days after notice is given to you pursuant to Section 1.3.c.1, you notify Garan that you will not render further services under this Employment Agreement after a date set by you but not later than 30 days after your notice to Garan, or if Garan directs you in such notice not to render services, (a) Garan shall pay to you an amount equal to three times your Base Compensation as last determined prior to the date of such notice by the Board pursuant to Section 2.1 plus three times your last Annual Bonus determined by the Board, and (b) Garan shall continue to provide you until the Term End with your other benefits as in effect at the date of such notice or, at your option, as in effect one year prior to the date of such notice. The amount determined in accordance with (a) shall be payable in cash, one-third within five business days after the last day you render services under this Employment Agreement, one-third on the first anniversary of the last day you render services, and one-third on the second anniversary of the last day you render services. If Garan requests you to render services and, within 30 days after the notice is given to you pursuant to Section 1.3.c.1, you notify Garan that you will not render further services under this Employment Agreement, or if Garan directs you not to render services under this Employment Agreement, you shall be relieved of your obligations pursuant to Sections 1.1 and 1.2 after the last day that you render services under this Employment Agreement, but neither you nor Garan shall be relieved of any other obligations under this Employment Agreement. If Garan directs you to render services and you continue to do so, the provisions of Section 3.1.a shall no longer apply but neither you nor Garan shall be relieved of any other obligations under this Employment Agreement. 2. Base Compensation, Annual Bonus, and Executive Employee Benefits. 2.1. Base Compensation and Annual Bonus. During the Employment Term, Garan shall pay to you base compensation in each 12 month period commencing October 1 and ending September 30 ("Fiscal Year") as determined from time to time by the Board ("Base Compensation"), but for the Fiscal Year ending September 30, 1997, and for each Fiscal Year thereafter, such amount shall be not less than $345,000. [References to Base Compensation in this Employment Agreement shall not give effect to any salary reduction agreement.] In addition to payment of Base Compensation, the Board may determine, but is not obligated to, to pay to you an annual Fiscal Year bonus ("Annual Bonus"). 2.2. Executive Employee Benefits. During the Employment Term, Garan shall provide you with employee benefits determined from time to time by the Board, which employee benefits shall be at least as favorable as those provided to other senior executives of Garan, and Garan shall maintain a life insurance policy on your life payable to your designated beneficiary or beneficiaries in the principal amount of not less than $l,000,000. 3. Termination of Employment. 3.1. Voluntary Termination. If (a) Garan's present chief executive officer ceases to serve in such position for any reason and within 6 months of such event either (i) you are not given the opportunity to become chief executive officer of Garan on terms reasonably acceptable to you and Garan, or (ii) Garan employs another chief executive officer, then within 30 days after the earlier of the expiration of such 6 month period or employment of another chief executive officer, you may give notice to Garan terminating your employment, or (b) a Change of Control Event, as such term is defined in Annex I to this Employment Agreement, occurs at any time during the Employment Term, within 6 months after such Change of Control Event you may give notice to Garan terminating your employment. Such termination of employment shall be effective on a date set by you but not later than 30 days after you give notice of termination to Garan. In the event of such voluntary termination, Garan will pay to you cash severance equal to 2.99 times the sum of (i) the average of your Base Compensation determined by the Board in accordance with Section 2.1 for each of the 5 Fiscal Years ending with the Fiscal Year preceding the Fiscal Year in which either the current chief executive officer ceases to serve in such position or a Change of Control Event occurs plus (ii) the average of your last 5 Annual Bonuses determined by the Board in accordance with Section 2.1 prior to the commencement of the 6 month period after the current chief executive officer ceases to serve in such position or the Change of Control Event. Such severance shall be payable to you on the next business day after the last day you render services under this Employment Agreement. It is expressly agreed that the provisions of Section 3.1.b shall not apply if the Change of Control Event is a result of a completed "management buyout" of Garan in which you participate as an equity investor. 3.2. Termination by Garan Other Than for Cause. If Garan terminates your employment prior to the Term End for any reason other than as provided in Section 1.3.c or for Cause as defined in Annex I to this Employment Agreement: 3.2.a. Garan shall pay to you an amount equal to three times your Base Compensation plus three times your last Annual Bonus as each was last determined prior to the date of such termination by the Board pursuant to Section 2.1. Such amount shall be payable in cash, one-third within five business days of such termination, one-third on the first anniversary of such termination, and one-third on the second anniversary of such termination, and 3.2.b. Garan shall continue to provide you with executive employee benefits as provided in Section 2.2, or alternatively shall provide you with life insurance, medical reimbursement, disability, and accidental death and dismemberment benefit coverage at levels no less favorable than those in effect for you pursuant to Section 2.2 on the date of termination of your employment if such executive employee benefits were being provided to you by Garan immediately prior to the termination of your employment, for a period equal to the lesser of (i) two years following the date of termination of your employment or until the date of the Term End, whichever comes later, or (ii) until you are provided by another employer with benefits substantially comparable to the benefits described in this Section 3.2.b. 3.3. Termination by Garan for Cause. Garan shall have the right to terminate your employment under this Employment Agreement at any time upon a determination by Garan to dismiss you for Cause as defined in Annex I to this Employment Agreement. Upon such termination for Cause, Garan's sole obligation shall be to pay you any accrued but unpaid Base Compensation and executive employee benefits described in Sections 2.1 and 2.2 as of the date of the termination of your employment. 3.4. Death. Upon your death during the term of this Employment Agreement prior to your becoming Disabled (as defined in Section 3.5), this Employment Agreement shall terminate and all obligations of Garan under this Emp loyment Agreement shall terminate simultaneously therewith, except that Garan shall pay to your designated beneficiaries, or if no beneficiaries are designated, to your estate, any amounts under Sections 2 and 3 which are unpaid and earned to the date of your death. In addition, Garan shall pay to your designated beneficiaries, or if no beneficiaries are designated, to your estate, an amount equal to 150% of the total of your then Base Compensation and your last Annual Bonus as each was last determined by the Board in accordance with Section 2.1, in 12 equal monthly installments commencing with the first day of the month following the date of your death. 3.5. Disability. 3.5.a. In the event you incur a Disability, until the earlier to occur of the date of your death or the date you become Disabled (as such terms are defined in Section 3.5.e), Garan shall continue to pay to you your Base Compensation as last determined by the Board in accordance with the provisions of Section 2.1 and continue your executive employee benefits set forth in Section 2.2. 3.5.b. If you become Disabled, Garan shall (i) continue to pay you monthly, regardless of your death after you become Disabled, until the later of the Term End or 18 months from the date that you became Disabled, but for not more than 36 months, 1/12th of the total of your Base Compensation in effect at the date you incurred the Disability plus an amount equal to your last Annual Bonus as each was determined by the Board pursuant to the provisions of Section 2.1 prior to the date you incurred the Disability, reduced by the gross amount payable as a result of such Disability under any disability or salary continuation policy or plan, the cost of which is paid by Garan, and (ii) during the period set forth in Section 3.5.a(i), continue your other executive employee benefits set forth in Section 2.2 as in effect at the first day that you were unable to carry out your duties because of psychological, emotional, or physical reasons which resulted in your Disability. 3.5.c. If you become Disabled, (i) Garan can remove you from the position that you then hold and (ii) the provisions of Sections 3.2 and 3.4 shall no longer apply, provided that neither Garan nor you shall be relieved of any other obligations under this Employment Agreement. 3.5.d. If you die after incurring a Disability but prior to becoming Disabled, the provisions of Section 3.4 shall apply in lieu of the provisions of this Section 3.5. 3.5.e. For purposes of this Section 3.5, Disability shall mean that you are unable to substantially carry out your obligations under this Employment Agreement because of psychological, emotional, or physical reasons, and Disabled shall mean that your Disability has continued for a period of 90 consecutive days or for an aggregate of 120 days during any period of 360 consecutive days. 3.6. Automobile. Within 30 days following the last day that you render services as an employee to Garan under this Employment Agreement, the date of your death, or the date on which you become Disabled, you or your Estate shall have the right to elect to purchase from Garan the automobile then owned and supplied to you by Garan, if any, at the value thereof on Garan's books at such time. Payment shall be made in cash on the 30th day after you make such election. 3.7. Parachute Payments. If any amounts payable pursuant to this Employment Agreement which are deemed to constitute Parachute Payments, as defined in Annex I to this Employment Agreement, when added to any other payments which are deemed to constitute Parachute Payments, would result in the imposition on you of an excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended from time to time, the amounts payable under this Employment Agreement shall be reduced by the smallest amount necessary to avoid the imposition of such excise tax. 4. Trade Secrets, Non-Competition, Non- Interference, and Non-Disparagement. 4.1. Trade Secrets. You acknowledge that: (a) your employment by Garan throughout the term of this Employment Agreement and prior thereto will bring and has brought you into close contact with many confidential affairs of Garan, (b) the business of Garan is conducted throughout the United States and abroad and competes with similar businesses of other organizations, (c) Garan carries on substantial promotional, marketing, and/or sales activities throughout the United States and abroad, and (d) the covenants contained in Sections 4.2 and 4.3 of this Employment Agreement are specific inducements by you to Garan in connection with the execution of this Employment Agreement. 4.2. Non-Competition. In recognition of the provisions of Section 4.1 and as consideration for your continued employment by Garan, the payment by Garan to you of compensation, and Garan providing you with benefits, you agree that: 4.2.a. While you are performing services for Garan pursuant to this Employment Agreement, and at all times thereafter, you shall not disclose, communicate, or divulge to any person (other than to officers, directors, or employees of Garan and its subsidiaries whose duties require such knowledge) or use for your personal benefit or for the benefit of anyone other than Garan and its subsidiaries, any trade secrets, specifications, sales or merchandising plans, programs, research, or other confidential information employed in or proposed to be employed in the business of Garan and its subsidiaries which comes to or came to your knowledge in the course of or by reason of your employment by Garan, or your performance under this Employment Agreement. 4.2.b. In the event that(i)(x) Garan notifies you in accordance with the provisions of Section l.3.c.2 that you either (1) are requested to render services under this Employment Agreement and you then notify Garan pursuant to the provisions of Section 1.3.c.3 that you will not render further services or (2) are directed not to render services under this Employment Agreement, or (y) your employment pursuant to this Employment Agreement is terminated by Garan pursuant to Section 3.2 or 3.3, or (z) the term of this Employment Agreement ends, and (ii) Garan notifies you that it invokes the provisions of this Section 4.2.b within five business days after its direction to you not to render services or after the date you give notice that you will not render further services, or not later than five business days prior to the Term End, or includes such notice in the notice of termination pursuant to Section 3.2 or 3.3, then Garan shall pay you monthly in advance for the 12-month period beginning on the last day you render services to Garan, compensation at an annual rate equal to the greater of (A) the total of your Base Compensation in effect at the last day that you render services to Garan plus your last Annual Bonus as each was last determined by the Board pursuant to Section 2.1, or (B) the total of your average annual Base Compensation in the 24 month period ending on the last day that you render services to Garan plus the average of your last two Annual Bonuses as each was determined by the Board pursuant to Section 2.1, and you shall not directly or indirectly, enter into or in any manner take part as an employee, agent, independent contractor, consultant, owner, sole proprietor, partner, joint venturer, member, officer, director, or shareholder or take part in any other capacity in, for, or with any person, firm, corporation, association, or business enterprise, or in any manner render any assistance to any business or endeavor, whose business activities are the same, similar to, or competitive with any part of the business which is conducted by Garan and its subsidiaries during the course of your employment by Garan prior to and pursuant to this Employment Agreement in any state in the United States and in any territory, possession, or foreign country, provided that the provisions of this Section 4.2.b shall not preclude you from ownership, as an investor, of less than 5% of the stock of a publicly owned company which engages in such business activities. The provisions of this Section 4.2.b may not be invoked by Garan if Garan terminates your employment upon or after a Change of Control Event unless the Change in Control Event is a result of a completed "management buyout" of Garan in which you participate as an equity investor. 4.3. Non-Interference. Upon the termination of your services for Garan under this Employment Agreement, until the one year anniversary date of the last day that you render services pursuant to this Employment Agreement, neither you nor any person, firm, corporation, association, or business enterprise with which you are affiliated as an employee, agent, independent contractor, consultant, partner, joint venturer, officer, director, or shareholder shall directly or indirectly induce or attempt to induce any employee of Garan or any of its subsidiaries to terminate or alter his or her employment relationship with Garan or any of its subsidiaries, or directly or indirectly hire any person who is or had been employed by Garan or any of its subsidiaries. The provisions of this Section 4.3 may not be invoked by Garan if you terminate your employment pursuant to Section 3.1 or Garan terminates your employment upon or after a Change of Control Event. 4.4. Non-Disparagement. During the Employment Term and thereafter, (a) you shall not directly or indirectly, disparage the name, reputation, or products of Garan and (b) Garan shall not, directly or indirectly, disparage your name or reputation. 4.5. Additional Provisions. 4.5.a. In the event that the provisions of Sections 4.2, 4.3, or 4.4 should be deemed unenforceable, invalid, or overbroad in whole or in part for any reason, any court of competent jurisdiction is, or the Arbitrators appointed in accordance with the provisions of Section 5 are, hereby authorized, requested, and instructed to reform such sections consistent with the intent of Sections 4.2, 4.3, or 4.4 to provide for the maximum restraints upon (i) your activities (including, but not limited to, time, geographic area, employee solicitation, and disparagement), (ii) and with respect to Section 4.4, Garan's activities, which may then be legal and valid. 4.5.b. You and Garan agree that violation by you of the provisions of Sections 4.1, 4.2, 4.3, or 4.4 or by Garan of the provisions of Section 4.4 will cause irreparable injury to the other for which any remedy at law would be inadequate, and that the injured party shall be entitled in any court of law or equity or in any arbitration proceeding in accordance with Section 5, whichever forum is designated by the injured party, to temporary, preliminary, permanent, and other injunctive relief against any breach of the provisions contained in such sections, and such punitive and compensatory damages as shall be awarded. Further, in the event of a violation of the provisions of Sections 4.1, 4.2, 4.3, or 4.4, (i) the period of non-disclosure, non-competition, employee non-interference, or non-disparagement referred to therein shall be extended for a period of time equal to that period beginning on the date when such violation commenced and ending when the activities constituting that violation shall be finally terminated, and (ii) Garan shall have the right to suspend your compensation and benefits and payments made pursuant to Section 4.2.b until the activities constituting that violation shall be finally terminated. 5. Arbitration and Jurisdiction. 5.1. Arbitration. Except as otherwise alternatively provided in Section 4.5 relating to the reformation of the non-competition, employee non-interference, and non-disparagement provisions and obtaining injunctive relief, any controversy or claim arising out of or relating to this Employment Agreement, or the breach thereof, shall be settled by arbitration by one Arbitrator in New York, New York, in accordance with the Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator may be entered in any court having jurisdiction thereof. 5.2. Consent to Jurisdiction. Each of you and Garan hereby consents to the jurisdiction of the Supreme Court of the State of New York for the County of New York and the United States District Court for the Southern District of New York for all purposes in connection with (a) the arbitration referred to in Section 5.1 and (b) this Employment Agreement, and further consents that any process or notice of motion in connection therewith may be served by certified or registered mail or by personal service in accordance with the provisions of Section 6, within or without the State of New York, provided a reasonable time for appearance is allowed. 6. Notice. All notices provided for in this Employment Agreement shall be in writing and shall be given by registered or certified mail, return receipt requested, and by regular mail, both with postage prepaid, or personally delivered, to the addresses set forth below, and shall be deemed given when sent. The addresses referred to above are: Your address: 2 Sylvan Court Livingston, New Jersey 07039 Garan: 350 Fifth Avenue New York, New York 10118 Attn: Chairman With a copy to: Tannenbaum Dubin & Robinson, LLP 1140 Avenue of the Americas New York, New York 10036 Attn: Marvin S. Robinson, Esq. Either you or Garan at any time may give notice of another address in accordance with the provisions of this Section 6. 7. Governing Law, Amendment, and Binding Effect, etc. 7.1 This Employment Agreement (a) shall be governed by and construed in accordance with the laws of the State of New York as if it were an agreement made and to be performed entirely within such State, (b) may not be modified or amended except by a writing signed by each of Garan or its successors and you, (c) may not be assigned by Garan except as provided in Section 7.2 or by you, (d) shall be binding upon each of Garan and its successors and you and your distributees, personal representatives, executors, and administrators, and (e) contains the entire agreement and understanding between Garan and you with respect to the subject matter hereof and supersedes all prior agreements, arrangements, and understandings, written or oral, between Garan and you with respect to the subject matter of this Employment Agreement. 7.2 If Garan shall be merged into or consolidated with another entity, or another entity acquires substantially all of the assets of Garan, the provisions of this Employment Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation or acquiring such assets. Garan will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of Garan, by an agreement in form and substance satisfactory to you, to expressly assume and agree to perform this Employment Agreement in the same manner and to the same extent that Garan would be required to perform it if no such succession had taken place. The provisions of the prior sentences also shall apply in the event of any subsequent mergers, consolidations, or transfers of assets. 8. Withholding; Mitigation of Damages. 8.1. Garan, to the extent permitted by law, shall have the right to deduct from any payment or benefit of any kind otherwise due to you under this Employment Agreement, any Federal, state, or local taxes of any kind required to be withheld. 8.2. Except as provided in Section 3.5.a, all payments and benefits to which you are entitled under this Employment Agreement shall be made and provided without offset, deduction, or mitigation on account of income you may receive from other employment or otherwise. 9. Litigation Expenses. Garan shall pay all of your costs and expenses, including attorneys' fees and disbursements, in connection with any legal proceedings (including, but not limited to, arbitration), whether or not instituted by Garan or you, relating to the interpretation or enforcement of any provision of this Employment Agreement. If the foregoing correctly sets forth our agreement, please execute and return the enclosed copy of this letter. Sincerely, GARAN, INCORPORATED By: ______________________________ Seymour Lichtenstein, Chairman ACCEPTED AND AGREED: ____________________ Jerald Kamiel ANNEX I CERTAIN DEFINITIONS As used in this Employment Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated: "Cause" means willful and gross misconduct on your part that is materially and demonstrably detrimental to Garan or the commission by you of one or more acts which constitute an indictable crime under Federal, state, or local law, as determined in good faith by a written resolution duly adopted by the affirmative vote of a majority of all of the directors then serving on Garan's Board of Directors at a meeting duly called and held for that purpose after reasonable notice to you and opportunity for you and your counsel to be heard. "Change of Control Event" means any one of the following: (a) Continuing Directors no longer constitute at least a majority of Garan's Board of Directors, (b) any person or group of persons (as defined in Rule 13d-5 under the Securities Exchange Act of 1934), together with its affiliates, become the beneficial owner, directly or indirectly, of at least 40% of Garan's then outstanding Common Stock, (c) the approval by Garan's shareholders of the merger or consolidation of Garan with any other corporation, the sale of substantially all of the assets of Garan, or the liquidation or dissolution of Garan, unless, in the case of a merger or consolidation, the incumbent Continuing Directors in office immediately prior to such merger or consolidation will constitute at least a majority of the directors of the surviving corporation of such merger or consolidation and any parent (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934) of such corporation, and such surviving corporation (and such parent, if any) shall have at least five directors, or (d) at least a majority of the incumbent Continuing Directors in office immediately prior to any other action proposed to be taken by Garan's shareholders or by Garan's Board of Directors determines that such proposed action, if taken, would constitute a Change of Control of Garan and such proposed action is thereafter taken. "Continuing Director" means any individual who is a member of Garan's Board of Directors on October 1, 1996, or who thereafter is designated (before such person's initial election as a director) as a Continuing Director by a majority of the then Continuing Directors. "Parachute Payment" means any payment deemed to constitute a "parachute payment" as defined in Section 280G of the Internal Revenue Code of 1986 as amended from time to time. EX-10.3 4 GARAN, INCORPORATED 350 Fifth Avenue New York, New York 10036 January 15, 1997 Mr. William J. Wilson 79 Benedict Hill Road New Canaan, Connecticut 06840 Dear Bill: We are writing to amend and restate, effective as of October 1, 1996, the agreement between you and Garan, Incorporated ("Garan") originally entered into as of October l, 1986, and subsequently amended and restated (the agreement as amended and now again restated, "Employment Agreement") with respect to your continuing employment by Garan. We have agreed that: l. Position, Duties, and Period of Employment. 1.l. Position. Garan hereby continues to employ you, and you agree to accept continued employment, as Vice President - Finance and Administration. 1.2. Duties. During the period of your employment under this Employment Agreement ("Employment Term"), except for vacations, holidays, and personal days, as each is authorized by and consistent with the practices of Garan, and absences due to psychological, emotional, or physical reasons, you shall devote your full business time, skill, and energy to the business and affairs of Garan, and you shall use your best efforts to promote the best interests of Garan. 1.3. Period of Employment. Your employment under this Employment Agreement shall be for a term ending September 30, 2000 ("Term End"). 2. Base Compensation, Annual Bonus, and Executive Employee Benefits. 2.1. Base Compensation and Annual Bonus. During the Employment Term, Garan shall pay to you base compensation ("Base Compensation") in each 12 month period commencing October 1 and ending September 30 ("Fiscal Year") as determined from time to time by the Board of Directors of Garan ("Board"), but for the Fiscal Year ending September 30, 1997, and for each Fiscal Year thereafter, such amount shall be not less than $205,000. [References to Base Compensation in this Employment Agreement shall not give effect to any salary reduction agreement.] In addition to payment of Base Compensation, the Board may determine, but is not obligated to, to pay to you an annual Fiscal Year bonus ("Annual Bonus"). 2.2. Executive Employee Benefits. During the Employment Term, Garan shall provide you with employee benefits determined from time to time by the Board, which employee benefits shall be at least as favorable as those provided to other senior executives of Garan, and Garan shall maintain a life insurance policy on your life payable to your designated beneficiary or beneficiaries in the principal amount of not less than $500,000. 3. Termination of Employment. 3.1.Voluntary Termination After a Change of Control Event. If a Change of Control Event, as such term is defined in Annex I to this Employment Agreement, occurs at any time during the Employment Term, within 6 months after such Change of Control Event you may give notice to Garan terminating your employment. Such termination of employment shall be effective on a date set by you but not later than 30 days after you give notice of termination to Garan. In the event of such voluntary termination, Garan will pay to you cash severance equal to 2.99 times the sum of (a) the average of your Base Compensation determined by the Board in accordance with the provisions of Section 2.1 for each of the 5 Fiscal Years ending with the Fiscal Year preceding the Fiscal Year in which the Change of Control Event occurs plus (b) the average of your last 5 Annual Bonuses determined by the Board in accordance with Section 2.1 prior to the Change of Control Event. Such severance shall be payable to you on the next business day after the last day you render services under this Employment Agreement. It is expressly agreed that this Section 3.1 shall not apply if the Change of Control Event is a result of a completed "management buyout" of Garan in which you participate as an equity investor. 3.2. Termination by Garan Other Than for Cause. If Garan for any reason other than for Cause as defined in Annex I to this Employment Agreement (a) terminates your employment prior to October 1, 2000, or (b) fails to renew the term of this Employment Agreement on substantially the same terms: 3.2.a. Garan shall pay to you an amount equal to the greater of (i) two times your Base Compensation plus two times your last Annual Bonus as each was last determined by the Board pursuant to Section 2.1 prior to the date of such termination and (ii) three times your Base Compensation as last determined by the Board pursuant to Section 2.1 prior to the date of such termination. Such amount shall be payable in cash, one-third within five business days of such termination, one-third on the first anniversary of such termination, and one-third on the second anniversary of such termination, and 3.2.b. Garan shall continue to provide you with executive employee benefits as provided in Section 2.2, or alternatively, shall provide you with life insurance, medical reimbursement, disability, and accidental death and dismemberment benefit coverage at levels no less favorable than those in effect for you pursuant to Section 2.2 on the date of termination of your employment if such executive employee benefits were being provided to you by Garan immediately prior to the termination of your employment, for a period equal to the lesser of (i) two years following the date of termination of your employment or September 30, 2000, whichever comes later, or (ii) until you are provided by another employer with benefits substantially comparable to the benefits described in this Section 3.2.b. 3.3. Termination by Garan for Cause. Garan shall have the right to terminate your employment under this Employment Agreement at any time upon a determination by Garan to dismiss you for Cause as defined in Annex I to this Employment Agreement. Upon such termination for Cause, Garan's sole obligation shall be to pay you any accrued but unpaid Base Compensation and executive employee benefits described in Sections 2.1 and 2.2 as of the date of the termination of your employment. 3.4. Death. Upon your death during the term of this Employment Agreement prior to your becoming Disabled (as defined in Section 3.5), this Employment Agreement shall terminate, and all obligations of Garan under this Employment Agreement shall terminate simultaneously therewith, except that Garan shall pay to your designated beneficiaries, or if no beneficiaries are designated, to your estate, any amounts under Sections 2 and 3 which are unpaid and earned to the date of your death. In addition, Garan shall pay to your designated beneficiaries, or if no beneficiaries are designated, to your estate, an amount equal to 150% of the total of your then Base Compensation and last Annual Bonus as each was last determined by the Board in accordance with Section 2.1, in 12 equal monthly installments commencing with the first day of the month following the date of your death. 3.5. Disability. 3.5.a. In the event you incur a Disability, until the earlier to occur of the date of your death or the date you become Disabled (as such terms are defined in Section 3.5.e), Garan shall continue to pay to you your Base Compensation as last determined by the Board in accordance with the provisions of Section 2.1 and continue your executive employee benefits set forth in Section 2.2. 3.5.b. If you become Disabled, Garan shall (i) continue to pay you monthly, regardless of your death after you become Disabled, until the later of the Term End or 18 months from the date that you became Disabled, but for not more than 36 months, 1/12th of the total of your Base Compensation in effect at the date you incurred the Disability plus an amount equal to your last Annual Bonus as each was determined by the Board pursuant to the provisions of Section 2.1 prior to the date you incurred the Disability, reduced by the gross amount payable as a result of such Disability under any disability or salary continuation policy or plan, the cost of which is paid by Garan, and (ii) during the period set forth in Section 3.5.a(i), continue your other executive employee benefits set forth in Section 2.2 as in effect at the first day that you were unable to carry out your duties because of psychological, emotional, or physical reasons which resulted in your Disability. 3.5.c. If you become Disabled, (i) Garan can remove you from the position that you then hold and (ii) the provisions of Sections 3.2 and 3.4 shall no longer apply, provided that neither Garan nor you shall be relieved of any other obligations under this Employment Agreement. 3.5.d. If you die after incurring a Disability but prior to becoming Disabled, the provisions of Section 3.4 shall apply in lieu of the provisions of this Section 3.5. 3.5.e. For purposes of this Section 3.5, Disability shall mean that you are unable to substantially carry out your obligations under this Employment Agreement because of psychological, emotional, or physical reasons, and Disabled shall mean that your Disability has continued for a period of 90 consecutive days or for an aggregate of 120 days during any period of 360 consecutive days. 3.6. Automobile. Within 30 days following the last day that you render services as an employee to Garan under this Employment Agreement, the date of your death, or the date on which you became Disabled, you or your Estate shall have the right to elect to purchase from Garan the automobile then owned and supplied to you by Garan, if any, at the value thereof on Garan's books at such time. Payment shall be made in cash on the 30th day after you make such election. 3.7. Parachute Payments. If any amounts payable pursuant to this Employment Agreement which are deemed to constitute Parachute Payments, as defined in Annex I to this Employment Agreement, when added to any other payments which are deemed to constitute Parachute Payments, would result in the imposition on you of an excise tax under Section 4999 of the Internal Revenue Code of l986, as amended from time to time, the amounts payable under this Employment Agreement shall be reduced by the smallest amount necessary to avoid the imposition of such excise tax. 4.Trade Secrets, Non-Competition, Non-Interference, and Non-Disparagement. 4.1. Trade Secrets. You acknowledge that: (a) your employment by Garan throughout the term of this Employment Agreement and prior thereto will bring and has brought you into close contact with many confidential affairs of Garan, (b) the business of Garan is conducted throughout the United States and abroad and competes with similar businesses of other organizations, (c) Garan carries on substantial promotional, marketing, and/or sales activities throughout the United States and abroad, and (d) the covenants contained in Sections 4.2 and 4.3 of this Employment Agreement are specific inducements by you to Garan in connection with the execution of this Employment Agreement. 4.2. Non-Competition. In recognition of the provisions of Section 4.1 and as consideration for your continued employment by Garan, the payment by Garan to you of compensation, and Garan providing you with benefits, you agree that: 4.2.a. While you are performing services for Garan pursuant to this Employment Agreement, and at all times thereafter, you shall not disclose, communicate, or divulge to any person (other than to officers, directors, or employees of Garan and its subsidiaries whose duties require such knowledge) or use for your personal benefit or for the benefit of anyone other than Garan and its subsidiaries, any trade secrets, specifications, sales or merchandising plans, programs, research, or other confidential information employed in or proposed to be employed in the business of Garan and its subsidiaries which comes to or came to your knowledge in the course of or by reason of your employment by Garan, or your performance under this Employment Agreement. 4.2.b. In the event that (i) your employment pursuant to this Employment Agreement is terminated by Garan pursuant to Section 3.2 or 3.3, or (ii) the term of this Employment Agreement ends, for so long as Garan continues to pay you in accordance with its payroll practices, but for not more than the 12 month period beginning on the last day you render services to Garan, compensation at an annual rate equal to the greater of (x) the total of your Base Compensation in effect at the last day that you render services to Garan plus your Annual Bonus as each was last determined by the Board pursuant to Section 2.1, or (y) the total of your average Base Compensation in the 24 month period ending on the last day that you render services to Garan plus the average of your last two Annual Bonuses as each was determined by the Board pursuant to Section 2.1, you shall not directly or indirectly, enter into or in any manner take part as an employee, agent, independent contractor, consultant, owner, sole proprietor, partner, joint venturer, member, officer, director, or shareholder or take part in any other capacity in, for, or with any person, firm, corporation, association, or business enterprise, or in any manner render any assistance to any business or endeavor, whose business activities are the same, similar to, or competitive with any part of the business which is conducted by Garan and its subsidiaries during the course of your employment by Garan prior to and pursuant to this Employment Agreement in any state in the United States and in any territory, possession, or foreign country, provided that the provisions of this Section 4.2.b shall not preclude you from ownership, as an investor, of less than 5% of the stock of a publicly owned company which engages in such business activities. The provisions of this Section 4.2.b may not be invoked by Garan if Garan terminates your employment upon or after a Change of Control Event unless the Change in Control Event is a result of a completed "management buyout" of Garan in which you participate as an equity investor. In the event Garan determines to pay you for the 12-month period referred to above, it shall do so for minimum periods of 3 months, and it shall give you notice that it is invoking the provisions of this Section 4.2.b and that it will compensate you accordingly. The initial such notice shall be given together with the notice of termination referred to in Section 3.2 or 3.3, as applicable, or 15 days prior to the end of the term of this Employment Agreement, and, thereafter, not later than 15 days prior to the beginning of each subsequent 3-month period. 4.3. Non-Interference. Upon the termination of your services for Garan under this Employment Agreement, until the one year anniversary date of the last day that you render services pursuant to this Employment Agreement, neither you nor any person, firm, corporation, association, or business enterprise with which you are affiliated as an employee, agent, independent contractor, consultant, partner, joint venturer, member, officer, director, or shareholder shall directly or indirectly induce or attempt to induce any employee of Garan or any of its subsidiaries to terminate or alter his or her employment relationship with Garan or any of its subsidiaries, or directly or indirectly hire any person who is or had been employed by Garan or any of its subsidiaries. The provisions of this Section 4.3 may not be invoked by Garan if you terminate your employment pursuant to Section 3.1 or Garan terminates your employment upon or after a Change of Control Event. 4.4. Non-Disparagement. During the Employment Term and thereafter, (a) you shall not directly or indirectly, disparage the name, reputation, or products of Garan and (b) Garan shall not, directly or indirectly, disparage your name or reputation. 4.5. Additional Provisions. 4.5.a. In the event that the provisions of Sections 4.2, 4.3, or 4.4 should be deemed unenforceable, invalid, or overbroad in whole or in part for any reason, any court of competent jurisdiction is, or the Arbitrators appointed in accordance with the provisions of Section 5 are, hereby authorized, requested, and instructed to reform such sections consistent with the intent of Sections 4.2, 4.3, or 4.4 to provide for the maximum restraints upon (i) your activities (including, but not limited to, time, geographic area, employee solicitation, and disparagement), (ii) and with respect to Section 4.4, Garan's activities, which may then be legal and valid. 4.5.b. You and Garan agree that violation by you of the provisions of Sections 4.1, 4.2, 4.3, or 4.4 or by Garan of the provisions of Section 4.4 will cause irreparable injury to the other for which any remedy at law would be inadequate, and that the injured party shall be entitled in any court of law or equity or in any arbitration proceeding in accordance with Section 5, whichever forum is designated by the injured party, to temporary, preliminary, permanent, and other injunctive relief against any breach of the provisions contained in such sections, and such punitive and compensatory damages as shall be awarded. Further, in the event of a violation of the provisions of Sections 4.1, 4.2, 4.3, or 4.4, (i) the period of non-disclosure, non-competition, employee non-interference, or non-disparagement referred to therein shall be extended for a period of time equal to that period beginning on the date when such violation commenced and ending when the activities constituting that violation shall be finally terminated, and (ii) Garan shall have the right to suspend your compensation and benefits and payments made pursuant to Section 4.2.b until the activities constituting that violation shall be finally terminated. 5. Arbitration and Jurisdiction. 5.1. Arbitration. Except as otherwise alternatively provided in Section 4.5 relating to the reformation of the non-competition, employee non-interference, and non-disparagement provisions and obtaining injunctive relief, any controversy or claim arising out of or relating to this Employment Agreement, or the breach thereof, shall be settled by arbitration by one Arbitrator in New York, New York, in accordance with the Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator may be entered in any court having jurisdiction thereof. 5.2. Consent to Jurisdiction. Each of you and Garan hereby consents to the jurisdiction of the Supreme Court of the State of New York for the County of New York and the United States District Court for the Southern District of New York for all purposes in connection with (a) the arbitration referred to in Section 5.1 and (b) this Employment Agreement, and further consents that any process or notice of motion in connection therewith may be served by certified or registered mail or by personal service in accordance with the provisions of Section 6, within or without the State of New York, provided a reasonable time for appearance is allowed. 6. Notice. All notices provided for in this Employment Agreement shall be in writing and shall be given by registered or certified mail, return receipt requested, and by regular mail, both with postage prepaid, or personally delivered, to the addresses set forth below, and shall be deemed given when sent. The addresses referred to above are: Your address: 79 Benedict Hill Road New Canaan, Connecticut 06840 Garan: 350 Fifth Avenue New York, New York 10118 Attn: President With a copy to: Tannenbaum Dubin & Robinson, LLP 1140 Avenue of the Americas New York, New York 10036 Attn: Marvin S. Robinson, Esq. Either you or Garan at any time may give notice of another address in accordance with the provisions of this Section 6. 7. Governing Law, Amendment, and Binding Effect, etc. 7.1 This Employment Agreement (a) shall be governed by and construed in accordance with the laws of the State of New York as if it were an agreement made and to be performed entirely within such State, (b) may not be modified or amended except by a writing signed by each of Garan or its successors and you, (c) may not be assigned by Garan except as provided in Section 7.2 or by you, (d) shall be binding upon each of Garan and its successors and you and your distributees, personal representatives, executors, and administrators, and (e) contains the entire agreement and understanding between Garan and you with respect to the subject matter hereof and supersedes all prior agreements, arrangements, and understandings, written or oral, between Garan and you with respect to the subject matter of this Employment Agreement. 7.2 If Garan shall be merged into or consolidated with another entity, or another entity acquires substantially all of the assets of Garan, the provisions of this Employment Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation or acquiring such assets. Garan will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of Garan, by an agreement in form and substance satisfactory to you, to expressly assume and agree to perform this Employment Agreement in the same manner and to the same extent that Garan would be required to perform it if no such succession had taken place. The provisions of the prior sentences also shall apply in the event of any subsequent mergers, consolidations, or transfers of assets. 8. Withholding; Mitigation of Damages. 8.1. Garan, to the extent permitted by law, shall have the right to deduct from any payment or benefit of any kind otherwise due to you under this Employment Agreement, any Federal, state, or local taxes of any kind required to be withheld. 8.2. Except as provided in Section 3.5.a, all payments and benefits to which you are entitled under this Employment Agreement shall be made and provided without offset, deduction, or mitigation on account of income you may receive from other employment or otherwise. 9. Litigation Expenses. Garan shall pay all of your costs and expenses, including attorneys' fees and disbursements, in connection with any legal proceedings (including, but not limited to, arbitration), whether or not instituted by Garan or you, relating to the interpretation or enforcement of any provision of this Employment Agreement. If the foregoing correctly sets forth our agreement, please execute and return the enclosed copy of this letter. Sincerely, GARAN, INCORPORATED By:________________________ Jerald Kamiel, President ACCEPTED AND AGREED: ____________________ William J. Wilson ANNEX I CERTAIN DEFINITIONS As used in this Employment Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated: "Cause" means willful and gross misconduct on your part that is materially and demonstrably detrimental to Garan or the commission by you of one or more acts which constitute an indictable crime under Federal, state, or local law, as determined in good faith by a written resolution duly adopted by the affirmative vote of a majority of all of the directors then serving on Garan's Board of Directors at a meeting duly called and held for that purpose after reasonable notice to you and opportunity for you and your counsel to be heard. "Change of Control Event" means any one of the following: (a) Continuing Directors no longer constitute at least a majority of Garan's Board of Directors, (b) any person or group of persons (as defined in Rule 13d-5 under the Securities Exchange Act of 1934), together with its affiliates, become the beneficial owner, directly or indirectly, of at least 40% of Garan's then outstanding Common Stock, (c) the approval by Garan's shareholders of the merger or consolidation of Garan with any other corporation, the sale of substantially all of the assets of Garan or the liquidation or dissolution of Garan, unless, in the case of a merger or consolidation, the incumbent Continuing Directors in office immediately prior to such merger or consolidation will constitute at least a majority of the directors of the surviving corporation of such merger or consolidation and any parent (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934) of such corporation, and such surviving corporation (and such parent, if any) shall have at least five directors, or (d) at least a majority of the incumbent Continuing Directors in office immediately prior to any other action proposed to be taken by Garan's shareholders or by Garan's Board of Directors determines that such proposed action, if taken, would constitute a Change of Control of Garan and such proposed action is thereafter taken. "Continuing Director" means any individual who is a member of Garan's Board of Directors on October 1, 1996, or who thereafter is designated (before such person's initial election as a director) as a Continuing Director by a majority of the then Continuing Directors. "Parachute Payment" means any payment deemed to constitute a "parachute payment" as defined in Section 280G of the Internal Revenue Code of 1986 as amended from time to time. EX-10.4 5 GARAN, INCORPORATED 350 Fifth Avenue New York, New York 10036 January 15, 1997 Mr. Rodney Faver Route 1, Box 260 Starkville, Mississippi 39759 Dear Rodney: We are writing to amend and restate, effective as of October 1, 1996, the agreement between you and Garan, Incorporated ("Garan") originally entered into as of October l, 1988, and subsequently amended and restated (the agreement as amended and now again restated, "Employment Agreement") with respect to your continuing employment by Garan. We have agreed that: l. Position, Duties, and Period of Employment. 1.l. Position. Garan hereby continues to employ you, and you agree to accept continued employment, as a divisional officer with the title of Vice President - Manufacturing. 1.2. Duties. During the period of your employment under this Employment Agreement ("Employment Term"), except for vacations, holidays, and personal days, as each is authorized by and consistent with the practices of Garan, and absences due to psychological, emotional, or physical reasons, you shall devote your full business time, skill, and energy to the business and affairs of Garan, and you shall use your best efforts to promote the best interests of Garan. 1.3. Period of Employment. Your employment under this Employment Agreement shall be for a term ending September 30, 1998 ("Term End"). 2.Base Compensation, Annual Bonus, and Executive Employee Benefits. 2.1. Base Compensation and Annual Bonus. During the Employment Term, Garan shall pay to you base compensation ("Base Compensation") in each 12 month period commencing October 1 and ending September 30 ("Fiscal Year") as determined from time to time by the Board of Directors of Garan ("Board"), but for the Fiscal Year ending September 30, 1997, and for each Fiscal Year thereafter, such amount shall be not less than $175,000. [References to Base Compensation in this Employment Agreement shall not give effect to any salary reduction agreement.] In addition to payment of Base Compensation, the Board may determine, but is not obligated to, to pay to you an annual Fiscal Year bonus ("Annual Bonus"). 2.2. Executive Employee Benefits. During the Employment Term, Garan shall provide you with employee benefits determined from time to time by the Board, which employee benefits shall be at least as favorable as those provided to other senior executives of Garan, and Garan shall maintain a life insurance policy on your life payable to your designated beneficiary or beneficiaries in the principal amount of not less than $500,000. 3. Termination of Employment. 3.1. Voluntary Termination After a Change of Control Event. If a Change of Control Event, as such term is defined in Annex I to this Employment Agreement, occurs at any time during the Employment Term, within 6 months after such Change of Control Event you may give notice to Garan terminating your employment. Such termination of employment shall be effective on a date set by you but not later than 30 days after you give notice of termination to Garan. In the event of such voluntary termination, Garan will pay to you cash severance equal to 2.99 times the sum of (a) the average of your Base Compensation determined by the Board in accordance with the provisions of Section 2.1 for each of the 5 Fiscal Years ending with the Fiscal Year preceding the Fiscal Year in which the Change of Control Event occurs plus (b) the average of your last 5 Annual Bonuses determined by the Board in accordance with Section 2.1 prior to the Change of Control Event. Such severance shall be payable to you on the next business day after the last day you render services under this Employment Agreement. It is expressly agreed that this Section 3.1 shall not apply if the Change of Control Event is a result of a completed "management buyout" of Garan in which you participate as an equity investor. 3.2. Termination by Garan Other Than for Cause. If Garan for any reason other than for Cause as defined in Annex I to this Employment Agreement (a) terminates your employment prior to October 1, 1998, or (b) fails to renew the term of this Employment Agreement on substantially the same terms: 3.2.a. Garan shall pay to you an amount equal to the greater of (i) two times your Base Compensation plus two times your last Annual Bonus as each was last determined by the Board pursuant to Section 2.1 prior to the date of such termination and (ii) three times your Base Compensation as last determined by the Board pursuant to Section 2.1 prior to the date of such termination. Such amount shall be payable in cash, one-third within five business days of such termination, one-third on the first anniversary of such termination, and one-third on the second anniversary of such termination, and 3.2.b. Garan shall continue to provide you with executive employee benefits as provided in Section 2.2, or alternatively, shall provide you with life insurance, medical reimbursement, disability, and accidental death and dismemberment benefit coverage at levels no less favorable than those in effect for you pursuant to Section 2.2 on the date of termination of your employment if such executive employee benefits were being provided to you by Garan immediately prior to the termination of your employment, for a period equal to the lesser of (i) two years following the date of termination of your employment or September 30, 1998, whichever comes later, or (ii) until you are provided by another employer with benefits substantially comparable to the benefits described in this Section 3.2.b. 3.3. Termination by Garan for Cause. Garan shall have the right to terminate your employment under this Employment Agreement at any time upon a determination by Garan to dismiss you for Cause as defined in Annex I to this Employment Agreement. Upon such termination for Cause, Garan's sole obligation shall be to pay you any accrued but unpaid Base Compensation and executive employee benefits described in Sections 2.1 and 2.2 as of the date of the termination of your employment. 3.4. Death. Upon your death during the term of this Employment Agreement prior to your becoming Disabled (as defined in Section 3.5), this Employment Agreement shall terminate, and all obligations of Garan under this Employment Agreement shall terminate simultaneously therewith, except that Garan shall pay to your designated beneficiaries, or if no beneficiaries are designated, to your estate, any amounts under Sections 2 and 3 which are unpaid and earned to the date of your death. In addition, Garan shall pay to your designated beneficiaries, or if no beneficiaries are designated, to your estate, an amount equal to 150% of the total of your then Base Compensation and last Annual Bonus as each was last determined by the Board in accordance with Section 2.1, in 12 equal monthly installments commencing with the first day of the month following the date of your death. 3.5. Disability. 3.5.a. In the event you incur a Disability, until the earlier to occur of the date of your death or the date you become Disabled (as such terms are defined in Section 3.5.e), Garan shall continue to pay to you your Base Compensation as last determined by the Board in accordance with the provisions of Section 2.1 and continue your executive employee benefits set forth in Section 2.2. 3.5.b. If you become Disabled, Garan shall (i) continue to pay you monthly, regardless of your death after you become Disabled, until the later of the Term End or 18 months from the date that you became Disabled, but for not more than 36 months, 1/12th of the total of your Base Compensation in effect at the date you incurred the Disability plus an amount equal to your last Annual Bonus as each was determined by the Board pursuant to the provisions of Section 2.1 prior to the date you incurred the Disability, reduced by the gross amount payable as a result of such Disability under any disability or salary continuation policy or plan, the cost of which is paid by Garan, and (ii) during the period set forth in Section 3.5.a(i), continue your other executive employee benefits set forth in Section 2.2 as in effect at the first day that you were unable to carry out your duties because of psychological, emotional, or physical reasons which resulted in your Disability. 3.5.c. If you become Disabled, (i) Garan can remove you from the position that you then hold and (ii) the provisions of Sections 3.2 and 3.4 shall no longer apply, provided that neither Garan nor you shall be relieved of any other obligations under this Employment Agreement. 3.5.d. If you die after incurring a Disability but prior to becoming Disabled, the provisions of Section 3.4 shall apply in lieu of the provisions of this Section 3.5. 3.5.e. For purposes of this Section 3.5, Disability shall mean that you are unable to substantially carry out your obligations under this Employment Agreement because of psychological, emotional, or physical reasons, and Disabled shall mean that your Disability has continued for a period of 90 consecutive days or for an aggregate of 120 days during any period of 360 consecutive days. 3.6. Automobile. Within 30 days following the last day that you render services as an employee to Garan under this Employment Agreement, the date of your death, or the date on which you became Disabled, you or your Estate shall have the right to elect to purchase from Garan the automobile then owned and supplied to you by Garan, if any, at the value thereof on Garan's books at such time. Payment shall be made in cash on the 30th day after you make such election. 3.7. Parachute Payments. If any amounts payable pursuant to this Employment Agreement which are deemed to constitute Parachute Payments, as defined in Annex I to this Employment Agreement, when added to any other payments which are deemed to constitute Parachute Payments, would result in the imposition on you of an excise tax under Section 4999 of the Internal Revenue Code of l986, as amended from time to time, the amounts payable under this Employment Agreement shall be reduced by the smallest amount necessary to avoid the imposition of such excise tax. 4.Trade Secrets, Non-Competition, Non-Interference, and Non-Disparagement. 4.1. Trade Secrets. You acknowledge that: (a) your employment by Garan throughout the term of this Employment Agreement and prior thereto will bring and has brought you into close contact with many confidential affairs of Garan, (b) the business of Garan is conducted throughout the United States and abroad and competes with similar businesses of other organizations, (c) Garan carries on substantial promotional, marketing, and/or sales activities throughout the United States and abroad, and (d) the covenants contained in Sections 4.2 and 4.3 of this Employment Agreement are specific inducements by you to Garan in connection with the execution of this Employment Agreement. 4.2. Non-Competition. In recognition of the provisions of Section 4.1 and as consideration for your continued employment by Garan, the payment by Garan to you of compensation, and Garan providing you with benefits, you agree that: 4.2.a. While you are performing services for Garan pursuant to this Employment Agreement, and at all times thereafter, you shall not disclose, communicate, or divulge to any person (other than to officers, directors, or employees of Garan and its subsidiaries whose duties require such knowledge) or use for your personal benefit or for the benefit of anyone other than Garan and its subsidiaries, any trade secrets, specifications, sales or merchandising plans, programs, research, or other confidential information employed in or proposed to be employed in the business of Garan and its subsidiaries which comes to or came to your knowledge in the course of or by reason of your employment by Garan, or your performance under this Employment Agreement. 4.2.b. In the event that (i) your employment pursuant to this Employment Agreement is terminated by Garan pursuant to Section 3.2 or 3.3, or (ii) the term of this Employment Agreement ends, for so long as Garan continues to pay you in accordance with its payroll practices, but for not more than the 12 month period beginning on the last day you render services to Garan, compensation at an annual rate equal to the greater of (x) the total of your Base Compensation in effect at the last day that you render services to Garan plus your Annual Bonus as each was last determined by the Board pursuant to Section 2.1, or (y) the total of your average Base Compensation in the 24 month period ending on the last day that you render services to Garan plus the average of your last two Annual Bonuses as each was determined by the Board pursuant to Section 2.1, you shall not directly or indirectly, enter into or in any manner take part as an employee, agent, independent contractor, consultant, owner, sole proprietor, partner, joint venturer, member, officer, director, or shareholder or take part in any other capacity in, for, or with any person, firm, corporation, association, or business enterprise, or in any manner render any assistance to any business or endeavor, whose business activities are the same, similar to, or competitive with any part of the business which is conducted by Garan and its subsidiaries during the course of your employment by Garan prior to and pursuant to this Employment Agreement in any state in the United States and in any territory, possession, or foreign country, provided that the provisions of this Section 4.2.b shall not preclude you from ownership, as an investor, of less than 5% of the stock of a publicly owned company which engages in such business activities. The provisions of this Section 4.2.b may not be invoked by Garan if Garan terminates your employment upon or after a Change of Control Event unless the Change in Control Event is a result of a completed "management buyout" of Garan in which you participate as an equity investor. In the event Garan determines to pay you for the 12-month period referred to above, it shall do so for minimum periods of 3 months, and it shall give you notice that it is invoking the provisions of this Section 4.2.b and that it will compensate you accordingly. The initial such notice shall be given together with the notice of termination referred to in Section 3.2 or 3.3, as applicable, or 15 days prior to the end of the term of this Employment Agreement, and, thereafter, not later than 15 days prior to the beginning of each subsequent 3-month period. 4.3. Non-Interference. Upon the termination of your services for Garan under this Employment Agreement, until the one year anniversary date of the last day that you render services pursuant to this Employment Agreement, neither you nor any person, firm, corporation, association, or business enterprise with which you are affiliated as an employee, agent, independent contractor, consultant, partner, joint venturer, member, officer, director, or shareholder shall directly or indirectly induce or attempt to induce any employee of Garan or any of its subsidiaries to terminate or alter his or her employment relationship with Garan or any of its subsidiaries, or directly or indirectly hire any person who is or had been employed by Garan or any of its subsidiaries. The provisions of this Section 4.3 may not be invoked by Garan if you terminate your employment pursuant to Section 3.1 or Garan terminates your employment upon or after a Change of Control Event. 4.4. Non-Disparagement. During the Employment Term and thereafter, (a) you shall not directly or indirectly, disparage the name, reputation, or products of Garan and (b) Garan shall not, directly or indirectly, disparage your name or reputation. 4.5. Additional Provisions. 4.5.a. In the event that the provisions of Sections 4.2, 4.3, or 4.4 should be deemed unenforceable, invalid, or overbroad in whole or in part for any reason, any court of competent jurisdiction is, or the Arbitrators appointed in accordance with the provisions of Section 5 are, hereby authorized, requested, and instructed to reform such sections consistent with the intent of Sections 4.2, 4.3, or 4.4 to provide for the maximum restraints upon (i) your activities (including, but not limited to, time, geographic area, employee solicitation, and disparagement), (ii) and with respect to Section 4.4, Garan's activities, which may then be legal and valid. 4.5.b. You and Garan agree that violation by you of the provisions of Sections 4.1, 4.2, 4.3, or 4.4 or by Garan of the provisions of Section 4.4 will cause irreparable injury to the other for which any remedy at law would be inadequate, and that the injured party shall be entitled in any court of law or equity or in any arbitration proceeding in accordance with Section 5, whichever forum is designated by the injured party, to temporary, preliminary, permanent, and other injunctive relief against any breach of the provisions contained in such sections, and such punitive and compensatory damages as shall be awarded. Further, in the event of a violation of the provisions of Sections 4.1, 4.2, 4.3, or 4.4, (i) the period of non-disclosure, non-competition, employee non-interference, or non-disparagement referred to therein shall be extended for a period of time equal to that period beginning on the date when such violation commenced and ending when the activities constituting that violation shall be finally terminated, and (ii) Garan shall have the right to suspend your compensation and benefits and payments made pursuant to Section 4.2.b until the activities constituting that violation shall be finally terminated. 5. Arbitration and Jurisdiction. 5.1. Arbitration. Except as otherwise alternatively provided in Section 4.5 relating to the reformation of the non-competition, employee non-interference, and non-disparagement provisions and obtaining injunctive relief, any controversy or claim arising out of or relating to this Employment Agreement, or the breach thereof, shall be settled by arbitration by one Arbitrator in New York, New York, in accordance with the Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator may be entered in any court having jurisdiction thereof. 5.2. Consent to Jurisdiction. Each of you and Garan hereby consents to the jurisdiction of the Supreme Court of the State of New York for the County of New York and the United States District Court for the Southern District of New York for all purposes in connection with (a) the arbitration referred to in Section 5.1 and (b) this Employment Agreement, and further consents that any process or notice of motion in connection therewith may be served by certified or registered mail or by personal service in accordance with the provisions of Section 6, within or without the State of New York, provided a reasonable time for appearance is allowed. 6. Notice. All notices provided for in this Employment Agreement shall be in writing and shall be given by registered or certified mail, return receipt requested, and by regular mail, both with postage prepaid, or personally delivered, to the addresses set forth below, and shall be deemed given when sent. The addresses referred to above are: Your address: Route 1, Box 260 Starkville, Mississippi 39759 Garan: 350 Fifth Avenue New York, New York 10118 Attn: President With a copy to: Tannenbaum Dubin & Robinson, LLP 1140 Avenue of the Americas New York, New York 10036 Attn: Marvin S. Robinson, Esq. Either you or Garan at any time may give notice of another address in accordance with the provisions of this Section 6. 7. Governing Law, Amendment, and Binding Effect, etc. 7.1 This Employment Agreement (a) shall be governed by and construed in accordance with the laws of the State of New York as if it were an agreement made and to be performed entirely within such State, (b) may not be modified or amended except by a writing signed by each of Garan or its successors and you, (c) may not be assigned by Garan except as provided in Section 7.2 or by you, (d) shall be binding upon each of Garan and its successors and you and your distributees, personal representatives, executors, and administrators, and (e) contains the entire agreement and understanding between Garan and you with respect to the subject matter hereof and supersedes all prior agreements, arrangements, and understandings, written or oral, between Garan and you with respect to the subject matter of this Employment Agreement. 7.2 If Garan shall be merged into or consolidated with another entity, or another entity acquires substantially all of the assets of Garan, the provisions of this Employment Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation or acquiring such assets. Garan will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of Garan, by an agreement in form and substance satisfactory to you, to expressly assume and agree to perform this Employment Agreement in the same manner and to the same extent that Garan would be required to perform it if no such succession had taken place. The provisions of the prior sentences also shall apply in the event of any subsequent mergers, consolidations, or transfers of assets. 8. Withholding; Mitigation of Damages. 8.1. Garan, to the extent permitted by law, shall have the right to deduct from any payment or benefit of any kind otherwise due to you under this Employment Agreement, any Federal, state, or local taxes of any kind required to be withheld. 8.2. Except as provided in Section 3.5.a, all payments and benefits to which you are entitled under this Employment Agreement shall be made and provided without offset, deduction, or mitigation on account of income you may receive from other employment or otherwise. 9. Litigation Expenses. Garan shall pay all of your costs and expenses, including attorneys' fees and disbursements, in connection with any legal proceedings (including, but not limited to, arbitration), whether or not instituted by Garan or you, relating to the interpretation or enforcement of any provision of this Employment Agreement. If the foregoing correctly sets forth our agreement, please execute and return the enclosed copy of this letter. Sincerely, GARAN, INCORPORATED By:________________________ Jerald Kamiel, President ACCEPTED AND AGREED: ____________________ Rodney Faver ANNEX I CERTAIN DEFINITIONS As used in this Employment Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated: "Cause" means willful and gross misconduct on your part that is materially and demonstrably detrimental to Garan or the commission by you of one or more acts which constitute an indictable crime under Federal, state, or local law, as determined in good faith by a written resolution duly adopted by the affirmative vote of a majority of all of the directors then serving on Garan's Board of Directors at a meeting duly called and held for that purpose after reasonable notice to you and opportunity for you and your counsel to be heard. "Change of Control Event" means any one of the following: (a) Continuing Directors no longer constitute at least a majority of Garan's Board of Directors, (b) any person or group of persons (as defined in Rule 13d-5 under the Securities Exchange Act of 1934), together with its affiliates, become the beneficial owner, directly or indirectly, of at least 40% of Garan's then outstanding Common Stock, (c) the approval by Garan's shareholders of the merger or consolidation of Garan with any other corporation, the sale of substantially all of the assets of Garan or the liquidation or dissolution of Garan, unless, in the case of a merger or consolidation, the incumbent Continuing Directors in office immediately prior to such merger or consolidation will constitute at least a majority of the directors of the surviving corporation of such merger or consolidation and any parent (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934) of such corporation, and such surviving corporation (and such parent, if any) shall have at least five directors, or (d) at least a majority of the incumbent Continuing Directors in office immediately prior to any other action proposed to be taken by Garan's shareholders or by Garan's Board of Directors determines that such proposed action, if taken, would constitute a Change of Control of Garan and such proposed action is thereafter taken. "Continuing Director" means any individual who is a member of Garan's Board of Directors on October 1, 1996, or who thereafter is designated (before such person's initial election as a director) as a Continuing Director by a majority of the then Continuing Directors. "Parachute Payment" means any payment deemed to constitute a "parachute payment" as defined in Section 280G of the Internal Revenue Code of 1986 as amended from time to time. EX-27 6
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED STATEMENTS OF EARNINGS AND BALANCE SHEETS OF GARAN, INCORPORATED AND SUBSIDIARIES ANNEXED HERETO AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000039917 GARAN, INCORPORATED 3-MOS 6-MOS SEP-30-1997 SEP-30-1997 JAN-1-1997 OCT-31-1996 MAR-31-1997 MAR-31-1997 10,577,000 10,577,000 12,731,000 12,731,000 23,913,000 23,913,000 508,000 508,000 31,756,000 31,756,000 83,256,000 83,256,000 33,779,000 33,779,000 19,849,000 19,849,000 119,742,000 119,742,000 16,896,000 16,896,000 2,893,000 2,893,000 2,535,000 2,535,000 0 0 0 0 94,542,000 94,542,000 119,742,000 119,742,000 37,611,000 68,604,000 37,611,000 68,604,000 28,458,000 52,369,000 28,458,000 52,369,000 0 0 0 0 27,000 52,000 4,218,000 6,594,000 1,677,000 2,616,000 0 0 0 0 0 0 0 0 2,541,000 3,978,000 0.50 0.78 0 0
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