Exhibit 10.3
GARAN, INCORPORATED
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
May 1, 2001
Xx. Xxxxxxx X. Xxxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Dear Xxxx:
We are writing to amend and restate, effective as of May 1, 2001, the
agreement between you and Garan, Incorporated ("Garan") with respect to
your continuing employment by Garan originally entered into as of October
l, 1986, and subsequently amended and/or restated (the agreement as now
again amended and restated, "Employment Agreement"). We have agreed that:
1. Position, Duties, and Period of Employment.
1.1. 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, 2003 ("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, 2001, including the period October 1, 2000 to
April 30, 2001, and for each Fiscal Year thereafter, such amount shall be
not less than $225,000. [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, that Garan pay to you an annual bonus
for a Fiscal Year ("Annual Bonus"), provided that an Annual Bonus may be
payable to you as otherwise provided in this Employment Agreement.
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.
3.1.a. 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 pursuant to this
Section 3.1.a. 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 severance equal to 2.99 times the average of the 3 highest of your
combined Base Compensation and Annual Bonus determined by the Board in
accordance with Section 2.1 for the 5 full Fiscal Years ending with the
Fiscal Year preceding the Fiscal Year in which the Change of Control Event
occurs. Such severance shall be paid to you not later than the next
business day after the last day you render services under this Employment
Agreement. In addition to the amounts to be paid to you as severance in
the event of your termination of employment after a Change of Control Event
as provided in this Section 3.1.a, Garan shall pay to you at the same time
(i) a fractional part of your last Annual Bonus determined by the Board in
accordance with Section 2.1 prior to your termination of employment, equal
to the number of months after the Fiscal Year for which such Annual Bonus
was determined to and including the month of termination of employment
divided by 12 and (ii) any unpaid Annual Bonus determined by the Board in
accordance with Section 2.1 prior to your termination of employment. It is
expressly agreed that this Section 3.1.a 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.
3.1.b. If all or a portion of any payments under this
Employment Agreement, or under any other agreement with or plan of Garan
qualify as "excess parachute payments" under Section 280G of the Internal
Revenue Code of 1986, as the same is and may be amended from time to time
("Code"), and are thereby subject to the excise tax described in Code
Section 4999, Garan shall pay to you an additional "Gross-Up Payment."
This Gross-Up Payment shall be an amount equal to your excise tax liability
under Code Section 4999 (including excise tax liability with respect to the
Gross-Up Payment), plus an additional amount to cover your Federal, state,
and local income and employment taxes on the Gross-Up Payment. The Gross-
Up Payment described in this Section 3.1.b shall be paid as soon as
practicable following your termination of employment, but not later than 30
days following such termination of employment. If the Internal Revenue
Service subsequently determines that your excise tax liability is greater
than the amount of excise tax used by Garan in computing your Gross-Up
Payment, Garan shall promptly make an additional payment to you equal to
the amount necessary to make you whole on an after-tax basis, including the
total amount of any underpaid excise tax, any related income or employment
tax, and any related interest and/or penalties due to the Internal Revenue
Service and/or other taxing authorities.
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 terminates your employment prior to October
1, 2003, or fails to renew the term of this Employment Agreement on
substantially the same terms:
3.2.x. Xxxxx shall pay to you (i) any earned but unpaid Base
Compensation and executive employee benefits provided pursuant to Section
2.2 as of the effective date of termination or last day of the Employment
Term, within 5 business days of such date and (ii) in the event that Garan
pays a bonus to any senior executive with respect to the Fiscal Year during
which the effective date of such termination or Term End occurs, a
fractional part of your last Annual Bonus determined by the Board in
accordance with Section 2.1, equal to the number of months in the Fiscal
Year in which such termination or Term End occurred, to and including the
month in which the effective date of termination occurs or Term End divided
by 12, payable at the same time any bonus is paid to any senior executive.
3.2.x. Xxxxx shall pay to you an amount equal to the greater
of (i) 2 times your Base Compensation plus 2 times your Annual Bonus as
each was last determined by the Board in accordance with Section 2.1 prior
to the date of such termination or Term End and (ii) 3 times your Base
Compensation as last determined by the Board in accordance with Section 2.1
prior to the date of such termination or Term End. Such amount shall be
payable in cash, one-half within 5 business days of the effective date of
termination or last day of the Employment Term and the balance, without
interest, on the first anniversary of the initial payment.
3.2.x. Xxxxx shall continue to provide you with executive
employee benefits pursuant to 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 such
termination or Term End if such executive employee benefits were being
provided to you by Garan immediately prior to such termination or Term End,
for a period equal to the sooner of (i) 2 years following the date of
termination of your employment or September 30, 2003, whichever comes
later, or (ii) until another employer provides you with benefits
substantially comparable to the benefits pursuant to this Section 3.2.c.
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 Base Compensation and provide executive employee benefits pursuant
to Section 2.2 which are earned and unpaid as of the effective 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.e), 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 beneficiary or beneficiaries, or if
no beneficiaries are designated, to your estate, (a) any earned and unpaid
Base Compensation and executive employee benefits provided pursuant to
Section 2.2 as of the date of your death, within 30 days of your death, (b)
any unpaid Annual Bonus determined by the Board in accordance with Section
2.1 prior to the date of your death, within 30 days of your death, (c) in
the event that Garan pays a bonus to any senior executive with respect to
the Fiscal Year during which your death occurs, a fractional part of your
last Annual Bonus determined by the Board in accordance with Section 2.1,
equal to the number of months in the Fiscal Year in which your death
occurred to and including the month of your death divided by 12, payable at
the same time any such bonus is paid to any senior executive, and (d) an
amount equal to 150% of the total of your Base Compensation and Annual
Bonus as each was last determined by the Board in accordance with Section
2.1 prior to the date of your death, payable 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
Section 2.1 prior to the date you incurred a Disability, and continue your
executive employee benefits provided pursuant to Section 2.2. In addition,
in the event that Garan pays a bonus to any senior executive with respect
to the Fiscal Year during which you incurred a Disability unless otherwise
payable in accordance with Section 3.5.b, Garan shall pay to you at the
same time any bonus is paid to any senior executive, a fractional part of
your last Annual Bonus determined by the Board in accordance with Section
2.1, equal to the number of months in the Fiscal Year in which you incurred
a Disability to and including the months during which you are being paid
Base Compensation pursuant to this Section 3.5.a, but not after the month
of your death or in which you became Disabled if such event occurs in the
Fiscal Year in which you incurred a Disability, divided by 12.
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 combined Base
Compensation and Annual Bonus, as each was last determined by the Board in
accordance with Section 2.1 prior to the date you incurred the Disability,
reduced by the gross amount paid by a third party as a result of such
Disability under any disability or salary continuation policy or plan, the
cost of which is paid by Garan, (ii) pay you any unpaid Annual Bonus
determined by the Board in accordance with Section 2.1 prior to the date
you became Disabled, within 5 business days of the date you become
Disabled, (iii) in the event that Garan pays a bonus to any senior
executive with respect to the Fiscal Year during which you became Disabled,
pay to you at the same time such bonus is paid to any senior executive, a
fractional part of your last Annual Bonus determined by the Board in
accordance with Section 2.1, equal to the number of months in the Fiscal
Year in which you became Disabled to and including the month you became
Disabled, not including any months for which you receive a fractional part
of your Annual Bonus pursuant to Section 3.5.a, divided by 12, and (iv)
during the period set forth in Section 3.5.b(i), continue your other
executive employee benefits provided pursuant to Section 2.2 as in effect
on the first day that you incurred 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 Section 3.5.b.
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. Voluntary Termination by You.
You may give notice to Garan terminating your employment pursuant
to this Section 3.6 at any time. 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 shall pay to you (a) any earned but unpaid Base
Compensation and executive employee benefits pursuant to Section 2.2 as of
the date of termination, within 5 business days of such date, (b) any
unpaid Annual Bonus determined by the Board in accordance with Section 2.1
prior to your termination, within 5 business days of such date, and (c) in
the event that Garan pays a bonus to any senior executive with respect to
the Fiscal Year during which such termination occurs, a fractional part of
your last Annual Bonus determined by the Board in accordance with Section
2.1, equal to the number of months in the Fiscal Year in which such
termination occurred to and including the month of your termination divided
by 12, payable at the same time such bonus is paid to any senior executive.
In addition, Garan shall use its best efforts to provide to you and your
dependents until your death major medical health insurance coverage
substantially similar to the coverage it presently provides to its retired
officers or directors who have completed 15 years or more of service.
3.7. 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 or before the 30th day
after you make such election.
4. Trade Secrets, Non-Disclosure, 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, sales, and/or manufacturing
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 its execution of this
Employment Agreement.
4.2. Non-Disclosure and 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 employee 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, merchandising, or manufacturing plans, manufacturing
methods, 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,
(ii) you terminate your employment prior to the Term End pursuant to
Section 3.6, or (iii) 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 on the
last day that you render services to Garan plus your Annual Bonus as each
was last determined by the Board in accordance with Section 2.1 or (y) the
total of 12 times your average monthly Base Compensation in the 24 month
period ending on the last day that you render services to Garan plus the
average of your 2 Annual Bonuses as each was last determined by the Board
in accordance with 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
within 12 months 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 part or all of 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. Such initial notice shall be given together
with the notice of termination referred to in Section 3.2 or 3.3, or within
15 business days after receipt by Garan of your termination of employment
pursuant to Section 3.6, or 15 days prior to the end of the Term End if the
term is not renewed 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 1 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 share-
holder 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 within 12 months of the last day you render
services pursuant to the Employment Agreement. The provisions of this
Section 4.3 may not be invoked by Garan if you terminate your employment
pursuant to Section 3.1.a or Garan terminates your employment upon or
within 12 months 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 Section 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 or the Arbitrator
appointed in accordance with Section 5 is hereby authorized, requested, and
instructed to reform such section consistent with the intent of Section
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) and (ii) 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 Section 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 section, and such
punitive and compensatory damages as shall be awarded. Further, in the
event of a violation by you of the provisions of Section 4.1, 4.2, or 4.3,
(i) the period of non-disclosure, non-competition, and employee
non-interference 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-disclosure, 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, to the addresses
set forth below, or personally delivered, and shall be deemed given when
sent.
The addresses referred to above are:
Your address: 000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
and
c/o Garan, Incorporated
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Garan: 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President
With a copy to: Xxxxxxxxxx Xxxxx & Xxxxxxxx, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, 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.
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 and 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.b, 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 by you 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: /S/ XXXXXX XXXXXX
Xxxxxx Xxxxxx, President
ACCEPTED AND AGREED:
/S/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
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 May 1, 2001, 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.
