GARAN, INCORPORATED
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
January 15, 1997
Xx. Xxxxxxx Xxxxxxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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.x. Xxxxx 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.x. Xxxxx 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: 000 Xxxx 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 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:_________________________
Xxxxxx Xxxxxx, President
ACCEPTED AND AGREED:
______________________
Xxxxxxx Xxxxxxxxxxxx
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.
