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Exhibit 10.1
Option Agreement dated as of 1st day of July, 1987, by and
among State-O-Maine, Inc., a Delaware corporation ("SOM"), Nautica Apparel,
Inc., a Delaware corporation (the "Company" or "Nautica") and Xxxxx Xxx, an
individual residing at 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Xxxxx").
WHEREAS, SOM is the parent corporation of Nautica;
WHEREAS, Xxxxx is employed by Nautica;
WHEREAS, SOM and Nautica desires to continue to employ Xxxxx
to manage Nautica;
WHEREAS, SOM and Nautica desire to provide Xxxxx with
incentives to insure the continued growth and well being of Nautica:
NOW, THEREFORE, in consideration of the mutual premises and
covenants herein contained, the parties hereto hereby agree as follows:
1. Grant of Options. SOM hereby grants to Xxxxx an option (the
"Option") to purchase up to an aggregate of 178,731 shares (the "Shares") of the
common stock of SOM, $0.10 par value ("Common Stock"), at the purchase price of
$11.00 per share, exercisable in cumulative installments at any time after the
date hereof and prior to the Option Termination Date (as hereinafter defined) as
follows:
(i) 44,683 shares at any time after the date hereof and prior
to the Option Termination Date but only in the event that the Company's
performance for the fiscal year ended February 28, 1988, equal or exceed the
"Profitability Milestone" as hereinafter defined;
(ii) an additional 44,683 shares at any time after the end of
the fiscal year commencing March 1, 1988, and prior to the Option Termination
Date, but only in the event that the Company's performance for such fiscal year
equal or exceed the Profitability Milestone;
(iii) an additional 44,683 shares at any time after the end of
the fiscal year commencing March 1, 1989, and prior to the Option Termination
Date, but only in the event that the Company's performance for such fiscal year
equals or exceeds the Profitability Milestone.
(iv) an additional 44,683 shares at any time after the end of
the fiscal year commencing March 1, 1990, and prior to the Option Termination
Date, but only in the event that the Company's performance for such fiscal year
equal or exceed the Profitability Milestone; and
(v) 44,683 shares (plus any shares not acquired pursuant to
clause (i), clause (ii), clause (iii) and clause (iv) above) at any time prior
to the Option Termination Date for each fiscal year commencing March 1, 1991, in
which the Company's performance for such fiscal year equals or exceeds the
Profitability Milestone.
2. Profitability Milestone. As used in this Agreement, the
Company's performance shall equal or exceed the "Profitability Milestone" if
either (i) Nautica's pretax profits equal or exceed 10% or (ii) SOM's return on
cash equity investment in Nautica equal or exceed 25%, in each case, as
determined by Nautica's independent auditors in accordance with generally
accepted accounting principles consistently applied. Xxxxx shall be entitled, at
SOM's expense, to engage auditors of his choice to verify the determination of
the independent auditors selected by Nautica. Notwithstanding anything to the
contrary contained in this Agreement, however, should Nautica's performance for
any fiscal year not equal or exceed the Profitability Milestone for such year
but Nautica's cumulative performance averaged over all prior fiscal years would
equal or exceed the Profitability Milestone for each such year, then Nautica's
performance for such fiscal year will be deemed to have equaled or exceeded the
Profitability Milestone for each such year and Xxxxx will be
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entitled to exercise the Options in respect of such years.
3. Adjustments for Splits, etc. If SOM shall, at any time or
from time to time after the date hereof, (i) pay a dividend in Common Stock or
(ii)subdivide its outstanding shares of Common Stock into a greater or lesser
number of shares, then the number of shares of Common Stock subject to purchase
pursuant to the Options granted hereunder, and the exercise price per share,
shall be proportionately increased or decreased, as the case may be, so that the
ratio of the total number of shares owned by Xxxxx, assuming that any option
provided for in this Agreement is fully exercised, would remain the same as the
ratio on the date hereof for an aggregate exercise price equal to that as
provided herein.
As used herein, Common Stock shall include any class of stock into which the
Common Stock is converted.
4. Option Termination Date. As used herein, the Option
Termination Date shall mean 60 days after the earlier of (i) ten years from the
date hereof or (ii) the date of a final judicial determination that Xxxxx have
been properly terminated for "cause."
5. Exercise of Option. The Option, or any part thereof, shall
be exercised by the giving of written notice of exercise to the President of SOM
specifying the number of whole shares to be purchased and accompanied by payment
of the aggregate price of the number of shares purchased in exercising the
Option together with a copy of this Agreement and such investment declarations
as may be required, from time to time, by SOM; such exercise shall be effective
upon receipt by the President of SOM of such written notice, payment, copy of
the Agreement and investment declaration. As used in this Section 5, the term
"payment" shall mean payment in cash, by check or by promissory note.
6. Automatic Exercise. Notwithstanding anything to the
contrary contained in this Agreement, Xxxxx shall be entitled to exercise the
Option to acquire the full number of the Shares at any time after a breach by
the Company or SOM of any obligation of the Company, SOM or of Xxxxxx Xxxxxxx to
Xxxxx contained in this Agreement or in any other agreement, instrument or
document delivered to Xxxxx as of the date hereof.
7. No Reorganization. The Company and SOM jointly and
severally agree that neither the Company nor SOM will take any action, without
David's prior written consent, to reorganize the Company in any manner which
would materially alter David's ability to achieve the Profitability Milestone.
8. Changes in Stock. Without loss of generality to the
prohibition contained in Section 7 above, in the event that, prior to the
issuance by SOM of all shares of the stock in respect of which the Option is
granted, SOM shall take any action involving recapitalization, or a
reorganization, including a merger or consolidation, in which SOM is the
surviving corporation (other than a merger in which the stock of SOM is
exchanged for stock of another corporation), that results in the
reclassification of, or the increase, decrease or change in or in the number of,
the outstanding shares of the Common Stock of SOM or the issuance of Common
Stock otherwise than for cash or property, then an appropriate adjustment shall
be made in the number of shares then subject to this Agreement and the price
thereof so that during the remainder of the life of this Agreement Xxxxx shall
have an option to purchase under similar terms and conditions such new stock or
other securities, if any, as shall be the equivalent of the stock, as presently
constituted, still covered by the Option and not theretofore taken up and paid
for by Xxxxx. Subject to any required action by the stockholders, if SOM is
involved in a merger or consolidation in which it is not the surviving
corporation, or any other merger in which the Common Stock of SOM is exchanged
for stock or another corporation, or in the event of a complete liquidation of
SOM, the Board of Directors of SOM (the "Board") shall at least 20 days prior to
the effective date of any such merger, consolidation or liquidation, either (i)
make all outstanding options immediately exercisable or (ii) arrange to have the
surviving corporation grant to Xxxxx replacement options on fair and reasonable
terms acceptable to Xxxxx.
9. Equitable Performance. In the event of a breach or
threatened breach by SOM or the Company of any of its obligations hereunder, SOM
and the Company individually and jointly acknowledge
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that Xxxxx will have no adequate remedies at law and that Xxxxx will be
irreparable damaged in the event that the provisions of this Agreement are not
specifically enforced. Accordingly, SOM and the Company jointly and severally
agree that (a) an action for specific performance of its obligations created by
this Agreement is a proper remedy for such breach or threatened breach and (b)
SOM and the Company will not assert as a defense or otherwise in any such action
an allegation or claim that would contravene the agreement of the parties set
forth in this Section 9. Such equitable remedy shall, however, be cumulative and
not exclusive and shall be in addition to any other remedies available to Xxxxx
for a breach or threatened breach of this Agreement, including the recovery of
damages.
10. Governing Law, Entire Agreement, Amendments, etc. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, supersedes all prior agreements and understandings among the
parties hereto, and contain the entire agreement among the parties with respect
to the matters covered hereby. The provisions of this Agreement may not be
modified, terminated or amended except in a writing signed by the parties
hereto.
11. Binding Nature. This Agreement and the rights, powers and
duties set forth herein shall, except as set forth herein, bind and inure to the
benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties hereto. The Company and SOM hereby jointly
and severally agree to execute any further instruments and shall perform any
acts which are or may become necessary to effectuate the terms of this
Agreement. SOM hereby unconditionally guarantees the prompt and punctual payment
to Xxxxx of all of the monetary obligations of Nautica contained in this
Agreement.
IN WITNESS WHEREOF, the parties hereto set their hand and seal
as of the date first above written.
STATE-O-MAINE, INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------
NAUTICA APPAREL, INC.
By: /s/ Xxxxxx Xxxxxxx
-------------------------
/s/ Xxxxx Xxx
-------------------------
Xxxxx Xxx
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STATE-O-MAINE, INC.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Nautica Apparel, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Mr. Xxxxx Xxx, President
Nautica International, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Mr. Xxxxx Xxx, President
Mr. Xxxxx Xxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
Reference is made to the agreements listed on Schedule A annexed hereto
(such agreements, as they may from time to time be amended, collectively, the
"Relevant Agreements").
As you know, effective March 1, 1990, all of the business of Nautica
Apparel, Inc. ("NAI"), except for activities in the maintenance and management
of the intellectual properties of NAI and the collection and disbursement of
income therefrom, were transferred to Nautica International, Inc. ("NII"), a
newly created entity, which is the operating company for the business that was
conducted by NAI prior to March 1, 1990 (the "Nautica Business"). This
restructuring was planned to achieve certain tax advantages with minimal impact
on the Nautica Business. NAI and NII together function collectively in the same
manner as NAI functioned before the restructuring, that is, NAI and NII
constitute the Nautica Business.
In order to accurately reflect the restructuring, each of the signatories
hereto hereby agree that each of the Relevant Agreements shall be amended so
that all references to "Nautica Apparel, Inc.", "Nautica" or the "Company" in
each of the Relevant Agreement shall, effective as of March 1, 1990, mean NAI
and NII as a single consolidated entity notwithstanding the restructuring.
Without loss of generality to the foregoing, and by way of illustration
only, references to pre-tax profits in the definitions of "Profitability
Milestone" in the Reorganization Agreement (as defined in Schedule A) and in
the Option Agreement (as defined in Schedule A) shall mean the consolidated
pre-tax profits of NAI and NII as a single consolidated entity. Moreover,
without any loss of generality, the definition of "Company" or "Nautica" in the
Employment Agreement (as defined in Schedule A) shall mean both NAI and NII,
individually and severally, and Xxxxx Xxx shall be employed as the President of
both NAI and NII.
In furtherance of the intent and purposes of the foregoing, each of the
signatories hereto hereby further agree to take all such further action, and
execute and deliver all such other documents, instruments or agreements as any
of the signatories hereto may request to implement the intent and purposes of
this letter agreement and of the aforedescribed restructuring.
Please evidence your agreement to the foregoing by signing below.
Sincerely yours,
STATE-O-MAINE, INC.
By /s/
----------------------------------
Agreed to and Accepted
as of March 1, 1990:
NAUTICA INTERNATIONAL, INC.
By /s/
-----------------------------
STATE-O-MAINE, INC.
By /s/
-----------------------------
NAUTICA APPAREL, INC.
By /s/
-----------------------------
/s/
-----------------------------
Xxxxxx Xxxxxxx
/s/
-----------------------------
Xxxxx Xxx
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AMENDMENT NO. 2 dated as of November 26, 1990, to Option
Agreement dated as of July 1, 1987 (the "1987 Agreement"), by and among
State-O-Maine, Inc., a Delaware corporation ("SOM"), Nautica Apparel, Inc., a
Delaware corporation ("NAI"), and Xxxxx Xxx ("Xxxxx") (the 1987 Agreement, as
amended by the First Amendment (defined below and by this Amendment No. 2,
collectively, the "Agreement").
Capitalized terms used in this Amendment No. 2, unless
otherwise defined or unless the context otherwise requires, shall have the
meaning assigned to them in the 1987 Agreement.
WHEREAS, effective March 1, 1990, all of the business of NAI,
except for activities in the maintenance and management of the intellectual
properties of NAI and the collection and disbursement of income therefrom, were
transferred to Nautica International, Inc. ("NII"), a newly created Delaware
corporation which is the operating company for the business conducted by NAI
prior to March 1, 1990 (NAI and NII individually and collectively hereinafter
"Nautica" or the "Company");
WHEREAS, by letter agreement dated as of March 1, 1990, the
1987 Agreement, among other agreements, was amended so that all references to
NAI shall mean NAI and NII as a single consolidated entity (such letter
agreement, the "First Amendment");
WHEREAS, under the 1987 Agreement, Xxxxx has been granted the
Option to purchase up to an aggregate of 178,731 shares of Common Stock, at the
purchase price of $11.00 per share, subject to adjustments both in the number of
shares covered by the Option as well as the purchase price per share in the
event of a stock split or stock dividend payable in Common Stock;
WHEREAS, on August 6, 1987, SOM effected a five-for-four stock
split in the form of a Common Stock dividend of 25%;
WHEREAS, on February 23, 1989, SOM effected a six-for-five
stock split in the form of a Common Stock dividend of 20%;
WHEREAS, on December 14, 1989, SOM effected a five-for-four
stock split in the form of a Common Stock dividend of 25%;
WHEREAS, the Option, as so adjusted, would entitle Xxxxx to
purchase up to an aggregate of 335,121 shares of Common Stock at the purchase
price of $5.87 per share;
WHEREAS, the closing bid price for a share of Common Stock, as
quoted by the National Market System of the National Association of Securities
Dealers Automated Quotation System on November 23, 1990, was $4.50;
WHEREAS, SOM and Nautica continue to desire to provide Xxxxx
with incentive to manage Nautica for the benefit of SOM and its shareholders;
NOW, THEREFORE, the parties hereto, for good and valuable
consideration, hereby agree as follows:
1. Section 4 of the 1987 Agreement is hereby amended by
deleting the words "ten years" contained therein and substituting in place
therefor the words "twenty years."
2. Except as amended hereby, all terms of the Agreement are
hereby ratified, approved and confirmed in all respects.
3. This Amendment No. 2 is subject to and conditioned upon
approval of the Board of Directors of SOM. In the event that the Board of
Directors of SOM disapproves of this Amendment No.
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2, this Amendment No. 2 shall be null and void.
4. This Amendment No. 2 may be signed in any number of
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto have caused
this Amendment No. 2 to be duly executed as of the date first above written.
STATE-O-MAINE, INC.
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, President
NAUTICA INTERNATIONAL, INC.
By: /s/ Xxxxx Xxx
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Xxxxx Xxx, President
NAUTICA APPAREL, INC.
By: /s/ Xxxxx Xxx
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Xxxxx Xxx, President
/s/ Xxxxx Xxx
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Xxxxx Xxx
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May 8, 1991
Mr. Xxxxx Xxx, President
Nautica International, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xxxxx:
Reference is made to Amendment No. 2 dated as of November 26,
1990 to your Option Agreement dated as of July 1, 1987 by and among
State-O-Maine, Inc., Nautica Apparel, Inc. and yourself.
We are pleased to report that the Board of Directors approved
Amendment No. 2 on February 26, 1991 subject to clarification of paragraph 1 of
said Amendment, and confirmed such approval on May 7, 1991. Accordingly,
paragraph 1 of Amendment No. 2 is hereby clarified by inserting in its place the
following:
"1. Section 4 of the 1987 Agreement is hereby deleted
in its entirety and the following paragraph inserted in lieu thereof:
4. Option Termination Date. As used herein, the
Option Termination Date shall mean 60 days after the earlier of (i)
July 1, 1997 or (ii) the date of a final judicial determination that
Xxxxx has been properly terminated for "cause." Notwithstanding the
above, in the event Xxxxx is employed by the Company on July 1, 1997,
the Option Termination Date shall mean 60 days after the earlier of (A)
July 1, 2007 or (B) ten months following the date that Xxxxx ceases to
be employed by the Company for any reason whatsoever."
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Except as otherwise specifically amended herein, all of the
terms and provisions of the Option Agreement, as amended, shall remain in full
force and effect.
Kindly countersign three copies of this letter, retain one for
your file and return two copies to the undersigned.
Many thanks.
Sincerely,
STATE-O-MAINE, INC.
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, President
Agreed to and Accepted:
NAUTICA INTERNATIONAL, INC.
By: /s/ Xxxxx Xxx
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Xxxxx Xxx
NAUTICA APPAREL, INC.
By: /s/ Xxxxx Xxx
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Xxxxx Xxx
/s/ Xxxxx Xxx
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Xxxxx Xxx
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