Exhibit 10.1

 

TERMINATION AGREEMENT

 

TERMINATION AGREEMENT effective as of November 1, 2008 between SWANK, INC., a
Delaware corporation having its principal office at 90 Park Avenue, New York,
New York 10016 (the “Company”), and _________________________________
(“Employee”).

 

W I T N E S S E T H:

 

WHEREAS, in consideration of the contribution that has been, and can continue to
be, made by Employee toward the success of the business of the Company, the
Company desires to enter into this Agreement with Employee; and

 

WHEREAS, Employee desires to enter into this Agreement with the Company.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company and Employee hereby agree as follows:

 

1.     Term and Operation of Agreement. This Agreement shall be effective for a
term (the “Term”) commencing as of November 1, 2008 and ending on the earlier of
(i) October 31, 2011 (subject to extension as provided below) and (ii) the
termination of Employee’s employment prior to a Change in Control (as
hereinafter defined) of the Company; provided, however, that (x) prior to a
Change in Control, the expiration date set forth in clause (i) above shall be
automatically extended on each October 31 during the Term, commencing on October
31, 2009, for an additional year unless the Company shall have given the
Employee not less than 30 days’ written notice prior to the then current
expiration date that there shall be no extension (in which event the expiration
date set forth in such clause (i), as theretofore extended, shall not thereafter
be further extended) and (y) notwithstanding the foregoing, if there is a Change
in Control subsequent to October 31, 2008, but prior to the termination of this
Agreement in accordance with the foregoing, then the Term shall be automatically
fixed as a two-year term commencing on the date such Change in Control shall
have occurred and ending on the second anniversary of the date of such Change in
Control.

 

For purposes of this Agreement, Employee’s employment by the Company shall be
deemed to be continuing (i) for any period during which, in accordance with any
contract between him and the Company (“Employment Agreement”), provision shall
be made for Employee to perform services as an employee of the Company and
Employee shall be entitled to compensation from the Company for same, or (ii) if
there is no Employment Agreement, for any period during which Employee is in
fact performing services as an employee of the Company and receiving
compensation from the Company for same.

 

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2.         Change in Control-Termination of Employment and Compensation in Event
of Termination.

 

(a)       After a Change in Control has occurred, Employee may terminate his
employment within two years thereafter upon the occurrence of any of the
following events:

 

(i)        Failure to elect or appoint, or re-elect or re-appoint, Employee to,
or removal of Employee from, his office and/or position with the Company as
constituted immediately prior to the Change in Control, except in connection
with the termination of Employee’s employment pursuant to subparagraph 3(a)
hereof.

 

(ii)       A reduction in Employee’s overall compensation (including any
reduction in pension or other benefit programs or perquisites) or a significant
change in the nature or scope of the authorities, powers, functions or duties
normally attached to Employee’s position with the Company as referred to in
clause (i) of subparagraph 2(a) hereof.

 

(iii)      A determination by Employee made in good faith that, as a result of a
Change in Control, he is unable to effectively carry out the authorities,
powers, functions or duties attached to his position with the Company as
referred to in clause (i) of subparagraph 2(a) hereof, and the situation is not
remedied within thirty (30) calendar days after receipt by the Company of
written notice from Employee of such determination.

 

(iv)      A breach by the Company of any provision of this Agreement not covered
by clauses (i), (ii) or (iii) of this subparagraph 2(a), which is not remedied
within thirty (30) calendar days after receipt by the Company of written notice
from Employee of such breach.

 

(v)       A change in the location at which substantially all of Employee’s
duties with the Company are to be performed to a location which is not within a
20-mile radius of the address of the place where Employee is performing services
immediately prior to the Change in Control.

 

(vi)      A failure by the Company to obtain the assumption of, and the
agreement to perform, this Agreement by any successor (within the meaning of
paragraph 9).

 

An election by Employee to terminate his employment under the provisions of this
subparagraph 2(a) shall not be deemed a voluntary termination of employment by
Employee for the purpose of interpreting the provisions of any of the Company’s
employee benefit plans, programs or policies, except to the extent necessary to
comply with Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”). Employee’s right to terminate his employment for good reason shall not
be affected by his illness or incapacity, whether physical or mental, unless the
Company shall at the time be entitled to terminate his employment under
paragraph 3(a)(ii) of this Agreement. Employee’s continued employment with the
Company for any period of time less than two years after a Change in Control
shall not be considered a waiver of any right he may have to terminate his
employment pursuant to this paragraph 2(a).

 

 

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(b)       After a Change in Control has occurred, and subject to paragraph 3(f)
of this Agreement, if Employee terminates his employment with the Company
pursuant to subparagraph 2(a) hereof or if Employee’s employment is terminated
by the Company for any reason other than pursuant to paragraph 3(a) hereof,
Employee (i) shall be entitled to his salary, bonuses, awards, perquisites and
benefits, including, without limitation, benefits and awards under the Company’s
stock option plans and the Company’s pension and retirement plans and programs,
through the Termination Date (as hereafter defined) and, in addition thereto
(ii) shall be entitled to be paid in a lump-sum in an amount of cash (to be
computed, at the expense of the Company, by BDO Seidman, LLP, independent
certified public accountants to the Company, or such other independent certified
accountants regularly employed by the Company (the “Accountants”) in charge of
the Company’s account immediately prior to the Change in Control, whose
computation shall be conclusive and binding upon Employee and the Company) equal
to 2.99 times Employee’s “base amount” as defined in Code Section 280G(b)(3)
(less such reductions, if any, provided for in any written employment agreement
between the company and Employee). Such lump-sum payment is hereinafter referred
to as the “Termination Compensation.”

 

(c)       The Termination Compensation shall be paid on Employee’s Termination
Date unless it is determined that Employee is a “specified employee” (within the
meaning of Code Section 409A and the regulations thereunder) at the time of the
Employee’s termination of employment, in which case the payment of the
Termination Compensation shall be delayed until the date which is 6 months after
the date of Employee’s separation from service (or, if earlier than the end of
such 6-month period, the date of Employee’s death)and shall be increased to
reflect interest during the period of the delay calculated on the basis of the
prime rate as reported in The Wall Street Journal as in effect on the date of
such termination of employment.

 

(d)       Upon payment of the Termination Compensation and all amounts to which
Employee may be entitled under subparagraph 2(b), any Employment Agreement
between Employee and the Company shall terminate and be of no further force or
effect.

 

(e)       For purposes hereof, a Change in Control shall be deemed to have
occurred (i) if there has occurred a change in control as the term “control” is
defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934 as
in effect on the date hereof (the “Exchange Act”); (ii) when any “person” (as
such term is defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act),
except for an employee stock ownership trust (or any of the trustees thereof) of
the Company, becomes a beneficial owner, directly or indirectly, of securities
of the Company representing twenty-five (25%) percent or more of the Company’s
then outstanding securities having the right to vote on the election of
directors; (iii) during any period of not more than two (2) consecutive years
(not including any period prior to the execution of this Agreement), individuals
who at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clauses (i), (ii), (iv),
(v), (vi) or (vii) of this subparagraph 2(c)) whose election by the Board or
nomination for election by the Company’s

 

 

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stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who were either directors at the beginning of the
period or whose election or nomination for election was previously approved,
cease for any reason to constitute at least seventy-five (75%) percent of the
entire Board of Directors; (iv) when a majority of the directors elected at any
annual or special meeting of stockholders (or by written consent in lieu of a
meeting) are not individuals nominated by the Company’s incumbent Board of
Directors; (v) if the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the holders of voting securities of the
Company outstanding immediately prior thereto being the holders of at least
eighty (80%) percent of the voting securities of the surviving entity
outstanding immediately after such merger or consolidation; (vi) if the
shareholders of the Company approve a plan of complete liquidation of the
Company; or (vii) if the shareholders of the Company approve an agreement for
the sale or disposition of all or substantially all of the Company’s assets.
However, the foregoing notwithstanding, no Change in Control shall be deemed to
have occurred as a result of any event specified in clauses (i)-(v) of this
paragraph 2(e) if John Tulin shall remain as the chief executive officer of the
Company following such event.

 

(f)        It is intended that the “present value” of the payments and benefits
to Employee, whether under this Agreement or otherwise, which are includable in
the computation of “parachute payments” shall not, in the aggregate, exceed 2.99
times the “base amount” (the terms “present value”, parachute payments” and
“base amount” being determined in accordance with Section 280G of the Code).
Accordingly, if Employee receives payments or benefits from the Company prior to
payment of the Termination Compensation which, when added to the Termination
Compensation and any other payments or benefits which are required to be
included in the computation of parachute payments, would, in the opinion of the
Accountants, subject any of the payments or benefits to Employee to the excise
tax imposed by Section 4999 of the Code, the Termination Compensation shall be
reduced by the smallest amount necessary, in the opinion of the Accountants, to
avoid such tax. In addition, the Company shall have no obligation to make any
payment or provide any benefit to Employee subsequent to payment of the
Termination Compensation which, in the opinion of the Accountants, would subject
any of the payments or benefits to Employee to the excise tax imposed by Section
4999 of the Code. No reduction in Termination Compensation or release of the
Company from any payment or benefit obligation in reliance upon any aforesaid
opinion of the Accountants shall be permitted unless the Company shall have
provided to Employee a copy of any such opinion, specifically entitling Employee
to rely thereon, no later than the date otherwise required for payment of the
Termination Compensation or any such later payment or benefit.

 

(g)       Promptly after a Change in Control occurs, or before a Change in
Control occurs if there is a high degree of probability that a Change in Control
will occur in the immediate future, as determined by the Chief Executive Officer
of the Company, the Company shall deliver to a bank, or other institution
approved by Employee, as escrow agent, an amount of cash funds or short term
investments necessary to fund the Termination Compensation and instruct such
escrow agent to make the payments of such employee benefits due Employee in the
amounts and at the time as provided in paragraphs 2(b) and (c). The amount to be
delivered to

 

 

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such escrow agent hereunder shall be sufficient to fund such payments from
principal, and all income on the escrowed funds shall be paid to the Company at
the time the principal is paid to the Employee; provided, however, that any
income earned after the Termination Date on principal not paid to Employee at
the time provided in paragraph 2(c) shall be paid to Employee as soon as
practicable, but in no event later than two and one-half (2½) months following
the date such income is posted to the applicable account.

 

 

3.

Termination by The Company.

 

(a)       Except as otherwise provided in any other agreement between Employee
and the Company, Employee’s employment may be terminated by the Company without
any further liability under this Agreement if Employee shall (i) die; (ii) be
totally unable to perform the duties and services attached to his position with
the Company for a period of not less than 365 consecutive days due to illness or
incapacity, whether physical or mental; (iii) violate any written contractual
covenant of Employee then in effect in favor of the Company prohibiting Employee
from competing with the Company in any manner materially detrimental to the
Company; or (iv) be convicted of a felony involving an act against the Company
and said conviction shall not have been reversed or be subject to further
appeal, it being expressly understood, however, that conviction for violation of
a criminal statute by reason of actions taken in the course of performance of
Employee’s duties as an executive of the Company shall not be deemed to involve
an act against the Company for purposes hereof unless involving a theft,
embezzlement or other fraud against the Company or any of its officers,
directors or employees, or unless involving an act of physical harm to any of
such persons.

 

(b)       After a Change in Control has occurred, if Employee’s employment is
terminated by the Company pursuant to subparagraph 3(a) hereof, Employee (or his
widow, or if she shall not survive him, any party designated by Employee by
notice to the Company, or Employee’s estate, in the absence of such notice)
shall receive the sums (if any) Employee would otherwise have received if a
Change in Control had not occurred.

 

 

4.

Notice of Termination and Termination Date.

 

(a)       Any termination of Employee’s employment by the Company or by Employee
shall be communicated by a Notice of Termination to the other party hereto. For
purposes hereof, a “Notice of Termination” shall mean a notice which shall state
the “Termination Date” (as hereafter defined) and the specific reasons, and
shall set forth in reasonable detail the facts and circumstances, for such
determination and, in the case of Employee’s termination of employment pursuant
to paragraph 2(a)(iii) hereof, shall state that Employee has made the good faith
determination required by that subparagraph.
 

(b)       “Termination Date” shall mean the date specified in the Notice of
Termination as the last day of Employee’s employment by the Company, which date
shall not be sooner than the date on which the Notice of Termination is given.

 

 

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(c)       If within thirty (30) calendar days after any Notice of Termination is
given, or, if later, prior to the Termination Date (as determined without regard
to this paragraph 4(c)), the party hereto receiving such Notice of Termination
notifies the other party hereto that a dispute exists concerning the
termination, the Termination Date shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties hereto, by
a binding arbitration award or by a final judgment, order or decree of a court
of competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Termination Date shall be extended by a notice of
dispute only if such notice is given in good faith and the party hereto giving
such notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of such dispute, the Company will continue to pay
to Employee his full compensation (including perquisites and other benefits) in
effect when the notice of dispute was given and continue Employee as a
participant in all employee benefit plans and programs in which he was
participating when the notice of dispute was given, until the dispute is finally
resolved as hereinabove provided.

 

5.         Code Section 409A. Notwithstanding any other provision of this
Agreement, it is intended that any payment which is provided pursuant to or in
connection with this Termination Agreement which is considered to be deferred
compensation subject to Code Section 409A shall be provided and paid in a
manner, and at such time and in such form, as complies with the applicable
requirements of Code Section 409A to avoid the unfavorable tax consequences
provided therein for non-compliance. For purposes of this Termination Agreement,
termination of employment shall mean a “separation from service” from the
Company and all related entities within the meaning of Code Section 409A where
it is reasonably anticipated that no further services will be performed after
such date or that the level of bona fide services that Employee will perform
after that date (whether as an employee or independent contractor) would
permanently decrease to no more than twenty (20) percent of the average level of
bona fide services performed by Employee over the immediately preceding
thirty-six (36) month period.

 

6.         Mitigation. Employee shall not be required to use his best efforts to
mitigate the payment of the Termination Compensation by seeking other
employment. To the extent that Employee shall, during or after the Term, receive
compensation from any other employment, the payment of Termination Compensation
shall not be adjusted.

 

7.         Arbitration. In the event any dispute arises between the parties
hereto, Employee and the Company shall each have the right to seek arbitration
in New York, New York under the rules of the American Arbitration Association by
giving written notice of intention to arbitrate to the other party. Any award
rendered in any such arbitration proceeding shall be non-appealable and final
and binding upon the parties hereto, and judgment thereon may be entered in any
court of competent jurisdiction. If Employee prevails in any litigation or
arbitration proceeding brought in accordance herewith, or if any such litigation
or arbitration proceeding is settled, Employee shall be entitled, to the extent
not prohibited by applicable law, to reimbursement from the Company for his
reasonable attorneys’ fees and expenses incurred in connection with such
litigation or arbitration proceeding.

 

 

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8.

Indemnification.

 

(a)       The Company agrees that all rights to indemnification existing
immediately prior to a Change in Control and all rights to indemnification
existing immediately prior to the Termination Date in favor of Employee as
provided in the respective corporate charters and by-laws of the Company and its
subsidiaries shall survive the Termination Date and shall continue in full force
and effect for a period of not less than ten (10) years after the Termination
Date. Until the expiration of such period, the Company shall also indemnify
Employee to the fullest extent permitted by the Delaware General Corporation
Law; provided, that in the event that any claim shall be asserted or made within
such ten-year period, all rights to indemnification in respect of any such claim
shall continue until disposition of such claim. Without limiting the foregoing,
in the event that Employee becomes involved in any capacity in any action,
proceeding or investigation in connection with any activities involving the
Company occurring on or prior to the Termination Date, the Company will, subject
to paragraph 8(b), advance to Employee his reasonable legal and other expenses
(including the cost of any investigation and preparation) incurred in connection
therewith.

 

(b)       Employee shall give prompt written notice to the Company of any claim
and the commencement of any action, suit or proceeding for which indemnification
may be sought under this paragraph 8, and the Company, through counsel
reasonably satisfactory to Employee, may assume the defense thereof; provided,
however, that Employee shall be entitled to participate in any such action, suit
or proceeding with counsel of his own choice but at his own expense; and
provided, further, the Employee shall be entitled to participate in any such
action, suit or proceeding with counsel of his own choice at the expense of the
Company if, in the good faith judgment of Employee’s counsel, representation by
the Company’s counsel may present a conflict of interest or there may be
defenses available to Employee which are different from or in addition to those
available to the Company. In any event, if the Company fails to assume the
defense within a reasonable time, Employee may assume such defense and the
reasonable fees and expenses of his attorneys shall be borne by the Company. No
action, suit or proceeding for which indemnification may be sought shall be
compromised or settled in any manner which might adversely affect the interest
of the Company without the prior written consent of the Company. Notwithstanding
anything in this Agreement to the contrary, the Company shall not, without the
written consent of Employee, (i) settle or compromise any action, suit or
proceeding or consent to the entry of any judgment which does not include as an
unconditional term thereof the delivery by the claimant or plaintiff to Employee
of a written release from all liability in respect of such action, suit or
proceeding or (ii) settle or compromise any action, suit or proceeding in any
manner that may materially and adversely affect Employee other than as a result
of money damages or other money payments for which the Company fully pays.

 

(c)       The Company shall cause to be maintained in effect, for not less than
two (2) years after the Termination Date, the then current policies of the
directors’ and officers’ liability insurance maintained by the Company and the
Company’s subsidiaries provided that the

 

 

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Company may substitute therefor policies of at least the same coverage
containing terms and conditions which are no less advantageous so long as no
lapse in coverage occurs as a result of such substitution, and shall use its
best efforts to provide such insurance for an additional three (3) years after
the expiration of such two-year period, subject to the availability of such
insurance at commercially reasonable rates (or, if not available at reasonable
rates, then the Company shall purchase similar insurance but with such lower
limits of liability, without change in retention amounts, as may be available
for a premium comparable to that paid by the Company for the last year of such
two-year period), with respect to all matters occurring prior to and including
the Termination Date; provided, that in the event that any claim shall be
asserted or made within such period during which insurance has been or is to be
provided, such insurance shall be continued in respect of any such claim until
final disposition of any and all such claims. The Company shall pay all
expenses, including reasonable attorneys’ fees, that may be incurred by Employee
in enforcing the indemnity and other obligations provided for in this paragraph
8. The covenant in this paragraph 8 shall survive the Termination Date and shall
continue without time limit (except as expressly provided in this paragraph 8).

 

9.         Assignability. This Agreement may not be assigned by Employee and all
of its terms and conditions shall be binding upon and inure to the benefit of
Employee and his heirs, legatees and legal representatives and the Company and
its successors and assignees. Successors of the Company shall include, without
limitation, any corporation or corporations acquiring directly or indirectly all
or substantially all of the assets of the Company, whether by merger,
consolidation, purchase or otherwise, and such successor shall thereafter be
deemed the “Company” for purposes hereof.

 

10.       Notices. All notices, requests, demands and other communications
provided for hereby shall be in writing and shall be deemed to have been duly
given when delivered personally when received, or sent by registered or
certified mail, return receipt requested, or by Federal Express or other
equivalent overnight courier, in each case with the cost of delivery prepaid, to
the party entitled thereto at the address first above written (in the case of
the Company) or to such address as contained in the Company’s records (in the
case of Employee) or to such other address as may be designated by notice
pursuant to this paragraph.

 

11.       Modification; Supercedes Other Termination Agreements. This Agreement
may be modified or amended only by an instrument in writing signed by Employee
and the Company and any provision hereof may be waived only by an instrument in
writing signed by the party hereto against whom any such waiver is sought to be
enforced. In the event Employee and the Company are parties to a Termination
Agreement dated January 1, 1999 (the “Old Termination Agreement”), upon
execution and delivery by Employee and the Company of this Agreement, the Old
Termination Agreement shall terminate and be of no further force or effect.

 

12.       Severability. The invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision contained herein.

 

 

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13.       Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law (other than Section 5-1401 of the New York General
Obligations Law).

 

14.       Captions. The captioned headings herein are for convenience of
reference only and are not intended and shall not be construed to have any
substantive effect.

 

[Signatures are on the following page.]

 

 

 

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                        IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.

 

 

SWANK, INC.
  By: Name:

 

Title:

   

Name of Employee:

 

 

 

 

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