EXHIBIT 10.35
SEPARATION AGREEMENT
In consideration for the agreement by Signal Apparel Company, Inc. ("the
Company") to provide David E. Houseman ("Employee") with the severance package
and benefits outlined below, the sufficiency of which the Employee acknowledges,
Employee, on behalf of Employee, Employee's heirs, Employee's successors and
assigns, releases and forever discharges the Company and its officers,
directors, employees, shareholders (specifically including, but not limited to
WG Trading Company Limited Partnership, including its respective "Guaranty"
dated May 9, 1997, and WGI LLC and all individual and other affiliates of the
foregoing, all hereinafter referred to as "WG"), representatives, subsidiaries,
parent and affiliated companies and their respective assigns from any and all
claims, damages, liabilities and causes of action, whether known or unknown
which the Employee may presently have or claim to have relating to or arising
out of Employee's employment by the company or the termination of that
employment including, but not limited to, claims under federal, state, or local
constitutions, statutes, regulations, ordinances or common law, including, but
not limited to the Employee Retirement Income Security Act, and the Civil Rights
Act, as amended and specifically including, but not limited to the agreement
between the Company and Employee dated October 1, 1997 (the "Employment
Agreement") including any written or oral amendments thereto as well as any
other oral or written agreements between the Company and Employee. The foregoing
release shall specifically exclude claims for indemnification by Employee
pursuant to Article Eighth of the Company's Restated Articles of Incorporation,
as amended or claims against Employee covered by the Company's officers' and
directors' liability insurance, in each case resulting from claims by third
parties arising from Employee's actions as an employee, officer and/or director
of the Company.
The Company and Employee agree that:
1. Employee's employment with the Company ceased as of September 18,
1998, and Employee has resigned as an employee, officer and director
of the Company and all affiliated companies as of that date.
2. The Company shall pay Employee the sum of $100,000, less required
withholdings in accordance with the following schedule:
(a) $60,000 on the eighth day following execution of this Agreement
(subject to the terms of Section I); and
(b) Four monthly payments of $10,000 each payable on or before
November 2, 1998, December 1, 1998, January 4, 1999 and February
1, 1999, respectively.
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3. The Company shall permit Employee to maintain Employee's existing
health and dental insurance benefits through September 30, 1999
provided Employee continues the payment of Employee's portion of the
premiums with respect to such insurance.
4. The Company shall extend all medical and dental benefits after
September 30, 1999 for the period of eighteen months at the option of
the Employee in accordance with the Consolidated Omnibus Budget
Reconciliation Act (COBRA) of 1986.
5. The Company shall compensate Employee at Employee's existing rate of
pay for ten unused days of accrued vacation in the amount of
$5,769.24, less required withholdings.
6. Upon submission of documentation acceptable to the Company, Employee
will be reimbursed for Employee's legal expenses in connection with
the finalization of this Agreement up to the sum of $2,500.
7. The Company hereby confirms its grant to Employee dated May 8, 1998 of
options to purchase 275,000 shares of the Company's Common Stock in
accordance with the Company's 1985 Stock Option Plan. The Options will
be subject to the following terms:
(a) The exercise price will be $1.75 per share;
(b) The options will expire on September 17, 2001 and will be
classified as non-incentive options;
(c) The options will be fully vested and eligible for exercise one
year from the date of grant; and
(d) Within 10 days of the date hereof, the Company agrees to execute
a stock option agreement with Employee containing the above terms
and the other relevant provisions of the Company's stock option
plan.
(e) The Company confirms that its 1985 Stock Option Plan is in
accordance with Rule 16b-3 of the Securities Exchange Act of
1934.
8. Within 10 days of the date hereof, the Company agrees to reimburse
Employee the sum of $18,831 as a school tuition allowance.
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9. The Company and WG hereby release Employee from any and all claims,
damages, liabilities and causes of action, whether known or unknown
which the Company or WG may have relating to or arising out of
Employee's employment by the Company or relationship with WG.
10. The Company agrees to use reasonable efforts to cause its employees to
avoid making disparaging comments concerning Employee. The Company
agrees to provide neutral references concerning Employee in the event
of inquiries from potential employers.
11. The Company shall not be obligated to provide any other benefits other
than those discussed in this Agreement and no benefits will be
provided until the Company receives a signed copy of this Agreement.
THE EMPLOYEE AGREES THAT:
(a) The severance benefits to be paid by the Company under this Agreement
and Release are intended to resolve any potential claim by the
Employee concerning Employee's employment by the Company and his
termination from the employment relationship. The parties acknowledge
that this is a compromise settlement of disputed matters. These
severance benefits may exceed the benefits Employee would have
received had Employee not executed this Agreement.
(b) The Employee has been advised to discuss this Agreement and Release
with an attorney of Employee's choice before signing it, and is freely
and voluntarily signing this document in exchange for the promises and
consideration provided by the Company under this Agreement.
(c) This Agreement and Release constitute the entire agreement between the
Employee and the Company concerning the Employee's employment by the
Company and Employee's separation therefrom. This Agreement and
Release will supersede all prior written or oral agreements or
understandings between the Company and the Employee relating to his
employment by the Company and his separation therefrom, specifically
including but not limited to the Employment Agreement. Notwithstanding
the foregoing, Employee hereby reconfirms Employee's obligation to
comply with Sections 4, 8 and 9 of the Employment Agreement.
(d) Any material violation or material breach of the terms of this
Agreement during the period during which the above outlined benefits
are to be paid will render
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the obligation of the Company a nullity and extinguish its obligation
to continue performance under the terms contained therein. If the
Company believes Employee has violated or breached this Agreement, it
will send written notice thereof to Employee, and provided such
violation or breach is curable, allow Employee 10 days to cure such
violation or breach and upon such cure, the Agreement shall remain in
effect.
(e) Employee will immediately return to the Company all documents, files
(including copies thereof) and other Company property.
(f) Employee agrees to cooperate fully with the Company in connection with
the transition of Employee's responsibilities from Employee and to
refrain from making disparaging comments concerning the Company to any
account or any other third party.
(g) Employee agrees to maintain the confidentiality of all proprietary
information concerning the Company, as well as the terms of this
Agreement, and will not disclose the terms of this Agreement to any
person other than members of Employee's immediate family and
Employee's legal and financial advisors.
(h) Employee further acknowledges that he has been given at least
Twenty-Five (25) days to review and consider this Agreement. This
offer will expire at the close of business on the 25th day following
its presentment to Employee unless a signed copy of this Agreement has
been returned to the Company by that date.
(i) In further consideration for the Agreement by the Company to provide
Employee with the severance package and benefits outlined above, the
sufficiency of which the Employee acknowledges, Employee, on behalf of
himself, Employee's successors, and assigns, releases and forever
discharges the Company and its subsidiaries, parent and affiliated
companies and their respective assigns from any and all claims or
causes of action relating to or arising out of Employee's employment
by the Company or the termination of that employment which arises
under the Age Discrimination in Employment Act, as amended. The
Employee further acknowledges that he may revoke acceptance to the
waiver of claims under the Age Discrimination in Employment Act, by
notifying the Company of such revocation within seven (7) days of the
execution of this Agreement. The Company will not provide severance
payments until the expiration of this seven day period.
This Agreement will be interpreted in accordance with the laws of the State of
Tennessee.
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The foregoing is agreed to between Employee and the Company as of the last date
set forth below.
/s/ DAVID E. HOUSEMAN 9/30/98
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DAVID E. HOUSEMAN DATE
/s/ ROBERT J. POWELL, VP 9/30/98
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COMPANY REPRESENTATIVE DATE
WG Trading Company Limited Partnership and WGI LLC each agree to the release of
claims by it herein.
WG TRADING COMPANY
LIMITED PARTNERSHIP WGI LLC
BY: /s/ PAUL R. GREENWOOD BY: /s/ PAUL R. GREENWOOD
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TITLE: Managing Partner TITLE: Manager
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DATE: 10/1/98 DATE: 10/1/98
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