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PVH’s 8-K Filing Puts Calvin Before the Horse

NEW YORK — Barry Schwartz will have to focus his future apparel endeavors on the racetrack.<br><br>Phillips-Van Heusen Corp. spelled out some specific non-compete clauses related to its purchase agreement of Calvin Klein Inc. in a filing with the...

NEW YORK — Barry Schwartz will have to focus his future apparel endeavors on the racetrack.

Phillips-Van Heusen Corp. spelled out some specific non-compete clauses related to its purchase agreement of Calvin Klein Inc. in a filing with the Securities and Exchange Commission on Friday, including a clause that would allow Schwartz, who is chairman of CKI but also a well-known racing enthusiast, to hypothetically sell New York Racing Association T-shirts.

While he is expected to continue as a consultant to Calvin Klein following the completion of the $430 million cash-and-stock purchase, Schwartz will likely turn his attentions toward his external role as chairman and chief executive officer of NYRA. That move is backed up by PVH’s Form 8-K filing, which said that as part of the deal, Schwartz would be bound by a non-compete clause to not work or consult for apparel, home furnishings or accessories businesses for the next five years.

But the filing went on to specify that “the business of all activities related to the equine business… including horse breeding and horse racing” is excluded from that clause, giving the example of selling NYRA T-shirts.

Calvin Klein will also be bound by a non-compete clause, although the filing did not indicate its duration.

The 130-page filing outlined the terms of the sale of CKI and also indicated that in addition to the previously reported terms, the transaction includes a nine-year warrant in favor of Klein to purchase 320,000 shares of PVH common stock at $28 per share. Payments based on future sales of the Calvin Klein brand, which will be made to Klein at the end of each PVH quarter, were also detailed to be based on the worldwide wholesale volume of all products bearing the CK and Calvin Klein logos. One caveat: should PVH decide upon its closing to change its corporate name to CKI, that would not mean that Klein’s payments will be based upon sales of all its other products, like Izod sportswear or Geoffrey Beene shirts.