EXHIBIT 10(C)
AMENDED AND RESTATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT is made and entered into by and between PremiumWear,
Inc., a Minnesota corporation with its principal offices at 0000 Xxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxx (the "Company") and Xxxxxx X. Xxxxxxx, residing at 000
Xxxxxxxxx Xxxx, Xxxxx Xxxxxx, XX 00000 (the "Executive"), and shall be effective
as of the 23rd day of February, 2000.
WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its shareholders; and
WHEREAS, the Executive has made and is expected to make, due to the
Executive's intimate knowledge of the business and affairs of the Company, its
policies, methods, personnel, and problems, a significant contribution to the
profitability, growth, and financial strength of the Company; and
WHEREAS, the Company, as a publicly held corporation, recognizes that
the possibility of a Change in Control may exist, and that such possibility and
the uncertainty and questions which it may raise among management may result in
the departure or distraction of the Executive in the performance of the
Executive's duties, to the detriment of the Company and its shareholders; and
WHEREAS, it is in the best interests of the Company and its
stockholders to reinforce and encourage the continued attention and dedication
of management personnel, including the Executive, to their assigned duties
without distraction and to ensure the continued availability to the Company of
the Executive in the event of a Change in Control.
THEREFORE, in consideration of the foregoing and other respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. Term of Agreement. This Agreement shall be effective from and after
the date hereof and shall continue in effect through December 31, 2001, and
shall automatically be extended for successive one-year periods thereafter
unless the Board of Directors of the Company (the "Board") shall have approved,
and the Executive is notified in writing, prior to January 1, 2001 and each
January 1 thereafter, that the term of this Agreement shall not be extended or
further extended; provided, however, that if a Change in Control shall have
occurred during the original or extended term of this Agreement, this Agreement
shall continue in effect for a period of 24 months from the date of the
occurrence of a Change in Control. In the event that one or more Change in
Control events shall occur during the original or any extended term of this
Agreement, the 24- month period shall follow the last Change in Control. This
Agreement shall neither impose nor confer any further rights or obligations on
the Company or the Executive on the day after the end of the term of this
Agreement. Expiration of the term of this Agreement of itself and without
subsequent action by the Company or the Executive shall not end the employment
relationship between the Company and the Executive.
2. Change in Control. No benefits shall be payable hereunder unless
there shall have been a Change in Control. For purposes of this Agreement, a
"Change in Control" of the Company shall mean a change in control which would be
required to be reported in response to Item 6(e) on Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), whether or not the Company is then subject to such reporting
requirement, including, without limitation, if:
(a) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, becomes a "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined
voting power of the Company's then outstanding securities; or
(b) During any period of two consecutive years (not including
any period ending prior to the effective date of this Agreement), the
Incumbent Directors cease for any reason to constitute at least a
majority of the Board of Directors. The term "Incumbent Directors"
shall mean those individuals who are members of the Board of Directors
on the effective date of this Agreement and any individual who
subsequently becomes a member of the Board of Directors (other than a
director designated by a person who has entered into agreement with the
Company to effect a transaction contemplated by Section 2(c)) whose
election or nomination for election by the Company's shareholders was
approved by a vote of at least a majority of the then Incumbent
Directors; or
(c) (i) The Company consummates a merger, consolidation, share
exchange, division or other reorganization of the Company with any
corporation or entity, other than an entity owned at least 80% by the
Company, unless immediately after such transaction, the shareholders of
the Company immediately prior to such transaction beneficially own,
directly or indirectly 51% or more of the combined voting power of
resulting entity's outstanding voting securities as well as 51% or more
of the Total Market Value of the resulting entity, or in the case of a
division, 51% or more of the combined voting power of the outstanding
voting securities of each entity resulting from the division as well as
51% or more of the Total Market Value of each such entity, in each case
in substantially the same proportion as such shareholders owned shares
of the Company prior to such transaction; (ii) the shareholders of the
Company approve an agreement for the sale or disposition (in one
transaction or a series of transactions) of assets of the Company, the
total consideration of which is greater than 51% of the Total Market
Value of the Company, or (iii) the Company adopts a plan of complete
liquidation or winding-up of the Company. "Total Market Value" shall
mean the aggregate market value of the Company's or the resulting
entity's outstanding common stock (on a fully diluted basis) plus the
aggregate market value of the Company's or the resulting entity's other
outstanding equity securities as measured by the exchange rate
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of the transaction or by such other method as the Board determines
where there is not readily ascertainable exchange rate.
3. Termination Following Change in Control. If a Change in Control
shall have occurred during the term of this Agreement, the Executive shall be
entitled to the benefits provided in subsection 4(d) unless such termination is
(A) because of the Executive's death or Retirement, (B) by the Company for Cause
or Disability, or (C) by the Executive other than for Good Reason.
(a) Disability; Retirement. If, as a result of incapacity due
to physical or mental illness, the Executive shall have been absent
from the full-time performance of the Executive's duties with the
Company for at least six (6) consecutive months, and within 30 days
after written Notice of Termination is given the Executive shall not
have returned to the full-time performance of the Executive's duties,
the Company may terminate the Executive's employment for "Disability".
Any question as to the existence of the Executive's Disability upon
which the Executive and the Company cannot agree shall be determined by
a qualified independent physician selected by the Executive (or, if the
Executive is unable to make such selection, it shall be made by any
adult member of the Executive's immediate family), and approved by the
Company. The determination of such physician made in writing to the
Company and to the Executive shall be final and conclusive for all
purposes of this Agreement. Termination by the Company or the Executive
of the Executive's employment based on "Retirement" shall mean
termination on or after attaining Normal Retirement Age in accordance
with the PremiumWear, Inc. Profit Sharing Plan and Trust.
(b) Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure by the
Executive (other than any such failure resulting from (1) the
Executive's incapacity due to physical or mental illness, (2)
any such actual or anticipated failure after the issuance of a
Notice of Termination by the Executive for Good Reason or (3)
the Company's active or passive obstruction of the performance
of the Executive's duties and responsibilities) to perform
substantially the duties and responsibilities of the
Executive's position with the Company after a written demand
for substantial performance is delivered to the Executive by
the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not
substantially performed the duties or responsibilities;
(ii) the conviction of the Executive by a court of
competent jurisdiction for felony criminal conduct; or
(iii) the willful engaging by the Executive in fraud
or dishonesty which is demonstrably and materially injurious
to the Company, monetarily or otherwise.
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No act, or failure to act, on the Executive's part shall be deemed
"willful" unless committed, or omitted by the Executive in bad faith
and without reasonable belief that the Executive's act or failure to
act was in the best interest of the Company. The Executive shall not be
terminated for Cause unless and until the Company shall have delivered
to the Executive a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive's counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, the
Executive's conduct was Cause and specifying the particulars thereof in
detail.
(c) Good Reason. The Executive shall be entitled to terminate
his employment for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean, without the Executive's express written consent,
any of the following:
(i) The assignment to the Executive of any duties
inconsistent with the Executive's status or position with the
Company, or a substantial alteration in the nature or status
of the Executive's responsibilities from those in effect
immediately prior to the Change in Control;
(ii) A reduction by the Company in the Executive's
annual compensation including, but not limited to, base pay or
short and/long term incentive pay in effect immediately prior
to a Change in Control;
(iii) The relocation of the Company's principal
executive offices to a location more than fifty miles from
Minnetonka, Minnesota; (B) the Company requiring the Executive
to be based anywhere other than at his offices in Grand
Rapids, Michigan, except for required travel on the Company's
business to an extent substantially consistent with the
Executive's business travel obligations immediately prior to
the Change in Control, provided, however, that the Executive
shall not be required to travel to the Company's principal
executive offices more than twice a month; or (C) a
significant increase in the level of travel required of the
Executive as compared to travel obligations immediately prior
to the Change in Control;
(iv) The failure by the Company to continue to
provide the Executive with benefits at least as favorable to
those enjoyed by the Executive under any of the Company's
pension, life insurance, medical, health and accident,
disability, deferred compensation, incentive awards, incentive
stock options, or savings plans in which the Executive was
participating immediately prior to the Change in Control, the
taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive
the Executive of any material fringe benefit enjoyed
immediately prior to the Change in Control, or the failure by
the Company to provide the Executive with the number of paid
vacation days to which the
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Executive is entitled immediately prior to the Change in
Control, provided, however, that the Company may amend any
such plan or programs as long as such amendments do not reduce
any benefits to which the Executive would be entitled upon
termination;
(v) The failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree
to perform this Agreement, as contemplated in Section 7; or
(vi) any material violation of this Agreement by the
Company.
(d) Notice of Termination. Any purported termination of the
Executive's employment by the Company or by the Executive shall be
communicated by written Notice of Termination to the other party hereto
in accordance with Section 8. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth
the facts and circum stances claimed to provide a basis for termination
of the Executive's employment.
(e) Date of Termination. For purposes of this Agreement, "Date
of Termination" shall mean:
(i) If the Executive's employment is terminated for
Disability, 30 days after Notice of Termination is given
(provided that the Executive shall have been absent from
full-time performance of duties for at least six (6) months
and shall not have returned to the full-time performance of
the Executive's duties during such 30 day period in accordance
with Section 3(a) hereof); and
(ii) If the Executive's employment is terminated
pursuant to subsections (b) or (c) above or for any other
reason (other than Disability), the date specified in the
Notice of Termination (which, in the case of a termination
pursuant to subsection (b) above shall not be less than 10
days, and in the case of a termination pursuant to subsection
(c) above shall not be less than 10 nor more than 30 days,
respectively, from the date such Notice of Termination is
given).
(f) Dispute of Termination. If, within 10 days after any
Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be the date on which the
dispute is finally determined, either by mutual written agreement of
the parties, or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or the time for appeal
therefrom having expired and no appeal having been perfected);
provided, that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving
such notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the
Company
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shall continue to pay the Executive full compensation in effect when
the notice giving rise to the dispute was given (including, but not
limited to, base salary) and continue the Executive as a participant in
all compensation, benefit and insurance plans in which the Executive
was participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved in accordance with this
subsection. Amounts paid under this subsection are in addition to all
other amounts due under this Agreement and shall not be offset against
or reduce any other amounts under this Agreement.
4. Compensation Upon Termination or During Disability. Following a
Change in Control of the Company, as defined in subsection 2(a), upon
termination of the Executive's employment or during a period of Disability, the
Executive shall be entitled to the following benefits:
(a) During any period that the Executive fails to perform
full-time duties with the Company as a result of a Disability, the
Company shall pay the Executive, the Executive's base salary as in
effect at the commencement of any such period and the amount of any
other form or type of compensation otherwise payable for such period if
the Executive were not so disabled, until such time as the Executive is
determined to be eligible for long term disability benefits in
accordance with the Company's insurance programs then in effect or the
Executive is terminated for Disability.
(b) If the Executive's employment shall be terminated by the
Company for Cause or by the Executive other than for Good Reason,
Disability or Retirement, the Company shall pay to the Executive his
full base salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given and the Company shall have
no further obligation to the Executive under this Agreement, except
with respect to any benefits to which the Executive is entitled under
any Company pension or welfare benefit plan, insurance program or as
otherwise required by law.
(c) If the Executive's employment shall be terminated by the
Company or by the Executive for Disability or Retirement, or by reason
of death, the Company shall immediately commence payment to the
Executive (or the Executive's designated beneficiaries or estate, if no
beneficiary is designated) of any and all benefits to which the
Executive is entitled under the Company's retirement and insurance
programs then in effect.
(d) If the Executive's employment shall be terminated (A) by
the Company other than for Cause, Retirement, Disability or the
Executive's death or (B) by the Executive for Good Reason, then the
Executive shall be entitled to the benefits provided below:
(i) The Company shall pay the Executive, through the
Date of Termination, the Executive's base salary as in effect
at the time the Notice of Termination is given and any other
form or type of compensation otherwise payable for such
period;
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(ii) In lieu of any further salary payments for
periods subsequent to the Date of Termination, the Company
shall pay a severance payment (the "Severance Payment") equal
to two times the Executive's Annual Compensation as defined
below. For purposes of this Section 4, "Annual Compensation"
shall mean the Executive's annual salary (regardless of
whether all or any portion of such salary has been contributed
to a deferred compensation plan), the annual amount of the
Company bonus for which the Executive is eligible upon
attainment of 100% of the target (regardless of whether such
target bonus has been achieved or whether conditions of such
target bonus are actually fulfilled), and any other type or
form of compensation paid to the Executive by the Company (or
any corporation (an "Affiliate") affiliated with the Company
within the meaning of Section 1504 of the Internal Revenue
Code of 1986 as it may be amended from time to time (the
"Code")) and included in the Executive's gross income for
federal tax purposes during the 12-month period ending
immediately prior to the Date of Termination, but excluding:
a) any amount actually paid to the Executive as a cash payment
of the target bonus (regardless of whether all or any portion
of such the Company bonus was contributed to a deferred
compensation plan); b) compensation income recognized as a
result of the exercise of stock options or sale of the stock
so acquired; and c) any payments actually or constructively
received from a plan or arrangement of deferred compensation
between the Company and the Executive. All of the items
included in Annual Compensation shall be those in effect on
the Date of Termination and shall be calculated without giving
effect to any reduction in such compensation which would
constitute a breach of this Agreement. The Severance Payment
shall be made in a single lump sum within 60 days after the
Date of Termination.
(iii) For the 24-month period after the Date of
Termination, the Company shall arrange to provide, at its sole
expense, the Executive with life, disability, accident and
health insurance benefits substantially similar to those which
the Executive is receiving or entitled to receive immediately
prior to the Notice of Termination. The cost of providing such
benefits shall be in addition to (and shall not reduce) the
Severance Payment. Benefits otherwise receivable by the
Executive pursuant to this paragraph (iii) shall be reduced to
the extent comparable benefits are actually received by the
Executive during such period, and any such benefits actually
received by the Executive shall be reported to the Company.
(iv) Up to $10,000 for individual outplacement
counseling to the Executive.
(v) The Company shall also pay to the Executive all
legal fees and expenses incurred by the Executive as a result
of such termination (including all such fees and expenses, if
any, incurred in contesting or disputing any such termination
or in seeking to obtain or enforce any right or benefit
provided by this Agreement).
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(e) The Executive shall not be required to mitigate the amount
of any payment provided for in this Section 4 by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section 4 be reduced by any compensation earned by
the Executive as the result of employment by another employer or by
retirement benefits after the Date of Termination, or otherwise.
(f) The Executive shall be entitled to receive all benefits
payable to the Executive under Company pension and welfare benefit
plans or any successor of such plan and any other plan or agreement
relating to retirement benefits which shall be in addition to, and not
reduced by, any other amounts payable to the Executive under this
Section 4.
(g) The Executive shall be entitled to exercise all rights and
to receive all benefits accruing to the Executive under any and all
Company stock purchase and stock option plans or programs, or any
successor to any such plans or programs, which shall be in addition to,
and not reduced by, any other amounts payable to the Executive under
this Section 4.
Notwithstanding anything herein to the contrary, if the Executive's
employment is governed by a separate written employment agreement that provides
benefits upon a termination of employment, the aggregate of any payments or
benefits payable under such employment agreement shall offset and reduce the
aggregate of payments and benefits under this Agreement.
5. Limitation on Parachute Payments. If, in the opinion of tax counsel
selected by the Company and acceptable to the Executive, the Severance Payment
(in its full amount or as partially reduced, as the case may be) plus all other
payments or benefits which constitute "parachute payments" within the meaning of
section 280G(b)(2) of the Code exceeds the amount that is deductible by the
Company by reason of section 280G, and in the opinion or such tax counsel, the
Severance Payment (in its full amount or as partially reduced, as the case may
be) plus all other payments or benefits which constitute "parachute payments"
within the meaning of section 280G(b)(2) of the Code are not reasonable
compensation for services actually rendered or to be rendered, within the
meaning of section 280G(b)(4) of the Code, the Severance Payment shall be
reduced by the excess of the aggregate "parachute payments" that would be paid
to or for the Executive without any portion of such "parachute payments" not
being deductible by reason of section 280G of the Code. The value of any
non-cash benefit or any deferred cash payments shall be determined by the
Company in accordance with the principles of sections 280G(d)(3) and (4) of the
Code.
If it is established pursuant to a final determination of a court or an
Internal Revenue Service proceeding that, notwithstanding the good faith of the
Executive and the Company in applying the terms of this subsection, the
aggregate "parachute payments" paid to or for the Executive's benefit are in an
amount that would result in any portion of such "parachute payments" not being
deductible by the Company or its Affiliates by reason of section 280G of the
Code, then the Executive shall have an obligation to pay the Company upon demand
an amount equal to the sum of (A) the excess
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of the aggregate "parachute payments" paid to or for the Executive's benefit
over the aggregate "parachute payments" that would have been paid to or for the
Executive's's benefit without any portion of such "parachute payments" not being
deductible by reason of section 280G of the Code; and (B) interest on the amount
set forth in clause (A) of this sentence at the applicable Federal rate (as
defined in section 1274(d) of the Code) from the date of the Executive's receipt
of such excess until the date of such payment.
6. Funding of Payments. In order to assure the performance of the
Company or its successor of its obligations under this Agreement, the Company
may deposit in trust an amount equal to the maximum payment that will be due the
Executive under the terms hereof. Under a written trust instrument, the Trustee
shall be instructed to pay to the Executive (or the Executive's legal
representative, as the case may be) the amount to which the Executive shall be
entitled under the terms hereof, and the balance, if any, of the trust not so
paid or reserved for payment shall be repaid to the Company. If the Company
deposits funds in trust, payment shall be made no later than the occurrence of a
Change in Control. If and to the extent there are not amounts in trust
sufficient to pay the Executive under this Agreement, the Company shall remain
liable for any and all payments due to the Executive. In accordance with the
terms of such trust, at all times during the term of this Agreement, the
Executive shall have no rights, other than as an unsecured general creditor of
the Company, to any amounts held in trust and all trust assets shall be general
assets of the Company and subject to the claims of creditors of the Company.
Failure of the Company to establish or fully fund such trust shall not be deemed
a revocation or termination of this Agreement by the Company.
7. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to 51% or more of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to the compensation and benefits from the Company in the same amount
and on the same terms as he would be entitled hereunder if he terminated his
employment for Good Reason following a Change in Control, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, successors, heirs, and
designated beneficiaries. If the Executive should die while any amount would
still be payable to the Executive hereunder if the Executive had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's designated
beneficiaries, or, if there is no such designated beneficiary, to the
Executive's estate.
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8. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the last known residence address of the Executive or in the case of
the Company, to its principal office to the attention of each of the then
directors of the Company with a copy to its Secretary, or to such other address
as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.
9. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the parties. No waiver by either party hereto at any
time of any breach by the other party to this Agreement of, or compliance with,
any condition or provision of this Agreement to be performed by such other-party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or similar time. No agreements or representations, oral
or otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Minnesota.
10. Validity. The invalidity or unenforceability or any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear,
Inc., and the Executive have hereunto set their hands to be effective as of the
date first above written.
PREMIUMWEAR, INC.
By /s/ Xxxxx X. Xxxx
-------------------------------------
Xxxxx X. Xxxx
Its President & CEO
-----------------------------------
EXECUTIVE:
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
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