EXHIBIT 99.4(a)
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into by and between PremiumWear, Inc., a
Delaware corporation with its principal offices at 0000 Xxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxxx (the "Company"), and Xxxxx X. Xxxx, residing at Edina, Minnesota (the
"Executive"), and shall be effective as of this 26th day of May, 2000.
WHEREAS, pursuant to an Agreement and Plan of Merger dated as of May 26,
2000 (the "Merger Agreement"), by and among New England Business Service, Inc.,
a Delaware corporation ("NEBS"), Penguin Sub, Inc., a Delaware corporation and a
wholly-owned subsidiary of NEBS ("Sub"), and the Company, Sub will offer to
purchase shares of the Company's common stock pursuant to a tender offer, and
upon successful completion of the tender offer, will thereafter be merged with
and into the Company (the "Merger"), with the Company being the surviving
corporation in the Merger and a wholly-owned subsidiary of NEBS; and
WHEREAS, the Company desires to secure the continuation of the Executive's
services as President and Chief Executive Officer following the Merger, and the
Executive desires to perform such services for the Company, on the terms and
conditions as set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. Term. This Agreement shall be effective from and after the date hereof
----
and shall continue in effect through June 30, 2003. Except as expressly
provided herein, 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. Duties. The Executive is engaged to and shall render services in the
------
position of President and Chief Executive Officer of the Company. Following the
Merger, the Executive will in addition be appointed as an executive officer of
NEBS with the title of Senior Vice President. In this regard, the Executive
shall perform such services as are appropriate to those positions and such other
services that are assigned to him from time to time by the President of NEBS.
The Executive will devote his full time, attention and skill to the business and
affairs of the Company during normal working hours, and will use his best
efforts to advance the Company's interests, and will not engage in outside
business activities, except for managing passive investments and serving on
other corporate, civic or charitable boards or committees, provided that such
permitted outside business activities do not significantly interfere with the
performance of his duties hereunder.
1
3. Compensation.
------------
(a) Base Salary. Commencing on the effective date of the Merger, and
thereafter during the term of the Executive's employment hereunder, the Company
will pay to the Executive an annual base salary of $225,000, such salary to be
paid in conformity with the Company's policies relating to salaried employees.
The Executive's base salary will be subject to annual review and may be
increased, but not decreased, based on the recommendation of the President of
NEBS.
(b) Bonus. The Executive will be eligible for the following incentive
bonuses following the Merger:
(i) The Executive will participate in an Annual Executive Bonus Plan,
beginning with NEBS' fiscal year 2001, with a bonus target equal to 60% of
base salary. Payments will be determined against financial and personal
objectives established by NEBS' Board of Directors and President at the
beginning of each fiscal year, which objectives will include Company-specific
objectives, as well as NEBS' overall corporate objectives; provided, however,
that 50% of the Executive's bonus target for fiscal 2001 will be guaranteed,
and all payments to the Executive under the Annual Executive Bonus Plan with
respect to NEBS' fiscal years 2001 through 2003 will be paid in cash within 60
days following the end of the applicable fiscal year. The financial
objectives established for the Annual Executive Bonus Plan for fiscal year
2001 that will be applicable to the Executive are set forth in Attachment A
hereto.
(ii) The Company will establish a Special Incentive Plan which will be
in effect for NEBS' fiscal years 2001 through 2003, and the Executive will
participate in this plan with an annual bonus target equal to 120% of base
salary. Payments will be determined against specific sales and earnings
objectives for the Company, which objectives are set forth in Attachment B
hereto; provided, however, that upon the occurrence of a Change in Control (as
defined below), 50% of the Executive's bonus target for the remaining fiscal
years of the plan (including the year in which the Change in Control occurs)
will be guaranteed; provided, further, however, that the foregoing guarantee
will not apply with respect to any fiscal year in which the Executive's
employment is terminated (A) by the Company for Cause (as hereinafter defined)
or (B) by the Executive other than for Good Reason (as hereinafter defined),
or for subsequent fiscal years. For purposes of this Agreement, "Change in
Control" has the same meaning, and is subject to the same limitations, as set
forth in Section 2 of the First Amendment to Amended and Restated Change in
Control Severance Agreement dated as of May 26, 2000 by and between the
Company and the Executive.
Payments under the Special Incentive Plan will be made within 60 days
following the end of the applicable fiscal year and will be in the form of
restricted shares of NEBS common stock in lieu of cash, under NEBS' Stock
Compensation Plan, and such shares will vest six months following the end of
the applicable fiscal year with respect to each respective award. Restricted
share awards will be subject to
2
the terms and conditions of restricted stock award agreements substantially in
the form of Attachment C hereto. With respect to each award, if the aggregate
fair market value of the awarded shares on the vesting date is less than the
fair market value of such shares on the date of grant, then the Company will
pay such difference to the Executive in cash within 10 days of the applicable
vesting date.
(iii) Upon the effective date of the Merger, the Executive's
participation in the Company's 2000 Bonus Plan (the "2000 Bonus Plan") will
cease; provided, however, that, within 60 days following the Merger, the
Company will pay the Executive the pro-rated amount of the bonus for which the
Executive was otherwise eligible under the 2000 Bonus Plan (assuming for these
purposes that the plan permits pro-rated payouts) with respect to the period
from January 2, 2000 through the effective date of the Merger.
4. Additional Benefits.
-------------------
(a) Stock Options.
(i) Immediately following the Merger, the Executive will be granted an
option to purchase 25,000 shares of NEBS common stock. The portion of the
option that vests on the date of grant will, to the extent permitted by
applicable law, be granted in the form of incentive stock options, and such
portion as qualifies for incentive stock option status will be granted under
the NEBS 1997 Key Employee and Eligible Director Stock Option and Stock
Appreciation Rights Plan (the "1997 Plan"); the remaining portion of the
option will be granted on terms substantially similar to the 1997 Plan and
will be in the form of options that do not qualify as incentive stock options.
The exercise price for such option will be the fair market value of NEBS
common stock on the date of grant, as determined in accordance with the 1997
Plan. The option will vest as to 25% of the option shares on the date of
grant, and as to an additional 25% per year on each of the first three
anniversaries of the date of grant, and will have a maximum term of ten years,
subject to earlier termination in accordance with the terms of the 1997 Plan.
(ii) The Executive will be entitled to receive additional option
grants during NEBS' fiscal 2001 equal to the difference, if any, between the
number of options granted to the Executive immediately following the Merger as
described above and such greater number of options granted during fiscal year
2001 to other NEBS senior vice presidents with comparable duties and
responsibilities.
(b) Other Benefits.
(i) The Executive will be entitled to and will receive such other
employee benefits, such as 401(k), hospitalization, medical, life and other
insurance benefits, vacation, sick pay and short-term and long-term disability
that are now being maintained by the Company for the benefit of senior
executives, subject to the terms, conditions, and overall administration of
such benefits and to the right of the Company to hereafter change the level of
such benefits as part of a general change in
3
policy affecting senior executives of the Company generally; provided that any
action by the Company which would directly or indirectly materially reduce any
of such benefits and which remains uncured after 30 days following the
delivery of the Executive's written notice of such breach to the Company in
accordance with Section 9 below will entitle the Executive to terminate his
employment hereunder for Good Reason (as defined below); and provided,
further, that so long as the Company does not reduce its portion (in either
dollars or percentage of total premium cost) of the Executive's premium cost
for the group health plans in which the Executive participates, any increase
in the Executive's co-payment amount for such premiums shall not be deemed to
be a reduction in the Executive's benefits provided by this Section.
(ii) The Company will promptly pay (or reimburse the Executive for)
all reasonable business expenses incurred by him in the performance of his
duties hereunder in accordance with policies from time to time adopted by the
Board of Directors or by NEBS, including business travel and entertainment
expenses. The Executive shall furnish to the Company such receipts and records
as the Company may require to verify the foregoing expenses.
(iii) As an executive officer of NEBS following the Merger, the
Executive will be eligible to participate in the financial, estate and tax
planning assistance program made available to NEBS' officers. The Company
will reimburse the Executive up to $4,000 per fiscal year for expenses
incurred in these services. Following the Merger, the Executive will be
invited to attend meetings of NEBS' Board of Directors to the same extent as
other executive officers of NEBS.
5. Termination of Employment.
-------------------------
(a) Termination by the Company. The Company may terminate the Executive's
employment with the Company hereunder at any time:
(i) upon the death or Disability (as hereinafter defined) of the
Executive. For purposes of this Agreement, "Disability" shall be deemed the
reason for the Company's termination of the Executive's employment with the
Company if, as a result of the Executive's incapacity due to mental or
physical disability, the Executive is absent from the full-time performance of
his duties with the Company for at least 6 consecutive months, and within 30
days after written Notice of Termination (as defined below) is given the
Executive shall not have returned to the full-time performance of his duties.
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 reasonably 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,
absent fraud.
4
(ii) for Cause. For purpose of this Agreement, "Cause" shall mean
(A) 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 or death, (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, signed by a majority of the
Company's Board of Directors, is delivered to the Executive, which demand
specifically identifies the manner in which the directors believe that the
Executive has not substantially performed his duties or responsibilities; (B)
the conviction of the Executive by a court of competent jurisdiction for
felony criminal conduct; (C) the willful engaging by the Executive in fraud or
dishonesty which is demonstrably and materially injurious to the Company or
its reputation, monetarily or otherwise; or (D) the Executive's violation of
Section 7 of this Agreement (other than violations of Section 7(a) that are
both inadvertent and immaterial). 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 a 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 a majority of the entire membership of NEBS'
Board of Directors at a meeting of said 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 by said Board),
finding that, in the good faith opinion of said Board, the Executive's conduct
was Cause and specifying the particulars thereof in detail.
(iii) without Cause, provided that in such case the Executive shall be
entitled to the benefits set forth in Section 6(d) and (e) below.
(b) Termination by the Executive. The Executive may terminate his
employment with the Company hereunder at any time:
(i) for Good Reason. "Good Reason" shall mean, without the Executive's
express written consent, any of the following: (A) 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
Merger; (B) a reduction by the Company in the Executive's annual base salary
or bonus targets; (C) (1) the relocation of the Company's principal executive
offices to a location more than 50 miles from Minnetonka, Minnesota; or (2)
the Company requiring the Executive to be based anywhere other than the
Company's principal executive offices except for required travel on the
Company's business to the extent reasonably consistent with the Company's
strategic business plan, and except to the extent for travel in connection
with the Executive's management reporting, planning and training
responsibilities to NEBS; (D) the taking of any action by the Company which
would directly or indirectly materially reduce any of the other benefits
described in Section 4(b) and
5
which remains uncured after 30 days following the delivery of the Executive's
written notice of such breach to the Company in accordance with Section 9
below; or (E) any material violation of this Agreement by the Company which
remains uncured after 30 days following the delivery of the Executive's
written notice of such breach to the Company in accordance with Section 9
below. The Executive acknowledges that he will not be entitled to terminate
his employment with the Company for Good Reason solely by reason of (x) the
consummation of the transactions contemplated by the Merger Agreement (and any
subsequent transactions directly related thereto and contemplated thereby),
including his resignation or removal from the board of directors of the
Company or any of its subsidiaries, or any change in his reporting
responsibilities to reflect the fact that the Company is a subsidiary of NEBS,
or (y) any reduction or discontinuation of the Special Incentive Plan referred
to in Section 3(b)(ii) after NEBS' fiscal year 2003, or (z) the Company's
election not to extend the term of the Amended and Restated Change in Control
Severance Agreement dated as of May 22, 2000, as amended (the "Change in
Control Agreement"), by and between the Company and the Executive, in
accordance with the first sentence of Section 1 of the Change in Control
Agreement.
(ii) other than for Good Reason; provided that the Company retains
the right to terminate the Executive's employment for Cause at any time during
the notice period referred to in Section 5(d) below.
(c) 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 9
below. 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 circumstances claimed to provide a
basis for termination of the Executive's employment.
(d) 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 the Notice of Termination is given (provided that the Executive
shall have been absent from the full-time performance of his duties for at
least 6 months and shall not have returned to the full-time performance of his
duties during such 30-day period in accordance with Section 5(a)(i) hereof);
and
(ii) If the Executive's employment is terminated pursuant to Section
5(a)(ii), 5(a)(iii) or 5(b) 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 Section 5(a)(ii) above shall not be less
than 10 days, and in the case of a termination pursuant to Section 5(b)(i)
above shall not be less than 10 nor more than 30 days, and in the case of a
termination pursuant to Section 5(b)(ii) above shall not be less than 60 days,
respectively, from the date such Notice of Termination is given).
6
If the Executive delivers a Notice of Termination in connection with an
intended termination of employment by the Executive other than for Good
Reason, the Company may, in its sole discretion, waive the requirement that
the Executive remain employed during the entire notice period, and may fix an
earlier date as the Date of Termination, which actions shall not under any
circumstances be deemed to be a termination of the Executive's employment by
the Company without Cause.
(e) 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 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
Section. Amounts paid under this Section 5(e) 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.
6. Compensation Upon Termination or During Disability. 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 his full-time
duties with the Company as a result of Disability, the Company shall pay the
Executive his 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 program 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, then 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 plan, insurance program or as otherwise required by law.
(c) If the Executive's employment shall be terminated by the Company for
Disability or by reason of the Executive's death, then the Company shall (i)
immediately
7
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, (ii) immediately pay the Executive (or the executor or administrator
of the Executive's estate) for all vacation time earned but not used through the
Date of Termination and (iii) pay the Executive (or the executor or
administrator of the Executive's estate) the bonus payment in accordance with
Section 6(e) below.
(d) If the Executive's employment shall be terminated (A) by the Company
without Cause (excluding termination for Disability or by reason of the
Executive's death), or (B) by the Executive for Good Reason, then
notwithstanding such termination, the Executive shall be entitled to the
benefits provided below:
(i) The Company shall continue to pay the Executive his base salary at
the rate in effect immediately prior to the Notice of Termination (or, if
higher, at the rate in effect immediately prior to the reduction giving rise
to the Executive's termination for Good Reason in accordance with Section
5(b)(i)(B) above) for the remaining term of this Agreement (the "Severance
Period").
(ii) The Executive will be paid for all vacation time earned but not
used through his Date of Termination, but vacation will not continue to accrue
after such date.
(iii) During the Severance Period, the Company shall also (A) continue
to reimburse the Executive for the premium cost of any life or long term
disability insurance maintained by the Executive pursuant to this Agreement on
substantially the same terms as prior to the Notice of Termination, and (B) if
the Executive is eligible for and elects continuation coverage under one or
more group health plans sponsored by the Company, and is not otherwise
eligible to receive such coverage pursuant to another employer's plan, pay the
same portion of the premium cost of such coverage, if any, as is paid by the
Company for members of its management team who are actively employed. Except
as set forth above, after his Date of Termination the Executive's benefits
under any other applicable employee benefit plans will be determined in
accordance with the terms of such plans then in effect or as otherwise
required by law.
(iv) The amount of compensation and benefit payments to the Executive
during the Severance Period shall be offset by any compensation or benefit
payments by another employer, or by a self proprietorship if the Executive is
self employed, to Employee during the Severance Period; provided that there
shall be no offset with respect to any compensation or benefit payments
derived from the continuation of any business activities in which the
Executive was engaged prior to the Date of Termination and which are expressly
permitted under Section 2 above.
(e) If the Executive's employment shall be terminated (i) by the Company
other than for Cause (including termination for Disability or by reason of the
Executive's death), or (ii) by the Executive for Good Reason, prior to the end
of any fiscal year, then
8
notwithstanding such termination or the terms of any bonus plan to the contrary,
the Executive shall be entitled to a bonus if the earnings thresholds for the
applicable fiscal year have been achieved as of the last day of the fiscal year
in which his termination of employment occurs; provided, however, that the
amount of such bonus shall be calculated by multiplying the bonus amount that
would have been payable to the Executive, had his employment not terminated
during the fiscal year, by a fraction, the numerator of which is the number of
full weeks of employment completed by the Executive during such fiscal year and
the denominator of which is 52.
Notwithstanding the foregoing, if the Executive's employment shall be
terminated (A) by the Company without Cause (excluding termination for
Disability or by reason of the Employee's death), or (B) by the Executive for
Good Reason, then notwithstanding such termination or the terms of any bonus
plan to the contrary, the Executive shall be entitled to bonuses under the
Special Incentive Plan referred to in Section 3(b)(ii) above with respect to
each of the remaining fiscal years of the plan (including the year in which his
termination of employment occurs) if the earnings thresholds for each applicable
fiscal year have been achieved as of the last day of each such fiscal year;
provided that each such bonus payment shall be in the amount that would have
been payable to the Executive had his employment not been terminated; and
provided, further, that if termination of the Executive's employment under the
circumstances described above occurs upon or following a Change in Control, 50%
of the Executive's bonus target under the Special Incentive Plan for such
remaining years will be guaranteed.
If the Executive's employment shall be terminated (A) by the Company for
Cause, or (B) by the Executive other than for Good Reason, prior to the end of
any fiscal year, then no bonus shall be payable for such year. Any bonus amount
payable pursuant to this Section 6(e) shall be paid at the same time bonuses are
paid to other senior executives of the Company, and shall be payable in cash.
(f) The Company's obligation to make the payments provided by Section 6(d)
or (e) is conditioned upon the Executive's execution of a customary release of
claims relating to the termination of the Executive's employment with the
Company, in favor of the Company, its affiliates, and their respective
directors, officers, employees and agents.
(g) If the Executive's employment shall be terminated (i) by the Company
other than for Cause, or (ii) by the Executive for Good Reason, then (A) any
unvested portion of the stock option referred to in Section 4(a)(i) shall
automatically vest and become exercisable immediately prior to the Date of
Termination, and (B) any unvested restricted shares of NEBS stock awarded in
connection with the Special Incentive Plan and then held by the Executive shall
thereupon vest in the Executive (or, in the case of death, in the person or
persons to whom such shares pass by will or by the laws of descent and
distribution), and shall be delivered to the Executive, or to the executor or
administrator of his estate, upon satisfaction of all applicable income,
employment and other tax withholding obligations.
(h) All amounts payable to the Executive hereunder are subject to such
income, employment and other tax withholding obligations as are required by
applicable law.
9
(i) If the Executive's employment is terminated by the Company without
Cause following the term of this Agreement, the Executive shall be entitled to
severance benefits consistent with the Company's historical policy and practice
with respect to corporate officers.
7. Non-Disclosure of Company Information; Non-Competition.
------------------------------------------------------
(a) The Executive understands that he will have access to confidential and
proprietary information of the Company (including its subsidiaries and
affiliates) and hereby agrees that he will treat all such information as
confidential and proprietary information of the Company (or of such subsidiary
or affiliate, as the case may be) and he will not, either directly or
indirectly, copy, use or disclose any such confidential or proprietary
information which he may either obtain or develop during employment with the
Company to any person, firm, company, association or other entity, unless such
copying, use or disclosure is for the exclusive benefit of the Company as the
Company may direct or he is otherwise required to do so by law.
(b) At such time as the Executive's employment with the Company
terminates, regardless of the reason, the Executive shall return to the Company
any and all confidential and proprietary information of the Company, customer
files and all copies of such information, whether stored on paper or
electronically, which the Executive may have acquired or developed during his
employment with the Company and any other property of the Company, regardless of
the confidential or proprietary nature of such property, which the Executive may
have in his possession at that time.
(c) During the term of this Agreement and while the Executive is employed
by the Company, the Executive shall not, directly or indirectly, engage in any
business or sales activity or other endeavor which competes with the business of
the Company (or of any of its subsidiaries or affiliates), whether as an
employee, agent, independent contractor, consultant, advisor, director, owner
(except as a holder of not more than 1% of the outstanding stock of a publicly-
traded company) or sole proprietor of another organization or entity. In
addition, for a period of six months following the termination of the
Executive's employment with the Company for Cause by the Company or for any
reason by the Executive other than for Good Reason, the Executive shall not,
directly or indirectly, anywhere within the United States, Canada and such other
countries in which the Company conducts business during his employment, own
(except as a holder of not more than 1% of the outstanding stock of a publicly-
traded company), manage, operate, control, be employed by, render services to,
participate in or be connected in any manner with any business which is
competitive to the Company's business, including, without limitation, any
business which buys, sells, manufactures, distributes, markets or promotes (i)
apparel products to golf sports shops and to promotional products/advertising
specialty industry customers or (ii) personalized apparel products targeted to
small businesses for professional image, promotional or advertising specialty
uses, it being recognized that (A) if the Executive's employment is terminated
by the Company other than for Cause or by the Executive for Good Reason, the
restrictions of this Section 7(c) shall
10
not apply after the termination of his employment, and (B) the restrictions of
this Section 7(c) shall not apply with respect to any period during which the
Company fails to continue making payments to the Executive at his base salary
rate as set forth in Section 3(a) above.
(d) For a period ending six months following termination of the
Executive's employment with the Company, if the Executive's employment with the
Company is terminated by the Company for Cause or by the Executive other than
for Good Reason, then the Executive agrees that he will not, either directly or
indirectly, solicit, hire, employ, retain or otherwise contact any employee of
the Company, any independent contractor or sales representative of the Company
or any person who has been an employee of the Company during the one-year period
prior to the termination of the Executive's employment with the Company, nor
assist any other person or entity to solicit or hire any such individual.
(e) The Executive acknowledges that the restrictions set forth in this
Section 7 are reasonably necessary to protect a legitimate business interest of
the Company and that the Company has no adequate remedy at law for any breach of
the provisions of this Section 7 by the Executive and that such breach will
result in irreparable harm to the Company. Accordingly, in the event of the
breach by the Executive of any of the provisions of this Section 7, the Company
will have no further obligations to him under this Agreement, including without
limitation the payments described in Section 6(d) and (e) above, and in addition
and supplementary to any other rights and remedies existing in its favor, the
Company shall be entitled to seek specific performance and/or injunctive or
other relief in order to enforce or prevent any violation of the provisions
hereof.
8. 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, 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.
11
9. Notice. For the purposes 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 at least one of the
directors of the Company, with a copy to NEBS, 000 Xxxx Xxxxxx, Xxxxxx, XX
00000, Attention: President (provided that notice to the Company shall not be
effective unless a copy of such notice is delivered to NEBS as aforesaid), 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.
10. 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. Each of the
parties consents to personal jurisdiction in any action brought in any court,
federal or state, of competent jurisdiction within the State of Minnesota,
waives any argument that such a forum is not convenient, and agrees that any
litigation or arbitration relating to this Agreement shall be venued in Hennepin
County, Minnesota.
If the Merger Agreement is terminated for any reason prior to the
occurrence of the Merger, then this Agreement shall automatically be deemed to
have been terminated and cancelled, without any further liability of either
party or of NEBS to each other.
11. Severability. Any term or provision of this Agreement that is invalid
------------
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
[Signature Page Follows]
12
IN WITNESS WHEREOF, the undersigned officer, on behalf of PremiumWear,
Inc., and the Executive have hereunto set their hands as of the date first above
written.
PREMIUMWEAR, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Its Chairman of the Board
EXECUTIVE:
/s/ Xxxxx X. Xxxx
---------------------------------------
Xxxxx X. Xxxx
13
