EXHIBIT 99.5(c)
FIRST AMENDMENT
TO
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS FIRST AMENDMENT TO CHANGE IN CONTROL SEVERANCE AGREEMENT (this "First
Amendment") is made and entered to 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 New Hope, Minnesota (the
"Executive"), and shall be effective as of this 26th day of May, 2000.
WHEREAS, the Company and the Executive are parties to a Change in Control
Severance Agreement dated as of September 23, 1999 (the "Change in Control
Agreement"), pursuant to which the Executive is entitled to certain benefits in
the event of a termination of his employment with the Company following a
"Change in Control" (as defined in the Change in Control Agreement"); and
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 Chief Financial Officer following the Merger, and the Executive
desires to perform such services for the Company, and to that end the Company
and the Executive have entered into an Employment Agreement of even date
herewith (the "Employment Agreement"); and
WHEREAS, in order to induce the Company to enter into the Employment
Agreement, the Company and the Executive desire to amend the Change in Control
Agreement to provide, among other things, that the consummation of the
transactions contemplated by the Merger Agreement will not constitute a "Change
in Control" under the terms of the Change in Control Agreement; and
WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Change in Control Agreement;
THEREFORE, in consideration of the foregoing and other respective covenants
and agreements of the parties herein contained, the parties hereto agree as
follows:
1. The Executive hereby agrees that the consummation of the transactions
contemplated by the Merger Agreement (and any subsequent transactions directly
related
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thereto and contemplated thereby) will not constitute a "Change in Control" for
purposes of the Change in Control Agreement.
2. The first sentence of Section 1 of the Change in Control Agreement is
hereby amended by deleting the reference to "December 31, 2001", and
substituting "June 30, 2004" therefor, and by deleting the reference to "January
1, 2001", and substituting "January 1, 2004" therefor.
3. Section 2 of the Change in Control Agreement is hereby deleted in its
entirety and the following substituted therefor, such amendment to be effective
from and after the effective time of the Merger:
"2. Change in Control. No benefits shall be payable hereunder unless
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there shall have been a Change in Control. For purposes of this Agreement,
a "Change in Control" shall mean:
"(a) Following the Merger, the Company (i) ceases to be a direct or
indirect subsidiary of NEBS, or (ii) sells or otherwise disposes of all or
substantially all of its assets or business to any "person" (as such term
is defined in Section 3(a)(9) and as used in Section 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), being hereinafter
referred to as a " Person") other than NEBS or one of its affiliates; or
"(b) The acquisition by any Person of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or
more of either (i) the then outstanding shares of NEBS common stock or (ii)
the combined voting power of NEBS' outstanding securities ordinarily having
the right to vote at elections of directors ("Outstanding NEBS Voting
Securities"); provided, however, that the following acquisitions shall not
constitute a Change in Control: (A) any acquisition directly from NEBS
(excluding an acquisition by virtue of the exercise of a conversion
privilege); (B) any acquisition by NEBS or by any corporation controlled by
NEBS; (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by NEBS or any corporation controlled by NEBS; or
(D) any acquisition by any corporation pursuant to a consolidation or
merger if, following such consolidation or merger, the conditions described
in clauses (i), (ii) and (iii) of Section 2(d) below are satisfied; or
"(c) Individuals who, as of the date hereof, constitute the NEBS
Board of Directors (the "NEBS Incumbent Board") ceasing for any reason to
constitute at least a majority of the NEBS Board of Directors; provided,
however, that any individual becoming a NEBS director (other than a
director designated by a Person who has entered into an agreement with the
Company to effect a transaction described in Sections 2(b) or (d))
subsequent to the date hereof whose election, or nomination for election by
NEBS' stockholders, was approved by a vote or resolution of at least a
majority of the directors then comprising the NEBS Incumbent Board shall be
considered as though such individual were a member of the NEBS Incumbent
Board, but excluding, for this purpose, any such individual
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whose initial assumption of office occurs as a result of either an actual
or threatened solicitation in opposition (as such terms are used in Rule
14a-6 of Regulation 14A promulgated under the Exchange Act) to the election
of directors conducted or to be conducted by or on behalf of a Person other
than the NEBS Board of Directors; or
"(d) Adoption by the NEBS Board of Directors of a resolution
approving an agreement of consolidation of NEBS with or merger of NEBS into
another corporation or business entity in each case, unless, following such
consolidation or merger, (i) more than 60% of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
consolidation or merger and/or the combined voting power of the then
outstanding voting securities of such corporation or business entity
entitled to vote generally in the election of directors (or other persons
having the general power to direct the affairs of such entity) is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the NEBS common stock and Outstanding NEBS Voting Securities immediately
prior to such consolidation or merger in substantially the same proportions
as their ownership, immediately prior to such consolidation or merger, of
the NEBS common stock and Outstanding NEBS Voting Securities, as the case
may be, (ii) no Person (excluding NEBS, any employee benefit plan (or
related trust) of NEBS or such corporation or other business entity
resulting from such consolidation or merger and any Person beneficially
owning, immediately prior to such consolidation or merger, directly or
indirectly, 35% or more of the NEBS common stock or Outstanding NEBS Voting
Securities, as the case may be) beneficially owns, directly or indirectly,
35% or more of, respectively, the then outstanding shares of common stock
of the corporation resulting from such consolidation or merger and/or the
combined voting power of the then outstanding voting securities of such
corporation or business entity entitled to vote generally in the election
of its directors (or other persons having the general power to direct the
affairs of the corporation of other business entity) and (iii) at least a
majority of the members of the board of directors (or other group of
persons having the general power to direct the affairs of the corporation
or other business entity) resulting from such consolidation or merger were
members of the NEBS Incumbent Board at the time of the execution of the
initial agreement providing for such consolidation or merger; provided,
that any right to receive compensation pursuant to Section 4 below which
shall vest by reason of the action of the NEBS Board of Directors pursuant
to this Section 2(d) shall be divested upon (A) the rejection of such
agreement of consolidation or merger by NEBS' stockholders or (B) its
abandonment by either party thereto in accordance with its terms; or
"(e) Adoption by the requisite majority of the whole NEBS Board of
Directors, or by the holders of such majority of stock of NEBS as is
required by law or by NEBS' Certificate of Incorporation or By-Laws as then
in effect, of a resolution or consent authorizing (i) the dissolution of
NEBS or (ii) the sale or other disposition of all or substantially all of
the assets of NEBS, other than to a
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corporation or other business entity with respect to which, following such
sale or other disposition, (A) more than 60% of, respectively, the then
outstanding shares of common stock of such corporation and/or the combined
voting power of the outstanding voting securities of such corporation or
other entity entitled to vote generally in the election of its directors
(or other persons having the general power to direct its affairs) is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of the NEBS common stock and Outstanding NEBS Voting Securities immediately
prior to such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such sale or other
disposition, of the NEBS common stock and/or Outstanding NEBS Voting
Securities, as the case may be, (B) no Person (excluding NEBS and any
employee benefit plan (or related trust) of NEBS or such corporation or
other business entity and any Person beneficially owning, immediately prior
to such sale or other disposition, directly or indirectly, 35% or more of
the NEBS common stock and/or Outstanding NEBS Voting Securities, as the
case may be) beneficially owns, directly or indirectly, 35% or more of,
respectively, the then outstanding shares of common stock of such
corporation and/or the combined voting power of the then outstanding voting
securities of such corporation or other business entity entitled to vote
generally in the election of directors (or other persons having the general
power to direct its affairs), and (C) at least a majority of the members of
the board of directors or group of persons having the general power to
direct the affairs of such corporation or other entity were members of the
NEBS Incumbent Board at the time of the execution of the initial agreement
of action of the NEBS Board of Directors providing for such sale or other
disposition of assets of NEBS; provided, that any right to receive
compensation pursuant to Section 4 below which shall vest by reason of the
action of the NEBS Board of Directors or NEBS' stockholders pursuant to
this Section 2(e) shall be divested upon the abandonment by NEBS of such
dissolution, or such sale of or other disposition of assets, as the case
may be.
"Notwithstanding anything in the foregoing to the contrary, no Change
in Control shall be deemed to have occurred for purposes of this Agreement
by virtue of any transaction which results in the Executive, or a group of
Persons which includes the Executive, acquiring, directly or indirectly,
35% or more of the combined voting power of the Outstanding NEBS Voting
Securities."
4. Section 5 of the Change in Control Agreement is hereby deleted in its
entirety and the following substituted therefor:
"5. Limitation on Parachute Payments. If, in the opinion of tax
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counsel selected by the Company and NEBS and acceptable to the Executive,
the Severance Payment (in its full amount or as partially reduced, as the
case may be) or any other payment or benefit which constitutes a "parachute
payment" within the meaning of section 280G(b)(2) of the Code (whether made
pursuant to this Agreement or otherwise) exceeds, either individually or in
the aggregate, the amount that is deductible by the Company or NEBS by
reason of section 280G,
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and in the opinion of such tax counsel, the Severance Payment (in its full
amount or as partially reduced, as the case may be) or any other payments
or benefits which constitute "parachute payments" within the meaning of
section 280G 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 and/or such other payments or
benefits shall be reduced by the excess of the aggregate "parachute
payments" over that amount which could 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 and NEBS in
accordance with the principles of section 280G of the Code and the
regulations promulgated thereunder.
"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 (including
without limitation NEBS) by reason of section 280G of the Code, then the
Executive shall have the obligation to pay the Company upon demand an
amount equal to the sum of (A) the excess 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
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."
5. If the Merger Agreement is terminated for any reason prior to the
occurrence of the Merger, then this First Amendment shall automatically be
deemed to have been terminated and cancelled, without any further liability of
either party or NEBS to each other, and the terms of the Change in Control
Agreement, without giving effect to the terms of this First Amendment, shall
automatically be reinstated and thereafter shall remain in full force and
effect.
6. Except to the extent expressly amended hereby, the provisions of the
Change in Control Agreement shall remain in full force and effect.
7. The validity, interpretation, construction and performance of this
First Amendment shall be governed by the laws of the State of Minnesota.
[Signature Page Follows]
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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/ Xxxxx X. Xxxx
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Its Chief Executive Officer
EXECUTIVE:
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
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