PARAGON TRADE BRANDS, INC.
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
CHIEF EXECUTIVE OFFICER
This Agreement, made as of the 5th day of August, 1997, by and between
Paragon Trade Brands, Inc., a Delaware corporation (the "Company"), and Xxxxx X.
Xxxxxxx ("Employee").
W I T N E S S E T H :
WHEREAS, the Company desires to continue to employ Employee and Employee
desires to continue to be employed by the Company upon the terms and conditions
set forth herein; and
WHEREAS, the Company desires to amend and restate the provisions of that
certain Employment Agreement made as of the 2nd day of February 1993 (the
"Original Agreement"), by and between the Company and Employee;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed as follows:
1. EMPLOYMENT. The Company hereby employs Employee as chief
executive officer of the Company and Employee hereby accepts such employment,
upon the terms and conditions set forth herein.
2. TERM. Except as otherwise noted in this Agreement or the Schedules
attached hereto, the term of this Agreement shall commence on the Effective Date
and shall expire on the date which the Employee's employment by the Company
terminates. For purposes of this Agreement, the term "Effective Date" means the
date first written above.
3. DUTIES. Employee will, during the term hereof: (a) faithfully,
diligently and capably do and perform all such acts and duties, and furnish such
services, as the board of directors of the Company shall direct or as is
customary for the chief executive officer of a publicly held company, and do and
perform all acts in the ordinary course of the Company's business (subject to
such limitations as the board of directors of the Company may prescribe)
necessary and conducive to the Company's best interests; (b) devote such time,
energy and skill to the business of the Company and to the promotion of the
Company's best interests as is reasonably required of an individual whose
employment as the chief executive officer of the Company is the individual's
principal occupation and employment; and (c) comply with any and all Company
announced policies and procedures governing conduct in the workplace.
4. COMPENSATION.
(a) The Company shall compensate Employee for all services to be performed
by Employee during the term of this Agreement as follows:
(i) pay salary at a salary rate to be determined annually
by the compensation committee of the board of directors of the Company
("Salary Rate") in
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periodic installments in accordance with Company practices for other
executive employees; and
(ii) grant awards of stock options and restricted stock ("stock
awards") to be determined annually by the compensation committee of the
board of directors of the Company;
(iii) provide a deferred compensation plan as set forth on
Schedule A hereto;
(iv) provide a supplemental severance plan as set forth on
Schedule B hereto; and
(v) provide such additional or special compensation as the board of
directors of the Company shall approve after receipt of recommendations
from the compensation committee of the board of directors, it being
understood by Employee that except with respect to compensation
contemplated by Schedules A and B, Employee's compensation by the Company
shall be only such compensation as shall have been approved by the board
of directors of the Company.
(b) In addition to compensation as provided for in Section 4(a), the
Company agrees that Employee shall be entitled to participate in such life
insurance, medical, dental, pension, retirement and other benefits plans as are
made available from time to time by the Company for the benefit of its salaried
employees generally.
5. TERMINATION OF EMPLOYMENT.
(a) For purposes of this Agreement (1) Employee's employment by the
Company shall terminate (A) by reason of Employee's death, voluntary
resignation, retirement or disability (as the terms "retirement" and
"disability" are defined in Article 1 of the Paragon Trade Brands, Inc. Deferred
Compensation Plan adopted effective April 1, 1997), or (B) at the request of the
Company's board of directors ("Board Requested Termination"); or (C) for cause;
and (2) "cause" shall be deemed to exist if (i) Employee engages in acts of
dishonesty or fraud in connection with his services hereunder; or (ii) during
his employment, Employee is in breach of his obligations under Sections 3, 6 or
7, or the confidentiality agreement contemplated by Section 7;
(b) If Employee's employment with the Company is terminated by reason of
Employee's death, retirement or disability, the Company's obligations hereunder
shall be satisfied by providing the benefits provided for under the Company's
other benefits plans applicable in the case of an employee's death, retirement
or permanent disability;
(c) If Employee's employment with the Company is terminated (i) for cause
or (ii) by Employee's voluntary resignation for a reason other than one
enumerated in Section 5(d), all obligations of the Company under this Agreement
shall terminate with such termination of employment, and Employee shall not be
entitled to any compensation under this Agreement except for compensation fully
earned and unpaid, and vested benefits under stock options and restricted stock
granted Employee, as of the date of termination of employment.
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(d) If Employee's employment with the Company is terminated as a result of
a Board Requested Termination, Employee shall be entitled to payment of a sum
equal to two times the Employee's annualized Salary Rate in effect at the time
of notification of termination, in addition to all compensation earned but
unpaid and benefits vested unconditionally to the date of termination, which
cash sum shall be payable in twenty-four (24) equal monthly installments, as
applicable, subject to such deductions as may be required by law, beginning on
the 15th day of the month following the month in which termination of employment
occurs. Payment of the appropriate amount in cash shall be deemed to be
liquidated damages for purposes of any suit brought by or on behalf of Employee
for damages for breach of this Agreement.
6. RESTRICTIVE COVENANT. During Employee's employment with the
Company, and for a period of two (2) years following termination of
Employee's employment with the Company for any reason, as long as the Company
meets its obligations under this Agreement, Employee shall not,
(a) directly or indirectly be employed or retained by, serve as an officer
or director of, act as a consultant or advisor to, engage in, or be financially
interested in, any person or persons, firm, association, venture, entity,
partnership, corporation or sole proprietorship that competes, directly or
indirectly, with the Company, or any business of the Company, as the Company is
conducting its business at the time of termination of his employment; or
(b) assist financially or in any other manner, directly or through any
other person or persons, firm, association, venture, entity, partnership,
corporation or sole proprietorship, whether as a partner, shareholder in excess
of 5% of the issued and outstanding shares, agent, owner, advisor or material
financial backer, any person or entity to enter into, develop, or carry on any
business that competes with the Company, or any business of the Company, as the
Company is conducting its business at the time of termination of his employment;
or
(c) recruit or hire, or attempt to recruit or hire, directly or
indirectly, any member of the key management team who is employed by the Company
at the time of termination of Employee's employment (for purposes of this
Section 6(c), the Company's key management team shall include those employees
eligible to receive either stock option grants or awards of stock appreciation
rights under any of the Company's incentive compensation plans); or
(d) directly or indirectly, orally or in writing, disparage the Company,
its products or employees in any way or interfere to the detriment of the
Company with any existing business relationship of the Company and any of its
employees, agents or representatives; or
(e) directly or indirectly divert or attempt to divert from the Company
any business in which the Company is engaged.
Any breach of this restrictive covenant by Employee shall effect a
forfeiture of Employee's rights hereunder and terminate the Company's
obligations under this Agreement, and Employee shall not be entitled to any
compensation contemplated by this Agreement, whether or not earned or vested as
of the date of termination of the Company's obligations under this Agreement.
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7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Employee agrees to enter into a confidentiality agreement, in the form
attached as Schedule C (the "Confidentiality Agreement"), concurrently with the
execution of this agreement.
(b) Any breach by Employee of the Confidentiality Agreement shall effect a
forfeiture of Employee's rights hereunder and terminate the Company's
obligations under this Agreement, and Employee shall not be entitled to any
compensation contemplated by this Agreement, whether or not earned or vested as
of the date of termination of the Company's obligations under this Agreement.
8. ADDITIONAL REMEDIES. Employee recognizes that irreparable injury will
result to the Company and to its business and properties in the event of any
breach by Employee of any of the provisions of Section 6 or the Confidentiality
Agreement and that Employee's continued employment is predicated on the
covenants made by him pursuant thereto. In the event of any breach by Employee
of his obligations under Section 6 or the Confidentiality Agreement, the Company
shall be entitled, in addition to any other remedies and damages available, to
injunctive relief to restrain any such breach by Employee or by any person or
persons acting for or with Employee in any capacity whatsoever.
9. NONASSIGNMENT. This Agreement is personal to Employee and shall
not be assigned by him. Employee shall not hypothecate, delegate, encumber,
alienate, transfer or otherwise dispose of his rights and duties hereunder.
This Agreement shall not be assigned by the Company without the prior written
consent of Employee.
10. WAIVER. The waiver by a party of a breach by the other party of
any provision of this Agreement shall not be construed as a waiver by such
party of any subsequent breach by the other party.
11. SEVERABILITY. If any clause, phrase, provision or portion of this
Agreement or the application thereof to any person or circumstance shall be
invalid or unenforceable under any applicable law, such event shall not affect
or render invalid or unenforceable the remainder of this Agreement and shall not
affect the application of any clause, provision or portion hereof to other
persons or circumstances.
12. BENEFIT. The provisions of this Agreement shall inure to the benefit
of the Company, its successors and assigns, and shall be binding upon the
Company and Employee, its and his heirs, personal representatives and
successors, including without limitation Employee's estate and the executors,
administrators, or trustees of such estate.
13. RELEVANT LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Georgia.
14. NOTICES. All notices, requests, demands and other communications
in connection with this Agreement shall be made in writing and shall be
deemed to have been given when delivered by hand or facsimile transmission,
or 48 hours after mailing at any general or branch United States Post Office,
by registered or certified mail, postage prepaid,
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addressed as follows, or to such other address as shall have been designated
in writing by the addressee:
(a) If to the Company:
Paragon Trade Brands, Inc.
Attn: Corporate Secretary
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
(b) If to Employee:
Xxxxx X. Xxxxxxx
000 Xxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx
15. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding
of the parties and supersedes all prior agreements, arrangements, and
communications, whether oral or written, pertaining to the subject matter
hereof, and this Agreement shall not be modified or amended except by written
agreement of the Company and Employee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first set-forth above.
PARAGON TRADE BRANDS, INC.
Attest:
/S/ XXXXXXX X. XXXXXX By: /S/ XXXXX X. XXXX
--------------------- -----------------------
EMPLOYEE:
/S/ XXXXX X. XXXXXXX
--------------------
Xxxxx X. Xxxxxxx
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SCHEDULE A
DEFERRED COMPENSATION PLAN
PARAGON TRADE BRANDS, INC.
CHIEF EXECUTIVE OFFICER
1. GENERAL TERMS
A. AWARDS UNSECURED. The Company will pay Awards granted under this
Agreement ("Awards") from its general assets and will not set
aside any funds to pay or secure Awards at any time prior to
payment.
B. INTEREST. Interest will not be paid on Awards prior to the date
each Award becomes effective. Interest on Awards after they
become effective will accrue as described in Section 3C below.
C. TERMINATION OF EMPLOYMENT. If Employee is terminated by the
Company for willful violation of the Company rules or for gross
negligence in job performance, no portion of any Award will be
paid. In the event of Employee's death or disability, or if
Employee is terminated for reasons other than those listed above,
prior to the date an Award becomes effective, Employee (or
Employee's surviving spouse if any and, if not, Employee's legal
representative) will be paid the total amount of all Awards which
have become effective plus a pro rata portion of the current
year's Award which is not yet effective. Such pro rata portion
shall be determined by multiplying the amount of the Award by a
fraction the numerator of which is the number of months Employee
was employed by the Company during that year and the denominator
of which is twelve.
D. OTHER PLANS NOT AFFECTED. Awards under this Agreement will be in
addition to amounts paid to Employee under any other compensation
or benefit program of the Company.
E. DEFINITION OF TERMS. Capitalized terms not otherwise defined
herein are used as defined in the Amended and Restated Employment
Agreement between Paragon Trade Brands, Inc. and Xxxxx X. Xxxxxxx
dated August 5, 1997.
F. OWNERSHIP OF ASSETS. Nothing contained herein shall be deemed to
create a trust of any kind or create any fiduciary relationship.
Funds in the Deferred Compensation Account shall continue for all
purposes to be a part of the general funds of the Company, and no
person other than the Company shall have any interest in such
funds. Employee's (or Employee's beneficiaries') right to
receive payments from the Company under this Agreement shall be
no greater than the right of any unsecured general creditor of
the Company.
2. ANNUAL AWARDS
A. AMOUNT. There will be seven annual Awards, one each year
commencing in 1993. The amount of each annual Award will be 20%
of Employee's base
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Schedule A (CONT)
salary plus any incentive compensation earned by Employee in the
year prior to the Award.
B. EFFECTIVE DATE AND PAYMENT OF AWARDS. The effective date for
each year's Award will be December 31, with the effective date of
the first award to be December 31, 1993. As soon as practicable
after June 30, 1997, the obligation of the Company under this
Agreement to pay Employee the aggregate Awards earned through
December 31, 1996, and all earnings thereon, shall be transferred
to Employee's Company Contribution Account under the Paragon
Trade Brands, Inc. Deferred Compensation Plan, adopted effective
April 1, 1997 (the "Deferred Compensation Plan"). The Company
shall transfer this obligation by making a cash contribution in
the amount of such obligation to Employee's Company Contribution
Account under the Master Trust Agreement for the Paragon Trade
Brands, Inc. Deferred Compensation Plan (the "Trust"); and upon
the date such contribution is received by the Trust, the
Company's obligation to pay such deferred compensation and
earnings thereon under this Agreement shall be fully
extinguished. Upon the transfer of such funds to the Trust, such
obligation shall be governed solely by the terms of the Deferred
Compensation Plan, provided, however, that Employee shall at all
times be 100% vested in all amounts in his Company Contribution
Account under the Deferred Compensation Plan.
Awards made for the year commencing January 1, 1997 and thereafter
will not become an obligation under this Agreement. Instead, when an
Award is credited the Company shall as soon as practicable
thereafter transfer cash in the amount of such Award to Employee's
Company Contribution Account under the Trust. Such contribution to
the Employee's Company Contribution Account under the Deferred
Compensation Plan shall be governed solely by the terms of the
Deferred Compensation Plan, provided, however, that Employee shall
at all times be 100% vested in all amounts in his Company
Contribution Account under the Deferred Compensation Plan."
3. INTEREST ON AWARDS
A. DEFERRED COMPENSATION ACCOUNT. As of the date each Award becomes
effective, the Company shall credit to a reserve account the
Employee's name (the "Deferred Compensation Account") the amount
of each Award.
C. INTEREST. The balance (including principal and interest) in the
Deferred Compensation Account shall earn interest at an annual
rate equal to the three-month Treasury Xxxx rate as of each
January 15 converted to an interest-bearing equivalent plus two
percent (2%) as determined from time to time by the Compensation
Committee of the Board of Directors of the Company.
Employee may designate beneficiaries to succeed to Employee's right to
receive future payments of Deferred Awards in the event of Employee's
death. If no designation is made or the designated beneficiary predeceases
Employee, designation shall be made to Employee's estate.
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SCHEDULE B
PARAGON TRADE BRANDS, INC.
SEVERANCE PROTECTION PLAN
(CHIEF EXECUTIVE OFFICER)
WHEREAS, the Board of Directors of Paragon Trade Brands, Inc. (the
"Company") recognizes that the threat of an unsolicited takeover of the Company
may occur which can result in significant distractions to its key executive
personnel because of the uncertainties inherent in such a situation; and
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of its chief
executive officer in the event of a threat of a change in control of the Company
and to ensure his continued dedication and efforts in such event without undue
concern for his personal financial and employment security.
NOW, THEREFORE, in order to fulfill the above purposes, the following plan
has been developed and is hereby adopted.
ARTICLE I
ESTABLISHMENT OF PLAN
As of the Effective Date, the Company hereby establishes a severance
compensation plan known as the Paragon Trade Brands, Inc. Severance Protection
Plan (Chief Executive Officer) as set forth in this document.
ARTICLE II
DEFINITIONS
As used herein the following words and phrases shall have the following
respective meanings unless the context clearly indicates otherwise.
2.1 BOARD. The Board of Directors of Paragon Trade Brands, Inc.
2.2 BASE SALARY. The amount Executive is entitled to receive as
wages or salary on an annualized basis.
2.3 CAUSE. The Company may terminate the Executive's employment for
"Cause." "Cause" is defined as (i) a material breach by Executive of the terms
of the Amended and Restated Employment Agreement between Executive and the
Company dated August 5, 1997, (ii) the conviction of Executive of any criminal
act that two thirds (2/3) of the Board shall, in its sole and absolute
discretion, deem to constitute Cause, or (iii) conduct by Executive in his
office with the Company that is grossly inappropriate and demonstrably likely to
lead to material injury to the Company, as determined by two-thirds (2/3) of the
Board acting reasonably and in good faith; provided, however, that in the case
of (iii) above, such conduct
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Schedule B (CONT)
shall not constitute Cause unless the Board shall have delivered to Executive
notice setting forth with specificity (x) the conduct deemed to qualify as
Cause, (y) reasonable action that would remedy such objection, and (z) a
reasonable time (not less than thirty (30) days) within which Executive may
take such remedial action, and Executive shall not have taken such specified
remedial action within such specified reasonable time.
2.4 CHANGE IN CONTROL. A "Change in Control" shall be deemed to occur:
(a) if any person (as such term is used in sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 of the Exchange Act), directly or indirectly, of the securities of
the Company representing 50% or more of the combined voting power of the
Company's then outstanding securities,
(b) upon the first purchase of the Company's Common Stock pursuant
to a tender or exchange offer (other than a tender or exchange offer made by the
Company),
(c) upon the approval by the Company's stockholders of a merger or
consolidation, a sale or disposition of all or substantially all of the
Company's assets or a plan of liquidation or dissolution of the Company, or
(d) if, during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the Company
cease for any reason to constitute at least a majority thereof, unless the
election or nomination for the election by the Company's stockholders of each
new director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period.
2.5 COMPANY. Paragon Trade Brands, Inc.
2.6 EFFECTIVE DATE. The effective date of the Amended and Restated
Employment Agreement between Xxxxx X. Xxxxxxx and the Company dated as of
August 5,1997.
2.7 EXECUTIVE. Xxxxx X. Xxxxxxx.
2.8 GOOD REASON. "Good Reason" shall mean the occurrence of any of
the following events or conditions:
(a) a change in the Executive's status, title, position or
responsibilities (including reporting responsibilities) which, in the
Executive's reasonable judgment, represents a substantial reduction of the
status, title, position or responsibilities as in effect immediately prior
thereto; the assignment to the Executive of any duties or responsibilities
which, in the Executive's reasonable judgment, are inconsistent with such
status, title, position or responsibilities; or any removal of the Executive
from or failure to reappoint or reelect him to any of such positions, except in
connection with the termination of his employment for Cause, Permanent
Disability, as a result of his death, or by the Executive other than for Good
Reason;
(b) a reduction in the Executive's annual base salary;
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Schedule B (CONT)
(c) the Company's requiring the Executive (without the consent of
the Executive) to be based at any place outside a thirty-five (35) mile radius
of his place of employment prior to a Change in Control, except for reasonably
required travel on the Company's business which is not materially greater than
such travel requirements prior the Change in Control;
(d) the failure by the Company to (A) continue in effect any
material compensation or benefit plan in which the Executive was participating
at the time of the Change in Control, or (B) provide the Executive with
compensation and benefits at least equal (in terms of benefit levels and/or
reward opportunities) to those provided for under each employee benefit plan,
program and practice as in effect immediately prior to the Change in Control (or
as in effect following the Change in Control, if greater);
(e) any material breach by the Company of any provisions of
this Plan;
(f) any purported termination of the Executive's employment for
Cause by the Company which does not otherwise comply with the terms of this
Plan.
2.9 NOTICE OF TERMINATION. "Notice of Termination" shall mean a notice
which indicates the specific provisions in this Plan relied upon as the basis
for any termination of employment and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. No purported
termination of employment shall be effective without such Notice of Termination.
2.10 PERMANENT DISABILITY. The Executive shall be deemed to have become
permanently disabled for purposes of this Plan if the Board of Directors of the
Company finds, upon the basis of medical evidence satisfactory to it, that the
Executive is totally disabled, whether due to physical or mental condition, so
as to be prevented from engaging in further employment by the Company and that
such disability will be permanent and continuous during the remainder of his
life.
2.11 SEVERANCE BENEFIT. The benefit payable in accordance with
Article IV of the Plan.
ARTICLE III
ELIGIBILITY
3.1 PARTICIPATION. Executive shall automatically be entitled to be a
Participant in the Plan as of the Effective Date.
3.2 DURATION OF PARTICIPATION. Executive shall cease to be a Participant
in the Plan if he ceases to be an employee of the Company at any time prior to a
Change in Control or, if his employment is terminated following a Change in
Control under circumstances where he is not entitled to severance benefits under
the terms of this Plan. If Executive is entitled to payment of a Severance
Benefit, he shall remain a Participant in the Plan until the full amount of the
Severance Benefit has been paid to him.
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Schedule B (CONT)
ARTICLE IV
SEVERANCE BENEFITS
4.1 RIGHT TO SEVERANCE BENEFIT. Executive shall be entitled to receive
from the Company a Severance Benefit in the amount provided in Section 4.2 if
(i) a Change in Control has occurred and (ii) within one year thereafter,
Executive's employment with the Company terminates for any reason, except (b),
that notwithstanding the provisions of subparagraph (1), no benefits under this
Plan will be payable should the Participant's termination of employment be (i)
for Cause, (ii) by reason of Permanent Disability, (iii) initiated by the
Participant for other than Good Reason, or (iv) by reason of the Participant's
death.
4.2 AMOUNT OF SEVERANCE BENEFITS. If Executive's employment is terminated
in circumstances entitling him to a Severance Benefit as provided in Section
4.1, Executive shall be entitled to the following benefits:
(a) the Company shall pay to the Executive, as severance pay and in
lieu of any further salary for periods subsequent to the Termination Date (as
specified in Section 5.2), in a single payment (without any discount for
accelerated payment), an amount in cash equal to 2.9 times the Executive's Base
Salary immediately prior to the Change in Control, less any amounts paid to
Executive under the Paragon Trade Brands Salaried Severance Plan;
(b) for a period of eighteen (18) months subsequent to the
Executive's termination of employment, the Company shall at its expense continue
on behalf of the Executive and his dependents and beneficiaries, the life
insurance, disability, medical dental and hospitalization benefits which were
being provided to the Executive at the time of termination of employment. The
benefits provided in this Subsection 4.2(b) shall be no less favorable to the
Executive, in terms of amounts and deductibles and costs to him, than the
coverage provided the Executive under the plans providing such benefits at the
time Notice of Termination is given. The Executive shall notify the Company if
he obtains employment with another entity or individual during the eighteen (18)
months subsequent to his termination and in doing so shall inform the Company
whether the Executive has been provided all or some of the foregoing benefits by
his new employer. The Company's obligation hereunder with respect to the
foregoing benefits shall be limited to the extent that the Executive obtains any
such benefits pursuant to a subsequent employer's benefit plans, in which case
the Company may reduce the coverage of any benefits it is required to provide
the Executive hereunder as long as the aggregate coverage of the combined
benefit plans is no less favorable to the Executive, in terms of amounts and
deductibles and costs to him, than the coverage required to be provided
hereunder. This subsection (b) shall not be interpreted so as to limit any
benefits to which the Executive or his dependents may be entitled under any of
the Company's employee benefit plans, programs or practices following the
Executive's termination of employment. The provision of continued benefits to
the Executive under this subsection (b) shall not deprive the Executive of any
independent statutory right to continue benefits coverage pursuant to Sections
601 through 606 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
(c) the Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment
or otherwise and no
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Schedule B (CONT)
such payment shall be offset or reduced by the amount of any compensation or
benefits provided to the Executive in any subsequent employment.
ARTICLE V
TERMINATION OF EMPLOYMENT
5.1 WRITTEN NOTICE REQUIRED. Any purported termination of
employment, either by the Company or by the Executive, shall be communicated
by written Notice of Termination to the other.
5.2 TERMINATION DATE. In the case of the Executive's death, the
Executive's Termination Date shall be his date of death. In all other cases, the
Executive's Termination Date shall be the date specified in the Notice of
Termination subject to the following:
(a) If the Executive's employment is terminated by the Employer for
Cause or due to Permanent Disability, the date specified in the Notice of
Termination shall be at least thirty (30) days from the date the Notice of
Termination is given to the Executive, provided that in the case of Disability
the Executive shall not have returned to the full-time performance of his duties
during such period of at least thirty (30) days; and
(b) If the Executive terminates his employment for Good Reason, the
date specified in the Notice of Termination shall not be more than sixty (60)
days from the date the Notice of Termination is given to the Company.
ARTICLE VI
SUCCESSORS TO CORPORATION
6.1 SUCCESSORS. This Plan shall bind any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, in the same
manner and to the same extent that the Company would be obligated under this
Plan if no succession had taken place. In the case of any transaction in which a
successor would not by the foregoing provision or by operation of law be bound
by the Plan, the Company shall require such successor expressly and
unconditionally to assume and agree to perform the Company's obligations under
this Plan, in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place.
ARTICLE VII
DURATION, AMENDMENT AND PLAN TERMINATION
7.1 DURATION. This Plan shall continue in effect until terminated in
accordance with Section 7.2. If a Change in Control occurs, this Plan shall
continue in full force and effect, and shall not terminate or expire until after
all Executives who have become entitled to Severance Benefits hereunder shall
have received such payments in full.
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Schedule B (CONT)
7.2 AMENDMENT AND TERMINATION. The Plan may be terminated or amended in
any respect by resolution adopted by two-thirds of the Board, provided, however,
that no such amendment or termination of the Plan may be made if such amendment
or termination would adversely affect any right of an Executive and provided
further, that the Plan no longer shall be subject to amendment, change,
substitution, deletion, revocation or termination in any respect whatsoever
following a Change in Control.
7.3 FORM OF AMENDMENT. The form of amendment or termination of the Plan
shall be a written instrument signed by a duly authorized officer or officers of
the Corporation, certifying that the amendment or termination has been approved
by the Board.
ARTICLE VIII
ADDITIONAL PAYMENTS BY THE EMPLOYER
8.1 In the event it shall be determined that any payment or distribution
of any type by the Company to or for the benefit of the Executive, whether paid
or payable or distributed or distributable pursuant to the terms of this Plan or
otherwise (the "Total Payments"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Total Payments. Payment of the Gross-Up Payment shall be made
in accordance with Section 7.3.
8.2 DETERMINATION BY ACCOUNTANT. All determinations required to be made
under this Section 8, including whether a Gross-Up Payment is required and the
amount of such Gross-Up Payment, shall be made by the independent accounting
firm retained by the Company on the date of a Change in Control (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days of the date of termination, if
applicable, or such earlier time as is requested by the Company. If the
Accounting Firm determines that no Excise Tax is payable by the Company, it
shall furnish the Executive with an opinion that he has substantial authority
not to report any Excise Tax on his federal income tax return. Any determination
by the Accounting Firm shall be binding upon the Company and the Participant. As
a result of the uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up payments which will not have been made by the Company
should have been made ("Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 8.3 and the Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
8.3 NOTIFICATION REQUIRED. The Executive shall notify the Company
in writing of any claim by the Internal Revenue Service that, if successful,
would require the payment by the
6
Schedule B (CONT)
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive knows of
such claim and shall apprise the Company of the nature of such claim and
the date on which such claim is requested to be paid. The Executive shall
not pay such claim prior to the expiration of the thirty-day period following
the date of which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive shall:
(a) give the Company any information reasonably requested by
the Company relating to such claim,
(b) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(c) cooperate with the Company in good faith in order to
effectively contest such claim,
(d) permit the Company to participate in any proceedings relating to
such claim, provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Participant
harmless, on an after-tax basis, for any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment provisions of this Section 8.3, the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
xxx for a refund, or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Participant, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Participant shall be entitled to settle or contest, as the case may be, any
other issued raised by the Internal Revenue Service or any other taxing
authority.
8.4 REPAYMENT. If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8.3, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 8.3) promptly pay to
the Company the amount of such refund
7
Schedule B (CONT)
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 8.3, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of thirty days after
such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
ARTICLE IX
MISCELLANEOUS
9.1 INDEMNIFICATION. If the Executive institutes any legal action in
seeking to obtain or enforce, or is required to defend in any legal action the
validity or enforceability of, any right or benefit provided by this Plan, the
Company will pay for all actual legal fees and expenses incurred by the
Executive.
9.2 EMPLOYMENT STATUS. This Plan does not constitute a contract of
employment or impose on the Company any obligation to retain the Executive as an
employee, to change the status of the Executive's employment or to change any
employment policies of the Company.
9.3 VALIDITY AND SEVERABILITY. The invalidity or unenforceability of any
provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.4 GOVERNING LAW. The validity, interpretation, construction and
performance of the Plan shall in all respects be governed by the laws of the
State of Georgia.
9.5 CHOICE OF FORUM. Executive shall be entitled to enforce the provisions
of this Plan, or to assert any claim for benefits under the terms of this Plan,
in any state or federal court located in the State of Georgia, in addition to
any other appropriate forum.
8
SCHEDULE C
PARAGON TRADE BRANDS, INC.
EMPLOYEE CONFIDENTIALITY AGREEMENT
In consideration of the compensation paid to me by my employer (my employer can
be Paragon Trade Brands, inc. or any of its majority owned subsidiaries) and my
continued employment as an employee in a position where my duties include the
possession of or access to my employer's trade secrets*, such duties being
assigned as of August 5, 1997, I hereby agree on behalf of myself, my executors,
legal representatives and assigns that:
1. I will not at any time, either during or after my employment by my
employer, disclose to those not confidentially bound to my employer,
or use for their or my own benefit any of my employer's trade
secrets without written consent from my employer;
2. I will, upon termination of my employment with my employer or upon
prior request, deliver to my employer any and all objects,
materials, devices or substances including any writing recording,
drawing, sample specimen, prototype model, photography, blueprint or
map which describes depicts, contains, constitutes, reflects or
records my employer's trade secrets, and all copies thereof in my
possession; and
3. I consent to my employer's notification to any future employer
that I may have of the existence of this agreement.
/S/ XXXXXXX X. XXXXXX /S/ XXXXX X. XXXXXXX
--------------------- --------------------
Witness Employee
PARAGON TRADE BRANDS, INC.
Accepted: AUGUST 5, 1997 By: /S/ XXXXX X. XXXX
------------------------- -----------------
*"Trade Secret" means the whole or any portion or phase of any scientific or
technical or business information, design, process, procedure, formula or
improvement, any future plans, customer lists, market studies, cost and price
studies or similar business information which is secret and of value. A "trade
secret" shall be presumed to be secret when the employer takes measures to
prevent it from becoming available to persons other than those selected by the
employer to have access thereto for limited purposes. It shall be presumed to be
of value if money has been spent in its development, if it gives the employer an
opportunity to obtain an advantage over competitors who do not know or use it,
or if it is salable.
