Exhibit (d)(3)
EXECUTION COPY
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
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as of July 9, 2001, between FLD Acquisition Corp., a Georgia corporation (the
"Company"), and Xxxxxx X. Xxxxxxx ("Executive"). This Agreement shall become
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effective (the "Effective Date") only upon the consummation of the Merger
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contemplated by the Agreement and Plan of Merger dated as of the date hereof
(the "Merger Agreement"), by and among Full Line Distributors, Inc., a Georgia
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corporation (the "Surviving Corporation"), Broder Bros., Co., a Michigan
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corporation, and the Company, and this Agreement shall terminate on a
coterminous basis with the termination or expiration of the Merger Agreement.
In connection with the transactions contemplated by the Merger Agreement, the
Company shall merge with and into the Surviving Corporation.
The Company and Executive desire to enter into this Agreement to
provide the terms and conditions pursuant to which Executive will serve as the
president of the Company's manufacturing division.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive
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hereby accepts employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning and ending as provided in
paragraph 4 hereof (the "Employment Period").
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2. Position and Duties.
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(a) During the Employment Period, Executive shall serve as President
of the Company's Manufacturing Division and shall have the normal duties,
responsibilities and authority of the President of the Manufacturing Division,
subject to the overall direction and authority of the Company's senior officers
and its board of directors (the "Board").
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(b) Executive shall report to the Company's Chief Executive Officer,
and Executive shall devote his best efforts and his full business time and
attention to the business and affairs of the Company and its Subsidiaries;
provided, that nothing in this paragraph 2(b) shall prohibit Executive from
devoting a reasonable amount of business time and attention to charitable
activities, and from performing services for T Shirt Brokerage Services, Inc.
("TSBS") so long as such services do not interfere with Executive's duties to
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the Company.
(c) For purposes of this Agreement, "Subsidiaries" shall mean any
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corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
3. Base Salary and Benefits.
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(a) During the Employment Period, Executive's base salary shall be
$250,000 per annum and shall be subject to review by the Chief Executive Officer
or his designee (the "Supervising Officers") on an annual basis (the "Base
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Salary"), which salary shall be payable in regular installments in accordance
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with the Company's general payroll practices and shall be subject to customary
withholding. In addition, during the Employment Period, Executive shall be
entitled to participate in all of the Company's employee health, retirement and
disability benefit programs for which employees of the Company and its
Subsidiaries are generally eligible. Executive shall be entitled to four weeks
of paid vacation per calendar year.
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
(c) During the Employment Period, Executive will be eligible to earn
an annual target performance bonus of up to $100,000 during each calendar year
ended December 31/st/, (commencing with the year ended December 31, 2001). Such
bonus will be payable based on the attainment of the performance targets and
objectives for each such year, which will be established annually by the
Supervising Officers. Any bonus under this paragraph 3(c) shall be deemed to
have been earned and accrued as of the end of the applicable fiscal year for
purposes of this Agreement and shall be paid to the Executive, in cash, no later
than February 28/th/ of the calendar year following the year for which such
bonus applies. Executive's bonus for fiscal year 2001 will be prorated based
upon the number of days Executive was actually in the Company's employment
during such fiscal year.
4. Term.
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(a) The Employment Period will commence on the Effective Date hereof
and shall terminate one year thereafter; provided that the Employment Period
(including, without limitation, any extensions of the Employment Period pursuant
to the provisions below or otherwise) (i) shall terminate upon Executive's
resignation, death or Disability (as defined below) and (ii) may be terminated
by the Company at any time for Cause (as defined below) or without Cause;
provided further, that the Employment Period will automatically renew for
successive periods of one year each, unless either party delivers written notice
to the other of its intention not to renew the Employment Period for such
successive one year period at least 30 days prior to the commencement of any
such renewal period.
(b) Subject to the other terms and conditions of this paragraph 4(b),
if the Employment Period is terminated by the Company without Cause or if
Executive shall terminate the Employment Period for Good Reason (as defined
below) during the term of this Agreement, Executive shall be entitled to (i)
receive his Base Salary and benefits described in paragraph 3(a) above, in each
case for 180 days after the date of such termination and (ii) retain his laptop
computer and cellular telephone (provided, Executive shall be solely responsible
for cellular charges for periods on or after the date of termination). Any such
amounts payable under this paragraph 4(b) will be
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payable at such times as such amounts would have been payable had Executive not
been terminated. Notwithstanding anything in this Agreement to the contrary, the
Company shall have no obligation to pay any amounts payable under this paragraph
4(b) during such times as Executive is in breach of paragraph 5, 6, or 7 hereof.
As a condition to the Company's obligations (if any) to make severance payments
pursuant to this paragraph 4(b), Executive will execute and deliver a general
release in form and substance satisfactory to the Company.
(c) If the Employment Period is terminated by the Company for Cause
or is terminated pursuant to clause (a)(i) above (other than a resignation by
Executive for Good Reason), Executive shall be entitled to receive his Base
Salary through the date of termination and no other payment.
(d) Except as otherwise provided in paragraph 4(b) or paragraph 4(c),
all of Executive's rights to fringe benefits and bonuses hereunder (if any)
which accrue after the termination of the Employment Period shall cease upon
such termination. The Company may offset any amounts Executive owes it or its
Subsidiaries against any amounts it owes Executive hereunder.
(e) For purposes of this Agreement, "Disability" (i) shall mean any
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physical or mental incapacitation which results in Executive's inability to
perform his duties and responsibilities for the Company for a total of 90 days
during any twelve-month period. If the Company and Executive are unable to
agree as to whether Executive is Disabled, the question will be decided by a
physician selected jointly by the Company and Executive, at the joint expense of
the Company and Executive, whose decision will be conclusive and binding.
(f) For purposes of this Agreement, "Cause" shall mean (i) the
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commission of a felony or any other act or omission involving dishonesty,
disloyalty or fraud with respect to the Company or any of its Subsidiaries or
any of their customers or suppliers, (ii) conduct bringing the Company or any of
its Subsidiaries into substantial public disgrace or disrepute, (iii)
substantial and repeated failure, after delivery of written notice from the
Supervising Officers to the Executive and a ten (10) business day period to
effect a cure, to perform duties as reasonably directed by the Supervising
Officers, (iv) gross negligence or willful misconduct with respect to the
Company or any of its Subsidiaries, or (v) any other material breach of this
Agreement or the Non-Compete Agreement which, in the case of a material breach
of this Agreement, remains uncured for a period of ten (10) business days after
Executive is given written notice of such material breach.
(g) For purposes of this Agreement, "Good Reason" shall mean the
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occurrence, without Executive's consent, of any of the following: (i) unless
corrected within ten (10) business days after delivery by Executive of written
notice to the Supervising Officers of Executive's objection thereto, the
assignment to Executive of any significant duties materially inconsistent with
Executive's position as president of the Company's manufacturing division or a
substantial adverse alteration in the nature or status of Executive's
responsibilities for the Company, (ii) any reduction in the Base Salary paid to
Executive; (iii) the failure by the Company to pay or provide Executive within
ten (10) days of written demand, any amount of Base Salary, bonus or any other
benefit which is due, owing and payable under this Agreement or (iv) the failure
by the Company to continue to provide Executive with benefits which satisfy the
requirements of the last sentence of paragraph 3(a).
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5. Confidential Information. Executive acknowledges that the
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information, observations and data (including without limitation trade secrets,
know-how, research and product plans, customer lists, software, inventions,
processes, formulas, technology, designs, drawings, specifications, marketing
and advertising materials, distribution and sales methods and systems, sales and
profit figures and other technical or business information) disclosed or
otherwise revealed to him, or discovered or otherwise obtained by him, directly
or indirectly, while employed by the Company or any of its Subsidiaries
concerning the business or affairs of the Company or any of its Subsidiaries
("Confidential Information") are the property of the Company or such Subsidiary.
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Therefore, Executive agrees that he shall not disclose to any unauthorized
person or use for his own purposes any Confidential Information without the
prior written consent of the Supervising Officers, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Executive's acts or omissions in violation
of this Agreement. Notwithstanding the foregoing, Executive shall not be deemed
to be in breach of this Section 5 by virtue of his owning, managing or rendering
services to TSBS (as such business exists on the date hereof as described on
Exhibit A attached hereto); provided, that the foregoing shall not permit
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Executive to disclose Confidential Information to third parties other than TSBS
or to disclose written or electronic Confidential Information to TSBS.
Executive shall deliver to the Company at the termination of the Employment
Period, or at any other time the Company may request, all memoran da, notes,
plans, records, reports, computer tapes, printouts and software and other
documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined below) or the business of the Company or
any Subsidiary which he may then possess or have under his control.
6. Inventions and Patents. Executive acknowledges that all
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inventions, innovations, improvements, developments, methods, designs, analyses,
drawings, reports and all similar or related information (whether or not
patentable) which relate to the Company's or any of its Subsidiaries' actual or
anticipated business, research and development or existing or future products or
services and which are conceived, developed or made by Executive while employed
by the Company and its Subsidiaries ("Work Product") belong to the Company or
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such Subsidiary. Executive shall promptly disclose such Work Product to the
Supervising Officers and perform all actions reasonably requested by the
Supervising Officers (whether during or after the Employment Period) to
establish and confirm such ownership (including, without limitation,
assignments, consents, powers of attorney and other instruments). Any
inventions, innovations, improvements, developments, methods, designs, analyses,
drawings or reports that are developed by Executive while performing services
for TSBS and relate solely to the business of TSBS (i.e., they have no
commercial application to the Company's business) shall be the property of TSBS.
7. Non-Compete, Non-Solicitation.
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(a) Each of the parties hereto acknowledges and agrees that the
Company is engaged in the business of purchasing, warehousing, distributing,
selling, marketing, manufacturing and producing (whether for internal use or
sale to third parties) casualwear and sportswear for men, women, children and
infants, including but not limited to T-shirts, sweatshirts, golf shirts, denim
products, fleece products, sleep wear, sweaters, woven shirts, outerwear,
headgear, sports jerseys, jackets, turtlenecks, bags, aprons, towels, robes and
shorts, whether imprintable or imprinted (collectively, "Apparel Products"),
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which business is conducted (including production, promotional
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and marketing activities and sales activities) (the foregoing being referred to
as the "Restricted Business") in the Restricted Territory (as defined below).
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During the course of his association with the Company, Executive will possess
extensive knowledge and proprietary information with respect to the Company,
which, if disclosed or made available to the Company's competitors, would have a
material adverse effect on the Company, and Executive will be responsible for
the creation of goodwill inherent in the Company. As a result of this Agreement,
the Company will provide Executive with substantial compensation.
(b) In light of Executive's contributions to the growth and
development of the Company, including the creation of goodwill, Confidential
Information and Work Product of the Company, Executive will execute and deliver
this Agreement for the purpose of preserving for the Company's benefit the
goodwill, Confidential Information, Work Product, proprietary rights and going
concern value of the Company, and to protect the Company's business
opportunities. The covenants contained in this paragraph 7 are integral to the
Company's employment of Executive and the Company would not enter into and
deliver this Agreement absent Executive's agreement to the covenants contained
in paragraphs 5, 6 and 7 of this Agreement and unless such covenants are in full
force and effect and valid, binding and enforceable against Executive.
(c) In order to protect the value of the Company's equity and its
legitimate business interests (including the goodwill, Confidential Information
and Work Product of the Company), Executive agrees that during the Employment
Period and for a period of one year thereafter (the "Noncompete Period"), he
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shall not, directly or indirectly, either for himself or for any other person,
partnership, corporation, company or other entity, own, manage, control,
participate in, consult with, render services for, or in any other manner engage
in any business or enterprise which is engaged in the Restricted Business
anywhere in the Restricted Territory. Notwithstanding this paragraph 7,
Executive shall be entitled to own, manage and render services to TSBS as such
business exists on the date hereof (which business is described on Exhibit A
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attached hereto) without violation of paragraph 7 of this Agreement (subject to
the other obligations of Executive under this Agreement and the covenants set
forth in Exhibit A attached hereto). Executive agrees that the aforementioned
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covenant is reasonable with respect to its duration, geographical area and scope
of restricted activities. In particular, Executive acknowledges and agrees that
the Company currently conducts its business throughout the Restricted Territory
and that the geographic scope of this restriction is necessary to protect the
goodwill and Confidential Information of the Company.
For purposes of this Agreement,
"participate" includes any direct or indirect interest in any
enterprise, whether as an officer, director, employee, partner, sole proprietor,
agent, representative, independent contractor, executive, franchisor,
franchisee, owner or otherwise; provided that the foregoing activities shall not
include the passive ownership (i.e., Executive does not directly or indirectly
participate in the business or management of the applicable entity) of less than
2% of the stock of a publicly-held corporation whose stock is traded on a
national securities exchange and which is not primarily engaged in a business of
providing products or services which are similar to or compete with the products
and services of the Company, and
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"Restricted Territory" means the geographic area that is within the
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one day shipping zone of United Parcel Service from the Company's facilities
located in Fullerton, California; Miramar, Florida; Doraville, Georgia; Xxxxxxx,
Georgia; Berkeley, Missouri; Bedford Heights, Ohio; and Houston, Texas.
(d) During the Noncompete Period, Executive shall not directly or
indirectly through another person or entity (i) induce or attempt to induce any
employee of the Company to leave the employ of the Company, or in any way
interfere with the relationship between the Company and any employee thereof,
(ii) hire any person who was an employee of the Company at any time during the
Noncompete Period, (iii) induce or attempt to induce any customer (including,
without limitation, any subsidiaries, divisions or affiliates thereof),
supplier, licensee, licensor, franchisee or other business relation of the
Company to cease doing business with the Company, or in any way interfere with
the relationship between any such customer (including, without limitation, any
subsidiaries, divisions or affiliates thereof), supplier, licensee, licensor,
franchisee or business relation and the Company (including, without limitation,
making any negative statements or communications about the Company) or (iv)
service, engage in business with or provide products or services to any customer
(including, without limitation, any subsidiaries, divisions or affiliates
thereof) of the Company with respect to Apparel Products.
(e) Executive acknowledges and agrees that, the Company would not
enter into and deliver this Agreement unless Executive's covenants set forth in
paragraphs 5, 6 and 7 are in full force and effect and are binding and
enforceable obligations of Executive. Executive also acknowledges that, during
his employment as president of the Company's manufacturing division, he will
become familiar with the Confidential Information and Work Product of the
Company and he will be entrusted with supervising all aspects of the
manufacturing business. Executive also acknowledges that, prior to the
Effective Date, he has served as the chief executive officer of the Surviving
Corporation, and that as such, he has supervised all aspects of the Surviving
Corporations's business, and has contributed to the growth and goodwill of such
business and the creation of significant equity value for such business.
Executive further acknowledges that as president of the Company's manufacturing
division, Executive will have direct or indirect responsibility, oversight or
duties with respect to all of the manufacturing business of the Company and its
employees, vendors, customers, clients and other business relations, and that,
accordingly, the geographical restriction contained in this paragraph 7 is
reasonable in all respects and necessary to protect the goodwill and
Confidential Information and Work Product of the Company and that, without such
protection, the Company's customer and client relations and competitive
advantage would be materially adversely effected. It is specifically recognized
by Executive that the Company would not have entered into the Merger Agreement
or engaged in the transactions contemplated thereby without the restrictions
contained in this paragraph 7. Executive further acknowledges that the
restrictions contained in this paragraph 7 do not impose an undue hardship on
him due to the fact that he has general business skills which may be used in
industries other than that in which the Company conducts business and do not
deprive Executive of his livelihood. In addition, Executive agrees and
acknowledges that the potential harm to the Company of the non-enforcement of
paragraph 5, 6 or 7 outweighs any harm to Executive of their enforcement by
injunction or otherwise. Executive acknowledges that he has carefully read this
Agreement and has given careful consideration to the restraints imposed upon the
Executive by this Agreement, and is in full accord as to their necessity for the
reasonable and proper protection of the Company. Executive expressly
acknowledges and
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agrees that each and every restraint imposed by this Agreement is reasonable
with respect to subject matter, time period and geographical area. Executive
agrees that the covenants made in paragraph 7(c) and paragraph 7(d) will be
construed as agreements independent of any other provisions of this Agreement
and will survive any order of a court of competent jurisdiction terminating any
other provisions of this Agreement.
8. Enforcement. If, at the time of enforcement of paragraph 5, 6 or
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7 of this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services are unique and because Executive has access to
Confidential Information and Work Product, the parties hereto agree that money
damages would not be an adequate remedy for any breach of this Agreement.
Therefore, in the event of a breach or threatened breach of this Agreement, the
Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, the provisions hereof (without posting a bond or
other security). In addition, in the event of an alleged breach or violation by
Executive of paragraph 7, the Noncompete Period shall be tolled until such
breach or violation has been duly cured. Executive agrees that the restrictions
contained in paragraphs 5, 6 and 7 are reasonable.
9. Other Businesses. As long as Executive is employed by the
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Company or any of its Subsidiaries, Executive agrees that he will not, except
with the express written consent of the Supervising Officers, become engaged in,
or render services for, any business other than the business of the Company, any
of its Subsidiaries or any corporation or partnership in which the Company or
any of its Subsidiaries have an equity interest; provided, that nothing in this
paragraph 9 shall prohibit Executive from devoting a reasonable amount of
business time and attention to charitable activities. Notwithstanding this
paragraph 9, Executive shall be entitled to own, manage and render services to
TSBS as such business exists on the date hereof (which business is described on
Exhibit A attached hereto) without violation of paragraph 9 of this Agreement
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(subject to the other obligations of Executive under this Agreement and the
covenants set forth in Exhibit A attached hereto).
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10. Executive's Representations. Executive hereby represents and
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warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms. Executive hereby acknowledges and represents that he has consulted
with independent legal counsel regarding his rights and obligations under this
Agreement and that he fully understands the terms and conditions contained
herein.
11. Survival. Paragraphs 4, 5, 6 and 7 shall survive and continue in
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full force in accordance with their terms notwithstanding any termination of the
Employment Period.
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12. Notices. Any notice provided for in this Agreement shall be in
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writing and shall be either personally delivered, or mailed by first class mail,
return receipt requested, to the recipient at the address below indicated:
Notices to Executive:
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Xxxxxx X. Xxxxxxx
0000 Xxxxx Xxxxxx Xxxxx Xxxx
Xxxxxxx, XX 00000
With a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx, LLP
1230 Peachtree Street, N.E.
Suite 3100, Promenade II
Xxxxxxx, XX 00000
Attn: Xxxxxx Xxx Xxxxxxxx
Xxxxxx X. Xxxxx
Notices to the Company:
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Broder Bros., Co.
00000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxx
Xxxxxx Xxxxx
With copies to:
Broder Bros., Co.
x/x Xxxx Xxxxxxx, Xxx.
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxx Xxxxx
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, P.C.
Xxxxx X. Breach
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.
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13. Severability. Whenever possible, each provision of this
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Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
14. Complete Agreement. This Agreement, those documents expressly
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referred to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
15. No Strict Construction. The language used in this Agreement
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shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
16. Counterparts. This Agreement may be executed in separate
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counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
17. Successors and Assigns. This Agreement is intended to bind and
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inure to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company. Executive acknowledges that the Company shall have the
right to assign this Agreement in connection with the sale or transfer of all or
any portion of the Company's Manufacturing Division, whether such sale or
transfer is consummated by way of a merger, stock or interest purchase, asset
sale, recapitalization or any other form of transaction consummating such sale
or transfer.
18. Choice of Law. All issues and questions concerning the
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construction, validity, enforcement and interpretation of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of Georgia, without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of Georgia or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Georgia.
19. Amendment and Waiver. The provisions of this Agreement may be
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amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
20. References to the Company. From and after the effectiveness of
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the Merger contemplated by the Merger Agreement, all references to the Company
shall be deemed to be references to the Surviving Corporation.
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* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
FLD ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxx
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Its: CEO
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/s/ Xxxxxx X. Xxxxxxx
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XXXXXX X. XXXXXXX
[Signature Page to Employment Agreement]
EXHIBIT A
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The following is a description of the current business of T Shirt Brokerage
Services, Inc. ("TSBS"), as described by Executive:
TSBS is engaged in the business of acting as a broker (as opposed to a
distributor) for apparel products purchased from either apparel manufacturers,
apparel importers, screen printers and embroiders, fabric xxxxx or apparel
distributors. Except as set froth below, the products that TSBS brokers are
materially discounted (i.e., in excess of 20% of the then current standard
price) apparel products that are primarily close outs, discontinued items or
overstocked items. As a broker, TSBS does not generally warehouse any of the
goods that it sells. Occasionally, TSBS may take possession and warehouse the
goods that it is brokering, however TSBS will not use more than 10,000 square
feet, in the aggregate, of storage space at any one time. Subject to the
foregoing, TSBS does not act as a distributor, meaning that it does not (a)
purchase goods for storage and redistribution or (b) solicit orders or customers
through catalog solicitation or other general advertising methods (other than
trade magazine advertisements). TSBS's business is national in scope.
For purposes of the Agreement, the foregoing describes the business that
Executive may continue to engage in without violating the terms of Section 7 or
Section 9 of the Agreement.
On occasion, TSBS has the opportunity to act as a broker for the sale of apparel
products which are not materially discounted (i.e., the discount on such
products is less than 20% of the then current standard price). TSBS shall be
permitted to act as a broker in such transactions without Executive violating
the terms of this Agreement so long as Executive causes TSBS to give the Company
a right of first refusal with respect to such apparel products before TSBS
brokers such products to a third party, it being understood that if the Company
declines to purchase such products TSBS may only sell such products to a third
party on terms no more favorable than the terms offered to the Company.
