COTTONTOPS, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 31, 1997 between Cottontops,
Inc., a Delaware corporation (the "COMPANY") a wholly-owned subsidiary of Anvil
Knitwear, Inc. (the "ANVIL"), and Tom Glennon ("EXECUTIVE").
WHEREAS, the execution and delivery of this Agreement by the Company
and Executive is a condition to the purchase of substantially all of the assets
of Cottontops, Inc., a North Carolina corporation ("CT-1"), by the Company
pursuant to an Asset Purchase Agreement of even date herewith (the "ASSET
PURCHASE AGREEMENT"). Any capitalized term used herein but not defined herein
shall have the meaning given to such term in the Asset Purchase Agreement.
NOW THEREFORE, 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
hereby accepts employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning on the date hereof and ending
as provided in paragraph 4 hereof (the "EMPLOYMENT PERIOD").
2. POSITION AND DUTIES.
(a) During the Employment Period, Executive shall serve as the
President of the Company and shall have the normal duties, responsibilities and
authority of the President, subject to the power of the board of directors and
senior executives of the Company (the "BOARD") to expand or limit such duties,
responsibilities and authority and to override actions of the President.
(b) Executive shall report to the Board and Executive shall devote
his best efforts and his full business time and attention (except for permitted
vacation periods and reasonable periods of illness or other incapacity) to the
business and affairs of the Company. Executive shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner.
3. BASE SALARY AND BENEFITS.
(a) During the Employment Period, Executive's base salary shall be
$60,000 per annum or such other rate as the Board may designate from time to
time (the "BASE SALARY"),
which salary shall be payable in regular installments in accordance with the
Company's general payroll practices and shall be subject to customary
withholding.
(b) In addition to the Base Salary, Executive shall receive a bonus
following the end of each fiscal year during the Employment Period equal to ten
percent (10%) of the Net Profits (as defined below) earned by the Company during
such fiscal year (the "NET PROFIT BONUS"). "NET PROFITS" shall mean the net
pre-tax income of the Company for the fiscal year, determined in accordance with
GAAP, as reflected in the Company's financial statements after (i) deducting (to
the extent not already deducted) the administrative expenses for those functions
performed by Anvil (which shall not exceed the Projected Administrative Expenses
set forth on EXHIBIT A hereto by more than $75,000 per year) and any borrowing
expenses incurred by Anvil on behalf of the Company for such fiscal year, and
(ii) adding back any Contingent Payment paid during such fiscal year (to the
extent such Contingent Payment was deducted in determining the net pre-tax
income of the Company for such fiscal year). Within 20 days after Anvil
receives its audited financial statements in respect of such fiscal year, the
Company shall deliver to the Executive (A) a detailed calculation of any Net
Profit Bonus due under this Section 3(b) for such fiscal year, and (B) a check
in the amount of such Net Profit Bonus (if any).
(c) 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.
4. TERM.
(a) Unless renewed by the mutual agreement of the Company and
Executive, the Employment Period shall end upon the fourth anniversary of the
date of this Agreement; PROVIDED, HOWEVER, that (i) the Employment Period shall
terminate prior to such date upon Executive's resignation, death or permanent
disability or incapacity (as determined by the Board in its good faith
judgment), and (ii) the Employment Period may be terminated by the Company at
any time prior to such date for Cause (as defined below).
(b) (i) If the Employment Period is terminated pursuant to clause
(a)(i) above, Executive shall be entitled to receive his Base Salary through the
date of termination and a Pro Rata Net Profit Bonus;
(ii) If the Employment Period is terminated pursuant to clause
(a)(ii) (but only on the grounds of Substandard Performance as set forth in
clause (e)(vi) below) above, Executive shall be entitled to receive his Base
Salary through the date of termination and a Pro Rata Net Profit Bonus; and
(iii) If the Employment Period is terminated pursuant to clause
(a)(ii) (on any of the grounds set forth in clause (e) below, except on the
grounds of Substandard
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Performance as set forth in clause (e)(vi) below) above, Executive shall only
receive his Base Salary through the date of termination.
(c) For the purposes of this Agreement "PRO RATA NET PROFIT BONUS"
shall mean (i) if the termination date is during the second six months of the
fiscal year, the pro rata portion of any Net Profit Bonus due pursuant to
Section 3(b) hereof in respect of the fiscal year of termination based upon the
net profits earned by the Company during such fiscal year, or (ii) if the
termination date is during the first six months of such fiscal year, the pro
rata portion of the Net Profit Bonus (if any) paid to Executive for the
immediately preceding fiscal year. The pro rata portion of any Net Profit Bonus
shall be equal to the product of multiplying (A) the Net Profit Bonus as
determined in accordance with Section 3(b) hereof or the Net Profit Bonus (if
any) paid to Executive for the immediately preceding fiscal year (as applicable)
by (B) a fraction the numerator of which is the actual number of days that the
Executive was employed by the Company (up to and including the date of
termination) during such fiscal year and the denominator of which is 365.
(d) Without limiting any other right that the Company may have under
any other agreement, at law or in equity, the Company may set-off and reduce any
Net Profit Bonus payable under this Agreement by any amount claimed to be owing
by Executive to the Company pursuant to Section 2.2.2 or Section 8.2 of the
Asset Purchase Agreement PROVIDED, THAT the Company shall not set-off and reduce
any of its obligations under this Agreement until the expiration of a reasonable
time period (which shall not be less than 90 days) after the Company provides
Executive with written notice of its intention to exercise such right. Upon
resolution of said claim any amounts withheld hereunder that are not retained to
satisfy such claims shall be paid forthwith to the Executive. For purposes of
Section 3(b) of this Agreement, all amounts set-off against the Net Profit Bonus
otherwise payable to Executive shall be deemed to have been paid to the
Executive.
(e) For purposes of this Agreement, "CAUSE" shall mean (i) the
commission of a felony or a crime involving moral turpitude or the commission of
any other act or omission involving dishonesty, disloyalty or fraud with respect
to the Company or any of its customers or suppliers, (ii) conduct tending to
bring the Company into substantial public disgrace or disrepute, (iii)
substantial and repeated failure to perform duties as reasonably directed by the
Board, (iv) gross negligence or willful misconduct with respect to the Company,
(v) any other material breach of this Agreement which is not cured within 15
days after written notice thereof to Executive, or (vi) Executive's Substandard
Performance (as defined below). For the purposes of this Agreement,
"SUBSTANDARD PERFORMANCE" shall be determined by a majority of the Board as
provided herein. The Board shall give Executive written notice of the Board's
concern over Executive's performance, and Executive shall have 15 days to
prepare for a meeting with the Board, at which time Executive may present any
information on market competitive conditions and any other factors bearing upon
his performance. The Board shall give due consideration to the overall industry
experience in assessing Executive's performance. After due consideration of
these factors, if a majority of the Board determines in good faith that the
Company would have performed substantially better with other management and that
the future performance of the
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Company would be best served by new management, the Board may terminate
Executive for "Substandard Performance."
5. CONFIDENTIAL INFORMATION. Executive acknowledges that the
information, observations and data obtained by him while employed by the Company
(including those obtained while employed by CT-1 prior to the date of this
Agreement and the acquisition of CT-1 by the Company) concerning the business or
affairs of the Company ("CONFIDENTIAL INFORMATION") are the property of the
Company. 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 Board, 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. Executive
shall deliver to the Company at the termination of the Employment Period, or at
any other time the Company may request, all memoranda, 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 which he may then possess or have
under his control.
6. INVENTIONS AND PATENTS. Executive acknowledges that all
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 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
("WORK PRODUCT") belong to the Company. Executive shall promptly disclose such
Work Product to the Board and perform all actions reasonably requested by the
Board (whether during or after the Employment Period) to establish and confirm
such ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
7. NON-COMPETE, NON-SOLICITATION.
(a) In further consideration of the compensation to be paid to
Executive hereunder, Executive acknowledges that in the course of his employment
with the Company he shall become familiar, and during his employment with CT-1
he has become familiar, with the Company's trade secrets and with other
Confidential Information concerning the Company and that his services have been
and shall be of special, unique and extraordinary value to CT-1 and the Company.
Therefore, Executive agrees that during the Non-Compete Period, he shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with, render services for, or in any manner engage in any business
competing with the business of the Company, as such business exists on the date
of the termination of Executive's employment with the Company, within any
geographical area in which the Company engages or plans to engage in such
business; PROVIDED, HOWEVER, that the Company recognizes that Executive has
ownership interests in PKI, Inc., American Standard Apparel, Inc., Kohn Mills,
Inc., Sweatshirt Apparel USA, Inc., American Knitworks, Inc., and Proknit
Apparel, Inc. (the "COMPETING COMPANIES") which compete with the Company in the
apparel industry and agrees to allow Executive to liquidate such ownership
interest in and terminate any active participation in the business of the
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Competing Companies during a period beginning on the date hereof and ending on
the first anniversary of the date hereof. Nothing herein shall prohibit
Executive from being a passive owner of not more than 25% of the outstanding
stock of any class of any other corporation, so long as Executive has no active
participation in the business of such corporation. The "NON-COMPETE PERIOD"
shall begin on the date hereof and end on the earlier to occur of (i) the fifth
anniversary of the date of this Agreement and (ii) the first anniversary of the
date the Employment Period was terminated pursuant Sections 4(a)(ii) (but only
on the grounds of Substandard Performance as set forth in Section 4(e)(vi)
above) hereof.
(b) During the Non-Compete Period, Executive shall not directly or
indirectly through another 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 Employment
Period or (iii) induce or attempt to induce any customer, 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, supplier, licensee or business relation and the Company
(including, without limitation, making any negative statements or communications
about the Company).
(c) If, at the time of enforcement of this paragraph 7, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Executive agrees that the restrictions
contained in this paragraph 7 are reasonable.
(c) In the event of the breach or a threatened breach by Executive of
any of the provisions of this paragraph 7, the Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity 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 this
paragraph 7, the Non-Compete Period shall be tolled until such breach or
violation has been duly cured.
8. EXECUTIVE'S REPRESENTATIONS. Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and shall 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
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rights and obligations under this Agreement and that he fully understands the
terms and conditions contained herein.
9. SURVIVAL. Paragraphs 5, 6 and 7 and paragraphs 11 through 17
shall survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.
10. NOTICES. Any notice provided for in this Agreement shall be in
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:
Cottontops, Inc.
P.O. Box 789
Farmville, NC 27828
Attn: Tom Glennon
Fax: (919) 753-7168
Phone: (919) 753-8092
with a copy to:
Lazarus & Lazarus, P.C.
240 Madison Avenue
New York, NY 10016
Attn: Harlan M. Lazarus
Fax: (212) 684-0314
Phone: (212) 889-7400
NOTICES TO THE COMPANY:
Anvil Knitwear, Inc.
228 East 45th Street
New York, NY 10017
Attn: Jacob Hollander, Esq.
Fax: (212) 885-9411
Phone: (212) 476-0352
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.
11. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any
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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.
12. COMPLETE AGREEMENT. This Agreement, the Asset Purchase
Agreement, those documents expressly 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.
13. NO STRICT CONSTRUCTION. The language used in this Agreement
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.
14. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
15. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
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.
16. CHOICE OF LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR
PROVISIONS THEREOF THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
17. AMENDMENT AND WAIVER. The provisions of this Agreement may be
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.
* * * * *
[END OF DOCUMENT]
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COTTONTOPS, INC.
By
---------------------------
Name: Jacob Hollander
Title: Vice President and Secretary
-------------------------------
TOM GLENNON
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EXHIBIT A
PROJECTED ADMINISTRATIVE EXPENSES
1997 $1,201,782
1998 $1,486,799
1999 $1,695,554
2000 $1,825,782
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