Exhibit 10.1

EXECUTION COPY

SEVERANCE AND FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

THIS SEVERANCE AND FIRST AMENDMENT TO EMPLOYMENT AGREEMENT is entered into as of
March 1, 2007, by and between David J. Hollister (“Hollister”) and Broder Bros.,
Co., a Michigan corporation (the “Company”). The Company and Hollister are
sometimes collectively referred to herein as the “Parties” and individually as a
“Party”. Capitalized terms not otherwise defined in this Agreement which are
defined in the Employment Agreement (as defined below) shall have the meanings
set forth therein.

WHEREAS, Hollister and the Company are parties to that certain Employment
Agreement, dated as of January 10, 2004 (as amended from time to time in
accordance with its terms, the “Employment Agreement”).

WHEREAS, Hollister and the Company are parties to that certain Executive Stock
Purchase Agreement, dated as of September 17, 2004 (as amended from time to time
in accordance with its terms, the “Stock Purchase Agreement”), pursuant to which
Hollister purchased from the Company, and the Company sold to Hollister, the
following “Purchased Equity”: (i) 28,236 shares of the Company’s Class B Common
Shares, par value $.01 per share (“Class B Common”), (ii) 2,738 shares of the
Company’s Class L Common, Series 3, par value $.01 per share (“Class L Common,
Series 3”), (iii) 2,647 shares of the Company’s Class L Common, Series 4, par
value $.01 per share (“Class L Common, Series 4”), and (iv) 304 warrants to
purchase shares of Class L Common, Series 3 (“Warrants”), for an aggregate
purchase price of $100,000.

WHEREAS, Hollister and the Company are parties to that certain Executive Stock
Option Agreement, dated as of April 21, 2004 (as amended from time to time in
accordance with its terms, the “Stock Option Agreement”), pursuant to which the
Company granted to Hollister an Option (as such term is defined in the Stock
Option Agreement, the “Option”) to purchase the following: (i) up to 593,235
shares of Class B Common at a price per share of $0.1944, (ii) up to 63,926
shares of Class L Common, Series 3 at a price per share of $15.75, and (iii) up
to 55,623 shares of Class L Common, Series 4, at a price per share of $13.69,
all in accordance with and subject to the Broder Bros., Co. 2004 Executive Stock
Option Plan (as amended from time to time in accordance with its terms, the
“Stock Option Plan”) and the Stock Option Agreement.

WHEREAS, in connection with the Stock Purchase Agreement, Hollister became a
party to (i) that certain Amended and Restated Shareholders Agreement, dated as
of September 22, 2003, by and among the Company and the parties thereto (as
amended from time to time in accordance with its terms, the “Shareholders
Agreement”), and (ii) that certain Amended and Restated Registration Agreement,
dated as of September 22, 2003, by and among the Company and the parties
thereto.

 

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WHEREAS, Hollister terminated his employment relationship with the Company and
its Subsidiaries effective as of January 31, 2007.

WHEREAS, Hollister desires to sell the Purchased Equity (as defined below) to
the Company, and the Company desires to purchase the Purchased Equity on the
terms and subject to the conditions set forth herein.

WHEREAS, Hollister and the Company desire to amend the Employment Agreement as
provided herein.

WHEREAS, prior to the date hereof, the Bain Group Shareholders (as such term is
defined in the Shareholders Agreement) have consented to the transactions set
forth herein as required under Section 2 the Shareholders Agreement.

In consideration of the mutual covenants and agreements set forth herein, the
parties hereto agree as follows:

1. Termination of Employment and Consideration.

(a) Termination of Employment Relationship. As of January 31, 2007 (the
“Separation Date”), Hollister terminated his employment with the Company without
Good Reason. In exchange for Hollister’s execution of this Agreement, including
the Release in Section 4 and the Extension of Noncompete Period in Section 6(b)
hereof, and Hollister’s continued compliance with the Employment Agreement,
including, without limitation, paragraphs 5, 6 and 7 thereof, the Company agrees
to provide Hollister with the Purchase Price and Transition Bonus Payment (as
defined herein).

(b) Payments.

(i) Transition Bonus Payment. The Company shall pay to Hollister a transition
bonus in the aggregate amount of $63,000 in cash (the “Transition Bonus
Payment”). The Transition Bonus Payment shall be payable by the Company to
Hollister in a single lump sum on March 9, 2007 (the “Effective Date”); provided
that such payment shall be subject to reduction in respect of applicable
federal, state and local tax withholdings.

(ii) Payment for Execution of Release and Amendment to Employment Agreement. The
Company shall pay to Hollister an aggregate amount of $457,000 in cash (the
“Noncompete/Release Payment”) on the Effective Date; provided that such
Noncompete/Release Payment shall be subject to reduction in respect of
applicable federal, state and local tax withholdings. The Transition Bonus
Payment and Noncompete/Release Payment provided to Hollister shall not be
considered compensation for purposes of any employee benefit plan, program,
policy or arrangement maintained or hereafter established by the Company or any
of its Affiliates. Hollister acknowledges that he understands that the
Noncompete/Release Payment provided to him represents consideration for signing
this Agreement, including, without limitation, the Release in Section 4 and the
Extension of Noncompete Period in Section 6(b) hereof and are not salary, wages
or benefits to which Hollister was already entitled.

 

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(iii) Other Payments. Notwithstanding anything to the contrary set forth in the
Employment Agreement or otherwise, except with respect to the Transition Bonus
Payment, the Noncompete/Release Payment and the reimbursable business expenses
listed on Schedule 1(b)(iii) attached hereto, Hollister, agrees that he is not
entitled to any other salary, bonus (including any performance-based bonus),
severance, reimbursement, benefit, payment or expectation of remuneration or
other monies from the Company, its Subsidiaries or their Affiliates. For
purposes of this Agreement, “Affiliate” of any Person is any other Person
controlled by, controlling or under common control with such Person. For
purposes of this Agreement, “Person” shall mean an individual, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization and a governmental
entity or any department, agency or political subdivision thereof.

2. Sale and Assignment of the Purchased Equity

(a) Sale and Assignment. On the terms and subject to the conditions set forth in
this Section 2, Hollister hereby sells, assigns and transfers to the Company as
of the Effective Date, all right, title and interest in the Purchased Equity,
and the Company hereby purchases the Purchased Equity for an aggregate price of
$114,000 in cash, payable on the Effective Date by wire transfer of immediately
available funds (the “Purchase Price”). The Company shall deliver to Hollister
the Purchase Price on the Effective Date, Hollister shall deliver to the Company
any and all certificates, documents and/or instruments representing the
Purchased Equity and the Company will reflect the sale of the Purchased Equity
by Hollister to the Company in the Company’s books and records. Hollister
acknowledges that he understands that the Company’s purchase of the Purchased
Equity and the Purchase Price provided to him represents, in part, consideration
for signing this Agreement, including, without limitation, the Release in
Section 4 and the Extension of Noncompete Period in Section 6(b) hereof and are
not salary, wages or benefits to which Hollister was already entitled.

(b) Representations and Warranties of Hollister to the Company. Hollister hereby
represents and warrants to the Company, as of the date hereof and as of the
Effective Date, as follows:

(i) Ownership of Interest. Hollister is the legal and beneficial owner of the
Option and the Purchased Equity and will transfer to the Company good and
marketable title to the Purchased Equity, free and clear of any and all liens,
pledges, encumbrances, charges or claims of any kind whatsoever.

(ii) Execution and Effect of Agreement. Hollister has the requisite power and
authority to enter this Agreement and to carry out the transactions contemplated
by this Section 2. This Agreement constitutes a valid and binding obligation of
Hollister, enforceable against Hollister in accordance with its terms.

(iii) No Reliance. Hollister has not relied on any representations, promises or
agreements of any kind made to him in connection with his decision to accept
this Agreement, except those explicitly set forth in this Agreement.

 

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(iv) Valid and Binding; No Breach. The Employment Agreement (as amended hereby)
constitutes a valid and binding obligation of Hollister, enforceable against
Hollister in accordance with its terms. Since the Separation Date, Hollister has
not breached or violated any of the terms of the Employment Agreement. In
addition, since the Separation Date, Hollister has not engaged in a Competitive
Activity (as such term is amended by this Agreement and defined in the
Employment Agreement).

(c) Representations and Warranties of the Company to Hollister. The Company
hereby represents and warrants to Hollister, as of the date hereof and as of the
Effective Date, that it has the requisite power and authority to enter this
Agreement and to carry out the transactions contemplated by this Section 2. The
execution and delivery of this Agreement by the undersigned on behalf of the
Company and the consummation of the transactions contemplated by this Section 2
by the Company have been duly authorized. Section 2 of this Agreement
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms.

(d) Survival of Representations and Warranties. All of the representations and
warranties contained in this Section 2, shall survive after the date hereof.
Each party agrees to indemnify and hold harmless the other, and their respective
directors, officers, employees, agents and Affiliates from and against any
losses which are incurred by each such indemnified party as a result of the
breach by the first party of any of its representations, warranties or covenants
set forth in this Section 2.

3. Cancellation of Option and any Option Shares; Cancellation of Other Equity;
Survival of Provisions of Employment Agreement.

(a) Cancellation of Option and any Option Shares. On the Effective Date,
Hollister will present, contribute and deliver to the Company for cancellation
all certificates and instruments which represent the Option or any Option Shares
whether vested or unvested (as such term is defined in the Stock Option
Agreement, the “Option Shares”). Hollister hereby acknowledges and agrees that,
upon payment of the Noncompete/Release Payment, Transition Bonus Payment and the
Purchase Price, (i) the Option and any Option Shares shall automatically be
canceled and retired and shall cease to exist, (ii) all of the Company’s
obligations with respect to the Option or any Option Shares will have been
satisfied, and (iii) the Company will then be released from any and all
obligations with respect to the Option or any Option Shares.

(b) Cancellation of Other Equity. Upon consummation of the transactions
contemplated herein, any securities, notes, bonds, options, warrants or other
instruments convertible into or exchangeable for capital stock of the Company or
any subsidiary of the Company then held by Hollister or any of his Affiliates
shall be automatically canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.

(c) Survival of Provisions of Employment Agreement. The Parties agree and
acknowledge that paragraphs 4 through 24 (other than paragraph 18) of the
Employment Agreement shall survive in full force in accordance with their terms
notwithstanding the termination of Hollister’s Employment Period and the
amendment of the Employment Agreement.

 

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4. Release by Hollister.

(a) For the consideration received (including, without limitation, the promises,
agreements and payments described herein), all as provided for in Sections 1 and
2 of this Agreement, Hollister (for Hollister, Hollister’s heirs, assigns and
executors) hereby acknowledges full and complete satisfaction of and fully and
forever releases and forever discharges the Company, any of its Affiliates, and
its and their directors, officers, agents, shareholders and employees from any
and all claims, suits, demands, causes of action, contracts, covenants,
obligations, debts, costs, expenses, attorneys’ fees, liabilities of whatever
kind or nature in law or equity, by statute or otherwise whether now known or
unknown, vested or contingent, suspected or unsuspected, and whether or not
concealed or hidden, which have existed or may have existed, or which do exist,
through the Effective Date, (“Claims”) of any kind, which relate in any way to
Hollister’s employment with the Company or the termination of that employment,
except those arising out of (i) the performance of this Agreement or the
surviving terms of the Employment Agreement, (ii) Hollister’s right to any
indemnification by the Company pursuant to its articles of incorporation and
bylaws, or (iii) Hollister’s rights to coverage under the Company’s directors’
and officers’ insurance policy. Such released claims include, without in any way
limiting the generality of the foregoing language, any and all claims of
employment discrimination under any local, state, or federal law or ordinance,
including, without limitation, Title VII of the Civil Rights Act of 1964, as
amended; the Civil Rights Act of 1991; the Americans with Disabilities Act of
1990; the Age Discrimination in Employment Act of 1967, as amended.

(b) In signing this Release Hollister acknowledges that he intends that it shall
be effective as a bar to each and every one of the Claims hereinabove mentioned
or implied. Hollister expressly consents that this Agreement shall be given full
force and effect according to each and all of its express terms and provisions,
including those relating to unknown and unsuspected Claims (notwithstanding any
state statute that expressly limits the effectiveness of a general release of
unknown, unsuspected and unanticipated Claims), if any, as well as those
relating to any other Claims hereinabove mentioned or implied. Hollister
acknowledges and agrees that this waiver is an essential and material term of
this Agreement and without such waiver the Company would not have provided the
Noncompete/Release Payment, Purchase Price or the Transition Bonus Payment
described in Sections 1 and 2. Hollister further agrees that in the event he
brings his own Claim in which he seeks damages against the Company, or in the
event he seeks to recover against the Company in any Claim brought by a
governmental agency on his behalf, this release shall serve as a complete
defense to such Claims.

(c) By signing this Agreement, Hollister acknowledges that he:

(i) has been given twenty-one days after receipt of this Agreement within which
to consider it;

(ii) has carefully read and fully understands all of the provisions of this
Agreement;

(iii) knowingly and voluntarily agrees to all of the terms set forth in this
Agreement;

 

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(iv) knowingly and voluntarily agrees to be legally bound by this Agreement;

(v) has been advised and encouraged in writing (via this Agreement) to consult
with an attorney and tax advisor prior to signing this Agreement;

(vi) understands that this Agreement, including the Release, shall not become
effective and enforceable until the eighth day following execution of this
Agreement, and that at any time prior to the effective day he can revoke this
Agreement.

5. Release by the Company.

(a) The Company releases and forever discharges Hollister from any and all
Claims which relate in any way to his employment with the Company or the
termination of that employment; which were Known to the Company prior to the
Effective Date. For purposes of this paragraph, “Known to the Company” means the
actual knowledge of the members of the Company’s Board of Directors and the
Company’s three most highly paid executive officers (in each case, other than
Hollister).

(b) In signing this Release the Company acknowledges that the Company intends
that this Release shall be effective as a bar to each and every one of the
Claims hereinabove mentioned or implied. The Company expressly consents that
this Agreement shall be given full force and effect according to each and all of
its express terms and provisions, including those relating to unknown and
unsuspected Claims (notwithstanding any state statute that expressly limits the
effectiveness of a general release of unknown, unsuspected and unanticipated
Claims), if any, as well as those relating to any other Claims hereinabove
mentioned or implied. The Company acknowledges and agrees that this waiver is an
essential and material term of this Agreement and without such waiver Hollister
would not have entered into this Agreement. The Company further agrees that in
the event the Company brings its own Claim in which the Company seeks damages
against Hollister, or in the event the Company seeks to recover against
Hollister in any Claim brought by a governmental agency on the Company’s behalf,
this release shall serve as a complete defense to such Claims.

6. Additional Agreements; Extension of Noncompete Period.

(a) Additional Agreements.

(i) Hollister agrees to keep all confidential and proprietary information about
the past or present business affairs of the Company confidential unless a prior
written release from the Company is obtained, except for any disclosure required
by law.

(ii) Hollister further agrees that as of the date hereof, he has returned to the
Company any and all property, tangible or intangible, relating to its business,
which he possessed or had control over at any time (including, but not limited
to, company-provided credit cards, building or office access cards, keys,
computer equipment, manuals, files, documents, records, software, customer data
base and other data) and that he shall not retain any copies,

 

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compilations, extracts, excerpts, summaries or other notes of any such manuals,
files, documents, records, software, customer data base or other data.

(b) Extension of Noncompete Period. In connection with Hollister’s receipt of
consideration hereunder, including the Noncompete/Release Payment, Hollister
acknowledges and agrees that the Noncompete Period (as such term is defined in
the Employment Agreement prior to the date hereof) shall be extended for an
additional twenty-four months, for a total of thirty-six months after the
Separation Date. To effectuate the foregoing, the parties hereto agree and
acknowledge that as of the Effective Date, the Employment Agreement shall be
amended such that the occurrence of the phrase “one (1) year” set forth in
paragraph 7(a) of the Employment Agreement shall be deleted in its entirety and
replaced with the following: “three (3) years”.

7. Confidentiality of this Agreement.

(a) The contents of this Agreement, including but not limited to its financial
terms, are strictly confidential. By signing this agreement Hollister agrees and
represents that he will maintain the confidential nature of the agreement,
except (i) for disclosures to legal counsel, tax and financial planners, and
immediate family who agree to keep it confidential; (ii) as otherwise required
by law, in which case Hollister shall notify the Company in writing in advance
of disclosure; and (iii) as necessary to enforce this Agreement.

(b) The Company agrees that it will keep the contents of this Agreement
confidential, except (i) for disclosures to its executive staff and governing
body, as necessary or appropriate, and to its outside counsel and auditors;
(ii) as otherwise required by law; and (iii) as necessary to enforce this
Agreement.

 

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8. No Transfer or Assignment. The Parties agree that no interest or right
Hollister has or any of his beneficiaries has to receive payment or to receive
benefits under this Agreement shall be subject in any manner to sale, transfer,
assignment, pledge, attachment, garnishment, or other alienation or encumbrance
of any kind, except as required by law. Nor may such interest or right to
receive payment or distribution be taken, voluntarily or involuntarily, for the
satisfaction of the obligations or debts of, or other claims against Hollister
or his beneficiary, including for alimony, except to the extent required by law.

9. No Admissions. This Agreement shall not be construed as an admission of any
wrongdoing by any of the Parties or any of their directors, officers, agents or
employees.

10. No Other Agreement. Except as otherwise provided herein, including, without
limitation, Section 3(c) hereof, this Agreement contains the entire agreement
between the Parties with regard to the subject matter hereof. No part of this
Agreement may be changed except in writing, executed by Hollister and the
Company.

11. Governing Law. This Agreement shall be interpreted in accordance with the
laws of the State of Michigan. Whenever possible, each provision of this
Agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision shall be held to be prohibited or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating or affecting the remainder
of such provision or any of the remaining provisions of this Agreement.

12. Fees and Expenses. Except as set forth in this Section 12, all costs and
expenses incurred or to be incurred by Hollister or his Affiliates shall be paid
by Hollister, or the Company and its Affiliates shall be paid by the Company
(including, without limitation, all fees related to accounting, legal and other
professional services) in negotiating and preparing this Agreement and in
closing and carrying out the transactions contemplated by this Agreement.
Notwithstanding the foregoing, within 15 days of presentation of proper
invoices, the Company shall pay up to, but not in excess of, $2,500 for
reasonable legal fees and expenses due to Pepper Hamilton LLP in connection with
the cessation of Hollister’s employment with the Company and the documentation
of this Agreement. Pepper Hamilton LLP is an intended third party beneficiary of
this Section 12.

13. 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.

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

 

BRODER BROS., CO. By:  

/s/ Martin J. Matthews

Its:   Interim Chief Financial Officer

/s/ David J. Hollister

DAVID J. HOLLISTER

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Schedule 1(b)(iii)

The Company shall reimburse Hollister for an amount equal to $23,000, as set
forth in the memorandum dated July 19, 2004.