**Exhibit 10.2.5.1**

 

**AMENDED EXECUTIVE EMPLOYMENTAGREEMENT**

 

AMENDED EXECUTIVE EMPLOYMENT AGREEMENT, effective June 1, 2005, byand between SPORT-HALEY, INC., a Colorado corporation (the “Company”) andCATHERINE B. BLAIR (the “Executive”).

 

WHEREAS, the Company has, prior to the date of this Agreement, employedthe Executive as the Company’s Vice President of Merchandising and Design,pursuant to that Executive Employment Agreement effective July 1, 1997;and

 

WHEREAS, the Company desires to continue to employ the Executive on afull-time basis, and the Executive desires to be so employed by the Company,pursuant to the terms of this Amended Executive Employment Agreement, whichAgreement shall supersede and replace the Executive Employment Agreementeffective July 1, 1997.

 

NOW, THEREFORE, in consideration of the mutual covenants containedherein, the parties agree as follows:

 

**ARTICLE I**

 

**EMPLOYMENT DUTIES AND BENEFITS**

 

Section 1.1  Employment.  The Company hereby employs the Executive inthe position described on Schedule 1 hereto as an executive officer of theCompany.  The Executive accepts suchemployment and agrees to perform the duties and responsibilities assigned toher pursuant to this Agreement.

 

Section 1.2  Duties and Responsibilities.  The Executive shall hold the position withthe Company which is specified on Schedule 1, which is attached hereto andincorporated herein by reference.  TheExecutive is employed pursuant to the terms of this Agreement and agrees todevote full-time to the business of the Company.  The Executive shall perform the duties setforth on Schedule 1 while employed as an executive officer, and suchfurther duties as may be determined and assigned to her from time-to-time bythe Chief Executive Officer or the Board of Directors of the Company.

 

Section 1.3  Working Facilities.  The Executive shall be furnished withfacilities and services suitable to the position and adequate for theperformance of the Executive’s duties under this Agreement.  The Executive’s duties shall be rendered atthe Company’s offices, or at such other place or places as the Executive maydesignate with the Company’s approval, which shall not be unreasonablywithheld.

 

Section 1.4  Vacations.  The Executive shall be entitled each year toa reasonable vacation of not less than four weeks in accordance with theestablished practices of the Company now or

 

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hereafter in effect for executive personnel, during which time theExecutive’s compensation shall be paid in full. Should the Company from time-to-time require the Executive to performjob duties during vacation periods, the Executive shall be entitled tocompensatory vacation time at a mutually agreeable time.

 

Section 1.5  Expenses.  The Executive is authorized to incurreasonable expenses for promoting the domestic and international business ofthe Company in all respects, including expenses for entertainment, travel andsimilar items.  The Company willreimburse the Executive for all such expenses upon the presentation by theExecutive, from time-to-time, of an itemized account of such expenditures.

 

Section 1.6  Benefit Plans.  From the effective date of this Agreement,the Executive shall be entitled to participate in all existing benefit plansprovided to the Company’s executive employees including, to the extent now orhereafter in effect, medical, health, dental, vision, disability, lifeinsurance and death benefit plans, in accordance with the terms of such plans.

 

**ARTICLE II**

 

**COMPENSATION**

 

Section 2.1  BaseSalary.  The Company shall pay to the Executive a basesalary of not less than the amount specified on Schedule 1, subject toannual review and raises in such base salary. The base salary may be raised by action of the Board of Directors, andsuch raises shall thereafter be included in the Executive’s base salary asdefined for purposes of this Agreement and the Company’s bonus plan.

 

Section 2.2  Bonus and Bonus PlanParticipation.  The Executive shallbe entitled to receive a bonus at such time or times as may be determined bythe Board of Directors of the Company. The Executive shall also be entitled to receive bonuses of up to 30% ofthe Executive’s base salary in accordance with the provisions of theCompany-wide bonus plan as in effect from time to time.

 

**ARTICLE III**

 

**TERM OF EMPLOYMENT AND TERMINATION**

 

Section 3.1  Term.  This Agreement shall be for a term which isspecified on Schedule 1, commencing on its effective date, subject,however, to termination during such period as provided in this Article.  Provided that the Executive is in compliancewith all of her obligations hereunder, the term of the Executive’s employmentshall be extended automatically for one additional year at the end of each yearof the term or extended term of this Agreement on the same terms and conditionsas contained in this Agreement, unless either the Company or the Executiveshall, at least 90 days prior to the expiration of the initial term or of anyrenewal term, give written notice of the intention not

 

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to renew this Agreement.  If theCompany gives such written notice of non-renewal, the provisions of Section 3.3shall apply; if the Executive gives such written notice of non-renewal, theprovisions of Section 3.5 shall apply. Automatic renewals shall be effective in subsequent years on the sameday of the same month as the original effective day and month of thisAgreement.

 

Section 3.2  Termination by the Companywith Cause.  The Company mayterminate the Executive, at any time, upon ten days’ written notice andopportunity for the Executive to remedy any non-compliance with the terms ofthis Agreement (if such non-compliance is capable of being remedied; if not,the Company’s notice of termination shall be effective immediately), forCause.  In such event, the Board ofDirectors shall provide in writing to the Executive an opinion of the Board ofDirectors, signed by each member voting in favor of termination of theExecutive, which shall specify with particularity the basis for suchtermination.  Upon the date of terminationof this Agreement pursuant to this Section 3.2, the Company’s obligationto pay any compensation shall terminate, at which time the Company shall beresponsible for compensating the Executive for any vacation time nottaken.  Subject to this exception and theobligation of the Company to compensate the Executive through the noticeperiod, no other compensation shall be payable to the Executive should thisAgreement be terminated pursuant to this Section 3.2.

 

As used herein, the term “Cause” shall be limited to any of thefollowing from and after the date hereof: (i) any willful breach of anymaterial written policy of the Company that results in material anddemonstrable liability or loss to the Company; (ii) the engaging byExecutive in conduct involving moral turpitude that causes material anddemonstrable injury, monetarily or otherwise, to the Company, including, butnot limited to, misappropriation or conversion of assets of the Company (otherthan immaterial assets); (iii) conviction of or entry of a plea of nolocontendere to a felony, which is not appealed and subsequently reversed orvacated; or (iv) a material breach of this Agreement by engaging in actionin violation of the restrictive covenants in this Agreement.  No act or failure to act by the Executiveshall be deemed “willful” if done, or omitted to be done, by her in good faithand with the reasonable belief that her action or omission was in the bestinterests of the Company.

 

Section 3.3  Termination by the Companywithout Cause.  The Company mayterminate the Executive’s services without cause at any time upon 90 days’written notice.  In such event, inaddition to compensating the Executive during such 90-day notice period, theCompany shall be obligated to compensate the Executive with severance pay equalto twelve additional months’ compensation as of the date of suchtermination.  Accordingly, in the eventthe Company terminates this Agreement without cause or chooses not to renewthis Agreement upon its expiration, the Executive shall receive an aggregate offifteen months’ salary from and after the date of the

 

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Executive’s receipt of a notice of termination through and includingthe date of termination.  In addition tothe foregoing, the Executive shall receive a bonus which shall be equivalent to50% of the bonus last received by the Executive, if any, during the twelvemonths prior to termination.

 

Section 3.4  Termination by the Executivewith Cause.  The Executive mayterminate her employment with the Company at any time, upon ten days’ writtennotice and opportunity for the Company to remedy any non-compliance, by reasonof (i) the Company’s material failure to perform its duties pursuant tothis Agreement, or (ii) any material diminishment in the duties and responsibilities,working facilities, or benefits as described in Article I of thisAgreement.  The Executive shall not beentitled to the severance compensation and other benefits described in Section 3.7below in the event of termination of this Agreement pursuant to this Section 3.4,except as otherwise provided in Section 3.7(a), but shall be entitled tothe compensation provided in Section 3.3 upon a determination that theCompany has failed to perform its duties pursuant to this Agreement and thatsuch failure is material or a determination that the duties andresponsibilities, working facilities, or benefits as described herein have beenmaterially diminished. Such determination shall be made by the Board ofDirectors in their best good faith.

 

Section 3.5  Termination by the ExecutiveWithout Cause.  The Executive,without cause, may terminate this Agreement upon 90 days’ written notice to theCompany.  In such event, the Executiveshall not be required to render the services required under this Agreementfollowing such 90-day period. Compensation for vacation time not taken by the Executive shall be paidto the Executive at the date of termination. The Executive shall not be entitled to the severance compensation andother benefits described in Section 3.7 below in the event of terminationof this Agreement pursuant to this Section 3.5, except as described in Section 3.7(a),but shall be entitled to the compensation provided in Section 3.3.

 

Section 3.6  Termination upon Death ofthe Executive.  In addition to anyother provision relating to termination, this Agreement shall terminate uponthe Executive’s death.  In such event,all unpaid compensation and bonuses, compensation for vacation time not takenby the Executive and all expense reimbursements due to the Executive shall bepaid to the Executive’s estate.

 

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Section 3.7  Severance Compensation andContinuation of Benefits.

 

(a)                                  Notwithstanding any otherprovisions hereof, in the event of a non-negotiated change in control of theCompany and either the Executive or the Company terminate this Agreement within60 days of such non-negotiated change in control, the Executive shall receiveseverance compensation, payable in a lump sum within 30 days of suchnon-negotiated change in control, equal to three times her annual salary andincentive or bonus payments, if any, as shall have been paid to the Executiveduring the most recent 12-month period concluded prior to the date of hertermination or resignation.  If the totalamount of the non-negotiated change of control compensation were to exceedthree times the Executive’s base compensation (the average annual taxablecompensation of the Executive for the five years preceding the year in whichthe change of control occurs), the Company and the Executive will reduce thelump sum compensation to be received by the Executive in order to avoid theimposition of the golden parachute tax as provided in the Tax Reform Act of1984, as amended by the Tax Reform Act of 1986.

 

(b)                                 The term “change of control” isdefined for purposes of this Agreement as a (i) change in ownership in oneor a series of transactions of 50% or more of the outstanding shares of theCompany, (ii) merger, consolidation, reorganization or liquidation of theCompany, or (iii) a change in control of the type that would be requiredto be reported in response to Item 6(e) of Schedule 14A promulgatedunder the Securities Exchange Act of 1934, as amended (“Exchange Act”) whetheror not the Company is then subject to such reporting requirement; providedthat, without limitation, such a change of control shall be deemed to haveoccurred if (A) any ‘person’ (as such term is used in Sections 13(d) and14(d) of the Exchange Act), other than a trustee or fiduciary holdingsecurities under an employee benefit plan of the Company and other than aperson who is a director of the Company on the date hereof, is or becomes the ‘beneficialowner’ (as defined in Rule 13d-3 under the Exchange Act) directly orindirectly, of securities of the Company representing 30% or more of theCompany’s combined voting power of the Company’s then outstanding securities, (B) atany time following the execution of this Agreement, a majority of the Board ofDirectors is not comprised of (i) individuals who on the date of thisAgreement were members of the Board plus (ii) any new directors whosenomination for election by the Board or the Company’s Stockholders was approvedby the vote of two-thirds of the directors then in office who either weredirectors or whose nomination was previously so approved.  Notwithstanding any provisions to thecontrary herein, a change of control shall not mean any transaction or seriesof transactions wherein the Company repurchases its own

 

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securities or a “going private” transaction by the Company or itsaffiliates, within the meaning of Rule 13e-3 promulgated under theExchange Act.

 

The term “non-negotiated change of control,” shall mean a change of control,as defined above, which is not negotiated or approved by at least two thirds ofthe board of directors of the Company prior to the change of control event.

 

(c)                                  In the event the Executive isrequired to hire counsel to negotiate on her behalf in connection with hertermination or a change in control of the Company, or in order to enforce therights and obligations as provided herein, the Company shall reimburse to theExecutive all reasonable attorney’s fees which may be expended by the Executivein seeking to enforce the terms hereof. Such reimbursement shall be paid by the Company every 30 days after theExecutive provides to the Company copies of invoices from the Executive’scounsel.  Such invoices may be redactedto preserve the attorney-client privilege or attorney-client confidentiality.

 

(d)                                 So long as the Executive isreceiving severance compensation pursuant to this Section 3.7, theExecutive shall be entitled to continue to participate, at the Company’s cost,in all existing benefit plans provided to the Company’s executive employees atthe time of the Executive’s termination or resignation.  Such plans shall include, but are not limitedto, then-existing medical, health, dental, vision, disability, life insuranceand death benefit plans.  If the terms ofsuch plans expressly prohibit the Executive from continuing as a participant insuch plans following the date of resignation or termination, the Company willprovide the Executive with benefits equivalent to, or exceeding, those offeredby the then-existing benefit plans offered to the Company’s executiveemployees, all at the Company’s cost, for the duration of the Executive’s rightto severance compensation hereunder.

 

Any compensation to be paid to the Executive under the foregoing provisionsof this Section 3.7 shall be subject to the Executive complying with thenon-compete provisions of Section 4.1(c) below.  In the event the Executive does not socomply, the Company shall be released from any obligations to the Executiveunder this Section 3.7.

 

Section 3.8  Options.  Any options granted to the Executive topurchase stock of the Company shall become fully vested on the date oftermination of this Agreement, except in the event termination is by theCompany for reasons specified in Section 3.3 of this Agreement.  This provision shall serve as a contractualmodification of any option grants or agreements between the Executive and theCompany, whether such grants or agreements shall pre-date or postdate thisAgreement, and is hereby incorporated by reference into each such option grantor agreement.

 

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**ARTICLE IV**

 

**CONFIDENTIALITY AND COMPETITION**

 

Section 4.1  Further Obligations of theExecutive During and After Employment.

 

(a)                                  The Executive agrees that duringthe term of her employment under this Agreement, she will engage in no otherbusiness activities which are or may be competitive with, or which might placeher in a competing position to that of, the Company or any subsidiary of the Company.

 

(b)                                 The Executive realizes that duringthe course of her employment, the Executive will have produced and/or haveaccess to confidential business plans, information, business opportunityrecords, notebooks, data, formula, specifications, trade secrets, customerlists, account lists and inventions of the Company and its affiliates.  Therefore, during or subsequent to heremployment by the Company, or by an affiliate, the Executive agrees to hold inconfidence and not to directly or indirectly disclose or use or copy or makelists of any such information, except to the extent authorized by the Companyin writing.  All records, files, businessplans, documents, equipment and the like, or copies thereof, relating to Company’sbusiness, or the business of an affiliated company, which the Executive shallprepare, or use, or come into contact with, shall remain the sole property ofthe Company, or of an affiliated company, and shall not be removed from theCompany’s or the affiliated company’s premises without its written consent, andshall be promptly returned to the Company upon termination or resignation ofemployment with the Company or its affiliated companies.

 

(c)                                  Because of her employment by theCompany, the Executive will have access to trade secrets and confidentialinformation about the Company, its business plans, its business accounts, itsbusiness opportunities, its expansion plans into other geographic areas and itsmethods of doing business.  The Executiveagrees that for a period of one (1) year after termination or resignationof her employment (except if the Executive terminates this Agreement for causeunder Section 3.5 hereof), she will not, directly or indirectly, competewith the Company or its affiliates in the business of designing, merchandising,marketing or contracting for the manufacture of men’s and women’s golf apparel,golf outerwear or golf headwear within the United States.  This non-compete agreement shall be void andof no further force or effect in the event termination occurs under Section 3.3or Section 3.7 hereof and the Company fails to pay the Executive amountsrequired under Section 3.3 or Section 3.7 hereof.

 

(d)                                 In the event a court of competentjurisdiction finds any provision of this Section 4.1 to be so overbroad asto be unenforceable, then such provision shall be reduced in scope by thecourt, but only to the extent deemed necessary by the court to render theprovision reasonable and enforceable, it being the Executive’s intention toprovide the Company with the broadest protection possible against harmfulcompetition.

 

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**ARTICLE V**

 

**DISABILITY AND ILLNESS**

 

Section 5.1  Disability and SalaryContinuation.

 

A.                                   Definition of Total Disability. For purposes of this Agreement, the terms “totally disabled” and “totaldisability” shall mean disability as defined in any total disability insurancepolicy or policies, if any, in effect with respect to the Executive.  If no insurance policy is in effect, “totaldisability” shall mean a medically determinable physical or mental conditionwhich in the opinion of two independent physicians renders the Executive unableto perform substantially all of the duties required pursuant to thisAgreement.  Total disability shall bedeemed to have occurred on the date of the disabling injury or onset of thedisabling illness, as determined by the two independent physicians.

 

B.                                     Salary Continuation. If the Executive becomes totally disabled during the term of thisAgreement, her full salary shall be continued for 360 days from the date of thedisabling injury or onset of the disability illness.

 

Section 5.2  Illness.  If the Executive is unable to perform theservices required under this Agreement by reason of illness or physical injurynot amounting to total disability, as defined in this Article, the compensationotherwise payable to the Executive under this Agreement shall be continued infull for the remaining term or renewed term of this Agreement, but in no eventfor a period exceeding one year.

 

**ARTICLE VI**

 

**GENERAL MATTERS**

 

Section 6.1  Governing Law.  This Agreement shall be governed by the lawsof the State of Colorado and shall be construed in accordance therewith.

 

Section 6.2  No Waiver.  No provision of this Agreement may be waivedexcept by an agreement in writing signed by the waiving party.  A waiver of any term or provision shall notbe construed as a waiver of any other term or provision.

 

Section 6.3  Amendment.  This Agreement may be amended, altered orrevoked at any time, in whole or in part, by filing with this Agreement awritten instrument setting forth such changes, signed by each of the parties.

 

Section 6.4  Benefit.  This Agreement shall be binding upon theExecutive and the Company, and shall not be assignable by the Company withoutthe Executive’s written consent.

 

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Section 6.5  Construction.  Throughout this Agreement the singular shallinclude the plural, and the plural shall income the singular, and the masculineand neuter shall include the feminine, wherever the context so requires.

 

Section 6.6  Text to Control.  The headings of articles and sections areincluded solely for convenience of reference. If any conflict between any heading and the text of this Agreement exists,the text shall control.

 

Section 6.7  Severability.  If any provision of this Agreement isdeclared by any court of competent jurisdiction to be invalid for any reason,such invalidity shall not affect the remaining provisions.  On the contrary, such remaining provisionsshall be fully severable, and this Agreement shall be construed and enforced asif such invalid provisions had not been included in the Agreement.

 

Section 6.8  Authority.  The officer executing this Agreement onbehalf of the Company has been empowered and directed to do so by the Board ofDirectors of the Company.

 

Section 6.9  Effective Date.  The effective date of this Agreement shall beJune 1, 2005.

 
|   | SPORT-HALEY, INC.      |
|--------|------------------------|
|   |                   |   |
|   |                   |   |
|   | By:                    | /s/ Donald W. Jewell |   |
|   |                   | Donald W. Jewell, Chief Executive Officer |
|   |                   |   |
|   |                   |   |
|   | EXECUTIVE:             |
|   |                   |   |
|   |                   |   |
|   | /s/ Catherine B. Blair |   |
|   | Catherine B. Blair     |
|        |                        |  |  |  |

 

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**SPORT-HALEY, INC.**

 

**EXECUTIVE EMPLOYMENT AGREEMENT**

 

**Schedule 1**

 

**Duties and Compensation**

 
| Executive:                   | Catherine B. Blair                                                                                                                                                    |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         |                                                                                                                                                                  |
| Position:                    | Vice President of Merchandising and Design                                                                                                                            |
|                         |                                                                                                                                                                  |
| Base Salary:                 | $110,000 per year, payable bi-weekly                                                                                                                                  |
|                         |                                                                                                                                                                  |
| Bonus:                       | As determined by the Board of Directors and in accordance with  Company-wide bonus plan.                                                                              |
|                         |                                                                                                                                                                  |
| Term:                        | June 1, 2005 through May 30, 2006, subject to automatic one  (1) year extensions described in Section 3.1 of the Executive  Employment Agreement. |
|                         |                                                                                                                                                                  |
| Duties and Responsibilities: | Supervision and coordination of all merchandising and design  operations of the women’s division of the Company/Sport-Haley.                                     |

 

 
| APPROVED:               |                    |
|-------------------------|-------------------------|
|                    |                    |
|                    |                    |
| THE COMPANY:            | EXECUTIVE:              |
|                    |                    |
|                    |                    |
| By:                     | /s/ Donald W. Jewell    |   | /s/ Catherine B. Blair |   |
|                    | Donald W. Jewell        | Catherine B. Blair |
|                    | Chief Executive Officer |   |
|                    |                    |   |
|                    |                    |
| Date: June 1, 2005 | Date: June 1, 2005 |
|                         |                         |  |  |  |

 

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