EMPLOYMENT AGREEMENT
Exhibit 10.3
THIS EMPLOYMENT AGREEMENT, dated as of the 9th day of September, 2008, between XXX.
A. BANK CLOTHIERS, INC. (“Employer”) and X. XXXX BLACK (“Executive”).
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which are hereby
acknowledged, Employer and Executive do hereby agree as follows:
1. Employment of Executive
Employer hereby agrees to employ Executive, and Executive hereby agrees to be in the employ of
Employer, upon the terms and conditions hereinafter set forth. This Agreement is a contract for
personal services of Executive and services pursuant hereto may only be performed by Executive.
2. Employment Period
The term of Executive’s employment under this Agreement (the “Employment Period”) shall
commence December 21, 2008 and shall, subject to earlier termination as provided in Section 5,
continue through January 29, 2011.
3. Duties and Responsibilities
3.1 General. During the Employment Period, Executive (i) shall have the title of Chief
Executive Officer and (ii) shall devote substantially all of his business time and expend his best
efforts, energies and skills to the business of the Company. The preceding sentence shall not be
construed to prohibit Executive from continuing to devote more than an insignificant amount of
time, in accordance with his past practice, to management of his investments, serving on boards of
directors, performing consulting services on his own time (except for retail department stores
where the consulting services are focused on the men’s clothing business or for specialty men’s
stores) and participation in civic and philanthropic activities.
Executive shall perform such duties, consistent with his status as Chief Executive Officer of
Employer, as he may be assigned from time to time by Employer’s Board of Directors (the “Board”).
Executive shall have such authority, discretion, power and responsibility, and shall be entitled to
an office, secretarial and administrative assistance (at least one secretary and/or administrative
assistant of his selection) and other facilities and conditions of employment, as are customary or
appropriate to his position. Without limitation of the generality of the foregoing, but subject to
any applicable legal requirements, Executive, within the general guidelines adopted from time to
time by the Board, shall have the power, without further approval of the Board, to hire, fire and
establish the terms of employment (including all compensation and bonus arrangements) of all
employees of, and consultants and other advisers to, the Company (other than the Chairman of the
Board of Directors). Executive shall also serve without additional compensation as a director of
the Company and, if he should so desire, any of its subsidiaries. Executive agrees to resign any
and all such directorships concurrently with the expiration or other termination of his employment
hereunder. For all purposes of this Agreement, the term “Company” means Employer and all corporation, associations, companies, partnerships, firms and
other enterprises controlled by or under common control with Employer.
3.2 Location of Executive Offices. The Company will maintain its principal executive
offices at a location in the Baltimore, Maryland metropolitan area.
4. Compensation and Related Matters
4.1 Base Salary. Employer shall pay to Executive during the Employment Period an
annual base salary (the “Base Salary”) in accordance with this Section 4.1. Subject to increases as
set forth in the immediately following sentence, the Base Salary shall be $750,000. Beginning in
Fiscal 2010, the Compensation Committee of the Board (the “Compensation Committee”) shall increase
the Base Salary at least once each fiscal year on the date on which general salary increases within
the Company for such year take effect (the “Annual Increase Date”). The annual increase shall be in
an amount not less than the percentage increase in the consumer price index over the most recently
reported 12-month period. In the event the Compensation Committee fails to so increase the Base
Salary in any fiscal year by the Annual Increase Date, the Base Salary shall automatically be
increased on such date by an amount equal to the percentage increase in the consumer price index
over the most recently reported 12-month period. The Base Salary shall be payable in installments
in accordance with the Company’s policy on payment of executives in effect from time to time.
4.2 Annual Bonus. Provided the hereinafter described Bonus is approved by the
shareholders of Employer, for the fiscal year ending January 30, 2010 and for each fiscal year
thereafter that begins during the Employment Period (each such fiscal year, a “Bonus Year”),
Executive shall be entitled to receive a bonus of up to 200% of Base Salary (each, a “Bonus”) based
upon attainment of annual quantitative and qualitative performance goals. The performance goals
shall be established as soon as possible following the beginning of each Bonus Year by the
Compensation Committee in consultation with Executive. The relationship between the size of each
Bonus and degree of attainment of performance objectives shall be discretionary with the
Compensation Committee. The Bonus earned for any Bonus Year shall be payable promptly following the
determination thereof, but in no event later than 90 days following the end of each Bonus Year.
Notwithstanding anything to the contrary contained herein or in the Employer’s Bonus Plan, in the
event (y) the Employment Period shall end for any reason whatsoever on a day prior to payment to
Executive of a Bonus for the last full Bonus Year contained within the Employment Period, and (z)
Executive would have been entitled to receive a Bonus for such last full Bonus Year had the
Employment Period not ended — then, Employer shall pay to Executive the Bonus for such last full
Bonus Year as and when such Bonus would have been paid had the Employment Period not ended.
4.3 Car Allowance. Employer shall pay to Executive throughout the Employment Period a
car allowance equal to $1,600 per month, which shall be in lieu of any expense reimbursement
related to a car purchased or leased, repairs, insurance, or gas, oil or mileage charges.
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4.4 Other Benefits. Throughout the Employment Period, subject to, and to the extent
Executive is eligible under their respective terms, Executive shall be entitled to receive such
fringe benefits as are, or are from time to time hereafter, generally provided by Employer to
Employer’s senior management employees (other than those provided under or pursuant to separately
negotiated individual employment agreements or arrangements) under any pension or retirement plan,
disability plan or insurance, group life insurance, medical and dental insurance, travel accident
insurance, stock option, phantom stock or other similar plan or program of employer. Executive’s
Base Salary shall (where applicable) constitute the compensation on the basis of which the amount
of Executive’s benefits under any such plan or program shall be fixed and determined. If, during
the Employment Period, any plan or program in which Executive participates shall be amended so as
to result in overall reduction of Executive’s benefits, or shall be terminated without being
replaced by a new plan or program providing for benefits equivalent overall to those provided for
Executive prior thereto, the Company shall make arrangements, in addition to any such amended or
terminated plan or program, for Executive to participate in a plan or program so as to provide
benefits to Executive at least equivalent overall to those provided to Executive prior to such
amendment or termination, such benefits to be provided through a plan or program of insurance if
commercially available.
4.5 Expense Reimbursement. Employer shall reimburse Executive for all business
expenses, including car rental expense while traveling on Employer business, reasonably incurred by
him in the performance of his duties under this Agreement and consistent with past practice upon
his presentation, not less frequently than monthly, of signed, itemized accounts of such
expenditures, all in accordance with Employer’s procedures and policies as adopted and in effect
from time to time and applicable to its senior management employees.
4.6 Vacations. Executive shall be entitled to 20 business days of vacation during each
calendar year, which shall accrue in accordance with the Company’s vacation policy in effect from
time to time for its senior executive officers, with reasonable carry-over allowances, which
vacations shall be taken at such time or times as shall not unreasonably interfere with Executive’s
performance of his duties under this Agreement. Upon termination of Executive’s employment pursuant
to Section 5 herein, for any reason whatsoever, Employer shall pay Executive, in addition to any
termination compensation provided for under Section 6 herein, an amount equivalent to Executive’s
per diem compensation at the then-current Base Salary rate multiplied by the number of unused
vacation days, including any carry-over, accrued by Executive as of the date of termination.
5. Termination of Employment Period
5.1 Termination without Cause. Employer or Executive may, by delivery of not less than
60 days’ notice to the other at any time during the Employment Period, terminate the Employment
Period without cause.
5.2 By Employer for Cause. Employer may, at any time during the Employment Period by
notice to Executive in accordance with and only after full compliance with the procedure set forth
herein terminate the Employment Period “for cause” effective immediately. For the purposes hereof,
“for cause” means:
(i) the conviction of Executive in a court of competent jurisdiction of
a crime constituting a felony in such jurisdiction involving money or
other property of Employer or any of its affiliates or any other felony
or offense involving moral turpitude; or
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(ii) the willful (a) commission of an act not approved of or
ratified by the Board involving a material conflict of interest or
self-dealing relating to any material aspect of the Company’s business
or affairs; or (b) commission of an act of fraud or misrepresentation
(including the omission of material facts), provided that such acts
relate to the business of the Company and would materially and
negatively impact upon the Company; or (c) material failure of
Executive to obey directions of the Board that are consistent with
Executive’s status as Chief Executive Officer; however, for the
purposes of this subsection 5.2 (ii), the refusal of Executive to
comply with an order or directive of anyone other than the majority of
the Board, or the refusal of Executive to perform an act
which is contrary to his duties, responsibilities and/or
authority as Chief Executive Officer or is unlawful shall
not constitute “for cause”. In the event of an act or
omission as provided for in this subsection 5.2 (ii),
Employer shall provide Executive with a written notice of intent
to terminate the Employment Period “for cause”, setting forth,
with reasonable particularity, the reasons and acts or
omissions constituting “cause” under this subsection, and
shall provide Executive with at least thirty (30)
calendar days after such notice to cure or eliminate the
problem or violation giving rise to such cause or any
longer period as reasonably needed by Executive, provided
that it is susceptible of cure or elimination and
Executive is proceeding diligently and in good faith to cure
such violation. In the event and only after the Executive fails
to cure the problem or violation within the period provided
for herein, Employer may exercise its rights to terminate
the Employment Period in accordance with the procedure
set forth below.
Termination “for cause” shall be effected only if (A) Employer has delivered to Executive of a
written notice of termination “for cause”, setting forth, with reasonable particularity, the
reasons for such “for cause” termination, (B) Employer has provided Executive with, on at least ten
(10) business days’ prior written notice, in the case of a termination pursuant to subsection
5.2(ii), the opportunity, together with Executive’s counsel, to be heard before Employer’s Board,
said hearing to occur at such reasonable time and place that is mutually convenient to Executive,
his counsel, and Employer, and (C) the Board (after such notice and opportunity to be heard has
been provided to Executive in the case of a termination pursuant to subsection 5.2(ii)) adopts a
resolution concurred in by not less than majority of all of the directors of Employer then in
office, including at least two-thirds of all of the directors who are not officers of Employer,
that Executive was guilty of conduct constituting “for cause” hereunder, which conduct has not been
cured (if applicable), and specifying the particulars thereof in detail.
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5.3 By Executive for Good Reason. Executive may, at any time during the Employment
Period by notice to Employer, terminate the Employment Period under this Agreement for “good
reason” effective immediately. For the purposes hereof, “good reason” means any material breach by
Employer of any provision of this Agreement which, if susceptible of being cured, is not cured
within 30 days of delivery of notice thereof to Employer by Executive; it being agreed, however,
that the foregoing 30 day cure period shall not be applicable to any failure timely to pay (or any
reduction in) compensation or benefits paid or payable to Executive pursuant to the provisions of
Section 4 hereof. Without limitation of the generality of the foregoing, each of the following
shall be deemed to be a material breach of this Agreement by Employer: (x) any failure timely to
pay (or any reduction in) compensation (including benefits) paid or payable to Executive pursuant
to the provisions of Section 4 hereof; (y) any reduction in the duties, responsibilities or
perquisites of Executive as provided in Section 3.1 hereof and (z) any transfer of the Company’s
principal executive offices outside the geographic area described in Section 3.2 hereof or
requirement that Executive principally perform his duties in other than such office.
5.4 By Executive for a Change of Control. Executive may by notice to Employer,
terminate the Employment Period under this Agreement for a “change of control” effective
immediately provided that not more than 90 days shall have elapsed subsequent to Executive’s
becoming aware of the occurrence of the change of control.
For purposes of this Agreement, a “change of control” of the Company shall be deemed to have
occurred if, as a result of a single transaction or a series of transactions, (A) any “person” (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)), other than a trustee or other fiduciary holding securities under any
employee benefit plan of the Company or a corporation owned, directly or indirectly, by the
stockholders of the Company (including any nominee corporation that holds shares of the Company on
behalf of the beneficial owners of such corporation), in substantially the same proportions as
their ownership of stock, of the Company, is or becomes the “beneficial owner” (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing
51% or more of the combined voting power of the Company’s then outstanding securities; or (B) any
“person” (as such term is used in Sections13(d) and 14(d) of the Exchange Act), other than a
trustee or other fiduciary holding securities under any employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the stockholders of the Company (including any
nominee corporation that holds shares of the Company on behalf of the beneficial owners of such
corporation), in substantially the same proportions as their ownership of stock of the Company, is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of the combined voting power of
the Company’s then outstanding securities and there are at least a majority of directors serving on
the Board of Directors who were not serving in such capacity as of the date hereof or who were not
elected with the consent of the Executive; or (C) the shareholders of the Company approve a merger
or consolidation of the Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 70% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after such merger or
consolidation, or the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale
or disposition by the Company of all or substantially all the Company’s assets other than a
liquidation or sale which would result in the holders of the voting securities of the Company
immediately prior thereto continuing to hold at least 70% of the combined voting power of the
successor entity immediately following such liquidation or sale.
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5.5 Disability. During the Employment Period, if, as a result of physical or mental
incapacity or infirmity (including alcoholism or drug addiction), Executive shall be unable to
perform his material duties under this Agreement for (i) a continuous period of at least 180 days,
or (ii) periods aggregating at least 270 days during any period of 12 consecutive months (each a
“Disability Period”), and at the end of the Disability Period there is no reasonable probability
that Executive can promptly resume his material duties hereunder pursuant hereto, Executive shall
be deemed disabled (the “Disability”) and Employer, by notice to Executive, shall have the right to
terminate the Employment Period for Disability at, as of or after the end of the Disability Period.
The existence of the Disability shall be determined by a reputable, licensed physician mutually
selected by Employer and Executive, whose determination shall be final and binding on the parties;
provided, that if Employer and Executive cannot agree upon such physician, such physician shall be
designated by the then acting President of the Baltimore City Medical Society, and if for any
reason such President shall fail or refuse to designate such physician, such physician shall, at
the request of either party, be designated by the American Arbitration Association. Executive shall
cooperate in all reasonable respects to enable an examination to be made by such physician.
5.6 Death. The Employment Period shall end on the date of Executive’s death.
6. Termination Compensation; Non-Compete
6.1 Termination Without Cause, for Good Reason or Change of Control. If the
Employment Period is terminated by Employer pursuant to the provisions of Section 5.1 or by
Executive pursuant to the provisions of Sections 5.3 or 5.4 hereof, Employer will pay to Executive
on the last day of the Employment Period the sum of (a) $1,500,000, plus (b) if applicable, the
Bonus for the last full Bonus Year pursuant to Section 4.2. Employer shall have no obligation to
continue any other benefits provided for in Section 4 past the date of termination.
6.2 Certain Other Terminations. If the Employment Period is terminated (a) by Employer
pursuant to the provisions of Section 5.2 at any time prior to, or more than 90 days after, a
change of control of the Company, (b) by Executive pursuant to Section 5.1, (c) as a result of a
Disability pursuant to the provisions of Section 5.5, or (d) as a result of the death of Executive
pursuant to the provisions of Section 5.6., Employer shall pay to Executive, within 60 days of the
date of termination, (x) his then annual Base Salary through the date of termination, (y) in the
case of termination for Disability or by death pursuant to the provisions of Section 5.5 or 5.6,
when due pursuant to the provisions of Section 4.2 the maximum Bonus for the Bonus Year in which
the date of termination occurred multiplied by a fraction, the numerator of which shall be the
number of days of the Employment Period within the Bonus Year and the denominator of which shall be
365 and (z) if applicable, the Bonus for the last full Bonus Year pursuant to Section 4.2. Employer shall have no obligation to continue any other benefits
provided for in Section 4 past the date of termination.
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6.3 Expiration with Severance. If (a) Employer fails to offer to Executive at least a
one year renewal or extension of the Employment Period on its then current terms by no later than
August 1 of the last year of the Employment Period and (b) the Employment Period shall thereafter
expire on its then stated expiration date, Employer will pay to Executive, on or before the date of
termination, an amount equal to the sum of (y) $750,000 and (z) if applicable, the earned Bonus for
the Bonus Year ending on the stated expiration date of the Employment Period. Employer shall have
no obligation to continue any other benefits provided in Section 4 past the date of termination.
6.4 No Other Termination Compensation. Executive shall not, except as set forth in
this Section 6 and in Section 4.6, be entitled to any compensation following termination of the
Employment Period, except as may be otherwise provided in any stock options granted by Employer to
Executive.
6.5 Mitigation. Executive shall not be required to mitigate the amount of any payments
or benefits provided for hereunder upon termination of the Employment Period by seeking employment
with any other person, or otherwise, nor shall the amount of any such payments or benefits be
reduced by any compensation, benefit or other amount earned by, accrued for or paid to Executive as
the result of Executive’s employment by or consultancy or other association with any other person.
6.6 Non-compete. For the purposes of this Agreement, “not compete” (or words of
similar effect) shall mean that Executive shall not, directly or indirectly (a) engage in any
activities that are in competition with the Company in any geographic area within 50 miles of the
location of any Company store (owned or franchised) as of the date of termination of Executive (b)
engage in any catalog business that focuses on the sale of men’s clothing, (c) solicit any customer
of the Company or (d) solicit any person who is then employed by the Company or was employed by the
Company within one year of such solicitation to (i) terminate his or her employment with the
Company, (ii) accept employment with anyone other than the Company, or (iii) in any manner
interfere with the business of the Company. If the Employment Period is terminated (x) by Executive
pursuant to the provisions of Section 5.4 hereof; (y) by Employer pursuant to the provisions of
Section 5.1 hereof; or (z) by Executive pursuant to the provisions of Section 5.3 hereof, Executive
shall not compete with the Company for a period of two years from the date of termination. If the
Employment Period is terminated by the Employer pursuant to the provisions of Section 5.2,
Executive shall not compete with the Company for a period of six months from the date of
termination. If the Employment Period expires and Executive is entitled to severance pursuant to
Section 6.3, Executive shall not compete with the Company for a period of one year from the date of
expiration. Executive acknowledges and agrees that in the event of any violation or threatened
violation by Executive by his obligations under this section, Employer shall be entitled to
injunctive relief without any necessity to post bond. Executive acknowledges and agrees that the
Company’s catalog business is competitive with retail store businesses offering similar product
lines.
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7. Indemnification
The Company shall indemnify and hold Executive harmless from and against any expenses
(including attorneys’ fees of the attorneys selected by Executive to represent him, which shall be
advanced as incurred), judgments, fines and amounts paid in settlement incurred by him by reason of
his being made a party or threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal administrative or investigative, by reason of
any act or omission to act by Executive during or before the Employment Period or otherwise by
reason of the fact that he is or was a director or officer of Employer of any subsidiary or
affiliate included as a part of the Company, to the fullest extent and in the manner set forth and
permitted by the General Corporation Law of the State of Delaware and any other applicable law as
from time to time in effect. The provisions of this Section 7 shall survive any termination of the
Employment Period or any deemed termination of this Agreement.
8. Miscellaneous
8.1 Notices. All notices required or permitted to be given hereunder shall be in
writing and shall be (a) sent by certified mail-return receipt requested, postage prepaid, (b)
personally delivered (via overnight delivery or otherwise), or (c) transmitted by facsimile.
Notices shall be deemed delivered as follows: (a) three days after deposit with the United States
Postal Service by certified mail; (b) one business day after deposit with a nationally-recognized
overnight delivery service; (c) on the date of delivery when sent by local, commercial delivery
service; or (d) on the date of transmission if sent by facsimile during the hours of 9:00 a.m. to
5:00 p.m. on a business day, or on the next following business day if sent by facsimile other than
during such time. Notwithstanding anything to the contrary contained herein, notices shall be
deemed to have been given when received or refused by the party to which or whom it was sent or
delivered and any writing actually received by the party to which or whom it is addressed
(regardless of the means of delivery) shall be sufficient notice hereunder. Notices shall be
addressed as follows, provided that either party may, at any time, in the manner set forth for
giving notices to the other, establish a different address to which notices to it or him shall be
sent:
If to Employer:
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Xxx. A. Bank Clothiers, Inc. 000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxxxxx 00000 Attn: Chief Financial Officer |
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With copy to:
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Xxx. A. Bank Clothiers, Inc. 000 Xxxxxxx Xxxx Xxxxxxxxx, Xxxxxxxx 00000 Attn: General Counsel |
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If to Executive:
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Xx. X. Xxxx Black 0 Xxxxxxx Xxxxx Xxxxxxxxxxx, Xxxxxxxx 00000 |
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8.2 Legal Fees. The Company shall pay the reasonable legal fees and expenses incurred
by Executive in connection with preparation, negotiation, executive and delivery of this Agreement
(not to exceed $5,000), as well as such fees and expenses incurred in connection with any amendment
or modification hereof or enforcement of Executive’s rights hereunder.
8.3 Taxes. Employer is authorized to withhold (from any compensation or benefits
payable hereunder to Executive) such amounts for income tax, social security unemployment
compensation and other taxes as shall be necessary or appropriate in the reasonable judgment of
Employer to comply with applicable laws and regulations.
8.4 Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Maryland, without regard to any conflicts of law
jurisprudence. Executive hereby consents to the jurisdiction of the state courts of the State of
Maryland and the United States District Court for District of Maryland over all claims arising
under this Agreement.
8.5 Arbitration. Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Baltimore, Maryland in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be entered on the
arbitration award in any court having jurisdiction; PROVIDED, HOWEVER, that Executive shall be
entitled to seek specific performance of his right to be paid until expiration of the Employment
Period during the pendency of any arbitration.
8.6 Headings. All descriptive headings in this Agreement are inserted for convenience
only and shall be disregarded in construing or applying any provision of this Agreement.
8.7 Counterparts. This Agreement may be executed by facsimile and/or in counterparts,
each of which shall be deemed to be an original, but all of which together shall constitute one and
the same instrument.
8.8 Severability. If any provision of this Agreement, or any part thereof, is held to
be unenforceable, the remainder of such provision and this Agreement, as the case may be, shall
nevertheless remain in full force and effect.
8.9 Entire Agreement and Representations. This Agreement contains the entire agreement
and understanding between Employer and Executive with respect to the subject matter hereof. No
representations or warranties of any kind or nature relating to the Company or its several
businesses, or relating to the Company’s assets, liabilities, operations, future plans or prospects
have been made by or on behalf of Employer to Executive. This Agreement supersedes any prior
agreement between the parties relating to the subject matter hereof.
8.10 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors, heirs (in the case of
Executive) and assigns.
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8.11 Termination of Prior Employment Agreement. Effective upon the commencement of the
Employment Period, Employer and Executive hereby terminate that certain Employment Agreement, dated
as of December 21, 1999, as amended, pursuant to which Executive was employed by Employer.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
EMPLOYER: |
EXECUTIVE: | ||||
XXX. A. BANK CLOTHIERS, INC. |
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By: | /s/ Xxxxxx X. Xxxxxx | /s/ | X. XXXX BLACK | ||
Xxxxxx X. Xxxxxx, Chairman Compensation Committee |
X. XXXX BLACK |
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