EXHIBIT 10.18
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of the _____ day of December
l999, by and between X. XXXX BLACK ("Employee") and XXX. A. BANK CLOTHIERS, INC.
("Employer" or "Company").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which
are hereby acknowledged, Employer hereby agrees to employ Employee as an
Executive Vice President, and Employee hereby agrees to be and remain in the
employ of Employer, upon the terms and conditions hereinafter set forth:
1. EMPLOYMENT PERIOD. Subject to earlier termination as set forth in this
Agreement, the period of employment under this Agreement (the "Employment
Period") shall be for approximately two years beginning January 10, 2000 (the
"Start Date") and ending February 2, 2002.
2. DUTIES AND RESPONSIBILITIES.
2.1 General. During the Employment Period, Executive shall (i) have the
-------
title of Executive Vice President and (ii) devote substantially all of his
business time and expend his best efforts, energies and skills to the business
of the Company. Executive shall perform such duties, consistent with his status
as Executive Vice President, as he may be assigned from time to time by
Employer's Chief Executive Officer (the "Chief Executive Officer").
2.2 Location of Executive Office. The Company will maintain its principal
----------------------------
executive offices at a location in the Baltimore, Maryland metropolitan area.
Executive shall not be required to perform services for the Company at any other
location, except for services rendered in connection with reasonably required
travel on Company business.
3. COMPENSATION AND RELATED MATTERS
3.1 Base Salary. Employer shall pay to Executive during the
-----------
Employment Period an annual base salary (the "Base Salary") of $250,000. The
Base Salary for each year shall be payable in installments in accordance with
the Company's policy on payment to executives in effect from time to time.
3.2 Annual Bonus. For fiscal year 2000 (ending on or about January
------------
31, 2001) and for each other fiscal year that begins during the Employment
Period (each such fiscal year, a "Bonus Year"), Executive shall be eligible to
receive a bonus of up to 40% of Base Salary (each, a "Bonus") conditioned upon
the satisfaction of (a) Company performance goals established by the
Compensation Committee of the Board of Directors of the Company (the
"Committee") for such Bonus Year and (b) personal performance goals submitted by
the Executive to, and approved by, the Chief Executive Officer and the Committee
for such Bonus Year. Company and personal performance goals are herein referred
to collectively as the "Performance Goals". The Performance Goals for each Bonus
Year shall be established as soon as possible following the beginning of such
Bonus Year. 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. If (a) the Employment Period shall expire
or terminate and (b) Employee is entitled to payment of a bonus pursuant to
Section 5 hereof, the Bonus payable for the Bonus Year in which the Employment
Period terminates or expires shall equal the Bonus that would have been paid had
the Employment Period not so terminated or expired, 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. For the
purposes of determining the amount of Bonus payable pursuant to the immediately
preceding sentence, it shall be assumed that all conditions to payment based
upon performance by the Executive (e.g. personal performance goals) have been
satisfied. 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.
3.3 Other Benefits. During 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
employment agreements or arrangements). Employer shall reimburse Executive for
any COBRA premiums incurred by Executive prior to eligibility in the Company's
health plan.
3.4 Moving Allowance. Employer shall pay to Executive, or pay on
----------------
Executive's behalf, an allowance of not more than $75,000 in connection with
Executive's relocation from Xxxxxxx to Baltimore (the "Moving Allowance").
Employer shall contract directly for the one-time transportation of Executive's
household goods to Baltimore. Employer and Executive shall cooperate in good
faith to arrange for a third-party relocation service to assist in the
disposition of Executive's personal residence in Xxxxxxx. Employer shall
reimburse Executive for ordinary and customary settlement expenses incurred in
connection with the sale of Executive's Xxxxxxx residence and the purchase of
Executive's Baltimore residence; provided, however, that Employer shall not
reimburse Executive for more than 2% of any purchase money mortgage for
origination fees and discount points, any prepaid or escrow amounts or any
amounts adjusted between buyer and seller (e.g. taxes or utilities). Any portion
of the Moving Allowance not used by Executive, or paid on Executive's behalf,
for actual relocation expenses may be used by Executive to offset the tax
consequences, if any, of the compensation to Executive represented by the Moving
Allowance. Notwithstanding anything to the contrary contained in this Section
3.4, the total of all payments made by Employer hereunder, whether directly to
Executive or to third parties in connection with Executive's relocation, shall
in no event exceed $75,000, inclusive of any tax gross-up.
3.5 Stock Options. Subject to the approval of the Committee, Employer
-------------
shall grant to Executive an option to purchase 55,000 shares of Employer's
common stock at an option price equal to the market closing price of such stock
on the Start Date, vesting as to 27,500 shares on
2
the Start Date and as to 27,500 shares on the first anniversary of the Start
Date. The option shall otherwise be upon such terms and conditions as are usual
and customary for grants of options by Employer to executives.
3.6 Vacation. Executive shall be entitled to 20 days of vacation
--------
during each 12-month vacation accrual period, which days shall accrue in
accordance with the Company's vacation policy in effect from time to time for
its senior executive officers. Vacations shall be taken at such time or times as
shall not unreasonably interfere with Executive's performance of his duties
under this Agreement. The number of vacation days shall be prorated for any 12-
month vacation accrual period not wholly within the Employment Period. Upon
termination of Executive's employment pursuant to Section 4 for any reason
whatsoever, Employer shall pay Executive, in addition to any termination
compensation provided for under Section 5, 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.
3.7 Car Allowance. In addition to such other compensation as may be
-------------
due and payable hereunder, Employer shall pay to Executive a car allowance in
the amount of $800.00 per month during the Employment Period.
4. TERMINATION OF EMPLOYMENT PERIOD.
4.1. Termination without Cause or Good Reason. Employer or Employee
----------------------------------------
may terminate the Employment Period at any time without cause or without good
reason upon 60 days notice. Notwithstanding the forgoing, Employer shall have
the right to terminate the Employment Period without cause upon less than 60
days notice by paying to Executive, in addition to such other termination
compensation as may be payable pursuant to Section 5.1, an amount equal to
Executive's then-current per diem Base Salary multiplied by the difference
between 60 and the number of days notice given.
4.2 Termination by Employer for Cause. Employer may terminate the
---------------------------------
Employment Period in accordance with this Section 4.2 at any time for cause. For
the purpose of this Section 4.2, "cause" shall mean any of the following:
a) 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 the Company or any of its affiliates or any other
felony or offense involving moral turpitude;
b) the willful commission of an act not approved of or
ratified by the Chief Executive Officer involving a material conflict of
interest or self-dealing relating to any material aspect of the Company's
business or affairs;
c) the willful commission of any act of fraud or
misrepresentation (including the omission of material facts) provided that such
act relates to the business of the Company and would materially and negatively
impact upon the Company ; or
3
d) the willful and material failure of Executive to comply
with the lawful orders of the Chief Executive Officer, provided such orders are
consistent with Executive's duties, responsibilities and/or authority as
Executive Vice President of the Company.
In the event Employer shall elect to pursue a termination for cause,
Employer shall deliver to Executive a written notice from the Chief Executive
Officer setting forth with reasonable particularity the grounds upon which the
Chief Executive Officer has found cause for termination. In the event such
grounds are predicated upon acts or omissions as set forth in paragraphs (b),
(c) or (d) above, Executive shall have thirty (30) days, or such longer period
as may be necessary provided Executive has commenced and is diligently
proceeding, to cure or eliminate the cause for termination. In the event
Executive has failed to timely cure or eliminate the cause for termination as
set forth in the immediately preceding sentence, or in the event the grounds for
termination are predicated upon conviction of Executive as set forth in
paragraph (a) above, the Company, acting by and through the Chief Executive
Officer, shall have the right to immediate terminate Executive for cause.
4.3. Termination by Employee for Good Reason. Executive may, at any
----------------------------------------
time during the Employment Period by notice to Employer, terminate the
Employment Period effective immediately for "good reason". 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 to pay timely (or any reduction in) compensation or benefits paid or
payable to Executive pursuant to the provisions of Section 3 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 to
pay timely (or any reduction in) compensation (including benefits) paid or
payable to Executive pursuant to the provisions of Section 3 hereof; (y) any
reduction in the duties, responsibilities or perquisites of Executive as
provided in this Agreement and (z) any transfer of the Company's principal
executive offices outside the geographic area described in Section 2.2 hereof or
requirement that Executive principally perform his duties outside such
geographic area.
4.4 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
4
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.
4.5 Death. The Employment Period shall end on the date of Executive's
-----
death.
5. TERMINATION COMPENSATION; NON-COMPETE
5.1 Termination Without Cause by Employer or for Good Reason by
-----------------------------------------------------------
Executive. If the Employment Period is terminated by Employer pursuant to the
---------
provisions of Section 4.1 hereof or by Executive pursuant to the provisions of
Section 4.3 hereof, Employer will pay to Executive (a) Base Salary for a period
of twelve (12) months following the date of termination (calculated at the Base
Salary rate in effect as of the date of termination) payable in equal
installments at the times Base Salary would have been paid had the Employment
Period not been terminated; (b) when and if due pursuant to the provisions of
Section 3.2 hereof, the prorated Bonus for the then current Bonus Year and (c)
if applicable, the Bonus for the last full Bonus Year pursuant to Section 3.2.
Employer shall have no obligation to continue any other benefits provided for in
Section 3 past the date of termination, except as provided in Section 3.6.
5.2 Certain Other Terminations. If the Employment Period is
--------------------------
terminated by Employer pursuant to the provisions of Section 4.2, by Executive
pursuant to Section 4.1, for Disability pursuant to the provisions of Section
4.4 or as a result of the death of Executive as set forth in Section 4.5,
Employer shall pay to Executive (a) Base Salary through the date of termination,
(b) in the case of termination as a result of a Disability or the death of
Executive, when and if due pursuant to provisions of Section 3.2, the prorated
Bonus for the Bonus Year in which the date of termination occurred and (c) if
applicable, the Bonus for the last full Bonus Year pursuant to Section 3.2.
Employer shall have no obligation to continue any other benefits provided for in
Section 3 past the date of termination, except as provided in Section 3.6.
5.3 Expiration at Election of Employer. If the Employment Period
----------------------------------
expires on its then stated expiration date without Employer having offered to
Executive at least a one year renewal or extension of the Employment Period on
its then current terms, Employer shall pay to Executive (a) Base Salary for the
twelve (12) month period following the date of termination (calculated at the
Base Salary rate in effect as of the date of termination), payable in equal
installments at the times Base Salary would have been paid had the Employment
Period not been terminated, (b) when and if due pursuant to the provisions of
Section 3.2, the Bonus for the Bonus Year in which the Employment Period expired
prorated as provided in said Section 3.2 and (c) if applicable, the Bonus for
the last full Bonus Year pursuant to Section 3.2. Employer shall have no
obligation to continue any other benefits provided for in Section 3 past the
date of termination, except as provided in Section 3.6.
5.4 No Other Termination Compensation. Executive shall not, except as
---------------------------------
set forth in this Section 5 and in Section 3.6, be entitled to any compensation
following termination of the Employment Period, except as otherwise provided in
any stock options granted by Employer to Executive.
5
5.5 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. Without any obligation of Employer to provide
any benefits to Executive after termination of the Employment Period except as
specifically set forth herein, any medical, dental or hospitalization insurance
or other benefits provided to Executive with his employment by or consultancy
with an unaffiliated person shall be primary to any benefits provided to
Executive pursuant to this Agreement for the purposes of coordination of
benefits.
5.6 Non-Compete. For the 6 month period following the termination or
-----------
expiration of the Employment Period for any reason whatsoever (other than a
termination by Executive pursuant to Section 4.1, in which case the applicable
period shall be one year), and for so long as Employer is making and the
Executive is accepting the payments required to be made to Executive pursuant to
this Section 5, Executive shall not, directly or indirectly, (i) 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 the Employment Period (provided that the foregoing
geographic limitation shall also be construed to prohibit Executive from
engaging in any catalogue business that focuses on the sale of men's clothing),
(ii) solicit any customer of the Company or (iii) solicit any person who is then
employed by the Company or was employed by the Company within one year of such
solicitation to (a) terminate his or her employment with the Company, (b) accept
employment with anyone other than the Company, or (c) in any manner interfere
with the business of the Company. Executive acknowledges and agrees that in the
event of any violation or threatened violation by Executive of his obligations
under the preceding, Employer shall be entitled to injunctive relief without any
necessity to post bond. Executive acknowledges and agrees that the Company's
catalogue business is competitive with retail store business offering similar
product lines. Without limiting the generality of the foregoing, a business
shall be considered to be "in competition with the Company" if such business (y)
is a retailer which derives more than 35% of its gross revenue from the sale of
men's apparel (e.g. Xxxxxx Brothers, Men's Wearhouse); or (z) distributes
anywhere in the United States a catalog which derives more than 35% of its gross
revenue from the sale of men's apparel. A department store shall not be
considered to be "in competition with the Company" for the purposes of this
Agreement.
6. 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), judgements,
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 the
Employment Period or otherwise by reason of the fact that he is or was a
director or officer of Employer or 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
6
other applicable law as from time to time in effect. The provisions of this
Section 6 shall survive any termination of the Employment Period or any deemed
termination of this Agreement.
7. MISCELLANEOUS
7.1 Notices. Any notice, consent or authorization required or
-------
permitted to be given pursuant to this Agreement shall be in writing and sent to
the party for or to whom intended, at the address of such party set forth below,
be registered or certified mail, postage paid (deemed given five days after
deposit in the U.S. mails) or personally or by facsimile transmission (deemed
given upon receipt), or at such other address as either party shall designate by
notice given to the other in the manner provided herein.
If to Employer: Xxx. A. Bank Clothiers, Inc.
000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Secretary
If to Executive: Xx. X. Xxxx Xxxxx
Xxx. A. Bank Clothiers, Inc.
000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
7.2 Legal Fees. The Company shall pay the reasonable legal fees and
----------
expenses incurred by Executive in connection with any amendment or modification
hereof or enforcement of Executive's rights hereunder.
7.3 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 judgement of Employer to comply with applicable
laws and regulations.
7.4 Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the State of Maryland applicable to
agreements made and to be performed therein.
7.5 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. Judgement 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.
7.6 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.
7
7.7 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
7.8 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.
7.9 Entire Agreement and Representation. 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.
7.10 Successor 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
XXX. A. BANK CLOTHIERS, INC.
By: Xxxxxx X. Xxxxxxxx X. Xxxx Black
-------------------------- ---------------------------
Xxxxxx X. Xxxxxxxx, X. XXXX BLACK
Chief Executive Officer
8
