EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of September 19, 1997 between XXXX
X. XXXXX ("Executive") and XXX. A. BANK CLOTHIERS, INC. ("Employer" or
"Company").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and adequacy of which
are hereby acknowledged, the parties hereto hereby agree as follows:
1. EMPLOYMENT OF EXECUTIVE
Employer hereby agrees to employ Executive, and Executive hereby agrees
to be and remain in the employ of Employer, upon the terms and conditions
hereinafter set forth. This Agreement is a contract for the 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 as of the date hereof and shall, subject to
earlier termination as provided in Section 5, continue through September 30,
1998 and shall continue thereafter for successive one-year periods unless, at
least 180 days before the end of the initial Employment Period or any subsequent
one-year period, either party gives notice to the other of his or its desire to
terminate the Employment Period, in which case the Employment Period shall
terminate as of the end of the then-current term.
3. DUTIES AND RESPONSIBILITIES
3.1 General. During the Employment Period, Executive (i) shall have the
title of Senior Vice President - Manufacturing and (ii) shall 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 Senior Vice President - Manufacturing, as he may
be assigned from time to time by Employer's Chief Executive Officer (the "Chief
Executive Officer").
3.2 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
required travel on the Company's business to an extent not substantially in
excess of Executive's past travel commitments for the Company.
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") of $153,000 for the twelve
month period ending
approximately June 30, 1998. The Base Salary shall be increased from to time to
time upon mutual agreement of the parties hereto; provided, that the Base Salary
shall in all events be increased at least once every twelve (12) months by a
percentage not less than the percentage increase in the Consumer Price Index (or
any equivalent index in the event the Consumer Price Index shall no longer be
published). 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.
4.2 Annual Bonus. For fiscal year 1997 and for each fiscal year that
begins during the Employment Period (each such fiscal year, a "Bonus Year"),
Executive shall be eligible to receive a bonus (each, a "Bonus") of up to 40% of
Base Salary pursuant to the terms and conditions of Employer's Bonus Plan in
effect from time to time. 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 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 (including, but not limited to,
health care coverage at Employer's expense) 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). In addition, Executive shall
receive a weekly car allowance of $120.00 per week.
5. TERMINATION OF EMPLOYMENT PERIOD
5.1 Termination Without Cause or Good Reason. Employer may terminate
the Employment Period at any time without cause. Executive may, by delivery of
not less than 60 days' notice to Employer at any time during the Employment
Period, terminate the Employment Period without good reason.
5.2 By Employer for Cause. Employer may, at any time during the
Employment Period by notice to Executive, terminate the Employment Period "for
cause" effective immediately. For the purposes hereof, "for cause" means any
material misconduct, including, but not limited to (a) conviction of Executive
in a court of competent jurisdiction of a crime constituting a felony or other
serious offense; or (b) the commission of an act not approved of or ratified by
the Board of Directors involving a conflict of interest or self-dealing relating
to Employer or any subsidiary or affiliate thereof; or (c) commission of an act
of fraud or misrepresentation (including the omission of material facts); or (d)
failure of Executive to obey any material order or directive of the Board of
Directors of the Company or the Chief Executive
2
Officer, provided such order or directive is lawful and not contrary to
Executive's duties, responsibilities and authority as an Senior Vice President
Manufacturing of the Company and is consistent with Executive's status as an
Senior Vice President Manufacturing of the Company; or (e) material violation by
Executive of any rule, regulation or policy of Employer generally applicable to
other employees of the Company.
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,
"for good reason" means (i) 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 or (ii) the
occurrence of a change in control (as hereinafter defined) of Employer, if, and
only if, any of the duties, responsibilities or perquisites of Executive as
provided in this Agreement are thereafter reduced. 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 or 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 this Agreement; 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 outside such geographic area.
For purposes of this Agreement, a "change in 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
Sections 13(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
3
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.
5.4 Death. The Employment Period shall end on the date of Executive's
death.
6. TERMINATION COMPENSATION; NON-COMPETE
6.1 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 5.1 hereof or by Executive pursuant to the provisions of
Section 5.3 hereof, Employer will 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 termination date, payable in equal
installments at the times Base Salary would have been paid had the Employment
Period not been terminated, (b) the Bonus for the last full Bonus Year pursuant
to Section 4.2 and (c) for each option (vested or not) to purchase a share of
the Company's common stock held by Executive as of the date of termination, an
amount, if greater than zero, equal to the last sale price of one share of the
Company's common stock as of market close on the termination date, less the
exercise price of such option. All options held by Executive as of the date of
termination shall expire on such date, notwithstanding anything to the contrary
contained in any option agreement. All other benefits provided for in Section
4.3 shall be continued at the expense of Employer for the period that payments
are required to be made pursuant to the preceding provisions of this Section
6.1. Without limiting the generality of the immediately preceding sentence,
Employer agrees that (x) the health benefits to be continued on behalf of the
Executive (at Company expense) during the twelve month severance period shall
not be part of Executive's optional COBRA period; (y) Executive shall have the
right and option to continue health coverage at Executive's expense after the
twelve month severance period to the greatest extent required to be offered by
the Company pursuant to applicable law; and (z) Executive shall be entitled to
continue contributions into the Company's 401k Plan during the twelve month
severance period and the Company shall match a share of such contributions in
accordance with the Company's general policy applicable to active employees.
Notwithstanding termination of the Employment Period, Executive shall continue
to be entitled to discounts on purchases of products from the Company in
accordance with the discount program in effect from time to time for active
employees of the Company.
6.2 Certain Other Terminations. If the Employment Period is
terminated by Employer pursuant to the provisions of Section 5.2 at any time
prior to a change in control of
4
the Company, by Executive pursuant to Section 5.1 or as a result of the death of
Executive pursuant to the provisions of Section 5.4, Employer shall pay to
Executive (a) Base Salary (calculated at its then current rate per year) through
the date of termination, (b) in the case of termination by death pursuant to the
provisions of Section 5.4, when due pursuant to provisions of Section 4.2 the
Bonus for the Bonus Year in which the date of termination occurred prorated as
provided in said Section 4.2 and (c) if applicable, the Bonus for the last 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.
6.3 Termination with Severance. In the event the Employment Period is
terminated by Employer pursuant to Section 5.2 at any time following a change in
control of the Company or the Employment Period is terminated by Employer
pursuant to notice given in accordance with Section 2 hereof, Employer shall pay
to Executive (a) Base Salary for the twelve (12) month period following the date
of termination (calculated at the applicable Base Salary rate which would have
been in effect from time to time during the balance of Employment Period,
assuming no termination), payable in equal installments at the times Base Salary
would have been paid had the Employment Period not been terminated, (b) when due
pursuant to the provisions of Section 4.2 the Bonus for the Bonus Year in which
the Employment Period expired prorated as provided in said Section 4.2 and (c)
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.
6.4 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, provided, that any medical, dental or
hospitalization insurance or benefits provided to Executive with his employment
by or consultancy with an unaffiliated person during such period shall be
primary to the benefits to be provided to Executive pursuant to this Agreement
for the purposes of coordination of benefits.
6.5 Non-Compete. For so long as any termination compensation is being
paid to Executive pursuant to this Section 6 or, in the event of termination of
this Agreement by Employer for cause or by Executive without good reason, for
the balance of what would have been the current Employment Period assuming no
such termination, Executive shall not, directly or indirectly, (i) engage in any
activities that are in competition with the Company in any geographic area where
the Company is engaged in business, (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
sentence, Employer shall be entitled to injunctive relief without any necessity
to post bond.
5
6.6 Unused Vacation. Upon termination of Executive's employment
pursuant to Section 5 herein or non-renewal of the Employment period as provided
for under Section 2 herein, for any reason whatsoever, Employer shall pay
Executive, in addition to any termination compensation provided for under this
Section 6, 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.
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), 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 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. 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, by registered or certified mail, postage paid (deemed given five
days after deposit in the U.S. mail) 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. Notices
to Employer shall be sent to: Xxx. A. Bank Clothiers, Inc., 000 Xxxxxxx
Xxxx, Xxxxxxxxx, Xxxxxxxx 00000-0000, Attn: Secretary. Notices to
Executive shall be sent to: Xx. Xxxx X. Xxxxx, Xxx. A. Bank Clothiers,
Inc., 000 Xxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000-0000.
8.2 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.
8.3 Interpretation. 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. All descriptive headings in this
Agreement are inserted for convenience only and shall be disregarded in
construing or applying any provision of this
6
Agreement. 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. 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.
8.4 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.
8.8 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.
8.9 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.
8.10 Effectiveness. The presentation of this document to Executive is
an inquiry into terms and not an offer. The execution and delivery of this
document by Executive shall be an offer which may be accepted by the Company
only in writing. This Agreement shall be effective, if at all, only upon
execution hereof by each party hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
XXX. A. BANK CLOTHIERS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
____________________________________
Xxxxxxx X. Xxxxxx, Chairman and
Chief Executive Officer
/s/ Xxxx X. Xxxxx
____________________________________
XXXX X. XXXXX
