AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement"),
made and entered into as of _______________ ___, 1998, is by and between Lamonts
Apparel, Inc., a Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxxxxx
("Xxxxxxxxxx").
WHEREAS, this Agreement, which amends and restates the Employment
Agreement, dated as of April 18, 1995 (the "Existing Employment Agreement"),
between executive and the Company, is being entered into in connection with the
Company's Plan of Reorganization (the "Plan of Reorganization" or "Plan");
WHEREAS, the Plan provides, among other things, for the continued
employment of Executive after confirmation of the Plan and dismissal of the
Company's Chapter 11 case (the "Bankruptcy Case") under Chapter 11 of the United
States Bankruptcy Code; and
WHEREAS, the Plan was confirmed by order entered on[ ] by the
United States Bankruptcy Court for the Western District of Washington at Seattle
and the Bankruptcy Case has been dismissed;
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual covenants set forth herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
to amend and restate the Existing Employment Agreement as follows:
1. EMPLOYMENT OF ROTHSCHILD; TITLE.
(A) EMPLOYMENT. The Company hereby agrees to employ Rothschild,
and Rothschild agrees to enter into the employment of the Company, on the terms
and conditions set forth in this Agreement. Rothschild agrees during the term
of his employment to devote such portion of his business and professional time,
efforts, skills and abilities to the performance of his duties as stated herein
and to the furtherance of the Company's business as the Chairman of the Board of
Directors of the Company (the "Board") may reasonably direct.
(B) TITLE. Rothschild's job title will be Vice Chairman of the
Board and his duties will be those as are mutually determined by the Chairman
and the Vice Chairman of the Board, consistent with the position of
Vice Chairman, including managing the legal, financial and administrative
functions of the Company.
(C) BOARD MEMBERSHIP. The Company agrees that it will use its
best efforts to cause Executive to be nominated to the Board and to serve as
Vice Chairman of the Board at each annual meeting of stockholders of the Company
during the term.
2. TERM. Unless terminated at an earlier date in accordance with
Section 8, the term of this Agreement (the "Term") shall continue until the
third anniversary of the 90th day following the effective date of the Plan (the
"Effective Date").
3. COMPENSATION.
(A) BASE SALARY. Subject to Section 8 hereof, as compensation
for Rothschild's services hereunder, the Company shall pay to Rothschild a
base salary of (i) $240,000 per year, payable in equal monthly installments
of $20,000, in arrears at the end of each calendar month during the first 90
days of the Term and (ii) $150,000 per year, payable in equal monthly
installments of $12,500, in arrears at the end of each calendar month during
the remainder of the Term.
(B) REORGANIZATION BONUS. Upon the Effective Date, the
Company became obligated to pay to Rothschild, a bonus (the "Reorganization
Bonus") in an amount equal to (i) $186,667 and (ii) an additional bonus of
$80,000. The portion of the Reorganization Bonus payable pursuant to clause
(ii) of this Section 3(b) shall be payable on the 90th day after the
Effective Date. The Reorganization Bonus shall be an Expense of
Administration obligation of the Company.
(C) INCREASES IN BASE SALARY. Beginning on January 31, 1998,
Rothschild's Base Salary shall be reviewed by the Board or the Compensation
Committee thereof no less frequently than on each January 31 during the Term.
The Base Salary payable to Rothschild may be increased on each such date (and at
such other times as such Board or the Compensation Committee may deem
appropriate during the Term) to such amount determined appropriate by such Board
or the Compensation Committee; PROVIDED, HOWEVER, that Rothschild's Base Salary
shall be increased annually in a minimum amount equal to the cost-of-living
increment as reported in the "Consumer Price Index, Los Angeles, California, All
Items," published by the U.S. Department of Labor (using January 1, 1995 as the
base date for
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comparison with respect to the increase to be made on January 31, 1998, and
using January 1, of the immediately preceding year as the base date for
comparison with respect to each annual increase to be made thereafter). Each
such new Base Salary shall become the base for each successive year increase.
Any increase in Base Salary or other compensation shall in no way limit or
reduce any other obligations of the Company hereunder and, once established
as an increased specified rate, Rothschild's Base Salary shall not be reduced
unless Rothschild otherwise agrees in writing.
4. ADDITIONAL COMPENSATION. On the Effective Date, the Company
shall issue to Rothschild (i) options to purchase 150,000 shares of common
stock of the Company ("Common Stock"), and (ii) to prevent dilution upon
exercise of the New Class A Warrants and the New Class B Warrants (as each
such term is defined in the Plan of Reorganization), (x) options to purchase
36,722 shares of Common Stock, which options shall be exercisable at a price
of $.01 per share on the first date on which the Aggregate Equity Trading
Value (as such term is defined in the Plan of Reorganization) equals or
exceeds $20 million and (y) options to purchase 13,337 shares of Common
Stock, which options shall become exercisable at a price of $.01 per share on
the first date on which the Aggregate Equity Trading Value equals or exceeds
$25 million; PROVIDED THAT, the aggregate number of options described in
clauses (ii)(x) and (y) above which may be exercised by Rothschild shall bear
the same proportion (based on the total number of such options granted to
Rothschild) to the number of options described in clause (i) above that have
been exercised by Rothschild (based on the total number of such options
granted to Rothschild). In addition, to prevent dilution upon the exercise
of the New Class C Warrants (as such term is defined in the Plan of
Reorganization), Rothschild will be issued New Class C Warrants exercisable
for 57,160 shares of Common Stock, exercisable in accordance with the terms
thereof.
The options shall have a term of ten years and shall vest (x) 50% upon
the Effective Date, (y) 25% on the first anniversary of the Effective Date and
(z) 25% on the second anniversary of the Effective Date; PROVIDED THAT, if this
Agreement is thereafter terminated pursuant to Section 8(a)(i), such options
shall vest in full upon the date of such termination.
5. TAX WITHHOLDING; WAIVER OF BENEFITS. The Company has the right
to deduct from all compensation and amounts payable to Rothschild under this
Agreement social security (FICA) taxes and all federal, state, municipal or
other such taxes, deductions or charges as may now be in effect or that may
hereafter be enacted or required. During the Term, Rothschild hereby waives, to
the fullest extent
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permitted by applicable law, all benefits and executive perquisites provided
to employees of the Company, including, without limitation, those provided to
its senior executives (but excluding 401(k) benefits and benefits and
perquisites provided to directors of the Company, including (without
limitation), directors' and officers' liability insurance).
6. EXPENSES. Rothschild acknowledges that the performance of his
duties hereunder will require significant travel, primarily to Kirkland,
Washington, and agrees to be present in such other locations at such other
times as the Chairman of the Board may reasonably request. Rothschild shall
be reimbursed by the Company, in accordance with its reimbursement policy
from time to time in effect, for all reasonable and necessary out-of-pocket
expenses incurred by him in performing his duties under this Agreement,
including (without limitation) hotel, rental car, airfare and other
reasonable travel expenses between Rothschild's home in Los Angeles,
California, and Kirkland, Washington. Rothschild shall be furnished with a
suitable office and secretarial assistance at the Company's headquarters.
7. CONFIDENTIAL INFORMATION.
(A) CONFIDENTIALITY. Except as permitted or directed by the
Board through written authorization, during the Term and for a period of two
years thereafter, Rothschild shall not, and shall not permit any of his
affiliates or representatives (collectively, "REPRESENTATIVES") to, divulge,
furnish or make accessible to anyone or use in any way (other than in the
ordinary course of the business of the Company) any confidential or secret
knowledge or information of the Company which Rothschild or any of his
Representatives has acquired or becomes acquainted with or will acquire or
become acquainted with prior to the termination of this Agreement, whether
developed by itself or by others, concerning any trade secrets, confidential
or secret designs, directly or indirectly useful in any aspect of the
business of the Company, any customer or supplier lists of the Company, any
confidential or secret development or research work of the Company, or any
other confidential information or secret aspects of the business of the
Company. The foregoing obligations of confidentiality, however, shall not
apply to disclosure of any knowledge or information that is required by any
governmental agency or instrumentality to be disclosed or is now published or
which subsequently becomes generally publicly known in the form in which it
was obtained from the Company, other than as a direct or indirect result of
the breach of this Agreement by Rothschild or any of his Representatives;
PROVIDED THAT, in the case of a governmental agency or instrumentality
seeking disclosure of such confidential material, Rothschild agrees to
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provide the Company with prompt notice, sufficient information and reasonable
assistance so that the Company can seek an appropriate order or other
appropriate remedy or, if the Company wishes, waive Rothschild's compliance
with this Section 7.
(B) CONFIDENTIAL MATERIALS. Upon termination of this Agreement
and upon written request of the Company, Rothschild agrees to deliver promptly
to the Company all written confidential or secret knowledge or information of
the Company, including, without limitation, all analyses, compilations, studies
or other documents or records prepared by Rothschild, his Representatives or any
others, and all copies or other reproductions of any of the aforementioned
items.
8. TERMINATION.
(A) BASES FOR TERMINATION. Notwithstanding any other
provision hereof, this Agreement and the relationship created hereunder
between the Company and Rothschild shall terminate prior to the expiration of
the Term only upon the occurrence of any one of the following events:
(I) 30 days after delivery to Rothschild by the Company of
written notice of the Company's voluntary and unilateral termination
of this Agreement;
(II) 30 days after delivery to the Company by Rothschild of
written notice of Rothschild's voluntary and unilateral termination of
this Agreement; or
(III) immediately after delivery to Rothschild by the
Company of written notice of termination for "cause." For purposes of
this Agreement, "cause" shall mean (A) any dishonest or fraudulent act
or course of conduct by Rothschild, or other act or course of conduct
by Rothschild constituting a criminal act or that results in improper
gain or personal enrichment of Rothschild at the expense of the
Company, or the commission by Rothschild of an act or a course of
conduct involving moral turpitude, or Rothschild's insubordination to
the Board; or (B) the engaging by Rothschild in willful misconduct or
gross negligence that is injurious to the Company; or (C) a material
breach by Rothschild of any of the terms or conditions of this
Agreement or of policies reasonably established by the Board, or
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Rothschild's material neglect of his duties or of the Company's
business, PROVIDED THAT, no such termination pursuant to this clause
(C) shall be effective unless the Company shall have given Rothschild
30 days' prior written notice specifying the manner in which
Rothschild's conduct or performance fails to comply with this
clause (C) and Rothschild shall not have cured such non-complying
conduct or performance within such 30-day period. (Termination
pursuant to this clause (C) shall be effective 30 days after such
notice unless such conduct has been cured in the good faith judgment
of the Board of Directors of the Company.)
(B) EFFECT OF TERMINATION.
(I) If this Agreement is terminated pursuant to Section
8(a)(i), Rothschild shall be entitled to receive only (A) the unpaid
portion of his base salary that would have been payable pursuant to
Section 3(a) during the Termination Period (defined below) had this
Agreement not been so terminated, which shall be paid to Rothschild in
arrears at the end of each calendar month during such period, plus (B)
any unreimbursed expenses payable pursuant to Section 6, which shall
be paid to Rothschild within ten business days after the date that
Rothschild submits to the Company reasonable documentation of such
unreimbursed expenses. "TERMINATION PERIOD" shall mean the period
beginning on the effective date of termination and ending on the last
day of the Term.
(II) If this Agreement is terminated pursuant to Section
8(a)(ii) or (iii), Rothschild shall be entitled to receive only (A)
his base salary payable pursuant to Section 3(a), pro-rated through
the effective date of such termination, which shall be paid to
Rothschild on the effective date of such termination, plus (B) any
unreimbursed expenses payable pursuant to Section 6, which shall be
paid to Rothschild within ten business days after the date that
Rothschild submits to the Company reasonable documentation of such
unreimbursed expenses.
(C) GENERAL RELEASE. Acceptance by Rothschild of any amounts
pursuant to this Section 8 shall constitute a full and complete release by
Rothschild of any and all claims Rothschild may have against the Company, its
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officers, directors, and affiliates, including, but not limited to, claims he
might have relating to Rothschild's cessation of employment with the Company;
PROVIDED, however, that there may be properly excluded from the scope of such
general release the following:
(I) claims that Rothschild may have against the Company for
reimbursement of reasonable and necessary business expenses incurred
by him during the course of his employment;
(II) claims that may be made by Rothschild for payment of
base salary properly due to him; or
(III) claims respecting matters for which Rothschild is
entitled to be indemnified under the Company's Certificate of
Incorporation or Bylaws or indemnification agreements, respecting
third-party claims asserted or third-party litigation pending or
threatened against Rothschild.
A condition to Rothschild's receipt of any amounts pursuant to this Section 8
shall be Rothschild's execution and delivery of a general release as described
above. In exchange for such release, the Company shall, if Rothschild's
employment is terminated without cause, provide a release to Rothschild, but
only with respect to claims against Rothschild that are actually known to the
Company as of the time of such termination.
9. LIABILITY OF ROTHSCHILD. Rothschild assumes no responsibility
under this Agreement, other than to perform the services to be performed
hereunder in good faith and to maintain the confidentiality of any
confidential or secret information of the Company pursuant to Section 7.
Rothschild shall not be liable to the Company, except by reason of acts
constituting bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties.
The Company shall maintain directors' and officers' insurance policies
during the Term and for a period of twelve months thereafter on substantially
the same terms as the Corporation's current policies; PROVIDED THAT, if any
insurer shall cancel or refuse to renew any such policy and the Company is
unable to obtain a replacement policy on substantially the same terms reasonably
satisfactory to Rothschild, the Company will timely exercise any and all options
thereunder, and pay any and all premiums or other charges necessary, to extend
the period during
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which claims may be made thereunder; PROVIDED further THAT, the Company shall
not be required to pay such premiums or other charges necessary to extend
such period if they are substantially in excess of the premiums in effect on
the date hereof. If the Company does not maintain directors' and officers'
insurance at any time during the Term, Rothschild may terminate this
Agreement immediately and such termination shall be treated as a termination
under 8(a)(i) hereof.
10. OTHER BUSINESS ACTIVITIES. The Company acknowledges and agrees
that Rothschild may perform consulting services for other persons; PROVIDED
THAT, Rothschild may not perform consulting or other services for any retail
apparel chain that is competitive with the Company or its subsidiaries in any
geographical area in which the Company or any of its subsidiaries engages in
business. Subject to the foregoing proviso, nothing in this Agreement shall
restrict or limit the right of Rothschild, the Company or their respective
affiliates or associates to engage in whatever activities they choose,
whether or not competitive with matters covered by this Agreement, and none
of them shall, as a result of this Agreement, have any obligation to offer
any interest in such activities to any party hereto.
11. ARBITRATION - EXCLUSIVE REMEDY.
(A) Except as otherwise provided herein, the parties agree that
the exclusive remedy or method of resolving all disputes or questions arising
out of or relating to this Agreement shall be arbitration. Arbitration shall be
held in Seattle, Washington, presided over by one arbitrator. Any arbitration
may be initiated by either party by written notice ("Arbitration Notice") to the
other party specifying the subject of the requested arbitration.
(B) If the parties are unable to mutually select an arbitrator
to hear the matter, then the American Arbitration Association, upon application
of the initiating party, shall provide a panel of arbitrators from which the
parties shall select one to hear the matter.
(C) The arbitration proceeding shall be conducted in accordance
with the Rules for Resolution of Employment Disputes of the American Arbitration
Association. The administrative costs of arbitration (including the expense of
a party in preparing for and presenting the party's case at the arbitration and
of the fees and expenses of legal counsel to a party, all of which shall be
borne by that party), shall be borne by the Company only if Rothschild receives
substantially the relief sought by him in the arbitration; otherwise, the costs
shall be borne
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equally between the parties. The arbitration determination or award shall be
final and conclusive on the parties, and judgment upon such award may entered
and enforced in any court of competent jurisdiction.
12. MISCELLANEOUS.
(A) ASSIGNMENT. The Company shall have the right to assign
this Agreement to its successors or assigns. The terms "successors" and
"assigns" shall include any person, corporation, partnership or other entity
that buys all or substantially all of the Company's assets or all of its
stock, or with which the Company merges or consolidates. The rights, duties
and benefits to Rothschild hereunder are personal to him, and no such right
or benefit may be assigned by him.
(B) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF WASHINGTON AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WITHIN SAID STATE WITHOUT CONSIDERATION OF
ANY CONFLICTS OF LAW PROVISIONS THEREOF.
(C) ENTIRE AGREEMENT. This Agreement evidences the entire
understanding and agreement of the parties hereto relative to the employment
arrangement between Rothschild and the Company and the other matters
discussed herein. This Agreement supersedes any and all other agreements and
understandings, whether written or oral, relative to the matters discussed
herein.
(D) SEVERABILITY. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law. If any term, provision
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated,
and the parties hereto shall use their reasonable efforts to find and employ a
valid, legal, nonvoid and enforceable alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without
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including any of such that may be hereafter declared invalid, illegal, void
or unenforceable.
(E) AMENDMENTS/WAIVERS. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
(F) HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(G) COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but one
and the same instrument.
(H) NOTICES. Any notices or other communications to the Company
or Rothschild required or permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to the Company:
Lamonts Apparel, Inc.
00000 Xxxxxxx Xxxx X.X.
Xxxxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Attention: Chief Executive Officer
If to Rothschild:
Xxxxx X. Xxxxxxxxxx
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
The Company or Rothschild by notice to the other party may designate additional
or different addresses as shall be furnished in writing by such party. Any
notice or
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communication to the Company or Rothschild shall be deemed to have been given
or made as of the date so delivered, if personally delivered; when answered
back, if telexed; when receipt is acknowledged, if telecopied; and five
business days after mailing if sent by registered or certified mail, postage
prepaid (except that a notice of change of address shall not be deemed to
have been given until actually received by the addressee).
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IN WITNESS WHEREOF, the Company and Rothschild have executed this
Agreement as of the date set forth in the first paragraph.
LAMONTS APPAREL, INC.
By: _______________________________
Name: Xxxx Xxxxxxxxxxx
Title: Chairman and
Chief Executive Officer
XXXXX X. XXXXXXXXXX
____________________________
Xxxxx X. Xxxxxxxxxx
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