AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of September 19,
1997, effective as of February 5, 1996, between XXXXX XXXXXXXX ("Executive") and
XXX. A. BANK CLOTHIERS, INC. ("Employer").
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 personal services of
Executive and services pursuant hereto may only be performed by Executive. This
Agreement is an amendment and restatement of that certain Employment Agreement,
dated as of February 5, 1996, between Executive and Employer, which Employment
agreement is hereby superseded in its entirety.
2. EMPLOYMENT PERIOD
The term of Executive's employment under this Agreement (the "Employment
Period") shall commence as of February 5, 1996 and shall, subject to earlier
termination as provided in Section 5, continue for a period of three years after
commencement and be automatically renewed thereafter for successive one-year
periods unless, at least 180 days before the end of the initial three-year
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 such period.
3. DUTIES AND RESPONSIBILITIES
3.1 General. During the Employment Period, Executive (i) shall have the
title of President and Chief Merchandising 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 and participating
in civic and philanthropic activities.
Executive shall perform such duties, consistent with his status as
President and Chief Merchandising Officer of Employer, as he may be assigned
from time to time by Employer's Chief Executive Officer (the "Chief Executive
Officer") or Employer's Board of Directors (the "Board of Directors"). Executive
shall have such authority, discretion, power and responsibility, and shall be
entitled to such secretarial and administrative assistance and other facilities
and conditions of employment, as are customary or appropriate to his position.
Upon request of the Board of Directors, Executive shall also serve without
additional compensation as a director of the Company and any of its
subsidiaries. For all purposes of this Agreement, the term "Company" means
Employer and
all corporations, associations, companies, partnership, 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.
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.
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 $200,000 for the first year
of the Employment Period ("Year 1"); $400,000 for the second year of the
Employment Period; and $400,000 for the third year of the Employment Period. The
Base Salary for each year shall be payable in installments in accordance with
the Company's policy on payment of executives in effect from time to time.
Beginning February 5, 2000, and on each February 5th thereafter during the
Employment Period, the Base Salary shall be increased (but never decreased) by a
percentage equal to the annual percentage increase, if any, in the Consumer
Price Index for Urban Wage Earners and Clerical Workers, Washington-Baltimore
DC-MD-VA-WA, All Items (November 1, 1996 = 100) (the "Index"), published by the
Bureau of Labor Statistics of the United States Department of Labor. Any portion
of increased Base Salary which is retroactively due to Executive hereunder shall
be payable within 15 days after the computation thereof has been made.
Appropriate adjustment shall be promptly made following receipt of notice from
Executive in the event there is a published amendment of the Index figures upon
which the computation is based. If publication of the Index is discontinued, the
parties shall accept comparable statistics on the cost of living for the
Baltimore, Maryland area as computed and published by any recognized authority
acceptable to the parties. The Compensation Committee of the Board of Directors
(the "Committee") or the Board of Directors shall have the right, but not the
obligation, acting in their sole discretion, to increase the Base Salary by an
amount in excess of the otherwise required annual cost of living adjustments.
4.2 Annual Bonus. For fiscal year 1996 (ending February 4, 1997) and for
each fiscal year that begins during the Employment Period (each such fiscal
year, a "Bonus Year"), Executive shall be entitled to receive a bonus (each, a
"Bonus") as hereinafter set forth. The Bonus for Bonus Year 1996 shall be
$175,000, payable on or before February 1, 1997. For Bonus Year 1997 (ending
January 31, 1998), Executive shall be entitled to receive a Bonus of 50% of Base
Salary conditioned upon the satisfaction of (a) Company performance goals
established by the Committee for such Bonus Year and (b) personal performance
goals submitted by the Executive to, and approved by, the Company and the
Committee for such Bonus Year. Company and personal performance goals are herein
referred to collectively as the "Performance Goals". For Bonus Year 1998 (ending
January 30, 1999), and for each Bonus Year thereafter, Executive shall be
entitled to receive a Bonus of 75% of Base Salary conditioned upon satisfaction
of the Performance Goals for such Bonus Year. In the event the Performance Goals
for any Bonus Year are not fully satisfied, the Committee shall have the right,
but not the obligation, to grant a partial Bonus for such Bonus Year. 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
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shall expire or terminate and (b) Employee is entitled to payment of a bonus
pursuant to Section 6 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.
4.3 Housing - The Ohio House. Executive is the owner of a house located in
Cincinnati, Ohio (the "Ohio House"). Executive shall use reasonable efforts to
sell the Ohio House for the fair market value thereof. Executive shall not
accept an offer to purchase the Ohio House for less than the fair market value
thereof without the consent of the Company, which consent shall not be
unreasonably withheld. Upon settlement of the Ohio House, the Company shall
reimburse Executive for (a) the Deficiency (as hereinafter defined), but not
more than $100,000 and (b) the reasonable costs and expenses incurred by
Executive in connection with the sale and settlement of the Ohio House, but not
more than $30,000. For the purposes hereof, the "Deficiency" shall mean the
difference (but not less than zero) obtained by subtracting the gross selling
price of the Ohio House from $550,000.00 (the purchase price paid by Executive
for the Ohio House plus the cost of capital improvements).
4.4 Housing - The Mortgage Loan. The Company shall loan to Executive the
sum of $200,000 (the "Mortgage Loan"), repayable over five years (or less) as
hereinafter set forth, to assist with the purchase of a house to be selected or
built by Executive (the "New House"). The Mortgage Loan shall be evidenced by an
amended and restated deed of trust note (the "Note") and secured by, at
Employer's option, a mortgage or deed of trust (the "Mortgage"). The Mortgage
Loan shall be funded (a) at settlement of the New House or (b) if Executive
shall elect to build the New House and purchase the land therefor separately, at
settlement of said land; provided, however, that Employer shall not be
responsible for funding more than 80% of the cost of said land. The difference
between $200,000 and the amount funded for said land shall be funded as mutually
agreed upon by Employer and Executive, but not later than settlement on the
completed New House. The Mortgage shall secure no less than a second lien on the
New House. The Mortgage Loan shall bear interest at the applicable "Federal
Rate" (as hereinafter defined) in effect on the date of the Mortgage Loan. For
the purposes hereof, the "Federal Rate" shall mean that rate of interest,
determined by Employer's auditors in accordance with Internal Revenue Service
regulations, necessary to prevent interest on the Mortgage Loan from being
imputed to Executive as income and to Employer as expense. The Mortgage Loan
shall be repayable in sixty, equal payments of principal, plus accrued and
unpaid interest. All payments shall be due on the first of each month, with
interest payable in arrears. Notwithstanding anything to the contrary contained
herein or in the Note or Mortgage, Executive shall not be required to make the
principal and/or interest payments otherwise due during the Employment Period
and the Employer
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shall credit the Mortgage Loan account as if such payments had been timely made.
Amounts so credited shall be deemed forgiven and Executive shall not be liable
for repayment thereof. In the event (a) Executive shall remain in the employ of
Employer for at least 5 consecutive years; (b) Employer shall terminate this
Agreement without cause (Section 5.1); (c) Executive shall terminate this
Agreement for good reason (Section 5.3); (d) this Agreement shall terminate or
be terminated as a result of the death (Section 5.5) or disability (Section 5.4)
of Executive; (e) Employer (or any trustee of Employer) shall reject this
Agreement pursuant to powers granted under the United States Bankruptcy Code (11
U.S.C. xx.xx. 101 et seq.), or any successor statute thereto, and either (i)
Employer and Executive, each acting in his/its sole and absolute subjective
discretion, shall fail to agree upon terms and conditions for Executive's
continued employment with Employer or (ii) Executive, in his sole and absolute
subjective discretion, shall fail to accept, and thereafter Employer shall fail
to withdraw its demand for, any proposed revision in the terms and conditions of
the Mortgage Loan; or (f) Employer shall give notice of termination pursuant to
Section 2 of this Agreement, then, and in any of such events, the Mortgage Loan,
and all interest due thereon, shall, subject to receipt of assigned insurance
proceeds in the case of death as provided in Section 4.7, be deemed paid in
full. In the event (x) Executive shall terminate this Agreement without cause
(Section 5.1); (y) Executive shall give notice of termination pursuant to
Section 2; or (z) Employer shall terminate this Agreement for cause (Section
5.2), Executive shall pay to Employer the unpaid principal balance and all
accrued interest on the Mortgage Loan. Upon payment or deemed payment of the
Mortgage Loan, and all interest due thereon, the Note shall be canceled and
returned to Executive and the Mortgage shall be released of record. In addition
to the Mortgage Loan, Employer shall reimburse Executive for the reasonable
costs and expenses incurred by Executive in connection with the settlement of
the New House, but not more than $30,000.
4.5 Life Insurance. Employer shall maintain in effect at all times during
the Employment Period, at Employer's expense, a policy of term life insurance,
or such other type of policy as Executive shall request provided that the cost
to Employer thereof is approximately the same as the cost of such term policy,
on the life of Executive in the amount of not less than $1,000,000 naming such
person as Executive shall designate from time to time as the owner and
beneficiary thereof. Executive agrees that Employer shall have the right to
obtain other life insurance on Executive's life, at Employer's sole expense and
with Employer or an affiliate thereof as the sole beneficiary thereof. Employer
shall also have the right, at its sole cost, to increase the amount of the
aforesaid $1,000,000 policy and Executive shall execute such assignments or
other documents necessary or desirable to assign to Employer the proceeds of the
policy in excess of $1,000,000 . Executive shall (i) cooperate fully with
Employer in obtaining all such insurance, (ii) sign any necessary consents,
applications and other related forms or documents, and (iii) take any required
medical examinations. If such examination(s) shall disclose that Executive is
not eligible for "standard, non-smoking risk" pricing for term life insurance,
the amount of such insurance shall be reduced to an amount which is available
for a premium equal to the premium which would have been charged for $1,000,000
of term life insurance had Executive been so eligible. At Executive's option and
expense, any policy maintained by Employer under this Section 4.5 shall be
transferred to Executive upon the expiration or termination of the Employment
Period, unless such transfer is otherwise prohibited. After such transfer,
Employer shall have no further responsibility with respect to said policy.
4.6 Automobile. Throughout the Employment Period, Employer shall provide to
Executive, at Employer's expense, an automobile in accordance with Employer's
policy in effect from time to time
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for the leasing of automobiles for use by Employer's senior management. Employer
shall also be responsible for all expenses of use and operation of such
automobile. At Executive's option, Employer shall assume responsibility for
Executive's existing car lease payments, provided that such payments shall not
exceed $800 per month. Upon termination or expiration of the Employment Period,
or upon expiration of any automobile lease entered into by Employer in
satisfaction of its obligations under this Section 4.6, Executive shall have the
right and option to assume the lease on his then-current car and to exercise any
buy-out option contained in such lease.
4.7 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 or other employees (other than those provided under or pursuant to
separately negotiated individual employment agreement 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. The first $200,000 (or such lesser amount as may be necessary) of
benefits under any life insurance policy provided hereunder (but not the
$1,000,000 policy under Section 4.5) shall be assigned to Employer to pay the
remaining principal balance of the Mortgage Loan upon the death of Executive.
4.8 Expense Reimbursement. Employer shall reimburse Executive for all
business expenses reasonably incurred by him in the performance of his duties
under this Agreement 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. Without limiting the
generality of the foregoing, Employer shall pay for all of Executive's
reasonable travel expenses incurred in traveling from and to the Ohio House and,
prior to the earlier of settlement upon the New House or September 30, 1996, his
reasonable living expenses (not to exceed $5,000 per month) while the Executive
is residing in the Baltimore, Maryland area, including, without limitation,
hotel or other residential accommodation expenses and meals, all such amounts to
be treated as additional salary for all securities acts reporting purposes.
4.9 Tax Gross-up. In the event that any payments made by Employer to or on
behalf of Executive pursuant to the provisions of Section 4.3 through 4.8 hereof
(other than the Mortgage Loan and principal and interest forgiveness in
connection therewith) result in the payment of additional federal, state or
local income taxes by Executive, Employer shall pay to Executive the amount of
such additional taxes plus such additional amount as shall be necessary to hold
harmless Executive, as nearly as can be, from the obligation to pay such taxes
in respect of amounts payable pursuant to this Section 4.9.
4.10 Stock Options. On the effective date hereof, the Company shall grant
to Executive the right and option to purchase an aggregate of 60,000 shares (the
"Option Shares") of the Company's common stock, $.01 par value per share, which
option is intended, to the fullest extent permitted by law, to qualify as an
incentive stock option, as defined to Section 422 of the Internal Revenue Code
of 1986. The option to purchase one-half of the Option Shares shall be granted
pursuant to each of the
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Company's two option plans pursuant to the standard agreements therefor. The
"Purchase Price" and "Closing Price" shall be determined with reference to the
effective date hereof in accordance with such agreements.
4.11 Vacations. Executive shall be entitled to 20 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, 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. The
number of vacation days shall be prorated for any calendar year not wholly
within the Employment Period. Upon termination of Executive's employment
pursuant to Section 5 or non-renewal of the Employment Period pursuant to
Section 2, for any reason whatsoever, Employer shall pay Executive, in addition
to any termination compensation provided for under 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.
4.12. Initiation Fee Loan. The Company shall loan to Executive the sum of
approximately $40,000 (the "Initiation Fee Loan"), as evidenced by two, $20,000
Promissory Notes in form and substance mutually satisfactory to the Company and
Executive. One half of the Initiation Fee Loan shall be made upon terms and
conditions substantially similar to those established for the Mortgage Loan, all
as more fully set forth in Promissory Note A. The other half of the Initiation
Fee Loan shall be secured by the "equity portion" of the initiation fee paid by
Executive for membership at Caves Valley Country Club ("Caves Valley"), all as
more fully set forth in Promissory Note B. For the purposes of this Section
4.12, the "equity portion" of the initiation fee shall mean that portion thereof
refunded upon resignation by Executive of his membership at Caves Valley.
Executive hereby assigns to the Company, as collateral security for repayment of
that portion of the Initiation Fee Loan evidenced by Promissory Note B, the
equity portion of Executive's initiation fee at Caves Valley.
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 terminate the Employment Period in
accordance with this Section 5.2 at any time for cause. For the purpose of this
Section 5.2, "cause" shall mean any of the following:
a) the conviction of Executive in a court of competent
jurisdiction of a felony involving money or property of
the Company or moral turpitude;
b) the willful commission of an act not approved of or
ratified by the Chief Executive Officer involving a series
of material conflicts of interest or self-dealings
relating to any material aspect of the Company;
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c) the willful commission of any act of fraud or
misrepresentation (including the omission of material
facts) relating to the business of the Company and
materially and negatively impacting upon the Company and
its business; or
d) at any time prior to a change in control of the Company,
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 President and
Chief Merchandising Officer of the Company.
In the event Employer shall elect to pursue a termination for cause,
Employer shall deliver to Executive, with a copy to the Board of Directors, 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,
Executive and Executive's counsel (if Executive shall so elect) shall be granted
the opportunity to be heard before the Board of Directors upon not less than ten
days notice. The Employment Period shall terminate for cause if the Board of
Directors shall adopt at such hearing (or, in the event of cause predicated on a
criminal conviction as set forth in paragraph (a) above, at any meeting
following such conviction) a resolution concurred in by not less than a majority
of the Board of Directors, including at least two-thirds of all of the directors
who are not officers of Employer, that Executive was guilty of conduct
constituting "cause" hereunder, which conduct has not been timely cured (if
applicable), and specifying the particulars thereof in reasonable detail.
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 (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 (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 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
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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 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;
provided, however, the change in ownership of the Company's securities resulting
from the initial public offering thereof shall not be deemed a "change in
control" for purposes of this Agreement.
5.4 Disability. During the Employment Period, if, as a result of physical
or mental incapacity or infirmity (excluding 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.
5.5 Death. The Employment Period shall end on the date of Executive's
death.
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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 a period of thirty
(30) months following the date of termination (calculated at the applicable Base
Salary rate which would have been in effect for each year 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) on the date due pursuant to the provisions of Section 4.2
hereof, the Bonus for the then current Bonus Year prorated as provided in
Section 4.2 and (c) if applicable, the Bonus for the last full Bonus Year
pursuant to Section 4.2. All other benefits provided for in Sections 4.5, 4.6,
4.7, 4.9 and 4.11 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 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
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 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, by Executive pursuant to
Section 5.1 or as a result of the death of Executive as set forth in Section
5.5, 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 as a result of the death of Executive as set forth in Section 5.5,
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 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.
6.3 Termination for Disability. If the Employment Period is terminated by
Employer pursuant to the provisions of Section 5.4, Employer shall make all
payments and continue all benefits provided for in Section 6.1 for the balance
of the Employment Period (assuming no termination), provided, however, that such
payments shall be reduced by any amounts actually paid to Executive pursuant to
any disability insurance or other such similar program maintained by Employer.
6.4 Expiration at Election of Employer. In the event the Employment Period
expires because of an election by Employer to allow the Employment Period to
expire at the end of its then stated term as provided in Section 2 hereof,
Employer shall pay to Executive (a) Base Salary for the thirty (30) month period
following the date of termination (calculated at its then current rate per
year), payable in equal installments at the times Base Salary would have been
paid had the
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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.
6.5 Tax Grossup. In the event that any amounts paid to Executive pursuant
to the provisions of this Section 6 (including benefits continued and payments
deemed received by reason of changes in stock options provided for therein, all
such amounts, collectively, the "Severance Payments") shall be deemed to be
subject to the tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (or any successor section thereto) (the "Excise Tax"), an additional
amount (the "Grossup Amount") shall be paid by Employer to Executive such that
the net amount retained by Executive, after deduction of any Excise Tax on the
Severance Payments and any federal, state and local income tax and Excise Tax
upon the payment provided for by this sentence, shall be equal to the Severance
Payments. The provisions of this Section 6.5 shall survive the expiration of the
Employment Period and shall continue in effect until expiration of the statute
of limitations for tax returns filed that include the period in which any
Severance Payments are made or, if earlier, final determination of tax liability
relating thereto. Payment of the Grossup Amount shall be made in accordance with
the computation thereof by the accountant to Executive in connection with
preparation of Executive's tax return for the relevant tax year, and shall be
adjusted upon final determination of tax liability, with any increase therein
being paid by the Employer to Executive or decrease therein being paid by
Executive to Employer within 30 days following the date of final determination
of tax liability.
6.6 No Other Termination Compensation. Executive shall not, except as set
forth in this Section 6 and in Section 4.7, be entitled to any compensation
following termination of the Employment Period, except as otherwise provided in
any stock options granted by Employer to Executive.
6.7 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.
6.8 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 5.1, 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
either Section 6.1 or 6.4 hereof, 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
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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; provided, however, in the event Executive violates any
of the provisions of the foregoing at any time after the expiration of 6 months
(one year, in the case of a termination by Executive pursuant to Section 5.1)
following the termination of the Employment Period, Employer's sole remedy under
this Agreement shall be the right to terminate any and all severance payments
required under Sections 6.1 or 6.4 hereof. Executive acknowledges and agrees
that in the event of any violation or threatened violation by Executive of his
obligations under the preceding sentence during the six month (or, in the case
of a termination pursuant to Section 5.1, the one year) period following the
termination of the Employment Period, Employer shall be entitled to injunctive
relief without any necessity to post bond.
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, 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. Xxxxx Xxxxxxxx
Xxx. A. Bank Clothiers, Inc.
000 Xxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000-0000
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8.2 Legal Fees. From and after any change in control of the Company,
Employer shall, upon demand by Executive, pay directly or reimburse Executive
for all costs and expenses, including but not limited to attorneys' fees and
court costs, incurred by Executive (a) in the event of any breach or threatened
breach by Employer of any of the terms and conditions of this Agreement, (b) in
the event of any dispute under this Agreement between Employer and Executive,
(c) in connection with the enforcement of any right or remedy reserved to
Executive under this Agreement, (d) in connection with the defense of any claim
by Employer of a breach by Executive under this Agreement (regardless of whether
such claim is proven) or (e) in connection with any modification of or amendment
to this Agreement. Neither the institution of any lawsuit nor the rendering of
any particular judgement therein shall constitute a condition precedent to
Executive's rights under the immediately preceding sentence.
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 judgement 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 applicable to
agreements made and to be performed therein.
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. 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.
8.6 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 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 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.
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8.10 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: /s/ Xxxxxxx X. Xxxxxx
____________________________________
Xxxxxxx X. Xxxxxx, Chairman and
Chief Executive Officer
/s/ Xxxxx Xxxxxxxx
____________________________________
XXXXX XXXXXXXX
