EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of March 30, 1998, by and
among General Textiles, a California corporation which has its principal office
at 0000 Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx, ("General Textiles"); Family Bargain
Corporation, a Delaware corporation which indirectly owns all of the outstanding
shares of capital stock of General Textiles and has its principal office at 0000
Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx ("FBC"); and Xxxxxxx Xxxxxxx, who currently
resides at 00 Xxxxxxx Xxx, Xxxxxxxxxx, Xxxxxxxxxxx ("Executive").
W I T N E S S E T H:
WHEREAS, General Textiles, FBC and Executive desire to enter
into an agreement (the "Agreement") setting forth the terms of Executive's
employment by General Textiles for a term beginning on March 30, 1998 (the
"Effective Date").
NOW, THEREFORE, in consideration of the promises and mutual
covenants contained herein and for other good and valuable consideration, the
parties agree as follows:
1. Term of Employment. Except upon earlier termination as
provided in Section 9 hereof, Executive's employment under this Agreement shall
be for a five year term commencing on the Effective Date and terminating on
March 29, 2003 (the "Employment Term").
2. Positions. (a) Executive shall serve as President and Chief
Executive Officer of General Textiles. Executive shall report to the Board of
Directors of General Textiles (the "Board") and shall have such duties and
authority, consistent with his position as the Chief Executive Officer of
General Textiles as shall be assigned to him from time to time by the Board.
(b) During the Employment Term, Executive shall, without additional
compensation, also (i) serve on the Board of Directors of FBC and perform such
executive and consulting services for, or on behalf of, FBC and one or more
other affiliates of General Textiles and FBC as the Board may, from time to
time, request. General Textiles, FBC and such other affiliates are hereinafter
referred to, collectively, as the "Company" and, individually, as a "Constituent
Corporation". For purposes of this Agreement, the term "affiliate" shall have
the meaning ascribed thereto in the Securities Exchange Act of 1934, as amended
(the "Act").
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(c) During the Employment Term, Executive shall devote
substantially all of his business time and efforts to the performance of his
duties hereunder; provided, however, that Executive shall be permitted, to the
extent that such activities do not materially interfere with the performance of
his duties and responsibilities hereunder, to manage his personal financial and
legal affairs and to serve on corporate, civic, or charitable boards or
committees. Notwithstanding the foregoing, the Executive shall not serve on any
corporate board of directors or similar body if such service would be
inconsistent with his fiduciary responsibilities to any Constituent Corporation
and in no event shall Executive serve on any such board or other body unless
approved by the Board, which approval shall not be unreasonably withheld.
3. Base Salary. During the Employment Term, General Textiles
shall pay to the Executive a base salary at the annual rate of not less than six
hundred thousand dollars ($600,000). Base salary shall be payable in accordance
with the usual payroll practices of General Textiles. Executive's base salary
shall be subject to annual review by the Board or its designee and may be
increased, but not decreased, from time to time. The base salary, as determined
as aforesaid from time to time, shall constitute "Base Salary" for purposes of
this Agreement.
4. Annual Bonus. Executive's annual bonus will be targeted at
50% of the Base Salary. The Board and the Executive will agree on annual
targets, with final discretion residing with the Board. If the targets are
exceeded, the Board may increase the bonus. If the targets are not met, the
Board may reduce or withhold the bonus entirely. The Board will annually review
whether a merit increase of the annual bonus is warranted.
5. Equity Compensation. (a) FBC will grant to Executive
options under its incentive stock option plan ("ISO Plan") entitling Executive
to acquire a total of three hundred thousand (300,000) shares of FBC's common
stock at a price equal to the closing market price of such common stock on March
10, 1998, the date upon which General Textiles, FBC and the Executive came to an
agreement as to the terms of this Agreement. The options granted to Executive
pursuant to this Section 5 shall vest in increments of sixty thousand (60,000)
shares on each of the first five anniversaries of the Effective Date.
(b) As promptly as practicable following the Effective Date,
the Executive shall purchase from FBC, at a purchase price of $1,000 per share,
one thousand four hundred (1,400) shares of FBC's Series B preferred stock (the
"Executive Stock"). FBC will lend to Executive, upon the terms and subject to
the conditions set forth in Exhibit A hereto, an amount equal to the cost
incurred by the Executive for the acquisition of the Executive Stock.
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(c) Executive will grant to FBC an option (the "Buy-back
Option") entitling FBC to acquire the Executive Stock, or the common shares into
which the Executive Stock has been converted ("Conversion Shares"), from
Executive in the event that Executive's employment under this Agreement is
terminated for any reason other than pursuant to Section 9(a)(i), (ii) or (iii)
hereof. The price at which FBC will be entitled to exercise the Buy-back Option
shall be determined by reference to the following table:
================================================================================
Number of years elapsed 1 2 3 4 5
from the Effective Date
================================================================================
--------------------------------------------------------------------------------
Percentage of Executiv 80% 60% 40% 20% 0%
Stock (or Conversion
Shares) subject to the
Buy-back Option
--------------------------------------------------------------------------------
Exercise Price of the $1.75 $2.00 $2.25 $2.50 -
Buy-back Option,
assuming conversion into
common stock
================================================================================
The number of shares of Executive Stock or Conversion Shares subject to the
Buy-Back Option and the exercise price of the Buy-Back Option shall be
determined by interpolation in the event of any exercise of the Buy-Back Option
on any date other than an anniversary of the Effective Date.
(d) FBC will grant to Executive, effective as of the Effective
Date, further options (the "Further Options") entitling Executive to acquire a
total of nine hundred thousand (900,000) shares of FBC's common stock at a price
of two dollars ($2.00) per share. The Executive will be entitled to exercise the
Further Options prior to the sixth anniversary of the Effective Date, provided
that:
(i) the Executive shall not be entitled to exercise any of the
Further Options unless the closing market price of FBC's shares shall equal or
exceed six dollars ($6.00) per share on sixty (60) trading days during any
twelve (12) month period commencing at any time after the Effective Date and
terminating prior to the termination, for any reason, of Executive's employment
hereunder;
(ii) the Executive shall be entitled to exercise not more than
four hundred fifty thousand (450,000) of the Further Options if the closing
market price of FBC's shares shall equal or exceed six dollars ($6.00) per share
on, but shall fail to exceed seven dollars and fifty cents ($7.50) per share, on
sixty (60)
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trading days during any twelve (12) month period commencing at any time after
the Effective Date and terminating prior to the termination, for any reason, of
Executive's employment hereunder; and
(iii) the Executive shall be entitled to exercise all of the
Further Options if the closing market price of FBC's shares shall equal or
exceed seven dollars and fifty cents ($7.50) for sixty (60) trading days during
any twelve (12) month period commencing at any time after the Effective Date and
terminating prior to the termination, for any reason, of Executive's employment
hereunder.
6. Employee Benefits and Vacation. (a) During the Employment
Term, Executive shall be entitled to participate in all pension, retirement,
savings, welfare and other pension and welfare employee benefit plans and
arrangements and fringe benefits and perquisites generally maintained by the
Company from time to time for the benefit of senior executives of the Company,
in accordance with their respective terms as in effect from time to time (other
than any special arrangement entered into by contract with an executive).
(b) During the Employment Term, Executive shall be entitled to
vacation each year in accordance with the Company's policies in effect from time
to time, but in no event less than four (4) weeks paid vacation per calendar
year. The Executive shall also be entitled to such sick leave as is customarily
provided by the Company for its senior executive employees.
7. Moving Expenses. The Executive shall be reimbursed, on an
after-tax basis, for expenses incurred by the Executive in the relocation of his
family to San Diego for the purpose of commencing Executive's employment with
General Textiles pursuant to this Agreement.
8. Business Expenses. The Executive shall be reimbursed for
the travel, entertainment and other business expenses incurred by Executive in
the performance of his duties hereunder, in accordance with policies generally
applicable to senior executives of the Company as in effect from time to time.
9. Termination. (a) The employment of Executive under this
Agreement shall terminate upon the occurrence of any of the following events:
(i) the death of Executive;
(ii) the termination by General Textiles of Executive's
employment due to Executive's Disability pursuant to Section 9(b) hereof,
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(iii) the termination by Executive of Executive's employment
for Good Reason pursuant to Section 9(c) hereof;
(iv) the termination by General Textiles of Executive's
employment without Cause;
(v) the termination by Executive of Executive's employment
without Good Reason upon sixty (60) days prior written notice; or
(vi) the termination by General Textiles of Executive's
employment for Cause pursuant to Section 9(e) hereof.
(b) Disability. If, by reason of the same or related physical
or mental reasons, Executive is unable to carry out his material duties pursuant
to this Agreement for more than six (6) months in any twelve (12) consecutive
month period, General Textiles may terminate Executive's employment for
Disability upon thirty (30) days prior written notice, by a Notice of Disability
Termination.
(c) Termination for Good Reason. A Termination for Good Reason
means a termination by Executive by written notice given within ninety (90) days
after the occurrence of the Good Reason event. For purposes of this Agreement,
"Good Reason" shall mean the occurrence or failure to cause the occurrence, as
the case may be, without Executive's express written consent, of any of the
following circumstances, unless such circumstances are fully corrected prior to
the date of termination specified in the Notice of Termination for Good Reason
(as defined in Section 9(d) hereof): (i) the material branch by the Company of
any of its obligations to Executive under this Agreement or the failure of
General Textiles to make timely payments of compensation or reimbursement
pursuant to Section 3, 4, 7 or 8 hereof; (ii) any material diminution, after the
Effective Date, of Executive's positions, duties or responsibilities hereunder,
as of the Effective Date (except in each case in connection with the termination
of Executive's employment for Cause or Disability or as a result of Executive's
death, or temporarily as a result of Executive's illness or other absence and
provided that a reduction in the size or number of the units reporting to
Executive as a result of dispositions, shall not be a material diminution), or
the assignment to Executive of duties or responsibilities that are inconsistent
with Executive's position as the Chief Executive Officer of General Textiles;
(iii) removal of, or the nonreelection of, the Executive from his position as
the Chief Executive Officer of General Textiles; or (iv) a relocation of the
principal executive offices of General Textiles to a location more than
twenty-five (25) miles from San Diego, California or a relocation of Executive
away from such principal executive office.
(d) Notice of Termination for Good Reason. A Notice of
Termination for Good Reason shall mean a notice that shall indicate the specific
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termination provision in Section 9(c) relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
Termination for Good Reason. The failure by Executive to set forth in the Notice
of Termination for Good Reason any fact or circumstance which contributes to the
showing of Good Reason shall not waive any right of Executive hereunder or
preclude Executive from asserting such fact or circumstance in enforcing his
rights hereunder. The Notice of Termination for Good Reason shall provide for a
date of termination not less than ten (10) nor more than sixty (60) days after
the date such Notice of Termination for Good Reason is given, provided that in
the case of the events set forth in Section 9(c)(ii) or (iii) the date may be
two (2) days after the giving of such notice.
(e) Cause. Subject to the notification provisions of Section
9(f) below, Executive's employment hereunder may be terminated by General
Textiles for Cause. For purposes of this Agreement, the term "Cause" shall be
limited to (i) willful misconduct by Executive with regard to the Company; (ii)
the refusal of Executive to follow the proper written direction of the Board or
the Board of Directors of FBC; provided, however, that the foregoing refusal
shall not be "Cause" if Executive in good faith believes that such direction is
illegal, unethical or immoral and promptly so notifies the entity or person
giving the direction; (iii) Executive being convicted of a felony; (iv) the
willful breach by Executive of any fiduciary duty owed by Executive to any
Constituent Corporation which has a material adverse effect on the Company; or
(v) Executive's material fraud with regard to any Constituent Corporation.
(f) Notice of Termination for Cause. A Notice of Termination
for Cause shall mean a notice that shall indicate the specific termination
provision in Section 10(e) relied upon and shall set forth in reasonable detail
the facts and circumstances which provide a basis for Termination for Cause.
Further, a Notification for Cause shall include a copy of a resolution duly
adopted by at least a majority of the entire membership of the Board at a
meeting of the Board which was called for the purpose of considering such
termination and which Executive and his representative had the right to attend
and address the Board, finding that, in the good faith opinion of the Board,
Executive engaged in conduct set forth in the definition of Cause herein and
specifying the particulars thereof in reasonable detail. The date of termination
for a Termination for Cause shall be the date indicated in the Notice of
Termination. Any purported Termination for Cause which is held by a court not to
have been based on the grounds set forth in this Agreement or not to have
followed the procedures set forth in this Agreement shall be deemed a
Termination without Cause.
10. Consequences of Termination of Employment. (a) Death. If
Executive's employment is terminated during the Employment Term by reason of
Executive's death, the employment period under this Agreement shall terminate
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without further obligations to the Executive's legal representatives under this
Agreement except for (i) any compensation earned but not yet paid, including and
without limitation, any declared but unpaid bonus, any amount of Base Salary or
deferred compensation accrued or earned but unpaid, any accrued vacation pay
payable pursuant to the Company's policies and any unreimbursed business
expenses payable pursuant to Section 8, which amounts shall be promptly paid in
a lump sum to Executive's estate; (ii) the product of (x) the target annual
bonus for the fiscal year of Executive's death, multiplied by (y) a fraction,
the numerator of which is the number of days of the current fiscal year during
which Executive was employed by General Textiles, and the denominator of which
is 365, which bonus shall be paid when bonuses for such period are paid to the
other executives; (iii) full accelerated vesting, with a waiver of all
performance based targets, under all outstanding equity-based and long-term
incentive plans (with options remaining outstanding as provided under the
applicable stock option plan and a pro rata payment under any long term
incentive plans based on actual coverage under such plans at the time payments
normally would be made under such plans); (iv) subject to Section 11 hereof, any
other amounts or benefits owing to Executive under the then applicable employee
benefit plans or policies of the Company, which shall be paid in accordance with
such plans or policies; (v) payment on a monthly basis of twelve (12) months of
Base Salary, which shall be paid to Executive's spouse, or if she shall
predecease him, then to Executive's children (or their guardian if one is
appointed) in equal shares; and (vi) payment of the spouse's and dependent's
COBRA coverage premiums to the extent, and so long as, they remain eligible for
COBRA coverage, but in no event more than three (3) years.
(b) Disability. If Executive's employment is terminated by
reason of Executive's Disability, Executive shall be entitled to receive the
payments and benefits to which his representatives would be entitled in the
event of a termination of employment by reason of his death; provided that the
payment of Base Salary shall be reduced by the projected amount he would receive
under any long-term disability policy or program maintained by the Company
during the twelve (12) month period during which Base Salary is being paid.
(c) Termination by Executive for Good Reason or for Change in
Control. If (i) Executive terminates his employment hereunder for Good Reason
during the Employment Term, or (ii) a Change in Control occurs and within 90
days thereafter Executive terminates his employment for any reason, Executive
shall be entitled to receive the payments and benefits to which his
representatives would be entitled in the event of a termination of employment by
reason of his death.
(d) Termination with Cause or Voluntary Resignation without
Good Reason. If Executive's employment hereunder is terminated (i) by General
Textiles for Cause or (ii) by Executive without Good Reason except within 90
days following
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a Change in Control, the Executive shall be entitled to receive only his Base
Salary through the date of termination, any earned but unpaid bonus, and any
unreimbursed business expenses payable pursuant to Section 8. All other benefits
(including without limitation restricted stock and options) due Executive
following such termination of employment shall be determined in accordance with
the plans, policies and practices applicable to Executive.
(e) Termination by the Company Without Cause. If Executive's
employment is terminated by the Company without cause, Executive shall be
entitled to receive the payments and benefits to which his representatives would
be entitled in the event of a termination of employment by reason of his death;
provided, however, that Executive shall not be entitled to receive the benefit
set forth in clause (iii) of Paragraph 10(a) hereof.
11. No Mitigation; No Set-Off. In the event of any termination
of employment under Section 9, Executive shall be under no obligation to seek
other employment and there shall be no offset against any amounts due Executive
under this Agreement on account of any remuneration attributable to any
subsequent employment that Executive may obtain. Any amounts due under Section
10 are in the nature of severance payments, or liquidated damages, or both, and
are not in the nature of a penalty. Such amounts are inclusive and in lieu of
any amounts payable under any other salary continuation or cash severance
arrangement of General Textiles or any affiliate thereof and to the extent paid
or provided under any other such arrangement shall be offset from the amount due
hereunder.
12. Change in Control. (a) Subject to the provisions of
Section 12(b) hereof, for purposes of this Agreement, the term "Change in
Control" shall mean (a) the sale of all or substantially all of the assets of
the Company in the aggregate, whether pursuant to a single transaction or
pursuant to a series of transactions and whether through an asset sale or stock
sale, other than to an affiliate; (b) any "person" (as defined in the Act) not
an affiliate of FBC on the Effective Date becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Act), directly or indirectly, of securities of
FBC representing fifty (50%) or more of the combined voting power of FBC's then
outstanding securities; (c) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors, and any new director (other than a director designated by a person
who has entered into an agreement with FBC to effect a transaction described in
this paragraph) whose election by the Board of Directors of FBC or nomination
for election by FBC's stockholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the beginning
of the two-year period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
of the Board of Directors; (d) the stockholders of FBC approve a merger or
consolidation of FBC with any other
29
corporation, other than a merger or consolidation which would result in the
voting securities of FBC outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the
combined voting power of the voting securities of FBC or such surviving entity
outstanding immediately after such merger or consolidation; or (e) the
stockholders of FBC approve a plan of complete liquidation of FBC or an
agreement for the sale or disposition by FBC of all or substantially all of
FBC's assets other than the sale of all or substantially all of the assets of
FBC to a person or persons who beneficially own, directly or indirectly, at
least fifty percent (50%) or more of the combined voting power of the
outstanding voting securities of FBC at the time of the sale.
(b) General Textiles, FBC and Xxxxxxx acknowledge that General
Textiles and FBC currently have under consideration the possibility of effecting
a restructuring of such corporations. Notwithstanding anything to the contrary
set forth herein, it is agreed that no restructuring, recapitalization,
reorganization, merger, consolidation or similar transaction involving General
Textiles, FBC or any affiliate thereof (but not involving any unaffiliated third
party) shall be deemed to constitute a Change of Control hereunder unless, upon
consummation thereof, an actual change in control over the Company, within the
meaning of the Act, from that in effect on the Effective Date shall have taken
place.
13. Confidential Information, Non-Competition and
Non-Solicitation of the Company. (a) (i) Executive acknowledges that, as a
result of his employment hereunder, Executive will obtain secret and
confidential information of the Company and the Company will suffer substantial
damage, which would be difficult to ascertain and in an amount which would be
difficult to compute, if Executive should use any of such confidential
information and that because of the nature of the information that will be known
to Executive it is necessary for the Company to be protected by the prohibition
against Competition as set forth herein, as well as the Confidentiality
restrictions set forth herein.
(ii)Executive acknowledges that the retention of nonclerical
employees of the Company, in which the Company has invested training and on
which the Company depends for the operation of its business, is important to the
businesses of the Company; Executive will obtain unique information as to such
employees as an executive of the Company and will develop a unique relationship
with such persons as a result of being an executive of the Company; and,
therefore, it is necessary for the Company to be protected from Executive's
Solicitation of such employees as set forth below.
(iii)Executive acknowledges that the provisions of this
Agreement are reasonable and necessary for the protection of the business of the
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Company and that part of the compensation paid under this Agreement and the
agreement to pay severance in certain instances is in consideration for the
agreements in this Section 13.
(b) As used herein, "Competition" shall mean: participating,
directly or indirectly, as an individual proprietor, partner, stockholder,
officer, employee, director, joint venturer, investor, lender, consultant or in
any capacity whatsoever (within the United States of America, or in any other
country where any Constituent Corporation does business) in a business in
competition with any business conducted any Constituent Corporation; provided,
however, that such participation shall not include (i) the ownership of not more
than one percent (1%) of the total outstanding stock of a publicly-held company;
or any activity engaged in with the prior written approval of the Board.
(c) As used herein, "Solicitation" shall mean recruiting,
soliciting or inducing any nonclerical employee of any Constituent Corporation
to terminate his or her employment with, or otherwise cease his or her
relationship with, such Constituent Corporation or hiring, or assisting another
person or entity to hire, any nonclerical employee of any Constituent
Corporation or any person who, within six (6) months before, had been a
nonclerical employee of any Constituent Corporation, unless the employment of
such person by a Constituent Corporation was terminated involuntarily and
without cause.
(d) If any restriction set forth with regard to Competition or
Solicitation is found by any court of competent jurisdiction, or an arbitrator,
to be unenforceable because it extends for too long a period of time or over too
great a range of activities or in too broad a geographic area, it shall be
interpreted to extend over the maximum period of time, range of activities or
geographic area as to which it may be enforceable. If any provision of this
Section 13 shall be declared to be invalid or unenforceable, in whole or in
part, as a result of the foregoing, as a result of public policy or for any
other reason, such invalidity shall not affect the remaining provisions of this
Section which shall remain in full force and effect.
(e) During and after the Employment Term, Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company and its
business, including any confidential information as to suppliers (i) obtained by
Executive during his employment by the Company and (ii) not otherwise in the
public domain. Executive shall not, without prior written consent of the
Company, unless compelled pursuant to the order of a court or other governmental
or legal body having jurisdiction over such matter, communicate or divulge any
such information, knowledge or data to anyone other than the Company, and those
designated by it. In the event Executive is compelled by order of a court or
other governmental or legal body to communicate or
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divulge any such information, knowledge or data to anyone other than the
foregoing, he shall promptly notify the Company of any such order and he shall
cooperate fully with the Company in protecting such information to the full
extent possible under applicable law.
(f) Upon termination of his employment with General Textiles,
or at any time General Textiles may request, Executive will promptly deliver to
General Textiles, as requested, all documents (whether prepared by the Company,
Executive or a third party) relating to the Company or any of its business or
property which he may possess or have under his direction or control, other than
his personal employment and personnel records.
(g) During the Employment Term and for one (1) year
thereafter, Executive will not enter into Competition with the Company.
Furthermore, in the event of any termination of Executive's employment for any
reason whatsoever, whether by the Company or by the Executive and whether or not
for Cause, Good Reason or expiration of the Employment Term, the Executive will
not engage in Solicitation for three (3) years thereafter.
(h) Executive acknowledges that in the event of a breach of
this Section 13, the Company will be caused irreparable injury and money damages
may not be an adequate remedy. Consequently, Executive agrees that the Company
shall be entitled to injunctive relief (in addition to its other remedies at
law) to have the provisions of this Section 13 enforced.
14. Indemnification. (a) The Company agrees that if Executive
is made a party to or threatened to be made a party to any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he is or was a director or officer of
any Constituent Corporation or is or was serving at the request of any
Constituent Corporation as a director, officer, member, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including, without limitation, service with respect to employee
benefit plans, whether or not the basis of such Proceeding is alleged action in
an official capacity as a director, officer, member, employee, fiduciary or
agent while serving as a director, officer, member, employee, fiduciary or
agent, he shall be indemnified and held harmless by the applicable company to
the fullest extent authorized by applicable law against all Expenses incurred or
suffered by Executive in connection therewith, and such indemnification shall
continue as to Executive even if Executive has ceased to be an officer,
director, member, fiduciary or agent, or is no longer employed by such company,
and shall inure to the benefit of his heirs, executors and administrators.
32
(b) As used in this Agreement, the term "Expenses" shall
include, without limitation, damages, losses, judgments, liabilities, fines,
penalties, excise taxes, settlements and costs, attorneys' fees, accountants'
fees, and disbursements and costs of attachment or similar bonds,
investigations, and any expenses of establishing a right to indemnification
under this Agreement.
(c) Expenses incurred by Executive in connection with any
Proceeding shall be paid in advance upon request of Executive and the giving by
the Executive of any undertakings required by applicable law.
(d) Executive shall give the Company notice of any claim made
against him for which indemnity will or could be sought under this Agreement. In
addition, Executive shall give the Company such information and cooperation as
it may reasonably require and as shall be within Executive's power and at such
times and places as are reasonably convenient for Executive.
(e) With respect to any Proceeding as to which Executive
notifies the Company of the commencement thereof:
(i) The Company will be entitled to participate therein at its
own expense; and
(ii) Except as otherwise provided below, to the extent that it
may wish, the Company will be entitled to assume the defense thereof, with
counsel reasonably satisfactory to Executive, in which case Executive also shall
have the right to employ his own counsel in such action, suit or proceeding, but
only at his own cost and expense, provided that the Company shall only be
permitted to assume defense of a Proceeding if (1) the Proceeding could not
result in imposition of criminal penalties against Executive and (2) the Company
acknowledges that it is liable to indemnify Executive with respect to all
Expenses with respect to such Proceedings, except as provided earlier in this
sentence with regard to Executive's own counsel.
(f) The Company shall not be liable to indemnify Executive
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner which would impose any penalty on Executive (except a
penalty in respect of which Executive is fully indemnified hereunder) without
Executive's written consent. Neither the Company nor Executive will unreasonably
withhold or delay consent to any proposed settlement.
(g) The right to indemnification and the payment of expenses
incurred in defending a Proceeding in advance of its final disposition conferred
in this Section 14 shall not be exclusive of any other right which Executive may
have or
33
hereafter may acquire under any statute, provision of the certificate of
incorporation or by-laws of the any company, agreements, vote of stockholders or
disinterested directors or otherwise.
(h) The Company shall obtain officer and director liability
insurance policies covering Executive in the same aggregate amount and under the
same terms as are maintained by the Company for senior officers and directors.
15. Miscellaneous.
(a) Entire Agreement/Amendments. This Agreement and the
instruments contemplated herein, contain the entire understanding of the parties
with respect to the employment of Executive by the Company. There are no
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter hereof other than those
expressly set forth herein and therein. This Agreement may not be altered,
modified, or amended except by written instrument signed by the parties hereto.
(b) No Waiver. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party's rights or deprive such party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
Any such waiver must be in writing and signed by Executive or an authorized
officer of General Textiles, as the case may be.
(c) Assignment. This Agreement shall not be assignable by
Executive. This Agreement shall be assignable by General Textiles, but only to
another Constituent Corporation and only if such Constituent Corporation
promptly assumes all of the obligations hereunder of General Textiles in a
writing delivered to the Executive and otherwise complies with the provisions
hereof with regard to such assumption. Upon such assignment and assumption, all
obligations of General Textiles herein shall be the obligations of the assignee
entity or acquiror, as the case may be, but General Textiles shall remain
secondarily liable for the obligations hereunder.
(d) Successors; Binding Agreement. This Agreement shall inure
to the benefit of and be binding upon the personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees legatees
and permitted assignees of the parties hereto.
(e) Communications. For the purpose of this Agreement, notices
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given (i) when faxed or delivered, or (ii)
two
34
business days after being mailed by United States registered or certified mail,
return receipt requested, postage prepaid, addressed to the respective addresses
set forth on the initial page of this Agreement, provided that all notices to
General Textiles or FBC shall be directed to the Chairman of the Board of
Directors of General Textiles and FBC or to such other address as any party may
have furnished to the other in writing in accordance herewith. Notice of change
of address shall be effective only upon receipt.
(f) Withholding Taxes. The Company may withhold from any and
all amounts payable under this Agreement to Executive such Federal, state and
local taxes as may be required to be withheld pursuant to any applicable law or
regulation.
(g) Survival. The respective rights and obligations of the
parties hereunder shall survive any termination of Executive's employment to the
extent necessary to the agreed preservation of such rights and obligations.
(h) Counterparts. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
(i) Headings. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
GENERAL TEXTILES
By:/s/ Xxxxx X. Xxxxxxxxxx
FAMILY BARGAIN CORPORATION
By:/s/ Xxxxx X. Xxxxxxxxxx
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
35
EXHIBIT A
Terms of Loan
Principal Amount: $1,400,000
Interest Rate: 8%, to accrue and be paid at maturity
Principal Amortization: Annual repayments of principal in an amount
equal to 16.25% of the annual bonus paid to the
borrower by General Textiles
Maturity: Five years from the date of the loan
Security and Recourse: The loan will be secured by a pledge of the shares
purchased with the proceeds of the loan. Personal
recourse against the borrower will be limited to
the amount of $600,000.
