EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") has been entered
into as of the 13th day of August, 1997 (the "Effective Date"), by
and between INNOVO GROUP INC., a Delaware corporation with
principal offices in Springfield, Tennessee ("Employer"), and J.
XXXX XXXXXXXXXXX, an individual and resident of the State of
Tennessee ("Employee").
Recitals
WHEREAS, Employer has entered into a Letter of Intent dated
July 29, 1997 ("Letter of Intent"), and a Stock Purchase Agreement
dated August 13, 1997 (the "Stock Purchase Agreement"), whereby it
has agreed to sell certain securities of Employer to Employee and
certain other individuals;
WHEREAS, as a condition of the Stock Purchase Agreement, the
Employer agreed to enter into employment agreements with certain
persons, including Employee;
WHEREAS, Employer desires to obtain the services of Employee,
and Employee desires to secure employment from the Employer upon
the following terms and conditions;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, the parties agree as follows:
1. Employment. Employer hereby employs Employee as Vice
President and Treasurer, and Employee hereby accepts and agrees to
such employment, pursuant and subject to the orders, advice and
direction of the President, Chief Executive Officer and Board of
Directors of Employer. Employee shall perform such other duties as
are customarily performed by one holding such position in other,
same or similar businesses or enterprises as that engaged in by
Employer. Employee also shall render such other and unrelated
services and duties as may be assigned to him from time to time by
the President, Chief Executive Officer or Board of Directors of
Employer. Employee shall report directly to the Chief Executive
Officer of Employer.
2. Best Efforts of Employee. Employee agrees that he will
at all times faithfully, industriously, and to the best of his
ability, experience and talents, perform all of the duties that may
be required of and from him pursuant to the express and implicit
terms hereof, to the reasonable satisfaction of Employer, and that
he will devote such portion of his professional time as he deems
appropriate to his duties. Such duties shall be rendered at the
principal offices of Employer as is hereinabove set forth, and at
such other place or places as Employer shall in good faith require
or as the interest, needs, business or opportunity of Employer
shall require.
3. Term of Employment. The initial term of employment (the
"Initial Term") of Employee by Employer shall be for a period of
two (2) years, commencing August 14, 1997 (the "Commencement Date")
and terminating August 14, 1999 (the "Expiration Date"), and
thereafter renewing for successive one (1) year terms, each such
term to commence on the successive anniversaries of the Expiration
Date, unless either party shall give written notice of intention to
terminate at least ninety (90) days prior to the Expiration Date or
prior to expiration of any such successive term, and subject to
earlier termination as provided in Section 5 of this Agreement.
4. Compensation of Employee. Employer shall pay Employee,
and Employee shall accept from Employer in return for his services
and the covenants contained herein, the following:
A. Base Compensation. During the term of employment of
Employee, Employer shall pay Employee, and Employee shall
accept from Employer, in payment of Employee's services
hereunder, base compensation of Seventy Thousand and 0/100
Dollars ($70,000.00) per year (less applicable payroll taxes),
payable monthly in accordance with the standard practices of
the Employer ("Base Compensation").
B. Bonus. In addition, Employee may also be paid, on
an annual or other basis, such bonus or other compensation as
the Board of Directors in its sole discretion may determine to
be reasonable compensation for Employee, considering the
performance of Employee, the business and financial condition
of the Employer and the operating results achieved.
C. Employee Benefits. Employee shall be entitled to
receive the normal health care benefits and such other
employment benefits as are generally available to senior
officers of Employer.
5. Termination. Employer may terminate the employment of
Employee at any time with "Cause." For the purposes hereof, the
term "Cause" shall mean, without limitation: the conviction of
Employee of a felony, or a crime of moral turpitude designated as
such under the laws of the State of Tennessee or the applicable
jurisdiction; a material omission or misstatement in the
information provided to the Employer during negotiations between
the parties prior to the execution of the Letter of Intent and
prior to the closing of the transactions contemplated by the Letter
of Intent; the failure of the Employee to carry out the reasonable
written instructions of the Board of Directors of Employer after
the Employee has received written notice of such instructions and
a reasonable opportunity to cure any such failure; the inability of
Employee, through sickness or other incapacity, to perform his
duties under this Agreement for a period in excess of ninety (90)
substantially consecutive days; or the determination by a court or
arbitrator of competent jurisdiction that a material term of this
Agreement has been violated. The Employee's employment by Employer
may also be terminated without Cause by either party upon sixty
(60) days' prior written notice to the other. In the event
Employee's employment is so terminated with or without Cause,
Employer shall have no obligation to make any further payments to
Employee, and Employee shall forfeit and lose his right to receive
any other form of compensation or benefits; provided, however,
Employee shall be entitled to: (i) all Base Compensation earned
through the date of termination; and (ii) a termination payment of
Seventy Thousand Dollars ($70,000.00), payable in equal monthly
installments commencing one month from the date of termination and
ending one year from the date of termination.
6. Restrictive Covenants. Employee covenants and agrees
that, during the term of his employment with Employer and for a
period of two (2) years thereafter, he shall be subject to the
following restrictions (the "Restrictive Covenants"):
A. Competition. Employee will not own or participate
in the ownership of any business that manufactures products
that compete in whole or in part with the products of the
Employer or its affiliates, anywhere within the continental
United States of America; provided, however, that Employee may
purchase or otherwise acquire up to (but not more than) one
percent (1%) of any class of securities of any enterprise (but
without otherwise participating in the activities of such
enterprise) if such securities are listed on any national or
regional securities exchange or have been registered under
Section 12(g) of the Securities Exchange Act of 1934.
B. Employee Solicitation. Employee will not in any
way, directly or indirectly, for himself or on behalf of or in
conjunction with any person or business entity other than the
Employer, solicit or attempt to solicit any officers,
directors, employees or agents of the Employer to leave,
resign or terminate their employment with the Employer.
C. Confidential Information.
(1) Definition. For purposes of this Agreement,
the term "Confidential Information" shall mean
information that the Employer owns or possesses, that it
uses or is potentially useful in its business, that it
treats as proprietary, private, or confidential, and that
is not generally known to the public, including, but not
limited to, information relating to Employer's existing
and contemplated businesses, sales, company financial
information, products, technology, manufacturing
techniques, engineering processes, chemical formulae,
marketing, sales methods, technical service expertise,
employees, lists of actual or potential customers, actual
and potential customer usage and requirements, new and
existing programs or services, prices and terms, pricing
strategy, sources of supplies and materials, operating
and other cost data, trade secrets, inventions, patent
applications, and other proprietary information as may
exist or be developed from time to time by the Employer,
or its affiliates.
(2) Information Access and Disclosure. Employee
acknowledges that he shall occupy a position of trust and
confidence with the Employer and will have access to and
may develop Confidential Information of actual or
potential value to or otherwise useful to Employer.
Employee shall hold in strictest confidence and not
disclose, without express written authorization from the
President, Chief Executive Officer or Board of Directors
of Employer, to any person or entity, other than the
Employer and its affiliates and their officers and
agents, or use in whole or in part any Confidential
Information that Employee may acquire while employed by
Employer.
(3) Employer Property Return. At the termination
of Employee's employment with Employer, or at any other
time that Employer may request, Employee shall promptly
deliver to Employer all memoranda, notes, records,
reports, documents, sketches, plans, models,
compositions, formulations, computer data, and other
tangible items made or compiled by Employee or in
Employee's possession concerning or relating to the
Employer or its affiliates and their businesses,
operations or affairs and any Confidential Information
that the Employee may possess or have under his control
("Company Property").
7. Remedies. Employee acknowledges that any violation of
any of the Restrictive Covenants contained in Section 6 of this
Agreement will cause continuing and irreparable harm to the
Employer for which monetary damages would not be adequate
compensation. Employee, therefore, agrees that, if he violates or
threatens to violate any of these restrictive covenants, the
Employer shall be entitled, in addition to any other legal or
equitable remedies available to it, to (a) entry of an injunction,
temporary and permanent, enjoining such breach and securing
specific performance of this Agreement, including requiring
Employee to return all Company Property; (b) monetary damages,
insofar as they can be determined; (c) forfeiture of all
compensation paid by Employer or otherwise owing to Employee under
this Agreement; and (d) recovery of Employer's reasonable
attorney's fees and costs of prosecuting any such action. The
parties waive the right to a jury trial with respect to any
controversy or claim between or among the parties hereto, including
but not limited to those arising out of or relating to this
Agreement, as well as any claim based on or arising from an alleged
tort.
8. Severability. Whenever possible, each provision and term
of this Agreement will be interpreted in a manner to be effective
and valid; however, if any provision or term of this Agreement is
held to be prohibited or invalid, then such provision or term will
be ineffective only to the extent of such prohibition or
invalidity, without invalidating or affecting in any manner
whatsoever the remainder of such provision or term or the remaining
provisions or terms of this Agreement. More specifically, Employee
acknowledges that the restrictive covenants contained in Section 6
of this Agreement are reasonable in scope, time and geographic
area; however, if any of these covenants are held to be
unreasonable, arbitrary, or against public policy, such covenants
will be considered divisible with respect to scope, time, and
geographic area, and in such lesser scope, time and geographic
area, will be effective, binding and enforceable against the
Employee.
9. Successors and Assigns. This Agreement will be binding
upon the Employer and the Employee and will inure to the benefit of
the Employer and its affiliates, successors and assigns, as well as
to the Employee and his heirs. This Agreement is not assignable by
the Employee, except upon the written agreement of both parties.
10. Waiver. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement
will operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege
will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law,
(a) no claim or right arising out of this Agreement can be
discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing, signed by the
other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given;
and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party
giving such notice or demand to take further action without notice
or demand as provided in this Agreement.
11. Governing Law. This Agreement and all performance
hereunder shall be construed and governed by the laws of the State
of Tennessee, without regard to conflicts of laws principles.
12. Construction. The headings of Sections in this Agreement
are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this
Agreement unless otherwise specified. All words used in this
Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms. All
references herein to the word "and" shall mean "and/or," and all
references herein to the word "or" shall mean "and/or." The
parties, in acknowledgement that all of them have been represented
by counsel and that this Agreement has been carefully negotiated,
agree that the construction and interpretation of this Agreement
and other documents entered into in connection herewith shall not
be affected by the identity of the party or parties under whose
direction or at whose expense this Agreement and such documents
were prepared or drafted.
13. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter of
this Agreement and supersedes all prior written and oral agreements
and understandings between Employer and Employee with respect to
the subject matter of this Agreement. This Agreement may not be
amended except by a written agreement executed by the party to be
charged with the amendment.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first above written.
INNOVO GROUP INC.
By: /s/X. X. Xxxxx
_________________________
X. X. XXXXX
Title: CEO
/s/ J. Xxxx Xxxxxxxxxxx
__________________________
J. XXXX XXXXXXXXXXX
