EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into as of
February 12, 2001 by and between WinsLoew Furniture, Inc. (the "Company"), a
Florida corporation and Xxxxxxx X. Xxxxxx (the "Employee").
RECITALS
A. The Employee is currently employed by the Company.
B. The Employee possesses inmate knowledge of the business and affairs of
the Company, its policies, methods and personnel.
C. The Company recognizes that the Employee desires to assure the
Employee's continued employment by the Company and to compensate him therefore
pursuant to this Agreement.
D. The Employee is willing to make has services available to the Company on
the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
1. Employment.
1.1. General. The Company hereby agrees to employ the Employee,
and the Employee hereby agrees to serve the Company on the terms
and conditions set forth herein.
1.2. Duties of Employee. During the term of this Agreement, the
Employee shall serve as Vice President-Sales and Marketing of the
Company, shall diligently perform all services as may be assigned
to him by Xxxxx Xxxxxx. The Employee shall devote his full time and
attention to the business and affairs of the Company and render such
services to the best of his ability.
2. Term.
2.1 Initial Term. The term of this Agreement, and the employment of
the Employee hereunder, shall be for the five-year period commencing
upon the date first noted above (the "Initial Term"), unless sooner
terminated in accordance with the terms and conditions hereof.
2.2 Renewal Terms. The Initial Term of this Agreement, and the
employment of the Employee hereunder, may be renewed and extended
for such period or periods as may be mutually agreed to by the Company
and the Employee in a written supplement to this Agreement signed by
the Employee and the Company ("Written Supplement"). If this Agreement
is not so renewed and extended prior to the expiration of the Initial
term, this Agreement, and the employment of the Employee hereunder,
shall automatically terminate upon expiration of the Initial Term.
3. Compensation.
3.1 Base Salary. The Employee shall receive a base salary at the
annual rate of not less than $160,000 (the "Base Salary ") during
the Term of this Agreement, with such Base Salary payable in
installments consistent with the Company's normal payroll schedule,
subject to applicable withholding and other taxes. The Base Salary
shall be adjusted annually to reflect, at a minimum, any increase
from the previous year in the national Consumer Price Index. The
Base Salary shall also be reviewed, at least annually, for merit
increases and may, by action and in the discretion of the Board,
be increased at any time or from time to time. The Base Salary,
if so increased, shall not thereafter be decreased for any reason.
If the term of this Agreement shall be renewed and extended as
provided in Section 2.2 hereof, then during such renewal
term of his/her employment hereunder, the Employee shall be paid a
base salary as set forth in the Written Supplement.
3.2 Incentive Compensation.
(a) In addition to the Base Salary, the Employee shall
be entitled to receive annual incentive compensation ("Incentive Compensation")
for each fiscal year ending during the term of this Agreement, commencing with
fiscal year 2001, for which the Company has Operating Earnings (as hereafter
defined) of at least Seventy five percent (75%) of the Target Earnings (as
hereafter defined) of the Company for such year. For purposes of this Section
3.2, "Operating Earnings" shall mean the operating earnings of the Company
as determined in accordance with generally accepted accounting principals
("GAAP"), consistently applied with the Company's past practices, provided,
however, that such Operating Earnings shall not reflect ( i.e., shall not be
reduced by ) any amortization of goodwill. The method of determining Operating
Earnings shall be consistent throughout the term of this Agreement. The
determination of Operating Earnings made by the Company shall be final and
binding on the parties to this Agreement. For purposes of this Section 3.2,
the "Target Earnings" for 2001 and each subsequent year shall be determined
by the President and CEO and/or Chief Financial Officer. The President and
CEO and/or Chief Financial Officer shall have the right to modify, at any
time and in its reasonable discretion, any previously established "Target
Earnings" for reasons such as, but not limited to, any acquisition, disposition,
merger, reorganization, liquidation, dissolution or other transaction
involving the Company or any of its subsidiaries, or other extraordinary
or significant events or changes in circumstances relating to the Company
or any of its subsidiaries, businesses or operations.
(b) The amount of the Employee's Incentive Compensation for
each fiscal year shall be determined as follows:
I. If the Operating Earnings for the year do not exceed the Target Earnings
for one year, the Incentive Compensation shall be calculated by (A) multiplying
(i) thirty percent (30%) of the Employee's Base Salary for the year (the
"Maximum Bonus") by (ii) the remainder of (w) the fraction obtained by dividing
the Operating Earnings by the Target Earnings less (x) 0.75, and then (B)
multiplying the resulting product by three (3); or
II. If the Operating Earnings for the first year exceed the Target Earnings
for the year, the Incentive Compensation shall be calculated by (A) multiplying
(i) the maximum Bonus by (ii) the remainder of (y) the fraction obtained by
dividing the Operating Earnings by the Target Earnings, less (z) 1.0, and then
(B) multiplying the resulting product by two (2), then adding 75% of the Maximum
Bonus; provided, however, that in no event shall the Incentive Compensation for
any year exceed the Maximum Bonus.
III. For Example, (A) if Operating Earnings are 75% of the applicable
Target Earnings or less, the Employee's Incentive Compensation for that year
would be zero, (B) if Operating Earnings are 90% of the Applicable Target
Earnings, the Employee's Incentive Compensation for that year would be 45% of
the Maximum Bonus, (C) if Operating Earnings are 100% of the Target Earnings,
the Employee's Incentive Compensation for that year would be 75% of the Maximum
Bonus, (D) if the Operating Earnings are 110% of the Target Earnings, the
Employee's Incentive Compensation for that year would be 95% of the Maximum
Bonus, and (E) if the Operating Earnings are 120% of the Target Earnings, the
Employee's Incentive Compensation for that year would be limited to 100% of the
Maximum Bonus.
(c) For purposes of this Agreement, the amount of Incentive
Compensation payable with respect to any fiscal year (net of any tax or other
amount properly withheld therefrom) shall be paid by the Company to Employee
within one hundred twenty (120) days after the end of the fiscal year; provided,
however, that any amount paid shall be subject to increase or decrease based
upon the results of any audited financial statements with respect to such year.
Any such audited financial statements shall be completed within 120 days after
the end of the fiscal year.
4. Expenses Reimbursement and Other Benefits.
4.1 Reimbursable Expenses. During the term of the Employee's
employment hereunder, the Company, upon the submission of proper substantiation
by the Employee, shall reimburse the Employee for all reasonable expenses
actually and necessarily paid or incurred by the Employee in the course of and
pursuant to the business of the Company.
4.2 Other Benefits. The Employee shall be entitled to participate
in all medical and hospitalization, group life insurance, and any and all other
plans as are presently and hereinafter provided by the Company to its Employees.
The Employee shall be entitled to vacations in accordance with the Company's
prevailing policy for its Employees; provided, however, that in no event may a
vacation be taken at a time when to do so could, in the reasonable judgment by
the Board, adversely affect the Company's business.
5. Termination.
5.1 Termination for Cause. The Company shall at all times have
the right, upon written notice to the Employee, to terminate the Employee's
employment hereunder for "Cause" (as defined below in this paragraph 5.1). Upon
any termination pursuant to this Section 5.1 the Company shall have no further
liability hereunder (other than for reimbursement for reasonable business
expenses incurred prior to the date of termination, subject, however to the
provisions of Section 4.1). For purposes of this Agreement, the term "Cause"
shall mean (i) the willful failure or refusal of the Employee to perform the
duties or render the services assigned to him from time to time by the Board,
(ii) gross negligence or misconduct by the Employee in the performance of his
duties to the Company, (iii) the charging or indictment of the Employee to a
felony, (iv) the association, directly or indirectly, of the Employee for his
profit or financial benefit, with any person, firm, partnership, association,
entity or corporation that competes, in any material way, with the Company, (v)
the disclosing or using of any material trade secret or confidential information
of the Company at any time by the Employee, except as required in connection
with his duties to the Company, (vi) the breach by the Employee of his fiduciary
duty or duty of trust to the Company, (vii) any breach or unsatisfactory
performance by the Employee of any of the material terms or provisions of this
Agreement, or any other agreement with the Company or any of its subsidiaries
(whether written or oral), which is not cured within twenty (20) business days
after the Company gives written notice of such breach or unsatisfactory
performance to the Employee.
5.2 Disability. The Company shall at all times have the right,
upon written notice to the Employee, to terminate the Employee's employment
hereunder, if the Employee shall, as the result of mental or physical
incapacity, illness or disability, become unable to perform his duties
hereunder for in excess of ninety (90) consecutive days. Upon any termination
pursuant to this Section 5.2, the Company shall pay to the Employee any unpaid
amounts of his Base Salary and Incentive Compensation accrued through the
effective date of termination and the Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however to the provisions
of Section 4.1).
5.3 Death. In the event of the death of the Employee during the
term of his employment hereunder, the Company shall pay to the estate of
the deceased Employee any unpaid amounts of his Base Salary and Incentive
Compensation accrued through the date of his death and the Company shall
have no further liability hereunder (other than for reimbursement for
reasonable business expensed incurred prior to the date of the Employee's death,
subject, however to the provisions of Section 4.1)
5.4 Termination Without Cause. At any time the Company shall have
the right to terminate the Employee's employment hereunder by written notice to
the Employee; provided, however, that the Company shall (i) pay to the Employee
any unpaid Base Salary and Incentive Compensation accrued through the effective
date of termination specified in such notice. The Company shall have no further
liability hereunder (other than for reimbursement for reasonable business
expensed incurred prior to the date of the Employee's termination, subject,
however to the provisions of Section 4.1).
6. Restrictive Covenants.
6.1 Non-Competition. In consideration for his employment by the
Company, while employed by the Company and for a period of one year (except
that such period shall be six months if Employee's employment is terminated
pursuant to Section 5.4 hereof) following the date his employment is terminated
hereunder, but in no event shall the term of this covenant not to compete extend
for less than five years from the date of this Agreement, the Employee shall
not, directly or indirectly, engage in or have any interest in any sole
proprietorship, partnership, corporation, limited liability company or business
or any other entity, whether as an employee, officer, director, partner, agent,
security holder, consultant or otherwise, that directly or indirectly is engaged
in any of the businesses WinsLoew is engaged in at the termination date
("Restricted Business") in any of the United States, territories and possessions
of the United States and each of the other countries and territories of the
World in which the Company conducts or has conducted the business of the Company
during the five years preceding the date of this Agreement ("Restricted Area");
provided, however, that nothing hereon shall be deemed to prevent the Employee
from acquiring through market purchases and owning, solely as an investment,
less than five percent in the aggregate of the equity securities of any class of
any issuer whose shares are registered under Section 12(b) or Section 12(g) of
the Securities Exchange Act, and are listed or admitted for trading on any
United States national securities exchange or are quoted on the National
Association of Securities Dealers Automated Quotations System, or any similar
system of automated dissemination of quotations of securities prices in common
use, so long as the employee is not a member of any "control group" (within the
meaning of the rules and regulations of the United States Securities and
Exchange Commission) of any such issuer.
6.2 Reasonableness and Necessity of Restrictions. The Employee
acknowledges and agrees that the covenants provided for in this Section 6 are
reasonable and necessary in terms of time, area and line of business to protect
the Company's legitimate business interests and in protecting the Company's
trade secrets. The Employee further acknowledges and agrees that such covenants
are reasonable and necessary in terms of time, area and line of business to
protect the Company's other legitimate business interests, which include its
interests in protecting the Company's (i) valuable confidential business
information, (ii) substantial relationships with customers throughout the
Restricted Area and (iii)customer goodwill associated with the Company's ongoing
business. The Employee expressly authorizes the enforcement of the covenants
provided for in this Section 6.2 by (A) the Company or any of its subsidiaries
and any successors to the Company's business. The covenants provided for in
this Section 6 shall be construed as a separate and independent covenant for
each of the separate states, territories and possessions included in the
Restricted Area. To the extent that the covenant provided for in this Section 6
may later be deemed by a court to be too broad to be enforced with respect to
its duration or with respect to any particular activity or geographic area, the
court making such determination shall have the power to reduce the duration or
scope of the provision, and to add or delete specific words or phrases to or
from the provision. The provision as modified shall then be enforced.
6.3 Non-Solicitation of Employees, Agents and Independent
Contractors. In consideration for his employment by the Company, while
employed by the Company and for a period of one year (except that the period
shall be six months if Employee's employment is terminated pursuant to Section
5.4 hereof) following the date his employment is terminated hereunder, but in no
event shall the term of this covenant not to solicit extend for less than five
years from the date of this Agreement, the Employee expressly covenants and
agrees that for a period of five (5) years from and after the date of this
Agreement, such Employee will not, directly or, (i) solicit for employment or
employ or engage as an agent or independent contractor (or attempt to solicit
for employment or employ or engage as an agent or independent contractor), for
himself or herself or on behalf of any sole proprietorship, partnership,
corporation, limited liability company or business or any other entity (other
than Loewenstein, WinsLoew or any of their subsidiaries), any employee of the
Company (whether currently employed or engaged by the Company or employed or
engaged by the Company during the term of this non-solicitation covenant) or any
person who was an employee, agent or independent contractor of the Company at
any time during the two (2) year period preceding the date hereof, or (ii)
encourage any such employee to leave his or her employment with the Company or
(iii) encourage any such agent or independent contractor to terminate his, her
or its engagement with the Company. The Employee's covenant not to solicit in
this Section 6.3 shall be in conjunction with and in addition to the covenant
not to solicit under Section 6(e) of the Stock Purchase Agreement.
6.4 Nondisclosure. The Employee shall not divulge, communicate,
use to the detriment of the Company or for the benefit of any other person
or persons, or misuse in any way, any confidential information pertaining to the
business of the Company. Any confidential information, trade secrets or data now
known or hereafter acquired by the Employee with respect to the business of the
Company (which shall include, but not limited to, information concerning the
Company's financial condition, prospects, customers, sources of leads, methods
of doing business, and the manner of design, manufacture, financing, marketing
and distribution of the Company's products) shall be deemed a valuable, special
and unique asset of the Company that is received by the Employee in confidence
and as a fiduciary, and Employee shall remain a fiduciary to the Company with
respect to all such information.
6.5 Books and Records. All books, records, and accounts
relating in any manner to the customers or clients of the Company, whether
prepared by the Employee or otherwise coming into the Employee's possession,
shall be the exclusive property of the Company and shall be returned immediately
to the Company on termination of the Employee's employment hereunder or on the
Company's request at any time.
6.6 Condition Precedent to Employment; Consideration. The
Employee acknowledges and agrees that the Employee's agreement to abide by
the restrictive covenants under this Section 6 are a condition precedent to his
or her continued employment by the Company; that the Company's employment of the
Employee is adequate consideration to bind the Employee under these restrictive
covenants during and after his or her employment by the Company pursuant to the
terms and conditions stated under this Section 6; and that Alabama law will
apply in any proceeding to enforce these restrictive covenants.
7. Entire Agreement.
This Agreement constitutes the entire agreement between the parties hereto
with respect to the subject matter hereof and, upon the commencement of the
Initial Term of this Agreement, shall supersede all prior arrangements,
understandings, both oral and written, between the Employee and the Company with
respect to such subject matter. All such prior agreements, understandings and
arrangements for the provision of services by the Employee to the Company and
the compensation of the Employee in any form shall automatically terminate upon
the commencement of the Initial Term of this Agreement. This Agreement may not
be modified in any way unless by a written instrument signed by both the Company
and the Employee.
8. Notices.
Any notice required or permitted to be given hereunder shall be deemed
given when delivered by hand or when deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid, (i) if
to the Company, to the address of Company's principal offices in Birmingham,
Alabama, and (ii) if to the Employee, to his address as reflected on the payroll
records of the Company, or to such other address as either party hereto may from
time to time give notice of to the other.
9. Benefits; Binding Effect.
This Agreement shall be for the benefit of and binding upon the parties
hereto and their respective heirs, personal representatives, legal
representatives, successors and where applicable, assigns, including, without
limitation, any successor to the Company, whether by merger, consolidation, sale
of stock sale of assets or otherwise; provided, however that the Employee shall
not delegate his employment obligations hereunder, or any portion thereof, to
any other person.
10. Severability.
The invalidity of any one or more of the words, phrases, sentences, clauses
or sections contained in this Agreement shall not affect the enforceability of
the remaining portions of this Agreement or any part thereof, all of which are
inserted conditionally on their being valid in law, and, in the event that any
one or more of the words, phrases, sentences, clauses or section contained in
this Agreement shall be declared invalid, this Agreement shall be construed as
if such invalid word or words, phrase or phrases, sentence or sentences, clause
or clauses, or section or sections had not been inserted. If such invalidity is
caused by length of time or size of area, or both, the otherwise invalid
provision will be considered to be reduced to a period or area which would cure
such invalidity.
11. Waivers.
The waiver by either party hereto of a breach or violation of any term or
provision of this Agreement shall not operate nor be construed as a waiver of
any subsequent breach or violation.
12. Damages.
Nothing contained herein shall be construed to prevent the Company or the
Employee from seeking and recovering from the other damages sustained by either
or both of them as a result of its or his breach of any term or provision of
this Agreement. In the event that either party hereto seeks arbitration of a
claim for the collection of any damages resulting from, or files suite for the
injunction of any action constituting, a breach of any of the terms or
provisions of this Agreement, then the breeching party shall pay all reasonable
arbitration costs or court cost and attorney's fees of the other.
13. Section Headings.
The section headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
14. No Third Party Beneficiary.
Nothing expressed or implied in this Agreement is intended, or shall be
construed, to confer upon or give any person other than the Company, the parties
hereto and their respective heirs, personal representatives, legal
representatives, successors and assigns, any rights or remedies under or by
reason of this Agreement.
15. Governing Law; Jurisdiction.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Alabama (i.e., without giving effect to any choice
or conflict of law provision or rule (whether of the State of Alabama or any
other jurisdiction) that would case the application of the laws of any
jurisdiction other than the State of Alabama). Subject to the arbitration
provisions under Section 16 and the last sentence of this Section 15, each of
the Parties hereby (i) irrevocably submits to the exclusive jurisdiction of any
state court sitting in Shelby County, Alabama or federal court sitting in
Jefferson County, Alabama in any action, suit or proceeding arising out of or
relating to this Agreement that by law cannot e resolved by arbitration and
agrees that all claims in respect of such action or proceeding may be heard and
determined in any such court, (ii) waives, and agrees not to assert in any such
suit, action or proceeding, any claim that (A) such Party is not personally
subject to the jurisdiction of such court or of any other court to which
proceedings in such court may be appealed, (B) such suit, action or proceeding
is brought in an inconvenient forum or (C) the venue of such suit, action or
proceeding is improper, (iii) expressly waives any requirement for the posting
of a bond by the party bringing such suit, action or proceeding and (iv)
consents to process being served in any such suit, action or proceeding by
mailing, certified mail, return receipt requested, a copy thereof to such party
at the address in effect for notices hereunder, and agrees that such services
shall constitute good and sufficient service of process and notice thereof.
Nothing in this Agreement shall affect or limit any right to serve process in
any other manner permitted by law or shall be construed to prevent the Company
or any of its subsidiaries to bring or pursue, any action arising out of or in
connection with the restrictive covenants under Section 6 in any jurisdiction
where the Employee is allegedly conducting the prohibited activity.
16. Arbitration.
If the Parties should have a material dispute arising out of or relating to
this Agreement or the Parties' respective rights and duties, then the Parties
will resolve such dispute in the following manner: (i) any Party may at any time
deliver to the others a written dispute notice setting forth a brief description
of the issue for which arbitration is requested; (ii) during the 45 day period
following the delivery of the notice described in clause (i) above, appropriate
representatives of the various Parties will meet and seek to resolve the
disputed issue through negotiation, (iii) if representatives of the Parties are
unable to resolve the disputed issue through negotiation, then within 30 days
after the period described in clause (ii) above, the Parties will refer the
issue (to the exclusion of a court of law) to final and binding arbitration in
Shelby County, Alabama in accordance with the then exiting rules (the "Rules")
of the American Arbitration Association ("AAA"), and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof; provided, however, that the law applicable to any controversy shall be
the law of the State of Alabama, regardless of principles of conflicts of laws.
In any arbitration pursuant to this Agreement the award or decision shall be
rendered by an arbitrator appointed by the Company and the Employee. In the
event of failure of the Company and the Employee to agree within 60 days after
the commencement of the arbitration proceeding upon the appointment of the
arbitrator, the arbitrator shall be appointed by the AAA in accordance with the
Rules. Upon the selection of the arbitrator, an award or decision shall be
rendered within no more than 45 days. Notwithstanding the foregoing, the request
by any Party for preliminary or permanent injunctive relief, whether prohibitive
or mandatory, shall not be subject to arbitration and may be adjudicated
exclusively in those courts set forth in Section 15 above.
17. Equitable Remedies.
The Employee acknowledges and agrees that the Company and its subsidiaries
would not have an adequate remedy at law in the event any of the provisions of
the restrictive covenants in Section 6 of this Agreement are not performed in
accordance with their specific terms or are breached, and that a breach by the
Employee of any of the covenants contained in Section 6 will cause irreparable
harm and damage to the Company and its subsidiaries, the monetary amount of
which may be virtually impossible to ascertain. Accordingly, notwithstanding
anything contrary in this Agreement, the Employee agrees that the Company and
its subsidiaries shall be entitled to an immediate injunction or injunctions to
prevent breaches of any provision of any of Section 6 and to enforce
specifically the terms and provisions thereof in any action instituted in those
courts set forth in Section 15 above, and that such right to injunction shall be
cumulative and in addition to whatever other remedies the Company my possess.
The obligations of the Employee under Section 6 of this Agreement shall
constitute covenants that are independent from any obligations that are or in
the future may be owing to the Employee by the Company and, accordingly, shall
be enforceable by the Company notwithstanding any breach or alleged breach by
the Company of any obligation to the Employee.
(Signatures appear on next page)
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
WINSLOEW FURNITURE, INC.
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
President and CEO
------------------------------------
By: _________________________________
Its: _________________________________
Employee
By: /s/Xxxxxxx X Xxxxxx
Xxxxxxx X Xxxxxx
