EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and effective as
of October 6th, 1998, by and between XXXX INDUSTRIES, INC., a Georgia
corporation ("Employer") and XXXXXX X. XXXX, an individual resident of the State
of Georgia (the "Executive").
RECITALS
Concurrently with the execution and delivery of this Agreement,
Employer is acquiring Queen Carpet Corporation, a Georgia corporation (the
"Company") pursuant to merger of the Company with and into Employer in
accordance with that certain Agreement and Plan of Merger, dated August 13,
1998, by and among Employer, Xxxxxxxx Acquisition Corp., a wholly-owned
subsidiary of Employer (the "Subsidiary"), the Company, Executive, Xxxxx Xxxx,
Xxxxx Xxxx Family Trust, Xxxxxx Xxxx Family Trust, and Xxxxx Xxxx Schejola
Family Trust, as amended by that certain First Amendment to Agreement and Plan
of Merger dated of even date herewith (as amended, the "Merger Agreement"),.
Subject to the terms and conditions set forth herein, Employer desires to employ
Executive.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For the purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1. Capitalized terms not
expressly defined in this Agreement shall have the meanings ascribed to them in
the Merger Agreement.
"Agreement"--this Employment Agreement, as amended from time to time.
"Basic Compensation"--Salary and Benefits.
"Benefits"--as defined in Section 3.1(b).
"Confidential Information"--any and all:
(a) trade secrets concerning the business and affairs of
Employer or its affiliates or subsidiaries, product specifications, data,
formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples and inventions, past, current, and planned research and
development, current and planned manufacturing or distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer software and programs (including
object code and source code), computer software and database technologies,
systems, structures, and architectures (and related formulae, compositions,
processes, improvements, devices, inventions, discoveries, concepts, designs,
methods and information); and
(b) information concerning the business and affairs of
Employer or its subsidiaries or affiliates (which includes historical financial
statements, financial projections and budgets, historical and projected sales,
capital spending budgets and plans, the names and backgrounds of key personnel,
and personnel training and techniques and materials) however documented; and
(c) notes, analyses, compilations, studies, summaries, and
other material prepared by or for Employer or its subsidiaries or affiliates
containing or based, in whole or in part, on any information included in the
foregoing;
provided that the information listed in (a) through (c) above shall not be
deemed to be Confidential Information if such information is already known by
Executive or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of Executive.
"disability"--as defined in Section 6.2.
"Effective Date"--the date stated in the first paragraph of this
Agreement.
"Employee Invention"--any idea, invention, technique, modification,
process, or improvement (whether patentable or not), any industrial design
(whether registerable or not), and any work of authorship (whether or not
copyright protection may be obtained for it) created, conceived, or developed by
the Executive, either solely or in conjunction with others, during the
Employment Period, or a period that includes a portion of the Employment Period,
that relates in any way to, or is useful in any manner in, the business then
being conducted or proposed to be conducted by Employer or its subsidiaries or
affiliates, and any such item created by the Executive, either solely or in
conjunction with others, following termination of the Executive's employment
with Employer, that is based upon or uses Confidential Information.
"Employer Board of Directors"--the board of directors of Employer.
"Employment Period"--the term of this Agreement.
"Executive Committee" -- the Executive Committee of the Board of
Directors of Employer.
"for cause"--as defined in Section 6.3.
"Noncompetition Agreement"--as defined in Section 6.3.
"person"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, or governmental body.
"Post-Employment Period"-- the five (5) year period beginning on the
date of termination of the Executive's employment with the Employer.
"Proprietary Items"--as defined in Section 7.2(a)(iv).
EXHIBIT 10-G - PAGE 2
"Salary"--as defined in Section 3.1(a).
2. EMPLOYMENT TERMS AND DUTIES
2.1. Employment. Employer hereby employs the Executive, and the
Executive hereby accepts employment by Employer, upon the terms and conditions
set forth in this Agreement.
2.2. Term. Subject to the provisions of Section 6, the term of the
Executive's employment under this Agreement will begin on the Effective Date and
end on the fifth anniversary of the Effective Date.
2.3. Duties. The Executive will have such duties commensurate with his
titles as are assigned or delegated to the Executive by the Employer Board of
Directors, and will serve as Executive Vice President of Employer, and President
of the Queen Carpet Division of Employer during the entire term of this
Agreement. In addition, Employer shall nominate Executive to serve on its Board
of Directors and shall cause Executive to be elected to the Board of Directors
of Employer and to be appointed to serve on the Executive Committee of the Board
of Directors of Employer. The Executive will devote his entire business time,
attention, skill, and energy exclusively to the business of Employer, will use
his best efforts to promote the success of Employer's business, and will
cooperate fully with the Employer Board of Directors in the advancement of the
best interests of Employer. Nothing in this Section 2.3, however, will prevent
the Executive from engaging in additional activities in connection with personal
investments and community affairs that are not inconsistent with the Executive's
duties under this Agreement. If the Executive is elected as a director of any of
Employer's subsidiaries or affiliates, or as an officer in addition to his
positions described herein, the Executive will fulfill his duties as such
director or officer without additional compensation.
3. COMPENSATION
3.1. Basic Compensation.
(a) Salary and Bonus. The Executive will be paid an annual
salary and bonus described on Exhibit A attached hereto (the "Salary"), which
will be payable by Employer in equal periodic installments according to
Employer's customary payroll practices, but no less frequently than monthly, and
shall be subject to and reduced by any applicable federal state and/or local
income and/or payroll tax withholding and reporting requirements.
(b) Benefits. The Executive will, during the Employment
Period, participate in such profit sharing, life insurance, hospitalization,
major medical, and other employee benefit plans of Employer as are generally
made available from time to time to executive officers of Employer, to the
extent the Executive is eligible under the terms of those plans (collectively,
the "Benefits"). Executive will receive credit with respect to Benefits for his
prior term of employment by the Company, and to the extent permissible under the
Benefits plans, any "pre-existing condition" limitation on coverage thereunder
shall be waived.
EXHIBIT 10-G - PAGE 3
4. FACILITIES AND EXPENSES
Employer will furnish the Executive office space, equipment, supplies,
and such other facilities and personnel as Employer deems necessary or
appropriate for the performance of the Executive's duties under this Agreement.
In addition, Employer will provide secretarial and similar services with respect
to the reasonable additional requirements of Executive. Employer (where
appropriate) will pay the Executive's dues in such professional societies, and
will pay on behalf of the Executive (or reimburse the Executive for) reasonable
expenses incurred by the Executive at the request of, or on behalf of, Employer
in the performance of the Executive's duties pursuant to this Agreement, in
accordance with Employer's employment policies as determined from time to time
by the Employer Board of Directors, including reasonable expenses incurred by
the Executive in attending conventions, seminars, and other business meetings,
in appropriate business entertainment activities, and for promotional expenses.
The Executive shall file expense reports with respect to such expenses in
accordance with Employer's policies as determined from time to time by the
Employer Board of Directors.
5. VACATIONS AND HOLIDAYS
The Executive will be entitled to paid vacation, holidays and other
paid leave in accordance with the policies of Employer as determined from time
to time by the Employer Board of Directors. Executive will receive credit with
respect to such policies for his prior term of employment by the Company.
6. TERMINATION
6.1. Events of Termination. The Employment Period, the Executive's Basic
Compensation as set forth in Section 3.1 above and any and all other rights of
the Executive under this Agreement or otherwise as an employee of Employer will
terminate (except as otherwise provided in this Section 6):
(a) upon the death of the Executive;
(b) upon the disability of the Executive (as defined in
Section 6.2) immediately upon notice from either party to the other; or
(c) for cause (as defined in Section 6.3), immediately upon
notice from Employer to the Executive, or at such later time as such notice may
specify.
6.2. Definition of Disability. For purposes of Section 6.1, the
Executive will be deemed to have a "disability" if, for physical or mental
reasons, the Executive is unable to perform the essential functions of the
Executive's duties with or without reasonable accommodation under this Agreement
for 120 consecutive days, or 180 days during any 12-month period, as determined
in accordance with this Section 6.2. The disability of the Executive will be
determined by a medical doctor selected by written agreement of Employer and the
Executive upon the request of either party by notice to the other (the "Original
Notice"). If Employer and the Executive cannot agree on the selection of a
medical doctor within 30 days of such Original Notice, each of them will select
EXHIBIT 10-G - PAGE 4
a medical doctor within 45 days of such Original Notice and the two medical
doctors will select a third medical doctor within 60 days of such Original
Notice who will determine whether the Executive has a disability. The
determination of the medical doctor selected under this Section 6.2 will be
binding on both parties. The Executive must submit to a reasonable number of
examinations by the medical doctor making the determination of disability under
this Section 6.2, and the Executive hereby authorizes the disclosure and release
to Employer of such determination and all supporting medical records. If the
Executive is not legally competent, the Executive's legal guardian or duly
authorized attorney-in-fact will act in the Executive's stead, under this
Section 6.2, for the purposes of submitting the Executive to the examinations,
and providing the authorization of disclosure, required under this Section 6.2.
6.3. Definition of "For Cause". For purposes of Section 6.1, the phrase
"for cause" means: (a) the Executive's material breach of this Agreement, or the
Noncompetition Agreement entered into on the date hereof between Employer and
the Executive (the "Noncompetition Agreement") pursuant to the Merger Agreement,
in each case following notice of such breach and an opportunity to cure the same
within ten (10) days of written notice thereof; (b) the Executive's unreasonable
failure to adhere to any material or fundamental Employer policy or directive if
the Executive has been given a reasonable opportunity to comply with such policy
or directive or cure his failure to comply (for this purpose "reasonable
opportunity" shall not exceed a ten-day period following written notice of
failure to comply); (c) the appropriation (or attempted appropriation) of a
material business opportunity of Employer or any of its subsidiaries or
affiliates for personal profit and without the consent of Employer; (d) the
material misappropriation (or attempted misappropriation) of any funds or
property of Employer or any of its subsidiaries or affiliates; (e) the
conviction of, or the entering of a guilty plea or plea of no contest with
respect to, a felony, or the equivalent thereof; or (f) Executive's unreasonable
misconduct or gross negligence in performing his duties and responsibilities
hereunder to the extent materially injurious to the conduct of the business of
Employer or its affiliates or subsidiaries.
6.4. Termination Pay. Effective upon the termination of this Agreement,
Employer will be obligated to pay Basic Compensation to the Executive (or, in
the event of his death, his designated beneficiary) only as follows:
(a) Termination by Employer for cause. If Employer terminates
this Agreement for cause, the Executive will be entitled to receive his Salary
only through the date such termination is effective and the Executive will not
be entitled to receive any bonus unpaid as of such date.
(b) Termination upon Disability. If this Agreement is
terminated by either party as a result of the Executive's disability, as
determined under Section 6.2, Employer shall pay the Executive his Salary
through the remainder of the calendar month during which such termination is
effective and for the lesser of (i) six (6) consecutive months thereafter, or
(ii) the period until disability insurance benefits commence under any
disability insurance coverage furnished by Employer to the Executive.
(c) Termination upon Death. If this Agreement is terminated
because of the Executive's death, the Executive's personal representative will
be entitled to receive the Executive's Salary through the end of the calendar
month in which the Executive's death occurs.
(d) Benefits. Except as provided in Section 6.4(e) below, the
EXHIBIT 10-G - PAGE 5
Executive's accrual of, or participation in plans providing for, the Benefits
will cease at the effective date of the termination of this Agreement, and the
Executive will be entitled to accrued Benefits pursuant to such plans only as
provided in such plans.
(e) Termination Other than for cause. If this Agreement is
terminated by Employer for any reason other than one provided under Section 6.1,
Executive shall be entitled to receive the Salary and Benefits provided pursuant
to Section 3.1 for the period commencing on the effective date of such
termination and ending on the fifth anniversary of the date hereof.
7. NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS
7.1. Acknowledgements by the Executive. The Executive acknowledges that
(a) during the Employment Period and as a part of his employment, the Executive
will be afforded access to Confidential Information and will create Confidential
Information on behalf of Employer and its subsidiaries and affiliates; (b)
public disclosure of such Confidential Information could have an adverse effect
on Employer or its subsidiaries or affiliates and their respective businesses;
(c) Employer has required that the Executive make the covenants in this Section
7 as a condition to consummation of the transactions contemplated by the Merger
Agreement; and (d) the provisions of this Section 7 are reasonable and necessary
to prevent the improper use or disclosure of Confidential Information and to
provide Employer with exclusive ownership of all Employee Inventions.
7.2. Agreements of the Executive. In consideration of the compensation
and benefits to be paid or provided to the Executive by Employer under this
Agreement, the Executive covenants as follows:
(a) Confidentiality.
(i) During the Employment Period and the Post-Employment
Period, the Executive will hold in confidence the Confidential
Information and will not disclose it to any person except with
the specific prior written consent of the Employer Board of
Directors or except as otherwise expressly permitted by the
terms of this Agreement.
(ii) Any trade secrets of Employer or its subsidiaries or
affiliates will be entitled to all of the protections and
benefits under applicable state trade secret law and any other
applicable law. If any information that Employer or any of its
subsidiaries or affiliates deems to be a trade secret is found
by a court of competent jurisdiction not to be a trade secret
for purposes of this Agreement, such information will,
nevertheless, be considered Confidential Information for
purposes of this Agreement.
(iii) None of the foregoing obligations and restrictions
applies to any part of the Confidential Information that the
Executive demonstrates was or became generally available to
the public other than as a result of a disclosure by the
Executive.
EXHIBIT 10-G - PAGE 6
(iv) The Executive will not remove from the premises of
Employer or its subsidiaries and affiliates (except to the
extent such removal is for purposes of the performance of the
Executive's duties at home or while traveling, or except as
otherwise specifically authorized by the Employer Board of
Directors) any Confidential Information, document, record,
notebook, plan, model, component, device, or computer software
or code, whether embodied in a disk or in any other form
(collectively, the "Proprietary Items"). The Executive
recognizes that, as between Employer and its subsidiaries and
affiliates and the Executive, all of the Proprietary Items,
whether or not developed by the Executive, are the exclusive
property of Employer and its subsidiaries and affiliates. Upon
termination of this Agreement, or upon the request of the
Board of Directors during the Employment Period, the Executive
will return to Employer and its subsidiaries and affiliates
all of the Proprietary Items in the Executive's possession or
subject to the Executive's control, and the Executive shall
not retain any copies, abstracts, sketches, or other physical
embodiment of any of the Proprietary Items.
(b) Employee Inventions. Each Employee Invention will belong
exclusively to Employer. The Executive acknowledges that all of the Executive's
writing, works of authorship, and other Employee Inventions are works made for
hire and the property of Employer, including any copyrights, patents, or other
intellectual property rights pertaining thereto. If it is determined that any
such works are not works made for hire, the Executive hereby assigns to Employer
all of the Executive's right, title, and interest including all rights of
copyright, patent, and other intellectual property rights, to or in such
Employee Inventions. The Executive covenants that he will promptly:
(i) disclose to Employer in writing any Employee
Invention;
(ii) assign to Employer or to a party designated by
Employer, at Employer's request and without additional
compensation, all of the Executive's rights to the Employee
Invention for the United States and all foreign jurisdictions;
(iii) execute and deliver to Employer such applications,
assignments, and other documents as Employer may request in
order to apply for and obtain patents or other registrations
with respect to any Employee Invention in the United States
and any foreign jurisdictions;
(iv) sign all other papers necessary to carry out the
above obligations; and
(v) give testimony and render any other assistance in
support of Employer's rights to any Employee Invention.
7.3. Disputes or Controversies. The Executive recognizes that should a
dispute or controversy arising from or relating to this Agreement be submitted
for adjudication to any court, arbitration panel, or other third party, the
preservation of the secrecy of Confidential Information may be jeopardized. All
pleadings, documents, testimony, and records relating to any such adjudication
will be maintained in secrecy and will be available for inspection by Employer,
the Executive, and their respective attorneys and experts, who will agree, in
EXHIBIT 10-G - PAGE 7
advance and in writing, to receive and maintain all such information in secrecy,
except as may be limited by them in writing.
8. GENERAL PROVISIONS
8.1. Injunctive Relief and Additional Remedy. The Executive
acknowledges that the injury that would be suffered by Employer as a result of a
breach of the provisions of this Agreement (including any provision of Section
7) would be irreparable and that an award of monetary damages to Employer for
such a breach would be an inadequate remedy. Consequently, Employer will have
the right, in addition to any other rights it may have, to obtain injunctive
relief to restrain any breach or threatened breach or otherwise to specifically
enforce any provision of this Agreement, and Employer will not be obligated to
post bond or other security in seeking such relief. Without limiting Employer's
rights under this Section 8 or any other remedies of Employer, if the Executive
breaches any of the provisions of Section 7, Employer will have the right to
cease making any payments otherwise due to the Executive under this Agreement.
8.2. Covenants of Section 7 are Essential and Independent Covenants.
The covenants by the Executive in Section 7 are essential elements of this
Agreement, and without the Executive's agreement to comply with such covenants,
Employer would not have entered into the Merger Agreement, this Agreement or
employed or continued the employment of the Executive. Employer and the
Executive have independently consulted their respective counsel and have been
advised in all respects concerning the reasonableness and propriety of such
covenants, with specific regard to the nature of the business conducted by
Employer.
The Executive's covenants in Section 7 are independent covenants and
the existence of any claim by the Executive against Employer under this
Agreement or otherwise, will not excuse the Executive's breach of any covenant
in Section 7.
If the Executive's employment hereunder expires or is terminated, this
Agreement will continue in full force and effect as is necessary or appropriate
to enforce the covenants and agreements of the Executive in Section 7.
8.3. Representations and Warranties by the Executive. The Executive
represents and warrants to Employer that the execution and delivery by the
Executive of this Agreement do not, and the performance by the Executive of the
Executive's obligations hereunder will not, with or without the giving of notice
or the passage of time, or both: (a) violate any judgment, writ, injunction, or
order of any court, arbitrator, or governmental agency applicable to the
Executive; or (b) conflict with, result in the breach of any provisions of or
the termination of, or constitute a default under, any agreement to which the
Executive is a party or by which the Executive is or may be bound.
8.4. Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by either
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
EXHIBIT 10-G - PAGE 8
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.
8.5. Binding Effect; Delegation of Duties Prohibited. This Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto and
their respective successors, permitted assigns, heirs, and legal
representatives, including any entity with which Employer may merge or
consolidate or to which all or substantially all of its assets may be
transferred. The duties and covenants of the Executive under this Agreement,
being personal, may not be delegated.
8.6. Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (effective upon written confirmation of
receipt), (b) sent by facsimile (effective upon written confirmation of
receipt), provided that a copy is mailed by registered mail, return receipt
requested, or (c) received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case to the appropriate
addresses and facsimile numbers set forth below (or to such other addresses and
facsimile numbers as a party may designate by notice to the other parties):
If to Employer:
Xxxx Industries, Inc.
X.X. Xxxxxx 0000
Xxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
With a copy to (which shall not constitute notice):
Powell, Goldstein, Xxxxxx & Xxxxxx LLP
Sixteenth Floor
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. XxXxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Executive:
Xxxxxx X. Xxxx
000 Xx. Xxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
Facsimile No.:
With a copy to (which shall not constitute notice):
EXHIBIT 10-G - PAGE 9
Kinney, Kemp, Sponcler, Xxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: H. Xxxxxx Xxxxxx, Xx., Esq.
Facsimile No.: (000) 000-0000
8.7. Entire Agreement; Amendments. This Agreement (together with
exhibits attached hereto), the Merger Agreement (together with schedules and
exhibits attached thereto), and the documents executed in connection with the
Merger Agreement, contain the entire agreement between the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, between the parties hereto with respect to the
subject matter hereof. This Agreement may not be amended orally, but only by an
agreement in writing signed by the parties hereto.
8.8. Governing Law. This Agreement will be governed by the laws
of the State of Georgia without regard to conflicts of laws principles.
8.9. Jurisdiction. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement may be
brought against either of the parties in the United States District Court for
the Northern District of Georgia, or if jurisdiction and venue is not proper in
federal court, then the Superior Court of Xxxxxxxxx County, Georgia, and each of
the parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on either party anywhere in the world.
8.10. Section Headings, 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.
8.11. Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
8.12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK;
SIGNATURES CONTAINED ON NEXT PAGE.]
EXHIBIT 10-G - PAGE 10
IN WITNESS WHEREOF, the corporate party hereto has caused this
Agreement to be executed by its duly authorized representative, and the
individual party has executed and delivered this Agreement, as of the date above
first written above.
EMPLOYER:
XXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
EXECUTIVE:
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
EXHIBIT 10-G - PAGE 11
EXHIBIT A
SALARY AND BONUS
Salary: Not less than $600,000 per annum, subject to annual
review by the Compensation Committee of the Board of
Directors.
Bonus: Senior Executive Bonus Program of the Company, as
determined from time to time, provided that the Senior
Executive Bonus Program applicable to Executive shall
be consistent with that of the President of the Company.
EXHIBIT 10-G - PAGE 12
