EXHIBIT 10.2
EMPLOYMENT AGREEMENT DATED
DECEMBER 31, 1996 BETWEEN
NEW DIRECTIONS MANUFACTURING, INC. AND XXXX XXXXXX, XX.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made this 31st day of December,
1996; by and between New Directions Manufacturing, Inc., an Arizona corporation
with offices located at 0000 Xxxx Xxxxxxxx, Xxxxxxx, Xxxxxxx 00000 ("Employer"),
and Xxxx Xxxxxx, Xx., a natural person ("Employee").
PREMISES
WHEREAS, Employer is in the business of manufacturing, distributing and
marketing contemporary oak wood furniture throughout the United States and
Canada;
WHEREAS, Employee has the requisite skills and experience to manage a
company in a business such as Employer and desires to enter into a written
agreement to serve as Executive Vice President of Employer; and
WHEREAS, Employer desires to secure the services of Employee pursuant to
the terms and conditions of an employment agreement and to protect its interest
by obtaining certain covenants from Employee.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree as follows:
1. Employment. Employer employs Employee and Employee accepts employment
as Executive Vice President of Employer upon the terms and conditions set forth
in this Agreement.
2. Term. The term of this Agreement shall commence January 7, 1997 (the
"Effective Date"), and shall continue for an initial term of three (3) years.
This Agreement may be renewed at the end of the term for an additional term upon
the written agreement of the parties. If there is no written agreement for any
additional term(s) then Employee's employment will continue on a month to month
basis subject to termination pursuant to the terms of this Agreement.
3. Compensation. In consideration of the services rendered to Employer
by Employee during the term of this Agreement, Employer shall provide Employee
the following compensation:
(a) Monthly Salary. Employer shall pay Employee a salary at the
monthly rate of $8,333.33 (the "Monthly Salary"), such salary to be subject to
all applicable local, state and federal withholding taxes, fees, and other
assessments. The Monthly Salary shall be payable to Employee in accordance with
the normal payroll practices of Employer then in effect. Employee shall be
solely responsible for income taxes, fees or other assessments imposed on
employee by reasons of any cash or non-cash compensation and benefits provided
by this Agreement.
(b) Other Compensation. In addition to the Monthly Salary, Employee
shall be entitled to the following:
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(i) all legal and religious national holidays, and 21 days paid
vacation/sick leave per annum commencing in the first year of this Agreement.
All vacation time and paid sick leave shall be earned on a trimester basis.
Employee shall arrange for vacations in advance at such time or times as shall
be mutually agreeable to Employee and the President of Employer. Employee may
not receive pay in lieu of vacation/sick leave;
(ii) participation in a bonus plan to be established by Employer;
(iii) participation in all employee benefit plans and arrangements
adopted by Employer and provided to Employee relating to pensions, hospital,
medical, dental, disability and life insurance, deferred salary and savings
plans, and other similar employee benefit plans or arrangements (each, an
"Employee Benefit Plan"), to the extent that Employee meets the eligibility
requirements for any such Employee Benefit Plan in accordance with the
provisions of each Employee Benefit Plan as in effect from time to time;
provided, however, that nothing in this paragraph shall require Employer to
provide health or medical insurance benefits to Employee or any dependent of
Employee with respect to any condition existing prior to the Effective Date of
this Agreement, except as may be covered by Employer's health and medical
insurance plans sponsored for employees in general; and
(iv) payment or reimbursement by Employer for budgeted expenses
incurred by Employee in connection with the performance by Employee of his
duties under this Agreement in accordance with Employer's policies and practices
for reimbursement of such expenses with respect to Employer's practices for
reimbursement of such expenses with respect to Employer's executive officers
(e.g. class of travel, hotel, spousal travel allowances, etc.), as in effect
from time to time, including, without limitation, reasonable and necessary
travel, lodging, entertainment and meals incurred by Employee in furtherance of
Employer's business and at Employer's request (including, without limitation,
expenses associated with any required travel exceeding 100 miles measured from
Employer's current principal place of business in Phoenix, Arizona).
4. Duties. During the term of this Agreement, Employee shall initially
serve as the Executive Vice President of Employer. Employee shall perform the
tasks and have the rights, powers and obligations normally associated with the
office of Executive Vice President. Subject to Employee's consent and
agreement, such agreement not to be unreasonably withheld by Employee, Employee
agrees to serve in such other offices or positions with Employer that Employer's
Board of Directors shall reasonably request.
(a) Throughout the term of this Agreement, Employee shall devote his
full business time, best efforts, attention and skill to, and shall perform
faithfully, loyally and efficiently his duties as Executive Vice President of
Employer, including acting as a spokesperson for Employer (e.g. interfacing with
celebrities, media figures, and similar persons to promote Employer's brand and
products), interviewing twith the media and participating in market specific
media tours, attending major trade shows and conventions, visiting with key
customers, making himself available for financial public relations, and making
himself available for international public relations; keeping abreast of
scheduling for product lines, marketing, advertising and promotional
presentations and strategic planning meetings; continuing his public speazking
activities in promotion of the business and activities of Employer, as well as
engaging in various other public relations activities on behalf of Employer; adn
to the exercise of such powers, the performance of such duties and the
fulfillment of such other services and responsibilities as may be duly assigned
to or vested in Employee in furtherance of the
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foregoing duties by the Board of Directors and/or the President and Chief
Executive Officer of Employer, if any. During the term of this Agreement,
Employee shall (i) coordinate and mutually agree upon his calendar with the
President of Employer; (ii) report directly to the President and Chief Executive
Officer, if any, of Employer; (iii) attend all meetings of the Board of
Directors and all meetings of Employer's Management Committee, if any; (iv)
participate in the development of Employer's budget; and (v) use Employee's
reasonable best efforts to promote the interests of Employer. Employee will not,
without the prior written approval of the Board of Directors, engage in any
other business activity which would interfere with the performance of Employee's
duties, services and responsibilities or which is in violation of either the
terms of this Agreement or the policies established form time to time by
Employer (unless specifically permitted by this Agreement or other writing
signed by or on behalf of Employer);
(b) Employee will punctually and faithfully perform and observe any
and all rules and regulations which Employer may now or shall hereafter
reasonably establish governing Employee's conduct and the conduct of Employer's
business which are consistent with this Agreement.
5. Extent of Services/Conduct. Employee may perform services for other
organizations and volunteer for one or more charitable organizations provided
that, in the reasonable judgment of the Board of Directors, such services do not
interfere and are not inconsistent with Employee's duties and obligations under
this Agreement. Employee may invest his assets in such form or manner as will
not require his services in the operation of the affairs of the companies in
which such investments are made, and provided further that Employee shall not
make a "direct" investment in any specific company which, in the reasonable
judgment of the Board of Directors, is in direct competition with the business
of Employer. For the purposes of this Section 5, an investment in a mutual fund
registered under the Investment Company Act of 1940, as amended, shall not be
considered a "direct" investment in any specific company. Employee pledges his
careful avoidance of all persona acts, habits, usages, and statement which might
injure, in any manner, directly or indirectly, the personal or business or
reputation of Employer.
6. Covenant Not to Compete. Except as may be expressly consented to by
the Board of Directors, Employee covenants and agrees for the benefit of
Employer and Employer's successors and assigns that during the term of this
Agreement or for a period of five (5) years following the Effective Date,
whichever shall be longer (the "Restrictive Period"), Employee will not engage
or participate, directly or indirectly, as principal, agent, employee, employer,
consultant or in any other individual or representative capacity whatever, in
the conduct or management of, own (legally or beneficially) or have the right or
option to acquire, any direct or indirect interest in any business which, in the
reasonable judgment of the Board of Directors, engages, directly or indirectly,
in the business of manufacturing, distributing or marketing like product, or
otherwise competes with Employer's business or business prospects.
Additionally, during the Restrictive Period Employee will not without
the written consent of Employer, directly or indirectly: (i) call on, solicit,
or use any of the customers or suppliers of Employer or its successors and
assigns either for Employee or for any other person, association or entity; or
(ii) solicit or hire employees of Employer or its successors and assigns either
for Employee or for any other person, association or entity. Employee
specifically acknowledges and agrees that the foregoing covenants are reasonable
in content and scope and are given for adequate consideration. Employer shall
have the option to reduce the scope and extent of the foregoing covenants, by
written
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notice to Employee, either before or after any adjudication of the legality of
said covenants, whereupon said covenants, as so reduced, shall be binding and
enforceable against Employer.
7. Non-Disclosure of Information. In further consideration of employment
and the continuation of employment by Employer, Employee will not, directly or
indirectly, during or after the term of employment, disclose to any person not
authorized by Employer to receive or use such information except, for the sole
benefit of Employer, any of Employer's confidential or proprietary data,
information, or techniques, or give to any person not authorized by Employer to
receive it, any information that is not generally known to anyone other than
Employer or that is designated by Employer as "Limited," "Private,"
"Confidential," or similarly designated.
8. Termination of Employment. Employee's employment hereunder shall
terminate upon the earliest to occur of any of the following events, on the
dates and at the times specified below:
(a) the close of business on the last day of the term of this
Agreement and any extension thereof (the "Expiration Date");
(b) the close of business on the date of Employee's death ("Death");
(c) the close of business on the Termination Date (as defined below)
specified in the Notice of Termination (as defined below) which Employer shall
have delivered to Employee due to Employee's Disability. "Disability" shall
refer to any situation in which (i) Employee is absent from work for 180
calendar days in any twelve-month period by reason of illness or incapacity
whether physical or otherwise; or (ii) the Board of Directors reasonably
determines that Employee is unable to perform his duties, services and
responsibilities by reason of illness or incapacity (whether physical or
otherwise) for a total of 180 calendar days in any twelve-month period during
the term of this Agreement. Employee agrees, in the event of any dispute under
this Subsection 8(c), and after receipt by Employee of such Notice of
Termination from Employer, to submit to a physical examination by a licensed
physician selected by Employer. Employee may seek a second opinion from a
licensed physician acceptable to Employer. If the results o the first
examination and the second examination are different, a licensed physician
selected by the physicians who have performed the first and second examinations
shall perform a third physical examination of Employee, the result of which
shall be determinative for purposes of this Subsection 8(c);
(d) the close of business on the Termination Date specified in the
Notice of Termination which Employee shall have delivered to Employer to
terminate his employment ("Voluntary Termination:); and
(e) the close of business on the Termination Date specified in the
Notice of Termination which Employer shall have delivered to Employee to
terminate Employee's employment for Cause. "Cause" as used herein shall include
termination based on (i) Employee's material breach of this Agreement; (ii)
conviction of Employee for any crime constituting a felony in the jurisdiction
in which committed, any crime involving moral turpitude whether or not a felony,
or any other criminal act against Employer involving dishonesty or willful
misconduct intended to injure Employer (whether or not a felony); (iii)
substance abuse by Employee; (iv) the failure or refusal of Employee to follow
one or more lawful and proper directives of the Board of Directors delivered to
Employee in writing; (v) willful malfeasance or gross misconduct by Employee
which discredits or damages Employer; or (vi) unauthorized disclosure of
confidences of Employer.
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9. Notice of Termination. Any purported termination of Employee's
employment hereunder by either Employer or Employee (other than by reason of
Death or on the Expiration Date) shall be communicated by written Notice of
Termination to the other party. As used herein, "Notice of Termination" shall
mean a notice which indicates the specific termination provision in this
Agreement relied upon and sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee's
employment herein.
10. Termination Date. As used herein, the term "Termination Date" shall
mean (i) the date of Employee's death; or (ii) the Expiration Date; or (iii) the
date specified in the Notice of Termination.
11. Accrued Salary, Benefits. Upon termination of this Agreement, all
unpaid but earned or accrued salary as of the Termination Date, shall be due and
payable to Employee, Employee's designee(s), or in the absence of such
designation, Employee's estate, within thirty (30) days after the Termination
Date.
12. Disability. If the Employee is unable to perform his services by
reason of illness or incapacity, the compensation payable to him under Section 3
herein shall continue only in accordance with decision unilaterally reached by
the Board of Directors or pursuant to any written policy of the Company.
13. Sale of Business. The provisions of this Agreement shall survive the
sale or transfer of Employer or Employer's business, and Employer's successor-
in-interest or the purchaser of Employer's business, whichever shall be the
case, shall be subject to and bound by the terms of this Agreement. This
provision shall apply in the event of any of the following events:
(a) The sale, by the Employer, of substantially all of its assets to a
single purchaser or group of associated purchasers;
(b) The sale, exchange or other disposition to a single entity or
group of entities under common control in one transaction or series of related
transactions of greater than fifty percent (50%) of the outstanding shares of
the Employer's common stock; or
(c) The merger or consolidation of the Employer in a transaction in
which the shareholders of the Employer receive less than fifty percent (50%) of
the outstanding voting shares of the new or continuing corporation.
14. Employee Not Restricted by Other Agreement. The Employee hereby
expressly represents, warrants, and covenants to the Employer that he is not
bound, in any manner, by any agreement, whether written or oral, which would
restrict him from performing any duties under this Agreement.
15. Survival. The provisions of this Agreement including, specifically,
the Employee's representation, covenants, and agreements set forth in Sections
6, 7, and 13 shall survive the termi nation of this Agreement.
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16. Entire Agreement. This Agreement constitutes the entire understanding
between the parties and there are no covenants, conditions, representation, or
agreements, oral or written, or any nature whatsoever, other than those herein
contained.
17. Amendments. No amendment, alteration, or modification of this
Agreement shall be binding upon the parties hereto unless said amendment,
alteration, or modification is in writing and signed by all parties hereto.
18. Waiver. The waiver of any term, condition, clause, or provision of
this Agreement shall in no way be deemed or considered a waiver of any other
term, condition, clause or provision of this Agreement.
19. Severability. If any term, condition, clause or provision of the
Agreement shall be deemed to be void or invalid then that term, condition,
clause or provision shall be stricken from this Agreement to the extent it is
held to be void or invalid, to be void or invalid and in all other respects this
Agreement shall be valid and in full force and operation.
20. Notices. Any notice or other communication required or permitted
hereunder shall be sent by United States certified mail, postage prepaid,
addressed:
If to Employer: ________________________
Attention: _____________
________________________
________________________
Telephone:
Facsimile:
and, if to Employee: Xxxx Xxxxxx, Xx.
________________________
________________________
Telephone:
Facsimile:
or to such other person or address designated by the parties to receive notice.
The date of the notice shall be the date of the mailing.
21. Additional Documents. The parties hereto agree to execute any and all
additional papers and documents reasonably necessary or appropriate to
effectuate the terms of this Agreement.
22. Governing Law. This Agreement shall be subject to and governed by the
laws of the State of Arizona as applied to residents of the State of Arizona
without regard to conflicts of law principles. Any legal action hereunder shall
be properly commenced only in a federal or state court of competent jurisdiction
in Maricopa County, Arizona. The prevailing party in any such action shall be
entitled to recover, in addition to any relief or award ordered by the court, a
reasonable attorney fee and all costs of court.
23. Assignment. This Agreement shall not be assignable by any party to
this Agreement, except upon the written consent of all parties hereto. The
Employee shall not have the right to pledge,
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encumber, or dispose of the right to receive any payments under this Agreement,
which payments and right thereto are expressly declared to be nonassignable and
nontransferable and, in the event of any attempted assignment or transfer, the
Employer shall have no further liability hereunder.
24. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original but both of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal the day and year first above written.
[Employer] [Employee]
/s/ Xxxx X. Xxx /s/ Xxxxxx X. Xxxxx
--------------------- ------------------------
Xxxx X. Xxx Xxxxxx X. Xxxxx
Chief Executive Officer President
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