Exhibit 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of March 1,
2005 by Xxxxxx Lighting Products, Inc. a Delaware corporation (the "Employer"),
Xxxxxx Xxxxxxxxx, an individual resident in Collin County (the "Executive") and
Craftmade International, Inc., a Delaware corporation ("Craftmade").
RECITALS
Concurrently with the execution and delivery of this Agreement,
Craftmade is acquiring Xxxx Xxxxxx Co., Inc., a Texas corporation doing business
as Xxxxxx Lighting Products ("Xxxxxx Lighting"), through a merger (the "Merger")
of Xxxxxx Lighting with and into Employer, pursuant to a Merger Agreement dated
as of March 1, 2005, among Craftmade, Employer, Executive, Xxxx Xxxxxx and
Xxxxxx Lighting (the "Merger Agreement"). Craftmade and the Employer desire the
Executive's continued employment with Employer, and the Executive wishes to
accept such continued employment, upon the terms and conditions set forth in
this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
For the purposes of this Agreement, the following terms have the
meanings specified or referred to in this Article I.
"Basic Compensation"--Salary and Benefits.
"Board of Directors"--the board of directors of the Employer.
"Confidential Information"--information that is used in either the
Employer's business or in Craftmade's business and
(a) is proprietary to, about or created by the Employer or Craftmade;
(b) gives the Employer or Craftmade some competitive advantage, the
opportunity of obtaining such advantage or the disclosure of which could be
detrimental to the interests of the Employer or Craftmade;
(c) is not typically disclosed to non-employees by Employer or
Craftmade, or otherwise is treated as confidential by the Employer or Craftmade;
or
(d) is designated as Confidential Information by the Employer or
Craftmade or from all the relevant circumstances should reasonably be assumed by
the Employee to be confidential to the Employer or Craftmade and shall include,
but is not limited to:
(1) Customer lists and prospect lists developed by Employer
and Craftmade;
(2) Information regarding the Employer and Craftmade's
customers which Executive acquired as a result of Executive's
employment with the Employer, including but not limited to (i)
customer history, names and contact information, (ii) contact
database, (iii) call reports, (iv) contracts, purchase orders,
and agreements, (v) customer requirements, preferences, and
specifications, (vi) customer financial information, and (vii)
ad material;
(3) Information related to the Employer and Craftmade's
business, including but not limited to (i) marketing
strategies and plans, (ii) operating policies, manuals and
procedures, (iii) pricing and pricing strategies, (iv)
business plans, strategies and designs, (v) pending projects
and proposals, (vi) sales, (vii) profits, (viii) production
numbers, (ix) proprietary production processes, (x) price
lists, quotes and quotas, (xi) engineering drawings, product
specifications, (xii) test documents, and (xiii) other
business and financial information of the Employer;
(4) Information regarding the Employer and Craftmade's
computer and technical programs that Executive acquired as a
result of his employment, including but not limited to (i)
computer processes, (ii) computer programs, codes, and
passwords, and (iii) proprietary technical information such as
formulas and specifications;
(5) Information regarding the Employer and Craftmade's vendors
that Executive acquired as a result of his employment,
including but not limited to, product and service information,
vendor lists, pricing lists and other information regarding
the business activities of such vendors;
(6) Training materials developed by and provided to Executive
by Employer and Craftmade;
(7) Any other information that Executive acquired as a result
of Executive's employment with Employer and/or Craftmade and
which Executive has a reasonable basis to believe Employer and
Craftmade would not want disclosed to a business competitor or
to the general public.
Confidential Information shall not include information publicly known (other
than as a result of a direct or indirect disclosure by the Executive). The
phrase "publicly known" shall mean readily accessible to the public in a written
publication.
"Effective Date"--the date stated in the first paragraph of the
Agreement.
"Employment Period"--the term of the Executive's employment under this
Agreement.
"Fiscal Year"--the Employer's fiscal year, as it exists on the
Effective Date or as changed from time to time.
"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"--for purposes of Section 8.2, the two-year
period beginning on the date of termination of the Executive's employment with
the Employer.
ARTICLE II
EMPLOYMENT TERMS AND DUTIES
2.1 Employment. The Employer hereby employs the Executive commencing as
of the Effective Date, and the Executive hereby accepts employment by the
Employer commencing as of the Effective Date, upon the terms and conditions set
forth in this Agreement.
2.2 Term. Subject to the provisions of Article VI, the term of the
Executive's employment under this Agreement will initially be three years,
beginning on the Effective Date and ending on the third anniversary of the
Effective Date (the "Initial Term"). After the Initial Term, the Agreement shall
be extended for two additional one-year terms (the "First Additional Term" and
the "Second Additional Term," respectively), unless the Executive provides
written notice of election not to renew at least 45 days before the commencement
of the First Additional Term and the Second Additional Term, respectively.
2.3 Duties. The Executive will initially serve as Vice President of the
Employer and will have such duties as are typically commensurate with such
position, subject to the assignment or delegation of duties by the Board of
Directors or Chief Executive Officer of Employer. Except as set forth in the
following sentence, the Executive will devote his entire business time,
attention, skill, and energy exclusively to the business of the Employer, will
use his best efforts to promote the success of the Employer's business, and will
cooperate fully with the Board of Directors in the advancement of the best
interests of the Employer. Employee will be allowed to continue in his current
capacity with TOCOR, Inc., so long as such activities do not adversely affect
his duties or performance with the Company and as long as TOCOR, Inc. is not a
competitor of the Company or Craftmade. Executive shall operate primarily out of
Craftmade's executive office, currently in Coppell, Texas.
ARTICLE III
COMPENSATION
3.1 Basic Compensation.
(a) Salary. The Executive will be paid an annual salary of $200,000.00,
subject to adjustment as provided below (the "Salary"), which will be payable in
equal periodic installments according to the Employer's customary payroll
practices, but no less frequently than monthly. The Salary will be reviewed by
the Board of Directors not less frequently than annually, and may be adjusted
upward in the sole discretion of the Board of Directors.
(b) Bonus. The Chief Executive Officer of Employer will review the
performance of the Executive not less frequently than annually, and the Chief
Executive Officer of Employer shall provide for an annual bonus to the Executive
(the "Bonus") based on the performance of the Employer; such standards for the
performance of Employer shall be comparable to those standards established
concerning the receipt of any bonus by similarly situated executives of the
Employer or Craftmade.
(c) Benefits. The Executive will, during the Employment Period, be
entitled to such pension, profit sharing, life insurance, hospitalization, major
medical, disability and other employee benefits of the Employer or Craftmade
that may be in effect from time to time, to the extent the executive is eligible
under the terms of those plans (collectively, the "Benefits").
ARTICLE IV
FACILITIES AND EXPENSES
The Employer will furnish the Executive office space, equipment,
supplies, and such other facilities and personnel as the Employer deems
necessary or appropriate for the performance of the Executive's duties under
this Agreement. The Employer 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, the Employer in the performance of the Executive's duties
pursuant to this Agreement, and in accordance with the Employer's employment
policies, 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 must file
expense reports with respect to such expenses in accordance with the Employer's
policies.
ARTICLE V
VACATIONS AND HOLIDAYS
The Executive will be entitled to the amount of paid vacation as is
provided to similarly situated executives of the Employer or Craftmade, in
accordance with the vacation policies of the Employer or Craftmade in effect for
its executive officers from time to time. Vacation must be taken by the
Executive at such time or times as approved by the Chairman of the Board or
Chief Executive Officer of Employer. The Executive will also be entitled to the
paid holidays set forth in the Employer's or Craftmade's policies. Vacation days
and holidays during any Fiscal Year that are not used by the Executive during
such Fiscal Year may not be used in any subsequent Fiscal Year.
ARTICLE VI
TERMINATION
6.1 Events of Termination. The Employment Period, the Executive's Basic
Compensation, the Executive's Bonus and any and all other rights of the
Executive under this Agreement or otherwise as an employee of the Employer will
terminate (except as otherwise provided in this Article VI):
(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;
(c) upon termination of the Executive for Cause (as defined in Section
6.3), immediately upon notice from the Employer to the Executive, or at such
later time as such notice may specify;
(d) upon termination by the Executive for Good Reason (as defined in
Section 6.4) upon not less than thirty days' prior notice from the Executive to
the Employer;
(e) upon termination of the Executive without Cause; or
(f) upon termination by the Executive for other than Good Reason.
6.2 Definition of Disability. The Executive will be deemed to have a
"disability" if, for physical or mental reasons, the Executive is unable to
perform the Executive's duties under this Agreement for 120 consecutive days, or
180 days during any twelve 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 the Employer and the Executive upon the
request of either party by notice to the other. If the Employer and the
Executive cannot agree on the selection of a medical doctor, each of them will
select a medical doctor and the two medical doctors will select a third medical
doctor 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 the 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 "Cause". "Cause" means: (a) the Executive's material
breach of this Agreement; (b) the Executive's failure to adhere to any written
Employer policy if the Executive has been given a reasonable opportunity to
comply with such policy or cure his failure to comply (which reasonable
opportunity must be granted during the ten-day period preceding termination of
this Agreement); (c) the appropriation (or attempted appropriation) of a
business opportunity of the Employer or Craftmade, including attempting to
secure or securing any personal profit in connection with any transaction
entered into on behalf of the Employer or Craftmade; (d) the misappropriation
(or attempted misappropriation) of any of the Employer's or Craftmade's funds or
property; or (e) the conviction of or the entering of a guilty plea or plea of
no contest with respect to, a felony, the equivalent thereof, or any other crime
with respect to which imprisonment is a possible punishment.
6.4 Definition of "Good Reason". The phrase "Good Reason" means any of
the following: (a) the Employer's or Craftmade's material breach of this
Agreement; (b) the assignment of the Executive without his consent to a
position, responsibilities, or duties of a materially lesser status or degree of
responsibility than his position, responsibilities, or duties at the Effective
Date; (c) the relocation of the Employee outside of the continental United
States; or (d) any material reduction in Benefits.
6.5 Termination Pay. Effective upon the termination of this Agreement,
the Employer will be obligated to pay the Executive (or, in the event of his
death, his designated beneficiary as defined below) only such compensation as is
provided in this Section 6.5, and in lieu of all other amounts and in settlement
and complete release of (i) all claims the Executive may have against the
Employer or Craftmade, or any of its affiliates, arising out of or pursuant to
this Agreement and (ii) all claims the Employer or Craftmade may have against
the Executive arising out of or pursuant to this Agreement. For purposes of this
Section 6.5, the Executive's designated beneficiary will be such individual
beneficiary or trust, located at such address, as the Executive may designate by
notice to the Employer from time to time or, if the Executive fails to give
notice to the Employer of such a beneficiary, the Executive's estate.
Notwithstanding the preceding sentence, the Employer will have no duty, in any
circumstances, to attempt to open an estate on behalf of the Executive, to
determine whether any beneficiary designated by the Executive is alive or to
ascertain the address of any such beneficiary, to determine the existence of any
trust, to determine whether any person or entity purporting to act as the
Executive's personal representative (or the trustee of a trust established by
the Executive) is duly authorized to act in that capacity, or to locate or
attempt to locate any beneficiary, personal representative, or trustee.
(a) Termination by the Executive for Good Reason or Termination by the
Employer Without Cause. If the Executive terminates this Agreement for Good
Reason or if Employer
terminates this Agreement without Cause, the Employer will pay the Executive (i)
the Executive's Salary for the remainder, if any, of the Initial Term, or the
First Additional Term or the Second Additional Term, as applicable, (ii) the
value of any accrued but unpaid or unused vacation or sick leave for the
calendar year and (iii) that portion of the Executive's Bonus, if any, for the
Fiscal Year during which the termination is effective, prorated through the date
of termination.
(b) Termination by the Employer for Cause or Termination by the
Executive Without Good Reason. If the Employer terminates this Agreement for
Cause or if the Executive terminates this Agreement for other than Good Reason,
the Executive will be entitled to receive his Salary only through the date such
termination is effective, but will not be entitled to any Bonus for the Fiscal
Year during which such termination occurs or any subsequent Fiscal Year.
(c) 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, the Employer will pay the Executive his Salary through the
remainder of the calendar month during which such termination is effective and
the period until disability insurance benefits commence under the disability
insurance coverage furnished by the Employer to the Executive.
(d) Termination upon Death. If this Agreement is terminated because of
the Executive's death, the Executive will be entitled to receive his Salary
through the end of the calendar month in which his death occurs, and that part
of the Executive's Bonus, if any, for the Fiscal Year during which his death
occurs, prorated through the end of the calendar month during which his death
occurs.
(e) Benefits. The 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. Notwithstanding the
preceding, the Executive shall be entitled to receive all accrued but unpaid
salary, Benefits and vacation pay upon the termination of this Agreement.
6.6 Exclusive Remedy. The compensation provided in this Article VI
shall constitute the sole and exclusive remedy of Employee in connection with
his termination of employment and shall be in lieu of all other amounts and in
settlement and complete release of all claims the Employee may have against the
Employer. Upon any termination of employment, the Employee shall execute a
general release of all claims against Employer in form and substance reasonably
satisfactory to Employer.
ARTICLE VII
NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS
7.1 Confidential Information. Upon Executive's execution of this
Agreement, Employer and Craftmade agree that they will immediately provide
Executive with specialized knowledge and training regarding the business in
which the Employer and Craftmade are involved, and will immediately provide
Executive with Confidential Information and trade secrets of the Employer and
Craftmade. Employer and Craftmade also agree to provide Executive with
Confidential Information on an on-going basis.
Executive understands and acknowledges that (a) such Confidential
Information has been developed and/or acquired by the Employer and Craftmade
through the expenditure of substantial time, effort and money, (b) such
Confidential Information gives Employer and Craftmade a competitive advantage
over others who do not have this information, (c) Employer and Craftmade would
be irreparably harmed if the Confidential Information were disclosed to any
third-party; (d) because the Executive possesses substantial technical expertise
and skill with respect to the Employer's business, the Employer and Craftmade
desire to obtain exclusive ownership of all Work Product as defined in Section
7.2(b), and the Employer will be at a substantial competitive disadvantage if it
fails to acquire exclusive ownership of all Work Product; (e) Craftmade has
required that the Executive make the covenants in this Article VII as a
condition to the Merger; and (f) the provisions of this Article VII are
reasonable and necessary to prevent the improper use or disclosure of
Confidential Information and to provide the Employer with exclusive ownership of
all Work Product.
7.2 Disclosure of Confidential Information and Return of Company
Property. In exchange for the Employer and Craftmade's promises to provide
Executive with specialized training and Confidential Information, Executive
agrees that he will hold all Confidential Information of the Employer and
Craftmade in trust for Employer and will not: (a) use the information for any
purpose other than the benefit of Employer; or (b) disclose to any person or
entity any Confidential Information of Employer or Craftmade except as necessary
during Executive's employment with Employer to perform services on behalf of
Employer.
To execute and enforce the terms of this Article VII, Executive
covenants as follows:
(a) Confidentiality.
(i) During and following the Employment Period, the Executive
will hold in confidence the Confidential Information and will not
disclose it to any person except (A) with the specific prior written
consent of the Employer and Craftmade, (B) as necessary to carry out
the Executive's duties under this Agreement or (C) except as otherwise
expressly permitted by the terms of this Agreement.
(ii) Any trade secrets of the Employer and Craftmade will be
entitled to all of the protections and benefits under applicable law.
If any information that the Employer 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. The
Executive hereby waives any requirement that the Employer submit proof
of the economic value of any trade secret or post a bond or other
security.
(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 direct or indirect disclosure by the Executive.
(iv) The Executive will not remove from the Employer or
Craftmade's premises (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 and Craftmade) any 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 the Employer and the Executive,
all of the Proprietary Items, whether or not developed by the
Executive, are the exclusive property of the Employer and Craftmade.
Upon termination of this Agreement by either party, or upon the request
of the Employer during the Employment Period, the Executive will return
to the Employer 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.
(v) Executive will take reasonable steps to safeguard all
Confidential Information and prevent its disclosure to unauthorized
persons.
(b) Ownership of Information, Inventions, and Original Works. Any and
all work product, information, inventions, original works of authorship, ideas,
concepts, photographs, illustrations, writings, designs, computer software,
formulations, know-how, trade secrets, discoveries, developments, modifications,
improvements, processes, procedures and/or techniques that Executive may make,
conceive, create, discover, develop, or reduce to practice, either solely by
Executive or jointly with any other person or persons, during Executive's
employment, whether or not during working hours, and which directly or
indirectly:
(i) are useful in connection with any business now or
hereafter carried on or contemplated by the Employer or Craftmade,
including developments or expansions of its present fields of
operations; or
(ii) relate to matters within the scope, field, duties or
responsibility of Executive's employment with the Employer or
Craftmade; or
(iii) are based on Executive's knowledge of the actual or
anticipated business or interest of the Employer or Craftmade; or
(iii) are aided by the use of time, materials, facilities or
information of the Employer or Craftmade,
(collectively referred to as "Work Product"), are the sole and exclusive
property of the Employer and Craftmade, and Executive shall promptly disclose
all such Work Product to the Employer.
Executive shall maintain adequate written records of Work Product, in such
format specified by Employer, and such records will be available to and remain
the sole property of the Employer at all times.
Executive assigns to Employer, without further compensation, all right, title
and interest in and to all Work Product in all countries of the world. Executive
recognizes that all Work Product, made, created, conceived, discovered,
developed, or reduced to practice by Executive either solely or jointly with any
other person or persons, within one (1) year after termination of employment
(voluntary or otherwise), are likely to have been conceived in significant part
either while employed by the Employer or Craftmade or as a direct result of
knowledge Executive had of proprietary information. Accordingly, Executive
agrees that such Work Product shall be deemed to be owned by Employer under the
terms of the Agreement, unless clearly proved by Executive to have been
conceived after such termination.
Without further compensation or reimbursement, Executive shall take all actions
necessary so that Employer can prepare and present applications for copyright or
patent therefore, and can secure such copyright or patents wherever possible, as
well as reissue renewals, and extensions thereof, and can obtain the record
title to such copyright or patents.
Executive acknowledges that Employer or Craftmade from time to time may have
agreements with other persons or entities that impose obligations or
restrictions on the Employer or Craftmade regarding Work Product made during the
course of work there under or regarding the confidential information of such
other parties or entities. Executive agrees to be bound by all such obligations
and restrictions and to take all action necessary to discharge the obligations
of Employer or Craftmade.
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. To
the extent permitted by law, all pleadings, documents, testimony, and records
relating to any such adjudication will be maintained in secrecy and will be
available for inspection by the Employer, the Executive, and their respective
attorneys and experts, who will agree, in advance and in writing, to receive and
maintain all such information in secrecy, except as may be limited by them in
writing.
ARTICLE VIII
NON-COMPETITION, NON-SOLICITATION
AND NON-INTERFERENCE
8.1 Acknowledgment of the Executive. The Executive acknowledges that:
(a) the services to be performed by him under this Agreement are of a special,
unique, unusual, extraordinary, and intellectual character; (b) the Employer's
business is international in scope and its products are marketed throughout the
world; (c) the Employer competes with other businesses that are or could be
located in any part of the world; (d) Craftmade has required that the Executive
make the covenants set forth in this Article VIII as a condition to the Merger;
and (e) the provisions of this Article VIII are reasonable and necessary to
protect the Employer's business.
8.2 Covenant Not to Compete. In order to protect Employer and
Craftmade's Confidential Information, it is necessary to enter into the
following restrictive covenant. Thus, Executive covenants that he will not,
directly or indirectly:
(a) during the Employment Period, except in the course of his
employment hereunder, directly or indirectly, engage or invest in, own, manage,
operate, finance, control, or participate in the ownership, management,
operation, financing, or control of, be employed by, associated with, or in any
manner connected with, lend the Executive's name or any similar name to, lend
Executive's credit to or render services or advice to, any business whose
products, services or activities compete in whole or in part with the products,
services or activities of the Employer, Craftmade or any affiliate of the
Employer or Craftmade, anywhere in the world; provided, however, that the
Executive may purchase or otherwise acquire up to (but not more than) one
percent 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) during the Post-Employment Period, directly or indirectly, engage
or invest in, own, manage, operate, finance, control, or participate in the
ownership, management, operation, financing, or control of, be employed by,
associated with, or in any manner connected with, lend the Executive's name or
any similar name to, lend Executive's credit to or render services or advice to,
any business whose products, services or activities compete in whole or in part
with the products, services or activities of the Employer, Craftmade or any
affiliate of the Employer or Craftmade in the market areas utilized by the
Employer, Craftmade or any affiliate of the Employer or Craftmade on the last
day of the Employment Period, which includes, but is not limited to, markets in
the United States; provided, however, that the Executive may purchase or
otherwise acquire up to (but not more than) one percent 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;
(c) whether for the Executive's own account or for the account of any
other person, at any time during the Employment Period and the Post-Employment
Period, solicit business of the same product lines being carried by the
Employer, Craftmade or any affiliate of the Employer or Craftmade in the same
market areas as the Employer, Craftmade or any affiliate of the Employer or
Craftmade, from any person known by the Executive to be a customer of the
Employer, Craftmade or any affiliate of the Employer or Craftmade, whether or
not the Executive had personal contact with such person during and by reason of
the Executive's employment with the Employer;
(d) whether for the Executive's own account or the account of any other
person (i) at any time during the Employment Period and the Post-Employment
Period, solicit, employ, or otherwise engage as an employee, independent
contractor, or otherwise, any person who is an employee of the Employer,
Craftmade or any affiliate of the Employer or Craftmade or in any manner induce
or attempt to induce any employee of the Employer, Craftmade or any affiliate of
the Employer or Craftmade to terminate his employment with the Employer,
Craftmade or any affiliate of the Employer or Craftmade; or (ii) at any time
during the Employment Period and the Post-Employment Period, interfere with the
Employer's relationship with any person, including any person who at any time
during the Employment Period was an employee, contractor, supplier, or customer
of the Employer, Craftmade or any affiliate of the Employer or Craftmade; or
(e) at any time during or after the Employment Period, disparage the
Employer, Craftmade or any of their shareholders, directors, officers,
employees, or agents.
If any covenant in this Section 8.2 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as a court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not against
public policy, will be effective, binding, and enforceable against the
Executive.
The period of time applicable to any covenant in this Section 8.2 will
be extended by the duration of any violation by the Executive of such covenant.
The Executive will, while the covenant under this Section 8.2 is in
effect, give notice to the Employer, within ten days after accepting any other
employment, of the identity of the Executive's employer. Craftmade or the
Employer may notify such employer that the Executive is bound by this Agreement
and, at the Employer's election, furnish such employer with a copy of this
Agreement or relevant portions thereof.
ARTICLE IX
GENERAL PROVISIONS
9.1 Injunctive Relief and Additional Remedy. The Executive acknowledges
that the injury that would be suffered by the Employer as a result of a breach
of the provisions of this Agreement (including any provision of Articles VII and
VIII) would be irreparable and that an award of monetary damages to the Employer
for such a breach would be an inadequate remedy. Consequently, the 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 the Employer will not
be obligated to post bond or other security in seeking such relief.
9.2 Covenants of Articles VII and VIII Are Essential and Independent
Covenants. The covenants by the Executive in Articles VII and VIII are essential
elements of this Agreement, and without the Executive's agreement to comply with
such covenants, Craftmade would not have consented to the Merger and Craftmade
would not have entered into this Agreement or employed or continued the
employment of the Executive. The 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 the Employer.
The Executive's covenants in Articles VII and VIII are independent
covenants and the existence of any claim by the Executive against the Employer
under this Agreement or otherwise, or against Craftmade, will not excuse the
Executive's breach of any covenant in Articles VII or VIII.
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 Articles VII and
VIII.
9.3 Representations and Warranties by the Executive. The Executive
represents and warrants to the 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.
9.4 Obligations Contingent on Performance. The obligations of the
Employer hereunder, including its obligation to pay the compensation provided
for herein, are contingent upon the Executive's performance of the Executive's
obligations hereunder.
9.5 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
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.
9.6 Successors and Assignment. This Agreement, including without
limitation Articles VII and VIII, shall inure to the benefit of, and shall be
binding upon, the parties hereto and their respective successors, assigns,
heirs, and legal representatives, including any entity with which the 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.
9.7 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 (with written confirmation of receipt), (b)
sent by facsimile (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when 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:
Xxxxxx Lighting Products, Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxx 000
P.O. Box #1037
Coppell, Texas 75019-1037
Attention: Xxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
Executive:
Xxxxxx Xxxxxxxxx
0000 Xxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Craftmade:
Craftmade International, Inc.
000 Xxxxx Xxxxx Xxxx
Xxxxx 000
P.O. Box #1037
Coppell, Texas 75019-1037
Attention: Xxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
9.8 Entire Agreement; Amendments. This Agreement, the Merger Agreement,
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.
9.9 Governing Law. This Agreement will be governed by the laws of the
State of Texas without regard to conflicts of laws principles.
9.10 Jurisdiction. Any action or proceeding seeking to enforce any
provision of, or based on any right arising out of, this Agreement shall be
brought against any of the parties in the courts of the State of Texas, County
of Dallas, or, if it has or can acquire jurisdiction, in the United States
District Court for the Northern District of Texas, 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.
9.11 Section and Article Headings, Construction. The headings of
Sections and Articles in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" and "Article" or "Articles" refer to the corresponding Section or
Sections and Article or Articles 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.
9.12 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.
9.13 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.
9.14 Dispute Resolution. Subject to the Company's right to seek
injunctive relief in court as provided in Section 9.1 of this Agreement, any
dispute, controversy or claim arising out of or in relation to or connection to
this Agreement, including without limitation any dispute as to the construction,
validity, interpretation, enforceability or breach of this Agreement, shall be
exclusively and finally settled by arbitration, and any party may submit such
dispute, controversy or claim, including a claim for indemnification under this
Section 9.14, to arbitration.
(a) Arbitrators. The arbitration shall be heard and determined
by one arbitrator, who shall be impartial and who shall be selected by
mutual agreement of the parties; provided, however, that if the dispute
involves more than $50,000, then the arbitration shall be heard and
determined by three (3) arbitrators. If three (3) arbitrators are
necessary as provided above, then (i) each side shall appoint an
arbitrator of its choice within thirty (30) days of the submission of a
notice of arbitration and (ii) the party-appointed arbitrators shall in
turn appoint a presiding arbitrator of the tribunal within thirty (30)
days following the appointment of the last party-appointed arbitrator.
If (x) the parties cannot agree on the sole arbitrator, (y) one party
refuses to appoint its party-appointed arbitrator within said thirty
(30) day period or (z) the party-appointed arbitrators cannot reach
agreement on a presiding arbitrator of the tribunal, then the
appointing authority for the implementation of such procedure shall be
the Senior United States District Judge for the Northern District of
Texas, who shall appoint an independent arbitrator who does not have
any financial interest in the dispute, controversy or claim. If the
Senior United States District Judge for the Northern District of Texas
refuses or fails to act as the appointing authority within ninety (90)
days after being requested to do so, then the appointing authority
shall be the Chief Executive
Officer of the American Arbitration Association, who shall appoint an
independent arbitrator who does not have any financial interest in the
dispute, controversy or claim. All decisions and awards by the
arbitration tribunal shall be made by majority vote.
(b) Proceedings. Unless otherwise expressly agreed in writing
by the parties to the arbitration proceedings:
(i) The arbitration proceedings shall be held in
Dallas, Texas, at a site chosen by mutual agreement of the
parties, or if the parties cannot reach agreement on a
location within thirty (30) days of the appointment of the
last arbitrator, then at a site chosen by the arbitrators;
(ii) The arbitrators shall be and remain at all times
wholly independent and impartial;
(iii) The arbitration proceedings shall be conducted
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, as amended from time to
time;
(iv) Any procedural issues not determined under the
arbitral rules selected pursuant to item (iii) above shall be
determined by the law of the place of arbitration, other than
those laws which would refer the matter to another
jurisdiction;
(v) The costs of the arbitration proceedings
(including attorneys' fees and costs) shall be borne in the
manner determined by the arbitrators;
(vi) The decision of the arbitrators shall be reduced
to writing; final and binding without the right of appeal; the
sole and exclusive remedy regarding any claims, counterclaims,
issues or accounting presented to the arbitrators; made and
promptly paid in United States dollars free of any deduction
or offset; and any costs or fees incident to enforcing the
award shall, to the maximum extent permitted by law, be
charged against the party resisting such enforcement;
(vii) The award shall include interest from the date
of any breach or violation of this Agreement, as determined by
the arbitral award, and from the date of the award until paid
in full, at 6% per annum; and
(viii) Judgment upon the award may be entered in any
court having jurisdiction over the person or the assets of the
party owing the judgment or application may be made to such
court for a judicial acceptance of the award and an order of
enforcement, as the case may be.
9.15 Guarantee of Performance. In the event that Employer fails to
comply with any of its obligations pursuant to this Agreement, Craftmade shall
use its best efforts to fulfill such obligations of Employer.
*****
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date above first written above.
EXECUTIVE:
/s/ Xxxxxx Xxxxxxxxx
---------------------------------------------
Xxxxxx Xxxxxxxxx
CRAFTMADE INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chairman of the Board, President and
Chief Executive Officer
XXXXXX LIGHTING PRODUCTS, INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
