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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of,
August 8, 1997, to become effective as of the Effective Date (as herein defined)
by and between TROPICAL SPORTSWEAR INT'L CORPORATION, a Florida corporation (the
"Company"), and XXXXXXX X. XXXXXX (the "Employee").
RECITALS:
In entering into this Agreement, the Company desires to provide the
Employee with substantial incentives to serve the Company without distraction
or concern over minimum compensation, benefits or tenure, to develop and
implement the Company's business plan and to manage the Company's future growth
and development and to maximize the returns to the Company's stockholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
provisions contained herein, and for other good and valuable consideration, the
parties hereto agree with each other as follows:
1. EMPLOYMENT
A. On the terms and subject to the conditions hereinafter set
forth, and beginning as of the Effective Date, the Company will employ the
Employee as President of Company and the Employee will serve in the Company's
employ in that position. The Employee shall perform such duties, and have such
powers, authority, functions, duties and responsibilities for the Company and
corporations Affiliated with the Company as are commensurate and consistent
with the employment as President of the Company. The Employee also shall have
such additional powers, authority, functions, duties and responsibilities as
may be assigned to him by the Chief Executive Officer.
B. The Employee shall not, at any time during the Term of
Employment, engage in any other activities unless these activities do not
interfere materially with the Employee's duties and responsibilities for the
Company at that time.
2. EFFECTIVE DATE
The Effective Date means the closing date of the sales of shares of the
Common Stock to the underwriters in the Company's initial public offering.
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3. TERM OF EMPLOYMENT
The Initial Term of the Employee's Employment shall be for a period of
three (3) years commencing on the Effective Date. The Renewal Term shall
commence two (2) years from the Effective Date and renew each day thereafter for
an additional day without further action from the Company or the Employee, it
being the intention of the parties that from the Effective Date there shall be a
three (3) year duration and from the second (2nd) anniversary of the Effective
Date there shall be a continuously remaining term of one (1) year duration of
the Employee's Employment. In the event that Employee's Employment hereunder
shall not have otherwise been terminated, such Employment shall terminate at
the end of the Company's fiscal year in which the Employee reaches age
sixty-five (65).
4. COMPENSATION
A. BASE SALARY. A Base Salary shall be payable to the Employee by
the Company as a guaranteed minimum annual amount hereunder for each
Compensation Year during the period from the Effective Date to the Termination
Date. That Base Salary shall be payable in the intervals consistent with the
Company's normal payroll schedules (but in no event less frequently than
semi-monthly) and shall be payable initially at the annual rate of $225,000.00.
On the first and each subsequent anniversary of the Company's fiscal
year, the Base Salary shall be increased by the greater of the same percentage
increase (if any) in the CPI for the twelve (12) month period immediately
preceding such anniversary or such amount that the Board of Directors shall
determine. The first such increase will be made on September 30, 1997. "CPI"
means for any period the Consumer Price Index for All Urban Consumers-All Items
Index for Tampa, Florida (or any substantially similar index published for the
same area), as published by the United States Department of Labor, Bureau of
Labor Statistics (or its successor) for that period.
B. ANNUAL CASH BONUS. The Annual Cash Bonus shall be calculated
as of the end of the Company's fiscal year. (The first such calculation will be
made as of September 30, 1997, the first fiscal year end of the Company after
the Effective Date.) The Annual Cash Bonus shall be paid to the Employee within
one hundred and eighty (180) days of the beginning of each fiscal year. The
Employee's target Annual Cash Bonus shall be fifty percent (50%) of Base
Salary. However, Employee may earn an actual Annual Cash Bonus of between
fifty percent (50%) and two hundred percent (200%) of the target Annual
Cash Bonus. If the Company does not meet the threshold level of performance,
the Annual Cash Bonus will be zero percent (0%) of Base Salary. At the minimum
performance threshold, the Annual Cash Bonus will be fifty percent (50%) of the
target Annual Cash Bonus. If the Company reaches or exceeds the maximum level of
performance, Employee's
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Annual Cash Bonus will be two-hundred fifty percent (250%) of the target Annual
Cash Bonus (said 250%) times the aforesaid 40% resulting in a capping of the
Annual Cash Bonus at 100% of Base Salary.
For purposes of determining the Employee's Annual Cash Bonus, the
Company's average Return on Total Capital Employed (ROCE), as determined over
a four year period, will be calculated and then compared against an average
target ROCE as calculated for a select group of companies over the same period.
The select group of companies shall be those listed on Exhibit B; provided,
however that if the parties agree that one or more of the selected companies
becomes unrepresentative or otherwise unsuitable or unavailable for comparison,
the parties shall select a reasonable substitute. If the parties are unable to
agree upon a reasonable substitute they shall agree on a third party such as a
disinterested and nationally recognized accounting firm that shall make the
recommendation which shall be binding. The average target ROCE for the select
group of twenty (20) publicly traded apparel companies, excluding the Company,
for which financial data are readily available will be calculated by
determining the ROCE each year for each company in the select group and then
determining the average ROCE for each company over the four year period. Next,
the companies are ranked based upon the four year average ROCE for each
company. The seventy-fifth percentile of the four year average ROCE of the
select group is the average ROCE for a company on the list which, excluding the
Company, results in five companies from the select group being above and
fifteen companies for the select group being below the Company's average ROCE.
That average ROCE (i.e. the seventy-fifth percentile) then becomes the target
ROCE ("TROCE") for purposes of comparing the Company's average ROCE.
A four year average ROCE for the Company is then calculated in the same
fashion that the average ROCE is calculated for the select group of companies.
If the four year average ROCE for the Company is equal to or greater than
eighty-five percent (85%) of the TROCE, Employee's Annual Cash Bonus is fifty
percent (50%) of the target Annual Cash Bonus. If the four year average ROCE
for the Company is at least one-hundred and thirty percent (130%) of the TROCE,
Employee's Annual Cash Bonus is two-hundred fifty percent (250%) of the target
Annual Cash Bonus. If the four year average ROCE for the Company is between
eighty-five percent (85%) of the TROCE and one-hundred and thirty percent
(130%) of the TROCE, the Annual Cash Bonus will be determined by straight line
interpolation (as more particularly described in the formula attached as
Exhibit A and incorporated herein by reference). Exhibit A attached hereto and
incorporated by reference is an example of the foregoing methodology, correctly
applied. The seventy-fifth percentile of the average ROCE's is 16.58. This is
the TROCE. The Company's average ROCE is 20.16% or 122% of the TROCE.
Accordingly, the Employee's Annual Cash Bonus is 94.66% of Base Salary.
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ROCE is defined as net income plus tax adjusted interest expense divided by
beginning shareholder equity plus average total debt. The average total debt
will be calculated on an annual basis and will reflect all interest bearing
liabilities, including off balance sheet items. Net income will be final net
income as reported under GAAP and will not exclude any unusual or extraordinary
items such as gains or losses recognized from the sale of assets, write downs,
etc. The interest expense will include all interest paid by the Company and
will be adjusted to reflect the Company's tax rate for the performance year.
C. LIMITATIONS ON PAYMENTS. Notwithstanding any other provision of
this Agreement, if any portion of any payment under this Agreement, or under any
other agreement with or plan of the Company or its affiliates (in the aggregate
"Total Payments"), would constitute an "excess parachute payment," then the
Total Payments to be made to the Employee shall be reduced such that the value
of the aggregate Total Payments that the Employee is entitled to receive shall
be One Dollar ($1) less than the maximum amount which the Employee may receive
without becoming subject to the tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or which the Company may pay
without loss of deduction under Section 280G(a) of the Code. For purposes of
this Agreement, the terms "excess parachute payment" and "parachute payments"
shall have the meaning assigned to them in Section 280G of the Code, and such
"parachute payments" shall be valued as provided therein. Present value for
purposes of this Agreement shall be calculated in accordance with Section
1274(b)(2) of the Code. Within fifteen (15) days following the Date of
Termination or notice by the Company to the Employee of its belief that there is
a payment or benefit due the Employee which will result in an excess parachute
payment as defined in Section 280G of the Code, the Employee and the Company, at
the Company's expense, shall obtain the opinion (which need not be unqualified)
of nationally recognized tax counsel selected by the Company's independent
auditors and acceptable to the Employee in his sole discretion (which may be
regular outside counsel to the Company), which opinion sets forth (i) the amount
of the Base Period Income, (ii) the amount and present value of Total Payments
and (iii) the amount and present value of any excess parachute payments
determined without regard to the limitations of this paragraph. As used in this
Agreement, the term "Base Period Income" means an amount equal to the Employee's
"annualized includible compensation for the base period" as defined in Section
280G(d)(1) of the Code. For purposes of such opinion, the value of any noncash
benefits or any deferred payment or benefit shall be determined by the Company's
independent auditors in accordance with the principles of Sections 280(G)(d)(3)
and (4) of the Code, which determination shall be evidenced in a certificate of
such auditors addressed to the Company and the Employee. If such opinion
determines that there would be an excess parachute payment, any payment or
benefit determined by such counsel to be includible in Total Payments shall be
reduced or eliminated as specified by the Employee in writing delivered to the
Company within five (5) days of his receipt of such opinion or, if the Employee
fails to so notify the
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Company, then as the Company shall reasonably determine, so that under the
bases of calculations set forth in such opinion there will be excess parachute
payment. If such legal counsel so requests in connection with the opinion
required by this paragraph, the Employee and the Company shall obtain at the
Company's expense, and the legal counsel may rely on in providing the opinion,
the advice of a firm of recognized executive compensation to be received by the
Employee. If the provisions of Sections 280G and 4999 of the Code are repealed
without succession, then this paragraph shall be of no further force or effect.
5. TERMINATION
A. TERMINATION BY COMPANY WITH CAUSE. The Company may terminate
Employee at any time with notice for "cause." "Cause" shall mean and be
limited to
(1) any willful and persistent material breach by the
Employee of the performance of his duties pursuant to this Agreement which
continues after written notice from the Company;
(2) the Employee's conviction (which, through lapse of time
or otherwise is not subject to appeal) of any crime or offense involving money
or other property of the Company or others or which constitutes a felony in the
jurisdiction involved;
(3) any disclosure by the Employee to any person, firm or
corporation other than the Company and its directors, officers, and employees
of any material confidential information or trade secrets of the Company which
is materially detrimental to the interests of the Company and made outside the
scope of the Employee's duties to the Company;
(4) engaging by the Employee, without prior consent of the
Board of Directors of the Company, in any other business other than the business
of the Company which interferes in any material respect with the performance of
Employee's duties;
(5) fraud on the Company;
(6) material misrepresentation by the Employee to any
officer or director of the Company;
(7) theft of any property of the Company;
(8) chronic alcoholism;
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(9) or drug addiction.
"Cause" does not include substandard performance or nonperformance by the
Employee. If the employment of the Employee is terminated by the Company for
cause, the Employee will not be entitled to any severance or separation benefits
and Employee's salary, bonus, benefits and business expense reimbursements shall
cease as of the date of termination. All salary, bonuses on a prorata basis,
benefits and business expense reimbursements that are due to the Employee
hereunder and not paid up to the date of such termination shall be paid to the
Employee within forty-five (45) days of such termination.
B. TERMINATION BY THE COMPANY WITHOUT CAUSE. In the event the
Employee is terminated without cause by the Company, the Employee shall be
entitled to receive Annual Base Salary, at Employee's then present Annual Base
Salary rate, through the first to occur of (1) the date the Employee obtains
subsequent employment (whether self-employment or employment by a third party)
and (2) the remaining term under this Agreement; provided, however, that if the
Employee obtains employment (whether self-employment or employment by a third
party) prior to the expiration of the remaining term under the Agreement, the
Company shall pay to Employee the difference, if any, between (i) Employee's
Annual Base Salary rate at the time of termination by the Company without cause,
minus (ii) Employee's annual cash compensation rate from his new employment. All
such payments under the provision shall be made on a bi-weekly basis. In no
event shall the Company be obligated to make a lump-sum payment to Employee. The
Employee shall also be entitled to the medical benefits he was receiving on the
date of such termination for an additional twelve (12) months from the date of
termination; provided; however, such medical benefits shall cease immediately
upon the subsequent employment or self-employment of the Employee, whichever
first occurs. No other benefits other than those specified herein will be
available to the Employee if the Employee is terminated without cause by the
Company.
C. TERMINATION BY EMPLOYEE. In the event that the Employee's
employment with the Company hereunder is terminated other than by the Company
(e.g., death, disability or resignation) Employee shall not be entitled to any
severance or other separation benefits and Employee's salary, bonus and other
benefits shall cease as of termination.
D. NON-COMPETITION.
(1) The Employee shall not divulge or communicate to any
person (except in performing his duties under this
agreement) or use for his own purpose Confidential
Information which is not generally known to the public
and shall use his best efforts to prevent the
publication or disclosure by any other person of any
such Confidential Information. Information shall be
deemed not to be Confidential Information if it has
become known to the public generally through no act or
fault of the Employee. All documents and objects made,
complied, received or held or used by Employee in
connection with the business of the Company during the
employment shall be and remain the Company's property.
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(2) In the event that Employee terminates his employment with
Company or in the event that the Company terminates the Employee for cause, the
Employee agrees that, except as otherwise provided herein, during the Employment
and for a period of one year after the termination of such employee. Employee
will not directly or indirectly, whether or not for compensation and whether or
not as an employee, be engaged in or have any impermissible financial interest
in any business that is engaged in the merchandising, manufacturing,
distribution or marketing of men's casual pants, shorts and jeans (a "competing
business"). For purpose of this Agreement, the Employee shall not be deemed to
be engaged in a competing business if Employee is employed by a division or
subsidiary or similar business unit of a company or other business entity that
would otherwise be deemed a competing business so long as the division,
subsidiary or similar business unit by which the Employee is employed is
accounted for as a separate profit center and does not engage in a competing
business, and Employee's ownership interest, if any is not an impermissible
financial interest. For purposes of this Agreement, the Employee shall be deemed
to be engaged in a competing business if Employee is an employee, officer,
director, partner or consultant of such competing business or has an
impermissible financial interest therein. For purposes of this Agreement, the
Employee shall be deemed to have an impermissible financial interest in
competing business if Employee is a partner or shareholder directly or
indirectly, therein, except as provided hereinafter. Employee shall not be
deemed to have an impermissible financial interest in any competing publicly
traded or privately held business so long as Employee owns less than five
percent (5%) of any class of securities of such publicy-traded or privately
held company and is not an officer, director, partner, employee or consultant
thereto, except as to holding an office or being an employee, as otherwise
provided in the "employed by a division . . ." sentence above.
(3) The Employee recognizes that during the Employment and for a
period of two (2) years after the Date of Termination, Employee shall not employ
any person who was employed by the Company or any of its controlled Affiliates
on the Termination Date, or induce such Person to accept employment other than
with the Company or its subsidiaries.
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(4) The Employee recognizes that a breach of his
obligations under this paragraphs(1) through (3) above would cause irreparable
harm to the Company and, provided that as a pre-condition the Company has
previously tendered all sums that are due and payable to the Employee under the
terms of this Agreement, the Company shall be entitled to preliminary and
permanent injunctions enjoining violations as a non-exclusive remedy.
6. OTHER EMPLOYEE RIGHTS
A. PAID VACATION; HOLIDAYS. The Employee shall be entitled to not
less than four (4) weeks of annual vacation and all legal holidays during which
times his applicable compensation shall be paid in full.
B. FRINGE BENEFITS. During the term of this agreement, the
Employee is entitled to the same level of fringe benefits previously and
currently provided to Employee by the Company including but not limited to a
company car for business and personal use, health insurance, dental insurance,
disability insurance, and life insurance.
C. BUSINESS EXPENSES. The Employee is authorized to incur, and
will be entitled to receive prompt reimbursement for, all reasonable expenses
incurred by the Employee in performing his duties and carrying out his
responsibilities hereunder, including air fare and hotels, business meals,
entertainment and travel expenses, provided that the Employee complies with the
applicable policies, practices and procedures of the Company relating to the
submission of expense reports, receipts or similar documentation of those
expenses. The Company shall either pay directly or promptly reimburse the
Employee for such expenses not more than twenty (20) days after the submission
to the Company by the Employee from time to time of an itemized accounting of
such expenditures for which direct payment or reimbursement is sought.
7. GENERAL PROVISION
A. GOVERNING LAW. This Agreement shall be construed and regulated
under and by the laws of the State of Florida. Personal jurisdiction for any
proceeding brought pursuant to this Agreement shall be vested in the
appropriate County or Circuit Court of the Thirteenth Judicial Circuit in and
for Hillsborough County, Florida, or the Federal District Court of the Middle
District of Florida, Hillsborough County Division. Venue for any legal action
authorized hereunder shall be in Hillsborough County, Florida.
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B. SEVERABILITY. If any provision of this Agreement is deemed to
be unenforceable in accordance with its term, but would be considered
enforceable if the time period or geographic area of its effect is reduced,
then such provision shall be so reduced with the excessive aspects of the
offending provisions deemed severed and deleted from this Agreement with the
Agreement enforceable in full in accordance with its terms as so modified.
C. NOTICES. Whenever notice is required to be given hereunder,
written notice mailed or delivered to the Company at 0000 Xxxx Xxxxxx Xxxxxx,
Xxxxx, Xxxxxxx 00000 (if intended for the Company), or such other address as
the Company shall furnish in writing, shall constitute sufficient notice to the
Company; and written notice mailed or delivered to Employee at 00000 Xxxxxxxx
Xxxxx, Xxxxx, XX 00000, or such other place as may be designated by Employee in
writing, shall constitute sufficient notice to Employee. Where "the Company" or
"Employee" consists of more than one party, notice to one shall constitute
notice to all.
D. WAIVER OF MODIFICATION. No waiver or modification of this
Agreement or of any covenant, condition, or limitation herein contained shall
be valid unless in writing and duly executed by the party to be charged
therewith. Furthermore, no evidence of any waiver or modification shall be
offered or received in evidence in any proceeding, arbitration or litigation
between the parties arising out of or affecting this Agreement or the rights
or obligations of any party hereunder, unless such waiver or modification is in
writing and duly executed as aforesaid. The provisions of this paragraph may
not be waived except as herein set forth.
E. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter of this
Agreement, and supersedes any and all previous agreements, negotiations and
promises between the parties, whether written or oral, with respect to such
subject matter.
F. AMENDMENT. No amendment of any provision of this Agreement
shall be effective unless it is in writing and signed by the party against whom
it is sought to be enforced, and then such waiver or amendment shall be
effective only in the specific instance and for the specific purpose for which
it is given.
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G. ASSIGNMENTS. Employee may not directly or indirectly transfer
or assign any of its rights or obligations hereunder without prior written
consent of the Company, which consent may be given or withheld in the Company's
sole and exclusive discretion, and any such attempted assignment or transfer by
Employee without the Company's consent shall be void. Except as otherwise
provided herein, this Agreement shall bind and inure to the benefit of the
Company and its successors and assigns and Employee and its successors,
permitted assigns, heirs, devisees and legal representatives, as the case
may be.
H. SECTION HEADINGS. Section, subsection and similar headings
contained in this Agreement are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year indicated above.
TROPICAL SPORTSWEAR INT'L
CORPORATION
By: -----------------------------------
Its: ----------------------------------
EMPLOYEE
---------------------------------------
Xxxxxxx X. Xxxxxx
Employee's Permanent Address:
00000 Xxxxxxxx Xxxxx
Xxxxx, XX 00000
