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Exhibit 10.9
EMPLOYMENT AGREEMENT
DRAFT [SIC]
This Employment Agreement ("Agreement") is made and entered into as of
June 30, 1998 by and between Tropicraft a Florida Corporation (the "Company"),
and Xxxxx Xxxxxxxx (the Executive).
RECITALS
The Executive is currently employed as Vice President of Tropicraft,
Inc., a Division of Winston Furniture Company, Inc.
The Executive possesses inmate knowledge of the business and affairs of
the Predecessor, its policies, methods and personnel.
The Company recognizes that the Executive has contributed to the growth
and success of the Predecessor, and desires to assure the Executive's employment
by the Company following the Merger and to compensate him therefore pursuant to
this Agreement.
The Executive is willing to make has services available to the Company
on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties agree as follows:
1. EMPLOYMENT.
1.1 General. The Company hereby agrees to employ the
Executive, and the Executive hereby agrees to serve the Company on the terms and
conditions set forth herein.
1.2 DUTIES OF EXECUTIVE. During the term of this agreement,
the Executive shall serve as Vice President of the Company, shall diligently
perform all services as may be assigned to him by the Company's President and
Chief Executive Officer and/or the Company's Board of Directors or any
authorized Committee of the Board of Directors (the full Board or such
Committee, as the case any be, is referred to herein as the "Board"), and shall
exercise such power and authority as may from time to time be delegated to him
by the Board. The Executive shall devote his full time and attention to the
business and affairs of the Company, render such services to the best of his
ability, and use his best efforts to promote the interests of the Company.
2. TERM.
2.1 TERM. The term of this Agreement, and the employment of
the Executive hereunder, shall commence on the date of closing of the
anticipated stock purchase acquisition of
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Tropic Craft, Inc. by Winston furniture Company of Alabama, Inc., and shall
continue for a period of sixty months (5 years) unless sooner terminated by
mutual agreement or in accordance with Article 5, "Termination." In the event
this agreement is terminated prior to the expiration of its initial sixty month
(5 year) term, the Company shall have no further obligation to the Executive of
any nature whatsoever, or for any reason except as specifically set forth in
Article 5 and the executive shall have no further obligation to the company,
except as set forth in Article 6, "Restrictive Covenants."
3. COMPENSATION.
3.1 BASE SALARY. The Executive shall receive a base salary at
the annual rate of not less than $150,000.00 (the "Base Salary") during the
Term of this Agreement, with such Base Salary payable in installments consistent
with the Company's normal payroll schedule, subject to applicable withholding
and other taxes. The Base Salary may be adjusted annually to reflect, at a
minimum, any increase from the previous year in the national Consumer Price
Index. The Base Salary shall also be reviewed, at least annually, for merit
increases and may, by action and in the discretion of the Board, be increased at
any time or from time to time. The Base Salary, if so increased, shall not
thereafter be decreased for any reason. Additionally, $7,000 added per annum
for car allowance - $7,000 not considered in Bonus calculation.
3.2 INCENTIVE COMPENSATION.
(a) In addition to the Base Salary, the Executive
shall be entitled to receive annual incentive compensation ("Incentive
Compensation"), in the amount determined pursuant to the Section 3.2, for each
fiscal year ending during the term of this Agreement for which the Company has
Operating Earnings (as hereafter defined) of at least Seventy five percent (75%)
of the Target Earnings (as hereinafter defined) of the Company for such year.
For purposes of this Section 3.2, "Operating Earnings" shall mean the
consolidation operating earnings of the Company as determined in accordance with
generally accepted accounting principals ("GAAP"), consistently applied with the
Company's past practices, provided, however, that such Operating Earnings shall
not reflect (i.e., shall not be reduced by) any amortization of goodwill. The
determination of Operating Earnings made by the Company shall be final and
binding on the parties to this Agreement. For purposes of this Section 3.2, the
"Target Earnings" for fiscal 1998 is $ , and the
"Target earnings" or each subsequent year shall be determined by the
Compensation Committee of the Board of Directors. The Compensation Committee
shall have the right to modify, at any time and in its sole discretion, any
previously established "Target Earnings" for reasons such as, but not limited
to, any acquisition, disposition, merger, reorganization, liquidation,
dissolution or other transaction involving the Company or any of its
subsidiaries, or other extraordinary or significant events or changes in
circumstances relating to the company or any of its subsidiaries, businesses or
operations.
(b) The amount of the Executive's Incentive
Compensation for each fiscal year shall be determined as follows:
I. If the Operating Earnings for the year do
not exceed the Target Earnings for one year, the Incentive Compensation shall be
calculated by (A) multiplying
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(I) forty percent (40%) of the Executive's Base Salary for the year (the
"Maximum Bonus") by (ii) the remainder of (w) the fraction obtained by dividing
the Operating Earnings by the Target Earnings less (x) 0. , and then
(B) multiplying the resulting product by two (2), then adding % of the
Maximum Bonus; provided, however, that in no event shall the Incentive
Compensation for any year exceed the Maximum Bonus.
II. If the Operating Earnings for the first
year exceed the Target Earnings for the year, the Incentive Compensation shall
be calculated by (A) multiplying (1) the maximum Bonus by (ii) the remainder of
(y) the fraction obtained by dividing the Operating Earnings by the Target
Earnings, Less (z) 1.0, and then (B) multiplying the resulting product by two
(2), then adding % of the Maximum Bonus; provided, however, that in no event
shall the Incentive Compensation for any year exceed the Maximum Bonus.
III. For Example, (A) if Operating Earnings
are 75% of the applicable Target Earnings or less, the Executive's Incentive
Compensation for that year would be I (B) if Operating Earnings are 90% of the
Applicable Target Earnings, the Executive's Incentive Compensation for that year
would be % of the Maximum Bonus, (C) if Operating Earnings are 100% of the
Target Earnings, the Executive's Incentive Compensation for that year would be
_____% of the Maximum Bonus, (D) if the Operating Earnings are 110% of the
Target Earnings, the Executive's Incentive Compensation for that year would be
_____% of the Maximum Bonus, and (E) if the Operating Earnings are 120% of the
Target Earnings, the Executive's Incentive Compensation for that year would be
limited to % of the Maximum Bonus.
(c) For purposes of this Agreement, the amount of
Incentive Compensation payable with respect to any fiscal year (net of any tax
or other amount properly withheld therefrom) shall be paid by the Company to
Executive within one hundred twenty (120) days after the end of the fiscal year;
provided, however, that any amount paid shall be subject to increase or
decrease based upon the results of any audited financial statements, with
respect to such year.
4. EXPENSES REIMBURSEMENT AND OTHER BENEFITS.
4.1 REIMBURSABLE EXPENSES. During the term of the Executive's
employment hereunder, the Company, upon the submission of proper substantiation
by the Executive, shall reimburse the Executive for all reasonable expenses
actual and necessarily paid or incurred by the Executive in the course of and
pursuant to the business of the Company.
4.2 OTHER BENEFITS. The Executive shall be entitled to
participate in all medical and hospitalization, group life insurance, and any
and all other plans as are presently and hereinafter provided by the Company to
its executives. The Executive shall be entitled to vacations in accordance with
the Company's prevailing policy for its executives; provided, however, that in
no event may a vacation be taken at a time when to do so could, in the
reasonable judgment by the Board, adversely affect the Company's business.
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5. TERMINATION.
5.1 TERMINATION FOR CAUSE. The Company shall at all times have
the right, upon written notice to the Executive, to terminate the Executive's
employment hereunder for "Cause" (as defined below in this paragraph 5. 1). Upon
any termination pursuant to this termination and the Company shall have no
further liability hereunder other than for reimbursement for reasonable business
expenses incurred prior to the date of termination, subject, however to the
provisions of Section 4.1). For purposes of this Agreement, the term "Cause"
shall mean (i) the willful failure or refusal of the Executive to perform the
duties or render the services assigned to him from time to time by the Board,
(ii) gross negligence or misconduct by the Executive in the performance of his
duties to the Company (iii) the charging or indictment of the Executive in
connection with a felony, (iv) the association, directly or indirectly, of the
Executive for his profit or financial benefit, with any person, firm,
partnership, association, entity or corporation that competes, in any material
way, with the Company, (v) the disclosing or using of any material trade secret
or confidential information of the Company at any time by the Executive, except
as required in connection with his duties to the Company, or (vi) the breach by
the Executive of his fiduciary duty or duty of trust to the Company, (vii) any
breach or unsatisfactory performance by the Executive of any of the terms or
provisions of this Agreement or any other agreement with the Company or any of
its subsidiaries (whether written or oral), which is not cured within twenty
(20) business days after the Company gives written notice of such breach or
unsatisfactory performance to the Executive.
5.2 DISABILITY. The Company shall at all times have the right,
upon written notice to the Executive, to terminate the Executive's employment
hereunder, if the Executive shall, as the result of mental or physical
incapacity, illness or disability, become unable to perform his duties hereunder
for in excess of ninety (90) days in any 12-month period. Upon any termination
pursuant to this Section 5.2, the Company shall pay to the Executive any unpaid
amounts of his Base Salary and Incentive Compensation accrued through the
effective date of termination and the Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however to the provisions of
Section 4.1).
5.3 DEATH. In the event of the death of the Executive during
the ten-n of his employment hereunder, the Company shall pay to the estate of
the deceased Executive any unpaid amounts of his Base Salary and Incentive
Compensation accrued through the date of his death and the Company shall have no
further liability hereunder (other than for reimbursement for reasonable
business expensed incurred prior to the date of the Executive's death, subject,
however to the provisions of Section 4.1).
5.4 TERMINATION WITHOUT CAUSE. At any time the Company shall
have the right to terminate the Executive's employment hereunder by written
notice to the Executive; provided, however, that the Company shall (i) pay to
the Executive any unpaid Base Salary and Incentive Compensation accrued through
the effective date of termination specified in such notice.
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6. RESTRICTIVE COVENANTS.
6.1 NON-COMPETITION. While employed by the Company and for a
period of one year (except that such period shall be six months if Executive's
employment is terminated pursuant to Section 5.4 hereof) following later of the
date his employment is terminated hereunder or, if applicable, the Severance
Date, the Executive shall not, directly or indirectly, engage in or have any
interest in sole proprietorship, partnership, corporation or business or any
person or entity (whether as an employee officer, director, partner, agent,
security holder, creditor, consultant or otherwise) that directly or indirectly
engages in competition with the Company in any state, country commonwealth,
territory or other place in which the Company sells its products (it being
agreed that for all purposes of this Section 6, "the Company" shall include all
of its subsidiaries).
6.2 NONDISCLOSURE. The Executive shall not divulge,
communicate, use to the detriment of the Company or for the benefit of any other
person or persons, or misuse in any way, any confidential information pertaining
to the business of the Company. Any confidential information or data now known
or hereafter acquired by the Executive with respect to the business of the
Company (which shall include, but not limited to, information concerning the
Company's financial condition, prospects, customers, source of leads, methods of
doing business, and the manner of design, manufacture, financing, marketing and
distribution of the Company's products) shall be deemed a valuable, special and
unique asset of the Company that is received by the Executive in confidence and
as a fiduciary, and Executive shall remain a fiduciary to the Company with
respect to all such information.
6.3 NONSOLICITATION OF EMPLOYEES AND CUSTOMERS. While employed
by the Company and for a period of three years (except that the period with
respect to the prohibitions in clause (ii) hereof shall be six months if
Executive's employment is terminated pursuant to Section 5.4 hereof) following
the later of the date his employment is terminated hereunder or, if applicable,
the Severance Date, the Executive shall not , directly or indirectly, for
himself or for any person, firm, corporation, partnership, association or other
entity, (i) attempt to employ or enter into any contractual arrangement with any
employee or former employee of the Company, unless such employee or former
employee has not been employed by the Company for a period in excess of six
months, and/or (ii) call on or solicit any of the actual or targeted prospective
customers or clients of the Company, nor shall the Executive make known the
names and address of such customers or any information relating in any manner to
the Company's trade or business relationships with such customers.
6.4 BOOKS AND RECORDS. All books, records, and accounts
relating in any manner to the customers or clients of the Company, whether
prepared by the Executive or otherwise coming into the Executive's possession,
shall be the exclusive property of the Company and shall be returned immediately
to the Company on termination of the Executive's employment hereunder or on the
Company's request at any time.
7. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Section 6 of this Agreement will
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cause irreparable harm and damage to the Company, the monetary amount of which
may be virtually impossible to ascertain. As a result, the Executive recognizes
and hereby acknowledges that the Company shall be entitled to and injunction
from any court of competent jurisdiction enjoining and restraining any violation
of any or all of the covenants contained in Section 6 of this Agreement by the
Executive or any of his affiliates, associates, partners or agents, either
directly or indirectly, and that such right to injunction shall be cumulative
and in addition to whatever other remedies the Company may possess.
8. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Alabama.
9. ENTIRE AGREEMENT. This agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and, upon
the commencement of the Term of this Agreement, shall supersede all prior
arrangements, understandings, both oral and written, between the Executive and
the Company or the Predecessor (or any of their respective affiliates) with
respect to such subject matter, including the Executive's Employment Agreement
with the Predecessor dated (the "Prior Employment
Agreement"). Except for the obligation to pay all accrued but unpaid salary and
other compensation due the Executive under the Prior Employment Agreement
through the commencement of the Term of this Agreement all such prior agreements
(including the Prior Employment Agreement), understandings and arrangements for
the provisions of services by the Executive to the Predecessor or the Company
and the compensation of the Executive in any form shall automatically terminate
upon the commencement of the Initial Term of this Agreement, and each party
shall thereupon and thereby, without any further action, release and forever
discharge the other (and the other's affiliates) from any and all such prior
agreements, understandings or arrangements. This Agreement may not be modified
in any way unless by a written instrument signed by both the Company and the
Executive.
10. NOTICES.
Any notice required or permitted to be given hereunder shall be deemed
given when delivered by hand or when deposited in the United States mail, by
registered or certified mail, return receipt requested, postage prepaid, (i) if
to the Company, to the address of the Company's principal offices in Birmingham,
Alabama (with a copy to Trivest, Inc., 0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxxx Xxxxx,
Xxxxx Xxxxxxx 00000, Attention: Xxxxx X. Xxxxx, Vice President and General
Counsel), and (ii) if to the Executive, to his address as reflected on the
payroll to the Executive, to his address as reflected on the payroll records of
the Company, or to such other address as either party hereto may from time to
time give notice of to the other.
11. BENEFITS, BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representative, legal representations, successors and where applicable, assigns,
including, without limitation, any successor to the Company, whether by merger,
consolidation, sale of stock, sale of assets or otherwise: provided, however
that the Executive shall not delegate his employment obligations hereunder, or
any portion thereof, to any other person.
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12. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or section contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or areas which would cure such invalidity.
13. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.
14. DAMAGES. Nothing contained herein shall be construed to prevent the
Company or the Executive from seeking and recovering from the other damages
sustained by either or both of them as a result of its or his breach of any term
or provision of this Agreement. In the event that either party hereto brings
suit for the collection of any damages resulting from, or for the injunction of
any action constituting, a breach of any of the terms or provisions of this
Agreement, then the party found to be at fault shall pay all reasonable court
cost and attorney's fees of the other.
15. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
WINSTON FURNITURE COMPANY
By: /s/ Xxxxx Xxxx
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Xxxxx Xxxx
President and Chief Executive Officer
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Executive
/s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx
Vice President Sales & Marketing
Tropicraft
/s/ SH, PV Tropic Craft
[NOTARIAL ACKNOWLEDGEMENT]
6/27/98 /s/ Xxxxxx X. Xxxxx Comm. Exp.
Personally Known -------------------------- 4/6/02
Ocala, Florida
Xxxxxx County
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