EMPLOYMENT AGREEMENT
AGREEMENT made and entered into as of April 1, 1997 (the "Agreement"),
by and between TEXFI INDUSTRIES, INC., a Delaware corporation with offices at
0000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx Xxxxxxxx ("Texfi" or the "Company"), and
XXXXXX X. XXXXXX, XX., ("Xxxxxx").
W I T N E S S E T H:
WHEREAS, Xxxxxx and the Company previously entered into an Employment
Agreement dated as of October 31, 1994; and
WHEREAS, Xxxxxx and the Company desire to cancel the October 31, 1994
Agreement and enter into this Employment Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree that the following provisions shall constitute the Agreement:
1. Termination of Prior Agreement. As of the date of this
Employment Agreement , the Employment Agreement dated October 31, 1994 by
and between Xxxxxx and the Company shall be terminated andbe of no further
force or effect.
2. Employment. Texfi hereby employs Xxxxxx and Xxxxxx
hereby accepts employment with Texfi for the term set forth in Section 3
below, in the position and with the duties and responsibilities set forth in
Section 4 below, and upon the other terms and conditions hereinafter stated.
3. Term. Unless otherwise terminated as hereinafter
provided, the term of the
1
Agreement shall commence on April 1, 1997 and shall continue through
April 30, 2000.
4. Position, Duties, Responsibilities, Extent of Services.
4.1 Position. It is intended that, at all times during the
term of the Agreement, Xxxxxx shall serve as President and Chief Operating
Officer of the Company. In accordance with such position, he is hereby granted
appropriate responsibilities duties, and authorities, subject to the direction
of the Chief Executive Officer of the Company.
4.2 Extent of Services. During his employment under this
Agreement, Xxxxxx shall devote his full time and attention to the business and
affairs of Texfi; provided, however, that nothing in this Agreement shall
preclude Xxxxxx from engaging in charitable and civic activities or from
managing his personal investments so long as such outside activities do not
unreasonably interfere with the performance of his duties and responsibilities
under this Agreement.
5. Salary. For services rendered by him under this
Agreement, Xxxxxx shall receive a base salary at the annual rate of
$375,000 (the "Base Salary"), payable at least in equal monthly
installments.
6. Bonus. Xxxxxx will be eligible to participate in
the incentive bonus plans in effect from time to time for senior executive
officers of Texfi.
7. Stock Options. Texfi hereby grants to Xxxxxx [nonqualified]
[qualified] stock options of the Company in the amount of 100,000 shares of
common stock of the Company. Such options shall expire on a date ten (10)
years from the date of this Agreement and shall be exercisable at a price
equal to $4.125 per share.
8. Employee Benefit Plans. Xxxxxx will be provided employee
benefit
2
programs comparable to those being provided by Texfi to senior executive
officers during the term of the Agreement.
9. Reimbursable Expenses.
9.1 Business Expenses. During the term of his employment
hereunder, Xxxxxx shall be entitled to receive proper reimbursement for all
reasonable out-of-pocket expenses incurred by him (in accordance with the
policies and procedures established by Texfi for its senior executive officers)
in performing services hereunder, provided Xxxxxx properly accounts therefor.
9.2 Automobile. During the term of his
employment hereunder, Texfi will furnish to Xxxxxx an automobile to be used in
performing his duties on behalf of Texfi.
10. Termination of Employment.
10.1 Death. In the event of the death of Xxxxxx during the
term of this Agreement, the following payments shall be made to his designated
beneficiary or, in the absence of such designation, to his estate: (a) his Base
Salary, as provided in Section 5, though the end of the month in which death
occurs, and (b) any amounts due under Incentive Bonus Plans then in effect in
accordance with the terms of such plans.
10.2 Long Term Disability. In the event that Xxxxxx shall
suffer an illness or mental or physical disability or incapacity of such a
nature, degree or effect that he is unable to perform his duties hereunder for a
continuous period of six months or for shorter periods aggregating six months
within any 12-month period, the Company, at its sole option, may terminate his
employment and this Agreement. Upon such termination, Xxxxxx, shall be entitled
to payment of (a) his Base Salary, as provided in Section 5, through
3
the end of the pay period in which the termination occurs, and (b) any amounts
due under Incentive Bonus Plans then in effect in accordance with the terms of
such plans.
10.3 For Cause. The Company shall have the right to terminate
the employment of Xxxxxx and this Agreement for "cause." For purposes of this
Agreement, "cause" shall mean: (I) Xxxxxx'x willful and continued failure to
perform substantially his duties under this Agreement (other than by reason of
illness or mental or physical disability or incapacity) for more than 60 days
after a written demand for substantial performance is delivered to him by the
Board of Directors of the Company, which demand specifically identifies the
manner in which Xxxxxx has not substantially performed his duties; (ii) theft or
misappropriation by Xxxxxx of assets of the Company; or (iii) actions by Xxxxxx
which constitute an act of moral turpitude or that materially injure the
Company. If Xxxxxx'x employment is terminated for cause, he shall be entitled to
his Base Salary, as provided in Section 5, through the end of the pay period in
which the termination occurs.
10.4 Without Cause. Notwithstanding any other term or
provision of this Agreement, the Company may terminate Xxxxxx'x employment and
this Agreement at any time and for whatever reason it deems appropriate. In the
event such termination by the Company occurs and is not due to disability
pursuant to Section 10.2 or for cause pursuant to Section 10.3, Xxxxxx shall be
entitled to payment of (a) his Base Salary, as provided in Section 5, for the
greater of six (6) months from the date of termination or the remaining term of
this Agreement, and (b) any amounts due under Incentive Bonus Plans then in
effect in accordance with the terms of such plans.
10.5 Voluntary Termination. Xxxxxx may voluntarily terminate
his
4
employment with the Company on at least 60 days' prior written notice. Upon
such termination, Xxxxxx shall be entitled to his Base Salary, as provided in
Section 5, though the end of the pay period in which the termination occurs.
10.6 Change of Duties.Xxxxxx may voluntarily terminate his
employment with the Company on at least 60 days' prior written notice at any
time after his position, responsibilities and duties as President and Chief
Operating Officer of the Company, as set forth in Section 4.1, are substantially
changed and the new position, responsibilities and duties assigned to him are
not reasonably acceptable to him. In the event of such termination, Xxxxxx shall
be entitled to payment of (a) his Base Salary, as provided in Section 5 for the
greater of six (6) months from the date of termination or the remaining term of
this Agreement, and (b) any amounts due under Incentive Bonus Plans then in
effect in accordance with the terms of such plans.
11. Acceleration of Stock Options. All outstanding and
unexpired stock options held by Xxxxxx that are not then exercisable shall
become exercisable, in whole or in part, for a period of sixty (60) days
following termination of employment pursuant to Section 10.4 or Section 10.6.
12. Covenants Not to Compete.
12.1 Competition; Soliciting Customers. Xxxxxx promises
and agrees that, until the later of (a) the termination of the Agreement or
(b) the expiration of any salary payments made to Xxxxxx pursuant to Sections
10.4 or 10.6, he will not, directly or indirectly:
(i) own, manage, operate, control, be employed by,
render
5
advisory services to, participate in or be connected
in any management or control of any business in the
United States that is engaged in competition with
Texfi or any of its subsidiaries or affiliates in
the commission dyeing and finishing of textile
products or the manufacture and/or sale of textile
products of the same or a like nature to the
products of Texfi and its subsidiaries, or (ii)
influence or attempt to influence any customer of
Texfi or any of its subsidiaries or affiliates to
divert its purchases of woven or knit fabrics or
other products to any individual, partnership, firm,
corporation or other entity then in competition with
Texfi or any of its subsidiaries or affiliates.
For purposes of this Section 12.1, "competition with Texfi or any of its
subsidiaries or affiliates" shall mean direct competition for customers of
textile products or services in any geographic area in which Texfi or any of its
subsidiaries or affiliates is engaged, directly or indirectly, in selling or
attempting to sell such products or services/
12.2 Soliciting Employees; Interference.Xxxxxx promises and
agrees that, for a period of one year after the later of (a) the termination of
the Agreement, or (b) the expiration of any salary payments made to Xxxxxx
pursuant to Sections 10.4 or 10.6, he will not, directly or indirectly:
(i) solicit any employee of Texfi or any subsidiary
or affiliate of Texfi or any subsidiary or affiliate
of Texfi, who earned annually $25,000 or more as an
employee during the last six months of
6
Xxxxxx'x employment by Texfi, to work for any
business, individual, partnership, firm, corporation
or other entity then in competition with the
business of Texfi or any of its subsidiaries or
affiliates; or (ii) wrongfully interfere with,
disrupt or attempt to disrupt the relationship,
contractual or otherwise, between Texfi and any
other party, including without limitation any
supplier, distributor, lessor or lessee, licensor or
licensee.
12.3 Scope. Xxxxxx acknowledges and agrees that the covenants
set forth in Sections 12.1 and 12.2 shall be enforceable in accordance with
their terms notwithstanding any termination of the Agreement or his employment
by Texfi, for any reason whatsoever, including without limitation, the
termination of his employment under the circumstances described in Sections
10.3, 10.4, 10.5 and 10.6; and the obligations set forth in Sections 12.1 and
12.2 shall continue as therein provided irrespective of whether payments are
required by Texfi to Xxxxxx under the Agreement except that Xxxxxx shall not be
bound by said covenants if Texfi fails to make any payments which, under the
terms of the Agreement, it has agreed to make to Xxxxxx after the termination of
his employment.
12.4 Savings Clause. It is the desire and intent of the
parties that the provisions of Sections 12.1 and 12.2 shall be enforced to the
fullest extent permitted under the laws and public policies of each jurisdiction
in which enforcement is sought. Accordingly, if any particular portion of
Sections 10.1 and 10.2 shall be adjudicated to be invalid or unenforceable, such
adjudication shall apply only with respect to the operation of that portion in
the particular jurisdiction in which such adjudication is made, and all
7
other portions shall continue in full force and effect.
13. Confidential Information; Rights to Materials.
13.1 Confidential Information. Xxxxxx agrees not to disclose,
either while in Texfi's employ or at any time thereafter, to any person not
employed by Texfi, or not engaged to render services to Texfi, any confidential
and proprietary information of Texfi obtained ;by him while in the employ of
Texfi, including, without limitation, any of Texfi's methods, processes,
techniques, shop practices, formulae, research data, marketing and sales
information, personnel data, customer lists, financial data, plans, and all
other know-how, trade secrets and proprietary information of Texfi; provided,
however, that this provision shall not preclude Xxxxxx from use or disclosure of
information known generally to the public (other than information known
generally to the public as a result of a violation of this Section 12.1 by
Xxxxxx), from use or disclosure of information acquired by Xxxxxx outside of his
affiliation with Texfi, from disclosure required by law or court order, or from
disclosure appropriate and in the ordinary course of carrying out his duties and
authorities hereunder (e.g., disclosure to Texfi's outside accountants, bankers
or trade creditors of financial data properly requested by such persons).
13.2 Rights to Materials. Xxxxxx also agrees that, upon
termination of his employment for whatever reason, he will not take with him,
without the prior written consent of an officer authorized to act in the matter
by the Board of Directors, any records, files, memoranda, reports, price lists,
customer lists, drawings, plans, sketches, documents, specifications, and the
like (or any copies thereof) relating to the business of Texfi.
14. Assignment by Texfi. This Agreement shall be binding upon and shall
inure
8
to the benefit of Texfi or any corporation or other entity to which Texfi
may transfer all or substantially all of its assets and business (by operation
of law or otherwise) and to which Texfi may assign this Agreement, in which case
"Texfi," as used herein, shall mean such transferee corporation or other entity.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws and judicial decisions of the State of
North Carolina.
16. Entire Agreement. This Agreement contains all of the
understandings and agreements of the parties hereto with respect to the
employment of Xxxxxx by the company and supersedes all prior
understandings and agreements between the parties, whether oral or in writing.
17. Amendment; Waiver. No provision of this Agreement may be amended,
modified or waived unless such amendment, modification or waiver is agreed to in
writing and signed by Xxxxxx and by an officer of the Company duly authorized to
sign by the Board of Directors of the Company. No waiver by either party hereto
of any breach by the other of any provision of this Agreement to be performed by
such other party shall be deemed a waiver of a similar or dissimilar provision
at the same time or at any prior or subsequent time.
18. Severability. If any one or more of the provisions
contained in this Agreement shall be invalid, illegal, or unenforceable in any
respect under applicable law, the validity, legality or enforceability of the
remaining provisions shall not in any way be effected or impaired thereby.
19. Withholding. Anything herein to the contrary
notwithstanding, all
9
payments made by the Company hereunder shall be subject to
the withholding of such amounts relating to taxes as the Company may reasonably
determine it should withhold pursuant to any applicable law or regulation.
IN WITNESS WHEREOF, the parties hereby have executed this Agreement
as of the 1st day of April,
1997.
TEXFI INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx,
Chief Executive Officer
EMPLOYEE:
/s/ Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx, Xx.
