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EXHIBIT 10.11.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and effective as of May 27,
1997, by and between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Employee"), residing at ▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇▇, INC., an Ohio corporation
("Employer"), with its principal place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇. In consideration of the mutual covenants and promises
of the parties hereto, Employer and Employee agree as follows:
SECTION I. EMPLOYMENT. A. Upon approval of its Board of Directors,
Employer hereby agrees to employ Employee as Executive Vice
President-Operations, and in such other duties, capacities, and responsibilities
as Employer may, from time to time, assign Employee, and Employee accepts such
employment with Employer, subject to the terms and conditions set forth in this
Agreement. Employee is expected to be elected an "executive officer" of Employer
by the Board of Directors of Employer, and to remain so during the term of his
employment.
B. Employee will report directly to Employer's Chief Executive Officer.
Employee will have reporting directly to him at least the Employer's Market
Presidents, the Vice President-Furniture, and the store operations, store
office, and warehouse functions. The Chief Executive Officer will retain
responsibility for, and direct reporting relationships with, the accounting,
financial, and legal functions, and for the Vice Presidents-Advertising,
Bedding, Appliances, and Electronics.
SECTION II. TERM OF EMPLOYMENT. A. This Agreement, and the employment
under it, shall commence on the day and date first written above and continue
for one year thereafter, unless earlier terminated
under the provisions set forth herein.
B. Upon the first anniversary of the effective date of this Agreement
and upon each anniversary thereafter, it shall be automatically renewed for
successive one year terms; provided, however, that this Agreement may be
terminated by either party, by given written notice to the other party at least
30 days prior to each anniversary of this Agreement.
If such termination is caused by Employer for any reason, including as the
direct or indirect result of a "Business Combination," as defined in Employer's
Amended and Restated Articles of Incorporation, Article 11.A.1., then Employer
shall be required to pay to Employee any amounts due under this Agreement until
its expiration at its next anniversary date following such termination;
provided, however, that no payments under this paragraph shall be required if
the termination of Employee is for Cause (as defined hereinafter).
If Employee is terminated during the first two years following the effective
date of this Agreement, or if Employer fails to renew this Agreement on either
of the first two anniversaries following its effective date, and such
termination or non-renewal is caused by Employer for any reason, including as
the direct or indirect result of a "Business Combination," as defined in
Employer's Amended and Restated Articles of Incorporation, Article 11.A.1., then
Employer shall be required to pay to Employee any amounts due under this
Agreement through its second anniversary, plus the sum of $250,000 payable in
twelve equal monthly installments commencing in the month following such
termination; provided, however, that no payments under this paragraph shall be
required if the termination or non-renewal of Employee is for Cause. Any
payments made by Employer under this paragraph shall be reduced by any salary,
wages, bonuses, consulting fees, or net earnings from self-employment generated
or earned by Employee during the period such payments are made by Employer.
Employee hereby agrees to provide reasonable documentation of such earnings to
Employer, including copies of his federal income tax returns. Upon the second
anniversary following the effective date of this Agreement, the provisions set
forth in this paragraph shall expire and be of no further force or effect.
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SECTION III. DUTIES OF EMPLOYEE. Employee will serve Employer faithfully
and to the best of his ability, under the direction of the Chief Executive
Officer of Employer. Employee will devote all of his time, energy, and skill
during regular business hours to such employment. Employee shall perform such
services and act in such executive capacity as the Chief Executive Officer shall
direct.
SECTION IV. COMPENSATION. A. Employee's salary shall be set at the rate of
$250,000 per year from the day and date first written above through the first
anniversary of this Agreement, and shall not be reduced below such amount during
the term of this Agreement.
B. Employer shall pay Employee's salary in accordance with the pay practices
of Employer, as applied to all executive officers.
C. Employee shall participate in the ▇▇▇▇▇▇▇, Inc. Executive Compensation
Plan, as amended from time to time, and any other compensation plans or
arrangements provided to Employer's executive officers.
D. Employer shall provide Employee with a late-model automobile for
Employee's use. Such automobile shall be provided, at Employer's option, by
either: (1) purchasing Employee's current personal automobile at its fair
market value, or (2) leasing an automobile for Employee's use. Employee hereby
acknowledges that any personal use of such automobile shall be taxable to him
pursuant to current income tax law and regulations.
E. Employer shall assist with the relocation of Employee to the greater
Dayton, Ohio area, in accordance with Employer's relocation policies, as
follows:
1. For a period of up to one year after the effective date of this
Agreement, at its expense, Employer shall provide an apartment or
corporate suite in the greater Dayton, Ohio area for use by Employee
until such time as Employee relocates to the greater Dayton, Ohio area.
Employer shall provide rent, utilities, and other direct out-of-pocket
expenses associated with such apartment or suite, but shall not
reimburse Employee's food, personal, or miscellaneous expenses.
Employee commits to use his best efforts to complete such relocation,
and terminate the expenses set forth in this section, as quickly as is
practical. During the period referred to in this section 1. and in
accordance with Employer's travel policies, Employer shall pay for one
coach-class round-trip ticket so that Employee may return to Boca
Raton, Florida every other weekend.
2. If Employee relocates his family to the greater Dayton, Ohio area
prior to the sale of his principal residence in Boca Raton, Florida,
Employer will reimburse Employee for the actual out-of-pocket interest
cost on Employee's existing home mortgage loan on his principal
residence, for a period of up to one year, until such time as
Employee's principal residence is sold.
3. Upon the sale of Employee's principal residence in Boca Raton,
Florida, Employer will reimburse the actual real estate brokerage
commission incurred by Employee in such sale. In the event Employee is
able to sell his principal residence without the use of a real estate
broker, Employer will reimburse the actual out-of-pocket expenses
incurred by Employee in advertising his residence for sale and for
legal expenses incurred in such sale.
4. In accordance with its moving policy, Employer will pay the actual
out-of-pocket moving expenses incurred by Employee in relocating his
personal residence from Boca Raton, Florida to Dayton, Ohio.
Employee hereby acknowledges that many, if not all, if the reimbursements set
forth in this Section IV.E. will be taxable to him under current income tax law
and regulations.
SECTION V. FAILURE TO PAY EMPLOYEE. The failure of Employer to pay
Employee's compensation as provided in Section IV may, in Employee's sole
discretion, be deemed a breach of this Agreement, and unless such breach is
cured within ten days after written notice to Employer, this Agreement shall
terminate, including the provisions of Sections X and XI.
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SECTION VI. PURCHASES OF COMMON STOCK.A. Subject to approval by Employer's
Board of Directors, Employer shall deliver to Employee an option to purchase
106,000 shares of the common stock of Employer, in accordance with the terms of
the ▇▇▇▇▇▇▇, Inc. 1993 Stock Incentive Plan.
B. If at any time during the first two years following the effective date of
this Agreement, Employee is named President and Chief Operating Officer of
Employer, subject to approval by Employer's Board of Directors, Employer shall
deliver to Employee an option to purchase 50,000 shares of the common stock of
Employer, in accordance with the terms of the ▇▇▇▇▇▇▇, Inc. 1993 Stock Incentive
Plan.
C. Within 30 days after the effective date of this Agreement, Employee will
purchase 10,000 common shares of Employer, at the fair market value(3) on the
date of such purchase, and will deliver payment in full for such purchase.
(1) Employee hereby acknowledges that the common shares to be
delivered to him pursuant to this subsection C. will not be registered
for sale under applicable federal securities laws and regulations and
may never be so registered. Employee agrees to execute an "investment
letter" in form reasonably satisfactory to Employer's General Counsel,
and substantially as follows:
▇▇▇▇▇▇▇, Inc.
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Sir:
I have agreed to purchase 10,000 Common Shares of ▇▇▇▇▇▇▇, Inc.
("Shares"). You have undertaken to sell these Shares to me on the
basis of the representations and assurances contained in this letter.
I hereby represent and warrant I am purchasing the Shares for my own
account, for investment and not for the purpose of resale or
redistribution except in accordance with the Securities Act of 1933
and the Rules and Regulations of the Securities and Exchange
Commission thereunder. I am not acquiring these securities for resale
upon the occurrence or nonoccurrence of some predetermined event such
as, for example, the expiration of the six-month capital gains period
under the Internal Revenue Code, or a market rise, or if the market
does not rise, or after any fixed or determinable period in the
future.
I agree that the certificate for the Shares purchased may bear the
following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold or transferred unless there is in effect with
respect to said shares a registration statement pursuant to
that Act, or unless the holder of these Shares shall have
received a written opinion of competent securities counsel
satisfactory to the General Counsel of ▇▇▇▇▇▇▇, Inc. that such
sale or transfer is exempt from the registration requirements
of that Act."
Very truly yours,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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3 For this purpose, "fair market value" is defined as the average of the
high and low trading prices of Employer's common shares on the date immediately
preceding the date of purchase.
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D. Employee agrees to enroll in Employer's Employee Stock Purchase Plan as
soon as he is able to meet the qualifications set forth in such plan, and to
purchase $25,000 of Employer's stock through such plan during the first year
following his enrollment.
SECTION VII. REIMBURSEMENT OF EXPENSES.Employer shall reimburse Employee
for reasonable out-of-pocket expenses which Employee shall incur in connection
with his services for Employer rendered under this Agreement, upon presentation
by Employee of appropriate vouchers to Employer, and if in accordance with
Employer's travel and reimbursement policies.
SECTION VIII. RULES AND REGULATIONS OF EMPLOYER. Employee hereby agrees to
abide by, and observe, the written policies, rules, regulations, and
restrictions imposed on employees and executive officers of Employer, as amended
from time to time, and as provided to Employee, as well as those set forth in
this Agreement. Violation of any such policies, rules, or regulations may be
cause for Employer invoking the provisions of Section IX of this Agreement.
SECTION IX. TERMINATION. A. If Employee shall fail or be unable to perform
the services required by this Agreement because of any physical or mental
infirmity, and such failure or inability shall continue for three consecutive
months, or for six months during any twelve-consecutive-month period, Employer
shall have the right to terminate this Agreement 90 days after delivering
written notice of the termination to Employee; provided, however, that Employee
shall continue to receive his full compensation to the date of termination,
notwithstanding any such infirmity. The provisions of Sections X and XI shall
continue in full force and effect notwithstanding the termination of this
Agreement, but if after recovery from such infirmity as evidenced by a medical
certificate of a physician of Employer, Employer does not choose to hire
Employee in the executive capacity described in Section I above, the provisions
of Sections X and XI, if still in effect, shall thereupon terminate.
B. The Chief Executive Officer of Employer may terminate Employee, by giving
written notice to Employee of such termination, at any time with or without
Cause (as defined below); provided, however, that if such termination is for any
reason other than for Cause, the provisions of this Agreement, including the
compensation arrangements set forth in Section IV, shall continue through the
term of this Agreement, as set forth in Section II.
C. The Chief Executive Officer of Employer may terminate Employee for "Cause."
Cause is defined as one or more of the following acts or conditions taken by or
created by Employee:
1. Employee's failure to strictly adhere to the terms of
this Agreement or any of Employer's written policies, rules,
or regulations, as amended from time to time and provided to
Employee.
2. Commission by Employee of a felony or any crime
involving moral turpitude; commission by Employee of any act
that exposes Employer, or any of its officers or directors,
to any criminal liability for such act of Employee; or any
gross negligence or willful misconduct in the performance of
Employee's duties that results in any detriment to Employer
or its officers or directors.
3. The death of Employee during the term of this
Agreement; provided, however, that Employer shall pay to
Employee's estate any amounts that are owed to Employee
under this Agreement at the date of death, but Employee's
compensation, as set forth in Section IV.A. shall terminate
on his death.
In the event that Employer proposes to invoke one or more of the provisions of
subsection C.1. or 2. above, Employer shall provide written notice to Employee
setting forth the specific reasons for the proposed termination and shall permit
Employee a thirty-day period in which to address and resolve the points raised
in such notice. In the event such points are not resolved to the reasonable
satisfaction of the Chief Executive Officer of Employer, then Employee shall be
given written notice of his termination for Cause and this Agreement shall
terminate as of the date of the written notice of such termination to Employee;
provided, however, that Employer shall be liable to Employee for any amounts
owed to Employee through the date of such termination for Cause, that the
provisions of Sections X through XII shall survive
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such termination for Cause, and that no further payments will be made to
Employee under Section IV subsequent to termination for Cause.
SECTION X. NONCOMPETITION AFTER TERMINATION. A. Employee agrees that in
addition to any other limitation, for a period of one year after the termination
of his employment with Employer, except a termination caused by Employer in
violation of the terms of this Agreement, and unless otherwise specified, he
will not directly or indirectly engage in, or in any manner be connected with or
employed by any person, firm, or corporation engaged in the retail sale of
products similar to those sold by Employer within a radius of 50 miles of any
facility of Employer, its affiliates, or its subsidiaries, or any facility that
Employer has publicly announced its intention to open.
B. Notwithstanding anything in subparagraph A. above, if Employer terminates
Employee without Cause, the period of noncompetition, as set forth in
subparagraph A. above, shall be from the date of termination through the earlier
of: (1) the date this Agreement would otherwise expire under the provisions of
Section II, or (2) the date on which the Employer violates any other term of
this Agreement.
SECTION XI. SOLICITATION AFTER TERMINATION. Employee agrees that in addition
to any other limitation, for a period of two years after the termination of his
employment with Employer, except a termination caused by Employer in violation
of the terms of this Agreement, and unless otherwise specified, he will not, on
behalf of himself or on behalf of any other person, firm, or corporation, call
on any of the employees of Employer, or any of its affiliates or subsidiaries,
for the purpose of recruiting such employees to employment with Employee, his
then-current employer, or affiliates of his then-current employer. Further,
Employee agrees that, for such two-year period, if any employee of Employer
contacts Employee about employment with Employee, his then-current employer, or
any of its affiliates or subsidiaries, Employee shall contact Employer prior to
employing the prospective employee, and shall permit Employer to discuss the
matter with the prospective employee.
SECTION XII. USE OF CONFIDENTIAL INFORMATION. Employee agrees that in
addition to any other limitation, for a period of two years after termination
of his employment, regardless of the circumstances of the termination of
employment, he will not communicate to any person, firm, or corporation any
information relating to customer lists, retail prices, secrets, advertising,
vendor product pricing, nor any confidential knowledge or secrets which he
might from time to time acquire with respect to the business of the Employer,
or any of its affiliates or subsidiaries. Employee acknowledges that Employer
has other confidentiality rules set forth in its employee handbook, and other
rules imposed by NATM Buying Corp., which also apply to Employee. Except as
specifically provided elsewhere herein, this Section XII shall survive the
expiration or termination of this Agreement.
SECTION XIII. INJUNCTIVE RELIEF. Employee acknowledges that the services to
be rendered are of a unique, special, and extraordinary character which would be
difficult or impossible for Employer to replace, so Employee agrees that, in the
event of a violation of any of the provisions of this Agreement, Employer shall,
in addition to any other rights and remedies available under this Agreement, at
law or otherwise, be entitled to an injunction to be issued by any court of
competent jurisdiction enjoining and restraining Employee from committing any
violation of this Agreement, and Employee hereby consents to the issuance of
such injunction.
SECTION XIV. COMMUNICATIONS TO EMPLOYER. From the time this Agreement
commences until its termination, Employee shall communicate and channel to
Employer all knowledge, business, and any other matters of information which
could concern or be in any way beneficial to the business of Employer, whether
acquired by Employee before or during the term of this Agreement; provided,
however, that nothing in this Agreement shall be construed as requiring such
communications when the information is lawfully protected from disclosure as a
trade secret of a third party. Any such information communicated to Employer
shall be and remain the property of Employer, notwithstanding the subsequent
termination of this Agreement.
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SECTION XV. TERMINATION BY EMPLOYEE. If Employer shall cease conducting its
business, take any action looking toward its dissolution or liquidation, make an
assignment for the benefit of its creditors, admit in writing its inability to
pay its debts as they become due, file a voluntary, or be the subject of an
involuntary, petition in bankruptcy, or be the subject of any state or federal
insolvency proceeding of any kind, then Employee may, in his sole discretion, by
written notice to Employer, terminate his employment and Employer consents to
his release under such circumstances and agrees that if Employer ceases to
operate or exist as a result of such event, the noncompetition and other
provisions of Sections X through XII shall thereupon terminate.
SECTION XVI. BINDING EFFECT; MISCELLANEOUS. A. This Agreement shall be
binding on and shall inure to the benefit of any successor or successors of
Employer and the personal representatives of Employee.
B. This Agreement constitutes the entire Agreement between the parties hereto,
and supersedes all prior discussions, drafts, negotiations, proposals, and
agreements between the parties, whether written or oral. This Agreement may not
be amended except by a written instrument executed by the parties hereto.
Employer and Employee entered into that certain Confidentiality Agreement dated
April 21, 1997. That Confidentiality Agreement is superseded by this Agreement.
C. If any provision of this Agreement is ultimately determined to be invalid
or unenforceable, by a final non-appealable ruling of a court of competent
jurisdiction, the remaining provisions of this Agreement shall not be affected
by such determination, shall remain in full force and effect, and shall be
construed in manner most likely to carry out the original intent of the parties.
D. This Agreement may be executed in any number of counterparts, each of which
shall be an original, and all of which, taken together, constitute one single,
binding, enforceable agreement.
E. Any notice given, or required to be given, under this Agreement, shall be
deemed to have been duly given if it is delivered to the addresses shown above
by either: (1) first-class mail, postage prepaid or (2) a nationally recognized
courier service. The parties may change such addresses at any time by giving
written notice to the other partly to this Agreement in the manner set forth
herein.
SECTION XVII. LAW TO GOVERN CONTRACT. This Agreement shall be governed by
the laws of the State of Ohio.
SECTION XVIII. INDEMNIFICATION. Employee has informed Employer that he has
certain agreements with his former employer, ▇▇▇▇▇▇ Furniture Incorporated, or
its subsidiaries or affiliates ("LFI"), that may restrict certain of his
activities with respect to Employer. Employee hereby agrees to hold Employer
harmless, and to unconditionally indemnify Employer, from any cost, loss, or
expense, including professional fees, incurred by Employer as the result of a
breach, or alleged breach, of any agreements between Employee and LFI, and he
will promptly reimburse Employer for any such costs, losses, expenses, or fees,
upon presentation of evidence and written request by Employer.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and date first stated above.
▇▇▇▇▇▇▇, INC., by
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its
President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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