1
Exhibit (10)(k)
EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT") is entered into as of
September 21, 1999, between Calloway's Cornelius, Inc., a Texas corporation (the
"EMPLOYER"), and C. Sterling Cornelius, an individual residing in Houston, Texas
(the "EMPLOYEE").
WHEREAS, the Employer desires to employ the Employee, and the Employee
desires to be employed by the Employer, upon the terms and conditions set forth
in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as follows:
SECTION 1.
EMPLOYMENT
1.1 EMPLOYMENT. The Employer hereby employs the Employee and the Employee
hereby accepts employment by the Employer for the period and upon the terms and
conditions contained in this Agreement.
1.2 OFFICE AND DUTIES. The Employee shall serve the Employer as
President, with the authority, duties and responsibilities customarily incident
to such office. The Employee shall perform such other executive services
commensurate with his position as may from time to time be assigned to the
Employee by the Chairman of the Board of the Employer. Further, the Employee's
actions shall at all times be subject to the direction of the Chairman of the
Board of the Employer.
1.3 PERFORMANCE. During the term of employment under this Agreement, the
Employee shall devote on a full-time basis all of his time, energy, skill and
best efforts to the performance of his duties hereunder in a manner that will
faithfully and diligently further the business and interests of the Employer.
The Employee shall comply with the employee policies or written manuals of the
Employer as they exist from time to time. The Employee shall not work either on
a part-time or independent contractor basis for any other business or enterprise
during the term of employment under this Agreement.
1.4 PLACE OF WORK. The Employee shall perform services under this
Agreement at the Employer's principal office in the Houston, Texas area, and at
such other place or places as the Employer may in good faith require. However,
the Employee understands that he may be required to travel in connection with
the performance of his duties.
SECTION 2.
TERM
1.5 TERM. Unless otherwise terminated in accordance with Sections 4 or 5,
the term of employment hereunder (the "TERM") shall be for a period of three (3)
years from the date of this Agreement. If the Employee's employment is
terminated as set forth herein, the Term shall end on the effective date of such
termination of employment.
2
SECTION 3.
COMPENSATION FOR EMPLOYMENT
1.6 BASE SALARY. During the Term, the base annual compensation of the
Employee for all of his employment services to the Employer under this Agreement
shall be $125,000, which the Employer shall pay to the Employee in equal
installments and in accordance with the normal payroll policies of the Employer.
1.7 ANNUAL BONUS. Each year during the Term, the Employee will receive an
annual bonus from a bonus fund that shall be equal to 10% of the combined
pre-tax profit of the Employer, calculated in accordance with the normal
accounting practices of the Employer. A portion or portions of such bonus fund
may be paid to one or more other employees of the Employer if such employees are
part of the Employer's succession plan, with such portion or portions being in
such amounts as are determined by the Employee, with the approval of the
Chairman of the Board of the Employer.
1.8 PAYMENT AND REIMBURSEMENT OF EXPENSES. During the Term, the Employer
shall pay or reimburse the Employee for all reasonable travel and other expenses
incurred by the Employee in performing his obligations under this Agreement in
accordance with the policies and procedures of the Employer, provided that the
Employee properly accounts for such expenses in accordance with the regular
policies of the Employer.
1.9 OTHER BENEFITS. During the Term, the Employee shall be entitled to
participate in or receive benefits under any plan or arrangement made available
by the Employer to its senior executive officers, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Any such plan or arrangement shall be revocable and subject to
termination or amendment at any time.
1.10 VACATION. During each year of the Term and in accordance with the
regular policies of the Employer, the Employee shall be entitled to three (3)
weeks of vacation, during which his compensation hereunder shall be paid in
full. Such vacation shall be taken at times consistent with the effective
discharge of the Employee's duties. If the Employee does not use the entire
vacation allotted to him in any fiscal year of the Term, any unused amounts
shall expire and be forfeited by the Employee without compensation by the
Employer.
SECTION 4.
TERMINATION FOR CAUSE
1.11 TERMINATION; CAUSE. The Employer may terminate the employment of the
Employee at any time for Cause. For purposes hereof, "CAUSE" means any of the
following:
(1) the failure by the Employee to perform his duties hereunder
to the reasonable satisfaction of the Chairman of the Board
of the Employer; or
(2) the breach by the Employee of any of the terms of this
Agreement;
provided, however, that the events described in clauses (a) and (b) above shall
not constitute Cause unless the Employer gives the Employee written notice of
such event, and the Employee thereafter fails to cure such event within 10 days
after receipt of such notice.
1.12 EMPLOYER OBLIGATIONS TO EMPLOYEE. Upon termination for Cause, the
Employer shall have no further liability or obligation to the Employee under
this Agreement or otherwise in connection with his employment hereunder, except
for (a) any unpaid salary accrued through the date of termination, (b) any
unreimbursed expenses properly incurred prior to the date of
3
termination, and (c) any rights granted to the Employee under applicable law or
any employee benefit plan (in accordance with the terms of any such plan).
SECTION 5.
VOLUNTARY TERMINATION
1.13 VOLUNTARY TERMINATION. The Employee may voluntarily terminate his
employment at any time. In such event, the Employer shall have no further
liability or obligation to the Employee under this Agreement or otherwise in
connection with his employment hereunder, except for (a) any unpaid salary
accrued through the date of termination, (b) any unreimbursed expenses properly
incurred prior to the date of termination, and (c) any rights granted to the
Employee under applicable law or any employee benefit plan (in accordance with
the terms of any such plan).
SECTION 6.
NONCOMPETITION
1.14 DESCRIPTION OF PROSCRIBED ACTIONS. In consideration for the
Employer's obligations hereunder and in consideration of the benefits to the
Employee under the Asset Purchase Agreement between Calloway's Nursery, Inc.,
Cornelius Nurseries Inc., Turkey Creek Farms, Inc. and Wholesale Landscape
Distributors, Inc., dated as of June 3, 1999, during the Term and for three (3)
years thereafter (unless such period is extended pursuant to the terms of this
Agreement), the Employee shall not:
(1) 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, be a consultant to, associated or in any
manner connected with, lend credit to, or render services
or advice to, any Competing Business (defined below);
provided, however, that the Employee may invest in the
securities of any enterprise (but without otherwise
participating in the activities of such enterprise) if (x)
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, as amended,
and (y) the Employee does not beneficially own (as
beneficial ownership is defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended) in
excess of 1% of the outstanding capital stock of such
enterprise;
(2) directly or indirectly, either as principal, agent,
independent contractor, consultant, director, officer,
employee, employer, advisor (whether paid or unpaid),
stockholder, partner or in any other individual or
representative capacity whatsoever, either for his own
benefit or for the benefit of any other person or entity,
solicit, divert or take away any suppliers or customers of
the Employer or any of its subsidiaries or any prospective
suppliers or customers of the Employer with whom the
Employer has discussed (in person, by telephone, or in
writing) possible business relationships during the
24-month period prior to the end of the Term; or
4
(3) directly or indirectly, either as principal, agent,
independent contractor, consultant, director, officer,
employee, employer, advisor (whether paid or unpaid),
stockholder, partner or in any other individual or
representative capacity whatsoever, either for his own
benefit or for the benefit of any other person or entity
(i) hire, attempt to hire, contact or solicit with respect
to hiring, any employee of the Employer or any of its
subsidiaries, (ii) induce or otherwise counsel, advise or
encourage any employee of the Employer or any of its
subsidiaries to leave the employment of the Employer or any
of its subsidiaries, or (iii) induce any representative or
agent of the Employer or any of its subsidiaries to
terminate or modify its relationship with the Employer or
any such subsidiary.
In the event of any breach by the Employee of any covenant set forth in this
Section 6.1, the term of such covenant will be extended by the period of the
duration of such breach.
1.15 COMPETING BUSINESS. For purposes of this Agreement, "COMPETING
BUSINESS" shall mean any individual, business, firm, company, partnership, joint
venture, organization, or other entity engaged in the retail sale of lawn and
garden products in the State of Texas.
1.16 JUDICIAL MODIFICATION. The Employee agrees that if a court of
competent jurisdiction determines that the length of time, geographic scope, or
any other restriction, or portion thereof, set forth in Section 6.1 is overly
restrictive and unenforceable, the court may reduce or modify such restrictions
to those which it deems reasonable and enforceable under the circumstances, and
as so reduced or modified, the parties agree that the restrictions of Section
6.1 shall remain in full force and effect. The Employee further agrees that if a
court of competent jurisdiction determines that any provision of Section 6.1 is
invalid or against public policy, the remaining provisions of Section 6.1 and
the remainder of this Agreement shall not be affected thereby, and shall remain
in full force and effect.
1.17 ACKNOWLEDGMENTS. The Employee acknowledge that Section 6.1 is
ancillary to the sale of the business and goodwill of Cornelius Nurseries
Incorporated to Calloway's Nursery, Inc. Therefore, to protect the goodwill of
Cornelius Nurseries Incorporated, and Confidential Information (as defined
below) of the Employer, the Employee agrees to the restrictive covenants above.
1.18 INJUNCTIVE RELIEF. If the Employee fails to perform the agreements
in Section 6.1, the Employer will have the right to injunctive relief without
posting any bond whatsoever, restraining the Employee from further violation, as
well as damages and attorneys' fees.
SECTION 7.
REMEDIES
1.19 REMEDIES. The Employee expressly acknowledges that the remedy at law
for any breach of Section 6 will be inadequate and that upon any such breach or
threatened breach, the Employer shall be entitled as a matter of right to
injunctive relief in any court of competent jurisdiction, in equity or
otherwise, and to enforce the specific performance of the Employee's obligations
under those provisions. The rights conferred upon the Employer by the preceding
sentence shall not be exclusive of, but shall be in addition to, any other
rights or remedies which the Employer may have at law, in equity or otherwise.
During any period in which the Employee is in breach of the covenants contained
in Section 6, the time period of those covenants shall be extended for an amount
of time that the Employee is in breach of the covenants.
5
SECTION 8.
REPRESENTATION BY EMPLOYEE
1.20 REPRESENTATION BY EMPLOYEE. The Employee hereby represents and
warrants to the Employer that the execution of this Agreement by the Employee
and the Employee's performance of his duties hereunder will not conflict with,
cause a default under, or give any party a right to damages under any other
agreement to which the Employee is a party or is bound.
SECTION 9.
GENERAL
1.21 GOVERNING LAW. This Agreement shall be governed by, construed,
interpreted and applied in accordance with the laws of the State of Texas,
without giving effect to any conflict of laws rules that would refer the matter
to the laws of another jurisdiction.
Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts serving Harris County, Texas, for
the purposes of any action arising out of this Agreement, or the subject matter
hereof.
To the extent permitted by applicable law, each party hereby waives and
agrees not to assert, by way of motion, as a defense or otherwise, in any such
action (a) that such party is not personally subject to the jurisdiction of the
above-named courts, (b) that the action is brought in an inconvenient forum, (c)
that it is immune from any legal process with respect to itself or its property,
(d) that the venue of the suit, action or proceeding is improper, or (e) that
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.
1.22 BINDING EFFECT. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of, and be enforceable by, the
respective heirs, representatives, successors (including any successor as a
result of a merger or similar reorganization) and assigns of the parties hereto,
except that the duties and responsibilities of the Employee hereunder are of a
personal nature and shall not be assignable in whole or in part by the Employee.
1.23 NOTICES. All notices required to be given under this Agreement shall
be in writing and shall be deemed to have been given and received when
personally delivered, or when mailed by registered or certified mail, postage
prepaid, return receipt requested, or when sent by overnight delivery service,
addressed as follows:
If to the Employee: C. Sterling Cornelius
10723 Bayou Glen
Houston, Texas 77042
If to the Employer: Calloway's Cornelius, Inc.
2233 S. Voss Road
Houston, Texas 77057
Attention: James C. Estill
with a copy to: Calloway's Nursery, Inc.
4200 Airport Freeway, Suite 200
Fort Worth, Texas 76117-6200
Attention: James C. Estill
6
Such addresses may be changed from time to time by written notice to the other
party.
1.24 LEGAL FEES AND EXPENSES. The prevailing party in any legal
proceeding based upon this Agreement shall be entitled to reasonable attorney's
fees and court costs, in addition to any other recoveries allowed by law.
1.25 ENTIRE AGREEMENT; MODIFICATION. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all other agreements (oral or written) with respect to
the subject matter hereof. This Agreement may not be modified or amended in any
way except in writing by the parties hereto.
1.26 DURATION. Notwithstanding the termination of the Term and of the
Employee's employment by the Employer, this Agreement shall continue to bind the
parties for so long as any obligations remain under the terms of this Agreement.
1.27 WAIVER. No waiver of any breach of this Agreement shall be construed
to be a waiver as to succeeding breaches.
1.28 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such provision or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
1.29 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but together shall constitute one and the
same Agreement.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have duly executed this Agreement as of the day and year first written above.
EMPLOYEE:
/s/ C. Sterling Cornelius
---------------------------------
EMPLOYER:
CALLOWAY'S CORNELIUS, INC.
By: /s/ James C. Estill
--------------------------
James C. Estill
Chairman of the Board