EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made as of December
29, 2008, between DECORATOR INDUSTRIES, INC. (the "Company" or "Employer"), a
Pennsylvania corporation, and WILLIAM BASSETT ("Employee"), of Pasco County,
Florida.
WHEREAS, Employee has been President and Chief Executive
Officer of the Company, in which capacity his services have contributed
materially to the successful operation of the Company's business;
WHEREAS, the parties entered into an employment agreement,
dated August 2, 1994, and amended both on July 29, 2003 and on May 25, 2004
(collectively the "Prior Agreement"), and insofar as the Prior Agreement
addressed the employment of Employee on and after January 1, 2008, the parties
through this Agreement rescind and revoke the Prior Agreement, and enter into
this Agreement to address the terms and conditions of Employee's employment by
the Company on and after January 1, 2008.
NOW, THEREFORE, intending to be legally bound hereby, the
Company hereby agrees to employ Employee, and Employee hereby agrees to be
employed by the Company, upon the following terms and conditions:
1. TERM. The Company will employ Employee and Employee accepts
employment with the Company on the terms and conditions herein from January 1,
2008 until December 31, 2012 (the "Term"), unless earlier terminated as provided
in paragraph 8.
2. DUTIES. Employee shall use his best energies and abilities in
performing such services and duties as are assigned to him by the Company's
Board of Directors, and as he deems reasonably necessary for the benefit of the
Company, in the capacity as an executive level consultant and adviser to the
Company. His duties shall include assistance and advice to the President of the
Company, review and advice regarding the Company's financial matters, strategic
planning, and both due diligence for and the negotiation of acquisitions by the
Company.
3. COMPENSATION. During the Term of this Agreement, subject to the
provisions of Sections 8 and 9, the Company shall pay to the Employee a base
annual salary of $216,000, payable in monthly installments of $18,000 in
accordance with the Company's established payroll policies.
4. HEALTH INSURANCE BENEFITS.
(a) During Employee's employment hereunder and subsequently for the
life of Employee and/or his spouse, Employer shall pay or reimburse, as
applicable, the following:
(i) the premiums required for the Employee and/or his spouse to
participate in the Employer's group health plans. If Employee
and/or his spouse are not eligible to participate in such group
health plans, or if no such plans are maintained, the Employer
shall reimburse the premiums required for Employee and/or his
spouse to participate in Medicare Parts A, B and D (or other
government health plan replacing Medicare) that would otherwise be
borne by Employee, and the premiums for Medicare Supplement
(Medigap) insurance coverage; and
(ii) premiums for a long-term care policy or policies, procured
by the Company, covering Employee and his spouse; provided that,
to the extent that such premiums on an annual basis exceed
$10,744.98, Employee shall be responsible for paying such excess.
(b) Without limitation of the provisions of Section 4(a), the
following provisions shall apply after the termination of Employee's
employment:
(i) During COBRA Continuation Period. To the extent permitted
by applicable law and Employer's benefit plans, Employer shall
maintain Employee's paid coverage for health insurance through the
payment of Employee's COBRA premiums until the expiration of the
COBRA Continuation Period. During the applicable period of
coverage described in the foregoing sentence, the Employee shall
be entitled to benefits, on substantially the same basis as would
have otherwise been provided had Employee not been terminated. To
the extent that such benefits are available under Employer's
benefit plans and Employee had such coverage immediately prior to
termination of employment, such continuation of benefits for
Employee shall also cover the Employee's dependents for so long as
Employee is receiving such benefits under this Section 4(b)(i).
The COBRA Continuation Period for health insurance under this
Section 4(b)(i) shall be deemed to run concurrent with the
continuation period federally mandated by COBRA (generally 18
months), or any other legally mandated and applicable federal,
state, or local coverage period for benefits provided to
terminated employees under the health care plan(s).
(ii) After COBRA Continuation Period. Following the conclusion
of the COBRA Continuation Period described above (or, if sooner,
the cessation of such coverage), Employer will reimburse Employee
(or Employee's spouse, as applicable, net of applicable
withholdings required by law) for the premium for Employee and/or
his spouse to participate in Medicare Parts A, B and D (or other
government health plan replacing Medicare), including the premiums
for Medicare Supplement (Medigap) insurance coverage that would
otherwise be borne by Employee.
5. LIFE INSURANCE.
(a) The Company shall continue during Employee's employment
hereunder to reimburse (net of applicable withholdings required by law)
Employee for the premiums Employee pays on General American Life Ins.
Policy No. 612860 (Policy 612860), so long as Policy 612860 is in
effect. If Employee cancels, suspends or surrenders Policy 612860, he
shall notify the Company before doing so, but giving such notice shall
not create any right in the Company to make any claim against Policy
612860.
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(b) On or before December 31, 2008, the Company shall transfer
American General Life Ins. Policy No. U10017109L ("Policy 10017109L")
to Employee, and shall thereafter during Employee's employment
hereunder reimburse (net of applicable withholdings required by law and
plus the Gross-Up Payment (net of applicable withholdings) provided for
in Section 7(b)) Employee for the premiums Employee pays on Policy
10017109L. If Employee cancels, suspends or surrenders Policy
10017109L, he shall notify the Company before doing so, but giving such
notice shall not create any right in the Company to make any claim
against Policy 10017109L.
6. OTHER FRINGE BENEFITS.
(a) During Employee's employment hereunder, Employee shall continue
to receive other fringe benefits from the Company on no less favorable
a basis than other employees of the Company of executive rank and
status, except for benefits not legally available to Employee because
of his status, compensation, age or similar factors, and subject to a
maximum cost to the Company of $35,000 per year.
(b) During Employee's employment hereunder, the Company shall
provide Employee a computer for home use, linked to the Company's
network and server.
7. TREATMENT OF TAXABLE BENEFITS.
(a) To the extent required by law, the Company will annually report
as taxable wages and/or impute income to Employee the value of any
taxable benefits, and all payments to the Employee shall be net of
applicable withholdings as required by law.
(b) To the extent that the reimbursement right provided in Section
5(b) shall be subject to income taxation under the federal Internal
Revenue Code of 1986 (the "Code") ("Additional Tax"), Employee shall be
entitled to receive, and the Company shall pay to Employee, with the
reimbursement payment, an additional payment ("Gross-Up Payment") in an
amount equal to the Additional Tax (including federal income tax on
such Additional Tax, computed at the highest marginal personal income
tax rate). Employer shall also pay to Employee in 2008 a Gross-Up
Payment (net if applicable withholdings) in an amount equal to the
Additional Tax due by Employee on the transfer of the American General
Policy. Determination of any Gross-Up Payment shall be made by Louis
Plung & Co. or such other recognized accounting firm mutually accepted
by the Company and Employee.
(c) Reimbursement to Employee for premiums under Sections 4 or 5
will be available only to the extent that: (i) such expense is actually
incurred for any particular calendar year and reasonably substantiated;
(ii) reimbursement shall be made no later than the end of the calendar
year following the year in which such expense is incurred by Employee;
and (iii) no reimbursement provided for any expense incurred in one
taxable year will affect the amount available in another taxable year.
The Employee is not entitled to liquidate or exchange for another
benefit any right to reimbursements or in-kind benefits under this
Agreement. However, in the event that any benefit provided for in
Sections 4 or 5 of this Agreement ceases to be commercially available,
the Company shall use its commercially reasonable best efforts to
provide the Employee with a substitute in-kind benefit or health or
life insurance product which preserves for the Employee the practical
realization of the benefits contemplated in this Agreement.
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8. TERMINATION.
(a) The Company may involuntarily terminate the employment of
Employee for his dishonesty or willful misconduct adversely affecting
its business affairs, based on majority vote of the Company's Board of
Directors and reasonable written notice to Employee of that vote.
(b) If for any reason Employee becomes totally and permanently
disabled, physically or mentally, so as to be unable to perform all of
his duties hereunder, and the Employee is reasonably unlikely to
recover to the extent necessary to resume his usual duties within 60
days, the Company by a majority vote of its Board of Directors may
involuntarily terminate without cause the employment of Employee
hereunder, effective a reasonable time after receiving written medical
documentation of such total and permanent disability. The total and
permanent disability of the Employee shall be substantiated by a
written report of the Employee's regular physician or any other
physician satisfactory to the Company and the Employee. The Employee
agrees to make himself and his medical records available to such
physician for the purposes of preparing such written report concerning
his total and permanent disability.
(c) If Employee dies during the Term, his employment hereunder
shall terminate and the payment of compensation under Section 3 shall
thereupon be discontinued; provided, however, the Company shall pay
$108,000 to his designated payee, or if none, to the trustee of his
revocable living trust, or if no trustee, to his estate. Any such
payment shall be made within 60 days of the date of Employee's death.
Notwithstanding such employment termination, the provisions of Section
4 of this Agreement shall survive for the benefit of Employer's spouse,
if living, and the Company shall continue to be bound by such
provisions of this Agreement.
(d) The Employee may terminate his employment with the Company at
any time upon 60 days advance written notice to the Company for "Good
Reason." Good reason shall exist if the Company materially reduces the
Employee's compensation payable under Section 3 of this Employment
Agreement, or materially reduces the benefits or life insurance payable
under Sections 4 and 5 of this Employment Agreement. In order for
Employee to terminate for Good Reason, (i) the Employer must be
notified by Employee in writing within 90 days of the event
constituting Good Reason, (ii) the event must remain uncorrected by
Employer for 30 days following such notice (the "Notice Period"), and
(iii) such termination must occur within 60 days after the expiration
of the Notice Period.
9. SEVERANCE. Subject to the provisions of Section 17, in the event
Employee's employment is involuntarily terminated without cause pursuant to
Section 8(b) or the Employee terminates his employment for Good Reason pursuant
to Section 8(d)of this Agreement, then the Company shall:
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(a) continue to pay to Employee the compensation under Section 3 of
this Agreement for the remaining Term of this Agreement, in exchange
for the Employee's agreement to be bound until December 31, 2014 by the
confidentiality and non-compete provisions in Sections 10 and 11 of
this Agreement; and
(b) continue to provide the benefits set forth in Sections 4 and 5
of this Agreement.
10. CONFIDENTIAL INFORMATION, ETC.
(a) Employee recognizes and acknowledges that: (i) in his
employment hereunder he will acquire information, which could include
in whole or in part information concerning the Company's sales, sales
methods and proposals, customers and prospective customers, amount or
kind of customers' purchases from the Company, the Company's sources of
supply, computer programs, processes, methods, ideas, improvements,
inventions or other confidential or proprietary information belonging
to the Company or relating to the Company's affairs (collectively the
"Confidential Information"); (ii) the Confidential Information is the
property of the Company; (iii) the use, misappropriation or disclosure
of the Confidential Information would constitute a breach of trust and
could cause irreparable injury to the Company; and (iv) it is essential
to the protection of the Company's good will and to the maintenance of
the Company's competitive position that the Confidential Information be
kept secret and that Employee not disclose the Confidential Information
to others or use the Confidential Information to his own advantage or
the advantage of others.
(b) Employee further recognizes and acknowledges that it is
essential for the proper protection of the business of the Company that
he be restrained from (i) soliciting or inducing any employee of the
Company to leave the employ of the Company, (ii) hiring or attempting
to hire any employee of the Company, (iii) soliciting the trade of or
trading with the customers and suppliers of the Company for any
business purpose, and (iv) competing against the Company for a
reasonable period.
11. NON-COMPETE.
(a) Employee agrees to hold and safeguard the Confidential
Information in trust for the Company, its successors and assigns and
agrees that he shall not, without the prior written consent of the
Company, disclose or make available to anyone for use outside the
Company at any time, either during his employment by the Company or
subsequent to the termination of his employment by the Company for any
reason, including without limitation termination by the Company in a
Termination for Cause or otherwise, any of the Confidential
Information, whether or not developed by Employee, except as required
in the performance of Employee's duties to the Company.
(b) Upon the termination of Employee's employment by the Company or
by Employee for any reason, including without limitation termination by
the Company in a Termination for Cause or otherwise, Employee shall
promptly deliver to the Company all originals and copies of
correspondence, financial and business records, reports, flow-charts,
proposals and any documents concerning the Company's customers or
concerning products or processes used by the Company and, without
limiting the foregoing, shall promptly deliver to the Company any and
all other documents or materials containing or constituting
Confidential Information.
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(c) Employee agrees that during his employment by the Company he
shall not, directly or indirectly, solicit the trade of, or trade with,
any customer, prospective customer or supplier of the Company for any
business purpose other than for the benefit of the Company. Employee
further agrees that for a period of one year after termination of
employment hereunder, Employee shall not, directly or indirectly,
solicit the trade of, or trade with, any customers or suppliers, or
prospective customers or suppliers, of the Company, or solicit or
induce, or attempt to solicit or induce, any employee of the Company to
leave the Company for any reason whatsoever or hire any employee of the
Company.
(d) Employee covenants and agrees that during the period of his
employment hereunder and for a period of one year after termination of
employment hereunder, Employee shall not within the United States
engage, directly or indirectly, whether as principal or as agent,
officer, director, employee, consultant, shareholder or otherwise,
alone or in association with any other person, corporation or other
entity, in any Competing Business. For purposes of this Agreement, the
term "Competing Business" shall mean any person, corporation or other
entity which sells or attempts to sell any products or services which
are the same as or similar to the products and services sold by the
Company at any time and from time to time during the last two years
prior to the termination of Employee's employment hereunder.
12. INJUNCTIVE AND OTHER RELIEF.
(a) Employee represents that his experience and capabilities are
such that the provisions of paragraphs 10 and 11 will not prevent him
from earning his livelihood, and acknowledges that it would cause the
Company serious and irreparable injury and cost if Employee were to use
his ability and knowledge in competition with the Company or to
otherwise breach the obligations contained in said paragraphs.
(b) In the event of a breach by Employee of the terms of this
Agreement, the Company shall be entitled, if it shall so elect, to
institute legal proceedings to obtain damages for any such breach, or
to enforce the specific performance of this Agreement by Employee and
to enjoin Employee from any further violation of this Agreement and to
exercise such remedies cumulatively or in conjunction with all other
rights and remedies provided by law. Employee acknowledges, however,
that the remedies at law for any breach by him of the provisions of
this Agreement may be inadequate and that the Company shall be entitled
to injunctive relief against him in the event of any breach whether or
not the Company may also be entitled to recover damages hereunder.
(c) It is the intention of the parties that the provisions of
paragraphs 8 and 9 hereof shall be enforceable to the fullest extent
permissible under applicable law, but that the unenforceability (or
modification to conform to such law) of any provision or provisions
hereof shall not render unenforceable, or impair, the remainder
thereof. If any provision or provisions hereof shall be deemed invalid
or unenforceable, either in whole or in part, this Agreement shall be
deemed amended to delete or modify, as necessary, the offending
provision or provisions and to alter the bounds thereof in order to
render it valid and enforceable.
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13. ARBITRATION. Any dispute arising out of or relating to this
Agreement or the breach, termination or validity hereof shall be finally settled
by arbitration conducted expeditiously in accordance with the Employment Dispute
Rules of the American Arbitration Association by three independent and impartial
arbitrators. Each party shall appoint one of such arbitrators, and the two
arbitrators so appointed shall appoint the third arbitrator. The arbitration
shall be governed by the United States Arbitration Act, 9 U.S.C. ss.ss. 1-16,
and judgment on the award rendered by the arbitrators may be entered by any
court having jurisdiction thereof. The place of arbitration shall be Miami,
Florida. The arbitrators are not empowered to award damages in excess of
compensatory damages and each party hereby irrevocably waives any damages in
excess of compensatory damages.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida without giving effect to any
choice or conflict of law provision or rule (whether of the State of Florida or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Florida.
15. AMENDMENTS, WAIVERS, ETC. No amendment of any provision of this
Agreement, and no postponement or waiver of any such provision or of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be valid unless such amendment, postponement or waiver
is in writing and signed by or on behalf of the Company and Employee.
Notwithstanding the foregoing or any provision of this Agreement to the
contrary, Employer may at any time (with the consent of the Employee) modify,
amend or terminate any or all of the provisions of this Agreement or take any
other action, to the extent necessary or advisable, to conform the provisions of
this Agreement or the benefits provided thereunder with Section 409A of the
Code, the regulations issued thereunder or an exception thereto.
16. ASSIGNMENT. The rights and duties of the Company under this
Agreement may be transferred to, and shall be binding upon, any person or
company which acquires the Company or its business by merger, purchase or
otherwise. Except as otherwise provided in this paragraph 16, neither the
Company nor Employee may transfer any of their respective rights and duties
hereunder except with the written consent of the other party hereto.
17. SECTION 409A/TERMINATION OF EMPLOYMENT.
(a) The provisions of this Agreement will be administered,
interpreted and construed in a manner intended to comply with Section
409A of the Code ("Section 409A"), the regulations issued thereunder or
any exception thereto.
(b) For purposes of this Agreement, Employee shall be considered to
have experienced a termination of employment only if Employee has
terminated employment with Employer and all of its controlled group
members within the meaning of Section 409A of the Code. For purposes
hereof, the determination of controlled group members shall be made
pursuant to the provisions of Section 414(b) and 414(c) of the Code;
provided that the language "at least 50 percent" shall be used instead
of "at least 80 percent" in each place it appears in Section
1563(a)(1),(2) and (3) of the Code and Treas. Reg.ss.1.414(c)-2.
Whether Employee has terminated employment will be determined based on
all of the facts and circumstances and in accordance with the guidance
issued under Section 409A of the Code.
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(c) For purposes of Section 409A, each payment shall be treated as
a separate payment. Each payment under this Agreement is intended to be
excepted from Section 409A to the maximum extent provided under Section
409A as follows: (i) each payment that is scheduled to be made
following the Employee's termination date and within the applicable 2
1/2month period specified in Treas. Reg.ss.1.409A-1(b)(4) is intended
to be excepted under the short-term deferral exception as specified in
Treas. Reg.ss.1.409A-1(b)(4); (ii) post-termination medical benefits
are intended to be excepted under the medical benefits exception as
specified in Treas. Reg.ss.1.409A-1(b)(9)(v)(B), and (iii) each payment
that is not otherwise excepted under the short-term deferral exception
or medical benefits exception is intended to be excepted under the
involuntary pay exception as specified in Treas.
Reg.ss.1.409A-1(b)(9)(iii). The Employee shall have no right to
designate the date of any payment under this Agreement.
(d) With respect to payments subject to Section 409A of the Code
(and not excepted therefrom), if any, it is intended that each payment
is paid on permissible distribution event and at a specified time
consistent with Section 409A of the Code. Employer reserves the right
to accelerate and/or defer any payment to the extent permitted and
consistent with Section 409A. Notwithstanding any provision of this
Agreement to the contrary, to the extent that a payment hereunder is
subject to Section 409A of the Code (and not excepted therefrom) and
payable on account of a termination of employment, such payment shall
be delayed for a period of six months after the date of termination
(or, if earlier, the death of Employee) if the Employee is a "specified
employee" (as defined in Section 409A of the Code and determined in
accordance with the procedures established by Employer). Any payment
that would otherwise have been due or owing during such six-month
period will be paid immediately following the end of the six-month
period in the month following the month containing the six-month
anniversary of the date of termination. Notwithstanding any provision
of this Agreement to the contrary, to the extent the timing of any
payment or benefit due under this Agreement was modified pursuant to
the transition guidance provided by the IRS concerning the time and
form of payment, any such modification shall only apply to amounts that
would not otherwise be payable in 2008 and may not cause an amount to
be paid in 2008 that would not otherwise be paid in 2008. To the extent
any such payment cannot be made in 2008 under the transition guidance,
such payment will be made in January 2009.
18. INTERPRETATION, ETC. The Company and Employee have participated
jointly in negotiating and drafting of this Agreement. If an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Company and Employee and no presumption or burden
of proof shall arise favoring or disfavoring the Company or Employee because of
the authorship of any of the provisions of this Agreement. The word "including"
shall mean including without limitation. The rights and remedies expressly
specified in this Agreement are cumulative and are not exclusive of any rights
or remedies which either party would otherwise have. The paragraph headings
hereof are for convenience only and shall not affect the meaning or
interpretation of this Agreement.
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19. INTEGRATION, COUNTERPARTS. This Agreement constitutes the entire
agreement between the parties and supersedes any prior understandings,
agreements or representations by or among the parties, written or oral, to the
extent they relate to the subject matter hereof. Employee and the Company
specifically revoke and rescind the Prior Agreement, and agree that it is of no
force and effect, and is superseded by this Agreement, insofar as it relates to
Employee's employment by the Company on and after January 1, 2008. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
WITNESS the due execution hereof as of this 29th day
of December, 2008.
Attest: DECORATOR INDUSTRIES, INC.
By /s/ Thomas L. Dusthimer
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Corporate Seal Thomas L. Dusthimer
By /s/ Joseph N. Ellis
---------------------------------
Joseph N. Ellis
By /s/ Ellen Downey
---------------------------------
Ellen Downey
Witness: WILLIAM BASSETT
/s/ Darlene Bassett /s/ William Bassett
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William Bassett
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