American Furniture Files Suit and Seeks Injunction Order Against Former Company President Gerald Washington.

TUPELO, Miss. -- On Monday, Ecru-based American Furniture filed a lawsuit against Gerald Washington, former company president, and others in The Circuit Court of Lee County, Mississippi, to enforce a non-compete agreement made by Washington. Judge Sharion Aycock has set an October 8 hearing date to determine whether to issue a preliminary injunction to prevent Washington and other defendants from doing business in the upholstered furniture industry pending trial.

The suit was filed after numerous actions and statements by Washington that American Furniture believes are clear violations of the five-year non-compete agreement he signed as a part of the sale of the company earlier this year.

American Furniture is seeking to enjoin Washington and others acting with him from "directly or indirectly, in his or her own capacity or through any other person, whether as owner, consultant, executive, partner, member, manager, officer, director, venturer, agent, through stock ownership, investment of capital, lending of money or property, rendering of services, or otherwise engage or provide assistance to any person engaged in the business of manufacturing or selling upholstered furniture in the Territory" - terms that were agreed upon in an Amended and Restated Employment Agreement signed by Gerald Washington prior to the sale of American Furniture.

According to the filing, Washington has already opened a new business, Washington Sales Co., which will supply frames, fabricated foam, thread and showwood to furniture manufacturers in a manner that American Furniture alleges is in direct violation of the non-compete agreement. American Furniture also contends that Washington, along with several former American Furniture executives, is heavily involved in the formation of Affordable Furniture Manufacturing Co., Inc., a direct market competitor. In addition to Gerald Washington, American Furniture also seeks to enjoin Washington Sales Co., Affordable Manufacturing, Jim Sneed and Terry Austin.

"We have a very strong company and excellent employees," said Matt Harrison, chairman of American Furniture Manufacturing's holding company. "This company was purchased with the contractual understanding that the former ownership and management would not be taking measures to undermine our business, our employee trust and our customer relationships. Filing for a restraint became our only resort to uphold the contracts we all signed in good faith and with clear understanding of their meaning. Gerald Washington received a lot of money in connection with the sale in exchange for his agreement that he and his family refrain from direct competition for five years, and we expect him to honor his commitment."

Harrison and American Furniture president, Mike Thomas, also said that the new ownership will be good for the local community as well as the company. "We are dedicated to growing this business and making it more successful than ever. Our goals are to dramatically increase the plant's size and the number of jobs available within a few years," they explained.

In late July, an investor group led by Hampshire Equity Partners of New York and Hunt Private Equity Group in Dallas, as well as other investors, including senior management, purchased American Furniture. The new ownership team plans to expand on American Furniture's successful business model of efficiency and value in the promotional-priced upholstered furniture industry.

American Furniture is the nation's largest company devoted totally to upholstered promotional furniture, and produces stationary furniture, motion furniture, recliners and occasional chairs for wholesale and retail customers across the United States and Canada.