AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 1 dated as of the 1st day of October,
1996 to the Employment Agreement, dated as of January 1, 1991
(the "Original Agreement") between XXXXXX X. XXXXXXXXX
("Employee") and XXXXXXX FURNITURE COMPANY, INC., a Delaware
corporation (the "Company"), formerly Xxxxxxx Interiors
Corporation.
The parties hereto desire to amend the Original Agreement.
Except as provided herein, all terms used in this Amendment have
the same meaning as in the Original Agreement.
NOW THEREFORE, in consideration of the foregoing and the
covenants and agreement set forth herein, the parties hereto,
intending to be legally bound, agree as follows:
1. Section 2 of the Employment Agreement is deleted in its
entirety and the following inserted in lieu thereof:
Term. The term of employment under this Agreement (the
"Term") shall commence January 1, 1996 and end on
December 31, 1996 and shall continue thereafter unless
either party gives notice (a "Termination Notice") on
or before November 1 of any year that employment under
this Agreement will not continue for an additional
period of one year beginning on the following January
1.
2. Section 3(b) is deleted in its entirety and the
following inserted in lieu thereof:
b. Bonus. In addition to base salary, the
Employee shall be entitled to receive an annual
bonus which shall not exceed 80% of his then
current base salary. The amount of such bonus for
any fiscal year shall be related to the
achievement of certain profit thresholds and
objectives to be set at the beginning of each
fiscal year by the Board of Directors of the
Company.
3. Section 4 shall be amended by deleting the words "and
of Xxxxxxx Holding Corporation, a Delaware corporation
("Holding")" and replacing the words "the Company's operating
subsidiaries" with "any operating subsidiaries of the Company".
4. Section 6a shall be deleted in its entirety and the
following inserted in lieu thereof:
a. Non-Competition Restriction. Except with the
prior consent in writing of the Company or as
provided in the last sentence of this Section
6(a), the Employee shall not (A) during his
employment hereunder or (B) for a period of two
years after termination of his employment
hereunder in the event Employee receives severance
payments pursuant to Section 7(b) or Section 7(e),
directly or indirectly manage, operate, control,
be employed by, participate in, invest in or be
connected in any manner with the management,
operation, ownership or control of any business or
venture which is in competition in the United
States with the business of the Company, provided
that nothing herein shall prohibit the Employee
from owning securities of the Company or up to 5%
of the outstanding voting securities of any issuer
which is listed on the New York or American Stock
Exchange or as to which trading is reported or
quoted on the NASDAQ System. The provisions of
this Section 6(a) shall not be applicable in the
event the Employee terminates his employment under
Section 7(d).
5. Section 6b is deleted in its entirety and the following
inserted in lieu thereof:
b. Non-solicitation Agreement. Except with the prior
consent in writing of the Company, the Employee shall
not directly or indirectly hire or employ in any
capacity or solicit the employment of or offer
employment to or entice away or in any other manner
persuade or attempt to persuade any person employed by
the Company or any of its subsidiaries to leave the
employ of any of them. This Agreement shall remain in
full force and effect for a period of two years after
the Term.
6. Section 7 is deleted in its entirety and the following
inserted in lieu thereof:
7. Termination of Employment and Severance Payments.
a. Termination for Cause. During the Term, the
Company may terminate the Employee's employment
under this Agreement at any time for Cause (as
hereinafter defined) upon written notice
specifying the cause and date of termination.
Payments under this Agreement shall cease as of
the date of termination for Cause. For this
purpose, "Cause" means gross or willful neglect of
duty which is not corrected after 30 days' written
notice thereof; misconduct, malfeasance, fraud or
dishonesty which materially and adversely affects
the Company or its reputation in the industry; or
the commission of a felony or a crime involving
moral turpitude.
b. Termination without Cause. During the Term,
the Company may terminate the Employee's
employment under this Agreement at any time for
any reason other than Cause upon written notice
specifying the date of termination and the
Employee shall be entitled to the payments
provided under this Section 7(b). In the event
the Company terminates the Employee's employment
for reasons other than Cause (which includes
termination by the Company for what the Company
believes to be Cause when it is ultimately
determined that the Employee was terminated
without cause), then the Employee shall receive
severance payments as follows: (i) the Employee
shall continue to receive his base salary on a
monthly basis for the remainder of the calendar
year in which such termination occurred, (ii) the
Employee shall be paid an annual bonus for the
calendar year in which such termination occurred
equal to the average of the bonuses paid to the
Employee for the three fiscal years preceding the
year in which termination occurred (which bonus
shall be payable within ninety days after the
close of the fiscal year in which such termination
occurs), and (iii) during the two calendar years
following the year in which such termination
occurs, the Employee shall receive annual
severance pay equal to the base salary in effect
at the termination of employment plus an amount
equal to the average of the bonuses paid to the
Employee for the three fiscal years preceding the
year in which employment is terminated, which
annual severance pay shall be paid on a monthly
basis during the two years following the
termination of employment. If there shall take
place a Change in Control (as defined in Section
7(d)) of the Company on or before termination of
Employment, the Employee shall be entitled to
receive the total severance pay provided for under
this Section 7(b) in a single payment on the date
of such Employee's termination, or if a Change in
Control occurs after the date of such Employee's
termination, the Employee shall be entitled to
receive the total severance pay remaining to be
paid pursuant to this Section 7(b) in a single
payment on the date when a Change in Control
occurs. In the event the independent accountants
acting as auditors for the Company on the date of
a Change in Control (or another accounting firm
designated by them) determine that such single
payment, together with other compensation received
by the Employee that is a contingent on a Change
in Control, would constitute "excess parachute
payments" within the meaning of Section 280G
("Section 280G") of the Internal Revenue Code of
1986, as amended and regulations thereunder, the
single payment to the Employee shall be reduced to
the minimum extent necessary so that no portion
thereof shall be subject to the excise tax imposed
by Section 280G but only if by reason of, and
giving effect to such reduction, the Employees
net after-tax benefit will exceed the Employees
net after-tax benefit if such reduction were not
made.
c. Termination in Event of Death or Disability. If
the Employee dies or becomes disabled during the Term,
his employment under this Agreement shall terminate and
payments of base salary hereunder shall cease as of the
end of the month in which such event shall occur. For
purposes of this Agreement, the Employee shall be
deemed to be disabled if he is unable to perform his
duties hereunder for any period of four consecutive
months or for six months in any twelve-month period.
If the Employee's employment is terminated hereunder
pursuant to this Section 7(c), the Employee or
Employee's estate shall be entitled to a bonus payment
in an amount equal to the amount determined by
multiplying the bonus which would otherwise have been
payable for the full year by a fraction, the numerator
of which is the number of days the Employee was
employed during such fiscal year and the denominator of
which is 365. Such bonus shall be payable ninety days
after the close of the fiscal year in which Employee
dies or becomes disabled.
d. Termination on Change of Control. By
delivering 15 days' written notice to the Company,
Employee may terminate his employment under this
Agreement at any time within two years after a
Change in Control and the Employee shall be
entitled to the payments provided under Section
7(e). "Change of Control" means an event
described in (i), (ii), (iii), or (iv):
(i) The acquisition by a Group of Beneficial
Ownership of 35% or more of the Stock or the
Voting Power of the Company, but excluding for
this purpose: (A) any acquisition by the Company
(or a subsidiary), or an employee benefit plan of
the Company; (B) any acquisition of Stock of the
Company by management employees of the Company; or
(C) the ownership of Stock by a Group that owns
10% or more of the Stock or Voting Power of the
Company on the date of this Agreement; provided,
however, the acquisition of additional Stock by
any such Group in an amount greater than 5% of the
then outstanding Stock shall not be excluded and
shall constitute a Change of Control. "Group"
means any individual, entity or group within the
meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the
"Act"), "Beneficial Ownership" has the meaning in
Rule 13d-3 promulgated under the Act, "Stock"
means the then outstanding shares of common stock
of the Company, and "Voting Power" means the
combined voting power of the outstanding voting
securities entitled to vote generally in the
election of directors.
(ii) Individuals who constitute the board of
directors of the Company on the date of this
Agreement (the "Incumbent Board") cease to
constitute at least a majority of the board of
directors of the Company (the "Board"), provided
that any director whose nomination was approved by
a majority of the Incumbent Board shall be
considered a member of the Incumbent Board unless
such individual's initial assumption of office is
in connection with an actual or threatened
election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the
Act).
(iii) Approval by the shareholders of the
Company of a reorganization, merger or
consolidation, in each case, in which the owners
of more than 50% of the Stock or Voting Power of
the Company do not, following such reorganization,
merger or consolidation, beneficially own,
directly or indirectly, more than 50% of the Stock
or Voting Power of the corporation resulting from
such reorganization, merger or consolidation.
(iv) A complete liquidation or dissolution of
the Company or of its sale or other disposition of
all or substantially all of the assets of the
Company.
x. Xxxxxxxxx Payments. The Employee shall
be entitled to the severance payment provided in
this Section 7(e) in the event (i) the Employee
terminates employment on or after the occurrence
of a Change in Control pursuant to Section 7(d),
(ii) the Employee's employment terminates as a
result of the Company's delivery of a Termination
Notice, or (iii) the Employee voluntarily
terminates his employment and the Company elects
to make severance payments in order to have the
non-competition covenant in Section 6(a)
effective. In the event the Employee is entitled
to severance payment pursuant to the foregoing
sentence, the Employee shall receive an annual
severance pay equal to the base salary in effect
at the termination of employment plus an amount
equal to the average of the bonuses paid to the
Employee for the three fiscal years preceding the
year in which employment is terminated, which
annual severance pay shall be paid on a monthly
basis during the two years following termination
of employment. If there shall take place a Change
in Control of the Company on or before termination
of Employment, the Employee shall be entitled to
receive the total severance pay provided for under
this Section 7(e) in a single payment on the date
of such Employee's termination, or if a Change in
Control occurs after the date of such Employee's
termination, the Employee shall be entitled to
receive the total severance pay remaining to be
paid pursuant to this Section 7(e) in a single
payment on the date when a Change in Control
occurs. In the event the independent accountants
acting as auditors for the Company on the date of
a Change in Control (or another accounting firm
designated by them) determine that such single
payment, together with other compensation received
by the Employee that is a contingent on a Change
in Control, would constitute "excess parachute
payments" within the meaning of Section 280G of
the Internal Revenue Code of 1986, as amended and
regulations thereunder, the single payment to the
Employee shall be reduced to the minimum extent
necessary so that no portion thereof shall be
subject to the excise tax imposed by Section 280G
but only if by reason of, and giving effect to
such reduction, the Employees net after-tax
benefit will exceed the Employees net after-tax
benefit if such reduction were not made.
7. Section 10 is amended by changing the reference to
"Xxxxxxx Interiors Corporation" to "Xxxxxxx Furniture Company,
Inc."
8. Section 12 is amended by deleting the words "Holding
or" in the first sentence thereof.
9. This Amendment shall be governed by and construed in
accordance with its laws of the Commonwealth of Virginia without
regard to the conflict of laws rules thereof.
10. This Amendment may be executed in counterparts, each of
which shall be deemed an original, but all of which together
shall constitute one and the same agreement.
11. The Original Agreement as amended hereby and this
Amendment shall be read together to constitute one agreement.
The parties hereto agree that the Original Agreement, as amended
hereby, remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed on the day and year first above
written.
XXXXXXX FURNITURE COMPANY, INC.
By:
Name:
Title:
Xxxxxx X. Xxxxxxxxx
10QExh10.4
