EXHIBIT 10.54
EMPLOYMENT AGREEMENT
AGREEMENT, dated June 1, 1998 and effective as of June 1, 1998, by and
between Xxxxxx X. Xxxxx ("Executive") and Xxxxxx Furniture Incorporated ("LFI"),
a Delaware corporation, Xxxxxx Furniture Corporation ("LFC"), a Florida
corporation, Xxxxxx Furniture Realty Corporation ("LFC Realty"), a Florida
corporation, Xxxxxx Shopping Service, Inc. ("LSS"), a Florida corporation,
Xxxxxx Furniture Company of the Midwest Inc. ("LFC Midwest"), a Colorado
corporation, Xxxxxx Furniture of the Pacific, Inc. ("LFC Pacific"), a California
corporation, Xxxxxx Furniture Company of Washington, Inc. ("LFC Washington"), a
Washington corporation, Xxxxxx Furniture Company of the Midwest Realty, Inc.
("LFC Midwest Realty"), a Colorado corporation, Xxxxxx Furniture Company of the
Pacific Realty, Inc. ("LFC Pacific Realty"), a California corporation, Xxxxxx
Furniture Company of Washington Realty, Inc., ("LFC Washington Realty"), a
Washington corporation, Xxxx X. Xxxxx Company ("JMS Co."), an Illinois
corporation, and Xxxx X. Xxxxx Realty Company ("JMS Realty"), an Illinois
corporation (together, the "Company").
WHEREAS, Executive is currently serving as President -- Store
Operations; and
WHEREAS, in light of the commencement of the Chapter 11 Case (as
defined below) on September 5, 1997, the Company desires to enter into the
Agreement as set forth herein; and
WHEREAS, the Company desires to continue to employ Executive and
Executive desires to continue to furnish services to the Company on the terms
and conditions hereinafter set forth; and
WHEREAS, the parties desire to enter into this agreement (the
"Agreement") setting forth the terms and conditions of Executive's continuing
employment relationship with the Company; and
WHEREAS, this Agreement is authorized and entered into by the parties
pursuant to that certain Order Under 11 U.S.C. Section (b) (1) Authorizing The
Debtors To Execute Employment Agreement with Xxxxxx X. Xxxxx As Their President
-- Store Operations, dated June __, 1998, by the Xxxxxxxxx Xxxxxx X. Xxxxxx, Xx.
in the jointly administered Chapter 11 cases styled IN RE XXXXXX FURNITURE
INCORPORATED, ET AL., Case No. 97-1842 (JJF) (Bankr. Dist. Delaware) (together,
the "Chapter 11 Case").
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth below, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby agrees to continue to employ
Executive, and Executive hereby accepts such continued employment, on the terms
and conditions hereinafter set forth.
2. TERM. The period of employment of Executive by the Company hereunder
(the "Employment Period") shall commence on June 1, 1998 (the "Effective Date")
and shall end on November 1, 1999, unless further extended as provided in this
Section 2 or sooner terminated in the event that Executive's employment is
terminated without breach of this Agreement as provided in Section 7. On
November 1, 1999 the term of Executive's employment shall be automatically
extended for one (1) additional year unless, at least thirty (30) days prior to
such 1st day of November (the "Renewal Date"), the Company shall have delivered
to Executive or Executive shall have delivered to the Company written notice
that the term of Executive's employment hereunder will not be extended.
3. POSITION AND DUTIES. During the Employment Period, Executive shall
serve as President -- Store Operations or, prior to a Change in Control, in such
similar position as the Chief Executive Officer of the Company may
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determine. Executive shall have such responsibilities and authority as may from
time to time be assigned to Executive by the Chief Executive Officer of the
Company, provided that such responsibilities and authority are consistent with
Executive's position with the Company. Executive agrees to devote substantially
all his working time and use his best efforts in the performance of his duties
for the Company.
4. PLACE OF PERFORMANCE. In connection with Executive's employment by
the Company, Executive shall be based at the principal executive offices of the
Company in Boca Raton, Florida, or such other location to which Executive has
consented, except for required travel on the Company's business to an extent
substantially consistent with normal business travel obligations.
5. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. As compensation for the performance by
Executive of his obligations hereunder, during the Employment Period, the
Company shall pay Executive an annual base salary at a rate not less than three
hundred twenty-five thousand dollars ($325,000.00) per year ("Base Salary").
Base Salary shall be paid in approximately equal installments in accordance with
the Company's customary payroll practices. Base Salary may be increased from
time to time in accordance with the normal business practices of the Company
and, if so increased, shall not thereafter during the Employment Period be
decreased.
(b) SIGNING BONUS. On execution of this Agreement, the Company
shall pay Executive a signing bonus of one hundred thousand dollars
($100,000.00).
(c) ANNUAL BONUSES. During the Employment Period, Executive
shall be eligible to receive such annual bonus (the "Annual Bonus") as may be
provided pursuant to the terms of the applicable incentive plans of the Company,
as such plans may from time to time be revised prior to a Change in Control of
the Company. The Annual Bonus shall be paid in accordance with the terms of such
plans; provided, however, that Executive's Annual Bonus under the first year of
this Agreement shall not be less than one hundred thousand dollars
($100,000.00).
(d) EXPENSES. The Company shall promptly reimburse Executive
for all reasonable business expenses incurred during the Employment Period by
Executive in performing services hereunder, including all expenses of travel and
living expenses while away from home on business or at the request of and in the
service of the Company, provided that such expenses are incurred and accounted
for in accordance with the policies and procedures established by the Company.
(e) OTHER BENEFITS. Executive shall be entitled to participate
in all of the employee benefit plans and arrangements in effect, on the
Effective Date and shall be entitled to participate in or receive benefits under
any employee benefit plan or arrangement made available by the Company in the
future to its executives and key management employees (including without
limitation each incentive plan, pension and retirement plan and arrangement,
supplemental pension and retirement plan and arrangement, stock option plan,
life insurance and health-and-accident plan and arrangement, medical insurance
plan, disability plan, survivor income plan, relocation plan and vacation plan),
subject to and on a basis consistent with the terms, conditions and overall
administration of such plans and arrangements. Nothing paid to Executive under
any plan or arrangement presently in effect or made available in the future
shall be deemed to be in lieu of the salary payable to Executive pursuant to
subsection (a) of this Section 5.
(f) VACATION. As of the Effective Date, Executive shall have a
vested right to fifteen (15) vacation days. Executive shall accrue the right to
a minimum of fifteen (15) additional vacation days in each subsequent year of
employment in accordance with the Company's vacation plan as may be amended
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from time to time. Executive's right to receive compensation in respect of
earned but unused vacation days shall be determined in accordance with the
Company's vacation plan as may be amended from time to time. In addition to any
vacation days specified in this Section 5(f), Executive shall be entitled to all
paid holidays given by the Company to its executives.
(g) SERVICES FURNISHED. During the Employment Period, the
Company shall furnish Executive with office space, stenographic assistance and
such other facilities and services, including a company car, as shall be
suitable to Executive's position and adequate for the performance of his duties
as set forth in Section 3 hereof.
6. OFFICES. Subject to Sections 3 and 4 hereof, Executive agrees to
serve without additional compensation, if elected or appointed thereto, as a
director of the Company, including LFI, LFC and any of its subsidiaries, and as
a member of any committees of the board of directors of any such corporations,
and in one or more executive positions of the Company, provided that Executive
is indemnified for serving in any and all such capacities on a basis no less
favorable than is currently provided to any other director of the Company, or
any such executive position, as the case may be.
7. TERMINATION. Executive's employment hereunder may be terminated
without any breach of this Agreement only under the circumstances set forth in
the following subsections (a), (b), (c) and (d):
(a) DEATH. Executive's employment hereunder shall terminate
upon his death.
(b) DISABILITY. If, as a result of Executive's incapacity due
to physical or mental illness, Executive shall have been absent from the
full-time performance of his duties hereunder for 180 days during any 12-month
period, and within thirty (30) days after written Notice of Termination (as
defined in Section 8 hereof) is given shall not have returned to the performance
of his duties hereunder on a full-time basis, the Company may terminate
Executive's employment hereunder for "Disability." Should there be a dispute as
to whether Executive is disabled, Executive shall be examined by a
Company-designated physician at the Company's expense. If Executive's physician
disagrees with the conclusion of the physician designated by the Company, then
the Company's physician and Executive's physician shall select a third physician
whose findings shall be conclusive.
(c) CAUSE. The Company may terminate Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate Executive's employment hereunder upon the occurrence of any
of the following events:
(i) the commission by Executive of a felony that
brings material disrepute to the Company; or
(ii) the continuing failure by Executive to
substantially perform his duties hereunder (other than such
failure resulting from Executive's incapacity due to physical
or mental illness or subsequent to the issuance of a Notice of
Termination by Executive for Good Reason) after demand for
substantial performance is delivered by the Company in writing
that specifically identifies the manner in which the Company
believes Executive has not substantially performed his duties;
or
(iii) misconduct by Executive (including, but not
limited to, breach by Executive of the provisions of Section
11 hereof) that is demonstrably and materially injurious to
the Company or its subsidiaries, whether monetarily or
otherwise.
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Cause shall not exist unless and until the Company has delivered to Executive a
copy of a resolution duly adopted by the affirmative vote of not less than
two-thirds (2/3) of the entire membership of the LFI Board of Directors (the
"LFI Board") at a meeting of the LFI Board called and held for such purpose
(after reasonable notice to Executive and an opportunity for Executive, together
with his counsel, to be heard before the LFI Board), finding that in the good
faith opinion of the LFI Board, Executive was engaged in the conduct set forth
in this Section 7(c) and specifying the particulars thereof in detail.
(d) GOOD REASON. Executive may terminate his employment during
the Employment Period hereunder for "Good Reason" after the occurrence, without
the written consent of Executive, of an event constituting a material breach of
this Agreement by the Company that has not been fully cured within ten (10) days
after written notice thereof has been given by Executive to the Company,
provided that, without limiting the generality of the foregoing, within 18
months after a Change in Control, any one of the following events shall be
deemed a material breach of this Agreement:
(i) the assignment to Executive of any duties
materially inconsistent with Executive's status as an
executive officer of the Company or a substantial adverse
alteration in the nature of Executive's responsibilities from
those in effect immediately prior to the Change in Control;
(ii) a reduction by the Company in Executive's Base
Salary as in effect immediately prior to the Change in
Control;
(iii) the relocation of Executive's principal place
of employment to a location more than forty (40) miles from
the place of such employment immediately prior to the Change
in Control;
(iv) the failure by the Company to pay to Executive
any portion of Executive's current compensation or to pay to
Executive any portion of an installment of deferred
compensation under any deferred compensation program of the
Company within fifteen (15) days of the date such compensation
is due;
(v) the failure by the Company to provide Executive
with compensation plans which, in the aggregate, provide
Executive with substantially comparable compensation
opportunities to those compensation opportunities for which
Executive was eligible immediately prior to the Change in
Control;
(vi) the failure by the Company to continue to
provide Executive with benefits substantially similar in the
aggregate to those enjoyed by Executive under the Company's
pension, life insurance, medical, health and accident, or
disability plans in which Executive was participating at the
time of the Change in Control, the taking of any action by the
Company which would directly or indirectly materially reduce
such benefits in the aggregate or deprive Executive of fringe
benefits substantially similar in the aggregate to those
enjoyed by Executive at the time of the Change in Control, or
the failure by the Company to provide Executive with the
number of paid vacation days to which Executive is entitled on
the basis of years of service with the Company in accordance
with the Company's normal vacation policy in effect at the
time of the Change in Control;
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(vii) any purported termination of Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8(a) or
that does not comply with Section 7(c), if applicable (and for
purposes of this Agreement, no such purported termination
shall be effective); or
(viii) the failure of a successor to the Company to
expressly assume and agree to perform this Agreement pursuant
to Section 13(a) hereof.
Executive's right to terminate his employment hereunder for Good Reason shall
not be affected by his incapacity due to physical or mental illness, provided
that this sentence shall not effect the Company's rights under this Section 7.
Executive's continued employment shall not constitute consent to, or a waiver of
rights with respect to, any act or failure to act constituting Good Reason
hereunder.
(e) DEFINITION OF CHANGE IN CONTROL. For purposes of this
Agreement, a "Change in Control" of the Company shall mean the occurrence of any
one of the following events:
(i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than any trustee or other
fiduciary holding securities under an employee benefit plan of
LFC or LFI, or any corporation owned, directly or indirectly,
by the stockholders of LFC or LFI in substantially the same
proportions as their ownership of stock of LFC or LFI, as the
case may be (a "Person"), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of LFC or LFI representing 50% or
more of the combined voting power of the then outstanding
securities of LFC or LFI, as the case may be;
(ii) during any period of two consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the LFC Board of Directors (the "LFC Board") or the
LFI Board, and any new director (other than a director
designated by a Person who has entered into an agreement with
LFC or in Section 7(e) (ii) being met, shall not constitute a
Change in Control under this Section.
8. TERMINATION PROCEDURE.
(a) NOTICE OF TERMINATION. Any termination of Executive's
employment by the Company or by Executive (other than termination pursuant to
Section 7(a) hereof) shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 14. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executive's employment under the provision so
indicated.
(b) DATE OF TERMINATION. "Date of Termination" shall mean (i)
if Executive's employment is terminated by his death, the date of his death,
(ii) if Executive's employment is terminated pursuant to Section 7(b) above,
thirty (30) days after Notice of Termination (provided that Executive shall not
have returned to the performance of his duties on a full-time basis during such
thirty (30) day period), (iii) if Executive's employment is terminated pursuant
to Section 7(c) above, the date specified in the Notice of Termination, (iv) if
this contract is not renewed by the Renewal Date, the
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date 30 days after the Renewal Date, and (v) if Executive's employment is
terminated for any other reason, the date on which a Notice of Termination is
given or any later date (within 30 days) set forth in such Notice of
Termination; PROVIDED, HOWEVER, that, if within thirty (30) days after any
Notice of Termination is given the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding and
final arbitration award or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected) (a "Final Order"); provided FURTHER, HOWEVER, that
the Date of Termination shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence.
(c) COMPENSATION DURING DISPUTE. If a purported termination
occurs on or after a Change in Control and during the Employment Period, and
such termination is disputed in accordance with subsection (b) of this Section 8
hereof, the Company shall continue to pay Executive the full compensation in
effect when the notice giving rise to the dispute was given (including, but not
limited to, salary) and continue Executive as a participant in all compensation,
benefit and insurance plans in which Executive was participating when the notice
giving rise to the dispute was given, until the Date of Termination, determined
in accordance with subsection (b) of this Section 8. Amounts paid under this
Section 8(c) shall be offset against or reduce any other amounts due under this
Agreement. In addition, Executive shall repay any amounts paid under this
Section 8(c) if it is determined by a Final Order that such Employee was
properly terminated for Cause.
9. COMPENSATION UPON TERMINATION OR DURING DISABILITY.
(a) DISABILITY; DEATH. During any period that Executive fails
to perform his duties hereunder as a result of incapacity due to physical or
mental illness ("Disability Period"), Executive shall continue to receive his
full Base Salary at the rate in effect at the beginning of such period, less all
compensation payable to Executive under any Company-funded disability plan, if
any, as in effect during such period, until his employment is terminated
pursuant to Section 7(b). Subsequent to the termination of Executive's
employment pursuant to Section 7(b), or in the event Executive's employment is
terminated by reason of his death, the Company shall have no further obligations
to Executive under this Agreement and Executive's benefits shall be determined
under the Company's retirement, insurance and other compensation programs then
in effect in accordance with the terms of such programs.
(b) BY COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD REASON.
If during the Employment Period Executive's employment is terminated by the
Company other than for Cause or Disability or by Executive for Good Reason, or
if this contract is not renewed by the Renewal Date, then --
(i) in addition to any amounts due Executive pursuant
to Sections 5(a) or 5(b) hereof, the Company shall pay
Executive (or his legal representatives or estate) an amount,
in cash, equal to one and one-half (1-1/2) times his Base
Salary as in effect on the Date of Termination in equal
monthly installments over an eighteen (18) month period;
provided, however, that after nine (9) months after the Date
of Termination, Executive shall make reasonable efforts to
seek other employment; provided, further, however, that
Executive will not be required to accept a position of
substantially different character than the highest position
held by such Executive with the Company or a position that
would cause such Executive to violate Section 11(b) hereof,
nor will Executive be required to accept a position in a
location that is unreasonable given the personal
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circumstances of Executive. To the extent that Executive shall
receive compensation and benefits from such other employment,
whether as an employee, consultant, independent contractor,
owner or otherwise, (together, "Other Employment") the
payments to be made and the benefits provided by the Company
under this Section 9(b) (i) for the period beginning nine (9)
months after termination of employment hereof shall be
correspondingly reduced. Notwithstanding the foregoing, if on
or after a Change in Control, a termination of the type
referred to in this section 9(b) occurs, or if this contract
is not renewed for an additional period of at least 18 months
at least 30 days prior to the expiration of the original or
extended term of this contract, as applicable, then the
Company shall pay to Executive a lump sum amount, in cash,
equal to one and one-half (1-1/2) times the sum of Base Salary
(at the rate in effect immediately prior to the occurrence of
the circumstance giving rise to the Notice of Termination) and
such amount shall not be reduced by any amounts Executive
shall receive from Other Employment; and provided further
(ii) the Company shall maintain in full force and
effect, for the continued benefit of Executive and his
dependents for the remainder of the Employment Period, all
employee welfare benefit plans and programs in which Executive
was entitled to participate immediately prior to the Date of
Termination, provided that Executive's continued participation
is possible under the general terms and provisions of such
plans and programs. In the event that Executive's
participation in any such plan or program is barred, the
Company shall arrange to provide Executive and his dependents
with benefits substantially similar to those which Executive
and his dependents would otherwise have been entitled to
receive under such plans and programs from which their
continued participation is barred. This paragraph is qualified
by Section 10.
(iii) in determining the retirement benefits to which
Executive is entitled under the Company's Supplemental
Executive Retirement Plan (the "SERP"), Executive shall be
deemed to have accumulated (after the Date of Termination)
thirty-six (36) additional months of service credit thereunder
at Executive's highest annual rate of compensation during the
twelve (12) months immediately preceding the Date of
Termination ("Additional Service Credit"). Executive shall be
entitled to commence receipt of his benefit under this
paragraph (iii) on the first day of the month following the
expiration of the Employment Period; PROVIDED, HOWEVER, that
if Executive elects to commence payments of such benefit prior
to his attainment of age 55, his annual benefit (as increased
hereunder) shall be reduced by 3% for each year that his
actual age is less than 55 years. Notwithstanding the
foregoing, if Executive's termination occurs on or after a
Change in Control, the Company shall pay Executive, in lieu of
the additional periodic payments described herein above, a
lump sum amount, in cash, equal to the actuarial equivalent of
the excess of (i) the retirement pension (determined as a
straight life annuity commencing at Normal Retirement Age) to
which Executive would be entitled under the terms of the SERP
(without regard to any amendment to the SERP made subsequent
to a Change in Control and on or prior to the Date of
Termination, which amendment adversely affects in any manner
with computation of retirement benefits thereunder), taking
into account Executive's Additional Service Credit over (ii)
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the retirement pension (determined as a straight life annuity
commencing at Normal Retirement Age) to which Executive would
be entitled pursuant to the provisions of the SERP. For
purposes of this Section 9(b) (iii), "actuarial equivalent"
shall be determined using the Pension Benefit Guaranty
Corporation rates for immediate annuities for the month in
which the Date of Termination occurs.
Notwithstanding the foregoing, by entering into the
Agreement, the Company is not assuming any Executive's SERP,
nor granting any rights to administrative priority to any
employee with respect to his or her SERP, which rights shall
be unaffected by the execution of such Agreement, and
Executive so acknowledges and agrees. Without limiting the
foregoing, the Company reserves the right to seek assumption
of the SERP, and/or administrative priority for or allowance
of the claims arising under the SERP. Similarly, Executive
reserves the right to move for assumption of the SERP, or seek
administrative priority and/or allowance of the claims arising
thereunder. In addition, the official Creditors' Committee
reserves the right to oppose assumption of the SERP, seek
rejection or termination of the SERP, and/or oppose the amount
of priority of any claims arising under the SERP.
(c) BY COMPANY FOR CAUSE OR BY EXECUTIVE OTHER THAN FOR GOOD
REASON. If Executive's employment shall be terminated by the Company for Cause
or by Executive other than for Good Reason, then the Company shall pay Executive
his Base Salary (at the rate in effect at the time Notice of Termination is
given) through the Date of Termination, and the Company shall have no additional
obligations to Executive under this Agreement except as set forth in subsection
(d) of this Section 9.
(d) COMPENSATION PLANS. Following any termination of
Executive's employment, the Company shall pay Executive all unpaid amounts, if
any, to which Executive is entitled as of the Date of Termination under any
compensation plan or program of the Company, at the time such payments are due.
(e) CONTINGENT LIMITATION.
(i) Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received
or to be received by Executive in connection with a Change in
Control or the termination of Executive's employment (whether
pursuant to the terms of this Agreement (the "Severance
Payments") or any other plan, arrangement or agreement with
the Company, any Person whose actions result in a Change in
Control or any Person affiliated with the Company or such
Person) (all such payments and benefits, including the
Severance Payments, being hereinafter called "Total Payments")
would be subject (in whole or part) to the excise tax ("Excise
Tax") imposed under section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code") as determined by the
Company's independent accountant, then the Severance Payments
shall be reduced to the extent necessary so that no portion of
the Total Payments is subject to the Excise Tax (after taking
into account any reduction in the Total Payments provided by
reason of section 280G of the Code in such other plan,
arrangement or agreement); PROVIDED, HOWEVER, that such
reduction shall be made only if (A) the net amount of such
Total Payments, as so reduced (and after deduction of the net
amount of federal, state and local income tax on such reduced
Total Payments), is greater than (B) the net amount of such
Total Payments, without
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reduction (but after deduction of the net amount of federal,
state and local income tax and Excise Tax on such Total
Payments).
(ii) For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the
amount of such Excise Tax, (A) no portion of the Total
Payments the receipt or enjoyment of which Executive shall
have effectively waived in writing prior to the Date of
Termination shall be taken into account, (B) no portion of the
Total Payments shall be taken into account which in the
opinion of tax counsel selected by the Company does not
constitute a "parachute payment" within the meaning of section
280G(b) (2) of the Code (including by reason of section
280G(b) (4) (A) of the Code) and, in calculating the Excise
Tax, no portion of such Total Payments shall be taken into
account which constitutes reasonable compensation for services
actually rendered (within the meaning of section 280G(b) (4)
(B) of the Code) in excess of the Base Amount allocable to
such reasonable compensation, and (C) the value of any noncash
benefit or any deferred payment or benefit included in the
Total Payments shall be determined by the Company in
accordance with the principles of sections 280G(d) (3) and (4)
of the Code. For purposes of determining the amount of the
deductions for income tax described in clauses (A) and (B) of
paragraph (i) of this Section 9(e), Executive shall be deemed
to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which occurs
the Date of Termination and state and local income taxes at
the highest marginal rate of taxation in the state and
locality of Executive's residence on the Date of Termination,
net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local
taxes.
(iii) Prior to the payment date set fourth in Section
9(f), the Company shall provide Executive with its calculation
of the amounts referred to in this Section 9(e) and such
supporting materials as are reasonably necessary for Executive
to evaluate the Company's calculations. If Executive objects
to the Company's calculations, the Company shall pay to
Executive such portion of the Severance Payments (up to 100%
thereof) as Executive determines is necessary to result in
Executive's receiving the greater of clauses (A) and (B) of
paragraph (i) of this Section 9(e).
(f) TIME OF PAYMENTS. The lump sum payments provided for in
Section 9(b) shall be made not later than the fifth business day following the
Date of Termination, PROVIDED, HOWEVER, that if the amount of such payments, and
the contingent limitation on such payments set forth in Section 9(e) cannot be
finally determined on or before such day, the Company shall pay Executive on
such day an estimate, as determined in good faith by the Company, of the minimum
amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b) (2) (B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth day after the Date of Termination. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due,
such excess shall constitute a loan by the Company to Executive, payable on the
fifth business day after demand by the Company (together with interest at the
rate provided in section 1274(b) (2) (B) of the Code).
10. MITIGATION. Executive shall not be required to mitigate the amount
of any payment provided for Executive by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for
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Executive hereunder be reduced by any compensation earned by Executive as the
result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by Executive to the Company, or otherwise
except as is hereinafter specifically provided in Section 9(b) (i) and this
Section 10. To the extent that Executive, during the relevant period described
in Section 9(b) (ii) hereof, shall receive from a subsequent employer benefits
similar to those to be provided under Section 9(b) (ii), the benefits to be
provided under the provisions of said Section 9(b) (ii) shall be correspondingly
reduced. If the Date of Termination shall occur prior to a Change in Control,
the benefits to be provided under Section 9(b) (i) hereof shall also be reduced
to the extent of any salary to which Executive becomes entitled from any
subsequent employer for the period beginning nine (9) months after the Date of
Termination.
11. CONFIDENTIAL INFORMATION; NONCOMPETITION REQUIREMENT.
(a) CONFIDENTIAL INFORMATION. Executive shall hold in a
fiduciary capacity for the benefit of the Company all trade secrets,
confidential information, and knowledge or data relating to the Company and its
businesses, which shall have been obtained by Executive during Executive's
employment by the Company and which shall not have been or now or hereafter have
become public knowledge (other than by acts by Executive or representatives of
Executive in violation of this Agreement). Executive shall not, without the
prior written consent of the Company or as may otherwise be required by law or
legal process, communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Company and those designated by the
Company. Any termination of Executive's employment or of this Agreement shall
have no effect on the continuing operation of this Section 11(a).
(b) NONCOMPETITION REQUIREMENT. During any period that
Executive is performing services hereunder or Executive is entitled to payment
pursuant to Section 9(b) (i), and for a period of one (1) year following a
termination of Executive's employment by the Company for Cause or by Executive
other than for Good Reason, Executive agrees that, without the prior written
consent of the Company, he shall not, directly or indirectly, with or without
pay, either as an employee, employer, consultant, agent, principal, partner,
stockholder, corporate officer, director, manager, investor, lender, advisor,
owner, associate or in any other individual or representative capacity, engage
or participate in any business that is in competition in any manner whatsoever
("Competitive Business") with any of the Company's retail stores unless such
Competitive Business is located more than fifty (50) miles from the site, as of
the Date of Termination, of any such retail store of the Company; PROVIDED,
however, that the noncompetition requirement of this Section 11(b) shall be
limited to six months after the Date of Termination if Executive's employment is
terminated on or after a Change in Control.
(c) INJUNCTIVE RELIEF. In the event of a breach or threatened
breach of this Section 11, Executive agrees that the Company shall be entitled
to injunctive relief in a court of appropriate jurisdiction to remedy any such
breach or threatened breach, Executive acknowledging that damages would be
inadequate and insufficient.
12. INDEMNIFICATION; LEGAL FEES. The Company shall indemnify Executive
to the full extent permitted by law and the by-laws of the Company for all
expenses, costs, liabilities and legal fees which Executive may incur in the
discharge of his duties hereunder, including any legal fees and expenses
incurred by Executive in contesting or disputing any termination of the
Executive's employment or in seeking to obtain or enforce any right or benefit
provided by this Agreement or in connection with any tax audit or proceeding to
the extent attributable to the application of Section 4999 of the Code to any
payment or benefit provided hereunder) other than for any such expenses, costs,
liabilities or legal fees incurred as a result of Executive's bad faith or gross
negligence. In the event that it is determined by a Final Order that Executive's
contest or dispute of his termination was frivolous,
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Executive shall repay all legal fees previously paid by the Company to
Executive's counsel for work done to contest or dispute such termination.
Payments due to Executive under this section shall be made at the later of the
time specified in Section 9(f), or within five (5) days after Executive's
request for payment accompanied with such evidence of fees and expenses incurred
as the Company reasonably may require. Any termination of Executive's employment
or of this Agreement shall have no effect on the continuing operation of this
Section 12.
13. SUCCESSORS; BINDING AGREEMENT.
(a) COMPANY'S SUCCESSORS. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle Executive to compensation from
the Company in the same amount and on the same terms as he would be entitled to
hereunder if he terminated his employment for Good Reason, except that for
purposes of implementing the foregoing, the date on which any such succession
becomes effective shall be deemed the Date of Termination. As used in this
Agreement, "Company" shall mean the Company as herein before defined and any
successor to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 13 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.
(b) EXECUTIVE'S SUCCESSORS. This Agreement and all rights of
Executive hereunder shall inure to the benefit of and be enforceable by
Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should die
while any amounts would still be payable to him hereunder if he had continued to
live, all such amounts unless otherwise provided herein shall be paid in
accordance with the terms of this Agreement to Executive's devisee, legatee, or
other designee or, if there be no such designee, to Executive's estate.
14. NOTICE. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
Xxxxxx X. Xxxxx
0000 X.X. 000xx Xxxxxx
Xxxxx, Xxxxxxx 00000
If to the Company:
Xxxxxx Furniture Corporation
0000 X. Xxxxxxx Xxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Executive and such officer of the Company, as may be
11
specifically designated by the LFI Board or its compensation committee. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. This Agreement shall be binding
on all successors to the Company. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Florida without regard to its conflicts of law principles. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder shall
be paid net of any applicable withholding required under federal, state or local
law. The obligations of the parties under Section 9 shall survive the expiration
of the term of this Agreement. The compensation and benefits payable to
Executive under this Agreement shall be in lieu of any other severance benefits
to which Executive may otherwise be entitled upon his termination of employment
under any severance plan, program, policy or arrangement of the Company.
16. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
XXXXXX FURNITURE INCORPORATED
By:
----------------------------------
Name:
Title:
XXXXXX FURNITURE CORPORATION
By:
----------------------------------
Name:
Title:
XXXXXX FURNITURE REALTY CORPORATION
By:
----------------------------------
Name:
Title:
12
XXXXXX SHOPPING SERVICES, INC.
By:
----------------------------------
Name:
Title:
XXXXXX FURNITURE COMPANY OF
THE MIDWEST, INC.
By:
----------------------------------
Name:
Title:
XXXXXX FURNITURE COMPANY OF
THE PACIFIC, INC.
By:
----------------------------------
Name:
Title:
XXXXXX FURNITURE COMPANY OF
WASHINGTON, INC.
By:
----------------------------------
Name:
Title:
XXXXXX FURNITURE COMPANY OF THE
MIDWEST REALTY, INC.
By:
----------------------------------
Name:
Title:
XXXXXX FURNITURE OF THE PACIFIC
REALTY, INC.
By:
----------------------------------
Name:
Title:
XXXXXX FURNITURE OF WASHINGTON
REALTY, INC.
By:
----------------------------------
Name:
Title:
13
XXXX X. XXXXX COMPANY
By:
----------------------------------
Name:
Title:
XXXX X. XXXXX REALTY COMPANY
By:
----------------------------------
Name:
Title:
EXECUTIVE
-------------------------------------
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