EMPLOYMENT AGREEMENT Restated as of December 31, 2008
Exhibit
10.1
Restated
as of December 31, 2008
THIS
AGREEMENT, originally made as of June 1, 1996 and restated as of December 31,
2008, between XXXXXXX X. XXXXX (“Employee”) and XXXXXXX FURNITURE COMPANY, INC.,
a Delaware corporation (the “Company”). The Agreement is restated to
comply with the requirements of Section 409A of the Internal Revenue Code of
1986 (the “Code”).
WHEREAS,
the Company desires to assure that it will have the benefit of the continued
service and experience of the Employee, who is a principal executive officer of
the Company and an integral part of its management, and the Employee is willing
to enter into an agreement to such end upon the terms and conditions set forth
in this Agreement. In consideration of the foregoing and the mutual
agreements herein contained, the parties agree as follows:
1. Employment. The
Company hereby employs the Employee and the Employee hereby accepts employment
upon and agrees to the terms and conditions set forth herein.
2. Term. The
term of employment under this Agreement (the “Term”) commenced January 1, 1996
and has continued through December 31, 2008 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.
3. Compensation.
a. Salary. During
the Employee’s employment hereunder, the Company shall pay the Employee for all
services rendered by the Employee a base salary at an annual rate of at least
$272,000, with upward adjustments as the Board of Directors of the Company shall
deem appropriate. Such salary shall be payable to the Employee in
accordance with the Company’s usual paying practices, but not less frequently
than monthly.
b. Bonus. In
addition to base salary, the Employee shall be entitled to receive a potential
annual bonus of $50,000, subject to upward adjustment. The amount of
such bonus for any fiscal year shall be related to the achievement of certain
performance thresholds and objectives to be set at the beginning of each fiscal
year by the Board of Directors of the Company.
c. Other
Benefits. The Employee shall also receive such other customary
employee “fringe” benefits as are afforded generally by the Company to its
senior personnel, including grants of stock options and participation in the
Company’s deferred compensation program.
4. Duties. The
Employee shall continue to perform the duties of Executive Vice President –
Finance and Administration and Secretary of the Company and shall, under the
direction of the Chief Executive Officer or President, faithfully and to the
best of his ability perform such duties and such other duties and
responsibilities as may be reasonably assigned by the Chief Executive Officer or
President from time to time, including service as an officer or director of any
subsidiaries of the Company but not including service as an officer or director
of nonsubsidiary affiliates not in the same business as the
Company.
5. Extent of
Services. During the Employee’s employment hereunder, the
Employee shall devote his entire working time, attention and energy to the
business of the Company and shall not be engaged in any other active business of
any kind except as authorized by the Chief Executive Officer or
President.
6. Restrictive
Covenants.
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).
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.
c. Confidential
Information. The Employee further agrees to keep confidential
and not use for his personal benefit or for any other person’s benefit any and
all proprietary information received by the Employee relating to inventions,
products, production methods, financial matters, sources of supply, markets,
marketing methods and customers of the Company on the date hereof or developed
by or for it during the Term. This Agreement shall remain in full
force and effect after the Term without limit in point of time, but shall cease
to apply to information that legitimately comes into the public
domain.
d. Specific
Enforcement. It is agreed and understood by the parties hereto
that, in view of the nature of the business of the Company, the restrictions in
subsections a., b. and c. above are reasonable and necessary to protect the
legitimate interests of the Company, monetary damages alone are not an adequate
remedy for any breach of such provisions, and any violation thereof would result
in irreparable injuries to the Company. The Employee therefore
acknowledges that, in the event of his violation of any of such restrictions,
the Company shall be entitled to obtain from any court of competent jurisdiction
preliminary and permanent injunctive relief as well as damages and an equitable
accounting of all earnings, profits and other benefits arising from such
violation, which rights shall be cumulative and in addition to any other rights
or remedies to which the Company may be entitled.
e. Severability and
Extension. If the period of time or the area specified in
subsection a. above is determined to be unreasonable in any proceeding, such
period shall be reduced by such number of months or the area shall be reduced by
the elimination of such portion thereof, or both, so that such restrictions may
be enforced for such time and in such area as is determined to be
reasonable. If the Employee violates any of the restrictions
contained in subsection a. above, the restrictive period shall not run in favor
of the Employee from the time of the commencement of any such violation until
such time as such violation shall cease.
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 be entitled to
severance payments as follows: (i) monthly payments equal to his base
salary for the remainder of the calendar year in which such Termination
occurred, (ii) for the two calendar years following the year in which
such Termination occurred, monthly payments equal to one-twelfth of the sum of
the Employee’s base salary in effect at the date of Termination 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, and (iii) a one-time
payment equal to the average of the bonuses paid to the Employee for the three
fiscal years preceding the year in which the date of Termination
occurs. If the Employee is a Specified Employee, the monthly payments
under (b)(i) and (ii) otherwise payable for the first six months after the date
of Termination shall be made in a lump sum six months and one day after the date
of Termination. The one-time payment under (b)(iii) shall be made
ninety days after the close of the fiscal year in which such termination occurs,
provided that, if the Employee is a Specified Employee, payment shall not be
made before six months and one day after the date of Termination. If
there shall take place a Change in Control (as defined in Section 7(d)) of the
Company on or within two years before the date of Termination, 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 Termination or, if the Employee
is a Specified Employee, six months and one day after the date of
Termination. If a Change in Control occurs after the Employee’s date
of 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 when
a Change in Control occurs, provided that, if the Employee is a Specified
Employee, payment shall not be earlier than six months and one day after the
date of Termination. 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 maximum amount which may be paid without such payments being “excess
parachute payments”.
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 the
date on which the Company experiences a change in ownership (as described in
subsection (i)), a change in effective control (as described in subsection
(ii)), or a change in the ownership of a substantial portion of its assets (as
described in subsection (iii)):
(i) any
person or more than one person acting as a group acquires beneficial ownership
of Company stock that, together with the Company stock already held by such
person or group, represents more than 50 percent of the total fair market value
or total voting power of the Company stock; provided, however, that if any one
person or more than one person acting as a group is considered to own more than
50 percent of the total fair market value or total voting power of the Company
stock, the acquisition of additional stock by the same person or persons is not
considered to cause a change in the ownership of the Company for purposes of
this subsection (i) or to cause a change in effective control of the Company for
purposes of subsection (ii);
(ii) (1)
any person or more than one person acting as a group acquires (or has acquired
during the twelve-consecutive-month period ending on the date of the most recent
acquisition by such person or persons) beneficial ownership of Company stock
possessing 35 percent or more of the total voting power of the Company stock; or
(2) a majority of members of the Board is replaced during a
twelve-consecutive-month period by directors whose appointment or election is
not endorsed by a majority of the members of the Board before the date of the
appointment or election; provided, however, that if any one person or more than
one person acting as a group is considered to effectively control the Company
for purposes of this subsection (ii), the acquisition of additional control of
the corporation by the same person or persons is not considered to cause a
change in the effective control for purposes of this subsection (ii) or to cause
a change in ownership of the Company for purposes of subsection (i);
or
(iii) any
person or more than one person acting as a group acquires (or has acquired
during the twelve-consecutive-month period ending on the date of the most recent
acquisition by such person or group) assets from the Company having a total
gross fair market value equal to 40 percent or more of the total gross fair
market value of all of the assets of the Company immediately prior to such
acquisition or acquisitions; provided that a transfer of assets by the Company
is not treated as a change in the ownership of such assets if the assets are
transferred to (1) a shareholder of the Company immediately before the asset
transfer in exchange for or with respect to Company stock; (2) an entity, 50
percent or more of the total fair market value or total voting power of which is
owned, directly or indirectly, by the Company; (3) a person or more than one
person acting as a group that owns, directly or indirectly, 50 percent or more
of the total fair market value or total voting power of all outstanding Company
stock; or (4) an entity, at least 50 percent of the total fair market value or
total voting power of which is owned, directly or indirectly, by a person
described in (3) above. Except as otherwise provided in this
subsection (iii), a person’s status is determined immediately after the transfer
of the assets. For purposes of this subsection (iii), “gross fair market value”
means the value of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets.
The term
“group” shall have the meaning provided in Sections 1.409(i)(5)(v)(B), (vi)(D)
or (vii)(C) of the Treasury Regulations (or any successor provisions), as
applicable. The term “beneficial ownership” shall have the meaning
provided in Section 1.409(i)(5)(v)(iii) of the Treasury Regulations (or any
successor provision).
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 for the two years
following the date of Termination, monthly payments equal to one-twelfth of the
sum of the Employee’s base salary in effect at the date of Termination plus an
amount equal to the average of the bonuses paid to the Employee for the three
fiscal years preceding the year in which the date of Termination
occurs. If the Employee is a Specified Employee, the monthly payments
otherwise payable for the first six months after the date of Termination shall
be made in a lump sum six months and one day after the date of
Termination. If there shall take place a Change in Control (as
defined in Section 7(d)) of the Company on or within two years before the date
of Termination, 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
Termination or, if the Employee is a Specified Employee, six months and one day
after the date of Termination. If a Change in Control occurs after
the Employee’s date of 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 when a Change in Control occurs, provided that, if the Employee
is a Specified Employee, payment shall not be earlier than six months and one
day after the date of Termination. 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 maximum amount which may be paid without such payments
being “excess parachute payments”.
f. Defined
Terms. For purposes of this Agreement, Termination occurs when
the Employee has a “separation from service” as described in Treasury
Regulations Section 1.409A-1(h) or any successor provision. For
purposes of this Agreement, Specified Employee has the meaning as defined in
Treasury Regulations Section 1.409A-1(i) or any successor provision, determined
as of the Employee’s date of Termination.
8. Vacation. During
the Term, the Employee shall be entitled to a vacation in each calendar year in
accordance with the Company’s policy during which vacation his compensation
shall be paid in full.
9. Insurance. During
the Term, the Company will continue to include the Employee and his eligible
dependents as insureds under its existing insurance policies on the same terms
and conditions and with the same benefits as those in effect on the date hereof;
provided, however, that the forgoing shall not prohibit the Company from
adopting alternative benefit packages and programs so long as the benefits
thereunder, considered in the aggregate, are at least as favorable to the
Employee and his eligible dependents.
10. Notice. All
notices, requests, demands and other communications hereunder shall be in
writing and shall be effective upon the mailing thereof by registered or
certified mail, postage prepaid, and addressed as set forth below:
a. If
to the Company:
Xxxxxxx
Furniture Company, Inc.
Xxxxx 00,
X.X. Xxx 00
Xxxxxxxxxxx,
Xxxxxxxx 00000
b. If
to the Employee:
Xxxxxxx
X. Xxxxx
000 Xxxxx
Xxxxx
Xxxxxxxxxxxx,
XX 00000
Any party
may change the address to which notices are to be addressed by giving the other
party written notice in the manner herein set forth.
11. Waiver of
Breach. Waiver by either party of a breach of any provision of
this Agreement by the other shall not operate as a waiver of any subsequent
breach by such other party.
12. Entire
Agreement. This Agreement contains the entire agreement of the
parties in this matter and supersedes any other agreement, oral or written,
concerning the employment or compensation of the Employee by the
Company. It may be changed only by an agreement in writing signed by
both parties hereto.
13. Governing
Law. This Agreement shall be governed by the laws of the
Commonwealth of Virginia.
14. Benefit. This
Agreement shall be binding upon and inure to the benefit of and shall be
enforceable by and against the Company, its successors and assigns, and the
Employee, his heirs, beneficiaries and legal representatives.
IN
WITNESS WHEREOF, the Employee and the Company have executed this Agreement as of
the day and year above written.
XXXXXXX
FURNITURE COMPANY, INC.
By: s/Xxxxxx X.
Xxxxxxxxx
Name: Xxxxxx
X. Xxxxxxxxx
Title:
Chairman and Chief Executive Officer
s/Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx
