EMPLOYMENT AGREEMENT
10.1(h)
- Employment Agreement
This agreement is made and entered into this
15th day of June 2007, by and between Hooker Furniture Corporation (“Employer”)
and Xxxx X. Xxxx (“Executive”) (each a “Party” and collectively, the
“Parties”).
WHEREAS, Executive has substantial expertise in
the management of the design, manufacture and marketing of upholstered
furniture; and
WHEREAS, Employer desires to secure Executive’s
service and expertise in connection with Employer’s upholstery
business beginning July 16th, 2007 (the “Effective Date”); and
WHEREAS, the Parties agree that a covenant not
to compete is essential to the growth and stability of the upholstery business
of Employer during the first years after its employment of the Executive and to
the continuing viability of such business whenever the employment to which this
Agreement relates is terminated;
1. Employment. Upon
the Effective Date, Employer shall employ and Executive agrees to become
employed as Executive Vice President – Upholstery Operations of Employer to
oversee the operations of Employer’s upholstery business and to perform such
different or other duties as may be assigned to him by Employer from time to
time by Employer’s Chief Executive Officer. Executive will devote his full
working time and best efforts to the diligent and faithful performance of such
duties as may be entrusted to him from time to time by Employer, and shall
observe and abide by the corporate policies and decisions of Employer in all
business matters.
2. Term. Executive’s
employment shall continue under this Agreement for a period beginning on the
Effective Date of this Agreement and ending three (3) years
thereafter.
3. Compensation. Employer
shall pay and Executive shall accept as full consideration for the services to
be rendered hereunder compensation consisting of the items listed
below. Employer shall have no obligation to pay any such compensation
for any period after the termination of Executive’s employment, except as
otherwise expressly provided.
(a) Salary, paid
pursuant to Employer’s normal payroll practices, at an annual rate of $264,000
per year or such other rate as may be established prospectively by the
Compensation Committee of Employer’s Board of Directors (the “Compensation
Committee”) from time to time generally consistent with the range of salaries
for officers of Employer with a similar level of responsibility to
Executive. All such payments shall be subject to deduction and
withholding authorized or required by applicable law.
(b) An Annual
Bonus with respect to each fiscal year of the Employer (the “Performance Year”)
during the term of this Agreement , beginning with the Performance Year that
began on January 29, 2007. The Annual Bonus shall be computed as a
percentage of Executive’s salary actually paid with respect to the Performance
Year, which percentage shall be at least 20% and shall not exceed 40% of such
salary. The terms and conditions of the Annual Bonus, including the
applicable performance criteria for a Performance Year, and the determination of
the amount of the Annual Bonus payable to the Executive for a Performance Year
(if any) shall be determined in the sole discretion of Employer’s Chief
Executive Officer or the Compensation Committee, as determined by the
Compensation Committee. The Annual Bonus with respect to a
Performance Year will be paid during the period that begins on the first day
immediately following the last day of the Performance Year and ends on April 15
of the calendar year in which the Performance Year ends.
(c) Such other
benefits, payments, or items of compensation as are provided under the employee
benefit plans of the Employer, or as are made available from time to time under
compensation policies set by Employer for management employees of Employer
having similar salary and level of responsibility; provided, that Executive
shall be entitled to four weeks of vacation each fiscal year, which shall be
pro-rated for the portion of any fiscal year Executive is employed by the
Company during the Term of this Agreement.
(d) Employer
shall reimburse Executive, in accordance with the general policies and practices
of Employer as in effect from time to time, for normal out-of-pocket expenses
incurred by Executive in the ordinary course of business, including without
limitation, Employer’s standard mileage allowance for business use of any
personal vehicle, business related travel, customer entertainment, cellular telephone expense and professional
organizations.
4. Disability or
Death.
(a) Disability. If at
any time during the Term of this Agreement, Executive becomes disabled and he
has not breached any of the provisions of this Agreement, compensation shall
continue to be paid to him according to the Employer’s normal payroll schedule
while he is still living, but only for the first six (6) month period
during which he shall be so disabled. Such payments shall be in lieu
of any other disability benefit payable for such period under any other employee
benefit plan, policy or practice of the Employer. In such event,
Employer may, at its sole option, retain Executive in its employment and
continue payment of Executive’s compensation for an additional period of up to
23 months (for maximum of 29 months total) until he is able to return to work,
or Employer may terminate this Agreement. If the Employer exercises
its discretion to terminate the Agreement on account of the Executive’s
disability, the Executive shall not be entitled to any further compensation or
benefits under this Agreement (except for such compensation or benefits to which
the Executive may be entitled under the terms of any employee benefit plan of
the
Employer). For purposes of this Section 4(a), Executive
shall be considered “disabled” if he has suffered any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a
continuous period of not less than six months, where such impairment causes the Executive to be unable to perform the duties of his position of employment or any substantially similar position of employment with the Employer.
continuous period of not less than six months, where such impairment causes the Executive to be unable to perform the duties of his position of employment or any substantially similar position of employment with the Employer.
(b) Death. If
Executive should die during the Term of this Agreement, Executive’s employment
and Employer’s obligations hereunder (other than pro rata payment of salary)
shall terminate as of his death. In such event, the Employer shall pay the
Executive an Annual Bonus for the Performance Year in which the Executive died,
which shall be prorated for the period ending on the date of the Executive’s
death. Such Annual Bonus, if any, shall be paid by no later than
April 15 of the calendar year in which such Performance Year ends.
5. Termination
by Employer.
(a) Cause. Employer
may terminate the employment of Executive under this Agreement during its Term
for Cause. “Cause” shall include Executive’s fraud, dishonesty, theft,
embezzlement, misconduct by Executive injurious to the Employer or any of its
affiliates, conviction of, or entry of a plea of guilty or nolo contendere to, a crime
that constitutes a felony or other crime involving moral turpitude, competition
with Employer or any of its affiliates, unauthorized use of any trade secrets of
Employer or any of its affiliates or Confidential Information (as defined
below), a violation of any policy, code or standard of ethics generally
applicable to employees of the Employer, Executive’s material breach of
fiduciary duties owed to Employer, Executive’s excessive and unexcused
absenteeism unrelated to a disability, or, following written notice and a
reasonable opportunity to cure, gross neglect by Executive of the duties
assigned to him. In such event no further Salary shall be paid to
Executive after the date of termination and no Annual Bonus shall be paid to
Executive after the date of termination, including any Annual Bonus with respect
to any fiscal year or the portion of any fiscal year preceding the date of
termination. Executive shall retain only such rights to participate
in other benefits as are required by the terms of those plans, Employer’s
polices, or applicable law.
(b) Without Cause. Employer may
terminate the employment of Executive under this Agreement during its Term
without Cause. In such event, however, Executive, while living, shall
be entitled to continue to receive his (1) then current base Salary for a period
of twelve (12) months following such termination of employment and (2) Annual
Bonus for a period of twelve (12) months following such termination of
employment or the remaining Term of this Agreement, whichever is less (the
“Severance Period”). Annual Bonus payment(s), if otherwise payable under the
terms described and referenced in Section 3(b) above, shall be made during the
period(s) described in Section 3(b) above, for any Performance Year that ends
before or during the Severance Period and for any portion of a Performance Year
that falls during the Severance Period, in each case if
applicable. Notwithstanding the foregoing, the total amount payable
under this Section 5(b) shall not exceed the applicable dollar limit imposed
under Treasury Regulation Section 1.409A-1(b)(9)(iii), or any successor or
replacement section thereto.
6. Employment Upon Expiration
of Agreement. If Executive is still employed by Employer when
this Agreement expires by the conclusion of its Term, Executive’s employment
with Employer may or may not continue thereafter, but any such employment shall
be “at will,” and may be terminated by either Employer or Executive at any time,
with or without Cause, except as otherwise agreed in writing by Employer and
Executive; provided, that if after the expiration of the Term of this Agreement
Employer terminates the employment of Executive without Cause, Executive, while
living, shall be entitled to continue to receive his then current base Salary
for a period of twelve (12) months following such termination of employment.
Notwithstanding the foregoing, the total amount payable under this Section 6
shall not exceed the applicable dollar limit imposed under Treasury Regulation
Section 1.409A-1(b)(9)(iii), or any successor or replacement section
thereto.
7. Confidential Information and
Return of Property. “Confidential Information” means any
written, oral, or other information obtained by Executive in confidence from
Employer, or any of its affiliates, including without limitation information
about their respective operations, financial condition, business commitments or
business strategy, as a result of his employment with Employer unless
such information is already publicly known through no fault of any person bound
by a duty of confidentiality to Employer or any of its
affiliates. Executive will not at any time, during or after his
employment with Employer, directly or indirectly disclose Confidential
Information to any person or entity other than authorized officers, directors
and employees of Employer. Executive will not at any time, during or
after his employment with Employer, in any manner use Confidential Information
on behalf of himself or any other person or entity other than Employer, or
accept any position in which he would have a duty to any person to use
Confidential Information against the interests of Employer or any of its
affiliates. Upon termination of his employment for any reason,
Executive will promptly return to Employer all property of Employer, including
documents and computer files, especially where such property contains or
reflects Confidential Information. Nothing in this Agreement shall be
interpreted or shall operate to diminish such duties or obligations of Executive
to Employer that arise or continue in effect after the termination of
Executive’s employment hereunder, including without limitation any such duties
or obligations to maintain confidentiality or refrain from adverse use of any of
Employer’s trade secrets or other Confidential Information that Executive may
have acquired in the course of Executive’s employment.
8. Disclosure and Ownership of
Work Related Intellectual Property. Executive shall disclose
fully to Employer any and all intellectual property (including, without
limitation, inventions, processes, improvements to inventions and processes, and
enhancements to inventions and processes, whether or not patentable, formulae,
data and computer programs, related documentation and all other forms of
copyrightable subject matter) that Executive conceives, develops or makes during
the term of his employment and that in whole or in part result from or relate to
Executive’s work for Employer (collectively, “Work Related Intellectual
Property”). Any such disclosure shall be made promptly after each
item of Work Related Intellectual Property is conceived, developed or made by
Executive, whichever is sooner. Executive acknowledges that all Work
Related Intellectual Property that is copyrightable subject matter and which
qualifies as “work made for hire” shall be automatically owned by
Employer. Further, Executive hereby assigns to Employer any and all
rights which Executive has or may have in Work Related Intellectual Property
that is copyrightable subject matter and that, for any reason, does not qualify
as “work made for hire.” If any Work Related Intellectual Property
embodies or reflects any preexisting rights of Executive, Executive hereby
grants to Employer the irrevocable, perpetual, nonexclusive, worldwide, and
royalty-free license to use, reproduce, display, perform, distribute copies of
and prepare derivative works based upon such preexisting rights and to authorize
others to do any or all of the foregoing.
9. Covenant Not to
Compete. Executive and Employer agree that after the Effective
Date, Employer’s upholstery business will depend to a considerable extent on the
individual efforts of Executive. Moreover, Executive recognizes that,
by virtue of his employment with Employer, he will have access to confidential
and/or proprietary information relating to the Employer’s
business. Accordingly, and in consideration of Employer’s agreement
to employ Executive, Executive covenants and agrees that he will not, for the
period of his employment hereunder and for two (2) years
thereafter, whether or not within the original Term of this Agreement, engage
directly or indirectly
(as principal, agent, or consultant or through any corporation, firm or
organization in which he may be an officer, director, employee, shareholder,
partner, member or be otherwise affiliated) in the design, development,
manufacture, import or wholesale sale of upholstered furniture, in any position
in which he has responsibility for conducting, control over, influence over, or
input into the management, policies, or strategies of any business competing
with that being conducted by Employer or any of its affiliates in any U.S.
state, territory or district in which any of them is doing business upon the
termination of his employment under this Agreement; provided, however, that,
subject to Executive’s obligations under Section 8, this provision shall not,
after the termination of Executive’s employment under this Agreement, prohibit
Executive from providing consulting services to independent furniture retailers
(“Retail Furniture Consulting Services”) as long as any such furniture retailer
is not affiliated, directly or indirectly, whether through ownership or
franchise or other arrangement, with any entity engaged in the design,
development, manufacture, import or wholesale sale of upholstered
furniture. During the two-year period after the termination of
Executive’s employment under this Agreement, Executive shall give written notice
to Employer not more than five business days after Executive is engaged to
provide Retail Furniture Consulting Services. In addition, this provision shall
not, after the termination of Executive’s employment under this Agreement,
prohibit Executive from owning less than 2% of the stock of any publicly held
corporation.
10. Non-Solicitation of
Customers. Executive agrees that during the Term of this
Agreement, and for a period of two (2) years
thereafter, whether or not within the original Term of this Agreement,
regardless of the circumstances of the termination or any claim that Executive
may have against Employer under this Agreement or otherwise, Executive will
not:
(a) Solicit or
attempt to solicit, for purposes competitive with Employer or any of its
affiliates, any person or entity who was an existing customer or employee of
Employer or any of its affiliates within one (1) year prior to
the termination of Executive’s employment hereunder;
(b) Any person or
entity from whom Employer or any of its affiliates or Executive was, within the
one (1) year
period prior to the termination of Executive’s employment hereunder, actively
soliciting or preparing to solicit for the purpose of establishing a customer,
employment, or other business relationship; or
(c) Solicit or
encourage any vendor, supplier or employee of Employer or any of its affiliates
to cease doing business with Employer or any of its affiliates or to divert
goods or services previously provided to Employer or any of its affiliates to
any person or entity other than Employer or any of its affiliates.
11. Equitable
Relief. Executive acknowledges and agrees that a breach of any
of the covenants made by him in Sections 7, 8, 9 and 10 above would cause
irreparable harm to Employer or any of its affiliates for which there would be
no adequate remedy at law. Accordingly, in the event of any
threatened or actual breach of any such covenant, Executive agrees that Employer
shall be entitled to enforce any such covenant by injunctive and other
appropriate equitable relief in any court of competent jurisdiction, in addition
to all other remedies available. If Executive breaches Sections 9 or
10 above, the duration of the period identified shall be computed from the date
he resumes compliance with the covenant or from the date Employer is granted
injunctive or other equitable relief by a court of competent jurisdiction
enforcing the covenant, whichever shall first occur, reduced by the number of
days Executive was not in breach of the covenant after termination of
employment, or any delay in filing suit, whichever is greater.
12. Assignment. Employer
may assign this Agreement to any other entity acquiring all or substantially all
of the assets or stock of Employer or to any other entity into which or with
which Employer may be merged or consolidated. Upon such assignment,
merger, or consolidation, the rights of Employer under this Agreement, as well
as the obligations and liabilities of Employer hereunder, shall inure to the
benefit of and be binding upon the assignee, successor-in-interest, or
transferee of Employer and Employer shall no further obligations or liabilities
hereunder. This Agreement is not assignable in any respect by
Executive.
13. Invalid
Provisions. It is not the intention of either Party to violate
any public policy, or any statutory or common law. If any sentence,
paragraph, clause or combination of the same in this Agreement is in violation
of the law of any State where applicable, such sentence, paragraph, clause or
combination of the same shall be void in the jurisdictions where it is unlawful,
and the remainder of the Agreement shall remain binding on the
Parties. However, the Parties agree, and it is their desire that a
court should substitute for each such illegal, invalid or unenforceable covenant
a reasonable and judicially-enforceable limitation in its place, and that as so
modified the covenant shall be as fully enforceable as if set forth herein by
the Parties themselves in the modified form.
14. Entire Agreement;
Amendments. This Agreement contains the entire agreement of
the Parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, if any, relating to the subject matter hereof.
This Agreement may be amended in whole or in part only by an instrument in
writing setting forth the particulars of such amendment and duly executed by
both Parties.
15. Multiple
Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together shall constitute one and the same instrument.
16. Governing Law. The
validity, construction, interpretation and enforceability of this Agreement and
the capacity of the parties shall be determined and governed by the laws of the
Commonwealth of Virginia, without regard to the conflict of law rules contained
therein.
17. Taxes. All
payments made under this Agreement shall be subject to the Employer’s
withholding of all required foreign, federal, state and local income and
employment/payroll taxes, and all payments shall be net of such tax
withholding. The parties intend that any payment under this Agreement
shall, to the extent subject to Section 409A of the Internal Revenue Code of
1986, as amended (“Code Section 409A”) be paid in compliance with Code Section
409A
and the Treasury Regulations thereunder such that there shall be no adverse tax
consequences, interest, or penalties as a result of the payments, and the
parties shall interpret the Agreement in accordance with Code Section 409A and
the Treasury Regulations thereunder. The parties agree to modify this
Agreement or the timing (but not the amount) of any payment to the extent
necessary to comply with Section 409A of the Code and avoid application of any
taxes, penalties, or interest thereunder. However, in the event that
the payments under the Agreement are subject to any taxes (including, without
limitation, those specified in Code Section 409A), the Executive shall be solely
liable for the payment of any such taxes.
[Signature
Page Follows]
IN WITNESS WHEREOF, the parties hereto have
executed and delivered this Agreement as of the date first written
above.
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Employer
By: /s/
Xxxx X. Xxxx, Xx. Xxxx X. Xxxx, Xx.
Chairman,
President and Chief Executive Officer
Hooker
Furniture Corporation
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Executive
/s/
Xxxx X Xxxx
Xxxx X.
Xxxx
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