Exhibit 10.cc.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement "), dated as of November
1, 1996, between Troy A. Peery, Jr. (the "Executive") and Heilig-Meyers
Company, a Virginia corporation (the "Company"), recites and provides as
follows:
WHEREAS, the Board of Directors of the Company (the "Board") expects
that the Executive will continue to make substantial contributions to the growth
and prospects of the Company; and
WHEREAS, the Board desires that the Company retain the services of the
Executive, and the Executive desires to continue his employment with the
Company, all on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the Company and the Executive agree as
follows:
1. Employment Period. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ of the
Company, in accordance with the terms and provisions of this Agreement, for the
period commencing on the date of this Agreement (the "Effective Date") and
ending on the third anniversary of such date (the "Employment Period"). Subject
to the provisions of Section 3 hereof, the Employment Period shall be a constant
rolling period of three (3) years, commencing on the Effective Date, with the
result that, for each day after the Effective Date the Executive's term of
employment shall be extended for an additional day so that at all times the
remaining period of the Executive's term of employment shall be three (3) years.
2. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements), authority,
duties and responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned at any
time during the 90-day period immediately preceding the Effective Date and (B)
the Executive's services shall be performed at the location where the Executive
was employed immediately preceding the Effective Date or any office which is
less than 35 miles from such location.
(page 106)
(ii) The Board agrees that during the Employment Period it shall
nominate the Executive for election to the Board at each annual meeting of
shareholders and use its best efforts to cause the Executive to be duly elected
to the Board at each such meeting.
(iii) During the Employment Period, and excluding any periods of
vacation and leave to which the Executive is entitled, the Executive agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the executive to (A) serve on corporate, civic, charitable,
furniture industry association or professional association boards or committees
(provided the Executive obtains prior approval of the Board), (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's responsibilities to the
Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive
shall receive an annual base salary ("Annual Base Salary"), which shall be paid
in equal installments on a monthly basis, at least equal to twelve times the
highest monthly base salary paid or payable to the Executive by the Company and
its affiliated companies in respect of the twelve-month period immediately
preceding the month in which the Effective Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually and shall be
increased at any time and from time to time as shall be substantially consistent
with increases in base salary generally awarded in the ordinary course of
business to other peer executives of the Company and its affiliated companies.
Any increase in Annual Base Salary shall not serve to limit or reduce any other
obligation to the Executive under this Agreement. Annual Base Salary shall not
be reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As used in
this Agreement, the term "affiliated companies" shall include any company
controlled by, controlling or under common control with the Company.
(page 107)
(ii) Annual Bonus. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during the Employment
Period, in cash an annual bonus (the "Annual Bonus") under the Company's Annual
Performance-Based Bonus Plan or, if more favorable to the Executive, under any
plans, practices, programs and policies of the Company and its affiliates in
effect generally at any time after the Effective Date with respect to other peer
executives of the Company and its affiliated companies.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Executive shall be entitled to participate in all
incentive (including, without limitation, stock incentive), savings and
retirement plans, practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies, but in no event
shall such plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Effective Date or if more favorable to
the Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medial, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable employment
expenses incurred by the Executive in accordance with the most favorable
policies, practices and procedures of the Company and its affiliated companies
in effect for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter
(page 108)
with respect to other peer executives of the Company and its affiliated
companies.
(vi) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect for the executive at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 90-day period immediately preceding the Effective Date or, if more favorable
to the Executive, as provided generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.
3. Termination of Employment.
(a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 11(b) of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate effective on
the 30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of the Executive's
duties. For purposes of this Agreement, "Disability" shall mean the absence of
the Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician
selected by the
(page 109)
Company or its insurers and acceptable to the Executive or the Executive's legal
representative (such agreement as to acceptability not to be withheld
unreasonably).
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean (i) a material breach by the Executive of the Executive's obligations under
Section 2(a) (other than as a result of incapacity due to physical or mental
illness) which is demonstrably willful and deliberate on the Executive's part,
which is committed in bad faith or without reasonable belief that such breach is
in the best interests of the Company and which is not remediated in a reasonable
period of time after receipt of written notice from the Company specifying such
breach or (ii) the conviction of the Executive of a felony involving moral
turpitude.
(c) Notice of Termination. Any termination by the Company for Cause,
or by the Executive, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 11(b). For purposes of this
Agreement, a "Notice of Termination" means a written notice which (i) indicates
the specific termination provision in this Agreement relied upon, (ii) to the
extent applicable, sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment under
the provision so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after the giving of
such notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance shall not waive any right of the
Executive or the Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(d) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive, the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the Executive of
such termination and (iii) if the Executive's employment is terminated by reason
of death or Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may be.
4. Obligations of the Company upon Termination.
(a) Other than for Cause or Death. The Company may terminate
the Executive's employment during the Employment Period for other than
Cause or Death. If, during the Employment Period, the Company shall
(page 110)
terminate the Executive's employment other than for Cause or death or the
Executive shall terminate employment:
(i) The Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the sum of (1) the Executive's
Annual Base Salary through the Date of Termination to the extent not theretofore
paid; (2) to the extent not theretofore paid, the product of (A) the greater of
(x) the Annual Bonus paid or payable, including by reason of any deferral, to
the Executive (and annualized for any fiscal year consisting of less than twelve
full months or for which the Executive has been employed for less than twelve
full months) for the most recently completed fiscal year during the Employment
Period, if any, and (y) the average annualized (for any fiscal year consisting
of less than twelve full months or with respect to which the Executive has been
employed for less than twelve full months) bonus paid or payable, including by
reason of any deferral, to the Executive by the Company and its affiliated
companies in respect of the three fiscal years immediately preceding the fiscal
year in which the Date of Termination occurs (such greater amount shall be
hereinafter referred to as the "Highest Annual Bonus") and (B) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365; (3) any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon) to the extent not theretofore paid; and (4) any accrued
vacation pay, to the extent not theretofore paid (the sum of the amounts
described in clauses (1), (2), (3) and (4) shall be hereinafter referred to as
the "Accrued Obligations"); and
(ii) The Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the sum of the Executive's Annual
Base Salary and Highest Annual Bonus payable to the Executive from the Date of
Termination to the end of the Employment Period; and
(iii) For the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the Company shall
continue benefits to the Executive and/or the Executive's family at least equal
to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2(b)(iv) if the
Executive's employment had not been terminated in accordance with the most
favorable plans, practices, programs or policies of the Company and its
affiliated companies as in effect and applicable generally to other peer
executives and their families during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive
medial or
(page 111)
other welfare benefits under another employer provided plan, the medial and
other welfare benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility (such
continuation of such benefits for the applicable period herein set forth shall
be hereinafter referred to as "Welfare Benefit Continuation"). For purposes of
determining eligibility of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be considered to
have remained employed until the end of the Employment Period and to have
retired on the last day of such period; and
(iv) To the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive and/or the Executive's family any
other amounts or benefits required to be paid or provided or which the Executive
and/or the Executive's family is eligible to receive pursuant to this Agreement
and under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies as in effect and applicable generally to
other peer executives and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally thereafter with respect to other peer executives of the Company
and its affiliated companies and their families (such other amounts and benefits
shall be hereinafter referred to as the "Other Benefits").
(b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations (which shall
be paid to the Executive's estate or beneficiary, as applicable, in a lump sum
in cash within 30 days of the Date of Termination) and the timely payment or
provision of the Welfare Benefit Continuation and Other Benefits.
(c) Cause. If the Executive's employment shall be terminated for Cause
during the Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive
his Annual Base Salary through the Date of Termination plus the amount of any
compensation previously deferred by the Executive, in each case to the extent
theretofore unpaid.
(d) Time of Payment. The Company shall make all payments required by
this Section 4 within the time periods provided in Sections 4(a), 4(b) and 4(c);
provided, however, that in the event that any such payments would become
non-deductible to the Company under the provisions of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the Executive is a
"covered employee" as defined in Treas. Reg. Section 1.162-27(c)(2) for the
taxable year of the Company during which the Date of Termination occurred or for
the immediately preceding year, the Company shall make any such payment not
earlier than 90 days
(page 112)
following the end of the Company's taxable year during which the
Executive last was a "covered employee."
5. Nonexclusivity of Rights. Except as provided in Sections 4(a)(iii), 4(b)
and 4(c), nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.
6. Full Settlement; Resolution of Disputes.
(a) The Company's obligation to make the payment provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim, right
or action which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as provided in Section
4(a)(iii) with respect to Welfare Benefit Continuation and Section 8(a) with
respect to non-competition, such amounts shall not be reduced whether or not the
Executive obtains other employment. The Company agrees to pay, to the full
extent permitted by law, all reasonable legal fees and expenses that the
Executive may incur to enforce this Agreement and that result from a breach of
this Agreement by the Company; provided, however, that the reasonableness of the
fees and expenses must be determined by an independent arbitrator, using
standard legal principles, mutually agreed upon by the Company and the Executive
in accordance with rules set forth by the American Arbitration Association.
(b) If there shall be any dispute between the Company and the
Executive in the event of any termination of the Executive's employment by the
Company or by the Executive, then, unless and until there is a final,
nonappealable judgment by a court of competent jurisdiction declaring that such
termination was for Cause, the Company shall pay all amounts, and provide all
benefits, to the Executive and/or the Executive's family or other beneficiaries,
as the case may be, that the Company would be required to pay or provide
pursuant to Section 4(a) as though such termination were by the Company without
Cause or by the Executive; provided, however, that the Company shall not be
required to
(page 113)
pay any disputed amounts pursuant to this paragraph except upon receipt of an
undertaking (which may be unsecured) by or on behalf of the Executive to repay
all such amounts to which the Executive is ultimately adjudged by such court not
to be entitled.
7. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or
except as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 7 constitute a basis for deferring or withholding any
amounts otherwise payable to the Executive under this Agreement.
8. Non-Compete; Non-Solicitation.
(a) Except as is set forth below, for a period commencing on the date
hereof and ending on the date 36 months after the Executive ceases to be
employed by the Company (the "Non-Competition Period"), the Executive shall not
in the United States of America, directly or indirectly, either for himself or
any other person, own, manage, control, materially participate in, invest in,
permit his name to be used by, act as consultant or advisor to, render material
services for (along or in association with any person, firm, corporation or
other business organization) or otherwise assist in any manner any entity that
engages in or owns, invests in, manages or controls any venture or enterprise
engaged in the retail furniture industry (or any other business of the type that
constitutes a substantial portion of the Company's business at the date the
Executive ceases to be employed by the Company ) (collectively, a "Competitor");
provided, however, that the restrictions set forth above shall immediately
terminate and shall be of no further force or effect (i) in the event of a
default by the Company in the payment of any compensation or benefits to which
the Executive is entitled hereunder, which default is not cured within ten (10)
days after written notice thereof, or (ii) at the election of the Executive if
the Executive's employment has been terminated by the Company other than for
Cause and if the Executive (A) gives written notice to the Company during the
Non-Competition Period that he desires to accept employment with a Competitor;
and (B) agrees that the severance payment specified in Section 4(a)(i) hereof
shall be mitigated by the amount of salary and pro rata target bonus payable to
the Executive by the Competitor and
(page 114)
attributable to employment during the Non-Competition Period (it being
understood that the amount of such mitigated severance shall be paid by the
Executive to the Company in a lump-sum payment within thirty (30) days after the
Executive commences employment with the Competitor). Nothing herein shall
prohibit the Executive from being a passive owner of not more than 2% of the
equity securities of a corporation engaged in such business which is publicly
traded, so long as he has no active participation in the business of such
corporation.
(b) During the Non-Competition Period, the Executive shall not,
directly or indirectly, (i) induce or attempt to induce or aid others in
inducing an employee of the Company to leave the employ of the Company, or in
any way interfere with the relationship between the Company and an employee of
the Company except in the proper exercise of the Executive's authority, or (ii)
in any way interfere with the relationship between the Company and any customer,
supplier, licensee or other business relation of the Company.
(c) If, at the time of enforcement of this Section 8, a court shall
hold that the duration, scope, area or other restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope, area or other restrictions reasonable under such
circumstances shall be substituted for the stated duration, scope, area or other
restrictions.
(d) The covenants made in this Section 8 shall be construed as an
agreement independent of any other provisions of this Agreement, and shall
survive the termination of this Agreement. Moreover, the existence of any claim
or cause of action of the Executive against the Company or any of its
affiliates, whether or not predicated upon the terms of this Agreement, shall
not constitute a defense to the enforcement of these covenants.
9. Indemnity. The Company will indemnify the Executive, in his
capacity as an officer and director of the Company, to the fullest extent
permitted by the Company's Articles of Incorporation and Bylaws.
10. Successors.
(a) This Agreement is personal to the Executive and without the prior
written consent of the company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(page 115)
(c) 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 assume
expressly 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. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Virginia, without reference to principles
of conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive to: If to the Company to:
Troy A. Peery, Jr. Heilig-Meyers Company
14 Broad Run Road 2235 Staples Mill Road
Manakin Sabot, Virginia 23103 Richmond, Virginia 23230
Attention: Corporate Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amount payable under
this Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement.
(page 116)
(f) Any entitlements to the Executive created under Section
2(b) shall be contract rights to the extent not prohibited by law. However, the
Company shall not be required to amend, or refrain from amending, any of its
plans to so provide the contract rights.
(g) The Executive and the Company agree that as of the date
hereof, this Agreements supersedes and terminates the Employment Agreement
between the Company and the Executive dated September 11, 1989, as amended
August 26, 1993.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
HEILIG-MEYERS COMPANY
By:/s/ William C. DeRusha
Title:Chairman and CEO
/s/ Troy A. Peery, Jr.
Troy A. Peery, Jr.
(page 117)