FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment is made as of July 1, 1999, by and among Olympic Cascade
Financial Corporation, a Delaware corporation (the "Company"), National
Securities Corporation, a Washington corporation and a wholly-owned subsidiary
of the Company ("National") and Steven A. Rothstein, an individual
("Executive").
A. The Company, National and Executive are parties to an Employment
Agreement dated as of April 1, 1998 (the "Agreement"), pursuant to which each of
the Company and National employ Executive as its Chairman and Chief Executive
Officer, based in the Company's executive offices in Chicago, Illinois; and
B. The Company, National and Executive desire to amend certain
provisions of the Agreement, as set forth in this Amendment.
NOW, THEREFORE, in consideration of the mutual terms, covenants and
conditions set forth below, the parties agree as follows:
1. TERM OF AGREEMENT. Section 2 of the Agreement is hereby deleted in its
entirety and replaced with the following:
"The term of this Agreement shall be for a period of three (3) years
commencing on July 1, 1999, unless terminated earlier pursuant to
Section 7 below."
2. CONFLICTING ACTIVITIES. Section 4.3 of the Agreement is hereby deleted in its
entirety and replaced with the following:
"4.3 CONFLICTING ACTIVITIES. For the term of this Agreement or until
Executive's employment hereunder terminates, whichever occurs first,
Executive hereby agrees to promote and develop all business
opportunities that come to his attention relating to current or
anticipated future business of the Company and National, in a manner
consistent with the best interest of the Company and National and with
his duties under this Agreement. If Executive becomes aware of a
business opportunity during the performance of his duties hereunder,
through the use of the property or information of the Company or
National, or under circumstances that would reasonably lead Executive
to believe that the business opportunity was intended by the offeror to
be offered to the Company or National, he shall first offer such
opportunity to the Company or National, as the case may be. Should the
Board of Directors of the Company or National, as the case may be, not
exercise its right to pursue this business opportunity within a
reasonable period of time, not to exceed thirty (30) days, Executive
may develop the business opportunity for himself; provided, however,
that such development may in no way conflict or interfere with the
duties owed by Executive to the Company and National under this
Agreement. Further, Executive may develop such business opportunities
only on his own time, and may not use any service, personnel,
equipment, supplies, facility, or trade secrets of the Company or
National in their development. As used herein, the term "business
opportunity" shall not include business opportunities involving
investment in publicly traded stocks, bonds or other securities, or
other investments of a personal nature.
3. SEVERANCE. Section 5 of the Agreement is hereby deleted in its
entirety and replaced with the following:
"So long as this Agreement is in effect, and except as would be
inconsistent with Section 7, upon termination of Executive's
employment, Executive or Executive's designees or heirs shall be
entitled to a lump sum payment equal to one year of Executive's Base
Salary as then in effect (the "Severance Payment"). Notwithstanding any
other provision of this Agreement to the contrary, for purposes of this
Section 5, all compensation payable pursuant to Section 3 of this
Agreement shall be accrued to the date of termination of employment."
4. CHANGE OF CONTROL. Section 7.1 of the Agreement shall be amended by adding a
new subsection (e) and a new subsection (f) immediately following Section
7.1(d), as follows:
"(e) Executive's employment hereunder may be terminated by the Company
or by Executive at any time within ninety (90) days after the
occurrence of a Change in Control (as defined below). Upon such
termination:
(i) the Company shall pay to Executive as a lump-sum payment an amount
equal to two (2) years' Base Salary in effect at the time of
termination;
(ii) the Company shall provide Executive with a continuation of health
insurance coverage, existing office space and existing secretarial and
telephone services, in each case for a period of eighteen (18) months
after the date of termination; and
(iii) all stock options issued by the Company and National to Executive shall
immediately vest and become exercisable for a period of at least two
(2) years after the date of termination, notwithstanding any provision
to the contrary in the Company's stock option plan or in any stock
option agreement between the Company and/or National and Executive.
For purposes of this Agreement, a "Change in Control" shall mean the
occurrence of any of the following events:
(x) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (collectively, a "person") of Beneficial ownership (as
such term is defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of twenty-five percent
(25%) or more of the then outstanding shares of common stock
of the Company or National (collectively, the "Outstanding
Common Stock"); provided, however, that the following shall
not constitute a Change of Control: (i) any acquisition by an
Underwriter (as such term is defined in Section 2(11) of the
Securities Act of 1933, as amended) for the purpose of making
a public offering; or (ii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or National or any corporation controlled by the
Company or National;
(y) the sale or liquidation of all or substantially all of
the assets of the
Company or National; or
(z) any transaction or series of transactions which
result in Steven A. Rothstein directly or indirectly owning
less than ten percent (10%) of the Outstanding Common Stock,
other than as a result of a transaction or series of
transactions involving the direct or indirect voluntary sale,
transfer or other disposition of common stock of the Company
by Steven A. Rothstein.
(f) Notwithstanding anything contained herein, or in any other
agreement between the Company, National and Executive, or benefit or
compensation plan under which the Executive participates, to the
contrary, in the event that any amounts due Executive under this
Section 7.1, or under any other plan or program of the Company or
National or other agreement between the Company, National and
Executive, constitute "parachute payments," within the meaning of
section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), and the amount of such parachute payments, when reduced by the
federal excise taxes due and owing on such parachute payments, if any,
is less than the amount Executive would receive if he were paid only
three (3) times his "base amount," as that term is defined in section
280G of the Code, then, in lieu of all payments hereunder which are
parachute payments, Executive shall be paid, in cash, an amount equal
to three (3) times his base amount less one dollar ($1.00). The
determinations to be made with respect to this Section 7.1(f) shall be
made by an independent auditor jointly selected by the parties."
5. GOVERNING LAW. Section 9.3 of the Agreement is hereby deleted in its entirety
and replaced with the following:
"This Agreement is made under and shall be construed in accordance with
the laws of the State of Illinois, without regard to conflict of laws
principles. The Company, National and Executive hereby consent and
agree to be subject to the jurisdiction of the federal and state courts
of the State of Illinois sitting in Chicago, Illinois, in any suit,
action or proceeding arising out of this Agreement or the transactions
contemplated hereby."
6. AFFECT ON AGREEMENT. Except as set forth in this Amendment, the Agreement and
each of the parties' respective obligations thereunder shall remain in full
force and effect, and shall not be waived, modified, superseded or otherwise
affected by this Amendment. This Amendment is not to be construed as a release,
waiver or modification of any of the terms, conditions, covenants, rights or
remedies set forth in the Agreement, except as specifically set forth herein.
7. COUNTERPARTS. This Amendment may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
8. GOVERNING LAW. This Amendment is made under and shall be construed in
accordance with the laws of the State of Illinois, without regard to conflict of
laws principles.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first above written.
OLYMPIC CASCADE FINANCIAL CORPORATION NATIONAL SECURITIES CORPORATION
By:________________________________ By:________________________________
Its:________________________________ Its:_________________________________
EXECUTIVE
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Steven A. Rothstein