Document:

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                                                                     Exhibit 4.2

                            WESTLINKS RESOURCES LTD.

                                      AND

                                REPRESENTATIVES'

                               WARRANT AGREEMENT

     REPRESENTATIVES' WARRANT AGREEMENT dated as of _______________ , 2000 by
and between WESTLINKS RESOURCES LTD., (the "Company") and [the Underwriters]
(collectively the "Representatives").

                                  WITNESSETH:

     WHEREAS, the Company proposes to issue to the Representatives 200,000
warrants (each a "Representatives' Warrant") each to purchase one share of the
Company's no par value common stock, (the "Common Stock").

     WHEREAS, the Representatives have agreed, pursuant to the underwriting
agreement (the "Underwriting Agreement") dated _______________ , 2000 by and
between the Representatives and the Company, to act as the Representatives in
connection with the Company's proposed public offering (the "Public Offering")
of 1,000,000 shares of Common Stock and 1,000,000 common stock purchase warrants
(the "Offering Securities"); and

     WHEREAS, the Representatives' Warrants to be issued pursuant to this
Agreement will be issued on the Firm Closing Date (as such term is defined in
the Underwriting Agreement) by the Company to the Representatives in
consideration for, and as part of, the Representatives' compensation in
connection with the Representatives' acting as the Representatives pursuant to
the Underwriting Agreement and in such amounts as the Representatives shall
advise the Company in writing;

     NOW, THEREFORE, in consideration of the premises, the payment by the
Representatives to the Company of One Hundred Dollars ($100.00), the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     1.  Grant.  The Holder (as defined in Section 3 below) is hereby granted
the right to purchase, at any time from _______________ , 2001 until 5:00 p.m.,
New York time, _______________ , 2005, up to 200,000 shares of Common Stock, at
an initial purchase price (subject to adjustment as provided in Section 8
hereof) of $________ per share of Common Stock subject to the terms and
conditions of this Agreement. The securities issuable upon exercise of the
Representatives' Warrant are sometimes referred to herein as the
"Representatives' Securities."

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     2.  Warrant Certificates. The warrant certificate (the "Representatives'
Warrant Certificate") to be delivered pursuant to this Agreement shall be in the
form set forth in the attached Warrant Certificate and is made a part hereof,
with such appropriate insertions, omissions, substitutions, and other variations
as required or permitted by this Agreement.

     3.  Exercise of Representatives' Warrant.

         The Representatives' Warrant is exercisable during the term set forth
in Section 1 hereof payable by certified or cashier's check or money order in
lawful money of the United States. Upon surrender of the Representatives'
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Purchase Price (as hereinafter defined) for the
Representatives' Securities (and such other amounts, if any, arising pursuant to
Section 4 hereof) at the Company's principal office, the registered holder of a
Representatives' Warrant Certificate ("Holder" or "Holders") shall be entitled
to receive a certificate or certificates for the Representatives' Securities so
purchased. The purchase rights represented by each Representatives' Warrant
Certificate are exercisable at the option of the Holder or Holders thereof, in
whole or in part as to Representatives' Securities. The Representatives' Warrant
may be exercised to purchase all or any part of the Representatives' Securities
represented thereby. In the case of the purchase of less than all the
Representatives' Securities purchasable on the exercise of the Representatives'
Warrant represented by a Representatives' Warrant Certificate, the Company shall
cancel the Representatives' Warrant Certificate represented thereby upon the
surrender thereof and shall execute and deliver a new Representatives' Warrant
Certificate of like tenor for the balance of the Representatives' Securities
purchasable thereunder.

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     4.  Issuance of Certificates. Upon the exercise of the Representatives'
Warrant and payment of the Purchase Price therefor, the issuance of certificates
representing the Representatives' Securities or other securities, properties or
rights underlying such Representatives' Warrant, shall be made forthwith (and in
any event within five (5) business days thereafter) without further charge to
the Holder thereof, and such certificates shall (subject to the provisions of
Sections 5 and 7 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
The Representatives' Warrant Certificates and the certificates representing the
Representatives' Securities or other securities, property or rights (if such
property or rights are represented by certificates) shall be executed on behalf
of the Company by the manual or facsimile signature of the then present Chairman
or Vice Chairman of the Board of Directors or President or Vice President of the
Company, attested to by the manual or facsimile signature of the then present
Secretary or Assistant Secretary or Treasurer or Assistant Treasurer of the
Company. The Representatives' Warrant Certificates shall be dated the date of
issuance thereof by the Company upon initial issuance, transfer or exchange.

     5.  Restriction On Transfer of Representatives' Warrant. The Holder of a
Representatives' Warrant Certificate (and its Permitted Transferee, as defined
below), by its acceptance thereof, covenants and agrees that until
_______________ , 2005, the Representatives' Warrant may not be sold,
transferred, assigned, hypothecated or otherwise disposed of, in whole or in
part, except to officers and partners of the Representatives (but not
directors), or any Public Offering selling group member and their respective
officers and partners, ("Permitted Transferees"). Thereafter the
Representatives' Warrant may be transferred, assigned, hypothecated or otherwise
disposed of in compliance with applicable law.

     6.  Purchase Price.

         (a) Initial and Adjusted Purchase Price. Except as otherwise provided
in Section 8 hereof, the initial purchase price of the Representatives'
Securities is set forth in

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Section 1. The adjusted purchase price shall be the price which shall result
from time to time from any and all adjustments of the initial purchase price in
accordance with the provisions of Section 8 hereof.

         (b)  Purchase Price. The term "Purchase Price" herein shall mean the
initial purchase price or the adjusted purchase price, depending upon the
context.

     7.  Registration Rights.

         (a)  Registration Under the Securities Act of 1933 as amended ("Act").
The Representatives' Warrant may have not been registered under the Act. The
Representatives' Warrant Certificates may bear the following legend:

         "The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"), and may not be offered
for sale or sold except pursuant to (i) an effective registration statement
under the Act, or (ii) an opinion of counsel, if such opinion and counsel shall
be reasonably satisfactory to counsel to the issuer, that an exemption from
registration under the Act is available."

         (b)  Demand Registration. (1) At any time commencing on the first
anniversary of and expiring on the fifth anniversary of the effective date of
the Company's Registration Statement relating to the Public Offering (the
"Effective Date"), the Holders of a Majority (as hereinafter defined) in
interest of the Representatives' Warrant, or the Majority in interest of the
Representatives' Securities (assuming the exercise of all of the
Representatives' Warrant) shall have the right, exercisable by written notice to
the Company, to have the Company prepare and file with the U.S. Securities and
Exchange Commission (the "Commission"), on one (1) occasion, a registration
statement on Form S-1 or SB-2 or other appropriate form, and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for the Holders, in order to comply with the
provisions of the Act, so as to permit a public offering and sale, of the
Representatives' Securities by such Holders and any other Holders of the
Representatives' Warrant and/or the Representatives' Securities who notify the
Company within fifteen (15) business days after receipt of the notice described
in Section 7(b)(2).

              (2)  The Company covenants and agrees to give written notice of
any registration request under this Section 7(b) by any Holders to all other
registered Holders of the Representatives' Warrant and the Representatives'
Securities within ten (10) calendar days from the date of the receipt of any
such registration request.

              (3)  For purposes of this Agreement, the term "Majority" in
reference to the Holders of the Representatives' Warrant or Representatives'
Securities, shall mean in excess of fifty percent (50%) of the then outstanding
Representatives' Warrant or

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Representatives' Securities that (i) are not held by the Company, an affiliate,
officer, creditor, employee or agent thereof or any of their respective
affiliates, members of their family, persons acting as nominees or in
conjunction therewith, or (ii) have not been resold to the public pursuant to a
registration statement filed with the Commission under the Act.

              (4)  The Company shall have no obligation to prepare and file a
registration statement pursuant to this Section 7(b) if, within twenty (20) days
after the Company receives such a demand for registration, the Company agrees,
or insiders who own individually more than 5% of the Company's outstanding
Common Stock agree, to purchase the Holder's Warrants and/or Warrant Shares from
the requesting Holders at a price equal to the difference between the Exercise
Price then in effect and the then current market price of the Company's Common
Stock. The market price of the Company's Common Stock shall be the average of
the closing asked prices for the Company's Common Stock during the ten (10)
business days period preceding such request.

         (c)  Piggyback Registration. (1) If, at any time within the period
commencing on the first anniversary and expiring on the sixth anniversary of the
Effective Date, the Company should file a registration statement with the
Commission under the Act (other than in connection with a merger or other
business combination transaction or pursuant to Form S-8), it will give written
notice at least twenty (20) calendar days prior to the filing of each such
registration statement to the Representatives and to all other Holders of the
Representatives' Warrant and/or the Representatives' Securities of its intention
to do so. If a Representatives or other Holders of the Representatives' Warrant
and/or the Representatives' Securities notify the Company within fifteen (15)
calendar days after receipt of any such notice of its or their desire to include
any Representatives' Securities in such proposed registration statement, the
Company shall afford the Representatives and such Holders of the
Representatives' Warrant and/or Representatives' Securities the opportunity to
have any such Representatives' Securities registered under such registration
statement. Notwithstanding the provisions of this Section 7(c)(1) and the
provisions of Section 7(d), the Company shall have the right at any time after
it shall have given written notice pursuant to this Section 7(c)(1)
(irrespective of whether a written request for inclusion of any such securities
shall have been made) to elect not to file any such proposed registration
statement, or to withdraw the same after the filing but prior to the effective
date thereof.

              (2)  If the managing underwriter of an offering to which the above
piggyback rights apply, in good faith and for valid business reasons, objects to
such rights, such objection shall preclude such inclusion.

         (d)  Covenants of the Company With Respect to Registration. In
connection with any registrations under Sections 7(b) and 7(c) hereof, the
Company covenants and agrees as follows:

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              (1)  The Company shall use its best efforts to file a registration
statement within thirty (30) calendar days of receipt of any demand therefor
pursuant to Section 7(b); provided, however, that the Company shall not be
required to produce audited or unaudited financial statements for any period
prior to the date such financial statements are required to be filed in a report
on Form 10-K or Form 10-Q (or Form 10-KSB or Form 10-QSB), as the case may be.
The Company shall use its best efforts to have any registration statement
declared effective at the earliest possible time, and shall furnish each Holder
desiring to sell Representatives' Securities such number of prospectuses as
shall reasonably be requested.

              (2)  The Company shall maintain the effectiveness of the
registration statement for a period of time equal to the lesser of 9 months or
until such time as all of the Warrant Shares have been sold pursuant to the
registration statement.

              (3)  The Company shall pay all costs (excluding fees and expenses
of Holders' counsel and any underwriting discounts or selling fees, expenses or
commissions), fees and expenses in connection with any registration statement
filed pursuant to Sections 7(b) and 7(c) hereof including, without limitation,
the Company's legal and accounting fees, printing expenses, blue sky fees and
expenses.

              (4)  The Company will use its best efforts to qualify or register
the Representatives' Securities included in a registration statement for
offering and sale under the securities or blue sky laws of such states as
reasonably are requested by the Holders, provided that the Company shall not be
obligated to execute or file any general consent to service of process or to
qualify as a foreign corporation to do business under the laws of any such
jurisdiction.

              (5)  The Company shall indemnify the Holders of the
Representatives' Securities to be sold pursuant to any registration statement
and each person, if any, who controls such Holders within the meaning of Section
15 of the Act or Section 20(a) of the Securities Exchange Act of 1934 (the
"Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from such registration
statement, but only to the same extent and with the same effect as the
provisions pursuant to which the Company has agreed to indemnify the
Representatives contained in Section 8 of the Underwriting Agreement.

              (6)  The Holders of the Representatives' Securities to be sold
pursuant to a registration statement, and their successors and assigns, shall
indemnify the Company, its officers and directors and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability to which they may become subject under the Act, the Exchange Act or
otherwise, arising from information furnished by or on behalf of such Holders,
or their successors or assigns, for specific inclusion in such registration
statement to the same extent and with the same effect as the provisions
contained in Section 8 of the Underwriting Agreement pursuant to which the
Representatives have agreed to indemnify the Company.

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              (7)   Nothing contained in this Agreement shall be construed as
requiring the Holders to exercise their Representatives' Warrant prior to the
initial filing of any registration statement or the effectiveness thereof,
provided that such Holders have made arrangements reasonably satisfactory to the
Company to pay the exercise price from the proceeds of such offering.

              (8)   The Company shall furnish to each Representatives for the
offering, if any, such documents as such Representatives may reasonably require.

              (9)   The Company shall as soon as practicable after the effective
date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.

              (10)  The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence described below and
any managing Representatives copies of all correspondence between the Commission
and the Company, its counsel or auditors with respect to the registration
statement and permit each Holder and Representatives to do such investigation,
upon reasonable advance notice, with respect to information contained in or
omitted from the registration statement as it deems reasonably necessary to
comply with applicable securities laws or rules of the National Association of
Securities Dealers, Inc. ("NASD"). Such investigation shall include access to
books, records and properties and opportunities to discuss the business of the
Company with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such Holder shall
reasonably request.

              (11)  The Company shall enter into an underwriting agreement with
the managing underwriter selected for such underwriting by Holders holding a
Majority of the Representatives' Securities requested to be included in such
underwriting, provided, however that such managing underwriter shall be
reasonably acceptable to the Company, except that in connection with an offering
for which the Holders have piggyback rights, the Company shall have the sole
right to select the managing underwriter or underwriters. Such underwriting
agreement shall be satisfactory in form and substance to the Company, a Majority
of such Holders (in respect of a registration under Section 7(b) only) and such
managing underwriter, and shall contain such representations, warranties and
covenants by the Company and such other terms as are customarily contained in
agreements of that type. The Holders shall be parties to any underwriting
agreement relating to an underwritten sale of their Representatives' Securities.
Such Holders shall not be required to make any representations or warranties to
or agreements with the Company or the underwriters except as they may relate to
such Holders and their intended methods of distribution.

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     8.  Adjustments to Purchase Price and Number of Securities.

         (a)  Computation of Adjusted Purchase Price. Except as hereinafter
provided, in case the Company shall at any time after the date hereof issue or
sell any shares of Common Stock (other than the issuances referred to in Section
8(g) hereof), including shares held in the Company's treasury, for a
consideration per share representing a discount greater than 10% to the "Market
Price" (as defined in Section 8(a)(6) hereof) per share of Common Stock on the
date such sale is approved by the Company, or without consideration, such as
pursuant to a stock split or stock dividend, then forthwith upon approval of any
such issuance or sale, the Purchase Price of the Common Stock shall (until
another such issuance or sale) be reduced to the price (calculated to the
nearest full cent) determined by dividing (i) the sum of (x) the total number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the Purchase Price in effect immediately prior to such issue or
sale, and (y) the consideration, if any, received by the Company upon such issue
or sale, by (ii) the total number of shares of Stock outstanding immediately
after such issue or sale provided, however, that in no event shall the Purchase
Price be adjusted pursuant to this computation to an amount in excess of the
Purchase Price in effect immediately prior to such computation, except in the
case of a combination of outstanding shares of Common Stock, as provided by
Section 8(c) hereof.

         For the purposes of this Section 8, the term "Purchase Price" shall
mean the Purchase Price of the Common Stock forming a part of the
Representatives' Securities set forth in Section 6 hereof, as adjusted from time
to time pursuant to the provisions of this Section 8.

         For the purposes of any computation to be made in accordance with this
Section 8(a), the following provisions shall be applicable:

              (1)  In case of the issuance or sale of shares of Common Stock (or
of other securities deemed hereunder to involve the issuance or sale of shares
of Common Stock) for a consideration part or all of which shall be cash, the
amount of the cash consideration therefor shall be deemed to be the amount of
cash received by the Company for such shares (or, if shares of Common Stock are
offered by the Company for subscription, the subscription price, or, if such
securities shall be sold to Representatives or dealers for public offering
without a subscription offering, the initial public offering price) before
deducting therefrom any compensation paid or discount allowed in the sale,
underwriting or purchase thereof by Representatives or dealers or others
performing similar services, or any expenses incurred in connection therewith.

              (2)  In case of the issuance or sale (otherwise than as a dividend
or other distribution on any stock of the Company, and otherwise than on the
exercise of options, rights or warrants or the conversion or exchange of
convertible or exchangeable securities) of shares of Common Stock (or of other
securities deemed hereunder to involve the issuance or sale

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of shares of Common Stock) for a consideration part or all of which shall be
other than cash, the amount of the consideration therefor other than cash shall
be deemed to be the value of such consideration as determined in good faith by
the Board of Directors of the Company.

              (3)  Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.

              (4)   The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in Section 8(a)(2).

              (5)  The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares of Common Stock issued
or issuable (subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights or warrants and upon the conversion or exchange of
convertible or exchangeable securities.

              (6)  As used herein in the phrase "Market Price" at any date shall
be deemed to be the last reported sale price, or, in the case no such reported
sale takes place on such day, the average of the last reported sales prices for
the last three (3) trading days, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the average closing bid price as furnished by the
NASD through the NASD Automated Quotation System ("NASDAQ") or similar
organization if NASDAQ is no longer reporting such information, or if the Common
Stock is not quoted on NASDAQ, as determined in good faith by resolution of the
Board of Directors of the Company, based on the best information available to
it.

         (b)  Options, Rights, Warrant and Convertible and Exchangeable
Securities. Except in the case of the Company issuing rights to subscribe for
shares of Common Stock distributed to all the stockholders of the Company and
Holders of Representatives' Warrant pursuant to Section 8(i) hereof, if the
Company shall at any time after the date hereof issue options, rights or
warrants to purchase shares of Common Stock, or issue any securities convertible
into or exchangeable for shares of Common Stock (other than the issuances
referred to in Section 8(g) hereof), (i) for a consideration per share
representing a discount greater than 10% to the Market Price (including the
issuance thereof without consideration such as pursuant to a stock split or
stock by way of dividend or other distribution), or (ii) without consideration,
the Purchase Price in effect immediately prior to the issuance of such

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options, rights or warrants, or such convertible or exchangeable securities, as
the case may be, shall be reduced to a price determined by making a computation
in accordance with the provisions of Section 8(a) hereof, provided that:

              (1)  The aggregate maximum number of shares of Common Stock
issuable or that may become issuable under such options, rights or warrants
(assuming exercise in full even if not then currently exercisable or currently
exercisable in full) shall be deemed to be issued and outstanding at the time
such options, rights or warrants were issued, and for a consideration equal to
the minimum purchase price per share provided for in such options, rights or
warrants at the time of issuance, plus the consideration (determined in the same
manner as consideration received on the issue or sale of shares in accordance
with the terms of the Representatives' Warrant), if any, received by the Company
for such options, rights or warrants; provided, however, that upon the
expiration or other termination of such options, rights or warrants, if any
thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this Section 8(b)(1) (and for
the purposes of Section 8(a)(5) hereof) shall be reduced by such number of
shares as to which options, warrants and/or rights shall have expired or
terminated unexercised, and such number of shares shall no longer be deemed to
be issued and outstanding, and the Purchase Price then in effect shall forthwith
be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of shares actually issued
or issuable upon the exercise of those options, rights or warrants as to which
the exercise rights shall not be expired or terminated unexercised.

              (2)  The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities (assuming conversion or exchange in full even if not then currently
convertible or exchangeable in full) shall be deemed to be issued and
outstanding at the time of issuance of such securities, and for a consideration
equal to the consideration (determined in the same manner as consideration
received on the issue or sale of shares of Common Stock in accordance with the
terms of the Representatives' Warrant) received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof; provided, however, that upon the
expiration or other termination of the right to convert or exchange such
convertible or exchangeable securities (whether by reason or redemption or
otherwise), the number of shares deemed to be issued and outstanding pursuant to
this Section 8(b)(2) (and for the purpose of Section 8(a)(5) hereof) shall be
reduced by such number of shares as to which the conversion or exchange rights
shall have expired or terminated unexercised, and such number of shares shall no
longer be deemed to be issued and outstanding and the Purchase Price then in
effect shall forthwith be readjusted and thereafter be the price which it would
have been had adjustment been made on the basis of the issuance only of the
shares actually issued or issuable upon the conversion or exchange of those
convertible or exchangeable securities as to which the conversion or exchange
rights shall not have expired or terminated unexercised.

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              (3)  If any change shall occur in the price per share provided for
in any of the options, rights or warrants referred to in Section 8(b)(1), or in
the price per share at which the securities referred to in Section 8(b)(2) are
convertible or exchangeable, and if a change in the Purchase Price has not
occurred by reason of the event giving rise to the change in the price per share
of such other options, rights, warrants, or convertible or exchangeable
securities, such options, rights or warrants or conversion or exchange rights,
as the case may be, to the extent not theretofore exercised, the shall be deemed
to have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the exercise
or conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.

         (c)  Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Purchase Price
shall forthwith be proportionately decreased in the case of a subdivision or
increased in the case of combination.

         (d)  Adjustment in Number of Securities. Upon each adjustment of the
Purchase Price pursuant to the provisions of this Section 8, the number of
Representatives' Securities issuable upon the exercise of the Representatives'
Warrant shall be adjusted to the nearest whole share by multiplying a number
equal to the Purchase Price in effect immediately prior to such adjustment by
the number of Representatives' Securities issuable upon exercise of the
Representatives' Warrant immediately prior to such adjustment and dividing the
product so obtained by the adjusted Purchase Price.

         (e)  Definition of Common Stock. For the purpose of this Agreement, the
term "Common Stock" shall mean the class of stock designated as Common Stock in
the Certificate of Incorporation, of the Company as it may be amended as of the
date hereof.

         (f)  Reclassification, Merger or Consolidation. The Company will not
merge, reorganize or take any other action which would terminate the
Representatives' Warrant without first making adequate provision for the
Representatives' Warrant. In case of any reclassification or change of the
outstanding shares of Common Stock issuable upon exercise of the outstanding
warrants (other than a change in par value to no par value, or from nor par
value to par value, or as a result of a subdivision or combination), or in case
of any consolidation of the Company with, or merger of the Company with, or
merger of the Company into, another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and which does not
result in any reclassification or change of the outstanding Common Stock except
a change as a result of a subdivision or combination of such shares or a change
in par value, as aforesaid), or in the case of a sale or conveyance to another
corporation or other entity of the property of the

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Company as an entirety or substantially as an entirety, the Holders of each
Representatives' Warrant then outstanding or to be outstanding shall have the
right thereafter (until the expiration of such Representatives' Warrant) to
purchase, upon exercise of such Representatives' Warrant, the kind and number of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance as if the
Holders were the owner of the shares of Common Stock underlying the
Representatives' Warrant immediately prior to any such events at a price equal
to the product of (x) the number of shares issuable upon exercise of the
Representatives' Warrant and (y) the Purchase Price in effect immediately prior
to the record date for such reclassification, change, consolidation, merger,
sale or conveyance, as if such Holders had exercised the Representatives'
Warrant. In the event of a consolidation, merger, sale or conveyance of
property, the corporation formed by such consolidation or merger, or acquiring
such property, shall execute and deliver to the Holders a supplemental
Representatives' warrant agreement to such effect. Such supplemental
Representatives' warrant agreement shall provide for adjustments which shall be
identical to the adjustment provided for in this Section 8. The provisions of
this Section 8(f) shall similarly apply to successive consolidations or mergers.

         (g)  No Adjustment of Purchase Price in Certain Cases. No adjustment of
the Purchase Price shall be made unless the adjustment first meets the
threshold described in paragraph 8(a), and no adjustment shall be made:

              (1)  Upon the issuance or sale of (i) the Representatives' Warrant
or the securities underlying the Representatives' Warrant, (ii) the securities
sold pursuant to the Public Offering (including those sold upon exercise of the
Representatives' over-allotment option), or (iii) the shares issuable pursuant
to the options, warrants, rights, stock purchase agreements or convertible or
exchangeable securities outstanding or in effect on the date hereof or pursuant
to any compensatory stock plan as described in the prospectus relating to the
Public Offering, or (iv) "restricted securities" as that term is defined in Rule
144 promulgated under the Securities Act of 1933, as amended, for not less than
50% of Market Price.

              (2)  If the amount of said adjustments shall aggregate less than
two ($.02) cents for one (1) share of Common Stock; provided, however, that in
such case any adjustment that would otherwise be required then to be made shall
be carried forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment so carried forward,
shall aggregate at least two ($.02) cents for one (1) share of Common Stock. In
addition, Registered Holders shall not be entitled to cash dividends paid by the
Company prior to the exercise of any warrant or warrants held by them.

     9.  Exchange and Replacement of Warrant Certificates. Each Representatives'
Warrant Certificate is exchangeable without expense, upon the surrender thereof
by the registered Holders at the principal executive office of the Company, for
a new Representatives' Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Representatives'
Securities in such denominations as shall be designated by the Holders thereof
at the time of such surrender.

                                       12
<PAGE>   13

     10.  Loss, Theft, etc. of Certificates Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any Representatives' Warrant Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to it,
and reimbursement to the Company of all reasonable expenses incidental thereto,
and upon surrender and cancellation of the Representatives' Warrant
Certificates, if mutilated, the Company will make and deliver a new
Representatives' Warrant Certificate of like tenor, in lieu thereof.

     11.  Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of the Representatives' Warrant, nor shall it be required to issue
scrip or pay cash in lieu of fractional interests; provided, however, that if a
Holder exercises all Representatives' Warrant held of record by such Holder the
fractional interests shall be eliminated by rounding any fraction to the nearest
whole number of shares of Common Stock or other securities, properties or
rights.

     12.  Reservation and Listing of Securities. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Representatives' Warrant,
such number of shares of Common Stock or other securities and properties or
rights as shall be issuable upon the exercise thereof. The Company covenants and
agrees that, upon exercise of Representatives' Warrant and payment of the
Purchase Price therefor, all the shares of Common Stock issuable upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any stockholder. As long as the
Representatives' Warrant shall be outstanding, the Company shall use its best
efforts to cause the Common Stock to be listed (subject to official notice of
issuance) on all securities exchanges on which the Common Stock issued to the
public in connection herewith may then be listed or quoted.

     13.  Notices to Representatives' Warrant Holders. Nothing contained in this
Agreement shall be construed as conferring upon the Holders the right to vote or
to consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Representatives' Warrant and their exercise, any
of the following events shall occur:

         (a)  the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or

                                       13
<PAGE>   14
         (b)  the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or

         (c)  a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) calendar days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, or entitled to
vote on such proposed dissolution, liquidation, winding up or sale. Such notice
shall specify such record date or the date of closing the transfer books, as the
case may be. Failure to give such notice or any defect therein shall not affect
the validity of any action taken in connection with the declaration or payment
of any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.

     14.  Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or five days after being mailed by registered or certified mail,
return receipt requested:

         (a)  If to the registered Holders of the Representatives' Warrant, to
the address of such Holders as shown on the books of the Company; or

         (b)  If to the Company to the address shown in the Underwriting
Agreement or to such other address as the Company may designate by notice to the
Holders.

     15.  Supplements and Amendments. The Company and the Representatives may
from time to time supplement or amend this Agreement without the approval of any
Holders of Representatives' Warrant Certificates (other than the
Representatives) in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provision in regard to matters or
questions arising hereunder which the Company and the Representatives may deem
necessary or desirable and which the

                                       14
<PAGE>   15

Company and the Representatives deem shall not adversely affect the interests of
the Holders of Representatives' Warrant Certificates.

     16.  Successors. All the covenants and provisions of this Agreement shall
be binding upon and inure to the benefit of the Company, the Representatives,
the Holders and their respective successors and assigns hereunder.

     17.  Termination. This Agreement shall terminate at the close of business
five years from the date hereof. Notwithstanding the foregoing, the
indemnification provisions of Section 7 shall survive such termination until the
close of business on the expiration of any applicable statue of limitations.

     18.  Governing Law; Submission to Jurisdiction. This Agreement and each
Representatives' Warrant Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be construed in accordance with the laws of said state without giving effect to
the rules of said state governing the conflicts of laws.

     19.  Entire Agreement; Modification. This Agreement (including the
Underwriting Agreement, to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof and thereof. This Agreement may not be modified or amended
except by a writing duly signed by the Company and the Holders of a Majority in
Interest of the Representatives' Securities (for this purpose, treating all then
outstanding Representatives' Warrants as if they had been exercised).

     20.  Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.

     21.  Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.

     22.  Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Representatives and any other registered Holders of the Representatives' Warrant
Certificates or Representatives' Securities any legal or equitable right, remedy
or claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the Company and the Representatives and any other Holders
of the Representatives' Warrant Certificates or Representatives' Securities.

     23.  Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.

                                       15
<PAGE>   16

     24.  Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Company, the Representatives and their respective successors and
assigns and the Holders from time to time of the Representatives' Warrant
Certificates or any of them.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.

                                    WESTLINKS RESOURCES LTD.

                                    By:
                                        -------------------------------------
                                        Chief Executive Officer

                                    [Underwriter], for itself and as
                                    Representatives of the Several Underwriters
                                    listed On Schedule A

                                    By:
                                        -------------------------------------
                                        Chief Executive Officer

                                    [Underwriter], for itself and as
                                    Representatives of the Several Underwriters
                                    listed on Schedule A

                                    By:
                                        -------------------------------------
                                        Chief Executive Officer

                                       16
<PAGE>   17

                                   SCHEDULE A

                                       TO

                       REPRESENTATIVES' WARRANT AGREEMENT

                                    BETWEEN

                            WESTLINKS RESOURCES LTD.

                                      AND

                         MERIT CAPITAL ASSOCIATES, INC.

                                      AND

                             SPENCER EDWARDS, INC.

REPRESENTATIVES

Merit Capital Associates, Inc.
Spencer Edwards, Inc.

UNDERWRITERS:

                                       17<PAGE>   1
                                                                   Exhibit 10.13

                            EXTENSION AND RENEWAL OF

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, as of this September 3, 2000 by and between DMI
FURNITURE, INC., a Delaware corporation ("DMI" or the "Corporation") and JOSEPH
G. HILL ("Employee").

         WHEREAS, Employee and DMI have entered into an Employment Agreement
dated as of September 1, 1986, which has been amended from time to time and
extended and renewed for additional terms through September 2, 2000;

         WHEREAS, the Employment Agreement, as amended, extended and renewed to
date, is intended to complement the terms of the Amendment to Employment
Agreement and Officer Severance Agreement dated as of May 19, 1988 between the
Employee and DMI (the "Officer Severance Agreement"), which provides for the
payment of certain benefits to Employee in certain circumstances following a
"change in control" of DMI (as defined in the Officer Severance Agreement).

         WHEREAS, Employee and DMI desire to amend, renew and extend the
Employment Agreement between them for an additional term expiring on September
1, 2001; and

         NOW, THEREFORE, intending to be legally bound hereby and in
consideration of the mutual undertakings hereinafter set forth, DMI and Employee
agree as follows, effective September 3, 2000;

         1. EMPLOYMENT. DMI or its successors hereby employs Employee and
Employee hereby accepts employment as Executive Vice President, Operations of
DMI for a period commencing September 3, 2000 and ending September 1, 2001.

         2. DUTIES OF EMPLOYEE. Employee further agrees as follows:

                  (a) To perform well and faithfully all such duties as are
assigned to him by the Board of Directors or the Chief Executive Officer of DMI;
and

                  (b) To devote the time and attention to the performance of all
matters necessary and appropriate to the discharge of the duties so assigned to
him in the operation of DMI, it being the intention of this provision to require
that Employee serve as a "full-time" employee of DMI, to devote his best efforts
to the performance of the duties of him; and

                  (c) Not to invest or otherwise be involved in any business or
other activity that competes with the business of DMI other than nominal
investments as a passive investor in publicly traded companies.

         3. COMPENSATION. As compensation for his services pursuant to this
Agreement, Employee shall be paid as follows:

                  (a) SALARY. A minimum salary of $190,000 per year payable at
the rate of $7,916.66 semi-monthly during the term of this Agreement. Each year,
on the anniversary date of this Agreement, the Compensation Committee of the
Corporation's Board of Directors will review increases in the cost of living and
may negotiate upward revisions to salary with the Employee.

                  (b) CASH BONUS FISCAL 2000. For the Corporation's fiscal year
2000, Employee shall receive an incentive bonus, the amount of which is the sum
of the following sections (i) through (vi):

                           (i) NET INCOME. Net income shall mean the net income
as reported to the Securities and Exchange Commission on form 10K excluding (a)
any gains or losses resulting from the sale, conversion or other disposition of
capital assets; (b) accruals made in accordance with general accepted accounting
principles to recognize the costs associated with the permanent closure of an
operation and the carrying costs prior to the sale of the assets of that
operation; (c) gain or loss resulting from non-operational litigation; and (d)
charges or credits resulting from the adoption of a change in accounting
principle.

                                       E-1

<PAGE>   2

                                    NET INCOME                 BONUS
                                    ----------                 -----
                                    <$900,000                     -0-
                                    $.9-$1.3M                 $15,000
                                    $1.3-$1.7M                $22,000
                                    $1.7-$2.2M                $30,000
                                    $2.2-$2.6M                $37,000
                                    $2.6-$3.0M                $44,000
                                    $3.0-$3.6M                $55,000

                           (ii) RETURN ON ASSETS. Return on Assets (ROA) is net
income (as defined in (i)) divided by total assets as of the beginning of the
fiscal year.

                                    ROA                         BONUS
                                    ---                         -----
                                    <2%                           -0-
                                    2%-3%                     $ 5,000
                                    3%-4%                     $ 7,500
                                    4%-5%                     $10,000
                                    5%-6%                     $12,500
                                    6%-7%                     $15,000
                                    7%-8%                     $17,500
                                    >8%                       $20,000

                           (iii)  SALES GROWTH.

                                 SALES GROWTH                    BONUS
                                 ------------                    -----
                                    <0%                            -0-
                                    0%-5%                      $ 3,500
                                    5%-10%                     $ 5,000
                                    10%-12.5%                  $ 6,500
                                    12.5%-15%                  $ 8,500
                                    15%-17.5%                  $10,000
                                    17.5%-20%                  $12,500
                                    >20%                       $15,000

                           (iv) INVESTOR RELATIONS/STOCK PERFORMANCE. Employee
shall prepare an investor relations program and submit it for approval by the
Board of Directors. Employee shall prepare quarterly program reports and submit
those reports to the Board. At the conclusion of the fiscal year, the
Compensation Committee and Board will review the success of the program and
determine the amount of bonus, if any, due Employee under this component.
Factors that will be considered include but are not limited to change in market
price, trading volume, price vs. industry multiples, micro-cap market
conditions, etc. The maximum bonus available for the fiscal year under this
section is $15,000.

                           (v) STRATEGIC ISSUES. At the conclusion of the fiscal
year, the Board will make a subjective evaluation of Employee's participation
and performance on long term strategic issues. The Board may award a bonus based
on this evaluation up to a maximum bonus under this section of $15,000.

                           (vi) ADDED RESPONSIBILITY. The Chief Executive
Officer shall prepare a report for the Board outlining the scope and performance
of added responsibilities as outlined by the CEO and Board. The Board may award
a bonus based on this report up to a maximum bonus under this section of
$20,000.

                  (c) CASH BONUS, FISCAL YEAR 2001. For the Corporation's fiscal
year 2001, Employee shall receive an incentive bonus, the amount of which is the
sum of the subsections (i) through (iii):

                                       E-2

<PAGE>   3

                           (i) NET INCOME. Net income shall mean the net income
as reported to the Securities and Exchange Commission on form 10K excluding (a)
any gains or losses resulting from the sale, conversion or other disposition of
capital assets; (b) accruals made in accordance with general accepted accounting
principles to recognize the costs associated with the permanent closure of an
operation and the carrying costs prior to the sale of the assets of that
operation; (c) gain or loss resulting from non-operational litigation; and (d)
charges or credits resulting from the adoption of a change in accounting
principle.

                        NET INCOME                 BONUS
                        ----------                 -----
                        <$900,000                     -0-
                        $.9-$1.3M                 $20,000
                        $1.3-$1.7M                $30,000
                        $1.7-$2.2M                $40,000
                        $2.2-$2.6M                $50,000
                        $2.6-$3.0M                $60,000
                        $3.0-$3.6M                $72,000
                        $3.6-$4.0M                $84,000

                           (ii) RETURN ON ASSETS. Return on Assets (ROA) is net
income (as defined in (i)) divided by total assets as of the beginning of the
fiscal year.

                       RETURN ON ASSETS            BONUS
                       ----------------            -----
                            <2%                       -0-
                            2%-3%                 $ 7,000
                            3%-4%                 $10,500
                            4%-5%                 $14,000
                            5%-6%                 $17,500
                            6%-7%                 $21,000
                            7%-8%                 $24,500
                            >8%                   $28,000

                          (iii)  SALES GROWTH.

                        REVENUE GROWTH             BONUS
                        --------------             -----
                           <0%                        -0-
                           0%-5%                  $ 6,500
                           5%-10%                 $ 9,300
                           10%-12.5%              $12,100
                           12.5%-15%              $15,800
                           15%-17.5%              $18,600
                           17.5%-20%              $23,300
                           >20%                   $28,000

                  (d) BONUS PAYMENTS. Any bonus under this paragraph 3 shall be
paid within one hundred thirty days of the end of the fiscal year.

         4. FRINGE BENEFITS. DMI will provide Employee with fringe benefits as
follows:

                  (a) DMI will maintain, without contribution by Employee, life
insurance with benefits payable as designated by Employee in a face amount equal
to three times Employee's annual base salary rate hereunder provided however the
face amount of life insurance benefits is not to exceed $750,000.

                  (b) DMI will maintain health insurance at least as
comprehensive as provided for other key and executive employees.

                  (c) DMI will maintain, without contribution by Employee,
travel accident insurance with benefits payable as designated by Employee in a
face amount equal to $250,000 death benefits for accidental death in the course
of travel.

                                       E-3
<PAGE>   4

                  (d) DMI will provide Employee with an automobile comparable to
those furnished to other key executives, or its cash equivalent of $675 per
month, for Employee's business related use.

                  (e) Employee shall receive reimbursement for expenses incurred
by him in connection with Medical Care for Employees, his spouse and his
dependents, provided, however, that the amount paid by DMI to Employee pursuant
to this subsection in any fiscal year during the term of this Agreement shall
not exceed $2,000. For the purpose of this subsection the term "Medical Care"
means amounts paid for the diagnosis, care, medication, treatment, or prevention
of disease, or for the purpose of affecting any structure or function of the
body (including amounts paid for accident or health insurance), or for
transportation primarily for and essential to Medical Care. Payments hereunder
may be made from time to time as requested by Employee with or without requiring
proof of the medical expenses in questions, in the discretion of the Board of
Directors, and it is not necessary that such medical expenses have already been
paid by Employee, his spouse, or his aforesaid dependents, but merely that, if
not yet paid, there exists an obligation to pay them. Premiums paid by DMI under
any group accident or health insurance policy that may be maintained by DMI
covering or for the benefit of some or all of its employees, and payments made
by insurers pursuant to said policy, shall not to any extent be regarded as
payments made pursuant to this subsection.

                  (f) Employee shall receive annual reimbursement for expenses
incurred by him in connection with personal or tax financial planning, not to
exceed $2,000 per year.

                  (g) Employee shall be entitled to participate in any benefit
plan of a type not specifically covered by this Agreement and established by DMI
for key employees during the term of Employee's employment hereunder on a basis
consistent with his age, position, responsibilities, and level of compensation.

                  (h) Employee shall be reimbursed for his reasonable
out-of-pocket travel and business expenses, including but not limited to,
membership in private clubs for business purposes. All such club memberships
will be approved by a majority of outside members of the Board of Directors.

         5. VACATION. Employee shall be entitled to a four-week vacation with
pay in each 12-month period ending August 31. A maximum of one week of annual
paid vacation shall be cumulative and will not be deemed waived if not taken
during the applicable 12-month period. Employee's paid vacation shall be
pro-rated based on the number of months he has remained employed by DMI during
any fiscal year during which this Agreement expires or is terminated.

         6. OTHER BOARD OF DIRECTORS ACTION. Nothing in this Agreement shall be
deemed to prevent the Board of Directors of DMI from taking any action it may
deem, in its sole discretion, to be desirable to make the terms and conditions
of this Employment Agreement more beneficial to Employee, or to add further
benefits to his employment with DMI, provided that Employee agrees to such
changes and additions.

         7. TERMINATION. This Agreement shall terminate and, except to the
extent previously accrued or as otherwise provided in the Officer Severance
Agreement, all rights and obligations of DMI and Employee under this Agreement
shall be void, upon the earliest to occur of any of the following:

                  (a) Expiration of the period of employment set forth in
paragraph 1, providing that the Corporation has served the Employee with Notice,
not less than 90 days prior to the expiration of the term of this agreement, of
the Corporation's decision to not renew the agreement. If the Corporation does
not serve the Employee with this Notice of non-renewal, then this agreement
automatically renews and extends for a period of an additional one year period
through the end of the following fiscal year of the Corporation. In the event
the Corporation gives notice of non-renewal, and the Corporation fails to
negotiate other employment arrangements with Employee, Employee will receive a
severance payment in the amount of $140,000 on October 1, 2001, providing
Employee delivers a release of liability in substantially the same form as
attached here as "Exhibit A".

                  (b) Death of Employee;

                  (c) Mental or physical illness or disability of Employee that
shall incapacitate him, for a period of 90 successive days or for an aggregate
period of 120 days during any 12 calendar months, from fully performing the
duties assigned to him hereunder and in the good faith determination of the
Board of Directors and upon written notice to Employee.

                                       E-4

<PAGE>   5

                  (d) If Employee (i) is found guilty of having committed
         against DMI any criminal act, including criminal fraud, or (ii) is
         found guilty of having committed any criminal act involving moral
         turpitude, or (iii) the willful and continued failure by the Employee
         to substantially perform the Employee's duties with DMI after a written
         demand for substantial performance is delivered to the Employee by the
         Board, which demand specifically identifies the manner in which the
         Board believes that the Employee has not substantially performed his
         duties; or (iv) the willful engaging by the Employee in gross
         misconduct materially and demonstrably injurious to the Corporation.
         For the purposes of this definition, no act, or failure to act on the
         Employee's part shall be considered "willful" unless done or omitted to
         be done by the Employee other than in good faith and without reasonable
         belief that the Employee's action or omission was in the best interests
         of DMI. The Employee shall not be deemed to have been terminated for
         Cause (as defined in the Officer Severance Agreement) unless and until
         DMI has delivered a Notice of Termination, as provided therein.

                  (e) Voluntary cessation by Employee of his duties and
         responsibilities under this agreement.

                  If DMI terminates Employee's employment other than for Cause
         (as defined in the Officer Severance Agreement), and a change in
         control (as defined in the Officer Severance Agreement) occurs within 9
         months thereafter, then Employee shall be entitled to all benefits
         provided under the Officer Severance Agreement.

                  Otherwise, if Employee's employment hereunder is terminated
for any other reason than those specified in subparagraphs (a) through (e) of
this paragraph 7, then DMI shall remain liable to Employee and shall pay
Employee in full settlement of DMI's obligations hereunder: (i) the full amount
of the balance of his base salary as provided in subparagraph 3(a) above, to the
expiration date of this Agreement or to such expiration date as may have been
extended by action of the Board of Directors pursuant to subparagraph 7(a), in a
lump sum; PLUS (ii) an amount equal to the cash bonus and the stock bonus that
would have been payable to Employee pursuant to subparagraph 3(b) above had
Employee remained employed until the end of DMI's fiscal year, multiplied by a
fraction, the numerator of which is the number of complete calendar months
during which Employee was employed during the fiscal year and the denominator of
which is 12. The payments based upon the cash bonus and the stock bonus shall be
paid within 130 days of the delivery to DMI of the financial statements upon
which they shall be based.

         8. COORDINATION WITH OFFICER SEVERANCE AGREEMENT. For the purposes of
the Officer Severance Agreement, this Agreement shall constitute a renewal and
extension of the Employment Agreement dated as of September 1, 1986 between
Employee and DMI. If any provision of this Agreement may be viewed as
conflicting with a provision of the Officer Severance Agreement, and the
provision at issue does not specifically state that it is intended to supersede
the Officer Severance Agreement, the Officer Severance Agreement shall control.

         9. NON-COMPETITION. If this Agreement is terminated for any reason
specified in subparagraphs (a) through (e) of Paragraph 7, Employee shall
refrain, for a period of one year after the termination of this Agreement, from
carrying on a business that competes with a business conducted by DMI within the
geographic areas described as follows:

                  The 50 states of the United States of America and Puerto Rico,
                  except for the states of Washington, Oregon, Idaho, Colorado,
                  Wyoming, North Dakota and South Dakota.

For the purposes of this paragraph, a business shall be deemed carried on by
Employee if carried on by a proprietorship, partnership, association, or
corporation, or other business entity with which Employee is connected, except
that Employee shall not be deemed to be connected with a business competitive to
that conducted by DMI to the extent that Employee is merely a passive investor
therein or not engaged in the business operations thereof as an officer,
director, employee, agent, consultant, sales representative, or other provider
of personal services in a capacity that would enable him to use his knowledge or
DMI's trade secrets, customer lists, sources of supply or unique business
methods to compete against DMI. It is agreed that in the event of a breach or a
threatened breach of the foregoing, no adequate remedy exists at law to protect
DMI's interests and that DMI shall be entitled to appropriate injunctive relief.
Should the foregoing covenant be adjudged to any extent invalid by any court of
competent jurisdiction, such covenant shall be deemed modified to the extent
necessary to make it enforceable.

         10. PLACE OF EMPLOYMENT. DMI agrees that the principal location at
which Employee is to render his services hereunder will continue to be
Louisville, Kentucky.

                                      E-5
<PAGE>   6

         11. NOTICES. Any notice to DMI or Employee hereunder may be given by
delivering it to, or by depositing it in the United States mail, postage
pre-paid and by certified mail, addressed to the parties at the following
addresses:

                  DMI:
                  ---
                  Mr. Donald D. Dreher
                  DMI Furniture, Inc.
                  One Oxmoor Place
                  101 Bullitt Lane
                  Louisville, KY 40222

                  with a required copy to:

                  Chairman, Compensation / Stock Option Committee
                  DMI Furniture, Inc.
                  One Oxmoor Place
                  101 Bullitt Lane
                  Louisville, KY 40222

                  EMPLOYEE:
                  --------
                  Mr. Joseph G. Hill
                  5506 Apache Road
                  Louisville, KY 40207

         12. ENTIRE AGREEMENT. This Agreement and the Officer Severance
Agreement (a) contain the complete and entire understanding and agreement of DMI
and Employee respecting the subject matter hereof; (b) supersede and cancel all
understandings or agreements, oral or written, respecting the employment of
Employee in connection with the business of DMI; and (c) may not be modified
except by an instrument in writing executed by DMI and Employee.

         13. WAIVER OF BREACH. The waiver by either party, of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach of either party.

         14. ASSIGNMENT. Employee may not assign his rights or obligations under
this agreement. The rights and obligations of DMI shall inure to the benefit of
and shall be binding upon the successors and assigns of DMI.

         15. CAPTIONS. All captions and headings used herein are for convenient
reference only and do not form part of this Agreement.

         IN WITNESS WHEREOF, DMI and Employee have caused this Agreement to be
duly executed and delivered on the day and year first above written, but
effective September 1, 1999.

                                         DMI FURNITURE, INC.

ATTEST:                                  By
       -----------------------------        ------------------------------------
                                                      Donald D. Dreher
                                                      Chairman of the Board,
President, and

                                                      Chief Executive Officer

                                                      --------------------------
                                                      Joseph G. Hill

------------------------------------

                                       E-6

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