Document:

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                                  Exhibit 10.7
                                  ------------

Amendment, dated as of February 26, 2000, to Employment Agreement between the
Registrant and Lewis H. Aronson dated July 29, 1992, as amended.

<PAGE>

                                                                    EXHIBIT 10.7

February 26, 2000

Mr. Lewis H. Aronson
3581 Mary Ellen Drive
Bemus Point, NY 14712

Dear Mr. Aronson:

The purpose of this letter is to formally amend in writing the Employment
Agreement between Bush Industries, Inc. and you dated July 29, 1992, to reflect
the salary and severance changes recommended and approved by the Compensation
Committee, and effective February 26, 2000, as follows:

1.   Salary: Annual Base Salary of $280,000 under Section 4(a).
     ------

2.   Severance: Under section 5(a), if terminated without good cause, the
     ---------
     severance allowance increases to eighteen (18) months, from twelve (12)
     months under the original contract. Please see the amended language in
     Section 5 attached.

3.   Profit Sharing Calculation: The formula for calculating the applicable
     ---------------------------
     profit sharing base, payable under Section 5(a) and 5(c), is clarified
     pursuant to the attached amended language in Section 5.

4.   Constructive Termination: Language has been added that further clarifies
     ------------------------
     the definition of "Constructive Termination."

5.   Attachments: Attachments A, B, and C have been updated to reflect your
     -----------
     current position and compensation package.

All other provisions of the Employment Agreement shall remain in effect.

If you have any questions or concerns about this subject, please let me know as
soon as possible.

Thank you.

Very truly yours,

BUSH INDUSTRIES, INC.

/s/ Neil A. Frederick
Neil A. Frederick
Treasurer

NAF/lm
enclosures
cc:   Mr. David Dawson

<PAGE>

                        SECTION 5 - WITH AMENDED LANGUAGE
                        ---------------------------------

5.       Termination of Employment During the Period of Employment.
         ---------------------------------------------------------

         (a)      Termination by the Company without Good Cause.  The Company
                  ---------------------------------------------
                  may terminate the Executive's employment without Good Cause
                  (as defined in Section 5(f), hereof) only upon sixty (60) days
                  prior written notice to the Executive. If the Executive's
                  employment with the Company is so terminated by the Company
                  and such termination is not a Constructive Termination (as
                  defined in Section 5(f), hereof), the Company, subject to full
                  compliance by the Executive with the provisions of Sections 7
                  and 8 below, relating to "Confidential Information" and
                  "Competition; Detrimental Conduct," shall pay the Executive,
                  as severance pay, an amount equal to the compensation and
                  benefits that would be payable to the Executive under Sections
                  4(a), 4(b), and 4(d) above during the next succeeding eighteen
                  (18) month period if such termination of employment had not
                  occurred, at the time(s), in the installment(s) and on the
                  other terms and conditions that would apply to the payment of
                  such compensation, provided, however, that for purposes of
                  determining the amount of profit sharing payable to Executive
                  under this Section 5(a), such profit sharing award shall be
                  determined based upon the four full fiscal quarters of the
                  Company immediately preceding the date of the afore-described
                  notice to the Executive of Executive's termination hereunder,
                  as described below.

                  The aggregate amount of such profit sharing payable every
                  three (3) months under this Section 5(a) shall equal the (i)
                  the average (the "Average") of the Company's return on sales
                  percentage (calculated before tax or any profit-sharing award)
                  for the above four fiscal quarters (determined by adding the
                  Company's return on sales percentage for each of the above
                  four fiscal quarters and dividing said sum by four), and (ii)
                  multiplied by the Executive's multiple, as set forth in
                  Attachment B, used in calculating the Executive's profit
                  sharing award during the last full fiscal quarter of the
                  Company prior to the date of the above-described notice of
                  termination, (iii) multiplied by the Executive's annual gross
                  base salary as of the date such notice is given hereunder,
                  (iv) with the resulting product multiplied by 1.5. By way of
                  illustration and not limitation, in the event on July 15, the
                  Company gives the Executive the afore-described sixty day
                  notice of termination, the profit sharing award the Executive
                  would be entitled to hereunder would be the Average of the
                  return on sales percentage for the Company for the four full
                  fiscal quarters ending immediately prior to July 15.
                  Accordingly, if the return on sales percentage for quarter one
                  was 7%, quarter two, 11%, quarter 3, 15% and quarter four, 7%,
                  the Average would be determined by adding the return on sales
                  percentage for each of such fiscal quarters (which would
                  result in the sum of 40%), divided by 4, with a resulting
                  Average percentage of 10%. If the Executive's multiple in the
                  last full fiscal quarter of the Company immediately preceding
                  the date of notice of termination was 7, for example, the
                  Average percentage would be multiplied by 7, resulting in a
                  product of 70%, multiplied by the Executive's annual gross
                  base salary as of the date of such notice. If such gross base
                  annual salary, for example, was $100,000, the profit sharing
                  would equal $70,000, multiplied by 1.5 (the equivalent of
                  eighteen months in years) or $105,000, which would be paid in
                  six equal installments over the 18 month period, as part of
                  the severance compensation hereunder. In said example, the
                  Executive would, therefore, be entitled hereunder to an
                  aggregate severance compensation payable over said eighteen
                  month period equal to his annual gross base salary during said
                  eighteen month period, or $100,000 multiplied by 1.5 or
                  $150,000, plus the above-determined profit sharing award of
                  $105,000, for a total of $255,000, plus the other benefits and
                  entitlements the Executive is to receive hereunder.

<PAGE>

                  For the purposes of this Agreement, a termination of
                  employment by the Executive that occurs after the Executive is
                  assigned (without his written consent) duties,
                  responsibilities or reporting relationships not contemplated
                  by Section 3 and not consistent with his position as a senior
                  officer, or after his duties or responsibilities contemplated
                  by Section 3 above are limited in any respect materially
                  detrimental to him, which situation is not remedied within
                  thirty (30) days after the Company receives written notice
                  from the Executive of the situation, shall be deemed a
                  termination by the Company without Good Cause under this
                  Section 5(a).

         (b)      Termination by the Company for Good Cause or by the Executive.
                  -------------------------------------------------------------
                  The Company may terminate the Executive's employment with the
                  Company with Good Cause, or the Executive may elect to
                  terminate his employment with the Company for any reason, upon
                  thirty (30) days prior written notice to the other party
                  hereto. If Executive's employment by the Company is so
                  terminated by the Company with Good Cause or is terminated by
                  the Executive, and such termination is not a Constructive
                  Termination, the Executive shall not be entitled to receive
                  any compensation or benefits under Sections 4(a), 4(b), or
                  4(d) accruing after the date of such termination or any
                  payment under Section 5(a), or otherwise, and Executive shall
                  continue to be bound by Sections 7 and 8.

         (c)      Constructive Termination. If, during the period of employment,
                  ------------------------
                  the Executive's employment by the Company is subject to a
                  Constructive Termination, or in the event that portion of the
                  Company's business with respect to which primarily the
                  Executive's duties relate, is sold, liquidated, or otherwise
                  ceased to be operated, then the Company shall pay the
                  Executive, as a severance payment, an amount equal to the
                  compensation and benefits that would have been payable to the
                  Executive under Sections 4(a), 4(b), and 4(d), hereof during
                  the next succeeding thirty-six (36) month period if such
                  termination of employment had not occurred, such sum to be
                  paid in a lump sum on or before the tenth day following the
                  date of termination, provided, however, that for the purposes
                  of this Section 5(c), such profit sharing award shall be
                  determined based upon the four full fiscal quarters of the
                  Company immediately preceding the date of the termination, as
                  described below. Notwithstanding the foregoing, in the event
                  the Executive's employment with the Company is terminated
                  within three months prior to an event which otherwise would
                  have give rise to a termination with respect to which the
                  provisions of this Section 5(c) would have been applicable,
                  then the provisions of this Section 5(c) shall control.

                  The aggregate amount of such profit sharing payable under this
                  Section 5(a) shall equal the (i) the Average of the Company's
                  return on sales percentage (calculated before tax or any
                  profit-sharing award) for the above four fiscal quarters
                  (determined by adding the Company's return on sales percentage
                  for each of the above four fiscal quarters and dividing said
                  sum by four), and (ii) multiplied by the Executive's multiple,
                  as set forth in Attachment B hereto, used in calculating the
                  Executive's profit sharing award during the last full fiscal
                  quarter of the Company prior to the date of the
                  above-described termination, (iii) multiplied by the
                  Executive's annual gross base salary as of the date of
                  termination, (iv) with the resulting product multiplied by 3.
                  By way of illustration and not limitation, in the event on
                  July 15, the Executive `s employment is terminated, the profit
                  sharing award the Executive would be entitled to hereunder
                  would be the Average of the return on sales percentage for the
                  Company for the four full fiscal quarters ending immediately
                  prior to July 15. Accordingly, if the return on sales
                  percentage for quarter one was 7%, quarter two, 11%, quarter
                  3, 15% and quarter four, 7%, the Average would be determined
                  by adding the

                                       2

<PAGE>

                  return on sales percentage for each of such fiscal quarters
                  (which would result in the sum of 40%), divided by 4, with a
                  resulting Average percentage of 10%. If the Executive's
                  multiple in the last full fiscal quarter of the Company
                  immediately preceding the date of termination was 7, for
                  example, the Average percentage would be multiplied by 7,
                  resulting in a product of 70%, multiplied by the Executive's
                  annual gross base salary as of the date of such termination.
                  If such gross base annual salary, for example, was $100,000,
                  the profit sharing would equal $70,000, multiplied by 3 or
                  $210,000, which would be paid in the lump sum payment
                  described above. In said example, the Executive would,
                  therefore, be entitled hereunder to an aggregate severance
                  compensation payable in a lump sum equal to his annual gross
                  base salary during said three year period, or $100,000
                  multiplied by 3 or $300,000, plus the above-determined profit
                  sharing award of $210,000, for a total of $510,000, plus the
                  other benefits and entitlements the Executive is to receive
                  hereunder.

                  If the lump sum payment under this Section 5(c), either alone
                  or together with other payments which the Executive has the
                  right to receive from the Company, would constitute a
                  parachute payment (as defined in Section 280G of the Internal
                  Revenue Code of 1986, as amended, (the "Code"), such lump sum
                  severance payment shall be reduced to the largest amount as
                  will result in no portion of the lump sum severance payment
                  under this Section 5(c) being subject to the excise tax
                  imposed by Section 4999 of the Code. The determination of any
                  reduction in the lump sum severance payment under this Section
                  5(c) pursuant to the foregoing provision shall be made by
                  independent counsel to the Company in consultation with the
                  independent certified public accountants of the Company.

         (d)      Continuation of Insurance upon Termination.
                  ------------------------------------------

                  (i)      Upon the termination of the employment of the
                           Executive pursuant to Sections 5(a), or 5(c), hereof,
                           the Executive shall be entitled to continuation of
                           coverage under the group health, life, and disability
                           plans then in effect covering the Executive, or such
                           similar plans as the Company may provide for its
                           executives from time to time thereafter, but in no
                           event shall such coverages be less favorable than the
                           group health, life, and disability coverages provided
                           by the Company as of the date hereof. The Company
                           shall be responsible for paying all of the costs of
                           such coverages that it would have paid if the
                           Executive was still in the employ of the Company.
                           Such coverages shall continue until the earlier of
                           the following dates: (i) the date that the Executive
                           is eligible for similar employer-sponsored group
                           coverage from a subsequent employer, or (ii) the date
                           the Executive attains age 65. The group health
                           coverage shall cover the Executive and his spouse and
                           dependents. The life insurance policy covering the
                           life of the Executive shall name as beneficiary the
                           person or persons designated from time to time by the
                           Executive.

                  (ii)     Upon the termination of employment of the Executive
                           pursuant to Section 5(b), hereof, the Executive shall
                           be entitled only to continuation of coverage under
                           the group health plans then in effect covering the
                           Executive and only to the extent required by the
                           provisions of (S) 4980B of the Internal Revenue Code,
                           as amended, and (S)(S) 601-608 of the Employee
                           Retirement Income Security Act of 1974, as amended.
                           As permitted under such statutes, the Executive shall
                           be responsible for paying the full cost of such
                           continuation coverage.

         (e)      Disability of Executive.  In the event of the Executive's
                  -----------------------
                  disability (as hereinafter defined) during his employment
                  under this Agreement, the employment of the Executive and this

                                       3

<PAGE>

                  Agreement may be terminated by the Company nine (9) months
                  after the commencement of such disability; provided, however,
                  that upon any such termination, the Executive shall be
                  entitled to payment of the Severance payments provided under
                  Section 5(a) hereof, reduced by any benefits he may receive
                  under any short term disability and long term disability plans
                  sponsored by the Company covering its senior management
                  employees at the time that the Executive's disability
                  commences. During the period of the Executive's disability,
                  the Executive shall continue to receive the compensation
                  provided for in this Agreement, reduced by any benefits he may
                  receive under any short term disability and long term
                  disability plans sponsored by the Company covering its senior
                  management employees at the time that the Executive's
                  disability commences. If before the end of nine months from
                  the first day of disability, the Executive's disability shall
                  have ceased, and he shall have resumed the full-time
                  performance of his duties under this Agreement, the Executive
                  shall continue to receive the compensation provided for in
                  this Agreement. Provided, however, that unless the Executive
                  shall satisfactorily perform his duties on a full-time basis
                  under this Agreement for a continuous period of at least sixty
                  (60) calendar days following a period of disability before the
                  Executive again becomes disabled, he shall not be entitled to
                  begin a new nine month period for such subsequent disability,
                  and the subsequent period of disability shall be added to the
                  first in determining whether the Executive has been disabled
                  for nine (9) months in connection with this Section. During
                  the period of his disability, the Executive shall be entitled
                  to benefits in accordance with and subject to the terms and
                  provisions of the Company's short-term disability income plan
                  and its long-term disability plan for its senior management
                  employees, as in effect at the time of the commencement of
                  disability. For purposes of this Agreement, "disability" shall
                  have the same meaning as given that term under the Company's
                  long term disability plan for its senior management employees,
                  as in effect from time to time.

         (f)      Definitions Applicable to this Section.  For the purposes of
                  --------------------------------------
                  this Agreement:

                  (i)      "Good Cause" shall mean the Executive willfully or
                           intentionally neglects to substantially perform his
                           duties with the Company, or the Executive materially
                           breaches any provision of this Agreement, including
                           Section 7 below, relating to confidential
                           information; provided, however, that such willful or
                           intentional neglect of duties or the material breach
                           hereof continues uncured by the Executive for more
                           than sixty (60) days after written notice of such
                           neglect or material breach from the Company to the
                           Executive. For purposes of this Agreement, no act, or
                           failure to act, on the Executive's part shall be
                           considered "willful" or "intentional" unless done, or
                           omitted to be done, by him in bad faith and without
                           reasonable belief that his action or omission to act
                           was in the best interest of the Company. The Company
                           shall also have "Good Cause" to terminate the
                           Executive if the Executive commits an act or acts of
                           dishonesty resulting or intended to result directly
                           or indirectly in gain or personal enrichment at the
                           expense of the Company, its affiliates, or its
                           stockholders.

                  (ii)     a "Constructive Termination" shall mean a termination
                           of this Agreement by the Executive under any of the
                           following circumstances:

                           (1)      The Company is in material breach of any of
                                    its obligations under this Agreement, and
                                    the situation is not remedied within thirty
                                    (30) days after the Company receives written
                                    notice from the Executive of the situation,
                                    or

                                       4

<PAGE>

                           (2)      The Executive determines in good faith that,
                                    as a result of Change in the Control of the
                                    Company (as defined below) there is a
                                    substantial adverse alteration in the nature
                                    or status of the Executive's duties or
                                    responsibilities from those in effect
                                    immediately prior to the change in control
                                    of the Company, and the situation is not
                                    remedied within thirty (30) days after the
                                    Company receives written notice from the
                                    Executive of such determination, or

                           (3)      Any termination of the Employee's employment
                                    with the Company under Sections 5(a), or
                                    5(b) hereof, except a termination pursuant
                                    to Section 5(b) hereof by the Company with
                                    Good Cause, shall be deemed a Constructive
                                    Termination if it occurs within thirty-six
                                    (36) months following the date of a Change
                                    in Control.

                  (iii)    "Change in Control of the Company" shall mean an
                           event which shall be deemed to have occurred if:

                           (1)      any "person" as such term is used in Section
                                    13(d) and 14(d) of the Securities Exchange
                                    Act of 1934, (the "Exchange Act") (other
                                    than Paul S. Bush, the Company, any trustee
                                    or other fiduciary holding securities under
                                    any employee benefit plan of the Company, or
                                    any Company owned, directly or indirectly,
                                    by the stockholders of the Company in
                                    substantially the same proportions as their
                                    ownership of stock of the Company), is or
                                    becomes the "beneficial owner" (as defined
                                    in Rule 13d-3 under the Exchange Act),
                                    directly or indirectly, of securities of the
                                    Company representing thirty percent (30%) or
                                    more of the combined voting power of the
                                    Company's then outstanding securities;

                           (2)      during any period of two consecutive years,
                                    individuals who at the beginning of such
                                    period constitute the Board, and any new
                                    director (other than a director designated
                                    by a person who has entered into an
                                    agreement with the Company to effect a
                                    transaction described in clause (i), (iii),
                                    or (iv) herein) whose election by the Board
                                    or nomination for election by the Company's
                                    stockholders was approved by a vote of at
                                    least two-thirds (2/3) of the directors then
                                    still in office who either were directors at
                                    the beginning of the period or whose
                                    election or nomination for election was
                                    previously so approved, cease for any reason
                                    to constitute at least a majority thereof;

                           (3)      the stockholders of the Company approve a
                                    merger or consolidation of the Company with
                                    any other corporation, other than a merger
                                                           ----- ----
                                    or consolidation which would result in the
                                    voting securities of the Company outstanding
                                    immediately prior thereto continuing to
                                    represent (either by remaining outstanding
                                    or by being converted into voting securities
                                    of the surviving entity) more than eighty
                                    percent (80%) of the combined voting power
                                    of the voting securities of the Company or
                                    such surviving entity outstanding
                                    immediately after such merger or
                                    consolidation; provided, however, that a
                                    merger or consolidation effected to
                                    implement a recapitalization of the Company
                                    (or similar transaction) in which no
                                    "person" (as hereinabove defined) acquires
                                    more than twenty-five percent (25%) of the
                                    combined

                                       5

<PAGE>

                                    voting power of the Company's then
                                    outstanding securities shall not constitute
                                    a change of control of the Company; or

                           (4)      the stockholders (or if stockholder approval
                                    is not required, then the Company's Board of
                                    Directors) of the Company approve a plan of
                                    complete liquidation of the Company or an
                                    agreement for the sale or disposition by the
                                    Company of all or substantially all of the
                                    Company's assets; or

                           (5)      Paul Bush ceases to own capital stock of the
                                    Company having fifty one percent (51%) of
                                    the total voting control of the Company.

                                       6<PAGE>

                                  Exhibit 10.8
                                  ------------

Employment Agreement between the Registrant and Gregory P. Bush dated October
10, 2000.

<PAGE>

                                                                    EXHIBIT 10.8
                              EMPLOYMENT AGREEMENT
                              --------------------

AGREEMENT dated the 10/th/ day of October, 2000, between BUSH INDUSTRIES, INC.,
                    ------        -------
a Delaware corporation having its principal place of business in Jamestown, New
York (the "Company"), and Gregory P. Bush, residing at 2478 Palm Road,
Jamestown, New York 14701 (the "Executive").

                               W I T N E S S E T H

WHEREAS, the Company considers the establishment and maintenance of a sound and
vital management to be essential to protecting and enhancing the best interests
of the Company and its stockholders; and

WHEREAS, the Executive is Senior Vice President of Product Development and
Research and Development and a member of the Board of Directors of the Company
and has developed an intimate and thorough knowledge of the Company's business
methods and operations; and

WHEREAS, the retention of the Executive's services, for and on behalf of the
Company, is materially important to the preservation and enhancement of the
value of the Company's business; and

WHEREAS, the Executive is willing to continue to serve in the employ of the
Company as Senior Vice President of Product Development and Research and
Development and as a member of the Board of Directors for the period and on the
other terms and conditions hereafter stated;

NOW THEREFORE, the Company and the Executive hereby agree as follows:

1.      Employment.  The Company agrees to employ the Executive, and the
        ----------
        Executive agrees to remain in the employ of the Company for the period
        and on the other terms and conditions set forth below.

2.      Term of Agreement.  The initial period of employment under this
        -----------------
        Agreement shall commence on October 10, 2000, and shall end on the third
        anniversary of such date, unless sooner terminated in accordance with
        the terms and conditions hereinafter set forth or unless the term is
        extended by way of the automatic renewal provision contained in this
        Section. On each annual anniversary date of the commencement of the
        initial term hereof, the term of employment hereunder shall, unless the
        Company provides the Executive with written notice to the contrary at
        least sixty (60) days prior to such annual anniversary date, be renewed
        for a term of three (3) years commencing on that annual anniversary
        date. In the event the Company provides such written notice of
        nonrenewal to the Executive at least sixty (60) days prior to an annual
        anniversary date, then the term hereof shall not be extended, but the
        then current three (3) year term in effect shall continue for the
        remaining two (2) years of its term.

3.      Position and Responsibilities. During the period of employment, the
        -----------------------------
        Executive agrees to serve the Company and the Company agrees to employ
        the Executive as its Senior Vice President of Product Development and
        Research and Development of the Company, with the duties and
        responsibilities summarized in Attachment A attached hereto. In
        addition, the Executive agrees to serve as a member of the Board of
        Directors of the Company during the period of employment.

4.      Compensation.  For all services rendered by the Executive to or for the
        ------------
        Company and its affiliates in all capacities during the period of
        employment, and for the undertakings as to Confidential Information and
        Competition set forth in Sections 7 and 8 below, the Executive shall be
        entitled to the following:

       (a)    a base salary, payable in installments not less frequent than
              monthly, at the annual rate of Two Hundred Fifteen Thousand
              ($215,000) Dollars during the initial year of employment
              hereunder.

<PAGE>

                Salary for any subsequent year shall be based upon the merit
                system employed for senior management of the Company, but shall
                not be less than the salary paid for the immediate preceding
                year; and

        (b)     participation in the Company's profit sharing or executive
                incentive plan as in effect as of the date hereof at the level
                set forth in Attachment B attached hereto. The level of
                participation in such plan in subsequent years shall be based
                upon the merit system employed for senior management of the
                Company, but shall not be less than the level of participation
                for the immediate preceding year; and

        (c)     participation in all Company health, welfare, pension and other
                employee benefit and fringe benefit plans (including insurance
                plans and vacation plans or policies) in which all other
                officers of the Company participate during the period of
                employment, subject in all events to any changes to the terms
                and conditions of such plans as in effect from time to time; and

        (d)     participation in the other special allowance and bonus
                arrangements more particularly described in Attachments B and C
                attached hereto.

5.      Termination of Employment During the Period of Employment.
        ---------------------------------------------------------

        (a)     Termination by the Company  without Good Cause.  The Company may
                ----------------------------------------------
                terminate the Executive's employment without Good Cause (as
                defined in Section 5(f), hereof) only upon sixty (60) days prior
                written notice to the Executive. If the Executive's employment
                with the Company is so terminated by the Company and such
                termination is not a Constructive Termination (as defined in
                Section 5(f), hereof), the Company, subject to full compliance
                by the Executive with the provisions of Sections 7 and 8 below,
                relating to "Confidential Information" and "Competition;
                Detrimental Conduct," shall pay the Executive, as severance pay,
                an amount equal to the compensation and benefits that would be
                payable to the Executive under Sections 4(a), 4(b), and 4(d)
                above during the next succeeding eighteen (18) month period if
                such termination of employment had not occurred, at the time(s),
                in the installment(s) and on the other terms and conditions that
                would apply to the payment of such compensation, provided,
                however, that for purposes of determining the amount of profit
                sharing payable to Executive under this Section 5(a), such
                profit sharing award shall be determined based upon the four
                full fiscal quarters of the Company immediately preceding the
                date of the afore-described notice to the Executive of
                Executive's termination hereunder, as described below.

                The aggregate amount of such profit sharing payable every three
                (3) months under this Section 5(a) shall equal the (i) the
                average (the "Average") of the Company's return on sales
                percentage (calculated before tax or any profit-sharing award)
                for the above four fiscal quarters (determined by adding the
                Company's return on sales percentage for each of the above four
                fiscal quarters and dividing said sum by four), and (ii)
                multiplied by the Executive's multiple, as set forth in
                Attachment B, used in calculating the Executive's profit sharing
                award during the last full fiscal quarter of the Company prior
                to the date of the above-described notice of termination, (iii)
                multiplied by the Executive's annual gross base salary as of the
                date such notice is given hereunder, (iv) with the resulting
                product multiplied by 1.5. By way of illustration and not
                limitation, in the event on July 15, the Company gives the
                Executive the afore-described sixty day notice of termination,
                the profit sharing award the Executive would be entitled to
                hereunder would be the Average of the return on sales percentage
                for the Company for the four full fiscal quarters ending
                immediately prior to July 15. Accordingly, if the return on
                sales percentage for quarter one was 7%, quarter two, 11%,
                quarter 3, 15% and quarter four, 7%, the Average would be
                determined by adding the return on sales percentage for each of
                such fiscal quarters (which would result in the sum of 40%),
                divided by 4, with a resulting Average percentage of 10%. If the

                                        2

<PAGE>

                Executive's multiple in the last full fiscal quarter of the
                Company immediately preceding the date of notice of termination
                was 7, for example, the Average percentage would be multiplied
                by 7, resulting in a product of 70%, multiplied by the
                Executive's annual gross base salary as of the date of such
                notice. If such gross base annual salary, for example, was
                $100,000, the profit sharing would equal $70,000, multiplied by
                1.5 (the equivalent of eighteen months in years) or $105,000,
                which would be paid in six equal installments over the 18 month
                period, as part of the severance compensation hereunder. In said
                example, the Executive would, therefore, be entitled hereunder
                to an aggregate severance compensation payable over said
                eighteen month period equal to his annual gross base salary
                during said eighteen month period, or $100,000 multiplied by 1.5
                or $150,000, plus the above-determined profit sharing award of
                $105,000, for a total of $255,000, plus the other benefits and
                entitlements the Executive is to receive hereunder.

                For the purposes of this Agreement, a termination of employment
                by the Executive that occurs after the Executive is assigned
                (without his written consent) duties, responsibilities or
                reporting relationships not contemplated by Section 3 and not
                consistent with his position as a senior officer, or after his
                duties or responsibilities contemplated by Section 3 above are
                limited in any respect materially detrimental to him, which
                situation is not remedied within thirty (30) days after the
                Company receives written notice from the Executive of the
                situation, shall be deemed a termination by the Company without
                Good Cause under this Section 5(a).

        (b)     Termination by the Company for Good Cause or by the Executive.
                -------------------------------------------------------------
                The Company may terminate the Executive's employment with the
                Company with Good Cause, or the Executive may elect to terminate
                his employment with the Company for any reason, upon thirty (30)
                days prior written notice to the other party hereto. If
                Executive's employment by the Company is so terminated by the
                Company with Good Cause or is terminated by the Executive, and
                such termination is not a Constructive Termination, the
                Executive shall not be entitled to receive any compensation or
                benefits under Sections 4(a), 4(b), or 4(d) accruing after the
                date of such termination or any payment under Section 5(a), or
                otherwise, and Executive shall continue to be bound by Sections
                7 and 8.

        (c)     Constructive Termination.  If, during the period of employment,
                ------------------------
                the Executive's employment by the Company is subject to a
                Constructive Termination, or in the event that portion of the
                Company's business with respect to which primarily the
                Executive's duties relate, is sold, liquidated, or otherwise
                ceased to be operated, then the Company shall pay the Executive,
                as a severance payment, an amount equal to the compensation and
                benefits that would have been payable to the Executive under
                Sections 4(a), 4(b), and 4(d), hereof during the next succeeding
                thirty-six (36) month period if such termination of employment
                had not occurred, such sum to be paid in a lump sum on or before
                the tenth day following the date of termination, provided,
                however, that for the purposes of this Section 5(c), such profit
                sharing award shall be determined based upon the four full
                fiscal quarters of the Company immediately preceding the date of
                the termination, as described below. Notwithstanding the
                foregoing, in the event the Executive's employment with the
                Company is terminated within three months prior to an event
                which otherwise would have give rise to a termination with
                respect to which the provisions of this Section 5(c) would have
                been applicable, then the provisions of this Section 5(c) shall
                control.

                The aggregate amount of such profit sharing payable under this
                Section 5(a) shall equal the (i) the Average of the Company's
                return on sales percentage (calculated before tax or any
                profit-sharing award) for the above four fiscal quarters
                (determined by adding the Company's return on sales percentage
                for each of the above four fiscal quarters and dividing said sum
                by four), and (ii) multiplied by the Executive's multiple, as
                set forth in Attachment B hereto, used in calculating the
                Executive's profit sharing award during the last full fiscal
                quarter of the Company prior to the date

                                        3

<PAGE>

                of the above-described termination, (iii) multiplied by the
                Executive's annual gross base salary as of the date of
                termination, (iv) with the resulting product multiplied by 3. By
                way of illustration and not limitation, in the event on July 15,
                the Executive `s employment is terminated, the profit sharing
                award the Executive would be entitled to hereunder would be the
                Average of the return on sales percentage for the Company for
                the four full fiscal quarters ending immediately prior to July
                15. Accordingly, if the return on sales percentage for quarter
                one was 7%, quarter two, 11%, quarter 3, 15% and quarter four,
                7%, the Average would be determined by adding the return on
                sales percentage for each of such fiscal quarters (which would
                result in the sum of 40%), divided by 4, with a resulting
                Average percentage of 10%. If the Executive's multiple in the
                last full fiscal quarter of the Company immediately preceding
                the date of termination was 7, for example, the Average
                percentage would be multiplied by 7, resulting in a product of
                70%, multiplied by the Executive's annual gross base salary as
                of the date of such termination. If such gross base annual
                salary, for example, was $100,000, the profit sharing would
                equal $70,000, multiplied by 3 or $210,000, which would be paid
                in the lump sum payment described above. In said example, the
                Executive would, therefore, be entitled hereunder to an
                aggregate severance compensation payable in a lump sum equal to
                his annual gross base salary during said three year period, or
                $100,000 multiplied by 3 or $300,000, plus the above-determined
                profit sharing award of $210,000, for a total of $510,000, plus
                the other benefits and entitlements the Executive is to receive
                hereunder.

                If the lump sum payment under this Section 5(c), either alone or
                together with other payments which the Executive has the right
                to receive from the Company, would constitute a parachute
                payment (as defined in Section 280G of the Internal Revenue Code
                of 1986, as amended, (the "Code"), such lump sum severance
                payment shall be reduced to the largest amount as will result in
                no portion of the lump sum severance payment under this Section
                5(c) being subject to the excise tax imposed by Section 4999 of
                the Code. The determination of any reduction in the lump sum
                severance payment under this Section 5(c) pursuant to the
                foregoing provision shall be made by independent counsel to the
                Company in consultation with the independent certified public
                accountants of the Company.

        (d)     Continuation of Insurance upon Termination.
                ------------------------------------------

                (i)    Upon the termination of the employment of the Executive
                       pursuant to Sections 5(a), or 5(c), hereof, the Executive
                       shall be entitled to continuation of coverage under the
                       group health, life, and disability plans then in effect
                       covering the Executive, or such similar plans as the
                       Company may provide for its executives from time to time
                       thereafter, but in no event shall such coverages be less
                       favorable than the group health, life, and disability
                       coverages provided by the Company as of the date hereof.
                       The Company shall be responsible for paying all of the
                       costs of such coverages that it would have paid if the
                       Executive was still in the employ of the Company. Such
                       coverages shall continue until the earlier of the
                       following dates: (i) the date that the Executive is
                       eligible for similar employer-sponsored group coverage
                       from a subsequent employer, or (ii) the date the
                       Executive attains age 65. The group health coverage shall
                       cover the Executive and his spouse and dependents. The
                       life insurance policy covering the life of the Executive
                       shall name as beneficiary the person or persons
                       designated from time to time by the Executive.

                (ii)   Upon the termination of employment of the Executive
                       pursuant to Section 5(b), hereof, the Executive shall be
                       entitled only to continuation of coverage under the group
                       health plans then in effect covering the Executive and
                       only to the extent required by the provisions of (S)
                       4980B of the Internal Revenue Code, as amended, and
                       (S)(S) 601-608 of the Employee Retirement Income
                       Security Act of 1974, as amended. As permitted under

                                        4

<PAGE>

                       such statutes, the Executive shall be responsible for
                       paying the full cost of such continuation coverage.

        (e)     Disability of Executive.  In the event of the Executive's
                -----------------------
                disability (as hereinafter defined) during his employment under
                this Agreement, the employment of the Executive and this
                Agreement may be terminated by the Company nine (9) months after
                the commencement of such disability; provided, however, that
                upon any such termination, the Executive shall be entitled to
                payment of the Severance payments provided under Section 5(a)
                hereof, reduced by any benefits he may receive under any short
                term disability and long term disability plans sponsored by the
                Company covering its senior management employees at the time
                that the Executive's disability commences. During the period of
                the Executive's disability, the Executive shall continue to
                receive the compensation provided for in this Agreement, reduced
                by any benefits he may receive under any short term disability
                and long term disability plans sponsored by the Company covering
                its senior management employees at the time that the Executive's
                disability commences. If before the end of nine months from the
                first day of disability, the Executive's disability shall have
                ceased, and he shall have resumed the full-time performance of
                his duties under this Agreement, the Executive shall continue to
                receive the compensation provided for in this Agreement.
                Provided, however, that unless the Executive shall
                satisfactorily perform his duties on a full-time basis under
                this Agreement for a continuous period of at least sixty (60)
                calendar days following a period of disability before the
                Executive again becomes disabled, he shall not be entitled to
                begin a new nine month period for such subsequent disability,
                and the subsequent period of disability shall be added to the
                first in determining whether the Executive has been disabled for
                nine (9) months in connection with this Section. During the
                period of his disability, the Executive shall be entitled to
                benefits in accordance with and subject to the terms and
                provisions of the Company's short-term disability income plan
                and its long-term disability plan for its senior management
                employees, as in effect at the time of the commencement of
                disability. For purposes of this Agreement, "disability" shall
                have the same meaning as given that term under the Company's
                long term disability plan for its senior management employees,
                as in effect from time to time.

        (f)     Definitions Applicable to this Section. For the purposes of this
                ---------------------------------------
                Agreement:

                (i)    "Good Cause" shall mean the Executive willfully or
                       intentionally neglects to substantially perform his
                       duties with the Company, or the Executive materially
                       breaches any provision of this Agreement, including
                       Section 7 below, relating to confidential information;
                       provided, however, that such willful or intentional
                       neglect of duties or the material breach hereof continues
                       uncured by the Executive for more than sixty (60) days
                       after written notice of such neglect or material breach
                       from the Company to the Executive. For purposes of this
                       Agreement, no act, or failure to act, on the Executive's
                       part shall be considered "willful" or "intentional"
                       unless done, or omitted to be done, by him in bad faith
                       and without reasonable belief that his action or omission
                       to act was in the best interest of the Company. The
                       Company shall also have "Good Cause" to terminate the
                       Executive if the Executive commits an act or acts of
                       dishonesty resulting or intended to result directly or
                       indirectly in gain or personal enrichment at the expense
                       of the Company, its affiliates, or its stockholders.

                (ii)   a "Constructive Termination" shall mean a termination of
                       this Agreement by the Executive under any of the
                       following circumstances:

                       (1)   The Company is in material breach of any of its
                             obligations under this Agreement, and the situation
                             is not remedied within thirty (30) days after the
                             Company receives written notice from the Executive
                             of the situation, or

                                        5

<PAGE>

                           (2)   The Executive determines in good faith that,
                                 as a result of Change in the Control of the
                                 Company (as defined below) there is a
                                 substantial adverse alteration in the nature or
                                 status of the Executive's duties or
                                 responsibilities from those in effect
                                 immediately prior to the change in control of
                                 the Company, and the situation is not remedied
                                 within thirty (30) days after the Company
                                 receives written notice from the Executive of
                                 such determination, or

                           (3)   Any termination of the Employee's employment
                                 with the Company under Sections 5(a), or 5(b)
                                 hereof, except a termination pursuant to
                                 Section 5(b) hereof by the Company with Good
                                 Cause, shall be deemed a Constructive
                                 Termination if it occurs within thirty-six (36)
                                 months following the date of a Change in
                                 Control.

                   (iii)   "Change in Control of the Company" shall mean an
                           event which shall be deemed to have occurred if:

                           (1)   any "person" as such term is used in Section
                                 13(d) and 14(d) of the Securities Exchange Act
                                 of 1934, (the "Exchange Act") (other than Paul
                                 S. Bush, the Company, any trustee or other
                                 fiduciary holding securities under any employee
                                 benefit plan of the Company, or any Company
                                 owned, directly or indirectly, by the
                                 stockholders of the Company in substantially
                                 the same proportions as their ownership of
                                 stock of the Company), is or becomes the
                                 "beneficial owner" (as defined in Rule 13d-3
                                 under the Exchange Act), directly or
                                 indirectly, of securities of the Company
                                 representing thirty percent (30%) or more of
                                 the combined voting power of the Company's then
                                 outstanding securities;

                           (2)   during any period of two consecutive years,
                                 individuals who at the beginning of such period
                                 constitute the Board, and any new director
                                 (other than a director designated by a person
                                 who has entered into an agreement with the
                                 Company to effect a transaction described in
                                 clause (i), (iii), or (iv) herein) whose
                                 election by the Board or nomination for
                                 election by the Company's stockholders was
                                 approved by a vote of at least two-thirds (2/3)
                                 of the directors then still in office who
                                 either were directors at the beginning of the
                                 period or whose election or nomination for
                                 election was previously so approved, cease for
                                 any reason to constitute at least a majority
                                 thereof;

                           (3)   the stockholders of the Company approve a
                                 merger or consolidation of the Company with any
                                 other corporation, other than a merger or
                                                    ----------
                                 consolidation which would result in the voting
                                 securities of the Company outstanding
                                 immediately prior thereto continuing to
                                 represent (either by remaining outstanding or
                                 by being converted into voting securities of
                                 the surviving entity) more than eighty percent
                                 (80%) of the combined voting power of the
                                 voting securities of the Company or such
                                 surviving entity outstanding immediately after
                                 such merger or consolidation; provided,
                                 however, that a merger or consolidation
                                 effected to implement a recapitalization of the
                                 Company (or similar transaction) in which no
                                 "person" (as hereinabove defined) acquires more
                                 than twenty-five percent (25%) of the combined
                                 voting power of the Company's then outstanding
                                 securities shall not constitute a change of
                                 control of the Company; or

                           (4)   the stockholders (or if stockholder approval
                                 is not required, then the Company's Board of
                                 Directors) of the Company approve a plan of
                                 complete liquidation of

                                        6

<PAGE>

                        the Company or an agreement for the sale or disposition
                        by the Company of all or substantially all of the
                        Company's assets; or

                  (5)   Paul Bush ceases to own capital stock of the Company
                        having fifty one percent (51%) of the total voting
                        control of the Company.

6.   Obligation to Mitigate Damages. The Executive shall not be required to
     ------------------------------
     mitigate the amount of any payment provided for under this Agreement by
     seeking other employment or otherwise, nor shall the amount of any payment
     hereunder be reduced by any compensation earned by the Executive as the
     result of employment by another employer after termination of the
     Executive.

7.   Confidential Information. Except as required in the course of his
     ------------------------
     employment, the Executive agrees not to disclose to others or permit such
     disclosure, or make use of or permit the use of for his own benefit or the
     benefit of others, any confidential information, without the prior written
     consent of the Company. Confidential information as used in this Agreement
     includes any information, whether of a financial, technical or marketing
     nature, that pertains to the present or prospective business of the Company
     or any affiliate of the Company, or of any present or prospective customer,
     consultant or supplier of the Company or of any other party with which the
     Company does business and may be contractually or otherwise obligated to
     maintain such information secret, and becomes known to Executive or is
     generated by the Executive in the course of his employment with the
     Company, including, but not limited to, manufacturing equipment, processes
     and materials, data, know-how, experience, names, buying habits, or
     practices of any customers, marketing methods and related data, the names
     of any vendors or suppliers, costs of materials, prices, manufacturing and
     sales costs or lists or other written records. Confidential information,
     however, shall not include information that is, or through no fault of the
     Executive becomes, generally and overtly known in the industry in which the
     Company competes. The Executive also agrees that upon leaving the Company's
     employ he will not take with him, without the prior written consent of the
     Company, and he will surrender to the Company, any record, list, drawing,
     blueprint, specification or other document or property of the Company or
     any subsidiary thereof, together with any copy or reproduction thereof,
     mechanical or otherwise, which is of a confidential nature relating to the
     Company or any affiliate of the Company, or, without limitation, relating
     to its or their methods of distribution, suppliers, customers, client
     relationships, marketing strategies or any description of any formulae or
     secret processes, or which was obtained by him or entrusted to him during
     the course of his employment with the Company or which otherwise contains
     confidential information.

8.   Competition, Detrimental Conduct.
     --------------------------------

     (a)   The Executive covenants and agrees that during the twelve (12) months
           following the termination of his employment with the Company for any
           reason whatsoever, he will not engage in "Competition" with the
           Company. For purposes of this Section 8, "Competition" shall mean:

           (i)    Directly or indirectly, either as a principal, agent employer,
                  partner, director, stockholder or otherwise, engaging in, or
                  being interested in, any business in competition with the
                  business of the Company or any affiliate of the Company,
                  including, without limitation, taking a management, advisory,
                  sales, or ownership position with, or control of, a business
                  engaged in the design, manufacturing, marketing, distribution
                  or sale of products in any geographical area in which the
                  Company or any affiliate of the Company is at the time
                  engaging in the design, manufacturing, marketing,
                  distribution, or sale of such products; provided, however,
                  that in no event shall ownership of less than five percent
                  (5%) of the outstanding capital stock entitled to vote for the
                  election of directors of a corporation with a class of equity
                  securities held of record by more than five hundred

                                        7

<PAGE>

                  (500) persons, standing alone, be deemed Competition with the
                  Company within the meaning of this Section 8(a).

            (ii)  Soliciting any person who is a supplier or customer of the
                  businesses conducted by the Company, or any business in which
                  the Executive has been engaged on behalf of the Company, or
                  any affiliate of the Company, at any time during the period of
                  employment on behalf of a business described in clause (i) of
                  this Section 8(a).

            (iii) Inducing or attempting to persuade any employee of the Company
                  or any of its affiliates to terminate his employment in order
                  to enter into employment with a business described in clause
                  (i) of this Section 8(a). The Executive recognizes and agrees
                  that the restrictions on his activities contained in this
                  Section 8 are required for the reasonable protection of the
                  Company and its investments.

        (b) The Executive recognizes and agrees that, by reason of his
            knowledge, experience, skill and ability, his services are
            extraordinary and unique, that the breach or attempted breach of the
            restrictive covenants set forth in Section 7 or Section 8(a) above
            will result in immediate and irreparable injury to the Company for
            which the Company will not have an adequate remedy at law, and that
            the Company shall be entitled to a decree of specific performance of
            those covenants and to a temporary and permanent injunction
            enjoining the breach thereof, and to seek any and all other remedies
            to which the Company may be entitled, including, without limitation,
            monetary damages, without posting bond or furnishing security of any
            kind.

        (c) The Executive agrees that the Company shall not be obligated to make
            any further payments provided for in Section 5(a), or otherwise
            above if the Executive shall, during the period in which such
            payments are being made, engage in Competition with the Company as
            defined in Section 8(a) above, breach his obligations under Section
            7, or otherwise act or conduct himself to the detriment of the
            Company or any affiliates. The provisions of this Section 8(c) and
            Section 8(b) are in addition to and not by way of limitation of any
            other rights or remedies available to the Company.

    9.  Severability.
        ------------

        (a) In the event that any provision of this Agreement shall be
            determined to be invalid or unenforceable for any reason, in whole
            or in part, the remaining provisions of this Agreement not so
            invalid or unenforceable shall be unaffected thereby and shall
            remain in full force and effect to the fullest extent permitted by
            law.

        (b) Any provision of this Agreement which may be invalid or
            unenforceable in any jurisdiction shall be limited by construction
            thereof, to the end that such provision shall be valid and
            enforceable in such jurisdiction; and

        (c) Any provision of this Agreement which may for any reason be invalid
            or unenforceable in any jurisdiction shall remain in effect and be
            enforceable in any jurisdiction in which such provision shall be
            valid and enforceable.

   10.  General Provisions.
        ------------------

        (a) No right of the Executive to or in any payments under this Agreement
            shall be subject to anticipation, alienation, sale, assignment,
            encumbrance, pledge, charge or hypothecation or to execution,
            attachment, levy or similar process, or assignment by operation of
            law.

                                        8

<PAGE>

         (b)   This Agreement shall be governed by and construed and enforced in
               accordance with the laws of the State of New York without
               giving effect to the principles of conflicts of laws thereof.

         (c)   This Agreement shall be binding upon and inure to the benefit of
               the Company, its successors and assigns, and the Executive, his
               heirs, legatees, distributees and legal representatives;
               provided, however, the Executive may not assign his rights or
               delegate his duties under this Agreement without the consent of
               the Company and any purported assignment or delegation shall be
               void.

         (d)   All claims, disputes and other matters in question between the
               Company and the Executive arising out of or relating to this
               Agreement, including the breach or enforcement thereof, shall be
               decided by arbitration held in Jamestown, New York, in accordance
               with the Commercial Arbitration Rules of the American Arbitration
               Association, unless the parties otherwise mutually agree;
               provided, however, that this arbitration provision shall not
               prevent the Company from obtaining a temporary restraining order
               or preliminary injunction from a court of competent jurisdiction
               pending final resolution by arbitration of a claim, dispute or
               other matter arising hereunder. The foregoing Agreement to
               arbitrate shall be specifically enforceable under the prevailing
               arbitration rules. Any award rendered by the arbitrator(s) shall
               be final, and judgment may be entered thereon in any court having
               jurisdiction thereof. All fees and changes of the American
               Arbitration Association, and the legal fees and other costs and
               expenses of the parties, shall be borne as the arbitrators shall
               determine in their award. Notice of demand for arbitration shall
               be filed in writing with the other party to this Agreement and
               with the American Arbitration Association. The demand for
               arbitration shall be made within a reasonable time after the
               claim, dispute or other matters in question have arisen but in no
               event after the date when institution of legal or equitable
               proceedings based on such claim, dispute or other matters in
               question would be barred by the applicable statute of
               limitations.

         (e)   Any notice or other communication to the Company pursuant to
               any provision of this Agreement shall be given in writing and
               will be deemed to have been delivered

               (i)   when delivered in person to the Corporate Secretary of the
                     Company, or

               (ii)  one week after it is deposited in the United States
                     certified or registered mail, postage prepaid, addressed to
                     the Corporate Secretary of the Company at One Mason Drive,
                     Jamestown, New York 14701, or at such other address of
                     which the Company may from time to time give the Executive
                     written notice in accordance with Section 10(f) below.

         (f)   Any notice or other communication to the Executive pursuant to
               any provision of this Agreement shall be in writing and will be
               deemed to have been delivered

               (i)   when delivered to the Executive in person, or

               (ii)  one week after it is deposited in the United States
                     certified or registered mail, postage prepaid, addressed to
                     the Executive at the address set forth on the first page
                     hereof, and/or at such other address of which the Executive
                     may from time to time give the Company written notice in
                     accordance with Section 10(e) above.

         (g)   No provision of this Agreement may be amended, modified or waived
               unless such amendment, modification or waiver shall be agreed to
               in writing, signed by the Executive and an authorized officer of
               the Company.

                                        9

<PAGE>

             (h)  An affiliate of the Company is any person that directly or
                  indirectly controls, is controlled by, or is under common
                  control with, the Company. An affiliate shall not, however,
                  include any business enterprise owned or controlled by Mr.
                  Paul S. Bush other than the Company and its direct and
                  indirect subsidiaries unless such business enterprise is
                  engaged in a business of a type conducted by the Company or
                  its subsidiaries.

             (i)  This instrument contains the entire agreement of the parties
                  relating to the subject matter of this Agreement and
                  supersedes and replaces all prior agreements and
                  understandings with respect to such subject matter, and the
                  parties have made no agreements, representations or warranties
                  relating to the subject matter of this Agreement which are not
                  set forth herein.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

                                          BUSH INDUSTRIES, INC.

(Seal)

                                          By: /s/
                                              --------------------------
Attest:                                   Title:
                                                ------------------------

/s/
------------------------------
Witness

                                          By: /s/                       (Seal)
                                             ---------------------------
                                             Gregory P. Bush

                                          Title:
                                                ------------------------
/s/
------------------------------
Witness

                                       10

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