Document:

Exhibit 10.1

 

 

 

 

 

 

FOURTH AMENDMENT TO CREDIT AGREEMENT

This Fourth Amendment to Credit Agreement, is dated the 13th day of April, 2016 (this "Amendment"), by and among Calgon Carbon Corporation, a Delaware corporation ("Calgon Carbon"), each of the Guarantors (as defined herein), each of the Lenders (as defined herein) and PNC Bank, National Association ("PNC"), as administrative agent for the Lenders (PNC, in such capacity, the "Administrative Agent").

W I T N E S S E T H:

WHEREAS, Calgon Carbon, the other Borrowers from time to time party thereto (together with Calgon Carbon, collectively the "Borrowers" and each a "Borrower"), the Guarantors from time to time party thereto (the "Guarantors"), PNC and various other financial institutions party thereto (PNC and such other financial institutions are each, a "Lender" and collectively, the "Lenders") and the Administrative Agent entered into that certain Credit Agreement, dated as of November 6, 2013, as amended by that certain (i) Letter Agreement, dated as of February 10, 2014, (ii) Second Amendment and Consent to Credit Agreement, dated November 6, 2014, (iii) Third Amendment to Credit Agreement, dated August 7, 2015 and (iv) Consent Letter, dated November 6, 2015 (as amended and as may be further amended, modified, supplemented or restated from time to time, the "Credit Agreement"); and

WHEREAS, the Loan Parties desire to amend certain provisions of the Credit Agreement and the Administrative Agent and the Lenders desire to permit such amendments pursuant to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:

1.    All capitalized terms used herein which are defined in the Credit Agreement shall have the same meaning herein as in the Credit Agreement unless the context clearly indicates otherwise.

2.    Clause (ii) of Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] is hereby amended and restated in its entirety as follows:

(ii)      any Loan Party (provided, however, that if such Loan Party is a Borrower, such Borrower shall survive the Permitted Acquisition) or any Subsidiary of any Loan Party may consolidate with, merge into, or acquire assets or capital stock (or any combination of the foregoing transactions) of another Person who is principally engaged in a business permitted hereunder (a "Target") or enter into any agreement or arrangement with a third party that would otherwise commit a Loan Party to enter into any of the foregoing acquisition transactions or a combination of the foregoing acquisition transactions (each, a "Permitted Acquisition"), so long as:

3.    Clause (ii)(E) of Section 8.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] is hereby amended and restated in its entirety as follows:

(E)      after giving effect to such Permitted Acquisition: (w) the aggregate consideration paid for all Permitted Acquisitions in any fiscal year does not exceed One Hundred Million and 00/100 Dollars ($100,000,000.00); provided that such amount shall be increased from One Hundred Million and 00/100 Dollars ($100,000,000.00) to Two Hundred Million and 00/100 Dollars ($200,000,000.00) for the fiscal year ending December 31, 2016 if the Loan Parties enter into any Permitted Acquisition on or prior to April 30, 2016, (x) after giving effect to such Permitted Acquisition and the incurrence of any Loans, other Indebtedness or contingent obligations in connection therewith, a pro forma Leverage Ratio not greater than 2.75 to 1.0 for the period equal to the four (4) consecutive fiscal quarters most recently ended for which financial statements are available prior to the date of such Permitted Acquisition, (y) the sum of (1) United States currency of the Parent on a Consolidated Basis held in domestic deposit accounts and (2) Undrawn Availability is at least Fifty Million and 00/100 Dollars ($50,000,000.00), provided that such Undrawn Availability threshold shall be decreased from Fifty Million and 00/100 Dollars ($50,000,000.00) to Forty Million and 00/100 Dollars ($40,000,000.00) for the fiscal year ending December 31, 2016 if the Loan Parties enter into any Permitted Acquisition on or prior to April 30, 2016,  and (z) with respect to each such Permitted Acquisition for which the aggregate consideration exceeds Five Million and 00/100 Dollars ($5,000,000.00), the Loan Parties demonstrate compliance with subsections (w) through and including (y) by delivering at least five (5) Business Days prior to such Permitted Acquisition a Compliance Certificate evidencing such compliance;

4.    Exhibit 8.3.3 [Quarterly Compliance Certificate] to the Credit Agreement is hereby amended and restated in its entirety by Exhibit 8.3.3 attached to this Amendment.

5.    The amendments set forth in Sections 2 through 4 of this Amendment shall not become effective until the Administrative Agent has received the following, each in form and substance acceptable to the Administrative Agent:

		(a)	this Amendment, duly executed by the Borrower, the Guarantors, the Lenders and the Administrative Agent;

		(b)	a certificate of an Authorized Officer of each Loan Party in form and substance reasonably satisfactory to the Administrative Agent;

		(c)	a certificate of an Authorized Officer of each Loan Party as to (i) resolutions authorizing each Loan Party to enter into this Amendment, (ii) incumbency of the officers of each Loan Party and (iii) no amendments to the organizational documents of each Loan Party, all in form and substance satisfactory to the Administrative Agent;

		(d)	evidence reasonably satisfactory to the Administrative Agent that (1) on or prior to April 30, 2016 the Loan Parties have either entered into (A) an acquisition agreement (or similar agreement) or (B) any agreement or arrangement with a third party that would otherwise commit a Loan Party to enter into one or more related acquisition transactions at a later date, relating to a Permitted Acquisition which shall be consummated in fiscal year 2016, and (2) the aggregate consideration for such Permitted Acquisition, together with all other Permitted Acquisitions entered into in fiscal year 2016, exceeds One Hundred Million and 00/100 Dollars ($100,000,000.00).

		(e)	payment of all fees and expenses owed to the Administrative Agent and its counsel in connection with this Amendment; and

		(f)	such other documents as may be reasonably requested by the Administrative Agent.

6.    The Loan Parties hereby reconfirm and reaffirm that all representations and warranties, agreements and covenants made by and pursuant to the terms and conditions of the Credit Agreement and in each other Loan Document are true and correct in all material respects (without duplication of any materiality qualifier contained therein), before and after giving effect to this Amendment, as though made on and as of the date hereof, except for those made specifically as of another date, in which case such representations and warranties shall be true and correct in all material respects as of such date or time.

7.    The Loan Parties represent and warrant that no Potential Default or Event of Default exists under the Credit Agreement, nor will any occur as a result of the execution and delivery of this Amendment or the performance or observance of any provision hereof.

8.   Each reference to the Credit Agreement that is made in the Credit Agreement or any other document executed or to be executed in connection therewith shall hereafter be construed as a reference to the Credit Agreement as amended hereby.

9.    The agreements contained in this Amendment are limited to the specific agreements contained herein.  Except as amended hereby, all of the terms and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect.  This Amendment amends the Credit Agreement and is not a novation thereof.

10.  This Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which, when so executed, shall be deemed to be an original, but all such counterparts shall constitute but one and the same instrument.  Delivery of an executed counterpart of a signature page of this Amendment by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Amendment.

11.  This Amendment shall be governed by, and shall be construed and enforced in accordance with, the Laws of the Commonwealth of Pennsylvania without regard to its conflict of laws principles.  The Loan Parties hereby consent to the jurisdiction and venue of the courts of the Commonwealth of Pennsylvania sitting in Allegheny County, Pennsylvania and of the United States District Court for the Western District of Pennsylvania, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Amendment.

[INTENTIONALLY LEFT BLANK]

 

 

 

 

 

IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto, have caused this Amendment to be duly executed by their duly authorized officers on the day and year first above written.

 

 

	 	 	
BORROWER:

	 
	 	 	 	 	 
	
WITNESS: 

	 	
Calgon Carbon Corporation,

	 
	 	 	
a Delaware corporation 

	 
	 	 	 	 	 
	
/s/ Stevan R. Schott

	 	
By: 

	/s/ Chad Whalen 	 
	 	 	 	
Chad Whalen

	 
	 	 	 	
Senior Vice President, General Counsel & Secretary

	 

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

 

		 	
GUARANTORS:

	 
	 	 	 	 	 
	
WITNESS: 

	 	
Calgon Carbon Corporation,

	 
	 	 	
a Delaware corporation 

	 
	 	 	 	 	 
	 	 	 	 	 
	
/s/ Stevan R. Schott 

	 	By: 	/s/ Chad Whalen  	 
	 	 	Name: 	/s/ Chad Whalen	 
	 	 	Title: 	Vice President and Secretary 	 
	 	 	 	 	 
	 	 	 	 	 
	
WITNESS:  

	 	
Calgon Carbon UV Technologies LLC,  

	 
	 	 	
a Delaware limited liability company  

	 
	 	 	 	 	 
	 	 	 	 	 
	
/s/ Stevan R. Schott

	 	
By: 

	/s/ Chad Whalen 	 
	 	 	Name: 	
Chad Whalen

	 
	 	 	Title: 	
Manager, Vice President and Secretary

	 

 

 

 

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
 

	
ADMINISTRATIVE AGENT AND

	
 

	
LENDERS: 

	
 

	
 

	 	
 

	
 

	
PNC BANK, NATIONAL ASSOCIATION, as a 

	
 

	
Lender and as Administrative Agent 

	
 

	 	
 

	
 

	By: 	
/s/ Tracy J. DeCock

	
 

	Name: 	
Tracy J. DeCock

	
 

	Title: 	
Senior Vice President

 

  

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

 

	
 

	
CITIZENS BANK OF PENNSYLVANIA, as a

	
 

	
Lender

	
 

	
 

	 	
 

	
 

	By: 	
/s/ Joseph F. King

	
 

	Name: 	
Joseph F. King

	
 

	Title: 	
Senior Vice President

 

 

  

 [SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
 

	
BRANCH BANKING AND TRUST

	
 

	COMPANY, as a Lender
	
 

	 	
 

	
 

	By: 	
/s/ John K. Perez

	
 

	Name: 	
John K. Perez

	
 

	Title: 	
Senior Vice President

  

 

 

  

 [SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
 

	
BANK OF AMERICA, N.A, as a Lender

	
 

	
 

	
 

	
 

	 	
 

	
 

	By: 	
/s/ Susan R. Rich

	
 

	Name: 	
Susan R. Rich

	
 

	Title: 	
Vice President

  

 

  

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
 

	
FIRST COMMONWEALTH BANK, as a Lender

	
 

	
 

	
 

	
 

	 	
 

	
 

	By: 	
/s/ Stephen J. Orban

	
 

	Name: 	
Stephen J. Orban

	
 

	Title: 	
Senior Vice President

 

 

 

 

  

 [SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]

 

	
 

	
FIRST NATIONAL BANK OF 

	
 

	PENNSYLVANIA, as a Lender
	
 

	 	
 

	
 

	By: 	
/s/ Jason Falce

	
 

	Name: 	
Jason Falce

	
 

	Title: 	
Banking Officer

EXHIBIT 8.3.3

FORM OF

AMENDED AND RESTATED QUARTERLY COMPLIANCE CERTIFICATE

________ __, 201_

PNC Bank, National Association,

as Administrative Agent

The Tower at PNC

300 Fifth Ave. – 13th Floor

Pittsburgh, PA 15222

Ladies and Gentlemen:

I refer to the Credit Agreement, dated as of November 6, 2013, by and among Calgon Carbon Corporation, a Delaware corporation ("Calgon Carbon"), each other Person which joins thereunder as a Borrower (Calgon Carbon and such other Persons are each, a "Borrower" and collectively, the "Borrowers"), the Guarantors (as defined therein) party thereto, PNC Bank, National Association ("PNC Bank") and various other financial institutions from time to time (PNC Bank and such other financial institutions are each a "Lender" and collectively, the "Lenders"), and PNC Bank, as administrative agent for the Lenders (in such capacity, the "Administrative Agent") as amended by that certain (i) Letter Agreement, dated as of February 10, 2014, (ii) Second Amendment and Consent to Credit Agreement, dated November 6, 2014, (iii) Third Amendment to Credit Agreement, dated August 7, 2015; (iv) Consent Letter, dated November 6, 2015 and (v) Fourth Amendment to Credit Agreement, dated April 13, 2016 (as may be further amended, modified, supplemented or restated from time to time, the "Credit Agreement").  Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings.

I, the ____________________ [Chief Financial Officer/Treasurer] of the Parent, does hereby certify on behalf of the Parent as of the _________ [quarter/year] ended _______________ ___, 201__ (the "Report Date"), as follows:

1.    CHECK ONE:

		______	The annual financial statements of the Parent on a Consolidated Basis, consisting of an audited consolidated balance sheet as of the end of such fiscal year, and related audited consolidated  statements of income, stockholders' equity and cash flows being delivered to the Administrative Agent and the Lenders with this Compliance Certificate (a) are all in reasonable detail and set forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and (b) comply with the reporting requirements for such financial statements as set forth in Section 8.3.2 [Annual Financial Statements] of the Credit Agreement.

OR

		______	The quarterly financial statements of the Parent on a Consolidated Basis, consisting of an unaudited consolidated balance sheet as of the end of such fiscal quarter and related unaudited consolidated statements of income and cash flows being delivered to the Administrative Agent and the Lenders with this Compliance Certificate (a) are all in reasonable detail and have been prepared in accordance with GAAP, consistently applied (subject to normal year-end audit adjustments), and set forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year, and (b) comply with the reporting requirements for such financial statements as set forth in Section 8.3.1 [Quarterly Financial Statements] of the Credit Agreement.

2.    The representations and warranties of the Loan Parties contained in Section 6 [Representations and Warranties] of the Credit Agreement and in each of the other Loan Documents to which they are a party are true and correct in all material respects (without duplication of any materiality qualifier contained therein) with the same effect as though such representations and warranties had been made on and as of the Report Date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties were true and correct on and as of the specific dates or times referred to therein).

3.    In accordance with Section 6.2 [Updates to Schedules] of the Credit Agreement, attached hereto as Exhibit A is an updated Schedule 6.1.2 to the Credit Agreement.

4.    No Event of Default or Potential Default exists on the Report Date; no Event of Default or Potential Default has occurred or is continuing since the date of the previously delivered Compliance Certificate; no Material Adverse Change has occurred since the date of the previously delivered Compliance Certificate; and no event has occurred or is continuing since the date of the previously delivered Compliance Certificate that may reasonably be expected to result in a Material Adverse Change.

[NOTE:  If any Event of Default, Potential Default, Material Adverse Change or event which may reasonably be expected to result in a Material Adverse Change has occurred or is continuing, set forth on an attached sheet the nature thereof and the action which the Loan Parties have taken, are taking or propose to take with respect thereto.]

5.    Minimum Interest Coverage Ratio (Section 8.2.15).  The Interest Coverage Ratio for the period equal to the four (4) consecutive fiscal quarters ending as of the Report Date is _________ to 1.0, which is not less than the required ratio of 2.50 to 1.00 for such period.

6.    Maximum Leverage Ratio (Section 8.2.16).  The Leverage Ratio for the period equal to the four (4) consecutive fiscal quarters ending as of the Report Date is _________ to 1.0, which is not greater than the required ratio of 3.25 to 1.00 for such period.

7.    Permitted Acquisition (Section 8.2.6). [If applicable and if the consideration for the Proposed Permitted Acquisition (as hereinafter defined) is greater than Five Million and 00/100 Dollars ($5,000,000.00).].  _______________ [insert name of applicable Loan Party] intends to enter into a Permitted Acquisition with _____________ [enter name of the target company] pursuant to which _______________ [insert name of applicable Loan Party] will ________________ [provide a brief description of the transactions contemplated by such Permitted Acquisition] (the "Proposed Permitted Acquisition").  The aggregate consideration for all Permitted Acquisitions (including the Proposed Permitted Acquisition) in the current fiscal year is ___________ which is not greater than the permitted basket of One Hundred Million and 00/100 Dollars ($100,000,000.00)1 .  After giving effect to the Proposed Permitted Acquisition and the incurrence of any Loans, other Indebtedness or contingent obligations in connection therewith, the pro form Leverage Ratio for the period equal to the four (4) consecutive fiscal quarters most recently ended for which financial statements are available prior to the date of the Proposed Permitted Acquisition is ____ to 1.0, which is not greater than the permitted ratio of 2.75 to 1.0.  The sum of (1) United States currency of the Parent on a Consolidated Basis held in domestic deposit accounts and (2) Undrawn Availability is ______________ which is not less than the required Fifty Million and 00/100 Dollars ($50,000,000.00)2.

8.    Calculations.  The calculations supporting Sections 5 through and including 7 hereof, as applicable, are set forth in the spreadsheet attached hereto as Exhibit B.

 [INTENTIONALLY LEFT BLANK]

 

 

 

 

 

 

 

1 The permitted basket shall be increased to Two Hundred Million and 00/100 Dollars ($200,000,000.00) for the fiscal year ending December 31, 2016 if the Loan Parties have entered into a Permitted Acquisition on or prior to April 30, 2016 as set forth in Section 8.2.6(ii)(E) of the Credit Agreement.

2 The required amount of Undrawn Availability shall decrease to Forty Million and 00/100 Dollars ($40,000,000.00) for the fiscal year ending December 31, 2016 if the Loan Parties enter into any Permitted Acquisition on or prior to April 30, 2016 as set forth in Section 8.2.6(ii)(E) of the Credit Agreement.

 

IN WITNESS WHEREOF, and intending to be legally bound, the undersigned has executed this Compliance Certificate this ____ day of _______________, 20___.

 

	
WITNESS:

	
 

	
[PARENT]

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
(SEAL)

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	
Title:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

EXHIBIT A

Updated Schedule 6.1.2

[see attached]

 

EXHIBIT B

Spreadsheet

[see attached]ex10-1i.htm

Exhibit 10.1(i)

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is made and entered into this 1st day of February, 2016, by and between Hooker Furniture Corporation (“Employer”) and George Revington (“Executive”) (each a “Party” and collectively, the “Parties”) to be effective upon the closing of the transactions described in that certain Asset Purchase Agreement (the “Purchase Agreement”) by and between Employer and Home Meridian International, Inc. of even date herewith.  If the Purchase Agreement is terminated in accordance with its terms, this Agreement shall be deemed null and void and of no further effect

WHEREAS, Employer desires to secure Executive’s service and expertise in connection with Employer’s business, beginning on the Effective Date; and

WHEREAS, the Parties agree that a covenant not to compete is essential to the growth and stability of Employer’s business and to the continuing viability of such business whenever the employment to which this Agreement relates is terminated.

NOW, THEREFORE, in consideration of the promises and the mutual agreements contained herein, Employer and Executive hereby agree as follows:

1. Employment.  Upon the Effective Date, Employer shall employ and Executive agrees to be employed as President and Chief Operating Officer, Home Meridian International, a division of Hooker Furniture Corporation (“HMI”) and to perform such duties as may be assigned to him by Employer from time to time by Employer’s Chief Executive Officer.  Executive will devote his full working time and best efforts to the diligent and faithful performance of such duties as may be entrusted to him from time to time by Employer, and shall observe and abide by the corporate policies and decisions of Employer in all business matters.

2. Term.  Executive’s employment shall continue under this Agreement for a period of three (3) years following the Effective Date or until earlier terminated as provided herein, it being understood and agreed that this Agreement shall not be effective if the Purchase Agreement and the transactions contemplated thereby are not consummated and closed.  Following the expiration of the Term, Executive’s employment shall continue on an at-will basis.

3. Compensation.  Employer shall pay and Executive shall accept as full consideration for the services to be rendered hereunder compensation consisting of the items listed below. Employer shall have no obligation to pay any such compensation for any period after the termination of Executive’s employment, except as otherwise expressly provided.

(a) Employer shall pay Executive base salary, paid pursuant to Employer’s normal payroll practices, at an annual rate of $400,000 per year or such other rate as may be established prospectively by the Compensation Committee of Employer’s Board of Directors (the “Compensation Committee”) from time to time (“Salary”). All such Salary payments shall be subject to deduction and withholding authorized or required by applicable law.

(b) As determined in the discretion of the Compensation Committee, Executive will be eligible to receive (i) a target annual incentive bonus equal to 45% of the Executive’s Salary under the annual incentive plan established by the Compensation Committee with respect to each fiscal year of Employer (the “Performance Year”) during the term of this Agreement (the “Annual Bonus”), including a pro-rated Annual Bonus for the Company’s 2017 fiscal year based on the portion of such year during which Executive is employed after the Effective Date, and (ii) long term incentive awards with an aggregate target value equal to 60% of Executive’s Salary and with terms and conditions similar to those awarded to other management employees of Employer having similar salary and level of responsibility (“LTI Awards”), including a pro-rated LTI Award for the Company’s 2017 fiscal year based on the portion of such year during which Executive is employed after the Effective Date. Payout of the target Annual Bonus will be subject to achievement of 100% of HMI’s budgeted operating income goal for the Performance Year as determined by the Committee in its sole discretion. All other terms and conditions of the Annual Bonus and LTI Awards shall be determined by the Compensation Committee in its sole discretion.

 

  

  

  

 

(c) Executive shall receive such other benefits, payments, or items of compensation as are provided under the employee benefit plans of Employer, or as are made available from time to time under compensation policies set by Employer for management employees of Employer having similar salary and level of responsibility; provided, that Executive shall be entitled to four weeks of Paid Time Off each fiscal year, which shall be pro-rated for the portion of any fiscal year Executive is employed by Employer during the Term of this Agreement. Lease payments for any Company car provided to Executive will be deducted from Executive’s pay for the duration of the lease. Any additional or final expenses associated with the lease will be deducted from Executive’s pay.

(d) Employer shall reimburse Executive, in accordance with the general policies and practices of Employer as in effect from time to time, for normal out-of-pocket expenses incurred by Executive in the ordinary course of business, including without limitation, Employer’s standard mileage allowance for business use of any personal vehicle, business related travel, customer entertainment, and professional organizations.

4. Disability or Death.

(a) Disability.  If at any time during the Term of this Agreement Executive becomes disabled, Employer may terminate this Agreement. If Employer exercises its discretion to terminate the Agreement on account of the Executive’s disability, the Executive shall not be entitled to any further compensation or benefits under this Agreement (except for such compensation or benefits to which the Executive may be entitled under the terms of any employee benefit plan of Employer). For purposes of this Section 4(a), Executive shall be considered “disabled” if he has suffered any medically determinable physical or mental impairment that causes the Executive to be unable to perform the essential duties of his position of employment for 180 consecutive days or any 180 days in any 365-consecutive-day period.

(b) Death.  If Executive should die during the Term of this Agreement, Executive’s employment and Employer’s obligations hereunder (other than pro rata payment of Salary) shall terminate as of his death.

5. Termination by Employer.

(a) Cause.  Employer may terminate the employment of Executive under this Agreement during its Term for Cause. “Cause” shall include Executive’s (i) fraud, theft or embezzlement against the Employer or any of its affiliates, (ii) misconduct by Executive in the performance of his duties injurious to the business or reputation Employer or any of its affiliates, (iii) conviction of, or entry of a plea of guilty or nolo contendere to, a crime that constitutes a felony or other crime involving dishonesty or moral turpitude, (iv) breach of any restrictive covenant set forth in Section 7, 8, 9, 10 or 11 herein, violation of any policy, code or standard of ethics generally applicable to employees of Employer, or material breach of fiduciary duties owed to Employer, or (iv) refusal to perform or gross neglect of the duties assigned to him. In such event no further Salary shall be paid to Executive after the date of termination, no Annual Bonus shall be paid to Executive after the date of termination (including any Annual Bonus with respect to any fiscal year or the portion of any fiscal year preceding the date of termination), and Executive shall forfeit any compensation which had not become vested on or before of the date of Executive’s termination of employment. Executive shall retain only such rights to continue to participate in Employer’s benefit plans as are required by the terms of those plans or applicable law.

 

  

  

  

 

(b) Without Cause. Employer may terminate the employment of Executive under this Agreement during its Term without Cause.  In such event, no further Salary shall be paid to Executive after the date of termination, Executive shall forfeit any compensation which had not become vested on or before of the date of Executive’s termination of employment and Executive shall retain only such rights to continue to participate in Employer’s benefit plans as are required by the terms of those plans or applicable law. Notwithstanding the forgoing, Employer shall pay to the Executive an Annual Bonus for the Performance Year in which the Executive’s employment was terminated if an Annual Bonus is otherwise payable for that Performance Year, which shall be prorated for the period ending on the date of the Executive's termination.  Such Annual Bonus, if any, shall be paid by no later than April 15 of the calendar year in which such Performance Year ends.

6. Resignation by Employee. Executive may terminate his employment under this Agreement during its Term for any reason (or no reason) upon 30 days’ advance written notice to Employer. Employer may, in its sole discretion, waive the aforementioned notice requirement and accept Employee’s resignation effective as of any earlier date. Upon resignation by Executive, no further Salary shall be paid to Executive after the date of termination, Executive shall forfeit any compensation which had not become vested on or before of the date of Executive’s termination of employment and Executive shall retain only such rights to continue to participate in Employer’s benefit plans as are required by the terms of those plans or applicable law.

7. Confidential Information and Return of Property.  “Confidential Information” means any written, oral, or other information obtained by Executive in confidence from Employer, or any of its affiliates, including without limitation information about their respective operations, financial condition, business commitments or business strategy, as a result of his employment with Employer unless such information is already publicly known through no fault of any person bound by a duty of confidentiality to Employer or any of its affiliates.  Executive will not at any time, during or after his employment with Employer, directly or indirectly disclose Confidential Information to any person or entity other than authorized officers, directors and employees of Employer.  Executive will not at any time, during or after his employment with Employer, in any manner use Confidential Information on behalf of himself or any other person or entity other than Employer, or accept any position in which he would have a duty to any person to use Confidential Information against the interests of Employer or any of its affiliates.  Upon termination of his employment for any reason, Executive will promptly return to Employer all property of Employer, including documents and computer files, especially where such property contains or reflects Confidential Information.  Nothing in this Agreement shall be interpreted or shall operate to diminish such duties or obligations of Executive to Employer that arise or continue in effect after the termination of Executive’s employment hereunder, including without limitation any such duties or obligations to maintain confidentiality or refrain from adverse use of any of Employer's trade secrets or other Confidential Information that Executive may have acquired in the course of Executive's employment.

8. Disclosure and Ownership of Work Related Intellectual Property.  Executive shall disclose fully to Employer any and all intellectual property (including, without limitation, inventions, processes, improvements to inventions and processes, and enhancements to inventions and processes, whether or not patentable, formulae, data and computer programs, related documentation and all other forms of copyrightable subject matter) that Executive conceives, develops or makes during the term of his employment, whether or not within the original Term of this Agreement, and that in whole or in part result from or relate to Executive's work for Employer (collectively, “Work Related Intellectual Property”).  Any such disclosure shall be made promptly after each item of Work Related Intellectual Property is conceived, developed or made by Executive, whichever is sooner.  Executive acknowledges that all Work Related Intellectual Property that is copyrightable subject matter and which qualifies as "work made for hire" shall be automatically owned by Employer.  Further, Executive hereby assigns to Employer any and all rights which Executive has or may have in Work Related Intellectual Property that is copyrightable subject matter and that, for any reason, does not qualify as "work made for hire."  If any Work Related Intellectual Property embodies or reflects any preexisting rights of Executive, Executive hereby grants to Employer the irrevocable, perpetual, nonexclusive, worldwide, and royalty-free license to use, reproduce, display, perform, distribute copies of and prepare derivative works based upon such preexisting rights and to authorize others to do any or all of the foregoing.

 

  

  

  

 

9. Covenant Not to Compete. Executive covenants and agrees that for a period of twenty-four (24) months following Executive’s last day of employment with Employer, Executive shall not:

(a) engage in any Competitive Activity (as defined below) within the Prohibited Territory (as defined below); and/or

(b) as an employee, agent, partner, shareholder, member, investor, director, consultant, or otherwise assist others to engage in Competitive Activity within the Prohibited Territory.

“Competitive Activity” means: (i) engaging in any aspect of the Business (as defined below) that Executive was involved with on behalf Employer at any time during the last 12 months of Executive’s employment with Employer; (ii) engaging in work for a competitor of  Employer that is substantially similar to the work Executive performed on behalf of Employer at any time during the last 12 months of employment with Employer; and/or (iii) engaging in any work for a competitor of Employer that is likely to result in Executive’s use or disclosure of any Confidential Information.  Notwithstanding the preceding, Executive may own less than two percent (2%) of any class of securities registered pursuant to the Securities Exchange Act of 1934, as amended, of any corporation engaged in competition with Employer so long as Executive does not otherwise participate in the management or operation of any such business, or violate any other provision of this Agreement.

The "Business" means the business of developing, designing, manufacturing, distributing, promoting, importing, selling or providing the same or substantial similar wood, metal or upholstered residential furniture products.

"Prohibited Territory" means the geographic territory consisting of the states of North Carolina, California, Arizona, Georgia and the Commonwealth of Virginia.  Executive acknowledges and agrees that Executive will assist Employer to engage in its business in the territory described in the preceding sentence and therefore such territory is necessary and reasonable for the covenants in this Section.

 

10. Agreement Not To Interfere.  Executive covenants and agrees that, for a period of twenty-four (24) months following Executive’s last day of employment with Employer, Executive shall not:

(a) solicit, encourage, cause or attempt to cause any Restricted Customer (as defined below) not to do business with Employer or to reduce any part of its business with Employer;

(b) solicit, encourage, cause or attempt to cause any Restricted Customer to purchase any services or products from any business other than Employer that are competitive with or a replacement for the services or products offered by Employer;

(c) sell or provide any services or products to any Restricted Customer that are competitive with or a replacement for Employer's services or products;

(d) solicit, encourage, cause or attempt to cause any supplier of goods or services to Employer not to do business with or to reduce any part of its business with Employer;

 

  

  

  

 

(e) as an employee, agent, partner, shareholder, member, investor, director, consultant, or otherwise assist any competitor of Employer to engage in any of the conduct described in sub-sections (a) – (d) of this Section.

“Restricted Customer” means:  (i) any customer of Employer with whom Executive had contact or communications at any time during Executive's last twelve (12) months of employment with Employer; (ii) any customer of Employer for whom Executive supervised Employer's dealings at any time during Executive’s last twelve (12) months of employment with Employer; (iii) any customer of Employer about whom Executive obtained any Confidential Information during Executive's last twelve (12) months of employment with Employer; (iv) any prospective customer of Employer with whom Executive had contact or communications at any time during Executive’s last six (6) months of employment with Employer; (v) any prospective customer of Employer for whom Executive supervised Employer’s dealings at any time during Executive's last six (6) months of employment with Employer; and (vi) any prospective customer of Employer about whom Executive obtained any Confidential Information during Executive's last six (6) months of employment with Employer.

11. Agreement Not To Raid Employees.  Executive covenants and agrees that for a period twenty-four (24) months following Executive’s last day of employment with Employer, Executive shall not: (a) hire or engage as an employee or as an independent contractor any person then employed by Employer; and/or (b) solicit or encourage any employee or independent contractor to leave his or her employment or engagement with Employer.

12. Reasonableness of Restrictions; Remedies for Breach.

(a) Executive acknowledges and agrees that the restrictions, prohibitions and other provisions in Sections 7, 8, 9, 10 and 11 above are reasonable, fair and equitable in terms of duration and scope, are necessary to protect the legitimate business interests of Employer, and are a material inducement to Employer to enter into this Agreement.

(b) Executive acknowledges and agrees that a breach of any of the covenants made by him in Sections 7, 8, 9, 10 and 11 above would cause irreparable harm to Employer or any of its affiliates for which there would be no adequate remedy at law.  Accordingly, the parties agree that in the event of any breach or attempted breach by Executive of any of the provisions of Sections 7, 8, 9, 10 or 11, Employer shall be entitled to institute and prosecute proceedings at law or in equity with respect to such breach, and, if successful, to recover such costs, expenses, and reasonable attorney's fees as may be incurred in connection with such proceedings. Employer shall also be able to recover any damages suffered due to Executive's breach of any of the covenants made by him in Sections 7, 8, 9, 10 or 11 above.

(c) If Executive breaches Sections 7, 8, 9, 10, or 11 above, the duration of the period identified shall be computed from the date he resumes compliance with the covenant or from the date Employer is granted injunctive or other equitable relief by a court of competent jurisdiction enforcing the covenant, whichever shall first occur, reduced by the number of days Executive was not in breach of the covenant after termination of employment, or any delay in filing suit, whichever is greater.

13. Survival of Obligations.  Executive’s obligations under Sections 7, 8, 9, 10 and 11 of this Agreement shall survive the termination of his employment and this Agreement, regardless of the reason for or method of termination.  Each of the provisions in these Sections shall be enforceable independently of every other provision, and the existence of any claim or cause of action Executive may have against Employer, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of these Sections of the Agreement by Employer.

 

  

  

  

 

14. Non-disparagement.  To the maximum extent permitted by law, Executive agrees that he will not disparage or denigrate to any person any aspect of his relationship with Employer, nor the character of Employer, nor Employer’s employees, agents, representatives, products, operating methods, suppliers, customers, or service providers, whether past, present, or future, and whether or not based on or with reference to Executive's relationship with Employer.

15. Actions After Termination.  Executive agrees that following his termination from Employer, regardless of the reason for the termination, he will continue to make himself available for reasonable consultation with Employer and Employer's agents and employees regarding his prior work for Employer.  Such consultation shall include Executive's making himself reasonably available for interviews by Employer’s counsel, depositions, and/or appearances before courts or administrative agencies upon Employer's reasonable request.  Executive agrees that if he is contacted by any government agency with reference to Employer's business, or by any person contemplating or maintaining any claim or legal action against Employer, or by any agent or attorney of such person, he will promptly notify Employer of the substance of his communications with such person. In no event shall such services exceed 20% of the average level of services performed by Executive over the 36-month period immediately preceding the date on which Executive's employment terminated.

16. Assignment.  Employer may assign this Agreement to any other entity acquiring all or substantially all of the assets or stock of Employer or to any other entity into which or with which Employer may be merged or consolidated.  Upon such assignment, merger, or consolidation, the rights of Employer under this Agreement, as well as the obligations and liabilities of Employer hereunder, shall inure to the benefit of and be binding upon the assignee, successor-in-interest, or transferee of Employer and Employer shall have no further obligations or liabilities hereunder.  This Agreement is not assignable in any respect by Executive.

17. Invalid Provisions.  It is not the intention of either Party to violate any public policy, or any statutory or common law.  If any sentence, paragraph, clause or combination of the same in this Agreement is in violation of the law of any State where applicable, such sentence, paragraph, clause or combination of the same shall be void in the jurisdictions where it is unlawful, and the remainder of the Agreement shall remain binding on the Parties.  However, the Parties agree, and it is their desire that a court should substitute for each such illegal, invalid or unenforceable covenant a reasonable and judicially-enforceable limitation in its place, and that as so modified the covenant shall be as fully enforceable as if set forth herein by the Parties themselves in the modified form.

18. Entire Agreement; Amendments.  This Agreement contains the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, if any, relating to the subject matter hereof, including, without limitation, any prior agreements, arrangements and understandings relating to employment and compensation between Executive and Home Meridian International, Inc. or its affiliates. This Agreement may be amended in whole or in part only by an instrument in writing setting forth the particulars of such amendment and duly executed by both Parties.

 

19. Multiple Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument.

20. Governing Law; Jurisdiction. The validity, construction, interpretation and enforceability of this Agreement and the capacity of the parties shall be determined and governed by the laws of the Commonwealth of Virginia, without regard to the conflict of law rules contained therein.  The parties hereby agree and consent that any and all causes of action arising under this Agreement shall only have jurisdiction and venue in the United States District Court for the Western District of Virginia, Danville Division and/or the Circuit Court for Henry County, Commonwealth of Virginia.

 

  

  

  

 

21. Taxes.  All payments made under this Agreement shall be subject to Employer's withholding of all required foreign, federal, state and local income and employment/payroll taxes, and all payments shall be net of such tax withholding.  The parties intend that any payment under this Agreement shall, to the extent subject to Section 409A of the Internal Revenue Code of 1986, as amended (“Code Section 409A”), be paid in compliance with Code Section 409A and the Treasury Regulations thereunder such that there shall be no adverse tax consequences, interest, or penalties as a result of the payments.  The parties shall interpret the Agreement in accordance with that intent, and to the extent applicable, with Code Section 409A and the Treasury Regulations thereunder.  With respect to any payment subject to Section 409A, the parties agree to modify this Agreement or the timing (but not the amount) of such payment to the extent necessary to comply with Section 409A of the Code and avoid application of any taxes, penalties, or interest thereunder.  However, in the event that the payments under the Agreement are subject to any taxes (including, without limitation, those specified in Code Section 409A), Executive shall be solely liable for the payment of any such taxes.

22. Acknowledgement and Release. Executive acknowledges and agrees that the Employer does not and will not owe Executive any payments or benefits under or related to any compensation or benefit plan, agreement or other arrangement maintained by Home Meridian International, Inc. or its affiliates (the “Sellers”), other than rights arising after the effective date of this Agreement under a benefit plan, agreement or other arrangement that the Employer and its affiliates specifically agreed in writing to assume from the Sellers (“Assumed Arrangements”).  Executive hereby releases the Company and its affiliates, to the fullest extent permitted by applicable law, from any and all claims related to Executive’s employment with or separation from Sellers, other than any claims with respect to the Assumed Arrangements.

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

HOOKER FURNITURE CORPORATION

/s/ Paul B. Toms, Jr. 

Paul B. Toms, Jr.

Chairman & Chief Executive Officer

EXECUTIVE

/s/ George Revington 

George Revington

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