<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-21226
------------------------------
SEAMAN FURNITURE COMPANY, INC.
------------------------------
(Exact Name of Registrant as Specified In Its Charter)
Delaware 11-2751205
- - ----------------------------- ------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
300 Crossways Park Drive
Woodbury, New York 11797
- - ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 496-9560
---------------
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock, $.01 par value Nasdaq National Market
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
___ ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.[X]
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
___ ___
As of July 15, 1996, the aggregate market value of voting stock held
by non-affiliates of the Registrant was $16,654,237.75 based on the last
reported sale price of the Registrant's Common Stock on the Nasdaq National
Market System.
4,537,041 shares of Common Stock were outstanding on July 15, 1996.
Documents Incorporated by Reference
-----------------------------------
Location in Form 10-K Incorporated Document
--------------------- --------------------
Part III Proxy Statement for the
Consisting of Items 10, 11, 12 and 13 Company's
1996 Stockholders Meeting
<PAGE>
Item 1. BUSINESS
--------
General
Seaman Furniture Company, Inc. (the "Company" or "Seaman's") believes
that it is the largest regional specialty furniture retailer in the northeastern
United States in terms of sales and that it has the leading market position in
the greater New York metropolitan area. The Company currently operates a chain
of 38 stores. Of these, 27 are in the New York, New Jersey and Connecticut Tri-
State Area, six are in the Philadelphia metropolitan area, and five in the
Cleveland/Akron, Ohio metropolitan area. The move into the Cleveland/Akron
area, which occured in the current fiscal year was the Company's first expansion
beyond the Northeast. Seaman's stores sell a variety of living room, bedroom,
dining room and other home furniture and accessories in contemporary,
traditional, country and casual styles. The Company was incorporated in
Delaware in June 1985 as a successor to the business founded by Julius Seaman,
who opened the first "Seaman's" store in Brooklyn, New York in 1933.
Seaman's retailing philosophy targets the broad sector of middle-income,
value-oriented consumers by providing value pricing, quality products, customer
service, quick delivery and in-store credit. This philosophy is conveyed to
consumers through Seaman's high-impact television, radio and newspaper
advertising.
Marketing and Merchandising
Seaman's retailing philosophy is driven by its unique "narrow and deep"
merchandising strategy. The basis of this strategy is to carry and display in
each store a similar variety of furniture styles and models in a carefully
limited selection of fabrics, colors and finishes pre-selected by Seaman's
buyers. The "narrow and deep" merchandising strategy allows the Company to
purchase merchandise in large quantities at substantial savings to the Company
and, ultimately, the customer. The ability to purchase items in large
quantities also enables the Company to work with its suppliers to customize
merchandise so that the Company can offer items that are often exclusive to its
trading area. Seaman's also is able to offer quick delivery of merchandise to
its customers since less than 2% of Seaman's sales are special order items, with
the balance being items that are usually stocked in Seaman's warehouses.
Pricing decisions, including the timing and amount of promotions and markdowns,
are made centrally by Seaman's management and its buyers.
"The Package/(R)/" is an important element of Seaman's distinctive
merchandising strategy. In the 1970s, Seaman's stores implemented "The
Package/(R)/" concept, which encourages the purchase of a collection of
complementary furniture items at a significant savings compared to the already
competitive prices of the individual items in the collection. In the stores,
furniture is displayed in model room settings that present the furniture as
coordinated collections in a home environment, which enables customers to more
easily envision the furniture in their own homes, in addition to encouraging the
purchase of multiple pieces of furniture in one transaction. Seaman's mass
media advertising campaigns emphasize the value in this merchandising concept.
The
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majority of the dollar value of all merchandise sold over each of the last
three fiscal years was sold as part of a package of merchandise.
The Company has broadened its merchandising mix to appeal to a wider base of
consumers in its market areas. The Company has specialized in contemporary,
high-fashion, European-style furniture, but has recently increased the amount
and selection of traditional, country and casual styles of furniture in its
stores in order to attract customers that might not have previously shopped at
Seaman's stores. The recently implemented store design strategy emphasizes this
product mix by tailoring the environment of each model room setting to the style
of the furniture and by creating distinct sales areas for each style of
furniture. In addition, the Company has introduced a number of higher-priced
items to attract additional customers and to enhance consumer perception of the
Company as a quality retailer. The Company currently displays substantially the
same merchandise mix in all of its stores. However, it makes changes in a
particular region's stores' merchandise mix based on local nuances and
preferences reported to the Company by regional and store management.
The Company believes that it maintains relatively low inventories of
merchandise in relation to its sales by use of its inventory control system.
Seaman's buyers monitor inventory regularly to maintain levels required by its
most recent sales trends. Daily computer reports are available that show, among
other things, sales by category and style of furniture, which help the Company
understand local preferences and market conditions. The Company takes advantage
of rapid merchandise turnover to continually update and refresh the styles,
fabrics, colors and finishes available. Seaman's average inventory turnover,
including store display samples, is approximately five times per year, which the
Company believes is among the highest in its industry.
All of Seaman's stores are generally open seven days a week. Each location is
staffed with trained management and sales personnel who are familiar with the
Company's merchandise, promotions and credit programs. Management personnel are
compensated on a salary and bonus basis, and sales personnel are compensated on
a salary and commission basis.
The Company provides a one-year limited warranty on all of the furniture it
sells. Pursuant to this limited warranty, the Company generally replaces or
repairs any defective merchandise or offers a merchandise certificate or refund
at the customer's option. The Company generally requires that its suppliers
stand behind its warranty. The Company could bear the cost, however, if a
supplier did not honor the warranty obligation.
Store Redesign and Renovation
The Company has been redesigning and renovating its existing stores and
designing its new stores to provide a more attractive in-store atmosphere. This
has been achieved by professionally redesigning and redecorating selling space
in existing stores and designing new stores in order to improve the consumer's
shopping experience and to enhance the appearance of displayed merchandise.
Seaman's new design strategy focuses on partitioning store selling space to
create multiple room settings that include furniture, lamps and other
accessories suggesting
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how merchandise might look in the customer's home. Since May 1993, the Company
has invested approximately $3.6 million to renovate its existing stores, and
expects to invest approximately $1 million on store renovations through fiscal
1997. Currently, 26 of Seaman's 38 stores have been renovated or were initially
designed under these new guidelines, and the Company expects to complete its
redesign and renovation program within the next two fiscal years.
Competition
All aspects of the retail furniture business are highly competitive. Business
practices such as credit availability, credit terms and selection of merchandise
vary widely among the Company's competitors. The Company believes that the
principal areas of competition with respect to its business are price, delivery
time and selection, and that it competes effectively in these areas. The
Company's competitors include individual furniture stores, department and
discount stores and chain stores, some of which have been established in the
same geographic areas as the Company's stores for long periods of time. Some of
the Company's competitors derive revenue from sales or products other than
furniture. Management believes that the Company's principal competitors are
Levitz Furniture Corporation and the department stores in its trading areas.
Suppliers
The Company purchases all of its merchandise directly from approximately 160
domestic and foreign suppliers. The Company does not manufacture any of the
furniture it sells. Over the last three fiscal years, no supplier has provided
the Company with merchandise representing more than 6.5% of the Company's
purchases, and the Company is not dependent upon any single supplier for
merchandise. In fiscal 1996, the Company purchased approximately 80% of its
merchandise from 40 of its suppliers. The Company is diversified in all of its
product categories, with a minimum of at least three suppliers in all primary
categories. Although the Company has no long-term contracts or commitments with
any supplier, the Company has had long-term relationships with many of its
suppliers and believes that it is viewed as a valued customer due to its prompt
payment history, its low rate of merchandise returns because of its use of
clearance centers to liquidate slow-selling merchandise, and its practice of
purchasing merchandise in large quantities. This ability to purchase items in
large quantities also enables the Company to work with its suppliers to
customize its merchandise in order to offer items that are often exclusive to
its trading area. While management believes that alternative sources of supply
are available for all merchandise purchased, purchases from these alternative
sources may be more costly both with respect to price and payment terms.
Foreign suppliers provide the Company with approximately 30% of its
merchandise. The Company imports merchandise principally from suppliers in
Canada, Italy and the Far East. All of the Company's purchases from foreign
suppliers are based on U.S. dollar values and are paid in U.S. dollars without
adjustments for currency rate fluctuations. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Overview."
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Warehousing, Distribution and Delivery
Seaman's purchasing strategy of pre-selecting and stocking specific
merchandise in its warehouses together with the size of its warehouses enables
the Company to take advantage of purchasing efficiencies and to store large
amounts of certain merchandise in order to ensure quick delivery. The majority
of items sold in Seaman's stores are delivered to the customer within two weeks,
and in some instances within a few days. The Company believes that such quick
delivery provides it with a distinct advantage in its competitive markets.
The Company operates three warehouses to store its inventories of merchandise
which are located in Woodbridge, New Jersey (the "Woodbridge warehouse"),
Central Islip, New York (the "Islip warehouse") and Cleveland, Ohio (the
"Cleveland warehouse"). The Woodbridge warehouse, which is approximately
450,000 square feet, is a leased facility. It services Seaman's seven northern
New Jersey stores, its six Philadelphia area stores and five of its New York
stores. Approximately 40% of Seaman's sales in fiscal 1996 were delivered from
this facility. The Islip warehouse is owned and operated by the Company and has
approximately 248,000 square feet that services Seaman's stores in Connecticut
and its remaining New York stores. Approximately 30% of the Company's sales in
fiscal 1996 were delivered from this facility. The Cleveland warehouse, which is
a leased facility, is approximately 100,000 square feet and services the Ohio
stores. The term on this lease expires on May 30, 1997 and the Company is
presently seeking other warehouse space. See "Properties". The balance of the
inventory is stored with and delivered from either a public warehouse or certain
suppliers who store and deliver goods for the Company. The Company believes that
these warehouses will be sufficient to support Seaman's deliveries in its
existing market areas over the next two fiscal years.
In April of 1996 the Company converted its Islip warehouse to a full radio
frequency inventory control system ("RF System"). The Company plans to convert
its Woodbridge warehouse to a similar RF System in August 1996. The Company has
no plans to connect its Cleveland warehouse to an RF System in the near future.
Merchandise is delivered from the Woodbridge, Islip and Cleveland warehouses
to customers by two delivery companies, which also collect cash balances due
from customers as agents for the Company. The Company has written contracts
with the delivery companies whereby the amounts paid by the Company to these
companies vary depending on the volume of merchandise delivered and the distance
traveled. The contracts with these delivery companies are material to the
Company. If one of the delivery companies were to cease doing business with the
Company, the other company could replace it or another delivery company could be
found without a material impact on the delivery process. It would be difficult,
however, to replace both delivery companies at the same time due to the start-up
time necessary to familiarize a new delivery company with the Company's
operations.
The Company also permits customers to pick up some merchandise directly from
its stores, clearance centers and warehouses. Certain merchandise, particularly
store display items, discontinued styles and clearance items, is delivered
directly from Seaman's stores and clearance centers by small independent
truckers.
4
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Advertising and Promotions
The Company believes it enjoys widespread name recognition in its current
market areas, primarily due to intensive, ongoing mass media advertising
campaigns utilizing the Company's trademarks "Seaman's/(R)/," "See Seaman's
First/(R)/," "Seaman's Plus/(R)/" and "The Package/(R)/." Advertising and
sales promotions are important parts of Seaman's overall merchandising strategy,
emphasizing the reputation of the Company as a quality retailer and the value of
"The Package/(R)/" concept of merchandising. See "Business - Marketing and
Merchandising." Approximately 43% of Seaman's advertising budget for fiscal
1996 was for local television and radio advertising and the remaining 57% was
for advertising in major New York, Philadelphia and Cleveland metropolitan area
newspapers and for the distribution of color circulars in newspapers.
Historically, the Company has not used direct mail as a significant part of its
advertising programs.
In the last few years, the Company has instituted an additional area of focus
in its advertising strategy, concentrating on corporate image advertising to
increase consumer awareness of Seaman's history and reputation and to
communicate Seaman's commitment to value pricing, product quality, customer
service and quick delivery. See "Business - Marketing and Merchandising." The
limited warranty program and the emphasis on value, quality and customer service
in Seaman's advertising are designed to improve consumer perception of the
Company as a quality and value-oriented retailer.
In addition to this additional focus on institutional, corporate image
advertising, the Company continues to offer and advertise credit and product
promotions on a regular basis. Seaman's product promotions usually offer
discounted prices on specific individual items and on items that are
merchandised together in "The Package/(R)/" approach.
One of Seaman's most successful promotions has been its "No/No/No" campaign,
which offers qualifying "Seaman's Plus/(R)/" credit card customers no down
payment (exclusive of sales tax and delivery charges), deferred payments and
interest free terms for a specified period, generally three to four months, on
certain purchases. These promotions not only serve to bolster sales but have
the added effects of providing additional customers for the "Seaman's Plus/(R)/"
credit card program and an increased possibility that customers will become
repeat customers through continued use of their "Seaman's Plus/(R)/" credit
card. See "Business - Credit Operations."
Information Systems
Since July 1994, the Company has been utilizing a new computer system. The
system integrates Seaman's financial, purchasing and inventory functions and
enables management to access credit, sales and inventory information quickly,
while providing many operating efficiencies for the Company. The planning for
this system began in December 1992 and cost the Company approximately $3 million
to implement. In April 1996, the Company installed an RF System in its Islip
warehouse and plans to complete installation of a similar system in its
Woodbridge warehouse in August 1996.
5
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Credit Operations
The Company offers its customers the option to make purchases using cash, the
"Seaman's Plus/(R)/" credit card or other major credit and charge cards
(MasterCard, Visa, Optima and Discover credit cards and the American Express
card). Unless the Company finances the customer's purchase, the Company
requires a deposit covering sales tax and delivery charges when a sale is made,
with the balance payable upon or prior to delivery of the merchandise.
The Company has provided in-house credit for its customers since the early
1980s. In April 1994, Seaman's introduced the "Seaman's Plus/(R)/" credit card,
which is offered to qualified customers for the purchase of merchandise at any
of Seaman's stores. The Company currently offers special credit terms to its
cardholders on a promotional basis, such as no down payment on the furniture,
deferred payments and interest free promotions under the "No/No/No" program.
See "Business - Advertising and Promotions." Those customers who are approved
for credit and utilize the "Seaman's Plus/(R)/" credit card, may spend up to
their approved credit limit on furniture purchases with a nominal down-payment.
In April 1994, the Company upgraded its applicant credit approval system to a
new statistically derived point-scoring system. The Company is enhancing this
approval system on an ongoing basis. Convenient, in-store credit approvals for
Seaman's customers are processed in a matter of minutes.
The Company uses an outside service to process applications and provide
billing and collection services on it's "Seaman's Plus (R)" credit card. In
April 1994, the Company entered into a five year agreement with "SPS" Payment
Systems, Inc. to provide these services.
Seasonality and Cyclicality
The Company's business generally is not subject to significant seasonal
variations. However, the Company's business is significantly influenced by the
general economy, consumer confidence and disposable income, and the housing
markets in the areas where its stores are located.
Trademarks
The Company's name is well established in the current markets served by the
Company's stores, and management believes that the reputation of that trade name
is important. The Company and its subsidiaries do not have any material patents
or trademarks, except for the Company's trademarks "The Package/(R)/," "See
Seaman's First,/(R)/" "Seaman's Plus/(R)/" and "Fabric Bond/(R)/". The Company
is in the process of registering an additional trademark, "The Sensible Way to a
Beautiful Home/(TM)/."
6
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Employees
As of April 30, 1996, the Company had 1,057 full-time employees. Four
collective bargaining agreements with Local 875 of the International Brotherhood
of Teamsters are currently in force. Contracts covering the employment of the
New York, New Jersey, Connecticut and Philadelphia sales staff, the New York,
New Jersey, Connecticut, Philadelphia store porters and certain Woodbridge
warehouse staff are due to expire on January 2, 1997, February 28, 1997 and
August 15, 1997, respectively. Although not yet signed, the Company has
negotiated a new collective bargaining agreement covering union members at the
Islip warehouse. Pursuant to this new agreement, the union members at the Islip
warehouse are receiving medical coverage from U.S. Healthcare. Except for the
Islip union members, under the collective bargaining agreements with Local 875,
the Company contributes to the union's welfare and pension funds. For its
nonunion employees, the Company provides health, dental, life and disability
insurance coverage. The Company also has a defined contribution 401(k) savings
plan covering nonunion employees. The Company has never had a strike or work
stoppage.
1988 Leveraged Buyout and Subsequent Reorganization
Following an initial public offering of Seaman's common stock in 1985 and a
secondary offering in 1986, the Company was taken private in a leveraged buyout
(the "LBO") by affiliates of Kohlberg Kravis Roberts & Co., L.P. in 1988,
incurring debt of approximately $360 million. The Company experienced a
considerable, unanticipated decline in sales volume, operating income and
liquidity in the years 1989 through 1991 due, among other things, to changes in
business philosophy (including cutting merchandise margins, de-emphasizing "The
Package/(R)/" concept and expanding Seaman's emphasis on sales events in its
advertising) and the debt burden that resulted from the LBO, and was exacerbated
further by a significant economic recession in the United States that was
especially severe in the northeastern United States. Thereafter, the Company
filed for bankruptcy protection under Chapter 11 ("Chapter 11") of the United
States Bankruptcy Code in January 1992. The Company emerged from Chapter 11
proceedings in October 1992, with its outstanding indebtedness having been
reduced from approximately $360 million to approximately $13 million. As part
of its Chapter 11 proceedings, the Company adopted "fresh start reporting."
Current senior management of the Company was appointed by the Board of Directors
immediately following Seaman's emergence from Chapter 11 proceedings.
Item 2. PROPERTIES
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The Company currently operates 38 stores: 27 stores in the New York,
New Jersey and Connecticut Tri-State Area, six stores in the Philadelphia
metropolitan area and five stores in the Cleveland/Akron metropolitan area.
Most of Seaman's stores are located near heavily populated areas, shopping malls
or other retail operations and are near major highways or other major
thoroughfares. Seaman's stores range in size from approximately 10,000 to
47,000 square feet, and most of each store is devoted to selling space. The
average selling space per store is approximately 23,000 square feet. No store
accounted for more than 10% of the Company's net sales for fiscal 1996.
7
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The opening of the five stores in the Cleveland/Akron area is the
Company's initial expansion beyond the Northeast. The Cleveland stores range in
size from approximately 10,000 square feet to 37,000 square feet. One of the
locations is presently only 10,000 square feet; however, the lease provides that
the landlord must, within one year of the signing of the lease, commence
building an additional 10,000 - 15,000 square feet onto the store.
The Company has signed a lease for a store on White Plains Road in The
Bronx, which will replace the Company's existing store on Bruckner Boulevard,
the lease for which expires in May 1998. The Company has been able to reach
agreement with the landlord of the existing store allowing termination of that
lease when the new store opens. The new store will be part of an approximately
100,000 square foot shopping center, which is currently under construction.
Occupancy is expected in the fall of 1996.
All of Seaman's stores are leased. See Note 10 of the Notes to
Consolidated Financial Statements for information with respect to specific
leases. The terms for the 38 leases expire at various times in the years from
1998 through 2022 with many having options to renew for additional periods.
There can be no assurances that the leases that expire will be renewed or
renegotiated on the same terms.
As discussed above, the Company operates three warehouse facilities:
the Woodbridge, New Jersey warehouse, the Central Islip, New York warehouse and
the Cleveland, Ohio warehouse. The Woodbridge warehouse, which is approximately
450,000 square feet, is leased. This lease expires in 2002 with an option to
renew for eight additional years. The Islip warehouse is owned by the Company
and has approximately 248,000 square feet, of which 180,000 square feet was
completed in March 1987 at a cost of $10.7 million financed, in part, by a $6.0
million industrial revenue bond issued by the Town of Islip, New York, which has
a floating interest rate equivalent to the prime lending rate plus 1% and is
payable monthly. The Company is presently in negotiations with Fleet Bank to
secure a mortgage on the Islip warehouse to pre-pay the industrial revenue bond.
At April 30, 1996, the unpaid balance on the industrial revenue bond was $4.0
million. The Cleveland warehouse which is approximately 100,000 square feet is
leased. The initial term of this lease is for a period of 18 months and will
expire on May 30, 1997. The Company decided not to exercise an option it had to
extend the term of this lease. It is currently seeking other warehouse space
while continuing discussions with the landlord of the present facility on
possibly staying at that location. The Company believes that the Islip,
Woodbridge and Cleveland warehouses have sufficient capacity to support Seaman's
near term planned expansion in the current market areas they serve. See
"Business - Warehousing, Distribution and Delivery."
The Company's executive offices are located in a 40,000 square foot
leased facility located in Woodbury, New York. This lease expires in 2002 with
an option to renew for five additional years. The Company believes that its
executive offices are sufficient to accommodate current anticipated growth.
The Company also owns approximately 16 acres of undeveloped land
located in Bridgeport, New Jersey, which property is being marketed for sale.
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Item 3. LEGAL PROCEEDINGS
-----------------
Previously reported in the Company's 10-Q for the quarter ended
October 31, 1995.
Item 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITY HOLDERS
------------------------
None.
PART II.
--------
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MARKETS
-------------------------------
The Company's common stock, par value $0.01 per share (the "Common
Stock") became listed on the Nasdaq National Market on June 8, 1993. Prior to
that it was quoted on the National Quotation System's "pink sheets." The common
stock closed at $17 9/16 on July 15, 1996.
The following table sets forth (as reported by Nasdaq National Market)
for the periods indicated the prices of the common stock.
<TABLE>
<CAPTION>
Fiscal 1996 High Low Close
----------- ---- --- -----
<S> <C> <C> <C>
4th Quarter 19 3/4 15 18 1/2
3rd Quarter 19 1/2 17 1/2 18 3/8
2nd Quarter 19 3/4 16 3/4 19 3/4
1st Quarter 21 18 3/4 18 3/4
Fiscal 1995 High Low Close
----------- ---- --- -----
4th Quarter 24 1/4 19 1/2 20 1/2
3rd Quarter 22 3/4 16 1/4 20 7/8
2nd Quarter 17 1/2 15 17
1st Quarter 16 1/4 13 1/16 16
</TABLE>
These quotations reflect inter-dealer prices, without retail markups,
markdowns or commissions.
The number of record holders of the Company's Common Stock as of July
15, 1996 was approximately 280. Pursuant to the Company's Amended and Restated
Stock Option Plan, 976,205 shares of the Common Stock are subject to outstanding
options at April 30, 1996. See "The Company's Proxy Statement for 1996 Annual
Stockholders Meeting."
The Company has never paid any cash dividends on its stock.
9
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ITEM 6. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(Amounts in Thousands)
----------------------------------------------------------------------------------------
Proforma
Year Year Year Twelve-month Year
ended ended ended Period ended ended
April 30, 1996 April 30, 1995 April 30, 1994 April 30, 1993(1) April 30, 1992
---------------- ---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues:
Net Sales $229,505 $215,857 $170,348 $162,576 $220,456
Net Finance Charge Income 14,036 12,364 7,865 8,490 6,722
------------- ------------- ------------- ------------- -------------
Total 243,541 228,221 178,213 171,066 227,178
------------- ------------- ------------- ------------- -------------
Operating Costs & Expenses:
Cost of sales, including
Buying and Occupancy costs 152,982 138,038 112,648 109,904 159,078
Selling, General and Administrative 83,094 74,691 60,159 63,171 80,974
Amortization and Writedown
of Goodwill - - - - 51,842
------------- ------------- ------------- ------------- -------------
Total 236,076 212,729 172,807 173,075 291,894
------------- ------------- ------------- ------------- -------------
Income (Loss) from Operations 7,465 15,492 5,406 (2,009) (64,716)
Interest Expense (1,748) (1,707) (1,854) (1,347) (11,841)
Interest Income 878 561 694 507 638
Reorganization Charges - - - (8,033) (6,648)
------------- ------------- ------------- ------------- -------------
Income (Loss) before Income Tax
and Extraordinary Credits 6,595 14,346 4,246 (10,882) (82,567)
Income Tax (Expense)/Benefit (2,700) (5,738) 2,694 - -
------------- ------------- ------------- ------------- -------------
Income (Loss) before
Extraordinary Credits 3,895 8,608 6,940 (10,882) (82,567)
Extraordinary Credits - - - 353,569 -
------------- ------------- ------------- ------------- -------------
Net Income (Loss) $3,895 $8,608 $6,940 $342,687 ($82,567)
============= ============= ============= ============= =============
</TABLE>
(1) Combines arithmetically the five month period ended September 30,
1992 and the seven month period ended April 30, 1993. The 1993
twelve-month period includes five months of activities while the
Company operated as a Debtor-in-Possession and seven months of
activities after emergence from Chapter 11 and debt discharge.
<PAGE>
The following table sets forth for the periods indicated certain items
in selected financial data as a percentage of sales, and the percentage
change of such items from the indicated prior period.
<TABLE>
<CAPTION>
Percentage of Net Sales Percentage Increase (Decrease)
----------------------------------------- ----------------------------------
Proforma Year Ended April 30,
Year Year Year Twelve-month 1996 1995 1994
ended ended ended Period ended vs vs vs
4/30/96 4/30/95 4/30/94 4/30/93 (1) 1995 1994 1993
----------------------------------------- ----------------------------------
Revenues:
<S> <C> <C> <C> <C> <C> <C> <C>
Net Sales 100.0 100.0 100.0 100.0 6.3 26.7 4.8
Net Finance Charge Income 6.1 5.7 4.6 5.2 13.5 57.2 -7.4
Cost of sales, including
Buying and Occupancy costs 66.7 63.9 66.1 67.6 10.8 22.5 2.5
Selling, General and Administrative 36.2 34.6 35.3 38.9 11.3 24.2 -4.8
Income (Loss) from Operations 3.3 7.2 3.2 -1.3 -51.8 186.6 369.1
Interest Expense -0.8 -0.8 -1.1 -0.8 2.4 -7.9 37.6
Interest Income 0.4 0.3 0.4 0.3 56.5 -19.2 36.9
Reorganization Charges - - - -4.9 - - -100.0
Income (Loss) before Income Tax
and Extraordinary Credits 3.0 6.7 2.5 -6.7 -54.0 237.9 139.0
Income Tax (Expense)/Benefit -1.2 -2.7 1.6 - -52.9 313.0 100.0
Income (Loss) before
Extraordinary Credits 1.7 4.0 4.1 -6.7 -54.8 24.0 163.8
Extraordinary Credits - - - 217.5 - - -100.0
Net Income(Loss) 1.7 4.0 4.1 210.8 -54.8 24.0 -98.0
</TABLE>
(1) Combines arithmetically the five month period ended September 30,
1992 and the seven month period ended April 30, 1993. The 1993
twelve-month period includes five months of activities while the
Company operated as a Debtor-in-Possession and seven months of
activities after emergence from Chapter 11 and debt discharge.
11
<PAGE>
<TABLE>
<CAPTION>
(Amounts in Thousands)
----------------------------------------------------------------------------------
at at at at at
April 30, April 30, April 30, April 30, April 30,
1996 1995 1994 1993 1992
Balance Sheet Data: ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Cash & Cash Equivalents $3,436 $20,431 $23,512 $26,353 $15,713
Other Current Assets 101,142 80,585 68,207 54,455 68,598
Current Liabilities 37,631 43,350 35,841 25,635 405,205(1)
Working Capital (Deficiency) 66,947 57,666 55,878 55,173 (320,894)
Total Assets 159,251 153,334 136,586 113,436 126,334
Long-term Debt 20,085 12,328 12,915 13,278 13,626
Stockholders' Equity (Deficiency) $101,535 $97,656 $87,830 $74,523 ($292,497)
</TABLE>
(1) Includes liabilities subject to settlement under reorganization
proceedings of $381,540 at April 30, 1992.
12
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
----------------------------------------------
The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with "Selected
Consolidated Financial Information," the Consolidated Financial Statements and
Notes thereto and the other information included elsewhere in this Form 10-K.
The Company's fiscal year ends on April 30. Fiscal years are
identified according to the calendar year in which they end. For example, the
fiscal year ended April 30, 1996 is referred to as "fiscal 1996."
Overview
The Company is engaged in a single line of business, the retail sale
of residential furniture, and the Company's revenues are principally derived
from such sales. The Company also has a proprietary credit card program which
is operated to promote its furniture business. In April 1994, after
significantly revising its credit card program and appointing a new outside
service provider, the Company launched the "Seaman's Plus/(R)/" credit card as
an integral part of its furniture business. For fiscal 1996, net finance charge
income from the Company's credit card operations represented 6.1% of net sales.
The Company's most significant category of operating expenses is the
cost of sales, which includes the cost of goods sold, warehousing, distribution
and delivery (net of delivery charges to customers) expenses, rent and
depreciation for the stores and buying staff expenses, including payroll. The
category of selling, general and administrative expenses is the other
significant element in the Company's cost structure. They include store
(excluding rent and depreciation) expenses, advertising, corporate
administration (excluding buying staff) expenses and the costs of the credit
card program, including write-offs.
The Company imports a substantial amount of merchandise directly from
foreign suppliers. Imported merchandise represented approximately 30% to 35% of
the Company's cost of goods sold during the periods discussed hereinafter. The
Company pays for all of such imported merchandise in U.S. dollars based on U.S.
dollar prices fixed at the time of the Company's order. The Company does not
issue open purchase orders as to price and therefore does not bear foreign
currency exchange rate fluctuation risk in connection with such import
purchases; that risk is borne by the Company's suppliers. While foreign
currency exchange rates affect the U.S. dollar prices that suppliers quote to
the Company, the Company is not obligated to purchase merchandise if a supplier
seeks to increase the price established at the time of the Company's order. The
Company is able to purchase replacement merchandise from both domestic and
foreign suppliers.
In connection with the LBO in February 1988, the Company incurred debt
of approximately $360 million, which influenced both strategic and day-to-day
management decisions. The Company then experienced a considerable,
unanticipated decline in sales volume,
13
<PAGE>
operating income and liquidity in the years 1989 through 1991 due, inter alia,
to changes in business philosophy (including, for example, reducing retail gross
margin, de-emphasizing "The Package/(R)/" concept and expanding Seaman's
emphasis on sales events in its advertising) and the debt burden that resulted
from the LBO. The Company's situation was exacerbated by a significant economic
recession that was especially severe in the northeastern United States. Although
the LBO debt was restructured in November 1989, in December 1991 the Company was
facing possible cross-defaults under its senior and subordinated debt
obligations and, in January 1992, filed for Chapter 11 bankruptcy protection.
See "Business - 1988 LBO and Subsequent Reorganization." Shortly after filing
for bankruptcy protection, the Company closed 15 of its then 37 stores. The
Company emerged from Chapter 11 proceedings in October 1992 with its outstanding
indebtedness having been reduced from approximately $360 million to
approximately $13 million. As part of its Chapter 11 proceedings, the Company
also adopted "fresh start reporting." Current senior management of the Company
was appointed by the Board of Directors immediately following the Company's
emergence from Chapter 11.
Results of Operations
Fiscal Year Ended April 30, 1996 Compared to Fiscal Year Ended April 30, 1995
- - -----------------------------------------------------------------------------
Net sales for fiscal 1996 of $229.5 million increased by $13.6 million
(or 6.3%) compared to net sales for fiscal year 1995. The increase resulted
from the opening of nine new stores commencing in September 1995. Comparable
store sales for fiscal 1996 were $204.8 million, a decrease of $11.1 million (or
5.1%) compared to comparable store sales of $215.9 million for fiscal 1995.
Management believes that this decrease is primarily attributable to the weak
sales environment in the furniture industry and severe winter weather conditions
in the Company's markets.
Net finance charge income of $14.0 million for fiscal 1996 increased
by $1.7 million (or 13.5%) from fiscal 1995, primarily due to an increase in the
average accounts receivable balance in fiscal 1996 compared to fiscal 1995.
Since the Company instituted the "Seaman's Plus/(R)/" credit card in April 1994,
proprietary credit sales grew from 30% of total sales in fiscal 1994 to 46% in
fiscal 1995 and have more recently leveled off at 40% in fiscal 1996.
As a result of the foregoing increases, total revenues for fiscal 1996
were $243.5 million, an increase of $15.3 million (or 6.7%) over the comparable
prior year period.
Cost of sales increased by $14.9 million (or 10.8%) between the two
periods, principally due to the increase in net sales, the opening of nine new
stores and a warehouse, and decreased gross margins due to the competitive
retail environment.
Selling, general and administrative expenses increased by $8.4 million
(or 11.3%) between the two periods, principally due to the opening of nine
stores and an increase in the allowance for bad debts due to the higher customer
accounts receivable balance. The Company also incurred increased advertising
expenses due to its entrance into a new market.
14
<PAGE>
As a result of the foregoing, income from operations was $7.5 million
for fiscal 1996 compared to $15.5 million for fiscal 1995.
Net interest expense of $870,000 for fiscal 1996 decreased 24.1% from
$1.1 million in fiscal 1995 due to increased interest income attributed to
higher cash balances. The Company's interest expense primarily consists of
interest on its capital leases and on the mortgage it holds for its Islip
warehouse.
The provision for income taxes for fiscal 1996 is based upon an
effective income tax rate of 41%. As of April 30, 1996, the Company had a long-
term deferred tax asset of $11.9 million and a current deferred tax asset of
$5.7 million. The long-term deferred tax asset is primarily related to net
operating losses. There are limitations on the time periods during which these
deferred tax assets can be used and on the amounts that the Company can use each
year. See Note 4 of Notes to Consolidated Financial Statements.
As a result of the foregoing, the Company's net income for fiscal 1996
was $3.9 million compared to net income of $8.6 million for fiscal 1995.
Fiscal Year Ended April 30, 1995 Compared to Fiscal Year Ended April 30, 1994
- - -----------------------------------------------------------------------------
Net sales for fiscal 1995 of $215.9 million increased by $45.5 million
(or 26.7%) compared to net sales for fiscal year 1994. Of such increase, $16.1
million resulted from the opening of five new stores commencing in September
1994 and the balance was primarily attributable to the implementation of new
management strategies, including a redirected advertising focus and an increased
emphasis on the Company's credit card operations, including the implementation
of the "Seaman's Plus/(R)/" credit card. Comparable store sales for fiscal 1995
were $198.2 million, an increase of $28.3 million (or 16.7%) compared to
comparable store sales of $169.9 million for fiscal 1994. Management believes
that this increase is primarily attributable to the redirected advertising
focus, customer acceptance of the "Seaman's Plus/(R)/" credit card, the ongoing
store redesign and renovation program and the use of a broadened merchandise mix
in the Company's stores.
Finance charge income of $12.4 million for fiscal 1995 increased by
$4.5 million (or 57.2%) from fiscal 1994, primarily due to an increase in sales
made on the "Seaman's Plus/(R)/" credit card of $16.0 million in fiscal 1995
compared to fiscal 1994. Sales made on the "Seaman's Plus/(R)/" credit card
increased to approximately 46% of net sales in fiscal 1995 from approximately
30% of net sales in fiscal 1994.
As a result of the foregoing increases, total revenues for fiscal 1995
were $228.2 million, an increase of $50.0 million (or 28.1%) over the comparable
prior year period.
Cost of sales increased by $25.4 million (or 22.5%) between the two
periods, principally due to the increase in net sales, but decreased as a
percentage of net sales from 66.1% for fiscal 1994 to 63.9% for fiscal 1995.
The decrease as a percentage of net sales was primarily due to the Company's
operating leverage, which supported the increase in net sales without
corresponding
15
<PAGE>
increases in fixed operating costs (in particular, warehousing expenses), and
an improvement in retail gross margin.
Selling, general and administrative expenses increased by $14.5
million (or 24.2%) between the two periods, principally due to the opening of
five stores and an increase in the allowance for bad debts due to the higher
customer accounts receivable balance. As a percentage of net sales, however,
selling, general and administrative expenses decreased from 35.3% for fiscal
1994 to 34.6% for fiscal 1995. The decrease as a percentage of net sales was
principally due to operating leverage, in particular with respect to advertising
and corporate administration expenses. Additionally, the Company maintained
cost controls while continuing to increase its net sales volume.
As a result of the foregoing, income from operations improved to $15.5
million for fiscal 1995 compared to $5.4 million for fiscal 1994.
Net interest expense of $1.2 million for fiscal 1995 remained constant
as compared to fiscal 1994. The Company's interest expense primarily consists
of interest on its capital leases and on the mortgage it holds for its Islip
warehouse.
The provision for income taxes for fiscal 1995, is based upon an
effective income tax rate of 40%. As of April 30, 1995, the Company had a long-
term deferred tax asset of $13.4 million and a current deferred tax asset of
$5.6 million. The long-term deferred tax asset is primarily related to net
operating losses that occurred following the LBO. There are limitations on the
time periods during which these deferred tax assets can be used and on the
amounts that the Company can use each year. In fiscal 1994, the Company recorded
a non-recurring income tax benefit of $4.2 million, which was principally a
result of the utilization of tax operating loss carryforwards. See Note 4 of
Notes to Consolidated Financial Statements.
As a result of the foregoing, the Company's net income for fiscal 1995
was $8.6 million compared to net income of $6.9 million for fiscal 1994.
Fiscal 1994 Compared to Twelve-Month Period Ended April 30, 1993
- - ----------------------------------------------------------------
The twelve-month period ended April 30, 1993 includes five months of
activities while the Company operated as a debtor-in-possession under Chapter 11
of the Bankruptcy Code and seven months after the Company emerged from its
Chapter 11 proceedings. While these five and seven-month periods are not
comparable, they have been arithmetically combined for purposes of an analysis
of variance from fiscal 1994 results. In the following discussion, the twelve-
month period ended April 30, 1993 is referred to as "fiscal 1993."
Net sales for fiscal 1994 of $170.3 million increased by $7.8 million
(or 4.8%) compared to net sales for fiscal 1993 principally due to the opening
of three new stores during fiscal 1994. Comparable store sales were $159.5
million and $158.9 million for fiscal years 1994 and 1993, respectively. While
comparable store sales were flat in fiscal 1994, management believes that fiscal
1994 was an important transitional year in that for the first time since fiscal
1988, the
16
<PAGE>
Company did not suffer a decline in comparable store sales, declines which had
ranged from approximately 4% to 8% during such fiscal years.
Finance charge income of $7.9 million for fiscal 1994 decreased by
$0.6 million (or 7.4%) compared to fiscal 1993. Although the dollar amount of
accounts receivable increased in fiscal 1994, the level of interest bearing
receivables during fiscal 1994 declined as a result of an increase in marketing
promotions offering deferred interest periods to customers using the Company's
proprietary credit card. The decline in the interest-bearing accounts
receivable resulted in lower finance charge income.
As a result of the foregoing, total revenues for fiscal 1994 of $178.2
million increased by $7.1 million (or 4.2%) over fiscal 1993.
Cost of sales increased by $2.7 million (or 2.5%) between the two
fiscal years, principally due to the increase in net sales, but decreased as a
percentage of net sales from 67.6% in fiscal 1993 to 66.1% in fiscal 1994. The
decrease as a percentage of net sales was primarily due to an increase in retail
gross margin resulting from changes in pricing policy whereby price mark-downs
were limited to only advertised items during sales promotions rather than
reducing prices on all merchandise storewide as had been done in the past. The
remaining items in the stores, although competitively priced, were not reduced
from their day-to-day prices.
Selling, general and administrative expenses decreased by $3.0 million
(or 4.8%) between the two fiscal years, and also decreased as a percentage of
net sales from 38.9% in fiscal 1993 to 35.3% in fiscal 1994. This decline,
which was achieved despite higher net sales, was primarily due to a reduction in
bad debt expenses, primarily resulting from improved collection procedures.
Reductions in rent for the Company's headquarters, in payroll and in data
processing costs also contributed to the decline in both absolute and percentage
terms.
As a result of the foregoing, income from operations was $5.4 million
for fiscal 1994 compared to a $2.0 million loss from operations for fiscal 1993.
Net interest expense of $1.2 million for fiscal 1994 increased by
38.1% compared to fiscal 1993 primarily due to a non-recurring imputed interest
credit in fiscal 1993. Reorganization charges resulting from the Company's
Chapter 11 proceedings decreased from $8.0 million in fiscal 1993 to zero in
fiscal 1994 due to the Company's emergence from Chapter 11 proceedings in
October 1992. At that time, the Company recognized a one-time extraordinary
credit of $353.6 million as a result of the cancellation of outstanding
indebtedness in connection with its Bankruptcy Court-approved plan of
reorganization. See Note 5 of Notes to Consolidated Financial Statements.
The Company recorded a non-recurring income tax benefit in fiscal 1994
of $4.2 million, which was principally a result of the utilization of tax
operating loss carryforwards. In fiscal 1993, no such benefit was recorded and
the Company reported no tax expense.
17
<PAGE>
As of April 30, 1994, the Company evaluated the realizability of its
aggregate deferred tax assets, which arose as a result of temporary differences
between book and taxable income and net operating loss carryforwards, and
determined it was appropriate to reverse a portion of the evaluation allowance
previously recorded. The results of that were to increase paid-in-capital by
$8.9 million for that portion of the deferred tax assets which arose prior to
the Company's emergence from its Chapter 11 proceedings and to record $4.3
million as a benefit against the income tax provision for the portion of the
deferred tax assets that arose subsequent to the Company's emergence from its
Chapter 11 proceedings.
As a result of the foregoing, the Company's net income for fiscal 1994
was $6.9 million as compared to $342.7 million for fiscal 1993 (which was
principally attributable to the above-described cancellation of indebtedness).
Liquidity and Capital Resources
At April 30, 1996, the Company had working capital of $66.9 million.
The Company's principal sources of liquidity are earnings before income taxes,
depreciation and amortization, and borrowings under the $40 million Revolving
Credit and Security Agreement (the "Loan Agreement") with the Bank of New York
Commercial Corporation and NatWest Bank N.A. as co-lenders (the "Lenders").
The Company's principal uses of cash are working capital needs, capital
expenditures and debt service obligations, including capitalized lease costs.
The Company's cash and cash equivalents decreased in fiscal 1996, 1995
and 1994. Without the proceeds from the Loan Agreement, the Company could
continue to experience negative cash flows principally because of potential
increases in the customer accounts receivable balance, capital expenditures and
potential increases in inventory to support higher sales volume.
The Company's working capital increased from $57.7 million at April
30, 1995 to $66.9 million at April 30, 1996. Cash and cash equivalents declined
from $20.4 million at April 30, 1995 to $3.4 million at April 30, 1996. As of
April 30, 1996, the Company had stockholders' equity of $101.5 million. The
Company's largest asset at such date was accounts receivable of $65.7 million
(net of bad debt reserves). At April 30, 1996, $9.1 million was outstanding
under the Loan Agreement including letters of credit of approximately $700,000.
At April 30, 1996, the Company had an additional $11.7 million in long term
debt, consisting of capitalized lease obligations and an industrial revenue bond
in connection with its Central Islip, New York warehouse facility. See
"Properties."
The Company entered into the Loan Agreement on April 29, 1996. The
term of the Loan Agreement is three years. The Loan Agreement includes
provisions for issuance of up to $5 million aggregate amount of letters of
credit. The Company granted to the Lenders a security interest in the Company's
customer receivables and all General Intangibles as defined in the Loan
Agreement. The Loan Agreement contains covenants and provisions which are
customary for a secured revolving credit facility. The funds available under the
Loan Agreement will be used primarily for capital expenditures and general
corporate purposes.
18
<PAGE>
At the same time that the Company entered into the Loan Agreement, it
redeemed certain receivables- backed securities designated "8.10% Class A Credit
Card Participation Certificates, Series 1995-1" in the amount of $20 million,
from a third party investor not affiliated with the Company. These Certificates
were issued in April 1995 by the Seaman Furniture Credit Card Master Trust which
originated by Seaman Receivables Corporation, a wholly owned special purpose
finance subsidiary of the Company.
Capital expenditures during fiscal 1994, fiscal 1995 and fiscal 1996
were, $4.5 million, $6.5 million and $8 million, respectively. Capital
expenditures during fiscal 1994 were primarily attributable to the acquisition
of a new computer system that became operational in July 1994, for new store
openings and for existing store renovations. Capital expenditures during fiscal
1995 and 1996 were principally for new store openings and store renovations and
most recently a radio frequency system for the Islip warehouse. See "Business -
Store Redesign and Renovation."
Unless a customer is making a purchase using the "Seaman's Plus/(R)/"
credit card, the Company generally requires customers to make a down payment
(generally 30% of the sales price) at the time an order is placed, with the
balance payable upon or prior to delivery of the merchandise. With the
introduction of the "Seaman's Plus/(R)/" credit card, the percentage of sales
paid with cash, check or major credit cards (for which customers are generally
required to provide a down payment absent a special promotion) has changed from
approximately 69% in fiscal 1994, to approximately 54% in fiscal 1995 to
approximately 60% in fiscal 1996. The balance of the Company's sales for each
of such periods was financed internally from working capital on the Company's
proprietary credit card.
Customer deposits at April 30, 1994, April 30, 1995 and April 30, 1996
were $6.6 million, $7.5 million and $9.3 million, respectively. The relatively
low level of customer deposits on a given date compared to net sales for a
period reflects both the Company's quick delivery policy and customer use of the
"Seaman's Plus/(R)/" credit card. As the Company generates more sales with the
"Seaman's Plus/(R)/" credit card, the level of customer deposits is not expected
to change in tandem with changes in net sales.
When the Company opens a new store in an existing market, it is able
to leverage its fixed costs for advertising and corporate administration to
cover the new store. While its fixed costs for warehousing may not increase (if
there is existing warehouse capacity), increased expansion even in existing
markets will ultimately lead to increased warehousing costs. As the Company
opens stores in new markets, however, the Company's fixed costs for warehousing,
advertising and corporate administration are likely to increase as existing
warehousing facilities are not likely to be able to service new, geographically
distant markets, existing advertising programs will not promote the Company and
its merchandise in such new markets and new personnel will likely be needed to
manage the new market areas. However, additional expansion in a new market area
should not result in greater fixed costs as the new warehouse facilities,
advertising programs and administrative framework should be sufficient to
support reasonable, planned expansion in such markets. In addition, as the
Company expands into urban areas that are less populated than the greater New
York metropolitan area, and as the Company opens stores in suburban areas in new
and existing markets, the Company expects average sales per store and sales per
square foot of
19
<PAGE>
selling space to be less than that of existing stores due to differences in
population density and size of local market.
The Company currently expects that the borrowings under the Loan
Agreement together with the cash from operations, will be sufficient to meet
the Company's planned capital expenditures, long-term debt (composed of capital
lease obligations and principal on the Company's industrial revenue bond and
repayments on the revolving line) and currently anticipated working capital
requirements through the end of fiscal 1998.
Inflation
Inflation has not had a material impact on the Company's operating
and occupancy costs.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
See Index to Financial Statements and Exhibits, which appears on
Page F-1 hereof.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
--------------------------------------
None.
PART III.
---------
Information required by Item 10 "Directors and Executive Officers of
the Registrant," Item 11 "Executive Compensation," Item 12 "Security Ownership
of Certain Beneficial Owners and Management" and Item 13 "Certain Relationships
and Related Transactions" of Regulation S-K are herein incorporated by reference
to the Proxy Statement for the 1996 Annual Meeting of Stockholders of the
Company.
PART IV.
--------
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 10-K
------------------------
(a) Financial Statements
--------------------
See Index to Financial Statements and Schedules which appears on page
F-1 hereof.
(b) Reports on Form 8-K
-------------------
The Company filed a report on Form 8-K regarding the Revolving Loan
and Security Agreement on May 14, 1996 pursuant to Item 2.
20
<PAGE>
(c) Exhibits
--------
The exhibits listed on the Exhibit Index following the signature page
hereof are filed herewith in response to this Item.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SEAMAN FURNITURE COMPANY, INC.
By: /s/ Alan Rosenberg
-------------------------------------
Alan Rosenberg, President and
Chief Executive Officer
Date: July 25, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Alan Rosenberg
- - --------------------------------------------------
Alan Rosenberg, President, Chief Executive Officer Date: July 25, 1996
and Director
/s/ Peter McGeough
- - --------------------------------------------------
Peter McGeough, Executive Vice President, Chief
Financial and Administrative Officer Date: July 25, 1996
/s/ Steven H. Halper
- - --------------------------------------------------
Steven H. Halper, Executive Vice President, Date: July 25, 1996
Chief Operating Officer and Secretary
/s/ Coleen A. Colreavy
- - --------------------------------------------------
Coleen A. Colreavy, Vice President, Date: July 25, 1996
Corporate Controller and Chief Accounting Officer
21
<PAGE>
SIGNATURES
----------
/s/ Barry J. Alperin
- - -------------------------------------
Barry J. Alperin, Director Date: July 25, 1996
/s/ Kim Z. Golden
- - -------------------------------------
Kim Z. Golden, Director Date: July 25, 1996
/s/ Leo Peraldo
- - -------------------------------------
Leo Peraldo, Director Date: July 25, 1996
/s/ James B. Rubin
- - -------------------------------------
James B. Rubin, Director Date: July 25, 1996
/s/ Robert C. Ruocco
- - ------------------------------------
Robert C. Ruocco, Director Date: July 25, 1996
22
<PAGE>
SEAMAN FURNITURE COMPANY,INC. AND SUBSIDIARIES
Index to Financial Statements and Schedules
Page No.
--------
Financial Statements:
Independent Auditor's Reports F-2
Consolidated Balance Sheets, for the Years Ended
April 30, 1996 and 1995 F-3
Statements of Consolidated Operations, for the
Years Ended April 30, 1996, 1995 and 1994. F-4
Statements of Stockholder's Equity, for the Years
Ended April 30, 1996, 1995 and 1994. F-5
Statements of Consolidated Cash Flows, for the
Years Ended April 30, 1996, 1995 and 1994. F-6
Notes to Consolidated Financial Statements F-7
Schedules:
SCHEDULES OMITTED
Schedules not filed herewith are omitted because of the absence of
conditions under which they are required or because the information called for
is shown in the financial statements or notes thereto.
F-1
<PAGE>
[LOGO OF DELOITTE &
TOUCHE LLP
APPEARS HERE] -----------------------------------------------------
Two Jericho Plaza Telephone:(516)935-9000
Jericho, New York 11753-1683 Facsimile (516)935-9056
INDEPENDENT AUDITORS' REPORT
----------------------------
The Board of Directors and Shareholders
Seaman Furniture Company, Inc.:
We have audited the accompanying consolidated balance sheets of Seaman
Furniture Company, Inc. and Subsidiaries (collectively, the "Company") as of
April 30, 1996 and 1995 and the related statements of consolidated operations,
stockholders' equity and consolidated cash flows for the years ended April 30,
1996, 1995 and 1994. These consolidated financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company at April 30, 1996 and 1995 and the results of their operations and
their cash flows for the years ended April 30, 1996, 1995 and 1994 in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
June 14, 1996
- - ---------------
Deloitte Touche
Tohmatsu
International
- - ---------------
F-2
<PAGE>
<TABLE>
<CAPTION>
SEAMAN FURNITURE COMPANY, INC. AND SUBSIDIARIES
- - -----------------------------------------------
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1996 AND 1995 (in thousands of dollars)
- - --------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS NOTES 1996 1995
- - ------ ----- ---- ----
CURRENT ASSETS:
Cash and cash equivalents $ 3,436 $ 20,431
Accounts receivable - net 2,6 65,716 51,065
Merchandise inventories 2 27,796 23,423
Prepaid expenses and other 1,921 493
Deferred income tax benefit 4 5,709 5,604
-------- --------
Total current assets 104,578 101,016
PROPERTY AND EQUIPMENT-at cost 2
Land 2,724 2,724
Buildings and improvements 15,145 15,145
Furniture, fixtures and 13,199 10,928
office equipment
Leaseholds and leasehold 15,992 10,799
improvements -------- --------
Total 47,060 39,596
Less - Accumulated depreciation
and amortization (13,909) (10,698)
-------- --------
Property and equipment - net 33,151 28,898
PROPERTY FINANCED BY CAPITAL
LEASES (less accumulated
amortization of $3,366
at April 30, 1996,
and $2,955 at April 30, 1995 2 5,138 5,549
Deferred Income Tax Benefit 4 11,935 13,409
OTHER ASSETS (principally 4,449 4,462
deposits) -------- --------
TOTAL $159,251 $153,334
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
LIABILITIES AND
STOCKHOLDERS' EQUITY NOTES 1996 1995
- - -------------------- ----- ---- ----
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable - trade $ 11,022 $ 10,600
Accrued expenses and other 16,670 24,661
Current portion of
long-term debt 673 587
Customer deposits 2 9,266 7,502
-------- --------
Total current liabilities 37,631 43,350
-------- --------
LONG-TERM DEBT 3 20,085 12,328
-------- --------
COMMITMENTS AND
CONTINGENCIES 7
STOCKHOLDERS' EQUITY:
Preferred stock-$.01 par value;
authorized 1,000,000 shares
(no shares issued) - -
Common stock-$.01 par value;
authorized 15,000,000 shares;
issued 5,004,575 shares
at April 30, 1996 50 50
Additional paid-in capital 5 86,817 86,817
Retained earnings 20,225 16,330
-------- --------
107,092 103,197
Less: Treasury Stock, at
cost (467,534 and 466,742
shares at April 30, 1996
and 1995, respectively) (5,557) (5,541)
-------- --------
Stockholders' equity - net 101,535 97,656
-------- --------
TOTAL $159,251 $153,334
======== ========
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
SEAMAN FURNITURE COMPANY, INC. AND SUBSIDIARIES
- - -----------------------------------------------
STATEMENTS OF CONSOLIDATED OPERATIONS
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
(in thousands of dollars except per share amounts)
- - -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEAR ENDED
APRIL 30, APRIL 30, APRIL 30,
NOTES 1996 1995 1994
----- ----------- ----------- ----------
REVENUES:
Net sales 2 $229,505 $215,857 $170,348
Net finance charge income 14,036 12,364 7,865
-------- -------- ----------
Total 243,541 228,221 178,213
-------- -------- ----------
OPERATING COSTS AND
EXPENSES:
Cost of sales, including
buying and occupancy costs 152,982 138,038 112,648
Selling, general and
administrative 2 83,094 74,691 60,159
-------- -------- ----------
Total 236,076 212,729 172,807
-------- -------- ----------
INCOME FROM OPERATIONS 7,465 15,492 5,406
INTEREST EXPENSE (1,748) (1,707) (1,854)
INTEREST INCOME 878 561 694
-------- -------- ----------
INCOME BEFORE (PROVISION) BENEFIT
FOR INCOME TAXES 6,595 14,346 4,246
(PROVISION) BENEFIT FOR
INCOME TAXES 4 (2,700) (5,738) 2,694
-------- -------- ----------
NET INCOME $ 3,895 $ 8,608 $ 6,940
======== ======== ==========
NET INCOME PER SHARE 2 $0.78 $1.68 $ 1.37
======== ======== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
- - --------------------------------------------------------------------------------
F-4
<PAGE>
SEAMAN FURNITURE COMPANY, INC. AND SUBSIDIARIES
- - -----------------------------------------------
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 1996, 1995 AND 1994
(in thousands of dollars)
- - -------------------------
<TABLE>
<CAPTION>
Common Stock Additional
----------------- Paid-In Retained Treasury
Shares Amount Capital Earnings Stock
--------- ------ ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
Balances at May 1, 1993 5,000,000 $50 $73,691 $ 782 $ -
Issued common stock 2,500 -
Repurchase of treasury
stock (2,536)
Reversal of Valuation
Allowance for deferred
tax assets originating
prior to emergence from
Chapter 11 8,903
Net income for the year
ended April 30, 1994 6,940
--------- --- ------ ------ ------
Balances at April 30, 1994 5,002,500 50 82,594 7,722 (2,536)
Issued common stock 2,075 - 19
Repurchase of treasury
stock (3,005)
Reversal of Valuation
Allowance for deferred
tax assets originating
prior to emergence
from Chapter 11 4,204
Net income for the year 8,608
ended April 30, 1995 --------- --- ------ ------- -------
Balances at April 30, 1995 5,004,575 50 86,817 16,330 (5,541)
Repurchase of treasury
stock (16)
Net income for the year
ended April 30, 1996 3,895
--------- ------ ---------- -------- --------
Balances at April 30, 1996 5,004,575 $50 $86,817 $20,225 $(5,557)
========= ====== ========== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
SEAMAN FURNITURE COMPANY, INC. AND SUBSIDIARIES
- - -----------------------------------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE YEAR ENDED APRIL 30, 1996, 1995 AND 1994
(in thousands of dollars)
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
April 30, 1996 April 30, 1995 April 30, 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,895 $ 8,608 $ 6,940
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Depreciation and
amortization 4,156 3,143 2,676
Deferred income tax
benefit 1,369 613 (3,185)
Provision for bad debts 12,716 8,905 4,028
Noncash interest - - 200
Gain on sale of property - - (142)
Asset and liability
management:
Accounts receivable (7,367) (35,954) (11,592)
Merchandise inventories (4,373) (4,021) (2,321)
Prepaid expenses and
other assets (1,415) (1,820) (260)
Accounts payable 422 1,367 3,199
Accrued expenses and
other (7,991) 5,170 3,383
Customer deposits 1,764 890 172
-------- -------- --------
Net cash provided by (used
in) operating activities 3,176 (13,099) 3,098
-------- -------- --------
INVESTING ACTIVITIES:
Purchase of equipment (7,998) (6,472) (4,473)
Proceeds from sale of assets - - 1,521
-------- -------- --------
Net cash used in investing
activities (7,998) (6,472) (2,952)
-------- -------- --------
FINANCING ACTIVITIES:
Securitization of accounts
receivable (20,000) 20,000 -
Repayments under Debt
obligations (587) (505) (451)
Purchase of Treasury Stock (16) (3,005) (2,536)
Borrowings on lines of
credit 8,430 - -
-------- -------- --------
Net cash (used in) provided
by financing activities (12,173) 16,490 (2,987)
-------- -------- --------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (16,995) (3,081) (2,841)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 20,431 23,512 26,353
-------- -------- --------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 3,436 $ 20,431 $ 23,512
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
SEAMAN FURNITURE COMPANY, INC. AND SUBSIDIARIES
- - -----------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - ------------------------------------------
1. DESCRIPTION OF BUSINESS
Seaman Furniture Company, Inc. (the "Company"), a Delaware corporation, is
one of the largest regional specialty furniture retailers in the
Northeastern United States. The Company currently operates a chain of 38
stores in the greater New York, Philadelphia and Cleveland metropolitan
areas. The Company was incorporated in 1985 as a successor to the business
founded by Julius Seaman, who started the business in Brooklyn in 1933.
2. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
Principles of Consolidation - The accompanying consolidated financial
---------------------------
statements include the accounts of Seaman Furniture Company, Inc. and its
wholly-owned subsidiaries. All significant intercompany transactions and
balances have been eliminated in consolidation.
Sales and Customer Deposits - Sales are recorded upon the delivery of
---------------------------
merchandise to customers. Customer deposits are recorded as a liability
until delivery of the merchandise to customers or until the deposit is
forfeited. Income from forfeited deposits is recorded using estimates
determined from the Company's experience with prior forfeitures.
Cash Equivalents - Cash equivalents consist of highly liquid investments
----------------
primarily in commercial paper and certificates of deposit, all of which
have a maturity of three months or less. All securities, which are held
to maturity, are stated at cost, adjusted for previous amortized or
discount accreted, if any. The Company has the intent and ability to hold
such securities to maturity. As of April 30, 1996 and 1995, the Company did
not hold any available-for-sale securities. Interest earned on investment
securities is included in interest income.
Accounts Receivable - Accounts receivable consist principally of interest-
-------------------
bearing amounts due from retail customers under financing agreements which
provide for monthly payments over various terms, substantially all of which
are between 24 and 33 months. Accounts receivable installments due in more
than one year are included in current assets in accordance with standard
industry practices. It is not practicable to determine the amount of such
installments.
The activity in the allowance for doubtful accounts for each of the periods
presented follows (in thousands of dollars):
<TABLE>
<CAPTION>
Year ended Year ended Year ended
April 30, 1996 April 30, 1995 April 30, 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Balance, beginning of
period $ 8,786 $ 5,494 $ 5,614
Provision 12,716 8,739 4,027
Write-offs (14,558) (6,987) (6,611)
Recoveries 2,039 1,540 2,464
-------- ------- -------
Balance, end of period $ 8,983 $ 8,786 $ 5,494
======== ======= =======
</TABLE>
F-7
<PAGE>
Merchandise Inventories - The Company values its inventories under the
-----------------------
first-in, first-out cost flow assumption.
Property and Equipment - Property and equipment is stated at cost less
----------------------
accumulated depreciation and amortization. Depreciation of buildings and
improvements and furniture, fixtures and office equipment is computed using
the straight-line method over their estimated useful lives which are:
buildings and improvements, 30 to 31.5 years and furniture, fixtures and
office equipment, 5 to 10 years. Leaseholds and leasehold improvements are
amortized over the terms of the related leases or their estimated useful
lives, whichever are shorter.
Property Financed by Capital Leases - Property financed by capital leases
-----------------------------------
is amortized on the straight-line basis over the shorter of their estimated
useful lives or the remaining terms of the leases.
Income Taxes - The Company follows the provisions of Statement of Financial
------------
Accounting Standards No. 109. "Accounting for Income Taxes" ("SFAS No.
109"), which requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been included
in the company's financial statements or tax returns. Under this method,
deferred tax assets and liabilities are determined based on the differences
between the financial accounting and tax bases of assets and liabilities
using enacted tax rates in effect for the year in which the differences are
expected to reverse.
Operating Leases - Rent expense relating to stores which are classified as
----------------
operating leases due to the terms of the respective leases is recognized on
the straight-line method.
Store Opening Expenses - Expenses (other than those relating to capital
----------------------
improvements) associated with new store openings are charged to operations
in the period in which such expenses are incurred.
Net Income Per Share- Net income per share is based on the weighted average
--------------------
number of common and common equivalent shares outstanding during the
period. Employee stock options are considered to be common stock
equivalents and, accordingly, the calculation includes approximately
442,111, 455,981 and 364,698 common stock equivalent shares using the
treasury stock method for the years ended April 30, 1996, 1995 and 1994,
respectively.
Pervasiveness of Estimates - The preparation of financial statements in
--------------------------
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Reclassifications - Certain reclassifications have been made to prior
-----------------
consolidated financial statements to conform with the April 30, 1996
presentation.
F-8
<PAGE>
3. LONG-TERM DEBT
Long-term debt - At April 30, 1996 and 1995, long-term debt, consisted of
--------------
the following in thousands of dollars:
<TABLE>
<CAPTION>
April 30,
------------------
1996 1995
------- ---------
<S> <C> <C>
Industrial Revenue Bonds (A) $ 3,962 $ 4,387
Revolving Credit Agreement (B) 8,430 -
Capital Leases (C) 8,366 8,528
------- -------
Total 20,758 12,915
------- -------
Less:
Current portion 673 587
------- -------
Long-term debt $20,085 $12,328
======= =======
</TABLE>
(A) Town of Islip Industrial Development Agency Loan ("IDA") - The IDA Loan
--------------------------------------------------------
is evidenced by a $6,000,000 industrial development revenue bond issued
by the Town of Islip Industrial Development Agency, the proceeds from
which were used to finance the construction of a warehouse in Central
Islip, New York. The loan is payable in increasing quarterly installments
through 2002, with interest at one percent over the prime rate specified
by the bank that purchased the related industrial revenue bond from the
Town of Islip. The prime rate at April 30, 1996 was 8.25 percent. The
loan is collateralized by land and a building with a carrying value of
approximately $11.5 million at April 30, 1996.
(B) Revolving Term Loan Agreement - On April 26, 1996, the Company entered
-----------------------------
into a revolving term loan agreement with two banks, under which the
banks were committed to lend up to $40 million to the Company. The
Company is obligated to pay a commitment fee of .25 percent per annum of
the unused balance under these agreements. Borrowings under these
agreements bear interest at variable rates based upon the net income of
the Company, as defined in the agreement. Interest on these borrowings
was 8.75 percent at April 30, 1996.
The loan agreements contain certain covenants which include (i)
maintenance of certain financial ratios; (ii) maintenance of certain
amounts of net income, working capital and net worth; (iii) limitations
on capital expenditures; (iv) limitations on the payment of dividends;
(v) limitations on other indebtedness; (vi) restrictions on the disposal
of assets; and (vii) limitations on corporate reorganizations. At April
30, 1996, the Company was in compliance with each of the covenants
mentioned above.
(C) Capital Leases - The obligations relative to capital leases at April 30,
--------------
1996 relate to two stores and are payable in varying monthly installments.
F-9
<PAGE>
Long-Term Maturities - Long-term Obligations are scheduled to mature as
--------------------
follows (in thousands of dollars):
<TABLE>
<CAPTION>
Year Ended April 30, Amount
------------------------- -------
<S> <C>
1997 $ 1,914
1998 2,017
1999 10,620
2000 2,334
2001 2,447
Thereafter 15,618
-------
Total 34,950
Less interest on capital leases 14,192
-------
Total $20,758
=======
</TABLE>
4. INCOME TAXES
The Company adopted SFAS No. 109 and accordingly, deferred tax assets or
liabilities at the end of each period are determined using the currently
enacted tax rate expected to apply to taxable income in the periods in
which the deferred tax asset or liability is expected to be settled or
realized.
The income tax provision (benefit) is as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
April 30, 1996 April 30, 1995 April 30, 1994
-------------- -------------- ---------------
<S> <C> <C> <C>
Current:
Federal $ 911 $3,821 $ 141
State & Local 420 1,304 350
Deferred 1,369 613 (3,185)
------ ------ -------
Total $2,700 $5,738 $(2,694)
====== ====== =======
</TABLE>
The Company's effective income tax rate differs from the Federal statutory
rate. The reasons for this difference are as follows (dollar amounts in
thousands):
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
April 30, 1996 April 30, 1995 April 30, 1994
--------------- -------------- -----------------
Amount % Amount % Amount %
------- ------ ------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Federal statutory
rate $2,243 34.0 $4,878 34.0 $ 1,444 34.0
Increases (reductions)
due to:State & local
taxes - net of
Federal Income tax
benefits 457 7.0 860 6.0 211 5.0
Reversal of Valuation
Allowance - - - - (4,349) (102.0)
------ ---- ------ ---- ------- ------
Effective rate $2,700 41.0 $5,738 40.0 $(2,694) (63.0)
====== ==== ====== ==== ======= ======
</TABLE>
F-10
<PAGE>
The significant elements of gross deferred tax assets and
liabilities at April 30, 1996 and 1995 are as follows (dollar amounts in
thousands):
<TABLE>
<CAPTION>
April 30, 1996 April 30, 1995
-------------------- --------------------
Deferred Tax Deferred Tax
Assets/(Liabilities) Assets/(Liabilities)
-------------------- --------------------
<S> <C> <C>
Allowance for doubtful
accounts $ 4,193 $ 4,064
Allowances for obsolete and
slow-moving inventories 1,489 1,326
Customer deposit forfeitures 72 301
Other (45) (87)
------- -------
Current 5,709 5,604
------- -------
Capital leases 1,367 1,276
Accelerated Depreciation (1,132) (1,036)
Other 487 189
Net Operating Loss
Carryforwards 11,213 12,980
------- -------
Noncurrent 11,935 13,409
------- -------
Total $17,644 $19,013
======= =======
</TABLE>
At April 30, 1996, the Company had Federal tax loss carryforwards
aggregating approximately $24 million, which expire in 2007. Net operating
loss carryforwards of approximately $3 million were utilized during the
fiscal year ended April 30, 1996.
As of April 30, 1995, the Company reversed the remaining valuation
allowance of $4,204,000 previously recorded primarily for state net
operating loss carryforwards. The Company determined it appropriate given
the continued profitability, as well as the projections of future earnings.
The result of such decision was to increase paid-in capital for all such
tax assets, all of which arose prior to the emergence from Chapter 11.
5. SHAREHOLDERS' EQUITY
The Company's amended and restated Certificate of Incorporation as of
October 1992 provided that the authorized capital stock of the Company
consists of 15 million shares of Common Stock, par value $.01 per share.
The holders of the Common Stock are entitled to one vote for each share
held of record on all matters submitted to a vote of stockholders. Holders
of Common Stock are entitled to receive ratably such dividends as may be
declared by the Board of Directors out of funds legally available therefor.
Stock Options
-------------
The Company has a compensatory stock option plan (the "Plan") which
provides for the issuance of incentive or non-qualified stock options to
certain senior executives and other executives. The aggregate options which
may be granted under the Plan is 1,500,000. The Plan is administered by the
Compensation Committee of the Company's Board of Directors.
F-11
<PAGE>
Under the Plan, the Company grants options at the approximate fair market
value. The Company's stock options become exercisable over varying terms,
as specified by the Compensation Committee. The options granted to certain
senior executives (see Note 7) are exercisable in full any time after the
granting date. The options granted to other executives vest over a two- or
three-year period. Stock options are subject to forfeiture in certain
circumstances.
A summary of activity under the Company's stock option plans for the year
ended April 30, 1996 is as follows:
<TABLE>
<CAPTION>
Number of Exercise
Shares Price Range
----------- --------------
<S> <C> <C>
Balance - May 1, 1993 555,555 $5.01
Granted 37,000 $9.00
------- ==============
Balance - April 30, 1994 592,555 $ 5.01 - $9.00
======= ==============
Granted 93,000 $12.50 - $18.75
Exercised (2,075) $9.00
------- ---------------
Balance - April 30, 1995 683,480 $ 5.01 - $18.75
======= ===============
Granted 322,500 $20.50 - $35.00
Exercised (10,041) $ 9.00 - $12.50
Canceled (19,734) $20.50
------- ---------------
Balance - April 30, 1996 976,205 $ 5.01 - $35.00
======= ===============
</TABLE>
6. SALE OF ACCOUNTS RECEIVABLE
In April 1995, the Company entered into an agreement with a third party to
sell, with limited recourse, $20 million of its eligible, as defined, trade
accounts receivable. The rate associated with that agreement was 8.1
percent per annum. In April 1996, the Company redeemed and terminated the
1995 series of Class A Securitization Certificates in the amount of $20
million.
7. COMMITMENTS AND CONTINGENCIES
Operating Leases
----------------
The Company is obligated under various noncancelable operating leases
covering stores and two warehouses which provide for minimum rentals plus,
in certain instances, real estate taxes, other expenses and additional
rentals based on sales levels.
Future minimum lease payments under these operating leases are as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
Year Ending April 30, Amount
--------------------- --------
<S> <C>
1997 $ 12,617
1998 12,383
1999 11,965
2000 11,664
2001 11,415
2002 - 2006 36,721
2007 - 2011 11,226
2012 - 2016 2,236
2017 - 2021 2,177
2022 - 2023 620
--------
Total $113,024
========
</TABLE>
F-12
<PAGE>
Rent Expense
------------
Rent expense for operating leases aggregated approximately $13,197,000,
$10,883,000, $9,265,000 (net of sub-lease income of approximately $541,000,
$495,000 and $595,000) for the years ended April 30, 1996, 1995 and 1994,
respectively. These amounts include additional rental payments of
approximately $12,000, $51,000 and $7,000, respectively, which are based on
store sales.
Retirement Plans
----------------
The Company has a defined contribution pension plan which is qualified
under Section 401(k) of the Internal Revenue Code. Such plan is available
to substantially all employees not covered by collective bargaining
agreements. The Company may make contributions to match a portion of
participant contributions.
The Company also participates in a multi-employer union-sponsored pension
plan. Information concerning benefits and assets available to pay benefits
for this plan is not available. Under the Employee Retirement Income
Security Act of 1974, as amended, an employer, upon withdrawal from a
multi-employer plan, is required to continue funding its proportionate
share of the plan's unfunded vested benefits, if any. The Company has no
current intention of withdrawing from the plan.
Total expenses related to these plans aggregated approximately $1,658,000,
$1,497,000 and $1,098,000, respectively, for the years ended April 30,
1996, 1995 and 1994.
Litigation
----------
The Company is involved in various proceedings incidental to the normal
course of their business. Management does not expect that any of such
proceedings will have a material adverse effect on the Company's
consolidated financial position or results of operations.
Employment Agreements
---------------------
The Company, in May 1995, renewed its three-year employment agreements with
certain senior executives of the Company. Such employment agreements, all
of which terminate in April 1998, require annual compensation in the
aggregate of $770,000 with increases subject to a Consumer Price Index
formula, as defined in the agreements, or the discretion of the Board of
Directors.
Also, such executives were granted 165,000 options during fiscal 1996 to
purchase shares of common stock issuable pursuant to the 1992 Stock Option
Plan, which was adopted by the Company. Such options vest over a three-year
period.
In addition, during fiscal 1993, such executives were granted 555,555
options (at the then fair values) to purchase shares of common stock
issuable pursuant to the 1992 Stock Option Plan, which was adopted by the
Company. Such options vest at the sole discretion of the Board of
Directors, but in any event, no later than ten years from the date of
grant. Approximately one-half of such options were issued and fully vested
at the date of grant. Subsequent thereto, an additional 23,150 and 162,035
options became vested in June 1994 and May 1995, respectively. At April 30,
1996, 92,592 options remain unvested.
F-13
<PAGE>
8. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
Year Ended First Second Third Fourth
April 30, 1996 Quarter Quarter Quarter Quarter Total
- - -------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $57,468 $57,966 $56,292 $57,779 $229,505
Gross Margin $19,927 $19,885 $18,048 $18,663 $ 76,523
Net Income $ 1,534 $ 1,504 $ 335 $ 522 $ 3,895
Net Income Per Share $ 0.31 $ 0.30 $ 0.07 $ 0.10 $ 0.78
Year Ended First Second Third Fourth
April 30, 1995 Quarter Quarter Quarter Quarter Total
- - -------------------------------------------------------------------------
Sales $48,889 $54,062 $57,440 $55,466 $215,857
Gross Margin $17,205 $19,425 $20,311 $20,878 $ 77,819
Net Income $ 1,488 $ 1,921 $ 2,457 $ 2,742 $ 8,608
Net Income Per Share $ 0.29 $ 0.38 $ 0.49 $ 0.52 $ 1.68
</TABLE>
Quarterly and total year earnings per share are calculated independently
based on the weighted average number of shares and share equivalents
outstanding during each period.
9. SUPPLEMENTAL INFORMATION
Interest paid during the years ended April 30, 1996, 1995 and 1994
aggregated approximately $1,594,000, $1,707,000 and $1,654,000,
respectively.
Additionally, pursuant to the terms of a capital lease agreement which
resulted in negative amortization of the principal balance, the Company
incurred an additional $66,000 in capital lease obligations during the year
ended April 30, 1996.
* * * * * *
F-14
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
No. Description
------- -----------
*2 First Amended Joint Plan of Reorganization dated July 21,
1992.
*3.1 Amended and Restated Certificate of Incorporation
effective as of February 12, 1993.
*3.2 Amended and Restated By-Laws effective as of February 12,
1993.
4.1(a) Article IV and VI of the Amended and Restated Certificate
of Incorporation (incorporated by reference to Exhibit 3.1
filed as part of the Registration Statement on Form 10
filed by the Company on February 13, 1993) and Articles II
and VI of the Amended and Restated By-Laws (incorporated
by reference to Exhibit 3.2 filed as part of the
Registration Statement on Form 10 filed by the Company on
February 13, 1993).
4.3 Amended and Restated 1992 Stock Option Plan (incorporated
by reference to Exhibit 4.3 filed as part of the
Registration Statement on Form S-8 filed by the Company on
February 4, 1994).
**10.1 (a) Delivery Service Agreement dated as of September 12,
1994 between the Company and Merchants Home Delivery
Service, Inc.
(b) Delivery Service Agreement dated as of May 12, 1993
between the Company and Joseph Eletto Transfer, Inc.
*10.2 Lease Agreement dated June 14, 1991 between the Company
and Mack Woodbridge Industrial.
10.3 (a) Employment Agreement dated as of May 1, 1995 between
the Company and Alan Rosenberg.
(b) Employment Agreement dated as of May 1, 1995 between
the Company and Steven H. Halper.
(c) Employment Agreement dated as of May 1, 1995 between
the Company and Peter McGeough.
*10.4 1992 Stock Option Plan.
<PAGE>
10.5 * (a) Nonqualified Stock Option Agreement dated as of
October 14, 1992 between the Company and Alan
Rosenberg.
**(b) Nonqualified Stock Option Agreement dated as of June
30, 1994 between the Company and Alan Rosenberg.
**(c) Nonqualified Stock Option Agreement dated as of June
30, 1994 between the Company and Alan Rosenberg.
*(d) Nonqualified Stock Option Agreement dated as of
October 14, 1992 between the Company and Steven H.
Halper.
**(e) Nonqualified Stock Option Agreement dated as of June
30, 1994 between the Company and Steven H. Halper.
**(f) Nonqualified Stock Option Agreement dated as of June
30, 1994 between the Company and Steven H. Halper.
*(g) Nonqualified Stock Option Agreement dated as of
October 14, 1992 between the Company and Peter
McGeough.
**(h) Nonqualified Stock Option Agreement dated as of June
30, 1994 between the Company and Peter McGeough.
**(i) Nonqualified Stock Option Agreement dated as of June
30, 1994 between the Company and Peter McGeough.
**(j) Nonqualified Stock Option Agreement dated as of June
30, 1994 between the Company and Thomas Martinez.
**(k) Nonqualified Stock Option Agreement dated as of
April 2, 1993 between the Company and Thomas
Martinez.
**(l) Nonqualified Stock Option Agreement dated as of
April 2, 1993 between the Company and Donald S.
Leibowitz.
**(m) Nonqualified Stock Option Agreement dated as of
June 30, 1994 between the Company and Donald S.
Leibowitz.
**(n) Nonqualified Stock Option Agreement dated as of
November 11, 1994 between the Company and Barry J.
Alperin.
**(o) Nonqualified Stock Option Agreement dated as of
November 11, 1994 between the Company and Leo
Peraldo.
<PAGE>
(p) Form of Nonqualified Stock Option Agreement dated
as of May 1, 1995 between the Company and Alan
Rosenberg.
(q) Form of Nonqualified Stock Option Agreement dated as
of May 1, 1995 between the Company and Alan
Rosenberg.
(r) Form of Nonqualified Stock Option Agreement dated as
of May 1, 1995 between the Company and Steven H.
Halper.
(s) Form of Nonqualified Stock Option Agreement dated as
of May 1, 1995 between the Company and Steven H.
Halper.
(t) Form of Nonqualified Stock Option Agreement dated as
of May 1, 1995 between the Company and Peter
McGeough.
(u) Form of Nonqualified Stock Option Agreement dated as
of May 1, 1995 between the Company and Peter
McGeough.
(v) Form of Nonqualified Stock Option Agreement dated as
of May 1, 1995 between the Company and Thomas
Martinez.
(w) Form of Nonqualified Stock Option Agreement dated as
of May 1, 1995 between the Company and Donald S.
Leibwitz
10.6 **(a) Agreement dated as of February 14, 1994 between the
Company and Local 875 affiliated with the
International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America.
**(b) Agreement dated as of December 23, 1993 between the
Company a and Local 876 affiliated with the
International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America.
**(c) Agreement dated as of August 16, 1994 between the
Company and Local 875 affiliated with the
International Brotherhood of Teamsters,
Warehousement and Helpers of America.
(d) Form of Agreement dated as of January 1995 between
the Company and Local 875 affiliated with the
International Brotherhood of Teamsters, Chauffeurs,
Warehousemen and Helpers of America. (unsigned)
*10.7 Form of Indemnification Agreement
10.8 Pooling and Servicing Agreement dated as of March
15, 1995, among Seaman Receivables Corporation, as
transferor, Seaman Furniture Company, Inc. as
servicer, and The Bank of New York, as trustee.
(Incorporated by reference to Exhibit 10.1 filed as
part of the Current Report on Form 8-K filed by the
Company on April 22, 1995.)
<PAGE>
10.9 Revolving credit and Security Agreement dated as of
April 29, 1996 with the Bank of New York Credit Corp. and
NatWest Bank N.A. as Co-Lenders. (Incorporated by
reference to Exhibit 7 filed as part of the current report
on Form 8-K filed by the Company on May 14, 1996.)
21 Subsidiaries.
* Incorporated by reference to the exhibit with the corresponding exhibit
number filed as part of the Registration Statement on Form 10 filed by
the Company on February 13, 1993.
** Incorporated by reference to the exhibit with the corresponding exhibit
number filed as part of the 10-K filed by The Company on July 25, 1995.
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 1st day
of May, 1995, by and between SEAMAN FURNITURE COMPANY, INC., a Delaware
corporation (the "Company"), and MR. ALAN ROSENBERG, an individual residing at 6
Longacre Lane, Dix Hills, New York 11746 (the "Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Employee currently serves as the President and Chief
Executive Officer of the Company pursuant to the provisions of an employment
agreement dated as of October 14, 1992 between the Company and the Employee (the
"Prior Employment Agreement"), and the Company desires to retain the continued
services of the Employee;
WHEREAS, the parties wish to amend and restate the Prior Employment
Agreement to provide the Employee with compensation and other benefits on the
terms and conditions set forth in this Agreement;
WHEREAS, the Employee is willing to accept such continued employment and
perform services for the Company on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company and the Employee hereby agree as
follows:
<PAGE>
ARTICLE I
EMPLOYMENT
----------
1.1 Term. The Company hereby employs the Employee as its President and
----
Chief Executive Officer, and the Employee hereby agrees to serve the Company in
such capacity, for a three-year term commencing as of May 1, 1995, and ending on
April 30, 1998, subject to automatic renewal following the initial term for
consecutive terms of one year each commencing on the day after the expiration of
the then current term, unless either party elects to terminate by giving written
notice to the other at least ninety (90) days prior to the expiration of the
then current term (the "Termination Date"), unless sooner terminated pursuant to
the provisions of this Agreement (the "Term of Employment"); provided, however,
-------- -------
that any termination of employment by the Employee (other than for death,
Permanent Disability or Good Reason (as such terms are hereinafter defined)) may
only be made upon forty-five (45) days prior written notice to the Company and
any termination of employment by the Employee for Good Reason may only be made
upon ten (10) days prior written notice to the Company.
1.2 Duties. The Employee shall be employed on a full-time basis and
------
shall all his business time and attention to the performance of services, duties
and responsibilities in connection with his employment as the President and
Chief Executive Officer of the Company. The Employee shall perform
<PAGE>
such duties and exercise such powers commensurate with his position as the
President and Chief Executive Officer of the Company, subject to the direction
of the Board of Directors of the Company (the "Board") or its designees and
subject to such restrictions as such Board or its designees may reasonably from
time to time impose. The Employee shall serve as a member of the Board of the
Company and as an officer or director of any subsidiary or affiliate of the
Company if elected to such positions by the stockholders or board of directors
of such subsidiary or affiliate. During the term of this Agreement, the Board of
Directors of the Company shall nominate the Employee for election to the Board
of Directors at each annual meeting of stockholders for which his then current
term as a director expires. The Employee agrees that he will resign as a
director upon termination of this Agreement for any reason.
The Employee shall at all times during the Term of Employment discharge
all such duties and responsibilities conscientiously, in good faith and to the
best of his ability, giving to the Company the full benefit of his knowledge,
expertise, skill and judgment. The Employee shall not, without the prior written
consent of the Board, render services of a business, professional or commercial
nature for compensation to any other entity or person other than the Company nor
engage or participate in any trade, business or occupation whatsoever other than
as authorized by the Board in connection with the
<PAGE>
performance of his duties hereunder to the Company. (Notwithstanding the
foregoing, nothing herein shall preclude the Employee from owning and leasing a
second home.) Nothing in this Agreement shall preclude the Employee from
participating in charitable, educational, religious and community affairs and
organizations, and similar types of activities, from managing personal
investments made by him in publicly traded equity securities (provided that no
such investment in any class of securities may exceed 5% of the outstanding
securities of such class, without the prior written approval of the Board) or
from serving, subject to the prior written approval of the Board, as a member of
boards of directors or as a trustee of any other corporation, association or
entity, so long as, in the reasonable determination of such Board, such
activities do not interfere with his duties and responsibilities hereunder and
the Board has given its prior written approval thereof.
1.3 Compensation. (a) As compensation for the Employee's services
------------
hereunder, the Company shall pay to the Employee an annual salary of $300,000
(the "Salary"), payable in accordance with the ordinary payroll practices of the
Company. In addition, the Employee acknowledges receipt of a cash bonus of
$325,000 representing the Employee's bonus for the fiscal year ending April 30,
1995.
(b) On each May 1 commencing with May 1, 1996, the Employee's Salary
shall be increased by an amount determined by
<PAGE>
multiplying $300,000 by a fraction, the numerator of which is the Consumer Price
Index for All Urban Consumers -- (1982 - 84 = 100) for N.Y. - Northern N.J. -
Long Island. NY - NJ -CT, as published by the Bureau of Labor Statistics of the
United States Department of Labor (the "CPI") for the preceding April, and the
denominator of which is the CPI for April 1995. Once increased, such increased
amount shall constitute the Employee's Salary, subject to any increase pursuant
to Section 1.3(c).
(c) Prior to April 30, 1996, and prior to each April 30 thereafter,
the Board shall review the Salary and benefits payable to the Employee, or for
which the Employee is eligible hereunder and, in their discretion, after
consideration of the Employee's performance, the profitability and financial
position of the Company and such other factors as they deem appropriate, the
Board may by a majority vote agree to increase the Salary of the Employee and/or
to pay to the Employee a bonus in respect of the prior fiscal year of the
Company (a "Bonus") as may be deemed appropriate in their absolute sole
discretion and as provided in this Agreement. If the Employee's Salary is
increased, such increased amount shall constitute the Employee's Salary.
Nothing, herein, however, shall be deemed to create an obligation of the Company
to increase the Salary of the Employee pursuant to this Section 1.3(c) or to pay
a Bonus to the Employee at any time other than as provided in Section 1.3(d).
Any increase in Salary greater than that contemplated by Section
<PAGE>
1.3(b) or any payment of any Bonus other than as provided in Section 1.3(d)
shall be totally discretionary with the Board.
(d) (i) The Employee shall receive a minimum Bonus for the fiscal
year ending April 30, 1996 (the "1996 Minimum Bonus") calculated pursuant to the
matrix (the "1996 Matrix") set forth on Exhibit A to this Agreement. The
assumptions set forth on Exhibit A are for illustrative purposes only and are
not binding on the Board. The amount of the 1996 Minimum Bonus shall be
calculated by multiplying the relevant percentage from the 1996 Matrix (based on
the Company's actual financial results for such fiscal year) by the Salary of
the Employee. The percentage amounts set forth in the 1996 Matrix relate solely
to the fiscal year ending April 30, 1996 and are the only guaranteed portions of
the Bonus. Any Bonus amounts in excess of the 1996 Minimum Bonus, if any, will
be determined by the Board in its sole discretion, notwithstanding the financial
performance of the Company.
(ii) The Employee shall be eligible for a minimum Bonus for each
completed fiscal year of his employment hereunder. During the term hereof and
prior to April 30 of each year, the Board will consult with the Employee in
developing a matrix for the following fiscal year, which matrix will ultimately
be established by the Board in its sole discretion.
(e) Upon the commencement of his employment hereunder and for so long
as he remains employed hereunder, the Company
<PAGE>
shall provide the Employee with the exclusive use of a Company-owned automobile
suitable for a senior executive, which automobile shall be replaced not more
frequently than every two (2) years.
(f) The Company shall provide the Employee during the term of his
employment hereunder with coverage under all employee benefit programs, plans
and practices (commensurate with his position in the Company and to the extent
permitted under any employee benefit plan) including the Company's 401(k)
savings plan but excluding any bonus, profit-sharing or similar programs, plans
or practices (but not excluding any qualified pension plan the contributions to
which are not based on profits) in accordance with the terms thereof, which the
Company makes available to its senior executives. The Company shall either
provide the Employee with supplemental medical insurance which shall cover the
cost of any co-payment obligations and/or deductibles with respect to any
medical insurance provided to the Employee by the Company or shall reimburse the
Employee for any such co-payment obligations and/or deductibles. If the Company
maintains a dental insurance policy for its employees generally, the Company
shall either provide the Employee with supplemental dental insurance which shall
cover the cost of any co-payment obligations and/or deductibles with respect to
any dental insurance provided to the Employee by the Company or shall reimburse
the Employee for any such co-payment obligations and/or
<PAGE>
deductibles. If the Employee is insurable, the Company shall provide the
Employee during the term of his employment hereunder up to $1,000,000 of term
life insurance payable to the Employee's designated beneficiary at no cost to
the Employee, which insurance will be in addition to any other life insurance
provided or made available to employees of the Company generally. At the
termination of employment, the Company, at the Employee's request and at his
sole expense, shall use its best efforts to assign whatever interest the Company
has in such term life insurance policy to the Employee to enable the Employee to
continue to maintain such policy.
(g) The Employee shall be entitled to twenty (20) business days paid
vacation in each calendar year or any greater number of vacation days provided
generally to other senior executives of the Company. Any vacation not taken by
the Employee shall not be carried over into subsequent years nor shall the
Employee be entitled to receive any payment in lieu of such unused vacation.
The Employee, in addition, shall be entitled to the perquisites and other fringe
benefits made available to senior executives of the Company, commensurate with
his position with the Company.
(h) The Employee is authorized to incur reasonable, ordinary and
necessary expenses in carrying out his duties and responsibilities under this
Agreement, including, without limitation, expenses for travel, business,
entertainment and
<PAGE>
similar items related to such duties and responsibilities. The Company will
reimburse the Employee for all such expenses upon presentation by the Employee
from time to time of appropriately itemized and approved (consistent with the
Company's policy) accounts of such expenditures.
(i) The Company shall grant to the Employee an option to purchase up
to 60,000 shares of the common stock of the Company pursuant to the Amended and
Restated 1992 Stock Option Plan, vesting in equal amounts on each of May 1, 1996
at an exercise price of $24.00 per share, May 1, 1997 at an exercise price of
$29.00 per share and May 1, 1998 at an exercise price of $35.00 per share, in
each case on the terms and conditions set forth in such Plan and in the stock
option agreement to be executed by the Company and the Employee with respect
thereto.
ARTICLE II
TERMINATION OF EMPLOYMENT
-------------------------
2.1 Termination Not for Cause or for Good Reason. (a) The Company
--------------------------------------------
terminate the Employee's employment at any time for any reason. If the
Employee's employment is terminated by the Company other than (i) for Cause (as
defined in Section 2.4 hereof) or (ii) as a result of the Employee's death or
Permanent Disability (as defined in Section 2.2 hereof), or if the Employee
terminates his employment for Good Reason (as defined in Section 2.1(b) hereof)
prior to the Termination Date, the Employee shall receive such payments under
the Company's
<PAGE>
applicable plans or programs, including but not limited to those referred to in
Section 1.3(f) hereof, to which he is entitled pursuant to the terms of such
plans or programs. In addition, the Employee shall be entitled to continue to
receive his then current Salary for a period of two years following the date of
termination. Furthermore, the Employee will be eligible to elect to continue his
medical care coverage in accordance with the requirements of Section 4980B of
the Internal Revenue Code of 1986, as amended ("COBRA").
(b) For the purposes of this Agreement, "Good Reason" shall mean any
of the following (without the Employee's express prior written consent) which
the Company fails to cure within ten (10) days:
(i) Any material breach by the Company of any provision of this
Agreement;
(ii) Any material diminution by the Company of the Employee's
duties or responsibilities, except in connection with the termination
of the Employee's employment for Cause, as a result of Permanent
Disability, as a result of the Employee's death or by the Employee
other than for Good Reason; or
(iii) Any change in control (a "Change in Control"). As used
herein a Change in Control shall be deemed to have occurred if (x) at
any time representatives of Sass Lamle Rubin, M.J. Whitman, L.P. T.
Rowe Price Group, and any of their affiliates, or any one or more of
them, shall not constitute, or have the right to constitute, at least
two members of the Board or (y) any person or "group" (as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934 and
Rule 13d-3 promulgated thereunder) becomes a beneficial
<PAGE>
owner of more than 50% of the voting stock of the Company.
2.2 Permanent Disability. If the Employee becomes totally and
--------------------
permanently disabled (as defined in the Company's Long-Term Disability Benefits
Plan applicable to senior executive officers as in effect on the date hereof or,
if no such plan exists, permanently disabled shall mean that by reason of a
physical or mental disability or infirmity which has continued for more than 120
consecutive days or for shorter periods which have aggregated more than 120 days
in any period of 180 consecutive days, the Employee has been unable to perform
the duties contemplated by this Agreement ("Permanent Disability")), then the
Board of the Company, in its discretion, or the Employee may terminate the
Employee's employment on written notice thereof, and the Employee shall receive
or commence receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability
insurance policy or similar arrangement which the Company maintains
during the term hereof;
(ii) the amount of Salary earned but not yet paid (the "Salary
Payment"); and
(iii) such payments under applicable plans or programs, including
but not limited to those referred to in Section 1.3(f) hereof, to which
he is entitled pursuant to the terms of such plans or programs.
2.3 Death. In the event of the Employee's death during the term of
-----
his employment hereunder, the Employee's estate or
<PAGE>
designated beneficiaries shall receive or commence receiving, as soon as
practicable:
(i) any death benefits provided under the employee benefit
programs, plans and practices referred to in Section 1.3(f) hereof, in
accordance with their terms;
(ii) the Salary Payment; and
(iii) such payments under applicable plans or programs, including
but not limited to those referred to in Section 1.3(f) hereof, to which
the Employee's estate or designated beneficiaries are entitled pursuant
to the terms of such plans or programs.
2.4 Discharge for Cause; Voluntary Termination by the Employee. The
----------------------------------------------------------
Company shall have the right to terminate the employment of the Employee for
Cause. In the event that the Employee's employment is terminated by the Company
for Cause (as hereinafter defined) or by the Employee other than for Good Reason
or other than as a result of the Employee's Permanent Disability or death, prior
to the Termination Date, the Employee shall only be entitled to receive the
Salary Payment and such payments under plans or programs, including but not
limited to those referred to in Section 1.3(f) hereof, to which the Employee is
entitled pursuant to the terms of such plans or programs. After the termination
of the Employee's employment under this Section 2.4, the obligations of the
Company under this Agreement to make any further payments, or provide any
benefits specified herein, to the Employee other than those referred to in the
<PAGE>
preceding sentence shall thereupon cease and terminate. Notwithstanding the
foregoing, if the Employee is terminated for Cause pursuant to Section 2.4(a),
(e)(ii) or (f) at any time within one year following the date (the "Date") that
representatives of any person or "group" (as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934 and Rule 13d-3 promulgated
thereunder) (other than those listed in Section 2.1(b)(iii)(x)) (a "Significant
Shareholder"), shall constitute at any time four or more members of the Board
and provided representatives of such Significant Shareholder still constitute
four or more directors on the Board at the time of such termination, the
Employee shall be entitled to receive such amounts and other benefits payable
under Section 2.1(a) for a period commencing with the date of such termination
through the first anniversary of the Date as though such termination had not
been for Cause. As used herein, the term "Cause" shall be limited to (a) gross
negligence or wilful misconduct by the Employee in the performance of his
duties; (b) dishonesty, fraud, embezzlement or misappropriation (other than an
arms's-length dispute relating to the erroneous reporting of an immaterial
amount as an expense), by the Employee relating to the Company or any of its
funds, properties, opportunities or other assets; (c) continuing refusal by the
Employee to perform his duties hereunder or any lawful direction of the Board of
the Company as required under Section 1.2, which is not cured within ten (10)
<PAGE>
days after written notice of any such refusal to perform such duties or
direction was given to the Employee; (d) any material breach of the provisions
of Article III of this Agreement by the Employee or any other material breach of
this Agreement by the Employee which is not cured by the Employee within ten
(10) days after written notice; (e) the indictment or conviction of the Employee
for commission of (i) any felony or (ii) any misdemeanor involving moral
turpitude; provided, however, if the Employee is terminated for Cause pursuant
to this Section 2.4(e) and the indictment is dismissed or the Employee is not
found guilty of any such felony or misdemeanor, the Employee shall be entitled
to receive such amounts and other benefits payable under Section 2.1(a) as
though the termination of employment had not been a termination for Cause; and
(f) acting in any manner or making any statements which a majority of the Board
of the Company reasonably determines to be materially detrimental or materially
damaging to the reputation, operations, prospects or business relations of the
Company.
2.5 Termination After a Change in Control. In the event the Employee
--------------------------------------
has not exercised his right to terminate this Agreement pursuant to Section
2.1(b)(iii) and the Employee is terminated for Cause pursuant to Section 2.4(a),
(e)(ii) or (f) within one year following such Change in Control, the Employee
shall be entitled to receive such amounts and other benefits payable under
Section 2.1(a) for a period commencing with the
<PAGE>
date of such termination through the first anniversary of the date of such
Change in Control as though the termination of employment had not been a
termination for Cause.
2.6 Liquidated Damages. The parties agree that any amounts payable to
------------------
the Employee under this Agreement following his termination of employment shall
constitute liquidated damages. The parties agree that the damages payable to
the Employee in the event of such termination would be difficult to estimate
accurately, the amounts payable bear a reasonable relationship to the amount of
damages anticipated by the parties as of the date hereof and such amounts are
not a penalty. The parties agree that the Employee shall not be obligated to
mitigate damages by seeking other employment and any earnings from subsequent
employment shall not reduce the amounts payable hereunder.
ARTICLE III
CONFIDENTIAL INFORMATION; NON-COMPETITION
-----------------------------------------
3.1 Nondisclosure of Confidential Information; Non-Competition. (a)
----------------------------------------------------------
The Employee shall not, without the prior written consent of the Board of the
Company, use, divulge, disclose or make accessible to any other person, firm,
partnership, corporation or other entity any Confidential Information (as
hereinafter defined) pertaining to the business of the Company or any of its
affiliates or subsidiaries, except (i) while employed by the Company, in the
business of and for the
<PAGE>
benefit of the Company, or (ii) when required to do so by a court of competent
jurisdiction, by any governmental agency having supervisory authority over the
business of the Company, or by any administrative body or legislative body
(including a committee thereof) with purported or apparent jurisdiction to order
the Employee to divulge, disclose or make accessible such information. For
purposes of this Section 3.1(a), "Confidential Information" shall mean non-
public information concerning the Company's financial data, strategic business
plans, product development (or other proprietary product data), customer lists,
marketing plans, processes, inventions, devices and other non-public,
proprietary and confidential information of the Company, its affiliates,
subsidiaries or its customers, that, in any case, is not otherwise available to
the public.
(b) During the period of his employment by the Company and for one
year thereafter in the event (x) the Employee is terminated by the Company
other than for Cause or the Employee terminates his employment for Good Reason
and therefore continues to receive his then current Salary pursuant to Section
2.1(a) or (y) the Employee is terminated by the Company for Cause or the
Employee terminates his employment other than for Good Reason and the Company,
in its sole discretion, elects to pay the Employee his then current Salary for a
period of one year following his termination, the Employee agrees that, without
the prior written consent of the Board of the Company, (A) he will
<PAGE>
not, directly or indirectly, either as principal, manager, agent, consultant,
officer, stockholder, partner, investor, lender or employee or in any other
capacity, carry on, be engaged in or have any financial interest in, any
business which is in competition with the business of the Company and/or its
affiliates or subsidiaries and (B) he shall not, on his own behalf or on behalf
of any person, firm or company, directly or indirectly, solicit or offer
employment to any person who has been employed by the Company or any of its
affiliates or subsidiaries at any time during the twelve (12) months immediately
preceding such solicitation or offer.
(c) For purposes of this Article III, a business shall be deemed to
be in competition with the Company if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company and/or its affiliates or
subsidiaries as a material part of the business of the Company and/or its
affiliates or subsidiaries within the same geographic area in which the Company
and/or its affiliates or subsidiaries principally effect such purchases, sales
or dealings or renders such services; provided, however, that neither the
business of furniture manufacturing nor the business of purchasing fabric from
textile mills and selling such fabric to furniture manufacturers will be deemed
to be in competition with the Company. Nothing in this Article III shall be
construed so as to
<PAGE>
preclude the Employee from investing directly or indirectly in any publicly
traded equity securities, provided that no such investment in any class of
securities may exceed 5% of the outstanding securities of such class, without
the prior written approval of the Board.
(d) The Employee and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree that
if in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of this covenant as to the
court shall appear not reasonable and to enforce the remainder of the covenant
as so amended. The Employee agrees that any breach of the covenants contained
in this Article III would irreparably injure the Company. Accordingly, the
Employee agrees that the Company may, in addition to pursuing any other remedies
it may have in law or in equity, obtain an injunction against the Employee from
any court having jurisdiction over the matter restraining any further violation
of this Agreement by the Employee.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 Parties Benefitted; Assignment. This Agreement shall become
------------------------------
effective as of the date hereof and, from and after that time, shall extend to
and be binding upon, and inure to the
<PAGE>
benefit of, the Employee, his heirs and his personal representative or
representatives, and the Company and its successors and assigns. Neither this
Agreement nor any rights or obligations hereunder may be assigned by the
Employee.
4.2 Notices. Any and all notices, demands, requests or other
-------
communications required or permitted hereunder to be served on, given to or
delivered to any party to this Agreement shall be in writing and shall be deemed
to have been duly given when delivered in person or when dispatched by telegram
or electronic facsimile transfer (confirmed in writing by regular mail
simultaneously dispatched), or, if sent by certified mail return receipt
requested, on the second day after the day of mailing, to the parties at their
respective addresses set forth below:
If to Employee:
Mr. Alan Rosenberg
6 Longacre Lane
Dix Hills, NY 11746
with a copy to:
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036
Attention: Richard R. Reilly, Esq.
If to the Company:
Seaman Furniture Company, Inc.
300 Crossways Park Drive
Woodbury, NY 11797
Attention: General Counsel
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, NY 10022
Attention: John J. Hyland, Esq.
<PAGE>
4.3 Severability. Each section and subsection of this Agreement
------------
constitutes a separate and distinct provision hereof. It is the intent of the
parties hereto that the provisions of this Agreement be enforced to the fullest
extent permissible under the laws and public policies applicable in each
jurisdiction in which enforcement is sought. Accordingly, if any provision of
this Agreement shall be adjudicated to be invalid, ineffective or unenforceable,
the remaining provisions shall not be affected thereby. The invalid,
ineffective or unenforceable provision shall, without further action by the
parties, be automatically amended to effect the original purpose and intent of
the invalid, ineffective or unenforceable provision; provided, however, that
-------- -------
such amendment shall apply only with respect to the operation of such provision
in the particular jurisdiction with respect to which such adjudication is made.
4.4 Amendment. No amendment, supplement, modification, waiver or
---------
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof, nor
shall such waiver constitute a continuing waiver.
4.5 Legal Fees. In the event an action is brought by the Employee to
----------
enforce his rights hereunder and a final
<PAGE>
(non-appealable) judgment is entered against the Company, the Company shall pay
to the Employee the reasonable legal fees and expenses incurred by the Employee
in connection with such action, provided the Employee furnishes to the Company
satisfactory evidence of such legal fees and expenses. In any other event, each
party shall bear the costs of any legal fees and other fees and expenses which
may be incurred in respect of enforcing its respective rights under this
Agreement.
4.6 Survivorship. The respective rights and obligations of the
------------
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 4.6 are in addition to the survivorship provisions of
any other section of this Agreement.
4.7 Indemnification. The Company agrees that if the Employee is made
---------------
a party, or is threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director, officer or employee of the
Company or its affiliates or is or was serving at the request of the Company or
its affiliates as a director, officer, member, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, whether or
not the basis of such Proceeding is the Employee's alleged action in an official
capacity while serving as a director, officer, member, employee
<PAGE>
or agent, the Employee shall be indemnified and held harmless by the Company to
the fullest extent permitted or authorized by the Company's certificate of
incorporation or bylaws or, if greater, by the laws of the State of Delaware,
against all cost, expense, liability and loss (including attorneys' fees)
judgments, fines, and amounts paid or to be paid in settlement) reasonably
incurred or suffered by the Employee in connection therewith, and such
indemnification shall continue as to the Employee even if he has ceased to be a
director, member, employee or agent of the Company or its affiliates or other
entity and shall inure to the benefit of the Employee's heirs, executors and
administrators. The Company shall advance to the Employee all reasonable costs
and expenses incurred by him in connection with a Proceeding within ten (10)
days after receipt by the Company of a written request for such advance. Such
request shall include an undertaking by the Employee to repay the amount of such
advance if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses. The indemnification rights provided
by this Section 4.7 shall not be construed to limit any other rights to
indemnification that Employee may have under the Company's certificate of
incorporation, by-laws or pursuant to an indemnification agreement between the
Company and Employee. The Company agrees to maintain a directors' and officers'
liability insurance policy covering the Employee to the
<PAGE>
extent that the Company provides such coverage for its other executive officers
or its directors.
4.8 Beneficiaries; References. The Employee shall be entitled to
-------------------------
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Employee's death, and may change such election, in
either case by giving the Company written notice thereof. In the event of the
Employee's death or a judicial determination of his incompetence, reference in
this Agreement to the Employee shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal representative.
4.9 Third Parties. Nothing expressed or implied in this Agreement is
-------------
intended, or shall be construed, to confer upon or give any person or entity
other than the Company and the Employee any rights or remedies under, or by
reason of, this Agreement.
4.10 Currency. Unless stipulated otherwise herein, all references in
--------
this Agreement to "dollars," "money," "payments," or other similar financial or
monetary terms are references to the currency of the United States of America.
4.11 Entire Agreement. This Agreement embodies the entire agreement
----------------
and understanding between the parties hereto and supersedes in all respects any
prior or other agreement or
<PAGE>
understanding between the Company and the Employee including the Prior
Employment Agreement.
4.12 Withholding. The Company shall be entitled to withhold from
-----------
payment any amount of withholding required by law.
4.13 Governing Law. This Agreement and the legal relations among the
-------------
parties hereto shall be governed by and construed in accordance with the
substantive laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
4.14 Headings. The headings of the Articles and Sections of this
--------
Agreement have been inserted solely for convenience of reference and shall in no
way restrict or modify any of the terms or provisions hereof.
4.15 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and delivered by its duly authorized officer, and the Employee had
duly executed and delivered this Agreement, as of the date first written above.
SEAMAN FURNITURE COMPANY, INC.
By:____________________________
Name:
Title:
<PAGE>
-------------------------------
ALAN ROSENBERG
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 1st day
of May, 1995, by and between SEAMAN FURNITURE COMPANY, INC., a Delaware
corporation (the "Company"), and MR. STEVEN H. HALPER, an individual residing at
3 Diana Circle, Roslyn Heights, New York 11576 (the "Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Employee currently serves as the Chief Operating Officer
of the Company pursuant to the provisions of an employment agreement dated as of
October 14, 1992 between the Company and the Employee (the "Prior Employment
Agreement"), and the Company desires to retain the continued services of the
Employee;
WHEREAS, the parties wish to amend and restate the Prior Employment
Agreement to provide the Employee with compensation and other benefits on the
terms and conditions set forth in this Agreement;
WHEREAS, the Employee is willing to accept such continued employment
and perform services for the Company on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Employee hereby
agree as follows:
<PAGE>
ARTICLE I
EMPLOYMENT
----------
1.1 Term. The Company hereby employs the Employee as its Chief
----
Operating Officer, and the Employee hereby agrees to serve the Company in such
capacity, for a three-year term commencing as of May 1, 1995, and ending on
April 30, 1998, subject to automatic renewal following the initial term for
consecutive terms of one year each commencing on the day after the expiration of
the then current term, unless either party elects to terminate by giving written
notice to the other at least ninety (90) days prior to the expiration of the
then current term (the "Termination Date"), unless sooner terminated pursuant to
the provisions of this Agreement (the "Term of Employment"); provided, however,
-------- -------
that any termination of employment by the Employee (other than for death,
Permanent Disability or Good Reason (as such terms are hereinafter defined)) may
only be made upon forty-five (45) days prior written notice to the Company and
any termination of employment by the Employee for Good Reason may only be made
upon ten (10) days prior written notice to the Company.
1.2 Duties. The Employee shall be employed on a full-time basis and
------
shall devote all his business time and attention to the performance of services,
duties and responsibilities in connection with his employment as the Chief
Operating Officer of the Company. The Employee shall perform such duties and
exercise
<PAGE>
such powers commensurate with his position as the Chief Operating Officer of the
Company, subject to the direction of the Board of Directors of the Company (the
"Board") or its designees and subject to such restrictions as such Board or its
designees may reasonably from time to time impose. The Employee shall serve as a
member of the Board of the Company and as an officer or director of any
subsidiary or affiliate of the Company if elected to such positions by the
stockholders or board of directors of such subsidiary or affiliate.
The Employee shall at all times during the Term of Employment
discharge all such duties and responsibilities conscientiously, in good faith
and to the best of his ability, giving to the Company the full benefit of his
knowledge, expertise, skill and judgment. The Employee shall not, without the
prior written consent of the Board, render services of a business, professional
or commercial nature for compensation to any other entity or person other than
the Company nor engage or participate in any trade, business or occupation
whatsoever other than as authorized by the Board in connection with the
performance of his duties hereunder to the Company. (Notwithstanding the
foregoing, nothing herein shall preclude the Employee from owning and leasing a
second home.) Nothing in this Agreement shall preclude the Employee from
participating in charitable, educational, religious and community affairs and
organizations, and similar types of activities, from managing
<PAGE>
personal investments made by him in publicly traded equity securities (provided
that no such investment in any class of securities may exceed 5% of the
outstanding securities of such class, without the prior written approval of the
Board) or from serving, subject to the prior written approval of the Board, as a
member of boards of directors or as a trustee of any other corporation,
association or entity, so long as, in the reasonable determination of such
Board, such activities do not interfere with his duties and responsibilities
hereunder and the Board has given its prior written approval thereof.
1.3 Compensation. (a) As compensation for the Employee's services
------------
hereunder, the Company shall pay to the Employee an annual salary of $235,000
(the "Salary"), payable in accordance with the ordinary payroll practices of the
Company. In addition, the Employee acknowledges receipt of a cash bonus of
$275,000 representing the Employee's bonus for the fiscal year ending April 30,
1995.
(b) On each May 1 commencing with May 1, 1996, the Employee's Salary
shall be increased by an amount determined by multiplying $235,000 by a
fraction, the numerator of which is the Consumer Price Index for All Urban
Consumers -- (1982 - 84 = 100) for N.Y. - Northern N.J. - Long Island. NY - NJ -
CT, as published by the Bureau of Labor Statistics of the United States
Department of Labor (the "CPI") for the preceding April, and the denominator of
which is the CPI for April 1995. Once increased,
<PAGE>
such increased amount shall constitute the Employee's Salary, subject to any
increase pursuant to Section 1.3(c).
(c) Prior to April 30, 1996, and prior to each April 30 thereafter,
the Board shall review the Salary and benefits payable to the Employee, or for
which the Employee is eligible hereunder and, in their discretion, after
consideration of the Employee's performance, the profitability and financial
position of the Company and such other factors as they deem appropriate, the
Board may by a majority vote agree to increase the Salary of the Employee and/or
to pay to the Employee a bonus in respect of the prior fiscal year of the
Company (a "Bonus") as may be deemed appropriate in their absolute sole
discretion and as provided in this Agreement. If the Employee's Salary is
increased, such increased amount shall constitute the Employee's Salary.
Nothing, herein, however, shall be deemed to create an obligation of the Company
to increase the Salary of the Employee pursuant to this Section 1.3(c) or to pay
a Bonus to the Employee at any time other than as provided in Section 1.3(d).
Any increase in Salary greater than that contemplated by Section 1.3(b) or any
payment of any Bonus other than as provided in Section 1.3(d) shall be totally
discretionary with the Board.
(d) (i) The Employee shall receive a minimum Bonus for the fiscal
year ending April 30, 1996 (the "1996 Minimum Bonus") calculated pursuant to the
matrix (the "1996 Matrix") set forth on Exhibit A to this Agreement. The
assumptions set forth
<PAGE>
on Exhibit A are for illustrative purposes only and are not binding on the
Board. The amount of the 1996 Minimum Bonus shall be calculated by multiplying
the relevant percentage from the 1996 Matrix (based on the Company's actual
financial results for such fiscal year) by the Salary of the Employee. The
percentage amounts set forth in the 1996 Matrix relate solely to the fiscal year
ending April 30, 1996 and are the only guaranteed portions of the Bonus. Any
Bonus amounts in excess of the 1996 Minimum Bonus, if any, will be determined by
the Board in its sole discretion, notwithstanding the financial performance of
the Company.
(ii) The Employee shall be eligible for a minimum Bonus for each
completed fiscal year of his employment hereunder. During the term hereof and
prior to April 30 of each year, the Board will consult with the Employee in
developing a matrix for the following fiscal year, which matrix will ultimately
be established by the Board in its sole discretion.
(e) Upon the commencement of his employment hereunder and for so long
as he remains employed hereunder, the Company shall provide the Employee with
the exclusive use of a Company-owned automobile suitable for a senior executive,
which automobile shall be replaced not more frequently than every two (2) years.
(f) The Company shall provide the Employee during the term of his
employment hereunder with coverage under all employee
<PAGE>
benefit programs, plans and practices (commensurate with his position in the
Company and to the extent permitted under any employee benefit plan) including
the Company's 401(k) savings plan but excluding any bonus, profit-sharing or
similar programs, plans or practices (but not excluding any qualified pension
plan the contributions to which are not based on profits) in accordance with the
terms thereof, which the Company makes available to its senior executives. The
Company shall either provide the Employee with supplemental medical insurance
which shall cover the cost of any co-payment obligations and/or deductibles with
respect to any medical insurance provided to the Employee by the Company or
shall reimburse the Employee for any such co-payment obligations and/or
deductibles. If the Company maintains a dental insurance policy for its
employees generally, the Company shall either provide the Employee with
supplemental dental insurance which shall cover the cost of any co-payment
obligations and/or deductibles with respect to any dental insurance provided to
the Employee by the Company or shall reimburse the Employee for any such co-
payment obligations and/or deductibles. If the Employee is insurable, the
Company shall provide the Employee during the term of his employment hereunder
up to $750,000 of term life insurance payable to the Employee's designated
beneficiary at no cost to the Employee, which insurance will be in addition to
any other life insurance provided or made available to employees of the Company
generally.
<PAGE>
At the termination of employment, the Company, at the Employee's request and
at his sole expense, shall use its best efforts to assign whatever interest the
Company has in such term life insurance policy to the Employee to enable the
Employee to continue to maintain such policy.
(g) The Employee shall be entitled to twenty (20) business days paid
vacation in each calendar year or any greater number of vacation days provided
generally to other senior executives of the Company. Any vacation not taken by
the Employee shall not be carried over into subsequent years nor shall the
Employee be entitled to receive any payment in lieu of such unused vacation.
The Employee, in addition, shall be entitled to the perquisites and other fringe
benefits made available to senior executives of the Company, commensurate with
his position with the Company.
(h) The Employee is authorized to incur reasonable, ordinary and
necessary expenses in carrying out his duties and responsibilities under this
Agreement, including, without limitation, expenses for travel, business,
entertainment and similar items related to such duties and responsibilities.
The Company will reimburse the Employee for all such expenses upon presentation
by the Employee from time to time of appropriately itemized and approved
(consistent with the Company's policy) accounts of such expenditures.
<PAGE>
(i) The Company shall grant to the Employee an option to purchase up
to 52,500 shares of the common stock of the Company pursuant to the Amended and
Restated 1992 Stock Option Plan, vesting in equal amounts on each of May 1, 1996
at an exercise price of $24.00 per share, May 1, 1997 at an exercise price of
$29.00 per share and May 1, 1998 at an exercise price of $35.00 per share, in
each case on the terms and conditions set forth in such Plan and in the stock
option agreement to be executed by the Company and the Employee with respect
thereto.
ARTICLE II
TERMINATION OF EMPLOYMENT
-------------------------
2.1 Termination Not for Cause or for Good Reason. (a) The Company
---------------------------------------------
may terminate the Employee's employment at any time for any reason. If the
Employee's employment is terminated by the Company other than (i) for Cause (as
defined in Section 2.4 hereof) or (ii) as a result of the Employee's death or
Permanent Disability (as defined in Section 2.2 hereof), or if the Employee
terminates his employment for Good Reason (as defined in Section 2.1(b) hereof)
prior to the Termination Date, the Employee shall receive such payments under
the Company's applicable plans or programs, including but not limited to those
referred to in Section 1.3(f) hereof, to which he is entitled pursuant to the
terms of such plans or programs. In addition, the Employee shall be entitled to
continue to receive his then current Salary for a period of two years following
the date of
<PAGE>
termination. Furthermore, the Employee will be eligible to elect to continue his
medical care coverage in accordance with the requirements of Section 4980B of
the Internal Revenue Code of 1986, as amended ("COBRA").
(b) For the purposes of this Agreement, "Good Reason" shall mean any
of the following (without the Employee's express prior written consent) which
the Company fails to cure within ten (10) days:
(i) Any material breach by the Company of any provision of this
Agreement;
(ii) Any material diminution by the Company of the Employee's
duties or responsibilities, except in connection with the termination
of the Employee's employment for Cause, as a result of Permanent
Disability, as a result of the Employee's death or by the Employee
other than for Good Reason; or
(iii) Any change in control (a "Change in Control"). As used
herein a Change in Control shall be deemed to have occurred if (x) at
any time representatives of Sass Lamle Rubin, M.J. Whitman, L.P. T.
Rowe Price Group, and any of their affiliates, or any one or more of
them, shall not constitute, or have the right to constitute, at least
two members of the Board or (y) any person or "group" (as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934 and
Rule 13d-3 promulgated thereunder) becomes a beneficial owner of more
than 50% of the voting stock of the Company.
2.2 Permanent Disability. If the Employee becomes totally and
--------------------
permanently disabled (as defined in the Company's Long-Term Disability Benefits
Plan applicable to senior executive officers as in effect on the date hereof or,
if no such plan
<PAGE>
exists, permanently disabled shall mean that by reason of a physical or mental
disability or infirmity which has continued for more than 120 consecutive days
or for shorter periods which have aggregated more than 120 days in any period of
180 consecutive days, the Employee has been unable to perform the duties
contemplated by this Agreement ("Permanent Disability")), then the Board of the
Company, in its discretion, or the Employee may terminate the Employee's
employment on written notice thereof, and the Employee shall receive or commence
receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability
insurance policy or similar arrangement which the Company maintains
during the term hereof;
(ii) the amount of Salary earned but not yet paid (the "Salary
Payment"); and
(iii) such payments under applicable plans or programs, including
but not limited to those referred to in Section 1.3(f) hereof, to which
he is entitled pursuant to the terms of such plans or programs.
2.3 Death. In the event of the Employee's death during the term of
-----
his employment hereunder, the Employee's estate or designated beneficiaries
shall receive or commence receiving, as soon as practicable:
(i) any death benefits provided under the employee benefit
programs, plans and practices referred to in Section 1.3(f) hereof, in
accordance with their terms;
(ii) the Salary Payment; and
<PAGE>
(iii) such payments under applicable plans or programs, including
but not limited to those referred to in Section 1.3(f) hereof, to which
the Employee's estate or designated beneficiaries are entitled pursuant
to the terms of such plans or programs.
2.4 Discharge for Cause; Voluntary Termination by the Employee. The
----------------------------------------------------------
Company shall have the right to terminate the employment of the Employee for
Cause. In the event that the Employee's employment is terminated by the Company
for Cause (as hereinafter defined) or by the Employee other than for Good Reason
or other than as a result of the Employee's Permanent Disability or death, prior
to the Termination Date, the Employee shall only be entitled to receive the
Salary Payment and such payments under plans or programs, including but not
limited to those referred to in Section 1.3(f) hereof, to which the Employee is
entitled pursuant to the terms of such plans or programs. After the termination
of the Employee's employment under this Section 2.4, the obligations of the
Company under this Agreement to make any further payments, or provide any
benefits specified herein, to the Employee other than those referred to in the
preceding sentence shall thereupon cease and terminate. Notwithstanding the
foregoing, if the Employee is terminated for Cause pursuant to Section 2.4(a),
(e)(ii) or (f) at any time within one year following the date (the "Date") that
representatives of any person or "group" (as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934 and Rule
<PAGE>
13d-3 promulgated thereunder) (other than those listed in Section
2.1(b)(iii)(x)) (a "Significant Shareholder"), shall constitute at any time four
or more members of the Board and provided representatives of such Significant
Shareholder still constitute four or more directors on the Board at the time of
such termination, the Employee shall be entitled to receive such amounts and
other benefits payable under Section 2.1(a) for a period commencing with the
date of such termination through the first anniversary of the Date as though
such termination had not been for Cause. As used herein, the term "Cause" shall
be limited to (a) gross negligence or wilful misconduct by the Employee in the
performance of his duties; (b) dishonesty, fraud, embezzlement or
misappropriation (other than an arms's-length dispute relating to the erroneous
reporting of an immaterial amount as an expense), by the Employee relating to
the Company or any of its funds, properties, opportunities or other assets; (c)
continuing refusal by the Employee to perform his duties hereunder or any lawful
direction of the Board of the Company as required under Section 1.2, which is
not cured within ten (10) days after written notice of any such refusal to
perform such duties or direction was given to the Employee; (d) any material
breach of the provisions of Article III of this Agreement by the Employee or any
other material breach of this Agreement by the Employee which is not cured by
the Employee within ten (10) days after written notice; (e) the indictment or
conviction of the
<PAGE>
Employee for commission of (i) any felony or (ii) any misdemeanor involving
moral turpitude; provided, however, if the Employee is terminated for Cause
pursuant to this Section 2.4(e) and the indictment is dismissed or the Employee
is not found guilty of any such felony or misdemeanor, the Employee shall be
entitled to receive such amounts and other benefits payable under Section 2.1(a)
as though the termination of employment had not been a termination for Cause;
and (f) acting in any manner or making any statements which a majority of the
Board of the Company reasonably determines to be materially detrimental or
materially damaging to the reputation, operations, prospects or business
relations of the Company.
2.5 Termination After a Change in Control. In the event the Employee
--------------------------------------
has not exercised his right to terminate this Agreement pursuant to Section
2.1(b)(iii) and the Employee is terminated for Cause pursuant to Section 2.4(a),
(e)(ii) or (f) within one year following such Change in Control, the Employee
shall be entitled to receive such amounts and other benefits payable under
Section 2.1(a) for a period commencing with the date of such termination through
the first anniversary of the date of such Change in Control as though the
termination of employment had not been a termination for Cause.
2.6 Liquidated Damages. The parties agree that any amounts payable to
------------------
the Employee under this Agreement following his termination of employment shall
constitute liquidated
<PAGE>
damages. The parties agree that the damages payable to the Employee in the event
of such termination would be difficult to estimate accurately, the amounts
payable bear a reasonable relationship to the amount of damages anticipated by
the parties as of the date hereof and such amounts are not a penalty. The
parties agree that the Employee shall not be obligated to mitigate damages by
seeking other employment and any earnings from subsequent employment shall not
reduce the amounts payable hereunder.
ARTICLE III
CONFIDENTIAL INFORMATION; NON-COMPETITION
-----------------------------------------
3.1 Nondisclosure of Confidential Information; Non-Competition.
----------------------------------------------------------
(a) The Employee shall not, without the prior written consent of the Board
of the Company, use, divulge, disclose or make accessible to any other person,
firm, partnership, corporation or other entity any Confidential Information (as
hereinafter defined) pertaining to the business of the Company or any of its
affiliates or subsidiaries, except (i) while employed by the Company, in the
business of and for the benefit of the Company, or (ii) when required to do so
by a court of competent jurisdiction, by any governmental agency having
supervisory authority over the business of the Company, or by any administrative
body or legislative body (including a committee thereof) with purported or
apparent jurisdiction to order the Employee to divulge, disclose or make
accessible such
<PAGE>
information. For purposes of this Section 3.1(a), "Confidential Information"
shall mean non-public information concerning the Company's financial data,
strategic business plans, product development (or other proprietary product
data), customer lists, marketing plans, processes, inventions, devices and other
non-public, proprietary and confidential information of the Company, its
affiliates, subsidiaries or its customers, that, in any case, is not otherwise
available to the public.
(b) During the period of his employment by the Company and for one
year thereafter in the event (x) the Employee is terminated by the Company
other than for Cause or the Employee terminates his employment for Good Reason
and therefore continues to receive his then current Salary pursuant to Section
2.1(a) or (y) the Employee is terminated by the Company for Cause or the
Employee terminates his employment other than for Good Reason and the Company,
in its sole discretion, elects to pay the Employee his then current Salary for a
period of one year following his termination, the Employee agrees that, without
the prior written consent of the Board of the Company, (A) he will not, directly
or indirectly, either as principal, manager, agent, consultant, officer,
stockholder, partner, investor, lender or employee or in any other capacity,
carry on, be engaged in or have any financial interest in, any business which is
in competition with the business of the Company and/or its affiliates or
subsidiaries and (B) he shall not, on his own
<PAGE>
behalf or on behalf of any person, firm or company, directly or indirectly,
solicit or offer employment to any person who has been employed by the Company
or any of its affiliates or subsidiaries at any time during the twelve (12)
months immediately preceding such solicitation or offer.
(c) For purposes of this Article III, a business shall be deemed to
be in competition with the Company if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company and/or its affiliates or
subsidiaries as a material part of the business of the Company and/or its
affiliates or subsidiaries within the same geographic area in which the Company
and/or its affiliates or subsidiaries principally effect such purchases, sales
or dealings or renders such services; provided, however, that neither the
business of furniture manufacturing nor the business of purchasing fabric from
textile mills and selling such fabric to furniture manufacturers will be deemed
to be in competition with the Company. Nothing in this Article III shall be
construed so as to preclude the Employee from investing directly or indirectly
in any publicly traded equity securities, provided that no such investment in
any class of securities may exceed 5% of the outstanding securities of such
class, without the prior written approval of the Board.
<PAGE>
(d) The Employee and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree that
if in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of this covenant as to the
court shall appear not reasonable and to enforce the remainder of the covenant
as so amended. The Employee agrees that any breach of the covenants contained
in this Article III would irreparably injure the Company. Accordingly, the
Employee agrees that the Company may, in addition to pursuing any other remedies
it may have in law or in equity, obtain an injunction against the Employee from
any court having jurisdiction over the matter restraining any further violation
of this Agreement by the Employee.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 Parties Benefitted; Assignment. This Agreement shall become
------------------------------
effective as of the date hereof and, from and after that time, shall extend to
and be binding upon, and inure to the benefit of, the Employee, his heirs and
his personal representative or representatives, and the Company and its
successors and assigns. Neither this Agreement nor any rights or obligations
hereunder may be assigned by the Employee.
<PAGE>
4.2 Notices. Any and all notices, demands, requests or other
-------
communications required or permitted hereunder to be served on, given to or
delivered to any party to this Agreement shall be in writing and shall be deemed
to have been duly given when delivered in person or when dispatched by telegram
or electronic facsimile transfer (confirmed in writing by regular mail
simultaneously dispatched), or, if sent by certified mail return receipt
requested, on the second day after the day of mailing, to the parties at their
respective addresses set forth below:
<PAGE>
If to Employee:
Mr. Steven H. Halper
3 Diana Circle
Roslyn Heights, NY 11576
with a copy to:
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036
Attention: Richard R. Reilly, Esq.
If to the Company:
Seaman Furniture Company, Inc.
300 Crossways Park Drive
Woodbury, NY 11797
Attention: General Counsel
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, NY 10022
Attention: John J. Hyland, Esq.
4.3 Severability. Each section and subsection of this Agreement
------------
constitutes a separate and distinct provision hereof. It is the intent of the
parties hereto that the provisions of this Agreement be enforced to the fullest
extent permissible under the laws and public policies applicable in each
jurisdiction in which enforcement is sought. Accordingly, if any provision of
this Agreement shall be adjudicated to be invalid, ineffective or unenforceable,
the remaining provisions shall not be affected thereby. The invalid,
ineffective or unenforceable provision shall, without further action by the
parties, be automatically amended to effect the original purpose and intent
<PAGE>
of the invalid, ineffective or unenforceable provision; provided, however, that
-------- -------
such amendment shall apply only with respect to the operation of such provision
in the particular jurisdiction with respect to which such adjudication is made.
4.4 Amendment. No amendment, supplement, modification, waiver or
---------
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof, nor
shall such waiver constitute a continuing waiver.
4.5 Legal Fees. In the event an action is brought by the Employee to
----------
enforce his rights hereunder and a final (non-appealable) judgment is entered
against the Company, the Company shall pay to the Employee the reasonable legal
fees and expenses incurred by the Employee in connection with such action,
provided the Employee furnishes to the Company satisfactory evidence of such
legal fees and expenses. In any other event, each party shall bear the costs of
any legal fees and other fees and expenses which may be incurred in respect of
enforcing its respective rights under this Agreement.
4.6 Survivorship. The respective rights and obligations of the
------------
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
<PAGE>
provisions of this Section 4.6 are in addition to the survivorship provisions of
any other section of this Agreement.
4.7 Indemnification. The Company agrees that if the Employee is made
---------------
a party, or is threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director, officer or employee of the
Company or its affiliates or is or was serving at the request of the Company or
its affiliates as a director, officer, member, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, whether or
not the basis of such Proceeding is the Employee's alleged action in an official
capacity while serving as a director, officer, member, employee or agent, the
Employee shall be indemnified and held harmless by the Company to the fullest
extent permitted or authorized by the Company's certificate of incorporation or
bylaws or, if greater, by the laws of the State of Delaware, against all cost,
expense, liability and loss (including attorneys' fees) judgments, fines, and
amounts paid or to be paid in settlement) reasonably incurred or suffered by the
Employee in connection therewith, and such indemnification shall continue as to
the Employee even if he has ceased to be a director, member, employee or agent
of the Company or its affiliates or other entity and shall inure to the benefit
of the Employee's heirs, executors and administrators. The Company shall
advance to the Employee all reasonable costs and
<PAGE>
expenses incurred by him in connection with a Proceeding within ten (10) days
after receipt by the Company of a written request for such advance. Such request
shall include an undertaking by the Employee to repay the amount of such advance
if it shall ultimately be determined that he is not entitled to be indemnified
against such costs and expenses. The indemnification rights provided by this
Section 4.7 shall not be construed to limit any other rights to indemnification
that Employee may have under the Company's certificate of incorporation, by-laws
or pursuant to an indemnification agreement between the Company and Employee.
The Company agrees to maintain a directors' and officers' liability insurance
policy covering the Employee to the extent that the Company provides such
coverage for its other executive officers or its directors.
4.8 Beneficiaries; References. The Employee shall be entitled to
-------------------------
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Employee's death, and may change such election, in
either case by giving the Company written notice thereof. In the event of the
Employee's death or a judicial determination of his incompetence, reference in
this Agreement to the Employee shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal representative.
<PAGE>
4.9 Third Parties. Nothing expressed or implied in this Agreement is
-------------
intended, or shall be construed, to confer upon or give any person or entity
other than the Company and the Employee any rights or remedies under, or by
reason of, this Agreement.
4.10 Currency. Unless stipulated otherwise herein, all references in
--------
this Agreement to "dollars," "money," "payments," or other similar financial or
monetary terms are references to the currency of the United States of America.
4.11 Entire Agreement. This Agreement embodies the entire agreement
----------------
and understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company and the Employee
including the Prior Employment Agreement.
4.12 Withholding. The Company shall be entitled to withhold from
-----------
payment any amount of withholding required by law.
4.13 Governing Law. This Agreement and the legal relations among the
-------------
parties hereto shall be governed by and construed in accordance with the
substantive laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
4.14 Headings. The headings of the Articles and Sections of this
--------
Agreement have been inserted solely for convenience of reference and shall in no
way restrict or modify any of the terms or provisions hereof.
<PAGE>
4.15 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and delivered by its duly authorized officer, and the Employee had
duly executed and delivered this Agreement, as of the date first written above.
SEAMAN FURNITURE COMPANY, INC.
By:____________________________
Name:
Title:
-------------------------------
STEVEN H. HALPER
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 1st day
of May, 1995, by and between SEAMAN FURNITURE COMPANY, INC., a Delaware
corporation (the "Company"), and MR. PETER MCGEOUGH, an individual residing at
20 Forrest Drive, Lloyd Neck, New York 11743 (the "Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Employee currently serves as the Chief Administrative and
Financial Officer of the Company pursuant to the provisions of an employment
agreement dated as of October 14, 1992 between the Company and the Employee (the
"Prior Employment Agreement"), and the Company desires to retain the continued
services of the Employee;
WHEREAS, the parties wish to amend and restate the Prior Employment
Agreement to provide the Employee with compensation and other benefits on the
terms and conditions set forth in this Agreement;
WHEREAS, the Employee is willing to accept such continued employment
and perform services for the Company on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Employee hereby
agree as follows:
<PAGE>
ARTICLE I
EMPLOYMENT
----------
1.1 Term. The Company hereby employs the Employee as its Chief
----
Administrative and Financial Officer, and the Employee hereby agrees to serve
the Company in such capacity, for a three-year term commencing as of May 1,
1995, and ending on April 30, 1998, subject to automatic renewal following the
initial term for consecutive terms of one year each commencing on the day after
the expiration of the then current term, unless either party elects to terminate
by giving written notice to the other at least ninety (90) days prior to the
expiration of the then current term (the "Termination Date"), unless sooner
terminated pursuant to the provisions of this Agreement (the "Term of
Employment"); provided, however, that any termination of employment by the
-------- -------
Employee (other than for death, Permanent Disability or Good Reason (as such
terms are hereinafter defined)) may only be made upon forty-five (45) days prior
written notice to the Company and any termination of employment by the Employee
for Good Reason may only be made upon ten (10) days prior written notice to the
Company.
1.2 Duties. The Employee shall be employed on a full-time basis and
shall devote all his business time and attention to the performance of services,
duties and responsibilities in connection with his employment as the Chief
Administrative and Financial Officer of the Company. The Employee shall perform
<PAGE>
such duties and exercise such powers commensurate with his position as the Chief
Administrative and Financial Officer of the Company, subject to the direction of
the Board of Directors of the Company (the "Board") or its designees and subject
to such restrictions as such Board or its designees may reasonably from time to
time impose. The Employee shall serve as a member of the Board of the Company,
and as an officer or director of any subsidiary or affiliate of the Company if
elected to such positions by the stockholders or board of directors of such
subsidiary or affiliate.
The Employee shall at all times during the Term of Employment
discharge all such duties and responsibilities conscientiously, in good faith
and to the best of his ability, giving to the Company the full benefit of his
knowledge, expertise, skill and judgment. The Employee shall not, without the
prior written consent of the Board, render services of a business, professional
or commercial nature for compensation to any other entity or person other than
the Company nor engage or participate in any trade, business or occupation
whatsoever other than as authorized by the Board in connection with the
performance of his duties hereunder to the Company. (Notwithstanding the
foregoing, nothing herein shall preclude the Employee from owning and leasing a
second home.) Nothing in this Agreement shall preclude the Employee from
participating in charitable, educational, religious and community affairs and
<PAGE>
organizations, and similar types of activities, from managing personal
investments made by him in publicly traded equity securities (provided that no
such investment in any class of securities may exceed 5% of the outstanding
securities of such class, without the prior written approval of the Board) or
from serving, subject to the prior written approval of the Board, as a member of
boards of directors or as a trustee of any other corporation, association or
entity, so long as, in the reasonable determination of such Board, such
activities do not interfere with his duties and responsibilities hereunder and
the Board has given its prior written approval thereof.
1.3 Compensation. (a) As compensation for the Employee's services
------------
hereunder, the Company shall pay to the Employee an annual salary of $235,000
(the "Salary"), payable in accordance with the ordinary payroll practices of the
Company. In addition, the Employee acknowledges receipt of a cash bonus of
$275,000 representing the Employee's bonus for the fiscal year ending April 30,
1995.
(b) On each May 1 commencing with May 1, 1996, the Employee's
Salary shall be increased by an amount determined by multiplying $235,000 by a
fraction, the numerator of which is the Consumer Price Index for All Urban
Consumers -- (1982 - 84 = 100) for N.Y. - Northern N.J. - Long Island. NY - NJ -
CT, as published by the Bureau of Labor Statistics of the United States
Department of Labor (the "CPI") for the preceding April, and the
<PAGE>
denominator of which is the CPI for April 1995. Once increased, such increased
amount shall constitute the Employee's Salary, subject to any increase pursuant
to Section 1.3(c).
(c) Prior to April 30, 1996, and prior to each April 30
thereafter, the Board shall review the Salary and benefits payable to the
Employee, or for which the Employee is eligible hereunder and, in their
discretion, after consideration of the Employee's performance, the profitability
and financial position of the Company and such other factors as they deem
appropriate, the Board may by a majority vote agree to increase the Salary of
the Employee and/or to pay to the Employee a bonus in respect of the prior
fiscal year of the Company (a "Bonus") as may be deemed appropriate in their
absolute sole discretion and as provided in this Agreement. If the Employee's
Salary is increased, such increased amount shall constitute the Employee's
Salary. Nothing, herein, however, shall be deemed to create an obligation of the
Company to increase the Salary of the Employee pursuant to this Section 1.3(c)
or to pay a Bonus to the Employee at any time other than as provided in Section
1.3(d). Any increase in Salary greater than that contemplated by Section 1.3(b)
or any payment of any Bonus other than as provided in Section 1.3(d) shall be
totally discretionary with the Board.
(d) (i) The Employee shall receive a minimum Bonus for the fiscal
year ending April 30, 1996 (the "1996 Minimum Bonus") calculated pursuant to the
matrix (the "1996 Matrix") set
<PAGE>
forth on Exhibit A to this Agreement. The assumptions set forth on Exhibit A are
for illustrative purposes only and are not binding on the Board. The amount of
the 1996 Minimum Bonus shall be calculated by multiplying the relevant
percentage from the 1996 Matrix (based on the Company's actual financial results
for such fiscal year) by the Salary of the Employee. The percentage amounts set
forth in the 1996 Matrix relate solely to the fiscal year ending April 30, 1996
and are the only guaranteed portions of the Bonus. Any Bonus amounts in excess
of the 1996 Minimum Bonus, if any, will be determined by the Board in its sole
discretion, notwithstanding the financial performance of the Company.
(ii) The Employee shall be eligible for a minimum Bonus for each
completed fiscal year of his employment hereunder. During the term hereof and
prior to April 30 of each year, the Board will consult with the Employee in
developing a matrix for the following fiscal year, which matrix will ultimately
be established by the Board in its sole discretion.
(e) Upon the commencement of his employment hereunder and for so
long as he remains employed hereunder, the Company shall provide the Employee
with the exclusive use of a Company-owned automobile suitable for a senior
executive, which automobile shall be replaced not more frequently than every two
(2) years.
<PAGE>
(f) The Company shall provide the Employee during the term of his
employment hereunder with coverage under all employee benefit programs, plans
and practices (commensurate with his position in the Company and to the extent
permitted under any employee benefit plan) including the Company's 401(k)
savings plan but excluding any bonus, profit-sharing or similar programs, plans
or practices (but not excluding any qualified pension plan the contributions to
which are not based on profits) in accordance with the terms thereof, which the
Company makes available to its senior executives. The Company shall either
provide the Employee with supplemental medical insurance which shall cover the
cost of any co-payment obligations and/or deductibles with respect to any
medical insurance provided to the Employee by the Company or shall reimburse the
Employee for any such co-payment obligations and/or deductibles. If the Company
maintains a dental insurance policy for its employees generally, the Company
shall either provide the Employee with supplemental dental insurance which shall
cover the cost of any co-payment obligations and/or deductibles with respect to
any dental insurance provided to the Employee by the Company or shall reimburse
the Employee for any such co-payment obligations and/or deductibles. If the
Employee is insurable, the Company shall provide the Employee during the term of
his employment hereunder up to $750,000 of term life insurance payable to the
Employee's designated beneficiary at no cost to the Employee, which
<PAGE>
insurance will be in addition to any other life insurance provided or made
available to employees of the Company generally. At the termination of
employment, the Company, at the Employee's request and at his sole expense,
shall use its best efforts to assign whatever interest the Company has in such
term life insurance policy to the Employee to enable the Employee to continue to
maintain such policy.
(g) The Employee shall be entitled to twenty (20) business days paid
vacation in each calendar year or any greater number of vacation days provided
generally to other senior executives of the Company. Any vacation not taken by
the Employee shall not be carried over into subsequent years nor shall the
Employee be entitled to receive any payment in lieu of such unused vacation.
The Employee, in addition, shall be entitled to the perquisites and other fringe
benefits made available to senior executives of the Company, commensurate with
his position with the Company.
(h) The Employee is authorized to incur reasonable, ordinary and
necessary expenses in carrying out his duties and responsibilities under this
Agreement, including, without limitation, expenses for travel, business,
entertainment and similar items related to such duties and responsibilities.
The Company will reimburse the Employee for all such expenses upon presentation
by the Employee from time to time of appropriately
<PAGE>
itemized and approved (consistent with the Company's policy) accounts of such
expenditures.
(i) The Company shall grant to the Employee an option to purchase up
to 52,500 shares of the common stock of the Company pursuant to the Amended and
Restated 1992 Stock Option Plan, vesting in equal amounts on each of May 1, 1996
at an exercise price of $24.00 per share, May 1, 1997 at an exercise price of
$29.00 per share and May 1, 1998 at an exercise price of $35.00 per share, in
each case on the terms and conditions set forth in such Plan and in the stock
option agreement to be executed by the Company and the Employee with respect
thereto.
ARTICLE II
TERMINATION OF EMPLOYMENT
-------------------------
2.1 Termination Not for Cause or for Good Reason. (a) The Company may
--------------------------------------------
terminate the Employee's employment at any time for any reason. If the
Employee's employment is terminated by the Company other than (i) for Cause (as
defined in Section 2.4 hereof) or (ii) as a result of the Employee's death or
Permanent Disability (as defined in Section 2.2 hereof), or if the Employee
terminates his employment for Good Reason (as defined in Section 2.1(b) hereof)
prior to the Termination Date, the Employee shall receive such payments under
the Company's applicable plans or programs, including but not limited to those
referred to in Section 1.3(f) hereof, to which he is entitled pursuant to the
terms of such plans or programs. In addition,
<PAGE>
the Employee shall be entitled to continue to receive his then current Salary
for a period of two years following the date of termination. Furthermore, the
Employee will be eligible to elect to continue his medical care coverage in
accordance with the requirements of Section 4980B of the Internal Revenue Code
of 1986, as amended ("COBRA").
(b) For the purposes of this Agreement, "Good Reason" shall mean any
of the following (without the Employee's express prior written consent) which
the Company fails to cure within ten (10) days:
(i) Any material breach by the Company of any provision of this
Agreement;
(ii) Any material diminution by the Company of the Employee's
duties or responsibilities, except in connection with the termination
of the Employee's employment for Cause, as a result of Permanent
Disability, as a result of the Employee's death or by the Employee
other than for Good Reason; or
(iii) Any change in control (a "Change in Control"). As used
herein a Change in Control shall be deemed to have occurred if (x) at
any time representatives of Sass Lamle Rubin, M.J. Whitman, L.P. T.
Rowe Price Group, and any of their affiliates, or any one or more of
them, shall not constitute, or have the right to constitute, at least
two members of the Board or (y) any person or "group" (as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934 and
Rule 13d-3 promulgated thereunder) becomes a beneficial owner of more
than 50% of the voting stock of the Company.
2.2 Permanent Disability. If the Employee becomes totally and
--------------------
permanently disabled (as defined in the Company's
<PAGE>
Long-Term Disability Benefits Plan applicable to senior executive officers as in
effect on the date hereof or, if no such plan exists, permanently disabled shall
mean that by reason of a physical or mental disability or infirmity which has
continued for more than 120 consecutive days or for shorter periods which have
aggregated more than 120 days in any period of 180 consecutive days, the
Employee has been unable to perform the duties contemplated by this Agreement
("Permanent Disability")), then the Board of the Company, in its discretion, or
the Employee may terminate the Employee's employment on written notice thereof,
and the Employee shall receive or commence receiving, as soon as practicable:
(i) amounts payable pursuant to the terms of a disability
insurance policy or similar arrangement which the Company maintains
during the term hereof;
(ii) the amount of Salary earned but not yet paid (the "Salary
Payment"); and
(iii) such payments under applicable plans or programs, including
but not limited to those referred to in Section 1.3(f) hereof, to which
he is entitled pursuant to the terms of such plans or programs.
2.3 Death. In the event of the Employee's death during the term of
-----
his employment hereunder, the Employee's estate or designated beneficiaries
shall receive or commence receiving, as soon as practicable:
(i) any death benefits provided under the employee benefit
programs, plans and practices
<PAGE>
referred to in Section 1.3(f) hereof, in accordance with their terms;
(ii) the Salary Payment; and
(iii) such payments under applicable plans or programs, including
but not limited to those referred to in Section 1.3(f) hereof, to which
the Employee's estate or designated beneficiaries are entitled pursuant
to the terms of such plans or programs.
2.4 Discharge for Cause; Voluntary Termination by the Employee. The
----------------------------------------------------------
Company shall have the right to terminate the employment of the Employee for
Cause. In the event that the Employee's employment is terminated by the Company
for Cause (as hereinafter defined) or by the Employee other than for Good Reason
or other than as a result of the Employee's Permanent Disability or death, prior
to the Termination Date, the Employee shall only be entitled to receive the
Salary Payment and such payments under plans or programs, including but not
limited to those referred to in Section 1.3(f) hereof, to which the Employee is
entitled pursuant to the terms of such plans or programs. After the termination
of the Employee's employment under this Section 2.4, the obligations of the
Company under this Agreement to make any further payments, or provide any
benefits specified herein, to the Employee other than those referred to in the
preceding sentence shall thereupon cease and terminate. Notwithstanding the
foregoing, if the Employee is terminated for Cause pursuant to Section 2.4(a),
(e)(ii) or (f) at any time within one year following the date (the "Date") that
<PAGE>
representatives of any person or "group" (as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934 and Rule 13d-3 promulgated
thereunder) (other than those listed in Section 2.1(b)(iii)(x)) (a "Significant
Shareholder"), shall constitute at any time four or more members of the Board
and provided representatives of such Significant Shareholder still constitute
four or more directors on the Board at the time of such termination, the
Employee shall be entitled to receive such amounts and other benefits payable
under Section 2.1(a) for a period commencing with the date of such termination
through the first anniversary of the Date as though such termination had not
been for Cause. As used herein, the term "Cause" shall be limited to (a) gross
negligence or wilful misconduct by the Employee in the performance of his
duties; (b) dishonesty, fraud, embezzlement or misappropriation (other than an
arms's-length dispute relating to the erroneous reporting of an immaterial
amount as an expense), by the Employee relating to the Company or any of its
funds, properties, opportunities or other assets; (c) continuing refusal by the
Employee to perform his duties hereunder or any lawful direction of the Board of
the Company as required under Section 1.2, which is not cured within ten (10)
days after written notice of any such refusal to perform such duties or
direction was given to the Employee; (d) any material breach of the provisions
of Article III of this Agreement by the Employee or any other material breach of
this Agreement by the
<PAGE>
Employee which is not cured by the Employee within ten (10) days after written
notice; (e) the indictment or conviction of the Employee for commission of (i)
any felony or (ii) any misdemeanor involving moral turpitude; provided, however,
if the Employee is terminated for Cause pursuant to this Section 2.4(e) and the
indictment is dismissed or the Employee is not found guilty of any such felony
or misdemeanor, the Employee shall be entitled to receive such amounts and other
benefits payable under Section 2.1(a) as though the termination of employment
had not been a termination for Cause; and (f) acting in any manner or making any
statements which a majority of the Board of the Company reasonably determines to
be materially detrimental or materially damaging to the reputation, operations,
prospects or business relations of the Company.
2.5 Termination After a Change in Control. In the event the Employee
--------------------------------------
has not exercised his right to terminate this Agreement pursuant to Section
2.1(b)(iii) and the Employee is terminated for Cause pursuant to Section 2.4(a),
(e)(ii) or (f) within one year following such Change in Control, the Employee
shall be entitled to receive such amounts and other benefits payable under
Section 2.1(a) for a period commencing with the date of such termination through
the first anniversary of the date of such Change in Control as though the
termination of employment had not been a termination for Cause.
<PAGE>
2.6 Liquidated Damages. The parties agree that any amounts payable to
------------------
the Employee under this Agreement following his termination of employment shall
constitute liquidated damages. The parties agree that the damages payable to
the Employee in the event of such termination would be difficult to estimate
accurately, the amounts payable bear a reasonable relationship to the amount of
damages anticipated by the parties as of the date hereof and such amounts are
not a penalty. The parties agree that the Employee shall not be obligated to
mitigate damages by seeking other employment and any earnings from subsequent
employment shall not reduce the amounts payable hereunder.
ARTICLE III
CONFIDENTIAL INFORMATION; NON-COMPETITION
-----------------------------------------
3.1 Nondisclosure of Confidential Information;
-----------------------------------------
Non-Competition. (a) The Employee shall not, without the prior written consent
- - ----------------
of the Board of the Company, use, divulge, disclose or make accessible to any
other person, firm, partnership, corporation or other entity any Confidential
Information (as hereinafter defined) pertaining to the business of the Company
or any of its affiliates or subsidiaries, except (i) while employed by the
Company, in the business of and for the benefit of the Company, or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
<PAGE>
administrative body or legislative body (including a committee thereof) with
purported or apparent jurisdiction to order the Employee to divulge, disclose or
make accessible such information. For purposes of this Section 3.1(a),
"Confidential Information" shall mean non-public information concerning the
Company's financial data, strategic business plans, product development (or
other proprietary product data), customer lists, marketing plans, processes,
inventions, devices and other non-public, proprietary and confidential
information of the Company, its affiliates, subsidiaries or its customers, that,
in any case, is not otherwise available to the public.
(b) During the period of his employment by the Company and for one
year thereafter in the event (x) the Employee is terminated by the Company other
than for Cause or the Employee terminates his employment for Good Reason and
therefore continues to receive his then current Salary pursuant to Section
2.1(a) or (y) the Employee is terminated by the Company for Cause or the
Employee terminates his employment other than for Good Reason and the Company,
in its sole discretion, elects to pay the Employee his then current Salary for a
period of one year following his termination, the Employee agrees that, without
the prior written consent of the Board of the Company, (A) he will not, directly
or indirectly, either as principal, manager, agent, consultant, officer,
stockholder, partner, investor, lender or employee or in any other capacity,
carry on, be engaged in or
<PAGE>
have any financial interest in, any business which is in competition with the
business of the Company and/or its affiliates or subsidiaries and (B) he shall
not, on his own behalf or on behalf of any person, firm or company, directly or
indirectly, solicit or offer employment to any person who has been employed by
the Company or any of its affiliates or subsidiaries at any time during the
twelve (12) months immediately preceding such solicitation or offer.
(c) For purposes of this Article III, a business shall be deemed
to be in competition with the Company if it is principally involved in the
purchase, sale or other dealing in any property or the rendering of any service
purchased, sold, dealt in or rendered by the Company and/or its affiliates or
subsidiaries as a material part of the business of the Company and/or its
affiliates or subsidiaries within the same geographic area in which the Company
and/or its affiliates or subsidiaries principally effect such purchases, sales
or dealings or renders such services; provided, however, that neither the
business of furniture manufacturing nor the business of purchasing fabric from
textile mills and selling such fabric to furniture manufacturers will be deemed
to be in competition with the Company. Nothing in this Article III shall be
construed so as to preclude the Employee from investing directly or indirectly
in any publicly traded equity securities, provided that no such investment in
any class of securities may exceed 5% of the
<PAGE>
outstanding securities of such class, without the prior written approval of the
Board.
(d) The Employee and the Company agree that this covenant not to
compete is a reasonable covenant under the circumstances, and further agree that
if in the opinion of any court of competent jurisdiction such restraint is not
reasonable in any respect, such court shall have the right, power and authority
to excise or modify such provision or provisions of this covenant as to the
court shall appear not reasonable and to enforce the remainder of the covenant
as so amended. The Employee agrees that any breach of the covenants contained
in this Article III would irreparably injure the Company. Accordingly, the
Employee agrees that the Company may, in addition to pursuing any other remedies
it may have in law or in equity, obtain an injunction against the Employee from
any court having jurisdiction over the matter restraining any further violation
of this Agreement by the Employee.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 Parties Benefitted; Assignment. This Agreement shall become
------------------------------
effective as of the date hereof and, from and after that time, shall extend to
and be binding upon, and inure to the benefit of, the Employee, his heirs and
his personal representative or representatives, and the Company and its
<PAGE>
successors and assigns. Neither this Agreement nor any rights or obligations
hereunder may be assigned by the Employee.
4.2 Notices. Any and all notices, demands, requests or other
-------
communications required or permitted hereunder to be served on, given to or
delivered to any party to this Agreement shall be in writing and shall be deemed
to have been duly given when delivered in person or when dispatched by telegram
or electronic facsimile transfer (confirmed in writing by regular mail
simultaneously dispatched), or, if sent by certified mail return receipt
requested, on the second day after the day of mailing, to the parties at their
respective addresses set forth below:
If to Employee:
Mr. Peter McGeough
20 Forrest Drive
Lloyd Neck, NY 11743
with a copy to:
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036
Attention: Richard R. Reilly, Esq.
If to the Company:
Seaman Furniture Company, Inc.
300 Crossways Park Drive
Woodbury, NY 11797
Attention: General Counsel
with a copy to:
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, NY 10022
Attention: John J. Hyland, Esq.
<PAGE>
4.3 Severability. Each section and subsection of this Agreement
------------
constitutes a separate and distinct provision hereof. It is the intent of the
parties hereto that the provisions of this Agreement be enforced to the fullest
extent permissible under the laws and public policies applicable in each
jurisdiction in which enforcement is sought. Accordingly, if any provision of
this Agreement shall be adjudicated to be invalid, ineffective or unenforceable,
the remaining provisions shall not be affected thereby. The invalid,
ineffective or unenforceable provision shall, without further action by the
parties, be automatically amended to effect the original purpose and intent of
the invalid, ineffective or unenforceable provision; provided, however, that
-------- -------
such amendment shall apply only with respect to the operation of such provision
in the particular jurisdiction with respect to which such adjudication is made.
4.4 Amendment. No amendment, supplement, modification, waiver or
---------
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof, nor
shall such waiver constitute a continuing waiver.
4.5 Legal Fees. In the event an action is brought by the Employee to
----------
enforce his rights hereunder and a final (non-appealable) judgment is entered
against the Company, the Company shall pay to the Employee the reasonable legal
fees and
<PAGE>
expenses incurred by the Employee in connection with such action, provided the
Employee furnishes to the Company satisfactory evidence of such legal fees and
expenses. In any other event, each party shall bear the costs of any legal fees
and other fees and expenses which may be incurred in respect of enforcing its
respective rights under this Agreement.
4.6 Survivorship. The respective rights and obligations of the
------------
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations. The
provisions of this Section 4.6 are in addition to the survivorship provisions of
any other section of this Agreement.
4.7 Indemnification. The Company agrees that if the Employee is made
---------------
a party, or is threatened to be made a party, to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director, officer or employee of the
Company or its affiliates or is or was serving at the request of the Company or
its affiliates as a director, officer, member, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, whether or
not the basis of such Proceeding is the Employee's alleged action in an official
capacity while serving as a director, officer, member, employee or agent, the
Employee shall be indemnified and held harmless by the Company to the fullest
extent permitted or authorized by the
<PAGE>
Company's certificate of incorporation or bylaws or, if greater, by the laws of
the State of Delaware, against all cost, expense, liability and loss (including
attorneys' fees) judgments, fines, and amounts paid or to be paid in settlement)
reasonably incurred or suffered by the Employee in connection therewith, and
such indemnification shall continue as to the Employee even if he has ceased to
be a director, member, employee or agent of the Company or its affiliates or
other entity and shall inure to the benefit of the Employee's heirs, executors
and administrators. The Company shall advance to the Employee all reasonable
costs and expenses incurred by him in connection with a Proceeding within ten
(10) days after receipt by the Company of a written request for such advance.
Such request shall include an undertaking by the Employee to repay the amount of
such advance if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses. The indemnification rights provided
by this Section 4.7 shall not be construed to limit any other rights to
indemnification that Employee may have under the Company's certificate of
incorporation, by-laws or pursuant to an indemnification agreement between the
Company and Employee. The Company agrees to maintain a directors' and officers'
liability insurance policy covering the Employee to the extent that the Company
provides such coverage for its other executive officers or its directors.
<PAGE>
4.8 Beneficiaries; References. The Employee shall be entitled to
-------------------------
select (and change, to the extent permitted under any applicable law) a
beneficiary or beneficiaries to receive any compensation or benefit payable
hereunder following the Employee's death, and may change such election, in
either case by giving the Company written notice thereof. In the event of the
Employee's death or a judicial determination of his incompetence, reference in
this Agreement to the Employee shall be deemed, where appropriate, to refer to
his beneficiary, estate or other legal representative.
4.9 Third Parties. Nothing expressed or implied in this Agreement is
-------------
intended, or shall be construed, to confer upon or give any person or entity
other than the Company and the Employee any rights or remedies under, or by
reason of, this Agreement.
4.10 Currency. Unless stipulated otherwise herein, all references in
--------
this Agreement to "dollars," "money," "payments," or other similar financial or
monetary terms are references to the currency of the United States of America.
4.11 Entire Agreement. This Agreement embodies the entire agreement
----------------
and understanding between the parties hereto and supersedes in all respects any
prior or other agreement or understanding between the Company and the Employee
including the Prior Employment Agreement.
<PAGE>
4.12 Withholding. The Company shall be entitled to withhold from
-----------
payment any amount of withholding required by law.
4.13 Governing Law. This Agreement and the legal relations among the
-------------
parties hereto shall be governed by and construed in accordance with the
substantive laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
4.14 Headings. The headings of the Articles and Sections of this
--------
Agreement have been inserted solely for convenience of reference and shall in no
way restrict or modify any of the terms or provisions hereof.
4.15 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and delivered by its duly authorized officer, and the Employee had
duly executed and delivered this Agreement, as of the date first written above.
SEAMAN FURNITURE COMPANY, INC.
By:
---------------------------
Name:
Title:
<PAGE>
-------------------------------
PETER MCGEOUGH
<PAGE>
FORM
----
AGREEMENT
---------
AGREEMENT made and entered into as of the 26th day of January, 1996
effective December 28, 1995 by and between SEAMAN FURNITURE COMPANY, INC.,
located at 300 Crossways Park Drive, Woodbury, New York 11797, a Delaware
Corporation, hereinafter referred to as the Employer or Company, and LOCAL 875
affiliated with the INTERNATIONAL BROTHERHOOD OF TEAMSTERS, hereinafter
designated as the Union or the Local.
W I T N E S S E T H:
-------------------
WHEREAS, the Employer is engaged in the business of retail
sale of furniture and
WHEREAS, the Union represents the majority of the Employees of the
Employer at Employer's Central Islip, New York Warehouse, and
WHEREAS, the parties hereto desire to cooperate in establishing
conditions in the Employer's Central Islip, New York Warehouse, which will tend
to secure to the workers a living wage, improve the standards of labor, abolish
unfair competition insofar as labor is concerned, and provide methods for a fair
and peaceful adjustment of all disputes that may arise between the parties
hereto,
NOW THEREFORE, in consideration of one dollar and other good and
valuable consideration to each in hand paid by the other, and in consideration
of the mutual promises and obligations herein assumed and made, the parties
hereby agree as follows:
<PAGE>
ARTICLE I
- - ---------
GOOD FAITH
----------
The Employer and the Union hereby agree that they will in good faith
live up to the provisions of this Agreement, and that this Agreement is entered
into by the Union and the Employer on behalf of the employees of the Employer,
now employed or hereafter to be employed, in the bargaining unit as defined in
Article II hereof.
ARTICLE II
- - ----------
RECOGNITION
-----------
The Employer agrees to and does hereby recognize the Union as the sole
and exclusive bargaining agent for all warehouse employees at the Employer's
Central Islip, New York Warehouse, excluding clerical and office employees,
guards, professional employees and supervisors as defined in the Labor
Management Relations Act of 1947.
This Agreement shall cover all future plants within a one hundred
twenty-five (125) mile radius measured from the Company's headquarters which the
Company may operate during the term of this Agreement or any extension of this
Agreement, including all plants within the radius operated as the result of
expansion or change. This clause shall insure the benefit of the Local herein
only, but not its successors or assigns.
ARTICLE III
- - -----------
UNION SECURITY
--------------
All workers who are members of the Local Union on the effective date
of this subsection or on the date of execution of this Agreement, whichever is
the later, shall remain members of
2
<PAGE>
the Local Union in good standing as a condition of employment. All present
employees who are not members of this Local Union and all employees who are
hired hereafter shall become and remain members in good standing of the Local
Union as a condition of employment by the 61st day following the effective date
of this subsection or the date of their employment, whichever is the later. This
provision shall be made and become effective as of such time as it may be made
and become effective under the provisions of the National Labor Relations Act,
but not retroactively.
The failure of any person to become a member of the Union at the
required time shall obligate the Employer, upon written notice from the Union to
such effect and to further effect that Union membership was available to such
person on the same terms and conditions generally available to other members, to
forthwith discharge such person. Further, the failure of any person to maintain
his or her Union membership in good standing as required herein shall, upon
written notice to the Employer by the Union to such effect, obligate the
Employer to discharge such person.
In the event of any change in the law during the term of this
Agreement, the Employer agrees that the Union will be entitled to receive the
maximum Union security which may be lawfully permissible.
No provision of this Article shall apply in any state to the extent
that it may be prohibited by State law. If under applicable State law,
additional requirements must be met before
3
<PAGE>
any such provisions may become effective, such additional requirements shall
first be met.
If any provisions of this Article are invalid under the law of any
state wherein this Agreement is executed, such provisions shall be modified to
comply with the requirements of State law or shall be re-negotiated for the
purpose of adequate replacement. If such negotiations shall not result in a
mutually satisfactory agreement, the Union and Employer shall be permitted all
legal or economic recourse.
ARTICLE IV
- - ----------
CHECK-OFF
---------
The Employer agrees to deduct, on the first pay day of each month,
from the salary or wages of the employees covered by this Agreement such Union
dues and initiation fees as the Union, by written notice, advises the Employer
are regularly due as such from the employees, and will turn such monies over to
the Union on or before the TENTH DAY of each month, covering the prior month,
together with its listing of the employees and amount, from whom such monies
have been deducted, provided, however, that the Employer will make such
deduction only from wages of those employees who submit individual written
authorization to the Employer directing and authorizing the Employer to make
such deductions.
Any monies deducted from the employees are to remain the property of
the Union and in no event shall the Employer be permitted to use said monies for
any other purpose.
4
<PAGE>
ARTICLE V
- - ---------
HOURS OF WORK
-------------
Each regular shift shall consist of not more than eight (8) hours per
day, and shall constitute a regular work day. The regular work week shall
consist of five (5) days and shall commence on Monday and terminate on Saturday
of each week. Employees who regularly work a particular shift must receive at
least one (1) week's notice before working a different shift. Employees
switching to the different shift must remain on that shift for at least two (2)
weeks unless mutually waived by the Employer and Union.
ARTICLE VI
- - ----------
OVERTIME
--------
Work performed in excess of eight (8) hours per day and/or forty (40)
hours per week shall be considered as overtime work and shall be paid for at the
rate of time and one-half the regular rate of pay. Work performed on holidays
shall be paid for at the rate of time and one-half, in addition to the holiday
pay. Work performed on Sunday will be paid for at the rate of double time. In
any week during which a holiday occurs, the holiday shall be regarded as a
regular day worked, and overtime shall commence after thirty-two (32) hours of
work that week.
ARTICLE VII
- - -----------
HOLIDAYS
--------
The Employer shall not require its employees to work on the
foregoing holidays, and shall pay them for such holidays.
New Year's Day July 4th
Martin Luther King's Birthday Labor Day
Washington's Birthday Thanksgiving Day
Memorial Day Christmas Day
Employee's Birthday*
5
<PAGE>
One (1) floating holiday to be determined by management with four (4) weeks'
notice.
To be eligible for holiday pay, the employee must work the full
scheduled day before and the full scheduled day after the said holiday, unless
that employee is on lay-off or absent due to a verifiable illness or emergency.
Employees with legitimate illnesses during the work day who are required to
leave early will not forfeit the holiday.
Holiday pay for the employees who do not work on the foregoing holiday
shall be eight (8) hours pay.
* For those employees hired after the effective date of the
Agreement, there will be a one-year waiting period before becoming eligible for
the Employee Birthday holiday.
A. If any of said holidays fall on Saturday, then even though no work
shall be performed, the employees shall be paid at straight time for that day.
B. If any of said holidays shall fall on Sunday, then the Monday
following shall be considered the holiday, and even though no work shall have
been performed on such Monday, the employees shall be paid for that day.
C. If any of the above holidays shall fall within the employee's
vacation period, his or her vacation shall be extended one (1) day with pay.
D. Employees absent because of a compensable illness or injury shall
be entitled to full holiday pay, provided illness is temporary and does not
exceed six (6) weeks' duration.
6
<PAGE>
E. If any of said holidays shall fall on Monday, employees working
the Tuesday through Saturday workweek, shall celebrate the holiday on Tuesday of
that week.
ARTICLE VIII
- - ------------
PERSONAL DAYS
-------------
Employees hired prior to the effective date of the Agreement, December
28, 1995, will be eligible for three (3) Personal Days per calendar year.
Personal Days are to be scheduled in advance and require Management's approval.
Personal Days must be used by the end of the calendar year. Carry over from one
year to the next is not permitted nor will there be a pay out of the cash
equivalent of any or all of the unused entitlement.
For those hired after the effective date of the Agreement, the
following applies:
1. if the employee is hired after the start of the calendar year but
prior to August 1, the employee will be eligible for three (3) Personal Days
after completing his or her probationary period;
2. if the employee is hired after August 1, the employee will be
eligible for three (3) Personal Days at the beginning of the calendar year after
completing one year of service.
ARTICLE IX
- - ----------
VACATIONS
---------
The Employer shall grant vacation with pay for all its employees in
accordance with the provisions of this paragraph as set forth below:
7
<PAGE>
All employees shall receive not less than his or her prorated vacation
as follows:
One (1) week of vacation for all employees with one (1) year or more
but less than two (2) years in the employ of the Employer.
Two (2) weeks of vacation with pay for all employees with two (2)
years or more in the employ of the Employer.
Three (3) weeks of vacation with pay for all employees with six (6)
years or more in the employ of the Employer.
Four (4) weeks of vacation with pay for all employees with fourteen
(14) years or more in the employ of the Employer.
The Employer shall pay to all its employees their vacation pay prior
to the employee going on his or her vacation.
There will be no vacations between November 1 through and including
December 24, in any year. For those employees hired after the effective date
with an anniversary date during the period between November 1 and December 24,
for their first vacation earned only, they will be permitted to carry it over to
the next calendar year, but it must be taken by June 1.
Employees who have been employed for one year or more, who are
discharged, leave their employment or who are laid off at any time during the
term of this Agreement, shall be paid pro-rata vacation at the time of their job
severance. Such pro-rata vacation shall be based upon the vacation provisions
above set forth.
8
<PAGE>
ARTICLE X
- - ---------
WAGES AND WAGE INCREASES
------------------------
A. Effective as of December 28, 1995, there shall be a general wage
increase of seventy-five cents per hour for all employees covered by this
Agreement who by such date have completed their probationary period.
B. Effective as of December 30, 1996, there shall be a general wage
increase of fifty (50) cents per hour for all employees covered by this
Agreement who by such date have completed their probationary period.
C. Effective as of December 29, 1997, there shall be a general wage
increase of fifty (50) cents per hour for all employees covered by this
Agreement who by such date have completed their probationary period.
ARTICLE XI
- - ----------
MEDICAL AND LIFE INSURANCE BENEFITS
-----------------------------------
A. In order to protect and promote the health and welfare of the
employees, the Employer will make available U.S. Healthcare Medical Plan ("U.S.
Healthcare") coverage, subject to the terms and conditions of that plan, from
March 1, 1996 through the expiration date of this Agreement. Those employees
who decide to enroll in U.S. Healthcare may choose the coverage of either (i)
U.S. Healthcare's Value Plus or (ii) U.S. Healthcare's Quality Point of Service
or (iii) decline U.S. Healthcare coverage.
Those employees who enroll in U.S. Healthcare's Value Plus will pay,
each pay period, $6.92 for Individual Coverage or $18.46 for Family coverage.
Those employees who enroll in U.S.
9
<PAGE>
Healthcare's Quality Point of Service will pay, each pay period, $11.54 for
Individual Coverage or $27.69 for Family Coverage. The employee's contribution
will not increase during the term of this Agreement (i.e. until December 28,
1998).
B. The employer will make available to eligible members, life
insurance, subject to the terms and conditions of that plan, from March 1, 1996
through the expiration date of this Agreement. Those employees with two (2)
years or less in the employ of the Employer will be provided with life insurance
in the amount of $1,500.00 and accidental death and dismemberment benefits in
the amount of $1,500.00.
Those employees with three, four or five (3, 4, or 5) years in the
employ of the Employer will be provided with life insurance in the amount of
$2,500.00 and accidental death and dismemberment benefits in the amount of
$1,500.00
Those employees with five (5) years or more in the employ of the
Employer will be provided with life insurance in the amount of $5,000.00 and
accidental death and dismemberment benefits in the amount of $1,500.00.
C. Until March 1, 1996, the employees will continue to be covered by
the Local 875 Louis Hirsch Memorial Welfare Fund and the Employer will pay the
monthly contribution for each employee for the months of January and February
1996.
Employer shall continue to make any other payment required to be made
by the Employer such as New York Disability payments, New York Unemployment
Insurance, Social Security, Workers' Compensation, etc.
10
<PAGE>
ARTICLE XII
- - -----------
PENSION FUND
------------
In order to protect and promote security for employees in the
industry, the Union has established a PENSION FUND, which is administered under
a Declaration of Trust adopted by its members.
The Employer will not make any payments to the Pension Fund until the
Union demonstrates, to the satisfaction of the Employer, that the Pension Fund
is not overfunded. If the Pension Fund is overfunded either presently or in the
future, the Employer shall have no obligation to make any further contributions
to the fund. If at any time thereafter, the Union demonstrates to the
satisfaction of the Employer that the Pension Fund is not overfunded, the
Employer will make such contributions as are necessary to maintain the same
level of benefits available on the date of this Agreement, up to a maximum of
eight percent (8%) of the gross earnings for each Employee covered by this
Agreement.
ARTICLE XIII
- - ------------
LEGAL FUND
----------
The Union has established the Local 875 Pre-Paid Legal Plan (the
"Legal Plan"), which is administered under a Trust Indenture adopted by its
members. Effective as of December 28, 1995, the Employer shall contribute to
the Legal Plan $12.50 per month per employee, which sum shall be utilized by the
Trustees of the Legal Plan in accordance with the Trust Indenture.
11
<PAGE>
ARTICLE XIV
- - -----------
GRIEVANCE PROCEDURE
-------------------
A grievance is hereby jointly defined to be any controversy,
complaint, misunderstanding, or dispute.
Any grievance arising between the Company and the Union shall be
settled in the following manner:
A. The aggrieved employee or employees must present the grievance to
the Shop Steward within five (5) working days after the reason for the grievance
has occurred, except that no time limit shall apply in case of violation of wage
provisions of this Agreement. If a satisfactory settlement is not effected with
the Director of Distribution within three (3) working days, the Shop Steward and
employee shall submit such grievance in writing to the Union's Business
Representative.
B. The Business Representative shall then take the matter up with a
representative of the Company with authority to act upon such grievance. A
decision must be made within five (5) working days.
C. If the Company fails to comply with any settlement of the
grievance or fails to comply with the procedures of this Article, the Union has
the right to take all legal and economic action to enforce its demands.
Section 2:
- - ---------
Any Shop Steward shall be permitted to leave his or her work to
investigate and adjust the grievance of any employee within his or her
jurisdiction, after notification to his or her Supervisor. Employees shall have
the Shop Steward or a
12
<PAGE>
representative of the Union present during the discussion of any grievance with
representatives of the Company.
Section 3:
- - ---------
A. The dispute shall then be submitted to arbitration. An Arbitrator
shall be selected from a list provided by the Federal Mediation Conciliation
Service or an otherwise mutually agreed upon Arbitrator.
B. Expense of the Arbitrator selected or appointed shall be borne
equally by the Company and the Union, unless Arbitration is requested because of
the Employer's failure to make remittances as required by this Agreement, in
which event the Employer shall pay the total cost.
Section 4:
- - ---------
The Arbitrator shall not have the authority to amend or modify this
Agreement or establish new terms or conditions under this Agreement. The
Arbitrator shall determine any question or arbitrability. In the event the
position of the Union is sustained, the aggrieved party shall be entitled to all
the benefits of this Agreement which should have accrued to him or her had there
been no grievance.
Section 5:
- - ---------
Both parties agree to accept the decision of the Arbitrator as final
and binding. If the Company fails to comply with the award of the Arbitrator or
with the procedures of this Article, the Union has a right to take all legal and
economic action to enforce compliance.
13
<PAGE>
ARTICLE XV
- - ----------
SENIORITY
---------
A. The Employer recognizes the principle of seniority. For the
purpose of lay-off and rehiring, seniority shall be on a plant-wide basis, in
that the last employee hired in the plant-wide basis shall be the first employee
laid off and the last employee laid off shall be the first employee rehired
provided said employee has the skill and the ability to perform the job.
B. It is agreed by the Company and the Union that all Shop Stewards
and officers of the Union have seniority over all employees in the plant
providing they can do the work that is to be done.
C. Any employee who is laid off six (6) consecutive months shall lose
his or her seniority. However, if he or she is rehired thereafter, such
employee shall return with his or her original seniority.
D. The right of seniority in re-employment shall be accorded to a
laid off employee prior to new employees being hired, provided such said off
employees responded to a call to report for work not more than three (3) working
days after notice has been sent to him or her by registered mail, return receipt
requested, to his or her last-known post office address.
E. Preference in assignment to shift work and choice of newly-created
jobs shall be given to employees having seniority provided said employees have
the skill and ability to perform the job. An employee does not have the right
to "bump" into any
14
<PAGE>
other job function. The Employer shall not be required to train employees for
any job including those which are newly created.
F. Seniority right to a laid off employee will continue to accumulate
while he or she is laid off.
G. It is agreed between the parties that seniority by department will
prevail for temporary daily work assignments.
ARTICLE XVI
- - -----------
NOTICE TO AND FROM THE UNION
----------------------------
A. A seniority list, including name, category, rate of pay, and
starting date, shall be submitted every other month.
B. Remittance sheets, including names, new employees' starting date,
old employees' termination date, gross wages earned for the preceding month for
each employee, the amounts of dues and initiation checked-off, contributions to
fringe benefit funds, and for what monthly periods, shall be remitted once a
month, within ten (10) days after the first day of each month, together with
checks made payable to the proper fringe benefit fund and dues and initiation to
Local 875, I.B.T.
C. All necessary cards, properly signed, to the fringe benefit funds,
from a new employee, must be submitted with the remittance sheet.
D. For failure to submit the remittance sheet within ten (10) days
after it is due, then in such event, the Union at its option, may take economic
action until it is submitted, and the Employer shall pay to employees for all
time out on strike or work stoppage their regular rate of pay.
15
<PAGE>
E. If the Employer fails to notify the Union of the hiring of a new
employee and/or the rehiring of employee, then in such event, the Employer shall
be responsible from the first day due, for all monies as if he or she collected
same to the Union for dues, initiations and contributions to all fringe benefit
funds as described herein.
F. For failure to remit monies due to the Union for dues, initiations
and any fringe benefit fund before the sixty-first (61st) day of accrual, the
Union, at its option, may charge a bookkeeping fee of two (2%) percent per month
or any part thereof until it is remitted, provided that not less than ten (10)
days written notice of the proposed charge is given to the Employer and the
Employer fails to remit within ten (10) days.
G. If the Employer fails to notify the Union of the termination of an
employee, for any reason, then in such event, the Employer shall be responsible
for all monies, as if he or she collected same, to the Union for dues,
initiation and contributions to all fringe benefit funds, if any, as described
herein.
H. The Trustees of the Legal Plan and, if the Employer is then making
contributions to the Pension Fund the Trustees of the Pension Fund, may audit
the Employer's payroll books and records after giving reasonable notice to the
Employer, and if contributions are incorrect, the Employer shall pay the cost of
such audit and all legal fees necessary and incident to collect the same.
16
<PAGE>
I. In the event of default by the Employer in the payment of
contributions to the Funds mentioned in this Agreement, the Trustees may take
legal action to obtain payment, including but not limited to, the commencement
of arbitration proceedings for such purposes before an Arbitrator, selected by
the appropriate Trustees. All expenses thereto, including but not limited to,
the fee and expenses of the Arbitration and any filing or other administrative
fee plus reasonable attorney's fees fixed at twenty (20%) percent of the
indebtedness, together with interest at a reasonable rate on any monies
determined to be due, shall be chargeable to and an obligation of, the
contributing Employer against whom such suit is brought or such arbitration
proceedings is commenced. The Arbitrator may schedule a hearing on twenty-four
(24) hours notice by regular or certified mail.
ARTICLE XVII
- - ------------
BULLETIN BOARD
--------------
The Employer will provide the Union with a Bulletin Board in an
appropriate location in the plant to be used by the Union for posting of all
Union notices and literature.
ARTICLE XVIII
- - -------------
NON-DISCRIMINATION
------------------
No employee shall be discriminated against, directly or indirectly,
because of his or her membership in or activity on behalf of the Union, nor will
the Employer, directly or indirectly discourage membership in the Union, and the
provisions of this Agreement shall apply to all employees without discrimination
as to gender, color, race, creed, age or national origin, or disability.
17
<PAGE>
ARTICLE XIX
- - -----------
SAFETY AND SANITARY CONDITIONS
------------------------------
The Company shall furnish and maintain safe and healthful sanitary
conditions, including clean and adequate locker accommodations, washing
facilities and toilets.
ARTICLE XX
- - ----------
VISITATION
----------
Union representatives shall be given the right to enter the plant
premises at all reasonable times for the purpose of investigating grievances and
to secure the enforcement of the contract and for such other purposes as may be
necessary; provided, however, that prior to entering the plant property they
shall first advise the front office of their presence and intention to enter the
plant property.
ARTICLE XXI
- - -----------
LEAVE OF ABSENCE
----------------
A. In accordance with the Family and Medical Leave Act of 1993 (the
"FMLA"), an employee who has been employed by the Employer for at least twelve
(12) months (at the time the leave commences) and has worked at least 1,250
compensable hours during the twelve (12) months prior to the leave is entitled
to a total of twelve (12) weeks of unpaid leave during any twelve (12) month
period for the reasons listed in the FMLA. An employee who takes a leave of
absence under FMLA is required to use his or her accrued vacation, sick or
personal days during the leave period. For example, when two weeks of accrued
paid leave is used by an employee for FMLA purposes, the Employer will provide
ten (10) weeks unpaid leave to total twelve (12) weeks. A leave of
18
<PAGE>
absence under FMLA will be granted in accordance with Employer's then existing
procedures. The FMLA and the regulations promulgated thereunder will govern the
procedures for a leave of absence unless state law provides greater family and
medical leave rights in which case the state law will govern.
B. Any employee upon application in writing may be granted a leave of
absence without pay not to exceed one (1) month because of official Union
business. No more than five (5%) percent of the work force may be out on leave
of absence at any one time. This leave of absence must be authorized by the
Distribution Manager.
ARTICLE XXII
- - ------------
EXISTING PRACTICES
------------------
All benefits of employment in existence at the effective date of this
Agreement and not modified by the Agreement shall be continued without
modification.
ARTICLE XXIII
- - -------------
NO STRIKE - NO LOCKOUT
----------------------
During the term of this Agreement the Employer agrees that they will
not declare or authorize a lockout unless the Union fails to comply with an
arbitration award within forty-eight (48) hours after the award has been made.
Neither the Union nor its officers, agent or representative shall be liable for
any acts of any person or any workers participating in any strike or work
stoppage unless such act or strike or work stoppage has been expressly
authorized by the Union and in conformance with the
19
<PAGE>
provisions of the Constitution of the Union and the provisions of the
International Union Constitution.
The parties further agree that any strike, slowdown or stoppage not
authorized as herein specified shall not be deemed a violation of this
Agreement.
In the event of an unauthorized slowdown or work stoppage, the Union
agrees within twenty-four (24) hours after receipt of notice thereof from the
Employer solely to endeavor in good faith to bring about a return to work of its
members who have stopped work. Upon failure of the employees to return to work
within the said twenty-four (24) hours, the Employer may take appropriate action
with respect to such employee or employees. Compliance by the Union in good
faith herewith shall be deemed full compliance with the Union's obligation
hereunder.
ARTICLE XXIV
- - ------------
GUARANTEED WORK
---------------
Employees regularly scheduled for full-shift work shall be given eight
(8) hours work or the monetary equivalent thereof unless notified on the
previous day not to report, except in cases of power failure, Acts of God or
other such circumstances beyond the Employer's control. This clause shall not
apply to part time or premium work except that employees called in as opposed to
being scheduled for their regular shift shall be guaranteed at least four (4)
hours work or the monetary equivalent thereof.
20
<PAGE>
ARTICLE XXV
- - -----------
TRANSFERS
---------
Employees performing work in one classification and transferred to
perform work in a classification for which the wage rate is lower than that of
the original classification, shall receive pay at the rate set forth in their
original classification. Employees required to do work in a classification for
which there is a higher rate of pay shall train in that classification for a
maximum of sixty (60) days. Should an employee pass his or her training period,
he or she shall retroactively receive fifty (50%) percent of the higher rate for
time trained. Upon passing his or her training period, he or she shall
thereafter receive the higher rate. It is agreed that the furniture refinishing
training period shall be a maximum of four (4) months.
ARTICLE XXVI
- - ------------
DISCHARGE
---------
No employee shall be discharged except for just and sufficient cause.
Any employee, if he or she is discharged shall be granted an interview with his
or her Shop Steward.
Whenever the Union disputes and/or disagrees with the justification
for the discharge of any employee, the Union shall provide the Employer with a
written notice of its dispute and/or disagreement within one (1) working day of
the time that the individual is required to leave the plant premises or the
chief steward receives official notification of the Employer's intention to
discharge the said employee, whichever occurs later. The dispute and/or
disagreement shall thereupon be adjusted
21
<PAGE>
between the parties in the manner provided for in Article XIV of this Agreement.
Any employee who has been discharged and subsequently reinstated as a result of
invoking the machinery for resolving dispute as set forth in Article XIV may be
reinstated to his or her former job with full pay.
New employees shall have a sixty (60) day probationary period during
which time the Employer reserves the right to discharge, and such discharge
shall not be subject to the grievance procedure. This sixty (60) day period
shall consist of sixty (60) days on the job, working at the warehouse.
ARTICLE XXVII
- - -------------
COLLECTIVE BARGAINING
---------------------
The Company agrees that it will negotiate with Union during the term
of this Agreement concerning any matter involving wages, hours and working
conditions of the employees, which is not specifically provided for in this
Agreement and which is not a subject of any grievance.
ARTICLE XXVIII
- - --------------
SUBCONTRACTING
--------------
The Company will not, so long as equipment and personnel are
available, subcontract work which is customarily performed by employees in the
bargaining unit, to any other company.
ARTICLE XXIX
- - ------------
PROTECTION OF RIGHTS
--------------------
Picket Line: It shall not be a violation of this Agreement, and shall
-----------
not be cause for discharge or disciplinary action, in the event an employee:
(1) refuses to enter upon any property of his or her Employer involved in a
lawful primary
22
<PAGE>
labor dispute or refuses to go through or work behind any lawful primary picket
lines at his or her Employer's place of business, including primary picket lines
of Union's parties to this Agreement.
ARTICLE XXX
- - -----------
ASSIGNABILITY
-------------
This Agreement shall be binding upon the parties hereto, their
successors and assigns.
ARTICLE XXXI
- - ------------
EFFECTIVE DATE
--------------
All the terms and conditions of this Agreement shall be effective as
of December 28, 1995, except as otherwise indicated.
ARTICLE XXXII
- - -------------
SEPARABILITY
------------
It is understood and agreed that if any provision of the Agreement or
the application of such provision to any person or circumstances shall be held
invalid, the remainder of this Agreement or the application of such provision to
other person or circumstances shall not be affected thereby.
ARTICLE XXXIII
- - --------------
MINIMUM STARTING WAGES
----------------------
The Employer agrees that in no event shall it pay its employees less
than the minimum wages decreed by the New York State and/or Federal Agencies
having jurisdiction thereof during the term of this Agreement.
Upon completion of the sixty (60) day probationary period, employees
shall receive thirty (30) cents per hour.
23
<PAGE>
ARTICLE XXXIV
- - -------------
SICK LEAVE
----------
The Employer agrees to grant to all of its eligible employees covered
by this Agreement, six (6) days per calendar year for sick leave. Should any
sick days not be used, the monetary equivalent of the unused portion shall be
paid to the employees by Christmas of each calendar year.
A new employee must work six (6) months to be eligible for sick leave.
ARTICLE XXXV
- - ------------
BEREAVEMENT PAY
---------------
Employees shall be able to receive up to three (3) days mourning leave
with pay in the event of the death of an employee's spouse, mother, father,
brother, sister, child, grandparent, grandchild, current mother-in-law or
current father-in-law. This shall be a make-whole provision. If death occurs
over a weekend, vacation, etc., an employee shall receive bereavement pay for
actual work days lost only. Proof of relationship and proof of death will be
required.
ARTICLE XXXVI
- - -------------
SEVERANCE PAY
-------------
If the Employer goes out of business, each employee who has six (6)
months of seniority or more, shall receive one (1) week's severance pay.
ARTICLE XXXVII
- - --------------
MISCELLANEOUS
-------------
The Employer will use its best efforts to secure checks for the night
shift only, the evening prior to the normal
24
<PAGE>
distribution of checks. Checks must not be cashed until the following day.
ARTICLE XXXVIII
- - ---------------
DURATION
--------
The foregoing Agreement between the Employer and the Union shall
continue in full force and effect from December 28, 1995 to December 29, 1998
and shall be automatically renewed from year to year thereafter unless at least
sixty (60) days prior to any expiration date either party desiring to terminate
or modify Agreement shall so notify the other party in writing.
IN WITNESS WHEREOF the Employer has caused these present to be signed.
SEAMAN FURNITURE COMPANY, INC. LOCAL 875, AFFILIATED WITH
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS
BY: BY:
--------------------------- ---------------------------
25
<PAGE>
FORM FOR
---- ---
SEAMAN FURNITURE COMPANY, INC.
Nonqualified Stock Option Agreement
-----------------------------------
WHEREAS, Alan Rosenberg (the "Optionee") is President, C.E.O. and
Director of Seaman Furniture Company, Inc. (the "Company");
WHEREAS, the execution of a Nonqualified Stock Option Agreement
substantially in the form hereof has been duly authorized by a resolution of the
Board of Directors (the "Board") of the Company duly adopted as of May 1, 1995
(the "Date of Grant") and incorporated herein by reference; and
WHEREAS, the option granted hereby is intended as a nonqualified stock
option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, pursuant to the Company's 1992 Stock Option Plan (the
"Plan"), the Company hereby grants to the Optionee an option to purchase 9,000
shares of Common Stock, par value $.01 per share, of the Company at the exercise
price of per share, and agrees to cause certificates for any shares purchased
hereunder to be delivered to the Optionee upon full payment of the option
exercise price, subject to the terms and conditions of the Plan and the terms
and conditions hereinafter set forth.
1. This option (until terminated as hereinafter provided) shall be
exercisable in full at any time after the Date
<PAGE>
of Grant. To the extent exercisable, this option may be exercised in whole or in
part from time to time.
2. The option exercise price shall be payable (a) in cash or by check
acceptable to the Company, (b) by transfer to the Company of shares of Common
Stock that have been owned by the Optionee for more than six months prior to the
date of exercise and have a fair market value on the date of exercise equal to
the option exercise price, or (c) by a combination of any of the foregoing
methods of payment. The requirement of payment in cash shall be deemed
satisfied if the Optionee shall have made arrangements satisfactory to the
Company with a broker who is a member of the National Association of Securities
Dealers, Inc. to sell a sufficient number of the shares being purchased so that
the net proceeds of the sale transaction will at least equal the option exercise
price and pursuant to which the broker undertakes to deliver the full option
exercise price to the Company not later than the date on which the sale
transaction will settle in the ordinary course of business. For the purposes of
this Section 2 and Section 9 hereof, "fair market value" shall be as determined
by the Committee from time to time.
3. (a) If the Optionee desires to sell all or any portion of the
shares of Common Stock owned by him pursuant to any exercise of any option
granted under the Plan, the Optionee shall give written notice to the Company of
his intention to dispose of such shares, which notice shall specify the number
of
<PAGE>
shares of Common Stock proposed to be disposed of, the minimum price proposed to
be asked therefor on a per share basis (the "First Refusal Price"), in the case
of a private sale the intended purchaser of such shares, if known, and if not
known, a written explanation as to the reason the Optionee does not know the
identity of the intended purchaser, and the other terms and conditions of the
proposed sale. Such notice shall constitute an offer to sell to the Company all
of the shares of Common Stock set forth in such notice, at the aggregate First
Refusal Price and on the terms other than price set forth in such notice (the
"First Refusal Offer").
(b) The First Refusal Offer may be accepted, in whole only, by the
Company by giving notice of acceptance to the Optionee within 2 business days
after receiving the First Refusal Offer, which notice of acceptance shall
specify the number of shares of Common Stock to be purchased by the Company.
(c) The closing of any purchase pursuant to this Paragraph 3 shall be
held within 10 business days following the date the Company gives its notice of
acceptance, at such date, time and/or place as the parties may agree. At any
such closing, the Optionee shall deliver to the Company a certificate or
certificates representing the number of shares of Common Stock specified in the
Company's notice of acceptance, duly endorsed or accompanied by stock powers
duly executed in blank and otherwise in proper form for transfer on the books of
the Company, together
<PAGE>
with stamps for any applicable stock transfer tax or provision for payment
thereof, and the Company shall deliver to the Optionee a certified check or bank
draft payable to the order of the Optionee in an amount equal to the product of
the First Refusal Price and the number of shares of Common Stock being purchased
by the Company.
(d) If the Company does not exercise the First Refusal Offer, the
Optionee may, within 10 business days immediately following the expiration of
such 2 business days, sell all or any portion of the balance of the shares of
Common Stock covered by the First Refusal Offer which are not covered by a
notice of acceptance of the Company at a price per share not less than the First
Refusal Price and on the same terms and conditions (including as to manner of
payment) as those set forth in the First Refusal Offer. If the Optionee does
not make such disposition within such 10 business days, no subsequent
disposition of any of the Optionee's shares of Common Stock may be made without
again complying with this Paragraph 3.
(e) If the Optionee fails to comply with this Paragraph 3 with respect
to any of his shares of Common Stock, any attempted or purported sale,
assignment, transfer, or other disposition of such shares shall be void and of
no effect, and all dividends and other distributions of any kind whatsoever
(whether pursuant to liquidation or otherwise) shall be deemed to have been
waived, and the voting rights of such shares on any
<PAGE>
matter whatsoever shall be suspended, during the period commencing with the
Optionee's initial failure of compliance with this Paragraph 3 and ending when
the Company has agreed in writing to terminate such suspension and permit such
sale, assignment, transfer, hypothecation, pledge, encumbrance or other
disposition.
4. Upon the Optionee's ceasing to be an employee of the Company or a
Subsidiary for any reason, including death or retirement or following permanent
disability (a "Termination"), the Company shall have the right upon a written
notice (the "Repurchase Notice") given to the Optionee within 30 days of such
Termination, to repurchase from the Optionee all or any portion of the Common
Stock then owned by the Optionee and acquired hereunder and to require the
Optionee to surrender to the Company for cancellation all or any portion of this
option then remaining exercisable upon payment to the Optionee, from any source
of funds legally available therefor, of the purchase price as hereinafter
provided.
If there is a public trading market for the Common Stock, the purchase
price for any repurchase shall be determined within 2 business days of the date
of the Repurchase Notice and shall be payable in cash within 10 business days
following the date of such determination. If there is not a public trading
market for the Common Stock, the purchase price for any repurchase shall be
determined within 90 days after the
<PAGE>
Repurchase Notice and shall be payable in cash within 10 business days following
the date of such determination. With respect to the Common Stock, the purchase
price shall be determined by (a) multiplying the number of shares of Common
Stock being repurchased by the Company by (b) the Current Market Price (as
defined below) per share of Common Stock as of the date of the Repurchase
Notice. With respect to the surrender of options, the purchase price shall be
determined by (a) multiplying the number of shares of Common Stock subject to
such options or portion thereof being surrendered to the Company by (b) the
difference between the Current Market Price (as defined below) per share of
Common Stock as of the date of the Repurchase Notice and the option exercise
price per share of Common Stock as of the date of the Repurchase Notice.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the average of the daily market prices for
the previous 10 consecutive business days for a listing on the National Market
System ("NMS") or the previous 30 consecutive business days for a listing on
NASDAQ. The daily market price for each such business day shall be the last
reported closing price if listed on the NMS or the average of the last reported
closing bid and asked prices on such day on NASDAQ, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., or if neither corporation is reporting
<PAGE>
such prices, as furnished by any member of the NASD which is making a market in
the Common Stock. In the event there is no market for the shares or the
Committee, in its sole discretion, determines that on account of the lack of
trading volume, the Current Market Price cannot be determined from the daily
market prices, the Current Market Price shall mean the amount determined by an
investment banker selected by the Optionee from a list of at least three
disinterested qualified investment bankers provided by the Committee.
5. This option shall terminate on the earliest of the following
dates:
(a) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, ninety days after the date of a
Termination other than on account of death; provided, however, if the date of
-------- -------
Termination occurs within the initial three months and one day after the date of
grant of the option, the ninety-day period shall be extended through the fifth
business day after the six-month anniversary of the date of grant of the option;
(b) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, one year after the date of
Optionee's death; and
(c) Ten years from the Date of Grant.
Nothing contained in this option shall limit in any way whatsoever any
right that the Company or a Subsidiary may
<PAGE>
otherwise have to terminate the employment of the Optionee at any time.
6. This option is not transferable by the Optionee except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Optionee only by the Optionee or, in the event of his legal incapacity to do
so, by his guardian or legal representative acting on behalf of the Optionee in
a fiduciary capacity under state law and court supervision.
7. Notwithstanding any other provision of this Nonqualified Stock
Option Agreement, this option shall not be exercisable if the exercise would
involve a violation of any applicable federal or state securities law, and the
Company hereby agrees to make reasonable efforts to comply with all such laws.
8. The Committee shall make such adjustments in the option price and
in the number or kind of shares of Common Stock or other securities covered by
this option as the Committee may in good faith determine to be equitably
required in order to prevent dilution or expansion of the rights of the Optionee
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization or partial or complete liquidation or other
distribution of assets
<PAGE>
involving the Company or (c) any other corporate transaction or event having an
effect similar to any of the foregoing.
9. If the Company shall be required to withhold any federal, state or
local tax in connection with the Optionee's exercise of this option, it shall be
a condition to such exercise that the Optionee pay or make provision
satisfactory to the Company for payment of all such taxes. The Optionee may
elect with the consent of the Committee that all or any part of such withholding
requirement be satisfied by retention by the Company of a portion of the shares
purchased upon exercise of this option. If such election is made, the shares so
retained shall be credited against such withholding requirement at the then fair
market value on the date of exercise as defined in Section 2 hereof.
10. For the purposes of this Nonqualified Stock Option Agreement, (a)
the term "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 80% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, and (b) the continuous
employment of the Optionee with the Company or a Subsidiary shall not be deemed
interrupted, and the Optionee shall not be deemed to have ceased to be an
employee of the
<PAGE>
Company or any Subsidiary, by reason of the transfer of his employment among the
Company and its Subsidiaries.
EXECUTED as of the 1st day of May, 1995.
--- --- ----
SEAMAN FURNITURE COMPANY, INC.
By /s/ Robert Webber
---------------------------
Title: Vice President
<PAGE>
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Nonqualified Stock Option Agreement and accepts the option
granted hereunder.
/s/ Alan Rosenberg
---------------------------------------------
Optionee
<PAGE>
FORM
----
SEAMAN FURNITURE COMPANY, INC.
Nonqualified Stock Option Agreement
-----------------------------------
WHEREAS, Alan Rosenberg (the "Optionee") is President, C.E.O. and
Director of Seaman Furniture Company, Inc. (the "Company");
WHEREAS, the execution of a Nonqualified Stock Option Agreement
substantially in the form hereof has been duly authorized by a resolution of the
Board of Directors (the "Board") of the Company duly adopted as of May 1, 1995
(the "Date of Grant") and incorporated herein by reference; and
WHEREAS, the option granted hereby is intended as a nonqualified stock
option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, pursuant to the Company's 1992 Stock Option Plan (the
"Plan"), the Company hereby grants to the Optionee an option to purchase 9,000
shares of Common Stock, par value $.01 per share, of the Company at the exercise
price of Twenty Dollars Fifty Cents ($20.50) per share, and agrees to cause
certificates for any shares purchased hereunder to be delivered to the Optionee
upon full payment of the option exercise price, subject to the terms and
conditions of the Plan and the terms and conditions hereinafter set forth.
1. This option (until terminated as hereinafter provided) shall be
exercisable to the extent of shares on and shares on
------ ----------- ------
and shares on , but only if at such time the
- - ----------- -------- -----------
Optionee is in the employ of the Company or any Subsidiary and has been in the
continuous employ since the date hereof. For the purposes of this paragraph,
leaves of absence approved by the Board or the committee of the Board (the
"Committee") for illness, military or governmental service or other cause shall
be regarded as employment.
<PAGE>
To the extent exercisable, this option may be exercised in whole or in part from
time to time.
2. The option exercise price shall be payable (a) in cash or by check
acceptable to the Company, (b) by transfer to the Company of shares of Common
Stock that have been owned by the Optionee for more than six months prior to the
date of exercise and have a fair market value on the date of exercise equal to
the option exercise price, or (c) by a combination of any of the foregoing
methods of payment. The requirement of payment in cash shall be deemed
satisfied if the Optionee shall have made arrangements satisfactory to the
Company with a broker who is a member of the National Association of Securities
Dealers, Inc. to sell a sufficient number of the shares being purchased so that
the net proceeds of the sale transaction will at least equal the option exercise
price and pursuant to which the broker undertakes to deliver the full option
exercise price to the Company not later than the date on which the sale
transaction will settle in the ordinary course of business. For the purposes of
this Section 2 and Section 9 hereof, "fair market value" shall be as determined
by the Committee from time to time.
3. (a) If the Optionee desires to sell all or any portion of the
shares of Common Stock owned by him pursuant to any exercise of any option
granted under the Plan, the Optionee shall give written notice to the Company of
his intention to dispose of such shares, which notice shall specify the number
of
<PAGE>
shares of Common Stock proposed to be disposed of, the minimum price proposed
to be asked therefor on a per share basis (the "First Refusal Price"), in the
case of a private sale the intended purchaser of such shares, if known, and if
not known, a written explanation as to the reason the Optionee does not know the
identity of the intended purchaser, and the other terms and conditions of the
proposed sale. Such notice shall constitute an offer to sell to the Company all
of the shares of Common Stock set forth in such notice, at the aggregate First
Refusal Price and on the terms other than price set forth in such notice (the
"First Refusal Offer").
(b) The First Refusal Offer may be accepted, in whole only, by the
Company by giving notice of acceptance to the Optionee within 2 business days
after receiving the First Refusal Offer, which notice of acceptance shall
specify the number of shares of Common Stock to be purchased by the Company.
(c) The closing of any purchase pursuant to this Paragraph 3 shall be
held within 10 business days following the date the Company gives its notice of
acceptance, at such date, time and/or place as the parties may agree. At any
such closing, the Optionee shall deliver to the Company a certificate or
certificates representing the number of shares of Common Stock specified in the
Company's notice of acceptance, duly endorsed or accompanied by stock powers
duly executed in blank and otherwise in proper form for transfer on the books of
the Company, together
<PAGE>
with stamps for any applicable stock transfer tax or provision for payment
thereof, and the Company shall deliver to the Optionee a certified check or bank
draft payable to the order of the Optionee in an amount equal to the product of
the First Refusal Price and the number of shares of Common Stock being purchased
by the Company.
(d) If the Company does not exercise the First Refusal Offer, the
Optionee may, within 10 business days immediately following the expiration of
such 2 business days, sell all or any portion of the balance of the shares of
Common Stock covered by the First Refusal Offer which are not covered by a
notice of acceptance of the Company at a price per share not less than the First
Refusal Price and on the same terms and conditions (including as to manner of
payment) as those set forth in the First Refusal Offer. If the Optionee does
not make such disposition within such 10 business days, no subsequent
disposition of any of the Optionee's shares of Common Stock may be made without
again complying with this Paragraph 3.
(e) If the Optionee fails to comply with this Paragraph 3 with respect
to any of his shares of Common Stock, any attempted or purported sale,
assignment, transfer, or other disposition of such shares shall be void and of
no effect, and all dividends and other distributions of any kind whatsoever
(whether pursuant to liquidation or otherwise) shall be deemed to have been
waived, and the voting rights of such shares on any
<PAGE>
matter whatsoever shall be suspended, during the period commencing with the
Optionee's initial failure of compliance with this Paragraph 3 and ending when
the Company has agreed in writing to terminate such suspension and permit such
sale, assignment, transfer, hypothecation, pledge, encumbrance or other
disposition.
4. Upon the Optionee's ceasing to be an employee of the Company or a
Subsidiary for any reason, including death or retirement or following permanent
disability (a "Termination"), the Company shall have the right upon a written
notice (the "Repurchase Notice") given to the Optionee within 30 days of such
Termination, to repurchase from the Optionee all or any portion of the Common
Stock then owned by the Optionee and acquired hereunder and to require the
Optionee to surrender to the Company for cancellation all or any portion of this
option then remaining exercisable upon payment to the Optionee, from any source
of funds legally available therefor, of the purchase price as hereinafter
provided.
If there is a public trading market for the Common Stock, the purchase
price for any repurchase shall be determined within 2 business days of the date
of the Repurchase Notice and shall be payable in cash within 10 business days
following the date of such determination. If there is not a public trading
market for the Common Stock, the purchase price for any repurchase shall be
determined within 90 days after
<PAGE>
the Repurchase Notice and shall be payable in cash within 10 business days
following the date of such determination. With respect to the Common Stock, the
purchase price shall be determined by (a) multiplying the number of shares of
Common Stock being repurchased by the Company by (b) the Current Market Price
(as defined below) per share of Common Stock as of the date of the Repurchase
Notice. With respect to the surrender of options, the purchase price shall be
determined by (a) multiplying the number of shares of Common Stock subject to
such options or portion thereof being surrendered to the Company by (b) the
difference between the Current Market Price (as defined below) per share of
Common Stock as of the date of the Repurchase Notice and the option exercise
price per share of Common Stock as of the date of the Repurchase Notice.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the average of the daily market prices for
the previous 10 consecutive business days for a listing on the National Market
System ("NMS") or the previous 30 consecutive business days for a listing on
NASDAQ. The daily market price for each such business day shall be the last
reported closing price if listed on the NMS or the average of the last reported
closing bid and asked prices on such day on NASDAQ, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., or if neither corporation is reporting
<PAGE>
such prices, as furnished by any member of the NASD which is making a market in
the Common Stock. In the event there is no market for the shares or the
Committee, in its sole discretion, determines that on account of the lack of
trading volume, the Current Market Price cannot be determined from the daily
market prices, the Current Market Price shall mean the amount determined by an
investment banker selected by the Optionee from a list of at least three
disinterested qualified investment bankers provided by the Committee.
5. This option shall terminate on the earliest of the following
dates:
(a) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, ninety days after the date of a
Termination other than on account of death; provided, however, if the date of
-------- -------
Termination occurs within the initial three months and one day after the date of
grant of the option, the ninety-day period shall be extended through the fifth
business day after the six-month anniversary of the date of grant of the option;
(b) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, one year after the date of
Optionee's death; and
(c) Ten years from the Date of Grant.
Nothing contained in this option shall limit in any way whatsoever any
right that the Company or a Subsidiary may
<PAGE>
otherwise have to terminate the employment of the Optionee at any time.
6. This option is not transferable by the Optionee except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Optionee only by the Optionee or, in the event of his legal incapacity to do
so, by his guardian or legal representative acting on behalf of the Optionee in
a fiduciary capacity under state law and court supervision.
7. Notwithstanding any other provision of this Nonqualified Stock
Option Agreement, this option shall not be exercisable if the exercise would
involve a violation of any applicable federal or state securities law, and the
Company hereby agrees to make reasonable efforts to comply with all such laws.
8. The Committee shall make such adjustments in the option price and
in the number or kind of shares of Common Stock or other securities covered by
this option as the Committee may in good faith determine to be equitably
required in order to prevent dilution or expansion of the rights of the Optionee
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization or partial or complete liquidation or other
distribution of assets
<PAGE>
involving the Company or (c) any other corporate transaction or event having an
effect similar to any of the foregoing.
9. If the Company shall be required to withhold any federal, state or
local tax in connection with the Optionee's exercise of this option, it shall be
a condition to such exercise that the Optionee pay or make provision
satisfactory to the Company for payment of all such taxes. The Optionee may
elect with the consent of the Committee that all or any part of such withholding
requirement be satisfied by retention by the Company of a portion of the shares
purchased upon exercise of this option. If such election is made, the shares so
retained shall be credited against such withholding requirement at the then fair
market value on the date of exercise as defined in Section 2 hereof.
10. For the purposes of this Nonqualified Stock Option Agreement, (a)
the term "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 80% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, and (b) the continuous
employment of the Optionee with the Company or a Subsidiary shall not be deemed
interrupted, and the Optionee shall not be deemed to have ceased to be an
employee of the
<PAGE>
Company or any Subsidiary, by reason of the transfer of his employment among the
Company and its Subsidiaries.
EXECUTED as of the 1st day of May, 1995.
SEAMAN FURNITURE COMPANY, INC.
By /s/ Robert Webber
-----------------------------
Title:
<PAGE>
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Nonqualified Stock Option Agreement and accepts the option
granted hereunder.
/s/ Alan Rosenberg
------------------------------
Alan Rosenberg
---------------
Optionee
<PAGE>
FORM
----
SEAMAN FURNITURE COMPANY, INC.
Nonqualified Stock Option Agreement
-----------------------------------
WHEREAS, Steven H. Halper (the "Optionee") is Executive V.P., Chief
Operating Officer and Secretary of Seaman Furniture Company, Inc. (the
"Company");
WHEREAS, the execution of a Nonqualified Stock Option Agreement
substantially in the form hereof has been duly authorized by a resolution of the
Board of Directors (the "Board") of the Company duly adopted as of
May 1, 1995 (the "Date of Grant") and incorporated herein by reference; and
WHEREAS, the option granted hereby is intended as a nonqualified stock
option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, pursuant to the Company's 1992 Stock Option Plan (the
"Plan"), the Company hereby grants to the Optionee an option to purchase 9,000
shares of Common Stock, par value $.01 per share, of the Company at the exercise
price of Twenty Dollars Fifty Cents ($20.50) per share, and agrees to cause
certificates for any shares purchased hereunder to be delivered to the Optionee
upon full payment of the option exercise price, subject to the terms and
conditions of the Plan and the terms and conditions hereinafter set forth.
1. This option (until terminated as hereinafter provided) shall be
exercisable in full at any time after the Date
<PAGE>
of Grant. To the extent exercisable, this option may be exercised in whole or in
part from time to time.
2. The option exercise price shall be payable (a) in cash or by check
acceptable to the Company, (b) by transfer to the Company of shares of Common
Stock that have been owned by the Optionee for more than six months prior to the
date of exercise and have a fair market value on the date of exercise equal to
the option exercise price, or (c) by a combination of any of the foregoing
methods of payment. The requirement of payment in cash shall be deemed
satisfied if the Optionee shall have made arrangements satisfactory to the
Company with a broker who is a member of the National Association of Securities
Dealers, Inc. to sell a sufficient number of the shares being purchased so that
the net proceeds of the sale transaction will at least equal the option exercise
price and pursuant to which the broker undertakes to deliver the full option
exercise price to the Company not later than the date on which the sale
transaction will settle in the ordinary course of business. For the purposes of
this Section 2 and Section 9 hereof, "fair market value" shall be as determined
by the Committee from time to time.
3. (a) If the Optionee desires to sell all or any portion of the
shares of Common Stock owned by him pursuant to any exercise of any option
granted under the Plan, the Optionee shall give written notice to the Company of
his intention to dispose of such shares, which notice shall specify the number
of
<PAGE>
shares of Common Stock proposed to be disposed of, the minimum price proposed
to be asked therefor on a per share basis (the "First Refusal Price"), in the
case of a private sale the intended purchaser of such shares, if known, and if
not known, a written explanation as to the reason the Optionee does not know the
identity of the intended purchaser, and the other terms and conditions of the
proposed sale. Such notice shall constitute an offer to sell to the Company all
of the shares of Common Stock set forth in such notice, at the aggregate First
Refusal Price and on the terms other than price set forth in such notice (the
"First Refusal Offer").
(b) The First Refusal Offer may be accepted, in whole only, by the
Company by giving notice of acceptance to the Optionee within 2 business days
after receiving the First Refusal Offer, which notice of acceptance shall
specify the number of shares of Common Stock to be purchased by the Company.
(c) The closing of any purchase pursuant to this Paragraph 3 shall be
held within 10 business days following the date the Company gives its notice of
acceptance, at such date, time and/or place as the parties may agree. At any
such closing, the Optionee shall deliver to the Company a certificate or
certificates representing the number of shares of Common Stock specified in the
Company's notice of acceptance, duly endorsed or accompanied by stock powers
duly executed in blank and otherwise in proper form for transfer on the books of
the Company, together
<PAGE>
with stamps for any applicable stock transfer tax or provision for payment
thereof, and the Company shall deliver to the Optionee a certified check or bank
draft payable to the order of the Optionee in an amount equal to the product of
the First Refusal Price and the number of shares of Common Stock being purchased
by the Company.
(d) If the Company does not exercise the First Refusal Offer, the
Optionee may, within 10 business days immediately following the expiration of
such 2 business days, sell all or any portion of the balance of the shares of
Common Stock covered by the First Refusal Offer which are not covered by a
notice of acceptance of the Company at a price per share not less than the First
Refusal Price and on the same terms and conditions (including as to manner of
payment) as those set forth in the First Refusal Offer. If the Optionee does
not make such disposition within such 10 business days, no subsequent
disposition of any of the Optionee's shares of Common Stock may be made without
again complying with this Paragraph 3.
(e) If the Optionee fails to comply with this Paragraph 3 with respect
to any of his shares of Common Stock, any attempted or purported sale,
assignment, transfer, or other disposition of such shares shall be void and of
no effect, and all dividends and other distributions of any kind whatsoever
(whether pursuant to liquidation or otherwise) shall be deemed to have been
waived, and the voting rights of such shares on any
<PAGE>
matter whatsoever shall be suspended, during the period commencing with the
Optionee's initial failure of compliance with this Paragraph 3 and ending when
the Company has agreed in writing to terminate such suspension and permit such
sale, assignment, transfer, hypothecation, pledge, encumbrance or other
disposition.
4. Upon the Optionee's ceasing to be an employee of the Company or a
Subsidiary for any reason, including death or retirement or following permanent
disability (a "Termination"), the Company shall have the right upon a written
notice (the "Repurchase Notice") given to the Optionee within 30 days of such
Termination, to repurchase from the Optionee all or any portion of the Common
Stock then owned by the Optionee and acquired hereunder and to require the
Optionee to surrender to the Company for cancellation all or any portion of this
option then remaining exercisable upon payment to the Optionee, from any source
of funds legally available therefor, of the purchase price as hereinafter
provided.
If there is a public trading market for the Common Stock, the purchase
price for any repurchase shall be determined within 2 business days of the date
of the Repurchase Notice and shall be payable in cash within 10 business days
following the date of such determination. If there is not a public trading
market for the Common Stock, the purchase price for any repurchase shall be
determined within 90 days after the
<PAGE>
Repurchase Notice and shall be payable in cash within 10 business days following
the date of such determination. With respect to the Common Stock, the purchase
price shall be determined by (a) multiplying the number of shares of Common
Stock being repurchased by the Company by (b) the Current Market Price (as
defined below) per share of Common Stock as of the date of the Repurchase
Notice. With respect to the surrender of options, the purchase price shall be
determined by (a) multiplying the number of shares of Common Stock subject to
such options or portion thereof being surrendered to the Company by (b) the
difference between the Current Market Price (as defined below) per share of
Common Stock as of the date of the Repurchase Notice and the option exercise
price per share of Common Stock as of the date of the Repurchase Notice.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the average of the daily market prices for
the previous 10 consecutive business days for a listing on the National Market
System ("NMS") or the previous 30 consecutive business days for a listing on
NASDAQ. The daily market price for each such business day shall be the last
reported closing price if listed on the NMS or the average of the last reported
closing bid and asked prices on such day on NASDAQ, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., or if neither corporation is reporting
<PAGE>
such prices, as furnished by any member of the NASD which is making a market in
the Common Stock. In the event there is no market for the shares or the
Committee, in its sole discretion, determines that on account of the lack of
trading volume, the Current Market Price cannot be determined from the daily
market prices, the Current Market Price shall mean the amount determined by an
investment banker selected by the Optionee from a list of at least three
disinterested qualified investment bankers provided by the Committee.
5. This option shall terminate on the earliest of the following
dates:
(a) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, ninety days after the date of a
Termination other than on account of death; provided, however, if the date of
-------- -------
Termination occurs within the initial three months and one day after the date of
grant of the option, the ninety-day period shall be extended through the fifth
business day after the six-month anniversary of the date of grant of the option;
(b) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, one year after the date of
Optionee's death; and
(c) Ten years from the Date of Grant.
Nothing contained in this option shall limit in any way whatsoever any
right that the Company or a Subsidiary may
<PAGE>
otherwise have to terminate the employment of the Optionee at any time.
6. This option is not transferable by the Optionee except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Optionee only by the Optionee or, in the event of his legal incapacity to do
so, by his guardian or legal representative acting on behalf of the Optionee in
a fiduciary capacity under state law and court supervision.
7. Notwithstanding any other provision of this Nonqualified Stock
Option Agreement, this option shall not be exercisable if the exercise would
involve a violation of any applicable federal or state securities law, and the
Company hereby agrees to make reasonable efforts to comply with all such laws.
8. The Committee shall make such adjustments in the option price and
in the number or kind of shares of Common Stock or other securities covered by
this option as the Committee may in good faith determine to be equitably
required in order to prevent dilution or expansion of the rights of the Optionee
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization or partial or complete liquidation or other
distribution of assets
<PAGE>
involving the Company or (c) any other corporate transaction or event having an
effect similar to any of the foregoing.
9. If the Company shall be required to withhold any federal, state or
local tax in connection with the Optionee's exercise of this option, it shall be
a condition to such exercise that the Optionee pay or make provision
satisfactory to the Company for payment of all such taxes. The Optionee may
elect with the consent of the Committee that all or any part of such withholding
requirement be satisfied by retention by the Company of a portion of the shares
purchased upon exercise of this option. If such election is made, the shares so
retained shall be credited against such withholding requirement at the then fair
market value on the date of exercise as defined in Section 2 hereof.
10. For the purposes of this Nonqualified Stock Option Agreement, (a)
the term "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 80% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, and (b) the continuous
employment of the Optionee with the Company or a Subsidiary shall not be deemed
interrupted, and the Optionee shall not be deemed to have ceased to be an
employee of the
<PAGE>
Company or any Subsidiary, by reason of the transfer of his employment among the
Company and its Subsidiaries.
EXECUTED as of the 1st day of May , 1995.
---- --------- -----
SEAMAN FURNITURE COMPANY, INC.
By: /s/ Robert Webber
------------------------------------
Title:
<PAGE>
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Nonqualified Stock Option Agreement and accepts the option
granted hereunder.
/s/ Steven H. Halper
------------------------------
Steven H. Halper
----------------
Optionee
<PAGE>
FORM
----
SEAMAN FURNITURE COMPANY, INC.
Nonqualified Stock Option Agreement
-----------------------------------
WHEREAS, Steven H. Halper (the "Optionee") is Executive V.P., Chief
Operating Officer and Secretary of Seaman Furniture Company, Inc. (the
"Company");
WHEREAS, the execution of a Nonqualified Stock Option Agreement
substantially in the form hereof has been duly authorized by a resolution of the
Board of Directors (the "Board") of the Company duly adopted as of May 1, 1995
(the "Date of Grant") and incorporated herein by reference; and
WHEREAS, the option granted hereby is intended as a nonqualified stock
option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, pursuant to the Company's 1992 Stock Option Plan (the
"Plan"), the Company hereby grants to the Optionee an option to purchase 9,000
shares of Common Stock, par value $.01 per share, of the Company at the exercise
price of Twenty Dollars Fifty Cents ($20.50) per share, and agrees to cause
certificates for any shares purchased hereunder to be delivered to the Optionee
upon full payment of the option exercise price, subject to the terms and
conditions of the Plan and the terms and conditions hereinafter set forth.
1. This option (until terminated as hereinafter provided) shall be
exercisable to the extent of _______ shares on _______ and _______ shares on
_______ and shares on _______, but only if at such time the Optionee is in the
employ of the Company or any Subsidiary and has been in the continuous employ
since the date hereof. For the purposes of this paragraph, leaves of absense
approved by the Board or the committee of the Board (the "Committee") for
illness, military or governmental service or other cause shall be regarded as
employment.
<PAGE>
To the extent exercisable, this option may be exercised in whole or in
part from time to time.
2. The option exercise price shall be payable (a) in cash or by check
acceptable to the Company, (b) by transfer to the Company of shares of Common
Stock that have been owned by the Optionee for more than six months prior to the
date of exercise and have a fair market value on the date of exercise equal to
the option exercise price, or (c) by a combination of any of the foregoing
methods of payment. The requirement of payment in cash shall be deemed
satisfied if the Optionee shall have made arrangements satisfactory to the
Company with a broker who is a member of the National Association of Securities
Dealers, Inc. to sell a sufficient number of the shares being purchased so that
the net proceeds of the sale transaction will at least equal the option exercise
price and pursuant to which the broker undertakes to deliver the full option
exercise price to the Company not later than the date on which the sale
transaction will settle in the ordinary course of business. For the purposes of
this Section 2 and Section 9 hereof, "fair market value" shall be as determined
by the Committee from time to time.
3. (a) If the Optionee desires to sell all or any portion of the
shares of Common Stock owned by him pursuant to any exercise of any option
granted under the Plan, the Optionee shall give written notice to the Company of
his intention to dispose of such shares, which notice shall specify the number
of
<PAGE>
shares of Common Stock proposed to be disposed of, the minimum price proposed to
be asked therefor on a per share basis (the "First Refusal Price"), in the case
of a private sale the intended purchaser of such shares, if known, and if not
known, a written explanation as to the reason the Optionee does not know the
identity of the intended purchaser, and the other terms and conditions of the
proposed sale. Such notice shall constitute an offer to sell to the Company all
of the shares of Common Stock set forth in such notice, at the aggregate First
Refusal Price and on the terms other than price set forth in such notice (the
"First Refusal Offer").
(b) The First Refusal Offer may be accepted, in whole only, by the
Company by giving notice of acceptance to the Optionee within 2 business days
after receiving the First Refusal Offer, which notice of acceptance shall
specify the number of shares of Common Stock to be purchased by the Company.
(c) The closing of any purchase pursuant to this Paragraph 3 shall be
held within 10 business days following the date the Company gives its notice of
acceptance, at such date, time and/or place as the parties may agree. At any
such closing, the Optionee shall deliver to the Company a certificate or
certificates representing the number of shares of Common Stock specified in the
Company's notice of acceptance, duly endorsed or accompanied by stock powers
duly executed in blank and otherwise in proper form for transfer on the books of
the Company, together
<PAGE>
with stamps for any applicable stock transfer tax or provision for payment
thereof, and the Company shall deliver to the Optionee a certified check or bank
draft payable to the order of the Optionee in an amount equal to the product of
the First Refusal Price and the number of shares of Common Stock being purchased
by the Company.
(d) If the Company does not exercise the First Refusal Offer, the
Optionee may, within 10 business days immediately following the expiration of
such 2 business days, sell all or any portion of the balance of the shares of
Common Stock covered by the First Refusal Offer which are not covered by a
notice of acceptance of the Company at a price per share not less than the First
Refusal Price and on the same terms and conditions (including as to manner of
payment) as those set forth in the First Refusal Offer. If the Optionee does
not make such disposition within such 10 business days, no subsequent
disposition of any of the Optionee's shares of Common Stock may be made without
again complying with this Paragraph 3.
(e) If the Optionee fails to comply with this Paragraph 3 with respect
to any of his shares of Common Stock, any attempted or purported sale,
assignment, transfer, or other disposition of such shares shall be void and of
no effect, and all dividends and other distributions of any kind whatsoever
(whether pursuant to liquidation or otherwise) shall be deemed to have been
waived, and the voting rights of such shares on any
<PAGE>
matter whatsoever shall be suspended, during the period commencing with the
Optionee's initial failure of compliance with this Paragraph 3 and ending when
the Company has agreed in writing to terminate such suspension and permit such
sale, assignment, transfer, hypothecation, pledge, encumbrance or other
disposition.
4. Upon the Optionee's ceasing to be an employee of the Company or a
Subsidiary for any reason, including death or retirement or following permanent
disability (a "Termination"), the Company shall have the right upon a written
notice (the "Repurchase Notice") given to the Optionee within 30 days of such
Termination, to repurchase from the Optionee all or any portion of the Common
Stock then owned by the Optionee and acquired hereunder and to require the
Optionee to surrender to the Company for cancellation all or any portion of this
option then remaining exercisable upon payment to the Optionee, from any source
of funds legally available therefor, of the purchase price as hereinafter
provided.
If there is a public trading market for the Common Stock, the purchase
price for any repurchase shall be determined within 2 business days of the date
of the Repurchase Notice and shall be payable in cash within 10 business days
following the date of such determination. If there is not a public trading
market for the Common Stock, the purchase price for any repurchase shall be
determined within 90 days after the
<PAGE>
Repurchase Notice and shall be payable in cash within 10 business days following
the date of such determination. With respect to the Common Stock, the purchase
price shall be determined by (a) multiplying the number of shares of Common
Stock being repurchased by the Company by (b) the Current Market Price (as
defined below) per share of Common Stock as of the date of the Repurchase
Notice. With respect to the surrender of options, the purchase price shall be
determined by (a) multiplying the number of shares of Common Stock subject to
such options or portion thereof being surrendered to the Company by (b) the
difference between the Current Market Price (as defined below) per share of
Common Stock as of the date of the Repurchase Notice and the option exercise
price per share of Common Stock as of the date of the Repurchase Notice.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the average of the daily market prices for
the previous 10 consecutive business days for a listing on the National Market
System ("NMS") or the previous 30 consecutive business days for a listing on
NASDAQ. The daily market price for each such business day shall be the last
reported closing price if listed on the NMS or the average of the last reported
closing bid and asked prices on such day on NASDAQ, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., or if neither corporation is reporting
<PAGE>
such prices, as furnished by any member of the NASD which is making a market in
the Common Stock. In the event there is no market for the shares or the
Committee, in its sole discretion, determines that on account of the lack of
trading volume, the Current Market Price cannot be determined from the daily
market prices, the Current Market Price shall mean the amount determined by an
investment banker selected by the Optionee from a list of at least three
disinterested qualified investment bankers provided by the Committee.
5. This option shall terminate on the earliest of the following
dates:
(a) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, ninety days after the date of a
Termination other than on account of death; provided, however, if the date of
-------- -------
Termination occurs within the initial three months and one day after the date of
grant of the option, the ninety-day period shall be extended through the fifth
business day after the six-month anniversary of the date of grant of the option;
(b) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, one year after the date of
Optionee's death; and
(c) Ten years from the Date of Grant.
Nothing contained in this option shall limit in any way whatsoever any
right that the Company or a Subsidiary may
<PAGE>
otherwise have to terminate the employment of the Optionee at any time.
6. This option is not transferable by the Optionee except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Optionee only by the Optionee or, in the event of his legal incapacity to do
so, by his guardian or legal representative acting on behalf of the Optionee in
a fiduciary capacity under state law and court supervision.
7. Notwithstanding any other provision of this Nonqualified Stock
Option Agreement, this option shall not be exercisable if the exercise would
involve a violation of any applicable federal or state securities law, and the
Company hereby agrees to make reasonable efforts to comply with all such laws.
8. The Committee shall make such adjustments in the option price and
in the number or kind of shares of Common Stock or other securities covered by
this option as the Committee may in good faith determine to be equitably
required in order to prevent dilution or expansion of the rights of the Optionee
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization or partial or complete liquidation or other
distribution of assets
<PAGE>
involving the Company or (c) any other corporate transaction or event having an
effect similar to any of the foregoing.
9. If the Company shall be required to withhold any federal, state or
local tax in connection with the Optionee's exercise of this option, it shall be
a condition to such exercise that the Optionee pay or make provision
satisfactory to the Company for payment of all such taxes. The Optionee may
elect with the consent of the Committee that all or any part of such withholding
requirement be satisfied by retention by the Company of a portion of the shares
purchased upon exercise of this option. If such election is made, the shares so
retained shall be credited against such withholding requirement at the then fair
market value on the date of exercise as defined in Section 2 hereof.
10. For the purposes of this Nonqualified Stock Option Agreement,
(a) the term "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 80% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, and (b) the continuous
employment of the Optionee with the Company or a Subsidiary shall not be deemed
interrupted, and the Optionee shall not be deemed to have ceased to be an
employee of the
<PAGE>
Company or any Subsidiary, by reason of the transfer of his employment among the
Company and its Subsidiaries.
EXECUTED as of the 1st day of May, 1995.
--- --- ----
SEAMAN FURNITURE COMPANY, INC.
By /s/ Robert Webber
---------------------------
Title:
<PAGE>
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Nonqualified Stock Option Agreement and accepts the option
granted hereunder.
/s/ Steven H. Halper
---------------------------------------------
Steven H. Halper
----------------
Optionee
<PAGE>
SEAMAN FURNITURE COMPANY, INC.
Nonqualified Stock Option Agreement
-----------------------------------
WHEREAS, Peter McGeough (the "Optionee") is Executive V.P., C.F.O. and
Chief Administrative Officer of Seaman Furniture Company, Inc. (the "Company");
WHEREAS, the execution of a Nonqualified Stock Option Agreement
substantially in the form hereof has been duly authorized by a resolution of the
Board of Directors (the "Board") of the Company duly adopted as of May 1, 1995
(the "Date of Grant") and incorporated herein by reference; and
WHEREAS, the option granted hereby is intended as a nonqualified stock
option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, pursuant to the Company's 1992 Stock Option Plan (the
"Plan"), the Company hereby grants to the Optionee an option to purchase 9,000
shares of Common Stock, par value $.01 per share, of the Company at the exercise
price of Twenty Dollars Fifty Cents ($ 20.50) per share, and agrees to cause
certificates for any shares purchased hereunder to be delivered to the Optionee
upon full payment of the option exercise price, subject to the terms and
conditions of the Plan and the terms and conditions hereinafter set forth.
1. This option (until terminated as hereinafter provided) shall be
exercisable in full at any time after the Date
<PAGE>
of Grant. To the extent exercisable, this option may be exercised in whole or in
part from time to time.
2. The option exercise price shall be payable (a) in cash or by check
acceptable to the Company, (b) by transfer to the Company of shares of Common
Stock that have been owned by the Optionee for more than six months prior to the
date of exercise and have a fair market value on the date of exercise equal to
the option exercise price, or (c) by a combination of any of the foregoing
methods of payment. The requirement of payment in cash shall be deemed
satisfied if the Optionee shall have made arrangements satisfactory to the
Company with a broker who is a member of the National Association of Securities
Dealers, Inc. to sell a sufficient number of the shares being purchased so that
the net proceeds of the sale transaction will at least equal the option exercise
price and pursuant to which the broker undertakes to deliver the full option
exercise price to the Company not later than the date on which the sale
transaction will settle in the ordinary course of business. For the purposes of
this Section 2 and Section 9 hereof, "fair market value" shall be as determined
by the Committee from time to time.
3. (a) If the Optionee desires to sell all or any portion of the
shares of Common Stock owned by him pursuant to any exercise of any option
granted under the Plan, the Optionee shall give written notice to the Company of
his intention to dispose of such shares, which notice shall specify the number
of
<PAGE>
shares of Common Stock proposed to be disposed of, the minimum price proposed to
be asked therefor on a per share basis (the "First Refusal Price"), in the case
of a private sale the intended purchaser of such shares, if known, and if not
known, a written explanation as to the reason the Optionee does not know the
identity of the intended purchaser, and the other terms and conditions of the
proposed sale. Such notice shall constitute an offer to sell to the Company all
of the shares of Common Stock set forth in such notice, at the aggregate First
Refusal Price and on the terms other than price set forth in such notice (the
"First Refusal Offer").
(b) The First Refusal Offer may be accepted, in whole only, by the
Company by giving notice of acceptance to the Optionee within 2 business days
after receiving the First Refusal Offer, which notice of acceptance shall
specify the number of shares of Common Stock to be purchased by the Company.
(c) The closing of any purchase pursuant to this Paragraph 3 shall be
held within 10 business days following the date the Company gives its notice of
acceptance, at such date, time and/or place as the parties may agree. At any
such closing, the Optionee shall deliver to the Company a certificate or
certificates representing the number of shares of Common Stock specified in the
Company's notice of acceptance, duly endorsed or accompanied by stock powers
duly executed in blank and otherwise in proper form for transfer on the books of
the Company, together
<PAGE>
with stamps for any applicable stock transfer tax or
provision for payment thereof, and the Company shall deliver to the Optionee a
certified check or bank draft payable to the order of the Optionee in an amount
equal to the product of the First Refusal Price and the number of shares of
Common Stock being purchased by the Company.
(d) If the Company does not exercise the First Refusal Offer, the
Optionee may, within 10 business days immediately following the expiration of
such 2 business days, sell all or any portion of the balance of the shares of
Common Stock covered by the First Refusal Offer which are not covered by a
notice of acceptance of the Company at a price per share not less than the First
Refusal Price and on the same terms and conditions (including as to manner of
payment) as those set forth in the First Refusal Offer. If the Optionee does
not make such disposition within such 10 business days, no subsequent
disposition of any of the Optionee's shares of Common Stock may be made without
again complying with this Paragraph 3.
(e) If the Optionee fails to comply with this Paragraph 3 with respect
to any of his shares of Common Stock, any attempted or purported sale,
assignment, transfer, or other disposition of such shares shall be void and of
no effect, and all dividends and other distributions of any kind whatsoever
(whether pursuant to liquidation or otherwise) shall be deemed to have been
waived, and the voting rights of such shares on any
<PAGE>
matter whatsoever shall be suspended, during the period commencing with the
Optionee's initial failure of compliance with this Paragraph 3 and ending when
the Company has agreed in writing to terminate such suspension and permit such
sale, assignment, transfer, hypothecation, pledge, encumbrance or other
disposition.
4. Upon the Optionee's ceasing to be an employee of the Company or a
Subsidiary for any reason, including death or retirement or following permanent
disability (a "Termination"), the Company shall have the right upon a written
notice (the "Repurchase Notice") given to the Optionee within 30 days of such
Termination, to repurchase from the Optionee all or any portion of the Common
Stock then owned by the Optionee and acquired hereunder and to require the
Optionee to surrender to the Company for cancellation all or any portion of this
option then remaining exercisable upon payment to the Optionee, from any source
of funds legally available therefor, of the purchase price as hereinafter
provided.
If there is a public trading market for the Common Stock, the purchase
price for any repurchase shall be determined within 2 business days of the date
of the Repurchase Notice and shall be payable in cash within 10 business days
following the date of such determination. If there is not a public trading
market for the Common Stock, the purchase price for any repurchase shall be
determined within 90 days after the
<PAGE>
Repurchase Notice and shall be payable in cash within 10 business days following
the date of such determination. With respect to the Common Stock, the purchase
price shall be determined by (a) multiplying the number of shares of Common
Stock being repurchased by the Company by (b) the Current Market Price (as
defined below) per share of Common Stock as of the date of the Repurchase
Notice. With respect to the surrender of options, the purchase price shall be
determined by (a) multiplying the number of shares of Common Stock subject to
such options or portion thereof being surrendered to the Company by (b) the
difference between the Current Market Price (as defined below) per share of
Common Stock as of the date of the Repurchase Notice and the option exercise
price per share of Common Stock as of the date of the Repurchase Notice.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the average of the daily market prices for
the previous 10 consecutive business days for a listing on the National Market
System ("NMS") or the previous 30 consecutive business days for a listing on
NASDAQ. The daily market price for each such business day shall be the last
reported closing price if listed on the NMS or the average of the last reported
closing bid and asked prices on such day on NASDAQ, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., or if neither corporation is reporting
<PAGE>
such prices, as furnished by any member of the NASD which is making a market in
the Common Stock. In the event there is no market for the shares or the
Committee, in its sole discretion, determines that on account of the lack of
trading volume, the Current Market Price cannot be determined from the daily
market prices, the Current Market Price shall mean the amount determined by an
investment banker selected by the Optionee from a list of at least three
disinterested qualified investment bankers provided by the Committee.
5. This option shall terminate on the earliest of the following
dates:
(a) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, ninety days after the date of a
Termination other than on account of death; provided, however, if the date of
-------- -------
Termination occurs within the initial three months and one day after the date of
grant of the option, the ninety-day period shall be extended through the fifth
business day after the six-month anniversary of the date of grant of the option;
(b) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, one year after the date of
Optionee's death; and
(c) Ten years from the Date of Grant.
Nothing contained in this option shall limit in any way whatsoever any
right that the Company or a Subsidiary may
<PAGE>
otherwise have to terminate the employment of the Optionee at any time.
6. This option is not transferable by the Optionee except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Optionee only by the Optionee or, in the event of his legal incapacity to do
so, by his guardian or legal representative acting on behalf of the Optionee in
a fiduciary capacity under state law and court supervision.
7. Notwithstanding any other provision of this Nonqualified Stock
Option Agreement, this option shall not be exercisable if the exercise would
involve a violation of any applicable federal or state securities law, and the
Company hereby agrees to make reasonable efforts to comply with all such laws.
8. The Committee shall make such adjustments in the option price and
in the number or kind of shares of Common Stock or other securities covered by
this option as the Committee may in good faith determine to be equitably
required in order to prevent dilution or expansion of the rights of the Optionee
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization or partial or complete liquidation or other
distribution of assets
<PAGE>
involving the Company or (c) any other corporate transaction or event having an
effect similar to any of the foregoing.
9. If the Company shall be required to withhold any federal, state or
local tax in connection with the Optionee's exercise of this option, it shall be
a condition to such exercise that the Optionee pay or make provision
satisfactory to the Company for payment of all such taxes. The Optionee may
elect with the consent of the Committee that all or any part of such withholding
requirement be satisfied by retention by the Company of a portion of the shares
purchased upon exercise of this option. If such election is made, the shares so
retained shall be credited against such withholding requirement at the then fair
market value on the date of exercise as defined in Section 2 hereof.
10. For the purposes of this Nonqualified Stock Option Agreement, (a)
the term "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 80% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, and (b) the continuous
employment of the Optionee with the Company or a Subsidiary shall not be deemed
interrupted, and the Optionee shall not be deemed to have ceased to be an
employee of the
<PAGE>
Company or any Subsidiary, by reason of the transfer of his employment among the
Company and its Subsidiaries.
EXECUTED as of the 1st day of May, 1995.
SEAMAN FURNITURE COMPANY, INC.
By /s/ Robert Webber
---------------------------
Title:
<PAGE>
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Nonqualified Stock Option Agreement and accepts the option
granted hereunder.
/s/ Peter McGeough
---------------------------------------------
Peter McGeough
--------------
Optionee
<PAGE>
FORM
----
SEAMAN FURNITURE COMPANY, INC.
Nonqualified Stock Option Agreement
-----------------------------------
WHEREAS, Peter McGeough (the "Optionee") is Executive V.P., C.F.O. and
Chief Administrative Officer of Seaman Furniture Company, Inc. (the "Company");
WHEREAS, the execution of a Nonqualified Stock Option Agreement
substantially in the form hereof has been duly authorized by a resolution of the
Board of Directors (the "Board") of the Company duly adopted as of May 1, 1995
(the "Date of Grant") and incorporated herein by reference; and
WHEREAS, the option granted hereby is intended as a nonqualified stock
option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, pursuant to the Company's 1992 Stock Option Plan (the
"Plan"), the Company hereby grants to the Optionee an option to purchase 9,000
shares of Common Stock, par value $.01 per share, of the Company at the exercise
price of Twenty Dollars Fifty Cents ($ 20.50) per share, and agrees to cause
certificates for any shares purchased hereunder to be delivered to the Optionee
upon full payment of the option exercise price, subject to the terms and
conditions of the Plan and the terms and conditions hereinafter set forth.
1. This option (until terminated as hereinafter provided) shall be
exercisable to the extent of ______ shares on _____________ and ______ shares on
_____________ and ______ shares on _____________, but only if at such time the
Optionee is in the employ of the Company or any Subsidiary and has been in the
continuous employ since the date hereof. For the purposes of this paragraph,
leaves of absence approved by the Board or the committee of the Board (the
"Committee") for illness, military or governmental service or other cause shall
be regarded as employment.
<PAGE>
exercisable, this option may be exercised in whole or in part from time to time.
2. The option exercise price shall be payable (a) in cash or by check
acceptable to the Company, (b) by transfer to the Company of shares of Common
Stock that have been owned by the Optionee for more than six months prior to the
date of exercise and have a fair market value on the date of exercise equal to
the option exercise price, or (c) by a combination of any of the foregoing
methods of payment. The requirement of payment in cash shall be deemed
satisfied if the Optionee shall have made arrangements satisfactory to the
Company with a broker who is a member of the National Association of Securities
Dealers, Inc. to sell a sufficient number of the shares being purchased so that
the net proceeds of the sale transaction will at least equal the option exercise
price and pursuant to which the broker undertakes to deliver the full option
exercise price to the Company not later than the date on which the sale
transaction will settle in the ordinary course of business. For the purposes of
this Section 2 and Section 9 hereof, "fair market value" shall be as determined
by the Committee from time to time.
3. (a) If the Optionee desires to sell all or any portion of the
shares of Common Stock owned by him pursuant to any exercise of any option
granted under the Plan, the Optionee shall give written notice to the Company of
his intention to dispose of such shares, which notice shall specify the number
<PAGE>
of shares of Common Stock proposed to be disposed of, the minimum price proposed
to be asked therefor on a per share basis (the "First Refusal Price"), in the
case of a private sale the intended purchaser of such shares, if known, and if
not known, a written explanation as to the reason the Optionee does not know the
identity of the intended purchaser, and the other terms and conditions of the
proposed sale. Such notice shall constitute an offer to sell to the Company all
of the shares of Common Stock set forth in such notice, at the aggregate First
Refusal Price and on the terms other than price set forth in such notice (the
"First Refusal Offer").
(b) The First Refusal Offer may be accepted, in whole only, by the
Company by giving notice of acceptance to the Optionee within 2 business days
after receiving the First Refusal Offer, which notice of acceptance shall
specify the number of shares of Common Stock to be purchased by the Company.
(c) The closing of any purchase pursuant to this Paragraph 3 shall be
held within 10 business days following the date the Company gives its notice of
acceptance, at such date, time and/or place as the parties may agree. At any
such closing, the Optionee shall deliver to the Company a certificate or
certificates representing the number of shares of Common Stock specified in the
Company's notice of acceptance, duly endorsed or accompanied by stock powers
duly executed in blank and otherwise in proper form for transfer on the books of
<PAGE>
the Company, together with stamps for any applicable stock transfer tax or
provision for payment thereof, and the Company shall deliver to the Optionee a
certified check or bank draft payable to the order of the Optionee in an amount
equal to the product of the First Refusal Price and the number of shares of
Common Stock being purchased by the Company.
(d) If the Company does not exercise the First Refusal Offer, the
Optionee may, within 10 business days immediately following the expiration of
such 2 business days, sell all or any portion of the balance of the shares of
Common Stock covered by the First Refusal Offer which are not covered by a
notice of acceptance of the Company at a price per share not less than the First
Refusal Price and on the same terms and conditions (including as to manner of
payment) as those set forth in the First Refusal Offer. If the Optionee does
not make such disposition within such 10 business days, no subsequent
disposition of any of the Optionee's shares of Common Stock may be made without
again complying with this Paragraph 3.
(e) If the Optionee fails to comply with this Paragraph 3 with respect
to any of his shares of Common Stock, any attempted or purported sale,
assignment, transfer, or other disposition of such shares shall be void and of
no effect, and all dividends and other distributions of any kind whatsoever
(whether pursuant to liquidation or otherwise) shall be deemed to have been
waived, and the voting rights of such shares on any matter whatsoever shall be
<PAGE>
suspended, during the period commencing with the Optionee's initial failure of
compliance with this Paragraph 3 and ending when the Company has agreed in
writing to terminate such suspension and permit such sale, assignment, transfer,
hypothecation, pledge, encumbrance or other disposition.
4. Upon the Optionee's ceasing to be an employee of the Company or a
Subsidiary for any reason, including death or retirement or following permanent
disability (a "Termination"), the Company shall have the right upon a written
notice (the "Repurchase Notice") given to the Optionee within 30 days of such
Termination, to repurchase from the Optionee all or any portion of the Common
Stock then owned by the Optionee and acquired hereunder and to require the
Optionee to surrender to the Company for cancellation all or any portion of this
option then remaining exercisable upon payment to the Optionee, from any source
of funds legally available therefor, of the purchase price as hereinafter
provided.
If there is a public trading market for the Common Stock, the purchase
price for any repurchase shall be determined within 2 business days of the date
of the Repurchase Notice and shall be payable in cash within 10 business days
following the date of such determination. If there is not a public trading
market for the Common Stock, the purchase price for any repurchase shall be
determined within 90 days after the Repurchase Notice and shall be payable in
<PAGE>
cash within 10 business days following the date of such determination. With
respect to the Common Stock, the purchase price shall be determined by (a)
multiplying the number of shares of Common Stock being repurchased by the
Company by (b) the Current Market Price (as defined below) per share of Common
Stock as of the date of the Repurchase Notice. With respect to the surrender of
options, the purchase price shall be determined by (a) multiplying the number of
shares of Common Stock subject to such options or portion thereof being
surrendered to the Company by (b) the difference between the Current Market
Price (as defined below) per share of Common Stock as of the date of the
Repurchase Notice and the option exercise price per share of Common Stock as of
the date of the Repurchase Notice.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the average of the daily market prices for
the previous 10 consecutive business days for a listing on the National Market
System ("NMS") or the previous 30 consecutive business days for a listing on
NASDAQ. The daily market price for each such business day shall be the last
reported closing price if listed on the NMS or the average of the last reported
closing bid and asked prices on such day on NASDAQ, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., or if neither corporation is reporting such prices, as
<PAGE>
furnished by any member of the NASD which is making a market in the Common
Stock. In the event there is no market for the shares or the Committee, in its
sole discretion, determines that on account of the lack of trading volume, the
Current Market Price cannot be determined from the daily market prices, the
Current Market Price shall mean the amount determined by an investment banker
selected by the Optionee from a list of at least three disinterested qualified
investment bankers provided by the Committee.
5. This option shall terminate on the earliest of the following dates:
(a) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, ninety days after the date of a
Termination other than on account of death; provided, however, if the date of
-------- -------
Termination occurs within the initial three months and one day after the date of
grant of the option, the ninety-day period shall be extended through the fifth
business day after the six-month anniversary of the date of grant of the option;
(b) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, one year after the date of
Optionee's death; and
(c) Ten years from the Date of Grant.
Nothing contained in this option shall limit in any way whatsoever any
right that the Company or a Subsidiary may otherwise have to terminate the
<PAGE>
employment of the Optionee at any time.
6. This option is not transferable by the Optionee except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Optionee only by the Optionee or, in the event of his legal incapacity to do
so, by his guardian or legal representative acting on behalf of the Optionee in
a fiduciary capacity under state law and court supervision.
7. Notwithstanding any other provision of this Nonqualified Stock
Option Agreement, this option shall not be exercisable if the exercise would
involve a violation of any applicable federal or state securities law, and the
Company hereby agrees to make reasonable efforts to comply with all such laws.
8. The Committee shall make such adjustments in the option price and
in the number or kind of shares of Common Stock or other securities covered by
this option as the Committee may in good faith determine to be equitably
required in order to prevent dilution or expansion of the rights of the Optionee
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization or partial or complete liquidation or other
distribution of assets involving the Company or (c) any other corporate
transaction or event having an effect similar to any of the foregoing.
<PAGE>
9. If the Company shall be required to withhold any federal, state or
local tax in connection with the Optionee's exercise of this option, it shall be
a condition to such exercise that the Optionee pay or make provision
satisfactory to the Company for payment of all such taxes. The Optionee may
elect with the consent of the Committee that all or any part of such withholding
requirement be satisfied by retention by the Company of a portion of the shares
purchased upon exercise of this option. If such election is made, the shares so
retained shall be credited against such withholding requirement at the then fair
market value on the date of exercise as defined in Section 2 hereof.
10. For the purposes of this Nonqualified Stock Option Agreement, (a)
the term "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 80% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, and (b) the continuous
employment of the Optionee with the Company or a Subsidiary shall not be deemed
interrupted, and the Optionee shall not be deemed to have ceased to be an
<PAGE>
employee of the Company or any Subsidiary, by reason of the transfer of his
employment among the Company and its Subsidiaries.
EXECUTED as of the 1st day of May, 1995
SEAMAN FURNITURE COMPANY, INC.
By /s/ Robert Webber
-------------------------------------
Title:
<PAGE>
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Nonqualified Stock Option Agreement and accepts the option
granted hereunder.
/s/ Peter McGeough
------------------------------
Peter McGeough
--------------
Optionee
<PAGE>
FORM FOR
---- ---
SEAMAN FURNITURE COMPANY, INC.
Nonqualified Stock Option Agreement
-----------------------------------
WHEREAS, Thomas Martinez (the "Optionee") is Vice President, of
Seaman Furniture Company, Inc. (the "Company");
WHEREAS, the execution of a Nonqualified Stock Option Agreement
substantially in the form hereof has been duly authorized by a resolution of the
Board of Directors (the "Board") of the Company duly adopted as of May 1, 1995
(the "Date of Grant") and incorporated herein by reference; and
WHEREAS, the option granted hereby is intended as a nonqualified stock
option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, pursuant to the Company's 1992 Stock Option Plan (the
"Plan"), the Company hereby grants to the Optionee an option to purchase 9,000
shares of Common Stock, par value $.01 per share, of the Company at the exercise
price of per share, and agrees to cause certificates for any shares purchased
hereunder to be delivered to the Optionee upon full payment of the option
exercise price, subject to the terms and conditions of the Plan and the terms
and conditions hereinafter set forth.
1. This option (until terminated as hereinafter provided) shall be
exercisable to the extent of ____ shares on ________________ and ____ shares on
________ and ____ shares on ____________, but only if at such time the Optionee
is in the employ of the Company or any Subsidiary and has been in the continuous
employ since the date hereof. For the purposes of this paragraph, leaves of
absence approved by the Board or the committee of the Board (the "Committee")
for illness, military or governmental service or other cause shall be regarded
as employment.
<PAGE>
To the extent exercisable, this option may be exercised in whole or in part from
time to time.
2. The option exercise price shall be payable (a) in cash or by check
acceptable to the Company, (b) by transfer to the Company of shares of Common
Stock that have been owned by the Optionee for more than six months prior to the
date of exercise and have a fair market value on the date of exercise equal to
the option exercise price, or (c) by a combination of any of the foregoing
methods of payment. The requirement of payment in cash shall be deemed
satisfied if the Optionee shall have made arrangements satisfactory to the
Company with a broker who is a member of the National Association of Securities
Dealers, Inc. to sell a sufficient number of the shares being purchased so that
the net proceeds of the sale transaction will at least equal the option exercise
price and pursuant to which the broker undertakes to deliver the full option
exercise price to the Company not later than the date on which the sale
transaction will settle in the ordinary course of business. For the purposes of
this Section 2 and Section 9 hereof, "fair market value" shall be as determined
by the Committee from time to time.
3. (a) If the Optionee desires to sell all or any portion of the
shares of Common Stock owned by him pursuant to any exercise of any option
granted under the Plan, the Optionee shall give written notice to the Company of
his intention to dispose of such shares, which notice shall specify the number
of
<PAGE>
shares of Common Stock proposed to be disposed of, the minimum price proposed to
be asked therefor on a per share basis (the "First Refusal Price"), in the case
of a private sale the intended purchaser of such shares, if known, and if not
known, a written explanation as to the reason the Optionee does not know the
identity of the intended purchaser, and the other terms and conditions of the
proposed sale. Such notice shall constitute an offer to sell to the Company all
of the shares of Common Stock set forth in such notice, at the aggregate First
Refusal Price and on the terms other than price set forth in such notice (the
"First Refusal Offer").
(b) The First Refusal Offer may be accepted, in whole only, by the
Company by giving notice of acceptance to the Optionee within 2 business days
after receiving the First Refusal Offer, which notice of acceptance shall
specify the number of shares of Common Stock to be purchased by the Company.
(c) The closing of any purchase pursuant to this Paragraph 3 shall be
held within 10 business days following the date the Company gives its notice of
acceptance, at such date, time and/or place as the parties may agree. At any
such closing, the Optionee shall deliver to the Company a certificate or
certificates representing the number of shares of Common Stock specified in the
Company's notice of acceptance, duly endorsed or accompanied by stock powers
duly executed in blank and otherwise in proper form for transfer on the books of
the Company, together
<PAGE>
with stamps for any applicable stock transfer tax or provision for payment
thereof, and the Company shall deliver to the Optionee a certified check or bank
draft payable to the order of the Optionee in an amount equal to the product of
the First Refusal Price and the number of shares of Common Stock being purchased
by the Company.
(d) If the Company does not exercise the First Refusal Offer, the
Optionee may, within 10 business days immediately following the expiration of
such 2 business days, sell all or any portion of the balance of the shares of
Common Stock covered by the First Refusal Offer which are not covered by a
notice of acceptance of the Company at a price per share not less than the First
Refusal Price and on the same terms and conditions (including as to manner of
payment) as those set forth in the First Refusal Offer. If the Optionee does
not make such disposition within such 10 business days, no subsequent
disposition of any of the Optionee's shares of Common Stock may be made without
again complying with this Paragraph 3.
(e) If the Optionee fails to comply with this Paragraph 3 with respect
to any of his shares of Common Stock, any attempted or purported sale,
assignment, transfer, or other disposition of such shares shall be void and of
no effect, and all dividends and other distributions of any kind whatsoever
(whether pursuant to liquidation or otherwise) shall be deemed to have been
waived, and the voting rights of such shares on any
<PAGE>
matter whatsoever shall be suspended, during the period commencing with the
Optionee's initial failure of compliance with this Paragraph 3 and ending when
the Company has agreed in writing to terminate such suspension and permit such
sale, assignment, transfer, hypothecation, pledge, encumbrance or other
disposition.
4. Upon the Optionee's ceasing to be an employee of the Company or a
Subsidiary for any reason, including death or retirement or following permanent
disability (a "Termination"), the Company shall have the right upon a written
notice (the "Repurchase Notice") given to the Optionee within 30 days of such
Termination, to repurchase from the Optionee all or any portion of the Common
Stock then owned by the Optionee and acquired hereunder and to require the
Optionee to surrender to the Company for cancellation all or any portion of this
option then remaining exercisable upon payment to the Optionee, from any source
of funds legally available therefor, of the purchase price as hereinafter
provided.
If there is a public trading market for the Common Stock, the purchase
price for any repurchase shall be determined within 2 business days of the date
of the Repurchase Notice and shall be payable in cash within 10 business days
following the date of such determination. If there is not a public trading
market for the Common Stock, the purchase price for any repurchase shall be
determined within 90 days after the
<PAGE>
Repurchase Notice and shall be payable in cash within 10 business days following
the date of such determination. With respect to the Common Stock, the purchase
price shall be determined by (a) multiplying the number of shares of Common
Stock being repurchased by the Company by (b) the Current Market Price (as
defined below) per share of Common Stock as of the date of the Repurchase
Notice. With respect to the surrender of options, the purchase price shall be
determined by (a) multiplying the number of shares of Common Stock subject to
such options or portion thereof being surrendered to the Company by (b) the
difference between the Current Market Price (as defined below) per share of
Common Stock as of the date of the Repurchase Notice and the option exercise
price per share of Common Stock as of the date of the Repurchase Notice.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the average of the daily market prices for
the previous 10 consecutive business days for a listing on the National Market
System ("NMS") or the previous 30 consecutive business days for a listing on
NASDAQ. The daily market price for each such business day shall be the last
reported closing price if listed on the NMS or the average of the last reported
closing bid and asked prices on such day on NASDAQ, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., or if neither corporation is reporting
<PAGE>
such prices, as furnished by any member of the NASD which is making a market in
the Common Stock. In the event there is no market for the shares or the
Committee, in its sole discretion, determines that on account of the lack of
trading volume, the Current Market Price cannot be determined from the daily
market prices, the Current Market Price shall mean the amount determined by an
investment banker selected by the Optionee from a list of at least three
disinterested qualified investment bankers provided by the Committee.
5. This option shall terminate on the earliest of the following
dates:
(a) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, ninety days after the date of a
Termination other than on account of death; provided, however, if the date of
-------- -------
Termination occurs within the initial three months and one day after the date of
grant of the option, the ninety-day period shall be extended through the fifth
business day after the six-month anniversary of the date of grant of the option;
(b) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, one year after the date of
Optionee's death; and
(c) Ten years from the Date of Grant.
Nothing contained in this option shall limit in any way whatsoever any
right that the Company or a Subsidiary may
<PAGE>
otherwise have to terminate the employment of the Optionee at any time.
6. This option is not transferable by the Optionee except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Optionee only by the Optionee or, in the event of his legal incapacity to do
so, by his guardian or legal representative acting on behalf of the Optionee in
a fiduciary capacity under state law and court supervision.
7. Notwithstanding any other provision of this Nonqualified Stock
Option Agreement, this option shall not be exercisable if the exercise would
involve a violation of any applicable federal or state securities law, and the
Company hereby agrees to make reasonable efforts to comply with all such laws.
8. The Committee shall make such adjustments in the option price and
in the number or kind of shares of Common Stock or other securities covered by
this option as the Committee may in good faith determine to be equitably
required in order to prevent dilution or expansion of the rights of the Optionee
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization or partial or complete liquidation or other
distribution of assets
<PAGE>
involving the Company or (c) any other corporate transaction or event having an
effect similar to any of the foregoing.
9. If the Company shall be required to withhold any federal, state or
local tax in connection with the Optionee's exercise of this option, it shall be
a condition to such exercise that the Optionee pay or make provision
satisfactory to the Company for payment of all such taxes. The Optionee may
elect with the consent of the Committee that all or any part of such withholding
requirement be satisfied by retention by the Company of a portion of the shares
purchased upon exercise of this option. If such election is made, the shares so
retained shall be credited against such withholding requirement at the then fair
market value on the date of exercise as defined in Section 2 hereof.
10. For the purposes of this Nonqualified Stock Option Agreement, (a)
the term "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 80% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, and (b) the continuous
employment of the Optionee with the Company or a Subsidiary shall not be deemed
interrupted, and the Optionee shall not be deemed to have ceased to be an
employee of the
<PAGE>
Company or any Subsidiary, by reason of the transfer of his employment among the
Company and its Subsidiaries.
EXECUTED as of the 1st day of May, 1995.
--- --- ----
SEAMAN FURNITURE COMPANY, INC.
By /s/ Robert Webber
---------------------------
Title: Vice President
<PAGE>
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Nonqualified Stock Option Agreement and accepts the option
granted hereunder.
/s/ Thomas Martinez
---------------------------------------------
Optionee
<PAGE>
FORM FOR
---- ---
SEAMAN FURNITURE COMPANY, INC.
Nonqualified Stock Option Agreement
-----------------------------------
WHEREAS, Donald S. Leibowitz (the "Optionee") is Vice President,
of Seaman Furniture Company, Inc. (the "Company");
WHEREAS, the execution of a Nonqualified Stock Option Agreement
substantially in the form hereof has been duly authorized by a resolution of the
Board of Directors (the "Board") of the Company duly adopted as of May 1, 1995
(the "Date of Grant") and incorporated herein by reference; and
WHEREAS, the option granted hereby is intended as a nonqualified stock
option and shall not be treated as an "incentive stock option" within the
meaning of that term under Section 422 of the Internal Revenue Code of 1986, as
amended.
NOW, THEREFORE, pursuant to the Company's 1992 Stock Option Plan (the
"Plan"), the Company hereby grants to the Optionee an option to purchase 9,000
shares of Common Stock, par value $.01 per share, of the Company at the exercise
price of per share, and agrees to cause certificates for any shares purchased
hereunder to be delivered to the Optionee upon full payment of the option
exercise price, subject to the terms and conditions of the Plan and the terms
and conditions hereinafter set forth.
1. This option (until terminated as hereinafter provided) shall be
exercisable to the extent of _______ shares on ____________ and _______ shares
on _________ and __________ shares on _________, but only if at such time the
Optionee is in the employ of the Company or any Subsidiary and has been in the
continuous employ since the date hereof. For the purposes of this paragraph,
leaves of absence approved by the Board or the committee of the Board (the
"Committee") for illness, military or governmental service or other cause shall
be regarded as employment.
<PAGE>
To the extent exercisable, this option may be exercised in whole or in part from
time to time.
2. The option exercise price shall be payable (a) in cash or by check
acceptable to the Company, (b) by transfer to the Company of shares of Common
Stock that have been owned by the Optionee for more than six months prior to the
date of exercise and have a fair market value on the date of exercise equal to
the option exercise price, or (c) by a combination of any of the foregoing
methods of payment. The requirement of payment in cash shall be deemed
satisfied if the Optionee shall have made arrangements satisfactory to the
Company with a broker who is a member of the National Association of Securities
Dealers, Inc. to sell a sufficient number of the shares being purchased so that
the net proceeds of the sale transaction will at least equal the option exercise
price and pursuant to which the broker undertakes to deliver the full option
exercise price to the Company not later than the date on which the sale
transaction will settle in the ordinary course of business. For the purposes of
this Section 2 and Section 9 hereof, "fair market value" shall be as determined
by the Committee from time to time.
3. (a) If the Optionee desires to sell all or any portion of the
shares of Common Stock owned by him pursuant to any exercise of any option
granted under the Plan, the Optionee shall give written notice to the Company of
his intention to dispose of such shares, which notice shall specify the number
of
<PAGE>
shares of Common Stock proposed to be disposed of, the minimum price proposed to
be asked therefor on a per share basis (the "First Refusal Price"), in the case
of a private sale the intended purchaser of such shares, if known, and if not
known, a written explanation as to the reason the Optionee does not know the
identity of the intended purchaser, and the other terms and conditions of the
proposed sale. Such notice shall constitute an offer to sell to the Company all
of the shares of Common Stock set forth in such notice, at the aggregate First
Refusal Price and on the terms other than price set forth in such notice (the
"First Refusal Offer").
(b) The First Refusal Offer may be accepted, in whole only, by the
Company by giving notice of acceptance to the Optionee within 2 business days
after receiving the First Refusal Offer, which notice of acceptance shall
specify the number of shares of Common Stock to be purchased by the Company.
(c) The closing of any purchase pursuant to this Paragraph 3 shall be
held within 10 business days following the date the Company gives its notice of
acceptance, at such date, time and/or place as the parties may agree. At any
such closing, the Optionee shall deliver to the Company a certificate or
certificates representing the number of shares of Common Stock specified in the
Company's notice of acceptance, duly endorsed or accompanied by stock powers
duly executed in blank and otherwise in proper form for transfer on the books of
the Company, together
<PAGE>
with stamps for any applicable stock transfer tax or provision for payment
thereof, and the Company shall deliver to the Optionee a certified check or bank
draft payable to the order of the Optionee in an amount equal to the product of
the First Refusal Price and the number of shares of Common Stock being purchased
by the Company.
(d) If the Company does not exercise the First Refusal Offer, the
Optionee may, within 10 business days immediately following the expiration of
such 2 business days, sell all or any portion of the balance of the shares of
Common Stock covered by the First Refusal Offer which are not covered by a
notice of acceptance of the Company at a price per share not less than the First
Refusal Price and on the same terms and conditions (including as to manner of
payment) as those set forth in the First Refusal Offer. If the Optionee does
not make such disposition within such 10 business days, no subsequent
disposition of any of the Optionee's shares of Common Stock may be made without
again complying with this Paragraph 3.
(e) If the Optionee fails to comply with this Paragraph 3 with respect
to any of his shares of Common Stock, any attempted or purported sale,
assignment, transfer, or other disposition of such shares shall be void and of
no effect, and all dividends and other distributions of any kind whatsoever
(whether pursuant to liquidation or otherwise) shall be deemed to have been
waived, and the voting rights of such shares on any
<PAGE>
matter whatsoever shall be suspended, during the period commencing with the
Optionee's initial failure of compliance with this Paragraph 3 and ending when
the Company has agreed in writing to terminate such suspension and permit such
sale, assignment, transfer, hypothecation, pledge, encumbrance or other
disposition.
4. Upon the Optionee's ceasing to be an employee of the Company or a
Subsidiary for any reason, including death or retirement or following permanent
disability (a "Termination"), the Company shall have the right upon a written
notice (the "Repurchase Notice") given to the Optionee within 30 days of such
Termination, to repurchase from the Optionee all or any portion of the Common
Stock then owned by the Optionee and acquired hereunder and to require the
Optionee to surrender to the Company for cancellation all or any portion of this
option then remaining exercisable upon payment to the Optionee, from any source
of funds legally available therefor, of the purchase price as hereinafter
provided.
If there is a public trading market for the Common Stock, the purchase
price for any repurchase shall be determined within 2 business days of the date
of the Repurchase Notice and shall be payable in cash within 10 business days
following the date of such determination. If there is not a public trading
market for the Common Stock, the purchase price for any repurchase shall be
determined within 90 days after the
<PAGE>
Repurchase Notice and shall be payable in cash within 10 business days following
the date of such determination. With respect to the Common Stock, the purchase
price shall be determined by (a) multiplying the number of shares of Common
Stock being repurchased by the Company by (b) the Current Market Price (as
defined below) per share of Common Stock as of the date of the Repurchase
Notice. With respect to the surrender of options, the purchase price shall be
determined by (a) multiplying the number of shares of Common Stock subject to
such options or portion thereof being surrendered to the Company by (b) the
difference between the Current Market Price (as defined below) per share of
Common Stock as of the date of the Repurchase Notice and the option exercise
price per share of Common Stock as of the date of the Repurchase Notice.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, the average of the daily market prices for
the previous 10 consecutive business days for a listing on the National Market
System ("NMS") or the previous 30 consecutive business days for a listing on
NASDAQ. The daily market price for each such business day shall be the last
reported closing price if listed on the NMS or the average of the last reported
closing bid and asked prices on such day on NASDAQ, as furnished by the National
Association of Securities Dealers Automatic Quotation System or the National
Quotation Bureau, Inc., or if neither corporation is reporting
<PAGE>
such prices, as furnished by any member of the NASD which is making a market in
the Common Stock. In the event there is no market for the shares or the
Committee, in its sole discretion, determines that on account of the lack of
trading volume, the Current Market Price cannot be determined from the daily
market prices, the Current Market Price shall mean the amount determined by an
investment banker selected by the Optionee from a list of at least three
disinterested qualified investment bankers provided by the Committee.
5. This option shall terminate on the earliest of the following
dates:
(a) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, ninety days after the date of a
Termination other than on account of death; provided, however, if the date of
-------- -------
Termination occurs within the initial three months and one day after the date of
grant of the option, the ninety-day period shall be extended through the fifth
business day after the six-month anniversary of the date of grant of the option;
(b) Except with respect to any portion of this option subject to a
Repurchase Notice given pursuant to Section 4, one year after the date of
Optionee's death; and
(c) Ten years from the Date of Grant.
Nothing contained in this option shall limit in any way whatsoever any
right that the Company or a Subsidiary may
<PAGE>
otherwise have to terminate the employment of the Optionee at any time.
6. This option is not transferable by the Optionee except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Optionee only by the Optionee or, in the event of his legal incapacity to do
so, by his guardian or legal representative acting on behalf of the Optionee in
a fiduciary capacity under state law and court supervision.
7. Notwithstanding any other provision of this Nonqualified Stock
Option Agreement, this option shall not be exercisable if the exercise would
involve a violation of any applicable federal or state securities law, and the
Company hereby agrees to make reasonable efforts to comply with all such laws.
8. The Committee shall make such adjustments in the option price and
in the number or kind of shares of Common Stock or other securities covered by
this option as the Committee may in good faith determine to be equitably
required in order to prevent dilution or expansion of the rights of the Optionee
that otherwise would result from (a) any stock dividend, stock split,
combination of shares, recapitalization or other change in the capital structure
of the Company, (b) any merger, consolidation, spin-off, spin-out, split-off,
split-up, reorganization or partial or complete liquidation or other
distribution of assets
<PAGE>
involving the Company or (c) any other corporate transaction or event having an
effect similar to any of the foregoing.
9. If the Company shall be required to withhold any federal, state or
local tax in connection with the Optionee's exercise of this option, it shall be
a condition to such exercise that the Optionee pay or make provision
satisfactory to the Company for payment of all such taxes. The Optionee may
elect with the consent of the Committee that all or any part of such withholding
requirement be satisfied by retention by the Company of a portion of the shares
purchased upon exercise of this option. If such election is made, the shares so
retained shall be credited against such withholding requirement at the then fair
market value on the date of exercise as defined in Section 2 hereof.
10. For the purposes of this Nonqualified Stock Option Agreement, (a)
the term "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 80% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain, and (b) the continuous
employment of the Optionee with the Company or a Subsidiary shall not be deemed
interrupted, and the Optionee shall not be deemed to have ceased to be an
employee of the
<PAGE>
Company or any Subsidiary, by reason of the transfer of his employment among the
Company and its Subsidiaries.
EXECUTED as of the 1st day of May, 1995.
--- --- ----
SEAMAN FURNITURE COMPANY, INC.
By /s/ Robert Webber
---------------------------
Title: Vice President
<PAGE>
The undersigned Optionee hereby acknowledges receipt of an executed
original of this Nonqualified Stock Option Agreement and accepts the option
granted hereunder.
/s/ Donald s. Leibowitz
---------------------------------------------
Optionee
<PAGE>
EXHIBIT 21
----------
1. Seaman Furniture Company of Union Square
2. Leatherworks at Seaman's, Inc.
3. Seaman Credit Corp.
4. Parallax Development Industries, Inc.
5. Seaman Receivable Corp.
6. RHM, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> APR-30-1996 APR-30-1995
<PERIOD-START> MAY-01-1995 MAY-01-1994
<PERIOD-END> APR-30-1996 APR-30-1995
<CASH> 3,436 20,431
<SECURITIES> 0 0
<RECEIVABLES> 74,864 59,862
<ALLOWANCES> 8,983 8,786
<INVENTORY> 27,796 23,423
<CURRENT-ASSETS> 104,578 101,016
<PP&E> 47,060 39,596
<DEPRECIATION> 13,909 10,698
<TOTAL-ASSETS> 159,251 153,334
<CURRENT-LIABILITIES> 37,631 43,350
<BONDS> 0 0
0 0
0 0
<COMMON> 50 50
<OTHER-SE> 101,485 97,606
<TOTAL-LIABILITY-AND-EQUITY> 159,251 153,334
<SALES> 229,505 215,857
<TOTAL-REVENUES> 243,541 228,221
<CGS> 152,982 138,038
<TOTAL-COSTS> 236,076 212,729
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 870 1,146
<INCOME-PRETAX> 6,595 14,346
<INCOME-TAX> 2,700 5,738
<INCOME-CONTINUING> 3,895 8,608
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,895 8,608
<EPS-PRIMARY> .78 1.68
<EPS-DILUTED> .78 1.68
</TABLE>
