EXHIBIT 10.17
FIRST AMENDMENT made as of the 27th day of January, 2000 to the Employment
Agreement dated as of May 7, 1998 by and between Golden Books Family
Entertainment, Inc. with its principal United States office at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and Xx. Xxxxxx Xxxxxxx,
residing at 00 Xxxx 00xx Xxxxxx, #0-X, Xxx Xxxx, Xxx Xxxx 00000 (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive have previously entered into the
Employment Agreement; and
WHEREAS, the Company and the Executive desire to amend the Employment
Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Employment Agreement is amended effective as of the date hereof as
follows:
a. Section 2(a) of the Employment Agreement is amended by the
deletion of the first sentence thereof and the substitution of the
following sentence in lieu thereof:
"The Executive shall serve as the Company's Executive Vice President,
Chief Administrative Officer, General Counsel and Secretary, with such
duties, responsibilities and authority in such capacities as shall be
consistent therewith, including directing the Company's legal
department, business affairs department, human resources department
and corporate communications department."
b. Section 2(b) of the Employment Agreement is amended in its
entirety to read as follows:
"(b) In the Executive's capacity as Executive Vice President, Chief
Administrative Officer, General Counsel and Secretary, he shall report
to the Company's Chairman and Chief Executive Officer."
c. Section 3(b) of the Employment Agreement is amended in its
entirety to read as follows:
"(b) ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment
Term, an annual bonus (the "Annual Bonus") pursuant to the Company's
Executive Officer Bonus Plan or a replacement therefor (the "Annual
Plan") under one or more of the criteria prescribed in the Annual Plan
and approved by the Compensation Committee of the Board of Directors,
which bonus shall be pro rated for any fiscal year during which the
Executive is employed for less than 12 months. The Executive shall
have a target annual bonus of 100% of his Annual Base Salary (the
"Target Bonus") and an annual bonus opportunity of 200% of his Annual
Base Salary (inclusive of the Target Bonus), subject in each case to
attainment of the performance goals set forth in the Annual Plan. The
Executive waives any right to receive a pro rated Target Award under
Section 15 of the Executive Officer Bonus Plan upon a "change of
control," as defined therein, so long as he shall be employed on the
last day of the fiscal year and be entitled to an Annual Bonus at the
levels specified herein on a non pro rated basis for the fiscal year
of such "change of control" if the performance goals for such fiscal
year are achieved. Each such Annual Bonus shall be paid no later than
the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus. The
parties acknowledge that the Annual Plan has been approved by the
stockholders of the Company in accordance with the requirements of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"). The Board may award the Executive bonuses other than pursuant
to the Annual Plan in its discretion."
d. Section 3(c) of the Employment Agreement is amended in its
entirety to read as follows:
"(c) STOCK OPTIONS. The Executive will be granted, as soon as
administratively feasible, a stock option (the "Option") to purchase
1% of the Company's issued and outstanding common stock ("Common
Stock") on a fully diluted basis (including all shares authorized,
whether or not issued or covered by a grant, under any employee stock
incentive plan and any warrants) pursuant to the Company's management
incentive plan (the "Stock Option Plan") in accordance with the form
of option agreement annexed as Exhibit A hereto ("Option Agreement").
The exercise price with respect to each share of Common Stock subject
to the Option will be the "Fair Market Value" (as defined in the Stock
Option Plan) of a share of Common Stock on the date of the grant. The
Option will become
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exercisable as to one-third of the shares of Common Stock subject
thereto on the first anniversary of the date of grant, as to an
additional one-third of such shares on the second anniversary of the
date of grant, and as to the remaining one-third of such shares on the
third anniversary of the date of grant, provided the Executive has
been continuously employed through each applicable vesting date.
Notwithstanding anything in this Agreement to the contrary, upon the
occurrence of a Change in Control (as such term is defined in Section
3(i) below, without regard to clause (iv) of Section 3(i)(A) and
clause (ii)(b) of Section 3(i)(C)) during the Employment Term, the
Option shall become fully and immediately exercisable. The Option will
have a term of seven years (the "Option Term"). Upon the termination
of Executive's employment:
(1) by reason of death, the Option shall become fully and immediately
exercisable and the Executive's estate may exercise the Option until
the earlier of one year following the Executive's death or the end of
the Option Term, following which time the Option shall terminate and
be no longer exercisable;
(2) by reason of Disability (as such term is defined in Section 4(a)
below), the Option shall become fully and immediately exercisable and
the Executive (or, following his death, his estate) may exercise the
Option until the earlier of one year following the Date of Termination
(as such term is defined in Section 4(e) below) or the end of the
Option Term, following which time the Option shall terminate and be no
longer exercisable;
(3) by the Company for Cause (as such term is defined in Section 4(a)
below), the Option shall terminate and no longer be exercisable
effective on the Executive's Date of Termination;
(4) by the Executive without Good Reason (as such term is defined in
Section 4(b) below), the Option, to the extent exercisable on the Date
of Termination, shall remain exercisable by the Executive (or,
following his death, his estate) until the earlier of 90 days
following such date or the end of the Option Term, following which
time the Option shall terminate and be no longer exercisable; or
(5) by the Company without Cause or by the Executive with Good Reason,
the entire Option shall become fully and immediately exercisable and
the Executive may exercise the Option until the earlier of one year
following the Executive's Date of Termination or the end of the Option
Term, following which time the Option shall terminate and be no longer
exercisable.
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The Executive shall be entitled to participate in other Company stock
option grants or other equity plans or programs, if any, in which
senior executives of the Company are eligible to participate on a
basis generally commensurate with his position as may be determined by
the Compensation Committee.
The Executive will be entitled to pay the exercise price of the Option
with shares of Common Stock previously acquired by the Executive and
may elect to have any withholding taxes required to be withheld as a
result of the exercise of the Option taken out of Common Stock
issuable to the Executive as a result of such exercise.
Other than as stated above, the Option will be governed by the terms
and conditions of the Company's Stock Option Plan and the Option
Agreement thereunder."
e. Section 3 of the Employment Agreement is amended by adding a new
Subsection (i) thereto, to read in its entirety as follows:
"(i) DEFINITION OF CHANGE OF CONTROL. For the purpose of this
Agreement, a "Change of Control" shall mean:
(A) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2)) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 35% or more (on a fully diluted basis) of
either (i) the then outstanding shares of common stock of the Company,
taking into account as outstanding for this purpose such common stock
issuable upon the exercise of options or warrants, the conversion of
convertible stock or debt, and the exercise of any similar right to
acquire such common stock (the "Outstanding Company Common Stock") or
(ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election
of directors (the "Outstanding Company Voting Securities"); provided,
however, that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change of Control; (i) any
acquisition by the Company or any "affiliate" of the Company, within
the meaning of 17 C.F.R. ss. 230.405 (an "Affiliate"), (ii) any
acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any Affiliate of the Company, (iii)
any acquisition by any corporation pursuant to a transaction which
complies with clauses (i), (ii) and (iii) of paragraph (C) of this
Subsection (i), or (iv) any acquisition by the Executive or by Xxxxxxx
X. Xxxxxx ("Xxxxxx"), or
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by a group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) that includes the Executive or Xxxxxx or both;
(B) Individuals who, as of the date hereof, constitute the
Board of Directors (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that
any individual becoming a director subsequent thereto whose election,
or nomination for election by the Company's stockholders, was approved
by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
(C) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets
of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60%
of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the
Company's assets either directly or through one or more subsidiaries)
in substantially the same proportions as their ownership, immediately
prior to such Business Combination of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be,
(ii) no Person (excluding (a) any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Affiliate of the
Company, or such corporation resulting from such Business Combination
or any Affiliate of such corporation, or (b) any entity in which the
Executive or Xxxxxx has an equity interest, or any Affiliate of such
entity) beneficially owns, directly or indirectly, 35% or more (on a
fully diluted basis) of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business
Combination, taking into account as outstanding for this purpose such
common stock issuable upon the exercise of options or warrants, the
conversion of convertible stock or debt, and the exercise of any
similar
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right to acquire such common stock, or the combined voting power of
the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business
Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(D) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company."
f. Section 4(b)(v) of the Employment Agreement is amended in its
entirety to read as follows:
"(v) the termination of Xxxxxx'x employment (i) by the Company
for any reason or (ii) by Xxxxxx for "good reason" (as defined in the
Employment Agreement by and between Xxxxxx and the Company, dated as
of January 27, 2000); provided, however, that any such termination of
Xxxxxx'x employment shall constitute Good Reason under this Agreement
only for the sixty (60) day period following the last day of Xxxxxx'x
employment."
g. Clause (iii) of Section of Section 4(d) of the Employment
Agreement is amended to read as follows:
"(iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination
date."
h. Clause (i) of Section 4(e) of the Employment Agreement is amended
to read as follows:
"(i) if the Executive's employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein (which
date shall be not more than thirty (30) days (and in the case of any
termination of the Executive's employment in accordance with Section
4(b)(v) of this Agreement, at least forty-five (45) days) after the
giving of such notice), as the case may be (although such Date of
Termination shall retroactively cease to apply if the circumstances
providing the basis of termination for Cause or Good Reason are cured
in accordance with Section 4(a) or 4(b) of this Agreement,
respectively),"
i. Section 5(a)(i)(B) is amended in its entirety to read as follows:
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"(B) an amount equal to two and one-half times (2 1/2) (and if
the Date of Termination is on or after May 1, 2001, two (2) times )
the sum of (i) the Annual Base Salary payable to the executive under
this Agreement, at the annual rate in effect as of the Termination
Date as provided in Section 3(a), and (ii) the Target Bonus paid or
payable, including any portion thereof which was earned but deferred,
for the most recently completed fiscal year during the Employment
Term, to be paid in a lump sum within 30 days after the Date of
Termination. The Executive shall have no duty or obligation to
mitigate the amounts or obligations provided in this Section 5(a)(i),
even in the event the Executive becomes reemployed by another
employer."
j. Section 13(b) of the Employment Agreement is amended in its
entirety to read as follows:
"(b)xxxAll notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
IF TO THE EXECUTIVE:
Xx. Xxxxxx Xxxxxxx
00 Xxxx 00xx Xxxxxx
#0-X
Xxx Xxxx, Xxx Xxxx 00000
IF TO THE COMPANY:
Golden Books Family Entertainment, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee."
2. As amended by the First Amendment, the Employment Agreement shall
remain in full force and effect.
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IN WITNESS WHEREOF, the Company has caused this amendment to be executed by
its duly authorized officers and the Executive has hereunto set his hand as of
the date first above written.
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
By: ________________________________________
________________________________________
Xxxxxx Xxxxxxx, Esq.
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