EXHIBIT 10.1
AMENDMENT NO. 3 TO EMPLOYMENT AGREEMENT
This Amendment No. 3 dated as of February 1, 2006 (this "Amendment") to
that certain Employment Agreement, by and between Xxxxxx Xxxxxx, Ltd., a
Delaware corporation (the "Company"), and Xxxxxx Xxxxxx (the "Executive"), as
amended.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company and the Executive are parties to that certain
Employment Agreement dated as of January 1, 1998, as amended by Amendment No. 1
dated as of June 29, 2001 and as amended by Amendment No. 2 dated as of October
30, 2002 (collectively, the "Original Agreement"), a copy of which is attached
hereto Exhibit A; and
WHEREAS, the Executive and the Company desire to amend the Original
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Effective as of the date hereof, the Original Agreement is
hereby amended as follows:
A. The first sentence of Section 3 of the Original
Agreement shall be deleted in its entirety and in
lieu thereof the following sentence shall be
inserted:
The term of this Agreement, unless sooner terminated
in accordance with the provisions set forth herein,
shall be for the period commencing on the date hereof
and terminating on December 31, 2009 (the "Term").
B. The following sentence shall be inserted at the end
of Section 3 of the Original Agreement.
If the Company notifies the Executive in writing of
its intention not to renew this Agreement (other than
For Cause or Total Disability as set forth in
Sections 5.3 and 6), then Executive shall be entitled
to receive severance compensation in cash in an
amount equal to his then-current Base Salary for the
90-day period commencing on the expiration of the
Term payable to the Executive at such regular weekly,
biweekly, or semi-monthly time or times as the
Company makes payment of its regular payroll in the
regular course of business as long as Executive
complies with Section 8 hereof.
C. Section 4.1 of the Original Agreement shall be
deleted in its entirety and in lieu thereof the
following paragraph shall be inserted:
Section 4.1 Salary.
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The Company shall pay to Executive an annual base
salary of (i) One Hundred Sixty Nine Thousand Four
Hundred Dollars ($169,400) until September 30, 2001,
(ii) Two Hundred Thousand Dollars ($200,000) from
October 1, 2001 through December 31, 2002, (iii) Two
Hundred Twenty Thousand Dollars ($220,000) from
January 1, 2003 through December 31, 2003, (iv) Two
Hundred Thirty Four Thousand Dollars ($234,000) from
January 1, 2004 through December 31, 2004, (v) Two
Hundred Forty Thousand Dollars ($240,000) from
January 1, 2005 through December 31, 2005, and (vi)
Four Hundred Twenty Five Thousand Dollars ($425,000)
per annum from and after January 1, 2006 subject to
increases in accordance with the terms of the last
sentence of this Section 4.1 (the "Base Salary"),
less such deductions as shall be required to be
withheld by applicable law and regulations. The Base
Salary payable to the Executive shall be paid at such
regular weekly, biweekly or semi-monthly time or
times as the Company makes payment of its regular
payroll in the regular course of business. The Base
Salary is subject to the following increases: (x) on
January 1, 2007, the Base Salary shall be increased
by 2.5% of the then-current Base Salary; (y) on
January 1, 2008, the Base Salary shall be increased
by 5% of the then-current Base Salary; and (z) on
January 1, 2009, the Base Salary shall be increased
by 5% of the then-current Base Salary.
D. Sections 4.2 (a), (b) and (c) of the Original
Agreement shall be deleted in their entirety and in
lieu thereof the following paragraphs shall be
inserted:
(a) ANNUAL BONUS. The Corporation shall pay
Executive an annual bonus, in such amount,
if any, and at such time or times, as the
Board of Directors, or a committee thereof,
may determine in its absolute discretion,
subject to the Corporation's ordinary
payroll practice.
(b) STOCK AWARDS. Subject to the availability of
shares under any new stock incentive plan
designated by the Board of Directors and
approved by the stockholders (the "New
Equity Incentive Plan"), Executive shall be
entitled to participate in the New Equity
Incentive Plan, with any award(s) thereunder
as may be determined by the Board of
Directors, or a committee thereof, from time
to time in its absolute discretion.
E. Section 4.3 of the Original Agreement shall be
amended by deleting "$800" and inserting in lieu
thereof "$1,000.00".
F. Section 5.5(a) of the Original Agreement shall be
deleted in its entirety and in lieu thereof the
following paragraph shall be inserted:
(a) If, during the period commencing 120 days
prior to a Change of Control and ending on
the day immediately prior to a Change of
Control, Executive's employment shall have
been terminated by the Corporation (other
than For Cause) or by Executive for Good
Reason (as defined below), the Executive
shall receive in cash, within ten (10) days
of termination, an amount equal to three (3)
times the total compensation received by the
Executive pursuant to Sections 4.1, 4.2(a)
and 4.4 of this Agreement for the preceding
twelve (12) month period ending on the last
previous December 31 except that in lieu of
the actual Base Salary component received
during such period under Section 4.1 of this
Agreement, there shall be substituted the
annual Base Salary to which the Executive
was entitled as of the date of termination.
As used herein, the term "Good Reason" shall
mean the occurrence of any of the following:
(i) the assignment to Executive,
without his consent, of any duties
inconsistent in any substantial and
negative respect with his
positions, duties, responsibilities
and status with the Corporation as
contemplated hereunder or
diminution of such position, duties
and status, if not remedied by the
Corporation within thirty (30) days
after receipt of written notice
thereof from Executive;
(ii) any removal of Executive, without
his consent, from any positions or
offices Executive held as
contemplated hereunder (except in
connection with the termination of
Executive's employment by the
Corporation For Cause or on account
of Total Disability pursuant to the
requirements of this Agreement), if
not remedied by the Corporation
within thirty (30) days after
receipt of written notice thereof
from Executive;
(iii) a reduction by the Corporation of
Executive's Base Salary as in
effect as contemplated hereunder,
except in connection with the
termination of Executive's
employment by the Corporation For
Cause or due to Total Disability
pursuant to the requirements of
this Agreement;
(iv) any termination of Executive's
employment by the Corporation
during the Term that is not
effected pursuant to the
requirements of this Agreement;
(v) any material breach by the
Corporation of the terms of this
Agreement that is not remedied by
the Corporation within thirty (30)
days after receipt of written
notice thereof from Executive;
(v) the relocation of Executive's work
location, without Executive's
consent, to a place more than
seventy five (75) miles from the
location set forth herein; or
(vi) failure by any successor to the
Corporation to expressly assume all
obligations of the Corporation
under this Agreement, which failure
is not remedied by the Corporation
within thirty (30) days after
receipt of written notice thereof
from Executive.
G. Section 5.5(b), which was deleted from the Original
Agreement in Amendment No. 2, shall be reinserted and
shall read in its entirety as follows:
(b) In the event that any payment (or portion
thereof) to Executive under Section 5.5(a)
is determined to constitute an "excess
parachute payment" under Sections 280G and
4999 of the Internal Revenue Code of 1986,
as amended, the following calculations shall
be made:
(i) The after-tax value to Executive of
the payments under Section 5.5(a)
without any reduction; and
(ii) The after-tax value to Executive of
the payments under Section 5.5(a)
as reduced to the maximum amount
(the "Maximum Amount") which may be
paid to Executive without any
portion of the payments
constituting an "excess parachute
payment".
If after applying the agreed upon calculations set
forth above, it is determined that the after-tax
value determined under clause (ii) above is greater
than the after-tax value determined under clause (i)
above, the payments to Executive under Section 5.5(a)
shall be reduced to the Maximum Amount.
H. A new Section 5.7 shall be inserted:
Section 5.7. Release. Payment of severance hereunder
is conditioned on Executive's executing and not
revoking a general release in such form as shall be
reasonably requested by the Corporation. The
Corporation shall also execute a similar release in
favor of Employee.
2. As hereinabove modified, all of the terms and provisions of
the Original Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.
3 as of date first set forth above.
Xxxxx Xxxxxx, Ltd.
By: /s/ XXXXXXXX XXXXXX
-------------------------------------
Xxxxxxxx Xxxxxx
Chief Executive Officer
/s/ XXXXXX XXXXXX
-------------------------------------
Xxxxxx Xxxxxx
EXHIBIT A
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 1, 1998 by and between XXXXXX
XXXXXX, LTD., a New York corporation with offices at 00-00 Xxxxxxx Xxxxxx, Xxxx
Xxxxxx Xxxx, X.X. 00000 (the "Company"), and XXXXXX XXXXXX, an individual
residing at 0000 Xxxxx Xxxxxx, Xxx Xxxx Xxxx, XX 00000 (the " Executive").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company desires to secure the continued services of
Executive upon the terms and condition hereinafter set forth; and
WHEREAS, Executive desires to continue to render services to the
Company upon the terms and conditions herein set forth.
NOW, THEREFORE, the parties mutually agree as follows:
Section 1. Employment. The Company hereby employs Executive and
Executive hereby accepts such employment, as an executive of the Company,
subject to the terms and conditions set forth in this Agreement.
Section 2. Duties. Executive shall serve as the Company's Chief
Financial Officer until such time as the Company hires an individual in such
capacity and thereafter, Executive shall for the remainder of the Term (as
hereinafter defined) serve as the Treasurer and Controller of the Company. The
Executive shall perform such duties as may reasonably be assigned to him from
time to time by the Chief Executive Officer of the Company. During the term of
this Agreement, Executive shall devote all of his business time to the
performance of his duties hereunder unless otherwise authorized by the Board of
Directors.
Section 3. Term of Employment. The term of Executive's employment,
unless sooner terminated in accordance with the provisions set forth herein,
shall be for a period of four (4) years commencing January 1, 1998 (the "Term").
The terms of this Agreement shall be automatically extended for one additional
term of one year unless either parties notifies the other in writing by
certified mail return receipt requested at least 90 days prior to the expiration
of the Term, of its intention not to extend the Term. If the Executive advises
the Company of his intent not to extend the Term in writing by certified mail
return receipt requested, he shall not be entitled to any additional
compensation. [However, if the Company advises the Executive of its intent not
to extend the Term (other than for Cause or Total Disability solely as set forth
in Sections 5 and 6), then Executive shall be entitled to receive severance
compensation equal to the then applicable Base Salary for three month period
commencing on the expiration of the Term, to be paid in accordance with the
Company's customary payroll practices, as long as Executive continues to be in
compliance with Section 8 hereof.]
Section 4.1 Salary. The Company shall pay to Executive a base salary
of One Hundred and Forty Thousand Dollars ($140,000) per annum, subject to
increases in accordance with the terms of the last sentence of this Section 4.1
(the "Base Salary"), less such deductions as shall be required to be withheld by
applicable law and regulations. All salaries payable to Executive shall be paid
at such regular weekly, biweekly or semi-monthly time or times as the Company
make payment of its regular payroll in the regular course of business.
Commencing on the third anniversary of the date hereof, and on each anniversary
thereafter during the Term, the Base Salary shall be increased by 10% of the
then Base Salary.
Section 4.2 Bonuses. Subject to the approval of the Company's 1998
Stock Plan by the stockholders of the Company, the Executive shall receive an
option to purchase 25,000 shares of Common Stock on June 30 of each year during
the Term. The options comprising the option shall vest quarterly (6,250 shares)
over a one (1) year period commencing on June 30, 1998 and be exercisable at a
price equal to the average closing bid price of the Company's shares of Common
Stock on June 30. The Company agrees to reserve under a stock plan approved by
its stockholders 100,000 shares of the Company's Common Stock for issuance upon
the exercise of such option. The Company shall use its best efforts to obtain
approval by the Company's stockholders of the 1998 Stock Plan so that the
Company may lawfully issue the options contemplated by this Section 4.2.
Section 4.3 Automobile Allowance. The Company shall, at the direction
of Executive, either reimburse Executive for, or directly pay the cost of, the
use of an automobile during the Term and all usual expenditures in connection
therewith; i.e., fuel, insurance, parking, customary maintenance and repairs,
etc., in an amount not to exceed $500 per month.
Section 4.4 Benefits. Executive shall be entitled to participate in
such pension, profit sharing, group insurance, options plans, hospitalization,
and group health and benefit plans and all other benefits and plans as the
Company provides to its senior Executives except current benefits and plans may
not be removed or altered to the detriment of Executive.
Section 5 Termination
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Section 5.1 Death. This Agreement shall terminate upon the death of
Executive; provided however, that the Company shall continue to pay to the
estate of Executive the salary and all other benefit as set forth herein for the
twelve (12) months period immediately subsequent to the date of Executive's
death.
Section 5.2 Termination Due to Total Disability;
-----------------------------------
Resignation. In the event Executive is discharged due to
his "Total Disability" (as those terms are defined below) or in the event
Executive resigns, then upon such occurrence, this Agreement shall be deemed
terminated and the Company shall be released from all obligations to Executive
with respect to this Agreement, except obligations accrued prior to such
termination date and as provided herein.
Section 5.3 "For Cause" As used herein, the term "For Cause" shall
only mean: (i) a deliberate and intentional breach by Executive of a substantial
and material duty and responsibility under the Agreement that results in
material harm to the Company unless such breach is committed with reasonable
belief that such breach was not contrary to the best interests of the Company,
and is not remedied, if capable of being remedied, within thirty (30) days after
receipt of written notice by certified mail return receipt requested from the
Company specifying such breach; or (ii) Executive's plea of guilty or nolo
contendere to, or conviction of, a felony, which conviction or plea causes
material damage to the reputation or financial position of the Company.
In the event that the Executive is discharged for Cause, then
upon such occurrence, this Agreement shall be deemed terminated and the Company
shall be released from all obligations to the Executive with respect to this
Agreement, except obligations which accrue prior to such termination date and as
provided herein.
Section 5.4 Termination Other Than For Total Disability. In the event
Executive is discharged other than for Cause or due to his "Total Disability,"
then such termination shall only be effective if he receives written notice
thereof by certified mail return receipt requested which notice properly sets
forth the Company's agreement to pay to Executive the balance of his benefit
including salary that would have been paid by the Company pursuant to this
Agreement, over the full Term of the Agreement if the Company had not terminated
this Agreement. Such amount shall be payable in two (2) installment as follows
(i) Fifty (50%) percent on January 1 immediately following such termination and
the balance of fifty (50%) percent one year after.
Section 5.5 Termination Upon Change Of Control.
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(a) If a Change of Control (as defined below) occurs without the
Executive's prior written consent, the Executive shall have the right to
terminate this Agreement. At least ten (10) days prior to any such proposed
Change of Control, the Company shall notify Executive of its intention to effect
such Change of Control, and the Executive shall thereupon have five (5) days
from the actual receipt of such notice to give notice of his intention to
terminate this Agreement in the event of the Change of Control. If,
notwithstanding such notice by the Executive, the Company proceeds with such
Change of Control, this Agreement shall be deemed terminated as of the effective
date of the event constituting the Change of Control and the Executive shall
receive in cash, within ten (10) days of termination, (i) any compensation
accrued and unpaid pursuant to Section 4 of this Agreement, (ii) an amount equal
to the balance of Executive's salary that would have been paid by the Company
pursuant to Section 4.1 hereof over the full Term of this Agreement as if the
Agreement had not been terminated, (iii) an amount equal to Executive's bonus,
if any, for the preceding 12-month period ended December 31, multiplied by the
remaining years (including any fractional years) left under this Agreement since
the date such bonus was determined by the Board of Directors plus (iv) an amount
equal to $200,000 as severance under this Agreement. In the event that any
payment (or portion thereof) to the Executive under this Section 5.5 is
determined to constitute an "excess parachute payment," under Sections 28OG and
4999 of the Internal Revenue Code of 1986, as amended, the following
calculations shall be made:
(i) The after-tax value to the Executive of the payments
under this Section 5.5 without any reduction; and
(ii) The after-tax value to the Executive of the payments
under this Section 5.5 as reduced to the maximum amount (the "Maximum Amount")
which may be paid to the Executive without a portion of the payments
constituting an "excess parachute payment".
If, after applying the agreed-upon calculations set forth
above, it is determined that the after-tax value determined under clause (ii)
above is greater than the after-tax value determined under clause (i) above, the
payments to Executive under this Section 5.5 shall be reduced to the Maximum
Amount.
(b) If a Change of Control occurs, regardless of whether the
Executive has consented to such Change of Control, Executive shall have the
right to resign.
Section 5.6 "Change of Control". As used herein, the term "Change of
Control" shall mean:
(a) When any "person" as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and as used in
Section 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d)
of the Exchange Act, but excluding the Company or any subsidiary or any
affiliate of the Company or any employee benefit plan sponsored or maintained by
the Company or any subsidiary of the Company (including any trustee of such plan
acting as trustee), becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities; or
(b) When, during any period of twenty-four (24) consecutive
months, the individuals who, at the beginning of such period, constitute the
Board of Directors (the "Incumbent Directors") cease for any reason other than
death to constitute at least a majority thereof, provided, however, that a
director who was not a director at the beginning of such 24-month period shall
be deemed to have satisfied such 24-month requirement (and be an Incumbent
Director) if such director was elected by, or on the recommendation of or with
the approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually (because they were directors at the
beginning of such 24-month period) or through the operation of this proviso; or
(c) The occurrence of a transaction requiring stockholder approval
for the acquisition of the Company by an entity other than the Company or a
subsidiary or an affiliate of the Company through purchase of assets, or by
merger, or otherwise.
Section 6 Disability
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Section 6.1 Total Disability. In the event that after Executive has
failed to have performed his regular and customary duties for a period of ninety
(90) consecutive days or for any one hundred and eighty (180) days out of any
three hundred and sixty (360) days period. And before Executive has become
"Rehabilitated" (as herein below defined) a majority of the members of the Board
of Directors of the Company, exclusive of Executive may vote to determine that
Executive is mentally or physically incapable or unable to continue to perform
such regular and customary duties of employment and upon the date of written
notice to Executive by certified mail return receipt requested of such majority
vote, Executive shall be deemed to be suffering from a "Total Disability". As
used herein, the term "Rehabilitated" shall mean such time as Executive is
willing, able and commences to devote his time and energies to the affairs of
the Company to a reasonable extent and in a similar manner that he did prior to
this disability.
Section 6.2 Payment During Disability. In the event Executive is
unable to perform his duties hereunder by reason of a disability, prior to the
time such disability is deemed by a Total Disability in accordance with the
provisions of Section 6.1 above, the Company shall continue to pay Executive his
benefit including salary pursuant to this Agreement for the twelve (12) month
period immediately subsequent to the date of determination of Total Disability.
Section 7 Vacation. Executive shall be entitled to a vacation for
four (4) weeks per year during which period all benefits including salary shall
be paid in full. Executive shall take his vacation at such time as Executive and
the Company shall determine is mutually convenient said vacation shall be
cumulative or taken in extra pay.
Section 8 Disclosure of Confidential Information. Executive
recognizes that he has had and will continue to have access to secret and
confidential information regarding the Company, including but not limited to its
customer list, products, know-how, and business plans. Executive acknowledges
that such information is of great value to the Company, is the sole property of
the Company, and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Company herein, Executive
will not, at any time, during his employment hereunder, reveal, divulge or make
known to any person, any information concerning the Company acquired by
Executive during the course of his employment, which is treated as confidential
by the Company. Provided same is not otherwise in the public domain or
information that Executive could have and did learned separate and apart from
his duties set forth herein, provided said information would not be detrimental
to the Company this provision shall survive Executive's employment hereunder for
a period of six months.
Section 9.1 Assignments. Neither Executive nor the Company may assign
or delegate any of their rights or duties under this Agreement without the
express written consent of the other.
Section 9.2 Entire Agreement. This Agreement constitutes and embodies
the full and complete understanding and agreement of the parties with respect to
Executive's employment by the Company, supersedes all prior understanding and
agreements, whether oral or written, between Executive and the Company,
including by not limited to the prior Employment Agreement, and shall not be
amended, modified or changed except by an instrument in writing executed by the
party to be charged. The invalidity of one or more provisions of this Agreement
shall not invalidate any other provision of this Agreement. No waiver by either
party of any provision or condition to be performed shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
Section 9.3 Binding Effect. This Agreement shall inure to the benefit
of, be binding upon and enforceable against, the parties hereto and their
respective successors, heirs, beneficiaries and permitted assigns.
Section 9.4 Headings. The headings contained in this Agreement are
for convenience of reference only and shall not affect any way the meaning or
interpretation of this Agreement.
Section 9.5 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when delivered, sent by registered
or certified mail, return receipt requested, postage prepaid or by private
overnight mail service (e.g., Federal Express) to the party at the address set
forth above or to such other address as either party may hereafter given notice
of accordance with provision hereof. Notice shall be deemed given on the sooner
of the date actually received or the third business day after sending.
Section 9.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to such State's conflicts of laws provisions and each of the parties
hereto irrevocably consents to the jurisdiction and venue of the federal and
state courts located in the Sate of New York, County of New York.
Section 9.7 Counterparts. This Agreement may be executed
simultaneously into two or more counterparts, each of which shall be deemed and
original, but all of which together shall constitute one of the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
XXXXXX XXXXXX, LTD.
By: /s/ XXXXXX XXXXXX
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer and
President
By: /s/ XXXXXX XXXXXX
-----------------------------------------
Xxxxxx Xxxxxx
AMENDMENT TO NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 dated as of June 29, 2001 (this "Amendment") to
that certain Employment Agreement, by and between Xxxxxx Xxxxxx, Ltd., a
Delaware corporation (the "Company"), and Xxxxxx Xxxxxx (the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Executive are parties to that certain
Employment Agreement dated as of January 1, 1998, a copy of which is attached
hereto as Exhibit A (the "Original Agreement"); and
WHEREAS, the Executive and the Company desire to amend the Original
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Effective as of the date hereof, the Original Agreement is
hereby amended as follows:
A. The first sentence of Section 3 shall be deleted in its
entirety and in lieu thereof the following sentence shall be inserted:
"The term of this Agreement, unless sooner terminated in accordance
with the provisions set forth herein, shall be for the period
commencing on the date hereof and terminating on December 31, 2005 (the
"Term")."
B. The last sentence (marked by brackets) of Section 3 shall be
deleted in its entirety.
C. Section 4.1 shall be deleted in its entirety and in lieu
thereof the following paragraph shall be inserted:
"Section 4.1. Salary.
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The Company shall pay to Executive an annual base salary of (i) One
Hundred Sixty Nine Thousand Four Hundred Dollars ($169,400) until
September 30, 2001, (ii) Two Hundred Thousand Dollars ($200,000) from
October 1, 2001 through December 31, 2002, (iii) Two Hundred Twenty
Thousand Dollars ($220,000) from January 1, 2003 through December 31,
2003, (iv) Two Hundred Thirty Four Thousand Dollars ($234,000) from
January 1, 2004 through December 31, 2004 and (v) Two Hundred Forty
Thousand Dollars ($240,000) from January 1, 2005 through December 31,
2005, less such deductions as shall be required to be withheld by
applicable laws and regulations. Executive's base salary, as in effect
at any time is hereinafter referred to as the "Base Salary." The Base
Salary payable to Executive shall be paid at such regular weekly,
biweekly or semi-monthly time or times as the Company makes payment of
its regular payroll in the regular course of business."
D. Section 4.2 shall be deleted in its entirety and the following
paragraphs shall be inserted in lieu thereof:
"Section 4.2. Bonuses.
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(a) Options. Subject to the approval by the stockholders of the most
recent amendment to the Company's 1999 Stock Plan (as amended, the "1999 Plan")
and subject to availability of shares under such 1999 Plan or any other
qualified or non-qualified stock incentive plan designated by the Board of
Directors and approved by the stockholders of the Company, the Executive shall
receive an option to purchase 40,000 shares of Common Stock (the "Annual
Option") on June 30, 2001 and every June 30th of each year during the Term
(each, a "Grant Date"). The Annual Options shall vest quarterly commencing on
the Grant Date and on the last day of each fiscal quarter thereafter. The
exercise price shall be equal to the lesser of (i) the average closing bid price
of the Company's shares of Common Stock as reported by the Nasdaq Stock Market
or such other exchange on which the Common Stock shall be listed on the Grant
Date or (ii) June 30th of the year in which the Grant Date shall occur, if the
Grant Date shall not be June 30th. The vested Annual Options shall be
exercisable at any time after the Grant Date for a period of seven (7) years
following the Grant Date.
(b) Signing Bonus. On the date of this Amendment, the Company shall
pay to the Executive a cash bonus equal to Fifty Thousand Dollars ($50,000).
(c) Annual Cash Bonus. Within ninety (90) days following the end of
each calendar year beginning December 31st, 2001 and every calendar year
thereafter during the Term, the Company shall pay Executive an annual cash bonus
equal to one and one-half percent (1.5%) of the increase in the Company's
earnings before interest, tax, depreciation and amortization ("EBITDA") for such
fiscal year over the EBITDA of the prior fiscal year based on audited financial
statements of the Company for such fiscal year; provided however, in no event
shall the annual cash bonus exceed the Base Salary for such year. The
determination of EBITDA for any fiscal year shall give effect to all bonuses
(including the bonus provided for in this Section 4.2) accrued or payable for
such fiscal year to Executive and all other employees of the Company.
Additionally, if as of the end of any calendar quarter, for such calendar
quarter and the immediately preceding three (3) calendar quarters the Company
has had sales of $300,000,000 or more, Executive shall receive a bonus of Fifty
Thousand Dollars ($50,000) promptly after the end of such calendar quarter;
provided, however, in no event shall Executive receive pursuant to this section
more than one (1) such fifty thousand dollars ($50,000) bonus in any given
calendar year."
E. Section 4.3 shall be amended by deleting "$500" and inserting
in lieu thereof "$800".
F. Section 4.4 shall be amended by adding the following sentence
at the end of the Section:
"During the Term of this Agreement, the Company shall pay life
insurance premiums on behalf of the Executive of approximately Eighty
Thousand Dollars ($80,000) per year. All right, title and interest in
and to such life insurance, including but not limited to the cash
value, surrender value and any other value attributable to such policy
shall be the property of the Executive."
G. Section 5.2 shall be deleted in its entirety and in lieu
thereof the following paragraph shall be inserted:
"Section 5.2. Termination Due To Total Disability.
-----------------------------------
Subject to Section 6.2 hereof, in the event Executive is discharged due
to his "Total Disability" (as this term is defined below), then this
Agreement shall be deemed terminated and the Company shall be released
from all obligations to Executive with respect to this Agreement,
except obligations accrued prior to such termination and those
obligations provided in Section 6.2 hereof."
H. Section 5.3. shall be deleted in its entirety and in lieu
thereof the following paragraphs shall be inserted:
"Section 5.3. For Cause
---------
As used herein, the term "For Cause" shall only mean: (i) a deliberate
and intentional breach by Executive of a substantial and material duty
and responsibility under this Agreement that results in material harm
to the Company unless such breach is committed with reasonable belief
that such breach was not contrary to the best interests of the Company,
and is not remedied, if capable of being remedied, within thirty (30)
days after receipt of written notice by certified mail return receipt
requested from the Company specifying such breach; (ii) Executive's
conviction of, or pleading guilty or nolo contendere to, any crime,
constituting a felony in the jurisdiction involved, which the Board of
Directors, in its sole discretion, determines shall cause material
change to the reputation or financial position of the Company; (iii)
the conviction of Executive of any crime involving moral turpitude;
which the Board of Directors, in its sole discretion, determines shall
cause material harm to the Company, or (iv) gross negligence or willful
misconduct in the conduct of Executive's duties or willful or refusal
to perform such duties as may be delegated to Executive which are
consistent with Executive's position as in effect just prior to such
delegation, and that as to any conduct concerning this subsection such
conduct is not corrected by Executive within thirty (30) days following
receipt by Executive of written notice from the Board of Directors,
such notice to state with specificity the nature of the breach, failure
or refusal, gross negligence or willful misconduct related to
Executive's employment with the Company.
In the event that the Executive is discharged "For Cause" or Executive
resigns for any reason, this Agreement shall be deemed terminated and
the Company shall be released from all obligations to Executive with
respect to this Agreement, except obligations accrued prior to such
termination."
I. Section 5.4 shall be deleted in its entirety and in lieu
thereof the following paragraph shall be inserted:
"Section 5.4. Termination Other Than For Cause, Death or Due To Total
Disability.
Subject to the terms and conditions of this Agreement, the
Company may terminate Executive other than For Cause upon thirty (30)
days' prior written notice to Executive by certified mail return
receipt requested ("Notice of Termination"). In the event Executive is
discharged other than "For Cause" or due to his death or Total
Disability, then such termination shall be effective thirty (30) days
from Executive's receipt of the Notice of Termination (the "Termination
Date"). Such Notice of Termination shall properly set forth the
Company's agreement to pay to Executive the following amount: the
product of (i) Executive's Base Salary on the effective date of such
termination plus the bonus paid or payable (pursuant to Section 4.2(c))
to Executive for the fiscal year ended on the December 31st immediately
preceding the Termination Date, multiplied by (ii) the number of years
(and fraction of years) remaining in the Term. In addition, Executive
shall be entitled to continue to receive, for what would have been the
balance of the Term, the amount payable to him or on his account
pursuant to Section 4.4. Such amounts shall be payable to Executive by
the Company in two (2) installments as follows: (i) fifty percent (50%)
on January 1st immediately following the Termination Date and, (ii) the
remaining fifty percent (50%) balance one (1) year after.
J. Section 5.5 shall be deleted in its entirety and in lieu
thereof the following paragraph shall be inserted:
"Section 5.5. Change of Control
-----------------
(a) If a Change of Control (as defined below) occurs without the
Executive's prior written consent, the Executive shall have the right
to terminate this Agreement. At least ten (10) days prior to any such
proposed Change of Control, the Company shall notify Executive of its
intention to effect such Change of Control, and the Executive shall
thereupon have five (5) days from the actual receipt of such notice to
give his intention to terminate this Agreement in the event of the
Change of Control. If Executive shall give notice of his intention to
terminate this Agreement in the event of the Change of Control, this
Agreement shall be deemed terminated as of the effective date of the
event constituting the Change of Control and the Executive shall
receive in cash, within ten (10) days of termination, (i) any
compensation accrued and unpaid pursuant to Section 4 of this
Agreement, (ii) an amount equal to the balance of Executive's Base
Salary that would have been paid by the Company pursuant to Section 4.1
hereof over the full Term of this Agreement as if the Agreement had not
been terminated, (iii) the amount payable to him on his account
pursuant to Section 4.4 of this Agreement, and (iv) an amount equal to
Executive's bonus, if any, for the preceding 12-month period ended
December 31st (paid pursuant to Section 4.2(c)), multiplied by the
remaining years (including any fractional years) left under this
Agreement since the date such bonus was determined by the Board of
Directors; provided, however, in no event will the amount payable
pursuant to this clause (a) be greater than three (3) times the total
compensation received by Executive pursuant to Sections 4.1, 4.2, 4.4
of this Agreement for the preceding twelve (12) month period ending
December 31st or less than one and one-half (1.5) times the total
compensation so received by Executive during such period.
(b) In the event that any payment (or portion thereof) to Executive under
Section 5.5(a) is determined to constitute an "excess parachute
payment," under Sections 280G and 4999 of the Internal Revenue Code of
1986, as amended, the following calculations shall be made:
(i) The after-tax value to Executive of the payments
under Section 5.5(a) without any reduction; and
(ii) The after-tax value to Executive of the payments
under Section 5.5(a) as reduced to the maximum amount
(the "Maximum Amount") which may be paid to Executive
without any portion of the payments constituting an
"excess parachute payment".
If after applying the agreed upon calculations set forth above, it is
determined that the after-tax value determined under clause (ii) above
is greater than the after-tax value determined under clause (i) above,
the payments to Executive under Section 5.5(a) shall be reduced to the
Maximum Amount."
I. Section 6.2 shall be deleted in its entirety and in lieu
thereof the following paragraph shall be inserted:
"Section 6.2. Payment During Disability.
-------------------------
In the event Executive is unable to perform his duties hereunder by
reason of a disability, prior to the time such disability is deemed a
Total Disability in accordance with the provisions of Section 6.1
above, the Company shall continue to pay Executive his benefits
including salary pursuant to this Agreement during the continuance of
any such disability. Upon a determination of any Total Disability
pursuant to the provisions of Section 6.1 above, the Company shall pay
to Executive his Base Salary pursuant to this Agreement for the twelve
(12) month period immediately subsequent to the date of determination
of Total Disability."
2. As herein modified, all of the terms and provisions of the
Original Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the day first above written.
XXXXXX XXXXXX, LTD.
By: /s/ XXXXXX XXXXXX
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chief Executive Officer
/s/ XXXXXX XXXXXX
-------------------------------------
Xxxxxx Xxxxxx
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
This Amendment No. 2 dated as of October 30, 2002 (this "Amendment") to
that certain Employment Agreement, by and between Xxxxxx Xxxxxx, Ltd., a
Delaware corporation (the "Company"), and Xxxxxx Xxxxxx (the "Executive"), as
amended.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company and the Executive are parties to that certain
Employment Agreement dated as of January 1, 1998, as amended by Amendment No. 1
dated as of June 29, 2001 (collectively the "Original Agreement"), a copy of
which is attached hereto as Exhibit A; and
WHEREAS, the Executive and the Company desire to amend the Original
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
A. Effective as of the date hereof, the Original Agreement is
hereby amended as follows:
1. The following section shall be added as subsection
(d) of Section 4.2 of the Original Agreement:
(d) In addition to all of the foregoing
compensation and benefits, if the Executive
is employed by the Company on December 31,
2005 (the "Stock Grant Date"), the Company
shall grant to the Executive on the Stock
Grant Date an additional 20,000 common
shares of the Company (the "2005 Stock
Grant"). The Company shall not place any
restrictions on any of the shares granted to
the Executive pursuant to the 2005 Stock
Grant. Moreover, notwithstanding anything to
the contrary herein, in the event of a
Change of Control or the termination of the
Executive's employment for any reason (other
than For Cause or the Executive's
resignation) under Section 5 or Section 6
prior to the Stock Grant Date, the Company
shall award to the Executive the 2005 Stock
Grant as of the earlier of the date of the
Change of Control or the date of the
termination of his employment.
2. Section 5.5 (a) shall be deleted in its entirety and
in lieu thereof the following paragraph shall be
inserted:
"Section 5.5 Change of Control
(a) If a Change of Control (as defined below)
occurs without the Executive's prior written
consent, the Executive shall have the right
to terminate this Agreement. At least ten
(10) days prior to any such proposed Change
of Control, the Company shall notify
Executive of its intention to effect such
Change of Control ("Notice of Change of
Control"), and the Executive shall thereupon
have five (5) days from the actual receipt
of such notice to give notice of his
intention to terminate this Agreement in the
event of the Change in Control. If Executive
shall give notice of his intention to
terminate this Agreement in the event of the
Change in Control, this Agreement shall be
deemed terminated as of the effective date
of the event constituting the Change of
Control and the Executive shall receive in
cash, within ten (10) days of termination,
an amount equal to three (3) times the total
compensation received by the Executive
pursuant to Sections 4.1, 4.2(b), 4.2(c) and
4.4 of this Agreement for the preceding
twelve (12) month period ending on the last
previous December 31 except that in lieu of
the actual Base Salary component received
during such period under Section 4.1 of this
Agreement, there shall be substituted the
annual Base Salary to which the Executive
was entitled as of the date of the giving of
the Notice of Change of Control."
3. Section 5.5(b) shall be deleted in its entirety.
B. As hereinabove modified, all of the terms and provisions of
the Original Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment No. 2 as of the date first set forth above.
Xxxxx Xxxxxx, Ltd.
By: /s/ XXXXXXXX XXXXXX
-------------------------------------
Xxxxxxxx Xxxxxx
Chief Executive Officer
/s/ XXXXXX XXXXXX
-------------------------------------
Xxxxxx Xxxxxx
