EXHIBIT 10.1
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
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This amendment is made effective August 11, 2003, between Metatec, Inc., an
Ohio corporation (the "Company"), and Xxxxxxxxxxx X. Xxxxx ("Xx. Xxxxx").
BACKGROUND INFORMATION
A. The Company and Xx. Xxxxx (the "Parties") are the parties to an
Employment Agreement dated November 22, 2000 (the "Original Agreement") as
amended by a First Amendment dated March 26, 2002 (collectively, the
"Agreement").
B. On February 27, 2003, the Compensation Committee (the "Committee") of
the Board of Directors (the "Board") of the Company approved certain
modifications to the Agreement, but left one item open for additional review and
consideration. On July 22, 2003, the Committee approved the final item, and the
Parties are entering into this amendment to reflect and confirm the previously
approved modifications to the Agreement.
C. The Committee has also previously approved the terms of an agreement
under which Xx. Xxxxx could potentially receive a payment upon a change in
control of the Company to provide an incentive for Xx. Xxxxx to continue his
employment with the Company through any change in control that may occur. The
Parties desire to incorporate those terms into this amendment rather than
executing a separate agreement.
STATEMENT OF AGREEMENT
The Parties hereby acknowledge the accuracy of the foregoing Background
Information and agree as follows:
Section 1. DEFINITIONS. Any capitalized terms used by not otherwise defined
in this amendment shall have the respective meanings given those terms in the
Agreement.
Section 2. SALARY. Effective March 1, 2003, Xx. Xxxxx'x Base Salary was
increased to an annual rate of $375,000.
Section 3. BONUSES. So long as Xx. Xxxxx'x employment with the Company
continues for the remainder of calendar year 2003, the Company shall pay Xx.
Xxxxx a bonus in an amount of up to 60% of the Base Salary, payable not later
than March 31, 2004, with the final percentage to be determined based upon the
performance of the Company as compared with the 2003 plan for the Company that
was reviewed by the Committee (the "Base Plan"). For this purpose, the
applicable performance thresholds and cumulative bonus percentages shall be as
follows (with all applicable threshold calculations to be determined under
generally accepted accounting principles):
THRESHOLD CUMULATIVE %
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Achieve Base Plan on a net earnings basis 30%
$845,000 net earnings improvement over Base Plan 40%
$1,345,000 net earnings improvement over Base Plan 50%
$1,845,000 net earnings improvement over Base Plan 60%
The Committee may, but shall not be obligated to, award a bonus amount
based upon a percentage of Base Salary between the percentages specified above
if the Company's performance falls between any of the specified thresholds.
Xx. Xxxxx shall be eligible for such periodic bonuses for periods after
calendar year 2003 as may be determined by the Committee or the Board.
Section 6. LIFE INSURANCE. Subject to Xx. Xxxxx'x continued employment, not
later than February 28 of each calendar year after the date of this amendment,
the Company shall pay $40,000 as a premium payment under Xx. Xxxxx'x current
life insurance policy with Northwestern Mutual that is referenced in the
Agreement.
Section 7. SEVERANCE. Section 11(b)(iii) of the Original Agreement is
hereby modified to read in its entirety as follows:
(iii) At any time without Cause; provided that if the Company
terminates Xx. Xxxxx'x employment pursuant to this clause (iii) and no
other basis for termination exists under this agreement, then Xx. Xxxxx
shall be entitled to severance payments in an aggregate amount equal to the
then current annual Base Salary, payable in bi-weekly installments, in
arrears, for the 18-month period immediately following such termination, in
accordance with the Company's general policies and procedure for payment of
salaries to its executive personnel, together with reimbursement of Xx.
Xxxxx'x cost for continuation of health insurance coverage under COBRA for
the shorter of (A) such 18-month period or (B) the period ending at such
time as he is eligible for comparable health care insurance under a
different employer's policy. Notwithstanding any other provisions of this
agreement to the contrary, such severance and reimbursements (collectively,
the "Severance Benefits") shall be payable only if Xx. Xxxxx is in full
compliance with the provisions of ss.10 of this agreement.
If Xx. Xxxxx terminates his employment with the Company for Good Reason (as
defined below), he will be entitled to the same Severance Benefits as if he had
been terminated by the Company without Cause at that time. For purposes of this
amendment and the Agreement, "Good Reason" shall mean any substantial reduction
in (a) compensation or benefits (exclusive of bonuses, equity based
compensation, or other performance-based compensation, and reductions in
benefits affecting the Company's executive personnel generally) unless the
reduction is replaced with a reasonably equivalent alternative, or (b)
responsibility or authority.
Section 8. NONCOMPETITION. Section 10(iii) of the Original Agreement is
hereby modified to read in its entirety as follows:
(iii) "Restricted Period" shall mean the period beginning on
the Commencement Date and ending on the date that is 18 months
after termination of Xx. Xxxxx'x employment with the Company (for
any reason, whether pursuant to this agreement or otherwise); and
Section 9. CHANGE IN CONTROL PAYMENT. If a Change In Control of the Company
occurs while Xx. Xxxxx is employed by the Company, then the Company shall pay to
Xx. Xxxxx, not later than 30 days after such Change In Control, an amount equal
to 5% of the Consideration (as defined below) for such Change In Control.
For purposes of this amendment and the Agreement, the following terms shall
have the following meanings, respectively:
(a) A "Change In Control" of the Company shall mean any of the
following, whether occurring as a result of one transaction or a series of
transactions:
(i) The direct or indirect acquisition by any "person" as
defined in ss.3(a)(9) of the 1934 Act and as used in ss.ss.13(d)
and 14(d) thereof, including a "group" within the meaning of
ss.13(d) of the 1934 Act (hereinafter, simply a "Person"), of
"beneficial ownership" (within the meaning of Rule 13d-3 under
the 0000 Xxx) of securities of the Company representing more than
60% of the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the
election of directors of the Company (the "Company Voting
Securities"), provided that: (A) for purposes of this subsection
(i), the term "Person" shall not include the Company, any
subsidiary of the Company, 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), or any
affiliate of the Company, and (B) the provisions of this
subsection (i) shall not apply to any acquisition of securities
that is pursuant to, a part of, or one of multiple steps in a
Sale Transaction (as defined below) that constitutes a Change In
Control under clause (ii), below; or
(ii) Any reorganization, merger, or consolidation involving
the Company, or a sale or other disposition of all or
substantially all of the assets of the Company (any such
transaction, a "Sale Transaction"), unless, in any such case,
following such Sale Transaction: (A) all or substantially all of
the individuals and entities who were the beneficial owners of
the Company Voting Securities outstanding immediately prior to
such Sale Transaction beneficially own, directly or indirectly,
immediately following such Sale Transaction, more than 50% of the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors (or
individuals having similar duties) of the entity resulting from
such Sale Transaction, and (B) at least a majority of the
directors (or individuals having similar duties) of the entity
resulting from such Sale Transaction were incumbent directors of
the Company at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Sale
Transaction.
(b) "Consideration" shall mean the aggregate value of all
consideration paid or distributed to the Company's shareholders in a
Change In Control, including without limitation all cash or cash
equivalents paid or distributed and the value of all promissory notes,
other evidences of indebtedness, capital stock, or other securities or
debt or equity interests issued to the shareholders of the Company.
For this purpose, cash and cash equivalents shall be valued at their
stated amounts. If the consideration paid or distributed includes
items other than cash and cash equivalents, then the value of such
other consideration shall be its fair value as of the closing of the
applicable Change In Control. To the extent such other consideration
consists of publicly traded securities, then the fair value of such
securities shall be deemed to be the last sale price of such
securities as of the then-most recent trading day on the market or
exchange on which such securities are traded. To the extent such other
consideration is not publicly traded securities, then the fair value
of such consideration shall be determined (1) by agreement of the
Parties, if they are able to agree within 10 business days after
either of them requests the other to so agree, or, if not, (2) by an
independent appraiser or an independent accounting firm selected by
the Company, whose determination shall be final and binding on the
Parties, and whose fees and expenses for that purpose shall be paid by
the Company.
In the event of any disagreement regarding any calculation necessary for
purposes of applying the provisions of this section, such calculation shall be
made by any independent accounting firm selected by the Company, whose
calculation shall be final and binding on the Parties.
Section 10. CONDITION; INTERPRETATION. The Company's obligations under this
amendment shall be subject to any applicable restrictions currently contained in
the Second Amended and Restated Loan Agreement dated as of February 8, 2002,
among the Company, The Huntington National Bank, for itself and as
Administrative Agent, and Bank One, N.A. This is an amendment to and a part of
the Agreement. In the event of any inconsistencies between the provisions of the
Agreement and this amendment, the provisions of this amendment shall control.
Except as modified by this amendment, the Agreement shall continue in full force
and effect without change.
METATEC INC.
By /s/ Xxxx X. Xxxxxxxx /s/ Xxxxxxxxxxx X. Xxxxx
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Xxxx X. Xxxxxxxx, Chief XXXXXXXXXXX X. XXXXX
Financial Officer