Exhibit 10.4
------------
MODIFICATION AGREEMENT
MODIFICATION AGREEMENT made this 26th day of January, 1999 and between
XXXXXX INDUSTRIES, INC., a Delaware corporation (hereinafter the "Company") and
XXX X. XXXXX, an individual residing at 000 Xxxxx Xxxxxxxxx Xxxxx, Xxxx Xxxxx,
Xxxxxxx 00000 (hereinafter "the Employee").
W I T N E S S E T H:
WHEREAS, the Company and Employee entered into an Employment Agreement
dated October 1, 1998 (hereinafter the "Employment Agreement"); and
WHEREAS, the Company and Employee desire to amend said Employment
Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Xxxxxxxxx "0 (xxx)" of the Employment Agreement is hereby deleted in
its entirety, and in its place and stead shall be the following:
"(iii) Not later than one hundred twenty (120) days after
the end of the fiscal year of the Company and each
subsequent fiscal year of the Company ending during
the period of employment, the Company shall pay to
Employee, as incentive compensation an amount equal
to five (5%) percent of the Consolidated Pretax
Earnings of the Company in excess of the Company's
Minimum Consolidated Pretax Earnings, as defined
below in this clause (iii).
For purposes hereof, the term "Consolidated Pretax Earnings"
of the Company shall mean, with respect to any fiscal year, the
consolidated income, if any, of the Company for such fiscal year as set
forth in the audited, consolidated financial statements (the "Financial
Statements") of the Company and its subsidiaries included in its Annual
Report to stockholders for such fiscal year, before deduction of taxes
based on income or of the incentive compensation to be paid to Employee
for such fiscal year under this Agreement. For the purposes hereof the
term "Minimum Consolidated Pretax Earnings" of the Company shall mean
with respect to any fiscal year, the consolidated Pretax Earnings of
the Company equal to $2,000,000."
2. Paragraph "12" of the Employment Agreement is hereby deleted in its
entirety, and in its place and stead shall be the following:
"12. CHANGE OF CONTROL. In the event there shall be a change
in the present control of the Company as hereinafter defined, or in any
person directly or indirectly presently controlling the Company, as
hereinafter defined, Employee shall have the right, exercisable within
six months of his becoming aware of such event, to terminate his
employment. Upon such termination, Employee shall immediately receive
as a lump sum payment an amount equal to (i) three (3) times his "base
amount", within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (hereinafter "the Code"), reduced by (ii)
$100.00.
For purposes of this Agreement, a change in control of the
Company, or in any person directly or indirectly controlling the
Company, shall mean:
a) a change in control as such term is presently defined
in Regulation 240.12b-2 under the Securities Exchange
Act of 1934 ("Exchange Act"); or
b) if any "person" (as such term is used in Section
13(d) and 14 (d) of the Exchange Act) other than the
Company or any "person" who on the date of this
Agreement is a director or officer of the Company,
becomes the "beneficial owner" (as defined in Rule
13(d)-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing
twenty-five (25%) of the voting power of the
Company's then outstanding securities; or
c) if during the term of this Agreement, individuals who
at the beginning of such period constitute the Board
of Directors cease for any reason to constitute at
least a majority thereof, unless the election of each
director who is not a director at the beginning of
such period has been approved in advance by directors
representing at least two-thirds (2/3) of the
directors then in office who were directors at the
beginning of the period.
3. Paragraph "12-A" shall be added to the Employment Agreement as
following:
-2-
"12-A. PARACHUTES. If all, or any portion, of the payments
provided under this Agreement, and/or any other payments and benefits
that Employee receives or is entitled to receive from the Company,
whether or not under an existing plan, arrangement or other agreement,
constitutes an excess "parachute payment" within the meaning of Section
280G(b) of the Code (each such parachute payment, a "Parachute
Payment") and will result in the imposition on Employee of an excise
tax under Section 4999 of the Code, then, in addition to any other
benefits to which Employee is entitled under this Agreement, the
Company shall pay him an amount in cash equal to the sum of the excise
taxes payable by him by reason of receiving Parachute Payments, plus
the amount necessary to put him in the same after-tax position (taking
into account any and all applicable federal, state and local excise,
income or other taxes at the highest possible applicable rates on such
Parachute Payments, including without limitation any payments under
this Employment Agreement, as if no excise taxes had been imposed with
respect to Parachute Payments (the "Parachute Gross-up")."
4. The aforesaid Employment Agreement in all other respects is hereby
ratified and confirmed.
IN WITNESS WHEREOF, the undersigned have executed this Modification
Agreement as of the day and year first above written.
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxx Xxxx
---------------------
Xxxxx Xxxx, President
/s/ Xxx X. Xxxxx
----------------------
Xxx X. Xxxxx, Employee
-3-
July 30, 1999
Xx. Xxx X. Xxxxx
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxx Xxxxx, Xx 00000
Re: Employment Agreement dated October 1, 1998, as modified January 26, 1999,
between Xxxxxx Industries, Inc. and Xxx X. Xxxxx (the "Employment
Agreement")
Dear Xx. Xxxxx:
The following will set forth our mutual agreement as to the modification of the
Employment Agreement effective June 17, 1999:
1. Paragrapah 5(i) is amended to provide for an annual salary of
$587,972 reflecting an increase of $100,000 annually, plus the
cumulative cost of living adjustment through June 30, 1999 as
provided in Paragraph 5(ii),
2. Paragraph 5 (ii) of the Employment Agreement shall be amended to
change the base period for computation of the cost of living
adjustment to July 1, 1999.
3. You shall receive an allowance for life insurance in the annual
amount of $56,000, which shall be payable semi-annually by the
Company on August 1, and February 1, as presently provided for in
the Employment Agreement.
In all other respects, the Employment Agreement is hereby ratified and
confirmed.
If you agree with all of the above, would you please sign and return a
xxx of this letter whereupon the same shall constitute a binding
agreement between us.
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxx Xxxx
--------------------
Xxxxx Xxxx
President
ACCEPTED AND AGREED:
---------------------------
Xxx X. Xxxxx
