FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT ("Agreement") made on
December 31, 1998, but effective as of October 1, 1998 by and between Xxxxxxxx
Xxxxxxxx ("Employee") and STV Group, Inc., a Pennsylvania corporation
("Employer").
WHEREAS, Employer and Employee are parties to an Employment Agreement,
made as of October 29, 1998, effective October 1, 1998 (the "Employment
Agreement"), pursuant to which Employee has been re-employed by Employer; and
WHEREAS, the Employer and the Employee desire to amend the Employment
Agreement solely to the extent set forth herein and otherwise desire to, and
hereby do, ratify and affirm the Employment Agreement;
NOW THEREFORE, in consideration of the promises, covenants and
agreements of the parties contained herein and in the Employment Agreement, and
intending to be legally bound, the parties hereby covenant and agree as follows:
1. Supplemental Retirement Benefits. Paragraph 3.6.3 of the Employment
Agreement, entitled "Supplemental Retirement Benefits" is hereby deleted from
the Employment Agreement and the following paragraph enumerated as 3.6.3 and
entitled "Supplemental Retirement Benefits" is deemed substituted and
incorporated into the Employment Agreement as if originally and fully set forth
in its place and stead:
3.6.3(a) Supplemental Retirement Benefits. Commencing on the
first day of the month following termination of Employee's employment
with Employer, Employee shall be entitled to receive annual benefits
("Supplemental Retirement Benefits") from Employer under a Supplemental
Executive Retirement Plan ("SERP"), as described in this section in the
amount of Three Hundred and Twenty-five Thousand Dollars ($325,000.00)
per annum. The foregoing Supplemental Retirement Benefits shall be
payable monthly in equal installments for a total period of fifteen
(15) years of the lives
of Employee and his spouse or of the survivor next following the
termination of Employee's employment with Employer. As of January 1 of
each year following the year in which payment of the SERP benefit
commences, the amount of the Supplemental Retirement Benefits shall be
increased by a cost-of-living factor based on the increase in the
Consumer Price Index-Urban Consumers for the immediately preceding
calendar year. The Supplemental Retirement Benefits shall be fully
vested and non-forfeitable in the event that Employee's employment
with Employer terminates after September 30, 2003 for any reason or if
such employment terminates prior to October 1, 2003 by reason of
death, disability (as described in Paragraph 4.2.2 of the Employment
Agreement) termination by Employer other than for cause (as described
in Paragraph 4.2.4 of the Employment Agreement) or termination by
Employee for good reason (as described in Paragraph 4.2.5 of the
Employment Agreement) other than retirement.
3.6.3(b) Notwithstanding the foregoing Paragraph 3.6.3(a), in
the event that Employee's employment with Employer is terminated prior
to October 1, 2003 by Employer for cause (as described in Paragraph
4.2.3 of the Employment Agreement) or by Employee by retirement (as
described in Paragraph 4.2.5 of the Employment Agreement), then the
annual amount of the Supplemental Retirement Benefits payable to the
Employee shall equal the sum of (i) the annual amount of Supplemental
Retirement Benefits that was accrued under the terms of the Prior
Employment Agreement and (11) the product of (A) the excess of Three
Hundred and Twenty-five Thousand Dollars ($325,000.00) over the annual
amount described in clause (i) above times (B) a fraction the numerator
of which is the number of days Employee has remained employed by
Employer from the effective date of this Agreement to his date of
termination and the denominator of which is 1,825.
3.6.3(c) Notwithstanding the foregoing, if a change in control
(as defined in Appendix A) shall occur at any time during the term of
this Agreement or before the Supplemental Retirement Benefits have been
fully paid, the Supplemental Retirement Benefits shall immediately
become and be fully vested and non-forfeitable in the amount set forth
in Paragraph 3.6.3 (a) above and the Employer shall within thirty (30)
days following such change of control provide to the Employee and
Employee's spouse, or the survivor, security for the life of such
benefit in the form of a fully funded annuity payment or other
equivalent guarantee or the actuarial lump sum equivalent of the
remaining Supplemental Retirement Benefits shall be accelerated and
paid to Employee or his surviving spouse in a single lump sum in cash
within forty-five (45) days following such change of control. Any such
annuity contract or equivalent guarantee shall be issued by an
insurance company having an A.M. Best financial strength rating of at
least A+ and a Standard & Poor's claims paying ability rating of at
least AA. Actuarial equivalence shall be determined in accordance with
reasonable actuarial assumptions. The Employer, with the consent and
approval of the Employee, which consent and approval shall not
unreasonably be withheld, shall retain an independent third party
actuarial firm to determine the actuarial lump sum equivalent. In the
event that the Employer shall elect to make payment of the Supplemental
Retirement Benefits by annuity as provided above, upon the death of
Employee's surviving spouse within the 15-year term of the SERP, the
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balance of any remaining Supplemental Retirement Benefits which would
have become due and owing to Employee, or to Employee's surviving
spouse, shall be payable to such beneficiaries as may have been
designated by Employee or Employee's surviving spouse during their
respective lifetimes. In addition, in the event that, as a result of
the Employer's election to make payment of the Supplemental Retirement
Benefits by annuity as provided above, any taxable income is
recognized by Employee in advance of receipt of payment of the
Supplemental Retirement Benefits in whole or in part, Employer shall,
promptly upon its calculation, advance to Employee, in cash, an amount
sufficient to cover any of Employee's federal, state and local tax
liability with respect to any such taxable income recognized by
Employee as a consequence of Employer's election to make payment of
the Supplemental Retirement Benefits by annuity, as well as Employee's
federal, state and local tax liability with respect to such cash
payment, which advance shall be repaid without interest by the
employee pari pasu as Employee receives payment of such Supplemental
Retirement Benefits. (Collectively, the General Retirement Benefits,
Medical Retirement Benefits and Supplemental Retirement Benefits are
referred to as "Retirement Benefits").
2. Termination for Cause. Paragraph 4.2.3 of the Employment Agreement,
entitled "Termination for Cause" is hereby deleted from the Employment Agreement
and the following paragraph enumerated as 4.2.3 and entitled "Termination for
Cause" is deemed substituted and incorporated into the Employment Agreement as
if originally and fully set forth in its place and stead:
4.2.3. Termination for Cause. At any time during the Term,
Employer may terminate Employee's employment hereunder for Cause (as
defined herein), effective immediately upon notice to Employee, if at a
duly convened meeting of the Board of Directors of which Employee was
given reasonable advance notice (30 days or more) and at which Employee
and his counsel had the opportunity to be heard, a resolution was duly
adopted by the affirmative vote of not less than two-thirds of the
Board finding that, in the good faith judgment of the Board, (1) an
event (which is described in the resolution in reasonable detail)
constituting Cause has occurred, and (2) the Employee was given
reasonable notice of the event and either Employee had a reasonable
opportunity of no less than one hundred and twenty (120) days duration
to take remedial action but failed or refused to do so, or an
opportunity to take remedial action would not have been meaningful or
appropriate under the circumstances.
For purposes of this Agreement, Cause shall mean:
(1) Employee is grossly negligent in the performance of his duties
under this Agreement resulting in a material impairment of Employer's
performance, and Employee continues to be grossly negligent after
demand for corrective action is delivered by the Employer that
specifically identifies the manner in which the employer believes the
Employee has been grossly
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negligent under this Agreement or (2) Employee is convicted of or
pleads guilty or nolo contendere to a felony. For purposes of this
Agreement "grossly negligent" means that Employee willfully breaches
or habitually neglects the duties which he is required to perform
under the terms of this Agreement. A termination of Employee's
employment shall not be deemed a termination for Cause if the notice
of termination is delivered to Employee more than thirty (30) days
after the Board of Directors knows or should know of the event or
action alleged to constitute Cause.
On termination of this Agreement pursuant to this
Section 4.2.3, with the exception of any benefits under the SERP which
survive such termination and except that Employee shall be entitled to
any unpaid portion of his Compensation and Benefits earned prior to the
date of termination, all rights to Compensation and Benefits of
Employee shall cease as of the Date of Termination.
3. Entire Understanding. This Agreement, together with the Employment
Agreement, all other documents, instruments, certificates and agreements
executed in connection herewith shall be read and construed together and sets
forth the entire understanding between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous, written, oral,
expressed or implied, communications, agreements and understandings with respect
to the subject matter hereof.
4. Modification. This Agreement shall not be amended, modified,
supplemented or terminated except in writing signed by both parties. No action
taken by Employer hereunder, including without limitation any waiver, consent or
approval, shall be effective unless approved by a majority of the Board.
5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one counterpart hereof.
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6. Controlling Law. This Agreement is made under, and shall be governed
by, construed and enforced in accordance with, the substantive laws of
Pennsylvania applicable to agreements made and to be performed entirely therein.
7. Ratification. Other than as amended by this Agreement, the
Employment Agreement is ratified, affirmed and remains in force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above mentioned, under Seal, intending to be legally bound
hereby.
EMPLOYEE: EMPLOYER:
/s/ Xxxxxxxx X. Xxxxxxxx
Attest: By: /s/ Xxxxx Xxxxxxxxxx, MD
(Authorized Officer)
/s/ Xxxxx X. Xxxxx
Secretary
(Corporate Seal)
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APPENDIX A
Definition of Change in Control
For purposes of this Agreement, "change of control" shall mean the
occurrence of one or more of the following: (A) The acquisition, other than from
Employer, 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")) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) (a "Person") of 30% or more of either (i)
the then outstanding shares of Common Stock of Employer (the "Outstanding
Employer Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of Employer entitled to vote generally in the
election of directors (the "Employer Voting Securities"), provided, however,
that any acquisition by (x) Employer or any of its subsidiaries, or any employee
benefit plan (or related trust) sponsored or maintained by Employer or any of
its subsidiaries or (y) any Person that is eligible, pursuant to Rule 13d-1(b)
under the Exchange Act, to file a statement on Schedule 13G with respect to its
beneficial ownership of Employer Voting Securities, whether or not such Person
shall have filed a statement on Schedule 13G, unless such Person shall have
filed a statement on Schedule 13D with respect to beneficial ownership of 30% or
more of Employer Voting Securities or (z) any corporation with respect to which,
following such acquisition, more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Employer Common Stock
and Employer Voting Securities immediately prior to such acquisition in
substantially the same proportion as
their ownership, immediately prior to such acquisition, of the Outstanding
Employer Common Stock and Employer Voting Securities, as the case may be, shall
not constitute a Change of Control; or (B) Individuals who, as of the date
hereof, constitute the Board of Directors of Employer (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board, provided
that any individual becoming a director subsequent to the date hereof whose
election or nomination for election by Employer's shareholders, 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 is in connection with an actual or threatened
election contest relating to the election of the Directors of Employer (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act); or (C) Approval by the shareholders of Employer of a reorganization,
merger or consolidation (a "Business Combination"), in each case, with respect
to which all or substantially all of the individuals and entities who were the
respective beneficial owners of the Outstanding Employer Common Stock and
Employer Voting Securities immediately prior to such Business Combination do
not, following 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 Employer resulting from Business Combination in substantially the
same proportion as their ownership immediately prior to such Business
Combination of the Outstanding Employer Common Stock and Employer Voting
Securities, as the case may be; or (D) (i) a complete liquidation or dissolution
of Employer or of (ii) sale or other disposition of all or substantially all of
the assets of Employer other than to a corporation
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with respect to which, following such sale or disposition, 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 is then owned beneficially, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Employer Common Stock
and Employer Voting Securities immediately prior to such sale or disposition in
substantially the same proportion as their ownership of the Outstanding Employer
Common Stock and Employer Voting Securities, as the case may be, immediately
prior to such sale or disposition.
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