AMENDMENT
NO. 1 TO XXXX XXXXX'X
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 1 TO XXXX XXXXX'X AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (the "Amendment") is entered into as of December 12, 2007, by
and between RCM Technologies, Inc. ("Employer") and Xxxx Xxxxx ("Employee").
WHEREAS Employer and Employee previously entered into an Amended and
Restated Employment Agreement dated as of November 30, 1996 (the "Employment
Agreement");
WHEREAS, in order to comply with the requirements of section 409A of
the Internal Revenue Code of 1986, as amended (the "Code"), Employer desires to
amend the Employment Agreement; and
WHEREAS, Employee has agreed to the changes to the Employment Agreement
to comply with the requirements of section 409A of the Code.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree that the Employment Agreement is hereby amended as follows:
1. The second paragraph of Section 4(a) of the Employment Agreement is hereby
amended in its entirety to read as follows:
"In the event of Employee's death while employed by Employer,
Employer will pay Employee's named beneficiary, or if there be
none then living, to his estate, within thirty (30) days
following Employee's date of death a lump sum cash payment
which is equal to the base salary that Employee would have
received for the six (6)-month period following Employee's
date of death."
2. Subsection 4(d)(i) of the Employment Agreement is hereby amended in its
entirety to read as follows:
"(i) Employer shall pay as a liquidated amount to Employee
within five (5) days of such termination, but subject to
subsection 4(f) below, a lump sum cash payment equal to the
total of any further salary and bonus payments that would have
become due to Employee had he remained employed by Employer
for a period of three (3) years following the date of
termination; calculating the amount of such salary based upon
Employee's current gross salary (for federal income tax
purposes) and bonus based upon the maximum bonus that Employee
was eligible to receive during Employer's most recently
completed fiscal year;"
3. Subsection 4(d)(iii) of the Employment Agreement is hereby amended in its
entirety to read as follows:
"(iii) For a period of three (3) years following Employee's
termination of employment, Employee shall receive and, where
applicable, his spouse and dependents shall receive health
insurance coverage that is equivalent to the coverage that
Employee would have been eligible to receive if Employee
continued in employment during such period; provided, that in
order to receive such continued coverage, Employee shall be
required to pay to Employer at the same time that premium
payments are due for the month an amount equal to the full
monthly premium payments required for such coverage and
Employer shall reimburse to Employee the amount of such
monthly premium, less the amount that Employee was required to
pay for such coverage immediately prior to the date of his
termination of employment (the `Health Payment'), no later
than five (5) days following the date the premium for the
month is paid by Employee. In addition, on each date on which
the Health Payments are made, subject to subsection 4(f)
below, Employer shall pay to Employee an additional amount
equal to the federal, state and local income and payroll taxes
that Employee incurs on each monthly Health Payment (the
`Health Gross-up Payment'). The Health Payment paid to
Employee during the period of time during which Employee would
be entitled to continuation coverage under Employer's group
health plan pursuant to section 4980B of the Code (or any
replacement or successor provision of the United States tax
law) if Employee elected such coverage and paid the applicable
premiums is intended to qualify for the exception from
deferred compensation as a medical benefit provided in
accordance with the requirements of Treas. Reg.
ss.1.409A-1(b)(9)(v)(B). The Health Payment and the Health
Gross-up Payment shall be reimbursed to Employee in a manner
that complies with the requirements of Treas. Reg.
ss.1.409A-3(i)(1)(iv);"
4. A new subsection 4(d)(iv) is hereby added to the Employment Agreement to read
in its entirety as follows, and the remainder of Section 4 is renumbered
accordingly:
"(iv) Within five (5) days following Employee's termination of
employment, but subject to subsection 4(f) below, Employer shall
pay Employee a lump sum cash payment equal to the aggregate
value of continuing Employee's life and disability coverage,
long term care insurance and automobile lease in effect
immediately prior to Employee's termination of employment for
the three (3)-year period following Employee's termination of
employment as if Employee continued to be employed by Employer
for such three (3)-year period. In addition, subject to
subsection 4(f) below, Employer shall pay to Employee an
additional amount equal to the federal, state and local income
and payroll taxes that Employee incurs on the lump sum cash
payment for the cost of continuing of all of the abovementioned
benefits pursuant to this Section 4(d)(iv);"
5. A new subsection 4(d)(v), as renumbered, is hereby added to the
Employment Agreement to read in its entirety as follows, and the
remainder of Section 4 is renumbered accordingly:
"(v) Within five (5) days following Employee's termination of
employment, but subject to subsection 4(f) below, Employer shall
pay Employee a lump sum cash payment equal to the aggregate
value of continuing all employee benefits (other than those in
subsections (d)(iii) and (iv)) provided to Employee immediately
prior to his termination of employment for the three (3)-year
period following Employee's termination of employment as if
Employee continued to be employed by Employer for such three
(3)-year period. In addition, subject to subsection 4(f) below,
Employer shall pay to Employee an additional amount equal to the
federal, state and local income and payroll taxes that Employee
incurs on the lump sum cash payment for the cost of continuing
all employee benefits pursuant to this Section 4(d)(v);"
6. A new subsection 4(f) is hereby added to the Employment Agreement to read in
its entirety as follows:
"(f)(i) Notwithstanding any provision to the contrary in this
Agreement, if Employee is deemed at the time of his
termination of employment to be a `key employee' within the
meaning of that term under Code section 416(i) (as used for
purposes of defining a "specified employee" under section 409A
of the Code) and delayed payment of an amount that is payable
to or on behalf of Employee in connection with a termination
of employment is required in order to avoid a prohibited
distribution under section 409A(a)(2) of the Code, no such
amount shall be provided to or paid on behalf of Employee
prior to the earlier of (x) the expiration of the six
(6)-month period measured from the date of Employee's
`separation from service' (as such term is defined in Treasury
Regulations issued under Code section 409A) or (y) the date of
Employee's death; provided, however, that upon the expiration
of the applicable Code section 409A(a)(2) postponement period
referred to herein, all amounts delayed pursuant to this
subsection 4(f), with accrued interest as described below,
shall be paid in a lump sum payment to or on behalf of
Employee within five (5) days after the end of the
postponement period. The determination of who is a `key
employee', including the number and identity of persons
considered officers and the identification date, shall be made
by the Compensation Committee of the Board of Directors of
Employer or its delegate in accordance with the provisions of
section 409A of the Code and the regulations issued
thereunder.
(ii) If payment of any amounts under this Agreement
is required to be delayed pursuant to section 409A of the
Code, Employer shall pay interest on the postponed payments
from the date on which the amounts otherwise would have been
paid to the date on which such amounts are paid at an annual
rate equal to the prime rate listed in the Wall Street Journal
as of Employee's date of termination.
(iii) In the event that any payments payable to
Employee pursuant to subsections 4(d)(i), (iii), (iv) and (v)
are delayed because of this subsection 4(f), Employer shall
establish an irrevocable rabbi trust based on the Internal
Revenue Service's model rabbi trust as provided in Revenue
Procedure 92-64 and contribute to such rabbi trust within five
(5) days following the date of Employee's termination of
employment with Employer an amount sufficient to cover the
amounts payable to Employee which are delayed pursuant to this
subsection 4(f) because of section 409A of the Code, plus an
additional amount to cover the interest that is payable on
such amounts, as calculated pursuant to subsection 4(f)(ii)
above."
7. A new Section 8 is hereby added to the Employment Agreement to read in its
entirety as follows, and the remaining Sections of the Employment Agreement are
renumbered accordingly:
"8. Certain Increases in Payment.
(a) Gross-up Payment. Anything in this Agreement to
the contrary notwithstanding, in the event that it shall be
determined that any payment or distribution by Employer to or
for the benefit of Employee, whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise (a `Payment'), would constitute an
`excess parachute payment' within the meaning of section 280G
of the Code, Employee shall be paid an additional amount (the
`Gross-Up Payment') such that the net amount retained by
Employee after deduction of any excise tax imposed under
section 4999 of the Code, and any federal, state and local
income and employment tax and excise tax imposed upon the
Gross-Up Payment shall be equal to the Payment. For purposes
of determining the amount of the Gross-Up Payment, Employee
shall be deemed to pay federal income tax and employment taxes
at the highest marginal rate of federal income and employment
taxation in the calendar year in which the Gross-Up Payment is
to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of
Employee's residence on the termination date, net of the
maximum reduction in federal income taxes that may be obtained
from the deduction of such state and local taxes.
(b) Determination. All determinations to be made
under this Section 8 shall be made by Employer's independent
public accountant or another independent public accountant
selected by mutual agreement of Employer and Employee (the
`Accounting Firm'), which firm shall provide its
determinations and any supporting calculations both to
Employer and Employee within ten (10) days of the triggering
event. Any such determination by the Accounting Firm shall be
binding upon Employer and Employee. Employer shall pay the
Gross-Up Payment to Employee within ten (10) days after the
Accounting Firm's determination. All payments made pursuant to
this Section 8 shall be paid, in any event, in a manner that
is consistent with Treas. Reg. ss.1.409A-(i)(1)(v).
(c) Fees and Expenses. All of the fees and expenses
of the Accounting Firm in performing the determinations
referred to in this Section 8 shall be borne solely by
Employer. Employer agrees to indemnify and hold harmless the
Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations
pursuant to this Section, except for claims, damages or
expenses resulting from the gross negligence or willful
misconduct of the Accounting Firm."
8. A new Section 15 is hereby added to the Employment Agreement to read in its
entirety as follows, and the remaining Sections of the Employment Agreement are
renumbered accordingly:
"LEGAL FEES:
15. Except as provided in Section 13 of this Agreement, it is
the intent of Employer that Employee not be required to incur
the expenses associated with the enforcement of any rights
under this Agreement by litigation or other legal action,
because the cost and expense of such legal action would
substantially detract from the benefits untended to be
extended to Employee hereunder. Accordingly if Employee is
required to take any legal action to enforce his rights under
this Agreement, Employer irrevocably authorizes Employee to
retain counsel of Employee's choice, at the expense of
Employer as provided in this Section 15, to represent Employee
in connection with the initiation or defense of any litigation
or other legal action, whether such legal action is by or
against Employer or any director, officer, shareholder, or
other person affiliated with Employer, in any jurisdiction.
Notwithstanding any existing or prior attorney-client
relationship between Employer and such counsel, Employer
irrevocably consents to Employee entering into an
attorney-client relationship with such counsel, and in that
connection Employer and Employee agree that a confidential
relationship shall exist between Employee and such counsel.
The reasonable fees and expenses of counsel selected from time
to time by Employee as hereinabove provided shall be paid in
advance or reimbursed to Employee, by Employer within five (5)
days following presentation by Employee of a statement or
statements or customary retainer letter prepared by such
counsel in accordance with its customary practices, but not
later than December 31 of the calendar year following the
calendar year in which the fees or expenses are actually
incurred. Except as provided in Section 13 of this Agreement,
any legal fees incurred by Employer by reason of any dispute
between the parties as to enforceability of or the terms
contained in this Agreement, notwithstanding the outcome of
any such dispute, shall be the sole responsibility of
Employer, and Employer shall not take any action to seek
reimbursement from Employee for such expense."
9. A new Section 19 is hereby added to the Employment Agreement to read
in its entirety as follows:
"19. SECTION 409A OF THE CODE:
This Agreement is intended to comply with section 409A of the
Code and its corresponding regulations, to the extent
applicable. Notwithstanding anything in this Agreement to the
contrary, payments may only be made under this Agreement upon
an event and in a manner permitted by section 409A of the
Code, to the extent applicable. All payments to be made upon
Employee's termination of employment under this Agreement may
only be made upon a `separation from service' as provided in
section 409A of the Code. In no event may Employee, directly
or indirectly, designate the calendar year of payment. All
reimbursements and in-kind benefits provided under the
Agreement shall be made or provided in accordance with the
requirements of section 409A of the Code, including, where
applicable, the requirement that (i) any reimbursement shall
be for expenses incurred during Employee's lifetime (or during
a shorter period of time specified in this Agreement), (ii)
the amount of expenses eligible for reimbursement, or in-kind
benefits provided, during a calendar year may not affect the
expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year, (iii) the reimbursement
of an eligible expense will be made on or before the last day
of the calendar year following the year in which the expense
is incurred, and (iv) the right to reimbursement or in-kind
benefits is not subject to liquidation or exchange for another
benefit."
10. In all respects not amended, the Employment Agreement is hereby ratified and
confirmed.
11. This Amendment No. 1 shall be effective as of December 12, 2007.
IN WITNESS WHEREOF, Employer and Employee agree to the terms of the
foregoing Amendment No. 1, effective as of the date set forth above.
RCM TECHNOLOGIES, INC.
By: s//Xxxxxxxx Xxxxxxxxx
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Chairman of Compensation Committee
s//Xxxx Xxxxx
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Employee
