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Exhibit 10.28
EMPLOYMENT AGREEMENT
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AGREEMENT by and between Xxxxxxx Company, a Delaware corporation (the
"Company") and Xxxxx X. Xxx (the "Executive"), dated as of the 15th day of
November, 1993.
1. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the date hereof and ending on the third anniversary of such
date (the "Employment Period"); provided, however, that unless previously
terminated, the Employment Period shall be automatically extended so as to
terminate three years from each ensuing day, unless the Company shall give
notice to the Executive that the Employment Period shall not be so extended, in
which event the Employment Period shall terminate on the third anniversary of
such notice.
2. TERMS OF EMPLOYMENT. (a) POSITION AND DUTIES. (i) Commencing on the
date hereof and for the remainder of the Employment Period, the Executive shall
be Chief Executive Officer of the Company and shall have such duties,
responsibilities, and authority as shall be consistent therewith. Commencing on
January 1, 1994, the Executive shall be Chairman of the Board of Directors of
the Company. From and after the date hereof, the Executive shall serve on the
Company's Board of Directors.
(ii) During the Employment Period, and excluding any periods of
vacation, permitted leaves of absence and sick leave to which the Executive is
entitled, the Executive agrees to devote full attention and time, effort and
skill, to the business and affairs of the Company and to use the Executive's
best efforts to perform faithfully and efficiently such responsibilities, except
that Executive shall have the right to make passive investments in businesses or
entities not related to, and which do not directly or indirectly compete with,
the business of the Company and its subsidiaries
(b) COMPENSATION (i) BASE SALARY. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary") of
$375,000. The Annual Base Salary shall be paid in accordance with the Company's
normal payroll practices. During the Employment Period, the Annual Base Salary
shall be reviewed (for purposes of increases only) by the Board of Directors
from time to time as they determine. Any increase in Annual Base Salary shall
not serve to limit or reduce any other obligation to the Executive under this
Agreement.
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(ii) ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") based on the Company's achievement of its
annual financial plan approved by the Board of Directors as follows :
% of Plan Bonus as % of Salary
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Less than 90 0
at least 90 but less than 100 37.5
at least 100 but less than 110 50
at least 110 but less than 120 75
120 or more 100
To the extent that the percentage of plan achieved falls between the
amounts described above, the bonus as a percentage of salary shall be equitably
pro rated. Notwithstanding the foregoing, the Executive shall be entitled to a
bonus with respect to 1993 of $30,000 and a minimum bonus with respect to 1994
of 37.5% of his Annual Base Salary. Each such Annual Bonus shall be paid in
accordance with the Company's normal payroll practices, but in no event later
than April 1 of the respective years.
(iii) STOCK OPTIONS. The Executive shall be granted on the date hereof
a nonqualified stock option to acquire 350,000 shares of the Company's common
stock at a price of $2.75 per share and will be granted no later than April 30,
1994 an additional option to acquire 350,000 shares at a price equal to the fair
market value of the Company's Common Stock on December 31, 1993 as determined by
Houlihan, Lokey, Xxxxxx & Xxxxx (together, the "Options") . The Options shall
vest and become exercisable with respect to 20% of the shares subject to the
Options upon grant, and with an additional 20% vesting on each anniversary of
the date of grant. In the event of a Change of Control (as defined below) , all
Options will vest immediately. For purposes of this Agreement, a "Change of
Control" means either (i) a sale of all of the stock or substantially all of the
assets of the Company whether by merger or otherwise, or (ii) a transaction
following which Xxxxxxx Xxxxx Capital Partners, Inc. and its affiliates cease to
be in the aggregate the largest stockholders of the Company other than the
Xxxxxxx Company Employee Stock Ownership Plan. The Options shall be evidenced by
one or more option agreements in substantially the form attached hereto as
EXHIBIT A.
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(iv) SAVINGS AND RETIREMENT PLANS. During the Employment Period, the
Executive shall be eligible to participate in all savings and retirement plans,
practices, policies and programs applicable generally to other peer executives
of the Company.
(v) WELFARE BENEFIT PLANS. During the Employment Period, the Executive
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company (including, without
limitation, and where applicable, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent applicable generally to
other peer executives of the Company. The Company shall provide the Executive
with term life insurance in an amount equal to four times his Annual Base
Salary.
(vi) EXPENSES. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred on behalf of the Company by the Executive, which expenses shall be ac-
counted for and evidenced in accordance with the Company's normal policies.
(vii) FRINGE BENEFITS. During the Employment Period, the Executive
shall be entitled to payment of dining and country club dues and membership
fees, and an automobile of his choice and payment of related expenses.
(viii) VACATION. During the Employment Period, the Executive shall be
entitled to four weeks of paid vacation .
3. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 8(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the 30th day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive
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business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative .
(b) CAUSE. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:
(i) the continued failure of the Executive to perform substantially the
Executive's duties with the Company, after a written demand for substantial
performance is delivered to the Executive by the Board which specifically
identifies the manner in which the Board believes that the Executive has not
substantially performed the Executive's duties, or
(ii) the willful engaging by the Executive in felonious illegal conduct
or gross misconduct or other conduct materially injurious to the Company, or
(iii) a material breach of this Agreement; which is not cured by the
Executive within a reasonable period after the Company has provided him with
notice of such breach .
(c) GOOD REASON. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the assignment to the Executive of any duties materially
inconsistent with the Executive's position (including status, offices, titles
and reporting requirements), authority, duties or responsibilities as
contemplated by Section 2(a) of this Agreement, or any other action by the
Company which results in a material diminution in such position, authority,
duties or responsibilities, excluding for this purpose an action not taken in
bad faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any material failure by the Company to comply with any of the
provisions of Section 2(b) of this Agreement, other than a failure not occurring
in bad faith and which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(iii) any material breach of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause, or
by the Executive for Good Reason, shall
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be communicated by Notice of Termination to the other party hereto given in
accordance with Section 8(b) of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than thirty days after the giving of such notice)
. The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Date of Termination shall be the date on which the Company notifies the
Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
4. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) GOOD REASON; OTHER
THAN FOR CAUSE, DEATH OR DISABILITY. If, during the Employment Period, the
Company shall terminate the Executive's employment other than for Cause or
Disability or the Executive shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive the aggregate of the
following amounts:
A. within 30 days after the Date of Termination, the sum of (1) the
Executive's Annual Base Salary through the Date of Termination to the
extent not theretofore paid, (2) a pro rata Annual Bonus for the year
in which the Date of Termination occurs based on the Company's
annualized actual performance, (3) any compensation previously
deferred by the Executive (together with any accrued interest or
earnings thereon) to the extent not theretofore paid and (4) any
expenses for dining and country club
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dues and membership fees described in Section 2(b) (vii) that have been
incurred before the Date of Termination and cannot be eliminated by
resignation promptly following the Date of Termination (the sum , of
the amounts described in clauses (1), (2), (3) and (4) shall be
hereinafter referred to as the "Accrued Obligations"); and
B. Executive's Annual Base Salary for three years after the Date of
Termination payable when Annual Base Salary would have been paid if the
Executive were still employed by the Company;
(ii) all Options shall become immediately exer-
cisable and vested;
(iii) for three years after the Executive's Date of Termination, the
Company shall continue benefits to the Executive and/or the Executive's family
at least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section 2(b) (v)
of this Agreement if the Executive's employment had not been terminated;
(iv) the Company shall, at its sole expense as incurred, provide the
Executive with outplacement services the scope and provider of which shall be
selected by the Executive in his sole discretion provided that the total cost of
such services shall not exceed fifteen percent of the Annual Base Salary as in
effect immediately before the Date of Termination;
(v) until the later of (A) the third anniversary of the Date of
Termination or the expiration of the lease of the automobile provided pursuant
to Section 2(b) (vii) or (B) the 180th day after the Date of Termination, the
Company shall continue to provide such automobile and pay the related expenses;
and
(vi) to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is entitled to receive under any
plan, program, policy or practice or contract or agreement of the Company (such
other amounts and benefits shall be hereinafter referred to as the "Other
Benefits").
(b) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under
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this Agreement, other than for (i) payment of Accrued Obligations, (ii) the
timely payment or provision of Other Benefits and (iii) for six (6) months after
the Executive's death, the continuation of benefits to the Executive's family at
least equal to those which would have been provided to them in accordance with
the plans, programs, practices and policies described in Section 2(b) (v) of
this Agreement if the Executive's employment had not been terminated. Accrued
Obligations shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination.
(c) DISABILITY, If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for (i)
payment of Accrued Obligations, (ii) the timely payment or pro- vision of Other
Benefits, and (iii) to the extent not provided through Other Benefits, cash
disability benefits from the Disability Effective Date through the date on which
the Executive would attain the age of 65 equal, on an annualized basis, to
66-2/3 percent of the Executive's Annual Base Salary as in effect immediately
before the Disability Effective Date. Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
(d) CAUSE; OTHER THAN FOR GOOD REASON, If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) his Annual Base Salary through the Date of
Termination, (y) the amount of any compensation previously deferred by the
Executive, together with any accrued interest or earnings thereon, and (z) Other
Benefits, in each case to the extent theretofore unpaid. If the Executive
voluntarily terminates employment during the Employment Period, excluding a
termination for Good Reason, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued Obligations and the timely
payment or provision of Other Benefits. In such case, all Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination. Upon a termination of the Executive's employment for Cause by
the Company or by the Executive without Good Reason, the Executive shall forfeit
all Options that are not vested on the Date of Termination.
5. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company and for which the Executive
may
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qualify. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement.
6. CONFIDENTIAL INFORMATION AND NONCOMPETITION
(a) The Executive recognizes and acknowledges that all information
pertaining to the affairs, business, clients, customers or other relationships
of the Company is confidential and is a unique and valuable asset of the
Company. Access to and knowledge of this information are essential to the
performance of the Executive's duties under this Agreement. The Executive will
not during the Employment Period, except to the extent reasonably necessary in
the performance of the duties under this Agreement, or after the Employment
Period, give to any person, firm, association, corporation or governmental
agency any information concerning the affairs, business, clients, customers or
other relationships of the Company except (i) as required by law, (ii) if and to
the extent reasonable or necessary (including to employees and agents of the
Company), to perform his duties hereunder, and (iii) in the event such
information becomes publicly available other than as a result of Executive's
breach of this Section 6 (a). The Executive will not make use of this type of
information for his own purposes or for the benefit of an y person or
organization other than the Company. The Executive will also use his best
efforts to prevent the disclosure of this information by others. All records,
memoranda and other information or materials relating to the business of the
Company (whether created by the Executive or otherwise coming into his
possession) are confidential and will remain the property of the Company.
(b) The Executive agrees that during the Employment Period and (i) in
the case of a termination of the Executive's employment for Cause, for the
period of twelve (12) months following the Date of Termination and (ii) in the
case of any other termination of the Executive's employment with the Company,
for the period of thirty-six months following such termination (the
"Noncompetition Period"), he will not engage in any activity that is competitive
in any material respect with the business conducted by, or that would have an
adverse impact on the business or prospects of, the Company or, to the extent
that any affiliate or associate of the Company is engaged in the business of the
Company, the business or prospects of any affiliate or associate of the Company.
Such prohibited activity shall include, but not be limited to, any management,
ownership or distribution
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activity connected with or related to any business engaged in by the Company.
The Executive will not, during such period, solicit any members of the
then-current customers or suppliers of the Company. During the Noncompetition
Period, the Executive shall not, and shall cause any person or entity with which
he is affiliated not to, solicit or induce, or attempt to solicit or induce, any
employee of the Company or any of its subsidiaries to leave the employment of
the Company or of any of its subsidiaries to work for the Executive or any
person or entity with which he is affiliated. During the Noncompetition Period,
the Executive shall not, and shall cause any person or entity with which he is
affiliated not to, solicit or induce, or attempt to solicit or induce, any
person who was employed by the Company or any of its subsidiaries on a full-time
basis during the 90 days immediately prior to the termination of the Executive's
employment to accept employment with the Executive or with any person or entity
with which he is affiliated.
(c) The Company's obligations under the terms of this Agreement will
cease upon any violation of the provisions of this Section 6 by the Executive.
(d) The parties desire that the provisions of this Section 6 be
enforced to the fullest extent permissible under the laws and public policies
applied in the jurisdictions in which enforcement is sought. If any portion of
this Section 6 is judged to be invalid or unenforceable, this Section 6 will be
deemed to be amended to the extent necessary to ensure that this Section 6 will
be enforceable to the maximum extent permissible under applicable law.
7. SUCCESSORS. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
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assumes and agrees to perform this Agreement by operation of law, or otherwise.
8. MISCELLANEOUS. (a) This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
--------------------
Xxxxx X. Xxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
If to the Company:
------------------
Xxxxxxx Company
Xxx Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or
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any other provision of this Agreement or the failure to assert any right the
Executive or the Company may have hereunder shall not be deemed to be a waiver
of such provision or right or any other provision or right of this Agreement.
(f) The Company agrees to reimburse the Executive for all reasonable
legal fees incurred by him in the negotiation and preparation of this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
XXXXX X. XXX
/s/ Xxxxx X. Xxx
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XXXXXXX COMPANY
By /s/ X.X. Xxxxxx
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AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT
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This AMENDMENT NO. 1 dated as of October 5, 1995, to that certain
Employment Agreement by and between Xxxxxxx Company, a Delaware corporation (the
"Company") and Xxxxx X. Xxx (the "Executive"), dated as of the 15th day of
November, 1993 (the "Agreement") .
The Agreement is hereby amended to the extent set forth below. All
other provisions of the Agreement shall remain in full force and effect.
A. "3. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY" is hereby
amended in its entirety to read as follows:
"The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that a Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of
Disability set forth below) , it may give to the Executive written
notice in accordance with Section 8(b) of this Agreement of its
intention to terminate the Executive's employment. In such event,
the Executive's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date" ) , provided that, within
the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the inability of
the Executive to perform as an executive officer on a part-time or
full-time basis for 180 days within any twelve (12) month period as
a result of mental or physical illness or due to an accident or
accidents, and which incapacity is determined by a physician
selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative."
B. A new subsection 2(c) is hereby added to "Section 2. TERMS OF
EMPLOYMENT" to read in its entirety as follows:
(c) RELOCATION. The Executive shall not be required to relocate more
than seventy-five (75) miles from the Atlanta, Georgia metropolitan
area; provided, however,
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that the Executive shall be required to travel as the reasonable
needs of the business requires.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused this Amendment to be executed in its name on its behalf, all as of the
day and year first above written .
XXXXX X. XXX
/s/ Xxxxx X. Xxx
--------------------
XXXXXXX COMPANY
By: /s/ Xxx Xxxxxx
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AMENDMENT NO. 2
TO
EMPLOYMENT AGREEMENT
This Amendment No. 2 dated as of June 29, 1998 (this "Amendment"), to
the Employment Agreement by and between Xxxxxxx Company, a Delaware corporation
(the "Company), and Xxxxx X. Xxx (the "Executive") dated as of the 15th day of
November, 1993, as amended by Amendment No. 1 dated as of October 5, 1995 (the
"Agreement").
The Agreement is hereby amended to the extent set forth below, such
amendments to be effective solely upon the later to occur of(i) an "Approved
Sale" (as defined in that certain Stock Option Agreement dated as of March 22,
1996, between Xxxxxxx Holdings, Inc., a Delaware corporation, and the Executive)
and (ii) the affirmative vote of persons owning, prior to the occurrence of such
Approved Sale, more than 75% of the voting power of all outstanding stock of the
Company. All other provisions of the Agreement shall remain in full force and
effect.
A. Section 1 is hereby amended to read in its entirety as
follows:
"The Company hereby agrees to continue the Executive in its employ, and
the Executive agrees to remain in the employ of the Company subject to the terms
and conditions of this Agreement, for a period (the "Period of Employment")
which commences on the date hereof (the "Effective Date") and continues for
three years following the Effective Date; provided, however, that the Period of
Employment shall, from and after the Effective Date, be automatically extended
so as to terminate three years from each ensuing day, unless the Company shall
give notice to the Executive that the Period of Employment shall not be so
extended, in which event the Period of Employment shall terminate on the third
anniversary of such notice. Notwithstanding the foregoing, the Period of
Employment is subject to earlier termination as provided herein."
B. Section 2(a)(ii) is hereby amended by adding the following paragraph
directly below the existing paragraph:
"Nothing in this Agreement shall preclude the Executive from devoting
reasonable periods of time to charitable and community activities (including
serving on charitable organization boards or similar bodies) or the management
of the Executive's investment assets, provided such activities do not interfere
with the performance by the Executive of the Executive's duties hereunder.
Furthermore, service by the Executive on the boards of directors of up to two
noncompeting companies shall not be deemed to be a violation of this Agreement,
provided such service does not interfere with the performance of the Executive's
duties hereunder."
C. Section 2(b)(i) is hereby amended by adding the following sentence
to the end of such section:
"The Annual Base Salary in effect as the date hereof is $575,000."
D. Section 2(b)(ii) is hereby amended to read in its entirety as
follows:
"(ii) ANNUAL BONUS. In addition to Annual Base Salary, the Executive
shall be awarded for each fiscal year ending during the Employment Period, an
Annual Bonus (the "Annual
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Bonus") based on the Company's achievement of its annual financial plan approved
by the Board of Directors as follows:
ANNUAL BONUS AS %
% OF PLAN OF ANNUAL BASE SALARY
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Less than 90.0% 0%
90.0% 60.0%
100.0% 80.0%
Increment for each percentage point over 100% 7.5%
To the extent that the percentage of plan achieved falls between the
amounts described above, the bonus as a percentage of salary shall be equitably
pro rated. Each such Annual Bonus shall be paid in accordance with the Company's
normal payroll practices, but in no event later than April 1 of the year
following that in which it is earned."
E. Section 2(vi) is hereby amended by adding the following at the end
of such section:
"Notwithstanding anything to the contrary contained herein, Executive
shall be entitled to reimbursement of all such reasonable expenses incurred as
of the date of Executive's termination pursuant to Section 3 below.
F. Section 3(b) is hereby amended by adding the following at the end of
such section:
"The failure of the Company's actual operating results to meet or
exceed the financial plan as approved by the Board of Directors shall not
constitute "Cause" for purposes of this Agreement, PROVIDED that such failure or
lack thereof shall not mean that Executive's employment hereunder cannot be
terminated for "Cause", as defined in this Agreement, due to other facts and
circumstances."
G. Section 3(c)(i) is hereby amended by adding the following words
directly after the words "receipt of notice thereof given by the Executive":
"; provided, however the parties agree that "Good Reason" will not be
deemed to have occurred merely because the Company becomes a subsidiary or
division of another entity following an "Approved Sale", provided that the
Executive continues to serve as the Chief Executive Officer of such subsidiary
or division and such subsidiary or division is comparable in size to the
organization consisting of the Company and its subsidiaries."
H. Section 4(a)(i)(A)(2) is hereby amended to read in its entirety as
follows:
"a pro rata Annual Bonus for the number of days having elapsed, as of
the Date of Termination, in the year in which the Date of Termination occurs
based on the Company's actual performance compared to its annual financial plan
approved by the Board of Directors over the number of full calendar months
elapsed as of the Date of Termination, calculated as follows:
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ANNUAL BONUS AS %
% OF PLAN OF ANNUAL BASE SALARY
--------- ---------------------
Less than 90.0% 0%
90.0% - 102.5% 80.0%
Greater than 102.5% 80.0% PLUS 7.5% for each percentage point
over 100% of Plan
, PROVIDED that in determining actual performance compared to plan, a period of
not less than three full calendar months shall be used, such that if the Date of
Termination falls within the first quarter of any fiscal year, such three full
calendar months shall include the necessary number of the immediately preceding
full months from the prior fiscal year,"
I. Section 4(a)(i)(A)(4) shall be amended by adding the following words
immediately after the words "any expenses":
"or obligations";
J. Section 4(a)(i)(B) is hereby amended in its entirety to read as
follows:
"For a period of three years following the Date of Termination,
Executive's Annual Base Salary as in effect immediately before the Date of
Termination."
K. A new section 4(a)(i)(C) is hereby added to read in its entirety as
follows:
"For a period of one year following the Date of Termination, an Annual
Bonus in the amount of 80% of the Executive's Annual Base Salary as in effect
immediately before the Date of
Termination."
L. Section 4(a)(vi) is hereby amended by adding the following words
directly after the words "hereinafter referred to as the "Other Benefits")":
"PROVIDED, HOWEVER, that except as provided in Sections 4(a)(i)(A)(4)
and 4(a)(v), the Executive shall not be entitled, after the Date of Termination,
to those fringe benefits to be provided to the Executive during the Employment
Term pursuant to Section 2(b)(vii); and"
M. A new Section 4(a)(vii) is hereby added to read in its entirety as
follows:
"(vi) in lieu of the payments described in Sections 4(a)(i)(B) and (C)
hereof, unless Executive expressly requests in writing within five business days
after the Date of Termination to receive the installment payment procedure set
forth in Sections 4(a)(i)(B) and (C), the Company shall pay the total of the
Executive's Annual Base Salary payments and Annual Bonus payments described in
Sections 4(a)(i)(B) and (C) in a single sum within thirty (30) days following
the Date of Termination."
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N. A new section 4(e) is hereby added to read in its entirety as
follows:
"(e) SECTION 280G PROTECTION.
(i) If, on the Date of Termination, the Company (and every member
of the "affiliated group" within the meaning of Section 280G(d)(5) of the
Internal Revenue Code of 1986, as amended (the "Code") of which the Company is a
member) is an entity as to which no stock was readily tradable on an established
securities market (within the meaning of Section 280G(b)(5)(A)(ii)(I) of the
Code), the Company shall make a cash payment to the Executive at the time set
forth below equal to the amount of excise taxes (the "Excise Tax Gross-up
Payment") which Executive is required to pay pursuant to Section 4999 of the
Code as a result of any payments made by or on behalf of the Company or any
successor thereto being treated as an "excess parachute payment" within the
meaning of Section 280G(b) of the Code. In addition to the foregoing, the cash
payment due to the Executive under this Section 4(e) shall be increased by the
aggregate amount, computed at the highest applicable marginal tax rate, of
federal, state and local income, Medicare and excise taxes for which the
Executive will be liable on account of such cash payments to be made under this
Section 4(e), such that the Executive will receive the Excise Tax Gross-up
Payment net of all income, Medicare and excise taxes imposed on the Executive as
a result of his receipt of such Excise Tax Gross-up Payment. The computation of
this payment shall be determined, at the expense of the Company, by an
independent accounting, actuarial or consulting firm to be mutually agreed upon
by the Company and the Executive.
(ii) Payment of the Excise Tax Gross-up Payment shall be made at
such time as the Company shall determine, in its sole discretion, but in no
event later than the date which is five (5) business days prior to the due date,
without regard to any extension, for filing the Executive's federal income tax
return for the calendar year which includes the date as of which the
aforementioned "excess parachute payments" are determined. Notwithstanding the
foregoing, there shall be no duplication of payments by the Company under this
Section 4(e) in respect of excise taxes under Section 4999 of the Code to the
extent that the Company is making cash payments in respect of such excise taxes
under any other arrangement with the Executive. In the event that the Executive
is liable for excise taxes under Section 4999 of the Code as a result of
payments made by the Company or any successor thereto which exceed the amount of
excise, income and Medicare taxes used in computing the Executive's payment
under this Section 4(e), the Company or its successor shall indemnify the
Executive for such additional excise taxes, income taxes, Medicare taxes,
interest and penalties on a net, after-tax basis.
0. Section 6(b) is hereby amended by deleting the first two sentences
of such section and adding the following:
"The Executive agrees that during the Payment Period, he will not be a
proprietor, director, officer, employee, five percent or greater stockholder,
consultant or partner (or the equivalent thereof) in any business engaged to a
material extent in the manufacture or sale of (i) mattresses or box springs or
(ii) any other products which constitute more than ten percent of the Company's
revenues at the time that it is in competition with the Company in any market."
P. Section 6(b) is hereby further amended by adding the following at
the end of such section:
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"The Executive understands that the foregoing restrictions may limit
the Executive's ability to engage in certain business pursuits during the period
provided for above, but acknowledges that the Executive will receive
sufficiently higher remuneration and other benefits from the Company hereunder
than the Executive would otherwise receive to justify such restriction. The
Executive acknowledges that the Executive understands the effect of the
provisions of this Section 6(b), that the Executive has had reasonable time to
consider the effect of these provisions, and that the Executive was encouraged
to and had an opportunity to consult an attorney with respect to these
provisions.
Q. A new section 8(g) is hereby added to read in its entirety as
follows:
"(g) The Company agrees to reimburse the Executive for all reasonable
attorney fees and expenses incurred by the Executive to enforce the provisions
of this Agreement if Executive's claims are successful; provided, however, that
if the Executive's claims are not successful, the Company shall only reimburse
25% of such reasonable attorney fees and expenses."
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused this Amendment to be executed in its name on its behalf, all as of the
day and year first above written.
XXXXX X. XXX
/s/ Xxxxx X. Xxx
-----------------
XXXXXXX COMPANY
/s/ X.X. Xxxxxx
------------------
By:
Title: Sr. VP H.R.
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