FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.1
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This First Amendment (the “Amendment”) to the Employment Agreement dated as of December 17,
2007 (the “Agreement”), is entered into this 17th day of December, 2008, to be effective the
1st day of January, 2009, between Xxxxxx X. Xxxxx (“Employee”) and X. Xxxxxxxx, Inc.
(“Employer”).
WHEREAS, Employee and Employer desire to amend the Agreement to revise the noncompetition
provisions;
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Employment. Section 2 of the Agreement shall be replaced as indicated below:
During the Term of this Agreement, the Employer hereby agrees to employ
Employee commencing January 1, 2008 as President and Chief Executive Officer for
the Employer, and the Employee hereby accepts such employment on the terms and
conditions herein contained.
2. Term of Agreement. Section 4.1 of the Agreement shall be revised as indicated
below:
4.1 The Employer hereby employs the Employee for a Term which
commenced as of January 1, 2008 and ends December 31, 2011;
provided, however, at December 31, 2009, this Agreement shall automatically be
extended for an additional year to December 31, 2012 unless either party shall give
notice to the other of non-extension not later than October 1, 2009; and provided,
further, that if, however a Change in Control shall have occurred during the
Term of this Agreement, Sections 7 and 8 and 10 through 21 of this Agreement shall
continue in effect until at least the end of the Change-in-Control Protective Period
(whether or not the Term of the Agreement shall have expired for other purposes).
2. Compensation. The first paragraph of Section 5 of the Agreement shall be revised
as indicated below:
The Employer agrees to pay to the Employee as compensation for his services
hereunder a Base Salary initially equal to the fixed annual salary as shown on
Exhibit A hereto and as will be shown on the Employer’s employment records, payable
in substantially bimonthly or monthly installments, as the case may be, in the
manner consistent with the Employer’s payroll practices. Employee is eligible
for and may receive annual merit increases in his Base Salary. Employer shall
consider Employee for annual merit increases at the time the other employees of
Employer are being considered for the merit pool or such other merit increase
program that may be adopted by Employer and the effective
date for any annual merit increase granted to Employee will be the same as the
other employees granted merit increases pursuant to the merit pool or other merit
increase program. The Base Salary may be discretionarily increased by the Board
from time to time as the Board deems appropriate in its reasonable business
judgement.
3. Payment of Cash Bonuses. The fourth paragraph of Section 5 of the Agreement shall
be revised as indicated below:
The Employee will also be entitled to receive cash payments (each a “Cash Bonus”) of the
following amounts conditioned upon being employed on the following dates (each a “Bonus
Date”):
| • | $750,000 on the date employment is commenced; | ||
| • | $250,000 on January 1, 2009; | ||
| • | $250,000 on January 1, 2010; and | ||
| • | $250,000 on December 31, 2010. |
Except as otherwise provided in this Section 5, each Cash Bonus shall be paid within ten
(10) days following the applicable Bonus Date (provided that the timing of payment of which
during such ten (10) day period shall be in the Company’s sole discretion).
4. Compensation. The fifth paragraph of Section 5 of the Agreement shall be revised
as indicated below:
In the event that Employee’s employment is terminated for any reason other than termination
for Cause by the Employer or voluntary resignation by the Employee, each remaining unpaid
Cash Bonus will become immediately due and will be paid to the Employee by the Employer
within 30 days after the Date of Termination. The initial Cash Bonus payment will,
however, be subject to reimbursement by Employee to Employer in the amount of any payment of
discretionary incentive compensation paid to Employee by his previous employer which is
expected to occur, if at all, on or about March 31, 2008.
5. Time of Payments. The second sentence of Section 8.3 of the Agreement shall be
revised as indicated below:
Notwithstanding anything in this Agreement to the contrary, if the Employee is a “specified
employee,” within the meaning of Section 409A of the Code and as determined under the
Company’s policy for determining specified employees, on the Date of Termination, all
payments under this Agreement and Exhibit A that are subject to Section 409A of the
Code and become payable in connection with the Employee’s
termination shall not be paid (or commence to be paid) until the first business day
of the seventh month following the Date of Termination (or, if earlier, the Employee’s
death).
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6. Post-termination Payments upon Termination (Prior to a Change in Control) by Death or
by the Employer without Cause. The paragraphs contained in Section 9.2 of the Agreement shall
be revised as indicated below:
9.2 TERMINATION BY THE EMPLOYER WITHOUT CAUSE. If the Employer shall terminate
the Employee’s employment during the Term and prior to a Change in Control, without
Cause (and not for Disability or in connection with the Employee’s death), the
Employer shall pay the Employee:
(A) His Base Salary throughout the remaining Term in accordance with the
regular [bimonthly] payroll practices of the Employer;
(B) Annual Bonuses during the remaining Term, each of which bonus shall be
equal to either the greater of (i) $490,000 or (ii) the average annual bonus
paid to the Employee during the most recent three (3) calendar years of the
Employee’s employment by the Company or such shorter period during which
Employee has been employed, if less than three (3) years (prorated for any
partial calendar years in the remaining Term). The amount payable under this
Section 9.2(B) shall be paid in a lump sum within ninety (90) days following the
Employee’s termination of employment; and
(C) Any unpaid Cash Bonus described in Section 5, which shall be paid
in accordance with Section 5.
(D) Any unpaid compensation and/or compensation attributable to RSU
Award(s) that has not been issued and/or LTIP RS Awards as provided
in, and pursuant to the terms of, Exhibit A.
An amount equal to up to one year’s Base Salary plus one year’s Annual Bonus, to
the extent payable to Employee as determined by the foregoing, shall be in
consideration of (and subject to Employee’s continued compliance with) Employee’s
obligations under Section 13.2.
7. Severance Payments; Excise Tax Gross-up.
a. The paragraph contained in Section 10.1(A) of the Agreement shall be revised as
indicated below:
(A) In lieu of any further salary payments to the Employee for periods
subsequent to the Date of Termination and in lieu of any severance benefit
otherwise payable to the Employee, the Employer shall pay to the Employee a lump
sum severance payment, in cash, equal to (i) the Employee’s Base Salary
in effect immediately prior to the occurrence of the event or circumstance
upon which the Notice of Termination is based divided by twelve (12) and
multiplied by the number of full months remaining in the Term, and (ii) the
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average annual bonus, including but not limited to the Annual Bonus described in
Exhibit A, earned by the Employee under the Employer’s annual incentive
plan in the Employer’s fiscal years immediately preceding the fiscal year in
which the Date of Termination occurs multiplied by the number of fiscal years
that a bonus, including but not limited to the Annual Bonus described in Exhibit
A, has not been paid to the Employee; provided, however, that in the
event that the Date of Termination occurs prior to the date on which Employee is
first entitled to receive a bonus under the Employer’s annual incentive
plan, the average annual bonus shall be deemed to be $490,000. In addition,
Employee will be entitled to receive any unpaid Cash Bonus described in Section
5, which shall be paid in accordance with Section 5, and any unpaid
compensation and/or compensation attributable to RSU Award(s) that has not been
issued and/or LTIP RS Awards as provided in, and pursuant to the
terms of, Exhibit A. An amount equal to up to one year’s Base Salary
plus one year’s Annual Bonus, to the extent payable to Employee as determined by
the foregoing, shall be in consideration of Employee’s obligations under Section
13.2.
b. The date reference in the first sentence of Section 10.1(B) of the Agreement to “on
December 31, 2010” shall be replaced with “at the end of the Term, as it may be extended”.
8. Time of Severance Payments. The reference to “Sections 10.1(A) and (B)” in Section
10.3 of the Agreement shall be replaced with “Section 10.1(A)”.
9. Date of Termination. The reference to “thirty (30) period” in the parenthetical of
the second sentence of Section 11.2 of the Agreement shall be replaced with “thirty (30) day
period”.
10. Non-Competition Provisions. The paragraphs contained in Section 13.2 of the
Agreement shall be revised as indicated below:
13.2 NON-COMPETITION AND NON-SOLICITATION. The Employee covenants and agrees that
during the period of one (1) year following any termination of the Employee’s employment
which occurs prior to a Change in Control, the Employee will not, directly or indirectly,
either as an individual for the Employee’s own account or as an investor, or other
participant in, or as an employee, agent, or representative of, any other business
enterprise:
(i) solicit, employ, entice, take away or interfere with, or attempt to solicit,
employ, entice, take away or interfere with, any employee of the Employer or the Companies;
or
(ii) engage or participate in or finance, aid or be connected with any enterprise which
competes with the business of the Companies, or any of them.
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The geographical limitations of the foregoing shall include any country in which the
Companies or any of them shall be doing business as of such date of such termination. This
covenant shall apply without regard to the circumstances of any termination of the
Employee’s employment which occurs prior to a Change in
Control.
11. Accounting Firm. The reference to “Auditor” in Section 20(A) of the Agreement
shall be replaced with “Accounting Firm”.
12. Base Salary, Bonuses. The first three bullets point of Exhibit A shall be revised
as indicated below:
Employee’s starting annual Base Salary effective November 1, 2008 is $700,000.00
$775,000.00.
Employee will be entitled to participate in our Company’s management bonus program (“Bonus
Program”) each fiscal year or partial fiscal year of the Company occurring during the Term
of the Agreement. Initially and unless otherwise mutually agreed, the Employee will
participate in the Bonus Program at the 70% target level , or
$490,000.00, with leverage
ranging from 0% to 200150% based upon performance metrics to be agreed upon by the
Compensation Committee of the Board of Directors and the Employee, and approved by the Board
of Directors (“Annual Bonus”). In the event that the Employee and the Board of Directors are
unable to agree upon a performance metrics by March 31st of each year, the
performance metrics will be referred to binding arbitration.
Employee is entitled to the Cash Bonuses described in Section 5, which shall be paid in
accordance with Section 5.
13. Grant of Restricted Stock Awards. The third paragraph of the fourth bullet point
of Exhibit A shall be revised as indicated below:
Each year during the Term of the Agreement, Employee is entitled to receive an award of
performance-based restricted shares of common stock or restricted stock units, as the
case may be, as long-term incentive compensation under the 2006 Incentive Plan based on
a target grant value of 200% of the Employee’s Base Salary (“LTIP RS Award”), with vesting
based upon performance metrics to be agreed upon by the Compensation Committee of the Board
and the Employee, and approved ratified by the Board of Directors. In the event
that the Employee and the Board of Directors are unable to agree upon a performance metrics
by March 31st of each year, the performance metrics will be referred to binding
arbitration.
14. Vesting of Restricted Stock Awards. The fourth paragraph of the fourth bullet
point of Exhibit A shall be revised as indicated below:
In the event of termination of Employee’s employment: (i) without Cause or for Good Reason
following a Change in Control; (ii) due to resignation with Cause as described in
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Section
4.2 of the Agreement, or (iii) without Cause prior to a Change in Control, Employee will be
entitled to vesting of shares represented by the LTIP RS Award as follows: (a) if such
termination occurs during the first year of the Term of this Agreement, one third of the
Award shares will vest, and (b) if such termination occurs after the first anniversary of
this Agreement, Award shares will vest on a pro rata basis for the period of time then
lapsed, but in each case only if the performance criteria described in the awards
have been satisfied.
15. No Further Amendment. Except as otherwise amended hereby, all terms of the
Agreement shall remain in full force and effect.
| Xxxxxx X. Xxxxx | ||||||
| /s/ Xxxxxx X. Xxxxx | ||||||
| Date: | December 17, 2008 | |||||
| X. Xxxxxxxx, Inc. | ||||||
| By: | /s/ Xxxxx X. Xxxx
|
|||||
| Its: | Vice President and Chief Legal Officer | |||||
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