Exhibit 10.4
October 26, 2006
PERSONAL & CONFIDENTIAL
Xxxxxx X. Xxxxxx
000 Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Re: Employment Agreement
Dear Xxx:
I am writing in reference to our recent discussions regarding your
employment agreement with Continental Global Group, Inc. (the "Company"). This
letter shall serve to clarify and amend certain provisions thereof.
Your employment agreement provides for the payment of 24 months salary
continuation in the event of your resignation following a Change of Control. You
have requested clarification of the definition of a Change of Control in your
employment agreement relating to a sale of a majority of the capital stock of
the Company. I confirm that a sale of a majority of the capital stock of the
Company to an unaffiliated third party would constitute a Change of Control
under your employment agreement.
You have requested your severance payments due to you under Section 3.6
of the employment agreement be paid in a lump sum on the date of your
termination of employment following a Change of Control. The Board of Directors
of the Company (the "Board") has determined that acceleration of such payments
to your date of termination following a Change of Control is fair and in the
best interests of the Company; provided that you also agree to defer any
exercise of your 45-day post-Change of Control election to terminate your
employment under that section for a transition period of up to six months (or
for such shorter period) as may be requested in writing by an acquirer.
Obviously, if you are terminated by the Company without Cause during such period
or you voluntarily resign within the 45-day period following any requested
transition period of up to six months, you will be entitled to the severance
payments specified in that section. This being said, nothing shall obligate the
Company or its stockholders to accept any proposal that would constitute a
Change of Control or to make a payment if no such proposal has been consummated.
You have also requested clarification regarding the term of your
employment agreement and the effect of termination without Cause prior to or
following February 13, 2007. The initial term of your employment agreement (as
provided in Section 1.1 thereof) is one year. That one-year period expires
February 13, 2007. In the absence of your death, disability or termination for
Cause, your employment agreement presently provides that your employment with
the Company and the employment agreement shall continue thereafter until either
you or the Company gives "not less than ninety (90) days' prior notice" of
termination. In the event the Company terminates you without Cause prior to, on
or following February 13, 2007, including through non-renewal of the contract,
Section 3.4(d) of your employment agreement entitles you to twelve months of
continued "Salary and Benefits." In addition, if you were terminated without
Cause prior to February 13, 2007, you would also be entitled to the compensation
and benefits due to you through the initial term.
You have also requested that the Board consider acceleration of the
payment of your 2006 bonus under your employment agreement to December 31, 2006.
Your employment agreement now provides for payment within 90 days following
approval by the Board of the audited financial statements of the Company. Based
upon year-to-date results, the Board has agreed to accelerate payment of your
estimated bonus for the 2006 fiscal year as requested (calculated in accordance
with the terms of your employment agreement) subject to a corrective (or true
up) payment to you or to the Company by you within 10 business days following
the Board's approval of the 2006 audited financial statements of the Company.
You will be entitled to payment of the 2006 bonus regardless of whether the
Company terminates your employment without Cause before or after the initial
term. You have asked me to confirm that the Company will be utilizing the
original 2006 budget (that calls for income before taxes of $23,146,266) in
calculating your bonus. I confirm that that is the approved budget amount.
Finally, I also confirm that with respect to the payments discussed
above (i.e., the 2006 bonus and a severance payment upon a Change of Control),
the mitigation provisions in your employment agreement do not apply.
Except as specifically provided above, this letter is not intended to
and does not modify any provisions of your employment agreement. If you are in
agreement with the changes and interpretations set forth above, please execute,
date and return a copy of this letter to me.
Cordially,
Chairman
Accepted and Agreed to by:
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Xxxxxx X. Xxxxxx
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Date
