AMENDMENT
NO. 1 TO XXXX XXXXX'X SECOND AMENDED AND RESTATED
TERMINATION BENEFITS AGREEMENT
THIS AMENDMENT NO. 1 TO XXXX XXXXX'X SECOND AMENDED AND RESTATED
TERMINATION BENEFITS AGREEMENT (the "Amendment") is entered into as of
December 12, 2007, by and between RCM Technologies, Inc. (the "Company") and
Xxxx Xxxxx (the "Executive").
WHEREAS the Company and the Executive have entered into a Second
Amended and Restated Termination Benefits Agreement dated as of March 18, 1997
(the "Termination Agreement");
WHEREAS, in order to comply with the requirements of section 409A of
the Internal Revenue Code of 1986, as amended (the "Code"), the Company desires
to amend the Termination Agreement; and
WHEREAS, Executive has agreed to the changes to the Termination
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 Termination Agreement is hereby amended as follows:
1. Subsection 5(a) of the Termination Agreement is hereby amended in its
entirety to read as follows:
"(a) The Company shall pay as a liquidated amount to Executive
within five (5) days of such termination, but subject to
subsection 5(g) below, a lump sum cash payment which is equal
to the remainder of any further salary and ascertainable bonus
payments that would have become due to Executive during the
remainder of the Extended Term; calculating the amount of such
salary based upon Executive's current gross salary (for
federal income tax purposes) and the ascertainable bonus based
upon the maximum bonus that Executive was eligible to receive
during the Company's most recently completed fiscal year;"
2. Subsection 5(c) of the Termination Agreement is hereby deleted in its
entirety and the remainder of Section 5 is renumbered accordingly.
3. Subsection 5(c) of the Termination Agreement, as renumbered (formerly
subsection 5(d)), is hereby amended in its entirety to read as follows:
"(c) For a period of three (3) years following Executive's
termination of employment, Executive shall receive and, where
applicable, his spouse and dependents shall receive health
insurance coverage that is equivalent to the coverage that
Executive would have been eligible to receive if Executive
continued in employment during such period; provided, that in
order to receive such continued coverage, Executive shall be
required to pay to the Company 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 the
Company shall reimburse to Executive the amount of such
monthly premium, less the amount that Executive 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 Executive. In addition, on each date on which
the Health Payments are made, subject to subsection 5(g)
below, the Company shall pay to Executive an additional amount
equal to the federal, state and local income and payroll taxes
that Executive incurs on each monthly Health Payment (the
`Health Gross-up Payment'). The Health Payment paid to
Executive during the period of time during which Executive
would be entitled to continuation coverage under the Company's
group health plan pursuant to section 4980B of the Code (or
any replacement or successor provision of the United States
tax law) if Executive elected such coverage and paid the
applicable premiums is intended to qualify for the exception
from deferred compensation as a health 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 Executive in a manner
that complies with the requirements of Treas. Reg.
ss.1.409A-3(i)(1)(iv);"
4. A new subsection 5(d), as renumbered, is hereby added to the
Termination Agreement to read in its entirety as follows, and the
remainder of Section 5 is renumbered accordingly:
"(d) Within five (5) days following Executive's termination of
employment, but subject to subsection 5(g) below, the Company
shall pay Executive a lump sum cash payment equal to the
aggregate value of continuing Executive's life and disability
coverage, long term care insurance and automobile lease in
effect immediately prior to Executive's termination of
employment for the three (3)-year period following Executive's
termination of employment as if Executive continued to be
employed by the Company for such three (3)-year period. In
addition, subject to subsection 5(g) below, the Company shall
pay to Executive an additional amount equal to the federal,
state and local income and payroll taxes that Executive incurs
on the lump sum cash payment for the cost of continuing of all
of the abovementioned benefits pursuant to this Section 5(d);"
5. A new subsection 5(e), as renumbered, is hereby added to the
Termination Agreement to read in its entirety as follows, and the
remainder of Section 5 is renumbered accordingly:
"(e) Within five (5) days following Executive's termination of
employment, but subject to subsection 5(g) below, the Company
shall pay Executive a lump sum cash payment equal to the
aggregate value of continuing all Company benefits (other than
those in subsections 5(c) and (d)) provided to Executive
immediately prior to his termination of employment, including
those provided in the Employment Agreement, for the three
(3)-year period following Executive's termination of employment
as if Executive continued to be employed by the Company for such
three (3)-year period. In addition, subject to subsection 5(g)
below, the Company shall pay to Executive an additional amount
equal to the federal, state and local income and payroll taxes
that Executive incurs on the lump sum cash payment for the cost
of continuing all Company benefits pursuant to this Section
5(e);"
6. Subsection 5(g) of the Termination Agreement, as renumbered (formerly
subsection 5(f)), is deleted in its entirety and replaced with the following:
"(g)(i) Notwithstanding any provision to the contrary in this
Agreement, if Executive 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 Executive 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 Executive
prior to the earlier of (x) the expiration of the six
(6)-month period measured from the date of Executive's
`separation from service' (as such term is defined in Treasury
Regulations issued under Code section 409A) or (y) the date of
Executive'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 5(g), with accrued interest as described below,
shall be paid in a lump sum payment to or on behalf of
Executive 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 the
Company 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, the Company 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 Executive's date of termination.
(iii) In the event that any severance payments
payable to Executive pursuant to subsections 5(a), (b), (c),
(d) and (e) are delayed because of this subsection 5(g), the
Company 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 Executive's
termination of employment with the Company an amount
sufficient to cover the amounts payable to Executive which are
delayed pursuant to this subsection 5(g) 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 5(g)(ii) above."
7. A new Section 6 is hereby added to the Termination Agreement to read in its
entirety as follows, and the remaining Sections of the Termination Agreement are
renumbered accordingly:
"6. 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 the Company to
or for the benefit of Executive, 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, Executive shall be paid an additional amount (the
`Gross-Up Payment') such that the net amount retained by
Executive 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, Executive
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
Executive'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 6 shall be made by the Company's
independent public accountant immediately prior to the Change
in Control or another independent public accountant selected
by mutual agreement of the Company and Executive (the
`Accounting Firm'), which firm shall provide its
determinations and any supporting calculations both to the
Company and Executive within ten (10) days of the triggering
event. Any such determination by the Accounting Firm shall be
binding upon the Company and Executive. The Company shall pay
the Gross-Up Payment to Executive within ten (10) days after
the Accounting Firm's determination. All payments made
pursuant to this Section 6 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 6 shall be borne solely by the
Company. The Company 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. The second to last sentence in Section 9, as renumbered (formerly Section 8)
is hereby amended in its entirety to read as follows:
"The reasonable fees and expenses of counsel selected from
time to time by Executive as hereinabove provided shall be
paid in advance or reimbursed to Executive, by the Company
within five (5) days following presentation by Executive 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."
9. A new Section 12 is hereby added to the Termination Agreement to read
in its entirety as follows:
"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
Executive's termination of employment under this Agreement may
only be made upon a `separation from service' as provided in
section 409A of the Code and the regulations promulgated
thereunder. In no event may Executive, 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
Executive'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 Termination Agreement is hereby ratified
and confirmed.
11. This Amendment No. 1 shall be effective as of December 12, 2007.
IN WITNESS WHEREOF, the Company and Executive 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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Executive
