AMENDMENT TO EMPLOYMENT AGREEMENT
AMENDMENT (this "Amendment") made as of September 28, 1999,
between XXXXX-CRAFT INDUSTRIES, INC., a Delaware corporation ("Xxxxx-Craft"),
and XXXX X XXXXXXXX (the "Executive"). This Amendment amends the Agreement made
as of January 1, 1994 between Xxxxx-Craft and the Executive as set forth below,
effective as of the date hereof, except as otherwise provided.
1. The Agreement is hereby amended by extending the Employment Term (as
defined in Section 1.2) to December 31, 2004.
2. Effective as of October 1, 1999, Section 4.3.2 of the Agreement is
hereby amended by
substituting "$47,916.67" for "$20,833.33" in clause (i) thereof.
3. The Agreement is hereby amended by revising Section 6.1(f) in its
entirety to read as follows:
(f) The Executive shall be entitled to such additional compensation and
benefits (including but not limited to additional grants of options and other
equity-based awards) as may be granted to him from time to time by the Board of
Directors of Xxxxx-Craft or the Compensation Committee thereof. In this regard,
it is the intention of the compensation Committee to consider the adoption of an
equity plan, to submit such plan to the shareholders of Xxxxx-Craft at the
annual meeting of shareholders to be held in 2000 and, if so adopted and
approved, to make an additional grant or grants to the Executive pursuant to
such plan.
4. The Agreement is hereby amended by adding a new Section 6.3 to read as
follows:
6.3 Pursuant to the action of the Compensation Committee of
the Board of Directors of Xxxxx-Xxxxx, Xxxxx-Craft hereby grants to the
Executive, effective as of September 28, 1999, an option ("Option") to purchase
300,000 shares of the common stock of Xxxxx-Craft ("Shares") under the
Xxxxx-Craft Industries, Inc. 1999 Management Incentive Plan, as amended (the
"1999 Plan"), at a price per Share equal to the fair market value (as defined in
the 1999 Plan) of the Shares on such date. As long as the Executive remains
employed by or acts as a consultant to Xxxxx-Craft (and except as may otherwise
be provided hereinbelow), (a) 50% of the Shares subject to the Option shall
first become exercisable on the fourth anniversary of the date of grant and the
remaining Shares subject to the Option shall first become exercisable on the
fifth anniversary of the date of grant, and (b) once exercisable, the Option
shall remain exercisable until the expiration of the applicable period set forth
in the 1999 Plan. In the event of the termination of the Employment Period by
reason of the Executive's death or disability (as defined in Section 10.2), the
Option granted pursuant to this Section 6.3 shall become fully exercisable and
shall remain exercisable for such period as is set forth in the 1999 Plan. In
the event the Executive's employment terminates for any reason (other than death
or disability) prior to a Change in Control and prior to the third anniversary
of the date of grant, the Option shall be forfeited in its entirety. In the
event that, prior to a Change in Control and between the third and fourth
anniversaries of the date of grant, the Executive's employment terminates under
circumstances entitling him to severance under Section 10.4.2, 30% of the Shares
subject to the Option shall become exercisable and shall remain exercisable for
a period of 90 days following the date of termination and the remainder of such
Option shall be forfeited. In the event of a termination of employment pursuant
to clause (1) of Section 1.4.1, then during the period in which the Executive
subsequently performs consulting services pursuant to Section 11 hereof, the
Option shall remain outstanding in accordance with its terms as if the Executive
remained in employment (and upon any subsequent termination of the Executive's
consulting services, the Executive's rights with respect to the Option shall be
determined as if such termination constituted a termination of employment). In
the event that, on or after a Change in Control, the Executive's employment
terminates under circumstances entitling him to severance under Section 10.4.2,
the Option shall become fully exercisable immediately upon the Executive's
termination of employment, shall remain exercisable until the 10th anniversary
of the date of grant and shall become transferable. In the event of a
termination of the Executive's employment not otherwise described herein, the
Option, to the extent not exercisable at the date of termination, shall be
forfeited and, to the extent exercisable at the date of termination, shall
remain exercisable for such period as is set forth in the 1999 Plan.
5. The Agreement is hereby amended by deleting Section 7 in its entirety.
6. The Agreement is hereby amended by restating Section 8 thereof in its
entirety to read as follows:
8. Change in Control.
8.1 For the purposes of this Agreement, a "Change in Control" shall mean:
8.1.1 Individuals who, as of the Effective Date, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the Effective Date whose election, or nomination for election by the
stockholders of Xxxxx-Craft, shall be approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) or other actual or threatened
solicitation of proxies or consents by or on behalf of any individual, entity or
group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
"Person"), other than the Board; or
8.1.2 Approval by the stockholders of Xxxxx-Craft of a reorganization,
merger or consolidation, in each case, unless, following such reorganization,
merger or consolidation: (a) more than 50% of the combined voting power of the
then outstanding voting securities ("Outstanding Voting Securities") of the
corporation resulting from such reorganization, merger, or consolidation, which
may be Xxxxx-Craft (the "Resulting Corporation"), entitled to vote generally in
the election of directors (the "Resulting Corporation Voting Securities") shall
then be owned beneficially, directly or indirectly, by all or substantially all
of the Persons who were the beneficial owners of Outstanding Voting Securities
immediately prior to such reorganization, merger, or consolidation, in
substantially the same proportions as their respective ownerships of Outstanding
Voting Securities immediately prior to such reorganization, merger or
consolidation; and (b) at least 50% of the members of the board of directors of
the Resulting Corporation shall have been members of the Incumbent Board at the
time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
8.1.3 Approval by the stockholders of Xxxxx-Craft of (a) a complete
liquidation or dissolution of Xxxxx-Craft or (b) the sale or other disposition
of all or substantially all of the assets of Xxxxx-Craft, other than to a
corporation (the "Buyer") with respect to which (i) following such sale or other
disposition, more than 50% of the combined voting power of securities of Buyer
entitled to vote generally in the election of directors, shall be owned
beneficially, directly or indirectly, by all or substantially all of the Persons
who were the beneficial owners of the Outstanding Voting Securities immediately
prior to such sale or other disposition, in substantially the same proportion as
their respective ownerships of Outstanding Voting Securities immediately prior
to such sale or other disposition; and (ii) at least 50% of the members of the
board of directors of Buyer shall have been members of the Incumbent Board at
the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of Xxxxx-Craft.
7. The Agreement is hereby amended by revising clause (c) of the first
sentence of Section 9 (Termination of Agreement for Cause) to read as follows:
(c) prior to a Change in Control, the Executive's dishonesty in the course
of fulfilling his duties hereunder;
8. The Agreement is hereby amended by substituting a semicolon and the word
"or" for the period at the end of clause (d) of the first sentence of Section 9
(Termination of Agreement for Cause) and by adding the following new clause (e)
thereafter, to read as follows:
(e) prior to a Change in Control, at least two-thirds ( ) of
the nonemployee members of the Board of Directors of Xxxxx-Craft shall have
determined that the Executive has intentionally committed an act that could have
a material adverse effect on the reputation or business of Xxxxx-Craft.
9. The Agreement is hereby amended by restating Section 10.4.1 in its
entirety to read as follows:
10.4.1 The Executive may (but shall not be obligated to)
terminate the Employment Term (1) on at least one year's notice if such notice
is given prior to a Change in Control, or (2) following a Change in Control, on
30 days' prior written notice, effective as of any date occurring during the
90-day period commencing on the Designated Date (as defined below in this
Section 10.4.1) for any reason or (3) on 30 days' prior written notice,
effective as of any time during the Employment Term, if, without the Executive's
express written consent, in the case of this clause (3) only, (a) the Executive
shall not be elected (and continued) as a director of Xxxxx-Craft or UTV and as
the Executive Vice President of Xxxxx-Craft and President of Xxxxx-Craft's
Television Division, or the Executive shall be removed from such board or
office; or (b) Xxxxx-Craft shall fail to cure a material breach of this
Agreement within 30 days after notice; or (c) the Executive shall not be
continuously afforded the authority, responsibilities and prerogatives
contemplated in Section 2.2 and 2.3; or (d) Xxxxx-Craft shall materially reduce
any benefit to which the Executive is entitled pursuant to Section 6.1 and, if
the termination of the Employment Term shall occur prior to a Change in Control,
shall not have similarly reduced such benefit with respect to Xxxxx-Craft senior
executives generally; (e) the Executive shall be required to perform his
principal services under this Agreement at a place other than that set forth in
Section 3; or (f) following a Change in Control, Xxxxx-Craft fails to provide
the Executive a bonus (the "Minimum Bonus") equal to the higher of (1) the mean
performance bonuses theretofore paid to or payable to the Executive in respect
of the five fiscal years immediately preceding the fiscal year in which occurs
the Change in Control or (2) the bonus set forth in Section 4.4. Such right to
terminate the Employment Term shall be the Executive's exclusive remedy in the
event of the occurrence of any of the events descried in this Section 10.4.1.
For purposes of clause (c) of the preceding sentence, the Executive shall be
deemed not to have been continuously afforded the authority, responsibilities
and prerogatives contemplated in Sections 2.2 and 2.3 if there shall occur any
reduction in the scope, level or nature of the Executive's employment hereunder,
or any demotion, any phasing out or assignment to others, of the duties
contemplated in Section 2. For purposes of this Section 10.4, any determination
made by the Executive in good faith that any of the events described in clauses
(a) through (f) of the first sentence of Section 10.4.1 has occurred shall be
conclusive. For purposes of this Section 10.4, "Designated Date" shall mean the
12-month anniversary of the Change in Control; provided that the number 12 shall
be decreased (but not below 6) by the excess, if any, of the number of full
months elapsed between (x) the execution of the agreement that contemplates such
Change in Control transaction and (y) the consummation of such transaction. The
Executive may elect to rescind any notice previously furnished pursuant to
clause (1) of this Section, provided such rescission is furnished in writing to
Xxxxx-Craft prior to a Change in Control and prior to the effective date of the
Executive's termination.
10. The Agreement is hereby amended by restating Section 10.4.2 in its
entirety to read as follows:
10.4.2 If the Executive shall elect to terminate the
Employment Term upon the occurrence of any event described in clause (2) or
clause (3) of Section 10.4.1, or if Xxxxx-Craft shall terminate this Agreement
other than for cause or disability pursuant to Sections 9 and 10 hereof, then
the Executive shall have no further obligation to perform services for
Xxxxx-Craft pursuant to Section 2, but he shall be entitled to receive from
Xxxxx-Craft, within 30 days after the date of termination of the Employment
Term, in lieu of the amounts that would otherwise be payable hereunder, a lump
sum in cash of an amount equal to the sum of (a) one times (if such termination
occurs prior to a Change in Control) or three times (if such termination occurs
on or after a Change in Control) the aggregate of (i) compensation that would
have been payable each year at the rate of (A) the base salary payable to the
Executive pursuant to Section 4.1 and (B) all amounts of Deferred Compensation
payable to the Executive pursuant to Section 4.3 (each at the rate in effect on
the date of the termination of the Employment Term (including any COLA
Adjustment theretofore required to have been made)) and (ii) an amount equal to
the highest performance bonuses theretofore paid to or payable to the Executive
with respect to the five full fiscal years of Xxxxx-Craft immediately preceding
the date of termination of the Employment Term; (b) all consulting fees that
would have been payable pursuant to Section 11 hereof without regard to any COLA
Adjustment; (c) a pro rata bonus based upon the target bonus under Section 4.4
for the year in which occurs the date of such termination; and (d) in the event
that the Executive shall have elected to terminate the Employment Term under
Section 10.4.1 (3) (f), an amount equal to the excess of (x) the Minimum Bonus
applicable to the Executive for each fiscal year, commencing with the year in
which occurs the Change in Control through and including the fiscal year prior
to the year in which occurs such date of ermination, over (y) the actual bonus
paid to the Executive for each such year. In addition, for the period beginning
on the date of termination of the Employment Term and running through the day on
which the Employment Term would have ended (as extended, if theretofore
extended) if not terminated pursuant to this Section 10.4.2 and ending on the
date on which the Consulting Term would have ended (the "Cutoff Date"),
Xxxxx-Craft shall maintain, at its expense, all insurance coverages and medical
and health benefits in respect of the Executive that shall have been in effect
with respect to him prior to the occurrence of the event entitling the Executive
to terminate this Agreement (or, if such termination occurs following a Change
in Control, as in effect immediately prior to such Change in Control, if more
favorable to the Executive). In addition, the Executive shall become fully
vested under his Executive Deferred Compensation Income Agreement (to the extent
not previously vested). Notwithstanding the above, Deferred Compensation amounts
previously deferred and credited to the Account shall be paid in accordance with
Section 4.3.3.
11. The Agreement is hereby amended by adding a new Section 10.4.3 to read
as follows:
10.4.3 If the Executive shall elect to terminate the
Employment Term as described in clause (1) of Section 10.4.1 and if Xxxxx-Craft
shall thereafter terminate this Agreement other than for cause or disability
pursuant to Sections 9 and 10 hereof prior to the effective date of the
termination of the Employment Term as set forth in the Executive's notice, then
the Executive shall have no further obligation to perform services for
Xxxxx-Craft pursuant to Section 2, but he shall be entitled to receive from
Xxxxx-Craft, within 30 days after the date of termination of the Employment
Term, in lieu of the amounts that would otherwise be payable hereunder, a lump
sum in cash of an amount equal to the compensation that would have been paid to
him under Sections 4.1, 4.3, 4.4 and 6.1(c) during the period remaining until
the effective date of termination of the Employment Term as set forth in the
Executive's notice. Notwithstanding any such termination by Xxxxx-Craft, the
Consulting Term shall commence on the effective date of termination as set forth
in the Executive's notice.
12. The Agreement is hereby amended by restating the first sentence of
Section 11 thereof to read as follows:
If the Employment Term shall terminate on December 31, 2004
or, if earlier, on account of or termination by the Executive pursuant to clause
(1) of Section 10.4.1, or upon expiration of the period with respect to which
the Executive receives payment on account of disability pursuant to Section
10.2, then during the period beginning on the date of termination of the
Employment Term (or, in the case disability, on the date the Employment Term
would otherwise have ended) and ending on May 31, 2007 (the "Consulting Term"),
the Executive shall render to Xxxxx-Craft such consultation and advice as the
Board of Directors or the Chief Executive Officer of Xxxxx-Craft may request,
subject to the Executive's reasonable convenience and other business activities;
provided, however, that the Executive shall not be required to devote more than
240 hours in any calendar year to such services, which shall be performed at a
time and place mutually convenient to both parties.
13. The Agreement is hereby amended by restating the third sentence of
Section 12.2 thereof to read as follows:
Executive shall not, either during the Employment Term or the
Consulting Term, or, except in the case of a termination of employment by
Xxxxx-Craft without cause or by the Executive as described in clause (2) or (3)
of Section 10.4.1 (whether occurring before or after a Change in Control), for
the one-year period thereafter, render services of any kind to others, engage in
any other business activity or acquire any interest of any type in any other
person or entity that would prevent his fulfilling his obligations under this
Agreement or that Executive knows is in competition with Xxxxx-Craft or any
Affiliate.
14. The Agreement is hereby amended by adding thereto a new Section 14.8 to
read as follows:
14.8. Xxxxx-Craft agrees that, if the Executive's employment
with Xxxxx-Craft terminates during the Employment Term, the Executive is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by Xxxxx-Craft pursuant hereto. Further, the amount of
any payment or benefit provided for in this Agreement (other than as expressly
provided in Section 10.2) shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement
benefits, by offset against any amount claimed to be owed by the Executive to
Xxxxx-Craft, or otherwise.
Except as set forth above, the Agreement is hereby ratified
and confirmed in all respects.
XXXXX-CRAFT INDUSTRIES, INC.
By:
Xxxxxxx X. Xxxxxx
Chairman
By:
Xxxx X Xxxxxxxx
