Exhibit 10.4
Execution Version
MULTI-YEAR PERFORMANCE INCENTIVE BONUS ADDENDUM
This Addendum Agreement between Xxxxx Xxxxxxx ("Xxxxxxx") and Xxxx
National Corporation ("Xxxx National") has been negotiated between Xxxxxxx and
Xxxx National pursuant to Paragraph 4(b)(ii) and Exhibit A of Xxxxxxx'x
Employment Agreement (the "Employment Agreement"). The agreed upon terms
covering the period of February 1, 2003 to February 1, 2005 (the "Bonus Period")
are as follows:
1. The terms of Exhibit A are incorporated herein and made a part of this
Addendum Agreement.
2. Seventy-five percent (75%) of the Multi-Year Performance Incentive Bonus
for the Bonus Period shall be quantitative and twenty-five percent (25%)
shall be qualitative.
(a). The quantitative component of the bonus shall be based upon the
Xxxxxx Projections presented to the parties on August 14, 2003. In
order to earn the target bonus set forth in Exhibit A of the
Employment Agreement, Xxxxxxx must achieve the Xxxxxx Plan
objectives for the Bonus Period, and if those objectives are not
achieved Xxxxxxx shall receive no bonus under this Addendum
Agreement. In order to earn the maximum bonus set forth in Exhibit A
of the Employment Agreement, Xxxxxxx must achieve the Xxxxxx
Aggressive objectives for the Bonus Period. If results are in
between the two objectives the bonus amount to be paid to Xxxxxxx
will be prorated and paid out on a straight-line basis. Expenses
related to a "change of control" (as defined in the Employment
Agreement) or an aborted "change of control" shall be excluded from
the results. The quantitative component will be determined one-half
(1/2) by EBITDA and one-half (1/2) by Return on Capital
(calculated by EBITDA as a percentage of capital, both equity and
debt), each measured during the Bonus Period.
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Exhibit 10.4
Execution Version
Each of these two measurements will be weighed equally in
determining and calculating the quantitative component of the bonus.
(b). The qualitative component of the bonus shall be based at the sole
discretion of Xxxx National's Compensation Committee and can range
from zero to 100% of the potential contractual formula. The
performance areas that will be considered for Xxxxxxx to earn the
qualitative component of the bonus include tailored marketing and
programming for franchisees, leadership development, and effective
Board interaction.
3. Anything contained in this Addendum or in the Employment Agreement to the
contrary notwithstanding, in the event that a change of control occurs
during the Bonus Period, Xxxxxxx shall receive a bonus payment in the
amount of $500,000, (such amount being referred to herein as the "COC
Incentive Bonus Payment"). The COC Incentive Bonus Payment shall be paid
to Xxxxxxx within ten (10) days following the change of control.
Furthermore, in the event of a change of control during the Bonus Period,
any COC Incentive Bonus Payment paid to Xxxxxxx pursuant to the
immediately preceding sentence, shall be credited against the multi-year
performance incentive bonus, if any, that Xxxxxxx earns for the Bonus
Period in the event Xxxxxxx continues to be employed under the Employment
Agreement for the duration of the Bonus Period following the change of
control. If Xxxxxxx does not continue to be employed by Xxxx National or
any of its affiliates through the end of the Bonus Period, Xxxxxxx will
not be entitled to any additional bonus payments (other than the COC
Incentive Bonus Payment) under this Addendum for the Bonus Period. The
payment of the COC Incentive Bonus Payment under this paragraph shall be
disregarded in calculating the payments required to be made
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Exhibit 10.4
Execution Version
to Xxxxxxx pursuant to Paragraph 6(c) of the Employment Agreement.
However, for purposes of Section 7 of the Employment Agreement, the
payment of the COC Incentive Bonus Payment shall be deemed to have been
made pursuant to Section 6(c) of the Employment Agreement.
4. In the event of any extraordinary developments which impact retailers
generally, or extraordinary internal developments which impact operations
of Xxxx National, Xxxxxxx can request the Compensation Committee of Xxxx
National to re-establish the quantitative terms set forth in this Addendum
Agreement. Any such request must be in writing and any agreed upon
adjustment to the quantitative terms must also be in writing and signed by
both parties in order to be effective. Notwithstanding the foregoing, the
Compensation Committee shall have no obligation to make any such
adjustment.
IN WITNESS WHEREOF, the parties have executed this Addendum Agreement on
the 26th day of November, 2003.
XXXX NATIONAL CORPORATION
BY: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
Senior Vice President
XXXXX XXXXXXX, individually
BY: /s/ Xxxxx Xxxxxxx
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