EXHIBIT 10.18
AMENDMENT OF
EMPLOYMENT AGREEMENT OF XXXXXXX X. XXXXXX, XX.
This Amendment of Employment Agreement (the "Amendment") is made and
entered into this 5th day of October 2007, by and between Xxxxxxx X.
Xxxxxx, Xx. (the "Executive") and General Employment Enterprises, Inc.,
an Illinois Corporation (the "Company") (collectively, the "Parties").
WHEREAS, the Parties entered into an Employment Agreement effective
as of August 1, 2001 (the "Agreement"); and
WHEREAS, the Parties now consider it desirable to amend the terms and
conditions of the Agreement by this Amendment to reflect the requirements of
Internal Revenue Code Section 409A and to clarify the rights of the Parties;
NOW THEREFORE, in accordance with Section 13 of the Agreement and in
consideration of the mutual promises herein made, the sufficiency of which
are expressly acknowledged, the Parties agree as follows:
1. The following new Sections 2(b) and 2(c) shall be substituted for
Section 2(b) of the Agreement:
"(b) Termination. In the event Executive's employment
is terminated other than as a result of Executive's death or
disability (as defined in Section 2(a) hereinabove) and either
by the Company for a reason other than 'Cause' or by the
Executive for 'Good Reason,' the Executive shall receive:
(i) reimbursement for any expenses incurred in connection with
outplacement assistance of the Executive up to $25,000,
(ii) a lump sum cash payment equal to the sum of the
Executive's Base Salary and the Average Annual Performance
Bonus (as defined below) that would have been provided
under Section 3 of this Agreement for the remainder of the
Term specified in Section 2(a) above, (iii) the Executive's
'severance bonus,' which equals the Executive's Average Annual
Performance Bonus multiplied by a fraction, the numerator of
which is the number of days elapsed in the fiscal year of
termination and the denominator of which is 365, and
(iv) continuation of the Benefits and Perquisites provided
under Section 4 of this Agreement for the remainder of the
Term specified in Section 2(a) above. In the event that the
Company cannot provided any of the Benefits or Perquisites
required by clause (iv) above because of applicable law or
plan terms, the Executive shall receive a lump sum payment
from the Company equal to the value of such Benefits and
Perquisites that are not provided, payable within ten (10)
business days of termination. To the extent any
reimbursements are subject to Section 409A of the Internal
Revenue Code of 1986, as amended (the 'Code'), then such
expenses must be incurred before the last day of the second
taxable year following the taxable year in which the
termination occurred, provided that any reimbursement for such
expenses be paid before the Executive's third taxable year
following the taxable year in which the termination occurred.
For purposes of this Agreement, the Executive's Average Annual
Performance Bonus shall be equal to the greater of (y) the
Performance Bonus paid to the Executive for the last full
fiscal year before employment termination, and (z) the average
of the annual Performance Bonus paid the to the Executive for
each of the last three full fiscal years before employment
termination. Amounts to be paid to the Executive under
clauses (i) and (ii) above of this Section 2(b) shall be paid
within ten (10) business days of his employment termination.
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For purposes of this Agreement, 'Cause' shall mean
(i) conviction of a felony, (ii) an act of dishonesty or fraud
that has a material adverse impact on the business of the
Company, or (iii) gross negligence in the performance of his
duties as Chief Executive Officer of the Company. For
purposes of this Agreement, 'Good Reason' shall mean, without
the Executive's consent, (i) a material diminution in the
Executive's base compensation, (ii) a material diminution in
the Executive's authority, duties, or responsibilities;
(iii) a material change in the geographic location at which
the Executive must perform the services; and (iv) any other
action or inaction that constitutes a material breach by the
Company of this Agreement. The Executive must provide written
notice to the Company within 90 days of the initial existence
of one or more of the above conditions to constitute Good
Reason. Upon such notice, the Company shall have a period of
at least 30 days during which it may remedy the condition. A
separation from service will not constitute a termination for
Good Reason pursuant this Section 2(b) unless such
separation occurs during a period of time not to exceed two
years following the initial existence of one or more of the
above conditions.
(c) Notwithstanding any other provisions of this
Agreement, but subject to Executive's continued compliance
with the provisions of Section 9, in the event that any
payment, benefit or distribution by or on behalf of the
Company to or for the benefit of the Executive (whether paid
or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this
paragraph) (the 'Payments') is determined to be an 'excess
parachute payment' pursuant to Code Section 280G or any
successor or substitute provision of the Code, with the effect
that the Executive is liable for the payment of the excise tax
described in Code Section 4999 or any successor or substitute
provision of the Code (the 'Excise Tax'), then the Company
shall pay to the Executive an additional amount (the
'Gross-Up Payment') such that the net amount retained by
Executive, after deduction of any Excise Tax on the Payments
and any federal, state and local income and employment taxes
and Excise Tax on the Gross-Up Payment, shall be equal to the
Payments."
2. The following three new sentences shall be added to Section 11 of
the Agreement, immediately after the last sentence thereof:
"The arbitration shall be conducted in DuPage County,
Illinois. The Company shall bear all costs of the arbitration
proceeding. All reasonable costs and expenses (including fees
and disbursements of counsel) incurred by the Executive in
seeking to interpret this Agreement or enforce rights pursuant
to this Agreement shall be paid on behalf of or reimbursed to
the Executive promptly by the Company, if the Executive is
successful in asserting such rights."
3. The following new Sections 17, 18 and 19 shall be added to the
Agreement immediately after Section 16 thereof:
"17. Indemnification and Insurance. For the period from
the Commencement Date through at least the sixth anniversary
of the Executive's termination of employment from the Company,
the Company agrees to maintain the Executive as an insured
party on all directors' and officers' insurance maintained by
the Company for the benefit of its directors and officers on
at least the same basis as all other covered individuals and
provide the Executive with at least the same corporate
indemnification as its other senior officers.
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18. Effect on Other Obligations. Payments and benefits
herein provided to the Executive by the Company will be made
without regard to and in addition to any other payments or
benefits required to be paid to the Executive at any time
hereafter under the terms of any other agreement between the
Executive and the Company (it being understood and agreed that
the Executive will not be entitled to severance or termination
benefits in addition to those provided herein under any
severance or termination plan of the Company or its
affiliates). No payments or benefits provided the Executive
hereunder will be reduced by any amount the Executive may earn
or receive from employment with another employer or from any
other source without violation of this Agreement. In no event
will the Executive be obliged to seek other employment or take
any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this
Agreement.
19. Code Section 409A. This Agreement is intended to
comply with Code Section 409A and the interpretative guidance
thereunder, including the exceptions for short-term deferrals,
separation pay arrangements, reimbursements, and in-kind
distributions, and shall be administered accordingly. This
Agreement shall be construed and interpreted with such intent.
If a payment under Sections 2(b) or 4(c) above does not
qualify as a short-term deferral under Code Section 409A and
Treas. Reg. Section 1.409A-1(b)(4) (or any similar or
successor provisions), and the Executive is a Specified
Employee (as defined below) as of his termination,
distributions to the Executive may not be made before the
date that is six months after the date of his termination or,
if earlier, the date of the Executive's death (the
'Six-Month Delay Rule'). Payments to which the Executive
would otherwise be entitled during the first six months
following the termination (the 'Six-Month Delay') will be
accumulated and paid on the first day of the seventh month
following the termination. Notwithstanding the Six-Month
Delay Rule set forth in this Section 19(b):
(a) To the maximum extent permitted under Code
Section 409A and Treas. Reg. Section 1.409A-1(b)(9)(iii)
(or any similar or successor provisions), during each month
of the Six-Month Delay, the Company will pay the Executive an
amount equal to the lesser of (A) the total monthly severance
provided under Sections 2(b) and 4(c) above, or (B) one-sixth
(1/6) of the lesser of (1) the maximum amount that may be
taken into account under a qualified plan pursuant to Code
Section 401(a)(17) for the year in which the Executive's
termination occurs, and (2) the sum of the Executive's
annualized compensation based upon the annual rate of pay for
services provided to the Company for the taxable year of the
Executive preceding the taxable year of the Executive in which
his termination occurs (adjusted for any increase during that
year that was expected to continue indefinitely if the
Executive had not had a termination); provided that amounts
paid under this sentence will count toward, and will not be in
addition to, the total payment amount required to be made to
the Executive by the Company under Sections 2(b) and 4(c); and
(b) To the maximum extent permitted under Code
Section 409A and Treas. Reg. Section 1.409A-1(b)(9)(v)(D)
(or any similar or successor provisions), within ten (10) days
of the termination, the Company will pay the Executive an
amount equal to the applicable dollar amount under Code
Section 402(g)(1)(B) for the year of the Executive's
termination; provided that the amount paid under this sentence
will count toward, and will not be in addition to, the total
payment amount required to be made to the Executive by the
Company under Sections 2(b) and 4(c).
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(c) For purposes of this Agreement, 'Specified
Employee' has the meaning given that term in Code Section 409A
and Treas. Reg. 1.409A-1(c)(i) (or any similar or successor
provisions). The Company's 'specified employee identification
date' (as described in Treas. Reg. 1.409A-1(c)(i)(3)) will be
December 31 of each year, and the Company's 'specified
employee effective date' (as described in Treas.
Reg. 1.409A- 1(c)(i)(4) or any similar or successor
provisions) will be February 1 of each succeeding year."
* * * *
IN WITNESS WHEREOF, the parties have executed this Amendment on this
5th day of October 2007.
GENERAL EMPLOYMENT ENTERPRISES, INC. EXECUTIVE
By: /s/ Xxxxxxx Xxxxxxxx /s/ Xxxxxxx X. Xxxxxx, Xx.
Xxxxxxx Xxxxxxxx
Chairman of the Compensation Committee
and member of the Board of Directors
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