AMENDMENT 2008-1 TO THE EMPLOYMENT AGREEMENT
Exhibit 10.1
AMENDMENT, dated as of December 31, 2008, between Xxxxxx Business Services Corp., (the
“Company”) and Xxxxxx X. Xxxx (the “Executive”).
RECITALS
WHEREAS, the Company and Executive previously entered into that certain Employment Agreement,
dated as of October 14, 2003, (the “Employment Agreement”), which sets forth the terms and
conditions of Executive’s employment with the Company;
WHEREAS, the Company and Executive desire to amend the Employment Agreement to comply with the
requirements of the Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and
the final regulations issued thereunder, as well as to make certain additional changes to the
Employment Agreement; and
WHEREAS, Section 18 of the Employment Agreement provides that the Employment Agreement may be
amended pursuant to a written agreement between Executive and the Company.
NOW, THEREFORE, the Company and Executive hereby agree that, effective as of the date set
forth above, the Employment Agreement shall be amended as follows:
1. Section 7(a)(v) of the Employment Agreement is hereby amended in its entirety to read as
follows:
“(v) Resignation for Good Reason. Executive may terminate Executive’s
employment hereunder for Good Reason, provided that Executive must provide written
notice of termination for Good Reason to the Company within ninety (90) days after
the initial occurrence of the event constituting Good Reason and the Company shall
have a period of thirty (30) days from receipt of such notice to correct the event
that constitutes the grounds for Good Reason as set forth in the Executive’s notice
of termination for Good Reason. If the Company does not correct the event
constituting Good Reason within such thirty (30) day period, the Executive’s
employment with the Company shall terminate on the first business day that
immediately follows the end of the Company’s thirty (30) day cure period, unless the
Company requires an earlier termination date. For purposes of this Agreement, “Good
Reason” shall mean the occurrence of any one or more of the following, without the
consent of Executive: (a) a material diminution in Executive’s authority, duties or
responsibilities; (b) the Company requires that Executive report to an officer or
employee of the Company instead of reporting directly to the Company’s Board of
Directors; (c) a material diminution in Executive’s base compensation, which, for
purposes of this Agreement, “base compensation” means Executive’s Base Salary and
target Incentive Bonus
percentage in effect immediately prior to the action taken to diminish Executive’s
Base Salary or target Incentive Bonus percentage; (d) a material change in the
geographic location at which Executive must perform services, which shall include a
change to a location that is more than twenty-five (25) miles from the location at
which the Executive performs services hereunder as of December 31, 2008; or (e) any
other action or inaction that constitutes a material breach by the Company under the
Agreement.”
2. A new Section 7(a)(vii) is hereby added to the Employment Agreement as follows:
“(vii) Termination upon Change in Control. If a Change in Control (as
defined in Exhibit A) occurs during the Employment Period, Executive’s employment
with the Company shall automatically terminate without cause as of the date of the
Change in Control.”
3. A new Section 7(a)(viii) is hereby added to the Employment Agreement as follows:
“(viii) Termination upon Non-Renewal of Agreement. If the Agreement is not
renewed by the Company, Executive’s employment with the Company shall automatically
terminate as of the last day of the Agreement Term, provided that Executive was
willing and able to execute a new contract providing terms and conditions
substantially similar to those in the Agreement and to continue providing services
under such Agreement.”
4. Section 7(b)(i) of the Employment Agreement is hereby amended in its entirety as follows:
“(i) For Cause; Without Good Reason. If Executive’s employment is
terminated for Cause pursuant to Section 7(a)(i) or in the event of Executive’s
voluntary termination of his employment pursuant to Section 7(a)(vi) without Good
Reason, then (A) the Company shall pay Executive his Base Salary through the Date of
Termination (as later defined) within thirty (30) days from the Date of Termination,
(B) Executive shall receive accrued but unpaid benefits (such as accrued but unpaid
insurance benefits, retirement plan benefits, paid time off (PTO) benefits, expense
reimbursements, etc.) as of the Date of Termination in accordance with the terms of
the applicable plan, and (C) Executive’s vested rights under any stock option, stock
incentive or other incentive compensation plan or program shall be subject to the
terms and conditions of such plans and programs. Executive and his dependents shall
also be entitled to any continuation of coverage rights required by COBRA, with
premiums to be paid by Executive (collectively, the items set forth in this
paragraph (i) are referred to herein as the “Accrued Benefits”).”
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5. Section 7(b)(ii) of the Employment Agreement is hereby amended in its entirety as follows:
“(ii) Death or Disability. If Executive’s employment is terminated
pursuant to Section 7(a)(ii) or 7(a)(iii) by reason of death or Disability, then the
Company shall pay Executive or his estate, as applicable, the Accrued Benefits, and,
within thirty (30) days following the Date of Termination, any Incentive Bonus
earned but not yet paid for any fiscal year completed prior to the year in which the
Date of Termination occurs. Executive or his estate shall also be entitled to all
insurance proceeds paid pursuant to the coverage provided by the applicable policy
referenced in Section 5 hereof.”
6. Section 7(b)(iii) of the Employment Agreement is hereby amended in its entirety as follows:
“(iii) Termination without Cause; Resignation for Good Reason; Termination Upon
Non-Renewal of Agreement; Termination on Account of Change in Control. If the
Company terminates Executive’s employment without Cause pursuant to Section
7(a)(iv), Executive resigns for Good Reason pursuant to Section 7(a)(v), Executive’s
employment terminates on account of a Change in Control pursuant to Section
7(a)(vii), or the Company’s non-renewal of the Agreement pursuant to Section
7(a)(viii), then, provided Executive executes a standard release of employment
claims in the form attached hereto as Exhibit B, and does not revoke such release,
the Company shall pay Executive an amount equal to (w) two (2) times the sum of (A)
Executive’s then-current Base Salary and (B) the average Incentive Bonus earned by
Executive for the two (2) fiscal years preceding the Date of Termination; (x)
twenty-four (24), times the monthly COBRA premium rate as in effect on Executive’s
Date of Termination to continue the medical and dental benefits covering Executive
and his family, as applicable, on his Date of Termination (the “COBRA Payment”),
plus an additional amount so that the after tax amount that Executive will receive
pursuant to this clause (x) on an after-tax basis will equal the COBRA Payment; (y)
two (2) times the sum of the annual premium of the additional life insurance and
long-term disability insurance coverage described in Section 5 hereof as in effect
on the Date of Termination, at the same level in which Executive was covered by such
insurance on his Date of Termination (the “Life and Disability Payment”), plus an
additional amount so that the after tax amount that Executive will receive pursuant
to this clause (y) on an after-tax basis will equal the Life and Disability Payment;
and (z) payment of any Incentive Bonus earned but not yet paid for any fiscal year
completed prior to the year in which the Date of Termination occurs and the Accrued
Benefits. The amounts payable pursuant to this paragraph (iii) shall be paid to
Executive in a lump sum within thirty (30) days following his Date of Termination.”
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7. Section 7(b)(iv) of the Employment Agreement is hereby amended in its entirety as follows:
“(iv) Stock Incentives. In the event that (A) Executive’s employment is
terminated on account of death or Disability pursuant to Section 7(a)(ii) or (iii);
(B) the Company terminates Executive’s employment without Cause pursuant to Section
7(a)(iv); (C) Executive resigns with Good Reason pursuant to Section 7(a)(v); (D)
Executive’s employment is terminated on account of a Change in Control pursuant to
Section 7(a)(vii); or (E) Executive’s employment is terminated on account of
non-renewal of the Agreement pursuant to Section 7(a)(viii), then (1) the portion of
the unvested and outstanding Company stock options, restricted stock, stock units or
other stock incentive rights held by Executive shall automatically vest immediately
upon the Date of Termination, notwithstanding the terms of any applicable option
plan or option award agreement and (ii) any stock options granted to Executive on or
after the date of the Agreement shall remain exercisable for a period of two years
from the Date of Termination, notwithstanding the terms of any applicable option
agreement, but not longer than the original term of the option. The Company agrees
to take all corporate or other actions necessary or appropriate to affect the intent
of this Section 7(b)(iv).”
8. Section 7(c)(v) of the Employment Agreement is hereby amended in its entirety to read as
follows and new Sections 7(c)(vi) and 7(c)(vii) are hereby added to the Employment Agreement to
read as follows:
“(v) if Executive terminates his employment pursuant to (A) Section 7(a)(v), the
Date of Termination shall be as set forth in such Section and (B) Section 7(a)(vi),
upon the date specified in the written notice of termination delivered to the
Company by Executive; (vi) if Executive’s employment terminates pursuant to Section
7(a)(vii), the date of the Change in Control; and (vii) if Executive’s employment
terminates pursuant to Section 7(a)(viii), the last day of the Agreement Term.”
9. A new Section 20 is hereby be added to the Employment Agreement as follows:
“20. Section 409A of the Internal Revenue Code.
(a) Interpretation. Notwithstanding the other provisions hereof, this
Agreement is intended to comply with the requirements of Section 409A of the Code,
to the extent applicable, and this Agreement shall be interpreted to avoid any
penalty sanctions under Section 409A of the Code. Accordingly, all provisions
herein, or incorporated by reference, shall be construed and interpreted to comply
with Section 409A of the Code and, if necessary, any such provision shall be deemed
amended to comply with Section 409A of the Code and regulations thereunder. If any
payment or benefit cannot be provided or made at the time specified herein without
incurring sanctions under Section 409A of the
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Code, then such benefit or payment shall be provided in full at the earliest time
thereafter when such sanctions will not be imposed. All payments to be made upon a
termination of employment under this Agreement that are deferred compensation may
only be made upon a “separation from service” under Section 409A of the Code. For
purposes of Section 409A of the Code, each payment made under this Agreement shall
be treated as a separate payment. In no event may Executive designate the calendar
year of payment.
(b) Payment Delay. To the maximum extent permitted under Section 409A
of the Code, the severance benefits payable under this Agreement are intended to
comply with the “short-term deferral exception” under Treas. Reg. §1.409A-1(b)(4),
and any remaining amount is intended to comply with the “separation pay exception”
under Treas. Reg. §1.409A-1(b)(9)(iii); provided, however, any amount payable to
Executive during the six (6) month period following Executive’s Date of Termination
that does not qualify within either of the foregoing exceptions and constitutes
deferred compensation subject to the requirements of Section 409A of the Code, then
such amount shall hereinafter be referred to as the “Excess Amount.” If at the time
of Executive’s separation from service, the Company’s (or any entity required to be
aggregated with the Company under Section 409A of the Code) stock is publicly-traded
on an established securities market or otherwise and Executive is a “specified
employee” (as defined in Section 409A of the Code and determined in the sole
discretion of the Company (or any successor thereto) in accordance with the
Company’s (or any successor thereto) “specified employee” determination policy),
then the Company shall postpone the commencement of the payment of the portion of
the Excess Amount that is payable within the six (6) month period following
Executive’s Date of Termination with the Company (or any successor thereto) for six
(6) months following Executive’s termination date with the Company (or any successor
thereto). The delayed Excess Amount shall be paid in a lump sum to Executive within
ten (10) days following the date that is six (6) months following Executive’s Date
of Termination with the Company (or any successor thereto). If Executive dies
during such six (6) month period and prior to the payment of the portion of the
Excess Amount that is required to be delayed on account of Section 409A of the Code,
such Excess Amount shall be paid to the personal representative of Executive’s
estate within thirty (30) days after Executive’s death.
(c) Reimbursements. All reimbursements provided under this 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 is 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
during a calendar year may not affect the expenses eligible for reimbursement in any
other calendar year, (iii) the reimbursement of an eligible expense will be made on
or before the last day of the taxable year following the year in which the expense
is incurred, and (iv) the right to reimbursement is not subject to liquidation or
exchange for another benefit. Any
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tax gross up payments to be made hereunder shall be made not later than the end of
Executive’s taxable year next following Executive’s taxable year in which the
related taxes are remitted to the taxing authority.”
10. In all respects not modified by this Amendment 2008-1, the Employment Agreement is hereby
ratified and confirmed.
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IN WITNESS WHEREOF, the Company and the Executive agree to the terms of the foregoing
Amendment 2008-1, effective as of the date set forth above.
| XXXXXX BUSINESS SERVICES CORP. | ||||
| By: | ||||
| Its: | ||||
| EXECUTIVE | ||||
| Xxxxxx X. Xxxx | ||||
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