EXHIBIT 10.14
SECOND AMENDMENT made as of the 27th day of January, 2000 to the
Employment Agreement dated as of July 28, 1997 and amended September 1, 1998 by
and between Golden Books Publishing Company, Inc. with its principal United
States office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"),
and Xx. Xxxxxxx X. Xxxxxxx, residing at 00 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company and the Executive have previously entered into
the Employment Agreement; and
WHEREAS, the Company and the Executive desire to amend the Employment
Agreement; and
WHEREAS, the Company desires to assign the Employment Agreement to
Golden Books Family Entertainment, Inc. ("GBFEI") and GBFEI desires to assume
the Employment Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Company hereby assigns the Employment Agreement to GBFEI and
GBFEI hereby assumes the Employment Agreement.
2. The Employment Agreement is amended effective as of the date hereof
as follows:
a. All references in the Employment Agreement to the Company
shall be deemed to refer to Golden Books Family Entertainment, Inc.
and not Golden Books Publishing Company.
b. Section 1 of the Employment Agreement is amended in its
entirety to read as follows:
"The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to continue with the employ of the
Company, commencing on the Effective Date and continuing through
and including December 31, 2002, unless terminated earlier in
accordance with Section 4 below."
c. Section 2(a) of the Employment Agreement is amended in its
entirety to read as follows:
"The Executive shall serve as the Company's Executive Vice
President and Chief Operating Officer with such duties,
responsibilities and authority in such capacities as shall be
consistent therewith. The Executive shall report to the Chairman
and Chief Executive Officer of the Company. The Executive shall
be based in New York, New York."
d. Section 3(a) of the Employment Agreement is amended by the
deletion of the first sentence and the addition of the following
sentence in lieu thereof:
"(a) BASE SALARY. During the Employment Term, the Executive shall
receive an annual base salary ("Annual Base Salary") of $350,000
for each year of the term."
e. Section 3(b) of the Employment Agreement is amended in its
entirety to read as follows:
"(b) ANNUAL BONUS. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year ending during
the Employment Term, an annual bonus (the "Annual Bonus")
pursuant to the Company's Executive Officer Bonus Plan or a
replacement thereof (the "Annual Plan") under one or more of the
criteria prescribed in the Annual Plan and approved by the
Compensation Committee of the Board of Directors, which bonus
shall be pro rated for any fiscal year during which the Executive
is employed for less than 12 months. The Executive shall have a
target annual bonus of 100% of his Annual Base Salary (the
"Target Bonus"), subject to attainment of the performance goals
set forth in the Annual Plan. The Executive waives any right to
receive a pro rated Target Award under Section 15 of the
Executive Office Bonus Plan upon a "change of control," as
defined therein, so long as he shall be employed on the last day
of the fiscal year and be entitled to an Annual Bonus at the
levels specified herein on a non pro rated basis for the fiscal
year of such "change of control" if the performance goals for
such fiscal year are achieved. Each such Annual Bonus shall be
paid no later than the end of the third month of the fiscal year
next following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of
such Annual Bonus. The parties acknowledge that the Annual Plan
has been approved by the stockholders of the Company in
accordance with the requirements of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Board
may award the Executive bonuses other than pursuant to the Annual
Plan in its discretion."
f. Section 3(c) of the Employment Agreement is amended in its
entirety to read as follows:
"(c) STOCK OPTIONS. The Executive will be granted, as soon as
administratively feasible, a stock option (the "Option") to
purchase 1% of the Company's issued and outstanding common stock
("Common Stock") on a fully diluted basis (including all shares
authorized, whether or not issued or covered by a grant, under
any employee stock incentive plan and any warrants) pursuant to
the Company's management incentive plan (the "Stock Option Plan")
in accordance with the form of option agreement annexed as
Exhibit A hereto ("Option Agreement"). The exercise price with
respect to each share of Common Stock subject to the Option will
be the "Fair Market Value" (as defined in the Stock Option Plan)
of a share of Common Stock on the date of the grant. The Option
will become exercisable as to one-third of the shares of Common
Stock subject thereto on the first anniversary of the date of
grant, as to an additional one-third of such shares on the second
anniversary of the date of grant, and as to the remaining
one-third of such shares on the third anniversary of the date of
grant, provided the Executive has been continuously employed
through each applicable vesting date. Notwithstanding anything in
this Agreement to the contrary, upon the occurrence of a Change
in Control (as such term is defined in Section 4(f) below,
without regard to clause (iv) of Section 4(f)(A) and clause
(ii)(b) of Section 4(f)(C)) during the Employment Term, the
Option shall become fully and immediately exercisable. The Option
will have a term of seven years (the "Option Term"). Upon the
termination of Executive's employment:
(1) by reason of death, the Option shall become fully and
immediately exercisable and the Executive's estate may exercise
the Option until the earlier of one year following the
Executive's death or the end of the Option Term, following which
time the Option shall terminate and be no longer exercisable;
(2) by reason of Disability (as such term is defined in Section
4(a) below), the Option shall become fully and immediately
exercisable and the Executive (or, following his death, his
estate) may exercise the Option until the earlier of one year
following the Date of Termination (as such term is defined in
Section 4(e) below) or the end of the Option Term, following
which time the Option shall terminate and be no longer
exercisable;
(3) by the Company for Cause (as such term is defined in Section
4(a) below), the Option shall terminate and no longer be
exercisable effective on the Executive's Date of Termination;
(4) by the Executive without Good Reason (as such term is defined
in Section 4(b) below), the Option, to the extent exercisable on
the Date of Termination, shall remain exercisable by the
Executive (or, following his death, his estate) until the earlier
of 90 days following such date or the end of the Option Term,
following which time the Option shall terminate and be no longer
exercisable; or
(5) by the Company without Cause or by the Executive with Good
Reason, the entire Option shall become fully and immediately
exercisable and the Executive may exercise the Option until the
earlier of one year following the Executive's Date of Termination
or the end of the Option Term, following which time the Option
shall terminate and be no longer exercisable.
The Executive shall be entitled to participate in other Company
stock option grants or other equity plans or programs, if any, in
which senior executives of the Company are eligible to
participate on a basis generally commensurate with his position
as may be determined by the Compensation Committee.
The Executive will be entitled to pay the exercise price of the
Option with shares of Common Stock previously acquired by the
Executive and may elect to have any withholding taxes required to
be withheld as a result of the exercise of the Option taken out
of Common Stock issuable to the Executive as a result of such
exercise.
Other than as stated above, the Option will be governed by the
terms and conditions of the Company's Stock Option Plan and the
Option Agreement thereunder."
g. Section 4(a) of the Employment Agreement is amended by the
addition of the parenthetical "("Disability")" following "business
days", at the end of that section.
h. Section 4(b)(iv) of the Agreement is amended by replacing the
period at the end of that section with "; or" and a new Section
4(b)(v) is added to read as follows:
"(v) the Company's termination of the Executive's employment for
any reason other than Cause, within two years following a "Change
of Control" (as defined in Section 4(f) of this Agreement)."
i. A new Section 4(f) to the Employment Agreement is added to
read as follows:
"(f) DEFINITION OF CHANGE OF CONTROL. For the purpose of this
Agreement, a "Change of Control" shall mean:
(A) ____ The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 35% of more (on a
fully diluted basis) of either (i) the then outstanding shares of
common stock of the Company, taking into account as outstanding
for this purpose such common stock issuable upon the exercise of
options warrants, the conversion of convertible stock or debt,
and the exercise of any similar right to acquire such common
stock (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (i) , the
following acquisitions shall not constitute a Change of Control;
(i) any acquisition by the Company or any "affiliate" of the
Company, within the meaning of 17 C.F.R. ss.230.405 (an
"Affiliate"), (ii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
Affiliate of the Company, (iii) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of paragraph (C) of this Subsection (f), or
(iv) any acquisition by the Executive, or by a group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) that
includes the Executive;
(B) ____ Individuals who, as of the date hereof, constitute
the Board of Directors (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
thereto whose election, or nomination for election by the
Company's stockholders, was 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 an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(C) ____ Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, and
(ii) no Person (excluding (a) any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
Affiliate of the Company, or such corporation resulting from such
Business Combination or any Affiliate of such corporation, or (b)
any entity in which the Executive has an equity interest, or any
Affiliate of such entity) beneficially owns, directly or
indirectly, 35% or more (on a fully diluted basis) of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination, taking into
account as outstanding for this purpose such common stock
issuable upon the exercise of options or warrants, the conversion
of convertible stock or debt, and the exercise of any similar
right to acquire such common stock, or the combined voting power
of the then outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the
Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action
of the Board, providing for such Business Combination; or
(D) Approval by the stockholders of the Company of a
complete liquidation or dissolution of the Company."
j. Section 5(a) of the Agreement is replaced in its entirety to
read as follows:
(i) ____ the Company shall pay to the Executive the
aggregate of the following amounts:
A. ______ the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
theretofore paid, and (2) any compensation previously deferred by
the Executive (together with any accrued interest or earnings
thereon) and any accrued vacation pay, in each case to the extent
not theretofore paid (the sum of the amounts described
in clauses (1) and (2) shall be hereinafter referred to as the
"Accrued Obligations"). All Accrued Obligations shall be paid in
a lump sum in cash within 30 days of the Date of Termination; and
B. ______ the Executive's Annual Base Salary as set
forth in Section 3(a) for the year in which the Date of
Termination falls, to be paid either (1) in a lump sum, if
approved by the Board, 30 days after the Date of Termination, or
(2) as salary continuation for a period of one year following the
Date of Termination, except that, in the event of a termination
described in Section 4(b)(v) herein, the Executive shall be paid
two times his Annual Base Salary in a lump sum or as a two-year
salary continuation. The Executive shall have no duty or
obligation to mitigate, and such salary continuation payments
will continue even in the event the Executive becomes reemployed
by another employer.
(ii) ____ all stock options, restricted stock and other
stock-based compensation shall become exercisable or vested pursuant
to Section 3(c)(5) herein;
(iii) for one year after the Executive's Date of Termination
(or for two years in the event of a termination described in Section
4(b)(v) herein), the Company shall continue benefits to the Executive
and/or the Executive's family at least equal to those which would have
been provided to them in accordance with the plans, programs,
practices and policies described in Section 3(e) of this Agreement if
the Executive's employment had not been terminated, provided, however,
that if the Executive becomes reemployed with another employer and is
eligible to receive medical or other welfare benefits under another
employer provided plan, the corresponding medical and other welfare
benefits described herein shall be terminated. Those welfare benefits
not offered by the new employer shall continue until termination of
the above described one or two year period. For purposes of
determining eligibility (but not the time of commencement of benefits)
of the Executive for retiree benefits pursuant to such plans,
practices, programs and policies, the Executive shall be considered to
have remained employed until the later of two years after the Date of
Termination or the end of the Employment Term and to have retired on
the last day of such period;
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts
or benefits required to be paid or provided to the Executive or which
the Executive is entitled to receive under any plan, program, policy
or practice or contract or agreement of the Company and its affiliated
companies, to the extent payment of any such amounts or benefits are
not already provided for under this Agreement (such other amounts and
benefits shall be hereinafter referred to as the "Other Benefits").
The Executive shall have the right to approve, such approval not be
unreasonably withheld, any written announcement, if any, of the termination of
the Executive's employment with the Company.
k. Section 10(a) of the Employment Agreement is amended in its
entirety to read as follows:
"(a) On or before June 1, 2002, the Company and the Executive
agree to meet to discuss each others intentions with respect to
Executive's employment with the Company after the termination of
this Agreement; provided, however, that this paragraph shall
create no duty or obligation on behalf of either the Company or
the Executive with respect to such discussion."
l. Section 11(b) of the Employment Agreement is amended in its
entirety to read as follows:
"(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
IF TO THE EXECUTIVE:
Xx. Xxxxxxx X. Xxxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
IF TO THE COMPANY:
Golden Books Family Entertainment, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Administrative Officer
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee."
3. ____________________ As amended by the Second Amendment, the
Employment Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this amendment to be
executed by its duly authorized officers and the Executive has hereunto set his
hand as of the date first above written.
GOLDEN BOOKS FAMILY ENTERTAINMENT, INC.
By: ________________________________________
GOLDEN BOOKS PUBLISHING COMPANY, INC.
By: ________________________________________
________________________________________
Xxxxxxx X. Xxxxxxx
