EXHIBIT 10.20
AMENDMENT NO 1
TO
EMPLOYMENT AGREEMENT
This Amendment No. 1 to Employment Agreement ("AMENDMENT") is entered into
to be effective as of May 13, 2002 by and between Xxxxxxx X. Xxxx ("EXECUTIVE"),
and Xxxxxx'x, Inc., a Delaware corporation ("COMPANY").
WHEREAS, Executive and Company are parties to that certain Employment
Agreement dated to be effective as of May 22, 2001 (as amended hereby, the
"AGREEMENT"); and
WHEREAS, Company and Executive now desire to amend the Agreement;
NOW, THEREFORE, for and in consideration of the premises and the mutual
benefits to the parties arising out of this Amendment, the receipt and
sufficiency of which are hereby acknowledged by the parties' execution and
delivery hereof, Company and Executive agree as follows:
1. AMENDMENTS TO THE AGREEMENT.
(a) AMENDMENT TO PARAGRAPH 3(b). Paragraph 3(b) of the Agreement is
hereby amended so as to read in its entirety as follows:
"(b) Executive shall devote his full time, attention and energy
to the business of the Company; provided, however, that
Executive shall be entitled to (1) serve on corporate, civic
or charitable boards or committees (other than those of
entities which are competitors of the Company and its
affiliates), (2) belong to and attend functions of
professional organizations and generally engage in
professional development activities, including attending
conferences relating to such organizations and activities,
and (3) deliver lectures or fulfill speaking engagements;
provided further that such activities do not materially
impact on Executive's abilities to fully perform his
obligations to the Company."
(b) AMENDMENT TO PARAGRAPHS 6(a) AND 6(c). Paragraphs 6(a) and
6(c) of the Agreement are hereby amended to include the following:
"... and except after the term of his employment, to the extent
such information is already known by Executive at the time it is
disclosed to Executive, is or becomes generally known to the
public through no wrongful act of Executive, is received by
Executive from a third party without restriction on disclosure
and without a breach of any obligation of confidentiality running
to the Company, or is independently developed by Executive
without the use of or reference to any Proprietary Information
received from the Company."
(c) AMENDMENT TO PARAGRAPH 6(f). Paragraph 6(f) of the Agreement is
hereby amended so as to read in its entirety as follows:
"(f) Executive acknowledges that any breach by Executive of this
Section 6 will result in irreparable harm to the Company
with respect to which no adequate remedy at law exists.
Accordingly, in addition to any other remedies available to
the Company with respect to any actual or threatened breach
of this Agreement, the Company shall be entitled to seek
temporary or permanent injunctive relief and Executive
consents to any temporary and permanent injunctive relief
which may be granted by a court of competent jurisdiction."
(d) AMENDMENT TO PARAGRAPH 6(g). Paragraph 6(g) of the Agreement is
hereby amended so as to read in its entirety as follows:
"(g) The Company's obligations under Section 7(h)(i) of this
Agreement (if any) shall cease in the event of Executive's
material breach of his obligations under this Section 6,
which material breach continues after ten (10) business
days' written notice and opportunity to cure (provided that
if the material breach will result in imminent and material
harm to the Company, then the Executive shall be required to
cure such material breach within the time period reasonably
requested by the Board to avoid such material harm)."
(e) AMENDMENT TO PARAGRAPH 7(a). Paragraph 7(a) of the Agreement is
hereby amended so as to read in its entirety as follows:
"(a) The Company shall have the right to terminate the employment
of Executive under this Agreement at any time, and without
notice, for "Cause" as hereinafter defined. "Cause" for the
purpose of this Agreement shall mean any one or more of the
following:
(i) the material breach or violation by Executive of
this Agreement or the failure of Executive to
perform in any material respect any of his
obligations under this Agreement for any reason
other than death or disability which failure or
breach continues after ten business (10) days
written notice and opportunity to cure (provided
that if the material breach or violation will result
in imminent and material harm to the Company, then
the Executive shall be required to cure such
material breach or violation within the time period
reasonably requested by the Board to avoid such
material harm),
(ii) gross neglect of duties by Executive,
(iii) misappropriation of Company assets or willful breach
of fiduciary duty as an officer of the Company,
(iv) conviction of Executive of a felony, or
(v) the willful failure or refusal of Executive to
follow in all material respects a lawful and ethical
direction from the Board, which directive is
consistent with the scope and nature of the
Executive's duties and responsibilities hereunder of
the Chief Executive Officer and President of a
company and which failure or refusal continues after
ten (10) business days' written notice and
opportunity to cure (provided that if the failure or
refusal will result in imminent and material harm to
the Company, then the Executive shall be required to
cure such failure or refusal within the time period
reasonably requested by the Board to avoid such
material harm)."
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(f) AMENDMENTS TO PARAGRAPH 7(c). Paragraph 7(c)(ii) of the Agreement
is hereby amended so as to read in its entirety as follows:
"(ii) A material reduction in Executive's duties and/or
responsibilities as the Chief Executive Officer and
President, responsible for directing the operations
of the Company, which reduction in duties and/or
responsibilities continues after ten (10) days'
written notice to Company of Executive's objection
to this material reduction in duties and/or
responsibilities. A material reduction in duties
and/or responsibilities shall be considered taking
into account all of the facts and circumstances,
including without limitation the revenues, strategic
direction and the number of employees of the
operation(s) managed by Executive prior to and
following such reduction in Executive's duties
and/or responsibilities. For the avoidance of doubt,
the change in Executive's status from the Chief
Executive Officer of a public company to the Chief
Executive Officer of a division or a subsidiary of a
public or non-public company would be considered a
material reduction in duties for the purpose of this
Section 7(c)(ii)";
In addition, a new paragraph 7(c) (iv) shall be added as follows, with
the current paragraph 7(c)(iv) redesignated as 7(c) (v):
"(ii) The assignment of duties to Executive materially
inconsistent with either Executive's prior duties as
Chief Executive Officer of the Company or reasonable
duties assigned to a Chief Executive Officer of a
similar company."
(g) AMENDMENT TO PARAGRAPH 7(h)(i). Paragraph 7(h)(i) of the
Agreement is hereby amended so as to read in its entirety as follows:
"(h) In the event of a termination by Company without Cause on or
prior to other termination of this Agreement, or the
termination by Executive for Good Reason on or prior to
other termination of this Agreement (the parties each
acknowledge that, in the event of an event constituting Good
Reason arising as a result of or following a Change of
Control of the Company, Executive will have a period of six
(6) months following such event to terminate this Agreement
and receive the compensation and benefits described below),
the Executive shall be entitled to the following:
(i) as severance compensation, his then applicable
salary compensation for a period of twelve (12)
months, less all applicable withholdings required by
state or federal law (and the Executive shall be
under no obligation to mitigate his damages or seek
other employment) (the "Severance Payment"), which
Severance Payment shall be payable by the Company as
a lump sum within thirty (30) days of such
termination;"
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(h) ADDITION OF PARAGRAPH 7(i). The Agreement is hereby amended to
provide for the addition of Paragraph 7(i) to read in its entirety as follows:
"(i) In addition to the Severance Payment and related benefits
provided for in Section 7(h) above, in the event of: (a) a
termination by the Company without Cause, within the period
commencing with a public announcement of the Company's
intention to effect a Change of Control of the Company and
continuing for a period of eighteen (18) months thereafter
(provided that the obligation to provide the benefits
described below will be triggered by this subparagraph (a)
only in the event that such Change of Control is completed),
or (b) a termination by the Executive within the first six
(6) months following a Change of Control of the Company
based on a significant reduction of Executive's compensation
or benefits, a relocation of Executive's office by a
distance of greater than 50 miles, or the death or
disability of Executive, or (c) termination by Executive for
any reason after completing a minimum of six (6) months of
Employment with the Company following a Change of Control of
the Company, the Executive shall be entitled to the
following:
(i) as severance compensation, his then applicable
salary compensation (payable monthly) for a period
of six (6) months from the date of such
termination, less all applicable withholdings
required by state or federal law (and the
Executive shall be under no obligation to mitigate
his damages or seek other employment) (the "Change
of Control Severance Payment"),;
(i) ADDITION OF PARAGRAPH 7(j). The Agreement is hereby amended to
provide for the addition of Paragraph 7(j) to read in its entirety as follows:
"(j) In addition to the Change of Control Severance Payment and
related benefits provided for in Section 7(i) above, in the
event of: (a) a termination by the Company without Cause,
within the period commencing with a public announcement of
the Company's intention to effect a Change of Control of the
Company and continuing for a period of eighteen (18) months
thereafter, or (b) a termination by the Executive for Good
Reason at any time within eighteen (18) months following a
public announcement of a Change of Control of the Company
(provided that the obligation to provide the benefits
described below will be triggered by subparagraphs (a) or
(b) only in the event that such Change of Control is
completed), the Executive shall be entitled to the
following:
(i) the pro rata portion of his bonus for the
then-current fiscal year, calculated by multiplying
the maximum bonus for which Executive is eligible
for such full fiscal year (such maximum bonus is
currently set at fifty percent (50%) of Executive's
base salary for the fiscal year ending March 31,
2003; in the event that at any point in a subsequent
fiscal year, the Board has not yet specified a bonus
plan for Executive, then the maximum bonus to which
Executive was entitled in the previous fiscal year
will apply for the purposes of this paragraph) and
multiplying it by the number of days in such fiscal
year through the date of termination divided by 365;
and
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(ii) the option to continue to receive benefits equal to
or greater than those benefits provided under the
Company's health and disability benefit plans in
which Executive and/or his family are participating
as of the date of termination as described in
Section 5 at a cost no greater than the then current
cost of such benefits to Executive as of the date of
termination for a period of twelve (12) months
following the termination.
(j) Addition of Paragraph 7(k). The Agreement is hereby amended to
provide for the addition of Paragraph 7(k) to read in its entirety as follows
(k) "In addition to the Change of Control Severance Payment and
additional benefits provided for in Sections 7(i) and 7(j)
above, in the event of a termination by the Company without
Cause, within the period commencing with a public
announcement of the Company's intention to effect a Change
of Control of the Company and continuing for a period of
eighteen (18) months thereafter (provided that the
obligation to provide the payments described below will be
triggered by the above provision only in the event that such
Change of Control is completed), the Executive shall be
entitled to the following:
(i) a cash payment equal to the aggregate value (as
calculated below) of that portion of Executive's
Eligible Stock Options (as defined below) that would
have become vested and exercisable by virtue of such
Change of Control of the Company and not otherwise
vested and exercisable on the date of Executive's
termination (such portion of the Eligible Stock
Options being the "CIC Options"). The value per CIC
Option shall be the difference between the fair
market value as of the date of such Change of
Control of the cash, securities or other
consideration payable in exchange for each share of
the Company's common stock in connection with such
Change of Control and the exercise price for such
CIC Option. By way of example, if: (i) Executive
would have been entitled to accelerated vesting and
exercise of 200,000 Eligible Stock Options by virtue
of the completion of a Change of Control and which
are not otherwise vested and exercisable on his date
of termination; (ii) the completed Change of Control
results in each share of the Company's common stock
being converted into the right to receive shares of
stock in the acquiring or resulting company valued
at $7.50 per share plus $2.00 in cash; and (iii) the
weighted average exercise price of the 200,000 CIC
Options is equal to $4.50 per share; then Executive
will be entitled to 200,000 times ($9.50 - $4.50) or
One Million Dollars ($1,000,000) pursuant to this
provision. The "Eligible Stock Options" refer to
options granted to the Executive to acquire: (i)
225,000 shares of the Company's common stock at an
exercise price of $3.40 per share granted on May 22,
2001; (ii) 150,000 shares of the Company's common
stock at an exercise price of $5.00 per share
granted on May 22, 2001; and (iii) 150,000 shares of
the Company's common stock at an exercise price of
$5.30 per share granted on May 13, 2002.
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(k) Addition of Paragraph 7(l). The Agreement is hereby amended to
provide for the addition of Paragraph 7(l) to read in its entirety as follows:
"(l) In the event that any payment or distribution by 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,) (a "Payment") is
determined to be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code, or any interest
or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Company shall pay
to the Executive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by Executive
of all such excise taxes on any such payment (including any
interest or penalties imposed with respect thereto)
including any Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to
the Excise Tax imposed upon all such payments."
(l) AMENDMENT TO PARAGRAPH 8(c). Paragraph 8(c) of the Agreement is
hereby amended so as to read in its entirety as follows:
"(c) During the Non-Compete Period, the Executive shall not
solicit or encourage any of the following to discontinue
his, her or its relationship with the Company or any
subsidiary of the Company; (i) employees, (ii) suppliers,
distributors or customers, (iii) former employees whose
employment has been terminated for less than six (6) months,
or (iv) potential suppliers, distributors or customers
Executive had contact with or performed services for during
his employment with the Company;"
(m) Amendment TO PARAGRAPH 8(g). Paragraph 8(g) of the Agreement is
hereby amended so as to read in its entirety as follows:
"(g) The Executive acknowledges that any breach by his of this
Agreement will result in irreparable harm to the Company
with respect to which no adequate remedy at law shall exist.
Accordingly, in addition to any other remedies available to
the Company with respect to any actual or threatened breach
of this Agreement, the Company shall be entitled to seek
temporary or permanent injunctive relief and the Executive
consents to the entry of any temporary and permanent
injunctive relief, (together with temporary restraining
orders ancillary to the same) which may be granted by a
court of competent jurisdiction;"
(n) AMENDMENT TO PARAGRAPH 8(h). Paragraph 8(h) of the Agreement is
hereby amended so as to read in its entirety as follows:
"(h) The Company's obligations under Section 7(h)(i) of this
Agreement (if any) shall cease in the event of Executive's
material breach of his obligations under this Section 8,
which material breach continues after ten (10) business
days' written notice and opportunity to cure (provided that
if the material breach will result in imminent and material
harm to the Company, then the Executive shall be required to
cure such material breach within the time period reasonably
requested by the Board to avoid such material harm); and"
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2. NO OTHER CHANGES/PROMISES. Except as specifically set forth in this
Amendment, the terms and provisions of the Agreement shall remain unmodified and
the Agreement is hereby confirmed by the parties as being in full force and
effect as amended herein. This Amendment and the Agreement constitute the entire
understanding of the parties with respect to the subject matter thereof, and no
other covenants have been made by either party to the other.
3. INCORPORATION OF PROVISIONS. The terms and provisions of Paragraphs
12-18 of the Agreement are incorporated herein by reference.
4. COUNTERPARTS. This Amendment may be executed in counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
to be effective as of the day and year first above written.
"COMPANY"
HOOVERS, INC., a Delaware corporation
By:
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Name:
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Title:
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"EXECUTIVE"
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Xxxxxxx X. Xxxx
Social Security # :
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