EXHIBIT 10.1
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FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement (the "First Amendment") is
made the 23rd day of June, 2008, between ThinkEngine Networks, Inc., a Delaware
corporation and successor to Cognitronics Corporation (together with any
predecessor or successor companies, the "Company"), and Xxxxxxx Xxxxxxxx (the
"Employee").
WHEREAS, the Company previously entered into an Employment Agreement
with the Executive dated as of August 16, 2006 (the "Agreement"); and
WHEREAS, in light of changes to the law concerning severance and
deferred compensation, including Internal Revenue Code Section 409A and related
Treasury Regulations, the Company and the Employee wish to amend the Agreement
by this First Amendment to clarify certain provisions in the event the
Employee's employment is involuntarily terminated, and to make other minor,
clarifying revisions to the Agreement;
NOW THEREFORE, the following Sections of the Agreement are hereby
amended as follows:
1. Section 5 of the Agreement shall be amended by the addition of the following
at the end thereof:
"Any such cash bonus shall be paid, if at all, by no later
than the end of the applicable 2-1/2 month period. The
applicable 2-1/2 month period is the period ending on the 15th
day of the third month following the end of the Employee's or
the Company's first taxable year in which the right to such
cash bonus is no longer subject to a substantial risk of
forfeiture, whichever is later."
2. Section 10(b) of the Agreement shall be amended to read in its entirety as
follows:
"(b) Termination by the Employee for Good Reason. The Employee
may terminate his employment and the Term of Employment for "Good
Reason," which shall mean a resignation and Separation from Service
within less than two years following the initial existence of one or
more of the following conditions arising without the Employee's
consent:
(1) any material reduction of the Employee's duties
and significant responsibilities hereunder (not including
reasonable changes in title or in corporate structure);
(2) a material reduction in the Employee's salary or
benefits, other than an across-the-board reduction affecting
all members of senior management; or
(3) a material breach of this Agreement by the
Company;
provided, in any case, that a prior written notice specifying the
reasons within ninety (90) days after the initial existence of the
condition and an opportunity to cure such condition (if curable) shall
be afforded the Company, and that "Good Reason" shall exist only if the
Company shall fail to cure such condition within thirty-one (31) days
after its receipt of such prior written notice. In addition, until the
Employee's actual Separation from Service the Employee must remain
willing
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and able to continue to perform services in accordance with the terms
of this Agreement and not be in breach of the Employee's obligations
hereunder."
3. Section 10(e) of the Agreement shall be amended to read in its entirety as
follows:
"(e) Effect of Termination Without Serious Cause or With Good
Reason. If (i) the Company terminates the Term of Employment and the
Employee's employment herein without Serious Cause, or (ii) the
Employee terminates the Term of Employment and his employment hereunder
for Good Reason, and, in either case, under circumstances that
constitute an Involuntary Separation from Service with the Company, the
Company shall pay the Employee a separation pay benefit equal to six
months of the Employee's then-current base salary and will make
available a subsidized healthcare coverage benefit, as described below.
(1) Payment of the separation pay benefit shall
commence as of the Employee's Separation from Service date,
and shall continue thereafter in equal fixed installments over
a six month period in accordance with the Company's standard
payroll procedures then in effect.
(2) In the event the value of the separation pay
benefit shall exceed two times the lesser of the Employee's
annualized compensation or the maximum amount that may be
taken into account for qualified plan purposes (in each case,
as determined in accordance with Treasury Regulation
ss.1.409A-1(b)(9)(iii)(A)), the excess shall not be paid as
provided in (1), above, but instead shall be withheld and paid
on the first day of the first month after the date that is six
months after the Employee's Separation from Service date,
without adjustment for the delay in payment.
(3) In no event shall separation pay benefits be
accelerated, nor shall the Employee be eligible to defer
separation pay benefits to a later date.
(4) If COBRA continuation coverage under any Company
health benefit plan is elected, the Company shall contribute
to the cost of such benefits, on the same basis the Company
would have contributed to the cost of the coverage had the
Employee continued to be an active employee of the Company,
for the period of the COBRA coverage or one year, whichever is
shorter.
In addition, the Employee will be entitled to prompt payment of (i) any
accrued but unpaid salary and vacation, (ii) any earned but unpaid
bonus from a prior fiscal year, and (iii) reimbursement of business
expenses incurred prior to the date of termination. Any bonus shall be
paid in accordance with Section 5, hereof. In no event shall any other
payments described in this paragraph be paid later than the end of the
first calendar year following the year in which the Employee's
Separation from Service occurs."
4. New Section 10(g) is hereby added to the Agreement to read as follows:
"(g) Definitions. For purposes of this Section 10 and Section
11, below, the following definitions shall apply:
"Separation from Service" means, generally, a termination of
employment with the Company. For purposes of this agreement, Separation
from Service shall have the same meaning as such term has for purposes
of Internal Revenue Code ss.409A (including Treasury Regulation
ss.1.409A-1(h)).
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"Involuntary Separation from Service" means a Separation from
Service due to the independent exercise of the unilateral authority of
the Company to terminate the Employee's employment, other than due to
the Employee's implicit or explicit request, where the Employee is
willing and able to continue employment with the Company.
Notwithstanding the foregoing, a termination for Good Reason may
constitute an Involuntary Separation from Service. For purposes of this
agreement, Involuntary Separation from Service shall have the same
meaning as such term has for purposes of Internal Revenue Code ss.409A
(including Treasury Regulation ss.1.409A-1(n))."
5. The first paragraph of Section 11(a) of the Agreement shall be amended to
read in its entirety as follows:
"(a) Effect of Termination. If (i) the Company (or a successor
thereto) terminates the Term of Employment and the Employee's
employment herein without Serious Cause, or (ii) the Employee
terminates the Term of Employment and his employment hereunder for Good
Reason, and, in either case, the termination of employment occurs (I)
in connection with a Change in Control, (II) no later than the date
which is two years after the date on which such Change of Control
occurs, and (III) under circumstances that constitute an Involuntary
Separation from Service with the Company, the Company shall pay the
Employee a separation pay benefit equal to one year of the Employee's
then-current base salary and will make available a subsidized
healthcare coverage benefit, as described below.
(1) Payment of the separation pay benefit shall
commence as of the Employee's Separation from Service date,
and shall continue thereafter in equal fixed installments over
a one year period in accordance with the Company's standard
payroll procedures then in effect.
(2) In the event the value of the separation pay
benefit shall exceed two times the lesser of the Employee's
annualized compensation or the maximum amount that may be
taken into account for qualified plan purposes (in each case,
as determined in accordance with Treasury Regulation
ss.1.409A-1(b)(9)(iii)(A)), the excess shall not be paid as
provided in (1), above, but instead shall be withheld and paid
on the first day of the first month after the date that is six
months after the Employee's Separation from Service date,
without adjustment for the delay in payment.
(3) In no event shall separation pay benefits be
accelerated, nor shall the Employee be eligible to defer
separation pay benefits to a later date.
(4) If COBRA continuation coverage under any Company
health benefit plan is elected, the Company shall contribute
to the cost of such benefits on the same basis the Company
would have contributed to the cost of the coverage had the
Employee continued to be an active employee of the Company for
the period of the COBRA coverage or one year, whichever is
shorter.
In addition, the Employee will be entitled to prompt payment of (i) any
accrued but unpaid salary and vacation, (ii) any earned but unpaid
bonus from a prior fiscal year (subject, if applicable, to the terms of
any deferred compensation arrangements), and (iii) reimbursement of
business expenses incurred prior to the date of termination. Any bonus
shall be paid in accordance with Section 5, hereof. In no event shall
any other payments described in this paragraph be paid later
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than the end of the first calendar year following the year in which
the Employee's Separation from Service occurs."
6. Except as expressly amended herein, all provisions of the Employment
Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment as of the day and year first above written.
THINKENGINE NETWORKS, INC.
By: /s/ Xxxx X. Xxxxxxxxxxx
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Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President and Chief
Financial Officer
/s/ Xxxxxxx X. Xxxxxxxx
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XXXXXXX X. XXXXXXXX
