Exhibit 10.1
AMENDMENT
TO
EXECUTIVE EMPLOYMENT AGREEMENT
dated as of April 11, 1997
between
Strategic Distribution, Inc.
and
Xxxx X. Xxxxxx
Dated as of March 11, 1999
AMENDMENT
TO
EXECUTIVE EMPLOYMENT AGREEMENT
This Amendment to that certain Executive Employment Agreement, dated as
of April 11, 1997, is made as of the 11th day of March 1999, by and between
STRATEGIC DISTRIBUTION, INC., a Delaware corporation (the "COMPANY"), and XXXX
X. XXXXXX (the "EXECUTIVE").
W I T N E S S E T H:
WHEREAS, the parties have entered into that certain Executive
Employment Agreement, dated as of April 11, 1997 (the "AGREEMENT"); and
WHEREAS, the parties desire to amend certain of the terms of the
Agreement;
NOW THEREFORE, in consideration of the foregoing premises, it is hereby
agreed by and between the parties as follows:
1.1. Section 2 of the Agreement is hereby amended by deleting
the word "third" on the fifth line thereof and replacing it with the word
"sixth" in its stead.
1.2. Section 3(a) of the Agreement is hereby amended by
deleting the first sentence thereof in its entirety and replacing it with the
following sentence in its place and stead.
"As compensation for the performance of the Executive's services
hereunder, the Company shall pay to the Executive a base salary (the
"SALARY") of (i) Three Hundred Sixty Thousand Dollars ($360,000) per
annum for the period from April 11, 1997 to and including December 31,
1998 and (ii) Four Hundred Thousand Dollars ($400,000) per annum
thereafter, with increases, if any, as may be approved in writing by
the Board of Directors."
1.3. Section 3 of the Agreement is hereby further amended by
adding the following new Sections 3(e) and 3(f) after Section 3(d) thereto:
"(e) ADDITIONAL BENEFITS APPROVED DECEMBER 16, 1998. The Executive
shall be entitled to the additional benefits described under the
heading "Additional Xxxxxx Compensation Matters " set forth in the
excerpt from the Unanimous Written Consent of the board of directors of
the Company dated December 16, 1998, a copy of which excerpt is
attached hereto as Exhibit A.
(f) ADDITIONAL BENEFITS APPROVED MARCH 11, 1999. The Executive shall be
entitled to the additional benefits described under the heading "Grant
of Xxxxxx Stock Options" set forth in Resolutions adopted by the
Section 162(m) Committee of the board of directors of the Company on
March 11, 1999, a copy of which Resolutions is attached hereto as
Exhibit B."
1.4. Section 6(b) of the Agreement is hereby amended by
deleting the words "ninety (90) days" in the eighth and ninth lines thereof and
replacing them with the words "one hundred eighty (180) days" in their stead.
1.5. Section 6(d) of the Agreement is hereby amended by
deleting the fourth sentence thereof in its entirety and replacing it with the
following sentence in its place and stead:
"The term "SUBSTANTIAL BREACH" means any material breach by the Company
of its obligations hereunder consisting of: (i) the failure of the
Company to pay the Executive the Salary or Bonus, if any, in accordance
with Section 3(a) and (b) hereof; (ii) the failure by the Company to
substantially maintain and continue the Executive's participation in
benefit plans as provided in Section 3(c) hereof; (iii) the failure by
the Company to comply with Section 3(e) hereto within a reasonable time
after the date of the Unanimous Written Consent referred to in Section
3(e); (iv) any material diminishment in the duties or responsibilities
of the Executive described in Section 1 including without limitation a
change in the functions which report, directly or indirectly, to the
Executive; (v) any relocation of the Company's headquarters to a
location more than fifty (50) miles from the current headquarters of
the Company without the written consent of the Executive; (vi) a
merger, reorganization or other business combination involving the
Company if the Company is not the surviving corporation; (vii) a sale
of all or substantially all of the Company's assets; or (viii) the
acquisition by a person (as such term is used in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "ACT"))
other than a shareholder identified in the Company's most recent proxy
statement, of beneficial ownership (as such term is used in Rule 13d-3
promulgated under the Act) of twenty percent (20%) or more of the
issued and outstanding common stock of the Company (a "CONTROL
ACQUISITION") if, during the twelve month period following the Control
Acquisition (the "MEASUREMENT YEAR") one of the following shall occur:
(A) there is a change in the composition of the Board of Directors of
the Company which results, on any date during the Measurement Year, in
a majority of the members of the Board being comprised of individuals
who were not members of the Board prior to the date of the Control
Acquisition, or (B) there is a change in the composition of the
Executive
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Committee of the Board of Directors of the Company which results, on
any date during the Measurement Year, in a majority of the members of
the Executive Committee being comprised of individuals who were not
members of the Executive Committee prior to the date of the Control
Acquisition; PROVIDED, HOWEVER, that the term "SUBSTANTIAL BREACH"
shall not include a termination of the Executive's employment hereunder
pursuant to Section 6(b) or (c) hereof."
1.6. The Agreement is further amended by adding a new Exhibit
A and a new Exhibit B to the Agreement, which Exhibits A and B are attached to
this Amendment.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
STRATEGIC DISTRIBUTION, INC.
By:/s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman
EXECUTIVE
/s/ Xxxx X. Xxxxxx
---------------------------------
Xxxx X. Xxxxxx
000 Xxxxxxxxxx Xxxx Xxxx
Xxx Xxxx, Xxxxxxxxxxxx 00000
fax: (000) 000-0000
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EXHIBIT A
ACTION BY
UNANIMOUS WRITTEN CONSENT OF
THE BOARD OF DIRECTORS OF
STRATEGIC DISTRIBUTION, INC.
The undersigned, being all of the directors of Strategic Distribution, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), do hereby consent, pursuant to Section 141(f) of the General
Corporation Law of the State of Delaware, to the adoption of the following
resolutions by the Board of Directors of the Corporation without a meeting and
to the actions authorized thereby:
AMENDMENTS TO XXXXXX EMPLOYMENT AGREEMENT
WHEREAS, the Company wishes to amend certain of the terms of employment contract
of Xxxx X. Xxxxxx, President and Chief Executive Officer of the Company.
NOW, THEREFORE, BE IT RESOLVED, that Section 2 of the Executive
Employment Agreement, dated as of April 11, 1997, by and between Xxxx
X. Xxxxxx and the Company (the "Xxxxxx Employment Agreement") be
amended to extend the termination date of the Agreement from May 1,
2000 to May 1, 2003; and be it further
RESOLVED, that Mr. Sergey's minimum Salary under Section 3(a) of the
Xxxxxx Employment Agreement shall be increased from $360,000 per annum
to $400,000 per annum, effective January 1, 1999; and be it further
RESOLVED, that Section 6(b) of the Xxxxxx Employment Agreement be
amended to provide that the Company shall not have the right to
terminate Mr. Sergey's employment as a result of Mr. Sergey's
disability until such time as Mr. Xxxxxx shall have been unable, as a
result of injuries or illnesses that are substantially related to each
other, to perform the duties required of him under the Xxxxxx
Employment Agreement for an aggregate of one hundred eighty (180) days
(whether or not consecutive) during any twelve (12) month period during
the term of the Xxxxxx Employment Agreement; and be it further
RESOLVED, that Clause (vii) of Section 6(d) of the Xxxxxx Employment
Agreement be amended in its entirety to read as follows:
(vii) the acquisition by a person (as such term is used in
Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Act")) other than a shareholder
identified in the Company's most recent proxy statement, of
beneficial ownership (as such term is used in Rule 13d-3
promulgated under the Act) of twenty percent (20%) or more of
the issued and outstanding common stock of the Company (a
"Control Acquisition") if, during the twelve month period
following the Control Acquisition (the "Measurement Year") one
of the following shall occur (A) there is a change in the
composition of the Board of Directors of the Company which
results, on any date during the Measurement Year, in a
majority of the members of the Board being comprised of
individuals who were not members of the Board prior to the
date of the Control Acquisition, or (B) a change in the
composition of the Executive Committee of the Board of
Directors of the Company which results, on any date during the
Measurement Year, in a majority of the members of the
Executive Committee being comprised of individuals who were
not members of the Executive Committee prior to the date of
the Control Acquisition;
and be it further
RESOLVED, that the Chairman of the Company, the Chief Financial Officer
of the Company, and any Vice President of the Company, each acting
singly, hereby is authorized and empowered to execute and deliver in
the name of the Company such agreements, certificates, instruments and
other documents and to take all such other actions as may be necessary,
desirable or appropriate in connection with the matters approved
herein.
ADDITIONAL XXXXXX COMPENSATION MATTERS
WHEREAS, the Company wishes to address certain other compensation matters
related to the Company's employment of Xxxx X. Xxxxxx.
NOW, THEREFORE, BE IT RESOLVED, that the bonus target for Mr. Xxxxxx in
future years shall remain 100% of Mr. Sergey's base salary, the actual
amount of Mr. Sergey's bonus for services rendered in 1999 to be
determined by the Committee in early 2000, based upon Mr. Sergey's
achievement of performance criteria,; and be it further
RESOLVED, that the Company eliminate the existing $2 million term life
insurance policy maintained for Mr. Xxxxxx, and replace such policy
with a Company-funded $2.6 million "split-dollar" life insurance policy
(the "New Life Policy"), which New Life Policy will have the following
terms (i) annual cost to the Company of approximately $210,000, the
first $100,000 of which will be paid from bonus compensation that would
otherwise be paid to Mr. Xxxxxx (i.e., for so long as the Company is
paying premiums under the New Life Policy, each annual bonus otherwise
payable to Mr. Xxxxxx will be reduced by $100,000), (ii) at the end of
five years, the Company will receive a payment of $400,000 under the
policy, and the remainder of the policy, including future funding
obligations, will be assigned to Mr. Xxxxxx, and (iii) the Company will
retain the right to a $400,000 death benefit under the New Life Policy
up until the time that the Company receives the $400,000 payment
described in clause (ii); and be it further
RESOLVED, that the benefit payable to Mr. Xxxxxx under his long term
disability insurance be increased from $20,000 per month to $24,000 per
month effective January 1, 1999; and be it further
RESOLVED, that the Chairman of the Company, the Chief Financial Officer
of the Company, and any Vice President of the Company, each acting
singly, hereby is authorized and empowered to execute and deliver in
the name of the Company such agreements, certificates, instruments and
other documents and to take all such other actions as may be necessary,
desirable or appropriate in connection with the matters approved
herein.
EXHIBIT B
GRANT OF XXXXXX STOCK OPTIONS:
RESOLVED, that the Company shall grant non-qualified stock options for 400,000
shares of the Company's common stock to Xxxx X. Xxxxxx (the "Xxxxxx
Non-Qualified Options"). The Xxxxxx Non-Qualified Options shall be granted as of
March 11, 1999 and shall be granted under the Company's 1999 Incentive Stock
Option Plan (the "1999 Plan"), subject to the approval of the 1999 Plan by the
shareholders of the Company. The exercise price of the Xxxxxx Non-Qualified
Options shall be the greater of (A) $2.81 per share, and (B) the price per share
which was equal to the mean between the last quoted bid and asked prices of the
Company's Common Stock on March 10, 1999, as reported on the Nasdaq National
Market System. Vesting of the Xxxxxx Non-Qualified Options shall be governed by
the following provisions:
(a) Subject to the provisions of paragraphs (b), (c) and (d) below,
the Xxxxxx Non-Qualified Options will vest and become
exercisable in full on December 16, 2005.
(b) Notwithstanding the provisions of paragraph (a) above, and
subject to the provisions of paragraphs (c) and (d) below:
(i) The first 200,000 of the Xxxxxx Non-Qualified Options
may be exercised prior to December 16, 2005 if, and
after such date as, the Company's common stock has
traded at or above $6.00 per share for thirty
consecutive trading days; and
(ii) The remaining 200,000 of the Xxxxxx Non-Qualified
Options may be exercised prior to December 16, 2005 if,
and after such date as, the Company's common stock has
traded at or above $9.00 per share for thirty
consecutive trading days.
(c) Notwithstanding the provisions of paragraph (b) above, and
subject to the provisions of paragraph (d) below, (i) none of
the Xxxxxx Non-Qualified Options may be exercised prior to
December 16, 1999, (ii) no more than 100,000 of the Xxxxxx
Non-Qualified Options may be exercised prior to December 16,
2000, (iii) no more than a total of 200,000 of the Xxxxxx
Non-Qualified Options may be exercised prior to December 16,
2001, and (iv) no more than a total of 300,000 of the Xxxxxx
Non-Qualified Options may be exercised prior to December 16,
2002.
GRANT OF XXXXXX STOCK OPTIONS: (cont'd)
(d) Notwithstanding the provisions of paragraphs (a), (b) and (c)
above, all of the Xxxxxx Non-Qualified Options will become
immediately exercisable upon a Change in Control of the
Company.
(e) For the purposes of paragraph (d) above, a "Change in Control
of the Company" means (i) a merger, reorganization or other
business combination involving the Company if the Company is
not the surviving corporation, (ii) a sale of all or
substantially all of the Company's assets; or (iii) the
acquisition by a person other than a shareholder identified in
the Company's most recent proxy statement of beneficial
ownership of twenty percent (20%) or more of the issued and
outstanding common stock of the Company (a "Control
Acquisition") if, at any time during the twelve month period
following the Control Acquisition (the "Measurement Year") one
of the following shall occur (A) there is a change in the
composition of the Board of Directors of the Company which
results, on any date during the Measurement Year, in a
majority of the members of the Board being comprised of
individuals who were not members of the Board prior to the
date of the Control Acquisition, or (B) a change in the
composition of the Executive Committee of the Board of
Directors of the Company which results, on any date during the
Measurement Year, in a majority of the members of the
Executive Committee being comprised of individuals who were
not members of the Executive Committee prior to the date of
the Control Acquisition.
