July 1, 1999
Xx. Xxxxxxxx Xxxxx
Xxxxxx Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xxxxxxxx:
Reference is hereby made to the Employment Agreement ("Employment
Agreement"), dated February 1, 1999 between yourself as the employee and
Xxxxxx Corporation (the "Corporation").
We have mutually agreed to amend the Employment Agreement effective as
of the date of this letter as follows:
1. The first sentence of Section 1 is hereby deleted in its entirety
and substituted with the following therefore:
"The Corporation agrees to employ the Employee and the Employee
agrees to serve the Corporation as the senior executive officer of the
Corporation, having the titles, Chief Financial Officer and Chief
Operating Officer of the Corporation."
2. The first sentence of Section 2 is hereby deleted in its entirety
and substituted with the following therefore:
"The term of the Employee's employment under this Agreement shall
commence on the Commencement Date and end on December 31, 2001."
3. Section 3 (a) is hereby deleted in its entirety and substituted
with the following therefore:
"As annual salary for the services to be rendered by the Employee
the Corporation shall pay a salary as of July 1, 1999 at the rate of
$325,000 per annum until December 31, 1999, $350,000 for the next
twelve month period of the Employment Period and $375,000 for the
final twelve month period of the Employment Period, payable in equal
bi-weekly installments during the Employment Period (the "Salary")."
4. Section 6 (f) (ii) is hereby deleted in its entirety and
substituted with the following therefore:
"Salary, at the annualized rate in effect on the Termination Date
for a period of twelve (12) months following the Termination Date (the
"Non-renewal Severance Period")."
5. Paragraph (a) of Exhibit 1 to the Employment Agreement ,
"INCENTIVE COMPENSATION SCHEDULE", is hereby deleted in its entirety and
substituted with the following therefore:
"If the Corporation's "Pre-tax Income", as shown on its audited
financial statements for any fiscal year during the Employment Period
("Actual Annual Pre-tax Income"), is equal to or greater than 100% of
the amount of Pre-tax Income provided for in the Corporation's annual
business plan for that fiscal year ("Planned Annual Pre-tax Income"),
the Employee shall receive a cash bonus equal to 60% of his annual
Salary at the end of the applicable fiscal year ("Annual Salary")."
6. Paragraph (b) of Exhibit 1 to the Employment Agreement , "INCENTIVE
COMPENSATION SCHEDULE", is hereby deleted in its entirety and substituted
with the following therefore:
"If Actual Annual Pre-tax Income is less than 100% of Planned
Annual Pre-tax Income, the Employee's cash bonus shall be reduced by
1.2% for each full 1% decrease (after rounding to the nearest 1/100th
of a percent) by which Actual Annual Pre-tax Income is less than 100%
of Planned Annual Pre-tax Income. For example, if Actual Annual
Pre-tax Income was 95% of Planned Annual Pre-tax Income, the Employee
would receive a cash bonus equal to 54% of his Annual Salary. In no
event shall the Employee receive a cash bonus if the Actual Annual
Pre-tax Income is less than 90% of the Planned Annual Pre-tax Income."
7. Section 6(e) is hereby amended by the addition of the following at
the end of the first paragraph of Section 6(e):
", or (v) the occurrence of an event constituting a "change
of control" (as defined below). The definition of "change of control"
shall include (i) a merger of Xxxxxx resulting in a third-party
acquiring at least 50% of the outstanding Common Stock; (ii) any
acquisition by a third-party of at least 50% of the outstanding Common
Stock; and (iii) a sale of all or substantially all of the stock or
assets of Xxxxxx."
8. The following new Section 19 is hereby inserted in the Employment
Agreement:
"SECTION 19. STOCK OPTIONS. The Corporation shall grant to the
Employee non-qualified Stock Options (the "Stock Options")
representing the right to purchase 100,000 shares of the Corporation's
common stock, par value $1.00 per share (the "Common Stock"), pursuant
to the Corporation's 1999 Stock Option Plan. The exercise price for
the Stock Options will be the market price of the Common Stock on the
grant date. The Stock Options shall be subject to the terms and
conditions set forth in the Corporation's 1999 Stock Option Plan and
an agreement or agreements to be entered into, pursuant to such plan
(the "Stock Option Agreements"), between the Corporation and the
Employee, provided however, there shall be no restrictions on any
Common Stock acquired by Employee by exercise of any options granted
by the Corporation, except for those restrictions pursuant to
applicable law.
Notwithstanding anything contained herein or in the Stock Option
Agreements to the contrary, all Stock Options outstanding shall
immediately vest upon a "Change of Control" (as hereinafter defined).
During the Employment Period, Employee shall also receive such
additional options as the Board deems appropriate in its sole
discretion."
Except as specifically set forth herein, the Employment Agreement
remains in full force and effect and is hereby ratified, confirmed and
approved. The Employment Agreement as modified by this letter is the only
agreement that governs the term of your employment. All other Letter
Agreements and memorandums are hereby null and void.
If the foregoing correctly sets forth our mutual agreement, please
sign and return to me the three attached copies of this letter.
Very truly yours,
XXXXXX CORPORATION
By
--------------------------------
Xxxxxxx X. Xxxxxx
Chairman of the Board and
Chief Executive Officer
Accepted and Agreed to
By
-----------------------------
Xxxxxxxx Xxxxx
