EXHIBIT 10.3
AMENDMENT TO EMPLOYMENT AGREEMENT
AMENDMENT made and entered into as of this 11th
day of April, 1997 by and between DYNAMICS CORPORATION OF
AMERICA, a New York corporation ("DCA") and Xxxxx X.
Xxxxxxx (the "Executive").
WHEREAS, DCA and the Executive have previously
entered into an Employment Agreement as of February 1,
1996 (the "Agreement"); and
WHEREAS, DCA, and the Executive desire to amend
the Agreement in accordance with Article Tenth thereof.
NOW, THEREFORE, DCA and the Executive hereby
agree as follows:
1. Part A. of Article Fourth of the Agreement
is hereby amended in its entirety to read as follows:
FOURTH: A. In the event of the occurrence of a
Change in Control at any time during the
Employment Period, the Executive shall have the
right to terminate this Employment Agreement
upon thirty days written notice given at any
time within 3 months after the occurrence of
the Change in Control. If the Executive shall
have terminated this Employment Agreement
pursuant to the foregoing provisions of this
part A, or if DCA, any successor ("Successor")
of DCA (whether by merger, consolidation or
otherwise), or any parent ("Parent") of DCA or
of any such successor shall have terminated
this Employment Agreement during such three
month period, DCA or the Successor or Parent,
as the case may be, shall pay to the Executive
as compensation, in a lump sum on the date of
such termination, in lieu of any further
compensation provided for in Article SECOND
hereof, an amount equal to five times the sum
of (a) two-thirds of the aggregate regular
compensation provided for in part A of said
Article SECOND, at the rate in effect at the
time of such termination or, if greater, at the
rate in effect on the date of the Change in
Control and (b) two-thirds of the largest
amount earned by the Executive as stock and
cash bonuses for any of the five fiscal years
preceding that in which termination occurs.
In addition, DCA or the Successor or Parent, as
the case may be, (a) shall pay in a single lump
sum to Security Mutual Life Insurance Company
of New York, to be held in a side fund in
escrow by said carrier to pay when due the
annual premiums on the Policy, an amount equal
to ten (10) times the amount of the last annual
premium payment on the Policy made prior to the
date of the Change in Control, (b) shall
forfeit all rights under the Collateral
Assignment to be repaid the aggregate amount of
all premiums paid on the Policy prior to, on or
after the date of termination, and (c) shall
release and waive all rights under the
Collateral Assignment, shall not endanger in
any way any benefit available to the Executive
under the Policy and shall not be entitled to
any further rights or interest in the Policy.
2. Article Fourth of the Agreement is hereby
further amended by adding new parts C. and D. thereto as
follows:
C. For purposes of this Agreement, the
following terms shall have the following
meanings:
A "Change in Control" shall be deemed to have
occurred if the event set forth in any one of
the following paragraphs shall have occurred:
(I) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of
DCA (not including in the securities
beneficially owned by such Person any
securities acquired directly from DCA or its
Affiliates) representing 25% or more of the
combined voting power of DCA's then outstanding
securities, excluding any Person who becomes
such a Beneficial Owner in connection with a
transaction described in clause (i) of
paragraph (III) below; or
(II) the following individuals cease for any
reason to constitute a majority of the number
of directors then serving on the Board of
Directors of DCA (the "Board"): individuals
who, on the date hereof, constitute the Board
and any new director (other than a director
whose initial assumption of office is in
connection with an actual or threatened
election contest, including but not limited to
a consent solicitation, relating to the
election of directors of DCA) whose appointment
or election by the Board or nomination for
election by DCA's stockholders was approved or
recommended by a vote of at least two-thirds
(2/3) of the directors then still in office who
either were directors on the date hereof or
whose appointment, election or nomination for
election was previously so approved or
recommended; or
(III) there is consummated a merger or
consolidation of DCA or any direct or indirect
subsidiary of DCA with any other corporation,
other than (i) a merger or consolidation which
would result in the voting securities of DCA
outstanding immediately prior to such merger or
consolidation continuing to represent (either
by remaining outstanding or by being converted
into voting securities of the surviving entity
or any parent thereof) at least 60% of the
combined voting power of the securities of DCA
or such surviving entity or any parent thereof
outstanding immediately after such merger or
consolidation, or (ii) a merger or
consolidation effected to implement a
recapitalization of DCA (or similar
transaction) in which no Person is or becomes
the Beneficial Owner, directly or indirectly,
of securities of DCA (not including in the
securities Beneficially Owned by such Person
any securities acquired directly from DCA or
its Affiliates other than in connection with
the acquisition by DCA or its Affiliates of a
business) representing 25% or more of the
combined voting power of DCA's then outstanding
securities; or
(IV) the stockholders of DCA approve a plan of
complete liquidation or dissolution of DCA or
there is consummated an agreement for the sale
or disposition by DCA of all or substantially
all of DCA's assets, other than a sale or
disposition by DCA of all or substantially all
of DCA's assets to an entity, at least 60% of
the combined voting power of the voting
securities of which are owned by stockholders
of DCA in substantially the same proportions as
their ownership of DCA immediately prior to
such sale.
"Person" shall have the meaning given in
Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not
include (i) DCA or any of its subsidiaries,
(ii) a trustee or other fiduciary holding
securities under an employee benefit plan of
DCA or any of its Affiliates, (iii) an
underwriter temporarily holding securities
pursuant to an offering of such securities, or
(iv) a corporation owned, directly or
indirectly, by the stockholders of DCA in
substantially the same proportions as their
ownership of stock of DCA.
"Beneficial Owner" shall have the meaning set
forth in Rule 13d-3 under the Exchange Act.
"Affiliate" shall have the meaning set forth in
Rule 12b-2 promulgated under Section 12 of the
Exchange Act.
"Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to
time.
D. If any of the payments or benefits
received or to be received by the Executive in
connection with a Change in Control or the
Executive's termination of employment (whether
pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with DCA,
any Person whose actions result in a Change in
Control or any Person affiliated with DCA or
such Person) (such payments or benefits,
excluding the Gross-Up Payment, being
hereinafter referred to as the "Total
Payments") will be subject to any tax (the
"Excise Tax") imposed under section 4999 of the
Internal Revenue Code of 1986, as amended (the
"Code"), DCA or the Successor or Parent, as the
case may be, shall pay to the Executive an
additional amount (the "Gross-Up Payment") such
that the net amount retained by the Executive,
after deduction of any Excise Tax on the Total
Payments and any federal, state and local
income and employment taxes and Excise Tax upon
the Gross-Up Payment, shall be equal to the
Total Payments.
For purposes of determining whether any of the
Total Payments will be subject to the Excise
Tax and the amount of such Excise Tax, (i) all
of the Total Payments shall be treated as
"parachute payments" (within the meaning of
section 280G(b)(2) of the Code) unless, in the
opinion of tax counsel ("Tax Counsel")
reasonably acceptable to the Executive and
selected by the accounting firm which was,
immediately prior to the Change in Control,
DCA's independent auditor (the "Auditor"), such
payments or benefits (in whole or in part) do
not constitute parachute payments, including by
reason of section 280G(b)(4)(A) of the Code,
(ii) all "excess parachute payments" within the
meaning of section 280G(b)(l) of the Code shall
be treated as subject to the Excise Tax unless,
in the opinion of Tax Counsel, such excess
parachute payments (in whole or in part)
represent reasonable compensation for services
actually rendered (within the meaning of
section 280G(b)(4)(B) of the Code) in excess of
the "base amount" (with the meaning of section
280G(b)(3) of the Code) allocable to such
reasonable compensation, or are otherwise not
subject to the Excise Tax, and (iii) the value
of any noncash benefits or any deferred payment
or benefit shall be determined by the Auditor
in accordance with the principles of sections
280G(d)(3) and (4) of the Code. For purposes
of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay
federal income tax at the highest marginal rate
of federal income taxation in the calendar year
in which the Gross-Up Payment is to be made and
state and local income taxes at the highest
marginal rate of taxation in the state and
locality of the Executive's residence on the
date of the Executive's termination of
employment, net of the maximum reduction in
federal income taxes which could be obtained
from deduction of such state and local taxes.
In the event that the Excise Tax is finally
determined to be less than the amount taken
into account hereunder in calculating the
Gross-Up Payment, the Executive shall repay to
DCA, or the Successor or Parent, as the case
may be, within five (5) business days following
the time that the amount of such reduction in
the Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to
such reduction (plus that portion of the
Gross-Up Payment attributable to the Excise Tax
and federal, state and local income and
employment taxes imposed on the Gross-Up
Payment being repaid by the Executive, to the
extent that such repayment results in a
reduction in the Excise Tax and a dollar-for-
dollar reduction in the Executive's taxable
income and wages for purposes of federal, state
and local income and employment taxes, plus
interest on the amount of such repayment at
120% of the rate provided in section
1274(b)(2)(B) of the Code. In the event that
the Excise Tax is determined to exceed the
amount taken into account hereunder in
calculating the Gross-Up Payment (including by
reason of any payment the existence or amount
of which cannot be determined at the time of
the Gross-Up Payment), DCA or the Successor or
Parent, as the case may be, shall make an
additional Gross-Up Payment in respect of such
excess (plus any interest, penalties or
additions payable by the Executive with respect
to such excess) within five (5) business days
following the time that the amount of such
excess is finally determined. The Executive
and DCA or the Successor or Parent, as the case
may be, shall each reasonably cooperate with
the other in connection with any administrative
or judicial proceedings concerning the
existence or amount of liability for Excise Tax
with respect to the Total Payments.
Except as set forth above, the Agreement is
hereby ratified and confirmed in all respects.
IN WITNESS WHEREOF, each of the parties hereto
has executed this Amendment as of the day and year first
written above.
DYNAMICS CORPORATION OF AMERICA
By: /s/ Xxxxxx Xxxxxxxx
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/s/ Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX
