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EXHIBIT 10.16
FIRST AMENDMENT
FIRST AMENDMENT dated as of November 12, 1992 to the Amendment to
Employment Agreement (the "Agreement") dated January 2, 1991 by and between
XXXX X. XXXXXX (the "Employee") and Xxxxx International, Inc., a Delaware
corporation (the "COMPANY").
The Agreement is hereby amended in the following respects:
1. Section 2(a) is amended to read in its entirety as follows:
(a) Base Salary. An amount in cash equal to three (3) times the
amount of EMPLOYEE'S Base Salary (as defined below). "Base Salary" is the
greater of the EMPLOYEE'S annual base salary (x) immediately prior to the
Change in Control or (y) on the effective date of his Covered Termination. Any
payments made hereunder are in lieu of any lump sum payment of base salary
required under the Employment Agreement as a result of the termination of
EMPLOYEE pursuant to Section 4.3 of the Employment Agreement.
2. Section 2(b) is amended to read in its entirety as follows:
(b) Bonus. An amount in cash equal to the amount of EMPLOYEE'S Target
Incentive Level for an Award under the COMPANY'S Annual Long Term Incentive
Plan as in effect on his date of Covered Termination, or, if greater, as in
effect immediately prior to the Change in Control.
3. At the end of Section 8, delete the period after the word "company" and
add the following:
; and provided, further, that for purposes of this subsection (b), any
good faith determination of an event described in clauses (i)-(vi) made by the
EMPLOYEE shall be conclusive; or (c) EMPLOYEE'S employment is terminated by the
COMPANY for a reason other than for cause in anticipation of a Change in
Control or at the request of a third party seeking to cause a Change in
Control.
4. Amend Section 11 so that it reads in its entirety as follows:
11. Definition of Change in Control. A "Change in Control" shall
mean any of the following events:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more
of the combined voting power of the then outstanding voting
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securities of the COMPANY entitled to vote generally in the election of
directors (the "Outstanding COMPANY Voting Securities"); provided, however,
that for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the COMPANY
(ii) any acquisition by the COMPANY, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the COMPANY or any
corporation controlled by the COMPANY or (iv) any acquisition by an corporation
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
subsection (c) below; or
(b) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
COMPANY'S shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or
(c) approval by the shareholders of the COMPANY of a reorganization,
merger or consolidation or sale or other disposition of all or substantially
all of the assets of the COMPANY (a "Business Combination"), in each case,
unless following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners of the Outstanding
COMPANY Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election
of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a
result of such transaction owns the COMPANY or all or substantially all of the
COMPANY'S assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination of the Outstanding COMPANY Voting Securities, (ii) no
Person (excluding any employee benefit plan (or related trust) of the COMPANY
or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 50% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing
for such Business Combination; or
(d) approval by the shareholders of the COMPANY of a complete
liquidation or dissolution of the COMPANY.
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5. Add a new Section 14 to read in its entirety as follows:
14. Reduction in Payments. (a) For purposes of this section, (i)
"Payment" shall mean any payment or distribution in the nature of compensation
to or for the benefit of EMPLOYEE, whether paid or payable pursuant to this
Agreement or otherwise; (ii) "Agreement Payment" shall mean a Payment paid or
payable pursuant to this Agreement (disregarding this Section); (iii) "Net
After Tax Receipt" shall mean the Present Value of a Payment net of all taxes
imposed on EMPLOYEE with respect thereto under Sections 1 and 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), determined by applying
the highest marginal rate under Section 1 of the Code which applied to the
EMPLOYEE'S taxable income for the immediately preceding taxable year; (iv)
"Present Value" shall mean such value determined in accordance with Section
2800 (d)(4) of the Code; and (v) "Safe Harbor" shall mean the sum of $1.00 less
than three times the EMPLOYEE'S "base amount" within the meaning of that term
in Section 280G of the Code.
(b) Anything in this Agreement to the contrary notwithstanding, in
the event Xxxxxx Xxxxxxxx & Co. (the "Accounting Firm") shall determine that
receipt of all Payments would subject EMPLOYEE to tax under Section 4999 of the
Code, it shall determine whether the receipt of the Safe Harbor would result in
greater Net After Tax Receipts to the EMPLOYEE than receipt of all the
Agreement Payments. If said firm determines that the receipt of the Safe
Harbor would so result, the aggregate Agreement Payments shall be reduced to
the Safe Harbor.
If the Accounting firm determines that aggregate Agreement Payments
should be reduced to the Safe Harbor, the COMPANY shall promptly give EMPLOYEE
notice to that effect and a copy of the detailed calculation thereof, and the
EMPLOYEE may then elect, in his sole discretion, which and how much of the
Agreement Payments shall be eliminated or reduced (as long as after such
election the present value of the aggregate Agreement Payments equals the Safe
Harbor), and shall advise the COMPANY in writing of his election within ten
days of his receipt of notice. If no such election is made by the EMPLOYEE
within such ten-day period, the COMPANY may elect which of such Agreement
Payments shall be eliminated or reduced (as long as after such election the
present value of the aggregate Agreement Payments equals the Safe Harbor) and
shall notify the EMPLOYEE promptly of such election. All determinations made by
the Accounting Firm under this Section shall be binding upon the COMPANY and
EMPLOYEE and shall be made within 60 days of a termination of employment of the
EMPLOYEE. As promptly as practicable following such determination, the COMPANY
shall pay to or distribute for the benefit of EMPLOYEE such Agreement Payments
as are then due to EMPLOYEE under this Agreement and shall promptly pay to or
distribute for the benefit of EMPLOYEE in the future such Agreement Payments as
become due to Employee under this Agreement.
(c) While it is the intention of the COMPANY and the EMPLOYEE to
reduce the amounts payable or distributable to EMPLOYEE hereunder only if the
aggregate Net After Tax Receipts to EMPLOYEE would thereby be increased, as a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that amounts will not have been paid or distributed by
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the COMPANY to or for the benefit of EMPLOYEE pursuant to this Agreement which
should not have been so paid or distributed ("Overpayment") or that additional
amounts which will have not been paid or distributed by the COMPANY to or for
the benefit of EMPLOYEE pursuant to this Agreement could have been so paid or
distributed ("Underpayment"), in each case, consistent with the calculation of
the Reduced Amount hereunder. In the event that the Accounting Firm, based
either upon the assertion of a deficiency by the Internal Revenue Service
against the COMPANY or EMPLOYEE which the Accounting Firm believes has a high
probability of success determines that an Overpayment has been made, any such
Overpayment paid or distributed by the COMPANY to or for the benefit of
EMPLOYEE shall be treated for all purposes as a loan to EMPLOYEE which EMPLOYEE
shall repay to the COMPANY together with interest at the applicable federal
rate provided for in Section 7872 (f) (2) of the Code; provided, however, that
no such loan shall be deemed to have been made and no amount shall be payable
by EMPLOYEE to the COMPANY if and to the extent such deemed loan and payment
would not either reduce the amount on which the EMPLOYEE is subject to tax
under Section 1 and Section 4999 of the Code or generate a refund of such
taxes. In the event that the Accounting Firm, based upon controlling precedent
or substantial authority, determines that an Underpayment has occurred, any
such Underpayment shall be promptly paid by the COMPANY to or for the benefit
of the EMPLOYEE together with interest at the applicable federal rate provided
for in Section 7872 of the Code.
6. Add a new Section 15 to read in its entirety as follows:
15. Reimbursement. The COMPANY agrees to pay as incurred, to the
full extent permitted by law, all legal fees and expenses which the EMPLOYEE
may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the COMPANY, the EMPLOYEE or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
EMPLOYEE about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872 of the Code.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the day and year first above written.
XXXXX INTERNATIONAL, INC. XXXX X. XXXXXX
By:
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