EXHIBIT 10.7
AMENDMENT TO EMPLOYMENT AGREEMENT
AMENDMENT dated as of September 5, 1997 by and between Xxxx-Xxxxxx Security
Corporation, a Delaware corporation (the "Company"), and X.X. Xxxxxxx (the
"Executive") to the Employment Agreement dated as of March 28, 1995 (as amended
by letter dated August 28, 1995 and memorandum dated December 21, 1995, the
"Employment Agreement").
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into the Employment
Agreement; and
WHEREAS, the parties hereto desire to amend the Employment Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions; References. Unless otherwise specifically defined
herein, each term used herein that is defined in the Employment Agreement shall
have the meaning assigned to such term in the Employment Agreement.
Section 2. Amendment to Section 3(d) of the Employment Agreement.
Section 3(d) of the Employment Agreement is hereby amended by adding the
following clause (iv) at the end thereof:
"(iv) Notwithstanding the foregoing, upon a Change in Control of the
Company (as defined in Section 4(c)), the shares in the Trust,
together with any dividends and other distributions made or scheduled
to be made with respect thereto to the trustee of the Trust, and the
amount of any Special Deferred Compensation that has not yet been
paid, shall be delivered to the Executive immediately."
Section 3. Amendment to Section 4(c) of the Employment Agreement.
Section 4(c)(i)(D) of the Employment Agreement is hereby amended by deleting it
in its entirety and replacing it with the following:
"D. should there be a Change in Control of the Company (as defined
below), a termination by the Executive, at his own initiative, for any
reason during the 30-day period immediately following the end of the
three month period (or such shorter transition period to which the
Company may in its discretion consent) immediately following the date
of the Change in Control."
SECTION 4. Amendment to Section 5(a) of the Employment Agreement. Section
5(a) of the Employment Agreement is hereby amended by deleting it in its
entirety and replacing it with the following:
"(a) Other Than for Cause, Death or Disability; Good Reason. If,
during the Employment Period, the Company terminates the Executive's
employment other than for Cause or Disability, or the Executive
terminates his employment for Good Reason, the Company shall pay the
amounts described in subparagraph (i) below to the Executive in a lump
sum in cash within 30 days after the Date of Termination and shall
provide the benefits described in subparagraph (ii) below. The
payments provided pursuant to this Section 5(a) are intended as
liquidated damages for a termination of the Executive's employment by
the Company other than for Cause or Disability or for the actions of
the Company leading to a termination of the Executive's employment by
the Executive for Good Reason, and shall be the sole and exclusive
remedy therefor.
(i) The amounts to be paid in a lump sum as described above are:
A. The Executive's accrued but unpaid cash compensation
(the "Accrued Obligations"), which shall equal the sum of (l) any
portion of the Executive's Annual Base Salary and supplemental
benefit compensation payable pursuant to Section 3(g) of this
Agreement through the Date of Termination that has not yet been
paid; (2) an amount (reduced, in the case of a termination of
employment following a Change in Control, by the Change in
Control Bonus (as defined in Section 5(d))) equal to the product
of the Annual Bonus the Executive would have received for the
year of termination if all goals had been achieved at the
"expected" level (as such term is used to calculate bonuses under
the Company's annual bonus plan)
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(the "Severance Bonus") times a fraction, the numerator of which
is the number of days in the current fiscal year through the Date
of Termination and the denominator of which is 365; (3) any
compensation previously deferred by the Executive pursuant to
Section 3(c) of this Agreement (together with any accrued
interest or earnings thereon) that has not yet been paid; and (4)
any accrued but unpaid Annual Bonuses and vacation pay; and
X. Xxxxxxxxx pay equal to (1) the sum of (I) the Annual
Base Salary, (II) the Severance Bonus and (III) the annual
supplemental benefit compensation which, absent termination,
would have been payable pursuant to Section 3(g) of this
Agreement for the twelve month period following the Date of
Termination at the rate in effect at the Date of Termination; (2)
the assets then held in the Trust (if any) together with any
dividends and other distributions then scheduled to be made to
the trustee of the Trust; and (3) the amount of any Special
Deferred Compensation that has not yet been paid.
(ii) The benefits to be provided are benefits to the Executive
and/or the Executive's family at least as favorable as those that
would have been provided to them under Section 3(f) and clause (ii) of
Section 3(h) of this Agreement if the Executive's employment had
continued through the end of the second anniversary of the Date of
Termination; provided, however, that during any period when the
Executive is eligible to receive such benefits under another employer-
provided plan, the benefits provided by the Company under this Section
5(a)(ii) may be made secondary to those provided under such other
plan. In addition, effective as of the second anniversary of the Date
of Termination, the Executive shall be provided with post-retirement
benefits on the same terms and conditions as provided to retirees and
their beneficiaries pursuant to the Xxxx-Xxxxxx Security Corporation
Retiree Health Care Plan and any other plans maintained for retirees,
without regard to the Executive's age or years of service.
(iii) In the event that the Executive becomes entitled to the
payments and benefits provided above and/or any other payments or
benefits in connection with a change in control or termination of the
Executive's employment with the Company (whether pursuant
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to the terms of this Agreement or any other plan, arrangement or
agreement with the Company, any person whose actions result in a
change in control or any person affiliated with the Company or such
person) (collectively, the "Payments"), if any of the Payments will be
subject to the tax (the "Excise Tax") imposed by Section 4999 of the
Code, the Company shall pay the Executive, at least 30 days prior to
the time payment of any such Excise Tax is due, an additional amount
(the "Gross-Up Payment") such that the net amount retained by the
Executive, after deduction of any Excise Tax and any federal and state
and local income tax imposed on the Gross-Up Payment, shall be equal
to the Excise Tax imposed on the Payments. For purposes of determining
whether any of the Payments will be subject to the Excise Tax and the
amount of such Excise Tax, (A) the Payments shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2) of the
Code, and all "excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to the Executive the
Payments (in whole or in part) do not constitute parachute payments or
excess parachute payments or are otherwise not subject to the Excise
Tax, (B) the amount of the Payments which shall be treated as subject
to the Excise Tax shall be equal to the lesser of (i) the total amount
of the Payments or (ii) the amount of excess parachute payments within
the meaning of Section 280G(b)(1) (after applying clause (A) above),
and (C) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in
accordance with the principles of Section 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 taxes at the
highest marginal rate of federal income taxation in the calenday 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 Termination, 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 subsequently determined to be less than the
amount taken into account hereunder at the time of termination of
employment, the Executive shall repay to the Company at the time that
the amount of such reduction in Excise Tax is finally determined, the
portion of the Gross-Up Payment attributable to such reduction (plus
the portion of the Gross-Up
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Payment attributable to the Excise Tax and federal and state and local
income tax imposed on the Gross-Up Payment being repaid by the
Executive if such repayment results in a reduction in Excise Tax
and/or a federal and state and local income tax deduction) plus
interest on the amount of such repayment at 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 at the
time of the termination of employment (including by reason of any
payment the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest payable
with respect to such excess) at the time that the amount of such
excess is finally determined."
SECTION 5. Amendment to Section 5 of the Employment Agreement. Section 5
of the Employment Agreement is hereby amended by deleting the heading in its
entirety and replacing it with "Obligations of the Company Upon Termination
and/or a Change in Control" and adding the following at the end thereof:
"(d) Change in Control. Within 60 days following a Change in Control of
the Company, the company shall pay the Executive a pro rata annual bonus for the
year in which such Change in Control occurs, based on the Company's performance
for the period ending upon such Change in Control, as determined by the
Compensation Committee prior to the Change in Control (the "Change in Control
Bonus").
SECTION 6. No Waiver. Except as expressly provided herein, this Amendment
shall not operate as a waiver or amendment of any right, power or privilege of
the parties under the Employment Agreement. Except as expressly modified hereby,
all of the terms and conditions of the Employment Agreement shall remain
unaltered and in full force and effect.
SECTION 7. Counterparts; Effectiveness. This Amendment may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Amendment shall become effective as of the date hereof when the Company
shall have received a duly executed counterpart hereof signed by the Executive.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first above written.
XXXX-XXXXXX SECURITY
CORPORATION
By: /s/ Xxxxxx X. XxXxxx
-----------------------------
Name: Xxxxxx X. XxXxxx
Title: Director
/s/ J. Xxx Xxxxxxx
---------------------------------
X.X. Xxxxxxx
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