EXHIBIT 10AJ
FIRST AMENDMENT TO
THE EMPLOYMENT AGREEMENT BY AND BETWEEN
XXXX XXXXXX AND ZENITH ELECTRONICS CORPORATION
WHEREAS, XXXX XXXXXX (THE "EXECUTIVE") AND ZENITH ELECTRONICS
CORPORATION (THE "COMPANY") ENTERED INTO AN EMPLOYMENT AGREEMENT, DATED AS OF
JANUARY 12, 1998 (THE "EMPLOYMENT AGREEMENT");
WHEREAS, the Executive and the Company reserved the right to amend the
Employment Agreement, by written consent of each party;
WHEREAS, the parties desire to amend the Employment Agreement in light
of the proposed restructuring of the Company through a bankruptcy reorganization
(the "Restructuring");
NOW, THEREFORE, the Employment Agreement is hereby amended in the
manner set forth below, effective as of the effective date of the Restructuring:
1. Section 2 of the Employment Agreement is amended to delete
subparagraphs (e) and (f), and to insert in lieu thereof new subparagraphs (e)
and (f) to read as follows:
(e) Performance-Based Cash Grant. As provided in Exhibit 3, which is
attached to and forms a part of this Agreement, the Executive shall be
awarded a performance-based cash grant payable after three years in
accordance with the provisions of Exhibit 2.
(f) Reserved.
2. Exhibit 2 is deleted and Exhibit 3 is renumbered as Exhibit 2 and
amended and restated in its entirety, to read as follows:
EXHIBIT 3
LONG-TERM INCENTIVE AWARD
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3-1. Long-Term Performance Award. If the Executive
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continues in the employ of the Company from the Effective Date through
December 31, 2000, then the Executive shall have the opportunity to
receive a long-term incentive bonus, payable on the later of March 31,
2001 or 30 days after receipt of the Company's audited financial
statement for calendar year 2000, if the Company's performance meets
or exceeds certain performance targets established with respect to the
three year period of 1998 to 2000. The Executive will receive a bonus
equal to $6 million for such period if target performance is achieved,
and $12 million if maximum stated levels are achieved. The performance
criteria shall be the following four criteria, each having the
weighting designated below:
1. Earnings before taxes 30%
2. Cash flow from operations 30%
3. Cash flow relating to non-core assets less
restructuring expenses 20%
4. Business development targets (such as
market position in core products) 20%
Achievement of the corporate objectives shall be determined by the
Board or its delegate based on audited financial statements of the
Company, except for business development targets, which will be
determined by the Board of its delegate. If the objectives are
attained at target levels for any component of the formula, the
corresponding portion of such bonus shall be payable. At achievement
of performance between target and maximum levels of performance, the
percentage of Basic Compensation payable shall be determined by
mathematical interpolation. The actual performance criteria for the
1998-2000 period shall be as set forth on Appendix A hereto.
3-2. Termination Without Cause. If the Executive does not
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continue in the employ of the Company from the Effective Date through
December 31, 2000, and his Date of Termination occurs under
circumstances described in paragraph 3(b) (relating to the Executive's
being Permanently Disabled), under circumstances described in
paragraph 3(d) (relating to constructive discharge), under
circumstances described in paragraph 3(f) (relating to termination by
the Company without Cause), or because of the Executive's death, then
he will be entitled to a cash payment equal to the amount which would
have been payable based on achievement of the performance objectives
set forth
2
in Section 3-1 above, which shall be determined based on actual
performance from January 1, 1998 through the last day of the fiscal
quarter of the Company in which the Date of Termination occurs (the
"Short Period") and as if the performance objectives for the Short
Period were determined based on the business plan for the period
corresponding to the Short Period), multiplied by a fraction, the
numerator of which shall be the number of days from and including
January 1, 1998 and through and including the Date of Termination, and
the denominator of which is 1095. Distribution of any amounts payable
pursuant to this Section 3-2 shall be made not later than 90 days
following the end of the Company's fiscal quarter in which the
Executive's Date of Termination occurs.
3-3. Other Termination. If the Executive's Date of Termination
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occurs during the Agreement Term under circumstances described in
paragraph 3(c) (relating to the Executive's termination for Cause) or
paragraph 3(e) (relating to the Executive's resignation), then no
amount shall be paid under this Exhibit 3.
3. This First Amendment is a binding agreement between the parties
as of the date of execution to take effect upon the date the Company files its
petition for a prepackaged chapter 11 proceeding under the provisions of the
United States Bankruptcy Code.
IN WITNESS WHEREOF, the Executive and the duly authorized officer of
the Company have each executed this First Amendment on the date specified below.
ZENITH ELECTRONICS CORPORATION
Dated: August 7, 1998 /s/ Xxxxxx X. XxXxxxx
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Dated: August 7, 1998 /s/ Xxxxxxx X. Xxxxxx
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Executive
