Exhibit 10.23
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This FIRST AMENDMENT (the "Amendment"), made and entered into effective as
of the 1st day of August, 2001, by and between SHERWOOD BRANDS, INC., a Maryland
corporation (the "Company"), and XXXX XXXXXXX (the "Executive").
WITNESSETH:
WHEREAS, the Company and the Executive entered into that certain Employment
Agreement, dated as of May 1, 1998 (the "Agreement");
WHEREAS, the Agreement, pursuant to its Section 2.2, automatically renewed
on August 1, 2001 for a new three year term; and
WHEREAS, the Executive and the Company now mutually desire to amend the
Agreement.
NOW, THEREFORE, effective as of the 1st day of August, 2001, the Employment
Agreement shall be amended as follows:
1. Section 2.1 of the Agreement shall be deleted in its entirety and
replaced with the following:
"Term of Employment. The term of this Agreement, and the employment of
the Executive hereunder, shall commence on August 1, 2001 and shall
expire on July 31, 2004, unless sooner terminated in accordance with
the terms and conditions hereof."
2. Section 3.1 of the Agreement shall be deleted in its entirety and
replaced with the following:
"Base Salary. For the period August 1, 2001 through July 31, 2002, the
Executive shall receive a base salary at the annual rate of $389,149
(the "Base Salary"), with such Base Salary payable in installments
consistent with the Company's normal payroll schedule, subject to
applicable withholding and other taxes. The Base Salary shall be
reviewed, at least annually, for merit increases and may, by action
and in the discretion of the Compensation Committee or the Board, be
increased at any time or from time to time. In addition, on August 1,
2002, and each subsequent August 1 prior to the Expiration Date, the
Base Salary shall be increased by the greatest of: (i) five percent
(5%); (ii) that percentage by which the Consumer Price Index, for the
Rockville, Maryland area published by the United States government
(the "Index") for the immediately preceding fiscal year exceeds such
index for the next preceding fiscal year. If publication of the Index
is discontinued, the parties hereto shall accept
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comparable statistics on the cost of living for the Rockville,
Maryland area as computed and published by an agency of the United
States government, or if no such agency computes and publishes such
statistics, by any regularly published national financial periodical
that does compute and publish such statistics.
3. Section 3.2 of the Agreement shall be deleted in its entirety and
replaced with the following:
"Awards. During the term of this Agreement, the Executive shall be
eligible to receive performance and annual incentive awards (the
"Awards") payable in cash in accordance with Section 8 of the SHERWOOD
BRANDS, INC. 1998 EXECUTIVE COMPENSATION PLAN, as may be amended from
time to time (the "Executive Plan"). Except as otherwise provided for
in this Section 3.2, the Awards, if any, shall be determined pursuant
to such formulae as the Committee or the Board, in its sole and
absolute discretion, shall set forth from time to time in accordance
with the Executive Plan, except that:
(i) In no event shall the Awards payable to the Executive in
any fiscal year while this Agreement is in effect be less than his
pro-rata share of the Bonus Pool.
(ii) The "Bonus Pool" for the fiscal year ended July 31, 2001
shall not be less than 15% of the amount, if any, by which pre-tax
profits for that fiscal year exceeds $1,440,000 (the "Base Year Bonus
Pool").
(iii) For fiscal years beginning on or after August 1, 2001
during the term of this Agreement, the Bonus Pool shall be equal to
the product of:
(x) the sum of 100% plus the percentage, if any, by
which the earnings before interest, taxes, depreciation and
amortization (EBITDA) of the Company for the fiscal year,
calculated prior to any deduction for any Awards made from the
Bonus Pool for that year (the "Adjusted EBITDA") exceeds the
Company's EBITDA for the Company's fiscal year ended July 31,
2001, calculated prior to any deduction for any Awards made
from the Bonus Pool for that year (the "Adjusted Base Year
EBITDA"), multiplied by
(y) the Base Year Bonus Pool.
If the Adjusted EBITDA for the fiscal year for which the Award is
being determined does not exceed the Adjusted Base Year EBITDA, then
the Bonus Pool for that year shall be equal to the product of the Base
Year Bonus Pool times the percentage of the result of dividing the
Adjusted EBITDA for such fiscal year by the Adjusted Base Year EBITDA.
If the Adjusted EBITDA for the fiscal year is less than $2,000,000
than the
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Bonus Pool for that year shall be zero, or such other amount, if any,
as the Board shall determine.
(iv) The Bonus Pool for any fiscal year, as determined above,
shall be shared by the Executive and whomever of Xxxxx Xxxxxxx, Xxxx
Xxxxxxxx, and Xxxxx Xxxxxxx shall be employed by the Company for any
portion of the fiscal year for which the Bonus Pool is being
determined, pro rata, based upon the amount of Base Salary paid to
each of them, respectively, by the Company during that fiscal year.
"Pre-tax profits" shall mean those profits of the Company for any
fiscal year determined prior to the reduction for any federal or state
income taxes and prior to the grant of any Awards to the Executive or
any other individual under the Executive Plan and determined in
accordance with generally accepted accounting principles as
consistently applied. EBITDA shall have the same meaning for purposes
of this Agreement as it is given for purposes of the Company's
financial statements, and shall be determined in accordance with
generally accepted accounting principles as consistently applied. Any
Awards payable pursuant to this Section 3.2 are sometimes hereinafter
referred to as "Incentive Compensation." Each period for which
Incentive Compensation is payable under the Executive Plan is
sometimes hereinafter referred to as a Bonus Period. Unless otherwise
specified by the Committee or the Board pursuant to the Executive
Plan, the Bonus Period shall be the fiscal year of the Company."
4. Section 5.4(iv) of the Agreement shall be deleted in its entirety and
replaced with the following:
"(iv) pay to the Executive the greater of (1) the Incentive
Compensation payable under such formula, if any, set forth by the
Committee or the Board in its discretion pursuant to Section 3.2
hereof; provided such formula takes into account the relationship that
the portion of the year in which the termination occurs that the
Executive was employed by the Company bears to the total year, and if
not, a portion of the Incentive Compensation payable under such
formula which bears the same relationship to the Incentive
Compensation as the number of days the Executive was employed by the
Company during the year in which the termination occurs bears to 365,
payable in the time and manner specified under such formula, or (2)
his pro-rata portion of the Bonus Pool, if any, for the Bonus Period
in which such termination occurs, in the time, manner, and amount
provided in Section 3.2 hereof,"
5. After Section 5.5 of the Agreement shall be inserted new Section 5.5A,
which shall read as follows:
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"Retirement:
(a) If the Executive's employment is terminated under Section 5.4 or
5.5 hereof, or by expiration of this Agreement under Section 2 hereof,
after the Executive has attained the age of 65, the Executive shall be
entitled to the following benefits in addition to any benefits
provided by the applicable termination provision:
(i) The Company shall continue to provide health and dental
insurance, as provided under Section 4.2 hereof, under
the Company's health and dental plans for as long as it
shall be permissible and practical. Thereafter, the
Company shall reimburse the Executive for the cost of
purchasing comparable coverage, until the Executive's
death;
(ii) The Company shall cause the title to the automobile
provided to the Executive under Section 4.4 hereof to be
transferred to the Executive, free and clear of any
encumbrances. The Company shall continue to pay the
insurance premiums for the automobile so long as it is
owned and operated by the Executive as his primary
vehicle;
(iii) The Company shall continue to furnish the Executive
within office, secretarial help and other reasonable
facilities and services consistent with Section 4.3 of
this Agreement, until the Executive's death.
(iv) The Executive will provide consulting services to the
Company for three years for which the Company shall pay
the Executive $150,000 per annum.
(b) If the Executive's employment is terminated under Section
5.4 or 5.5 hereof, or by expiration of this Agreement under Section 2
hereof, prior to the time the Executive has attained the age of 65,
the Executive shall be entitled to the following benefits in addition
to any benefits provided by the applicable termination provision:
(i) The Company shall continue to provide health,
dental, and long-term disability insurance, as provided in Section 4.2
hereof, under the Company's health, dental, and long-term disability
plans for a period of two years from the date of termination or
expiration of this Agreement;
(ii) The Company shall cause the title to the automobile
provided to the Executive under Section 4.4 hereof to be
transferred to the Executive, free and clear of any
encumbrances. The Company shall continue to pay the
insurance premiums for the automobile for a period of two
years from the date of termination or expiration of this
Agreement, or so long as it is owned and operated by the
Executive as his primary vehicle, whichever is shorter.
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(iii) The Executive will provide consulting services to the
Company for three years for which the Company shall pay the
Executive $150,000 per annum.
IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed effective as of the day and year first above written.
EXECUTIVE COMPANY
SHERWOOD BRANDS, INC., a Maryland
corporation
/s/ Xxxx Xxxxxxx By: /s/ [ILLEGIBLE]
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Xxxx Xxxxxxx Name:
Title:
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