EXHIBIT 10.19
SECOND AMENDMENT
TO EMPLOYMENT AGREEMENT
This SECOND AMENDMENT TO EMPLOYMENT AGREEMENT ("Second Amendment") is
entered into as of October 1, 2001, by and between Xxxxxxxxx Xxxxx, Inc., a
California corporation (the "Company"), formerly known as Xxxxxxxx Merchandising
Corporation, and Xx. Xxxxxxx Xxxxxxxx ("Xx. Xxxxxxxx"). Capitalized terms used
and not otherwise defined herein shall have the meanings ascribed to such terms
in the Employment Agreement (as defined below).
WHEREAS, the Company and Xx. Xxxxxxxx have entered into an Employment
Agreement (the "Employment Agreement"), dated October 1, 1996, which sets forth
the terms and conditions of Xx. Xxxxxxxx'x employment by the Company;
WHEREAS, Section 7.01 of the Employment Agreement provides that the
Company and Xx. Xxxxxxxx may amend the Employment Agreement; and
WHEREAS, the Company and Xx. Xxxxxxxx desire to amend the Employment
Agreement as set forth in this Second Amendment;
NOW, THEREFORE, in consideration of the premises set forth herein and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and Xx. Xxxxxxxx hereby amend the Employment Agreement
as follows, effective as of October 1, 2001:
1. Section 3.01 of the Employment Agreement is hereby restated in
its entirety as follows:
"SECTION 3.01. Term. Subject to earlier termination as provided
in this Agreement, Xx. Xxxxxxxx shall be employed commencing on the date
first mentioned above (the "Commencement Date") and ending on the
seventh anniversary of such date (the "Term"). Neither party is under
any obligation to extend or renew this Agreement. Any new employment
agreement shall only be effective after having been reduced to writing
and executed by both parties hereto. In the absence of earlier
termination as provided herein, this Agreement shall terminate
automatically on the seventh anniversary of the Commencement Date. In
the event Xx. Xxxxxxxx continues to perform services after this
Agreement has terminated, and pending execution of a new employment
agreement, if any, such services shall constitute employment for an
unspecified term, terminable at will, with or without cause or reason,
with or without advance notice, and with or without pay in lieu of
advance notice."
2. Section 4.01 of the Employment Agreement is hereby restated in
its entirety as follows:
"SECTION 4.01. Salary. The Company shall pay Xx. Xxxxxxxx an
annualized base salary of $550,000, to be paid in accordance with the
Company's pay policy.
3. Section 4.03 of the Employment Agreement is hereby amended by
adding the following sentence to the end of such Section:
"For work performed during each of fiscal year 2002 and 2003
(ending September 30, 2002 and 2003, respectively), Xx. Xxxxxxxx shall
receive an annual bonus in an amount determined in accordance with
SCHEDULE A hereto."
4. The following new Sections 4.12, 4.13 and 4.14 are hereby added
to the Employment Agreement immediately following Section 4.11 thereof:
"SECTION 4.12. Life Insurance. The Company shall pay for, or
promptly reimburse Xx. Xxxxxxxx for, insurance premiums incurred by Xx.
Xxxxxxxx with respect to life insurance policy number #1530859, provided
that the amount of such payments shall in no event exceed $25,000 per
year.
SECTION 4.13. Certain Additional Payments. The Company shall pay
to Xx. Xxxxxxxx such additional amounts (the "Gross-Up Payment") as are
necessary to reimburse Xx. Xxxxxxxx, on an after-tax basis, for all
federal, state and local income and employment taxes (the "Taxes")
payable by Xx. Xxxxxxxx with respect to the payments or benefits
received by Xx. Xxxxxxxx pursuant to Sections 4.05, 4.06, and 4.12
hereof (the "Payments"), such that the net amount retained by Xx.
Xxxxxxxx, after deduction of any Taxes on the Payments and on the
Gross-Up Payment, shall be equal to the Payments.
5. This Second Amendment shall be and is hereby incorporated in and
forms a part of the Employment Agreement.
6. Except as amended as set forth herein, the Employment Agreement
shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed this Second
Amendment to Employment Agreement as of the date first set forth above.
XXXXXXX XXXXXXXX XXXXXXXXX XXXXX, INC.,
formerly known as XXXXXXXX
MERCHANDISING CORPORATION
By: /s/ XXXXXXX XXXXXXXX By: /s/ XXXX X. XXXXXXX
---------------------------- ----------------------------
Title: Chief Operating Officer
Dated: October 8, 2001 Dated: October 5, 2001
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2
SCHEDULE A
BONUS DETERMINATION
For the Company's fiscal years 2002 and 2003, Xx. Xxxxxxxx shall be
eligible for a bonus based on achievement of annual EBITDA results. The bonus
amount shall be based on the Company's total consolidated earnings before
interest, taxes, depreciation and amortization (EBITDA) for each respective
year, computed pursuant to the definition provided in the Company's Second
Amended and Restated Revolving Credit Agreement, dated December 23, 1998, as
amended.
The annual bonus shall be an amount equal to the annual EBITDA amount
multiplied by a predetermined percentage. Such percentage shall be 0.00% in the
event that EBITDA for any particular year grows 10% or less over the prior
fiscal year, shall be 0.50% if EBITDA grows 20%, and shall be 0.75% if EBITDA
grows 35% or more.
Should EBITDA for any particular year reflect a growth rate between 10%
and 20%, the bonus percentage shall be a proportional interpolation between
0.00% and 0.50%. Should EBITDA reflect a growth rate between 20% and 35%, the
bonus percentage shall be a proportional interpolation between 0.50% and 0.75%.
The growth rates, bonus percentages and resultant bonus payments shall
be adjusted in the event of any extraordinary acquisition by the Company, as
such adjustments shall be established by the Board, in which deliberations Xx.
Xxxxxxxx shall be entitled to participate as a member thereof.
A-1
