AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
Exhibit
2.4
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (this “Amendment”) is made by and between Xxxx
Corporation, a Delaware corporation (the “Company”) and Xxxxxxx X. XxxXxxxxx (“Employee” or “you”)
and is entered into effective as of the consummation (the “Closing Date”) of the transactions
contemplated by the AGREEMENT AND PLAN OF MERGER, dated as of February 9, 2007 (the “Merger
Agreement”), by and among AREP Car Holdings Corp., a Delaware corporation (“Parent”), AREP Car
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”),
and the Company.
RECITALS
A. The Company employs Employee pursuant to that certain Employment Agreement by and between
the Company and Employee dated March 15, 2005 (“Employment Agreement”);
B. The Company and the Employee desire to amend the Employment Agreement to provide for the
Company’s continued employment of Employee.
NOW, THEREFORE, in consideration of the foregoing, the covenants hereinafter set forth, and
for other good and valuable consideration, intending to be legally bound hereby, the parties hereto
hereby amend the Employment Agreement as follows:
AGREEMENT
1. Section 2 of the Employment Agreement shall be deleted in its entirety and replaced
to read as follows:
2. Terms of Employment. During the Term, you agree to be a full-time employee
of the Company serving in the position of Chief Executive Officer. You agree to
devote substantially all of your working time and attention to the business and
affairs of the Company, to discharge the responsibilities associated with your
position with the Company, and to use your best efforts to perform faithfully and
efficiently such responsibilities. In addition, you agree to serve in such other or
different capacities or offices to which you may be assigned, appointed or elected
from time to time by the Company. Nothing herein shall prohibit you from devoting
your time to civic and community activities, serving as a member of the Board of
Directors of other corporations that do not compete with the Company, or managing
personal investments, as long as the foregoing do not interfere with the performance
of your duties hereunder or violate the terms of the Company’s Code of Business
Ethics and Conduct, the Company’s Corporate Governance Guidelines, or other policies
applicable to the Company’s executives generally, as those policies may be amended
from time to time by the Company.
2. Section 3 of the Employment Agreement shall be deleted in its entirety and
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replaced to read as follows:
3. Compensation.
(a) As compensation for your services under this Agreement, you shall be entitled
during the Term to receive an initial base salary the annualized amount of which
shall be $1,150,000.00, to be paid in accordance with existing payroll practices for
the Company. Increases in your base salary, if any, shall be as approved by the
Board or a committee appointed by the Board. In addition, during the first year of
the Term you shall receive an annual incentive compensation bonus of at least 125%
of the initial base salary (the “Initial Bonus”). The Initial Bonus shall be paid
on the first anniversary of the Closing Date. Subsequent bonuses shall be paid in
such amount and at such times as may be approved from time to time by the Board or a
committee appointed by the Board, but in no event later than two and a half months
following the calendar year in which the subsequent bonuses are earned by you.
(b) During the Term, you shall be eligible for participation in the welfare,
retirement, perquisite and fringe benefit, and other benefit plans, practices,
policies and programs, as may be in effect from time to time, for senior executives
of the Company generally.
(c) During the Term, you shall be eligible for prompt reimbursement for business
expenses reasonably incurred by you in accordance with the Company’s policies, as
may be in effect from time to time, for its senior executives generally.
(d) On or as soon as practicable following the Closing Date, the Company will
establish and maintain an Award Plan (“New Plan”) providing for awards of up to 6%
of the Company’s outstanding common stock to be available for grants to Company
employees. On, or as soon as practicable following the Closing Date, you shall be
awarded an option (“New Option”) to purchase .6% of the Company’s then outstanding
common stock. The New Option shall have a term of ten (10) years and shall have an
exercise price per share equal to the aggregate purchase price (to be determined at
the Effective Time, as defined in the Merger Agreement) paid under the Merger
Agreement divided by the number of outstanding shares of Company common stock
following the consummation of the transactions contemplated by the Merger Agreement.
The New Option shall vest equally on an annual basis at a rate of twenty-five
percent per year over a period of four (4) years and shall accelerate and fully vest
upon (i) a Change in Control following the Closing Date; or (ii) your termination
pursuant to Section 5(d) of this Agreement. The Company shall have the right to
repurchase any shares awarded pursuant to the exercise of the New Option at Fair
Market Value following your termination of employment. Fair Market Value shall be
defined as the value of the Company as determined by a nationally recognized
independent appraiser selected by the Company; provided, however, that in the event
the independent appraiser shall indicate a range of value, the parties agree that
the
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median of the range shall be used. The terms of the New Option will be subject to
the terms of the New Plan and the New Option grant agreement.
3. Section 4(b) of the Employment Agreement shall be amended by adding the following
language at the end of that section:
Notwithstanding the foregoing, for purposes of the compensation under this Agreement
subject to Section 409A of the Code, “Incapacity” shall mean you (A) are unable to
engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months, or (B)
you are, by reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, receiving income replacement benefits
for a period of not less than three (3) months under a Company-sponsored group
disability plan.
4. Section 4(d) of the Employment Agreement shall be deleted in its entirety and
replaced to read as follows:
(d) Good Reason. For purposes of this Agreement, “Good Reason” shall mean the
occurrence of any of the following circumstances or events:
(i) any reduction by the Company in your base salary or adverse change in
the manner of computing your Bonus, as in effect from time to time, except
for across-the-board salary reductions or changes to the manner of computing
bonuses similarly affecting all executive officers of the Company subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, as
determined by the Board (“executive officers”);
(ii) the failure by the Company to pay or provide to you any amounts of base
salary, the Initial Bonus or other Bonuses or any benefits which are due,
owing and payable to you pursuant to the terms hereof, except pursuant to an
across-the-board compensation deferral similarly affecting all executive
officers, or to pay to you any portion of an installment of deferred
compensation due under any deferred compensation program of the Company;
(iii) except in the case of across-the-board reductions, deferrals,
eliminations, or plan modifications similarly affecting all executive
officers, the failure by the Company to continue to provide you with
benefits substantially similar in the aggregate to the Company’s life
insurance, medical, dental, health, accident or disability plans in which
you are participating following the Closing Date;
(iv) except on a temporary basis as described in Section 4(b), a material
adverse change in your responsibilities, position, reporting relationships,
authority or duties; or
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(v) without limiting the generality or effect of the foregoing, any material
breach of this Agreement by the Company.
However, the language in Sections 4(d)(i) through (iii) concerning reductions,
changes, deferrals, eliminations, or plan modifications similarly affecting all
executive officers of the Company shall not be applicable to circumstances or events
occurring in anticipation of, or within one year after, a Change in Control, as
defined in Section 4(e). In addition, upon a Change in Control, you shall have the
right to resign for Good Reason if your principal place of employment is transferred
to a location fifty (50) or more miles from its location immediately preceding the
transfer.
Notwithstanding anything else herein, Good Reason shall not exist if, with regard to
the circumstances or events relied upon in your Notice of Termination: (x) you
failed to provide a Notice of Termination to the Company within sixty (60) days
after the date you knew or should have known of such circumstances or events, (y)
the circumstances or events are fully corrected by the Company prior to the Date of
Termination, or (z) you give your express written consent to the circumstances or
events.
5. Section 4 (e) shall be deleted in its entirety and replaced to read as follows:
(e) Change in Control. For purposes of this Agreement, a “Change in Control” of the
Company shall be deemed to have occurred as of the first day any one or more of the
following paragraphs is satisfied:
(i) any Person as that term is used in Section 13(d)(3) or Section 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
(other than the Company or a trustee or other fiduciary holding securities
under an employee benefit plan of the Company, a corporation owned directly
or indirectly by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company or an affiliate of
Xxxx Xxxxx) becomes the Beneficial Owner, as that term is defined in Rule
13d-3 of the General Rules and Regulations under the Exchange Act, directly
or indirectly, of securities of the Company, representing more than fifty
percent of the combined voting power of the Company’s then outstanding
securities.
(ii) during any period of twenty-six consecutive months beginning on or
after the Closing Date, individuals who at the beginning of the period
constituted the Board cease for any reason (other than death, disability or
voluntary retirement) to constitute a majority of the Board. For this
purpose, any new Director whose election by the Board, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the Directors then still in office, and who either were
Directors at the beginning of the period or whose election or nomination
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for election was so approved, will be deemed to have been a Director at the
beginning of any twenty-six month period under consideration.
(iii) the shareholders of the Company approve: (A) a plan of complete
liquidation or dissolution of the Company; or (B) an agreement for the sale
or disposition of all or substantially all the Company’s assets; or (C) a
merger, consolidation or reorganization of the Company with or involving any
other corporation, other than a merger, consolidation or reorganization that
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least
eighty percent of the combined voting power of the voting securities of the
Company (or such surviving entity) outstanding immediately after such
merger, consolidation, or reorganization.
Notwithstanding anything else herein, a Change in Control shall not include (x)
the transactions contemplated by the Merger Agreement or any transaction between the
Company and/or Parent and a related party. For this purpose, a related party shall
include any entity that would qualify as under common control, part of a controlled
group, or part of an affiliated service group under Code section 414 and the
Treasury Regulations thereunder, with 50% replacing 80% wherever it appears in Code
section 414 and the Treasury Regulations thereunder, or (y) any affiliate of Xxxx
Xxxxx; or (z) a public offering of the Company’s common stock.
6. Section 5(d) shall be deleted in its entirety and replaced to read as follows:
(d) If your employment shall be terminated (a) by the Company, except for a
termination by the Company for Cause or Incapacity or by a Notice of Non-Renewal (or
due to your death), or (b) by you for Good Reason, then you shall be entitled to the
benefits provided below:
(i) The Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time the Notice of Termination is
given (or, if greater, at the rate in effect at any time within 90 days
prior to the time the Notice of Termination is given), plus all other
amounts to which you are entitled under any compensation or benefit plans of
the Company, including, without limitation, (a) the Initial Bonus, which
shall not be pro rated in the event you are terminated prior to the one-year
anniversary of the Closing Date; or (b) if you are terminated after the
one-year anniversary of the Closing Date, a Bonus prorated for the portion
of the Bonus measurement period occurring prior to the Date of Termination,
at the time such payments are due, except as otherwise provided below.
(ii) Conditioned upon your execution of a general release relating to your
employment in form and substance reasonably acceptable to the Company, the
Company shall pay or cause to be paid to you, in lieu of any
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further payments to you for the portion of the Term subsequent to the Date
of Termination an amount (the “Severance Payment”), which shall be equal to
the sum of:
(A) the aggregate base salary (at the highest rate in effect at any
time during the Term) which you would have received pursuant to this
Agreement for the Severance Period had your employment with the
Company continued for such period, and
(B) the aggregate Bonus based upon the highest annual Bonus that you
received with respect to any calendar year during the two years
immediately preceding the calendar year in which the Date of
Termination occurred, or, in the event that the Date of Termination
occurs prior to the first anniversary of the Closing Date, based upon
the Initial Bonus pursuant to Section 3 above.
The Severance Payment shall be paid over a period of two (2) years (the
“Severance Period”) in the following manner: to the extent Section 409A does
not apply to the Severance Payment, an amount equal to fifty percent (50%)
of the value of the Severance Payment shall be paid in a lump sum as soon as
administratively practicable after your Termination Date, and an amount
equal to the remaining fifty percent (50%) paid in equal semi-monthly
installments, without interest, beginning six (6) months after the Date of
Termination and continuing through the end of the Severance Period. To the
extent Section 409A applies to the Severance Payment, an amount equal to
fifty (50%) of the value of the Severance Payment shall be paid on the first
day of the seventh month following the Date of Termination, and the
remaining fifty (50%) shall be paid in equal semimonthly installments
without interest beginning on the eighth month after the Date of Termination
and continuing through the end of the Severance Period.
(iii) All outstanding awards, and all amounts owing or accrued, on the Date
of Termination under the Xxxx Corporation Long-Term Stock Incentive Plan
(“LTSIP”), the Xxxx Corporation Management Stock Purchase Plan (“MSPP”), the
Xxxx Corporation Executive Supplemental Savings Plan (“ESSP”) and the Xxxx
Corporation Pension Equalization Program (“PEP”), and any other compensation
or equity-based plan, program or arrangement of the Company in which you
participated (including, following a Change in Control, any additional
accruals provided thereunder due to a Change in Control) and any similar
successor plans, programs or arrangements of the Company in which you have
participated, to the extent not previously paid or provided to you in
accordance with Section 24 of this Agreement, shall become due and owing on
the Date of Termination and shall be paid to you under the terms and
conditions of such plans, programs and arrangements (and the award
agreements and other documents thereunder). You and the Company
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acknowledge that references in this Section 5(d)(iii) to the PEP, the MSPP,
the ESSP, and the LTSIP, shall be deemed to be references to such plans as
amended or restated from time to time and to any similar plan of the Company
that supplements or supersedes any such plans. In addition, you and the
Company acknowledge that references in this Section 5 to any section of the
Code shall be deemed to be references to such section as amended from time
to time or to any successor thereto.
7. Section 10(e) shall be deleted in its entirety.
8. Section 22 shall be amended by adding the following language at the end of the
section:
If and to the extent applicable, Parent shall cause the Company or the Merger Sub,
whichever survives the transaction contemplated by the Merger Agreement, to select a
“specified employee” identification date as soon as administratively feasible
following the Closing Date in accordance with Section 409A of the Code and Treasury
Regulation § 1.409A.
9. A new Section 23 shall be added as follows:
The Company (or any successor thereto) shall fully indemnify you in accordance with the
Company’s charter, bylaws and other organizational documents or as specified under Delaware law,
whichever provides you the greatest rights of indemnity (which rights shall include rights of
advancement). The Company shall also provide, and maintain as current, a policy of Directors and
Officers liability insurance for the duration of the Agreement Term.
10. A new Section 24 shall be added as follows:
24. Merger Agreement
Notwithstanding the foregoing provisions of this Agreement, all outstanding awards,
and all amounts owing or accrued under the Xxxx Corporation LTSIP, MSPP, ESSP PEP,
and any other compensation or equity-based plan, program or arrangement of the
Company in which you participate, shall, in connection with the consummation of the
transactions contemplated by the Merger Agreement, vest and shall, except as set
forth below, be paid to you under the terms and conditions of such plans, programs
or arrangements (and the award agreements and other documents thereunder) and in
accordance with the terms of the Merger Agreement and this Amendment. In addition,
the Company shall take such actions as are necessary to allow you to elect to
receive (x) at least 70% of your accrued benefit in PEP and the ESSP pension make-up
account (the “Pension Make-Up Account”)(which provides a benefit to
participants equal to the benefit that would have accrued under the Xxxx Corporation
Pension Plan and/or the PEP, had the participants not elected to defer compensation
under Section 2.2 of the ESSP and not elected to defer compensation under the
Management Stock Purchase Plan) on January 15, 2008 and (y) up to the remaining 30%
of the accrued benefit in PEP and the Pension Make-up Account on January 15, 2009.
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Any elections and percentages with respect to the payout of the PEP and Pension
Make-Up Account shall be made and fixed no later than December 31, 2007.
Other than as set forth herein, in all other respects the Employment Agreement remains in full
force and effect in accordance with the terms thereof.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the 9th day of February,
2007.
| XXXX CORPORATION | ||||
By:
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/s/ Xxxxxx X. Xxxxxxxxx
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| Agreed to this 9th day of February, 2007: |
/s/ Xxxxxxx X. XxxXxxxxx
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Xxxxxxx X. XxxXxxxxx
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