AMENDMENT NO. 1
TO
EMPLOYMENT AGREEMENT
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT ("Amendment"), entered into as of
February ___, 1997 but bearing an effective date of January 1, 1997, by and
between XXXXXXXXX INDUSTRIES, INC., a Delaware corporation having offices
at 00000 X.X. 0xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (the "Company") and Xxxx X.
Xxxxxxx, residing at ____________________ (the "Executive").
RECITALS
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WHEREAS, the Company and the Executive entered into an Employment
Agreement, dated as of May 18, 1995 (the "Employment Agreement"), pursuant to
which, among other things, the Executive assumed duties of a responsible nature
to the benefit of the Company and its Board of Directors; and
WHEREAS, the Company and the Executive desire to amend the Employment
Agreement as set forth herein;
NOW, THEREFORE, the Company and the Executive hereby agree as follows:
1. Section 3(a) of the Employment Agreement is hereby amended to read in
its entirety as follows:
(a) Position and Duties. Effective as of January 1, 1997 and thereafter
during the Employment Period the Executive's position shall be Executive
Vice President, Chief Financial Officer, Treasurer and Assistant Secretary
of the Company. The Executive's services shall be performed at the
Company's headquarters or a location where a substantial activity for which
the Executive has responsibility is located.
2. Section 3(b) of the Employment Agreement is hereby amended to read in
its entirety as follows:
(b) Compensation.
(i) Base Salary. Effective as of January 1, 1997, the Executive's base
annual salary shall be $190,000. During the Employment Period, the Executive's
base annual salary may be reviewed and changed; however, the Company shall not
pay the Executive a base annual salary less than $190,000 after January 1,
1997 and thereafter during the Employment Period. Any increase in base salary
shall not serve to limit or reduce any other obligation to the Executive under
this Agreement.
(ii) Annual Bonus. For each calendar year commencing with the year ending
December 31, 1997, at the end of which the Executive is employed by the Company
as set forth herein:
(A) if the Company has Net Income (as defined below) for such year of an
amount equal to the target net income before taxes determined in accordance with
generally accepted accounting principles in the U.S. as in effect from time to
time (the "Net Income") as approved by the Board of Directors of the Company (or
the Executive Committee of the Board of Directors, if one exists) for such year
(the "Target"), the Executive shall be entitled to a bonus in an amount equal to
$90,000.
(B) if the Company has Net Income for such year of more than the Target and
less than 150% of the Target, the Executive shall be entitled to a bonus as
calculated below:
B = $90,000 + $90,000 x (NI - T)
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T
where:
B = the bonus earned in such year.
T = the Target for such year.
NI = the actual Net Income for such year.
(C) if the Company has Net Income for such year of 150% of the Target or
more, the Executive shall be entitled to a bonus of $135,000.
(D) if the Company has Net Income for such year of less than 50% of the
Target, the Executive shall not be entitled to a bonus.
(E) if the Company has Net Income for such year of at least 50% of the
Target but less than the Target, the Executive shall be entitled to a
bonus as calculated below:
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B = $90,000 - ($90,000 x 2 x (T - NI) )
---------------
T
where:
B = the bonus earned in such year.
T = the Target for such year.
NI = the actual Net Income for such year.
3. Section 3(c) of the Employment Agreement is hereby amended to include
the following Subsection (iv) which shall read in its entirety as follows:
(iv) Life Insurance. The Company shall obtain and maintain a
life insurance policy on the life of the Executive in the amount of
$2,000,000 with a variable annuity feature mutually acceptable to the
Executive and the Company. The Company will pay the premium on such
policy for the entire period commencing on the date of this Amendment
and ending on the seventh anniversary of the date hereof (the "Policy
Period"). Until January 1, 1999, the Company shall own, and shall have
the right to designate the beneficiary under, such insurance policy.
The Executive shall have the option of causing the Company to transfer
the ownership of the policy (and the right to designate the beneficiary
thereunder) to the Executive at no cost to the Executive after January
1, 1999 (but the Company will continue to pay the premium on such
policy for the entire Policy Period). If the Executive does not
exercise his option to transfer ownership of the policy, upon the
termination of the Policy Period, the Company shall transfer the policy
to the Executive at no cost to the Executive. In the event that this
Agreement is terminated (other than for cause) prior to that time, the
Company will transfer ownership of the policy to the Executive and pay
the Executive a lump sum payment equal to the unpaid premium remaining
through the end of the Policy Period. Such lump sum payment shall
include an amount sufficient to compensate the Executive for any
Federal, state or local income taxes associated with the receipt of
such payment.
4. Section 8(b) of the Employment Agreement is hereby amended to read in
its entirety as follows:
(b) as soon as practicable after the Company has received
at least $15,000,000 of proceeds from the exercise of its existing
public warrants outstanding as of the January 1, 1997 and so long as the
Employment Period has not expired or been terminated, the Executive shall
be granted options to purchase 100,000 shares of the Company's common
stock, subject to the approval of the Company's Board of Directors. Such
options will, subject to the terms thereof (consistent with the terms of
the Company's 1996 Stock Option Plan), be exercisable at a price equal to
100% of the fair market value of the common
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stock of the Company at the time such options are granted and shall
vest with the Executive in three equal annual installments beginning on
the first anniversary of the date of grant.
5. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW).
6. As herein amended, the Employment Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the Company and the Executive have caused this
Amendment to be executed as of the date first written above.
XXXXXXXXX INDUSTRIES, INC.
By:________________________
Name: Zivi X. Xxxxxx
Title: President and CEO
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Xxxx X. Xxxxxxx
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