AMENDMENT TO EMPLOYMENT AGREEMENT
AMENDMENT made and entered into as of this 11th day of
April, 1997 by and between DYNAMICS CORPORATION OF AMERICA, a New York
corporation ("DCA") and ____________ (the "Executive").
WHEREAS, DCA and the Executive have previously entered into
an Employment Agreement as of February 1, 1996 (the "Agreement"); and
WHEREAS, DCA, and the Executive desire to amend the
Agreement in accordance with Article Tenth thereof.
NOW, THEREFORE, DCA and the Executive hereby agree as
follows:
1. Part A. of Article Fourth of the Agreement
is hereby amended in its entirety to read as follows:
"FOURTH: A. In the event of the occurrence of a Change in
Control at any time during the Employment Period, the Executive shall have the
right to terminate this Employment Agreement upon thirty days written notice
given at any time within 3 months after the occurrence of the Change in
Control. If the Executive shall have terminated this Employment Agreement
pursuant to the foregoing provisions of this part A, or if DCA, any successor
of DCA (whether by merger, consolidation or
otherwise), or any parent of DCA or of any such successor shall have
terminated this Employment Agreement during such three month period, DCA or
such successor or parent entity, as the case may be, shall pay to the
Executive as compensation, in a lump sum on the date of such termination, in
lieu of any further compensation provided for in Article SECOND hereof, an
amount equal to five times the sum of (a) two-thirds of the aggregate regular
compensation provided for in part A of said Article SECOND, at the rate in
effect at the time of such termination or, if greater, at the rate in effect
on the date of the Change in Control and (b) two-thirds of the largest amount
earned by the Executive as stock and cash bonuses for any of the five fiscal
years preceding that in which termination occurs.
In addition, DCA or such successor or parent entity (a)
shall pay in a single lump sum to Security Mutual Life Insurance Company of
New York, to be held in a side fund in escrow by said carrier to pay when due
the annual premiums on the Policy, an amount equal to ten (10) times the
amount of the last annual premium payment on the Policy made prior to the date
of the Change in Control, (b) shall forfeit all rights under the Collateral
Assignment to be repaid the aggregate amount of all premiums paid on the
Policy prior to, on or after the
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date of termination, and (c) shall release and waive all rights under the
Collateral Assignment, shall not endanger in any way any benefit available to
the Executive under the Policy and shall not be entitled to any further rights
or interest in the Policy."
2. Article Fourth of the Agreement is hereby
amended by adding new parts C. and D. thereto as follows:
"C. For purposes of this Agreement, the following terms
shall have the following meanings:
A "Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have
occurred:
(I) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of DCA (not including in the securities
beneficially owned by such Person any securities acquired directly from DCA or
its Affiliates) representing 25% or more of the combined voting power of DCA's
then outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in clause (i) of
paragraph (III) below; or
(II) the following individuals cease for any reason to
constitute a majority of the number of directors then serving on the Board of
Directors of DCA (the "Board"): individuals who, on the date hereof,
constitute
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the Board and any new director (other than a director whose initial assumption
of office is in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the election
of directors of DCA) whose appointment or election by the Board or nomination
for election by DCA's stockholders was approved or recommended by a vote of at
least two-thirds (2/3) of the directors then still in office who either were
directors on the date hereof or whose appointment, election or nomination for
election was previously so approved or recommended; or
(III) there is consummated a merger or consolidation of DCA
or any direct or indirect subsidiary of DCA with any other corporation, other
than (i) a merger or consolidation which would result in the voting securities
of DCA outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) at least
60% of the combined voting power of the securities of DCA or such surviving
entity or any parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement a
recapitalization of DCA (or similar transaction) in which no Person is or
becomes the Beneficial
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Owner, directly or indirectly, of securities of DCA (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from DCA or its Affiliates other than in connection with the acquisition by
DCA or its Affiliates of a business) representing 25% or more of the combined
voting power of DCA's then outstanding securities; or
(IV) the stockholders of DCA approve a plan of complete
liquidation or dissolution of DCA or there is consummated an agreement for the
sale or disposition by DCA of all or substantially all of DCA's assets, other
than a sale or disposition by DCA of all or substantially all of DCA's assets
to an entity, at least 60% of the combined voting power of the voting
securities of which are owned by stockholders of DCA in substantially the same
proportions as their ownership of DCA immediately prior to such sale.
"Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) DCA or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of DCA or any of its Affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or
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(iv) a corporation owned, directly or indirectly, by the stockholders of DCA
in substantially the same proportions as their ownership of stock of DCA.
"Beneficial Owner" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
"Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
D. If the Executive becomes entitled to the payments or
benefits under this Article FOURTH, if any of the payments or benefits
received or to be received by the Executive in connection with a Change in
Control or the Executive's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or agreement with DCA,
any Person whose actions result in a Change in Control or any Person
affiliated with DCA or such Person) (such payments or benefits, excluding the
Gross-Up Payment, being hereinafter referred to as the "Total Payments") will
be subject to any tax (the "Excise Tax") imposed under section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), DCA shall pay to the
Executive an additional amount (the "Gross-Up Payment") such that the net
amount retained by
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the Executive, after deduction of any Excise Tax on the Total Payments and any
federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Total Payments. For purposes of
determining whether any of the Total Payments will be subject to the Excise
Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be
treated as "parachute payments" (within the meaning of section 280G(b)(2) of
the Code) unless, in the opinion of tax counsel ("Tax Counsel") reasonably
acceptable to the Executive and selected by the accounting firm which was,
immediately prior to the Change in Control, DCA's independent auditor (the
"Auditor"), such payments or benefits (in whole or in part) do not constitute
parachute payments, including by reason of section 280G(b)(4)(A) of the Code,
(ii) all "excess parachute payments" within the meaning of section 280G(b)(l)
of the Code shall be treated as subject to the Excise Tax unless, in the
opinion of Tax Counsel, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered (within the
meaning of section 280G(b)(4)(B) of the Code) in excess of the "base amount"
(with the meaning of section 280G(b)(3) of the Code) allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax, and
(iii) the value
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of any noncash benefits or any deferred payment or benefit shall be determined
by the Auditor in accordance with the principles of sections 280G(d)(3) and
(4) of the Code. For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay federal income tax at the
highest marginal rate of federal income taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive's
residence on the date of the Executive's termination of employment, net of the
maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.
In the event that the Excise Tax is finally determined to be
less than the amount taken into account hereunder in calculating the Gross-Up
Payment, the Executive shall repay to DCA, within five (5) business days
following the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction (plus that portion of the Gross-Up Payment attributable to the
Excise Tax and federal, state and local income and employment taxes imposed on
the Gross-Up Payment being repaid by the Executive, to the extent that such
repayment results in a reduction in the Excise Tax and a
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dollar-for-dollar reduction in the Executive's taxable income and wages for
purposes of federal, state and local income and employment taxes, plus
interest on the amount of such repayment at 120% of the rate provided in
section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder in calculating
the Gross-Up Payment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), DCA
shall make an additional Gross-Up Payment in respect of such excess (plus any
interest, penalties or additions payable by the Executive with respect to such
excess) within five (5) business days following the time that the amount of
such excess is finally determined. The Executive and DCA shall each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax
with respect to the Total Payments."
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IN WITNESS WHEREOF, each of the parties hereto has executed
this Amendment as of the day and year first written above.
DYNAMICS CORPORATION OF AMERICA
By:
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[Name of Executive]
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