AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.6
AMENDMENT TO EMPLOYMENT AGREEMENT
This AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”), dated as of September 5, 2008,
amends that certain employment agreement, dated May 12, 2006 (the “Employment Agreement”), between
CSS Industries, Inc., a Delaware corporation (“CSS”), and Xxxxxxxxxxx X. Xxxxxx (“Executive”).
WHEREAS, CSS and the Executive previously entered into the Employment Agreement, which, among
other things, provides for the employment of the Executive by CSS in the position of President and
Chief Executive Officer;
WHEREAS, as set forth in Section 1 of the Employment Agreement, the original term of such
employment arrangement was three (3) years, expiring on June 30, 2009;
WHEREAS, CSS and the Executive desire to extend the term of the Executive’s employment with
CSS until June 30, 2011, unless terminated earlier by the Executive or by CSS at any time as
provided in the Employment Agreement, and to provide that the term of the Executive’s employment
with CSS shall renew each year for a three (3) year term unless either the Executive or CSS gives
notice of non-renewal at least ninety (90) days prior to July 1 of each year;
WHEREAS, as set forth in Section 4 of the Employment Agreement, the Executive is eligible to
receive certain severance benefits in the event that his employment with CSS is terminated by CSS
without cause prior to the end of his employment term set forth in the Employment Agreement;
WHEREAS, CSS and the Executive also desire to modify certain severance benefits, as set forth
in this Amendment, for which the Executive may be eligible in the event that his employment with
CSS is terminated by CSS without cause prior to the end of his then current employment term set
forth in Section 1 of the Employment Agreement;
WHEREAS, CSS and the Executive also desire to amend the Employment Agreement so that it
complies with the requirements of section 409A of the Internal Revenue Code of 1986, as amended;
WHEREAS, CSS and the Executive also desire to memorialize the terms and conditions of the
Executive’s continued employment by CSS under the terms of the Employment Agreement, as amended by
this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and
for other good and valuable consideration, the receipt and sufficiency of which is acknowledged,
the parties hereto, intending to be legally bound, agree as follows:
1. Amendment and Restatement of Section 1. The parties acknowledge and agree that
Section 1 of the Employment Agreement shall be deleted in its entirety and replaced with the
following:
1. Contract Term — The term of your employment will extend until June 30,
2011, unless terminated earlier by you or by CSS at any time as provided herein. The term
of the Executive’s employment with CSS shall renew each year for a three (3) year term
unless either the Executive or CSS gives notice of non-renewal at least ninety (90) days
prior to July 1 of each year.
2. Amendment and Restatement of Section 4. The parties acknowledge and agree that
Section 4 of the Employment Agreement shall be deleted in its entirety and replaced with the
following:
4. Employment Status; Severance Pay — Your employment status with CSS will be
that of an employee at-will, and thus this employment status is subject to termination by
either you or CSS at any time. However, in the event that CSS terminates your employment
without cause at any time prior to the end of the Executive’s then current employment term
set forth in Section 1 hereof, and subject to your compliance with the terms and conditions
of this letter agreement, CSS will pay you an amount equal to the greater of (i) eighteen
(18) months of your then-current annual base salary (less applicable tax withholdings and
payroll deductions) or (ii) an amount equal to your then-current annual base salary (less
applicable tax withholdings and payroll deductions) for the period from the effective date
of such termination to the end of the Executive’s then current employment term set forth in
Section 1 hereof, such amount reduced by and to the extent of any earnings and other
compensation received by you or accrued for your benefit for your services (whether as an
employee or as an independent contractor) during the period commencing on the day following
the one year anniversary of your termination. In addition to the foregoing, in the event
that CSS terminates your employment without cause at any time prior to the end of the
Executive’s then current employment term set forth in Section 1 hereof, and subject to your
compliance with the terms and conditions of this letter agreement, CSS will make the
services of an “outplacement” firm available to you to assist you in finding new employment;
provided, however, that CSS’ expenditures to make such services available to you shall not
exceed the aggregate amount of $6,500. For purposes of this letter agreement, termination
“without cause” means termination other than termination resulting from or related to your
breach of any of your obligations under this letter agreement, your failure to comply with
any lawful directive of CSS’ Chairman of the Board of Directors or the Board of Directors of
CSS, your failure to comply with CSS’ Code of Ethics, your conviction of a felony or of any
moral turpitude crime, or your willful or intentional engagement in conduct injurious to CSS
or any of its affiliates.
The foregoing payment obligation, and the foregoing obligation to make “outplacement”
services available to you, is contingent upon (x) receipt by CSS of a valid and fully
effective release (in form and substance reasonably satisfactory to CSS) of all claims of
any nature which you might have at such time against CSS, its affiliates and their
respective officers, directors and agents, excepting therefrom only any payments due to you
from CSS pursuant to this paragraph, and (y) your resignation from all positions of any
nature which you may then hold with CSS and its affiliates. If you are eligible to receive
the foregoing payment, such amount will be paid to you in equal installments, with such
installments being paid on the then-applicable paydays for CSS executives,
commencing on or about the first such payday following the termination of your employment by
CSS without cause and your satisfaction of the conditions specified in the immediately
preceding sentence.
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In addition, if you are eligible to receive severance pay under the terms of this letter
agreement, and if you elect health care continuation coverage under the Consolidated Omnibus
Reconciliation Act (“COBRA”) following termination of your employment, CSS will pay for a
portion of the monthly COBRA premium, on the same basis as CSS pays for a portion of such
coverage for active employees, until the earlier of the date upon which (a) severance
payments are no longer paid to you hereunder, (b) you no longer qualify to receive COBRA
benefits, or (c) you elect to discontinue health care continuation coverage under COBRA. If
you elect to continue health care continuation coverage under COBRA, normal employee premium
deductions will be made from your severance pay.
Further, if you are eligible to receive the payment set forth in clause (ii) of the first
paragraph of this Section 4, you covenant and agree that commencing with the one year
anniversary of the date of your termination you will promptly advise CSS in writing on a
bi-weekly basis of any earnings and other compensation received by you or accrued for your
benefit for your services (whether as an employee or as an independent contractor) during
the period commencing on the day following the one year anniversary of your termination.
3. Addition of a New Section 10. The parties acknowledge and agree that a new Section
10 shall be added to the Employment Agreement, which new Section 10 shall read as follows:
10. Section 409A of the Code.
(a) Interpretation. This letter agreement shall be interpreted to avoid any
penalty sanctions under section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”). If any payment or benefit cannot be provided or made at the time specified herein
without incurring sanctions under section 409A, then such benefit or payment shall be
provided in full at the earliest time thereafter when such sanctions will not be imposed.
All payments to be made upon a termination of employment under this letter agreement may
only be made upon a ‘separation from service’ under section 409A of the Code. For purposes
of section 409A of the Code, each payment made under this letter agreement shall be treated
as a separate payment and the right to a series of installment payments shall be treated as
the right to a series of separate payments. In no event may you, directly or indirectly,
designate the calendar year of payment.
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(b) Payment Delay. To the maximum extent permitted under section 409A of the
Code, the cash severance payments payable under this letter agreement are intended to comply
with the ‘short-term deferral exception’ under Treas. Reg. §1.409A-1(b)(4), and any
remaining amount is intended to comply with the ‘separation pay exception’ under Treas. Reg.
§1.409A-1(b)(9)(iii); provided, however, any amount payable to the Executive during the
six-month period following your termination date that does not qualify within either of the
foregoing exceptions and is deemed as deferred compensation
subject to the requirements of section 409A of the Code, then such amount shall hereinafter
be referred to as the ‘Excess Amount.’ If at the time of your termination of employment,
you are a ‘specified employee’ (as defined in section 409A of the Code and determined in the
sole discretion of CSS (or any successor thereto) in accordance with CSS’s (or any successor
thereto) ‘specified employee’ determination policy), then CSS shall postpone the
commencement of the payment of the portion of the Excess Amount that is payable within the
six-month period following your ‘separation from service’ with CSS (or any successor
thereto) for six months following your ‘separation from service’ with CSS (or any successor
thereto). The delayed Excess Amount shall be paid in a lump sum to you within thirty (30)
days following the date that is six (6) months following the your ‘separation from service’
with CSS (or any successor thereto), and any amount payable to you after the expiration of
such six (6) month period under this letter agreement shall continue to be paid to you in
accordance with the terms of this letter agreement. If you die during such six-month period
and prior to the payment of the portion of the Excess Amount that is required to be delayed
on account of section 409A of the Code, such Excess Amount shall be paid to the personal
representative of your estate within sixty (60) days after your death, and any amounts not
delayed shall be paid to the personal representative of your estate in accordance with the
terms of this letter agreement.
(c) Reimbursements. All reimbursements provided under this letter agreement
shall be made or provided in accordance with the requirements of section 409A, including,
where applicable, the requirement that (i) any reimbursement is for expenses incurred during
your lifetime (or during a shorter period of time specified in this letter agreement), (ii)
the amount of expenses eligible for reimbursement during a calendar year may not affect the
expenses eligible for reimbursement in any other calendar year, (iii) the reimbursement of
an eligible expense will be made on or before the last day of the calendar year following
the year in which the expense is incurred, and (iv) the right to reimbursement is not
subject to liquidation or exchange for another benefit.
4. Miscellaneous. Except as expressly modified hereby, the Employment Agreement
remains in full force and effect. Upon the execution and delivery hereof, the Employment Agreement
shall thereupon be deemed to be amended as hereinabove set forth, and this Amendment and the
Employment Agreement shall henceforth be read, taken and construed as one and the same instrument.
This Amendment may be executed in counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been signed by each of the parties hereto and delivered
to the other party.
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IN WITNESS WHEREOF, this Amendment has been executed by CSS and by the Executive as of the date
first above written.
|
CSS INDUSTRIES, INC. (“CSS”) |
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| By: | /s/ Xxxx Xxxxxx | |||
| Xxxx Xxxxxx | ||||
| Chairman of the Board of Directors | ||||
| /s/ Xxxxxxxxxxx X. Xxxxxx | ||||
| Xxxxxxxxxxx X. Xxxxxx (“Executive”) | ||||
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