EXHIBIT 10.10B
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
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THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (the "Second Amendment") is
made effective as of December 27, 2002 and entered into this 17th day of May,
2003, by and among HF HOLDINGS, INC., a Delaware corporation (the "Company"),
ICON HEALTH & FITNESS, INC., a Delaware corporation (the "Subsidiary"), and GARY
E. STEVENSON (the "Employee" and together with the Company and the Subsidiary,
the "Parties"). Defined terms not otherwise defined in this Second Amendment
shall have the meanings ascribed to them in the Employment Agreement (as defined
below).
WHEREAS, the Parties entered into an Employment Agreement dated September
27, 1999, as amended by the First Amendment to Employment Agreement, dated April
29, 2002 (the "Employment Agreement"); and
WHEREAS, the Parties desire to further amend certain provisions of the
Employment Agreement in accordance with the provisions of this Second Amendment.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
1. Amendments. The following sections of the Employment Agreement are
hereby amended as follows.
(a) That Section 2.2, as amended, is hereby deleted in its entirety
and replaced with the following text:
"2.2 Subject to earlier termination is hereinafter provided,
the COMPANY hereby employs the EMPLOYEE and the EMPLOYEE
agrees to serve the COMPANY in the positions of President
and Chief Operating Officer from the EFFECTIVE DATE until
September 27, 2002, (the "TERM"); and by mutual
agreement, the COMPANY and the EMPLOYEE hereby extend the
TERM from September 27, 2002 to September 27, 2005."
(b) That Section 2 shall be amended by inserting the following
Section immediately after Section 2.4:
"2.5 The COMPANY shall pay the EMPLOYEE a one-time retention
bonus of THREE HUNDRED THOUSAND DOLLARS ($300,000), for
services rendered or to be rendered to the COMPANY, as
the case may be, during the COMPANY'S Fiscal Year 2003."
(c) That Section 3.1 shall hereby be amended by adding a new
sentence thereto as follows: "Such annual base salary shall be increased from
its current level at the date hereof by ONE HUNDRED THOUSAND DOLLARS ($100,000)
effective for the COMPANY'S fiscal year 2003".
(d) That Section 4.1 is hereby deleted in its entirety and is
replaced with the following text:
"4.1 The EMPLOYEE shall receive with respect to (i) each
fiscal year ending during the Term, and (ii) that portion
of any fiscal year ending after Term during which he is
employed hereunder, a bonus equal to one and thirty-two
one-hundredths percent (1.32%) [or one and one tenth
percent (1.10%) in the even of the application of the
proviso set forth in Section 9.8 hereof] of the
consolidated EBITDA (as that term is defined in the
Credit Agreement, dated April 9, 2002, among the
SUBSIDIARY, General Electric Capital Corporation and the
other lenders thereunder, without regard to any
amendments thereto) of the SUBSIDIARY and its
subsidiaries (but not including the COMPANY); provided,
however, that such bonus (i) shall, in the event of a
Material Acquisition (as reasonably determined in good
faith by the Board of Directors) by the COMPANY or the
SUBSIDIARY and absent an agreement to the Contrary
between the COMPANY and the EMPLOYEE, be calculated
without taking account of any EBITDA (as defined above)
properly attributable to such Material Acquisition, and
(ii) shall not be payable with respect to any such fiscal
year unless such EBITDA for such fiscal year exceeds five
and one-half percent (5.5%) of the consolidated net sales
of the SUBSIDIARY and its subsidiaries (but not including
the COMPANY) determined in accordance with generally
accepted accounting principles and provided, further,
that for purposes of this Agreement, EBITDA shall be
calculated without regard to any bonuses payable
hereunder."
(e) That Section 9.3 is hereby deleted in its entirety and replaced
with the following text:
"9.3 The EMPLOYEE may terminate the TERM by sending his
resignation in writing to the Board of Directors not less
than six (6) months prior to the effective date of such
resignation or, if such resignation is submitted in good
faith so that the EMPLOYEE can perform full time church
service, not less than three (3) months prior to the
effective date of such resignation, failing which notice
the EMPLOYEE may be subject to any and all damages
incurred as a result of such failure; provided, however,
in the case of any termination pursuant to this Section
9.3 the EMPLOYEE shall, at his sole option, have the
right, for a period of three (3) years from the date of
such resignation, to reemployment with the COMPANY in an
executive position, with salary and duties commensurate
with such position, and for such term as the EMPLOYEE and
the Board of Directors shall then agree. In the event the
EMPLOYEE has given notice to the COMPANY pursuant to this
Section 9.3, the COMPANY may, at its option, earlier
terminate EMPLOYEE'S employment."
(f) That Section 9.8 is hereby deleted in its entirety and is
replaced with the following text:
"9.8 In the event of the termination of the TERM by virtue of
Section 9.3, 9.4 or 9.5, the COMPANY shall pay to the
EMPLOYEE a severance pay equal to the EMPLOYEE's base
salary then in effect and the bonus referred to in
Section 4 hereof, pro-rated for the period of the
payment, for three (3) years following the termination of
the TERM; provided, however, that if, due to the
EMPLOYEE's resignation, there is a termination of the
TERM, without any action by the COMPANY, during the one
(1) year period following the EFFECTIVE DATE, the
EMPLOYEE shall forego FIVE HUNDRED THOUSAND DOLLARS
($500,000) of any severance pay to which he would
otherwise be entitled under this Section 9.8, unless the
resignation resulting in such termination is submitted
(i) in good faith by EMPLOYEE pursuant to Section 9.3 so
that the EMPLOYEE can perform full time church service,
or (ii) pursuant to Section 9.5 and provided, further,
that if the EMPLOYEE's resignation is submitted by
EMPLOYEE pursuant to Section 9.3 (other than so that the
EMPLOYEE can perform full time church service), then the
bonus referred to in Section 4.1 hereof shall be
calculated at the rate of one and one tenth percent
(1.10%). For the purposes of this Section 9.8, the bonus
referred to in Section 4.1 hereof shall be determined
using EBITDA (as defined in Section 4.1 hereof) for the
fiscal year immediately preceding termination and shall
be paid to the EMPLOYEE within ninety (90) days from the
end of the COMPANY's applicable fiscal year, and the base
salary shall be paid to the EMPLOYEE on the same payment
schedule as was applicable to the EMPLOYEE during his
employment."
(g) That Section 10.3 is hereby deleted in its entirety and is
replaced with the following text:
"10.3 Notwithstanding the foregoing, if termination of
employment occurs under Section 9.3, 9.4 or 9.5, the
period stipulated by Section 10.1 is reduced to three (3)
years; provided, however, that such period shall be
extended by written notice to the EMPLOYEE within thirty
(30) days of such termination by an additional two (2)
years (i.e., for a total of five (5) years from the
termination of EMPLOYEE's employment) if and to the
extent that the COMPANY, at its option, pays to the
EMPLOYEE additional severance pay equal to the EMPLOYEE's
base salary then in effect and
the bonus referred to in Section 4 hereof, pro-rated for
the period of the payment, for an additional two (2)
years beyond that required to be paid by the COMPANY to
the EMPLOYEE under Section 9.8. If paid at the COMPANY's
option, such bonuses, which shall be determined using
EBITDA (as defined in Section 4.1 hereof) for the fiscal
year immediately preceding termination, are to be paid
within ninety (90) days from the end of the COMPANY's
applicable fiscal year, and the base salary shall be paid
to the EMPLOYEE on the same payment schedule as was
applicable to the EMPLOYEE during his employment."
(h) That Section 23.1. c) is hereby deleted in its entirety and is
replaced with the following text:
"c) With a copy in each case to:
Weil, Gotshal & Manges LLP 100 Federal Street 34th
floor Boston, MA 02110 Fax: 617-772-8333 Attn:
Charles W. Robins, Esq.
and
Ropes & Gray
One International Place
Boston, MA 02110
Fax: 617-951-7050
Attn: R. Newcomb Stillwell, Esq."
2. No Other Changes. Except as otherwise expressly provided hereby,
all the terms, conditions, and provisions of the Employment Agreement remain
unaltered, valid, binding, and in full force and effect in the form existing
immediately prior to the execution and delivery of this Second Amendment.
3. Counterparts. This Second Amendment may be executed in any number
of counterparts, which, when taken together, shall constitute one and the same
agreement.
Counterpart Signature Page
Second Amendment to Gary E. Stevenson Employment Agreement
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IN WITNESS HEREOF, the parties hereto have signed this Second Amendment to
Employment Agreement this 17th day of May, 2003.
HF HOLDINGS, INC.
- ----------------------------- By: -----------------------------
Witness Name:
Title:
ICON HEALTH & FITNESS
- ----------------------------- By: -----------------------------
Witness Name:
Title:
- ----------------------------- By: -----------------------------
Witness Gary E. Stevenson
APPROVED by the Combined Board of Directors of the Company and the Subsidiary:
By: ---------------------------------------
Name:
Title: