1
EXHIBIT 10.52
AMENDMENT
TO
EMPLOYMENT AGREEMENT
OF
LORRI PALKO
THIS AMENDMENT made as of this ___ day of January, 2000 by and between
DORSEY TRAILERS, INC. (the "Company") and LORRI PALKO ("Executive");
WITNESSETH:
WHEREAS, the Company and Executive entered into an Employment Agreement,
dated as of November 17, 1997 (the "Employment Agreement"), providing for the
terms and conditions of Executive's employment by the Company as its President
and Chief Operating Officer; and
WHEREAS, the Company has recently named a new Chief Executive Officer, and,
effective July 1, 2000, the Company will likely name a new President and Chief
Operating Officer or eliminate the position; and
WHEREAS, the Company desires for Executive to remain employed as its
President and Chief Operating Officer through June 30, 2000; and
WHEREAS, the parties now desire to amend the Employment Agreement in the
manner hereinafter provided;
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Employment Agreement, the parties
hereby agree, as follows:
1. Section 1(b) of the Employment Agreement is hereby amended by deleting
said section in its entirety and substituting in lieu thereof the following:
2
(b) The initial term of Executive's employment under this
Agreement shall be the period commencing on November 17,1997 and ending on
December 31, 1999 (the "Initial Term"). The term of Executive's employment
shall be extended, for the next succeeding 6-month period, commencing on
January 1, 2000 and ending on June 30, 2000 (the "Extended Term"). For
purposes of this Agreement, the Initial Term and the Extended Term shall be
referred to collectively as the "Term." If Executive remains employed by
the Company after the expiration of the Term, she shall be considered an
"at will" employee and her duties and terms of condition of employment
shall be determined by the Board. Until the date that Executive's
employment terminates under the Agreement, Executive shall continue to be
employed by the Company as provided in Section 1(a) hereof and to receive
the benefits and compensation provided in Section 2 hereof; provided,
notwithstanding anything herein to the contrary, the Base Salary level in
effect as of December 15, 1999 shall not be reduced during the remainder of
Executive's employment under the Agreement.
2. Section 3 of the Employment Agreement is hereby amended by
deleting said section in its entirety and substituting in lieu thereof the
following:
3. Retention and Termination Benefits.
(a) Subject to Executive's rights to receive the compensation and
benefits under this Section 3, the Company shall have the right to
terminate Executive's employment at any time, and payments of compensation
and benefits under Section 2 for periods after her termination date shall
cease. If Executive remains employed by the Company hereunder through June
30, 2000, whether or not her employment with the Company ends as of such
time, or if Executive's employment is terminated before June 30, 2000 other
than (i) by the Company for
2
3
Cause (as defined in subsection (e)(i) hereof), (ii) upon Executive's
Disability (as defined in subsection (e)(iii) hereof) or death, or (iii) by
Executive without Good Reason (as defined in subsection (e)(iv) hereof),
the Company (A) no later than the later of (x) 7 days after her employment
is terminated or (y) 2 days after the last day of the revocation period for
her release of the Company (as described in subsection (d) hereof), shall,
subject to Executive's compliance with Section 4 of the Agreement, pay to
Executive a lump-sum amount equal to one year's Base Salary as in effect on
the last day of her employment hereunder; (B) effective as of July 1, 2000,
shall cause 35,000 unvested option (or such lesser number as are then
unvested) of the outstanding stock options granted to Executive by the
Company to become fully vested and immediately exercisable and shall cause
the term of the 90,000 options granted to Executive (or such lesser number
as Executive then holds) to be extended for the five-year period commencing
on July 1, 2000; and (C) if Executive's employment with the Company has
terminated, shall provide Executive with the benefits described in
subsection (b) hereof.
(b) The health and group term life insurance benefits coverage in
effect at the date of Executive's termination shall be continued at the
same level and in the same manner as if Executive had continued her
employment, beginning on the date of Executive's termination and ending on
the date 12 months from the date of Executive's termination. Any additional
coverages Executive had at termination, including dependent coverage (but
no supplemental executive medical coverage), will also be continued for
such period on the same terms, to the extent permitted by the applicable
policies or contracts. Any costs Executive was paying for such coverages at
the time of termination shall be paid by Executive through monthly
deductions from the amount payable hereunder or, if such withholding cannot
be done on a monthly basis, by separate check payable to the Company each
month in advance.
3
4
(c) If, prior to June 30, 2000, a Change of Control occurs and
Executive's employment is terminated after, or coincidentally with, such Change
in Control (i) by the Company, other than for Cause, Disability or death, or
(ii) by Executive for Good Reason, Executive shall be entitled: (A) to continue
to receive her Base Salary and health and group term life insurance benefits as
if she had remained actively employed through June 30, 2000; and (B) to receive
on June 30, 2000 the retention and termination benefits provided in subsections
(a) and (b) as if she had remained employed through June 30, 2000.
(d) To be entitled to any of the compensation and benefits described
above in this Section 3, Executive shall sign a release in favor of the Company
in the form attached to this Agreement as Exhibit A. No payment shall be made
under this Section 3 until such release has been properly executed and delivered
to the Company and until the expiration of the revocation period, provided under
the release. If the release is not properly executed by Executive and delivered
to the Company within the reasonable time period specified in the release, the
Company's obligations under this Section 3 will terminate.
(e) For purposes of this Agreement, the following definitions shall
apply:
(i) "Cause" -- For purposes of this Agreement, the term "Cause"
shall mean:
(A) Executive's fraud, malfeasance, gross negligence, or willful
misconduct with respect to the business affairs of the Company, (B) Executive's
refusal or repeated failure to follow the established reasonable and lawful
policies of the Company, (C) Executive's failure to follow the directions and
business decisions of the Chief Executive Officer of the Company, (D) conviction
of a felony or crime involving moral turpitude, or (E) Executive's making any
false and malicious oral or written statement to a third party which (1) is
disparaging to the Company, its officers, directors, employees, affiliates
4
5
(including TruckBay.com, Inc. or its affiliates, "TruckBay"), or their
practices, and which causes material damages to the Company or
TruckBay; or (2) materially interferes with or materially impairs the
Company's normal business operations or the operations of TruckBay, or
the Company's relationship with its customers, dealers or suppliers,
and causes material damages to the Company or TruckBay; or (3)
materially interferes with or materially impairs any efforts by
management of the Company to effectuate a sale of the Company or
substantially all of its assets.
A termination of Executive for Cause based on clause (B) or (C) of
the preceding paragraph shall take effect 30 days after Executive
receives from the Company written notice of intent to terminate,
including the Company's description of the alleged cause, unless
Executive shall, during such 30-day period, remedy the events or
circumstances constituting Cause.
Any termination of Executive for Cause under clause (E) must be
made by action of a Committee comprised of the Chief Executive Officer
of the Company and the members of the Board other than the Chairman of
the Board, all determined as of January 1, 2000, and may only become
effective after Executive has been given 30 days' written notice of
such termination and a hearing has been held before said Committee
during which evidence of Executive's alleged violation of Clause (E)
will be presented, and Executive will have an opportunity to challenge
and refute such evidence and question any witnesses. Executive shall
have the right to have an attorney represent her at the hearing. If,
after such hearing, the Committee determines that the Executive is to
be terminated for Cause under clause (E), Executive shall have the
right to a denovo determination of the issue by arbitration
administered by the American Arbitration Association (AAA) under its
5
6
Commercial Arbitration Rules. During the arbitration, no deference
shall be given to the decision or findings of the Committee. Any
decision rendered by such arbitration may be entered in any court
having jurisdiction thereof. The Company will pay all costs and
expenses of the arbitration, except the costs and expenses of
Executive's counsel (which Executive may later recover if the
arbitrator rules in her favor). The parties will select one arbitrator
in accordance with the AAA rules. Until the earlier of the date a final
ruling is issued by the arbitrator or June 30, 2000, the Company shall
continue to pay Executive her monthly Base Salary and to provide her
with the benefits described in Section 3(b), and after such date,
Executive's compensation (but not her benefits) shall cease pending the
arbitration decision; provided, if the arbitrator rules in favor of the
Company, Executive shall repay to the Company the aggregate of all
amounts of Base Salary paid to her for periods after the effective date
of her termination through June 30, 2000, and if the arbitrator rules
in favor of Executive, subject to Executive's execution of the release
described in subsection (d) above, the Company shall pay and award the
Executive all compensation and benefits that would have been due under
Section 3 if she had remained employed through June 30, 2000 (with
interest at the rate of 8% per annum from June 30, 2000 until the
payment date on the lump sum amount payable under 3(a)(A) above), less
the aggregate amount of Base Salary paid to Executive with respect to
periods after her termination of employment and until June 30, 2000,
and shall pay the reasonable attorneys' fees and expenses incurred by
Executive in connection with resolving the dispute based under clause
(E). As used in clause (E), the term "third party" shall include
parties that are not affiliated with the Company or its affiliates
(including TruckBay), and shall also include employees of the Company
and the employees of the Company's
6
7
affiliates (including TruckBay), but shall not include the Chief
Executive Officer or the Directors of the Company.
(ii) "Change in Control" - a Change in Control shall be deemed
to have occurred (A) upon consummation of a merger, consolidation or
other business combination of the Company with any other "person" (as
such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) or affiliate thereof, other than a
merger, consolidation or business combination which would result in
the outstanding common stock of the Company immediately prior to such
transaction continuing to represent (either by remaining outstanding
or by being converted into common stock of the surviving entity or a
parent or affiliate thereof) at least fifty percent (50%) of the
outstanding common stock of the Company or such surviving entity or
parent or affiliate thereof outstanding immediately after such
merger; or (B) if more than 25% of the then outstanding shares of
Common Stock of the Company are, in a single transaction or in a
series of related transactions, sold or otherwise transferred to or
are acquired by (except as collateral security for a loan) any other
corporation, association or other person, entity or group, whether or
not any such shareholder or any shareholders included in such group
were shareholders of the Company prior to the Change in Control
(excluding any shareholder who on the date hereof owns 25% or more of
the outstanding shares of Common Stock of the Company); or (C) if all
or substantially all of the assets of the Company are sold or
otherwise transferred to or otherwise acquired by any other
corporation, association or other person, entity or group; or (D) if
during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, cease for any reason to
constitute at least a majority thereof, unless the election of
7
8
each new director was approved in advance by a vote of at least a
majority of the directors then still in office who were directors at
the beginning of the period.
(iii) "Disability" or "Disabled" -- Executive's absence from his
duties on a full-time basis for 180 consecutive business days as a
result of incapacity due to physical or mental illness or injury.
(iv) "Good Reason" -- For the purposes of this Agreement, "Good
Reason" shall mean: (A) a material breach of this Agreement by the
Company which is not corrected within 30 days of notice of such breach
by Executive; (B) any significant demotion of Executive to a different
position; (C) any significant reduction in Executive's
responsibilities or job duties; or (D) the officers or directors of the
Company or any affiliate (including TruckBay) make any false and
malicious oral or written statement to a third party which is
disparaging to Executive and which causes material damages to
Executive.
4. This Amendment shall be effective as of January 1, 2000. Except as
hereby modified, the provisions of the Employment Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
EXECUTIVE:
-------------------------------
Lorri Palko
COMPANY:
DORSEY TRAILERS, INC.
BY:
----------------------------
8