Exhibit 10.1

 

AMENDMENT NO. 2

TO

EMPLOYMENT AGREEMENT

OF

ZACHARY PARKER

 

This Amendment No. 2 (this “Amendment”) to the employment agreement of Zachary
Parker dated February 9, 2010 and as previously amended on June 1, 2011 (the
“Employment Agreement”), is made and entered into as of November 21, 2012 (the
“Effective Date”), by and between Zachary Parker (the “Employee”) and DLH
HOLDINGS CORP. (formerly, TeamStaff, Inc.), a New Jersey corporation (the
“Company”).

 

W I T N E S S E T H:

 

WHEREAS, the Company and the Employee entered into the Employment Agreement to
govern the terms of Employee’s employment by the Company as President and Chief
Executive Officer; and

 

WHEREAS, the Company and the Employee desire to amend the Employment Agreement
to provide, among other things, an extension of the term of the agreement, a
change in Base Salary and an additional grant of Options; and

 

NOW, THEREFORE, it is mutually agreed by and between the parties hereto as
follows:

 

SECTION 1. Amendments to the Employment Agreement.  As of the Effective Date,
the following amendments to the Employment Agreement shall be deemed effective:

 

A.                                    Section 4.1 of the Employment Agreement is
hereby amended and restated as follows:

 

4.1                               During the term of this Agreement, Employee
shall be compensated initially at the rate of $288,000 per annum, subject to
such increases, if any, as determined by the Board of Directors, or if the Board
so designates, the Management Resources and Compensation Committee (the
“Committee”), in its discretion, at the commencement of each of the Company’s
fiscal years during the term of this Agreement (the “Base Salary”). The Base
Salary shall be paid to the Employee in accordance with the Company’s regular
executive payroll periods. Notwithstanding the foregoing, in the event the
Company reports positive net income for a fiscal quarter ending prior to the
Expiration Date of this Amendment (as such terms are defined below in
Section 1(B) of

 

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this Amendment), as determined in accordance with generally accepted accounting
principles (the “Initial Performance Target”), Employee’s Base Salary shall be
increased 5% effective as of the first day of the next succeeding fiscal
quarter. The determination as to whether the Initial Performance Target has been
achieved shall be made in good faith by the Audit Committee of the Company’s
Board of Directors in connection with its review of the Company’s financial
statements to filed with the U.S. Securities and Exchange Commission as part of
a Quarterly Report on Form 10-Q of Annual Report on Form 10-K.

 

In addition, in the event that the Company achieves the Initial Performance
Target, if the Company thereafter continues to report positive net income on a
quarterly basis (as determined in accordance with generally accepted accounting
principles in the same manner as described in the immediately preceding
paragraph) for two additional sequential quarterly periods prior to the
Expiration Date of this Amendment (the “Second Performance Target”), Employee’s
Base Salary (as adjusted) shall be increased by an additional 5% effective as of
the first day of the next succeeding fiscal quarter following satisfaction of
the Second Performance Target.  By way of example, if the Company achieves the
Initial Performance Target (as contemplated herein) Employee’s Base Salary,
shall increase to $302,400. If the Company thereafter achieves the Second
Performance Target (as contemplated herein), Employee’s Base Salary will
increase to $317,520.

 

B.                                    Sections 8.1 and 8.2 of the Employment
Agreement are hereby amended and restated as follows:

 

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8.1                               This Agreement shall be for a term (the
“Initial Term”) commencing on the Effective Date as set forth above (the
“Commencement Date”) and terminating on September 30, 2015 (the “Expiration
Date”), unless sooner terminated upon the death of the Employee, or as otherwise
provided herein. In addition, upon the mutual written consent of the Company and
Employee, at any time prior to the Expiration Date, this Employment Agreement
shall be extended for an additional period of one (1) year (the “Option Year”)
commencing on the date of such mutual written consent of the parties (the
“Option Exercise Date”). In the event the parties agree to exercise the Option
Year, (a) the Expiration Date shall be the date that is the one (1) year
anniversary date of the Option Exercise Date and (b) the Company shall pay to
Employee a bonus payment (the “Option Year Bonus”) of $50,000, which amount
shall be paid in full within 15 days following the Option Exercise Date,
provided Employee has not voluntarily resigned, or been terminated for Cause
prior to such date. The Option Year Bonus would be in addition to any other
bonus payment that Employee may be entitled to under the Employment Agreement.

 

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8.2                               Unless this Agreement is earlier terminated
pursuant to the terms hereof, the Company agrees to use its best efforts to
notify the Employee in writing of the Company’s intention to continue Employee’s
employment after the Expiration Date no less than 90 days prior to the
Expiration Date. In the event the Company either (i) fails to notify the
Employee in accordance with Section 8.2, (ii) notifies Employee that it does not
intend to continue the Employee’s employment after the Expiration Date, or
(iii) after notifying the Employee pursuant to Section 8.2, fails to reach an
agreement on a new employment agreement prior to the Expiration Date, then upon
termination of the Employee’s employment on or after the Expiration Date for any
reason except Cause, the Company shall pay Employee the Severance Payment,
Accrued Compensation and the Continuation Benefits.

 

C.                                    Article XI of the Employment Agreement is
hereby amended to add the following section as follows:

 

11.1A (a)  As an inducement to Employee to enter into this Amendment, the
Company hereby grants to Employee options to purchase 250,000 shares of the
Company’s Common Stock, $.001 par value (the “Options”), subject to the terms
and conditions of the Company’s 2006 Long Term Incentive Plan, as amended (the
“Plan”), and the terms and conditions set forth in the Stock Option Agreement
which are incorporated herein by reference.  The Options shall be exercisable at
a per share exercise price equal to the Closing Price of the Company’s Common
Stock on the date of execution of this Amendment (the “Exercise Price”). 
Provided Employee is an employee of the Company on the vesting date, and unless
otherwise provided by this Agreement, the Options shall vest in full if the
Closing Price of the Company’s Common Stock equals or exceeds the lesser of
(i) $4.00 per share or (ii) a per share price equal to 200% of the Exercise
Price,

 

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in each case for ten consecutive trading days. The “Closing Price of the
Company’s Common Stock” shall be determined in accordance with Section 11.3 of
the Employment Agreement. In the event that the Company effects a subdivision or
consolidation of its Common Stock or other capital readjustment, the payment of
a stock dividend, or other recapitalization, then the above-stated metric for
determining the vesting of the Options granted hereunder shall automatically be
adjusted to reflect such event.

 

(b)                                 Notwithstanding anything else to the
contrary set forth herein or in the Employment Agreement, in the event of a
termination of Employee’s employment with the Company pursuant to
Section 9.1(ii) or pursuant to Section 8.2 of the Employment Agreement, as
amended, or by the Employee for Good Reason and provided that the Stock Options
granted pursuant to this Amendment have vested (the “Vested Options”) on or
prior to the effective date of such termination, then notwithstanding anything
herein, the Employment Agreement or in any stock option agreement to the
contrary, the exercise period in which Employee may exercise the Vested Options
to purchase shares of Common Stock of the Company shall be extended for a period
of twelve (12) months from the effective date of the termination of Employee’s
employment with the Company and the terms of the Vested Options shall be deemed
amended to take into account the foregoing provisions. It is further expressly
agreed that in the event that the termination event which would result in the
Employee receiving the benefits described in this paragraph occurs in connection
with a Change in Control, Employee shall be entitled to receive the benefits
described in this paragraph.

 

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D.                                    The Employment Agreement is further
amended by adding a new Article XIIA as follows:

 

ARTICLE XIIA

 

SECTION 409A COMPLIANCE

 

12A.1               To the extent applicable, it is intended that any amounts
payable under this Agreement shall either be exempt from Section 409A of the
Code or shall comply with Section 409A (including Treasury regulations and other
published guidance related thereto) so as not to subject Employee to payment of
any additional tax, penalty or interest imposed under Section 409A of the Code.
The provisions of this Agreement shall be construed and interpreted to the
maximum extent permitted to avoid the imputation of any such additional tax,
penalty or interest under Section 409A of the Code yet preserve (to the nearest
extent reasonably possible) the intended benefit payable to Employee.
Notwithstanding the foregoing, the Company makes no representations regarding
the tax treatment of any payments hereunder, and the Employee shall be
responsible for any and all applicable taxes, other than the Company’s share of
employment taxes on the severance payments provided by the Agreement. Employee
acknowledges that Employee has been advised to obtain independent legal, tax or
other counsel in connection with Section 409A of the Code.

 

12A.2               Notwithstanding any provisions of this Agreement to the
contrary, if Employee is a “specified employee” (within the meaning of
Section 409A of the Code and the regulations adopted thereunder) at the time of
Employee’s separation from service and if any portion of the payments or
benefits to be received by Employee upon separation from service would be
considered deferred compensation under Section 409A of the Code and the
regulations adopted thereunder (“Nonqualified Deferred Compensation”), amounts
that would otherwise be payable pursuant to this Agreement during the six-month
period immediately following Employee’s

 

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separation from service that constitute Nonqualified Deferred Compensation and
benefits that would otherwise be provided pursuant to this Agreement during the
six-month period immediately following Employee’s separation from service that
constitute Nonqualified Deferred Compensation will instead be paid or made
available on the earlier of (i) the first business day of the seventh month
following the date of Employee’s separation from service and (ii) Employee’s
death. Notwithstanding anything in this Agreement to the contrary, distributions
upon termination of Employee’s employment shall be interpreted to mean
Employee’s “separation from service” with the Company (as determined in
accordance with Section 409A of the Code and the regulations adopted
thereunder).  Each payment under this Agreement shall be regarded as a “separate
payment” and not of a series of payments for purposes of Section 409A of the
Code.

 

12A.3               Except as otherwise specifically provided in this Agreement,
if any reimbursement to which the Employee is entitled under this Agreement
would constitute deferred compensation subject to Section 409A of the Code, the
following additional rules shall apply: (i) the reimbursable expense must have
been incurred, except as otherwise expressly provided in this Agreement, during
the term of this Agreement; (ii) the amount of expenses eligible for
reimbursement during any taxable year will not affect the amount of expenses
eligible for reimbursement in any other taxable year; (iii) the reimbursement
shall be made as soon as practicable after Employee’s submission of such
expenses in accordance with the Company’s policy, but in no event later than the
last day of Employee’s taxable year following the taxable year in which the
expense was incurred; and (iv) the Employee’s entitlement to reimbursement shall
not be subject to liquidation or exchange for another benefit.

 

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E.                                     Article XV of the Employment Agreement is
hereby amended and restated as follows:

 

ARTICLE XV

 

NOTICE

 

For the purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when (a) personally delivered or (b) sent by (i) a nationally
recognized overnight courier service or (ii) certified mail, return receipt
requested, postage prepaid and in each case addressed to the respective
addresses as set forth below or to any such other address as the party to
receive the notice shall advise by due notice given in accordance with this
paragraph. All notices and communications shall be deemed to have been received
on (A) if delivered by personal service, the date of delivery thereof; (B) if
delivered by a nationally recognized overnight courier service, on the first
business day following deposit with such courier service; or (C) on the third
business day after the mailing thereof via certified mail.  Notwithstanding the
foregoing, any notice of change of address shall be effective only upon receipt.

 

The current addresses of the parties are as follows:

 

IF TO THE COMPANY:

DLH Holdings Corp.

 

1776 Peachtree Drive NW

 

Suite 300S

 

Atlanta, GA 30309

 

 

WITH A COPY TO:

Victor J. DiGioia

 

Becker & Poliakoff, LLP

 

45 Broadway

 

New York, NY 10006

 

 

IF TO THE EMPLOYEE:

Zachary Parker

 

 

WITH A COPY TO:

Not Applicable

 

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SECTION 2.  General Provisions.

 

A.                                          Modification; Full Force and Effect.
Except as expressly modified and superseded by this Amendment, the terms,
representations, warranties, covenants and other provisions of the Employment
Agreement are and shall continue to be in full force and effect in accordance
with their respective terms.

 

B.                                          Governing Law. This Agreement has
been negotiated and executed in the State of Georgia which shall govern its
construction and validity.

 

C.                                          References to the Employment
Agreement. After the date hereof, all references to “this Employment Agreement,”
“this Agreement” and phrases of similar import, shall refer to the Employment
Agreement, as previously amended, and as amended by this Amendment (it being
understood that all references to the date hereof or the date of this Employment
Agreement shall continue to refer to February 9, 2010 unless a different date is
expressly referenced).

 

D.                                          Definitions. Capitalized terms used
but not defined herein shall have the meanings ascribed to such terms in the
Employment Agreement.

 

E.                                           Counterparts. This Amendment may be
executed in several counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument. Executed counterparts
may be delivered via facsimile or other means of electronic transmission.

 

F.                                            Entire Agreement; Modifications.
This Amendment contains the entire agreement and understanding of the parties
with respect to its subject matter and supersedes all prior arrangements and
understandings between the parties, both written and oral, with respect to its
subject matter. This Amendment may not be amended or modified except in the
manner for amendment of the Employment Agreement as set forth therein. The
observance of any term of this Amendment may be waived (either generally or in a
particular instance and either retroactively or prospectively) in the manner set
forth in the Employment Agreement and the failure of any party at any time or
times to require performance of any provision hereof shall in no manner affect
the rights at a later time to enforce the same.  No waivers of or exceptions to
any term, condition, or provision of this Amendment, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition, or provision. This Amendment shall be
binding upon and shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and assigns.

 

Remainder of page intentionally left blank; signature page follows.

 

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IN WITNESS WHEREOF, the parties hereto have individually signed this Amendment,
and in the case of the Company, have caused this Amendment to be signed by its
authorized representative, all as of the date first written above.

 

 

 

DLH HOLDINGS CORP.

 

 

 

 

 

By:

/s/ Peter Black

 

 

Peter Black

 

 

Chairman of the Management Resources and Compensation Committee

 

 

 

 

 

/s/ Zachary C. Parker

 

Zachary Parker

 

Employee

 

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