AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 to Employment Agreement (this "Agreement") is made
and entered into effective as of October 25, 1996 by and between Primeco Inc.,
a Texas corporation ("Employer"), Xxxxx Xxxxxxx ("Employee"), and Prime Service,
Inc., a Delaware corporation and parent company of Employer ("Parent").
WHEREAS, Employer and Employee have entered into an Employment Agreement,
dated as of April 1, 1996 (the "Employment Agreement");
WHEREAS, to induce Employee to stay in the employ of Employer, Employer
and Employee desire to amend certain terms and conditions of the Employment
Agreement, including providing for the issuance of options to purchase Common
Stock of the Parent;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINED TERMS. Capitalized terms not defined herein shall have
the meanings set forth in the Employment Agreement.
2. EXTENSION OF PERIOD OF EMPLOYMENT. The "Expiration Date" set
forth in Section 1 of the Employment Agreement shall be amended to be December
2, 1999.
3. INCENTIVE COMPENSATION.
(a) Section 3.1 of the Employment Agreement is hereby amended and
restated in its entirety as follows:
"3.2 INCENTIVE COMPENSATION. In addition to the Base Salary
provided for in Section 3.1 hereof, Employee shall participate in the
Management Cash Incentive Bonus Program (the "Program") as adopted by the
Board and pursuant to which Employee shall be entitled to annual cash
bonuses as set forth on Exhibit B hereto. Employer agrees that it will
not amend or modify the Program in any manner materially adverse to
Employee's interest thereunder without Employee's written consent. It is
understood that by its terms the Program terminates after payment of
bonuses for the year ended December 21, 2001 unless extended beyond that
date by the Board in its sole discretion. Notwithstanding the foregoing,
Employee's bonus payment, if any, under the Program for fiscal 1996 shall
be based upon achievement of the applicable targets by Employer for the
entire fiscal year, but the amount of such bonus payment shall be
prorated in accordance with the number of days during the 1996 fiscal
year that Employee was employed hereunder."
(b) Exhibit B of the Employment Agreement is hereby amended and
restated in its entirety by Exhibit B attached hereto.
4. STOCK OPTIONS. The Parent shall grant Employee options to
purchase 36,300 shares of its Common Stock (the "Common Stock"), pursuant to the
Parent's 1996 Management
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Stock Incentive Plan (the "Plan") and a stock option agreement approved by the
committee administering the Plan (the "Committee"), which options will become
exercisable in accordance with the vesting schedule set forth therein, provided
that the Parent completes an initial public offering of its Common Stock prior
to November 30, 1996.
5. RELOAD OPTIONS. Upon exercise of all or part of an option (other
than a Reload Option (as hereinafter defined)) to purchase shares of Common
Stock granted under the Plan (an "Option") within 30 days of vesting of the
portion of the Option so exercised, with all or part of the payment of the
exercise price in the form of shares of Common Stock, the Committee may, at its
sole and absolute discretion, grant Employee a new Option for shares of Common
Stock equal to the number of shares that were delivered by Employee to the
Parent to pay, in whole or in part, the exercise price of the previous Option (a
"Reload Option"). The exercise price of a Reload Option shall be equal to at
least 100% of the fair market value per share of the Common Stock, as determined
pursuant to Section 5 of the Plan, on the date of the exercise of the previous
Option. The Reload Option shall vest in full on the fifth anniversary of the
effective date (as such term is defined in Employee's stock option agreement
under the Plan) of the Option to which such Reload Option relates. Reload
Options shall not be granted for exercise of a Reload Option. Notwithstanding
the foregoing, no Reload Option shall be granted unless the Plan contains
sufficient shares of Common Stock for such grant.
6. OTHER TERMS AND CONDITIONS. Except as expressly amended or
modified in this Agreement, all terms and conditions of the Employment Agreement
remain in full force and effect.
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IN WITNESS WHEREOF, each of the parties to this Agreement has executed
and delivered this Agreement as of the date first written above.
PRIMECO INC.
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
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Title: Chief Executive Officer
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PRIME SERVICE, INC.
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
------------------------
Title: Chief Executive Officer
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EMPLOYEE:
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
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EXHIBIT B
MANAGEMENT CASH BONUS INCENTIVE PROGRAM
1996 ONLY
For 1996 only, cash bonuses shall be payable pursuant to the following
table, with an EBITDA target for 1996 of $90 million. For 1996 only, Earnings
Before Interest, Taxes, Depreciation and Amortization ("EBITDA") is defined as:
a. Consolidated Net Income (loss) of Prime Service, Inc. (the
"Company") and its subsidiaries as it would appear on a consolidated
statement of income (loss) of the Company prepared in accordance with
U.S. GAAP, consistently applied, which shall reflect a reduction for all
management and employee bonuses payable with respect to the Fiscal Year;
plus (minus)
b. Any provision (benefit) for taxes (including franchise
taxes) deducted (added) in calculating such consolidated net income
(loss); plus
c. Any interest expense (net of interest income), deducted in
calculating such consolidated net income (loss); (minus)
d. Costs charged against any purchase accounting reserves
established in connection with the acquisition; (minus)
e. The effects of the reversal of any excess purchase
accounting reserves established in connection with the acquisition; plus
f. Amortization expenses deducted in calculating consolidated
net income (loss); plus
g. Depreciation expense deducted in calculating consolidated
net income (loss); plus
h. Management fees paid to Investcorp S.A. or its
subsidiaries; plus (minus)
i. Any unusual losses (gains) deducted (added) in calculating
consolidated net income (loss). (Unusual items are intended to include
transactions considered outside the ordinary course of business. EBITDA
will be adjusted to eliminate the effects, if any, of such transactions,
the intent being to calculate EBITDA as if such transactions had not
occurred); plus (minus)
j. Any compensation expense (income) deducted (added) in
calculating consolidated net income (loss) attributable to transactions
involving equity securities of Holding or its subsidiaries.
The Employee and his or her representative shall be provided reasonable
opportunity to review the computation of EBITDA and reasonable access to the
data and information supporting such computation and shall have the right to
challenge in good faith such computation.
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For 1996 only, the percentage of Base Salary payable as bonus shall be
determined as follows:
% of Base
% of 1996 EBITDA Salary Payable
Target Achieved as Bonus(1)
-------------------------- --------------------
Equal To Or But Less
Greater Than: Than:
--------------- ------------
0 85 0
85 90 10-15
90 95 27-40
95 100 43-65
100 110 67-100
110 120 80-120
120 130 93-140
130 140 107-160
140 150 120-180
150 160 133-200
160 170 147-220
170 180 160-240
180 190 173-260
190 200 187-280
200 --- 200-300
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(1) The Company's Board of Directors (the "Board") in its discretion shall
set the bonus percentage amount for each fiscal year within the ranges
indicated, but not less than the bottom of the range. The bonus percentage will
be determined on an individual basis and may differ among eligible employees.
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1997 THROUGH 2001
For 1997 through 2001, cash bonuses under the Management Cash Bonus
Incentive Program are payable to participants in the program in a given year if
the Company's net income for such year exceeds 90% of the net income target (the
"Net Income Percentage") in the Company's budget for such year, as approved by
the Board. EBITDA2 targets for such years shall be as set forth in the
Company's budget for such year, as approved by the Board. EBITDA and net income
targets shall be subject to change in the discretion of the Board for any change
to the capital structure of the Company or Primeco Inc., the Company's
subsidiary, in connection with any acquisitions, equity offerings or other
transactions that would, or would be likely to, materially affect EBITDA or net
income. Upon achievement of the Net Income Percentage, the percentage of Base
Salary payable as bonus shall be determined as follows:
% of Base
% of EBITDA Salary Payable
Target Achieved as Bonus(3)
-------------------------- ------------------
Equal To Or But Less
Greater Than: Than:
---------------- -----------
0 90 0
90 100 50-80
100 110 60-100
110 120 100-105
120 130 105-110
130 140 110-115
140 150 115-120
150 160 120-125
160 170 125-130
170 180 130-135
180 190 135-140
190 200 140-145
200 --- 145-150
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(2) EBITDA for each of 1997 through 2001 shall be defined by the Board in the
budget for each year.
(3) The Board in its discretion shall set the bonus percentage amount for
each fiscal year within the ranges indicated, but not less than the bottom of
the range. The bonus percentage will be determined on an individual basis and
may differ among eligible employees.
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