Exhibit 99.9
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
This Amendment No. 1 to Employment Agreement (this "Agreement") is made
and entered into as of June 8, 1997, by and between Prime Service, Inc., a
Delaware corporation and successor by merger to Primeco Inc., a Texas
corporation ("Employer"), and Xxxxx X. York ("Employee").
WHEREAS, Employer and Employee have entered into an Employment Agreement,
dated as of October 25, 1996 (the "Employment Agreement");
WHEREAS, Employer and Employee desire to amend the Employment Agreement
to address the possibility of a change in control of Employer;
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 are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Defined Terms.
(a) Capitalized terms not defined herein shall have the meanings
set forth in the Employment Agreement.
(b) As used herein and in the Employment Agreement, the following
terms shall have the following meanings:
"Change in Control" shall mean any of the following events: (i)
any Person, other than Investcorp S.A., its affiliates and the
executive officers of Employer ("Permitted Holders"), becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a Person shall be
deemed to have beneficial ownership of shares that such Person has a
right to acquire only if such right to acquire is immediately
exercisable) of more than 50% of the shares of capital stock of
Employer normally entitled to vote for the election of directors; or
(ii) at any time (a) Employer shall consolidate, merge, or effect a
share exchange with any other Person unless after giving effect
thereto more than 50% of the shares of capital stock of the
continuing or surviving Person (or an affiliate of such Person that
controls such Person) normally entitled to vote for directors shall
be beneficially owned by Permitted Holders or (b) Employer shall
sell or otherwise transfer more than 50% of the assets or earning
power of Employer and its subsidiaries (taken as a whole) to any
Person. For this definition, "Person" shall have the meaning
ascribed to such term in Section 3(a)(9) of the Securities Exchange
Act of 1934 and used in Sections 13(d) and 14(d) thereof, including
a "group" as used in Section 13(d) thereof.
"Change in Control Date" shall mean the date immediately prior
to the effectiveness of a Change in Control.
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2. Amendments. If a Change in Control occurs, the Employment Agreement
shall be amended, effective as of the Change in Control Date, as set forth in
this Section 2:
(a) Exhibit B to the Employment Agreement shall be restated in its
entirety to read as appended hereto.
(b) Section 4 of the Employment Agreement is amended by deleting
the words "payments or" from the second sentence thereof.
(c) Section 6.1 of the Employment Agreement is amended by adding a
new Section 6.1(e) to read as follows:
(e) For Good Reason. At the option of Employee, at any time
prior to the Expiration Date, for any of the following reasons (each
a "Good Reason"), whereupon Employer shall become obligated to make
those payments set forth in Section 7.1(d) hereof: (i) there is a
material adverse change in Employee's title from that which he held
on the Change in Control Date (provided that the removal of or
failure to elect Employee as a director of the Company shall not
constitute "Good Reason"); (ii) Employee's duties as an employee are
materially reduced or diminished from those in effect on the Change
in Control Date without Employee's written consent; (iii) Employer
reduces Employee's compensation after the Change in Control Date;
(iv) Employer amends or modifies the Program or benefits as in
effect on the Change in Control Date in any manner materially
adverse to Employee's interest thereunder; or (v) Employer requires
that Employee's employment be based more than 60 miles from the
location of Employer's executive offices on the Change in Control
Date, without Employee's written consent.
(d) Section 7.1(a) of the Employment Agreement is restated in its
entirety to read as follows:
(a) If Employer terminates Employee's employment for Cause or
if Employee voluntarily terminates his employment other than for
Good Reason, Employer's obligation to compensate Employee shall in
all respects cease as of the Date of Termination, except that
Employer shall pay Employee the Base Salary accrued under Section 3
hereof and the reimbursable expenses incurred under Section 5 hereof
up to such Date of Termination (the "Accrued Obligations");
(e) Section 7.1(d) of the Employment Agreement is restated in its
entirety to read as follows:
(d) If Employee's employment is terminated by Employer
pursuant to Section 6.1(d) or by Employee for Good Reason pursuant
to Section 6.1(e), Employer's obligation to compensate Employee
shall in all respects cease, except that within thirty (30) days
after the Date of Termination Employer shall pay to Employee the
Accrued Obligations, and for the period ending on the earlier of the
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Expiration Date or the second anniversary of the Date of
Termination (the "Severance Period"), Employer shall:
(i) pay to Employee, at Employee's election, (A) on a
monthly basis, for each month in the Severance Period, an
amount equal to one-twelfth (1/12th) of the annual Base Salary
of Employee in effect at the Date of Termination or the Change
in Control Date, whichever is greater, or (B) in a single
payment, made within thirty (30) days after the Date of
Termination, the aggregate amount of such monthly Base Salary
payments for the Severance Period (the "Continuation Payments");
(ii) pay to Employee: (A) at Employee's election, (1) on a
monthly basis, for each month in the Severance Period, an
amount equal to one-twelfth (1/12th) of the bonus payment
payable to him under the Program for the fiscal year prior to
the fiscal year in which the Date of Termination occurs (each a
"Monthly Bonus Payment") or (2) in a single payment, made
within thirty (30) days after the Date of Termination, the
aggregate amount of all Monthly Bonus Payments for the
Severance Period; and (B) if the Date of Termination occurs in
the 1997 fiscal year, in a single payment made within thirty
(30) days after the Date of Termination, an amount equal to the
bonus payment paid to him under the Program for the 1996 fiscal
year (annualized, if Employee was employed by Employer for less
than all of such fiscal year), prorated for the period from the
beginning of the 1997 fiscal year through the Date of
Termination; and
(iii) continue to maintain, during the Severance
Period for the benefit of Employee and his dependents, basic
health, dental and life insurance and related medical expenses
coverage (including disability and hospitalization coverage)
(the "Continuation Benefits") on terms no less favorable to
Employee than Employer provides to its executive officers
generally, as such benefits may be modified from time to time
during the Severance Period.
During the Severance Period, Employee shall be required to make any
contributions required to maintain such Continuation Benefits, which
may be withheld from the Continuation Payments (if monthly payments
thereof are elected by Employee); provided that such contributions
are also required to be made by Employer's executive officers
generally. If at any time during the Severance Period Employee shall
obtain employment with a third party (the "Substitute Employer") in
which Employee is entitled to receive basic health benefits in
connection with such employment on terms provided by the Substitute
Employer to its similarly situated employees generally, Employer
shall no longer be required to provide Continuation Benefits to
Employee, regardless of whether such benefits differ in any respect
from the Continuation Benefits. Employer shall be excused from its
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obligations to make payments under this Section 7.1(d) if Employee
breaches its obligations hereunder (including its obligations under
Article 8 hereof).
(f) Section 8.4(a) of the Employment Agreement is amended by
restating the first sentence thereof in its entirety to read as follows:
(a) Employee acknowledges and recognizes the highly
competitive nature of Employer's business and, in consideration
of the payment by Employer to Employee of amounts that may
hereafter be paid to Employee pursuant to Sections 7.1 or
8.4(d) hereof, Employee agrees that during the period (the
"Covered Time") (i) for a termination pursuant to a Notice of
Termination, beginning on the Date of Termination and ending
(A) if Employee's employment is terminated for any reason other
than pursuant to Section 6.1(d) hereof or Section 6.1(e)
hereof, on the second anniversary of the Date of Termination or
(B) if Employee's employment is terminated pursuant to Section
6.1(d) hereof or Section 6.1(e) hereof on the earlier of the
second anniversary of the Date of Termination or the last day
of the Severance Period, or (ii) for a termination on the
expiration of the term of this Agreement (but subject to
compliance with Section 8.4(d) hereof), beginning on the date
of such expiration and ending on the date (not later than the
first anniversary of the date of such expiration) established
pursuant to Section 8.4(d) hereof, Employee will not compete
with the business of Employer, which means that Employee will
not engage, directly or indirectly, in the "Covered Business"
(as hereinafter defined) in any state of the United States of
America in which the Employer is conducting business or
proposes to conduct business as of the Date of Termination and
any states contiguous therewith (these areas are hereinafter
collectively referred to as the "Covered Area").
(g) Section 8.4(d) of the Employment Agreement is hereby restated
in its entirety to read as follows:
(d) If the term of this Agreement (and any extensions
thereof) expires pursuant to Section 1 hereof, Employer may
elect to have the Covered Time extend from the date of
expiration of the term of this Agreement (and any extensions
thereof) up to and through the first anniversary of such date
by delivering written notice to Employee (specifying the
duration of such Covered Time), within ten (10) days of the
date of expiration, that Employer has elected to continue to
pay to Employee the monthly Continuation Payments in the amount
described in Section 7.1(d)(i)(A) hereof (treating such Covered
Time as the Severance Period for such purpose) and provide the
Continuation Benefits as described in Section 7.1(d)(iii)
hereof (treating such Covered Time as the Severance Period for
such purpose) (on terms no less favorable to Employee than
Employer provides to its executive officers generally, as such
benefits may be modified from time to time) for each month of
such
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Covered Time. During such Covered Time, Employee shall be
required to make any contributions required to maintain such
Continuation Payments; provided that such contributions are
also required to be made by the Employer's executive officers
generally. If at any time during such Covered Time Employee
shall obtain employment with a Substitute Employer in which
Employee is entitled to receive basic health benefits in
connection with such employment on terms provided by the
Substitute Employer to its similarly situated employees
generally, Employer shall no longer be required to provide
Continuation Benefits to the Employee, regardless of whether
such benefits differ in any respect from the Continuation
Benefits. Employer shall be excused from its obligations to
make payments under this Section 8.4(d) if Employee breaches
its obligations hereunder.
3. Stock Option Vesting. Notwithstanding the vesting schedules
provided in the Stock Option Agreement, dated as of April 1, 1996, as
amended, or the Stock Option Agreement, dated as of October 25, 1996, each
between Employer and Employee (collectively, the "Stock Option Agreements"),
all options granted thereunder shall become immediately exercisable upon a
Change in Control unless prior thereto such options shall have been exercised
or shall have expired.
4. Golden Parachute Gross-Up.
(a) If the aggregate of the benefit payments under this Agreement
and the Stock Option Agreements would cause the payment of one or more of
such benefit payments to constitute an "excess parachute payment" as
defined in Section 280G(b) of the Internal Revenue Code ("Code"), then
Employer will pay to the Internal Revenue Service for the account of
Employee, when Employee's underlying tax liability is due and payable
(but subject to paragraphs (b), (c) and (d) below), an additional amount
in cash (the "Gross-Up Payment") equal to the amount necessary to cause
the net amount retained by Employee, after deduction of any (i) excise
tax on the payments under this Agreement and the Stock Option Agreements,
(ii) federal, state or local income tax on the Gross-Up Payment, and
(iii) excise tax on the Gross-Up Payment, to be equal to the aggregate
remuneration Employee would have received under this Agreement and the
Stock Option Agreements, excluding such Gross-Up Payment (net of all
federal, state and local excise and income taxes), as if Sections 280G
and 4999 of the Code (and any successor provisions thereto) had not been
enacted into law.
(b) The Gross-Up Payment provided for in paragraph (a) above shall
not be made unless Employee provides written notice to Employer setting
forth, in reasonable detail, the amounts and calculation of such benefit
payments constituting "excess parachute payments" and accompanied by a
written opinion of a nationally recognized accounting firm confirming
that such benefit payments constitute "excess parachute payments," with
such notice and opinion received by Employer prior to the time that
Employee pays any tax based on or files any tax return claiming receipt
of "excess
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parachute payments." The reasonable fees and expenses of obtaining such
opinion shall be paid by Employer.
(c) Upon receipt of the opinion described in paragraph (b) above,
Employer will have thirty (30) days to notify Employee whether it wishes
to obtain an opinion (the "Second Opinion") from a nationally recognized
accounting firm selected by Employer that such benefit payments
constitute "excess parachute payments." Employer shall have thirty (30)
days to obtain the Second Opinion. If the accounting firm rendering the
Second Opinion concludes that such benefit payments do not constitute
"excess parachute payments," Employee and Employer shall each prepare
their respective tax returns on that basis.
(d) If based on the Second Opinion Employee does not report the
receipt of any "excess parachute payments," then notwithstanding any
other provision of this Agreement or the Stock Option Agreements,
Employer shall nevertheless be liable for the Gross-Up Payment provided
for in paragraph (a) above if Employee provides copies to Employer within
ten (10) days of any and all notices or other correspondence from a tax
authority of an examination of Employee's returns for the tax periods in
which Employee received payments under this Agreement and the Stock
Option Agreements ("Examination Notice"), and provides Employer with the
right to represent Employee in connection with any such examination.
Employer also agrees to indemnify Employee from and hold harmless
Employee against any costs reasonably incurred by Employee in connection
with any such Examination Notice to the extent attributable to the
receipt by Employee of amounts considered "excess parachute payments"
contrary to the conclusion of the Second Opinion.
5. Other Terms and Conditions. Except as expressly amended or modified
in this Agreement, all terms and conditions of the Employment Agreement and
the Stock Option Agreements remain in full force and effect.
6. Termination. This Agreement, including the amendments and
modifications of the Employment Agreement and the Stock Option Agreements
effected hereby, shall cease to have any force or effect if (a) on September
30, 1997, there shall not be in effect a binding definitive agreement,
providing for a Change in Control, to which Employer or any of its
controlling stockholders is party, or (b) a Change in Control shall not have
occurred by December 31, 1997.
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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.
EMPLOYER:
PRIME SERVICE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Title: Chairman of the Board, President and
Chief Executive Officer
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EMPLOYEE:
/s/ Xxxxx X. York
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Xxxxx X. York
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EXHIBIT B
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 Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA") for such year equals or exceeds 90% of the EBITDA
target in the Company's budget for such year, as approved by the Board,
provided that the EBITDA target for 1997 is $135 million, as set forth in the
Employer's 1997 budget. EBITDA targets for 1998-2001 shall be as set by the
Board in its sole discretion. EBITDA targets shall be subject to change in
the discretion of the Board for any change to the capital structure of the
Company in connection with any acquisitions, equity offerings or other
transactions that would, or would be likely to, materially affect EBITDA or
net income. The percentage of Base Salary payable as bonus shall be
determined as follows:
% of EBITDA % of Base Salary
Target Achieved Payable as Bonus(1)
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Equal To Or Greater Than: But Less 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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(1) 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.
