Exhibit 10.4
FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT, made and entered into this
30th day of June , 2000, by and between BRAND SERVICES, INC. (formerly known as
BRAND SCAFFOLD SERVICES, INC.), a Delaware corporation (the "Company") and XXXX
X. XXXXXX ("Executive").
W I T N E S S E T H:
WHEREAS, the parties entered into a certain Employment Agreement dated as
of June 1, 1999 (the "Employment Agreement"); and
WHEREAS, pursuant to Section 13. (b) of the Employment Agreement, the
Employment Agreement can be amended by agreement of the parties in writing; and
WHEREAS, the parties desire to amend and modify the Employment Agreement in
certain respects.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the Employment
Agreement is hereby amended as follows.
FIRST: The Employment Agreement is hereby amended by deleting Section 1
thereof, in its entirety, and substituting a new Section with the same number in
lieu thereof which Section shall read as follows:
1. EMPLOYMENT TERM. Executive's continued employment by the Company
shall be for a period which shall commence on April 1, 1999, and shall
terminate on March 31, 2004 (the "Expiration Date"). The period commencing
as of March 31, 1999, and ending on the Expiration Date is hereinafter
referred to as the "Employment Term". Notwithstanding the foregoing, the
Employment Term shall terminate in any and all events upon the termination
of Executive's employment hereunder.
SECOND: The Employment Agreement is hereby amended by deleting Section 3
thereof, in its entirety, and substituting a new Section with the same number in
lieu thereof which Section shall read as follows:
3. BASE SALARY. During the Employment Term, the Company shall pay
Executive a base salary (the "Base Salary") at the annual rate of not less
than (i) $375,000 for the period January 1, 1999 through December 31, 1999
and '(ii) $390,000 for the period January 1, 2000 through the Expiration
Date,
payable in arrears, in accordance with the usual payment practices of the
Company. Executive's Base Salary shall be subject to periodic review by the
Compensation Committee of the Company, not less frequently than annually,
beginning January 1, 2000.
THIRD: The Employment Agreement is hereby amended by deleting Section 3
thereof, in its entirety, and substituting a new Section with the same number in
lieu thereof which Section shall read as follows:
5. EMPLOYEE BENEFITS.
(a) During the Employment Term:
(i) Executive shall be entitled to participate on a basis no less
favorable than other senior executives of the Company in all retirement, welfare
benefit, incentive compensation, perquisite and other plans and arrangements of
the Company applicable to senior executives of the Company as in effect from
time to time; and
(ii) Executive shall be reimbursed on a monthly basis for the
lease of an automobile in an amount not to exceed $775/month and Executive shall
be reimbursed on a monthly basis for the then current monthly dues and
assessments as charged by Executive's country club.
(b) In addition, for the period commencing on the date of this
Agreement and ending upon the issuance by Nationwide Life Insurance Company of
the "Policy", as defined in Section 5-1/2, below, the Company shall assume the
obligation to pay premiums in an amount up to $2,000 annually under Executive's
life insurance policy with First Colony (No. 2619072) having a face amount of
$600,000.
FOURTH: The Employment Agreement is amended by inserting an additional
Section between Section 5 and Section 6, to be known as Section 5-1/2, which
Section shall read as follows:
5-1/2. PAYMENT OF LIFE INSURANCE PREMIUMS PURSUANT TO SPLIT DOLLAR
AGREEMENT. Executive is or shall be the owner of a certain life insurance
policy issued by Nationwide Life Insurance Company (the "Insurer") on the
life of Executive having an initial face amount of Three Million Three
Hundred Sixty-Nine Thousand Three Hundred Fifty-Four Dollars ($3,369,354)
(the "Policy"). The Company shall remit annually to the Insurer certain
payments of premiums on the Policy pursuant to a Split Dollar Agreement to
be entered into between The Company and Executive in the form attached
hereto as Exhibit "A" and made a part hereof (the "Split Dollar
Agreement"). Obligations due the Company under the Split Dollar Agreement
and under this Section 5-1/2 shall be secured by a Collateral Assignment
entered into between the Company and Executive in the form attached hereto
as Exhibit "B" and made a part hereof
2
(the "Collateral Assignment). Pursuant to the terms and conditions of the
Split Dollar Agreement:
(a) Subject to the provisions of paragraph (b), below, so long as
Executive has not materially breached this Employment Agreement, the
Company shall remit annually to the Insurer as payment of premiums on the
Policy, the following amounts on the following dates:
The date on which the Policy is to be issued $200,000
First anniversary of the issue date of the Policy $200,000
Second anniversary of the issue date of the Policy $200,000
Third anniversary of the issue date of the Policy $200,000
Fourth anniversary of the issue date of the Policy $200,000
(b) Notwithstanding any provision of paragraph (a), above, to the
contrary, in the event of a change of control of fifty-one percent (51%) or
more of the common stock of the Company, other than a sale into the public
markets, then not later than immediately prior to the occurrence of such
change of control, the Company shall deposit cash in an amount equal to the
aggregate amount of the then unpaid premium installments set forth in
paragraph (a), above, with the Trustee of a "rabbi" trust, the form for
which is attached hereto as Exhibit "C" and made a part hereof (the "Rabbi
Trust"). So long as Executive has not materially breached this Agreement,
the Trustee of the Rabbi Trust shall remit annually, on the dates and in
the amounts specified in paragraph (a), above, from the Rabbi Trust to the
Insurer as payment of premiums on the Policy, those premium installments
specified in paragraph (a), above, unpaid on the date of such change of
control. Following such change of control and the deposit by the Company
with the Trustee of the Rabbi Trust of the aggregate sum required pursuant
to this paragraph (b), the obligation to remit those premium installments
specified in paragraph (a), above, unpaid on the date of such change of
control shall be the obligation of the Trustee of the Rabbi Trust and not
that of the Company.
In the event of the insolvency of the Company as provided in the Rabbi
Trust agreement, Executive shall have the right to pay any of the premiums
specified hereunder when due.
(c) In the event of a material breach by Executive of a provision of
this Employment Agreement at any time on or before the fifth (5th)
anniversary of the issue date of the Policy, then the Company, in addition
to any other remedies it may otherwise have available at equity or at law,
shall have the right to enforce its rights under this Agreement, the Split
Dollar Agreement and the Collateral Assignment and surrender the Policy and
receive the entire cash surrender value thereof, and any remaining balance
then funding the Rabbi
3
Trust, in partial or full satisfaction, as the case may be, of the
Company's rights under this Agreement and/or the Split-Dollar Agreement.
FIFTH: The Employment Agreement is hereby amended by deleting paragraph (c)
of Section 7 thereof, in its entirety, and substituting a new paragraph with the
same letter in lieu thereof which paragraph shall read as follows:
(c) DISABILITY; BY THE COMPANY WITHOUT CAUSE. The Employment Term
shall terminate prior to the Expiration Date, at the Company's election, if
Executive incurs a Disability (as defined below). In addition, the
Employment Term may be terminated prior to the Expiration Date by the
Company without Cause.
If the Employment Term is terminated prior to the Expiration Date by
reason of Disability or by the Company without Cause, subject to
Executive's continued compliance with the covenants set forth in Section
10, Executive shall receive (i) the amounts described under Section 7(a);
(ii) continued payment of Base Salary through the last day of the 24th
month following the date of termination (the "Severance Period"); (iii)
continued coverage under the Company's welfare benefit arrangements as in
effect from time to time through the earlier of (A) the end of the
Severance Period, and (B) such time as Executive is eligible to receive
comparable welfare benefits from a subsequent employer; and (iv) in the
case of a termination by the company without Cause, a Bonus payment equal
to $39,000 multiplied by the number of months remaining in the Severance
Period, payable at the time bonuses are paid to the Company's other senior
executives.
All other benefits following termination of the Employment Term
pursuant to this Section 7(c) shall be determined in accordance with the
plans, policies and practices of the Company. Provided, in the event of the
disability of Executive, the provisions of Section 6(f)(i)(B) of the DU
Brand Holdings, Inc. Stock Option Plan in effect as of the date of the
execution of this Agreement shall be of no effect and neither DU Brand
Holdings, Inc. nor its successor or designee shall have the absolute right
to acquire any shares owned or acquired by Executive, his spouse and lineal
descendants or any trust the beneficiaries of which consist only of such
Executive, the Executive's spouse or lineal descendants. Notwithstanding
the foregoing, any such shares shall remain subject to the terms and
conditions of the Amended and Restated Shareholders Agreement dated as of
September 30, 1996 among DU Merchant Banking Partners, L.P; DU
International Partners, C.V.; DU Offshore partners, C.V.; DU Merchant
Banking funding, Inc.; Carlisle-Brand Investors, L.P.; Rust Industrial
Services, Inc.; DU Brand Holdings, Inc.; Brand Scaffold Services, Inc.; and
Certain Individuals.
4
SIXTH: The Employment Agreement is hereby amended by deleting Section 8
thereof, in its entirety, and substituting a new Section with the same number in
lieu thereof which Section shall read as follows:
8. Change of Control. In the event of a change of control of 51% or
more of the common stock of the Company, other than a sale into the public
markets, Executive shall have the option to terminate his employment with
the Company and to receive for a period of 24 months following his
termination (a) the Executive's then-current monthly salary; (b) a monthly
bonus of $39,000; and (c) all Employee Benefits described in Section 5 of
this Agreement.
SEVENTH: The Employment Agreement is hereby amended by deleting Section 9
thereof, in its entirety, and substituting a new Section with the same number in
lieu thereof which Section shall read as follows:
9. CHANGE OF JOB RESPONSIBILITIES. In the event of a change of control
of 51% or more of the common stock of the Company, other than a sale into
the public markets, if Executive's job responsibilities are changed from
those described in Section 2 of this Agreement, Executive shall have the
option to terminate his employment with the Company and to receive for a
period ending on the last day of the 24th month following the Executive's
termination or the Expiration Date, whichever is later, (a) the Executive's
then-current monthly salary; (b) a monthly bonus of $39,000; and (c) all
Employee Benefits as described in Section 5 of this Agreement.
EIGHTH: The Employment Agreement is hereby amended by deleting paragraph
(a) of Section 10 thereof, in its entirety, and substituting a new paragraph
with the same letter in lieu thereof which paragraph shall read as follows:
(a) Executive acknowledges and recognizes the highly competitive
nature of the businesses of the Company and its affiliates and accordingly
agrees that during the Employment Term, and thereafter, through the fifth
(5th) anniversary of the issue date of the Policy:
(i) Executive will not directly or indirectly engage in any
business which is in competition with any line of business conducted by the
Company or its affiliates (including without limitation by performing or
soliciting the performance of services for any person who is a customer or
client of the Company or any of its affiliates) whether such engagement is as an
officer, director, proprietor, employee, partner, investor (other than as holder
of less than 1% of the outstanding capital stock of a publicly traded
corporation), consultant, advisor, agent, sales representative or other
participant, in any geographic area in which the Company or any of its
affiliates conducted any such competing line of business.
5
(ii) Executive will not directly or indirectly assist others in
engaging in any of the activities in which Executive is prohibited from engaging
in by clause (i) above.
NINTH: The Employment Agreement is amended by inserting an additional
Section between Section 12 and Section 13, to be known as Section 12-1/2, which
Section shall read as follows:
12-1/2. EXCISE TAX IMPOSED ON EXECUTIVE AS A RESULT OF CHANGE OF
CONTROL. If (i) there occurs a change of control of fifty-one percent (51%)
or more of the common stock of the Company, other than a sale into the
public markets, and (ii) Executive shall be liable for any tax imposed
under Section 4999 of the Internal Revenue Code of 1986, as amended, or any
successor provision thereto, as a result of payments under this Employment
Agreement, then not later than the due date for the payment of any such
tax, the company shall pay to Executive (a) an amount equal to such tax,
plus (b) an amount equal to any additional taxes incurred by Executive as a
result of the tax payments to Executive prescribed pursuant to clause (a),
immediately preceding, and this clause (b).
TENTH: The Employment Agreement is amended by inserting an additional
paragraph between paragraphs (m) and (n) of Section 13, to be known as paragraph
(m'), which paragraph shall read as follows:
(m') FEES AND EXPENSES IN EVENT OF BREACH BY COMPANY FOLLOWING CHANGE
OF CONTROl. Notwithstanding any provision of paragraph (m), above, to the
contrary, in the event of a breach of this Agreement by the Company at any
time after a change of control of fifty-one percent (51%) or more of the
common stock of the Company, other than a sale into the public markets,
whether or not litigation is commenced, then, the Company shall pay to
Executive, in addition to any damages incurred by Executive, the costs and
expenses incurred by Executive in connection with such breach (including,
without limitation, all court costs and reasonable attorneys' fees and
costs.
ELEVENTH: The Employment Agreement, as modified by this First
Amendment to Employment Agreement, shall remain in full force and effect
according to the terms thereof.
6
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Employment Agreement the day and year first above written.
/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
"Executive"
BRAND SERVICES, INC.
By:__
Title:
the "Company"
