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 X. Post ("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 December 2, 1994 (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."
(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
19,965 shares of its Common Stock (the "Common Stock"), pursuant to the Parent's
1996 Management 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.
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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 X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Chief Executive Officer
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PRIME SERVICE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: Chief Executive Officer
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EMPLOYEE:
/s/ Xxxxx X. Post
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Xxxxx X. Post
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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 EBITDA
Target Achieved % of Base
Salary Payable
as Bonus3
Equal To Or
Greater Than: But Less
Than:
% 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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