EXHIBIT 10(i)
November 14, 1996
Reference is made to: (i) the Asset Purchase Agreement dated as of
December 1, 1992 and Amendment to Asset Purchase Agreement dated July 30, 1993
(collectively, the "Purchase Agreement") by and among Allied Bond & Collection
Agency, a Pennsylvania general partnership, Xxxxxxx Xxxxxx and Xxxxxxx X. Silver
(collectively referred to in this letter as the "Partners"), The Union
Corporation, a Delaware corporation ("Union"), and Allied Bond & Collection
Agency, Inc., a Delaware corporation (the "Company"), and (ii) the employment
agreements dated as of December 1, 1992 (the "Employment Agreements") by and
among the Company, Union and each of the Partners. Unless otherwise defined
herein, the capitalized terms used herein shall have the meaning ascribed
thereto in the Purchase Agreement and/or Employment Agreements.
-2-
This will confirm that, effective as of the date hereof, the Purchase
Agreement and the Employment Agreements shall be deemed amended in the following
respects:
(1) The parties hereto agree that, for purposes of determining Tier-
One Additional Consideration and Tier-Two Additional Consideration payable to
the Partners pursuant to Section 1.5 of the Purchase Agreement, as well as
calculation of the bonus payable to each of the Partners pursuant to Section (B)
of Article THIRD of the respective Employment Agreements, Adjusted Pretax Income
of the Company for any fiscal period commencing on and after July 1, 1995 shall
include the pretax income of Interactive Performance, Inc. ("IPI"), a wholly-
owned subsidiary of Union incorporated in connection with the performance of
certain services on behalf of AT&T Corp. ("AT&T"), adjusted to exclude (A)
revenues and profits generated by IPI in connection with all non-accounts
receivable collection activities performed on behalf of AT&T ("Non-ARC
Services") and (B) the results of IPI's wholly-owned subsidiary, Interactive
Performance of Florida, Inc. ("IP of Florida"), and any other subsidiary of IPI
unless otherwise agreed to in writing by Union (as adjusted, such pretax income
shall hereinafter be referred to as "IPI Pretax Income"). IPI Pretax Income for
any period shall include, in addition to all income and expenses which are
included in the general ledger or other books and records of IPI (excluding
those
-3-
of IP of Florida and revenues and expenses associated with Non-ARC Services),
(i) all reasonable and proportional costs incurred by Union and/or any
affiliates of Union on behalf of IPI during such period in connection with the
performance of services by IPI on behalf of AT&T, including but not limited to
insurance, tax preparation, travel and auditing services , (ii) an interest
charge with respect to any funds of Union and/or any affiliates of Union
advanced to or on behalf of, or otherwise utilized by, IPI, which charge will be
calculated utilizing the interest rate charged to Union (as may be adjusted from
time to time) on amounts which Union has borrowed under that certain Amended and
Restated Revolving Credit Agreement dated as of December 31, 1994 (the "Credit
Agreement") between Union and The First National Bank of Boston, as amended, or
amounts borrowed under whatever may be Union's principal working capital lending
facility if First National Bank of Boston is no longer the principal lender to
Union (or, in the event Union has no borrowings outstanding under the Credit
Agreement or successor working capital facility during any period for which an
interest calculation is required under this Agreement, the parties shall utilize
the interest rate that would have been applied under the Credit Agreement or
successor facility had borrowings been outstanding during such period), (iii)
12.5% of the cost of all compensation and benefits payable by Union and any of
its affiliated companies to Xxxxxxx X. Xxxxxx during such period, excluding the
non-discretionary
-4-
bonus which may be earned by Xx. Xxxxxx during such period pursuant to Paragraph
(B)(i) of Article THIRD of the employment agreement dated as of July 1, 1995 by
and among Union, Capital Credit Corporation and Xx. Xxxxxx (and any similar
bonus which may be earned by Xx. Xxxxxx in any subsequent employment agreement
entered into by him with Union and/or any of its affiliated companies), but in
no event shall the charge required by this clause (iii) exceed $50,000 in any
year, and (iv) 5% of the cost of all compensation and benefits payable by Union
and any of its affiliated companies to Xxxxxxxx X. Xxxx, but in no event shall
the charge required by this clause (iv) exceed $10,000 in any year.
(2) Paragraph (B)(i) of Article THIRD of each of the respective
Employment Agreements shall be amended to read in its entirety as follows:
"(B) (i) Employee shall receive a bonus for each fiscal year
ended June 30 ("Fiscal Year") commencing with the Fiscal Year ending
in 1993, calculated as a percent of Base Salary in accordance with the
table attached hereto as Exhibit A. Such percent shall be determined
by comparing the Company's current Fiscal Year Adjusted Pretax Income
with the greater of (a) the highest Adjusted Pretax Income in any
Fiscal Year during the period of employment hereunder and
(b) $4,621,452, which is the annual income of Allied Bond & Collection
Agency ("AB&CA") for the calendar year 1992 on which the purchase
price for the acquisition of the business and assets of AB&CA (the
"Acquisition") is based ("1992 AB&CA Adjusted Pretax Income"). For
purposes of the first Fiscal Year hereunder, the basis of comparison
will be such portion of the 1992 AB&CA Adjusted Pretax Income as is
-5-
determined by multiplying the 1992 AB&CA Adjusted Pretax Income by a
fraction, the numerator of which shall be the number of days from and
after the date of closing of the Acquisition through and including
June 30, 1993 and the denominator of which is 365.
"Adjusted Pretax Income" for purposes of this Agreement (other
than 1992 AB&CA Adjusted Pretax Income) shall be determined in
accordance with the provisions applicable to the determination of
Adjusted Pretax Income of Purchaser set forth in the Asset Purchase
Agreement dated as of December 1, 1992 by and among Union, Purchaser,
Employee, the Co-Chairman and AB&CA (the "Asset Purchase Agreement")
relating to the Acquisition as amended for Fiscal Years beginning on
and after July 1, 1992 by the provisions of that certain letter
agreement dated November 14, 1996 by and among Union, Purchaser,
Employee and the Co-Chairman, except that any bonus expense payable to
Employee and the Co-Chairman hereunder shall not be deducted for
purposes of determining Adjusted Pretax Income under this Agreement."
Each of the Partners acknowledges that no bonus has been earned by him under
Section (B) of Article THIRD of his respective employment agreement for any
fiscal year beginning with the fiscal year ended June 30, 1993.
(3) Exhibit A shall be amended to read in its entirety as follows:
"EXHIBIT A
Each principal will receive an annual bonus which is calculated as a
percent of his base salary. The bonus percent will be based on the
percent increase in the Company's current year Adjusted Pretax Income
versus the greater of (a) the highest Adjusted Pretax Income for each
fiscal year during the period ending June 30, 1998, and (b)
$4,621,452, which is the 1992 AB&CA Adjusted Pretax Income. (See
table below.)
-6-
=====================================================
INCREASE IN % OF BASE SALARY TO BE PAID
ADJUSTED PRETAX INCOME AS BONUS
-----------------------------------------------------
less than 10% 0%
-----------------------------------------------------
10% to 20% 2 x Increase %
-----------------------------------------------------
21% to 25% 4 X Increase %
-----------------------------------------------------
26% to 30% 6 X Increase %
-----------------------------------------------------
greater than 30% 7 X Increase %"
=====================================================
(4) Xxxxxxx X. Silver acknowledges that the Company and Union have
satisfied their obligation to him to provide the life and disability insurance
required to be furnished to him pursuant to Section (F) of Article THIRD of his
Employment Agreement by offering to make such insurance available to him, he has
elected to forego such insurance through the remainder of the term of the
Employment Agreement and is waiving any and all rights he had or has, now or in
the future, under the Employment Agreement to such insurance. Xxxxxxx Xxxxxx
acknowledges that the Company and Union have satisfied their obligation to him
to provide the disability insurance required to be furnished to him pursuant to
Section (F) of Article THIRD of his Employment Agreement by offering to make
such insurance available to him, he has elected to forego such insurance through
the remainder of the term of the Employment Agreement and is waiving any and all
rights he had or has, now or in the future, under the Employment Agreement to
such insurance. Concerning the life insurance
-7-
benefit to which he is still entitled under the Employment Agreement, Xxxxxxx
Xxxxxx acknowledges that the obligations of Union and the Company with respect
to such insurance only relate to the payment of the premiums in respect of such
insurance, and it shall be Xxxxxxx Xxxxxx'x responsibility to take whatever
actions may be necessary to keep such insurance in effect.
(5) The parties hereto agree that, for a period of five years
following termination of their respective employment with the Company (except if
such termination is by the Company for Cause), each Partner and his spouse will
continue to be covered, at the Company's expense, under the Company's group
medical insurance coverage in which they are participants at the time of
termination (which coverage will be an indemnity-based, fee-for-service medical
plan and will not utilize a "gatekeeper" primary care physician component common
in health maintenance organizations), provided they are eligible for inclusion
in such group coverage. In addition, each of the Partners (or if such Partner
dies during the five year period referred to above, his respective spouse),
shall have the right to elect to discontinue participation in the Company's
group medical plan and arrange for medical insurance of his or her own choosing.
In the event (i) a Partner or spouse either (a) is not eligible or becomes
ineligible for participation in the Company medical insurance plan or (b) elects
to discontinue participation in the plan, or
-8-
(ii) the Company terminates such group medical insurance plan, the only
obligation of the Company under this Section 5 will be to pay the applicable
Partner or spouse (as the case may be) an amount equal to the monthly insurance
premium paid by the Company in respect of the Partner (and/or spouse) under the
Company plan at the time of the occurrence of either (i) or (ii), as the case
may be, which amount shall be fixed at the time of such occurrence and shall be
paid each month thereafter to the Partner or spouse, as the case may be, for the
remainder of the five year period referred to above.
In all other respects, the Purchase Agreement and Employment
Agreements shall remain in full force and effect.
-9-
Please acknowledge your agreement with the foregoing by countersigning
this letter in the space provided below.
THE UNION CORPORATION
By:/s/ XXXXXX X. XXXXXX
-------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman
ALLIED BOND & COLLECTION
AGENCY, INC.
By:/s/ XXXXXXX XXXXXX
-------------------------
Name: Xxxxxxx Xxxxxx
Title: Executive Vice
President
AGREED:
/s/ XXXXXXX XXXXXX
-----------------------
Xxxxxxx Xxxxxx
/s/ XXXXXXX X. SILVER
-----------------------
Xxxxxxx X. Silver
