Exhibit (10)(iii)(A)(15)(ii)
to Form 10-K for 1993
AMENDMENT TO
EMPLOYMENT AGREEMENT
THIS AMENDMENT TO AGREEMENT is made on this 30TH day of JUNE, 1993, between
MATRIXX Marketing Inc., an Ohio corporation with its principal place of business
in Cincinnati, Ohio ("Employer" or "MATRIXX"), Cincinnati Bell Inc., an Ohio
corporation with its principal place of business in Cincinnati, Ohio ("CBI"),
and James F. Orr, an individual residing in Ohio ("Employee").
MATRIXX, CBI and Employee previously entered into an employment agreement
made as of January 1, 1989 (the "Employment Agreement"). The parties now desire
to amend the Employment Agreement, such amendment being supported by full and
adequate consideration, and agree that the Employment Agreement shall be
modified as follows:
I. The introductory language of Section 7(B) shall be amended and restated
as follows:
(B) Except as otherwise set forth in Section 7(C), on the earlier of
the Expiration Date or Employee ceasing to be an employee of Employer, or
any other entity described in Section 14, for any reason (the last day of
the month preceding the Expiration Date or such cessation hereafter being
referred to as the "Performance Award Date"), Employer shall pay a
Performance Award to Employee in an amount determined and on the terms as
follows:
II. Section 7(B)(i) and the introductory language of Section 7(B)(ii)
shall be
amended and restated as follows:
(i) The Performance Award shall be calculated based upon test period
net revenues and pre-tax earnings of Newco (hereinafter referred to as
"MATRIXX" in this Amendment). For purposes hereof, the test period is the
period beginning one year before the Performance Award Date (the date as of
which the payment of the Performance Award by Employer will be deemed to
occur) and ending on the date one year after the Performance Award Date.
Test period net revenues shall equal the total net revenues of MATRIXX for
such 24-month period divided by two. Test period pre-tax earnings shall
equal the pre-tax earnings for such 24-month period divided by two. In
calculating test period pre-tax earnings (or net revenues if such could be
affected), deduction or adjustment shall be made for salaries, bonuses,
employee benefit plan obligations, other compensatory amounts or
reimbursement for employee expenses for any person who devotes
substantially all of his or her time, attention and energy to the business
of MATRIXX, whether or not paid or accrued by MATRIXX.
(ii) Net revenues and pre-tax earnings shall be calculated by
Employer using Employer's standard accounting principles and practices
which shall be in accordance with generally accepted accounting principles
("GAAP"), as employed by Cincinnati Bell Information Systems Inc. Net
revenues shall be defined as gross revenues from sales less uncollectible
reserves. Revenues for a particular month, which are earned in a currency
other than United States
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Dollars, shall be converted to United States Dollars at the average of the
daily rates for conversion of the foreign currency into United States
Dollars during that month. Conversion rates shall be those published in
the Wall Street Journal. Pre-tax earnings shall be defined as gross
revenues less all expenses and costs of doing business (including
Employee's salary, bonus and benefits), except for federal income taxes;
provided, however, that no deduction shall be made for any payment of
dividends by MATRIXX at any time. Provided further that, unless the
parties agree otherwise, for purposes of determining pre-tax earnings, GAAP
"pushdown" accounting rules shall apply in the case of acquisitions. It is
agreed for purposes of this calculation that 75 percent of the purchase
price, including the value of CBI restricted stock issued in connection
with the purchases of ADI and Ameritel, shall be allocated to goodwill and
the amortization of goodwill relating to acquired companies shall be deemed
to occur over a 40-year period. For the purpose of calculating pre-tax
earnings in computing the Performance Award payable to Employee:
III. New Section 7(B)(ii)(a), (b) and (c) shall be added to read as
follows:
(a) interest expense shall be computed monthly, on the amount of
CBI's Average Daily Outstanding Capital Investment in MATRIXX and its
subsidiaries (the "MATRIXX Group"), and deducted from gross revenues.
CBI's Daily Outstanding Capital Investment in MATRIXX, for any day, means
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CBI's Capital Investments in the MATRIXX Group, as of such day, reduced by
MATRIXX's Cash Flow. CBI's Capital Investment in the MATRIXX Group excludes the
first $30,000,000 of capital invested in MATRIXX and excludes CBI's contribution
of TMS to MATRIXX. A portion of all other capital investment shall be included,
in the percentage applicable to the year in which the capital investment is
made, as set forth below:
YEAR INVESTMENT MADE PERCENTAGE
-------------------- ----------
1988 100%
1989 100%
1990 100%
1991 65%
1992 35%
1993 0%
1994 0%
MATRIXX's Cash Flow, as of any day, is the sum of the cash removed
from the MATRIXX Group by CBI's cash management system, from the date of
the Employment Agreement through such day, plus the cash balances of the
MATRIXX Group, as of such day, minus the cash advanced to the MATRIXX Group
by CBI's cash management system from the date of the Employment Agreement
through such day, however, MATRIXX's Cash Flow shall never be less than
zero. The payment of intercorporate invoices is not to be treated as cash
removed from the MATRIXX Group. CBI's Average Daily Outstanding
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Capital Investment in MATRIXX for any month shall be the sum of each day's
Daily Outstanding Capital Investment, divided by the number of days in such
month. The rate of interest shall be the prime rate of CBI's primary bank
minus One Percent (1%).
For example, after exhausting the $30,000,000 of excluded capital, CBI
makes capital investments in MATRIXX of $40,000,000 in 1990, $20,000,000 in
1991 and $30,000,000 in 1992. For March, 1994 the prime rate is Eleven
Percent (11%). Prior to March, CBI's cumulative cash removal from the
MATRIXX Group was $11,000,000, and the cumulative cash advanced was
$500,000. No cash is advanced or removed in March. The cash balances of
the MATRIXX Group during March are a constant sum of $200,000. CBI's
Capital Investment totals $63,500,000 (1990 equals 100% of $40,000,000
invested; 1991 equals 65% of $20,000,000 invested; 1992 equals 35% of
$30,000,000 invested). MATRIXX's Cash Flow is $10,700,000 ($11,000,000
cash removed plus $200,000 cash balances minus $500,000 cash advanced).
CBI's Average Daily Outstanding Capital Investment is $52,800,000
($63,500,000 Capital Investment minus $10,700,000 Cash Flow). The March,
1994 interest charge for purposes of computation of the Performance Award
is $440,000 (one month's interest on $52,800,000 at an annual rate of Ten
Percent (10%), which is the March, 1994 prime rate minus One Percent (1%)).
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(b) foreign currency denominated pre-tax earnings for each month of
the test period will be converted into dollars at the average of the daily
rates for conversion of the foreign currency into United States Dollars
during that month (using rates published in the Wall Street Journal).
Capital Investments in, cash advances to and cash repayments by the MATRIXX
Group shall be recorded in United States Dollars at the time the
investment, cash advance or cash repayment is made even though the funds
are transferred to or from a foreign subsidiary of MATRIXX. Foreign
currency cash balances of the MATRIXX Group for a particular month shall be
valued at the average of the high and low exchange rates for that month, as
published in the Wall Street Journal.
(c) no deduction or adjustment shall be made for the payment of the
Performance Award to Employee or the payment of a similar award or amount
(including a tax gross-up on any such award or amount) to any other person.
IV. New Section 7(B)(vi) shall be added to read as follows:
(vi) If Employee remains in the employ of Employer until the date
preceding the Expiration Date by sixty (60) days, Employee and Employer may
mutually agree to defer the Performance Award payment by Employer until (a)
Employee ceases to be an employee of Employer, or (b) Employee reaches the
age of 65, whichever occurs first. If Employee ceases to remain in the
employ
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of Employer at any time after the Expiration Date and if Employee and
Employer have agreed to defer payment of the Performance Award, Employee
and Employer may mutually agree to further defer such payment for
Employee's Performance Award until a date within three (3) years from the
date of such cessation if Employee and Employer agree to such deferral no
later than sixty (60) days preceding Employee's last date of employment.
The amount of the Performance Award, as calculated pursuant to this
Section 7(B), shall bear interest at the rate as utilized in CBI's
Executive Deferred Compensation Plan, as set from time to time, from the
Expiration Date until the date Employee actually receives such payment
under this Section 7(B)(vi). Such payment amount, plus all accrued
interest thereon, shall be paid to Employee on such date.
V. In all other respects the terms of the Employment Agreement shall
remain as originally executed and as amended, except as necessary for
cross-referencing.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
Agreement to be duly executed on the day and year first above written.
EMPLOYER:
MATRIXX MARKETING INC.
By:/S/ DAVID J. LAHEY
------------------------
David J. Lahey, Chairman of the Board
CINCINNATI BELL INC.
By:/S/ J. T. LAMACCHIA
--------------------------
J.T. LaMacchia, President and COO
EMPLOYEE:
/S/ JAMES F. ORR
----------------------------
James F. Orr
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