Fill and Sign the Fy2000 Omnibus Appropriations Act Federation of American Form

§APPROVAL OF HOLT EMPLOYMENT AND RELATED AGREEMENTS (ITEM 2) Under amendments to the Code that are effective for fiscal years beginning in 1994 and subsequent years, no deduction is allowed for annual compensation in excess of $1 million paid by a publicly traded corporation to its chief executive officer and the four other most hi ghly compensated officers. However, there is no limitation on the deductibility of “quali fied performance-based compensation.” To satisfy this definition, (i) the compensation must be pa id solely on account of the attainment of one or more pre-established, objective performance goals; (ii) the performance goals under which compensation is paid must be established by a compensation committee comprised solely of two or more directors who qualify as “outside directors” for purposes of the exception; (iii) the material terms under which the com pensation is to be paid must be disclosed to and subsequently approved by shareholders of the corporation in a separate vote before payment is made; and (iv) the compensation committee m ust certify in writing before payment of the compensation that the performance goals and any other mat erial terms were in fact satisfied. Under proposed regulations published on December 20, 1993, compensation attributable to a stock option is deemed to satisfy the performance goal requirement (summarized in (i) above) if (1) the grant or award is made by the compensation committee; (2) the pl an under which the option is granted states the maximum number of shares with respect to whi ch options may be granted during a specified period to an employee; and (3) under the terms of the option, the amount of compensation is based solely on an increase in the value of the stock a fter the date of grant. According to the proposed regulations, a director is an “outside director” if he or she is not a current employee of the corporation; is not a former employee who receives compensa tion for prior services (other than under a qualified retirement plan); has not been an office r of the corporation; and does not receive remuneration directly or indirectly in any capa city other than as a director. The Company and TASC have entered into an employment agreement and stock option and change of control compensation agreements with John C. Holt. These agreements are subject to shareholder approval at the Annual Meeting. The Company is submitting these agreements for shareholder approval at the Annual Meeting in an effort to comply with the requirements to obtain a federal income tax deduction for the full amount of performance-based compensati on to be paid to Mr. Holt. The Company has in the past used long term cash incentives and stock options as an important device to motivate and reward its executive officers as well as the e xecutive officers of its subsidiaries, and believes that equity incentives represented by stock options enha nce its ability to attract and retain key personnel. The Committee and the Board have determined that it is in the best interests of the Company to provide a compensation arrangement for Mr. Holt that rewards him for gains in the value of TASC and for gains in shareholder wealth. To this end and after consultation with independent compensation consultants, the Company negotiated wit h Mr. Holt the following compensation arrangements, including the long term cash incentive and grant of options. The Company believes that these arrangements are appropriate in light of Mr. Holt’s level of responsibility, importance to the Company and past levels of compensation. Employment AgreementPursuant to the terms of his employment, Mr. Holt is employed as Executive Vice President of the Company and Chief Executive Officer and President of TASC. The term of his employment agreement ends December 31, 1998. Mr. Holt’s annual salary under the agreement is $400,000, increased from time to time as determined by the board of directors of TASC. Mr. Holt is also eligible to receive an annual bonus of 40 percent of his base salary provide d pre- specified financial and non-financial goals are met. However, this bonus will be at least $100,000 annually, except that the minimum bonus for 1994 is 40 percent of the salary actually paid to him during 1994. The bonus may be as much as 100 percent of Mr. Holt’s annual salary, depending upon the extent to which performance goals, to be established by the Compensation Committee of the Company and approved by the board of directors of TASC at or near the beginning of each year after consultation with Mr. Holt, are achieved or exceeded. Eighty percent of Mr. Holt’s annual bonus opportunity will be based on selected TASC financial goals and the remainder will be based on individual goals set for Mr. Holt. The performance bonus wil l not be paid unless and until the Compensation Committee shall have certified in writing that the performance goals have been obtained. In addition to his salary and bonus under the employment agreement, Mr. Holt will also be entitled to a long-term incentive cash payment if TASC achieves an aggre gate growth in its “economic value-added” (“EVA”) of more than ten percent per year. For this purpose “EVA” is defined as TASC’s net annual operating income before goodwill and acquisition costs, minus interest payments by TASC, plus interest received by TASC, minus an annual capita l charge equal to ten percent of the average book value of TASC, and plus any amount paid by TASC or any of its subsidiaries to satisfy a judgment in, or to settle, a lawsuit or proceeding in which TASC was involved on the date of the agreement. If the aggregate amount of EVA grows a t an annual rate of 30 percent or more over the five year period ending December 31, 1998, from the 1993 EVA, the maximum cash payment will be $5,000,000. If the EVA grows at an annual rate of more than 10 percent but less than 30 percent, the cash payment will be proportionatel y less than the $5,000,000 maximum amount. No payment will be due if the actual EVA grows at a t en percent or less annual rate. If the amount due is more than $2,000,000, TASC may make the payment in three equal annual installments, with interest at one percent over prim e, beginning not later than March 31, 1999. Mr. Holt will forfeit any amounts that he may have earned under this long-term incentive arrangement if (i) he terminates his employment with TASC prior to December 31, 1998 or his employment with TASC is terminated for “cause” as that te rm is defined in the agreement; or (ii) TASC does not achieve a compound growth rate of EVA of greater than ten percent for the five years ended December 31, 1998. The long-term incent ive cash payment will not be made unless and until the Compensation Committee shall have certified in writing that the relevant growth in EVA shall have been attained and that other material terms have been satisfied. Under the employment agreement, Mr. Holt is also entitled to participate in retirement and other employee benefit plans and fringe benefits provided by TASC and to the use of an automobile for business use or in lieu thereof an automobile allowance. He will be ent itled to receive up to $5,000 annually as reimbursement for expenses incurred in obtaining tax and est ate planning assistance and will be paid up to $2,500 as reimbursement for legal expenses in connection with the employment agreement. He will receive relocation benefits in accordance with the Company’s established policy and, in addition, he has been paid $200,000 (less applicable taxes) to help offset certain expenses associated with the agreement. Mr. Holt’s compensation and benefits for serving as a member of the Board of Directors of the Company will terminate as of the date of the agreement, but options previously gra nted to him as a director will continue in accordance with their terms. No options were gra nted to Mr. Holt under the Non-Employee Directors Stock Option Plan on February 28, 1993, the date when annual grants were made to the other outside directors, in view of Mr. Holt’s agreement to become an employee of TASC in April 1993. Under the employment agreement, the board of directors of TASC may terminate Mr. Holt’s employment at any time with or without cause. However, termination other than termination for cause by a two-thirds vote of the board would subject TASC to liability for liquidated damages in an amount equal to two times the amount of Mr. Holt’s annual salary at the time of the termination. In addition, if the termination without cause occ urs in 1996, 1997 or 1998, Mr. Holt would be entitled to an additional cash payment based upon the growth in EVA for the number of full calendar years during which Mr. Holt was actually employed by TASC (with 1994 being treated as a full year for this purpose). He also would be entitled to rece ive a lump sum cash payment of $150,000 from the Company in the event his employment is terminated by TASC, with or without cause. This potential $150,000 payment is in lieu of Mr. Holt receiving any benefits under the Company’s Supplemental Death Benefit and Ret irement Income Plan (see page 7 for a discussion of these benefits). Under the employment agreement, for a period of twelve months following termination of the agreement, Mr. Holt is prohibited from soliciting business from customers of TASC or t he Company, from inducing any customer to reduce its business with TASC or the Company or any of its subsidiaries, and from soliciting any employee of TASC or the Company to leave the employ of TASC, the Company or any subsidiary or affiliate. For a period of two years following termination of his employment, Mr. Holt agreed to keep confidential certai n trade secrets and confidential information of TASC or any of its subsidiaries or affiliates. Stock Option AgreementPursuant to the employment agreement, the Company has granted to Mr. Holt an option to purchase 500,000 shares of the Company’s Common Stock for $13.50 per Share, which exceeded the closing price on the New York Stock Exchange of a share of Company Common Stock on the date of grant. Such option is evidenced by a stock option agreement dated Februa ry 28, 1994 between the Company and Mr. Holt. Generally, the option becomes exercisable to the extent of 100,000 shares on February 27, 1995, 1996, 1997 and 1998 and becomes fully exercisable on December 31, 1998. The option will become fully exercisable in the eve nt of a “change of control” as defined for purposes of the change of control compensation agreement between Mr. Holt and the Company and, in such event, Mr. Holt may elect to have the option cashed out based upon the greater of the highest price per share paid or offered in any transa ction related to a change of control or the highest price per share paid in any transacti on reported on an exchange at any tithe during the preceding 60-day period. Also, all options will become fully exercisable in the event of termination of Mr. Holt’s employment without cause and Mr. Holt will be entitled to exercise the option for 90 days following such termination. If Mr. Holt ’s employment terminates other than by reason of death, disability or involuntary termina tion without cause, the option will terminate. In the event of Mr. Holt’s death or disability, the option will continue to be exercisable, to the extent it had become exercisable before termination of employment, for one year. Under the option agreement, Mr. Holt will be permitted to borrow from the Company to exercise the option. The maximum amount he can borrow is the lesse r of 80 percent of the fair market value of the stock at the time of exercise or 100 perc ent of the option price. Mr. Holt will be required to pledge the stock he purchases through exercise of t he option to secure the loan and will be required to increase the amount of collatera l (or pay down the loan) so that the outstanding balance of the loan is not more than 90 percent of t he value of the collateral at any time. The term of the loan will not exceed three years. The loan will bear interest at the lowest rate so as not to require imputation of interest income under federal income tax laws. The loan will become payable in full upon termination of Mr. Holt’s employment other than by reason of disability or death, except that the loan will be payable on the 90th day following an involuntary termination of Mr. Holt’s employment by TASC without cause. The option is not transferable other than by reason of death. The shares subject to the option a nd the option exercise price will be adjusted appropriately to reflect changes in the Com pany’s capitalization. At March 16, 1994, the market value of the 500,000 shares of Company Common Stock subject to the option granted to Mr. Holt was $7,187,500 based upon a closing sale price of the Company’s Common Stock on that date of $14.375 per Share. Subject to the vesting requirements described above, the net value (before applicable taxes) to be realize d by Mr. Holt upon the exercise of the option was $437,500 on such date. The grant of the option will not be a taxable event for Mr. Holt or the Company. Upon exercising the option, Mr. Holt will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the stock on the date of exercise (except that, if Mr. Holt is subject to certain restrictions imposed by the securities laws, the measurement date will be deferred, unless he makes a special tax elec tion within 30 days after exercise to have income determined without regard to the restrictions). If the Company complies with applicable withholding requirements, it will be entitled to a busine ss expense deduction in the same amount and at the same time as Mr. Holt recognizes ordi nary income. Upon a subsequent sale or exchange of shares acquired pursuant to the exercise of a nonqualified option, Mr. Holt will have taxable gain or loss, measured by the difference between the a mount realized on the disposition and the tax basis of the shares (generally, the amount pai d for the shares plus the amount treated as ordinary income at the time the option was exerc ised). If Mr. Holt surrenders shares of Common Stock in payment of part or all of the exercise price for t he options, no gain or loss will be recognized with respect to the shares surrendered. The basis of the shares surrendered will be treated as the substituted tax basis for an equivalent num ber of option shares received and the new shares will be treated as having been held for the same holding period as had expired with respect to the transferred shares. The difference between the aggregate option exercise price and the aggregate fair market value of the shares rec eived pursuant to the exercise of the option will be taxed as ordinary income. Mr. Holt’s basi s in the additional shares will be equal to the amount included in his income. Under current fe deral income tax law, the highest tax rate on ordinary income is 36 percent plus a 10 perc ent surtax, and long-term capital gains are subject to a maximum tax rate of 28 percent. Be cause of certain provisions in the law relating to the “phase out” of personal exemptions and certain l imitations on itemized deductions, the federal income tax consequences to a particular taxpaye r of receiving additional amounts of ordinary income or capital gain may be greater than would be indic ated by application of the foregoing tax rates to the additional amount of income or gain. Change of Control Compensation AgreementMr. Holt has also entered into a change of control compensation agreement with the Company. In the event of a change of control of the Company, the agreement provides that t he Company will pay to Mr. Holt an amount generally equal to three times the average annual compensation paid to him during the preceding five years if his employment is termi nated by the Company without cause within three years after a change of control. The agreement m ay be unilaterally rescinded or amended by the Board of Directors of the Company without the c onsent of Mr. Holt prior to a change of control or events potentially leading to a change of control. The aforementioned employment agreement, stock option agreement and change of control compensation agreement are subject to the approval of the shareholders of the Compa ny at its Annual Meeting of Shareholders. In the event that shareholder approval is not forthcom ing, Mr. Holt’s employment with TASC and the Company shall immediately terminate and the subject agreements shall be of no further force or effect. In such an event, in order to com pensate Mr. Holt for, among other things, the disruption to Mr. Holt’s career caused by this matter, the Company has agreed to pay Mr. Holt a lump sum cash payment equal in amount to two t imes his salary. Requisite Vote The affirmative vote of the holders of a majority of the Shares present or represented a nd entitled to vote at the Annual Meeting of Shareholders is required for approval of the Holt employment, stock option and change in control agreements. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS SHAREHOLDER APPROVAL OF THE HOLT EMPLOYMENT AND RELATED AGREEMENTS. Primark Corporation 4/5/94 §15.203 To ratify an Employment Agreement between a corporation and a person who has been its Chairman and President, which reduces his hourly commitment to the corporation and provides that he be paid a pro rata salary and a fee if a specified acquisition transaction occurs RATIFICATION OF EMPLOYMENT AGREEMENT Martin J. Wygod has been Chairman of the Board, President and Chief Executive Officer of the Company since December 1982. Mr. Wygod is presently employed by the Company under a five-year employment arrangement which was effective as of January 19, 1983, providing for compensation of $75,000 annually, plus possible increases (to be mutually negotiated) based on increases in sales, assets, net worth and net income of the Company. The Board of Directors determined that it is in the best interests of the Company that such arrangement be changed so that compensation to Mr. Wygod in addition to the specified annual compensation not be pa yable on a current basis as increases in sales, assets, net worth and net income of the Com pany occur, but rather only in the event an Acquisition Transaction (as hereinafter defined) occurs. The Board of Directors has authorized and approved a five-year employment agreement with Mr. Wygod to be dated and effective as of October 1, 1984 (the “Employment Agreement”). The Board seeks to have such Employment Agreement ratified by the shareholders. Assuming a quorum is present at the Meeting, the affirmative vote of holders of a majority of the shares voting on such matter is required for ratification. The following is a brief description of the material features of the Employment Agreement. The Employment Agreement provides for Mr. Wygod to serve initially as Chairman of the Board, President and Chief Executive Officer of the Company and, subsequently, in a ny office or offices mutually determined by the Board and Mr. Wygod. His primary responsibili ties are to supervise all acquisitions and financings by the Company and its subsidiaries, long-t erm financial planning and corporate development and coordination of operating entities. The term of the Employment Agreement is for five years, commencing October 1, 1984. While Mr. Wygod is not precluded from being employed by other companies or from participating in other business activities, he is required, under the Employment Agreement , to work not less than 750 hours on an annual basis. For his services under the Employment Agreement, Mr. Wygod is to receive a salary a t an annual rate of $75,000, is entitled to participate in any group insurance, hospitaliz ation, medical health and accident, disability or similar plans of the Company on t he same basis and at the same level as other senior executives and is also entitled to receive certain additional compensation upon the consummation of any Acquisition Transaction. Mr. Wygod is appointed pursuant to the Employment Agreement as the Company’s principal negotiator with respect to any proposed purchase or other acquisition of the Company, its subsidiaries or any portion of the business or assets of the Company or its subsidiaries (whether existing or owned on the date of the Employment Agreement or thereafter acquired and whether in a single transaction or series of transactions), whether through merger, sale of a ssets, tender offer, private or open market sales of stock or otherwise (any such transaction, other than a sale of assets in the ordinary course of business, being referred to as an “Acquisition Transaction”). Under the Employment Agreement, Mr. Wygod will agree to analyze any offers with respect to an Acquisition Transaction, whether or not solicited or initiat ed by the Company, and to assist in the negotiation of any such Acquisition Transaction. As additional com pensation under the Employment Agreement, in the event of any Acquisition Transaction occurring, or