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EXHIBIT 10.5
STRICTLY CONFIDENTIAL
EMPLOYMENT AGREEMENT
BETWEEN
XXXXX PRODUCTS COMPANY
AND
F. XXXXXX XXXXX, XX.
THIS EMPLOYMENT AGREEMENT dated as of August 3, 1998 is made between Xxxxx
Products Company (the "Company"), a Delaware corporation, and F. Xxxxxx Xxxxx,
Xx. (the "Executive"). This Agreement is made with reference to the following
facts and objectives:
R E C I T A L S
A. The Executive shall be the Senior Vice President, Operations of the
Company.
B. The Executive acknowledges that the services to be performed by him
under this Agreement are of a special and unique character; the business of the
Company is currently international in scope and the Company has plans to
continue to expand its business throughout the world; and the Company competes
with other persons that are or could be located in any part of the world; and
in order to assure the Company that the Company will retain its value and the
Company's business as a going concern, it is necessary that the Executive
undertake not to utilize his special knowledge of the Company, its business and
its relationships with customers and suppliers to compete with the Company if
the Executive were to leave the Company.
C. The Executive further acknowledges that, during his employment by
the Company, he will occupy a position of trust and confidence with the Company
and, during such employment, the Company will compensate him, among other
purposes, to develop and preserve customer relationships and other goodwill
exclusively for the Company's benefit and that, as a result, he will develop
customer relationships and goodwill that are valuable and important to the
Company, and will become familiar with the Company's trade secrets, including,
without limitation, its profit margins, customer preferences and requirements,
and with other proprietary and confidential information concerning the Company
and its business.
D. The Executive further acknowledges that, throughout his employment
under this Agreement, he is expected to continue to occupy a position of trust
and confidence with the Company. In return, the Company will compensate him,
among other purposes, to develop and preserve customer relationships and
goodwill exclusively for the Company's benefit, which will be valuable and
important to the Company.
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Further, he will likely be familiar with the Company's trade secrets,
including, without limitation, its profit margins, customer preferences and
requirements, and with other confidential and proprietary information
concerning the Company and its business.
E. The Executive further acknowledges that the use by him for his own
benefit or that of others of such goodwill, trade secrets or proprietary and
confidential information or the solicitation of and/or doing business with any
of the Company's customers and potential customers would have a material
adverse effect on the Company and its business, and would place the Company at
a substantial competitive disadvantage.
F. The Executive further acknowledges that the agreements and
covenants contained in this Agreement, and, in particular, sections 6
(Non-Competition Covenants) and 7 (Confidentiality and Proprietary
Information), are essential to protect the Company and the goodwill of the
Company's business, are a condition precedent to the Company's willingness to
enter this Agreement and to pay the consideration set forth in this Agreement,
and are necessary and reasonable in light of the particular business of the
Company, his knowledge thereof and the services he will perform under this
Agreement.
THE PARTIES ACCORDINGLY AGREE AS FOLLOWS:
AGREEMENT
1. EMPLOYMENT The Company hereby agrees to employ the Executive,
and the Executive hereby accepts employment by the Company, on the terms and
conditions of this Agreement.
2. EMPLOYMENT TERM
(a) Subject to section 9 (Termination of Employment), the term of the
Executive's employment under this Agreement begins on the date of this
Agreement and ends on the third anniversary of that date; provided, however,
that, commencing on the third anniversary of the date of this Agreement and
each subsequent anniversary, the term shall be extended for an additional one
year period unless either the Executive or the Company gives the other party
written notice at least thirty (30) days before such anniversary that this
Agreement shall terminate on the then scheduled expiration date (the
"non-extension notice"). If such non-extension notice is given, this Agreement
shall automatically terminate on such expiration date.
(b) The actual term of the Executive's employment under this,
including any extension, continuation or earlier termination of the original
term, is referred to in this Agreement as the "employment term."
3. RESPONSIBILITIES During the employment term, the Executive shall
serve as Senior Vice President, Operations or in any other position or capacity
to which he may from time to time be elected or appointed, and shall perform
such services for the Company as are reasonably required by the Company, and as
may be required by
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virtue of the offices and positions held by the Executive. The Executive agrees
that, as a part of his duties under this Agreement, he may be required from
time to time to perform services for affiliates of the Company. The Executive
will not be required to relocate his residence outside the continental United
States, but will be available for such travel as his responsibilities under
this Agreement may reasonably require. The Executive shall devote his full time
and best efforts to the performance of all responsibilities to the Company and
its affiliates and to further their respective businesses and interests.
4. COMPENSATION
(a) The Company agrees to pay the Executive throughout the employment
term an initial base salary at the rate of $215,000.00 per annum (as adjusted
pursuant to the provision of this paragraph 4(a)) (the "base salary") payable
in equal installments in accordance with Company payroll practices from time to
time in effect. Executive's base salary will be reviewed and may be adjusted
annually by the president of the Company or by the board of directors of the
Company (or the compensation committee thereof) (the "board"), after taking
into consideration the recommendations of the president of the Company,
provided that Executive's base salary may not be decreased below his initial
base salary.
(b) Subject to Section 9 (Termination of Employment), the Company
agrees to pay the Executive throughout the employment term an annual bonus
(the "annual bonus") calculated pursuant to Exhibit A attached hereto. The
amount of the annual bonus payable to the Executive for 1998 shall be
calculated as if the Executive were employed by the Company for the entire
year, and, except as set forth in Section 9 (Termination of Employment), the
amount of bonus payable to the Executive for other partial years of employment
shall be prorated for the portion of a year the Executive is employed by
multiplying the annual bonus determined pursuant to Exhibit A by a fraction
with a numerator equal to the number of days of the fiscal year during which
the Executive was employed, and with a denominator of 365.
5. OTHER EXECUTIVE BENEFITS
(a) The Executive shall, during the employment term, be eligible to
participate in such 401(k), profit sharing, bonus, life insurance,
hospitalization and major medical and other employee benefit plans of the
Company in effect from time to time, to the extent that he is eligible under
and complies with the terms of those plans, but the allocation of benefits
under any plan that provides that allocations thereunder shall be in the
discretion of the board shall be as determined from time to time solely by the
board in its discretion.
(b) The Executive shall also participate in the Company's
paid vacation plan but in no event shall Executive's annual entitlement be less
than 4 weeks. Vacation not used by the end of a year shall be forfeited and
shall not be eligible to be carried over to another year or eligible for
reimbursement except as otherwise provided by Company policies.
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6. NON-COMPETITION COVENANTS Throughout the employment term and
commencing with the date of this Agreement and ending on the later of the end
of the period that Executive receives severance pay from the Company pursuant
to Section 9 or the second anniversary of the date on which the Executive
ceases to be employed by the Company for any reason whatsoever, (the
"Non-Compete Period"), the Executive promises and agrees that he will not: (a)
directly or indirectly assist in, engage in, have any financial interest in, or
participate in any way in, as an owner, partner, employee, agent, board member,
or shareholder, any business that involves, in whole or in part, the design,
manufacture, distribution or sale of dry pet foods (or any other business in
which the Company may engage or begin preparation to engage during the
employment term) or make preparation with any person to do any of the
foregoing; provided, however, that the Executive may own, solely as an
investment, up to 1.0% of any class of securities of any person if such
securities are listed on any national or regional securities exchange; (b) call
upon or have any contact with any person or any successor in interest to any
person who was at any time during the Executive's last three years of
employment with the Company, a customer of the Company, or call upon or have
any contact with any person or any successor in interest to any person who is a
prospective customer of the Company, and with whom the Executive dealt, or on
whose account the Executive worked, at any time during the Executive's last
three years of employment with the Company, for the purpose of (i) diverting
any business of such person from the Company, or (ii) selling or offering to
sell to any such customer any product or service that is of the same general
type or that performs similar functions as any product or service which has
been sold, provided or offered for sale by the Company at any time during the
Executive's last three years of employment with the Company, (c) solicit any
employee of the Company to terminate his or her employment with the Company or
employ any such individual during his or her employment with the Company and
for a period of twelve months after such individual terminates his or her
employment with the Company, or (d) without the prior written consent of the
Company's board of directors, acquire or discuss the acquisition of any
ownership interest in or warrant or right to acquire any such interest, or
acquire any employment or other pecuniary benefit from any person that, at the
time, is a prospective candidate for or was a party to a control transaction.
The term "control transaction" means any transaction or series of transactions
whereby the Company or a controlling interest in the Company is acquired by
another Person (whether by purchase, merger, consolidation or sale of all or
substantially all of the Company's consolidated assets). The Executive
acknowledges and agrees that the consideration and benefits to be provided to
the Executive under this Agreement have been bargained and negotiated in
exchange for, and in consideration of, Executive's agreement to abide by the
terms and provisions of this section 6 and section 7 (Confidentiality and
Proprietary Information). The Executive acknowledges and agrees that all of the
Executive's duties and obligations under this section 6 shall survive the
expiration or termination of the Executive's employment with the Company,
regardless of the causes therefor.
7. CONFIDENTIALITY AND PROPRIETARY INFORMATION In addition to any
common-law restriction upon the Executive's use, disclosure or exploitation of
confidential, proprietary or secret information of the Company, the Executive
covenants
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and agrees that, without prior written consent of the Company, he will not at
any time during or after the employment term use for himself or disclose to or
use for any other person, directly or indirectly, any secret, confidential or
proprietary information of the Company, including, without limitation, the
Company's processes, formulas, techniques, customer identities, preferences,
requirements, reports and other sensitive customer information, servicing
methods, profit margins, analyses, employee, vendor and supplier information,
business or marketing plans or strategies, financial data and presentation or
sales materials, technologies, computer programs, software, designs and
inventions (collectively, the "confidential information"); provided, however,
that the term confidential information does not include or refer to any
information that is in the public domain (other than by a breach of this
Agreement). The Executive acknowledges that the confidential information is
vital, sensitive, confidential and proprietary to the Company. The Executive
covenants and agrees that all files, reports, lists, materials, records,
documents, notes, memoranda, specifications, product or other formulas,
equipment and other items, and any originals, copies, recordings, abstracts or
notes thereof, relating to the confidential information or the Company business
that the Executive is or was either provided, prepares or prepared himself,
uses or used or simply acquires or acquired during this employment with the
Company (either before or during the employment term), are and shall remain the
sole and exclusive property of the Company and shall be immediately returned to
the Company at any time upon demand and, in all events, immediately at the end
of the employment term. The Executive acknowledges and agrees that all of the
Executive's duties and obligations under this section 7 shall survive the
expiration or termination of the Executive's employment with the Company,
regardless of the cause therefor.
8. REMEDIES FOR BREACH In the event of a breach or threatened breach
of any of the Executive's duties and obligations under sections 6
(Non-Competition Covenants) or 7 (Confidentiality and Proprietary Information),
the Company shall be entitled, in addition to any other legal or equitable
remedies the Company may have in that connection (including any right to
damages that the Company may suffer), to a temporary, preliminary, and/or
permanent injunction restraining such breach or threatened breach. The
Executive hereby expressly acknowledges that the harm that might result to the
Company's goodwill or its relationships with customers, or as a result of the
disclosure or use of the confidential information, is largely irreparable. The
Executive specifically agrees that, in the event there is a question as to the
enforceability of sections 6 (Non-Competition Covenants) or 7 (Confidentiality
and Proprietary Information), the Executive will not engage in any conduct
inconsistent with or contrary to either of such sections until after the
question has been resolved by a non-appealable final judgement.
9. TERMINATION OF EMPLOYMENT
(a) The employment term and the Executive's employment by the Company
shall terminate: (i) upon the death of the Executive; (ii) upon the disability
of the Executive (as defined in section 9(b)(2)) upon thirty (30) days prior
written notice given by the Company to the Executive; (iii) for cause (as
defined in section 9(b)(1)),
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immediately upon the giving of written notice thereof by the Company to the
Executive or at such later time as the notice may specify; (iv) without cause,
upon not less than thirty (30) days prior written notice given by the Company
to the Executive, or (v) voluntarily by the Executive upon not less than thirty
(30) days prior written notice given to the Company by the Executive.
(b) In this section 9:
(1) "Cause" means; (a) the Executive has been
indicted for or convicted of a felony; (b) the
commission of any act by Executive constituting
financial dishonesty against the Company (including
fraud or embezzlement); (c) gross dereliction of
duty to the Company (other than by reason of death
or disability) after Executive has been advised by
the board of directors or the Company's president of
any such dereliction of duty (whether of the same or
similar nature) and has been given an opportunity to
correct his performance; (d) commission of an act
involving moral turpitude which (i) brings the
Company into public disrepute or disgrace, or (ii)
causes material injury to the customer relations,
operations or the business prospects of the Company;
(e) the repeated refusal or failure by Executive to
follow the lawful directives of the board of
directors or the president of the Company; or (f)
the material breach by Executive of the provisions
of this Agreement.
(2) "Disability" refers to any circumstances in
which the Executive, by reason of illness,
incapacity or other disability, has failed to
perform his duties or fulfill his obligations under
this Agreement for a cumulative total of 180 days in
any 12-month period.
(c) Upon the termination of the Executive's employment under
the Agreement, the employment term shall end and all rights of the Executive
under this Agreement shall terminate, except that the Executive shall
nonetheless be entitled to receive the following:
(1) If the termination occurs by reason of the death
or disability of the Executive, the Executive shall
be entitled to receive the base salary accrued
through the date of termination and annual bonus
prorated through the date of termination.
(2) If the termination is made by the Company
without cause, or as a result of the Company
delivering a non-extension notice (but not as a
result of the Executive delivering a non-extension
notice to the Company), the Executive shall be
entitled to receive severance pay equivalent to his
base salary and annual bonus, if
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and as each would have been payable if the Executive
had not been so terminated, for the period commencing
on the first day after the date of termination and
terminating on the second anniversary of the date on
which Executive ceases to be employed by the Company.
With respect to the annual bonus, for the year in
which the termination of employment occurred, the
Executive shall receive the annual bonus the
Executive would have been entitled to receive if the
Executive had remained employed for the entire year,
and for the last calendar year in which the
Executive is receiving severance payments, the
Executive shall receive a pro rata portion of the
annual bonus the Executive would have been entitled
to receive if the Executive had remained employed
for the entire year with such pro rata portion being
equal to a fraction with a numerator equal to the
number of days of the fiscal year during which the
Executive receives severance pay and with a
denominator of 365.
(3) If the termination is made by the Company for
cause, or voluntarily by Executive, the Executive
shall be entitled to receive his base salary through
the date of termination. If any termination for
cause made by the Company is ever ultimately
determined by a court, agency or other tribunal to
have been without cause, then the Company's sole
liability under the Agreement or otherwise at law or
in equity shall be to pay the Executive those
amounts that would have otherwise been paid to the
Executive under section 9(c)(2) (Termination of
Employment, without cause) and the reasonable
attorney's fees and costs incurred by the Executive
in successfully obtaining this determination from
the court, agency or other tribunal.
(4) To the extent permitted by law or group
insurance plans maintained for the Company's
employees, Executive will be entitled to continue
coverage under any health, disability and life
insurance program during the period Executive is
receiving severance payments in accordance with
paragraphs 9(c)(1), (2) or (3), at no cost to the
Executive. The Executive's rights will continue
under benefit programs that, by their own terms or
by law, extend beyond the date of termination or
continued coverage provided for in the preceding
sentence, including, without limitation, health care
under COBRA, 401(k), stock purchase or stock option
agreements, and non-qualified salary continuation
agreements.
10. NOTICE Any notice required or permitted to be given under this
agreement must be in writing and is effectively given:
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(1) To the Company, when signed by the Executive and delivered in
person to the chairman of the board, president, or secretary
(excluding the Executive) of the Company, or, one day after the
date sent by national commercial courier for next day delivery,
or two days after the date mailed, by certified or registered
mail, postage prepaid, in either case to the address set forth
below, or at such other address as the Company may designate for
this purpose in a notice given to the Executive.
Attn: President and Chief Executive Officer
Xxxxx Products Company
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
(2) To the Executive, when signed by an officer of the Company
(excluding the Executive) and delivered to the Executive in
person, or, one day after the date sent by national commercial
courier for next day delivery, or two days after the date mailed,
by certified or registered mail, postage prepaid, in either case
to the address set forth under the Executive's signature at the
end of this Agreement or at such other address as the Executive
may designate for this purpose in a notice given to the Company.
11. INVALIDITY OF PROVISIONS If any provision of this Agreement is
adjudicated to be invalid or unenforceable under applicable law, the validity
or enforceability of the remaining provisions shall be unaffected. To the
extent that any provision of this agreement is adjudicated to be invalid or
unenforceable because it is over broad, that provision shall not be void but
rather shall be limited only to the extent required by applicable law and
enforced as so limited.
12. ENTIRE AGREEMENT; WRITTEN MODIFICATIONS This Agreement contains
the entire agreement between the parties and supersedes all prior or
contemporaneous representations, promises, understandings and agreements
between the Executive and the Company. This Agreement may not be changed except
by written agreement of the parties and specifically rescinds and replaces any
written or oral employment agreement between the Company and the Executive and
any written or oral employment agreement between the Executive and the
Company's affiliate, Xxxxx Xxxx Pet Food Company, Inc.
13. GOVERNING LAW In light of the Company's contacts with the state of
Tennessee and its significant interest in insuring that disputes as to the
validity and enforceability of section 6 (Non-Competition Covenants) and 7
(Confidentiality and Proprietary Information) of this Agreement are resolved on
a uniform basis, the Executive and the Company agree that any litigation
involving noncompliance with or alleged breach of sections 6 (Non-Competition
Covenants) or 7 (Confidentiality and Proprietary Information) must be filed and
conducted in Tennessee and the Executive and
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the Company consent to the personal jurisdiction of the federal and state
courts sitting in Tennessee for purposes of any such litigation. This Agreement
shall be governed by the internal laws of the State of Tennessee without regard
to Tennessee conflict of laws principles.
14. CERTAIN DEFINED TERMS In this agreement:
(1) "Affiliate" of the Company means any person
controlling, controlled by or under common control
with the Company.
(2) "Annual bonus" is defined in section 4(b).
(3) "Base salary" is defined in section 4(a).
(4) "Board" is defined in section 4(a).
(5) "Company" as used in sections 6 (Non-Competition
Covenants) and 7 (Confidentiality and Proprietary
Information), includes each affiliate of the Company
for which the Executive performs services at any
time during his employment if the affiliate is
engaged in any business that involves, in whole or
in part, the design, manufacture, distribution or
sale of dry pet foods (or any other business in
which the Company may engage or begin preparation to
engage during the employment term).
(6) "Control transaction" is defined in section 6(d).
(7) "Employment term" is defined in section 2(b).
(8) "Non-extension notice" is defined in section 2(a).
(9) "Person" includes any individual, trust, estate,
business trust, partnership, corporation, unincorporated
association, governmental entity, limited liability
company and any other juridical person.
15. COMPANY'S AND EXECUTIVE'S RIGHT TO RECOVER COSTS The Company and
the Executive undertake and agree that, if either party breaches or threatens
to breach any provision of this Agreement, the breaching party shall be liable
for reasonable attorneys' fees and costs incurred by the other party in
enforcing its rights under this Agreement.
16. RULE OF CONSTRUCTION The rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be employed
in interpreting this Agreement.
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17. TOLLING In view of the parties' recognition and agreement that the
Company is entitled after the expiration or termination of the employment term
to certain limited protection from competition by the Executive, the Executive
and the Company agree that the running of the period set forth in section 6
(Non-Competition Covenants) shall be tolled during any period of time in which
the Executive violates that section.
18. SUCCESSORS AND ASSIGNS The Company may assign this Agreement or
any right or interest under this Agreement to any person that hereafter becomes
an affiliate of the Company or to any person to which the Company sells all or
any substantial part of its assets and, in such event, the Company shall,
automatically upon the assignee's assumption of the Company's obligations
hereunder, be released from any such obligations. This Agreement shall inure to
the benefit of the Company, and its successors and assigns.
19. NONWAIVER OF RIGHTS The Company's or the Executive's failure to
enforce at any time any of the provisions of this Agreement or to require at
any time performance by the other party of any of the provisions hereof shall
in no way be construed to be a waiver of such provisions or to affect either
the validity of this Agreement, or any part hereof, or the right of the Company
or the Executive thereafter to enforce each and every provision in accordance
with the terms of this Agreement.
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PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY
CERTIFYING THAT THE EXECUTIVE (A) RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW
AND STUDY BEFORE EXECUTING IT; (B) READ THIS AGREEMENT CAREFULLY BEFORE SIGNING
IT; (C) HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THIS AGREEMENT TO ASK ANY
QUESTIONS THE EXECUTIVE HAD ABOUT THIS AGREEMENT AND RECEIVED SATISFACTORY
ANSWERS TO ALL SUCH QUESTIONS; (D) UNDERSTANDS THE EXECUTIVE'S RIGHTS AND
OBLIGATIONS UNDER THIS AGREEMENT; AND (E) EXECUTED AND DELIVERED THIS AGREEMENT
AT THE OFFICES OF THE COMPANY IN BRENTWOOD, TENNESSEE.
EXECUTED AND EFFECTIVE as of the date first written above.
WITNESS: XXXXX PRODUCTS COMPANY
/s/ XXXXX XXXXXX By: /s/ XXXXXXX X. XXXXXX
------------------------------ -----------------------------
Xxxxxxx X. Xxxxxx
President & CEO
WITNESS: EXECUTIVE:
/s/ XXXXXXX XXXXXX By: /s/ XXXXXX XXXXX, XX.
------------------------------ -----------------------------
F. Xxxxxx Xxxxx, Xx.
0000 Xxxxxxxx Xx.
-----------------------------
Xxxxxx Xxxxxxx
Xxxxxxxx Xxxxxxx, XX 00000
-----------------------------
City, State, Zip Code
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EXHIBIT A
TO EMPLOYMENT AGREEMENT WITH
F. XXXXXX XXXXX, XX.
XXXXX PRODUCTS COMPANY
ANNUAL BONUS PROGRAM
1. For each fiscal year of the Company during the employment term, the
board, after taking into consideration the recommendations of the president of
the Company, will establish objectives comprised of both corporate and
individual goals (each goal will be referred to herein as a "Target"), as well
as the percentage weighting (the "weight") that will apply to each Target,
wherein the sum of the weights shall equal 100%.
2. For the Company's 1998 fiscal year, the board will set an EBITDA
Target for the Company and its subsidiaries which will be weighted at 100% for
the calculation of the bonus payable under this program for the 1998 fiscal
year. The term "EBITDA" will have the same meaning as set forth in the DPC
Acquisition Corp. Option Agreements granted under the DPC Acquisition Corp.
1996 Stock Option Plan.
3. For purposes of computing the Executive's annual bonus, the bonus
will be equal to 70% of his base salary in effect at the end of the fiscal year
(the "base bonus") and the annual bonus will be computed by summing the
percentages earned for each Target, as determined by computing the sum of
paragraphs in 3(a) through 3(d) below for each Target that has been assigned a
weight, and then multiplying that sum times the base bonus.
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(a) Where the actual performance exceeds 85% of the
Target for such fiscal year, Executive will receive 55% of
the weight assigned for the Target.
(b) For each of the first full 15 percentage points
by which actual performance exceeds 85% of the Target,
Executive will receive 3% of the weight assigned for the
Target. The maximum which Executive may receive under this
paragraph 3(b) cannot exceed 45% of the weight assigned for
the Target.
(c) For each of the first full 15 percentage points
by which the actual performance exceeds 100% of the Target,
Executive will receive 6% of the weight assigned for the
Target. The maximum which Executive may receive under this
paragraph 3(c) cannot exceed 90% of the weight assigned for
the Target.
(d) For each full percentage point by which the
actual performance exceeds 115% of the Target, Executive will
receive 9% of the weight assigned for the target.
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For illustrative purposes, assume the Executive's base bonus is
$30,000 and his weighting is as follows:
Target Weight Description of Target
------ ------ ---------------------
1 50% Corporate EBITDA
2 35% Territory Margin Contribution
3 15% Expense Control
Bonus Calculation:
-----------------
Assumed % Earned Weighted
Target Performance for Target Weight % Earned
------ ----------- ---------- ------ --------
1 95% 85% x 50% = 42.5%
2 120% 235% x 35% = 82.3%
3 80% 0 x 15% = 0
--------
% of base bonus earned 124.8%
Base bonus $30,000
Bonus earned $37,440
4. In the event that, after the setting of the Targets, the Company or
any of its subsidiaries acquires additional assets, entities or
subsidiaries that produce the same or similar products, which
acquisition, either singly or together with one or more other
acquisitions, the board determines in good faith may significantly
affect the Targets for the fiscal year, the board may, in good faith,
either (a) adjust such Targets to reflect the projected effect of such
acquisition or acquisitions on any Targets or (b) exclude the effects
of such acquisition or acquisitions on the Targets for purposes of
determining Executive's annual bonus by calculating the Targets for
such fiscal year on a pro forma basis as though such acquisition or
acquisitions had not been consummated. Similarly, in the event that,
after setting the Targets, the Company is acquired by another Person
(whether by purchase, merger, consolidation or sale of all or
substantially all of the Company's
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consolidated assets) and the board determines in good faith that such
acquisition may significantly affect the Targets for the fiscal year,
the board may, in good faith, either (x) adjust such Targets to
reflect the projected effect of such acquisition on any Target or (y)
exclude the effects of such acquisition on the Targets for purposes of
determining Executive's annual bonus by calculating the Targets for
such fiscal year on a pro forma basis as though such acquisition had
not been consummated.
5. The annual bonus payable for any fiscal year will be paid
within 30 days after the delivery of the Company's audited financial
statements for such fiscal year. In the event of any dispute between
the Company and Executive as to the amount of the bonus for any fiscal
year, such dispute will be resolved by the Company's auditors or any
one of Price Xxxxxxxxxx, Xxxxxx Xxxxxxxx, or Ernst & Young, or their
successors, as selected by the board, by having such accounting firm
calculate the amount of the bonus for such fiscal year utilizing the
Company's audited financial statements for such fiscal year. The
decision of such accounting firm will be final and binding on the
Company and Executive.
6. Except as otherwise provided herein, capitalized terms
used herein which are not defined herein have the meanings given to
such terms under the Employment Agreement to which this Annual Bonus
Program is attached.
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