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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
BETWEEN
▇▇▇▇▇ PRODUCTS COMPANY
AND
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
THIS EMPLOYMENT AGREEMENT dated January 1, 1998 is made between ▇▇▇▇▇
Products Company (the "Company"), a Delaware corporation, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
(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 President and Chief Operating
Officer of the Company and has served the Company as an employee continuously
during the past four months;
B. The Executive acknowledges that the services previously
provided by him to the Company and 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
to date by the Company, he has occupied a position of trust and confidence with
the Company and, during such employment, the Company has compensated 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 has
developed customer relationships and goodwill that are valuable and important
to the Company, and has 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
continue to compensate him,
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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. Further, he will likely continue to 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 has previously performed and
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 Agreement, including any extension, continuation or earlier termination of
the original term, is referred to in this Agreement as the "employment term."
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3. RESPONSIBILITIES During the employment term,
the Executive shall serve as President and Chief Operating Officer 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 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 $275,000.00 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 Chief Executive Officer 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 Chief Executive Officer 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 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.
(c) As further consideration for the performance and
observance by the Executive of his obligations under this Agreement and as
additional, special consideration for his signing this Agreement and thereby
binding himself to the covenants enumerated herein, particularly those set
forth in Section 6 (Non-Competition Covenants) and 7 (Confidentiality and
Proprietary Information) the Company has paid a signing bonus of $175,000 to
the Executive, which the Executive does hereby acknowledge as having been
received, and the Company agrees to pay the Executive, subject to Section 9
(Termination of Employment), an additional signing bonus of $175,000 on
September 1, 1998.
(d) If Executive is employed by the Company on September
1, 1998, the Company agrees to issue to Executive on such date a stock option
for 25,000 shares of DPC Acquisition Corp. common stock with an exercise price
equal to the fair market value of such shares at the time of grant and with
other terms consistent with stock options being granted at such time.
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5. OTHER EXECUTIVE BENEFITS
(a) The Executive shall, during the employment term, be
eligible to participate in such pension, 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.
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 third 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"
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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 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
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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)), 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
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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 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 third 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 an 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
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(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, pension, 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:
(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: Chief Executive Officer
▇▇▇▇▇ Products Company
P.O. Box ▇▇▇
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(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.
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13. GOVERNING LAW In light of the Company's contacts with the
state of Missouri 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 Missouri and the Executive and the Company consent to the personal
jurisdiction of the federal and state courts sitting in Missouri for purposes
of any such litigation. This Agreement shall be governed by the internal laws
of the State of Missouri without regard to Missouri 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
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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.
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 JOPLIN, MISSOURI.
EXECUTED AND EFFECTIVE as of the date first written above.
WITNESS: ▇▇▇▇▇ PRODUCTS COMPANY
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------- --------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Executive Officer
WITNESS: EXECUTIVE:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------- --------------------------------
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Street Address
--------------------------------
City, State, Zip Code
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EXHIBIT A
▇▇▇▇▇ 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 100% 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.
(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.
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(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.
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
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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 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
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Company's auditors or any one of Price ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 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.
