XXXX XXXXXX EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is effective as of
January 1, 1996 by and between Fotoball USA, Inc., a Delaware corporation
(the "Company"), and Xxxx X. Xxxxxx ("Employee").
W I T N E S S E T H :
WHEREAS, Employee is currently serving as the Vice President of
Marketing of the Company pursuant to an Exclusive Services Agreement between
Company and the Eastwoods Group, Inc., a California Corporation, which
provides, among other things, that the Eastwoods Group shall lend the
exclusive services of Employee to Company during the term of the Exclusive
Services Agreement;
WHEREAS, the Company desires to contract directly with Employee as
Vice President of Marketing of the Company, and Employee desires to contract
directly for such employment, upon the terms set forth in the Agreement;
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the adequacy
and receipt of which are hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT.
(a) The Company hereby employs (the "Employment") Employee as the Vice
President of Marketing of the Company. Employee's responsibilities
shall be as follows:
(i) to utilize the Company's products and expertise, and the Company's
and the Employee's relationships with the sports community and the
corporate community and the Company's production sources, to
develop sports-related and non-sports related products (including
toys and other collectibles) and promotions that enhance corporate
America's ability to reach its customer base,
(ii) to expand the Company's premium marketing activities into
additional geographical and other areas, including overseas and
(iii) to contribute to the development and execution of the overall
marketing strategy of the Company. Employee shall report to the
President and Chief Executive Officer of the Company.
Employee hereby accepts the Employment and agrees to render
such services, perform such duties and exercise such supervision,
guidance and powers, and such additional services, duties or
powers as may be agreed on by Employee and President and Chief
Executive Officer of the Company, to, for and with respect to
the Company, for the period and upon the terms set forth in this
Agreement.
(b) Employee shall devote substantially all of his business time and
attention to the business and affairs of the Company consistent with
his position with the Company, except for vacations permitted
pursuant to Section 3.5 and Disability (as defined in Section 6.2).
This Agreement shall not be construed as preventing Employee from
engaging in charitable and community affairs, or giving attention to
his passive investments, provided that such activities do not
interfere with the regular performance of his duties and
responsibilities under this Agreement.
2. TERM.
Except as otherwise specifically provided in Section 6 below, the
term of this Agreement (the "Term") shall commence effective as of
January 1, 1996 and shall continue until December 31, 1998, subject
to the terms and conditions of this Agreement.
3. COMPENSATION
3.1 Base Salary.
Employee shall be paid a base salary (the "Base Salary") at an
annual rate of one hundred fifty thousand dollars ($150,000),
payable on a semi-monthly basis, on the first and fifteenth on
each month. The Base Salary shall be reviewed by the Board of
Directors of the Company (the "Board") on or before January 1 of
each year during the Term, with such reviews to commence prior
to such date, and shall be subject to increase in the discretion
of the Board, taking into account merit, corporate and individual
performance and general business conditions. Such increase, if
any, in Employee's Base Salary shall be effective on January 1
of each year during the Term commencing in 1997.
3.2 Annual Cash Bonus.
(a) In addition to the Base Salary, Employee shall be entitled
to annual bonus compensation ("Annual Bonus Compensation") based
on Employee's contribution to overhead and profit (the "Ostern
Contribution") of the Company. The Ostern Contribution shall
be equal to (i) the gross annual sales of the Company
(including sales generated by any subsidiary or affiliate of the
Company which may be acquired or formed on or after January 1,
1996 in which the Company has the then-current right to vote
more than 50% of the capital stock) produced by Employee or in
which Employee is instrumental in obtaining the contract and/or
purchase order under which such sales are generated (collectively,
such annual sales shall be referred to herein as "Ostern Gross
Annual Sales"), (ii) less (A) sales returns, allowances and
discounts attributable to Ostern Gross Annual Sales (other than
allowances and discounts due to bad debts); (B) the cost of
sales (not including commissions, marketing expenses and general
and administrative expenses) and royalties expenses incurred
by the Company for Ostern Gross Annual Sales; (C) any costs
incurred by the Company as a direct result of ongoing customer
requests that directly result in a change of estimate (as opposed
to production errors) for Ostern Gross Annual Sales; and (D)
costs directly resulting from the negligence or mismanagement
of Employee or those subordinates under his direct supervision
or control (costs directly resulting from the negligence or
mismanagement of the Company (other than Employee or his
referenced subordinates) will not be deducted from the Ostern
Gross Annual Sales. Attached as Exhibit A is an example of the
calculation of the Annual Bonus Compensation. Sales, cost of
sales, royalties expenses and receivables, as referred to in this
Agreement, shall be calculated in the same manner as such
categories are prepared in connection with the Company's federal
securities law filings of its quarterly and annual financial
statements.
(b) The Annual Bonus Compensation shall be based on the
following formula:
Ostern Annual Bonus Aggregate Annual Bonus
Contribution ($) (% of the Ostern Contribution) Compensation Range ($)
----------------- -------------------------------- -----------------------
0 - 1,000,000 None None
1,000,001 - 5,000,000 9 0 - 360,000
5,000,001 - 10,000,000 10 360,000 - 860,000
10,000,001 - 15,000,000 11 860,000 - 1,410,000
15,000,001 - 20,000,000 12 1,410,000 - 2,010,000
20,000,001 - 25,000,000 13 2,010,000 - 2,660,000
25,000,001 and above 14 2,660,000 and above
Except as set forth in Section 6.3 hereof, the Annual Bonus Compensation for
any fiscal year of the Company shall be calculated quarterly on the accrual
basis of accounting and shall be payable in a lump sum to Employee within
thirty (30) days after the end of each fiscal quarter; provided, however,
that, if any portion of the Annual Bonus Compensation payable to Employee for
any fiscal quarter is represented by a receivable in excess of $1,000,000
that is not collected within thirty (30) days after the end of such fiscal
quarter, the Company shall have the right to delay payment of the Annual
Bonus Compensation which is attributable to the uncollected receivable for
such fiscal quarter until seven (7) days after such receivable is collected
by the Company but in no event shall the Company delay payment for more than
120 days after the invoice relating to such receivable is issued. If the
receivable is paid in one or more payments, the Company shall pay to Employee,
within seven (7) days of receipt of such payment, a pro-rata portion of the
Annual Bonus Compensation which is attributable to the payment received.
(c) Employee shall document each job proposal to be included
in the Ostern Contribution by a bid sheet in the form of Exhibit B
that briefly describes the job, denotes the estimated cost of the
job by cost category and the price to be charged to the customer
and shows such other information necessary, in the determination
of senior management of the Company (other than Employee), for
senior management to review each job proposal. Prior to the
delivery by Employee of a formal price quotation for the job to
the customer, Employee shall received the written approval of a
representative of senior management (other than Employee).
3.3 Chevron Cash Bonus.
In addition to the Base Salary and Annual Bonus Compensation,
Employee shall be entitled to a one-time cash bonus (the "Cash
Bonus") with respect to the Chevron model car program which is
currently scheduled for shipment during the second quarter of
1996 (the "Program") in an amount equal to .331565% of the gross
invoice amount of the shipment; provided, however, that the Cash
Bonus shall not exceed thirty thousand dollars ($30,000) in the
aggregate. Notwithstanding any provisions contained in Section
3.2(b), the Cash Bonus shall be payable in a lump sum to Employee
within thirty (30) days after the shipping and invoicing of the
Program.
3.4 Employee Benefits.
In addition to the Base Salary and the Bonus Compensation,
Employee shall be entitled (i) to continue to receive the fringe
benefits now provided by the Company (which the Company intends to
memorialize in an employee manual, as such manual may be amended
from time to time) in addition to any additional benefits hereafter
provided to its executive officers, including, but not limited to,
life, hospitalization, surgical, major medical and disability
insurance (other than under the Company's supplementary disability
plan) and sick leave, (ii) to be a full participant in all of the
Company's other benefit plans, pension plans, retirement plans and
profit-sharing plans which may be in effect from time to time or
may hereafter be adopted by the Company, (iii) to receive, for the
purchase and maintenance of a disability policy by Employee, an
amount equal to $5,000 per year, payable quarterly, and (iv) to
costs and expenses for the maintenance, including insurance, and
operation of Employee's automobile in an amount equal to $500.00
per month. Employee hereby waives his right to participate in the
Company's supplementary disability plan.
3.5 Vacation.
During the Term, Employee shall be entitled to such vacation with
pay during each calendar year of his Employment hereunder consistent
with his position as an executive officer of the Company, but in no
event less than three (3) weeks in any such calendar year (pro-rated
as necessary for partial calendar years during the Term). Such
vacation may be taken, in Employee's discretion, at such time or
times as are not inconsistent with the reasonable business needs of
the Company. Employee shall not be entitled to any additional
compensation in the event that Employee, for whatever reason, fails
to take such vacation during any year of his Employment hereunder.
Employee shall also be entitled to all paid holidays given by the
Company to its executive officers.
4. INDEMNIFICATION.
Employee shall be entitled at all times to the benefit of the
maximum indemnification and advancement of expenses available from
time to time under the laws of the State of Delaware.
5. EXPENSES.
During the Term, the Company shall reimburse Employee, on a monthly
basis, upon presentation of appropriate vouchers or receipts in
accordance with the Company's expense reimbursement policies for
executive officers, for all reasonable out-of-pocket expenses
incurred or expended by Employee in connection with the performance
of his duties under this Agreement. Such reimbursement shall occur
with 5 days after Employee presents such monthly documentation.
6. CONSEQUENCES OF TERMINATION OF EMPLOYMENT.
6.1 Death.
In the event of the death of Employee during the Term, Employee's
employment hereunder shall be terminated as of the date of his
death and Employee's designated beneficiary, or, in the absence of
such designation, the estate or other legal representative of
Employee (collectively, the "Estate") shall be paid, Employee's
unpaid Base Salary (calculated through the end of the month in
which the death occurs) and Annual Bonus Compensation (based upon
the Projects represented in the Ostern Contribution which are in
process or invoiced on the date of death) paid as set forth in
Section 3.2(b). The Estate shall be entitled to all other death
benefits in accordance with the terms of the Company's benefit
programs and plans.
6.2 Disability.
In the event Employee shall be unable to render the services or
perform his duties hereunder by reason of illness, injury or
incapacity (whether physical, mental, emotional or psychological)
(any of the foregoing shall be referred to herein as a "Disability")
for a period of either (i) ninety (90) consecutive days or (ii) one
hundred eighty (180) days in any consecutive three hundred sixty-five
(365) day period, the Company shall have the right to terminate this
Agreement by giving Employee ten (10) days prior written notice.
If Employee's Employment hereunder is so terminated, Employee shall
be paid, in addition to payments under any disability insurance
policy in effect, Employee's unpaid Base Salary (calculated through
the end of the month in which the termination occurs) and Annual
Bonus Compensation (based upon the Projects represented in the
Ostern Contribution which are in process or invoiced on the date
of termination) paid as set forth in Section 3.2(b).
6.3 Termination of Employment of Employee by the Company for Cause.
(a) Subject to Section 6.3(b), nothing herein shall prevent the
Company from terminating Employee's Employment for Cause (as
defined below). From and after the date of such termination,
except as set forth in this Section 6.3 Employee shall no longer
be entitled to receive Base Salary or Annual Bonus Compensation
and the Company shall no longer be required to pay premiums
on any life insurance or disability policy for Employee.
Subject to the Company's right to set off against annual bonus
compensation, to the extent actual damages or losses can be
established or are incurred by the Company to the date of
set-off, Employee shall be paid Base Salary to the date of
termination and Annual Bonus Compensation (based upon the
Projects represented in the Ostern Contribution which are in
process or invoiced on the date of termination) paid as set
forth in Section 3.2(b). Any rights and benefits which Employee
may have in respect of any other compensation or any employee
benefit plans or programs of the Company, whether pursuant to
Section 3.4 or otherwise, shall be determined in accordance with
the terms of such other compensation arrangements or plans or
programs. The term "Cause," as used herein, shall mean that:
(i) Employee shall embezzle funds or misappropriate other
property of the Company or any subsidiary; or (ii) Employee
shall willfully disobey a lawful directive of the Board, whether
through commission or omission; or (iii) Employee shall breach
the Agreement in a material manner or engage in fraudulent
conduct as regards the Company.
(b) The Company shall provide Employee with written notice stating
that it intends to terminate Employee's Employment for Cause
under this Section 6.3 and specifying the particular act or acts
on the basis of which the Board intends to so terminate
Employee's Employment. Employee shall then be given the
opportunity, within fifteen (15) days of his receipt of such
notice, to have a meeting with the Board to discuss such act or
acts (other than with respect to an action described in Section
6.3(a)(i) above as to which the Board may immediately terminate
Employee's Employment for Cause). Other than with respect to an
action described in Section 6.3(a)(i) above, Employee shall be
given seven (7) days after his meeting with the Board to take
reasonable steps to cease or correct the performance (or
nonperformance) giving rise to such written notice. In the
event Board determines that Employee has failed within such
seven-day period to take reasonable steps to cease or correct
such performance (or nonperformance), Employee shall be given
the opportunity, within ten (10) days of his receipt of written
notice to such effect, to have a meeting with the Board to
discuss such determination. Following that meeting, if the
Board believes that Employee has failed to take reasonable steps
to cease or correct his performance (or nonperformance) as
above described, the Board may thereupon terminate the
Employment of Employee for Cause.
6.4 Termination of Employment at End of Term.
If this Agreement is not renewed by the Company and Employee at
the expiration of the Term, as consideration for the agreements
and covenants of Employee set forth in Section 8 hereof, the
Company shall pay Employee a severance and non-competition payment
equal to the Annual Bonus Compensation earned by Employee in each
fiscal year of the Company after the expiration of the Term, based
on the projects represented in the Ostern Contribution which are
in process or invoiced on the last day of the Term. Such severance
and non-competition payment shall be calculated quarterly on the
accrual basis of accounting and shall be payable in a lump sum to
Employee within thirty (30) days after the end of each fiscal
quarter of the Company; provided, however, that, if any portion of
the Annual Bonus Compensation payable to Employee for any fiscal
quarter is represented by a receivable in excess of $1,000,000 that
is not collected within thirty (30) days after the end of such
fiscal quarter, the Company shall have the right to delay payment
of the Annual Bonus Compensation which is attributable to the
uncollected receivable for such fiscal quarter until seven (7) days
after such receivable is collected by the Company but in no event
shall the Company delay payment for more than 120 days after the
invoice relating to such receivable is issued. If the receivable
is paid in one or more payments, the Company shall pay to Employee,
within seven (7) days of receipt of such payment, a pro-rata
portion of the Annual Bonus Compensation which is attributable to
the payment received.
7. CONFIDENTIAL INFORMATION.
7.1 Employee covenants and agrees that he will not at any time,
either during the Term or thereafter, use, disclose or make
accessible to any other person, firm, partnership, corporation
or any other entity any Confidential Information (as defined
below) pertaining to the business of the Company except (i)
while employed by the Company, in the business of and for
the benefit of the Company or (ii) when required to do so by a
court of competent jurisdiction, by any governmental agency
having supervisory authority over the business of the Company,
or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order the Company to
divulge, disclose or make accessible such information. For
purposes of this Agreement, "Confidential Information" shall
mean non-public information concerning the Company's financial
data, statistical data, strategic business plans, product
development (or other proprietary product data), customer and
supplier lists, customer and supplier information, information
relating to practices, processes, methods, trade secrets,
marketing plans and other non-public, proprietary and
confidential information of the Company; provided, however,
that Confidential Information shall not include any information
which (x) is known generally to the public other than as a
result of unauthorized disclosure by Employee, (y) becomes
available to Employee on a non-confidential basis from a source
other than the Company or (z) was available to Employee on
a non-confidential basis prior to its disclosure to Employee
by the Company. It is specifically understood and agreed by
Employee that any Confidential Information received by Employee
during his Employment by the Company is deemed Confidential
Information for purposes of this Agreement. In the event
Employee's Employment is terminated hereunder for any reason,
he immediately shall return to the Company all Confidential
Information in his possession.
7.2 Employee and the Company agree that this covenant regarding
Confidential Information is a reasonable covenant under the
circumstances, and further agree that if, in the opinion of any
court of competent jurisdiction, such covenant is not reasonable
in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of
this covenant as to the court shall appear not reasonable and
to enforce the remainder of the covenant as so amended. Employee
agrees that any breach of the covenant contained in this Section 7
would irreparably injure the Company. Accordingly, Employee
agrees that the Company, in addition to pursuing any other
remedies it may have in law or in equity, may obtain an injunction
against Employee from any court having jurisdiction over the
matter, restraining any further violation of this Section 7.
8. NON-COMPETITION; NON-SOLICITATION.
8.1 Employee agrees that during the Non-Competition Period
(as defined in Section 8.4 below), without the prior written
consent of the Company: (i) he shall not be a principal, manager,
agent, consultant, officer, director or employee of, or, directly
or indirectly, own more than one (1%) percent of any class or
series of equity securities in, any partnership, corporation or
other entity, which, now or at such time, has material operations
which are engaged in any business activity competitive (directly
or indirectly) with the business of the Company; and (ii) he shall
not, directly or indirectly, have any business dealings or contact
with any entities that were suppliers or customers of the Company
during the Term or sell any products sold by the Company during
the Term; provided, however, that Employee may act as an
independent sales representative in soliciting premium promotions
with respect to product categories sold by the Company during the
Non-Competition Period so long as Employee first offers the
Company the opportunity to produce and/or sell the premium
promotions on commercially reasonable terms and conditions, with
gross margins to be not less than gross margins received by the
Company from projects included in the Ostern Contribution during
the last year of the Term unless market conditions dictate that
reasonable adjustments are appropriate at the time such promotions
are presented to the Company. The Company shall, in its sole
and absolute discretion, accept or reject any premium promotion
offered by Employee to the Company pursuant to this Section 8.1
within a reasonable period of time. Employee may, as an
independent sales representative, contact, negotiate and deal
with those persons or other entities which have been customers of
the Company and which could be deemed to be competitors of the
Company for purposes of Section 8.1(i), and those persons and
entities referenced in Section 8.1(ii), in order to facilitate
negotiation and preparation of contracts to produce and/or sell
premium promotions to be first offered to the Company. Such
contact and negotiations shall not violate this Non-Competition/
Non-Solicitation provision. If the Company does not accept the
proposed offer within a reasonable time, Employee may offer the
premium promotion to any person or entity whatsoever, without
violating this Non-Competition/Non-Solicitation provision, but
only on the same terms and conditions as first offered to the
Company. If the Company accepts any premium promotion offered
to the Company by Employee pursuant to this Section 8.1, Employee
shall be entitled to a cash commission of ten percent (10%) of the
gross revenues derived from such premium promotion. Any such
commissions relating to a commission-applicable premium promotion
pursuant to this Section 8.1 shall be payable in a lump sum to
Employee within thirty (30) days after the payment for such
premium promotion is received by the Company.
8.2 During the Non-Competition Period, Employee agrees that, without
the prior written consent of the Company (and other than on behalf
of the Company), Employee shall not, on his own behalf or on
behalf of any person or entity, directly or indirectly hire or
solicit the employment of any employee who has been employed by
the Company at any time during the six (6) months immediately
preceding such date of hiring or solicitation.
8.3 Employee and the Company agree that the covenants of non-
competition and non-solicitation are reasonable covenants under
the circumstances, and further agree that if, in the opinion of
any court of competent jurisdiction such covenants are not
reasonable in any respect, such court shall have the right, power
and authority to excise or modify such provision or provisions of
these covenants as to the court shall appear not reasonable and
to enforce the remainder of these covenants as so amended.
Employee agrees that any breach of the covenants contained in this
Section 8 would irreparably injure the Company. Accordingly,
Employee agrees that the Company, in addition to pursuing any
other remedies it may have in law or in equity, may obtain an
injunction against Employee from any court having jurisdiction
over the matter, restraining any further violation of this Section
8.
8.4 The provisions of this Section 8 shall extend for the Term
and survive the termination of this Agreement for one year from
the date of such termination (herein referred to as the "Non-
Competition Period").
9. NOTICES.
All notices and other communications hereunder shall be in writing
and shall be deemed to have been given if delivered personally or
sent by facsimile transmission, overnight courier, or certified,
registered or express mail, postage prepaid. Any such notice shall
be deemed given when so delivered personally or sent by facsimile
transmission (provided that a confirmation copy is sent by overnight
courier), one day after deposit with an overnight courier, or if
mailed, five (5) days after the date of deposit in the United States
mails, as follows:
If to the Company, to: Fotoball USA, Inc.
0000 Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax No.: (000) 000-0000
Attention: President and Chief Executive Officer
If to Employee, to: Xxxx X. Xxxxxx
00000 Xxx X'Xxxxxxx
Xxx Xxx, Xxxxxxxxxx 00000
With a copy to: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxx, Ferguson, Naumann, Xxxxxx & Xxxx
Imperial Bank Tower
000 "X" Xxxxxx, Xxxxx floor
Xxx Xxxxx, Xxxxxxxxxx 00000
Fax No.: (000) 000-0000
10. ENTIRE AGREEMENT.
This Agreement contains the entire agreement between the parties
hereto with respect to the matters contemplated herein and
supersedes all prior agreements or understandings among the parties
related to such matters.
11. BINDING EFFECT.
Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the Company and its
successors and assigns and upon Employee. "Successors and assigns"
shall mean, in the case of the Company, any successor pursuant to
a merger, consolidation, or sale, or other transfer of all or
substantially all of the assets or capital stock of the Company.
12. NO ASSIGNMENT.
Except as contemplated by Section 11 above, this Agreement shall
not be assignable or otherwise transferable by either party.
13. AMENDMENT OR MODIFICATION; WAIVER.
No provision of this Agreement may be amended or waived unless
such amendment or waiver [is authorized by the Board and] is
agreed to in writing, signed by Employee and by a duly authorized
officer of the Company (other than Employee). Except as otherwise
specifically provided in this Agreement, no waiver by either party
hereto of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or
condition at the same or at any prior or subsequent time.
14. FEES AND EXPENSES.
If either party institutes any action or proceedings to enforce
any rights the party has under this Agreement, or for damages by
reason of any alleged breach of any provision of this Agreement, or
for a declaration of each party's rights or obligations hereunder or
to set aside any provision hereof, or for any other judicial remedy,
the prevailing party shall be entitled to reimbursement from the
other party for its costs and expenses incurred thereby, including
but not limited to, reasonable attorneys' fees and disbursements.
15. GOVERNIN LAW.
The validity, interpretation, construction, performance and
enforcement of this Agreement shall be governed by the internal
laws of the State of California, without regard to its conflicts of
law rules.
16. TITLES.
Titles to the Sections in this Agreement are intended solely for
convenience and no provision of this Agreement is to be construed
by reference to the title of any Section.
17. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, which
together shall constitute one agreement. It shall not be necessary
for each party to sign each counterpart so long as each party has
signed at least one counterpart.
18. SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms and provisions of this
Agreement in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first set forth above.
FOTOBALL USA, INC.
By: /s/Xxxxxxx Xxxxxx
--------------------------------
Xxxxxxx Xxxxxx
President and Chief Executive Officer
By: /s/Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
EXHIBIT A
Pro Forma Calculation of Xxxx Xxxxxx'x Annual Cash Bonus
Assuming 1996 Xxxx Xxxxxx Sales
$10,000,000
Estimated Direct Costs and Royalties
$ 6,200,000
Contribution to overhead and profit ("COP")
$ 3,800,000
Calculation of Annual Cash Bonus TOTAL
Total COP
$ 3,800,000
$0-$1,000,000 = 0%
1,000,000 x 0.0% $ 0
Remainder
$ 2,800,000
$1,000,000-$5,000,000 = 9%
2,800,000 x 9.0% $ 252,000
---------
$ 252,000
