EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of February 1, 2000 (the
"Effective Date"), between Xxxxx X. Xxxx ("Executive") and BHA GROUP HOLDINGS,
INC., a Delaware corporation ("Employer").
Executive is currently employed by Employer as President and
Chief Executive Officer of Employer pursuant to an Employment Agreement dated
August 1, 1990, as amended by an amendment and restatement dated September 1,
1993 (as amended and restated, the "Prior Agreement"). Employer wishes to
continue to employ Executive and Executive wishes to continue to be employed by
Employer pursuant to the terms and conditions set forth below. The parties
therefore agree that the Prior Agreement is terminated as of the Effective Date
and Executive shall thereafter be employed by Employer pursuant to the terms of
this Agreement as follows:
1. EMPLOYMENT OF EXECUTIVE
Employer hereby agrees to employ Executive and Executive
hereby agrees to be in the employ of Employer upon the terms and conditions
hereinafter set forth.
2. EMPLOYMENT PERIOD
The term of Executive's employment under this Agreement (the
"Employment Period") shall commence as of the Effective Date and shall, subject
to earlier termination as provided in Section 5, continue until September 30,
2002. The expiration date of the Employment Period shall be automatically
extended for an additional one year period (each thereof, a "Renewal Period") on
each October 1, commencing October 1, 2000, unless at least 90 days prior to any
such October 1st either Executive or Employer delivers written notice to the
other of his or its election to have such automatic extensions cease, in which
event the then current expiration date of the Employment Period shall continue
in effect for the balance of the Employment Period.
3. DUTIES AND RESPONSIBILITIES
During the Employment Period, Executive (i) shall be the
President and Chief Executive Officer of Employer and (ii) shall devote his full
attention and expend his best efforts, energies and skills on a full-time basis
to the business of the Company (as hereinafter defined). Executive shall serve
on Executive Committee of the Company. Executive shall have such authority,
discretion, power and responsibility, and shall be entitled to office,
secretarial and other facilities and conditions of employment, as are customary
or appropriate to his position and as are currently exercised by or afforded to
him. Employer shall use its best efforts to cause Executive to be nominated as a
member of Employer's management slate of directors and to be elected as a
director of Employer and a member of the Executive Committee of its Board of
Directors (if such a committee exists). If so elected, Executive shall serve
without additional
compensation as a director and member of such committee (and, if so elected or
appointed, as the case may be, as an officer or director of any of Employer's
subsidiaries), but if he is not so elected or appointed his compensation
hereunder shall in no way be affected. During the Employment Period, Executive
will be subject to all of the policies, rules and regulations applicable to
Employer's senior executives. Executive shall report directly to the Chairman of
the Board of Directors of the Employer. For all purposes of this Agreement, the
term "Company" means Employer and all corporations, associations, companies,
partnerships, firms and other enterprises controlled by or under common control
with Employer.
4. COMPENSATION AND RELATED MATTERS
4.1 Compensation, Generally. For all services rendered and
required to be rendered by, covenants of, and restrictions imposed on, Executive
under this Agreement, Employer shall pay to Executive during and with respect to
the Employment Period, and Executive agrees to accept, such base salary ("Base
Salary") and bonuses as are set forth on Exhibit 4.1. Executive's compensation
shall be reviewed by the Board of Directors prior to commencement of each
Renewal Period and may be adjusted upward only for such Renewal Period to take
into account Executive's prior performance and increases in the cost of living
not previously taken into account in setting Executive's compensation level.
4.2 Benefit Plans. To the extent that (i) Executive is
eligible under the general provisions thereof and (ii) Employer maintains such
plan or program for the benefit of its senior executives, during the Employment
Period the Executive shall be eligible to participate in any pension,
profit-sharing, or similar plan or program of the Employer now existing or
established hereafter. To the extent maintained in effect by the Employer for
its senior executives, the Executive shall also be entitled to participate in
any group insurance, hospitalization, medical, dental, accident, disability or
similar plan or program of the Employer now existing or established hereafter to
the extent that he is eligible under the general provisions thereof. The
Executive shall be entitled to receive other benefits generally available to all
senior executives of the Employer the extent that he is eligible therefor.
Executive's Base Salary shall (where applicable) constitute the compensation on
the basis of which the amount of Executive's benefits under any such plan or
program shall be fixed and determined. Without limiting the foregoing, Executive
shall be eligible for the benefits set forth on Exhibit 4.2. Any future change
in the benefits offered to Executive shall provide Executive with benefits, on
an aggregate basis, at least substantially equivalent to the benefits, on an
aggregate basis, provided to Executive prior to such change.
4.3 Business Expense Reimbursement. Employer shall reimburse
Executive for all business expenses reasonably incurred by him in the
performance of his duties under this Agreement upon his presentation, not less
frequently than monthly, of signed, itemized accounts of such expenditures, all
in accordance with Employer's procedures and policies as adopted and in effect
from time to time and applicable to its senior executives.
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4.4 Vacations. Executive shall be entitled to vacations
consistent with those currently provided to Executive, which vacations shall be
taken at such time or times as shall not unreasonably interfere with Executive's
performance of his duties under this Agreement.
5. TERMINATION OF EMPLOYMENT PERIOD
5.1 Termination Without Cause. Employer or Executive may, by
notice to the other at any time during the Employment Period, terminate the
Employment Period without cause. The effective date of termination shall be 30
days after the date on which such notice is given.
5.2 By Employer: Cause. Employer may, at any time during the
Employment Period by action of its Board of Directors and upon notice to
Executive, terminate the Employment Period "for cause" effective immediately.
Such notice shall specify the cause for termination. For the purposes hereof,
"for cause" means:
(a) Executive's continued failure or refusal to perform his
duties and responsibilities hereunder after written warning of any such failure
or refusal and reasonable opportunity to appear before Employer's Board of
Directors to explain the reasons for such failure or refusal;
(b) Executive's dishonesty that directly or indirectly
materially affects, or has the likelihood of materially affecting, Employer;
(c) Executive's continued use of illegal drugs or excessive
use of alcohol, which has the effect of interfering materially with the
performance of his obligations under this Agreement, after written warning
thereof;
(d) Conviction of Executive for a felony or any crime
involving in either case an act of moral turpitude, dishonesty, fraud, or
unethical or unlawful business conduct; or
(e) Conduct by Executive that could reasonably be expected to
materially injure the reputation, business or business relationships of the
Company.
5.3 By Executive: Good Reason. Executive may, at any time
during the Employment Period by notice to Employer, terminate the Employment
Period under this Agreement "for good reason" effective immediately. For the
purposes hereof, "for good reason" means (a) any significant reduction in the
duties, responsibilities or prerequisites of Executive that Employer fails to
remedy within 30 days after notice thereof to Employer; (b) any change in the
compensation or benefits provided for in Exhibits 4.1 and 4.2 which fails to
provide Executive with compensation and benefits, on an aggregate basis, at
least substantially equivalent to the compensation and benefits, on an aggregate
basis, provided to Executive prior to such change that Employer fails to remedy
within 30 days after notice thereof to Employer; (c) unless Executive otherwise
consents, Executive being required to render his primary services more than
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50 miles from the place he is then rendering his primary services; or (d) a
material breach by Employer of any provision of this Agreement that Employer
fails to remedy or cease within 30 days after notice thereof to Employer.
5.4 Disability. During the Employment Period, if the Executive
shall have a physical or mental incapacity or infirmity (other than alcoholism
or drug addiction) which results in his being treated as disabled (the
"Disability") for purposes of the Employer's long-term disability policy
covering the Executive, then Employer, by notice to Executive, shall have the
right to terminate the Employment Period at any time thereafter.
5.5 Death. The Employment Period shall end on the date of
Executive's death.
6. TERMINATION COMPENSATION
6.1 Termination Without Cause By Employer or By Executive For
Good Reason. If the Employment Period is terminated by Employer without cause
pursuant to Section 5.1, or by Executive for good reason pursuant to Section
5.3, then Executive shall be entitled to be paid by Employer, as liquidated
damages and not as a penalty, (a) all Base Salary that he would have been
entitled to receive pursuant to this Agreement if the Employment Period had
continued for one year after the termination of Employment Period (the "Relevant
Period") and (b) a payment equal to 70% of the maximum short-term bonus
Executive could have earned pursuant to Paragraph 2 or 3 of Exhibit 4.1 for the
fiscal year in which the Employment Period is terminated (without taking into
account any increase in the annual bonus resulting from the cumulative
three-year EPS, as defined in Paragraph 2(b), (c) and (d) of Exhibit 4.1). Any
payments required to be made pursuant to the preceding sentence shall be made on
the same dates such payments would have been made had Executive continued to be
employed by Employer during the Relevant Period. Executive shall not be required
to mitigate the amount of any payments provided for hereunder upon termination
of the Employment Period by seeking employment with any other person, or
otherwise and the amounts payable to Executive pursuant to this Section 6.1
shall not be reduced by amounts received by him from any employment or
engagements with other persons during the Relevant Period.
6.2 Termination Upon Death or Disability. If the Employment
Period is terminated by reason of Disability or the death of Executive, then
Executive or his estate shall be entitled to be paid by Employer (in addition to
any amounts payable under the insurance, plans or programs referred to in
Section 4.2) the pro rata portion of any short-term bonus that Executive would
have been entitled to receive pursuant to Paragraph 2 or 3 of Exhibit 4.1, in
respect of the fiscal year in which the Employment Period is terminated, if the
Employment Period had continued through the end of such fiscal year. Any payment
required to be made pursuant to the preceding sentence shall be made on the same
date such payment would have been made had the Employment Period continued
through such date. For the purposes hereof, the pro rata portion of any bonus in
respect of any fiscal year means the total amount of such bonus (as if the
Employment Period had not terminated prior to the end of fiscal year),
multiplied by a fraction, the numerator of which is the number of days within
such fiscal year on or prior to the
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termination of the Employment Period and the denominator of which is the number
of days within such fiscal year.
6.3 Termination After a Change in Control. If the Employment
Period is terminated within three months prior to or 12 months after a Change in
Control by Employer without cause pursuant to Section 5.1, or by Executive for
good reason pursuant to Section 5.3, then Executive shall be entitled to be paid
by Employer, as liquidated damages and not as a penalty, (a) all Base Salary
that he would have been entitled to receive pursuant to this Agreement if the
Employment Period had continued for two years after the termination of the
Employment Period (the "CIC Relevant Period") and (b) two payments each equal to
70% of the maximum short-term bonus Executive could have earned pursuant to
Paragraph 2 or 3 of Exhibit 4.1 for the fiscal year in which the Employment
Period is terminated (without taking into account any increase in the annual
bonus resulting from the cumulative three-year EPS, as defined in Paragraph
2(b), (c) or (d) of Exhibit 4.1). Any payments required to be made pursuant to
the preceding sentence shall be made on the same dates such payments would have
been made had Executive continued to be employed by Employer during the CIC
Relevant Period. Executive shall not be required to mitigate the amount of any
payments provided for hereunder upon termination of the Employment Period by
seeking employment with any other person, or otherwise and the amounts payable
to Executive pursuant to this Section 6.3 shall not be reduced by amounts
received by him from any employment or engagements with other person during the
CIC Relevant Period. For purpose of this Agreement a "Change in Control" shall
mean the occurrence of any one of the following events:
(a) any "person," as such term is used in Sections
3(a)(9) and 13(d) of the Securities Exchange Act of 1934, becomes a "beneficial
owner," as such term is used in Rule 13d-3 promulgated under that act, of 50% or
more of the capital stock of Employer of any class or classes having general
voting power under ordinary circumstances, in the absence of contingencies, to
elect the directors of a corporation ("Voting Stock");
(b) the majority of the Board of Directors of
Employer consists of individuals other than Incumbent Directors, which term
means the members of the Board of Directors on the Effective Date; provided that
any person becoming a director subsequent to such date whose election or
nomination for election was supported by two-thirds of the directors who then
comprised the Incumbent Directors shall be considered to be an Incumbent
Director;
(c) Employer adopts any plan of liquidation providing
for the distribution of all or substantially all of its assets;
(d) all or substantially all of the assets or
business of Employer is disposed of pursuant to a merger, consolidation or other
transaction (unless the shareholders of Employer immediately prior to such
merger, consolidation or other transaction beneficially own, directly or
indirectly, in substantially the same proportion as they owned the Voting Stock,
the Voting Stock or other ownership interests of the entity or entities, if any,
that succeed to the business of Employer); or
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(e) Employer combines with another company and is the
surviving corporation but, immediately after the combination, the shareholders
of Employer immediately prior to the combination hold, directly or indirectly,
50% or less of the Voting Stock of the combined company.
6.4 Benefits After Termination. At the time the Employment
Period is terminated, Executive's rights to benefits under any benefit plans or
insurance plans or other death benefit programs or arrangements of Employer or
under any stock option, restricted stock or other plan of Employer shall be
determined, subject to the other terms and provisions of this Agreement, in
accordance with the terms and provisions of such plans, arrangements, or in the
case of stock options, restricted stock or other awards, any agreements relating
to the grant thereof. In addition, at the time the Employment Period is
terminated, Employee shall be entitled to payment for any accrued vacation time.
6.5 Additional Termination Benefits. If the Employment Period
is terminated by Employer without cause pursuant to Section 5.1, or by Executive
for good reason pursuant to Section 5.3, then during the Relevant Period or the
CIC Relevant Period, which ever is applicable, Executive shall be entitled to
continue medical insurance coverage for himself, spouse and dependents on the
same basis as he had prior to the termination of the Employment Period and,
unless otherwise specifically provided in Exhibit 4.2, to the benefits provided
for in Section 4.2 and Exhibit 4.2. In addition, if at the time the Employment
Period is terminated, Employee has the use of an Employer automobile, he shall
have the right at the end of the Relevant Period or the CIC Relevant Period,
which ever is applicable, to purchase the automobile from Employer or buy-out
any remaining lease to which the automobile is subject.
6.6 Excise Tax Gross-Up. In the event that Executive becomes
entitled to any payments under this Agreement, then if any such payments or any
other compensation, benefit or other amount from Employer for the benefit of
Executive ("Parachute Payments") will be subject to the tax imposed by Section
4999 of the Code (including any applicable interest and penalties, the "Excise
Tax"), no Parachute Payment shall be reduced (except for required tax
withholdings) and Employer shall pay to Executive by the earlier of the date
such Excise Tax is withheld from payments made to Executive or the date such
Excise Tax becomes due and payable by Executive, an additional amount (the
"Gross-Up Payment") such that the net amount retained by Executive, after
deduction of any Excise Tax on the Parachute Payments and taxes based upon the
Tax Rate and Excise Tax upon the payment provided for by this Section 6.6, shall
be equal to the amount the Executive would have received if no Excise Tax had
been imposed. Employer shall reasonably determine in good faith whether any of
the Parachute Payments are subject to the Excise Tax and the amount of any
Excise Tax and shall notify Executive of its determination. Employer and
Executive shall file all tax returns and reports regarding such Parachute
Payments in a manner consistent with Employer's reasonable good faith
determination. For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay taxes at the Tax Rate applicable at the time of
the Gross-Up Payment. In the event that the Excise Tax is
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subsequently determined to be less than the amount taken into account hereunder
at the time a Parachute Payment is made, Executive shall repay to Employer at
the time that the amount of such reduction in Excise Tax is finally determined
the portion of the Gross-Up Payment attributable to such reduction plus interest
on the amount of such repayment at the rate provided in Section 1274(d)(1) of
the Code or other applicable provision of the Code, but only to the extent that
such interest is paid to Executive. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the time a
Parachute Payment is made (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment),
Employer shall make an additional gross-up payment in respect of such excess
(plus any interest or penalties payable in respect of such excess) at the time
that the amount of such excess is finally determined. Employer shall reimburse
Executive for all reasonable fees, expenses, and costs related to determining
the reasonableness of any Employer position in connection with this paragraph,
preparation of any tax return or other filing that is affected by any matter
addressed in this paragraph and any audit, litigation or other proceeding that
is affected by any matter addressed in this paragraph.
6.7 Release. In partial consideration for Employer's
obligations to make the payments described in Section 6.1, 6.3 or 6.6 and to
provide the benefits described in Section 6.5, Executive shall execute and
deliver to Employer a general release satisfactory to Employer. If Executive
shall fail to execute and deliver such release to the Employer, or if Executive
shall revoke his consent to such release, if revocation is available, Executive
shall receive, in lieu of the payments and benefits provided in Section 6.1,
6.3, 6.5 and/or 6.6, payments and benefits, if any, determined in accordance
with the written personal policies of the Employer relating to severance then
generally applicable to employees with length of service and compensation level
of Executive.
6.8 No Other Termination Compensation. Executive shall not,
except as set forth in this Section 6, be entitled to compensation in respect of
any period following termination of the Employment Period.
7. LOCATION OF EXECUTIVE'S ACTIVITIES
Executive's principal place of business in the performance of
his duties and obligations under this Agreement shall be in the Kansas City
metropolitan area. Notwithstanding the preceding sentence, Executive will engage
in such travel and spend such time in other places as may be necessary and
appropriate in furtherance of his duties hereunder.
8. EXCLUSIVITY OF SERVICES, CONFIDENTIAL INFORMATION AND RESTRICTIVE COVENANTS
8.1 Exclusivity of Services and Restrictions. During the
Employment Period and the two-year period thereafter (the "Post-Employment
Period"), Executive shall not, directly or indirectly, (a) be or become
interested in or associated with (as an officer, director, stockholder, partner,
consultant, owner, employee, agent, creditor or otherwise) any business that is
then, or
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which then proposes to become, a competitor of the Company, provided, that the
foregoing shall not restrict Executive from the ownership, solely as an
investment, of securities of any business if such ownership is not as
controlling person of such business, not as a member of a group that controls
such business, and not as a direct or indirect beneficial owner of 5% or more of
any class of securities of such business, (b) induce or seek to influence any
employee of (or consultant to) the Company to leave its employ (or terminate
such consultancy), (c) aid a competitor or supplier of the Company in any
attempt to hire a person who shall have been employed by, or who was a
consultant to, the Company within the one-year period preceding the date of any
such aid, or (d) induce or attempt to influence any person who was a supplier or
customer to the Company during such period to transact business with a
competitor of the Company; provided, however, that, unless the Employment Period
has been terminated by Employer for cause pursuant to Section 5.2, the
provisions of this Section 8.1 shall continue in effect during the
Post-Employment Period only so long as Employer continues to pay Executive all
amounts to which Executive is entitled pursuant to Section 6 of this Agreement.
8.2 Confidential Information. Executive shall not at any time,
whether during the Employment Period or thereafter, disclose or use (except in
the course of his employment hereunder and in furtherance of the business of the
Company, or as required by applicable law) any confidential information, trade
secrets or proprietary data (including, without limitation, customer lists and
the identity of and any information relating to any customer) of the Company.
8.3 Disclosure of Restrictions. If Executive shall accept or
commence employment with, or agree to provide services to, any person (except a
person who is then affiliated with Employer) during the period from the date
hereof through the end of the Post-Employment Period then, and in such event, on
or before the date of such acceptance or agreement (and before commencement of
employment or the provision of services) Executive shall deliver a copy of this
Section 8 to his proposed employer.
8.4 Injunction. Notwithstanding any other provisions of this
Agreement, Executive acknowledges and agrees that in the event of a violation or
threatened violation of any of the provisions of this Section 8, Employer shall
have no adequate remedy at law and shall therefore be entitled to enforce each
such provision by temporary or permanent injunctive or mandatory relief obtained
in any court of competent jurisdiction without the necessity of proving damage
or posting any bond or other security, and without prejudice to any other
remedies that may be available at law or in equity.
9. INTELLECTUAL PROPERTY.
During the Employment Period, Executive shall disclose to
Employer all ideas, inventions and business plans developed by him during the
Employment Period that relate directly or indirectly to the Company's business,
including, without limitation, any process, operation, product or improvement
that may be patentable or copyrightable. Executive agrees that such shall be the
property of the Company and that he shall at the Company's request and
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cost do whatever is necessary to secure the rights thereto by patent, copyright
or otherwise to the Company.
10. MISCELLANEOUS
10.1 Notices. Any notice, consent or authorization required or
permitted to be given pursuant to this Agreement shall be in writing and sent to
the party for or to whom intended, at the address of such party set forth below,
by registered or certified mail (if available), postage paid, or at such other
address as either party shall designate by notice given to the other in the
manner provided herein.
If to Employer, to it at:
0000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Board of Directors
If to Executive, to him at:
Xxxxx X. Xxxx
0000 000xx Xxxxxx
Xxxxxxx, Xxxxxx 00000
10.2 Taxes. Employer is authorized to withhold, from any
compensation or benefits payable hereunder to Executive, such amounts for income
tax, social security, unemployment compensation and other taxes as shall be
necessary or appropriate in the reasonable judgment of Employer to comply with
applicable laws and regulations.
10.3 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of Missouri applicable to
agreements made and to be performed therein.
10.4 Headings. All descriptive headings in this Agreement are
inserted for convenience only and shall be disregarded in construing or applying
any provision of this Agreement.
10.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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10.6 Severability. If any provision of this Agreement, or part
thereof, is held to be unenforceable, the remainder of such provision and this
Agreement, as the case may be, shall nevertheless remain in full force and
effect.
10.7 Entire Agreement. This Agreement contains the entire
agreement and understanding between Employer and Executive with respect to the
subject matter hereof. This Agreement supersedes any prior agreement between the
parties relating to the subject matter hereof.
10.8 Arbitration. Any controversy or claim arising out of,
under or relating to this Agreement or the performance or breach hereof, shall
be resolved by arbitration in Kansas City, Missouri, before the American
Arbitration Association, in accordance with the rules then in effect of such
Association; and judgment upon the award or decision rendered may be entered and
enforced in any court of competent jurisdiction. The award of the arbitrator in
any arbitration may, in its discretion, include provision for payment of legal
fees and expenses incurred by the prevailing party.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the Restatement Date.
BHA GROUP HOLDINGS, INC.
By: /s/ Xxxxxx Rheinfrank, Jr.
----------------------------------------
Name: Xxxxxx Xxxxxxxxxx, Jr.
Title: Chairman of the Board of Directors
Executive:
/s/ Xxxxx X. Xxxx
---------------------------------
Xxxxx X. Xxxx
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Exhibit 4.1
COMPENSATION
1. Base Salary. During the Employment Period, Employer shall
pay to Executive Base Salary, payable in equal monthly installments at such
times during each month as is customary with Employer with respect to its senior
executives, at a rate of $250,000 per annum.
2. Short-Term Bonus Arrangement Applicable for Fiscal Years
2000, 2001 and 2002.
(a) Executive shall be entitled to receive an annual cash
bonus for fiscal years 2000, 2001 and 2002 based on the consolidated earnings
per share of Employer ("EPS") and determined under the following Annual Cash
Incentive Matrix:
===================================================================================================================
ANNUAL CASH INCENTIVE MATRIX
-------------------------------------------------------------------------------------------------------------------
FISCAL YEAR EPS/BONUS EPS/BONUS EPS/BONUS
-------------------------------------------------------------------------------------------------------------------
2000 $0.80/$35,000 $0.95/$70,000 $1.00/$100,000
-------------------------------------------------------------------------------------------------------------------
2001 $1.00/$35,000 $1.25/$70,000 $1.35/$100,000
-------------------------------------------------------------------------------------------------------------------
2002 $1.20/$35,000 $1.50/$70,000 $1.75/$100,000
-------------------------------------------------------------------------------------------------------------------
Cumulative $3.00/$105,000 $3.70/$210,000 $4.10/$300,000
===================================================================================================================
(b) An annual cash bonus shall not be payable for (i) fiscal
year 2000, if EPS for such fiscal year is less than $.80 (ii) fiscal year 2001,
if EPS for such fiscal year is less than $1.00 or (iii) fiscal year 2002, if EPS
is less than $1.20; provided however, an annual cash bonus for fiscal year 2002
may be payable, as described hereinafter, if the cumulative EPS for the
three-year period ending on September 30, 2002 (the "cumulative three-year EPS")
is at least $3.00.
(c) If the EPS for a fiscal year or for the cumulative
three-year period is between the EPS levels shown on the above matrix, the
amount of the annual cash bonus shall be determined on a pro rata basis. The
maximum annual cash bonus for fiscal year 2000 or 2001 is $100,000. The maximum
annual cash bonus for fiscal year 2002 is $100,000 unless increased as a result
of the cumulative three-year period EPS as provided hereinafter. If the
cumulated three-year EPS exceeds $4.10, the total cumulative bonus payable shall
equal $300,000 plus $2,250 for each $.01 the cumulative three-year EPS exceeds
$4.10.
(d) The amount of the annual cash bonus for fiscal year 2002
may be increased from the amounts shown on the third horizontal line in the
above matrix as a result of the cumulative three-year EPS. The following example
illustrates how the annual cash bonus for fiscal year 2002 may be increased by
the cumulative three-year EPS:
EPS BONUS
------ -----
Fiscal Year 2000 $ .75 $ 0
Fiscal Year 2001 $ 1.25 $ 70,000
Fiscal Year 2002 $ 1.50 $ 70,000
------ ---------
Cumulative Three-Year Total $ 3.50 $140,000
Cumulative Adjustment $ 40,000 (additional amount paid in 2002)
Cumulative Bonus Paid $180,000
The cumulative annual bonus for fiscal years 2000, 20001 and 2002 before the
cumulative adjustment would be $140,000. Because the cumulative three-year EPS
of $3.50 is between $3.00 and $3.70, the cumulative three-year bonus amount
attributable to $3.50 would be $180,000, a proration between $3.00/$105,000 and
$3.70/$210,000. Accordingly, the cumulative three-year bonus payable under the
bonus program would be $180,000. As such, an additional $40,000 would be payable
in 2002 to bring the fiscal year 2002 bonus to $110,000 and the cumulative
three-year bonus to $180,000.
(e) Within 75 days following the end of each of fiscal years
2000, 2001 and 2002, Employer shall pay to Executive the annual cash bonus
payable, if any, with respect of such fiscal year
3. Short-Term Bonus Arrangement(s) Applicable for Fiscal Years
After 2002. Executive shall be entitled to receive annual cash bonuses for years
after fiscal year 2002 under a bonus arrangement or arrangements to be
determined by Employer which shall provide Executive an annual bonus opportunity
of at least $100,000.
4. Long-Term Incentive Arrangement Applicable for Fiscal Years
2000, 2001 and 2002. On November 9, 1999, Executive received a grant of options
to purchase 36,000 shares of Company Common Stock. Pursuant to the Compensation
Committee's grant to Executive, the options, to the extent not previously
exercisable and vested, shall be immediately exercisable and vested upon the
termination of the Employment Period by Employer without cause pursuant to
Section 5.1, or by Executive for good reason pursuant to Section 5.3, if such
termination occurs within three months prior to or 12 months after a Change in
Control.
5. Long-Term Incentive Arrangement(s) Applicable for Fiscal
Years After 2002. In each fiscal year after 2002, Executive shall be entitled to
participate in a long-term incentive arrangement or arrangements to be
determined by Employer, which arrangements or arrangements shall provide
Executive an opportunity to earn an amount no less than the product of $100,000
multiplied by the numbers of fiscal years to which the arrangement or
arrangements relate.
Exhibit 4.2
BENEFITS
1. Automobile. To facilitate the performance of Executive's
responsibilities under this Agreement, during the Employment Period, Employer
shall, at Employer's expense, continuously make available to Executive for
Executive's personal use the automobile currently made available to Executive,
or an automobile selected by Executive substantially comparable thereto, and
shall pay the costs of operating, maintaining, insuring, garaging and otherwise
using such automobile, subject to such policies as may be in effect from time to
time applicable to Employer's senior executives.
2. Other Benefits. (a) Employer shall maintain in effect at
all times during the Employment Period, at Employer's expense, a policy of
insurance on the life of Executive in the amount of $1,000,000 naming such
person as Executive shall designate from time to time as the owner and
beneficiary thereof. Executive agrees to aid, and cooperate in all reasonable
respects with, Employer in procuring such insurance, including, without
limitation, by submitting to the usual and customary medical examinations and
filling out, executing and delivering such applications and other instruments in
writing as may be reasonably required by an insurance company or companies to
which any application or applications for such insurance may be made by or for
Employer.
(b) Employer shall maintain in effect at all times during the
Employment Period, at Employer's expense, either a group or individual
disability policy covering the Executive.
(c) Employer shall reimburse Executive for all out-of-pocket
medical and related expenses incurred by Executive and his immediate family and
not otherwise covered by the Employer's insurance plans or programs, up to but
not exceeding an aggregate of $8,000 per year, upon his presentation to Employer
of signed, itemized accounts of such expenditures, all in accordance with
Employer's procedures and policies as adopted and in effect from time to time
and applicable to its senior executives.
(d) Employer shall pay or otherwise reimburse Executive for
the expenses incurred or to be incurred by him in connection with the membership
of Executive and his family in the country club to which they currently belong
or a substantially comparable club selected by Executive, up to but not
exceeding an aggregate of $1,500 per year, upon his presentation to Employer of
signed, itemized accounts of such expenditures, all in accordance with
Employer's procedures and policies as adopted and in effect from time to time
and applicable to its senior executives.
