EXHIBIT 10.48
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement dated as of April 1, 2004, is
between Strata Directional Drilling, Inc. ("Strata"), Xxxxx-Xxxxxxxx Corporation
(with respect to Section 3 hereof) and Xxxxx Xxxxx. Certain capitalized terms
used herein are defined in Section 1 below.
R E C I T A L S:
A. Executive is currently employed by Company pursuant to an employment
agreement dated April 1, 2002 (the "2002 Employment Agreement") which terminates
on April 1, 2004;
B. Company wishes to continue to employ Executive, and Executive
desires to continue employment with Company by entering into a written agreement
to specify the terms and conditions of Executive's continued employment with
Company;
C. Executive is to be employed as President and Chief Executive Officer
and shall be a director of Company, and shall be an integral member of its
management team;
D. Company considers the maintenance of a sound management team,
including Executive, essential to protecting and enhancing its best interests
and those of its stockholders;
E. Company recognizes that the possibility of a change in control of
Company may result in the departure or distraction of management to the
detriment of Company and its stockholders; and
F. Company has determined that appropriate steps should be taken to
obtain and retain the continued attention and dedication of selected members of
Company's management team to their assigned duties without the distraction
arising from the possibility of a change in control of Company.
NOW, THEREFORE, in consideration of Executive's past and future
employment with Company and other good and valuable consideration, the parties
agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
will have the following meanings:
(a) AGREEMENT refers to the Executive Employment Agreement
represented by this document.
(b) CAUSE has the meaning ascribed to it in Section 7(a)(ii).
(c) CHANGE IN CONTROL means:
(i) The acquisition after the date hereof by any
individual, entity or group, or a Person (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) other
than an Excluded Person, of ownership of more than 50% of
either: (i) the then outstanding shares of Common Stock
("Outstanding Common Stock"); or (ii) the combined voting
power of the then outstanding voting securities of the
Company entitled to vote generally in the election of
directors ("Outstanding Voting Securities");
(ii) Individuals who, as of the date hereof,
constitute the Board of Directors of the Company ("Incumbent
Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, as a member of the Incumbent
Board, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election
contest (as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Securities Exchange Act of 1934) or
other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Approval by the stockholders of the Company
of a reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (i) more than 50% of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Common Stock and Outstanding
Voting Securities immediately prior to such reorganization,
merger or consolidation, in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation of the Outstanding
Common Stock and Outstanding Voting Securities, as the case
may be, or at least a majority of the members of the board of
directors of the corporation resulting from such
reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(iv) Approval by the stockholders of the Company of
(i) a complete liquidation or dissolution of the Company or
(ii) the sale or other disposition of all or substantially
all of the assets of the Company, other than to a
corporation, with respect to which following such sale or
other disposition, (1) more than 50% of, respectively, the
then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting
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securities of such corporation entitled to vote generally in
the election for directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Common Stock and Outstanding
Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other
disposition, of the Outstanding Common Stock and Outstanding
Voting Securities, as the case may be; or (2) at least a
majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time
of the execution of the initial agreement or action of the
Board providing for such sale or other disposition of assets
of the Company.
(d) CODE means the Internal Revenue Code of 1986, as amended.
(e) COMMENCEMENT DATE has the meaning ascribed to it in
Section 4.
(f) COMPANY means Xxxxx-Xxxxxxxx Corporation.
(g) CONFIDENTIAL INFORMATION has the meaning ascribed to it in
Section 9(b).
(h) CONSTRUCTIVELY TERMINATED with respect to an Executive's
employment with Company will be deemed to have occurred if Executive
terminates his employment within six months following the date on which
Company:
(i) demotes Executive to a lesser position, either in
title or responsibility, than the highest position held by
Executive with Company at any time during Executive's
employment with Company after the date hereof;
(ii) decreases Executive's salary below the highest
level in effect at any time during Executive's employment with
Company or reduces Executive's benefits and perquisites below
the highest levels in effect at any time during Executive's
employment with Company (other than as a result of any
amendment or termination of any Executive or group or other
executive benefit plan, which amendment or termination is
applicable to all executives of Company or any inadvertent
reduction in benefits that Company cures within 30 days after
receiving written notice of such reduction);
(iii) requires Executive to relocate to a principal
place of business more than 50 miles from the principal place
of business occupied by Company on the first day of an
Applicable Period;
(iv) is subject to a Change In Control, unless
Executive accepts employment with a successor to Company; or
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(v) breaches any other material term of this
Agreement which is not cured by Company within 30 days after
receiving notice of such breach.
(i) DESIGNATED INDUSTRY has the meaning ascribed to it in
Section 10(a)(i)(1).
(j) DETERMINATION has the meaning ascribed to such term in
Section 1313(a) of the Code.
(k) DISABILITY with respect to Executive shall be deemed to
exist if he meets the definition of disability under the terms of the
Company's current long-term disability policy (or any replacement
long-term disability policy). Any refusal by Executive to submit to a
reasonable medical examination to determine whether Executive is so
disabled shall be deemed conclusively to constitute evidence of
Executive's disability.
(l) EXECUTIVE refers to Xxxxx Xxxxx.
(m) EXCLUDED PERSON means any Person who beneficially owns
more than 10% of the outstanding shares of the Company at any time
prior to the date hereof.
(n) COMPANY refers collectively to the Company and its
subsidiaries and other affiliates. In Section 10, the term "Company"
shall be deemed to refer to the Company, and for purposes of Section
10, Executive shall be deemed to be employed by the Company and all
compensation and benefits paid or provided to Executive by any Company
under this Agreement at any time shall be deemed to have been paid or
provided to Executive by the Company.
(o) INCENTIVE PLAN means the Xxxxx-Xxxxxxxx Corporation 2003
Incentive Stock Plan, as amended from time to time.
(p) INVENTIONS has the meaning ascribed to it in Section 8(a).
(q) SALARY has the meaning ascribed to it in Section 5(a).
(r) SEPARATION PAYMENT PERIOD has the meaning ascribed to it
in Section 7(b)(ii).
(s) SEPARATION PAYMENTS has the meaning ascribed to it in
Section 7(b)(ii).
SECTION 2. EMPLOYMENT. Company hereby employs Executive, and Executive
hereby accepts employment by Company, upon the terms and subject to the
conditions hereinafter set forth. The 2002 Employment Agreement is hereby
terminated and superceded by this Agreement, effective the date hereof.
SECTION 3. DUTIES. Executive shall be employed as the President and
Chief Executive Officer and shall serve as a director of Company. Executive
agrees to devote such time as is necessary to perform his duties attendant to
his executive position with Company, in a manner consistent with Executive's
employment prior to the date hereof. Xxxxx-Xxxxxxxx Corporation and Company
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shall cause Executive to be maintained as a director of the Company. Executive
shall be allowed to engage in other activities as an investor as well as
participate in activities of charitable organizations of his choice so long as
they do not materially interfere with his duties for Company.
SECTION 4. TERM. The term of employment of Executive hereunder shall
commence on the date of this Agreement and terminate three years hence.
SECTION 5. COMPENSATION AND BENEFITS. In consideration for the services
of Executive hereunder, Company shall compensate Executive as follows (except as
set forth herein, Executive acknowledges payment in full of all amounts due to
him for services rendered prior to the date hereof):
(a) SALARY. Company shall pay Executive, semi-monthly in
arrears with its normal payroll procedures, a salary which is
equivalent to an annual rate of $200,000 (the "Salary"). The Salary may
not be decreased at any time during the term of Executive's employment
hereunder and shall be reviewed no less than annually by Company. Any
increase in the Salary shall be in the sole discretion of the
Compensation Committee of the Board of Directors of the Company.
(b) MANAGEMENT INCENTIVE BONUS; STOCK OPTIONS. Executive shall
be entitled to receive a bonus equal to a maximum of 120% of his Salary
in accordance with Schedule A attached hereto based upon Strata's
EBITDA. Such bonus shall be paid monthly following the completion of
the Company's internal financial statements for each month and adjusted
annually within 30 days after the completion of the Company's audited
financial statements for each year. In addition, Executive shall be
entitled to receive bonuses during the first three months of 2004 in
accordance with the formula attached as Schedule A (and shall not be
entitled to receive a bonus for such period in accordance with the
terms of his prior employment agreement). Executive shall also be
eligible to receive from Company such annual management incentive
bonuses as may be provided in management incentive bonus plans adopted
from time to time by Company. On December 16, 2003, the Board of
Directors approved the grant of options to purchase 500,000 shares of
Common Stock of the Company pursuant to the Incentive Plan.
(c) VACATION. Executive shall be entitled to four (4) weeks
paid vacation per year. Unless otherwise approved by the Compensation
Committee of the Board of Directors of the Company, a maximum of ten
days accrued vacation not taken in any calendar year shall be carried
forward and may be used in the next subsequent calendar year. Executive
shall schedule his paid vacation to be taken at times which are
reasonably and mutually convenient to both Company and Executive.
(d) INSURANCE BENEFITS. Company shall provide accident,
health, dental, disability and life insurance for Executive under the
group accident, health, dental, disability and life insurance plans as
may be maintained by Company for its full-time, salaried Executives.
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(e) OFFICE SPACE AND EXPENSES. Company shall provide and pay
the expenses of maintaining an office for Executive during the term of
this Agreement. Additional office space for the staff of the Executive
shall be obtained at the expense of the Company.
(f) ASSISTANT EXPENSES. Company shall assume and pay all
salary and benefits of an Assistant to Executive.
(g) SIGNING BONUS. As an incentive for Executive to execute
this Agreement, Company agrees to pay $75,000 to Executive concurrently
with the execution and delivery of this Agreement as a signing bonus.
(h) ADDITIONAL RESPONSIBILITIES. To the extent the Company
requests Executive to undertake additional responsibilities after the
date hereof the Company's Board shall review and make an appropriate
adjustment in Executive's compensation hereunder.
SECTION 6. EXPENSES. The parties anticipate that in connection with the
services to be performed by Executive pursuant to the terms of this Agreement,
Executive will be required to make payments for travel, entertainment of
business associates and similar expenses. Company shall reimburse Executive for
all reasonable expenses of types authorized by Company and incurred by Executive
in the performance of his duties hereunder, consistent with past practices.
Executive shall comply with such reporting requirements with respect to expenses
as Company may establish from time to time.
SECTION 7. TERMINATION.
(a) GENERAL. Executive's employment hereunder shall commence
on the Commencement Date and continue until the end of the term
specified in Section 4, except that the employment of Executive
hereunder shall terminate prior to such time in accordance with the
following:
(i) DEATH OR DISABILITY. Upon the death of Executive
during the term of his employment hereunder or, at the option
of Company, in the event of Executive's Disability, upon 30
days' notice to Executive.
(ii) FOR CAUSE. For "Cause" immediately upon written
notice by Company to Executive. A termination shall be for
Cause if:
(1) Executive commits a criminal act
involving dishonesty or moral turpitude; or
(2) Executive commits a material breach of
any of the covenants, terms and provisions hereof or
fails to obey written directions delivered to
Executive by the Company's Board of Directors which
are not inconsistent with Executive's rights under
this Agreement.
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(iii) WITHOUT CAUSE. Without Cause upon notice by the
Board of Directors to Executive or upon notice by Executive to
the Board if Executive has been Constructively Terminated.
(b) SEVERANCE PAY.
(i) TERMINATION UPON DEATH OR DISABILITY OR FOR
CAUSE. Executive shall not be entitled to any severance pay or
other compensation upon termination of his employment pursuant
to Section 7(a)(i) or (ii) except for his Salary earned but
unpaid as of the date of termination, unpaid expense
reimbursements under Section 6 for expenses incurred in
accordance with the terms hereof prior to termination, and
compensation for accrued, unused vacation as of the date of
termination.
(ii) TERMINATION WITHOUT CAUSE. In the event
Executive's employment hereunder is terminated pursuant to
Section 7(a)(iii), Company shall pay Executive Separation
Payments as Executive's sole remedy in connection with such
termination. "Separation Payments" are payments made at the
semi-monthly rate of Executive's then current salary in effect
immediately preceding the date of termination. Separation
Payments shall be made for the entire term of this Agreement
(the "Separation Payment Period") and shall be paid by Company
in equal semi-monthly payments in arrears or in accordance
with its then-current normal payroll procedure, provided that
Company's obligation to make Separation Payments shall be
reduced by any amounts earned by Executive for services during
the Separation Payment Period. Company shall also pay
Executive his Salary earned but unpaid as of the date of
termination, unpaid expense reimbursements under Section 6 for
expenses incurred in accordance with the terms hereof prior to
termination, and compensation for accrued, unused vacation as
of the date of termination.
SECTION 8. INVENTIONS; ASSIGNMENT.
(a) INVENTIONS DEFINED. All rights to discoveries, inventions,
improvements, designs and innovations (including all data and records
pertaining thereto) that relate to the business of Company, whether or
not patentable, copyrightable or reduced to writing, that Executive may
discover, invent or originate during the term of his employment
hereunder, and for a period of six months thereafter, either alone or
with others and whether or not during working hours or by the use of
the facilities of Company ("Inventions"), shall be the exclusive
property of Company. Executive shall promptly disclose all Inventions
to Company, shall execute at the request of Company any assignments or
other documents Company may deem necessary to protect or perfect its
rights therein, and shall assist Company, at Company's expense, in
obtaining, defending and enforcing Company's rights therein. Executive
hereby appoints Company as his attorney-in-fact to execute on his
behalf any assignments or other documents deemed necessary by Company
to protect or perfect its rights to any Inventions.
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(b) COVENANT TO ASSIGN AND COOPERATE. Without limiting the
generality of the foregoing, Executive hereby assigns and transfers to
Company the world-wide right, title and interest of Executive in the
Inventions. Executive agrees that Company may apply for and receive
patent rights (including Letters Patent in the United States) for the
Inventions in Company's name in such countries as may be determined
solely by Company. Executive shall communicate to Company all facts
known to Executive relating to the Inventions and shall cooperate with
Company's reasonable requests in connection with vesting title to the
Inventions and related patents exclusively in Company and in connection
with obtaining, maintaining and protecting Company's exclusive patent
rights in the Inventions.
(c) SUCCESSORS AND ASSIGNS. Executive's obligations under this
Section 8 shall inure to the benefit of Company and its successors and
assigns and shall survive the expiration of the term of this Agreement
for such time as may be necessary to protect the proprietary rights of
Company in the Inventions.
SECTION 9. CONFIDENTIAL INFORMATION.
(a) ACKNOWLEDGMENT OF PROPRIETARY INTEREST. Executive
acknowledges the proprietary interest of Company in all Confidential
Information. Executive agrees that all Confidential Information learned
by Executive during his employment with Company or otherwise, whether
developed by Executive alone or in conjunction with others or
otherwise, is and shall remain the exclusive property of Company.
Executive further acknowledges and agrees that his disclosure of any
Confidential Information will result in irreparable injury and damage
to Company.
(b) CONFIDENTIAL INFORMATION DEFINED. "Confidential
Information" means all confidential and proprietary information of
Company, including without limitation (i) information derived from
reports, investigations, experiments, research and work in progress,
(ii) methods of operation, (iii) market data, (iv) proprietary computer
programs and codes, (v) drawings, designs, plans and proposals, (vi)
marketing and sales programs, (vii) client lists, (viii) historical
financial information and financial projections, (ix) pricing formulae
and policies, (x) all other concepts, ideas, materials and information
prepared or performed for or by Company and (xi) all information
related to the business, products, purchases or sales of Company or any
of its suppliers and customers, other than information that is publicly
available.
(c) COVENANT NOT TO DIVULGE CONFIDENTIAL INFORMATION. Company
is entitled to prevent the disclosure of Confidential Information. As a
portion of the consideration for the employment of Executive and for
the compensation being paid to Executive by Company, Executive agrees
at all times during the term of his employment hereunder and thereafter
to hold in strict confidence and not to disclose or allow to be
disclosed to any person, firm or corporation, other than to his
professional advisors (who have the obligation to maintain the
confidentiality of such information) and to persons engaged by Company
to further the business of Company, and not to use except in the
pursuit of the business of Company, the Confidential Information,
without the prior written consent of Company.
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(d) RETURN OF MATERIALS AT TERMINATION. In the event of any
termination or cessation of his employment with Company for any reason,
Executive shall promptly deliver to Company all documents, data and
other information derived from or otherwise pertaining to Confidential
Information. Executive shall not take or retain any documents or other
information, or any reproduction or excerpt thereof, containing or
pertaining to any Confidential Information.
SECTION 10. NONCOMPETITION.
(a) Until termination of Executive's employment hereunder,
Executive shall not do any of the following:
(i) engage directly or indirectly, alone or as a
shareholder, partner, director, officer, Executive of or
consultant to any other business organization, in any business
activities that:
(1) relate to the oil and gas drilling
services industry (the "Designated Industry"); or
(2) were either conducted by Company prior
to the termination of Executive's employment
hereunder or proposed to be conducted by Company at
the time of such termination;
(ii) approach any customer or supplier of Company in
an attempt to divert it to any competitor of Company in the
Designated Industry; or
(iii) solicit or encourage any employee or Executive
of Company to end his relationship with Company or commence
any such relationship with any competitor of Company.
(b) Executive's noncompetition obligations hereunder shall not
preclude Executive from owning less than five percent of the common
stock of any publicly traded corporation conducting business activities
in the Designated Industry. If at any time the provisions of this
Section 10 are determined to be invalid or unenforceable by reason of
being vague or unreasonable as to area, duration or scope of activity,
this Section 10 shall be considered divisible and shall be immediately
amended to only such area, duration and scope of activity as shall be
determined to be reasonable and enforceable by the court or other body
having jurisdiction over the matter, and Executive agrees that this
Section 10 as so amended shall be valid and binding as though any
invalid or unenforceable provision had not been included herein.
SECTION 11. GENERAL.
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(a) NOTICES. All notices and other communications hereunder
shall be in writing or by written telecommunication, and shall be
deemed to have been duly given upon delivery if delivered personally or
via written telecommunication, or five days after mailing if mailed by
certified mail, return receipt requested or by written
telecommunication, to the relevant address set forth below, or to such
other address as the recipient of such notice or communication shall
have specified to the other party in accordance with this Section
11(a):
If to Company, to: with a copy to:
Xxxxx-Xxxxxxxx Corporation Xxxxxx X. Xxxxxxxx
0000 Xxxxxxx, Xxxxx 000 Xxxxxx Xxxxxxxxx Xxxxx & Xxxxxxxx LLP
Xxxxxxx, Xxxxx 00000 0000 00xx Xxxxxx, Xxxxx 0000 Xxxxx
Xxxxx Xxxxxx, XX 00000
If to Executive, to the last address for Executive appearing on the
Company's records
(b) WITHHOLDING. All payments required to be made to Executive
by Company under this Agreement shall be subject to the withholding of
such amounts, if any, relating to federal, state and local taxes as may
be required by law.
(c) EQUITABLE REMEDIES. Each of the parties hereto
acknowledges and agrees that upon any breach by Executive or Company of
his or its obligations hereunder, Company and Executive shall have no
adequate remedy at law and accordingly shall be entitled to specific
performance and other appropriate injunctive and equitable relief.
(d) SEVERABILITY. If any provision of this Agreement is held
to be illegal, invalid or unenforceable, such provision shall be fully
severable, and this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision never comprised a part
hereof, and the remaining provisions hereof shall remain in full force
and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall
be added automatically as part of this Agreement a provision as similar
in its terms to such illegal, invalid or unenforceable provision as may
be possible and be legal, valid and enforceable.
(e) WAIVERS. No delay or omission by either party in
exercising any right, power or privilege hereunder shall impair such
right, power or privilege, nor shall any single or partial exercise of
any such right, power or privilege preclude any further exercise
thereof or the exercise of any other right, power or privilege.
(f) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument.
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(g) CAPTIONS. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
any of the terms or provisions hereof.
(h) REFERENCE TO AGREEMENT. Use of the words "herein,"
"hereof," "hereto," "hereunder" and the like in this Agreement refer to
this Agreement only as a whole and not to any particular section or
subsection of this Agreement, unless otherwise noted.
(i) BINDING AGREEMENT. This Agreement shall be binding upon
and inure to the benefit of the parties and shall be enforceable by the
personal representatives and heirs of Executive and the successors and
assigns of Company. This Agreement may be assigned by the Company or
any Company to any Company or, subject to Section 7(b)(iii), to any
successor to all or substantially all of the Company's business as a
result of a merger, consolidation, sale of stock or assets, or similar
transaction; provided that in the event of any such assignment, the
Company shall remain liable for all of its obligations hereunder and
shall be liable for all obligations of all such assignees hereunder. If
Executive dies while any amounts would still be payable to him
hereunder, such amounts shall be paid to Executive's estate. This
Agreement is not otherwise assignable by Executive.
(j) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof and may not be
amended except by a written instrument hereafter signed by each of the
parties hereto.
(k) GOVERNING LAW. This Agreement and the performance hereof
shall be construed and governed in accordance with the laws of the
State of Texas, without regard to its choice of law principles.
(l) GENDER AND NUMBER. The masculine gender shall be deemed to
denote the feminine or neuter genders, the singular to denote the
plural, and the plural to denote the singular, where the context so
permits.
EXECUTED as of the date and year first above written.
Strata Directional Technology, Inc.
By /S/ XXXXXXX X. XXXXXXXXXXXX
----------------------------------------
Xxxxxxx X. Xxxxxxxxxxxx
Allis Chalmers Corporation
By /S/ XXXXXXX X. XXXXXXXXXXXX
----------------------------------------
Xxxxxxx X. Xxxxxxxxxxxx, Chief Executive
Officer
/S/ XXXXX XXXXX
-----------------------------------------
Xxxxx Xxxxx
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SCHEDULE A
BONUS CALCULATION
1. BONUS CALCULATION. For each calendar year, the Executive shall be
entitled to a monthly bonus equal to 5% of Strata's earnings before taxes,
interest and depreciation ("EBITDA") calculated on a cumulative monthly
average basis, provided that Executive meets minimum EBITDA targets
established by the Compensation Committee or the Board of Directors for each
year, both on a monthly and a cumulative basis.
2. CALCULATION IN 2004. During calendar year 2004:
(a) The monthly average EBITDA shall be calculated from the January 1, 2004;
(b) The minimum EBITDA targets shall be as follows: Executive shall be
entitled to receive a monthly bonus for any month only if (i) such month's
EBITDA prior to taking into account the bonus exceeds $184.211 (to ensure a
minimum current month EBITDA of $175,000 after payment of the bonus), and
(ii) the cumulative monthly average EBITDA after giving effect to the
payment of all bonuses (including the current month) is greater than
$175,000; and
(c) Notwithstanding the foregoing, Executive shall be entitled to receive
aggregate annual bonus payments equal to at least 5% of the Company's EBITDA
during the period January 1, 2004 through December 31, 2004 (after giving
effect to all bonus payments) provided that such EBITDA exceeds $2,100,000.
If the bonus so calculated exceeds the amounts paid to Executive pursuant to
(a) and (b) above, such excess shall be paid to Executive within 10 days
following completion of the audit for 2004.
3. CALCULATION IN SUBSEQUENT YEARS. During 2005 and subsequent years:
(a) The Compensation Committee shall establish new minimum EBITDA targets
during or prior to the first month of such year, and the bonus shall be
calculated and paid on a calendar year basis, i.e., beginning in January of
each year, and the monthly average EBITDA shall be calculated from January 1
of each year; and
(b) Executive shall be entitled to receive aggregate annual bonus payments
equal to at least 5% of the Company's annual EBITDA (after giving effect to
all bonus payments) during each year provided that annual EBITDA (pro rated
for the final year of the contract) exceeds such minimums as are established
by the Compensation Committee and/or Board of Directors. If the bonus so
calculated exceeds the amounts paid to Executive pursuant to (a) above, such
excess shall be paid to Executive within 10 days following completion of the
audit for such calendar year (or, in the case of the period January 1, 2007
through March 31, 2007, prior to June 1, 2007).
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4. LIMITATION ON TOTAL BONUS AMOUNT. Notwithstanding the foregoing, in no
event shall Executive's bonus for any month exceed $20,000.
5. ADJUSTMENT IN THE EVENT OF EXTRAORDINARY TRANSACTION. In the event that
Strata consummates an acquisition of another company or assets or similar
transaction that is expected to materially affect its EBITDA expectations,
the bonus parameters shall be adjusted in the reasonable discretion of the
Compensation Committee and/or the Board of Directors to reflect the impact
of such transaction.
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