Item 9 (c)(4)
EMPLOYMENT AND BONUS AGREEMENT
EMPLOYMENT AND BONUS AGREEMENT ("Agreement") made and entered
into as of this 7th day of November, 1996 by and between XXXXXXXXXX
ELECTRONICS, LTD., a corporation with its principal place of
business located at 00 X 000 Xxxxxxxxx Xxxx, XxXxx, XX 00000 (the
"Employer"), and XXXXX X. XXXXXXX, an individual whose current
residence is located at 0000 Xxxx Xxxx, Xxxx Xxxxx, XX 00000
("Employee").
RECITALS
WHEREAS, the Employer desires to employ Employee as its
President and Chief Operating Officer upon the terms and conditions
stated herein; and
WHEREAS, Employee desires to be so employed by the Employer at
the salary and benefits provided for herein; and
WHEREAS, Employee acknowledges and understands that during the
course of his employment, Employee will become familiar with
certain confidential information of the Employer which is
exceptionally valuable to the Employer and vital to the success of
the Employer's business; and
WHEREAS, the Employer and Employee desire to protect such
confidential information from disclosure to third parties or its
use to the detriment of the Employer; and
WHEREAS, the Employee acknowledges that the likelihood of
disclosure of such confidential information would be substantially
reduced, and that legitimate business interests of the Employer
would be protected, if Employee refrains from competing with the
Employer and from soliciting its customers and employees during and
following the term of the Agreement, and Employee is willing to
covenant that he will refrain from such actions.
NOW THEREFORE, in consideration of the promises and of the
mutual covenants and agreements hereinafter set forth, the parties
hereto acknowledge and agree as follows:
ARTICLE ONE
NATURE AND TERM OF EMPLOYMENT
1.01 Employment. The Employer hereby agrees to employ
Employee and Employee hereby accepts employment as the Employer's
President and Chief Operating Officer.
1.02 Term of Employment. Employee's employment pursuant to
this Agreement shall commence on November 12, 1996, or such earlier
date as may be agreed upon by Employee and the Employer and,
subject to the provisions of Article Four, the term of such
employment (the "Employment Term") shall continue indefinitely from
such commencement date on an "at will" basis.
1.03 Duties. The duties of Employee shall be as determined by
the Employer's Board of Directors (the "Board") consistent with his
position as President and Chief Operating Officer and Employee will
adhere to the policies and procedures of the Employer, including,
without limitation, its Code of Conduct, and will follow the
supervision and direction of the Chairman of the Board of the
Employer in the performance of such duties. Employee agrees to
devote his full working time, attention and energies to the
diligent and satisfactory performance of his duties hereunder.
Employee will not, during the Employment Term or during any period
during which Employee is receiving payments pursuant to Article 2
and/or Sections 5.04 or 5.05 or any other provision of this
Agreement, engage in any activity, other than on behalf of Employer
or any of its subsidiaries, which is intended or would reasonably
be expected to have a material adverse affect on the Employer's
reputation, goodwill or business relationships or which is intended
or would reasonably be expected to result in material economic harm
to the Employer.
ARTICLE TWO
COMPENSATION AND BENEFITS
For all services to be rendered by him in any capacity hereunder
(including as an officer, director, committee member or otherwise
of the Employer or any parent or subsidiary thereof or any division
of any thereof) on behalf of the Employer, the Employer agrees to
pay Employee so long as he is employed hereunder, and the Employee
agrees to accept, the compensation set forth in Sections 2.01 and
2.02.
2.01 Base Salary. During the term of Employee's employment
hereunder, the Employer shall pay to Employee an annual base salary
("Base Salary") of Three Hundred Thousand and 00/100 Dollars
($300,000), payable in installments as are customary under the
Employer's payroll practices from time to time. The Employer at
its sole discretion may, but is not required to, review and adjust
the Employee's Base Salary from year to year; provided, however,
that, except as may be expressly consented otherwise in writing by
Employee, (i) Employer may not decrease Employee's Base Salary, and
(ii) whenever Employer increases base salaries of all or
substantially all of its senior executive employees, Employer shall
increase Employee's Base Salary by a percentage amount no less than
the percentage amount of the average increase in base salary of
Employer's other senior executive employees. No additional
compensation shall be payable to Employee by reason of the number
of hours worked or by reason of hours worked on Saturdays, Sundays,
holidays or otherwise.
2.02 Management Incentive Plan. During the term of the
Employee's employment hereunder, the Employee shall be a
participant in the Bonus Plan, a copy of which is attached hereto
as Exhibit A, as modified from time to time with the written
consent of Employee (the "Annual Incentive Plan"). The Employee's
"target bonus percentage" for purposes of the Annual Incentive Plan
shall be fifty percent (50%) of his Base Salary. Except as
otherwise provided in this Agreement, (i) bonuses under the Annual
Incentive Plan shall be paid strictly in accordance with the Annual
Incentive Plan, and (ii) for any partial fiscal year the bonus
shall be computed and paid only for the portion of the fiscal year
Employee is employed hereunder.
2.03 Stock Options. To induce Employee to accept the
employment offered hereunder, on the date of commencement of
employment hereunder the Employer shall grant Employee options
under the Xxxxxxxxxx Electronics, Ltd. Employee's 1996 Incentive
Compensation Plan to purchase an aggregate of 50,000 shares of
Employer's Common Stock, vesting 10,000 shares per year beginning
on the anniversary date of the grant, at an exercise price equal to
the fair market value (as defined in the Plan) of Employer's Common
Stock on the grant date. The Employer at its sole discretion may,
but is not required to, grant Employee additional options. Upon
the occurrence of a "material change" as defined in Section 5.06,
all options held by Employee shall be and become fully vested.
2.04 Vacation. Employee shall be entitled to paid vacation
each year during the term of this Agreement in accordance with the
Employer's vacation policy for senior executive officers as in
effect from time to time, which vacations shall be scheduled for
such times as Employee and the Chairman of the Board of Employer
shall mutually agree.
2.05 Other Benefits. Employer will provide to Employee such
benefits (other than bonus, severance and incentive compensation
benefits) as are generally provided by the Employer to its other
senior executive employees, including but not limited to,
automobile allowance, health/major medical insurance, dental
insurance, disability insurance, life insurance, sick days and
other employee benefits (collectively "Other Benefits"), all in
accordance with the terms and conditions of the applicable Other
Benefits plans. Nothing in this Agreement shall require the
Employer to maintain any benefit plan nor prohibit the Employer
from modifying any such plan as it sees fit from time to time. It
is only intended that Employee shall be entitled to participate in
any such plan offered for which he may qualify under the terms of
any such plan as it may from time to time exist, in accordance with
the terms thereof.
2.06 Withholding. All salary, bonus and other payments
described in this Agreement shall be subject to withholding for
federal, state or local taxes, amounts required to be withheld
under applicable benefit policies or programs, and any other
amounts that may be required to be withheld by law, judicial order
or otherwise.
ARTICLE THREE
CONFIDENTIAL INFORMATION
3.01 Definition of Confidential Information. For the purposes
of this Agreement, the term "Confidential Information" shall mean,
but shall not be limited to, any technical or non-technical data,
formulae, compilations, programs, devices, methods, techniques,
procedures, manuals, financial data, business plans, lists of
actual or potential customers or suppliers, lists of employees, and
any information regarding the Employer's products, marketing or
database, or that of any subsidiary of Employer, (whether or not
reduced to writing) which is not generally known to the public.
The Employer and Employee acknowledge and agree that such
Confidential Information is extremely valuable to the Employer and
may constitute trade secret information under applicable law. In
the event that any part of the Confidential Information becomes
generally known to the public through legitimate origins (e.g.,
other than by the breach of this Agreement by Employee or by other
misappropriation of the Confidential Information), that part of the
Confidential Information shall no longer be deemed Confidential
Information for the purposes of this Agreement, but Employee shall
continue to be bound by the terms of this Agreement as to all other
Confidential Information.
3.02 Ownership of Confidential Information. Employee agrees
that the Confidential Information (including, without limitation,
that which was or is developed, created or prepared by or for
Employee) is and at all times shall remain the sole and exclusive
property of the Employer. All records relating to the Employer's
or any subsidiary's operations, investigations, and business, and
any notes with respect to such records, made or received by
Employee in connection with his services hereunder, and all copies
of such records or notes made by, for, or with the consent of
Employee, are and shall be the Employer's property exclusively, and
shall surrender the same to the Employer at the Employer's request
but, in any event, no later than at the termination of his
employment with the Employer as provided in Section 3.04 below.
3.03 Non-Disclosure of Confidential Information. Except in
the course of the performance of Employee's duties with Employer
(or as required by law), Employee will not during, or after
termination of, Employee's employment by the Employer, in any form
or manner, directly or indirectly, knowingly divulge, disseminate,
disclose or communicate to any person, entity, firm, corporation or
any other third party, or knowingly utilize for Employee's personal
benefit or for the benefit of any competitor of the Employer, any
Confidential Information, and shall use his reasonable endeavors to
prevent the improper use, dissemination, publication, or disclosure
of, any Confidential Information.
3.04 Delivery Upon Termination. Upon termination of
Employee's employment with the Employer for any reason, Employee
shall promptly deliver to the Employer all correspondence, files,
manuals, letters, notes, notebooks, reports, programs, plans,
proposals, financial documents, and any other documents or data
concerning the Employer's customers, suppliers, database, business
plans, marketing or manufacturing strategies, or processes and/or
which contains Confidential Information, together will all other
property of the Employer or any affiliate in Employee's possession,
custody or control.
ARTICLE FOUR
NON-COMPETE AND NON-SOLICITATION COVENANTS
4.01 Covenant Not To Compete. During the Employment Term and
for a period of two years after termination of Employee's
employment for any reason, Employee will not, on behalf of himself
or on behalf of another person, corporation, partnership or entity,
canvas, call upon, solicit, entice, persuade, or induce any
individual or entity which was or is a customer or supplier of the
Employer during the last twelve (12) months of Employee's
employment and with whom Employee dealt on behalf of the Employer,
for the following:
(a) except on behalf of the Employer or any of its
subsidiaries, to purchase (with respect to customers)
Competing Products, or
(b) except on behalf of the Employer or any of its
subsidiaries, to request or advise any such customer or
supplier to withdraw, curtail or cancel its business with
the Employer, and
In addition, during the Employment Term and for a period of two
years after termination of Employee's employment for any reason,
Employee shall not approach, respond to, or otherwise deal with any
such customer or supplier for such purpose or authorize or
knowingly cooperate with the taking of any such actions by any
other person, corporation, partnership or entity, other than on
behalf of Employer or any of its subsidiaries, nor will Employee
otherwise attempt to interfere (to the Employer's detriment) in the
relationship between the Employer and any such customer or
supplier, other than on behalf of Employer or any of its
subsidiaries.
"Competing Products" as used in this Article means products or
services which are similar to, compete with, or can be used for the
same purposes as products or services sold or offered for sale by
Employer or which were in active development by Employer within the
last twelve (12) months of Employee's employment.
4.02 Covenant Not to Solicit Employees. During the Employment
Term and for a period of two years after termination of Employee's
employment for any reason, Employee will not, for any reason,
employ, solicit or endeavor to entice away from the Employer
(whether for his own benefit or on behalf of another person or
entity) any employees of the Employer who have had access to
Confidential Information to work for any competitor of the
Employer, nor will Employee otherwise attempt to interfere (to the
Employer's detriment) in the relationship between the Employer and
any of its employees, other than on behalf of Employer or any of
its subsidiaries.
4.03 Independent Obligations. Each obligation of each
section, subparagraph and provision of this Article shall be
independent of any obligation under any other section, subparagraph
or provision hereof, except that Employee's obligations are
contingent upon the Employer's performance of its obligations under
Articles Two and Five and Section 7.11 and shall be suspended at
any time that Employer is in breach of Article Two or Article Five
or Section 7.11.
ARTICLE FIVE
TERMINATION
5.01 Termination of Employee for Cause. The Employer shall
have the right to terminate Employee's employment at any time for
"cause." Prior to such termination, the Employer shall provide
Employee with written notification of any and all allegations
constituting "cause" and the Employee shall be given five (5)
working days after receipt of such written notification to respond
to those allegations in writing. Upon receipt of the Employee's
response, the Employer shall meet with the Employee (accompanied,
if desired by Employee, by his legal counsel) to discuss the
allegations. Employer may require that Employee not report to work
during such period.
For purposes hereof, "cause" shall mean (i) an act or acts of
personal dishonesty taken by the Employee and intended to result in
personal enrichment of the Employee, (ii) material violations by
the Employee of the Employee's obligations or duties under, or any
terms of, this Agreement, which are not remedied in a reasonable
period (not to exceed ten (10) days) after receipt of written
notice thereof from the Employer, or (iii) Employee being indicted
or convicted (by trial, guilty or no contest plea or otherwise) of
(a) a felony, (b) any other crime involving moral turpitude, or (c)
any violation of law which would impair the ability of the Employer
or any affiliate to obtain any license deemed necessary or
desirable for the conduct of its actual or proposed business.
5.02 Termination of Employee Because of Employee's Disability,
Injury or Illness. Either Employee or the Employer shall have the
right to terminate Employee's employment if Employee is unable to
perform the duties assigned to him by the Employer because of
Employee's disability, injury or illness, provided however, such
inability must have existed for a total of sixty (60) days in any
consecutive four (4) month period before such termination can be
made effective.
5.03 Termination as a Result of Employee's Death. The
Employee's employment shall automatically terminate upon Employee's
death.
5.04 Termination of Employee for any Other Reason. The
Employer shall have the right to terminate Employee's employment at
any time at will for any reason other than the reasons set forth in
Sections 5.01, 5.02 or 5.03 upon notice to Employee.
5.05 Termination by Employee for Good Reason. Employee shall
have the right to terminate his employment at any time for "good
reason". Prior to such termination, Employee shall provide
Employer with written notification of any and all allegations
constituting "good reason" and Employer shall be given five (5)
working days after receipt of such written allegations to respond.
Upon receipt of the Employer's response, Employee (accompanied, if
desired by Employee, by his legal counsel) shall meet with the
Employer (accompanied, if desired by Employer, by its legal
counsel) to discuss the allegations. Employee shall not be
required to report to work during such period.
For purposes hereof, "good reason" means material violation by
the Employer of the Employer's obligations or duties under, or any
terms of, this Agreement, which are not remedied in a reasonable
period (not to exceed ten (10) days) after receipt of written
notice thereof from Employee.
5.06 Termination by Employee after Material Change. Employee
shall have the right to terminate his employment at any time within
a period of 180 days after any "material change".
For purposes hereof, "material change" means (i) any sale or
other transfer of all or substantially all of the Employer's
assets, (ii) any merger, consolidation, share exchange, tender
offer, or other similar transaction involving the Employer, unless
the surviving entity is under control by the same person(s) or
entity(ies) as the Employer was prior to the transaction, (iii) any
change in control of the Employer as a result of a tender offer,
proxy contest or otherwise, or (iv) any plan is approved to
liquidate or dissolve the Employer.
5.07 Termination by Employee for any Other Reason. Employee
shall have the right to terminate his employment at any time for
any reason other than the reasons set forth in Sections 5.05 and 5
06.
5.08 Payments, etc. after Termination. Upon the termination
of Employee's employment, the Employer shall have the following
obligations, in addition to any obligations imposed by law and any
obligations under the terms and provisions of any plan or program
in which Employee is a participant;
(a) The Employer shall be obligated to pay Employee his Base
Salary, bonus under the Annual Incentive Plan, and Other Benefits
earned or accrued through the date of termination.
(b) In addition to the amounts payable under Section 5.08(a), if
Employee's employment is terminated as a result of Employee's
disability, injury or illness pursuant to Section 5.02 or
Employee's death pursuant to Section 5.03, the Employer shall be
obligated to pay Employee his bonus under the Annual Incentive Plan
for the full quarter in which his employment terminates.
(c) In addition to the amounts payable under Section 5.08(a), if
Employee's employment is terminated by the Employer other than for
"cause" pursuant to Section 5.01 or as a result of Employee's
disability, injury or illness pursuant to Section 5.02 or if
Employee's employment is terminated by Employee for "good reason"
pursuant to Section 5.05 or following a "material change" pursuant
to Section 5.06 or if Employee's employment is terminated pursuant
to Section 7.02 (except as provided otherwise in Section 7.02), the
Employer shall continue to pay to Employee (i) his then current
Base Salary for a period of one year following the termination of
his employment, plus (i) an amount, on the 90th, 180th, 270th and
360th day after the date of termination, equal to his bonus under
the Annual Incentive Plan for the last full quarter preceding the
date of termination. In addition, for a period of one year
following the termination of his employment, Employee shall
continue to receive the same Other Benefits (provided the Other
Benefits plans so permit, or, if the Other Benefits plans do not so
permit, a substantially equivalent benefit shall be provided to
Employee) and options granted to Employee shall vest as if Employee
had remained in the employ of Employer for such one year period and
for purposes of exercising the options he shall be deemed to have
terminated with the consent of Employer as of the end of such one
year period, and any deferred compensation, incentive compensation,
and any other compensation awarded to Employee shall become fully
and absolutely vested as of the date of termination.
(d) Employer may suspend any or all payments and other obligations
to Employee under this Article Five at any time that Employee is in
material breach of Articles Three or Four or Section 7.11.
ARTICLE SIX
REMEDIES
6.01 Injunction. Employee acknowledges that the restrictions
contained in this Agreement will not prevent him from obtaining
such other gainful employment he may desire to obtain or cause him
any undue hardship and are reasonable and necessary in order to
protect the legitimate interests of the Employer and that violation
thereof would result in irreparable injury to the Employer.
Employee therefor acknowledges and agrees that in the event of a
breach or threatened breach by Employee of the provisions of
Articles Three or Four or Section 7.11, the Employer shall be
entitled to an injunction restraining Employee from such breach or
threatened breach. Nothing herein shall be construed as
prohibiting or limiting the Employer from pursuing any other
remedies available to the Employer for such breach or threatened
breach, the rights hereinabove mentioned being in addition to and
not in substitution of such other rights and remedies, all of which
may be exercised concurrently. The period of restriction specified
in Article Four shall xxxxx during the time of any violation
thereof, and the portion of such period remaining at the
commencement of the violation shall not begin to run until the
violation is cured.
6.02 Survival. The provisions of this Article Six and of
Articles Three and Four and Section 7.11 shall survive the
termination or expiration of this Agreement.
ARTICLE SEVEN
MISCELLANEOUS
7.01 Assignment. Employee and Employer acknowledge and agree
that the covenants, terms and provisions contained in this
Agreement constitute a personal employment contract and the rights
and obligations of the parties thereunder cannot be transferred,
sold, assigned, pledged or hypothecated, excepting that the rights
and obligations of the Employer under this Agreement may be
assigned or transferred pursuant to a sale of the business, merger,
consolidation, share exchange, sale of substantially all of the
Employer's assets, or other reorganization described in Section 368
of the Code, or through liquidation, dissolution or otherwise,
whether or not the Employer is the continuing entity, provided that
the assignee, or transferee is the successor to all or
substantially all of the assets of the Employer and such assignee
or transferee assumes the rights and duties of the Employer, if
any, as contained in this Agreement, either contractually or as a
matter of law.
7.02 Litigation with Prior Employer. In the event that
Employee shall be permanently enjoined by a court of competent
jurisdiction from being employed by Employer based on his prior
employment relationship, or in the event that Employer shall be
enjoined from employing Employee, Employee's employment shall
terminate on the effective date of such injunction and the Employer
shall have the obligations described in Section 5.08(a) and 5.08(c)
if such injunction is granted because of Employee's breach of his
confidentiality or non-compete obligations to his former employer
or its parent or their respective successors or assigns by reason
of any action or inaction of (i) Employee taken with the direction
of the Chairman of Employer given with knowledge that it may be a
breach of such obligations, or (ii) the Company that is not taken
at the direction of Employee, in all other events Employer's
obligation shall be to pay to Employee his then current Base Salary
and Other Benefits accrued up to and including the date on which
Employee's employment is so terminated as described in Section
5.08(a). Whether or not any such injunction is issued, Employer
shall also defend Employee against any and all claims, and
indemnify and hold harmless Employee with respect to any and all
attorneys' fees and other defense costs, judgments and expenses
that Employee may incur in connection with litigation with
Employee's previous employer (or its successor) arising out of or
relating to Employee's employment with the Employer and any actions
and things that Employee may take or do at the request or with the
approval of Employer.
7.03 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter
hereof and may not be modified except in writing by the parties
hereto. Furthermore, the parties hereto specifically agree that
all prior agreements, whether written or oral, relating to
Employee's employment by the Employer shall be of no further force
or effect from and after the date hereof.
7.04 Severability. If any phrase clause or provision of this
Agreement is declared invalid or unenforceable by a court of
competent jurisdiction, such phrase, clause or provision shall be
deemed severed from this Agreement, but will not affect any other
provisions of this Agreement, which shall otherwise remain in full
force and effect. If any restriction or limitation in this
Agreement is deemed to be unreasonable, onerous and unduly
restrictive by a court of competent jurisdiction, it shall not be
stricken, in its entirety and held totally void and unenforceable,
but shall be deemed rewritten and shall remain effective to the
maximum extent permissible within reasonable bounds.
7.05 Notices. Any notice, request or other communication
required to be given pursuant to the provisions hereof shall be in
writing and shall be deemed to have been given when delivered in
person or five (5) days after being deposited in the United States
mail, certified or registered, postage prepaid, return receipt
requested and addressed to the party at its or his last known
addresses. The address of any party may be changed by notice in
writing to the other parties duly served in accordance herewith.
7.06 Waiver. The waiver by the Employer or Employee of any
breach of any term or condition of this Agreement shall not be
deemed to constitute the waiver of any other breach of the same or
any other term or condition hereof.
7.07 Attorneys Fees and For Future. In the event that
Employee has been found to have violated in any material respect
any of the terms of Articles Three or Four or Section 7.11 of this
Agreement either after a preliminary injunction hearing or a trial
on the merits, Employee shall pay to the Employer the Employer's
costs and expenses, including attorneys fees, in enforcing the
terms of Articles Three or Four of this Agreement. In addition, in
the event of a material breach by Employee of Articles Three or
Four or Section 7.11, Employee shall lose all rights to receive any
future payments under the Annual Incentive Plan set forth in
Section 2.02 above and any payments pursuant to Article Five,
except as may be required by law not to be waivable or forfeitable.
7.09 Continuing Obligation. The obligations, duties and
liabilities of Employee pursuant to Articles Three and Four and
Section 7.11 of this Agreement are continuing, absolute and
unconditional and shall remain in full force and effect as provided
herein.
7.10 No Conflicting Obligations or Use. Employee represents
and warrants to Employer that his execution of this Agreement and
the performance of the terms and conditions contained herein does
not constitute a breach of any agreement to which he is a party that
has not been disclosed to the Employer (it being understood that
Employee makes no representation or warranty with respect to the
severance agreement dated May 30, 1996 between Employee and Premier
Farnell Corp.). In addition, Employee agrees not to knowingly use
in connection with his employment hereunder, or to knowingly
disclose to Employer, or knowingly induce the Employer to use, any
confidential or proprietary information or material belonging to any
previous employer or other person or entity. The foregoing
restriction shall not apply with respect to information and material
which is generally publicly available without restraint and thus is
not confidential or proprietary or any information which is used or
disclosed at the request or with the approval of the Employer.
7.11 The Employer's Good Name. Employee will at no time engage
in conduct or make any statements which falsely and materially
demean, defame, libel, slander, destroy or diminish in any way the
reputation or goodwill of the Employer, its parents or subsidiaries,
or their respective shareholders, directors, officers, employees,
or agents or the products sold by the Employer or any of its parents
or subsidiaries. The Employer, its parents or subsidiaries, and
their respective shareholders, directors, officers, employees, and
agents will at no time engage in conduct or make any statements
which falsely and materially demean, defame, libel, slander, destroy
or diminish in any way the reputation of Employee. These
obligations shall survive the termination of this Agreement.
7.12 Good Faith. Employee and the Employer (and the Employee's
officers and directors) shall at all times act fairly, reasonably
and in good faith in relation to this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
EMPLOYEE EMPLOYER
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxxxxx
__________________________ By: _______________________________________
Chairman
Title: ____________________________________
EXHIBIT A
Bonus Plan
For purposes hereof the following terms shall have the
following meaning:
"Company" shall mean Xxxxxxxxxx Electronics, Ltd.
"Executive" shall mean the particular employee of the Company
participating in this Plan.
"Actual Earnings Per Share" for any fiscal year quarter shall
be that earnings per share as reported by the Company in its
quarterly report to its shareholders for such quarter with
final adjustment on its year end audited financial statement
for such year.
"Base Earning Per Share" for any fiscal year shall be that
earnings per share of the Company for its prior fiscal year as
reported to its shareholders on its year end audited financial
statement for such year and with respect to any fiscal quarter
in such year shall be equal to one fourth of the total for the
year.
"Goal Earnings Per Share" for any fiscal year shall be that
earnings per share established by the Company as such in its
budget for such year and with respect to any fiscal quarter in
such year shall be equal to one fourth of the total for the
year. Should the Company fail to establish a Goal Earnings
Per Share for a fiscal year in its budget then Goal Earnings
Per Share for such year shall be equal to Actual Earnings Per
Share for the prior fiscal year increased by 25%. The Goal
Earnings Per Share for Executive shall never exceed the Goal
Earnings Per Share for any other senior executive employee for
the purpose of any bonus plan.
"Target Bonus Percentage" shall mean the percentage of
Executive's Base Salary which he will receive as a bonus as
established in his employment agreement.
Executive shall receive a bonus equal to the Target Bonus
Percentage of his Base Salary (as defined in his employment
agreement) paid to him for the period for which the bonus is
calculated if the Actual Earnings Per Share is equal to Goal
Earnings Per Share and zero if Actual Earnings Per Share is equal
to or less than Base Earnings Per Share. If Actual Earnings Per
Share is greater than Base Earnings Per Share but more or less than
Goal Earnings Per Share, the bonus shall be a pro rata amount with
no maximum, computed on a scale with Base Earnings Per Share equal
to zero and Goal Earnings Per Share equal to 100% of Target Bonus
Percentage. For example, assume Salary for a fiscal year at
$300,000, Target Bonus Percentage for such period at 50%, Base
Earnings Per Share for such period at $0.68 and Goal Earnings Per
Share at $0.84.
The Bonus would be calculated as follows:
Bonus Potential for performance equal to Goal Earnings Per Share
$300,000 (Salary For Period)
x .50 (Target Bonus Percentage)
$150,000 (Bonus Potential for Goal Performance)
Bonus Potential for each $.01 of Earnings Per Share in excess of
Base Earnings Per Share
$0.84 (Goal Earnings Per Share)
- 0.68 (Base Earnings Per Share)
$ 16 (Cents Difference between Base and Goal)
$150,000.00 (Bonus Potential for Goal Performance see
calculation above)
divided by 16 (Cents Difference between Base and Goal see
calculation above)
$ 9,375.00 (Bonus Amount for each $.01 of Earnings Per
Share in excess of Base)
(a) Then assume Actual Earnings Per Share for period of $0.90
$0.90 (Actual Earnings Per Share)
$0.68 (Base Earnings Per Share)
22 (Cents Earnings Per Share in excess of Base)
x $9,375.00 (Bonus Amount for each $.01 of Earnings Per
Share in excess of Base)
$206,250.00 (Bonus Amount for $0.90 Earnings Per Share
performance)
(b) Then assume Actual Earnings Per Share for period of $0.80
$0.80 (Actual Earnings Per Share)
$0.68 (Base Earnings Per Share)
12 (Cents Earnings Per Share in excess of Base)
x $9,375.00 (Bonus Amount for each $.01 of Earnings Per
Share in excess of Base)
$112,500.00 (Bonus Amount for $0.80 Earnings Per Share
performance)
Bonus will be calculated and paid on a quarterly basis. Base
Earnings Per Share and Goal Earnings Per Share for the Company's
fiscal year ending May 31, 1997 are $0.68 and $0.84, respectively.
