Exhibit 10.22
BINDING TERM SHEET
Management Incentives
A. If the entire company is sold for cash or liquid equivalents in one or
more contiguous transactions:
1. The sale(s) must be completed in such a fashion that the
entire bank debt has been paid in full on or before December 15, 2001
as a condition to payment of any management incentives; provided that,
in the event that a detailed term sheet or an agreement has been
executed for any such sale and the transaction closes on or before
January 31, 2001, said date for paying the bank debt will be extended
until the date of such closing, provided that any loss or damage
incurred by the company as a result of paying the bank debt after
December 15, 2001 shall be deducted from the initial incentive
payments to be made.
2. Best efforts will be made to have purchaser(s) assume the
existing employment agreements of CEO, COO and CFO with salary
continuation or severance paid in accordance with those agreements.
In the event that any such agreements are not assumed as aforesaid,
and if Nextera is unable to fund the obligations under such employment
agreements, and if employment is not otherwise offered to the CEO, COO
or CFO upon terms comparable to his existing agreement, then the CEO,
COO and/or CFO, as applicable, will be given 9 month agreements with
Knowledge Universe or an affiliate of Knowledge Universe to serve in a
consulting or employment capacity, as determined by Knowledge
Universe, at existing base pay level, plus medical benefits. The
obligation to pay medical benefits may be satisfied by paying the
premiums on existing policies extended through COBRA.
3. Management incentives replace any annual bonus provided for
in the employment agreements, except as provided in C below.
4. The management incentive formula will be as follows:
a) 5% of the first $10MM of proceeds realized by Nextera after
payment of bank debt ("net proceeds").
b) 6% of the next $10MM of net proceeds.
c) 7% of the next $10MM of net proceeds.
d) 8% of the next $10MM of net proceeds.
e) 9% of the next $10MM of net proceeds.
f) 4% of the balance of net proceeds, not to exceed $1MM.
5. Management incentive bonus to be paid from proceeds of such sale as
follows:
a) $1MM, or if the total incentive bonus is less than $1MM,
the total incentive bonus, to be paid in cash, as soon as
practical after closing.
b) An additional $500,000 shall be paid in cash in the event
that such payment is deemed by directors of the company not to
impair the operations or otherwise adversely affect other
obligations of the company at the time.
c) The balance shall be paid in cash on a pro rata basis with
the retirement of the subordinated debt of the company, provided
that, in the event that the payment
dates on the subordinated debt are extended, interest shall accrue on
said balance at a rate equal to the rate on the subordinated debt from
the date of such extension until the date paid.
B. If only certain assets or divisions are sold:
1. The sale(s) must be completed in such as fashion that the
entire bank debt has been paid in full or refinanced on or before
December 15, 2001 as a condition to payment of any management
incentives; provided that, in the event that a detailed term
sheet or an agreement has been executed for any such sale and the
transaction closes on or before January 31, 2002, said date for
paying the bank debt will be extended until the date of such
closing, provided that any loss or damage incurred by the company
as a result of paying the bank debt after December 15, 2001 shall
be deducted from the initial incentive payments to be made.
2. Best efforts will be made to have purchaser(s) assume the
existing employment agreements of CEO, COO and CFO with salary
continuation or severance paid in accordance with those
agreements. In the event that any such agreements are not assumed
as aforesaid, and if Nextera is unable to fund the obligations
under such employment agreements, and if employment is not
otherwise offered to the CEO, COO or CFO upon terms comparable to
his existing agreement, then the CEO, COO and/or CFO, as
applicable, will be given 9 month agreements with Knowledge
Universe or an affiliate of Knowledge Universe to serve in a
consulting or employment capacity, as determined by Knowledge
Universe, at existing base pay level, plus medical benefits. The
obligation to pay medical benefits may be satisfied by paying the
premiums on existing policies extended through COBRA.
3. Management incentives replace any annual bonus provided for in
the employment agreements, except as provided in C below.
4. The management incentive bonus shall equal 8% of the
capitalized value of the surviving entity based upon the average
stock price for 45 days following completion of the sale of
assets and the payment of the bank debt, but in no event shall
said amount be less than $1MM nor more than $4MM.
5. The management incentive bonus shall be paid as follows:
a) $1MM to be paid in cash, as soon as practical after
closing(s).
b) An additional $500,000 shall be paid in cash in the event
that such payment is deemed by directors of the company not
to impair the operations or otherwise adversely affect other
obligations of the company at the time.
c) The balance shall be on a pro rata basis with the
retirement of the subordinated debt of the company, provided
that, in the event that the payment dates on the
subordinated debt are extended, interest shall accrue on
said balance at a rate equal to the rate on the subordinated
debt from the date of such extension until the date paid; or
by delivery of freely tradable common stock in the resulting
company based upon 95% of the average stock price for the 45
days following the date of completion of the transaction, at
the employee's option.
C. If neither of the events referred to in A or B above takes place, then the
CFO and COO shall receive a percentage of their respective targeted
bonuses, as determined by the CEO, in an amount equal to the percentage of
the targeted bonus set forth in the CEO's employment agreement which is
paid to the CEO for the CEO's employment agreement which is paid to the CEO
for 2001. The compensation committee of the Board of Directors shall
accept any recommendations made by the CEO, as long as there is a
reasonable basis for such
recommendations. If the amount of the discretionary bonuses computed
pursuant to this paragraph C is greater than the management incentives set
forth in A or B above, then the CEO, COO and CFO shall be entitled to
receive said discretionary bonus in lieu of the management incentive bonus
set forth in A and B above, and this document shall be or no further force
or effect. Bonuses (if any) of the CEO, COO and CFO shall be payable by
February 28, 2002 or as soon as practical thereafter.
D. The CEO, COO, and CFO will be entitled to participate in the management
incentives provided for herein on the following basis.
Xxxxx X. Xxxxxxxxx 58%
Xxxxxxx X. Xxxxx 28%
Xxxxxxx X. Xxxxxxxxx 14%
E. Each manager referred to above will be entitled to receive a share of the
management incentives provided for herein if he is an employee of Nextera
or an affiliate of Knowledge Universe at the time the sale transactions are
consummated or if any such employment is theretofore terminated for any
reason other than either cause (as defined in the manager's existing
employment agreement) or voluntary termination (it being agreed that
continued employment of the manager by the purchaser of certain assets or
divisions of Nextera shall not be deemed to involve a termination of
employment).
NEXTERA ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, Chairman
Special Committee - Board of
Directors
/s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
