Exhibit 10.31
EMPLOYMENT AGREEMENT
AGREEMENT made and entered into in Littleton, Massachusetts, by and
between Dover Saddlery, Inc. (the "Company"), a Delaware corporation with its
principal place of business at Littleton, Massachusetts, and Xxxxxxxx A. R.
Grylls (the "Executive"), effective as of the 1st day of September, 2005.
WHEREAS, the operations of the Company are a complex matter requiring
direction and leadership in a variety of arenas;
WHEREAS, the Executive possesses the experience and expertise to provide
the direction and leadership required by the Company and its Affiliates from his
business experience prior to joining the Company and his years of service to the
Company; and
WHEREAS, subject to the terms and conditions hereinafter set forth, the
Company therefore wishes to establish the terms of the continued employment of
the Executive as its Vice President and Chief Operating Officer the Executive
agrees to so establish such terms of his employment;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises, terms, provisions and conditions set forth in this Agreement,
the parties hereby agree:
1. Employment. Subject to the terms and conditions set forth in this
Agreement, the Company hereby offers and the Executive hereby accepts employment
on the terms set forth in this Agreement.
2. Term. Subject to earlier termination as hereafter provided, this
Agreement shall have a rolling twenty-four month term; the original term hereof
shall commence on September 1, 2005 and shall end on August 31, 2007. Unless
terminated pursuant to another provision of this Agreement, this Agreement shall
at all times have a twenty-four month term, but may at any time be terminated by
either party by giving not less than twenty-four months written notice of the
termination date. The term of this Agreement, as from time to time extended or
renewed, is hereafter referred to as "the term of this Agreement" or "the term
hereof."
3. Capacity and Performance.
(a) During the term hereof, the Executive shall serve the
Company as its Vice President and Chief Operating Officer. In addition, and
without further compensation, the Executive shall serve as a director of the
Company, if so elected by the stockholders of the Company, and shall serve as a
director of one or more of the Company's Affiliates if so elected from time to
time.
(b) During the term hereof, the Executive shall be employed by
the Company on a full-time basis and shall have all powers and duties consistent
with the position of Vice President, subject to the direction of the Board.
(c) During the term hereof, the Executive shall devote his full
business time and his best efforts, business judgment, skill and knowledge
exclusively to the advancement of the business and interests of the Company and
its Affiliates and to the discharge of his duties and responsibilities
hereunder; provided, however, that this provision shall not prevent the
Executive from managing his personal investments and engaging in civic and
charitable activities outside of normal business hours.
(d) Except for required travel on the Company's business to an
extent substantially consistent with his present business travel obligations and
except for attendance at meetings of the Board of Directors of the Company
and/or its Affiliates, the Executive shall not be required to work on a regular
basis at any location outside of a fifty (50) mile radius of Littleton,
Massachusetts.
4. Compensation and Benefits. As compensation for all services performed
by the Executive under and during the term hereof and subject to performance of
the Executive's duties and of the obligations of the Executive to the Company
and its Affiliates pursuant to this Agreement.
(a) Base Salary. During the term hereof, the Company shall pay
the Executive a salary at the rate of Two Hundred Fifty Thousand Dollars
($250,000.00) per annum, payable in accordance with the payroll practices of the
Company for its executives. Such base salary is hereafter referred to as the
"Base Salary." The Base Salary will be increased on January 1 of each year to
follow year-to-year increases in the Consumer Price Index for All Urban
Consumers ("CPI-U") as reported in the immediately preceding December reports.
(b) Incentive and Bonus Compensation. The Executive shall
continue to participate in the Company's current performance bonus program as
described in Exhibit A attached hereto. Further, if any other incentive or bonus
compensation programs are made available to executives of the Company,
generally, the Executive shall be entitled during the term hereof to participate
in such program in accordance with the terms thereof, as such terms may be
modified or amended by the Company from time to time; provided, however, that
nothing contained herein shall obligate the Company to adopt or continue such
additional incentive or bonus compensation programs. Any compensation paid to
the Executive under such an incentive or bonus compensation program shall be in
addition to the Base Salary.
(c) Vacations. During the term hereof, the Executive shall be
entitled to four (4) weeks of paid vacation annually, to be taken at such times
and intervals as shall be determined by the Executive, subject to the reasonable
business needs of the Company.
(d) Retirement Plans. During the term hereof, the Employee shall
be entitled to participate in and enjoy the benefit of the Company's 401-K Plan,
and any other retirement or similar plans, programs or arrangements available to
Executive Management from time to time. For purposes of the Agreement,
"Executive Management"
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means the Employee and the other two most highly paid non-shareholder executive
officers of the Company from time to time.
(e) Health, Welfare and Fringe Benefit Plans, Etc. During the
term hereof, the Employee shall at no cost to him be entitled to participate in
and enjoy the benefit of all of the health, medical, dental, cafeteria,
reimbursement, accident, travel, insurance, sick leave, other leaves of absence,
holidays and other similar welfare, fringe-benefit or employment-related plans,
programs, arrangements, policies or prerequisites available to Executive
Management from time to time. Participation shall be subject to the terms of the
applicable plan documents and the discretion of the Board or any administrative
or other committee provided for in or contemplated by such plan. The Company may
alter, modify, add to or delete its employee benefit plans as they apply to
Executive Management at such times and in such manner as the Company determines
to be appropriate, without recourse by the Executive.
(f) Additional Benefits. In addition to the other compensation
and benefits described in this Section, the Company shall pay or reimburse the
Executive for additional benefits selected by him having an annual cost of an
amount not to exceed Twenty-five Thousand Dollars ($25,000.00).
(g) Business Expenses. The Company shall pay or reimburse the
Executive for all reasonable business expenses incurred or paid by the Executive
in the performance of his duties and responsibilities hereunder, subject to any
restrictions on such expenses set by the Board and to such reasonable
substantiation and documentation as may be specified by the Company from time to
time.
5. Termination of Employment and Severance Benefits. Notwithstanding the
provisions of Section 2 hereof, the Executive's employment hereunder shall
terminate prior to the expiration of the term hereof under the following
circumstances:
(a) Retirement or Death. In the event of the Executive's
retirement or death during the term hereof, the Executive's employment hereunder
shall immediately and automatically terminate. In the event of the Executive's
death during the term hereof, the Company shall pay to the Executive's
designated beneficiary or, if no beneficiary has been designated by the
Executive, to his estate, any earned and unpaid Base Salary and any incentive or
bonus compensation that is earned but unpaid, pro rated through the date of his
death.
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(b) Disability.
(i) The Company may terminate the Executive's employment
hereunder, upon notice to the Executive, in the event that the Executive becomes
disabled during his employment hereunder through any illness, injury, accident
or condition of either a physical or psychological nature and, as a result, is
unable to perform substantially all of his duties and responsibilities hereunder
for a period of twelve consecutive months, subject to any applicable provisions
of the Americans with Disabilities Act.
(ii) The Board may designate another employee to act in
the Executive's place during any period of the Executive's disability.
Notwithstanding any such designation, the Executive shall continue to receive
the Base Salary and other benefits in accordance with Section 4 to the extent
provided by the then-current terms of the applicable benefit plans, until the
termination of his employment.
(iii) If any question shall arise as to whether during
any period the Executive is disabled through any illness, injury, accident or
condition of either a physical or psychological nature so as to be unable to
perform substantially all of his duties and responsibilities hereunder, the
Executive may, and at the request of the Company shall, submit to a medical
examination by a physician selected by the mutual agreement of the Company and
the Executive or his duly appointed guardian, if any, to determine whether the
Executive is so disabled and such determination shall for the purposes of this
Agreement be conclusive of the issue. In the event that the Company and the
Executive are unable to agree upon the selection of the physician to conduct
such medical examination, the Company and the Executive shall each select a
physician and the two physicians shall select a third physician, and the three
physicians so selected shall conduct the medical examination; the determination
of the two physicians who agree on whether the Executive is disabled shall for
the purposes of this Agreement be conclusive of the issue. If the question of
the Executive's disability shall arise and the Executive shall fail to submit to
such medical examination, the Company's determination of the issue shall be
binding on the Executive.
(c) By the Company for Cause. The Company may terminate the
Executive's employment hereunder for cause at any time upon written notice to
the Executive setting forth in reasonable detail the nature of such cause. The
following, as determined by the Board in its reasonable judgment, shall
constitute cause for termination:
(i) The Executive's falsification of the accounts of the
Company, embezzlement of funds of the Company or other fraud with respect to the
Company or any of its Affiliates; or
(ii) Conviction of, or a plea of nolo contendre to, a
felony; or
(iii) Conduct engaged in by the Executive the
continuation of
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which is not in the best interests of the Company and which is or if continued
would be materially harmful to the business, interests or reputation of the
Company or any of its Affiliates and as to which the Board of Directors has
given the Executive notice in writing, specifying the exact conduct deemed
materially harmful and providing a minimum of thirty (30) day opportunity to
cure. Such written notice shall be presented to the Executive in person at a
duly called and scheduled meeting of the Board of Directors.
Upon the giving of notice of termination of the Executive's employment hereunder
for cause, the Company shall have no further obligation or liability to the
Executive, other than the payment of Base Salary earned and unpaid at the date
of termination, and the contribution by the Company to the cost of the
Executive's participation (subject to any required employee contribution by the
Executive under the terms of the applicable plans) in the Company's group
medical and dental insurance plans as the same are in effect from time to time
for so long as the Executive is entitled to continue such participation under
applicable law and plan terms.
(d) By the Company other than for Cause. The Company may
terminate the Executive's employment hereunder other than for cause at any time
upon notice to the Executive. In the event of such termination, then until the
conclusion of a period equal to twenty-four (24) months from the date such
termination is effective, the Company shall continue to pay the Executive the
Base Salary at the rate in effect on the date of termination. If the date of
termination is on or after July 1st of any year, then the Executive shall also
be entitled to receive a prorated portion of his annual incentive compensation,
provided that at the time of termination the Company is meeting or exceeding the
goals previously established under the annual incentive plan.
(e) By the Executive for Good Reason. The Executive may
terminate his employment hereunder for Good Reason, upon notice to the Company
setting forth in reasonable detail the nature of such Good Reason. The following
shall constitute ("Good Reason" for termination by the Executive:
(i) Failure of the Company to continue the Executive in
the position of Vice President and Chief Operating Officer;
(ii) Breach by the Company of Section 3(d) hereof or
material diminution in the nature or scope of the Executive's responsibilities,
duties or authority; or
(iii) Any other material breach of this Agreement by the
Company and, if such breach may be cured, the Company's failure to do so within
ten (10) days after written notice thereof.
In the event of termination in accordance with this Section 5(e), then until the
conclusion of a period equal to twenty-four (24) months from the date such
termination is
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effective, the Company shall continue to pay the Executive the Base Salary at
the rate in effect on the date of termination. If the date of termination is on
or after July 1st of any year, then the Executive shall also be entitled to
receive a prorated portion of his annual incentive compensation, provided that
at the time of termination the Company is meeting or exceeding the goals
previously established under the annual incentive plan.
(f) By the Executive Other than for Good Reason. The Executive
may terminate his employment hereunder at any time upon thirty (30) days' notice
to the Company. In the event of termination of employment by the Executive
pursuant to this Section 5(f), the Board may elect to waive the period of
notice, or any portion thereof, and, if the Board so elects, the Company will
pay the Executive his Base Salary for the notice period (or for any remaining
portion of the period), and the Company shall contribute to the cost of the
Executive's participation (subject to any required employee contribution by the
Executive under the terms of the applicable plans) in the Company's group
medical and dental insurance plans as the same are in effect from time to time
for so long as the Executive is entitled to continue such participation under
applicable law and plan terms. Except as may be necessary or appropriate in
connection with successor employment, the Executive will keep confidential the
termination of his employment pursuant to this Section 5(f) until the earlier of
the Company's announcement thereof or the expiration of a period of forty-five
(45) days from the Executive's notice hereunder.
(g) Upon a Change of Control.
(i) If a Change of Control occurs and within two years
following such Change of Control the Company terminates the Executive's
employment other than for Cause or the Executive terminates his employment for
Good Reason, then, in lieu of any payments to or on behalf of the Executive
under Section 5(d) or 5(e) hereof, the Company shall pay the Executive, within
ten business days of such termination, in a lump sum and amount equal to his
Base Salary for a twenty-four (24) month period.
(ii) A Change of Control shall be deemed to take place
if at some time after the initial public offering of the Company's common shares
(A) any Person or "group" (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934), in any transaction or series of related
transactions, becomes a beneficial owner (within the meaning of Rule 13d-3 as
promulgated under the Securities Exchange Act of 1934), directly or indirectly,
of securities representing fifty percent (50%) or more of the total number of
votes that may be cast for the election of directors of the Company; (B) any
merger or consolidation involving the Company (other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 51% of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation); (C) the sale , lease,
conveyance or other disposition of all or substantially all of the Company's
assets as an entirety or substantially as an entirety to any Person or group (as
defined above) acting in concert, other than in the ordinary course of business;
or (D) the stockholders of the Company approve a plan of complete liquidation of
the Company
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or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(h) The Company shall promptly reimburse the Executive for the
amount of all reasonable attorneys' fees and expenses incurred by the Executive
in seeking to obtain or enforce any right or benefit provided the Executive
under this Section 5.
(i) Post-Agreement Employment. In the event the Executive
remains in the employ of the Company or any of its Affiliates following
termination of this Agreement, by the expiration of the term hereof or
otherwise, then such employment shall be at will.
6. Effect of Termination. The provisions of this Section 6 shall apply
to termination due to the expiration of the term hereof pursuant to Section 5 or
otherwise.
(a) The Company may, as a condition of fulfilling its
obligations to the Executive under Section 5, require the Executive to execute
and deliver a release to the effect that performance by the Company under this
Agreement shall constitute full settlement of any claim that the Executive might
otherwise assert against the Company, its Affiliates or any of their
shareholders, directors, officers, employees or agents on account of such
termination.
(b) Unless otherwise specifically provided herein, benefits
shall terminate pursuant to the terms of the applicable benefit plans based on
the date of termination of the Executive's employment without regard to any
continuation of Base Salary or other payment to the Executive following such
date of termination.
(c) Provisions of this Agreement shall survive any termination
if so provided herein or if necessary or desirable fully to accomplish the
purposes of such provision, including without limitation the obligations of the
Executive under Sections 7 and 8 hereof. The obligation of the Company to make
payments to or on behalf of the Executive under Sections 5(d), 5(e) or 5(g)
hereof is expressly conditioned upon the Executive's continued full performance
of his obligations under Sections 7 and 8 hereof. The Executive recognizes that,
except as expressly provided in sections 5(d), 5(e) or 5 (g), no compensation is
earned after termination of employment.
7. Confidential Information.
(a) The Executive acknowledges that the Company and its
Affiliates continually develop Confidential Information, that the Executive may
develop Confidential Information for the Company or its Affiliates and that the
Executive may learn of Confidential Information during the course of employment.
The Executive will comply with the policies and procedures of the Company and
its Affiliates for protecting Confidential Information and shall never disclose
to any Person (except as required by applicable law or for the proper
performance of his duties and responsibilities to the Company and its
Affiliates), or use for his own benefit or gain, any Confidential
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Information obtained by the Executive incident to his employment or other
association with the Company or any of its Affiliates. The Executive understands
that this restriction shall continue to apply after his employment terminates,
regardless of the reason for such termination.
(b) All documents, records, tapes and other media of every kind
and description relating to the business, present or otherwise, of the Company
or its Affiliates and any copies, in whole or in part, thereof (the
"Documents"), whether or not prepared by the Executive, shall be the sole and
exclusive property of the Company and its Affiliates. The Executive shall
safeguard all Documents and shall surrender to the Company at the time his
employment terminates, or at such earlier time or times as the Board or its
designee may specify, all Documents then in the Executive's possession or
control.
8. Restricted Activities. In consideration of the foregoing, the
Executive agrees that some restrictions on his activities during and after his
employment are necessary to protect the goodwill, Confidential Information and
other legitimate interests of the Company and its Affiliates.
(a) While the Executive is employed by the Company and until the
conclusion of a period equal to twenty-four (24) months from the date the
Executive's employment terminates, (the "Non-Competition Period"), the Executive
shall not, directly or indirectly, whether as owner, partner, investor,
consultant, agent, employee, co-venturer or otherwise, compete with the Company
or any of its Affiliates within the United States of America or undertake any
planning for any business competitive with the Company or any of its Affiliates.
Specifically, but without limiting the foregoing, the Executive agrees not to
engage in any manner in any activity that is competitive with the business of
the Company or any of its Affiliates as conducted during the Executive's
employment in the retail store, retail catalog or Internet retail sale of
equestrian products.
(b) The Executive agrees that, during his employment with the
Company, will not undertake any outside activity, whether or not competitive
with the business of the Company or its Affiliates, that could reasonably give
rise to a conflict of interest or otherwise interfere with his duties and
obligation to the Company or any of its Affiliates.
(c) The Executive further agrees that while he is employed by
the Company and during the Non-Competition Period, the Executive will not hire
or attempt to hire any employee of the Company or any of its Affiliates, assist
in such hiring by any Person, encourage any such employee to terminate his or
her relationship with the Company or any of its Affiliates, or solicit or
encourage any customer or vendor of the Company or any of its Affiliates to
terminate its relationship with them.
(d) The Executive shall specifically not be able to shorten the
Non-Competition Period by waiving his right to receive payments under paragraph
5(d) or 5(e).
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9. Notification Requirement. Until the conclusion of the Non-Competition
Period, the Executive shall give notice to the Company of each new business
activity he plans to undertake, at least thirty (30) days prior to beginning any
such activity. Such notice shall state the name and address of the Person for
whom such activity is undertaken and the nature of the Executive's business
relationship(s) and position(s) with such Person. Subject to reasonable
confidentiality requirements of a successor employer, the Executive shall
provide the Company with such other pertinent information concerning such
business activity as the Company may reasonably request in order to determine
the Executive's continued compliance with his obligations under Sections 7 and 8
hereof.
10. Enforcement of Covenants. The Executive acknowledges that he has
carefully read and considered all the terms and conditions of this Agreement,
including the restraints imposed upon him pursuant to Sections 7 and 8 hereof.
The Executive agrees that said restraints are necessary for the reasonable and
proper protection of the Company and its Affiliates and that each of the
restraints is reasonable in respect to subject matter, length of time and
geographic area. The Executive further acknowledges that, were he to breach any
of the covenants contained in Sections 7 or 8 hereof, the damage to the Company
would be irreparable. The Executive therefore agrees that the Company, in
addition to any other remedies available to it, shall be entitled to preliminary
and permanent injunctive relief against any breach or threatened breach by the
Executive of any of said covenants, without having to post bond. The parties
further agree that, in the event that any provision of Sections 7 or 8 hereof
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of its being extended over too great a time, too large a geographic
area or too great a range of activities, such provision shall be deemed to be
modified to permit its enforcement to the maximum extent permitted by law.
11. Definitions. Words or phrases which are initially capitalized or are
within quotation marks shall have the meanings provided in this Section 11 and
as provided elsewhere herein. For purposes of this Agreement, the following
definitions apply:
(a) "Affiliates" means all persons and entities directly or
indirectly controlling, controlled by or under common control with the Company,
within the meaning of Rule 405 promulgated under the Securities Act of 1933, as
amended.
(b) "Confidential Information" means any and all information of
the Company and its Affiliates that is not generally known by others with whom
they compete or do business, or with whom they plan to compete or do business
and any and all information, publicly known in whole or in part or not, which,
if disclosed by the Company or its Affiliates would assist in competition
against them. Confidential Information includes without limitation non-public
information relating to (i) the development, research, testing, manufacturing,
marketing and financial activities of the Company, (ii) the Manufacturing
Processes, (iii) the costs, sources of supply, financial performance and
strategic plans of the Company and its Affiliates, (iv) the identity and special
needs of the customers of the Company and its Affiliates and (v) the people and
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organizations with whom the Company and its Affiliates have business
relationships and the existence of those relationships. Confidential Information
also includes comparable information that the Company or any of its Affiliates
have received belonging to others or which was received by the Company or any of
its Affiliates with any understanding that it would not be disclosed.
(c) "Manufacturing Processes" means all manufacturing processes
planned, researched, used, licensed or otherwise put into use by the Company or
any of its Affiliates, together with the identity of all subcontractors dealt
with during the Executive's employment.
(d) "Person" means an individual, a corporation, an association,
a partnership, an estate, a trust and any other entity or organization, other
than the Company or any of its Affiliates.
12. Withholding. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.
13. Assignment. Neither the Company nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other; provided, however,
that the Company may assign its rights and obligations under this Agreement
without the consent of the Executive in the event that the Company shall
hereafter effect a reorganization, consolidate with, or merge into, any other
Person or transfer all or substantially all of its properties or assets to any
other Person, subject in such case to the provisions of Section 5(g) hereof. The
Agreement shall inure to the benefit of and be binding upon the Company and the
Executive, their respective successors, executors, administrators, heirs and
permitted assigns. Without limiting the generality of the foregoing, this
Agreement shall be binding upon any successor to the business of the Company as
a result of a Change-of-Control transaction described in Section 5(g)(ii)
hereof.
14. Severability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
15. Waiver. No waiver of any provisions hereof shall be effective unless
made in writing and signed by the waiving party. The failure of either party to
require the performance of any term or obligation of this Agreement, or the
waiver by either party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
16. Notices. Any and all notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
sent by telecopy or
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sent postage prepaid by certified mail (return receipt requested) or reputable
courier service and shall be deemed given when so delivered by hand, telex or
telecopy, or if mailed, five days after mailing (two business days in the case
of courier service) to the parties as follows: to the Executive at his last
known address on the books of the Company and, in the case of the Company, to
its principal place of business, attention of Chief Executive Officer or to such
other address as either party may specify by notice to the other.
17. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior communications, agreements and
understandings, written or oral, with respect to the terms and conditions of the
Executive's employment.
18. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by an expressly authorized
representative of the Company.
19. Headings. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.
20. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
21. Governing Law. This is a Massachusetts contract and shall be
construed and enforced under and be governed in all respects by the laws of the
Commonwealth of Massachusetts, without regard to the conflict of laws principles
thereof.
22. Public Offering Contingency. The Company and the Executive have
entered into this Agreement in anticipation of a public offering of its Common
Shares prior to March 31, 2006. In the event no such public offering is
consummated by such date, this Agreement shall become a nullity in all respects,
and the Executive shall revert to being an at-will employee of the Company on
the terms set forth in a certain Consent Action of the Company's Board, dated
June 8, 2005.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized representative, and by the
Executive, as of the date first above written.
THE EXECUTIVE DOVER SADDLERY, INC.
________________________ By: ________________________________
Xxxxxxxx A. R. Grylls
Its _____________, duly authorized
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Exhibit A
Bonus Program
The Executive's annual bonus will be calculated on the basis of the
following table:
EBIT Goal Bonus
Achievement
----------- -----
Below 75% No Bonus
75% of goal 10% of salary
87.5% of goal 20% of salary
100% of goal 30% of salary
110% of goal and up 40% of salary (max)
To the extent that the Company's actual "Earnings Before Payment of
Interest and Taxes" ("EBIT") falls between two of the foregoing milestones, the
Executive's bonus will be prorated based on a straight line interpolation.
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