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EXHIBIT 10.7
STRICTLY CONFIDENTIAL
EMPLOYMENT AGREEMENT
BETWEEN
XXXXX PRODUCTS COMPANY
AND
XXXXXX X. XXXXXX
THIS EMPLOYMENT AGREEMENT dated as of August 17, 1998 is made
between Xxxxx Products Company (the "Company"), a Delaware corporation, and
Xxxxxx X. Xxxxxx (the "Executive"). This Agreement is made with reference to
the following facts and objectives:
R E C I T A L S
A. The Executive shall be the Chief Information Officer of the
Company.
B. The Executive acknowledges that the services to be performed
by him under this Agreement are of a special and unique character; the business
of the Company is currently international in scope and the Company has plans to
continue to expand its business throughout the world; and the Company competes
with other persons that are or could be located in any part of the world; and
in order to assure the Company that the Company will retain its value and the
Company's business as a going concern, it is necessary that the Executive
undertake not to utilize his special knowledge of the Company, its business and
its relationships with customers and suppliers to compete with the Company if
the Executive were to leave the Company.
C. The Executive further acknowledges that, during his employment
by the Company, he will occupy a position of trust and confidence with the
Company and, during such employment, the Company will compensate him, among
other purposes, to develop and preserve customer relationships and other
goodwill exclusively for the Company's benefit and that, as a result, he will
develop customer relationships and goodwill that are valuable and important to
the Company, and will become familiar with the Company's trade secrets,
including, without limitation, its profit margins, customer preferences and
requirements, and with other proprietary and confidential information
concerning the Company and its business.
D. The Executive further acknowledges that, throughout his
employment under this Agreement, he is expected to continue to occupy a
position of trust and confidence with the Company. In return, the Company will
compensate him, among other purposes, to develop and preserve customer
relationships and goodwill exclusively for the Company's benefit, which will be
valuable and important to the Company. Further, he will likely be familiar
with the Company's trade secrets, including, without
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limitation, its profit margins, customer preferences and requirements, and with
other confidential and proprietary information concerning the Company and its
business.
E. The Executive further acknowledges that the use by him for his
own benefit or that of others of such goodwill, trade secrets or proprietary
and confidential information or the solicitation of and/or doing business with
any of the Company's customers and potential customers would have a material
adverse effect on the Company and its business, and would place the Company at
a substantial competitive disadvantage.
F. The Executive further acknowledges that the agreements and
covenants contained in this Agreement, and, in particular, sections 6
(Non-Competition Covenants) and 7 (Confidentiality and Proprietary
Information), are essential to protect the Company and the goodwill of the
Company's business, are a condition precedent to the Company's willingness to
enter this Agreement and to pay the consideration set forth in this Agreement,
and are necessary and reasonable in light of the particular business of the
Company, his knowledge thereof and the services he will perform under this
Agreement.
THE PARTIES ACCORDINGLY AGREE AS FOLLOWS:
AGREEMENT
1. EMPLOYMENT The Company hereby agrees to
employ the Executive, and the Executive hereby accepts employment by the
Company, on the terms and conditions of this Agreement.
2. EMPLOYMENT TERM
(a) Subject to section 9 (Termination of Employment), the
term of the Executive's employment under this Agreement begins on the date of
this Agreement and ends on the third anniversary of that date; provided,
however, that, commencing on the third anniversary of the date of this
Agreement and each subsequent anniversary, the term shall be extended for an
additional one year period unless either the Executive or the Company gives the
other party written notice at least thirty (30) days before such anniversary
that this Agreement shall terminate on the then scheduled expiration date (the
"non-extension notice"). If such non-extension notice is given, this Agreement
shall automatically terminate on such expiration date.
(b) The actual term of the Executive's employment under
this Agreement, including any extension, continuation or earlier termination of
the original term, is referred to in this Agreement as the "employment term."
3. RESPONSIBILITIES During the employment term,
the Executive shall serve as Chief Information Officer or in any other
position or capacity to which he may from time to time be elected or appointed,
and shall perform such services for the Company as are reasonably required by
the Company, and as may be required by virtue of the offices and positions held
by the Executive. The Executive agrees that, as a part of
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his duties under this Agreement, he may be required from time to time to
perform services for affiliates of the Company. The Executive will not be
required to relocate his residence outside the continental United States, but
will be available for such travel as his responsibilities under this Agreement
may reasonably require. The Executive shall devote his full time and best
efforts to the performance of all responsibilities to the Company and its
affiliates and to further their respective businesses and interests.
4. COMPENSATION
(a) The Company agrees to pay the Executive a sign-on
bonus of $80,000 upon execution hereof. The Company agrees to pay the Executive
throughout the employment term an initial base salary at the rate of $160,000.00
per annum (as adjusted pursuant to the provision of this paragraph 4(a)) (the
"base salary") payable in equal installments in accordance with Company payroll
practices from time to time in effect. Executive's base salary will be reviewed
and may be adjusted annually by the president of the Company or by the board of
directors of the Company (or the compensation committee thereof) (the "board"),
after taking into consideration the recommendations of the president of the
Company, provided that Executive's base salary may not be decreased below his
initial base salary.
(b) Subject to Section 9 (Termination of Employment), the
Company agrees to pay the Executive throughout the employment term an annual
bonus (the "annual bonus") calculated pursuant to Exhibit A attached hereto. The
amount of the annual bonus payable to the Executive for 1998 shall be calculated
as if the Executive were employed by the Company for the entire year, and,
except as set forth in Section 9 (Termination of Employment), the amount of
bonus payable to the Executive for other partial years of employment shall be
prorated for the portion of a year the Executive is employed by multiplying the
annual bonus determined pursuant to Exhibit A by a fraction with a numerator
equal to the number of days of the fiscal year during which the Executive was
employed, and with a denominator of 365.
5. OTHER EXECUTIVE BENEFITS
(a) The Executive shall, during the employment term, be
eligible to participate in such 401(k), profit sharing, bonus, life insurance,
hospitalization and major medical and other employee benefit plans of the
Company in effect from time to time, to the extent that he is eligible under
and complies with the terms of those plans, but the allocation of benefits
under any plan that provides that allocations thereunder shall be in the
discretion of the board shall be as determined from time to time solely by the
board in its discretion.
(b) The Executive shall also participate in the Company's
paid vacation plan but in no event shall Executive's annual entitlement be less
than 4 weeks. Vacation not used by the end of a year shall be forfeited and
shall not be eligible to be carried over to another year or eligible for
reimbursement except as otherwise provided by Company policies.
6. NON-COMPETITION COVENANTS Throughout the employment
term and commencing with the date of this Agreement and ending on the later of
the end of the period that Executive receives severance pay from the Company
pursuant to Section 9 or
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the first anniversary of the date on which the Executive ceases to be employed
by the Company for any reason whatsoever, (the "Non-Compete Period"), the
Executive promises and agrees that he will not: (a) directly or indirectly
assist in, engage in, have any financial interest in, or participate in any way
in, as an owner, partner, employee, agent, board member, or shareholder, any
business that involves, in whole or in part, the design, manufacture,
distribution or sale of dry pet foods (or any other business in which the
Company may engage or begin preparation to engage during the employment term)
or make preparation with any person to do any of the foregoing; provided,
however, that the Executive may own, solely as an investment, up to 1.0% of any
class of securities of any person if such securities are listed on any national
or regional securities exchange; (b) call upon or have any contact with any
person or any successor in interest to any person who was at any time during
the Executive's last three years of employment with the Company, a customer of
the Company, or call upon or have any contact with any person or any successor
in interest to any person who is a prospective customer of the Company, and
with whom the Executive dealt, or on whose account the Executive worked, at any
time during the Executive's last three years of employment with the Company,
for the purpose of (i) diverting any business of such person from the Company,
or (ii) selling or offering to sell to any such customer any product or service
that is of the same general type or that performs similar functions as any
product or service which has been sold, provided or offered for sale by the
Company at any time during the Executive's last three years of employment with
the Company, (c) solicit any employee of the Company to terminate his or her
employment with the Company or employ any such individual during his or her
employment with the Company and for a period of twelve months after such
individual terminates his or her employment with the Company, or (d) without
the prior written consent of the Company's board of directors, acquire or
discuss the acquisition of any ownership interest in or warrant or right to
acquire any such interest, or acquire any employment or other pecuniary benefit
from any person that, at the time, is a prospective candidate for or was a
party to a control transaction. The term "control transaction" means any
transaction or series of transactions whereby the Company or a controlling
interest in the Company is acquired by another Person (whether by purchase,
merger, consolidation or sale of all or substantially all of the Company's
consolidated assets). The Executive acknowledges and agrees that the
consideration and benefits to be provided to the Executive under this Agreement
have been bargained and negotiated in exchange for, and in consideration of,
Executive's agreement to abide by the terms and provisions of this section 6
and section 7 (Confidentiality and Proprietary Information). The Executive
acknowledges and agrees that all of the Executive's duties and obligations
under this section 6 shall survive the expiration or termination of the
Executive's employment with the Company, regardless of the causes therefor.
7. CONFIDENTIALITY AND PROPRIETARY INFORMATION In
addition to any common-law restriction upon the Executive's use, disclosure or
exploitation of confidential, proprietary or secret information of the Company,
the Executive covenants and agrees that, without prior written consent of the
Company, he will not at any time during or after the employment term use for
himself or disclose to or use for any other person, directly or indirectly, any
secret, confidential or proprietary information of the Company, including,
without limitation, the Company's processes, formulas, techniques,
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customer identities, preferences, requirements, reports and other sensitive
customer information, servicing methods, profit margins, analyses, employee,
vendor and supplier information, business or marketing plans or strategies,
financial data and presentation or sales materials, technologies, computer
programs, software, designs and inventions (collectively, the "confidential
information"); provided, however, that the term confidential information does
not include or refer to any information that is in the public domain (other
than by a breach of this Agreement). The Executive acknowledges that the
confidential information is vital, sensitive, confidential and proprietary to
the Company. The Executive covenants and agrees that all files, reports,
lists, materials, records, documents, notes, memoranda, specifications, product
or other formulas, equipment and other items, and any originals, copies,
recordings, abstracts or notes thereof, relating to the confidential
information or the Company business that the Executive is or was either
provided, prepares or prepared himself, uses or used or simply acquires or
acquired during this employment with the Company (either before or during the
employment term), are and shall remain the sole and exclusive property of the
Company and shall be immediately returned to the Company at any time upon
demand and, in all events, immediately at the end of the employment term. The
Executive acknowledges and agrees that all of the Executive's duties and
obligations under this section 7 shall survive the expiration or termination of
the Executive's employment with the Company, regardless of the cause therefor.
8. REMEDIES FOR BREACH In the event of a breach or
threatened breach of any of the Executive's duties and obligations under
sections 6 (Non-Competition Covenants) or 7 (Confidentiality and Proprietary
Information), the Company shall be entitled, in addition to any other legal or
equitable remedies the Company may have in that connection (including any right
to damages that the Company may suffer), to a temporary, preliminary, and/or
permanent injunction restraining such breach or threatened breach. The
Executive hereby expressly acknowledges that the harm that might result to the
Company's goodwill or its relationships with customers, or as a result of the
disclosure or use of the confidential information, is largely irreparable. The
Executive specifically agrees that, in the event there is a question as to the
enforceability of sections 6 (Non-Competition Covenants) or 7 (Confidentiality
and Proprietary Information), the Executive will not engage in any conduct
inconsistent with or contrary to either of such sections until after the
question has been resolved by a non-appealable final judgement.
9. TERMINATION OF EMPLOYMENT
(a) The employment term and the Executive's employment by the
Company shall terminate: (i) upon the death of the Executive; (ii) upon the
disability of the Executive (as defined in section 9(b)(2)) upon thirty (30)
days prior written notice given by the Company to the Executive; (iii) for
cause (as defined in section 9(b)(1)), immediately upon the giving of written
notice thereof by the Company to the Executive or at such later time as the
notice may specify; (iv) without cause, upon not less than thirty (30) days
prior written notice given by the Company to the Executive, or (v)
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voluntarily by the Executive upon not less than thirty (30) days prior
written notice given to the Company by the Executive.
(b) In this section 9:
(1) "Cause" means; (a) the Executive has been
indicted for or convicted of a felony; (b) the
commission of any act by Executive constituting
financial dishonesty against the Company (including
fraud or embezzlement); (c) gross dereliction of duty
to the Company (other than by reason of death or
disability) after Executive has been advised by the
board of directors or the Company's president of any
such dereliction of duty (whether of the same or
similar nature) and has been given an opportunity to
correct his performance; (d) commission of an act
involving moral turpitude which (i) brings the
Company into public disrepute or disgrace, or (ii)
causes material injury to the customer relations,
operations or the business prospects of the Company;
(e) the repeated refusal or failure by Executive to
follow the lawful directives of the board of
directors or the president of the Company; or (f) the
material breach by Executive of the provisions of
this Agreement.
(2) "Disability" refers to any circumstances in
which the Executive, by reason of illness, incapacity
or other disability, has failed to perform his duties
or fulfill his obligations under this Agreement for a
cumulative total of 180 days in any 12-month period.
(c) Upon the termination of the Executive's employment
under the Agreement, the employment term shall end and all rights of the
Executive under this Agreement shall terminate, except that the Executive shall
nonetheless be entitled to receive the following:
(1) If the termination occurs by reason of the
death or disability of the Executive, the Executive
shall be entitled to receive the base salary accrued
through the date of termination and annual bonus
prorated through the date of termination.
(2) If the termination is made by the Company
without cause, or as a result of the Company
delivering a non-extension notice (but not as a
result of the Executive delivering a non- extension
notice to the Company), the Executive shall be
entitled to receive severance pay equivalent to his
base salary and annual bonus, if and as each would
have been payable if the Executive had not been so
terminated, for the period commencing on the first
day after the date of termination and terminating on
the first anniversary of the
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date on which Executive ceases to be employed by the
Company. With respect to the annual bonus, for the
year in which the termination of employment occurred,
the Executive shall receive the annual bonus the
Executive would have been entitled to receive if the
Executive had remained employed for the entire year,
and for the last calendar year in which the Executive
is receiving severance payments, the Executive shall
receive a pro rata portion of the annual bonus the
Executive would have been entitled to receive if the
Executive had remained employed for the entire year
with such pro rata portion being equal to a fraction
with a numerator equal to the number of days of the
fiscal year during which the Executive receives
severance pay and with a denominator of 365.
(3) If the termination is made by the Company for
cause, or voluntarily by Executive, the Executive
shall be entitled to receive his base salary through
the date of termination. If any termination for
cause made by the Company is ever ultimately
determined by a court, agency or other tribunal to
have been without cause, then the Company's sole
liability under the Agreement or otherwise at law or
in equity shall be to pay the Executive those amounts
that would have otherwise been paid to the Executive
under section 9(c)(2) (Termination of Employment,
without cause) and the reasonable attorney's fees and
costs incurred by the Executive in successfully
obtaining this determination from the court, agency
or other tribunal.
(4) To the extent permitted by law or group
insurance plans maintained for the Company's
employees, Executive will be entitled to continue
coverage under any health, disability and life
insurance program during the period Executive is
receiving severance payments in accordance with
paragraphs 9(c)(1), (2) or (3), at no cost to the
Executive. The Executive's rights will continue
under benefit programs that, by their own terms or by
law, extend beyond the date of termination or
continued coverage provided for in the preceding
sentence, including, without limitation, health care
under COBRA, 401(k), stock purchase or stock option
agreements, and non-qualified salary continuation
agreements.
10. NOTICE Any notice required or permitted to be given
under this agreement must be in writing and is effectively given:
(1) To the Company, when signed by the Executive and delivered in
person to the chairman of the board, president, or secretary
(excluding the Executive) of the Company, or, one day after
the date sent by national commercial courier for next day
delivery, or two days after the date mailed, by certified or
registered
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mail, postage prepaid, in either case to the address set forth
below, or at such other address as the Company may designate
for this purpose in a notice given to the Executive.
Attn: President and Chief Executive Officer
Xxxxx Products Company
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
(2) To the Executive, when signed by an officer of the Company
(excluding the Executive) and delivered to the Executive in
person, or, one day after the date sent by national commercial
courier for next day delivery, or two days after the date
mailed, by certified or registered mail, postage prepaid, in
either case to the address set forth under the Executive's
signature at the end of this Agreement or at such other
address as the Executive may designate for this purpose in a
notice given to the Company.
11. INVALIDITY OF PROVISIONS If any provision of this
Agreement is adjudicated to be invalid or unenforceable under applicable law,
the validity or enforceability of the remaining provisions shall be unaffected.
To the extent that any provision of this agreement is adjudicated to be invalid
or unenforceable because it is over broad, that provision shall not be void but
rather shall be limited only to the extent required by applicable law and
enforced as so limited.
12. ENTIRE AGREEMENT; WRITTEN MODIFICATIONS This
Agreement contains the entire agreement between the parties and supersedes all
prior or contemporaneous representations, promises, understandings and
agreements between the Executive and the Company. This Agreement may not be
changed except by written agreement of the parties and specifically rescinds
and replaces any written or oral employment agreement between the Company and
the Executive.
13. GOVERNING LAW In light of the Company's contacts with the
state of Tennessee and its significant interest in insuring that disputes as to
the validity and enforceability of section 6 (Non-Competition Covenants) and 7
(Confidentiality and Proprietary Information) of this Agreement are resolved on
a uniform basis, the Executive and the Company agree that any litigation
involving noncompliance with or alleged breach of sections 6 (Non-Competition
Covenants) or 7 (Confidentiality and Proprietary Information) must be filed and
conducted in Tennessee and the Executive and the Company consent to the
personal jurisdiction of the federal and state courts sitting in Tennessee for
purposes of any such litigation. This Agreement shall be governed by the
internal laws of the State of Tennessee without regard to Tennessee conflict of
laws principles.
14. CERTAIN DEFINED TERMS In this agreement:
(1) "Affiliate" of the Company means any person
controlling, controlled by or under common control
with the Company.
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(2) "Annual bonus" is defined in section 4(b).
(3) "Base salary" is defined in section 4(a).
(4) "Board" is defined in section 4(a).
(5) "Company" as used in sections 6
(Non-Competition Covenants) and 7 (Confidentiality
and Proprietary Information), includes each affiliate
of the Company for which the Executive performs
services at any time during his employment if the
affiliate is engaged in any business that involves,
in whole or in part, the design, manufacture,
distribution or sale of dry pet foods (or any other
business in which the Company may engage or begin
preparation to engage during the employment term).
(6) "Control transaction" is defined in section
6(d).
(7) "Employment term" is defined in section 2(b).
(8) "Non-extension notice" is defined in section
2(a).
(9) "Person" includes any individual, trust,
estate, business trust, partnership, corporation,
unincorporated association, governmental entity,
limited liability company and any other juridical
person.
15. COMPANY'S AND EXECUTIVE'S RIGHT TO RECOVER COSTS
The Company and the Executive undertake and agree that, if either party
breaches or threatens to breach any provision of this Agreement, the breaching
party shall be liable for reasonable attorneys' fees and costs incurred by the
other party in enforcing its rights under this Agreement.
16. RULE OF CONSTRUCTION The rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be employed in interpreting this Agreement.
17. TOLLING In view of the parties' recognition and
agreement that the Company is entitled after the expiration or termination of
the employment term to certain limited protection from competition by the
Executive, the Executive and the Company agree that the running of the period
set forth in section 6 (Non-Competition Covenants) shall be tolled during any
period of time in which the Executive violates that section.
18. SUCCESSORS AND ASSIGNS The Company may assign this
Agreement or any right or interest under this Agreement to any person that
hereafter becomes an affiliate of the Company or to any person to which the
Company sells all or
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any substantial part of its assets and, in such event, the Company shall,
automatically upon the assignee's assumption of the Company's obligations
hereunder, be released from any such obligations. This Agreement shall inure
to the benefit of the Company, and its successors and assigns.
19. NONWAIVER OF RIGHTS The Company's or the
Executive's failure to enforce at any time any of the provisions of this
Agreement or to require at any time performance by the other party of any of
the provisions hereof shall in no way be construed to be a waiver of such
provisions or to affect either the validity of this Agreement, or any part
hereof, or the right of the Company or the Executive thereafter to enforce each
and every provision in accordance with the terms of this Agreement.
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PLEASE NOTE: BY SIGNING THIS AGREEMENT, THE EXECUTIVE IS HEREBY
CERTIFYING THAT THE EXECUTIVE (A) RECEIVED A COPY OF THIS AGREEMENT FOR REVIEW
AND STUDY BEFORE EXECUTING IT; (B) READ THIS AGREEMENT CAREFULLY BEFORE SIGNING
IT; (C) HAD SUFFICIENT OPPORTUNITY BEFORE SIGNING THIS AGREEMENT TO ASK ANY
QUESTIONS THE EXECUTIVE HAD ABOUT THIS AGREEMENT AND RECEIVED SATISFACTORY
ANSWERS TO ALL SUCH QUESTIONS; (D) UNDERSTANDS THE EXECUTIVE'S RIGHTS AND
OBLIGATIONS UNDER THIS AGREEMENT; AND (E) EXECUTED AND DELIVERED THIS AGREEMENT
AT THE OFFICES OF THE COMPANY IN BRENTWOOD, TENNESSEE.
EXECUTED AND EFFECTIVE as of the date first written above.
WITNESS: XXXXX PET CARE COMPANY
/s/ XXXXXXX X. XXXXXX, XX. By: /s/ XXXXXXX X. XXXXXX
------------------------------------------ ---------------------------
Xxxxxxx X. Xxxxxx
President & CEO
WITNESS: EXECUTIVE:
/s/ XXXXXX X. XXXXXX
------------------------------------------ ---------------------------
Xxxxxx X. Xxxxxx
0000 XxXxxxxx Xx.
---------------------------
Xxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
---------------------------
City, State, Zip Code
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EXHIBIT A
TO EMPLOYMENT AGREEMENT WITH
XXXXXX X. XXXXXX
XXXXX PRODUCTS COMPANY
ANNUAL BONUS PROGRAM
1. For each fiscal year of the Company during the employment
term, the board, after taking into consideration the recommendations of the
president of the Company, will establish objectives comprised of both
corporate and individual goals (each goal will be referred to herein as a
"Target"), as well as the percentage weighting (the "weight") that will apply
to each Target, wherein the sum of the weights shall equal 100%.
2. For the Company's 1998 fiscal year, the board will set an
EBITDA Target for the Company and its subsidiaries which will be weighted at
100% for the calculation of the bonus payable under this program for the 1998
fiscal year. The term "EBITDA" will have the same meaning as set forth in the
DPC Acquisition Corp. Option Agreements granted under the DPC Acquisition Corp.
1996 Stock Option Plan.
3. For purposes of computing the Executive's annual bonus, the
bonus will be equal to 50% of his base salary in effect at the end of the
fiscal year (the "base bonus") and the annual bonus will be computed by summing
the percentages earned for each Target, as determined by computing the sum of
paragraphs in 3(a) through 3(d) below for each Target that has been assigned a
weight, and then multiplying that sum times the base bonus.
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(a) Where the actual performance exceeds 85% of
the Target for such fiscal year, Executive will receive 55% of
the weight assigned for the Target.
(b) For each of the first full 15 percentage
points by which actual performance exceeds 85% of the Target,
Executive will receive 3% of the weight assigned for the
Target. The maximum which Executive may receive under this
paragraph 3(b) cannot exceed 45% of the weight assigned for
the Target.
(c) For each of the first full 15 percentage
points by which the actual performance exceeds 100% of the
Target, Executive will receive 6% of the weight assigned for
the Target. The maximum which Executive may receive under
this paragraph 3(c) cannot exceed 90% of the weight assigned
for the Target.
(d) For each full percentage point by which the
actual performance exceeds 115% of the Target, Executive will
receive 9% of the weight assigned for the target.
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For illustrative purposes, assume the Executive's base bonus is
$30,000 and his weighting is as follows:
Target Weight Description of Target
------ ------ ---------------------
1 50% Corporate EBITDA
2 35% Territory Margin Contribution
3 15% Expense Control
Bonus Calculation:
Assumed % Earned Weighted
Target Performance for Target Weight % Earned
------ ----------- ---------- ------ --------
1 95% 85% x 50% = 42.5%
2 120% 235% x 35% = 82.3%
3 80% 0 x 15% = 0
--------
% of base bonus earned 124.8%
Base bonus $30,000
Bonus earned $37,440
4. In the event that, after the setting of the Targets, the
Company or any of its subsidiaries acquires additional assets,
entities or subsidiaries that produce the same or similar products,
which acquisition, either singly or together with one or more other
acquisitions, the board determines in good faith may significantly
affect the Targets for the fiscal year, the board may, in good faith,
either (a) adjust such Targets to reflect the projected effect of such
acquisition or acquisitions on any Targets or (b) exclude the effects
of such acquisition or acquisitions on the Targets for purposes of
determining Executive's annual bonus by calculating the Targets for
such fiscal year on a pro forma basis as though such acquisition or
acquisitions had not been consummated. Similarly, in the event that,
after setting the Targets, the Company is acquired by another Person
(whether by purchase, merger, consolidation or sale of all or
substantially all of the Company's
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consolidated assets) and the board determines in good faith that such
acquisition may significantly affect the Targets for the fiscal year,
the board may, in good faith, either (x) adjust such Targets to
reflect the projected effect of such acquisition on any Target or (y)
exclude the effects of such acquisition on the Targets for purposes of
determining Executive's annual bonus by calculating the Targets for
such fiscal year on a pro forma basis as though such acquisition had
not been consummated.
5. The annual bonus payable for any fiscal year will be
paid within 30 days after the delivery of the Company's audited
financial statements for such fiscal year. In the event of any
dispute between the Company and Executive as to the amount of the
bonus for any fiscal year, such dispute will be resolved by the
Company's auditors or any one of Price Xxxxxxxxxx, Xxxxxx Xxxxxxxx, or
Ernst & Young, or their successors, as selected by the board, by
having such accounting firm calculate the amount of the bonus for such
fiscal year utilizing the Company's audited financial statements for
such fiscal year. The decision of such accounting firm will be final
and binding on the Company and Executive.
6. Except as otherwise provided herein, capitalized
terms used herein which are not defined herein have the meanings given
to such terms under the Employment Agreement to which this Annual
Bonus Program is attached.
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