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EXHIBIT 10.2
To: Xxx Xxxxxxxxxx
From: Xxxxxx Xxxx
Date: June 1, 1998
Re: Letter of Understanding and Summary of Discussion
This contract is entered into and effective January 1, 1999, through
December 31, 2001 and will renew for 1 year periods thereafter.
1. The December 23, 1996 agreement will stay in effect through December 31,
1998. My base compensation salary will be $180,000 per year plus current
benefits. I will not be included in the corporate bonus pool used for the
general Xxxxxxx xxxxx.
2. My annual bonus will be the sum of A) through D):
A) When the "adjusted net income" is above $80,000 the
incremental amount over $80,000 up to $100,000, or up to
$20,000, will be paid to me as my bonus. If for instance,
"adjusted net income" equalled $95,000 my bonus would be
$15,000.
B) For the next $400,000 in "adjusted net income", 15% of this
amount will be paid to me as my bonus.
C) For the next $500,000 in "adjusted net income", 10% of this
amount will be paid to me as my bonus.
D) 5% of "adjusted net income" over $1,000,000 will be paid to
me as my bonus.
"Adjusted net income" will be net income before taxes after certain
adjustments. These adjustments will consist of adding back to net income, 25%
of the amount charged to Phoenix Entities.
3. If termination occurs prior to January 1, 2001, the termination payment
will be equal to the greater of:
i) the cumulative remaining balance of my Base Compensation
Package through January 1, 2001, plus $250,000, or
ii) 10 times the most recent year's "adjusted net income", less
book value, times the percentage as listed below for
termination occurring in:
1998 1%
1999 2%
2000 3%
4. If termination or non-renewal of my contract occurs after January 1,
2001, the termination payment will be equal to the greater of:
i) the remaining amount that I am entitled to receive during the
calendar year in which I am terminated plus $250,000,or
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To: Xxx Xxxxxxxxxx
From: Xxxxxx Xxxx
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ii) 10 times the most recent year's "adjusted net income", less
book value, times the percentage listed below for termination
occurring in:
2001 4%
2002 5%
after 2002 5%
5. If I elect to leave the company for any reason, I will receive 10 times
the most recent years' "adjusted net income", less book value, times the
percentage as listed below according to my year of departure:
1998 1%
1999 2%
2000 3%
2001 4%
2002 5%
after 2002 5%
If any of the payments referenced above and made under Sections 3, 4 or 5
exceed $250,000, then the amount in excess of $250,000 shall be paid at the
beginning of each of the next three years.
6. A sale of ReSource/Phoenix to an outside party will entitle me to
receive 5% of the proceeds available over and above book value and
selling expenses.
7. It is understood that any sale of ReSource/Phoenix to an outside party
with its transfer of ownership would nullify my 3-year contract entered
into as of January 1, 1999 and any subsequent renewals thereof. This
would become effective upon my receipt of the payment referred to in
Section 6.
In the event a sale were to occur during my initial 3-year contract
term, I would be entitled to receive a minimum amount of $358,000 in
compensation in total. This would be calculated by adding the payments
already received under my initial 3-year contract to my payment referred
to in Section 6. If the sum of these two amounts aggregated to less than
$358,000, I would be entitled to that additional amount bringing my
total benefit to $358,000.
8. If in any year the "adjusted net income" exceeds $3,000,000 my salary
will be increased by 50% beginning with the following year. Thereafter
my annual bonus will be limited to 5% of "adjusted net income" and
Section 2 will no longer be in force.
/s/ XXXXXX X. XXXX /s/ XXX XXXXXXXXXX
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Xxxxxx X. Xxxx Date Xxx Xxxxxxxxxx Date
