EXHIBIT 10.10
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Agreement") is entered into the ____
day of September, 2000 (the "Effective Date") by and between BEAUTY RESOURCE,
INC., a Nevada corporation ("B.R."), and BIOZHEM COSMECEUTICALS, INC., a Texas
corporation (the "Company").
WHEREAS, the Company is in the business of developing, manufacturing
and marketing certain cosmetics, skin care products and related products (the
"Business");
WHEREAS, B.R. has special expertise and experience in the operation,
management and marketing of companies engaged in activities similar to the
Business; and
WHEREAS, the Company desires to engage B.R. to manage the Business and
B.R. agrees to assume management responsibilities of the Business.
NOW, THEREFORE, for and in consideration of the premises and conditions
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged and agreed, the parties hereto agree as
follows:
1. DEFINITIONS. When used in this Agreement, the following terms shall
have the meanings ascribed to them below:
"GAAP" means, at any particular time, generally accepted
accounting principles as in effect at such time. Any accounting term used in
this Agreement shall have the meaning customarily given to such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP as consistently applied and using the same method of
valuation as used in the preparation of the Company's financial statements.
"Management Fee" has the meaning set forth on Exhibit A.
"Pre-Tax Net Income" shall mean net income determined in
accordance with GAAP without any deduction or provision for the payment of
income taxes.
"Retained Rights" shall mean the rights and obligations of the
Board of Directors of the Company in accordance with the Articles of
Incorporation and the Bylaws of the Company and any applicable Texas or other
law, including but not limited to the right to sell, award, distribute, redeem
or acquire additional securities of the Company, the obligation to effectuate
all filings of the Company with the Securities and Exchange Commission or any
other federal, state or other regulatory authority, the right to approve an
acquisition or disposition of a business or assets of a business, the right to
initiate and effectuate a sale of all or substantially all of the Company's
assets or ownership interest of the Company, the right to approve contracts for
executives and officers, and the right to borrow and repay any indebtedness or
guarantee any indebtedness on behalf of the Company.
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"Term" shall mean, subject to the provisions of Section 10
hereof, a period beginning as of the Effective Date and terminating five (5)
years thereafter.
2. GENERAL MANAGEMENT. The Company hereby engages B.R. to provide and
perform for and on behalf of the Company all management services reasonably
necessary for the proper and efficient operation of the Business during the Term
of this Agreement. Such services shall include, but shall not be limited to,
those items set forth in Sections 2, 3, 4 and 5 of this Agreement. B.R. is
authorized to provide and perform for and on behalf of the Company all services
required of B.R. pursuant to the terms of this Agreement in such manner as B.R.
deems reasonable and appropriate in order to meet the day-to-day requirements of
operating the Business. B.R. hereby accepts such engagement and agrees to
furnish to the Company all management services necessary for the proper and
efficient operation of the Business. Subject to the Retained Rights and the
fiduciary duties of the Board of Directors and officers of the Company, the
Company will cooperate with B.R.'s day-to-day operation of the Company. B.R.
personnel currently assigned to provide management services on behalf of B.R.
hereunder to the Company include Xxxxx Xxxxxx, Xxxxxx Xxxxxxxxx, Xxx Xxxxxx and
Xxx XxXxxxxx. Additional B.R. personnel may be assigned to perform services to
the Company hereunder, provided that B.R. advises the Company of such proposed
assignment and the Board of Directors of the Company agrees thereto.
3. BOOKKEEPING AND ACCOUNTS. B.R. shall supervise the bookkeeping and
accounting services for and on behalf of the Company, including but not limited
to, maintenance, care and supervision of all business records, papers,
documents, ledgers, journals and reports, the preparation of all federal and
state tax filings for the Company and the payment, collection and accounting of
all accounts receivable and payables of the Company. B.R. understands that all
such business records, papers and documents are and will remain the sole
property of the Company, and shall be available for inspection by the Company at
all times. Upon termination of this Agreement, all such business records, papers
and documents shall be delivered to the Company. Notwithstanding the foregoing,
the officers of the Company, reporting to the Board of Directors of the Company,
shall be responsible for all financial reporting, consistent with the Company's
obligations as a publicly-held Company.
4. MARKETING OF COMPANY PRODUCTS. B.R. shall be responsible for all
marketing and distribution activities on behalf of the Company including, but
not limited to, determining which products to market, sales prices, target
markets and customers, selecting distribution methods and procedures and
advertising activities.
5. ADMINISTRATIVE ACTIVITIES. In addition to the activities described
in Sections 2, 3, 4 and 5 of this Agreement, B.R. shall be responsible for all
other administrative functions of the Company including, without limitation,
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hiring and personnel matters, compensation arrangements with employees of the
Company, selecting outside advisors and consultants to the Company, choosing
vendors and suppliers, selecting and negotiating banking relationships and all
other normal and customary activities associated with operating a business. Any
employees of the Company shall report to B.R. although the Company shall pay the
compensation of such employees.
At all times during the Term of this Agreement, B.R. shall:
(a) operate the Business in the usual, regular and ordinary
course of business;
(b) preserve the Company's relationships with customers,
clients, accounts and others having a business relationship with the Company;
(c) maintain insurance policies of the Company at or above the
current coverage amounts; and
(d) make all normal and customary repairs to the Company's
offices and assets in order to maintain such offices and assets in at least
their current conditions.
6. COMPENSATION. The Company shall pay or grant to B.R., as
compensation for the services it provides to the Company pursuant to this
Agreement, the Management Fee and other consideration described on Exhibit A
attached hereto and made a part hereof. Exhibit A may be amended from
time-to-time only upon the execution of a written amendment by both parties
hereto.
7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company makes the
following representations and warranties to B.R. as an inducement to B.R. to
enter into this Agreement and to manage the Business:
(a) ORGANIZATION. The Company is a corporation duly
incorporated and organized and validly existing and in good standing under the
laws of the State of Texas with corporate power and authority to own and operate
the Business and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where such qualification is necessary.
(b) AUTHORITY. The Company has the legal capability and
authority to enter into and carry out the transactions contemplated by this
Agreement. Neither the execution of this Agreement, not the consummation of the
transactions contemplated herein violates, conflicts with or results in, or will
violate, conflict with or result in, a breach by the Company of the terms,
conditions, or provisions, as applicable, of its Articles of Incorporation or
Bylaws or of any security interest, deed of trust, debt instrument or loan
agreement, or any undertaking to which it is a party or by which it is bound, or
any applicable law, regulation, bylaw, ordinance or order of any jurisdiction
where the Company carries on the Business.
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(c) Capital Stock. The authorized capital stock of the Company
as of the date hereof consists of 100,000,000 shares of common stock, 9,589,956
of which shares are issued and outstanding ("Common Stock") and 10,000,000
shares of preferred stock, none of which are currently issued and outstanding.
(d) Governmental Authorizations. The Company holds such
licenses, permits, consents, authorizations and orders of such governmental or
regulatory authorities as are necessary to carry on the Business and such
licenses, permits, consents, authorizations and orders are in full force and
effect and have been and are being fully complied with by the Company.
(e) Proceedings. There are no actions, suits, or proceedings,
pending or threatened, before any court or government authority or other
administrative agency or any administrative officer which, if successful, could
adversely affect the Business or the Company's right to enter into this
Agreement.
8. COMPANY BANK ACCOUNTS. B.R. shall designate Xxxxx Xxxxxx and the
Company shall have the right to designate one officer of the Company, each of
whom shall be signatories on the Company's bank accounts. The signature of both
such signatories will be required to transfer or disburse funds in excess of
$50,000 from any of the Company's bank accounts. B.R. may substitute another of
its employees in place of Xxxxx Xxxxxx as a signatory on Company bank accounts
provided that such substituted employee is approved by the Board of Directors of
the Company. Notwithstanding the foregoing, in the event that there arises at
any time, or from time to time, situations where current obligations exceed the
Company's financial ability at that time to pay all such obligations as they
mature, the allocation of any payments to third parties and to B.R. shall be
subject to the exercise by the Board of Directors of the Company of its
reasonable business judgment and fiduciary duty to the Company's shareholders.
9. COOPERATION. Each of the parties hereto agrees to cooperate
reasonably with the other in connection with the performance of its respective
obligations under this Agreement.
10. TERM; TERMINATION OF AGREEMENT. This Agreement shall remain in
effect for five (5) years after the Effective Date hereof (the "Term") unless
mutually terminated or terminated as herein provided.
(a) The Company may terminate this Agreement upon thirty (30)
days written notice to B.R. for "cause". As used herein "cause" shall exist if:
(i) B.R. has engaged in gross negligence, gross
incompetence or willful misconduct in the performance of, or B.R.'s willful
refusal without proper reason to perform, the duties and services required of
B.R. pursuant to this Agreement;
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(ii) B.R. or any of its officers has been convicted
of a felony;
(iii) B.R. has breached any material provision of
this Agreement, which breach has not been cured within thirty (30) days of
receipt by B.R. of written notice from the Company;
(iv) B.R. is insolvent, or there has been an
appointment of a receiver for all or any part of the property of B.R., an
assignment for the benefit of creditors of B.R., or there has been filed a
proceeding under any bankruptcy laws by or against B.R;
(v) The Company has not achieved at least the
following net sales and net income levels for the indicated periods:
Contract Period Net Sales Net Income
--------------- --------- ----------
4/01/2001-9/30/2001 $4,000,000 N/A
4/01/2001-3/31/2002 $15,000,000 $250,000
4/01/2002-3/31/2003 $30,000,000 $2,500,000
4/01/2003-3/31/2004 $40,000,000 $3,500,000
4/01/2004-3/31/2005 $60,000,000 $5,500,000
4/01/2005-3/31/2006 $80,000,000 $7,500,000
For purposes hereof, the term "net income" shall mean the Pre-Tax Net Income of
the Company for the indicated period, increased by the amount of any deductions
recognized by the Company in determining its Pre-Tax Net Income in respect of
stock option awards received by B.R. for such period pursuant to the provisions
of Exhibit A hereto.
(vi) Voluntary or involuntary dissolution proceedings
in respect of B.R. have been commenced.
(b) B.R. may terminate this Agreement if the Company has breached any
material provision of this Agreement, which breach has not been cured within
thirty (30) days of receipt by the Company of written notice from B.R. of such
breach.
The right to terminate this Agreement as herein provided shall be cumulative and
in addition to any other rights and remedies the parties may be entitled to
pursue under applicable law. The exercise of one or more of such rights or
remedies shall not impair the rights of either party to exercise any other right
or remedy at law or in equity. Termination of this Agreement shall not release
or discharge any party from any obligation, debt or liability which shall have
previously accrued, and remain to be performed as of the effective date of
termination.
11. CONFIDENTIALITY. B.R. recognizes and agrees that the Business of
the Company and its business interests require a confidential relationship
between it and B.R. and the fullest practical protection and confidential
treatment of its trade secrets, proprietary business practices, customer and
supplier lists, and other proprietary information regarding the business or
financial affairs of the Company. Accordingly, B.R. agrees that during the term
of this Agreement and at all times thereafter it will:
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(a) Keep secret and confidential all such confidential
information, trade secrets, proprietary trade practices, customer and supplier
lists and proprietary business practices of the Company (written or unwritten),
and B.R. shall not divulge, disclose or reveal for any reason or in any manner
to any person who is not an officer, director or employee of the Company any of
the foregoing information; but excluding information:
(i) that has been disclosed by the Company to the
public;
(ii) that has been received by B.R. from a third
party without breaching an obligation owed to the Company; or
(iii) that is generally known in the trade or
industry or that has been disclosed to a third party by the Company without
similar restriction.
(b) Not use or aid others in using, directly or indirectly,
the same in competition with the Company, unless required by a valid order of a
court or other governmental authority of competent jurisdiction;
(c) Not:
(i) offer, induce, solicit, influence or attempt to
influence any employee of the Company to terminate his or her employment with
the Company for the purpose of working for a competitor of the Company;
(ii) influence or attempt to influence any agent,
customer or supplier who has a business relationship with the Company to cease
or adversely alter that business relationship; or
(iii) contact, solicit or do business with any person
who is, or has been at any time during the two years preceding the termination
of this Agreement, a customer of the Company for the purpose of diverting,
soliciting or accepting any business in competition with the Company.
In addition, upon termination of this Agreement for any reason, B.R. shall not
retain or remove, without the Company's advance written consent, any list, data,
book, record, manual, drawing, document, schedule, source code, specification,
computer tape, program, diskette or software or other written or recorded
information pertaining to the business and financial affairs of the Company.
12. NONCOMPETITION. In consideration of the compensation payable to
B.R. hereunder, during the Term of this Agreement and for a period of two (2)
years after termination of this Agreement by either B.R. or the Company, B.R.
will not, directly or indirectly, own, manage, operate, participate in,
undertake any employment with or have any interest in any business enterprise
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within the United States which is competitive with the Business. B.R. expressly
acknowledges and stipulates that the time and area restrictions of the foregoing
obligations do not unduly oppress B.R.'s present or future business
opportunities. In addition, B.R. acknowledges that the restrictions set forth in
Sections 11 and 12 hereof are reasonable limitations necessary to protect the
legitimate business interests of the Company in guarding the trade secrets,
preserving the goodwill of its customers and business, preventing solicitation
of its existing customers, and preventing unauthorized use of its proprietary or
confidential business lists, records and information. To the extent that the
duration, geographical area, or scope of activity of any of the preceding
restrictions would cause them to be unenforceable in a particular jurisdiction,
the restrictions automatically will be reformed for purposes of enforcement in
that jurisdiction to a duration, geographical area, or scope of activity that is
valid and enforceable in that jurisdiction. Reformation of a restriction to
validate its enforcement in any particular jurisdiction, however, will not
affect the enforcement of the restriction as stated in any other jurisdiction in
which it is enforceable as stated. Also, the invalidity of a restriction in a
particular jurisdiction will not affect the validity or enforcement of the
restriction in another jurisdiction where it is otherwise valid.
13. REMEDIES FOR BREACH. B.R. stipulates that a breach by it of any of
the restrictive covenants set forth in Sections 11 and 12 of this Agreement will
diminish the value of the Company and will cause irreparable and continuing
injury to the Company for which an adequate legal remedy will not exist.
Accordingly, the Company is hereby granted and shall have the right of
injunction (any requirements for posting of bonds for injunction are hereby
expressly waived) and such other and further relief, both in law and in equity,
as the Company may be entitled to receive under the laws of the State of
California in the event B.R. breaches or threatens to breach any of the
covenants or agreements contained herein.
14. MISCELLANEOUS. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
15. INDEMNIFICATION.
(a) INDEMNIFICATION OF B.R. The Company shall indemnify,
defend and hold harmless B.R., its agents, representatives, employees, officers,
directors and representatives from and against any and all losses, liabilities,
claims, damages, deficiencies and expenses, including interest, penalties, court
costs and reasonable attorneys' fees ("Losses") which may be incurred by or
suffered by persons or entities and which arise out of or result from any breach
of any representation, warranty, covenant or agreement of the Company contained
in this agreement or which is related to the operation of the Business prior to
the Effective Date, or to the operation of the Business after the date hereof
unless arising from B.R.'s negligence, misconduct or any breach of its
contractual duties hereunder.
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(b) INDEMNIFICATION OF THE COMPANY. B.R. shall indemnify,
defend and hold harmless the Company, its agents, representatives, employees,
officers, directors and representatives from and against any and all Losses
which may be incurred by or suffered by persons or entities relating to the
breach by B.R. of any of its obligations under this Agreement or the negligence,
misconduct or any breach of B.R.'s contractual duties hereunder.
16. ASSIGNMENT. This Agreement and the rights and obligations created
hereunder shall not be assigned or subcontracted by B.R., either voluntarily or
by operation of the law, without the express prior written consent of the
Company. Any assignment or subcontracting without such consent shall be null and
void.
17. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California without regard to any conflict-of-laws
rules.
18. WAIVER. Any failure of either party to comply with any obligation,
covenant, agreement or condition herein may be waived by the other party, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
19. AMENDMENT. Except as provided otherwise herein, this Agreement may
be amended, modified or supplemented only by written agreement of each of the
parties hereto.
20. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding of the parties hereto with respect to the subject matter
contained herein, and supercedes all prior agreements and understandings between
the parties with respect to the subject matter hereof, whether written or oral,
and whether explicit or implicit, which have been entered into between the
parties prior to the execution hereof. There are no restrictions, provisions,
representations, warranties, covenants or understandings, other than those
expressly set forth or referred to herein.
21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
22. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the other party at
the following addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof):
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If to Company: Biozhem Cosmeceuticals, Inc.
19641 Descartes
Xxxxxxxx Xxxxx, XX 00000
With a copy to: Xxxxxx X. Xxxx, Esq.
Two Memorial City Plaza
820 Gessner, Suite 1360
Xxxxxxx, Xxxxx 00000
If to B.R.: Beauty Resource, Inc.
32545B Golden Lantern #0000
Xxxx Xxxxx, XX 00000
With a copy to: Xxxxxxx Xxxxxxx
Jeffer, Shaff, Falk, LLP
00000 Xxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
23. PARTIAL INVALIDITY. If any one or more of the terms, provisions,
promises, covenants or conditions of the Agreement or the application thereof to
any person or circumstance shall be adjudged to any extent invalid,
unenforceable, void or voidable for any reasons whatsoever by a court of
competent jurisdiction, each and all of the remaining terms, provisions,
promises, covenants and conditions of this Agreement or their application to
other persons or circumstances shall not be affected thereby and shall be valid
and enforceable to the fullest extend permitted by law.
24. HEADINGS; TITLES. The headings appearing herein are for convenience
and reference only and shall not be deemed to govern, limit, modify or in any
manner affect the scope, meaning or intent of the provisions of this Agreement.
25. BINDING EFFECT. Subject to the provisions contained herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and upon their respective successors.
26. JURISDICTION AND VENUE. THE PARTIES HEREBY CONSENT TO THE
JURISDICTION OF THE STATE OR FEDERAL COURTS LOCATED WITHIN THE STATE OF
CALIFORNIA, AND IRREVOCABLY AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF
OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN SUCH COURTS. THE PARTIES
ACCEPT THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVE ANY DEFENSE
OF FORUM NON-CONVENIENS, AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Effective Date.
BEAUTY RESOURCE, INC.
By: /S/ Xxxxx Xxxxxx
Its: President
BIOZHEM COSMECEUTICALS, INC.
By: /s/ Xxxxx Xxxx
Its: President
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EXHIBIT A
---------
MANAGEMENT FEE:
---------------
For its services to the Company and for undertaking all of its obligations
hereunder to the Company, B.R. shall be paid a fee of $15,000 per month. In
addition, commencing April 1, 2001 and continuing on the first day of each
quarter thereafter during the Term, the Company shall pay to B.R. a fee in the
amount of 0.5% of the sales (net of returns and allowances) of the Company for
the preceding quarter.
CEO SIGNING BONUS:
------------------
Upon execution of this Agreement, the Company shall elect Xxxxx Xxxxxx President
of the Company, to serve at the pleasure of the Board of Directors of the
Company, and shall award her options to purchase 100,000 shares of common stock
of the Company at an exercise price of $0.25 per share, such options to be
exercised on or before September 30, 2003.
INTERIM BONUSES:
----------------
For achieving an increase of 25% in net sales for the three months ending
December 31, 2000 over the three-month period ending September 30, 2000, the
Company shall award B.R. options to purchase 100,000 shares of common stock of
the Company at an exercise price of $0.25 per share, such options to be
exercised on or before December 31, 2003.
For achieving an increase of 50% in net sales for the three months ending March
31, 2001 over the three-month period ending September 30, 2000, the Company
shall award B.R. options to purchase 100,000 shares of common stock of the
Company at an exercise price of $0.25 per share, such options to be exercised on
or before March 31, 2004.
REVENUE-BASED AWARDS:
---------------------
Upon achieving the following net sales levels of the Company for the periods
indicated below, the Company shall award B.R. options to purchase shares of
common stock of the Company at an exercise price of $0.25 per share as set forth
below, such options to be exercised on or before the indicated expiration date:
Page 11 of Exhibit A
CUMULATIVE NET NUMBER OF EXPIRATION
PERIOD SALES DURING PERIOD OPTIONS DATE
------ ------------------- ------- ----
Quarter ending 6/30/2001 $1,875,000 150,000 3/31/2005
Six months ending 9/30/2001 $4,500,000 300,000* 3/31/2005
Nine months ending 12/31/2001 $9,000,000 450,000* 3/31/2005
Twelve months ending 3/31/2002 $15,000,000 600,000* 3/31/2005
Contract year beginning 4/1/2002
and ending 3/31/2003 $30,000,000 300,000 3/31/2006
Contract year beginning 4/1/2003
and ending 3/31/2004 $40,000,000 300,000 3/31/2007
Contract year beginning 4/1/2004
and ending 3/31/2005 $60,000,000 300,000 3/31/2008
Contract year beginning 4/1/2005
and ending 3/31/2006 $80,000,000 300,000 3/31/2009
------
*Less the number of options awarded in one or more prior quarters in the
contract year beginning April 1, 2001.
In the event that the net sales of the Company for any of the applicable
contract years exceeds the foregoing threshold net sales amounts, the amount of
such excess shall be carried forward and credited to the net sales of the
subsequent contract year for the purposes of determining whether the threshold
net sales for the subsequent contract year have been achieved.
PRE-TAX NET INCOME AWARDS:
--------------------------
OPTIONS
-------
In addition, the Company shall award B.R. options to purchase shares of
common stock of the Company at an exercise price of $0.25 per share based upon
the Pre-Tax Net Income of the Company for full fiscal years during the Term, as
set forth below:
Page 12 of Exhibit A
NUMBER OF
PRE-TAX NET INCOME OPTIONS
------------------ -------
Contract year
beginning 4/1/2001 At least $0 but less than $500,000 100,000
At least $500,000 but less than $1,000,000 200,000
At least $1,000,000 but less than $1,500,000 400,000
At least $1,500,000 but less than $2,000,000 500,000
$2,000,000 or more 600,000
Contract year
beginning 4/1/2002 At least $3,000,000 but less than $4,00,000 200,000
At least $4,000,000 but less than $5,000,000 350,000
At least $5,000,000 but less than $6,000,000 500,000
$6,000,000 or more 600,000
Contract year
beginning 4/1/2003 At least $4,000,000 but less than $5,500,000 200,000
At least $5,500,000 but less than $6,750,000 350,000
At least $6,750,000 but less than $8,000,000 500,000
$8,000,000 or more 600,000
Contract year
beginning 4/1/2004 At least $6,000,000 but less than $8,000,000 200,000
At least $8,000,000 but less than $10,000,000 350,000
At least $10,000,000 but less than $12,000,000 500,000
$12,000,000 or more 600,000
Contract year
beginning 4/1/2005 At least $8,000,000 but less than $10,500,000 200,000
At least $10,500,000 but less than $13,000,000 350,000
At least $13,000,000 but less than $16,000,000 500,000
$16,000,000 or more 600,000
CASH
----
In addition, the Company will pay B.R. cash bonuses based upon the
Company achieving specified percentages of Pre-Tax Net Income (excluding the
cash bonus) to the net sales of the Company for full fiscal years during the
Term, as set forth below:
Page 13 of Exhibit A
PRE-TAX NET INCOME CASH BONUS
(EXCLUDING THE CASH BONUS) AS A PERCENTAGE OF PRE-TAX NET INCOME
AS A PERCENTAGE OF NET SALES (EXCLUDING THE CASH BONUS)
0% but less than 15% -0-
At least 15% but less than 20% 2%
At least 20% but less than 25% 4%
25% or more 5%
Any bonuses earned by B.R. hereunder which are payable in options to
purchase common stock of the Company will be issued pursuant to the terms of
option agreements containing customary provisions, including non-dilution and
adjustment provisions resulting from the subdivision or combination of shares of
common stock of the Company or the issuance by the Company of dividends payable
in shares of its common stock. Such options, if earned by B.R., will be issued
reasonably promptly by the Company following the determination that such awards
have been earned by B.R. pursuant to the terms hereof. All options to be issued
to B.R. based upon the Pre-Tax Net Income of the Company shall be exercisable at
any time during the three-year period after the end of the fiscal year in
respect of which the option was earned and awarded. Any cash bonuses earned by
B.R., hereunder, shall be paid to B.R. by no later than 120 days after the end
of the fiscal year in respect of which such cash bonus was earned.
Page 14 of Exhibit A
