Exhibit 10.5
BONUS PLAN
This Bonus Plan is by and between Vidler Water Company, Inc. and Nevada Land &
Resource Company, LLC ("Companies") on behalf of Xxxxx Xxxxxxx ("Employee").
I. Annual Bonus. The annual bonus will be determined on an annual basis as
follows:
A. The calculation to determine the bonus will be performed after the
close of each calendar Year upon the final closing of the financial
records during the first quarter of the following year, and will be
based on a consolidated basis.
B. The calculation will be based on the following formula:
Vidler Net Earnings,
Before Interest Expense to Pico and Taxes $__________________
NLRC Net Earnings,
Before Interest Expense to Pico and Taxes $__________________
Gain from sale of Companies* $__________________
TOTAL Net Income/Gain,
Before Interest Expense to Pico and Income Taxes $__________________
NET BONUS COMPENSATION $__________________
2% of Combined Net Income
*In the event an interest in Vidler or NLRC is sold to a non-affiliated
third party, the bonus will be calculated as 2% of the gain in Pico's book
value resulting from the sale transaction.
C. Every effort will be made to finance Companies' transactions from
the funds of Companies prior to obtaining financing from PICO
Holdings, Inc. PICO Holdings reserves the right to dividend out
earnings or repay/increase intercompany financing to PICO Holdings
at PICO Holding's discretion.
D. In the event that the Net Bonus Compensation, as calculated in 2.
above, is negative, no bonus compensation will be payable. Any
negative balance will not accrue forward to the following year, as
each year will be valued on an individual year-by-year basis.
E. An insurance policy in the amount of $500,000 paid by the Company.
II. TERMINATION.
A. If Companies terminate without cause the employment of Employee or
eliminates Employee's position, Companies will determine the bonus
amount based on a prorata calculation determined as of the current
quarter's financials. The bonus amount will also include the
financial impact of all pending transactions which are consummated
prior to the termination date and reach financial close by the end
of the termination calendar
year. The company financial statements will be closed as soon as
possible after the end of the quarter immediately following
termination, and paid, as soon as practicable, after the year end
results are determined.
B. If Employee voluntarily terminates employment or if Employee is
terminated for cause, Employee shall have only the right to receive
payment for services rendered prior to the date of such termination,
based solely on Employee's current salary at the date of
termination, and any standard employee severance benefit. No further
bonuses or payments of any type under this Agreement shall be due.
This Bonus Plan is effective January 1, 2003 and shall automatically renew on
January 1, of each calendar year on the same terms and conditions as stated
above, unless it has been terminated by written notice to the employee at least
ten days before the end of the calendar year.
VIDLER WATER COMPANY, INC.
NEVADA LAND & RESOURCE COMPANY, LLC
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Director
Date: September 15, 2003
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