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STRICTLY CONFIDENTIAL
EMPLOYMENT AGREEMENT
BETWEEN
XXXXX PRODUCTS COMPANY
AND
XXXXXXX X. XXXXXXXX
THIS EMPLOYMENT AGREEMENT dated January 1, 1998 is made between Xxxxx
Products Company (the "Company"), a Delaware corporation, and Xxxxxxx X.
Xxxxxxxx (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 Vice President - Marketing and New
Products of the Company and has served the Company as an employee continuously
during the past one year;
B. The Executive acknowledges that the services previously
provided by him to the Company and 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
to date by the Company, he has occupied a position of trust and confidence with
the Company and, during such employment, the Company has compensated 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 has
developed customer relationships and goodwill that are valuable and important to
the Company, and has 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.
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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 continue
to 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 continue to be
familiar with the Company's trade secrets, including, without 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 has previously performed and 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.
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(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 Vice President - Marketing and New Products, 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 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 throughout
the employment term an initial base salary at the rate of $120,000.00 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 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 pension, 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.
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(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 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.
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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, 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.
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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) 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.
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(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 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
without cause, or as a result of the Company
delivering a non-extension notice, and such
termination occurs after a control transaction
whereby Xxxxxxx Purina Company or any of its
subsidiaries or affiliates has acquired the Company,
the Executive shall be entitled to receive severance
pay equal to his base pay and annual bonus, with such
amounts being calculated in the same manner as set
forth above, except that the annual bonus for each of
such years shall be 50% of the annual base salary at
the time of termination of employment, for the period
commencing on this first day after the date of
termination and terminating on the third anniversary
of the date the Executive ceases to be employed by
the Company.
(4) 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
an 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.
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(5) 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) through (4), 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, pension, 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 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: Chief Executive Officer
Xxxxx Products Company
P.O. Box 000
Xxxx 00xx & Xxxxx Xxxx Xxxx
Xxxxxx, 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
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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.
13. GOVERNING LAW In light of the Company's contacts with the
state of Missouri 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 Missouri and the Executive and the Company consent to the personal
jurisdiction of the federal and state courts sitting in Missouri for purposes of
any such litigation. This Agreement shall be governed by the internal laws of
the State of Missouri without regard to Missouri 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.
(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.
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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 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 JOPLIN, MISSOURI.
EXECUTED AND EFFECTIVE as of the date first written above.
WITNESS: XXXXX PRODUCTS COMPANY
/s/ Xxxxxxx XxXxx /s/ Xxx X. Xxxxxxxx
---------------------------------- ------------------------------------
Xxx X. Xxxxxxxx
President and CEO
WITNESS: EXECUTIVE:
/s/ Xxxxxx Xxxxxxxx /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------- ------------------------------------
0000 X. 00xx
------------------------------------
Xxxxxx Xxxxxxx
Xxxxxx, XX 00000
------------------------------------
City, State, Zip Code
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EXHIBIT A
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.
(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.
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(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.
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
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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 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
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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.
