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EXHIBIT 10.26
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETITION AGREEMENT (the "Agreement"), made
and entered into as of this 8th day of January, 1998, by and between M. XXXX
XXXX (the "Executive") on the one hand and SOUTHERN SHOWCASE HOUSING, INC., a
North Carolina corporation (the "Company") and CHAMPION ENTERPRISES, INC., a
Michigan corporation ("Champion") on the other.
W I T N E S S E T H:
WHEREAS, Executive was a shareholder of, and prior to the date hereof
the Executive has been employed by Company; and
WHEREAS, on the date hereof the shareholders of Company are selling
their stock to Champion Home Centers, Inc., a subsidiary of Champion, pursuant
to the terms of a Stock Purchase Agreement dated December 5, 1997 (the "Purchase
Agreement"); and
WHEREAS, Executive, as a shareholder of Company, will receive a direct
and substantial economic benefit from the sale of his stock to Champion Home
Centers, Inc. pursuant to the Purchase Agreement; and
WHEREAS, the execution and delivery of this Agreement by Executive is
an express condition precedent to the obligations under the Purchase Agreement
and Executive is executing and delivering this Agreement in satisfaction of such
condition precedent; and
WHEREAS, the Executive is expected to make a major contribution to the
growth, profitability and financial strength of the Company; and
WHEREAS, the Company, Champion and the Executive desire to set forth
the terms and conditions of Executive's employment with the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, the parties hereto agree as follows:
1. Employment. The Company hereby employs the Executive, and the
Executive hereby accepts such employment by the Company, on the terms and
conditions set forth herein.
2. Term. The term of this Agreement shall be for the period commencing
on the date of this Agreement (the "Commencement Date") and terminating on the
fifth anniversary of the Commencement Date (the "Initial Term"), unless sooner
terminated in the manner hereinafter provided. After the Initial Term, this
Agreement may be extended for such additional period(s), if any, as may be
agreed upon in writing by Executive and the Company.
3. Duties.
(a) During the term of this Agreement, the Executive shall
serve as President and perform the duties of the chief executive officer of the
Company. Subject always to the supervision and direction of the Board of
Directors of the Company, the Executive shall have the duties and
responsibilities customarily associated with such office and as otherwise
provided in the Bylaws of the Company. During the term of this Agreement, the
Executive shall devote his full working time and his best efforts, and apply all
of his skill and experience, to
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the proper performance of his duties hereunder and to the business and affairs
of the Company.
(b) During the term of this Agreement, the Executive, without
the prior written approval of the Board of Directors of the Company, shall not,
either directly or indirectly, actively engage in any business other than that
specified herein or accept any employment or office whatsoever (including but
not limited to serving as a director) from any other person, firm, corporation
or entity; provided, however, that the foregoing shall not prohibit the
Executive from serving as a director of another corporation which does not
interfere with the proper performance of Executive's obligations under this
Agreement and which does not otherwise breach any of Executive's covenants under
this Agreement.
4. Compensation and Benefits.
(a) The Company will pay the Executive during the term of this
Agreement a base salary of One Hundred Thousand Dollars ($100,000) per annum
payable monthly or, if more frequent installments are provided under the
Company's regular payroll practices for senior executives, then in such more
frequent installments, in any case less all applicable withholdings.
(b) In addition to the base salary, the Executive shall be
entitled to: (i) a performance bonus each year during the term of this Agreement
determined in accordance with Exhibit A hereto, which bonus shall be payable as
provided in Exhibit A hereto; and (ii) options to acquire common stock of
Champion in accordance with the provisions of Exhibit B hereto.
(c) The Company shall pay or reimburse the Executive for all
reasonable business expenses actually incurred or paid by the Executive during
the term of his employment under this Agreement, in the performance of his
services hereunder. Such payment or reimbursement shall be made upon
presentation of expense statements or vouchers or other supporting information
acceptable to the Company.
(d) The compensation of the Executive provided for by this
Agreement shall not preclude the Executive from participating, to the extent
that he is eligible therefor, in any plans or programs which may be maintained
by the Company for its senior executives generally, providing insurance,
retirement benefits, stock options, or other like fringe benefits.
(e) By execution of this Agreement, Champion hereby
unconditionally guarantees the full, complete and timely payment of any and all
obligations of Company under this Agreement.
5. Resignation or Discharge.
(a) The Company may terminate this Agreement at any time and
for any reason. If the Executive is terminated without "cause" (as defined
below), the Executive shall be entitled to receive: his base salary to the date
of termination, within thirty (30) days of such termination; a performance bonus
for the year in which such termination occurs, prorated as hereinafter provided
in the case of death or disability; immediate vesting of all options described
on Exhibit B, and, within 30 days of such termination, payment of all Earn-Out
Payments pursuant to that certain Stock Purchase Agreement dated December 5,
1997, as if such payments had been earned. In the event Executive's employment
with the Company is terminated prior to the expiration of the term of this
Agreement on account of (y) the Executive's resignation or (z) the Executive's
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discharge by the Company for "cause" (as hereinafter defined), all compensation
and benefits described in Section 4 of this Agreement, including the options
described on Exhibit B, shall terminate as of the date of such termination of
employment and a portion of the Earn-Out Payments may be retained by the Company
as liquidated damages as provided in the Stock Purchase Agreement. In the event
such Earn-Out Payment(s) are retained, Company and Champion shall have no other
claim or remedy against Executive hereunder except pursuant to Sections 8 and 9
hereof, which will be construed as ancillary to and independent of any other
provisions of this Agreement as provided below.
(b) For purposes of this Agreement, "cause" shall mean an
omission, act or action or series of omissions, acts or actions of the Executive
which constitute(s), cause(s) or result(s) in:
(i) the Executive's dishonesty in his financial
dealings with the Company;
(ii) the conviction of a crime by the Executive which
constitutes (x) a felony or (y) a misdemeanor involving moral turpitude which
may reasonably be expected to have an adverse effect on the Company, its
business, reputation or interest;
(iii) a breach by the Executive of this Agreement or
any other contract or agreement between the Executive and the Company or a
breach by the Executive of a fiduciary duty or responsibility to the Company; or
(iv) the refusal of the Executive to follow the
lawful policies and directives of the Board of Directors of the Company
consistent with this Agreement;
(v) the Pretax Earnings (as defined in Exhibit A
attached hereto) of the Company falling below Three Million Dollars ($3,000,000)
for any fiscal year of the Company,
Provided that discharge pursuant to clause (iii) or clause (iv) shall
not constitute discharge for "cause" unless the Executive shall have first
received written notice from the Board of Directors of the Company stating the
nature of such breach or refusal and affording the Executive an opportunity to
correct the acts or omissions complained of within thirty (30) days of actual
receipt by the Executive of notice thereof.
6. Death or Disability. The term of employment of the Executive shall
terminate forthwith in the event of the death of the Executive, or, at the
option of the Company, in the event that the Executive shall fail to render and
perform the services required of him under this Agreement because of
"disability" (as hereinafter defined). In the event of such a termination, all
compensation described in Section 4 of this Agreement shall terminate as of the
date of such termination; provided, however, that the Executive (or his estate
or designated beneficiary) shall be entitled to receive the unpaid portion of
the annual bonus provided for in Exhibit A for (x) all Bonus Years which have
ended prior to the date of such death or termination, which such sum shall be
payable within thirty (30) days of such death or termination and (y) the Bonus
Year in which such death or termination shall occur, in which event such Bonus
Year shall be prorated by multiplying the amount of bonus earned with respect to
such year as if such death or disability had not occurred by a fraction, the
numerator of which shall be the number of weeks in such partial Bonus Year and
the denominator of which shall be 52 or 53, depending upon the number of weeks
in the Company's fiscal year. The
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bonus as so calculated shall be payable upon the earlier of thirty (30) days
after a final determination of the bonus for the Bonus Year ending on such death
or termination or ninety (90) days after the end of such Bonus Year.
For purposes of this Agreement, "disability" shall mean the inability
of the Executive to perform his duties and obligations for the Company as
required by this Agreement, because of a disability which is not of a temporary
nature, which results from mental or bodily injury, sickness or disease or any
combination thereof, and which has lasted a period of more than one hundred
eighty (180) consecutive days or two hundred forty (240) days within any twelve
(12) month period.
7. Disclosure of Proprietary Information. The Executive shall promptly
disclose to the Company in such form and manner as the Company may reasonably
require (i) all operations, systems, services, methods, developments,
inventions, improvements and other information or data pertaining to the
business or activities of the Company as are conceived, originated, discovered
or developed by Executive (whether or not copyrighted or patented) during the
term of his employment with the Company (whether before or after the
Commencement Date), and (ii) such information and data pertaining to the
business, operations, personnel, activities, financial affairs, and other
information relating to the Company and its dealers, distributors, customers,
suppliers and employees as may be reasonably required for the Company to operate
its business. It is understood that such information is proprietary in nature
and shall (as between the Company and Executive) be for the exclusive use and
benefit of the Company and shall be and remain the property of the Company. If
so requested by the Company, the Executive shall execute and deliver to the
Company any instrument as the Company may reasonably request to effectuate the
assignment of any such proprietary information to the Company.
8. Noncompetition.
(a) The Executive acknowledges that: the principal business of
the Company is the retail sale and service of manufactured housing, together
with the providing and/or arranging for financing and insurance services in
connection therewith (the "Business"); he is one of the very limited number of
persons who has developed the Business to its present condition; his work for
the Company with respect to the Business has brought and will continue to bring
him into close contact with many confidential affairs not readily available to
the public; and the Company, Champion and subsidiaries of Champion (the
"Champion Companies"), will suffer substantial and irreparable harm in the event
the Executive should enter into competition with any of them or disclose any of
the affairs of any of them to any third parties. The Executive acknowledges that
during the term of this Agreement the Company has agreed to provide and make
available to him, and he shall receive, special training and knowledge from the
Company, which will include confidential and proprietary information of the
Company, including the confidential information identified in Section 9 below.
The Executive acknowledges that this confidential information is valuable to the
Company and, therefore, its protection and maintenance constitutes a legitimate
interest to be protected by the Company by this covenant not to compete.
(b) In view of the foregoing and in order to induce the
Company and Champion to authorize and approve its wholly-owned subsidiary to
enter into the Purchase Agreement and to consummate the transactions
contemplated thereby and thereupon to cause the Company to enter into this
Agreement, the Executive hereby agrees in the event of termination of his
employment for any reason other than termination without "cause" (as defined in
Section 5(b) hereof) that until the
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later of (x) the end of the Initial Term of this Agreement (whether or not
termination occurs prior to such time), (y) two years after the effective date
of termination, if termination occurs within the first four years of the Initial
Term, and (z) otherwise one year after the effective date of termination, he:
(i) will not, directly or indirectly, whether as an
officer, director, consultant, agent, employee, partner, shareholder,
participant, owner or otherwise, engage in any aspect or segment of the Business
or any business which competes with the Business, including, without limitation,
manufactured or modular housing or any other type of housing or housing
components manufactured and/or sold (including but not limited to retail sales)
off site in all states where the Company, Champion or the Champion Companies are
from time to time engaged in competing business (either directly or through any
dealer) (the "Covered Area"); provided, however, that the foregoing shall not
preclude (A) investments by the Executive in public companies where the
Executive does not own two percent (2%) or more of the outstanding equity and
does not actively participate in the business in which such investment is made,
or (B) investments by the Executive in any publicly-traded securities of
Champion.
(ii) will not, directly or indirectly, interfere
with, disrupt, or attempt to disrupt, any relationship, contractual or
otherwise, between the Company, Champion or any of the Champion Companies and
any dealer, distributor, customer, supplier or employee of the Company, Champion
or any of the Champion Companies in the Covered Area;
(iii) will not, directly or indirectly, employ or
solicit the employment or engagement by others of any employee of the Company,
Champion or any Champion Company who was such an employee at the time of
termination of the Executive's employment hereunder or within six (6) months
prior thereto.
(c) The Executive acknowledges that the restricted period of
time and geographical area under Section 8(a) hereof are reasonable, in view of
the nature of the Business in which the Company, Champion and the Champion
Companies are engaged and the Executive's knowledge of the Business and the
confidential information that will be made available to the Executive in
connection with this Agreement, as well as the fact that the Executive received
a significant portion of the purchase price when the merger was consummated. The
Executive represents to the Company that the enforcement of the restrictions
contained in this Section 8 would not be unduly burdensome to the Executive, and
in order to induce Champion and its subsidiary to enter into the Purchase
Agreement and to cause the Company after the merger to employ the Executive in
accordance with this Agreement, the Executive further represents and
acknowledges that the Executive is willing and able to compete in other
geographical areas not prohibited by this Section 8. Notwithstanding the
foregoing, if any provision, or any part thereof, of this Section 8 is held to
be unenforceable because of the duration thereof or the area covered thereby,
the parties agree that the court or arbitrators making the determination shall
have the power to reduce the duration or the area of such provision, or to
delete specific words or phrases, and in its reduced or amended form such
provision shall then be enforceable and be enforced.
(d) The Executive intends to, and does hereby, confer
jurisdiction to enforce the covenants contained in this Section 8 upon the
courts of the State of North Carolina.
(e) The representations and covenants contained in this
Section 8 and Section 9 below on the part of the Executive will be construed as
ancillary to and independent of any other provision of the Purchase Agreement
and this
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Agreement, and the existence of any claim or cause of action of the Executive
against Champion, the Company or any officer, director, or shareholder of
Champion and/or the Company, whether predicated on the Purchase Agreement, this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of the covenants of the Executive contained in this Section 8 or Section
9. In addition, the provisions of this Section 8 and Section 9 below shall
continue to be binding upon the Executive in accordance with its terms,
notwithstanding the termination of this Agreement.
9. Nondisclosure.
Except with the prior written consent of the Company in each instance
or as may be necessary to perform the Executive's services hereunder or required
by applicable law, the Executive shall not disclose, use, publish, or in any
other manner reveal, directly or indirectly, at any time during or after the
term of this Agreement, any confidential information relating to the business of
the Company, Champion or any of the Champion Companies. Such confidential
information shall include, but shall not be limited to, information relating to
(i) the business, operations, systems, services, know-how, trade secrets,
dealer, distributor and customer lists, pricing policies, operational methods,
market plans, product development plans, acquisition plans, design and design
projects, inventions and research projects and all other plans of the Company,
Champion or any of the Champion Companies and (ii) the business, operations,
personnel, activities, financial affairs, and other information relating to the
Company, Champion or any of the Champion Companies and their dealers,
distributors, customers, suppliers and employees. Such confidential information
shall not include information which is or becomes generally available to the
public other than as a result of a disclosure by the Executive. In the event
that the Executive is required pursuant to, or required by, applicable law,
regulation or legal process to disclose any of the confidential information, he
shall first inform Champion, which may seek a protective order or other
appropriate remedy or, in its sole discretion, waive compliance with the terms
of this Agreement. In the event that no such protective order or other remedy is
obtained, or Champion waives compliance with the terms of this Agreement, the
Executive shall furnish only that portion of the confidential information which
the Executive is advised by counsel is legally required to be disclosed and will
exercise commercially reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded the confidential information.
10. Remedies for Certain Breaches.
If the Executive commits a breach, or threatens to commit a breach, of
any of the provisions of Section 8 or Section 9, the Company, Champion and the
Champion Companies shall have the following rights and remedies, each of which
rights and remedies shall be independent of the others, and shall be severally
enforceable, and all of which rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available under law or in equity
to the Company, Champion and the Champion Companies:
(i) the right and remedy to have the provisions of Section 8
and/or Section 9 enforced by any court of competent jurisdiction by injunction,
restraining order, specific performance or other equitable relief in favor of
the Company, Champion and the Champion Companies, it being acknowledged and
agreed that any breach or threatened breach of Section 8 and/or Section 9 by the
Executive will cause irreparable injury to the Company, Champion and the
Champion Companies and that money damages will not provide an adequate remedy to
the Company, Champion and the Champion Companies;
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(ii) the right and remedy to require the Executive to account
for and pay over to the Company, Champion and the Champion Companies all
compensation, profits, monies, accruals, increments or other benefits
(collectively, "Benefits") derived or received by the Executive as the result of
any transaction constituting a breach of any of the provisions of Section 8
and/or Section 9, and the Executive hereby agrees to account for such Benefits
and pay over all such Benefits to the Company, Champion and the Champion
Companies; and
(iii) the right and remedy to retain, as provided in the
Purchase Agreement, a portion of the (x) Hold Back Amount (as defined in the
Purchase Agreement) and/or (y) Earn-out Payment (as defined in the Purchase
Agreement).
11. Survivability; Affiliates.
The rights of the Company, Champion and the Champion Companies
and the obligations of the Executive pursuant to Sections 8, 9 and 10 shall
survive the termination of the Executive's employment with the Company or the
expiration of the term of this Agreement.
12. Absence of Restrictions.
No provisions of this Agreement shall be deemed to restrict the
absolute right of the Company at any time to sell or dispose of all or any part
of the assets of the Company, or to reconstitute the same in any one or more
other entities, or to merge, consolidate, sell or liquidate or otherwise abandon
or cease the active conduct of its Business, but none of the foregoing shall
relieve the Company of its obligations hereunder and pursuant to that certain
Stock Purchase Agreement dated December 5, 1997, including making adequate and
equitable provisions for the bonuses and options provided for in Section 4(b)
hereof. The Company and Champion shall have any assignee of the Business deliver
a certificate assuming, ratifying and confirming this Agreement in every respect
and without modification.
13. Assignment.
The Company, Champion and the Champion Companies shall have the right
to assign their rights under this Agreement in connection with any sale or
disposition of all or substantially all of the assets of any of them or any
merger or consolidation of any of them. It shall be a condition precedent to the
closing of any such assignment by the Company and Champion that the assignee
shall, after notice and upon written request of the Executive, deliver a
certificate assuming, ratifying and confirming this Agreement in every respect
and without modification. Such certificate shall, without limitation, confirm
Executive's entitlement to earn performance bonus payments in accordance with
this Agreement and Exhibit A, the options to acquire common stock of Champion in
accordance with Exhibit B, and the right to receive the Earn-Out Payments. The
Executive shall, after notice and upon written request of such assignee, deliver
a certificate ratifying and confirming his obligation under this Agreement, and
acknowledging that the "Company", as used in this Agreement, shall from and
after the date of such assignment be deemed to mean the assignee of the Company.
This Agreement calls for the personal services of the Executive and no part of
its rights or obligations hereunder may be assigned by the Executive.
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14. Notices.
All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given when personally
delivered, the next business day after forwarded by overnight express (including
but not limited to United Parcel Service, Federal Express, Airborne or similar
service) or three (3) days after mailed by registered or certified United States
mail, postage prepaid and return receipt requested, to the following addresses
to the extent applicable (or to such other address of a party as shall have been
specified to the other party by notice):
(a) if to the Executive, to:
M. Xxxx Xxxx
c/o Southern Showcase Housing, Inc.
0000 Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
copy to:
X. Xxxxxxxxx X. Xxxxxxx, Esq.
Xxxxx Xxxxxxxxx Xxxxx Xxxxxx & Xxxxx
A Professional Limited Liability Company
000 Xxxxx Xxxxxx Xxxx, Xxxxx 000 (27408)
X.X. Xxx 0000 (00000)
Xxxxxxxxxx, XX
(b) if to the Company, Champion or any of the Champion
Companies, to:
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000-0000
Attention: President and Chief Executive Officer
15. Miscellaneous.
(a) This Agreement constitutes the sole and entire agreement
between the Executive and the Company with respect to the Company's employment
of the Executive and shall not be altered, modified or amended except by a
written instrument signed by the Executive and the Company.
(b) This Agreement shall inure to the benefit of, and be
binding upon (i) the parties hereto, Champion and the Champion Companies, (ii)
the heirs, administrators, executors and personal representatives of the
Executive and (iii) the successors and assigns of the Company, Champion and the
Champion Companies, as provided for herein.
(c) The Section headings appearing in this Agreement are for
purposes of easy reference and shall not be considered a part of this Agreement
or in any way modify, amend or affect its provisions.
(d) It is agreed that a waiver by either party of a breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by that same party.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina (other than conflicts of
law principles). Any and all actions concerning any dispute arising under this
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Agreement shall be filed and maintained only in the General Court of Justice,
Superior Court Division for Guilford County, North Carolina. If any provisions
of this Agreement as applied to any part or to any circumstance shall be
adjudged by a court to be invalid or unenforceable, the same shall in no way
affect any other provision of this Agreement, the application of such provision
in any other circumstances or the validity or enforceability of this Agreement.
(f) Company and Executive agree that the Employment Agreement
between them dated September 30, 1997, is hereby rescinded, revoked and
terminated as of the date hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized representative and the Executive has executed
this Agreement on the day and year first above written.
EXECUTIVE:
M. XXXX XXXX
COMPANY:
SOUTHERN SHOWCASE HOUSING, INC.
By:
Name: Xxxxxx X. Xxxxx, Xx.
Title: Chairman of the Board
CHAMPION:
CHAMPION ENTERPRISES, INC.
By:
Name: Xxxxxx X. Xxxxx, Xx.
Title: President
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EXHIBIT A
Performance Bonus
The bonus to be paid to the Executive pursuant to Section 4(b) of this
Agreement shall be calculated as follows:
1. Bonus Calculation. Provided Executive is not in default under this
Agreement or any other agreement between Executive and the Company, and provided
that the Executive is employed by the Company as of the last day of the
applicable Bonus Year (as hereafter defined) (except in the case of death,
disability or a separation without "cause" at the behest of the Company, in
which case a bonus shall be prorated as provided in the Agreement), the Company
shall pay to Executive annual bonuses (the "Bonus") calculated as follows:
(a) Calculation.
(i) If the Pretax Earnings for the applicable fiscal year is
less than $4,500,000, the Bonus shall equal zero percent (0%) of the Pretax
Earnings. If the Pretax Earnings for the applicable fiscal year is $4,500,000 or
more, but less than $6,000,000, the Bonus shall equal five percent (5%) of the
Pretax Earnings. If the Pretax Earnings for the applicable fiscal year is equal
to or greater than $6,000,000, but less than $10,000,000, the Bonus shall equal
ten percent (10%) of Pretax Earnings. If the Pretax Earnings for the applicable
fiscal year is equal to or greater than $10,000,000, the Bonus shall equal
fifteen percent (15%) of Pretax Earnings. As used herein, the terms
"$4,500,000", "$6,000,000" and "$10,000,000" are each a "Threshold Amount".
(ii) With respect to any quarterly estimates, partial Bonus
Year, at the commencement or termination of this Agreement, or any change in the
Bonus Year, the Threshold Amount shall be adjusted to an amount determined by
multiplying each Threshold Amount by a fraction, the numerator of which shall be
the number of weeks in such partial Bonus Year or quarter and the denominator of
which shall be 52 or 53, depending upon the number of weeks in the corporation's
fiscal year, and the foregoing calculation in Section (a) (i) above shall be
applied using such adjusted Threshold Amount.
(b) Definitions.
(i) "Pretax Earnings" shall mean earnings before federal and
state income taxes and before accrual of all bonuses under the Employment
Agreements to be entered into by the Company as referred to in Section 6.1 of
the Purchase Agreement. In computing Pretax Earnings, there shall be no
deduction for allocation of corporate overhead of Champion Home Centers, Inc.
("CHC") or Champion and its affiliates and there shall be no effect given to
amortization of goodwill relating to CHC's acquisition of the Common Stock.
Pretax Earnings shall be determined by the internal accounting staff of Champion
in accordance with GAAP (as hereinafter defined) from the books and records of
the Company; provided, however, for the costs of acquisitions or establishment
of retail lots by the Company after the date hereof, normal amortization shall
be used for up to $150,000 per lot opening or acquisition costs, with any excess
over that amount to be amortized over 5 years for purposes of this calculation,
and, provided further, that capital provided by Champion or its affiliates for
such acquisitions or establishment of retail lots shall be on an interest-free
basis. The Pretax Earnings calculation for the 1998 Bonus Year shall be based on
the time period from the date hereof to December 31, 1998. Any dispute between
the parties regarding such determination shall be resolved by arbitration by an
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independent accounting firm mutually agreed upon, which arbitration shall be
conducted as expeditiously as is reasonably possible. The determination of the
arbitrator shall be binding and conclusive upon the matters determined thereby
and may be entered as a judgment by the General Court of Justice, Superior Court
Division for Guilford County, North Carolina. All costs and expenses relating to
the services provided by the arbitrator shall be paid equally by the Executive
and the Company.
(ii) "Bonus Year" shall mean the fiscal year of the Company
and may be changed by the Company upon the adoption of any new fiscal year of
the Company.
(c) Terms of Payment.
The Bonus, if any, shall be payable upon the earlier of thirty (30)
days after the final determination of the Bonus for each Bonus Year or ninety
(90) days after the end of each Bonus Year. Commencing with the 1998 Bonus Year,
the Company shall advance a portion of the Bonus to the Executive not later than
thirty (30) days after the Pretax Earnings for each quarter of each Bonus Year
shall have been determined by the Company's internal accounting staff or sixty
(60) days after the end of such quarterly period (provided that Executive is
employed by the Company as of the last day of such quarterly period), in an
amount equal to seventy-five percent (75%) of the Bonus for such quarterly
period. In no event shall the aggregate of the quarterly distributions exceed
seventy-five percent (75%) of the Bonus for the year to date period. Pretax
Earnings shall be determined in accordance with the definition set forth above
except that it shall be determined on the statement of operations for such
period prepared in accordance with the Company's normal procedures for such
internal interim statements.
