1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
BETWEEN
▇▇▇▇▇ PRODUCTS COMPANY
AND
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
THIS EMPLOYMENT AGREEMENT dated January 1, 1998 is made
between ▇▇▇▇▇ Products Company (the "Company"), a Delaware corporation, and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (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 - Co-Pack
Business Development of the Company and has served the Company as an employee
continuously during the past twenty-four years;
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.
2
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.
3
(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 - Co-Pack Business
Development 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
$168,000.00 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.
4
(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.
5
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.
6
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.
7
(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 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.
(4) 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), (2) or (3),
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.
8
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
▇▇▇▇▇ Products Company
P.O. Box ▇▇▇
▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(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 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 and specifically rescinds
and replaces the employment agreement between the Company and the Executive
dated June 1, 1994.
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
9
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.
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
10
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.
- The remainder of this page is intentionally left blank -
11
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: ▇▇▇▇▇ PRODUCTS COMPANY
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------ --------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and CEO
WITNESS: EXECUTIVE:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------ --------------------------------
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇, ▇▇▇▇▇, Zip Code
12
EXHIBIT A
▇▇▇▇▇ 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.
13
(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
14
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
15
Company's auditors or any one of Price ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 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.