EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of September 11, 2004, by and
among HIRSCH INTERNATIONAL CORP., a Delaware corporation with offices located at
200 Wireless Boulevard, Hauppauge, New York 11788 (the "Company") and PAUL E.
GALLAGHER, residing at 97 Wolver Hollow Road, Upper Brookville, New York 11545
(the "Executive").
W I T N E S S E T H:
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WHEREAS, the Company is engaged in importing, marketing,
manufacturing, and distributing commercial embroidery equipment and related
goods and services; and
WHEREAS, the Company wishes to assure itself of the services
of the Executive for the period provided in this Agreement, and the Executive is
willing to continue to serve in the employ of the Company on a full-time basis
for said period upon the terms and conditions hereinafter provided.
NOW, THEREFORE, the Company and the Executive, intending to be
legally bound, agree as follows:
1. Employment. The Company, pursuant to the terms and conditions set forth
in this Agreement, hereby agrees to continue to employ the Executive, who
accepts such continued employment with the Company as its President and Chief
Operating Officer and such other positions and duties of a responsible nature as
the Company's Board of Directors may from time to time determine and assign to
him commensurate with the described offices. During the Term of this Agreement
(as defined herein) the Board of Directors shall nominate him to serve as a
Director of the Company and, if elected to the Board by the Stockholders, he
agrees to continue to serve as a Director during such term, without additional
compensation for such service. Effective December 1, 2004, the Executive further
agrees to serve as Chief Executive Officer of the Company, upon the terms and
conditions hereinafter set forth, if elected to that position upon the
anticipated retirement of the Company's present Chief Executive Officer.
Throughout the Term, the Executive shall devote all of his business time,
attention and energy to his duties and to the business and affairs of the
Company and shall not engage, directly or indirectly, in any other business,
employment or occupation.
2. Term. The term of this Agreement shall commence as of the date hereof
(the "Commencement Date") and shall terminate on the date immediately preceding
the second anniversary date of the Commencement Date (the "Term").
3. Compensation. As full compensation for all services to be rendered by
the Executive to the Company pursuant to the terms of this Agreement, the
Executive shall receive the compensation and benefits described in this Section
3.
3.1 Executive shall receive a base salary (the "Base
Salary") at the rate of (i) Three Hundred Twenty Five
Thousand ($325,000.00) Dollars per year during the
first year of the Term, and (ii) Three Hundred Fifty
Thousand ($350,000.00) Dollars per year during the
second year of the Term. The Base Salary shall be
payable at such regular times and intervals as the
Company customarily pays its employees from time to
time.
3.2 The Executive shall have the right to participate, on
the same basis as other executive employees of the
Company, in the Company's employee benefit programs, if
any, including, without limitation, group life, health,
accident and hospitalization insurance programs
covering the Executive and his dependents.
3.3 The Executive shall be entitled to participate in and
receive a bonus under the Company's annual incentive
plan for key executive employees, (the "Incentive
Plan") as that plan shall be adopted and implemented by
the Compensation Committee of the Board of directors
from time to time, substantially as described in
Appendix A hereto. The Executive's Target Incentive
Percentage and Stretch Incentive Percentage under the
Incentive Plan shall be 50 percent and 100 percent,
respectively, of Base Salary. All such bonuses shall be
payable as soon as practicable following the issuance
of the independent audit report for the fiscal year.
3.4 In light of his anticipated election as Chief Executive
Officer of the Company, upon the execution of this
Agreement the Company shall grant to Executive an
option to purchase One Hundred and Fifty Thousand
(150,000) shares of its Class A common stock pursuant
to the Company's 1993 Stock Option Plan. The Stock
Option Agreement shall be in form and substance
comparable to the Stock Option most recently granted by
the Company to the Executive, provided, however, that
the Option shall be exercisable on or after December
31, 2004 with respect to one half of the underlying
shares and on or after December 31, 2005 with respect
to the other half.
3.5 The Company shall deduct from the Executive's Base
Salary and any bonus payment which Executive may
receive any federal, state or city withholding taxes,
social security contributions and any other amounts
which may be required to be deducted or withheld by the
Company pursuant to any federal, state or city laws,
rules or regulations.
3.6 The Company shall reimburse the Executive, or cause him
to be reimbursed, for all reasonable out-of-pocket
expenses incurred by him in the performance of his
duties hereunder or in furtherance of the business
and/or interests of the Company; provided, however,
that the Executive shall have previously furnished to
the Company an itemized account, satisfactory to the
Company, in substantiation of such expenditures.
3.7 The Executive shall be entitled to continue the
full-time use of his current Company vehicle, until its
current automobile lease expires. Thereafter, for the
duration of the Term of this Agreement the Company will
reimburse Executive for his actual expenses (including
auto insurance premiums, maintenance and repair
expenses), not to exceed $1,250 per month, plus a
gasoline allowance of $200 per month, incurred in
operating an automobile that has been designated by
Executive as his vehicle for use in Company business.
3.8 During the Term, Executive shall be entitled to four
(4) weeks paid vacation per year to be taken in
accordance with Company policy and procedure.
4. Indemnification. The Company undertakes, to the maximum extent permitted
by law, to defend, indemnify and hold the Executive harmless from and against
all claims, damages, losses and expenses, including reasonable attorneys' fees
and disbursements, arising out of the performance by the Executive of his duties
pursuant to this Agreement, in furtherance of the Company's business and within
the scope of his employment.
5. Termination.
5.1 Death. If the Executive dies during the Term, he shall
be entitled to receive his Base Salary through
the end of the month during which death occurs plus a
pro rata portion, based upon his period of service to
the Company, of the amount, if any, he would have been
entitled to receive under the Incentive Plan if his
employment had continued until the end of the fiscal
year.
5.2 Disability. The Company may terminate the employment of
the Executive by reason of disability by giving notice
of such termination as of the end of any month after
the Executive becomes disabled. For purposes of this
Agreement, the Executive shall be deemed to be
"disabled" if the Executive has been substantially
unable to perform his duties for three (3) consecutive
months or six (6) months in any nine (9) month period,
as determined in good faith by a majority of the
members of the Board of Directors (excluding the
Executive), based upon such medical or other evidence
as the Board may deem sufficient,. In the event of such
termination for disability, the Executive shall be
entitled to receive his Base Salary through the end of
the month during which disability occurs plus a pro
rata portion, based upon his period of service to the
Company, of the amount, if any, he would have been
entitled to receive under the Incentive Plan if his
employment had continued until the end of the fiscal
year.
5.3 Involuntary Termination. The Company shall have the
right to terminate employment of the Executive for
"Cause" if one or more of the following acts shall
occur:
(a) Executive shall have committed a material
breach of any of the provisions or covenants of this Agreement;
(b) Executive shall have committed an act of gross
negligence in the performance of his duties or
obligations hereunder, or, without proper cause, the willing refusal or habitual
neglect of his employment duties or obligations under this Agreement;
(c) Executive shall have committed a material act of
willful misconduct, dishonesty or breach of trust
which directly or shall indirectly cause the Company or any of its subsidiaries
to suffer any loss, fine, civil penalty, judgment, claim, damage or expense; or
(d) Executive shall have been convicted of, or shall
have plead guilty or nolo contendere to, a felony
(unless committed in the reasonable, good faith belief that the Executive's
actions were in the best interests of the Company and its stockholders and would
not violate criminal law).
The Company may terminate the employment of Executive for Cause by delivering
notice (the "Termination Notice") of such intention to Executive, describing
with reasonable detail the events or the acts or omissions of the Executive
constituting the basis for termination. Provided, however, with respect to any
act or omission set forth in clauses (a) and (b) of this Section 5.3, upon the
reasonable request of the Executive such termination shall not be effective
until thirty (30) days following the Termination Notice, during which time the
Executive shall have an opportunity to cure or remedy such act or omission. If
the company terminates the employment of the executive for Cause the Executive
shall be entitled to receive only his Base Salary through the end of the month
in which the Termination Notice is effective.
5.4 Severance Payments. In addition to the amounts
described above in this Section 5, if termination of
employment shall occur as a result of one of the
following listed events, the Company shall pay the
Executive severance payments ("Severance Payments"), in
the amounts described below:
(a) this Agreement is terminated prior to the
expiration of its Term due to Executive's death or disability
as set forth in Sections 5.1 and 5.2, respectively, above;
(b) the Company commits a material breach of the
provisions of this Agreement and fails to cure or remedy
such breach within thirty (30) days following its receipt of written notice
thereof given by the Executive (at the end of which time this Agreement shall be
deemed terminated); or
(c) prior to or concurrent with the expiration of the
Term, the Company fails to offer Executive employment
with the Company as Chief Executive Officer or Chief Operating Officer on
substantially the same terms and conditions as are set forth in this Agreement.
The Severance Payments shall be computed and payable as follows:
(w) The Executive shall continue to receive regular payments of Base Salary
for a period of six (6) months following termination (the "Severance Payment
Period"), as if termination had not occurred; and
(x) Following the close of the fiscal year in which termination occurs,
provided Executive has not violated the provisions of Sections 6 and 7, the
Company shall pay to Executive a pro rata portion, based upon his period of
service to the Company, of the amount, if any, he would have been entitled to
receive under the Incentive Plan if his employment had continued until the end
of the fiscal year; provided, however, that
(y) The Company may suspend or terminate the Severance
Payments if Executive should be in default of his obligations set forth in
Sections 6.1 and 6.2 below.
During the Severance Period the Executive shall continue to participate in the
Company's health, accident and hospitalization insurance programs covering the
Executive and his dependents.
5.5 Resignation by Executive. Notwithstanding anything
contained herein to the contrary, Executive shall have
the right to terminate this Agreement at any time, for
any reason and for no reason, upon thirty (30) days
prior written notice to the Company. Upon such
termination, the Company shall pay to Executive the
Base Salary earned by Executive through the date of
termination. Thereafter, with the specific exception of
the obligations set forth in Sections 6 and 7 below,
neither Executive nor the Company shall have any
further obligations hereunder; provided, however, that
following the close of the fiscal year in which
termination occurs, if Executive has not violated the
provisions of Sections 6 and 7, the Company shall pay
to Executive a pro rata portion, based upon his period
of service to the Company, of the amount, if any, he
would have been entitled to receive under the Incentive
Plan if his employment had continued until the end of
the fiscal year.
6. Restrictive Covenants.
6.1 Confidential Information; Covenant not to Disclose. The
Executive covenants and undertakes that he will not at
any time during or after the termination of his
employment hereunder reveal, divulge, or make known to
any person, firm, corporation, or business organization
(other than the Company or its affiliates, if any), or
use for his own account any customer lists, trade
secrets, or any secret or any confidential information
of any kind used by the Company during his employment
by the Company, and made known (whether or not with the
knowledge and permission of the Company, whether or not
developed, devised, or otherwise created in whole or in
part by the efforts of the Executive, and whether or
not a matter of public knowledge unless as a result of
authorized disclosure) to the Executive by reason of
his employment by the Company. The Executive further
covenants and agrees that he shall retain such
knowledge and information which he has acquired or
shall acquire and develop during his employment
respecting such customer lists, trade secrets, and
secret or confidential information in trust for the
sole benefit of the Company, its successors and
assigns.
6.2 Covenant Not to Compete; Non-Interference.
6.2.1The Executive covenants and undertakes that, during
the period of his employment hereunder and for a period
of one (1) year thereafter, he will not, without the
prior written consent of the Company, directly or
indirectly, and whether as principal, agent, officer,
director, employee, consultant, or otherwise, alone or
in association with any other person, firm,
corporation, or other business organization, carry on,
or be engaged, concerned, or take part in, or render
services to, or own, share in the earnings of, or
invest in the stock, bonds, or other securities of any
person, firm, corporation, or other business
organization (other than the Company or its affiliates,
if any) engaged in the business of distributing,
manufacturing or assembling embroidery equipment or
software for the embroidery industry or providing
retail embroidery services (a "Similar Business")
except in the course of his employment hereunder;
provided, however, that the Executive may invest in
stock, bonds, or other securities of any Similar
Business (but without otherwise participating in the
activities of such Similar Business) if (i) such stock,
bonds, or other securities are listed on any national
or regional securities exchange or have been registered
under Section 12(g) of the Securities Exchange Act of
1934; and (ii) his investment does not exceed, in the
case of any class of the capital stock of any one
issuer, 2% of the issued and outstanding shares, or in
the case of bonds or other securities, 2% of the
aggregate principal amount thereof issued and
outstanding.
6.2.2The Executive covenants and undertakes that during the
period of his employment hereunder and for a period of
one (1) year thereafter he will not, whether for his
own account or for the account of any other person,
firm, corporation or other business organization,
interfere with the Company's relationship with, or
endeavor to entice away from the Company, any person,
firm, corporation or other business organization who or
which at any time during the term of the Executive's
employment with the Company was an employee,
consultant, agent, supplier or customer of the Company.
6.2.3If any provision of this Article 6.2 is held by any
court of competent jurisdiction to be unenforceable
because of the scope, duration or area of
applicability, such provision shall be deemed modified
to the extent the court modifies the scope, duration or
area of applicability of such provision to make it
enforceable.
7. Injunction. It is recognized and hereby acknowledged by the Executive
that a breach or violation by the Executive of any of the covenants or
agreements contained in this Agreement may cause irreparable harm and damage to
the Company hereto, the monetary amount of which may be virtually impossible to
ascertain. As a result, the Executive recognizes and acknowledges that the
Company shall be entitled to an injunction, without posting any bond or security
in connection therewith, from any court of competent jurisdiction enjoining and
restraining any breach or violation of any of the restrictive covenants
contained in Article 6 of this Agreement by the Executive , either directly or
indirectly, and that such right to injunction shall be cumulative and in
addition to whatever other rights or remedies the Company may possess. Nothing
contained in this Article 7 shall be construed to prevent the Company from
seeking and recovering from the Executive damages sustained as a result of any
breach or violation by the Executive of any of the covenants or agreements
contained in this Agreement, and that in the event of any such breach, the
Company shall avail itself of all remedies available both at law and at equity.
8. Compliance with Other Agreements. The Executive represents and warrants
to the Company that the execution of this Agreement by him and the performance
of his obligations hereunder will not, with or without the giving of notice, the
passage of time or both, conflict with, result in the breach of any provision of
or the termination of, or constitute a default under, any agreement to which the
Executive is a party or by which the Executive is or may be bound.
9. Employment Security Provisions.
9.1 Payments in the Event of Change of Control. If a
"Change of Control" should occur during the Term of
this Agreement and if, within six months after the
change of control event occurs, (i) the employment of
Executive with the Company is terminated by the Company
for any reason other than those described in Sections
5.1, 5.2 or 5.3, above; or (ii) the Executive
terminates his employment with the Company for Good
Reason, as defined below, all of the following
provisions shall apply:
(a) The Company shall pay Executive for a period of one
year following the termination of employment (the
"Payment Period"), an annual amount equal to the
Executive's Base Salary. Payments of Base Salary shall
be made during the Payment Period in substantially
equal monthly or other installments of the same
frequency as the payments of salary being made to the
Executive at the date of the Change of Control, and
shall commence as soon as practicable after the date of
termination of Executive's employment.
(b) Executive shall continue to be covered by, and receive
any and all benefits accrued or provided under, any
health and dental plan, disability plan, survivor
income plan and life insurance plan or other benefit
plan maintained by the Company in which Executive was
participating immediately prior to the date of
termination, as if Executive continued to be an
employee of the Company. The amount, form and time of
payment of such benefits shall be determined by the
terms of such plans. However, if participation in any
one or more of such welfare or benefit plans is not
possible under the terms thereof, the Company shall
provide the Executive with substantially identical
benefits. Such coverage shall cease if and when the
Executive obtains employment with another employer
during the Payment Period, and becomes eligible for
coverage under a substantially similar plan provided by
the new employer.
(c) If upon the date of termination of Executive's
employment, Executive shall hold any stock options
under any stock option plan of the Company, as such
plans may be amended and in effect from time to time,
all such stock options shall continue to be valid and
in full force and effect and shall become immediately
vested and exercisable.
(d) During the Payment Period, Executive shall not be
entitled to reimbursement for fringe benefits other
than as provided in this Agreement, nor shall Executive
be entitled to receive any payments or other
compensation attributable to vacation periods that
would have been earned had Executive's employment
continued during the Payment Period.
9.2 Definitions applicable to Change of Control. The
following definitions, in addition to the definitions
appearing elsewhere in this Agreement, shall apply to
this Article 9:
(a) "Change of Control" shall be deemed to occur on the
happening of any of the following events: (i) a sale of
substantially all of the assets of the Company to an
entity that is not controlled by the Company or by any
persons or entities that immediately preceding such
event owned, directly or indirectly, individually or in
combination, 25% or more of the voting stock of the
Company including any securities owned by affiliates of
the Company; (ii) the complete liquidation of the
Company; (iii) the merger, reorganization or
consolidation of the Company with or into one or more
entities, the result of which is that the Company shall
cease to exist as an independent entity, unless the
surviving entity is controlled by the Company or by any
persons or entities that immediately preceding such
event owned, directly or indirectly, individually or in
combination, 25% or more of the voting stock of the
Company including any securities owned by affiliates of
the Company; (iv) a change in the actual or beneficial
ownership of the Company's stock so that Mr. Henry
Arnberg no longer possesses sufficient voting power,
directly or indirectly, to elect a majority of its
Board of Directors; or (v) a change in the membership
of the Board of Directors of the Company during the
Term of this Agreement, as a result of which the
persons who were directors on November 1, 2004 shall
cease to constitute at least a majority of the Board,
unless the election of each director who was not a
director on the Commencement Date shall have been
approved in advance by at least a majority of the
directors then in office who were directors on the
Commencement Date.
(b) "Good Reason" shall exist if: (i) there is a
significant reduction in the nature or the scope of
Executive's authority, (ii) there is a reduction in
Executive's Base Salary, or (iii) there is a change in
the actual or beneficial ownership of the Company's
stock so that Mr. Henry Arnberg no longer possesses
sufficient voting power, directly or indirectly, to
elect a majority of its Board of Directors.
9.3 Limitation on Benefits. If any payment or distribution
to be made pursuant to this Section 9 (the "Payments"),
is deemed to be an "Excess Parachute Payment" under
Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"), and, therefore, nondeductible by
the Company, the Payments shall be reduced (but not
below zero) to the amount, which, in total, maximizes
the aggregate present value of Payments without causing
any Payment to be an Excess Parachute Payment.
The Company shall promptly give the Executive written notice of any
determination that a Payment would be deemed an Excess Parachute
Payment, and shall provide a detailed calculation thereof. The
Executive may then elect, in his sole discretion, which and how much
of the Payments, or any other amounts due him from the Company, shall
be eliminated or reduced to avoid the payment of an Excess Parachute
Payment. If the Executive does not advise the company of his election
within 14 days of his receipt of such notice, the Company may
determine which and how much of the Payments shall be eliminated or
reduced, in accordance with this Section 9.3, and shall notify the
Executive promptly of such determination.
Because of uncertainty in the application of Section 280G of the Code,
it is possible that the Company will have made Payments that should
not have been made (an "Overpayment") or that Payments not made by the
Company could have been made (an "Underpayment"). If the Internal
Revenue Service shall assess a deficiency against the Company, based
upon a reasonable determination that an Overpayment has been made,
such Overpayment shall be treated as a loan to the Executive. Upon
demand of the Company, the Executive shall repay such amount, together
with interest at the applicable Federal rate (as provided in Section
7872(f)(2) of the Code). If a determination is made that an
Underpayment has occurred, the Company shall promptly pay such
Underpayment to or for the benefit of the Executive, together with
interest at such applicable Federal rate.
All determinations required under this Paragraph shall be made by the
Company's independent auditors and shall be binding upon the Company
and the Executive. The initial determination shall be made within 30
days following the Executive's termination of employment, and the
Company shall commence payments to or for the benefit of the Executive
as soon as practicable following such determination and the elections
described above.
10. Miscellaneous.
10.1 Notices. Any notice or other communication to a
party under this Agreement shall be in writing,
and if by use of the mail shall be considered given
when mailed by certified mail, return receipt
requested, to the party at the following address or at
such other address as the party may specify by notice
to the other:
If to the Company:
Hirsch International Corp.
200 Wireless Boulevard
Hauppauge, New York 11788
Attn: Mr. Henry Arnberg, Chairman of the Board, and
Ms. Beverly Eichel, CFO
With a copy to:
Ruskin Moscou Faltischek, P.C.
190 EAB Plaza
East Tower, 15th Floor
Uniondale, New York 11556
Attn: Adam P. Silvers, Esq.
If to the Executive:
Mr. Paul E. Gallagher
97 Wolver Hollow Road
Upper Brookville, New York 11545
With a copy to:
Berkowitz, Trager & Trager LLC
275 Madison Avenue 36th Floor
New York, New York 10016
Attn: Steven T. Gersh, Esq.
10.2 Benefit. This Agreement shall be binding upon and
inure to the benefit of the respective parties hereto
and their legal representatives, successors and
assigns. Insofar as the Executive is concerned this
Agreement, being personal, cannot be assigned.
10.3 Validity. The invalidity or unenforceability of any
provisions hereof shall in no way affect the validity
or enforceability of any other provision.
10.4 Entire Agreement. The Agreement constitutes the
entire Agreement between the parties, and supersedes
all existing agreements between them. It may only be
changed or terminated by an instrument in writing
signed by both parties. The covenants of the Executive
contained in Article 6 of this Agreement shall survive
the termination of this Agreement and the expiration of
the Term.
10.5 New York Law to Govern. This Agreement shall be
governed by, construed and interpreted in accordance
with the laws of the State of New York., without regard
to its conflicts of laws principles.
10.6 Corporate Action. The execution and delivery of this
Agreement by the Company has been authorized and
approved by all requisite corporate action.
10.7 Waiver of Breach. The failure of a party to insist
on strict adherence to any term of this Agreement on
any occasion shall not be considered a waiver or
deprive that party of the right thereafter to insist
upon strict adherence to that term or any term of this
Agreement. Any waiver hereto must be in writing.
10.8 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute
one and the same instrument.
10.9 Paragraph Headings. Paragraph headings are inserted
herein for convenience only and are not intended to
modify, limit or alter the meaning of any provision of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands
and executed this Agreement as of the day and year first above written.
HIRSCH INTERNATIONAL CORP.
By:
_______________________________________
Henry Arnberg, Chief Executive Officer
______________________________________
Paul Gallagher
APPENDIX A
HIRSCH INTERNATIONAL CORP.
Annual Incentive Plan for Key Executive EMPLOYEES
Following is a description of the Hirsch International Corp, Annual
Incentive Plan for Key Executive Employees (the "Incentive Plan").
As of the beginning of each fiscal year of the Company, Commencing with
the fiscal year ended January 31, 2005, the Compensation Committee of the
Company's Board of Directors (the "Compensation Committee"), in consultation
with the Chief Executive Officer ("CEO") of the Company will establish, a list
of key executive employees who will participate in the Incentive Plan for that
year, together with a Target Bonus and Stretch Bonus Percentage for each
participant. The Compensation Committee in consultation with the CEO will also
set three annual goals for the Company's Pre-tax Profit (as defined below), the
achievement of which will entitle the participants in the Incentive Plan to
receive bonus payments. The amount of any such bonus payments paid to Executive
will be determined based on the extent to which the Company achieves or exceeds
the Pre-tax Profit goals established for the fiscal year. The three levels of
Pre-tax Profit and the percentage of Base Salary payable with respect to each
are as follows:
(a) "Minimum Profit Level"--the minimum profit level that must be achieved
prior to the awarding of any bonus and that must be maintained after
the payment of all bonuses under the plan.
(b) "Target Profit Level"--the profit level that must be achieved in order
for each participant to receive a bonus equal to his or her Target
Incentive Percentage of Base Salary.
(c) "Stretch Profit Level"--the profit level that must be achieved or
exceeded in order for each participant to receive a bonus equal to his
or her Stretch Incentive Percentage of Base Salary.,
If Pre-tax Profit is greater than the Minimum Level but less than the
Target Level, or greater than the Target Level but less than the Stretch Level,
all bonuses paid under the plan shall be reduced pro-rata to reflect the
proportional amount by which the Target Level or Stretch Level was not achieved.
The computation of such pro-rata reductions shall be made by the Compensation
Committee, in its sole discretion, in a manner that it deems fair and equitable
to all participants and such computations shall be final and binding.
For purposes hereof, the Company's "Pre-tax Profit" shall be the
Company's income from operations (i) before the payment of income taxes as set
forth in the Company's audited financial statements prepared in accordance with
generally accepted accounting principles, consistently applied, (ii) after the
accrual for the payment of all executive bonuses, and (iii) except to the extent
otherwise agreed to by the Compensation Committee, excluding (x) all unusual or
non-recurring items, and (y) the reversal of any prior year reserves (unless
such the establishment of such reserves resulted in loss of bonuses in the year
of their establishment). All bonus payments due hereunder shall be made as soon
as practicable following completion of the applicable fiscal year of the
Company.