EXHIBIT 10.4
LASIRIS, INC.
EXECUTIVE INCENTIVE COMPENSATION PLAN
1. Purpose
This Incentive Compensation Plan (the "Plan") is being adopted in
connection with the acquisition by Lasiris Holdings, Inc., a New Brunswick
corporation (the "Company") and a subsidiary of Stoker & Yale, Inc.("S&Y"), of
all of the capital stock of Lasiris, Inc., a Canadian corporation ("Lasiris"),
pursuant to that certain Offer of Purchase and Sale, dated as of March 14, 1998
(the "Offer"), by and among the S&Y, the Company, Lasiris and all holders of
outstanding capital stock of Lasiris. The Plan, the adoption of which is a
condition to the closing of the transactions contemplated by the Offer (the
"Closing"), authorizes the grant of cash incentive awards to the participants
named on Exhibit A hereto (the "Participants"). Additional Participants may be
added to Exhibit A by action of the Compensation Committee of the Board of
Directors of S&Y. The Plan is being adopted as a performance incentive for the
Participants in connection with the operation of Lasiris.
2. Awards
Subject to the terms and conditions of the Plan, cash awards shall be made
under the Plan as follows:
(a) As soon as practicable following the expiration of each of (i) the
period from and including January 1, 1998 to and including December 31,
1998, (ii) the period from and including January 1, 1999 to and including
December 31, 1999 and (iii) the period from and including January 1, 2000
to and including December 31, 2000 (each such period a "Fiscal Year"),
S&Y's Chief Financial Officer shall deliver to the Compensation Committee
of S&Y's Board of Directors (the "Compensation Committee") audited
financial statements of Lasiris for the applicable Fiscal Year, prepared in
accordance with generally accepted accounting principles (as in effect in
Canada) applied consistently (the "Audited Financial Statements").
(b) The aggregate amount of cash to be awarded under the Plan with
respect to each Fiscal Year (the "Aggregate Award Amount") shall be
determined based on the earnings before interest, taxes, depreciation and
amortization ("EBITDA") reflected on the Audited Financial Statements and
without reduction for (i) any amount paid or payable by Lasiris to the
Societe de Development du Quebec ("SDI") pursuant to that certain letter
agreement, dated as of October 31, 1997 or May 13, 1998, by and between
S&Y, Lasiris and certain other parties named therein, (ii) any commitment
fees
or other extraordinary items payable by Lasiris to The Toronto-Dominion
Bank ("TDB") in connection with that certain Credit Agreement, dated as of
May 13, 1998, by and among TDB, Lasiris and certain other parties named
therein or (iii) professional fees and expenses paid or payable by Lasiris
in connection with the transactions and its financing contemplated by the
Offer for the applicable Fiscal Year as follows:
For the Fiscal Year Beginning on January 1, 1998 and Ending December 31,
1998(1)
- --------------------------------------------------------------------------------
EBITDA Aggregate Award Amount
- --------------------------------------------------------------------------------
Less than $1,000,000 $0
- --------------------------------------------------------------------------------
Greater than $1,000,000 but less than
$1,250,000 (.05)(EBITDA)
- --------------------------------------------------------------------------------
Greater than $1,250,000 but less than
$1,500,000 $62,500 + (.075)(EBITDA - $1,250,000)
- --------------------------------------------------------------------------------
Greater than $1,500,000 $81,250 + (.09)(EBITDA - 1,500,000)
- --------------------------------------------------------------------------------
For the Fiscal Year Beginning on January 1, 1999 and Ending December 31,
1999(1)
- --------------------------------------------------------------------------------
EBITDA Aggregate Award Amount
- --------------------------------------------------------------------------------
Less than $1,150,000 $0
- --------------------------------------------------------------------------------
Greater than $1,150,000 but less than
$1,437,500 (.05)(EBITDA)
- --------------------------------------------------------------------------------
Greater than $1,437,500 but less than
$1,725,000 $71,875 + (.075)(EBITDA - $1,437,500)
- --------------------------------------------------------------------------------
Greater than $1,725,000 $93,437 + (.09)(EBITDA - 1,725,000)
- --------------------------------------------------------------------------------
- --------
(1) All amounts are in Canadian Dollars unless otherwise indicated.
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For the Fiscal Year Beginning on January 1, 2000 and Ending December 31,
2000(1)
- --------------------------------------------------------------------------------
EBITDA Aggregate Award Amount
- --------------------------------------------------------------------------------
Less than $1,322,500 $0
- --------------------------------------------------------------------------------
Greater than $1,322,500 but less than
$1,653,125 (.05)(EBITDA)
- --------------------------------------------------------------------------------
Greater than $1,653,125 but less than
$1,983,750 $82,656 + (.075)(EBITDA - $1,653,125)
- --------------------------------------------------------------------------------
Greater than $1,983,750 $107,452 + (.09)(EBITDA - 1,983,750)
- --------------------------------------------------------------------------------
(c) The foregoing notwithstanding, the Aggregate Award Amount
otherwise payable for the Fiscal Year ending December 31, 1998 shall be
equal to the Aggregate Award Amount as determined above multiplied by a
fraction the numerator of which shall be the number of days from the
closing date of the transactions contemplated by the Offer to and including
December 31, 1998 and the denominator of which shall be 365.
3. Administration
(a) The Plan shall be administered by the Compensation Committee, as
such committee is constituted from time to time. Action by the Compensation
Committee with respect to the Plan shall require the affirmative vote of a
majority of all of its members.
(b) Subject to the terms and conditions of the Plan, the Compensation
Committee shall have the power:
(i) To construe and interpret the Plan and to establish, amend
and revoke rules and regulations for the administration of the Plan
(including, without limitation, to correct any defect or supply any
omission, or reconcile any inconsistency, in the Plan) in the manner
and to the extent the Compensation Committee shall deem necessary or
expedient to make the Plan fully effective; and
(ii) Generally, to exercise such powers and to perform such acts
as are deemed necessary or expedient to promote the best interests of
S&Y, Lasiris and the Participants with respect to the Plan.
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All decisions and determinations by the Compensation Committee in the
exercise of these powers shall be final and binding upon Lasiris and the
Participants.
4. Awards
With respect to each Fiscal Year described above, the Compensation
Committee shall award to the Participants, the entire Aggregate Award Amount
determined in accordance with Section 2 above. Such awards shall be distributed
by Lasiris to the Participants no later than thirty (30) days after the delivery
of Audited Financial Statements for the pertinent Fiscal Year. In no event shall
the aggregate amount of cash awards made to the Participants with respect to any
such Fiscal Year exceed the Aggregate Award Amount for such Fiscal Year. Each
participant shall have the right to receive such award in cash or in
Exchangeable Shares (as defined in the Offer). In the event that any Participant
elects to receive an award in the form of Exchangeable Shares, the number of
Exchangeable Shares deliverable to such Participant shall be equal to the
quotient of (i) the amount of the award payable to such Participant divided by
(ii) the then current Fair Market Value (as defined below) of the Buyer Stock
(as defined in the Offer). For the purposes of this Plan, with respect to Buyer
Stock, "Fair Market Value" shall mean, as of any date, the average of the
closing prices for Buyer Stock on the Nasdaq SmallCap Market for the sixty (60)
days prior to the date of determination.
5. Eligibility
Awards under the Plan shall be made solely to the Participants set forth on
Exhibit A, as such Exhibit is amended from time to time by the Compensation
Committee. No person who is not an employee of Lasiris on the last day of any
Fiscal Year (a "Terminated Participant") shall be entitled to receive any award
under the Plan with respect to such Fiscal Year, regardless of whether such
person is listed as a Participant on Exhibit A, unless such Terminated
Participant's employment with Lasiris was terminated under circumstances
constituting a breach by Lasiris of the Employment and Non-Competition Agreement
between such Terminated Participant and Lasiris, if any. The portion of the
Aggregate Award Amount that would otherwise be payable to a Terminated
Participant, but for the termination of his or her employment, shall be
available for distribution to Participants hereunder.
6. Taxation of Awards
Lasiris shall undertake to make deductions, withholdings and tax reports
with respect to awards under the Plan to the extent that it reasonably and in
good faith believes that it is required to make such deductions, withholdings
and tax reports. Payments under the Plan shall be in amounts net of any such
deductions or withholdings. Nothing in the Plan shall be
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construed to require Lasiris to make any payments to compensate any Participant
for any adverse tax effect associated with any awards or for any deduction or
withholding from any awards.
7. Amendment of the Plan
The Board of Directors of the Company, the Board of Directors of S&Y or the
Compensation Committee, with the written consent of a majority of the
Participants, may discontinue or amend the Plan at any time, or from time to
time.
8. Nonexclusivity of the Plan
The adoption of the Plan by the Board of Directors shall not be construed
as creating any limitations on the power of the Board of Directors or the
Compensation Committee to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of cash bonuses or awards
otherwise than under the Plan. The Plan shall not under any circumstances be
deemed to confer upon any Participant or other employee any right to continued
employment with the Company or S&Y.
9. Governing Law
This Agreement shall be construed under and governed by the internal laws
of the Provinces of Quebec, Canada and the federal laws of Canada applicable
therein without regard to its conflict of laws provisions.
10. Effective Date of the Plan; Duration of the Plan
The Plan shall become effective upon the date that it is approved by the
Board of Directors. The Plan shall expire, and no further awards shall be made
under the Plan, after the date on which the awards, if any, with respect to the
Fiscal year ending December 31, 2000 are made.
11. Language
At the request of the parties, this agreement and all documents relating
thereto have been, and shall be, drawn up in the English language. A la demande
des parties aux presentes, cette convention et tout dcument s'y rapportant ont
ete rediges en langue anglaise.
***
Approved by Board of Directors: March 5, 1998
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EXHIBIT A
Plan Participants
Alain Beauregard
Luc Many
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