Exhibit 10.06
THE GREAT LAKES HOLDINGS CORPORATION ANNUAL CASH BONUS PLAN
1. Purpose.
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The Great Lakes Holdings Corporation Annual Cash Bonus Plan (the
"Plan") is established to provide annual cash bonuses to senior management
personnel who influence the profitability of the Great Lakes Holdings
Corporation (the "Company") and its subsidiaries.
2. Administration.
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The Plan is administered by the Compensation Committee (the
"Committee") designated by the Board of Directors of the Company (the "Board"),
which committee, subject to action of the Board, has complete discretion and
authority with respect to the Plan and its application except to the extent that
discretion is expressly limited by the Plan.
3. Eligibility for Participation.
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The Committee shall at the suggestion of the Company's Chief Executive
officer, but in its sole discretion, designate each year those employees of the
Company who shall participate in the Plan (a "Participant"). A Participant whose
employment by the Company terminates for any reason shall not participate in the
Plan for the year of termination and, following such termination, the Company
shall have no further obligation hereunder to the Participant.
4. Determination of Bonus Amounts.
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(a) EBITD. Each fiscal year (a "Performance Year") a bonus shall be
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awarded to a Participant based on the Company's achievement of a target "EBITD"
(as defined below). The target EBITD for the first Performance Year is set forth
on Exhibit A. The target EBITD for each subsequent Performance Year will be
established annually by the Committee prior to the commencement of such
Performance Year. For all purposes under this Plan, EBITD shall, for a
particular Performance Year, mean the earnings of the Company before interest,
taxes and depreciation (exclusive of any extraordinary or unusual items of
income or expense), all as determined by the Committee. EBITD shall also be
adjusted by the Committee, in its discretion, to reflect the effect of any
acquisition, divestiture, sale-leaseback, or other corporate transaction in
which the Company or any of its subsidiaries engage. Each such determination
approved by the Committee shall be conclusive.
(b) Bonus Levels. The Committee shall set Minimum, Target and Maximum
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bonus levels for each Participant as a percentage of the Participant's base
annual salary. The Minimum or Target bonus shall be paid to the Participant if
the Company achieves 90% or 100%, respectively, of the target EBITD for the
applicable Performance Year. No bonus shall be payable without special action of
the Board, if the Company achieves less than 90% of target EBITD. The Maximum
bonus shall be paid to the Participant if the Company achieves a level of EBITD
at least 20% above the target EBITD for the applicable Performance Year;
provided, however, that in no event shall an amount greater than the
Participant's Target bonus be paid unless the Committee, in its sole discretion,
determines that other qualitative criteria have been satisfied by the
Participant during the Performance Year including, but not limited to, the
overall financial performance and condition of the Company and the Participant's
individual performance.
(c) Bonus Adjustments. If the Company achieves a percentage of target
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EBITD greater than that required for the payment of a Minimum or Target level
bonus but less than that required for the payment of the next highest bonus
level, the Participant's bonus shall be adjusted upwards based on linear
interpolation between the percentages of target EBITD required for the payment
of (i) the Minimum or Target level bonus, as applicable and (ii) the next
highest level bonus. Any bonus payments to be made in excess of the Target level
bonus which may be required by the immediately preceding sentence shall be
subject to the additional qualitative criteria set forth in section 4(b) above.
(d) Time of payment. Payment of bonuses shall be made as soon as
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practicable following the close of the Performance Year to which the bonus
relates. In the event a Participant's employment terminates for "Cause" (as
defined below) following a Performance Year but prior to the payment of a bonus
with respect to such Performance Year, any bonus otherwise payable shall be paid
only in the discretion of the Committee. In the event a Participant's employment
terminates other than for Cause following such Performance Year, any bonus
payable with respect thereto shall be paid at the time otherwise required
hereunder. For purposes of this Plan, "Cause" shall mean (i) commission by the
Participant of any felony involving moral turpitude, (ii) the Participant's
willful misconduct as an employee of the Company involving dishonesty (including
the unauthorized disclosure of confidential or proprietary information of the
Company) or (iii) the Participant's willful failure to render services to the
Company in accordance with his employment.
5. Miscellaneous.
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(a) Although it is the present intention of the Company to continue
the Plan in effect for an indefinite period of time, the Company reserves the
right to terminate the Plan in
its entirety at any time or to modify the Plan as it exists from time to time,
provided that no such action shall adversely affect any bonus previously awarded
under the Plan with respect to a prior Performance Year and provided further
that no termination or modification which would adversely affect a Participant
hereunder shall take effect with respect to a Performance Year in progress at
the time of such action.
(b) No bonus payable under the Plan shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge prior to actual receipt thereof by the payee; and any attempt to so
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge prior
to such receipt shall be void. The Company shall not be liable in any manner for
or subject to the debts, contracts, liabilities, engagements or torts of any
person entitled to any bonus under the Plan.
(c) Nothing contained herein shall confer upon any Participant the
right to be retained in the service of the Company or any subsidiary thereof nor
limit the right of the Company or any subsidiary thereof to discharge or
otherwise deal with any Participant without regard to the existence of the Plan.
(d) The Plan shall at all times be entirely unfunded and no provision
shall at any time be made with respect to segregating assets of the Company or
any subsidiary thereof for payment of any bonuses hereunder. No Participant or
any other person shall have any interest in any particular assets of the Company
or any subsidiary thereof by reason of the right to receive a bonus under the
Plan and any such Participant or any other person shall have only the rights of
a general unsecured creditor of the Company or any subsidiary thereof with
respect to any rights under the Plan.
(e) To the extent required by law, the Company will withhold from
payments otherwise due hereunder such taxes required to be withheld by the
federal or any state or local government.
(f) The Plan shall be governed by and construed in accordance with the
laws of the State of New York.
In 1996 the Company bonus Plan was revised to incorporate three bonus categories
as follows:
1.) Annual Christmas bonus
2.) Management bonuses
3.) Senior Management bonuses
All bonuses are based on company performance but required minimum EBITDA
thresholds will vary for each plan as follows:
1.) Annual Christmas Bonuses
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Annual Christmas bonuses are awarded to non management employees. An
EBITDA level of "Total Business Requirement" cash flow, as defined
in the company's profit sharing plan, must be attained to pay a
minimum bonus. This calculation is:
Interest on current year debt $
Minimum return on beginning of year Equity (10%)
Minimum return on Capital Expenditures 800,000
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Total Business Requirements $
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Under this plan, bonuses will be awarded in three categories based on each
employees level of responsibility as follows:
Minimum Target Maximum
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Employee "Total Business EBITDA within 15% EBITDA at least
Category Requirement" of budget 15% over budget
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A $ 500 $ 1,000 $ 1,500
B 750 1,500 2,250
C 1,000 2,000 3,000
File Memorandum
Page 2
January 26, 1998
2.) Management Bonuses
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Individual management bonus awards are discretionary but a pool of
allowable bonus payments will be calculated each year based on
budgeted EBITDA as follows:
EBITDA Approximate
as a percentage Bonus
of Budget Pool
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Less than 70% 0
75% 250,000
100% 500,000
125% 750,000
Between each threshold the pool will be interpolated based on actual EBITDA.
3.) Senior Management Bonuses
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Senior Management bonuses are determined by the board of directors
which currently requires a threshold EBITDA level of 90% of budget.