Exhibit 10.1


 


EMPLOYMENT AGREEMENT


 


THIS
AGREEMENT is effective this 1st day of January, 2004, by and between
Ballistic Recovery Systems, Inc., a Minnesota corporation (the “Company”)
and Mark B. Thomas, a Minnesota resident (the “Executive”).


 


WITNESSETH


 


WHEREAS,
the Company desires to continue to employ Executive and Executive desires to be
employed by the Company all upon the terms and conditions hereinafter set
forth.


 


NOW,
THEREFORE, in consideration for the foregoing, the parties agree as follows:


 


1.     EMPLOYMENT.  The Company hereby employs Executive and
Executive hereby accepts employment by the Company on the terms and conditions
hereinafter set forth.


 


2.     TERM.  The term of this Agreement shall commence on
and shall continue for a period of twenty-four (24) months from the date of
this Agreement (the “Initial Term”).  In
the event that (a) a new employment agreement has not been entered into as
of the end of the Initial Term; (b) this Agreement has not been terminated
during the Initial Term; and (c) the parties are negotiating in good faith
to enter into a new employment agreement, then the terms of this Agreement
shall automatically be extended for a 12 month period following the Initial
Term.  All provisions of this Agreement,
except those with respect to Section 4.2.1 (Non-Discretionary Bonus only
with respect to the payment of any earned and unpaid Non-Discretionary Bonus
for any fiscal year or portion of a fiscal year that the Agreement was in
force), Section 5 (Board of Directors Position), Sections 8.1, 8.2, 8.3,
8.4 and 8.5 (Confidentiality) and Section 9 (General Provisions), shall be
null and void if (i)(a) Executive has not been terminated during the
Initial Term and (b) the Initial Term has not been extended for a 12-month
period or (ii)(a) the Initial Term is extended for a 12-month
period and (b) the parties do not execute a new employment agreement
superceding this Agreement during such 12-month period.


 


3.     POSITION AND
DUTIES.  The Executive shall
serve as the President and Chief Executive Officer of the Company as set forth
in the bylaws of the Company.  The
Executive shall report to the Board of Directors of the Company (the “Board”)
as set forth in the bylaws of the Company and shall perform the duties required
of such position and as directed by the Board. 
The Executive also agrees to serve as the Treasurer and Chief Financial
Officer as set forth in the bylaws of the Company throughout the term of this
Agreement, or until such time as a qualified successor is named to that
position by the Board.  Notwithstanding
the foregoing, it is the intent of the parties that the Company select a new
Treasurer and Chief Financial Officer. 
The Executive shall devote substantially all of his working time and
efforts to the business of the Company.


 


4.     COMPENSATION.  Subject to the provisions of Section 8,
Executive shall be compensated for the services that Executive renders to the
Company pursuant to this Agreement as follows:


 


4.1 
Base Salary.  During the
term of this Agreement, Executive shall be paid a salary at the annual rate of
$180,250 (the “Base Salary”), subject to withholding for federal and state
income taxes and all other required deductions payable in accordance with
Company payroll policies but in no event, less than monthly.  The Base Salary may be increased at the
discretion of the Board and will be reviewed on an annual basis by the Board.


 


4.2     Bonus
Compensation. 
The Executive is eligible for an annual bonus for each fiscal year of
the Company during which he is an Executive. 
The annual bonus will be broken down into two components: the
non-discretionary bonus (the “Non-Discretionary Bonus”) and the discretionary
bonus (the “Discretionary Bonus”).  The
maximum bonus compensation payable to the Executive hereunder shall in no event
exceed 100% of the Base Salary for such fiscal year.  The bonus compensation is a gross bonus
subject to withholding for federal and state income taxes and all other
required deductions.  The bonus
compensation guidelines can be reviewed at any point during the term of the
Agreement as requested by either party, but any adjustments in the terms of the
bonus compensation clause must be agreed upon by both the Company and Executive
before the adjustments take effect.  The
description of each component of the bonus and the basis for calculation will
be as follows:


 


4.2.1   Non-Discretionary Bonus.  The Non-Discretionary Bonus shall not exceed
75% of the Executive’s Base Salary for such fiscal year.  The purpose of the Non-Discretionary Bonus is
to provide compensation to the Executive for meeting certain performance goals
of the Company as determined by the Board’s Compensation Committee as set forth
hereto as Exhibit A and shall be paid to Executive within 75 days of
fiscal year-end provided that the Company has received its audited financial
statements for such fiscal year within such 75 day period.


 


4.2.2   Discretionary Bonus.  The Discretionary Bonus shall not exceed 25%
of the Executive’s Base Salary for such fiscal year.  The purpose of the Discretionary Bonus is to
provide compensation to the Executive for Executive’s performance.  The amount of the Discretionary Bonus shall
be determined annually by the Board’s Compensation Committee and shall be paid
to Executive within 75 days of fiscal year-end.


 


4.3     Stock
Options.  All stock options
and/or stock option agreements heretofore entered into shall remain in full
force and effect, according to the terms and conditions previously agreed upon.


 


5.     BOARD OF
DIRECTORS POSITION. 
The Executive will continue to serve on the Board along with the other
elected Directors for the term so elected. 
In the event that the Executive is terminated or resigns his position
from the Company for any reason, the Executive agrees to resign from his
position on the Board.


 


6.     EXECUTIVE
BENEFITS.


 


6.1     Fringe
Benefits.  The Executive shall
be entitled to participate in or receive benefits under all of the Company’s
employee and any executive benefit plans and arrangements in accordance with
applicable policies, agreements and plan documents for such period of time as
such plan and arrangements shall remain in effect.  These benefits shall include any pension
plan, profit sharing plan, savings plan, stock option plan (subject to the
terms of Section 4.3), life insurance, health and accident plan.  Nothing paid to the Executive under any plan
or arrangement presently in effect or made


 


1





















 


available
in the future shall be deemed to be in lieu of any other compensation payable
to the Executive hereunder, except that the Executive’s bonus payments shall be
calculated as provided in Section 4.


 


6.2     Vacations.  The Executive shall be entitled to the number
of paid vacation days in each calendar year, and to compensation for earned but
unused vacation days, determined by the Company from time to time for its
senior executive officers.


 


6.3     Expenses.  The Company shall reimburse Executive for all
reasonable and necessary out-of-pocket expenses incurred by the Executive in
connection with the performance of duties hereunder, in accordance with the
Company’s policy in effect from time to time with respect to the reimbursement
of expenses but only upon presentation by Executive of receipts detailing such
expenses.


 


7.     TERMINATION
OF EMPLOYMENT.


 


7.1     Death or
Disability.  The Executive’s
employment herein shall automatically terminate if Executive shall die during
the term of this agreement.


 


If as
a result of the Executive’s incapacity due to physical or mental illness, the
Executive shall have been absent from his duties with the Company on a
full-time basis for six months, and if within 90 days after written notice of
termination is thereafter given by the Company, the Executive shall not have
returned to the full-time performance of the Executive’s duties, the Company
may terminate this Agreement for “Disability”.


 


7.2     Termination
by Company.  The Company may
terminate the Executive’s employment, with or without Cause, upon written
notice to the Executive.  The Executive’s
employment may also be terminated by “Constructive Termination.”


 


a.     “Cause” shall
mean: (A) dishonesty, fraud, material and deliberate injury or attempted
injury, in each case related to the Company or its business, (B) any
felony, or (C) material and intentional failure or neglect of duties by
Executive to satisfactorily perform the duties assigned to him pursuant to this
Agreement which continues for a period of 60 days after a written demand to
Executive by the Board detailing the material and intentional failure or
neglect of duties for such satisfactory performance which specifically
identifies the manner in which it is alleged that Executive has not
satisfactory performed such duties.


 


b.     “Constructive
Termination” means, in each case, without Executive’s prior consent:  (A) a material adverse change of
Executive’s responsibilities as President and Chief Executive Officer with
respect to the Company, (B) an adverse change in Executive’s Base Salary,
Non-Discretionary Bonus components as determined in Exhibit A or as
otherwise agreed to by the parties, or other benefits, provided that a change
in Executive’s Base Salary or Bonus Compensation or other benefits shall not be
deemed to be an adverse change if a similar change is made to the compensation
or other benefits of similarly situated Company management employees, or (C) a
requirement to relocate in excess of 50 miles from Executive’s then current
place of employment, provided, however, that it shall not be
deemed a Constructive Termination pursuant to (C) hereunder if (i) an
acquisition of substantially all the assets by or a merger with Cirrus Design
is consummated and closed prior to January 1, 2005 (a “Cirrus Transaction”)
and (ii) Executive is required to relocate in excess of 50 miles
from Executive’s then current place of employment prior to January 1,
2005.  In case of a Cirrus Transaction
prior to January 1, 2005 and the Executive is required to, but does not
relocate in excess of 50 miles from Executive’s then current place of
employment, then the severance provisions of Section 7.2(d) and the
non-competition provisions of Section 8.6 shall not apply.


 


c.     Termination
for Cause.  In the event that the
Executive is terminated for Cause as defined in Section 7.2 (a) herein,
the Executive will receive the Base Salary and be entitled to Executive’s
accrued but unpaid time off pay (including, but not limited to, vacation, any
unpaid expense reimbursements, and any other accrued benefits other than Bonus
provided in Section 4.2 herein) and reimbursement for any expenses
incurred through the last date of employment. 
Executive’s rights in regard to stock options, pension, profit sharing,
group health, life and other insurance benefits shall be governed by applicable
agreements and plan documents.    In the
case of termination for Cause, no bonus shall be paid to the Executive for the
fiscal year in which such Executive was terminated.  In the event that the Executive is terminated
for Cause, the Executive will not be entitled to any other severance pay
provisions of this Agreement.


 


d.     Termination
Without Cause or by Constructive Termination.  Except as provided in Section 7.2(b)(C),
if the Executive’s employment is terminated because of Constructive Termination
or by the Company for any reason other than for Cause, both as defined in Section 7.2,
then the Executive shall be paid severance pay equal to (a) twelve (12)
month’s pay of his Base Salary; (b) Executive’s accrued but unpaid time
off pay (including, but not limited to, vacation); (c) any pro rata
bonuses provided in Section 4.2 for the fiscal year in which termination
occurs; and (d) and any other accrued benefits and reimbursement for any
expenses incurred through the last date of employment.  Executive’s rights in regard to stock
options, pension, profit sharing, group health, life and other insurance
benefits shall be governed by applicable agreements and plan documents.  Payment of such severance shall be
conditioned upon Executive entering into a mutually acceptable release,
releasing the Company, its officers, directors and agents from claims relating
to employment pursuant to this Agreement or otherwise.  Said severance pay shall be paid to the
Executive in six (6) equal installments, less any applicable withholding
for federal and state taxes and other required deductions; and it shall be paid
starting fourteen (14) days after Executive’s last day of work, and take the
form of six (6) equal payments beginning with the fourteenth (14th)
day and continuing every thirty (30) days until complete.


 


e.     No
Requirement to Mitigate.  The
Executive shall not be required to mitigate damages or the amount of any
payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this section be
reduced by any compensation earned by the Executive as the result of employment
by another employer after the Date of Termination, or otherwise.


 


7.3     Termination
by Executive.  Executive may, upon
thirty (30) days written notice, terminate Executive’s employment at any time
and for any reason.  During the thirty
(30) days after notice is given, Executive agrees that he shall continue to
render his normal services to the Company, and the Company agrees that it shall
continue his compensation and benefits under this Agreement during the notice
period.  In the event the Executive
voluntarily terminates his employment, the Company is not obligated to continue
to pay the Executive his Base Salary through the end of the term of this
Agreement, but the Company is obligated to pay the Executive any bonuses or
benefits earned or


 


2





















 


accumulated
as of Executive’s last day of employment. 
For example, with respect to bonus, if the Executive terminates the
Executive’s employment at the end of the 9th month of a fiscal year,
the Executive would be entitled to receive 9/12th of that fiscal
year’s bonus as calculated under Section 4.2.  The bonus portion of this section will
be paid to the Executive no later than 120 days following the conclusion of the
applicable fiscal year.  All other
payments due under this section will be paid to the Executive within
fourteen (14) days of the Executive’s last day of employment.  The Company shall pay Executive his Base
Salary then in effect through his last day of employment according to the
normal payroll schedule; any accrued and unused vacation; and reimbursement for
any expenses incurred through his last date of employment; as well as any other
accrued benefits.  Executive’s rights in
regard to stock options, pension, profit sharing, group health, life and other
insurance benefits shall be governed by applicable agreements and plan
documents.


 


7.4     The provisions
of this Section 7, and any payment provided for hereunder, shall not
reduce any amounts otherwise payable, or in any way diminish the Executive’s
existing rights, or rights which would accrue solely as a result of the passage
of time, under any benefit plan, incentive plan, securities plan, or other
contract, plan, or arrangement.


 


7.5     The Company will
use its best efforts to require any successor or assign  (whether direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, expressly, absolutely, and unconditionally to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
or assignment  had taken place.  As used in this Agreement, “the Company”
shall mean the Company as hereinbefore defined and any successor or assign to
its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this section or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.  If any successor or assign of the Company
fails to assume the performance of this Agreement in its entirety, Executive’s
employment will be deemed to have been terminated by the Company without Cause
under Section 7.2(d) and all provisions, including but not limited to
the severance pay and pro rata bonus provisions, of Section 7.2(d) shall
apply.


 


7.6     The provisions
of this Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees, and legatees. If the Executive
should die while any amounts are still payable to him hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Section 7 to the Executive’s devisee, legatee, or other
designee or, if there be no such designee, to the Executive’s estate.  If the Executive should die, any amount due
to him through the date of his death shall be paid to the Executive’s devisee,
legatee, or other designee or, if there be no such designee, to the Executive’s
estate.


 


8.     CONFIDENTIALITY
AND NON-COMPETITION.


 


8.1     All
records of the accounts of Company, of any nature, whether existing at the time
of Executive’s employment, procured through the efforts of Executive, or
obtained by Executive from any other source, and whether prepared by Executive
or otherwise, shall be the exclusive property of Company regardless of who actually
purchased the original book, record or magnetic storage unit on which such
information is recorded.


 


8.2     All
such books and records shall be immediately returned to Company by Executive on
any termination of employment, whether or not any dispute exists between
Company and Executive at, regarding, and/or following the termination of
employment.


 


8.3     During
the term of employment under this Agreement, Executive will have access to and
become acquainted with various trade secrets, consisting of formulas, programs,
patterns, devices, inventions, processes, compilations of data and information,
sources of data and information, records, and specifications, all of which are
owned by Company and regularly used in the operation of Company’s business.


 


8.4     All
files, records, documents, drawings, specifications, programs, equipment and
similar items relating to the business of Company, whether they are prepared by
Company or by Executive, or come into Executive’s possession in any other way
and whether or not they contain or constitute trade secrets owned by Company,
are and shall remain the exclusive property of Company and shall not be removed
from the premises of Company under any circumstances whatsoever without the
prior written consent of Company.


 


8.5     Executive
promises and agrees that Executive shall not misuse, misappropriate, give,
sell, furnish, nor disclose, whether for consideration or for no consideration,
and whether or not during or following his or her employment with Company, or
at any other time thereafter, any trade secrets described herein, directly or
indirectly, or use them in any way or manner, for his or her own benefit or the
benefit of others, except as required in the course and scope of Executive’s
employment with Company. Executive agrees and promises not to make known to
other person, firm, or corporation the names, addresses or any other
information of any of Company’s customers or vendors.


 


8.6     Except
as provided in Section 7.2(b)(C), for a period of two years following
termination of employment during the term of this Agreement, (A) Executive
agrees and promises not to call on, solicit, or take away any of the customers
of Company on whom Executive called on or with whom Executive became acquainted
with during his or her employment herein and (B) Executive agrees that
within the United States or any international country in which the Company can
demonstrate that it actively markets its products at the time of this
Agreement, Executive shall not directly or indirectly become employed by,
consult with, own, manage, operate, or conduct any business engaged in the
design, manufacturing, marketing or distribution of emergency parachute
recovery systems for use with recreational, general and commercial aviation
aircraft and unmanned aircraft.


 


9.     GENERAL
PROVISIONS.


 


9.1     Notices.  Any notices to be given by either party to
the other may be effected either by personal delivery in writing or by mail,
registered and certified, postage prepaid with return receipt requested. Mailed
notices shall be addressed to the parties at their last known addresses as
appearing on the books of Company.


 


9.2     Entire
Agreement.  This Agreement supersedes any and all other
agreements, either oral or written, between the parties with respect to the
employment of Executive by Company for the purposes set forth in Section 3
above, and contains all of the covenants and agreements between the parties
with respect to such employment whatsoever. Each party to this Agreement
acknowledges that no representations, inducements, promises or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf of
any party, which are not embodied herein, and


 


3





















 


that no other agreement, statement, or promise
not contained in this Agreement shall be valid or binding. Any modification of
this Agreement will be effective only if it is in writing signed by the party
to be charged.


 


9.3     Partial
Invalidity.  If any provision in this Agreement is held by
a court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any manner.


 


9.4     Law
Governing Agreement.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.


 


9.5     Arbitration.  Any controversy or claim arising out of or
relating to this Agreement, or breach thereof, except claims which may be
handled in small claims court, shall be settled by arbitration in accordance
with the rules of the American Arbitration Association, and judgment on
the award rendered may be entered in any court having jurisdiction.


 


This
Agreement is effective as of the 1st day of January, 2004, in the
City of South St. Paul, County of Dakota, State of Minnesota.


 


	
  For
  the Company

  	
  Executive

  
	
   

  	
   

  
	
  /s/
  Robert L. Nelson

  	
   

  	
  /s/
  Mark B. Thomas

  	
   

  
	
  Robert
  L. Nelson, Chairman of the

  	
  Mark
  B. Thomas

  
	
  Board
  of Directors, BRS, Inc.

  	
   

  
				



 


 


EXHIBIT A


 


NON-DISCRETIONARY BONUS


 


Subject to the provisions
contained in the Agreement and herein, Executive is eligible for an annual
Non-Discretionary Bonus for each fiscal year during the term of this
Agreement.  The items utilized in each
fiscal year to determine the size of a Non-Discretionary Bonus, if any, are
listed in column 1 of the chart below. 
The Non-Discretionary Bonus is based on the achievement of more than 80%
of projected items listed in column 1. 
Column 2 indicates the fiscal year projections for fiscal year
2004.  With respect to fiscal year 2005,
and to the extent necessary, fiscal year 2006, the projected annual results
shall be as agreed to by Management and the Board in good faith no later than
60 days after the commencement of such fiscal year.  Non-Discretionary Bonus percentages to be
applied in calculating the bonus each fiscal year are set forth in columns 6
though 11 of the chart below for each line item category.  Fiscal year projections for each of the line
items, such as the projections appearing in column 2 for fiscal year 2004 as an
example, and actual figures for each of the items will be calculated in
accordance with the Company’s financial statements prepared by the Company’s
accountants in accordance with the Generally Accepted Accounting Principles (“GAAP”).


 


The Non-Discretionary
Bonus is calculated on a line by line basis. 
A Non-Discretionary Bonus could be received for any or all of the line
items A through J.  As an example, column
2 sets forth projections for fiscal year 2004 for each of the items in column
1.  Thus, if, in fiscal year 2004, the
Company achieves 80% (reference column 6 for the line item A, Total Sales) or
less of the projection for Total Sales of $8,386,818 (reference column 2 for
line item A, Total Sales), Executive will not receive a Non-Discretionary bonus
for the Total Sales item for fiscal year 2004. 
If the Company achieves 90% of the projection for Total Sales (reference
column 7 for the line item A, Total Sales), he will receive a Non-Discretionary
Bonus of 1.3% of Base Salary for achievement with respect to line item A.  Similarly, looking further down column 1, if
the Company achieves 90% of the projected Sport Sales of $1,662.940 (reference
column 2 for line item B, Sport Sales), he will receive a Non-Discretionary
Bonus of 1.3% of Base Salary for the achievement with respect to that line
item.  [With respect to each line item in
column 1, only one of the columns 6 through 11 will apply; i.e., if Total Sales
are 120% of projection, the Non-Discretionary Bonus associated with that item
is 5.6% and not 5.6% + 3.8% (Total Sales for 110% of projection), etc.]


 


The Non-Discretionary
Bonus may consist of awards across different columns for different line
items.  For instance, the Company may
achieve 90% of projection of Total Sales in a given fiscal year, and thus the
Executive would be paid 1.3% of his Base Salary for achievement with regard to
that line item.  In that same fiscal
year, the Company may also achieve, for instance, 110% of projection for Other
GA Sales, 110% of the projection for Total Operating Expenses, and 100% of
projection for Pre-Tax Net Income.  The
Executive would thus for that fiscal year receive a total Non-Discretionary
bonus of 23.8% of Base Salary for his achievements for the line items A) Total
Sales, D) Other GA Sales, J) Total Operating Expenses and I) Pre-Tax Net Income
(1.3% for Total Sales plus 5.6% for other GA Sales plus 9.4% for Total
Operating Expenses plus 7.5% for Pre-Tax Net Income).  In any event, the total Non-Discretionary
Bonus will not exceed 75% of Base Salary then in effect for that fiscal year.


 


Any
performance results falling between percentages of projection  (such as an achievement of between 90% and
100% of projection for the line item A, Total Sales) would be calculated on a
pro rata basis between the two ranges. 
For example, an achievement of 92% of projection for line item A, Total
Sales, would fall between columns 7 and 8 of the chart below, and the Executive
would receive the adjusted percentage, or 1.54% of Base Salary as follows:  (1) 1.3% (% of Base if 90% of projection
met) plus (2) .24% (the pro rata increase for the incremental
percentage over 90%) (1.2% (the difference between columns 7 and 8) times the
difference between the percentage achieved (92) and (90) divided by 10).


 


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Non-Discretionary Bonus
Allocation


 


	
  Columns

  1

  	
   

  	
  2

  	
   

  	
  3

  	
   

  	
  4

  	
   

  	
  5

  	
   

  	
  6

  	
   

  	
  7

  	
   

  	
  8

  	
   

  	
  9

  	
   

  	
  10

  	
   

  	
  11

  	
   

  
	
  Items

  	
   

  	
  Projected

  2004

  	
   

  	
  Percent of

  Sales

  	
   

  	
  Increase

  over prior

  year

  projection

  	
   

  	
  Percent

  Increase

  	
   

  	
  % of Base if

  80% of

  Projection

  	
   

  	
  % of Base if

  90% of

  Projection

  	
   

  	
  % of Base if

  100% of

  Projection

  	
   

  	
  % of Base if

  110% of

  Projection

  	
   

  	
  % of Base if

  120% of

  Projection

  	
   

  	
  % of Base if

  130% of

  Projection

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A Total Sales

  	
   

  	
  $

  	
  8,386,818

  	
   

  	
  100.0

  	
  %

  	
  $

  	
  1,817,007

  	
   

  	
  27.7

  	
  %

  	
  0.0

  	
  %

  	
  1.3

  	
  %

  	
  2.5

  	
  %

  	
  3.8

  	
  %

  	
  5.6

  	
  %

  	
  7.5

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B Sport Sales

  	
   

  	
  1,662,940

  	
   

  	
  19.8

  	
  %

  	
  307,220

  	
   

  	
  22.7

  	
  %

  	
  0.0

  	
  %

  	
  1.3

  	
  %

  	
  2.5

  	
  %

  	
  3.8

  	
  %

  	
  5.6

  	
  %

  	
  7.5

  	
  %

  
	
  C Cirrus Sales

  	
   

  	
  4,620,933

  	
   

  	
  55.1

  	
  %

  	
  460,727

  	
   

  	
  11.1

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  
	
  D Other GA Sales

  	
   

  	
  748,200

  	
   

  	
  8.9

  	
  %

  	
  635,560

  	
   

  	
  564.2

  	
  %

  	
  0.0

  	
  %

  	
  1.9

  	
  %

  	
  3.8

  	
  %

  	
  5.6

  	
  %

  	
  8.4

  	
  %

  	
  11.3

  	
  %

  
	
  E Other Experimental Sales

  	
   

  	
  321,000

  	
   

  	
  3.8

  	
  %

  	
  321,000

  	
   

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  1.3

  	
  %

  	
  2.5

  	
  %

  	
  3.8

  	
  %

  	
  5.6

  	
  %

  	
  7.5

  	
  %

  
	
  F Repairs and Repacks

  	
   

  	
  93,000

  	
   

  	
  1.1

  	
  %

  	
  26,187

  	
   

  	
  39.2

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  
	
  G Parts

  	
   

  	
  820,829

  	
   

  	
  9.8

  	
  %

  	
  40,257

  	
   

  	
  5.2

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  
	
  H Other Revenues

  	
   

  	
  119,915

  	
   

  	
  1.4

  	
  %

  	
  26,055

  	
   

  	
  27.8

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  	
  0.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I Pre-Tax Net Income (before non-cash stock and
  warrant)

  	
   

  	
  1,041,843

  	
   

  	
  12.4

  	
  %

  	
  111,477

  	
   

  	
  12.0

  	
  %

  	
  0.0

  	
  %

  	
  3.7

  	
  %*

  	
  7.5

  	
  %*

  	
  11.2

  	
  %*

  	
  16.9

  	
  %*

  	
  22.4

  	
  %*

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  % of
  Base

  if 120% of Projection

  	
   

  	
  % of Base

  if 110% of Projections

  	
   

  	
  % of Base

  if 100% of Projection

  	
   

  	
  % of Base

  if 90% of

  Projection

  	
   

  	
  % of Base

  if 80% of

  Projection

  	
   

  	
  % of Base

  if 70% of

  Projection

  	
   

  
	
  J Total Operating Expenses

  	
   

  	
  2,051,844

  	
   

  	
  24.5

  	
  %

  	
  433,107

  	
   

  	
  26.8

  	
  %

  	
  0.0

  	
  %

  	
  3.0

  	
  %**

  	
  6.2

  	
  %**

  	
  9.3

  	
  %**

  	
  14.2

  	
  %**

  	
  18.8

  	
  %**

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total % of Base Salary

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  0.0

  	
  %

  	
  12.5

  	
  %

  	
  25.0

  	
  %

  	
  37.5

  	
  %

  	
  56.3

  	
  %

  	
  75.0

  	
  %

  
																								



 










*The calculation of a
Non-Discretionary Bonus for achievement with respect to line item I, Pre- Tax
Net Income is determined as follows:


 


(1)   First determine the percentage that the
actual Pre-Tax Net Income for the fiscal year is of the actual Total Sales of
the fiscal year.


 


(2)   Next compare the actual percentage calculated
in (1) above to the projected percentage of sales, which for fiscal 2004
is set forth in column 3 for line item I.


 


For example, if for
fiscal year 2004, actual Pre-Tax Net Income equals 12.4% of actual Total Sales
(100% of the fiscal year 2004 projection as set forth in column 3 for line item
I), then a bonus award of 7.5% of Base Salary would be paid for achievement
with respect to that line item (see Column 8 for line item I).  As another example, if for fiscal year 2004,
Pre-Tax Net Income equals 11.2% of Total Sales (90% of the fiscal year 2004
Projection as set forth in column 3 for line item I), then a bonus award of
3.8% of Base Salary would be paid with respect to that line item (see Column 7
for line item I).


 


**The goal with regarding
to line item J, Total Operating Expenses, is to decrease Total Operating
Expenses as a percentage of Total Sales. 
Thus, the percentages used for determining the Non-Discretionary Bonus
with respect to line item J are separately reflected immediately above line
item J in columns 6 through 11.  The
calculation of the bonus is actually made as follows:


 


(1)   First determine the percentage that the
actual Total Operating Expense for the fiscal year is of the actual Total Sales
of the fiscal year.


 


(2)   Next compare the actual percentage calculated
in (1) above to the projected percentage of sales which for fiscal year
2004 is set forth in column 3 for line item J.


 


For example, if for
fiscal year 2004, the actual Total Operating Expenses equal 24.5% of actual
Total Sales (which equals 100% of the fiscal year 2004 projection as set forth
in column 3 for line item J ), then a bonus award of 6.3% of Base Salary would
be paid for achievement with respect to line item J (see Column 8 for line item
J).  As another example, if for fiscal
year 2004, the Total Operating Expenses equal 22.1% of Total Sales, which
amounts to a 10% reduction in the projected percentage Total Operating


 


5





















 


Expenses of Total Sales
(or 90% of the fiscal Year 2004 projection as set forth in column 3 for line
item J), then a bonus award of 9.4% of Base Salary would be paid (see Column 9
for line item J).


 


6