Document:

Prepared by MerrillDirect

Exhibit 10.22

December 12, 2000

EMPLOYMENT AGREEMENT

OF

LAURA
STUTSMAN

 

This Employment Agreement (“Agreement”)
is made this __ day of December, 2000 by and between Mackie Designs Inc., a
Washington corporation (“Employer”), and Laura Stutsman (“Employee”).

In consideration of
the promises and mutual covenants set forth in this Agreement, Employer and
Employee promise and agree as follows:

1.     Term of
Employment.   Employer hereby employs Employee, and
Employee hereby accepts employment with Employer, until such time as this
Agreement or such employment is terminated as set forth in Section 5 of this
Agreement.

2.     Scope of Duties.

2.1.   Duties.   Employee shall serve as Executive Vice
President, with responsibility for the Marketing of the Employer and all of its
subsidiaries, including, but not limited to, Eastern Acoustic Works, Inc. and
Radio Cine Forniture (RCF) S.r.L. 
Employee shall have such other and further responsibilities, duties and
goals as are reasonably established for him from time to time by the Chief
Executive Officer, or such other person specified by management from time to
time.  Employee shall report directly to
the Chief Executive Officer, upon request to Employer’s Board of Directors, or
to such other person as is specified by management from time to time.

2.2.   Facilities and Staff.   Employee will be furnished with such
facilities, services, staff and working conditions, consistent with Employer’s
current practices, as are suitable to his position and adequate for the
performance of his duties.

2.3.   Full Time and Attention.   Employee will loyally and
conscientiously devote substantially all of his business and professional time,
attention and energies (exclusive of periods of sickness and disability and
such normal holiday and vacation periods as have been established by Employer)
to the affairs of Employer. 
Notwithstanding the above:

2.3.1. Employee may expend a reasonable
amount of time for educational, professional or charitable activities; and,

2.3.2. This Agreement shall not be interpreted
to prohibit Employee from making passive personal investments or conducting
private business affairs, as long as those activities do not materially
interfere with the services required under this Agreement.

2.4.   Competitive Activities.   During the term of his
employment, Employee shall not, directly or indirectly, either as an officer,
director, investor, Employee, consultant, agent, independent contractor,
principal, partner, shareholder, or in any other capacity whatsoever, engage or
participate in any business activities or business entity which is, in any way,
competitive with any of the business of Employer, provided however, Employee
shall not be restricted from holding less than 5% of the outstanding securities
of any company whose securities are listed on a national securities exchange or
automated quotation system.

 

 

2.5    Indemnification and Insurance.   During the entire term of his
employment, Employee will receive the full benefit of the indemnification
provisions for officers and directors that are then contained in Employer’s
Articles of Incorporation and Bylaws, and shall be a named insured under
Employer’s Director’s and Officer’s liability insurance policy, as such
indemnification provisions and insurance policies are in effect from time to
time.

3.     Compensation and
Expenses.

        3.1.   Compensation.   During the term of this
Agreement, Employer will pay Employee as follows:

3.1.1. An initial base salary of
$175,000.00 per year, payable at such times and in such increments as are
consistent with Employer’s usual policies, but in no event less frequently than
monthly.  Any proposed annual salary
increase and any salary decrease will be determined by the Board; provided that
Employee’s salary shall never be less than that set forth above; and

3.1.2. Employee shall be a member of any
bonus pool maintained by Employer from time to time on behalf of senior
management.  The bonus pool is
established annually by the Compensation Committee of the Board, with the goals
and criteria adjusted from time to time as the Compensation Committee
determines in its sole discretion, and Employee’s right of membership in the
bonus pool shall give him no vested rights in any particular criteria or
amounts allocated to the bonus pool.

3.2.   Expenses.   Employer will reimburse Employee for all
reasonable travel, entertainment and miscellaneous expenses incurred in
connection with the performance of his duties under this Agreement. Such
reimbursement will be made in accordance with general policies and procedures
of Employer in effect from time to time relating to reimbursement.

3.3.   Taxes and Withholding.   Employer shall withhold or
deduct from sums due to Employee all sums required by applicable state or
federal law.

3.4.   Stock Options.   Employee shall receive 100,000 nonqualified
stock options per the Mackie Designs Inc. Amended and Restated 1995 Stock
Option Plan (“Plan”), as of the date of this Agreement.  All of Employee’s options shall be subject
to, and vest in accordance with, the terms and conditions of the Plan.  The options shall be at the market price for
Mackie’s shares as of the close of business on the date of this Agreement and
shall vest 25% per year over a four (4) year period commencing with the date of
this Agreement.

4.     Benefits.

4.1.   Vacation.   During the term of this Agreement, Employee
will be entitled to at least 3 weeks of vacation per year, to be taken and
accounted for in accordance with Employer’s policies for same in effect from
time to time, or such additional time as is in accordance with Employer’s
published rules regarding vacation.  If
additional personal time is requested by Employee, it shall be as determined
from time to time by the Chief Executive Officer.

4.2.   Group Benefits.   Employee shall participate in any pension,
insurance or other Employee benefit plan that is maintained by Employer from
time to time for employees similarly situated. 
To the extent possible, Employer will waive any waiting period required
for Employee’s enrollment in any group medical plan.

 

 

5.     Termination.

5.1.   Termination.   This Agreement, and Employee’s employment
with Employer, shall be terminated upon the occurrence of any one of the
following events:

5.1.1. The conviction
of Employee for any crime which is a felony under applicable law (other than one
arising from the operation of a motor vehicle unless Employee is imprisoned
following a conviction or after entering a plea in connection therewith);

5.1.2. The dishonesty
of Employee in the performance of his duties or in his reporting to the
management of Employer;

5.1.3. At the option
of Employer if any one of the following conditions occurs and persists after
Employer has given Employee prior written notice of intent to terminate his
employment with specific reasons therefor, and Employee fails to correct the
specified problems within a period of 30 days of the effective date of the
notice:

	 
  	
  (A)
  	
  Chronic
  alcoholism, drug abuse, or addiction;

  
	 
  	
  (B)
  	
  Failure
  of Employee to apply his full–time attention and best efforts to the
  business of Employer, other than due to the disability of Employee;

  
	 
  	
  (C)
  	
  Failure
  of Employee to perform consistently the duties assigned to him by Employer;

  
	 
  	
  (D)
  	
  Failure
  of Employee to handle his work or assignments in accordance with the policies
  of Employer, reasonably stated; or,

  
	 
  	
  (E)
  	
  Breach
  by Employee of any of the terms and conditions of this Agreement.
  

 

 

5.1.4. The death or
disability of Employee;

5.1.5. At the option of Employee in the
event of the insolvency of Employer;

5.1.6. At the option of Employee, without
good reason, upon giving 30 days prior written notice;

5.1.7. At the option
of the Employee, with good reason in accordance with subsection 5.2.2, upon
giving 30 days prior written notice; provided, that Employer has not corrected
any breach of this Agreement specified within such notice within such 30 day
period; or,

5.1.8. At the option of Employer without
cause upon giving written notice of 
termination.

5.2.   Effect of Termination.   In the event of the termination
of this Agreement and Employee’s employment hereunder:

5.2.1  If the
termination was pursuant to Sections 5.1.7 or 5.1.8, Employee shall be entitled
to receive, during the Payment Period (as hereinafter defined), (i) the
equivalent monthly salary to that set forth in Section 3.1.1; (ii) a prorata
share of any bonus earned by Employer senior management pursuant to Section
3.1.2 of this Agreement, with such pro rata share being determined by
multiplying Employee’s usual share thereof by a fraction, the numerator of
which is equal to the total number of working days worked by Employee during
the relevant period over which the bonus is calculated, and the denominator of
which is equal to the total number of working days during the relevant period
over which the bonus is calculated; provided, that the amount payable under
this subsection, if any, shall be payable at the next regularly scheduled date
for payment of such bonus pool; and, (iii) continued participation at
Employer’s expense in all relevant Employee benefit programs to which he would
have been entitled if he had continued to serve in the capacity set forth in
Section 2.1 during the Payment Period. 
All payments required to be made to Employee pursuant to this Section
5.2.1 shall continue to be made regardless of whether Employee secures other
employment with any other employer.  For
purposes of this section, the term “Payment Period” shall mean a period of 6
consecutive months following the month in which Employee is terminated.

5.2.2  Employee may terminate this
Agreement for good reason.  For purposes
of this Agreement, the term “good reason” shall mean (i) any breach of this
Agreement by Employer which is not cured within 30 days of written notice from
Employee specifying the basis for the breach; (ii)  the Employee’s
functions or duties are materially diminished; provided that such functions or
duties will not be deemed to have been materially diminished if the Employee’s
title, functions and/or duties have been changed so long as the Employee
remains employed as a senior member of the Employer’s senior management staff;
or (iii) repeated and consistent bad faith attempts by Employer to bring about
Employee’s resignation through obstruction by the Employer of Employee’s
ability to perform his duties on the Employer’s behalf.  In the event that the Employee terminates
this Agreement for good reason, Employee shall be entitled to the benefits set
forth in subsection 5.2.1 of this Agreement.

5.2.3  If the
termination was pursuant to Section 5.1.4, Employee (or his estate, as the case
may be) will be entitled to receive his salary as set forth in
Section 3.1.1 through the end of the calendar month in which his death or
disability occurs, and bonus pursuant to Section 3.1.2, if any, for the
fiscal year during which his death or disability occurs, prorated through the
end of the calendar month during which his death or disability occurs.  For purposes of this Agreement
"disability" means (i) the inability of Employee to perform the
duties of Employee's employment due to physical or emotional incapacity or illness,
where such inability continues for ninety (90) consecutive days and is expected
to be of long-continued and indefinite duration, or (ii) Employee shall be
entitled to (A) disability retirement benefits under the federal Social
Security Act or (B) recover benefits under any long-term disability plan
or policy maintained by the Employer. 
In the event of a dispute, the determination of disability shall be made
reasonably by the Board of Directors of the Employer and shall be supported by
advice of a consulting physician competent in the area to which such disability
relates.  The consulting physician shall
be agreed to jointly by Employee and the Employer.  In the event that Employer’s physician who diagnosed the
disability and the consulting physician reach different conclusions, the
physician who diagnosed the disability and the consulting physician shall
select a third physician who shall advise the Board of Directors on Employer’s
disability.

 

 

5.2.4  If Employee was terminated
pursuant to Section 5.1.5, Employee shall be relieved of the obligations set
forth in Sections 8.1, 8.2 and 8.3 of this Agreement.

5.2.5  If the termination is for any
other reason than those set forth in Sections 5.1.4, 5.1.7 or 5.1.8, Employee
shall (i) have no rights to compensation or reimbursement for salary or bonus
for any period subsequent to the date of such termination, (ii) have no right
to participate in any Employee benefit programs under Section 4 for any period
subsequent to the date of such termination; provided that Employer will
remain obligated to meet any obligations it may have under COBRA, and (iii)
have no right to any bonus that would have been payable on a date subsequent to
Employee’s termination date.

5.3.   Effect of Merger, Dissolution or Transfer of Assets.   In the event of any voluntary
or involuntary dissolution of Employer, any merger or consolidation of Employer
with a third party whereby Employer is not a surviving entity, or any sale of
all or substantially all of the assets of Employer to any third party and in
the further event that the surviving or acquiring entity declines to assume
this Agreement and/or Employee’s employment is terminated by Employer or the
surviving entity within 90 days of the effective date thereof, such
nonassumption or termination will be deemed to have taken place pursuant to
section 5.1.8 and Employee shall be entitled to the benefits set forth in
section 5.2.1.

6.     Inventions.   Inventions made or conceived
entirely or partially by Employee while employed by Employer will be the
property of Employer.  As used in this
Section, the term “inventions” includes all creations, whether or not
patentable or copyrightable, and all ideas, reports, or other creative works,
including, without limitation, computer programs, manuals and related material,
which relate to the existing or proposed business of Employer or any other
business or research and development effort conducted by Employer.  All of Employee’s inventions which are
copyrightable shall be works for hire. 
Employee will cooperate with Employer to patent or copyright all
inventions by executing all documents tendered by Employer for such purpose, at
Employer’s expense.  Employee hereby
grants to Employer a power of attorney coupled with an interest, whereby
Employer may execute and deliver any and all documents necessary to so patent
or copyright any inventions in Employee’s name, place and stead as if such
execution and delivery were done by him, with such power of attorney accruing
in the event that he fails to cooperate as required by the preceding
sentence.  Notwithstanding the above,
this provision does not apply to any invention which was developed solely on
Employee’s own time and not using any of Employer’s equipment, supplies,
facilities or information, unless (i) (a) the invention relates directly
to the business of Employer or to Employer’s actual or demonstrably anticipated
research or development, or (b) the invention results from any work performed
by Employee for Employer and (ii) the invention was developed during the
term of his employment with Employer or any Affiliate.  For purposes of this Agreement, the term
“Affiliate” shall mean Mackie Designs Inc., a Washington corporation, Radio
Cine Forniture (RCF) S.r.L., an Italian corporation, or any entity which controls,
is controlled by or is under common control with Employer.  The obligations contained in this Section
shall survive the termination of this Agreement.

 

 

7.     Nondisclosure of
Confidential Information.   Employee acknowledges that during the term
of this Agreement he will learn and will have access to confidential
information regarding Employer and its affiliates, including without limitation
(i) confidential or secret plans, programs, documents, agreements or other
material relating to the business, services or activities, and (ii) trade
secrets, market reports, customer investigations, customer lists, files,
accounts and other similar information that is proprietary information
(collectively referred to as “Confidential Information”). Employee acknowledges
that such Confidential Information is a special, valuable and unique asset. All
records, file materials and Confidential Information obtained by Employee in
the course of employment with Employer or its affiliates or service as a
director of Employer or its affiliates are confidential and proprietary and
shall remain the exclusive property of the appropriate entity owning the
same.  Employee will not for any reason
use for his own benefit, or for the benefit of any person with whom Employee
becomes associated, any Confidential Information or disclose any such
Confidential Information to any person for any reason or purpose whatsoever
without the prior written consent of Employer, unless such Confidential
Information previously shall have became public knowledge through no action or
omission of Employee.  Employee, within
three (3) days from the date upon which his employment with Employer is
terminated or otherwise upon the request of Employer, shall return to Employer
any and all documents and material that constitutes Confidential
Information.  The obligations contained
in this Section shall survive the termination of this Agreement.

8.     Covenant Not to
Compete:  
But for the provisions of this Section 8, Employer would not enter into
this Agreement as it does not wish competition from Employee.  Accordingly:

8.1.   Noncompetition of Employee:   Except pursuant to the terms
and conditions of this Agreement and any services provided to any Affiliate,
for a period of six months from and after his last date of employment with
Employer, Employee shall not, directly or indirectly, singly or in partnership
or in conjunction with any other person or persons, firm, association,
syndicate, company or corporation, as officer, director, consultant, employee,
independent contractor, principal, agent, shareholder, partner, owner or
otherwise, carry on, finance, guarantee the indebtedness of, be engaged in or
permit its name or credit to be used in any way in conjunction with any
manufacturer of professional loudspeakers located anywhere in the United
States, provided however, Employee shall not be restricted from holding less
than 5% of the outstanding securities of any company whose securities are
listed on a national securities exchange or automated quotation system;

8.2.   Nonsolicitation of Customers:   During the one (1) year period
from and after his last date of employment with Employer, Employee shall not,
directly or indirectly, either for its own benefit or for the benefit of others
or in conjunction with any business or entity which is then in competition with
Employer, solicit, call on, interfere with, or attempt to divert away from
Employer or any Affiliate any person or firm who was a customer of Employer or
such Affiliate at any time;

 

 

8.3.   Nonsolicitation of Employees:   During the one (1) year period
from and after his last date of employment with Employer, Employee shall not,
directly or indirectly, offer to employ, solicit or enlist any employee of
Employer or such Affiliate to leave his or her respective employment for any
reason;

8.4.   Injunctive Relief:   In addition to damages suffered by Employer
as a result of Employee’s breach of this paragraph, Employer shall be entitled
to the granting of an injunction to prohibit violations of this paragraph upon reasonable
proof of the occurrence of any event which contravenes its terms.  If a bond is required with respect to the
securing of any such injunction, the parties agree that the maximum amount of
any such bond shall be $1,000;

8.5.   Terms:   Employee acknowledges that the provisions
of this Section 8 have been considered by him and are reasonable as to time,
area, and extent, having regard to all circumstances of this transaction; and,

8.6.   Severability:   If any provision of this Section 8 shall be
unenforceable, illegal, or contrary to the public policy of the jurisdiction in
which it is sought to be enforced, such provision shall be deemed to be deleted
from this Agreement and the remaining provisions of this Section shall be and
remain valid and binding upon and enforceable by the parties hereto.  In addition, the duration and coverage of
each separate covenant may be limited by a court in which enforcement of such
covenant is sought to the extent necessary to permit the enforcement of such
separate covenant.

9.     Specific
Performance.   Employer and Employee recognize that the
services rendered under this Agreement by Employee are special, unique and of
an extraordinary character. Accordingly, in the event of any breach by Employee
of the provisions of Sections 6, 7 or 8 of this Agreement and in addition to
any other remedies available to Employer by law, Employer may specifically
enforce Employee’s obligations under such sections.

10.    Miscellaneous.

10.1.  Assignability.   Except as provided in Section 5.3, the
rights and obligations of Employer under this Agreement shall inure to the
benefit of and be binding up the successors and assigns of Employer.  The rights and obligations of Employee
hereunder may not be assigned or alienated and any attempt to do so by Employee
will be void.

10.2.  Separability.   If any provision of this Agreement
otherwise is deemed to be invalid or unenforceable or is prohibited by the laws
of the state or jurisdiction where it is to be performed, this Agreement shall
considered divisible as to such provisions and such provision shall be
inoperative in such state or jurisdiction and shall not be part of the
consideration moving from either of the parties to the other.  The remaining provisions of this Agreement
shall be valid and binding and of like effect as though such provision were not
included.

10.3.  Notice.   All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have duly
given if personally delivered, telexed or telecopied to, or, if mailed, when
mailed to the other party by certified mail, return receipt requested, at (a)
in the case of Employer, the location of its principal executive offices, or
(b) in the case of Employee, the location of his principal residence or last
known principal residence.

10.4.  Arbitration.   All disputes under this Agreement shall be
settled by arbitration in Seattle, Washington, before a single arbitrator
pursuant to the rules of the American Arbitration Association.  Arbitration may be commenced at any time by
any party hereto giving written notice to the other party that such dispute has
been referred to arbitration under this Section 10.4.  The arbitrator shall be selected by the joint agreement of the
Board of Directors of the Employer and Employee, but if they do not so agree
within 20 days after the date of the notice referred to above, the selection
shall be made pursuant to the rules maintained by such Association.  Any award rendered by the arbitrator shall
be conclusive and binding upon the parties hereto; provided, however, that any
such award shall be accompanied by a written opinion of the arbitrator giving
the reasons for the award.  This
provision for arbitration shall be specifically enforceable by the parties and
the decision of the arbitrator in accordance herewith shall be final and
binding and there shall be no right of appeal therefrom.  Each party shall pay its own expenses of
arbitration and the expenses of the arbitrator shall be equally shared;
provided, however, that if in the opinion of the arbitrator any claim or any
defense or objection thereto was unreasonable, the arbitrator may assess, as
part of his award, all or any part of the arbitration expenses of the other
party (including reasonable attorneys’ fees) and of the arbitrator against the
party raising such unreasonable claim, defense or objection.

 

 

10.5.  Injunctive Relief, Jurisdiction and Venue.   The Employee acknowledges that
the injury that would be suffered by the Employer as a result of a breach of
the provisions of this Agreement would be irreparable and that an award of
monetary damages to the Employer for such a breach would be an inadequate
remedy.  Consequently, the Employer will
have the right, in addition to any other rights it may have, to obtain injunctive
relief to restrain any breach or threatened breach or otherwise to specifically
enforce any provision of this Agreement. 
The jurisdiction and venue of all actions between the parties pursuant
to this section shall lie exclusively in any state or federal court sitting in
Boston, Massachusetts.

10.6.  Governing Law.   The validity, performance, construction and
effect of this Agreement shall be governed by the internal, substantive laws of
the State of Washington, without giving effect to the conflict of laws rules
thereof.

10.7.  Waiver; Amendment.   The waiver by any party to this Agreement
of a breach of any provision hereof by any party shall not be construed as a
waiver of any subsequent breach by any party. 
No provision of this Agreement may be terminated, amended, supplemented,
waived or modified other than by an instrument in writing signed by the party
against whom the enforcement of the termination, amendment, supplement, waiver
or modification is sought.

10.8.  Attorneys’ Fees.   In the event of any litigation arising out
of the execution of this Agreement or any claimed breach thereof, the
prevailing party in such litigation shall be entitled to recover its reasonable
attorneys’ fees and reasonable costs of litigation (including on appeal thereof)
in addition to any other award or decree given or granted by the court.

10.9.  Entire Agreement.   This Agreement constitutes the entire
agreement between the parties regarding the subject matter, and there are no
other understandings, either written or oral, which affect the terms
hereof.  This Agreement may be
supplemented, modified or amended only by a subsequent written agreement
between the parties.

DATED the day and year first above
written.

MACKIE DESIGNS INC.

 

	
  By:___________________________
  	
  _______________________
  	 
  	 
  
	
  Title:     Chief Executive
  Officer
  	
  Laura
  StutsmanPrepared by MerrillDirect

Exhibit
10.4

BMC
INDUSTRIES, INC.

2001 MANAGEMENT INCENTIVE PLAN

CORPORATE PARTICIPANTS

1.       OBJECTIVE

          To
focus management attention on profit performance and balance sheet management.

2.       GLOSSARY
OF TERMS

          EPS -
Consolidated Earnings Per Share as reported publicly.

          Maximum Performance - The level of EPS justifying a “maximum”
incentive award.

          Par Performance - The level of EPS justifying a “target”
incentive award.

          Cut-in Performance - The level of EPS justifying a “minimum”
incentive award.

          Target Incentive - The percent (%) of base pay when a 100%
incentive award is earned.

          Minimum Incentive - The percent (%) of base pay when a 10%
incentive award is earned.

          Maximum Incentive - The percent (%) of base pay when a 150%
incentive award is earned.

3.       ELIGIBLE
PARTICIPANTS

Key management employees.

4.       2001
PERFORMANCE STANDARDS

EPS targets are subject to change by management
based on events that were not contemplated in the 2001 budget, including
investments made for an acquisition, new facility or significant expansion.

5.       AWARD
LEVELS

Target incentive awards are a percent (%) of
base salary, depending on the employee’s level of responsibility.

6.       ORGANIZATIONAL
WEIGHTING

Corporate participants earn
awards based only on Corporate performance.

BMC Industries, Inc. - 2001
Management Incentive Plan - Corporate Participants – Page 2

7.       INCENTIVE
OPPORTUNITY

Individual incentive awards will be prorated and
calculated based on the following, once the applicable thresholds have been
exceeded:

•   150% of
target incentive is earned when reported EPS, as defined earlier, equal or
exceed “maximum”.

•   100% of target incentive is earned when reported EPS, as
defined earlier, equal or exceed “par”.

•   10% of target incentive is earned when reported EPS, as
defined earlier, equal “cut-in”.

•   No incentive will be paid when reported EPS, as defined
earlier, fall below “cut-in”.

8.       PAYMENT
FORM

          Cash.

 

BMC INDUSTRIES, INC.

 2001 MANAGEMENT INCENTIVE PLAN

General Provisions

1.       “Base salary” in the Plan means the cumulative
base salary paid, not earned, by BMC or one of its divisions (“the Company”)
during the 2001 calendar year (“the Year”), excluding all other forms of
compensation.

2.       Incentive compensation payments for the Year
will be made as soon as practicable after the review and receipt of the audited
financial statements for the Year.

3.       If a participant becomes ineligible during the
Year because of a change in position, the participant will be eligible for
incentive compensation only for the period of time he/she was participating in
the Plan.

4.       Payments will be made only to those participants
who are in the employment of the Company on the date the incentive payment is
made, with the following exceptions:

a)       If
the participant is a member of a division divested during 2001 and remains in
the employ of the Company through the closing date of the divestiture, he/she
will be eligible for an incentive award based on year-to-date performance
versus year-to-date performance standards. The year-to-date performance will be
determined by applying the percent that the performance standards are of the
approved 2001 budget.

b)       If
a participant dies during 2001, prorated incentive compensation will be paid to
the participant’s beneficiary, as designated under the Group Life Insurance
Plan, or if a beneficiary is not so designated, to the duly appointed personal
representative of the participant’s estate.

c)       If
a participant retires with the consent of the Company during 2001, s/he will be
eligible to receive incentive compensation prorated for the duration of his/her
participation in the 2001 Plan.

d)       If
a participant has been given a military leave of absence and is to immediately
enter the service of the armed forces, the participant will be eligible to
receive incentive compensation prorated for the duration of his/her
participation in the 2001 Plan.

e)       If a participant for any reason such as illness, disability,
etc., is able to work only part-time, the Chief Executive Officer will
determine the extent to which such employee shall participate. Each case will
be handled on the basis of its own merits.

5.       If, during the Year, a participant moves from an
incentive-eligible position to a position with a different incentive target
and/or different incentive criteria, s/he will be eligible to receive incentive
compensation prorated for his/her participation in each position.

6.      Participation
in this Plan does not constitute or imply a guarantee of continued employment.

BMC Industries, Inc. – 2001 Management Incentive Plan – General
Provisions – Page 2

7.      Participation
in this Plan does not constitute a warranty that a participant will participate
in a future plan, and the existence of a plan during the Year is not to be
construed as an obligation to provide any such plan in the future.

8.      A
participant whose general job performance is unsatisfactory, or whose
managerial behavior is not in the best interest of the Company, will be
terminated from the Management Incentive Plan, effective upon written notice,
with no rights to a prorated award.

9.       The obligation of the Company, as set forth herein, shall be subject to
modification in such manner and to such extent as it deems necessary to comply
with any law, regulation or governmental order pertaining to employee
compensation.

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