Document:

ntn_10k-ex1005.htm

 

Exhibit 10.5

 

SECOND AMENDMENT TO LEASE

(The Campus)

THIS SECOND AMENDMENT TO LEASE ("Second Amendment") is made and entered into as of the  I& day of February, 2006, by and between COGNAC CAMPUS LLC, a Delaware limited liability company ("Landlord") and NTN BUZZTIME, INC., a Delaware corporation ("Tenant").

RECITALS:

A.           Prentiss Properties Acquisition Partners, L.P., a Delaware limited partnership ("Original Landlord") and NTN Communications, Inc., a Delaware corporation ("Original Tenant"), entered into that certain Standard Multi-Occupancy Lease dated as of July 17, 2000 (the "Original Lease"), as amended by that certain First Amendment to Lease dated October 4, 2005 by and between Original Landlord and Original Tenant ("First Amendment"), whereby Original Landlord leased to Original Tenant and Original Tenant leased from Original Landlord certain space located in that certain building located and addressed at 5966 La Place Court, Carlsbad, California (the "Building"). The Original Lease, as amended by the First Amendment, may be referred to herein as the "Lease." Landlord is the successor-in-interest in the Lease to Original Landlord. Tenant is the successor-in-interest in the Lease to Original Tenant by way of name change.

B.           By this Second Amendment, Landlord and Tenant desire to (i) expand the Existing Premises (as defined below), (ii) extend the Term of the Lease, and (iii) otherwise modify the Lease as provided herein.

C.           Unless otherwise defined herein, capitalized terms as used herein shall have the same meanings as given thereto in the Lease.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

AGREEMENT:

1.           The Existing Premises. Landlord and Tenant hereby agree that pursuant to the Lease, Landlord currently leases to Tenant and Tenant currently leases from Landlord that certain space in the Building containing 39,397 rentable square feet of space ("Existing Premises"), as more particularly described in the Lease.

2.           The Expansion Space; Term.

2.1.           The Expansion Space. That certain space in the Building containing 2,122 rentable (2,034 usable) square feet of space, as outlined on the floor plan attached hereto as Exhibit "A" and made a part hereof, may be referred to herein as the "Expansion Space." From and after April 1, 2006 ("Expansion Space Commencement Date"), Tenant shall lease from Landlord and Landlord shall lease to Tenant the Expansion Space. Accordingly, effective upon the Expansion Space Commencement Date, the Existing Premises shall be increased to include the Expansion Space. Landlord and Tenant hereby agree that such addition of the Expansion Space to the Existing Premises shall, effective as of the Expansion Space Commencement Date, increase the number of rentable square feet leased by Tenant in the Building to a total of 41,519 rentable square feet. Effective as of the Expansion Space Commencement Date, all references in the Lease to the "Premises" shall mean and refer to the Existing Premises and the Expansion Space.

 

  

1

  

 

2.2.           Term. The term of Tenant's lease of the Expansion Space ("Expansion Space Term") shall be for a period of sixty-three (63) months, commencing on the Expansion Space Commencement Date and ending, unless sooner terminated as provided in the Lease, on June 30, 2011 ("Expansion Space Termination Date").

3.           Monthly Base Rent for the Expansion Space. Commencing as of the Expansion Space Commencement Date and continuing until the Expansion Space Termination Date, Tenant shall pay, in accordance with the provisions of this Section 3, monthly Base Rent for the Expansion Space and in addition to all other charges and additional rent payable by Tenant for the Premises (including the Existing Premises and the Expansion Space) as follows:

Monthly Base Rent

	
Months of

Expansion Space Term

	 	
Monthly Base Rent

	 	
Monthly Base Rent

per rentable square

feet of Expansion Space

	
4/1/06 — 06/30/07

	 	
$1,697.60

	 	
$0.80

	
7/1/07 — 06/30/08

	 	
$1,740.04

	 	
$0.82

	
7/1/08 — 06/30/09

	 	
$1,803.70

	 	
$0.85

	
7/1/09 — 06/30/10

	 	
$1,846.14

	 	
$0.87

	
7/1/10 — 06/30/11

	 	
$1,909.80

	 	
$0.90

4.           Tenant's Proportionate Share. Commencing as of the Expansion Space Commencement Date and continuing until the Expansion Space Termination Date, Tenant's Proportionate Share shall be 65.86%; provided, however, that in determining Tenant's Proportionate Share of Operating Expenses, Landlord shall have the right, from time to time, to equitably allocate some or all of the Operating Expenses between the Building and/or among different tenants of the Project and/or different buildings of the Project (the "Cost Pools"). Such Cost Pools may include, without limitation, the office space tenants and industrial space tenants of the Project or of a building or buildings in the Project. As of the date hereof, Tenant acknowledges and agrees that such Cost Pools include an allocation by Landlord of (i) certain Operating Expenses attributable solely to the buildings located at 5964 and 5966 La Place Court to the tenants of those buildings, and (ii) certain Operating Expenses attributable to the Project as a whole to all tenants of the Project. Such Cost Pools may also include an allocation of certain Operating Expenses within or under covenants, conditions and restrictions affecting the Project. In addition, Landlord shall have the right from time to time, in its reasonable discretion, to include or exclude existing or future buildings in the Project for purposes of determining Operating Expenses and/or the provision of various services and amenities thereto, including allocation of Operating Expenses in any such Cost Pools.

5.           Condition of Premises and Landlord's Work.

5.1.           Condition of Premises. Tenant hereby agrees to accept the Premises (including the Existing Premises and the Expansion Space) in its "as-is" condition and Tenant hereby acknowledges that Landlord, except as otherwise provided below, shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Premises. Tenant also acknowledges that Landlord has made no representation or warranty regarding the condition of the Premises.

5.2.           Landlord's Work in Expansion Space. Prior to the Expansion Space Commencement Date, Landlord shall, at Landlord's sole cost and expense, using Building-standard materials and in Landlord's Building-standard manner, construct those certain improvements in the Expansion Space as described on the scope of work and work plan attached hereto as Exhibit "B" (collectively, "Landlord's Work").

6.           Use of Expansion Space. Notwithstanding anything in the Lease to the contrary, the Expansion Space may only be utilized by Tenant for warehouse purposes (and for no other purpose whatsoever), all to the extent in compliance with all applicable laws and consistent with the character of the Project as a first-class project.

7.           Brokers. Except for Brandywine Operating Partnership, L.P. ("Landlord's Broker"), each party represents and warrants to the other that no broker, agent or finder negotiated or was instrumental in negotiating or consummating this Second Amendment. Each party further agrees to defend, indemnify and hold harmless the other party from and against any claim for commission or finder's fee by any entity (other than Landlord's Broker) who claims or alleges that they were retained or engaged by the first party or at the request of such party in connection with this Second Amendment.

 

  

2

  

 

8.           Security Deposit. Tenant has previously deposited with Landlord Forty-Five Thousand One Hundred Sixty-Seven and 14/100 Dollars ($45,167.14) as a Security Deposit under the Lease. On or before the Expansion Space Commencement Date, Tenant shall deposit with Landlord an additional One Thousand Nine Hundred Nine and 80/100 Dollars ($1,909.80), for a total Security Deposit under the Lease, as amended herein, of Forty-Seven Thousand Seventy-Six and 94/100 Dollars ($47,076.94). Landlord shall continue to hold the Security Deposit (as increased herein) in accordance with the terms and conditions of Section Q-12 of the Lease.

9.           Notices to Landlord. Effective as of the date of this Second Amendment, any notices to Landlord must be sent, delivered or transmitted, as the case may be, as follows:

Notices for Rent:

Cognac Campus LLC

P.O. Box 100276

Pasadena, CA 91189-0276

All other notices:

Cognac Campus LLC

c/o Prudential Real Estate Investors

4 Embarcadero Center, Suite 2700

San Francisco, CA 94111

Attention: Pat Coffey

with a copy to:

Cognac Campus LLC

c/o Prudential Real Estate Investors

8 Campus Drive, 4th Floor

Parsippany, NJ 07054

Attention: Greg Shanklin, Legal Department

and

Brandywine Operating Partnership, LP

705 Palomar Airport Road, Suite 320

Carlsbad, CA 92011

Attention: Vice President

10.           Authority. Each individual executing this Second Amendment on behalf of Tenant represents and warrants that Tenant is a duly formed and existing entity qualified to do business in California and that Tenant has full right and authority to deliver this Second Amendment and that each person signing on behalf of Tenant is authorized to do so.

11.           ERISA. To induce Landlord to enter into this Second Amendment, and in order to enable The Prudential Insurance Company of America ("Prudential") to satisfy its compliance with the Employee Retirement Income Security Act of 1974, as amended, Tenant represents and warrants to Landlord and Prudential that: (i) neither Tenant nor any of its affiliates (within the meaning of Part V(c) of Prohibited Transaction Exemption 84-14 granted by the U.S. Department of Labor ("PTE 84-14")) has, or during the immediately preceding year has exercised, the authority to appoint or terminate Prudential as investment manager of any assets of the employee benefit plan whose assets are held by Prudential or to negotiate the terms of any management agreement with Prudential on behalf of any such plan; (ii) the transaction evidenced by the Lease (as modified by this Second Amendment) is not specifically excluded by Part I(b) of PTE 84-14; (iii) the undersigned is not a related party of Prudential (as defined in V(h) of PTE 84-14, and (iv) the terms of the Lease (as modified by this Second Amendment) have been negotiated and determined at arm's length, as such terms would be negotiated and determined by unrelated parties.

12.           No Further Modification. Except as set forth in this Second Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect.

 

  

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IN WITNESS WHEREOF, this Second Amendment has been executed as of the day and year first above written.

 

	
"LANDLORD"

	
COGNAC CAMPUS LLC,

	  	
a Delaware limited liability company

	  	  
	  	
By: The Prudential Insurance Company of America, a New Jersey corporation, its sole member

	  	  
	  	
By: /s/ Patrick Coffey

	  	
pat Coffey, Vice President

	  	  
	  	  
	
"TENANT"

	
NTN BUZZTIME, INC.,

a Delaware corporation

	  	  
	  	
By: /s/ Andy Wrobel

	  	
Print Name: Andy Wrobel

	  	
Title: CFO

	  	  
	  	
By:

	  	
Print Name:

	  	
Title:

 

 

 

  

4

  

 

 

 

 

 

  

EXHIBIT "A"

-1-

  

 

 

 

  

EXHIBIT "B"

-1-

  

 

 

 

  

EXHIBIT "B"

-2-

  

 

 

 

  

  

EXHIBIT "B"

-3-ntn_10k-ex1006.htm

 

Exhibit 10.6

 

 

 

  

1

  

 

NTN Buzztime, Inc. Corporate Incentive Plan for Eligible Employees of NTN

Buzztime, Inc. and NTN Canada, Inc.

Fiscal Year 2009

	
Section

	
Description

	
1

	
Purpose

	
The purpose of the NTN Buzztime, Inc. Corporate Incentive Plan for Eligible Employees of NTN Buzztime, Inc. and NTN Canada, Inc., (“Plan”) is twofold:

 

(1) To motivate Participants to focus on and maximize their efforts to achieve Buzztime’s Corporate Goals.

 

(2) To encourage the retention of those employees who do so.

 

It is anticipated that the pursuit of goals will foster teamwork, promote accountability and drive performance. This Plan has been approved by the Executive Committee and Board Compensation Committee. This Plan may be changed or modified at any time, on a prospective basis, at the discretion of the Board Compensation Committee.

 

	
2

	
Effective Dates

	
The Plan Period is January 1, 2009 – December 31, 2009.

 

	
3

	
Eligibility

	
To be an eligible participant in the Plan, employees must be employed by Buzztime on or before November 30, 2009, on active, full-time, paid status and not be a participant in any other Buzztime incentive compensation program. (All eligible employees are referred to in this Plan as “Participant(s)”). Only Participants may earn incentive compensation under this Plan.

 

Each Participant will receive a performance evaluation assessing his/her overall performance for the Plan Period. Only Participants receiving an overall rating of “Meets Requirements” or higher in their performance evaluation assessed by his or her supervisor at the end of the Plan Period will be eligible. Any Participant who received a performance rating below “Meets Requirements” will be ineligible to participate in the Plan.

 

Any Participant under disciplinary action (any level of performance counseling, warning and performance improvement plan) will be ineligible to participate in the Plan. If the employee upon reevaluation, however, is released from disciplinary action, he/she will at that same time resume eligibility under the Plan and may be eligible to receive a prorated incentive amount that excludes the period of time he/she was under disciplinary action.

 

Any newly hired employee who becomes eligible for the Plan during the year may be eligible to receive a prorated incentive amount.

 

	
4

	
Plan Design

	
(1) Prerequisites to Earning Incentive Compensation

To earn incentive compensation under this Plan, subject to provisions of Section 6, the following criteria must be satisfied: (a) The Plan must be funded, based on the achievement of the Corporate Goal during the Plan Period which is to meet target EBITDA and free cash flow expectations; and (b) the Participant must be employed by Buzztime on the Payout Date. If Buzztime does not achieve the EBITDA and free cash flow targets, no incentive amounts will be paid under this Plan.

 

(2) Corporate Goal – Our 2009 Corporate Goal is comprised of two parts; First, to meet our target EBITDA and second to meet our target free cash flow. EBITDA and free cash flow targets are as approved by the Board of Directors.

 

EBITDA is defined as earnings before interest, tax, depreciation and amortization ( “EBITDA” ) as defined in Buzztime’s financial reports. Free cash flow ( “FCF” ) is defined as operating cash flow less capital expenditures.

 

 

Confidential, internal use only

  

2

  

	  	  	
Management will aim to provide monthly Incentive Plan updates against targets to all Participants. Additionally, Buzztime will communicate how the Incentive Plan is tracking against targets on a quarterly basis after quarterly earnings are released, typically this occurs 6 weeks after each calendar quarter ends.

 

The payout pool is determined and funded based on meeting the Corporate Goal. If the Company meets the Corporate Goal, there is a 100% payout pool generated. If the Corporate Goal is exceeded the payout pool remains the same at 100%. If the Corporate Goal is not met, the plan is not funded and no payout will be earned nor paid.

 

(3) Target Payout

Each Participant will have a Target Payout, assigned by his/her position and job level, and defined either as a percentage or a specific amount of their annual base salary. (Please refer to your personal incentive memo). The “annual base salary” is defined as the Participant’s annual base salary excluding benefits as of December 31, 2009.

 

The Target Payout amount will be adjusted when warranted pursuant to Sections 5 and 6.

 

(4) Performance Measures

The Incentive Plan is based upon the attainment of financial and non- financial weighted goals in the following categories. Please see your personal incentive memo for your role’s corresponding level. Individual goal achievement will be tracked using Success Factors. It is in your best interest to maintain and update your progress against your goals on a monthly basis.

	  	  	  

 

	 	
Performance Measure

	
Corporate Goal

Weight

	
Department Goals

Weight

	
Individual

Goals

Weight (3-6 performance goals)

	
Total Weight

	 	
Level G

	
75%

	
N/A

	
25%

	
100%

	 	
Level H

	
50%

	
30%

	
20%

	
100%

	 	
Level I

	
N/A

	
50%

	
50%

	
100%

 

	  	  	
5) Payout Formula Terms

The Incentive Payout amount is based on the following terms:

 

% of Corporate Goal Achievement  - Overall percent achieved of the Corporate Goal.

 

Participant’s Target Payout Amount - Participant’s annual base salary x the Target Payout or this could be a specific amount. Please refer to your personal incentive memo.

 

Department Weight – The ratio of weight assigned to the attainment of the departments goals achieved expressed as a percentage (i.e., if the Content department achieved 95% of it's goals, they could carry a 30% weight in the payout formula for level H from the table above)

 

 

Confidential, internal use only

 

 

  

3

  

 

 

 

	  	  	
Corporate Weight – The ratio of weight assigned to the attainment of the corporate goal achieved expressed as a percentage (i.e., if Buzztime achieved 100% of its goals, it carry’s a weight of 50% in calculating the payout formula for level H from the table above).

 

	
Individual Weight – The ratio of weight assigned to the attainment of a Participant’s goals achieved expressed as a percentage (i.e., if Bob Smith achieved 100% of his goals, they carry a weight of 20% in calculating the payout formula for level H from the table above).

 

	
Total Weight – The total of the department, corporate and individual weights expressed as a percentage.

 

	
Individual Incentive Payout – The incentive payout amount an individual is awarded after the payout formula is completed subject to all sections of this Plan.

 

	
(6) Performance Determination

Buzztime’s actual performance against the Corporate Goal for the Plan Period will be determined and approved by the Board Compensation Committee as soon as practicable after the Plan Period ends, subject to the completion and approval by Buzztime of the relevant financial or other Buzztime reports upon which the Corporate Goal is measured.

 

(7) Payout Schedule

50% of the incentive pool will be paid out provided all prerequisites to earning incentive compensation are met pursuant to Sections 4, 5, 8 and the

Company has forecasted to meet or exceed the Corporate Goal for 2009 and the YTD results for the first half of the fiscal year were at or better than budget. The remaining 50%, if there was a payout made June 2009, will be made pursuant to Section 5.

 

(8) Annual Recovery Opportunity

An Annual Recovery incentive payment will be made if there was no semi-annual payout paid because June 2009 targets were not met or 2009 forecast was below budget. The annual recovery is met if the Corporate Goals are achieved at 100% or greater (same as Section 4 (2) “Corporate Goal”) at the close of the year

provided all the of prerequisites to earning incentive compensation are met pursuant to Sections 4,5 and 8.

 

(9) Payout Formula

Please refer to your personal incentive memo for formula payout examples.

 

	
5

	
Payout

Details

	
Payout Date(s): Subject to Section 8, and provided all the of prerequisites to earning incentive compensation are met pursuant to Section 4 a semi-annual payment of the Plan will occur (a) within 30 days after the June 2009 month-end close and (b) within 30 days after receipt of the independent’s auditor’s report on Buzztime’s annual financial statements for the prior year, but no later than March 15, 2010. The first incentive payment will be equal to 50% of the calculated payout and the second payment will be the remaining 50% of the calculated payout.

 

Prorated Payouts: The Individual Incentive Payout that otherwise would have been earned in the Plan Period will be prorated when the provisions of Section 6 apply.

 

Plan Administration and Interpretation: This Plan shall be administered and interpreted by the Executive Committee (CEO, CFO, and VP, HR) at its sole discretion. The Executive Committee must approve any exceptions to the term and conditions of this Plan.

 

Confidential, internal use only

 

 

  

4

  

 

	  	  	
401 k deferrals: In accordance with the NTN Buzztime, Inc. 401 k Plan, no 401 k deductions will be withheld from incentive (“bonus”) wages.

 

Taxes: Incentive payments are in addition to the Participant’s base salary and are included as total cash compensation and, as such, recorded on the Participant’s W-2 (or applicable country statement) statement of wages. Individual Incentive Payouts are considered taxable income and are reported as Gross Income (not “after taxes”). Participants will have all appropriate payroll taxes and withholdings deducted from these incentive payments at the IRS supplemental tax rate.

 

	
6

	
Prorated Participation

	
Late Entry into the Plan: An employee who enters into an eligible position and, therefore, becomes a Participant after the beginning of the Plan Period (either through new hire, promotion or transfer) will be assigned a Target Payout and will be able to earn prorated incentive payment on that basis.

 

Effect of Termination: A Participant must be employed on the Payout Date(s) to earn an incentive payment. If a Participant voluntarily resigns from employment prior to the Payout Date(s), no incentive payment is earned. If Buzztime terminates a Participant’s employment prior to the Payout Date(s), no incentive payment is earned.

 

Effect of Disciplinary Action: Any Participant under disciplinary action (any level of performance counseling, warning and/or performance improvement plan) will be ineligible to participate in the Plan. If the employee upon reevaluation, however, is released from disciplinary action, he/she will at that same time resume eligibility under the Plan and may be eligible to receive a prorated incentive amount that excludes the period of time he/she was under disciplinary action.

 

Internal Promotions and Transfers: Employees who transfer within Buzztime and/or are promoted into new positions that are not eligible to participate in this Plan will be paid a prorated Individual Incentive Payout. Participants who transfer within and/or promoted into new positions will be re-evaluated to ensure they are at the appropriate incentive level based on their position and job level. The incentive payment during the time in the Plan Period he or she was a Participant is subject to the prerequisites to earning incentive compensation.

 

Approved Time Off: The Individual Incentive Payout will not be prorated to account for time off due to paid time off except when time off is used on an approved leave of absence.

 

Leave of Absence: The Individual Incentive Payout for Participants who are on an approved leave of absence from Buzztime will be prorated based on the length of the approved leave during the Plan Period. During the time an employee is on an approved leave of absence, he or she will not be considered a Participant.

 

	
7

	
At Will Employment

	
Employment with Buzztime is at-will. This means that just as a Participant is free to resign at any time, Buzztime reserves the right to discharge a Participant at any time, with or without cause or advance notice. In connection with the “at-will” employment relationship, Buzztime also reserves the right to exercise its managerial discretion in reassigning, transferring, promoting or demoting an employee, at any time. Participation in the Plan does not guarantee continued employment for any particular period of time or otherwise change Buzztime’s policy of employment at-will.

 

	
8

	
Management Rights

	
Buzztime reserves the right to amend or terminate this Plan, at any time, at management’s discretion, with or without advance notice. Any amendments to the

 

Confidential, internal use only

 

  

5

  

 

 

	  	  	
Plan will be in writing and approved by the Board Compensation Committee. If this Plan is amended or terminated prior to the end of the Plan Period, Participants will be paid, according to any amending or terminating documents.

 

This Plan will automatically terminate at the end of the Plan Period, except that the Payout provisions will continue in effect until satisfied. However, Buzztime, at its discretion, may elect to re-issue the Plan, in writing, with new Effective Dates.

 

 

 

 

 

 

 

 

 

Confidential, internal use only

 

 

 

  

6

  

 

 

Level G Payout Formula examples

Example 1 Half –Year Payout

An employee earns a base of $105,000, is a Participant for the entire FIRST HALF of the Plan Period, and the Target Payout percent is 25% which equals a FIRST HALF of the year Target Payout Amount of $26,250 x 50% (first-half) = $13,125. The individual goals are achieved at 100% or are tracking at 100%. Corporate achieved 100% of its goal, mid-year, so the plan is funded at 50% of the 100% payout pool (it is divided in half to represent the FIRST HALF of the year).

	
Participants Target Payout Amount

	
x

	
Corporate

Goal

Achievement

	
+

	
Department

Goal

Achievement

	
+

	
Individual

Goal

Achievement

	
=

	
Individual

Incentive

Amount

	
Weighting

	  	
75%

	
+

	
N/A

	
+

	
25%

	
=

	
100%

	
Overall Goal Attainment %

	  	
100%

	  	
100%

	  	
100%

	  	  
	
Apply Weighting

	  	
(100%x.75)

	  	
N/A

	  	
(100%x.25)

	  	  
	
$26,250

	
x

	
75%

	
+

	
N/A

	
+

	
25%

	
=

	
$26,250

	
Individual Incentive Amount

	
x

	
Payout Pool Percentage

	
=

	
Incentive Payout

	
$26,250

	
x

	
50%

	
=

	
$13,125

Example 2 – Full Year Payout w/ Half Year Payout Occurred

An employee earns a base of $105,000, is a Participant for the entire Plan Period and his/her Target Payout percent is 25%, will equals a Target Payout of $26,250. The individual goals are achieved at 95%. Corporate achieved 105% of its goals, which yields a 100% payout pool.

	
Participants Target Payout Amount

	
x

	
Corporate

Goal

Achievement

	
+

	
Department

Goal

Achievement

	
+

	
Individual

Goal

Achievement

	
=

	
Individual

Incentive

Amount

	
Weighting

	  	
75%

	
+

	
N/A

	
+

	
25%

	
=

	
100%

	
Overall Goal Attainment %

	  	
105%

	  	  	  	
95%

	  	  
	
Apply Weighting

	  	
(100%x.75)

	  	
N/A

	  	
(95%x.25)

	  	  
	
$26,250

	
x

	
75%

	
+

	
N/A

	
+

	
23.75%

	
=

	
$25,921.87

	
Individual Incentive Amount

	
-

	
Incentive Amount Paid to Date

	
=

	
Incentive Payout to be Paid

	
$25,921.87

	
-

	
$13,125

	
=

	
$12,796.87

 

 

 

Confidential, internal use only

 

 

  

7

  

Level H Payout Formula examples

Example 1 Half –Year Payout

An employee earns a base of $40,000, is a Participant for the entire FIRST HALF of the Plan Period, and the Target Payout percent is 5% which equals a FIRST HALF of the year Target Payout Amount of $2,000 x 50% (first-half) = $1,000. The individual goals are achieved at 90% or are tracking at 90%, department goals are tracking or achieved at 95%. Corporate achieved 100% of its goal, mid-year, so the plan is funded at 50% of the 100% payout pool (it is divided in half to represent the FIRST HALF of the year).

	
Participants Target Payout Amount

	
x

	
Corporate

Goal

Achievement

	
+

	
Department

Goal

Achievement

	
+

	
Individual

Goal

Achievement

	
=

	
Individual

Incentive

Amount

	
Weighting

	  	
50%

	
+

	
30%

	
+

	
20%

	
=

	
100%

	
Overall Goal Attainment %

	  	
100%

	  	
95%

	  	
90%

	  	  
	
Apply Weighting

	  	
(100% x.50)

	  	
(95% x.30)

	  	
(90%x.20)

	  	  
	
$2,000

	
x

	
50%

	
+

	
28.5%

	
+

	
18%

	
=

	
$1,930

	
Individual Incentive Amount

	
x

	
Payout Pool Percentage

	
=

	
Incentive Payout to be PAID

	
$1,930

	
x

	
50%

	
=

	
$965

Example 2 – Full Year Payout w/ Half Year Payout Occurred

An employee earns a base of $40,000, is a Participant for the entire Plan Period and his/her Target Payout percent is 5%, will equals a Target Payout of $2,000. The individual goals are achieved at 95%, department goals are achieved at 95%. Corporate achieved 105% of its goals, which yields a 100% payout pool.

	
Participants Target Payout Amount

	
x

	
Corporate

Goal

Achievement

	
+

	
Department

Goal

Achievement

	
+

	
Individual

Goal

Achievement

	
=

	
Individual

Incentive

Amount

	
Weighting

	  	
50%

	
+

	
30%

	
+

	
20%

	
=

	
100%

	
Overall Goal Attainment %

	  	
105%

	  	
95%

	  	
95%

	  	  
	
Apply Weighting

	  	
(100%x.50)

	  	
(95% x .30)

	  	
(95%x.20)

	  	  
	
$2,000

	
x

	
50%

	
+

	
28.5%

	
+

	
19%

	
=

	
$1,950

	
Individual Incentive Amount

	
-

	
Incentive Amount Paid to Date

	
=

	
Incentive Payout to be Paid

	
$1,950

	
-

	
$965

	
=

	
$985

 

 

Confidential, internal use only

 

 

  

8

  

 

Level I Payout Formula examples

Example 1 Half –Year Payout

An employee earns a base of $25,000, is a Participant for the entire FIRST HALF of the Plan Period, and the Target Payout is $500 which equals a FIRST HALF of the year Target Payout Amount of $500 x 50% (first-half) = $250. The individual goals are achieved at 90% or are tracking at 90%, department goals are tracking or achieved at 95%. Corporate achieved 100% of its goal, mid-year, so the plan is funded at 50% of the 100% payout pool (it is divided in half to represent the FIRST HALF of the year).

	
Participants Target Payout Amount

	
x

	
Corporate

Goal

Achievement

	  	
Department

Goal

Achievement

	
+

	
Individual

Goal

Achievement

	
=

	
Individual

Incentive

Amount

	
Weighting

	  	
N/A

	  	
50%

	
+

	
50%

	
=

	
100%

	
Overall Goal Attainment %

	  	
100%

	  	
95%

	  	
90%

	  	  
	
Apply Weighting

	  	
N/A

	  	
(95% x.50)

	  	
(90%x.50)

	  	  
	
$500

	
x

	
Plan Funded

	  	
47.5%

	
+

	
45%

	
=

	
$462.50

	
Individual Incentive Amount

	
x

	
Payout Pool Percentage

	
=

	
Incentive Payout to be PAID

	
$462.50

	
x

	
50%

	
=

	
$231.25

Example 2 – Full Year Payout w/ Half Year Payout Occurred

An employee earns a base of $25,000, is a Participant for the entire Plan Period and his/her Target Payout is $500. The individual goals are achieved at 95%, department goals are achieved at 95%. Corporate achieved 105% of its goals, which yields a 100% payout pool.

	
Participants Target Payout Amount

	
x

	
Corporate

Goal

Achievement

	
+

	
Department

Goal

Achievement

	
+

	
Individual

Goal

Achievement

	
=

	
Individual

Incentive

Amount

	
Weighting

	  	
N/A

	  	
50%

	
+

	
50%

	
=

	
100%

	
Overall Goal Attainment %

	  	
105%

	  	
95%

	  	
95%

	  	  
	
Apply Weighting

	  	
N/A

	  	
(95% x .50)

	  	
(95%x.50)

	  	  
	
$500

	
x

	
Plan Funded

	  	
47.5%

	
+

	
47.5%

	
=

	
$475

	
Individual Incentive Amount

	
-

	
Incentive Amount Paid to Date

	
=

	
Incentive Payout to be Paid

	
$475

	
-

	
$231.25

	
=

	
$243.75

Confidential, internal use only

 

 

 

  

9

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