Document:

exv10w2

 

Exhibit 10.2

CONSULTING AGREEMENT

     THIS CONSULTING AGREEMENT (the “Agreement”) is entered into on December 11, 2007, between
BUILDERS FIRSTSOURCE, INC. (“Company”), and KEVIN P. O’MEARA (“Consultant”).

     It is hereby agreed between Company and Consultant as follows:

     1. Term. This Agreement is effective on the date stated above and shall remain in effect for
two (2) years from the date hereof (the “Term”).

     2. Materiality of Obligations. Company and Consultant consider Section 5, among other terms
of this Agreement, to be a vitally important element of their bargain. Without excluding any other
terms from being material, Company and Consultant expressly acknowledge that the terms of Section 5
are material terms of this Agreement, without which (in whole or in part), Company would not have
agreed to its obligations in this Agreement.

     3. Services and Compensation.

          3.1 Services. During the term of this Agreement, Consultant shall provide such
advice, support and information pertaining to the operations, planning, strategies, growth, and
management of Company as are reasonably requested by the Company; provided that Consultant shall
not be required to provide more than (a) twenty (20) hours per month of consulting services
(excluding reasonable travel time) during the first six months of the Term and (b) ten (10) hours
per month of consulting services thereafter.

          3.2 Compensation. In return for the services described above, and in return for
Consultant’s compliance with the covenants to which Consultant agrees in Section 5 of this
Agreement, Company agrees to grant Consultant, subject to the provisions of Section 6.1 of this
Agreement, 89,334 restricted shares (the “Restricted Shares”) of the Company’s common stock, par
value $0.01 per share, pursuant to the Company’s 2007 Incentive Plan. All of the Restricted Shares
will vest two years from the date hereof. Additionally, starting six (6) months after the date
hereof, Consultant shall be entitled to participate in Company’s benefit plans that are, by their
terms, available to consultants; provided that this will include health insurance coverage under
the Company’s standard medical and dental insurance plans. If Company is unable to include
consultant on the Company’s medical insurance plan, then Company will pay Consultant $579.81 per
month for each month from the sixth month of this Agreement to the end of this Agreement in which
the Company is unable to include Consultant on such medical insurance plan (or such greater amount
that is then required to obtain benefits under COBRA with respect to Company’s then effective
standard medical insurance plan). If the Company is unable to include Consultant on the Company’s
standard dental insurance plan, then Company will pay Consultant $18.38 per month for each month
from the sixth month of this Agreement to the end of this Agreement in which the Company is unable
to include Consultant on such dental insurance plan (or such greater amount that is then required
to obtain benefits under COBRA with respect to Company’s then effective standard dental insurance
plan). Consultant will not be entitled to any cash compensation hereunder except as set forth in
Section 3.3. The Company’s

 

 

obligation to allow Consultant to participate in the medical and dental plans referenced
above, including without limitation the Company’s obligation to make the payments in lieu of such
participation as described above, shall expire and terminate immediately upon Consultant’s becoming
eligible for coverage under another employer’s benefits plan or policy.

          3.3 Expenses. Company shall reimburse Consultant for all travel, lodging, meals and
other reasonable expenses that are: (a) legitimate business expenses that are reimbursable in
accordance with Company’s expense reimbursement policy; (b) incurred by Consultant in providing
services to Company under this Agreement; and (c) pre-approved by Company. In order for
reimbursement for an expense to become due to Consultant, (a) Consultant must submit to Company an
expense reimbursement request form itemizing such expenses, along with supporting documentation;
and (b) the expense reimbursement form must be approved by the Chief Executive Officer of Company
or his designee. Additionally, starting the first month after the date hereof, Consultant will be
entitled to twelve monthly payments of $1,000 to help cover Consultant’s general expenses incurred
in the connection with the performance of his obligations under this Agreement.

          3.4 Termination. Company may terminate this Agreement at any time during the Term for
Cause. For the purposes of this Agreement, “Cause” shall mean (a) Consultant’s violation of any
provision of Section 5 hereof to the extent not cured as provided in section 6.2 if the Company
elects to provide such opportunity for cure, (b) Consultant’s engaging in any fraudulent or other
willful act taken in bad faith designed, or that could be reasonably anticipated, to cause material
harm to the Company, or (c) Consultant’s material failure to perform his other obligations under
this Agreement that is not cured within 30 days after written notice thereof from the Company.
Consultant’s obligations under Section 5 hereof shall survive a termination of this Agreement by
the Company for Cause. If the Company terminates this Agreement without Cause, its obligations
under this Agreement and the Restricted Stock Award Agreement shall continue as if no termination
had occurred.

     4. Independent Contractor.

          4.1 Relationship. Consultant is an independent contractor. This Agreement shall not
create the relationship of employer and employee, a partnership or a joint venture between the
parties. Company shall not control or direct the details and/or means by which Consultant performs
his services. Consultant shall determine the number of days and hours of his work, as well as the
number of his assistants, partners or employees. Consultant shall be solely responsible for the
conduct and performance, and for the wages, payroll taxes, social security taxes, fringe benefits,
workers’ compensation insurance, work and performance schedules and work conditions, of his
assistants, partners, and employees. Consultant acknowledges and agrees that he has no authority
to enter into contracts on behalf of Company or to otherwise obligate Company in any respect during
the term of this Agreement.

          4.2 Taxes. Consultant shall be responsible for and pay all costs of conducting his
business, including but not limited to, the expense and responsibility for any and all applicable
insurance, city, county, state and Federal licenses, permits, taxes, and assessments of any and all
regulatory agencies, boards, or municipalities. Consultant is responsible for payment of his
self-employment taxes, including without limitation, income taxes, unemployment taxes, workers’

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compensation taxes, social security taxes, and business and occupation taxes, and shall
indemnify and hold Company harmless from paying such taxes.

     5. Noncompetition; Nonsolicitation.

          5.1 Non-Competition. Consultant agrees, for two (2) years from the date hereof, not
to engage in competition (or assist any other Person in engaging in competition) with the Company
or any Related Party, directly or indirectly (either individually, by any form of ownership, or as
a director, manager, member, officer, principal, agent, employee, employer, advisor, consultant,
lender, member, shareholder, partner, or other representative in a Competing Business), in the
Business of the Company in a Prohibited Location by performing services that are the same as or
substantially similar to those services Consultant performed for the Company at any time during
either the Term or the last three (3) years of Consultant’s employment with the Company. “Person”
means any individual, corporation, limited liability company, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or other entity. “Related
Parties” means any of the directly or indirectly held subsidiaries of the Company or any of their
related divisions, predecessors, successors or assigns. “Competing Business” means any business,
regardless of form, that is directly engaged, in whole or in relevant part, in any business or
enterprise that is the same as, or substantially the same as or similar to, the Business of the
Company; provided that employment by an entity or enterprise that derives less than ten percent
(10%) of its revenue or income from activities constituting the Business of the Company shall not
be deemed to be a Competing Business unless the Employee is actively involved in such competing
activities. The “Business of the Company” means, to the extent the Company or a Related Entity is
engaged in such activity, the business of (a) manufacturing roof and floor trusses, wall panels,
stairs, vinyl and aluminum windows, and synthetic millwork and (b) supplying and installing
structural and related building products including without limitation, the items enumerated in
clause (a) and doors, engineered wood products, lumber and lumber sheet goods, millwork, kitchen
cabinets, insulation and other building products. A “Prohibited Location” means any location
within fifty (50) miles of any of the Company’s or any Related Party’s physical locations.
Ownership of a 1% or smaller interest in a publicly-traded entity shall not be a violation of the
foregoing covenant. For the purposes of this Agreement, the parties agree that homebuilders and
any vendors supplying building products or services to the Company shall be deemed to be Competing
Businesses; provided, however, that no vendor whose gross sales to the Company do not exceed $25
million per year will be deemed a Competing Business.

          5.2 Customer Non-Solicitation. Consultant agrees, for a period of two (2) years from
the date hereof, not to directly or indirectly solicit, divert, or appropriate, or attempt to
solicit, divert, or appropriate, (on behalf of Consultant or any other Person) for the purposes of
providing products or services that are the same as or substantially similar to the general types
of products or services described in the Business of the Company, any actual or prospective
customer with whom Consultant has material business contact during the term of this Agreement or
had material business contact during the last two (2) years of Consultant’s employment with the
Company prior to the date hereof.

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          5.3 Employee Non-Solicitation. Consultant agrees, for a period of two (2) years from
the date hereof, not to directly or indirectly solicit or divert, or attempt to solicit or divert,
(either on behalf of the Consultant or any other Person) any person employed by the Company or any
Related Party with whom Consultant had contact in the course of his employment with the Company
(each, a “Company Employee“) to leave or reduce their employment with the Company or any Related
Party or to work for Consultant or any other Person, including, without limitation, a Competing
Business. Consultant agrees, for a period of two (2) years from the date hereof, not to directly
or indirectly (either on behalf of the Consultant or any other Person) hire any Company Employee or
to respond to inquiries seeking employment from any Company Employee. This paragraph only applies
to persons who are actively employed as Company Employees or were Company Employees within one (1)
year of the time of any such actual or attempted solicitation, hiring, or inquiry.

          5.4 Non-Disclosure of Confidential Information. Consultant agrees that all
Confidential Information and all physical embodiments or derivatives thereof that were received or
developed by Consultant while employed by the Company or during his engagement as a consultant
under this Agreement, shall remain the sole and exclusive property of the Company or the applicable
Related Party. For a period of three (3) years from the date hereof, Consultant will hold such
Confidential Information in trust and strictest confidence, and shall not use, reproduce,
distribute, disclose, or otherwise disseminate such Confidential Information or any physical
embodiments thereof, and may in no event take any action causing, or fail to take any action within
his reasonable control necessary in order to prevent, any Confidential Information disclosed to or
developed by Consultant to lose its character or cease to qualify as Confidential Information.
Consultant also agrees that he will immediately deliver to the Company all property belonging to
the Company or applicable Related Party, including all Confidential Information and any physical
embodiments thereof.

          “Confidential Information” means information and the compilation of information related to the
operation of the Company or a Related Party that derives economic value, actual or potential, from
not being generally known or readily available to, or ascertainable by, other persons who can
obtain economic value from its disclosure or use. Assuming the foregoing criteria are met,
Confidential Information includes, but is not limited to, compilations of information concerning
the Company’s and the Related Parties’ financial plans and performance, potential acquisitions
(including without limitation information described herein regarding potential acquisition
targets), business plans and strategies, personnel information, information technology processes,
research, development, and manufacturing of Company or Related Party products, existing or
prospective customers, proposals made to existing or prospective customers or other information
contained in bids or offers to such customers, the terms of any arrangements or agreements with
customers, including the amounts paid for services or how pricing was developed by the Company or
any Related Party, the layout, design, and implementation of customer specific projects, the
identity of suppliers or subcontractors, information regarding supplier or subcontractor pricing or
contract terms, the composition or description of future services that are or may be provided by
the Company or any Related Party, the Company’s or any Related Party’s financial, marketing, and
sales information, and technical expertise, formulas, source codes, and know how developed by the
Company or any Related Party, including the unique manner in which the Company or any Related Party
conducts its business. Confidential Information also includes information disclosed to the Company
or any Related

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Party by a third party that the Company or such Related Party is required to treat as confidential.

          5.5 Non-Disclosure of Trade Secrets. Consultant agrees that all Trade Secrets
belonging to the Company or any Related Party and all physical embodiments or derivatives thereof
shall remain the sole and exclusive property of the Company or such Related Party. Consultant will
hold such Trade Secrets in trust and strictest confidence, and shall not use, reproduce,
distribute, disclose, or otherwise disseminate such Trade Secrets or any physical embodiments
thereof, and may in no event take any action causing, or fail to take any action within his
reasonable control necessary in order to prevent, any such Trade Secrets to lose their character or
cease to qualify as Trade Secrets. “Trade Secret” means information including a formula, pattern,
compilation, program, device, method, technique, or process that (a) derives independent economic
value, actual or potential, from not being generally known to, and not being readily ascertainable
by proper means by, other persons who can obtain economic value from its disclosure or use, and (b)
is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. A
trade secret may consist of a simple fact, item, or procedure, or a series or sequence of items or
procedures that, although individually could be perceived as relatively minor or simple,
collectively can make a substantial difference in the efficiency of a process or the production of
a product or may be the basis of a marketing or commercial strategy. The collective effect of the
items and procedures must be considered in any analysis of whether a trade secret exists and not
the general knowledge of each individual item or procedure.

          5.6 Non-Disparagement. Consultant and the Company each agree they will not disparage,
defame, place in a negative light, or ridicule the other or, with respect to Consultant, the
Company or any Related Party or any of their employees, directors, managers, officers, agents, or
predecessors, or any of the Company’s or any Related Party’s products or services, or otherwise
tortiously interfere with the Company’s or any Related Party’s actual or prospective business
relationships. The obligations of the Company under this paragraph apply only to statements made
by the Company’s officers or directors and to public statements by the Company.

     6. Effect of Breach of Section 5. If Consultant fails to comply, in whole or in part, with
his obligations under Section 5, or if Consultant attempts to avoid or invalidate, in whole or in
part, his obligations under Section 5, Company shall have, after it becomes aware of such failure
or attempt, the option in its sole discretion to: (a) treat the Agreement as continuing, subject to
the terms of Section 6.1; (b) terminate the Agreement; or (c) provide an opportunity for Consultant
to cure his breach, subject to the terms of Section 6.2.

          6.1 Termination of Payment Obligations/Cancellation of Restricted Shares. Regardless
of whether Company elects to treat the Agreement as continuing, Company’s obligations in Sections
3.2 and 3.3 of this Agreement shall terminate immediately if: (a) Consultant fails to comply, in
whole or in part, with his obligations in Section 5; (b) Consultant attempts to avoid or
invalidate, in whole or in part, his obligations in Section 5; or (c) a court finds Section 5 to be
unenforceable, in whole or in part provided that the Company shall not be excused from its
obligations under Sections 3.2 and 3.3 if Consultant did not instigate, request, or participate in
such proceeding and Consultant continues to perform his obligations under and does not breach the
provisions of Section 5. Upon such termination of the Company’s

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obligations in Sections 3.2 and 3.3 of this Agreement, Company shall not be obligated to pay
Consultant any amounts not yet due, prorated or otherwise, and all the Restricted Shares shall
automatically be forfeited effective upon such termination.

          6.2 If Company elects to provide an opportunity to cure Consultant’s failure or attempt,
Company will provide to Consultant written notice. Consultant shall have ten (10) days after the
date of the notice to cure the failure or attempt and provide a sworn written statement to Company
that the failure or attempt has been cured and is not continuing. If Consultant does not cure and
provide such statement to Company on or before the tenth (10th) day after the date of
the notice, Company shall have the option in its sole discretion to (a) treat the Agreement as
continuing, subject to the terms of Section 6.1 or (b) terminate the Agreement.

     7. Return of Company Property. Consultant agrees to return to the Company any Confidential
Information received by Consultant during the Term upon the Company’s request at any time during
the Term. Consultant further agrees that upon the termination of this Agreement (for whatever
reason), Consultant will deliver to Company all property of Company and/or the Related Parties.
Such property includes, without limitation, Confidential Information and all materials, tools, and
information: (a) provided by or obtained from Company; or (b) created, in whole or in part, during
the course of services provided to Company.

     8. Miscellaneous.

          8.1 The failure of either party to this Agreement to enforce at any time any of its provisions
or terms shall not be construed to be a waiver of such provision or term, nor of the right of
either party to later enforce such term or provision.

          8.2 This Agreement shall be governed by the laws of the State of Texas, other than the
conflicts of law provisions thereof. Exclusive venue for disputes regarding, or interpretation of,
this Agreement lies in the state or federal courts of competent jurisdiction serving Dallas, Texas.

          8.3 Company shall be entitled to injunctive relief and specific performance in addition to any
other available legal or equitable remedies for any breach or threatened breach of Sections 5, 6,
and/or 7 of this Agreement. The remedies provided in this Agreement shall be deemed cumulative,
and the exercise of one shall not preclude the exercise of any other remedy at law or in equity for
the same event or any other event.

          8.4 If any provision of this Agreement other than Section 5 is held to be unenforceable in
whole or in part, the remaining provisions will nevertheless continue to be valid and enforceable.
If Section 5 is held to be unenforceable in whole or in part, Sections 3.2 and 3.3 in whole shall
be deemed unenforceable and shall no longer have any force or effect; provided that Company shall
not be excused from its obligations under Sections 3.2 and 3.3 if Consultant did not instigate,
request, or participate in such determination of unenforceability and Consultant continues to
perform his obligations under and does not breach the provisions of Section 5.

          8.5 Each Party’s obligations hereunder are in addition to, and not exclusive of, any and all
of its or his other obligations and duties to the other party, whether express, implied,

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in fact or in law, including without limitation under the Separation Agreement between the
parties dated as of December 11, 2007 (the “Separation Agreement”).

          8.6 If Consultant elects to revoke the Separation Agreement, as provided for therein, this
Agreement, including all the Company’s obligations hereunder, shall be null and void and the
Restricted Shares shall automatically be forfeited upon such revocation.

          8.7 This Agreement, the Separation Agreement and the Restricted Stock Award of even date
herewith represent and contain the entire understanding between the parties in connection with
their subject matter. The parties expressly acknowledge that there are no oral or written
collateral agreements, understandings or representations other than this Agreement and the prior
agreements between Company and Consultant other than the Separation Agreements and any option
agreements between the parties, subject to the terms of Section 6 hereof. The parties acknowledge
that they have not relied upon any representation or statement made by the other party or that
party’s agent but not set forth in this Agreement or the prior agreements between Company and
Consultant.

          8.8 This Agreement may be signed in multiple counterparts which shall be construed together as
one instrument.

          8.9 No party may assign this Agreement or the rights or obligations hereunder without the
written consent of the other party.

          8.10 Builders FirstSource, Inc. and its affiliates are third party beneficiaries of this
Agreement and shall be entitled to enforce this Agreement in accordance with its terms.

          8.11 This Agreement may only be modified by a written agreement signed by both parties. Only
the Chief Executive Officer or a Senior Vice President of Company may sign a modification agreement
on behalf of Company.

     IN WITNESS WHEREOF, the parties have signed this Agreement.

	 	 	 	 	 	 	 	 	 
	BUILDERS FIRSTSOURCE, INC.	 	CONSULTANT	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Donald F. McAleenan
 

	 	By:
	 	/s/ Kevin P. O’Meara
 

	 	 
	 
	 	 	 	 	 	 	 	 
	Title:

	 	Senior Vice President,	 	 	 	 	 	 
	 

	 	General Counsel and Secretary	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:

	 	December 11, 2007	 	 	 	 	 	 

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Exhibit 10.14

EZCORP, Inc. 2008 Incentive Compensation Plan

PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND ARE BEING FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION IN A CONFIDENTIAL TREATMENT REQUEST UNDER RULE 24B-2 OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED. THE SYMBOL “[***] IN THIS EXHIBIT INDICATES THAT INFORMATION HAS BEEN
OMITTED.

FY 2008 Incentive Compensation Program

 

 

FY 2008 Incentive Compensation Program

Policy

It is a policy of EZCORP, Inc. and its wholly owned affiliates (also referred to as “the Company”)
to offer a total compensation package which is commensurate with the job assigned, competitive
within the affiliated industry, and reflective of the value of each individual’s performance and
overall contribution towards the short and long term success of the Company.

As a supplement to the base compensation paid and stock awards granted by EZCORP, the Company
offers the FY2008 Incentive Compensation Program (the “Program”) to reward the accomplishment of
corporate, business unit, and personal objectives for select key associates. This Program is
designed to motivate selected associates to strive for excellence in both Company and specific
personal objectives and provides incentive compensation awards for their achievement.

Objectives

The primary objectives of the EZCORP Incentive Compensation Program are:

	 	1.	 	To provide an incentive for individuals to drive their performance to achieve
strategic Company and personal objectives.
	 
	 	2.	 	To attract, retain and motivate top-quality associates who are able to add
significant value to the Company’s performance.
	 
	 	3.	 	To provide incentive compensation opportunities which are competitive for the
associate levels and the affiliated industry.

Eligibility for Participation

The Compensation Advisory Group (President/CEO, SVP Administration and the SVP & CFO) will
recommend to the Board Compensation Committee, who will approve the positions that will participate
in the Program. Participants are generally selected from positions that typically have
incentive-based compensation components in the industry and from individuals who make meaningful
and substantial contributions to the business. Participation in the Program will be determined
prior to the beginning of the fiscal year. Eligible associates will usually be drawn from:

	 	1.	 	Officers and Executives of the Company.
	 
	 	2.	 	Regional and Corporate Director Level Management
	 
	 	3.	 	Key Management individuals as determined by the Compensation Advisory Group and
approved by the Board Compensation Committee.

Setting of Financial Measurements and Individual Objectives

Company Objective:

The President/CEO will recommend, and the Board of Directors will approve specific financial
measures and set Company Objectives that will be used to determine the incentive awards for the
year.

Individual Objectives:

The Executive Committee will determine overall departmental objectives and assign some or all of
those objectives as Personal Objectives to specific individual participants.

 

 

Awards will be based on the level of attainment of both the Company Objectives and the Personal
Objectives of each participant. However, the Board of Directors will set a minimum financial
threshold that must be attained for any incentive compensation to be paid.

The Company’s Minimum Financial Objective for FY2008 (below which no incentive awards will be made)
will be a net income of:

[***]

Company management will conduct periodic progress reviews with participants during the year in the
monthly Key Performance Review (KPR) meetings to monitor progress and ensure on-going focus and
alignment.

FY 2008 Company Objectives and Incentive Targets 

Net Income will be used to determine actual financial award payouts for FY2008. For purposes of
this Program, “Net Income” is defined as the net income shown on the audited financial statements,
adjusted for any special items, charges and credits, which the Board Compensation Committee, in its
sole discretion, determines are unusual or infrequently occurring events or situations and that
generally do not provide or require cash, and also are not subject to the direct control of
management.

However, the Board Compensation Committee may elect to translate the Company’s Net Income
objectives to “Earnings Per Share” objective and
utilize that Company Objective for specific
participants. For purposes of this Program, “Earnings Per Shares” is defined as the “Net Income”
as defined above divided by the diluted weighted average number of shares outstanding for the year.
The Board Compensation Committee, in its sole discretion, may adjust number of shares used in this
calculation to take into account any unusual special occurrences that may have unfairly impacted
this calculation.

The Company’s net income goal for Incentive Compensation is [***]. The minimum threshold
for any payout is reached at [***] and the maximum payout is achieved at [***].

Based upon these Net Income goals, the Earnings Per Share goals for FY2008 will be a minimum
level of [***] EPS, a target level of [***] EPS, and a maximum level of [***] EPS.

The payout for financial participation for a participant can be read from the following matrix
based on FY2008 “Net Income” and “Earnings Per Share”:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Income
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Bonus Payout
	 	 	50	%	 	 	100	%	 	 	150	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Earning Per Share
	 	 	[***]	 	 	 	[***]	 	 	 	[***]	 

FY 2008 Personal Objectives and Incentive Targets

	 	1.	 	The Board Compensation Committee establishes all of the Incentive Compensation Plan
objectives for the Chairman of the Board and the President/CEO. The Chairman of
the Board and the President/CEO do not have Personal Objectives as defined by this Plan and
will have their incentive award determined solely by the achievement of the overall
Company’s Financial Objectives as approved by the Board
Compensation Committee.

 

 

	 	2.	 	The Executive Committee has established Departmental Objectives for FY2008 for all
other participants. Based upon those Departmental Objectives, participants have been
assigned Personal Objectives for the FY2008 Incentive Compensation Program. Except for the
Company Objectives of the Chairman of the Board and the President/CEO, these Personal Objectives
are subject to revisions based upon changing circumstances as deemed appropriate by the
President/CEO throughout the year.
	 
	 	3.	 	The quality of the output of specific Personal Objectives will be a substantial portion
of the payout rating. To ensure consistency in the scoring of the performance in achieving
Personal Objectives by individual participants, the following definitions and payout
structure are provided:

	 	 	 	 	 	 	 
	*

	 	Achieved or exceeds the target goal
	 	 	 	Payout 100%
	 
	 	 	 	 	 	 
	*

	 	Slight miss of the target goal
	 	 	 	Payout 50% to 75%
	 
	 	 	 	 	 	 
	*

	 	Miss minimum target goal
	 	 	 	Payout zero

	 	4.	 	The Personal Objectives portion of the incentive award is maximized at [***] of the
allocated percentage. For participants, other than the Chairman of the Board and the
President/CEO, the Executive Committee will determine scores to be given.
	 
	 	5.	 	The relative weighting of Company and Personal Objectives will be determined based upon
the individual position and the amount of control they have on the achievement of the
Objectives. Therefore, individual participants will have different weighting between
Company and Personal Objectives, as shown in Schedule “A”.

Calculation of Incentive Compensation Payout

The Company Objectives and the Personal Objectives will be scored based upon the actual results
achieved for the Program year. Each participant’s actual payout will be determined using the
formula below:

	 	 	 	 	 	 	 	 	 
	A.
	 	% Company Objective Participation

	 	___%
	 	(A1)
	 	(assigned, see personal documentation)
	 	 	 
	 	 	 	 	 	 
	 	 	Matrix Rating

	 	___%
	 	(A2)
	 	(Company financial goal; percent
achievement)
	 	 	 
	 	 	 	 	 	 
	 	 	(A1 x A2) =

	 	___%
	 	(A3)
	 	(Company Objective Factor)
	B.
	 	% Personal Objectives
Participation

	 	___%
	 	(B1)
	 	(assigned, see personal documentation)
	 	 	 
	 	 	 	 	 	 
	 	 	Weighted Rating for
Personal Objectives

	 	___%
	 	(B2)
	 	(sum of all personal objective
ratings divided by the number of
assigned objectives)
	 	 	 
	 	 	 	 	 	 
	 	 	(B1 x B2) =

	 	___%
	 	(B3)
	 	(Personal Objective Factor)
	C.
	 	Base Salary as of
October 1, 2007

	$	___
	 	(C1)	 	 
	 	 	 
	 	 	 	 	 	 
	 	 	Participation Factor

	 	___%
	 	(C2)
	 	(Sum of A3 + B3)
	 	 	 
	 	 	 	 	 	 
	 	 	(C1 x C2) =

	$	___
	 	(C3)
	 	Incentive Payout

 

 

Calculation Example:

	1.	 	Participant has a base salary = $60,000
	 
	2.	 	Participant has a Company Objective incentive potential of 5% of Base Salary
	 
	3.	 	Participant has a Personal Objective incentive potential of 10% of Base Salary
	 
	4.	 	The Company achieves Net Income resulting in a 150% financial payout
	 
	5.	 	Participant achieved 75% of overall weighting for Personal Objectives

	 	 	 	 	 	 	 	 	 	 	 
	A.
	 	Company Obj. Potential

	 	 	5	%	 	(A1)
	 	(assigned, see personal documentation)
	 	 	 
	 	 	 	 	 	 	 	 
	 	 	Company Matrix Rating

	 	 	150	%	 	(A2)	 	 
	 	 	 
	 	 	 	 	 	 	 	 
	 	 	(A1 x A2) =

	 	 	7.5	%	 	(A3)
	 	(Company Factor)
	B.
	 	Personal Obj. Potential

	 	 	10	%	 	(B1)
	 	(assigned, see personal documentation)
	 	 	 
	 	 	 	 	 	 	 	 
	 	 	Weighted Rating

	 	 	75	%	 	(B2)
	 	(sum of all
personal objective
ratings divided by
the number of
assigned
objectives)
	 	 	 
	 	 	 	 	 	 	 	 
	 	 	(B1 x B2) =

	 	 	7.5	%	 	(B3)
	 	(Objective Factor)
	 
	C.
	 	Base Salary
as of 10/1/07

	 	$	60,000	 	 	(C1)	 	 
	 	 	Participation Factor

(A3 + B3)

	 	 	15.0	%	 	(C2)
	 	(Sum of Company
Factor and Personal
Factor)
	 	 	(C1 x C2) =

	 	$	9,000	 	 	(C3)
	 	Incentive Payout
	 	 	 

	 	 	 	 	 	 	 	 

Incentive Program Funding

Funding for the Incentive Compensation Program will be based on the number of participants selected
for the individual Program year and their individual level of participation. At the beginning of
each fiscal year, a budget will be established based on participant information and on economic,
operational and financial profitability. The full amount of the Program payouts will be included
in the administrative expense of the Company prior to the determination of the Company’s final
results for ICP purposes. Therefore, the funding of the ICP payouts is a part of the financial
results of the Company for incentive calculations.

Administration of the Program

Amendments to or termination of the Program

While it is the intention of the Company to provide an incentive compensation plan annually,
the company, with the approval of the Compensation Committee, reserves the right to:

	 	ü	 	Amend or modify the incentive plan in its entirety;
	 
	 	ü	 	 Suspend or terminate the Program at any time.

Performance Measurement

	 	1.	 	Except for the Chairman of the Board and the President/CEO
(whose awards are determined by the Board Compensation Committee
based upon their specific criteria), the Executive Committee, at
its sole discretion, will score each departmental objective and the individual performance
of each ICP participant as it relates to that specific Objective. Participants who share a
common Personal

 

 

	 	 	 	Objective may be rated differently based upon their contribution to the achievement or lack
of achievement of that specific objective.
	 
	 	2.	 	The fact that an associate is initially selected as eligible to participate in the ICP
does not mean that he or she is entitled to or guaranteed receipt of an incentive
compensation award.
	 
	 	3.	 	Actions taken by a Participant in the Program to enhance his or her incentive pay at
the expense of the long-term benefit of the Company will result in the Participant being
disqualified as a Program Participant, at the sole discretion of the Company.
	 
	 	4.	 	Except for the Chairman of the Board and the President/CEO, if it can be determined by
the Company, at its sole discretion, that a Participant’s actions throughout the ICP year
did not support or actually worked against their team’s ability to meet its objective, the
Participant will not receive any incentive compensation award even if all of the objectives
are obtained. For the Chairman of the Board and the President/CEO, the Board Compensation
Committee may make this determination and their decision will be final and binding.
	 
	 	5.	 	The Compensation Advisory Group reserves the right, in its sole discretion, to
establish the measurement systems associated with this Program and to approve in advance,
departmental and Personal Objectives.
	 
	 	6.	 	Any participant who receives an “UNSATISFACTORY” appraisal rating as determined by the
Company or the Board Compensation Committee, in its sole discretion, for the incentive
period will not be eligible for an incentive award for that period.

No Implied Contract

The information presented in this Program shall not in any way be construed to constitute a
binding employment or compensation contract between the Company and its associates, nor
shall it in any way affect the “employment-at-will relationship” between associates and the
Company.

Rules Concerning Awards Payments and Participation

	 	1.	 	Participants must be employed with the Company at the time incentive payments are made
to be eligible to receive an award
	 
	 	2.	 	Participants who voluntarily or involuntarily leave the service of the Company shall
not be entitled to receive an award at the end of the Program year.
	 
	 	3.	 	Except for the Chairman of the Board, the President/CEO and all company officers,
recommendations to include a new hire, change a participant’s
incentive level or add
a promoted associate into the Program at any time during the Program year must be approved
by the President/CEO. This action is mandatory before informing any associate of their
participation in the Program. Partial year participant awards, if any, will be prorated
based upon full months of the associate’s inclusion into the Program and their achievement
of Program year objectives.
	 
	 	4.	 	Associates hired after the second fiscal quarter (March 31, 2008) will not normally be
eligible for participation until the following Program year. The President/CEO must approve
any exceptions to the above in advance. Approval of such exception is mandatory
before informing any associate of their participation in the Program.

 

 

Discretionary Awards

The President/CEO will have the authority to award “discretionary bonuses” at year-end. These
awards will be granted to individuals based upon the associate’s contribution toward either the
achievement of the Company’s strategic objectives or the FY2008 financial plan. Individual awards
will not exceed [***]; aggregate of awards will not exceed [***] annually.

Effective Date of the Program:

This Program shall be in effect for the fiscal year 2008.

Approvals:

	 	 	 
	/s/ Joe Rotunda
 

Joe Rotunda

	 	Date: 10-1-07 
	President & Chief Executive Officer
	 	 
	 
	 	 
	/s/ Robert Kasenter
 

Robert Kasenter

	 	Date: 10-1-07 
	Sr. Vice President, Administration
	 	 
	 
	 	 
	/s/ Connie Kondik
 

Connie Kondik

	 	Date: 10-1-07 
	VP & General Counsel, Secretary to the Board

Confirming Compensation Committee Approval
	 	 

 

 

Schedule A

FY 2008 ICP Participants List

[***]

2008 ICP Objectives

[***]

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