Under the terms of her employment agreement, Ms. Nilsen is entitled to (1) an
annual base salary of $325,000, which amount may be increased in the boards sole discretion at the start of each calendar year, (2) Quarterly Bonuses of 3.5% of Adjusted Quarterly Pre-Tax Profit,
and (3) participate in our benefit plans. In the event that (A) Ms. Nilsens employment is terminated by the company without cause or (B) Ms. Nilsen terminates her employment with the company for good reason,
Ms. Nilsen is entitled to receive severance payable in 24 equal monthly installments (except to the extent payment is required to be delayed pursuant to Section 409A of the Code) equal to the sum of (i) (x) one years full base
salary and an average annual bonus for the three most recent fiscal years prior to the termination of employment multiplied by (y) two and (ii) a pro-rated Quarterly Bonus for the quarter in which
the termination occurs. In addition, under the foregoing circumstances, Ms. Nilsen is also entitled to receive payment of any previously earned and deferred Quarterly Bonus in the reserve account following the end of the fiscal year in which
her employment terminates. In the event Ms. Nilsen is terminated without cause or resigns with good reason in connection with a change of control, Ms. Nilsens severance payment pursuant to the employment agreement is reduced by the
amount of any cash portion of the benefits paid to Ms. Nilsen upon such change of control pursuant to the bonus agreement described below or any amendment, restatement, or replacement thereof. In the event Ms. Nilsen is terminated for
cause or terminates her employment with the company without good reason, no severance is payable.
If the employment agreement terminates
as a result of death or disability, Ms. Nilsen is entitled to all bonuses earned or accrued as of the date of her termination. Furthermore, in the case of disability, Ms. Nilsen is also entitled to continue receiving her base salary and
benefits for three months or until the date she begins receiving benefits under a disability plan or policy, whichever is soonest.
In the
event of a sale, transfer, or other disposition of all or substantially all of our assets or business, whether by merger, consolidation, or otherwise, we may assign the employment agreement and its rights, provided that the successor assumes all of
our obligations under the employment agreement.
If any payment or benefit under the employment agreement and any other agreement, plan,
or arrangement would constitute an excess parachute payment under Section 280G of the Code, then Ms. Nilsen would receive either the full amount of such payments and benefits or a lesser amount such that no portion of the payments and
benefits would be subject to the excise tax, whichever would result in a greater after-tax benefit to Ms. Nilsen.
The employment agreement defines cause and good reason the same as in Mr. Hennessys employment agreement,
which is described above under the description of payments to Mr. Hennessy.
Bonus Agreement
We also have a bonus agreement with Ms. Nilsen that provides for a one-time cash bonus within
15 days of a change of control of the company equal to the greater of the following:
(1) $1,000,000; or
(2) the sum of (A) 150% of the total base salary (before deductions) paid to Ms. Nilsen for the most recent fiscal
year ended prior to the change of control, (B) 150% of the prior years bonus, and (C) a pro rata portion of the prior years bonus, provided at least such amount has been accrued by us as a bonus for Ms. Nilsen in the
fiscal year during which the change of control occurs.
If the bonus payable upon a change of control, together with any other payments or
benefits received or to be received by Ms. Nilsen from the company or any successor thereto in the change of control transaction, would constitute an excess parachute payment under Section 280G of the Code, then Ms. Nilsen would
receive either the full amount of such payments and benefits or a lesser amount such that no portion of the payments and benefits would be subject to the excise tax, whichever would result in a greater
after-tax benefit to Ms. Nilsen.
A change of control is defined in the bonus agreement the
same as in the restricted stock unit award agreements, which are described above under the description of payments to Mr. Hennessy.
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