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Pension accounting was excluded from the Cash Bonus Plan calculations in fiscal years 2011 and 2012. Awards under the Cash Bonus Plan are paid once per year following the release of the Company’s audited


financial statements. A minimum threshold of 4% IBT as a percentage of net sales must be achieved prior to any payment to a participant under the Cash Bonus Plan. Once the minimum 4% of IBT is achieved by the Company, the participant earns a cash bonus equal to 15% of such participant’s base salary. For IBT in excess of 4% for the fiscal year, the participant’s cash bonus increases by .5% of such participant’s base salary for each .1% increase in the Company’s IBT. There is no cap on the amount that may be paid under the Cash Bonus Plan. In fiscal 2012, IBT, excluding pension expense, did exceed the 4% minimum. As a result, cash bonuses will be paid for fiscal 2012 under the Cash Bonus Plan and this is reflected in the summary compensation table. Mr. O’Brien had an additional target in his cash bonus plan for fiscal year 2012 that was paid on the reduction of professional fees.


The Board of Directors, upon the recommendation of the Compensation Committee, voted in fiscal 2008 to


adopt a cash bonus plan for Anthony M. Aspin, an executive officer and Vice President Sales of the Company. Mr. Aspin’s cash bonus plan became effective for fiscal 2008 and bases awards on sales and IBT as a percentage of net sales from consolidated results of operations. The Board of Directors administers Mr. Aspin’s plan.


Awards under Mr. Aspin’s plan are paid once per year following the release of the Company’s audited


financial statements. Mr. Aspin’s plan consists of two components: sales and IBT. His plan is based on the combination of the sales bonus component and the IBT bonus component. The IBT component of Mr. Aspin’s plan is calculated in the same manner as the Cash Bonus Plan. The performance minimum for the sales component is 80% of the sales target, with an opportunity for an increased sales bonus to the extent sales exceeds 80% of the sales target. The sales target, which is not disclosed herein, represents the portion of net sales in the North American marketplace for those product lines for which Mr. Aspin is responsible. These sales represent a portion of the total North American sales as disclosed in Footnote 15 to the Company’s financial statements found in its Annual Report on Form 10-K. Under the IBT component of Mr. Aspin’s plan, Mr. Aspin earns a cash bonus equal to 10% of his base salary once the minimum 4% of IBT is achieved by the Company and Mr. Aspin’s IBT bonus increases by 2% of his base salary for each 1% of IBT over the 4% minimum. There is no cap on the IBT component of this plan. In fiscal 2012, the IBT and sales components did exceed the minimum threshold. A cash bonus will be paid for fiscal 2012 and this is reflected in the summary compensation table.


Long Term Equity Incentives The Board has adopted the Company’s 2012 Long-Term Incentive Plan, subject to stockholder approval,


under which equity-based and cash-incentive awards may be granted to employees, directors, consultants and advisors of the Company. We expect to provide long-term equity compensation opportunities under the 2012 Long- Term Incentive Plan to our named executive officers to provide a link between compensation and shareholder value and as a valuable retention component as, generally, the executive forfeits any unvested portion of the long-term equity component if the executive is not employed by the Company at the time of vesting. Radford, in conducting a competitive review of executive compensation, found the Company’s named executive officers were lacking in competitive long-term incentive opportunity and recommended a first year strategy of making long term equity grants that would position the Company in the 25th percentile of the market using a combination of options and restricted stock units. Market data for long term incentive compensation at the 25th percentile ranged from $248,000 in value for chief executive officers and $55,000 to $136,000 for other named executive officers.


There are also other opportunities for our employees, including our named executive officers, to invest in


Company stock through the 401(k) Plan, the Company’s 1952 Employees’ Stock Purchase Plan and, if approved by the stockholders of the Company, the 2012 Employee Stock Purchase Plan.


Retirement Benefits The Compensation Committee and Company management believe that it is important to provide retirement


benefits to employees who reach retirement age. Company retirement benefits consist of the following components:


14 A11


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