Dexsil Corporation - Page 7




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          based on a history that shows that Lynn's compensation for fiscal           
          years ended from 1982 through 1990 equaled 10, 11, or 12 percent            
          of sales.  There was no testimony, however, indicating when and             
          how the alleged formula was established.  In response to leading            
          questions, Lynn testified as follows:                                       
                    Q  And over the years has your compensation, and                  
               in particular in '89 and '90, borne any relationship to                
               the sales and, if so, approximately what?                              
                    A  Approximately about 11 or 12 percent, something                
               like that.                                                             
                    Q  Has that been fairly consistent over the years?                
                    A  Very consistent.                                               
                    Q  And in terms of salary -- your total                           
               compensation, in terms of salary and bonus, how is that                
               broken down and why do you do it that way?                             
                    A  We met with the -- at the end of every year,                   
               after the financial statement was audited and prepared,                
               we would sit down and determine a compensation.  It was                
               kind of an informal thing.  We would set a compensation                
               plan for the next year based on the sales.                             
                    My salary didn't increase very much, but it was                   
               mostly on performance, how we performed, how the sales                 
               came in and whether we needed cash or what our cash                    
               needs were, but the actual paying of the bonus at the                  
               time was determined by the cash flow.                                  
          Petitioner's certified public accountant testified as follows:              
                    Q  Okay, during these years, could you tell the                   
               Court what participation, if any, you had in setting                   
               the compensation for Ted Lynn?                                         
                    A  Well, during the audit and after audit, Ted and                
               I would get together and we would discuss what salaries                
               were and we would try to project what salaries should                  
               be in the coming year.                                                 





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