2. LOYAL AND CONSCIENTIOUS PERFORMANCE; NONCOMPETITION.
2.1 During the Employment Period, Executive shall devote his full business energies, interest, abilities and productive time to Petco. This section shall not preclude Executive from managing personal investments, subject to Section 2.3, engaging in civic, charitable or religious activities that do not adversely affect the Executives performance of his duties.
2.2 Except with the prior written consent of the Board, Executive will not, during the Employment Period, compete with the Company, either directly or indirectly, in any manner or capacity, as adviser, consultant, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any phase of developing, manufacturing or marketing any product or service that is in the same field of use or that otherwise competes with a product or service that is offered, is actively under development, or is actively being considered for development by the Company.
2.3 Except as permitted herein, Executive agrees not to acquire, assume or participate in, directly or indirectly, any position, investment or interest that Executive knows or should know is adverse or antagonistic to the Company, its business, clients, strategic partners, investors or prospects. Ownership by Executive, as a passive investment, of less than five percent (5%) of the outstanding shares of capital stock of any corporation with one or more classes of its capital stock listed on a national securities exchange or publicly traded in the over-the-counter market shall not constitute a breach of this paragraph.
3. COMPENSATION AND BENEFITS.
3.1 The Company will pay Executive an annual base salary (the Base Salary) of Five Hundred Fifty Thousand Dollars ($550,000) per year, payable in accordance with the Companys standard payroll practices. Such salary shall be prorated for any partial year of employment on the basis of a 365-day fiscal year.
3.2 Executives Base Salary shall be reviewed annually and may be increased (but not decreased) in the Companys sole discretion.
3.3 All of Executives compensation shall be subject to withholding taxes and any other employment taxes as are required to be collected or withheld by the Company under applicable law.
3.4 Annual Performance Bonus Executive will be eligible for a bonus payment for each fiscal year of the Company (the Annual Performance Bonus), with a target bonus of eighty percent (80%) of Executives annualized Base Salary for the applicable fiscal year, based on the achievement of specific performance criteria established by the Board, provided that Executive shall be guaranteed payment of an Annual Performance Bonus for fiscal year 2019 of not less than Four Hundred Forty Thousand Dollars ($440,000) (which payment is subject to offset pursuant to Section 3.15). Commencing with the fiscal year beginning in 2020, the Board shall establish the specific performance criteria for each fiscal year no later than January 31 of each such fiscal year, after conferring with Executive and considering his input in