EXHIBIT 10.17
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement"), dated as of this 16th day of
October, 1997, is by and between Monterey Bay Bouquet, Inc., a California
corporation (the "Company") and a wholly-owned subsidiary of USA Floral
Products, Inc. ("USAF"), a Delaware corporation, and Xxxxxxx Xxxxxxxx
("Employee").
RECITALS
The Company desires to continue to employ Employee and to have the benefit
of his skills and services, and Employee desires to continue employment with the
Company, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein, and the performance of each, the parties
hereto, intending legally to be bound, hereby agree as follows:
AGREEMENTS
1. Employment; Term. The Company hereby employs Employee to perform the
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duties described herein, and Employee hereby accepts employment with the
Company, for a term beginning on the date hereof and continuing for a period of
two years (the "Term"). The Term of this Agreement shall be automatically
renewed for one one-year period, unless the Company or USAF gives notice to the
Employee at least six months prior to the expiration of the initial two-year
Term that this Agreement shall not be renewed.
2. Position and Duties. The Company hereby employs Employee as its
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President. As such, Employee shall have responsibilities, duties and authority
reasonably accorded to and expected of a President of the Company. Employee
will report directly to the Board of Directors of the Company (the "Board").
Employee hereby accepts this employment upon the terms and conditions herein
contained and agrees to devote all of his professional time, attention, and
efforts to promote and further the business of the Company. Employee shall
faithfully adhere to, execute, and fulfill all policies established by the
Company.
3. Compensation. For all services rendered by Employee, the Company shall
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compensate Employee as follows:
(a) Base Salary. Effective on the date hereof, the base salary payable to
Employee shall be $170,000 per year, payable on a regular basis in accordance
with the Company's standard payroll procedures, but not less than monthly. On
at least an annual basis, the Board will review Employee's performance and may
make increases to such base salary if, in its sole discretion, any such increase
is warranted.
(b) Incentive Bonus. During the Term, Employee shall be eligible to
receive an incentive bonus up to the amount, based upon the criteria, and
payable at such times as are, specified in Exhibit A attached hereto. The
amount, manner of payment, and form of consideration, if any, shall be
determined by the Board of Directors of USAF, in its sole and absolute
discretion, and such determination shall be binding and final. To the extent
that such bonus is to be determined in light of financial performance during a
specified fiscal period and this Agreement commences on a date after the start
of such fiscal period, any bonus payable in respect of such fiscal period's
results may be prorated. In addition, if the period of Employee's employment
hereunder expires before the end of a fiscal period, and if Employee is eligible
to receive a bonus at such time (such eligibility being subject to the
restrictions set forth in Section 6 below), any bonus payable in respect of such
fiscal period's results may be prorated.
(c) Perquisites, Benefits, and Other Compensation. During the Term,
Employee shall be entitled to receive all perquisites and benefits as are
customarily provided by the Company to its employees, subject to such changes,
additions, or deletions as the Company may make generally from time to time, as
well as such other perquisites or benefits as may be specified from time to time
by the Board. In addition, Employee shall receive options to purchase 50,000
shares of USAF stock (at the price at which such shares were sold in the initial
public offering of USAF stock), promptly after registration of the USA Floral
Products, Inc. 1997 Long-Term Incentive Plan ("Long-Term Incentive Plan"). The
Company shall cause the Long-Term Incentive Plan to be registered promptly after
the execution of this Agreement.
4. Expense Reimbursement. The Company shall reimburse Employee for (or,
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at the Company's option, pay) all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of his services
hereunder during the Term. All reimbursable expenses shall be appropriately
documented in reasonable detail by Employee upon submission of any request for
reimbursement, and in a format and manner consistent with the Company's expense
reporting policy, as well as applicable federal and state tax record keeping
requirements.
5. Place of Performance. Employee understands that he may be requested by
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the Company to relocate from his present residence to another geographic
location in order to more efficiently carry out his duties and responsibilities
under this Agreement or as part of a promotion or a change in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will provide Employee with a relocation allowance, in an amount determined by
the Company, to assist Employee in covering the costs of moving himself, his
immediate family, and their personal property and effects. The total amount and
type of costs to be covered shall be determined by the Company, in light of
prevailing Company policy at the time. If Employee is requested to relocate to
an area more than thirty miles in any direction from his present residence and
Employee does not agree to relocate, Employee may terminate his employment
hereunder and Employee shall receive from the Company base salary at the rate
then in effect for the time remaining under the then-current period of the Term
and the one-year renewal term.
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6. Termination; Rights on Termination. Employee's employment may be
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terminated in any one of the followings ways, prior to the expiration of the
Term:
(a) Death. The death of Employee shall immediately terminate the Term, and
no severance compensation shall be owed to Employee's estate. Any stock options
held by Employee at the time of his death shall be exercisable pursuant to their
terms by Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been unable to perform the material
duties of his position on a full-time basis for a period of four consecutive
months, or for a total of four months in any six-month period, then 30 days
after written notice to the Employee (which notice may be given before or after
the end of the aforementioned periods, but which shall not be effective earlier
than the last day of the applicable period), the Company may terminate
Employee's employment hereunder if Employee is unable to resume his full-time
duties at the conclusion of such notice period. Subject to Section 6(f) below,
if Employee's employment is terminated as a result of Employee's disability, the
Company shall continue to pay Employee his base salary at the then-current rate
for the lesser of (i) 3 months from the effective date of termination, or (ii)
whatever time period is remaining under the then-current period of the Term
(without regard to renewals thereof). Such payments shall be made in accordance
with the Company's regular payroll cycle.
(c) Termination by the Company "For Cause." The Company may terminate the
Term 10 days after written notice to Employee "for cause," which shall be: (i)
Employee's material breach of this Agreement, which breach is not cured within
10 days of receipt by Employee of written notice from the Company specifying the
breach; (ii) Employee's gross negligence in the performance of his duties
hereunder, intentional nonperformance or mis-performance of such duties, or
refusal to abide by or comply with the directives of the Board, his superior
officers, if any, or the Company's policies and procedures, which actions
continue for a period of at least 10 days after receipt by Employee of written
notice of the need to cure or cease; (iii) Employee's willful dishonesty, fraud,
or misconduct with respect to the business or affairs of the Company or USAF,
and that in the judgment of the Company or USAF materially and adversely affects
the operations or reputation of the Company or USAF; (iv) Employee's conviction
of a felony or other crime involving moral turpitude; or (v) Employee's abuse of
alcohol or drugs (legal or illegal) that, in the Company's judgment, materially
impairs Employee's ability to perform his duties hereunder. In the event of a
termination "for cause," as enumerated above, Employee shall have no right to
any severance compensation.
(d) Without Cause. At any time after December 31, 1997, the Company may,
without cause, terminate the Term and Employee's employment, effective 30 days
after written notice is provided to the Employee. Should Employee be terminated
by the Company without cause, subject to Section 6(f) below, Employee shall
receive from the Company the base salary at the rate then in effect for whatever
time period is remaining under the then-current period of the Term (without
regard to renewals thereof). Such payments shall be made in accordance with the
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Company's regular payroll cycle. If Employee resigns or otherwise terminates
his employment for any reason or for no reason, Employee shall receive no
severance compensation.
(e) Payment Through Termination. Upon termination of Employee's employment
for any reason provided above, Employee shall be entitled to receive all
compensation earned and all benefits and reimbursements (including payments for
accrued vacation and sick leave, in each case in accordance with applicable
policies of the Company) due through the effective date of termination.
Additional compensation subsequent to termination, if any, will be due and
payable to Employee only to the extent and in the manner expressly provided
above in this Section 6. With respect to incentive bonus compensation, Employee
shall be entitled to receive any bonus declared but not paid prior to
termination. In addition, in the event of a termination by the Company under
Section 6(b) or 6(d), Employee shall be entitled to receive incentive bonus
compensation through the end of the Company's fiscal year in which termination
occurs, calculated as if Employee had remained employed by the Company through
the end of such fiscal year, and paid in such amounts, at such times, and in
such forms as are determined pursuant to Section 3(b) above and Exhibit A
attached hereto. Except as specified in the preceding two sentences, Employee
shall not be entitled to receive any incentive bonus compensation after the
effective date of termination of his employment. All other rights and
obligations of USAF, the Company, and Employee under this Agreement shall cease
as of the effective date of termination, except that Employee's obligations
under Sections 7, 8, 9 and 10 below shall survive such termination in
accordance with their terms.
(f) Right to Offset. In the event of any termination of Employee's
employment under this Agreement, the Employee shall have no obligation to seek
other employment; provided, that in the event that Employee secures employment
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or any consulting or other similar arrangement during the period that any
payment is continuing pursuant to the provisions of this Section 6, the Company
shall have the right to reduce the amounts to be paid hereunder by the amount of
Employee's earnings from such other employment.
7. Restriction on Competition.
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(a) During the Term, and thereafter, if Employee continues to be employed
by the Company and/or any other entity owned by or affiliated with the Company
or USAF on an "at will" basis, for the duration of such period, and thereafter
for a period equal to the longer of (x) two years, or (y) the period during
which Employee is receiving any severance pay from the Company, Employee shall
not, directly or indirectly, for himself or on behalf of or in conjunction with
any other person, company, partnership, corporation, business, group, or other
entity (each, a "Person"):
(i) engage, as an officer, director, shareholder, owner, partner, joint
venturer, or in a managerial capacity, whether as an employee, independent
contractor, consultant, advisor, or sales representative, in any business
selling any products or services in direct competition with the Company or USAF
that involves the importing, brokerage, shipping or marketing of floral
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products or the manufacturing or mass marketing of bouquets, or any business
engaging in the consolidation of the floral industry, within the United States
(the "Territory");
(ii) call upon any Person who is, at that time, within the Territory, an
employee of the Company or USAF for the purpose or with the intent of enticing
such employee away from or out of the employ of the Company or USAF;
(iii) call upon any Person who or that is, at that time, or has been,
within one year prior to that time, a customer of the Company or USAF within the
Territory for the purpose of soliciting or selling products or services in
direct competition with the Company or USAF within the Territory; or
(iv) on Employee's own behalf or on behalf of any competitor, call upon
any Person who or that, during Employee's employment by the Company or USAF was
either called upon by the Company or USAF as a prospective acquisition candidate
or was the subject of an acquisition analysis conducted by the Company or USAF.
(b) The foregoing covenants shall not be deemed to prohibit Employee from
(i) acquiring as an investment not more than one percent of the capital stock of
a competing business, whose stock is traded on a national securities exchange or
through the automated quotation system of a registered securities association or
(ii) engaging in the business of growing flowers in the United States.
(c) It is further agreed that, in the event that Employee shall cease to be
employed by the Company or USAF and enters into a business or pursues other
activities that, at such time, are not in competition with the Company or USAF,
Employee shall not be chargeable with a violation of this Section 7 if the
Company or USAF subsequently enters the same (or a similar) competitive business
or activity or commences competitive operations within the Territory. In
addition, if Employee has no actual knowledge that his actions violate the terms
of this Section 7, Employee shall not be deemed to have breached the restrictive
covenants contained herein if, promptly after being notified by the Company or
USAF of such breach, Employee ceases the prohibited actions.
(d) For purposes of this Section 7, references to "USAF" shall mean USA
Floral Products, Inc., together with its subsidiaries and affiliates.
(e) The covenants in this Section 7 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. If any provision of this Section 7 relating to the time period
or geographic area of the restrictive covenants shall be declared by a court of
competent jurisdiction to exceed the maximum time period or geographic area, as
applicable, that such court deems reasonable and enforceable, said time period
or geographic area shall be deemed to be, and thereafter shall become, the
maximum time period or largest geographic area that such court deems reasonable
and enforceable and this
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Agreement shall automatically be considered to have been amended and revised to
reflect such determination.
(f) All of the covenants in this Section 7 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company or
USAF, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by USAF or the Company of such covenants; provided,
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that upon the failure of the Company to make any payments required under this
Agreement, the Employee may, upon 30 days' prior written notice to the Company,
waive his right to receive any additional compensation pursuant to this
Agreement and engage in any activity prohibited by the covenants of this Section
7. It is specifically agreed that the period of two years stated at the
beginning of this Section 7, during which the agreements and covenants of
Employee made in this Section 7 shall be effective, shall be computed by
excluding from such computation any time during which Employee is in violation
of any provision of this Section 7.
(g) If the time period specified by this Section 7 shall be reduced by law
or court decision, then, notwithstanding the provisions of Section 6 above,
Employee shall be entitled to receive from the Company his base salary at the
rate then in effect solely for the longer of (i) the time period during which
the provisions of this Section 7 shall be enforceable under the provisions of
such applicable law, or (ii) the time period during which Employee is not
engaging in any competitive activity, but in no event longer than the applicable
period provided in Section 6 above. If Employee is subject to a restriction on
competitive activity as a party to that certain Amended and Restated Agreement
and Plan of Contribution, dated as of August 5, 1997, by and among Employee, the
Company, Bay Area Bouquets, Inc., USAF, Xxxxxx Xxxxx and Xxxxxxx Xxxxxxxx (the
"Merger Agreement"), then Employee shall abide by, and in all cases be subject
to, the restrictive covenants (whether in this Section 7 or in the Merger
Agreement) that, in the aggregate, impose restrictions on Employee for the
longest duration and the broadest geographic scope (taking into account the
effect of any applicable court decisions limiting the scope or duration of such
restrictions), it being agreed that all such restrictive covenants are supported
by separate and distinct consideration. This Section 7(g) shall be construed
and interpreted in light of the duration of the applicable restrictive
covenants.
(h) Employee has carefully read and considered the provisions of this
Section 7 and, having done so, agrees that the restrictive covenants in this
Section 7 impose a fair and reasonable restraint on Employee and are reasonably
required to protect the interests of the Company and USAF, and their respective
officers, directors, employees, and stockholders. It is further agreed that the
Company and Employee intend that such covenants be construed and enforced in
accordance with the changing activities, business, and locations of the Company
and USAF throughout the term of these covenants.
8. Confidential Information. Employee hereby agrees to hold in strict
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confidence and not to disclose to any third party any of the valuable,
confidential, and proprietary business, financial, technical, economic, sales,
and/or other types of proprietary business information
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relating to the Company and/or USAF (including all trade secrets), in whatever
form, whether oral, written, or electronic (collectively, the "Confidential
Information"), to which Employee has, or is given (or has had or been given),
access as a result of his employment by the Company. It is agreed that the
Confidential Information is confidential and proprietary to the Company and/or
USAF because such Confidential Information encompasses technical know-how, trade
secrets, or technical, financial, organizational, sales, or other valuable
aspects of the Company's and USAF's business and trade, including, without
limitation, technologies, products, processes, plans, clients, personnel,
operations, and business activities. This restriction shall not apply to any
Confidential Information that (a) becomes known generally to the public through
no fault of the Employee; (b) is required by applicable law, legal process, or
any order or mandate of a court or other governmental authority to be disclosed;
or (c) is reasonably believed by Employee, based upon the advice of legal
counsel, to be required to be disclosed in defense of a lawsuit or other legal
or administrative action brought against Employee; provided, that in the case of
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clauses (b) or (c), Employee shall give the Company reasonable advance written
notice of the Confidential Information intended to be disclosed and the reasons
and circumstances surrounding such disclosure, in order to permit the Company to
seek a protective order or other appropriate request for confidential treatment
of the applicable Confidential Information.
9. Inventions. Employee shall disclose promptly to the Company and USAF
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any and all significant conceptions and ideas for inventions, improvements, and
valuable discoveries, whether patentable or not, that are conceived or made by
Employee, solely or jointly with another, during the period of employment or
within one year thereafter, and that are directly related to the business or
activities of the Company or USAF and that Employee conceives as a result of his
employment by the Company, regardless of whether or not such ideas, inventions,
or improvements qualify as "works for hire." Employee hereby assigns and agrees
to assign all his interests therein to the Company or its nominee. Whenever
requested to do so by the Company, Employee shall execute any and all
applications, assignments, or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
10. Return of Company Property. Promptly upon termination of Employee's
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employment by the Company for any reason or no reason, Employee or Employee's
personal representative shall return to the Company (a) all Confidential
Information; (b) all other records, designs, patents, business plans, financial
statements, manuals, memoranda, lists, correspondence, reports, records, charts,
advertising materials, and other data or property delivered to or compiled by
Employee by or on behalf of the Company, USAF or their respective
representatives, vendors, or customers that pertain to the business of the
Company or USAF, whether in paper, electronic, or other form; and (c) all keys,
credit cards, vehicles, and other property of the Company or USAF. Employee
shall not retain or cause to be retained any copies of the foregoing. Employee
hereby agrees that all of the foregoing shall be and remain the property of the
Company or USAF, as the case may be, and be subject at all times to their
discretion and control.
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11. No Prior Agreements. Employee hereby represents and warrants to the
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Company that the execution of this Agreement by Employee, his employment by the
Company, and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former employer, client, or any other Person.
Further, Employee agrees to indemnify and hold harmless the Company and its
officers, directors, and representatives for any claim, including, but not
limited to, reasonable attorneys' fees and expenses of investigation, of any
such third party that such third party may now have or may hereafter come to
have against the Company or such other persons, based upon or arising out of any
non-competition agreement, invention, secrecy, or other agreement between
Employee and such third party that was in existence as of the date of this
Agreement. To the extent that Employee had any oral or written employment
agreement or understanding with the Company, this Agreement shall automatically
supersede such agreement or understanding, and upon execution of this Agreement
by Employee and the Company, such prior agreement or understanding automatically
shall be deemed to have been terminated and shall be null and void.
12. Assignment; Binding Effect. Employee understands that he has been
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selected for employment by the Company on the basis of his personal
qualifications, experience, and skills. Employee agrees, therefore, that he
cannot assign all or any portion of his performance under this Agreement. This
Agreement may not be assigned or transferred by the Company without the prior
written consent of Employee. Subject to the preceding two sentences, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective heirs, legal representatives,
successors, and assigns. Notwithstanding the foregoing, if Employee accepts
employment with a subsidiary or affiliate of USAF other than the Company, unless
Employee and his new employer agree otherwise in writing, this Agreement shall
automatically be deemed to have been assigned to such new employer (which shall
thereafter be an additional or substitute beneficiary of the covenants contained
herein, as appropriate), with the consent of Employee, such assignment shall be
considered a condition of employment by such new employer, and references to the
"Company" in this Agreement shall be deemed to refer to such new employer. If
the Company is merged with or into another subsidiary or affiliate of USAF, such
action shall not be considered to cause an assignment of this Agreement, and the
surviving or successor entity shall become the beneficiary of this Agreement and
all references to the "Company" shall be deemed to refer to such surviving or
successor entity. It is intended that USAF will be a third-party beneficiary of
the rights of the Company under this Agreement. No other Person shall be a
third-party beneficiary.
13. Complete Agreement; Waiver; Amendment. This Agreement is not a
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promise of future employment. Employee has no oral representations,
understandings, or agreements with the Company or any of its officers,
directors, or representatives covering the same subject matter as this
Agreement. This Agreement together with the Merger Agreement, is the final,
complete, and exclusive statement and expression of the agreement between the
Company and Employee with respect to the subject matter hereof and thereof, and
cannot be varied, contradicted, or supplemented by evidence of any prior or
contemporaneous oral or written agreements. This written Agreement may not be
later modified except by a further writing signed by a duly
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authorized officer of the Company and Employee, and no term of this Agreement
may be waived except by a writing signed by the party waiving the benefit of
such term.
14. Notice. Whenever any notice is required hereunder, it shall be given
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in writing addressed as follows:
To the Company: Monterey Bay Bouquet, Inc.
P. O. Box 1778
000 Xxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Vice President
with a copy to: USA Floral Products, Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000
To Employee: Xxxxxxx Xxxxxxxx
P. O. Box 1778
000 Xxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
Notice shall be deemed given and effective three days after the deposit in the
U.S. mail of a writing addressed as above and sent first class mail, certified,
return receipt requested, or, if sent by express delivery, hand delivery, or
facsimile, when actually received. Either party may change the address for
notice by notifying the other party of such change in accordance with this
Section 14.
15. Severability; Headings. If any portion of this Agreement is held
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invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. This
severability provision shall be in addition to, and not in place of, the
provisions of Section 7(e) above. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
16. Equitable Remedy. Because of the difficulty of measuring economic
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losses to the Company and/or USAF as a result of a breach of the restrictive
covenants set forth in Sections 7, 8, 9 and 10, and because of the immediate and
irreparable damage that would be caused to the Company and/or USAF for which
monetary damages would not be a sufficient remedy, it is hereby agreed that in
addition to all other remedies that may be available to the Company or
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USAF at law or in equity, the Company and USAF shall be entitled to specific
performance and any injunctive or other equitable relief as a remedy for any
breach or threatened breach of the aforementioned restrictive covenants.
17. Arbitration. Any unresolved dispute or controversy arising under or
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in connection with this Agreement shall be settled exclusively by arbitration
conducted in accordance with the rules of the American Arbitration Association
then in effect. The arbitrators shall not have the authority to add to, detract
from, or modify any provision hereof nor to award punitive damages to any
injured party. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The direct expense of any arbitration proceeding shall be
borne by the Company. Each party shall bear its own counsel fees. The
arbitration proceeding shall be held in the city where the Company is located.
Notwithstanding the foregoing, the Company and/or USAF shall be entitled to seek
injunctive or other equitable relief, as contemplated by Section 16 above, from
any court of competent jurisdiction, without the need to resort to arbitration.
18. Governing Law. This Agreement shall in all respects be construed
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according to the laws of the State of California, without regard to its conflict
of laws principles.
19. Attorneys' Fees. If any party to this Agreement shall bring any
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action or proceeding for any relief against the other, declaratory or otherwise,
arising out of this Agreement, the losing party shall pay to the prevailing
party a reasonable sum for attorney fees and costs incurred in bringing or
defending such action or proceeding and/or enforcing any judgment granted
therein, all of which shall be deemed to have accrued upon the commencement of
such action or proceeding and shall be paid whether or not such action or
proceeding is prosecuted to final judgment. Any judgment or order entered in
such action or proceeding shall contain a specific provision providing for the
recovery of attorney fees and costs, separate from the judgment, incurred in
enforcing such judgment. The prevailing party shall be determined by the trier
of fact based upon an assessment of which party's major arguments or positions
taken in the proceedings could fairly be said to have prevailed over the other
party's major arguments or positions on major disputed issues. For the purposes
of this section, attorney fees shall include, without limitation, fees incurred
in the following: (1) post-judgment motions; (2) contempt proceedings; (3)
garnishment, levy, and debtor and third party examinations; (4) discovery; and
(5) bankruptcy litigation. This Section is intended to be expressly severable
from the other provisions of this Agreement, is intended to survive any judgment
and is not to be deemed merged into the judgment.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
MONTEREY BAY BOUQUET, INC.
By: /s/ Xxxxxx X. Xxxxxxx
________________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
EMPLOYEE:
/s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx Xxxxxxxx
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EXHIBIT A
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Under USAF's Incentive Bonus Plan, Employee will be eligible to earn up to 100%
of Employee's base salary in bonus compensation, payable out of a bonus pool
determined by the Board of Directors of USAF or a compensation committee
thereof, depending upon the achievement of specified criteria and payable in the
form of cash, stock options, or other non-cash awards, in such proportions, and
in such forms, as are determined by the Board of Directors of USAF or a
compensation committee thereof. Bonuses under the Incentive Bonus Plan will be
determined by measuring Employee's performance, the Company's performance and
USAF's performance based on the following criteria, weighted as indicated, and
measured against target performance levels established by the Board of Directors
of USAF or such compensation committee: (i) USAF's profit - 25%, (ii) the profit
of the Company - 50% and (iii) revenue growth of the Company due to acquisitions
-25%.
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