8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): January 29, 2008

SUPPORTSOFT, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware (State or Other Jurisdiction of Incorporation) 000-30901 (Commission File No.) 94-3282005 (I.R.S. Employer Identification No.)

1900 Seaport Blvd., Third Floor, Redwood City, CA

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code:

(650) 556-9440

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers.

(c)  The disclosure in Item 8.01 regarding Mr. Barnum is incorporated herein by reference.

(d)  The disclosure in Item 8.01 regarding Ms. Schaffer is incorporated herein by reference.

(e)  The disclosure in Item 8.01 regarding the Executive Incentive Compensation Plan is incorporated herein by reference.

Item 8.01 Other Events

(a)  Shelly Schaffer will join the Company as our new Chief Financial Officer.  Ms. Schaffer will bring to the Company deep experience as a finance executive, including expertise with both consumer services and enterprise software business models, as well as demonstrated strengths in the areas of business partnering, investor communications, and strategic analysis.  Ms. Schaffer will join SupportSoft on February 29, 2008 as Executive Vice President, Finance and will assume the title of Chief Financial Officer following the filing of our Annual Report on Form 10-K for fiscal 2007.  She will be an Executive Officer of the Company.

Ms. Schaffer, 44, will join SupportSoft from Yahoo! Inc. where she has been Vice President, Corporate Operations Finance.  In this role, she has led the team responsible for global planning, forecasting and analytics, and global finance change management.  From September 2003 to December 2006, Ms. Schaffer served Mercury Interactive in finance roles of increasing responsibility, including Vice President of Strategic Finance and Treasury and Vice President of Financial Planning and Analysis.  Previously, Ms. Schaffer held senior finance roles spanning over a decade with The Coca Cola Company, Nestle Beverage Company, and Cosine Communications.  Ms. Schaffer graduated from the University of South Florida earning an MBA and received a Bachelors of Science in Mathematics and Economics from Florida Southern College.

Ken Owyang, the Company’s current Chief Financial Officer, is leaving the Company to pursue other interests, but will remain with SupportSoft as Chief Financial Officer through the filing of our Annual Report on Form 10-K in order to assist in a smooth transition of responsibilities to Ms. Schaffer.  The Company is deeply grateful to Mr. Owyang for his outstanding service over the last three years.

SupportSoft and Ms. Schaffer entered into an employment offer letter dated as of January 29, 2008, as amended on February 1, 2008, with the following terms:

Salary and Bonus:  Ms. Schaffer will receive an annual base salary of $265,000.Ms. Schaffer will also be eligible for bonus compensation under our Executive Incentive Compensation Plan, described below.  Under this plan, Ms. Schaffer may receive a bonus award of up to 50% of her annual salary, 50% of which will be associated with SupportSoft&# 146;s performance against our company plan and the other 50% of which will be based on Ms. Schaffer’s individual objectives.  Ms. Schaffer will also receive a one-time bonus of $115,000 to compensate her for forgone opportunities in her prior position.

Equity Award:  Our Compensation Committee has approved the grant to Ms. Schaffer of an option to purchase 449,000 shares of our common stock, effective on the third business day of March, 2008.    The option would have an exercise price equal to the fair market value of the underlying stock on that date, and would have vesting and other terms in accordance with our standard policies.

Separation Benefits:  In the event that Ms. Schaffer’s employment is involuntarily terminated, she will be entitled to a lump sum payment equal to six months of her base salary plus 50% of her bonus target for that year.  In the event that Ms. Schaffer’s employment is involuntarily terminated following a change in control of SupportSoft, her stock option will accelerate as to 50% of the then-unvested shares.

The foregoing description of Ms. Schaffer’s employment offer letter does not purport to be complete, and is qualified in its entirety by the full text of the employment offer letter, which is filed as Exhibit 10.1 hereto and incorporated herein by reference.

(b)  In January 2008 SupportSoft began operating in two business units, the Consumer Solutions Group (composed of operations relating to the consumer initiative we launched in 2007), and the Enterprise Solutions Group (composed of our traditional business).  We will begin segment reporting for these two units in our quarterly report for the first quarter of 2008.  We are organizing the Company in this fashion to ensure that each part of our business is focused, accountable and transparent.

In connection with the move to business units, on January 29, 2008, our Board of Directors made the following appointments:

·Mike Sayer, formerly our Senior Vice President, Worldwide Sales, will serve as Executive Vice President, Enterprise Solutions Group,

·Richard Mandeberg, formerly our Senior Vice President, Consumer Business Development, will serve as Executive Vice President, Consumer Solutions Group, and

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·Anthony Rodio, formerly our Senior Vice President, Chief Marketing Officer, will serve as Executive Vice President, Operations, focused on the Consumer Solutions Group.

As the leaders of our two business units, Messrs. Sayer and Mandeberg have been designated Executive Officers of SupportSoft.  Mr. Rodio, also designated an Executive Officer, will lead marketing and call center operations for the Consumer Solutions Group and will also be responsible for hosting services operations company-wide.  Robert Barnum will continue to play a key role in the Company as our Senior Vice President, Global Services but will no longer be an Executive Officer under SEC rules.

(c)  At its January 29, 2008 meeting the Board of Directors also adopted the Executive Incentive Compensation Plan (the “Plan”).  The Plan is designed to further align executive compensation with corporate performance by tying an increased percentage of incentive compensation to financial performance.  Under the Plan, designated employees share in Company achievements based on attainment of pre-established, corporate financial performance and individual performance goals.  Each eligible employee has a target bonus, calculated as a specified percentage of that employee’s annual salary.  The bonus amount will be based upon two components:  (1) the Company’s or the employee’s business unit’s achievement of its financial goals, and (2) the individual employee’s achievement of his or her management by objective (MBO) goals.  The portion of an individual’s overall target bonus attributable to Company or business unit performance will be greater for more senior employees, who have a greater influence on Company results.  Employees are eligible to receive greater than 100% of the company/business unit portion of their target bonus according to a formula for business overachievement.  Any overachievement will be earned only at the close of our fiscal year and will be paid annually.  The foregoing description of the Plan does not purport to be complete, and is qualified in its entirety by the full text of the Plan, which is filed as Exhibit 10.2 hereto and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
10.1	Employment Offer Letter dated as of January 29, 2008, as amended February 1, 2008, between the registrant and Shelly Schaffer
10.2	SupportSoft, Inc. Executive Incentive Compensation Incentive Plan

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 4, 2008

SUPPORTSOFT, INC.
By:	/s/ Anne-Marie Eileraas
Name:	Anne-Marie Eileraas
Title:	Vice President, General Counsel and Secretary

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Exhibit No.	Description
10.1	Employment Offer Letter dated as of January 29, 2008, as amended February 1, 2008, between the registrant and Shelly Schaffer
10.2	SupportSoft, Inc. Executive Incentive Compensation Incentive Plan

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EX-10.1

Exhibit 10.1

January 22, 2008

Dear Shelly,

On behalf of SupportSoft, Inc., a Delaware Corporation (“the Company”), we are pleased to offer you the position of Executive Vice President and Chief Financial Officer reporting to the Chief Executive Officer with a start date of February 29, 2008. This offer is contingent upon the satisfactory completion of interviews with the Board of Directors and our customary background check.  You will start as Executive Vice President, Finance, and will assume the title of Chief Financial Officer upon the Company’s filing of its Annual Report on Form 10-K.

The offer includes an annual equivalent base salary of $265,000. The base salary will be paid semi-monthly in accordance with the Company’s normal payroll procedures.  You will also be eligible for bonus compensation under the Company’s Executive Incentive Compensation Plan (the “Plan”).  Under the Plan, you may receive up to 50% of your actual salary earnings paid to you during the calendar year, for an annual equivalent On Target Earnings (OTE) of $397,500.  50% of your bonus will be associated with performance against the Company plan (as determined at the beginning of 2008) and 50% will be based on individual objectives.  Individual objectives will be determined within thirty days of hire or as soon as practicable thereafter.  Any such bonus will commence in the Second Quarter of 2008, with the full target amount achievable over the three remaining quarters following your hire date, and shall be paid within 30 days following the end of the quarter to which the bonus relates in accordance with the terms of the Plan; provided that in no event will any such bonus be paid earlier than the first day following the end of the quarter to which the bonus relates or later than March 15 of the year following the year to which the quarterly bonus relates. Any over-achievement associated with the Company plan shall be paid on an annual basis, as described in the Plan description. Target bonuses for subsequent years shall cover four quarters, as described in the Plan.

We will recommend to the Compensation Committee at the first meeting following your start date that you be granted stock options to purchase 449,000 shares of the Company’s common stock that will carry vesting and exercise provisions in accordance with the Company’s standard policies. The exercise price per share will be set at the fair market value (defined as the closing price) of the Company’s common stock on the day the grant becomes effective.  Following the initial twelve month period of your employment, you may be eligible to receive additional equity compensation awards as determined by the Compensation Committee in its sole discretion.

As a Company employee, you will also be eligible to receive all employee benefits, which will include health care (medical, vision, prescription drug, dental, hospital) and life and disability insurance (life, accidental death and dismemberment, long term disability, short term disability), vacation (paid time off) of 20 days per annum and 12 public holidays in accordance with the company’s published schedule. You should note that the Company reserves the right to modify compensation and benefits from time to time, as it deems prudent.

You should be aware that your employment with the Company is for no specified period and constitutes at will employment.  As a result, you are free to resign at any time, for any reason or for no reason.  Similarly, the Company is free to conclude its employment relationship with you at any time, with or without cause.

If your employment with the Company terminates as a result of an Involuntary Termination and you execute and deliver on a timely basis to the Company the Company’s standard General Release and Waiver of Claims Agreement and that release becomes effective in accordance with its terms following the expiration of any applicable revocation period, then you will become entitled to receive the following benefits:

(a)           On the first payroll date following the earlier of (i) the effective date of the General Release and Waiver of Claims Agreement and (ii) the sixtieth (60th) day following the date of your Involuntary Termination, the Company shall pay to you a lump sum payment  in an amount equal to six months of your base salary (at the rate in effect at the time of your termination) and 50% of the bonus target in effect for the year in which you are terminated, less applicable withholdings; and

(b)           Should you timely elect under Code Section 4980B to continue health care coverage under the Company’s group health plan for yourself, your spouse and your eligible dependents following your Involuntary Termination, then the Company shall provide such continued health care coverage for you and your spouse and other eligible dependents at its sole cost and expense. Such health care coverage at the Company’s expense shall continue until the earlier of (i) the expiration of the six (6)-month period measured from the date of your Involuntary Termination and (ii) the first date you are covered under another employer’s heath benefit program which provides substantially the same level of benefits without exclusion for pre-existing medical conditions.

Notwithstanding anything in this letter agreement, the Plan or the applicable stock option agreements to the contrary, if the Company is subject to a Change of Control (as defined in the Stock Option Agreement) before your employment with the Company terminates and you are subject to an Involuntary Termination within 12 months on or after that Change of Control, then 50% of the then-unvested shares subject to the Option will become vested and exercisable at the time of such Involuntary Termination (as defined below). Notwithstanding anything to the contrary in the Stock Option Agreement, a “going private” transaction shall not constitute a Change of Control.

Notwithstanding any provision in this letter agreement to the contrary, the following special provisions shall govern the payment date of your severance payment in the event that payment is deemed to constitute an item of deferred compensation under Section 409A of the Code:

(i) The severance payment will not be made at any time prior to the date of your Separation from Service, and

(ii) No payments or benefits to which you become entitled under this letter agreement shall be made or paid to you prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of your Separation from Service with the Company or (ii) the date of  your death, if you are deemed at the time of such Separation from Service a “key employee” within the meaning of that term under Code Section 416(i) and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2).  Upon the expiration of the applicable deferral period, all payments deferred pursuant to this paragraph shall be paid to you in a lump sum.

For purposes of this letter agreement, the following definitions shall be in effect:

“Involuntary Termination” means either (a) that your employment is terminated by the Company without Cause or (b) that you resign for Good Reason (as defined below).  You may terminate your employment hereunder for Good Reason upon satisfaction of the following requirements:  (A) notifying the Company within 90 days after the occurrence of the act or omission constituting grounds for the Good Reason termination, (B) providing the Company at least 30 days to correct such act or omission and (C) upon the Company’s failure to take such corrective action within such 30-day period, giving the Company written notice of such Good Reason termination within 5 business days thereafter, with such Good Reason termination to be effective immediately upon delivery of such notice to the Company. In order to receive any benefits upon termination, you will be required (i) to sign the Company’s standard General Release and Waiver of Claims Agreement and (ii) to return all Company property.  Involuntary termination does not include a termination by reason of your death

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or Permanent Disability.

“Permanent Disability” means your inability to perform the essential functions of your position with or without reasonable accommodation for a period of 120 consecutive days because of your physical or mental impairment.

“Cause” means a determination in the reasonable good faith of the Company that you have: (a) engaged in any act of fraud, embezzlement or dishonesty or any other act in violation of the law, including but not limited to, the conviction of, or pleading no lo contender to, a felony (except for ordinary traffic violations); (b) materially breached your fiduciary duty to the Company; (c) unreasonably refused to perform the good faith and lawful instructions of the Chief Executive Officer of which you have been notified and have failed to correct such non-performance within thirty (30) days following such notification (provided that such thirty-day cure period may be shortened upon notice if reasonably necessary to prevent harm to the Company),  (d) engaged in willful misconduct or gross negligence (e) willfully breached the Employment, Confidential Information and Invention Assignment Agreement; or (f) made any willful unauthorized use or disclosure of confidential information or trade secrets of the Company (or any parent or subsidiary).

“Good Reason” means (a) your employment duties or responsibilities are materially diminished by the Company without your prior written consent; (b) a material change in the geographic location of your place of employment without your approval, with a relocation of more than thirty (30) miles to be deemed material for purposes of this letter agreement; (c) a material breach by the Company of its obligations under the terms of this offer letter; or (d) in connection with a Change of Control, you report to someone other than the Chief Executive Officer of the parent or successor entity or you no longer have the title of Chief Financial Officer of the parent or successor entity.

“Separation from Service” means your cessation of Employee status and shall be deemed to occur at such time as the level of the bona fide services you are to perform in Employee status  (or as a consultant or other independent contractor)  permanently decreases to a level that is not more than twenty percent (20%) of the average level of services you rendered in Employee status during the immediately preceding thirty-six (36) months (or such shorter period for which you may have rendered such service). Any such determination as to Separation from Service, however, shall be made in accordance with the applicable standards of the Treasury Regulations issued under Section 409A of the Internal Revenue Code of 1986, as amended (“Code”). For purposes of determining whether you have incurred a Separation from Service, you will be deemed to continue in “Employee” status for so long as you remain in the employ of one or more members of the Employer Group, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. “Employer Group” means the Company and any other corporation or business controlled by, controlling or under common control with, the Company as determined in accordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder, except that in applying Sections 1563(1), (2) and (3) for purposes of determining the controlled group of corporations under Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in such sections and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses that are under common control for purposes of Section 414(c), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in Section 1.4.14(c)-2 of the Treasury Regulations.

For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States.  Such documentation must be provided to us during your Orientation period (schedule to be confirmed), or our employment relationship with you may be terminated.

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You agree that, during the term of your employment with the Company, you will not actively engage in any other employment, occupation, consulting or other business directly or indirectly related to the business in which the Company is now involved or becomes involved during the term of your employment, nor will you engage in any other activities that conflict with your obligations to the Company.

As a Company employee, you will be expected to abide by the Company’s rules and regulations. You will be expected to sign and comply with an Employment, Confidential Information and Invention Assignment Agreement (the “Employee NDA”) that requires, among other provisions, the assignment of patent rights to any invention made during your employment at the Company and non-disclosure of proprietary information.  Your employment will be contingent upon and not be deemed effective until you have executed and returned the Employee NDA to the Company.

As provided in the Employee NDA, in the event of any dispute or claim relating to or arising out of our employment relationship, you and the Company agree that all such disputes shall be fully and finally resolved by binding arbitration conducted by the American Arbitration Association in San Mateo County, California (or some other mutually agreed upon location) under the National Rules for the Resolution of Employment Disputes.  The Company agrees to pay the fees and costs of the arbitrator.   However, as also provided in the Employee NDA, we agree that this arbitration provision shall not apply to any disputes or claims relating to or arising out of the misuse or misappropriation of the other party’s trade secrets or proprietary information.

This letter, along with the agreement relating to proprietary rights between you and the Company, sets forth the terms of your employment with the Company and supersedes any prior representations or agreements, whether written or oral.  This letter may not be modified or amended except by a written agreement, signed by a designated representative of the Company and you.

To indicate your acceptance of the Company’s offer, please sign, date, and return this letter to our Human Resources department on or before Tuesday, January 29, 2008, 5:00 PM. If we receive the signed letter by the specified due date, the Company will authorize a payment to you of $115,000 to compensate you for forgone opportunities in your current position. This amount shall be paid with your first payroll following your hire date.

 This letter, along with the agreement relating to proprietary rights between you and the Company, sets forth the terms of your employment with the Company and supersedes any prior representations or agreements, whether written or oral.  This letter may not be modified or amended except by a written agreement, signed by a designated representative of the Company and you. A duplicate original is enclosed for your records.

We look forward to working with you.

Sincerely,

/s/ Joshua Pickus

Chief Executive Officer

SupportSoft, Inc.

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By signing this Offer Letter, I hereby accept, acknowledge and agree to the terms and conditions as stated above.

On this day of January 29, 2008

/s/ Shelly Schaffer
Shelly Schaffer
February 29, 2008
Start Date
Enclosures:	Duplicate Original Letter
	Release for Background Check

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EX-10.2

Exhibit 10.2

EXECUTIVE INCENTIVE COMPENSATION PLAN DESCRIPTION

SUPPORTSOFT, INC.

SupportSoft, Inc. (the “Company”) has adopted its 2008 Executive Incentive Compensation Plan effective beginning January 1, 2008.  The Executive Incentive Compensation Plan (the “Plan”) is designed to allow employees to share in Company achievements based on attainment of pre-established, corporate financial performance and individual performance goals.  The Plan is designed to motivate and reward select employees whose performance is critical to the overall success of the Company.

Eligibility and Plan Year

Plan eligibility is limited to Managers and above, subject to the annual review and approval of Company management. Employees who participate in a Company sales compensation program are not eligible for the Plan.  Eligibility is not automatic. A participant must be nominated by their supervisor with concurrence of the next level of management, as appropriate. Bonus eligible employees must be employed at the end of the payment period (quarter or year) to be eligible to receive a payment under the Plan.

The Plan is annual, January 1 through December 31, with achievement measured and bonuses paid on a quarterly basis, and overachievement paid on an annual basis.

Elements of the Plan

Each eligible employee has a target bonus, calculated as a specified percentage of that employee’s annual salary.  The bonus amount will be based upon two components:  (1) the Company or business unit’s achievement of its financial goals, and (2) the individual employee’s achievement of his or her management by objective (MBO) goals.

·Employees who are assigned to a specific business unit (Enterprise Solutions Group (ESG) or Consumer Solutions Group (CSG)) will be eligible for a bonus based in part on that business unit’s performance (the “Business Unit Portion”).

·Employees whose work is allocated to each of the business units on a percentage basis will be eligible for a bonus that includes a Business Unit Portion that is allocated proportionately to the individual BUs.   For example, an employee who is allocated 65% to CSG and 35% to ESG will receive a Business Unit Portion that is based 65% on CSG’s achievement of its objectives and 35% on ESG’s performance.

·Employees who work in General and Administrative roles (not assigned to a BU) will be eligible for a bonus tied to overall Company performance (the “Company Portion”).

·The remainder of each eligible employee’s target bonus will be based upon his or

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her individual MBO goals (the “MBO Portion”).

·The Company/BU Portion will be a larger percentage of the overall target bonus for more senior employees, who have a greater influence on Company results:

Level	Company Portion		Business Unit Portion		Individual MBO Portion
GM	—		100	%	—
VP/SVP/EVP (CSG)	—		50	%	50	%
VP/SVP/EVP (ESG)	—		50	%	50	%
VP/SVP/EVP (corporate)	50	%	—		50	%
Below VP level (CSG)	—		25	%	75	%
Below VP (ESG)	—		25	%	75	%
Below VP (corporate)	25	%	—		75	%

A partial bonus shall be paid for partial achievement of Company goals or individual MBO goals on a pro-rata basis.  An employee may also receive either the Company/BU Portion or the MBO Portion if one portion is earned but not the other.

The Company/BU Portion

At the beginning of each fiscal year, the Company will approve financial performance goals for the coming year to which the Plan will tie.  The Company may revise those financial performance goals at any time in its discretion.  The Company/BU Portion of the bonus is earned only at the close of the fiscal quarter or year to which it relates and only if the performance goals are achieved as determined by the Company in its discretion. In order to be eligible for a bonus, a participant must be an active, full-time employee of the Company on the last day of the quarter or year for which the incentive award is earned.

On an annual basis, if the Company or a BU exceeds its pre-established annual financial objectives, then the Company/BU Portion will increase proportionately. Employees are eligible to receive a total Company/BU Portion that is greater than 100% of his or her target amount, according to a pre-defined formula for business overachievement determined by the Company.  Overachievement will be capped in an amount determined by the Company in its discretion.  Any overachievement will be earned only at the close of the Company’s fiscal year and will be paid annually.  Bonus eligible employees must be employed at the end of the year to be eligible to receive any bonus payment for overachievement.

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The MBO Portion

Within the first two weeks of each quarter of the Company’s fiscal year, the employee and their supervisor will jointly prepare and agree upon written MBO performance goals. These goals would in turn be approved by the supervisor’s manager and then submitted to Human Resources.  MBOs should be specific, measurable, attainable, realistic, and timely.  They should define what the employee is going to do and how it will be achieved and measured, with quantifiable outcomes and expected completion dates.  MBOs should stretch employees outside their normal job responsibilities.  MBOs may consist of both team and individual objectives.  To the extent possible and consistent with the employee’s job description, the performance goals shall be based on objective criteria.  However, certain subjective criteria (such as “working well with co-workers”) will necessarily be included in the goals.

Each individual MBO will be weighted as a percentage of the total MBO Portion for the quarter and will be assigned a proportionate dollar award value.  MBOs are evaluated quarterly and any bonus payments for achievement will be calculated quarterly.  If there is a threshold of achievement for a given MBO, the employee must meet that threshold in order for any bonus to be paid. Each MBO may be treated differently in terms of threshold for payments. In other words, some MBOs may require an achievement of 80% or better, while others may not have a minimum threshold of achievement.

The MBO Portion will be earned only upon completion of the employee’s quarterly performance review demonstrating that the employee has achieved his or her performance goals during the course of the quarter.

Eligibility and Payments to Participants

In order to be eligible for a bonus, a participant must be an active, full-time employee of the Company on the last day of the quarter or year for which the incentive award is earned.  If a participant’s employment terminates prior to the end of the quarter, the employee will not have earned any portion of the bonus and therefore will not be entitled to any portion of the bonus.  The Company may make exceptions to this requirement in the event of an employee’s death or disability, as determined by the Company in its sole discretion.  Eligible employees who terminate employment for any reason after the end of the applicable bonus quarter will be entitled to full payment of any earned bonus award on the date fixed for payment.

New hires who are approved for inclusion into the plan, but become full time regular employees after the beginning of the quarter will not receive an award for their initial quarter of service. Exceptions will be made only with approval of the CEO or his designee.

Employees approved for inclusion in the plan arising from promotion and/or transfer after the start of the quarter will not receive an award for their initial quarter in their new role. Exceptions will be made only with approval of the CEO or his designee. However, if already in the plan, they will be eligible for full participation in their previous position’s rate based upon that position’s metrics.

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Awards shall be paid by check less applicable taxes, after the quarterly corporate performance results are available and certified by the Board of Directors and employee performance against MBO goals is determined, and in any event within 45 days following the end of the period to which the bonus relates.  In no event will any bonus be paid earlier than the first day following the end of the period to which the bonus relates or later than March 15 of the year following the year to which the bonus relates.  All appropriate taxes will be deducted and withheld from the award payment, as required by federal, state and/or local laws.

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The existence of, or an employee’s eligibility for, this Plan shall not be deemed to give the participant the right to be retained in the employ of the Company nor will the Plan, or rights thereunder, interfere with the rights of the Company to discharge any participant at any time.  The Plan will not be deemed to constitute a contract of employment with any participating employee, nor be deemed to be consideration for the employment of any participant.

The Plan, as set forth in this document, represents the general guidelines the Company presently intends to utilize to determine what incentive awards, if any, will be paid.  If, however, at the sole discretion of the Company, the Company’s best interest is served by applying different guidelines in special or for unusual circumstances, it reserves the right to do so by notice to such individuals at any time.  The Company reserves the right to amend or discontinue this Plan at any time in the best interests of the Company.  Without in anyway limiting the foregoing rights of the Company, should a material acquisition, disposition or change in corporate control occur during the Plan period, the Company reserves the right to amend or discontinue the Plan following such event in such manner as the Company, in its sole discretion, deems appropriate.

The Company shall have full power and authority to interpret and administer the Plan and shall be the sole arbiter of all manners of interpretation and application of the Plan and the Company’s determination shall be final.  Any inconsistencies that may occur between the Plan provisions and the calculation of the incentive results will be interpreted and resolved on an individual basis by the Company.

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