Common use of Merit Bonus Clause in Contracts

Merit Bonus. The Board of Directors, or the Compensation ----------- Committee of the Board have established, and shall monitor and oversee an incentive bonus program for the Executive which has definitive and specific hurdles and performance standards which, if achieved in the aggregate, would result in the Executive receiving bonus compensation of $175,000 during the applicable fiscal year, more specifically described as follows: (i) Attached as Exhibit "B" are the consolidated revenue, expense and ----------- net pre-tax profits projections prepared in accordance with generally accepted accounting principles by the Executive for the 1997 and 1998 calendar years of AVCOM. (ii) The Company and the Executive have agreed to tie the Executive's incentive bonus to the achievement of the revenue and net pre-tax profit projections contained in Exhibit "B". In connection with the merger of AVCOM ----------- and a subsidiary of the Company, there will be some integration of the operations of AVCOM and the Company to promote efficiency and increase profitability. For purposes of calculating the Executive's incentive bonus for the 1997 and 1998 fiscal years, the Company and the Executive agree to work together to formulate a reasonable measure of the profitability of AVCOM for these periods as though the merger had not occurred. (iii) In the event that the 1997 AVCOM calendar year consolidated net revenues and pre-tax net profits, as determined by the Company in the exercise of its good faith business judgment, are (a) 80% or more of the amounts set forth in Exhibit "B", the Executive shall receive a $50,000 ----------- incentive bonus for such year; (b) 90% or more of the amounts set forth in Exhibit "B", the Executive shall receive an additional $50,000 incentive bonus ----------- for such year (for a total of a $100,000 incentive bonus for such year); or (c) 100% or more of the amounts set forth in Exhibit "B", the Executive shall ----------- receive an additional $75,000 incentive bonus for such year (for a total of a $175,000 incentive bonus for such year). (iv) In the event that the 1998 AVCOM calendar year consolidated net revenues and pre-tax net profits, as determined by the Company in the exercise of its good faith business judgment, are (a) 80% or more of the amounts set forth in Exhibit "B", the Executive shall receive a $50,000 incentive bonus for ----------- such year; (b) 90% or more of the amounts set forth in Exhibit "B", the ----------- Executive shall receive an additional $50,000 incentive bonus for such year (for a total of a $100,000 incentive bonus for such year); or (c) 100% or more of the amounts set forth in Exhibit "B", the Executive shall receive an additional ----------- $75,000 incentive bonus for such year (for a total of a $175,000 incentive bonus for such year). (v) In the event that the Executive is not employed for the entire calendar year in either 1997 or 1998 due to a termination of employment as a result of death or disability, the Executive's incentive bonus compensation would be prorated at the end of the year based upon the incentive bonus compensation that would have been due for the entire year for the period of time during such calendar year of the Executive's employment with the Company. If Executive's employment is terminated for any other reason during a calendar year, no amount described in this Section 4(d) shall be due or payable. (vi) For calendar years after 1998 during which this Agreement is in effect, the Compensation Committee of the Board will monitor and review this program as necessary to reflect the Executive's contributions to the Company. The award of the merit bonus will be based primarily on two criteria. The first will be the nature of the Executive's performance in excess of the high level of reasonably achievable performance which the Company requires of all of its employees, including the quality and level of the Executive's performance; the achievement by the Executive of the reasonably achievable performance standards specified in the Executive's incentive bonus compensation plan; and the value which the Executive has contributed to or created for the Company. The second will be based on the overall profitability, level of increased profitability and success in each of the Company's activities in which the Executive has been materially involved, as well as the overall financial performance of the Company and its publicly-traded stock. (vii) For extraordinary performance by the Executive in any calendar year, the Compensation Committee of the Board may, in its sole and absolute discretion, consider the Executive for the receipt of an additional incentive bonus in excess of the specified incentive bonus plan outlined above.