Exhibit 10.2

 

Spherix Incorporated

 

SPHERIX INCORPORATED

INCENTIVE COMPENSATION PLAN

 

1.             Purpose.  The purpose of this Incentive Compensation Plan is to
provide economic incentives to key personnel of Spherix Incorporated and any
subsidiary corporations to assist it in achieving its business objectives.  This
Incentive Compensation Plan is designed to incentivize such key personnel to
meet various individual, division and corporate performance goals.

 

2.             Definitions.  For the purposes of the Plan, the following terms
shall have the following meanings:

 

“Annual Salary” – The annual base salary payable to a Participant.

 

“Awards” - Incentive compensation awards made pursuant to the Plan.

 

“Board” - The Board of Directors of the Corporation (or any committee thereof as
to which any duty or function hereunder has been delegated by the Board of
Directors).

 

“Calendar Year” – January 1 – December 31 periods commencing January 1, 2005.

 

“CEO” – The Chief Executive Officer of the Corporation.

 

“Corporation” – Spherix Incorporated, a Delaware corporation.

 

“Participant” - Each of the key employees of the Corporation and any Subsidiary
selected to participate in the Plan.  Unless otherwise determined by the Board,
the CEO, all Vice Presidents, all Division Directors and all Project Managers
shall be Participants.

 

“Performance Goals” – Target objectives used for measurement of Awards under the
Plan.  Performance Goals shall be either based on total Corporation performance
(“Corporate Performance Goals”), division performance (“Division Performance
Goals”), or individual performance (“Individual Performance Goals”).

 

“Plan” - This Incentive Compensation Plan, as set forth herein, or as
hereinafter amended.

 

“Subsidiary” – A corporation at least fifty percent (50%) of the total combined
voting power of all classes of capital stock of which is owned by the
Corporation, either directly or through one or more of its Subsidiaries.

 

“Target Bonus” – An aggregate dollar amount computed by multiplying a
Participant’s Annual Salary by 45% for the CEO, 35% for each Vice President, 25%
for each Division Director and 20% for each Project Manager.

 

3.             Effective Date.  The Plan will become effective for all Calendar
Years commencing as of January 1, 2005, and shall continue until terminated by
the Board.  The Board may terminate the Plan at any time and for any reason.

 

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4.             Regulations.  The Board shall have the power to adopt rules and
regulations (hereinafter referred to as the “Regulations”) not inconsistent with
the provisions of the Plan for the administration thereof, and to alter, amend
or revoke any Regulations so adopted.

 

5.             Interpretation and Administration of the Plan.  The Board shall
have full power and authority to interpret and administer the Plan and the
Regulations, and to make all decisions about the Plan and the Regulations.  The
decisions of the Board with respect to any questions concerning the
administration or interpretation of the Plan or Regulations shall be final,
conclusive, and binding.

 

6.             Establishment of Performance Goals.  Prior to the commencement of
each Calendar Year, the CEO shall submit to the Board for review and approval a
list of Participants together with Performance Goals.  The Board shall review,
make any necessary changes and thereafter approve the Participants and related
Performance Goals for the upcoming Calendar Year.  Notwithstanding the
foregoing, the Participants and related Performance Goals for Calendar Year 2005
have been approved by the Board as of the date of the adoption of this Plan.

 

7.             Performance Goals.  The Performance Goals for each Participant
shall be set forth in a writing signed on behalf of the Corporation and
distributed to each Participant.  Performance Goals established for the CEO
shall consist entirely of Corporate Performance Goals.  Performance Goals for
the Vice Presidents may consist of both Corporate Performance Goals and Division
Performance Goals.  Performance Goals for Division Directors and Project
Managers may consist of Corporate Performance Goals, Division Performance Goals
and Individual Performance Goals.

 

8.             Weighting of Performance Goals.  Performance Goals may be
weighted by the Board in its discretion, provided that in the event there is
more than one Corporate Performance Goal or Division Performance Goal for a
Participant, each of the Performance Goals in the relevant category shall be
equally weighted (the “Weighted Percentage”).

 

9.             CEO Award.  If the CEO achieves all of the CEO’s Performance
Goals at the 100% level, the CEO shall be entitled to an Award in an amount
equal to the Target Bonus.  In all other events, the Award shall be equal to the
sum of the amounts earned by the CEO for each of the Performance Goals based
upon a sliding scale of achievement of each such Performance Goal.  In this
event, the amount earned for each Performance Goal at the 100% level shall first
be calculated by dividing the Target Bonus by the number of the CEO’s
Performance Goals.  This resulting amount shall then be multiplied by the
percentage of actual achievement of the Performance Goal provided that such
percentage shall be zero if the actual achievement is below 80% and the maximum
percentage shall be 130% even if the actual achievement is in excess of 130%.

 

10.           Vice President Awards.  If a Vice President achieves all of the
Vice President’s Performance Goals at the 100% level, the Vice President shall
be entitled to an Award equal to the Target Bonus.  In all other events, the
Award shall be in an amount equal to the sum of the amounts

 

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earned by the Vice President for each of the Performance Goals based upon a
sliding scale of achievement.  In this event, the amount earned for each
Performance Goal at the 100% level shall first be calculated by multiplying the
Target Bonus by the Weighted Percentage.  This resulting amount shall then be
multiplied by the percentage of actual achievement of the Performance Goal
provided that such percentage shall be zero if the actual achievement is below
80% and the maximum percentage shall be 130% even if the actual achievement is
in excess of 130%.

 

11.           Division Director Awards.  If a Division Director achieves all of
the Division Director’s Performance Goals at the 100% level, the Division
Director shall be entitled to an Award equal to the Target Bonus.  In all other
events, the Award shall be in an amount equal to the sum of the amounts earned
by the Division Director for each of the Performance Goals based upon a sliding
scale of achievement.  In this event, the amount earned for each Performance
Goal at the 100% level shall first be calculated by multiplying the Target Bonus
by the Weighted Percentage.  This resulting amount shall then be multiplied by
the percentage of actual achievement of the Performance Goal provided that such
percentage shall be zero if the actual achievement is below 80% and the maximum
percentage shall be 130% even if the actual achievement is in excess of 130%.

 

12.           Project Manager Awards.  If a Project Manager achieves all of the
Project Manager’s Performance Goals at the 100% level, the Project Manager shall
be entitled to an Award equal to the Target Bonus.  In all other events, the
Award shall be in an amount equal to the sum of the amounts earned by the
Project Manager for each of the Performance Goals based upon a sliding scale of
achievement.  In this event, the amount earned for each Performance Goal at the
100% level shall first be calculated by multiplying the Target Bonus by the
Weighted Percentage.  This resulting amount shall then be multiplied by the
percentage of actual achievement of the Performance Goal provided that such
percentage shall be zero if the actual achievement is below 80% and the maximum
percentage shall be 130% even if the actual achievement is in excess of 130%.

 

13.           Example of Award Calculation.  The following is an example
illustrating the manner in which an Award will be calculated in the event that a
Participant does not achieve all of the Performance Goals at the 100% level.
 The example is based on a hypothetical Project Manager.  If the Project
Manager’s Annual Salary is $50,000.00 and the Board has established two (2)
Corporate Performance Goals (each weighted at 10%), one (1) Division Performance
Goal (weighted at 30%) and two (2) Individual Performance Goals (one weighted at
30% and the other at 20%), and the Project Manager achieves these Performance
Goals at 90%, 100%, 125%, 150%, and 75%, the Project Manager will be entitled to
an Award of $9,550, as follows:

 

Award for Corporate Performance Goal #1

 

$

900

 

Award for Corporate Performance Goal #2

 

1,000

 

Award for Division Performance Goal

 

3,750

 

Award for Individual Performance Goal #1

 

3,900

 

Award for Individual Performance Goal #2

 

0

 

 

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14.           Determination and Payment of Awards.  The Board shall determine
the amount of Awards payable to the Participants no later than the date the
Corporation publicly announces its earnings for the relevant Calendar Year.  All
Awards shall be paid in full in cash within five (5) days of the date of such
public announcement.

 

15.           Change in Status.  A Participant shall be entitled to an Award
earned for a Calendar Year if and only if the Participant remains a full time
employee as of the end of the Calendar Year for which the Award was earned.  If
a Participant is a full time employee at Calendar Year end but is not a full
time employee at the time of Award payment, the Participant shall still be
entitled to an Award payment unless the Participant’s employment was terminated
for cause as determined by the Board.  In the event a Participant changes
categories of employment during any Calendar Year, a new set of Performance
Goals may be established for the new category/position and the Award shall be
pro-rated based on the relative periods of time spent in each category.  In the
event a new Participant joins the Corporation in mid-Calendar Year, his Award
shall be pro-rated based on his time of service.

 

16.           Miscellaneous.

 

16.1.        Nothing contained in the Plan shall give any Participant the right
to be retained in the service of the Corporation or affect the right of the
Corporation to terminate the employment of any Participant.  The adoption of the
Plan shall not constitute a contract of employment between the Corporation and
any Participant.

 

16.2.        Except insofar as may otherwise be required by law, no amount
payable at any time under the Plan shall be subject in any manner to alienation
by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment,
charge, or encumbrance of any kind nor in any manner be subject to the debts or
liabilities of any person and any attempt to so alienate or subject any such
amount, whether presently or thereafter payable, shall be void.  If any person
shall attempt to, or shall, alienate, sell, transfer, assign, pledge, attach,
charge, or otherwise encumber any amount payable under the Plan, or any part
thereof, or if by reason of such Participant’s bankruptcy or other event
happening at any such time such amount would be made subject to such person’s
debts or liabilities or would otherwise not be enjoyed by such person, then the
Board, if it so elects, may direct that such amount be withheld and that the
same or any part thereof be paid or applied to or for the benefit of such
person, his or her spouse, children or other dependents, or any of them, in such
manner and proportion as the Board may deem proper.

 

16.3.        A Participant’s interest in amounts payable under the Plan shall at
all times be reflected on the Corporation’s books and records as unsecured,
unfunded obligation of the

 

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Corporation.  Participants shall have no right, title, or interest whatsoever in
or to any investment which the Corporation may make to aid it in meeting its
obligations under the Plan.  Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Corporation and any
Participant or any other person.  To the extent that any person acquires a right
to receive payments from the Corporation under this Plan, such right shall be no
greater than the right of an unsecured general creditor of the Corporation.  All
payments to be made hereunder shall be paid from the general funds of the
Corporation, and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such amounts.

 

16.4.        All expenses and costs of the operation of the Plan shall be borne
by the Corporation.

 

16.5.        All Awards under the Plan are subject to withholding, where
applicable, for Federal, state and local taxes.

 

16.6.        The Plan shall be governed by and construed in accordance with the
internal laws of the State of Maryland, without reference to principles of
conflict of laws.

 

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