Exhibit 10.25
 
EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into by and between
Smart Online, Inc., a Delaware corporation (the "'Company-), and Bob Dieterle,
an individual (the "Employee"), on April 15, 2010, to be effective as of
February 1, 2010 (the "Effective Date").
 
The Company desires to employ the Employee and the Employee desires to accept
such employment on the terms set forth below.
 
In consideration of the mutual promises set forth below and other good and
valuable consideration, the receipt and sufficiency of which the parties hereby
acknowledge, the Company and the Employee agree as follows:
 
1.           EMPLOYMENT, POSITION AND DUTIES. The Company shall employ the
Employee and the Employee shall serve the Company on the terms and conditions
set forth in this Agreement.

 
(a)            The Employee shall serve as a full-time employee of the Company
as General Manager and Senior Vice President, with such duties and
responsibilities as are described on Exhibit A annexed hereto, and such other
duties and responsibilities not inconsistent therewith as may from time to time
be assigned to him by the Board of Directors of the Company (the "Board") and
the Chief Executive Officer. Notwithstanding anything herein to the contrary.
the parties acknowledge and agree that Employee's position shall not entail any
policy-making functions within the meaning of Section 3b-7 of the Securities
Exchange Act of 1934, as amended, and Employee shall have no authority to hire
or dismiss Company personnel.
 
(b)           The Employee shall devote his loyalty, attention, and time to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Employee under this Agreement. use his best
efforts to carry out such responsibilities faithfully and efficiently.
 
(c)           During his employment. the Employee shall not engage in any other
business activities of any nature whatsoever (including board memberships) for
which he receives compensation without the Company's prior written consent;
provided, however, this provision does not prohibit him from personally owning
and trading in stocks, bonds, securities, real estate or other investment
properties for his own benefit which do not create actual or potential conflicts
of interest with the Company.
 
2.           COMPENSATION.
 
(a)            Base Salary. The Employee's base annual salary initially shall be
payable at the annual rate of One Hundred Fifty Thousand Dollars ($150,000),
less any applicable taxes and withholdings, payable in accordance with the
Company's standard payroll practices. Any salary adjustment shall be subject to
approval by the Board in its sole discretion, provided, however, that the
Employee shall be entitled to an increase in base annual salary at the annual
rate of Ten Thousand Dollars ($10,000), effective at such time as (1) the
Company achieves Positive Cash Flow for one (1) full calendar quarter after the
date hereof and (2) the Chief Executive Officer of the Company or the Board
approve, in writing, a business plan prepared by the Employee containing
reasonable assumptions underlying Positive Cash Flow projections for the next
three (3) calendar quarters. For purposes hereof, "Positive Cash Flow" for any
period shall mean, with respect to such period, that the Company's net earnings
(loss) plus (i) interest paid on the Company's Secured Convertible Subordinated
Notes and (ii) noncash charges, including depreciation and amortization, as
reported in the Company's financial statements as f i led with the Securities
and Exchange Commission, exceed zero, excluding non-recurring items of income,
gain, loss or expense treated as "extraordinary" items under U.S. Generally
Accepted Accounting Principles, and without giving effect to the operation of
any business operations commenced or acquired by the Company after the date
hereof that are outside the scope of Employee's management duties, as determined
by the Board.

 
(b)           Other Benefits. The Employee may participate in all medical,
dental, disability, insurance, 401(k), pension and other employee benefit plans
and programs which may be made available from time to time to Company employees
at the Employee's level, provided, however, that the Employee's participation is
subject to the applicable terms, conditions and eligibility requirements of
these plans and programs, some of which are within the plan administrator's
discretion, as they may exist from time to time. For so long as Employee is
employed by the Company. the Company will compensate Employee for the cost of
additional premiums. plus any taxes that Employee is required to pay on account
of such compensation, that Employee pays pursuant to the Company's existing
group life insurance plan to purchase additional coverage of up to $300,000 on
the life of Employee.

 
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(c)            Vacation. The Employee shall be entitled to paid vacation of
fifteen (15) days from the Effective Date until December 31, 2010, and
thereafter, twenty (20) days each calendar year, and shall be paid for any
unused portion of accrued vacation upon termination of employment hereunder as
provided in Sections 4 and 5. Unused vacation days in any year shall not carry
over to the next year and, to the extent not used, shall be forfeited.

 
(d)           Stock Award Agreement. Contemporaneously with the execution of
this Agreement, the Employee shall he granted an award of up to Fifty Thousand
(50,000) shares of common stock of the Company, par value $.001 per share
("Common Stock"), whose issuance is conditioned on the Company meeting certain
financial criteria. The terms of such award are as set forth in the Stock Award
Agreement between the Company and Employee.

 
(e)           Stock Options.                               Contemporaneously
with the execution of this Agreement. the Employee shall he granted stock
options to purchase up to Seventy Five Thousand (75.000) shares of Common Stock
(the "Options"). The Options shall vest and become exercisable over a period of
four (4) years, in increments of twenty-five percent (25%) per year. as set
forth in the Nonqualified Stock Option Agreement between the Company and the
Employee, which agreement sets forth the other terms of such Options.
 
(f)             Bonus.    In January of each year the Board will review the
profitability of the Company for the preceding calendar year. Provided the
Employee is then employed with the Company. the Employee shall be entitled to
receive annual bonuses in the amounts set forth on Schedule I attached hereto,
to be paid subject to the conditions and at the times set forth therein.
 
3.           TERM AND TERMINATION OF EMPLOYMENT. Notwithstanding anything herein
to the contrary, Employee shall be employed on an “AT WILL" basis. The period of
Employee's employment hereunder is referred to as the "Term", and shall be
subject to the following provisions:

 
(a)           Death of Employee. The Employee's employment and this Agreement
shall terminate automatically upon the Employee's death.

 
(b)           Without Cause. During the Term of this Agreement, the employment
relationship hereunder may be terminated at any time without Cause by the
Company.

 
(c)           With Cause. The Company may terminate the Employee's employment
immediately for Cause.  For purposes of this Agreement, "Cause" means:

 
(i)         Any act or omission of the Employee constituting misconduct or
negligence, fraud, misappropriation, embezzlement, conflict of interest or
competitive business activities, including without limitation any arrest on
criminal charges;

 
(ii)          any chemical dependence which materially adversely affects the
performance of his duties and responsibilities to the Company;

 
(iii)           breach of the Employee's fiduciary obligations to the Company,
if any, in a material respect:

 
(iv)           the Employee's material breach of the Company's policies or any
material provision of this Agreement:

 
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(v)          the Employee's misconduct resulting in substantial loss to the
Company or damage to the reputation of the Company: or

 
(vi)           the Employee's material violation of securities laws, rules or
regulations.

 
4.           OBLIGATIONS OF THE COMPANY UPON TERMINATION PRIOR TO A CHANGE IN
CONTROL.

 
(a)           Termination by the Company without Cause. If the Company
terminates the employment of the Employee without Cause prior to a Change in
Control, as defined herein,
 
(i)         the Company shall pay the Employee the portion of his base salary in
effect at the time of termination as he may be entitled to receive for services
rendered prior to the date of such termination:
 
(ii)          the Company shall pay the Employee for any unused portion of his
vacation in a lump sum in the second scheduled payroll following the date of
termination; and
 
(iii)             in the event the Employee has been employed pursuant to this
Agreement for more than six (6) consecutive months prior to such termination.

 
1.      the Company shall pay the Employee an amount (less any applicable taxes
and withholdings) equal to the Employee's then current monthly salary for a
period of three (3) months following the date of termination, payable in
substantially equal installments in accordance with the Company's standard
payroll practices. For purposes of Section 409A ("Section 409A") of the Internal
Revenue Code of 1986, as amended (the "Code"), as applicable, each installment
payment shall be considered to be a separate payment. If the total amount of
payments due the Employee under this Section should exceed the maximum amount
permitted to be paid under a separation pay plan exempt from regulation under
Section 409A pursuant to Treasury Regulations Section 1 .409A-1 (b)(9)(iii),
then the entire amount in excess of such maximum amount shall be paid in a lump
sum no later than two and one-half (2 V2) months following the end of the
calendar year in which the Employee's employment terminated, and

 
2.      the Company shall pay the monthly premium for continuation of Employee's
coverage under the Company's medical insurance plans, pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, for a period of three
(3) months following the date of termination.

 
(b)           Termination on Account of Death or with Cause. If this Agreement
terminates on account of Employee's death or i f the Company terminates the
employment of the Employee with Cause, the Company shall pay the Employee or his
beneficiary such compensation as is set forth in subsections (a)(i) (amounts due
at termination) and (a)(ii) (unused vacation) above.
 
5.           CHANGE IN CONTROL.
 
(a)           If, during the Term and following Employee's employment for six
(6) consecutive months under this Agreement. a Change in Control (as defined in
subsection (b) below) is consummated, as a result of which all of the Company's
shareholders, based on their share ownership, receive proceeds consisting of
cash and/or securities ("Change of Control Proceeds") valued at less than Five
Dollars ($5.00) per share for their Common Stock (prior to taking into account
any stock dividends, stock splits or other recapitalization events after the
date hereof), and within twelve (12) months following the Change in Control. (x)
the Employee's employment is terminated by the Company or the surviving entity,
as applicable, without Cause, or (y) the Employee terminates his employment for
"Good Reason" (as definedbelow), then the Company shall pay to the Employee (i)
the amounts set forth in Sections 4 (a)(i)-(ii) above, plus (ii) an amount equal
to Employee's then-current base salary that would have been paid to him from the
date of such termination through the 12-month anniversary of the Change of
Control. payable in a lump sum within thirty (30) days of' the effective date of
termination of employment, provided, however, that if the Change of Control
Proceeds are valued at an amount equal to or greater than Five Dollars ($5.00)
per share (prior to taking into account any stock dividends, stock splits or
other recapitalization events after the date hereof), and within twenty four
(24) months following the Change in Control the Employee's employment is
terminated by the Company or the surviving entity, as applicable, without Cause,
the Company shall pay to the Employee (i) the amounts set forth in Sections
4(a)(i)-(ii) above, plus (ii) an amount equal to Employee's then-current base
salary that would have been paid to him from the date of such termination
through the 24-month anniversary of the Change of Control (less any applicable
taxes and withholdings), payable in a lump sum within thirty (30) days of the
effective date of termination of employment.
 
 
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(b)           For purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred on the earliest of the following dates:
 
(i)         the date on which any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934. as amended (the
"Exchange Act"), other than: (i) the Company; (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company: (iii) a
corporation owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company:
or (iv) the existing holders of capital stock of the Company as of the effective
date hereof or their respective affiliates, is or becomes the "beneficial owner'
(as defined in Rule 1 3d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company's then outstanding securities; or
 
(ii)          on the condition that the transaction is consummated, the date the
shareholders of the Company approve a definitive agreement or plan for: (A) a
merger, share exchange, consolidation or reorganization involving the Company
and any other corporation or other entity as a result of which securities
representing more than fifty percent (50%) of the combined voting power of the
Company or of the surviving or resulting corporation or entity are held in the
aggregate by persons different than the persons holding those securities
(including their affiliates) immediately prior to such transaction: or (B) an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets.

 
(c)            For purposes of this Section 5, "Good Reason" shall mean the
Employee's resignation on account of any of the following conditions having
arisen without his consent and after having given the Company written notice of
the existence of such condition within thirty (30) days of the initial existence
of the condition, which condition is not remedied by the Company within thirty
(30) days of the Company's receipt of such written notice: (i) a material
diminution in the Employee's authority or responsibilities: (ii) a material
diminution in the Employee's base salary: (iii) relocation of the Employee's
office to a location more than fifty (50) miles outside of Research Triangle
Park, North Carolina: or (iv) any material breach of this Agreement by the
Company.
 
6.            EXPENSES. The Company shall reimburse the Employee for reasonable
and necessary expenses incurred by the Employee in the furtherance of the
Company's business in accordance with such procedures as the Company may from
time to time establish. To facilitate the work and availability of Employee, the
Company shall provide the Employee with reasonable  and necessary cellular
communications for business use.
 
7.            EMPLOYEE REPRESENTATION. The Employee represents and warrants that
he is under no contractual or other restriction or obligation which is
inconsistent with the execution of this Agreement. the performance of duties
hereunder or other rights of the Company hereunder.

 
8.           COVENANT NOT TO COMPETE. The Employee covenants that during the
Term of his employment hereunder and for so long as he is entitled to any
payments under Section              4(a)(iii)               and
Section                       5(a)          (the "Noncompetition Period") and
within the "Noncompetition Area" below, he shall not, directly or indirectly, as
owner, employee, stockholder, principal, agent, consultant, trustee or otherwise
or through the agency of any corporation, partnership, association, or other
entity (other than the Company) compete with the Company in the "Business" as
defined below.
 
(a)            For purposes of this Agreement, the "Noncompetition Area" shall
be the United States of America.
 
(b)           For the purposes of this Agreement, "Business" shall include any
business, service, or product engaged in, provided or produced by the Company
from the date of this Agreement to the date of the termination of the Employee's
employment with the Company, including, but not limited to, (i) the business of
development, production, marketing, design, manufacturing, leasing or selling
software related to business plans, accounting, or legal services for use by
small businesses, whether for use by professionals or consumers. (ii) the
business of development, marketing and operation of a business services Internet
portal for use by small businesses, and other products or services related to
any of the foregoing: (iii) providing web-hosted applications and technology
infrastructure syndication and/or (iv) any other business conducted by the
Company immediately prior to the date of termination of Employee's employment or
in which the Company shall at the time of termination of Employee's employment
with the Company be actively preparing for. For purposes of the foregoing
definition of "Business," a "small business" is any business enterprise with
fewer than 100 employees and a "business services Internet portal" is a web site
providing users with multiple online business resources covering broad topics
for small businesses such as, for example only. marketing, financial management,
legal, and business strategies using databases, online documents, reference
material, chat rooms, newsgroups, hyperlinking or other information tools.
 
9.           NONSOLICITATION COVENANT. The Employee covenants that during the
Noncompetition Period he shall not directly or indirectly, on behalf of himself
or on behalf of any other person, firm, partnership, corporation, association or
other entity, call upon any of the customers or clients of the Company for the
purpose of soliciting or providing any product or service similar to that
provided by the Company nor will he, in any way, directly or indirectly. for
himself, or on behalf of any other person, firm, partnership, corporation,
association, or other entity solicit, divert or take away. or attempt to
solicit, divert, or take away any of the customers, clients, business, or
patrons of the Company. The Employee further covenants that during the
Noncompetition Period he shall not, directly or indirectly, as principal, agent,
consultant, trustee or through the agency of any corporation, partnership,
association, or agency, induce or attempt to induce any person to leave the
employ of the Company
 
 
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10.           NONDISCLOSURE COVENANT.

 
(a)           The parties acknowledge that the Company is an enterprise whose
success is attributable largely to the ownership. use and development of certain
valuable confidential and proprietary information (the "Confidential Data"), and
that the Employee's employment with the Company will involve the Employee's
access to and work with such information. The Employee acknowledges that his
relationship with the Company is a confidential relationship. The Employee
covenants and agrees that (i) he shall keep and maintain the Confidential Data
in strictest confidence, and (ii) he shall not, either directly or indirectly,
use any Confidential Data for his own benefit, or divulge, disclose, or
communicate any Confidential Data in any manner whatsoever to any person or
entity other than the employees or agents of the Company having a need to know
such Confidential Data, and only to the extent necessary to perform their
responsibilities on behalf of the Company, and other than in the performance of
the Employee's duties in the employment by the Company. The Employee's agreement
not to disclose Confidential Data shall apply to all Confidential Data, whether
or not the Employee participated in the development thereof. Upon termination of
employment for any reason, the Employee will return to the Company all Company
documents, notes, programs, data and any other materials (including any copies
thereof) in his/her possession.

 
(b)           For purposes of this Agreement, the term "Confidential Data" shall
include any and all information related to the business of the Company, or to
its products, sales or businesses which is not general public knowledge,
specifically including (but without limiting the generality of the foregoing)
all financial and accounting data: computer software: processes: formulae:
inventions: methods: trade secrets: computer programs: engineering or technical
data, drawings, or designs; manufacturing techniques; patents, patent
applications, copyrights and copyright applications (in any such case, whether
registered or to be registered in the United States of America or elsewhere)
applied for, issued to or owned by the Company: information concerning pricing
and pricing policies; marketing techniques; suppliers. methods and manner of
operations. and information relating to the identity, needs and location of all
past. present and prospective customers. The parties stipulate that as between
them the above-described matters are important and confidential and gravely
affect the successful conduct of the business of the Company and that any breach
of the terms of this paragraph shall be a material breach of this Agreement.
 
11.           INVENTIONS. All inventions, designs, improvements and developments
made by the Employee, either solely or in collaboration with others, during his
employment with the Company, whether or not during working hours, and relating
to any methods. apparatus or products which are manufactured, sold, leased, used
or developed by the Company or which pertain to the Business (the
"Developments"), shall become and remain the property of the Company. The
Employee shall disclose promptly in writing to the Company all such
Developments. The Employee acknowledges and agrees that all Developments shall
be deemed "works made for hire" within the meaning of the United States
Copyright Act, as amended, If, for any reason, such Developments are not deemed
works made for hire, the Employee shall assign, and hereby assigns, to the
Company, all of the Employee’s right, title and interest (including, but not
limited to, copyright and all rights of inventorship) in and to such
Developments. At the request and expense of the Company, whether during or after
employment hereunder, the Employee shall make, execute and deliver all
application papers, assignments or Instruments, and perform or cause to be
performed such other lawful acts as the Company may deem necessary or desirable
in making or prosecuting applications, domestic or foreign, for patents
(including reissues. continuations and extensions thereof) and copyrights
related to such Developments or in vesting in the Company full legal title to
such Developments. The Employee shall assist and cooperate with the Company or
its representatives in any controversy or legal proceeding relating to such
Developments, or to any patents, copyrights or trade secrets with respect
thereto. If for any reason the Employee refuses or is unable to assist the
Company in obtaining or enforcing its rights with respect to such Developments,
the Employee hereby irrevocably designates and appoints the Company and its duly
authorized agents as the Employee's agents and attorneys-in-fact to execute and
file any documents and to do all other lawful acts necessary to protect the
Company's rights in the Developments. The Employee expressly acknowledges that
the special foregoing power of attorney is coupled with an interest and is
therefore irrevocable and shall survive (i) the Employee's death or incompetency
and (ii) any termination of this Agreement.

 
12.           INDEPENDENT COVENANTS. Each of the covenants on the part of the
Employee contained in paragraphs 9, 10 and 11 of this Agreement shall be
construed as an agreement independent of each other such covenant. The existence
of any claim or cause of action of the Employee against the Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of any such covenant.
 
13.           REASONABLENESS: INJUNCTION. The Employee acknowledges that the
covenants contained in this Agreement are reasonably necessary and designed for
the protection of the Company and its business, and that such covenants are
reasonably limited with respect to the activities prohibited, the duration
thereof. the geographic area thereof, the scope thereof and the effect thereof
on the Employee and the general public. The Employee further acknowledges that
violation of the covenants would immeasurably and irreparably damage the
Company, and by reason thereof the Employee agrees that for violation or
threatened violation of any of the provisions of this Agreement, the Company
shall, in addition to any other rights and remedies available to it, at law or
otherwise, be entitled to any injunction to be issued by any court of competent
jurisdiction enjoining and restraining the Employee from committing any
violation or threatened violation of this Agreement. The Employee consents to
the issuance of such injunction. Furthermore, the Company shall, in addition to
any other rights or remedies available to it. at law or otherwise, be entitled
to reimbursement of court costs. attorneys' fees, and other expenses incurred as
a result of a breach of this Agreement. The Employee agrees to reimburse the
Company for such expenses promptly following a final determination that the
Employee has breached this Agreement. In the event of a final determination that
Employee has not breached this Agreement, the Company agrees to reimburse the
Employee for his court costs and attorneys' fees promptly following such
determination.
 
 
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14.           DELAYED DISTRIBUTION TO KEY EMPLOYEES. If the Company determines,
in accordance with Sections 409A and 416(i) of the Code and the regulations
promulgated thereunder, in the Company's sole discretion, that the Employee is a
Key Employee of the Company on the date of his separation from service with the
Company and that a delay in severance pay and benefits provided under this
Agreement is necessary for compliance with Section 409A(a)(2)(B)(i), then any
severance payments and any continuation of benefits or reimbursement of benefit
costs provided under this Agreement and not otherwise exempt from Section 409A
shall be delayed for a period of six (6) months (the "409A Delay Period"). In
such event, any such severance payments and the cost of any such continuation of
benefits provided under this Agreement that would otherwise be due and payable
to the Employee during the 409A Delay Period shall be paid to the Employee in a
lump sum cash amount in the month following the end of the 409A Delay Period.
For purposes of this Agreement, "Key Employee" shall mean an employee who, on an
identification Date ("Identification Date" shall mean each December 3 1) is a
key employee as defined in Section 416(i) of the Code without regard to
paragraph (5) of that section. If the Employee is identified as a Key Employee
on an Identification Date, then the Employee shall be considered a Key Employee
for purposes of this Agreement during the period beginning on the first April 1
following the Identification Date and ending on the following March 31.
 
15.           MISCELLANEOUS.
 
(a)           This Agreement shall be subject to and governed by the substantive
laws of the State of Delaware, without giving effect to the conflicts of laws
provisions thereof. The Employee hereby submits to the jurisdiction and venue of
the state and federal courts of North Carolina.
 
(b)           The Company's failure to insist upon strict compliance with any
provision of this Agreement shall not be deemed a waiver of such provision or
any other provision.
 
(c)           This Agreement may not be modified except by an agreement in
writing executed by the parties.
 
(d)           The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision.
 
(e)           This Agreement may be assigned by the Company, but it is not
assignable by Employee.
 
(t)           This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns, and the acquirer of all or
substantially all of the Company's business or assets.
 
(g)           This Agreement expresses the whole and entire agreement between
the parties and supersedes and replaces any prior employment agreement,
understanding or arrangement between Company and the Employee.
 
[SIGNATURE PAGE FOLLOWS]

 
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IN WITNESS "HEREOF. the parties have executed this Employment Agreement as of
the day and year first written above.

 
COMPANY:
 
SMART ONLINE, INC.
 
By: /s/ Dror Zoreff, Chairman

EMPLOYEE:
 
/s/ Bob Dieterle

 
 
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SCHEDULE 1
 
TO
EMPLOYMENT AGREEMENT
BETWEEN
 
SMART ONLINE, INC. AND BOB DIETERLE

 
Pursuant to Section 2(f) of the Agreement, on the condition that Employee is
employed by the Company as of the last day of a calendar year during the Term (a
"Target Year"), the Employee shall be entitled to receive, within thirty (30)
days of the Company's filing of its Annual Report on Form 10-K with the
Securities and Exchange Commission (the "Form 10-K") for such Target Year, a
cash bonus ("Cash Bonus") calculated as follows::
 
1. A Bonus equal to five percent (5%) of the Company's Tier I Profits for such
Target Year. "Tier I Profits" means any Net Profits (as defined below) of the
Company to the extent such amounts represent Net Profits in excess of One
Million Dollars ($1,000.000), and less than or equal to Two Million Dollars
($2,000.000), plus
 
2. A Bonus equal to four percent (4%) of the Company's Tier 2 Profits for such
Target Year. "Tier 2 Profits" means any Net Profits of the Company to the extent
such amounts
 
represent Net Profits in excess of Two Million Dollars ($2,000,000), and less
than or equal to Three Million Dollars ($3,000,000), plus
 
3. A Bonus equal to two percent (2%) of the Tier 3 Profits for such Target Year.
"Tier 3 Profits" means any Net Profits of the Company to the extent such amounts
represent Net Profits in excess of Three Million Dollars ($3,000,000).
 
"Net Profits" means net earnings as set forth in the Company's audited financial
statements included in the Form 1 0-K. excluding non-recurring items of income,
gain, loss or expense treated as "extraordinary" items under U.S. Generally
Accepted Accounting Principles, and without giving effect to the operation of
any business operations commenced or acquired by the Company after the date
hereof that are outside the scope of' Employee's management duties, as
determined by the Board.