EXHIBIT 10.1


 


Summary of Executive Bonus Plan


(adopted August 18, 2010)


 


On August 18, 2010, the
Compensation Committee of our Board of Directors adopted a new executive
incentive bonus plan for our eligible executive officers to be effective for
the fiscal year ending December 31, 2010 in replacement of a prior
executive bonus plan, previously adopted on August 21, 2009 for the
quarterly periods ending September 30, 2009 and December 31, 2009.
The new plan was adopted by the Compensation Committee after consideration by
the Committee of our compensation philosophies, principles and processes as
described in our Annual Report on Form 10-K/A for the fiscal year ended
December 31, 2009 filed with the Securities and Exchange Commission on
April 30, 2010. These philosophies, principles and processes provide for
periodic review by the Committee of the performance of our executive officers,
the components of their compensation and the effectiveness of our compensation
programs in rewarding the contributions of our executive officers towards
enhancing our specific business goals while retaining and motivating high
quality individuals. In adopting the new executive incentive bonus plan for the
fiscal year ending December 31, 2010, the Committee also considered a new report
from an independent third party compensation consultant, Towers Watson,
together with other recent competitive market data.


 


The new executive incentive
bonus plan covers the following executive officers, with applicable incentive
targets under the plan indicated as a percentage of base salary for each as
follows: Frank F. Khulusi, Chairman, President and Chief Executive Officer —
50% of base salary; Brandon H. LaVerne, Chief Financial Officer — 40% of base
salary; Kristin M. Rogers, Executive Vice President of Sales and Marketing —
40% of base salary; and Joseph B. Hayek, Executive Vice President of Corporate
Development and Investor Relations — 40% of base salary.


 


The plan will be funded at
the above amounts if the company achieves 100% of a target of adjusted EBITDA
for the 2010 calendar year. Adjusted EBITDA is defined under the plan as
consolidated earnings before interest, taxes, depreciation and amortization,
and adjusted for stock-based compensation and non-recurring special charges, if
any, to be excluded from the calculation of EBITDA in the discretion of the
Compensation Committee.


 


The plan also has a minimum
adjusted EBITDA for any incentive bonuses to be paid under the plan and
contains incentive bonus decelerators based on performance below the
performance target. If the company performance falls below the performance
target, but is at least 90% of the performance target, the incentive bonuses
may be reduced by a percentage of the incentive bonus target equal to two times
the percentage points by which adjusted EBITDA falls below the performance
target. For example, if the company achieves 90% of the performance target,
incentive bonuses under the plan may be funded at 80% of the target incentive
bonus amounts described above.  If the company achieves less than 90% of
the performance target, the plan will not be funded and no incentive bonuses
will be paid under the plan.


 


The plan also contains
accelerators under which the incentive bonus amounts can exceed the above
described target incentive bonus amounts. If the company’s performance is
between 100% and 110% of the performance target, the incentive bonuses may be
increased at a rate of two times the percentage points by which adjusted EBITDA
exceeds 100% of the performance target.  For example, if the company
achieves 110% of the performance target, the incentive bonuses may be paid at
120% of the above described incentive bonus target amounts.


 


Additional accelerators are
available if the company’s performance is between 111% and 130% of the
performance target. In such event, in addition to the first accelerator
described above for performance between 100% and 110% of the performance
target, the incentive bonus amounts may be further increased by an additional
four times the percentage points by which the performance target exceeds 110%,
with a maximum funding of 200% of the incentive bonus targets. For
example, if the company achieves 120% of the performance target, the plan may
be funded and incentive bonuses paid at 160% of the above described incentive
bonus target amounts. If the company achieves 130% or more of the
performance target, the plan may be funded and incentive bonuses paid at 200%
of the above described incentive bonus target amounts.


 


Joe Hayek was a participant
in an individual incentive plan during the period of January 1, 2010
through June 30, 2010. Such plan is terminated and replaced with this
plan effective July 1, 2010. The previous plan was prorated at
$25,000 for the respective period, and is preliminarily funded for
$21,875. Joe Hayek’s annual incentive bonus target under the new plan for
2010 is set at $102,077, leaving $77,077 remaining as available for the period
from July 1, 2010 to December 31, 2010, after deducting the prorated
$25,000 for the first half of 2010.


 

















 


The Compensation Committee
may in its sole discretion reduce the amounts that would otherwise be payable
to any participant for any period (including a complete elimination of all
amounts to be paid under the bonus plan). Any such reduction may be based on
quantitative or qualitative factors determined in the discretion of the
Compensation Committee, which may be based in part upon qualitative
recommendations from our Chief Executive Officer (for executives other than the
Chief Executive Officer).


 


In addition to participation
in the executive incentive bonus plan, as described above, all of our executive
officers are eligible for discretionary bonuses as determined from time to time
by our Compensation Committee. At the August 18, 2010 Compensation
Committee meeting, the Committee also awarded Brandon LaVerne a discretionary
bonus outside of the plan in the amount of $30,000.