**Exhibit 10.16**

 

**2004 PAY FOR RESULTS PLAN – TIER ONE EXECUTIVETEAM**

 

**Objectives**

 

The company’s Pay forResults (PFR) Plan enables participants to share in the financial benefits ofCompany performance.  The plan isintended to:

 

•                                          provide a link between current bonus and businessgoals

•                                          link pay practices to current managementpractices

•                                          Improve employee loyalty

•                                          encourage teamwork

•                                          share the rewards of success.

 

**GeneralConcept**

 

1.               Theprogram will apply to the CEO, COO, CFO, CTO, SVP- HR and SVP - General LegalCounsel.

 

2.               A33% bonus will be paid on the basis of reaching a revenue target, an operatingincome target as well as a cash balance target.

 

3.               Thebonus mix is 33.4% for revenue, 33.3% for operating income and 33.3% formaintaining a cash balance above $7 million. If one target is reached and not the other two, then the bonus will bepaid on the target that was met.  Forexample if the revenue but not the operating income goal or cash balance ismet, then the PFR participant would receive 33.4% of the possible bonus.

 

4.               Thebonus will be paid quarterly on the payroll run immediately subsequent to thepublic release of the financial results.

 

5.               The Company seeksto achieve a balance between delivering on the financial performancecommunicated to its shareholders and providing upside incentive to itsmanagement team to exceed targeted financial performance.  The financial plan of the company isstructured in such a way that as the year progresses, profitability is expectedto improve significantly.  As such,overachievement in the latter part of the plan year will be rewarded more thanin the early part of the year as outlined below:

 

•                  InQ1 of each year, payouts will equal the proportional percentage overachievementversus the target.  For example, **110% overachievement would equate to 110% payout ofthe target bonus opportunity.**

•                  InQ2 of each year, payouts will be interpolated such that for each percentageoverachievement realized, the payout will equal 2.5%.  For example, **110%**

 

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**overachievement would equate to a 125% payout of the targetbonus opportunity (10 point overachievement multiplied by 2.5x).**

•                  InQ3 of each year, payouts will be interpolated such that for each percentageoverachievement realized, the payout will be 5%.  For example, **110% overachievement equals 150% payout of the target bonus opportunity(10 base point overachievement multiplied by 5x).**

•                  InQ4 of each year, payouts will be interpolated such that for each percentageoverachievement realized, the payout will be 10%.  For example, **110%overachievement equals 200% payout of the target bonus opportunity (10 basepoint overachievement multiplied by 10x).**

 

**In all of the above instances, the maximum percentage payoutto target earned is not to exceed 250%.**

 

5.               Targetswill be set annually.

 

**Participation**

 

1.               APFR participant must be employed on the last day of the bonus period to receivea bonus for that quarter.  Those whoterminate prior to the last day of the bonus period would not receive a bonusfor that quarter.

 

2.               Participantswho are new to the plan due to promotion or hire, will receive a prorated bonusfor the number of days their position is held during the quarter.

 

3.               Aten-day grace period for unpaid leave will be provided during each quarter forpurposes of calculating the bonus.  Ifhowever a PFR participant is out more than ten days on unpaid leave, the totalnumber of days in the bonus period will be divided by the number of days absentand the bonus will be adjusted.  Forexample: if there were 100 days in a bonus period and a PFR participant missed25 days, the bonus amount to be paid would be 75% of the total eligible bonusamount.

 

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