exv10w7



 







EXHIBIT 10.7




Summary of Executive Bonus Arrangements

(For Fiscal 2006)





	I.	 	Bonus Structure






	 	•	 	For the current year bonus, an executive’s on-target bonus objective is approved each
year by the compensation committee. Achievement of the bonus is based on four,
equally-weighted performance goals: 25% revenue (growth initiatives only), 25% Profit,
25% Cash (cash flow from operating and investing activities before changes in working
capital), 25% MBO (individual performance objectives); provided, however, that if the
growth revenue objective is not achieved at the 80% threshold level, the other three
objectives will be paid to a maximum of 50% of the target amounts.






	 	o	 	Financial Bonus Component split by quarter: 20% for each of the first three fiscal
quarters and 40% for the fourth quarter, in each case on a year-to-date basis.
	 
	 	o	 	2-break Financial Bonus formula:





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	% of Bonus	 	 	 	 	 	 	 	 	 	 
	 	 	up to 1st	 	1st Break	 	% of Bonus up to	 	2nd Break	 	% of Bonus up to	 	% of Bonus at and
	 	 	Break	 	Point	 	2nd Break	 	Point	 	100% of Plan	 	after 100%
	Revenue

	 	 	0	%	 	80% of Plan
	 	15% + 2.5% for each
	 	90% of Plan
	 	60% + 2.5% for each
	 	100% + 1.0% for each
	 

	 	 	 	 	 	 	 	1% over 80%
	 	 	 	1% over 90%
	 	1% over 100%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Profit

	 	 	0	%	 	95% of Plan
	 	15% + 10.0% for each
	 	97.5% of Plan
	 	60% + 10.0% for each
	 	100% + 1.0% for each
	 

	 	 	 	 	 	 	 	1% over 95%
	 	 	 	1% over 97.5%
	 	1% over 100%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash

	 	 	0	%	 	90% of Plan
	 	15% + 5.0% for each
	 	95% of Plan
	 	60% + 5.0% for each
	 	100% + 1.0% for each
	 

	 	 	 	 	 	 	 	1% over 90%
	 	 	 	1% over 95%
	 	1% over 100%







	 	o	 	MBOs are annual, tied to the Company’s growth initiatives and consist of
1-6 objectives per executive, negotiated and agreed between the Chief Executive
Officer and executive based on the approved budget and business plan. The
Chief Executive Officer’s MBOs are the sum of the individual executives’ MBOs.






	 	•	 	Long-Term Bonus Pool for the three subsequent fiscal years (1/3 each) = current
year bonus as actually earned up to bonus pool of 40% of the on-target current year
bonus. Additional bonus pool dollars are added at the rate of $1 per $2 of
overachievement of the Profit target up to maximum of 100% of the actual current year
bonus.






	 	o	 	Long-Term Bonus payouts for each of the three years are tied to the 5-year
revenue plan (including acquisitions).






	 	o	 	Long-Term Bonus award formula: <75% of target gets 75% of plan (floor);
75-100% gets 75% + 1% for each 1% over 75%; 100-125% gets




 









 






100% + 1% for each 1%
over 100%; 125-150% gets 150% + 2% for each 1% over 125%; >150% gets 200%
(cap).











	 	o	 	Payout in three annual installments following each of the three performance
periods. One-half of the floor amount is paid in common stock, valued at the time
of payment, and the remainder is paid in cash.






	 	•	 	Long-term bonus pool payouts from fiscal 2003, 2004 and 2005 are in their payout
phase. Their respective performance criteria are cash from operating and investing
activities before changes in working capital, earnings per share and revenue. These
awards are payable entirely in cash.






	II.	 	Miscellaneous Provisions






	 	•	 	If an executive’s employment is terminated for any reason, the executive forfeits
all rights to any current year bonus for the fiscal quarter in which the termination
occurs and subsequent fiscal quarters and forfeits all rights to any long-term bonus
not yet paid.
	 
	 	•	 	These compensation arrangements do not give any executive any right to be retained
in the employment of the Company and do not affect the right of the Company to
terminate, with or without cause, any executive’s employment at any time.
	 
	 	•	 	The Company has the right to withhold from any compensation payable to an
executive, or to cause the executive (or the executor or administrator of his or her
estate or his or her distributee) to make payment of, any federal, state, local, or
foreign taxes required to be withheld with respect to any payment.
	 
	 	•	 	The Company may amend, alter, suspend or discontinue the compensation arrangements,
as it shall from time to time consider desirable.
	 
	 	•	 	In limited circumstances, the Chief Executive Officer, in consultation with the
compensation committee, may approve limited exceptions to the terms of the bonus
plans.