Exhibit 10.23

 

**EMPLOYMENT AGREEMENT**

 

This EMPLOYMENT AGREEMENT is made as of August 7, 2008 by and between China Direct, Inc., a Florida corporation (the “Company”), and Marc Siegel (“Executive”).

 

**WITNESSETH**:

 

WHEREAS, Executive wishes to be employed by the Company with the duties and responsibilities as hereinafter described, and the Company desires to assure itself of the availability of Executive’s services in such capacity.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Company and Executive hereby agree as follows:

 

1.         EMPLOYMENT. The Company hereby agrees to employ Executive, and Executive hereby agrees to serve the Company, upon the terms and conditions hereinafter set forth.

 

2.         TERM. The employment of Executive by the Company pursuant to this Agreement shall be for a sixty five (65) month period commencing on August 1, 2008 (the “Employment Term”).

 

3.         DUTIES. Executive shall, subject to overall direction consistent with the legal authority of the Board of Directors of the Company (the “Board”), serve as, and have all power and authority inherent in the offices of President of            the Company and as well as a member of the Board and shall be responsible for those areas in the conduct of the business reasonably assigned to him by the Board. Executive shall devote substantially all his business time and efforts to the business of the Company; provided, however, that it is understood and agreed that, while Executive may devote time to other business matters in which he may have an interest, in the event of a conflict, Executive’s first and primary            responsibility shall be to the performance of his duties for the Company.

 

4.         COMPENSATION AND OTHER PROVISIONS. Executive shall be entitled to the compensation and benefits hereinafter described in subparagraphs (A) through (D) (such compensation and benefits being hereinafter referred to as “Compensation            Benefits”).

 

A.  BASE SALARY. The Company shall pay to Executive a base salary (the “Base Salary”) as follows:

 

i.          $400,000 per annum (pro rated) for the period commencing on August 1, 2008 and ending on December 31, 2008;

 

ii.         $450,000 per annum for the period commencing on January 1, 2009 and ending on December 31, 2009;

 

iii.        $500,000 per annum for the period commencing on January 1, 2010 and ending on December 31, 2010;

 

iv.        $550,000 per annum for the period commencing on January 1, 2011 and ending on December 31, 2011;

 

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v.         $600,000 per annum for the period commencing on January 1, 2012 and ending on December 31, 2012; and

 

vi.        $650,000 per annum for the period commencing on January 1, 2013 and ending on December 31, 2013.

 

B.  COMPENSATION ADJUSTMENT. The Base Salary and Executive’s other compensation will be reviewed by the Board of Directors of the Company (the “Board”) at least annually and may be increased (but not decreased) from time to time as the Board may determine.

 

C.  PARTICIPATION IN BENEFIT PLANS. During the Employment Term, Executive shall be eligible to participate in all Executive benefit plans and arrangements now in effect or which may hereafter be established, including, without limitation, all life, group insurance and medical care plans and all disability, retirement and            other Executive benefit plans of the Company. Should the Executive not want to participate in the Company’s health plan, with Board approval, the company will reimburse the Executive for the expense incurred in participating in another plan.

 

D.  OTHER PROVISIONS. During the Employment Term, Executive shall be entitled to (i) four (4) weeks paid vacation per annum, (ii) an automobile allowance of $750 per month (pro rated) which shall increase at five percent (5%) per annum beginning on January 1, 2009 and each year thereafter, and (iii) receive a mobile            phone allowance of $500 per month (pro rated) which shall increase five percent (5%) per annum beginning on January 1, 2009 and each year thereafter. Executive shall make himself available via email enabled mobile phone (such as a blackberry, iphone or similar mobile device) during periods in which they are not in the offices of the Company. Executive shall be reimbursed for all reasonable expenses incurred by him in the performance of his duties, including, but not limited to,            entertainment, travel and other expenses incurred in connection with such duties.

 

E.  DISCRETIONARY BONUSES. Executive shall be entitled to receive annual and/or interim cash bonuses and/or other bonuses (“Bonus Payments”) when and in such amounts as may be determined by the Board, pursuant to a recommendation by the compensation committee            of the Board. The Board shall meet at least annually to review Executive’s Bonus Payments and such Bonus Payments shall be based upon Executive’s performance of the duties assigned to him by the Board, the Company’s satisfaction of stated performance objectives known to Executive and/or other relevant factors.

 

F.   INCENTIVE COMPENSATION. Executive shall be entitled to receive incentive compensation pursuant toExhibit Abased on the performance of the calendar year 2008, and/or interim cash bonuses and/or other bonuses as compensation            (“Incentive Compensation”). Additional compensation for the year 2009 and beyond shall be determined by the Board at a future date.

 

G.  INDEMNIFICATION. The Company shall indemnify and hold harmless Executive to the fullest extent permitted by law for any action or inaction of Executive while serving as an officer and director of the Company or, at the Company’s request, as an officer or director of any other entity affiliated with the Company,            or as a fiduciary of any benefit plan. The Company shall include the Executive under the Company’s directors and officers’ liability insurance in the same amount and to the same extent as the Company covers its other officers and directors both (i) during the Employment Term, and (ii) for a five (5) year period after the Employment Term.

 

5.         TERMINATION. Executive’s employment hereunder shall terminate as a result of any of the following events:

 

A.  Executive’s death;

 

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B.  Executive shall be unable to perform his duties hereunder by reason of illness, accident or other physical or mental disability for a continuous period of at least three (3) months or an aggregate of nine (9) months during any continuous eighteen (18) month period (“Disability”);

 

C.  voluntary resignation by Executive;

 

D.  termination by the Company with Cause, where “Cause” shall mean: (i) final non-appealable adjudication of Executive of a felony, which would have a material or adverse effect on the business of the Company; or (ii) the determination of the Board (other than Executive) that Executive has engaged in            intentional misconduct or the gross neglect of his duties, which has a continuing material adverse effect on the business of the Company; or

 

E.  termination by the Company for any reason other than Cause.

 

Any termination pursuant to subparagraph B, C, D or E of this Section shall be communicated by a written notice (“Notice of Termination”), such notice to set forth with specificity the grounds for termination if termination is for “Cause”. Executive’s employment under this Agreement shall be deemed to have terminated as            follows: (i) if Executive’s employment is terminated pursuant to subparagraph A above, on the date of his death; (ii) if Executive’s employment is terminated pursuant to subparagraph B, D or E above, on the date the Notice of Termination is received by Executive; and (iii) if Executive’s employment is terminated pursuant to subparagraph C above, thirty (30) days after the date on which the Company receives Notice of Termination from Executive. The date on which            termination is deemed to have occurred pursuant to this paragraph is hereinafter referred to as the “Date of Termination”. If the Notice of Termination is sent to Executive by Company, then it shall be sent to Executive pursuant to the terms set forth in Section 14 of this Agreement.

 

6.         PAYMENTS ON TERMINATION. In the event that Executive’s employment is terminated pursuant to Sections 5 A, B, or E above, the Company shall pay to Executive and or his estate, (i) all of the Compensation Benefits Executive is entitled to through the Date of Termination (ii) all Incentive            Compensation, benefits and other compensation, if any, due and owing as of the Date of Termination, and (iii) any Severance Payments that the Executive may be entitled to pursuant to Section 15(C).

 

7.         LIFE INSURANCE. If requested by the Company, Executive shall submit to such physical examinations and otherwise take such actions and execute and deliver such documents as may be reasonably necessary to enable the Company to obtain life insurance on the life of Executive for the benefit of the            Company.

 

8.         REPRESENTATIONS AND WARRANTIES. Executive represents and warrants to the Company that he is under no contractual or other restriction or obligation that would prevent the performance of his duties hereunder or interfere with the rights of the Company hereunder.

 

9.         DISCLOSURE AND PROTECTION OF CONFIDENTIAL INFORMATION.

 

A.  For purposes of this Agreement, “Confidential Information” means knowledge, information and material which is proprietary to the Company, of which Executive may obtain knowledge or access through or as a result of his employment by the Company (including information conceived, originated, discovered or            developed in whole or in part by Executive). Confidential Information includes, but is not limited to, (i) technical knowledge, information and material such as trade secrets, processes, formulas, data, know-how, improvements, inventions, computer programs, drawings, patents, and experimental and development work techniques, and (ii) marketing and other information, such as supplier lists, customer

 

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lists, marketing and business plans, business or technical needs of customers, consultants, licensees or suppliers and their methods of doing business, arrangements with customers, consultants, licensees or suppliers, manuals and personnel records or data. Confidential Information also includes any information described above which the Company obtains from another party and which the Company treats as            proprietary or designates as confidential, whether or not owned or developed by the Company. Notwithstanding the foregoing, any information which is or becomes available to the general public other than by breach of this Section 9 shall not constitute Confidential Information for purposes of this Agreement.

 

B.  During the period in which the Executive is employed by the Company and for two (2) years thereafter, Executive agrees, to hold in confidence all Confidential Information and not to use such information for Executive’s own benefit or to reveal, report, publish, disclose or transfer, directly or indirectly, any Confidential Information to any person or entity,            or to utilize any Confidential Information for any purpose, except in the course of Executive’s work for the Company or as required by law.

 

C.  Executive will abide by any and all policies and procedures, whether formal or informal, that may from time to time be imposed by the Company for the protection of Confidential Information, and will inform the Company of any defects in, or improvements that could be made to, such policies and procedures.

 

D.  Executive will notify the Company in writing immediately upon receipt of any subpoena, notice to produce, or other compulsory order or process of any court of law or government agency which requires or may require the disclosure or other transfer of Confidential Information.

 

E.  Upon termination of Executive’s employment with the Company, Executive will deliver to the Company or destroy (at Executive’s election) any and all records and tangible property that contain Confidential Information that are in his possession or under his control.

 

10.       COVENANT NOT TO COMPETE.

 

A.  In consideration for the Company entering into this Agreement, Executive covenants and agrees that during the period in which the Executive is employed by the Company and for one (1) year thereafter, Executive will not, without the express prior written consent of the Company, directly or indirectly, compete with the business of the Company anywhere within the United            States of America or the Peoples Republic of China. Executive will not undertake any activities that are competitive with or acquire interests in an entity which is competitive with the business of the Company, whether alone, as a partner, or as an officer, director, Executive, independent contractor, consultant or shareholder holding 5% or more of the outstanding voting stock of any other corporation, or as a trustee, fiduciary or other representative of any other person or            entity.

 

B.  During the period in which the Executive is employed by the Company and for one (1) year thereafter, Executive will not, directly or indirectly, solicit or induce any Executive of the Company or any Executive of a subsidiary of the Company to leave his or her employment, or solicit or induce any consultant or independent contractor to sever that person’s            relationship with the Company.

 

C.  If any court shall determine that the duration or geographical limit of any covenant contained in this Section 10 is unenforceable, it is the intention of the parties that covenant shall not be terminated but shall be deemed amended to the extent required to render it valid and enforceable, such amendment to apply only in the jurisdiction of the court that has made            such adjudication.

 

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D.  Executive acknowledges and agrees that (i) the covenants contained in Sections 9 and 10 hereof are of the essence in this Agreement and that such covenants are reasonable and necessary to protect and preserve the interests, properties, and business of the Company, and (ii) irreparable loss and damage will be suffered by the Company should Executive breach any of such            covenants.

 

11.       AVAILABILITY OF INJUNCTIVE RELIEF. Executive acknowledges and agrees that any breach by him of the provisions of Sections 9 or 10 hereof will cause the Company irreparable injury and damage for which it cannot be adequately compensated in damages. Executive therefore expressly agrees that the Company shall            be entitled to seek injunctive and/or other equitable relief, on a temporary or permanent basis to prevent an anticipatory or continuing breach of this Agreement. Nothing herein shall be construed as a waiver by the Company of any right it may have or hereafter acquired to monetary damages by reason of any injury to its property, business or reputation or otherwise arising out of any wrongful act or omission of it.

 

12.       SURVIVAL. The covenants, agreements, representations and warranties contained in or made pursuant to this Agreement shall survive Executive’s termination of employment, irrespective of any investigation made by or on behalf of any party.

 

13.       MODIFICATION. This Agreement sets forth the entire understanding of the parties with respect to the subject matter hereof, supersedes all existing agreements between them concerning such subject matter, and may be modified only by a written instrument duly executed by each party.

 

14.       NOTICES. Any notice required or permitted hereunder shall be deemed validly given if delivered by hand, verified overnight delivery, or by first class, certified mail to the following addresses (or to such other address as the addressee shall notify in writing to the other party):

 

|   | If to Executive | Marc Siegel |
|--------|-----------------|-------------|

 

|   | If to the Company: | 431 Fairway Drive, Suite 200 |
|--------|--------------------|------------------------------|

Deerfield Beach, FL 33441

 

15.       SEVERANCE PROVISIONS. Upon the occurrence of a Triggering Event, as hereinafter defined, Executive shall be entitled to the immediate receipt of all Severance Payments from the Company in accordance with the terms hereinafter set forth:

 

A.  TRIGGERING EVENT. The occurrence of any of the following events shall be defined as a “Triggering Event” for purposes of this Agreement:

 

i.          The Company’s termination of Executive’s employment for any reason whatsoever (other than for Cause);

 

ii.         The voluntary resignation of Executive for any reason whatsoever within ninety (90) days following a Change of Control; or

 

iii.        The voluntary resignation of Executive for “good reason”, which for purposes hereof shall include, without limitation, (i) a demotion, (ii) a reduction in salary, benefits, bonuses, incentives or perquisites, or (iii) the relocation of the principal office of the Company or the relocation of Executive outside of            Broward or Palm Beach Counties, Florida; or

 

iv.        The death or Disability of Executive.

 

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B.  CHANGE OF CONTROL. For purposes of this Agreement, the term “Change of Control” shall mean the occurrence of any of the following events:

 

i.          Twenty five percent (25%) or more of the Company’s voting stock shall be acquired by any person (other than executives of the Company as of the date hereof ), entity or affiliated group;

ii.         If any individuals who at the beginning of any calendar year who were members of the Board (“Incumbent Directors”) cease for any reason (other than death) to constitute at least a majority thereof; provided that each new director whose election, or nomination for election by the Company’s shareholders, was            approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of such period shall be deemed an Incumbent Director unless such approval was made directly or indirectly in connection with an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board;

iii.        Any merger, consolidation or business combination pursuant to which the Company is not the surviving corporation or twenty five percent (25%) or more of the Company’s voting stock shall be owned or controlled by any person (other than executives of the Company as of the date hereof), entity or affiliated group;

iv.       A liquidation or dissolution of the Company; or

v.      The sale of all or substantially all of the Company’s assets.

 

C.  SEVERANCE PAYMENTS. For purposes of this Agreement, the term “Severance Payment” shall mean that:

 

i.          Executive shall receive a lump sum payment equal to the sum of (i) the product of (x) two (2) and (y) the Executive’s highest annual Base Salary as of the date of termination; and (ii) the product of (x) two (2) and (y) the sum of (A) highest Bonus Payment, (B) highest Incentive Compensation that Executive was            entitled to receive pursuant to Exhibit A in respect of any year within the three (3) years preceding the Triggering Event and (C) any other compensation payments the Executive is entitled pursuant to Section 4(D).

 

SEVERANCE PAYMENT FORMULA:

 

Severance Payment = [(2)(highest Base Salary)] + [(2)( highest Bonus Payment + highest Incentive Compensation + other compensation payments)]

 

ii.         All stock options, warrants, Incentive Compensation other stock appreciation rights and other similar securities shall accelerate and become immediately and fully vested and all conditions applicable to all contingently issued options, warrants, stock appreciation rights and other similar securities shall be deemed waived by            the Company. In addition, the Company will maintain in effect a registration statement covering the Executive’s Shares, as hereinafter defined.

 

iii.        All common shares underlying any stock options, warrants, Incentive Compensation, or other stock appreciation rights shall be covered by the Company by an effective or current registration statement under the Securities Act of 1933, as amended (the “Securities            Act”);

 

iv.        All Compensation Benefits applicable to Executive and his family members under Sections 4.A, B and C of the Agreement shall continue for a period of two (2) years following the later of

 

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(i) the Triggering Event or (ii) the expiration of the Employment Term (as if the Triggering Event had not occurred);

 

v.         In the event that Severance Payments are deemed to be “excess parachute payments” as defined under Section 280G of the Internal Revenue Code, then the Company shall pay to Executive an additional lump sum cash payment as shall be necessary to provide Executive with the same “after-tax” compensation and            benefits as if no such excise tax had been imposed;

 

vi.        The Company shall pay, as and when due, any and all attorneys’ fees and costs that Executive may incur in connection with the enforcement of his rights under this Agreement or any dispute or settlement in connection herewith;

 

vii.       Notwithstanding the forgoing, if a Triggering Event occurs on or prior to the first date that an Incentive Compensation payment is to be made to Executive, then the Incentive Compensation for purposes of this Section 15 shall be deemed to be the greater of (i) one hundred percent (100%) of Executive’s Base Salary, or (ii) the            amount earned pursuant to the terms set forth inExhibit A;

 

viii.       Severance Payments will not be subject to mitigation in any respect; and

 

ix.        The non-competition and non-solicitation periods described in Section 10 of this Agreement shall be reduced from one (1) year to three (3) months (other than by virtue of the expiration of the Executive’s period of employment under this Agreement or section 5 C).

 

D.  COMPLIANCE WITH CODE SECTION 409A.

 

i.          It is the intention of both the Company and Executive that the benefits and rights to which Executive could be entitled pursuant to this Agreement comply with Section 409A of the Code and the Treasury Regulations and other guidance promulgated or issued thereunder (“Section            409A”), to the extent that the requirements of Section 409A are applicable thereto, and the provisions of this Agreement shall be construed in a manner consistent with that intention. If Executive or the Company believes, at any time, that any such benefit or right that is subject to Section 409A does not so comply, it shall promptly advise the other and shall negotiate reasonably and in good faith to amend the terms of such benefits and rights such            that they comply with Section 409A (with the most limited possible economic effect on Executive and on the Company).

 

ii.         If and to the extent required to comply with Section 409A, no payment or benefit required to be paid under this Agreement on account of termination of Executive’s employment shall be made unless and until Executive incurs a “separation from service” within the meaning of Section 409A.

 

iii.        If Executive is a “specified Executive,” then no payment or benefit that is payable on account of Executive’s “separation from service”, as that term is defined for purposes of Section 409A, shall be made before the date that is six months after            Executive’s “separation from service” (or, if earlier, the date of Executive’s death) if and to the extent that such payment or benefit constitutes deferred compensation (or may be nonqualified deferred compensation) under Section 409A and such deferral is required to comply with the requirements of Section 409A. Any payment or benefit delayed by reason of the prior sentence shall be paid out or provided in a single lump sum at the end of such required            delay period in order to catch up to the original payment schedule. For purposes of this Section, Executive shall be considered to be a “specified Executive” if, at the time of his or her separation from service, Executive is a “key Executive”, within the meaning of Section 416(i) of the Code, of the Company (or any person or entity with whom the Company would be considered a single employer under Section            414(b) or Section 414(c) of the Code) any stock in which is publicly traded on an established securities market or otherwise.

 

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iv.        Neither the Company nor Executive, individually or in combination, may accelerate any payment or benefit that is subject to Section 409A, except in compliance with Section 409A and the provisions of this Agreement, and no amount that is subject to Section 409A shall be paid prior to the earliest date on which it may be paid without            violating Section 409A.

 

v.         For purposes of applying the provisions of Section 409A to this Agreement, each separately identified amount to which Executive is entitled under this Agreement shall be treated as a separate payment. In addition, to the extent permissible under Section 409A, any series of installment payments under this Agreement shall be            treated as a right to a series of separate payments.

 

E.  INDEPENDENT COUNSEL. The Company and Executive agree that each of them have been, or were advised and fully understand, that they are entitled to be represented by independent legal counsel with respect to all matters contemplated herein from the commencement of negotiations at all times through the execution            hereof

 

16.       WAIVER. Any waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this            Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. All waivers must be in writing.

 

17.       BINDING EFFECT. The Company’s rights and obligations under this Agreement shall not be transferable by assignment or otherwise, and any attempt to do any of the foregoing shall be void. The provisions of this Agreement shall be binding upon the Executive and his heirs and personal representatives, and            shall be binding upon and inure to the benefit of the Company, its successors and assigns.

 

18.       HEADINGS. The headings in this Agreement are solely for convenience of reference and shall be given no effect in the construction or interpretation of this Agreement.

 

19.       GOVERNING LAW; VENUE. This Agreement is to be performed in the State of Florida, and the validity, construction and enforcement of, and the remedies under, this Agreement shall be governed in accordance with the laws of the State of Florida, without giving effect to any choice of laws principles. In the            event of any litigation arising out of or relating to this Agreement, exclusive venue shall be in Palm Beach County, Florida.

 

20.       ENTIRE AGREEMENT. This writing constitutes the binding and entire agreement of the parties superseding and extinguishing all prior agreements or understandings regarding the subject matter hereof, and may not be modified without the written agreement by the parties.

 

21.       INVALIDITY. The invalidity or unenforceability of any term of this Agreement shall not invalidate, make unenforceable or otherwise affect any other term of this Agreement, which shall remain in full force and effect.

 

22.       ATTORNEYS’ FEES. Except for any disputes arising pursuant to Section 15 of this Agreement, if any dispute or litigation arises hereunder between any of the parties hereto, then the prevailing party shall be entitled to all reasonable costs and expenses incurred by it in connection therewith            (including, without limitation, all reasonable attorneys’ fees and costs incurred before and at any trial or other proceeding and at all tribunal levels), as well as all other relief granted in any suit or other proceeding. As

 

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used herein, a party shall be deemed “prevailing” when it recovers (i) as to a damage claim, an aggregate of more than fifty percent (50%) of the damages which it seeks among its various asserted claims exclusive of interest, attorney’s fees, costs incurred and exemplary damages and (ii) as to an equity claim, substantial injunctive or other equitable relief upon its asserted claim.            Either of the parties herein shall be entitled to request the trier of fact in any dispute, litigation or arbitration between them, to determine which of the parties is “prevailing”.

 

23.       DAMAGES. The Company and the Executive agree that the Executive will suffer a monetary loss if the common shares underlying the stock options, warrants, Incentive Compensation or other stock appreciation rights owned or held by Executive (the “Executive’s Securities”) are not covered for            resale under a current registration statement under the Securities Act. Accordingly, so long as the Company is subject to reporting and filing obligations under the Securities Act of 1934, the Company shall deliver for each thirty (30) consecutive day period that the Executive’s Securities are not covered by a current registration statement (or such lessor pro-rata amount for any period of less than thirty days) to the Executive as Liquidated Damages, an amount equal to five            percent (5%) of the total aggregate market value of the Executive’s Securities . The Company must pay the Liquidated Damages in cash. The Liquidated Damages must be paid within ten (10) days after the end of each thirty (30) day period or shorter part thereof for which Liquidated Damages are payable.

 

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WITNESS WHEREOF, the parties have executed this Agreement as of the date first hereinabove written.

 

**China Direct, Inc., a Florida Corporation**

 

Yuejian (James) Wang

Name

 

/s/ Yuejian (James) Wang

Signature

 

Chief Executive Officer

Title

 

 

**Executive**

 

**Marc Siegel, a Florida resident**

 

Marc Siegel

Name

 

/s/ Marc Siegel

Signature

 

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EXHIBIT A

 

1.         Incentive Compensation: As compensation the Executive shall be entitled to Incentive Compensation, in addition to Base Salary. Executive shall be entitled to Incentive Compensation which shall be determined, and distributed as follows;

 

(i)        Operating Results: The calculation of Operating Results will be made by the Company on an annual basis as determined by the filing of audited consolidated financial statements of the Company in its Form 10K filing. The calculation of the “Operating            Results” shall be made in accordance with the following formula:

 

Total Consolidated Net Income

+  Non Cash Charges

+  Dividends

=  Operating Results

 

(ii)       “Total Consolidated Net Income” (after taxes) shall be defined as the total consolidated net income as reflected in the consolidated statements of operations of the Company and its subsidiaries for the year ended December 31, 2008 as reported in the            audited consolidated financial statements (exclusive of our minority interest) pursuant to generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States) (“GAAP”).

 

(iii)      “Non Cash Charges” shall include all non cash charges expensed in the consolidated statements of operations of the Company and its subsidiaries for the year ended December 31, 2008 as reported in the audited consolidated financial statements pursuant to            GAAP.

 

(iv)      “Dividends” shall include all payments, cash or other expenses by the Company which are not related to the business operations of the subsidiaries of the Company.

 

2.         Executive shall be entitled to Incentive Compensation which shall be determined, and distributed, as a percentage of Base Salary in accordance with the following schedule:

 

| 2008 Operating Results | %      |
|------------------------|--------|
|                   |   |
| $ 36,000,000           | 200%   |
| $ 32,000,000           | 150%   |
| $ 28,000,000           | 100%   |
| $ 26,000,000           | 75%    |

 

3.         Executive shall be entitled to receive such Incentive Compensation in accordance with the following schedule:

 

|   | i. | 25% of the Incentive Compensation shall be due on June 30, 2009 |
|--------|----|-----------------------------------------------------------------|

|   | ii. | 25% of the Incentive Compensation shall be due on September 30, 2009 |
|--------|-----|----------------------------------------------------------------------|

|   | iii. | 50% of the Incentive Compensation shall be due on December 31, 2009 |
|--------|------|---------------------------------------------------------------------|

 

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