Document:

Unassociated Document

     

    EMPLOYMENT
AGREEMENT

     

    THIS
EMPLOYMENT AGREEMENT is made and entered into as of October 2, 2009, by and
between REPUBLIC AIRWAYS HOLDINGS INC. (hereinafter referred to as the
“Company”), a Delaware corporation, and Sean Menke (hereinafter referred to as
the “Executive”).

     

    RECITALS

     

    A.           Executive
has been the President and the Chief Executive Officer of Frontier Airlines,
Inc. (“Frontier”).

     

    B.           Frontier
filed for protection under Chapter 11 of the Bankruptcy Code.

     

    C.           The
Company was the successful bidder in the Frontier bankruptcy and on October 1,
2009, the Company has acquired all of the capital stock of
Frontier.

     

    D.           The
Company desires to employ Executive as the Executive Vice President and Chief
Marketing Officer of the Company.

     

    E.           The
effective date of this Agreement is October 2, 2009 (the “Effective
Date”).

     

    F.           The
Company and the Executive desire to enter into this Employment Agreement to set
forth their understanding of the terms of employment.

     

    NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties hereto agree as follows:

     

    1.           Employment.  Effective on
the Effective Date, the Company hereby employs the Executive, and the Executive
agrees to render to the Company the services and fulfill the duties during the
Term of this Agreement (as hereinafter defined):

     

    (a)           as
the Executive Vice President and Chief Marketing Officer of the Company;
and

     

    (b)           shall
hold such other offices as may be designated by the Company’s Board of Directors
of any direct or indirect subsidiary of the Company engaged in the operation of
an airline.

     

    The
Executive shall render his services at the direction of the President and the
Board of Directors of the Company.  Executive shall office at the
headquarters of Frontier in Denver, or such other location as may be agreed
between the Company and the Executive (the “Location”).  The Executive
agrees to use his best efforts to promote and further the business, reputation
and good name of the Company and the affiliates (collectively, the “Company
Group”) and to promptly and faithfully comply with all instructions, directions,
requests, rules and regulations made or issued from time to time by the
Company.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    During
such Term, Executive will not hold outside employment, or perform substantial
personal services for parties unrelated to the Company, without the advance
written approval of the Board; provided, that it shall not
be a violation of this Agreement for Executive to (a) serve on any civic, or
charitable boards or committees so long as such service does not interfere with
the performance of Executive’s duties and responsibilities under this Agreement,
as  the Board in its reasonable discretion shall determine, or (b)
manage personal investments.

     

    
      2.          
Term and
Termination.

    

     

    (a)           Term.  The term of
employment (the “Term”) shall commence on the Effective Date and continue until
December 31, 2012.

     

    (b)           Termination.  This Agreement
and Executive’s employment shall automatically terminate in the event of the
Executive’s death and may be terminated as follows:

     

    (i)           Either
party may terminate this Agreement by providing the other with 30 days prior
written notice of such termination.

     

    (ii)          The
Company may terminate this Agreement immediately for Cause as defined in Section 4 of this
Agreement.

     

    (iii)        
The Company may terminate this Agreement in the event of Executive’s Disability
as defined in Section 4 of this
Agreement.

     

    (iv)         Executive
may terminate this Agreement immediately for Good Reason as defined in Section 4 of this
Agreement.

     

    Termination
of the Agreement shall constitute termination of employment and termination of
employment shall constitute termination of the Agreement.  References
herein to either termination of the Agreement or termination of employment shall
encompass both.

     

    3.           Compensation and
Benefits.  As compensation for the Executive’s services
hereunder, including serving, at the designation of the Board of Directors of
the Company, as an officer of a subsidiary, the Company shall pay the Executive
the compensation and provide the benefits described below.

     

    (a)           Base Salary.  During the
Term, the Company shall pay the Executive an annual base salary of $260,000
(“Base Salary”).  The Board of Directors shall review the Executive’s
Base Salary each year and shall have the right in its discretion to increase
such Base Salary.  The term “Base Salary” shall refer to the initial
Base Salary as the same may be increased by the Board of Directors.

     

    (b)           Guaranteed Annual Bonus.  In
addition to the Base Salary, during the Term, the Company shall pay to the
Executive a Guaranteed Annual Bonus payment (a “Guaranteed Annual Bonus
Payment”) in the amount of $77,500.  The Guaranteed Annual Bonus
Payment shall be paid each year during the Term within 10 business days after
the end of the calendar year and shall not be prorated for the 2009 calendar
year.  In the event this Agreement is terminated, the Executive shall
not be entitled to any Guaranteed Annual Bonus Payment for such year or any
subsequent period.

    
      
         

      

      
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    (c)           Discretionary Bonus.  In
addition to the Base Salary and Guaranteed Annual Bonus Payment, during the
Term, the Company may pay to the Executive an annual discretionary bonus (a
“Discretionary Bonus”) in an amount, if any, as the Board of Directors of the
Company shall determine in its discretion. The Discretionary Bonus, if any, may
be paid each year during the Term within 60 calendar days after the end of the
calendar year and may be prorated for the 2009 calendar year for the period from
the date hereof through December 31, 2009.  In the event this
Agreement is terminated, the Executive shall not be entitled to any
Discretionary Bonus for such year or any subsequent period, except as provided
in Section 4
hereof.

    

    (d)           Bankruptcy Exit Bonus.  On
the Effective Date, the Company will pay Executive $500,000 in cash within 10
calendar days after the Effective Date.

    

    (e)           Equity Commitment.

     

    (i)           Restricted Shares.  On the
Effective Date, the Company has issued Executive 150,000 shares of restricted
common stock of the Company pursuant to the Republic Airways Holdings Inc. 2007
Equity Incentive Plan.  All restrictions shall lapse and such shares
shall become fully vested in 16 equal quarterly installments on the last day of
each calendar quarter commencing December 31, 2009 until such shares have become
fully vested.

     

    (ii)          Non-Qualified Stock
Options.  On the Effective Date, the Company has issued
Executive a non-qualified stock option to purchase 50,000 shares of common stock
of the Company pursuant to the Republic Airways Holdings Inc. 2007 Equity
Incentive Plan at an exercise price equal to the fair market value on the
Effective Date.  Such shares shall become exercisable and fully vested
in four equal annual installments on the first, second, third and fourth
anniversaries of the Effective Date.

     

    (iii)        
Registration
Statement.  The Company represents that the issuance of the
shares under this subsection is registered with the Securities and Exchange
Commission pursuant to a Registration Statement on form S-8.

     

    (f)           Reimbursement of Business
Expenses.  The Company
agrees to promptly reimburse Executive for reasonable business-related expenses
incurred in the performance of Executive’s duties under this Agreement in
accordance with Company policies.

    

    (g)           Benefit Plans and Programs.  To the extent
permitted by applicable law,  Executive (and where applicable, his
plan-eligible dependents) will be eligible to participate in all benefit plans
and programs, including indemnification rights, insurance arrangements, 401(k),
disability, medical, pension, profit sharing, or any other plan or arrangement,
including improvements or modifications of the same, maintained by the Company
for the benefit of its executive employees (or for an employee population which
includes its executive employees), subject in any event to the eligibility
requirements and other terms and conditions of those plans and
programs.

    
      
         

      

      
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    (h)           Travel
Privileges.    The Executive, his spouse and his
dependent children will travel with the priority code PSIP (Positive Space), and
companion or other eligible travelers will travel with the priority code SA3P
(Standby Space Available).  Executive will be provided an annual
travel barter account of $10,000 to purchase airline travel on
Frontier.

     

    (i)           Vacation.  The Executive
shall be entitled to take three weeks of paid vacation which shall accrue
monthly during each 12 months of the Executive’s employment hereunder, and which
vacation shall be taken on dates to be selected by mutual agreement of the
Company and the Executive.

    

    (j)           Moving Expenses.  In the
event that Executive is required to move his residence to another Company
headquarters not located in Denver, Colorado and Executive elects to move rather
that terminate this Agreement under Section 4(c) hereof, the Company will
reimburse Executive for the following:

     

    (i)           all
expenses of sale, including without limitation, broker fees;

     

    (ii)          all
costs incurred by Executive to move to the new residence, including without
limitation, packing, unpacking, shipping costs, temporary housing for up to 6
months and furniture storage for up to 6 months; and

     

    (iii)        
any loss realized by Executive on the sale of his primary residence in Colorado
as a result of a sale at a price below his original purchase price plus capital
improvements;

     

    provided, however, that the
total amount reimbursed or payable by the Company with respect to this Section
3(j) shall not exceed $250,000 for any single move.

     

    (k)           No Other Compensation.  Any
additional compensation specifically provided to the Executive and not provided
or made available to Company executives generally, shall only be provided if set
forth in writing and signed by both the Company and the Executive.

    

    (l)           Withholding.  The Company
shall have the right to deduct and withhold from the compensation payable to the
Executive hereunder any amounts required to be deducted and withheld under the
provisions of any statute, regulation, ordinance, order or any other amendment
thereto, heretofore or hereafter enacted, requiring the withholding or deduction
from compensation.

    
      
         

      

      
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      4.            
 Severance
Compensation.

    

     

    (a)           Termination Upon Death, or by the Company for
Disability or Without Cause.  In the event of Executive’s death
or in the event the Company terminates this Agreement as a result of Executive’s
Disability or other than for Cause, the Company shall pay to the Executive or
his estate as the case may be as severance compensation two times the
Executive’s Base Salary as then in effect plus two times the Executive’s
Discretionary Bonus paid for the Company’s last calendar year.  The
severance compensation shall be paid in a lump sum within ten (10) days
following termination of the Agreement.  The Executive agrees that the
Company may satisfy its obligations to provide severance compensation for death
or Disability pursuant to this Section
4(a) by purchasing and maintaining one or more insurance policies payable
to either the Executive or his designees or to the Company (with further payment
to the Executive or such designees) upon the Executive’s death or as a result of
the Executive’s Disability.  The Executive agrees to cooperate with
the Company in obtaining such insurance, including by participating in such
physical examinations and providing such personal information as may be
requested by the Company’s insurers.

     

    (b)           Occurrence of a Change in
Control.  In the event of a Change of Control (provided that
after such Change of Control, the Executive’s compensation is decreased, his
duties are diminished or the Company has requested the Executive to move his
residence from Denver, Colorado to another state or has requested Executive to
change the location of his business office to an address which is more than 25
miles from the Location), the Company shall pay to the Executive as severance
compensation two times the Executive’s Base Salary as then in effect plus two
times the Executive’s Discretionary Bonus paid for the Company’s last calendar
year.  The severance compensation shall be paid in a lump sum within
ten (10) days following a qualifying event.

     

    (c)           Termination by Executive for Good
Reason.    If Executive terminates this Agreement for
Good Reason, the Company shall pay to the Executive as severance compensation
two times the Executive’s Base Salary as then in effect plus two times the
Executive’s Discretionary Bonus paid for the Company’s last calendar
year.  The severance compensation shall be paid in a lump sum within
ten (10) days following termination.

     

    (d)           Termination by Executive for other than Good
Reason.  If the Executive terminates this Agreement other than
for Good Reason, the Company shall pay to the Executive his Base Salary for the
remainder of the Term.

     

    (e)           Failure to Renew.  If either
the Executive or the Company elects not to renew this Agreement at the end of
the stated Term, the Company shall pay to the Executive one times the
Executive’s Base Salary as in effect at the end of the Term.  Such
payment shall be made in a lump sum within ten (10) days following the end of
the stated Term of this Agreement.

    
      
         

      

      
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    (f)           Continuation of Benefits.

     

    (i)           Medical Benefits.  Upon
termination of this Agreement for any reason by Executive or the Company,
Executive, Executive’s spouse, and Executive’s dependents will continue to be
eligible for coverage under the Company’s group health plan or any successor
plan on the same basis as active executive employees of the Company, their
spouses, and their dependents for the greater of (i) the balance of the stated
Term of this Agreement or (ii) 12 months.    Upon the
failure to renew this Agreement by the Company or by Executive, Executive’s
spouse, and Executive’s dependents will continue to be eligible for coverage
under the Company’s group health plan or any successor plan on the same basis as
active executive employees of the Company, their spouses, and their dependents
for 12 months.  If and when group health coverage under another group
health  plan first becomes  available thereafter to
Executive, Executive’s spouse, or Executive’s dependents (as applicable), the
Company’s obligations under this paragraph will cease with respect to each
person to whom such coverage becomes  available,  and such
person shall have such “COBRA” benefit continuation rights as may then be
available under relevant law, treating Executive’s employment termination date
as the date of such person’s “qualifying event.”

     

    (ii)          Travel
Privileges.    Upon a termination of this Agreement
under Sections 4(a), (b) or (c),
Executive shall continue to receive the travel privileges set forth in Section
3(h)(i) for two years following the termination date.  Upon a
termination of this Agreement under Section 4(d), Executive shall continue to
receive the travel privileges set forth in Section 3(h) for the balance of the
stated Term.  Upon a termination of this Agreement under Section 4(e), Executive shall continue
to receive the travel privileges set forth in Section 3(h) for one year
following the termination date.

     

    (g)           Acceleration of Vesting; Extension of
Exercise Period.  Upon a termination of this Agreement under
Sections 4(a), (b) or (c), to
the extent Executive has not previously vested in such rights, Executive shall
become fully vested in all of the rights and interests held
by  Executive under the Company’s stock and other equity plans as of
the termination date, including without limitation any stock options, restricted
stock, restricted stock units, performance units, and/or performance shares; and
the exercise date of any options shall be extended for 24 months.

     

    (h)           Gross Up.  In the event that
Executive shall become entitled to any amounts, whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Company (the
“Regular Amounts”) that are determined to  be subject to the tax (the
“Excise Tax”) imposed by IRC Section 4999  as amended (and any similar
tax that may hereafter be imposed), the Company shall pay to Executive an
additional amount (the “Gross-up Payment”) such that the net amount retained by
Executive after payment of all applicable federal and state taxes on the sum of
the Regular Amount plus the Gross-up Payment, is equal to the net amount that
would have been retained by Executive after payment of all applicable federal
and state taxes on the Regular Amount if it had not been subject to the Excise
Tax.

    

    (i)           Cause.  “Cause” shall mean
that the Executive has (i) willfully or materially refused to perform a material
part of his duties hereunder, (ii) materially breached the provisions of Sections 5, 6 or 7 hereof, (iii) acted
fraudulently or dishonestly in his relations with the Company, (iv) committed
larceny, embezzlement, conversion or any other act involving the
misappropriation of Company funds or assets in the course of his employment, or
(v) been convicted of any felony or other crime involving an act of moral
turpitude.

    

    
      
        
        

      

      
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    (j)           Good Reason.  “Good Reason”
shall mean that (i) the Company has materially diminished the duties and
responsibilities of the Executive, (ii) any of Executive’s Base Salary,
Guaranteed Annual Bonus Payment or other non-discretionary payments or benefits
under Section 3 has been reduced, (iii) the Company has required the Executive
to move his residence from Denver, Colorado to another state or has required
Executive to change the location of his business office to an address which is
more than 25 miles from the Location without the consent of the Executive or
(iv) a Change of Control has occurred.

    

    (i)           Change in Control.  “Change
of Control” shall mean that after the Effective
Date, any person or group of affiliated or associated persons acquires a
majority or more of the voting power of the Company; (ii) the consummation of a
sale of all or substantially all of the assets of the Company; (iii) the
dissolution of the Company or (iv) the consummation of any merger,
consolidation, or reorganization involving the Company in which, immediately
after giving effect to such merger, consolidation or reorganization, less than
majority of the total voting power of outstanding stock of the surviving or
resulting entity is then “beneficially owned” (within the meaning of Rule 13d-3
under the Securities Exchange Act of 1934, as amended) in the aggregate by the
stockholders of the Company immediately prior to such merger, consolidation or
reorganization.

     

    (k)           Disability.  “Disability”
shall mean that Executive has sustained sickness or injury that renders
Executive incapable, with reasonable accommodation, of performing the duties and
services required of Executive hereunder for a period of 90 consecutive calendar
days or a total of 120 calendar days during any 12-month period.

     

    5.           Confidential
Information.  The Executive recognizes and acknowledges that he
shall receive in the course of his employment hereunder certain confidential
information and trade secrets concerning the Company Group’s business and
affairs which may be of great value to the Company Group.  The
Executive therefore agrees that he will not disclose any such information
relating to the Company Group, the Company Group’s personnel or their operations
other than in the ordinary course of business or in any way use such information
in any manner, which could adversely affect the Company Group’s
business.  For purposes of this Agreement, the terms “trade secrets”
and “confidential information” shall include any and all information concerning
the business and affairs of the Company Group and any division or other
affiliate of the Company Group that is not generally available to the
public.

     

    6.           Non-Competition.  The
Executive agrees that without the prior written consent of the Board of
Directors during the Term and for a period of 12 months following the
termination of this Agreement under circumstances that require the payment of
severance compensation pursuant to Section 4 of this Agreement, he will
not participate as an advisor, partner, joint venturer, investor, lender,
consultant or in any other capacity in any business transaction or proposed
business transaction with respect to which the Executive had a material personal
involvement on behalf of the Company Group during the last 12 months of his
employment with the Company, and which is known by the Executive as of the date
of such termination or expiration to be contemplated by the Company Group to
proceed during the 12 month period following such termination.

    
      
         

      

      
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    7.           Non-Solicitation.  The
Executive agrees that for a period of 12 months following the termination or
expiration of this Agreement, he shall not, without the prior written consent of
the Company, directly or indirectly, solicit for employment any person while he
or she is employed by the Company; provided, however, that nothing in this Section 7 shall prohibit Executive
from hiring applicants who applied pursuant to a general solicitation for
applicants through a newspaper or trade publication.

     

    8.           Breach of this
Agreement.  If the Executive commits a breach, or threatens to
commit a breach, of any of the provisions of Sections 5, 6 or 7 of this Agreement,
then the Company shall have the right and remedy to have those provisions
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed by the Executive that the rights and privileges of the
Company granted in Sections 5, 6 or
7 are of a special, unique and extraordinary character and any such
breach or threatened breach will cause great and irreparable injury to the
Company and that money damages will not provide an adequate remedy to the
Company.

     

    9.           Notices.  All notices and
other communications required or permitted hereunder shall be in writing
(including facsimile and email) and shall be deemed to have been duly given when
delivered (if by hand delivery, facsimile or email) or when mailed, certified or
registered mail, return receipt requested and postage prepaid:

     

    
      
        
          
            	
                    If
      to the Company:

                  	
                    Republic
      Airways Holdings Inc.

                  
	 	 
	 
      	
                    8909
      Purdue Road

                    Suite
      300

                    Indianapolis,
      IN  46268

                    Attention:  Bryan
      K. Bedford, President

                  
	 
      	 
      
	
                    If
      to the Executive:

                  	
                    2015
      Grape Street

                    Denver,
      Colorado 80207

                  

          

        

      

    

    

    10.         Applicable Law.  This
Agreement was negotiated and entered into within the State of
Indiana.  All matters pertaining to this Agreement shall be governed
by the laws of the State of Indiana, applicable to contracts made and to be
performed wholly therein and without regard to conflicts principles that would
result in the application of the laws of another
jurisdiction.  Nothing in this Agreement shall be construed to require
the commission of any act contrary to law, and wherever there is any conflict
between any provision of this Agreement and any material present or future
statute, law, governmental regulation or ordinance as a result of which the
parties have no legal right to contract or perform, the latter shall prevail,
but in such event the provision(s) of this Agreement affected shall be curtailed
and limited only to the extent necessary to bring it or them within the legal
requirements.

    
      
         

      

      
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    11.        
Entire Agreement; Modification;
Consents and Waivers.  This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and
supersedes any and all prior agreements or understandings, written or oral,
between the parties with respect to the subject matter hereof.  No
interpretation, change, termination or waiver of or extension of time for
performance under any provision of this Agreement shall be binding upon any
party unless in writing and signed by the party intended to be bound
thereby.  Except as otherwise provided in this Agreement, no waiver of
or other failure to exercise any right under or default or extension of time for
performance under any provision or this Agreement shall affect the right of any
party to exercise any subsequent right under or otherwise enforce said provision
or any other provision hereof or to exercise any right or remedy in the event of
any other default, whether or not similar.

     

    12.        
Severability.  The
parties acknowledge that, in their view, the terms of this Agreement are fair
and reasonable as of the date signed by them, including as to the scope and
duration of post-termination activities.  Accordingly, if any one or
more of the provisions contained in this Agreement shall for any reason, whether
by application of existing law or law which may develop after the date of this
Agreement, be determined by an arbitrator or court of competent jurisdiction to
be excessively broad as to scope of activity, duration or territory, or
otherwise unenforceable, the parties hereby jointly request such court to
construe any such provision by limiting or reducing it so as to be enforceable
to the maximum extent compatible with then-applicable law.  If any one
or more of the terms, provisions, covenants or restrictions of this Agreement
shall nonetheless be determined by an arbitrator or court of competent
jurisdiction to be invalid, void or unenforceable, then the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated.

     

    13.         Assignment.  Neither Party
shall assign this Agreement or any of its rights hereunder without the prior
written consent of the other Party.

     

    14.         Counterparts.  This
Agreement may be executed in counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.

     

    15.         Arbitration.  Each of the
parties hereby irrevocably and unconditionally consents to arbitrate any dispute
arising out of or relating in any manner to this Agreement or the employment
relationship contemplated hereby or the termination thereof, or any alleged
breach of any term or provision of this Agreement, except for (a) matters
litigated pursuant to Section 8 of this Agreement and (b) rights provided by
statute to Executive to access federal courts under benefit
plans.  Such arbitration shall be conducted in Denver, Colorado, if
initiated by Executive, and in Indianapolis, Indiana, if initiated by the
Company, by a single arbitrator in accordance with the rules of the American
Arbitration Association then in effect.  Judgment may be entered on
the arbitrator’s award in any federal or state court in Colorado or Indiana, as
the case may be (and the parties expressly consent to the jurisdiction of such
courts), or in any other court having jurisdiction.  Each of the
Parties agrees that in any arbitration arising out of or relating to this
Agreement or the employment relationship contemplated hereby or the termination
thereof, or any alleged breach of any term or provision of this Agreement or in
any action to enter judgment on an award in such arbitration each party shall
bear its own fees and expenses.

    
      
         

      

      
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    16.         Survival.  The provisions of
Sections 4 through 15 of this Agreement shall survive any
expiration or termination of this Agreement.

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as
of the date first above written.

    

    
      
        
          
            
              
                	 
      	
                        REPUBLIC
      AIRWAYS HOLDINGS INC.

                      
	 
      	 
      	 
      
	 
      	
                        By:

                      	 
      
	 
      	 	
                        Name:

                      
	 
      	 	
                        Title:

                      
	 
      	 
      	 
      
	 
      	      
                        /s/
      Sean Menke

                      
	 
      	
                        Sean
      Menke

                      

              

            

          

        

      

    

    
      
         

      

      
        10Unassociated Document

    EXHIBIT
10.8

    

    EMPLOYMENT
AGREEMENT WITH DUANE W. ALBRO

    PRESIDENT,
CHIEF EXECUTIVE OFFICER

    

    This
Employment
Agreement (this “Agreement”) is made and
entered into as of February 12, 2010 and shall be effective April 11, 2010 (the
“Effective Date”), by
and between Warwick
Valley Telephone Company (the “Company”) and Duane W.
Albro (“Executive”).

     

     

    
      	
              1.  

            	
              Employment.

            

    

     

    The
Company hereby agrees to employ Executive, and Executive hereby agrees to be
employed by the Company, upon the terms and subject to the conditions set forth
in this Agreement.

     

     

    
      	
              2.  

            	
              Term
      of Employment.

            

    

     

    (a) The
period of Executive’s employment under this Agreement shall begin as of the
Effective Date and shall continue until April 10, 2012 (the “Initial Term”), and shall be
renewed automatically for successive one-year periods thereafter (each, a “Renewal Period”), unless
Executive or the Company gives written notice of nonrenewal to the other at
least sixty (60) days before the expiration of the Initial Term or any
subsequent Renewal Period.

     

    (b) Notwithstanding
the foregoing, Executive’s employment may be terminated by the Company or by
Executive at any time for any reason.

     

    (c) As used
in this Agreement, the term “Employment Term” refers to
Executive’s period of employment from the Effective Date until the date his
employment terminates.

     

     

    
      	
              3.  

            	
              Duties
      and Responsibilities.

            

    

     

    (a) The
Company will employ Executive as its President and Chief Executive
Officer.  In such capacity, Executive shall perform the customary
duties and have the customary responsibilities of such positions and such other
duties as may be assigned to Executive from time to time by the Board of
Directors of the Company (the “Board”) or the Compensation
Committee of the Board of Directors (the “Compensation Committee”)
pursuant to the Compensation Committee’s properly delegated authority. Executive
will exercise his judgment in accordance with the highest ethical
standards.

     

    (b) Executive
agrees to faithfully serve the Company, devote his full working time, attention
and energies to the business of the Company, its subsidiaries and affiliated
entities, and perform the duties under this Agreement to the best of his
abilities.

     

    (c) Executive
agrees (i) to comply with all applicable laws, rules and regulations; (ii) to
comply with the Company’s rules, procedures, policies, requirements, and
directions; and (iii) not to engage in any other business or employment without
the written consent of the Company except as otherwise specifically provided
herein.

     

    (d) Executive
acknowledges that he has received a copy of the Company’s Code of Ethics, that
he has read the Code of Ethics and that this Agreement does not supersede that
policy.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
              4.  

            	
              Compensation
      and Benefits.

            

    

     

    (a) Base Salary.  During
the Employment Term, the Company shall pay Executive a base salary at the annual
rate of $270,000 per year or such higher rate as may be determined annually by
the Company (“Base
Salary”). Such Base Salary, less applicable withholdings, shall be paid
in accordance with the Company’s standard payroll practice for
executives.

     

    (b) Annual
Bonus.  During the Employment Term, Executive will be eligible
to receive an Annual Bonus each year, as determined in accordance with the
Applicable Plan approved by the Board (or Compensation Committee as the case may
be) for Executive for such year. An example of the Applicable Plan for 2010 is
attached as Appendix A to this Agreement for illustration purposes only.
Subsequent measurement metrics will be determined by the Board (or Compensation
Committee as the case may be) at their sole discretion for 2010 and each
subsequent year. The Board (or Compensation Committee as the case may be) has
the right to change or eliminate the Applicable Plan in its sole discretion at
any time. The Annual Bonus to be paid to Executive in 2011 shall be based on the
Company’s financial performance in 2010, continuing in like progression with the
Annual Bonus to be paid in any year based on the Company’s prior year’s
performance. Such Annual Bonus, less applicable withholdings, shall be paid
within 2.5 months of the end of the taxable fiscal year during which it was
earned. Except as otherwise provided by Section 7, in order to be eligible to
receive payment of any portion of an Annual Bonus, Executive must be actively
employed by the Company on the payment date. Notwithstanding the foregoing,
Executive acknowledges that whether any Annual Bonus is to be paid for a given
year and the amount of that Annual Bonus is completely at the discretion of the
Board (or Compensation Committee as the case may be).

     

    (c) Incentive
Compensation.  Executive shall be eligible to receive incentive
compensation (“Incentive
Compensation”) each year, in accordance with the Applicable Plan approved
by the Board (or Compensation Committee as the case may be) for Executive for
such year. The Incentive Compensation shall be in the form of equity-based
awards (stock options and restricted stock of the Company) under the Company’s
incentive compensation plans. An example of the Applicable Plan for 2010 is
attached as Appendix A to this Agreement for illustration purposes only.
Subsequent measurement metrics will be determined by the Board (or Compensation
Committee as the case may be) at their sole discretion for 2010 and each
subsequent year. The Board (or Compensation Committee as the case may be) has
the right to change or eliminate the Applicable Plan in its sole discretion at
any time. The Incentive Compensation to be paid to Executive in 2011 shall be
based on the Company’s financial performance in 2010, continuing in like
progression with the Incentive Compensation to be paid in any year based on the
Company’s prior year performance. Such Incentive Compensation shall be delivered
to Executive within 2.5 months of the end of the taxable fiscal year during
which it was earned. Except as otherwise provided by Section 7, in order to be
eligible to receive payment of any portion of the Incentive Compensation,
Executive must be actively employed by the Company on the payment date.
Notwithstanding the foregoing, Executive acknowledges that whether any Incentive
Compensation is to be paid for a given year and the amount of that Incentive
Compensation is completely at the discretion of the Board (or Compensation
Committee as the case may be).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (d) Benefit Plans, Fringe Benefits and
Vacation.  Executive shall be eligible to participate in any
401(k) savings plan generally made available by the Company to other executives
in accordance with the eligibility requirements of such plans and subject to the
terms and conditions set forth in such plans, except for any pension benefit.
Executive shall be eligible to participate in any health and welfare plans made
available to other executives, including, but not limited to, any medical and
dental benefits plan, life insurance plan, short-term and long-term disability
plans, or other executive benefit or fringe benefit plan. Executive will also be
eligible to receive at least four (4) weeks of vacation per calendar year,
accrued and earned on a daily basis, as well as other types of paid time-off
(e.g., holidays, personal days, absence due to illness, etc.) according to the
Company’s vacation and paid time-off policy.

     

    (e) Housing and Travel
Allowance.  Executive has affirmed his plan to maintain a
residence in the community served by the Company. To defray the costs to
Executive of this additional residence, and the cost of occasional commutes
between his current home and Company offices, the Company will provide Executive
with a Housing and Travel Allowance of $2,000 per month for the duration of his
employment under this Agreement. The Company shall also pay Executive a tax
gross-up benefit on the Housing and Travel Allowance in an amount such that,
after the withholding of all federal and state income and employment taxes with
respect to the Housing and Travel Allowance and the tax gross-up benefit,
Executive will be in the same after-tax economic position that Executive would
have been in had the Housing and Travel Allowance not been subject to such
taxes. The Housing and Travel Allowance and tax-gross up benefit for a given
month shall be paid to Executive on the first day of such month, or as soon as
administratively practicable thereafter, but in no event later than the end of
that month.

     

    (f) Expense
Reimbursement.  The Company shall promptly reimburse Executive
for the ordinary and necessary business expenses incurred by Executive in the
performance of the duties under this Agreement in accordance with the Company’s
customary practices applicable to executives, provided that such expenses are
incurred and accounted for in accordance with the Company’s expense
reimbursement policy. Reimbursement shall be made as soon as administratively
practicable following Executive’s submission of the necessary documents and
receipts required under the Company’s expense reimbursement policy, but in no
event later than December 31st of the
calendar year following the calendar year in which the expense was
incurred.

     

    (g) Concession.  Executive
will be provided with paid PDA or mobile phone service for one electronic
device, as well as concession Telephone and Toll Service, DSL Internet Service
and in territory Digital TV service benefits consistent with those available to
other executives.

     

    (h) Indemnification.  Executive
will be covered by the Company’s standard Director’s and Officer’s
Indemnification Agreement, providing for indemnification consistent with the New
York Business Corporation Law and the Company’s by-laws.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              5.  

            	
              Termination
      of Employment.

            

    

     

    Executive’s
employment may be terminated by the Company or by Executive at any time for any
reason. Upon termination, Executive shall be entitled to receive the
compensation and benefits described in Section 7. Executive’s employment will
terminate under the following conditions:

     

    (a) Death.  Executive’s
employment shall terminate upon Executive’s death.

     

    (b) Total
Disability.  The Company may terminate Executive’s employment
upon his becoming Totally Disabled. For purposes of this Agreement, Executive
shall be “Totally
Disabled” if Executive is physically or mentally incapacitated so as to
render Executive incapable of performing his usual and customary duties under
this Agreement without reasonable accommodation. Executive’s receipt of
disability benefits under the Company’s long-term disability plan, if any, or
receipt of Social Security disability benefits shall be deemed conclusive
evidence of Total Disability for purpose of this Agreement; provided, however,
that in the absence of Executive’s receipt of such longterm disability benefits
or Social Security benefits, the Company may, in its reasonable discretion (but
based upon appropriate medical evidence), determine that Executive is Totally
Disabled.

     

    (c) Termination
by the Company for Cause.

     

    
      	
              (i)  

            	
              The
      Company may terminate Executive’s employment for Cause at any time after
      providing written notice to
Executive.

            

    

     

    
      	
              (ii)  

            	
              For
      purposes of this Agreement, the term “Cause” shall mean any
      of the following: (A) conviction of a crime or a nolo contendere plea
      involving the alleged commission by Executive of a felony or of a criminal
      act involving, in the good faith judgment and sole discretion of the
      Board, fraud, dishonesty, or moral turpitude; (B) deliberate and continual
      refusal to perform employment duties reasonably requested by the Board
      after fifteen (15) days’ written notice by certified mail of such failure
      to perform, specifying that the failure constitutes cause (other than as a
      result of vacation, sickness, illness or injury); (C) fraud or
      embezzlement as determined by the Board; (D) gross misconduct or gross
      negligence in connection with the business of the Company or an affiliate
      which has a substantial adverse effect on the Company or the affiliate; or
      (E) breach of the terms of the confidentiality, non-solicitation and
      non-competition provisions of Section
9.

            

    

     

    
      	
              (iii)  

            	
              Regardless
      of whether Executive’s employment initially was considered to be
      terminated for any reason other than Cause, Executive’s employment will be
      considered to have been terminated for Cause for purposes of this
      Agreement if the Board subsequently determines that Executive engaged in
      an act constituting Cause during the Employment Period or Executive
      breached the terms of the terms of the confidentiality, non-solicitation
      and non-competition provisions of Section 9 after his
      termination.

            

    

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (d) Termination by the Company Without
Cause.  The Company may terminate Executive’s employment at any
time under this Agreement without Cause after providing written notice to
Executive.

     

    (e) Termination by
Executive.  Executive may terminate his employment under this
Agreement after providing thirty (30) days’ written notice to the
Company.

     

    (f) Expiration of Initial Term or Renewal
Period.  In the event that either party gives written notice of
non-renewal of the Initial Term or a Renewal Period, as applicable, pursuant to
Section 2, Executive’s employment shall terminate upon the expiration of the
Initial Term or Renewal Period.

     

     

    
      	
              6.  

            	
              Return
      of Property and Information.

            

    

     

    Executive
agrees that when his employment with the Company ends, he will immediately
return to the Company all property, data, information and knowledge which are in
his possession or under his control, including without limitation all documents,
forms, correspondence, financial records and forecasts, operation manuals,
notebooks, reports, proposals, computer programs, software, software
documentation, employee handbooks, supervisor’s manuals, lists of clients and
referral sources, client data, and all copies thereof, relating in any way to
the business of the Company, whether relating to the Company directly or to a
client of the Company, made or obtained by Executive during his employment with
the Company, whether or not such data, information, or knowledge constitute
confidential or trade secret information.

     

     

    
      	
              7.  

            	
              Compensation
      Following Termination of
Employment.

            

    

     

    (a) Termination for Any
Reason.  Upon termination of Executive’s employment for any
reason under this Agreement, Executive (or his designated beneficiary or estate,
as the case may be) shall be entitled to receive the following
compensation:

     

    
      	
              (i)  

            	
              Earned but Unpaid
      Compensation.  The Company shall pay Executive any
      accrued but unpaid Base Salary for services rendered through the date of
      termination, any appropriately documented and accrued but unpaid expenses
      required to be reimbursed under this Agreement, and any unused vacation
      accrued to the date of termination.

            

    

     

    
      	
              (ii)  

            	
              Other Compensation and
      Benefits.  Except as may be provided under this
      Agreement, any benefits to which Executive may be entitled through the
      date of Executive’s termination pursuant to the plans, policies and
      arrangements referred to in Section 4(d) shall be determined and paid in
      accordance with the terms of such plans, policies and arrangements, and
      except as otherwise provided by this Agreement, Executive shall have no
      right to receive any other compensation, or to participate in any other
      plan, arrangement or benefit, with respect to future periods after such
      termination or resignation.

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (b) Termination by the Company Without
Cause not in Connection With a Change in Control.  In the event
Executive’s employment is terminated without Cause before a Change in Control
(as defined by Section 7(c)(iii)) or more than twenty-four (24) months after a
Change in Control, if Executive executes the Release and Waiver required by
Section 8 and such Release and Waiver is not revoked on or before the expiration
of the revocation period thereof, and Executive has complied with the return of
property and information provision set forth in Section 6, then in addition to
the payments to be made pursuant to Section 7(a), the Company shall
also:

     

    
      	
              (i)  

            	
              Severance
      Pay.  Pay to Executive severance pay in an amount equal
      to 100% of his Base Salary in effect as of the date of his termination of
      employment. Payment of such Severance Pay shall be made in a lump sum as
      soon as administratively practicable after the date of Executive’s
      termination (or if required by Section 409A, on the six (6) month
      anniversary of his termination), but no later than ninety (90) days
      thereafter, and not before the expiration of the revocation period for the
      Release and Waiver.

            

    

     

    
      	
              (ii)  

            	
              Annual
      Bonus.  Pay to Executive the target amount of the Annual
      Bonus under the Applicable Plan for the year in which the termination of
      Executive’s employment occurs. Payment of such Annual Bonus shall be made
      in a lump sum as soon as administratively practicable after the date of
      Executive’s termination (or if required by Section 409A, on the six (6)
      month anniversary of his termination), but no later than ninety (90) days
      thereafter, and not before the expiration of the revocation period for the
      Release and Waiver.

            

    

     

    
      	
              (iii)  

            	
              Benefits
      Continuation.  Continue to provide Executive and his
      family for the one-year period following Executive’s termination with the
      health and welfare benefits, including, but not limited to, benefits under
      any medical and dental benefits plan, life insurance plan, short-term and
      long-term disability plans, or other executive benefit or fringe benefit
      plan, which Executive and his family were receiving as of the date of
      Executive’s termination. The Company shall provide such benefits at the
      same cost to Executive as the cost, if any, charged to Executive for those
      benefits at the time of his termination. To the extent that the provision
      of such benefits at the Company’s expense during the six (6) month period
      following Executive’s termination would violate the requirements of
      Section 409A, then Executive shall be required to pay to the Company the
      Company portion of the cost of such benefits during such six (6) month
      period, and the Company shall reimburse Executive for the amounts so paid
      by Executive on the six (6) month anniversary of his termination, or as
      soon as administratively practicable thereafter, but no later than ninety
      (90) days thereafter.

            

    

     

    (c) Termination by the Company Without
Cause or by Executive for Good Reason in Connection With a Change in
Control.

     

    
      	
              (i)  

            	
              In
      the event Executive’s employment is terminated by the Company without
      Cause, or by Executive for Good Reason, within the twenty-four (24) month
      period following a Change in Control, if Executive executes the Release
      and Waiver required by Section 8 and such Release and Waiver is not
      revoked on or before the expiration of the revocation period thereof, and
      Executive has complied with the return of property and information
      provision set forth in Section 6, then in addition to the payments to be
      made pursuant to 7(a), but subject to Section 7(c)(iv), the Company shall
      also:

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	
              (A)  

            	
              Severance
      Pay.  Pay to Executive severance pay in an amount equal
      to 150% of his
      Base Salary at its highest level in effect from the date of the Change in
      Control through his termination of employment. Payment of such Severance
      Pay shall be made in a lump sum as soon as administratively practicable
      after the date of Executive’s termination (or if required by Section 409A,
      on the six (6) month anniversary of his termination), but no later than
      ninety (90) days thereafter, and not before the expiration of the
      revocation period for the Release and
Waiver.

            

    

     

    
      	
              (B)  

            	
              Annual
      Bonus.  Pay to Executive 150% of the target amount of the
      Annual Bonus under the Applicable Plan for the year in which the
      termination of Executive’s employment occurs. Payment of such Annual Bonus
      shall be made in a lump sum as soon as administratively practicable after
      the date of Executive’s termination (or if required by Section 409A, on
      the six (6) month anniversary of his termination), but no later than
      ninety (90) days thereafter, and not before the expiration of the
      revocation period for the Release and
Waiver.

            

    

     

    
      	
              (C)  

            	
              Equity Vesting
      Acceleration.  Accelerate the vesting of and the lapsing
      of restrictions on any unvested or restricted equity compensation (e.g.,
      stock options, restricted stock,
etc.).

            

    

     

    
      	
              (D)  

            	
              Benefits
      Continuation.  Continue to provide Executive and his
      family for the one-year period following Executive’s termination with the
      health and welfare benefits, including, but not limited to, benefits under
      any medical and dental benefits plan, life insurance plan, short- term and
      long-term disability plans, or other executive benefit or fringe benefit
      plan, which Executive and his family were receiving as of the date of
      Executive’s termination. The Company shall provide such benefits at the
      same cost to Executive as the cost, if any, charged to Executive for those
      benefits at the time of his termination. To the extent that the provision
      of such benefits at the Company’s expense during the six (6) month period
      following Executive’s termination would violate the requirements of
      Section 409A, then Executive shall be required to pay to the Company the
      Company portion of the cost of such benefits during such six (6) month
      period, and the Company shall reimburse Executive for the amounts so paid
      by Executive on the six (6) month anniversary of his termination, or as
      soon as administratively practicable thereafter, but no later than ninety
      (90) days thereafter.

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    
      	
              (ii)  

            	
              “Good
      Reason.”  For
      purposes of this Agreement, the term “Good Reason” shall
      mean the occurrence of any of the following in connection with a Change in
      Control, without Executive’s express written consent: (A) the assignment
      of duties to Executive materially inconsistent with Executive’s current
      authorities, duties, responsibilities and status; (B) any reduction in
      Executive’s title, position, or reporting lines; (C) the relocation of
      Executive to an office or location more than seventy-five (75) miles from
      the office or location of Executive’s work as of the date of the Change in
      Control; (D) requiring Executive to travel on Company business to a
      substantially greater extent than required as of the date of the Change in
      Control; or (E) the reduction in Executive’s Base Salary as in effect on
      the date of the Change in Control.

            

    

     

    
      	
              (iii)  

            	
              “Change in
      Control.”  For
      purposes of this Agreement, the term “Change in Control”
      shall mean the happening of any of the
  following:

            

    

     

    
      	
              (A)  

            	
              Any
      individual, entity or group (within the meaning of Section 13(d)(3) or
      14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a
      “Person”) becomes
      the beneficial owner (within the meaning of Rule 13d-3 promulgated under
      the Exchange Act) of 25% or more of either (1) the then outstanding common
      shares of the Company (the “Outstanding Company Common
      Shares”) or (2) the combined voting power of the then outstanding
      voting securities of the Company entitled to vote generally in the
      election of directors (the “Outstanding
      Company  Voting Securities”); provided, however, that
      such beneficial ownership shall not constitute a Change in Control if it
      occurs as a result of any of the following acquisitions of securities: (I)
      any acquisition directly from the Company, (II) any acquisition by the
      Company or any corporation, partnership, trust or other entity controlled
      by the Company (a “Subsidiary”), (III)
      any acquisition by any employee benefit plan (or related trust) sponsored
      or maintained by the Company or any Subsidiary, (IV) any acquisition by an
      underwriter temporarily holding Company securities pursuant to an offering
      of such securities, (V) any acquisition by an individual, entity or group
      that is permitted to, and actually does, report its beneficial ownership
      on Schedule 13-G (or any successor schedule); provided that, if any such
      individual, entity or group subsequently becomes required to or does
      report its beneficial ownership on Schedule 13D (or any successor
      schedule), then, for purposes of this paragraph, such individual, entity
      or group shall be deemed to have first acquired, on the first date on
      which such individual, entity or group becomes required to or does so
      report, beneficial ownership of all of the Outstanding Company Common
      Stock and Outstanding Company Voting Securities beneficially owned by it
      on such date, or (VI) any acquisition by any corporation pursuant to a
      reorganization, merger or consolidation, if, following such
      reorganization, merger or consolidation, the conditions described in
      clauses (I ), (2) and (3) of Section 7(c)(iii)(C) are satisfied.
      Notwithstanding the foregoing, a Change in Control shall not be deemed to
      occur solely because any Person (the “Subject Person”)
      became the beneficial owner of 25% or more of the Outstanding Company
      Common Shares or Outstanding Company Voting Securities as a result of the
      acquisition of Outstanding Company Common Shares or Outstanding Company
      Voting Securities by the Company which, by reducing the number of
      Outstanding Company Common Shares or Outstanding Company Voting
      Securities, increases the proportional number of shares beneficially owned
      by the Subject Person; provided, that if a Change in Control would be
      deemed to have occurred (but for the operation of this sentence) as a
      result of the acquisition of Outstanding Company Common Shares or
      Outstanding Company Voting Securities by the Company, and after such share
      acquisition by the Company, the Subject Person becomes the beneficial
      owner of any additional Outstanding Company Common Shares or Outstanding
      Company Voting Securities which increases the percentage of the
      Outstanding Company Common Shares or Outstanding Company Voting Securities
      beneficially owned by the Subject Person, then a Change in Control shall
      then be deemed to have occurred; or

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    
      	
              (B)  

            	
              Individuals
      who, as of the date of this Agreement, constitute the Board (the “Incumbent Board”)
      cease for any reason to constitute at least a majority of the Board;
      provided, however, that any individual becoming a director subsequent to
      the date hereof 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 comprising the Incumbent Board shall be considered as
      though such individual were a member of the Incumbent Board, but
      excluding, for this purpose, any such individual whose initial assumption
      of office occurs as a result of either an actual or threatened election
      contest or other actual or threatened solicitation of proxies or consents
      by or on behalf of a Person other than the Board, including by reason of
      agreement intended to avoid or settle any such actual or threatened
      contest or solicitation; or

            

    

     

    
      	
              (C)  

            	
              The
      consummation of a reorganization, merger, statutory share exchange,
      consolidation, or similar corporate transaction involving the Company or
      any of its direct or indirect Subsidiaries (each a “Business Combination”)
      in each case, unless, following such Business Combination, (1) the
      Outstanding Company Common Shares and the Outstanding Company Voting
      Securities immediately prior to such Business Combination, continue to
      represent (either by remaining outstanding or being converted into voting
      securities of the resulting or surviving entity or any parent thereof)
      more than 50% of the then-outstanding shares of common stock and the
      combined voting power of the then-outstanding voting securities entitled
      to vote generally in the election of directors, as the case may be, of the
      corporation resulting from Business Combination (including, without
      limitation, a corporation that, as a result of such transaction, owns the
      Company or all or substantially all of the Company’s assets either
      directly or through one or more subsidiaries), (2) no Person (excluding
      the Company, any employee benefit plan (or related trust) of the Company,
      a Subsidiary or such corporation resulting from such Business Combination
      or any parent or a subsidiary thereof, and any Person beneficially owning,
      immediately prior to such reorganization, merger or consolidation,
      directly or indirectly, 25% or more of the Outstanding Company Common
      Shares or Outstanding Company Voting Securities, as the case may be)
      beneficially owns, directly or indirectly, 25% or more of, respectively,
      the then outstanding shares of common stock of the corporation resulting
      from such Business Combination (or any parent thereof) or the combined
      voting power of the then outstanding voting securities of such corporation
      entitled to vote generally in the election of directors, and (3) at least
      a majority of the members of the board of directors of the corporation
      resulting from such Business Combination (or any parent thereof) were
      members of the Incumbent Board at the time of the execution of the initial
      agreement or action of the Board providing for such Business Combination;
      or

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	
              (D)  

            	
              The
      consummation of the sale, lease, exchange or other disposition of all or
      substantially all of the assets of the Company, unless such assets have
      been sold, leased, exchanged or disposed of to a corporation with respect
      to which following such sale, lease, exchange or other disposition (1)
      more than 50% of, respectively, the then outstanding shares of common
      stock of such corporation and the combined voting power of the then
      outstanding voting securities of such corporation (or any parent thereof)
      entitled to vote generally in the election of directors is then
      beneficially owned, directly or indirectly, by all or substantially all of
      the individuals and entities who were the beneficial owners, respectively,
      of the Outstanding Company Common Shares and Outstanding Company Voting
      Securities immediately prior to such sale, lease, exchange or other
      disposition in substantially the same proportions as their ownership
      immediately prior to such sale, lease, exchange or other disposition of
      such Outstanding Company Common Shares and Outstanding Company Voting
      Shares, as the case may be, (2) no Person (excluding the Company and any
      employee benefit plan (or related trust) of the Company or a Subsidiary of
      such corporation or a subsidiary thereof and any Person beneficially
      owning, immediately prior to such sale, lease, exchange or other
      disposition, directly or indirectly, 25% or more of the Outstanding
      Company Common Shares or Outstanding Company Voting Securities, as the
      case may be) beneficially owns, directly or indirectly, 25% or more of,
      respectively, the then outstanding shares of common stock of such
      corporation (or any parent thereof) and the combined voting power of the
      then outstanding voting securities of such corporation (or any parent
      thereof) entitled to vote generally in the election of directors, and (3)
      at least a majority of the members of the board of directors of such
      corporation (or any parent thereof) were members of the Incumbent Board at
      the time of the execution of the initial agreement or action of the Board
      providing for such sale, lease, exchange or other disposition of assets of
      the Company; or

            

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      	
              (E)  

            	
              Approval
      by the shareholders of the Company of a complete liquidation or
      dissolution of the Company.

            

    

     

    
      	
              (iv)  

            	
              Potential Section 280G
      Adjustment.  In the event that any amount or benefit to
      be paid or provided to Executive pursuant to Section 7(c)(i), taken
      together with any amounts or benefits otherwise paid or provided to
      Executive by the Company or any affiliated company (collectively, the
      “Covered
      Payments”), would be an “excess parachute
      payment,” as defined in Section 280G of the Internal Revenue Code
      and the related Treasury Regulations and other guidance issued thereunder,
      and would thereby subject Executive to the tax imposed under Section 4999
      of the Internal Revenue Code (the “Excise Tax”), then the
      Company shall either (A) make the Covered Payment to Executive without
      adjustment and subject to the Excise Tax, or (B) reduce the Covered
      Payments to the maximum amount that may be paid without Executive becoming
      subject to the Excise Tax (such reduced amount, the “Payment Cap”),
      whichever provides the greater net after-tax benefit to Executive. In the
      event that the reduction of the Covered Payments will provide Executive
      with the greater net after-tax benefit, Executive shall have the right to
      designate which of the payments and benefits otherwise provided for in
      Section 7(c)(i) that he will receive in connection with the application of
      the Payment Cap.

            

    

     

    (d) Termination of
Employment.  For purposes of this Section 7, the term “termination of employment”
and words of similar import shall mean a “separation from service” as
defined by Section 409A, and this Section 7 shall be interpreted and
administered consistent with such definition.

     

    (e) No Mitigation; No Set-Off Against
Severance Benefits.  Executive shall not be required to
mitigate damages or the amount of any payment or benefits provided for under
Section 7 by seeking other employment or otherwise, nor shall the amount of any
payment or benefits provided for in Section 7 be reduced by any compensation
earned by Executive as a result of employment by another employer after the date
of termination of Executive’s employment with the Company, except as otherwise
provided by the confidentiality, non-solicitation and non-competition provisions
of Section 9. In addition, the Company’s obligations under this Agreement shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against
Executive.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    
      	
              8.  

            	
              Release
      and Waiver.

            

    

     

    (a) In
exchange for the additional consideration under Section 7 to which Executive
would not otherwise be entitled, Executive shall generally and completely
release the Company, its subsidiaries and affiliates, and its directors,
officers, executives, shareholders, partners, agents, attorneys, predecessors,
successors, insurers and assigns from any and all claims, liabilities and
obligations, both known and unknown, that arise out of or are in any way related
to events, acts, conduct, or omissions occurring at any time prior to or at
Executive’s termination. Such general release shall include, but shall not be
limited to: (i) all claims arising out of or in any way related to Executive’s
employment with the Company or the termination of that employment; (ii) all
claims related to Executive’s compensation or benefits from the Company,
including salary, bonuses, incentive compensation, vacation pay, expense
reimbursements, severance pay, fringe benefits, stock, stock options, restricted
stock, or any other ownership or equity interests in the Company, or its
subsidiaries or affiliates under all State and federal statutes such as the Fair
Labor Standards Act, the Family and Medical Leave Act, the Employee Retirement
and Income Security Act, the New York Labor Law and any similar State or local
statute, regulation or order; (iii) all claims for breach of contract, wrongful
termination, and breach of the implied covenant of good faith and fair dealing;
(iv) all tort claims, including claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (v) all federal,
state, and local statutory claims, including claims for discrimination,
harassment, retaliation, attorneys’ fees, or other claims arising under, for
example, the Age Discrimination in Employment Act (the “ADEA”), Title VII of the
Civil Rights Act of 1964, as amended, the Rehabilitation Act of 1973, the
Americans With Disabilities Act, the Equal Pay Act, the Family Medical Leave
Act, the New York Human Rights Law and any similar State or local statute,
regulation or order. Notwithstanding the foregoing, Executive shall not be
required to release the Company or its subsidiaries or affiliates from: (A) any
obligation to indemnify Executive pursuant to the articles and bylaws of the
Company, any valid fully executed indemnification agreement with the Company,
any applicable directors and officers liability insurance policy, and applicable
law; or (B) any obligations to make payments to Executive under Section 7.
Executive shall be required to represent that he has no lawsuits, claims or
actions pending in his name, or on behalf of any other person or entity, against
the Company or its subsidiaries or affiliates, or any other person or entity
subject to the release to be granted under this Section.

     

    (b) Executive
shall acknowledge that: (i) he is knowingly and voluntarily waiving and
releasing any rights he may have under the ADEA; (ii) that the consideration
given for the waiver and release (i.e., the additional consideration to be
provided under Section 7) is in addition to anything of value to which he is
already entitled; and (iii) that he has been advised, as required by the ADEA,
that: (A) his waiver and release does not apply to any rights or claims that may
arise after the date that he signs such release; (B) he should consult with an
attorney prior to signing the release (although he may choose voluntarily not to
do so); (C) he has twenty-one (21) days from the date he receives the proposed
release to consider the release (although he may choose voluntarily to sign it
earlier); (D) he has seven (7) days following the date he signs the release to
revoke the release by providing written notice of his revocation to the Board;
and (E) the release will not be effective until the date upon which the
revocation period has expired, which will be the eighth day after the date that
the release is signed by Executive.

     

    (c) The
claims included in this release and waiver do not include vested rights,
if any, under any qualified retirement plan in which Executive participates, and
his COBRA, unemployment compensation and worker’s compensation rights, if any.
Nothing in this release shall be construed to constitute a waiver of: (i) any
claims Executive may have against the Company that arise from acts or omissions
that occur after the effective date of this Release; (ii) Executive’s right to
file an administrative charge with any governmental agency concerning the
termination of that employment; or (iii) Executive’s right to participate in any
administrative or court investigation, hearing or proceeding. Executive agrees,
however, to waive and release any right to receive any individual remedy or to
recover any individual monetary or non-monetary damages as a result of any such
administrative charge or proceeding. In addition, this release does not affect
Executive’s rights as expressly created by this Agreement, and does not limit
his ability to enforce this Agreement.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    
      	
              9.  

            	
              Executive
      Covenants.

            

    

     

    (a) Non-Disclosure of Confidential
Information and Trade Secrets.

     

    
      	
              (i)  

            	
              During
      the course of Executive’s employment with the Company, Executive will
      acquire and have access to Confidential Information and Trade Secrets
      belonging to the Company, its affiliates, subsidiaries, divisions and
      joint ventures (collectively referred to as the “Company” throughout
      and for purposes of this Section 9). Such Confidential Information and
      Trade Secrets include, without limitation, business and technical
      information, whatever its nature and form and whether obtained orally, by
      observation, from written materials or otherwise, as for example: (A)
      financial and business information, such as information with respect to
      costs, commissions, fees, profits, profit margins, sales, markets, mailing
      lists, accounts receivables and accounts payables, pricing strategies,
      strategies and plans for future business, new business, product or other
      development, potential acquisitions or divestitures, and new marketing
      ideas; (B) marketing information, such as information on markets, end
      users and applications, the identity of the Company’s customers, vendors,
      suppliers, and distributors, their names and addresses, the names of
      representatives of the Company’s customers, vendors, distributors or
      suppliers responsible for entering into contracts with the Company, the
      Company’s financial arrangements with its distributors and suppliers, the
      amounts paid by such customers to the Company, specific customer needs and
      requirements, leads and referrals to prospective customers; and (C)
      personnel information, such as the identity and number of the Company’s
      employees, personal information such as social security numbers, skills,
      qualifications, and abilities. Executive acknowledges and agrees that the
      Confidential Information and Trade Secrets are not generally known or
      available to the general public, but have been developed, complied or
      acquired by the Company at its great effort and expense and for commercial
      advantage and, therefore, takes every reasonable precaution to prevent the
      use or disclosure of any part of it by or to unauthorized persons.
      Confidential Information and Trade Secrets can be in any form or media,
      whether oral, written or machine readable, including electronic
      files.

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    
      	
              (ii)  

            	
              Executive
      agrees he will not, while associated with the Company and for so long
      thereafter as the pertinent information or documentation remains
      confidential, directly or indirectly use, disclose or disseminate to any
      other person, organization or entity or otherwise use any Confidential
      Information and Trade Secrets, except as specifically required in the
      performance of Executive’s duties on behalf of the Company or with prior
      written authorization from the
Board.

            

    

     

    (b) Non-Solicitation of
Customers.  Executive acknowledges and agrees that during the
course of and solely as a result of employment with the Company, he will come
into contact with some, most or all of the Company’s customers and will have
access to Confidential Information and Trade Secrets regarding the Company’s
customers, distributors and suppliers. Consequently, Executive covenants and
agrees that in the event of the termination of his employment, whether such
termination is voluntary or involuntary, Executive will not, for a period of
twelve (12) months following such termination, directly or indirectly, solicit
or initiate contact with any customer, former customer or prospective customer
of the Company for the purpose of selling products or services to the customer
competitive with the products or services purchased by the customer from the
Company. This restriction shall apply to any customer, former customer or
prospective customer of the Company with whom Executive had contact or about
whom Executive obtained Confidential Information or Trade Secrets during his
employment with the Company. For the purposes of this Section, “contact” means interaction
between Executive and the customer or then prospective customer which takes
place to further the business relationship, or making sales to our performing
services for the customer or prospective customer on behalf of the Company. This
restriction will not apply when a former employee who is not working in a
competitive capacity responds to a request for proposal on behalf of his new
employer who is not engaged in the same or similar businesses as the
Company.

     

    (c) Non-Compete.  Executive
acknowledges that his services are special and unique, and compensation is
partly in consideration of and conditioned upon Executive not competing with
Company, and that a covenant on Executive’s part not to compete is essential to
protect the business and good will of the Company. Accordingly, except as
hereinafter provided, Executive agrees that for twelve (12) months after the
termination of his employment, Executive shall not be engaged or interested as a
director, officer, stockholder (except as provided herein), employee, partner,
individual proprietor, lender or in any other capacity, in any business, which
competitive with the business of the Company as conducted at the time of
Executive’s termination and which involves Executive’s knowledge, actions or
assistance within the counties of Westchester, Rockland, Ulster, Orange, Duchess
and Sullivan in New York and Sussex, Bergen and Passaic in New Jersey; however,
this restriction will not apply to new kinds of business in which Executive may
engage in the future, after such termination, unless Executive has been actively
engaged in the development or otherwise involved in such business while an
employee of the Company. In addition, Executive agrees that for this same twelve
(12) months, he shall not recruit or recommend any other person who is or was an
employee of the Company while Executive was also an employee, to any business
which is competitive with the business of Executive as conducted at the time of
Executive’s termination and which involves Executive’s knowledge, actions or
assistance within the counties of Westchester, Rockland, Ulster, Orange, Duchess
and Sullivan in New York and Sussex, Bergen and Passaic in New Jersey. Nothing
herein shall prohibit Executive from investing in any securities of any
corporation which is in competition with the Company, whose securities are
listed on a national exchange or traded in the over-the-counter market if
Executive shall own less than 5% of the outstanding securities of such
operation.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    (d) Enforcement of
Covenants.  Executive acknowledges and agrees that compliance
with the covenants set forth in this Section 9 is necessary to protect the
Confidential Information and Trade Secrets, business and goodwill of the
Company, and that any breach of this Section 9 will result in irreparable and
continuing harm to the Company, for which money damages may not provide adequate
relief. Accordingly, in the event of any breach or anticipatory breach of
Section 9 by Executive, the Company and Executive agree that the Company shall
be entitled to the following particular forms of relief as a result of such
breach, in addition to any remedies otherwise available to it at law or equity:
(i) injunctions, both preliminary and permanent, enjoining or restraining such
breach or anticipatory breach, and Executive hereby consents to the issuance
thereof forthwith and without bond; and (ii) recovery of all reasonable sums and
costs, including attorneys’ fees, incurred by the Company to enforce the
provisions of this Section 9.

     

     

    
      	
              10.  

            	
              Withholding
      of Taxes

            

    

     

    The
Company shall withhold from any compensation and benefits payable under this
Agreement all applicable federal, state, local or other taxes.

     

     

    
      	
              11.  

            	
              No
      Claim Against Assets.

            

    

     

    Nothing
in this Agreement shall be construed as giving Executive any claim against any
specific assets of the Company or as imposing any trustee relationship upon the
Company in respect of Executive. The Company shall not be required to establish
a special or separate fund or to segregate any of its assets in order to provide
for the satisfaction of its obligations under this Agreement. Executive’s rights
under this Agreement shall be limited to those of an unsecured general creditor
of the Company and its affiliates.

     

     

    
      	
              12.  

            	
              Executive
      Acknowledgement.

            

    

     

    Executive
acknowledges that he has had the opportunity to discuss this Agreement with and
obtain advice from his private attorney, has had sufficient time to and has
carefully read and fully understands all of the provisions of this Agreement,
and is knowingly and voluntarily entering into this Agreement.

     

     

    
      	
              13.  

            	
              Successors
      and Assignment.

            

    

     

    (a) Except as
otherwise provided in this Agreement, this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs,
representatives, successors and assigns.

     

    (b) The
Company shall require any successor or successors (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company, by agreement in form and substance
satisfactory to Executive, to acknowledge expressly that this Agreement is
binding upon and enforceable against the Company in accordance with the terms
hereof, and to become jointly and severally obligated with the Company to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession or successions had
taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement by the
Company.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    (c) The
rights and benefits of Executive under this Agreement are personal to him and no
such right or benefit shall be subject to voluntary or involuntary alienation,
assignment or transfer; provided, however, that nothing in this Section 13 shall
preclude Executive from designating a beneficiary or beneficiaries to receive
any benefit payable on his death.

     

     

    
      	
              14.  

            	
              Entire
      Agreement; Amendment.

            

    

     

    This
Agreement shall supersede any and all existing oral or written agreements,
representations, or warranties between Executive and the Company (or any of its
subsidiaries or affiliated entities) relating to the terms of Executive’s
employment, except for the Company’s Code of Ethics and the Director’s and
Officer’s Indemnification Agreement. This Agreement may not be amended except by
a written agreement signed by both parties.

     

     

    
      	
              15.  

            	
              Governing
      Law.

            

    

     

    This
Agreement shall be governed by and construed in accordance with the domestic
substantive laws of the State of New York, without giving effect to any
conflicts or choice of laws rule or provision that would result in the
application of the domestic substantive laws of any other
jurisdiction.

     

     

    
      	
              16.  

            	
              Section
      409A.

            

    

     

    The
parties intend that this Agreement and the payments and benefits to be provided
hereunder satisfy the requirements of Section 409A, and this Agreement shall be
administered and interpreted consistent with such intention.

     

     

    
      	
              17.  

            	
              Notices.

            

    

     

    Any
notice, consent, request or other communication made or given in connection with
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by registered or certified mail, return receipt
requested, or by facsimile or by hand delivery, to those listed below at their
following respective addresses or at such other address as each may specify by
notice to the others:

     

    
      	
              To
      the Company:

            
	
              Warwick
      Valley Telephone Company

            
	
              Attention:
      Chairman

            
	
              47
      Main Street

            
	
              Warwick,
      New York 10990

            
	 
      
	
              To
      Executive:

            
	
              At
      the address set forth below

            
	
              30
      Cedar Lane

            
	
              Babylon,
      New York 11702

            

    

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    
      	
              18.  

            	
              Miscellaneous.

            

    

     

    (a) Waiver.  The failure
of a party to insist upon strict adherence to any term of this Agreement on any
occasion shall not be considered a waiver thereof or deprive that party of the
right thereafter to insist upon strict adherence to that term or any other term
of this Agreement.

     

    (b) Severability.  If
any term or provision of this Agreement is declared illegal or unenforceable by
any court of competent jurisdiction and cannot be modified to be enforceable,
such term or provision shall immediately become null and void, leaving the
remainder of this Agreement in full force and effect.

     

    (c) Headings.  Section
headings are used herein for convenience of reference only and shall not affect
the meaning of any provision of this Agreement.

     

    (d) Rules of
Construction.  Whenever the context so requires, the use of the
singular shall be deemed to include the plural and vice versa.

     

    (e) Authority to Enter into this
Agreement.  The officer of the Company whose signature appears
below has been authorized to enter into this Agreement on behalf of the
Company.

     

    (f) Counterparts.  This
Agreement may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, and such counterparts will together
constitute but one agreement.

     

    In Witness
Whereof, the parties hereto have duly executed this Agreement as of the
day and year set forth below.

     

    

    
      	
              Warwick
      Valley Telephone Company

            	 
      	
              Executive

            
	
              /s/  Robert
      J. DeValentino

            	 
      	
              /s/  Duane
      W. Albro

            
	
              Robert
      J. DeValentino

            	 
      	
              Duane
      W. Albro

            
	
              Chairman,
      Board of Directors

            	 
      	
              President,
      Chief Executive Officer

            

    

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    APPENDIX
A

     

    Illustration
of Annual Bonus and Incentive Compensation (Long Term Incentive Plan) —
CEO

     

     

    

     

     

    Annual Bonus Performance
Matrix:

     

     

    The
performance matrix below will be used to calculate the Payout Factor amounts.
The Payout Factor amounts will be applied to both the Target Annual Bonus and
the Target Incentive Compensation amounts.

     

     

    Target Annual
Bonus:

     

    Target
Annual Bonus
Amount:                                                                60%  x  [base
salary of $270,000]  = $162,000

    Actual
Annual Bonus
Payout:                                                                [Target
Annual Bonus Amount of $162,000]  x  [calculated Payout
Factor]

    

     

    Methodology:

     

    Target
Financial Metrics will be determined for each year by the Board of Directors on
behalf of the Company and in collaboration with the CEO.

     

    The
matrix below reflects both the elements of performance that will be evaluated
and the weightings associated with each Financial Metric to determine the
applicable payout factor that will be used to calculate the Annual Bonus and
Incentive Compensation amounts.

     

    

     

    
      	
              Financial
      Metric

            	
              Weighting

            	
              Result

            	
              Target

            	
              Actual/Target

            	
              Payout
      Factor

            
	 
      	
              A

            	
              B

            	
              C

            	
              (B/C)

            	
              A
      x (B/C)

            
	
              Revenue

            	
              0.25

            	
              TBD

            	
              $TBD

            	
              TBD

            	
              TBD

            
	
              EBITDA

            	
              0.25

            	
              TBD

            	
              $TBD

            	
              TBD

            	
              TBD

            
	
              Free
      Cash Flow

            	
              0.25

            	
              TBD

            	
              $TBD

            	
              TBD

            	
              TBD

            
	
              Net
      Income

            	
              0.15

            	
              TBD

            	
              $TBD

            	
              TBD

            	
              TBD

            
	
              BOD
      Discretion

            	
              0.10

            	
              NA

            	
              NA

            	
              NA

            	
              TBD

            
	
              Total

            	
              1.00

            	 
      	 
      	 
      	
              Total
      Payout Factor

            

    

     

    Illustrative Example: By way of
illustration only,
assume the following Financial Metric targets: (1) Revenue: $30,000,000; (2)
EBITDA: $5,000,000; (3) Free Cash Flow: $2,000,000; and (4) Net Income:
$6,000,000.  Assume the following 

    actual
financial results for the fiscal year: (1) Actual Revenue: $28,000,000; (2)
Actual EBITDA: $4,000,000; (3) Actual Free Cash Flow: $1,500,000; and (4) Actual
Net Income: $5,000,000. The resulting payout factor calculations would be
calculated as follows:

     

    

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

     

    
      	
              Financial
      Metric

            	
              Weighting

            	
              Result

            	
              Target

            	
              Actual/Target

            	
              Payout
      Factor

            
	 
      	
              A

            	
              B

            	
              C

            	
              (B/C)

            	
              A
      x (B/C)

            
	
              Revenue

            	
              0.25

            	
              $28,000,000

            	
              $30,000,000

            	
              .9333

            	
              .2333

            
	
              EBITDA

            	
              0.25

            	
              $  4,000,000

            	
              $  5,000,000

            	
              .8000

            	
              .2000

            
	
              Free
      Cash Flow

            	
              0.25

            	
              $  1,500,000

            	
              $  2,000,000

            	
              .7500

            	
              .1875

            
	
              Net
      Income

            	
              0.15

            	
              $  5,000,000

            	
              $  6,000,000

            	
              .8333

            	
              .1250

            
	
              BOD
      Discretion

            	
              0.10

            	
              N/A

            	
              N/A

            	
              N/A

            	
              .1000

            
	
              Total

            	
              1.00

            	 
      	 
      	 
      	
              .8458

            

    

     

    Based
upon this illustration, which also assumes the BOD Discretionary component is
paid out in the full 10% amount, the actual Annual Bonus to be paid would be
based on a payout factor of .8458 and result in an Annual Bonus of $162,000 x
..8458 or $137,025

     

    Notwithstanding
the foregoing matrix, in the event that the actual results / target results for
Revenue and Net Income are less than .9000 (90%) then the payout factor
attributable to those metrics of measurement will be zero, respectively.
Likewise, in the event that the actual results / target results for EBITDA and
Free Cash Flow are less than .7500 (75%) then the payout factor attributable to
those metrics of measurement will be zero, respectively. This methodology will
also be applied to Incentive Compensation payout in the same
manner.

     

    

     

    Incentive Compensation (Long
Term Incentive Plan) Component:

     

    

     

    
      	
              Ø  

            	
              Target
      Incentive Compensation Component

            

    

     

    

     

    
      	
              Stock
      Options:

            	
              45,500

            
	 
      	 
      
	
              Restricted
      Shares:

            	
                9,000

            

    

    

     

    Applying
the same methodological approach used to determine the Annual Bonus payout as
shown above would result in an Incentive Compensation payout of:

     

    

     

    
      	
              Stock
      Options:

            	
              45,500
      x .8458 = 38,485

            
	
               
      

            	 
      
	
              Restricted
      Shares:

            	
                9,000
      x .8458 =   7,613

            

    

    

    For
calculating both the Annual Bonus and the Incentive Compensation, the Board of
Directors retains the sole discretion to award compensation, if any, under this
Appendix A.

     

     

     

      19

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