Exhibit 10.21
DESCRIPTION OF
EGAMES, INC. 2000 EMPLOYEE INCENTIVE COMPENSATION PLAN
On July 19, 1999, the Board of Directors of eGames, Inc. ("the
Company") approved the adoption of a company-wide Employee Incentive
Compensation Plan (the "Plan"). The amount of incentive compensation that each
Company employee was eligible to earn under the Plan was contingent on the
Company achieving certain net income objectives. Under the Plan, each employee
was eligible to earn a specified percentage of the employee's total annual
salary in incentive compensation. These percentages ranged from 10% of annual
salary for administrative employees to 50% of the annual salary for the Chief
Executive Officer.
No bonuses were to be earned until the Company had earned net income of
at least $1,135,000 (the "Minimum Threshold") during the 2000 fiscal year, which
amount was equivalent to the net income earned in fiscal 1998. Upon reaching the
Minimum Threshold, plus the amount required to pay the bonuses earned if the
Minimum Threshold were achieved, then 50% of the potential bonus to which each
employee was eligible would be earned. If net income of $3,100,000 (the 100%
Threshold") was earned during the 2000 fiscal year, plus the amount required to
pay the bonuses earned when that net income level had been achieved, then 100%
of the potential bonus to which each employee was eligible would be earned.
If the Company earned net income during the 2000 fiscal year that
exceeded the Minimum Threshold, plus the amount required to pay the bonuses
earned, then each employee would earn a bonus equal to the percentage of the
potential bonus to which they were eligible equal to the percentage of earnings
as measured against the 100% Threshold. For example, if an employee earned
$50,000 per year and was eligible to earn a bonus equal to 10% of his or her
salary if the 100% Threshold were met, then that employee would be paid a $5,000
bonus if the 100% Threshold were met.
On the date of adoption of the Plan, based on the number of employees
of the Company and their respective bonus percentages, the Company would have
been required to achieve pre-bonus earnings of approximately $1,400,000 during
the 2000 fiscal year in order to earn the minimum bonus (50%). There was no
maximum incentive compensation level. If the Company exceeded the 100%
Threshold, then additional incentive compensation would be earned on a linear
basis.
Any bonuses earned were to be paid subsequent to the completion of the
2000 fiscal year's financial statement audit. Since the Company did not achieve
the 50% minimum pre-bonus earnings level, the Company did not pay any bonuses
out under this Plan.
