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•	Item 1: the election of two Class III directors to serve until the Company’s 2018 Annual Meeting of Stockholders, or in each case until such director’s successor shall have been duly elected and qualified;

•	Item 2: the ratification of the Audit Committee’s appointment of BDO USA, LLP as our independent registered public accounting firm for the year ended December 31, 2015;

•	Item 3: the advisory approval of the Company’s executive compensation;

•	Item 4: the amendment and restatement of the LivePerson, Inc. Incentive Plan; and

•	to act upon such other business as may properly come before the Annual Meeting.

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(1)	Election of two Class III directors to serve until the 2018 Annual Meeting of Stockholders, or in each case until such director’s successor shall have been duly elected and qualified;

(2)	Ratification of the Audit Committee’s appointment of BDO USA, LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2015;

(3)	Advisory approval of the Company’s executive compensation;

(4)	Approval of an amendment and restatement of the LivePerson, Inc. Incentive Plan; and

(5)	Transaction of such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

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(1)	election of two Class III directors to serve until the 2018 Annual Meeting of Stockholders, or in each case until such director’s successor shall have been duly elected and qualified;

(2)	ratification of the Audit Committee’s appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2015;

(3)	advisory approval of the Company’s executive compensation;

(4)	approval of an amendment and restatement of the LivePerson, Inc. Incentive Plan; and

(5)	action upon such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

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•	All of the members of the Board other than Mr. LoCascio are “independent” under the Nasdaq rules.

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•	All members of our Audit Committee, Compensation Committee, and Nominating and Governance Committee are independent.

•	The Board has adopted a Code of Conduct applicable to all of our employees, including our executive officers, as well as a Code of Ethics for the Chief Executive Officer and Senior Financial Officers. The Code of Conduct and Code of Ethics can be found at www.liveperson.com/company/ir/corporate-governance.

•	The Board has adopted a policy regarding conflicts of interest and “related-person transactions” under which all potential conflicts of interest and related-person transactions must be reviewed and pre-approved by the Audit Committee.

•	An annual risk assessment of the Company’s compensation policies conducted by the Board and the Compensation Committee.

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•	the Company’s annual incentive compensation is based on balanced performance metrics that promote disciplined progress towards Company goals;

•	the Company does not offer significant short-term incentives that might drive high-risk investments at the expense of long-term Company value;

•	the Company’s long-term incentives do not drive high-risk investments at the expense of long-term Company value; and

•	the Company’s compensation programs are appropriately balanced between cash and equity, and the equity component does not promote unnecessary risk taking.

•	each person or group of affiliated persons whom we know to beneficially own more than five percent of our common stock;

•	each of our named executive officers identified in the “Summary Compensation Table” included in this Proxy Statement on page 23;

•	each of our directors and director nominees; and

•	each of our directors and executive officers as a group.

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(1)	Unless noted otherwise, the business address of each beneficial owner is c/o LivePerson, Inc., 475 Tenth Avenue, 5th Floor, New York, New York 10018.

(2)	Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and/or investment power with respect to the shares shown as beneficially owned.

(3)	Based solely on our review of the Schedule 13G/A filed with the SEC on January 22, 2015 by BlackRock, Inc., whose address is 40 East 52nd Street, New York, New York 10022.

(4)	Based solely on our review of the Schedule 13G filed with the SEC on February 12, 2015 by Granahan Investments Management, Inc., whose address is 404 Wyman Street, Waltham, MA 02451.

(5)	Based solely on our review of the Schedule 13G/A filed with the SEC on February 17, 2015 by Clearbridge Investments, LLC, whose address is 620 8th Avenue, New York, New York 10018.

(6)	Based solely on our review of the Schedule 13G filed with the SEC on February 10, 2015 by The Vanguard Group, whose address is 100 Vanguard Blvd., Malvern, PA 19355.

(7)	Based solely on our review of the Schedule 13G filed with the SEC on January 21, 2015 by Destrier Capital Management LLC, whose address is 489 5th Avenue, New York, New York 10017.

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(8)	Based solely on our review of the Schedule 13G filed with the SEC on February 17, 2015 by Shannon River Fund Management LLC, whose address is 850 Third Avenue, 13th Floor, New York, New York 10022.

(9)	Includes 822,000 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of April 16, 2015. Of the total shares held by Mr. LoCascio, 2,000,000 shares are pledged as collateral in connection with a line of credit extended to Mr. LoCascio by UBS.

(10)	Includes 192,500 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of April 16, 2015.

(11)	Reflects shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of April 16, 2015.

(12)	Reflects shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of April 16, 2015.

(13)	Reflects shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of April 16, 2015.

(14)	Includes 105,000 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of April 16, 2015.

(15)	Includes 145,000 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of April 16, 2015.

(16)	Reflects shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of April 16, 2015.

(17)	Includes 20,000 shares of common stock that are owned of record by a family trust over which Mr. Wesemann has indirect beneficial ownership. Also includes 140,000 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of April 16, 2015.

(18)	Includes 1,890,000 shares of common stock issuable upon exercise of options presently exercisable or exercisable within 60 days of April 16, 2015 and shares over which the directors and executive officers are indirect beneficial owners. Includes holdings of all directors and executive officers as a group including executive officers not listed above.

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•	Perquisites. We do not provide special benefits, perquisites or supplemental retirement plans to our Named Executive Officers.

•	Tax Gross-Ups. We do not provide any tax gross-ups to our Named Executive Officers.

•	Independence. Our Compensation Committee is comprised solely of independent directors.

•	Periodic Review. The Compensation Committee reviews our compensation practices and program to ensure that our Named Executive Officers are compensated in a manner consistent with our business strategy, competitive market practice, sound corporate governance principles and stockholder interests.

•

Risk Analysis. Our executive compensation program is structured to avoid inappropriate risk taking by our Named Executive Officers by having the appropriate pay philosophy tied to reasonable business objectives. The Compensation Committee has concluded that the Company’s executive compensation program are reasonable, in the best interest of our stockholders, and not likely to have a material adverse effect on our Company.

•	Hedging. Our Insider Trading Policy prohibits hedging of Company stock or the use of Company stock and any other transactions which could reasonably cause our officers to have interests adverse to our stockholders.

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•	align incentives, including bonus targets, performance metrics and equity, with Company fiscal performance as well as achievement of strategic objectives that create stockholder value;

•	retain and encourage high potential team players to build a career at the Company;

•	provide incentives that are cost-efficient, competitive with other organizations and fair to employees and stockholders; and

•	design a balanced approach to compensation that properly aligns incentives with Company performance and stockholder value and does not promote inappropriate risk taking.

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•	Base Salary - fixed pay that takes into account an individual’s role and responsibilities, experience, expertise and individual performance.

•

Annual Incentive - variable pay that is designed to reward attainment of annual business goals. Executives qualify for an annual cash incentive payment based on a combination of Company performance as well as individual performance against defined objectives tied to the Company’s strategic and fiscal objectives. In the case of executives whose primary objective is revenue generation, incentive compensation may take the form of commissions tied to revenue as well as other Company and individual performance metrics.

•

Long-Term Incentives - the Company’s equity based incentive plan allows for awards that may include stock options, stock appreciation rights, restricted stock, performance shares and other stock based awards, including restricted stock units and deferred stock units. To date, the Company has used only stock options for long-term incentive awards. Such awards are typically granted upon initial hire, and also from time to time during an employee’s continued tenure.

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•	Benefits and Perquisites - the Company offers certain benefits, including medical, dental and life insurance benefits and retirement savings that it considers to be consistent with industry practices and important for competitive recruitment and retention. The Company does not offer special benefits such as supplemental executive retirement plans, perquisites, tax gross-ups or tax equalization.

1.	Base Salary

2.	Annual Incentive Compensation

•	earnings per share;

•	gross or net revenues;

•	revenue per employee;

•	earnings before interest, taxes plus amortization and depreciation (EBITDA);

•	EBITDA per share;

•	attainment of strategic and/or product innovation objectives; or

•	such other goals established by the Committee.

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3.	Long-term Incentives - Equity-Based Awards

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4.	Other Benefits and Perquisites

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(1)

Amounts represent the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, or ASC Topic 718, and in accordance with SEC rules. Generally, the aggregate grant date fair value is the amount that the Company expects to expense in its financial statements over the award’s vesting schedule. These amounts reflect the Company’s accounting expense and do not correspond to the actual value that will be realized by the Named Executive Officers and there is no assurance that these grant date fair values will ever be realized by the Named Executive Officers. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For additional information on the valuation assumptions with respect to the grants, refer to Note 1 of LivePerson’s consolidated financial statements contained in our Annual Report on Form 10-K for the 2014 Fiscal Year, as filed with the SEC.

(2)

The performance-based, annual cash incentive bonuses earned in 2014 and paid in 2015 are reflected in the column entitled “Non-Equity Incentive Plan Compensation” for 2014, those earned in 2013 and paid in 2014 are reflected in the column entitled “Non-Equity Incentive Plan Compensation” for 2013 and those earned in 2012 and paid in 2013 are reflected in the column entitled “Non-Equity Incentive Plan Compensation” for 2012.

(3)	Amount includes: (i) $32 for premiums for term life insurance paid by us on behalf of Mr. LoCascio, Mr. Murphy, and Ms. Greenberg, (ii) $6,000 for matching contributions to 401(k) plans paid by us on behalf of Mr. Murphy, and Ms. Greenberg and (iii) $6,398, $19,261, and $6,364 for Mr. LoCascio, Mr. Murphy, and Ms. Greenberg respectively, for health, dental, vision and disability insurance.

(4)	Payments to Mr. Vanounou were made in Israeli New Shekels, or NIS. For the 2014 Fiscal Year, an average exchange rate of approximately U.S. $1.00/NIS 3.58 was used to calculate amounts for Mr. Vanounou with respect to amounts under “Salary” and “All Other Compensation.”

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(5)	Payments to Mr. Vanounou were made in Israeli New Shekels, or NIS. An exchange rate of U.S. $1.00/NIS 3.89 was used to calculate amounts for Mr. Vanounou with respect to amounts under “Non-Equity Incentive Plan Compensation” as per the employee agreement.

(6)

Amount includes: (i) $15,614 for employer contributions to Mr. Vanounou’s executive insurance fund, (ii) $5,761 for employer contributions to Mr. Vanounou’s education fund, (iii) $1,561 for employer contribution to Mr. Vanounou’s disability insurance, (iv) $8,415 for employer contribution to the Israeli National Insurance Fund and (vi) $26,013 for statutory contributions to Mr. Vanounou’s severance fund.

(7)	Payments to Mr. Banks were made in Pounds Sterling, or GBP. For the 2014 Fiscal Year, an average exchange rate of approximately GBP 1.647 was used to calculate amounts for Mr. Banks with respect to amounts under “Salary,” “Non-Equity Incentive Plan Compensation” and “All Other Compensation.”

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(1)

Represents Mr. LoCascio’s annual base salary as of December 31, 2014 and his 2014 Fiscal Year target bonus. If Mr. LoCascio is terminated by us without “cause” or Mr. LoCascio terminates his employment for “good reason,” we must pay him an amount equal to 12 months of his then current base salary and the pro rata portion of the bonus he would have been entitled to receive for the fiscal year in which the termination occurred. These amounts are payable in three equal monthly installments beginning 30 days after his termination. “Cause” means (i) an act or acts of dishonesty, moral turpitude or intentional felonious behavior which are materially detrimental to the Company, (ii) failure by Mr. LoCascio to obey the reasonable and lawful orders of our Board of Directors, (iii) gross negligence by Mr. LoCascio in the performance of, or willful disregard by Mr. LoCascio of his obligations under the agreement, or (iv) a conviction of Mr. LoCascio (including entry of a guilty or nolo contendere plea) of a crime involving fraud, dishonesty or moral turpitude or a felony. The term “good reason” under Mr. LoCascio’s employment agreement means (i) if Mr. LoCascio has suffered a material change or diminution in duties and responsibilities, (ii) if our Board of Directors reduces the base salary or bonus to which Mr. LoCascio is entitled under the agreement, (iii) if we consummate a sale of all or substantially all of our assets to a third party and the third party does not assume the obligations of the Company under the agreement or (iv) if Mr. LoCascio is relocated to a location outside the New York Metropolitan area. Pursuant to the agreement, for a period of one year from the date of termination of Mr. LoCascio’s employment, he may not directly or indirectly compete with us, including, but not limited to, being employed by any business which competes with us, or otherwise acting in a manner intended to advance an interest of a competitor of ours in a way that will or may injure an interest of ours.

(2)

Represents Mr. Murphy’s base salary as of December 31, 2014 for 6 months. If Mr. Murphy is terminated by us without “cause” or Mr. Murphy terminates his employment for “good reason,” then subject to executing a release of claims, he is entitled to receive his then-current base salary for a period of 6 months following such termination. The term “cause” in Mr. Murphy’s employment agreement means a determination by the Company (which determination shall not be arbitrary or capricious) that: (i) he materially failed to perform his specified or fundamental duties to us or any of our subsidiaries, (ii) he was convicted of, or pled nolo contendere to, a felony (regardless of the nature of the felony), or any other crime involving dishonesty, fraud, or moral turpitude, (iii) he engaged in or acted with gross negligence or willful misconduct (including but not limited to acts of fraud, criminal activity or professional misconduct) in connection with the performance of his duties and responsibility to us or any our subsidiaries, (iv) he failed to substantially comply with the rules and policies of the Company or any of our subsidiaries governing employee conduct or with the lawful directives of the Board of Directors, or (v) he breached any non-disclosure, non-solicitation or other restrictive covenant obligation to us or any of our subsidiaries. If in our reasonable discretion, we determine that an event or incident described in to clause (i) or (iv) above is curable, then in order to terminate Mr. Murphy’s employment for cause pursuant to clause (i) or (iv) above, we will (a) provide Mr. Murphy with written notice of the event or incident that we consider to be “cause” within 30 calendar days following its occurrence, (b) provide Mr. Murphy with a period of at least 15 calendar days to cure the event or incident, and (c) if the cause persists following the cure period, terminate Mr. Murphy’s employment by written termination letter any time within 60 calendar days following the date that notice to cure was delivered to

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(3)

Represents Mr. Murphy’s base salary as of December 31, 2014 for 6 months. If there is a change of control of the Company and Mr. Murphy is terminated by us without “cause” or Mr. Murphy terminates his employment for “good reason,” in each case within 12 months following the change of control, then subject to executing a release of claims, he is entitled to receive the following severance: (i) his then-current base salary for a period of 6 months following such termination and (ii) his outstanding options and/or other equity awards that are scheduled to vest in the 24-month period following his termination will accelerate and become exercisable upon such termination and will remain exercisable for up to 90 days following his termination.

(4)	Represents the closing price of our common stock on December 31, 2014 less the exercise price for the options held by Mr. Murphy, multiplied by the number of shares underlying the options that would otherwise vest over the following 24 months.

(5)	Payments to Mr. Vanounou are made in Israeli New Shekels, or NIS. For this disclosure, an average exchange rate of approximately U.S. $1.00/NIS 3.58 was used to calculate amounts for Mr. Vanounou.

(6)

Represents Mr. Vanounou’s base salary as of December 31, 2014 for 120 days. If Mr. Vanounou is terminated by us without “cause”, then subject to executing a release of claims, he will be entitled to 120 days’ notice, or at the option of the Company a lump sum severance payment equal to 120 days of his then current base salary. The term “cause” in Mr. Vanounou’s employment agreement has substantially the same definition as provided above for Mr. Murphy.

(7)

Represents Ms. Greenberg’s base salary as of December 31, 2014 for 6 months. If Ms. Greenberg is terminated by us without “cause,” or Ms. Greenberg is “constructively terminated,” then subject to executing a release of claims, she is entitled to receive the following severance: (i) a lump sum severance payment equal to 6 months of her then current base salary, (ii) all of her outstanding options will accelerate and become exercisable upon such termination and will remain exercisable for up to 12 months following her termination, and (iii) up to 6 months of premium payments for health insurance coverage under COBRA. The term “cause” in Ms. Greenberg’s employment agreement has substantially the same definition as provided above for Mr. Murphy. The term “constructively terminated” under her employment agreement means one of more of the following conditions arising without her consent and subject to certain notice and cure periods: (a) a relocation of our primary offices outside a radius that is 40 miles from our current offices; or (b) a material diminution of her job responsibilities or level of authority or base salary.

(8)	Represents the closing price of our common stock on December 31, 2014 less the exercise price for the options held by Ms. Greenberg, multiplied by the total number of unvested shares underlying the options.

(9)	Represents up to 6 months of premium payments for health insurance coverage under COBRA.

(10)

Represents Ms. Greenberg’s base salary as of December 31, 2014 for 9 months. If there is a change of control of the Company and Ms. Greenberg is terminated by us without “cause” or Mr. Greenberg is “constructively terminated,” in each case within 12 months following the change of control, then subject to executing a release of claims, she will be entitled to receive the same severance benefits as described above except the lump sum severance payment will be equal to 9 months (instead of 6 months) of her then current base salary.

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(1)

Amounts shown represent the target awards that could have been earned by the Named Executive Officer under the Company’s annual cash incentive bonus plan for these executives. There were no threshold or maximum bonus opportunities. The target amount could be exceeded based on performance metrics. Awards are based on achievement of individual performance objectives, Company performance as measured by EBITDA and the achievement of strategic objectives. The Compensation Committee retains discretion to adjust the bonus amount paid to any employee or executive up or down, regardless of that person’s target bonus or specific corporate performance metrics. Additional information about these bonus opportunities appear in the section of this Proxy Statement titled the “Compensation Discussion and Analysis.” The actual incentives earned in 2014 and paid in 2015 are reflected in the “Summary Compensation Table” in the “Non-Equity Incentive Plan Compensation” column.

(2)	The exercise price is the grant date closing market price per share.

(3)	Mr. Banks resigned from the Company effective as of January 23, 2015.

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(1)

Each stock option grant listed above vests as to 25% of the original number of shares covered by each stock option grant on the first anniversary of the grant date of each stock option (the “Grant Date”) and as to an additional 25% of the original number of shares at the end of each successive anniversary of the Grant Date until the fourth anniversary of the Grant Date, subject to the executive's continued service with the Company through each vesting date and any acceleration provisions set forth in each executive’s employment agreement as described above in “Employment Agreement for our Named Executive Officers.”

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(1)

This column represents the aggregate grant date fair value of stock options granted to each non-employee director in the 2014 Fiscal Year computed in accordance with FASB ASC Topic 718, and in accordance with SEC rules. Generally, the aggregate grant date fair value is the amount that the Company expects to expense in its financial statements over the award’s vesting schedule. These amounts reflect the company’s accounting expense and do not correspond to the actual value that will be realized by the non-employee directors and there is no assurance that these grant date fair values will ever be realized by the non-employee directors. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For additional information on the valuation assumptions with respect to the grants, refer to Note 1(l) of LivePerson’s consolidated financial statements contained in our Annual Report on Form 10-K for the 2014 Fiscal Year, as filed with the SEC.

(2)	As of December 31, 2014, the number of shares underlying unexercised stock options were: Mr. Block, 85,000; Mr. Lavan, 75,000; Mr. Vaskevitch 85,000; and Mr. Wesemann, 155,000.

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•	none of the members of the Compensation Committee was an officer (or former officer) or employee of the Company or any of its subsidiaries;

•	none of the members of the Compensation Committee had a direct or indirect material interest in any transaction in which the Company was a participant and the amount involved exceeded $120,000;

•	none of our executive officers served on the compensation committee (or another board committee with similar functions or, if none, the entire board of directors) of another entity where one of that entity’s executive officers served on our Compensation Committee;

•	none of our executive officers was a director of another entity where one of that entity’s executive officers served on our Compensation Committee; and

•	none of our executive officers served on the compensation committee (or another board committee with similar functions or, if none, the entire board of directors) of another entity where one of that entity’s executive officers served as a director on our Board of Directors.

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(1)

“Audit Fees” consists of fees for professional services rendered in connection with the audit of the Company’s consolidated annual financial statements, the review of the Company’s interim condensed consolidated financial statements included in quarterly reports, the audits in connection with statutory and regulatory filings or engagements and the audit of the Company’s internal controls over financial reporting.

(2)	“Audit-Related Fees” consists primarily of fees for professional services rendered in connection with the audits of the Company’s employee benefit plan and acquisition accounting due diligence.

(3)	“Tax Fees” consists of fees billed for professional services rendered for tax compliance, tax consulting and tax planning services.

(4)	“All Other Fees” - none.

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•	pre-established performance goals and objectives for each performance period;

•	objective, measurable performance goals bearing directly on reported financial results and related financial metrics as the basis for payments made under the Amended and Restated Incentive Plan; and

•	administrative oversight of the plan by the Compensation Committee.

•	bonuses to be paid pursuant to an objective formula;

•	certification by the Compensation Committee that the performance goals in the formula have been satisfied; and

•	that the stockholders of the Company have approved the material terms of the Amended and Restated Incentive Plan which include:

•	the eligible participants;

•	the individual bonus limit; and

•	the objective performance goals under the heading “Payout Criteria and Maximum Bonus” below.

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1.	PURPOSE

2.	EFFECTIVE DATE

3.	ADMINISTRATION

(a)

The Plan shall be administered by the Compensation Committee of the Company’s Board of Directors (the “Administrator”), which, to the extent required to qualify any bonuses paid hereunder as performance-based compensation within the meaning of Code Section 162(m), shall be comprised of two of more “outside directors” as defined in Code Section 162(m). The Administrator shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (i) determine which employees are eligible to participate in the Plan, (ii) establish target bonus amounts and Performance Goals (as defined below) for such target bonus amounts for each Performance Period (as defined below) under the Plan, (iii) prescribe all of the terms and conditions applicable to Plan bonuses hereunder, (iv) determine the extent of the achievement of the Performance Goals and the amount of bonuses to be paid hereunder, (v) adopt rules for the administration, interpretation and application of the Plan as are consistent therewith, and (vi) interpret, amend or revoke any such rules.

(b)

The Administrator, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority and powers under the Plan to one or more directors and/or executives of the Company with respect to bonuses under the Plan not intended to qualify as performance-based compensation within the meaning of Code Section 162(m) or bonuses under the Plan awarded to participants who are not current or future covered employees or executive officers (each, as defined in Section 1 above).

(c)	All determinations and decisions made by the Administrator or any delegate thereof pursuant to the provisions of the Plan shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.

(d)	The Company shall communicate individually with each participant in the Plan regarding his or her level of participation in the Plan.

(a)

To the extent a bonus is intended to qualify as performance-based compensation under Code Section 162(m), with respect to Participants who are or may become subject to Code Section 162(m), the establishment of the “Performance Periods,” the applicable “Performance Goals” (each as defined below), the payout formula and the target bonus amounts shall be set forth in writing and shall occur in compliance with, and to the extent required by, the rules of Code Section 162(m).

4.	ELIGIBILITY

(e)	is a full-time regular employee of the Company as of the last day of the applicable Performance Period; and

(f)	is not subject to disciplinary action, is in good standing with the Company and is not subject to a performance improvement plan.

5.	PERFORMANCE PERIODS AND PERFORMANCE GOALS

(a)	The Administrator shall establish the performance period or periods for the Plan, which may include the Company’s fiscal year, multiple fiscal years or any other period longer than one fiscal year not to exceed three years, and/or a portion of

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(b)

To the extent a bonus is intended to qualify as performance-based compensation under Code Section 162(m), the Administrator shall establish Performance Goals for each Performance Period, which shall be an objective formula or standard determined by the Administrator with respect to each Performance Period utilizing one or more of the following factors and any objectively verifiable adjustment(s) thereto permitted and pre-established by the Administrator in accordance with Code Section 162(m): (i) operating income; (ii) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (iii) earnings; (iv) cash flow; (v) market share; (vi) sales or revenue; (vii) expenses; (viii) cost of goods sold; (ix) profit/loss or profit margin; (x) working capital; (xi) return on equity or assets; (xii) debt or debt-to-equity; (xiii) accounts receivable; (xiv) writeoffs; (xv) cash; (xvi) assets; (xvii) liquidity; (xviii) operations; (xvix) product development; (xx) regulatory activity; (xxi) objective goals related to management, human resources, corporate governance or information technology; (xxii) business development; (xxiii) strategic alliances, licensing and partnering; (xxiv) mergers and acquisitions or divestitures; and/or (xxv) financings, each with respect to the Company and/or one or more of its affiliates or operating units (collectively, “Performance Goals”). As determined in the discretion of the Administrator, the Performance Goals for any Performance Period may (A) differ from Participant to Participant, Performance Period to Performance Period and from award to award, (B) be based on the performance of the Company as a whole or the performance of a specific Participant or one or more affiliates, divisions, departments, regions, or business units of the Company, (C) be measured on a per share, per capita, per employee, and/or other objective basis (D) be measured on a pre-tax or after-tax basis, and (E) be measured on an absolute basis or in relative terms (including, but not limited to, the passage of time and/or against other companies, financial metrics and/or an index). Without limiting the foregoing, the Administrator shall adjust any Performance Goal or other feature of a bonus award that relates to or is wholly or partially based on the number of, or the value of, any stock of the Company, to reflect any stock dividend or split, repurchase, recapitalization, combination, or exchange of shares or other similar changes in such stock. Any such discretion or adjustment by the Administrator shall be made in compliance, and consistent, with Code Section 162(m) to the extent such bonuses are intended to qualify as performance-based compensation under Code Section 162(m)).

(c)

The impact of objectively defined and non-discretionary items (includable in one or more of the following categories) may be taken into account in any manner pre-established by the Administrator in accordance with, and to extent required by, Code Section 162(m) (if applicable) when determining whether a Performance Goal has been attained: (i) changes in generally accepted accounting principles (“GAAP”); (ii) nonrecurring items, if any, that may be defined in an objective and non-discretionary manner under U.S. GAAP accounting standards or other applicable accounting standards in effect from time to time; (iii) the sale of investments or non-core assets; (iv) discontinued operations, categories or segments; (v) legal claims and/or litigation and insurance recoveries relating thereto; (vi) amortization, depreciation or impairment of tangible or intangible assets; (vii) reductions in force or early retirement programs; (viii) investments, acquisitions or dispositions; (ix) political, legal and other business interruptions (such as due to war, insurrection, riot, terrorism, confiscation, expropriation, nationalization, deprivation, seizure, and regulatory requirements); (x) natural catastrophes; (xi) currency fluctuations; (xii) stock based compensation expense; (xiii) early retirement of debt; (xiv) conversion of convertible debt securities; and (xv) termination of real estate leases. Each of the adjustments described above may relate to the Company as a whole or any part of the Company’s business or operations.

(d)

Bonus opportunities issued to Participants who are not subject to the limitations of Code Section 162(m) or that are not intended to comply with the requirements of Code Section 162(m) may take into account other factors, including other corporate and strategic business objectives, a Participant’s individual performance and contribution to the Company, and/or any other factor deemed appropriate by the Administrator (which need to be performance based), and any such Performance Goal(s) may be established, and once established, may be modified, by the Administrator at any time, as determined appropriate in the Administrator’s sole discretion.

6.	AMOUNT OF BONUS

(a)	With respect to each Participant, the Administrator will establish an individual target bonus amount (which may be, but is not required to be, based on the Participant’s base salary for the Performance Period).

(b)

If a target bonus is measured by reference to a Participant’s base salary for a Performance Period, base salary shall be the Participant’s base salary actually paid to the Participant for the Performance Period. Except as otherwise required by applicable law, base salary shall not include salary paid during any paid leave of absence or any variable forms of compensation including, but not limited to, overtime, on-call pay, lead premiums, shift differentials, bonuses, incentive compensation, commissions, stock options, restricted stock units, restricted stock, stock appreciation rights, or expense allowances or reimbursements. Subject to the maximum bonus that can be paid under the Plan (as described below), nothing in the Plan, or arising as a result of a Participant’s participation in the Plan, shall prevent the Company from changing a Participant’s base salary at any time based on such factors as the Company shall in its discretion determine appropriate.

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(c)

To the extent a bonus is intended to qualify as performance-based compensation under Code Section 162(m), the maximum amount of any such bonus that can be paid under the Plan to any Participant during any Performance Period is $6,000,000. Bonuses may be pro-rated and reduced on any basis determined appropriate in the Administrator’s sole discretion, including, but not limited to, in connection with transfers to new positions or new locations, new hires, Participants on a leave of absence for all or any portion of a Performance Period, or Participants working less than full-time. The Administrator reserves the right, in its sole discretion, to reduce or eliminate the amount of a bonus otherwise payable to a Participant with respect to any Performance Period. In addition, with respect to bonus opportunities that are not intended to qualify as performance-based compensation under Code Section 162(m), the Administrator reserves the right, in its sole discretion, to increase the amount of the bonus otherwise payable to such Participant with respect to any Performance Period.

(d)

With respect to Participants who are subject to the limitations of Code Section 162(m) and to the extent the bonus is intended to qualify as performance-based compensation under Code Section 162(m), after the end of each Performance Period, the Administrator shall certify in writing (which may be by approval of the minutes in which the certification was made) the extent to which the Performance Goals applicable to each Participant for the Performance Period were achieved or exceeded, as determined by the Administrator. A Participant will only be eligible to receive a bonus payment intended to qualify as performance-based compensation under Code Section 162(m) for a Performance Period if the Performance Goals for such period are achieved, with the actual bonus payment for each such Participant determined by applying the payout formula to the level of actual performance that has been certified in writing by the Administrator.

7.	PAYMENT OF BONUS

(a)	Unless otherwise determined by the Administrator, a Participant must be employed on the date a bonus under the Plan is to be paid. The Administrator may make exceptions to this requirement in the case of retirement, death or disability or under other circumstances, as determined by the Administrator in its sole discretion.

(b)	Bonus payments under the Plan shall be made in cash.

(c)

Any distribution made under the Plan shall occur as soon as practicable on or after the end of the applicable Performance Period; provided, that no bonus shall become payable with respect to any Performance Period until the applicable results have been verified by the Administrator and the Administrator otherwise determines that the underlying terms and conditions of the bonus have been satisfied. Notwithstanding the foregoing, in order to comply with the short-term deferral exception under Code Section 409A, the regulations and other guidance thereunder and any state law of similar effect (collectively “Code Section 409A”), if the Administrator waives the requirement that a Participant must be employed on the date a bonus under the Plan is to be paid, payout shall occur no later than the 15th day of the third month following the later of (i) the end of the Company’s taxable year in which such bonus is earned or (ii) the end of the calendar year in which such bonus is earned or shall be structured to comply with, or be exempt from, Code Section 409A.

8.	GENERAL

(a)	Each Participant shall be required to make adequate provision for federal, state or other applicable tax, withholding obligations, required deductions or other payments, if any, which arise in connection with any bonus or bonus opportunity under this Plan, whether by withholding, direct payment to the Company, or otherwise, as determined by the Company in its sole discretion.

(b)	Nothing in the Plan shall confer upon any Participant the right to continued employment with the Company or any of its affiliates, or affect in any way the right of the Company or any affiliate to terminate the Participant’s employment at any time, and for any reason, or change the Participant’s responsibilities.

(c)	Bonus opportunities under the Plan represent unfunded and unsecured obligations of the Company and a holder of any right hereunder in respect of any bonus shall have no rights other than those of a general unsecured creditor of the Company.

(d)	A Participant’s rights and interests under the Plan, or any amounts payable under the Plan, may not be assigned, pledged, or transferred except, in the event of a Participant’s death, to a designated beneficiary as may be permitted by the Administrator, or in the absence of such designation, by will or the laws of descent and distribution.

(e)

Each member of the Administrator and each employee of the Company or an affiliate who is delegated a duty under the Plan shall be indemnified and held harmless by the Company from and against any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act under the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in any such action, suit or proceeding against him or her, provided such loss, cost, liability or expense is not attributable to such person’s willful misconduct. Any person seeking indemnification under these provisions shall give the Company prompt notice of any claim and shall give the Company an opportunity, at its own expense, to handle and defend the same before the person undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive

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(f)	The expenses of administering the Plan shall be borne by the Company.

(g)

The Administrator may amend, suspend or terminate the Plan at any time, without regard to whether the amendment, suspension or termination occurs prior to, during or following any Performance Period; provided however, that any amendment of the Plan shall be subject to the approval of the Company’s stockholders to the extent required to comply with the requirements of Code Section 162(m), or any other applicable laws, regulations or rules.

(h)

The intention of the Company and the Administrator is to administer the Plan in compliance with Code Section 162(m) with respect to bonuses intended to qualify as performance-based compensation under Code Section 162(m) so that the bonuses paid under the Plan to Participants who are or may become subject to Code Section 162(m) will be treated as performance-based compensation under Code Section 162(m)(4)(C). If any provision of the Plan does not comply with the requirements of Code Section 162(m) with respect to a bonus intended to qualify as performance-based compensation under Code Section 162(m), then such provision shall be construed or deemed amended to the extent necessary to conform to such requirements. With respect to all other Participants and/or bonuses that are not intended to qualify as performance-based compensation under Code Section 162(m), the Plan may be operated without regard to the constraints of Code Section 162(m).

(i)

It is the intent of this Plan that all payments hereunder be exempt from the requirements of Code Section 409A so that none of the payments to be provided under this Plan will be subject to the adverse tax penalties imposed under Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to be so exempt. The Company and each Participant will work together in good faith to consider amendments to the Plan or revisions to the Plan with respect to the payment of any bonuses under the Plan, which are necessary or appropriate to avoid imposition of any additional tax or income recognition prior to the actual payment to the Participant under Code Section 409A. In no event will the Company reimburse a Participant for any taxes or other penalties that may be imposed on the Participant as a result of Code Section 409A.

(j)	The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any bonus, shall be determined in accordance with the laws of the State of New York (without giving effect to principles of conflicts of laws thereof).

(k)	In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

(l)

The Plan, and any resolutions of the Administrator in adopting or administering the Plan, is the entire understanding between the Company and the Participant regarding the subject matter of the Plan and supersedes all prior bonus or commission incentive plans or any written or verbal representations regarding the subject matter of the Plan. Participation in the Plan during a Performance Period will not convey any entitlement to participate in this or future plans or to the same or similar bonus benefits. Payments under the Plan are an extraordinary item of compensation that is outside the normal or expected compensation for the purpose of calculating any extra benefits, termination, severance, redundancy, end-of-service premiums, bonuses, long-service awards, overtime premiums, pension or retirement benefits or other similar payment.

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