**3. COMPENSATION AND BENEFITS:**(a) Salary. Officer shall receive a salary (the “Annual Salary”) at the rate of $195,000 per annum. Allsalary shall be less such deductions as shall be required to be withheld by applicable law andregulations, shall be paid twice monthly in accordance with the Company’s normal payroll practiceand shall be pro-rated for any period that does not constitute a full twelve (12) month period.(b) Bonuses. Officer shall be entitled to participate in the Company Bonus Plan at the Senior Managementlevel as set forth in the Company Bonus Plan Policy; said Bonus if any, will be based on theAnnual Base Salary.(c) Stock Options. Officer will be entitled to participate in the Company’s Equity Incentive Plan. Any proposedgrants under the plan are subject to approval by the Compensation Committee. Any and all approvedgrants shall be subject to the terms and conditions of Equity Incentive Plan.(d) Service Requirement. Compensation payable under this Agreement is directly linked to Officer’s service. If Officeris unable to perform his duties hereunder for ten (10) or more consecutive days due to any medicalcondition or other reason, Officer shall not earn compensation and benefits during such period ofnon-performance unless required by applicable law or in accordance with Company policy.**4. PARTICIPATION IN EXECUTIVE BENEFIT PLANS:**(a) Fringe Benefits. Officer shall be permitted during the Term to participate in anygroup life, medical, hospitalization, dental, health and accident and disability plans,supplemental health care plans and plans providing for life insurance coverage, and any other plansand benefits, generally maintained by Company for Officers of the stature and rank of Officerduring the Term hereof, each in accordance with the terms and conditions of such plans(collectively referred to herein as “Fringe Benefits”); provided, however, that Company shall notbe required to establish or maintain any such Fringe Benefits.(b) Vacation. Officer shall accrue paid vacation days at the rate of 6.16 hours perpay period up to a maximum of four (4) weeks per year in accordance with the terms and conditionsof the Company Vacation Policy.(c) Expenses. The Company will reimburse Officer for actual and necessarytravel and accommodation costs, entertainment and other business expenses incurred as a necessarypart of discharging the Officer’s duties hereunder, subject to receipt of reasonable andappropriate documentation by the Company and such expenses being in accordance with Company policy.
 
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**5. CERTAIN COVENANTS OF EXECUTIVE:**Without in any way limiting or waiving any other right or remedy accorded to Company or anylimitation placed upon Officer by law, Officer agrees as follows:(a) Confidential Information: Officer agrees that, neither during his employmentnor at any time thereafter shall Officer (i) disclose to any person, firm or corporation notemployed by the Company or anyaffiliate of either (the “Protected Company”) or not engaged to render services to any ProtectedCompany or (ii) use for the benefit of himself, or others, any confidential information of anyProtected Company obtained by the Officer at any time, including, without limitation, “know-how,”trade secrets, details of suppliers, pricing policies, financial data, operational methods,marketing and sales information or strategies, product development techniques or plans or anystrategies relating thereto, technical processes, designs and design projects, and otherproprietary information of any Protected Company; provided, however, that this provision shall notpreclude the Officer from (x) upon advice of counsel and notice to the Company, making anydisclosure required by any applicable law or (y) using or disclosing information known to thepublic (other than information known generally to the public as a result of any violation of thisSection 5(a)).(b) Property of Company. Any interest in trademarks, service-marks, copyrights,copyright applications, patents, patent applications, slogans, developments and processes which theOfficer may develop relating to the business of the Company in which the Company may then beengaged and any memoranda, notes, lists, records and other documents (and all copies thereof) madeor compiled by the Officer or made available to the Officer concerning the business of anyProtected Company shall belong and remain in the possession of any Protected Company, and shall bedelivered to the Company promptly upon the termination of the Officer’s employment with Company orat any other time on request by the Company.(c) Non-Solicitation of Employees. While employed by the Company, and for one (1)year immediately following the termination of employment, Officer shall not interfere with thebusiness of the Company by soliciting, attempting to solicit, inducing, or otherwise causing anyemployee of the Company to terminate his or her employment in order to become an owner, partner,employee, consultant or independent contractor to or for any other company or business venture.During his employment by the Company and after its termination, Officer shall not use, reproduce,or disclose to any other person or company, proprietary information belonging to the Company thatwould enable or assist such person or company to solicit, attempt to solicit, induce, or otherwisecause any employee to terminate his or her employment with the Company.**6. OTHER PROVISIONS:**(a) Rights and Remedies Upon Breach. If the Officer breaches, or threatens to commita breach of, any of the provisions of Section 5 hereof (the “Restrictive Covenants”) and, ifsusceptible to cure, fails to cure such breach or threatened breach within fifteen (15) days ofwritten notice from the Company, then the Company shall have the following rights and remedies,each of which rights and remedies shall be independent of the other and severally enforceable, andall of which rights and remedies shall be in addition to, and not in lieu of, any other rights andremedies available to the Company at law or in equity.(b) Accounting. The right and remedy to require the Officer to account for and payover to the Company all compensation, profits, monies, accruals, increments or other benefits(collectively “Benefits”) derived or received by the Officer as a result of any transactionsconstituting a breach of any of the Restrictive Covenants, and the Officer shall account for andpay over such Benefits to the Company.(c) Severability of Covenants. If any arbitrator or court determines that any of theRestrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder ofthe Restrictive Covenants shall not thereby be affected and shall be given full effect, withoutregard to the invalid portions.(d) Blue-Penciling. If any arbitrator or court construes any of the RestrictiveCovenants, or any part thereof, to be unenforceable because of the duration or geographic scope ofsuch provision, such arbitrator or court shall have the power to reduce the duration or scope ofsuch provision and, in its reduced form, such provision shall then be enforceable.
 
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(e) Injunctive Relief. Officer agrees and understands that the remedy atlaw for anybreach by Officer of the provisions of Section 5 hereof may be inadequate and that damagesresulting from such breach may not be susceptible to being measured in monetary terms.Accordingly, it is acknowledged that upon Officer’s breach (or threatened or imminent breach) ofany provision of Section 5 hereof, the Company shall be entitled to seek to obtain from anyarbitrator or court of competent jurisdiction injunctive relief to prevent the continuation ofsuch breach. Nothing contained herein shall be deemed to limit the Company’s remedies at law or inequity for any breach of the provisions of Section 5 hereof which may be available to the Company.**7. TERMINATION:**(a) Termination for Cause. The Company shall have the option to terminate thisAgreement and Officer’s employment during the Term upon the occurrence of any of the following: (i) the Officer’s gross dishonesty, fraud,misappropriation, embezzlement, or other act of material misconductagainst the Company; (ii) the Officer’s conviction of a felony (otherthan a traffic violation) which results in material injury to theCompany; (iii) Officer’s willful and knowing violation of anyrules or regulations of any governmental or regulatory body whichviolation is materially harmful to the Company; (iv) Violation of policies, rules or regulations ofthe Company which violation is materially harmful to the Company; (v) the Officer’s willful act of disloyalty that isintended to and/or results in material injury to the Company; (vi) the Officer’s chronic alcoholism or addictionto non-medically prescribed drugs;; or (viii) breach (and, where applicable, failure to cure) by the Officer of his materialobligations contained in this Agreement.Any act or omission of the Officer based upon authority given pursuant to the Articles ofIncorporation of the Company or Bylaws of the Company or a resolution duly adopted by the Company’sBoard of Directors or based upon the advice of counsel for the Company shall be conclusively deemedto be done by Officer in good faith and in the best interests of the Company.If Officer’s services are terminated as set forth in this subsection, Officer’s services shallcease as of such effective date of termination and all provisions and obligations under thisAgreement shall cease immediately (with the sole exception of Officer’s obligations under Paragraph5 and the arbitration requirement under Section 10 which survive fully and remain in effect inaccordance with their terms). In such event, the Company will pay Officer (a) his salary, unusedvacation and PTO pay, automobile allowance, and Fringe Benefits earned through and concluding onthe last day of his employment with the Company; (b) his unpaid reimbursable business expensesincurred by him through the last day of his employment with the Company; and (c) any earned andunpaid bonus pursuant to the Company Bonus Plan Policy.
 
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(b) Termination with Good Reason or Without Cause. If during the Term the Officerresigns for Good Reason or is terminated without Cause:(i) the Company will pay Officer (a) his salary, unused vacation and PTO pay,automobile allowance, and Fringe Benefits earned through and concluding on the last day ofhis employment with the Company, (b) his unpaid reimbursable business expenses incurred byhim through the last day of his employment with the Company; (c) any earned and unpaid bonuspursuant to the Company Bonus Plan Policy, and (d) any unpaid base salary amount fromthe termination date to February 28, 2009, plus three additional months of his base salary(“Severance pay”). Severance pay shall be less applicable withholding and paid to Officerwithin 30 days following the effective date of termination. All other provisions andobligations under this Agreement shall cease immediately upon the effective date oftermination (with the sole exception of Officer’s obligations under Paragraph 5(a), (b) and(c) and the arbitration requirement under Section 10 which survive fully and remain ineffect in accordance with their terms.)As used herein, Good Reason shall mean only:(i) withdrawal by the Company from Officer of a substantial part of his duties thenbeing performed, or responsibility or authority then being carried, by Officer, or permanentand substantial relocation of Officer’s location of employment without mutual consent ofOfficer;(ii) assignment by the Company to Officer of substantial additional duties orresponsibilities which are inconsistent with the duties or responsibilities then beingcarried by Officer;(iii) material reduction in the level of Officer’s responsibility, authority, autonomy,title, or compensation;(iv) the Company’s material breach of Officer this Agreement (or any otheragreement between Officer and the Company); and the failure of the Company to cure suchbreach within fifteen (15) days of notice thereof;(v) material fraud on the part of the Company; or(vi) discontinuance of the active operation of business of the Company, or insolvencyof the Company, or the filing by or against the Company of a petition in bankruptcy or forreorganization or restructuring pursuant to applicable insolvency or bankruptcy law.(c) Resignation Without Good Reason, Disability or Death. If during the Term, the Officerresigns without Good Reason, dies or becomes disabled (which cannot be reasonably accommodated inaccordance with applicable law) Officer’s services shall cease as of such effective date oftermination, disability or death and all provisions and obligations under this Agreement shallcease immediately (with the sole exception of Officer’s obligations under Paragraph 5 and thearbitration requirement under Section 10 which survive fully and remain in effect in accordancewith their terms.) In such event, the Company will pay Officer (a) his salary, unused vacationpay, automobile allowance, and Fringe Benefits earned through and concluding on the last day of hisemployment with the Company; (b) his unpaid reimbursable business expenses incurred by him throughthe last day of his employment with the Company; and (c) any earned and unpaid bonus pursuant tothe Company Bonus Plan Policy.**8. EXECUTIVE’S REPRESENTATIONS AND WARRANTIES:**(a) Right to Enter Into Agreement. Officer has the unfettered right to enter intothis entire Agreement on all of the terms, covenants and conditions hereof; and Officer has notdone or permitted to be done anything, which may curtail or impair any of the rights granted toCompany herein.(b) Breach Under Other Agreement or Arrangement. Neither the execution nor deliveryof this Agreement nor the performance by Officer of any of his obligations hereunder willconstitute a violation or breach of, or a default under, any agreement, arrangement orunderstanding, or any other restriction of any kind, to which Officer is a party nor by whichOfficer bound.(c) Services Rendered Deemed Special, Etc. Officer acknowledges and agrees that theservices to be rendered by him hereunder are of a special, unique, extraordinary and intellectualcharacter which gives them peculiar value, the loss of which cannot be adequately compensated forin an action at law and that abreach of any term, condition or covenant hereof will cause irreparable harm and injury to theCompany and in addition to any other available remedy the Company will be entitled to seekinjunctive relief.
 
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**9. USE OF NAME:**The Company shall have the right during the Term hereof to use Officer’s name, biography andapproved likenesses in connection with Company’s business, including advertising their products andservices, with the prior written consent of Officer.**10. ARBITRATION:**To the fullest extent permitted by applicable law, any controversy or claim past, present, orfuture, arising out of or relating to the hiring of Officer, Officer’s employment, the terminationof Officer’s employment, this Agreement and/or the breach or termination of this Agreement thatCompany may have against Officer or that Officer may have against Company or against its officers,directors, employees or agents in their capacity as such or the breach hereon, shall be settled bya single arbitrator in arbitration conducted in Los Angeles, California, in accordance with theNational Employment Arbitration Rules and Mediation Procedures of the American ArbitrationAssociation (“AAA”). These rules are posted on the AAA’s website, www.adr.org. The arbitratorsshall prepare a written award and judgment upon the award may be entered in any court havingjurisdiction thereof. The arbitrator’s decision shall be final and binding. The arbitrator shallhave the authority to settle such controversy or claim by finding that a party should be enjoinedfrom certain actions or be compelled to undertake certain actions as found by the arbitrator.Company shall pay the arbitrator’s fees.The claims covered by this Arbitration provision include, but are not limited to, claimsarising out of contract law, tort law, common law, defamation law, fraud law (including, withoutlimitation, fraud in the inducement of contract), wrongful discharge law, privacy rights, statutoryprotections, constitutional protections, wage and hour law, California Labor Code protections, theCalifornia Fair Employment and Housing Act, any similar state discrimination law, the Federal CivilRights Act of 1964 and 1991, as amended, the Age Discrimination in Employment Act, the OlderWorkers’ Benefit Protection Act, the Americans With Disabilities Act; claims for benefits (exceptclaims under an employee benefit plan that either (1) specifies that its claims procedure shallculminate in an arbitration procedure different from this one, or (2) is underwritten by acommercial insurer which decides claims); and claims for violation of any federal, state, or othergovernmental law, statute, regulation, or ordinance, except claims excluded in the followingsection.Notwithstanding the foregoing, the parties expressly agree that claims Officer may have forworkers’ compensation, state unemployment compensation benefits, and state disability insurance arenot covered by this Agreement. The parties further expressly agree that this provision does notapply to any matter in which the amount in controversy falls within the jurisdiction of the SmallClaims Division of the Municipal Courts of the State of California. Should such matter fall withinthe jurisdiction of the Small Claims Division of the Municipal Court of the State of California,then such matter shall be, and may only be, submitted to a Small Claims Division of the Courts ofthe State of California for Los Angeles County for determination.Arbitration and related proceedings will be governed by California Code of Civil ProcedureSection 1280 et seq. If for any reason the AAA refuses to administer the arbitration, the partiesagree that the appointment of an arbitrator shall be in accordance with California Code of CivilProcedure Section 1281.6. The provisions of this Arbitration Section shall survive the terminationof this Agreement and termination of Officer’s employment.
 
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**11. NOTICES:**(a) Delivery. Any notice, consent or other communication under this Agreement shallbe in writing and shall be delivered personally, telexed, sent by facsimile transmission orovernight courier (regularly providing proof of delivery) or sent by registered, certified, orexpress mail and shall be deemed given when so delivered personally, telexed, sent by facsimiletransmission or overnight courier, or if mailed two (2) days after the date of deposit in theUnited States mail as follows: to the parties at the following addresses (or at such other addressas a party may specify by notice in accordance with the provisions hereof to the other):If to Officer, to his address at:Dan Perini