(as hereinafter defined). For purposes of this Agreement, all references to “**EmploymentPeriod**” shall mean the period beginning on the date hereof and ending on the effective terminationof the Executive’s employment, and “**Termination Date**” shall mean the last day of the Executive’semployment under this Agreement (and not the date on which any notice described in the firstsentence of this Section 2 is given).          SECTION 3. Duties. During the Employment Period, the Executive shall be employed asExecutive Vice President and Chief Financial Officer of the Company and shall perform such dutiesconsistent with such title and shall report to the Chief Executive Officer of the Company. Ifrequested by the Company, during the Employment Period, the Executive shall also serve, withoutadditional compensation, in one or more executive positions and/or as a member of the board ofdirectors of the Company (the “**Board of Directors**”) or any Affiliate (as defined herein) of theCompany. The Executive shall comply fully with all applicable laws, rules and regulations as wellas with the Company’s policies, compliance manuals and procedures.          SECTION 4. Time to be devoted to Employment. The Executive shall devote his entireworking time to the business of the Company and shall use his best efforts, skills and abilities inhis diligent and faithful performance of his duties and responsibilities hereunder. During theEmployment Period, the Executive shall not engage in any other business activities or hold anyoffice or positions regardless of whether any such activity, office or position is pursued forprofit or other pecuniary advantage, without the prior consent of the Company; provided, however,the Executive may own, solely as an investment, 1.0% or less of the securities of any publiclytraded corporation.          SECTION 5. Compensation; Business Expenses; Benefits; Other Matters.(a) *Base Salary*. The Company shall pay the Executive an annual salary (the “**Base Salary**”)of $405,200, less applicable withholding and other deductions, payable in accordance with theCompany’s then current payroll practices. The Base Salary will be reviewed annually by theCompany’s Board of Directors or the Compensation Committee of the Board of Directors (the“**Compensation Committee**”), and may be increased, but not decreased, in the sole discretion of theBoard of Directors or Compensation Committee. Upon any such increase the term “Base Salary” shallmean such increased amount.          (b) *Annual Bonus*. At such times that the Company has a bonus plan(s) for its senior executiveofficers, the Executive shall be eligible to participate in such plan(s) and, if determined in thesole judgment of the Board of Directors or any committee that administers such bonus plan, toreceive an annual bonus pursuant to such bonus plan. Notwithstanding the foregoing, nothing inthis Agreement shall be construed as requiring the Company to establish or maintain any bonus planor to pay to the Executive any annual bonus. The amount and timing of any annual bonus that may bepaid to the Executive will be in the sole discretion of the Board of Directors or any committeethat administers such bonus plan.          (c) *Equity Compensation*. The Executive shall be eligible to receive such stock options,awards of restricted stock or other types of equity-based compensation as may be determined by theBoard of Directors or the Compensation Committee in its sole discretion and
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upon such terms and conditions as are determined by the Board of Directors or the CompensationCommittee in its sole discretion          (d) *Participation in Benefits*. The Executive shall be eligible to participate in, and receivebenefits under, any pension, profit sharing, medical, group health, hospitalization and disabilityinsurance, stock purchase, stock option, stock ownership, vacation or other employee benefit plan,program or policy of the Company which may be in effect at any time during the course of hisemployment by the Company and which shall be generally available to senior executive officers ofthe Company occupying positions of comparable status or responsibility, subject to the terms ofsuch plans, programs or policies. In addition, the Executive shall receive annual reimbursement ofup to $10,000 per calendar year for aggregate expenses incurred for financial planning, includingthe preparation of income tax returns, upon presentation of appropriate receipts for such expenses;provided that (i) the amount of such expenses eligible for reimbursement in one calendar year shallnot affect the amount of such expenses eligible for reimbursement in any other calendar year, and(ii) such reimbursement shall be made promptly and in no event later than December 31st of thecalendar year next following the calendar year in which such expenses were paid by the Executive.          (e) *Expense Reimbursement*. The Company shall, upon presentation by the Executive to theCompany of such appropriate documentation as may be required by the Company, reimburse theExecutive, in accordance with its practice from time to time for officers of the Company, for allreasonable and authorized expenses and other disbursements incurred by the Executive for or onbehalf of the Company in the performance of his duties hereunder.          (f) *Paid Time Off*. During the Employment Period, the Executive shall be entitled to takethirty-four paid time off days (“PTO”) for each year during the Employment Period, all or a portionof which may be carried over from year to year in accordance with the then-current PTO policy ofthe Company. The Executive may schedule the PTO as he elects, subject to the Company’s businessneeds. The Executive shall also be entitled to the paid holidays set forth in the Company’spolicies.          (g) *Indemnification*. To the fullest extent permitted under applicable law and the charter andby-laws of the Company, the Company and any of its Affiliates shall indemnify and hold harmless theExecutive, and advance payment to Executive for costs and expenses, for all liability incurred byhim to any third party as a result of the performance of his duties under this Agreement, subjectto the recoupment of such advances by the Company if it is ultimately determined that the Executivewas not entitled to such indemnification. The Company shall ensure that the Executive is coveredby the Company’s director and officer liability insurance policies during the Employment Period andfor at least six (6) years thereafter in an amount reasonably determined by the Board of Directors.          SECTION 6. Involuntary Termination. (a) *Disability*. If the Executive isincapacitated or disabled (as determined by a physician mutually acceptable to the Company and theExecutive) by accident, sickness or otherwise so as to render him mentally or physically incapableof performing the services required to be performed by him under this Agreement (such conditionbeing hereinafter referred to as a “**Disability**”) for an aggregate period of 180 days or more duringany twelve month period (whether or not consecutive and after using up any
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accrued PTO), the Company may, at any time thereafter during the continuation of suchDisability, at its option, terminate the Employment Period and the employment of the Executiveunder this Agreement immediately by giving him written notice to that effect. Until theExecutive’s employment hereunder shall have been terminated in accordance with the immediatelypreceding sentence, the Executive shall be entitled to receive the compensation and benefitsprovided in Section 5 notwithstanding any such Disability (less any Company-paid benefits that hereceives, such as short term disability or workers compensation, during such period).          (b) *Death*. If the Executive dies, the Employment Period and his employment hereunder shallcease as of the date of his death.          SECTION 7. Termination For Cause. (a) The Company may terminate the employment ofthe Executive hereunder at any time for Cause (as hereinafter defined) (such termination beingreferred to herein as a “**Termination For Cause**”) by giving the Executive written notice of suchtermination in accordance with Section 7(b). As used in this Agreement, “**Cause**” means that theExecutive: (i) has committed an act constituting a misdemeanor involving moral turpitude or afelony under the laws of the United States or any state or political subdivision thereof; (ii) hascommitted an act constituting a breach of fiduciary duty, gross negligence or willful misconduct;(iii) has engaged in conduct that violated the Company’s then existing material internal policiesor procedures and which is detrimental to the business, reputation, character or standing of theCompany or any of its Affiliates; (iv) has committed an act of fraud, self dealing, conflict ofinterest, dishonesty or misrepresentation; or (v) has materially breached his obligations as setforth in this Agreement.          (b) Termination for Cause shall occur only if the Company shall have given written notice tothe Executive specifying the nature of the breach or behavior, and, if the Termination for Cause ispursuant to clauses (ii), (iii) or (v) of Section 7(a), the Executive fails to correct (ifcorrectable) such breach or behavior as soon as practicable thereafter but no later than ten (10)days after receipt of the applicable notice, provided that there shall be only one notice andopportunity to correct with respect to clauses (ii), (iii) or (v) of Section 7(a).          SECTION 8. Termination Without Cause. The Company may terminate the employment of theExecutive hereunder without Cause (such termination being hereinafter referred to as a “**TerminationWithout Cause**”) by giving the Executive written notice of such termination, such termination totake effect on the date specified in such notice, which date shall not be earlier than the date onwhich such notice is given. For the avoidance of doubt, any notice given by the Company to theExecutive pursuant to the first sentence of Section 2 shall not be deemed or considered a notice ofa Termination Without Cause.          SECTION 9. Good Reason; Termination due to a Change in Control. (a) The Executivemay terminate his employment hereunder upon the existence of Good Reason. For purposes of thisAgreement, the following shall constitute “**Good Reason**”: after written notice setting forth thealleged Good Reason by the Executive to the Company (which notice must be delivered within ninety(90) days of the initial existence of the event or circumstances that constitutes the Good Reason),and the expiration of a 60-day cure period, there continues to be:
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(i) a material diminution in the Executive’s authority, duties or responsibilities; and/or(ii) a material breach by the Company of any material provision of this Agreement.          (b) If the Executive terminates this Agreement and his employment hereunder within twenty-four(24) months of a Change in Control (as defined below) for Good Reason, for purposes of thisAgreement such termination shall be considered a “**Termination due to a Change in Control**”. Forpurpose of this Agreement, any termination of the Executive’s employment by the Company withintwenty-four (24) months of a Change in Control other than pursuant to Section 6 or Section 7 alsoshall be considered a Termination due to a Change in Control. A “**Change in Control**” shall bedeemed to have occurred if:     (i) any “person” or group of “persons” (as the term “person” is used in Sections 13(d)and 14(d) of the Securities Exchange Act of 1934, as amended) (“**Person**”), acquires (or hasacquired during the twelve-month period ending on the date of the most recent acquisition bysuch Person) direct or indirect beneficial ownership of securities of the Companyrepresenting 50% or more of the combined voting power of the then outstanding securities ofthe Company (provided that acquisitions by the Executive or any existing stockholder of theCompany owning more than 20% of the combined voting power of the then outstanding securitiesof the Company as of the date of this Agreement shall be ignored for this purpose),     (ii) a merger or consolidation of the Company with any other corporation isconsummated, other than a merger or consolidation which resulted in all or substantially allof the holders of the Company’s voting securities immediately prior thereto continuing tohold at least 50% of the combined voting power of the outstanding voting securities of theCompany or of the surviving entity immediately after such merger or consolidation,     (iii) the Board of Directors of the Company approves a plan of complete liquidation ofthe Company or the Company is sold or all or substantially all of the Company’s assets aresold or disposed of other than any such sale or disposition where all or substantially allof the holders of the Company’s voting securities immediately prior thereto continue to holdat least 50% of the combined voting power of the outstanding voting securities of theacquiror or transferee entity immediately after such sale or disposition, or     (iv) individuals who, on the date following the date of the Company’s 2007 annualmeeting of stockholders, are directors (the “**Incumbent Board**”) cease for any reason toconstitute at least a majority of the directors; provided, however, that if the appointmentor election (or nomination for election) of any new director was approved or recommended bya majority vote of the Incumbent Board, such new director shall be considered a member ofthe Incumbent Board, unless such new director’s initial assumption of office occurs as aresult of or in connection with either an actual or threatened election contest (as suchterms are used in Rule 14a-11 of Regulation 14A promulgated under the Securities ExchangeAct of 1934, as amended) or other actual or threatened solicitation of proxies or consentsby or on behalf of an entity other than the Incumbent Board.
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     Notwithstanding the foregoing, for purposes of clause (i), a Change in Control will not bedeemed to have occurred if the power to control (directly or indirectly) the management andpolicies of the Company is not transferred from a Person to another Person; and, for purposes ofclause (ii), a Change in Control will not be deemed to occur if the assets of the Company aretransferred: (A) to a stockholder in exchange for his stock, (B) to an entity in which the Companyhas (directly or indirectly) more than 50% ownership, or (C) to a Person that has (directly ordirectly) more than 50% ownership of the Company with respect to its stock outstanding, or to anyentity in which such Person possesses (directly or indirectly) more than 50% ownership.          SECTION 10. Effect of Termination.          (a) *Definitions*. For purposes of this Agreement, the terms “**Accrued Rights**,” “**SeverancePayments**” and “**Change in Control Severance Payments**” shall have the following meanings:Accrued Rights. The Company shall pay Executive a one-time, lump-sum amount equalto the sum of (A) his earned but unpaid Base Salary, and, if applicable, any accrued andunpaid bonus, each pro-rated through the Termination Date and (B) any unreimbursed businessexpenses or other amounts due to Executive from the Company as of the Termination Date. Inaddition, the Company shall provide to Executive all payments, rights and benefits due as ofthe Termination Date under the terms of the Company’s employee and fringe benefit plans,practices, programs and arrangements referred to in Section 5 hereof (together with clauses(A) and (B), the “**Accrued Rights**”).Severance Payments. The Company shall pay Executive a lump—sum amount equal to thesum of (A) (i) 225% of his Base Salary if a Termination Without Cause or Termination forGood Reason occurs on or before December 31, 2009 or (ii) 150% of his Base Salary if aTermination Without Cause or Termination for Good Reason occurs on or after January 1, 2010,and (B) any unreimbursed business expenses or other amounts due to Executive from theCompany as of the Termination Date (if not already covered by a payment of Accrued Rights).Change in Control Severance Payments. The Company shall pay Executive a lump—sumamount equal to the sum of (A) (i) three times his Base Salary, if the Change in Controloccurred on or before December 31, 2009 or (ii) two times his Base Salary, if the Change inControl occurred on or after January 1, 2010 and (B) any unreimbursed business expenses orother amounts due to Executive from the Company as of the Termination Date; in addition, allstock options, restricted stock awards or other types of equity-based compensation then heldby the Executive which were not previously vested or exercised shall become fully vestedand/or exercisable.          (b) *Termination for Cause; Resignation by Executive; Disability; Death*. Upon the terminationof the Executive’s employment hereunder due to a Termination for Cause, the Resignation byExecutive, Disability or death, neither the Executive nor his beneficiary or estate shall have anyfurther rights or claims against the Company under this Agreement or otherwise, except the AccruedRights, which shall be paid to the Executive immediately upon
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termination or as otherwise provided pursuant to the applicable plan, practice, program orarrangement. For purposes of this Agreement, the defined terms **“Resignation”**and **“Resigns”**shallrefer to the Executive voluntarily terminating his employment hereunder, other than for Good Reasonor Termination due to a Change in Control.          (c) *Termination Without Cause; Termination for Good Reason*. Upon the termination of theExecutive’s employment hereunder due to a Termination Without Cause or Termination for Good Reason,neither the Executive nor his beneficiary or estate shall have any further rights or claims againstthe Company under this Agreement or otherwise, except the Accrued Rights and the Severance Paymentsas provided herein. The Accrued Rights shall be paid to the Executive immediately upon terminationor as otherwise provided pursuant to the applicable plan, practice, program or arrangement. Inconsideration for such Severance Payments, and as a condition of the receipt thereof, the Executiveagrees to execute a release releasing the Company and its Affiliates from all actions, claims,demands, causes of action, obligations, damages, liabilities, expenses and controversies of anynature, excluding those arising in connection with the enforcement of Executive’s indemnificationrights. As used in this Agreement, “**Affiliate**” means, with respect to any person or entity, anyother person or entity who directly or indirectly through one or more intermediaries controls, iscontrolled by, or is under common control with such person or entity; “control” means the power,directly or indirectly, to direct or cause the direction of the management and policies of a personor entity whether through ownership of voting securities, by contract or otherwise. Such releasemust become effective on or before March 15th of the calendar year next following the calendar yearin which such termination occurs. Provided the release becomes so effective, the SeverancePayments shall be paid to the Executive upon the effective date of the release (and no later thansuch March 15th date).          (d) *Termination due to a Change in Control*.               (i) Upon the termination of the Executive’s employment hereunder due to a Termination due to aChange in Control, neither the Executive nor his beneficiary or estate shall have any furtherrights or claims against the Company under this Agreement or otherwise, except the Accrued Rightsand the Change in Control Severance Payments as provided herein. The Accrued Rights shall be paidto the Executive immediately upon termination or as otherwise provided pursuant to the applicableplan, practice, program or arrangement. In consideration for the Change in Control SeverancePayments, and as a condition of the receipt thereof, the Executive agrees to execute a releasereleasing the Company and its Affiliates from all actions, claims, demands, causes of action,obligations, damages, liabilities, expenses and controversies of any nature, excluding thosearising in connection with the enforcement of Executive’s indemnification rights. Such releasemust become effective on or before March 15th of the calendar year next following the calendar yearin which such termination occurs. Provided the release becomes so effective, the SeverancePayments shall be paid to the Executive (and full vesting with respect to stock options, restrictedstock awards or other types of equity-based compensation shall occur) upon the effective date ofthe release (and no later than such March 15th date).               (ii) Notwithstanding any other provisions of this Agreement, if any of the benefits andpayments provided under this Agreement, either alone or together with other
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benefits and payments which the Executive has the right to receive either directly orindirectly from the Company or any of its Affiliates, would constitute an excess parachute payment(the **“Excess Payment”**) under Section 280G of the Internal Revenue Code of 1986, as amended (the**“Code”**), the Executive hereby agrees that the benefits and payments provided under this Agreementshall be reduced (but not below zero) by the amount necessary to prevent any such benefits andpayments to the Executive from constituting an Excess Payment; provided, however, that suchreduction shall be made only if, by reason of such reduction, the Executive’s net after-taxeconomic benefit shall exceed the net after-tax economic benefit to the Executive if such reductionwere not made.               (iii) All determinations required to be made under clause (ii) of this Section 10(d), and theassumptions to be utilized in arriving at such determination, shall be made by the certified publicaccounting firm used for auditing purposes by the Company immediately prior to the date oftermination or, if the parties determine that the certified public accounting firm used forauditing purposes by the Company immediately prior to the date of termination cannot make suchdetermination because of legal restrictions, the parties shall agree on a different certifiedpublic accounting firm (such certified public accounting firm is hereinafter referred to as the**“Accounting Firm”**), which shall promptly provide detailed supporting calculations both to theCompany and the Executive. The Company shall pay all fees and expenses of the Accounting Firm.          (e) *Severance upon expiration of this Agreement pursuant to Section 2*. If the Companydelivers a timely notice to the Executive pursuant to Section 2 of this Agreement so that thisAgreement expires by its terms, then, as long as the Executive’s employment hereunder has not beenotherwise terminated on a date earlier than the applicable December 31st date in accordance withthe provisions of this Agreement, upon such expiration of this Agreement on such applicableDecember 31st date the Executive’s employment shall terminate and neither the Executive nor hisbeneficiary or estate shall have any further rights or claims against the Company under thisAgreement or otherwise, except the Accrued Rights and the Severance Payments as provided herein(which, in connection with an expiration on December 31, 2009, shall be determined by reference toclause (A)(i) in the definition of “Severance Payments” in Section 10(a) of this Agreement, and inconnection with any other such expiration by reference to clause (A)(ii) of such definition). TheAccrued Rights shall be paid to the Executive immediately upon termination or as otherwise providedpursuant to the applicable plan, practice, program or arrangement. In consideration for suchSeverance Payments, and as a condition of the receipt thereof, the Executive agrees to execute arelease releasing the Company and its Affiliates from all actions, claims, demands, causes ofaction, obligations, damages, liabilities, expenses and controversies of any nature, excludingthose arising in connection with the enforcement of Executive’s indemnification rights. Suchrelease must become effective on or before March 15th of the calendar year next following thecalendar year in which such termination occurs. Provided the release becomes so effective, theSeverance Payments shall be paid to the Executive upon the effective date of the release (and nolater than such March 15th date).
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          (f) *409A.*               (i) In the event that any cash severance benefit or other benefit under this Section 10 shallbe subject to Section 409A of the Code and would fail to satisfy the distribution requirement ofSection 409A(a)(2)(A) of the Code, as a result of the application of Section 409A(a)(2)(B)(i) ofthe Code, then the payment of such benefits shall be delayed to the minimum extent necessary sothat such benefits are not subject to the provisions of Section 409A(a)(1) of the Code, and anysuch payments or benefits will be accumulated and paid or provided on the earliest permissible datepursuant to Section 409A(a)(2)(B)(i) of the Code. The Board of Directors or the CompensationCommittee may attach conditions to or adjust the amounts paid pursuant to this Section 10(f) topreserve, as closely as possible, the economic consequences that would have applied in the absenceof this Section 10(f); provided, however, that no such condition or adjustmentshall result in the payments being subject to Section 409A(a)(1) of the Code. The awards or grantsof options, restricted stock and/or other types of equity-based compensation may contain additionalprovisions relating to the application of Section 409A of the Code and to this Agreement and thepayments and benefits distributed hereunder.               (ii) To the extent required in order to comply with Section 409A of the Code (if applicable),amounts that would otherwise be payable under Section 10 during the six-month period immediatelyfollowing the date of termination shall instead be paid on the first business day after the datethat is six months following the Executive’s “separation from service” within the meaning ofSection 409A of the Code.          (g) *Clawback*. If the Company, based upon a final, non-appealable judicial or regulatorydetermination, determines that Section 304 of the Sarbanes-Oxley Act of 2002 is applicable to theExecutive hereunder, to the extent that the Company is required to prepare an accountingrestatement due to the material noncompliance of the Company, as a result of misconduct, with anyfinancial reporting requirement under the securities laws, (A) the Executive shall reimburse theCompany for (i) any discretionary bonus or other incentive-based or equity-based compensationreceived by the Executive from the Company or any of its Affiliates and (ii) any profits realizedfrom the sale of securities of the Company, in either case during the 12-month period following thefirst public issuance or filing with the Securities and Exchange Commission (whichever firstoccurs) of the financial document embodying such financial reporting requirement and (B) if thematerial noncompliance resulted from misconduct by the Executive, (i) neither the Executive nor theExecutive’s estate shall be entitled to exercise any stock options or other types of equity-basedcompensation then held by the Executive and (ii) such written conclusion of legal counsel orjudicial determination shall be the grounds for termination of the Executive’s employment by theCompany pursuant to Section 7 hereof.          SECTION 11. Disclosure of Information; Work Product; Warranty. (i) The Executiveacknowledges and agrees that there are certain trade secrets and confidential and proprietaryinformation (collectively, “**Confidential Information**”) which have been developed by the Company andwhich are used by the Company in its business. Confidential Information shall include, withoutlimitation: (i) customer lists and supplier lists; (ii) the details of the Company’s relationshipswith its customers, including the financial relationship with a customer, knowledge of the internal“politics"/workings of a customer organization, a customer’s technical
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needs and job specifications, knowledge of a customer’s strategic plans and the identities ofcontact persons within a customer’s organization; (iii) the Company’s marketing and developmentplans, business plans; and (iv) other information proprietary to the Company’s business. TheExecutive shall not, at any time during or after the Employment Period, use or disclose anyConfidential Information, except to authorized representatives of the Company or the customer or asrequired in the performance of his duties and responsibilities hereunder. Upon the termination ofthe Executive’s employment hereunder for any reason, the Executive shall as promptly as practicablereturn all customer and/or Company property, such as computers, software and cell phones, anddocuments (and any copies including in machine or human-readable form), to the Company. TheExecutive shall not be required to keep confidential any information, which is or becomes publiclyavailable or is already in his possession (unless obtained from the Company or one of itscustomers). Further, the Executive shall be free to use and employ his general skills, know-howand expertise, and to use, disclose and employ any generalized ideas, concepts, know-how, methods,techniques or skills, including those gained or learned during the course of the performance of anyservices hereunder, so long as he applies such information without disclosure or use of anyConfidential Information.               (ii) The Executive agrees that all copyrights, patents, trade secrets or other intellectualproperty rights associated with any ideas, concepts, techniques, inventions, processes, or works ofauthorship developed or created by him during the Employment Period and for a period of six (6)months thereafter, that (i) relate, whether directly or indirectly, to the Company’s actual oranticipated business, research or development or (ii) are suggested by or as a result of any workperformed by the Executive on the Company’s behalf, shall, to the extent possible, be consideredworks made for hire within the meaning of the Copyright Act (17 U.S.C. § 101 et. seq.) (the “**WorkProduct**”). All Work Product shall be and remain the property of the Company. To the extent thatany such Work Product may not, under applicable law, be considered works made for hire, theExecutive hereby grants, transfers, assigns, conveys and relinquishes, and agrees to grant,transfer, assign, convey and relinquish from time to time, on an exclusive basis, all of his right,title and interest in and to the Work Product to the Company in perpetuity or for the longestperiod otherwise permitted by applicable law. Consistent with his recognition of the Company’sabsolute ownership of all Work Product, the Executive agrees that he shall (i) not use any WorkProduct for the benefit of any party other than the Company and (ii) perform such acts and executesuch documents and instruments as the Company may now or hereafter deem reasonably necessary ordesirable to evidence the transfer of absolute ownership of all Work Product to the Company;provided, however, if following ten (10) days’ written notice from the Company, the Executiverefuses, or is unable, due to disability, incapacity, or death, to execute such documents relatingto the Work Product, he hereby appoints any of the Company’s officers as his attorney-in-fact toexecute such documents on his behalf. This agency is coupled with an interest and is irrevocablewithout the Company’s prior written consent.               (iii) The Executive represents and warrants to the Company that (i) there are no claims thatwould adversely affect his ability to assign all right, title and interest in and to the WorkProduct to the Company; (ii) the Work Product does not violate any patent, copyright or otherproprietary right of any third party; (iii) the Executive has the legal right to grant the Companythe assignment of his interest in the Work Product as set forth in this Agreement; and (iv) he hasnot brought and will not bring to his employment hereunder, or use in connection with suchemployment, any trade secret, confidential or proprietary information, or
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computer software, except for software that he has a right to use for the purpose for which itshall be used, in his employment hereunder.          SECTION 12. Restrictive Covenants. (a) *Non-Competition*. The Executive herebyacknowledges and recognizes that during the Employment Period he will be privy to trade secrets andconfidential information critical to the Company’s business and that the Company would find itextremely difficult or impossible to replace the Executive. Accordingly, Executive agrees that, inconsideration of the premises contained herein, and the consideration to be received by theExecutive hereunder, he will not and will not permit any of his Affiliates to, except with theCompany’s prior written consent, during the Employment Period and for the applicable periodspecified in Section 12(g) below from and after the Termination Date (the Employment Period andsuch additional applicable period collectively being the “**Non-Competition Period**”), engage,directly or indirectly, whether as an employee, officer, director, consultant or otherwise, in anyactivity that competes with the Company or any of its Affiliates in the business of insurance.Nothing in this Section 12(a) shall prohibit the Executive or any of his Affiliates from owning forpassive investment purposes less than 5% of the publicly traded securities of any corporationlisted on the New York Stock Exchange or the American Stock Exchange or the NASDAQ.          (b) *Customer Non-Solicitation*. During the Non-Competition Period, the Executive shall not,and shall not permit any of his Affiliates to solicit, directly or indirectly, any person or entitywhich (i) is currently a customer or party to any insurance-related contract with the Companyand/or its Affiliates, (ii) has been a customer or party to any insurance-related contract with theCompany and/or its Affiliates during the two year period immediately preceding such solicitation or(iii) was solicited by the Company and/or its Affiliates during the two year period immediatelypreceding such solicitation, provided that in the case of (b)(i) above such solicitation divertedor attempted to divert the business of the Company and/or its Affiliates to another person orentity or in the case of (b)(ii) and (b)(iii) above, the business solicited is business in whichthe Company is currently engaged.          (c) *Employee Non-Solicitation*. During the Non-Competition Period, the Executive shall not,and shall not permit any of his Affiliates to, directly or indirectly, (i) solicit for employment,engage and/or hire, whether directly or indirectly, any person who is then employed by the Companyand/or its Affiliates or engaged by the Company and/or its Affiliates as an independent contractoror consultant; and/or (ii) encourage or induce, whether directly or indirectly, any person who isthen employed by the Company and/or its Affiliates or engaged by the Company and/or its Affiliatesas an independent contractor or consultant to end his/her business relationship with the Companyand/or its Affiliates.          (d) *Non-Disparagement of the Company*. The Executive covenants that he will not, directly orindirectly at any time during or after the Employment Period, disparage the Company or any of itsshareholders, directors, officers, employees, or agents.          (e) *Non-Disparagement of the Executive*. The Company covenants that it will not, directly orindirectly at any time during or after the Employment Period, disparage the Executive.
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          (f) *Acknowledgement*. The Executive understands that the foregoing restrictions may limit hisability to earn a livelihood in a business similar to the business of the Company, but henevertheless believes that he has received and will receive sufficient consideration and otherbenefits as an employee of the Company and as otherwise provided hereunder to clearly justify suchrestrictions which, in any event (given his education, skills and ability), the Executive does notbelieve would prevent him from earning a living other than in a business which competes with theCompany.          (g) *Period of Non-Competition following Employment Period.*For purposes of this Agreement,with respect to the Non-Competition Period, the applicable period following the Termination Date,in respect of the following reasons for termination, shall be:               (i) Resignation by Executive: two (2) years; unless the Executive shall have given theCompany at least nine (9) months notice of his effective resignation date, in which case fifteen(15) months;               (ii) Death or Disability: none;               (iii) Termination for Cause: one (1) year;               (iv) Termination Without Cause: one (1) year;               (v) Termination for Good Reason: one (1) year;               (vi) Termination due to Change in Control: two (2) years.          SECTION 13. Enforcement; Severability; Etc. It is the desire and intent of theParties that this Agreement, including, without limitation, the provisions of Sections 11, 12, 13and 14 of this Agreement, shall be enforced to the fullest extent permissible under the laws andpublic policies applied in each jurisdiction in which enforcement is sought. Accordingly, if anyparticular provision of Sections 11, 12 and 14 of this Agreement is adjudicated to be invalid orunenforceable or shall for any reason be held to be excessively broad as to duration, geographicscope, activity or subject, it shall be construed by limiting and reducing it, so as to beenforceable to the extent compatible with applicable law and such provision shall be deemedmodified and amended to the extent necessary to render such provision enforceable in suchjurisdiction. The terms of this Agreement are intended to be, and shall be interpreted so as to,comply with Section 409A of the Code, and without having the Executive incur any tax or penaltyunder Section 409A of the Code as a consequence of the receipt of any payments or benefits underthis Agreement. In the event that it is determined that any term or provision of this Agreementdoes not so comply, then such non-compliant term or provision shall be amended so as to conform toSection 409A of the Code and, to the extent possible, preserve the original intent of theAgreement.          SECTION 14. Remedies. It is understood by the Parties hereto that the Executive’sobligations and the restrictions and remedies set forth in Sections 11 and 12 are essentialelements of this Agreement and that but for his agreement to comply with and/or agree to suchobligations, restrictions and remedies, the Company would not have entered into this Agreement oremployed (or continued to employ) him. The Executive acknowledges and
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understands that the provisions of Sections 11 and 12 of this Agreement are of a special andunique nature, the loss of which cannot be adequately compensated for in damages by an action atlaw, and that the breach or threatened breach of the provisions of Sections 11 and 12 of thisAgreement would cause the Company irreparable harm. In the event of a breach or threatened breachby the Executive of the provisions of Sections 11 and 12 of this Agreement, the Company shall beentitled to an injunction restraining him from such breach or other equitable relief, withoutposting a bond, in addition to other remedies available to the Company. In the event of a breachby the Executive of the provisions of Section 12 of this Agreement, the term of the Non-CompetitionPeriod shall be extended by the period of the duration of such breach. All remedies available forbreach of this Agreement are cumulative, and neither the pursuit of any remedy nor anythingcontained in this Agreement shall be construed as an election of a remedy or as prohibiting theCompany from or limiting the Company in pursuing any other remedies available for any breach orthreatened breach of this Agreement.          SECTION 15. Notices. All notices, claims, certificates, requests, demands and othercommunications hereunder shall be in writing and shall be deemed to have been duly given anddelivered if personally delivered or if sent by nationally recognized overnight courier, bytelecopy, or by registered or certified mail, return receipt requested and postage prepaid,addressed, if to the Company, at Specialty Underwriters’ Alliance, Inc., 222 South Riverside Plaza,Suite 1600, Chicago, IL 60606-6001, Facsimile: (312) 277-1800, Attention: General Counsel with acopy to Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, NY 10038, Attn: William W.Rosenblatt, Esq., Facsimile: 212-806-6006, and if to the Executive, at the address set forth underthe name of the Executive on the signature page hereto, or to such other address as the Party towhom notice is to be given may have furnished to the other Party or Parties in writing inaccordance herewith. Any such notice or communication shall be deemed to have been received (a) inthe case of personal delivery, on the date of such delivery, (b) in the case of nationallyrecognized overnight courier, on the next business day after the date when sent, (c) in the case oftelecopy transmission, when received, and (d) in the case of mailing, on the third business dayfollowing that on which the piece of mail containing such communication is posted. Written noticefrom the Company’s Board of Directors shall constitute proper notice from the Company in all casesrelating to this Agreement.          SECTION 16. Tax Withholding. The payments and benefits under this Agreement may becompensation and as such may be included in either the Executive’s W-2 earnings statements or 1099statements. The Company may withhold from any amounts payable under this Agreement such federal,state or local taxes as shall be required to be withheld pursuant to any applicable law orregulation.          SECTION 17. Binding Agreement; Benefit. Subject to Section 23 below, the provisionsof this Agreement will be binding upon, and will inure to the benefit of, the respective heirs,legal representatives, successors and assigns of the Parties. The Executive acknowledges andagrees that each Affiliate of the Company shall be an intended third party beneficiary of thisAgreement.          SECTION 18. Governing Law. This Agreement will be governed by, and construed andenforced in accordance with, the laws of the State of Illinois without giving effect to anyprinciples of conflict of laws. Each Party hereby irrevocably submits to the non-exclusive
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jurisdiction of the state and federal courts sitting in the State of Illinois, for theadjudication of any dispute hereunder or in connection herewith or with any transactioncontemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert inany suit, action or proceeding, any claim that it is not personally subject to the jurisdiction ofany such court, that such suit, action or proceeding is brought in an inconvenient forum or thatthe venue of such suit, action or proceeding is improper. Each Party hereby irrevocably waivespersonal service of process and consents to process being served in any such suit, action orproceeding by mailing a copy thereof to such Party at the address for such notices to it under thisAgreement and agrees that such service shall constitute good and sufficient service of process andnotice thereof. Nothing contained herein shall be deemed to limit in any way any right to serveprocess in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVETO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR INCONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.          SECTION 19. Waiver of Breach. The failure of a Party to enforce any term, provision,or condition of this Agreement at any time or times shall not be deemed a waiver of that term,provision, or condition. The waiver by either Party of a breach of any provision of this Agreementby the other Party must be in writing and shall not operate or be construed as a waiver of anyother or subsequent breach by such other Party.          SECTION 20. Entire Agreement; Amendments. This Agreement contains the entireagreement between the Parties with respect to the subject matter hereof and supersedes all prioragreements or understandings between the Parties with respect thereto. Notwithstanding theforegoing, this Agreement is not intended to exclude any other types of benefits not addressed bythis Agreement that may be available to the Executive upon a termination of employment with theCompany or its Affiliates, such as “COBRA” continuation. This Agreement may be amended only by anagreement in writing signed by the Parties hereto and authorized by the Company’s Board ofDirectors or Compensation Committee.          SECTION 21. Representations and Warranties by Executive. The Executive represents andwarrants that he is not a party to or subject to any restrictive covenants, legal restrictions orother agreements in favor of any person or entity which would in any way preclude, inhibit, impairor limit the Executive’s ability to perform his obligations under this Agreement, including, butnot limited to, non-competition agreements, non-solicitation agreements or confidentialityagreements. The Executive acknowledges that he has had a sufficient period of time within which toreview this Agreement, including Sections 11 and 12, with an attorney of his choice and he has doneso to the extent he desired.          SECTION 22. Headings. The section headings contained in this Agreement are forreference purposes only and shall not affect in any way the meaning or interpretation of thisAgreement.          SECTION 23. Assignment. This Agreement and the Executive’s performance hereunder arepersonal to the Executive and shall not be assignable by the Executive. The Company may assignthis Agreement to any Affiliate or to any successor to all or substantially
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all of the business and/or assets of the Company, whether directly or indirectly, by purchase,merger, consolidation, acquisition of stock, or otherwise. This Agreement shall inure to thebenefit of and be binding upon the Company and its successors and assigns. However, any suchassignment by the Company shall still be subject to the Executive’s rights under Sections 9(b) and10(d).          SECTION 24. Interpretation; Counterparts. No provision of this Agreement is to beinterpreted for or against any Party because that Party drafted such provision. For purposes ofthis Agreement: “herein,” “hereby,” “hereinafter,” “herewith,” “hereafter” and “hereinafter” referto this Agreement in its entirety, and not to any particular subsection or paragraph. ThisAgreement may be executed in counterparts, including a facsimile, and each such counterpart shallbe deemed to be an original instrument, but all such counterparts together shall constitute but oneagreement.          SECTION 25. No Mitigation. The Executive shall not be required to mitigate the amountof any benefits under this Agreement by seeking other employment or otherwise. The benefits to beprovided pursuant to this Agreement shall not be reduced by any compensation or benefits payable orprovided to the Executive as a result of employment by another employer after the date oftermination or otherwise.          SECTION 26. Survival. The provisions of Sections 5(g), 11, 12, 13, 14, 15, 17, 18 and21 and any other provisions of this Agreement that by their meaning are intended to survive shallsurvive termination of this Agreement or termination of the employment of the Executive for anyreason.
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     IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first writtenabove.      SPECIALTY UNDERWRITERS’ ALLIANCE, INC.