months of the Term in the event that the Term does not commence or end on the first day of acalendar month.. Base Salary shall be payable in accordance with the ordinary payroll practices ofthe Company, but no less frequently than semi-monthly. Unless this Agreement is terminated,extended or a new Agreement is negotiated, at the end of 2010, the Base Salary shall remainunchanged.          3.2 **Bonus.**As an inducement to the Executive, during the Term of this Agreement and anyrenewal or extension period thereafter, the Executive shall be entitled to receive, on March 15 ofeach calendar year, an annual Bonus of up to a number pursuant to the terms of the “Executive BonusPlan,” which is a weighted formula based upon the approved Budget by the Company’s Board ofDirectors and/or its Compensation Committee (“Target Bonus”).If the Board determines that the Company does not have sufficient cash available to make the abovedescribed cash obligations, the Board shall have the right to make such payments in stock, but atno time shall the cash payment due under the cash obligation fall below one third of the paymentobligation.          3.3 **Compensation Plans and Programs.**Executive shall be eligible to participate in anyCompensation Plan or Program (401(k) Plan and Stock Option Plan) maintained by the Company in whichother Executives or employees of the Company participate, on similar terms.          3.4 **Loans.**Under no circumstances may the Executive, directly or indirectly, receive a Loanfrom the Company, of any kind or fashion, or of any duration, whatsoever.     4. **Employee Benefits.**          4.1 **Medical, Dental and Vision Benefit Plans.**The Company shall provide to the Executive andhis family, during the Term of his employment, or any renewal or extension thereafter, withcoverage under all Employee medical, dental and vision benefit programs, plans or practices adoptedby the Company and made available to all employees of the Company.          4.2 **Life and Disability Insurance Benefit Plans.**The Company shall provide Executive duringthe Term of his employment, or any renewal or extension thereafter, with coverage under allEmployee life insurance and disability insurance plans as may be adopted and in effect by theCompany and made available to all employees of the Company.          4.3 **Vacation Benefit.**The Executive shall be entitled to four (4) weeks paid vacation in eachcalendar year (but no more than ten 10 consecutive business days at any given time), which shall betaken at such times as are consistent with Executive’s responsibilities hereunder. The Executive’svacation schedule shall be submitted and approved by the Company. The Executive shall at no timehave accrued more than four (4) weeks vacation.
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          4.4 **Expenses.**The Executive is authorized to incur reasonable expenses in carrying out hisduties and responsibilities under this Agreement, including expenses for travel, automobile(mileage reimbursement calculated at the Internal Revenue Service’s prevailing rates) and similaritems related to such duties and responsibilities. The Company will reimburse Executive for allsuch expenses upon presentation by Executive on a monthly basis of appropriately itemized andapproved (consistent with the Company’s policy and Board determined expenditure caps) accounts ofsuch expenditures.     5. **Termination of Employment.**     The Company may terminate Executive’s employment at any time for any reason.          5.1 **Termination Not for Cause.**If Executive’s employment is terminated by the Company otherthan for Cause (as defined in Section 5.2, below), Executive shall receive a severance paymentequal to twelve (12) months’ Base Salary and twelve (12) months’ benefits, and any earned and/oraccrued Bonus, as in effect immediately prior to such termination, payable in accordance with theordinary payroll practices of the Company, but not less frequently than semi-monthly following suchtermination of employment. The Company’s severance payment obligations under this Section 5 shallimmediately cease in the event the Executive breaches Sections 7 or 8 of this Agreement. Forpurposes of this Agreement, “Change in Control” shall have the meaning set forth inSection 5.3.          5.2 **Termination for Cause; Voluntary Termination by Executive; Death or Disability**.               A) For purposes of this Agreement, “Cause” shall mean any of the following:                    (i) Willful malfeasance or willful misconduct by Executive in connection with his employment;                    (ii) Continual refusal by Executive to perform his duties hereunder or any lawful direction ofthe Board of Directors of the Company within ten (10) days after notice of such refusal to performsuch duties or direction was given to the Executive;                    (iii) Any breach of the provisions of Sections 7 or 8 of this Agreement by Executive or anyother material breach of this Agreement by Executive; or                    (iv) The commission and conviction by Executive of (a) any felony, or (b) a misdemeanorinvolving moral turpitude, including but not limited to the Executive’s abuse of drugs and alcohol.
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               B) For purposes of this Agreement, “Permanent Disability” shall mean a disability thatwould entitle Executive to receive benefits under the Company’s long-term disability plan as ineffect from time to time or which prevents the Executive from performing his duties hereunder forone hundred eighty (180) consecutive days or more.               C) In the event that Executive’s employment is terminated (i) by the Company for Cause; (ii)by the Executive on a voluntary basis; (iii) as a result of the Executive’s Permanent Disability;or (iv) by the Executive’s death, then Executive or his Estate shall only be entitled to receiveBase Salary and Bonuses already earned and accrued through the Termination Date.In the event of termination by the Executive’s death or Permanent Disability, all such benefitsidentified herein shall be maintained and in effect for six (6) additional months by the Company.Any and all such unvested benefits (i.e. 401(k), restricted stock or stock options) shallimmediately vest. After the termination of Executive’s employment under this Section 5.2 andpayment of all amounts due to Executive under the terms of this Agreement, the obligations of theCompany under this Agreement to make any further payments, or provide any benefits specified herein(other than benefits required to be provided by applicable law or under the terms of any employeebenefit of the Company in which the Executive was a participant) to Executive shall thereupon ceaseand terminate. Termination of the Executive pursuant to this Section 5.2 shall be made by deliveryto Executive of a Notice from the Board of Directors of the Company.     5.3 **Change of Control**.If Executive’s employment with the Company is terminated by the Company (other than upon theexpiration of the Employment Terms, for Cause, or by reason of Disability, or upon Executive’sdeath) at any time within ninety (90) days before, or within twelve (12) months after, a Change inControl (as defined below), or if the Executive’s employment with the Company is terminated by theExecutive for Good Reason within six (6) months after a Change in Control, or if the Executive’semployment with the Company is terminated by the Executive for any reason, including without GoodReason, during the period commencing six (6) months after a Change in Control and ending twelve(12) months after a Change in Control, then the Company shall pay to the Executive: (i) anyaccrued, unpaid base salary payable under Section 3.1 as in effect on the Date of Termination, (ii)any unreimbursed business expenses under Section 3.2 and (iii) a severance benefit, in a lump sumcash payment, in an amount equal to: (A) the Executive’s annual rate of base salary, as in effectas of the Date of Termination, plus the Executive’s Target Bonus for the fiscal year of the Companyin which the Date of Termination occurs. The severance benefit under paragraph (iii) shall be paidnot later than sixty (60) days after the Date of Termination (subject to Section 9), provided thatthe Executive executes and delivers to the Company, and any revocation period required by law haslapsed and the Executive has not revoked, a general release of claims in a form acceptable to theCompany in its sole and absolute discretion, and the Executive is not in material breach of any ofthe provisions of this Agreement. The Company shall provide
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Executive with a general release of claims in a form acceptable to the Company not later than oneweek following the Date of Termination.For purposes of this Agreement, “Good Reason” means the occurrence of any of the following, withoutExecutive’s express written consent:(i) A material reduction in Executive’s base salary;(ii) A material reduction in Executive’s authority, duties or responsibilities;(iii) A material relocation of Executive’s primary place of employment, provided however,that in no instance will such a relocation be deemed material if it is less than fifty (50)miles from the Company’s location at which Executive performs most of his servicesimmediately prior to such relocation; or(iv) A material breach by the Company of any of its obligations under this Agreement;provided that Executive notifies the Company in writing of such event within 30 days of itsoccurrence and further provides the Company thirty (30) days to remedy the situation beforeterminating his employment no more than ninety (90) days after such occurrence.     (a) Accelerated Vesting of Options and Restricted Stock. In the event the Executive isentitled to the severance benefits pursuant to Section 5.3, each stock option exercisable forshares of Company Common Stock granted under the Company’s stock incentive plan that is held by theExecutive, if then outstanding, shall become immediately vested and exercisable with respect to allof the shares of Company Common Stock subject thereto on the Date of Termination and shall beexercisable in accordance with the provisions of the Company’s stock incentive plan and optionagreement pursuant to which such option was granted. In addition, in the event the Executive isentitled to severance benefits, a restricted stock award and restricted shares of the CompanyCommon Stock granted under the Company’s stock incentive plan that is held by the Executive that issubject to a forfeiture, reacquisition or repurchase option held by the Company shall become fullyvested, nonforfeitable and no longer subject to reacquisition or repurchase by the Company or otherrestrictions on the Date of Termination.     (b) “Change in Control” means the occurrence of any of the following events occurringafter the Effective Date:     (c) a Person directly or indirectly becomes the “beneficial owner” (as such term is defined inRule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934) of more than thirty-threepercent (33%) of the total voting power of the total outstanding voting securities of the Companyon a fully diluted basis, excluding from such calculation the voting securities beneficially ownedby such Person as of the Effective Date;     (d) a Person directly or indirectly acquires all or substantially all of the assets andbusiness of the Company;
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     (e) the consummation by the Company (whether directly involving the Company or indirectlyinvolving the Company through one or more intermediaries) of (x) a merger, consolidation,reorganization, or business combination or (y) the acquisition of assets or stock of anotherentity, in each case, other than a transaction which results in the Company’s voting securitiesoutstanding immediately before the transaction continuing to represent (either by remainingoutstanding or by being converted into voting securities of the entity or the person that, as aresult of the transaction, controls, directly or indirectly, the Company or owns, directly orindirectly, all or substantially all of the Company’s assets or otherwise succeeds to the businessof the Company (the Company or such person, the “Successor Entity”)) directly orindirectly, at least thirty five percent (35%) of the combined voting power of the SuccessorEntity’s outstanding voting securities immediately after the transaction.     6. **No Conflicts of Interest.**     The Executive shall not, directly or indirectly, engage or become interested in any otherbusiness, whether or not such business is competitive with the business of the Company, during theperiod of the Executive’s employment hereunder, or any renewals or extensions thereof.     7. **Nondisclosure of Confidential Information.**          The Executive shall not, without the prior written consent of the Company, use, divulge,disclose or make accessible to any other Person, any Confidential Information pertaining to thebusiness or affairs of the Company, except (i) while employed by the Company, in the business ofand for the benefit of the Company, or (ii) when required to do so by a court of competentjurisdiction, by any governmental agency having supervisory authority over the business of theCompany, or by any administrative body or legislative body (including a committee thereof) withjurisdiction to order the Executive to divulge, disclose or make accessible such information.For purposes of this Section 7, “Confidential Information” shall mean non-publicinformation concerning financial data, strategic business plans, sales or marketing plans, or otherproprietary marketing data, proprietary information, contracts or agreements with customers,vendors or consultants, and all other non-public, proprietary and confidential information of theCompany that in any case is not otherwise available to the public (other than by the Executive’sbreach of the terms hereof).     8. **Restrictive****Covenants**.          8.1 **Non-Solicitation**.               A) In consideration of the Executive’s employment with the Company, his participation in anystock, bonus or other incentive compensation plans of the Company, which the Executive acknowledgesis of direct benefit to herself, the Executive hereby covenants that, during the period commencingon the date hereof and ending on the two (2) year anniversary of the Termination Date (the“Restricted Period”),
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the Executive and his Affiliates (as defined herein) shall not directly or indirectly, throughany other Person, (i) employ, solicit or induce any individual who is, or was at any time duringthe one (1) year period prior to the Termination Date, an employee or consultant of the Company,(ii) cause such individual to terminate or refrain from renewing or extending his employment by orconsulting relationship with the Company, or (iii) cause such individual to become employed by orenter into a consulting relationship with the Company and its Affiliates or any other individual,Person or entity.               B) In consideration of the Executive’s employment with the Company, his participation in anystock, bonus or other incentive compensation plans of the Company, which the Executive acknowledgesis of direct benefit to herself, the Executive hereby covenants that, during the Restricted Period,the Executive and his Affiliates shall not directly or indirectly through any other Person,solicit, persuade or induce any Customer to terminate, reduce or refrain from renewing or extendingits contractual or other relationship with the Company in regard to the purchase of products orservices, performed, manufactured, marketed or sold by the Company or any other Person in regard tothe purchase of products or services similar or identical to those performed, manufactured,marketed or sold, by the Company. For purposes hereof, “Customer” means any individual,Person or entity which is a customer of the Company or which was a customer of the Company withinone (1) year prior to the Termination Date.               C) In consideration of the Executive’s employment with the Company, his participation in anystock, bonus or other incentive compensation plans of the Company, which the Executive acknowledgesis of direct benefit to herself, the Executive hereby covenants that, during the Restricted Period,the Executive and his Affiliates shall not directly or indirectly through any other Person,solicit, persuade or induce any Supplier to terminate, reduce or refrain from renewing or extendinghis, her or its contractual or other relationship with the Company, directly or indirectly inregard to the sale of products or services similar or identical to those performed, manufactured,marketed, sold or purchased by the Company. For purposes hereof, “Supplier” shall mean anyindividual, Person or entity which is a supplier of any product or service to the Company or whichwas a supplier to the Company within one (1) year prior to the Termination Date.          8.2 **Non-Compete**. In consideration for the Executive’s employment with the Company, hisparticipation in any stock, bonus or other incentive compensation plans of the Company, which theExecutive acknowledges is of direct benefit to herself the receipt and sufficiency of which ishereby acknowledged, the Executive hereby covenants that, during the term of his Employment, theExecutive shall not directly or indirectly, in his, own capacity or through one or more Affiliates,whether as owner, consultant, executive, partner, member, manager, officer, director, venturer,agent, through stock ownership, investment of capital, lending of money or property, rendering ofservices, or otherwise, engage or assist others to engage in the Business in the Territory;provided, that the Executive may own up to three (3%) percent of the outstanding shares ofa company engaged in such Business if such shares are listed on national securities exchange.
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          8.3 **Non-Disparagement.**The Executive agrees that neither the Executive nor any of hisAffiliates shall (i) in any way publicly disparage the Company, its equity holders, officers,directors, employees, agents or Affiliates, (ii) cause embarrassment or public humiliation to suchPersons, or (iii) make any public statement that is adverse, inimical or otherwise detrimental tothe interests of any such Persons or the Business at any time, including without limitation, duringperiods after the termination of this Agreement.          8.4 **Certain Definitions**. The following terms shall have the following meanings when used inthis Agreement:               A) “Affiliate” means, as to any Person, a Person that directly, or indirectly throughone or more intermediaries, controls or is controlled by, or is under common control with, thePerson specified. With respect to any natural Person, the term Affiliate shall also include anymember of said Person’s immediate family, any family limited partnership or similar entity for saidPerson and any trust, voting or otherwise, of which said Person is a trustee or of which saidPerson or any of said Person’s immediate family is a beneficiary. With respect to any trust, theterm Affiliate shall also include any beneficiary or trustee of such trust. For purposes of theforegoing, the term “control” and variations thereof means the possession of the power to direct orcause the direction of the management or policies of a Person, whether through the ownership ofvoting securities, by contract or otherwise.               B) “Territory” means Global.     9. **Specific Performance**     Since the Company will be irreparably damaged if the provisions of Sections 6, 7 and 8 hereofare not specifically enforced, the Company shall be entitled to an injunction restraining anyviolation of this Agreement by the Executive (without any bond or other security being required),or any other appropriate decree of specific performance. Such remedies shall not be exclusive andshall be in addition to any other remedy which the Company may have.     10. **Tax Matters**.          10.1 All payments of “nonqualified deferred compensation” (within the meaning of Section 409Aof the Internal Revenue Code of 1986, as amended (the “Code”) and the regulationspromulgated thereunder (“Section 409A”)) by the Company to the Executive are intended tocomply with the requirements of Section 409A, and shall be interpreted consistent therewith.Neither the Company nor the Executive, individually or in combination, may accelerate any suchdeferred payment, except in compliance with Section 409A, and no amount shall be paid prior to theearliest date on which it is permitted to be paid under Section 409A. Notwithstanding anythingherein to the contrary, no amendment may be made to this Agreement if it would cause the Agreementor any payment hereunder to not be in compliance with the requirements of Section 409A. However,the terms set forth in this Agreement may be reformed to the extent
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necessary to comply with Section 409A, while preserving to the extent practicable the intendedtreatment of the original Agreement.          10.2 In the event that the severance and other benefits provided for in this Agreement orotherwise payable to Executive by the Company (i) constitute “parachute payments” within themeaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section4999 of the Code (the “Excise Tax”), then Executive’s benefits under this Agreement shallbe reduced as to such lesser extent as would result in no portion of such benefits and paymentsbeing subject to the Excise Tax.          10.3 Unless the Company and Executive otherwise agree in writing, any determination requiredunder this Section 10 shall be made in writing by the Company’s independent public accountants (the“Accountants”), whose determination shall be conclusive and binding upon Executive and theCompany for all purposes. For purposes of making the calculations required by this Section 10, theAccountants may make reasonable assumptions and approximations concerning applicable taxes and mayrely on reasonable, good faith interpretations concerning the application of Section 280G and 4999of the Code. The Company and Executive shall furnish to the Accountants such information anddocuments as the Accountants may reasonably request in order to make a determination under thisSection 10. The Company shall bear all costs the Accountants may reasonably incur in connectionwith any calculations contemplated by this Section 10.     11. **Notices.**     All notices or communications hereunder shall be in writing, addressed as follows:**To the Company:**T3 Motion Inc.