Executive to one of its subsidiaries or affiliates for payroll purposes providing this doesnot change Executive’s role as the President and Chief Executive Officer of the Company.2. Employment Term.     Executive’s term of employment under this Agreement (such term of employment, as it may beextended or terminated, is herein referred to as the “Employment Term”) shall be for a termcommencing on the Effective Date and, unless terminated earlier as provided in Section 7 hereof,ending on May 28, 2010 (the “Original Employment Term”); provided that the Employment Termshall be automatically extended, subject to earlier termination as provided in Section 7 hereof,for successive additional one (1) year periods (the “Additional Terms”), unless, at leastthirty (30) days prior to the end of the Original Employment Term or the then current AdditionalTerm, the Company or Executive has notified the other in writing that the Employment Term shallterminate at the end of the then current term.3. Base Salary.     The Company agrees to pay Executive a base salary (the “Base Salary”) at an annualrate of Four Hundred Twenty Thousand Dollars ($420,000), payable in accordance with the regularpayroll practices of the Company, but not less frequently than monthly. Executive’s Base Salaryshall be reviewed and may be increased, but not decreased, from time to time by the Board (or acommittee thereof). The base salary as determined herein from time to time shall constitute “BaseSalary” for purposes of this Agreement.4. Incentive Bonus.     During the Employment Term, Executive shall be eligible to participate in the Company’s bonusand other incentive compensation plans and programs for the Company’s senior executives at a levelcommensurate with Executive’s position. Without limiting the foregoing, Executive shall have theopportunity to earn an annual target bonus (the “Annual Bonus”) of not less than sixtypercent (60%) of Executive’s Base Salary, or such greater amount as may be provided in an annualbonus plan approved by the Board (or a committee thereof), contingent upon the Company’sachievement of financial and operating metrics to be annually determined by the Board (or acommittee thereof), and upon the Executive’s achievement of individual performance goals approvedby the Board (or a committee thereof). Such annual incentive bonuses shall be paid to Executivewithin the sixty (60) day period following the close of the Company’s fiscal year.5. Equity Incentives.     (a) Discretionary Grants. At the sole discretion of the Board or any committee of theBoard (the “Committee”) appointed to administer the Company’s Equity Incentive Plan, as maybe amended from time to time, or any successor plan (any “Stock Plan”), Executive shall beeligible for grants of stock options and other equity awards of a level commensurate withExecutive’s position and similar to other executives of the Company.     (b) Change of Control. Notwithstanding any other provision of this Agreement, anyStock Plan or any equity award agreement, in the event of a Change in Control, all equity awards
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(including, but not limited to, any options and restricted stock grants made prior orsubsequent to the date of this Agreement) shall fully vest and be immediately exercisable. Forpurposes of this Agreement, a “Change in Control” shall mean the first of the followingevents to occur:     (i) the sale, lease, exchange or other transfer, directly or indirectly, ofsubstantially all of the assets of the Company (in one transaction or in a series of relatedtransactions) to a person or entity that is not controlled by the Company;     (ii) the approval by the shareholders of the Company of any plan or proposal for theliquidation or dissolution of the Company;     (iii) a merger or consolidation to which the Company is a party if the shareholders ofthe Company immediately prior to effective date of such merger or consolidation have“beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act), immediatelyfollowing the effective date of such merger or consolidation, of securities of the survivingcorporation representing (A) more than 50%, but not more than 70%, of the combined votingpower of the surviving corporation’s then outstanding securities ordinarily having the rightto vote at elections of directors, unless such merger or consolidation has been approved inadvance by the Incumbent Directors (as defined below), or (B) 50% or less of the combinedvoting power of the surviving corporation’s then outstanding securities ordinarily havingthe right to vote at elections of directors (regardless of any approval by the IncumbentDirectors);     (iv) any person becomes the “beneficial owner” (as defined in Rule 13d-3 under theExchange Act), directly or indirectly, of (A) 30% or more, but not 50% or more, of thecombined voting power of the Company’s outstanding securities ordinarily having the right tovote at elections of directors, unless the transaction resulting in such ownership has beenapproved in advance by the Incumbent Directors, or (B) 50% or more of the combined votingpower of the Company’s outstanding securities ordinarily having the right to vote atelections of directors (regardless of any approval by the Incumbent Directors);     (v) the Incumbent Directors cease for any reason to constitute at least a majority ofthe Board; or     (vi) any other change in control of the Company of a nature that would be required tobe reported pursuant to Section 13 or 15(d) of the Exchange Act, whether or not the Companyis then subject to such reporting requirements.     For purposes of this definition, “Incumbent Directors” of the Company will mean anyindividuals who are members of the Board on the date of this Agreement and any individualwho subsequently becomes a member of the Board whose election, or nomination for election bythe Company’s shareholders, was approved by a vote of at least a majority of the IncumbentDirectors (either by specific vote or by approval of the Company’s proxy statement in whichsuch individual is named as a nominee for director without objection to such nomination).
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6. Employee Benefits.     (a) Benefit Plans. Executive shall be entitled to participate in all employee benefitplans of the Company including, but not limited to, equity, pension, thrift, profit sharing,medical coverage, education, or other retirement or welfare benefits that the Company has adoptedor may adopt, maintain or contribute to for the benefit of its senior executives at a levelcommensurate with Executive’s position, subject to satisfying any applicable eligibilityrequirements.     (b) Paid Time Off. Executive shall be entitled to paid time off in accordance withthe Company’s policies applicable to its senior executives, but in no event less than twenty (20)days (as prorated for partial years).     (c) Perquisites. The Company shall provide to Executive all perquisites which othersenior executives of the Company are generally entitled to receive.     (d) Business and Entertainment Expenses. Upon presentation of appropriatedocumentation, Executive shall be reimbursed in accordance with the Company’s expense reimbursementpolicy for all reasonable and necessary business and entertainment expenses incurred in connectionwith the performance of Executive’s duties hereunder.7. Termination.     Executive’s employment and the Employment Term shall terminate on the first of the followingto occur:     (a) Disability. Upon written notice by the Company to Executive of termination due toDisability. For purposes of this Agreement, “Disability” shall be defined as the inabilityof Executive to have performed each and every material duty of Executive’s employment under thisAgreement due to a physical or mental injury, infirmity or incapacity for a period of 6 consecutivemonths in any 12-month period. The existence or nonexistence of a Disability shall be determinedby the Board, acting reasonably and in good faith, taking into consideration the opinion of anindependent physician selected by the Company and reasonably acceptable to Executive.     (b) Death. Automatically on the date of death of Executive.     (c) Cause. Immediately upon written notice by the Company to Executive of atermination for Cause. For purposes of this Agreement, “Cause” shall mean:     (i) Executive shall have been indicted for a felony;     (ii) Executive shall have been convicted of (or plead “guilty” or “nolo contendre” toor been found guilty and not convicted of) any misdemeanor or summary offense involvingfraud, theft, misrepresentation or moral turpitude or any other misdemeanor or summaryoffense that will, in the opinion of the Board, determined in good faith, adversely affectin any material respect the Company’s prospects or
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reputation or Executive’s ability to perform Executive’s obligations or duties to theCompany or any of its subsidiaries; or     (iii) The termination is evidenced by a resolution adopted in good faith by the Boardconcluding that Executive:     (A) intentionally and continually failed substantially to perform Executive’sreasonably assigned duties with the Company (other than a failure resulting fromExecutive’s incapacity due to physical or mental illness or from the assignment toExecutive of duties that would constitute Good Reason), which failure has continuedfor a period of at least thirty (30) days after a written notice of demand forsubstantial performance, signed by a duly authorized member of the Board, has beendelivered to Executive;     (B) intentionally engaged in conduct which is demonstrably and materiallyinjurious to the Company; provided, however, that no termination of Executive’semployment shall be for Cause as set forth in this subsection (B) until (1) thereshall have been delivered to Executive a copy of a written notice, signed by a dulyauthorized member of the Board, stating that the Board has determined that Executivehas engaged in the conduct set forth in this subsection (B), and (2) Executive shallhave been provided an opportunity to be heard by the Board;     (C) willfully or repeatedly engaged in misconduct or gross negligence in theperformance of Executive’s duties to the Company or any of its subsidiaries that hasa material detrimental effect on the Company; or     (D) committed an act of fraud, theft or dishonesty against the Company or anyof its subsidiaries or any act or omission intended to result in the personalenrichment of Executive or Executive’s spouse, parents, siblings, or descendants(whether by blood or adoption and including stepchildren) or the spouses of suchindividuals in violation of law or of Executive’s duty of loyalty to the Company orits subsidiaries at the expense, directly or indirectly, of the Company or any ofits subsidiaries.     (iv) Notwithstanding anything in the foregoing to the contrary, if Executive has beenterminated ostensibly for Cause because Executive has been indicted for a felony, andExecutive is not convicted of, or does not plead guilty or nolo contendere to, such felonyor a lesser offense (based on the same operative facts), such termination shall be deemed tobe a termination without Cause as of the date of the termination; provided, however, that,any payments due hereunder shall be only paid after a final determination in such proceedingis reached.     (d) Without Cause. Upon thirty (30) days’ written notice by the Company to Executiveof an involuntary termination other than for Cause, death or Disability.     (e) Good Reason. Upon written notice by Executive to the Company of a termination forGood Reason, unless such the events constituting the basis for Good Reason are corrected in allmaterial respects by the Company within thirty (30) days following written notification by
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Executive to the Company that he intends to terminate his employment hereunder for GoodReason, and provided that any such notice is given within ninety (90) days of the occurrence ofsuch Good Reason and Executive actually terminates employment within twelve (12) months of theoccurrence of such Good Reason event. For purposes of this Agreement, “Good Reason” shallmean, without the consent of Executive, the occurrence of any of the following events:     (i) any material reduction in Executive’s status, position(s), duties orresponsibilities as an executive of the Company;     (ii) any material reduction by the Company in Executive’s Base Salary, equityincentives, benefits or perquisites, or a material reduction by the Company in the bonusthat Executive may earn in a given year, provided, however, that inability of the Company orthe Executive to satisfy performance objectives under any bonus plan shall not constituteGood Reason;     (iii) any material failure by the Company to comply with any of the material provisionsregarding Executive’s Base Salary, bonus, equity incentive, benefits and perquisites andother benefits and amounts payable to Executive under this Agreement;     (iv) a material change in the geographic location at which Executive must performExecutive’s services; or     (v) any other material breach by the Company of its obligations hereunder.     Executive’s continued employment does not constitute consent to, or waiver of any rightsarising in connection with, any circumstances constituting Good Reason.     (f) Without Good Reason. Upon thirty (30) days’ prior written notice by Executive tothe Company of Executive’s voluntary termination of employment without Good Reason (which theCompany may, in its sole discretion, make effective earlier than any notice date).8. Consequences of Termination.     Subject to Section 9, the following amounts and benefits shall be due to Executive followingExecutive’s termination of employment; provided, however, that no termination payments shall bepayable hereunder if Executive has not returned to the Company all Company property used byExecutive including without limitation any automobile, computer or laptop, cell phone, Blackberryor similar device.     (a) Disability. Upon termination due to Disability, the Company shall pay or provideExecutive (i) any unpaid Base Salary through the date of termination; (ii) any unpaid bonus earnedwith respect to any fiscal year ending on or preceding the date of termination; (iii) reimbursementfor any unreimbursed expenses incurred through the date of termination; and (iv) all otherpayments, benefits or fringe benefits to which Executive may be entitled under the terms of anyapplicable compensation arrangement or benefit, equity or fringe benefit plan or program or grantor this Agreement (items (i)-(iv) being the “Accrued Amounts”). The Accrued Amounts shallbe paid to Executive within fifteen (15) days of the termination date**.**
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     (b) Death. In the event the Employment Term ends on account of Executive’s death,Executive’s estate shall be entitled to any Accrued Amounts. The Accrued Amounts shall be paid toExecutive within fifteen (15) days of notice of Executive’s death.     (c) Termination for Cause or Without Good Reason. If Executive’s employment should beterminated (i) by the Company for Cause, or (ii) by Executive without Good Reason, the Companyshall pay to Executive any Accrued Amounts. The Accrued Amounts shall be paid to Executive withinfifteen (15) days of the termination date.     (d) Termination Without Cause or for Good Reason Other Than in Connection with a PotentialChange of Control or Actual Change of Control. If Executive’s employment by the Company isterminated (1) by the Company other than for Cause, death or Disability, or if the Company providesnotice of its intention not to renew pursuant to Section 2, or (2) by Executive for Good Reason,but excluding, in each case (1) and (2) any such termination in connection with a Potential Changeof Control (as defined in Section 8(e)) or an actual Change in Control, then the Company shall payor provide Executive with:     (i) Accrued Amounts;     (ii) The right to receive a pro-rata portion of Executive’s Annual Bonus for theperformance year in which Executive’s termination occurs at the time that annual bonuses arepaid to other senior executives, which pro-rata portion shall be determined by multiplyingthe amount Executive would have received had employment continued through the end of theperformance year by a fraction, the numerator of which is the number of days during theperformance year of termination that Executive is employed by the Company and thedenominator of which is 365. For purposes of the foregoing, the amount the Executive wouldhave received shall be determined pursuant to the Company’s bonus plan with respect toCompany performance against criteria for the full fiscal year, and with respect toindividual performance based upon the Board’s determination, in good faith, as to the extentof the Executive’s progress toward individual performance criteria through the time oftermination;     (iii) Continuation of the Executive’s then current Base Salary as if Executive’semployment continued for a period of twelve (12) months from the date of termination;     (iv) A lump sum payment equal to twelve (12) times the monthly premium amount that theCompany would have been required to pay for group life insurance and group long termdisability insurance coverage if Executive had continued as an active employee of theCompany, based on the premium amounts in effect at the Executive’s date of termination(including any known increase in such premiums); and     (v) Subject to Executive’s timely election of any applicable continuation or conversioncoverage and continued co-payment of premiums, continued participation for twelve (12)months in the Company’s group medical and/or dental plans which cover Executive (andeligible dependents) upon the same terms and conditions (except for the requirements ofExecutive’s continued employment) in effect on the date of termination. To the extent suchcoverage cannot be provided under the Company’s group health
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and/or dental plans without jeopardizing the tax status of such plans, for underwritingreasons or because of the tax impact on Executive, the Company shall pay Executive not lessfrequently than monthly an amount equal to the amount the Company would have paid for suchbenefits on behalf of Executive if the benefits were provided to him as an employee. Thecontinuation of health benefits under this subsection shall reduce and count againstExecutive’s rights under the Consolidated Omnibus Budget Reconciliation Act of 1985, asamended (“COBRA”).     All benefits provided under Sections 8(d)(i) and (iv) shall be paid to Executive withinfifteen (15) days of the termination date, subject to Section 9, as applicable.     (e) Termination Without Cause or for Good Reason in Connection with a Potential Change ofControl or Actual Change of Control. If Executive’s employment by the Company is terminated by(1) the Company other than for Cause, death or Disability, or if the Company provides notice of itsintention not to renew pursuant to Section 2, or (2) by Executive for Good Reason, in each case (1)and (2) in connection with a Potential Change of Control or an actual Change of Control, then theCompany shall pay or provide Executive with:     (i) Subject to Section 9, as applicable, a lump sum payment, within fifteen (15) daysof the termination date, equal to the sum of:     (A) all Accrued Amounts,     (B) twelve (12) months of Base Salary,     (C) as compensation for cancellation of Executive’s then-current Annual Bonusopportunity, an additional 60% of annual Base Salary, and     (D) twelve (12) times the monthly premium amount that the Company would havebeen required to pay for group life insurance and group long term disabilityinsurance coverage if Executive had continued as an active employee of the Company,based on the premium amounts in effect at the Executive’s date of termination(including any known increase in such premiums); and     (ii) Subject to Executive’s continued co-payment of premiums, continued participationfor twelve (12) months in the Company’s group medical and/or dental plans which coverExecutive (and eligible dependents) upon the same terms and conditions (except for therequirements of Executive’s continued employment) in effect on the date of termination. Tothe extent such coverage cannot be provided under the Company’s health or welfare planswithout jeopardizing the tax status of such plans, for underwriting reasons or because ofthe tax impact on Executive, the Company shall pay Executive not less frequently thanmonthly an amount equal to the amount the Company would have paid for such benefits onbehalf of Executive if the benefits were provided to him as an employee. The continuationof health benefits under this subsection shall reduce and count against Executive’s rightsunder COBRA.     As used herein, a “Potential Change of Control” shall be deemed to have occurred if:(A) the Company enters into an agreement, the consummation of which would result in the
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occurrence of a Change of Control; (B) the Company or any person or entity publicly announcesan intention to take or to consider taking actions which, if consummated, would constitute a Changeof Control; or (C) the Board adopts a resolution to the effect that, for purposes of thisAgreement, a Potential Change of Control has occurred.     (f) Code Section 409A. Payment of amounts under this Section 8 are intended to complywith an exception to or exclusion from the requirements of Code Section 409A and this Agreementshall in all respects be administered in accordance with such intention; provided, however, if anypayment is or becomes subject to the requirements of Code Section 409A, the Agreement as it relatesto such payment is intended to comply with the requirements of Code Section 409A. In no event mayExecutive, directly or indirectly, designate the calendar year of any payment to be made under thisAgreement. The payments to be made under Section 8 are intended to be exempt from the requirementsof Code Section 409A because they are (i) non-taxable benefits, (ii) welfare benefits within themeaning of Treas. Reg. Sec. 1.409A-1(a)(5), (iii) short-term deferrals under Treas. Reg. Sec.1.409A-1(b)(4), or (iv) payments under a separation pay plan within the meaning of Treas. Reg. Sec.1.409A-1(b)(9). For purposes of the limitations under Code Section 409A, each payment under thisAgreement shall be treated as a separate payment. All payments to be made upon a termination ofemployment under this Agreement may only be made upon a “separation from service” as defined underCode Section 409A. All reimbursements to be made under this Agreement that constitute deferredcompensation subject to Code Section 409A shall be made in accordance with the requirements ofTreas. Reg. Sec. 1.409A-3(i)(1)(iv). If, at the time of Executive’s termination of employment,Executive is a “specified employee” within the meaning of Code Section 409A, then any payment of anamount that is deferred compensation payable on account of a separation from service shall besuspended and not made until the first day of the calendar month following the end of the six (6)month period following Executive’s termination of employment.     (g) Parachute Payments; Potential Reduction in Payments.     (i) Any provision of any Stock Plan or any equity award agreement (including thelimitations of Section 10.2 of the Equity Incentive Plan) relating to “parachute payments”under Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the“Code”), shall not apply to any equity award granted, at any time, to the Executiveunless the parties agree in writing to the contrary, including their express intent tooverride the substance and effect of this Section 8(g)(i).     (ii) The following terms shall have the following meanings for purposes of this Section8(g).     (A) “Excise Tax” shall mean the excise tax imposed by Section 4999 ofthe Code, together with any interest or penalties imposed with respect to suchexcise tax.     (B) “Net After-Tax Receipt” shall mean the present value (as determinedin accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of aPayment net of all taxes imposed on Executive with respect thereto under Sections 1and 4999 of the Code and under applicable state and local laws,
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determined by applying the highest marginal rate under Section 1 of the Codeand under state and local laws which applied to Executive’s taxable income for theimmediately preceding taxable year, or such other rate(s) as Executive certifies, inExecutive’s sole discretion, as likely to apply to him in the relevant tax year(s).     (C) “Payment” shall mean any payment or distribution in the nature ofcompensation (within the meaning of Section 280G(b)(2) of the Code) to or for thebenefit of Executive, whether paid or payable pursuant to this Agreement orotherwise.     (D) “Reduced Amount” shall mean the greatest amount of AgreementPayments that can be paid that would not result in the imposition of the Excise Taxif the Accounting Firm determines to reduce Agreement Payments pursuant to Section8(g)(iii).     (iii) The Company’s current independent public accounting firm, or such othernationally recognized certified public accounting firm as may be designated by the Company(the “Accounting Firm”), shall determine whether any Payment would subject Executiveto the Excise Tax as a result of a “change in ownership or control” of the Company (withinthe meaning of Section 1.280G-1 of the Department of the Treasury Regulations). In theevent the Accounting Firm determines that any Payment would subject the Executive to theExcise Tax, then the Payments shall be reduced to the Reduced Amount if the Accounting Firmdetermines that Executive would have a greater Net After-Tax Receipt of aggregate Paymentsif the Payments paid or payable under this Agreement (the “Agreement Payments”) werereduced to the Reduced Amount. Any reduction of the Payments shall be made in the followingorder: (1) options with an exercise price above the fair market value of the stock, providedthe options give rise to a Payment; (2) pro rata among amounts that constitute deferredcompensation under Code Section 409A; and (3) reduction of any remaining payments in themanner determined by the Accounting Firm.     (iv) All determinations required to be made under Section 8(g)(iii) shall be madefifteen (15) business days of the receipt of notice from the Company that there has been aPayment, or such earlier time as is requested by the Company, and shall be accompanied bydetailed supporting calculations provided both to the Company and Executive. The notice ofPayment from the Company to the Accounting Firm shall occur no later than the date of thePayment. In the event that the Accounting Firm is serving as accountant or auditor for theindividual, entity or group effecting the Change of Control, or in the event that theAccounting Firm fails to make the determination required hereby for any reason (includingthe Company’s failure to provide the Accounting Firm of notice of the Payment as providedabove), Executive may appoint another nationally recognized accounting firm to make thedeterminations required hereunder (which accounting firm shall then be referred to as theAccounting Firm hereunder). All fees and expenses of the Accounting Firm shall be bornesolely by the Company. Any determination by the Accounting Firm shall be binding upon theCompany and Executive.
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     (v) As a result of the uncertainty in the application of Section 4999 of the Code atthe time of the initial determination by the Accounting Firm hereunder, it is possible thatamounts will have been paid or distributed by the Company to or for the benefit of Executivepursuant to this Agreement which should not have been so paid or distributed(“Overpayment”) or that additional amounts which will have not been paid ordistributed by the Company to or for the benefit of Executive pursuant to this Agreementshould have been so paid or distributed (“Underpayment”). In the event that theAccounting Firm believes the Internal Revenue Service would have a 75% or greaterprobability of success based upon the assertion of a deficiency by the Internal RevenueService against either the Company or Executive for an Overpayment, Executive shall pay anysuch Overpayment to the Company together with interest at the applicable federal rateprovided for in Section 7872(f)(2) of the Code; provided, however, that no amountshall be payable by Executive to the Company if and to the extent such payment would noteither reduce the amount on which Executive is subject to tax under Section 1 and Section4999 of the Code or generate a refund of such taxes. In the event that the Accounting Firm,based upon controlling precedent or substantial authority, determines that an Underpaymenthas occurred, any such Underpayment shall be paid promptly (and in no event later than sixty(60) days following the date on which the Underpayment is determined) by the Company to orfor the benefit of Executive together with interest at the applicable federal rate providedfor in Section 7872(f)(2) of the Code.9. Release.     Any and all amounts payable and benefits or additional rights provided pursuant to thisAgreement beyond Accrued Amounts shall only be payable if Executive delivers to the Company ageneral release of all claims of Executive occurring up to the release date in the form ofExhibit A hereto (with such insertions or changes therein as may be necessary in thereasonable opinion of counsel for the Company to make it valid and encompassing under applicablelaw). The Company shall provide such release to Executive within five (5) days of Executive’stermination of employment and Executive must deliver such executed release to the Company withintwenty one (21) days of presentation thereof by the Company to Executive, or such other longer orshorter period as may be required by then applicable law.10. Restrictive Covenants.     (a) Confidentiality. Executive shall not, directly or indirectly, use, makeavailable, sell, disclose or otherwise communicate to any person, other than in the course ofExecutive’s assigned duties and for the benefit of the Company, either during the Employment Termor at any time thereafter, any nonpublic proprietary or confidential information, knowledge or datarelating to the Company or any of its subsidiaries or affiliates that has been obtained byExecutive during Executive’s employment by the Company or has been obtained pursuant to anyconsulting services provided by Executive to Company prior to Executive’s employment by theCompany. For purposes of this Agreement, non-public proprietary information means informationproprietary to the Company that is not generally known (including any “trade secret” within themeaning of the Economic Espionage Act of 1996, Title 18 U.S.C. §1839) about the Company’scustomers, products, services, personnel, pricing, sales strategy, technology, methods, processes,research, development, finances, systems, techniques, accounting,
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purchasing and plans. All information disclosed to Executive or to which Executive obtainsaccess, whether originated by him or by others, during the period that Executive is an employee ofthe Company (such period being referred to as the “Employment Period”) (whether prior tothe Effective Date or thereafter), shall be presumed to be non-public proprietary information if itis so treated by the Company or if Executive has a reasonable basis to believe it to be such. Theforegoing shall not apply to information to the extent that it (i) was known to the public prior toits disclosure to Executive; (ii) becomes known to the public subsequent to disclosure to Executivethrough no wrongful act of Executive or any representative of Executive; or (iii) Executive isrequired to disclose by applicable law, regulation or legal process (provided that Executiveprovides the Company with prior notice of the contemplated disclosure and reasonably cooperateswith the Company at its expense in seeking a protective order or other appropriate protection ofsuch information). Notwithstanding clauses (i) and (ii) of the preceding sentence, Executive’sobligation to maintain such disclosed information in confidence shall not terminate where onlyportions of the information are in the public domain.     (b) Non-solicitation. During the Employment Term and for the two year periodthereafter, Executive shall not, directly or indirectly, individually or on behalf of any otherperson, firm, corporation or other entity, knowingly solicit, aid or induce (i) any employee of orconsultant to the Company or any of its subsidiaries or affiliates to leave such employment orengagement in order to accept employment with or render services to or with any other person, firm,corporation or other entity unaffiliated with the Company or knowingly take any action tomaterially assist or aid any other person, firm, corporation or other entity in identifying orhiring any such employee or (ii) any customer of the Company or any of its subsidiaries oraffiliates to purchase goods or services then sold by the Company or any of its subsidiaries oraffiliates from another person, firm, corporation or other entity or assist or aid any otherpersons or entity in identifying or soliciting any such customer.     (c) Noncompetition. Executive acknowledges that Executive performs services of aunique nature for the Company that are irreplaceable, and that Executive’s performance of suchservices to a competing business will result in irreparable harm to the Company. Accordingly,during the Employment Term and for the two year period thereafter, Executive shall not, directly orindirectly, own, manage, operate, control, be employed by (whether as an employee, consultant,independent contractor or otherwise, and whether or not for compensation) or render services to anyperson, firm, corporation or other entity, in whatever form, engaged in any business of the sametype as any business in which the Company or any of its subsidiaries or affiliates is engaged onthe date of termination or in which they have proposed, on or prior to such date, to be engaged inon or after such date, in any locale of any country in which the Company or its subsidiariesconducts business. This Section 10(c) shall not prevent Executive from owning not more than onepercent of the total shares of all classes of stock outstanding of any publicly held entity engagedin such business, nor will it restrict Executive from rendering services to charitableorganizations, as such term is defined in Section 501(c) of the Code.     (d) Non-disparagement. Neither Executive nor the Company (for purposes hereof, theCompany shall mean the Company together with its executive officers and directors and not any otheremployees) shall make any public statements that disparage the other party, or in the case of theCompany, its respective subsidiaries, affiliates, employees, officers, directors, products orservices. Notwithstanding the foregoing, statements made in the course of sworn
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testimony in administrative, judicial or arbitral proceedings (including, without limitation,depositions in connection with such proceedings) shall not be subject to this Section 10(d).     (e) Equitable Relief and Other Remedies. Executive acknowledges and agrees that theCompany’s remedies at law for a breach or threatened breach of any of the provisions of thisSection 10 would be inadequate and, in recognition of this fact, Executive agrees that, in theevent of such a breach or threatened breach, in addition to any remedies at law, the Company,without posting any bond, shall be entitled to obtain equitable relief in the form of specificperformance, temporary restraining order, a temporary or permanent injunction or any otherequitable remedy which may then be available.     (f) Reformation. If it is determined by a court of competent jurisdiction in anystate or other jurisdiction that any restriction in this Section 10 is excessive in duration orscope or is unreasonable or unenforceable under the laws of that state or jurisdiction, it is theintention of the parties that such restriction may be modified or amended by the court to render itenforceable to the maximum extent permitted by the law of that state or jurisdiction.     (g) Survival of Provisions. The obligations contained in this Section 10 shallsurvive the termination or expiration of Executive’s employment with the Company and shall be fullyenforceable thereafter.11. Inventions and Other Intellectual Property.     (a) Assignment of Inventions and Works Limitation of Assignment in Certain Cases.Executive acknowledges that Executive will exercise Executive’s inventive and creative abilitiesfor the benefit of the Company. Executive therefore assigns and transfers to the CompanyExecutive’s entire right, title and interest in and to all Inventions. Executive agrees that allsuch Inventions are the sole property of the Company. For purposes of this Agreement,“Inventions” shall include but not be limited to all ideas, improvements, designs anddiscoveries whether or not patentable and whether or not reduced to practice, made or conceived byExecutive (whether made solely by Executive or jointly with others) which relate in any manner tothe business, work or research and development of the Company, its subsidiaries or affiliates, orresult from and are suggested by any task assigned to Executive or any work performed by Executivefor or on behalf of the Company, its predecessors in interest or any related entity. The foregoingdefinition does not however, include an Invention for which no equipment, supplies, facility, orconfidential information of the Company was used and that was developed entirely on Executive’s owntime and that (i) does not directly relate to the Company’s business, research or development, or(ii) does not result from any work performed by Executive for the Company.     Executive agrees that all Works are the sole property of the Company, and shall, to the extentpossible, be considered works made for hire for Company within the meaning of Title 17 of theUnited States Code; provided, however, that if Executive is domiciled in California or if any ofthe Work is created in California, then such Work shall not be a work made for hire. If for anyreason any Work is not deemed to be a work made for hire, then Executive assigns and transfers tothe Company Executive’s entire right, title and interest in and to such Work, and Executive furtherwaives all of Executive’s rights under the United States Copyright Act and under any othercountry’s copyright law, including any rights provided in 17 U.S.C. §§ 106 and
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106A, for any and all purposes for which such Work and any derivative works thereof may beused, and any rights of attribution and integrity or any other “moral rights of authors” withrespect to such Work and any derivative works thereof and any uses thereof to the full extent nowor hereafter permitted by the laws of the United States of America or the laws of any othercountry. For purposes of this Agreement, “Works” shall include but not be limited to allcopyrightable works created by Executive (whether solely by Executive or jointly with others)during the Employment Period, or any time thereafter, which relate in any manner to the business,work or research and development of the Company, its subsidiaries or affiliates, or result from andare suggested by any task assigned to Executive or any work performed by Executive for or on behalfof the Company, its subsidiaries or affiliates.     If any such assignment is invalid or ineffective for any reason, then Executive hereby grantsCompany a perpetual, royalty-free, non-exclusive, worldwide license to fully exploit anyintellectual property or propriety rights in such Inventions and Works and any patents andcopyrights (or other intellectual property or propriety registrations or applications) resultingtherefrom.     (b) Disclosure of Inventions, Works and Patents. Executive agrees that in connectionwith any Invention or Work:     (i) Executive will disclose such Invention promptly in writing to the Secretary orBoard of the Company, in order to permit the Company to claim rights to which it may beentitled under this Agreement.     (ii) Executive will, at the Company’s request, promptly execute a written assignment oftitle to the Company for any Invention required to be assigned by this Article(“Assignable Invention”), and Executive will preserve any such Assignable Inventionas confidential information of the Company.     (iii) Executive will give to the relevant contact person at the Company a copy of suchWork. Executive will, at the Company’s request, promptly execute a written assignment oftitle to the Company for any such Work.     (iv) Upon request, Executive agrees to assist the Company or its nominee (at itsexpense) during and at any time subsequent to the Employment Period in every reasonable wayto obtain for its own benefit patents and copyrights for such Assignable Inventions and suchWorks in any and all countries, which Inventions and Works shall be and remain the sole andexclusive property of the Company or its nominee whether or not patented or copyrighted.Executive agrees to execute such papers and perform such lawful acts as the Company deems tobe necessary to allow it to exercise all right, title and interest in such patents andcopyrights.     (c) Execution of Documents. In connection with this Section 11, Executive furtheragrees to execute, acknowledge and deliver to the Company or its nominee upon request (at itsexpense) all such documents, including applications for patents and copyrights and assignments ofinventions, patents and copyrights to be issued therefore, as the Company may determine necessaryor desirable to apply for and obtain letters, patents and copyrights on such Assignable
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Inventions and such Works in any and all countries and/or to protect the interest of theCompany or its nominee in such inventions, such Works, patents and copyrights, and to vest titlethereto in the Company, or its nominee.     (d) Maintenance of Records. Executive agrees to keep and maintain adequate andcurrent written records of all Inventions and Works made or created by Executive (in the form ofnotes, sketches, drawings and other typical forms), which records shall be available to and remainthe sole property of the Company at all times.     (e) Prior Inventions. It is understood that all inventions, if any, patented orunpatented, which Executive made prior to Executive’s first day as an employee of or consultant orcontractor to the Company, its predecessors in interest or any related entity (and which have notbeen otherwise assigned or transferred to the Company) are excluded from the scope of thisAgreement.     To preclude any possible uncertainty, Executive has set forth on Exhibit B attachedhereto a complete list of all Executive’s prior inventions, if any, including numbers of allpatents and patent applications, and a brief description of all unpatented inventions that are notthe property of a previous employer or other person and which have not been otherwise assigned ortransferred to the Company. Executive represents and covenants that the list is complete and that,if no items are on the list, Executive has no such prior inventions. Executive agrees to notifythe Company in writing before Executive makes any disclosure or performs any work on behalf of theCompany which appears to threaten or conflict with proprietary rights Executive claims in anyinvention or idea. In the event of Executive’s failure to give such notice, Executive agrees thatExecutive will make no claim against the Company with respect to any such inventions or ideas.     (f) Trade Secrets and Intellectual Property of Others. Executive represents thatExecutive’s performance of all the terms of this Agreement does not and will not breach anynoncompetition or non-solicitation agreement, or any agreement to keep proprietary information,knowledge or data acquired by Executive in confidence or in trust prior to the Employment Period,and Executive will not disclose to the Company or induce the Company to use any confidential orproprietary information or material belonging to any previous employer or other person. Executiveagrees not to enter into any agreement either written or oral in conflict herewith.     (g) Non Infringement. Executive represents that the work product that Executiveprovides to the Company, including the Inventions and the Works, and Company’s use thereof in theirindented manner: (a) do not and will not infringe or violate the copyright or trade secret rightsof any other party; and (b) to the best of Executive’s knowledge, do not and will not infringe orviolate the actual or prospective patent or trademark rights of any other party. If at any timeduring or after the Employment Period, Executive has reason to believe that the foregoingrepresentation is no longer true, then Executive shall promptly inform Company of such belief andthe reasons therefor.     (h) Other Obligations. Executive acknowledges that the Company from time to time mayhave agreements with other persons or with the U.S. Government or governments of other
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countries, or agencies thereof, which impose obligations or restrictions on the Companyregarding inventions made during the course of work thereunder or regarding the confidential natureof such work. Executive agrees to be bound by all such obligations and restrictions and to takeall action necessary to discharge the obligations of the Company thereunder.12. Assignments.     (a) This Agreement is personal to each of the parties hereto. Except as provided in Section12(b) below, no party may assign or delegate any rights or obligations hereunder without firstobtaining the written consent of the other party hereto.     (b) The Company will require that any successor (whether direct or indirect, by purchase,merger, consolidation or otherwise) to all or substantially all of the assets or business of theCompany to expressly assume and agree to perform this Agreement in the same manner and to the sameextent that the Company would be required to perform it if no such succession had taken place.13. Notice.     For the purpose of this Agreement, notices and all other communications provided for in thisAgreement shall be in writing and shall be deemed to have been duly given (i) on the date ofdelivery if delivered by hand, (ii) on the date of transmission, if delivered by confirmedfacsimile, (iii) on the first business day following the date of deposit if delivered by guaranteedovernight delivery service, or (iv) on the fourth business day following the date delivered ormailed by United States registered or certified mail, return receipt requested, postage prepaid,addressed as follows:If to Executive:At the address (or to the facsimile number) shown on the records of the Company.If to the Company:Virtual Radiologic Corporation