OF EACH FISCAL YEAR BASED ON THE EXECUTIVE AND
THE COMPANY SUCCESSFULLY ACHIEVING TARGETED ANNUAL PERFORMANCE OBJECTIVES (THE
"ANNUAL BONUS" AND, TOGETHER WITH THE ANNUAL SALARY, THE "ANNUAL
COMPENSATION").
TO RECEIVE SUCH ANNUAL BONUS, THE EXECUTIVE MUST STILL BE
EMPLOYED WITH THE COMPANY AS OF DECEMBER 31 OF THE YEAR FOR WHICH THE ANNUAL
BONUS IS PAYABLE AND NOT BE IN BREACH OF THIS AGREEMENT.
(C)
EQUITY COMPENSATION.
AS OF THE EFFECTIVE DATE, THE EXECUTIVE
SHALL BE GRANTED STOCK OPTIONS PURSUANT TO THE TERMS AND CONDITIONS OF A STOCK
OPTION AWARD AGREEMENT IN THE FORM APPROVED BY THE COMPANY'S BOARD AS OF THE
DATE HEREOF AND SUBJECT TO AMENDMENT AS SET FORTH THEREIN.
THESE OPTIONS WILL
BE ISSUED FROM A VALID STOCK OPTION PLAN APPROVED BY THE STOCKHOLDERS AND
REGISTERED UNDER AN S-8 WITHIN EIGHTEEN MONTHS FROM THE DATE HEREOF (THE "GRANT
DATE").
THE STOCK OPTION SHALL BE FOR THE PURCHASE OF 2,290,000 SHARES OF THE
COMPANY'S COMMON STOCK, NO PAR VALUE (THE "COMMON STOCK") AT A PRICE PER SHARE
EQUAL TO THE CLOSING PRICE ON THE OTC BB ON THE GRANT DATE.
OF THE STOCK
OPTIONS TO PURCHASE 2,290,000 SHARES OF THE COMPANY'S COMMON STOCK, STOCK
OPTIONS TO PURCHASE 572,500 SHARES OF COMMON STOCK SHALL VEST IMMEDIATELY UPON
EXECUTION OF THIS AGREEMENT, AND STOCK OPTIONS TO PURCHASE 143,124 SHARES OF
COMMON STOCK SHALL VEST AND BECOME EXERCISABLE EVERY 90 DAYS FOLLOWING THE
EFFECTIVE DATE FOR THE NEXT THREE YEARS FROM THE EFFECTIVE DATE AND AS FULLY
DEFINED IN THE STOCK OPTION AWARD AGREEMENT; PROVIDED THAT EXECUTIVE IS EMPLOYED
BY THE COMPANY ON SUCH VESTING DATE.
(D)
OTHER BENEFITS.
THE FRINGE BENEFITS, PERQUISITES AND OTHER
BENEFITS OF EMPLOYMENT TO BE PROVIDED TO THE EXECUTIVE SHALL BE EQUIVALENT TO
SUCH BENEFITS AND PERQUISITES AS ARE PROVIDED TO OTHER EXECUTIVES OF THE COMPANY
HAVING SIMILAR RANK AND SENIORITY TO THE EXECUTIVE, AS THOSE BENEFITS ARE
AMENDED FROM TIME TO TIME.
IN ADDITION, THE EXECUTIVE SHALL BE ENTITLED TO
PARTICIPATE IN ANY OTHER EXECUTIVE COMPENSATION OR EMPLOYEE BONUS PLANS
IMPLEMENTED BY THE COMPANY ON SUCH TERMS AND CONDITIONS AS SHALL HAVE BEEN
DETERMINED BY THE BOARD OR THE COMPENSATION COMMITTEE THEREOF.
PARTICIPATION IN
ANY SUCH BENEFIT PROGRAMS SHALL BE SUBJECT TO ANY APPLICABLE PROBATIONARY OR
SIMILAR PERIODS.
(E)
EXPENSES.
THE EXECUTIVE WILL BE REIMBURSED FOR ALL REASONABLE
OUT-OF-POCKET EXPENSES ACTUALLY INCURRED BY HIM IN THE FURTHERANCE OF HIS DUTIES
UNDER THIS AGREEMENT AND CONSISTENT WITH THE COMPANY'S POLICIES CONCERNING THE
REIMBURSEMENT OF SUCH EXPENSES.
SUCH EXPENSES SHALL BE REIMBURSED UPON
SUBMISSION TO THE COMPANY OF INVOICES CONTAINING ORIGINAL RECEIPTS FOR ALL SUCH
EXPENDITURES AND UPON REVIEW BY THE COMPANY OF THE REASONABLE NATURE OF SUCH
EXPENDITURES.
4.
TERMINATION.
All termination provisions require a 60 day written notice.
(A)
DISABILITY.
IF, AS A RESULT OF THE INCAPACITY OF THE
EXECUTIVE DUE TO PHYSICAL OR MENTAL ILLNESS, THE EXECUTIVE IS UNABLE TO PERFORM
THE DUTIES OF HIS OR HER POSITION OF EMPLOYMENT OR ANY SUBSTANTIALLY SIMILAR
POSITION
2
OF EMPLOYMENT BY REASON OF ANY