TRAVEL
AND OTHER OUT OF POCKET COSTS INCURRED BY THE EXECUTIVE IN PROVIDING THE
COOPERATION REQUESTED BY THE COMPANY UNDER SECTION 3(D) ABOVE.
4.
COMPENSATION.
(A)
CASH COMPENSATION.
SOLELY DURING THE
TERM OF HIS SERVICE, AND SUBJECT TO THE EXECUTIVE'S COMPLIANCE WITH HIS
OBLIGATIONS UNDER THIS AGREEMENT (INCLUDING HIS EXECUTION AND DELIVERY OF THE
RELEASE, WITHOUT RESCISSION THEREOF), THE COMPANY SHALL PAY THE EXECUTIVE
$210,000 PER YEAR, PAYABLE IN ARREARS IN MONTHLY INSTALLMENTS OF $17,500 ON OR
BEFORE THE LAST DAY OF EACH MONTH, FOR SERVING AS NON-EXECUTIVE CHAIRMAN OF THE
BOARD.
THE EXECUTIVE WILL NOT BE PAID ANY ADDITIONAL CASH COMPENSATION THAT MAY
BE PAID TO OTHER NON-EMPLOYEE DIRECTORS.
(B)
FUTURE OPTION GRANTS.
DURING THE TERM
OF HIS SERVICE AS A DIRECTOR, THE EXECUTIVE WILL BE ENTITLED TO GRANTS OF STOCK
OPTIONS MADE TO OTHER CONTINUING NON-EMPLOYEE DIRECTORS IN AMOUNTS AND ON THE
SAME TERMS AND CONDITIONS AS GRANTS TO SUCH OTHER NON-EMPLOYEE DIRECTORS.
(C)
EXISTING STOCK OPTIONS.
THE COMPANY
AND THE EXECUTIVE ACKNOWLEDGE AND AGREE THAT, AS OF THE RESIGNATION DATE, THE
EXECUTIVE HOLDS OPTIONS TO PURCHASE AN AGGREGATE OF 100,000 SHARES OF COMMON
STOCK OF THE COMPANY (THE "EXISTING OPTIONS").
THE EXISTING OPTIONS ARE HEREBY
AMENDED TO PROVIDE THAT:
(1)
NOTWITHSTANDING THE EXECUTIVE'S TERMINATION
OF EMPLOYMENT, THE CONTINUED VESTING AND EXERCISABILITY OF SUCH OPTIONS SHALL BE
DETERMINED BY REFERENCE TO THE EXECUTIVE'S CONTINUED SERVICE AS A DIRECTOR OF
THE COMPANY; AND
(2)
SUCH OPTIONS SHALL VEST IN FULL AND REMAIN
EXERCISABLE FOR THE BALANCE OF THEIR STATED TERM, WITHOUT EARLIER EXPIRATION, IN
THE EVENT THAT (I) THE COMPANY FAILS TO NOMINATE THE EXECUTIVE FOR ELECTION AS A
DIRECTOR, OR (II) THE COMPANY TERMINATES THE EXECUTIVE AS CHAIRMAN OF THE BOARD
WITHOUT CAUSE.
THE EXECUTIVE ACKNOWLEDGES THAT TO THE EXTENT THAT THE EXISTING OPTIONS ARE NOT
EXERCISED WITHIN NINETY DAYS AFTER THE RESIGNATION DATE, SUCH OPTIONS WILL NO
LONGER QUALIFY AS "INCENTIVE STOCK OPTIONS" UNDER SECTION 422 OF THE INTERNAL
REVENUE CODE.
(D)
EXPENSES.
THE COMPANY SHALL REIMBURSE
THE EXECUTIVE FOR ALL REASONABLE AND NECESSARY OUT-OF-POCKET BUSINESS, TRAVEL
AND ENTERTAINMENT EXPENSES INCURRED BY THE EXECUTIVE IN THE PERFORMANCE OF HIS
DUTIES AS CHAIRMAN OF THE BOARD, SUBJECT TO ADVANCE THE COMPANY'S NORMAL
POLICIES AND PROCEDURES FOR EXPENSE VERIFICATION AND DOCUMENTATION APPLICABLE TO
NON-EMPLOYEE DIRECTORS.
(E)
LAPTOP AND E-MAIL.
AS LONG AS THE
EXECUTIVE IS SERVING AS CHAIRMAN OF THE BOARD, THE EXECUTIVE WILL BE PROVIDED
WITH A LAPTOP COMPUTER AND HIS CURRENT E-MAIL ACCOUNT FOR PURPOSES OF PERFORMING
SERVICES PURSUANT TO THIS AGREEMENT.
8
(F)
SEVERANCE.
IF THE EXECUTIVE'S
SERVICE AS CHAIRMAN OF THE BOARD IS TERMINATED DUE TO (I) THE COMPANY'S FAILURE
TO NOMINATE THE CHAIRMAN FOR RE-ELECTION TO THE BOARD; (II) REMOVAL OF CHAIRMAN
TITLE BY BOARD WITHOUT CAUSE; OR (III) THE PARTIES FAILURE TO AGREE TO RENEW THE
TERM UNDER SECTION 2(A) AS OF THE END OF THE INITIAL TERM OR ANY RENEWAL TERM,
THE EXECUTIVE (OR HIS ESTATE IN THE EVENT OF HIS DEATH AFTER SUCH TERMINATION)
WILL BE ENTITLED TO A SEVERANCE