AT THE TIME OF TERMINATION;
(II) YOU HAVE FULFILLED ALL OF YOUR OBLIGATIONS UNDER PARAGRAPH 3(A) ABOVE; AND
(III) FOLLOWING YOUR TERMINATION FROM EMPLOYMENT WITH THE COMPANY, YOU HAVE
TIMELY SIGNED A SEVERANCE AGREEMENT AND RELEASE OF CLAIMS DRAFTED BY THE
COMPANY, THE COMPANY SHALL, IN ADDITION TO ANY POTENTIAL SEVERANCE PAY FOR WHICH
YOU MAY BE ELIGIBLE UNDER PARAGRAPH 7(B) HEREOF, PAY YOU AN EXTRA SEVERANCE
PAYMENT ACCORDING TO THE FOLLOWING SCHEDULE: $150,000 IF YOU ARE TERMINATED
PRIOR TO OCTOBER 1, 2004; $100,000 IF YOU ARE TERMINATED BETWEEN OCTOBER 2, 2004
AND OCTOBER 1, 2005; OR $50,000 IF YOU ARE TERMINATED BETWEEN OCTOBER 2, 2005
AND OCTOBER 1, 2006.
(D)
ANY SEVERANCE PAY DESCRIBED IN THIS PARAGRAPH 7 SHALL BE SUBJECT
TO ALL APPLICABLE
TAXES AND WITHHOLDINGS, AND SHALL NEVER EXCEED $385,000 GROSS PLUS THE
APPLICABLE AMOUNT CONTEMPLATED BY PARAGRAPH 7(C) HEREOF.
ANY SEVERANCE PAY THAT
YOU MAY RECEIVE SHALL BE PAID IN EQUAL MONTHLY INSTALLMENTS OVER THE TWENTY-FOUR
MONTH PERIOD FOLLOWING THE TERMINATION OF YOUR EMPLOYMENT.
THE COMPANY SHALL
HAVE THE RIGHT TO SET OFF AGAINST ANY SEVERANCE PAY THAT YOU MAY BECOME ELIGIBLE
TO RECEIVE UNDER THIS PARAGRAPH 7 ANY AMOUNTS YOU BORROWED FROM OR MAY OTHERWISE
OWE TO THE COMPANY.
8.
DEFINITIONS.
AS USED IN THIS LETTER AGREEMENT:
(A)
"CAUSE" MEANS (I) A GOOD FAITH FINDING BY THE COMPANY THAT (X) YOU
HAVE FAILED TO PERFORM YOUR REASONABLY ASSIGNED DUTIES FOR THE COMPANY AND HAVE
FAILED TO REMEDY SUCH FAILURE WITHIN TEN (10) DAYS FOLLOWING WRITTEN NOTICE FROM
THE COMPANY TO YOU NOTIFYING YOU OF SUCH FAILURE; AND/OR (Y) YOU HAVE ENGAGED IN
DISHONESTY, GROSS NEGLIGENCE OR MISCONDUCT; OR (II) YOUR CONVICTION OF, OR THE
ENTRY OF A PLEADING OF GUILTY OR NOLO CONTENDERE BY YOU TO, ANY CRIME INVOLVING
MORAL TURPITUDE OR ANY FELONY.
(B)
"GOOD REASON" MEANS, FOLLOWING A "CHANGE OF CONTROL" (AS DEFINED
BELOW), (I) A MATERIAL DIMINUTION IN YOUR POSITION, AUTHORITY OR
RESPONSIBILITIES; (II) A MATERIAL REDUCTION IN YOUR SALARY OR BENEFITS; OR (III)
THE RELOCATION OF YOUR PLACE OF WORK SUCH THAT THE DISTANCE FROM YOUR RESIDENCE
TO YOUR PLACE OF WORK IS INCREASED BY MORE THAN ONE HUNDRED (100) MILES.
(C)
"CHANGE OF CONTROL" MEANS (I) THE ACQUISITION BY A PERSON, PARTY
OR GROUP OF 50% OR MORE OF THE OUTSTANDING CAPITAL STOCK OF THE COMPANY,
EXCLUDING ACQUISITIONS FROM THE COMPANY, (II) THE ACQUISITION OF THE COMPANY BY
MEANS OF A REORGANIZATION, MERGER, CONSOLIDATION, RECAPITALIZATION OR ASSET
SALE, UNLESS THE OWNERS OF THE CAPITAL STOCK OF THE COMPANY BEFORE SUCH
TRANSACTION CONTINUE TO OWN MORE THAN 50% OF THE CAPITAL STOCK OF THE ACQUIRING
OR SUCCEEDING ENTITY IN SUBSTANTIALLY THE SAME PROPORTIONS, OR (III) A CHANGE,
WITHOUT BOARD APPROVAL, OF A MAJORITY OF THE BOARD (WHETHER OCCURRING ON ONE
DATE OR OVER TIME).
9.
CONFIDENTIALITY, INVENTIONS AND NON-COMPETITION.
AS A CONDITION
OF YOUR CONTINUED EMPLOYMENT, YOU WILL BE REQUIRED TO EXECUTE, TOGETHER WITH
THIS LETTER AGREEMENT, THE NONCOMPETITION, PROPRIETARY INFORMATION AND
INVENTIONS AGREEMENT ENCLOSED HEREWITH (THE "NONCOMPETITION AGREEMENT").
10.