WHICH QUALIFIES FULLY
UNDER THE PROVISIONS OF CALIFORNIA LABOR CODE SECTION 2870 (ATTACHED AS
EXHIBIT B).
EXECUTIVE WILL ADVISE THE COMPANY PROMPTLY IN WRITING OF ANY
INVENTIONS THAT EXECUTIVE BELIEVES MEET THE CRITERIA IN CALIFORNIA LABOR CODE
SECTION 2870.
5.
OFFICE.
THE COMPANY SHALL PROVIDE
EXECUTIVE WITH AN OFFICE AT THE LOCATION OF THE COMPANY'S PRIMARY BUSINESS
OPERATIONS THAT IS CONSISTENT WITH HIS POSITIONS AND TITLES.
6.
COMPENSATION AND FRINGE BENEFITS.
6.1
BASE SALARY.
FOR ALL SERVICES RENDERED BY
EXECUTIVE PURSUANT TO THIS AGREEMENT, THE COMPANY SHALL PAY EXECUTIVE A BASE
SALARY (THE "BASE SALARY") AT THE ANNUAL RATE OF NOT LESS THAN FOUR HUNDRED
THOUSAND DOLLARS ($400,000).
THE BASE SALARY SHALL BE PAID IN PERIODIC
INSTALLMENTS IN ACCORDANCE WITH THE COMPANY'S REGULAR PAYROLL PRACTICES.
EXECUTIVE'S ANNUAL SALARY SHALL BE ADJUSTED ANNUALLY ON JANUARY 1 OF EACH YEAR
TO COMPENSATE FOR CHANGES IN THE COST OF LIVING.
THE AMOUNT OF EACH ANNUAL COST
OF LIVING INCREASE SHALL BE TWICE THE RATE DETERMINED FOR SUCH ANNUAL PERIOD BY
THE "CONSUMER PRICE INDEX FOR URBAN WAGE EARNERS AND CLERICAL WORKERS (ALL
ITEMS) PUBLISHED BY THE BUREAU OF LABOR STATISTICS, U.S. DEPARTMENT OF LABOR
(1967 EQUALS 100)."
6.2
BONUSES.
(A)
EXECUTIVE SHALL BE ENTITLED TO A GUARANTEED
BONUS OF ONE HUNDRED THOUSAND DOLLARS ($100,000) ON DECEMBER 31 OF EACH YEAR
DURING THE TERM OF THIS AGREEMENT, PROVIDED THAT HE REMAINS CONTINUOUSLY
EMPLOYED BY THE COMPANY THROUGH EACH APPLICABLE DATE (THE "GUARANTEED BONUS"),
EXCEPTING FOR THE FIRST YEAR OF EMPLOYMENT, DURING WHICH EXECUTIVE MAY TAKE DOWN
ALL OR PART OF THE GUARANTEED BONUS AT ANY TIME AFTER JANUARY 1, 2004.
THE
GUARANTEED BONUS FOR THE SECOND AND THIRD YEARS OF EXECUTIVE'S EMPLOYMENT WILL
BE PAID NO LATER THAN JANUARY 31 OF THE FOLLOWING YEAR FOR WHICH SUCH GUARANTEED
BONUS IS EARNED IN ACCORDANCE WITH THE COMPANY'S NORMAL PAYROLL PRACTICES AND
POLICIES.
(B)
EXECUTIVE SHALL BE ELIGIBLE TO RECEIVE AN
ANNUAL PERFORMANCE-BASED BONUS OF TWO HUNDRED AND FIFTY THOUSAND DOLLARS
($250,000) BASED UPON
4
ACHIEVEMENT OF CERTAIN CRITERIA TO BE SPECIFIED BY THE COMPENSATION COMMITTEE OF
THE BOARD ("COMPENSATION COMMITTEE"), INCLUDING (WITHOUT LIMITATION) REVENUE AND
PROFITABILITY TARGETS AND/OR OTHER ORGANIZATIONAL AND STRATEGIC MILESTONES (THE
"PERFORMANCE BONUS"; AND TOGETHER WITH THE GUARANTEED BONUS, THE "BONUSES").
THE PERFORMANCE BONUS SHALL BE BASED UPON ACHIEVING PERFORMANCE OBJECTIVES
DURING EACH CALENDAR YEAR AND SHALL BE PAYABLE NO LATER THAN MARCH 31 OF THE
FOLLOWING YEAR IN ACCORDANCE WITH THE COMPANY'S NORMAL PAYROLL PRACTICES AND
POLICIES.
6.3
STOCK OPTIONS.
(A)
EXECUTIVE SHALL BE PERMITTED TO PARTICIPATE
IN ANY STOCK OPTION AND SIMILAR PLANS AS ADOPTED BY THE COMPANY FROM TIME TO
TIME FOR THE GRANT OF STOCK OPTIONS AND OTHER EQUITY INCENTIVES TO THE COMPANY'S
EMPLOYEES.
ON THE EFFECTIVE DATE AND ON EACH ANNIVERSARY THEREAFTER DURING THE
TERM OF THIS AGREEMENT (SUBJECT TO EXECUTIVE'S CONTINUOUS EMPLOYMENT WITH THE
COMPANY THROUGH EACH SUCH ANNIVERSARY), THE COMPANY SHALL GRANT EXECUTIVE A
STOCK OPTION, WHICH WILL BE, TO THE EXTENT POSSIBLE UNDER THE $100,000 RULE OF
SECTION 422(D) OF THE INTERNAL REVENUE