FOR PURPOSES OF THIS AGREEMENT:
(I)
"AFFILIATE" MEANS, WITH RESPECT TO ANY STOCKHOLDER OF THE
COMPANY, (A) ANY PERSON DIRECTLY OR INDIRECTLY CONTROLLING, CONTROLLED BY OR
UNDER COMMON CONTROL WITH SUCH STOCKHOLDER, OR (B) ANY OFFICER, DIRECTOR, OR
GENERAL PARTNER OF SUCH STOCKHOLDER.
(II)
"CAPPED AMOUNT" MEANS THE LARGEST AMOUNT PAYABLE TO EMPLOYEE
WITHOUT CAUSING THE APPLICATION OF A PARACHUTE EXCISE TAX.
(III)
"CODE" MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND
ALL RULES AND REGULATIONS PROMULGATED THEREUNDER.
(IV)
"PARACHUTE EXCISE TAX" MEANS THE FEDERAL EXCISE TAX LEVIED ON
CERTAIN "EXCESS PARACHUTE PAYMENTS" UNDER SECTION 4999 OF THE CODE OR ANY
SUCCESSOR PROVISION.
(V)
"PERSON" MEANS AN INDIVIDUAL, PARTNERSHIP, CORPORATION, JOINT
VENTURE, ASSOCIATION, TRUST, UNINCORPORATED ASSOCIATION, OTHER ENTITY,
ASSOCIATION OR GROUP OF ASSOCIATED PERSONS ACTING IN CONCERT (EXCEPT THAT SUCH
TERM SHALL NOT INCLUDE EMPLOYEES OF THE COMPANY, DAN W. MATTHIAS AND/OR REBECCA
C. MATTHIAS).
(VI)
"TOTAL AFTER-TAX PAYMENTS" MEANS THE TOTAL VALUE OF ALL
"PARACHUTE PAYMENTS" (AS THAT TERM IS DEFINED IN SECTION 280G(B)(2) OF THE CODE)
MADE TO OR FOR THE BENEFIT OF EMPLOYEE (WHETHER MADE UNDER THIS AGREEMENT OR
OTHERWISE), AFTER REDUCTION FOR ALL APPLICABLE TAXES (INCLUDING, WITHOUT
LIMITATION, THE PARACHUTE EXCISE TAX).
(VII)
"TOTAL PAYMENTS" MEANS THE TOTAL OF ALL "PARACHUTE PAYMENTS" (AS
THAT TERM IS DEFINED IN SECTION 280G(B)(2) OF THE CODE, BUT DETERMINED WITHOUT
REGARD TO SECTION 280G(B)(2)(A)(II)) MADE TO OR FOR THE BENEFIT OF EMPLOYEE,
WHETHER MADE UNDER THIS AGREEMENT OR OTHERWISE.
5.
EXTENT OF SERVICES.
DURING HIS EMPLOYMENT BY THE COMPANY,
EMPLOYEE WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY OTHER BUSINESS
ACTIVITIES OR PURSUITS WHATSOEVER, EXCEPT: (I) ACTIVITIES IN CONNECTION WITH ANY
CHARITABLE OR CIVIC ACTIVITIES, (II) PERSONAL INVESTMENTS, (III) SERVICE AS AN
EXECUTOR, TRUSTEE OR IN OTHER SIMILAR FIDUCIARY CAPACITY, OR (IV) OTHER
ACTIVITIES SPECIFICALLY AUTHORIZED BY THE COMPENSATION COMMITTEE OF THE BOARD;
PROVIDED, HOWEVER, THAT ANY OF THE FOREGOING EXCEPTIONS DO NOT: (X) INTERFERE
WITH EMPLOYEE'S PERFORMANCE OF RESPONSIBILITIES AND OBLIGATIONS PURSUANT TO THIS
AGREEMENT, OR (Y) CREATE A CONFLICT OF INTEREST WITH EMPLOYEE'S RESPONSIBILITIES
TO THE COMPANY.
FOR AVOIDANCE OF DOUBT, INCIDENTAL USE OF COMPANY FACILITIES
(SUCH AS TELEPHONE OR EMAIL SYSTEMS) IN FURTHERANCE OF ACTIVITIES AUTHORIZED
UNDER THIS PARAGRAPH WILL NOT CONSTITUTE AN INTERFERENCE WITH EMPLOYEE'S
OBLIGATIONS TO THE COMPANY.
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6.
COMPENSATION AND BENEFITS.
A.
THE COMPANY SHALL PAY TO THE EMPLOYEE AND THE EMPLOYEE AGREES TO
ACCEPT FROM THE COMPANY, IN FULL PAYMENT FOR THE EMPLOYEE'S SERVICES HEREUNDER,
THE ANNUAL BASE SALARY OF $525,000 OR AS OTHERWISE AGREED TO BY THE PARTIES (THE
"BASE SALARY").
B.
FOR EACH FISCAL YEAR ENDING DURING EMPLOYEE'S EMPLOYMENT
HEREUNDER, EMPLOYEE WILL BE ELIGIBLE TO EARN AN ANNUAL BONUS (THE "ANNUAL
BONUS").
(1)
EMPLOYEE'S TARGET ANNUAL BONUS FOR THE FISCAL YEAR ENDING
SEPTEMBER 30, 2007 WILL BE 50% OF HIS BASE SALARY FOR THAT YEAR.
(2)
EMPLOYEE'S TARGET ANNUAL BONUS FOR ANY FISCAL YEAR BEGINNING AFTER
SEPTEMBER 30, 2007 WILL BE 75% OF HIS BASE SALARY FOR THAT YEAR.
(3)
THE ACTUAL AMOUNT OF ANY ANNUAL BONUS