Document:

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EXHIBIT 4.1

iLive, Inc.
Convertible Note

$1,500,000                                                         Irvine, Ca.
                                                                   March 6, 2002

                         EXTENSION OF THE MATURITY DATE

Street Capital Inc. hereby grants iLive a thirty (30) day extension on the
$1,500,000 convertible note issued October 1, 2000. The original note was due on
or before 5:00 PM, Pacific Standard Time, on March 7, 2002. The extension will
extend the payment or conversion rights to April 7, 2002.

This extension is executed by Street Capital Inc. in accordance with the terms
and conditions set forth in the original note.

IN WITNESS WHEREOF, the Company has signed and sealed this Notes and delivered
it in Irvine, California as of March 6, 2002.

iLive, Inc.

By: /s/ Albert Aimers, CEO
   ---------------------------
Albert Aimers, CEO

Street Capital

By: /s/ Scott Henricks, President
   ------------------------------
Scott Henricks, President

<PAGE>

THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE
TREANSFERRED INLESS (I) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR SHC APPLICABLE SECURITIES LAWS OR (II) IN THE OPINION OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY REGISTRATION UNDER THE SECURITIES
ACT OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQURED IN CONNECTION WITH
SUCH TRANSFER.

iLive, Inc.
Convertible Note/Line of Credit

$1,500,000                                                     Beverly Hills, CA
                                                               October 1, 2000

FOR VALUE RECEIVED, the undersigned, iLive, inc. (formerly Powerhouse
International Corporation) its assigns, and successors (the "Company") hereby
promises to pay to the order of Street Capital, Inc. or its assigns (the
"Purchaser") in lawful money of the United States of America, an in immediately
available funds, the principal sum borrowed against the One Million Five Hundred
Thousand Dollar ($1,500,000) line of credit. The principal sum and any unpaid
interest thereon shall be due and payable on or before 5:00 pm Pacific Standard
Time, on March 7, 2002 (unless such payment date is accelerated as provided in
Section 5 hereof, extended as provided in section 2 hereof, or unless this Note
is converted as set forth in paragraph 1 hereof) ("Maturity"). Payment of all
amounts due hereunder shall be made at the address of the Purchaser provided for
in Section 6 hereof. The Company further promises to pay interest at the rate of
twelve percent per annum (12%) on the outstanding principal balance borrowed
against the Note, such interest will be payable upon maturity.

         1.   CONVERSION. The Purchaser of this Note is entitled at its option,
              at any time, upon fifteen (15) day's notice, and in whole or in
              part, until maturity hereof (as extended by Purchaser) to convert
              the principal amount of this Note or any portion of the principal
              amount hereof into Shares of the Common Stock of the Company at a
              conversion price for each share of common stock equal to $0.25.
              Such conversion shall be effectuated by surrendering the Note to
              be converted to the Company, with the form of Conversion Notice
              attached hereto as Exhibit A, executed by the Purchaser of this
              Note evidencing such Purchaser's intention to convert this Note or
              a specified portion hereof (as above provided). The date on which
              such Conversion Notice is given shall be deemed to be the date on
              which the Purchaser has delivered this Note, with the Conversion
              Notice duly executed, the Company or, if earlier, the date set
              forth in such Conversion Notice if this Note and such Conversion
              Notice is received by the Company within five business days after
              the date set forth in the Conversion Notices.

The Company agrees to take whatever steps are necessary to authorize and
reserve, free of preemptive rights and other similar contractual rights of stock
holders, a sufficient number of its authorized but not issued shares of its
Common Stock to satisfy the rights of conversion of the holder of this Note.

Any certificates representing Conversion Shares transferred to Purchaser which
are not registered for resale without restriction under the Securities Act or
applicable state securities laws shall be endorsed with the following legend:

THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMMENDED (THE "SECURITIES ACT")
OR ANY APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNLESS (i)
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH
APPLICABLE SECURITIES LAWS, OR (ii) IN THE OPINION OF COUNSEL REASONABLE

<PAGE>

         ACCEPTABLE TO THE COMPANY REGISTRATION UNDER THE SECURITIES ACT OR SUCH
         APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
         SUCH TRANSFER.

         1.   EXTENSION OF MATURITY DATE. Purchaser shall have the right in its
              sole discretion, to extend the maturity of this Note for up to
              five one-year periods, each such extension exercisable only by the
              Purchaser by delivering to the Company written notice of such
              extension at any time prior to the maturity date then in effect.

         2.   PREPAYMENT. The Company may at its option at any time and from
              time to time, prepay all or any part of the principal balance of
              this Note, without penalty or premium, provided that concurrently
              with each such prepayment the Company shall pay accrued interest
              on the principal so prepaid to the date of such prepayment.

         3.   TRANSFERABILITY. This Note shall not be transferred, pledged,
              hypothecated, or assigned by the Holder without the express
              written consent of the Company.

         4.   DEFAULT. The occurrence of any one of the following events shall
              constitute an Event of Default.

                  a.       The non-payment, when due, of any principal or
                           interest pursuant to this Note.

                  b.       The Material breach of any representation or warranty
                           in this Note. In the event the Purchaser becomes
                           aware of a breach of this Section 7(b), the Purchaser
                           shall notify the Company in writing of such breach
                           and the Company shall have five business days after
                           notice to cure such breach;

                  c.       The breach of any covenant or undertaking, not
                           otherwise provided for in this Section 7;

                  d.       A default shall occur in the payment when due
                           (subject to any applicable grace period), whether by
                           acceleration or otherwise, of any indebtedness of the
                           Company or an event of default or similar event shall
                           occur with respect to such indebtedness, if the
                           effect of such default or event (subject to any
                           required notice and any applicable grace period)
                           would be to accelerate the maturity of any such
                           indebtedness or to permit the holder or holders of
                           such indebtedness to cause such indebtedness to
                           become due and payable prior to its express maturity.

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                  e.       The commencement by the Company of any voluntary
                           proceeding under any bankruptcy, reorganization,
                           arrangement, insolvency, readjustment of debt,
                           receivership, dissolution, or liquidation law or
                           statute of any jurisdiction, whether now or hereafter
                           in effect: or the adjudication of the Company as
                           insolvent or bankrupt by a decree of a court of
                           competent jurisdiction; or the petition or
                           application by the Company for, acquiescence in , or
                           consent by the Company to, the appointment of any
                           receiver or trustee for the Company or for all or a
                           substantial part of the property of the Company ; or
                           the assignment by the Company for the benefit of
                           creditors; or the written admission of the Company of
                           its inability to pay its debts as they mature; or

                  f.       The commencement against the Company of any
                           proceeding relating to the Company under any
                           bankruptcy, reorganization, arrangement , insolvency,
                           adjustment of debt, receivership, dissolution, or
                           liquidation law or statute of any jurisdiction,
                           whether now or hereafter in effect, provided,
                           however, that the commencement of such a proceeding
                           shall not constitute and Event of Default unless the
                           Company consents to the same or admits in writing the
                           material allegations of same, or admits in writing
                           the material allegations of same , or said proceeding
                           shall remain undismissed for 20 days; or the issuance
                           of any order, judgement or decree for the appointment
                           of a receiver or trustee for the Company or for all
                           or a substantial part of the property of the Company,
                           which order, judgement or decree remains undismissed
                           for 20 days, or a warrant of attachment , execution
                           or similar process shall be issued against any
                           substantial part of the property of the Company.

              Upon the occurrence of any Default or Event of Default the
              Purchaser, may be written notice to the Company declare all or any
              portion of the unpaid principal amount due to Purchaser, together
              with all accrued interest thereon immediately due and payable in
              which event it shall immediately be and become due and payable
              provided that upon the occurrence of an Event of Default as set
              forth in paragraph (a) or paragraph (f) hereof, all or any portion
              of the unpaid principal amount due to Purchaser, together with all
              accrued interest thereon, shall immediately become due and payable
              without any such notice.

         5.   NOTICES. Notices to be given hereunder shall be in writing and
              shall be deemed to have been sufficiently given if delivered
              personally or sent by overnight courier or messenger or by
              registered or certified mail (air mail if overseas), return
              receipt requested, or by telex, facsimile transmissions, telegram
              or similar means of communication. Notice shall be deemed to have
              been received on the date and time of personal delivery, telex,
              facsimile transmission, telegram or similar means of
              communication, or if sent by overnight courier or messenger, shall
              be deemed to have been received on the next deliver day after
              deposit with the courier or messenger or if sent by certified
              mail, return receipt requested, shall be deemed to have been
              received on the third business day after the date of mailing.
              Notices shall be given to the following addresses:
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         If to the Company:

         ILive Inc.
         242 N Canon Dr. 3rd Floor
         Beverly Hills, Ca 90210
         Facsimile No: 310-285-0966

         With a Copy to:

         Law Offices of M Richard Cutler
         610 Newport Center Drive, Suite 800
         Newport Beach, CA 92660
         Attn: M Richard Cutler, Esq.
         Facsimile No: 949-719-1988

         If to the Purchaser:

         242 N Canon Drive
         Beverly Hills, CA 90210
         Facsimile No: 310-285-0966

6.       REPRESENTATIONS AND WARRANTIES. The Company hereby makes the following
         representations and warranties to the Purchaser:

         a.       ORGANIZATION, GOOD STANDING AND POWER. The Company is a
                  corporation duly incorporated, validly existing and in good
                  standing under the laws of the State of Nevada and has the
                  requisite corporate power to own, lease and operate its
                  properties and assets and to conduct its business as it is now
                  being conducted.

         b.       AUTHORIZATION: ENFORCEMENT. The Company has the requisite
                  corporate power and authority to enter into and perform this
                  Note and to issue and sell this Note, and the Conversion
                  Shares in accordance with the terms hereof. The execution ,
                  delivery and performance of this Note, by the Company and the
                  consummation by it of the Transactions contemplated hereby and
                  thereby have been duly and validly authorized by all necessary
                  corporate action, and that the Company hereby warrants that it
                  will take whatever action is necessary to authorize and
                  reserve, free of preemptive rights and other similar
                  contractual rights of stockholders, a sufficient number of its
                  authorized but unissued shares of its Common Stock to satisfy
                  the rights of conversion of the holder of this Note. This Note
                  when executed and delivered, will constitute a valid and

<PAGE>

                  binding obligation of the Company enforceable against the
                  Company in accordance with its terms, except as such
                  enforceability may be limited by applicable bankruptcy,
                  insolvency, reorganization, moratorium, liquidation,
                  conservatorship, receivership or similar laws relating to, or
                  affecting generally the enforcement of creditor's rights and
                  remedies or by other equitable principles of general
                  application.

         c.       ISSUANCE OF NOTE. The Note issued hereunder and the Conversion
                  Shares to be issued upon conversion of the Note have been duly
                  authorized by all necessary corporate action and, when paid
                  for or issued in accordance with the terms hereof, will be
                  validly issued and outstanding, fully paid and non-assessable
                  and entitled to the rights and preferences set forth herein.

         d.       DISCLOSURE. Neither this Note nor any other document,
                  certificate or instrument furnished to the Purchaser by or on
                  behalf of the Company in connection with the transactions
                  contemplated by this Note contains any untrue statement of a
                  material fact or omits to state a material fact necessary in
                  order to make the statement made herein or therein, in the
                  light of the circumstances under which they were made herein
                  or therein not misleading.

         Purchaser hereby makes the following representations and warranties to
         the Company

                  1.       ACQUISITION FOR INVESTMENT. Purchaser is purchasing
                           the Note solely for its own account for thee purpose
                           of investment and not with a view to or for sale in
                           connection with a distribution. Purchaser does not
                           have a present intention to sell the Note or the
                           Conversion Shares nor a present arrangement (whether
                           or not legally binding) or intention to effect any
                           distribution of the Note or the Conversion Shares to
                           or through any person entity, provided, however, that
                           by making the representations herein , such Purchaser
                           does not agree to hold the Note or the Conversion
                           Shares for any minimum or other specific term and
                           reserves the right to dispose of the Note or the
                           Conversion Shares at any time in accordance with
                           Federal securities laws applicable to such
                           disposition. Such Purchaser acknowledges that it is
                           able to bear the financial risks associated with an
                           investment in the Note or Conversion Shares and that
                           it has been given full access to such records of the
                           Company and the subsidiaries and to the officers of
                           the Company and the subsidiaries as it has deemed
                           necessary and appropriate to conduct its due
                           diligence investigation.

                  2.       ACCREDITED PURCHASERS. Such Purchaser is an
                           "accredited investor" as defined in Regulation D
                           promulgated under the Securities Act.

<PAGE>

7.       CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Company comments to
         the jurisdiction of any court of the State of California and of any
         federal court located in California.

8.       GOVERNING LAW. THIS NOTE HAS BEEN DELIVERED IN BEVERLY HILLS CALIFORNIA
         AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
         WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE
         AND TO BE PERFORMED ENTIRELY THEREIN WITHOUT GIVING EFFECT TO THE RULES
         OR PRINCIPLES OF CONFLICTS OF LAW.

9.       ATTORNEYS FEES. In the event the Purchaser or any holder hereof shall
         refer this Note to an attorney for collection, the Company agrees to
         pay all the costs and expenses incurred in attempting or effecting
         collection hereunder or enforcement of the terms of this Note,
         including reasonable attorney's fees, whether or not such is
         instituted.

10.      CONFORMITY WITH LAW. It is the intention of the Company and of the
         Purchaser to conform strictly to applicable usury and similar laws.
         Accordingly, notwithstanding anything to the contrary in this Note, it
         is agreed that the aggregate of all charges which constitute interest
         under applicable usury and similar laws that are contracted for,
         chargeable or receivable under or in respect of this Note, shall under
         no circumstances exceed the maximum amount of interest permitted by
         such laws, and any excess, whether occasioned by acceleration or
         maturity of this Note or otherwise, shall be canceled automatically,
         and if therefore paid, shall be either refunded to the Company or
         credited on the principal amount of this Note.

IN WITNESS WHEREOF, the Company has signed and sealed this Notes and delivered
it in Beverly Hills, California as of October 1 , 2000.

ATTEST:                                    iLive, Inc.

/s/ Mary Moriarty                          By: /s/ Albert Aimers, Chairman
-----------------------                       ----------------------------------
Mary Moriarty, Director                         Albert Aimers, Chairman

                                           Street Capital

                                           By: /s/ Scott Henricks, President
                                               ---------------------------------
                                               Scott Henricks, President<PAGE>
Exhibit 10.1

                              EMPLOYMENT AGREEMENT

         AGREEMENT, dated as of the 1st day of March, 2002, among iLive, Inc. a
Nevada corporation, having a principal place of business at 2102 Business Center
Drive, Irvine, CA 92612 (the "Company"), and Scott Henricks, an individual
residing in Orange County, CA 92612 (the "Executive").

         WHEREAS, the Company desires to employ the Executive as its President
and Chief Financial Officer; and

         WHEREAS, Executive is willing to accept such employment by the Company,
all in accordance with provisions hereinafter set forth.

         NOW, THEREFORE, in consideration of the promises and mutual
representations, covenants, and agreements set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree effective upon the Acquisition as
follows:

         1. TERM: The term of this Agreement shall be for a period of one (1)
years commencing on the effective date of the Offering (the "Effective Date")
and terminating on the third anniversary date of the Effective Date, subject to
earlier termination as provided herein or unless extended by mutual consent of
the parties.

         2. EMPLOYMENT: (A) Subject to the terms and conditions and for the
compensation hereinafter set forth, the Company hereby agrees to employ
Executive for and during the term of this Agreement. Executive is hereby
employed by the Company as its President and Chief Financial Officer responsible
for the direction and leadership of the entire corporation, including Corporate
governance, SEC filings, the overall management and financial health of the
organization, Formulate and execute major policies, programs and objectives to
promote and ensure the company's continuing success and growth, execute the
strategic and tactical operational growth plans for the company, with particular
emphasis on continued expansion into new products and markets take a leadership
role in formulating and articulating the company's vision and mission, achieve
maximum efficiency and profit objectives through the efforts of a strong
management team, develop management personnel and implement effective succession
plans, establish and maintain strong relationships with industry peers and major
corporate players necessary for ensuring the company's continued growth, foster
an achievement-oriented culture based on continuous learning principles where
employees are motivated and rewarded for both individual and team contributions.
The President and Chief Financial Officer reports to the Board of Directors and
may appoint officers, agents or employees other than those appointed by the
Board of Directors. The Executive will be an ex-officio member of all standing
committees, including the Executive Committee, and shall have the general powers
and duties of management normally vested in the office of President of a public
company. The Executive may sign, execute and deliver in the name of the
Corporation powers of attorney, contracts, bonds and other obligations, and
shall perform such other duties as may be prescribed from time to time by the
Board of Directors or by the Bylaws of the Corporation.

                                       1
<PAGE>

         The Executive will have full management responsibility for the overall
growth and profitability of the Company, requiring his expertise in marketing,
finance and strategic management. The Executive is directly responsible for
recruiting, developing and motivating the senior management team. The
development of strategic plans, implementation of operational plans, building
and growing of organizational infrastructures and instilling professional
management disciplines that will facilitate the Company achieving stated
objectives will be a primary responsibility. The Executive will also be as a
facilitator for and key participant in strategic financing initiatives,
supporting as may be required the Chairman and other Executive team members in
negotiations with Investment Banks, industry analysts, major financial
institutions and brokerage houses and investment funds.

         3. COMPENSATION:

         (A) SALARY: During the term of this Agreement, the Company agrees to
pay Executive, and Executive agrees to accept, an annual salary of not less than
$60,000 per year, payable in accordance with the Company's policies, for
services rendered by Executive hereunder.

         (B) PERFORMANCE BONUS: As additional compensation, the Company may pay
Executive a periodic bonus. The Board of Directors will fix the bonus payable to
the Executive at the end of each year.

         (C) INCREASES: The annual salary is subject to periodic increases at
the discretion of the Board of Directors with such increases to take effect no
later than on each anniversary date of this Agreement.

         (D) SIGNING BONUS: There is no signing bonus.

         (E) STOCK OPTIONS: The Company will grant to Executive up to stock
options to purchase shares of common stock of the Company, over the term of this
employment agreement the terms of which will be presented to the Company's Board
of Directors at a later date.

         4. EXPENSES: The Company shall reimburse Executive for all reasonable
and actual business expenses incurred by him in connection with his service to
the Company, upon submission by him of appropriate vouchers and expense account
reports.

         5. BENEFITS:

         (A) INSURANCE: In addition to the salary and bonus to be paid to
Executive hereunder, Executive and his dependents shall be entitled to
participate in such other benefits as are extended to active executive employees
of the Company and their dependents.

         (B) VACATION: Executive shall be entitled to take up to five (5) weeks
of paid vacation annually at a time mutually convenient to the Company and
Executive. Any such vacation time not used by Executive in any one year shall
accumulate to his benefit in the succeeding years.

                                       2
<PAGE>

         6. RESTRICTIVE COVENANTS: (A) Executive recognizes and acknowledges
that the Company, through the expenditure of considerable time and money, has
developed and will continue to develop in the future information concerning
customers, clients, marketing, business and operational methods of the Company
and its customers or clients, contracts, financial or other data, technical data
or any other confidential or proprietary information possessed, owned or used by
the Company, and that the same are confidential and proprietary, and are
"confidential information" of the Company. In consideration of his employment by
the Company hereunder, Executive agrees that he will not, without the consent of
the Board, make any disclosure of confidential information now or hereafter
possessed by the Company to any person, partnership, corporation or entity
either during or after the term hereunder, except to employees of the Company or
its subsidiaries or affiliates and to others within or without the Company, as
the Executive may deem necessary in order to conduct the Company's business and
except as may be required pursuant to any court order, judgment or decision from
any court of competent jurisdiction. The foregoing shall not apply to
information which is in the public domain on the date hereof; which, after it is
disclosed to Executive by the Company, is published or becomes part of the
public domain through no fault of Executive; which is known to Executive prior
to disclosure thereof to him by the Company as evidenced by his written records;
or, after Executive is no longer employed by the Company, which is thereafter
disclosed to Executive in good faith by a third party which is not under any
obligation of confidence or secrecy to the Company with respect to such
information at the time of disclosure to him. The provisions of this Section
shall continue in full force and effect notwithstanding any lawful termination
of Executive's employment under this Agreement for a period of one (1) year
following said termination of employment.

         (B) Except in the ordinary course of his duties as President and Chief
Financial Officer or in the furtherance of the business of the Company, during
the period from the date of this Agreement until one (1) year following the date
on which his employment with the Company is lawfully and properly terminated,
Executive will not, directly or indirectly:

                  (i) persuade or attempt to persuade any person or entity which
         is or was a customer, client or supplier of the Company on the date on
         which Executive's employment with the Company is terminated to cease
         doing business with the Company, or to reduce the amount of business it
         does with the Company;

                  (ii) solicit for himself or any other person or entity other
         than the Company the business of any person or entity which is a
         customer or client of the Company, or was its customer or client within
         six (6) months prior to the termination of his employment by the
         Company, with respect to distribution of roofing supplies and related
         products; or

                                       3
<PAGE>

                  (iii) persuade or attempt to persuade any employee of the
         Company, or any individual who was an employee of Company during the
         six (6) month period prior to the lawful and proper termination of this
         Agreement, to leave Company's employ, or to become employed by any
         person or entity other than the Company.

         (C) Executive acknowledges that the restrictive covenants (the
"Restrictive Covenants") contained in this section 6 are a condition of his
employment and are reasonable and valid in geographical and temporal scope and
in all other respects. If any court determines that any of the Restrictive
Covenants, or any part of any of the Restrictive Covenants, is invalid or
unenforceable, the remainder of the Restrictive Covenants and parts thereof
shall not thereby be affected and shall be given full effect, without regard to
the invalid portion. If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or enforceable because of the
geographic or temporal scope of such provision, such court shall have the power
to reduce the geographic or temporal scope of such provision, as the case may
be, and, in its reduced form, such provision shall then be enforceable.

         (D) If Executive breaches, or threatens to breach, any of the
Restrictive Covenants, the Company, in addition to and not in lieu of any other
rights and remedies it may have at law or in equity, shall have the right to
injunctive relief; it being acknowledged and agreed to by Executive that any
such breach or threatened breach would cause irreparable and continuing injury
to the Company and that money damages would not provide an adequate remedy to
the Company.

         7. TERMINATION:

         (A) DEATH: In the event of Executive's death ("Death") during the term
of his employment, Executive's designated beneficiary, or in the absence of such
beneficiary designation, his estate shall be entitled to payment of Executive's
salary from date of death to the expiration of one (1) year thereafter. In
addition, Executive's beneficiary and/or dependents shall be entitled, for the
same one year period to continuation, at the Company's expense, of such benefits
as are then being provided to them under Section 5(A) hereof, and any additional
benefits as may be provided to dependents of the Company's executive officers in
accordance with the terms of the Company's policies and practices. In addition,
any options granted to Executive which have not, by the terms of the options,
vested shall be deemed to have vested as of the date of his death and shall
thereafter be exercisable by Executive's beneficiary or estate for the maximum
period of time allowed for exercise thereof under the terms of the option.

                                       4
<PAGE>

         (B) DISABILITY:

         (a) In the event Executive, by reason of physical or mental incapacity,
shall be disabled ("Disability") for a period of at least six (6) consecutive
months, the Company shall have the option at any time thereafter to terminate
Employee's employment hereunder for disability. Such termination will be
effective thirty (30) days after the Board gives written notice of such
termination to Executive, unless Executive shall have returned to the
performance of his duties prior to the effective date of the notice. All
obligations of the Company hereunder shall cease upon the effectiveness of such
termination, provided that such termination shall not affect or impair any
rights Executive may have under any policy of long term disability insurance or
benefits then maintained on his behalf by the Company. In addition, for a period
of one (1) year following termination of Executive's employment for disability,
Executive and his dependents, as the case may be, shall continue to receive the
benefits set forth under subparagraph 5(A) hereof, as well as such benefits as
are extended to the Company's active executive employees and their dependents
during such period. Any options granted to the Executive which have not, by the
terms of the options, vested shall be deemed to have vested at the termination
and shall thereafter be exercisable by the Employee, his beneficiary,
conservator or estate, as applicable, for the maximum period of time allowed for
exercise thereof under the terms of the option.

         (b) "Incapacity" as used herein shall mean the inability of the
Executive due to physical or mental illness, injury or disease substantially to
perform his normal duties as President and Chief Financial Officer. Executive's
salary as provided for hereunder shall continue to be paid during any period of
incapacity prior to and including the date on which Executive's employment is
terminated for disability.

         (C) BY THE COMPANY FOR CAUSE:

         (a) The Company shall have the right, before the expiration of the term
of this Agreement, to terminate this Agreement and to discharge Executive for
cause (hereinafter "Cause"), and all compensation to Executive shall cease to
accrue upon discharge of Executive for Cause. For the purposes of this
Agreement, the term "Cause" shall mean (i) Executive's conviction of a felony;
(ii) the alcoholism or drug addiction of Executive; (iii) gross negligence or
willful misconduct of Executive in connection with his duties hereunder; (iv)
the determination by any regulatory or judicial authority (including any
securities self-regulatory organization) that Executive directly violated,
before or after the date hereof, any federal or state securities law, any rule
or regulation adopted thereunder; or (v) the continued and willful failure by
Executive to substantially and materially perform his material duties hereunder.

         (b) If the Company elects to terminate Executive employment for Cause
under (C)(a) above, such termination shall be effective fifteen (15) days after
the Company gives written notice of such termination to Executive. In the event
of a termination of Executive's employment for Cause in accordance with the
provisions of 7(C)(a), the Company shall have no further obligation to the
Executive, except for the payment of all compensation and other vested benefits
which have accrued through the date of such termination and not paid and any
other benefits to which he or his dependents may be entitled by law.

                                       5
<PAGE>

         (D) BY EXECUTIVE FOR REASON:

         Executive shall have the right to terminate his employment at any time
for "good reason" (herein designated and referred to as "Reason"). The term
Reason shall mean (i) the failure to elect or appoint, or re-elect or
re-appoint, Executive to, or removal or improperly attempted removal of
Executive from, his positions as President or Chief Financial Officer or
superior positions with the Company, except in connection with the proper
termination of Executive's employment by reason of Cause, Death or Disability;
(ii) a reduction in Executive's overall compensation other than his
discretionary bonus under Section 3(B) above or an adverse change in the nature
or scope of the authorities, powers, functions or duties normally attached to
the Executive's position with the Company; (iii) the Company's failure or
refusal to perform any obligations required to be performed in accordance with
this Agreement after a reasonable notice and an opportunity to cure same; and
(iv) a Change in Control of the Company, as defined herein, occurs.

         (E) SEVERANCE: (a) In the event Executive's employment hereunder shall
be terminated by the Executive for Reason or by the Company for other than
Cause, Death or Disability: (1) the Executive shall thereupon receive as
severance pay in a lump sum the amount of salary and bonuses which the Executive
would have received for the remaining term of this Agreement had there been no
termination, provided however, that in no event shall such lump sum payment be
less than one year's salary and bonus; and (2) the Executive's (and his
dependents') participation in any and all life, disability, medical and dental
insurance plans shall be continued, or equivalent benefits provided to him or
them by the Company, at no cost to him or them, for a period of two years from
the termination; and (3) any options granted to Executive which have not, by the
terms of the options, vested shall be deemed to have vested at the termination,
and shall thereafter be exercisable for the maximum period of time allowed for
exercise thereof under the terms of the option; and new paragraph (b) an
election by Executive to terminate his employment under the provisions of this
paragraph shall not be deemed a voluntary termination of employment of Executive
for the purpose of interrupting the provisions of any of the Company's employee
benefit plans, programs or policies.

         (F) RESIGNATION: In the event Executive resigns without Reason prior to
the expiration hereof, he shall receive any unpaid fixed salary through such
resignation date and such benefits to which he is entitled by law.

         (G) EXTENSION OF BENEFITS: Any extension of benefits following the
termination of employment provided for herein shall be deemed to be in addition
to, and not in lieu of, any period for the continuation of benefits provided for
by law, either at the Company's, Executive or his dependents' expense.

         (H) CHANGE IN CONTROL: For purposes hereof, a Change in Control shall
be deemed to have occurred (i) if there has occurred a "change in control" as
such term is used in Item 1 (a) of Form 8-K promulgated under the Securities
Exchange Act of 1934, as amended, at the date hereof ("Exchange Act") or (ii) if
there has occurred a change in control as the term "control" is defined in Rule
12b-2 promulgated under the Exchange Act.

                                       6
<PAGE>

         8. INDEMNIFICATION: Company hereby indemnifies and holds Executive
harmless to the extent of any and all claims, suits, proceedings, damages,
losses or liabilities incurred by Executive and arising out of any acts or
decisions done or made in the authorized scope of his employment hereunder.
Company hereby agrees to pay all expenses, including reasonable attorney's fees,
actually incurred by Executive in connection with the investigation of any such
matter, the defense of any such action, suit or proceeding and in connection
with any appeal thereon including the cost of settlements. Nothing contained
herein shall entitle Executive to indemnification by Company in excess of that
permitted under applicable law.

         9. WAIVER: No delay or omission to exercise any right, power or remedy
accruing to either party hereto shall impair any such right, power or remedy or
shall be construed to be a waiver of or an acquiescence to any breach hereof. No
waiver of any breach hereof shall be deemed to be a waiver of any other breach
hereof theretofore or thereafter occurring. Any waiver of any provision hereof
shall be effective only to the extent specifically set forth in the applicable
writing. All remedies afforded to either party under this Agreement, by law or
otherwise, shall be cumulative and not alternative and shall not preclude
assertion by either party of any other rights or the seeking of any other rights
or remedies against the other party.

         10. GOVERNING LAW: The validity of this Agreement or of any of the
provisions hereof shall be determined under and according to the laws of the
State of California, and this Agreement and its provisions shall be construed
according to the laws of the State of California, without regard to the
principles of conflicts of law and the actual domiciles of the parties hereto.

         11. NOTICES: All notices, demands or other communications required or
permitted to be given in connection with this Agreement shall be given in
writing, shall be transmitted to the appropriate party by hand delivery, by
certified mail, return receipt requested, postage prepaid or by overnight
carrier and shall be addressed to a party at such party's address shown on the
first page hereof. A party may designate by written notice given to the other
parties a new address to which any notice, demand or other communication
hereunder shall thereafter be given. Each notice, demand or other communication
transmitted in the manner described in this Section 11 shall be deemed to have
been given and received for all purposes at the time it shall have been (i)
delivered to the addressee as indicated by the return receipt (if transmitted by
mail), the affidavit of the messenger (if transmitted by hand delivery or
overnight carrier) or (ii) presented for delivery during normal business hours,
if such delivery shall not have been accepted for any reason.

         12. ASSIGNMENTS: This Agreement shall be binding upon and inure to the
benefit of the parties and each of their respective successors, assigns, heirs
and legal representatives; provided, however, that Executive may not assign or
delegate his obligations, responsibilities and duties hereunder except as
permitted by the Company's by-laws, custom, practice, policies or the Board of
Directors. Company may not assign this Agreement without the prior written
consent of Executive.

                                       7
<PAGE>

         13. MISCELLANEOUS: This Agreement contains the entire understanding
between the parties hereto and supersedes all other oral and written agreements
or understandings between them with respect to the subject matter hereof. No
modification or addition hereto or waiver or cancellation of any provision shall
be valid except by a writing signed by the party to be charged therewith.

         14. OBLIGATIONS OF A CONTINUING NATURE: It is expressly understood and
agreed that the covenants, agreements and restrictions undertaken by or imposed
on Executive and, the Company hereunder, which are stated to exist or continue
after termination of Executive's employment with the Company, shall exist and
continue irrespective of the method or circumstances of such termination for the
respective periods of time set forth herein.

         15. SEVERABILITY: The parties agree that if any of the covenants,
agreements or restrictions contained herein are held to be invalid by any court
of competent jurisdiction, the remainder of the other covenants, agreements
restrictions and parts thereof herein contained shall be severable so not to
invalidate any others and such other covenants, agreements, restrictions and
parts thereof shall be given full effect without regard to the invalid portion.

         16. VENUE: JURISDICTION: The Company and the Executive hereby agree
that any action, proceeding or claim against either of them arising out of, or
relating in any way to this Agreement shall be brought and enforced in any of
the courts of the State of California in California County, California, or the
United States District Court for the Southern District of California, and
irrevocably submit to such jurisdiction. The Company and the Executive hereby
waive any objection to such jurisdiction and that such courts represent an
inconvenient forum. Any process or summons to be served upon the Company or the
Executive may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to their
respective addresses set forth in the initial paragraph of this agreement or
such other address as a party may so notify the other parties hereto in the
manner provided by Section II hereof. Such mailing shall be deemed personal
service and shall be legal and binding upon the Company and the Executive in any
action, proceeding or claim.

                                       8
<PAGE>

         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.

                                            By:  _____________________________

Agreed and Accepted

-------------------------

                                       9

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