Document:

EXHIBIT 10.4

                       SUPPLEMENTAL INCOME PLAN AGREEMENT

THIS  AGREEMENT  made and entered into as of the 18th day of October,  2006 (the
"Effective  Date") by and between First South Bank, a commercial  bank organized
and existing  under the laws of the State of North  Carolina (the  "Bank"),  and
Robert E. Branch (the "Employee").

                                   WITNESSETH:

WHEREAS, the Employee is employed by the Bank;

WHEREAS,  the Bank recognizes the valuable services heretofore  performed for it
by the Employee and wishes to encourage his continued employment;

WHEREAS, the Employee wishes to be assured that he will be entitled to a certain
amount of  additional  compensation  for some  definite  period of time from and
after the  termination of his employment  with the Bank and that his beneficiary
will be entitled to a death benefit from and after the Employee's death;

WHEREAS,  the parties hereto wish to provide the terms and conditions upon which
the Bank  shall  pay such  additional  compensation  to the  Employee  after the
termination  of his  employment  with  the  Bank or such  death  benefit  to his
beneficiary after the Employee's death.

NOW,  THEREFORE,  in  consideration  of the premises and of the mutual  promises
herein contained, the parties hereto agree as follows:

Section  1.  Retirement  Benefits.  Except as  otherwise  specifically  provided
herein,  if the  Employee  shall remain in the  employment  of the Bank until he
attains the age of 65 (the "Retirement  Date"),  the Bank shall pay the Employee
the sum of ten thousand dollars  ($10,000.00) per annum for a period of five (5)
years,  payable  in  equal  monthly  installments,  commencing  on a date  to be
determined  by the Bank,  but in no event  later than the first day of the sixth
calendar month following the calendar month in which the Retirement Date occurs.

Section 2. Post-Retirement Death Benefits. In the event that the Employee should
die after becoming  entitled to receive  payments under Section I but before all
such payments have been made, the Bank will make all remaining  payments to such
beneficiary  or  beneficiaries  as the  Employee has  designated  to the Bank in
writing  (the  "Beneficiaries').  In the  event  of  death  of the  last  living
Beneficiary  before  all unpaid  payments  have been  made,  the  balance of any
payments which remain unpaid at the time of the death of such Beneficiary  shall
be commuted on the basis of six percent (6%) per annum  compounded  interest and
shall be paid in a single sum to the estate of the last  Beneficiary  to die. In
the absence of such beneficiary designation,  any amount remaining unpaid at the
Employee's  death shall be  commuted on the basis of six percent  (6%) per annum
compounded interest and shall be paid in a single sum to the Employee's estate.

Section  3.  Pre-Retirement  Death  Benefits.  In the  event of the death of the
Employee  while  employed by the Bank and before the  Retirement  Date, the Bank
shall make the payments described in Section I above to the  Beneficiaries,  and
the amount of such  payments  shall be determined as if the date of death of the
Employee was his Retirement  Date. The first monthly  payment shall be made on a
date to be determined  by the Bank,  but in no event later than the first day of
the sixth calendar month  following the month in which the Employee died. In the
event of death of the last living  Beneficiary before all the payments have been
made,  the  balance  of any  payments  which  remain  unpaid at the time of such
Beneficiary's death shall be commuted on the basis of six percent (6%) per annum
compounded  interest and shall be paid in a single sum to the estate of the last
Beneficiary to die. In the absence of any  beneficiary  designation  made by the
Employee  pursuant  to Section  2,  above,  or if no  Beneficiary  survives  the
Employee,  the payments to be made  hereunder  shall be commuted on the basis of
six percent (6%) per annum compounded interest and shall be paid in a single sum
to the Employee's estate. Notwithstanding the foregoing, if the Employee dies as
result of suicide on or before the two-year  anniversary of the Effective  Date,
no benefits of whatever nature shall be payable to the Beneficiaries  under this
Agreement.

                                       1
<PAGE>

Section 4. Termination Benefits.  Except as otherwise provided in Section 6 with
respect to termination of employment in certain circumstances, in the event that
the employment of the Employee terminates prior to the time he is first entitled
to receive  payments  under this  Agreement for any reason other than his death,
the Employee or his Beneficiaries,  as applicable,  shall be entitled,  upon the
occurrence  of the  Employee's  65th  birthday  or prior  death,  to receive the
percentage  of the  applicable  annual  payment  described  in  Section  I above
determined  by Exhibit A attached  hereto an  incorporated  herein by reference.
Such  payments  shall  be made in equal  monthly  installments,  with the  first
monthly installment commencing on a date to be determined by the Bank, but in no
event  later  than the first  day of the  sixth  calendar  month  following  the
calendar month of the Employee's 65th birthday or death, as applicable, occurs.

Section 5. Benefits Not Transferable.  Neither the Employee, any Beneficiary nor
any other person claiming any right or interest under this Agreement through the
Employee  or any other  Beneficiary  shall  have any right to  commute,  assign,
transfer or otherwise convey the right to receive any benefits hereunder.

Section 6. Binding Upon  Successors.  This Agreement and the Bank's  obligations
hereunder shall be binding upon the Bank's successors and permitted assigns. The
Bank may not assign its right or obligations  under this  Agreement  without the
Employee's prior written consent. In addition, the Bank shall not enter into any
agreement  proving  for the  merger of the Bank with and into  another  business
entity or the sale of more  than a  majority  of the  Bank's  assets to  another
business entity,  person or group of persons that does not specifically  provide
that such successor by merger or purchaser(s) of assets shall assume and satisfy
each and every  obligation of the Bank to the Employee under this Agreement.  In
the case of an asset  sale,  such  assumption  shall not relieve the Bank of its
liability to fulfill such obligations.

Except as otherwise provided in Sections 1, 2 or 3, above, as applicable, in the
event that, on or before the  occurrence of the  Employee's  Retirement  Date, a
"Termination of Protected Employment" occurs following a "Change in Control" (as
these terms are defined below),  the Employee shall be deemed to have retired as
of his  Retirement  Date  and  the  provisions  of  Section  I shall  be  deemed
applicable,  except that the Retirement Date shall be deemed to be the date that
such Change in Control shall occur.

For purposes of this  Agreement,  "Change in Control"  shall mean any one of the
following events:  (i) the acquisition of ownership,  holding,  or power to vote
more than 25% of the voting stock of the Bank or First South Bancorp,  Inc. (the
"Company"),  (ii) the  acquisition  of the ability to control the  election of a
majority of the Bank's or the Company's  directors,  (iii) the  acquisition of a
controlling  influence  over the  management  or  policies of the Bank or of the
Company by any person or by persons  acting as a "group"  (within the meaning of
Section 13(d) of the Securities Exchange Act of 1934), or (iv) during any period
of two consecutive  years,  individuals (the "Continuing  Directors") who at the
beginning of such period constitute the Board of Directors of the Bank or of the
Company  (the  "Existing  Board")  cease for any reason to  constitute  at least
two-thirds  thereof,  provided that any individual  whose election or nomination
for  election  as a member of the  Existing  Board was  approved by a vote of at
least two-thirds of the Continuing  Directors then in office shall be considered
a Continuing Director. Notwithstanding the foregoing, the Company's ownership of
the Bank shall not of itself  constitute a Change in Control for purposes of the
Agreement.  For purposes of this paragraph  only, the term "person" refers to an
individual or a corporation,  partnership,  trust,  association,  joint venture,
pool, syndicate, sole proprietorship,  unincorporated  organization or any other
form of entity not specifically listed herein.

                                       2
<PAGE>

For purposes of this Agreement,  a "Termination of Protected  Employment"  shall
occur if: (i) the Employee is terminated  without Just Cause,  with "Just Cause"
meaning, in the good faith  determination of the Bank's Board of Directors,  the
Employee's personal  dishonesty,  incompetence,  willful  misconduct,  breach of
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  willful violation of any law, or rule or regulation (other than traffic
violations or similar offenses) or final  cease-and-desist  order; provided that
no act, or failure to act, on the Employee's part shall be considered  "willful"
unless he has acted, or failed to act, with an absence of good faith and without
a reasonable  belief that his action or failure to act was in the best interests
of the Bank or of the  Company;  or (ii)  the  Employee  voluntarily  terminates
employment for an event that constitutes  "Good Reason," which shall mean any of
the following events,  that has not been consented to in advance by the Employee
in writing:  (a) the requirement that the Employee move his personal  residence,
or  perform  his  principal  executive  functions,  more than 30 miles  from his
primary  office  as of the  later of the  Effective  Date  and the  most  recent
voluntary relocation by the Employee; (b) a material reduction in the Employee's
base  compensation  in effect  on the date of the  Change  in  Control;  (c) the
failure by the Bank to continue to provide the Employee  with  compensation  and
benefits  in  effect  on the date of the  Change in  Control,  or with  benefits
substantially similar to those provided to him under any of the employee benefit
plans in which the  Employee  now or  hereafter  becomes a  participant,  or the
taking of any action by the Bank which would  directly or indirectly  reduce any
of such benefits or deprive the Employee of any material  fringe benefit enjoyed
by him;  (d) the  assignment  to the  Employee  of duties  and  responsibilities
materially  different from those normally  associated  with his position;  (e) a
failure to reelect the Employee to the Board of  Directors  of the Bank,  if the
Employee has served on such Board at any time during the term of the  Agreement;
(f) a material  diminution or reduction in the  Employee's  responsibilities  or
authority  (including   reporting   responsibilities)  in  connection  with  his
employment  with the Bank;  or (g) a material  reduction in the  secretarial  or
other administrative support of the Employee.

Section 7.  Benefits  Payable  Only from  General  Corporate  Assets;  Unsecured
General Creditor Status of Employee.

The payments to the Employee or his  Beneficiaries  hereunder shall be made from
assets,  which  shall  continue  for all  purposes,  to be a part of the general
unrestricted  assets of the Bank;  no person shall have nor acquire any interest
in any such assets by virtue of the  provisions  of this  Agreement.  The Bank's
obligations hereunder shall be an unfunded and unsecured promise to pay money in
the future.  To the extent that the  Employee or any person  acquires a right to
receive payments from the Bank under the provisions hereof,  such right shall be
no greater than the right of any unsecured general creditor of the Bank; no such
person shall have nor require any legal or equitable right, interest or claim in
or to any property or assets of the Bank.

                                       3
<PAGE>

In the event that, in its discretion,  the Bank purchases an insurance policy or
policies  insuring the life of the Employee (or any other  property) in order to
allow the Bank to recover the cost of providing  the benefits,  in whole,  or in
part, hereunder,  neither the Employee nor any beneficiary shall have the rights
whatsoever  therein or in the  proceeds  there from.  The Bank shall be the sole
owner and beneficiary of any such policy or policies and, as such, shall possess
and, may exercise all incidents of ownership therein.

Notwithstanding  any other  provision of this  Agreement that may be contrary or
inconsistent  herewith,  not  later  than ten  business  days  after a Change in
Control,  the Bank shall (i) deposit in a grantor  trust (the  "Trust")  that is
designed  in  accordance  with  Revenue   Procedure  92-64  and  has  a  trustee
independent  of the Bank,  the Company and any successor to their  interest,  an
amount equal to the present value of all benefits that may become  payable under
this Agreement, unless the Employee has previously provided a written release of
any claims under this Agreement,  and (ii) provide the trustee of the Trust with
a written  direction to hold said amount and any investment  return thereon in a
segregated account for the benefit of the Employee, and to follow the procedures
set forth in the next  paragraph  as to the  payment  of such  amounts  from the
Trust.

At any time or from time to time following a Change in Control, the Employee may
provide  the  trustee of the Trust with a written  schedule  directing  that the
trustee pay to the  Employee  the amounts  designated  in the  schedule as being
payable  pursuant to this Agreement.  Within three business days after receiving
said  notice,  the  trustee of the Trust  shall send a copy of the notice to the
Bank via overnight and registered mail (return receipt requested).  On the fifth
business  day after  mailing  said notice to the Bank,  the trustee of the Trust
shall pay the Employee the amount  designated  therein in immediately  available
funds,  unless prior thereto the Bank provides the trustee with a written notice
directing the trustee to withhold such payment. In the latter event, the trustee
shall  submit  the  dispute  to   non-appealable   binding   arbitration  for  a
determination of the amount payable to the Employee  pursuant to this Agreement,
and the costs of such arbitration (including any attorneys' fees incurred by the
Employee)  shall be paid by the Bank. The trustee shall choose the arbitrator to
settle  the  dispute,  and such  arbitrator  shall be bound by the  rules of the
American  Arbitration  Association in making his determination.  The parties and
the trustee shall be bound by the results of the  arbitration  and, within three
days of the  determination  by the  arbitrator,  the trustee  shall pay from the
Trust the amounts required to be paid to the Employee and/or the Bank, and in no
event  shall the  trustee be liable to either  party for making the  payments as
determined by the arbitrator.

Upon the  receipt of the  Employee's  written  release of all claims  under this
Agreement,  the  trustee of the Trust  shall pay to the Bank the entire  balance
remaining in the segregated  account maintained for the benefit of the Employee.
The Employee shall  thereafter have no further interest in the Trust pursuant to
this Agreement.

Section 8.  Additional  Benefits.  The benefits and rights  provided  under this
Agreement are in addition to, and  independent  of, those rights and benefits of
the  Employee  provided  under  other  agreements  with the Bank,  and shall not
affect,  reduce or diminish the right of Employee to  participate in any current
or future retirement plan or in any supplemental compensation arrangement.

Section  9. No  Contract  of  Employment.  Nothing  contained  herein  shall  be
construed to be a contract of employment or as conferring  upon the Employee the
right to continue to be employed by the Bank. It is expressly  understood by the
parties   hereto  that  this   Agreement   relates   exclusively  to  additional
compensation  for the  Employee's  services,  payable after  termination  of his
employment with the Bank, and is not intended to be an employment agreement.

                                       4
<PAGE>

Section 10.  Claims and Review Procedures.

      A.    General.  For the purposes of implementing a claims  procedure under
            this  Agreement  as  required  by  the  Employee  Retirement  Income
            Security Act of 1974 ("ERISA") (but not for any other purpose),  the
            Bank  is  hereby   designated  as  the  named   fiduciary  and  Plan
            Administrator of this unfunded,  nonqualified  deferred compensation
            plan.  If any  person  believes  he is being  denied  any  rights or
            benefits  under  the  Agreement,  such  person  may  file a claim in
            writing with the Plan  Administrator  for  resolution  in accordance
            with the provisions of Paragraph B of this Section 10.

      B.    Claims  Procedure.  If  any  claim  filed  hereunder  is  wholly  or
            partially denied, the Plan Administrator will notify the claimant of
            its  decision in  writing.  Such  notification  will be written in a
            manner calculated to be understood by the claimant and will contain:

            (i)   specific reasons for the denial,

            (ii)  specific reference to pertinent provisions of the Agreement on
                  which the Plan Administrator based its denial,

            (iii) a  description  of  any  additional  material  or  information
                  necessary  for the  claimant  to  perfect  such  claim  and an
                  explanation  of why such material or information is necessary,
                  and

            (iv)  information as to the steps to be taken if the claimant wishes
                  to submit a request for review.

                  Such  notification will be given within ninety (90) days after
                  the claim is received by the Plan Administrator (or within 180
                  days,  if special  circumstances  require an extension of time
                  for  processing  the  claim,  and if  written  notice  of such
                  extension and  circumstances  is given to the claimant  within
                  the initial ninety (90) day period).  If such  notification is
                  not given  within such  period,  the claim will be  considered
                  denied as of the last day of such period and the  claimant may
                  request a review of his claim in accordance with Section 10.C.
                  hereof.

      C.    Review  Procedure.  Within sixty (60) days after the date on which a
            claimant  received  a  written  notice  of a denied  claim  (or,  if
            applicable,  within  sixty  (60) days  after the date on which  such
            denial is  considered  to have  occurred)  the claimant (or his duly
            authorized representative) may:

            (i)   file a  written  request  with  the Plan  Administrator  for a
                  review of his denied claim and of pertinent documents; and

            (ii)  submit written issues and comments to the Plan Administrator.

                  The  plan  Administrator  will  notify  the  claimant  of  its
                  decision in writing.  Such  notification  will be written in a
                  manner  calculated  to be  understood by the claimant and will
                  contain  specific reasons for the decision as well as specific
                  references  to  pertinent  provisions  of the  Agreement.  The
                  decision on review  will be made within  sixty (60) days after
                  the request  for review is received by the Plan  Administrator
                  (or  within  one  hundred   twenty  (120)  days,   if  special
                  circumstances  require an extension of time for processing the
                  request (such as an election by the Plan Administrator to hold
                  a  hearing),  and if  written  notice  of such  extension  and
                  circumstances  is given to the  claimant  within  the  initial
                  sixty (60) day period.

                                       5
<PAGE>

Section 11. Amendment.  This Agreement may not be amended,  altered or modified,
except by a written  instrument signed by the parties hereto or their respective
successors, and may not be otherwise terminated except as provided herein.

Section  12.  Governing  Law.  This  Agreement,  and the  rights of the  parties
hereunder, shall be governed by and construed in accordance with the laws of the
State of North Carolina.

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

                                                    FIRST SOUTH BANK

         Attest:                                    By: /s/ Thomas A. Vann
                                                        ------------------
                                                    Thomas A. Vann
                                                    President and
         /s/ William L. Wall                        Chief Executive Officer
         -------------------
         William L. Wall
         Secretary
         {Corporate Seal}

                                                    EMPLOYEE:

                                                    /s/ Robert E. Branch
                                                    --------------------
                                                    Robert E. Branch

                                       6
<PAGE>

                                    EXHIBIT A
                                       TO
                       SUPPLEMENTAL INCOME PLAN AGREEMEENT
                                       FOR
                                ROBERT E. BRANCH

FULL YEARS OF EMPLOYMENT
                              AFTER EFFECTIVE DATE
                  1
                  2
                  3
                  4
                  5
                  6
                  7
                  8
                  9
                  10

PERCENTAGE OF THE ANNUAL INSTALLMENT PAYMENTS
STATED IN SECTION 1 OF THIS
AGREEMENT TO WHICH THE
                              EMPLOYEE IS ENTITLED
                  10
                  20
                  30
                  40
                  50
                  60
                  70
                  80
                  90
                  100

                                       7World
      Waste Technologies, Inc.

    13500
      Evening Creek Drive North

    Suite
      440

    San
      Diego, California 92128

    

    November
      4, 2006

    

    Dr.
      James
      Ferris

    

     

    Dear
      Jim:

     

    It
      gives
      us great pleasure to offer you the position of President and Chief Operating
      Officer for World Waste Technologies, Inc. This letter agreement (the
“Agreement”) sets forth the basic terms and conditions of your new position.
      Your effective date of hire by the Company is November 1, 2006. By signing
      this
      letter, you will be agreeing to these terms. It is important that you understand
      clearly both what your benefits are and the obligations you have to the
      Company.

     

    1.  Compensation.
      You
      will be compensated at the monthly rate of $14,000, payable monthly in arrears.
      Although you will no longer be a non-employee member of the board of directors
      of the Company (the “Board”)., so long as you continue to serve as a director
      you will receive the same fees (cash and equity) as our other non-employee
      directors. You will be reimbursed for all of your business expenses (including
      travel and lodging) in accordance with the Company’s standard
      practices.

     

    2.  Duties.
      You
      have been appointed by the Company to serve as its President and Chief Operating
      Officer. Your duties, responsibilities and authority include those set forth
      on
      the attached Annex A, together with such other duties as are appropriate to
      such
      position and as are from time to time assigned to you by the Chief Executive
      Officer. Throughout the term of your employment, you will devote such business
      time and energies to the business and affairs of the Company as needed to carry
      out your duties and responsibilities, subject to the overall supervision and
      direction of the Chief Executive Officer and the Board. You will work primarily
      out of the Company’s Anaheim, California plant.

     

    As
      an
      exempt employee, you are required to exercise your specialized expertise,
      independent judgment and discretion to provide high quality services. You are
      required to follow written office policies and procedures adopted from time
      to
      time by the Company. The Company reserves the right to change these written
      policies and procedures at any time. While at work, you are required to devote
      your full energies, efforts and abilities to your employment, unless the Company
      expressly agrees otherwise.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      Offer
        – Dr.
        James
        Ferris

      November
        4, 2006

      Page
        2
of
        2

    

     

    3.  Proprietary
      Information Agreement.
      You
      will be required to sign the Company's standard Proprietary Information and
      Inventions Agreement, which is incorporated into this agreement by reference.
      You are required to immediately notify the Company (through an appropriate
      officer or other employee of the Company) regarding any product, improvement
      or
      process which you shall discover, make, invent, conceive, develop or design,
      solely or jointly with others, relating to any product, equipment or process
      which is applicable to the subject matter of the Company's business, or which
      may be directly or indirectly utilized in connection therewith, irrespective
      of
      whether or not said product, improvement or process was discovered, made,
      invented, conceived, developed or designed on your time or at the expense of
      the
      Company.

     

    4.  Employee
      Benefits.
      You
      will be eligible for paid vacation, holidays, health benefits and other employee
      benefits, in accordance with the Company's employee policies as developed,
      adopted and modified from time to time. 

     

    5.  At
      Will Employment.
      Your
      employment with the Company is at the Company’s sole discretion (in legal terms,
      this means that your employment is “at-will”). In other words, either you or the
      Company can terminate your employment at any time for any reason, with or
      without cause and with or without notice, and without thereby incurring any
      liability under this Agreement or otherwise. This term of employment is not
      subject to change or modification of any kind except if in writing and signed
      by
      you and the Chief Executive Officer of the Company.

     

    6.  Arbitration.
      

     

    You
      and
      the Company agree that any dispute arising under or in connection with this
      Agreement, including any dispute involving your employment or the termination
      of
      that employment and any claim the Company may assert against you (whether based
      on contract, tort or statutory duty or prohibition, including any prohibition
      against discrimination or harassment or misuse of company property or trade
      secrets ), shall be submitted to binding arbitration in accordance with
      California Code of Civil Procedure §§ 1280 - 1294.2 before a single neutral
      arbitrator. You and the Company understand that each is waiving its rights
      to a
      jury trial.

     

    The
      party
      demanding arbitration shall submit a written claim to the other party setting
      out the basis of the claim. Demands shall be presented in the same manner as
      notices under this Agreement. You and the Company will attempt to reach
      agreement on an arbitrator within ten (10) business days of delivery of the
      arbitration demand. After this ten (10) business day period, either you or
      the
      Company may request a list of seven professional arbitrators from the American
      Arbitration Association or another mutually agreed service. You and the Company
      will alternately strike names until only one person remains and that person
      shall be designated as the arbitrator. The party demanding arbitration shall
      make the first strike.

     

    The
      arbitration shall take place in or within five miles of San Diego, California,
      at a time and place determined by the arbitrator. Each party shall be entitled
      to discovery of essential documents and witnesses and to deposition discovery,
      as determined by the arbitrator, taking into account the mutual desire to have
      a
      fast, cost-effective, dispute-resolution mechanism. You and the Company will
      attempt to cooperate in the discovery process before seeking the determination
      of the arbitrator. Except as otherwise determined by the arbitrator, you and
      the
      Company will each be limited to no more than three (3) depositions. The
      arbitrator shall have the powers provided in California Code of Civil Procedure
      §§ 1282.2 - 1284.2 and may provide all appropriate remedies at law or
      equity.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      Offer
–
        Dr. James Ferris

      November
        4, 2006

      Page
        3
of
        3

    

     

    The
      arbitrator will have the authority to entertain a motion to dismiss and/or
      a
      motion for summary judgment by either you or the Company and shall apply the
      standards governing such motions under California law, unless the standards
      of
      another judicial forum supercede California law. The Arbitrator shall render,
      within sixty (60) days of the completion of the arbitration, an award and a
      written, reasoned opinion in support of that award. Judgment on the award may
      be
      entered in any court having jurisdiction.

     

    The
      Company will pay the arbitrator's expenses and fees, all meeting room charges
      and any other expenses that would not have been incurred if the case were
      litigated in the judicial forum having jurisdiction over it. Unless otherwise
      ordered by the arbitrator pursuant to law or this Agreement, each party shall
      pay its own attorney fees, witness fees and other expenses incurred by the
      party
      for his or its own benefit. Your share of any filing, administration or similar
      fee shall be no more than the then current filing or other applicable fee in
      California Superior Court or, if applicable, other appropriate tribunal with
      jurisdiction..

     

    7.  Withholding.
      Anything to the contrary notwithstanding, all payments made by the Company
      hereunder to you or your estate or beneficiaries will be subject to tax
      withholding pursuant to any applicable laws or regulations. In lieu of
      withholding, the Company may, in its sole discretion, accept other provision
      for
      payment of taxes as required by law, provided it is satisfied that all
      requirements of law affecting its responsibilities to withhold such taxes have
      been satisfied.

     

    8.  Integrated
      Agreement.
      Please
      note that this Agreement supersedes any prior agreements, representations or
      promises of any kind, whether written, oral, express or implied between you
      and
      the Company with respect to the subject matters herein, including that certain
      Consulting Project Agreement dated as October 1, 2006 between you and the
      Company, which consulting agreement is hereby terminated. This Agreement
      constitutes the full, complete and exclusive agreement between you and the
      Company with respect to the subject matters in this Agreement.

     

    9.  Miscellaneous.
      No
      provision of this Agreement may be amended or waived unless such amendment
      or
      waiver is agreed to by you and the Chief Executive Officer in writing. No waiver
      by you or by the Company of the breach of any condition or provision of this
      Agreement will be deemed a waiver of a similar or dissimilar provision or
      condition at the same or any prior or subsequent time. In the event any portion
      of this Agreement is determined to be invalid or unenforceable for any reason,
      the remaining portions shall be unaffected thereby and will remain in full
      force
      and effect to the fullest extent permitted by law. All matters relating to
      the
      interpretation or enforcement of this Agreement shall be governed by California
      law, without regard to its choice of law provisions.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      Offer
–
        Dr. James Ferris

      November
        4, 2006

      Page
        4
of
        4

    

    We
      would
      appreciate if you would indicate your acceptance of this offer by signing below
      and returning a copy to us. A copy is provided for your records. 

     

    If
      there
      are any questions related to this letter, please do not hesitate to speak to
      me.

     

    
      	 	 	Sincerely,
	 
 	 
 	 
 
	 	 	/s/
              John
              Pimentel
	 	
              
John
              Pimentel
	 	CEO

    

     

    

    
      
        

      

    

    

    I
      agree
      to the terms of employment set forth in this Agreement.

     

    
      	 	 	 	 
	/s/
              Dr. James
              Ferris	 	 	November
              4,
              2006
	
              

              Signature

            	 	 	
              

              Date

            
	 	 	 	 
	Dr. James Ferris	 	 	 
	
              
                
Legal
                Name (Print)

            	 	 	 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ANNEX
      A

    

    Company
      Direction and Governance

    

    Work
      with, and under the direction of, the Chief Executive Officer of the Company.
      In
      this capacity, participate in setting the strategic direction of the Company
      as
      well as developing the annual business plan. Incumbent is a senior member of
      the
      management team and serves as a Director of the Company.

    

    Management
      Responsibilities

    

    Responsible
      for managing the day-to-day manufacturing, engineering and sales operations
      of
      the Company as well as development and maintenance of effective business
      processes that link manufacturing and sales to the customer and to accounting
      and control function.

    

    Reporting
      Relationships

    

    The
      General Manager[s]of operations and corporate staff in sales and engineering
      report directly to this position. 

    

    Authorities

    

    The
      Authorities of the office are set by the Chief Executive Officer. The
      President/COO has full authority to organize, hire and fire employees in his
      area of responsibility, consistent with budget authority and normally in
      consultation with the CEO. The spending authority of the President/COO is the
      same as that of the CEO; the President/COO has authority to obligate the Company
      financially up to $50,000, normally with consultation with the CEO.

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