EXHIBIT 10.4
EMPLOYMENT AGREEMENT
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This employment agreement (the "Agreement") is made and entered into
effective as of [____________] (the "Effective Date"), by and between Xxxxx X.
Xxxxxx (the "Employee") and Notify Corporation (the "Company").
RECITALS
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A. The Company desires to retain the services of Employee, and Employee
desires to be employed by the Company, on the terms and conditions set forth in
this Agreement.
B. Certain capitalized terms used in the Agreement are defined in Section
8 below.
In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Employee by the Company, the
parties agree as follows:
1. Duties and Scope of Employment.
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(a) Position. The Company shall employ the Employee in the position
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of Vice President, Sales and Marketing, with such duties, responsibilities and
compensation as in effect as of the Effective Date (as defined below); provided,
however, that the Board shall have the right, prior to the occurrence of a
Change of Control, to revise such responsibilities and compensation from time to
time as the Board may deem necessary or appropriate.
(b) Obligations. The Employee shall devote his full business efforts
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and time to the Company and its subsidiaries. The foregoing, however, shall not
preclude the Employee from engaging in such activities and services as do not
interfere or conflict with his responsibilities to the Company.
(c) Sales Quotas. Employee understands and acknowledges that Company
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has determined a sales quota for 1997 as attached as Exhibit A to this
Agreement. Employee understands and acknowledges that attainment of the 1997
Sales Quota is material to Employee's performance with the Company.
2. At-Will Employment. The Company and the Employee acknowledge the
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Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason, the
Employee shall not be entitled to any payments, benefits, damages, awards or
compensation other than as provided by this Agreement, or as may otherwise be
available in accordance with the Company's established employee plans and
practices or other agreements with the Company at the time of termination.
3. Compensation and Benefits.
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(a) Base Compensation. The Company shall pay the Employee as
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compensation for services a base salary at an annualized rate of $90,000. Such
salary shall be reviewed at least annually and shall be increased from time to
time subject to accomplishment of such performance and contribution goals and
objectives as may be established from time to time by the Board. Such salary
shall be paid periodically in accordance with normal Company payroll. The
annual compensation specified in this Section 3(a), together with any increases
in such compensation that the Board may grant from time to time, is referred to
in this Agreement as "Base Compensation".
(b) Commissions. For the 1997 fiscal year, commissions shall be paid
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in accordance with Exhibit B to this Agreement.
(c) Employee Benefits. The Employee shall be eligible to participate
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in the employee benefit plans and employee compensation programs maintained by
the Company applicable to other key employees of the Company, including (without
limitation) life, disability, health, accident and other insurance programs, and
paid vacations, subject in each case to the generally applicable terms and
conditions of the plan or program in question and to the determination of any
committee administering such plan or program.
(d) Expenses. The Company will pay or reimburse Employee for
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reasonable travel, entertainment or other expenses incurred by Employee in the
furtherance of or in connection with the performance of Employee's duties
hereunder in accordance with the Company's established policies. Employee shall
furnish the Company with evidence of the incurrence of such expenses within a
reasonable period of time from the date that they were incurred.
4. Severance Benefits.
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(a) Termination Following A Change of Control. If the Employee's
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employment with the Company terminates at any time within twenty-four (24)
months after a Change of Control, then, subject to Section 5, the Employee shall
be entitled to receive severance benefits as follows:
(i) Involuntary Termination. If the Employee's employment
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terminates as a result of Involuntary Termination (as defined in Section 8)
other than for Cause (as defined in Section 8), then the Employee shall be
entitled to receive a continuation of the Employee's Base Compensation for a
period equal to twelve (12) months.
(ii) Voluntary Resignation; Termination for Cause. If the
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Employee voluntarily terminates employment with the Company, other than for an
Involuntary Termination, or if the Employee is terminated for Cause, then the
Employee shall not be entitled to receive severance or other benefits except for
those (if any) as may then be established under the Company's then existing
severance and benefits plans and policies at the time of such termination.
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(iii) Disability; Death. If the Company terminates the Employee's
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employment as a result of the Employee's Disability, or such Employee's
employment is terminated due to the death of the Employee, then the Employee
shall not be entitled to receive severance or other benefits except those (if
any) as may then be established under the Company's then existing severance and
benefits plans and policies at the time of such Disability or Death.
(b) Termination Apart from Change of Control. If, during the term of
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this Agreement, the Employee's employment with the Company terminates, either
prior to the occurrence of a Change of Control or after the twenty-four (24)
month period following a Change of Control, then, subject to Section 5, the
Employee shall be entitled to receive severance benefits as follows:
(i) Involuntary Termination. If the Employee's employment
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terminates as a result of Involuntary Termination other than for Cause, then the
Employee shall be entitled to receive continuation of the Employee's Base
Compensation for the period of ninety (90) days.
(ii) Voluntary Resignation; Termination for Cause. If the
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Employee voluntarily terminates employment with the Company, other than for an
Involuntary Termination, or if the Employee is terminated for Cause, then the
Employee shall not be entitled to receive severance or other benefits except for
those (if any) as may then be established under the Company's then existing
severance and benefits plans and policies at the time of such termination.
(iii) Disability; Death. If the Company terminates the Employee's
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employment as a result of the Employee's Disability, or such Employee's
employment is terminated due to the death of the Employee, then the Employee
shall not be entitled to receive severance or other benefits except those (if
any) as may then be established under the Company's then existing severance and
benefits plans and policies at the time of such Disability or Death.
(c) Benefits. In the event the Employee is entitled to severance
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benefits pursuant to Section 4(a)(i) or Section 4(b)(i), then in addition to
such severance benefits, the Employee shall receive 100% Company-paid health,
dental and life insurance coverage as provided to such employee immediately
prior to the Employee's termination ( the "Company-Paid Coverage"). If such
coverage included the Employee's dependents immediately prior to the
Employee's's termination, such dependents shall also be covered at Company
expense. Company-Paid Coverage shall continue until the earlier of (i) twelve
(12) months following termination in the case of a termination described in
Section 4(a)(i), or (ii) ninety (90) days following termination in the case of a
termination described in Section 4(b)(i), or (iii) to the extent the Employee
becomes covered under another employer's group health, dental or life insurance
plan. In addition, without regard to the reason for termination of the
Employee's employment: (i) the Company shall pay the Employee any unpaid salary
due for periods prior to the Termination Date; (ii) the Company shall pay the
Employee all of the Employee's accrued and unused PTO ("Personal Time Off")
through the Termination Date; and (iii) following submission of proper expense
reports by the Employee, the Company shall reimburse the Employee for all
expenses reasonably and necessarily incurred by the Employee in connection with
the business of the Company prior to termination. These payments shall be made
promptly upon termination and within the period of time mandated by law.
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(d) Restricted Stock. In the event the Employee is entitled to
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severance benefits pursuant to Section 4(a)(i) of this Agreement, then all
Company stock purchased by the Employee subject to a repurchase right in favor
of the Company shall vest and any such repurchase right shall lapse.
5. Limitations on Payments. In the event that the severance and other
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benefits provided for in this Agreement or otherwise payable to the Employee (i)
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the"Code") and (ii) but for this
Section, would be subject to the excise tax imposed by Section 4999 of the Code,
then the Employee's severance benefits under Section 4(a)(i), as applicable,
shall be payable either
(a) in full, or if an excise tax under Section 4999 of the Code would
apply to such payment then
(b) as to such lessor amount which would result in no portion of such
severance benefits being subject to excise tax under Section 4999 of the Code,
whichever of the following amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by the Employee on an after-tax basis, of the greatest amount of
severance benefits under Section 4(a)(i), notwithstanding that all or some
portion of such severance benefits may be taxable under Section 4999 of the
Code. Unless the Company and the Employee otherwise agree in writing, any
determination required under this Section shall be made in writing by the
Company's independent public accountants (the "Accountant"), whose determination
shall be conclusive and binding upon the Employee and the Company for all
purposes. For the purposes of making calculation required by this Section, the
Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Company
and the Employee shall furnish to the Accountants such information and documents
as the Accountants may reasonably request in order to make a determination under
this Section. The Company shall bear all costs the Accountant may reasonably
incur in connection with any calculations contemplated by this Section.
6. Confidential Information.
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(a) Company Information. Employee agrees at all times during the term
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of Employee's employment and thereafter, to hold in strictest confidence, and
not to use, except for the benefit of the Company, or to disclose to any person,
firm or corporation without written authorization of the Board of Directors of
the Company, any Confidential Information of the Company. Employee understands
that "Confidential Information" means any Company proprietary information, trade
secrets or know-how, including, but not limited to, market research, product
plans, products, services, customer lists and customers (including, but not
limited to, customers of the Company on whom Employee will call), markets,
developments, marketing, finances or other business information disclosed to
Employee by the Company either directly or indirectly in writing, orally or by
drawings or observation of parts or equipment. Employee further understands
that Confidential Information does not include any of the foregoing items which
is based on either Employee's prior knowledge or the experience of the Employee
or has become publicly known and made generally available through no wrongful
act of Employee or of others who were under confidentiality obligations as to
the item or items involved.
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(b) Third Party Information. Employee recognizes that the Company has
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received and in the future will receive from third parties their confidential or
proprietary information subject to a duty on the Company's part to maintain the
confidentiality of such information and to use it only for certain limited
purposes. Employee agrees to hold all such confidential or proprietary
information in the strictest confidence and not to disclose it to any person,
firm or corporation or to use it except as necessary in carrying out Employee's
work for the Company consistent with the Company's agreement with such third
party.
7. Covenant Not to Solicit.
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(a) Until one year after termination of Employee's employment with the
Company for any reason, the Employee agrees that he shall not solicit, induce,
attempt to hire, recruit, encourage, take away, hire any employee of the Company
or cause an employee to leave their employment either for Employee or for any
other entity or person.
(b) The Employee represents that he (i) is familiar with the foregoing
covenant not to solicit, and (ii) is fully aware of his obligations hereunder,
including, without limitation, the reasonableness of the length of time, scope
and geographic coverage of this covenant.
8. Definition of Terms. The following terms referred to in this
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Agreement shall have the following meanings:
(a) Change of Control. "Change of Control" shall mean the occurrence
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of any of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
30% or more of the total voting power represented by the Company's then
outstanding voting securities; provided, however, that an initial public
offering of the Company's Common Stock shall not constitute a Change of Control;
or
(ii) A change in the composition of the Board of Directors of the
Company occurring within a two-year period, as a result of which fewer than a
majority of the directors are Incumbent Directors. "Incumbent Directors" shall
mean directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board of Directors
of the Company with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but shall not
include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of directors to the
Company); or
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
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(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such a merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) Involuntary Termination. "Involuntary Termination" shall mean
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without the Employee's express written consent (i) a significant reduction of
the Employee's duties, position or responsibilities, or the removal of the
Employee from such position and responsibilities, unless the Employee is
provided with a comparable position (i.e., a position of equal or greater
organizational level, duties, authority, compensation and status); (ii) a
substantial reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Employee
immediately prior to such reduction; (iii) a reduction by the Company in the
Base Compensation of the Employee as in effect immediately prior to such
reduction, other than a reduction which is part of and generally consistent with
a general reduction of officer salaries; (iv) a material reduction by the
Company in the kind or level of employee benefits to which the Employee is
entitled immediately prior to such reduction with the result that the Employee's
overall benefits package is significantly reduced, other than a reduction which
is part of and generally consistent with a general reduction of officer benefits
packages; (v) the relocation of the Employee to a facility or a location more
than 25 miles from the Employee's then present location, without the Employee's
express written consent; (vi) any purported termination of the Employee by the
Company which is not effected for Disability or for Cause, or (vii) the failure
of the Company to obtain the assumption of this agreement by any successors
contemplated in Section 9 below.
(c) Cause. "Cause" shall mean (i) any act of personal dishonesty
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taken by the Employee in connection with his responsibilities as an employee and
intended to result in substantial personal enrichment of the Employee, (ii) the
conviction of a felony which the Company's Board of Directors reasonably
believes had or will have a material detrimental effect on the Company's
reputation or business, (iii) a willful act by the Employee which constitutes
gross misconduct and which is injurious to the Company, and (iv) continued
violations by the Employee of the Employee's obligations which are demonstrably
willful and deliberate on the Employee's part after there has been delivered to
the Employee a written demand for performance from the Company which describes
the basis for the Company's belief that the Employee has not substantially
performed his duties.
(d) Disability. "Disability" shall mean that the Employee has been
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unable to perform his duties under this Agreement as the result of his
incapacity due to physical or mental illness, and such inability, at least 26
weeks after its commencement, is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the Employee
or the Employee's legal representative (such Agreement as to acceptability not
to be unreasonably withheld). Termination resulting from Disability may only be
effected after at least 30 days' written notice by the Company of its intention
to terminate the Employee's employment. In the event that the Employee resumes
the performance of substantially all of his duties hereunder before the
termination of his employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
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(e) Shipments. "Shipments" shall mean invoiced sales of product
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net of all discounts, trade-ins, allowances, and adjustments. Shipping and
handling charges, telemarketing, and other custom merchandising work done by the
Company on a subcontracting basis shall be excluded from the calculation of
Shipments.
(f) Termination Date. "Termination Date" shall mean (i) if this
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Agreement is terminated by the Company for Disability, thirty (30) days after
notice of termination is given to the Employee (provided that the Employee shall
not have returned to the performance of the Employee's duties on a full-time
basis during such thirty (30) day period), (ii) if the Employee's employment is
terminated by the Company for any other reason, the date on which a notice of
termination is given or such other date specified in the notice of termination,
or (iii) if the Agreement is terminated by the Employee, the date on which the
Employee delivers the notice of termination to the Company.
9. Successors.
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(a) Company's Successors. Any successor to the Company (whether
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direct or indirect and whether by purchase, lease, merger, consolidation,
liquidation or otherwise) to all or substantially all of the Company's business
and/or assets shall assume the obligation under this Agreement and agree
expressly to perform the obligations under this Agreement in the same manner and
to the same extent as the Company would be required to perform such obligations
in the absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this Section
or which becomes bound by the terms of this Agreement by operation of law.
(b) Employee's Successors. The terms of this Agreement and all rights
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of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
10. Returning Company Documents. Employee agrees that, at the time of
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leaving the employ of the Company, Employee will deliver to the Company (and
will not keep in Employee's possession, recreate or deliver to anyone else) any
and all devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, materials, equipment, other documents or
property, or reproductions of any aforementioned items developed by Employee
pursuant to Employee's employment with the Company or otherwise belonging to
the Company, its successors or assigns.
11. Notice.
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(a) General. Notices and all other communications contemplated by
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this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or when mailed by U.S. registered or certified mail,
return receipt requested and postage prepaid. In the case of the Employee,
mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company,
mailed notices shall be addressed to its corporate headquarters, and all notices
shall be delivered to the attention of its Secretary.
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(b) Notice of Termination. Any termination by the Company for Cause
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or by the Employee as a result of a voluntary resignation or an Involuntary
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with this Section. Such notice shall indicate the
specific termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the termination
date (which shall be not more than 30 days after the giving of such notice).
The failure by the Employee to include in the notice any fact or circumstance
which contributes to a showing of Involuntary Termination shall not waive any
right of the Employee hereunder or preclude the Employee from asserting such
fact or circumstance in enforcing his right hereunder.
12. Mediation; Arbitration.
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(a) Mediation. The Employee agrees that any dispute or controversy
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arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, performance, breach or termination
thereof, shall first be submitted to mediation. The mediation shall be
conducted within 45 days of either party notifying the other party of a dispute
or controversy regarding this Agreement or Employee's employment relationship
with the Company. Unless otherwise provided for by law, the Company and
Employee shall each pay half the costs and expenses of the mediation.
(b) Arbitration. Employee agrees that any dispute or controversy
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arising out of, relating to, or in connection with this Agreement, or the
interpretation, validity, construction, or breach thereof, shall be finally
settled by binding arbitration to be held in San Jose, California under the
National Rules for the Resolution of Employment Disputes supplemented by the
Supplemental Procedures for Large Complex Disputes, of the American Arbitration
Association as then in effect (the "Rules"). The arbitrator may grant
injunctions or other equitable relief in such dispute or controversy. The
decision of the arbitrator shall be final, conclusive and binding on the parties
to the arbitration. Judgment may be entered on the arbitrator's decision in any
court having jurisdiction.
(c) The arbitrator(s) shall apply California law to the merits of any
dispute or claim, without reference to rules of conflicts of law. The
arbitration proceedings shall be governed by the Rules.
(d) Unless otherwise provided for by law, the Company and the Employee
shall each pay half of the costs and expenses of such arbitration.
(e) The arbitrator shall be selected as follows: in the event the
Company and the Employee agree on one arbitrator, the arbitration shall be
conducted by such arbitrator. In the event the Company and the Employee do not
do agree, the Company and the Employee shall each select one independent,
qualified arbitrator and the two arbitrators so selected shall select the third
arbitrator. The Company reserves the right to object to any individual
arbitrator who shall be employed by or affiliated with a competing organization.
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(f) At the request of either party, arbitration proceedings will be
conducted in the utmost secrecy; in such case all documents, testimony and
records shall be received, heard and maintained by the arbitrators in secrecy
under seal, available for the inspection only of the Company or the Employee and
their respective attorneys and their respective experts who shall agree in
advance and in writing to receive all such information confidentially and to
maintain such information in secrecy until such information shall become
generally known.
(g) The decree or judgment of an award rendered by the arbitrators may
be entered in any court having jurisdiction thereof.
(h) Reasonable notice of the time and place of arbitration shall be
given to all persons, other than the parties, as shall be required by law, in
which case such persons or those authorized representatives shall have the right
to attend and/or participate in all the arbitration hearings in such manner as
the law shall require.
(i) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EMPLOYEE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EMPLOYEE
AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH
THIS EMPLOYMENT AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, OR
BREACH THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE
CONSTITUTES A WAIVER OF EMPLOYEE'S RIGHT TO A JURY TRIAL AS TO THESE ISSUES
ONLY.
13. Miscellaneous Provisions.
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(a) No Duty to Mitigate. The Employee shall not be required to
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mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Employee may receive from any
other source.
(b) Waiver. No provision of this Agreement shall be modified, waived
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or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
(c) Whole Agreement. No agreements, representations or understandings
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(whether oral or written and whether express or implied) which are not expressly
set forth in this Agreement have been made or entered into by either party with
respect to the subject matter hereof.
(d) Choice of Law. The validity, interpretation, construction and
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performance of this Agreement shall be governed by the laws of the State of
California.
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(e) Severability. The invalidity or unenforceability of any provision
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or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(f) No Assignment of Benefits. The rights of any person to payments
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or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this Section 13(f) shall be
void.
(g) Employment Taxes. All payments made pursuant to this Agreement
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will be subject to withholding of applicable income and employment taxes.
(h) Assignment by Company. The Company may assign its rights under
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this Agreement to an affiliate, and an affiliate may assign its rights under
this agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of the assignment. In the
event of any such assignment, the term "Company" when used in a section of this
Agreement shall mean the corporation that actually employs the Employee.
(i) Amendments. This Agreement shall not be changed or modified in
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whole or in part except by an instrument in writing signed by each party hereto.
(j) Counterparts. This Agreement may be executed in counterparts,
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each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
(k) Effect of Headings. The section headings herein are for
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convenience only and shall not affect the construction or interpretation of this
Agreement.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.
COMPANY NOTIFY CORPORATION
By: /s/ Xxxx XxXxxx
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Title: Chief Executive Officer
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Date: March 1, 1997
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EMPLOYEE
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Date: March 1, 1997
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EXHIBIT A
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For the 1997 fiscal year, your Shipment quota per quarter shall be as
follows:
First Quarter $ 400,000
Second Quarter $ 600,000
Third Quarter $1,100,000
Fourth Quarter $1,700,000
Annual Total $3,800,000
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EXHIBIT B
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Commissions
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For fiscal year 1997, Commissions shall be paid monthly 15 days after the
end of the month based on Shipments (as defined in Section 8(e) of the
Agreement) and the following rate schedule:
Commission Rate
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Margin of Product Commission Rate
51% to 90% 1.5%
26% to 50% 0.75%
15% to 25% 0.35%
less than 14% 0%
Bonus
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In addition to any commissions paid, Employee shall receive a $5,000 bonus
if Employee achieves $500,000 of new Shipments to the following companies:
Ameritech, Xxxx Atlantic, NYNEX, Sprint, SNET or
International Telco.
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