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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement is made and entered into effective as of
July 1, 2001 by and between Internet Pictures Corporation, a Delaware
corporation having an office at 0000 Xxxx Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000, and the individual named in Exhibit A ("Executive").
WHEREAS, the Company wishes to employ Executive with the title in
Exhibit A and upon the terms and conditions hereinafter set forth, and
Executive desires to serve in such capacities upon the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and Executive hereby agree as follows:
1. Term. Executive's employment under this Agreement shall
commence on the Effective Date set forth in Exhibit A and shall continue
indefinitely as set forth herein until termination of Executive's employment as
provided in Section 6 hereof. If Executive's employment is terminated pursuant
to Section 6 hereof, the Term of Employment shall expire as of the Termination
Date (as defined in Section 6 hereof).
2. Duties and Activities. During the Term of Employment,
Executive will faithfully perform those duties and responsibilities
commensurate with the position set forth in Exhibit A. Executive shall
participate and perform such other responsibilities and duties as may be
reasonably determined in the future by the Company's Chief Executive Officer
("CEO") or other officer designated in Exhibit A as Executive's Direct
Supervisor. Executive will devote Executive's entire business time, attention
and energy and use best efforts to advance the business and welfare of the
Company in furtherance of the policies established by the CEO. Executive shall
report to officers on the Senior Executive level (Senior Vice President,
Executive Vice President, President, CEO) as the CEO may determine. Executive
shall not engage in any other employment activities for any direct of indirect
remuneration, except that Executive may continue to devote reasonable time to
the management of personal investments, participation in community and
charitable affairs, and the activities as further set forth in Exhibit B
hereto, so long as such activities do not interfere with Executive's
performance of his duties under this Agreement.
3. Former Employers. Executive represents and warrants that
employment by the Company will not conflict with and will not be constrained by
any prior or current employment, consulting or other relationship. Executive
represents and warrants that Executive does not possess confidential
information arising out of any such employment, consulting or other
relationship, which in Executive's best judgment, would be utilized in
connection with employment by the Company. Executive has documented in Exhibit
C any prior inventions claimed by Executive.
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4. Compensation.
4.1 Base Salary. In consideration for Executive's
services under this Agreement, Executive will be paid a
salary at an annual rate set forth in Exhibit A, or at such
other annual salary rate as determined by the CEO, the Board
or its Compensation Committee, but in any event at least
equal to the salary rate in effect immediately preceding any
change thereto. Executive's annual salary rate in effect from
time to time is referred to herein as the "Base Salary".
Executive's Base Salary shall be paid in periodic
installments at such times as salaries are generally paid to
other senior executives of the Company.
4.2 Earned Bonus, Performance Bonus and Other
Compensation. Executive shall be eligible to receive Bonus
Compensation equal to the Bonus Rate set forth in Exhibit A
at target and based on objectives to be mutually defined.
Bonus Compensation shall be paid on terms agreed to and
documented in writing. Executive's compensation by payments
of Base Salary and Bonus Compensation shall not be deemed
exclusive and shall not prevent Executive from participating
in any other incentive compensation, profit sharing or
benefit plan made available by the Company to its executive
Executives generally. The Base Salary payments hereunder
shall not in any way limit or reduce any other obligation of
the Company hereunder, and no other compensation, benefit or
payment hereunder shall in any way limit or reduce the
obligation of the Company to pay Executive's Base Salary.
4.3 Stock Option Grant. The Company shall grant to
Executive an incentive stock option (the "Option"), (to the
extent permitted by the applicable provisions of Section 422
of the Internal Revenue Code) to purchase the number of
shares of the common stock of the Company as set forth in
Exhibit A. Executive shall be entitled to option shares in an
amount and consistent with option shares being granted to the
Company's other senior executive officers, which option
shares will be issued pursuant to the Company's employee
stock option plans, subject to approval by the Board of
Directors, and shall include the following terms:
(1) The option shares will vest as set forth in Exhibit
A.
(2) The exercise price for the option shall be at the
closing price on the date the Board of Directors approves the
option (the "Date of Grant"), as appropriately adjusted for
stock splits, stock dividends, and the like.
(3) The option shall be exercisable upon vesting or
within 90 days after termination of Executive's employment
with the Company. Termination shall occur after all
Continuation Payments, as defined in Section 7, have been
made by the Company to Executive.
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(4) Issuance of the option shall be in accordance with
all applicable securities laws and the other terms and
conditions of the Company's Stock Option Plan and form of the
Stock Option Agreement.
(5) The Option will have a term of ten years.
(6) In the event of a Change of Control (as defined in
the Company's 2001 Equity Incentive Plan), all unvested
options will vest and become fully exercisable. In the event
of the death of the Executive; or the Permanent Disability of
Executive (as defined in Section 6.1 (b) hereof), vesting of
options will continue for the 90 day period thereafter. In
the event of the termination of Executive without Cause (as
defined in Section 6.1 (c) hereof) or termination by
Executive for Good Reason (as defined in Section 6.1(e), then
vesting of options will continue in accordance with their
terms over the 6 month severance period.
5. Benefits.
5.1 Participation. Executive shall be entitled to
participate in all fringe benefit programs maintained by the
Company and made available to its executive officers from
time to time. The Company shall maintain for Executive
disability, health, vision, dental and prescription drug
coverage comparable to that provided to executives of the
Company. Executive shall be entitled to four (4) weeks of
paid vacation per year, which vacation time shall accrue in
accordance with the Company's policies.
5.2 Expenses. The Company will pay or reimburse
Executive for such reasonable travel, entertainment or other
business expenses incurred on behalf of the Company in
connection with the performance of Executive's duties
hereunder but only to the extent that such expenses were
either specifically authorized by the Company or incurred in
accordance with policies established by the CEO for
executives and provided that Executive shall furnish the
Company with such evidence relating to such expenses as the
Company may reasonably require to substantiate such expenses
for tax purposes.
6. Termination of Employment.
6.1 Circumstances of Termination. Notwithstanding the
terms set forth in Section 1 hereof, Executive's employment shall
terminate under any of the following circumstances and the date of
such an occurrence, unless otherwise provided below, shall be
Executive's "Termination Date":
(a) Death. Immediately, in the event of
Executive's death.
(b) Permanent Disability. At the option of the
Company, if Executive becomes physically or mentally incapacitated or
disabled so that (i) Executive is unable
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to perform for the Company substantially the same services as
Executive performed prior to incurring such incapacity or disability
or to devote a substantial portion of Executive's business time or use
Executive's best efforts to advance the business and welfare of the
Company or otherwise to perform Executive's duties under this
Agreement, (ii) such condition exists for an aggregate of six (6)
months in any twelve (12) month consecutive calendar months, and (iii)
such incapacity or disability is incapable of reasonable
accommodations under applicable law, including but not limited to the
Americans with Disabilities Act of 1990, as amended (a "Permanent
Disability"), the Company, at its option and expense, is entitled to
retain a physician reasonably acceptable to Executive to confirm the
existence of such incapacity or disability, and the determination of
such physician is binding upon the Company and Executive.
(c) Cause. At the option of the Company, if
Executive:
(i) has been convicted of a felony; or
(ii) has embezzled or misappropriated
Company funds or property or that
of the Company's customers,
suppliers or affiliates; or
(iii) has violated any material term of
this Employment Agreement; or
(iv) has demonstrated gross negligence
or willful misconduct in
connection with the performance of
Executive's duties hereunder;
provided, however, that with respect to subsections (iii) and (iv)
above, the Company's right to terminate Executive shall be conditioned
on (A) the Company giving Executive written notice specifically
referring to the pertinent subsection above and describing the
specific circumstances and/or actions purportedly giving rise to the
occurrence of such item; and (B) failure by Executive, within ten (10)
days after receipt of any such notice to cease the actions and/or
reinstate or rectify the circumstances described in such notice to the
reasonable satisfaction of the CEO. With respect to these subsections,
the Company shall have the right to place Executive on administrative
leave pending investigation of the circumstance(s) or action(s)
purportedly giving rise to the occurrence of such items.
(d) Without Cause. At the option of the Company
at any time for any reason other than those referred to above or for
no reason at all, whereupon the Company shall be obligated to make
those payments set forth in Section 7 hereof but if, and only if,
Executive executes a mutual, valid and comprehensive release of any
and all claims that the Executive may have against the Company in a
form provided by the Company.
(e) Resignation for Good Reason.
(i) Executive, at Executive option,
may resign for "Good Reason":
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(1) because the Company has
unreasonably reduced the role or
responsibilities of Executive;
(2) because the Company has reduced
Executive's Base Salary from the
level in effect immediately prior
to such change, with the exception
of a company-wide reduction of
compensation due to economic
considerations, provided that the
foregoing shall not limit or
derogate from the Company's
obligations set forth in Section 4
above;
(3) because the Company has breached
any material term of this
Agreement other than as noted in
subsections (1) and (2) above;
(4) because the Company requests
Executive to relocate; or
(5) the Company has relocated
Executive's principal office
location more than 20 miles from
its current location.
(6) In the event that Executive
terminates this Agreement for Good
Reason, the Company shall become
obligated to make those payments
set forth in Section 7 hereof.
6.2 Notice of Termination. Any intent to terminate
employment by Executive pursuant to Section 6.1(e) shall be
communicated by written notice to the Company setting forth
in detail the specific actions deemed to constitute Good
Reason. If the Company does not respond within ten (10) days
from such notice, the resignation shall be deemed effective.
The Company may, within the ten (10) day period, correct such
condition giving rise to Executive's notice or dispute
Executive's claims by giving written notice of such dispute.
6.3 At-Will Employment. Notwithstanding the Company's
obligation described in Sections 6 and 7, Executive's
employment with the Company will be on an "at will" basis,
meaning that either Executive or the Company may terminate
Executive's employment at any time for any reason or no
reason, without further obligation or liability.
6.4 Resignation. Upon termination of employment,
Executive shall be deemed to have resigned from the Board of
Directors of the Company if Executive was a director.
6.5 Cooperation. After notice of termination and the 60
days thereafter, Executive shall cooperate with the Company,
as reasonably requested by the Company, to effect a
transition of Executive's
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responsibilities and to ensure that the Company is aware of
all matters being handled by Executive.
7. Payments Upon Termination of Employment.
7.1 Payments. In addition to any rights Executive may
have under Section 4.3 on the Termination Date:
(a) If the Company terminates Executive's
employment for Cause or if Executive voluntarily terminates employment
without Good Reason, the Company's obligation to compensate Executive
shall in all respects cease as of the Termination Date, except that
the Company shall pay to Executive within 30 days the Base Salary
accrued under Section 4.1, a pro-rata amount of any Bonus or other
compensation earned under Section 4.3, the value of accrued vacation
time pursuant to Section 5.1 hereof, and the reimbursable expenses
incurred under Section 5.2 of this Agreement up to such Termination
Date (the "Accrued Obligations").
(b) If Executive's employment is terminated due
to the death of Executive, the Company's obligation to compensate
Executive shall in all respects cease as of the Termination Date,
except that within thirty (30) days after the Termination Date, the
Company shall pay Executive's estate or legal representative the
Accrued Obligations.
(c) If Executive's employment is terminated
upon the Permanent Disability of Executive, the Company's obligation
to compensate Executive with respect to Base Salary (as in effect on
the Termination Date) shall continue for up to six (6) months or until
Executive is eligible for long-term disability payments from the
Company's insurance provider, whichever is sooner. In addition, the
Company shall pay Executive any Accrued Obligations within 30 days of
termination; and
(d) If Executive's employment is terminated by
the Company pursuant to Section 6.1(d), or by Executive pursuant to
Section 6.1(e) the Company's obligation to compensate Executive shall
in all respects cease, except that within thirty (30) days after the
Termination Date the Company shall pay Executive the Accrued
Obligations and during the period ending on the expiration of the
sixth month following the Termination Date the Company shall pay to
Executive each month one-twelfth (1/12th) of the annual Base Salary of
Executive in effect at the Termination Date (the "Continuation
Payments"). The Company shall be excused from the obligations of this
Section 7.1(d) if Executive breaches Executive's obligations under
this Agreement or the Confidentiality Agreement.
Notwithstanding the foregoing, in the event such termination occurs
within two (2) years of a Change of Control of the Company, the full
amount of the
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Continuation Payments will be paid in a lump sum within ten (10) days
of such Change of Control.
7.2 Medical Benefits.If Executive's employment is
terminated by the Company pursuant to Section 6.1(d) or by Executive
pursuant to Section 6.1(e), the Company shall reimburse the Executive
for the amount of Executive's premium payments for group health
coverage, if any, elected by the Executive pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"); provided, however, that the Executive shall be solely
responsible for all matters relating to Executive's continuation of
coverage pursuant to COBRA, including (without limitation) Executive's
election of such coverage and Executive's timely payment of premiums;
provided further , that upon the earlier to occur of (C) the time that
the Executive no longer constitutes a Qualified Beneficiary (as such
term is defined in Section 4980B(g)(1) of the Internal Revenue Code of
1986, as amended) and (D) the date six (6) months following the
Executive's termination, the Company's obligations to reimburse the
Executive under this subsection (ii) shall cease.
7.3 Effect on this Agreement. Any termination of
Executive's employment under this Agreement shall not affect the
continuing operation and effect of this Section and Section 8 hereof,
which shall continue in full force and effect with respect to the
Company and Executive, and their heirs, successors and assigns.
Nothing in Section 6 hereof shall be deemed to
operate as a release, settlement or discharge of any liability of
Executive to the Company or others from any action or omission by
Executive enumerated in Section 6.1 (c) hereof as a possible basis for
termination of Executive's employment for Cause.
7.4 No Duty to Mitigate. Subject to the provisions of
the Confidentiality Agreement and Section 8 of this Agreement,
Executive shall be free to accept such employment and engage in such
business as Executive may desire following the termination of
employment hereunder, and no compensation received by Executive
therefrom shall reduce or affect any payments required to be made by
the Company hereunder except to the extent expressly provided herein
or in the benefit plans of the Company.
8. Post-Employment Activities.
8.1 Conditional Nature of Severance Payments;
Non-Competition. Executive acknowledges that the
nature of the Company's business is such that during
the term of employment and for twelve (12) months
following termination of Executive's employment with
the Company (the "Noncompete Period"):
8.1.1 if Executive were to become employed by, or
substantially involved in, the business of
a Competitor, it would be very
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difficult for the Executive not to rely on
or use the Company's trade secrets and
confidential information. A "Competitor" is
defined as any person, entity or division,
whether now existing or hereafter
established, which directly competes with
the products and services of the Company.
To avoid the inevitable disclosure of the
Company's trade secrets and confidential
information, Executive agrees and
acknowledges that the Executive's right to
receive the severance payments and other
benefits set forth in Section 7 (to the
extent the Executive is otherwise entitled
to such payments) shall be conditioned upon
(a) the Executive not directly or
indirectly engaging in (whether as an
employee, consultant, proprietor, partner,
director or otherwise), nor having any
ownership interest directly or indirectly
in more than 1% in, or participating in the
financing, operation, management or control
of, a Competitor; and (b) Executive
continuing to observe, and not be in breach
of, the provisions of the Confidentiality
Agreement and Invention Assignment
Agreement (the "Confidential Agreement")
entered into by Executive and the Company.
Upon any breach of this Section or the
Confidentiality Agreement, all severance
payments pursuant to Section 7 shall
immediately cease.
The obligations under the Confidential
Agreement shall survive termination of this
Agreement for any reason.
8.1.2 Executive shall not, without the prior
written consent of the Company, directly or
indirectly, (i) solicit, request, cause or
induce any person who is at the time, or 12
months prior thereto had been, an employee
of or a consultant of the Company to leave
the employ of or terminate such person's
relationship with the Company or (ii)
attempt to limit or interfere with any
business agreement or relationship existing
between the Company and/or its affiliates
with a third party.
8.1.3 Executive shall not disparage the business
reputation of the Company (or its
management team) or take any actions that
are harmful to the Company's goodwill with
its customers, content providers, bandwidth
or other network infrastructure providers,
vendors, employees, the media or the
public. Executive recognizes that such
actions would cause irreparable harm for
which there is no adequate remedy at law
and that the Company may seek in state or
federal court, and is entitled to a
temporary restraining
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order and to preliminary and permanent
injunctive relief in state or federal court
to stop any such conduct or statements for
any breach or threatened breach of this
Section 8 during the term of employment and
for a period of two years thereafter.
8.1.4 The Company spends considerable amounts of
time, money and effort in developing and
maintaining good will in its industry.
Executive agrees the covenants contained
within this Section 8: (i) are reasonable
and necessary in all respects to protect
the goodwill, trade secrets, confidential
information, and business interests of
Company; (ii) are not oppressive to
Executive; and (iii) do not impose any
greater restraint on Executive than is
reasonably necessary to protect the
goodwill, trade secrets, confidential
information and legitimate business
interests of Company.
8.1.5 Executive acknowledges and agrees that
promises made by the Company in this
Agreement such as (i) the establishment of
an employment relationship and (ii) the
commitment to provide severance
compensation in the event of the
termination of Executive's employment for
reasons other than Cause (subject to
certain requirements on the part of
Executive), constitute one form of
consideration for Executive's agreement to
and compliance with the restrictive
covenants in this Agreement. Executive
acknowledges and agrees that Company's
agreement to provide Executive with access
to Company's confidential and proprietary
information is a separate form of
consideration supporting the restrictive
covenants in this Agreement. Executive
acknowledges and agrees that the Company's
agreement to permit the use of the
Company's goodwill with the Company's
customers, investors and content providers
is a separate form of consideration
supporting the restrictive covenants in
this Agreement. Executive acknowledges and
agrees that the Company's commitment to
providing Executive with unique skill
development and training is a separate form
of consideration supporting the restrictive
covenants in this Agreement.
8.2 Exclusions. No provision of this Agreement shall be
construed to preclude Executive from performing the same
services which the Company hereby retains Executive to
perform for any person or entity which is not a Competitor of
the Company upon the expiration or termination of Executive's
employment (or any post-employment
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consultation) so long as Executive does not thereby violate
any term of the Confidentiality Agreement.
9. Remedies. Executive's obligations under the Confidentiality
Agreement under Section 8 of this Agreement shall survive the
expiration or termination of Executive's employment (whether through
Executive's resignation or otherwise) with the Company. Executive
acknowledges that a remedy at law for any breach or threatened breach
by Executive of the provisions of the Confidentiality Agreement or
Section 8 would be inadequate and Executive therefore agree that the
Company shall be entitled to injunctive relief in any court of
competent jurisdiction in the case of any such breach or threatened
breach. Executive acknowledges that this Section does not limit the
Company's right to seek monetary damages for breach of this Agreement.
10. Miscellaneous.
10.1 Notice. All notices, requests, consents and other
communications hereunder shall be in writing, shall be
addressed to the receiving party's address set forth below or
to such other address as a party may designate by notice
hereunder, and shall be either (i) delivered by hand, (ii)
made by telecopy, (iii) send by overnight courier, or (iv)
sent by registered or certified mail, return receipt
required, postage prepaid.
If to the Company: Internet Pictures Corporation
0000 Xxxx Xxxxxx Xxxx
Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
If to Executive: Home address of Executive as
maintained in the Company's
personnel records.
10.2 Modification and No Waiver of Breach. No waiver or
modification of this Agreement shall be binding unless it is
in writing signed by the parties hereto. No waiver by a party
of a breach hereof by the other party shall be deemed to
constitute a waiver of a future breach, whether of a similar
or dissimilar nature, except to the extent specifically
provided in any written waiver under this Section.
10.3. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA EXCLUDING ITS CONFILICT OF LAW
PRINCIPALS. ALL QUESTIONS RELATING TO THE VALIDITY AND
PERFORMANCE
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HEREOF AND REMEDIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAW.
10.4. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute
one and the same agreement.
10.5 Captions. The captions used herein are for ease of
reference only and shall not define or limit the provisions
hereof.
10.6 Assistance in Litigation. Executive shall, during
and after termination of employment, upon reasonable notice,
furnish such information and proper assistance to the Company
as may reasonably be required by the Company in connection
with any litigation in which it or any of its subsidiaries or
affiliates is, or may become a party; provided, however, that
such assistance following termination shall be furnished at
mutually agreeable times and for mutually agreeable
compensation.
10.7 Entire Agreement.This Agreement, any written
agreement referred to herein and the Exhibits hereto
constitute the entire agreement between the parties hereto
relating to the matters encompassed herby and supersede any
prior or contemporaneous written or oral agreements.
10.8 Successors.
(a) Any successor to the Company (whether
direct or indirect and whether by purchase,
lease, merger, consolidation, liquidation
or otherwise) to all or substantially all
of the Company's business and assets shall
assume the obligations 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 the Agreement, the
term "Company" shall include successor to
the Company's business and assets that
executes and delivers the assumption
agreement described in this subsection (a)
or which becomes bound by the terms of this
Agreement by operation of law.
(b) The terms of this Agreement and all rights
of Executive hereunder shall insure to the
benefit or, and be enforceable by,
Executive's personal or legal
representatives, executors, administrators,
successors, heirs, devisees and legatees.
10.9 Arbitration. Any dispute, controversy, or claim
arising out of, in connection with, or in relation to this
Agreement and its exhibits, except as
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provided in Section 9 hereof, shall be settled by arbitration
in California pursuant to the Commercial Rules then in effect
of the American Arbitration Association and in no other
place. Any award or determination shall be final, binding and
conclusive upon the parties, and a judgment rendered may be
entered in any court having jurisdiction thereof. Executive
and the Company knowingly waive any and all rights to a jury
trial in any form. The parties hereby expressly waive
punitive damages, and under no circumstances shall an award
contain any amount that in any way reflects punitive damages.
Each party shall bear its own expenses relating to the
arbitration, unless otherwise determined in arbitration.
It is intended that controversies or claims
submitted to arbitration under this Section shall remain
confidential, and to that end it is agreed by the parties
that neither the facts disclosed in the arbitration, the
issues arbitrated, nor the views or opinions of any persons
concerning them, shall be disclosed to third person at any
time, except to the extent necessary to enforce an award or
judgment or as require by law or in response to legal process
or in connection with such arbitration. Nothing in this
Section shall limit the Company's right to seek equitable
remedies in any court of competent jurisdiction for breach of
this Agreement.
IN WITNESS HEREOF, this Agreement has been duly executed as of the
Effective date written in Exhibit A.
INTERNET PICTURES CORPORATION
By: /s/ Xxxxx Xxxx
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Name: Xxxxx Xxxx
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Title: SVP/GM
------------------------------------
/s/ Xxxx Xxxxxx
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Executive
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EXHIBIT A
EFFECTIVE DATE OF EMPLOYMENT AGREEMENT: JULY 01, 2001
NAME: XXXX XXXXXX
TITLE: CHIEF FINANCIAL OFFICER AND EXECUTIVE
VICE PRESIDENT
DIRECT SUPERVISOR: XXXXXX XXXXXXXXXX
ANNUAL BASE SALARY: $225,000
TARGET BONUS RATE: 50%
OPTIONS:
NUMBER: 750,000
VESTING START DATE: JUNE 28TH, 2001
VESTING TERMS: 33.3% VESTING ONE YEAR FROM GRANT DATE, THEN
1/24TH EACH MONTH THEREAFTER FOR FULL VESTING
THREE YEARS FROM GRANT DATE.
OTHER (STATE "NONE" IF NO OTHER ITEMS SHOULD BE NOTED):
NONE
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EXHIBIT B
OTHER POSITIONS
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EXHIBIT C
PRIOR INVENTIONS
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