EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is dated March 2, 2004 between
IQ Biometrix, Inc., a Delaware corporation (the "Company") and ▇▇▇▇▇▇▇ ▇. ▇.
▇▇▇▇▇▇▇▇▇ (the "Executive").
1. EMPLOYMENT
The Company hereby agrees to employ the Executive, and the Executive
hereby agrees to be employed by the Company, on the terms and conditions set
forth herein. This Agreement supercedes and cancels that certain employment
agreement between the parties dated July 24, 2002 (the "Prior Agreement").
2. TERM AND RENEWAL
2.1 Term. This Agreement shall commence January 1, 2004 (the
"Commencement Date") and terminate on December 31, 2005 (the "Expiration Date")
unless extended by mutual consent for an additional 24 month period pursuant to
Section 2.2 hereof or sooner terminated as hereinafter provided (each such
period, an "Employment Period" and all such periods collectively, the "Term").
2.2 Renewal. Following the expiration of the initial or any renewal
Employment Period and provided that this Agreement has not been terminated by
the Executive or the Company pursuant to its terms, this Agreement may be
renewed upon the mutual consent of the parties on the terms set forth herein for
an additional twenty-four (24) month period.
3. POSITION AND DUTIES
3.1 Position. The Executive hereby agrees to serve as President and
Chief Executive Officer of the Company. In addition, for so long as such
Executive is elected by the Company's stockholders to serve as a member of the
board of directors of the Company (the "Board"), then, for so long as the
Executive is an employee of the Company, the Executive hereby agrees to serve as
a member and Chairman of the Board thereof if so nominated by the Board. At the
Company's request, the Executive may, at the Executive's discretion, serve the
Company and/or its respective subsidiaries and affiliates in other offices and
capacities in addition to the foregoing, but shall not be required to do so. In
the event that the Executive, during the term of this Agreement, serves in any
one or more of the aforementioned capacities, the Executive's compensation shall
not be increased beyond that specified in Section 4 of this Agreement. In
addition, in the event the Company and the Executive mutually agree that the
Executive shall terminate the Executive's service in any one or more of the
aforementioned capacities, or the Executive's service in one or more of the
aforementioned capacities is terminated, the Executive's compensation, as
specified in Section 4 of this Agreement, shall not be diminished or reduced in
any manner.
3.2 Duties. The Company agrees that the duties that may be assigned
to the Executive shall be the usual and customary duties of the offices of
President and Chief Executive Officer, and such other activities which may be
set forth in the Company Articles of Incorporation, Bylaws and other such
corporate documentation.
3.3 Devotion of Time and Effort. Executive shall devote
substantially all of his business time and effort in performing Executive's
duties as required hereunder and to act in the best interests of the Company at
all time.
3.4 Other Activities. The Executive may engage in other activities
for the Executive's own account while employed hereunder, including without
limitation charitable, community and other business activities, provided that
such activities do not compete directly or indirectly with the actual or
potential business of the Company and/or which interfere with the performance of
the Executive's duties hereunder, it being understood by the parties that the
Executive shall always put the best interest of the Company first except as when
the Executive may exercise his rights as a shareholder.
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4. COMPENSATION AND RELATED MATTERS
4.1 Salary. During the Employment Period, the Company shall pay the
Executive an annual salary of One Hundred Forty-Two Thousand and Seven Hundred
Dollars ($142,700.00) during the Term of this Agreement ("Base Salary").
4.2 Incentive Stock Options. Executive shall be granted an Incentive
Stock Option (ISO) to purchase an additional 200,000 shares of the Company's
Common Stock at an exercise price equal to the fair market value on the date of
such grant and pursuant to the terms of the Company's ISO Plan as and when
adopted.
4.3 Business Expenses. The Company shall promptly, in accordance
with Company policy, reimburse the Executive for all reasonable business
expenses incurred in accordance with and subject to the limits set forth in the
Company's written policies with respect to business expenses, including, without
limitation, club memberships, business seminar fees, professional association
dues, reasonable entertainment expenses incurred by the Executive in connection
with the business of the Company and/or its respective subsidiaries and
affiliates, and reasonable travel expenses, including all airfare, hotel and
rental car expenses, incurred by the Executive in traveling in connection with
the business of the Company, upon presentation to the Company of written
receipts for such expenses.
4.4 Milestone Bonuses. In addition to the compensation described
above, the Company shall award the Executive certain cash bonuses in the amounts
provided on Exhibit A attached hereto in the event that during Executive's
employment with the Company, the Company achieves certain milestones described
on Exhibit A hereto. Any bonus earned under this Section 4.4 shall be paid to
Executive within thirty (30) days following entitlement.
4.5 Other Benefits. During the Employment Period, the Company shall
provide to the Executive such other benefits as the Company may from time to
time make available to its other executive employees.
4.6 Automobile and Housing Allowance. The Company shall provide the
Executive with a non-accountable housing allowance of One Thousand, Five Hundred
Dollars ($1,500) per month and an automobile allowance of One Thousand Dollars
($1,000) per month during the Term.
4.7 Vacation. The Executive shall be entitled to three (3) vacation
weeks (fifteen (15) business days) in each calendar year. In addition, the
Executive will be entitled to all Company holidays.
5. TERMINATION
5.1 Death. The Executive's employment hereunder shall terminate upon
his death.
5.2 Disability. The Executive's employment hereunder shall terminate
on the Executive's physical or mental disability or infirmity which, in the
opinion of a competent physician selected by the Board, renders the Executive
unable to perform properly his duties under this Agreement for six (6)
consecutive calendar months or for shorter periods aggregating one hundred and
eighty (180) business days in any twelve (12) month period, but only to the
extent that such definition does not violate the Americans with Disabilities
Act.
5.3 Cause. The Company may terminate the Executive for Cause
immediately and at any time, upon written notice to Executive. For purposes of
this Agreement, "Cause" shall mean:
(a) Any conviction of Executive for commission of or participation
in a felony crime or a crime involving moral turpitude; or
(b) Any willful commission of any act of theft, embezzlement or
misappropriation against the Company, which causes material harm to the
Company; or
(c) Any reprimand, citation, censure, or other official action of
the Securities and Exchange Commission or any regulatory agency having
competent jurisdiction; or
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(d) The gross negligence, willful bad act, or unconscionable
behavior and/or continued failure to substantially perform the Executive's
duties hereunder (other than such failure resulting from the Executive's
incapacity due to physical or mental illness), which failure is not
remedied within a reasonable time after written demand for substantial
performance is delivered by the Company which specifically identifies the
manner in which the Company believes that the Executive has not
substantially performed the Executive's duties (except the failure to
operate the Company profitability in and of itself shall not constitute
Cause under this section).
(e) Any material addiction to drugs, alcohol or other regulated
substances
5.4 Termination Without Cause. The Company may terminate this
Agreement without Cause at any time, provided that the Company first delivers to
the Executive the Company's written election to terminate this Agreement at
least thirty (30) days prior to the effective date of termination.
5.5 Executive's Resignation. The Executive may resign his duties
under this Agreement upon thirty (30) days prior written notice to the Company.
5.6 Change of Control. The Executive may terminate this Agreement,
upon at least ten (10) days' prior written notice to the Company at any time
following a "Change in Control" (as hereinafter defined) of the Company. For
purposes of this Agreement, a "Change in Control" shall mean the occurrence of
any of the following events:
(a) Any combination of the individuals constituting the Board as of
the date of this Agreement (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that if
the election, or nomination for election by the Company's stockholders, of
any new director was approved by a vote of at least a majority of the
Incumbent Board, such new director shall be considered a member of the
Incumbent Board;
(b) An acquisition of any voting securities of the Company (the
"Voting Securities") by any "person" (as the term "person" is used for
purposes of Section 13(d) or Section 14(d) of the Securities Exchange Act
of 1934, as amended (the "1934 Act")) immediately after which such person
has "beneficial ownership" (within the meaning of Rule 13d-3 promulgated
under the ▇▇▇▇ ▇▇▇) of Twenty-Five Percent (25%) or more of the combined
voting power of the Company's then outstanding Voting Securities unless
such acquisition was approved by a vote of at least one more than a
majority of the Incumbent Board; or
(c) Approval by the stockholders of the Company of:
(i) A merger, consolidation, share exchange or reorganization
involving the Company, unless the stockholders of the Company,
immediately before such merger, consolidation, share exchange or
reorganization, own, directly or indirectly immediately following
such merger, consolidation, share exchange or reorganization, more
than Fifty Percent (50%) of the combined voting power of the
outstanding Voting Securities of the corporation that is the
successor in such merger, consolidation, share exchange or
reorganization (the "Surviving Company") in substantially the same
proportion as their ownership of the Voting Securities immediately
before such merger, consolidation, share exchange or reorganization;
(ii) A complete liquidation or dissolution of the Company; or
(iii) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company.
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5.7 Non-renewal. The Company may terminate this Agreement upon the
expiration of any Employment Period, provided that the Company gives written
notice of such non-renewal to the Executive at least thirty (30) days prior to
the expiration of such Employment Period.
5.8 Notice of Termination. Any termination of the Executive's
employment by the Company or the Executive shall be communicated by written
Notice of Termination to the other party. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice that shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
5.9 Date of Termination. The effective date of the Executive's
termination depends on the type of termination applied. "Date of Termination"
shall mean the following:
(a) If the Executive's employment is terminated by his death, the
date of his death;
(b) If the Executive's employment is terminated by reason of his
disability, the date of the opinion of the physician referred to in
Section 5.2 hereof;
(c) If the Executive's employment is terminated by the Company for
Cause pursuant to Section 5.3 hereof, or without Cause by the Company
pursuant to Section 5.4 hereof, the date specified in the Notice of
Termination;
(d) If the Executive resigns (pursuant to Section 5.5 hereof), or
his employment is terminated due to a Change of Control (pursuant to
Section 5.7 hereof), the date of the Notice of Termination; and
(e) If the Executive's employment is terminated pursuant to Section
5.8 hereof, the date this Agreement terminates by its terms.
6. COMPENSATION UPON TERMINATION
6.1 Death or Disability. If the Executive's employment shall be
terminated pursuant to Section 5.1 or 5.2 hereof, the Company shall pay monthly
to the Executive's estate an amount equal to one-twelfth of his annual salary
payable pursuant to Section 4.1 hereof and one-twelfth of any bonus payable
pursuant to Section 4.2 hereof at the most recent annual amount received, or
entitled to be received, by the Executive for a period equal to the greater of
one (1) year following the Date of Termination or the remainder of the
Employment Period as set forth in Section 2 hereof ("Severance Payment").
6.2 Cause. If the Executive's employment shall be terminated for
Cause pursuant to Section 5.3 hereof, the Company shall pay the Executive his
salary and any bonus then payable pursuant to Sections 4.1 hereof through the
Date of Termination.
6.3 Termination without Cause. In the event that the Company
terminates Executive's employment for any reason other than for death or
disability as defined in Sections 5.1 and 5.2 above and other than for Cause as
defined in Section 5.3 above, the Company shall pay the Executive: (a) his
salary and other benefits through and including the normal expiration date of
the term of Agreement then in effect as though the Executive had not been
terminated; and (b) a lump sum payment of an amount equal to all Milestone
Bonuses as though such Milestone Bonuses were fully earned at the time of such
termination. Additionally, all non-qualified stock options to purchase the
Company's stock granted to the Executive as of the Date of Termination and which
have not vested prior to the Date of Termination shall automatically vest and
become immediately exercisable by the Executive on the Date of Termination and
shall remain exercisable for a period of one year. The provisions of this
paragraph shall constitute an amendment to any existing stock option agreements
of the Company as of the Effective Date.
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6.4 Executive's Voluntary Termination. In the event of the voluntary
termination of this Agreement by the Executive, pursuant to Section 5.5 hereof,
the Executive shall have the right to receive the Executive's compensation as
provided in Section 4.1 hereof through the Date of Termination.
6.5 Termination Upon Change of Control.
(a) Notwithstanding the provisions of Section 6.4 above, if the
Executive terminates this Agreement within Six (6) months following a
Change in Control as defined in Section 5.7 hereof the Company shall pay
the Executive: (a) his salary and other benefits through and including the
Date of Termination; and, (b) an amount equal to (i) One and One Half (1
1/2) times Executive's Base Salary at the annual Base Salary then
currently in effect, and (ii) One and One Half (1 1/2) times the total
amount of all Milestone Bonuses as though such Milestone Bonuses were
fully earned at the time of such termination;
(b) If the Executive is terminated by the Company at any time
following a Change in Control pursuant to Section 5.6 hereof and such
termination is not for cause, as defined in Section 5.3 above, the Company
shall pay to the Executive: (x) his salary and other benefits through and
including the Date of Termination; and, (y) an amount equal to (i) three
(3) times Executive's Base Salary at the annual Base Salary then currently
in effect, and (ii) three (3) times the total amount of all Milestone
Bonuses as though such Milestone Bonuses were fully earned as of the Date
of Termination. Additionally, all non-qualified stock options to purchase
the Company's stock granted to the Executive as of the Date of Termination
and which have not vested prior to the Date of Termination shall
automatically become immediately vested and exercisable by the Executive
on the Date of Termination and shall remain exercisable for a period of
one year. The provisions of this paragraph shall constitute an amendment
to any existing stock option agreements between Executive and the Company
as of the Effective Date.
6.6 Manner of Payment. Any severance payment made pursuant to this
Section 6 shall be payable in a one-time payment by the Company, payable within
thirty (30) days of the Date of Termination.
6.7 Limitation.
(a) The foregoing notwithstanding, the total of such severance
payment, pursuant to Sections 6.1, 6.3, and 6.5 hereof, shall be reduced
to the extent that the payment of such amount would cause the Executive's
total termination benefits (as determined by the Executive's tax advisor)
to constitute an "excess" parachute payment under Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and by reason of
such excess parachute payment the Executive would be subject to an excise
tax under Section 4999(a) of the Code, but only if the Executive
determines that the after-tax value of the termination benefits calculated
with the foregoing restriction exceed those calculated without the
foregoing restriction.
(b) The foregoing notwithstanding, no severance payment or severance
benefit shall be due during any period in which Executive is in violation
of any provision of Section 7 below, and any and all unpaid severance
payments shall be forfeit and any and all severance benefits shall
immediately cease and be forfeit in the event that Executive is determined
by the final and binding ruling of any court of competent jurisdiction to
have violated any covenant of Section 7 below.
6.10 No Mitigation Required. The Executive shall not be required in
any way to mitigate the amount of any payment provided for in this Section 6,
including, but not limited to, by seeking other employment, nor shall the amount
of any payment provided for in this Section 6 be reduced by any compensation
earned by the Executive as a result of employment with another employer after
the termination date of employment, or otherwise.
7. CONFIDENTIALITY AND NON-SOLICITATION COVENANTS
7.1 Confidentiality. The Executive hereby agrees that the Executive
will not, during the Employment Period or at any time thereafter directly or
indirectly disclose or make available to any person, firm, corporation,
association or other entity for any reason or purpose whatsoever, any
Confidential Information (as defined below). The Executive agrees that, upon
termination of his employment with the Company, all Confidential Information in
his possession that is in written or other tangible form (together with all
copies or duplicates thereof, including computer files) shall be returned to the
Company and shall not be retained by the Executive or furnished to any third
party, in any form except as provided herein; provided, however, that the
Executive shall not be obligated to treat as confidential, or return to the
Company copies of any Confidential Information that (i) was publicly known at
the time of disclosure to the Executive, (ii) becomes publicly known or
available thereafter other than by any means in violation of this Agreement or
any other duty owed to the Company by the Executive, or (iii) is lawfully
disclosed to the Executive by a third party. As used in this Agreement the term
"Confidential Information" means information disclosed to the Executive or known
by the Executive as a consequence of or through his relationship with the
Company, about the owners, employees, business methods, public relations
methods, organization, procedures, property acquisition and development, or
finances, including, without limitation, information of or relating to the
Company and its affiliates.
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7.2 Non-Solicitation. For a period of two (2) years following the
date on which the Executive's employment hereunder is terminated, the Executive
shall not solicit or induce, without the prior written consent of the Company,
any of the Company's employees, agents or independent contractors to end their
relationship with the Company, or recruit, hire or otherwise induce any such
person to perform services for the Executive, or any other person, firm or
company.
7.3 Return of Property. The Executive hereby acknowledges and agrees
that all Personal Property and equipment furnished to or prepared by the
Executive in the course of or incident to his employment, belongs to the Company
and shall be promptly returned to the Company upon termination of the Employment
Period. "Personal Property" includes, without limitation, all electronic devices
of the Company used by the Executive, including, without limitation, personal
computers, facsimile machines, cellular telephones, pagers and tape recorders
and all books, manuals, records, reports, notes, contracts, lists, blueprints,
maps and other documents, or materials, or copies thereof (including computer
files), and all other proprietary information relating to the business of the
Company. Following termination, the Executive will not retain any written or
other tangible material containing any proprietary information of the Company.
7.4 Reasonableness of Restrictions. Each of sections 7.1, 7.2, and
7.3 set out above is acknowledged by Executive to be reasonable in duration,
extent and application and is the minimum protection necessary for the Company
in respect of its goodwill, Confidential Information, trade connections and
business. Each of the covenants and obligations on Executive's part set out in
sections 7.1, 7.2, and 7.3 is deemed to be separate and severable and
enforceable by the Company accordingly. If any of the restrictions set out above
are held to be void but would be valid if part of the wording was deleted such
restriction shall apply with such deletion as may be necessary to make it valid
and effective.
7.5 In the event of a breach by Executive of this Section 7, any
obligations for payment by the Company otherwise due pursuant to Section 6
hereof shall be void.
8. GENERAL PROVISIONS
8.1 Injunctive Relief and Enforcement. The Executive acknowledges
that the remedies at law for any breach by him of the provisions of Section 7
hereof may be inadequate and that, therefore, in the event of breach by the
Executive of the terms of Section 7 hereof, the Company shall be entitled to
institute legal proceedings to enforce the specific performance of this
Agreement by the Executive and to enjoin the Executive from any further
violation of Section 7 hereof and to exercise such remedies cumulatively or in
conjunction with all other rights and remedies provided by law and not otherwise
limited by this Agreement.
8.2 Notice. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when addressed as follows and (i) when
personally delivered, (ii) when transmitted by telecopy, electronic or digital
transmission with receipt confirmed, (iii) one day after delivery to an
overnight air courier guaranteeing next day delivery, or (iv) upon receipt if
sent by certified or registered mail. In each case notice shall be sent to:
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If to Executive: ▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇
If to the Company: IQ Biometrix, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Attention: Secretary
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
8.3 Severability. The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect. In addition, in the event any provision in this Agreement
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of extending for too great a period of time or over too great a
geographical area or by reason of being too extensive in any other respect, each
such agreement shall be interpreted to extend over the maximum period of time
for which it may be enforceable and to the maximum extent in all other respects
as to which it may be enforceable, and enforced as so interpreted, all as
determined by such court in such action.
8.4 Assignment. This Agreement may not be assigned by the Executive,
but may be assigned by the Company to any successor to its business and will
inure to the benefit and be binding upon any such successor.
8.5 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
8.6 Headings. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
8.7 Choice of Law; Venue. This Agreement shall be construed,
interpreted and enforced in accordance with the laws of the State of California
without giving effect to the principles of conflict of laws thereof. By
execution and delivery of this Agreement, the parties agree and accept that any
legal action or proceeding brought with respect to this Agreement shall be
brought in the court of appropriate jurisdiction in and for the County of San
Francisco, State of California, and the parties expressly waive any objection to
personal jurisdiction, venue or forum non conveniens.
8.8 Indemnification. To the fullest extent permitted under
applicable law, the Company shall indemnify, defend and hold the Executive
harmless from and against any and all causes of action, claims, demands,
liabilities, damages, costs and expenses of any nature whatsoever (collectively,
"Damages") directly or indirectly arising out of or relating to the Executive
discharging the Executive's duties hereunder on behalf of the Company and/or its
respective subsidiaries and affiliates, so long as the Executive acted in good
faith within the course and scope of the Executive's duties with respect to the
matter giving rise to the claim or Damages for which the Executive seeks
indemnification.
8.9 Attorneys' Fees. If any legal action, arbitration or other
proceeding, is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach or default in connection with any of the provisions of
this Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, including
any appeal of such action or proceeding, in addition to any other relief to
which that party may be entitled.
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8.10 Entire Agreement. This Agreement contains the entire agreement
and understanding between the Company and the Executive with respect to the
employment of the Executive by the Company as contemplated hereby except with
respect to any prior option grants including but not limited to that certain
option grant embodied in Sections 4B of the Prior Agreement, and no
representations, promises, agreements or understandings, written or oral, not
herein contained shall be of any force or effect. This Agreement shall not be
changed unless in writing and signed by both the Executive and the Board.
8.11 Amendments; Waivers. This Agreement may be amended or modified,
and any of the terms and covenants may be waived, only by a written instrument
executed by the parties hereto, or, in the case of a waiver, by the party
waiving compliance. Any waiver by any party in any one or more instances of any
term or covenant contained in this Agreement shall neither be deemed to be nor
construed as a further or continuing waiver of any such term or covenant of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the date and year first above written.
"Company" "Executive"
IQ BIOMETRIX, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇▇
---------------------------- --------------------------------
Title: Director ▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇▇
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EXHIBIT A
MILESTONE BONUS PLAN
(a) Revenue Bonus: Executive shall be entitled to receive a performance
bonus of Fifty Thousand Dollars ($50,000) ("Revenue Bonus") upon the Company's
attainment of at least Two Million Dollars ($2,000,000) of revenue for the
Twelve (12) month period ended December 31, 2004 ("Bonus Target"). If Executive
achieves at least 79% of Bonus Target but less than 100%, Executive shall be
entitled to a pro-rata percentage of the performance bonus (i.e.: if Executive
achieves at least 90% of Bonus Target, Executive shall be entitled to 90% of the
$50,000 bonus).
(b) Acquisition Bonus: Executive shall be entitled to receive a
performance bonus of Twenty-Five Thousand Dollars ($25,000) upon the Company's
acquisition of or merger with one or more entities which produce at least One
Million Dollars ($1,000,000) of revenue as reported by the Company in any
financial report to the Securities and Exchange Commission for any periods
ending December 31, 2004 ("Acquisition Bonus").
(c) Capital Funding Bonus: Executive shall be entitled to receive a bonus
of Ten Thousand Dollars ($10,000) for each One Million Dollars ($1,000,000) of
funding that the Company receives during the Twelve (12) month period ending
December 31, 2004, up to a maximum of Five Million Dollars ($5,000,000) in such
funding and Fifty Thousand Dollars ($50,000) in such bonus ("Funding Bonus").
(d) Profit Bonus: Executive shall be entitled to receive a performance
bonus of Twelve Thousand, Five Hundred Dollars ($12,500) for each quarter in
which the Company reports profit from operations in any financial report to the
Securities and Exchange Commission for any periods ending on or before December
31, 2004 ("Profit Bonus").
(e) Corporate Facility Bonus: Executive shall be entitled to receive a
performance bonus of Twenty Thousand Dollars ($20,000) upon the successful
location, organization and complete staffing of the Company's headquarter
facilities in the "South Bay" area of San Francisco ("Organization Bonus").
The Executive Compensation Committee of the Company's Board of Directors shall
determine bonuses, if any, for periods ending after December 31, 2004.
9
