Mr. Greg
Ballard
524 Vannier Dr.
Belmont, CA 94002
Sorrent, Inc. (the
“Company”) is pleased to offer you a position with the
Company as Chief Executive Officer and President, commencing on or
before September 29, 2003 (the “Start Date”). Your
duties as Chief Executive Officer and President are described on
Schedule 1 attached hereto and will include such other duties
and responsibilities as the Board may from time to time reasonably
assign to you. You will be elected to the Board, subject to
securing the necessary shareholder approvals.
A.
You will be entitled to receive an
annual salary of $250,000, less applicable withholding, (the
“Base Salary”), pro-rated in 2003 to reflect your Start
Date, to be paid in accordance with the Company’s normal
payroll procedures.
B.
During your first year of
employment, you will also be eligible to receive annual bonus
payments up to an aggregate of $100,000, as long as you are
employed by the Company on the payment dates (the
“Bonus”). The Bonus will be allocated as follows: (i)
$50,000 will be paid on or before April 30, 2004 on the
achievement of the milestones for calendar 2003, and the first
quarter of 2004, , set forth in Schedule 2 attached hereto as
determined by the Board in its sole discretion and (ii) $50,000
will be paid on or before the first anniversary of the Start Date
if the Board believes in its sole discretion that the 2004
milestones set foth in Schedule 2 have been exceeded. After
one year of employment, the Board will review and, in its
discretion, may adjust your Base Salary and Bonus.
Equity
Compensation. We will recommend that the Board grant you an
incentive stock option to purchase up to 1,600,000 shares of the
common stock of the Company at an exercise price equal to the fair
market value of such shares as determined by the Board, which stock
option shall be governed by the terms and conditions of the
Company’s 2001 Stock Option Plan (the “Plan”) and
Stock Option Agreement to be executed by you and the Company upon
Board approval of the grant. Such stock option shall vest over four
(4) years, whereby
400,000 shares
shall vest twelve (12) months after the option grant date
(which will be no earlier than the Start Date), and the remaining
1,200,000 shares shall vest monthly thereafter at the rate of 1/36
over the course of 36 months; provided, however,
(i) in the event the Company terminates your employment for
reasons other than Cause (as such term is defined in the Plan),
during the first 12 months of your employment, your vesting
schedule will be accelerated such that you will be entitled to
purchase 1/48 of the total number of shares subject to the option
for each full month of employment with the Company prior to such
termination, or (ii) in the event the Company consummates a
Change in Control Transaction (as such term is defined in the Plan)
and terminates your employment for reasons other than Cause within
six (6) months following the consummation of such Change in
Control Transaction, then fifty percent (50%) of the unvested
shares subject to the stock option will be accelerated.
Other
Benefits. As a Company employee, you will also be eligible to
receive certain employee benefits, as modified by the Company from
time to time, including medical and dental coverage, to the extent
that your position, tenure, salary, age, health and other
qualifications make you eligible to participate, subject to the
rules and regulations applicable thereto.
Severance.
In the event the Company terminates your employment for reasons
other than Cause (as such term is defined in the Plan) within one
year of your Start Date, you will be entitled to receive three
(3) months of your Base Salary (the “Severance
Payments”), paid bi-weekly pursuant to Sorrent’s normal
payroll schedule in exchange ofro your execution of release of
claims. Your stock options will not continue to vest during the
three (3) month period.
At-Will
Employment. Your employment with the Company is for no
specified period and constitutes an “AT-WILL”
employment arrangement. As a result, you are free to
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