2.            Severance Payments and Benefits .  In connection with the termination of Executive’s Employment Agreement and for his obligations to the Company under this Agreement, including, without limitation, the Non-Competition obligations set forth in the Employment Agreement, Executive shall receive the following:

2.1    Severance Payment .  A lump sum cash payment to be paid as set forth on Exhibit A attached hereto (the “Severance Payment”).  The Severance Payment equal to $279,929.68 represents the total payment for (i) severance, (ii) COBRA – HMO benefits, and (iii) applicable portion of Performance Bonus.  The Severance Payment shall be paid by the Company to the Executive on the Payment Date (as defined below).

2.2    Continuation of Company Sponsored Benefits .   Executive’s rights, if any, regarding continuation of group insurance coverage will be governed by the Consolidated Omnibus Budget Reconciliation Act of 1984, as amended (“COBRA”), effective June 1, 2006.  The Company will provide Executive with a COBRA notice, which will include the insurance premium rate for coverage for Executive under COBRA.  Executive will receive as part of Executive’s Severance Payment sufficient funds to cover the Company sponsored portion of Executive’s group insurance coverage for a period of twelve (12) months.  It will be Executive’s responsibility and obligation to pay the applicable COBRA premium for Executive’s coverage.  Other than COBRA benefits as set forth above, participation by Executive in all other Company sponsored benefits and plans shall terminate on the Separation Date.  In the event that neither COBRA nor Cal-COBRA is available to Executive, the Company shall nevertheless provide insurance to Executive that is commensurate with the coverage provided to Executive at the same cost as has been historically paid by Executive as of the Separation Date for a period of twelve (12) months.

2.3    Stock Option Vesting .  Executive owns options to purchase shares of the Company’s common stock, the terms and conditions of which are subject to the 1997 Plan and certain Stock Option Agreements, executed in connection with each applicable stock option grant by and between the Company and Executive (collectively, Executive’s “Options”).  In accordance with the Executive Retention Agreement all options are considered fully vested and may be exercised within ninety (90) days of termination date.

2.4    401K Account .  Nothing in this Agreement shall affect Executive’s rights to his Company 401(k) account.

3.              Consulting Services .  From and after the Separation Date and for a period of 12 months (which may be extended by mutual agreement) thereafter (the “Consulting Period”), Executive agrees to make himself reasonably available to the Company’s Board of Directors and its Executive Officers to consult on business and operational matters as reasonably requested by such persons, subject to Executive’s prior commitments or obligations.  Executive shall, if requested and if reasonably convenient for Executive, provide such services to the Company at the Company’s headquarters, and in such event, the Company shall make reasonable space available to Executive at such location.  In consideration for such Consulting Services, the

2

Company shall pay Executive per hour of service as set forth in a Consulting Agreement (the “Consulting Payments”).  The Consulting Payments shall be paid promptly by Company check to an address designated by Executive.  Notwithstanding the above, there shall be no minimum number of hours of Consulting Services required on the part of the Company or Executive during the Consulting Period.  The specific terms and conditions of the consulting arrangements shall be set forth in a Consulting Agreement to be entered into by and between the Company and Executive.

4.              Independent Contractor Status .  Executive acknowledges that to the extent Executive is engaged as a Consultant during the Consulting Period, Executive is being engaged by the Company on an independent contractor basis.  Under no circumstances shall Executive look to the Company as Executive’s employer, or as a partner, agent or principal during such period.  Except as expressly provided in this Agreement, Executive shall not be entitled to any benefits accorded to the Company’s employees, including, without limitation, worker’s compensation, disability insurance, vacation, sick pay, or participation in any of the Company’s benefit plans such as its Employee Stock Ownership Plan or 401k Plan.  No compensation to be paid to Executive for performing the services contemplated by the Consulting Agreement shall be subject to any withholding or deductions provided by local, state or federal law, which shall be the sole responsibility of Executive.

5.            Company Property .  Executive agrees to return all Company property to the Company immediately after the Separation Date; including, without limitation, any computer equipment, product samples or other Company equipment of a material nature, confidential company documentation, or any company records, unless the Company property is used in connection with services provided to or on behalf of the Company by Executive.  Notwithstanding the above, the parties agree that the Company cell phone issued to Executive shall remain with and shall become the property of Executive and Executive agrees to be responsible for all expenses and liabilities related thereto after the Separation Date.

6.            Executive Release .  In consideration of the terms of this Agreement as provided herein, except as to any obligations provided for or assumed in this Agreement or claims of fraud in the inducement, Executive agrees to waive and release the Company, and each of its affiliated or related entities, partnerships, parent or subsidiary corporations, members, partners, stockholders, directors, officers, employees, attorneys, agents, predecessors, successors and assigns, and each and all of them (collectively referred to as the “Company Releasees”), from all claims, damages, agreements, charges of discrimination or complaints of any nature whatsoever, whether or not now known, suspected or claimed, matured or unmatured, fixed or contingent, which Executive or his successors-in-interest ever had, now has, or may claim to have against the Company Releasees, or any of them, whether directly or indirectly, by reason of any act, event or omission concerning any matter, cause or thing arising prior to the date of execution of this Agreement, including, without limiting the generality of the foregoing, any claims relating to or arising out of (i) Executive’s employment or the cessation of that employment; (ii) any agreement between Executive and any of the Company Releasees, including, without limitation, the Employment Agreement; (iii) any tort or tort-type claims; (iv) any federal, state or governmental constitution, statute, regulation or ordinance, including, but not limited to, Title VII of the Civil Rights of 1964, the Employee Retirement Income Security Act, the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act, the Americans With Disabilities Act, and the California Fair Employment and Housing Act; (v) any claim for wages, salary,

3

bonuses, partnership interests, profit sharing, and/or any other compensation or benefit; (vi) any impairment of Executive’s ability to obtain subsequent employment; or (vii) any permanent or temporary disability or loss of future earnings as a result of injury or disability arising from or associated with employment or the termination of the employment relationship with any of the Company Releasees.  This release does not waive or release any claim