Sample Business Contracts

Employment Agreement - VA Research Inc. and Greg E. Zehr

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                            [VA RESEARCH LETTERHEAD]

December 11, 1998

Greg E. Zehr
105 Lorain Pl.
Los Gatos, CA 95032

Dear Greg:

At VA Research, we depend on the commitment, enthusiasm and skills of our team
members to lead the company's growth. Each person has both the luxury and the
duty to contribute to the future success of the company in the most meaningful
way he or she can.

With this in mind, we are pleased to offer you a position as Vice President of
Engineering, effective immediately.

We view your appointment as the beginning of a new stage in the VA Research
business plan. We're looking to you to help fulfill the company's goal to
become a recognized leader in Linux systems, in the context of a sincere
understanding of the Open Source culture and an ability to engineer quality
products in the tight margin environment.

As Vice President of Engineering, you will play a senior management role in
directing the company. Your areas of responsibility will include:

     Managing the complete product engineering process, from concept to product

     Representing the company in engineering issues to customers, the Linux
     community, suppliers, investors, media representatives and the general

     Modifying your responsibilities as the company's needs warrant.

Your compensation will consist of:

     A monthly salary of $12,500.00.

     Pending approval by the Board of Directors, participation in the company's
     stock option plan with 219,047 shares (2.0% equity stake on a post venture
     financing basis) granted on your starting date and vesting according to
     the plan schedule (currently 25 percent after one year and 1/48 per month
     thereafter), with one year acceleration in the event of a change of
     control and involuntary termination.

     Health insurance through Lifeguard and dental insurance through the

     Participation in the company's 401K plan.

     3 weeks paid vacation each year.

     An opportunity for a performance bonus in monthly installments totalling
     $50,000.00 over the course of a year.

<PAGE>   2
     In the event of involuntary termination for any reason, a severance package
     equal to six months' salary and pro-rated bonus will be paid on a salary
     continuation basis with medical benefits coverage during the severance

As with all VA Research staff, your employment is "at will," meaning either
you or the company may terminate your employment with two weeks written notice.
If you ever feel it necessary to discuss issues of your employment, please feel
free to raise them frankly with us.

Welcome to our team.


/s/ LARRY M. AUGUSTIN                        /s/ JOHN T. HALL
-----------------------                      ---------------------
Larry M. Augustin, PhD                       John T. Hall
President                                    Vice President

Accepted by:

/s/ GREG E. ZEHR                             12/11/98
---------------------                        -------------------
Greg E. Zehr                                 Date