MEMORANDUM OF AGREEMENT made and entered into this 5th day of November, 2003
BY AND BETWEEN: XXXXXX X XXXXXXX, Executive of Bala Cynwyd, Pennsylvania
Hereinafter referred to as "Executive"
OF THE FIRST PART
AND: LASER LOCK TECHNOLOGIES, INC., a Company incorporated under the
laws of the State of Nevada, having its office at 000 Xxxxx
Xxxx, Xxxx Xxxxxx, Xxxxxxxxxxxx 00000
Hereinafter referred to as "Company"
OF THE SECOND PART
WHEREAS the Executive presently serves as President and Chief Executive Officer
of the Company and has served the Company and its predecessors continuously
since its inception in November 1999, as its principal executive; and
WHEREAS the leadership of the Executive has constituted a major factor in the
development of the Company and the Company is greatly in need of the Executive's
continued leadership so that the further and uninterrupted progress of the
Company will be assured; and
WHEREAS the Company acknowledges and recognizes the value of the Executive's
services, including the capacity for service of special, unique and
extraordinary character; and
WHEREAS the Company desires to continue to employ, retain and make secure for
itself the experience and outstanding abilities and services of the Executive
for the period of at least five (5) years from the effective date hereof and to
replace the existing contract with the Company dated September 24, 2001; and
WHEREAS both parties desire to embody the terms and conditions of employment of
the Executive and of the Stock Options granted to him in connection therewith
into a written agreement; and
WHEREAS all of the terms, conditions and undertakings of this Agreement,
including without limitations those of the Stock Option embodied herein and the
execution of this Agreement, were duly fixed, stated, approved, authorized and
directed for and on behalf of the Company by a resolution of its Board of
Directors at a board meeting of such Board held at the office of the Company on
___________________, 2003 at which a quorum of Directors was present and voted,
exclusive of the Executive, and to which resolution reference is hereby made,
and which resolution by this reference is incorporated herein as though fully
and at length repeated.
NOW THEREFORE, for valuable consideration, it is mutually agreed by and between
the parties as follows:
ARTICLE ONE - EMPLOYMENT PERIOD AND DUTIES
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1.1 The Company agrees to and does hereby employ the Executive as President and
Chief Executive Officer and the Executive agrees to serve the Company in such
capacity for a period commencing on the effective date of this Agreement and
continuing for five (5) years thereafter (the "Employment Period").
1.2 The Company agrees and undertakes to nominate the Executive as a Director of
the Company during each year of the Employment Period and further agrees that to
support the Executive's nomination in the Company's annual proxy statement. In
addition and provided that the Executive is elected as a Director of the
Company, the Company agrees that it will elect the Executive as Chairman of the
Board during the Employment Period.
ARTICLE TWO - COMPENSATION
--------------------------
2.1 Subject to the provisions of Clause 2.3, the Company shall pay to said
Executive, and said Executive shall accept from the Company as basic payment for
his services during the Employment Period, the following annual compensation
(the "Basic Compensation", namely:
2.1.1 For each of the first two (2) twelve-month periods, the sum of
One Hundred and Fifty Thousand Dollars ($150,000.00) payable
in weekly or semi-monthly installments; and
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2.1.2 For each of the last three (3) twelve month periods, the sum
of One Hundred and Eighty Thousand Dollars ($180,000.00)
payable in weekly or semi-monthly installments
2.2 In addition to the Basic Payment during the Employment Period, the Executive
shall receive a sum, with respect to any fiscal year of the Company during the
Employment Period, in which the net income of the Company before taxes and as
determined solely by the firm of public accountants of the Company shall exceed
Three Hundred and Fifty Thousand Dollars ($350.000.00) equal to ten percent (10%
of such excess, the amount of any such additional sum shall not exceed One
Hundred and Twenty-Five Thousand Dollars ($125.000) in any fiscal year.
ARTICLE THREE - EXPENSES
------------------------
3.1 During the Employment Period, the Company will pay all reasonable business
related expenses incurred by the Executive in furtherance of or in connection
with the business of the Company and its subsidiaries.
3.2 The Executive shall be supplied with a leased car by the Company provided
that the annual lease monthly payments do not exceed the sum of Nine Hundred
Dollars ($900.00) per month. The Company shall pay or reimburse the Executive
for all operating costs of this vehicle including leasing costs, insurance,
maintenance, gas and oil.
ARTICLE FOUR - SERVICES
-----------------------
4.1 The Executive agrees to devote his full-time and efforts during the
Employment Period to the business of the Company and its subsidiaries, if any,
and to serve as a Director and Chairman of the Board of the Company, if elected
as such, provided, however, that he shall be entitled to a minimum vacation
period totaling at least one (1) month each calendar year which he may take, at
his option, either in whole or in part, consecutively or not, in any given
calendar year, and which vacation periods shall be cumulative over the term of
the Employment Period, if not taken.
4.2 The Executive shall perform his duties faithfully, diligently, and to the
best of his ability during the Employment Period. If he is not elected as
Chairman of the Board of the Company, he shall be obliged to perform only such
duties, services and tasks as he performed prior to his being elected, and he
shall be extended by the Company such courtesies, privileges and rights as are
consistent with the title of Chairman of a public company of comparable size.
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ARTICLE FIVE - RESTRICTIVE COVENANT
-----------------------------------
5.1 The Executive agrees that so long as this Agreement is in full force and
effect, he will not, directly or indirectly, either as principal, agent,
stockholder, or in any other capacity, engage in or have a financial interest
in, any business which is competitive to the business of the Company and its
subsidiaries, (except that nothing contained herein shall preclude the Executive
from purchasing or owing stock in any such business, providing that his holdings
do not exceed one percent (1%) of the issued and outstanding capital stock). For
the purpose hereof, a business will be deemed competitive if it involves the
production, manufacture or distribution of any product similar to those
produced, manufactured or distributed by the Company or any of its subsidiaries.
The Executive expressly agrees that upon a breach or violation of the foregoing
provision of this Agreement, the Company in addition to all other remedies shall
be entitled, as a matter of right, to injunctive relief in any court of
competent jurisdiction.
ARTICLE SIX - SECRET PROCESSES
------------------------------
6.1 The Executive will not divulge, furnish or make accessible to any one
otherwise than in the regular course of the business of the Company or any of
its subsidiaries) any knowledge or information with respect to confidential or
secret processes, formula, machinery, plans, devices or material of the Company
or any of its subsidiaries, with respect to any confidential or secret
engineering, development or research work of the Company or any of its
subsidiaries, or with respect to any other confidential or secret aspect of the
business of the Company or any of its subsidiaries.
ARTICLE SEVEN - DEATH
---------------------
7.1 In the event of the death of the Executive, the Company shall pay to his
surviving spouse or to his Estate in the event he has no surviving spouse, an
amount equal to one (1) year compensation calculated on the basis of the
compensation payable to the Executive under this Agreement at the date of nis
death. Such payments shall be made in equal monthly installments over a period
of two (2) years from the date of the death of the Executive, if the Executive's
spouse survives him but dies before all of the aforementioned monthly payments
have been made, then the balance of such payments shall be paid to the
Executive's estate in a lumps sum.
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ARTICLE EIGHT - TERMINATION
---------------------------
8.1 Death: Employment of the Executive hereunder shall terminate upon his death,
subject to the payments to be made to his surviving spouse pursuant to Section 7
hereof.
8.2 Disability: If during the Employment Period, the Executive should fail to
perform his duties hereunder on account of illness or other incapacity, and such
illness or other incapacity shall continue for a period of more than four (4)
months, the Company shall have the right, on twenty-one (21) days notice to the
Executive to terminate this Agreement. In this event, the Company shall be
obligated to pay to the Executive an amount equal to fifty percent (50%) of the
Basic Payment to which he was entitled as of the date of termination. However,
if prior to the date specified in such notice, the Executive's illness or
incapacity shall have terminated and he shall have taken up and performed his
duties hereunder, the Executive shall be entitled to resume his employment
hereunder as though such notice had not been given.
8.3 Termination for Cause: The Company may, in its sole discretion, terminate
the Executive's Employment Period under the following circumstances:
(a) Executive breaches his obligations under the terms of this
Agreement; or
(b) Executive has committed an act of dishonesty, moral turpitude
or theft or has breached his duties of loyalty to the Company
or an act of insubordination to its Board of Directors.
It is specifically understood that during the Employment Period, Executive shall
not be terminated pursuant to either 8.3 (a) or (b) unless and until Executive
has received reasonable written notice from the Company of the applicable
reasons for termination and Executive has had a reasonable opportunity to remedy
such a breach of duties or act of insubordination; however, the Company may
immediately terminate Executive in the event of the commission of an act of
dishonesty, moral turpitude or theft.
In the event of the termination of Executive under this section 8.3 Executive's
right to the compensation and benefits provided herein shall immediately
terminate and or cease to accrue, provided, however, that Executive shall
receive: (i) the unpaid portion, if any, of his base salary computed on a
pro-rated basis to the date of termination of employment; and (ii) any unpaid
accrued benefits owed to the Executive in accordance with the term of any Plan
or Program in which he is a participant.
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8.4 Termination other than for cause: The Company may terminate the employment
of Executive during the Employment Period for reasons other than those
enumerated in Section 8.3 however, in such event, the Company shall be liable to
Executive for compensation for the remainder of the Employment Period and, to
the extent not inconsistent with applicable law and/or the terms and conditions
of any Plan or Program, all other remaining benefits shall continue to accrue
until the end of the Employment Period, which shall constitute the full
liquidated damages to which Executive is entitled.
8.5 In the event of termination of this Agreement for any reason other than
death, Executive shall be entitled to purchase any life insurance policies on
his life then owned by the Company for the cash value thereof or, if such
policies have no cash value, upon payment of One Hundred Dollars ($100.00).
ARTICLE NINE - STOCK OPTION
---------------------------
9.1 As a further inducement to the Executive to enter into this Agreement and in
addition to the five hundred thousand (500,000) share option previously granted
to the Executive which options remain outstanding and fully vested as of this
day, and to provide a means of enhancing the Executive's proprietary interest in
the Company and to increase the Executive's incentive, the Company hereby grants
to the Executive the right and option to purchase from the Company up to two
million (2,000,000) shares of common stock of the Company exercisable upon the
following terms and conditions and in accordance with a Stock Option Plan to be
adopted by the Company, these options will be granted under an Equity
Compensation Plan for the employees and Consultants which is presently being
prepared and which will be executed by the Executive when completed.
9.1.1 Subject to the provisions hereof, this option shall be
exercisable as follows:
(i) On December 31, 2003, this option may be exercised
with respect to all or any part of the five hundred
thousand (500,000) of the said two million
(2,000,000) shares at an option price equal to the
last sale price at which the Shares of the Company
were sold on the date hereof (the "Option Price");
and
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(ii) After the expiration of one (1) year from the
effective date hereof, this option may be exercised
with respect to all or any part of seven hundred and
fifty thousand of the said two million (2,000,000)
shares at the Option Price less such number of shares
as may have been taken down by the Executive prior
thereto; and ;
(iii) After the expiration of two (2) years from the
effective date hereof, this option may be exercised
with respect to all or any part of one million
(1,000,000) of the said two million (2,000,000)
shares less such number of shares as may have been
taken down by the Executive hereunder prior thereto
at the Option Price; and
(iv) After the expiration of three (3) years from the
effective date hereof, this option may be exercised
with respect to all or any part of one million
(1,000,000) of the said two million (2,000,000)
shares, less such number of shares as may have been
taken down by the Executive prior thereto, at the
Option Price; and
(v) After the expiration of four (4) years from the
effective date hereof, this option may be exercised
with respect to all or any part of the said two
million (2,000,000) shares, at the Option Price less
such number of shares as may have been taken down by
the Executive prior thereto.
(c) This option shall not be transferable by the Executive
otherwise than by will or the laws of descent and
distribution, and shall be exercisable during his lifetime
only by him (and in no event later than eight (9) years from
the effective date hereof);
(d) In the event of the death of the Executive, this option may be
exercised by the estate of the Executive or by any person who
hereafter acquires the right to exercise such option by
bequest or inheritance or by reason of the death of the
Executive, within the period of two (2) years after the date
of death or such shorter period as may then be required under
applicable provisions of the United States Internal Revenue
Code relating to Stock Options;
(e) Subject to the requirements for restricted stock options of
the United States Internal Revenue Code, as now in effect or
as hereafter amended:
(i) In case the Company shall hereafter declare or pay to
the holders of its par value common stock a dividend
or dividends in stock of the Company, the Executive
upon any purchase thereafter of Option Shares as
herein provided, shall be entitled, without
additional payment, to receive in addition to the
Option Shares purchased such additional share or
shares of stock, disregarding fractions, as the
Executive would have received in the form of such
dividend or dividends if, on the effective date
hereof, he had been the holder of record of the
Option Shares purchased and had continued to hold
such shares and all shares received as stock
dividends;
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(ii) In case the shares of outstanding par value common
stock of the Company shall be reclassified or changed
into the same or a different number of shares of the
same or a different class, then the appropriate
number of shares, disregarding fractions, resulting
from such reclassification or change shall be
substituted for the Option Shares for all purposes
hereof;
(iii) In case pursuant to any reorganization or
re-capitalization of the Company, or its liquidation
or partial liquidation or spin-off, voluntary or
otherwise, or its consolidation or merger into or
with another corporation, or the sale, conversion,
lease or other transfer by the Company of all or
substantially all of its property, pursuant to which
the then outstanding shares of par value common stock
of the Company become exchangeable for other shares
of stock, the Executive, upon his purchase of Option
Shares pursuant to the terms hereof, shall be
entitled to receive in lieu of the shares of stock of
the Company he would otherwise be entitled, the
shares of stock, which the Executive would have
received upon such reorganization, re-capitalization,
liquidation, partial liquidation, spin-off,
consolidation, merger, or transfer, if immediately
prior thereto he had owned the shares of stock of the
Company at that time issuable to him pursuant to such
purchase and had exchanged such shares, disregarding
fractions, in accordance with terms of such
reorganization, re-capitalization, liquidation,
partial liquidation, spin-off, consolidation, merger,
or transfer.
(f) This option shall be exercised by written notice or notices
delivered to the Company's principal place of business;
(g) Delivery of the certificates representing the shares of stock
as to which this option shall be exercised at any given time,
shall be made promptly after receipt of such notice by the
Company against the payment of the purchase price of the
shares with respect to which the option is exercised at such
time;
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(h) The Executive, on behalf of himself, his legal representative
and any other person who may become entitled to act hereunder
by reason of the Executive's death, undertakes and agrees
that, in conjunction with each purchase of stock hereunder,
the purchaser will deliver to the Company his written
representation that such shares are being purchased with the
then present intention of holding the same for investment and
not with a view to the distribution thereof;
(i) Nothing contained in this Agreement is intended, or shall be
construed, to deprive the Executive of the full benefits of
this option for two million, five hundred thousand (2,500,000)
shares in the event of the discharge of the Executive by the
Company or other breach of this Agreement by the Company;
(j) The Company agrees that it now holds and will hold available a
sufficient number of shares of its par value common stock to
satisfy the requirements of this option;
(k) It is expressly understood that the stock options hereby
granted to the Executive is in addition to, and not meant to
be a replacement of the stock option totaling five hundred
thousand (500,000) shares heretofore granted by the Company to
the Executive.
ARTICLE TEN - EXECUTIVE'S RIGHTS UNDER CERTAIN PLANS
----------------------------------------------------
10.1 The Company agrees that nothing contained herein is intended to or shall be
deemed to be granted to the Executive in lieu of any rights and privileges which
the Executive may be entitled to as an employee of the Company under any
retirement, pension, insurance, hospitalization, or other plans which may now be
in effect or which may hereafter be adopted, it being understood that the
Executive shall have the same rights and privileges to participate in such plans
or benefits as any other employee.
ARTICLE ELEVEN - SUCCESSORS. ETC. OF THE COMPANY
------------------------------------------------
11.1 This Agreement shall inure to the benefit of and be binding upon the
Company, its successors and assigns, including without limitation any person,
partnership or corporation which may acquire all or substantially all of the
Company's assets and business, or into which the Company may be consolidated or
merged, and this provision shall apply in the event of any subsequent merger,
consolidation or transfer, and the Executive, his heirs, assigns, executors and
personal representatives.
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ARTICLE TWELVE - ENTIRE AGREEMENT
---------------------------------
12.1 The parties hereto agree that this Agreement supersedes any employment
agreement between the Executive and the Company and contains the entire
understanding and agreement between the parties and cannot be amended, modified
or supplemented in any respect, except by a subsequent written agreement entered
into by both parties hereto.
ARTICLE THIRTEEN - APPLICABLE LAW
---------------------------------
13.1 This Agreement shall be construed according to the laws of the State of
Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above mentioned.
LASER LOCK TECHNOLOGIES, INC.
/s/ Xxxxxx X. Xxxxxxx
Per:_________________________________ _________________________________
Xxxxxx X. Xxxxxxx
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