EMPLOYMENT AGREEMENT

 

            THIS EMPLOYMENT AGREEMENT (“Agreement”) is effective as of September
1, 2002, by and between URECOATS INDUSTRIES INC., a Delaware corporation with
offices at Newport Center Plaza, 1239 East Newport Center Drive, Suite 101,
Deerfield Beach, Florida 33442 (the “Company”), and Dale Epperson an individual
residing at 6430 Oak Hill Drive, Granite Bay, California 95746 (the
“Executive”).

 

W I T N E S S E T H :

 

            WHEREAS, the Company wishes to employ the Executive and the
Executive wishes to accept such employment, subject to the terms and conditions
hereinafter set forth.

 

            WHEREAS, the Company wishes to memorialize the employment of the
Executive in a formal Agreement and the Executive wishes to enter into such
Agreement, subject to the terms and conditions hereinafter set forth.

 

            NOW THEREFORE, the parties hereto, in consideration of the premises
and mutual promises contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
agree as follows:

 

            1.         EMPLOYMENT TERM.  The Company hereby agrees to employ the
Executive, and the Executive hereby accepts such employment for a period
beginning on September 1, 2002 through August 31, 2006, unless sooner terminated
in accordance with Section 6 hereof (the “Employment Period”).

 

            2.         POSITION; DUTIES.  During the Employment Period, the
Executive shall hold the title and position of Senior Vice President of Market
Development of the Company and shall have the duties and responsibilities
usually vested in such capacity, as determined from time to time by the Board of
Directors, and such other duties and responsibilities as may be assigned to him
from time to time by the Board of Directors, Chief Executive Officer and/or
President of the Company.

 

            3.         MANNER OF PERFORMANCE.  The Executive shall serve the
Company and devote all his business time, his best efforts and all his skill and
ability in the performance of his duties hereunder.  The Executive shall carry
out his duties in a competent and professional manner, to the reasonable
satisfaction of the Board of Directors, Chief Executive Officer and/or President
of the Company, shall work with other Executives of the Company and of its
affiliates and generally promote the best interests of the Company and its
customers.  The Executive shall not, in any capacity engage in any activity
which is, or may be, contrary to the welfare, interest or benefit of the
business now or hereafter conducted by the Company or any of its affiliates.

 

            4.         COMPENSATION AND RELATED MATTERS.  The Executive’s
compensation for his services hereunder shall be as follows:

 

                        4.1       Base Compensation.  During the Employment
Period, Executive shall receive an annual base salary (the "Annual Base Salary")
of $130,000, payable in accordance with the Company’s normal payroll practices.
Executive’s Annual Base Salary will be reviewed on an annual basis by the
Compensation Committee of the Board of Directors and may be increased from time
to time, in the discretion of the Compensation Committee. Any increase in Annual
Base Salary shall not serve to limit or reduce any other obligation to Executive
under this Agreement. Annual Base Salary shall not be reduced at any time
(including after any such increase), other than as part of an across-the-board
salary reduction applicable to other executive officers of the Company. The term
Annual Base Salary as utilized in this Agreement shall refer to Annual Base
Salary as adjusted from time to time.

 

                        4.2       Restricted Common Stock.

 

                                    (a)        Executive is hereby granted
48,000 shares of restricted common stock of the Company, $.01 par value per
share (the "Shares") subject to vesting in 3,000 share increments on a pro rata
calendar quarter basis commencing on the Effective Date. The Shares shall be
other compensation to the Executive for his services hereunder and shall be
earned and vest at the end of each quarter during the Employment Period.

 

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                                    (b)        The Shares, when vested, shall be
subject to the following conditions:

 

                                                (i)         The shares may not
be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of,
alienated or encumbered until the restrictions are removed according to the
terms of this Agreement or expire;

 

                                                (ii)        The Compensation
Committee may require that the certificates representing the Shares remain in
the physical custody of an escrow holder or the Company until all restrictions
are removed or expire;

 

                                                (iii)       Each certificate
representing Shares will bear such legend or legends making reference to the
restrictions imposed upon such Shares as the Compensation Committee in its
discretion deems necessary or appropriate to enforce such restrictions; and

 

                                                (iv)       Notwithstanding the
foregoing, all unearned and unvested Shares listed above shall immediately vest
and be delivered to the Executive upon the Change of Control as defined in
Section 7(c) provided that the Executive is employed by the Company on the date
of the Change in Control.  The Executive shall have no voting or other
stockholder rights with respect to any unearned and unvested Shares.  The Shares
shall not be assignable by the Executive or be subject to any claims by
creditors until they shall have been earned and vested in accordance with this
section. In addition to any other restrictions on the Shares described in this
section, which may be incorporated by reference in the stock certificates
evidencing the Shares, such certificates shall bear a legend substantially as
follows:

 

 

"The securities evidenced hereby have not been registered under the Securities
Act of 1933, as amended ("Securities Act").  The holder hereof, by acquiring
such securities, agrees that such securities may not be resold, pledged or
otherwise transferred except pursuant to an effective registration statement
duly filed under the Securities Act, or pursuant to an exemption effective under
the Securities Act."

 

/TBODY> /TBODY>

 

                                                (v)        The Executive hereby
agrees with Company that the holding period set forth in Rule 144 of the
Securities Act of 1933, as amended, shall only begin to run, with respect to any
Shares, on the date that such Shares are earned and vest in accordance herewith.

 

                        4.3       Stock Options.

 

                                    (a)        Executive shall be eligible for
the grant of equity compensation awards from time to time under such equity
compensation plans and arrangements as may be maintained by Company from time to
time. Any option grants made to Executive pursuant to such plans and
arrangements shall be subject to this Agreement and the provisions of such plans
and arrangements.

 

                                    (b)        On the Effective Date, Executive
shall be granted an incentive stock option to purchase 20,000 shares of the
Company (the “Stock Options”), as defined in and pursuant to and in accordance
with one of the Company’s existing stock option plans, or any successor plans as
the Board may designate (the "Stock Option Plan"). The Stock Options shall have
an exercise price equal to one hundred percent (100%) of the fair market value
of Company's common stock as of the date of grant, and, subject to vesting,
shall be exercisable at any time, in whole or in part, within five (5) years of
the date of grant.  These Stock Options shall vest up to a maximum of 5,000 per
year, and in accordance with this Section 4.3(b). The Stock Options vest after
the end of each calendar year in a number to be determined by dividing the
Company’s common stock price as of the end of any applicable year into a number
equal to 5% of any such year’s Excess Revenues, rounded to the nearest integer.
As used herein, "Excess Revenues" shall mean the Company’s annual Revenues minus
$1 million.

 

                                    (c)        As an example only, if in any
year the Revenues are $5 million, and the price of the Company’s stock at the
close of that year is $10.00, then 4,000 Stock Options to purchase 4,000 shares
of the Company shall vest, determined as follows:

 

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            $5 million - $1 million = $4 million (the Excess Revenues)

            $4 million X 5% of Excess Revenues = $200,000

            $200,000 / $10.00 = 20,000 (The number vested is greater than the
number allocated, so 4,000 is vested)

 

                                    (d)        Notwithstanding the foregoing,
Stock Options that do not vest in any given year shall be carried over and added
to a subsequent year’s maximum.  In the example provided in Section 4.3(c), -0-
Stock Options will be carried over to the next year, provided that the next year
is not the last year in this Agreement. Unless otherwise agreed to between the
parties, any unvested Stock Options at the end of the Employment Period shall be
canceled and of no force or effect.

 

                                    (e)        Company shall register the shares
issuable under the Stock Option on a Form S-8 registration statement prior to
the vesting of the first Stock Option and shall keep such registration statement
in effect for the entire period the Stock Options remain outstanding.  Each
shares issued upon exercise of a Stock Option granted pursuant to Sections
4.3(a) and 4.3(b), shall be transferable upon Executive’s election, to the
extent consistent with applicable restrictions under the Company’s registration
of the underlying shares with the Securities and Exchange Commission.

 

                                    (f)         All of Executive’s Stock Options
(including any Stock Options that are outstanding on the Effective Date) shall
be subject to, and governed by, the terms and provisions in the applicable
Company Stock Option Plan, except to the extent of modifications that are
expressly provided for in this Agreement which do not result in any
modifications to the Stock Option Plan which would require shareholder approval
or which would contravene any law which applies to the Stock Option Plan.

 

                                    (g)        If there is any change in the
common stock of Company by reason of any stock dividend, stock split, spin-off,
split up, merger, consolidation, recapitalization, reclassification, combination
or exchange of shares, or any other similar corporate event or reorganization,
however structured, then the number of shares subject to Executive’s Stock
Options and the exercise price of Executive’s Stock Options shall be equitably
and appropriately adjusted by the applicable Stock Option Plan administrator to
effectuate the intent of this Section 4.3. Notice of any adjustment shall be
given by Company to Executive and shall be final and binding on Executive.

 

                        4.4       Performance Awards.  In addition to the
foregoing, during the Employment Period, the Executive shall be eligible to earn
performance awards from time to time that the Company may, in its discretion,
determine to put into effect. The administrator of these plans or arrangements
shall determine the performance criteria (which need not be identical) to be
utilized to calculate the value of the Performance Awards, the term of such
Performance Awards, the Payment Event, and the form and time of payment of
Performance Awards. The specific terms and conditions of each Performance Award
shall be set forth in a written statement evidencing the grant of such
Performance Award. Upon the occurrence of a Payment Event, payment of a
Performance Award will be made to the Executive at fair market value on the date
of the Payment Event, as the administrator in its discretion may determine. The
administrator may impose a limitation on the amount payable upon the occurrence
of a Payment Event, which limitation shall be set forth in the written statement
evidencing the grant of the Performance Award. If Executive’s employment with
the Company is terminated for any reason, including but not limited to, death,
or disability prior to the occurrence of the Payment Event, all of the
Executive’s rights under the Performance Award shall expire and terminate unless
otherwise determined by the administrator.  Notwithstanding the foregoing, the
Executive shall be afforded the opportunity to earn a minimum aggregate of
30,000 Shares during the Employment Period at a maximum of 7,500 Shares, during
each calendar year hereof with respect to these plans or arrangements.

 

                        4.5       Discretionary Bonus. The Executive may be
eligible to receive additional bonus compensation at the sole and unreviewable
discretion of the Chief Executive Officer and/or President and the Compensation
Committee of the Board of Directors.

 

                        4.6       Compensation and Benefit Programs. During the
term of Executive’s employment hereunder, Executive shall be entitled to
participate in the following plans as they may exist from time to time during
the term hereof, to wit, any and all medical, dental, hospitalization,
accidental death and dismemberment, disability, travel and life insurance plans,
and any and all other plans as offered by the Company from time to time to its
Executives, including savings, pension, profit-sharing, stock options, and
deferred compensation plans, subject to the general eligibility and
participation provisions set forth in such plans.

 

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                        4.7       Vacation and Other Benefits.  During the term
of Executive’s employment hereunder, Executive shall be entitled to such paid
vacation, fringe benefits and perquisites as are provided from time to time by
the Company to similarly situated executives. Vacation will be taken at such
times as the Executive and the Company shall mutually determine and provided
that no vacation time shall interfere with the duties required to be rendered by
Executive hereunder. Notwithstanding the foregoing, as an officer of Company,
Executive is expected to utilize his vacation time judiciously and so as not to
jeopardize the business of Company or Urecoats.  Unused vacation may not be
carried forth to the next calendar year without prior written consent by the
Company, except that no written consent is required for carrying over a maximum
of fourteen days to any subsequent year. The Company shall also provide the
Executive reasonable reimbursement of out-of-pocket expenses incurred by him in
connection with his duties hereunder, upon submission of appropriate
documentation, and an automobile or automobile allowance, which expense or
allowance shall not exceed $750 per month, net.  Notwithstanding the foregoing
and as an exception to general policy, the Company will pay for Executive’s
reasonable and documented moving expenses for his relocation to Florida.  In
connection therewith, the Company will pay for an agent for packing and movement
of Executive’s household goods, up to 150 days temporary living allowance not to
exceed $2,000 per month, $50 per diem per day up to the 150 day temporary living
arrangements, transfer allowance equal to three times Executive’s monthly Base
Salary should Executive purchase a home within 24 months from his employment
date (payable at closing).

 

            4.8       Adjustments.  If the outstanding shares of common stock of
the Company are increased, decreased or exchanged for a different number or kind
of shares or other securities, or if additional shares or new or different
shares or other securities are distributed in respect of such shares of common
stock (or any stock or securities received with respect to such common stock),
through merger, consolidation, sale or exchange of all or substantially all of
the properties of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, spin-off or
other distribution with respect to such shares of Common Stock (or any stock or
securities received with respect to such common stock), or (ii) if the value of
the outstanding shares of common stock of the Company is reduced by reason of an
extraordinary cash dividend, a fair, appropriate and proportionate adjustment
shall be made in (x) the maximum number and kind of Shares provided in Section
4.2, (y) the number and kind of shares or other securities subject to then
outstanding Performance Awards described in Section 4.4, and (z) the price for
each share or other unit of any other securities subject to then outstanding
Performance Awards described in Section 4.4. Adjustments under this Section 4.8
will be made by the applicable authority, whose determination as to what
adjustments will be made and the extent thereof will be final, binding and
conclusive. No fractional interests will be issued from any such adjustments.

 

            5.         NON-COMPETITION; NON-DISCLOSURE.

 

                        5.1       Non-Competition.  During the Employment Period
and for a period of twelve (12) months after the termination of the Executive’s
employment with the Company for any reason (collectively the “Restriction
Period”), the Executive shall not, either directly or indirectly, for himself or
any third party, anywhere within or outside the United States (a) engage in or
have any interest in any activity that directly or indirectly competes with the
business of the Company or of any of its affiliates (which for purposes hereof
shall include all subsidiaries or parent companies of the Company, now or in the
future during the Employment Period), as conducted at any time during the
Employment Period, including without limitation, accepting employment from or
providing consulting services to any such competitor, owning any interest in or
being a partner, shareholder or owner of any such competitor, (b) solicit,
induce, recruit, or cause another person in the employ of the Company or its
affiliates or who is a consultant or independent contractor for the Company or
its affiliates to terminate his employment, engagement or other relationship
with the Company or its affiliates, or (c) solicit or accept business from any
individual or entity which shall have obtained the goods or services of, or
purchased goods or services from, the Company or its affiliates during the two
year period immediately prior to the end of the Employment Period or which
otherwise competes with or engages in a business which is competitive with or
similar to the business of the Company or any of its affiliates, (d) call on,
solicit or accept any business from any of the actual or targeted prospective
customers of the Company or its affiliates (the identity of and information
concerning which constitute trade secrets and Confidential Information of the
Company) on behalf of any person or entity in connection with any business
competitive with the business of the Company, nor shall the Executive make known
the names and addresses of such customers or any information relating in any
manner to the Company’s trade or business relationships with such customers,
other than in connection with the performance of Executive’s duties under this
Agreement.

 

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                        5.2       Non-disclosure.  The Executive shall not at
any time during the term hereof or thereafter divulge, communicate, or use in
any way, any Confidential Information (as hereinafter defined) pertaining to the
business of the Company. Any Confidential Information or data now or hereafter
acquired by the Executive with respect to the business of the Company (which
shall include, but not be limited to information concerning the Company’s
financial condition, prospects, technology, customers, suppliers, sources of
leads and methods of doing business) shall be deemed a valuable, special and
unique asset of the Company that is received by the Executive in confidence and
as a fiduciary, and Executive shall remain a fiduciary to the Company with
respect to all of such information. For purposes of this Agreement, the term
“Confidential Information” includes, but is not limited to, information
disclosed to the Executive or known by the Executive as a consequence of or
through his employment by the Company (including information conceived,
originated, discovered or developed by the Executive) prior to or after the date
hereof, and not generally known, about the Company or its business.
Notwithstanding the foregoing, nothing herein shall be deemed to restrict the
Executive from disclosing Confidential Information to the extent required by law
provided that prior to disclosing any such information required by law,
Executive shall give prior written notice thereof to Company and provide Company
with the opportunity to contest the disclosure.  The Executive shall not
disclose, without limitation as to time, Confidential Information to any person,
firm, corporation, association or other entity for any purpose or reason
whatsoever, except (i) to authorized representatives of the Company, (ii) during
the Employment Period, such information may be disclosed by the Executive as is
specifically required by Company in the course of performing his duties for the
Company, and (iii) to counsel and other advisers of Company subject to Company’s
prior approval and provided that such advisers agree to the confidentiality
provisions of this Section 5.2.

 

                        5.3       Ownership of Developments.  All copyrights,
patents, trade secrets, or other intellectual property rights associated with
any ideas, concepts, techniques, inventions, processes or works of authorship
developed or created by Executive during the course of performing work for the
Company or its customers (collectively, the “Work Product”) shall belong
exclusively to the Company and shall, to the extent possible, be considered a
work made by the Executive for hire for the Company within the meaning of Title
17 of the United States Code.  To the extent the Work Product may not be
considered work made by the Executive for hire for the Company, the Executive
agrees to assign, and automatically assign at the time of creation of the Work
Product, without any requirement of further consideration, any right, title, or
interest the Executive may have in such Work Product.  Upon the request of the
Company, the Executive shall take such further actions, including execution and
delivery of instruments of conveyance, as may be appropriate to give full and
proper effect to such assignment.  All of the foregoing shall also be deemed
Confidential Information for the purposes of Section 5.2, above.

 

                        5.4       Books and Records. All books, records, and
accounts relating in any manner to the Company (i.e., financial information,
customer, supplier, vendor identity, etc.), whether prepared by the Executive or
otherwise coming into the Executive’s possession, shall be the exclusive
property of the Company and shall be returned immediately to the Company on
termination of the Executive’s employment hereunder or otherwise on the
Company’s request at any time.

 

                        5.5       Definition of Company.  Solely for purposes of
this Agreement, the term “Company” also shall include any existing or future
subsidiaries of the Company that are operating during the time periods described
herein and any other entities that directly or indirectly, through one or more
intermediaries, control, are controlled by or are under common control with the
Company during the periods described herein.

 

                        5.6       Acknowledgment by Executive.  The Executive
acknowledges and confirms that (i) the restrictive covenants contained in this
Section 5 are reasonably necessary to protect the legitimate business interests
of the Company, and (ii) the restrictions contained in this Section 5 (including
without limitation the geographic area and length of the term of the provisions
of this Section 5) are not overbroad, overlong, or unfair and are not the result
of overreaching, duress or coercion of any kind. The Executive acknowledges and
confirms that his special knowledge of the business of the Company is or will be
such as would cause the Company serious injury or loss if he were to use such
ability and knowledge to the benefit of a competitor or were to compete with the
Company in violation of the terms of this Section 5. The Executive further
acknowledges that the restrictions contained in this Section 5 are intended to
be, and shall be, for the benefit of and shall be enforceable by, the Company’s
successors and assigns and shall be enforced to the fullest extent of the law
applicable at the time that Company deems it necessary or advisable to enforce
the restrictive covenants and other provisions of this Section 5.

 

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                        5.7       Injunctive Relief; Damages.  Because of the
difficulty of measuring economic losses to the Company as a result of a breach
of the foregoing covenants in this Section 5, and because of the immediate and
irreparable damage that could be caused to the Company for which it would have
no other adequate remedy, the Executive agrees that the foregoing covenants may
be enforced by the Company in the event of breach by the Executive, by
injunctions and restraining orders.  Nothing herein shall be construed as
prohibiting the Company from pursuing any other available remedy for such breach
or threatened breach, including the recovery of damages.

 

                        5.8       Severability; Reformation; Independent
Covenants. The covenants in this Section 5 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall thereby be reformed. Each covenant and agreement of Executive in
this Section 5 shall be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim or cause of action
by the Executive against the Company (including the affiliates thereof), whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of such covenants or agreements.  It is specifically
agreed that the periods of restriction during which the agreements and covenants
of the Executive made in this Section 5 shall be effective, shall be computed by
extending such periods by the amount of time during which the Executive is in
violation of any provision of Section 5. The covenants contained in this Section
5 shall not be affected by any breach of any other provision hereof by any party
hereto.

 

                        5.9       Survival.  The obligations of the parties
under this Section 5 shall survive the termination of this Agreement.

 

            6.         EARLY TERMINATION OF EXECUTIVE EMPLOYMENT.  This
Agreement may be terminated by either Party before the expiration of the
Employment Period for any reason, but subject to the terms, conditions and
remedies set forth in this Section 6, which shall provide the sole and exclusive
remedy for any such termination.

 

                        6.1       Uncompensated Terminations.  If the Executive
resigns from the Executive's employment hereunder without Cause (as defined in
Section 7(a), or if the Company terminates the Executive for Cause (as defined
in Section 7(b)), then the Executive shall be entitled to receive a cash sum
payment of the portion of Annual Base Salary earned up to and including the Date
of Termination (as defined in Section 6.4(b)), and any benefits that have
accrued under Sections 4.2 through 4.6 up to and including the Date of
Termination. The amount of cash payable to the Executive under this Section 6.1
shall be payable in accordance with the Company's normal payroll practices and
any other benefits described in Sections 4.2 through 4.6 will be handled in
accordance with the established procedures for each applicable benefit.  More
particularly, Executive shall be entitled only to (a) such Shares that have
actually vested as of the Date of Termination; (b) such Stock Options that he
has exercised or entitled to exercise as of the Date of Termination; and (c)
such bonuses, if any, that he has earned as of the Date of Termination. Any
payments or benefits to which Executive is otherwise entitled under this Section
6.1 shall be subject to setoff to the extent of any claims, which Company has
against Executive.

 

                        6.2       Compensated Termination. If the Executive
resigns for Cause or other than a Change in Control (except for a forced
resignation as described in Section 6.3(a)), or is terminated by the Company
without Cause, in each case prior to the expiration of the Employment Period,
the Executive's employment hereunder shall terminate on the Date of Termination
and the Executive shall be entitled to the following:

 

                                    (a)        the unpaid portion of Salary due
the Executive for the period of time through the Date of Termination, payable in
accordance with the Company's regular payroll practices;

 

                                    (b)        a severance cash payment equal to
six (6) months of the then current Annual Base Salary of Executive;

 

                                    (c)        a number of Shares equal to six
(6) months of the Shares described in Section 4.2, which Shares shall be deemed
earned and vested, and any restrictions on such Shares except as required by
applicable law shall immediately lapse and such Shares shall become
nonforfeitable.  The Shares shall be delivered to Executive pursuant to the time
periods and procedures provided for in Section 4.2, above.

 

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                                    (d)        a number of Stock Options equal
to six (6) months of the Stock Options described in Section 4.3, and any other
Company stock options granted to Executive, which Stock Options shall be deemed
vested, and any restrictions on such Stock Options except as required by
applicable law shall immediately lapse and such Stock Options shall be fully
exercisable in accordance with the requirements (except continued employment) of
Section 4.3;

 

                                    (e)        the product of (I) any
Performance Awards described in Section 4.4 which Executive can show that he
reasonably would have received had Executive remained in such Executive capacity
with the Company through the end of the calendar year in which occurs
Executive’s Date of Termination, multiplied by (II) a fraction, the numerator of
which is the number of days in the calendar year in which the Date of
Termination occurs through the Date of Termination and the denominator of which
is 365, but only to the extent not previously paid; provided that any payments
pursuant to this Section 6.2(e) shall be made within 30 days following the end
of the calendar year in which occurs Executive’s Date of Termination;

 

                                    (f)         for six (6) months following the
Date of Termination, Company shall continue to provide medical and dental
benefits only to Executive on the same basis as such benefits are provided
during such period to the senior executive officers of Company; provided,
however, that if Company’s welfare plans do not permit such coverage, Company
will provide Executive the medical benefits (with the same after tax effect)
outside of such plans; and

 

                                    (g)        To the extent not theretofore
paid or provided, Company shall timely pay or provide to Executive any other
amounts or benefits which Executive is entitled to receive through the Date of
Termination under any plan, program, policy or practice or contract or agreement
of Company and its affiliates, including accrued vacation to the extent unpaid
(such other amounts and benefits shall be hereinafter referred to as the "Other
Benefits").

 

                                    (h)        Notwithstanding the foregoing, in
the case of termination by the Company without Cause, the severance cash payment
described in section 6.2(b) shall be equal to twelve (12) months of the then
current Annual Base Salary of Executive.

 

                        6.3       Termination Due to Change in Control; Death or
Permanent Disability.

 

                                    (a)        If the Company undergoes a Change
in Control (as defined in Section 7(c)), the Executive has 120 days on or
following the date of the Change in Control to terminate his employment under
this Agreement pursuant to this Section 6.3(a); provided, however, that if the
Executive is forced to resign, then Executive shall be entitled to all of the
compensation and benefits described in Section 6.2.

 

                                    (b)        If the Executive becomes
Permanently Disabled (as defined in Section 7(e)) or dies prior to the
expiration of the Employment Period, the Executive's employment hereunder shall
terminate on the Date of Termination.

 

                                    (c)        If the Executive’s employment is
Terminated pursuant to either Sections 6.3(a) (except for a forced resignation)
or 6.3(b), the Executive or, in the case of the Executive’s death, the
Executive’s beneficiary or other legal representative, shall be entitled to: (i)
the unpaid portion of the Annual Base salary described in Section 4.1 due the
Executive up to the Date of Termination, which amount shall be payable in
accordance with the Company's regular payroll practices, (ii) the Shares
described in Section 4.2, to the extent earned and vested, which restrictions,
if any, shall immediately lapse and become nonforfeitable except as otherwise
required by law, (iii) the stock options described in Section 4.3, to the extent
granted and vested, shall become fully exercisable, (iv) any Performance Awards
described in Section 4.4, in the Compensation Committee’s discretion, and (v)
continuation of medical and dental benefits to Executive’s spouse and/or
eligible dependents, if any, for six (6) months, on the same basis as such
benefits are provided during such period to the senior executive officers of
Company; provided, however, that if Company’s welfare plans do not permit such
coverage, Company will provide Executive the medical benefits (with the same
after tax effect) outside of such plans, and (vi) to the extent not theretofore
paid or provided, any unpaid vacation pay or expense reimbursement or other
applicable Other Benefits.

 

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                        6.4       Notice and Date of Termination.

 

                                    (a)        Any termination of the
Executive's employment hereunder by the Company or the Executive (other than
termination due to the Executive's death) shall be communicated by a written
"Notice of Termination" to the other Party in accordance with Section 11 hereof.
A Notice of Termination shall indicate the specific provision of Section 6
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.

 

                                    (b)        "Date of Termination" shall mean

 

                                                (i)         If the Executive
resigns, the date that the Executive sets forth as his last day, but not later
than 30 days after the date Executive sends the Notice and, subject to Company’s
right to accelerate the Date of Termination to any earlier date;

 

                                                (ii)        If the Executive's
employment hereunder is terminated by the Company, the date specified in the
Notice of Termination, which shall be such date determined by the Company;
provided, however, that if such termination by the Company is for Cause, the
Date of Termination shall not be earlier than the expiration of any applicable
remedy period and no later than 60 days following the Notice of Termination;

 

                                                (iii)       If the Executive's
employment hereunder is terminated due to the Executive becoming Permanently
Disabled, the date the Company reasonably determines that he has become
Permanently Disabled;

 

                                                (iv)       If the Executive's
employment hereunder is terminated due to death, the date of death; or

 

                                                (v)        If the Executive's
employment hereunder is terminated by reason of the expiration of the Employment
Period, the date determined or set forth in Section 1.

 

                        6.5       Company’s Rights Not Prejudiced. 
Notwithstanding anything to the contrary in this Agreement, any payments or
distributions of Shares, Stock Options or Other Benefits of any nature which
Company makes to Executive shall be without prejudice to Company’s rights to
assert any claims that Company has or may have against Executive.

 

            7.         DEFINITIONS.  As used in this Agreement, the following
terms shall have the following meanings:

 

                                    (a)        "Cause," when used by the
Executive as the basis for resigning from his employment hereunder, shall mean:
(i) the Company's willful, material breach of any material obligation of the
Company under this Agreement, after giving the Company notice of such breach and
thirty (30) days to cure such breach; or (ii) the occurrence of a Change in
Control (as defined below), subject to Section 6.3(a).

 

                                    (b)        "Cause," when used by the Company
as a basis for terminating the Executive's employment hereunder, shall mean: (i)
the Executive's willful, material breach of any material obligation of the
Executive under this Agreement, including unreasonable failure or refusal to
perform the duties required of him, after giving the Executive notice of such
breach and thirty (30) days to cure such breach; (ii) any willful misconduct in
connection with his employment that could materially impair the financial
condition or reputation of the Company; or (iii) the Executive's conviction for,
or plea of guilty or nolo contendre (or similar plea) to any criminal offense
that is a felony or includes fraud as an element of the offense.

 

                                    (c)        "Change in Control" means the
following and shall be deemed to occur if any of the following events occur:

 

                                                (i)         Any "person," as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (a "Person"), is or becomes the
"beneficial owner," as defined in Rule 13d-3 under the Exchange Act (a
"Beneficial Owner"), directly or indirectly, of securities of the Company
representing (i) 20% or more of the combined voting power of the Company's then
outstanding voting securities, which acquisition is not approved in advance of
the acquisition or within 30 days after the acquisition by a majority of the
Incumbent Board (as hereinafter defined) or (ii) 33% or more of the combined
voting power of the Company's then outstanding voting securities, without regard
to whether such acquisition is approved by the Incumbent Board;

 

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                                                (ii)        Individuals who, as
of the date hereof, constitute the Board of Directors (the "Incumbent Board"),
cease for any reason to constitute at least a majority of the Board of
Directors, provided that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company's stockholders,
is approved by a vote of at least a majority of the directors then comprising
the Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) shall, for the purposes of this Director Plan, be considered as
though such person were a member of the Incumbent Board of the Company;

 

                                                (iii)       The consummation of
a merger, consolidation or reorganization involving the Company, other than one
which satisfies both of the following conditions:

 

                                                             (A)       a merger,
consolidation or reorganization which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
another entity) at least 55% of the combined voting power of the voting
securities of the Company or such other entity resulting from the merger,
consolidation or reorganization (the "Surviving Corporation") outstanding
immediately after such merger, consolidation or reorganization and being held in
substantially the same proportion as the ownership in the Company's voting
securities immediately before such merger, consolidation or reorganization, and

 

                                                             (B)       a merger,
consolidation or reorganization in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding voting
securities; or

 

                                                (iv)       The stockholders of
the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or other disposition by the Company of all or
substantially all of the Company's assets.

 

            Notwithstanding the preceding provisions of this Paragraph (c), a
Change in Control shall not be deemed to have occurred if the Person described
in the preceding provisions of this Paragraph (c) is (1) an underwriter or
underwriting syndicate that has acquired any of the Company's then outstanding
voting securities solely in connection with a public offering of the Company's
securities, (2) the Company or any subsidiary of the Company or (3) an employee
stock ownership plan or other employee benefit plan maintained by the Company
that is qualified under the provisions of the Code. In addition, notwithstanding
the preceding provisions of this Paragraph (c), a Change in Control shall not be
deemed to have occurred if the Person described in the preceding provisions of
this Paragraph (c) becomes a Beneficial Owner of more than the permitted amount
of outstanding securities as a result of the acquisition of voting securities by
the Company which, by reducing the number of voting securities outstanding,
increases the proportional number of shares beneficially owned by such Person,
provided, that if a Change in Control would occur but for the operation of this
sentence and such Person becomes the Beneficial Owner of any additional voting
securities (other than through the exercise of options granted under any stock
option plan of the Company or through a stock dividend or stock split), then a
Change in Control shall occur.

 

                                    (d)        "Disability" means Executive’s
absence from his duties with Company on a full-time basis for 90 days during any
consecutive twelve-month period as a result of incapacity due to mental or
physical illness as determined by a physician selected by Company and acceptable
to Executive. If Company determines in good faith that Executive’s Disability
has occurred during the Employment Period, it may give Executive written notice
in accordance with Section 6.4(a) of this Agreement of its intention to
terminate Executive’s employment. In such event, Executive’s employment shall
terminate effective on the thirtieth (30th) day after Executive’s receipt of
such notice (the "Disability Effective Date"), unless, within the thirty (30)
days after such receipt, Executive shall have been cleared by the physician to
return to work and has returned to full-time performance of his duties.

 

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                                    (e)        "Permanently Disabled" shall mean
when, and only when, the Executive is unable, by reason of illness or accident,
to perform, for a continuous 180-day period, the material elements of his duties
hereunder, and the Company has reasonably determined, based upon medical
documentation, that the Executive for such reason is unlikely to be able to
resume such duties in the foreseeable future.

 

            8.         ASSIGNMENT. Executive shall not have the right to assign
or delegate his rights or obligations hereunder, or any portion thereof, to any
other person.

 

            9.         GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida without regard to
its conflict of laws principles to the extent that such principles would require
the application of laws other than the laws of the State of Florida.  Venue for
any action brought hereunder shall be exclusively in Broward County, Florida and
the parties hereto waive any claim that such forum is inconvenient.

 

            10.       ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and, upon its effectiveness, shall supersede all prior agreements,
understandings and arrangements, both oral and written, between the Executive
and the Company (or any of its affiliates) with respect to such subject matter. 
This Agreement may not be modified in any way unless by written instrument
signed by both the Company and the Executive.

 

            11.       NOTICES. All notices required or permitted to be given
hereunder shall be in writing and shall be personally delivered by courier, sent
by registered or certified mail, return receipt requested or sent by confirmed
facsimile transmission addressed as set forth herein. Notices personally
delivered, sent by facsimile or sent by overnight courier shall be deemed given
on the date of delivery and notices mailed in accordance with the foregoing
shall be deemed given upon the earlier of receipt by the addressee, as evidenced
by the return receipt thereof, or three (3) days after deposit in the U.S. mail.
Notice shall be sent (i) if to the Company, addressed to its President at
Newport Center Plaza, 1239 East Newport Center Drive, Suite 101, Deerfield
Beach, Florida 33442 with a copy to Sader & LeMaire, P.A., 1901 West Cypress
Creek Road, Suite 415, Fort Lauderdale, Florida 33309, Attention: Robert L.
Sader, Esquire, and (ii) if to the Executive, to his address as reflected on the
payroll records of the Company, or to such other address as either party hereto
may from time to time give notice of to the other.

 

            12.       BENEFITS; BINDING EFFECT. This Agreement shall be for the
benefit of and binding upon the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and, where
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.

 

            13.       SEVERABILITY. The invalidity of any one or more of the
words, phrases, sentences, clauses or sections contained in this Agreement shall
not affect        the enforceability of the remaining portions of this Agreement
or any part thereof.  If any invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.

 

            14.       WAIVER. The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.

 

            15.       CONSTRUCTION. This Agreement shall be construed without
regard to any presumption or other rule requiring construction against the party
causing the drafting hereof, each party having been given the opportunity to be
represented by counsel of their choice in connection with the negotiation of
this Agreement.

 

            16.       SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

 

            17.       SINGULAR, PLURAL; GENDER.  Whenever used herein, nouns in
the singular shall include the plural, and the masculine pronoun shall include
the feminine gender.

 

            18.       NO THIRD PARTY BENEFICIARY. Nothing expressed or implied
in this Agreement is intended or shall be construed, to confer upon or give any
person other than the Company, the parties hereto and their respective heirs,
personal representatives, legal representatives, successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.

 

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            19.       EMPLOYEE HANDBOOK; OTHER INSTRUMENTS. The provisions of
this Agreement shall, to the extent of any conflict, supercede and take
precedence over any provisions of the Company’s employee handbook, as it exists
from time to time, or any other existing or future agreements or instruments
pertaining to or governing the rights and obligations of the parties to one
another insofar as permissible under applicable laws.

 

 

            IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.

 

 

COMPANY

 

WITNESS

 

 

 

 

By:

/s/ Timothy M. Kardok, CEO

 

/s/ Michael T. Adams

 

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Name: Timothy M. Kardok

 

 

Title:   Chief Executive Officer and President

 

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 WITNESS

 

 

 

 

By:

/s/ Dale L. Epperson

 

Christy L. Epperson

 

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Name: Dale Epperson

 

 

 

 

 

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