EXHIBIT 10.1
 
EMPLOYMENT CONTRACT
 
This Employment Contract (“Agreement”) is executed and delivered as of
February12, 2007, by and between Mace Security International, Inc., a Delaware
corporation (“Company”), and Gregory M. Krzemien, an individual (“Employee”).
 
RECITALS
 
The Company conducts diversified businesses, including, without limitation,
electronic and personal security device marketing and car washes (“Business”).
The Employee is an executive with extensive experience in corporate management.
The Company and Employee are parties to an Employment Contract dated March 26,
1999 under which Employee is employed by the Company on a month to month basis.
This Agreement replaces in its entirety, the Employment Contract dated March 26,
1999. The Company desires to retain Employee as Chief Financial Officer and
Treasurer of the Company and the Employee desires to remain employed as the
Chief Financial Officer and Treasurer.
 
Employee will be employed by Company in a confidential relationship wherein
Employee, in the course of employment with Company, will become familiar with
and aware of information as to the specific manner of doing business and the
customers of Company and its affiliates and the Company’s future plans. The
information Employee has and will have knowledge of is trade secrets and
constitutes valuable goodwill of Company. Employee recognizes that the business
of Company is dependent upon a number of trade secrets and confidential business
information, including customer lists and customer data. The protection of these
trade secrets is of critical importance to Company. Company will sustain great
loss and damage if, for whatever reason, during the term of this Agreement or
Employee’s employment with Company and for a period following the termination of
this Agreement or Employee’s employment, Employee should violate the provisions
of paragraph 4 of this Agreement. Further, Employee acknowledges that any such
violation would cause irreparable harm to Company and that Company would be
entitled, without limitation, to injunctive relief to remedy such violation.
 
NOW, THEREFORE, in consideration of the mutual promises, terms and conditions
set forth herein and the performance of each, the parties hereby agree as
follows:

 
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1. Services.
 
(a) Company hereby employs Employee as its Chief Financial Officer and
Treasurer, and the material duties of Employee may not be changed without the
Employee’s consent. The Company shall provide Employee a furnished and equipped
office from where Employee is to perform his duties (“Office”) and a staff
sufficient for Employee to perform his duties (“Staff”). The location of the
Office, at the time this Agreement is executed is 1000 Crawford Place, Suite
400, Mount Laurel, New Jersey. During any period that Louis D. Paolino, Jr. is
the Chief Executive Officer of the Company, the physical location of the Office
and the number and type of Staff may be changed without the consent of Employee.
If Employee is not satisfied with the changed location of the Office or the
change in Staff, Employee’s only recourse is to resign his employment. During
any period that Louis D. Paolino, Jr. is not the Chief Executive Officer of the
Company, (i) changes in the physical location of the Office are limited to a
twenty five mile radius from the physical location of the Office at the time
Louis D. Paolino, Jr. resigned or was terminated as Chief Executive Officer of
the Company, and (ii) the number and type of Staff may not be significantly
changed by the Company, unless the Employee consents to the Office or Staff
change in writing.
 
(b) Employee hereby accepts employment upon the terms and conditions contained
in this Agreement. Employee shall faithfully adhere to, execute and fulfill all
directions and policies established by the Company for its employees.
 
(c) Employee’s employment shall be for a full time position. Employee shall not,
during the term of his employment, without the prior written consent of Company,
be engaged in any other business activity pursued for gain, profit or other
pecuniary advantage, if such activity prevents Employee from devoting a minimum
of forty hours per week to Employee’s duties and responsibilities under this
Agreement. Employee may make personal investments in any form or manner,
regardless of whether Employee provides services in the operation or affairs of
the companies or enterprises in which such investments are made; provided that
Employee does not violate the terms of Paragraph 4 of this Agreement and devotes
a minimum of forty hours per week to Employee’s duties to the Company.

 
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2. Compensation.
 
(a) For all services to be rendered by Employee to Company, Company shall pay
Employee an initial base annual salary computed and earned ratably over twelve
months at the rate of Two Hundred Thirty Thousand Dollars ($230,000) per year,
commencing on the date hereof, payable in accordance with Company’s normal
payroll procedures. The Company’s Compensation Committee shall each calendar
year commission a compensation study for Employee’s position and shall review
Employee’s annual salary after taking into account the recommendations set forth
in the compensation study.
 
(b) To the extent that Company, from time to time in its sole discretion, offers
or provides any of the following to its employees, Employee, on an equal basis
with such other employees, shall be entitled to: (i) participation in all, if
any, life, health, medical, hospital, accident and disability insurance programs
of Company in existence for the benefit of its employees and for which Employee
qualifies; (ii) participation in all, if any, pension, retirement, profit
sharing or stock purchase plans for which Employee qualifies; and (iii)
participation in any other employee benefits which Company accords to its
employees and for which Employee qualifies.
 
(c) During the term of Employee’s employment with Company, Employee shall be
entitled to reimbursement for reasonable business expenses, including gasoline,
incurred on behalf of Company. Reimbursement for business expenses will be
provided to Employee on the same basis and under the same guidelines as are
applicable to all of Company’s employees. The Company shall also provide the
Employee with a seven hundred dollars ($700.00) per month car allowance.
 
(d) On the date that is within two business days after this Agreement is
executed by all parties to it, Employee shall be awarded an option grant
exercisable into Sixty Thousand shares of the Corporation’s common stock
(“Option”). The Option shall be granted under the Corporation’s Stock Option
Plan at an exercise price equal to the close of market on the date of grant. The
Option shall be a ten year option and shall vest over two years with the first
twenty thousand (20,000) option shares vesting on the date of grant, the next
twenty thousand (20,000) option shares vesting twelve months from the date of
grant and the last twenty thousand (20,000) option shares vesting twenty four
months from the date of grant. Notwithstanding the vesting schedule, the Option
shall completely vest upon the occurrence of the Retention Payment Trigger
Event, as defined in Paragraph 2(e) below.
 
 
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(e) To encourage, Employee to remain Employed with the Company, the Company
shall pay Employee a Retention Payment, as hereafter defined, upon the
occurrence of the Retention Payment Trigger Event, as hereafter defined;
provided that Employee is employed by the Company at the time of the Retention
Payment Trigger Event. For purposes of this Agreement, the term “Retention
Payment” shall mean a lump sum cash payment equal to the Employee’s then current
annual base salary, without consideration for any bonuses or the value of any
option award. The Retention Payment shall be paid to Employee within ten (10)
business days after the date that the Retention Payment Trigger Event occurred.
For purposes of this Agreement the Retention Payment Trigger Event has occurred
when both of the following items have occurred (i) Louis D. Paolino, Jr no
longer serves as the Company’s Chief Executive Officer, and (ii) any one of the
events set forth in items (a) through and including (c) below have taken place.
The Retention Payment Trigger Event shall have occurred when both item (i) and
(ii) occur regardless of which of the items occurs first or whether there is a
time gap between the items. By way of example, if any one of the items in (a)
through (c) below occurs in October 1, 2007 and Louis Paolino, Jr. remains the
Chief Executive Officer until December 30, 2007, the Retention Payment Trigger
Event has not occurred until December 30, 2007. Items (a) through (c) are as
follows:
 
(a) the acquisition in one or more transactions by any “Person”, excepting
Employee, as the term “Person” is used for purposes of Sections 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended (the “1934 Act”), of
“Beneficial Ownership” (as the term beneficial ownership is used for purposes or
Rule 13d-3 promulgated under the 1934 Act) of the fifty percent (50%) or more of
the combined voting power of the Company’s then outstanding voting securities
(the “Voting Securities”). For purposes of this Paragraph 2(e)(a), Voting
Securities acquired directly from the Company and from third parties by any
Person shall be included in the determination of such Person’s Beneficial
Ownership of Voting Securities.
 
(b) the approval by the shareholders of the Company and the consummation of: (A)
a merger, reorganization or consolidation involving the Company, if the
shareholders of the Company immediately before such merger, reorganization or
consolidation do not or will not own directly or indirectly immediately
following such merger, reorganization or consolidation, more than fifty percent
(50%) of the combined voting power of the outstanding Voting Securities of the
corporation resulting from or surviving such merger, reorganization or
consolidation in substantially the same proportion as their ownership of the
Voting Securities immediately before such merger, reorganization or
consolidation, or (B) a complete liquidation or dissolution of the Company, or
(C) an agreement for the sale or other disposition of 50% or more of the assets
of the Company and a distribution of the proceeds of the sale to the
shareholders.
 
 
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(c) the acceptance by shareholders of the Company of shares in a share exchange,
if the shareholders of the Company immediately before such share exchange do not
or will not own directly or indirectly following such share exchange more than
fifty percent (50%) of the combined voting power of the outstanding Voting
Securities of the corporation resulting from or surviving such share exchange in
substantially the same proportion as the ownership of the Voting Securities
outstanding immediately before such share exchange.
 
 3. Term. The period of Employee’s employment with the Company shall commence on
the date of this Agreement and shall continue for three years thereafter, unless
sooner terminated in accordance with the provisions of this Agreement (“Term”).
After expiration of the Term, Employee’s employment shall continue thereafter on
an at-will month-to-month basis, until terminated by either party to the
Agreement. During the month-to-month period the provisions of this Agreement
shall no longer apply, except for the provisions of Paragraph 15 which survive
the Term. During the at-will month-to month period, Employee shall continue to
be paid the Employee’s then current annual base salary under the provisions of
Paragraph 2(a), benefits under Paragraph 2(b) and the car allowance under
Paragraph 2(c).
 
4. Noncompetition Covenants.
 
(a) Employee agrees that the noncompetition covenants contained in this
Paragraph 4 are a material and substantial part of this Agreement.
 
(b) Employee covenants that during Employee’s employment with Company and for
three months following the termination of Employee’s employment (regardless of
the reason for the termination) the Employee shall not, directly or indirectly,
without the prior express written consent of Company, do any of the things set
forth in item (i) through (v) below:

 
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(i) engage, as an officer, director, shareholder, owner, partner, joint
venturer, agent, or in a managerial capacity, whether as an employee,
independent contractor, consultant, advisor or sales representative, in the
personal security device industry or in the car wash services industry within
the United States (the “Territory”);
 
(ii) call upon any person who is, at the time of the contact, an employee of
Company or its affiliates, if the purpose and intent of the contact is to entice
such employee away from or out of the employ of Company or its affiliates;
 
(iii) call upon any person or entity which is, at the time of the contact, a
customer of the Company or its affiliates for the purpose of soliciting or
selling any of the items or services which are the items or services offered by
the Company or its affiliates;
 
(iv) disclose the identity of the customers of Company or its affiliates,
whether in existence or proposed, to any person, firm, partnership, corporation
or other entity whatsoever, for any reason or purpose whatsoever; or
 
(v) promote, or assist, financially or otherwise, any person, firm, partnership,
corporation or other entity whatsoever to do any of the above.
 
  For the purposes of this Agreement, the term “affiliates” shall mean one or
more of: (A) each subsidiary of Company, and (B) each other entity under the
direct or indirect control of the Company.
 
(c) The Company will sustain significant losses and damages, if Employee
breaches the covenants in this Paragraph 4. There is no adequate monetary remedy
for the immediate and irreparable damage that would be caused to Company by
Employee’s breach of its non-competition covenants. Employee agrees that, in the
event of a breach by him of the foregoing covenants, such covenants may be
enforced by Company by, without limitation, injunctions and restraining orders.
 
(d) It is agreed by the parties that the covenants in this Paragraph 4 impose a
reasonable restraint on Employee in light of the activities and business of
Company on the date of the execution of this Agreement and the future plans of
Company.

 
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(e) The covenants in this Paragraph 4 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. If 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.
 
(f) The covenants in this Paragraph 4 shall be construed as independent of any
other provision of this Agreement and the existence of any claim or cause of
action of Employee against Company whether predicated on this Agreement, or
otherwise, shall not constitute a defense to the enforcement by Company of such
covenants. It is specifically agreed that the duration of the noncompetition
covenants stated above shall be computed by excluding from such computation all
time during which Employee is in violation of any provision of this Paragraph 4
and all time during which there is pending in any court of competent
jurisdiction any action (including any appeal from any judgment) brought by any
person, whether or not a party to this Agreement, in which action Company seeks
to enforce the agreements and covenants of Employee or in which any person
contests the validity of such agreements and covenants or their enforceability
or seeks to avoid their performance or enforcement. Provided that, no such
exclusion shall include the period of time within which Employee has ceased
violating this paragraph, whether or not as a result of being in compliance with
Court injunction or doing so voluntarily, and whether or not any action is
pending against Employee, and provided that no such exclusion shall include the
time an action is pending, if the action is finally determined in Employee’s
favor.

5. Confidential Information. It is expressly acknowledged by the Employee that
customer lists, orders, current and closed out orders, prospect lists, documents
containing the names or addresses of existing or potential customers,
information regarding the Company’s financial condition or business plans, the
methods by which the Company serves its customers or conducts its operations, as
well as other business procedures, are the property of the Company and
constitute confidential information or trade secrets of the Company
(“Confidential Information”). Employee agrees to maintain the confidentiality of
the Confidential Information and further agrees that Employee will not, directly
or indirectly, use or disclose Confidential Information to any natural or legal
person, other than authorized employees or agents of the Company, during the
Term or thereafter. All Confidential Information and all correspondence,
reports, charts, products, records, designs, patents, plans, manuals, “field
guides”, memoranda, advertising materials, lists and other data or property
collected by or delivered to Employee by or on behalf of Company, its
representatives, customers and government entities (including, without
limitation, customers obtained for Company by Employee), and all other materials
compiled by Employee which pertain to the business of Company shall be and shall
remain the property of Company, shall be subject at all times to its discretion
and control and shall be delivered, together with any and all copies thereof,
promptly to Company upon request at any time and without request upon completion
or other termination of Employee’s employment hereunder.

 
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6. Inventions. Employee shall disclose promptly to Company any and all
conceptions and ideas for inventions, improvements, and valuable discoveries,
whether patentable or not, which are conceived or made by Employee solely or
jointly with another during the period of employment or within three months
thereafter and which are related to the business or activities of Company.
Employee hereby assigns and agrees to assign all his interests therein to
Company or its nominee. Whenever requested to do so by Company, Employee shall
execute any and all applications, assignments or other instruments that Company
shall deem necessary to apply for and obtain Letters Patent of the United States
or any foreign country or to otherwise protect Company’s interest therein. These
obligations shall continue beyond the termination of employment with respect to
inventions, improvements and valuable discoveries, whether patentable or not,
conceived, made or acquired by Employee during the period of employment, and
shall be binding upon Employee’s heirs, assigns, executors, administrators and
other legal representatives.
 
7. Termination; Rights of Termination.
 
(a) Employee’s employment under this Agreement may be terminated during the term
hereof in any one or more of the following ways:
 
(i) Employee shall be terminated automatically upon the death or resignation of
Employee. The parties agree that Employee may resign as Chief Financial Officer
and Treasurer, at any time without such resignation constituting a breach of
this Agreement.
 
(ii) Employee may be terminated by the Company upon Employee’s inability to
perform his duties under this Agreement because of illness or physical or mental
disability or other incapacity which continues for a period of 120 days
consecutively during any one-year period.

 
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(iii) Employee may be terminated by the Company upon written notice to the
Employee any time after: (a) the occurrence of the Retention Payment Trigger
Event; and (b) the Employee having been paid the Retention Payment, as provided
in Paragraph 2(e) of this Agreement; and (c) the further payment of a lump sum
cash payment equal to the Employee’s then current annual base salary,
 
(iv) Employee may be terminated by the Company for Cause, as hereafter defined,
upon fifteen (15) day advance written notice to Employee. Cause, is hereby
defined as: (a) Employee committing against the Company fraud,
misrepresentation, theft or embezzlement, (b) Employee’s conviction of any
felony, (c) Employee’s material intentional violations of Company policies, or
(d) a material breach of the provisions of this Agreement, including
specifically the repeated failure of Employee to perform his duties after
written notice of such failure from the Company. However, in the event of
termination related to Employee’s performance, Employee’s termination shall only
be effective upon the expiration of a thirty (30) day cure period following a
lack of corrective action having been undertaken by Employee during said cure
period.
 
(b) On a breach or default of this Agreement on the part of the Company,
including, without limitation, changing the Employee’s duties, the location of
the Office or the number or amount Staff other then as permitted under Paragraph
1(a), the Employee is entitled to resign his employment and the Company shall
immediately pay to the Employee, the Employee’s then annual base salary paid
prior to the date of the Employee’s resignation, without consideration for any
bonuses or the value of any option award.
 
(c) Upon termination of Employee’s employment under Paragraph 7(a) for any
reason or resignation of Employee under Paragraph 7(b) , Employee shall be
entitled to receive Employee’s salary accrued through the date of termination,
plus any employee benefits which by their terms and provisions continue after
such termination, plus any Retention Payment owed by the Company at the time of
termination or resignation under the provisions of Paragraph 2(e) or which would
have become due but for the Company’s breach or default of the Agreement.
 
(d) In the event of termination of Employee’s employment under this Agreement
for any reason provided in this paragraph 7, or if Employee resigns prior to the
expiration of the term of this Agreement, all rights and obligations of Company
and Employee under this Agreement shall cease immediately, except that
Employee’s and the Company’s obligations under Paragraphs 4, 5, 6, 7 and 15
herein shall survive such termination. After such termination Employee shall
have no right to receive any compensation or payment hereunder, except as set
forth this Paragraph 7.

 
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8. Complete Agreement. This Agreement is the final, complete and exclusive
statement and expression of the agreement between Company and employee, it being
understood that there are no oral representations, understandings or agreements
covering the same subject matter as this Agreement. This Agreement supersedes,
and cannot be varied, contradicted or supplemented by evidence of any prior or
contemporaneous discussions, correspondence, or oral or written agreements of
any kind. This Agreement may be modified, altered or otherwise amended only by a
written instrument executed by both Company and Employee.
 
9. No Waiver; Remedies Cumulative. No waiver by the parties hereto of any
default or breach of any term, condition or covenant of this Agreement shall be
deemed to be a waiver of any subsequent default or breach of the same or any
other term, condition or covenant contained herein. No right, remedy or election
given by any term of this Agreement shall be deemed exclusive but each shall be
cumulative with all other rights, remedies and elections available at law or in
equity.
 
10. Assignment; Binding Effect. Employee understands that Employee has been
selected by Company on the basis of Employee’s personal qualifications,
experience and skills. Employee agrees, therefore, that he cannot assign all or
any portion of this Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and Company’s successors and assigns. It is
further understood and agreed that Company may be merged or consolidated with
another entity and that any such entity shall automatically succeed to the
rights, powers and duties of Company hereunder.
 
11. Notice. All notices or other communications required or permitted hereunder
shall be in writing and may be given by depositing the same in the United States
mail, addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, by overnight courier or by delivering
the same in person to such party.
 
To Company:        Chief Executive Officer
1000 Crawford Place
Mount Laurel, New Jersey 08054
 
To Employee:        Gregory M. Krzemien
1743 Central Park
Orefield, Pennsylvania 18069

 
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Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier and three days after the deposit in the U.
S. mail of a writing addressed as above and sent first class mail, certified,
return receipt requested, or when actually received, if earlier. Either party
may change the address for notice by notifying the other party of such change in
accordance with this paragraph 11.
 
12. Severability; Headings. If any portion of this Agreement is held invalid or
inoperative, the other portions of this Agreement shall be deemed valid and
operative and, so far as is reasonable and possible, effect shall be given to
the intent manifested by the portion held invalid or inoperative. The paragraph
headings herein are for reference purposes only and are not intended in any way
to describe, interpret, define or limit the extent or intent of this Agreement
or of any part hereof.

13. Gender. The use of the masculine pronoun in this Agreement has been used for
convenience and shall apply to the Employee.
 
14. Governing Law. This Agreement shall in all respects be construed in
accordance with the laws of the State of Delaware.
 
  15. Insurance and Indemnification.
 
(a) Subject to applicable law, for a period of six (6) years following
completion of the Term, the Company will: (i) indemnify Employee and his heirs
and representatives to the extent provided in the Company’s By-Laws in effect on
the date of this Agreement and will not amend, reduce or limit rights of
indemnity afforded to them or the ability of the Company to indemnify them, not
hinder, delay or make more difficult the exercise of such rights of indemnity
and (ii) maintain director and officer liability insurance coverage providing
Employee with coverage (1) at least as favorable as the policies in effect
immediately prior to the date hereof covering the Company’s directors and
officers or (2) as favorable as is available at a cost to the Company of up to
125% of the premiums currently being paid by the Company. The Company’s By-Law
provision regarding indemnification, in effect on the date of this Agreement is
attached as Exhibit “A” to this Agreement.

 
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(b) If any claim is (or claims are) made against Employee and his heirs and
representatives, including legal counsel, arising from Employee’s services as a
director, officer and employee of the Company, within six (6) years from the
expiration of the Term, the provisions of this Paragraph 15 respecting the
Company’s By-Laws shall continue in effect until the final disposition of all
such claims.
 
(c) The Company agrees to provide written notice to Employee immediately upon
learning of any claim or threatened claim against Employee by any third party
relating to or arising out of the business of the Company or Employee’s prior
service as a director, officer, employee or controlling shareholder of the
Company. The Company further agrees to provide to Employee any complaints and
other relevant documentation related to such claims immediately upon receipt of
such documentation.

(d) Employee agrees that he will cooperate with and assist the Company, as is
reasonably requested by the Company, in its defense of any action or proceeding
against the Company, its directors, officers, employees or affiliates arising
out of or in any way related to any transactions, events or other matters which
occurred during the period of his employment with the Company, to the extent
that such cooperation and assistance will not impair Employee’s legal rights or
remedies or increase the likelihood that Employee will incur any liabilities as
a result thereof. This Agreement shall not preclude Employee from testifying in
such action or proceeding. In the event that Employee does cooperate with and
assist the Company in its defenses of such an action or proceeding, the Company
agrees to reimburse Employee for all reasonable expenses incurred by Employee in
providing such assistance.
 
16. Arbitration.
 
(a) Each and every controversy or claim arising out of or relating to this
Agreement shall be settled by arbitration in Philadelphia, Pennsylvania, in
accordance with the commercial rules (the “Rules”) of the American Arbitration
Association then obtaining, and judgment upon the award rendered in such
arbitration shall be final and binding upon the parties and may be confirmed in
any court having jurisdiction thereof. Notwithstanding the foregoing, this
Agreement to arbitrate shall not bar any party from seeking temporary or
provisional remedies in any Court having jurisdiction. Notice of the demand for
arbitration shall be filed in writing with the other party to this Agreement,
which such demand shall set forth in the same degree of particularity as
required for complaints under the Federal Rules of Civil Procedure the claims to
be submitted to arbitration. Additionally, the demand for arbitration shall be
stated with reasonable particularity with respect to such demand with documents
attached as appropriate. In no event shall the demand for arbitration be made
after the date when institution of legal or equitable proceedings based on such
claim, dispute or other matter in question would be barred by the applicable
statutes of limitations.
 
 
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(b) The arbitrators shall have the authority and jurisdiction to determine their
own jurisdiction and enter any preliminary awards that would aid and assist the
conduct of the arbitration or preserve the parties’ rights with respect to the
arbitration as the arbitrators shall deem appropriate in their discretion. The
award of the arbitrators shall be in writing and it shall specify in detail the
issues submitted to arbitration and the award of the arbitrators with respect to
each of the issues so submitted.
 
(c) Within sixty (60) days after the commencement of any arbitration proceeding
under this Agreement, each party shall file with the arbitrators its
contemplated discovery plan outlining the desired documents to be produced, the
depositions to be take, if ordered by the arbitrators in accordance with the
Rules, and any other discovery action sought in the arbitration proceeding.
After a preliminary hearing, the arbitrators shall fix the scope and content of
each party’s discovery plan as the arbitrators deem appropriate. The arbitrators
shall have the authority to modify, amend or change the discovery plans of the
parties upon application by either party, if good cause appears for doing so.
 
(d) The award pursuant to such arbitration will be final, binding and
conclusive.
 
(e) Counsel to Company and Employee in connection with the negotiation of and
consummation of this Agreement shall be entitled to represent their respective
party in any and all proceedings under this Paragraph or in any other proceeding
(collectively, “Proceedings”). Company and Employee, respectively, waive the
right and agree they shall not seek to disqualify any such counsel in any such
Proceedings for any reason, including but not limited to the fact that such
counsel or any member thereof may be a witness in any such Proceedings or
possess or have learned of information of a confidential or financial nature of
the party whose interests are adverse to the party represented by such counsel
in any such Proceedings.
 
 
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IN WITNESS WHEREOF, the undersigned parties have executed this Agreement on the
year and day above written.

       
MACE SECURITY INTERNATIONAL, INC.
 
   
   
  By:    /s/ Louis D. Paolino, Jr., President  

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Louis D. Paolino, Jr., President

 

              
/s/ Gregory M. Krzemien
 

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Gregory M. Krzemien

 
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EXHIBIT A
 
INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
Section 6.01. Indemnification. Each person who was or is made a party or is
threatened to be made a party or is involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
Aproceeding@), by reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director or officer, of the
Corporation or is or was serving at the request of the Corporation as a director
or officer (or person performing similar function), employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment), against all expense, liability
and loss (including attorney=s fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators: provided, however, that except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board of Directors of
the Corporation.
 
Section 6.02. Advances. The right to indemnification conferred by this Article 6
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition, including,
without limitation, attorney=s fees, expert fees and all costs of litigation.
Subject to the tender to the Corporation of any undertaking then required under
the Delaware General Corporation law with respect to the repayment amounts of
amounts advanced, any such expenses, including, without limitation, attorney=s
fees, expert fees, and all costs of litigation, shall be paid automatically and
promptly upon tender by the director, officer, or employee, as applicable, of a
demand therefor.
 
Section 6.03. Procedure. If a claim under this Article 6 is not paid in full by
the Corporation within thirty days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim, and if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
 
 
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Section 6.04. Other Rights. The indemnification and advancement of expenses
provided by this Article 6 shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled
under any insurance or other agreement, vote of shareholders or disinterested
directors or otherwise, both as to actions in their official capacity and as to
actions in another capacity while holding an office, and shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such person.
 
Section 6.05. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, agent, fiduciary or other
representative of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
him against such liability under the provisions of these Bylaws.
 
Section 6.06. Modification. The duties of the Corporation to indemnify and to
advance expenses to a director or officer provided in this Article 6 shall be in
the nature of a contract between the Corporation and each such director or
officer, and no amendment or repeal of any provision of this Article 6 shall
alter, to the detriment of such director or officer, the right of such person to
the advancement of expenses or indemnification related to a claim based on an
act or failure to act which took place prior to such amendment, repeal or
termination.

 
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