fsb20907ex10i_kraig.htm


    KRAIG
      BIOCRAFT LABORATORIES, INC.

     

    ADDENDUM
      TO THE

     

    EMPLOYMENT
      CONTRACT: KIM K. THOMPSON

     

    THIS
      ADDENDUM to the EMPLOYMENT CONTRACT ("Agreement") dated the April

    26,
      2006, between Kraig Biocraft
      Laboratories, inc.,
      a Wyoming corporation
      (the

    "Company")
      and Km Thompson, an individual ("Executive", "Employee" or "Mr.

    Thompson")
      is dated November 6, 2006,

     

    The
      Board
      of Directors of the Company (the "Board") and Executive each desires that the
      EMPLOYMENT CONTRACT be modified and amended by this ADDENDUM as described below.
      \

     

    NOW,
      THEREFORE, in consideration of the mutual promises and undertakings contained
      in
      this ADDENDUM , and for other good and valuable consideration, the receipt
      and
      adequacy of which are hereby acknowledged, and intending to be legally bound
      hereby, the parties hereto agree as follows:

     

    Section
      4, subsection C of the EMPLOYMENT CONTRACT, titled Stock and Warrants, shall
      be
      deleted, and no stock warrants or stock options shall be issued or
      owing
to Mr. 'Thompson pursuant to former section 4(c). Pursuant to the deletion
      of said
      paragraph 4 (c), all references to the granting or vesting of stock warrants
      in
      section 4 (g), or otherwise in
      the Employment Contract, are rendered meaningless and void, and such is
      the intention of the parties entering into this addendum.

     

    Section
      8. titled Termination by Company, shall be amended to increase the referenced
      severance allowance to
      $600,000, or seventy five percent (75%) of the total salary compensation
      Executive would have been
entitled to for the
remainder
of
      his Term of employment, whichever is greater,

     

    Section
      9. titled Notice of Termination shall be amended to require that any notice
      of
      termination must, in order to be effective, be accompanied by
      a
tendering of the severance allowance specified in Section
      8.

     

    Section
      12. titled Death Benefit shall be amended to increase the referenced death
      benefit to three hundred thousand dollars ($300,000) or thirty percent (35%)
      of
      the total salary compensation Executive would have been entitled to for the
      remainder of his Term of employment, whichever is greater.

    


     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have executed this Addendum under seal
      the
      dayand year above first written.

     

    
      	
              Executive

            	
              Company

            
	 	 
	 	 
	
              /s/  Kim
                Thompson

            	
              /s/  Kim
                Thompson

            
	
              Kim
                Kraig Thompson

            	
              Kim
                Kraig Thompson

            
	 	C.E.O.
	 	On
              behalf of Kraig Biocraft Laboratories,
              Inc.


    

    


     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

     

     

    KRAIG
      BIOCRAFT LABORATORIES, INC.

     

    EMPLOYMENT
      CONTRACT: KIM K. THOMPSON

     

    THIS
      EMPLOYMENT CONTRACT ("Agreement") is dated as of the 26th day of April, 2006,
      by
      and between Kraig Biocraft Laboratories, Inc., a Wyoming corporation (the
      "Company') and Kim Thompson, an individual ("Executive'', "Employee" or “Mr. Thompson").

     

    The
      Board
      of Directors of the Company (the "Board") and Executive each desires that
      Executive furnish services to the Company on the terms and conditions
      hereinafter set forth. The parties enter into this agreement setting forth
      the
      terms and conditions of the employment of the Executive with the
      Company,

     

    NOW,
      THEREFORE, in consideration of the foregoing and of the mutual promises and
      undertakings contained in this Employment Contract, and for other good and
      valuable consideration, the receipt and adequacy of which are hereby
      acknowledged, and intending to be legally bound hereby, the parties hereto
      agree
      as follows:

     

    1.  Employment.
      The Company hereby agrees to employ the Executive, and the Executive
      hereby accepts such employment, on the terms and conditions hereinafter set
      forth.

     

    2.  Term. The
      term
      of Executive's employment under this Agreement shall be for a period of five
      (5)
      years, commencing on May 1, 2006 and ending on April 30, 2011, unless further
      extended or sooner terminated as hereinafter provided.

     

    On
      April
      30, 2007 and on the last day of April of each year thereafter, the Term shall
      be
      automatically extended for five (5) years, so that at all times, the Term on
      each April 30 during the duration of this Agreement shall be an unexpired period
      of five (5) years. The last day of the Term, as from time to time extended,
      is
      hereinafter referred to as the "Expiration Date." The Company or Executive
      may
      elect to terminate the automatic extension of the Term set forth
      in this section by giving written notice of such election
      on or before April 30 of any calendar year Upon the giving of such notice,
      Executive's employment under this Agreement shall terminate on the Expiration
      Date (as last extended).

     

    3.  Position
      and Duties. During the Term of this Agreement, Executive shall be
      employed as Chief Executive Officer of the Company. Inthis capacity
      Executive shall have overall authority for the management of the business of
      the
      Company and the subsidiaries and affiliates of the Company of which he serves
      as
      Chief Executive Officer, Executive hereby accepts such employment and agrees
      to
      perform the customary duties of a Chief Executive Officer and accepts such
      other
      duties as may be set forth herein,

     

    4.  Compensation
      and Related Matters.

     

    a.
      Base Salary. As compensation for the performance by the Executive of
      his duties hereunder, the Company shall pay the Executive a annual base salary
      of $185,000 for the period commencing May 1, 2006 through and including December
      31, 2006, which base pay shall be increased each January 1st for the
      subsequent
      twelve (12) month periods by six percent (6%). Company acknowledges that the
      base salary is less than Mr. Thompson's customary remuneration and that Mr.
      Thompson is entering into this agreement in part due his perception of the
      future value of warrants and deferred, delayed and bonus compensation. Mr.
      Thompson informs the Company, and the company hereby acknowledges that Mr.
      Thompson is entering into this agreement and will be performing the services
      to
      the Company as contemplated herein, in reliance on the promises and
      representations of the Company as described in this Agreement. Company further
      acknowledges that it is the Company's intention that Mr. Thompson so rely upon
      these promises and that this Agreement is offered by the Company as an
      inducement for Mr. Thompson to take on the role of Chief Executive
      Officer.

     

     

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    b.  Annual
      Bonus/Incentive Compensation. In addition to the compensation described
      in subparagraph a. above, Executive may receive such additional compensation,
      if
      any, in the form of an annual incentive bonus, as may be approved by the
      Company's Board of Directors.

     

    c.  Stock
      and Warrants. Executive will receive additional compensation in the
      form of warrants
      on the Company stock as a performance incentive. Executive will receive:
      1) a five year warrant On
      700,000 shares of the Company's common stock at an
      aggregate exercise price of $150,000; 2) a eight year warrant on $1,500,000
      shares of the Company's common stock at an aggregate exercise price of $500,000:
      3) a nine year warrant On
      2.000,000 shares of the Company's common stock at an aggregate exercise
      price of $800,000 Those warrants are fully vested as of the date of this
      agreement.

     

    d.  Life
      andDisability Insurance Premium. COMPANY shall pay
      Executive's premium on his personal life insurance policy for the period [he
      or
      she] performs the duties of EXECUTIVE. EXECUTIVE shall receive disability
      insurance in an amount which is reasonable and commercially
      customary.

     

    e.  Vacation
      and sick leave. Paid vacation of four (4) weeks per year, which
      vacation shall be taken at such times as are mutually convenient to Executive
      and the Company. Paid sick leave for up to 21 days per year.

     

    f.  Medical
      and Dental Insurance. COMPANY shall either provide to EXECUTIVE and pay
      the full premium for a comprehensive family health medical and dental insurance
      policy or
      if EXECUTIVE elects to provide [his or her] own
      hearth insurance, pay to EXECUTIVE an amount equal to the cost of
      providing said comprehensive family health insurance policy.

     

    g.  Performance
      Bonus Compensation. In addition to any other compensation paid to
      EXECUTIVE, COMPANY shall pay EXECUTIVE the following compensation and bonuses
      in
      accordance with the criteria set Forth below;

     

    
      	
               

            	
              1. Upon
                the Company's successful laboratory development of a new
                silk fiber composed of one or more proteins
                that are exogenous to a host and one or more proteins that are
                endogenous to a host, the company will: 1) Release Executive
                from the condition subsequent on a eight year warrant on 500,000
                shares of
                the company stock at an aggregate exercise price of $100,000 and,
                2) raise
                Executive's base pay by 14%.

            


    

     

    
      
        	
                 

              	
                2. Upon
                  the Company's successful laboratory development of a new silk fiber
                  composed of two ormore
                  proteins that are exogenous to a host, whether or not combined
                  with one or
                  more proteins that are endogenous to a host, the company will:
                  1) Release
                  Executive from the condition subsequent on a eight year warrant
                  on 600.000
                  shares of the company
                  stock at an aggregate exercise price of $110,000, and: 2)
                  raise
                  Executive's base pay by 15%.

              


      

       

    

    
      
        
          	
                   

                	
                  3. Upon
                    the Company's successful laboratory development of a new silk
                    fiber
                    composed, at least in part, of one or more
                    synthetic proteins, the company will 1) Release Executive
                    from the
                    condition subsequent on a eight year warrant on 900,000 shares
                    of the
                    company stock at an aggregate exercise price of $160,000, and;
                    2) raise
                    Executive's base pay by 18%.

                


        

         

      

    

    
      
        
          
            	
                     

                  	
                    4. Upon
                      the Company's successful laboratory development of a new silk
                      fiber
                      composed, at [east in part, of one or more proteins that are
                      genetic
                      modifications or induced mutations of a host silk proteins, the
                      company will raise Executive's base pay by
                      8%.

                  


          

           

          
            
              
                
                  
                    	
                             

                          	
                            5.
                              Upon the Company's successful laboratory development
                              of two out of three
                              of the silk fibers referenced in subsections 1, 2 and
                              3 above, rite Board
                              of Directors meet (within 60 days of said event) and
                              consider what bonus
                              compensation would be appropriate and suitably rewarding
                              to Executive
                              under the totality of the
                              circumstances.

                          


                  

                   

                   

                  
                    
                      
                      

                    

                    
                      2

                      
                        

                      

                    

                    
                      
                      

                    

                  

                  
                     

                    
                      
                        
                          
                            
                              	
                                       

                                    	
                                      
                                        6.
                                          Upon the Company's becoming either a registered
                                          company (in the United
                                          States or any foreign jurisdiction) or
                                          upon its stock being traded on the
                                          pink sheets or the OTC Bulletin Board,
                                          and upon the Company's achieving an
                                          average market capitalization over a 120
                                          calendar day period, in excess of
                                          $35,000,000 the company will raise Executive's
                                          base pay to $225,000, It
                                          Executive's base pay is less than that
                                          amount at the
                                          time.

                                      

                                    


                            

                             

                          

                        

                      

                    

                  

                  
                    
                      
                        
                          
                            
                              
                                	
                                         

                                      	
                                        
                                          7.
                                            Upon the Company's becoming either a
                                            registered company (in the United
                                            States or any foreign jurisdiction) or
                                            upon its stock being traded on the
                                            pink sheets or the OTC Bulletin Board,
                                            and upon the Company's achieving en
                                            average market capitalization over a
                                            91 calendar
                                            day period, in excess of 565,000,000
                                            the company will raise Executive's
                                            base pay to $260,000, if Executive's
                                            base pay is less than that amount at
                                            the time.

                                        

                                      


                              

                               

                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              	
                                                       

                                                    	
                                                      
                                                        8.
                                                          Upon the Company's becoming
                                                          either a registered company
                                                          (in the United
                                                          States or any foreign jurisdiction)
                                                          or upon its stock being
                                                          traded on the
                                                          pink sheets or the OTC
                                                          Bulletin Board, and upon
                                                          the Company's achieving
                                                          an
                                                          average market capitalization
                                                          over a 91 calendar day
                                                          period, in excess of
                                                          $100,000,000 the company
                                                          will raise Executive's
                                                          base pay to $290,000, if
                                                          Executive's base pay is
                                                          loss than that amount at
                                                          the
                                                          time.

                                                      

                                                    


                                            

                                             

                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              	
                                                                       

                                                                    	
                                                                      
                                                                        9. Upon
                                                                          the Company's
                                                                          becoming
                                                                          either
                                                                          a registered
                                                                          company
                                                                          (in the
                                                                          United
                                                                          States
                                                                          or any
                                                                          foreign
                                                                          jurisdiction)
                                                                          or upon
                                                                          its stock
                                                                          being traded
                                                                          on the
                                                                          pink
                                                                          sheets
                                                                          or the
                                                                          OTC Bulletin
                                                                          Board,
                                                                          and upon
                                                                          the Company's
                                                                          achieving
                                                                          an
                                                                          average
                                                                          market
                                                                          capitalization
                                                                          over a
                                                                          120 calendar
                                                                          day period,
                                                                          in excess
                                                                          of
                                                                          $200,000,000
                                                                          the company
                                                                          will raise
                                                                          Executive's
                                                                          base pay
                                                                          to $365,000,
                                                                          if
                                                                          Executive's
                                                                          base pay
                                                                          is less
                                                                          than that
                                                                          amount
                                                                          at the
                                                                          time.

                                                                      

                                                                    


                                                            

                                                             

                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                	
                                                                                         

                                                                                      	
                                                                                        
                                                                                          10.Upon
                                                                                            the
                                                                                            Company's
                                                                                            becoming
                                                                                            either
                                                                                            a
                                                                                            registered
                                                                                            company
                                                                                            (in
                                                                                            the
                                                                                            United
                                                                                            States
                                                                                            or
                                                                                            any
                                                                                            foreign
                                                                                            jurisdiction)
                                                                                            or
                                                                                            upon
                                                                                            its
                                                                                            stock
                                                                                            being
                                                                                            traded
                                                                                            on
                                                                                            the
                                                                                            pink
                                                                                            sheets
or
                                                                                            the
                                                                                            OTC
                                                                                            Bulletin
                                                                                            Board,
                                                                                            and
                                                                                            upon
                                                                                            the
                                                                                            Company's
                                                                                            achieving
                                                                                            an
                                                                                            average
                                                                                            market
                                                                                            capitalization
                                                                                            over
                                                                                            a
                                                                                            150
                                                                                            calendar
                                                                                            day
                                                                                            period,
                                                                                            in
                                                                                            excess
                                                                                            of
                                                                                            $350,000,000
                                                                                            the
                                                                                            company
                                                                                            will
                                                                                            raise
                                                                                            Executive's
                                                                                            base
                                                                                            pay
                                                                                            to
                                                                                            $420,000,
                                                                                            if
                                                                                            Executive's
                                                                                            base
                                                                                            pay
                                                                                            is
                                                                                            less
                                                                                            than
                                                                                            that
                                                                                            amount
                                                                                            at
                                                                                            the
                                                                                            time.

                                                                                        

                                                                                      


                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    The
      warrants described in this subsection (9) are in addition to any warrants issued
      outside of this subsection (g) and are fully vested as of the date of this
      agreement, but their exercise, in the absence of satisfying the respective
      criteria set forth above, is subject to the following conditions subsequent:
      11
      Executive exercises the warrants described in this subsection (g) without first
      satisfying the above described criteria, the exercise shall be subject to the
      condition that Executive First provide the Company with a written right to
      redeem any such shares at the exercise price. Such a right of redemption shall
      be for a period of seven years. The criteria will be deemed not to have been
      met, if not met within 120 days of the termination of Executives employment,
      for
      any reason.

     

    The
      events referenced in subsections I, 2 and/or 3 above will be deemed to have
      occurred and the criteria satisfied when verified in an opinion letter from
      any
      one of the following: Dr. Macomb Fraser, Dr, Randolph Lewis, or an independent
      laboratory of Company's choosing.

     

    h.
      Retirement Plan. The Company will make reasonable commercial efforts to
      adopt a retirement benefit plan, which will include
      Executive, which is reasonable and comparable to such plans as are customary
      in
      Company's industry.

     

    5.
      Reimbursement of Expenses. The
      Executive may incur reasonable expenses for furthering the Company's business,
      including expenses for entertainment, travel, meals, and similar items. The
      Company shall reimburse Executive for all business expenses after the Executive
      presents an itemized account of expenditures, pursuant to Company policy. The
      company will cause to be issued a corporate credit card which Executive can
      use
      for company business. Executive agrees that he
      will reimburse the company for an charges he makes on said credit
      account to the extent that such are not reasonably connected to the company's
      business as contemplated herein. The Company will make any request for
      reimbursement from Executive in writing and within fifty (50) days of the
      disputed expenditure. Any request or demand by the Company to Executive for
      reimbursement of expenditures is waved if not made within fifty days of the
      date
      the expenditure was made.
      No
      action will be brought or maintained by the Company against Executive, either
      in
      a court of law
or in
      arbitration, or otherwise, to recover expenses, if the Company has
      not complied with this section 5.

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

    6.  Devotion
      to Company. The Executive will devote substantially his furl
      time, attention, and energies to the business of the Company, its affiliates
      and
      subsidiaries during this employment. The Company understands that Executive
      is
      engaged in other business, and Executive is not prohibited from an active
      involvement in the operation of said business, however the parties do anticipate
      that Executive will devote substantially his full time not less than 70% of
      his
      work time)
to Company.

     

    7.  Termination
      by Executive. Executive may terminate his employment hereunder
      by giving thirty clays written notice to the Company, in which
      event such termination shall become effective at the end of the notice period,
      or earlier as may be specified by the Company after receipt of Executive's
      Notice of Termination.

     

    8.  Termination
      by Company. With or without cause, the Company may terminate
      Executive's employment at any time prior to the expiration of the five year
      term
      upon 60 days' written notice to the Executive. The Executive will be paid
      his/her regular salary up to the date of termination. In addition, the Company
      will pay the Executive on the date of the termination a severance allowance
      of
      $400,000, or sixty five percent (65%) of the total salary compensation Executive
      would have been entitled to for the remainder of his Term of employment,
      whichever is greater. The Company will pay any required withholding tax on
      said
      severance allowance without deducting the same from the amount to be paid to
      Executive, If two out of the three conditions set fourth in section 4 (g) sub
      parts 3, 4 and 5 have been met by
      the time of said
termination,
      or are met within 120 days subsequent to such termination,
      the severance allowance will be increase by $100,000.

     

    9.  Notice
      of Termination. Any purported termination of the Executive's
      employment shall be communicated by written Notice of Termination to the other
      party hereto. If such notice is served by the Company on the Executive, to
      be
      effective, it must include the signatures of the majority of the board of
      directors approving such termination and thanking Executive for his service
      to
      date.

     

    10. 
Termination
      Benefits, Upon the expiration or termination of this Agreement
      or Executives employment, by either party for any reason, Company shall continue
      to provide Executive with life and disability insurance and family health
      insurance described above for a period of thirty six (36) months from said
      termination/expiration. Company will make all reasonable efforts to allow
      Executive to continue such coverage thereafter at Executives own expense, This
      provision is in addition to
the
health
      benefits provided in section 11
      below. This provision shall survive the expiration or termination of
      this
      agreement for any
      reason.

     

    11.  Health
      Benefit. During the life
      of Executive
and also during the life of his spouse, Company shall provide Executive
      and his spouse accident and health insurance policies or programs reasonably
      comparable to those in effect on the date of termination. or Executive and
      his
      spouse shall be entitled to be paid an amount equal to the premiums which would
      be incurred for the purchase of accident
      and
      health insurance coverage comparable to that in effect on the Date of
      Termination. In addition, Company shall provide Executive with life and
      disability insurance policies in an amount not less than that in effect on
      the
      Date of Termination or Executive shall be entitled to be paid an amount equal
      to
      the premiums which would be incurred for the purchase of comparable coverage_ This provision shall
      survive the expiration or termination of this agreement for any
      reason.

     

    12.      
      Death Benefit. Should Executive die during
      the term
of employment, the Company shall pay to Executive's designee, the greater
      of eighty thousand dollars ($80,000) or
      thirty percent (26%) of the total salary compensation Executive
      would have been entitled to for the
remainder
      of his Term of employment,
      whichever is greater, Company will also continue to pay the
medical
      and
      health benefits for Executive's family for a period of eight (B) years, in
      addition to the benefits to Executives spouse, provided in section 11
      above.

     

    13.       
      Consulting Agreement.

    


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    a.               Upon
      the expiration or termination of this agreement for any reason, or by either
      party, Company
      agrees that it will employ Executive as a consultant for a period of six (6)
      years and at a rate of 54,000 per month, with a rate increase on January 1*I. 2009, and
      each
      January thereafter of three percent (3%).Inhis capacity as consultant,
      Executive will make himself available, as may be required by the Company,
      for up
      to 8 hours per month at such times and dates as are mutually convenient.
      Executive may perform these services by telecommunications from such locations
      as are convenient to him. In the event of the death of Executive, Executive's
      designee shall receive a monthly death benefit, from Company, equal to the
      amount of such consultancy, and for the full term or remainder of the term
      of
      the consultancy. Executive may resign from said consultancy position upon
      providing Company with thirty (30) days written notice. This provision shall
      survive the expiration or termination of this agreement for
      any
      reason.

     

    b.               In
      the event that Company achieves gross sales of ten million dollars ($10,000,000)
      or more,
      or
      one million dollars ($1,000,000) or more in net income, in any two years within
      ten (10) years of
      the date of this agreement, or upon the Company's achieving an average
      market capitalization over a 180 calendar day period, in excess of
      $45,000,000 within six (6) years of the date of this agreement, then the
      consulting period will be for ten (10) years
      (with
      payments guaranteed for the full 10 years to designee in the event of
      Executive's death during the term thereof), This provision shall survive the
      expiration or termination of this agreement for any reason.

     

    c               
      In the event that Company achieves gross sales of nineteen million dollars
      ($19,000,000) or
      more,
      or three million dollars ($3,000,000) or more in net income, in any two years
      within twelve (12) years of the date of this agreement, or upon the Company's
      achieving an average market capitalization over a 180 calendar day period,
      in
      excess of $65,000,000 within six (6) years of the date of this agreement, then
      the consulting period will be for the life time of Executive and his spouse
      (joint life with payments guaranteed for 20 years to designee in the event
      both
      predecease the twenty year period), and the consulting rate will be increased
      to
      $0,500 per month, with a three

    percent
      (3%) increase on January 1st 2009, and
      each January 1st  thereafter,
      This provision shall survive
      the expiration or termination of this agreement for any reason.

     

    d.               In
      the event that Company achieves gross sales of thirty eight million dollars
      ($38,000,000)
      ormore, or six million
      dollars ($6,000,000) or more in net income, in any two years within twelve
      (12)
      years of the date of this agreement, or upon the Company's achieving an average
      market capitalization over a 180 calendar day period, in excess of $120,000,000
      within six (6) years of the date of this agreement, then the consulting period
      will be for the life time of Executive and his spouse (joint life with payments
      guaranteed for 20 years to designee in the event both predecease the twenty
      year
      period), and the consulting rate will be increased to 510,000 per month, with
      a
      three percent (3%) increase on January lst 2009, and
      each
      January 1st
thereafter.
      This provision shall survive the expiration or
      termination of this agreement for any reason.

     

    e.               In
      the event that Company achieves gross sales of fifty nine million dollars
      ($59,000,000) or
      more,
      or nine million dollars ($9,000,000) or more in net income, in any year within
      twelve (12) years of the date of this agreement, or upon the Company's achieving
      an average market capitalization over a 180 calendar day period, in excess
      of
      $210,000,000 within six (6) years of The date of this agreement, then the
      consulting period will be for the life time of Executive and his spouse (joint
      life with
payments guaranteed
      for 20 years to designee in the event both
      predecease the twenty year period), and the consulting rate will be increased
      to
      $15,000 per month, with a three percent (3%) increase on January 1st. 2009, and
      each
      January 1st
thereafter,
      This provision shall survive the expiration or
      termination of this agreement for any reason.

     

    f.               In
      the event that
      Company achieves gross sales of seventy eight million dollars
($78,000,000)
      or more, or twelve million dollars ($12,000,000) ormore in net income,
      in any
      year within twelve (12) years of the date of this agreement, or upon the
      Company's achieving an average market capitalization over a 150 calendar day
      period, in excess of $320,000,000 within six (6) years of to date of This
      agreement, then the consulting period will be for
      The life time of Executive and his spouse (joint life with payments guaranteed
      for 20 years to designee in the event both predecease the twenty year period),
      and the consulting rate will be increased to $20,000 per month, with a three
      percent
      (3%) increase on January 1st
2009, and
      each January 1st thereafter.
      This
      provision shall survive the expiration or termination of this agreement for
      any
      reason.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    g.  The
      Company agrees that as it becomes commercially reasonable to do so, Company
      will
      fund this provision through the purchase of annuities, which shaft name
      Executive and his spouse as joint life beneficiaries and his designees as the
      alternative beneficiaries.

     

    h.  Net
      income as used in this section refers to net income as defined by the generally
      accepted accounting practices then in place
      in the United States of America, or cash flow, whichever is
      greater.

     

    i.       
Executive's
      rights to this consulting provision and the benefits thereof are fully vested
      as
      of the date of this Agreement, and any conditional event as described in this
      section, including Company's gross sales or net income events shall be
      interpreted as conditions subsequent to the vesting of the relevant
      benefits.

     

    14.  CHOICE
      OF LAW.  It is the intention of the parties to this
      Agreement that this Agreement and the performance under this Agreement, and
      all suits and special proceedings under this Agreement, be construed in
      accordance with and under the Laws of the State of Michigan.

     

    15.  DISPUTED
      COMPENSATION. In the event that the Company should at any time
      dispute any payment or vesting of compensation as provided herein to executive,
      Company agrees that it will provide Executive with a timely and immediate
      written notice of such dispute detailing the specific compensation that it
      disputes and detailing all of the legal reasons and the detailed factual basis
      for its objection thereto. Such written notice will be provided to Executive
      in
      advance of the payment or vesting of any such disputed payment to Executive.
      Providing such a notice does not eliminate or obviate the Company's
      responsibility to make such a payment of compensation, its dispute or objection
      notwithstanding.

     

    In
      the
      event that the reasons for the dispute or objection arise after the disbursement
      or vesting of such compensation to Executive, then Company agrees that it will
      provide notice to Executive at the earlier of twenty one (21) days from the
      date
      of any such disbursement or vesting if Company knew or reasonably should have
      known of the basis for such an objection within seven (7) days of such
      disbursement or vesting, or if Company did not know or reasonably could not
      be
      expected to known of the basis for such an objection, within one hundred and
      thirty one (131) days of the disbursement, payment or vesting of such benefit.
      Any request or demand by the Company for reimbursement of compensation paid
      to
      Executive pursuant to this agreement is waved if not made within the limitation
      period described in this paragraph. No action will be brought or maintained
      by
      the Company against Executive, either in a court of law or in arbitration,
      or
      otherwise, to recover compensation paid to executive if the Company has not
      complied with this section 15.

     

    Under
      no
      circumstances will any action will be brought or maintained by the company
      against executive, either in a court of law or in arbitration, or otherwise,
      to
      recover compensation already vested or paid to executive, even if prior notice
      of the dispute or objection as described above has been served, if more than
      three hundred and sixty five (365) days have passed since the payment or vesting
      which the company would otherwise seek to recover or overturn.

     

    This
      section 15 shall not apply to any compensation that Executive should receive
      that is over and above the compensation specifically described in this
      Agreement.

     

    16.         NO
      WAIVER. The failure of either party to this Agreement to insist
      upon the performance of any of the terms and conditions of this Agreement,
      or
      the waiver of any breach of any of the terms and conditions of this Agreement,
      shall not be construed as thereafter waiving any such terms and conditions,
      but
      the same shall continue and remain in full force and effect as if no such
      forbearance or waiver had occurred.

    


     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    17.  PARAGRAPH
      HEADINGS. The titles to the paragraphs of this Agreement are solely
for
      the convenience of the parties and shall not be used to explain, modify,
      simplify, or aid in the interpretation of the provisions
      of this Agreement.

     

    18.  COMPLETE
      AGREEMENT, This Agreement contains the complete agreement concerning
      the employment arrangement between the parties. The parties stipulate that
      neither of them has made any representation with respect to the subject matter
      of this Agreement or any representation including the execution and delivery
      of
      this Agreement except such representations as are specifically set forth in
      this
      Agreement and each of the parties acknowledges that [he or she] or it has relied
      on its own judgment in entering into this Agreement. The parties further
      acknowledge that any representations that may have been made by either of them
      to the other prior to the date of executing this Agreement are of no effect
      and
      that neither of them has relied thereon in connection with [his or her] dealings
      with the other.

     

    19.  INDEMNIFICATION.
      Company shall indemnify Executive against any and all expenses,
      including amounts paid upon judgments, counsel fees, environmental penalties
      and
      fines, and amounts paid in settlement (before or after suit is
      commenced),incurred by
      the Executive in connection with [his or her] defense or settlement
      of any claim, action, suit or proceeding in which [he or she] is made a party
      or
      which may be asserted against [him or her} by reason of [his or
      her] employment or the performance of duties in this
      Agreement or as an officer ordirector of the Company or otherwise in
      connection to the Company.  Such indemnification shall be in addition to
      any or rights to which Executive may be entitled under any law, the articles
      of
      incorporation, the bylaws, any agreement, or otherwise. This provision shall
      survive the expiration or termination of this agreement for any
      reason,

     

    20.  Assumption
      of Agreement by Company's Successors and Assignees. The Company's
      rights and obligations under this agreement will inure to the benefit and be
      binding upon the Company's successors and assignees.

     

    21.      
      Legal Fees. Inthe event of any dispute or proceeding arising under this
      Agreement where the Executive is ultimately the substantially prevailing party,
      the Company shall promptly reimburse Executive for all costs, including without
      limitation, the reasonable attorneys' fees of any attorney of the Executive's
      choosing, incurred by the Executive in any such dispute or proceeding arising
      under this Agreement.

     

    22.      
      Assignment. This Agreement shall not be assignable by either party
      without the prior written consent or the other party, However:

     

    (1)  It
      may be
      assigned by the Company to any person or entity acquiring all or substantially
      all of the assets thereof, however Company will remain as a guarantor of
      obligations hereunder: and

     

    (2)  It
      may be
      assigned by Executive as to his right to payment, but not as to any of his
      obligations hereunder; and

     

    23,  Severability
      of Provisions. If any of the provisions of this Agreement or the
      application of any such provision shall for any reason be held invalid by a
      court of competent jurisdiction, such
      invalidity shall not affect or impair any other provision, it being
      the
      intention of the parties that such other provisions shall be and remain
      in full force and effect.

     

    24,  Notices.
      Ali notices, requests, demands and other communications provided for
      by
      this Agreement shall be in writing and shall deemed to have been given at the
      time when mailed at any office of the United States Postal Service
      enclosed in a certified postage-paid envelope addressed to the respective party
      at the addresses set forth below (together with an electronic copy
      to the designated e-mail addresses listed below if notice is being served on
      Executive) or to such changed address as such party may have fixed by notice
      to
      the other party, provided, however, that any notice
      or
      change of address shall be affected only upon receipt and further provided
      that
      any notice may be personally delivered to the respective party by the party
      giving notice in lieu of being mailed.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    


    
      	
              If
                to Company:

               

            	
              Kraig
                Biocraft Laboratories, inc. Attention: CORP 95

              109
                E 17th
                Street, Suite 7

              Cheyenne,
                WY 82001

               

            
	
              If
                to Executive:

            	
            


    

     

    Either
      party may waive this notice provision by providing a written acknowledgement
      to
      the other party that the first party has received effective notice.

     

    25.       
      Binding Effect. This Agreement shall
      inure to the benefit of and shall be binding upon the Company,
      its
      successors and assigns, and any corporation which may acquire all or
      substantially all of the Company's assets or into which the Company may be
      consolidated or merged, and shall inure to the benefit of Executive's personal
      or legal representatives, executors, administrators, successors, heirs,
      distributees, devisees and legatees. Upon the Executive's death, all amounts,
      warrants, and other compensation, to which he is entitled hereunder, unless
      otherwise provided herein, shall be paid in accordance with the terms of this
      Agreement to the Executive's designee, or, if there be no such designee, to
      the
      Executive's estate.

     

    26.  
Exercise
      of Warrants.
      Ail warrants described herein shall contain customary cashless
      exercise and net issue features allowing the exercise price to be paid by a
      deduction of the number of shares, which is equivalent in value to the aggregate
      exercise price, from the equity to be received on exchange, The Company will
      also authorize Executive the alternative or tendering a six year promissory
      note
      as payment for such exercise price. Such note shall be secured entirely by
      a
      security interest in the stock which is received in exchange, and Company's
      recourse shall be limited to said security interest. Said note will allow
      interest to accrue, until maturation, at the annual rate of 6.1%. All such
      stock
      issued shall have the same registration rights, if any, of the Company's
      founder's stock.

     

    27.  Effect
      of Prior Agreements, This agreement does not supersede, nor
      shall it be interpreted as conflicting with, the Stock Purchase and intellectual
      Property Agreement entered into between the parties and dated April 26,
      2006.

     

    28.  Settlement
      by Binding Arbitration. Any claim or controversy that arises out
      of or relates to this agreement, or the breach of it, shall be settled by
      binding arbitration in
      accordance with
      the rules of JAMS. Said arbitration shall be before a single
      arbitrator whose decision shall be binding and final. Unless the parties agree
      otherwise, the arbitration shall be held in the JAMS offices in Chicago,
      Illinois. Judgment upon the award rendered may be entered in any
      court with jurisdiction. In the event that the dispute involves
      the
      withholding by the Company or the refusal to pay by the Company of any
      compensation due under the provisions of this agreement to Executive, his
      spouse, family or designee, and such Executive, his spouse, family ordesignee are the prevailing
      or
      substantially prevailing parties, the Arbitrator shall award pm judgment
      interest on any such compensation atthe
      annual rate of 14% or the maximum amount allowable under the law if less than
      /4%.

     

    29.
      Vesting of compensation and benefits.
Executive's (and where applicable Executive’s Spouse's and Designee's)
      right(s) to the compensation and benefits described in this Agreement are fully
      vested as of the date of
      this Agreement. The conditional events described in numbered
      paragraphs 4 (g) and 13 shall be interpreted as conditions subsequent, and
      shall
      not be interpreted as
      providing any conditionality and the immediate vesting of the benefit as of
      the
      date of this Agreement.

     

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    30.  Bankruptcy,
      Security and Liens. It is the intention of the parties that to the
      greatest extent allowable under the law, the rights and obligations of this
      employment agreement shall not be waved or subordinated by any bankruptcy.
      The
      parties further agree that the obligations of Company hereunder are secured
      by
      the Company's assets including its intellectual property. In furtherance of
      this
      provision, the Company will, upon request from Employee, file or cause to be
      filed such liens and notices of Employees security interests in said
      assets.

     

    31.      
      No
      Attorney—Client Relationship. No Attorney—Client
Confidentiality. Company's Waiver Of Conflicts.It is not
      the intention of the parties to create by this Agreement or through the
      employment relationship between them any attorney–client relationship, and
      Company specially disavows and rejects any such relationship. Executive will
      be
      employed in the capacity of Chief Executive Officer of the Company, and will
      use
      his skills and talents on the Company's behalf in his capacity as C.E.O. Nothing
      in this Agreement, in the employment relationship or in Executive's performance
      of his duties shall be deemed to create an attorney-client relationship with
      the
      Company, its shareholders, or its Board of Directors. Company specifically
      waves
      any such attorney client relationship. Company has no expectation of attorney
      client confidentiality in regard to this relationship and specifically waves
      any
      such attorney–client confidentiality with Executive. Executive is not an
      attorney for the Company, and his actions as an officer or director or
      shareholder shall not be interpreted as the actions of the Company's
      attorney.

     

    Similarly,
      Company has no expectation that the rules pertaining to conflicts of interests
      of attorneys, or any other rules relating to the engagement of attorneys apply
      to this employment relationship. The Company specifically waves any and all
      such
      conflicts. Neither will Executives performance of his duties, including without
      limitation, his role in advising, negotiating, drafting of documents and
      contracts, preparing and filing governmental notices, documents or fillings,
      recommending or taking action on behalf of the Company, appearing in pro say
      on
      behalf of the company, or any other service which is
      performed in his capacity as an officer or director of the company bedeemed
      to constitute the giving of legal advice. Company acknowledges that if it is
      at
      any time in need of, or desires, legal advice or legal services it must retain
      outside attorneys to render such advice or service. This provision may only
      be
      waved in a writing signed by
      both parties which explicitly and conspicuously states both the
      party's intention to waive this numbered paragraph 31.

     

    32.  Execution
      in Counterparts. This Agreement may be executed by the parties
      hereto signing the same instrument, or by each party hereto signing a separate
      counterpart or counterparts, each of which shall be deemed to be an original,
      but all of which together shall constitute one and the same instrument The
      parties agree that documents executed by facsimile or electronic transmission
      shall be acceptable in this transaction, and the
      signatures thereof shall have the same force and effect as original
      signatures.

     

    33.  Waiver.
      The failure of any party to insist in any one or more Instances
      upon performance of any terms or conditions of this Agreement shall not be
      construed as a waiver of future performance of any such term, covenant or
      conditions, but the obligations of either party with respect thereto shall
      continue in full force and effect.

     

        IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement under seal
      the
      day and year above first written.

     

     

    
       

      
        	
                Executive

              	
                Company

              
	 	 
	 	 
	
                /s/  Kim
                  Thompson

              	
                /s/  Kim
                  Thompson

              
	
                Kim
                  Kraig Thompson

              	
                Kim
                  Kraig Thompson

              
	 	C.E.O.
	 	On
                behalf of Kraig Biocraft Laboratories,
                Inc.


      

      
9