Document:

Exhibit 10.2

EXECUTIVE EMPLOYMENT AGREEMENT

Dated as of October 18, 2017

THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") dated as of the date first set forth above (the "Effective Date") is entered into by and between C-Bond Systems, LLC, a Texas limited liability corporation (the "Company"), and Scott R. Silverman (the "Executive"). The Company and Executive may collectively be referred to as the "Parties" and each individually as a "Party."

WHEREAS, the Company desires to employ the Executive as its Chief Executive Officer and the Executive desires to serve in such capacity on behalf of the Company, in each case subject to the terms and conditions herein;

NOW, THEREFORE, in consideration of the promises and of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Executive hereby agree as follows:

	1.	
Employment.

(a)    Term. The term of this Agreement (the "Initial Term") shall begin as of the Effective Date and shall end on the earlier of a) the third anniversary of the Effective Date and b) the time of the termination of the Executive's employment in accordance with Section 3. This Initial Term and any Renewal Term (as defined below) shall automatically be extended for one or more additional terms of one (1) year each (each a "Renewal Term" and together with the Initial Term, the "Term"), unless either the Company or Executive provide notice to the other Party of their desire to not so renew the Initial Term or Renewal Term (as applicable) at least thirty (30) days prior to the expiration of the then-current Initial Term or Renewal Term, as applicable. Notwithstanding anything in this Agreement to the contrary, if the Executive's independent contractor relationship with the Company is terminated by either Party per the terms of the cover letter to this agreement of even date,, this Agreement is null and void and Executive shall be entitled to no consideration other than that set forth in such cover letter. Notwithstanding anything in this Agreement to the contrary, any references to payments upon termination of Executive's employment shall only apply after the initial two month independent contractor term described in the cover letter. All unvested stock options shall expire upon such termination.

(b)   Duties. The Company hereby appoints Executive, and Executive shall serve, as Chief Executive Officer. Executive shall report to the Managing Members or Managers or other governing body pursuant to the terms of the Company's limited liability company agreement as amended from time to time (the "Board"). The Executive shall have such duties and responsibilities as are consistent with Executive's position.

 

  

Exhibit 10.2 -- Page 1

(c)   Best Efforts. During the Term, the Executive shall devote Executive's best efforts and full time and attention to promote the business and affairs of the Company and its affiliated companies, and shall be engaged in other business activities only to the extent that such activities are not competitive with the Company and do not interfere or conflict with Executive's obligations to the Company hereunder, including, without limitation, the obligations pursuant to Section 6. Notwithstanding the foregoing, the Executive may (1) serve on corporate, civic, educational, philanthropic or charitable boards or committees, (2) deliver lectures, fulfill speaking engagements or teach at educational institutions and (3) manage personal investments and consult non-competitive businesses so long as such activities do not significantly interfere with the performance of the Executive's responsibilities hereunder. The foregoing shall also not be construed as preventing the Executive from investing Executive's assets in such form or manner as will not require any significant services on Executive's part in the operation of the affairs of the businesses or entities in which such investments are made; provided, however, that the Executive shall not invest in any business competitive with the Company, except that the Executive shall be permitted to own not more than 5% of the stock of those companies whose securities are listed on a national securities exchange or quoted on the OTC Markets.

	2.	
Compensation and Other Benefits. As compensation for the services to be rendered hereunder, during the Term the Company shall pay to the Executive the salary and bonuses, and shall provide the benefits, as set forth in this Section 2.

(a)   Base Salary. The Company shall pay to the Executive an annual base salary of $300,000 annually, payable on a monthly basis commencing on the effective date (the "Base Salary"). Until the Company raises $1,000,000 in equity or debt financings after the date of this Agreement, Executive has agreed to be paid 1⁄2 of the base salary on a monthly basis with the other 1⁄2 being deferred. Once $1,000,000 in equity or debt financings is raised after the date of this Agreement, the Executive will receive the deferred portion of his compensation and his base salary will be paid in full moving forward. It is expressly agreed that all current employees of the Company will receive any deferred compensation currently due and owing simultaneous with the Executive. The Base Salary will increase by 10% on each anniversary date contingent on the achievement of certain performance objectives of the Company as set by the Board and communicated to and agreed to by the Executive in writing as soon as practicable after commencement of the year in which the increase shall occur.

(b)   Bonus. The Executive shall be eligible for an annual bonus payment in an amount to be determined by the Board and Executive (the "Bonus"). The Bonus shall be determined and payable based on the achievement of certain performance objectives of the Company as established by the Board and communicated to and agreed to by the Executive in writing as soon as practicable after commencement of the year in respect of which the Bonus is paid. It is understood between the Parties that the Target Bonus for each year shall be one times the annual salary.

Exhibit 10.2 -- Page 2

(c)    Equity Grants. The Executive shall be granted the following equity aw

(i)    On the Effective Date, Executive shall be granted an option to acquire 3,000,000 common units (the "stock options") of the Company (the "First Grant"), with a strike price of $1.00 per unit. These stock options will vest pro rata on a monthly basis for the term of the agreement. To be more specific, approximately 83,333 stock options will vest monthly. . In the event that Executive is terminated without Cause (as defined herein) or a Change of Control event (as defined herein) occurs, all stock options will immediately vest. On any other termination of Executive's employment, unvested options shall immediately terminate. All grants of stock options under this Agreement shall be subject to the terms of the C-Bond Systems, LLC Common Unit Option Plan and standard form of common unit option agreement

(ii)    On each annual anniversary of the Effective Date, the Executive shall be eligible to be granted a minimum of 500,000 stock options of the Company at a strike price of $2.75 per common unit on the achievement of certain performance objectives of the Company as established by the Board and communicated to and agreed to by the Executive in writing as soon as practicable after commencement of the year in respect of which the grant is made. The amount of these Grants may be increased by the Board.

(d)    Capital Raise Success Bonus: After the first $500,000 of equity investments is raised by the Company after the date of this Agreement, the Executive shall receive 5% of all equity capital raised from investors/ lenders that he introduces to the Company (i.e. excludes those investors to whom the Company or its officers have already made contact). This shall be considered additional compensation above and beyond the base salary and bonus.

(e)    Expenses. The Company shall reimburse the Executive for all necessary and reasonable travel, entertainment and other business expenses incurred by Executive in the performance of Executive's duties hereunder in accordance with such reasonable procedures as the Company may adopt generally from time to time.

(f)    Vacation. The Executive shall be entitled to 4 weeks of vacation annually, holiday and sick leave at levels no less than commensurate with those provided to any other senior executives of the Company, in accordance with the Company's vacation, holiday and other pay-for-time-not-worked policies.

(g)   Retirement and Welfare Benefits. The Executive shall be entitled to participate in the Company's health, life insurance, long and short-term disability, dental, retirement, and medical programs, if any, pursuant to their respective terms and conditions, on a basis no less than commensurate with those provided to any other senior executives of the Company. Nothing in this Agreement shall preclude the Company or any affiliate of the Company from terminating or amending any employee benefit plan or program from time to time after the Effective Date, provided that any such amendment or termination shall be effective as to the Executive only if it is equally applicable to every other senior executive officer of the Company.

 

 

Exhibit 10.2 -- Page 3

	3.	
Termination.

(a)   Definition of Cause. For purposes hereof, "Cause" shall mean:

(i)   a material violation of any material written rule or policy of the Company, a copy of which has been provided to Executive, and which the Executive fails to correct within 10 days after the Executive receives written notice from the Board of such violation;

(ii)   misconduct by the Executive to the material and demonstrable detriment of the Company;

(iii)   the Executive's conviction (by a court of competent jurisdiction, not subject to further appeal) of, or pleading guilty to, a felony;

(iv)   the Executive's continued and ongoing gross negligence in the performance of Executive's duties and responsibilities to the Company as described in this Agreement; or

(v)   the Executive's material failure to perform Executive's duties and responsibilities to the Company as described in this Agreement (other than any such failure resulting from the Executive's incapacity due to physical or mental illness as determined by a doctor appointed by the Board or any such failure subsequent to the Executive being delivered a notice of termination without Cause by the Company or delivering a notice of termination for Good Reason to the Company), in either case after written notice from the Board to the Executive of the specific nature of such material failure and the Executive's failure to cure such material failure within ten (10) days following receipt of such notice.

(b) Definition of Good Reason. For purposes hereof, "Good Reason" shall mean:

(i)   The Executive no longer being the Chief Executive Officer of the Company;

(ii)   a reduction in Base Salary, other than as part of an across-the-board reduction in salaries of management personnel (including all vice presidents and positions above) of less than 20%;

(iii)   at any time following a Change of Control (as defined in Section 4), a material diminution by the Company of compensation and benefits (taken as a whole) provided to the Executive as compared to immediately prior to a Change of Control;

(iv)   any other material breach by the Company of any of the terms and conditions of this Agreement which the Company fails to correct within 10 days after the Company receives written notice from Executive of such violation.

 

Exhibit 10.2 -- Page 4

(c)   Termination by the Company. The Company may terminate the Term and Executive's employment hereunder at any time, with or without Cause, subject to the terms and conditions herein.

(i)   For Cause. In the event that the Company terminates the Term or Executive's employment hereunder with Cause, then in such event, (4) the Company shall pay to Executive any unpaid Base Salary and benefits then owed or accrued, and any unreimbursed expenses incurred by the Executive pursuant to Section 2(e), in each case through the termination date, and each of which shall be paid within 10 days following the termination date; and (5) all of the Parties' rights and obligations hereunder shall thereafter cease, other than such rights or obligations which arose prior to the termination date or in connection with such termination, and subject to Section 16.

(ii)   Without Cause. In the event that the Company terminates the Term or Executive's employment hereunder without Cause, then in such event, subject to Section 3(f), (6) Executive will retain all stock options previously granted; (7) the Company shall pay to Executive any benefits then owed or accrued plus one year of Base Salary (if the Executive has been employed by the Company for at least one year. If the Executive has not been employed for one year, he will receive only one month of Base Salary), and any unreimbursed expenses incurred by the Executive pursuant to Section 2(e), through the termination date, and each of which shall be paid on the termination date; and (8) all of the Parties' rights and obligations hereunder shall thereafter cease, other than such rights or obligations which arose prior to the termination date or in connection with such termination, and subject to Section 16.

(d)   Termination by the Executive. The Executive may terminate the Term or resign from Executive's employment hereunder at any time, with or without Good Reason.

 (i)   With Good Reason. In the event that Executive terminates the Term or resigns from Executive's employment hereunder with Good Reason, the Company shall pay to Executive the amounts, and Executive shall, be entitled, subject to Section 3(f), to such benefits (including without limitation retaining stock options previously granted), that would have been payable to Executive or which Executive would have received had the Term and Executive's employment been terminated by the Company without Cause pursuant to Section 3(c)(ii).

(ii)   Without Good Reason. In the event that Executive terminates the Term or resigns from Executive's employment hereunder without Good Reason, the Company shall pay to Executive the amounts, and Executive shall be entitled to such benefits (including without limitation retaining stock options previously granted), that would have been payable to Executive or which Executive would have received had the Term and Executive's employment been terminated by the Company with Cause pursuant to Section 3(c)(i).

 

  

Exhibit 10.2 -- Page 5

(e)    Termination by Death or Disability. In the event of the Executive's death or total disability (as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended) during the Term, the Term and Executive's employment shall terminate on the date of death or total disability as determined by a doctor chosen by the Board and Executive shall be entitled to such benefits that would have been payable to Executive or which Executive would have received had the Term and Executive's employment been terminated by the Company with Cause pursuant to Section 3(c)(i).

(f)    The payment of the severance amounts outlined in this Agreement, other than the payment of accrued base salary and expense reimbursement under Sections 3(c)(i), 3(d)(ii) and 3(e), shall be contingent on the receipt by the Company of a complete release of all claims from the Executive in a form mutually agreed by the Parties.

4.     Change of Control.

A "Change of Control" shall be deemed to have occurred if, after the Effective Date, (i) the beneficial ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of securities representing more than 50% of the combined voting power of the Company is acquired by any "person" as defined in sections 13(d) and 14(d) of the Exchange Act (other than the Company, any subsidiary of the Company, or any trustee or other fiduciary holding securities under an employee benefit plan of the Company), (ii) the merger or consolidation of the Company with or into another corporation where the shareholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares representing in the aggregate 50% or more of the combined voting power of the securities of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any) in substantially the same proportion as their ownership of the Company immediately prior to such merger or consolidation, or (iii) the sale or other disposition of all or substantially all of the Company's assets to an entity, other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned directly or indirectly by shareholders of the Company, immediately prior to the sale or disposition, in substantially the same proportion as their ownership of the Company immediately prior to such sale or disposition. Notwithstanding anything herein to the contrary, the issuance of additional equity from numerous sources in connection with a capital raise by the Company shall not be a Change of Control. However, if a single investor or small group of related investors acting in one or a series of transactions, provide capital so as to take control of the Company (more than 50%), it shall be a change of control. For example, if a private equity firm(s) or a strategic investor invest significant capital into the Company resulting in their equity being in excess of 50%, it shall be a change of control.

 

(a)   If a change of control occurs during the term of this Agreement, all unvested stock options of the Executive shall vest in full. In addition, if the valuation of the Company in the Change of Control transaction is greater than $2.75 per common unit then outstanding, then the Executive shall be paid a bonus equal to two times his minimum Base Salary and minimum Target Bonus upon the closing of the Change of Control transaction; provided, however, that if there have been any unit splits, reverse unit splits, dividends of common units, unit recapitalizations or other similar transactions, then the $2.75 amount shall be appropriately adjusted by agreement between the Company and the Executive to give effect to the intent of this sentence.

 

Exhibit 10.2 -- Page 6

	5.	
Post-Termination Assistance. Upon the Executive's termination of employment with the Company, the Executive agrees to fully cooperate in all matters relating to the winding up or pending work on behalf of the Company and the orderly transfer of work to other employees of the Company following any termination of the Executives' employment. The Executive further agrees that Executive will provide, upon reasonable notice, such information and assistance to the Company as may reasonably be requested by the Company in connection with any audit, governmental investigation, litigation, or other dispute in which the Company is or may become a party and as to which the Executive has knowledge; provided, however, that i. the Company agrees to reimburse the Executive for any related out-of-pocket expenses, including travel expenses, and ii. any such assistance may not unreasonably interfere with Executive's then current employment.

	6.	
Restrictive Covenants.

(a)   In consideration of the obligations of the Company hereunder, the Executive agrees that Executive shall not:

(i)   during the Term and for a period of two years after a termination of the Executive's employment with the Company for any reason, 1. directly or indirectly become an employee, director, consultant or advisor of, or otherwise affiliated with, any business which provides, in whole or in part, the same or similar services and/or products offered by Company, or 2. directly or indirectly solicit or hire or encourage the solicitation or hiring of any person who was an employee of the Company at any time on or after the date of such termination (unless more than six months shall have elapsed between the last day of such person's employment by the Company and the first date of such solicitation or hiring);

(ii)   during or after the Term, make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any other action which disparages the Company or its officers, directors, businesses or reputations; or

during or after the Term, without the written consent of the Board, disclose to any person other than as required by law or court order, any confidential information obtained by the Executive while in the employ of the Company, provided, however, that confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Executive) or any specific information or type of information generally not considered confidential by persons engaged in the same business.

(iii)   as the Company, or information disclosed by the Company by any member of the Board or any other officer thereof to a third party without restrictions on the disclosure of such information.

(b)   Executive agrees that the geographic scope of the above restrictions shall extend to the geographic area in which Company actively conducted business immediately prior to termination of this Agreement or expiration of the Term.

(c)   For the purpose of Section 5 and Section 6 only, the term "Company" shall mean the Company and its subsidiaries. Notwithstanding the above, nothing in this Agreement shall preclude the Executive from making truthful statements or disclosures that are required by applicable law, regulation or legal process.

 

Exhibit 10.2 -- Page 7

(d)   Executive admits and agrees that Executive's breach of the provisions of this Section 6 would result in irreparable harm to the Company. Accordingly, in the event of Executive's breach or threatened breach of such restrictions, Executive agrees that the Company shall be entitled to an injunction restraining such breach or threatened breach without the necessity of posting a bond or other security. Further, in the event of Executive's breach, the duration of the restrictions contained in this Section 6 shall be extended for the entire time that the breach existed so that the Company is provided with the benefit of the full-time period provided herein.

(e)   In addition to injunctive relief, the Company shall be entitled to any other remedy available in law or equity by reason of Executive's breach or threatened breach of the restrictions contained in this Section 6.

(f)   If the Company or Executive retains an attorney to enforce or attest the provisions of this Section 6, the successful Party in such proceeding shall be entitled to receive its attorneys' fees and costs so incurred both prior to filing a lawsuit, during the lawsuit and on appeal, from the unsuccessful Party in such proceeding.

(g)   It is the intent and understanding of each Party hereto that if, in any action before any arbitration panel, court or agency legally empowered to enforce this Agreement, any term, restriction, covenant or promise in this Section 6 is found to be unreasonable and for that reason unenforceable, then such term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable by such arbitration panel, court or agency.

	7.	
Enforcement. The Executive hereby expressly acknowledges that the restrictions contained in Section 6 are reasonable and necessary to protect the Company's legitimate interests, that the Company would not have entered into this Agreement in the absence of such restrictions, and that any violation of such restrictions will result in irreparable harm to the Company. The Executive agrees that the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as an equitable accounting of all earnings, profits and other benefits arising from any violation of the restrictions contained in Section 6, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled. The Executive irrevocably and unconditionally iii. agrees that any legal proceeding arising out of this paragraph may be brought in any United States District Court located in the State of Florida (the "Selected Courts"), iv. consents to the non-exclusive jurisdiction of the Selected Courts in any such proceeding, and v. waives any objection to the laying of venue of any such proceeding in any Selected Court.

	8.	
No Mitigation or Set Off. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of whether the Executive obtains other employment. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others; provided, however, the Company shall have the right to offset the amount of any funds loaned or advanced to the Executive and not repaid against any severance obligations the Company may have to the Executive hereunder.

 

 

Exhibit 10.2 -- Page 8

	9.	
Return of Documents. Upon termination of Executive's employment, the Executive agrees to return all documents belonging to the Company in Executive's possession including, but not limited to, contracts, agreements, licenses, business plans, equipment, software, software programs, products, work-in-progress, source code, object code, computer disks, books, notes and all copies thereof, whether in written, electronic or other form; provided that the Executive may retain copies of Executive's rolodex. In addition, the Executive shall certify to the Company in writing as of the effective date of termination that none of the assets or business records belonging to the Company are in Executive's possession, remain under Executive's control, or have been transferred to any third person.

	10.	
Intellectual Property Rights.

(a)   Disclosure of Work Product. As used in this Agreement, the term "Work Product" means any invention, whether or not patentable, know-how, designs, mask works, trademarks, formulae, processes, manufacturing techniques, trade secrets, ideas, artwork, software or any copyrightable or patentable works. Executive agrees to disclose promptly in writing to Company, or any person designated by Company, all Work Product that is solely or jointly conceived, made, reduced to practice, or learned by Executive in the course of any work performed for Company ("Company Work Product"). Executive agrees (a) to use Executive's best efforts to maintain such Company Work Product in trust and strict confidence; (b) not to use Company Work Product in any manner or for any purpose not expressly set forth in this Agreement; and (c) not to disclose any such Company Work Product to any third party without first obtaining Company's express written consent on a case-by-case basis.

(b)   Ownership of Company Work Product. Executive agrees that any and all Company Work Product conceived, written, created or first reduced to practice in the performance of work under this Agreement shall be deemed "work for hire" under applicable law and shall be the sole and exclusive property of Company.

Assignment of Company Work Product. Executive irrevocably assigns to Company all right, title and interest worldwide in and to the Company Work Product and all applicable intellectual property rights related to the Company Work Product, including without limitation, copyrights, trademarks, trade secrets, patents, moral rights, contract and licensing rights (the "Proprietary Rights"). Except as set forth below, Executive retains no rights to use the Company Work Product and agrees not to challenge the validity of Company's ownership in the Company Work Product. Executive hereby grants to Company a perpetual, non-exclusive, fully paid-up, royalty-free, irrevocable and world-wide right, with rights to sublicense through multiple tiers of sublicensees, to reproduce, make derivative works of, publicly perform, and display in any form or medium whether now known or later developed, distribute, make, use and sell any and all Executive owned or controlled Work Product or technology that Executive uses to complete the services and which is necessary for Company to use or exploit the Company Work Product.

 

 

Exhibit 10.2 -- Page 9

(c)   Assistance. Executive agrees to cooperate with Company or its designee(s), both during and after the Term, in the procurement and maintenance of Company's rights in Company Work Product and to execute, when requested, any other documents deemed necessary by Company to carry out the purpose of this Agreement. Executive will assist Company in every proper way to obtain, and from time to time enforce, United States and foreign Proprietary Rights relating to Company Work Product in any and all countries. Executive's obligation to assist Company with respect to Proprietary Rights relating to such Company Work Product in any and all countries shall continue beyond the termination of this Agreement, but Company shall compensate Executive at a reasonable rate to be mutually agreed upon after such termination for the time actually spent by Executive at Company's request on such assistance.

(d)   Executive Representations and Warranties. Executive hereby represents and warrants that:

(i)   Company Work Product will be an original work of Executive or all applicable third parties will have executed assignments of rights reasonably acceptable to Company;

(ii)   neither the Company Work Product nor any element thereof will infringe the intellectual property rights of any third party;

(iii)   neither the Company Work Product nor any element thereof will be subject to any restrictions or to any mortgages, liens, pledges, security interests, encumbrances or encroachments;

(iv)   Executive will not grant, directly or indirectly, any rights or interest whatsoever in the Company Work Product to any third party;

(v)   Executive has full right and power to enter into and perform Executive's obligations under this Agreement without the consent of any third party;

(vi)   Executive will use best efforts to prevent injury to any person (including employees of Company) or damage to property (including Company's property) during the Term; and

(vii)   should Company Permit Executive to use any of Company's equipment, tools, or facilities during the Term, such permission shall be gratuitous and Executive shall be responsible for any injury to any person (including death) or damage to property (including Company's property) arising out of use of such equipment, tools or facilities.

Exhibit 10.2 -- Page 10

	11.	
Confidentiality.

(a)   Definition. For purposes of this Agreement, "Confidential Information" shall mean all Company Work Product and all non-public written, electronic, and oral information or materials of Company communicated to or otherwise obtained by Executive in connection with this Agreement, which is related to the products, business and activities of Company, its Affiliates (as defined below), and subsidiaries, and their respective customers, clients, suppliers, and other entities with which such party does business, including: (b) all costing, pricing, technology, software, documentation, research, techniques, procedures, processes, discoveries, inventions, methodologies, data, tools, templates, know how, intellectual property and all other proprietary information of Company; (c) the terms of this Agreement; and (d) any other information identified as confidential in writing by Company. Confidential Information shall not include information that: (a) was lawfully known by Executive without an obligation of confidentiality before its receipt from Company; (b) is independently developed by Executive without reliance on or use of Confidential Information; (c) is or becomes publicly available without a breach by Executive of this Agreement; or (d) is disclosed to Executive by a third party which is not required to maintain its confidentiality. An "Affiliate" of a Party shall mean any entity directly or indirectly controlling, controlled by, or under common control with, such Party at any time during the Term for so long as such control exists.

(b)   Company Ownership. Company shall retain all right, title, and interest to the Confidential Information, including all copies thereof and all rights to patents, copyrights, trademarks, trade secrets and other intellectual property rights inherent therein and appurtenant thereto. Subject to the terms and conditions of this Agreement, Company hereby grants Executive a non-exclusive, non-transferable, license during the Term to use any Confidential Information solely to the extent that such Confidential Information is necessary for the performance of Executive's duties hereunder. Executive shall not, by virtue of this Agreement or otherwise, acquire any proprietary rights whatsoever in Confidential Information, which shall be the sole and exclusive property and confidential information of Company. No identifying marks, copyright or proprietary right notices may be deleted from any copy of Confidential Information. Nothing contained herein shall be construed to limit the rights of Company from performing similar services for, or delivering the same or similar deliverable to, third parties using the Confidential Information and/or using the same personnel to provide any such services or deliverables.

(c)   Confidentiality Obligations. Executive agrees to hold the Confidential Information in confidence and not to copy, reproduce, sell, assign, license, market, transfer, give or otherwise disclose such Confidential Information to any person or entity or to use the Confidential Information for any purposes whatsoever, without the express written permission of Company, other than disclosure to Executive's, partners, principals, directors, officers, employees, subcontractors and agents on a "need-to-know" basis as reasonably required for the performance of Executive's obligations hereunder or as otherwise agreed to herein. Executive shall be responsible to Company for any violation of this Section 11 by Executive's employees, subcontractors, and agents. Executive shall maintain the Confidential Information with the same degree of care, but no less than a reasonable degree of care, as Executive employs concerning its own information of like kind and character.

 

 

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(d)    Required Disclosure. If Executive is requested to disclose any of the Confidential Information as part of an administrative or judicial proceeding, Executive shall, to the extent permitted by applicable law, promptly notify Company of that request and cooperate with Company, at Company's expense, in seeking a protective order or similar confidential treatment for the Confidential Information. If no protective order or other confidential treatment is obtained, Executive shall disclose only that portion of Confidential Information which is legally required and will exercise all reasonable efforts to obtain reliable assurances that confidential treatment will be accorded the Confidential Information which is required to be disclosed.

(e)   Enforcement. Executive acknowledges that the Confidential Information is unique and valuable, and that remedies at law will be inadequate to protect Company from any actual or threatened breach of this Section 11 by Executive and that any such breach would cause irreparable and continuing injury to Company. Therefore, Executive agrees that Company shall be entitled to seek equitable relief with respect to the enforcement of this Section 11 without any requirement to post a bond, including, without limitation, injunction and specific performance, without proof of actual damages or exhausting other remedies, in addition to all other remedies available to Company at law or in equity. For greater clarity, in the event of a breach or threatened breach by Executive of any of the provisions of this Section 11, in addition to and not in limitation of any other rights, remedies or damages available at law or in equity, Company shall be entitled to a permanent injunction or other like remedy in order to prevent or restrain any such breach or threatened breach by Executive, and Executive agrees that an interim injunction may be granted against Executive immediately on the commencement of any action, claim, suit or proceeding by Company to enforce the provisions of this Section 11, and Executive further irrevocably consents to the granting of any such interim or permanent injunction or any like remedy. If any action at law or in equity is necessary to enforce the terms of this Section 11, Executive, if it is determined to be at fault, shall pay Company's reasonable legal fees and expenses on a substantial indemnity basis.

(f)   Related Duties. Executive shall: (e) promptly deliver to Company upon Company's request all materials in Executive's possession which contain Confidential Information; (f) use its best efforts to prevent any unauthorized use or disclosure of the Confidential Information; (g) notify Company in writing immediately upon discovery of any such unauthorized use or disclosure; and (h) cooperate in every reasonable way to regain possession of any Confidential Information and to prevent further unauthorized use and disclosure thereof.

(g)   Legal Exceptions. Further notwithstanding the foregoing provisions of this Section 11, Executive may disclose confidential information as may be expressly required by law, governmental rule, regulation, executive order, court order, or in connection with a dispute between the Parties; provided that prior to making any such disclosure, Executive shall use its best efforts to: (i) provide Company with at least fifteen (15) days' prior written notice setting forth with specificity the reason(s) for such disclosure, supporting documentation therefor, and the circumstances giving rise thereto; and (j) limit the scope and duration of such disclosure to the strictest possible extent.

 

 

Exhibit 10.2 -- Page 12

(h)   Limitation. Except as specifically set forth herein, no licenses or rights under any patent, copyright, trademark, or trade secret are granted by Company to Executive hereunder, or are to be implied by this Agreement. Except for the restrictions on use and disclosure of Confidential Information imposed in this Agreement, no obligation of any kind is assumed or implied against either Party or their Affiliates by virtue of meetings or conversations between the Parties hereto with respect to the subject matter stated above or with respect to the exchange of Confidential Information. Each party further acknowledges that this Agreement and any meetings and communications of the Parties and their affiliates relating to the same subject matter shall not: (k) constitute an offer, request, invitation or contract with the other Party to engage in any research, development or other work; (l) constitute an offer, request, invitation or contract involving a buyer-seller relationship, joint venture, teaming or partnership relationship between the Parties and their affiliates; or (m) constitute a representation, warranty, assurance, guarantee or inducement with respect to the accuracy or completeness of any Confidential Information or the non-infringement of the rights of third persons.

	12.	
Effect of Waiver. The waiver by either Party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach hereof. No waiver shall be valid unless in writing.

	13.	
Assignment. This Agreement may not be assigned by either Party without the express prior written consent of the other Party hereto, except that the Company i. may assign this Agreement to any subsidiary or affiliate of the Company, provided that no such assignment shall relieve the Company of its obligations hereunder without the written consent of the Executive, and ii. will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. This Agreement shall inure to the benefit of, and shall be binding upon, the successors and permitted assigns of the Parties.

	14.	
No Third-Party Rights. Except as expressly provided in this Agreement, this Agreement is intended solely for the benefit of the Parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person or entity other than the Parties hereto.

	15.	
Entire Agreement; Effectiveness of Agreement. This Agreement sets forth the entire agreement of the Parties hereto and shall supersede any and all prior agreements and understandings concerning the Executive's employment by the Company. This Agreement may be changed only by a written document signed by the Executive and the Company. Notwithstanding the foregoing, this Agreement shall not supercede or replace any agreement entered into between the Company and the Executive with respect to any plan or benefit described in Section 2(f).

	16.	
Survival. The provisions of Section 4, Section 5, Section 6, Section 7, Section 9, Section 10, Section 11, this Section 16, Section 18 and Section 19 shall survive any termination or expiration of this Agreement.

 

Exhibit 10.2 -- Page 13

	17.	
Severability. If any one or more of the provisions, or portions of any provision, of the Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions or parts hereof shall not in any way be affected or impaired thereby.

	18	Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE SUBSTANTIVE AND PROCEDURAL LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO RULES GOVERNING CONFLICTS OF LAW.

 

	19.	
Arbitration.

(a)    other than as set forth in Section 7, any controversy, claim or dispute arising out of or relating to this Agreement or the Executive's employment by the Company, including, but not limited to, common law and statutory claims for discrimination, wrongful discharge, and unpaid wages, shall be resolved by arbitration in Charlotte, North Carolina pursuant to then-prevailing National Rules for the Resolution of Employment Disputes of the American Arbitration Association. The arbitration shall be conducted by three arbitrators, with one arbitrator selected by each Party and the third arbitrator selected by the two arbitrators so selected by the Parties. The arbitrators shall be bound to follow the applicable Agreement provisions in adjudicating the dispute. It is agreed by both Parties that the arbitrators' decision is final, and that no Party may take any action, judicial or administrative, to overturn such decision. The judgment rendered by the arbitrators may be entered in the Selected Courts. Each Party will pay its own expenses of arbitration and the expenses of the arbitrators will be equally shared provided that, if in the opinion of the arbitrators any claim, defense, or argument raised in the arbitration was unreasonable, the arbitrators may assess all or part of the expenses of the other Party (including reasonable attorneys' fees) and of the arbitrators as the arbitrators deem appropriate. The arbitrators may not award either Party punitive or consequential damages.

(b)   WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

	20.	
Indemnification. During the Term, the Executive shall be entitled to indemnification and insurance coverage for directors' and officers' liability, fiduciary liability and other liabilities arising out of the Executive's position with the Company in any capacity, in an amount not less than the highest amount available to any other senior level executive or member of the Board and to the full extent provided by the Company's certificate of incorporation or by-laws, and such coverage and protections, with respect to the various liabilities as to which the Executive has been customarily indemnified prior to termination of employment, shall continue for at least six years following the end of the Term. Any indemnification agreement entered into between the Company and the Executive shall continue in full force and effect in accordance with its terms following the termination of this Agreement.

 

Exhibit 10.2 -- Page 14

	21.	
Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party, or by registered or certified mail, return receipt requested, postage prepaid, or by email with return receipt requested and received or nationally recognized overnight courier service, addressed as set forth below or to such other address as either Party shall have furnished to the other in writing in accordance herewith. All notices, requests, demands and other communications shall be deemed to have been duly given iii. when delivered by hand, if personally delivered, iv. when delivered by courier or overnight mail, if delivered by commercial courier service or overnight mail, and v. on receipt of confirmed delivery, if sent by email.

If to the Company: C-Bond Systems, LLC

Attn: Bruce Rich

6035 South Loop East

Houston, TX 77033

Email: brich@cbondsvstems.com

If to Executive:

Scott Silverman

800 NE 69th St

Boca Raton, FL 33487

Email: ssilverman206@gmail.com

	22.	
Headings. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

	23.	
Rule of Construction. The general rule of construction for interpreting a contract, which provides that the provisions of a contract should be construed against the Party preparing the contract, is waived by the Parties hereto. Each Party acknowledges that such Party was represented by separate legal counsel in this matter who participated in the preparation of this Agreement or such Party had the opportunity to retain counsel to participate in the preparation of this Agreement but elected not to do so.

	24.	
Execution in Counterparts, Electronic Transmission. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original. The signature of any party to this Agreement which is transmitted by any reliable electronic means such as, but not limited to, a photocopy, electronically scanned or facsimile machine, for purposes hereof, is to be considered as an original signature, and the document transmitted is to be considered to have the same binding effect as an original signature or an original document.

[Signatures appear on following page]

 

 

Exhibit 10.2 -- Page 15

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Effective Date.

C-Bond Systems, LLC

By:  /s/ Bruce Rich,

Name: Bruce Rich, Managing Member on behalf of the Managing Members and Board of Directors

Scott R. Silverman

By:  /s/ Scott R. Silverman

 Name: Scott R. Silverman

 

  

Exhibit 10.2 -- Page 16

 

 

The Managers of the Company hereby join in the execution of this Agreement to evidence their consent of the attached Employment Agreement pursuant to the Company Limited Liability Agreement.

WE CONSENT AND AGREE TO THE ATTACHED EMPLOYMENT AGREEMENT OF SCOTT SILVERMAN ON THE DATE WRITTEN BELOW:

Date: 10/18/13

/s/ PAUL BROGAN

PAUL BROGAN, Manager

/s/ BRUCE RICH

BRUCE RICH, Manager

/s/ SERGIO MOREIRA, JR

 SERGIO MOREIRA, JR., Manager

 

 

 

Exhibit 10.2 -- Page 17Exhibit 10.3

INDEPENDENT CONTRACTOR AGREEMENT

 VINCE PUGLIESE AND C‐BOND SYSTEMS, LLC

Parties

		Submitted by:	
Bruce Rich

C‐Bond Systems, LLC

Houston Technology Center

410 Pierce St.

Houston, TX 77002

 [Phone] 713-357-9563

		Submitted to:	
Vince Pugliese

715 Love Henry Court

Southlake, Texas 76092

 [Phone] 817-751-9796

Agreement.

Vince Pugliese (Pugliese) has agreed to serve as Chief Operating Officer (COO) for C‐Bond Systems, LLC (C‐Bond or Company) and has executed a nondisclosure and confidentiality agreement with C‐Bond Systems pertaining to and covering all of its patent, copyright, trademark and/or other Intellectual Property Rights (IP), past, present, and "future" (meaning for the time Pugliese is obligated by this document and by the NDA document currently in place).

Pugliese's Duties/Obligations.

Pugliese will serve as Chief Operating Officer (COO) of C‐Bond Systems regarding all matters including development of their products. Pugliese will use his connections to advance opportunities for C‐Bond Systems. Prior to introducing the C‐Bond opportunity to any potential customers Pugliese will have the party sign appropriate NDAs before they start any work or are exposed to any confidential/proprietary information. Pugliese will also work with C‐Bond Systems on product management, manufacturing and distribution opportunities.

Pugliese will be compensated as described in this document. Pugliese will write reports to C‐Bond Systems on a weekly basis that describes his activities and provide details to the company. The activities that Pugliese engages in will be open for observance and inspection by Bruce Rich, or his designated representative. If Pugliese needs to travel for business related to C‐Bond Systems, expenses will be paid by C‐Bond Systems. Receipts must be submitted to C‐Bond for reimbursement to Pugliese within 15 days of Pugliese's payment of same. It is expected that reimbursement will be paid within 30 days following the end of travel, provided the receipts are turned in as stated in this paragraph.

 

Exhiit 10.3 -- Page 1

 

Compensation.

Pugliese will be paid a salary of $15,000 per month, and receive payment on the 15th and 30th calendar day of each month. Any future pay raises must be agreed upon between the parties.

Pugliese will be entitled to 4 week paid vacation each year of employment.

Pugliese will also receive options to purchase 166,666 common units per year for as long as he is employed by C‐Bond Systems, but only up to three years for a total of 500,000 at an exercise price of $2.50 per unit. These options are earned by Pugliese beginning October 12, 2015 in equal, pro-rated amounts on a monthly basis at a rate of 13,888.83 per month. If C‐Bond Systems is sold in less than three years, Pugliese will at that time become fully vested and granted options for the purchase of a total of 500,000 common units.

Pugliese will be entitled to participate in the Company incentive bonus program as they are implemented subject to the terms and conditions of Company incentive plan.

Pugliese will be entitled to performance plan and salary review following completion of 12 months of employment and subsequent 12 month periods of employment.

Pugliese will be entitled to expense account reimbursement subject to the terms and conditions of Company expense policy.

Pugliese is an independent contractor and shall assume all legal duties and responsibilities of independent contractor status. Specifically those duties and responsibilities include but are not limited to tax liabilities.

Under no circumstances will Pugliese have any ownership rights or control over C‐Bond Systems IP or patents.

Company will arrange housing for period of this agreement. A relocation package is open for negotiation pending future company performance.

C‐Bond Systems may provide Pugliese Company owned equipment from time to time. These items will be property of C‐Bond and will be returned to C‐Bond Systems when this agreement is terminated. This will include items purchased by C‐Bond Systems and expensed by Pugliese.

 

Exhiit 10.3 -- Page 2

 

Termination of Employment.

Termination of Employment. Contractor's employment hereunder may be terminated under the following circumstances:

(a) Death. Contractor's employment hereunder shall terminate upon Contractor's death.

(b) Total Disability. The Company may terminate Contractors employment hereunder upon Contractor becoming "Totally Disabled". For purposes of this Agreement, Contractor shall be 'Totally Disabled" if Contractor is physically or mentally incapacitated so as to render Contractor incapable of performing Contractor's usual and customary duties under this Agreement.

(c) Termination by the Company for Cause. The Company may terminate Contractor's employment hereunder for "Cause" at any time after providing written notice to Contractor.

(i) For purposes of this Agreement, the term "Cause" shall mean any of the following: (1) conviction of a crime (including conviction on a nolo contendere plea) involving a felony or, fraud, dishonesty, or moral turpitude: (2) deliberate and continual refusal to perform employment duties reasonably requested by the Company after thirty (30) days' written notice by certified mail of such failure to perform, specifying that the failure constitutes cause; (3) fraud or embezzlement determined in accordance with the Company's normal, internal investigative procedures; (4) gross misconduct or gross negligence in connection with the business of the Company or an affiliate which has substantial effect on the Company or the affiliate; or

(ii) An individual will be considered to have been terminated for Cause if the Company determines that the individual engaged in an act constituting Cause at any time prior to a payment date for any amounts due hereunder, regardless of whether the individual terminates employment voluntarily or is terminated involuntarily, and regardless of whether the individual's termination initially was considered to have been for Cause.

(iii) Any determination of Cause under this Agreement shall be made by resolution of the Company's Board of Directors adopted by the affirmative vote of not less than a majority of the entire membership of the Board of Directors (excluding Contractor if he is a director of the Company) at a meeting called with at least 10 days' prior written notice and held for that purpose and at which Contractor is given an opportunity to be heard.

 

Exhiit 10.3 -- Page 3

 

(d) Voluntary Termination by Contractor. Contractor may terminate employment hereunder at any time after providing thirty (30) days' written notice to the Company, or for good reason or for cause as described in Section 7 of this Agreement.

(e) Termination by the Company without Cause. The Company may terminate Contractor's employment hereunder without Cause at any time after providing (30) days written notice to Contractor.

(f) Compensation Following Termination of Employment. In the event that Contractor's employment hereunder is terminated, Contractor shall be entitled to the following compensation and benefits upon such termination: ii) Any accrued but unpaid Salary for services rendered to the date of termination and; any accrued but unpaid expenses required to be reimbursed, accrued PTO and accrued options under this Agreement through the date of termination.

Non-Competition: Non-Interference.

(a)     In consideration of the numerous mutual promises contained in this Agreement, including, without limitation, those involving Confidential Information (as defined below) and in order to protect the Company's legitimate business interests, including the business and customer goodwill and the Company's Confidential Information, and to reduce the likelihood of irreparable damage which would occur in the event such information is provided to or used by a competitor of the Company, Pugliese covenants and agrees that during his employment by the Company and for a period of twenty-four (24) months after the date of Pugliese's termination (for whatever reason), he shall not anywhere within the State of Texas or any other state where the Company or any affiliate is doing business at the time of termination, directly or indirectly compete in any way against CBond.

(b)     Pugliese agrees that, at any time during his employment by the Company and for a period of twenty-four (24) months following the date of Pugliese's termination, he will not:

(i)     Request, solicit or induce, or attempt to request, solicit or induce, any employee, consultant or independent contractor of the Company or any of its affiliates to leave or terminate his or his relationship with the Company or any of its affiliates for any reason whatsoever or hire or attempt to hire any such employee, consultant or contractor of the Company or any of its affiliates. Or;

(ii)     Interfere with, disrupt or attempt to disrupt the relationship, contractual or otherwise, between the Company or any of its affiliates and any customer, supplier, lessor, lessee, employee, subcontractor or other employee of the Company or any of its affiliates or in any way encourage them to terminate or otherwise alter their relationship with the Company or its affiliate.

 

Exhiit 10.3 -- Page 4

Non-Disclosure of Confidential Information.

(a)     Pugliese and the Company acknowledge and agree that the Company will provide and Pugliese will receive and have access to new and developing Confidential Information during the term of his employment under this Agreement. For purposes hereof, "Confidential Information" is any formula, pattern, patent, IP, device or compilation of information which is used in the Company's business, and which gives the Company an opportunity to obtain an advantage over competitors who do not know or use it and includes, but is not limited to, proprietary technology, operating procedures and methods of operations, financial statements and other financial information, trade secrets, market studies and forecasts, competitive analyses, target markets, advertising techniques, pricing policies and information, the substance of agreements with customers, subcontractors and others, marketing and similar arrangements, servicing and training programs and arrangements, customer and subcontractor lists, customer profiles, customer preferences, other trade secrets and any other documents embodying confidential and proprietary information. Pugliese acknowledges that sharing this Confidential Information with third parties would be detrimental to the Company and could place the Company at a competitive disadvantage. Pugliese shall not, during the term of this Agreement, or at any time thereafter, disclose directly or indirectly, to any person or entity, any Confidential Information acquired by him during the course of or as an incident to his employment hereunder. The foregoing restrictions and obligations under this Section (a) shall not apply to: iii) any Confidential Information that is or becomes generally available to the public other than as a result of a disclosure by Pugliese that Pugliese has no reason to believe resulted from an unauthorized disclosure, iv) any information obtained by Pugliese from a third party which Pugliese has no reason to believe is violating any obligation of confidentiality to the Company, or v) any information Pugliese is required by law to disclose. In the event that Pugliese is requested in any proceeding to disclose any Confidential Information, Pugliese agrees to give the Company prompt written notice of such request and the documents requested thereby so that the Company may seek an appropriate protective order. It is further agreed that if, in the absence of a protective order, Pugliese is nonetheless compelled to disclose Confidential Information to any tribunal or else stand liable for contempt or suffer other censure or penalty, Pugliese may disclose such information to such tribunal without liability hereunder; provided, however, that Pugliese must give the Company written notice of the information to be disclosed (including copies of the relevant portions of the relevant documents) as far in advance of its disclosure as is practicable, use all reasonable efforts to limit any such disclosure to the precise terms of such requirement and use all reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such information.

 

Exhiit 10.3 -- Page 5

 

        (b)     All Confidential Information and documents relating to the Company as described above shall be the exclusive property of the Company, and Pugliese shall use his Pugliese efforts to prevent any publication or disclosure thereof.  Upon termination of Pugliese's employment with the Company (for whatever reason) or upon the request of the Company, all documents, records, reports, writings and other similar documents containing confidential information, including written or electronic copies thereof, then in Pugliese's possession or control shall be immediately returned to the Company.

Remedies.

(a)     Pugliese acknowledges that the foregoing covenants are reasonable and necessary to protect the Business, existing, developing and new confidential and proprietary information and existing, developing and new goodwill of the Company and its affiliates. It is the express intention of the parties hereto to comply with all laws that may be applicable in this agreement. It is the express intention of the Company to restrict Pugliese's activities only to the extent necessary to protect the legitimate business interests of the Company and its subsidiaries. Pugliese acknowledges and agrees that the time, geographic, and other restrictions in this agreement are only as broad as reasonably necessary to protect the Confidential Information and goodwill of the Company, that such restrictions have been tailored to protect the interests of the Company and its subsidiaries and of the public without imposing undue hardship on Pugliese. Nevertheless, should any restriction contained in this agreement be found to exceed in time, scope or space the restriction permitted by law, it is expressly agreed that the covenants contained in this agreement as applicable, shall be reformed or modified by the final judgment of a court of competent jurisdiction to reflect enforceable duration, scope and space.

(b)     Pugliese recognizes that his breach of any of the provisions of this agreement would result in serious harm and irreparable damage to the Company for which monetary damages might not be an adequate remedy and that the amount of such damages may be difficult to determine. Therefore, if Pugliese breaches any provision in this agreement, then the Company shall be entitled to injunctive relief. The rights and remedies provided in this Agreement are cumulative in nature and the exercise of one shall not preclude the exercise of any other remedy at law or in equity for the same event or any other event.

Amendment or Alteration.

No amendment or alteration of the terms of this Agreement shall be valid unless made in writing and signed by both of the parties hereto.

 

Exhiit 10.3 -- Page 6

 

Governing Law.

This Agreement shall be governed in all respects by the laws of the State of Texas, without application of the conflict of laws principles thereof. Venue for any dispute will be in Nacogdoches County, Texas.

Severability.

The holding of any provision of this Agreement to be illegal, invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision of this Agreement, which shall remain in full force and effect.

Notices.

Any notice or other communication that one party desires to give to the other under this Agreement shall be in writing, and shall be deemed effectively given upon vi) personal delivery; vii) transmission by facsimile upon confirmation of receipt; viii) the next business day following deposit in any United States mail box, by overnight U.S. express mail, postage prepaid, return receipt requested, addressed to the other party at the address set forth on page one of this agreement or ix) delivery by any express service which results in personal delivery to the other party.

Waiver or Breach.

It is agreed that a waiver by either party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach by that same party.

Entire Agreement and Binding Effect.

This Agreement contains the entire agreement of the parties with respect to the subject matter hereof and, except as otherwise specifically provided herein, shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, heirs, distributees, successors and assigns. This Agreement supersedes and preempts any prior understandings, agreements or representations between the parties, written or oral, which may have been related to the subject matter hereof in any way.

Assignment.

This Agreement may not be transferred or assigned by Pugliese. The Company may transfer or assign this Agreement without the consent of Pugliese to a company or firm that succeeds to the business of the Company. Pugliese's involvement in C- Bond at the time of sale does not obligate him to join the new owner of the company.

 

Exhiit 10.3 -- Page 7

 

Headings.

The Section headings appearing in this Agreement are for purposes of easy reference and shall not be considered a part of this Agreement or in any way modify, amend or affect its provisions.

Counterparts and Facsimile Signatures.

This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. This Agreement may be executed by facsimile signature which shall be valid for all purposes.

Review of Agreement

Pugliese acknowledges that he b) has carefully read and understands all of the provisions of this Agreement and has had the opportunity for this Agreement to be reviewed by counsel, c) is voluntarily entering into this Agreement and d) has not relied upon any representation or statement made by the Company (or its affiliates, equity holders, agents, representatives, employees and attorneys) with regard to the subject matter or effect of this Agreement.

Signing on this document establishes the agreement for the date shown on the document.

Dated this the 12th day of October, 2015

 

	/s/ Vince Pugliese 	 	/s/ Bruce Rich 	 
	

 Vince Pugliese

	 	

Bruce Rich, CEO

 C‐Bond Systems, LLC.

	 

 

 

  

Exhiit 10.3 -- Page 8

 

 

ADDENDUM TO

EMPLOYMENT AGREEMENT

 GRANT OF OPTION RIGHTS

THIS ADDENDUM TO EMPLOYMENT AGREEMENT (the "Addendum") is made as of even date with the Employment Agreement to which it is attached and into which it is incorporated (the "Agreement"), by and between C‐Bond systems, a Texas company (the "Company"), and Vincent Pugliese (the "Executive");

WITNESSETH:

WHEREAS, the Company and the Executive wish to enter into a written agreement setting forth the terms and conditions for the granting of certain option rights as set forth below;

NOW, THEREFORE, in consideration of the foregoing premises and the promises and covenants in the Agreement and in this Addendum, the parties hereto agree as follows:

Option to Purchase Stock. Upon execution of the Agreement and this Addendum by both parties, the Executive shall be granted an additional option (the "Option") to purchase 500,000 units (the "Option") of the common units of C‐Bond Systems, LLC ("CBOND"). For all purposes of this Agreement and Addendum, the Grant Date shall be October 12, 2015. The Executive's right to purchase the additional Option units pursuant to this provision shall accrue as described in the vesting period provision set forth at Section below (the "Vesting Period"). The Executive may exercise such Option at any time prior to the tenth anniversary of the date of the Agreement. The Executive's exercise of all Option rights shall be effected in accordance with the terms of C‐Bond Systems operating agreement.

Compensation Plan (the "Plan"). Executive's rights with respect to all units that are the subject of this provision shall be governed by the terms of the Plan.

Options to Purchase Units. Upon execution of the Agreement and this Addendum by both parties, Executive shall effective upon the Grant Date be granted rights as set forth herein to 500,000 units subject to vesting requirements to be determined by the Company for its senior executives and the approval of said Compensation, Executive shall, for so long as he is employed pursuant to the Agreement, be awarded an annual stock option grant (the "Annual Grant") of a minimum of 250,000 units of C‐Bond System common units. If any Annual Grant or portion of Annual Grant is scheduled to vest within ninety (90) calendar days after a Triggering Termination (as that term is defined in this Addendum), such Annual Grant or portion of Annual Grant shall vest as scheduled notwithstanding such Triggering Termination, provided, however, that any exercise of option rights obtained pursuant to such a vesting must be performed by the Executive within ninety (90) calendar days after such Triggering Termination. Except as provided in the immediately foregoing sentence, any Annual Grant or portion of Annual Grant that has not vested on the effective date of any termination or expiration of Executive's employment with the Company shall be forfeited by the Executive. All rights of Executive with respect to the Annual Grant shall be subject to the terms of the operating agreement. The grant of Options described in this Section and Executive's compensation as described in the Agreement shall be subject to all applicable federal and/or state withholding requirements as determined by the Company.

Vesting Period. (a) With respect to all units of Option Units which are the subject of the rights and/or Option(s) described in the provisions set forth above, the Vesting Period shall begin on the Grant Date. The Vesting Period with respect to each installment shown on the schedule shall end on the Vesting Date applicable to such installment. If C‐Bond Systems is sold prior to October 12, 2017, Executive will at that time become fully vested.

Vesting Installment Date.

(a)         250,000 units of Option Units exercisable at $2.50 per unit on October 12, 2016

(b)         250,000 units of Option Units exercisable at $2.50 per unit on October 12, 2017

 

Exhiit 10.3 -- Page 9

 

Termination. In the event of a termination of the Executive's employment by the Company that: (i) is Without Cause as described in the Employment Agreement; or (ii) is a termination by the Executive for Good Reason as defined in Employment Agreement; or (iii) occurs because on or before the Offer Date (as defined in the Agreement) the Company fails to extend or renegotiate this Agreement with Executive at expiration (any of the foregoing a "Triggering Termination"), then, notwithstanding the foregoing provisions, Executive shall as of the termination of Executive's employment become vested in the shares of Option rights to all of the Option Units, and become owner of the Option Units (subject to the conditions described below) such Option rights free of all restrictions otherwise imposed by this Agreement (other than transfer or other restrictions imposed by the operating agreement, the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended or the rules thereto), prior to the date the Option rights would otherwise become vested; provided, however, that any exercise of Option rights pursuant to such a Triggering Termination must be performed by the Executive within ninety (90) calendar days after the date of such Triggering Termination or will be forfeited by the Executive. If a Triggering Termination occurs because the Company declines to extend or renegotiate this Agreement with Executive at the end of its term, then the effective date of such Triggering Termination shall be the date on which the term of the Agreement expires or Executive's termination of employment if later. In the event of any termination or expiration of Executive's employment with the Company other than pursuant to a Triggering Termination, any Option Units that has not vested on the date such termination or expiration occurs shall be forfeited by the Executive. All Option Units shall be subject to any restrictions imposed by the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended or the rules thereto.

Effective Date. Any term or provision contained in this Addendum to the contrary herein notwithstanding, the terms and provisions of this Addendum and all rights and/or options granted herein shall be subject to the provisions of the Operating Agreement and to the prior review and approval of C‐Bond Systems Board of Directors.

Application of IRC Section 162(m). In the event the Executive is or becomes a proxy-named executive or the Company in relation to the Executive is otherwise subject to the provisions of Section 162(m) of the Internal Revenue Code, the Company may defer the payment of all compensation to which Executive is entitled pursuant to this Addendum or the Agreement or otherwise take all measures, the Company reasonably deem necessary or advisable to comply with said Section 162(m) of the Internal Revenue Code or any successor provision with respect to deductibility of executive compensation. Any term or provision herein to the contrary notwithstanding, the timing and other conditions of any grants, options or payments to be made under this Addendum shall be subject to the requirements of all applicable laws and regulations, whether or not they are in existence or in effect when this Addendum is executed by the parties hereto.

Entire Agreement. Subject to the Employment Agreement to which this Addendum is attached as an addendum thereunder, this Addendum, in conjunction with the Agreement in its entirety, contains the entire agreement of the parties with regard to the subject matter hereof, supersedes all prior agreements and understandings, regarding such subject matter, whether written or oral, and may only be amended by an agreement in writing signed by the parties thereto.

No Effect on Agreement. Except as otherwise specifically set forth in this Addendum, all terms and conditions contained in the Agreement of which this Addendum is made part are and shall remain unmodified hereby

IN WITNESS WHEREOF, the parties hereto have executed this Addendum as of the date set forth hereinabove.

	
C‐BOND SYSTEMS, LLC

	 	
VINCE PUGLIESE

	 	 	 	 	 
	
By:

	/s/ Bruce Rich 	 	
By:

	/s/ Vince Pugliese 
	 	 	 	 	 
	
Title:

	CEO 	 	
Title:

	
Chief Operating Officer 

 

  

Exhiit 10.3 -- Page 10

 

AMENDMENT TO AGREEMENT

BETWEEN

C‐BOND SYSTEMS, LLC.

AND

 VINCE PUGLIESE

This amendment to the Agreement (Agreement) originally entered into October 12, 2015 and amended February 11, 2016 covering the period of October 12, 2015 and ending October 12, 2017 between C‐Bond Systems, LLC. (Company) and Vince Pugliese (Executive) is effective when signed by both parties and is dated, for reference only, December 20, 2016.

		1.	
The attached Agreement dated October 12, 2015 is amended as follows;

		a.	
Pugliese will serve as Chief Operations Officer (COO).

		b.	
Pugliese will receive additional options to purchase 150,000 common units per year of C‐Bond Systems for as long as he is COO, up to 2 years for a total of 300,000 at an exercise price of $2.75. These options are earned in equal, prorated amounts on a monthly basis at a rate of 8333.33 per month. If C‐Bond Systems is sold in less than 3 years, Pugliese will at that time be granted options for the purchase of the total 300,000 common units subject to the terms and conditions of the Company option plan.

		c.	
The Company agrees that the Executive shall receive severance benefits set forth in the event that Executive's employment with the Company is terminated under the circumstances described below.

		d.	
Executive acknowledges that this Agreement does not constitute a contract of employment. Executive understands and acknowledges that he is an employee at will and that either he or the Company may terminate the employment relationship between them at anytime and for any reason.

		e.	
Severance Pay Following a Change in Control. In the event a Change in Control (as defined below) occurs and, within one (1) year thereafter, the employment of Executive is terminated by the Company for a reason other than for Cause (as defined below) or by Executive for Good Reason (as defined below), then the Company shall pay to the Executive (as severance pay) a lump sum payment equal to (i) his then current (1) year base salary within 30 days after the Termination Date (as defined below). The Executive agrees that after the Termination Date, but prior to payment of the severance pay he shall execute a release of any and all claims he may have against the Company and its officers, employees, directors, parents and affiliates. Executive understands and agrees that the payment of the severance pay called for by this paragraph are contingent on his execution of the previously described release of claims.

 

Exhiit 10.3 -- Page 11

 

		f.	
Severance Pay Absent a Change in Control. In the event the employment of the Executive is terminated by the Company for a reason other than for Cause (as defined below), then the Company shall continue to pay to the Executive (as severance pay), (i) his regular base salary as in effect on the Executive's last day of employment for one (1) year following the Termination Date (as defined below) in installments, in accordance with the Company's regular payroll practices unless the parties agree in writing otherwise.

		g.	
Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

			
"Cause" shall mean a good faith finding by the Company of: (i) gross negligence or willful misconduct by Executive in connection with his employment duties, (ii) failure by Executive to perform his duties or responsibilities required pursuant to his employment, after written notice and an opportunity to cure, (iii) mis-appropriation by Executive of the assets or business opportunities of the Company, or its affiliates, (iv) embezzlement or other financial fraud committed by Executive, (v) the Executive knowingly allowing any third party to commit any of the acts described in any of the preceding clauses (iii)or (iv), or (vi) the Executive's indictment for, conviction of, or entry of a plea of no contest with respect to, any felony.

"Good Reason" shall mean (i) a reduction in the Executive's then current base salary, without the Executive's consent; or (ii) the Executive's assignment to a position where the duties of the position are outside his area of professional competence, (iii) the unilateral relocation by the Company of the Executive's principal work place for the Company.

"Change in Control" shall mean the consummation of any of the following events: (i) a sale, lease or disposition of all or substantially all of the assets of the Company, or (ii) a sale, merger, consolidation, reorganization, recapitalization, sale of assets, stock purchase, contribution or other similar transaction (in a single transaction or a series of related transactions) of the Company with or into any other corporation or corporations or other entity, or any other corporate reorganization, where the stockholders of the Company immediately prior to such event do not retain (in substantially the same percentages) beneficial ownership, directly or indirectly, of more than fifty percent (50%) of the voting power of and interest in the successor entity or the entity that controls the successor entity, provided, however, that no Change in Control shall be deemed to have occurred due to the conversion or payment of any equity or debt instrument of the Company which is outstanding on the date hereof.

"Termination Date" shall mean the Executive's last day on the payroll of the Company.

Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Executive.

 

 

Exhiit 10.3 -- Page 12

 

		h.	
Agreement will be extended to December 20, 2018

Except as expressly stated in the amendment, all other terms and conditions of the Agreement dated October 12, 2015 shall remain in effect as stated in that document.

 

	
 

	 	
VINCE PUGLIESE

	/s/ Bruce Rich  	 	 	 
		 	 	Date:	December 20, 2016
	 C‐Bond Systems, LLC

Bruce Rich/CEO

  	 	 	 
		 	 	
 

	 
	/s/ Vince Pugliese 	 	Date:	December 20, 2016
	 Vince Pugliese 	 	 	 

  

 

 

 

Exhiit 10.3 -- Page 13

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