Document:

Exhibit 10.4

 

SHARE
LOCK-UP AND ESCROW AGREEMENT

 

THIS SHARE LOCK-UP
AND ESCROW AGREEMENT (this “Agreement”) is made and entered into as of the 16th
day of April 2004 by and among Raice Paykin & Krieg LLP (the “Escrow
Agent”), Laser Recording Systems Inc., a New Jersey corporation (“Laser”), SCL
Ventures Ltd., a British Virgin Islands company (“SCL”), certain shareholders
of Laser signatory hereto (the “Laser Signatory Shareholders”), A. Giordano
Family Limited Partnership (the “Family Partnership”) having various partners
including Anthony Giordano, EPG Limited, a limited liability company organized
under the laws of the British Virgin Islands (“EPG”) having various members
including Anthony Giordano, and Anthony Giordano (“Mr. Giordano” and together
with Family Partnership and EPG, the “SCL Investors”).

 

WITNESSETH:

 

WHEREAS, on May
20, 2003, Laser, SCL, the Laser Signatory Shareholders and certain shareholders
of SCL signatory thereto entered into that certain Share Exchange Agreement (as
amended on November 30, 2003 and further amended on March 31, 2004,
the “Exchange Agreement”) related to the issuance of shares of Laser common
stock to the shareholders of SCL in exchange for all of the issued and
outstanding shares of SCL common stock (the “Exchange”);

 

WHEREAS, the Laser
Signatory Shareholders have agreed not to sell or otherwise transfer shares of
Laser common stock held by them for a period of one year following the closing
of the Exchange, subject to certain exceptions set forth in the Exchange Agreement
(the “Lock Up”);

 

WHEREAS, the SCL
Investors hereby agree that they will not sell or otherwise transfer any shares
of Laser common stock they currently hold or may receive during the term of the
Lock Up, including shares of Laser common stock to be issued in the Exchange,
without the consent of a majority of Laser’s independent directors for a period
of one year following the closing of the Exchange, such agreement to be on the
same terms, conditions and exceptions applicable to the Laser Signatory Shareholders
subject to the Lock Up;

 

WHEREAS, each of
the Laser Signatory Shareholders and the SCL Investors desire to place stock
certificates evidencing (i) the shares of Laser common stock currently held by
such parties and (ii) any shares of Laser common stock that may be received by
such parties during the term of the Lock Up, including shares of Laser common
stock to be issued in the Exchange (such stock certificates being referred to
herein as the “Escrow Deposit”), into escrow with the Escrow Agent to be held
and released by the Escrow Agent in accordance herewith; and

 

WHEREAS, the
Escrow Agent is willing to receive the Escrow Deposit and otherwise perform its
obligations hereunder.

 

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

 

 

1.                                       Terms.  Capitalized
terms used but not otherwise defined herein shall be defined as set forth in
the Exchange Agreement.

 

2.                                       Lock Up of Certain SCL Investors.

 

2.1                                 Giordano Share Lock-Up. For a period of one year following the
Closing Date, the SCL Investors shall not sell or otherwise transfer any shares
of Laser common stock they currently hold or may purchase in which Mr. Giordano
has or will have a pecuniary interest, including shares of Laser common stock
to be issued in the Exchange, without the consent of a majority of Laser’s
independent directors or the consent of all Laser Signatory Shareholders,
except on the same terms, conditions and exceptions applicable to the Laser
Signatory Shareholders subject to the Lock Up as set forth in Section 10.9
of the Exchange Agreement, including termination pursuant to
Section 10.9.2 (e) of the Exchange Agreement. In addition, if the Lock-Up
set forth in Section 10.9 of the Exchange Agreement lapses or is
terminated by Laser as to the Laser Signatory Shareholders, then the
restrictions described herein with respect to the SCL Investors shall also
lapse or be terminated.

 

2.2                                 Limitations. Notwithstanding the foregoing and the
Escrow Deposit and Release provisions of Section 3 hereof, the parties
hereto acknowledge that the SCL Investors are holders of record for parties
other than other than Mr. Giordano, including unaffiliated investors who are
members of EPG and/or partners of the Family Partnership, and the parties
intend, and this Agreement shall at all times be construed and interpreted by
all, including the Escrow Agent in the performance of its duties hereunder, to
apply solely to those shares of Laser common stock in which Giordano has a
pecuniary interest in addition to having beneficial ownership. To that end, the
parties agree that the restrictions and escrow provisions hereof shall not
apply to any shares of Laser common stock that are the subject of proposed sale
or transfer by or on behalf of persons other than Mr. Giordano. The Escrow
Agent may and shall rely without independent investigation upon an affidavit
signed by (a) Mr. Giordano and (b) either the Managing Member of EPG or the
General Partner of the Family Partnership (provided they are not Mr. Giordano),
as to the identity of those persons holding a pecuniary interest in any portion
of the Escrow Deposit attributable to the SCL Investors which are sought to be
sold, transferred or released from the Escrow Deposit.

 

2.3                                 Future Registration Not Affected. 
Nothing in this Agreement shall impair or restrict SCL or Laser’s right
at any time or from time to time to grant registration rights to one or more of
the parties hereto or to other holders of SCL common stock or Laser common
stock, or to effect such registration of any shares for future sale, provided
such proposed sales remain subject to the lock-up and escrow provisions of this
Agreement, to the extent then not terminated and otherwise still applicable
thereto.

 

3.                                       Escrow Deposit.

 

3.1.                              Delivery of Escrow Deposit. 
On the Closing Date, and for a period of one year after the Closing
Date, each of the Laser Signatory Shareholders and the SCL Investors shall
deliver to the Escrow Agent the Escrow Deposit to be held by the Escrow Agent
in escrow pursuant to the terms and conditions of this Agreement.

 

3.2.                              Acceptance of Escrow Deposit. 
Upon receipt of the Escrow Deposit, the Escrow Agent shall acknowledge
such receipt in writing to the parties hereto and shall hold and

 

 

release the same pursuant to the terms and conditions
of this Agreement.  The Escrow Agent
shall have no duty to verify whether the share amounts and documents delivered
comport with the requirements of any other agreement.

 

3.3.                              Release of Escrow Deposit. 
The Escrow Deposit shall be held and released by the Escrow Agent as
follows:

 

(a)                                  If, prior to the one year anniversary of
the Closing Date, Mitchell Sepaniak accepts a bona fide third party offer for
the purchase of Laser common stock, or an offer to participate in the public
sale, pursuant to a registration statement or otherwise, and a Laser Signatory
Shareholder or an SCL Investor, as the case may be, agrees to participate in
such third party offer or public sale, then the Escrow Agent shall release the
Escrow Deposit with respect to such Laser Signatory Shareholder or SCL
Investor, as applicable, to extent such party agrees to participate in such
third party offer.

 

(b)                                 If, prior to the one year anniversary of
the Closing Date, Laser enters into any transaction for the sale of common
stock at a price which values Laser on a pre-investment basis at less than $10
million, then the Escrow Agent shall return the Escrow Deposit to the Laser
Signatory Shareholders and SCL Investors.

 

(c)                                  If the Lock-Up set forth in
Section 10.9 of the Exchange Agreement lapses or is terminated in whole or
in part (whether by consent or action of Laser or otherwise) as to any part of
the Escrow Deposit applicable to a Laser Signatory Shareholder or SCL Investor,
then the Escrow Agent shall release such part of the Escrow Deposit with
respect to such Laser Signatory Shareholder or SCL Investor, as applicable.

 

(d)                                 In the event that all or a portion of the
Escrow Deposit was not released to the Laser Signatory Shareholders or SCL
Investors, as the case may be, in accordance with Section 3.3(a), 3.3(b)
or 3.3(c) above prior to the one year anniversary of the Closing Date, then the
Escrow Agent shall release all, or any remaining portion, of the Escrow Deposit
to the Laser Signatory Shareholders and SCL Investors, as applicable, on the
one year anniversary of the Closing Date.

 

(e)                                  Notwithstanding any provision of this
Agreement to the contrary, the Escrow Agent shall release the Escrow Deposit as
directed by the parties hereto in a written instruction duly executed by such
parties.

 

 

3.4                                 Escrow Agent; Duties and Liabilities.

 

(a)                                  It is expressly understood and agreed by
the parties that (i) the duties of the Escrow Agent, as herein specifically
provided, are purely ministerial in nature; (ii) the Escrow Agent shall not be
responsible or liable in any manner whatsoever for, or have any duty to inquire
into, the sufficiency, correctness, genuineness or validity of the notices it
receives hereunder, or the identity, authority or rights of any of the parties;
(iii) the Escrow Agent shall have no duties or responsibilities in connection
with the Escrow Deposit, other than those specifically set forth in this Agreement;
(iv) the Escrow Agent shall not incur any liability in acting upon any
signature, written notice, request, waiver, consent, receipt, or any other
paper or document believed by the Escrow Agent to be genuine; (v) the Escrow
Agent may assume that any person purporting to have authority to give notices
on behalf of any of the parties in accordance with the provisions hereof has
been duly authorized to do so; (vi) the Escrow Agent shall incur no liability
whatsoever except for such resulting from its willful misconduct or gross
negligence, as long as the Escrow Agent has acted in good faith in the
performance of its duties hereunder; and (vii) upon the Escrow Agent’s
performance of its obligations under Section 3.3 hereof, the Escrow Agent
shall be relieved of all liability, responsibility and obligation with respect
to the Escrow Deposit or arising out of or under this Agreement.

 

(b)                                 Escrow Agent shall not be under any
obligation to take any legal action in connection with this Agreement or
towards its enforcement or performance, or to appear in, prosecute or defend
any action or legal proceeding, and the parties agree to provide to Escrow
Agent such information and documentation as Escrow Agent may reasonably
request.

 

(c)                                  In the event of any disagreement relating
to the Escrow Deposit or the release thereof resulting in adverse claims or
demands being made in connection with the Escrow Deposit or in the event that
Escrow Agent is in doubt as to what action it should take hereunder, Escrow
Agent shall be entitled to retain the Escrow Deposit, but only to the extent of
the Escrow Deposit in controversy, until Escrow Agent shall have received a
final non-appealable order of a court of competent jurisdiction directing
release of the Escrow Deposit, in which event Escrow Agent shall release the
Escrow Deposit in accordance with such order. 
Any court order shall be accompanied by a legal opinion by counsel for
the presenting party satisfactory to Escrow Agent to the effect that the order
is final and non-appealable.  Escrow
Agent shall act on such court order and legal opinion without further
question.  If a proceeding for such
determination is not begun and diligently continued, the Escrow Agent may make
an ex parte application, or bring any appropriate action, for leave to deposit
the Escrow Deposit in the Supreme Court of the State of New York, County of New
York seeking such determination or such declaratory relief as the Escrow Agent
shall deem reasonably necessary under the circumstances, and the parties each
hereby irrevocably consent to the entering of an ex

 

 

parte order pursuant to
all applicable laws, rules and procedures of the State of New York and such
court.  The Escrow Agent shall be
reimbursed by Laser for all of Escrow Agent’s reasonable costs and expenses of
such action or proceeding, including, without limitation, reasonable attorneys’
fees and disbursements.

 

(d)                                 Escrow Agent does not have any interest
in the Escrow Deposit deposited hereunder and is serving as escrow agent only
and having only possession thereof.

 

(e)                                  None of the provisions of this Agreement
shall require the Escrow Agent to expend or risk its own funds or otherwise to
incur any liability, financial or otherwise, in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers if it shall
have reasonable grounds for believing that repayment of such funds or indemnity
satisfactory to it against such risk or liability is not assured to it.

 

(f)                                    The Escrow Agent may consult with
independent counsel and the advice or any opinion of counsel shall be full and
complete authorization and protection in respect of any action taken or omitted
by it hereunder in good faith and in accordance with such advice or opinion of
counsel.

 

(g)                                 The Escrow Agent may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly or
through agents, attorneys, custodians or nominees appointed with due care, and
shall not be responsible for any willful misconduct or gross negligence on the
part of any agent, attorney, custodian or nominee so appointed.

 

(h)                                 The Escrow Agent may at any time resign
by giving ten (10) days written notice of resignation to each of the parties
hereto.  Upon receiving such notice of
resignation, the parties hereto shall promptly appoint a successor and, upon
the acceptance by the successor of such appointment, release the resigning
Escrow Agent from its obligations hereunder by written instrument, a copy of
which instrument shall be delivered to the resigning Escrow Agent and the
successor.  If no successor shall have
been so appointed and have accepted appointment within forty-five (45) days
after the giving of such notice of resignation, the resigning Escrow Agent may petition
any court of competent jurisdiction for the appointment of a successor.

 

(i)                                     Any partnership or other similar entity
into which the Escrow Agent may be merged or converted or with which it may be
consolidated, or any partnership, corporation or other similar entity resulting
from any merger, conversion or consolidation to which the Escrow Agent shall be
a party, or any partnership, corporation or other similar entity succeeding to
the business of the Escrow Agent shall be the successor of the Escrow Agent
hereunder without the execution or filing of any paper with any party hereto or
any further act on the part of any of the parties hereto except

 

 

where an instrument of
transfer or assignment is required by law to effect such succession, anything
herein to the contrary notwithstanding.

 

(j)                                     Each of the parties to this Agreement
hereby acknowledges that the Escrow Agent has acted as counsel to Laser and the
Laser Signatory Shareholders, and shall have the right to continue to represent
the Laser Signatory Shareholders, in any action, proceeding, claim, litigation,
dispute, arbitration or negotiation arising hereunder, and SCL and the SCL
Investors hereby consent thereto and waive any objection to the continued
representation of the Laser Signatory Shareholders by the Escrow Agent in connection
therewith based upon the services of the Escrow Agent hereunder, without
waiving any duty or obligation the Escrow Agent may have to the parties under
this Agreement.

 

3.5                                 Indemnification of Escrow Agent. 
Laser and SCL hereby agree to indemnify and hold the Escrow Agent
harmless from any and all liabilities, obligations, damages, losses, claims,
encumbrances, costs or expenses (including reasonable attorneys’ fees and
expenses) (any or all of the foregoing herein referred to as a “Loss”) arising
hereunder or under or with respect to the Escrow Deposit, except for Losses
resulting from the willful misconduct or gross negligence of the Escrow
Agent.  Anything in this Agreement to
the contrary notwithstanding, in no event shall the Escrow Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
action.

 

4.                                       Rule 144 Procedures. 
Until the two year anniversary of the closing of the Exchange, in the
event an SCL Investor desires to sell or otherwise transfer shares of Laser
common stock which are or were part of the Escrow Deposit pursuant to Rule 144
under the Securities Act, such SCL Investor shall deliver to Raice Paykin &
Krieg LLP a copy of an opinion of counsel (which may be counsel to Laser or to
the SCL Investor) to the effect that such sale or transfer may be effectuated
without registration under the Securities Act no later than simultaneously with
delivery of such opinion of counsel to Laser or its transfer agent.

 

5.                                       Other Agreements.                                           Giordano agrees that he will not (a) seek
to become or accept appointment as an officer or director of Laser, or any
operating subsidiary of Laser, or (b) seek to acquire additional shares of
Laser common stock, if such acquisition would cause him to be, directly or
indirectly, the beneficial holder of 5% or more of the outstanding shares of
common stock of Laser, unless in the case of either (a) or (b), such action is
approved by the vote or written consent of a majority of the then incumbent
board of directors of Laser, including the vote or written consent of a
majority of the independent directors of Laser.

 

6.                                       Notices.  Any notice
or demand desired or required to be given hereunder shall be in writing and
deemed given when sent by facsimile transmission with receipt confirmed and
addressed as follows:

 

 

	
  a.

  	
   

  	
  If to the Escrow
  Agent, to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Raice Paykin & Krieg LLP

  
	
   

  	
   

  	
  185 Madison Avenue

  
	
   

  	
   

  	
  10th Floor

  
	
   

  	
   

  	
  New York, New York 10016

  
	
   

  	
   

  	
  Fax No.: (212) 604-9022

  
	
   

  	
   

  	
  Attention: Dave Thomas, Esq.

  
	
   

  	
   

  	
   

  
	
  b.

  	
   

  	
  If to Laser or the
  Laser Signatory Shareholders, to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Carl Lanzisera

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
  Laser Recording Systems
  Inc.

  
	
   

  	
   

  	
  1395 New York Avenue

  
	
   

  	
   

  	
  Huntington Station, New
  York 11746

  
	
   

  	
   

  	
  Fax No.: (631) 421-6392

  
	
   

  	
   

  	
   

  
	
  c.

  	
   

  	
  If to SCL, to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Mitchell Sepaniak

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
  SCL Ventures Ltd.

  
	
   

  	
   

  	
  515 East Olas Boulevard

  
	
   

  	
   

  	
  Suite 1350

  
	
   

  	
   

  	
  Fort Lauderdale, Florida 33301

  
	
   

  	
   

  	
  Fax No.: (954) 527-7751

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Brown Raysman Millstein Felder & Steiner LLP

  
	
   

  	
   

  	
  900 Third Avenue

  
	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
  Fax No.: (212) 895-2900

  
	
   

  	
   

  	
  Attention: David Warburg, Esq.

  
	
   

  	
   

  	
   

  
	
  d.

  	
   

  	
  If to the SCL Investors, to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Anthony Giordano

  
	
   

  	
   

  	
  c/o Broadmoor Asset Management

  
	
   

  	
   

  	
  515 East Olas Boulevard

  
	
   

  	
   

  	
  Suite 1350

  
	
   

  	
   

  	
  Fort Lauderdale, Florida 33301

  
	
   

  	
   

  	
  Fax No.: (954) 527-7751

  

 

 

	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Adorno & Yoss

  
	
   

  	
   

  	
  350 East Las Olas Boulevard

  
	
   

  	
   

  	
  Suite 1700

  
	
   

  	
   

  	
  Fort Lauderdale, Florida 
  33301-4217

  
	
   

  	
   

  	
  Fax No.: (954) 766-7800

  
	
   

  	
   

  	
  Attention:  Charles Pearlman,
  Esq.

  

 

or to such other address as hereafter shall be designated in writing by
the applicable party.

 

7.                                       Entire Agreement. 
This Agreement, the Exchange Agreement, and any exhibits and schedules
hereto and thereto constitute the entire agreement between the parties hereto
pertaining to the subject matters hereof, and supersede all negotiations,
preliminary agreements and all prior and contemporaneous discussions and
understandings of the parties in connection with the subject matters hereof.
Any exhibits and schedules hereto are hereby incorporated into and made a part
of this Agreement.

 

8.                                       Amendments.  No
amendment, waiver, change or modification of any of the terms, provisions or
conditions of this Agreement shall be effective unless made in writing and
signed or initialed by the parties or by their duly authorized agents.  Waiver of any provision of this Agreement
shall not be deemed a waiver of future compliance therewith and such provision
shall remain in full force and effect.

 

9.                                       Severability. 
In the event any provision of this Agreement is held invalid, illegal or
unenforceable, in whole or in part, the remaining provisions of this Agreement
shall not be affected thereby and shall continue to be valid and enforceable.

 

10.                                 Governing Law. 
This Agreement shall be governed and construed in accordance with the
laws of the State of New York without regard to any applicable principles of
conflicts of law.

 

11.                                 Submission to Jurisdiction. 
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH OF THE PARTIES HEREBY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS AND APPELLATE COURTS FROM ANY THEREOF.  EACH PARTY HEREBY IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF TO EACH PARTY BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO EACH PARTY AT ITS
ADDRESS SPECIFIED HEREIN.  EACH PARTY
HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

 

 

12.                                 Headings and Captions. 
The titles or captions of paragraphs in this Agreement are provided for
convenience of reference only, and shall not be considered a part hereof for
purposes of interpreting or applying this Agreement, and such titles or
captions do not define, limit, extend, explain or describe the scope or extent
of this Agreement or any of its terms or conditions.

 

13.                                 Gender and Number. 
Words and phrases herein shall be construed as in the singular or plural
number and as masculine, feminine or neuter gender, according to the context.

 

14.                                 Counterparts. 
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument, and in making proof hereof, it shall
not be necessary to produce or account for more than one such counterpart.

 

15.                                 Binding Effect on Successors and Assigns. 
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective legal representatives, heirs,
successors and assigns. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto (and their
respective legal representatives, heirs, successors and assigns), any rights,
remedies, obligations or liabilities.

 

 

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

 

	
  ESCROW AGENT:

  	
  SCL:

  
	
   

  	
   

  
	
  RAICE PAYKIN &
  KRIEG LLP

  	
  SCL VENTURES, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Dave Thomas

  	
   

  	
  By:

  	
  /s/  Mitchell Sepaniak  

  	
   

  
	
   

  	
   Member

  	
   

  	
  Mitchell Sepaniak

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
  LASER:

  	
  MR. GIORDANO:

  
	
   

  	
   

  
	
  LASER RECORDING SYSTEMS, INC.

  	
  /s/ Anthony Giordano

  	
   

  
	
   

  	
  Anthony Giordano

  
	
   

  	
   

  
	
  By:

  	
  /s/  Carl Lanzisera  

  	
   

  	
   

  
	
   

  	
  Carl Lanzisera  

  	
   

  	
  FAMILY PARTNERSHIP:

  
	
   

  	
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
  A. GIORDANO FAMILY LIMITED

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
   

  
	
  LASER SIGNATORY SHAREHOLDERS:

  	
  By:

  	
  /s/

  	
  Bronwyn Kathryn Fulton

  	
   

  
	
   

  	
  Name:

  	
  Bronwyn Kathryn Fulton

  
	
   

  	
  Title:

  	
  General Partner

  
	
  /s/  Carl Lanzisera

  	
   

  	
   

  
	
  Carl Lanzisera

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/  Carrie Niemiera

  	
   

  	
  EPG:

  
	
  Carrie Niemiera

  	
   

  
	
   

  	
  EPG LIMITED

  
	
   

  	
   

  
	
  /s/ Harvey Kash

  	
   

  	
   

  
	
  Harvey Kash

  	
  By:

  	
  /s/  Joseph Zumwalt

  	
   

  
	
   

  	
  Name:

  	
  Joseph Zumwalt

  
	
   

  	
  Title:

  	
  Managing MemberExhibit 10.5

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT
effective as of April 1, 2004 (the “Commencement Date”) by and between SCL
Ventures, Ltd. (the “Company”) and Mitchell J. Sepaniak (the “Executive”) (this
“Agreement”).

 

The parties hereto wish
to enter into an employment agreement on the terms and conditions set forth
below.  Accordingly, in consideration of
the premises and the respective covenants and agreements of the parties herein
contained, and intending to be legally bound hereby, the parties hereto agree
as follows:

 

1.                                       Term. 
The Executive’s employment under this Agreement shall commence on the
Commencement Date and shall end, unless terminated earlier pursuant to
Section 4, at the close of business on March 30, 2005 (the “Term”).

 

2.                                       Title, Duties and Authority.  The Executive shall serve as President and
Chief Executive Officer of the Company, and shall have such responsibilities
and duties (consistent with the Executive’s position as President and Chief
Executive Officer of the Company) as may from time to time be assigned to the
Executive by the board of directors of the Company (the “Board”), and shall
have all of the powers and duties usually incident to such offices.  In addition, throughout the Term, the
Executive shall serve as a member of the Board.  The Executive shall devote substantially all of his working time
and efforts to the business and affairs of the Company, except for vacations,
illness and incapacity; provided, however, that the Executive may serve on the
boards of directors of non-public companies and charitable organizations and
may devote reasonable time to charitable and civic organizations, in all cases
provided that the performance of his duties and responsibilities on such boards
and in such service does not interfere substantially with the performance of
his duties and responsibilities under this Agreement.

 

3.                                       Compensation and Benefits.

 

(a)                                  Base Salary.  During the Term, but solely after the date as of which the
Company has raised, during the period commencing on the Commencement Date, the
sum of Ten Million Dollars ($10,000,000), the Company shall pay the Executive a
base salary (“Base Salary) at the rate of One Hundred Fifty Thousand Dollars
($150,000) per annum, payable in accordance with the Company’s regular payroll
practices.

 

(b)                                 Employee Health and Dental Benefits.  The Executive shall be entitled to
participate in the Company’s employee health and dental benefits plan during
the Term, as such plan may be in effect from time to time.

 

(c)                                  Expenses.  The Executive shall be entitled to receive prompt reimbursement
of his expenses incurred in the performance of his employment hereunder upon
his submission to the Company of reasonable and customary expense claims to the
Company, in accordance with the Company’s procedures for expense reimbursement.

 

 

(d)                                 Vacations.  The Executive shall be entitled to two (2) weeks paid vacation
during the Term with no right to carry over unused days.

 

(e)                                  Sick Pay.  The Executive shall be entitled to five (5) paid sick days during
the Term, with no right to carry over unused days.

 

4.                                       Termination.  The Executive’s employment hereunder with the Company may be
terminated under the following circumstances:

 

(a)                                  Death or Disability.  If the Executive shall die or become
disabled during the Term, the Company may terminate the Executive’s employment
hereunder for death or “Disability,” as applicable.  For purposes of this Agreement, the Executive’s “Disability”
shall be determined in the sole discretion of the Board.

 

(b)                                 Cause. 
The Company may terminate the Executive’s employment hereunder for
Cause.  For purposes of this Agreement,
the Company shall have “Cause” to terminate the Executive’s employment
hereunder upon:

 

(i)                                     the failure by the Executive to
substantially perform the Executive’s duties hereunder (other than any such
failure resulting from the Executive’s Disability which shall be subject to the
provisions of Section 4(a));

 

(ii)                                  the willful violation by the Executive of
any of the Executive’s material obligations hereunder;

 

(iii)                               the willful engaging by the Executive in
misconduct which is materially injurious to the business or reputation of the
Company or any of its affiliates; or

 

(iv)                              the Executive’s conviction of a felony.

 

Notwithstanding the
foregoing, the Executive shall not be terminated for Cause without:

 

(A)                              delivery of a written notice to the
Executive setting forth the reasons for the Company’s intention to terminate
the Executive’s employment hereunder for Cause;

 

(B)                                the failure of the Executive to cure the
nonperformance, violation or misconduct described in the notice referred to in
clause (A) of this paragraph, if cure thereof is possible, to the reasonable
satisfaction of the Board, within fifteen (15) days of the Executive’s receipt
of such notice; and

 

(C)                                an opportunity for the Executive,
together with the Executive’s counsel, to be heard before the Board.

 

(c)                                  Without Cause.  The Company may terminate the Executive’s employment hereunder
without Cause.

 

(d)                                 Resignation.  The Executive may terminate the Executive’s employment hereunder
by his resignation.

 

 

5.                                       Compensation upon Termination.

 

(a)                                  Death or Disability.  If the Executive’s employment with the
Company hereunder is terminated on account of the Executive’s death or
Disability pursuant to Section 4(a), the Company shall as soon as
practicable pay to the Executive or the Executive’s estate, as applicable, or
as may be directed by the legal representatives of the Executive or the
Executive’s estate, as applicable, any Base Salary accrued and due to the
Executive under Section 3(a) through the date of the Executive’s death or
termination for Disability, as applicable. 
Other than the foregoing, the Company shall have no further obligations
to the Executive hereunder.

 

(b)                                 By the Company for Cause or By the
Executive.  If the Executive’s
employment with the Company hereunder is terminated by the Company for Cause
pursuant to Section 4(b) or by the Executive pursuant to
Section 4(d), the Company shall as soon as practicable pay the Executive
any Base Salary accrued and due to the Executive under Section 3(a)
through the Executive’s date of termination. 
Other than the foregoing, the Company shall have no further obligations
to the Executive hereunder.

 

(c)                                  Termination By the Company Without
Cause.  If the Company shall terminate
the Executive’s employment hereunder without Cause pursuant to
Section 4(c), then the Company shall:

 

(i)                                     as soon as practicable pay the Executive
any Base Salary accrued and due to the Executive under Section 3(a)
through his date of termination;

 

(ii)                                  continue to pay the Executive his Base
Salary in effect as of his date of termination for the lesser of the then
remainder of the Term or one (1) year (or until such earlier time that the
Executive violates the provisions of Section 6(a)), at the times such
payments would otherwise have been made under Section 3(a); and

 

(iii)                               provide the Executive for the lesser of
the then remainder of the Term or one (1) year (or until such earlier time that
the Executive violates the provisions of Section 6(a)), with continued
participation in the Company’s employee health and dental benefit plan, to the
extent that such a plan shall then continue to be in effect.

 

Other than the foregoing,
the Company shall have no further obligations to the Executive hereunder.

 

6.                                       Restrictive Covenant.

 

(a)                                  Reasonable Covenant.  It is expressly understood by and between
the Company and the Executive that the covenant contained in Section 6(b)
is an essential element of this Agreement and that but for the agreement by the
Executive to comply with such covenant and thereby not to diminish the value of
the organization and goodwill of the Company or any affiliate or subsidiary of
the Company, including relations with their employees, clients, customers and
accounts, the Company would not enter into this Agreement.  The Executive has independently consulted
with his legal counsel and after such consultation agrees that such covenant is
reasonable and proper.

 

(b)                                 Nondisclosure of Confidential
Information.  The Executive shall keep
secret and confidential and shall not disclose to any third party in any
fashion or for any purpose

 

 

whatsoever, any
information regarding this Agreement, or any other information regarding the
Company or its affiliates or subsidiaries which is not available to the general
public, and/or  not generally known
outside the Company or any such affiliate or subsidiary, to which he has or
shall have had access at any time during the course of his employment with the
Company, including, without limitation, any information relating to the
Company’s (and its affiliates’ or subsidiaries’):

 

(i)                                     business, operations, plans, strategies,
prospects or objectives;

 

(ii)                                  products, technologies, processes,
specifications, research and development operations and plans;

 

(iii)                               customers and customer lists;

 

(iv)                              distribution, sales, service, support and
marketing practices and operations;

 

(v)                                 financial condition and results of
operations;

 

(vi)                              operational strengths and weaknesses; and

 

(vii)                           personnel and compensation policies and
procedures.

 

Notwithstanding the
foregoing provisions of this Section 6, the Executive may discuss this
Agreement with the members of his immediate family and with his personal legal
and tax advisors and may disclose the existence of his employment with the
Company to any third party.

 

(c)                                  Specific Performance.  Without intending to limit the remedies
available to the Company or its affiliates or subsidiaries, the Executive
hereby agrees that damages at law would be an insufficient remedy to the
Company or its affiliates or subsidiaries in the event that the Executive
violates any of the provisions of this Section 6, and that, in addition to
money damages, the Company or its affiliates or subsidiaries may apply for and,
upon the requisite showing, have injunctive relief in any court of competent
jurisdiction to restrain the breach or threatened breach of or otherwise to
specifically enforce the covenant contained in Section 6 (b).

 

7.                                       Successors.  This Agreement cannot be assigned by any of the parties hereto
without the prior written consent of the other party hereto, except that it
shall be binding automatically on any successors and assigns of all or
substantially all of the business and/or assets of the Company (whether direct
or indirect, by purchase, merger, consolidation or otherwise).

 

8.                                       Arbitration.  Except as provided in Section 6(c), all controversies,
claims or disputes arising out of or relating to this Agreement shall be
settled by binding arbitration under the rules of the American Arbitration
Association, as the sole and exclusive remedy of either party, and judgment
upon such award rendered by the arbitrators(s) may be entered in any court of
competent jurisdiction.  The costs of
arbitration shall be borne by the unsuccessful party or otherwise as determined
by the arbitrators in their discretion.

 

 

9.                                       Governing Law.  The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware without
regard to conflicts of law principles.

 

10.                                 Amendments.  No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and such officers of the Company as may be specifically
designated for such purpose by the Board.

 

11.                                 Entire Agreement.  This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto.

 

12.                                 Survival.  The obligations of the parties hereto contained in Sections 5, 6
and 8 shall survive the termination of this Agreement.

 

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

 

	
   

  	
  SCL VENTURES, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Mitchell Sepaniak

  	
   

  
	
   

  	
  Name:

  	
    Mitchell
  Sepaniak

  
	
   

  	
  Title:

  	
    Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  Mitchell Sepaniak

  	
   

  
	
   

  	
  MITCHELL J. SEPANIAK

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00068-of-00352.parquet"}]]