Document:

Exhibit
10.4

 

PROMISSORY NOTE

 

	
  $150,000

  	
   

  	
  August 10, 2009     

  

San
Francisco, California

 

FOR
VALUE RECEIVED, receipt of which is hereby acknowledged, Etelos, Inc., a
Delaware Corporation with its principal place of business at 26828 Maple Valley
Highway, #297, Maple Valley, WA 98038 (the “Borrower”) promises to pay
to the order of Enable Growth Partners LP located at One Ferry Building, Suite 255,
San Francisco, California or at such other place as Lender may designate in
writing (the “Lender”) in lawful money of the United States of America,
the principal sum of One Hundred Fifty Thousand Dollars ($150,000) plus
interest thereon from the date the proceeds of the loan evidenced by this Note
are disbursed from the Lender to the Borrower until the Maturity Date (as
defined below), whether scheduled or accelerated, at a fixed interest rate
equal to Ten Percent (10%) per annum.

 

1.                                       Payment.  Payment of principal and accrued but unpaid
interest shall be due and payable in full on February 10, 2010 (the “Maturity
Date”), unless due earlier in accordance with the terms of this Note.

 

2.                                       Events of
Default.

 

(a)                                  “Event of
Default”, wherever used herein, means any one of the following events
(whatever the reason for such event and whether such event shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any
administrative or governmental body):

 

(i)                                     Any default in
the payment of the principal amount of, or the interest on, this Note, when due
and payable or any failure to pay any fees or other charges on this Note when
due and payable;

 

(ii)                                  The Borrower or
any of its subsidiaries or any other Person shall fail to provide the Lender
with, or to perform any obligation under this Note or any contract, instrument,
addenda, or document executed in connection with this Note, including without
limitation, any rate option agreement, guaranty, pledge agreement, security
agreement, or deed of trust (all such documents, including this Note, each a “Loan
Document”);

 

(iii)                               The Borrower or
any of its subsidiaries shall commence, or there shall be commenced against
Borrower or any subsidiary a case under any applicable bankruptcy or insolvency
laws as now or hereafter in effect or any successor thereto, or the Borrower or
any subsidiary commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of 

 

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debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to Borrower or any
subsidiary, or there is commenced against Borrower or any subsidiary any such
bankruptcy, insolvency or other proceeding which remains undismissed for a period
of 60 days; or Borrower or any subsidiary is adjudicated insolvent or bankrupt;
or any order of relief or other order approving any such case or proceeding is
entered; or Borrower or any subsidiary suffers any appointment of any custodian
or the like for it or any substantial part of its property which continues
undischarged or unstayed for a period of 60 days; or Borrower or any subsidiary
makes a general assignment for the benefit of creditors; or Borrower or any
subsidiary shall fail to pay, or shall state that it is unable to pay, or shall
be unable to pay, its debts generally as they become due; or Borrower or any
subsidiary shall call a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or the Borrower shall
die, become incapacitated, dissolve or terminate the business of the Borrower;
or Borrower or any subsidiary shall by any act or failure to act expressly
indicate its consent to, approval of or acquiescence in any of the foregoing;
or any corporate or other action is taken by Borrower or any subsidiary for the
purpose of effecting any of the foregoing;

 

(iv)                              The Borrower or
any of its subsidiaries shall fail to perform under any other agreement
involving the borrowing of money, the purchase of property, the advance of
credit or any other monetary liability of any kind to any Person, whether such
indebtedness now exists or shall hereafter be created and such default shall
result in such indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable;

 

(v)                                 The Borrower
shall (a) be a party to any Change of Control Transaction (as defined
below), (b) agree to sell or dispose all or in excess of 33% of its assets
in one or more transactions (whether or not such sale would constitute a Change
of Control Transaction), (c) redeem or repurchase more than a de minimis
number of shares of Common Stock or other equity securities of Borrower, or (d) make
any distribution or declare or pay any dividends (in cash or other property,
other than common stock) on, or purchase, acquire, redeem, or retire any of
Borrower’s capital stock, of any class, whether now or hereafter outstanding. “Change
of Control Transaction” shall mean the occurrence after the date hereof of any
of: (i) an acquisition after the date hereof by an individual or legal
entity or “group” (as described in Rule 13d-5(b)(1) promulgated under
the Securities Exchange Act of 1934, as amended) of effective control (whether
through legal or beneficial ownership of capital stock of Borrower, by contract
or otherwise) of in excess of 33% of the voting securities of Borrower, (ii) a
replacement at one time or over time of more than one-half of the members of
Borrower’s board of directors which is not approved by a majority of those
individuals who are members of the board of directors on the date hereof (or by
those individuals who are serving as members of the board of directors on any 

 

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date whose nomination to the board of directors was approved by a
majority of the members of the board of directors who are members on the date
hereof), (iii) the merger of Borrower with or into another entity that is
not wholly-owned by Borrower, consolidation or sale of 33% or more of the
assets of Borrower in one or a series of related transactions, or (iv) the
execution by Borrower of an agreement to which Borrower is a party or by which
it is bound, providing for any of the events set forth above in (i), (ii) or
(iii).

 

(vi)                              Any
judgment(s), writ or similar final process shall be entered or filed against
the Borrower or any of its subsidiaries, or any involuntary lien(s) of any
kind or character shall attach to any assets or property of Borrower, any of
which, in the judgment of Lender, might have a material adverse effect on the
financial condition or business of Borrower;

 

(vii)                           Any
governmental or regulatory authority shall take any action, any defined benefit
pension plan maintained by Borrower shall have any unfunded liabilities, or any
other event shall occur, any of which, in the judgment of Lender, might have a
material adverse effect on the financial condition or business of Borrower;

 

(viii)                        The Lender
reasonably determine, in good faith, that its security interest in the
Collateral (as defined in the Security Agreement) or the prospect of payment or
performance under this Agreement or any Loan Document is materially impaired;

 

(ix)                                Without Lender’s
prior written consent, any change shall occur in the executive management of
Borrower or any of its subsidiaries or any change shall occur in the corporate
or legal structure of Borrower or any of its subsidiaries;

 

(x)                                   The Borrower or
any of its subsidiaries shall fail to perform any of its covenants, agreements,
duties or obligations or otherwise commit any breach hereunder or in any Loan
Document.

 

(b)                                 Remedies Upon
Event of Default. If any Event of Default occurs (unless waived in
writing by the Lender), the full principal amount of this Note, together with
all accrued interest thereon, shall become, at the Lender’s election,
immediately due and payable in cash. Commencing 5 days after the occurrence of
any Event of Default that results in the acceleration of this Note, the
interest rate on this Note shall accrue at the rate of 18% per annum, or such
lower maximum amount of interest permitted to be charged under applicable
law.  The Lender need not provide and
Borrower hereby waives any presentment, demand, protest or other notice of any
kind, and the Lender may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such declaration may be rescinded and
annulled by Lender at any time prior to payment hereunder. No such rescission
or annulment shall affect any subsequent Event of 

 

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Default
or impair any right consequent thereon. The Lender have the right, at its sole
option, to continue to accept interest and/or principal payments due under the
Loan Documents after any Event of Default, and such acceptance shall not
constitute a waiver of such Event of Default or an extension of the Maturity
Date unless Lender agree otherwise in writing. In the event of an Event of
Default, Borrower agrees to pay all costs incurred in connection with the
collection of this Note, or enforcement of the terms of this Note, including
Lender’s reasonable attorneys’ fees and related costs.

 

3.                                       Security
Interest. As an inducement for the Lender to make the loan
evidenced by this Note, and to secure the complete and timely payment,
performance and discharge in full, as the case may be, of all of the
obligations of the Borrower under this Note, the Borrower, for itself, and each
of its subsidiaries, unconditionally and irrevocably pledges, grants and
hypothecates to the Lender a continuing and perfected security interest in and
to, a lien upon and a right of set-off against all of their respective right,
title and interest of whatsoever kind and nature in and to, all of the assets
of the Borrower.  The Borrower
acknowledges and agrees that the obligations of the Borrower under this Note,
are subject to security interest granted by the Borrower pursuant to the
Security Agreement dated January 31, 2008, by and among the Borrower and
the secured parties thereto (the “Security Agreement”) and that such
obligations are “Obligations” under the Security Agreement.  The Borrower and each of its subsidiaries
shall take any and all actions requested by the Lender in order to grant the
Lender a first priority security interest in the assets of the Borrower and its
subsidiaries, including all UCC-1 filing receipts.

 

4.                                       No Waiver of
Lender’s Rights.   All payments of principal and interest shall
be made without setoff, deduction or counterclaim. No delay or failure on the
part of the Lender in exercising any of its options, powers or rights, nor any
partial or single exercise of its options, powers or rights shall constitute a
waiver thereof or of any other option, power or right, and no waiver on the
part of the Lender of any of its options, powers or rights shall constitute a
waiver of any other option, power or right. Borrower hereby waives presentment
of payment, protest, and all notices or demands in connection with the
delivery, acceptance, performance, default or endorsement of this Note.
Acceptance by the Lender of less than the full amount due and payable hereunder
shall in no way limit the right of the Lender to require full payment of all
sums due and payable hereunder in accordance with the terms hereof.

 

5.                                       Modifications.   No term or provision contained herein may be
modified, amended or waived except by written agreement or consent signed by
the party to be bound thereby.

 

6.                                       Consent.   In accordance with the provisions of the
Loan Documents held by Lender, and solely with respect to this Note, Lender
waives its rights under those certain Loan Documents and grants its consent to
Borrower to enter into and perform the obligations in this Note.

 

7.                                       Choice of Law.   All questions concerning the construction,
validity, enforcement and interpretation of this Note shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each of
Borrower and Lender agree that all legal proceedings concerning the 

 

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interpretations,
enforcement and defense of this Note shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the “New
York Courts”). Each of Borrower and Lender hereby irrevocably submit to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder (including with respect to the enforcement of this Note), and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper. Each of
Borrower and Lender hereby irrevocably waive personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to the other at the address in effect for notices
to it under this Note and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. EACH OF BORROWER AND LENDER HEREBY IRREVOCABLY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

8.                                       Cumulative
Rights and Remedies; Usury.   The rights and remedies of Lender expressed
herein are cumulative and not exclusive of any rights and remedies otherwise
available under this Note or applicable law (including at equity). The election
of Lender to avail itself of any one or more remedies shall not be a bar to any
other available remedies, which Borrower agrees Lender may take from time to
time. If it shall be found that any interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall be reduced to the maximum permitted rate of interest under such law.

 

9.                                       Severability.   If any provision of this Note is declared by
a court of competent jurisdiction to be in any way invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder shall violate
applicable laws governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum permitted rate of interest.

 

10.                                 Successors and
Assigns.   This Note shall be binding
upon Borrower and its successors and shall inure to the benefit of the Lender
and its successors and assigns. The term “Lender” as used herein, shall also
include any endorsee, assignee or other holder of this Note.

 

11.                                 Lost or Stolen
Promissory Note.   If this
Note is lost, stolen, mutilated or otherwise destroyed, Borrower shall execute
and deliver to the Lender a new promissory note containing the same terms, and
in the same form, as this Note. In such event, Borrower may require the Lender
to deliver to Borrower an affidavit of lost instrument and customary indemnity
in respect thereof as a condition to the delivery of any such new promissory
note.

 

12.                                 Due
Authorization.   This Note
has been duly authorized, executed and delivered by 

 

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Borrower
and is the legal obligation of Borrower, enforceable against Borrower in
accordance with its terms except as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally.  No consent of any other party and no consent,
license, approval or authorization of, or registration or declaration with, any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance by the Borrower, or the validity or
enforceability of this Note other than such as have been met or obtained. The
execution, delivery and performance of this Note and all other agreements and
instruments executed and delivered or to be executed and delivered pursuant
hereto or thereto or the securities issuable upon conversion of this Note will
not violate any provision of any existing law or regulation or any order or
decree of any court, regulatory body or administrative agency or the
certificate of incorporation or by-laws of the Borrower or any mortgage,
indenture, contract or other agreement to which the Borrower is a party or by
which the Borrower or any property or assets of the Borrower may be bound.

 

13.                                 Notice.   Any and all notices or other communications
or deliveries to be provided by the Lender hereunder shall be in writing and
delivered personally, by facsimile, sent by a nationally recognized overnight
courier service or sent by certified or registered mail, postage prepaid,
addressed to the Borrower, or such other address or facsimile number as the
Borrower may specify for such purposes by notice to the Lender delivered in
accordance with this paragraph.  Any and
all notices or other communications or deliveries to be provided by the
Borrower hereunder shall be in writing and delivered personally, by facsimile,
sent by a nationally recognized overnight courier service or sent by certified
or registered mail, postage prepaid, addressed to the Lender at the address of
the Lender appearing on the books of the Borrower, or if no such address
appears, at the principal place of business of the Lender.  Any notice or other communication or
deliveries hereunder shall be deemed given and effective on the earliest of (i) the
date of transmission if delivered by hand or by telecopy that has been
confirmed as received by 5:00 P.M. on a business day, (ii) one
business day after being sent by nationally recognized overnight courier or
received by telecopy after 5:00 P.M. on any day, or (iii) five
business days after being sent by certified or registered mail, postage and
charges prepaid, return receipt requested.

 

14.                                 Time of the
Essence.  Time is of the essence of this
Note.

 

15.                                 Current Report.  Within 2 business days from the date of this Note, the
Borrower shall file a Current Report on Form 8-K with the Securities and
Exchange Commission, attaching this Note, and disclosing the material terms of
this Note.

 

Prior
to signing this Note, Borrower has consulted with its counsel and has read and
understands all the provisions of this Note. 
Borrower agrees to the terms of the Note and acknowledges receipt of a
completed copy of the Note.

 

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The undersigned signs this Note as a maker and not as a surety or guarantor or in any other capacity.
 
 

	
   

  	
  ETELOS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  Daniel J.A. Kolke

  
	
   

  	
  Title:
  Chairman & Chief Executive Officer

  

 

7United States Securities & Exchange Commission EDGAR Filing

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT, dated as of May 1, 2009 (this “Agreement”), is between Hawk Systems, Inc., a Delaware corporation, (the “Company”), and David Coriaty (the “Executive”).

RECITALS

A.

The Company believes the Executive can make a unique contribution to the business of the Company and the Board of Directors of the Company believes that the services of the Executive would be of great value to the Company. 

B.

The Company is willing to employ the Executive and the Executive is willing to accept employment by the Company upon the terms and provisions, and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and of the mutual benefits herein provided, the receipt and sufficiency of which are hereby acknowledged, the Company and the Executive hereby agree as follows:

1.

TERM OF EMPLOYMENT.

The Company hereby employs the Executive and the Executive hereby accepts employment by the Company, on the terms and conditions herein contained, for a period of one (1) year commencing as of the date hereof and ending on the first (1st) anniversary of the date hereof, subject to termination as hereinafter provided (the period from the date hereof through the first (1st) anniversary of the date hereof or the date of automatic termination of the Executive’s employment in accordance with the terms hereof, as the case may be (the “Employment Period”).  This Agreement and the Employment Period shall automatically extend for subsequent one (1) year periods by both parties, unless either party notifies the other not later than ninety (90) days prior to the then expiration date of the Employment Period that such party does not intend for the Employment Period to automatically extend.

2.

DUTIES.

(a)  

General Duties.  During the Employment Period, the Executive shall serve the Company as its Executive Chairman, with such duties consistent therewith, including but not limited to overseeing the development of the Company’s technology and assisting in the Company’s acquisitions of other companies and/or technologies.  Executive shall perform such other services for the Company as may be reasonably assigned to him from time to time by the Board of Directors of the Company.

(b)  

Primary Activity.  

(i)

During the Employment Period, the Executive shall devote his full business efforts, time and energy to the interests and business of the Company; however, the Executive shall be excused from performing any services for the Company hereunder during periods of temporary illness or incapacity and during vacations.  The Executive shall perform the duties set forth in subparagraph (a) above, unless as may be otherwise assigned by the Company from time to time.  It is acknowledged that the duties of the Executive may often require from time to time attention to business at times other than normal business hours.  During the Employment Period, the Executive shall, to the best of his skill and ability, perform his obligations hereunder and to advance and promote the business of the Company.  The Executive shall perform his duties and obligations hereunder diligently, faithfully and completely, and with the Executive’s application of his abilities, skills and judgment and in accordance with ethical and professional standards.  

(c)  

Travel.     The Executive agrees to travel for business purposes in connection with his responsibilities hereunder in a reasonable amount for reasonable lengths of time, commensurate with the Executive’s position and responsibilities. 

3.

COMPENSATION.

As full compensation to the Executive for performance of his services hereunder, the Company agrees to pay the Executive and the Executive agrees to accept the following salary and other benefits during the Employment Period:

(a)   

Salary.  The Company shall pay the Executive a salary at the annual rate of Seven Hundred Eighty Thousand Dollars ($780,000.00) per year or such other annual rate of compensation as the Board of Directors of the Company may from time to time determine (“Base Salary”).  The Base Salary due the Executive hereunder shall be payable in equal monthly installments, less any amounts required to be withheld by the Company from time to time from such salary under any applicable federal, state or local income tax laws or similar laws then in effect.    

(b)  

Reimbursement of Expenses.  The Company shall reimburse the Executive for all expenses properly incurred by him in the performance of his duties hereunder in accordance with policies established from time to time by the Board of Directors of the Company.  

(c)  

Further Benefits.  The Executive shall be entitled to participate in all health, accident, retirement or similar employee benefit plans provided by the Company generally to the executives of the Company to the extent commensurate with the participation therein of the senior executives of the Company.  The Executive shall be entitled to participate in any present or future bonus, insurance, pension, retirement, profit sharing, or other compensation or incentive or benefit plans adopted by the Company, for the general and overall benefit of senior executives of the Company or the employees of the Company, the extent and manner of participation to be reasonably determined by the Board of Directors.  The benefits provided in this Section 3(c) shall be in addition to the compensation and benefits provided elsewhere in this Section 3. 

(f)  

Offices.  The Executive agrees to serve without additional compensation, if elected or appointed thereto, in one or more offices or as a director of any of the Company’s affiliates, subsidiaries or sister companies.

(g)  

Vacation. The Executive shall be entitled to three (3) weeks vacation per year during the Employment Period.

4.

RESTRICTIONS AGAINST COMPETITION, SOLICITATION, SERVICING,  AND DIVULGING CORPORATE CONFIDENTIAL DATA  

(a)  

Covenant Not to Compete.  As a material inducement to sign this Agreement, the Executive agrees that as long as he is an employee of the Company, he will not Compete with the Company and, further, that he will not Compete with the Company during the three (3) year period beginning on the date of termination of this Agreement (the “Restriction Period”).  During the Employment Period and the Restriction Period, the Executive shall not within the United States directly or indirectly, either for Executive’s own account, or as a partner, shareholder (other than shares regularly traded in a recognized market), officer, director, employee, agent, consultant or otherwise, be employed by connected with, acquire or own in any manner, participate in, consult or otherwise associate with any other business, enterprise or venture that is competitive with the Company’s business. 

 

(b)  

Covenant Not to Solicit Employees. During Employment Period and Restriction Period, the Executive shall not, directly or indirectly, solicit for employment or employ any employee of the Company.  

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(c)  

Covenant Not to Solicit or Service.  The Executive acknowledges and agrees that the Company has spent significant amounts of time and money in the development of lists of its Customers, clients, liaisons, suppliers, distributors and vendors, which lists are not available to the general public or the Company’s other executives, and that these lists may contain other information about the Customers, clients, liaisons, suppliers, distributors and vendors not available to the general public and that the Executive will be privileged to these lists.  The Executive also acknowledges and agrees that the Company and its business would be irreparably and greatly damaged by the use of this information other than for its benefit.  Therefore, as a material inducement to the Company to enter into this Agreement, the Executive agrees that during the Employment Period and the Restriction Period that the Executive will not solicit or do business with, or attempt to solicit or do business with, directly or indirectly any of the Company’s Customers, clients, liaisons, suppliers, distributors or vendors, except on the Company’s behalf and will not solicit or do business with or attempt to solicit or do business with, directly or indirectly, any of the Company’s Customers, clients, liaisons, suppliers, distributors, developers and vendors.

(d)  

Covenant Not to Violate Corporate Confidences.  During the Employment Period and the Restriction Period, the Executive will have access to and will become aware of confidential information and trade secrets of the Company (the “Confidential Information”) including Customer data, pricing, vendor data, market plans, business plans, files, business secrets, business processes and business techniques not generally available to the public, and this Confidential Information has been compiled by the Company at great expense and over a great amount of time.  The parties acknowledge that this confidential information gives the Company a competitive advantage over other businesses in its field of endeavor and that the Company’s business will be greatly and irreparably damaged by the release or use of this confidential information outside of its own business.  Therefore, as a material inducement to the Company to enter into this Agreement, the Executive agrees that the Executive will not, during the Employment Period and during the Restriction Period, either disclose or divulge this Confidential Information to anyone or use the Confidential Information in any manner, other than in the performance of the Executive’s duties and obligations to the Company hereunder.  Notwithstanding the foregoing, the Executive may disclose Confidential Information pursuant to the applicable law or regulation or pursuant to subpoena or any civil or criminal investigatory request by any governmental body or regulatory authority.  For purposes hereof, Confidential Information shall not include information that (i) becomes publicly known other than due to a breach of this Agreement by the Executive; (ii) was known by the Executive prior to the commencement of this Agreement; or (iii) is furnished to the Executive by a third party who, to the knowledge of the Executive after reasonable inquiry, is not bound by a confidentiality or other similar obligation in favor of the Company.  

(e)  

Enforcement.    The Company may enforce the provisions of this section by suit for damages, injunction, or both.

 

(i) 

The Company would be irreparably injured by the breach of any provision of this Section 4 by the Executive, and money damages alone would not be an appropriate measure of the harm to the Company from such continuing breach.  Therefore, equitable relief, including specific performance of these provisions by injunction, would be an appropriate remedy for the breach of these provisions.  The right to seek equitable relief shall not be the exclusive remedy available to the Company for any such breach and all available remedies, including, without limitation, the right to seek monetary damages by suit or any other proceeding shall be cumulative.

 

(ii)   The obligations of the Executive pursuant to this Section 4 shall survive and shall be in full force and effect even if this Agreement is terminated for any reason whatsoever, not renewed or extended.  

(e) 

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

(i) 

“to Compete” and “to Compete with the Company” both mean to engage in any  business that is competitive with the Company in any manner whatsoever as of the date of termination of this Agreement, including competing as a proprietor, partner, investor, stockholder, director, officer, employee, consultant, independent contractor, or otherwise, within the United States.

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(ii) 

“Customer of the Company” shall mean any person or entity for whom it has performed or attempted to perform services or sold or, to the knowledge of the Executive, attempted to sell any product or service (including, without limitation, any client, patient, customer, franchisee, liaison, vendor or distributor), whether or not for compensation, and regardless of the date of such rendition, sale, or attempted rendition or sale.

5.

TERMINATION OF AGREEMENT.

(a)  

Events of Termination.  The Employment Period shall cease and terminate upon the earliest to occur of the events specified below:

 (i)  

the close of business on the first (1st) anniversary of the date hereof (or such anniversary of any subsequent renewal date as provided for in Section 1 hereof) if either party provides written notice of termination pursuant to Section 1 hereof.

(ii)  

the death of the Executive;

(iii)

termination of the Executive’s employment for Cause.  

(iv) 

the election by the Executive to terminate his employment hereunder upon One Hundred and Twenty (120) days prior written notice;

(v)  

due to the election by the Company to terminate the Executive’s employment hereunder without Cause; or

(vi)

the permanent disability of the Executive.  

(b)

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

(i)

 “Cause” to terminate the Executive’s employment hereunder shall exist upon (A) the failure by the Executive to substantially perform his material duties hereunder as solely determined by the Company, other than any such failure resulting from incapacity due to permanent disability (as hereafter determined), (B) the engaging by the Executive in gross negligence or willful misconduct injurious or potentially injurious to the Company or any of its subsidiaries as reasonably determined by the Board of Directors of the Company, (C) a breach by the Executive of the provisions of Section 4 hereof as reasonably determined by the Company, (D) any breach of loyalty or fiduciary duty as an officer or director of the Company or any of its subsidiaries as reasonably determined by the Board of Directors of the Company or (E) the conviction of the Executive of any crime, other than a misdemeanor. 

(ii) 

“Permanent Disability” of the Executive shall 

mean the Executive’s inability, because of his injury, illness, or other incapacity (physical or mental), as determined by a physician mutually acceptable to the Executive and the Company to perform the services to the Company contemplated hereby for a continuous period of One Hundred and Eighty (180) days.  Such permanent disability shall be deemed to have occurred on the One Hundred and Eightieth (180th) day.  

(c)

Compensation Upon Termination.  If the Employment Period shall cease and terminate pursuant to Section 5(a) hereof for any reason, Company shall pay to the Executive (or his estate in the case of subsection (a)(ii)) his Base Salary pursuant to Section 3(a) hereof and the reimbursable expenses incurred under Section 3(b) hereof through the date of termination.  The Company shall have no additional or further liability to the Executive hereunder, or

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(d)  

Effect of Termination.  This Agreement and all liabilities and obligations of the parties hereto hereunder shall cease and terminate effective upon any termination of the Employment Period permitted by this Agreement; provided, however, that the Executive’s obligations under Section 4 hereof shall survive any such termination.

(e)  

Remedies.  Nothing herein contained shall be construed as prohibiting any party hereto from pursuing any other remedies available to it for any breach of any provision hereof.

6.

NOTICES.

All notices, demands, consents, requests, instructions and other communications to be given or delivered or permitted under or by reason of the provisions of this Agreement or in connection with the transactions contemplated hereby shall be in writing and shall be deemed to be delivered and received by the intended recipient as follows:  (i) if personally delivered, on the business day of such delivery (as evidenced by the receipt of the personal delivery service), (ii) if mailed, certified or registered mail, return receipt requested, four (4) business days after being mailed, (iii) if delivered by overnight courier (with all charges having been prepaid), on the business day of such delivery (as evidenced by the receipt of the overnight courier service of recognized standing), or (iv) if delivered by facsimile transmission, on the business day of such delivery if sent by 5:00 p.m. in the time zone of the recipient, or if sent after that time, on the next succeeding business day (as evidenced by the printed confirmation of delivery generated by the sending party’s facsimile machine).  If any notice, demand, consent, request, instruction or other communication cannot be delivered because of a changed address of which no notice was given (in accordance with Section 6), or the refusal to accept same, the notice, demand, consent, request, instruction or other communication shall be deemed received on the second business day the notice is sent (as evidenced by a worn affidavit of the sender).  All such notices, demands, consents, requests, instructions and other communications will be sent to the following addresses or facsimile numbers as applicable:

(a)

If to the Company:

Hawk Systems, Inc.

777 South Flagler Drive

Suite 800-West Tower

West Palm Beach, FL 33401

ATTN:  President

With a copy to:

Greenberg Traurig P.A.

5100 Town Center Circle

Suite 400

Boca Raton, FL 33486

ATTN:  Bruce C. Rosetto, Esq.

(b) 

If to the Executive, addressed to:

[address]

[address]

[address]

or to such other address as any party may specify by notice given to the other party in accordance with this Section 6.

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7.

INVENTIONS.

The Executive shall disclose promptly to Company any and all conceptions and ideas for inventions, improvements, and valuable discoveries, whether patentable or not, which are conceived or made by the Executive solely or jointly with another during the Employment Period and which relate to the Company’s business.  The Executive hereby assigns and agrees to assign all his interest therein to Company or its nominee. Whenever requested by the Company, the Executive shall execute any and all applications, assigns or other instruments that Company shall deem necessary to apply for and obtain Letters of Patents of the United States or any foreign country or to otherwise protect Company’s interest therein, and if requested after the Employment Period, shall be at the Company’s cost and expense.  These obligations shall continue beyond termination of employment with respect to inventions, improvements and valuable discoveries, whether patentable or not, conceived, made or acquired by the Executive during the Employment Period or within one year thereafter, and shall be binding upon the Executive’s heirs, assigns, executors, administrators and other legal representatives.

8.

RETURN OF PROPERTY.

All correspondence, reports, charts, products, records, designs, patents, plans, manuals, sales and marketing material, memorandum, advertising materials, customer lists, distributor lists, vendor lists, telephones, beepers, portable computers, and any other such data, information or property collected by or delivered to the Executive by or on behalf of the Company, their representatives, customers, suppliers or others and all other materials compiled by the Executive, in each case during the Employment Period, which pertain to the business of the Company shall be and shall remain the property of the Company and shall be delivered to the Company promptly upon its request at any time and without request upon completion or other termination of the Executive’s employment hereunder for any reason.

9.

REPRESENTATIONS OF THE EXECUTIVE.

The Executive represents and warrants to the Company that he is not subject to any restriction or non-competition covenant in favor of a former employer or any other person or entity, and that the execution of this Agreement by the Executive and his provision of services to the Company and the performance of his obligations hereunder will not violate or be a breach of any agreement with a former employer or any other person or entity. Further, the Executive agrees to indemnify Company for any claim, including but not limited to attorneys’ fees and expenses of investigation, by any such third party that such third party may now have or may hereafter have against the Company based upon any noncompetition agreement, invention or secrecy agreement between the Executive and such third party.

10.

GOVERNING LAW; JURISDICTION.

(a)

This Agreement shall be governed by and construed in accordance with the laws of the State of Florida applicable to agreements made and to be performed in that state, without regard to any of its principles of conflicts of laws or other laws that would result in the application of the laws of other jurisdiction. 

(b)

Each of the parties unconditionally and irrevocably consents to the exclusive jurisdiction of the courts of the State of Florida and the federal district court located in Palm Beach County, Florida with respect to any suit, action or proceeding arising out of or relating to this Agreement that cannot be resolved by arbitration hereunder or for the purpose of enforcing any arbitration award hereunder, and each of the parties hereby unconditionally and irrevocably waives ay objection to venue in any such court or to assert that any such court is an inconvenient forum, and agrees that service of any summons, complaint, notice or other process relating to such suit, action or other proceeding may be effected in the manner provided in Section 6 hereof.  Each of the parties hereby unconditionally and irrevocably waives the right to a trial by jury in any such action, suit or other proceeding.

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11.

ADVICE OF COUNSEL.

The Executive recognizes that the Company is represented by counsel, namely Greenberg Traurig, P.A., and that such counsel does not represent the interests of the Executive.  The Company strongly recommends and suggests that the Executive obtain its own counsel to review this Agreement prior to execution of the Agreement.  The Company agrees to provide the Executive with a reasonable period of time to have this Agreement reviewed by its own counsel or any other professional adviser deemed appropriate by the Executive.  Should the Executive not choose to have this Agreement reviewed by its own counsel, then the Executive assumes the risk of such decision, and the Executive hereby acknowledges that Company has not unduly influenced the Executive in any way and that Company desires that the Executive retain its own counsel.

12.

AMENDMENT.

This Agreement may not be modified, amended, altered or supplemented, except by a written agreement executed by each of the parties hereto.

13.

ENTIRE AGREEMENT.

This Agreement embodies the entire understanding between the parties hereto respecting the subject matter hereof and no change, alteration or modification hereof may be made except in writing signed by both parties hereto.  Any prior employment agreement between the Company and the Executive shall be deemed to be superseded for all purposes by this Agreement and, upon the execution and delivery of this Agreement by the Executive and the Company, any such prior employment agreement shall be deemed to be canceled and of no further force or effect.  

14.

WAIVER.

Any waiver by a party hereto of any such breach of or failure to comply with any provision or condition of this Agreement by any other party hereto shall not be construed as, or constitute, a continuing waiver of such provision or condition, or a waiver of any other breach of, or failure to comply with, any other provision or condition of this Agreement, any such waiver to be limited to the specific matter and instance for which it is given.  No waiver of any such breach of, or failure to comply with, or provision or condition of this Agreement shall not be effective unless in a written instrument signed by the party granting the waiver and delivered to the other party hereto in the manner provided for in Section 6 hereof.  No failure or delay by any party to enforce or exercise its rights hereunder shall be deemed a waiver of such right, nor shall any single or partial exercise of any such right or any abandonment or discontinuance of steps to enforce such rights, preclude any other or further exercise thereof or the exercise of any other right. 

15.

BINDING EFFECT, NO ASSIGNMENT, ETC.

This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs, estate, successors and permitted assigns.  Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any party hereto without the prior written consent of the other party, and any attempt to do so shall be null and void, ab initio, and of no force or effect, except (i) for assignments and transfers by operation of law and (ii) that the Company may assign any or all of its respective rights, interests and obligations hereunder to any purchaser of a majority of the issued and outstanding capital stock of the Company or a substantial part of the assets of the Company; provided that such successor or assignee of the Company assumes the obligations of the Company hereunder in a manner reasonably acceptable to the Executive.

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16.

HEADINGS.

The section headings contained in the Agreement are inserted for reference purposes only and shall not affect in any way the meaning, construction or interpretation of this Agreement.  Any reference to the masculine, feminine, or neuter gender shall be a reference to such other gender as is appropriate.  References to the singular shall include the plural and vice versa.

17.

DRAFTING HISTORY.

This Agreement shall be construed and interpreted without regard to any presumption against the party causing this Agreement to be drafted.  The parties acknowledge that this Agreement was negotiated and drafted with each party being represented by competent counsel of its/his choice and with each party having an equal opportunity to participate in the drafting of the provisions hereof and shall therefore be construed as if drafted jointly by the parties.

18.

SEVERABILITY. 

If any provisions of this Agreement shall be held invalid, illegal or unenforceable in whole or in part, neither the validity of the remaining part of such provisions nor the validity of any other provisions of this Agreement shall in any way be affected thereby.  

19.

COUNTERPARTS.

This Agreement may be executed in two (2) or more counterparts (including by facsimile signature, which shall constitute a legal and valid signature), and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same document.  This Agreement shall become effective when one or more counterparts, taken together, shall have been executed and delivered by all of the parties.

[Signature Page Follows]

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

				
	 
	COMPANY:

	 
	 

	Witness:

	HAWK SYSTEMS, INC.

	 
	 

	 
	 

	 
	 

	 
	 

	/s/Hank Eckenrode                 

	       

	By:

	/s/ Robert McCann III             

	Hank Eckenrode

	 
	Name:

	Robert McCann III

	 
	Title:

	CEO

	 
	            

	 

	 
	 
	 

	 
	 
	 

	 
	EXECUTIVE:

	 
	 
	 

	 
	 
	 

	 
	 
	/s/ David Coriaty

	 
	 
	David Coriaty

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