EXHIBIT
99.1
EXECUTIVE EMPLOYMENT
AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT
(the “ Agreement
”) is executed October 16 2008 and is
retroactively effective on October 16, 2008 (the “
Effective Date ”), by and between ARKADOS GROUP, INC.
a Delaware corporation, having a principal place of business at
(the “ Company ”), and LARRY L.
CRAWFORD, residing at 2 Esplanade, Mountain Lakes,
NJ 07046 (the “ Executive ”).
Background
The Company desires to obtain the services of
the Executive as Executive Vice President and Chief Financial
Officer, and the Executive is willing to render such services, in
accordance with the terms hereinafter set forth.
The Company, by appropriate action, has
authorized the employment of the Executive as provided for in this
Agreement.
NOW THEREFORE, in consideration of the
respective agreements of the parties contained herein, it is agreed
as follows:
1. Term . The initial term
(the “ Initial Term ”) of this Agreement shall
commence October 1, 2008 and shall terminate on September 30, 2011.
Unless terminated as hereinafter provided, this Agreement shall
continue from month to month (each such period, a “
Renewal Term ”) on the same terms and
conditions as in the Initial Term, subject to adjustments as herein
provided (the “ Employment Term ”).
2. Employment .
(a)
The Executive will be employed as Senior Vice President and Chief
Financial Officer of the Company and will perform the duties,
undertake the responsibilities and exercise the authority
customarily performed, undertaken and exercised by persons situated
in a similar executive capacity, as are assigned to the Executive
from time to time by the board of directors (the “
Board ”) and chief executive officer. The
Executive agrees to serve as (i) a member of the Board (if
nominated and elected by the Company’s stockholders or
appointed by the Board to do so) and on any of the board of
directors of any subsidiary or affiliate of the Company, and (ii)
as an officer of any subsidiary or affiliate of the Company,
without any additional compensation while he is employed by the
Company. Upon termination of the Executive’s employment by
the Company for any reason, the Executive shall immediately resign
from the Board and any other position as a member of the board of
directors or as an officer of any such subsidiary or affiliate of
the Company.
(b)
Excluding periods of a vacation and sick leave to which the
Executive is entitled, the Executive agrees during the Employment
Term to devote substantially all of his business time to the
business and affairs of the Company and to the duties and
responsibilities assigned to the Executive hereunder by the
Company. The Executive may (i) serve on civic or charitable boards
or committees; and (ii) manage personal investments and
non-competing businesses; so long as any such activities do not
create a conflict of interest with the Company or materially
interfere with the performance of his duties and responsibilities
hereunder. Executive shall use his best efforts to
discharge the responsibilities of his office and position as set
forth herein.
3. Compensation .
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The Company
agrees to pay or cause to be paid to the Executive during the
Employment Term a base salary at the initial rate of Sixteen
Thousand Six Hundred Sixty Six and 67/100 ($16,666.67) per month
(i.e., $200,000.00 per annum) (hereinafter referred to as the
“ Base Salary ”). Such Base Salary
shall be payable in accordance with the Company’s standard
payroll schedule and subject to such deductions and withholding as
is required by law or any benefit plans in which the Executive
participates.
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It is
understood that the current cash flow and cash balance of the
Company will not allow it to pay Base Salary or any other cash
compensation hereunder until the Company raised substantial
additional working capital. The Executive therefore
agrees, subject to the grant of the Deferral Options (defined
below) to defer payment of Base Salary will be deferred until the
earlier of the receipt of $5,000,000 of gross proceeds from
financing activities following the Effective Date or January 15,
2009. This date may be amended by agreement of both parties in
writing. The Executive agrees not to bring action
against the Company or any officer or director as a result of any
deferral that is voluntary on the part of the Executive and for
which Compensation Options may vest, provided the deferred
amount paid when due.
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The
Compensation Committee of the Board which has the authority to
grant options under the Company’s various equity incentive
plans, the “ Compensation Committee ”) granted
1,200,000 non-qualified stock options (the “ Deferral
Options ”), exercisable at $0.25 per share for a period
of seven years from the date of grant to the
Executive. Such options will be subject to the terms of
the Company’s 2004 Stock Option and Restricted Stock Plan, as
amended (the “ Plan :) and will vest at the
rate of 33,333 per month, commencing October 31, 2008, on the last
day of each month in which Base Salary is deferred. Upon
payment of all but $16,667.68 of the Base Salary that has been
deferred at the time of such payment, vesting will cease for a
period of one month and will only begin again at the end of a month
in which more than $16,667.67 of Base Salary remains
deferred. Any options which remain unvested at the end
of Employment Term shall be forfeit unless otherwise vested
pursuant to the terms of the Plan, this or any other written
agreement.
(b)
The Compensation Committee has granted to the Executive 600,000
non-qualified stock options (the “ Compensation
Options ”), exercisable at $0.22 for a period of seven
years from the date of grant. The Compensation Options will be
subject to the terms of the Plan and will vest in 36 equal monthly
installments commencing October 30, 2008 and continuing on the
last day of the immediately following 36 months; provided,
however, that the vesting of the Compensation Options to Executive
hereunder is conditioned upon the continuous employment of
Executive by the Company through the date on which an installment
of Compensation Options vests. Upon termination of
Executive’s employment other than for Cause (as defined in
Section 8 below), Executive may exercise Options vested as of the
date of such Termination during the 90 day period following
termination of employment and all unexercised Options will be
terminated after such 90 day period. All unexercised Options will
immediately terminate upon the termination of Executive’s
employment for Cause.
(c)
Notwithstanding the provisions of Section 3(b) above, the vesting
schedule of the Compensation Options will be accelerated and all
unvested Compensation Options will vest immediately upon
termination for any reason than death, disability or Cause
following a Change of Control. For the purposes of this Agreement,
the term “ Change of Control ” will
mean:
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The acquisition
by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended, the “ Exchange Act ”) (each referred to
as a “ Person ”) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of
50% or more of either (a) the then outstanding shares of common
stock of the Company (the “ Outstanding Company
Common Stock ”) or (b) the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “ Outstanding
Company Voting Securities ”).
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(ii) Individuals
who, as of the date hereof, constitute the Board (the “
Incumbent Board ”) cease for any reason to constitute
at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose
appointment, election, or nomination for election by the
Company’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
other than the Board; or
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Consummation of
a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation (a
“ Business Combination ”), in each case, unless,
following such Business Combination, (a) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 50% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (b) no person
(excluding any corporation resulting from such Business Combination
or any employee benefit plan (or related trust) of the Company or
such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 50% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
prior to the Business Combination and (c) at least a majority of
the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the
action of the Board, for such Business Combination; or
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Approval by the
shareholders of the Company of a complete liquidation or
dissolution of the Company.
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4. Employee Benefits . The
Executive shall be entitled to participate in all employee benefit
plans, practices and programs maintained by the Company and made
available to employees generally including, without limitation, all
pension, retirement, profit sharing, savings, medical,
hospitalization, disability, dental, life or travel accident
insurance benefit plans. The Executive’s participation in
such plans, practices and programs shall be on the same basis and
terms as are applicable to employees of the Company
generall
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