FIRST AMENDMENT
TO
SEVERANCE AGREEMENT AND RELEASE
THIS FIRST AMENDMENT TO SETTLEMENT AGREEMENT AND RELEASE (this
"AMENDMENT") is effective as of November 15, 2000 by and between LMKI, Inc., a
Nevada corporation ("EMPLOYER"), and Xxxxxxx Xxxxxx ("EMPLOYEE").
R E C I T A L S
A. Employer and Employee are parties to that certain Severance
Agreement and Release dated effective August 8, 2000 (the "AGREEMENT") pursuant
to which, among other things, Employee resigned as an officer and director of
Employer, Employer agreed to make certain severance payments and Employer agreed
to certain terms regarding the payment of outstanding Notes to from Employer to
Employee (the "Notes").
B. Employer and Employee now desire to amend the Agreement.
NOW, THEREFORE, in accordance with the foregoing recitals, and AS
CONSIDERATION FOR the mutual covenants and agreements contained herein and for
other good and valuable consideration the receipt and sufficiency of which
hereby are acknowledged, Employer and Employee hereby agree as follows:
1. AMENDMENT TO THE AGREEMENT. The following changes, modifications,
additions or deletions are hereby made to the provisions of the Agreement set
forth below:
(a) ACKNOWLEDGEMENT OF SEVERANCE PAYMENTS. On or about August
14, 2000, Employer paid to Employee $100,000. Employee and Employer
acknowledge and agree that such payment shall be deemed and is
prepayment of ten (10) months of the severance payment obligations of
Employer under Section 2 of the Agreement.
(b) RESTATED SECTION 3. Section 3 of the Agreement is deleted
in its entirety and replaced with the following:
"EMPLOYEE AND EMPLOYER HEREBY AGREE TO MODIFY AND AMEND THE
PROMISSORY NOTES DATED ON VARIOUS DATES FROM MAY 20, 1999
THROUGH JULY 7, 2000, TO PROVIDE AS FOLLOWS:
(a) THE PRINCIPAL AMOUNT OF THE PROMISSORY NOTE SHALL BE
FIXED AND AGREED TO BE $1,727,785.00 AT NOVEMBER 15,
2000, WHICH INCLUDES ALL ACCRUED AND UNPAID INTEREST
(THE "OUTSTANDING NOTE AMOUNT");
(b) THE PRINCIPAL AMOUNT OF THE PROMISSORY NOTE AND
ACCRUED INTEREST THEREON SHALL BE OFFSET BY THE
BALANCE DUE TO LMKI, INC. FROM SPEEDSL OF $600,000.00
WHICH REPRESENTS ALL AMOUNT DUE AS OF NOVEMBER 15,
2000 (OTHER THAN CHARGES FOR ROUTERS AND INTERNAL
WIRING, IN AN AMOUNT TO BE MUTUALLY AGREED BETWEEN
SPEEDSL AND LMKI);
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(c) THE PRINCIPAL AMOUNT SHALL BE INCREASED BY THE AMOUNT
OF THE PURCHASE PRICE FOR THE CONTRIBUTED SHARES
(DEFINED BELOW);
(d) THE PROMISSORY NOTE SHALL BEAR INTEREST AT AN ANNUAL
RATE OF EIGHT PERCENT (8%) SIMPLE INTEREST FROM THE
DATE HEREOF;
(e) THE PRINCIPAL AMOUNT OF THE PROMISSORY NOTE AND
ACCRUED INTEREST THEREON SHALL BE PAYABLE AS FOLLOWS;
DATE AMOUNT
---- ------
DECEMBER 15, 2000 $125,000.00
JANUARY 15, 2001 $250,000.00
FEBRUARY 15, 2001 $250,000.00
MARCH 15, 2001 $250,000.00
APRIL 15, 2001 $250,000.00
MAY 15, 2000 $250,000.00
JUNE 15, 2000 $250,000.00
JULY 15, 2000 $250,000.00
AUGUST 15, 2001 $252,785.00
SEPTEMBER 15, 2001 ALL ACCRUED INTEREST.
ALL PAYMENTS SHALL BE ALLOCATED FIRST TO THE
REPAYMENT OF THE PRINCIPAL AND ACCRUED INTEREST
RELATING TO THE OUTSTANDING NOTE AMOUNT, AND
THEREAFTER TO THE PURCHASE PRICE FOR THE CONTRIBUTED
SHARES.
(f) THE PROMISSORY NOTE SHALL BE SECURED BY THE PLEDGE OF
5,000,000 SHARES OF EMPLOYER COMMON STOCK PURSUANT TO
A STOCK PLEDGE AGREEMENT IN THE FORM OF EXHIBIT B
HERETO; AND
(e) PAYMENT OF THE PROMISSORY NOTE SHALL BE SUBORDINATED
TO EMPLOYER'S PAYMENT OBLIGATIONS UNDER THE FAR EAST
NATIONAL BANK LOAN DOCUMENTS. LMKI SHALL USE ITS BEST
EFFORTS TO OBTAIN A WAIVER FROM FAR EAST NATIONAL
BANK TO PERFORM ITS OBLIGATIONS TO EMPLOYER UNDER
THIS AMENDMENT.
EMPLOYER SHALL DELIVER THE AMENDED PROMISSORY NOTE PRIOR TO
NOVEMBER 30, 2000."
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(c) RESTATED SECTION 4. Section 4 of the Agreement is
deleted in its entirety and replaced with the
following:
"SECTION 4. CONTRIBUTION OF STOCK AND OPTIONS; SECURED
PROMISSORY NOTE.
(a) CONTRIBUTION OF STOCK AND OPTIONS. EXCEPT THE
"RETAINED SHARES" AND THE "GIFTED SHARES," EACH DEFINED BELOW,
EMPLOYEE HEREBY CONTRIBUTES TO EMPLOYER FOR CANCELLATION AND
TERMINATION ALL SHARES OF CAPITAL STOCK, AND ALL OPTIONS OR
OTHER RIGHTS TO ACQUIRE ANY SHARES OF CAPITAL STOCK OF
EMPLOYER, OWNED BY EMPLOYEE OR ANY ENTITY OWNED, CONTROLLED OR
OF WHICH EMPLOYEE IS A BENEFICIAL OWNER OR NAMED BENEFICIARY
CURRENTLY ESTIMATED TO BE 12,000,000 (THE "CONTRIBUTED
SHARES"). EMPLOYEE SHALL BE ENTITLED TO RETAIN 2,000,000
SHARES OF COMMON STOCK (THE "RETAINED SHARES"). WITHIN FIVE
DAYS AFTER EXECUTION OF THIS AMENDMENT, EMPLOYEE SHALL DELIVER
ALL CERTIFICATES, AGREEMENTS OR OTHER INSTRUMENTS REPRESENTING
OR EVIDENCING THE CONTRIBUTED SHARES, DULY ENDORSED FOR
ASSIGNMENT OR ACCOMPANIED BY A STOCK ASSIGNMENT. IF SUCH
CERTIFICATES, AGREEMENTS OR INSTRUMENTS ARE NOT DELIVERED
WITHIN FIVE DAYS AFTER THE EXECUTION OF THIS AMENDMENT, THEN
EMPLOYEE AGREES THAT EMPLOYER MAY CANCEL SUCH CERTIFICATES,
AGREEMENTS OR INSTRUMENTS AND INSTRUCT ITS TRANSFER AGENT TO
TERMINATE SUCH CERTIFICATES ON ITS BOOKS AND RECORDS. EMPLOYEE
REPRESENTS AND WARRANTS THAT IT HAS ALL RIGHTS, TITLE AND
INTEREST IN AND TO THE CONTRIBUTED SHARES, AND THAT NO OTHER
PERSON, GROUP OR ENTITY HAS ACQUIRED ANY RIGHT, TITLE OR
INTEREST THEREIN. EMPLOYEE'S SPOUSE SHALL EXECUTE A SPOUSAL
CONSENT IN THE FORM ATTACHED HERETO.
(b) GIFTED SHARES. NOTWITHSTANDING SUBSECTION 4(a)
ABOVE, EMPLOYER SHALL BE PERMITTED TO GIFT TO SPEEDSL 971,000
SHARES OF LMKI COMMON STOCK, PROVIDED THAT SPEEDSL SHALL AGREE
IN WRITING NOT TO SELL MORE THAN 5,000 SHARES ON ANY DAY. LMKI
MAY TAKE REASONABLE MEASURES TO ENFORCE THE SALES LIMITATIONS
AGREED TO BY SPEEDSL.
(c) PURCHASE PRICE. IN CONSIDERATION OF EMPLOYEE'S
CONTRIBUTION OF THE CONTRIBUTED SHARES AND AS PAYMENT IN FULL
OF ALL OTHER AMOUNTS OWED TO EMPLOYEE, EMPLOYER SHALL PAY AN
AGGREGATE AMOUNT OF $1,000,000, WHICH AMOUNT SHALL BE ADDED TO
THE PROMISSORY NOTE. "
(d) INCREASE IN ATTORNEYS FEES. Upon execution of this
Amendment, LMKI shall pay to Employee $10,000.00 to
reimburse Employee for legal fees incurred in
connection with this Amendment.
(e) ATTORNEYS FEES. In the event of any litigation or
arbitration relating to or arising from this
Amendment or the Severance Agreement and Release, the
losing party in such litigation or arbitration shall
pay the attorneys fees and costs incurred by the
prevailing party.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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(f) Disparaging Publications. Employer agrees that it
will not publish any disparaging remarks regarding
Employee and will, for a period of one year from the
date hereof, use commercially reasonable efforts to
cause third parties to cease publishing any
disparaging remarks about Employee relating to his
past position or relationship with Employer.
2. NO OTHER CHANGES. Except as expressly provided in this Amendment,
the other terms and conditions of the Agreement remain the same and in full
force and effect.
3. REPRESENTATION OF LMKI. In connection with the repurchase of
Employee's shares of LMKI common stock and options, LMKI represents to Employee
that LMKI has not made any untrue statement of any material fact, or omitted any
material fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.
IN WITNESS WHEREOF, Employer and Employee have executed this Amendment
to be effective as of the date first written above.
"EMPLOYER": "EMPLOYEE":
LMKI, Inc.,
a Nevada corporation
By: /S/ Xxxxx Xxxxxx /s/ Xxxxxxx Xxxxxx
----------------------------------- -----------------------------------
Xxxxx Xxxxxx, Xxxxxxx Xxxxxx
CEO
[SIGNATURE PAGE TO FIRST AMENDMENT TO SEVERANCE AGREEMENT AND RELEASE]
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