Exhibit 7
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment to Employment Agreement is made and entered effective
November 29, 1999, by and between Xxxxxxx X. Xxxx ("Employee") and Optical
Security Group, Inc. ("the Company").
R E C I T A L S
A. Employee and the Company entered into an Employment Agreement
effective April 1, 1996, an Amendment to Employment Agreement effective March
31, 1998, and a further Amendment to Employment Agreement effective May 14, 1999
(together, the "Employment Agreement").
B. Among other things, the Employment Agreement provides for certain
termination payments, and a stock bonus of company shares in the event of
certain acquisition transactions in which the Company is involved.
C. Simultaneously with the execution of this Amendment to Employment
Agreement, the Company is entering into an Agreement and Plan of Merger (the
"Merger Agreement") with Applied Holographics, plc (the "Buyer"), pursuant to
which the Company will be merged (the "Merger") with a wholly-owned subsidiary
of the Buyer.
D. To facilitate the Merger, which constitutes an acquisition
transaction, the parties hereto have agreed to amend the Employment Agreement as
follows under the terms of this Amendment.
THEREFORE, in consideration of the recitals, the consideration referred
to below, the execution of transaction documents between the Buyer and the
Company, and other good and valuable consideration, the receipt and sufficiency
of which hereby is acknowledged, the parties agree as follows:
1. EMPLOYMENT TERMINATION. Employee's employment shall terminate
effective as of the later to occur of (a) the effective time of the Merger, and
(b) January 31, 2000. Upon such termination, the Company shall have no further
obligations to the Employee, other than the obligations (if not then paid in
full by the Company or the Buyer) to make the payments referred to in paragraphs
2, 4 and 5 below, any payment of
base salary through the date of termination and any rights to continuation of
benefits under the Employment Agreement which, by their terms, survive the
termination of the Employment Agreement. The Employee shall have the obligations
set out in the Employment Agreement which survive termination, including
obligations of confidentiality and non-competition.
2 BONUS. In recognition of Employee's service to the Company for the
years 1997, 1998 and 1999, Company shall pay to the Employee bonus compensation
in the amounts of $160,000, $200,000 and $240,000 respectively. The parties
agree and acknowledge that such bonus payments, including those for past years
(1) are contemplated in section 3-5 or the Employment Agreement, and the payment
of which has been limited by the Company's ability to pay such bonuses, and (2)
are reasonable compensation for Employee's services to the Company during such
periods of time, in view of his past experience and salary history, his pivotal
role in the management of the Company, and in view of his having been
compensated at less than a reasonable amount for that period of time.
3. TERMINATION PAYMENT. The termination payment provisions contained in
Section 12 of the Employment Agreement are deleted in their entirety.
4. OPTIONS. Employee acknowledges and agrees that in the Merger
Agreement, Buyer has agreed to pay to Employee, promptly after the effective
time of the Merger, the sum of $250,000 in full satisfaction of Employee's
options to acquire 147,000 shares of Company common stock. Employee acknowledges
that after receipt of such payment, Employee shall have no other rights against
the Company or Buyer with respect to such options.
5. STOCK BONUS. Employee acknowledges and agrees that in the Merger
Agreement, Buyer has agreed to pay to Employee, promptly after the effective
time of the Merger, the sum of $3,500,000 in full satisfaction of Employee's
right to a stock bonus provided under paragraph 3-5 of the Employment Agreement
and as otherwise allocated in the manner agreed to by Buyer, Seller and
Employee. Employee acknowledges that after receipt of such payment, Employee
shall have no other rights against the Company or Buyer with respect to such
stock bonus.
6. NO OTHER CHANGE. In all other respects, the Employment Agreement
shall remain unmodified and in full force and effect.
EXECUTED as of the day and year first above written.
EMPLOYEE:
/s/ XXXXXXX X. XXXX
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Xxxxxxx X. Xxxx
OPTICAL SECURITY GROUP, INC.
By: /s/ Xxxx X. Xxxxxxx
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Title: President
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