EMPLOYMENT AGREEMENT
Exhibit
99.3
EMPLOYMENT
AGREEMENT, dated as of the 9th of
December and effective as of the Effective Date (as defined below), by and
between SmartMetric Inc., a Nevada corporation (the “Company”), and Xxxxx
Xxxxxxxx (“Executive”).
W I T N E S E T
H:
WHEREAS,
Executive is currently serving as Chief Executive Officer and President of the
Company, and the Company wishes to assure itself of the services of Executive
for the period provided in this Agreement (“Agreement”);
and
WHEREAS,
Executive is willing to serve in the employ of the Company on the terms and
conditions hereinafter set forth.
NOW
THEREFORE, in consideration of the promises and the mutual covenants herein
contained, the Company and Executive, intending to be legally bound, hereby
agree as follows:
Section
1.
Employment.
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(a) Agreement to Employ. Upon the
terms and subject to the conditions of this Agreement, the Company hereby
employs Executive, and Executive hereby accepts employment by the
Company.
(b) Employment Period. For the
purposes of this Agreement, the Effective Date shall mean December 9, 2009. The
term of Executive’s employment shall initially be for a period of three (3)
years (the “Initial
Term”) commencing on the Effective Date; provided that such term may
be renewed by the mutual written agreement of Executive and the Company for
additional consecutive one (1) year terms (each, a “Renewal Term”),
unless, in either case, this Agreement shall have been earlier terminated in
accordance with Section 5 (the “Employment
Period”).
Section
2.
Position and
Duties.
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During
the Employment Period, Executive agrees to serve as Chairman of the Board of
Directors, President and Chief Executive Officer of the Company. Executive shall
render administrative and management services to the Company such as are
customarily performed by persons situated in a similar executive capacity and
shall perform such other duties not inconsistent with his title and office as
may be assigned to him by or under the authority of the Board of Directors of
the Company (“Board of
Directors”). Executive shall also perform the duties of Chief Software
Engineer and Electronic Engineer. During the Employment Period, Executive shall
devote a majority of his business time, skill and efforts to the business of the
Company. Notwithstanding the foregoing, Executive may (i) except as provided in
Section 6(a) hereof, (x) make and manage personal business investments of his
choice, (y) serve in any capacity with any civic, educational or charitable
organization, or any trade association, and (z) be involved in the management
and serve on the Board of Directors of any other company that does not conflict
with the business interests of SmartMetric, Inc., only upon obtaining approval
by the Board of Directors. Executive shall not be relocated from New York City
without Executive’s consent. If in the event the Executive is relocated to a
place other than New York for a period longer then one month and not exceeding
three (3) years then the company will pay all expenses for relocation including
rent/or mortgage payments for the duration of the relocation. Executive shall
have such authority as is necessary or appropriate to carry out his assigned
duties.
Section
3.
Compensation.
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The
Company shall pay Executive an annual salary of $170,000. In addition the
Executive may earn bonus amounts payable in cash, to be paid to the Executive
within sixty (60) days following the year-end audit, based upon the satisfaction
of performance criteria that will be established by a committee of the Board of
Directors (the “Compensation
Committee”) in its discretion, and subject to the approval of the Board
of Directors (or, if the Compensation Committee is not yet established, by the
Board of Directors). The Compensation Committee shall be comprised of a minimum
of three (3) directors, a majority of whom are independent. Such performance
criteria will include corporate performance goals consistent with the Company’s
business plan, and shall include a minimum of a 2% override on any
revenues generated to the Company on the Patent(s) that have been assigned to
the Company either directly by Executive, or by Applied Cryptography, Inc.,
payable once the Company achieves $100,000 in gross revenues from the
Patent. With regard to all other compensation, the final
determination as to the actual corporate and individual performance against the
pre-established goals and objectives, and the bonus amounts payable in
relationship to such performance, shall be made by the Compensation Committee in
its sole discretion. If this Agreement is renewed in accordance with Section
1(b), the Compensation Committee shall review Executive’s salary in light of the
performance of Executive and the Company, and may, in its discretion, increase
(but not decrease) such salary by an amount it determines to be appropriate.
Executive’s annual salary payable hereunder, is referred to herein as “Salary”.
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Section
4.
Benefits.
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(a) Vacations. Executive shall be
entitled to up to three (3) weeks’ paid vacation and up to 21 days paid
religious holidays (in addition to the holidays the Company extends, as a matter
of policy, to its employees) during each year of the Employment Period which,
with regard to vacation time shall be scheduled in Executive’s discretion,
subject to and taking into account the business exigencies of the Company, and
with regard to religious holidays will be taken at the appointed times. Unused
vacation (but not religious holidays) may be accrued from year to year in
accordance with the Company’s policy as in effect from time to time with regard
to executive employees.
(b) Business Expenses. The
Company shall pay or reimburse Executive for all documented reasonable business
expenses incurred by Executive in the performance of Executive’s duties
hereunder, in accordance with the Company’s policies.
(c) Other Benefits. During the
Employment Period, Executive shall receive such other life insurance, pension,
disability insurance, health insurance and sick pay benefits and other benefits
which the Company extends, as a matter of policy, to its executive employees
and, except as otherwise provided herein, shall be entitled to participate in
all deferred compensation and other incentive plans of the Company on the same
basis as other like employees of the Company.
(d) Indemnification. The Company
shall, to the maximum extent permitted by applicable law and the Company’s
certificate of incorporation or its bylaws, indemnify Executive and hold
Executive harmless from and against any claim, loss or cause of action arising
from or out of Executive’s performance as an officer, director or employee of
the Company provided
that Executive acted in good faith, was not negligent and did not breach any
duty owed to the Company. If any claim is asserted hereunder for which Executive
reasonably believes in good faith he is entitled to be indemnified, the Company
shall pay Executive’s reasonable legal expenses (or cause such expenses to be
paid), as may be required but no less frequently than on a quarterly basis,
provided that Executive
shall reimburse the Company for such amounts, plus simple interest thereon at
the 90-day United States Treasury Xxxx rate as in effect from time to time,
compounded annually, if Executive shall be found by a final, non-appealable
order of a court of competent jurisdiction not to be entitled to
indemnification.
(e) Key-Person Life Insurance.
The company may purchase “key-person” life insurance policies on the Executive’s
life in such amounts and of such types as is determined by the Board of
Directors. Executive shall cooperate fully with the Company in obtaining such
insurance and shall submit to such physical examinations and provide such
information as is reasonably required to obtain and maintain such policies.
Neither Executive nor his successor-in-interest or estate shall have any
interest in any such key-person policies so obtained.
Section
5.
Termination of
Employment.
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(a) Early Termination of the Employment
Period. Executive’s employment under this Agreement may be terminated in
any of the following manners:
Executive
may, upon written notice to the Company, terminate employment with the
Company at any time for “Good Reason”
(as defined in Section 5(e)) it being agreed that any such termination,
although effected by Executive shall not constitute a Voluntary
Termination;
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Executive’s
employment may, upon written notice to Executive, be terminated by the
Company at any time for “Cause” (as
defined in Section 5(d));
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This
Agreement shall terminate automatically upon Executive’s
death;
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The
Company may, upon written notice to Executive, terminate this Agreement
upon Executive’s Disability. As used herein, the term “Disability”
shall mean a determination that Executive suffers from illness or other
physical or mental impairment that prevents Executive from substantially
performing his duties for a period of 60 days during any six (6) month
period during the Employment Period or for 90 days during any twelve (12)
month period during the Employment Period. The determination of whether
(and, if appropriate, when) a Disability has occurred shall be made by a
majority of the Board of Directors of the
Company.
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Any
termination pursuant to this Section 5(a) shall be communicated to the
non-terminating party by a “Notices” in
accordance with Section 10.
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(b) Benefits Payable Upon
Termination.
(i)
Following the end of the Employment Period pursuant to any
manner described in Section 5(a) or for any other reason, the Company
shall pay to Executive (or, in the event of his death, his surviving
spouse, if any, or his estate): (A) any Salary earned, but unpaid, for
services rendered to the Company on or prior to the date on which the
Employment Period ended, and (B) amounts which are vested or which
Executive is otherwise entitled to receive under the terms of or in
accordance with any plan, policy, practice or program of, or any contract
or agreement with, the Company at the date the Employment Period ends. In
addition, the Executive shall be eligible for insurance coverage’s
mandated under COBRA and for any benefits for which Executive, as a former
employee, is eligible under the terms of the welfare plans, programs and
arrangements of the Company. The Corporation shall pay the first twelve
(12) months of COBRA premiums for Executive’s coverage under the Company’s
group medical insurance plan.
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(ii)
Vested benefits referred to in Section 5(b)(i) shall be
payable in accordance with the terms of the plan, policy, practice,
program, contract or agreement under which such benefits have
accrued.
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(c) Continuing Obligations. After
receipt of written notice of termination, but prior to the effective date of
such termination, Executive shall continue to perform his duties under this
Agreement unless specifically instructed to discontinue such performance. In the
event of termination, Executive and the Company shall remain liable for their
respective obligations accrued under this Agreement prior to the effective date
of termination.
(d) Definition of Cause. For
purposes of this Agreement, “Cause” means
Executive’s:
(i)
persistent and repeated refusal, failure or neglect to
perform the material duties of his employment under this Agreement (other
than by reason of Executive’s physical or mental illness or impairment),
provided that
such Cause shall be deemed to occur only after the Corporation gave
written notice thereof to Executive specifying in reasonable detail the
conduct constituting Cause, and Executive failed to cure and correct his
conduct within thirty (30) days after such
notice;
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(ii)
committing any act of fraud or embezzlement, provided that such
Cause shall be deemed to occur only after the Corporation gave written
notice thereof to Executive specifying in reasonable detail the instances
of such conduct, and Executive had the opportunity to be heard at a
meeting of the Board of Directors;
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(iii)
breach of clauses (a), (b) or (c) of Section 6 hereof that
results in a material detriment to the
Company;
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(iv)
conviction of a felony (including pleading guilty to a
felony); or
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(v)
habitual abuse of alcohol or
drugs.
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(e) Definition of Good Reason.
For purposes of this Agreement, “Good Reason”
means:
(i)
any material reduction in Executive’s authority, duties or
responsibilities;
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(ii)
any material change in Executive’s reporting lines or removal
of the Executive from his principal positions as of the beginning of the
Employment Period (other than a promotion);
or
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(iii)
any material failure by the Company to pay or provide the
compensation and benefits under this Agreement; provided that, in each
such event, the Executive shall give the Company notice thereof which
shall specify in reasonable detail the circumstances constituting Good
Reason, and there shall be no Good Reason with respect to any such
circumstances cured by the Corporation within thirty (30) days after such
notice.
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Section
6.
Noncompetition and
Confidentiality.
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(a) Noncompetition. During the
Employment Period and for one year thereafter, Executive shall not,
without the consent of the Company, assist or become associated with any person
or entity, whether as a principal, partner, employee, consultant or shareholder
(other than as a holder of not in excess of 5% of the outstanding voting shares
of any publicly traded company purchased in open market transactions) that is
actively engaged in the business of applying Smartcard technology to Internet
access and internet e-commerce solutions.
(b) Confidentiality and Company
Property. Executive agrees that he will not at any time during the
Employment Period and for five (5) years thereafter for any reason, in any
fashion, form, or manner, either directly or indirectly, divulge, disclose or
communicate to any person, firm, corporation or other business entity, in any
manner whatsoever, any confidential information or trade secrets concerning the
business of the Company, including, without limiting the generality of the
foregoing, the techniques, methods or systems of its operation or management,
any information regarding its financial matters, research and development data
and materials, and intellectual property rights, including, without limitation,
patents, patent applications, patent rights, trademarks, trademark applications,
trade names, service marks, service xxxx applications, copyrights, copyright
applications, databases, algorithms, computer programs and other software,
know-how, trade secrets, proprietary processes and formulae, inventions, trade
dress, logos and designs or any other material information concerning the
business of the Company (including customer lists), its manner of operation, its
plans or other material data (the “Confidential
Information”). The provisions of this Section 6 shall not apply to (i)
information disclosed in the performance of Executive’s duties to the Company
based on his reasonable good faith belief that such a disclosure is in the best
interests of Company (ii) information that is, at the time of the disclosure,
public knowledge; (iii) information disseminated by the Company to third parties
in the ordinary course of business; (iv) information lawfully received by
Executive from a third party who, based upon inquiry by Executive, is not bound
by a confidential relationship to the Company; or (v) information disclosed
under a requirement of law or as directed by applicable legal authority having
jurisdiction over Executive and (vi) information, ideas or inventions developed
by Executive prior to his employment by the Company.
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During
and after the term of employment hereunder, the Executive agrees not to remove
from the Company’s premises any documents, records, files, notebooks,
correspondence, computer printouts, computer programs, computer software, price
lists, microfilm, or other similar documents containing confidential
information, including copies thereof, whether prepared by him or others, except
as his duties shall require, and in such cases, will promptly return such items
to the Company. Upon termination of the Executive’s employment with the Company,
all such items including summaries or copies thereof, then in his possession,
shall be returned to the Company immediately. The Executive agrees to the return
of such items, which shall be a requirement in order for him to receive, at the
time of such termination, or any time thereafter, any compensation due him
pursuant to any paragraphs hereunder or otherwise;
(c) Patents
and Inventions. To date, Executive owns all of the rights, title and
interest in and to all inventions, ideas, disclosures and improvements, whether
patented or unpatented, and copyrightable material, made or conceived by
Executive, solely or jointly, or in whole or in part, during the Employment
Term. The foregoing includes all adoptions and improvements to the patent and
the underlying technology (the “Patent”) that, until this date, were subject of
a certain license agreement between Executive and the Company dated as
of August 1, 2004 (the “License Agreement”) pursuant to which
Executive has granted the Company an exclusive royalty license to distribute,
sell develop and otherwise utilize the Patent which consists of a business
system concept involving the use of a Smartcard to facilitate interconnectivity
to the Internet, storage of personal information and form filling and
transaction and identity verification functions. Executive will
terminate such License upon his receipt of Series B Preferred Stock, and will
assign the Patent to the Company in accordance with the terms outlined in a
certain Assignment Agreement dated December __, 2009.
Executive
hereby grants to the Company during the Employment Term a right of first refusal
to be the licensee of or to purchase on terms to be mutually agreed upon all of
the rights, title and interest of Executive in and to all other inventions,
ideas, disclosures and improvements, whether patented or unpatented, and
copyrightable material, made or conceived by Executive, in whole or in part,
during the Employment Term which (i) relate to methods, apparatus, designs,
products, processes or devices sold, leased, used or under construction or
development by the Company or (ii) otherwise relate to or pertain to the
business, functions or operations of the Company. However, under no
circumstances shall Executive utilized, sell, transfer, license or otherwise
hypothecate any such patents, inventions, ideas, disclosures, improvements
and/or copyrightable materials so as to compete with the business or products of
the Company.
(d) Non-Solicitation of
Employees. During the Employment Period and for five years thereafter,
Executive will not directly or indirectly induce any employee of the Company or
any of its subsidiaries or affiliates to terminate employment with such entity,
and will not directly or indirectly, either individually or as owner, agent,
employee, consultant or otherwise, employ or offer employment to any person who
is or was employed by the Company or a subsidiary thereof, unless such person
shall have ceased to be employed by such entity for a period of at least six
months.
(e) Injunctive Relief with Respect to
Covenants. Executive acknowledges and agrees that the covenants and
obligations of Executive with respect to Noncompetition, inventions,
confidentiality and Company property contained in this Section 6 relate to
special, unique and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company irreparable
injury for which adequate remedies are not available at law. Therefore,
Executive agrees that the Company shall be entitled to an injunction,
restraining order or such other equitable relief as a court of competent
jurisdiction may deem necessary or appropriate to restrain Executive from
committing any violation of the covenants and obligations contained in this
Section 6. These injunctive remedies are cumulative and are in addition to any
other rights and remedies the Company may have at law or in equity.
Section
7.
No
Conflict With Prior Agreements: Due
Authorization.
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Executive
represents to the Company that neither Executive’s execution of this Agreement
or commencement of employment hereunder nor the performance of Executive’s
duties hereunder conflicts with any contractual commitment on Executive’s part
to any third party. The Company represents to Executive that it is fully
authorized and empowered by action of the Company’s Board of Directors to enter
into this Agreement and that performance of its obligations under this Agreement
will not violate any agreement between it and any other person, firm or other
entity. Executive agrees that by execution of this Agreement any other
employment agreements between Executive and the Company and any of its
subsidiaries, are hereby terminated and neither party shall have any further
rights or obligations thereunder.
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Nothing
herein shall be construed to require Executive to use or disclose any
information that he is prohibited from using or disclosing as a result of legal
or contractual obligations.
Section
8.
Post-Termination
Obligations.
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(a)
Notwithstanding anything else provided in this Agreement, all
payments and benefits to Executive under this Agreement shall be subject to
Executive’s compliance with clause (b) of this Section 8 during the term of this
Agreement and for one full year after the expiration or termination
hereof.
(b)
Executive shall, upon reasonable notice, furnish such information
and assistance to the Company as may reasonably be required by the Company in
connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become, a party; provided that the Company
shall be required to reimburse Executive for the reasonable value of his time in
connection therewith and for any out-of-pocket costs attributable
thereto.
Section
9.
Source of
Payments.
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All
payments provided in this Agreement shall be timely paid in cash or check by the
Company.
Section
10.
Miscellaneous.
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(a) Survival. Sections 4(d), 5,
6, 7 and 8 shall survive the termination hereof.
(b) Binding Effect. This
Agreement shall be binding on the Company and any person or entity which
succeeds to the interest of the Company (regardless of whether such succession
occurs by operation of law) by reason of the sale of all or a portion the
Company’s stock, a merger, consolidation, or reorganization involving the
Company or a sale of the assets of the business of the Company (or portion
thereof) in which Executive performs a majority of his services. This Agreement
shall also inure to the benefit of Executive’s heirs, executors, administrators
and legal representatives.
(c) Assignment. Neither this
Agreement nor any of the rights or obligations hereunder shall be assigned or
delegated by any party hereto without the prior written consent of the other
party, except that the Company may delegate to any of its direct or indirect
wholly owned subsidiaries its obligations to provide compensation and benefits
hereunder, provided no
such delegation shall relieve the Company of its obligations
hereunder.
(d) Entire Agreement. This
Agreement constitutes the entire agreement between the parties hereto with
respect to the matters referred to herein, and supersedes any other employment
agreement Executive may have with the Company or any subsidiary of the Company
and no other agreement, oral or otherwise, shall be binding between the parties
unless it is in writing and signed by the party against whom enforcement is
sought. There are no promises, representations, inducements or statements
between the parties other than those that are expressly contained herein.
Executive acknowledges that he is entering into this Agreement of his own free
will and accord, and with no duress, that he has been represented and fully
advised by competent counsel in entering into this Agreement, that he has read
it and that he understands it and its legal consequences. No parol or other
evidence may be admitted to alter, modify or construe this Agreement, which may
be altered, modified or amended only by a writing signed by the parties
hereto.
(e) Severability; Reformation. In
the event that one or more of the provisions of this Agreement shall become
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby. In the event that any of Sections 6(a), (b) or (c) is not
enforceable in accordance with its terms, Executive and the Company agree that
such Section shall be reformed to make such Section enforceable in a manner
which provides the Company the maximum rights permitted at law.
(f) Waiver. Waiver by any party
hereto of any breach or default by the other party of any of the terms of this
Agreement shall not operate as a waiver of any other breach or default, whether
similar to or different from the breach or default waived. No waiver of any
provision of this Agreement shall be implied from any course of dealing between
the parties hereto or from any failure by either party hereto to assert its or
his rights hereunder on any occasion or series of occasions.
(g) Notices. Any notice required
or desired to be delivered under this Agreement shall be in writing and shall be
delivered personally against receipt, by courier service or by registered mail,
return receipt requested, and shall be effective upon actual receipt by the
party to which such notice shall be directed, and shall be addressed as follows
(or to such other address as the party entitled to notice shall hereafter
designate in accordance with the terms hereof):
(i)
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If
to the Company, to:
SmartMetric
Inc.
0000
XXXXXXX XXXXXX
XXXXX
000 XXXXXXXX XX 00000
With
a copy to:
Xxxxxx
Xxxxxxx
Sichenzia
Xxxx Xxxxxxxx Xxxxxxx, LLP
00
Xxxxxxxxxxx Xxxx
Xxxxxxxx,
XX 00000
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(ii)
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If
to Executive, to:
Xxxxx
Xxxxxxxx
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(h) Excise Tax Limit.
Notwithstanding anything in this Agreement to the contrary, in the event it
shall be determined that any payment or distribution by the Company or any other
person or entity to or for the benefit of Executive is a “parachute payment”
(within the meaning of Section 280G of the Internal Revenue Code, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise) (a “Payment”) in
connection with, or arising out of, his employment with the Company or a change
in ownership or effective control of the Company (within the meaning of Section
280G of the Internal Revenue Code, and would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code) (the “Excise Tax”), the
Payments shall be reduced to the extent necessary so that such remaining Payment
would not be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code.
(i) Headings. Headings to
paragraphs in this Agreement are for the convenience of the parties only and are
not intended to be part of or to affect the meaning or interpretation
hereof.
(j) Counterparts. This Agreement
may be executed in counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.
(k) Withholding. Any payments
provided for herein shall be reduced by any amounts required to be withheld by
the Company from time to time under applicable Federal, State or local income or
employment tax laws or similar statutes or other provisions of law then in
effect.
(l) Arbitration; Legal Fees.
Except as provided in this Agreement any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
New York, New York in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator’s award in
any court having jurisdiction. The Company shall reimburse Executive for all
reasonable legal fees and costs and other fees and expenses which Executive may
incur in respect of any dispute or controversy arising under or in connection
with this Agreement; provided, however, that the Company
shall not reimburse any such fees, costs and expenses if the fact finder
determines that the action brought by Executive was frivolous or in the event
judgment is entered against Executive.
(m)
GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
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IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer, and Executive has hereunto set his hand as of the day
and year first above written.
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By:
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/s/ | |
Name: Xxxxx Xxxxxxxx | |||
Title: President and CEO | |||
EXECUTIVE
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By:
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/s/ | |
Xxxxx
Xxxxxxxx
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