EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit
10.14
This
Executive Employment Agreement (“Agreement”) is made by and between Xxxxxxxxxxx
X. Xxxxxx (the “Employee”) and LaserCard Corporation, a Delaware corporation
(the "Company") (collectively the “Parties”) effective as of the later of the
dates it is signed on behalf of the Employee and the Company as indicated under
Authorized Signatures below (the “Effective Date”).
RECITAL
The
Employee is currently employed by the Company as its Chief Operating
Officer. The Employee and the Company have entered into various
agreements that affect the terms and conditions of the relationship between
the
Parties, including without limitation an agreement entitled Employee Agreement
dated November 29, 1995 (the “Intellectual Property Agreement”) attached as
Exhibit D and the Company’s Employee Handbook and the policies concerning such
matters as xxxxxxx xxxxxxx and foreign corrupt practices. The Employee and
the
Company wish to continue this relationship subject to the terms and conditions
contained in this Agreement.
AGREEMENT
Based
upon the facts and premises contained in the above RECITAL and in consideration
of the mutual promises below, and intending to be legally bound, the Company
and
the Employee agree as follows:
1.
Employment.
The
Company shall employ the Employee,
and the Employee shall serve the Company as Chief Operating
Officer.
2.
Duties
and Responsibilities.
The
Employee's primary duties and
responsibilities will be those generally associated with the position of Chief
Operating Officer. The Employees shall perform such other
duties as he may be assigned from time to time by the Company’s Chairman of the
Board, Vice Chairman of the Board, CEO, or its Board of Directors.
3.
Compensation.
3.1.
Base
Salary.
The
Employee is to receive base salary
to be paid to the Employee through the Company’s normal
payroll. Employee’s current base salary is at the per annum
rate of three hundred five thousand eleven dollars ($305,011). The Company acting through
its Compensation Committee will evaluate the base salary of the Employee on
an
annual basis and may increase or decrease the Employee’s then current salary
rate, provided that a reduction may result in the Employee’s ability to resign
for Good Reason as defined in Exhibit A.
3.2.
Bonuses.
At
the discretion of the Company’s board
of directors, the Company may institute a management bonus plan in which
Employee will participate along with other members of the Company’s senior
management. The amount and terms of the Employee’ or any other
incentive compensation plan or program may be changed prospectively at the
sole
discretion of the Company at any time.
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3.3.
Stock
Options and Other Equity Awards.
The
Employee has been granted multiple
stock options and one restricted stock award, all of which remain in full force
and effect according to their terms, and the Employee may in the future be
issued further stock options or shares of restricted stock or other equity
awards. The Company has adopted a policy guideline attached as Exhibit C
describing how the board of directors intends to exercise its judgment to make
arrangements as to stock options should certain mergers and acquisitions
involving the Company occur. The Company and Employee agree,
notwithstanding such policy guideline, that unless otherwise agreed to by both
the Company and Employee:
a. In
the event that the
Company is acquired (that is, there is a merger or sale of all or substantially
all of its assets such that thereafter Company stockholders prior to such event
own less than half of the outstanding voting stock of the surviving entity
by
virtue of their Company shares) then unless the Employee resigns as
an employee of the successor to the Company (whether for any or no reason)
within four (4) months after such acquisition, then all of Employee’s unvested
options or restricted stock shall vest in full on the first to occur of the
date
four (4) months after such acquisition and the date of a termination of the
Employee as an employee of the successor to the Company (for any or no
reason).
b. In
the event that the
Company acquires all or substantially all of the stock or assets of another
entity (whether by merger or otherwise) and either an employee at such other
entity takes Employee’s position within three months after such acquisition, or
the Company decides to hire a new person to fill Employee’s position within six
months after such acquisition, then all of Employee’s unvested options or
restricted stock shall vest in full if the Employee resigns or is terminated
within the following two months for any or no reason.
Section
3.3 a
pertains to an “Acquisition of the
Company” and Section 3.3b pertains to an “Acquisition by the
Company”.
4.
Benefits
and
Expenses.
4.1.
Benefit
and
Insurance Programs.
The
Employee will be entitled to
participate in all Company sponsored benefit and insurance programs
to the extent that such benefits are offered generally to the Company’s
employees in similar positions, with similar seniority.
4.2.
Expenses.
The
Company shall reimburse the
Employee, in accordance with the Company's policy, for all reasonable expenses
incurred by the Employee in connection with the performance of the Employee's
duties, upon presentation of appropriate vouchers covering such
expenses.
5.
Paid
Time
Off.
Employee
will be entitled to paid time
off (vacation, sick time, paid holidays, etc.) to the extent that such benefits
are offered generally to the Company's employees in similar positions, with
similar seniority.
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6.
Term
and
Termination.
6.1.
Term.
The
term of this Agreement (the “Term”)
begins on the Effective Date and expires on the date two (2) years after the
Effective Date; provided, however, that:
i. if
there has been an Acquisition of or
by the Company prior to the expiration of the Term, then this Agreement shall
not expire until two (2) years after such Acquisition;
ii. if
the employment of
Employee has been terminated during the Term, then the provisions of Sections
6.3 through 6.5 and Sections 7 and 8 shall continue for two (2) years after
such
employment termination; and
iii. if
neither (i) or (ii)
apply, then at the request of either party, the parties will confer during
the
thirty (30) days prior to the expiration of the Term to determine if they wish
to extend the Term of this Agreement and if so the terms and conditions under
which they would agree to such an extension. Notwithstanding the
foregoing, neither party has any obligation to extend the Term of this
Agreement.
6.2. At-will
Employment.
The
Employee’s employment is “at-will.”
This means that either the employee or the Company may terminate the Employee’s
employment under this Agreement at any time, with or without cause and with
or
without notice.
6.3.
Termination
as a Result of Death or Disability; Resignation without Good Reason; or
Termination for Cause.
If
the Employee’s employment terminates
during the Term of this Agreement as a result of the death or disability of
the
Employee1,
the Employee resignation without Good Reason (as defined in Exhibit A) or
termination by the Company for
Cause (as defined in Exhibit A) then the Company
shall
have no further obligations to the
Employee other than the payment of compensation earned though the last day
of
employment.
6.4.
Termination
Without Cause or Resignation for Good Reason.
If
during the Term of this Agreement the
Employee’s employment is terminated without Cause or if the Employee resigns for
Good Reason, the Company shall pay the Employee all compensation earned though
the last day of employment (Such amounts shall be paid upon termination) in
addition to the severance benefits described below.
6.4.1.
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Severance: For
a period
of twelve (12) months following the termination of employment (the
“Severance Period”), the Company shall continue to pay the
Employee on a monthly basis one-twelfth of the Employee’s per annum base
salary as determined on his last day of employment. Base salary does not
include, for example, overtime, bonuses, commissions, shift premiums
or
differentials, compensation associated with employee stock options,
reimbursements, sales commission awards, employee benefits, expense
allowances, or any other incidental or additional
compensation. Severance pay shall be made less any and all
applicable deductions and withholdings, required and/or permitted
by
applicable law.
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1
Based on the nature of the Employee’s position, the Parties agree that, if the
Employee is unable, with reasonable accommodation, to perform the essential
functions of his position for 60 consecutive days, continuing his employment
under this Agreement would result in undue hardship to the Company and the
Company may properly terminate his employment.
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6.4.2.
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COBRA: In
addition,
if the Employee elects to continue health insurance coverage
under
COBRA, then so long as the
Employee either is receiving severance payments under Section 6.4.1,
or
has received twelve (12) payments under Section 6.4.1, and is paying
COBRA
premiums, the Company will pay the employee a monthly payment equal
to the amount that was paid by the Company prior the termination
of
employment for up to a maximum of 18 months. The Employee will not
be
reimbursed for the portion of the premium which had been paid by
the
Employee prior to the termination of employment or for any administrative
fees or increases in premiums. The Employee is solely
responsible for filing any necessary paperwork for COBRA coverage
and
payment of all premiums. The Company’s duty to make these
payments will cease if Employee loses eligibility for COBRA continuation
coverage because Employee becomes eligible for group coverage from
another
employer. The employee (and/or Employee’s eligible
dependent(s)), shall have an obligation to inform the Company if
the
Employee or such dependants are no longer eligible for COBRA continuation
coverage, as is generally the case when the Employee receives group
coverage from another employer while receiving COBRA continuation
coverage. The period of such Company-reimbursed COBRA
continuation coverage shall be considered part of Employee’s (and
Employee’s eligible dependents’) COBRA coverage entitlement period, and
will, for tax purposes, be considered taxable income to
Employee.
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6.4.3.
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Options: The
fact that the
Employee is receiving severance shall have no effect on the Employee’s
options. Thus, the terms of Employee’s option agreements,
without impact of this Agreement except as provided by Section 3.3
above,
shall govern Employee’s options, including the effect of employment
termination on the options’ vesting and
expiration.
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6.5.
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Conditions
to Payment of the Severance.
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6.5.1.
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Execution
of Release as a Condition Precedent: As a condition
precedent to
receipt of the severance benefits described in Sections 6.4.1 and
6.4.2,
the Employee must execute and deliver to the Company a full general
release of all claims, known and unknown, in a form acceptable to
the
Company, including a waiver of the benefits of Section 1542 of the
California Civil Code. If the Employee does not execute and
deliver the Release within twenty-one (21) days of the date of termination
which Employee does not rescind during the following seven (7) days,
the
Company shall have no further obligation to provide the Employee
with any
severance benefits. The first payments
under Sections 6.4.1 and 6.4.2 shall not be due or payable until
such
seven-day period has expired without rescission of the
release.
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6.5.2.
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Non-Solicitation:
If, during the Severance Period,
the Employee directly or indirectly solicits or attempts to
solicit any employee or any full-time independent contractor or consultant
of the Company to perform services elsewhere then all severance benefits
described under Sections 6.4.1 and 6.4.2 shall immediately
cease.
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4
6.5.3.
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New
Position: The Employee’s severance
benefits
under Section 6.4.1 shall cease if Employee becomes an employee of
or
otherwise renders services to any business and the Employee agrees
to
promptly notify the Company when the Employee begins to so render
services. However, if the Board of Directors of the Company
determines that the services that Employee is going to perform for
the
other business do and will not involve the design, development, or
manufacture of plastic cards for secure data storage, whether they
utilize
contact or contactless chips, optical or magnetic stripes, holograms,
or
other means for data storage (the “Company’s Business”), then the Company
agrees to act affirmatively upon a request from Employee for the
severance
benefits under Section 6.4.1 to continue. If a court or
arbitrator, as the case may be, should for some reason require the
Company
to continue Employee’s severance benefits even if the Company’s Board of
Directors determines that Employee’s services involve the Company’s
Business, then such benefits shall continue only to the extent a
court or
arbitrator finds that the Employee has demonstrated by clear and
convincing evidence that Employee’s services have not already and would
not in the future utilize the Company’s confidential
information.
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6.5.4.
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Surviving
Terms: If, during the Severance period, the Employee violates any
of the terms of this Agreement or any other Agreement between the
Parties,
including without limitation the Intellectual Property Agreement,
then the
severance benefits described under Section 6.4.1 and 6.4.2 shall
immediately cease.
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6.5.5.
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Continued
Assistance: During the Severance Period, the Employee agrees to
respond to reasonable requests for information and provide reasonable
levels of assistance on issue related to Employee’s work with the Company
without further compensation. The Employee’s obligation for
reasonable assistance shall not exceed twenty hours during the first
week
following termination, ten hours per week during the next four weeks
and
five hours per month thereafter. If the Employee refuses to
provide such information and assistance at reasonable times and after
reasonable notice, then the severance benefits described under Section
6.4.1 and 6.4.2 shall
immediately cease.
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7.
Tax
Provisions
The
tax provisions set forth in Exhibit
E are hereby incorporated by reference as though fully set
forth.
8.
Miscellaneous.
The
Employee and the Company acknowledge
and agree that the Company may require an Employee to whom notice of termination
is given to leave the Company premises immediately, and may bar the Employee
from unescorted access to the Company premises, so as to enable the Company
to
secure Company and customer records and preserve Company and customer trade
secrets and proprietary information.
Upon
termination of the Employee’s employment for any reason, the Employee shall be
deemed to have resigned voluntarily from all offices and other employment
positions held with the Company, and from the board of directors, if the
Employee was serving in any such capacities at the time of
termination.
The
Employee will cooperate with the Company in the winding up or transferring
to
other employees of any pending work or projects. The Employee will
also cooperate with the Company in the defense of any action brought by any
third party against the Company that relates to Employee’s employment with the
Company.
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Payments
and benefits provided under this Agreement may taxable under the laws of the
United States and the State of California and will be subject to all required
withholdings and court ordered wage assignments and/or
garnishments.
This
Agreement shall be binding on the
parties hereto and on each of their heirs, executors, administrators,
successors, and assignees.
The
invalidity or unenforceability of any provision(s) of this Agreement under
particular facts and circumstances will not affect the validity or
enforceability either of other provisions of this Agreement or, under other
facts and circumstances, of such provision(s). In addition, such
provision(s) will be reformed to be less restrictive if under such facts and
circumstances they would then be valid and enforceable.
Notices
shall be given to the parties at its executive office, in the case of the
Company, and at the address in the Company’s payroll records for the
Employee. Notices shall be in writing and deemed given when received
in person or one day after being sent by overnight or four days after being
sent
by certified mail, return receipt requested. Any party may change its
address by giving notice to the other party of a new address in accordance
with
the foregoing provisions.
Nothing
in this Agreement shall limit
the right of the Officers, the Board of Directors and the shareholders of
Company to manage the business affairs of the Company, including, without
limitation, matters relating to personnel policies and procedures benefits
and
conditions of work, or give to the Employee any claim against Company with
respect to any decision relating to the conduct of the business of Company,
so
long as that decision is not made in breach of any of the Company’s express or
implied covenants or obligations under this Agreement.
Previous
and contemporaneous agreements
between the parties that do not conflict with the terms of this Agreement will
remain valid and binding between the Parties, including without limitation
the
Arbitration Agreement attached hereto as Exhibit B and the Intellectual Property
Agreement. However, this Agreement
contains a
complete statement of the agreements between the Parties with respect to the
matters it addresses and it supersedes and replaces any prior understandings
or
agreements regarding those matters. To the extent that the provisions
of any other agreement conflict with or are inconsistent with the provisions
of
this Agreement, the terms of this Agreement shall govern. This Agreement may
be
modified or amended only in writing, signed by both Parties.
This
Agreement shall be governed by and
construed in accordance with the laws of the State of California.
The
Employee expressly acknowledges and
agrees that Company’s rights under this Agreement may be transferred to or
assigned by Company to a successor employer.
In
the event of any arbitration or other
legal proceeding, the prevailing party shall recover his or its reasonable
attorneys' fees, except expenses, and costs, excluding arbitration
fees.
[Remainder
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Blank]
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The
Employee hereby authorizes the
Company to disclose this Agreement and his responsibilities hereunder to any
person or entity, including, without limitation, future employers or
clients.
AUTHORIZED
SIGNATURES
In
order
to bind themselves to this Executive Employment Agreement, the Employee and
a
duly authorized representative of the Company have signed their names below
on
the dates indicated.
The
Employee
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The
Company
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LaserCard
Corporation
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/s/
Xxxxxxxxxxx X. Xxxxxx
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By
/s/ Xxxxxxx X. Xxxxxxx,
CEO
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Xxxxxxxxxxx
X. Xxxxxx
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Signature
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Printed
Name Xxxxxxx
Xxxxxxx
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Date
Executed: January 4, 2008
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Date
Executed: January 4,
2008
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7
Exhibit
A
Definitions
GOOD
REASON shall
mean: (i) a material breach of the Agreement by the Company, (ii) a material
reduction of the Employee’s Base Salary, except that neither a
reduction proportionate to reductions imposed on all other members of
the Company’s executive management as part of a cost reduction effort nor a
reduction of the Employee’s base salary due to a change of duties as a result of
disability will be a Good Reason for termination, or (iii) the Employee’s duties
with the Company are materially reduced (provided that if there is an
Acquisition of or by the Company (as defined in Section 3.3) and the Employee’s
duties largely continue with respect to the business of the Company prior to
such acquisition, then such acquisition shall not be deemed to be a material
reduction in Employee’s duties. The Employee shall give notice to the Company
that the Employee intends to resign for one of the Good Reasons listed above,
detailing such Good Reason with specificity. If the Employee gives
notice to the Company, no later than ninety (90) days after the initial
existence of one or more of the conditions constituting Good Reason listed
above
arising without his consent, that the Employee intends to resign for one of
the
Good Reasons listed above, detailing such Good Reason with specificity, and
if
the Company does not remedy the situation so as to eliminate the Good Reason
within two (2) weeks of receiving such notice, then any resignation by the
Employee from the Company within the one (1) month period beginning with the
delivery of the notice shall be deemed a Resignation for Good
Reason.
CAUSE
is defined to
mean a good faith determination by the Company that the Employee has engaged
in
any of the following: 1) theft, misappropriation or embezzlement of Company
property, property of an officer, shareholder, director or employee, or property
of any customer or supplier of the Company; 2) any conduct which constitutes
unfair competition with the Company; 3) any breach of a contractual or fiduciary
duty to the Company or a material breach of a material Company policy not cured
within five days of the Company giving the Employee notice of the breach; 4)
material dishonesty in the performance of the Employee’s duties for the Company
or fraud against the Company; 5) materially exceeding the scope of
the Employee's authority as delegated or limited from time to time by the
Company; 6) inducement of any customer, consultant, employee or supplier of
the
Company to breach any contract with the Company or cease its business
relationship with the Company; 7) refusal to substantially follow the
lawful instructions of the board of directors, Chairman or Vice Chairman of
the
Board, or CEO; 8) failure to devote full-time effort to serving the
Company which is not cured within sixty (60) days of notice; 9)
conviction of a crime punishable
as a felony; or 10) death or disability of the Employee. The
Company’s good faith determination, based on reasonable evaluation that “Cause”
exists for termination of the employment relationship under this provision
shall
be conclusive for the purposes of this section. Neither the later
discovery of additional or different facts tending to negate the Company’s
determination of “Cause” nor any subsequent finding by any other fact finder
that the employee did not in fact engage in conduct identified in this
definition of “Cause” shall alter the finality of the Company’s determination
for the purposes of this section. The Company’s determination that Cause exists
shall be made by the Chairman or Vice Chairman of the Board or the CEO, with
the
approval of the Board of Directors or a committee of the independent members
of
the Board of Directors.
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Exhibit
B
Agreement
Regarding Arbitration
This
Agreement Regarding
Arbitration is executed in conjunction with the Parties’ execution of an
Executive Employment Agreement effective as of January 4, 2008, and all terms
used herein are as defined in that Agreement. Except as prohibited by
law, Parties to this Agreement
Regarding Arbitration agrees that, any claim, controversy or legal dispute
between them or between the Employee and any officer, director,
shareholder, agent or employee of the Company, each of whom is hereby designated
a third party beneficiary of this agreement regarding arbitration, (a "Dispute")
arising out of the Employee's
employment or termination of such employment or any agreement or contract
between the Parties will be resolved through binding arbitration in Santa
Xxxxx County, under the Arbitration Rules set forth in California Code of Civil
Procedure Section 1280 et seq.,
and
pursuant to
California law. This includes any claims the Employee may make relating to
alleged discrimination or harassment during employment based on race, color,
national origin, religion, disability, age, gender or sexual orientation, any
claims relating to compensation (wages, bonuses, benefits, etc.) and any claims
under federal state, or local laws or regulations relating to terms and
conditions of employment. THE PARTIES UNDERSTAND THAT BY AGREEING TO ARBITRATE
DISPUTES THEY ARE WAIVING ANY RIGHT TO A JURY TRIAL. This Agreement
Regarding Arbitration is not intended to modify or limit the remedies available
to either Party, including the right to seek interim relief, such as injunction
or attachment, through judicial process, which will not be deemed a waiver
of
the right to demand and obtain arbitration. Any Dispute that is not arbitrated,
including any judicial action to enforce this Agreement Regarding Arbitration
will be litigated exclusively in federal or California courts located in Santa
Xxxxx County, California, and the parties hereby consent and submit to the
jurisdiction and venue of such courts.
Xxxxxxxxxxx
X. Xxxxxx
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LaserCard
Corporation
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/s/
Xxxxxxxxxxx X. Xxxxxx
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By
/s/ Xxxxxxx X. Xxxxxxx,
CEO
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Printed
Name Xxxxxxx X.
Xxxxxxx
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9
Exhibit
C
Policy
Guidelines For Adjustment Of Stock Options In The Event Of An
Acquisition
Background
The
Employee’s stock option agreements provide that in the event of a merger or
other recapitalization, the Board of Directors shall make appropriate
adjustments to the terms of the outstanding options. Those agreements give
only
minor guidance as to what adjustments would be considered
“appropriate.”
Policy
(1)
In
the event of the acquisition of all or substantially all of the Corporation’s
assets or capital stock, adjustments are deemed “appropriate” if:
(a)
the vested portion of options may
be exercised prior to the acquisition on not less than 30 days’ notice;
and
(b)
arrangements are made so that
subject to continued employment of the optionee with the successor corporation,
the unvested portion of options will receive one of the following
benefits:
(i)
a replacement option that can be
exercised on the same vesting schedule at the same total exercise price to
purchase the stock or other securities of the successor corporation that would
have been received had the unvested option shares been outstanding at the time
of the acquisition; or
(ii)
a cash payment made with respect
to each option share at the time of vesting equal to the excess of the per-share
value paid for the acquisition (whether in cash or in securities of the
successor corporation) over the option exercise price.
(2)
In
the event the employment relationship between the employee and the successor
corporation is terminated within one year of the date of the sale of the
Corporation, it is intended that 100% of the remaining unvested portion of
all
options held by such employee on the date of the sale of the Corporation would
vest and remain exercisable for at least 90 days after the termination, provided
that:
(a)
the employee had been employed by
the Corporation continuously (except for approved leaves of absence) for at
least two years prior to the date of the sale of the Corporation;
and
(b)
the employment relationship of the
successor corporation and the employee was not terminated
by
either:
(i)
resignation by the employee;
or
(ii)
by the successor corporation due
to acts of moral turpitude on the part of the employee such as theft,
embezzlement, fraud, dishonesty, misappropriation or conversion of funds
committed against the Corporation or successor corporation, or due to the
employee’s material breach of an agreement with the Corporation or successor
corporation concerning disclosure and ownership of inventions, conflict of
interest, or confidentiality of information.
In
the
event the successor corporation had not assumed outstanding Corporation options
but rather was paying deferred compensation whenever Corporation options vested,
then the successor corporation would pay the employee the amount corresponding
to such accelerated vesting.
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Effect
This
policy guideline may be changed at any time by the Stock Option Committee or
the
Corporation’s Board of Directors. It does not constitute a part of this Plan.
The right of the Corporation or its successors to terminate the employment
of an
optionee, with or without cause, shall not be affected by this
guideline.
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Exhibit
D
Employee
Agreement
XXXXXXX
TECHNOLOGY CORPORATION
EMPLOYEE
AGREEMENT
XXXXXXX
TECHNOLOGY CORPORATION is
dedicated to a policy of exerting a significant influence in its chosen fields
through technical innovation and creative administration and
marketing. The competitive success of this policy depends to a large
extent on the Company's ability to capitalize on the creative talents of
its
employees, and to maintain a free flow of pertinent information among its
employees.
For
this reason, all employees are
requested to sign the attached AGREEMENT under which:
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1.
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requirements
for avoiding conflicting outside activities are specified,
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2.
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the
Company is assured of exclusive rights to ideas, works, and inventions
which relate to Company business, and
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3.
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the
Company is protected against unauthorized disclosure of proprietary
information.
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12
AGREEMENT
In
part consideration of my employment
now being or to be given by XXXXXXX TECHNOLOGY CORPORATION (hereinafter referred
to as the "Company"), a corporation of the State of Delaware, or by any
subsidiary or other affiliate of said Company, and effective as of the date
that
said employment first commenced, I agree that:
1.
During the term of my employment, I will not without the prior written consent
of the Company (a) engage in any other professional employment or consulting,
or
(b) directly or indirectly participate in or assist any business which is
a
current or potential supplier, customer, or competitor of the Company, except
that I may invest to an extent not exceeding one percent of the total
outstanding shares in each of one or more companies whose shares are listed
on a
national securities exchange or quoted daily by The Nasdaq Stock
Market.
2.
I will disclose promptly to the Company any ideas, inventions, works of
authorship (including but not limited to computer programs, software and
documentation), improvements or discoveries, patentable or unpatentable,
copyrightable or uncopyrightable, which during the term of my employment
I may
conceive, make, develop or work on, in whole or in part, solely or jointly
with
others, whether or not reduced to drawings, written description, documentation,
models or other tangible form, and which relate either to product, service,
research or development fields in which the Company or any of its affiliates
is,
at the time, actively engaged, or to my employment activities; and all such
ideas, inventions, works, improvements and discoveries shall forthwith and
without further consideration become and be the exclusive property of said
Company, its successors and assigns. The Company hereby notifies you that
the
foregoing does not apply to any invention which qualifies fully for exemption
under Section 2870 of the California Labor Code.
3.
I will assist the Company in every proper way, including the signing of any
and
all papers, authorization, applications and assignments, and making and keeping
of proper records, and the giving of evidence and testimony (all entirely
at the
Company's expense), to obtain and to maintain for the use and benefit of
the
Company or its nominees patents, copyrights or other protection for any and
all
such ideas, inventions, works, improvements and discoveries in all
countries.
4.
I understand and agree that all data and records coming into my possession
or
kept by me in connection with my employment, including notebooks, drawings,
blueprints, computer programs, software and documentation, bulletins, parts
lists, reports, customer lists, and production, cost, purchasing, and marketing
information, and employment data, including policies and salary information,
are
the exclusive property of the Company. I agree to return to the Company all
copies of such data and records upon termination of my employment unless
specific written consent is obtained from the President of the Company to
retain
any such data or records.
13
5.
I will regard and preserve as confidential and will not divulge to unauthorized
persons, or use for any unauthorized purposes, either during or after the
term
of my employment, any information, matter, or thing of secret, confidential
or
private nature, connected with the business of the Company or any of its
suppliers, customers or affiliates without the written consent of the President
of the Company until such time as such information otherwise becomes public
knowledge. Included within the meaning of the foregoing are matters of a
technical nature, such as know-how, formulae, computer programs, software
and
documentation, secret processes or machines, inventions, and research projects,
and matters of a business nature, such as information about costs, profits,
markets, sales, lists of customers and business data regarding customers,
salaries, and other personnel data of the Company's employees, and any other
information of a similar nature to the extent not available to the public,
and
plans for further development.
6.
As a matter of record, the following Schedule A contains a list of all ideas,
inventions, works, improvements and discoveries, patented and unpatented,
copyrighted and not copyrighted, and completed prior to my employment, which
I
desire to have specifically excluded from the operation of this
Agreement.
7.
I agree that I will not disclose to the Company or use for the benefit of
the
Company any confidential information derived from sources other than employment
with the Company. I further agree that if I am in doubt as to the confidential
status of any information, or if any information is alleged to be proprietary,
I
will refer to the President of the Company the question of whether such
information is available for disclosure and use for the benefit of the
Company.
8.
I understand that employment at the Company is employment at-will. Employment
at-will may be terminated with or without cause and with or without notice
at
any time by the employee or the Company. Nothing in this Agreement or in
any
document or statement shall limit the right to terminate employment at-will.
No
manager, supervisor or employee of the Company has any authority to enter
into
any agreement for employment for any specified period of time or to make
any
agreement for employment other than at-will. Only the President of the Company
has the authority to make any such agreement and then only in
writing.
9.
This Agreement shall not be terminated or altered by changes in duties,
compensation or other terms of my employment.
Employee:
/s/ Xxxxxxxxxxx
X.
Xxxxxx
November
29,
1995
(Signature)
(Date)
14
SCHEDULE
A
List
of
all ideas, inventions, works, improvements and discoveries, patented and
unpatented, copyrighted and not copyrighted, and completed, if any, prior
to my
employment:
(Leave
blank if not applicable)
/s/ Xxxxxxxxxxx
X.
Xxxxxx
November
29,
1995
(Signature)
(Date)
(rev.
8/14/95)
15
Exhibit
E.
Tax
Provisions
1. Section
409(A)
To
the
fullest extent applicable, amounts and other benefits payable under this
Agreement are intended to be exempt from the definition of “nonqualified
deferred compensation” under Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) in accordance with one or more of the exemptions
available under the final Treasury regulations promulgated under Section
409A. In this regard, each payment under this Agreement that is made
in a series of scheduled installments (within the meaning of Treasury Regulation
section 1.409A-2(b)(2)(iii)), including without limitation, each salary
continuation payment under Section 6.4 shall be deemed a separate payment for
purposes of Code section 409A.
To
the
extent that any amounts or benefits payable under this Agreement are or become
subject to Section 409A due to a failure to qualify for an exemption from the
definition of nonqualified deferred compensation in accordance with the final
Code Section 409A regulations, this Agreement is intended to comply with the
applicable requirements of Code Section 409A with respect to such amounts or
benefits. This Agreement shall be interpreted and administered to the
extent possible in a manner consistent with the foregoing statement of
intent.
In
each
case where this Agreement provides for the payment of an amount that constitutes
nonqualified deferred compensation under Code Section 409A to be made to the
Employee within a designated period (e.g., within 21 days after the date of
termination) and such period begins and ends in different calendar years, the
exact payment date within such range shall be determined by the Company, in
its
sole discretion, and the Employee shall have no right to designate the year
in
which the payment shall be made.
Notwithstanding
anything in this Agreement or elsewhere to the contrary, if the Company (or
its
affiliate) is a public company on the Employee’s date of termination and the
Employee is a “Specified Employee” (within the meaning of Section
409A(a)(2)(B)(i) of the Code, as determined by the Company’s Compensation
Committee) on such date, and the Company reasonably determines that any amount
or other benefit payable under this Agreement on account of the Employee’s
separation from service, within the meaning of Section 409A(a)(2)(A)(i) of
the
Code, constitutes nonqualified deferred compensation that will subject the
Employee to “additional tax” under Section 409A(a)(1)(B) of the Code (together
with any interest or penalties imposed with respect to, or in connection with,
such tax, a “409A Tax”) with respect to the payment of such amount or the
provision of such benefit if paid or provided at the time specified in the
Agreement, then the payment or provision thereof shall be postponed to the
first
business day of the seventh month following the date of termination or, if
earlier, the date of the Employee’s death (the “Delayed Payment Date”). The
Company and the Employee may agree to take other actions to avoid the imposition
of a 409A Tax at such time and in such manner as permitted under Section
409A. In the event that this paragraph requires a delay of any
payment, such payment shall be accumulated and paid in a single lump sum on
the
Delayed Payment Date.
The
Employee’s date of termination for purposes of determining the date that any
payment or benefit that is treated as nonqualified deferred compensation under
Code Section 409A is to be paid or provided (or in determining whether an
exemption to such treatment applies), and for purposes of determining whether
the Employee is a “Specified Employee” on the date of termination, shall be the
date on which the Employee has incurred a “separation from service” within the
meaning of Treasury Regulation Section 1.409A-1(h), or in subsequent IRS
guidance under Code Section 409A.
16
2. Section
280(g)
It
is not
the intent of the parties to this Agreement that any payment hereunder will
constitute a “parachute payment” as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”). Accordingly, all
benefits and payments pursuant to Sections 3.3 and 6.4 of this
Agreement shall be reduced, if necessary, to the largest aggregate
amount that will result in no portion thereof being subject to federal excise
tax or being nondeductible to the payor for federal income tax purposes under
Sections 280G or 4999 of the Code. The Company will determine which
payments or benefits are to be reduced, if necessary to conform to this
provision.
17
This
Executive Employment Agreement (“Agreement”) is made by and between Xxxxxx X.
Xxxxxx (the “Employee”) and LaserCard Corporation, a Delaware
corporation (the "Company") (collectively the “Parties”) effective as of the
later of the dates it is signed on behalf of the Employee and the Company as
indicated under Authorized Signatures below (the “Effective Date”).
RECITAL
The
Employee is currently employed by the Company as its Vice President, Finance,
and Chief Financial Officer. The Employee and the Company have
entered into various agreements that affect the terms and conditions of the
relationship between the Parties, including without limitation an agreement
entitled Employee Agreement dated December 20, 1995 (the “Intellectual Property
Agreement”) attached as Exhibit D and the Company’s Employee Handbook and the
policies concerning such matters as xxxxxxx xxxxxxx and foreign corrupt
practices. The Employee and the Company wish to continue this relationship
subject to the terms and conditions contained in this Agreement.
AGREEMENT
Based
upon the facts and premises contained in the above RECITAL and in consideration
of the mutual promises below, and intending to be legally bound, the Company
and
the Employee agree as follows:
1.
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Employment.
|
The
Company shall employ the Employee,
and the Employee shall serve the Company as Vice President, Finance, and
Chief Financial Officer.
2.
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Duties
and Responsibilities.
|
The
Employee's primary duties and
responsibilities will be those generally associated with the position of Vice
President, Finance, and Chief Financial Officer. The Employees
shall perform such other duties as he may be assigned from time to time by
the
Company’s Chairman of the Board,
Vice Chairman of the Board, CEO, or its Board of Directors.
3.
Compensation.
3.1
Base
Salary.
The
Employee is to receive base salary
to be paid to the Employee through the Company’s normal
payroll. Employee’s current base salary is at the per annum rate of
two hundred sixty-five thousand thirteen dollars ($265,013). The Company acting through
its Compensation Committee will evaluate the base salary of the Employee on
an
annual basis and may increase or decrease the Employee’s then current salary
rate, provided that a reduction may result in the Employee’s ability to resign
for Good Reason as defined in Exhibit A.
3.2
Bonuses.
At
the discretion of the Company’s board
of directors, the Company may institute a management bonus plan in which
Employee will participate along with other members of the Company’s senior
management. The amount and terms of the Employee’ or any other
incentive compensation plan or program may be changed prospectively at the
sole
discretion of the Company at any time.
18
3.3
Stock
Options and Other Equity Awards.
The
Employee has been granted multiple
stock options and one restricted stock award, all of which remain in full force
and effect according to their terms, and the Employee may in the future be
issued further stock options or shares of restricted stock or other equity
awards. The Company has adopted a policy guideline attached as Exhibit C
describing how the board of directors intends to exercise its judgment to make
arrangements as to stock options should certain mergers and acquisitions
involving the Company occur. The Company and Employee agree,
notwithstanding such policy guideline, that unless otherwise agreed to by both
the Company and Employee:
a. In
the event that the
Company is acquired (that is, there is a merger or sale of all or substantially
all of its assets such that thereafter Company stockholders prior to such event
own less than half of the outstanding voting stock of the surviving entity
by
virtue of their Company shares) then unless the Employee resigns as
an employee of the successor to the Company (whether for any or no reason)
within four (4) months after such acquisition, then all of Employee’s unvested
options or restricted stock shall vest in full on the first to occur of the
date
four (4) months after such acquisition and the date of a termination of the
Employee as an employee of the successor to the Company (for any or no
reason).
b. In
the event that the
Company acquires all or substantially all of the stock or assets of another
entity (whether by merger or otherwise) and either an employee at such other
entity takes Employee’s position within three months after such acquisition, or
the Company decides to hire a new person to fill Employee’s position within six
months after such acquisition, then all of Employee’s unvested options or
restricted stock shall vest in full if the Employee resigns or is terminated
within the following two months for any or no reason.
Section
3.3a pertains to an “Acquisition
of the Company” and Section 3.3b pertains to an “Acquisition by the
Company”.
4.
Benefits
and
Expenses.
4.1
Benefit
and
Insurance Programs.
The
Employee will be entitled to
participate in all Company sponsored benefit and insurance programs to the
extent that such benefits are offered generally to the Company’s employees in
similar positions, with similar seniority.
4.2
Expenses.
The
Company shall reimburse the
Employee, in accordance with the Company's policy, for all reasonable expenses
incurred by the Employee in connection with the performance of the Employee's
duties, upon presentation of appropriate vouchers covering such
expenses.
5.
Paid
Time Off.
Employee
will be entitled to paid time
off (vacation, sick time, paid holidays, etc.) to the extent that such benefits
are offered generally to the Company’s
employees in similar positions, with
similar seniority.
19
6.
Term
and Termination.
6.1
Term.
The
term of this Agreement (the “Term”)
begins on the Effective Date and expires on the date two (2) years after the
Effective Date; provided, however, that:
i. if
there has been an
Acquisition of or by the Company prior to the expiration of the Term, then
this
Agreement shall not expire until two (2) years after such
Acquisition;
ii. if
the employment of
Employee has been terminated during the Term, then the provisions of Sections
6.3 through 6.5 and Sections 7 and 8 shall continue for two (2) years after
such
employment termination; and
iii. if
neither (i) or (ii)
apply, then at the request of either party, the parties will confer during
the
thirty (30) days prior to the expiration of the Term to determine if they wish
to extend the Term of this Agreement and if so the terms and conditions under
which they would agree to such an extension. Notwithstanding the
foregoing, neither party has any obligation to extend the Term of this
Agreement.
6.2
At-will
Employment.
The
Employee’s employment is “at-will.”
This means that either the employee or the Company may terminate the Employee’s
employment under this Agreement at any time, with or without cause and with
or
without notice.
6.3
Termination
as a Result of Death or Disability; Resignation without Good Reason; or
Termination for Cause.
If
the Employee’s employment terminates
during the Term of this
Agreement as a result of
the death or disability of the Employee1
the Employee resignation without Good Reason (as defined in Exhibit A) or
termination by the Company for
Cause (as defined in Exhibit A) then the Company
shall
have no further obligations to the
Employee other than the payment of compensation earned though the last day
of
employment.
6.4
Termination
Without Cause or Resignation for Good Reason.
If
during the Term of this Agreement the
Employee’s employment is terminated without Cause or if the Employee resigns for
Good Reason, the Company shall pay the Employee all compensation earned though
the last day of employment (Such amounts shall be paid upon termination) in
addition to the severance benefits described below.
6.4.1.
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Severance: For
a period
of twelve (12) months following the termination of employment (the
“Severance Period”), the Company shall continue to pay the
Employee on a monthly basis one-twelfth of the Employee’s per annum base
salary as determined on his last day of employment. Base salary does not
include, for example, overtime, bonuses, commissions, shift premiums
or
differentials, compensation associated with employee stock options,
reimbursements, sales commission awards, employee benefits, expense
allowances, or any other incidental or additional
compensation. Severance pay shall be made less any and all
applicable deductions and withholdings, required and/or permitted
by
applicable law.
|
1 Based on the nature of the Employee’s position, the Parties agree that, if the Employee is unable, with reasonable accommodation, to perform the essential functions of his position for 60 consecutive days , continuing his employment under this Agreement would result in undue hardship to the Company and the Company may properly terminate his employment.
20
6.4.2.
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COBRA: In
addition,
if the Employee elects to continue health insurance coverage
under
COBRA, then so long as the
Employee either is receiving severance payments under Section 6.4.1,
or
has received twelve (12) payments under Section 6.4.1, and is paying
COBRA
premiums, the Company will pay the employee a monthly payment equal
to the amount that was paid by the Company prior the termination
of
employment for up to a maximum of 18 months. The Employee will not
be
reimbursed for the portion of the premium which had been paid by
the
Employee prior to the termination of employment or for any administrative
fees or increases in premiums. The Employee is solely
responsible for filing any necessary paperwork for COBRA coverage
and
payment of all premiums. The Company’s duty to make these
payments will cease if Employee loses eligibility for COBRA continuation
coverage because Employee becomes eligible for group coverage from
another
employer. The employee (and/or Employee’s eligible
dependent(s)), shall have an obligation to inform the Company if
the
Employee or such dependants are no longer eligible for COBRA continuation
coverage, as is generally the case when the Employee receives group
coverage from another employer while receiving COBRA continuation
coverage. The period of such Company-reimbursed COBRA
continuation coverage shall be considered part of Employee’s (and
Employee’s eligible dependents’) COBRA coverage entitlement period, and
will, for tax purposes, be considered taxable income to
Employee.
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6.4.3
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Options: The
fact that the
Employee is receiving severance shall have no effect on the Employee’s
options. Thus, the terms of Employee’s option agreements,
without impact of this Agreement except as provided by Section 3.3
above,
shall govern Employee’s options, including the effect of employment
termination on the options’ vesting and
expiration.
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|
6.5.
|
Conditions
to Payment of the Severance.
|
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6.5.1.
|
Execution
of Release as a Condition Precedent: As a condition
precedent to
receipt of the severance benefits described in Sections 6.4.1 and
6.4.2,
the Employee must execute and deliver to the Company a full general
release of all claims, known and unknown, in a form acceptable to
the
Company, including a waiver of the benefits of Section 1542 of the
California Civil Code. If the Employee does not execute and
deliver the Release within twenty-one (21) days of the date of termination
which Employee does not rescind during the following seven (7) days,
the
Company shall have no further obligation to provide the Employee
with any
severance benefits. The first payments under Sections 6.4.1 and
6.4.2 shall not be due or payable until such seven-day period has
expired
without rescission of the release.
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|
6.5.2
|
Non-Solicitation:
If, during the Severance
Period, the Employee directly or indirectly solicits or attempts
to
solicit any employee or any full-time independent contractor or consultant
of the Company to perform services elsewhere then all severance benefits
described under Sections 6.4.1 and 6.4.2 shall immediately
cease.
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21
6.5.3
|
New
Position: The Employee’s severance
benefits
under Section 6.4.1 shall cease if Employee becomes an employee of
or
otherwise renders services to any business and the Employee agrees
to
promptly notify the Company when the Employee begins to so render
services. However, if the Board of Directors of the Company
determines that the services that Employee is going to perform for
the
other business do and will not involve the design, development, or
manufacture of plastic cards for secure data storage, whether they
utilize
contact or contactless chips, optical or magnetic stripes, holograms,
or
other means for data storage (the “Company’s Business”), then the Company
agrees to act affirmatively upon a request from Employee for the
severance
benefits under Section 6.4.1 to continue. If a court or
arbitrator, as the case may be, should for some reason require the
Company
to continue Employee’s severance benefits even if the Company’s Board of
Directors determines that Employee’s services involve the Company’s
Business, then such benefits shall continue only to the extent a
court or
arbitrator finds that the Employee has demonstrated by clear and
convincing evidence that Employee’s services have not already and would
not in the future utilize the Company’s confidential
information.
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6.5.4
|
Surviving
Terms: If, during the Severance period, the Employee violates any
of the terms of this Agreement or any other Agreement between the
Parties,
including without limitation the Intellectual Property Agreement,
then the
severance benefits described under Section 6.4.1 and 6.4.2 shall
immediately cease.
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6.5.5
|
Continued
Assistance: During the Severance Period, the Employee agrees
to respond to reasonable requests for information and provide reasonable
levels of assistance on issue related to Employee’s work with the Company
without further compensation. The Employee’s obligation for
reasonable assistance shall not exceed twenty hours during the first
week
following termination, ten hours per week during the next four weeks
and
five hours per month thereafter. If the Employee refuses to
provide such information and assistance at reasonable times and after
reasonable notice, then the severance benefits described under Section
6.4.1 and 6.4.2 shall
immediately cease.
|
7.
Tax Provisions
The
tax provisions set forth in Exhibit
E are hereby incorporated by reference as though fully set
forth.
8.
Miscellaneous.
The
Employee and the Company acknowledge
and agree that the Company may require an Employee to whom notice of termination
is given to leave the Company premises immediately, and may bar the Employee
from unescorted access to the Company premises, so as to enable the Company
to
secure Company and customer records and preserve Company and customer trade
secrets and proprietary information.
Upon
termination of the Employee’s employment for any reason, the Employee shall be
deemed to have resigned voluntarily from all offices and other employment
positions held with the Company, and from the board of directors, if the
Employee was serving in any such capacities at the time of
termination.
The
Employee will cooperate with the Company in the winding up or transferring
to
other employees of any pending work or projects. The Employee will
also cooperate with the Company in the defense of any action brought by any
third party against the Company that relates to Employee’s employment with the
Company.
Payments
and benefits provided under this Agreement may taxable under the laws of the
United States and the State of California and will be subject to all required
withholdings and court ordered wage assignments and/or
garnishments.
22
This
Agreement shall be binding on the
parties hereto and on each of their heirs, executors, administrators,
successors, and assignees.
The
invalidity or unenforceability of any provision(s) of this Agreement under
particular facts and circumstances will not affect the validity or
enforceability either of other provisions of this Agreement or, under other
facts and circumstances, of such provision(s). In addition, such
provision(s) will be reformed to be less restrictive if under such facts and
circumstances they would then be valid and enforceable.
Notices
shall be given to the parties at its executive office, in the case of the
Company, and at the address in the Company’s payroll records for the
Employee. Notices shall be in writing and deemed given when received
in person or one day after being sent by overnight or four days after being
sent
by certified mail, return receipt requested. Any party may change its
address by giving notice to the other party of a new address in accordance
with
the foregoing provisions.
Nothing
in this Agreement shall limit
the right of the Officers, the Board of Directors and the shareholders of
Company to manage the business affairs of the Company, including, without
limitation, matters relating to personnel policies and procedures benefits
and
conditions of work, or give to the Employee any claim against Company with
respect to any decision relating to the conduct of the business of Company,
so
long as that decision is not made in breach of any of the Company’s express or
implied covenants or obligations under this Agreement.
Previous
and contemporaneous agreements
between the parties that do not conflict with the terms of this Agreement will
remain valid and binding between the Parties, including without limitation
the
Arbitration Agreement attached hereto as Exhibit B and the Intellectual Property
Agreement. However,
this Agreement contains a
complete statement of the agreements between the Parties with respect to the
matters it addresses and it supersedes and replaces any prior understandings
or
agreements regarding those matters. To the extent that the provisions
of any other agreement conflict with or are inconsistent with the provisions
of
this Agreement, the terms of this Agreement shall govern. This Agreement may
be
modified or amended only in writing, signed by both Parties.
This
Agreement shall be governed by and
construed in accordance with the laws of the State of California.
The
Employee expressly acknowledges and
agrees that Company’s rights under this Agreement may be transferred to or
assigned by Company to a successor employer.
In
the event of any arbitration or other
legal proceeding, the prevailing party shall recover his or its reasonable
attorneys' fees, except expenses, and costs, excluding arbitration
fees.
The
Employee hereby authorizes the
Company to disclose this Agreement and his responsibilities hereunder to any
person or entity, including, without limitation, future employers or
clients.
23
AUTHORIZED
SIGNATURES
In
order
to bind themselves to this Executive Employment Agreement, the Employee and
a
duly authorized representative of the Company have signed their names below
on
the dates indicated.
The
Employee
|
The
Company
|
|
LaserCard
Corporation
|
||
/s/
Xxxxxx X. Xxxxxx
|
By
/s/ Xxxxxxx X. Xxxxxxx,
CEO
|
|
Xxxxxx
X. Xxxxxx
|
Signature
|
|
Printed
Name Xxxxxxx
X. Xxxxxxx
|
||
Date
Executed: January 4, 2008
|
Date
Executed: January 4,
2008
|
24
Exhibit
A
Definitions
GOOD
REASON shall
mean: (i) a material breach of the Agreement by the Company, (ii) a material
reduction of the Employee’s Base Salary, except that neither a
reduction proportionate to reductions imposed on all other members of
the Company’s executive management as part of a cost reduction effort nor a
reduction of the Employee’s base salary due to a change of duties as a result of
disability will be a Good Reason for termination, or (iii) the Employee’s duties
with the Company are materially reduced (provided that if there is an
Acquisition of or by the Company (as defined in Section 3.3) and the Employee’s
duties largely continue with respect to the business of the Company prior to
such acquisition, then such acquisition shall not be deemed to be a material
reduction in Employee’s duties. The Employee shall give notice to the Company
that the Employee intends to resign for one of the Good Reasons listed above,
detailing such Good Reason with specificity. If the Employee gives
notice to the Company, no later than ninety (90) days after the initial
existence of one or more of the conditions constituting Good Reason listed
above
arising without his consent, that the Employee intends to resign for one of
the
Good Reasons listed above, detailing such Good Reason with specificity, and
if
the Company does not remedy the situation so as to eliminate the Good Reason
within two (2) weeks of receiving such notice, then any resignation by the
Employee from the Company within the one (1) month period beginning with the
delivery of the notice shall be deemed a Resignation for Good
Reason.
CAUSE
is defined to
mean a good faith determination by the Company that the Employee has engaged
in
any of the following: 1) theft, misappropriation or embezzlement of Company
property, property of an officer, shareholder, director or employee, or property
of any customer or supplier of the Company; 2) any conduct which constitutes
unfair competition with the Company; 3) any breach of a contractual or fiduciary
duty to the Company or a material breach of a material Company policy not cured
within five days of the Company giving the Employee notice of the breach; 4)
material dishonesty in the performance of the Employee’s duties for the Company
or fraud against the Company; 5) materially exceeding the scope of the
Employee's authority as delegated or limited from time to time by the Company;
6) inducement of any customer, consultant, employee or supplier of the Company
to breach any contract with the Company or cease its business relationship
with
the Company;(7) refusal to substantially follow the lawful
instructions of the board of directors, Chairman or Vice Chairman of the Board,
or CEO;(8) failure to devote full-time effort to serving the Company which
is
not cured within sixty (60) days of notice; 9) conviction of a crime punishable
as a
felony; or 10) death or disability of the Employee.. The Company’s
good faith determination, based on reasonable evaluation that “Cause” exists for
termination of the employment relationship under this provision shall be
conclusive for the purposes of this section. Neither the later
discovery of additional or different facts tending to negate the Company’s
determination of “Cause” nor any subsequent finding by any other fact finder
that the employee did not in fact engage in conduct identified in this
definition of “Cause” shall alter the finality of the Company’s determination
for the purposes of this section. The Company’s determination that Cause exists
shall be made by the Chairman or Vice Chairman of the Board or the CEO, with
the
approval of the Board of Directors or a committee of the independent members
of
the Board of Directors.
25
Exhibit
B
Agreement
Regarding Arbitration
This
Agreement Regarding
Arbitration is executed in conjunction with the Parties’ execution of an
Executive Employment Agreement effective as of January 4, 2008, and all terms
used herein are as defined in that Agreement. Except as prohibited by
law, Parties to this Agreement
Regarding Arbitration agrees that, any claim, controversy or legal dispute
between them or between the Employee and any officer, director,
shareholder, agent or employee of the Company, each of whom is hereby designated
a third party beneficiary of this agreement regarding arbitration, (a "Dispute")
arising out of the Employee's
employment or termination of such employment or any agreement or contract
between the Parties will be resolved through binding arbitration in Santa
Xxxxx County, under the Arbitration Rules set forth in California Code of Civil
Procedure Section 1280 et seq.,
and
pursuant to
California law. This includes any claims the Employee may make relating to
alleged discrimination or harassment during employment based on race, color,
national origin, religion, disability, age, gender or sexual orientation, any
claims relating to compensation (wages, bonuses, benefits, etc.) and any claims
under federal state, or local laws or regulations relating to terms and
conditions of employment. THE PARTIES UNDERSTAND THAT BY AGREEING TO ARBITRATE
DISPUTES THEY ARE WAIVING ANY RIGHT TO A JURY TRIAL. This Agreement
Regarding Arbitration is not intended to modify or limit the remedies available
to either Party, including the right to seek interim relief, such as injunction
or attachment, through judicial process, which will not be deemed a waiver
of
the right to demand and obtain arbitration. Any Dispute that is not arbitrated,
including any judicial action to enforce this Agreement Regarding Arbitration
will be litigated exclusively in federal or California courts located in Santa
Xxxxx County, California, and the parties hereby consent and submit to the
jurisdiction and venue of such courts.
Xxxxxx
X. Xxxxxx
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LaserCard
Corporation
|
/s/
Xxxxxx X. Xxxxxx
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By
/s/ Xxxxxxx X. Xxxxxxx,
CEO
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Printed
Name Xxxxxxx X.
Xxxxxxx
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26
Exhibit
C
Policy
Guidelines For Adjustment Of Stock Options In The Event Of An
Acquisition
Background
The
Employee’s stock option agreements provide that in the event of a merger or
other recapitalization, the Board of Directors shall make appropriate
adjustments to the terms of the outstanding options. Those agreements give
only
minor guidance as to what adjustments would be considered
“appropriate.”
Policy
(1)
In
the event of the acquisition of all or substantially all of the Corporation’s
assets or capital stock, adjustments are deemed “appropriate” if:
(a)
the vested portion of options may
be exercised prior to the acquisition on not less than 30 days’ notice;
and
(b)
arrangements are made so that
subject to continued employment of the optionee with the successor corporation,
the unvested portion of options will receive one of the following
benefits:
(i)
a replacement option that can be
exercised on the same vesting schedule at the same total exercise price to
purchase the stock or other securities of the successor corporation that would
have been received had the unvested option shares been outstanding at the time
of the acquisition; or
(ii)
a cash payment made with respect
to each option share at the time of vesting equal to the excess of the per-share
value paid for the acquisition (whether in cash or in securities of the
successor corporation) over the option exercise price.
(2)
In
the event the employment relationship between the employee and the successor
corporation is terminated within one year of the date of the sale of the
Corporation, it is intended that 100% of the remaining unvested portion of
all
options held by such employee on the date of the sale of the Corporation would
vest and remain exercisable for at least 90 days after the termination, provided
that:
(a)
the employee had been employed by
the Corporation continuously (except for approved leaves of absence) for at
least two years prior to the date of the sale of the Corporation;
and
(b)
the employment relationship of the
successor corporation and the employee was not terminated
by
either:
(i)
resignation by the employee;
or
(ii)
by the successor corporation due
to acts of moral turpitude on the part of the employee such as theft,
embezzlement, fraud, dishonesty, misappropriation or conversion of funds
committed against the Corporation or successor corporation, or due to the
employee’s material breach of an agreement with the Corporation or successor
corporation concerning disclosure and ownership of inventions, conflict of
interest, or confidentiality of information.
In
the
event the successor corporation had not assumed outstanding Corporation options
but rather was paying deferred compensation whenever Corporation options vested,
then the successor corporation would pay the employee the amount corresponding
to such accelerated vesting.
27
Effect
This
policy guideline may be changed at any time by the Stock Option Committee or
the
Corporation’s Board of Directors. It does not constitute a part of this Plan.
The right of the Corporation or its successors to terminate the employment
of an
optionee, with or without cause, shall not be affected by this
guideline.
28
Exhibit
D
Employee
Agreement
XXXXXXX
TECHNOLOGY CORPORATION
EMPLOYEE
AGREEMENT
XXXXXXX
TECHNOLOGY CORPORATION is
dedicated to a policy of exerting a significant influence in its chosen
fields
through technical innovation and creative administration and
marketing. The competitive success of this policy depends to a large
extent on the Company's ability to capitalize on the creative talents of
its
employees, and to maintain a free flow of pertinent information among its
employees.
For
this reason, all employees are
requested to sign the attached AGREEMENT under which:
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1.
|
requirements
for avoiding conflicting outside activities are
specified,
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2.
|
the
Company is assured of exclusive rights to ideas, works, and inventions
which relate to Company business,
and
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|
3.
|
the
Company is protected against unauthorized disclosure of proprietary
information.
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29
AGREEMENT
In
part consideration of my employment
now being or to be given by XXXXXXX TECHNOLOGY CORPORATION (hereinafter
referred
to as the "Company"), a corporation of the State of Delaware, or by any
subsidiary or other affiliate of said Company, and effective as of the
date that
said employment first commenced, I agree that:
1.
During the term of my employment, I will not without the prior written
consent
of the Company (a) engage in any other professional employment or consulting,
or
(b) directly or indirectly participate in or assist any business which
is a
current or potential supplier, customer, or competitor of the Company,
except
that I may invest to an extent not exceeding one percent of the total
outstanding shares in each of one or more companies whose shares are listed
on a
national securities exchange or quoted daily by The Nasdaq Stock
Market.
2.
I will disclose promptly to the Company any ideas, inventions, works of
authorship (including but not limited to computer programs, software and
documentation), improvements or discoveries, patentable or unpatentable,
copyrightable or uncopyrightable, which during the term of my employment
I may
conceive, make, develop or work on, in whole or in part, solely or jointly
with
others, whether or not reduced to drawings, written description, documentation,
models or other tangible form, and which relate either to product, service,
research or development fields in which the Company or any of its affiliates
is,
at the time, actively engaged, or to my employment activities; and all
such
ideas, inventions, works, improvements and discoveries shall forthwith
and
without further consideration become and be the exclusive property of said
Company, its successors and assigns. The Company hereby notifies you that
the
foregoing does not apply to any invention which qualifies fully for exemption
under Section 2870 of the California Labor Code.
3.
I will assist the Company in every proper way, including the signing of
any and
all papers, authorization, applications and assignments, and making and
keeping
of proper records, and the giving of evidence and testimony (all entirely
at the
Company's expense), to obtain and to maintain for the use and benefit of
the
Company or its nominees patents, copyrights or other protection for any
and all
such ideas, inventions, works, improvements and discoveries in all
countries.
4.
I understand and agree that all data and records coming into my possession
or
kept by me in connection with my employment, including notebooks, drawings,
blueprints, computer programs, software and documentation, bulletins, parts
lists, reports, customer lists, and production, cost, purchasing, and marketing
information, and employment data, including policies and salary information,
are
the exclusive property of the Company. I agree to return to the Company
all
copies of such data and records upon termination of my employment unless
specific written consent is obtained from the President of the Company
to retain
any such data or records.
30
5.
I will regard and preserve as confidential and will not divulge to unauthorized
persons, or use for any unauthorized purposes, either during or after the
term
of my employment, any information, matter, or thing of secret, confidential
or
private nature, connected with the business of the Company or any of its
suppliers, customers or affiliates without the written consent of the President
of the Company until such time as such information otherwise becomes public
knowledge. Included within the meaning of the foregoing are matters of
a
technical nature, such as know-how, formulae, computer programs, software
and
documentation, secret processes or machines, inventions, and research projects,
and matters of a business nature, such as information about costs, profits,
markets, sales, lists of customers and business data regarding customers,
salaries, and other personnel data of the Company's employees, and any
other
information of a similar nature to the extent not available to the public,
and
plans for further development.
6.
As a matter of record, the following Schedule A contains a list of all
ideas,
inventions, works, improvements and discoveries, patented and unpatented,
copyrighted and not copyrighted, and completed prior to my employment,
which I
desire to have specifically excluded from the operation of this
Agreement.
7.
I agree that I will not disclose to the Company or use for the benefit
of the
Company any confidential information derived from sources other than employment
with the Company. I further agree that if I am in doubt as to the confidential
status of any information, or if any information is alleged to be proprietary,
I
will refer to the President of the Company the question of whether such
information is available for disclosure and use for the benefit of the
Company.
8.
I understand that employment at the Company is employment at-will. Employment
at-will may be terminated with or without cause and with or without notice
at
any time by the employee or the Company. Nothing in this Agreement or in
any
document or statement shall limit the right to terminate employment at-will.
No
manager, supervisor or employee of the Company has any authority to enter
into
any agreement for employment for any specified period of time or to make
any
agreement for employment other than at-will. Only the President of the
Company
has the authority to make any such agreement and then only in
writing.
9.
This Agreement shall not be terminated or altered by changes in duties,
compensation or other terms of my employment.
Employee:
/s/ Xxxxxx
X.
Xxxxxx
December
20,
1995
(Signature)
(Date)
31
SCHEDULE
A
List
of
all ideas, inventions, works, improvements and discoveries, patented and
unpatented, copyrighted and not copyrighted, and completed, if any, prior
to my
employment:
(Leave
blank if not applicable)
_________________________
_________________________
(Signature)
(Date)
(rev.
8/14/95)
32
Exhibit
E.
Tax
Provisions
1. Section
409(A)
To
the
fullest extent applicable, amounts and other benefits payable under this
Agreement are intended to be exempt from the definition of “nonqualified
deferred compensation” under Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) in accordance with one or more of the exemptions
available under the final Treasury regulations promulgated under Section
409A. In this regard, each payment under this Agreement that is made
in a series of scheduled installments (within the meaning of Treasury Regulation
section 1.409A-2(b)(2)(iii)), including without limitation, each salary
continuation payment under Section 6.4 shall be deemed a separate payment for
purposes of Code section 409A.
To
the
extent that any amounts or benefits payable under this Agreement are or become
subject to Section 409A due to a failure to qualify for an exemption from the
definition of nonqualified deferred compensation in accordance with the final
Code Section 409A regulations, this Agreement is intended to comply with the
applicable requirements of Code Section 409A with respect to such amounts or
benefits. This Agreement shall be interpreted and administered to the
extent possible in a manner consistent with the foregoing statement of
intent.
In
each
case where this Agreement provides for the payment of an amount that constitutes
nonqualified deferred compensation under Code Section 409A to be made to the
Employee within a designated period (e.g., within 21 days after the date of
termination) and such period begins and ends in different calendar years, the
exact payment date within such range shall be determined by the Company, in
its
sole discretion, and the Employee shall have no right to designate the year
in
which the payment shall be made.
Notwithstanding
anything in this Agreement or elsewhere to the contrary, if the Company (or
its
affiliate) is a public company on the Employee’s date of termination and the
Employee is a “Specified Employee” (within the meaning of Section
409A(a)(2)(B)(i) of the Code, as determined by the Company’s Compensation
Committee) on such date, and the Company reasonably determines that any amount
or other benefit payable under this Agreement on account of the Employee’s
separation from service, within the meaning of Section 409A(a)(2)(A)(i) of
the
Code, constitutes nonqualified deferred compensation that will subject the
Employee to “additional tax” under Section 409A(a)(1)(B) of the Code (together
with any interest or penalties imposed with respect to, or in connection with,
such tax, a “409A Tax”) with respect to the payment of such amount or the
provision of such benefit if paid or provided at the time specified in the
Agreement, then the payment or provision thereof shall be postponed to the
first
business day of the seventh month following the date of termination or, if
earlier, the date of the Employee’s death (the “Delayed Payment Date”). The
Company and the Employee may agree to take other actions to avoid the imposition
of a 409A Tax at such time and in such manner as permitted under Section
409A. In the event that this paragraph requires a delay of any
payment, such payment shall be accumulated and paid in a single lump sum on
the
Delayed Payment Date.
The
Employee’s date of termination for purposes of determining the date that any
payment or benefit that is treated as nonqualified deferred compensation under
Code Section 409A is to be paid or provided (or in determining whether an
exemption to such treatment applies), and for purposes of determining whether
the Employee is a “Specified Employee” on the date of termination, shall be the
date on which the Employee has incurred a “separation from service” within the
meaning of Treasury Regulation Section 1.409A-1(h), or in subsequent IRS
guidance under Code Section 409A.
33
2. Section
280(g)
It
is not
the intent of the parties to this Agreement that any payment hereunder will
constitute a “parachute payment” as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”). Accordingly, all
benefits and payments pursuant to Sections 3.3 and 6.4 of this
Agreement shall be reduced, if necessary, to the largest aggregate
amount that will result in no portion thereof being subject to federal excise
tax or being nondeductible to the payor for federal income tax purposes under
Sections 280G or 4999 of the Code. The Company will determine which
payments or benefits are to be reduced, if necessary to conform to this
provision.
34