Exhibit 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement, dated as of January 1, 2001, is by and between
Chipcards, Inc., a California corporation (the "Company"), and Xxxx Xxxxxxx (the
"Executive").
WHEREAS, the Executive is employed as Executive Vice President of the
Company; and
WHEREAS, the Company desires assurance of the continued association and
services of the Executive in order to retain his experience, abilities, and
knowledge, and is therefore willing to engage his services on the terms and
conditions set forth below, and the Executive desires to accept such employment,
all on the terms and conditions hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Executive, each
intending to be legally bound, agree as follows:
1. Employment.
(a) Employment. Subject to all of the terms and conditions of this
Agreement, the Company agrees to employ the Executive as its Executive Vice
President, and the Executive hereby accepts such employment with the
Company. In such capacity, the Executive shall have full power and
authority, in association with the President, to manage and conduct the
business of the Company, subject to the policies and directives of the
Company's Board of Directors.
(b) Duties. The Executive will serve the Company faithfully to the
best of his ability and shall perform the duties of his office and such
other duties of an executive, managerial or administrative nature, all as
shall be specified and designated from time to time by the Board of
Directors of the Company. Without limiting the generality of the foregoing,
the Executive's duties shall include responsibility for overseeing the
day-to-day operations of the Company.
2. Compensation.
(a) Salary. For all duties and services to be performed by the
Executive hereunder, the Company shall pay the Executive an annual salary
(the "Base Salary") in the amount of One Hundred Seventy Five Thousand
Dollars ($175,000) per annum. Base Salary shall be payable in accordance
with the Company's payroll practices, as in effect from time to time. On
the first anniversary of this Agreement, the Executive's Base Salary shall
be reviewed by the Board or its Compensation Committee, and any increase
will be effective as of the date determined appropriate by the Board or its
Compensation Committee.
(b) Incentive Bonus. In addition to the Base Salary payable under
Section 2(a), Executive shall be entitled to receive annual and other
bonuses in the discretion of the Board of Directors based upon its good
faith determination of the extent to which the Executive's individual
performance objectives and the Company's profitability objectives and other
financial and nonfinancial objectives are achieved during the applicable
bonus period.
(c) Reimbursement of Business Expenses. The Company agrees to
reimburse the Executive for all reasonable out-of-pocket business expenses
incurred by the Executive on behalf of or in connection with the services
rendered to the Company, provided that the Executive properly accounts to
the Company for all such expenses in accordance with the rules and
regulations of the Internal Revenue Service under the Internal Revenue Code
of 1986, as amended (the "Code") and in accordance with the standard
policies of the Company relating to reimbursement of business expenses.
(d) Benefits. The Executive is entitled to participate in all normal
and customary employee benefit plans adopted by the Company to the extent
that the Executive is eligible to participate by the terms in such benefit
plans, subject to the conditions and limitations in such benefit plans.
Such employee benefit plans may be amended, modified or terminated in the
ordinary course of the Company's business.
(e) Vacation. The Executive shall be entitled to four (4) weeks of
paid vacation each twelve-month period, which shall accrue on a pro rata
basis from the date the Executive's employment commences under this
Agreement. In the event that the Executive is unable to take the total
amount of vacation time authorized herein during any year, such time shall
not be carried over to the following year or any other year.
3. Term and Termination.
(a) Term. Subject to earlier termination in accordance with Section
3(b) below, this Agreement will become effective on the date set forth
above and will continue for a period of three (3) years (the "Term"). Upon
the expiration of the initial three-year Term, the Company shall have the
option, at its sole discretion, of continuing the term of this Agreement
for an additional one (1) year term. If the Company exercises the
aforementioned option, this Agreement shall continue automatically for
succeeding terms of one (1) year each unless either party gives written
notice to the other at least sixty (60) days prior to the expiration of the
one-year option period or any succeeding term of his or its intention not
to renew.
(b) Termination. Subject to the respective continuing obligations of
the Company and the Executive under Sections 4 and 5:
2
(1) The Company may terminate this Agreement immediately on
written notice to the Executive for "Cause." For purposes of this
Section 3, Cause shall mean: (i) conduct by the Executive which is or
could reasonably be expected to be injurious to the Company, its
business or reputation, including, but not limited to, embezzlement,
fraud, dishonesty, breach of loyalty or other wrongful conduct; (ii)
the Executive's willful misconduct or negligence in the performance of
his duties hereunder, including the failure or refusal to comply with
any legal directives of the Board of Directors; (iii) the commission
by the Executive of an act constituting a felony for which the
Executive has been convicted or has pleaded nolo contendere; (iv) the
commission of a crime by the Executive involving moral turpitude or
fraud for which the Executive has been convicted or has pleaded nolo
contendere; (v) the failure to substantially perform his duties
hereunder after written notice and failure to cure within fifteen (15)
days (other than by reason of disability); (vi) the Executive's use of
alcohol or any controlled substance to an extent that it interferes
with the performance of his duties under this Agreement; or (vii) a
breach by the Executive of any of his obligations under this
Agreement.
(2) This Agreement will terminate upon the Executive's death or
upon written notice from the Company in the event of the Executive's
"permanent disability." The term "permanent disability" means a
physical or mental incapacity or disability which renders the
Executive unable to substantially render the services required
hereunder for an aggregate of ninety (90) days in any 365-day period,
as certified by either the Executive's attending physician or a
licensed physician retained by the Company for the purposes of making
such determination. In the event of any disagreement between the
Executive's attending physician and such physician retained by the
Company, the matter shall be resolved by a third licensed physician
selected jointly by the Executive's physician and the Company's
physician.
(3) This Agreement may be terminated by the Company without Cause
upon thirty (30) days prior written notice to the Executive.
The date this Agreement is terminated is hereinafter referred to as the
"Termination Date."
(c) Compensation Upon Termination.
(1) If the Executive voluntarily terminates this Agreement, or if
the Company terminates this Agreement for Cause pursuant to paragraph
(1) of Section 3(b), the Company will be obligated to pay the
Executive only Base Salary as may be due and owing or otherwise
accrued through the Termination Date and all other non-contingent
compensation earned and accrued up through the Termination Date. Such
Base Salary will be paid in one lump sum within ten (10) business days
of the Termination Date.
3
(2) If this Agreement terminates pursuant to paragraph (2) of
Section 3(b), the Company will be obligated to pay the Executive: (i)
Base Salary as may be due and owing or otherwise accrued through the
Termination Date; (ii) an additional amount equal to the Executive's
Base Salary for a period of three (3) months following the Termination
Date at the rate in effect on the Termination Date, less any life
insurance or disability insurance payments made to the Executive or
his personal representative pursuant to insurance policies maintained
by the Company for the benefit of the Executive; and (iii) all other
non-contingent compensation earned and accrued up through the
Termination Date. Such Base Salary and non-contingent compensation
will be paid in accordance with the Company's payroll practices, as in
effect from time to time.
(3) If the Company terminates this Agreement pursuant to
paragraph (3) of Section 3(b), the Company will be obligated to pay
the Executive (i) Base Salary as may be due and owing or otherwise
accrued through the Termination Date; (ii) an additional amount equal
to the Executive's Base Salary for a period of three (3) months
following the Termination Date or, if shorter, the balance of the Term
had his employment not been so terminated, at the rate in effect on
the Termination Date, as a severance payment (which sum the Executive
agrees is fair and reasonable); and (ii) all other non-contingent
compensation earned and accrued up through the Termination Date. Such
Base Salary and non-contingent compensation will be paid in accordance
with the Company's payroll practices, as in effect from time to time.
4. Confidentiality.
(a) "Confidential Information" means information or data of the
Company concerning its business, financial affairs, sales and marketing
plans, customers, suppliers, strategies, products and services, proposed
products and services, plans, ideas, drawings, designs, concepts, business
methods, inventions, discoveries, improvements, technology, engineering,
know-how, trade secrets, prototypes, processes, techniques, computer
programs and other proprietary information, but does not include
information that: (i) is or becomes part of the public domain through no
breach of this Agreement by the Executive; or (ii) is required to be
disclosed by order of a governmental agency or by a court of competent
jurisdiction.
(b) Acceptance and Use of Confidential Information. Except as
expressly authorized in writing by this Agreement or otherwise agreed to by
the Company in writing, during the term of this Agreement and thereafter,
(i) the Executive will not disclose, divulge or make accessible the
Confidential Information or any part thereof to any unauthorized person or
entity or use it for his own benefit or the benefit of any third party;
(ii) the Executive will use all reasonable care to protect the Confidential
Information of the Company from unauthorized use, disclosure and
publication; and (iii) the Executive will not render any services to any
person, firm, corporation, partnership, limited liability company,
association or other entity to which any such Confidential
4
Information, in whole or in part, has been disclosed or is threatened to be
disclosed by or at the instance of the Executive. The Executive further
agrees that he (i) shall use the Confidential Information only for, and in
the course of and in connection with providing services to the Company
pursuant to the terms of this Agreement, and (ii) shall, immediately upon
the earlier of the termination of this Agreement or at the request of the
Company, deliver to the Company any and all originals and all copies of the
Confidential Information, whether embodied in written, electronic or other
form.
(c) Confidential Materials. All memoranda, notes, lists, records,
customer lists, correspondence, calendars, graphs, data compilations,
drawings, designs, charts, tables, pamphlets, recordings, programs,
databases, minutes, telefax or telecopy transmissions and other documents,
including without limitation any kind of written, typewritten, printed,
recorded, computer-generated or graphic material, however produced or
reproduced, constituting or containing Confidential Information made or
compiled by the Executive or made available to the Executive shall be the
Company's property, shall be kept confidential in accordance with the
provisions of this Section 4, and shall be delivered to the Company at any
time on request and in any event upon the termination of the Executive's
employment with the Company for any reason.
(d) Injunctive Relief. The parties recognize that a remedy at law for
a breach of the provisions of this Section 4 may be inadequate and any
breach or threatened breach thereof will cause irreparable injury to the
Company. Accordingly, for its complete protection, the Company shall have
the right to obtain (without the necessity of posting any bond or other
security in connection therewith) injunctive relief, whether mandatory or
restraining, to enforce the provisions hereof. Such remedies shall not be
exclusive and shall be in addition to any other remedy, at law or in
equity, which the Company may have for any breach or threatened breach of
this Section 4 by the Executive.
The provisions of this Section 4 shall be effective during the Term
and thereafter, regardless of the manner or reasons for the termination of
employment.
5. Non-Competition Covenant.
(a) Other Agreements. The Executive represents and warrants to the
Company that he is not currently subject to a non-competition,
confidentiality or other such agreement which prohibits the Executive from
working for the Company.
(b) Non-Compete. The Executive agrees that, during his employment with
the Company and for a period of one (1) year after employment with the
Company terminates for any reason whatsoever, the Executive will not alone,
or in any capacity with another corporation, partnership, firm or other
organization, engage in any one or more of the following prohibited
activities:
(1) to directly or indirectly: (i) engage for his own account in
any Competitive Business (as defined below); (ii) render any services
in any capacity to any person or entity engaged in a Competitive
Business; or (iii) own, manage, control, participate in, consult with,
endorse, render services for, lend money to,
5
guarantee the debts or obligations of, or otherwise become
economically interested, whether as a partner, shareholder, director,
officer, employee, consultant, principal, member, manager, agent,
trustee, consultant or in any other relationship or capacity, in any
entity or person engaged in a Competitive Business;
(2) for a purpose competitive with the Company, to call upon,
solicit, influence or interfere with (i) any of the then-existing
clients, customers, vendors, suppliers or other persons or entities
conducting business with the Company, (ii) any clients, customers,
vendors, suppliers or other persons or entities conducting business
with the Company that have had a relationship with the Company during
the preceding twelve (12) months prior to the Termination Date, or
(iii) any potential clients, customers, vendors or suppliers that were
actively solicited by the Company during the preceding twelve (12)
months prior to the Termination Date;
(3) to disrupt, damage, impair, or interfere with the business of
the Company whether by way of interfering with or disrupting the
Company's relationships with employees, agents, representatives,
clients, customers, suppliers, vendors or other persons or entities
conducting business with the Company; or
(4) to employ or attempt to employ (by soliciting or assisting
anyone else in the solicitation of) any of the Company's current
employees as of the Executive's Termination Date or former employees
of the Company who left the employ of the Company within twelve (12)
months prior to the Termination Date on behalf of any other entity,
whether or not such entity competes with the Company.
For purposes hereof, the term "Competitive Business" shall mean: (i) any
business, wherever located, that is or would be competitive with the
business conducted by the Company or its affiliates at any time during the
period of the Executive's employment with the Company.
6
(c) Personal Investments. Nothing herein contained shall prevent the
Executive from being a passive owner of not more than one percent (1%) of
the outstanding stock of any class of a corporation which is engaged in a
Competitive Business and which is publicly traded, or of a privately held
corporation that is not competitive in any manner with the business of the
Company, provided the Executive (i) has no other participation in the
management, operations or business of such corporation and (ii) is not a
controlling person of, or a member of a group which controls, such
corporation.
(d) No Additional Compensation. In the event that the Executive's
employment terminates for any reason, no additional compensation will be
paid for this non-competition obligation, it being agreed by the parties
that the scope of the restrictions and period of time are reasonable and
that the compensation provided herein is adequate consideration for the
non-competition obligation.
(e) Survival. The obligations of this Section 5 will survive the
expiration or termination of this Agreement.
(f) Injunctive Relief. The parties recognize that a remedy at law for
a breach of the provisions of this Section 5 may be inadequate and any
breach or threatened breach thereof will cause irreparable injury to the
Company. Accordingly, for its complete protection, the Company shall have
the right to obtain (without the necessity of posting any bond or other
security in connection therewith) injunctive relief, whether mandatory or
restraining, to enforce the provisions hereof. Such remedies shall not be
exclusive and shall be in addition to any other remedy, at law or in
equity, which the Company may have for any breach or threatened breach of
this Section 5 by the Executive.
(g) Blue Penciling. If a court of competent jurisdiction determines
that any of the provisions of this Section 5, or any part thereof, is
unenforceable because of the scope, duration or area of applicability of
such provision(s), it is the intention of the parties that the court making
such determination shall: (i) modify such scope, duration or area, or all
of them, only to the extent required to cause such provision(s) to be
deemed enforceable; and (ii) that such provision(s) as so modified shall
then be deemed by such court to be applicable and enforceable in such
modified form and shall be enforced.
6. Miscellaneous.
(a) Legal Fees. In the event that either party institutes a legal
action or proceeding against the other to enforce or interpret this
Agreement or any of its terms, if a court of competent jurisdiction
determines that the Executive has violated this Agreement, the Executive
agrees to pay, in addition to all other damages awarded, the reasonable
costs and legal fees incurred by the Company in enforcing the Company's
rights hereunder. However, if the court determines that the Company has
violated this
7
Agreement, the Company shall reimburse the Executive for his reasonable
costs and legal fees in connection with such action.
(b) No Conflicts. The Executive represents and warrants to the Company
that neither the entering into of this Agreement nor the performance of any
obligations hereunder will conflict with or constitute a breach under any
obligation of the Executive under any agreement or contract to which the
Executive is a party or any other obligation by which the Executive is
bound.
(c) Successors and Assigns. The Company may assign this Agreement in
connection with a merger, consolidation, assignment, sale or other
disposition of substantially all of its assets or business. This Agreement
shall be binding on and inure to the benefit of the Company's successors
and assigns. This Agreement shall not be assignable by the Executive, but
it shall be binding upon, and shall inure to the benefit of, his heirs,
executors, administrators and legal representatives.
(d) Modification. This Agreement may be modified or amended only by a
writing signed by the Company and the Executive.
(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
(f) Dispute Resolution. Except for any proceeding brought pursuant to
Section 4(d) or 5(f) herein, the parties agree that any and all claims,
controversies and disputes of any nature whatsoever arising out of or
related in any way to the Executive's employment by the Company, including,
without limitation, any and all claims, controversies and disputes related
to his hiring, the terms of his employment or the termination of his
employment, and any dispute arising out of or relating to this Agreement or
the formation, breach, termination or validity thereof (a "Dispute"), will
be resolved as follows. If the Dispute cannot be settled through direct
discussions, the parties will first try to settle the Dispute in an
amicable manner by mediation under the Commercial Mediation Rules of the
American Arbitration Association, before resorting to arbitration. Any
Dispute that has not been resolved within thirty (30) days of the
initiation of the mediation procedure (the "Mediation Deadline") will be
settled by binding arbitration by a panel of three arbitrators in
accordance with the commercial arbitration rules of the American
Arbitration Association. The arbitration and mediation proceedings will be
located in either San Francisco, California or New York, New York, at the
sole discretion of the Company. Judgment upon any arbitration award may be
entered into any court having jurisdiction thereof and the parties' consent
to the jurisdiction of the courts the state in which the arbitration
occurred for this purpose.
(g) Construction. Subject to Section 5(g), if any provision of this
Agreement shall be held invalid or unenforceable, such invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall
8
be carried out as if any such invalid or unenforceable provision were not
contained herein, unless the invalidity or unenforceability of such
provision substantially impairs the benefits of the remaining portions of
this Agreement.
(h) Waivers. No failure or delay by the Company or the Executive in
exercising any right or remedy under this Agreement will waive any
provision of this Agreement, nor will any single or partial exercise by
either the Company or the Executive of any right or remedy under this
Agreement preclude either of them from otherwise or further exercising
these rights or remedies, or any other rights or remedies granted by any
law or any related document.
(i) Entire Agreement. This Agreement supersedes all previous and
contemporaneous oral negotiations, commitments, writings and understandings
between the parties concerning the matters in this Agreement.
(j) Notices. All notices and other communications required or
permitted under this Agreement will be in writing and sent by registered
first-class mail, return receipt requested, by overnight courier service or
by hand delivery and will be effective after five days after mailing to the
addresses stated at the beginning of this Agreement or upon delivery to
such address if by courier or hand delivery. These addresses may be changed
at any time by like notice. A copy of any notice sent to the Company shall
be sent to Xxxxx X. Xxxxxxx, Esq., Xxxxxxx, Xxxxxxx & Xxxxxx, LLP, 0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, facsimile number: (212)
407-0606.
(k) Advice of Counsel. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT,
IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE
ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE
TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE
CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION
THEREOF.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date first above written.
CHIPCARDS, INC. EXECUTIVE
By:
--------------------------------- --------------------------------
Name: Xxxx Xxxxxxx
Title:
9
