Exhibit 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement, dated as of November 1, 2000, is by and between
Chipcards, Inc., a California corporation (the "Company"), and Xxxxxxx Xxx (the
"Employee").
WHEREAS, the Company and Employee desire to enter into an Employment
Agreement setting forth the terms and conditions of Employee's employment with
the Corporation; and
WHEREAS, the Company desires assurance of the continued association and
services of the Employee in order to retain her experience, abilities, and
knowledge, and is therefore willing to engage her services on the terms and
conditions set forth below, and the Employee 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 Employee, each
intending to be legally bound, agree as follows:
1. Employment.
(a) Duties. The Employee will serve the Company faithfully to the best
of her ability and shall perform such duties as shall be assigned and
designated by the President or the Board of Directors of the Corporation.
2. Compensation.
(a) Salary. For all duties and services to be performed by the
Employee hereunder, the Company shall pay the Employee an annual salary
(the "Base Salary") in the amount of One Hundred Thousand Dollars
($100,000) 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 Employee'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), Employee 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 Employee'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 Employee for all reasonable out-of-pocket business expenses
incurred by the Employee on behalf of or in connection with the services
rendered to the Company, provided that the Employee properly accounts to
the Company for all such expenses in accordance with the rules and
regulations of the Internal Revenue Service under the
1
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 Employee is entitled to participate in all normal
and customary employee benefit plans adopted by the Company to the extent
that the Employee 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 Employee shall be entitled to three (3) weeks of
paid vacation each twelve-month period, which shall accrue on a pro rata
basis from the date the Employee's employment commences under this
Agreement. In the event that the Employee 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 her or its intention not
to renew.
(b) Termination. Subject to the respective continuing obligations of
the Company and the Employee under Sections 4 and 5:
(1) The Company may terminate this Agreement immediately on
written notice to the Employee for "Cause." For purposes of this
Section 3, Cause shall mean: (i) conduct by the Employee 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 Employee's willful misconduct or negligence in the performance of
her duties hereunder, including the failure or refusal to comply with
any legal directives of the Board of Directors; (iii) the commission
by the Employee of an act constituting a felony for which the Employee
has been convicted or has pleaded nolo contendere; (iv) the commission
of a crime by the Employee involving moral turpitude or fraud for
which the Employee has been convicted or has pleaded nolo contendere;
(v) the failure to substantially perform her duties hereunder after
written notice and failure to cure within fifteen (15) days (other
than by reason of disability); (vi) chronic and unexcused absenteeism;
(vii) the Employee's use of alcohol or any controlled substance to an
extent that it
2
interferes with the performance of her duties under this Agreement; or
(viii) a breach by the Employee of any of her obligations under this
Agreement.
(2) This Agreement will terminate upon the Employee's death or
upon written notice from the Company in the event of the Employee's
"permanent disability." The term "permanent disability" means a
physical or mental incapacity or disability which renders the Employee
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 Employee'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 Employee's attending
physician and such physician retained by the Company, the matter shall
be resolved by a third licensed physician selected jointly by the
Employee'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 Employee.
The date this Agreement is terminated is hereinafter referred to as
the "Termination Date."
(c) Compensation Upon Termination.
(1) If the Employee 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 Employee
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.
(2) If this Agreement terminates pursuant to paragraph (2) of
Section 3(b), the Company will be obligated to pay the Employee: (i)
Base Salary as may be due and owing or otherwise accrued through the
Termination Date; (ii) an additional amount equal to the Employee'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 Employee or her
personal representative pursuant to insurance policies maintained by
the Company for the benefit of the Employee; 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 Employee (i) Base
3
Salary as may be due and owing or otherwise accrued through the
Termination Date; (ii) an additional amount equal to the Employee's
Base Salary for a period of three (3) months following the Termination
Date or, if shorter, the balance of the Term had her employment not
been so terminated, at the rate in effect on the Termination Date, as
a severance payment (which sum the Employee 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 Employee; 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 Employee will not disclose, divulge or make accessible the
Confidential Information or any part thereof to any unauthorized person or
entity or use it for her own benefit or the benefit of any third party;
(ii) the Employee will use all reasonable care to protect the Confidential
Information of the Company from unauthorized use, disclosure and
publication; and (iii) the Employee will not render any services to any
person, firm, corporation, partnership, limited liability company,
association or other entity to which any such Confidential Information, in
whole or in part, has been disclosed or is threatened to be disclosed by or
at the instance of the Employee. The Employee 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
4
compiled by the Employee or made available to the Employee 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 Employee'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 Employee.
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 Employee represents and warrants to the
Company that he is not currently subject to a non-competition,
confidentiality or other such agreement which prohibits the Employee from
working for the Company.
(b) Non-Compete. The Employee agrees that, during her employment with
the Company and for a period of one (1) year after employment with the
Company terminates for any reason whatsoever, the Employee 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 her 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, 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
5
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 Employee'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 Employee's employment with the Company.
(c) Personal Investments. Nothing herein contained shall prevent the
Employee 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 Employee (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 Employee'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
6
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 Employee.
(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 Employee has violated this Agreement, the Employee
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 Agreement, the Company shall reimburse the Employee for her
reasonable costs and legal fees in connection with such action.
(b) No Conflicts. The Employee 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 Employee under any agreement or contract to which the
Employee is a party or any other obligation by which the Employee 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 Employee, but it
shall be binding upon, and shall inure to the benefit of, her 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 Employee.
(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 Employee's employment by the Company, including,
without limitation, any and all claims, controversies and disputes related
to her hiring, the terms of her employment or the
7
termination of her 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 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 Employee 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 Employee 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
8
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 Employee have executed this
Agreement as of the date first above written.
CHIPCARDS, INC. EMPLOYEE
By:
------------------------------- -------------------------------
Name: Xxxxxxx Xxx
Title:
9
