SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (the "Agreement") is
effective as of May 19, 2005, by and between I.Q. Biometrix, Inc., a Delaware
corporation (the "Company") and Xxxxxxx X. X. Xxxxxxxxx (the "Executive").
RECITALS
WHEREAS the Company and Executive entered into an Employment Agreement
effective January 1, 2004 (the "Employment Agreement") as amended on March 2,
2004 ;
WHEREAS, I.Q. Biometrix, Inc. ("IQB"), Wherify Wireless, Inc. ("Wherify")
and Wherify Acquisition, Inc., a newly-formed wholly-owned subsidiary of IQB
established under the laws of the state of California (the "Merger Sub") have
entered into an Agreement and Plan of Merger, dated April 13, 2004 (the "Merger
Agreement") as amended from time to time, pursuant to which Wherify has agreed,
subject to certain terms and conditions, to merge with and into Merger Sub (the
"Merger");
WHEREAS, subject to the Closing of the Merger, as defined in the Merger
Agreement, the Company and Executive desire to amend the Employment Agreement to
clarify and/or amend several of Executive's rights and responsibilities under
the Employment Agreement;
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth herein, the Company and the
Executive hereby amend the Employment Agreement as set forth below.
1. Term and Renewal. Section 2 of the Employment Agreement is hereby amended in
its entirety to read as follows:
"2.1 Term. This Agreement shall commence January 1, 2004 (the
"Commencement Date") and terminate on the last day of the month in which
the second anniversary date of the "Closing" (as defined in the Merger
Agreement) has occurred (the "Expiration Date") unless automatically
extended for an additional 24 month period pursuant to Section 2.2 hereof
or sooner terminated as hereinafter provided (each such period, an
"Employment Period"). Notwithstanding the foregoing, if the Closing has
not occurred on, or prior to, December 31, 2005, the initial Expiration
Date shall be December 31, 2007.
2.2 Renewal. Following the expiration of the initial or any renewal
Employment Period and provided that this Agreement has not been terminated
by the Executive or the Company pursuant to its terms, this Agreement
shall be automatically renewed on the terms set forth herein for an
additional twenty-four (24) month period, effective on each anniversary
date following the initial Expiration Date."
2. Termination. Notwithstanding anything to the contrary set forth in Section
5.6 of the Employment Agreement, "Good Reason" shall not include a change after
the Closing in Executive's job responsibilities and duties which existed prior
to the Closing as such pre-Closing duties and responsibilities are specifically
contemplated to be changed after the Closing in accordance with the specific
provisions set forth under this Employment Agreement.
3. Compensation Upon Termination.
(b) Section 6.5 of the Employment Agreement shall be amended and
restated as follows:
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"6.5 Termination After A Change of Control. Notwithstanding
the provisions of Sections 6.3 or 6.4 above, if within six (6) months following
a Change in Control as defined in Section 5.7 hereof (the "Severance Period")
(which Change of Control, in any event, shall be deemed have occurred on the
"Closing Date" of the merger between the Company and Wherify as defined in the
Merger Agreement) , (X) the Company terminates Executive without Cause, as
defined in Section 5.3, or (Y) Executive terminates his employment for Good
Reason pursuant to Section 5.6 above, instead of, and not in addition to, the
compensation to be paid to Executive pursuant to Sections 6.3 and 6.4 above, the
Company shall pay the Executive: (x) his Base Salary and other benefits through
and including the Date of Termination; and, (y) an amount equal to (i) three (3)
times Executive's Base Salary at the annual Base Salary then currently in
effect, and (ii) three (3) times the total amount of all Milestone Bonuses that
Executive was eligible to earn, whether or not fully earned, as though such
Milestone Bonuses were fully earned at the time of such termination
(collectively, (x)-(y) the "Severance Payment"). The Severance Payment set forth
in this Section 6.5 shall not accrue or be paid if such termination without
Cause or for Good Reason occurs after the Severance Period. After the Severance
Period (or during the Severance Period if this Section 6.5 does not apply), the
compensation set forth in Sections 6.3 and 6.4 above shall control. To the
extent the amount of any Milestone Bonus shall have not been determined or
reasonably agreed to, the amount of the Milestone Bonuses shall be equal to the
total Milestone Bonuses for which Executive was eligible during the prior year.
Additionally, all stock options to purchase the Company's stock granted to the
Executive as of the Date of Termination and which have not vested prior to the
Date of Termination shall automatically become immediately vested and
exercisable by the Executive on the Date of Termination and shall remain
exercisable for a period of one year. The provisions of this paragraph shall
constitute an amendment to any existing stock option agreements between the
Company and Executive as of the Effective Date."
4. Exhibit A to the Employment Agreement is hereby amended in its entirety to
read as set forth on Exhibit A attached hereto.
5. Remaining Provisions. Except as set forth herein, all other terms and
conditions of the Employment Agreement shall remain the same.
IN WITNESS WHEREOF, the parties have executed this Second Amendment to
Employment Agreement as of the date and year first above written.
"Company" "Executive"
IQ BIOMETRIX, INC., a Delaware corporation
By:
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Title: Xxxxxxx X. X. Xxxxxxxxx
EXHIBIT A
Milestone Bonus Plan
(a) Acquisition Bonus: Executive shall be entitled to receive a
performance bonus of Twenty-Five Thousand Dollars ($25,000) upon the Company's
acquisition of or merger with one or more entities which produce at least One
Million Dollars ($1,000,000) of revenue as reported by the Company in any
financial report to the Securities and Exchange Commission for any periods
ending December 31, 2005 ("Acquisition Bonus").
(b) Capital Funding Bonus: Executive shall be entitled to receive a bonus
of Ten Thousand Dollars ($10,000) for each One Million Dollars ($1,000,000) of
funding that the Company receives during the Twelve (12) month period ending
December 31, 2005, up to a maximum of Five Million Dollars ($5,000,000) in such
funding and Fifty Thousand Dollars ($50,000) in such bonus ("Funding Bonus").
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(c) Corporate Facility Bonus: Executive shall be entitled to receive a
performance bonus of Twenty Thousand Dollars ($20,000) upon the successful
location, organization and complete staffing of the Company's headquarter
facilities in the "South Bay" area of San Francisco ("Organization Bonus").
The Executive Compensation Committee of the Company's Board of Directors shall
determine bonuses, if any, for periods ending after December 31, 2005.
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