EMPLOYMENT AGREEMENT
Exhibit
99.1
THIS EMPLOYMENT
AGREEMENT ("Agreement") is by and between Patriot Scientific Corporation, a
Delaware corporation ("Employer" or the "Company") and Xxxx Xxxxxxx
("Executive").
In
consideration of the promises and mutual covenants contained herein, and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto do hereby agree as follows:
1. Employment. Upon the terms and conditions
hereinafter set forth, Employer hereby employs Executive to serve as the Interim
President and Chief Executive Officer ("CEO") of the Company, and Executive
hereby accepts such employment under the terms and conditions set forth herein.
Executive's interim position may be converted to the Company's standing
President/CEO by the mutual agreement of Employer and Executive with approval of
the Company's Board of Directors or the Executive Committee, if applicable,
(hereinafter collectively referred to as the "Board of Directors"), providing
that the interim period not exceed nine (9) months from the Effective
Date.
2. Effective Date. The effective date of
the Agreement shall be February 29, 2008 (the "Effective Date"). The employment
relationship pursuant to this Agreement shall be for an initial one hundred
twenty (120) day period commencing on the Effective Date set forth above
("Initial Term"), unless sooner terminated in accordance with Sections 4 and 7
below. On completion of the Initial Term specified above, and if not terminated
pursuant to Section 7 below, this Agreement will extend for a one year term
("One Year Term") and will be terminable by either party, with or without cause
as set forth in Sections 4 and 7 of this Agreement. If neither party has
terminated the Agreement within one year of the expiration of the Initial Term,
the employment relationship as set forth in this Agreement shall continue in
accordance with the terms of this Agreement on a day to day basis, except that
the provisions set forth in Section 7 shall not apply.
3. 3.Duties. Except as outlined in Exhibit
B, executive shall devote his entire business time, attention and energies to
the furtherance of business activities of the Company, including, but not
limited to all duties reasonable and consistent with that normally designated to
the office of president and CEO and such other duties and responsibilities that
may be assigned to him by the Board of Directors.
Executive
shall report to the Board of Directors and have such authority as is delegated
by the Board of Directors. Executive shall be governed by the policies and
practices established by the Company. Employer requires that: (i) Executive will
devote his utmost knowledge and best skill to the performance of his duties;
(ii) Executive shall devote his full business time, except as outlined in
Exhibit B, or as otherwise approved in writing, in advance, by the Board of
Directors, to the rendition of such services which time shall not be less than
40 hours per week, subject to absences for customary vacations and for
temporary illness; and (iii) Except as outlined in Exhibit B, Executive will not
engage in any other gainful occupation which requires his personal attention
and/or creates a conflict of interest with his job responsibilities under this
Agreement
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without
the prior written consent of the Board of Directors , with the exception that
Executive may personally trade in stock, bonds, securities, commodities or real
estate investments for his own benefit.
Executive's
job performance will be reviewed within four (4) months of the Effective Date,
and annually thereafter. Executive acknowledges and understands that performance
reviews do not necessitate or correlate with salary increases and that a
favorable performance review neither guarantees continued employment nor
increased compensation.
4. At-Will
Employment. Executive and
Employer agree that Executive's employment may be terminated by Executive or by
Employer, with or without cause any time prior to the expiration of the Initial
Term and/or the One Year Term in accordance with paragraph 7 of the Agreement,
and any time after the One Year Term without regard to paragraph 7. Executive
and Employer expressly agree that this provision is intended by Executive and
Employer to be the complete and final expression of their understanding
regarding the terms and conditions under which Executive's employment may be
terminated. Executive and Employer further understand and agree that no
representation contrary to this provision is valid, and that this provision may
not be augmented, contradicted or modified in any way, except in writing signed
by Executive and the Compensation Committee of the Board of
Directors.
5. Compensation.
5.1 Base Salary. Executive shall be
paid an annual base salary of Two Hundred
Fifty Thousand Dollars ($250,000), payable according to Employer's payroll
schedule and subject to applicable state and federal withholdings and other
payroll deductions.
5.2 Bonus. In addition to
Executive's base salary, Executive shall receive an amount
equivalent to his annual base salary at the time Executive's interim position is
converted by the Board of Directors to the Company's standing President/CEO or
upon the expiration of the nine month period after the Effective Date, whichever
occurs first, providing Executive remains employed by the Company at such time.
In the event Executive's employment is terminated without cause (and not by
death or disability) during the nine (9) month period after the Effective Date,
Executive shall receive a pro-rata portion of the bonus based on the term
Executive was actually employed by the Company.
5.3 Stock Options. Executive shall
also receive the following Stock Options as
additional compensation. The Stock Options referenced below will be granted
pursuant to, and will at all times be subject to, the terms of the Patriot
Scientific Corporation 2001, 2003 and 2006 Stock Option Plans ("Plans") and the
Stock Option Agreements pursuant to which they are granted.
(1) The Company
shall provide Executive with a combination of qualified and non-qualified
stock option for exercise into Three Hundred Thousand (300,000) shares of the
Company's common stock effective as of the Effective Date of this Agreement (the
"Signing Bonus Option"). The xxxxx xxxxx of the Signing Bonus Option shall be
the closing sales price of the Company's common stock on February 29, 2008 as
quoted on the OTC Bulletin Board, or if there is no closing
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sales
price on that date, the closing selling price on the last preceding date for
which such quotation exists. 100% of the shares subject to the Signing Bonus
Option will vest immediately.
(2) The
Company shall provide Executive with a non-qualified stock option
for
exercise into Seven Hundred Thousand (700,000) shares of the Company's common
stock effective as of the Effective Date of this Agreement (the "Interim Bonus
Option"). The
xxxxx xxxxx of the Interim Bonus Option shall be the closing sales price
of the Company's common stock on February 29, 2008 as quoted on the OTC Bulletin
Board, or if there is no closing sales price on that date, the closing selling
price on the last preceding date for which such quotation exists. 100% of the
shares subject to the Interim Bonus Option will vest at the time Executive's
interim position is converted by the Board of Directors to the Company's
standing President/CEO or upon the expiration of the nine month period after the
Effective Date, whichever occurs first, providing Executive remains employed by
the Company at such time. In the event Executive's employment is terminated
without cause (and not by death or disability) during the nine (9) month time
period after the Effective Date, Executive shall receive a pro-rata portion of
the Interim Bonus Option based on the term Executive was actually employed by
the Company.
(3) The
Company shall provide Executive with a non-qualified stock option
for
exercise into Two Million (2,000,000) shares of the Company's common stock
effective as of the Effective Date of this Agreement (the "Event Bonus Option").
The xxxxx xxxxx of the Event Bonus Option shall be the closing sales price of
the Company's common stock on February 29, 2008 as quoted on the OTC Bulletin
Board, or if there is no closing sales price on that date, the closing selling
price on the last preceding date for which such quotation exists. 100% of the
shares subject to the Event Bonus Option will vest, and Executive's interim
position will be converted to standing President/CEO, upon the effective date of
any one of the following events: (i) the successful closing of a merger or
acquisition brought forth primarily due to the efforts of Executive (excluding
any merger or acquisition with TPL or
any affiliated company) as approved by the Board of Directors; (ii) the
listing of the Company on the Amex or NASDAQ stock exchanges as approved by the
Board of Directors; (iii) a "sustained substantial increase in shareholder
value" (as defined below) directly resulting from an Executive action approved
by the Board of Directors; or (iv) approval by the Board of Directors for the
partial vesting of the Event Bonus Option. For purposes of this section, a
"sustained substantial increase in shareholder value" shall be defined as
follows: "an sustained increase in Patriot's Market Capitalization to over $400
million for a
period of no less than 90 days. "
6. Fringe
Benefits.
6.1 Benefits.
Executive shall, in accordance with Company policy and the terms of
the applicable plan documents, be eligible to participate in benefits under any
Company benefit plan or arrangement which may be in effect from time to time and
made available to its
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management
employees. Notwithstanding the current policy, Employer agrees to pay 100% of
employee cost for such medical benefits for Executive and his dependents during
the Executive's interim position.
6.2 Vacation. Executive shall
earn vacation days at the rate of fifteen (15) days per
year. Unused vacation shall carry over to the next year, but Executive shall
cease accruing further vacation at any time Executive has accrued twenty-three
(23) vacation days, and shall not accrue further vacation days until Executive
has used some or all of the accrued vacation days. Unused vacation days which
are not in excess of twenty-three (23) vacation days shall be paid in a cash
lump sum payment promptly after Executive's termination of employment. Executive
shall earn vacation days at the rate of twenty (20) days per year after 12
months of employment.
6.3 Automobile Allowance.
Employer shall pay Executive up to One Thousand
Dollars ($1,000) per month as an automobile allowance during the term of this
Agreement.
6.4 Expenses. Employer shall
reimburse Executive on a monthly basis for receipts
Executive submits for all reasonable and necessary travel and other business
expenses incurred by Executive in the performance of Executive's duties
hereunder, consistent with Employer's normal expense reimbursement policy.
Executive will be provided reimbursement for reasonable cell phone and home
Internet services, minus the personal use allowance, under the Company's
policy.
6.5 D&O
Insurance Coverage. Executive will also be provided coverage
under
the Company's D&O policy as its President and CEO and, additionally be
covered, for participation on certain outside company Boards as designated by
the Company based on the Company's
investments or other interests.
7. Termination.
7.1 Termination
With
Cause. If Executive (a)
breaches in any material respect or fails
to fulfill any fiduciary duty owed to Employer, as determined by the Board of
Directors in its sole discretion; (b) breaches in any material respect this
Agreement or any other confidentiality or non-solicitation, non-competition
agreement between Employer and Executive as determined by the Board of Directors
in its sole discretion; (c) pleads guilty to or is convicted of a felony, a
crime of moral turpitude or any other crime; (d) is found to have engaged in any
reckless, unprofessional, unethical, fraudulent, dishonest or grossly negligent
misconduct, or act of moral turpitude or in any manner that is detrimental to
the reputation, character or standing of Employer, (e) fails to satisfactorily
perform his duties to the Company, provided that Executive fails to cure any
such failure within thirty (30) days after written notice from Employer of such
failure, provided further, however, that such right to cure shall not apply to
any repetition of the same failure previously cured hereunder; or (f) violates
any material rule, regulation or policy of the Company that may be established
and made known to Employer's employees from time to time, including without
limitation, the Company Employee Handbook, a copy of which has been provided to
Executive, Employer may terminate immediately his employment and Executive shall
have no right to receive any compensation or benefit hereunder after such
termination other
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than base
salary and vacation earned or accrued but unpaid as of the date of termination.
Executive shall not be entitled to any severance, bonus, unvested options or
proration thereof, if terminated under this paragraph.
7.2 Termination Without Cause.
As stated in Section 4 of this Agreement, Executive
or the Company may at any time terminate Executive's employment with or without
cause. If the Company terminates Executive's employment during the One Year Term
as defined above and such termination is not a Termination With Cause as defined
above, the Company shall continue to pay Executive's base salary then in effect
as of the date of such termination on a pro-rated basis for a minimum period of
six (6) months according to Employer's payroll schedule and subject to
applicable withholdings for the remaining term of the Agreement ("Severance"),
if Executive signs a general release and agrees not to make any derogatory or
disparaging comments. Such Severance does not include the continuation of
benefits after termination or the proration of any bonus except as expressly
provided herein. The parties acknowledge that Severance under this provision is
not available during the Initial Term.
In order to
be entitled to the Severance reflected herein, Executive must sign a separation
agreement which shall include a general release of all claims known and unknown,
against Employer, its officers and directors, agents and employees and any
related entities or persons ("Releasees") and an agreement by Executive not to
make, directly or indirectly, disparaging or derogatory comments about the
Releasees, in a form to be provided by Employer's legal advisors. Although a
copy of the Company's current standard general release shall be available for
Executive's review upon his request, Executive acknowledges that such release is
subject to change at the Company's discretion. Nothing herein will be construed
to limit or modify the duty of Executive to mitigate Executive's damages in the
event Employer terminates Executive's employment without Cause.
7.3 Termination Upon Death or
Disability. Executive's employment shall
terminate
upon his death or disability ("disability" being defined as any mental or
physical condition which, in the reasonable opinion of a mutually agreed upon
licensed physician and/or psychiatrist (as the case may be), renders Executive
unable or incompetent to carry out Executive's duties under this Agreement, with
or without reasonable accommodation, for a period of at least four months). In
the event of a termination of Executive's employment for death or disability,
Executive shall have no right to receive any further compensation or benefit
hereunder after such termination other than base salary and vacation earned or
accrued but unpaid as of the date of termination.
8. Trade Secrets. Confidential Information and
Inventions.
8.1 Trade Secrets In General.
During the course of Executive's employment, Executive
will have access to various trade secrets, confidential information and
inventions of Employer as defined below.
(i) "Confidential
Information" means all information and material which is proprietary
to the Company, whether or not marked as "confidential" or "proprietary" and
which is disclosed to or obtained from the Company by the Executive, which
relates to the Company's past, present or future research, development or
business activities. Confidential Information is
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all
information or materials prepared by or for the Company and includes, without
limitation, all of the following: business records, intellectual property
licensing programs, licensing terms and conditions, strategic planning, business
acquisition planning, business development, joint venture planning, forward
planning, strategic initiatives, prospective patent portfolio information,
prospective investor information, prospective joint venture information,
designs, drawings, specifications, techniques, models, data, source code, object
code, documentation, diagrams, flow charts, research, development, processes,
systems, methods, machinery, procedures, "know- how", new product or new
technology information, formulas, patents, patent applications, product
prototypes, product copies, cost of production, manufacturing, developing or
marketing techniques and materials, cost of production, development or marketing
time tables, customer lists, strategies related to customers, suppliers or
personnel, contract forms, pricing policies and financial information, volumes
of sales, and other information of similar nature, whether or not reduced to
writing or other tangible form, and any other Trade Secrets, as defined by
subparagraph (iii), or non-public business information. Confidential Information
does not include any information which (I) was in the lawful and unrestricted
possession of the Executive prior to its disclosure by the Company, (2) is or
becomes generally available to the public by acts other than those of the
Executive after receiving it, or (3) has been received lawfully and in good
faith by the Executive from a third party who did not derive it from the
Company.
(ii) "Inventions"
means all discoveries, concepts and ideas, whether patentable or not,
including
but not limited to, processes, methods, formulas, compositions, techniques,
articles and machines, as well as improvements thereof or "know-how" related
thereto, relating at the time of conception or reduction to practice to the
business engaged in by the Company, or any actual or anticipated research or
development by the Company.
(iii) "Trade
Secrets" shall mean any scientific or technical data, information, design,
process, procedure, formula or improvement that is commercially available to the
Company and is not generally known in the industry.
This
section includes not only information belonging to Employer which existed before
the date of this Agreement, but also information developed by Executive for
Employer or its employees during his employment and thereafter.
8.2 Restriction on Use of Confidential
Information. Executive agrees that his use of
Trade Secrets and other Confidential Information is subject to the following
restrictions during the term of the Agreement and for an indefinite period
thereafter so long as the Trade Secrets and other Confidential Information have
not become generally known to the public.
8.2.1
Non-Disclosure. Except
as required by the performance of the Executive's services to the Company under
the terms of this Agreement, neither the Executive nor any of his agents or
representatives, shall, directly or indirectly, publish or otherwise disclose,
or permit others to publish, divulge, disseminate, copy or otherwise disclose
the Company's Trade Secrets, Confidential Information and/or Inventions as
defined above.
8.2.2
Use
Restriction.
Executive shall use the Trade Secrets, other Confidential Information and/or
Inventions only for the limited purpose for which they were disclosed. Executive
shall not disclose the Trade Secrets, other Confidential Information
and/or
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Inventions
to any third party without first obtaining written consent from the Board of
Directors and shall disclose the Trade Secrets, other Confidential Information
and/or Inventions only to Employer's own employees having a need know. Executive
shall promptly notify the Board of Directors of any items of Trade Secrets
prematurely disclosed.
8.2.3
Surrender Upon Termination.
Upon termination of his employment
with Employer for any reason, Executive will surrender and return to Employer
all documents, equipment, materials and records (in any media) in his possession
or control which reference or contain Trade Secrets, Inventions and other
Confidential Information. Executive shall immediately return to the Company all
lists, books, records, materials and documents, together with all copies
thereof, and all other Company property in his possession or under his control,
relating to or used in connection with the past, present or anticipated business
of the Company, or any affiliate or subsidiary thereof. Executive acknowledges
and agrees that all such lists, books, records, materials and documents, are the
sole and exclusive property of the Company. If Executive does not promptly
surrender the aforementioned Company property and documents, Executive agrees
that he shall be responsible for reimbursing Employer for all costs, including
attorneys' fees, incurred by Employer in an attempt to recover said property and
documents.
8.2.4
Prohibition Against Unfair
Competition. At any time after the termination of his
employment with Employer for any reason, Executive will not engage in
competition with Employer while making use of the Trade Secrets of
Employer.
8.2.5
Patents and Inventions.
The Executive agrees that any inventions made, conceived or completed by
him during the term of his service, solely or jointly with others, which are
made with the Company's equipment, supplies, facilities or Confidential
Information, or which relate at the time of conception or reduction to purpose
of the invention to the business of the Company or the Company's actual or
demonstrably anticipated research and development, or which result from any work
performed by the Executive for the Company, shall be the sole and exclusive
property of the Company. The Executive promises to assign such inventions to the
Company. The Executive also agrees that the Company shall have the right to keep
such inventions as trade secrets, if the Company chooses. The Executive agrees
to assign to the Company the Executive's rights in any other inventions where
the Company is required to grant those rights to the United States government or
any agency thereof. In order to permit the Company to claim rights to which it
may be entitled, the Executive agrees to disclose to the Company in confidence
all inventions which the Executive makes arising out of the Executive's service
and all patent applications filed by the Executive within one year after the
termination of his service.
The
Executive shall assist the Company in obtaining patents on all inventions,
designs, improvements and discoveries patentable by the Company in the United
States and in all foreign countries, and shall execute all documents and do all
things necessary to obtain letters patent, to vest the Company with full and
extensive title thereto, and to protect the same against infringement by
others.
9. Solicitation of Employees or
Customers.
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9.1 Information About Other
Employees. Executive will be called upon to work
closely with employees of Employer in performing services under this Agreement.
All information about such employees which becomes known to Executive during the
course of his employment with Employer, and which is not otherwise known to the
public, including compensation or commission structure, is a Trade Secret of
Employer and shall not be used by Executive in soliciting employees of Employer
at any time during or after termination of his employment with
Employer.
9.2 Solicitation of Employees
Prohibited. During Executive's employment
and for
one year following the termination of Executive's employment, Executive shall
not, directly or indirectly ask, solicit or encourage any employee(s) of
Employer to leave their employment with Employer. Executive further agrees that
he shall make any subsequent employer aware of this non-solicitation
obligation.
9.3 Solicitation of Customers
Prohibited. For a period of one year following the
termination of Executive's employment, Executive shall not, directly or
indirectly solicit the business of any of Employer's customers in any way
competitive with the business or demonstrably anticipated business of the
Company. Executive further agrees that he shall make any subsequent employer
aware of this non-solicitation obligation.
10. Non-Competition. During the
course of Executive's employment with the Company,
Executive shall not directly or indirectly own any interest in (other than
owning less than 5% of a publicly held company), manage, control, participate in
(whether as an officer, director, employee, partner, agent, representative,
volunteer or otherwise), consult with, render services for or in any manner
engage (whether or not during business hours) anywhere in the Restricted
Territories (as defined below) in any business activity that is in any way
competitive with the business or demonstrably anticipated business of the
Company. Further, Executive will not during the course of his employment with
the Company assist any other person or organization in competing or in preparing
to compete with any business or demonstrably anticipated business of the Company
anywhere in the Restricted Territories.
"Restricted
Territories" shall mean any county in the State of California or any other state
or territory in the United States or any other similar political subdivision in
any state or foreign country in which the Company has done business or has
actually investigated doing business or where its products are sold or
distributed whether or not for compensation.
11. Unfair
Competition, Misappropriation of Trade Secrets and Violation of
Solicitation/Noncompetition
Clauses. Executive acknowledges that unfair competition,
misappropriation
of trade secrets
or violation of any of the provisions contained in paragraphs 8 through
10 would cause irreparable injury to Employer, that the remedy at law for any
violation or threatened violation thereof would be inadequate, and that Employer
shall be entitled to temporary and permanent injunctive or other equitable
relief without the necessity of proving actual damages.
12. Representation Concerning Prior
Agreements.
Executive represents to Employer that he
is not bound by any non-competition and/or non-solicitation agreement that would
preclude, limit or in any manner affect his employment with Employer. Executive
further
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represents
that he can fully perform the duties of his employment without violating any
obligations he may have to any former employer, including but not limited to,
misappropriating any proprietary information acquired from a prior employer.
Executive agrees that he will indemnify and hold Employer harmless from any and
all liability and damage, including attorneys' fees and costs, resulting from
any breach of this provision.
13. Personnel Policies and
Procedures. The Employer shall have the authority to
establish
from time to time personnel policies and procedures to be followed by its
employees. Executive agrees to comply with the policies and procedures of the
Employer. To the extent any provisions in Employer's personnel policies and
procedures differ with the terms of this Agreement, the terms of this Agreement
shall apply.
14. Amendments. No amendment or
modification of the terms or conditions of this Agreement
shall be valid unless in writing and signed by the parties hereto.
15. Successors and Assigns. The
rights and obligations of the Employer under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of Employer. Executive shall not be entitled to assign any of his rights
or obligations under this Agreement.
16. Governing Law. This
Agreement shall be interpreted, construed, governed and enforced
in accordance with the laws of the State of California.
17. Severability. Each term,
condition, covenant or provision of this Agreement shall be viewed
as separate and distinct, and in the event that any such term, covenant or
provision shall be held by a court of competent jurisdiction to be invalid, the
remaining provisions shall continue in full force and effect.
18. Survival. The provisions in
paragraphs 8 through 11, 14 through 23, inclusive, of this
Agreement shall survive termination of Executive's employment, regardless of who
causes the termination and under what circumstances.
19. Waiver. Neither party's failure
to enforce any provision or provisions of this Agreement
shall be deemed or in any way construed as a waiver of any such provision or
provisions, nor prevent that party thereafter from enforcing each and every
provision of this Agreement. A waiver by either party of a breach of provision
or provisions of this Agreement shall not constitute a general waiver, or
prejudice the other party's right otherwise to demand strict compliance with
that provision or any other provisions in this Agreement.
20. Notices. Any notice
required or permitted to be given under this Agreement shall be
sufficient, if in writing, sent by mail to Executive's residence in the case of
Executive, or hand delivered to the Executive, and, in the case of Employer, to
the Board of Directors at the principal corporate office.
21. Arbitration.
The parties agree that disputes concerning the terms of this Agreement
and Executive's employment under this Agreement are subject to arbitration in
accordance with the Employee Arbitration Agreement attached hereto as Exhibit
"A" and incorporated by this reference as though fully set forth
herein.
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22. Entire Agreement.
Executive acknowledges receipt of this Agreement and agrees
that this
Agreement represents the entire agreement with Employer concerning the subject
matter hereof, and supersedes any previous oral or
written communications, representations, understandings or agreements
with Employer or any officer or agent thereof through the date the Agreement is
executed by the parties, except the Employee Arbitration Agreement which is
incorporated herein as set forth in paragraph 21 of this Agreement and attached
hereto as Exhibit "A." Executive understands that no representative of the
Employer has been authorized to enter into any agreement or commitment with
Executive which is inconsistent in any way with the terms of this
Agreement.
23. Construction. This Agreement
shall not be construed against any party on the grounds
that such party drafted the Agreement or caused it to be drafted.
24. Counterparts. This Agreement
may be executed simultaneously in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument. Further, facsimiles of signatures may be
taken as the actual signatures, and each party agrees to furnish the other with
documents bearing the original signatures within ten days of the facsimile
transmission.
25. Acknowledgment.
Executive acknowledges that he has been advised by Employer
to consult with independent counsel of his own choice, at his expense,
concerning this Agreement, that he has had the opportunity to do so, and that he
has taken advantage of that opportunity to the extent that he desires. Executive
further acknowledges that he has read and understands this Agreement, is fully
aware of its legal effect, and has entered into it freely based on his own
judgment,
IN
WITNESS HEREOF, the parties have executed this Agreement as of the date set
forth below.
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XXXX
XXXXXXX
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Dated: May
19, 2008
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/s/
Xxxx Xxxxxxx
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PATRIOT
SCIENTIFIC CORPORATION
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Dated: May
19, 2008
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By:
/s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx
X. Xxxxxxx
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Title: Chairman,
Executive Committee
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EXHIBIT
A
EXECUTIVE
ARBITRATION AGREEMENT
THIS
ARBITRATION AGREEMENT ("Agreement") is made by and between Patriot Scientific
Corporation ("Employer") and Xxxx Xxxxxxx ("Executive"),
The purpose
of this Agreement is to establish final and binding arbitration for all disputes
arising out of
Executive's relationship with Employer, including without limitation Executive's
employment or the termination of Executive's employment. Executive and Employer
desire to arbitrate their disputes on the terms and conditions set forth below
to gain the benefits of a speedy, impartial dispute-resolution procedure.
Executive and Employer agree to the following:
1. Claims Covered by the
Agreement. Executive and Employer mutually consent to
the
resolution by final and binding arbitration of all claims or controversies
("claims") that Employer may have against Executive or that Executive may have
against Employer or against its officers, directors, partners, employees,
agents, pension or benefit plans, administrators, or fiduciaries, or any
subsidiary or affiliated company or corporation (collectively referred to as
"Employer"), relating to, resulting from, or in any way arising out of
Executive's relationship with Employer, Executive's employment relationship with
Employer and/or the termination of Executive's employment relationship with
Employer, to the extent permitted by law. The claims covered by this Agreement
include, but are not limited to, claims for wages or other compensation due;
claims for breach of any contract or covenant (express or implied); tort claims;
claims for unfair competition, misappropriation of trade secrets, breach of
fiduciary duty, usurpation of corporate opportunity or similar claims; claims
for discrimination and harassment (including, but not limited to, race, sex,
religion, national origin, age, marital status or medical condition, disability,
sexual orientation, or any other characteristic protected by federal, state or
local law); claims for benefits (except where an employee benefit or pension
plan specifies that its claims procedure shall culminate in an arbitration
procedure different from this one); and claims for violation of any public
policy, federal, state or other governmental law, statute, regulation or
ordinance.
2. Required Notice of Claims and Statute of
Limitations. Executive may initiate arbitration
by serving or mailing a written notice to the Board of Directors. Employer may
initiate arbitration by serving or mailing a written notice to Executive at the
last address recorded in Executive's personnel file. The written notice must
specify the claims asserted against the other party. Notice of any claim sought
to be arbitrated must be served within the limitations period established by
applicable federal or state law.
3. Arbitration
Procedures.
a. After demand
for arbitration has been made by serving written notice under the
terms of Section 2 of this Agreement, the party demanding arbitration shall file
a demand for arbitration with the American Arbitration Association ("AAA") in
San Diego County.
EXHIBIT
"A"
b. Except as
provided herein, all rules governing the arbitration shall be the
then
applicable rules set forth by the AAA. If the dispute is employment-related, the
dispute shall be governed by the AAA's then current version of the national
rules for the resolution of employment disputes. The AAA's then applicable rules
governing the arbitration may be obtained from the AAA's website which currently
is xxx.xxx.xxx.
c. The
arbitrator shall apply the substantive law (and the law of remedies, if
applicable)
of the state in which the claim arose, or federal law, or both, as applicable to
the claim(s) asserted. The arbitrator shall have exclusive authority to resolve
any dispute relating to the interpretation, applicability, enforceability or
formation of this Agreement, including but not limited to any claim that all or
any part of this Agreement is void or voidable.
d. Either
party may file a motion for summary judgment or other dispositive
motion
with the arbitrator. The arbitrator is entitled to resolve some or all of the
asserted claims through such a motion. The standards to be applied by the
arbitrator in ruling on such a motion shall be the applicable laws as specified
in Section 3(c) of this Agreement.
e. Discovery
shall be allowed and conducted pursuant to the then applicable
arbitration
rules of the AAA. The arbitrator is authorized to rule on discovery motions
brought under the applicable discovery rules.
4. Application for Emergency Injunctive and/or
Other Equitable Relief. Claims by Employer
or Executive for emergency injunctive and/or other equitable relief relating to
unfair competition and/or the use and/or unauthorized disclosure of trade
secrets or confidential information shall be subject to the then current version
of the AAA's Optional Rules for Emergency Measures of Protection set forth
within the AAA's Commercial Dispute Resolution Procedures. The AAA shall appoint
a single emergency arbitrator to handle the claim(s) for emergency relief. The
emergency arbitrator selected by the AAA shall be either a retired judge or an
individual experienced in handling matters involving claims for emergency
injunctive and/or other equitable relief relating to unfair competition and the
use or unauthorized disclosure of trade secrets and/or confidential
information.
5. Arbitration Decision. The
arbitrator's decision will be final and binding. The arbitrator
shall issue a written arbitration decision revealing the essential findings and
conclusions upon which the decision and/or award is based. A party's right to
appeal the decision is limited to grounds provided under applicable federal or
state law.
6. Place of Arbitration. The
arbitration will be at a mutually convenient location that must be
within 50 miles of Executive's last Company employment location. If the parties
cannot agree upon a location, then the arbitration will be held at the AAA's
office nearest to Executive's last Company employment location.
7. Administrative Agencies.
Nothing in this Agreement is intended to prohibit Employee
from filing a claim or communicating with the United States Equal Employment
Opportunity Commission ("EEOC"), the National Labor Relations Board ("NLRB") or
the California Department of Fair Employment and Housing ("DFEH").
EXHIBIT
"A"
8. Construction.
Should any portion of this Agreement be found to be unenforceable,
such portion will be severed from this Agreement, and the remaining portions
shall continue to be enforceable.
9. Representation, Fees and Costs.
Each party may be represented by an attorney or other
representative selected by the party. Except as otherwise provided for by
statute, each party shall be responsible for its own attorneys' or
representative's fees. However, if there is a written agreement providing for
attorneys' fees, the arbitrator may award reasonable attorneys' fees to the
prevailing party. Employer shall be responsible for the arbitrator's fees and
costs, or any fees or costs charged by the AAA, to the extent they exceed any
fee or cost that Executive would be required to bear if the action were brought
in court.
10. Waiver of Jury Trial/Exclusive
Remedy. EXECUTIVE AND EMPLOYER KNOWINGLY AND VOLUNTARILY
WAIVE ANY CONSTITUTIONAL RIGHT TO HAVE ANY DISPUTE BETWEEN THEM DECIDED BY A
COURT OF LAW AND/OR BY A JURY IN COURT.
11. Sole and Entire Agreement. This
Agreement expresses the entire Agreement of the
parties and shall supersede any and all other agreements, oral or written,
concerning arbitration. This Agreement is not, and shall not be construed to
create, any contract of employment, express or implied.
12. Requirements for Modification or
Revocation. This Agreement to arbitrate shall
survive
the termination of Executive's employment. It can only be revoked or modified by
a writing signed by the Board of Directors, or appropriate committee thereof, of
Employer and Executive that specifically states an intent to revoke or modify
this Agreement.
13. Voluntary Agreement. EXECUTIVE
ACKNOWLEDGES THAT EXECUTIVE HAS CAREFULLY READ THIS AGREEMENT, UNDERSTANDS ITS
TERMS, AND AGREES THAT ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN EMPLOYER AND
EXECUTIVE RELATING TO THE SUBJECTS COVERED IN THE AGREEMENT ARE CONTAINED IN IT,
EXECUTIVE HAS KNOWINGLY AND VOLUNTARILY ENTERED INTO THE AGREEMENT WITHOUT
RELIANCE ON ANY PROVISIONS OR REPRESENTATIONS BY EMPLOYER, OTHER THAN THOSE
CONTAINED IN THIS AGREEMENT.
EXHIBIT
"A"
EXECUTIVE
FURTHER ACKNOWLEDGES THAT EXECUTIVE HAS BEEN GIVEN THE OPPORTUNITY TO DISCUSS
THIS AGREEMENT WITH EXECUTIVE'S PRIVATE LEGAL COUNSEL AND EXECUTIVE HAS UTILIZED
THAT OPPORTUNITY TO THE EXTENT DESIRED,
|
EXECUTIVE:
|
EMPLOYER:
|
|
|
PATRIOT
SCIENTIFIC CORPORATION, a
|
||
|
/s/
Xxxx Xxxxxxx
|
Delaware
corporation
|
|
|
Xxxx
Xxxxxxx
|
||
|
By:
/s/Xxxxxxx X. Xxxxxxx
|
||
|
Name: Xxxxxxx
X. Xxxxxxx
|
||
|
Title: Chairman,
Executive Committee
|
EXHIBIT
"A"
Exhibit
B
Executive
outside activities and disclosures
(Support
is less than 10 hours per month)
Barcelona
General Trading- Import/export to MENA region, consumer
services
Business
development, private investor, no current on-going efforts
BroadNav
Integrated Products Inc- Mfr of GPS hardware and LBS services
Executive
Director of Board of Directors; private investor; Board position resigned on
March 3, 2008
Dimensional
Imprint Technologies (DIT) — Mfg IP for HD PCB and IC substrates
Business
development activities, no ongoing support requirement
Ku
Soju Inc- Importer of Korean spirits through Anheuser
Xxxxx
Member of
Board of Directors, private investor, one day per quarter support for Board
meetings
Lightning
Ventures- Business development and investment LLC
Principal, private
investor, no on-going support requirement
Matrix
IPI- Importer- Sales rep and mfr in MENA region.
Private
investment, advisor, no current support requirements
Microsemi
Corp- Mfr of integrated circuits for consumer, defense and medical
Business
support for acquisition evaluation, completed Feb 2008
Mind
Research Institute-
a non-profit entity with a product/curriculum for improving
math
proficiency in K-5
and algebra readiness in schools, two hours per
quarter
NuPower
Inc- Power management ICs
Business
development and financing support, potential PTSC interest
Netpads
Inc- Computer services and Internet advertising to hospitality
industry
Private investor,
advisor, no current support requirements
RSI ID
Technologies- Mfr and design of RFID tags and labels
Business
development activity ended February 2008, possible PTSC interest
S3C- Mfr
and design for wireless sensor technology
Member of
Board of Director, resigned December 2007 due to acquisition
Note 1:
MENA is Middle East and North Africa
Note 2:
Bold-face
highlighting indicates current active projects
EXHIBIT "B"
