EMPLOYMENT AGREEMENT
AGREEMENT made as of the _____ day of ______________, 1997 [date of IPO
Closing] by and between AMERICAN CARD TECHNOLOGY, INC., a Delaware corporation
(the "Company"), and XXXXXX XXXXX of Marietta, Georgia (the "Employee").
W I T N E S S E T H :
WHEREAS, Employee is employed by the Company as its Vice President, and
as a condition of closing on an initial public offering of the Company's common
stock through Whale Securities L.P., Employee and the Company have required that
this Employment Agreement be entered into.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants set forth herein, the parties hereto agree as follows:
(1) Duties and Extent of Services
(a) The Company shall employ the Employee, and the Employee shall
be employed by the Company, as its Vice President-Technical Operations. The
Employee shall perform such duties as are assigned or delegated to him by the
President, the Chief Executive Officer, or the Board of Directors of the Company
(the "Board"). Without limiting the generality of the foregoing, the Employee
shall be responsible for the management of the technical operations of the
Company, subject to the supervision of the President, the Chief Executive
Officer, or the Board.
(b) The Employee shall devote substantially all of his business
time, attention and energies to the business of the Company and the performance
of his responsibilities and duties and shall carry out such responsibilities and
duties diligently and to the best of his abilities. The Employee recognizes that
the Company is entering into this Agreement because of the Employee's expertise,
skills, and talents and his agreement to devote all of such expertise, skills,
and talents to the tasks assigned him pursuant to this Agreement. The Employee
agrees that he shall not engage in any other business activities of any kind
which would give rise to a conflict of interest for the Employee with respect to
his duties and obligations to the Company.
(2) Term
(a) Subject to the termination rights set forth in paragraph 4
hereof, the term (the "Term") of this Agreement shall begin on the date on which
an initial public offering of the Company's Common Stock is closed (the "IPO
Date") and shall continue until the date which is two (2) years after the IPO
Date.
(3) Compensation; Benefits. In consideration of the Employee's
rendering of services pursuant to this Agreement, Employee shall be entitled to
the following compensation and benefits:
(a) Employee shall be paid a base annual salary of (A) Eighty-Five
Thousand and 00/100 Dollars ($85,000.00) during the first year of the Initial
Term Date, and (B) One Hundred Twenty Thousand and 00/100 Dollars ($120,000.00)
during the second year of the Initial Term, payable in equal bi-weekly
installments in arrears.
(b) The Company shall reimburse the Employee for reasonable
out-of-pocket expenses incurred in connection with the business of the Company.
(c) During the term of this Agreement, the Employee shall be
entitled to paid vacation time of four (4) weeks during each calendar year.
(d) The Employee shall be entitled to such fringe benefits,
including, but not limited to, participation in medical, dental, and life
insurance plans, as are customarily provided to the senior executives of the
Company as determined by the Board of Directors of the Company and as provided
by the terms of the applicable benefit plans.
(4) Termination; Severance
(a) Either the Company or Employee may terminate Employee's
employment under this Agreement unilaterally at any time for any reason or for
no reason by giving the other party sixty (60) days' advance notice of the
intention to terminate.
(b) In addition to the termination rights in paragraph 4(a), the
Company shall have the right to terminate the Employee's employment under this
Agreement immediately at any time for Cause. For purposes hereof, Cause is
defined to be:
(i) Employee engages in deliberate misconduct or engages in
conduct which brings public obloquy upon the Company;
(ii) Employee repeatedly fails (A) to perform his obligations
hereunder, or (B) to follow reasonable directions of the Board of Directors of
the Company;
(iii) Employee is convicted of, or pleads nolo contendere to,
any crime or offense other than a misdemeanor;
(iv) Employee is repeatedly intoxicated by alcohol or drugs
during the performance of his duties; or
(v) Employee breaches this Agreement in any material way, and
such breach is not cured or corrected with due diligence by Employee after
written notice of such breach from the Company.
(c) Employee's employment shall also terminate immediately in the
event of the death or disability of the Employee. For purposes hereof,
"disability" of the Employee shall occur on the date on which a reasonable, good
faith determination is made by the Board that,
(2)
by reason of the physical or mental condition of the Employee, it is reasonably
probable that the Employee will be unable to perform his duties under this
Agreement for a period of at least one hundred eighty (180) days following the
date of the Board's determination;
(d) In the event of termination of Employee's employment prior to
the end of the Term, Employee shall be entitled to a lump sum severance payment
payable on the date of termination as follows:
(i) In the event the Employee's employment is terminated due to
Employee's death or disability, the Employee or Employee's estate shall be
entitled to a payment equal to the sum of:
(A) six (6) months of the then current base annual salary
(including accrued portions),
(B) any accrued salary which has not been paid, and
(C) any expense reimbursements due and owing to him at the
time of such termination.
(ii) If the Employee's employment is terminated by the Company
without Cause pursuant to paragraph 4(a), or Employee terminates his employment
for Good Reason (as hereafter defined), the Employee shall be entitled to a
payment equal to the sum of:
(A) the greater of (I) one (1) year of the then current
base annual salary, or (II) the total base annual salary which would be payable
for the balance of the Term, and
(B) any accrued salary which has not been paid, and
(C) any expense reimbursements due and owing to him at the
time of such termination.
(iii) In the event that Employee's employment is terminated by
the Company for Cause or is terminated by Employee voluntarily prior to the end
of the Term other than for Good Reason, Employee shall not be entitled to any
severance payment.
(e) For purposes hereof:
(i) "Good Reason" is defined to mean:
(A) the Board substantially diminishing Employee's
responsibilities and activities as set forth herein; or
(B) the Board taking action in material breach of this
Agreement; or
(C) requiring the Employee to relocate to anywhere other
than the metropolitan Atlanta area; or
(3)
(D) the voluntary resignation of Employee at any time
within sixty (60) days after a Change in Control (as hereinafter defined).
(ii) "Change of Control" shall mean any transaction or series of
transactions (including, without limitation, a tender offer, merger or
consolidation) the result of which is that any "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934,
as amended), other than Xxxxxxxx Perl, Xxxxxxx Xxxxxxx, Xx., Xxxxxxx Xxxxxxx,
and Xxxxxx Xxxxxxxxx, or trusts for the benefit of any of the foregoing or their
respective families, and any "person" or "group" solicited by any of such
persons:
(A) becomes the beneficial owner of more than 50% of the
total aggregate voting power of all classes of the voting stock of the Company
and/or warrants or options to acquire such voting stock, calculated on a fully
diluted basis; or
(B) acquires all or substantially all of the assets of the
Company.
(f) Upon termination or expiration of the term of this Agreement,
the Employee shall promptly return to the Company any Company property in his
possession or under his control, including, but not limited to, documents,
equipment, disks, tapes and keys.
(g) Termination of this Agreement shall have no effect on the rights
and obligations of the parties pursuant to paragraph 5 hereof.
(5) Confidential Information; Covenant Not to Compete
(a) The Employee acknowledges that the Company's business is
conducted in world-wide markets and that, in the course of performing his
responsibilities and duties pursuant to this Agreement, he will obtain knowledge
of, information relating to, and will develop at the Company's expense,
Confidential Information (as hereinafter defined) which, if disclosed to
competitors of the Company, would cause substantial injury to the Company. The
Employee therefore acknowledges the Company's legitimate need to prevent
disclosure and use of Confidential Information and that, but for the covenants
of the Employee set forth in this Paragraph 5, the Company would not be willing
to enter into this Agreement.
(b) The Employee agrees that he shall not, at any time during or
after the term of his employment by the Company, disclose to any person, firm or
corporation, or use for any purpose other than in connection with the
performance of his responsibilities and duties under this Agreement, any
proprietary information or other confidential information relating to the
business of the Company, including, but not limited to, technology, know-how,
trade secrets, techniques, client or customer lists, details of client or
customer contracts or relationships, pricing policies, operational methods, or
marketing plans or strategies (collectively, "Confidential Information"). The
Employee agrees that upon expiration or termination of his employment by the
Company he shall promptly return to the Company all property of the Company,
including, but not limited to, all Confidential Information and all documents,
recordings and other materials describing, evidencing or otherwise relating to
Confidential Information. Employee acknowledges that any and all intellectual
property related to the business of the Company is the property of the Company
and Employee has no rights therein.
(c) The Employee agrees that during the term of his employment by
the Company, he will not, directly or indirectly, own, operate, manage, join,
control or participate in the ownership, management, operation or control of, or
be employed by, render aid or advice to, or otherwise be associated with, any
person, firm, corporation or other organization that is engaged in the
(4)
United States and/or Canada in the business of developing, manufacturing,
marketing, selling, or distributing Smart Cards or Smart Card related systems
(the "NonCompete Covenant").
(d) In the event that Employee's employment is terminated by the
Company for Cause or is terminated by Employee voluntarily prior to the end of
the Term other than for Good Reason, Employee shall be bound to the Non-Compete
Covenant for a period of two (2) years following the date of his employment
termination.
(e) (i) In the event that Employee's employment is terminated due to
expiration of the Term, due to termination by the Company during the Term other
than for Cause, or due to voluntary termination by Employee for Good Reason,
then the Company shall have the option to bind Employee to the NonCompete
Covenant for two years after the termination of his employment by electing to do
so and agreeing to pay to Employee the NonCompete Consideration (as hereafter
defined) in equal monthly installments over the two year period. To make such
election, the Company shall give Employee notice of such election (which shall
include an agreement to pay the NonCompete Consideration) by no later than the
Election Date (as hereafter defined). Failure to give such notice by the
Election Date shall be deemed an election by the Company to not bind Employee to
the NonCompete Covenant for the two year period following employment
termination. In the event that the Company shall default in its payment of any
installment of the NonCompete Consideration, Employee shall be relieved from the
NonCompete Covenant, in addition to any other rights and remedies which Employee
may have.
(ii) For purposes hereof, the NonCompete Consideration is the
amount equal to (A) two times the current base annual salary being paid to
Employee on the day prior to the date of termination, less (B) the amount of any
lump sum severance payment to which Employee is entitled under paragraph 4(d)
hereof.
(iii) For purposes hereof, the "Election Date" is:
(A) if employment termination is due to expiration of the
Term, such date is the date which is three (3) months prior to the date on which
the Term expires;
(B) if employment termination is due to termination by the
Company during the Term other than for Cause, or due to voluntary termination by
Employee for Good Reason, such date is the date which is ten (10) days after the
Company or Employee, as the case may be, gives notice of such termination.
(f) Employee agrees that during the term of his employment by the
Company and for a period of two (2) years immediately following the termination
of his employment for any reason, Employee will not directly or indirectly, for
himself or on behalf of, or in conjunction with any other person, persons,
company, partnership, corporation or business entity, hire or employ any current
employees or personnel of the Company or induce or entice any such person to
leave the employ of the Company without the prior written consent of the
Company.
(g) Reference to the Company as used in this paragraph 5 shall
include any subsidiary or affiliate or successor in interest to the Company or
any such subsidiary or affiliate.
(h) If the Employee breaches, or threatens to commit a breach of,
any of the provisions of paragraph 5 hereof (the "Restrictive Covenants"), the
Company shall have the right and
(5)
remedy to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, including but not limited to the right to entry against
the Employee of restraining orders and injunctions (preliminary, mandatory,
temporary and permanent) against violations, threatened or actual, and whether
or not continuing, of any of the Restrictive Covenants, it being acknowledged
and agreed by the Employee that any breach or threatened breach of any of the
Restrictive Covenants would cause irreparable and continuing injury to the
Company and that money damages would not provide an adequate remedy to the
Company. The foregoing right and remedy shall be in addition to, and not in lieu
of, any other rights and remedies available to the Company at law or in equity.
(i) The Employee acknowledges and agrees that the Restrictive
Covenants are reasonable and valid in geographic and temporal scope and in all
other respects. The Company and the Employee further acknowledge and agree that
if any court determines that any of the Restrictive Covenants, or any part
thereof, is invalid or unenforceable for any reason, that it is clearly the
intent of the parties that the remainder of the Restrictive Covenants and parts
thereof shall not thereby be affected and shall be given full effect, without
regard to the invalid portions. No provision herein shall be dependent upon the
validity of any other provision.
(6) Miscellaneous
(a) All notices sent pursuant to this Agreement shall be in writing,
and shall be deemed duly given if delivered personally or sent by certified
mail, return receipt requested, to the parties at their last known addresses.
(b) This Agreement is governed by and is to be enforced according to
the laws of the State of Georgia and shall not be modified or any provision
waived unless in writing signed by the parties. The waiver by either party of a
breach of any provision of this Agreement by the other party shall not operate
as or be construed as a waiver of any subsequent breach.
(c) Notwithstanding any provision contained in this Agreement to the
contrary, the Employee's obligations set forth in paragraph 5 hereof shall
survive the expiration or termination of this Agreement or the Employee's
employment by the Company for any reason.
(d) This Agreement is the entire agreement of the parties and
expressly supersedes all previous agreements, expressions or discussions between
the parties or any affiliate of the parties.
(e) This Agreement shall be binding upon the parties and their
heirs, executors, administrators, successors, and assigns. Notwithstanding the
foregoing, this Agreement is entered into by the Company in consideration of the
personal expertise and skills of the Employee and, accordingly, the Employee may
not assign or delegate any obligation, right, or interest contained in this
Agreement. The Employee acknowledges and agrees that the Company's rights
hereunder may be assigned by the Company to any person or entity, and in the
event of such assignment, the Employee agrees that the Employees shall continue
to be bound by the covenants set forth herein and such assignee shall thereafter
be deemed the "Company" hereunder.
(6)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
WITNESSES:
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Xxxxxx Xxxxx
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AMERICAN CARD TECHNOLOGY, INC.
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By___________________________________
Xxxxxxx Xxxxxxx, Xx.
______________________________ Its President
(7)
