EXECUTIVE EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (this “Agreement”)
is
made as of May
___, 2008
(“Effective
Date”)
by and
between INNOVATIVE CARD TECHNOLOGIES, INC., a Delaware corporation (the
“Company”),
and
Xxxxxxx X. Xxxxxxx (“Executive”),
with
reference to the following facts:
A. Innovative
Card Technologies, Inc., a Delaware corporation (the “Company”),
is a
public company that develops and markets secure powered cards for payment,
identification, physical and logical access applications.
B. The
Company desires to employ the Executive, and the Executive desires to be
employed by the Company.
NOW,
THEREFORE, in consideration of the mutual covenants and promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the parties agree as
follows:
1. Employment.
The
Company hereby employs Executive and Executive hereby accepts such employment
upon the terms and conditions hereinafter set forth. Irrespective of the date
on
which this Agreement is executed, Executive’s date of employment with the
Company is May ____, 2008.
2. Duties.
Subject
to the terms and provisions of this Agreement, Executive is hereby employed
by
the Company as Senior Vice President Global Sales of the Company. Executive
shall have full responsibility and authority for such duties as customarily
are
associated with service as Senior Vice President Global Sales of the Company
at
the direction of the Chief Executive Officer of the Company (the “CEO”).
Executive shall faithfully and diligently perform such duties assigned to
Executive and shall report directly to the CEO.
3. Scope
of Services.
Executive shall devote substantially all of his business time, attention,
energies, skills, learning and efforts to the Company’s business.
4. At
Will Employment.
Executive
understands and acknowledges that his employment with Company is "AT WILL",
meaning that either Executive or Company may terminate the employment
relationship at
any
time with or without cause.
Upon
termination of the employment relationship by either Executive or Company,
Company shall have no obligations to Executive other than those expressed in
this Agreement or provided by law. Notwithstanding that certain time periods
are
expressed herein, such time periods are contingent upon Executive remaining
employed by Company and are not intended by either party to create any express
or implied term of employment, as Executive shall at all times be employed
on an
“AT WILL” basis with no term of employment.
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0. Compensation.
5.1 Salary.
Executive's annual compensation ("Base
Compensation")
under
this Agreement shall be Two Hundred Fifty Thousand Dollars ($250,000) per year,
prorated for any partial year, commencing upon the Effective Date. The
Base Compensation shall be payable in equal bi-monthly installments on the
fifteenth and end of each month.
5.2 Bonus.
Executive shall be eligible for a bonus targeted at one hundred percent (100%)
of Executive’s Base Compensation. The CEO, in his sole discretion, shall create
a performance plan that will permit Executive’s performance to be measured and
his bonus, if any, calculated pursuant to the numerical performance of the
Company. The performance plan shall include criteria based on sales of
DisplayCards and Clamshells; revenue; and gross profit margin performance
targets. Any bonus due to Executive shall be paid quarterly within forty five
(45) days after the end of each calendar quarter and seventy five days (75)
after the calendar year end, provided Employee is employed at the time of the
bonus payment. Executive shall be given the opportunity to meet with the Board
and Chief Executive Officer to discuss the evaluation and provide input. Payment
of the bonus, if any, shall be subject to all appropriate federal and state
income and employment taxes.
5.3 Expenses.
The
Company shall reimburse Executive for all reasonable business, entertainment
and
travel expenses actually incurred or paid by Executive in the performance of
his
services on behalf of the Company, in accordance with the Company’s expense
reimbursement policy in effect from time to time
5.4 Options.
The
Executive shall be eligible to participate in the Company’s Stock Incentive
Plan, and receive option grant(s) thereunder for the purchase of common stock
of
the Company (“Options”
or
“Option”)
at the
discretion of the Board of Directors. The Executive shall receive an initial
issuance of three hundred fifty thousand (350,000) Options to be issued and
priced at the closing price of the effective date subject to formal approval
of
the option grants by the Company’s Board of Directors. Vesting of the Options
granted to the Executive shall vest as follows: a) no options shall vest if
Executive’s employment with Company terminates prior to one year after the
Effective Date (the “Anniversary Date”); b) Eighty Seven Thousand Five Hundred
(87,500) shares on the Anniversary Date; c) Fourteen Thousand Five Hundred
Eighty Four (14,584) shares every sixty (60) days thereafter, with the exception
of the last vesting period being Fourteen Thousand Five Hundred Seventy Two
(14,572) shares, provided Executive is employed by Company on each said sixtieth
(60th)
day for
the next eighteen periods.
5.5 Vacation.
Executive shall be entitled to four (4) weeks paid vacation per year, to be
taken at such times as may be approved by the Company’s CEO or its designee. The
Executive shall be entitled to carry forward from year to year not more than
one
(1) week of unused vacation days (such limitation shall preclude Executive
from
having more than five (5) available weeks of vacation in any one year). All
unused vacation days shall be determined annually and provided such days exceed
one (1) week, Executive shall be paid for such excess unused days and may only
carry forward one (1) week per year.
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5.6 Other
Rights and Benefits.
Executive and his dependents (identified as ________________) shall receive
all
medical, dental, vision, short/long term disability and drug prescription
insurance through the Company’s group plan of insurance or reimbursement for
private insurance, including any COBRA coverage available to Executive, or
private insurance if such COBRA coverage ceases to be available, at Executive’s
option. However,
notwithstanding the foregoing, Company’s maximum reimbursement obligation to
Executive shall be limited to One Thousand Five Hundred Dollars ($1,500) per
month.
6. Taxation
of Payments and Benefits.
The
Company shall undertake to make deductions, withholdings and tax reports with
respect to payments and benefits under this Agreement to the extent that it
reasonably and in good faith believes that it is required to make such
deductions, withholdings and tax reports. Payments under this Agreement shall
be
in amounts net of any such deductions or withholdings. Nothing in this Agreement
shall be construed to require the Company to make any payments to compensate
the
Executive for any adverse tax effect associated with any payments or benefits
or
for any deduction or withholding from any payment or benefit.
7. Termination.
Executive’s employment may be terminated as follows:
7.1 Termination
for Death.
Executive’s employment shall terminate immediately upon Executive’s
death.
7.2 Termination
Upon Disability.
Executive’s employment shall terminate if Executive should become totally and
permanently disabled. For purposes of this Agreement, Executive shall be
considered “totally and permanently disabled” if Executive is treated as
permanently “disabled” under any permanent disability insurance policy
maintained by the Company and is entitled to full benefits payable under such
policy upon a total and permanent disability. In the event any such policy
is
either not in force or the benefits are not available under such policy, then
“total and permanent disability” shall mean the inability of Executive, as a
result of substance abuse, any mental, nervous or psychiatric disorder, or
physical condition, injury or illness to perform substantially all of his
current duties on a full-time basis for a period of six (6) consecutive months,
as determined by a licensed physician selected by the Board.
7.3 Termination
by Company for “Cause”.
The
Company may terminate this Agreement for “Cause” upon three (3) days written
notice so long as the Company has given Executive written notice describing
the
Cause and Executive has not cured such Cause within a reasonable time, but
not
less than twenty (20) days nor more than forty (40) days, as determined in
Company’s reasonable subjective discretion. However, if such “Cause” is not
reasonably capable of cure, Company shall not be obligated to provide a cure
period. For purposes of this Agreement, “Cause” shall mean the existence or
occurrence of any of the following:
(a) Executive’s
conviction for or pleading of nolo contendre to any felony involving the Company
or moral turpitude.
(b) Executive’s
misappropriation of Company assets.
(c) Executive’s
willful violation of a Company policy or a directive of the Board previously
delivered to him in writing.
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(d) Executive’s
material breach of his obligations, warranties or representations set forth
in
this Agreement.
(e) Any
willful neglect or material breach of duty by Executive under this Agreement,
or
any material failure by Executive to perform under this Agreement.
The
“Cause” provisions for termination are solely for purposes of determining
Executive’s severance pursuant to paragraph 9 herein, and shall not create any
implied right to termination solely for “Cause” as Executive’s employment at all
times shall be on an “AT WILL” basis not requiring cause or notice prior to
termination.
8. Change
in Control.
For
purposes of this Agreement, a “Change
in Control” means
a
change in ownership or control of the Company after the Effective Date effected
through any of the following:
(a) the
acquisition, directly or indirectly, by any person or related group of persons
(other than the Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) of beneficial
ownership of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities pursuant to a
tender or exchange offer made directly to the Company's stockholders;
(b) a
change
in the composition of the Board over a period of thirty-six
(36)
consecutive months or less such that a majority of the Board members ceases
by
reason of one or more contested elections for Board membership, to be comprised
of individuals who either (A) have been Board members continuously since the
beginning of such period, or (B) have been elected or nominated for election
as
Board members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such election
or
nomination was approved by the Board, or
(c) a
merger
or consolidation in which securities possessing at least fifty percent (50%)
of
the total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from the persons holding those
securities immediately prior to such transaction, or the sale, transfer or
other
disposition of all or substantially all of the Corporation's assets or a
complete liquidation or dissolution of the Corporation.
If
Executive’s employment is terminated without Cause prior to the Anniversary
Date, and after a Change in Control, Executive shall be deemed to have been
employed for one year for purposes of calculating his severance pursuant to
paragraph 9 herein.
9. Effect
of Termination.
If the
Executive’s employment is terminated by Executive without Cause or terminated by
the Company for Cause, death or a disability of Executive, Executive shall
not
be entitled to any severance pay or other benefits, except as mandated by law.
In the event the Company terminates Executive’s employment without “Cause,”
Executive shall be entitled to receive a lump sum payment equal to Twenty
Thousand Eight Hundred Thirty Three Dollars and Thirty Four Cents ($20,833.34)
for every one month Executive has been employed by Company, with such severance
payment not to exceed One Hundred Twenty Five Thousand Dollars ($125,000)
regardless of how long Executive has been employed by Company. Such payment
shall be made within five (5) business days following written notification
of
such termination, less all appropriate federal and state income and employment
taxes. In addition, if Executive is terminated by the Company without “Cause,”
(i) all Options issued to Executive prior to the termination without “Cause”
shall vest immediately and become exercisable; and (ii) Executive shall be
paid
any bonus the CEO deems appropriate within forty five (45) days after
termination.
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00. Representations
and Warranties.
Executive hereby represents and warrants to Company that as of the date of
execution of this Agreement: (i) this Agreement will not cause or require
Executive to breach any obligation to, or agreement or confidence with, any
other person; (ii) Executive is not representing, or otherwise affiliated in
any
capacity with, any other lines of products, manufacturers, vendors or customers
of the Company; and (iii) Executive has not been induced to enter into this
Agreement by any promise or representation other than as expressly set forth
in
this Agreement.
11. Non-Solicitation
and Non-Competition.
11.1 Non-Solicitation
of Employees.
Executive agrees that he will not, while employed by the Company and for a
period of two (2) years following termination of such employment:
(a) directly
solicit, encourage, or take any other action which is intended to induce any
other employee of the Company to terminate his or her employment with the
Company; or
(b) directly
interfere in any manner with the contractual or employment relationship between
the Company and any such employee of the Company.
The
foregoing shall not prohibit Executive or any entity with which Executive may
later be affiliated from hiring a former or existing employee of the Company
or
any of its subsidiaries, provided that such hiring does not result from the
direct actions of Executive. For purposes of this Section, any reference to
the
Company shall include all of the Company’s Affiliates. As used herein,
“Affiliate” means any person or entity controlling, controlled by or under
common control with another person or entity.
11.2 Non-Solicitation
of Customers with respect to Competitive Business Activity.
Executive agrees that he will not, while employed by the Company, directly
or
indirectly, whether for his own account or for the account of any other
individual or entity, solicit the business or patronage of any customers of
the
Company with respect to products and/or services directly related to a
Competitive Business Activity. “Competitive
Business Activity”
shall
mean engaging in, whether independently or as an employee, agent, consultant,
advisor, independent contractor, partner, stockholder, officer, director or
otherwise, any business which is materially competitive with the business of
the
Company as conducted or actively planned to be conducted by the Company during
his employment by it, provided that Executive shall not be deemed to engage
in a
Competitive Business Activity solely by reason of (i) owning 5% or less of
the
outstanding common stock of any corporation if such class of common stock is
registered under Section 12 of the Securities Exchange Act of 1934, or (ii)
after the termination of his employment by the Company, being employed by or
otherwise providing services to a corporation having total revenue of at least
$500 million (or such lower number as may be agreed by the Board) so long as
such services are provided solely to a division or other business unit of such
corporation which does not engage in a business which is then competitive with
the business of the Company.
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11.3 Non-Competition.
Without
the prior written consent of the CEO, during the period of employment with
the
Company, Executive will not, directly or indirectly, engage in any employment,
occupation, consulting or other business activity in competition with the
Company. Executive acknowledges and agrees that such conduct would violate
the
duty of loyalty owed by Executive to the Company. Employee agrees to promptly
disclose to the CEO, in writing, any business opportunities that are presented
to him or her in his or her capacity as an employee of the Company which are
of
a similar nature to the Company’s current business or business which, to
Executive’s knowledge, the Company proposes to engage in.
Executive
further acknowledges and agrees that, during the course of performing services
for the Company, the Company will furnish, disclose or make available to
Executive confidential and proprietary information related to the Company’s
business and that such confidential information has been developed and will
be
developed by the Company through the expenditure by the Company of substantial
time, effort and money and that all such confidential information could be
used
by Executive to harm the Company or adversely impact its operations. Executive
agrees to use all reasonable means to keep all such information confidential
and
secret and not to divulge any such information to any person or entity not
having a need to know such information and then to only do so under
circumstances designed to protect the Company’s information from further
disclosure. Accordingly, the Executive hereby agrees, in consideration of the
Company’s agreement to hire Executive and to pay the Employee’s compensation for
services rendered to the Company and in view of the position of trust to be
held
by Executive and the confidential nature and proprietary value of the
information which the Company may share with Executive, and for other good
and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, as follows:
For
a
period of one (1) year following the expiration or termination of the Agreement
(the “Restricted Term”), whether such termination is voluntary, involuntary or
with or without cause, Executive shall not, without the prior written consent
of
the Company, for the Executive for his own account or on behalf of any other,
directly or indirectly, either as principal, agent, stockholder, employee,
consultant, representative or in any other capacity, solicit, divert or
appropriate or attempt to solicit, divert or appropriate, for the purpose of
providing services, any customers or patrons of the Company, or any prospective
customers or patrons with respect to which the Company has targeted or developed
during the Term by the use of any of Company’s confidential, proprietary and/or
trade secret information.
Executive
further recognizes and acknowledges that the specified restrictions in this
paragraph are reasonable, legitimate and fair to Executive in light of the
Company’s need to market its services in a large geographic area in order to
have a sufficient customer base to make the Company’s business
profitable.
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If
any
part of this section should be determined by a court of competent jurisdiction
to be unreasonable in duration or scope, then this section is intended to and
shall extend only for such period of time, in such area and with respect to
such
activity as is determined to be reasonable.
12. Confidentiality
and Invention Assignment.
In
connection with this Agreement, Executive agrees to execute and acknowledge
his
employment shall be bound by the Company’s
Confidentiality and Invention Assignment Agreement,
a copy
of which has been previously provided to and reviewed by Executive and his
advisor(s). The terms of such Confidentiality and Invention Assignment Agreement
are incorporated herein by this reference and Executive acknowledges and agrees
that its terms and conditions constitute materials terms of this Agreement.
13. Miscellaneous.
13.1 Section
Headings.
The
section headings or captions in this Agreement are for convenience of reference
only and do not form a part hereof, and do not in any way modify, interpret
or
construe the intent of the parties or affect any of the provisions of this
Agreement.
13.2 Survival.
The
obligations and rights imposed upon the parties hereto by the provisions of
this
Agreement which relate to acts or events subsequent to the termination of this
Agreement shall survive the termination of this Agreement and shall remain
fully
effective thereafter, including without limitation the obligations of Executive
with respect to any Confidentiality or Invention Assignment obligations under
Section 12.
13.3 Severability.
Should
any one or more of the provisions of this Agreement be determined to be illegal
or unenforceable in any relevant jurisdiction, then such illegal or
unenforceable provision shall be modified by the proper court, if possible,
but
only to the extent necessary to make such provision enforceable, and such
modified provision and all other provisions of this Agreement shall be given
effect separately from the provision or portion thereof determined to be illegal
or unenforceable and shall not be affected thereby; provided
that,
any such modification shall apply only with respect to the operation of this
Agreement in the particular jurisdiction in which such determination of
illegality or unenforceability is made.
13.4 Waiver.
The
failure of either party to enforce any provision of this Agreement shall not
be
construed as a waiver of any such provision, nor prevent such party thereafter
from enforcing such provision or any other provision of this Agreement. The
rights granted both parties herein are cumulative and the election of one shall
not constitute a waiver of such party’s right to assert all other legal remedies
available under the circumstances.
13.5 Parties
in Interest.
Nothing
in this Agreement, except as expressly set forth herein, is intended to confer
any rights or remedies under or by reason of this Agreement on any persons
other
than the parties to this Agreement and the successors, assigns and affiliates
of
the Company, nor is anything in this Agreement intended to relieve or discharge
the obligation or liability of any third person to any party to this Agreement,
nor shall any provision give any third person any right of action over or
against any party to this Agreement.
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13.6 Assignment.
The
rights and obligations under this Agreement shall be binding upon, and inure
to
the benefit of, the heirs, executors, successors and assigns of Executive and
the Company. Except as specifically provided in this Section 13, neither the
Company nor Executive may assign this Agreement or delegate their respective
responsibilities under this Agreement without the consent of the other party
hereto. Upon the sale, exchange or other transfer of substantially all of the
assets of the Company, the Company shall assign this Agreement to the transferee
of such assets. No assignment of this Agreement by the Company shall relieve
the
Company of, and the Company shall remain obligated to perform, its duties and
obligations under this Agreement, including, without limitation, payment of
the
Base Compensation set forth in Section 5, above through the date of
Assignment.
13.7 Modification.
This
Agreement may be modified only by a contract in writing executed by the parties
to this Agreement against whom enforcement of such modification is
sought.
13.8 Prior
Understandings.
This
Agreement contains the entire agreement between the parties to this Agreement
with respect to the subject matter of this Agreement, is intended as a final
expression of such parties’ agreement with respect to such terms as are included
in this Agreement, is intended as a complete and exclusive statement of the
terms of such agreement, and supersedes all negotiations, stipulations,
understandings, agreements, representations and warranties, if any, with respect
to such subject matter, which precede or accompany the execution of this
Agreement.
13.9 Interpretation.
Whenever the context so requires in this Agreement, all words used in the
singular shall be construed to have been used in the plural (and vice versa),
each gender shall be construed to include any other genders, and the word
“person” shall be construed to include a natural person, a corporation, a firm,
a partnership, a joint venture, a trust, an estate or any other
entity.
13.10 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
13.11 Applicable
Law.
This
Agreement and the rights and obligations of the parties hereunder shall be
construed under, and governed by, the laws of the State of California without
giving effect to conflict of laws provisions.
13.12 Drafting
Ambiguities.
Each
party to this Agreement has reviewed and revised this Agreement. Each party
to
this Agreement has had the opportunity to have such party’s legal counsel review
and revise this Agreement. The rule of construction that any ambiguities are
to
be resolved against the drafting party shall not be employed in the interpretation
of this Agreement or of any amendments or exhibits to this
Agreement.
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IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the dates
indicated below.
| THE COMPANY: | ||
|
INNOVATIVE
CARD TECHNOLOGIES, INC.
a
Delaware corporation
|
||
| |
|
|
| Date: May _____, 2008 | By: | |
|
Xxxxxx X Xxxxxxxxx, CEO |
||
| EXECUTIVE: | ||
| |
|
|
| Dated: May ______, 2008 | By: | /s/ |
|
Xxxxxxx X. Xxxxxxx |
||
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