EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of May 20, 2003, is
entered into by and between XXXX X. XXX, an individual ("Employee"), and
STRIKEFORCE TECHNOLOGIES, INC., a New Jersey C-corporation (the "Company").
R E C I T A L S :
- - - - - - - -
A. The Company is in the business of providing primarily
authentication security software and related consulting services to individuals
and companies (the "Business"); and
B. Employee is committed to making a $300,000 capital investment in
the Business of Employer this month as part of Employer's initial funding
instrument; and
C. The Company desires to employ Employee and Employee desires to
accept such employment upon the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants contained herein, Employee and the Company hereby agree as follows:
1. Definitions. The following terms, when capitalized, shall have the
meanings set forth below:
"Board" shall mean the Board of Directors of the Company or any
applicable committee thereof.
"Business" shall mean authentication security software and related
consulting services to individuals and companies.
"Company Business" shall mean the Business and all other businesses in
which the Company or any of its affiliates is engaged and in which Employee
participates or is otherwise involved during Employee's employment with the
Company.
"Cause" shall mean (a) the commission by Employee of an act or series
of acts which in any case results in material injury to the business or
reputation of the Company; or (b) Employee's gross misconduct, fraud,
misappropriation of funds, or commission of a felony; or (c) Employee's willful
failure to perform his duties or the directions given to him as provided in
Section 3 of this Agreement, which failure has not been cured in all material
respects within twenty (20) days after the Company gives written notice thereof
to Employee; or (d) Employee's material breach of any provision of this
Agreement, which breach has not been cured in all material respects within
twenty (20) days after the Company gives written notice thereof to Employee.
"Confidential Information" shall mean information that is not
generally known and includes, but is not limited to, sales and marketing
information, customer account records, training and operations materials and
memoranda, personnel records, pricing and financial information relating to the
business, accounts, customers, employees and affairs of the Company or any of
its affiliates; any other similar information; and any and all other information
that may be marked "Confidential" by the Company. All inventions, discoveries,
techniques, technologies, methodologies, software, improvements, and other
similar works developed, conceived or created by Employee, either alone or in
conjunction with others, during Employees' employment with the Company shall be
considered "Confidential Information".
"Disability" shall mean that Employee is disabled so as to be unable
to perform his material duties hereunder, with or without accommodation, as
established pursuant to policies of the Company in effect from time to time.
"Earned Salary" shall mean base salary earned, but unpaid, for
services rendered to the Company by Employee prior to the date of a termination.
"Good Reason" shall mean any of the following: (a) a material
diminution of the duties or employment position of Employee as described in
Section 3; (b) a reduction in Employee's base salary or incentive compensation;
(c) a material breach by the Company of its obligations under this Agreement; or
(d) any change in Employee's principal place of work which would increase
Employee's commute by 35 miles or more. "Good Reason" shall not be effective
until the expiration of ten (10) business days following written notice to the
Company of Employee's grounds for claiming "Good Reason". Any action or inaction
which is remedied by the Company within ten (10) business days following such
written notice shall not constitute "Good Reason".
"Vested Benefits" shall mean vested benefits under, and payable in
accordance with the terms of, the Company's employee benefit plans as they may
exist from time to time (excluding, however, any Severance Payments described in
Section 7 hereof).
2. Initial Term of Agreement. The Company hereby employs Employee, and
Employee hereby accepts such employment and agrees to serve the Company, as its
Chief Executive Officer, for an initial term from May 20, 2003, through June 1,
2006.
3. Duties. Employee hereby agrees to perform such duties as are
customarily associated with and incidental to the position described in Section
2 and as may be assigned to him from time to time by the Board of Directors, to
whom Employee is responsible. Employee shall also serve as a voting member of
the Board of Company. Employee shall devote his full business time and efforts
solely to the business and interest of the Company. During the term of this
Agreement, Employee shall not engage in any activity which would be inconsistent
with such duties or with the objectives and business of the Company and shall
diligently perform his obligations and discharge his duties under this
Agreement. Employee shall adhere to all ethical practices and other policies,
rules and regulations established by the Company from time to time.
4. Compensation. The Company shall pay to Employee salary at a per
annum rate of $75,000 until the closing date of the first $2 million in funding,
and $150,000 per annum thereafter. Such payments shall be made in accordance
with the Company's customary practices for the payment of salaries to full-time
salaried employees. Employee's base salary hereunder shall be reviewed in
accordance with normal compensation review practices of the Company for
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employees with positions similar to the position of Employee hereunder. All
payments made to Employee pursuant to this Section 4 shall be subject to
withholding on account of applicable federal, state and local taxes. During his
employment, Employee shall be entitled to participate in a market-competitive
incentive bonus plan that shall be developed by Employee for this and each
forthcoming fiscal year of the Company and submitted to the Board of Directors
for approval and implementation. The plan shall be designed to reward
performance that increases shareholder value by increasing the before tax
earnings of the Company. Unless otherwise agreed, it is expected that the Bonus
Plan will provide incentives to senior level employees in amounts ranging from
10% to 200% of their base Compensation.
5. Benefits. While Employee is employed pursuant to this Agreement,
Employee shall be entitled to benefits from the Company which are substantially
comparable to the benefits which may be provided from time to time to other
full-time employees of the Company with positions similar to the position of
Employee hereunder.
(a) Beginning in 2003, Employee shall have four (4) weeks of Paid
Time Off (PTO) per calendar year, two weeks of which is bankable
if not used by the end of that calendar year.
(b) Company shall reimburse Employee for reasonable expenses incurred
by him or paid by Employee in performing his duties,
responsibilities, or services under this Agreement, including
travel and business development/entertainment expenses.
(c) Company shall pay costs of overnight accommodations for Employee
when, in Employee's reasonable judgment, it is in the best
interests of conducting the Company's business for Employee to
remain in New Jersey overnight instead of commuting to his home.
6. Equity. The Board hereby grants Employee options (the "Options") to
purchase 1,000,000 shares of the Company's common stock (the "Common Stock") on
a fully converted, fully diluted basis after completion of the funding round
that is in progress. The Options shall be at $1.00, have a term of 10 years from
vesting date in which to be exercised, and shall vest over a three (3) year
period, with 33-1/3% vesting on June 1, 2004, 33-1/3% vesting on June 1, 2005,
and the remainder vesting on June 1, 2006. The other terms of the Options shall
be governed by the Company's option plan as it may be in effect from time to
time however, no changes in the amount, term, price or vesting schedule shall be
made without Employee's prior written consent.
7. Severance Payment. If the Company terminates Employee's employment
with the Company for any reason other than for Cause, or other than as a result
of Employee's death or Disability, or if Employee terminates Employee's
employment with the Company for Good Reason, the Company shall pay Employee the
following:
(a) In the event Employee's employment is terminated at any time
prior to his six-month anniversary with Company, continue to
pay Employee the per annum rate of salary in effect for
Employee on the date of such termination for a period of
three (3) months thereafter (the "Severance Payment");
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(b) In the event Employee's employment is terminated at any time
as of his six-month anniversary and up to the date of his
fifth year anniversary with the Company, continue to pay
Employee the per annum rate of salary in effect for Employee
on the date of such termination for a period of six (6)
months thereafter (the "Severance Payment");
(c) In the event Employee's employment is terminated at any time
as of his five-year anniversary with the Company, or
thereafter, continue to pay Employee the per annum rate of
salary in effect for Employee on the date of such
termination for a period of twelve (12) months thereafter
(the "Severance Payment");
(d) Continue Employee's medical and dental benefits at the level
then in effect on the date of such termination for a period
of the Severance Payment; provided, however, that if
Employee secures other employment during such period that
provides similar coverage, the Company's obligation under
this subsection (d) shall terminate; and
(e) pay to Employee such bonus compensation under the Company's
short-term incentive plan, if any, that is in proportion to
the number of days Employee was employed in the fiscal year
for which the bonus is calculated and paid, payable at the
time such bonus is paid generally under the plan. (eg. If
Employee was employed for 182 days in the fiscal year of
employment termination, then Employee would receive 50% of
the bonus payable for that fiscal year, less any partial
payments already received by Employee.);
(f) Permit Employee to retain and exercise all Options as set
forth in Section 6 of this Agreement for the full duration
of their term; and
(g) At Employee's request, the Company shall repurchase all or
part of any Company stock distributed to Employee, at its
then current Fair Market Value as may be established by an
independent appraiser (as mutually agreed upon by Employee
and Company, and paid for by the Company) if the stock is
not publicly traded. Any such repurchase shall be in
accordance with applicable accounting rules to avoid adverse
accounting treatment.
In the event that:
(x) The Company terminates Employee's employment with the
Company for Cause;
(y) Employee voluntarily terminates his employment with the
Company (other than for Good Reason); or
(z) Employee's employment with the Company is terminated due to
Death or Disability,
the Company shall not be obligated to make any Severance Payments or bonus
payments to Employee and Employee shall only be entitled to receive payment of
his Earned Salary and Vested Benefits up to and including the date of any such
termination. Upon the payments of the aforesaid sums by the Company, all of the
Company's obligations to make any further payments to Employee pursuant to this
Agreement shall be terminated. The foregoing provisions of this Section 6 set
forth the sole liability and obligation of the Company in the event of a
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termination, other than any obligations of the Company that may be required by
law with respect to employee benefit plans (e.g., COBRA requirements).
8. Termination In Connection With A Change in Control. If, during the
term of this Agreement, the Company undergoes a Change in Control (as defined
below), and Employee is Terminated (as defined below), then, in place of the
Company's obligations under Section 6, the Company shall:
(a) pay Employee the compensation and benefits otherwise payable
to Employee under Section 4, through the date of
termination;
(b) pay Employee, for twelve (12) months after the date of
termination, his Base Salary under Section 4 above, at
Employee's then-current salary, plus a bonus equal to 75% of
Base Salary, less applicable deductions and withholding
taxes, payable on the Company's normal payroll/bonus payment
dates during that period;
(c) continue Employee's coverage under the Company's benefit
plans of general application, or similar plans, at the
Company's expense, for twelve (12) months after the date of
termination, provided, however, that if Employee secures
other employment during such period that provides similar
coverage, the Company's obligation under this subsection (c)
shall terminate;
(d) accelerate the vesting of all of Employee's Stock Options;
and
(e) at Employee's request, the Company shall repurchase all or
part of Employee's stock/vested options in the Company at
the then-current Fair Market Value as may be established by
an independent appraiser (mutually agreed upon by Employee
and Company and paid for by the Company) if the stock is not
publicly traded. Any such repurchase shall be in accordance
with applicable accounting rules to avoid adverse accounting
treatment.
For purposes of this Section 8:
(a) a "Change in Control" shall mean a transaction or series of
related transactions (such as a merger, consolidation, sale
of assets or tender offer) whereby the Company's
stockholders immediately prior to the transaction or series
of related transactions own less than a majority of the
Company's voting stock, or the voting stock of the surviving
entity of any such transaction or series of related
transactions, after such transaction, on account of shares
held by such stockholders in the Company immediately prior
to such transaction or series of related transactions; and
(b) "Terminated" shall mean that Employee is not offered a
position in the surviving entity in the Change in Control,
or an affiliate of such company, including the Company, that
is of the same title, responsibility and compensation as the
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position Employee held in the Company prior to the Change in
Control, within 50 miles of the Company's executive office
prior to the Change in Control, and maintained in that
position for at least twelve (12) months after the Change in
Control, except for Cause. For the avoidance of doubt, if
Employee is offered and maintained in a position where he
continues to be the chief executive of the primary portion
of the business that was operated by the Company prior to
the Change in Control, at the same compensation and within
50 miles of the previous executive office, then he will not
be deemed to have been "Terminated", even if he is not
called the President or Chief Executive Officer of the
surviving company.
9. Confidential Information. Employee shall not use, reveal, divulge
or disclose, or permit or assist any other person, firm, partnership, limited
liability company, corporation, or unincorporated association to use, any
Confidential Information. Notwithstanding the foregoing, Employee shall not be
subject to the restrictions set forth in this Section 9 with respect to
information which:
(a) becomes generally available to the public other than as a
result of disclosure by Employee or his agents or
representatives;
(b) becomes available to Employee on a non-confidential basis
from a source other than the Company or its agents, provided
that such source lawfully obtained such information and is
not bound by a confidentiality obligation not to disclose
such information; or
(c) is required to be disclosed by law.
The provisions of this Section 9 shall survive indefinitely and remain in full
force and effect regardless of any termination of this Agreement and the
termination of Employee's employment with the Company for any reason.
10. Restriction Against Competition. In recognition of the product and
industry knowledge, training, and client information Employer shall provide to
Employee as part of his new employment with Employer, as well as the agreed-upon
compensation, Employee agrees that throughout the term of his employment with
the Employer and for a period of one (1) year thereafter, regardless of the
reason for termination of employment, he will not, individually or in
conjunction with any other person, or as an employee, consultant, agent,
representative, partner or holder of any interest in any other person, firm,
corporation or other association:
(a) Solicit, entice or induce, or authorize or direct any
person, firm or corporation to solicit, entice or induce any
person, firm or corporation, with whom Employee had direct
business contact during the last year prior to his
termination date, to reduce the amount of, or cease doing,
business with the Employer;
(b) Solicit, entice or induce any person who is presently
employed with the Employer to become employed by any other
person, firm or corporation, and Employee shall not approach
any such employee for such purpose or authorize or direct
the taking of such actions by any other person; and
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(c) Solicit, be employed by, consult for, participate in,
directly or indirectly, or accept business in any area of
Business that is competitive with Employer's.
11. Remedies. Employee acknowledges and agrees that the Company would
suffer irreparable harm from a breach by Employee of the restrictive covenants
set forth in Section 9 and/or 10. Therefore, in the event of the actual or
threatened breach by Employee under Section 9 and/or 10, the Company may, in
addition and supplementary to any other rights and remedies existing in its
favor (including, without limitation, its right to terminate Employee's
employment), apply to any court of law or equity of competent jurisdiction for
specific performance or injunctive or other relief in order to enforce or
prevent any violation of the provisions of Sections 9 and/or 10.
12. Dispute Resolution. Any controversy relating to the existence of
Cause or Good Reason shall be settled by arbitration in the city in which the
Company's headquarters is located, in accordance with the laws of the State of
New Jersey by an arbitrator that is mutually acceptable to the Company and
Employee. The arbitration shall be conducted in accordance with the rules of the
American Arbitration Association, before a panel of three (3) arbitrators, to be
selected by mutual agreement of the parties. Any and all fees charged by any
arbitrator or panel of arbitrators shall be borne by the Company. The award of
the arbitrators shall be binding upon the parties. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.
13. Litigation/Arbitration Expenses. In the event that any dispute
arises between Employee and the Company as to the terms or interpretation of
this Agreement, whether instituted by formal legal proceedings, arbitration or
otherwise, including any action that either party takes to enforce the terms of
this Agreement or to defend against any action taken by the other, the
prevailing party shall be reimbursed for all costs and expenses (except as
provided in Section12 hereof regarding arbitration costs), including reasonable
attorney's fees, arising from such dispute, proceedings or actions, provided
that the prevailing party shall obtain a final judgment by a court of competent
jurisdiction in favor of the prevailing party. Such reimbursement shall be paid
within ten (10) days of furnishing written evidence, which may be in the form,
among other things, of a cancelled check or receipt, of any costs or expenses
incurred.
14. Notice. All notices and other communications required or permitted
under this Agreement shall be deemed to have been duly given and made if in
writing and if served either by personal delivery to the party for whom intended
(which shall include delivery by Federal Express or similar service) or three
(3) business days after being deposited, postage prepaid, certified or
registered mail, return receipt requested, in the United States mail bearing the
address shown in this Agreement for, or such other address as may be designated
in writing hereafter by, such party:
If to Employee: Xxxx X. Xxx
000 Xxxx Xxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
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If to the Company: StrikeForce Technologies, Inc.
0000 Xxxx Xxxxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxx, XX 00000
15. Reformation; Severability. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is finally
determined by a court of competent jurisdiction to be unenforceable or invalid
under applicable law, such provision shall be effective only to the extent of
its enforceability or validity, without affecting the enforceability or validity
of the remainder of this Agreement, and such court shall have jurisdiction to
reform this Agreement to the maximum extent permitted by law. In the event that
any such provision of this Agreement cannot be reformed, such provision shall be
deemed severed from this Agreement, but every other provision of this Agreement
shall remain in full force and effect.
16. Binding Effect; Waiver. The terms and provisions of this Agreement
shall be binding on and inure to the benefit of Employee, his heirs, executors,
administrators, and other legal representatives and shall be binding on and
inure to the benefit of the Company, its affiliates, successors or assigns. The
failure of the either party at any time or from time to time to require
performance of any of the breaching party's obligations under this Agreement
shall in no manner affect the other party's right to enforce any provision of
this Agreement at a subsequent time, and the waiver of any rights arising out of
any breach shall not be construed as a waiver of any rights arising out of any
subsequent or prior breach.
17. Entire Agreement. This Agreement constitutes the entire agreement
and understanding between Employee and the Company with respect to the subject
matter hereof, and supersedes all prior agreements and understandings relating
to the subject matter hereof.
18. Amendment. No amendment, modification, or waiver of any provision
of this Agreement, or consent to any departure by Employee therefrom, shall be
effective unless the same shall be in writing and signed by the parties hereto.
19. Assignment. This Agreement is for personal services to be
performed by Employee and may not be assigned or transferred by Employee, or the
obligations of Employee performed by any other party. All of the rights and
obligations of the Company under this Agreement are fully assignable and
transferable by the Company.
20. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
21. Headings. The various headings of this Agreement are inserted for
convenience only and shall not affect the meaning or interpretation of this
Agreement or any provisions hereof.
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22. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this instrument as of the date first above written.
EMPLOYEE:
/S/ Xxxx X. Xxx
--------------------------------
Xxxx X. Xxx
COMPANY:
StrikeForce Technologies, Inc.
By: /S/ Xxxxxx Xxxx
--------------------------
Name: Xxxxxx Xxxx
--------------------------
Title: President
--------------------------
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AMENDMENT TO EMPLOYMENT AGREEMENT
BETWEEN
StrikeForcc Technologies, Inc & Xxxx X. Xxx
WHEREAS Xxxx X. Xxx, an individual (Employee) and StrikeForce Technologies,
Inc. Have entered into an Employment Agreement May 20, 2003: and
WHEREAS the Employment Agreement has made several recitals: and
WHEREAS the Employment Agreement specifically makes mention to and outlines
the form and facts of compensation to be paid.
NOW, THEREFORE, be it known that as of this date November 27, 2004, Xx. Xxx
has consented to amend his Employment Agreement, specifically the
compensation section (4) of the employment agreement. This amendment is to
authorize the change, regarding the salary increase, based upon StrikeForce
Technologies, Inc. receiving two million ($2,000,000) dollars of funding.
This clause is to be replaced with the agreed upon wording "there will be
no raises permitted until the Company is public". This change is agreed to
by both parties (Xxxx X. Xxx & StrikeForce Technologies, Inc.) as evidenced
by the respective signatures of the parties below.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this amendment as of the date November 27, 2004.
EMPLOYEE;
/S/ Xxxx X. Xxx
------------
Xxxx X. Xxx
COMPANY:
StrikeForce Technologies, Inc.
By:/S/Xxxxxx Xxxx
--------------
Name: Xxxxxx Xxxx
Title:President
ADDENDUM TO EMPLOYMENT AGREEMENT
Between StrikeForce Technologies, Inc &
Xxxx X. Xxx
WHEREAS Mart X. Xxx, an individual (Employee) and StrikeForce Technologies,
Inc, Have entered into an Employment Agreement May 20,2003; and
WAEEREAS the Employment Agreement has made several recitals: and
WHEREAS the Employment Agreement specifically makes mention to and outlines
the form and facts of compensation to be paid.
NOW, THEREFORE, be it known that as of this date April 16, 2004 the
executive management team (in an informal discussion) has unanimously
consented to amend Xx. Xxx'a Employment Agreement, specifically the
compensation section (4) of the employment agreement This Addendum is to
authorize the increase in Mr, Kay's compensation (Section 4 of the original
Employment Agreement) to one hundred eleven thousand (S111,000) dollars,
IN WITNESS WHEREOF, me parties hereto have executed or caused to be
executed this Addendum as of the date April 16, 2004.
EMPLOYEE:
By:/S/ Xxxx X. Xxx
----------------
Xxxx L, Xxx
COMPANY:
StrikeForce Technologies, Inc.
By:/S/Xxxxxx Xxxx
--------------
Name: Xxxxxx Xxxx
Title:President
