EXECUTIVE EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this
“Agreement”) is made as of February __, 2009 (“Effective
Date”) by and between
INNOVATIVE CARD TECHNOLOGIES, INC., a Delaware corporation (the “Company”), and XXXXXXX XXXXXX (“Executive”), with reference to the following
facts:
RECITALS
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:
TERMS
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 November 17, 2008.
2. Duties. Subject to the terms and provisions of
this Agreement, Executive is hereby employed by the Company as Chief Executive
Officer and President of the Company. Executive shall have full responsibility
and authority for such duties as customarily are associated with service as
Chief Executive Officer and President of the Company at the direction of the
Board of Directors of the Company (the “Board”). Executive shall faithfully and
diligently perform such duties assigned to Executive and shall report directly
to the Board.
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. Executive’s employment with the Company
shall be at all times at-will employment and Company reserves the right to
terminate Executives employment and this Agreement for any reason with or
without cause, at any time in its sole discretion as provided for in Section 7
of the Agreement. Likewise, Executive may terminate his employment at
any time and for any reason as provided for in Section 7 of this
Agreement.
5. Compensation.
5.1 Salary. Executive’s annual compensation
(“Base
Compensation”) under this
Agreement shall be $240,000 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 entitle to an annual
cash bonus equal to 3% of the increase in market capitalization of the Company
for the period commencing on January 1, 2009 and ending on December 31,
2009. Executive shall also be entitled to an annual cash bonus in all
subsequent years in which he is employed equal to 2% of the increase in market
capitalization of the Company during each applicable year
thereafter. The cash bonus shall be paid to Executive no later than
January 31 of the year following the year in which the bonus is
earned. At the Company’s option, the cash bonus may be paid to
Executive in four (4) equal payments, the first payment on January 31 of the
year following the year in which the bonus is earned and the remaining three
equal payments shall be made on April 30, July 31 and October 31 of such
year. The cash bonus will be deemed earned on December 31 of
each respective year. In the event the Company elects to make such
payment in four equal installments, such payments will be made irrespective of
Executives employment at the time such payments become
due. In the event of an acquisition, merger or other
pooling of resources with another company, the bonus will be earned based on the
market capitalization of the company at the time of the merger or acquisition,
and the bonus cash shall be paid to the Executive within 30 days of the merger
or acquisition date. For purposes of clarification, in the event of a
decrease in the market capitalization of the Company during any applicable
period, Executive will not earn a bonus. Under no circumstance will
Executive be required to return a previously earned bonus or pay any sums to the
Company as a result of a decrease in market capitalization.
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 as from
time to time in effect.
5.4 Options. The Executive shall be eligible to
participate in the Company’s Stock Incentive Plan, and receive option grant(s)
there under 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 one million (1,000,000) Options to be
issued and priced at the closing price on November 17, 2008, subject to formal approval of the
option grants by the Company’s Board of Directors. The Options granted to the Executive
pursuant to this Section 5.4 shall have a term of 5 years and vest quarterly over 2 years so long as
Executive remains employed by the Company. In the event Executive is
terminated or resigns prior to the vesting of all Options, any unvested options
shall lapse 90 days after termination.
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 Board of Directors or its designee. The Executive shall be
entitled to carry forward from year to year unused vacation days and shall be
entitled to compensation therefore upon termination of
employment.
5.6 Other Rights
and Benefits. Executive and
his dependents 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.
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 or
Resignation. Executive’s termination or
resignation of employment shall be effective 30 days after the termination or
resignation notice is given by the Company or Executive, respectively
(“Termination Effective Date”).
8. Payment Upon
Termination. Upon Executive's termination of employment by either the
Company or Executive, all accrued but unpaid compensation as provided for in
Section 5 shall be paid within five (5) days following
the Termination Effective
Date. For purposes of calculating the Bonus as provided for in
Sections 5.2, the applicable measurement period shall be the period of time from
the beginning of the respective year through the Termination Effective
Date.
9. 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.
10. Non-Solicitation
and Non-Competition.
10.1 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.
10.2 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.
10.3 Non-Competition. Without the prior written consent of
the Board of Directors, 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 Board of Directors, 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. 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.
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.
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.
11. Confidentiality
and Invention Assignment.
In connection with this Agreement, Executive agrees to execute and acknowledges
his employment shall be bound by the Company’s
Confidentiality and Invention Assignment Agreement. 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.
12. Miscellaneous.
12.1 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.
12.2 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 to any
Confidentiality or Invention Assignment obligations under Section 11.
12.3 Arbitration.
(a) Any claim, dispute or other controversy
(a “Controversy”) relating to this Agreement shall be
settled and resolved by binding arbitration in Los Angeles County, California
before a single arbitrator under the Employment Rules of the American
Arbitration Association (“
AAA ”) in effect at the
time a demand for arbitration is made. If there is any conflict between the AAA
rules and this arbitration clause, this arbitration clause will govern and
determine the rights of the parties. The Parties to this Agreement (the
“
Parties ”) shall be
entitled to full discovery regarding the Controversy as permitted by the
California Code of Civil Procedure. The arbitrator’s decision on the Controversy
shall be a final and binding determination of the Controversy and shall be fully
enforceable as an arbitration award in any court having jurisdiction and venue
over the Parties. The arbitrator shall also award the prevailing Party any
reasonable attorneys’ fees and reasonable expenses the prevailing Party incurs
in connection with the arbitration, and the non-prevailing Party shall pay the
arbitrator’s fees and expenses. The arbitrator shall determine who is the
prevailing Party. Each Party also agrees to accept service of process for all
arbitration proceedings in accordance with AAA’s rules.
(b) The obligation to arbitrate shall not be
binding upon either party with respect to requests for temporary restraining
orders, preliminary injunctions or other procedures in a court of competent
jurisdiction to obtain interim relief when deemed necessary by such court to
preserve the status quo or prevent irreparable injury pending resolution by
arbitration of the actual dispute between the Parties.
(c) The provisions of this Section shall be
construed as independent of any other covenant or provision of this Agreement;
provided that, if a court of competent jurisdiction determines that any such
provisions are unlawful in any way, such court shall modify or interpret such
provisions to the minimum extent necessary to have them comply with the
law.
(d) This arbitration provision shall be
deemed to be self-executing and shall remain in full force and effect after
expiration or termination of this Agreement. In the event either party fails to
appear at any properly noticed arbitration proceeding, an award may be entered
against such party by default or otherwise notwithstanding said failure to
appear.
12.4 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.
12.5 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.
12.6 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.
12.7 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 12, 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.
12.8 Attorneys’
Fees. In the event of any
Controversy, suit, action or arbitration to enforce any of the terms or
provisions of this Agreement, the prevailing party shall be entitled to its
reasonable attorneys’ fees and costs. The foregoing entitlement shall also
include attorneys’ fees and costs of the prevailing party on any appeal of a
judgment and for any action to enforce a judgment.
12.9 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.
12.10 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.
12.11 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.
12.12 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.
12.13 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.
12.14 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.
[Signature Page
Follows]
IN WITNESS WHEREOF, the Parties have
executed this Agreement as of the dates indicated below.
|
THE COMPANY:
|
|||
|
INNOVATIVE CARD TECHNOLOGIES,
INC.
|
|||
|
a Delaware
corporation
|
|||
|
Dated:
|
By:
|
/s/ | |
| Name: | |||
|
Title:
|
Director | ||
|
EXECUTIVE:
|
|||
|
Dated:
|
By:
|
/s/ | |
| Name: |
Xxxxxxx
Xxxxxx
|
||
