EMPLOYMENT AGREEMENT
Exhibit
10.1
THIS
EMPLOYMENT AGREEMENT (hereinafter “Agreement”) is entered into and becomes
effective as of June 5, 2007 by and between Patriot Scientific Corporation
(hereinafter “PTSC” or “Employer” or “Company”), and Xxxxx Xxxxxx (hereinafter
“Xx. Xxxxxx” or “Employee”).
RECITALS
A. PTSC
is
an intellectual property licensing company that develops, markets and enables
innovative proprietary technologies.
B. PTSC
is a
Delaware corporation and is doing business in the State of
California.
C. Xx. Xxxxxx
is currently a member of the Board of Directors of PTSC. Both PTSC and Xx.
Xxxxxx desire that Xx. Xxxxxx be hired as the President and Chief Executive
Officer of PTSC on a full-time basis and that said employment be pursuant to
the
terms of this written Agreement.
IN
CONSIDERATION of their respective promises and covenants contained herein,
and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto do hereby agree as
follows:
AGREEMENT
1. Employment.
PTSC
hereby engages Employee to serve as its President and Chief Executive Officer,
and Employee hereby accepts such engagement upon the terms and conditions set
forth herein.
2. Term.
The
term of this Agreement shall begin on June 5, 2007 above and shall remain
in effect for one (1) year, unless terminated earlier pursuant to
Section 8.
3. Duties.
Xx. Xxxxxx is employed to serve as PTSC’s President and Chief Executive
Officer and shall perform such duties as are customarily performed by a person
serving in that office. Xx. Xxxxxx will report to the Board of Directors.
As part of Employee’s duties, Xx. Xxxxxx acknowledges and understands that:
(a) Employee will devote his best knowledge and skill to the performance of
his duties; (b) Employee shall devote his reasonable business time to the
rendition of such services, subject to absences for customary vacations and
for
temporary illness, which time shall not be less than forty (40) hours each
week;
and (c) Employee will not engage in any other gainful occupation which
requires his personal attention without prior consent of the Board of Directors,
with the exception that Employee may personally trade in stock, bonds,
securities, commodities or real estate investments for his own
benefit.
a. Six
Month Performance Evaluation.
PTSC
shall provide Xx. Xxxxxx with feedback regarding his performance within six
months of the effective date of this Agreement.
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b. Nine
Month Performance Evaluation.
PTSC
shall provide Xx. Xxxxxx with additional feedback regarding his performance
within nine months of the effective date of this Agreement.
4. Personnel
Policies and Procedures.
PTSC
shall have the authority to establish from time to time personnel policies
and
procedures to be followed by its employees. Employee agrees to comply with
the
policies and procedures of PTSC. To the extent any provisions in PTSC’s
personnel policies and procedures differ with the terms of this Agreement,
the
terms of this Agreement shall apply.
5. Compensation.
a. Salary.
During
the term of this Agreement, Employee shall be paid a salary of Two Hundred
and
Twenty Five Thousand Dollars ($225,000) per year. Employer, in its sole
discretion, may, but is not obligated to, provide additional compensation to
Employee, consistent with Employer’s policies and procedures.
b. Bonus.
Xx. Xxxxxx is eligible to receive an annual merit bonus as determined in
the sole discretion of the Board of Directors.
c. Stock
Options.
Xx. Xxxxxx shall also receive the following Stock Options as additional
compensation. The Stock Options referenced below will be granted pursuant to,
and will at all times be subject to, the terms of the Patriot Scientific
Corporation 2003 Stock Option Plan (“Plan”) and the Stock Option Agreements
pursuant to which they are granted.
i. Company
will provide Xx. Xxxxxx with incentive stock options (“ISO”) to purchase 400,000
shares of the Company’s common stock. These ISOs shall vest in a manner such
that the aggregate fair market value of the stock with respect to which the
ISOs
options are exercisable for the first time during any calendar year shall
approximate, but not exceed, $100,000, as set forth in Exhibit ”A” to the
Incentive Stock Option Agreement granting such options under the Plan. The
strike price for such shares shall be the fair market value of the stock on
the
date of grant (i.e. the effective date of that Agreement).
ii. Company
will provide Xx. Xxxxxx with a non-qualified stock options (“NSO”) to purchase
1,500,000 shares of the Company’s common stock. These NSOs shall vest based upon
certain performance milestones as set forth in Exhibit ”A” to the
Non-Qualified Stock Option Agreement granting such options under the Plan.
The
strike price for such shares shall be the fair market value of the stock on
the
date of grant (i.e. the effective date of that Agreement).
6. Fringe
Benefits.
a. Travel
Allowance.
Company
shall reimburse Employee for reasonable commuting expenses from his home to
Patriot’s corporate offices for a period not to exceed six months.
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b. Lodging.
Company
shall reimburse Employee for the cost of lodging in the County of San Diego
for
up to six months in an amount that is to be preapproved by the Compensation
Committee of the Board of Directors.
c. Automobile
Allowance.
Company
shall pay Employee up to eight hundred dollars ($800.00) per month as an
automobile allowance during the term of this Agreement.
d. Vacation.
Employee shall be eligible to receive the standard vacation benefits generally
available to similar employees of the Company, as may from time to time may
be
adopted by the Company.
e. Other
Benefits.
Employee shall be eligible to participate in all current employee benefit plans
or any other benefit plans established or made available by PTSC from time
to
time during the term of this Agreement to employees generally, subject to and
on
a basis consistent with the terms, conditions and overall administration of
such
plans and the written policies of PTSC, as modified by PTSC from time to time.
Employee shall receive other benefits as determined by the Board of
Directors.
7. Business
Expenses.
PTSC
shall reimburse Employee for reasonable and necessary expenses incurred by
Employee in the ordinary course of business for PTSC, in accordance with PTSC’s
policies and procedures.
8. Termination.
This
Agreement and the employment of Employee shall terminate prior to its expiration
date under the following conditions:
a. Upon
receipt by Employee of written notice from PTSC that Employee’s employment is
being terminated; or
b. The
death
of Employee; or,
c. The
permanent disability of Employee (permanent disability shall exist when Employee
suffers from a condition of mind or body that indefinitely prevents his further
performance of his essential duties, with or without reasonable accommodation);
or
d. Upon
thirty (30) days written notice by Employee that he is resigning his employment
from PTSC; or
e. Upon
receipt by Employee of written notice from PTSC that Employee’s employment is
being terminated for “good cause.” PTSC has “good cause” to terminate Employee’s
employment if:
i. Employee
fails or refuses to faithfully and diligently perform the usual and customary
duties of his employment, which failure or refusal is not cured within thirty
(30) days after written notice thereof is given to Employee; or
ii. Employee
fails or refuses to comply with the policies, standards and/or rules of Employer
which from time to time may be established, which failure or refusal is not
cured within thirty (30) days after written notice thereof is given to Employee;
or
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iii. Employee
fails or refuses to act in accordance with any lawful direction or order of
the
Board of Directors; or
iv. It
is
determined by the Board of Directors that Employee has conducted himself in
an
unprofessional, unethical, illegal or fraudulent manner, or has acted in a
manner detrimental to the reputation, character or standing of Employer;
including, but not limited to, theft or misappropriation of Employer’s assets,
engaging in unlawful discriminatory or harassing conduct, the filing of false
expense or related reports, or being convicted of a felony; or
v. Employee
violates any material term or condition of this Agreement.
9. Compensation
Upon Termination.
a. For
Other Than Good Cause.
In the
event Employee receives notice from Employer that his employment is terminated
for other than “good cause,” he shall receive his then current salary level for
the remaining term of the Agreement provided that Employee signs a release
of
all claims against PTSC on a release form provided by PTSC to him at that
time.
b. For
Good Cause.
In the
event Employee is terminated for good cause as defined in Section 8(e)
above, he shall receive notice that his employment is terminated and shall
receive two weeks’ pay at his then current wage level, even though the
employment terminated at the time notice was provided to Employee. Employee
is
entitled to no other severance compensation when he is terminated for good
cause
as defined in Section 8(e) above.
c. Death
or Permanent Disability.
In the
event Employee dies or becomes permanently disabled as defined in this
Agreement, PTSC’s obligations hereunder shall terminate after paying Employee
any compensation owed through the last day he worked.
d. Resignation.
In the
event Employer receives notification that Employee is resigning, Employee shall
be paid for the remainder of the time he continues to be employed at PTSC,
up to
a maximum of thirty (30) days.
10. Covenants
and Representations.
a. Confidential
Information.
By
signing this Agreement, Employee acknowledges and agrees that during the course
of Employee’s employment, Employer has disclosed and will disclose or make
available to Employee confidential and proprietary information related to
Employer’s business including, without limitation, trade secrets, business
records, intellectual property licensing programs, licensing terms and
conditions, strategic planning, business acquisition planning, research and
development, business development, joint venture planning, forward planning,
strategic initiatives, prospective patent portfolio information, prospective
investor information, prospective joint venture information, marketing
strategies and related data, financial information, targeted areas of
concentration of business development, contracts, business systems, plans and
projections whether or not patentable or entitled to trademark (the
“Confidential Information”), that such Confidential Information has been
developed and will be developed through the expenditure by Employer of
substantial time and money and that all such Confidential Information, except
to
the extent it is in the public domain, shall constitute valuable, special and
unique assets of Employer and trade secrets protected under applicable law.
Employee’s employment with Company creates in Employee a duty of trust and
confidentiality to Company with respect to the Confidential Information.
Accordingly, Employee agrees to use such Confidential Information only for
the
purpose of carrying out Employee’s duties with Employer and agrees that Employee
will not, during the period of employment or at any time thereafter,
misappropriate for Employee for others, disclose or in any way make available
to
others, directly or indirectly, any such Confidential Information. It is
expressly agreed that upon termination of employment Employee shall promptly
surrender to Employer any and all documents, equipment or other records in
any
media referencing or containing any Confidential Information including but
not
limited to the following: all equipment belonging to Employer and all documents
relating to Employer’s business, including without limitation computers, keys,
pagers, correspondence, computer disks, software, accounting or financial
records, employee lists, documents relating to Employer’s employees, drawings,
manuals, notes, notebooks, reports, flow charts, diagrams, designs, programs,
proposals, or any other physical items or documents relating to Employer.
Employee further agrees that he will not make or retain any unauthorized copies
or other reproductions of such materials. If Employee does not promptly
surrender the equipment and documents, Employee agrees that he shall be
responsible for reimbursing Employer for all costs, including attorney’s fees,
incurred by Employer in an attempt to recover said equipment and
documents.
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b. Prohibited
Solicitation of Employees.
During
Employee’s employment with Employer and for one year following the termination
of employment for any reason, Employee agrees that Employee shall not, directly
or indirectly, either for Employee or for any other person, firm or corporation,
call on, solicit, induce or encourage any employee, consultant or independent
contractor of Employer to become employed by any direct or indirect competitor
of Employer or to terminate his, her or its relationship with Employer.
c. Competition
During Employment.
In
consideration of Employee’s access to the Confidential Information described in
paragraph 10(a), Employee agrees that during Employee’s employment,
Employee shall not directly or indirectly compete with Employer.
11. Arbitration/Sole
Remedy for Breach of Agreement.
In the
event of any dispute between PTSC and Employee concerning any aspect of the
employment relationship, including any disputes relating to termination, all
such disputes shall be resolved by binding arbitration before a single neutral
arbitrator pursuant to the following terms. This provision shall supersede
any
prior arbitration agreement, policy or understanding between the parties. The
parties intend to revoke any prior arbitration agreement.
a. Claims
Covered by the Agreement.
Employee and Employer mutually consent to the resolution by final and binding
arbitration of all claims or controversies (“claims”) that Employer may have
against Employee or that Employee may have against Employer or against its
officers, directors, partners, employees, agents, pension or benefit plans,
administrators, or fiduciaries, franchisors, or any parent, subsidiary or
affiliated company or corporation (collectively referred to as “PTSC”), relating
to, resulting from, or in any way arising out of Employee’s employment
relationship with PTSC and/or the termination of Employee’s employment
relationship with PTSC, to the extent permitted by law. The claims covered
by
this Agreement include, but are not limited to, claims for wages or other
compensation due; claims for breach of any contract or covenant (express or
implied); tort claims; claims for discrimination and harassment (including,
but
not limited to, race, sex, religion, national origin, age, marital status or
medical condition, disability, or sexual orientation); claims for benefits
(except where an employee benefit or pension plan specifies that its claims
procedure shall culminate in an arbitration procedure different from this one);
claims for breach of any duties or obligations, including, but not limited
to,
claims for unfair competition, unauthorized use or disclosure of trade secrets
or confidential information, including claims for injunctive and/or other
equitable relief; and claims for violation of any public policy, federal, state
or other governmental law, statute, regulation or ordinance, except claims
excluded in the following section.
b. Claims
Not Covered by the Agreement.
Claims
Employee may have for workers’ compensation (excluding discrimination claims
under workers’ compensation statutes) or unemployment compensation benefits are
not covered by this Agreement.
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c. Required
Notice of Claims and Statute of Limitations.
Arbitration may be initiated by Employee by serving or mailing a written notice
to the Chairman of the Board of Directors of PTSC. Arbitration may be initiated
by PTSC by serving or mailing a written notice to Employee at his last known
address. The notice shall identify and describe the nature of all claims
asserted and the facts upon which such claims are based. The written notice
shall be served or mailed within the applicable statute of limitations period
set forth by federal or state law.
d. Arbitration
Procedures.
i. After
demand for arbitration has been made by serving written notice under the terms
of Section 11(c) of this Agreement, the party demanding arbitration shall
file a demand for arbitration with the office of Judicial Arbitration and
Mediation Services (“JAMS”) located in San Diego, California. The
arbitrator shall be selected from the JAMS panel and the arbitration shall
be
conducted pursuant to JAMS policies and procedures. All rules governing the
arbitration shall be the rules as set forth by JAMS. If the dispute is
employment-related, the dispute shall be governed by JAMS’s then current version
of the national rules for the resolution of employment disputes. JAMS’s then
applicable rules governing the arbitration may be obtained from JAMS’s website
which currently is xxx.xxxxxxx.xxx.
ii. The
arbitrator shall apply the substantive law (and the law of remedies, if
applicable) of the state in which the claim arose, or federal law, or both,
as
applicable to the claim(s) asserted. The arbitrator shall have exclusive
authority to resolve any dispute relating to the interpretation, applicability,
enforceability or formation of this Agreement, including but not limited to
any
claim that all or any part of this Agreement is void or voidable.
iii. Either
party may file a motion for summary judgment with the arbitrator. The arbitrator
is entitled to resolve some or all of the asserted claims through such a motion.
The standards to be applied by the arbitrator in ruling on a motion for summary
judgment shall be the applicable laws as specified in Section 11(d)(ii) of
this Agreement.
iv. Discovery
shall be allowed and conducted pursuant to the then applicable arbitration
rules
of JAMS, provided that the parties shall be entitled to discovery sufficient
to
adequately arbitrate their claims and defenses. The arbitrator is authorized
to
rule on discovery motions brought under the applicable discovery
rules.
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e. Application
For Emergency Injunctive And/Or Other Equitable Relief.
Claims
by Employer or Employee for emergency injunctive and/or other equitable relief
relating to unfair competition and/or the use and/or unauthorized disclosure
of
trade secrets or confidential information shall be submitted to JAMS for
emergency treatment. The parties agree that the JAMS administrator may select
a
neutral hearing officer (subject to conflicts) to hear the emergency request
only. The hearing officer should be experienced in considering requests for
emergency injunctive and/or other equitable relief. The hearing officer shall
conform his/her consideration and ruling with the applicable legal standards
as
if this matter were heard in a court of law in the applicable jurisdiction
for
such a dispute.
f. Arbitration
Decision.
The
arbitrator’s decision will be final and binding. The arbitrator shall issue a
written arbitration decision revealing the essential findings and conclusions
upon which the decision and/or award is based. A party’s right to appeal the
decision is limited to grounds provided under applicable federal or state
law.
g. Place
of Arbitration.
The
arbitration will be at a mutually convenient location that must be within 50
miles of Employee’s last company employment location. If the parties cannot
agree upon a location, then the arbitration will be held at JAMS’s office
nearest to Employee’s last employment location.
h. Representation,
Fees and Costs.
Each
party may be represented by an attorney or other representative selected by
the
party. Each party shall be responsible for its own attorneys’ or
representative’s fees. However, if any party prevails on a statutory claim that
affords the prevailing party’s attorneys’ fees, or if there is a written
agreement providing for fees, the arbitrator may award reasonable fees to the
prevailing party. PTSC shall be responsible for the arbitrator’s fees and costs
to the extent they exceed any fee or cost that Employee would be required to
bear if the action were brought in court.
i. Waiver
Of Jury Trial/Exclusive Remedy.
Employee and PTSC knowingly and voluntarily waive any constitutional right
to
have any dispute between them decided by a court of law and/or by a jury in
court.
12. Successors
and Assigns.
The
rights and obligations of PTSC under this Agreement shall enure to the benefit
of and shall be binding upon the successors and assigns of PTSC. Employee shall
not be entitled to assign any of his rights or obligations under this
Agreement.
13. Governing
Law.
This
Agreement shall be interpreted, construed, governed and enforced in accordance
to the laws of the State of California.
14. Amendments.
No
amendment or modification of the terms or conditions of this Agreement shall
be
valid unless in writing and signed by the parties hereto.
15. Separate
Terms.
Each
term, condition, covenant or provision of this Agreement shall be reviewed
as
separate and distinct, and in the event that any such term, covenant or
provision shall be held by a court of competent jurisdiction to be invalid,
the
remaining provisions shall continue in full force and effect.
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16. Waiver.
A
waiver by either party of a breach of provision or provisions of this Agreement
shall not constitute a general waiver, or prejudice the other party’s right
otherwise to demand strict compliance with that provision or any other
provisions in this Agreement.
17. Notices.
Any
notices required or permitted to be given under this Agreement shall be
sufficient, if in writing, sent by mail to his residence in the case of
Employee, or hand delivered to Employee, or to its principal office in the
case
of PTSC.
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18. Entire
Agreement.
Employee acknowledges receipt of this Agreement and agrees that this Agreement
represents the entire Agreement with PTSC concerning the subject matter hereof,
and supersedes any previous oral or written communications, representations,
understandings or Agreements with PTSC or any agent thereof. Employee
understands that no representative of PTSC has been authorized to enter into
any
Agreement or commitment with Employee, which is inconsistent in any way with
the
terms of this Agreement.
IN
WITNESS HEREOF, the parties have executed this Agreement as of the dates set
forth below.
| Dated: June 5, 2007 |
/s/
Xxxxx Xxxxxx
Xxxxx
Xxxxxx
|
Patriot
Scientific Corporation
| Dated: June 5, 2007 |
By:
/s/
Xxxxx X. Xxxx
Xxxxx
X. Xxxx, Chairman of the Board
|
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