EMPLOYMENT AGREEMENT
Employment Agreement made as of the _____ day of _____, 1998 by and between
American Card Technology, Inc. (the "Company"), a Delaware corporation, and
Lawrence O. Perl, of Key Biscayne, Florida (the "Employee").
W I T N E S E T H :
WHEREAS, Employee is employed by the Company as its Chief Executive
Officer, and as a condition of closing on an initial public offering of the
Company's common stock (the "IPO Closing")through Rockcrest Securities L.L.C.
("Rockcrest"), Rockcrest, Employee and the Company have required that this
Employment Agreement be entered into to be effective on the IPO Closing;
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth below, the parties hereby agree as follows:
1. EMPLOYMENT
1.1 Position and Duties. The Company shall employ Employee to serve in
and to have the authority and responsibilities for the position of chief
executive officer and to perform such other duties as relate to such position or
for such other position and duties as the Board of Directors of the Company (the
"Board") in its discretion may from time to time determine and assign to him.
The Board will have the authority to determine the means and manner by which
Employee is to perform his duties.
1.2 Exclusiveness. The Employee shall devote substantially all of his
business time, attention and energies to the business of the Company and the
performance of his responsibilities and duties and shall carry out such
responsibilities and duties diligently and to the best of his abilities. The
Employee recognizes that the Company is entering into this Agreement because of
the Employee's expertise, skills, and talents and his agreement to devote all of
such expertise, skills, and talents to the tasks assigned him pursuant to this
Agreement. The Employee agrees that he shall not engage in any other business
activities of any kind which would give rise to a conflict of interest for the
Employee with respect to his duties and obligations to the Company.
1.3 Compliance with Policies and Laws. Employee will at all times
comply with all applicable policies, standards and regulations of the Company as
may be established from time to time and will comply with all applicable laws
and regulations.
1.4 Personal Service. Employee's personal performance of his duties is
the essence of this Agreement. Employee's rights and obligations under this
Agreement are not assignable by Employee.
2. COMPENSATION
2.1 Base Salary. For all services to be rendered by Employee in any
capacity hereunder, including services as an officer, director, member of any
committee or any other duties assigned to him by the directors or officers of
the Company, the Company agrees to pay Employee an initial base salary of Two
Hundred Fifty Thousand and 00/100 Dollars ($250,000.00) per year payable in
equal bi-weekly installments in arrears. Employee's Base Salary may be adjusted
upward at the sole discretion of the Company during the term of this Agreement.
2.2 Incentive Bonus. Employee shall be entitled to participate in the
Company's Key Officer Incentive Bonus Plan if and when established by the Board.
This plan shall be established or changed as the circumstances warrant by the
Board and the amount which shall be paid to Employee as well as when such
payment will be made will likewise be established by the Board.
2.3 Other Bonuses or Incentive Compensation. Employee may also receive
such other bonuses, grants of stock, stock options, warrants or stock
appreciation rights as may be determined by the Board, in its sole discretion.
2.4 Other Benefits. Employee shall be entitled to such fringe benefits,
including, but not limited to, vacation, sick leave, participation in medical,
dental and life insurance plans and pension or profit-sharing plans, as are
customarily provided to the senior executives of the Company as determined by
the Board of Directors of the Company and as provided by the terms of the
applicable benefit plans.
2.5 Reimbursement of Expenses. The Company shall reimburse the
reasonable travel, entertainment and other expenses incurred by Employee in
connection with the performance of his duties in accordance with such policies
as may be adopted from time to time by the Company.
3. TERM OF THE AGREEMENT
Employee's employment under this Agreement will commence upon the IPO
Closing and continue, subject to early termination as provided in Paragraph 4
below, for a term of five years.
4. EARLY TERMINATION; SEVERANCE
4.1 Employee's employment under this Agreement may or will, as
appropriate, be terminated prior to the expiration of the term set forth above
in Paragraph 3 in the following circumstances.
(a) Disability. If Employee is disabled and fails to perform
his duties hereunder on account of illness or other incapacity which prevents
Employee from performing his duties for a continuous period of one hundred
eighty days, the Company thereafter may, upon ten days written notice, terminate
Employee's employment under this Agreement.
(b) Death. In the event of the death of Employee, this
Agreement will terminate immediately.
(c) By the Company for Cause. The Company may terminate
Employee's employment under this Agreement for Cause. For purposes of this
subparagraph, the Company will have "Cause" to terminate this Agreement upon (i)
the willful and continued failure by Employee to substantially perform his
duties hereunder (other than such failure resulting from Employee's incapacity
due to physical or mental illness), after a written demand for substantial
performance is delivered by the Company that specifically identifies the manner
in which the Company believes the Employee has not substantially performed his
duties, or (ii) the willful engaging by Employee in misconduct which is
materially injurious to the Company, monetarily or otherwise, (iii) the willful
violation by Employee of the provisions of this Agreement, (iv) a material
breach of any fiduciary duty owed by Employee to the Company or its
relationships with employees, suppliers, customers or others with whom the
Company does business or (v) the habitual or repeated misuse of alcohol or
controlled substances. For purposes of this subparagraph, no act, or failure to
act, on Employee's part shall be considered "willful" unless done, or omitted to
be done, by him not in good faith or without reasonable belief that his action
or omission was in the best interest of the Company. Notwithstanding the
foregoing, Employee will not be deemed to have been terminated for Cause without
reasonable notice to Employee setting forth the reasons for the Company's
intention to terminate for Cause, an opportunity for Employee to be heard before
the Board, and thereafter, a determination that in the good faith opinion of the
Board, "Cause" exists within the meaning set forth in clause (i), (ii), (iii),
(iv) or (v) of this subparagraph.
(d) By Company Without Cause. The Company may terminate
Employee's employment under this Agreement unilaterally at any time for any
reason or for no reason by giving Employee ninety (90) days' advance notice of
the intention to terminate. Employee may, at
the sole discretion of the Company, be relieved of his duties during such ninety
(90) day period, although Employee must be paid during such period.
(e) By Employee. Employee may terminate his employment under
this Agreement at any time upon ninety (90) days written notice to the Company.
Employee may, at the sole discretion of the Company, be relieved of his duties
during such ninety-day period, but continue to be paid during such period.
4.2 In the event of termination of Employee's employment prior to the
end of the Term, Employee shall be entitled to a lump sum severance payment
payable on the date of termination as follows:
(a) In the event the Employee's employment is terminated due to
Employee's death or disability, the Employee or Employee's estate shall be
entitled to a payment equal to the sum of (i) six months of the then current
base annual salary (including accrued portions), (ii) any accrued salary which
has not been paid, and (iii) any expense reimbursements due and owing to him at
the time of such termination.
(b) If the Employee's employment is terminated by the Company
without Cause as defined above, or Employee terminates his employment for Good
Reason (as hereafter defined), the Employee shall be entitled to a payment equal
to the sum of (i) the greater of one year of the then current base annual
salary, or the total base annual salary which would be payable for the balance
of the Term, and (ii) a pro-rata portion of what the Incentive Bonus for the
then current year would be if the calculation for the year through such date of
termination annualized out for the year would have resulted in an Incentive
Bonus for the year, and (iii) any accrued salary which has not been paid, and
(iv) any expense reimbursements due and owing to him at the time of such
termination.
(c) In the event that Employee's employment is terminated by the
Company for Cause or is terminated by Employee voluntarily prior to the end of
the Term other than for Good Reason, Employee shall not be entitled to any
severance payment.
4.3 For purposes hereof:
"Good Reason" is defined to mean (i) the Board substantially diminishing
Employee's responsibilities and activities to a degree which is not commensurate
with the position held by Employee; or (ii) the Board taking action in material
breach of this Agreement; or (iii) requiring the Employee to relocate to
anywhere other than the metropolitan Atlanta area; or (iv) the voluntary
resignation of Employee at any time within sixty days after a Change in Control
(as hereinafter defined).
"Change of Control" shall mean any transaction or series of transactions
(including, without limitation, a tender offer, merger or consolidation) the
result of which is that any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended), other
than Lawrence O. Perl, Raymond Findley, Jr., Raymond Roncari and Harold
Rothstein, or trusts for the benefit of any of the foregoing or their respective
families, and any "person" or "group" solicited by any of such persons: (i)
becomes the beneficial owner of more than 50 percent of the total aggregate
voting power of all classes of the voting stock of the
Company and/or warrants or options to acquire such voting stock, calculated on a
fully diluted basis; or (ii) acquires all or substantially all of the assets of
the Company.
5. COVENANT NOT TO COMPETE; CONFIDENTIALITY
5.1 Noncompetition. (a) Employee acknowledges and understands that the
Business (as defined below) in which the Company is engaged can be and will be
effectively and efficiently conducted anywhere in the world and the Company's
business is international in scope (as opposed to national and regional).
Therefore, as a material consideration of the Company's entering into this
Agreement, Employee agrees that during the Term and for a period of one year
following termination of Employee's employment under this Agreement for any
reason whatsoever, in the entire world, directly or indirectly, Employee shall
not, in any location whatsoever, (i) own (as a proprietor, partner, stockholder,
or otherwise) an interest in or (ii) participate (as an officer, director, or in
any other capacity) in the management, operation or control of, or (iii) perform
services as or act in the capacity of an employee, independent contractor,
consultant or agent of any enterprise, which competes, or intends to compete
with the Company's Business (the "Non-Compete Covenant") except with the prior
written consent of the Board, which consent may be withheld or granted in the
Board's sole and absolute discretion. The Company's "Business" as that term is
used in this Paragraph 5.1 means the development, manufacture, marketing,
selling or distribution of smart cards or smart card related systems.
(b) Notwithstanding the foregoing, in the event that Employee's
employment is terminated due to expiration of the Term without early termination
under Section 4, and Employee's employment is not otherwise renewed, Employee
shall not be bound to the Non-Compete Covenant unless the Company makes the
following election. The Company shall have the option to bind Employee to the
Non-Compete Covenant for one year after the termination of his employment due to
expiration of the Term by electing to do so and agreeing to pay to Employee the
Non-Compete Consideration (as hereafter defined) in equal monthly installments
over the one year period. To make such election, the Company shall give
Employee notice of such election (which shall include an agreement to pay the
Non-Compete Consideration) by no later than the Election Date (as hereafter
defined). Failure to give such notice by the Election Date shall be deemed an
election by the Company to not bind Employee to the Non-Compete Covenant for the
one year period following expiration of the Term. In the event that the Company
shall default in its payment of any installment of the Non-Compete
Consideration, Employee shall be relieved from the Non-Compete Covenant, in
addition to any other rights and remedies which Employee may have. For purposes
hereof: the "Non-Compete Consideration" is the amount equal to the current base
annual salary being paid to Employee on the day prior to the date of expiration
of the Term, and the "Election Date" is the date which is three (3) months prior
to the date on which the Term expires.
5.2 Covenant Not to Promote Termination of Relationships. As a material
consideration for the Company's entering into this Agreement, Employee covenants
and agrees that for a period of two years commencing on the termination of
Employee's employment with the Company, Employee shall not persuade or entice,
or attempt to persuade or entice any customer or client of the Company to
terminate its business or contractual relationship with the Company, or refrain
from establishing any such relationship with the Company.
5.3 Inducement of Breach. Employee shall promptly notify the Company if
any person, firm, partnership, limited liability company, association,
corporation or other entity attempts to induce Employee to breach any of the
terms or provisions of this Agreement.
5.4 Confidentiality. Employee acknowledges and agrees that all product
or service information, marketing information, lists or identities of the
Company's customers, pricing and cost information, financial information,
technical data, technical know-how, and other information and data related to
the Company's business ("Confidential Information") are valuable assets of the
Company. Except for Confidential Information which is a matter of public record
through no action or fault of the Employee, Employee shall not, during the Term
or after termination of Employee's employment hereunder for any reason
whatsoever, use, divulge, disclose, or communicate any Confidential Information
to any person or entity or use any Confidential Information for the benefit of
Employee or any other person or entity, except with the prior consent of the
Board of Directors of the Company, which consent may be withheld or granted in
the Board's sole and absolute discretion.
5.5 Return of Documents. Employee acknowledges and agrees that all
originals and copies of records, reports, documents, lists, memoranda, notes and
other documentation related to the business of the Company or containing any
Confidential Information shall be the sole and exclusive property of the Company
and shall be returned to the Company by Employee upon the termination of
Employee's employment hereunder for any reason whatsoever, or upon the written
request of the Company at any time.
5.6 No Solicitation. As a material consideration of the Company's
entering into this agreement, Employee covenants and agrees that during the Term
and for a period of two years after the termination of Employee's employment
hereunder for any reason whatsoever, neither Employee, nor any person or entity
controlled by Employee (including without limitation, members of Employee's
family), shall, directly or indirectly: (i) solicit for employment any person
employed by, or serving as a consultant to, the Company or the Company's
affiliates, successors or assigns or (ii) solicit or aid in the solicitation of
persons or business entities with whom the Company has done business or with
whom the Company has attempted to do business.
5.7 Equitable relief; Other Remedies. Employee acknowledges and agrees
that it would be difficult to measure damage to the Company from any breach by
Employee of any matter described in this Section 5 of this Agreement and that
monetary damages would be an inadequate remedy for any such breach.
Accordingly, Employee agrees that if Employee shall directly or indirectly
breach or take steps preliminary to breaching any of the provisions of this
Section 5 of this Agreement, the Company shall be entitled, in addition to all
other remedies it may have at law or in equity, to an injunction or other
appropriate orders or equitable relief to restrain any such breach, without
showing or proving any actual damage sustained by the Company. Employee further
agrees that, for any period during which the breach of any provision of this
Agreement has not been enjoined, the Company shall be entitled, upon proof of
same, to actual and consequential damages caused by such breach, including, but
not limited to loss of business relationships, loss of goodwill and loss of
prospective business advantage.
5.8 No release. Employee agrees that the termination of this Agreement
shall not release Employee from any of Employee's obligations under this Section
5, all of which shall survive such termination.
6. INDEMNIFICATION
To the fullest extent permitted under the law, the Company will defend,
advance funds, indemnify and hold Employee harmless with respect to any expenses
incurred, claims made against and other liabilities arising in connection with
any actual or threatened action, suit or proceeding, whether civil, criminal,
administrative, investigative or otherwise (including any suit or proceeding by
or in the right of the Company) to which Employee is made a party, is threatened
to be made a party or is an actual or potential witness by reason of the fact
that Employee is an officer, employee, director or agent of the Company, or at
the request of the Company, an officer, employee, director or agent of any other
entity, unless, in connection with such action, suit or proceeding or in
connection with the claims made therein, Employee has engaged in acts of bad
faith, willful misconduct, gross negligence or reckless disregard of his duties
to the Company or the best interests of the Company.
7. GENERAL PROVISIONS
7.1 Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the employment of Employee by the
Company and supersedes all prior and contemporaneous agreements between them
with respect to such subject matter.
7.2 Modification. This Agreement may not be changed, modified,
released, discharged, abandoned, or otherwise amended, in whole or in part,
except by an instrument in writing, signed by an employee and an authorized
officer of the Company.
7.3 Waiver. Failure of any party at any time to require performance of
any provision of this Agreement shall not limit such party's right to enforce
such provision, nor shall any waiver of any breach of this Agreement constitute
a waiver of such provision itself. No attempted or purposed waiver of any
provision of this Agreement shall be effective unless set forth in writing and
signed by the party to be bound.
7.4 Severability. The agreements and covenants contained in this
Agreement are severable, and in the event any of the agreements and covenants
contained in this Agreement should be held to be invalid by an arbitrator or by
any court or tribunal of competent jurisdiction, this agreement shall be
interpreted as if such valid agreements and covenants were not contained herein;
provided however, that if any legal proceeding or arbitrator or a court shall
hold unenforceable the covenants contained in Section 5 above by reason of their
geographic extent or duration or otherwise, any such covenant shall be reduced
in scope to the extent required by law and enforced in its reduced form.
7.5 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the state of Georgia.
7.6 Controversies or Disputes. Any controversy, claim, or dispute
arising under or relating to this agreement, or that arises out of or that is
based upon the employment relationship (including any wage claim, any claim for
wrongful termination, or any claim based upon any statute, regulation, or law
including those concerning employment discrimination, sexual harassment, civil
rights, age or disabilities), including tort claims (except a tort that is a
"compensable injury" under workers' compensation law), or a dispute between the
parties that arose or arises before, during or after employment, other than any
matter as to which a party seeks injunctive relief, shall be resolved by a
single, neutral arbitrator in an arbitration conducted in
Georgia, in accordance with the then-current rules of commercial arbitration of
the American Arbitration Association. Employee and the Company agree that
neither party is entitled to recover punitive damages. The decision or award
rendered by the arbitrator shall be final, nonappealable, and binding upon the
parties, and judgment may be entered upon it in accordance with applicable law
in a court of competent jurisdiction. The arbitrator shall be an attorney with
at least ten years of experience in employment law. Arbitration in accordance
with this paragraph is the sole and exclusive method, means and procedure to
resolve any and all claims or disputes other than those seeking exclusively
injunctive relief. Employee and the Company hereby irrevocably waive any and
all rights to resolve disputes in a manner contrary to the provisions of this
paragraph. Any and all attempts to circumvent the terms of this paragraph shall
be null and void and of no force and effect whatsoever.
8. NOTICES
Any notice given pursuant this Agreement shall be in writing and shall be
deemed given on the earlier of the date the notice is (i) personally delivered
to the party to be notified, (ii) mailed, postage prepaid, certified with return
receipt requested, addressed as follows, or to such other address as a party may
from time to time designate by notice to the other party, or (iii) delivered at
the party's address via courier service.
To the Company: American Card Technology, Inc.
1355 Terrell Mill Road
Building 1462, Suite 200
Marietta, Georgia 30067
Attention: President
To the Employee: Lawrence O. Perl
251 Crandon Boulevard - Unit 342
Key Biscayne, Florida 33149
AMERICAN CARD TECHNOLOGY, INC.
By
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Its President
Duly Authorized
EMPLOYEE
---------------------------------
Lawrence O. Perl
ACKNOWLEDGED AND AGREED TO
AS IF THIS 1ST DAY OF MAY, 1998
/s/Lawrence O. Perl
- ----------------------------
Lawrence O. Perl
AMERICAN CARD TECHNOLOGY, INC.
1355 TERRELL MILL ROAD
BUILDING 1462, SUITE 200
MARIETTA, GEORGIA 30067
- --------------------------------------------------------------------------------
May 1, 1998
Mr. Lawrence 0. Perl
251 Crandon Boulevard - Unit 342
Key Biscayne, Florida 33149
Dear Larry:
I refer to that certain Employment Agreement dated as of the date hereof by
and between American Card Technology, Inc. (the "Company"), as Employer, and
Lawrence 0. Perl, as Employee (the "Agreement").
Notwithstanding anything to the contrary contained Section 2 of in the
Agreement, until such time (the "Conversion Date") as the Company (i) raises an
amount equal to or greater than Six Million Four Hundred Thousand and 00/100
Dollars ($6,400,000. 00), net of underwriting commissions, through an initial
public offering, or (ii) the closing of a subsequent debt financing arranged
through Lilly Beter Capital Group, Ltd., the bi-weekly payments to be made in
arrears with respect to base salary shall be calculated as if the base salary
was One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00). Any balance of
the base salary shall accrue and bear interest at a rate of ten percent (10%)
per annum and be payable in full on the Conversion Date.
Please acknowledge your consent to the foregoing by countersigning the
enclosed duplicate copy of this letter below.
Very truly yours,
Raymond Findley, Jr.
Presidentt
ACKNOWLEDGED AND AGREED TO
AS OF THIS IST DAY OF MAY 1998
/s/ Lawrence 0. Perl
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Lawrence 0. Perl