Employment Agreement - Identix Corp. and Sunday Lewis
IDENTIX INCORPORATED
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of the
22nd day of August 2001, between Identix Incorporated, a Delaware corporation
("Identix"), and Sunday Lewis ("Employee").
BACKGROUND
Identix desires to assure the services of Employee from the date hereof
(the "Effective Date") for the term of years after the Effective Date indicated
on Schedule A (the "Term"), and Employee is willing to be employed by Identix
during such period, on the terms and subject to the conditions set forth in this
Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. Duties. During the Term, Employee shall devote all of
Employee's business time, energy, and skill to the affairs of Identix; provided,
however, that Employee may undertake such specific additional charitable and
business activities, if any, as Identix may reasonably approve (including,
without limitation, activities for affiliates of Identix). During the Term,
Employee shall report directly to the person indicated on Schedule A, or to such
other person or persons as may be selected by the Board of Directors of Identix
from time to time.
2. Term of Employment.
2.1 Definitions. For purposes of this Agreement the
following terms shall have the following meanings:
(a) "Change in Control" shall mean the occurrence
of any one of the following: (i) any "person", as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than Identix, a subsidiary, an affiliate, or an Identix
employee benefit plan, including any trustee of such plan acting as a trustee)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Identix representing
fifty percent (50%) or more of the combined voting power of Identix's then
outstanding securities; (ii) the election to a majority of the seats of the
Board of Directors of Identix of candidates who were not proposed by a majority
of the Board in office prior to the time of such election; or (iii) the
dissolution or liquidation (partial or total) of Identix or a sale of assets
involving fifty percent (50%) or more of the assets of Identix (other than the
disposition of a subsidiary) or other transaction or series of related
transactions pursuant to which the holders, as a group, of all of the shares of
Identix
<PAGE>
outstanding prior to the merger, reorganization or other transaction hold, as a
group, less than fifty percent (50%) of the shares of Identix outstanding after
the merger, reorganization or other transaction.
(b) "Resignation for Good Reason" shall mean a
voluntary resignation of employment by Employee as a result of (i) a material
diminution in responsibility, (ii) decrease in base salary, (iii) an involuntary
relocation, if there has been no Change in Control, or (iv) in the event of a
Change in Control, an involuntary relocation required of the Employee due to a
change by Identix in the location at which the Employee performs Employee's
principal duties for Identix to a new location that is both (A) outside a radius
of fifty (50) miles from the Employee's principal residence immediately prior to
the date of the Change in Control (the "Measurement Date") and (B) more than
thirty (30) miles from the location at which the Employee performed Employee's
principal duties for Identix immediately prior to the Measurement Date, provided
that Employee notifies Identix on or prior to any such resignation of the reason
for such resignation and Identix fails to cure such event within thirty (30)
days thereafter.
(c) "Termination For Cause" shall mean termination
by Identix of Employee's employment by Identix (i) by reason of Employee's
commission of a felony or other conduct involving fraud or moral turpitude, (ii)
by reason of Employee's fraud upon, or deliberate injury or attempted injury to
Identix, (iii) by reason of Employee's failure to substantially perform for
Identix the normal material duties related to Employee's job position (other
than failure resulting from incapacity due to disability or death) which failure
continues for sixty (60) days following the Employee's receipt of written notice
of such failure to perform, specifying the nature of the failure and the means
by which it can be remedied, (iv) by reason of Employee's willfully engaging in
gross misconduct which is materially and demonstrably injurious to Identix, or
(v) by reason of Employee's willful breach of this Agreement in any material
respect.
(d) "Termination Other Than For Cause" shall mean
termination by Identix of Employee's employment by Identix (other than in a
Termination For Cause). Included within the definition of "Termination Other
Than For Cause" shall be (i) Employee's death during the Term, (ii) termination
of Employee's employment by Identix based on Employee's failure to perform
Employee's duties under this Agreement on account of illness or physical or
mental incapacity for a period of more than three (3) consecutive months or
(iii) any other involuntary termination that does not constitute a Termination
For Cause.
(e) "Voluntary Termination" shall mean termination
by Employee of Employee's employment with Identix, excluding termination by
reason of Resignation for Good Reason as described in Section 2.1(b) and
termination by reason of Employee's death or disability as described in Section
2.1(d).
2
<PAGE>
2.2 Basic Term. The term of employment of Employee by
Identix shall commence on the Effective Date and shall continue for the Term
unless extended by mutual written agreement of Employee and Identix or earlier
terminated as provided in this Agreement.
2.3 Termination For Cause. Termination For Cause may be
effected by Identix at any time during the Term and shall be effected by written
notification to Employee. Upon Termination For Cause, Employee shall be
immediately paid all accrued salary, and all accrued vacation pay, all to the
effective date of termination, but Employee shall not be paid any other
compensation or reimbursement of any kind, including, without limitation,
severance compensation or bonus.
2.4 Termination Other Than For Cause or Resignation for
Good Reason. Notwithstanding anything else in this Agreement, Identix may effect
a Termination Other Than For Cause at any time after giving at least 30 days'
notice to Employee of such termination or pay in lieu of such notice. Upon the
effective date of any Termination Other Than For Cause or Resignation for Good
Reason, (a) Employee shall immediately be paid all accrued salary, and all
accrued vacation pay, all to the effective date of termination, (b) as severance
compensation, Employee shall continue to be paid Employee's then current base
salary for the 12 month severance period ("Severance Period"); provided, that
Employee shall have the right, exercisable in Employee's sole judgment, to be
immediately paid, in one-lump sum payment, an amount equivalent to Employee's
base salary for 12 months, rather than receiving such amount in regular payments
over the term of the Severance Period, (c) Employee shall immediately be paid
all bonuses accrued through the date of termination, (d) during the Severance
Period, Identix shall make COBRA payments to continue Employee's medical and
dental benefits (or pay Employee an amount equivalent to such COBRA payments)
and shall make payments to continue Employee's term life insurance (or pay
Employee an amount equivalent to the premiums in effect prior to termination),
and (e) all options to purchase Common Stock granted to Employee by Identix,
whether prior to or after the Effective Date, shall fully vest immediately, and
notwithstanding any provision of any relevant stock option agreement or stock
option plan to the contrary, Employee shall have 12 months from the effective
date of termination to exercise such options, but Employee shall not be paid any
other compensation or reimbursement of any kind. If any Termination Other Than
For Cause is the result of the death of Employee, all payments payable under
this Section 2.4 shall be paid to Employee's heirs or legal representative.
2.5 Voluntary Termination. In the event of a Voluntary
Termination, Identix shall immediately pay to Employee all accrued salary, and
all accrued vacation pay, all to the effective date of termination, but no other
compensation or reimbursement of any kind, including, without limitation,
severance compensation or bonus.
3
<PAGE>
2.6 Change in Control. If a Change in Control shall have
occurred during the Term, in addition to any rights Employee may have under
applicable stock option plans and/or stock option agreements with the Company,
the following shall apply:
(a) (i) If the Change in Control occurs during the
first year of this Agreement, then the Term, as indicated on Schedule A, shall
not be changed.
(ii) If the Change in Control occurs during
the second year of this Agreement, then the Term shall be extended to the first
anniversary of the Change in Control.
(b) (i) If there is a Termination Other Than For
Cause or Resignation for Good Reason within one year after a Change in Control,
and if any of the payments or benefits received or to be received by the
Employee in connection with a Change in Control or the Employee's termination of
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with Identix,) (all such payments and benefits,
excluding the Gross-Up Payment, being hereinafter referred to as the "Total
Payments") will be subject to the excise tax (the "Excise Tax") imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code"), Identix shall pay, at the time specified in Section 2.6(b)(iv), to
the Employee an additional amount (the "Gross-Up Payment") such that the net
amount retained by the Employee, after deduction of any Excise Tax on the Total
Payments and any Federal, state and local income and employment taxes and Excise
Tax upon the Gross-Up Payment, shall be equal to the Total Payments.
(ii) For purposes of determining whether any
of the Total Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (A) all of the Total Payments shall be treated as "parachute
payments" (within the meaning of Section 280G(b)(2) of the Code) unless, in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the Employee and
selected by the accounting firm which was, immediately prior to the Change in
Control, Identix's independent auditor (the "Auditor"), such payments or
benefits (in whole or in part) should not be treated by the courts as
constituting parachute payments, including by reason of Section 280G(b)(4)(A) of
the Code, (B) all "excess parachute payments" within the meaning of Section
280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in
the opinion of Tax Counsel, such excess parachute payments (in whole or in part)
should be treated by the courts as representing reasonable compensation for
services actually rendered (within the meaning of Section 280G(b)(4)(B) of the
Code), or are otherwise not subject to the Excise Tax, and (C) the value of any
noncash benefits or any deferred payment or benefit shall be determined by the
Auditor in accordance with the principles of Sections 280G(d)(3) and (4) of the
Code. All fees and expenses of the Tax Counsel and the Auditor shall be borne
solely by Identix.
4
<PAGE>
(iii) For purposes of determining the amount
of the Gross-Up Payment, the Employee shall be deemed to pay Federal income tax
at the highest marginal rate of Federal income taxation in the calendar year in
which the Gross-Up Payment is to be made and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Employee's
residence in the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in Federal income taxes which could be obtained from
deduction of such state and local taxes, taking into account the reduction in
itemized deduction under Section 68 of the Code.
(iv) The Gross-Up Payment shall be made upon
the payment to the Employee of the Total Payments, unless it is initially
determined by Identix or the Tax Counsel that the Total Payments are not subject
to the Excise Tax but after payment of the Total Payments, it is finally
determined following the proceedings set forth in Section 2.6(b)(v) and (vi)
that the Total Payments are subject to the Excise Tax, in which case it shall be
made upon the imposition upon the Employee of the Excise Tax.
(v) The Employee shall notify Identix in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by Identix of a Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than ten (10) business days after the
Employee is informed in writing of such claim and shall apprise Identix of the
nature of such claim and the date on which such claim is requested to be paid.
The Employee shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which the Employee gives such notice to Identix
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If Identix notifies the Employee in writing prior
to the expiration of such period that it desires to contest such claim, the
Employee shall:
A) give Identix any information reasonably requested by
Identix relating to such claim;
B) take such action in connection with contesting such
claim as Identix shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by Identix and reasonably
satisfactory to the Employee;
C) cooperate with Identix in good faith in order to
effectively contest such claim; and
D) permit Identix to control any proceedings relating to
such claim as provided below;
5
<PAGE>
provided, however, that Identix shall bear and pay directly all costs and
expenses (including, but not limited to, additional interest and penalties and
related legal, consulting or other similar fees) incurred in connection with
such contest and shall indemnify and hold the Employee harmless, on an after-tax
basis, for any Excise Tax or other tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of costs
and expenses.
(vi) Identix shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct the Employee to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Employee agrees to
prosecute such contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate courts, as Identix
shall determine; provided, however, that if Identix directs the Employee to pay
such claim and sue for a refund, Identix shall advance the amount of such
payment to the Employee on an interest-free basis, and shall indemnify and hold
the Employee harmless, on an after-tax basis, from any Excise Tax or other tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and provided, further, that if the Employee is required to extend the statute of
limitations to enable Identix to contest such claim, the Employee may limit this
extension solely to such claim. Identix's control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority. In addition, no position may be taken nor any final resolution
be agreed to by Identix without the Employee's consent if such position or
resolution could reasonably be expected to adversely affect the Employee
(including any other tax position of the Employee unrelated to the matters
covered hereby).
(vii) In the event that the Employee
receives a refund of the Excise Tax previously paid, the Employee shall repay to
Identix, within five (5) business days following the receipt of such refund of
the Excise Tax previously paid, the amount of such refund plus any interest
received by the Employee from the Internal Revenue Service on the refund, and an
amount equal to the reduction in the Employee's Federal, state and local income
tax assuming that the repayment is deductible, using the assumptions set forth
in Section 2.6(b)(iii). If, after the receipt by the Employee of an amount
advanced by Identix in connection with an Excise Tax claim, a determination is
made that Employee shall not be entitled to any refund with respect to such
claim and Identix does not notify the Employee in writing of its intent to
contest the denial of such refund prior to the expiration of thirty (30) days
after such determination, such advance shall be forgiven and shall not be
required to be repaid.
6
<PAGE>
3. Salary and Benefits.
3.1 Base Salary. As payment for the services to be
rendered by Employee as provided in Section 1 and subject to the terms and
conditions of Section 2, Identix shall initially pay to Employee a "base salary"
at the rate indicated on Schedule A, subject to deductions, payable bi-weekly in
the same manner as other Identix employees receive their base compensation.
3.2 Bonus. Employee shall be eligible for a bonus as
indicated on Schedule A.
3.3 Fringe Benefits. Employee shall be eligible to
participate in such of Identix's benefit plans as are now generally available or
later made generally available to employees of Identix. Such benefits shall at a
minimum include medical, dental and term life insurance.
4. Annual Performance Review. Identix shall perform an annual
review of Employee's performance and, in the discretion of the Board of
Directors of Identix, make appropriate increases in Employee's base salary and
determine whether additional stock option grants should be recommended to the
Board of Directors of Identix. The first such annual performance review after
the Effective Date shall be conducted on or about July 2002.
5. Miscellaneous.
5.1 Waiver. The waiver of any term or condition of this
Agreement by any party shall not be construed as a waiver of a subsequent breach
or failure of the same term or condition, or a waiver of any other term or
condition of this Agreement.
5.2 Notices. All notices, requests, demands, and other
communications made in connection with this Agreement shall be in writing and
shall be deemed to have been duly given on the date of delivery if delivered by
hand delivery or 12 hours after facsimile transmission to the persons identified
below or five days after mailing if mailed by certified or registered mail
postage prepaid return receipt requested addressed as follows:
If to Identix:
100 Cooper Court
Los Gatos, California 95032
Attn: Chief Executive Officer
Facsimile: 408-395-8166
7
<PAGE>
Confirmation No.: 408-335-1482
If to Employee:
To the address indicated on Schedule A
Any party may change its address for notices by notice duly given pursuant to
this Section 5.2.
5.3 Headings. The headings contained in this Agreement are
intended for convenience and shall not be used to interpret the meaning of this
Agreement or to determine the rights of the parties.
5.4 Governing Law; Consent to Jurisdiction and Venue. This
Agreement shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts entered into and wholly to be
performed within the State of California by California residents. Employee
hereby submits to the jurisdiction and venue of the Superior Court of the State
of California for the County of Santa Clara or the United States District Court
for the Northern District of California for any legal action arising from or
connected with this Agreement. Employee agrees that service upon Employee in any
such action may be made by first class mail, certified or registered, in the
manner provided for delivery of notices in Section 5.2.
5.5 Successor and Assigns. This Agreement shall be binding
upon and inure to the benefit of the executors, administrators, heirs,
successors and assigns of the parties; provided, however, that this Agreement
shall not be assignable by Identix (except in connection with the merger or
consolidation of Identix with or into another entity or the sale by Identix of
all or substantially all of its assets) or by Employee.
5.6 Counterparts. This Agreement may be signed in
counterparts with the same effect as if the signatures of each party were upon a
single instrument. All counterparts shall be deemed an original of this
Agreement.
5.7 Withholdings. All sums payable to Employee hereunder
shall be reduced by all Federal, state, local and other withholding and similar
taxes and payments required by applicable law.
5.8 Severability. If any provision of this Agreement is
held to be unenforceable for any reason, it shall be adjusted rather than
voided, if possible, in order to achieve the intent of the parties to the extent
possible. In any event, all other provisions of this Agreement shall be deemed
valid and enforceable to the full extent possible.
8
<PAGE>
5.9 Entire Agreement; Modifications. Except as otherwise
provided herein, this Agreement represents the entire understanding between the
parties with respect to the subject matter hereof, and this Agreement supersedes
any and all prior understandings, agreements, plans and negotiations, written or
oral, with respect to the subject matter hereof. All modifications to the
Agreement must be in writing and signed by the party against whom enforcement of
such modification is sought, provided that no modification shall be enforceable
against Identix unless signed by the Chief Executive Officer or Chief Operating
Officer of Identix.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
IDENTIX INCORPORATED
By /s/ Robert McCashin
-----------------------------
Name: Robert McCashin
Title: Chairman and CEO
EMPLOYEE
By /s/ Sunday Lewis
-----------------------------
9
<PAGE>
EMPLOYMENT AGREEMENT
SCHEDULE A
1. Name and address of Employee: Ms. Sunday Lewis
550 Battery Street
Apartment 1619
San Francisco, CA 94111
2. Term of Agreement: 2 years
3. Initial Annual Base Salary: $200,000
4. Bonus: As established by Board from time to time.
5. Severance Period: 12 months
6. Initially report to: Chairman and CEO
Initialed by:
Identix: /s/ Robert McCashin
----------------------
Employee: /s/ Sunday Lewis
----------------------
10