Exhibit 10.2

 

RETENTION AGREEMENT

 

This Retention Agreement (the “Agreement”) is effective as of             (the
“Effective Date”), by and between             (the “Employee”), and SAFLINK
Corporation, a Delaware corporation (the “Company”).

 

RECITALS

 

A.    The Employee presently serves at the pleasure of the Board of Directors of
the Company and performs significant strategic and management responsibilities
necessary to the continued conduct of the Company’s business and operations.

 

B.    The Board of Directors of the Company (the “Board”) has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication and objectivity of the Employee,
notwithstanding the possibility or occurrence of a Change of Control (as defined
below) of the Company.

 

C.    The Board believes that it is imperative to provide the Employee with
certain severance benefits upon the Employee’s termination of employment under
the circumstances described herein which provide the Employee with enhanced
financial security and provide sufficient incentive and encouragement to the
Employee to remain with the Company following a Change of Control.

 

D.    Certain capitalized terms used in the Agreement are defined in Section 3
below.

 

AGREEMENT

 

In consideration of the mutual covenants herein contained, and as an additional
inducement to Employee to continue her employment with the Company, the parties
agree as follows:

 

1.    Terms of Employment.    The Company and the Employee agree that the
Employee’s employment is at will, and that their employment relationship may be
terminated by either party at any time, with or without cause, subject to the
terms of this Agreement. If the Employee’s employment terminates for any reason
prior to, upon or following a Change of Control, the Employee shall not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Agreement.

 

2.    Severance Benefits.

 

(a)    Involuntary Termination.    If the Employee’s employment is terminated as
a result of Involuntary Termination (as defined in Section 3(b) below), then the
Employee shall be entitled to receive: (i) the compensation, accrued but unused
vacation and benefits earned by the Employee through the date of the Employee’s
termination of employment; and (ii) severance payments equal to four (4) months
salary determined on the basis of the Employee’s annual base salary rate in
effect immediately prior to the Employee’s Involuntary Termination, payable in
accordance with the Company’s standard payroll practices.

 

(b)    Termination Upon A Change of Control.    Subject to Section 2(g) below,
if the Employee’s employment is terminated as a result of Involuntary
Termination (as defined in Section 3(b) below) within two (2) months prior to,
upon or within twelve (12) months following consummation of a Change of Control,
then the Employee shall be entitled to receive the following:

 

(i)    The compensation, accrued but unused vacation and benefits earned by the
Employee through the date of the Employee’s termination of employment.

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(ii)    Severance payments equal to four (4) months salary determined on the
basis of the Employee’s annual base salary rate in effect immediately prior to
the Employee’s Involuntary Termination, payable in a lump sum within thirty (30)
days of the date of the Employee’s Involuntary Termination.

 

(iii)    In addition to the foregoing, to the extent the Employee holds any
options to purchase shares of the Company’s capital stock which are not vested
as of the date of such termination, then the vesting and exercisability of each
outstanding option shall accelerate with respect to one hundred percent (100%)
of the then unvested shares as of the date of such termination.

 

(iv)    In addition to the foregoing, for a period of up to twelve (12) months
after any termination under this Section 2(a), the Company shall reimburse the
Employee for any COBRA premiums paid by the Employee for continued group health
insurance coverage (the “Employment Benefits”). If the Employee’s medical
coverage immediately prior to the date of termination of employment included the
Employee’s dependents, the Company paid COBRA premiums shall include premiums
for such dependents. Such Employment Benefits shall terminate upon the earlier
of (A) twelve (12) months from the date of the Employee’s termination, or (B)
upon commencement of new employment by the Employee.

 

(v)    In addition to the foregoing, the Employee shall be entitled to receive
the laptop or other portable computer device used by the Employee, if any, as of
the date of termination; provided, the Employee first delivers such device to
the Company for removal of all Company proprietary information.

 

(c)    Voluntary Resignation.    If the Employee’s employment terminates by
reason of the Employee’s voluntary resignation (and is not an Involuntary
Termination or a termination for Cause), then the Employee shall not be entitled
to receive severance or other benefits following the date of such termination
under the terms of this Agreement, other than the compensation and benefits
earned by the Employee through the date of the Employee’s termination of
employment, and the Company shall have no obligation to provide for the
continuation of any health and medical benefit or life insurance plans existing
on the date of such termination except as otherwise required by applicable law.

 

(d)    Disability; Death.    If the Company terminates the Employee’s employment
as a result of the Employee’s Disability, or such Employee’s employment is
terminated at any time due to the death of the Employee, then the Employee shall
not be entitled to receive severance or other benefits following the date of
such termination under the terms of this Agreement, other than the compensation
and benefits earned by the Employee through the date of the Employee’s
termination of employment, and the Company shall have no obligation to provide
for the continuation of any health and medical benefit or life insurance plans
existing on the date of such termination except as otherwise required by
applicable law.

 

(e)    Termination for Cause.    If the Employee is terminated for Cause, then
the Employee shall not be entitled to receive any severance or other benefits
following the date of such termination under the terms of this Agreement, other
than the compensation and benefits earned by the Employee through the date of
the Employee’s termination of employment, and the Company shall have no
obligation to provide for the continuation of any health and medical benefit or
life insurance plans existing on the date of such termination except as
otherwise required by applicable law.

 

(f)    Release of Claims.    The Employee’s right to receive severance benefits
or accelerated vesting under this Agreement shall be conditioned upon the
Employee’s execution and delivery of a Waiver and Release substantially in the
form attached hereto as Exhibit A.

 

(g)    Limitation of Payments and Benefits.

 

(i)    To the extent that any of the payments and benefits provided for in this
Agreement or otherwise payable to the Employee constitute “parachute payments”
within the meaning of Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), and, but for this Section 2(g),

 

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would be subject to the excise tax imposed by Section 4999 of the Code or any
similar or successor provision, the aggregate amount of such payments and
benefits shall be reduced, but only to the extent necessary so that none of such
payments and benefits are subject to excise tax pursuant to Section 4999 of the
Code.

 

(ii)    Within sixty (60) days after the later of termination of employment or
the related Change of Control, the Company shall notify the Employee in writing
if it believes that any reduction in the payments and benefits that would
otherwise be paid or provided to the Employee under the terms of this Agreement
is required to comply with the provisions of Subsection 2(g)(i). If the Company
determines that any such reduction is required, it will provide the Employee
with copies of the information used and calculations made by the Company to
determine the amount of such reduction. The Company shall determine, in a fair
and equitable manner after consultation with the Employee, which payments and
benefits are to be reduced so as to result in the maximum benefit for the
Employee.

 

(iii)    Within thirty (30) days after the Employee’s receipt of the Company’s
notice pursuant to Subsection 2(g)(ii), the Employee shall notify the Company in
writing if the Employee disagrees with the amount of reduction determined by the
Company, or the selection of the payments and the benefits to be reduced. As
part of such notice, the Employee shall also advise the Company of the amount of
reduction, if any, that the Employee has, in good faith, determined to be
necessary to comply with the provisions of Subsection 2(g)(i) and/or the
payments and benefits to be reduced. Failure by the Employee to provide this
notice within the time allowed will be treated by the Company as acceptance by
the Employee of the amount of reduction determined by the Company and/or the
payments and benefits to be reduced. If any differences regarding the amount of
the reduction and/or the payments and benefits to be reduced have not been
resolved by mutual agreement within sixty (60) days after the Employee’s receipt
of the Company’s notice pursuant to Subsection 2(g)(ii), the amount of reduction
and/or the payments and benefits to be reduced as determined by the Employee
will be conclusive and binding on both parties unless, prior to the expiration
of such sixty (60) day period, the Company notifies the Employee in writing of
the Company’s intention to have the matter submitted to arbitration for
resolution and proceeds to do so promptly. If the Company gives no notice to the
Employee of a required reduction as provided in Subsection 2(g)(ii), the
Employee may unilaterally determine the amount of reduction required, if any,
and/or the payments and benefits to be reduced, and, upon written notice to the
Company, the amount and/or the payments and benefits to be reduced will be
conclusive and binding on both parties.

 

(iv)    If, as a result of the reductions required by Subsection 2(g)(i), the
amounts previously paid to the Employee exceed the amount to which the Employee
is entitled, the Employee will promptly return the excess amount to the Company.

 

3.    Definition of Terms.    The following terms referred to in this Agreement
shall have the following meanings:

 

(a)    Change of Control.    “Change of Control” shall mean the occurrence of
either of the following events:

 

(i)    Any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
total combined voting power represented by the Company’s then outstanding voting
securities; or

 

(ii)    (A) a merger or consolidation of the Company with any other corporation
or other business entity, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or parent thereof) more
than fifty percent

 

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(50%) of the total combined voting power represented by the voting securities of
the Company or such surviving or parent entity outstanding immediately after
such merger or consolidation; or (B) the complete liquidation of the Company; or
(C) the sale or disposition by the Company of all or substantially all the
Company’s assets, unless the Company remains an operating business and a going
concern.

 

(b)    Involuntary Termination.    “Involuntary Termination” shall mean the
termination of the Employee’s employment with the Company without Cause (and not
as a result of the Employee’s death or Disability) or Employee’s resignation
within sixty (60) days after any of the following:

 

(i)    Without the Employee’s express written consent, the assignment to the
Employee of any significant duties or the significant reduction of the
Employee’s duties, either of which is materially inconsistent with the
Employee’s position with the Company and responsibilities in effect immediately
prior to such assignment, or the removal of the Employee from such position and
responsibilities, which is not effected for death, Disability or for Cause;

 

(ii)    Without the Employee’s express written consent, any reduction by the
Company in the Employee’s base salary and/or or maximum incentive bonus
(subject, however, to satisfaction of applicable goals with respect to the
actual amount of incentive bonus earned) as in effect immediately prior to such
reduction, other than a reduction applied generally to executive officers of the
Company;

 

(iii)    Without the Employee’s express written consent, any reduction by the
Company in the kind or level of employee benefits to which the Employee is
entitled immediately prior to such reduction, other than a reduction applied
generally to executive officers of the Company;

 

(iv)    Without the Employee’s express written consent, the relocation of the
Employee to a facility or a location more than fifty (50) miles from the
Employee’s then present location; or

 

(v)    The failure of the Company to obtain the assumption of the terms of this
Agreement by any successors contemplated in Section 5 below, provided, however,
that the Employee’s resignation as a result of any of the foregoing conditions
shall be a voluntary resignation, and not an Involuntary Termination, unless the
Employee gives written notice of any such condition(s) to the Company and allows
the Company at least ten (10) days thereafter to correct such condition(s).

 

(c)    Cause.    For purposes of this Agreement, a termination for “Cause”
occurs if the Employee is terminated for any of the following reasons:

 

(i)    The Employee’s theft, dishonesty, misconduct or intentional falsification
of any employment or Company records;

 

(ii)    The Employee’s intentional and improper disclosure or use of the
Company’s confidential or proprietary information;

 

(iii)    Any action by the Employee that has a material detrimental effect on
the Company’s reputation or business;

 

(iv)    The Employee’s failure or inability to perform any assigned duty
reasonably expected of a person holding the Employee’s position after written
notice from the Company to the Employee of, and a reasonable opportunity to
cure, such failure or inability; or

 

(v)    The Employee’s conviction (including any plea of guilty or nolo
contendere) for any criminal act that impairs the Employee’s ability to perform
his or her duties for the Company.

 

(d)    Disability.    “Disability” shall mean that the Employee is unable to
perform his or her duties as an employee of the Company as the result of his or
her incapacity due to physical or mental impairment for 120 days (not
necessarily consecutive) in any one (1) year period. Termination resulting from
Disability may only be effected after at least thirty (30) days’ written notice
by the Company of its intention to

 

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terminate the Employee’s employment. In the event that the Employee resumes the
performance of substantially all of his or her duties as an employee of the
Company before the termination of his or her employment becomes effective, the
notice of intent to terminate shall automatically be deemed to have been
revoked.

 

4.    Employee Covenant Regarding Nonsolicitation.    For a period of one (1)
year following termination of employment for any reason, the Employee shall not
recruit, solicit, or invite the solicitation of any employees of the Company to
terminate their employment with the Company.

 

5.    Successors.

 

(a)    Company’s Successors.    Any successor (or parent thereof) to the Company
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) or to all or substantially all of the
Company’s business and/or assets shall assume the obligations under this
Agreement and agree expressly to perform the obligations under this Agreement in
the same manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession. For all purposes under
this Agreement, the term “Company” shall include any successor (or parent
thereof) to the Company’s business and/or assets which executes and delivers the
assumption agreement described in this subsection (a) or which becomes bound by
the terms of this Agreement by operation of law.

 

(b)    Employee’s Successors.    All rights of the Employee hereunder shall
inure to the benefit of, and be enforceable by, the Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. Employee shall have no right to assign any of his
obligations or duties under this Agreement to any other person or entity.

 

6.    Notice.

 

(a)    General.    Notices and all other communications contemplated by this
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Employee, mailed
notices shall be addressed to him or her at the home address which he or she
most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Secretary.

 

(b)    Notice of Termination.    Any termination by the Company for Cause or by
the Employee as a result of a voluntary resignation or an Involuntary
Termination shall be communicated by a notice of termination to the other party
hereto given in accordance with Section 6 of this Agreement. Such notice shall
indicate the specific termination provision in this Agreement relied upon, shall
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination under the provision so indicated, and shall specify the
termination date (which shall be not more than fifteen (15) days after the
giving of such notice).

 

7.    Miscellaneous Provisions.

 

(a)    No Duty to Mitigate.    The Employee shall not be required to mitigate
the amount of any payment contemplated by this Agreement (whether by seeking new
employment or in any other manner), nor, except with respect to the Employment
Benefits as described in Section 2(a)(i), shall any such payment be reduced by
any earnings that the Employee may receive from any other source.

 

(b)    Waiver.    No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing
and signed by the Employee and by an authorized officer of the Company (other
than the Employee). No waiver by either party of any breach of, or of compliance
with, any condition or provision of this Agreement by the other party shall be
considered a waiver of any other condition or provision or of the same condition
or provision at another time.

 

(c)    Choice of Law.    The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Washington.

 

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(d)    Severability.    The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.

 

(e)    Dispute Resolution/Mutual Waiver of Jury.    The Company and the Employee
acknowledge and agree that any dispute or controversy which may arise under this
Agreement is likely to involve complicated and difficult issues. Therefore each
party hereby irrevocably and unconditionally waives any right such party may
have to a trial by jury in respect or any litigation directly or indirectly
arising out of or relating to this Agreement. The Company and the Employee agree
to and hereby waive their respective rights to a jury trial as to matters
arising out of the terms of this Agreement. Each party certifies and
acknowledges that (i) no representative, agent or attorney of any other party
has represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (ii) each such party
understands and has considered the implications of this jury waiver, and (iii)
each such party voluntarily waives his, her or its right to a trial by jury.

 

(f)    No Assignment of Benefits.    The rights of any person to payments or
benefits under this Agreement shall not be made subject to option or assignment,
either by voluntary or involuntary assignment or by operation of law, including
(without limitation) bankruptcy, garnishment, attachment or other creditor’s
process, and any action in violation of this subsection (f) shall be void.

 

(g)    Employment Taxes.    All payments made pursuant to this Agreement will be
subject to withholding of applicable income and employment taxes.

 

(h)    Assignment by Company.    The Company may assign its rights under this
Agreement to an affiliate, and an affiliate may assign its rights under this
Agreement to another affiliate of the Company or to the Company; provided,
however, that no assignment shall be made if the net worth of the assignee is
less than the net worth of the Company at the time of assignment. In the case of
any such assignment, the term “Company” when used in a section of this Agreement
shall mean the corporation that actually employs the Employee.

 

(i)    Counterparts.    This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together will constitute one
and the same instrument.

 

(j)    Prior Agreements.    This Agreement shall supersede all prior
arrangements whether written or oral, and understandings, regarding the subject
matter of this Agreement. Notwithstanding the preceding, the provisions of the
SAFLINK Corporation 2000 Stock Incentive Plan and any Options granted
thereunder, including the determination of accelerated vesting upon the
occurrence of certain events, shall remain in full force and effect.

 

IN WITNESS WHEREOF, each of the parties has executed this Retention Agreement,
in the case of the Company by its duly authorized officer, as of the day and
year first above written.

 

COMPANY       SAFLINK CORPORATION                                

By:                                     
                                             

       

Title:                                    
                                           

EMPLOYEE

     

By:                                     
                                             

       

Printed Name:                                                             

 

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