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Exhibit 10.14
EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (“Agreement”) is made by and between
Christopher J. Dyball (the “Employee”) and LaserCard Corporation, a Delaware
corporation (the "Company") (collectively the “Parties”) effective as of the
later of the dates it is signed on behalf of the Employee and the Company as
indicated under Authorized Signatures below (the “Effective Date”).

RECITAL

The Employee is currently employed by the Company as its Chief Operating
Officer.  The Employee and the Company have entered into various agreements that
affect the terms and conditions of the relationship between the Parties,
including without limitation an agreement entitled Employee Agreement dated
November 29, 1995 (the “Intellectual Property Agreement”) attached as Exhibit D
and the Company’s Employee Handbook and the policies concerning such matters as
insider trading and foreign corrupt practices. The Employee and the Company wish
to continue this relationship subject to the terms and conditions contained in
this Agreement.

AGREEMENT

Based upon the facts and premises contained in the above RECITAL and in
consideration of the mutual promises below, and intending to be legally bound,
the Company and the Employee agree as follows:

1.             Employment.

The Company shall employ the Employee, and the Employee shall serve the Company
as Chief Operating Officer.

2.             Duties and Responsibilities.

The Employee's primary duties and responsibilities will be those generally
associated with the position of Chief Operating Officer.  The Employees shall
perform such other duties as he may be assigned from time to time by the
Company’s Chairman of the Board, Vice Chairman of the Board, CEO, or its Board
of Directors.

3.             Compensation.

3.1.            Base Salary.

The Employee is to receive base salary to be paid to the Employee through the
Company’s normal payroll.   Employee’s current base salary is at the per annum
rate of three hundred five thousand eleven dollars ($305,011).  The Company
acting through its Compensation Committee will evaluate the base salary of the
Employee on an annual basis and may increase or decrease the Employee’s then
current salary rate, provided that a reduction may result in the Employee’s
ability to resign for Good Reason as defined in Exhibit A.

3.2.            Bonuses.

At the discretion of the Company’s board of directors, the Company may institute
a management bonus plan in which Employee will participate along with other
members of the Company’s senior management.  The amount and terms of the
Employee’ or any other incentive compensation plan or program may be changed
prospectively at the sole discretion of the Company at any time.
 
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3.3.            Stock Options and Other Equity Awards.

The Employee has been granted multiple stock options and one restricted stock
award, all of which remain in full force and effect according to their terms,
and the Employee may in the future be issued further stock options or shares of
restricted stock or other equity awards. The Company has adopted a policy
guideline attached as Exhibit C describing how the board of directors intends to
exercise its judgment to make arrangements as to stock options should certain
mergers and acquisitions involving the Company occur.  The Company and Employee
agree, notwithstanding such policy guideline, that unless otherwise agreed to by
both the Company and Employee:

a.  In the event that the Company is acquired (that is, there is a merger or
sale of all or substantially all of its assets such that thereafter Company
stockholders prior to such event own less than half of the outstanding voting
stock of the surviving entity by virtue of their Company shares) then
unless  the Employee resigns as an employee of the successor to the Company
(whether for any or no reason) within four (4) months after such acquisition,
then all of Employee’s unvested options or restricted stock shall vest in full
on the first to occur of the date four (4) months after such acquisition and the
date of a termination of the Employee as an employee of the successor to the
Company (for any or no reason).

b.  In the event that the Company acquires all or substantially all of the stock
or assets of another entity (whether by merger or otherwise) and either an
employee at such other entity takes Employee’s position within three months
after such acquisition, or the Company decides to hire a new person to fill
Employee’s position within six months after such acquisition, then all of
Employee’s unvested options or restricted stock shall vest in full if the
Employee resigns or is terminated within the following two months for any or no
reason.

Section 3.3 a pertains to an “Acquisition of the Company” and Section 3.3b
pertains to an “Acquisition by the Company”.

4.              Benefits and Expenses.

     4.1.    Benefit and Insurance Programs.

The Employee will be entitled to participate in all Company sponsored benefit
and insurance  programs to the extent that such benefits are offered generally
to the Company’s employees in similar positions, with similar seniority.

4.2.     Expenses.

The Company shall reimburse the Employee, in accordance with the Company's
policy, for all reasonable expenses incurred by the Employee in connection with
the performance of the Employee's duties, upon presentation of appropriate
vouchers covering such expenses.

5.      Paid Time Off.

Employee will be entitled to paid time off (vacation, sick time, paid holidays,
etc.) to the extent that such benefits are offered generally to the Company's
employees in similar positions, with similar seniority.
 
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6.     Term and Termination.

6.1.    Term.

The term of this Agreement (the “Term”) begins on the Effective Date and expires
on the date two (2) years after the Effective Date; provided, however, that:

i.  if there has been an Acquisition of or by the Company prior to the
expiration of the Term, then this Agreement shall not expire until two (2) years
after such Acquisition;

ii.  if the employment of Employee has been terminated during the Term, then the
provisions of Sections 6.3 through 6.5 and Sections 7 and 8 shall continue for
two (2) years after such employment termination; and

iii.  if neither (i) or (ii) apply, then at the request of either party, the
parties will confer during the thirty (30) days prior to the expiration of the
Term to determine if they wish to extend the Term of this Agreement and if so
the terms and conditions under which they would agree to such an
extension.  Notwithstanding the foregoing, neither party has any obligation to
extend the Term of this Agreement.

6.2.    At-will Employment.

The Employee’s employment is “at-will.” This means that either the employee or
the Company may terminate the Employee’s employment under this Agreement at any
time, with or without cause and with or without notice.

6.3.            Termination as a Result of Death or Disability; Resignation
without Good Reason; or Termination for Cause.

If the Employee’s employment terminates during the Term of this Agreement as a
result of the death or disability of the Employee1, the Employee resignation
without Good Reason (as defined in Exhibit A) or termination by the Company for
Cause (as defined in Exhibit A) then the Company shall have no further
obligations to the Employee other than the payment of compensation earned though
the last day of employment.

6.4.            Termination Without Cause or Resignation for Good Reason.

If during the Term of this Agreement the Employee’s employment is terminated
without Cause or if the Employee resigns for Good Reason, the Company shall pay
the Employee all compensation earned though the last day of employment (Such
amounts shall be paid upon termination) in addition to the severance benefits
described below.

 
6.4.1.
Severance:  For a period of twelve (12) months following the termination of
employment (the “Severance Period”), the Company shall continue to pay  the
Employee on a monthly basis one-twelfth of the Employee’s per annum base salary
as determined on his last day of employment.  Base salary does not include, for
example, overtime, bonuses, commissions, shift premiums or differentials,
compensation associated with employee stock options, reimbursements, sales
commission awards, employee benefits, expense allowances, or any other
incidental or additional compensation.  Severance pay shall be made less any and
all applicable deductions and withholdings, required and/or permitted by
applicable law.

 
 

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1            Based on the nature of the Employee’s position, the Parties agree
that, if the Employee is unable, with reasonable accommodation, to perform the
essential functions of his position for 60 consecutive days, continuing his
employment under this Agreement would result in undue hardship to the Company
and the Company may properly terminate his employment.
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6.4.2.
COBRA:  In addition, if the Employee elects to continue health insurance
coverage under COBRA, then so long as the Employee either is receiving severance
payments under Section 6.4.1, or has received twelve (12) payments under Section
6.4.1, and is paying COBRA premiums, the Company will pay the employee a monthly
payment equal to the amount that was paid by the Company prior the termination
of employment for up to a maximum of 18 months. The Employee will not be
reimbursed for the portion of the premium which had been paid by the Employee
prior to the termination of employment or for any administrative fees or
increases in premiums.  The Employee is solely responsible for filing any
necessary paperwork for COBRA coverage and payment of all premiums.  The
Company’s duty to make these payments will cease if Employee loses eligibility
for COBRA continuation coverage because Employee becomes eligible for group
coverage from another employer.  The employee (and/or Employee’s eligible
dependent(s)), shall have an obligation to inform the Company if the Employee or
such dependants are no longer eligible for COBRA continuation coverage, as is
generally the case when the Employee receives group coverage from another
employer while receiving COBRA continuation coverage.  The period of such
Company-reimbursed COBRA continuation coverage shall be considered part of
Employee’s (and Employee’s eligible dependents’) COBRA coverage entitlement
period, and will, for tax purposes, be considered taxable income to Employee.
       
6.4.3.
Options:  The fact that the Employee is receiving severance shall have no effect
on the Employee’s options.   Thus, the terms of Employee’s option agreements,
without impact of this Agreement except as provided by Section 3.3 above, shall
govern Employee’s options, including the effect of employment termination on the
options’ vesting and expiration.
       
6.5.
Conditions to Payment of the Severance.
       
6.5.1.
Execution of Release as a Condition Precedent: As a condition precedent to
receipt of the severance benefits described in Sections 6.4.1 and 6.4.2, the
Employee must execute and deliver to the Company a full general release of all
claims, known and unknown, in a form acceptable to the Company, including a
waiver of the benefits of Section 1542 of the California Civil Code.  If the
Employee does not execute and deliver the Release within twenty-one (21) days of
the date of termination which Employee does not rescind during the following
seven (7) days, the Company shall have no further obligation to provide the
Employee with any severance benefits.  The first payments under Sections 6.4.1
and 6.4.2 shall not be due or payable until such seven-day period has expired
without rescission of the release.
       
6.5.2.
Non-Solicitation: If, during the Severance Period, the Employee directly or
indirectly  solicits or attempts to solicit any employee or any full-time
independent contractor or consultant of the Company to perform services
elsewhere then all severance benefits described under Sections 6.4.1 and 6.4.2
shall immediately cease.

 
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6.5.3.
New Position:  The Employee’s severance benefits under Section 6.4.1 shall cease
if Employee becomes an employee of or otherwise renders services to any business
and the Employee agrees to promptly notify the Company when the Employee begins
to so render services.  However, if the Board of Directors of the Company
determines that the services that Employee is going to perform for the other
business do and will not involve the design, development, or manufacture of
plastic cards for secure data storage, whether they utilize contact or
contactless chips, optical or magnetic stripes, holograms, or other means for
data storage (the “Company’s Business”), then the Company agrees to act
affirmatively upon a request from Employee for the severance benefits under
Section 6.4.1 to continue.  If a court or arbitrator, as the case may be, should
for some reason require the Company to continue Employee’s severance benefits
even if the Company’s Board of Directors determines that Employee’s services
involve the Company’s Business, then such benefits shall continue only to the
extent a court or arbitrator finds that the Employee has demonstrated by clear
and convincing evidence that Employee’s services have not already and would not
in the future utilize the Company’s confidential information.
       
6.5.4.
Surviving Terms: If, during the Severance period, the Employee violates any of
the terms of this Agreement or any other Agreement between the Parties,
including without limitation the Intellectual Property Agreement, then the
severance benefits described under Section 6.4.1 and 6.4.2 shall immediately
cease.
       
6.5.5.
Continued Assistance: During the Severance Period, the Employee agrees to
respond to reasonable requests for information and provide reasonable levels of
assistance on issue related to Employee’s work with the Company without further
compensation.  The Employee’s obligation for reasonable assistance shall not
exceed twenty hours during the first week following termination, ten hours per
week during the next four weeks and five hours per month thereafter.  If the
Employee refuses to provide such information and assistance at reasonable times
and after reasonable notice, then the severance benefits described under Section
6.4.1 and 6.4.2 shall immediately cease.

7.     Tax Provisions

The tax provisions set forth in Exhibit E are hereby incorporated by reference
as though fully set forth.

8.     Miscellaneous.

The Employee and the Company acknowledge and agree that the Company may require
an Employee to whom notice of termination is given to leave the Company premises
immediately, and may bar the Employee from unescorted access to the Company
premises, so as to enable the Company to secure Company and customer records and
preserve Company and customer trade secrets and proprietary information.

Upon termination of the Employee’s employment for any reason, the Employee shall
be deemed to have resigned voluntarily from all offices and other employment
positions held with the Company, and from the board of directors, if the
Employee was serving in any such capacities at the time of termination.
 
The Employee will cooperate with the Company in the winding up or transferring
to other employees of any pending work or projects.  The Employee will also
cooperate with the Company in the defense of any action brought by any third
party against the Company that relates to Employee’s employment with the
Company.
 
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Payments and benefits provided under this Agreement may taxable under the laws
of the United States and the State of California and will be subject to all
required withholdings and court ordered wage assignments and/or garnishments.

This Agreement shall be binding on the parties hereto and on each of their
heirs, executors, administrators, successors, and assignees.

The invalidity or unenforceability of any provision(s) of this Agreement under
particular facts and circumstances will not affect the validity or
enforceability either of other provisions of this Agreement or, under other
facts and circumstances, of such provision(s).  In addition, such provision(s)
will be reformed to be less restrictive if under such facts and circumstances
they would then be valid and enforceable.

Notices shall be given to the parties at its executive office, in the case of
the Company, and at the address in the Company’s payroll records for the
Employee.  Notices shall be in writing and deemed given when received in person
or one day after being sent by overnight or four days after being sent by
certified mail, return receipt requested.  Any party may change its address by
giving notice to the other party of a new address in accordance with the
foregoing provisions.

Nothing in this Agreement shall limit the right of the Officers, the Board of
Directors and the shareholders of Company to manage the business affairs of the
Company, including, without limitation, matters relating to personnel policies
and procedures benefits and conditions of work, or give to the Employee any
claim against Company with respect to any decision relating to the conduct of
the business of Company, so long as that decision is not made in breach of any
of the Company’s express or implied covenants or obligations under this
Agreement.

Previous and contemporaneous agreements between the parties that do not conflict
with the terms of this Agreement will remain valid and binding between the
Parties, including without limitation the Arbitration Agreement attached hereto
as Exhibit B and the Intellectual Property Agreement.  However, this Agreement
contains a complete statement of the agreements between the Parties with respect
to the matters it addresses and it supersedes and replaces any prior
understandings or agreements regarding those matters.  To the extent that the
provisions of any other agreement conflict with or are inconsistent with the
provisions of this Agreement, the terms of this Agreement shall govern. This
Agreement may be modified or amended only in writing, signed by both Parties.

This Agreement shall be governed by and construed in accordance with the laws of
the State of California.

The Employee expressly acknowledges and agrees that Company’s rights under this
Agreement may be transferred to or assigned by Company to a successor employer.

In the event of any arbitration or other legal proceeding, the prevailing party
shall recover his or its reasonable attorneys' fees, except expenses, and costs,
excluding arbitration fees.
 
 

 
[Remainder of Page Left Intentionally Blank]
 
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The Employee hereby authorizes the Company to disclose this Agreement and his
responsibilities hereunder to any person or entity, including, without
limitation, future employers or clients.
 
AUTHORIZED SIGNATURES

In order to bind themselves to this Executive Employment Agreement, the Employee
and a duly authorized representative of the Company have signed their names
below on the dates indicated.

The Employee
 
The Company
   
LaserCard Corporation
                 

/s/  Christopher J. Dyball
 

By /s/ Richard M. Haddock, CEO
Christopher J. Dyball
 
       Signature

         
Printed Name Richard Haddock
     
Date Executed:  January 4, 2008
 
Date Executed:  January 4, 2008

 
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Exhibit A
Definitions

GOOD REASON shall mean: (i) a material breach of the Agreement by the Company,
(ii) a material reduction of the Employee’s Base Salary, except that neither a
reduction  proportionate to reductions imposed on all other members of the
Company’s executive management as part of a cost reduction effort nor a
reduction of the Employee’s base salary due to a change of duties as a result of
disability will be a Good Reason for termination, or (iii) the Employee’s duties
with the Company are materially reduced (provided that if there is an
Acquisition of or by the Company (as defined in Section 3.3) and the Employee’s
duties largely continue with respect to the business of the Company prior to
such acquisition, then such acquisition shall not be deemed to be a material
reduction in Employee’s duties. The Employee shall give notice to the Company
that the Employee intends to resign for one of the Good Reasons listed above,
detailing such Good Reason with specificity.  If the Employee gives notice to
the Company, no later than ninety (90) days after the initial existence of one
or more of the conditions constituting Good Reason listed above arising without
his consent, that the Employee intends to resign for one of the Good Reasons
listed above, detailing such Good Reason with specificity, and if the Company
does not remedy the situation so as to eliminate the Good Reason within two (2)
weeks of receiving such notice, then any resignation by the Employee from the
Company within the one (1) month period beginning with the delivery of the
notice shall be deemed a Resignation for Good Reason.

CAUSE is defined to mean a good faith determination by the Company that the
Employee has engaged in any of the following: 1) theft, misappropriation or
embezzlement of Company property, property of an officer, shareholder, director
or employee, or property of any customer or supplier of the Company; 2) any
conduct which constitutes unfair competition with the Company; 3) any breach of
a contractual or fiduciary duty to the Company or a material breach of a
material Company policy not cured within five days of the Company giving the
Employee notice of the breach; 4) material dishonesty in the performance of the
Employee’s duties for the Company or fraud against the  Company; 5) materially
exceeding the scope of the Employee's authority as delegated or limited from
time to time by the Company; 6) inducement of any customer, consultant, employee
or supplier of the Company to breach any contract with the Company or cease its
business relationship with the Company; 7)  refusal to substantially follow the
lawful instructions of the board of directors, Chairman or Vice Chairman of the
Board, or CEO;  8) failure to devote full-time effort to serving the Company
which is not cured within sixty (60) days of notice;  9) conviction of a crime
punishable as a felony; or 10) death or disability of the Employee.  The
Company’s good faith determination, based on reasonable evaluation that “Cause”
exists for termination of the employment relationship under this provision shall
be conclusive for the purposes of this section.  Neither the later discovery of
additional or different facts tending to negate the Company’s determination of
“Cause” nor any subsequent finding by any other fact finder that the employee
did not in fact engage in conduct identified in this definition of “Cause” shall
alter the finality of the Company’s determination for the purposes of this
section. The Company’s determination that Cause exists shall be made by the
Chairman or Vice Chairman of the Board or the CEO, with the approval of the
Board of Directors or a committee of the independent members of the Board of
Directors.
 
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Exhibit B
Agreement Regarding Arbitration

This Agreement Regarding Arbitration is executed in conjunction with the
Parties’ execution of an Executive Employment Agreement effective as of January
4, 2008, and all terms used herein are as defined in that Agreement.  Except as
prohibited by law, Parties to this Agreement Regarding Arbitration agrees that,
any claim, controversy or legal dispute between them or between the Employee and
any officer, director, shareholder, agent or employee of the Company, each of
whom is hereby designated a third party beneficiary of this agreement regarding
arbitration, (a "Dispute") arising out of the Employee's employment or
termination of such employment or any agreement or contract between the Parties
will be resolved through binding arbitration in Santa Clara County, under the
Arbitration Rules set forth in California Code of Civil Procedure Section 1280
et seq., and pursuant to California law. This includes any claims the Employee
may make relating to alleged discrimination or harassment during employment
based on race, color, national origin, religion, disability, age, gender or
sexual orientation, any claims relating to compensation (wages, bonuses,
benefits, etc.) and any claims under federal state, or local laws or regulations
relating to terms and conditions of employment. THE PARTIES UNDERSTAND THAT BY
AGREEING TO ARBITRATE DISPUTES THEY ARE WAIVING ANY RIGHT TO A JURY TRIAL.  This
Agreement Regarding Arbitration is not intended to modify or limit the remedies
available to either Party, including the right to seek interim relief, such as
injunction or attachment, through judicial process, which will not be deemed a
waiver of the right to demand and obtain arbitration. Any Dispute that is not
arbitrated, including any judicial action to enforce this Agreement Regarding
Arbitration will be litigated exclusively in federal or California courts
located in Santa Clara County, California, and the parties hereby consent and
submit to the jurisdiction and venue of such courts.

       
Christopher J. Dyball
LaserCard Corporation
       

/s/ Christopher J. Dyball

By /s/ Richard M. Haddock, CEO
     

Printed Name Richard M. Haddock
       

 
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Exhibit C
 
Policy Guidelines For Adjustment Of Stock Options In The Event Of An Acquisition
 
 
Background
 
The Employee’s stock option agreements provide that in the event of a merger or
other recapitalization, the Board of Directors shall make appropriate
adjustments to the terms of the outstanding options. Those agreements give only
minor guidance as to what adjustments would be considered “appropriate.”
 
Policy
 
(1) In the event of the acquisition of all or substantially all of the
Corporation’s assets or capital stock, adjustments are deemed “appropriate” if:
 
(a) the vested portion of options may be exercised prior to the acquisition on
not less than 30 days’ notice; and
 
(b) arrangements are made so that subject to continued employment of the
optionee with the successor corporation, the unvested portion of options will
receive one of the following benefits:
 
(i) a replacement option that can be exercised on the same vesting schedule at
the same total exercise price to purchase the stock or other securities of the
successor corporation that would have been received had the unvested option
shares been outstanding at the time of the acquisition; or
 
(ii) a cash payment made with respect to each option share at the time of
vesting equal to the excess of the per-share value paid for the acquisition
(whether in cash or in securities of the successor corporation) over the option
exercise price.
 
(2) In the event the employment relationship between the employee and the
successor corporation is terminated within one year of the date of the sale of
the Corporation, it is intended that 100% of the remaining unvested portion of
all options held by such employee on the date of the sale of the Corporation
would vest and remain exercisable for at least 90 days after the termination,
provided that:
 
(a) the employee had been employed by the Corporation continuously (except for
approved leaves of absence) for at least two years prior to the date of the sale
of the Corporation; and
 
(b) the employment relationship of the successor corporation and the employee
was not terminated by either:
 
(i) resignation by the employee; or
 
(ii) by the successor corporation due to acts of moral turpitude on the part of
the employee such as theft, embezzlement, fraud, dishonesty, misappropriation or
conversion of funds committed against the Corporation or successor corporation,
or due to the employee’s material breach of an agreement with the Corporation or
successor corporation concerning disclosure and ownership of inventions,
conflict of interest, or confidentiality of information.
 
In the event the successor corporation had not assumed outstanding Corporation
options but rather was paying deferred compensation whenever Corporation options
vested, then the successor corporation would pay the employee the amount
corresponding to such accelerated vesting.

 
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Effect
 
This policy guideline may be changed at any time by the Stock Option Committee
or the Corporation’s Board of Directors. It does not constitute a part of this
Plan. The right of the Corporation or its successors to terminate the employment
of an optionee, with or without cause, shall not be affected by this guideline.
 
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Exhibit D
 

Employee Agreement
 

DREXLER TECHNOLOGY CORPORATION

EMPLOYEE AGREEMENT

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DREXLER TECHNOLOGY CORPORATION is dedicated to a policy of exerting a
significant influence in its chosen fields through technical innovation and
creative administration and marketing.  The competitive success of this policy
depends to a large extent on the Company's ability to capitalize on the creative
talents of its employees, and to maintain a free flow of pertinent information
among its employees.
For this reason, all employees are requested to sign the attached AGREEMENT
under which:
 
1.
requirements for avoiding conflicting outside activities are specified,

 
2.
the Company is assured of exclusive rights to ideas, works, and inventions which
relate to Company business, and

 
3.
the Company is protected against unauthorized disclosure of proprietary
information.

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AGREEMENT

In part consideration of my employment now being or to be given by DREXLER
TECHNOLOGY CORPORATION (hereinafter referred to as the "Company"), a corporation
of the State of Delaware, or by any subsidiary or other affiliate of said
Company, and effective as of the date that said employment first commenced, I
agree that:
1.            During the term of my employment, I will not without the prior
written consent of the Company (a) engage in any other professional employment
or consulting, or (b) directly or indirectly participate in or assist any
business which is a current or potential supplier, customer, or competitor of
the Company, except that I may invest to an extent not exceeding one percent of
the total outstanding shares in each of one or more companies whose shares are
listed on a national securities exchange or quoted daily by The Nasdaq Stock
Market.
2.            I will disclose promptly to the Company any ideas, inventions,
works of authorship (including but not limited to computer programs, software
and documentation), improvements or discoveries, patentable or unpatentable,
copyrightable or uncopyrightable, which during the term of my employment I may
conceive, make, develop or work on, in whole or in part, solely or jointly with
others, whether or not reduced to drawings, written description, documentation,
models or other tangible form, and which relate either to product, service,
research or development fields in which the Company or any of its affiliates is,
at the time, actively engaged, or to my employment activities; and all such
ideas, inventions, works, improvements and discoveries shall forthwith and
without further consideration become and be the exclusive property of said
Company, its successors and assigns. The Company hereby notifies you that the
foregoing does not apply to any invention which qualifies fully for exemption
under Section 2870 of the California Labor Code.
3.            I will assist the Company in every proper way, including the
signing of any and all papers, authorization, applications and assignments, and
making and keeping of proper records, and the giving of evidence and testimony
(all entirely at the Company's expense), to obtain and to maintain for the use
and benefit of the Company or its nominees patents, copyrights or other
protection for any and all such ideas, inventions, works, improvements and
discoveries in all countries.
4.            I understand and agree that all data and records coming into my
possession or kept by me in connection with my employment, including notebooks,
drawings, blueprints, computer programs, software and documentation, bulletins,
parts lists, reports, customer lists, and production, cost, purchasing, and
marketing information, and employment data, including policies and salary
information, are the exclusive property of the Company. I agree to return to the
Company all copies of such data and records upon termination of my employment
unless specific written consent is obtained from the President of the Company to
retain any such data or records.
 
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5.            I will regard and preserve as confidential and will not divulge to
unauthorized persons, or use for any unauthorized purposes, either during or
after the term of my employment, any information, matter, or thing of secret,
confidential or private nature, connected with the business of the Company or
any of its suppliers, customers or affiliates without the written consent of the
President of the Company until such time as such information otherwise becomes
public knowledge. Included within the meaning of the foregoing are matters of a
technical nature, such as know-how, formulae, computer programs, software and
documentation, secret processes or machines, inventions, and research projects,
and matters of a business nature, such as information about costs, profits,
markets, sales, lists of customers and business data regarding customers,
salaries, and other personnel data of the Company's employees, and any other
information of a similar nature to the extent not available to the public, and
plans for further development.
6.            As a matter of record, the following Schedule A contains a list of
all ideas, inventions, works, improvements and discoveries, patented and
unpatented, copyrighted and not copyrighted, and completed prior to my
employment, which I desire to have specifically excluded from the operation of
this Agreement.
7.            I agree that I will not disclose to the Company or use for the
benefit of the Company any confidential information derived from sources other
than employment with the Company. I further agree that if I am in doubt as to
the confidential status of any information, or if any information is alleged to
be proprietary, I will refer to the President of the Company the question of
whether such information is available for disclosure and use for the benefit of
the Company.
8.            I understand that employment at the Company is employment at-will.
Employment at-will may be terminated with or without cause and with or without
notice at any time by the employee or the Company. Nothing in this Agreement or
in any document or statement shall limit the right to terminate employment
at-will. No manager, supervisor or employee of the Company has any authority to
enter into any agreement for employment for any specified period of time or to
make any agreement for employment other than at-will. Only the President of the
Company has the authority to make any such agreement and then only in writing.
9.            This Agreement shall not be terminated or altered by changes in
duties, compensation or other terms of my employment.

Employee:

    /s/  Christopher J.
Dyball                                                                           
November 29, 1995
(Signature)                                                                                                                                                       
 (Date)

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SCHEDULE A

List of all ideas, inventions, works, improvements and discoveries, patented and
unpatented, copyrighted and not copyrighted, and completed, if any, prior to my
employment:
 
(Leave blank if not applicable)

/s/  Christopher J.
Dyball                                                                           
November 29, 1995
(Signature)                                                                                                              
                       (Date)
 
 
 
(rev. 8/14/95)
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Exhibit E.

Tax Provisions

1.  Section 409(A)

To the fullest extent applicable, amounts and other benefits payable under this
Agreement are intended to be exempt from the definition of “nonqualified
deferred compensation” under Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) in accordance with one or more of the exemptions
available under the final Treasury regulations promulgated under Section
409A.  In this regard, each payment under this Agreement that is made in a
series of scheduled installments (within the meaning of Treasury Regulation
section 1.409A-2(b)(2)(iii)), including without limitation, each salary
continuation payment under Section 6.4 shall be deemed a separate payment for
purposes of Code section 409A.

To the extent that any amounts or benefits payable under this Agreement are or
become subject to Section 409A due to a failure to qualify for an exemption from
the definition of nonqualified deferred compensation in accordance with the
final Code Section 409A regulations, this Agreement is intended to comply with
the applicable requirements of Code Section 409A with respect to such amounts or
benefits.  This Agreement shall be interpreted and administered to the extent
possible in a manner consistent with the foregoing statement of intent.

In each case where this Agreement provides for the payment of an amount that
constitutes nonqualified deferred compensation under Code Section 409A to be
made to the Employee within a designated period (e.g., within 21 days after the
date of termination) and such period begins and ends in different calendar
years, the exact payment date within such range shall be determined by the
Company, in its sole discretion, and the Employee shall have no right to
designate the year in which the payment shall be made.

Notwithstanding anything in this Agreement or elsewhere to the contrary, if the
Company (or its affiliate) is a public company on the Employee’s date of
termination and the Employee is a “Specified Employee” (within the meaning of
Section 409A(a)(2)(B)(i) of the Code, as determined by the Company’s
Compensation Committee) on such date, and the Company reasonably determines that
any amount or other benefit payable under this Agreement on account of the
Employee’s separation from service, within the meaning of Section
409A(a)(2)(A)(i) of the Code, constitutes nonqualified deferred compensation
that will subject the Employee to “additional tax” under Section 409A(a)(1)(B)
of the Code (together with any interest or penalties imposed with respect to, or
in connection with, such tax, a “409A Tax”) with respect to the payment of such
amount or the provision of such benefit if paid or provided at the time
specified in the Agreement, then the payment or provision thereof shall be
postponed to the first business day of the seventh month following the date of
termination or, if earlier, the date of the Employee’s death (the “Delayed
Payment Date”). The Company and the Employee may agree to take other actions to
avoid the imposition of a 409A Tax at such time and in such manner as permitted
under Section 409A.  In the event that this paragraph requires a delay of any
payment, such payment shall be accumulated and paid in a single lump sum on the
Delayed Payment Date.

The Employee’s date of termination for purposes of determining the date that any
payment or benefit that is treated as nonqualified deferred compensation under
Code Section 409A is to be paid or provided (or in determining whether an
exemption to such treatment applies), and for purposes of determining whether
the Employee is a “Specified Employee” on the date of termination, shall be the
date on which the Employee has incurred a “separation from service” within the
meaning of Treasury Regulation Section 1.409A-1(h), or in subsequent IRS
guidance under Code Section 409A.
 
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2.  Section 280(g)

It is not the intent of the parties to this Agreement that any payment hereunder
will constitute a “parachute payment” as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”).  Accordingly, all benefits and
payments pursuant to Sections 3.3 and 6.4 of this Agreement  shall be reduced,
if necessary, to the largest aggregate amount that will result in no portion
thereof being subject to federal excise tax or being nondeductible to the payor
for federal income tax purposes under Sections 280G or 4999 of the Code.  The
Company will determine which payments or benefits are to be reduced, if
necessary to conform to this provision.

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EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (“Agreement”) is made by and between Steven
G. Larson (the “Employee”) and LaserCard Corporation,  a Delaware corporation
(the "Company") (collectively the “Parties”) effective as of the later of the
dates it is signed on behalf of the Employee and the Company as indicated under
Authorized Signatures below (the “Effective Date”).

RECITAL

The Employee is currently employed by the Company as its Vice President,
Finance, and Chief Financial Officer.  The Employee and the Company have entered
into various agreements that affect the terms and conditions of the relationship
between the Parties, including without limitation an agreement entitled Employee
Agreement dated December 20, 1995 (the “Intellectual Property Agreement”)
attached as Exhibit D and the Company’s Employee Handbook and the policies
concerning such matters as insider trading and foreign corrupt practices. The
Employee and the Company wish to continue this relationship subject to the terms
and conditions contained in this Agreement.

AGREEMENT

Based upon the facts and premises contained in the above RECITAL and in
consideration of the mutual promises below, and intending to be legally bound,
the Company and the Employee agree as follows:

1.
Employment.

The Company shall employ the Employee, and the Employee shall serve the Company
as Vice President, Finance, and Chief Financial Officer.

2.
Duties and Responsibilities.

The Employee's primary duties and responsibilities will be those generally
associated with the position of Vice President, Finance, and Chief Financial
Officer.  The Employees shall perform such other duties as he may be assigned
from time to time by the Company’s Chairman of the Board, Vice Chairman of the
Board, CEO, or its Board of Directors.

3.             Compensation.

3.1      Base Salary.

The Employee is to receive base salary to be paid to the Employee through the
Company’s normal payroll.  Employee’s current base salary is at the per annum
rate of two hundred sixty-five thousand thirteen dollars ($265,013).  The
Company acting through its Compensation Committee will evaluate the base salary
of the Employee on an annual basis and may increase or decrease the Employee’s
then current salary rate, provided that a reduction may result in the Employee’s
ability to resign for Good Reason as defined in Exhibit A.

3.2              Bonuses.

At the discretion of the Company’s board of directors, the Company may institute
a management bonus plan in which Employee will participate along with other
members of the Company’s senior management.  The amount and terms of the
Employee’ or any other incentive compensation plan or program may be changed
prospectively at the sole discretion of the Company at any time.
 
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3.3              Stock Options and Other Equity Awards.

The Employee has been granted multiple stock options and one restricted stock
award, all of which remain in full force and effect according to their terms,
and the Employee may in the future be issued further stock options or shares of
restricted stock or other equity awards. The Company has adopted a policy
guideline attached as Exhibit C describing how the board of directors intends to
exercise its judgment to make arrangements as to stock options should certain
mergers and acquisitions involving the Company occur.  The Company and Employee
agree, notwithstanding such policy guideline, that unless otherwise agreed to by
both the Company and Employee:

a.  In the event that the Company is acquired (that is, there is a merger or
sale of all or substantially all of its assets such that thereafter Company
stockholders prior to such event own less than half of the outstanding voting
stock of the surviving entity by virtue of their Company shares) then
unless  the Employee resigns as an employee of the successor to the Company
(whether for any or no reason) within four (4) months after such acquisition,
then all of Employee’s unvested options or restricted stock shall vest in full
on the first to occur of the date four (4) months after such acquisition and the
date of a termination of the Employee as an employee of the successor to the
Company (for any or no reason).

b.  In the event that the Company acquires all or substantially all of the stock
or assets of another entity (whether by merger or otherwise) and either an
employee at such other entity takes Employee’s position within three months
after such acquisition, or the Company decides to hire a new person to fill
Employee’s position within six months after such acquisition, then all of
Employee’s unvested options or restricted stock shall vest in full if the
Employee resigns or is terminated within the following two months for any or no
reason.

Section 3.3a pertains to an “Acquisition of the Company” and Section 3.3b
pertains to an “Acquisition by the Company”.

4.             Benefits and Expenses.

4.1              Benefit and Insurance Programs.

The Employee will be entitled to participate in all Company sponsored benefit
and insurance programs to the extent that such benefits are offered generally to
the Company’s employees in similar positions, with similar seniority.

4.2              Expenses.

The Company shall reimburse the Employee, in accordance with the Company's
policy, for all reasonable expenses incurred by the Employee in connection with
the performance of the Employee's duties, upon presentation of appropriate
vouchers covering such expenses.

5.             Paid Time Off.

Employee will be entitled to paid time off (vacation, sick time, paid holidays,
etc.) to the extent that such benefits are offered generally to the Company’s
employees in similar positions, with similar seniority.
 
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6.             Term and Termination.

6.1             Term.

The term of this Agreement (the “Term”) begins on the Effective Date and expires
on the date two (2) years after the Effective Date; provided, however, that:

i.   if there has been an Acquisition of or by the Company prior to the
expiration of the Term, then this Agreement shall not expire until two (2) years
after such Acquisition;

ii.  if the employment of Employee has been terminated during the Term, then the
provisions of Sections 6.3 through 6.5 and Sections 7 and 8 shall continue for
two (2) years after such employment termination; and

iii.  if neither (i) or (ii) apply, then at the request of either party, the
parties will confer during the thirty (30) days prior to the expiration of the
Term to determine if they wish to extend the Term of this Agreement and if so
the terms and conditions under which they would agree to such an
extension.  Notwithstanding the foregoing, neither party has any obligation to
extend the Term of this Agreement.

6.2     At-will Employment.

The Employee’s employment is “at-will.” This means that either the employee or
the Company may terminate the Employee’s employment under this Agreement at any
time, with or without cause and with or without notice.

6.3             Termination as a Result of Death or Disability; Resignation
without Good Reason; or Termination for Cause.

If the Employee’s employment terminates during the Term of this Agreement as a
result of the death or disability of the Employee1 the Employee resignation
without Good Reason (as defined in Exhibit A) or termination by the Company for
Cause (as defined in Exhibit A) then the Company shall have no further
obligations to the Employee other than the payment of compensation earned though
the last day of employment.

6.4             Termination Without Cause or Resignation for Good Reason.

If during the Term of this Agreement the Employee’s employment is terminated
without Cause or if the Employee resigns for Good Reason, the Company shall pay
the Employee all compensation earned though the last day of employment (Such
amounts shall be paid upon termination) in addition to the severance benefits
described below.

 
6.4.1.
Severance:  For a period of twelve (12) months following the termination of
employment (the “Severance Period”), the Company shall continue to pay  the
Employee on a monthly basis one-twelfth of the Employee’s per annum base salary
as determined on his last day of employment.  Base salary does not include, for
example, overtime, bonuses, commissions, shift premiums or differentials,
compensation associated with employee stock options, reimbursements, sales
commission awards, employee benefits, expense allowances, or any other
incidental or additional compensation.  Severance pay shall be made less any and
all applicable deductions and withholdings, required and/or permitted by
applicable law.

 
 
 

--------------------------------------------------------------------------------

1            Based on the nature of the Employee’s position, the Parties agree
that, if the Employee is unable, with reasonable accommodation, to perform the
essential functions of his position for 60 consecutive days , continuing his
employment under this Agreement would result in undue hardship to the Company
and the Company may properly terminate his employment.
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6.4.2.
COBRA:  In addition, if the Employee elects to continue health insurance
coverage under COBRA, then so long as the Employee either is receiving severance
payments under Section 6.4.1, or has received twelve (12) payments under Section
6.4.1, and is paying COBRA premiums, the Company will pay the employee a monthly
payment equal to the amount that was paid by the Company prior the termination
of employment for up to a maximum of 18 months. The Employee will not be
reimbursed for the portion of the premium which had been paid by the Employee
prior to the termination of employment or for any administrative fees or
increases in premiums.  The Employee is solely responsible for filing any
necessary paperwork for COBRA coverage and payment of all premiums.  The
Company’s duty to make these payments will cease if Employee loses eligibility
for COBRA continuation coverage because Employee becomes eligible for group
coverage from another employer.  The employee (and/or Employee’s eligible
dependent(s)), shall have an obligation to inform the Company if the Employee or
such dependants are no longer eligible for COBRA continuation coverage, as is
generally the case when the Employee receives group coverage from another
employer while receiving COBRA continuation coverage.  The period of such
Company-reimbursed COBRA continuation coverage shall be considered part of
Employee’s (and Employee’s eligible dependents’) COBRA coverage entitlement
period, and will, for tax purposes, be considered taxable income to Employee.
       
6.4.3
Options:  The fact that the Employee is receiving severance shall have no effect
on the Employee’s options.   Thus, the terms of Employee’s option agreements,
without impact of this Agreement except as provided by Section 3.3 above, shall
govern Employee’s options, including the effect of employment termination on the
options’ vesting and expiration.
       
6.5.
Conditions to Payment of the Severance.
       
6.5.1.
Execution of Release as a Condition Precedent: As a condition precedent to
receipt of the severance benefits described in Sections 6.4.1 and 6.4.2, the
Employee must execute and deliver to the Company a full general release of all
claims, known and unknown, in a form acceptable to the Company, including a
waiver of the benefits of Section 1542 of the California Civil Code.  If the
Employee does not execute and deliver the Release within twenty-one (21) days of
the date of termination which Employee does not rescind during the following
seven (7) days, the Company shall have no further obligation to provide the
Employee with any severance benefits.  The first payments under Sections 6.4.1
and 6.4.2 shall not be due or payable until such seven-day period has expired
without rescission of the release.
       
6.5.2
Non-Solicitation: If, during the Severance Period, the Employee directly or
indirectly solicits or attempts to solicit any employee or any full-time
independent contractor or consultant of the Company to perform services
elsewhere then all severance benefits described under Sections 6.4.1 and 6.4.2
shall immediately cease.

 
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6.5.3
New Position:  The Employee’s severance benefits under Section 6.4.1 shall cease
if Employee becomes an employee of or otherwise renders services to any business
and the Employee agrees to promptly notify the Company when the Employee begins
to so render services.  However, if the Board of Directors of the Company
determines that the services that Employee is going to perform for the other
business do and will not involve the design, development, or manufacture of
plastic cards for secure data storage, whether they utilize contact or
contactless chips, optical or magnetic stripes, holograms, or other means for
data storage (the “Company’s Business”), then the Company agrees to act
affirmatively upon a request from Employee for the severance benefits under
Section 6.4.1 to continue.  If a court or arbitrator, as the case may be, should
for some reason require the Company to continue Employee’s severance benefits
even if the Company’s Board of Directors determines that Employee’s services
involve the Company’s Business, then such benefits shall continue only to the
extent a court or arbitrator finds that the Employee has demonstrated by clear
and convincing evidence that Employee’s services have not already and would not
in the future utilize the Company’s confidential information.
       
6.5.4
Surviving Terms: If, during the Severance period, the Employee violates any of
the terms of this Agreement or any other Agreement between the Parties,
including without limitation the Intellectual Property Agreement, then the
severance benefits described under Section 6.4.1 and 6.4.2 shall immediately
cease.
       
6.5.5
Continued Assistance: During the Severance Period, the Employee agrees to
respond to reasonable requests for information and provide reasonable levels of
assistance on issue related to Employee’s work with the Company without further
compensation.  The Employee’s obligation for reasonable assistance shall not
exceed twenty hours during the first week following termination, ten hours per
week during the next four weeks and five hours per month thereafter.  If the
Employee refuses to provide such information and assistance at reasonable times
and after reasonable notice, then the severance benefits described under Section
6.4.1 and 6.4.2 shall immediately cease.

 
7.             Tax Provisions

The tax provisions set forth in Exhibit E are hereby incorporated by reference
as though fully set forth.

8.             Miscellaneous.

The Employee and the Company acknowledge and agree that the Company may require
an Employee to whom notice of termination is given to leave the Company premises
immediately, and may bar the Employee from unescorted access to the Company
premises, so as to enable the Company to secure Company and customer records and
preserve Company and customer trade secrets and proprietary information.

Upon termination of the Employee’s employment for any reason, the Employee shall
be deemed to have resigned voluntarily from all offices and other employment
positions held with the Company, and from the board of directors, if the
Employee was serving in any such capacities at the time of termination.
 
The Employee will cooperate with the Company in the winding up or transferring
to other employees of any pending work or projects.  The Employee will also
cooperate with the Company in the defense of any action brought by any third
party against the Company that relates to Employee’s employment with the
Company.

Payments and benefits provided under this Agreement may taxable under the laws
of the United States and the State of California and will be subject to all
required withholdings and court ordered wage assignments and/or garnishments.
 
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This Agreement shall be binding on the parties hereto and on each of their
heirs, executors, administrators, successors, and assignees.

The invalidity or unenforceability of any provision(s) of this Agreement under
particular facts and circumstances will not affect the validity or
enforceability either of other provisions of this Agreement or, under other
facts and circumstances, of such provision(s).  In addition, such provision(s)
will be reformed to be less restrictive if under such facts and circumstances
they would then be valid and enforceable.

Notices shall be given to the parties at its executive office, in the case of
the Company, and at the address in the Company’s payroll records for the
Employee.  Notices shall be in writing and deemed given when received in person
or one day after being sent by overnight or four days after being sent by
certified mail, return receipt requested.  Any party may change its address by
giving notice to the other party of a new address in accordance with the
foregoing provisions.

Nothing in this Agreement shall limit the right of the Officers, the Board of
Directors and the shareholders of Company to manage the business affairs of the
Company, including, without limitation, matters relating to personnel policies
and procedures benefits and conditions of work, or give to the Employee any
claim against Company with respect to any decision relating to the conduct of
the business of Company, so long as that decision is not made in breach of any
of the Company’s express or implied covenants or obligations under this
Agreement.

Previous and contemporaneous agreements between the parties that do not conflict
with the terms of this Agreement will remain valid and binding between the
Parties, including without limitation the Arbitration Agreement attached hereto
as Exhibit B and the Intellectual Property Agreement.  However, this Agreement
contains a complete statement of the agreements between the Parties with respect
to the matters it addresses and it supersedes and replaces any prior
understandings or agreements regarding those matters.  To the extent that the
provisions of any other agreement conflict with or are inconsistent with the
provisions of this Agreement, the terms of this Agreement shall govern. This
Agreement may be modified or amended only in writing, signed by both Parties.

This Agreement shall be governed by and construed in accordance with the laws of
the State of California.

The Employee expressly acknowledges and agrees that Company’s rights under this
Agreement may be transferred to or assigned by Company to a successor employer.

In the event of any arbitration or other legal proceeding, the prevailing party
shall recover his or its reasonable attorneys' fees, except expenses, and costs,
excluding arbitration fees.

The Employee hereby authorizes the Company to disclose this Agreement and his
responsibilities hereunder to any person or entity, including, without
limitation, future employers or clients.

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AUTHORIZED SIGNATURES

In order to bind themselves to this Executive Employment Agreement, the Employee
and a duly authorized representative of the Company have signed their names
below on the dates indicated.

The Employee
 
The Company
   
LaserCard Corporation
                 

/s/ Steven G. Larson
 

By /s/ Richard M. Haddock, CEO
Steven G. Larson
 
       Signature

         
Printed Name Richard M. Haddock
     
Date Executed:  January 4, 2008
 
Date Executed:  January 4, 2008

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Exhibit A
Definitions

GOOD REASON shall mean: (i) a material breach of the Agreement by the Company,
(ii) a material reduction of the Employee’s Base Salary, except that neither a
reduction  proportionate to reductions imposed on all other members of the
Company’s executive management as part of a cost reduction effort nor a
reduction of the Employee’s base salary due to a change of duties as a result of
disability will be a Good Reason for termination, or (iii) the Employee’s duties
with the Company are materially reduced (provided that if there is an
Acquisition of or by the Company (as defined in Section 3.3) and the Employee’s
duties largely continue with respect to the business of the Company prior to
such acquisition, then such acquisition shall not be deemed to be a material
reduction in Employee’s duties. The Employee shall give notice to the Company
that the Employee intends to resign for one of the Good Reasons listed above,
detailing such Good Reason with specificity.  If the Employee gives notice to
the Company, no later than ninety (90) days after the initial existence of one
or more of the conditions constituting Good Reason listed above arising without
his consent, that the Employee intends to resign for one of the Good Reasons
listed above, detailing such Good Reason with specificity, and if the Company
does not remedy the situation so as to eliminate the Good Reason within two (2)
weeks of receiving such notice, then any resignation by the Employee from the
Company within the one (1) month period beginning with the delivery of the
notice shall be deemed a Resignation for Good Reason.

CAUSE is defined to mean a good faith determination by the Company that the
Employee has engaged in any of the following: 1) theft, misappropriation or
embezzlement of Company property, property of an officer, shareholder, director
or employee, or property of any customer or supplier of the Company; 2) any
conduct which constitutes unfair competition with the Company; 3) any breach of
a contractual or fiduciary duty to the Company or a material breach of a
material Company policy not cured within five days of the Company giving the
Employee notice of the breach; 4) material dishonesty in the performance of the
Employee’s duties for the Company or fraud against the Company; 5) materially
exceeding the scope of the Employee's authority as delegated or limited from
time to time by the Company; 6) inducement of any customer, consultant, employee
or supplier of the Company to breach any contract with the Company or cease its
business relationship with the Company;(7)  refusal to substantially follow the
lawful instructions of the board of directors, Chairman or Vice Chairman of the
Board, or CEO;(8) failure to devote full-time effort to serving the Company
which is not cured within sixty (60) days of notice; 9) conviction of a crime
punishable as a felony; or 10) death or disability of the Employee..  The
Company’s good faith determination, based on reasonable evaluation that “Cause”
exists for termination of the employment relationship under this provision shall
be conclusive for the purposes of this section.  Neither the later discovery of
additional or different facts tending to negate the Company’s determination of
“Cause” nor any subsequent finding by any other fact finder that the employee
did not in fact engage in conduct identified in this definition of “Cause” shall
alter the finality of the Company’s determination for the purposes of this
section. The Company’s determination that Cause exists shall be made by the
Chairman or Vice Chairman of the Board or the CEO, with the approval of the
Board of Directors or a committee of the independent members of the Board of
Directors.

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Exhibit B
Agreement Regarding Arbitration

This Agreement Regarding Arbitration is executed in conjunction with the
Parties’ execution of an Executive Employment Agreement effective as of January
4, 2008, and all terms used herein are as defined in that Agreement.  Except as
prohibited by law, Parties to this Agreement Regarding Arbitration agrees that,
any claim, controversy or legal dispute between them or between the Employee and
any officer, director, shareholder, agent or employee of the Company, each of
whom is hereby designated a third party beneficiary of this agreement regarding
arbitration, (a "Dispute") arising out of the Employee's employment or
termination of such employment or any agreement or contract between the Parties
will be resolved through binding arbitration in Santa Clara County, under the
Arbitration Rules set forth in California Code of Civil Procedure Section 1280
et seq., and pursuant to California law. This includes any claims the Employee
may make relating to alleged discrimination or harassment during employment
based on race, color, national origin, religion, disability, age, gender or
sexual orientation, any claims relating to compensation (wages, bonuses,
benefits, etc.) and any claims under federal state, or local laws or regulations
relating to terms and conditions of employment. THE PARTIES UNDERSTAND THAT BY
AGREEING TO ARBITRATE DISPUTES THEY ARE WAIVING ANY RIGHT TO A JURY TRIAL.  This
Agreement Regarding Arbitration is not intended to modify or limit the remedies
available to either Party, including the right to seek interim relief, such as
injunction or attachment, through judicial process, which will not be deemed a
waiver of the right to demand and obtain arbitration. Any Dispute that is not
arbitrated, including any judicial action to enforce this Agreement Regarding
Arbitration will be litigated exclusively in federal or California courts
located in Santa Clara County, California, and the parties hereby consent and
submit to the jurisdiction and venue of such courts.

       
Steven G. Larson
LaserCard Corporation
       

/s/ Steven G. Larson

By /s/ Richard M. Haddock, CEO
     

Printed Name Richard M. Haddock
       

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Exhibit C
 
Policy Guidelines For Adjustment Of Stock Options In The Event Of An Acquisition
 
 
Background
 
The Employee’s stock option agreements provide that in the event of a merger or
other recapitalization, the Board of Directors shall make appropriate
adjustments to the terms of the outstanding options. Those agreements give only
minor guidance as to what adjustments would be considered “appropriate.”
 
Policy
 
(1) In the event of the acquisition of all or substantially all of the
Corporation’s assets or capital stock, adjustments are deemed “appropriate” if:
 
(a) the vested portion of options may be exercised prior to the acquisition on
not less than 30 days’ notice; and
 
(b) arrangements are made so that subject to continued employment of the
optionee with the successor corporation, the unvested portion of options will
receive one of the following benefits:
 
(i) a replacement option that can be exercised on the same vesting schedule at
the same total exercise price to purchase the stock or other securities of the
successor corporation that would have been received had the unvested option
shares been outstanding at the time of the acquisition; or
 
(ii) a cash payment made with respect to each option share at the time of
vesting equal to the excess of the per-share value paid for the acquisition
(whether in cash or in securities of the successor corporation) over the option
exercise price.
 
(2) In the event the employment relationship between the employee and the
successor corporation is terminated within one year of the date of the sale of
the Corporation, it is intended that 100% of the remaining unvested portion of
all options held by such employee on the date of the sale of the Corporation
would vest and remain exercisable for at least 90 days after the termination,
provided that:
 
(a) the employee had been employed by the Corporation continuously (except for
approved leaves of absence) for at least two years prior to the date of the sale
of the Corporation; and
 
(b) the employment relationship of the successor corporation and the employee
was not terminated by either:
 
(i) resignation by the employee; or
 
(ii) by the successor corporation due to acts of moral turpitude on the part of
the employee such as theft, embezzlement, fraud, dishonesty, misappropriation or
conversion of funds committed against the Corporation or successor corporation,
or due to the employee’s material breach of an agreement with the Corporation or
successor corporation concerning disclosure and ownership of inventions,
conflict of interest, or confidentiality of information.
 
In the event the successor corporation had not assumed outstanding Corporation
options but rather was paying deferred compensation whenever Corporation options
vested, then the successor corporation would pay the employee the amount
corresponding to such accelerated vesting.
 
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Effect
 
This policy guideline may be changed at any time by the Stock Option Committee
or the Corporation’s Board of Directors. It does not constitute a part of this
Plan. The right of the Corporation or its successors to terminate the employment
of an optionee, with or without cause, shall not be affected by this guideline.
 
 
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Exhibit D
 

Employee Agreement

 

 

DREXLER TECHNOLOGY CORPORATION

EMPLOYEE AGREEMENT

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DREXLER TECHNOLOGY CORPORATION is dedicated to a policy of exerting a
significant influence in its chosen fields through technical innovation and
creative administration and marketing.  The competitive success of this policy
depends to a large extent on the Company's ability to capitalize on the creative
talents of its employees, and to maintain a free flow of pertinent information
among its employees.
For this reason, all employees are requested to sign the attached AGREEMENT
under which:
 
1.
requirements for avoiding conflicting outside activities are specified,

 
2.
the Company is assured of exclusive rights to ideas, works, and inventions which
relate to Company business, and

 
3.
the Company is protected against unauthorized disclosure of proprietary
information.

 
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AGREEMENT

In part consideration of my employment now being or to be given by DREXLER
TECHNOLOGY CORPORATION (hereinafter referred to as the "Company"), a corporation
of the State of Delaware, or by any subsidiary or other affiliate of said
Company, and effective as of the date that said employment first commenced, I
agree that:
1.            During the term of my employment, I will not without the prior
written consent of the Company (a) engage in any other professional employment
or consulting, or (b) directly or indirectly participate in or assist any
business which is a current or potential supplier, customer, or competitor of
the Company, except that I may invest to an extent not exceeding one percent of
the total outstanding shares in each of one or more companies whose shares are
listed on a national securities exchange or quoted daily by The Nasdaq Stock
Market.
2.            I will disclose promptly to the Company any ideas, inventions,
works of authorship (including but not limited to computer programs, software
and documentation), improvements or discoveries, patentable or unpatentable,
copyrightable or uncopyrightable, which during the term of my employment I may
conceive, make, develop or work on, in whole or in part, solely or jointly with
others, whether or not reduced to drawings, written description, documentation,
models or other tangible form, and which relate either to product, service,
research or development fields in which the Company or any of its affiliates is,
at the time, actively engaged, or to my employment activities; and all such
ideas, inventions, works, improvements and discoveries shall forthwith and
without further consideration become and be the exclusive property of said
Company, its successors and assigns. The Company hereby notifies you that the
foregoing does not apply to any invention which qualifies fully for exemption
under Section 2870 of the California Labor Code.
3.            I will assist the Company in every proper way, including the
signing of any and all papers, authorization, applications and assignments, and
making and keeping of proper records, and the giving of evidence and testimony
(all entirely at the Company's expense), to obtain and to maintain for the use
and benefit of the Company or its nominees patents, copyrights or other
protection for any and all such ideas, inventions, works, improvements and
discoveries in all countries.
4.            I understand and agree that all data and records coming into my
possession or kept by me in connection with my employment, including notebooks,
drawings, blueprints, computer programs, software and documentation, bulletins,
parts lists, reports, customer lists, and production, cost, purchasing, and
marketing information, and employment data, including policies and salary
information, are the exclusive property of the Company. I agree to return to the
Company all copies of such data and records upon termination of my employment
unless specific written consent is obtained from the President of the Company to
retain any such data or records.
 
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5.            I will regard and preserve as confidential and will not divulge to
unauthorized persons, or use for any unauthorized purposes, either during or
after the term of my employment, any information, matter, or thing of secret,
confidential or private nature, connected with the business of the Company or
any of its suppliers, customers or affiliates without the written consent of the
President of the Company until such time as such information otherwise becomes
public knowledge. Included within the meaning of the foregoing are matters of a
technical nature, such as know-how, formulae, computer programs, software and
documentation, secret processes or machines, inventions, and research projects,
and matters of a business nature, such as information about costs, profits,
markets, sales, lists of customers and business data regarding customers,
salaries, and other personnel data of the Company's employees, and any other
information of a similar nature to the extent not available to the public, and
plans for further development.
6.            As a matter of record, the following Schedule A contains a list of
all ideas, inventions, works, improvements and discoveries, patented and
unpatented, copyrighted and not copyrighted, and completed prior to my
employment, which I desire to have specifically excluded from the operation of
this Agreement.
7.            I agree that I will not disclose to the Company or use for the
benefit of the Company any confidential information derived from sources other
than employment with the Company. I further agree that if I am in doubt as to
the confidential status of any information, or if any information is alleged to
be proprietary, I will refer to the President of the Company the question of
whether such information is available for disclosure and use for the benefit of
the Company.
8.            I understand that employment at the Company is employment at-will.
Employment at-will may be terminated with or without cause and with or without
notice at any time by the employee or the Company. Nothing in this Agreement or
in any document or statement shall limit the right to terminate employment
at-will. No manager, supervisor or employee of the Company has any authority to
enter into any agreement for employment for any specified period of time or to
make any agreement for employment other than at-will. Only the President of the
Company has the authority to make any such agreement and then only in writing.
9.            This Agreement shall not be terminated or altered by changes in
duties, compensation or other terms of my employment.

Employee:

/s/  Steven G.
Larson                                                                           
December 20, 1995
(Signature)                                                                                                                            
                  (Date)
 
 
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SCHEDULE A

List of all ideas, inventions, works, improvements and discoveries, patented and
unpatented, copyrighted and not copyrighted, and completed, if any, prior to my
employment:
 
(Leave blank if not applicable)

_________________________                                    
_________________________
(Signature)                                                                                                
(Date)

(rev. 8/14/95)

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Exhibit E.

Tax Provisions

1.  Section 409(A)

To the fullest extent applicable, amounts and other benefits payable under this
Agreement are intended to be exempt from the definition of “nonqualified
deferred compensation” under Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) in accordance with one or more of the exemptions
available under the final Treasury regulations promulgated under Section
409A.  In this regard, each payment under this Agreement that is made in a
series of scheduled installments (within the meaning of Treasury Regulation
section 1.409A-2(b)(2)(iii)), including without limitation, each salary
continuation payment under Section 6.4 shall be deemed a separate payment for
purposes of Code section 409A.

To the extent that any amounts or benefits payable under this Agreement are or
become subject to Section 409A due to a failure to qualify for an exemption from
the definition of nonqualified deferred compensation in accordance with the
final Code Section 409A regulations, this Agreement is intended to comply with
the applicable requirements of Code Section 409A with respect to such amounts or
benefits.  This Agreement shall be interpreted and administered to the extent
possible in a manner consistent with the foregoing statement of intent.

In each case where this Agreement provides for the payment of an amount that
constitutes nonqualified deferred compensation under Code Section 409A to be
made to the Employee within a designated period (e.g., within 21 days after the
date of termination) and such period begins and ends in different calendar
years, the exact payment date within such range shall be determined by the
Company, in its sole discretion, and the Employee shall have no right to
designate the year in which the payment shall be made.

Notwithstanding anything in this Agreement or elsewhere to the contrary, if the
Company (or its affiliate) is a public company on the Employee’s date of
termination and the Employee is a “Specified Employee” (within the meaning of
Section 409A(a)(2)(B)(i) of the Code, as determined by the Company’s
Compensation Committee) on such date, and the Company reasonably determines that
any amount or other benefit payable under this Agreement on account of the
Employee’s separation from service, within the meaning of Section
409A(a)(2)(A)(i) of the Code, constitutes nonqualified deferred compensation
that will subject the Employee to “additional tax” under Section 409A(a)(1)(B)
of the Code (together with any interest or penalties imposed with respect to, or
in connection with, such tax, a “409A Tax”) with respect to the payment of such
amount or the provision of such benefit if paid or provided at the time
specified in the Agreement, then the payment or provision thereof shall be
postponed to the first business day of the seventh month following the date of
termination or, if earlier, the date of the Employee’s death (the “Delayed
Payment Date”). The Company and the Employee may agree to take other actions to
avoid the imposition of a 409A Tax at such time and in such manner as permitted
under Section 409A.  In the event that this paragraph requires a delay of any
payment, such payment shall be accumulated and paid in a single lump sum on the
Delayed Payment Date.

The Employee’s date of termination for purposes of determining the date that any
payment or benefit that is treated as nonqualified deferred compensation under
Code Section 409A is to be paid or provided (or in determining whether an
exemption to such treatment applies), and for purposes of determining whether
the Employee is a “Specified Employee” on the date of termination, shall be the
date on which the Employee has incurred a “separation from service” within the
meaning of Treasury Regulation Section 1.409A-1(h), or in subsequent IRS
guidance under Code Section 409A.
 
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2.  Section 280(g)

It is not the intent of the parties to this Agreement that any payment hereunder
will constitute a “parachute payment” as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the “Code”).  Accordingly, all benefits and
payments pursuant to Sections 3.3 and 6.4 of this Agreement  shall be reduced,
if necessary, to the largest aggregate amount that will result in no portion
thereof being subject to federal excise tax or being nondeductible to the payor
for federal income tax purposes under Sections 280G or 4999 of the Code.  The
Company will determine which payments or benefits are to be reduced, if
necessary to conform to this provision.
 
 
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