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 asChief 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 ofthree 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.




1





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.




2




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.


3




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.




4




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 6.4.2shall
                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 6.4.2shall
                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.




5




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 ofCalifornia.





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]




6




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
                CompanyLaserCard
                Corporation/s/ 
                Christopher J. Dyball
            
            By
                /s/ Richard M. Haddock,
                CEOChristopher
                J. Dyball
            
            SignaturePrinted
                Name Richard
                HaddockDate
                Executed:  January 4, 2008
            
            Date
                Executed:  January 4,
                2008




7





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.




8




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 themor 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 Partieswill be resolved through binding arbitration in Santa
      Clara County, under the Arbitration Rules set forth in California Code of Civil
      Procedure Section 1280 etseq.,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,
                CEOPrinted
                Name Richard M.
                Haddock




9




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 notterminated
      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.





10




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.




11


Exhibit
        D
  
 Employee
        Agreement
  
 
 
 
 
 
 
 
 
 
 DREXLER
        TECHNOLOGY CORPORATION
 
 EMPLOYEE
        AGREEMENT
 
 
 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.
 
 
 12
 
 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.
  13
  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)
 
 14
 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)


15




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.




16




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.





17




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 VicePresident, 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 oftwo 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.




18




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.




19




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 terminatesduring the Term of this
      Agreement asa result of
      the death or disability of the Employee1the 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.


20




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.




21




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 6.4.2shall
                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 6.4.2shall
                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.




22




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 ofCalifornia.





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.





23




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
                CompanyLaserCard
                Corporation/s/
                Steven G. Larson
            
            By
                /s/ Richard M. Haddock,
                CEOSteven
                G. Larson
            
            SignaturePrinted
                Name Richard
                M. HaddockDate
                Executed:  January 4, 2008
            
            Date
                Executed:  January 4,
                2008





24





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.





25




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 themor 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 Partieswill be resolved through binding arbitration in Santa
      Clara County, under the Arbitration Rules set forth in California Code of Civil
      Procedure Section 1280 etseq.,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,CEOPrinted
                Name Richard M.
                Haddock





26





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 notterminated
      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.




27




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.






28





Exhibit
          D
  
 Employee
          Agreement
 
  
 
  
 
 
 
 
 
 DREXLER
          TECHNOLOGY CORPORATION
 
 EMPLOYEE
          AGREEMENT
 
  
 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.
 
 29
 
 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.
  30
  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)
   31
 
 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)


32




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.




33




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.






34