EX-10.7 EXECUTIVE EMPLOYMENT AGREEMENT



 





Exhibit 10.7



EXECUTIVE EMPLOYMENT AGREEMENT




     This Executive Employment Agreement effective as of June 1, 2003 is
between Authen Tec, Inc.. a Delaware corporation (the “Company”), and F. Scott Moody (“Employee”).




	1.	 	Employment. The Company hereby employs Employee and Employee hereby accepts
employment with the Company to assist in the development and to promote the operation of the
business carried on by the Company subject to the following conditions:






	 	(a)	 	Position. Employee will serve as President and Chief Executive Officer of
the Company, in the discretion of the Board of Directors of the Company (the “Board”),
reporting to the Board and will perform such duties and will exercise such
responsibilities, commensurate with such positions, on behalf of the Company as from
time to time will be reasonably assigned to him by the Board. During his service
hereunder, Employee will at all times provide his full working time and best efforts to
the performance of his obligations and duties hereunder; provided, however, that nothing
herein contained will be deemed to prevent or limit the right of Employee to (i) invest
his funds in the capital stock or other securities of any corporation except a
competitor in the biometrics industry or (ii) serve on the boards of directors or
advisory committees of charitable organizations, trade organizations or other companies
which are not competitors in the biometrics industry and which are disclosed to the
Board.
	 
	 	(b)	 	Base Compensation. During the term of his employment hereunder, Employee
will be paid an annual base salary at the rate of Two Hundred and Thirty Thousand
Dollars ($230,000.00) (“Base Compensation”), payable in equal bi-weekly installments in
arrears; provided however, that beginning with the standard review cycle planned for
2004, the Board will review and, in its discretion, may increase Employee’s Base
Compensation based on the Company’s performance and Employee’s contributions.
	 
	 	(c)	 	Bonus Plan; Annual Bonus. No later than January 1 of each calendar year
during the term hereof, commencing with calendar year 2001, Employee will be
responsible for creating and presenting to the Board (or its Compensation Committee if
so authorized by the Board) a bonus plan for such calendar year (a “Bonus Plan”). If
Employee has timely submitted such Bonus Plan in the relevant calendar year, and if by
March 1 of the relevant calendar year, the Board has not approved such Bonus Plan, then
the Board will approve and deliver to Employee no later than April 1 of such year a
performance-based Bonus Plan created by the Board, which will be the Bonus Plan;
provided that such Board-created Bonus Plan will in each case be created in good faith
with the goal of maintaining and increasing stockholder value in the Company.
	 
	 	(d)	 	Other Benefits.





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	 	(i)	 	Insurance and other Benefits. Employee shall be entitled to
participate in. and shall receive the maximum benefits available under the Company’s
insurance programs (including health and life insurance), and any ERISA or other
benefit plans, as the same may be adopted and/or amended from time to time, and
shall receive all other fringe benefits that are provided by the Company to other
senior executives; provided that the Company will provide a term life insurance
policy covering Employee and providing for death benefits to Employee’s named
beneficiaries in an aggregate amount of at least 3.5 times Employee’s Base
Compensation.
	 
	 	(ii)	 	Vacation. Employee shall be entitled to an annual vacation of
such duration as may be determined by the Board but not less than that generally
established for other executives of the Company. Unused vacation shall be accrued
pursuant to the Company’s policy.
	 
	 	(iii)	 	Reimbursement of Expenses. The Company shall
reimburse Employee for all reasonable travel, entertainment and other expenses
incurred or paid by Employee in connection with or related to the performance
of his duties or responsibilities under this Agreement (including reasonable
home office equipment and telephone expenses directly related to Employee’s
performance of his duties), provided that Employee submits to the Company
substantiation of such expenses sufficient to satisfy the Company’s expense
reimbursement policies and the record keeping guidelines promulgated from time
to time by the Internal Revenue Service.
	 
	 	(iv)	 	Membership and Service Fees. The Company shall pay  the professional legal and financial advisory fees and costs incurred by Employee
up to $2,500 on an annual basis. The Company will also pay for Employee’s annual
membership in an airline travel club, such as the Delta Crown Room.
	 
	 	(v)	 	Car Allowance. The Company shall pay a car allowance, the cost of
which will be approved by the Board annually, but never to be less than $600 per
month.






	2.	 	Term of Employment; Termination.






	 	(a)	 	Term. Subject to termination under Section 2(b), the term of Employee’s
employment under this Agreement shall commence on the date hereof and terminate two (2)
years from the date hereof; provided that this Agreement shall be automatically
extended for successive one year terms upon the expiration of the initial or any
renewal term unless terminated by the Company upon not less than nine (9) months prior
written notice to the other party.




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	 	(b)	 	Termination; Post-Termination Matters.






	 	(i)	 	Termination.






	 	(A)	 	Termination by the Company for Employee’s Death or
Disability. In the event Employee becomes permanently disabled during
employment with the Company, the Company may terminate this Agreement by
giving thirty (30) days notice to Employee of its intent to terminate, and
unless Employee resumes performance of the duties set forth in Section 1(a)
within five (5) days of the date of the notice and continues performance for
the remainder of the notice period, this Agreement shall terminate at the end
of the thirty (30) day period. “Permanently disabled” for the purposes of this
Agreement means if Employee (I) is unable to work for 90 days within a one
year period not including any period specifically excepted from this provision
by the Board of Directors, or  (II) has a permanent or long-term physical or
mental impairment, disease, or loss, or combination thereof, that
substantially precludes him/her from engaging in useful occupations within
his/her competence, such as holding a job. For purposes hereof, “permanent”
means that the condition is or appears likely to continue to affect Employee
for the foreseeable future. In the event of any dispute under this Section
2(b)(i)(A), Employee shall submit to a physical examination by a licensed
physician mutually satisfactory to the Company and Employee, the cost of such
examination to be paid by the Company, and the determination of such physical
shall be determinative.
	 
	 	(B)	 	Voluntary Termination By Employee. Employee will
give the Company at least thirty (30) days prior written notice as to the
date of any voluntary termination by Employee, specifying therein the date of
termination; any failure of Employee to provide such timely notice will
result in a forfeiture, for the year in which the termination occurs, of any
bonus which Employee otherwise had accrued as at the date of his voluntary
termination.
	 
	 	(C)	 	Termination By the Company For Cause. The Company
may terminate Employee’s employment hereunder at any time for Cause. The
Company will give Employee written notice of any termination for Cause,
specifying therein in reasonable detail the basis for such termination for
Cause and the date of such termination, but may give such written notice at
any time.




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	 	(D)	 	Termination By the Company Without Cause. The Company may terminate
Employee’s employment at any time Without Cause. Any such termination Without
Cause will be within the sole discretion of the Company. Such discretion if
exercised by the Company will be unlimited and will not be subject to any test of
reasonableness by any court of law or by Employee.
	 
	 	(E)	 	Constructive Termination of Employee. Employee may terminate his
employment upon written notice to the Company of one of the following events,
specifying such event in detail (1) Employee’s compensation and benefits are
materially reduced below those in effect immediately prior to the effective date of
such notice other than as is proportional under a reasonable plan implemented
affecting all other employees, (2) Employee’s title and/or role are changed to a
title/role outside the executive titles of Chairman, CEO, COO, or President, or (3)
Employee’s removal as or failure to be elected or re-elected to the Board of
Directors, and the Company shall have not reversed in full such event within fourteen
days of such notice (a “Constructive Termination Event”), unless prior to such time
Employee has otherwise agreed in writing or such Constructive Termination Event
relates to a Change of Control of the Company.






	 	(ii)	 	Severance.






	 	(A)	 	If Employee’s employment is terminated pursuant to Sections 2(b)(i)(B) or
(C), the Company shall pay Employee only his Base Compensation through his actual
day of termination, and the Company shall have no further liability or obligation to
Employee, his executors, heirs, assigns or other persons claiming under or through
his estate.
	 
	 	(B)	 	If the Company terminates Employee’s employment pursuant to Section
2(b)(i)(A)(I) or (II), the Company shall pay Employee an amount equal to three (3)
months (not including accrued vacation) of Employee’s Base Compensation, payable in
accordance with the Company’s payroll practices, and, in the case of disability,
continue to provide Employee with the additional insurance benefits described herein
for such three month period.
	 
	 	(C)	 	If the Company terminates Employee’s employment Without Cause pursuant to
Section 2(b)(i)(D) or Employee terminates, his employment pursuant to Section
2(b)(i)(E), the Company shall provide Employee with the following:




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	 	(I)	 	An amount equal to nine (9) months (not including accrued vacation)
of Employee’s Base Compensation, payable in accordance with the
Company’s payroll practices and a continuation of the additional
insurance benefits described herein for such nine month period;
	 
	 	(II)	 	A pro-rata payment of the amount the Employee’s would
receive as a bonus payable under the Bonus Plan, then in effect, payable
when determined in accordance with the terms of the Bonus Plan and without
regard to any continuous employment requirement in the Bonus Plan; and
	 
	 	(III)	 	The assignment, at Employee’s option, of insurance
policies insuring Employee, provided that, notwithstanding paragraph (I)
above, Employee shall thereafter be responsible for any premium payments and
transfer of any vested funds or other benefits under any of the Company’s
ERISA or other benefit plans.






	 	(iii)	 	Definitions. As used in this Agreement.






	 	(A)	 	A “Voluntary termination” of employment by Employee, means any
termination at the will of Employee, other than by reason of a Constructive
Termination Event.
	 
	 	(B)	 	“Cause” means: (i) Employee’s refusal to render services to the
Company in accordance with his material obligations under this Agreement or other
lawful and commercially reasonable directions of the Board, after receipt of written
notice from the Board as to Employee’s refusal and such refusal continues for a
period of seven (7) days; (ii) the commission by Employee of an act of fraud or
embezzlement against the Company; (iii) Employee’s conviction of a felony; (iv)
intentional material damage to the tangible or intangible property of the Company by
Employee; or (v) drug or alcohol abuse impacting Employee’s ability to perform his
duties in a manner determined by the Board or otherwise adversely affecting the
Company. In the case of termination for Cause, Employee will be provided with a
written statement detailing the reasons for termination for Cause by the Board.
	 
	 	(C)	 	A termination “Without Cause” means a termination at the will of
the Company other than for (i) “Cause” as defined in Section 2(b)(iii)(B) hereof or,
(ii) “disability” as determined in Section 2(b)(i)(A).




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	 	(D)	 	“Change of Control” means (i) a merger or consolidation in which the
Company is not the surviving corporation, (ii) a merger in which the
company is the surviving corporaiton but after which the stockholders of
the Company immediately prior to the merger (other than any stockholder
which merges, or which owns or controls another corporaiton which merges,
with the Company in such merger) ceases to own their shares or other
equity interest in the Company, or (iii) the sale of substantially all of
the assets of the Company.






	 	(c)	 	Post-Termination Matters.






	 	(i)	 	Return of Materials. Upon any termination of Employee’s employment,
Employee will promptly return to the Company all personal property of the Company and all
copies and originals of documents and other tangible impressions, in
any medium, containing confidential or proprietary information of the Company.
	 
	 	(ii)	 	Expenses. The Company will pay to Employee all expenses permitted to be
reimbursed hereunder within ten (10) days after appropriate documentation has been
submitted by Employee.
	 
	 	(iii)	 	Noncompete; Nonsolicitation. During the term hereof and for the period
specifically indicated in subsections (A), (B), (C) and (D) below, following termination of
Employee’s employment for any reason, Employee will not, directly or indirectly, on behalf
of himself or on behalf of anyone else:






	 	(A)	 	for a period of twelve (12) months, as an individual
proprietor, partner, stockholder, officer, employee, director, joint venturer,
investor, lender, or in any other capacity whatsoever (other than as the
holder of not more than five percent (5%) of the total outstanding stock of a
publicly-held company), engage in any business activity that directly competes
with the kind or type of products or services of developed or being developed,
produced, marketed, distributed, planned, furnished or sold by the Company
while Employee was employed by the Company;
	 
	 	(B)	 	for a period of twelve (12) months, call upon any of the
customers of the Company who are such at the time of Employee’s termination
of employment hereunder, for the purpose of soliciting or providing any
product or service the same as that provided by the Company or for the
purpose of providing customers to any person or entity conducting a business
in direct competition with




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	 	 	 	the business of the Company, as conducted at the
date of Employee’s termination (a “Competitive
Business”);
	 
	 	(C)	 	for a period of twenty-four (24) months,
communicate with any of the other employees, consultants or
representatives of the Company for the purpose of inducing such
employees, consultants or representatives to discontinue their
relationship with the Company or to establish a relationship with
Employee or any Competitive Business; and
	 
	 	(D)	 	for a period of twelve (12) months, solicit,
divert or take away or attempt to solicit, divert or take away any of
the customers, clients, licenses, strategic partners or patrons of the
Company who are such at the time of the Employee’s termination of
employment with the Company.






	 	(iv)	 	Reasonableness of Covenants. Employee covenants and agrees with
the Company mat, if Employee violates any of his covenants or agreements
under Section 2(c)(iii), the Company will be entitled, subject to any
limitations of Florida law, to an accounting and repayment of all profits,
compensation, commissions, remuneration or benefits that Employee has
directly realized or may directly realize as a result of, growing out of or
in connection with any such violation; such remedy will be in addition to
and not in limitation of any injunctive relief or other rights or remedies
that the Company is or may be entitled at law or in equity or under this
Agreement. In the event that, notwithstanding the foregoing, any part of the
covenants set forth in Section 2(c)(iii) are held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining parts thereof
will nevertheless continue to be valid and enforceable as though the invalid
or unenforceable parts had not been included therein. In the event that any
provision of Section 2(c)(iii) is held by a court of competent jurisdiction
to exceed the restrictions which such court deems reasonable and
enforceable, such restrictions will be deemed to become and thereafter be
the maximum restrictions that such court deems reasonable and enforceable.






	3.	 	Life Insurance. The Company may, at its election and expense, obtain and maintain a
term life insurance policy on the life of Employee, with the Company named as beneficiary of
such policy.






	4.	 	Proprietary Information and Inventions. Employee will execute and deliver such
customary confidentiality and invention assignment agreements during the term hereof as the
Company requests of its employees. Employee represents and warrants to the Company that
Employee is not bringing with him, and covenants with the Company that





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	 	 	he will not use in the course of his employment with Company, any proprietary rights or
intellectual property rights to which he does not lawfully posses.






	5.	 	Board of Directors. For so long as Employee is serving as an employee of the Company
hereunder in the role of Chief Executive Officer. Chief Operating Officer or President, the
Company will use its best efforts to have the Employee’s name placed in nomination for
election as a Director of the Company reasonably prior to the date of any election of
Directors of the Company, of which date the Company will give Employee reasonable advance
notice.






	6.	 	Miscellaneous.






	 	(a)	 	Governing Law. This Agreement will be subject to and governed by the
laws of the State of Florida, without regard to its conflict of laws provisions.
	 
	 	(b)	 	No Waiver; Amendment. Failure to insist upon strict compliance with any
provision hereof will not be deemed a waiver of such provision of any other provision
hereof. This Agreement may not be modified except by a written agreement executed by
the parties hereto.
	 
	 	(c)	 	Severability; Context. The provisions of this Agreement will be deemed
severable, and the invalidity or unenforceability of any one or more of the provisions
hereof will not affect the validity or enforceability of the other provisions hereof.
Whenever required by the context, the singular number will include the plural and the
masculine or neuter gender will include all genders.
	 
	 	(d)	 	Survival and Priority. Provisions herein which by their terms so provide
will survive any termination of this Agreement or of termination of Employee’s
employment by the Company. Each of the parties hereto acknowledge and agrees that this
Agreement supersedes any existing agreements and any agreements entered into after the
date hereof (unless specifically stating otherwise therein) to which the Company and
Employee are parties or subject to relating to the subject matter contained herein.
	 
	 	(e)	 	Equitable Relief; Arbitration.






	 	(i)	 	In the event of a breach or threatened breach by Employee of the
provisions of this Agreement, the Company will, in addition to any other rights and
remedies available to it, at law or otherwise, be entitled to an injunction to be
issued by any court of competent jurisdiction enjoining and restraining Employee
from committing any present violation or future violation of this Agreement.
	 
	 	(ii)	 	The parties agree that any controversy, claim or dispute
arising out of or relation to this agreement, or the breach thereof,
except as discussed




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	 	 	 	herein or arising out of or relating to the employment of the executive, or the
termination thereof, including any statutory or common law claims
under federal, state or local law, including all laws prohibiting discrimination in the
workplace, shall be resolved by arbitration in Melbourne, Florida, in accordance
with the employment dispute resolution rules of the American Arbitration
Association. The parties agree that any award rendered by the arbitrator shall be
final and binding, and that judgment upon the award may be entered in any court
having jurisdiction thereof. The parties further acknowledge and agree that, due
to the nature of the confidential information, trade secrets, and intellectual
property belonging to the Company to which Employee has or will be given access,
and the likelihood of significant harm that the Company would suffer in the event
that such information was disclosed to third parties, nothing in this Section
2(iii) shall preclude the Company from going to court to seek injunctive relief
to prevent Employee from violating the obligations established in Section 2(iii)
of this Agreement. Each party shall bear its own costs in any such arbitration,
but the Company shall bear the direct and indirect expenses of the arbitrator.






	 	(f)	 	No Assignment; Binding Nature. Employee may not assign his rights or obligations
hereunder and any attempted assignment will be null and void. This Agreement will be binding
upon and more to the benefit of the successors and assigns of the Company and upon the heirs,
administrators and executors of Employee.
	 
	 	(g)	 	Notices. Unless otherwise herein provided, notice required or permitted to be given
to a party pursuant to the provisions of this Agreement will be in writing and will be
effective and deemed given under this Agreement on the earliest of: (i) the date of personal
delivery; (ii) the date of delivery by facsimile; or (iii) the next business day after
deposit with a nationally-recognized courier or overnight service, including FedEx or
Express Mail, for United States deliveries or three (3) business days after such deposit for
deliveries outside of the United States. All notices not delivered personally or by facsimile
will be sent with postage and other charges prepaid and properly addressed to the party to be
notified at the address set forth on the signature page of this Agreement, or at such other
address as such party may designate by ten (10) days’ advance written notice to the other
party hereto. All notices for delivery outside the United States will be sent by facsimile,
or by nationally recognized courier or overnight service, including Express Mail. Notices to
the Company by Employee will be marked to the Chairman of the Board.
	 
	 	(h)	 	Counterparts. This Agreement may be executed in counterparts, each of which
will be an original and both of which together will constitute one instrument.





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IN WITNESS WHEREOF, the parties have executed this Executive Employment Agreement as of the date
first written above.



	 	 	 	 	 	 	 	 	 
	THE COMPANY	 	 	EMPLOYEE:	 
	 
	 	 	 	 	 	 	 	 
	AuthenTec, Inc.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Ben Yu	 	 	/s/ F. Scott Moody	 
	 	 	 	 	 	 	 
	 

	 	Name: Ben Yu
	 	 	F. Scott Moody	 
	 

	 	Title: Director
	 	 	Address:
	 	246, Lansing Island Dr. 	 
	 	 	 	 	 	 	 	IHB, FL 32937	 







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