Document:

exhibit10-40.htm

Exhibit 10.27

 

EMPLOYMENT AGREEMENT

 

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of January 1, 2011 among Photronics, Inc., a Connecticut corporation (the “Company”), having a principal place of business at 15 Secor Road, Brookfield, CT 06804, PKL, a company incorporated under the laws of Korea (“PKL”) and Soo Hoo Jeong residing at 272-3, Gumi-Dong, Bundang, Seongnam, Kyeonggi, Korea 463-802 (“Executive”).

 

WITNESSETH:

 

     WHEREAS, the Company, PKL and Executive desire to enter into this Agreement to assure the Company of the continuing service of Executive and to set forth the terms and conditions of Executive’s employment with the Company. 

 

     NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties agree as follows: 

 

1. Term. The Company agrees to employ Executive and Executive hereby accepts such employment, in accordance with the terms of this Agreement. Subject to Section 5, the term of Executive’s employment shall commence on the date hereof and continue for three (3) years thereafter unless this Agreement is earlier terminated as provided herein (the “Term”); provided, however, that unless the Company gives written notice to Executive at least thirty (30) days prior to the end of the Term of this Agreement (as the Term may be extended pursuant to this Section 1), on each anniversary of the date hereof, the Term of this Agreement shall automatically be extended for an additional one (1) year period. 

 

2. Services.So long as this Agreement shall continue in effect, Executive shall devote Executive’s full business time, energy and ability to the business, affairs and interests of the Company and its subsidiaries and matters related thereto. Executive shall use his best efforts and abilities to promote the Company’s interests and shall perform faithfully the services contemplated by this Agreement in accordance with the Company’s policies as established by the Board of Directors of the Company. 

 

3. Duties and Responsibilities.

 

     (a) Executive shall serve as the Chief Operating Officer of the Company, President Asia Operations and shall also service as the Chairman and Chief Executive Officer of PK, Ltd (“PKL”), a majority owned subsidiary of the Company. In the performance of Executive’s duties, Executive shall report directly to the CEO or as otherwise directed by the CEO or the Company’s Board of Directors, and shall have such duties, responsibilities and authority as may from time to time be assigned to the Executive by the CEO or the Company’s Board of Directors. 

 

     (b) In addition, Executive agrees to observe and comply with the policies, rules and regulations of the Company. The Company agrees that the duties which may be assigned to Executive shall be the customary duties of the office of Chief Operating Officer, President of Asia Operations and Chairman and Chief Executive Officer of PKL and shall not be inconsistent with the provisions of the charter documents of the Company, PKL or applicable law.

 

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4. Compensation.

 

     (a) Base Compensation. During the Term, Executive will receive a base salary at the rate of U.S. $475,000 per year payable in accordance with the Company’s customary payroll practices generally applicable to similarly situated employees as may be in effect from time to time (the “Base Salary”). Executive’s base salary will be paid by PKL in Korea. At the end of each fiscal quarter PKL shall prepare a calculation of the average exchange rate for converting US dollar to Korean Won for each month in that quarter. PKL will then use the average exchange rate and compare that to the base salary paid to Executive for that quarter. As a result of the comparison, any overpayments by PKL will be reimbursed by Executive within ten days of receiving notification from PKL and any underpayments by PKL will be paid by PKL to Executive within ten days of completing the review.

 

     (b) Periodic Review. The Compensation Committee or the Board of Directors of the Company shall review Executive’s Base Salary and Benefits (as defined below) from time to time in accordance with the normal business practices of the Company. The Company may in its sole discretion increase the Base Salary during the Term. The amount of any increase combined with the previous year’s Base Salary shall then constitute Executive’s Base Salary for purposes of this Agreement. 

 

     (c)Additional Benefits. During the Term, the Executive shall be entitled to participate in the PKL employee benefit plans and arrangements as may be established from time to time in Korea (which may include, without limitation, medical plan, dental plan, disability plan, basic life insurance and business travel accident insurance plan, and the Company’s bonus plan(s), or stock award plans or any successor plans thereto (the “Benefits”)). The Company or PKL shall have the right to terminate or change any such plans or programs at any time. Upon termination ofExecutive’s employment with PKL, Executive will receive a lump sum payment of U.S. $108,000 multiplied by the total number of years that Executive was employed by PKL (including years prior to the date of this Agreement). The sum of $108,000 shall be fixed and is not subject to escalation or increase based on any bonus or salary increase that Executive may receive during the term of this Agreement (said retirement payment being referred to as the “PKL Retirement Payment”). The PKL Retirement Payment shall be paid either in U.S. dollars or the equivalent amount in Korean Won at the time of payment.

 

     (d)Automobile Allowance. During the Term of this Agreement, the Company shall provide the Executive with a company car and driver as is customary in Korea. 

 

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     (e) Vacation. During the Term of this Agreement, Executive shall be entitled to four (4) weeks’ paid vacation per calendar year, which shall not be transferable to any subsequent year.

 

     (f) Country Club Membership.The Company will pay the annual membership fee on behalf of Executive to Two Country Clubs in Korea that Executive has membership to and uses for business purposes as is customary in Korea 

 

5. Termination.This Agreement and all rights and obligations hereunder, except the rights and obligations contained in this Section 5, Section 7 (Confidential Information), Section 8 (Non-Competition), Section 9 (Intellectual Property) and Section 10 (Remedies), which shall survive any termination hereunder, shall terminate upon the earliest to occur of any of the following: 

 

     (a) Resignation without Good Reason; Retirement. Upon the resignation by Executive without Good Reason (as defined below) following at least thirty (30) days written notice to the Company or retirement from the Company in accordance with the normal retirement policies of the Company, Executive shall be entitled to receive a payment in the amount of the sum of (A) Executive’s Base Salary through the last day of employment to the extent not theretofore paid, (B) any compensation previously deferred by Executive (together with any accrued interest or earnings thereon), (C) any accrued vacation pay according to PKL’s local policy, and (D) the total amount of the PKL Retirement Payment as set forth in 4 (c) above in each case to the extent not theretofore already paid (the sum of the amounts described in clauses (A), (B), (C) and (D) shall be hereinafter referred to as the “Accrued Obligations”), in a lump sum, subject to statutory deductions and withholdings, in cash within ten (10) business days after the last day of employment or any earlier time required by applicable law. 

 

     (b) Death or Disability of Executive. 

 

          (i) If Executive’s employment is terminated by reason of Executive’s death or disability, this Agreement shall terminate without further obligations to Executive (or Executive’s heirs or legal representatives) under this Agreement, other than for: 

 

               (1) Payment of any Accrued Obligations, which shall be paid to Executive or Executive’s estate or beneficiary, as applicable, in a lump sum, subject to statutory deductions and withholdings, in cash within ten (10) business days after the date of termination or any earlier time required by applicable law. 

 

               (2) Payment to Executive or Executive’s estate or beneficiary, as applicable, of any amount accrued pursuant to the terms of any other applicable benefit plan. 

 

          (ii) If Executive shall become disabled, Executive’s employment may be terminated only by written notice from the Company to Executive. 

 

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          (iii) For the purposes of this Agreement, “disability” or “disabled” shall mean a mental or physical incapacity which prevents Executive from performing Executive’s duties with the Company for a period of three hundred sixty (360) consecutive calendar days, as certified by a physician selected by the Company or its insurers. 

 

     (c) Termination for Cause. 

 

          (i) The Company may terminate Executive’s employment and all of Executive’s rights to receive Base Salary, and any Benefits hereunder for Cause. 

 

          (ii) Upon such termination for Cause, Executive shall be entitled to receive any Accrued Obligations, which shall be paid to Executive in a lump sum, subject to statutory deductions and withholdings, in cash within ten (10) business days after the date of termination or any earlier time required by applicable law. 

 

          (iii) For purposes of this Agreement, the term “Cause” shall be defined as any of the following: 

 

               (1) Executive’s material breach of any of any obligations under this Agreement (other than by reason of physical or mental illness, injury, or condition); 

 

               (2) Executive’s conviction by, or entry of a plea of “guilty” or “nolo contendere” in a court of competent and final jurisdiction for any felony that impairs his ability to perform his duties to the Company or any crime of moral turpitude; 

 

               (3) Executive’s commission of an act of fraud upon the Company; 

 

               (4) Executive’s engaging in willful or reckless misconduct or gross negligence in connection with any property or activity of the Company or its Affiliates; 

 

               (5) Executive’s repeated and intemperate use of alcohol or illegal drugs after written notice from the Board or Directors; 

 

               (6) Executive’s material breach of any other material obligation to the Company (other than by reason of physical or mental illness, injury, or condition) that is or could reasonably be expected to result in material harm to the Company; 

 

               (7) Executive’s becoming insolvent or filing for bankruptcy; 

 

               (8) Executive’s becoming barred or prohibited by the SEC from holding Executive’s position with the Company; or 

 

               (9) Executive’s violation of any duty of loyalty (i.e., engaging in self-interested transactions, misappropriation of business opportunities that belong to the Company or PKL, or a breach of Executive’s fiduciary duties to the Company or PKL).

 

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     (d) Termination Without Cause; Resignation For Good Reason.

 

          (i) Notwithstanding any other provision of this Section 5, (i) the Company may, at its option and at any time, provide to Executive: (A) up to twelve (12) months’ advance written notice of termination of employment without Cause, or (B) written notice of a current material adverse change in the Executive’s position (such notice in (A) or (B) being referred to herein as a “Working Notice”). If the Company issues a Working Notice to the Executive, any entitlement to a Severance Payment and Benefit Period (as defined below) shall be reduced in proportion to the period covered by the Working Notice. During the period covered by the Working Notice, the Executive shall continue to provide the services according to Section 2, hereof as an employee of the Company. If the Executive resigns during the period covered by the Working Notice, then Executive shall receive only the Accrued Obligations through the date of termination. Executive, upon thirty (30) days advance notice to the Company, shall have the right to resign for Good Reason. 

 

          (ii) If Executive is so terminated without Cause or resigns for Good Reason, Executive shall receive from the Company: 

 

               (1) Any Accrued Obligations through the date of termination, which shall be paid to Executive in a lump sum, subject to statutory deductions and withholdings, in cash within ten (10) business days after the date of termination or any earlier time required by applicable law. 

 

               (2) A payment (“Severance Payment”) equal to twelve (12) months of Executive’s current Base Salary. The Severance Payment shall be paid by the Company to Executive in equal installments, following the expiration of the Revocation Period defined in the Release referred to in Section 5(d)(iv), in accordance with the Company’s customary payroll practices generally applicable to similarly situated employees as may be in effect from time and shall be subject to statutory deductions and withholdings. 

 

          (iii) As used in this Agreement, the term “Good Reason” shall mean (i) (except as set forth in Section 5(e)) the relocation of the Company’s principal executive offices to a location outside the contiguous 48 United States without the consent of Executive or (ii) a material diminution in Executive’s overall employee benefits not the result of changes in benefit plans affecting other employees, without the consent of Executive. 

 

          (iv) As a condition to receiving the payment and benefits extension contemplated by Section 5(d) or 5(e), Executive agrees to execute and deliver to the Company the Release substantially in the form attached to this Agreement as Exhibit A. 

 

     (e) Change of Control. 

 

          (i) For purposes of the Agreement, a “change of control” means, and shall be deemed to have taken place, if; 

 

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               (1) any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity or person, or any syndicate or group deemed to be a person under Section 14 (d) (2) of the Exchange Act, is or becomes the “beneficial owner” (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities entitled to vote in the election of directors of the Company; 

 

               (2) during any period of two (2) consecutive years (not including any period prior to the execution of this Agreement) individuals who at the beginning of such period constituted the Board and any new directors, whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least three-fourths (3/4ths) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; 

 

               (3) there occurs a reorganization, merger, consolidation or other corporate transaction involving the Company (a “Transaction”), and shareholders of the Company immediately prior to such Transaction do not, immediately after the Transaction, own more than 50% of the combined voting power of the Company or other corporation resulting from such Transaction; or 

 

               (4) there is a “change in control” of the Company. 

 

          (iii) If during the period three (3) months before or two (2) years following a “change in control” of the Company (or any successor), the Executive is terminated by the Company for any reason (other than for Cause as defined in Section 5(c) thereof), including an election by the Company or its successor not to extend this Agreement pursuant to Section 1, or the Executive resigns for Good Reason as defined in Section 5(e)(ii)), “ ”Executive shall be entitled to receive a cash payment equal to eighteen (18) months of Executive’s current Base Salary and the benefits described in Section 5(d)(ii) of the Agreement. Upon such “change of control” during the Term, the Term of this Agreement shall automatically be the period equal to the longer of (i) two (2) years from the date of the “change of control” or (ii) the remaining period of the initial three (3) year Term after the “change of control”. In no event shall Executive be entitled to receive both the Severance Payment described in Section 5(d) hereof and the “change of control” payment described in this Section 5(e). 

 

          (iv) Any payments to be made to Executive in connection with this Section 5(e) shall be made in a lump sum, subject to statutory deductions and withholdings, in cash within ten (10) business days after the date of termination or any earlier time required by applicable law, following the expiration of the Revocation Period defined in the Release referred to in Section 5(d)(iv). 

 

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     (g) Treatment of Stock Options Upon Change of Control or a Termination. 

 

          (i) All stock options or similar rights granted to Executive pursuant to the Company’s stock option plans including, without limitation, any restricted stock shall immediately vest as of the effective date of such “change of control”. 

 

          (ii) If this Agreement is terminated pursuant to clause (c) of this Section 5 or if Executive resigns his employment, all unvested stock options granted to Executive pursuant to the Company’s stock plans shall terminate immediately. 

 

               To the extent that the Executive has been granted stock options intended to be incentive stock options under Section 422 of the Internal Revenue Code, such stock options shall cease to be incentive stock options and shall be treated as nonqualified stock options if the options are exercised by the Employee more than three (3) months (one year in case of death or disability as defined in Section 422 of the Internal Revenue Code) following termination of employment. 

 

               Except as expressly modified by this clause (g) of this Section 5, all stock options and similar rights granted under the Company’s stock plans shall remain subject to all of the terms and conditions of the applicable stock plans and agreements evidencing the grants thereof. 

 

     (h) Exclusive Remedy. Executive agrees that the payments and other benefits provided and contemplated by this Agreement shall constitute the sole and exclusive obligation of the Company in respect of Executive’s employment with and relationship to the Company and PKL and that the full payment thereof shall be the sole and exclusive remedy for any termination of Executive’s employment. Executive covenants not to assert or pursue any other remedies, at law (including Korean statutory law) or in equity, with respect to any termination of employment. Executive further agrees that all previous employment agreements with either the Company or PKL will be terminated and except as set forth herein neither PKL nor the Company will have any other obligations or liabilities to Executive. Lastly, Executive further agrees that it waives any and all rights or remedies it may have under any Korean statutory or labor laws.

 

6. Business Expenses. During the Term of this Agreement, to the extent that such expenditures satisfy the criteria under applicable laws for deductibility by PKL as ordinary and necessary business expenses, PKL shall provide the Executive with reimbursement of reasonable business expenses incurred by the Executive in a manner consistent with the Company’s policies and provisions applicable to the Executives of the Company. 

 

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7. Confidential Information.

 

     (a) Executive acknowledges that the nature of Executive’s employment by the Company is such that Executive shall have access to information of a confidential and/or trade secret nature which has great value to the Company and which constitutes a substantial basis and foundation upon which the business of the Company is based. Such information includes (A) trade secrets, inventions, mask works, ideas, processes, manufacturing, formulas, source and object codes, data, programs, other works of authorship, know-how, improvements, discoveries, developments or experimental work, designs, and techniques; (B) information regarding plans for research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; (C) information regarding the skills and compensation of other employees the Company or its affiliates, including but not limited to, their respective business plans or clients (including, without limitation, customer lists and lists of customer sources), or information relating to the products, services, customers, sales or business affairs of the Company or its Affiliates (the “Confidential Information”). 

 

     (b) Executive shall keep all such Confidential Information in confidence during the Term of this Agreement and at any time thereafter and shall not disclose any of such Confidential Information to any other person, except to the extent such disclosure is (i) necessary to the performance of this Agreement and in furtherance of the Company’s best interests, (ii) required by applicable law, (iii) publicly known within the relevant industry, or (iv) authorized in writing by the Board. Upon termination of Executive’s employment with the Company, Executive shall deliver to the Company all documents, records, notebooks, work papers, and all similar material containing any of the foregoing information, whether prepared by Executive, the Company or anyone else. 

 

8. Non-Competition. Executive covenants and agrees that commencing on the date hereof and continuing for the entire Term of Executive’s employment and for period of twelve (12) months thereafter (the “Restricted Period”), Executive shall not: 

 

     (a) Work or be affiliated with in any capacity (including as a founder, employee, owner, consultant, or otherwise), directly or indirectly, for himself or on behalf of any other entity, in any business that manufacturers photomasks or that is otherwise competitive with the business of the Company or any subsidiary of the Company at any time during Executive’s employment or during the Restricted Period, such as, for example and not as a limitation, Toppan, DNP and the photomask manufacturing operations of semiconductor manufacturers such as IBM and TSMC. 

 

     (b) Solicit, attempt to solicit, or assist others in soliciting or attempting to solicit, directly or indirectly, any business related to the business of the Company from any customers or prospective customers of the Company; for the purposes of this Section 8, the term “customer” means any entity or person who is or has been a client or customer of the Company during the time which Executive was employed with the Company, and the term “prospective customer” means a person or entity who became known to the Company during the time which Executive was employed with the Company as a result of that person’s or entity’s interest in obtaining the services or products of the Company; and

 

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     (c) Solicit, attempt to solicit, or assist others in soliciting or attempting to solicit, directly or indirectly, for employment or similar capacity, any person who is an employee of, or an independent contractor for, the Company or its direct or indirect subsidiaries, parents or Affiliates or who was such an employee within twelve (12) months prior to the date of such solicitation or attempted solicitation. 

 

     (d) Executive acknowledges that in the event of his employment with the Company terminates for any reason, Executive will be able to earn a livelihood without violating the foregoing restrictions. 

 

     (e) If any provision or clause, or portion thereof, within this Section 8 shall be held by any court or other tribunal of competent jurisdiction to be illegal, invalid, or unenforceable in such jurisdiction, the remainder of such provision shall not be thereby affected and shall be given full effect, without regard to the invalid portion. It is the intention of the parties that, if any court construes any provision or clause within this Section 8, or any portion thereof, to be illegal, void or unenforceable because of the duration of such provision or the geographic area or matter covered thereby, such court shall reduce the duration, area, or matter of such provision, and, in its reduced form, such provision shall then be enforceable and shall be enforced. 

 

9. Intellectual Property. 

 

     (a) Executive has no interest (except as disclosed to the Company) in any inventions, designs, improvements, patents, copyrights and discoveries which are useful in or directly or indirectly related to the business of PKL or the Company or to any experimental work carried on by the Company or PKL. Except as may be limited by applicable law, all inventions, designs, improvements, patents, copyrights and discoveries conceived by Executive during the Term of this Agreement which are useful in or directly or indirectly related to the business of PKL or the Company or to any experimental work carried on by PKL or the Company, shall be the property of PKL or the Company. Executive will promptly and fully disclose to PKL or the Company all such inventions, designs, improvements, patents, copyrights and discoveries (whether developed individually or with other persons) and will take all steps necessary and reasonably required to assure PKL or the Company’s ownership thereof and to assist PKL or the Company in protecting or defending PKL or the Company’s proprietary rights therein. 

 

     (b) Executive also agrees to assist the Company in obtaining United States or foreign letters patent and copyright registrations covering inventions assigned hereunder to the Company and that Executive’s obligation to assist the Company shall continue beyond the termination of Executive’s employment but the Company shall compensate Executive at a reasonable rate for time actually spent by Executive at the Company’s request with respect to such assistance. If the Company is unable because of Executive’s mental or physical incapacity (for the period of such incapacity only) or for any other reason to secure Executive’s signature to apply for or to pursue any application for any United States or foreign letters patent or copyright registrations covering inventions assigned to the Company (after reasonable efforts to contact employee), then Executive hereby irrevocably designates and appoints the Company, each of its duly authorized officers and agents as Executive’s agent and attorney-in-fact to act for and in Executive’s behalf and stead to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by Executive. Executive will perform all other lawful acts necessary to assist the Company to enforce any copyrights or patents obtained including, without limitation, testifying in any suit or proceeding involving any of the copyrights or patents or executing any documents deemed necessary by the Company, all without further consideration but at the expense of the Company. If Executive is called upon to render such assistance after the termination of Executive’s employment, then Executive shall be entitled to a fair and reasonable per diem fee in addition to reimbursement of any expenses incurred at the request of the Company.

 

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10. Remedies. The parties hereto agree that the services to be rendered by Executive pursuant to this Agreement, and the rights and privileges granted to the Company and PKL pursuant to this Agreement, are of a special, unique, extraordinary and intellectual character, which gives them a peculiar value, the loss of which cannot be reasonably or adequately compensated in damages in any action at law, and that a breach by Executive of any of the terms of this Agreement will cause the PKL or the Company great and irreparable injury and damage. Executive hereby expressly agrees that the PKL or Company shall be entitled to the remedies of injunction, specific performance and other equitable relief to prevent a breach of this Agreement by Executive. This Section 10 shall not be construed as a waiver of any other rights or remedies which the Company or PKL may have for damages or otherwise. 

 

11. Return of Property. Executive agrees to return, on or before his last day of employment, all property belonging to the Company, including but not limited to computers, PDA, telephone and other credit cards, PKL or Company business records, PKL or Company automobile (if applicable), etc. 

 

12. Severability. If any provision of this Agreement is held to be unenforceable for any reason, it shall be adjusted rather than voided, if possible, to achieve the intent of the parties to the extent possible. In any event, all other provisions of this Agreement shall be deemed valid and enforceable to the extent possible. 

 

13. Succession. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns and any such successor or assignee shall be deemed substituted for the Company under the terms of this Agreement for all purposes. As used herein, “successor” and “assignee” shall include any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires the stock of the Company or to which the Company assigns this Agreement by operation of law or otherwise. The obligations and duties of Executive hereunder are personal and otherwise not assignable. Executive’s obligations and representations under this Agreement will survive the termination of Executive’s employment, regardless of the manner of such termination.

 

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14. Notices. Any notice or other communication provided for in this Agreement shall be in writing and sent if to the Company to its principal office at: 

 

Photronics, Inc.

15 Secor Road, PO Box 5226

 Brookfield, Connecticut 06804 

 

Attention: Chief Executive Officer

With a copy to the Vice President, General Counsel of Photronics, Inc. 

 

or at such other address as the Company may from time to time in writing designate, and if to Executive at the address set forth above or at such address as Executive may from time to time in writing designate. Each such notice or other communication shall be effective (I) if given by written telecommunication, three (3) days after its transmission to the applicable number so specified in (or pursuant to) this Section 14 and a verification of receipt is received, (ii) if given by certified mail, once verification of receipt is received, or (iii) if given by any other means, when actually delivered to the addressee at such address and verification of receipt is received. 

 

15. Adequate Consideration. Executive acknowledges that the cash severance and other benefits to be provided by the Company to Executive are not available under any current plan or policies of the Company. Accordingly, Executive further acknowledges that the payments and benefits under this Agreement provide adequate consideration for Executive’s obligations to the Company contained in Section 7 (Confidential Information), Section 8 (Non-Competition), Section 10 (Remedies) and Exhibit A (Release). 

 

16. Entire Agreement. This Agreement contains the entire agreement of the parties relating to the subject matter hereof and supersedes any prior agreements, undertakings, commitments and practices relating to Executive’s employment by the Company. 

 

17. Amendments. No amendment or modification of the terms of this Agreement shall be valid unless made in writing, duly executed by both parties. 

 

18. Waiver. No failure on the part of any party to exercise or delay in exercising any right hereunder shall be deemed a waiver thereof or of any other right, nor shall any single or partial exercise preclude any further or other exercise of such right or any other right. 

 

19. Governing Law. This Agreement, and the legal relations between the parties, shall be governed by and construed in accordance with the laws of the State of Connecticut without regard to conflicts of law doctrines and any court action arising out of this Agreement shall be brought in any court of competent jurisdiction within the State of Connecticut.

 

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20. Withholding. All compensation payable hereunder, including salary and other benefits, shall be subject to applicable taxes, withholding and other required, normal or elected employee deductions. 

 

21. Counterparts. This Agreement and any amendment hereto may be executed in one or more counterparts. All of such counterparts shall constitute one and the same agreement and shall become effective when a copy signed by each party has been delivered to the other party. 

 

22. Headings. Section and other headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

 

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

 

THE COMPANY

 

PHOTRONICS, INC. 

 

	By:     	/s/ Richelle Burr
	Name: Richelle Burr
	Title:

EXECUTIVE 

 

	/s/ Soo Hoo Jeong
	Name: Dr. Soo Hoo Jeong 
	Address: 272-3 Gumi-Dong, Bundang, Seongnam, Kyeonggi, Korea 463-802

 

 

PKL 

 

	/s/ Soo Hoo Jeong
	Name: Dr. Soo Hoo Jeong
	Title:

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EXHIBIT A

 

RELEASE 

 

1. I signed an Employment Agreement with Photronics, Inc. (the “Company”), effective January 1, 2011 (the “Agreement”), wherein I agreed to the terms applicable to certain terminations of employment with the Company. Pursuant to the terms of the Agreement, I am entitled to certain severance payments and benefits, described in the Agreement, provided that I sign this Release. 

 

2. In consideration of the severance payments described in the Agreement, I, on behalf of myself, my heirs, agents, representatives, predecessors, successors and assigns, hereby irrevocably release, acquit and forever discharge the Company and each of its respective agents, employees, representatives, parents, subsidiaries, divisions, affiliates, officers, directors, shareholders, investors, employees, attorneys, transferors, transferees, predecessors, successors and assigns, jointly and severally (the “Released Parties”) of and from any and all debts, suits, claims, actions, causes of action, controversies, demands, rights, damages, losses, expenses, costs, attorneys’ fees, compensation, liabilities and obligations whatsoever, suspected or unsuspected, known or unknown, foreseen or unforeseen, arising at any time up to and including the date of this Release, save and except for the parties’ obligations and rights under this Release. In recognition of the consideration set forth in the Agreement, I hereby release and forever discharge the Released Parties from any and all claims, actions and causes of action, I have or may have as of the date of this Release arising under any federal, state, or local statute, regulation, ordinance, or law of any kind, including under the Age Discrimination in Employment Act of 1967, as amended, and the applicable rules and regulations promulgated thereunder (“ADEA”), the Connecticut Human Rights and Opportunities Law, the Connecticut Family and Medical Leave Law, and the Connecticut Age Discrimination and Employee Insurance Benefits Law, and including claims for wrongful discharge, breach of contract, or in tort. 

 

3. I agree not to criticize, denigrate, or otherwise disparage the Company or any other Released Party. 

 

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4. This Release is not an admission of guilt or wrongdoing by either me or the Company. This Release constitutes the entire agreement between me and the Company with respect to the subject matter hereof, and I am not signing this Release in reliance on any representation not expressly set forth herein. No provisions of this Release may be modified, waived, amended or discharged except by a written document signed by me and a duly authorized Company representative. This Release binds my heirs, administrators, representatives, executors, successors, and assigns, and will inure to the benefit of all Released Parties and their respective heirs, administrators, representatives, executors, successors, and assigns. The invalidity or unenforceability of any provision of this Release shall not affect the validity or enforceability of any other provision of this Release, which shall remain in full force and effect. A waiver of any conditions or provisions of this Release in a given instance shall not be deemed a waiver of such conditions or provisions at any other time. If any of the provisions, terms or clauses of this Release are declared illegal, unenforceable or ineffective in a legal forum, those provisions, terms and clauses shall be deemed severable, such that all other provisions, terms and clauses of this Release shall remain valid and binding upon both parties. If any of the provisions, terms or clauses of this Release are found by a court to be overly broad, those provisions, terms and clauses shall be enforceable (and modified and enforced) to the broadest extent permissible under the law. The validity, interpretation, construction, and performance of this Release shall be governed by the internal laws of the State of Connecticut (excluding any that mandate the use of another jurisdiction’s laws)

 

5. All payments to me under this Release shall be net of applicable withholdings and deductions. 

 

6. The Company advised me to take this Release home, read it, and carefully consider all of its terms before signing it. The Company gave me at least 21 days in which to consider this Release, and I waive any right I might have to additional time beyond this consideration period within which to consider this Release. The Company advised me to discuss this Release with my own attorney (at my own expense) during this period if I wished to do so. I understand that I may revoke my acceptance of this Release within seven (7) days after I sign it (“Revocation Period”). I understand that if I revoke my acceptance of this Release, I will not be entitled to any payments or benefits hereunder or otherwise in connection with the termination of my employment with the Company, except as required by law in the absence of the Agreement and this Release. I have carefully read this Release, fully understand what it means, and am entering into it voluntarily. 

 

	Dr. Soo Hoo Jeong
	 
	/s/ Soo Hoo Jeong
	       Signature

14Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT, dated as of January 6, 2017, is made and entered
into by and between Payment Data Systems, Inc. inc., a Nevada corporation, having an office address at 12500 San Pedro Ave., Suite
120, San Antonio, Texas 78216 ("Payment Data Systems, Inc." or the "Company") and the individual named in Schedule
1 hereto, residing at the address listed in Schedule 1 (hereinafter referred to as the "Employee").

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to hire and retain the Employee as
an Employee to perform certain services for the Company.

 

NOW, THEREFORE, in consideration of the mutual covenants contained
herein and on the attached Schedule, and for other good and valuable consideration the receipt of which is hereby acknowledged,
the Company and the Employee hereby agree as follows:

 

1.       Employment of Employee.

 

		(a)	The Company hereby employs the Employee in the capacity and for the position set forth on Schedule
1 attached hereto. Employee hereby accepts such employment with the Company upon the terms and conditions hereinafter set forth.

 

		(b)	The duties of the Employee shall include the duties and services described in Schedule 1, which
duties and services shall at all times be subject to the direction, approval and control of the Board and shall include such other
duties, as may be assigned by the Board commensurate with the responsibilities normally associated with Employee's position.

 

2.       Services to be Rendered.

 

		(a)	Employee shall perform such duties as are usually performed by an Employee with the position set
forth in Schedule 1 of a business similar in size and scope as the Company and such other reasonable additional duties as may be
prescribed from time to time by the Company which are reasonable and consistent with the Company's operations, taking into account
Employee's expertise and job responsibilities. During the term of this Agreement, Employee agrees to devote his full time and attention
to the business and affairs of the Company to the extent necessary to discharge the responsibilities assigned to Employee and to
use reasonable efforts to perform faithfully and efficiently such responsibilities. The Employee will use Employee's best efforts
to promote the interests of the Company.

 

		(b)	During the term of this Agreement, it shall not be a violation of this Agreement for Employee to
(i) serve on corporate, civic or charitable boards or committees; (ii) deliver lectures, fulfill speaking engagements or teach
at educational institutions; or (iii) manage personal investments or companies in which personal investments are made so long as
such activities do not significantly interfere with the performance of Employee's responsibilities with the Company and which companies
are not in direct competition with the Company. Any income incurred by Employee outside the scope of his employment and permitted
pursuant to the provisions hereof, shall inure to the benefit of Employee, and the Company shall not claim any entitlement thereto;
provided, however, that any income derived by Employee related to the business of the Company, including, without limitation, compensation
for serving on boards of directors of companies in which the Company has a significant investment, shall be paid over to the Company
as and when received.

 

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		(c)	During the term of this Agreement, the Company shall furnish facilities commensurate and suitable
to Employee’s position and adequate for the performance of his duties hereunder.

 

3.       Term.

 

		(a)	Term of Employment. The term of this Agreement (the "Term") shall commence effective
as of the date hereof (the "Commencement Date"), and shall continue until April 15, 2019, unless (i) extended by the
mutual agreement of the Company and the Employee or (ii) extended or terminated as hereinafter provided.

 

		(b)	Termination of Employment by the Company for Cause. The Company may terminate Employee's
employment if such termination is for "Cause" (as defined herein) and Cause is not cured by Employee within any available
cure period provided below. Such notice must set forth in reasonable detail the facts underlying the claim of Cause. For the purposes
of this Agreement, "Cause" shall be defined as any of the following, which act or omission is in bad faith by Employee
without a reasonable belief that such act or omission would benefit the Company:

 

		(i)	a default or breach by Employee of any of the provisions of this Agreement materially detrimental
to the Company which is not cured within 15 days following written notice thereof;

 

		(ii)	actions by Employee constituting fraud, embezzlement or dishonesty which result in a conviction
of a criminal offense not yet overturned on appeal;

 

		(iii)	actions by Employee in intentionally furnishing materially false, misleading, or omissive information
to the Company's Board of Directors that is materially detrimental to the Company;

 

		(iv)	actions constituting a breach of the Sections 7 or 8 of this Agreement which is materially detrimental
to the Company;

 

		(v)	acts or omissions which constitute willful failure to follow reasonable and lawful directives of
the Company's Board of Directors, which are consistent with Employee's job responsibilities and performance which is not cured
within 15 days following written notice thereof.

 

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Upon termination for Cause, Employee shall immediately cease
to have any power of his position, but shall nevertheless be given a reasonable opportunity to access his office with the Company
for the purpose of retrieving his personal goods and files. If any conviction pursuant to Section 3(b) above is overturned on appeal,
Employee will be deemed to have been terminated without Cause as of the effective date of his earlier termination.

 

		(c)	Termination Without Cause. The Company has the right to terminate this Agreement without
Cause upon written notice, subject to payment by the Company of the Deferred Compensation described in Section 4(c) herein. In
such event, Employee shall cease to have any power of his office as of the effective date of the termination specified in such
written notice.

 

		(d)	Termination by Employee. Employee may terminate this Agreement upon 30 days' written notice
after the occurrence of a material default of this Agreement by the Company, which default is not cured within the 30-day notice
period. Such notice shall set forth in reasonable detail the acts underlying the default.

 

		(e)	Termination by Employee for Good Reason. Employee may terminate this Agreement upon 30 days
written notice if (i) Employee's duties are materially diminished or altered in a manner contrary to Section 1 and 2 of this Agreement,
(ii) Employee's title is altered in a material and adverse manner, (iii) Employee's reporting relationship is materially and adversely
modified, (iv) Employee's Base Salary, as provided hereunder, is diminished, (v) the Company shall relocate its Employee offices
more than 40 miles from their current location (collectively "Good Reason").

 

		(f)	Termination by Employee Without Good Reason. Employee may terminate this Agreement without
Good Reason upon 90 days written notice. Upon the termination date specified in such written notice (which date shall be not more
than 30 days following the date of such notice) Employee shall cease to have any power of his office.

 

		(g)	Term Extension. This Agreement shall be, upon approval of the Board of Directors, extended
for successive one-year periods at the end of the initial term and each extended term thereafter, unless either party provides
written notice of termination to the other party at least three months prior to the expiration of the initial or such extended
term, respectively.

 

		(h)	Termination by Employee Upon Change of Control. Upon a Change of Control, all stock options
issued to Employee and all restricted stock granted to Employee become fully vested and all ownership, title, use are fully granted
to Employee subject to payment by the Company of the Deferred Compensation described in Section 4(c) herein. Company agrees to
execute all documents and provide all legal opinions to Employee as requested by Employee or Employee’s authorized representative
in order for the Employee to sell, register, collateralize, transfer, etc. Change of Control is defined for the purposes of this
Agreement as any of the following acts:

 

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		(i)	The acquisition by any person, entity or "group" within the meaning of Section 13(d)
or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than a person, entity or "group"
that includes Employee, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of (A) more
than 50% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of the
Board of Directors or (B) more than 40% of the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of the Board of Directors ; or

 

		(ii)	If the individuals who serve on the Board of Directors as of the Commencement Date (the "Incumbent
Board") cease for any reason to constitute at least a majority of the Board of Directors; provided, however, any person who
becomes a director subsequent to the Commencement Date, whose election or nomination for election was approved by a vote of at
least a majority of the directors then constituting the Incumbent Board, shall for purposes of this Agreement be considered a member
of the Incumbent Board; or

 

		(ii)	(iii)Approval by the Company's equity holders of (A) a merger, reorganization or consolidation
whereby the Company's equity holders immediately prior to such approval do not, immediately after consummation of such reorganization,
merger or consolidation own more than 50% of the combined voting power of the surviving entity's then outstanding voting securities
entitled to vote generally in the election of directors; or (B) liquidation or dissolution of the Company; or (C) the sale of all
or substantially all of the assets of the Company.

 

4.       Compensation.

 

		(a)	Base Salary.

 

		(i)	Employee shall receive a base salary as set forth on Schedule 4(a) attached hereto.

 

		(ii)	Each January the Board of Directors of the Company shall review Employee's performance and the
Board of Directors may in its sole discretion elect to increase the salary then paid to Employee above the amount set forth on
Schedule 4(a), however, there shall be absolutely no obligation to do so.

 

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		(b)	Bonus Compensation.

 

		(i)	The Employee shall receive as "Bonus Compensation" during the initial or extended term
period of this agreement, the amount calculated in accordance with Schedule 4(b) attached hereto.

 

		(ii)	If at anytime hereafter, the Company shall adopt a bonus program, an option program or any other
form of equity participation for senior executive officers of the Company, the Employee shall be eligible to participate in such
bonus program, option program or other form of equity participation in a manner and capacity commensurate with his position and
duties.

 

		(c)	Deferred Compensation.

 

		(i)	When Due.  Employee shall be entitled to the Deferred Compensation as calculated below, the
initial installment of which is to be paid within 30 days after the event giving rise to the payout (except as provided below)
in the event that Employee's employment is terminated for any of the following reasons herein:  (A) termination by the Company
without cause pursuant to Section 3(c); (B) termination by Employee upon default by the Company pursuant to Section 3(d); (C) termination
by Employee after a Change of Control pursuant to Section 3(h) or; (D) termination by the Employee pursuant to Section 3(e).

 

		(ii)	Amount.  The Deferred Compensation shall be the amount ("Base Deferred Compensation")
which is calculated as the Base Salary payments Employee would have received had his employment continued for the remaining term
of this Agreement (including yearly increases calculated at the maximum increase for the prior two years). In addition to the Base
Deferred Compensation, Employee shall be entitled to the following (which, together with the Base Deferred Compensation and the
Bonus Deferred Compensation (as defined below) shall be collectively called the "Deferred Compensation") all of the benefits
otherwise provided in this Agreement during that period of time which is the remaining term of this Agreement, and an amount equal
to the pro rata portion of the Bonus Compensation for the year in which Employee's employment is terminated determined on the basis
of the number of days elapsed in such year prior to such termination (the "Bonus Deferred Compensation").  The Deferred
Compensation herein shall be deemed liquidated damages resulting from the Company's termination of this Agreement and shall be
Employee's sole and exclusive remedy for any such termination.  Deferred Compensation shall not be diminished or offset by
reason of any earnings by Employee subsequent to the date of termination.

 

		(iii)	Acceleration of Vesting of Stock Options and Restricted Stock Grants. All stock options issued
to Employee and all restricted stock granted to Employee become fully vested and all ownership, title, use are fully granted to
Employee.  Company agrees to execute all documents and provide all legal opinions to Employee as requested by Employee or
Employee’s authorized representative in order for the Employee to sell, register, collateralize, transfer, etc.

 

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		(d)	Payment of Deferred Compensation.  Except as provided below, the Deferred Compensation shall
be paid in monthly installments over the 12 months following the event giving rise to a Deferred Compensation.

 

5.       Benefits.

 

		(a)	Employee shall be entitled to a minimum of four weeks paid vacation during each 12-month period
during the term of this Agreement. In addition, Employee shall be entitled to paid time off for the same holidays as other employees
of the Company as established by the Board. No unused vacation will accrue to the benefit of the Employee and will not be paid
to the Employee upon termination of this Agreement for any cause.

 

 

		(b)	Employee shall be entitled to participate (in a manner and capacity commensurate with his position
and duties), subject to eligibility and other terms generally established by the Board, in any employee benefit plan (including
but not limited to life insurance plans, stock option plans, group hospitalization, health, dental care (which health insurance
shall also cover Employee's dependents), profit sharing and pension, bonus and other benefit plans), as may be adopted or amended
by the Company from time to time.

 

 

		(c)	Premium Reimbursement. The Company shall reimburse Employee for the premiums of all insurance policies
covering the long and short-term disability and long term care insurance of Employee and all insurance policies and insurance coverage
of the Employee and Employees dependents covering health, medical and dental not to exceed $15,000 per annum (as adjusted for increases
in the Consumer Price Index) during the term hereof.

		(d)	Membership Fees. The Company shall pay all initial membership fees on behalf of Employee for Employee's
membership in one country club, and one airline club. The Company shall pay all monthly dues on behalf of Employee for Employee's
membership in country club and airline club provided that the annual membership fees of such clubs in the aggregate do not exceed
$15,000. Employee shall pay all expenses for such club use that is not otherwise reimbursable as a Company business expense.

 

6.       Expenses.

 

The Company shall reimburse the Employee against appropriate
vouchers or other receipts for business expenses reasonably incurred by Employee in the performance of Employee's duties pursuant
to the terms hereof. Employee is authorized to incur reasonable traveling and other expenses in connection with the Company's business
and in performance of his duties under this Agreement. When engaging in business related air travel, the Employee should fly coach
class on domestic flights and business class on international flights. In addition, upon the submission of appropriate vouchers
or other receipts the Company shall reimburse Employee for tolls and reasonable business car phone charges. Employee shall submit
vouchers or other receipts once per calendar month and shall be reimbursed by Company within 30 days of submission.

 

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7.       Non-Competition,
Non-Solicitation and Non-Disparagement.

 

During the Term and for a period of two years thereafter:

 

		(a)	Employee shall not, directly or indirectly, enter into or participate (whether as owner, partner,
shareholder, officer, director, salesman, consultant, employee, principal or in any other relationship or capacity) in any business
operating or providing services in the United States within any State in which the Company or its affiliates are operating or providing
services as of the date of termination where Employee’s responsibilities include or relate to prepaid card or payment processing
services or the development or operation of any network to establish or maintain such services.", including without limitation
as principal or on behalf of others and the development or operation of any network to accomplish same (a "Competing Entity").

 

		(b)	Company and Employee understand and agree that the scope and duration of the covenants contained
in this Section 7 are reasonable both in time and geographical area and are fairly necessary to protect the Company's legitimate
business interests. Such covenants shall survive the termination of Employee's employment except as otherwise provided herein.
The parties further agree that such covenants shall be regarded as divisible and shall be operative as to time and geographical
area to the extent that they may be made so and, if any part of such covenants is declared invalid or unenforceable, the validity
and enforceability of the remainder shall not be affected. Employee hereby warrants to Company that Employee's compliance with
each of the restrictive covenants set forth in this Agreement will not, upon the termination, of Employee's employment with the
Company for any reason whatsoever, cause Employee to be unable to earn a living that is suitable and acceptable to Employee.

 

		(c)	Employee understands and agrees that, due to the highly competitive nature of the Company's industry,
the breach of any covenants set out in this Section 8 will cause irreparable injury to the Company for which it will have no adequate
remedy at law. Therefore, the Company shall be entitled, in addition to such other remedies as it may have hereunder, to a temporary
restraining order and to preliminary and permanent injunctive relief in state or federal court for any breach or threatened breach
of Section 7. Nothing herein, however, shall be construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach, including the recovery of damages from Employee,

 

		(d)	Employee shall not, without the prior written consent of the Company, directly or indirectly, (i)
solicit, request, cause or induce any person who is at the time, or 12 months prior thereto had been, an employee of or a consultant
of the Company to leave the employ of or terminate such person's relationship with the Company or (ii) employ, hire, engage or
be associated with, or endeavor to entice away from the Company any such person, or any customer of the Company or its affiliates
or (iii) attempt to limit or interfere with any business agreement or relationship existing between the Company and/or its affiliates
with a third party.

 

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		(e)	Employee shall not disparage the business reputation of the Company (or its management team) or
take any actions that are harmful to the Company's goodwill with its customers, content providers, bandwidth or other network infrastructure
providers, vendors, employees, the media or the public. Employee recognizes that such actions would cause irreparable harm for
which there is no adequate remedy at law and that the Company may seek in state or federal court, and is entitled to a temporary
restraining order and to preliminary and permanent injunctive relief in state or federal court to stop any such conduct or statements
for any breach or threatened breach of this Section 7(e) during the term of this Agreement and for a period of two years thereafter.

 

		(f)	Company spends considerable amounts of time, money and effort in developing and maintaining good
will in its industry. Employee agrees the covenants contained within this Section 7: (i) are reasonable and necessary in all respects
to protect the goodwill, trade secrets, confidential information, and business interests of Company; (ii) are not oppressive to
Employee; and (iii) do not impose any greater restraint on Employee than is reasonably necessary to protect the goodwill, trade
secrets, confidential information and legitimate business interests of Company.

 

		(g)	Employee acknowledges and agrees that promises made by the Company in this Agreement such as (i)
the establishment of a term of employment (rather than employment at will) and (ii) the commitment to provide severance compensation
in the event of the termination of Employee's employment for reasons other than Cause (subject to certain requirements on the part
of Employee), constitute one form of consideration for Employee's agreement to and compliance with the restrictive covenants in
this Agreement. Employee acknowledges and agrees that Company's agreement to provide Employee with access to Company's confidential
and proprietary information is a separate form of consideration supporting the restrictive covenants in this Agreement. Employee
acknowledges and agrees that the Company's agreement to permit the use of the Company's goodwill with the Company's customers,
investors and content providers is a separate form of consideration supporting the restrictive covenants in this Agreement. Employee
acknowledges and agrees that the Company's commitment to providing Employee with unique skill development and training is a separate
form of consideration supporting the restrictive covenants in this Agreement.

 

8.       Non-Disclosure of
Confidential Information.

 

		(a)	The Employee acknowledges that as a result of Employee's employment by the Company, the Employee,
both during and after the Term, will obtain secret and confidential information concerning the business of the Company and its
affiliates, including, without limitation, financial information, trade secrets, information concerning the operations, sales,
personnel, suppliers, customers, costs, profits and pricing policies, "know how" and certain business methodologies (the
"Confidential Information").

 

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		(b)	During the Term and thereafter, the Employee shall exercise all due and diligent precautions to
protect the integrity of the customer lists, mailing lists and sources thereof, statistical data and compilations, agreements,
contracts, manuals, memoranda, notes, records, reports or other documents and any and all other materials embodying any Confidential
Information (the "Confidential Materials") and, upon the Company's request in writing, Employee shall immediately return
to the Company all such Confidential Materials (and copies thereof) then in Employee's possession or control.

 

		(c)	Employee shall not at any time, either during the Term of this Agreement or thereafter, divulge
to any person or entity any Confidential Information or deliver or permit any person or entity to obtain any Confidential Materials
except (i) when required in the course of performing Employee's duties hereunder, (ii) with the Company's express written consent,
(iii) where required to be disclosed by court order, subpoena or other government process or (iv) the Employee shall have no responsibility
for the divulgence of any information which is in the public domain. If the Employee shall be required to make disclosure pursuant
to the provisions of clause (iii) of the preceding sentence, the Employee promptly, but in no event more than 48 hours after learning
of such subpoena, court order or other governmental process, shall notify, by personal delivery or by electronic means, confirmed
by mail, the Company and, at the Company's expense, Employee shall (x) take all reasonably necessary steps required by the Company
to defend against the enforcement of such subpoena, court order or other government process and (y) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the enforcement thereof.

 

		(d)	Upon termination of Employee's employment with the Company, the Employee shall promptly deliver
to the Company all Confidential Materials relating to the Company and its affiliates, which Employee may then possess or have under
Employee's control; provided, however, that Employee shall be entitled to retain copies of such documents reasonably necessary
to document Employee's financial relationship (both past and future) with the Company.

 

		(e)	The Employee acknowledges that (i) any breach of the provisions of these Sections 7 and 8 may cause
substantial and irreparable harm to the Company for which the Company would have no adequate remedy at law and (ii) the provisions
of this Agreement are reasonable and necessary for the protection of the business of the Company and its affiliates.

 

9.       Remedies.

 

		(a)	If Employee commits a breach, or threatens to commit a breach, of any of the provisions of Sections
7 or 8, the Company shall have the right and remedy:

 

		(i)	to have the provisions of this Agreement specifically enforced by any court having equity jurisdiction
or through arbitration as provided herein; and

 

		(ii)	to require Employee to account for and to pay over the Company all damages suffered by the Company
(including consequential and incidental damages) as the result of any transactions constituting a breach of any of the provisions
of Sections 7 and 8, and Employee hereby agrees to account for and pay over such damages to the Company;

 

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		(b)	The Employee acknowledges that the services being rendered hereunder to the Company are of a special,
unique and extraordinary character and that any such breach or threatened breach may cause substantial and irreparable injury to
the Company and that money damages will not provide an adequate remedy to the Company. In any equitable proceeding to enforce the
provisions hereof, the Company shall not have to prove irreparable harm. (However, in a suit for damages Company shall be required
to prove the amount of damages actually sustained.)

 

		(c)	Each of the rights and remedies enumerated in Section 9(a) shall be independent of the other, and
shall be severally enforceable, and such rights and remedies shall be in addition to, and not in lieu of any other rights and remedies
available to the Company under law or equity.

 

		(d)	If any provision of Section 7 or 8 is held to be unenforceable because of the scope, duration or
area of its applicability, the court making such determination shall have the power to modify such scope, duration, or area, or
all of them, and such provision or provisions shall then be enforceable in such modified form.

 

		(e)	The Company and Employee agree that any dispute or controversy arising between any of the parties
to this Agreement, or any person or entity in privity therewith, out of the transactions effected and relationships created in
connection herewith, including any dispute or controversy involving the formation, terms or construction of this Agreement, regardless
of kind or character, will be resolved through binding arbitration held in Bexar County, Texas. The only disputes not subject to
mandatory, binding arbitration are requests for injunctive relief. With respect to the arbitration of any dispute or controversy,
each party understands that:

 

		(i)	arbitration is final and binding on the parties;

 

		(ii)	each party is waiving its right to seek certain remedies in court, including to right to a jury
trial;

 

		(iii)	discovery in arbitration is different and more limited than discovery in litigation; and

 

		(iv)	an arbitrator's award need not include factual findings or legal reasoning, and any party's right
to appeal or to seek modification of a ruling by the arbitrator is strictly limited.

 

Each party to this Agreement will submit any dispute or
controversy to arbitration before the American Arbitration Association ("AAA") within five days after receiving a written
request to do so from the other party. If any party fails to submit a dispute or controversy to arbitration as requested, then
the requesting party may commence the arbitration proceeding. The Federal Arbitration Act will govern the proceeding and all issues
raised by this Agreement to be arbitrated. Each party to this Agreement will be bound by the determination of any arbitrator or
arbitration panel impaneled by the AAA to adjudicate the dispute. Judgment on any arbitration award may be entered in any court
of competent jurisdiction.

 

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Any party to this Agreement may bring an action including
a summary or expedited proceeding, to counsel arbitration of any such dispute or controversy in a court of competent jurisdiction
and, further, may seek provision or ancillary remedies, including temporary or injunctive relief in connection with such dispute
or controversy in a court of competent jurisdiction, provided that the dispute or controversy is ultimately resolved through binding
arbitration conducted in accordance with the terms and conditions of Section 10(e). If any party institutes legal proceedings in
an effort to resist arbitration and is unsuccessful in doing so, the prevailing party is entitled to recover, from the losing party,
its legal fees and out-of-pocket expenses incurred in connection with the defense of such legal proceedings.

 

10.       Indemnification.

 

		(a)	To the full extent allowed by law, the Company shall hold harmless and indemnify the Employee,
his executors, administrators or assigns, against any and all judgments, penalties (including excise and similar taxes), fines,
settlements and reasonable expenses (including attorneys' fees) actually incurred by the Employee (net of any related insurance
proceeds or other amounts received by the Employee or paid by or on behalf of the Company on the Employee's behalf in compensation
of such judgments, penalties, fines, settlements or expenses) in connection with any threatened, actual or completed action, suit
or proceeding, whether civil, criminal, arbitral, administrative or investigative, or any appeal in such action, suit or proceeding,
to which the Employee was, is or is threatened to be made a named defendant or respondent (a "Proceeding"), because such
person is or was a director or officer of the Company, or is or was serving at the request of the Company as a director, officer,
partner, venturer, proprietor, trustee, employee, agent or similar functionary (an "Affiliate Employee") of another corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise (each, a "Company Affiliate").
Upon authorization of indemnification of the Employee by the Board of Directors in accordance with the applicable provisions of
the Nevada General Corporation Law (the "NGCL"), the Employee shall be presumed to be entitled to such indemnification
under this Agreement upon submission of a Claim (as hereinafter defined). Thereafter, the Company shall have the burden of proof
to overcome the presumption that the Employee is so entitled. Such presumption shall only be overcome by a judgment or other final
adjudication, after all appeals and all time for appeals have expired ("Final Determination"), adverse to the Employee
establishing that such indemnification is not permitted hereunder or by law. An actual determination by the Company (including
its Board of Directors, legal counsel, or its stockholders) that the Employee has not met the applicable standard of conduct for
indemnification shall not be a defense to the action or create a presumption that the Employee has not met the applicable standard
of conduct. The purchase, establishment or maintenance of any Indemnification Arrangement shall not in any way diminish, restrict,
limit or affect the rights and obligations of the Company or of the Employee under this Agreement except as expressly provided
herein, and the execution and delivery of this Agreement by the Company and the Employee shall not in any way diminish, restrict,
limit or affect the Employee's right to indemnification from the Company or any other party or parties under any other indemnification
arrangement, the Certificate of Incorporation or Bylaws of the Company, or the NGCL.

 

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		(b)	Subject only to the provisions of this Section 10(b), as long as the Employee shall continue to
serve as an officer of the Company and, thereafter, as long as the Employee shall be subject to any possible Proceeding by reason
of the fact that the Employee was or is an officer of the Company, the Company shall, unless no such policies are available in
any market, purchase and maintain in effect for the benefit of the Employee one or more valid, binding and enforceable policies
(the "Insurance Policies") of directors' and officers' liability insurance ("D&O Insurance") providing
adequate liability coverage for the Employee's acts as an officer of the Company. The Company shall promptly notify the Employee
of any lapse, amendment or failure to renew said policy or policies or any provision thereof relating to the extent or nature of
coverage provided thereunder. In the event the Company does not purchase and maintain in effect said policy or policies of D&O
Insurance pursuant to the provisions of this Section 10(b), the Company shall, to the full extent permitted by law, in addition
to and not in limitation of the other rights granted the Employee under this Agreement, hold harmless and indemnify the Employee
to the full extent of coverage which would otherwise have been provided for the benefit of the Employee pursuant to the Insurance
Policies.

 

		(c)	The Employee shall have the right to receive from the Company on demand, or at his option to have
the Company pay promptly on his behalf, in advance of a Final Determination of a Proceeding all expenses payable by the Company
pursuant to the terms of this Agreement as corresponding amounts are expended or incurred by the Employee in connection with such
Proceeding or otherwise expended or incurred by the Employee (such amounts so expended or incurred being referred to as "Advanced
Amounts"). In making any claim for payment by the Company of any expenses, including any Advanced Amount, pursuant to this
Agreement, the Employee shall submit to the Company a written request for payment (a "Claim"), which includes a schedule
setting forth in reasonable detail the dollar amount expended (or incurred or expected to be expended or incurred). Each item on
such schedule shall be supported by the bill, agreement or other documentation relating thereto, a copy of which shall be appended
to the schedule as an exhibit.

 

Where the Employee is requesting Advanced Amounts, the Employee
must also provide (i) written affirmation of such Employee's good faith belief that he has met the standard of conduct required
by law for indemnification, and (ii) a written undertaking to repay such Advanced Amounts if a Final Determination is made that
the Employee is not entitled to indemnification hereunder.

 

		(d)	The Company shall not be liable under this Agreement to make any payment in connection with any
claim made against the Employee for an accounting of profits made from the purchase or sale by the Employee of securities of the
Company within the meaning of Section 16(b) of the Exchange Act or similar provisions of any state statutory law or common law.

 

    	 	12 of 17	 

     

    

		(e)	All agreements and obligations of the Company contained herein shall continue during the period
the Employee is an employee of the Company and shall continue thereafter so long as the Employee shall be subject to any possible
Proceeding by reason of the fact that the Employee was an officer of the Company.

 

		(f)	Promptly after receipt by the Employee of notice of the commencement of any Proceeding, the Employee
shall, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement
thereof, but failure to so notify the Company will not relieve the Company from any liability which it may have to the Employee.
With respect to any such Proceeding:

 

		(i)	The Company shall be entitled to participate therein at its own expense;

 

		(ii)	Except with prior written consent of the Employee, the Company shall not be entitled to assume
the defense of any Proceeding; and

 

		(iii)	The Company shall not settle any Proceeding in any manner which would impose any penalty or limitation
on the Employee without the Employee's prior written consent. The Employee shall not settle any Proceeding with respect to which
the Employee has received indemnified amounts or Advanced Amounts without the Company's prior written consent, nor will the Employee
unreasonably withhold consent to any proposed settlement.

 

11.       Notice.

 

Any notice required hereunder shall (a) be delivered by
hand or (b) sent by registered or certified mail addressed to the other party hereto at its address set forth above for Company
and on Item 1 of Schedule 1 for Employee or at such other address as notice thereof shall have been given in accordance with the
provisions of this Section 11. Any such notice shall become effective (i) if mailed, on the date indicated on the receipt or if
not accepted, the date indicated that delivery was attempted, and (ii) in the case of delivery by hand, upon delivery or attempted
delivery as shown on the records of the deliveries.

 

12.       Entire Agreement;
Amendments.

 

This Agreement supersedes any prior agreements or understandings,
oral or written, between the parties hereto and represents their entire understanding and agreement with respect to the subject
matter hereof. This Agreement can be amended, supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement which is executed by both parties to this Agreement. Any waiver of any breach
of this Agreement shall not be construed to be a continuing waiver or consent to any subsequent breach by any party hereto.

 

13.       Severability.

 

In the event of the invalidity or unenforceability of
any one or more provisions of this Agreement, such illegality or unenforceability shall not affect the validity or enforceability
of the other provisions hereof and such other provisions shall be deemed to remain in full force and effect.

 

    	 	13 of 17	 

     

    

14.       Assignment; Binding
Effect.

 

This Agreement is not assignable by Employee or the Company
without the prior written consent of the other party. This Agreement shall be binding upon and shall inure to the benefit of the
Employee and the Company and their successors and assigns. It is agreed that in the event of the termination under this Agreement
for any reason, except as expressly provided in this Agreement, all salary and benefits shall cease as of the date of termination
provided that all accrued salary, bonus and expenses shall be paid to Employee or Employee's successors, assigns, estate or legal
representative as the case may be.

 

15.       Section Headings.

 

The Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

16.       Governing Law; Venue.

 

This Agreement shall be construed and governed in accordance
with the laws of the State of Texas. The parties hereto agree that any actions or proceedings instituted to enforce rights hereunder
shall be initiated in Bexar County, Texas.

 

17.       Execution in Counterparts.

 

This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but all of which together shall constitute one and the same instruments.

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed on the day and year first above written.

 

"Company"

 

PAYMENT DATA SYSTEMS, INC.

 

 

By: /s/ Louis A. Hoch

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

Name: Louis A. Hoch

Title: President and CEO

 

"Employee"

 

/s/ Tom Jewell

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

Name: Tom Jewell

    	 	14 of 17	 

     

    

SCHEDULE 1

EMPLOYMENT CONTRACT

 

 

 

	1. Employee:	Tom Jewell
	 	 
	2. Position:	Senior Vice President, Chief Financial Officer  
	 	 
	3. Duties:	Management, operations and administration as appropriate for
	 	the Senior Vice President & CFO of the Company.

 

 

 

 

 

 

 

    	 	15 of 17	 

     

    

SCHEDULE 4(a)

 

 

Base Salary:                       $175,000 per annum

 

One time signing bonus: $30,000 to be paid on Employee’s first
pay period.

 

 

Restricted Stock Units: You shall receive two hundred thousand
(200,000) restricted stock units convertible into the Company’s common stock at the start of your employment, pursuant and
subject to the Company’s 2015 Equity Incentive Plan. Such shares shall vest in five equal tranches: beginning on the anniversary
of your first year of employment and every year after for five years. Notwithstanding the foregoing, if you cease to be the Company’s
CFO at any time during the vesting period for any reason (such as resignation, withdrawal, death, disability or any other reason),
then any unvested shares shall be irrefutably forfeited. Furthermore, you agree that the shares shall be subject to any “lock
up” agreement required to be signed by the Company’s officers in connection with any financing.

 

The Employee will be allowed to participate in any future stock
options or stock grants as approved and calculated by the Company’s executive compensation committee and/or president or
CEO.

 

 

 

 

 

 

 

 

 

    	 	16 of 17	 

     

    

SCHEDULE 4(b)

 

 

BONUS: Not to exceed 50% of the highest salary received in any year
of the Agreement and approved and calculated by the Company’s executive compensation committee and/or CEO.

 

 

 

 

 

 

 

 

 

 

 

 

 

17 of 17

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