EXHIBIT 6.9.3
EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of March 1, 2002 ("Commencement
Date") between Digital Descriptor Systems, Inc., a Delaware corporation (the
"Company"), and Xxxxxxx X. Xxxxxxxxxx (the "Employee")
RECITALS
WHEREAS,
A. The Company desires to employ the Employee as President & Chief
Operating Officer of the Company, or for such other duties as the Board of
Directors may determine, and in such capacities Employee shall render valuable
services to the Company and will have access to proprietary and confidential
information about the Company, and
B. Employee desires to accept such employment, and,
C. The Company's Board of Directors has approved and authorized the
execution of this Agreement.
THEREFORE, in consideration of the recitals, mutual covenants and
agreements contained in this Agreement, the Company and Employee agree as
follows:
SECTION I. Employment.
(a) The Company hereby employs the Employee and the Employee hereby
accepts employment with the Company, on the terms and subject to the conditions
herein set forth. He shall provide such services and perform such functions as
shall be determined from time to time by the Board of Directors of the Company.
If elected or appointed, he shall also serve as a director or officer of the
Company or its subsidiaries or affiliates, in each case without further
compensation. He understands and agrees that he may be required to undertake
business travel.
(b) Employee represents and warrants that his employment under this
Agreement, and his compliance with all the terms and provisions of this
Agreement, do not and will not (I) violate or conflict with any employment
agreement, secrecy, confidentiality or non-compete agreement, or any other
agreement or instrument to which he is a party or is otherwise bound or
affected, or against, the Company, the shareholders, officers or directors of
the Company, or any of the affiliates of any of the above persons (collectively,
the "Indemnities") in connections with such employment or such compliance.
Employee agrees to indemnify and hold harmless the Company and the other
Indemnities from and against any cost, loss or expense (including reasonable
attorney's fees as incurred) arising out of or relating to any misrepresentation
or breach of warranty or covenant set forth in this Section 1(b).
SECTION 2. Term.
The Employee's employment shall begin on the date of this
Agreement and shall continue, unless sooner terminated, until February 28, 2005
(the "Employment Term"), and shall be in force so long as the Company remains in
good standing under the laws, regulations and rules to which it may be subject
during the Agreement" term. The Employee" reassignment from President & Chief
Operating Officer to such other capacity as the Board of Directors may determine
shall not alter the term or any other provision of this Agreement. This
Agreement shall terminate on the earlier to occur of February 28, 2005 or the
date the Employee resigns or has his employment terminated. The provisions
contained in Sections 1(b), 7, 8 and 9, and those provisions necessary to
interpret such Sections, shall survive termination of this Agreement.
SECTION 3. Compensation.
(a) As full compensation for the performance of his services, the
Company shall pay the Employee an annual base salary (such annual base salary,
as it may be adjusted from time to time by the Board of Directors, the "Base
Salary") of One Hundred and Fifteen Thousand Dollars ($115,000) which shall be
paid to the Employee in approximately equal weekly installments beginning
following the Commencement Date and ending on the sooner of the Employee's
termination or the last day of the Employment Term. The amount of the Base
Salary is subject to review by the Board of Directors in September, 2002 and
every September thereafter, and may be adjusted by the Company following such
review, or at any other time, in the sole discretion of the Board of Directors;
provided, that the amount of the Base Salary may not be decreased below the
amount of the initial Base Salary. To the extent required by applicable law, the
Company shall withhold from any payments under this Agreement any applicable
federal, state, local or other taxes or amounts.
The Employee shall participate in the Annual Management Bonus Plan. As
a participant in the Annual Management Bonus Plan, the Employee will be eligible
to receive bonuses in any amount fro 0% to 100% of the Base Salary, payable in
March based on the Employee's performance for the immediately preceding calendar
year, and the Company's performance.
(b) The Employee shall participate in the Management Equity Incentive
Plan. As a participant in the Management Equity Incentive Plan, the Employee
will be eligible to receive options, which shall vest over a period of time from
the date of each option's issue, to purchase common shares of the Company. The
Company may grant to the employee, following the first anniversary of the date
hereof and at the sole discretion of the Board of Directors, options to purchase
common shares of the Company (subject to the vesting and the satisfaction of the
other terms and conditions of such options).
(c) The Employee shall be entitled to 25 vacation days per year at such
times as may be mutually agreed with the Board of Directors. In all other
aspects, the Employee's benefits including medical insurance, disability
insurance, life insurance, retirement and other benefits and perquisites
generally available to all senior managers of like businesses will be in
accordance with Company policy in effect from time to time but in any event not
less favorable to the Employee than benefits provided to any other employee of
the Company. The Employee shall also receive a standard relocation benefit
package that provides reimbursement to the Employee, against submission to the
Company of receipts therefor, of up to $25,000 of specified moving and
relocation expenses (including broker's fees) incurred by the Employee as a
result of the relocation of his principal residence nearer to the offices of the
Company.
(d) The employee shall be entitled to a monthly car allowance of Four
Hundred Dollars ($400) along with related car expenses and payment of a car loan
not to exceed Eight Hundred Dollars ($800.00) per month.
(e) The compensation to be paid under this Agreement shall be an
unsecured obligation of the Company, and not any of its subsidiaries, parents or
affiliates, and creates no security interest in any present or future assets of
the Company or its subsidiaries, parents or affiliates.
SECTION 4. Exclusivity.
The Employee shall devote substantially all of his time and energy to
the business of the Company, shall faithfully serve the Company, shall in all
respects conform to and comply with any directions or duties reasonably given to
him by the Board of Directors, shall use his best efforts to promote and serve
the interests of the Company and shall not engage in any other business
activity, whether or not such activity shall be engaged in for pecuniary profit,
except that the Employee may participate in the activities of professional trade
organizations and government sponsored programs related to the business of the
Company. Notwithstanding the above, Employee may be permitted to serve as a
director or trustee of other organizations with the Board's approval which may
be granted if it can be reasonably demonstrated that such service does not
interfere with the effective performance of Employee's duties under this
Agreement.
SECTION 5. Reimbursement for Expenses.
The Employee is authorized to incur reasonable expenses in the
discharge of his services, including expenses for travel, lodging and similar
items. The Company shall reimburse the Employee for all such proper expenses
upon his presentation of itemized accounts.
SECTION 6. Termination.
The employment of the Employee shall terminate upon the first to occur
of:
(a) his death or Disability(defined below);
(b) his discharge by the Company for Just Cause (defined below);
provided, that the Employee shall have received written notice from the Company
of the event giving rise to the Employee's discharge by the Company for Just
Cause at least 7 business days prior to the effective date of such discharge
during which period the Employee shall have the opportunity to correct the
breach giving rise to such just cause termination; provided, that such breach
shall not involve fraud or moral turpitude; or
(c) his discharge by the Company other than for Just Cause (defined
below).
For the purposes of this Agreement "Disability" shall mean the
Employee's inability to perform the duties required of him as reasonably
determined by the Board of Directors following a review of satisfactory medical
advice to the Board about Employee's physical or mental condition, because of
illness, incapacity, or physical or mental disability for a consecutive period
of 60 days or an aggregate period of 90 days during any 12-month period during
the term of this Agreement;
For the purposes of this Agreement "Just Cause" shall mean: (i.) the
Employee's failure, neglect or refusal to follow a lawful written order of the
Board of Directors or to perform his duties under this Agreement; (ii) any
willful or intentional act of the Employee that has the effect of injuring the
reputation or business of the Company or its affiliates in any material respect;
(iii) any continued absence from the Company unless such absence is (A) approved
or excused by the Board of Directors or (B) is the result of the Employee's
illness, disability or incapacity (in which event the provisions of Section 6(a)
hereof shall control) or a personal or family emergency; (iv) repeated
impairment of the Employee due to drunkenness; (v) conviction of the Employee
for the commission of a felony or a crime involving moral turpitude; (vi) a
material reach of the provisions of this Agreement; (vii) the commission by the
Employee of an act of fraud or embezzlement against the Company or breach of
fiduciary duty to the Company involving personal profit; or (viii)the illegal
use or possession of drugs.
SECTION 7. Right to Purchase and Right of First Refusal to Purchase
Employee's Shares; Severance Pay.
If the Employee's employment is terminated pursuant to Section 6(b), or
if the Employee resigns without Good Reason (defined below), the Employee shall
not receive any further compensation from the Company and Company shall have the
right to purchase, or if such right is not exercised and subsequently the
Employee offers to sell his shares to a third party the right of first refusal
to purchase, all shares, if any, of the Company's stock held by the Employee at
a price equal to the market price as published on the date of termination or the
acquisition cost, whichever is higher. If the Employee's employment under this
Agreement is terminated pursuant to Section 6(a) or 6(c), or if the Employee
resigns with Good Reason (defined below), the Company shall pay Employee his
base salary and benefits ("Severance Pay") for the greater of (the "Severance
Pay Period")(i) one year from the date of termination or resignation and (ii)
the remaining term of this Agreement, and shall have the right to purchase, or
if such right is not exercised and subsequently the Employee offers to sell his
shares to a third party the right of first refusal to purchase, all Employee's
shares, if any, of the Company's stock held by the Employee or his estate at a
price equal to the market value of such shares as published. The Severance Pay
shall be payable by the Company in equal weekly installments. The Company shall
pay for any purchase of the Employee's shares under this Section 7 immediately
upon the transfer of title of the certificates.
For the purposes of this Agreement a resignation by the Employee with
Good Reason shall mean a resignation by the Employee of his employment hereunder
following a Substantial breach (as hereinafter defined) and such Substantial
Breach shall have not been corrected by the Company within 30 days of receipt by
the Board of Directors of written notice from the Employee of the occurrence of
such Substantial Breach, which notice shall specifically set forth the nature of
the Substantial Breach which is the reason for such resignation and identify
such occurrence as a "Substantial Breach" under this Agreement. The term
"Substantial Breach" means any material breach by the Company of its obligations
hereunder consisting of (i.) any material breach of the terms of Section 3
above; (ii) a material reduction in the Employee's title or responsibilities; or
(iii) the failure of any successor to all or substantially all of the business
and/or assets of the company to assume this Agreement; provided, however, that
the term "Substantial Breach" shall not include a termination of the employee's
employment pursuant to Section 6(a) or (b) above. The Employee's resignation
without Good Reason shall not end the parties' respective continuing rights and
responsibilities under this Agreement including but not limited to those
enumerated in Sections 8, 9, 10, 12 and 15. Notwithstanding anything contained
in this Agreement to the contrary, the terms and provisions of this Section 7
shall not apply to any shares of capital stock issued by the Company to the
Employee in consideration for the Employee's sale to the Company of shares of
capital stock of Digital Descriptor Systems, Inc.
SECTION 8. Change of Control
(a) If a "Change of Control", as defined hereafter, occurs or
executive receives written notice from the Chairman of the Board
of Directors of the Company that a Change of Control will occur,
the executive shall have the right to terminate this Agreement,
by giving written notice to the Chairman of the Board of
Directors of the Company within thirty days of the Change of
Control or receipt of the notice that a Change in Control will
occur; but in the case of notice of a Change of Control that will
occur, any election by the executive to terminate this Agreement
shall be effective only if such Change of Control actually
occurs. If executive elects to terminate this Agreement under
this provision, he shall be entitled to be paid at the effective
date of the termination of this Agreement, compensation through
the date of termination.
(b) For the purposes of the Agreement, the definition of Change of
Control shall mean any sale, assignment, transfer or other
disposition, in one or more installments, during the term of this
Agreement of more than 50% of the outstanding common stock of the
Company, other than in bona fide offerings of its shares to the
public by the Company or any substantial shareholder, the result
of which would be the transfer, in the aggregate, of over 50, %
of the outstanding common stock. Any sale, assignment, transfer
or other disposition, in one or more installments, of more than
50% of the ownership interest in any entity which owns stock in
the Company or an ownership interest in an entity which owns
stock in the Company; shall be deemed to be a transfer of such
stock or ownership interest, as the case may be. Notwithstanding
the above, any sale, assignment, transfer of other disposition by
a person of Stock in the Company or an ownership interest in an
entity to and among the members of his immediate family or trusts
for the benefit of members of his immediate family, whether
during his life or upon his death, shall not be deemed to be a
transfer of such stock or ownership interest for the purposes of
the Agreement. The Company shall give prompt written notice to
the executive of any Change of Control during the term of this
Agreement.
SECTION 8. Secrecy, Non-Competition, Invention Rights.
(a) No Competing Employment. The Employee acknowledges that (i.) the
agreements and covenants contained in this Section 8 are essential to protect
the value of the Company's business and assets and (ii)by virtue of his
employment with the Company, he has obtained and will obtain such knowledge,
contacts, training and experience and there is a substantial probability that
such knowledge, contacts, training and experience could be used to the
substantial advantage of a competitor of the Company and to the Company's
substantial detriment. Therefore, the Employee agrees that, for the period
commencing on the date of this Agreement and ending on the first anniversary of
the termination of employment hereunder for any reason, the Employee shall not
participate or engage, directly or indirectly, for himself or on behalf of or in
conjunction with any person, partnership, corporation or other entity, whether
as an employee, independent contractor, agent, officer, director, shareholder,
partner, joint venturer, investor or otherwise, in any business that for profit
shall include the ownership and/or operation of or providing of consulting or
advisory services to any business enterprise engaged in the provision of
digitized imaging in the criminal justice field (a "Competitive Facility").
(b) Nondisclosure of Confidential Information. The Employee
acknowledges that (i.) the agreements and covenants contained in this Agreement
are essential to protect the value of the Company's business and assets and (ii)
by virtue of his employment with the Company, he has obtained and will obtain
knowledge, contacts, training and experience and there is a substantial
probability that such knowledge contacts, training and experience and there is a
substantial advantage of a competitor of the Company and to the Company's
substantial detriment. Therefore, the Employee agrees that, the Employee shall
not disclose directly or indirectly to any person or entity not affiliated with
the Company or use, without prior written consent from the Company either during
the Employment Term or at ant time thereafter, any Confidential Information (as
defined in the next sentence) except pursuant to and consistent with the order
of any court, legislative body or regulatory agency; provided, that the Employee
has given notice to the Company immediately after learning of such order. The
term "Confidential Information" shall mean information not in the public domain
or generally know in the industry, in any form (i.)concerning or relating to the
Company's operations and/or proprietary computer programs and software products
including but not limited to systems whether provided by or licensed from a
third party; (ii) acquired by the Employee while employed by the Company or
(iii)acquired following the Employment Term directly or indirectly, from any
person or entity owing a duty of confidentiality to the Company or any of its
affiliates, including but not limited to information regarding, trade secrets,
manuals or materials, technical information, contracts, systems, procedures,
mailing lists, know-how, financial or other data (including the revenues, costs
or profits associated with any of the Company's services), business plans, and
other financial statements, computer programs, source codes, software systems,
database, discs and printouts, software design specifications, plans (business,
technical or otherwise), customer and industry lists, correspondence, internal
reports, personnel files, sales and advertising material, telephone numbers,
names, addresses or any other compilations of information, written or unwritten,
which is or was used in the business or formation of the Company or its
affiliates.
The Employee agrees and acknowledges that all Confidential Information
in any form, and copies and extracts thereof, are and shall remain the sole and
exclusive property of the Company, and upon termination of his employment with
the Company, he shall return to the Company the originals and all copies of any
such information provided to or acquired by the Employee in connection with the
performance of his duties for the Company, and shall return to the Company all
files, correspondence and/or other communications received, maintained and/or
originated by him during the course of his employment.
(c) No Interference. The Employee shall not, whether for his own
account or for the account of any other individual, partnership, firm,
corporation or other business organization (other than the Company), directly or
indirectly solicit, endeavor to entice away form the Company or its affiliates,
or otherwise directly interfere with the relationship of the Company and its
affiliates with any person who is employed by or otherwise engaged to perform
services for the Company or its affiliates or who is, or was within the then
most recent twelve-month period, a client, joint venturer or prospective client
or joint venturer of the Company, or any of its affiliates.
(d) Inventions. By this Agreement, the Employee sells, transfers and
assigns to the Company, or to any person or entity designated by the Company,
all of the right, title and interest of the Employee in and to all inventions,
sales approaches or materials, software, ideas, training materials, disclosures
and improvements, whether patented or unpatented, copyrightable material, or
materials or services subject to trademark or service xxxx registration, made or
conceived by the Employee solely or jointly, in whole or in part, during or in
preparation for his employment by the Company which are not generally known to
the public or the industry or recognized as standard practice, processes or
devices which may be sold, leased, used or under construction or development by
the Company and (ii) arise (wholly or partly) from the efforts of the Employee
during his employment with the Company (an "Invention"). The Employee shall
communicate promptly and disclose to the Company, in such form as the Company
requests, all information, details and data pertaining to nay such Invention.
Any invention by the Employee within six (6) months following the termination of
his employment hereunder shall be deemed to fall within the provisions of this
Section 8(d) unless the Employee bears the burden of proof of showing that the
invention was first conceived and made following such termination.
SECTION 9. Injunctive Relief.
Without intending to limit the remedies available to the Company, the
Employee acknowledges that a breach of any of the covenants contained in Section
8 hereof may result in material irreparable injury to the Company or its
affiliates for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach of threat thereof, the Company shall be entitled to obtain a
temporary restraining order and/or a preliminary or permanent injunction,
without the necessity of proving irreparable harm or injury as a result of such
breach are threatened breach of Section 8 hereof, restraining the Employee from
engaging in activities prohibited by Section 8 hereof or such other relief as
may be required specifically to enforce any of the covenants in Section 8. In an
action commenced by the Company for relief under this Section 9, the Employee
agrees to submit to the jurisdiction of any state or federal court of record in
the State of Pennsylvania or in the state and county in which such violation may
occur, or in any other court, at the election of the Company.
SECTION 10. Successors; Binding Agreement.
Neither this Agreement, or any rights or benefits hereunder, may be
assigned, delegated, transferred, pledged or hypothecated without the written
consent of both parties hereto, and any such assignment, delegation, transfer,
pledge or hypothecation shall be null and void; provided, that the Company may
assign or transfer this Agreement to any entity into which the Company merges,
or to any entity created by the consolidation of the Company or to any entity
that acquires all or substantially all of the assets of the Company; provided,
that such entity expressly assumes all of the rights and obligations of the
Company hereunder.
SECTION 11. Waiver and Modification.
Any waiver, alteration or modification of any of the terms of this
Agreement shall be valid only if made in writing and signed by the parties
hereto; provided, however, that any such waiver, alteration or modification is
consented to on the Company's behalf by a member of the Board of Directors other
than the Employee. No waiver by either of the parties hereto of their rights
hereunder shall be deemed to constitute a waiver with respect to any subsequent
occurrences o transactions hereunder unless such waiver specifically states that
it is to be construed as a continuing waiver.
SECTION 12. Severability and Governing Law.
The Employee acknowledges and agrees that the covenants set forth in
Section 8 hereof are reasonable and valid in temporal scope and in all other
respects. If any of such covenants or such other provisions of this Agreement
are found to be invalid or unenforceable by a final determination of a court of
competent jurisdiction (a) the remaining terms and provisions hereof shall be
unimpaired and (b) the invalid or unenforceable term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision. THIS AGREEMENT SHALL BE GOVERNED BY
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF PENNSYLVANIA,
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
SECTION 13. Notices
All approvals, consents, notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given upon delivery, if delivered in person, or on the third business day
after mailing, if mailed, by registered or certified mail, postage prepaid,
return receipt requested, addressed in the case of the Company, to Digital
Descriptor Systems Inc, 000 Xxxxxxx Xxxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxxxx 00000
or, in each case, to such other address as may be designated to the other
parties from time to time as provided above.
SECTION 14. Captions and Section Headings.
Captions and section headings herein are for convenience only, are not
a part hereof and shall not be used in construing this Agreement.
SECTION 15. Arbitration of Disputes.
Subject only to the provisions of Section 9 above relating to
injunctive relief, any and all disputes, controversies and claims arising out of
or relating to this Agreement or its performance shall be settled and determined
by arbitration Pennsylvania (or the city of the Company's headquarters at the
election of the Company) before one (1) arbitrator pursuant to the Commercial
Rules then obtaining of the American Arbitration Association. The parties agree
that the arbitrators shall give effect to applicable statutes of limitation in
determining any claim and that they shall have the power to award damages,
preliminary or permanent injunctive relief and reasonable attorney's fees and
expenses to any party in such arbitration. The arbitration award shall be final
and binding upon the parties and judgement on such an award may be entered in
any court having competent jurisdiction.
SECTION 16. Entire Agreement
This Agreement constitutes the entire understanding and agreement of
the parties hereto regarding the employment of the Employee.
SECTION 17. Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed and original, but all of which taken together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
For the Company: Employee:
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Co-Chairman & CEO Xxxxxxx X. Xxxxxxxxxx
