Exhibit 10.24
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made effective as of the 25th
day of February, 2005 (the "Effective Date")
By and Among:
DIGITAL DESCRIPTOR SYSTEMS, INC., a Delaware corporation (the "Company" or
the "Employer"),
AND
Xxxxxxx X Xxxxxxxxxx, an individual having an address at 00 Xxxxx Xxxx, Xxxxxxx,
Xxx Xxxxxx ("Executive")
WHEREAS, Executive has agreed to serve as Senior Vice President and Chief
Financial Officer of the Company and the Company has agreed to hire Executive as
such, pursuant to the terms and conditions of this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Executive and the Company hereby agree as
follows:
ARTICLE 1
EMPLOYMENT
Employer hereby affirms the employment of Executive as Senior Vice President and
Chief Financial Officer of the Company and Executive hereby affirms and accepts
such employment by Employer for the "Term" (as defined in Article 3 below), upon
the terms and conditions set forth herein.
ARTICLE 2
DUTIES
During the Term, Executive shall serve Employer faithfully, diligently and to
the best of his ability, under the direction and supervision of the Boards of
Directors of Employer ("Boards of Directors") and shall use his best efforts to
promote the interests and goodwill of Employer and any affiliates, successors,
assigns, parent corporations, subsidiaries, and/or future purchasers of
Employer. Executive shall render such services during the Term at Employer 's
principal place of business or at such other place of business as may be
determined by the Boards of Directors, as Employer and may from time to time
reasonably require of him, and shall devote all of his business time to the
performance thereof. Executive shall have those duties and powers as generally
pertain to each of the offices of which he holds, as the case may be, subject to
the control of the Boards of Directors. Employer and Executive also agree that
Employer's Board of Directors shall nominate Executive to the Employer's Board
of Directors.
ARTICLE 3
TERM
3.1 The "Term" of this Agreement in connection with the Executive's position of
Senior Vice President and Chief Financial Officer shall commence on the
Effective Date and continue thereafter for a term of five (5) years, as may be
extended or earlier terminated pursuant to the terms and conditions of this
Agreement. The Term is renewable upon the agreement of the parties hereto.
ARTICLE 4
COMPENSATION
Salary
4.1 (a) In consideration of Executive's services to both Employer , Employer
shall pay to Executive an annual salary (the "Salary") of One Hundred and
Seventy Five Thousand Dollars ($175,000.00) and sometimes referred to as the
"Full Salary") , payable in equal installments at the end of such regular
payroll accounting periods as are established by Employer, or in such other
installments upon which the parties hereto shall mutually agree, and in
accordance with Employer's usual payroll procedures, but no less frequently than
monthly; provided, however, that the Full Salary may be deferred or reduced by
Employer if the Compensation Committee of the Board of Directors of the Employer
so determines ( a "Salary Reduction") and shall be paid in full as funds become
available during the balance of that calendar year or thereafter ("Salary
Payments"); but in no event shall the Salary Reduction exceed $75,000. Any
Salary Reduction shall be memorialized in a demand promissory note, accruing
interest in the amount of ten (10%) per annum, executed by Employer , jointly
and severally, and issued no later than ten days following any quarter during
which Executive receives less than his Full Salary. Provided further that in the
event Executive's Full Salary is reduced at any time during the Term, (i) all
officers' and directors' compensation shall also be proportionately reduced and
(ii) Employer shall not increase the compensation of any officer, director or
employee during any periods in which Executive's Full Salary is reduced until
all of the Salary Reduction amounts have been repaid to Executive in full. The
amount of the base salary for Executive in role of Senior Vice President and
Chief Financial Officer is subject to the review by the Board of Directors in
July of 2006 and every July 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 Full Salary may not be decreased
below the amount of the initial Base Salary. The Executive's reassignment to any
other capacity as the Board of Directors may determine shall not alter the term
or any other provision of this agreement.
Benefits
4.2 (a) During the Term, Executive shall be entitled to participate in all
medical and other Executive benefit plans, including vacation, sick leave,
retirement accounts and other Executive benefits provided by Employer to any of
the other senior officers of the Employer on terms and conditions no less
favorable than those offered to such senior officers. Such participation shall
be subject to the terms of the applicable plan documents, Employer's generally
applicable policies, and the discretion of the Board of Directors or any
administrative or other committee provided for in, or contemplated by, such
plan, but in no event shall Executive's participation in any medical and other
Executive benefit plans be less than the participation of any other senior
officer during the Term.
Expense Reimbursement
4.3 Employer shall reimburse Executive for reasonable and necessary expenses
incurred by him on behalf of Employer in the performance of his duties hereunder
during the Term, including any and all travel expenses related to the Employer's
business in accordance with Employer's then customary policies, provided that
such expenses are adequately documented. Executive is authorized to incur
reasonable expenses in the discharge of his services including costs for
equipment and services supporting telecommunications, computers, and other
similar items. The company shall reimburse the Executive for all such expenses
upon his presentation of properly itemized accounts.
Bonus
4.4 In addition to the Salary, the Executive shall be entitled to receive a
bonus for each calendar year of this Agreement as determined by the Board of
Directors in an amount equal to but not less than 10% and escalating up to 200%
of the Base Salary. In addition, Executive shall participate in a Management
Equity incentive Plan. The Executive 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 shall grant to the employee,
following the first anniversary of the date hereof, options to purchase common
shares of the Company (subject to the vesting and satisfaction of the other
terms and conditions of such options). Such decision to grant the options is at
the discretion of the Board of Directors. Each year's Bonus shall be payable to
the Executive within 110 days of the Company's calendar year end
Other Compensation
4.5 Executive shall receive a monthly allowance of $600, along with related
car expenses, in connection with transportation, travel and entertainment
expenses in the performance of his duties on behalf of Employer.
4.6 Executive shall receive five (5) weeks of paid vacation each calendar
year, which if such vacation is not all taken shall carry over from year
to year.
4.7 In case of disability as defined below Executive shall continue to receive
his full salary and benefits as stated in Section 4 of this agreement.
"Disability" means Executive's inability, with reasonable accommodation,
to substantially perform Executive's duties, services and obligations
under this Agreement due to physical or mental illness or other disability
for a continuous, uninterrupted period of one hundred and eighty (180)
calendar days during any twelve month period.
ARTICLE 5
OTHER EMPLOYMENT
During the Term of this Agreement, Executive shall devote substantially all of
his business and professional time and effort, attention, knowledge, and skill
to the management, supervision and direction of Employer's business and affairs
as Executive's highest professional priority. Except as provided below, Employer
shall be entitled to all benefits, profits or other issues arising from or
incidental to all work, services and advice performed or provided by Executive.
Nothing in this Agreement shall preclude Executive from devoting reasonable
periods required for:
(a) serving as a director or member of a committee of any organization
or corporation involving no conflict of interest with the interests
of Employer , provided that Executive must obtain the written
consent of Employer;
(b) serving as a consultant in his area of expertise (in areas other
than in connection with the business of Employer), to government,
industrial, and academic panels where it does not conflict with the
interests of Employer; and
(c) managing his personal investments or engaging in any other
non-competing business;
provided that such activities do not materially interfere with the regular
performance of his duties and responsibilities under this Agreement.
ARTICLE 6
CONFIDENTIAL INFORMATION/INVENTIONS
Confidential Information
6.1 Executive shall not, in any manner, for any reasons, either directly or
indirectly, divulge or communicate to any person, firm or corporation, any
confidential information concerning any matters not generally known in the
Public Sector Safety, Cargo and Transportation, product authentication and
unattended cargo, Homeland Security and Shipping and Distribution industries
(together, the "Security Industry") or otherwise made public by Employer which
affects or relates to Employer business, finances, marketing and/or operations,
research, development, inventions, products, designs, plans, procedures, or
other data (collectively, "Confidential Information") except in the ordinary
course of business or as required by applicable law. Without regard to whether
any item of Confidential Information is deemed or considered confidential,
material, or important, the parties hereto stipulate that as between them, to
the extent such item is not generally known in the Security Industry, such item
is important, material, and confidential and affects the successful conduct of
Employer's business and goodwill, and that any breach of the terms of this
Section 6.1 shall be a material and incurable breach of this Agreement.
Confidential Information shall not include: (i) information obtained or which
became known to Executive other than through his employment by Employer; (ii)
information in the public domain at the time of the disclosure of such
information by Executive; (iii) information that Executive can document was
independently developed by Executive; and (iv) information that is disclosed by
Executive with the prior written consent of Employer.
Documents
6.2 Executive further agrees that all documents and materials furnished to
Executive by Employer and relating to the Employer business or prospective
business are and shall remain the exclusive property of Employer. Executive
shall deliver all such documents and materials, uncopied, to Employer upon
demand therefore and in any event upon expiration or earlier termination of this
Agreement. Any payment of sums due and owing to Executive by Employer upon such
expiration or earlier termination shall be conditioned upon returning all such
documents and materials, and Executive expressly authorizes Employer to withhold
any payments due and owing pending return of such documents and materials.
Inventions
6.3 All ideas, inventions, and other developments or improvements conceived or
reduced to practice by Executive, alone or with others, during the Term of this
Agreement, whether or not during working hours, that are within the scope of the
business of Employer that relate to or result from any of Employer work or
projects or the services provided by Executive to Employer pursuant to this
Agreement, shall be the exclusive property of Employer. Executive agrees to
assist Employer, at Employer's expense, to obtain patents and copyrights on any
such ideas, inventions, writings, and other developments, and agrees to execute
all documents necessary to obtain such patents and copyrights in the name of
Employer.
Disclosure
6.4 During the Term, Executive will promptly disclose to the Boards of Directors
full information concerning any interest, direct or indirect, of Executive (as
owner, shareholder, partner, lender or other investor, director, officer,
Executive, consultant or otherwise) or any member of his immediate family in any
business that is reasonably known to Executive to purchase or otherwise obtain
services or products from, or to sell or otherwise provide services or products
to, Employer, or any of their suppliers or customers.
ARTICLE 7
COVENANT NOT TO COMPETE
(a) Except as expressly permitted in Article 5 above, during the Term of this
Agreement, Executive shall not engage in any of the following competitive
activities: (a) engaging directly or indirectly in any business or activity
substantially similar to any business or activity engaged in (or proposed to be
engaged in) by Employer ; (b) engaging directly or indirectly in any business or
activity competitive with any business or activity engaged in (or proposed to be
engaged in) by Employer ; (c) soliciting or taking away any Executive, agent,
representative, contractor, supplier, vendor, customer, franchisee, lender or
investor of Employer, or attempting to so solicit or take away; (d) interfering
with any contractual or other relationship between Employer and any Executive,
agent, representative, contractor, supplier, vendor, customer, franchisee,
lender or investor; or (e) using, for the benefit of any person or entity other
than Employer , any Confidential Information of Employer .
(b) The foregoing covenant prohibiting competitive activities shall survive the
termination of this Agreement and shall extend, and shall remain enforceable
against Executive, for the period of one (1) year following the date this
Agreement is terminated provided, however, this Agreement is not terminated
either by Executive pursuant to Article10.1 and 10.2 or by Employer without
cause pursuant to Article 10.3 in which case such Articles 5, 6 and 7,
respectively, shall not be binding upon Executive nor survive such termination.
In addition, during the one-year period following such expiration or earlier
termination, neither Executive, Employer nor shall make or permit the making of
any negative statement of any kind concerning Employer, or their affiliates, or
their directors, officers or agents or Executive.
ARTICLE 8
SURVIVAL
Executive agrees that the provisions of Articles 6, 7 and 9 shall survive
expiration or earlier termination of this Agreement and shall remain in full
force and effect thereafter for any reasons other than in the events of
termination either by Executive pursuant to Article10.1 and 10.2 or by Employer
without cause pursuant to Article 10.3.
ARTICLE 9
INJUNCTIVE RELIEF
Executive acknowledges and agrees that the covenants and obligations of
Executive set forth in Articles 6 and 7 with respect to non-competition,
non-solicitation, confidentiality and Employer's property relate to special,
unique and extraordinary matters and that a violation of any of the terms of
such covenants and obligations will cause Employer irreparable injury for which
adequate remedies are not available at law. Therefore, Executive agrees that
Employer shall be entitled to an injunction, restraining order or such other
equitable relief (without the requirement to post bond) as a court of competent
jurisdiction may deem necessary or appropriate to restrain Executive from
committing any violation of the covenants and obligations referred to in this
Article 9, provided, however, such injunctive relief shall not be available if
this Agreement is terminated either by Executive pursuant to Article10.1 and
10.2 or by Employer without cause pursuant to Article 10.3. These injunctive
remedies are cumulative and in addition to any other rights and remedies
Employer may have at law or in equity.
ARTICLE 10
TERMINATION
Termination by Executive
10.1 Executive may terminate this Agreement for Good Reason at any time upon 30
days' written notice to Employer provided the Good Reason has not been cured
within such period of time.
Good Reason
10.2 In this Agreement, "Good Reason" means, without Executive's prior written
consent, the occurrence of any of the following events, unless Employer shall
have fully cured all grounds for such termination within thirty (30) days after
Executive gives notice thereof:
(i) any reduction in his then-current Salary, except as provided under
Section 4.1;
(ii) any material failure to timely grant, or timely honor, any equity or
long-term incentive award;
(iii) failure to pay or provide required compensation and benefits;
(iv) any failure to appoint him as a Director of Employer the removal of
him from such position, other than by vote of Employer's
shareholders following his nomination by Employer's Board of
Directors at a meeting thereof, during the Term;
The written notice given hereunder by Executive to Employer shall specify
in reasonable detail the cause for termination, and such termination
notice shall not be effective until thirty (30) days after Employer
receipt of such notice, during which time Employer shall have the right to
respond to Executive's notice and cure the breach or other event giving
rise to the termination.
Termination by Employer
10.3 Employer may terminate its employment of Executive under this Agreement for
cause at any time by written notice to Executive. For purposes of this
Agreement, the term "cause" for termination by Employer shall be (a) a
conviction of or plea of guilty or nolo contendere by Executive to a felony, or
any crime involving fraud or embezzlement; (b) the refusal by Executive to
perform his material duties and obligations hereunder; (c) Executive's willful
or intentional misconduct in the performance of his duties and obligations; or
(d) if Executive or any member of his family makes any personal profit arising
out of or in connection with a transaction to which Employer is a party or with
which it is associated without making disclosure to and obtaining the prior
written consent of Parent. The written notice given hereunder by Employer to
Executive shall specify in reasonable detail the cause for termination. For
purposes of this Agreement, "family" shall mean Executive's spouse and/or
children. In the case of a termination for the causes described in (a) and (d)
above, such termination shall be effective upon receipt of the written notice.
In the case of the causes described in (b) and (c) above, such termination
notice shall not be effective until thirty (30) days after Executive's receipt
of such notice, during which time Executive shall have the right to respond to
Employer notice and cure the breach or other event giving rise to the
termination.
Severance
10.4 Upon a termination of this Agreement without Good Reason by Executive or
with cause by Employer , Employer shall pay to Executive all accrued and unpaid
compensation as of the date of such termination, including any amounts due
Executive under Article 4 subject to the provision of Section 6.2. Upon a
termination of this Agreement with Good Reason by Executive or without cause by
Employer, Employer shall pay to Executive the "Severance Payment." The Severance
Payment shall be payable over a period of six months from the date of
termination, subject to Employer's statutory and customary withholdings. The
first two-the Severance Payment shall be paid by Employer within thirty (30)
business days of the expiration of any applicable cure period and the remaining
three-fifth's of the Severance Payment shall be paid within 90 days of the
expiration of any applicable cure period. The "Severance Payment" shall equal
the total amount of the Full Salary payable to Executive under Section 4.1 of
this Agreement from the date of such termination until the end of the Term of
this Agreement (prorated for any partial month), together with a prorated amount
any bonus payable under Section 4.4.
Termination Upon Death
10.5 If Executive dies during the Term of this Agreement, this Agreement shall
terminate, except that Executive's legal representatives shall be entitled to
receive any earned but unpaid compensation or expense reimbursement, including
any amounts due Executive under Article 4, as well as any Salary Reduction
amounts outstanding through the date of death.
Termination Upon Disability
10.6 If, during the Term of this Agreement, Executive suffers and continues to
suffer from a "Disability" (as defined below), then Employer may terminate this
Agreement by delivering to Executive ten (10) calendar days' prior written
notice of termination based on such Disability, setting forth with specificity
the nature of such Disability and the determination of Disability by Employer.
For the purposes of this Agreement, "Disability" means Executive's inability,
with reasonable accommodation, to substantially perform Executive's duties,
services and obligations under this Agreement due to physical or mental illness
or other disability for a continuous, uninterrupted period of one hundred and
eighty (180) calendar days during any twelve month period. Upon any such
termination for Disability, Executive shall be entitled to receive any earned
but unpaid compensation or expense reimbursement as well as any Salary Reduction
amounts outstanding due hereunder through the date of termination.
ARTICLE 11
PERSONNEL POLICIES, CONDITIONS, AND BENEFITS
Except as otherwise provided herein, Executive's employment shall be
subject to the personnel policies and benefit plans which apply generally to
Employer's executives as the same may be interpreted, adopted, revised or
deleted from time to time, during the Term of this Agreement, by Parent in its
sole discretion, except, however, the provisions of this Article 11 shall not
operate to diminish, reduce, invalidate or terminate any of the Executive's
compensation or other rights granted pursuant to Articles 1,3, 4, 5, 7, 8, 9 and
10. During the Term hereof, Executive shall be entitled to vacation during each
year of the Term at the rate of five (5) weeks per year. Within 30 days after
the end of each year of the Term, Employer shall elect to (a) carry over and
allow Executive the right to use any accrued and unused vacation of Executive,
or (ii) pay Executive for such vacation in a lump sum in accordance with its
standard payroll practices. Executive shall take such vacation at a time
approved in advance by the Board of Directors of Employer, which approval will
not be unreasonably withheld but will take into account the staffing
requirements of Employer and the need for the timely performance of Executive's
responsibilities.
ARTICLE 12
BENEFICIARIES OF AGREEMENT
This Agreement shall inure to the benefit of Executive, his heirs and
successors, and to Employer, and any affiliates, successors, assigns, parent
corporations, subsidiaries, and/or purchasers of Employer or Parent as they now
or shall exist while this Agreement is in effect, subject, in the event of a
contemplated transfer of any rights or obligations under this Agreement, to
Article 13.8 below.
ARTICLE 13
GENERAL PROVISIONS
No Waiver
13.1 No failure by either party to declare a default based on any breach by the
other party of any obligation under this Agreement, nor failure of such party to
act quickly with regard thereto, shall be considered to be a waiver of any such
obligation, or of any future breach.
Modification
13.2 No waiver or modification of this Agreement or of any covenant, condition,
or limitation herein contained shall be valid unless in writing and duly
executed by the parties to be charged therewith.
Submission to Jurisdiction; Consent to Service of Process.
13.3 The parties hereto irrevocably submit to the exclusive jurisdiction of any
federal or state court located within the State of New Jersey over any dispute
arising out of or relating to this Agreement and each party irrevocably agrees
that all claims in respect of such dispute or any suit, action or proceeding
related thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute, suit, action or proceeding brought in such court or any defense of
inconvenient forum for the maintenance of any such dispute, suit, action or
proceeding. Each of the parties hereby agrees that a judgment in any such
dispute, suit, action or proceeding may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New Jersey, without regard to any conflict of laws principles.
Entire Agreement
13.4 This Agreement embodies the whole agreement between the parties hereto
regarding the subject matter hereof and there are no inducements, promises,
terms, conditions, or obligations made or entered into by Employer or Executive
other than contained herein. This agreement, when executed, replaces the
Employment agreement dated October 6, 2003.
Severability
13.5 Certain of the agreements and covenants contained herein are severable, and
in the event any of them, with the exception of those contained in Articles 1,
2, 3, 4, 5, 7, 8, 9, 10, 11 and 12, hereof, shall be held to be invalid by any
competent court, this Agreement shall be interpreted as if such invalid
agreements or covenants were not contained herein.
Headings
13.6 The headings contained herein are for the convenience of reference and are
not to be used in interpreting this Agreement.
Independent Legal Advice
13.7 Employer has obtained legal advice concerning this Agreement and has
requested that Executive obtain independent legal advice with respect to same
before executing this Agreement. Executive, in executing this Agreement,
represents and warranties to Employer that he has been so advised to obtain
independent legal advice, and that prior to the execution of this Agreement he
has so obtained independent legal advice, or has, in his discretion, knowingly
and willingly elected not to do so.
No Assignment
13.8 No party may assign, pledge or encumber its interest in this Agreement nor
assign or transfer any of its rights or duties under this Agreement, by
operation of law or otherwise, to any affiliates, successors, assigns, parent
corporations, subsidiaries, and/or future purchasers of Employer without the
prior written consent of the other parties.
IN WITNESS WHEREOF the parties have executed this Agreement effective as
of the day and year first above written.
DIGITAL DESCRIPTOR SYSTEMS, INC.
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx
President and Chief Executive Officer
Executive:
/s/ Xxxxxxx Xxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxx
