ADDENDUM to EMPLOYMENT AGREEMENT
Exhibit
10.3
This
AGREEMENT (the “Agreement”), dated as of July 15, 2008, by and between Document
Capture Technologies, Inc., a Delaware corporation with principal executive
offices at 0000 Xxxxxxxxxx Xxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 (hereinafter
referred to as the “Company”), and Xxxxxxx Xxxxxxx, an individual residing at
0000 Xxxxx Xxxx’x Xxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 (hereinafter referred to as
“Employee”).
W
I T N E S S E T H:
WHEREAS,
the Company and the Employee are parties to an Employment Agreement dated April
26, 2005 (the “Original Agreement”) and two Addenda to the Employment Agreement
dated January 18, 2008 and February 26, 2008 (the “Addenda” and together with
the Original Agreement, the “Employment Agreement”);
WHEREAS,
the Company desires to amend the Employment Agreement to (i) extend the term
of
the Employment Agreement through December 31, 2010; (ii) adjust Xx. Xxxxxxx’
base salary in order to reflect his current role with the Company; (iii) add
an
arbitration provision to the “Termination by Employer” section of the Employment
Agreement; and (iv) change the definition of Severance Payment.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1.
Capitalized terms used herein but not otherwise defined herein have the meanings
ascribed to them in the Employment Agreement. Capitalized terms amended hereby
shall affect the remainder of the Employment Agreement.
2.
Section 2(a) of Employee’s Employment Agreement is amended to read as follows:
a.
Subject to Section 9 and Section 10 below, the term of this Agreement shall
expire on December 31, 2010 (the “Term”). The Term of this Agreement shall be
automatically extended for additional one (1) year periods, unless either party
notifies the other in writing at least ninety (90) days prior to the expiration
of the then existing Term of its intention not to extend the Term. During the
Term, Employee shall devote substantially all of his business time and efforts
to Employer and its subsidiaries and affiliates.
3.
Section 4(a)(i) of the Employment Agreement is amended to read as
follows:
(i)
Employee shall be paid a base pay of $200,000 per year during the Term of this
Agreement. Employee shall be paid periodically in accordance with the policies
of the Employer during the term of this Agreement, but not less than monthly.
4.
Section 9(a)(i) of the Employment Agreement is amended to read as
follows:
(i)
Employer may terminate this Agreement upon written notice for Cause. For
purposes hereof, "Cause" shall mean (A) Employee's misconduct as could
reasonably be expected to have a material adverse effect on the business and
affairs of Employer, (B) the Employee's disregard of lawful instructions of
Employers Board of Directors consistent with Employee's position relating to
the
business of Employer or neglect of duties or failure to act, which, in each
case, could reasonably be expected to have a material adverse effect on the
business and affairs of Employer, (C) engaging by the Employee in conduct that
constitutes activity in competition with Employer, including any unapproved
activities identified in section 8(c) of this Agreement; (D) the conviction
of
Employee for the commission of a felony; and/or (E) the habitual abuse of
alcohol or controlled substances. Notwithstanding anything to the contrary
in
this Section 9(a)(i), Employer may not terminate Employee's employment under
this Agreement for Cause unless Employee shall have first received notice from
the Board advising Employee of the specific acts or omissions alleged to
constitute Cause, and such acts or omissions continue after Employee shall
have
had a reasonable opportunity (at least 10 days from the date Employee receives
the notice from the Board) to correct the acts or omissions so complained of.
In
no event shall alleged incompetence of Employee in the performance of Employee's
duties be deemed grounds for termination for Cause.
(ii)
If
Employer terminates Employee for Cause, both parties agree as follows:
(A)
Before such termination shall become effective, the matter shall be submitted
to
a binding arbitration conducted at a location in San Jose, California to be
determined by an arbitrator selected by the initiating party and in accordance
with the
then
existing Rules of Practice and Procedure of the American Arbitration
Association.
(B)
The
number of arbitrators shall be three; one selected by Employee, one selected
by
Employer, and one selected by the two selected arbitrators. Each arbitrator
shall be impartial and independent and shall perform his or her duties with
diligence and in good faith.
(C)
Any
party may be represented by counsel or other authorized representatives during
the arbitration hearings. No party shall communicate ex parte with a selected
or
candidate arbitrator.
(D)
The
arbitrators shall, by majority decision, determine the fairness and validity
of
Employer’s reasons for terminating Employee for Cause and such determination
shall be final and binding upon the parties. If the termination is determined
to
be invalid or unfair, Employer shall be deemed to have breached the Agreement
and Section 10 of the Agreement shall apply.
(E)
Each
party shall bear its expenses, costs and attorney fees relating to the
arbitration.
(F)
Until
such time as a final binding arbitration award is entered into, Employee shall
be placed on administrative leave and shall continue to receive his full
compensation (including salary, bonus, stock options and benefits) as if he
remained an Employee of the Company.
(iii)
This Agreement automatically shall terminate upon the death of Employee, except
that Employee's estate shall be entitled to receive any amount accrued under
Section 4(a).
5.
Section 9(b)(iii) of the Employment Agreement is amended to read as follows:
(iii)
If Employee shall terminate this Agreement under Section 9(b)(i), Employee
shall
be entitled to receive twelve (12) months salary, at his then current yearly
salary rate, (the “Severance Payment”), and Employer shall pay 100% of the
C.O.B.R.A. premiums for twelve (12) months after such termination. Other than
the Severance Payment and the payment of C.O.B.R.A. premiums described in this
section 9(b)(iii), Employer shall have no further obligation to compensate
Employee pursuant to Section 4 above. If Employee shall terminate this Agreement
pursuant to Section 9(b)(ii), Employee shall not be entitled to the Severance
Payment or any additional compensation as provided in Section 4.
All
other
terms and conditions of the Employment Agreement not affected hereby shall
remain in effect as originally drafted.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
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EMPLOYEE
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By:
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/s/
Xxxxx Xxxxx
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/s/
Xxxxxxx Xxxxxxx
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Xxxxx
Xxxxx
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Xxxxxxx
Xxxxxxx
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Chief
Executive Officer
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