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EXHIBIT 10.69
CONFIDENTIAL AGREEMENT
THIS CONFIDENTIAL AGREEMENT is entered into this 2nd day of January
1997 (the "Agreement") between INTEGRATED SECURITY SYSTEMS, INC. a Delaware
Corporation, with offices located at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx,
XX 00000 ("ISSI"), and XXXXX X. XXXXX, an individual residing at 00 Xxxxxx
Xxxx, Xxxxxx, XX 00000 (the "Employee").
WHEREAS ISSI desires to employ Employee for certain services and under
terms and conditions contained herein, and
WHEREAS Employee desires to be employed by ISSI under certain terms
and conditions herein and to provide certain services to ISSI as defined
herein,
WHEREAS ISSI and Employee desire to continue their relationship
pursuant to this Agreement,
NOW, THEREFORE, in consideration of the mutual promises set forth in
this Agreement, both parties agree to be bound as follows:
1.0 EMPLOYMENT
1.1 Affiliate. "Affiliate" shall mean any corporation over which
Employee or ISSI, as the case may be, can exercise effective
management and control.
1.2 Change in Control. "Change in Control" shall mean:
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13 (d) (3) or 14 (d) (2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person" which, for purposes of this definition,
excludes Employee or any of his Affiliates) or beneficial
ownership (within the meaning of Rule 13 (d) (3) promulgated
under the Exchange Act) of shares of common stock or other
securities of ISSI resulting in the beneficial ownership by
such individual, entity or group of fifty percent (50%) or
more of either (1) the then outstanding shares of common stock
of ISSI (The "Outstanding ISSI Common Stock") or (2) the
combined voting power of the then outstanding voting
securities of ISSI entitled to vote generally in the election
of directors (the "Outstanding ISSI Voting Securities"); or
(b) if individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to
constitute more than fifty percent (50%) of the members of the
Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or
nomination for election by ISSI's stockholders, was approved
by a vote of at least two thirds of the directors, then
constituting the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board , but
excluding,
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for this purpose, any such individual whose initial assumption
of office occurs as a result of either an actual or threatened
election consents subject to Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) approval by the stockholders of ISSI of a
reorganization, merger or consolidation, unless following such
reorganization, merger or consolidation, (1) more than fifty
percent (50%) of, respectively, the then outstanding shares of
common stock of the corporation resulting from such
reorganization, merger or consolidation (the "Outstanding
Survivor Common Stock"), and the combined voting power of the
then outstanding voting securities of such corporation
entitled to vote generally in the election of directors (the
"Outstanding Survivor Voting Securities"), is then
beneficially owned, directly or indirectly by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding ISSI
Common Stock and Outstanding ISSI Voting Securities
immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger,
or consolidation of the Outstanding ISSI Common Stock and
Outstanding ISSI Voting Securities, as the case may be (for
purposes of determining whether such percentage test is
satisfied, there shall be excluded form the number of shares
of Outstanding Survivor Common Stock and Outstanding Survivor
Voting Securities owned by ISSI's stockholders, but not from
the total number of shares of Outstanding Survivor Common
stock and Outstanding Survivor Voting Securities, any shares
or voting securities received by any such stockholder in
respect of any consideration other than shares or voting
securities of ISSI, (2) no Person (excluding ISSI), any
employee benefit plan (or related trust) of ISSI, any
qualified employee benefit plan of such surviving corporation
and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or
indirectly, fifty percent (50%) or more of the Outstanding
ISSI Common Stock or Outstanding ISSI Voting Securities, as
the case may be, beneficially owns, directly or indirectly,
fifty percent (50%) or more of, respectively, the shares of
Outstanding Survivor Common Stock or the Outstanding Survivor
Voting Securities and (3) more than fifty percent (50%) of the
members of the board of directors of the surviving corporation
were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(d) (1) approval by the stockholders of ISSI of a
complete liquidation or dissolution of ISSI or (2) the first
to occur of (i) the sale or other disposition (in one
transaction or a series of related transactions) of all or
substantially all of the assets of ISSI, or (ii) the approval
by the stockholders of ISSI of any such sale or
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disposition, other than, in each case, any such sale or
disposition to a corporation, with respect to which
immediately thereafter, ((x) more than fifty percent (50%) of,
respectively, the shares of Outstanding Survivor Common Stock
and the Outstanding Survivor Voting Securities is then
beneficially owned, directly, or indirectly, by all entities
who were the beneficial owners, respectively, of the
Outstanding ISSI Common Stock and Outstanding ISSI Voting
Securities immediately prior to such sale or other disposition
in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
Outstanding ISSI Common Stock and Outstanding ISSI Voting
Securities, as the case may be (for purposes of determining
whether such percentage test is satisfied, there shall be
excluded from the number of shares of Outstanding Survivor
Common Stock and Outstanding Survivor Voting Securities of the
surviving corporation, any shares or voting securities
received by any such stockholder in respect of any
consideration other than shares or voting securities of ISSI,
(y) no person excluding ISSI and any employee benefit plan (or
related trust) of ISSI, any Qualified employee benefit plan of
such transferee corporation and any Person beneficially
owning, immediately prior to such sale or other disposition,
directly or indirectly, fifty percent (50%) or more of the
Outstanding ISSI Common Stock or Outstanding ISSI Voting
Securities, as the case may be, beneficially owns, directly or
indirectly, fifty percent (50%) or more of, respectively, the
shares of Outstanding Survivor Common Stock and the
Outstanding Survivor Voting Securities and (z) more than fifty
percent (50%) of the members of the board of directors of the
Surviving Corporation were members of the Incumbent Board at
the time of the execution of the initial agreement or action
of the board providing for such sale or other disposition of
assets of ISSI.
(e) Notwithstanding anything to the contrary contained in
this Agreement, a Change in Control for purposes of this
Agreement shall not/mean the occurrence of any event as set
forth in subparagraph (a), (b), (c), or (d) of this paragraph
1.2 if Employee participated (i) in the sale of Outstanding
ISSI Voting Securities or (ii) in the voting of Shares of
Outstanding ISSI Common Stock or Outstanding ISSI Voting
Securities that resulted, directly or indirectly, in the event
which, but for this subparagraph (e), would otherwise
constitute a Change in Control under this Agreement.
2.0 EMPLOYMENT
ISSI agrees to and does hereby employ Employee, and Employee hereby agrees to
and does hereby continue in the employ of ISSI, for the period set forth in
paragraph 3 below (the Period of Employment), in the position and with the
duties and responsibilities set forth in paragraph 3 below, and upon the other
terms and conditions set forth in this Agreement.
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3.0 PERIOD OF EMPLOYMENT
The Period of Employment shall commence on the original date of this Agreement
and subject only to the provisions of paragraphs 10, 11, and 13.0 below,
relating, respectively, to death, disability and severance, shall continue
until the close of business two (2) years from the date of this Agreement. In
the event that Employee shall continue in the full- time employment of ISSI
after such two-year period or such later date without a written extension of
this Agreement, such continued employment shall be for successive annual
periods and shall be subject to the terms and conditions of this Agreement, and
the Period of Employment shall include the period during which Employee in fact
so continues in such employment.
4.0 POSITION
During the Period of Employment, Employee shall serve as Chief Financial
Officer (CFO) of ISSI or as otherwise assigned by the Board of Directors The
functions, duties and responsibilities of CFO shall be defined by the Board of
Directors. It is expressly understood that nothing in the foregoing shall
preclude the Board of Directors from making such organizational and reporting
changes as the Board of Directors may, in good faith, deem desirable and for
the benefit of ISSI.
5.0 PERFORMANCE
Throughout the Period of Employment, Employee agrees to devote Employee's full
time and undivided attention during normal business hours to the business and
affairs of ISSI and, in particular, to performance of all functions, duties and
responsibilities as CFO of ISSI and any subsidiaries or divisions, except for
reasonable vacations and except for illness or incapacity; but nothing in this
Agreement shall preclude Employee from devoting reasonable periods during
normal business hours required for serving as a member of the Board of
Directors or as a member of a committee appointed by the Board of Directors.
Activities of Employee which are not associated with ISSI and do not,
individually or together, interfere with the regular performance of functions,
duties and responsibilities as CFO for ISSI, or do not have a conflict of
interest with ISSI, in the reasonable but sole judgment of ISSI, are permitted.
6.0 COMPENSATION
For the acceptance of the terms and conditions of this Agreement and for the
execution of this Agreement, Employee shall be paid Seventy Five Thousand
Dollars ($75,000).
For all services to be rendered by Employee in any capacity during the Period
of Employment, including without limitation, services as CFO, member of the
Board of Directors, or member of any committee of ISSI and its subsidiaries,
divisions and affiliates, Employee shall be paid a minimum base fixed salary of
One Hundred Twenty Thousand Dollars and 00/100 ($120,000.00) payable in twenty
four equal payments twice each calendar month beginning January 1, 1997.
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Employee shall be eligible for an annual cash bonus as determined by the Board
of Directors. Any increase in compensation pursuant to the above, including
incentive awards or other compensation shall in no way diminish any other
obligations of ISSI under this Agreement. The compensation provided for in
this paragraph, together with the perquisites and benefits set forth in
paragraphs 7 and 8 below, are in addition to the benefits provided for in
paragraph 9 of this Agreement.
7.0 PERQUISITES
During the Period of Employment, Employee shall be entitled to perquisites,
including, without limitation, an appropriate private office, appropriate
secretarial and clerical support, and fringe benefits (which includes for e.g.
comprehensive medical benefits, 401(k) plan, and disability insurance) accorded
positions of equal rank, as well as to reimbursement, upon proper accounting,
of reasonable expenses and disbursements incurred by Employee in the course of
Employee's duties.
8.0 PARTICIPATION IN SUCCESS BY ACHIEVEMENT PLAN
During the Period of Employment, Employee shall be and shall continue to be a
full participant in any and all other incentive and compensation plans in which
ISSI employees may participate, both those that are in effect on the date of
this Agreement and any equivalent successor or new plans that may be adopted by
ISSI. Nothing in this Agreement shall preclude improvement of reward
opportunities in such plans or other plans in accordance with the practice of
ISSI.
9.0 BENEFIT PLANS
Nothing in this Agreement shall preclude ISSI from amending or terminating any
employee benefit plan or practice but, it being the intent of the parties that
Employee shall continue to be entitled during the Period of Employment to
perquisites as set forth in paragraph 7 above or at least equal to those
attached to Employee's position on the date of this Agreement, nothing in this
Agreement shall operate or be construed to reduce, or authorize a reduction,
without Employee's written consent, in the level of such perquisites and
benefits taken as a whole, if, and to the extent that, such perquisites,
benefits, and service credits are not payable or provided under any such plans
or practices by reason of such amendment or termination thereof, ISSI itself
shall pay or provide therefor. Under no circumstances shall Employee's current
medical plan be amended or terminated except with the express written
permission of Employee, unless substituted by a reasonably equivalent plan when
taken as a whole.
10.0 EFFECT OF DEATH
In the event of the death of Employee during the Period of Employment, the
legal beneficiary of Employee shall be entitled to the base or fixed salary
provided for in paragraph 6 above for the twelve (12) months after which death
shall have occurred, at the rate being paid at the time of
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death, and the Period of Employment shall be deemed to have ended as of the
close of business on the last day of the month in which death shall have
occurred but without prejudice to any payments otherwise due in respect of
Employee death.
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11.0 EFFECT OF DISABILITY
11.1 Compensation in the Event of Disability
In the event of the Disability (as defined in paragraph 11.3
below) of Employee during the Period of Employment, Employee
shall be entitled to an amount equal to the base or fixed
salary provided for in paragraph 6 above, at the rate being
paid at the time of the commencement of Disability, for the
period of such Disability, but not in excess of twelve (12)
months from the end of the Period of Employment as defined in
paragraph 11.3 below.
11.2 Reduction of Compensation in the Event of Disability
The amount of any payments due under paragraph 11.1 shall be
reduced by any payments to which Employee may be entitled for
the same period because of disability under any disability or
pension plan of ISSI or any division, subsidiary or affiliate
thereof, or as a result of worker's compensation or non-
occupational disability payments from any and all plans paid
for in Employee's behalf by ISSI.
11.3 Definition of Disability
The term "Disability" as used in this Agreement shall mean an
illness or accident occurring during the Period of Employment
which prevents Employee from performing the President and CFO
duties as determined by the Board of Directors under this
Agreement for a period of three (3) consecutive months. The
Period of Employment shall be deemed to have ended at the
close of business on the last day of such three (3)
consecutive month period but without prejudice to any payments
due Employee in respect of disability under paragraph 11.1 or
otherwise due to Employee or Employee's legal beneficiary.
12.0 INDEMNIFICATION
ISSI shall indemnify Employee to the full extent authorized or permitted as
stated under Exhibit 1, Article X, Indemnification, of the Bylaws of ISSI,
attached and made part.
13.0 SEVERANCE
13.1 Notice of Termination
Either Employee or ISSI may terminate this Employment
Agreement at any time by providing 30 days' written notice to
the other party (the "Severance Notice").
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13.2 Severance Payment
If the Severance Notice is served by ISSI, Employee shall
receive a single lump sum payment equal to six months of the
then current Employee's compensation at the time the Severance
Notice was served.
The acceptance of this severance payment by Employee shall
constitute the exclusive remedy of Employee with respect to
any claim Employee may have against ISSI for termination of
employment.
13.3 Securities
In the event of Change of Control as defined in paragraph 1.1
or termination of employment as defined in 13.1, then any and
all stock options, warrants, or other securities of ISSI
awarded to Employee shall be accelerated in maturity upon said
Change of Control or termination and Employee shall have the
right to exercise any and all rights said accelerated maturity
provides Employee, including, but not limited to, all
restricted stock, if any, becoming unrestricted and all stock
options and warrants becoming vested and exercisable.
Employee shall have the same other remaining terms and
conditions, rights and periods of exercise after accelerated
maturity as had existed prior to accelerated maturity.
13.4 Severance Allowance Entitlement
For six (6) months following termination by ISSI, Employee,
Employee's dependents and beneficiaries shall continue to be
entitled to comprehensive major medical plan) and perquisites
(excepting any incentive compensation of future grants of
stock options or warrants) to the same extent as if Employee
is no longer an employee of ISSI, ISSI shall pay or provide
for payment of such benefits to Employee, Employee's
dependents and beneficiaries.
13.5 Restrictive Covenant
During Employee's employment, and for a period of six (6)
months following termination (when termination is initiated by
ISSI) Employee agrees that he will not for himself or any
other person or business entity, compete with the "principal
core business" of ISSI (which is the manufacturing of road and
bridge equipment, navigational lighting equipment, and
perimeter security and the development of related security
integrated platform software, i.e., gates, pneumatic carriers
and gate operators and Intelli-Site); become employed by or
perform services in any capacity for any person or business
entity that competes with the "principal core business" of
ISSI.
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13.6 Recruiting of ISSI Employees
During the Restrictive Covenant period provided for in 13.5,
Employee agrees not to directly or indirectly recruit or
solicit any employee of ISSI or actively participate in the
solicitation of any employee of ISSI.
13.7 Request for Severance
In order to obtain the severance benefits provided for in
paragraph 13.2, Employee shall be required to submit a
"Request for Severance" indicating Employee's acceptance of
payment against all past, current and future claims. ISSI
shall have no obligation to pay any severance payment or
benefits unless and until Employee shall have submitted the
Request for Severance. In the event ISSI delays or fails to
pay severance benefits, ISSI will be responsible for paying
Employee attorneys fees and costs incurred in collecting the
severance and the severance benefits.
14.0 NON-DISCLOSURE OF CONFIDENTIAL OR PROPRIETARY INFORMATION
ISSI and Employee each represent, warrant and agree that the information
provided by ISSI, its Board of Directors or and authorized committee thereof to
Employee is proprietary in nature and will not be disseminated or disclosed to
third parties without first obtaining written permission from ISSI. Such
confidential information includes, but is not limited to, information,
knowledge, dates or property concerning any process, apparatus or product
manufactured, used, developed, investigated or considered by ISSI and also
specifically includes all confidential and/or proprietary information of any
other company revealed by ISSI, its Board of Directors or an authorized
committee thereof in confidence. All confidential information including
memoranda, notes, records, papers or other documents (and all copies thereof)
relating to ISSI's business and all property associated therewith in any way
obtained by Employee from ISSI, its Board of Directors or an authorized
committee thereof shall remain the property of ISSI and shall be delivered to
ISSI at any time upon ISSI's request. Such confidential information includes,
but is not limited to, any process, apparatus or product manufactured, used,
developed, investigated or considered by ISSI.
15.0 NO TRUST CREATED
Nothing contained in this Agreement and no action taken pursuant to the
provisions of this Agreement shall create or be construed to create a trust
fund of any kind. Any funds which may be set aside or provided for in this
Agreement shall continue for all purposes to be a part of the general funds of
ISSI and no person other than ISSI shall by virtue of the provisions of this
Agreement have any interest in such funds. To the extent that any person
acquires a right to receive payments from ISSI under this Agreement, such a
right shall be no greater than the right of any unsecured general creditor if
ISSI.
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16.0 SUCCESSOR IN INTEREST
This Agreement and the rights and obligations hereunder shall be binding upon
and inure to the benefit of the parties hereto and their respective legal
beneficiary, and shall also bind and insure to the benefit of any successor of
ISSI by merger or consolidation or any purchaser or assignee of all or
substantially all of its assets, but, except to any such successor, purchaser
or assignee of ISSI, neither this Agreement, nor any rights or benefits
hereunder may be assigned by either party hereto.
17.0 INVALID PROVISION
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, the remaining
provisions of this Agreement shall remain in full force and effect to the
fullest extent permitted by law.
18.0 MEDIATION OF DISPUTES
The parties agree that any controversy or claim arising out of or relating to
this Agreement or any dispute arising out of the interpretation of application
of this Agreement, which the parties hereto are unable to resolve, shall be
finally resolved and settled exclusively by binding mediation in Dallas, Texas
by a single mediator under the rules of normally accepted mediation within the
State of Texas. If the parties cannot agree upon a mediator, then each party
shall choose a single mediator at the expense of each party within thirty (30)
days of the date of the selection of the first mediator. The parties severally
recognize and consent to the mediation over each of their selected mediators.
Each party shall be responsible for its own expenses in presenting its case to
the mediator or mediators. The cost and expenses of the first mediator will be
split between the parties.
19.0 ATTORNEYS' FEES
ISSI agrees to pay Employee's attorneys' fees for representation relating to
changes in this Agreement; representation during negotiations pertaining said
changes, drafting various legal documents pertaining to such changes; and
drafting any Amended Employment Agreement and Severance Agreement if required
as part of said changes.
20.0 GOVERNING LAWS
This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Texas applicable to the agreements made and to be
performed entirely in Texas.
21.0 SCOPE OF AGREEMENT
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This Agreement does not supersede or modify in any respect any current or
future document relating to Employee's stock ownership or his right to own or
purchase stock (stock options) or relating to his rights in the 401(k) plan.
In all other respect this Agreement shall constitute the entire Agreement
between the parties superseding all prior written or oral agreements, and may
not be modified or amended and no waiver shall be effective unless by written
document signed by both parties hereto; provided, however, that any increase in
base salary, as provided in paragraph 6 hereof shall become an amendment to
this Agreement when approved by the Board of Directors of ISSI and recorded in
the approved minutes of such meeting.
Executed this ____ day of ________________, 19___.
INTEGRATED SECURITY SYSTEMS, INC. EMPLOYEE:
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Xxxxxx X. Xxxxxxxx Xxxxx X. Xxxxx
Chairman, President Chief Executive Officer
