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EXHIBIT 6.8
DIGITAL DESCRIPTOR SYSTEMS, INC.
COHN EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS AGREEMENT (the "Agreement"), is made and entered into as of the
7th day of July, 1994, by and between DIGITAL DESCRIPTOR SYSTEMS, INC., a
Delaware corporation (the "Company"), and GARRETT U. COHN, of Palatine, Illinois
("Cohn").
WITNESSETH:
THAT WHEREAS, the Company is engaged in the business of developing,
assembling and marketing installations which utilize digitized video and scanned
images tied to text to record and retrieve information (the "Business"); and
WHEREAS, Cohn has extensive sales and marketing experience as an
employee of the Company and its predecessor, Compu-Color, Inc., as a chief
operating officer; and
WHEREAS, it is anticipated that Compu-Color, Inc. will be merged into
the Company; and
WHEREAS, Cohn desires to be employed by the Company and the Company
desires to employ Cohn; and
WHEREAS, the Company and Cohn have agreed to restrict Cohn's ability to
compete with the Business and the Company has agreed to compensate Cohn for
Cohn's non-competition covenant;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, IT
IS HEREBY MUTUALLY AGREED as follows:
1. Recitals.
The recitals set forth above shall constitute and be deemed an integral
part of this Agreement.
2. Employment and Acceptance.
During the term (as hereinafter defined) of this Agreement, the Company
hereby agrees to employ Cohn in such position and with the duties and
responsibilities provided for in Exhibit A to this Agreement, as may be
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changed from time to time by the Board of Directors of the Company; provided,
however, that such changed duties shall be consistent in nature with the
executive duties described in Exhibit A. Cohn hereby accepts such employment and
agrees:
(a) to devote substantially all of his business time, attention and
energy, using his best efforts, to the duties and responsibilities set
forth herein, and
(b) to serve and further the interests of the Company in every lawful
way, giving honest, diligent, loyal and cooperative service to the
Company, and
(c) to comply with all rules and policies which, from time to time, may
be adopted by the Company, including, without limitation, those rules
and policies regarding disclosure of information concerning the
Company, its business, affairs, plans or customers.
3. Compensation.
As compensation for the services to be performed by Cohn under this
Agreement and for the non-competition covenant hereinafter contained, the
Company agrees to pay to Cohn, and Cohn agrees to accept, a salary and bonus as
set forth in Exhibit "B" to this Agreement.
4. Employee Benefits.
Cohn shall be entitled to the following, at Company expense:
(a) Use of a new luxury automobile, the equivalent of a Cadillac,
replaced at two (2) year intervals, including insurance, maintenance,
repairs and gas and oil.
(b) Major medical and all other health care policies for Cohn and his
dependents at least the equivalent to the best available Blue
Cross/Blue Shield policy;
5. No Conflict.
Cohn represents and warrants to the Company that he is not now under
any obligation to any person or entity, other than the Company, nor does he have
any other interest which is inconsistent with or in conflict with this
Agreement, or which would prevent, limit or impair in any way the performance by
him of any of the covenants herein, or any duties or responsibilities of his
employment hereunder, and he agrees to and shall indemnify and hold harmless the
Company from and against any claim, loss, damage, liability, cost or expense,
including, without limitation, attorneys' fees, which may be asserted against
the Company or any of its employees arising out of or in connection with the
alleged breach or violation of this representation and warranty.
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6. Term.
The term of this Agreement shall commence on the date on which
Compu-Color, Inc. is merged into the Company and shall continue for a five year
period thereafter, unless earlier terminated as provided hereunder (except for
the provisions of Section 13& and Exhibit "C" which are effective as of the
execution date of this Agreement). Except for the obligations of Cohn under
Sections 10 and 11, this Agreement shall terminate on such earlier date on which
any of the following events shall occur:
(a) The termination of Cohn's employment by the Company;
(b) The termination of Cohn's employment by Cohn; or
(c) The death of Cohn.
7. Cause.
The term "Cause" as used herein with respect to the termination of this
Agreement shall mean:
(a) Cohn's theft or embezzlement of money or property of the Company;
(b) Conviction of a serious crime, the commission of which shall have
resulted in substantial injury to the property or operations of the
Company;
(c) An intentional or wilful act or omission resulting in substantial
injury to the property or operations of the Company;
(d) The "Permanent Disability" of Cohn which shall mean the inability
of Cohn to perform his duties hereunder for a period of six consecutive
months or six months in any twelve consecutive months as a result of
physical or mental incapacity, as certified by a physician.
8. Compensation Upon Termination.
I.8.1 Termination For Cause or By Cohn.
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In the event that this Agreement is terminated by the Company for
Cause, the Company shall have no further obligations to Cohn under this
Agreement. In the event this Agreement is terminated by Cohn prior to
its expiration, Cohn shall be entitled to compensation through the date
of termination.
I.8.2 Termination Upon Permanent Disability.
If the Company terminates this Agreement as a result of the
permanent disability of Cohn, Cohn shall be entitled to compensation
through the date he becomes permanently disabled.
I.8.3 Termination Without Cause.
In the event that this Agreement is terminated by the Company
without Cause, Cohn shall be entitled to the following:
(a) The present value of his salary provided herein for the
balance of the term of this Agreement (without regard to any early
termination) calculated at the then prime rate of interest;
(b) The employee benefits provided under Section 4 furnished or
made available to Cohn for the balance of the term of this Agreement
(without regard to any early termination).
I.8.4 Termination on Death.
In the event that this Agreement is terminated by the death of
Cohn, Cohn shall be entitled to compensation through the date of his
death. Thereafter, the Company shall have no other obligations to Cohn
or his estate except as may be otherwise from time to time provided for
in writing.
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9. Change of Control.
I.9.1 Termination of Agreement.
If a "Change of Control", as defined hereafter, occurs or Cohn
receives written notice from the Chairman of the Board of Directors of
the Company that a Change of Control will occur, Cohn 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 of Control
will occur; but in the case of notice of a Change of Control that will
occur, any election by Cohn to terminate this Agreement shall be
effective only if such Change of Control actually occurs. If Cohn
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.
I.9.2 Change of Control.
For purposes of this 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 or 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
purposes of this Agreement. The Company shall give prompt written
notice to Cohn of any Change of Control during the term of this
Agreement.
10. Confidentiality.
I.10.1 Trade Secrets.
"Trade Secrets" shall include, but not be limited to, the
information of the Company encompassed in all drawings, designs, plans,
computer programs and computer program codes, financial information,
costs, pricing, computer programs, formulas and equations; the names,
buying and selling habits or practices of any of its customers, vendors
or suppliers; the prices it obtains or has obtained, or which it sells
or has sold, its products or services (except for published pricing
lists); assembling, labor, training and sales costs; lists or other
written records regarding the Company's business; compensation to Cohn
and other terms of this
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Agreement; and all concepts or ideas in or reasonably related to the
Business that have not previously been or are not hereafter publicly
released by duly authorized representatives of the Company or have not
otherwise become public knowledge. Any information of the Company which
is not readily available to the public and which is treated as
confidential by the Company shall be considered a trade secret unless
the Company advises Cohn otherwise, except as required by law.
I.10.2 Nondisclosure.
Cohn hereby covenants and agrees not to disclose to others, or
take or use for Cohn's own purposes or purposes of others, during or
after the term of this Agreement, any Trade Secrets of the Company,
whether or not work product, unless they become publicly known through
legitimate origins. Cohn recognizes and agrees that this obligation
applies not only to technical information, but also to any business
information that the Company treats as confidential.
I.10.3 Ownership By Company.
Cohn agrees that all documents, reports, drawings, designs,
plans, tools, equipment, proposals, computer programs and computer
program codes, marketing and sales plans that come into Cohn's
possession by reason of this Agreement are the property of the Company
and shall not be used in any way adverse to the Company's interests.
Cohn shall not deliver, reproduce or in any way allow documents, things
or reproductions to be delivered or used by any parties without
specific written direction or consent of the Board of Directors of the
Company. Upon termination of this Agreement, Cohn shall return all of
the Company's property to the Company.
I.10.4 Remedies.
Cohn acknowledges that the Trade Secrets are of a special,
unique, unusual, extraordinary and intellectual character, which gives
them a particular value, a loss of which cannot be reasonably or
adequately compensated in damages in an action at law. Cohn expressly
agrees that, in addition to any other rights or remedies that the
Company may possess, the Company shall be entitled to injunctive and
other equitable relief to prevent a breach of this Agreement by Cohn.
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11. Non-Competition.
I.11.1 Non-Competition Covenant.
Cohn hereby acknowledges and agrees that the market in which the
Business operates includes the entire geographical regions known as
North, South and Central America and Northern Europe and that the
Company has given valuable consideration, the receipt and adequacy of
which is hereby acknowledged, to conduct the Business free of
competition, direct or indirect, from Cohn. Cohn hereby agrees that he
shall not, directly or indirectly, engage in or become directly or
indirectly interested in any proprietorship, partnership, firm, trust,
corporation or other entity other than the Company (whether as owner,
partner, trustee, beneficiary, stockholder, officer, director,
employee, independent contractor, agent, servant, consultant or
otherwise, other than as an owner, partner or stockholder of less than
a five percent (5%) equity interest in an entity publicly traded on a
recognized stock exchange or over the counter market) that distributes,
sells, or markets products or services identical or similar to any
products or services offered in connection with the Business from the
date of termination of this Agreement and for a three year period
thereafter anywhere where the Company has an existing client
relationship or is in active pursuit of a new client account at the
time of termination of this agreement.
I.11.2 Remedies.
Cohn expressly acknowledges and agrees that the Business is
highly competitive and that a violation of any of the provisions of
this Section 12' would cause immediate and irreparable harm, loss and
damage to the Company not adequately compensable by a monetary award.
Without limiting any of the other remedies available to the Company at
law or in equity, or the Company's right or ability to collect money
damages, Cohn agrees that any actual or threatened violation of any of
the provisions of this Section 11 may be immediately restrained or
enjoined by any court of competent jurisdiction, and that a temporary
restraining order or emergency, preliminary or final injunction may be
issued in any court of competent jurisdiction. Except as otherwise
provided in this Agreement, the provisions of this Section 11 shall
survive the termination of this Agreement.
I.11.3 Enforcement.
It is the desire of the parties that the provisions of this
Section be enforced to the fullest extent permissible under the laws
and public policies in each jurisdiction in which enforcement might be
sought. Accordingly, without in any way limiting the general
application of Section 16 of this Agreement, if any particular portion
of this Section shall ever be adjudicated as invalid or unenforceable,
or if the application thereof to any party or circumstance shall be
adjudicated to be prohibited by or invalidated by such laws or public
polices, such section or sections shall be deemed amended to delete
therefrom such portions so adjudicated, such deletions to apply only
with respect to the operation of such section or sections in the
particular jurisdictions so adjudicating on the parties and under the
circumstances as to which so adjudicated.
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I.11.4 Company Default.
If the Company fails to make any payment hereunder within ninety
(90) days of when due, or files a voluntary petition under any
bankruptcy or insolvency laws or has an involuntary petition filed
against it that is not dismissed or appealed within ninety (90) days of
filing, or assigns its assets for the benefit of creditors, then Cohn
may terminate this Agreement, without terminating the Company's
liability to continue to make all payments due hereunder, and the
provisions of this Section 11 shall terminate and the obligations of
Cohn under this Section 11 shall be of no further force and effect.
12. Travel, Entertainment and Business Expenses.
The Company and Cohn hereby agree that Cohn's fees for membership in
industry-related organizations and the expenses of his participation in
industry-related events and for all travel, entertainment and other expenses
which are incurred by him in furtherance of the activities of the Company shall
be paid by the Company. Cohn shall be entitled to air travel in first class only
on flights longer than two and one-half (2 1/2) hours.
13. Cohn's Purchase of Restricted Common Stock.
Concurrently with the execution hereof and the execution of the
Restricted Stock Agreement attached hereto as Exhibit "C", Cohn shall be
entitled to purchase one hundred nineteen thousand nine hundred ninety-nine
(119,999) shares of the common stock of the Company for One Hundred Twenty
Dollars ($120).
14. Notices.
Any notices or other communication required or permitted to be given
hereunder shall be effective only if in writing and shall be deemed sufficiently
given only if delivered in person or sent by telegram, cable or by certified or
registered mail, postage prepaid, return receipt requested, addressed as
follows:
If to the Company:
Digital Descriptor Systems, Inc.
2010 Cabot Blvd. W
Suite F
Langhorne, PA 19047
Attention: Corporate Secretary
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With a copy to:
Phelan, Tucker, Boyle, Mullen, Bright & Walker
321 Market - P.O. Box 2150
Iowa City, Iowa 52244
Attention: Stephen F. Bright, Esq.
If to Cohn:
Garrett U. Cohn
1931 N. Hicks Road, Apt. 110
Palatine, IL 60067
With a copy to:
Schwartz & Freeman
Suite 1900
401 North Michigan Avenue
Chicago, Illinois 60611
Attention: Steven B. Randall, Esq.
or to such other person or address as either party may designate for such party
by written notice to the other given from time to time in the manner herein
provided. Any such notice or communication shall be deemed to have been given as
of the date so delivered, telegraphed, cabled, telefaxed or mailed.
15. Binding Effect and Benefit.
The provisions hereof shall be binding upon and shall inure to the
benefit of Cohn, his heirs, executors and administrators, and the Company, its
successors and assigns.
16. Waivers.
No delay on the part of any party in the exercise of any right or
remedy shall operate as a waiver there- of, and no single or partial exercise by
any party of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
17. Severability.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective under applicable law. If any
provision of this Agreement or the application thereof to any party or
circumstance shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition without
invalidating the remainder of such provision or any other provision of this
Agreement or the application of such provision to other parties or
circumstances.
18. Previous Agreement and Understandings.
All understandings and agreements heretofore made between the parties
are merged into this Agreement, which alone fully and completely expresses their
agreement and the same is entered into with no party relying upon any statement
or representation made by any other party not embodied in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
DIGITAL DESCRIPTOR SYSTEMS, INC.
a Delaware corporation
By:_____________________________
Its:____________________________
GARRETT U. COHN
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EXHIBIT "A"
Title: President and Chief Operating Officer
Duties: Cohn's executive duties shall be determined by the Board of Directors of
the Company. These duties shall include, but shall not be limited to, the
day-to-day operations of the Company, the hiring and firing of personnel, the
preparation and submission of budgets to the Board of Directors and all such
other and related executive duties as are generally performed by chief operating
officers of like-size companies.
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EXHIBIT "B"
COMPENSATION
The initial compensation to be paid hereunder, in consideration under
this Employment and Non-Competition Agreement shall be One Hundred Fifty
Thousand Dollars ($150,000) per year (the "Base Salary") payable in
substantially equal semi-monthly installments. The Base Salary shall be
determined from time to time by the Compensation Committee of the Board of
Directors (the "Committee") on or about August 1 of each year, which is
approximately Cohn's anniversary date as an employee of the Company (the
"Employment Anniversary Date"). On each Employment Anniversary Date hereof after
1994, the Committee shall review Cohn's level of compensation and make such
adjustments as it deems appropriate; provided, however, that no such adjustment
shall reduce Cohn's Base Salary without his prior consent. Additionally, the
Committee may, on the Employment Anniversary Date, after a full review of the
Company's operations for the prior fiscal year end and the six (6) months of
operation thereafter, grant a bonus to Cohn based upon the performance of Cohn
and the Company during the prior period.
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EXHIBIT "C"
RESTRICTED STOCK AGREEMENT
This Agreement (the "Agreement") is made as of the 7th day of July,
1994, between DIGITAL DESCRIPTOR SYSTEMS, INC., a Delaware corporation
("Company"), and GARRETT U. COHN of Palatine, Illinois ("Grantee").
W I T N E S E T H:
THAT WHEREAS, the Company and Grantee have entered into an agreement
captioned "COHN EMPLOYMENT AND NONCOMPETITION AGREEMENT" (the "Employment
Contract") concurrently herewith; and
WHEREAS, under the terms of the Employment Contract, the Company has
agreed to issue Grantee restricted shares of its common stock as compensation
for the services to be provided thereunder.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, IT
IS HEREBY MUTUALLY AGREED as follows:
1. Grant. A restricted stock award of one hundred nineteen thousand nine
hundred ninety nine (119,999) shares ("Restricted Shares") of the Company's
common stock, $.001 par value per share ("Common Stock"), is hereby granted by
the Company to the Grantee subject to the following terms and conditions.
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2. Transfer Restrictions. None of the Restricted Shares shall be sold,
assigned, pledged or otherwise transferred, voluntarily or involuntarily, by the
Grantee.
3. Release of Restrictions. The restrictions set forth in Section 2 above
with respect to the Restricted Shares, to the extent such Shares have not been
forfeited to the Company as provided in Section 4 below shall lapse on the first
to happen of:
(i) the eighth (8th) anniversary date of this Agreement,
(ii) the termination of the Grantee's employment with the Company by
reason of his permanent disability,
(iii) the date of the Grantee's death, or
(iv) an action by the Company's Board of Directors, in its sole
discretion, terminating such restrictions with respect to all or
some portion of the Restricted Shares.
4. Forfeiture. The Restricted Shares shall be forfeited to the Company
if, prior to the date the restrictions lapse as provided in Section 3 above,
either:
(i) prior to the fifth (5th) anniversary date of this Agreement, the
Grantee voluntarily terminates his employment by the Company or
the Company terminates the Grantee's employment for cause, as
provided in Section 8.1( of the Employment Contract; or
(ii) the Grantee violates his obligations under Sections 10 and 11 of
the Employment Contract.
5. Tender Offer/Merger; Adjustment of Shares. Notwithstanding anything
contained herein to the contrary:
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(a) Restricted Shares
(i) may be tendered in response to a tender offer for or a
request or invitation to tenders of greater than 50% of the
outstanding Common Stock of the Company or
(ii) may be surrendered in a merger, consolidation or share
exchange involving the Company; provided, in each case, that the
securities or other consideration received in exchange therefor
shall thereafter be subject to the restrictions and conditions
set forth herein.
(b) In the event of any change in the outstanding Common Stock
resulting from a subdivision or consolidation of shares, whether
through reorganization, recapitalization, share split, reverse
share split, share distribution or combination of shares or the
payment of a share dividend, the Restricted Shares shall be
treated in the same manner in any such transaction as other
Common Stock. Any Common Stock or other securities received by
the Grantee with respect to the Restricted Shares in any such
transaction shall be subject to the restrictions and conditions
set forth herein.
6. Rights as Stockholder. Effective as of the date of this Agreement, the
Grantee shall be entitled to all of the rights of a stockholder with respect to
the Restricted Shares; including the right to have stock certificates evidencing
the Restricted Shares issued in his name, the right to vote such Shares, and the
right to receive dividends and other distributions payable with respect to such
Shares.
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7. Restrictive Legend. Certificates for the Restricted Shares issued in
Grantee's name shall bear the following restrictive legend:
"The shares represented by this Certificate have not been
registered under the Securities Act of 1993 (the "Act") or any state
securities law. This Certificate may not be transferred or otherwise
disposed of unless an effective registration statement under the Act
and all applicable state securities laws is then in effect or, in the
opinion of counsel for the Corporation, such registration is not
necessary.
The transfer or other disposition of the Shares represented by
this Certificate is also restricted under the terms of a Restricted
Stock Agreement, dated July 7, 1994, a copy of which is available in
the office of the secretary of the Corporation."
8. Government Regulations. Grantee acknowledges that his ability to
transfer all or any portion of the Restricted Shares after all restrictions
imposed by this Agreement have lapsed will be subject to all applicable laws,
rules and regulations and to such approvals by any governmental agencies or
national securities exchanges as may be required. All costs relating to
compliance with such provisions and all costs incurred in obtaining any
necessary approvals shall be Grantee's sole responsibility.
9. Withholding Taxes. The Company shall have the right to require the
Grantee to remit to the Company, or to withhold from other amounts payable to
the Grantee, as compensation or otherwise, an amount sufficient to satisfy all
federal, state and local withholding tax requirements.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first written above.
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COMPANY: GRANTEE:
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DIGITAL DESCRIPTOR SYSTEMS, INC.
By: GARRETT U. COHN
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