EXHIBIT 99.3
EXECUTIVE EMPLOYMENT AGREEMENT
THIS
AGREEMENT, effective as of October 12, 2005 (the "Agreement"), by
and
between Paradigm Solutions International, Inc., a Maryland corporation having
its principal offices at 2600 Tower Oaks
Boulevard (the "Company"), and Thomas
J. Kristofco (the "Executive").
WHEREAS,
the Company
desires to employ and
retain the Executive
for the
term specified herein in order to advance the
business and interests of the
Company on the terms and conditions set
forth herein; and
WHEREAS,
the Executive
desires to provide his
services to the Company in
such capacities, on and subject to the
terms and conditions hereof.
NOW,
THEREFORE, the parties
hereto, intending to
be legally bound, agree
as follows:
1.
Employment and Term. Subject to all of the terms and conditions
hereof,
the Company does hereby employ and agree to employ the
Executive as its
Senior
Vice President for and during the
Employment Term, as
defined below,
and the
Executive does hereby accept such employment. The term of employment shall
commence on October 16, 2005 (the
"Effective
Date") and shall
continue until
October 15, 2008 unless earlier
terminated as herein
provided (the
"Employment
Term"), and thereafter shall be renewed for additional
terms of one (1)
year,
unless either party provides the other with
notice, as provided
for herein, at
least ninety (90) days prior to the date
the Employment
Term would
otherwise
renew, of that party's intention not to so
renew such term.
2. Duties
of Executive. The
Executive shall,
during the Employment
Term
hereunder, perform the executive and administrative duties, functions and
privileges incumbent with the position of Senior Vice
President and such other
duties as reasonably determined by the Chief Executive
Officer and the Board of
Directors of the Company from time to time.
The Executive shall report to the
Chief Executive Officer of the Company,
and if so elected,
the Executive
shall
serve as a member of the Board of Directors
without additional compensation. The
Executive agrees to serve the Company
faithfully,
conscientiously
and to the
best of his ability, and to devote
substantially all of his business time to the
business and affairs of the Company, primarily with respect to its Blair
Technology Group ("BTG") operations (and, if requested by the Board of
Directors, any subsidiary or affiliate of the Company) so as to promote
the
profit, benefit and advantage of the Company and, if applicable, any
subsidiaries or affiliates of the Company.
The Executive
agrees to accept
the
compensation to be made to him under this Agreement as full and complete
compensation for the services required to
be performed by, and the covenants of,
the Executive under this Agreement.
3.
Location and Travel.
The Executive
shall not be required
to relocate
outside the greater Altoona, Pennsylvania
metropolitan area without his consent.
The Executive acknowledges, however, that
significant domestic and international
travel may be required as part of his
duties hereunder; and the Executive agrees
to undertake such travel as may be reasonably required by the business of
the
Company from time to time.
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4.
Compensation.
Base Salary.
The Executive shall be paid Base Salary (as
defined
herein) at the annual rate of two hundred
thousand dollars ($200,000) for period
of October 16, 2005 through October 15, 2006. The Executive
shall be paid Base
Salary (as defined herein) at the annual rate of two
hundred twenty thousand
dollars ($220,000) for period of October
16, 2006 through October 15, 2007. The
Executive shall be paid Base Salary (as
defined herein) at the annual rate of
two hundred forty-two thousand dollars
($242,000) for period of October 16, 2007
through October 15, 2008. All compensation
shall be made in
accordance with the
standard payroll practices of the Company,
and whichever
compensation rate
is
applicable at a particular time is referred
to herein as the "Base Salary."
Bonus Compensation.
The Executive shall be
paid Bonus Compensation
(as defined herein) as a result of the
Company's earnings
associated with
its
BTG operations. Specifically, the Executive
shall receive a portion of a pool of
money equal to one fourth of the amount,
if any, by which BTG's
earnings before
interest, taxes, depreciation and amortization
("EBITDA") exceed the
budgeted
amounts of EBITDA for each of the three,
12 month periods ended on October 31,
2008. The EBITDA calculation for the period ended November 30, 2006 shall be
adjusted for redirected employees and sales of the Company's products and
services in the same manner as is contemplated by Section 1.7 of the Merger
Agreement of even date herewith by and
among the Company,
Executive and others.
Such Bonus Compensation pool will be divided among those of the three
former
principals of Blair Technology Group then employed by
the Company in proportion
to their respective individual Base Salary in relation to total
combined Base
Salary of all such principals who are then still
employed by the Company at the
end of the respective measurement period;
provided, however, that if Executive
is not employed by the Company at the end
of the applicable
measurement period,
he shall share in the bonus pool, on a pro rata basis based on the
portion of
the measurement period that he was so employed,
unless he was
terminated for
Cause or voluntarily resigned without Good Reason, in
either of which events he
shall not share in the bonus pool. The three measurement periods, and their
respective EBITDA targeted amounts are as
follows:
November 1, 2005 through October 31, 2006 $600,000 EBITDA
November 1, 2006 through October 31, 2007 $750,000 EBITDA
November 1, 2007 through October 31, 2008 $900,000 EBITDA
In the event that either the Executive's job duties and
responsibilities are directed away from the
Company's BTG
operations,
or the
Company is no longer able to track the
performance of the BTG
operations,
the
Executive and the Company shall work together in good faith to modify the
targeted amounts associated with the Bonus
Compensation to provide the Executive
with an opportunity to earn a comparable amount of Bonus Compensation as a
result of his contribution associated with the performance by those of the
Company's operations with which the
Executive was associated.
Automobile Allowance.
The Executive shall be paid an Automobile
Allowance as an addition to monthly Base Compensation in the amount of five
hundred dollars ($500) per month for the term of this agreement. Mileage
reimbursement will also be provided to the
Executive for business
miles driven
in accordance with Company policy for
reimbursed business expenses.
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4.1. Regular
Benefits. The Executive shall be entitled to
participate in any health insurance, accident insurance, hospitalization
insurance,
life insurance,
pension, or any other
similar plan or benefit
provided
by the Company to its executives or employees generally,
including,
but not limited to any
stock option plan, if and to the extent
that the
Executive is eligible to participate in accordance with the
provisions
of any such insurance, plan or benefit generally (such
benefits,
collectively,
the "Regular
Benefits").
The Executive will
be
provided
such Regular Benefits through those of the Blair Technology
Group
benefit
plans in existence
prior to the date of this Agreement until such
time that
transition
to the Company's benefits is undertaken. In any
event,
the Regular
Benefits will be no
less favorable to
Executive than
the
benefits previously
provided to the
Executive by Blair Technology
Group
prior to the date of
this Agreement,
and will provide credit to
Executive
for years of service to the Blair Technology Group prior to the
date of
this Agreement.
4.2. Vacation. The
Executive shall be entitled to vacation as
provided
in the Company's
policies, such vacation to be taken at times
mutually
agreeable to the
Executive and the Company. The Executive shall
further be
entitled to the number of paid holidays, and leaves for illness
or
temporary disability in accordance with the policies of the Company
for
its senior
executives. The Executive will be provided vacation through the
Blair
Technology
Group "Paid Time Off"
policy previously
in existence
prior to
the date of this Agreement until such time that transition to
the
Company's
vacation benefits plan is undertaken. The vacation benefits and
rate of
benefit accrual
received by Executive
shall be no less favorable
to
Executive than those
provided to the
Executive by Blair Technology
Group
prior to the date of this Agreement.
4.3. Term Life
Insurance.
The Company
shall have the
right
from time
to time to purchase,
modify or terminate
insurance policies on
the life
of the Executive for the benefit of the Company in such amount
as
the
Company shall determine in its sole discretion. In connection
therewith
the Executive shall,
at such time or times and at such place or
places as
the Company
may reasonably direct, submit himself to such
physical
examinations
and execute and deliver such documents as the
Company
may deem necessary
or desirable; provided, however, that the
eligibility of the Executive for, or the availability of, such insurance
shall not
be deemed to be a condition of continued employment hereunder.
The
Executive makes no
representation to the Company as to his current or
future
eligibility for insurance. The Executive may continue,
at his own
option
and expense, the life insurance (key man and buy/sell term
insurance)
in force for the Executive prior to the date of this Agreement.
If
Executive continues such insurance, he will also have all rights
associated
with such policies and will take over policy
ownership and
beneficiary designation.
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4.4. Expense
Reimbursement.
The Company shall
reimburse the
Executive
for all expenses
reasonably incurred by
him in connection with
the
performance
of his duties
hereunder and the
business of the Company
upon the
submission to the Company of appropriate receipts therefor, in
accordance
with the expense reimbursement policy of the Company.
5.
Termination and Severance Arrangements.
5.1. Termination
by the Company.
The Company may
terminate
this
Agreement at any time on or after
October 16, 2005 by
providing at
least
thirty (30) days advance written notice to the Executive. In the
event
that the Company terminates this Agreement (a) other than in
connection
with a Change of Control, in which event Section 6 shall apply,
and (b)
other than for Cause, in which event Section 5.3 shall apply,
the
Company
shall, notwithstanding
such termination, in consideration for all
of the
undertakings
and covenants of the Executive contained herein,
continue
to pay to the Executive the Base Salary and the Regular
Benefits
for the
balance of the three
(3) year employment
term as of the date
of
such
termination, but, in
any event, not less than twelve months from the
date of
such termination. In addition, in the event the Company
terminates
this
Agreement as described in the immediately preceding sentence, any
and
all
options granted to the Executive by the Company shall become
automatically and immediately vested and exercisable. In no event
however,
shall the
continuation
of such payments during such post-termination
period be
deemed to be employment hereunder for purposes of calculating
any bonus
due to the Executive or for purposes of determining the vesting
or
exercise period of any stock options granted hereunder, or
otherwise.
5.2. Termination by Executive. The Executive may terminate his
employment
for Good Reason and receive the payments and benefits specified
in Section
5.1 in the same manner as if the Company had terminated his
employment
without Cause.
For purposes of this
Agreement, "Good
Reason"
will exist
if any one or more of the following occur:
5.2.1. Failure
by the Company to honor any of its
material
obligations under this Agreement, including, without limitation,
its
obligations
under
Section
4 (Compensation),
Section
10
(Indemnification) and Section 12.5 (Successor Obligations).
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5.2.2. Failure by the
Company to honor its
own code of
ethics
related to the
preparation
of financial
statements or any
other
business
practices.
5.2.3. Demotion in
title or rank and/or
diminution in
basic
duties and
responsibilities
assigned to Executive or relocation of
Executive
by more than 25 miles from the location set forth in Section 3.
5.3. Termination
for Cause.
Notwithstanding
the Employment
Term, the
Company may terminate the Executive for Cause, as defined
below,
upon a
resolution duly adopted by the affirmative vote of not less than a
majority
of the entire membership of the Board of Directors (excluding
the
Executive,
if a director). In the event that the employment of the
Executive
is terminated
by the Company for
Cause, no severance or
other
post-termination
payment shall be due
or payable by the
Company to the
Executive
(except solely such Base Salary or other
payments as may
have
been
accrued but not yet
paid prior to such
termination). For
purposes
hereof,
"Cause" shall mean:
(a) the conviction with respect to any felony
or
misdemeanor involving
theft, fraud,
dishonesty or
misrepresentation;
(b) any
material misappropriation, embezzlement or conversion of the
Company's
or any of its subsidiary's or affiliate's property by the
Executive;
(c) willful misconduct by the Executive in respect of the
material
duties or obligations of the
