EMPLOYMENT AGREEMENT


 


This agreement is dated this 1st
day of May, 2003, between Duos Technologies, Inc., a Florida corporation, and any of its subsidiaries and affiliates
(hereinafter referred to as “Employer”) and Gianni B. Arcaini (hereinafter referred to as “Employee”).


 


WITNESSETH


		1.	Employment



 


Employer hereby employs Employee and Employee
hereby agrees to serve Employer in the initial capacity set forth in Exhibit A attached hereto (as might be modified in the future
at Employer’s sole discretion), for the term and upon the conditions hereinafter set forth. Employee agrees to perform such
reasonable executive functions commensurate with this office and such other duties as shall from time to time be assigned to him
by Employer’s Board of Directors. Employee shall perform his duties faithfully, diligently, competently, and to the best
of his ability, acting at all times in the best interest of Employer and to advance Employer’s interests. Employee shall
perform his duties from the locations set forth in Section A.1 (b) of Exhibit A. Employee shall, at all times, devote his full
working time, energy, attention, and good faith efforts to his duties and responsibilities under this Agreement, and shall not
seek, accept, or engage in any other employment or business activity during the term hereof, regardless of whether it is pursued
for compensation, gain, or profit. Employee, however, may invest his assets in other companies, so long as they do not require
Employee’s time or services in the operation of their affairs. Employee’s duties during the term hereof shall specifically
include, without limitation, those duties set forth in Section A.1 of Exhibit A attached hereto, to the extent further detailing
is deemed necessary or appropriate to describe Employee’s duties with more particularity.


 


Employer may, from time to time, extend
or curtail Employee’s precise services. Employee will be appointed as an officer of Employer and agrees to serve an initial
term as a director of Employer. Furthermore, Employer may nominate Employee for director or officer of any subsidiary of Employer,
Employee agrees to stand for election and if elected or appointed, to serve in such a capacity or capacities without additional
compensation. Employer will maintain adequate Directors and Officers liability insurance policy, and Employee shall be an insured
under such policy.


 


In addition to the terms and conditions
set forth herein, Employee shall be bound to and comply with the specific Corporate Authorities and Responsibilities set forth
in Exhibit “B” attached hereto and made a part hereof, as amended by the Board of Directors of Employer from time to
time in its sole discretion.


 


		2.	Term of Employment



 


The term of Employee’s employment
shall be as set forth in Section A.2 of Exhibit A attached hereto. Unless terminated in accordance with the provisions hereinafter
set forth, or unless either party shall give notice to the other of its intent to terminate at least sixty (60) days prior to the
expiration of the applicable term, the term shall be automatically extended for successive additional one-year periods. If such
a notice is given, Employee’s employment hereunder will terminate at the end of term, and Employee shall continue to render
his services and shall be paid his regular compensation up to the end of the term.


 



    	(1)



    	 



    

 


		3.	Compensation



 


		(a)	Base Compensation. As compensation for the services provided
by Employee pursuant to this Agreement, Employer shall pay to Employee compensation at the annual rate set forth in Section A.3
(a) of Exhibit A attached hereto from the date of commencement of the term hereof (the “Base Compensation”). The compensation
provided for in this Agreement shall be payable in equal semi-monthly installments on or before the fifteenth (15th)
and the last day of each month. All compensation paid to Employee under this Agreement shall be subject to withholding and other
applicable taxes.



 


		(b)	Reimbursement for Expenses and Automobile Allowance. In addition
to the Base Compensation payable hereunder, Employer shall pay to Employee a monthly automobile allowance as set forth in Section
A.3 (b) Exhibit A attached hereto, payable on or before the fifth (5th) day of the following month. Employee also shall
be entitled to reimbursement of all reasonable expenditures incurred by Employee in performance of Employee’s duties, including
travel and other expenses incurred by Employee while away on business, upon submission of an itemized account, receipts and other
support documentation relating to such expenditures.



 


		(c)	Incentive Compensation. Employee shall be eligible to participate
in executive incentive compensation plans, established at the sole discretion of the Board of Directors, that provide for the payment
of additional compensation contingent on achieving financial goals of Employer.



 


		4.	Participation in Employee Benefit Program



 


Employee will be entitled to participate
on the same basis as other employees in all of the employee benefit programs which may be adopted by Employer and in force from
time to time, including any hospitalization, medical, health, and accident insurance programs, policies, and benefits and life
insurance programs as may from time to time be in effect, at the sole discretion of the Board of Directors.


 


		5.	Employer’s Policy and Procedure Manual; Working Hours; Working
Facilities



 


Except as otherwise specifically set forth
herein or where applicable only to staff employees by its terms, Employee shall be bound by and subject to the policies, procedures,
and guidelines contained in Employer’s Policy and Procedures Manual, as promulgated from time to time, setting forth, among
other things, the Employer’s holidays for each year, insurance, disability, sick leave, funeral leave, expense reports and
other general matters. In the event of a conflict between the terms of the Policy and Procedure Manual and the terms of this Agreement,
the terms hereof shall control and supersede.


 


Employee shall be expected to work evenings,
weekends, and holidays, to the extent necessary or required.


 


Employee shall have a private office,
secretarial help, and such other facilities and services as are suitable to his position and appropriate to the performance of
his duties.


 



    	(2)



    	 



    

 


		6.	Non-Disclosure of Information; Competition



 


		(a)	Non-Disclosure; Non-Solicitation of Customers. Employee acknowledges
that the information to which he will have access concerning Employer’s business, customers, clients, assets, designs, specifications,
holdings, investments, plan, policies, transactions, techniques, methods, systems and dealings is a valuable, special and unique
asset and trade secret of Employer’s business. Employee covenants and agrees that upon termination of his employment for
whatever reason, whether voluntary or involuntary, he will promptly deliver to the Employer all property, Customer or client lists,
customer or client leads, information, memoranda, documents, and all other property belonging or relating to Employer or its business,
and that he will not, either during the term of his employment by Employer or at any time thereafter, do any act or thing derogatory
or harmful to Employer or its business or discuss with or disclose to any person, firm, partnership, association, corporation,
or other entity, for any reason or purpose, any matters, trade secrets, or confidential information pertaining to Employer or which
were disclosed to him or which came within his knowledge during the course of his employment with Employer, nor shall he make or
cause to be made any use of any such matters, trade secrets, or confidential information or directly or indirectly solicit, call
upon, divert, take away, or attempt to do so, any clients, employees, or customers of Employer. In the event of Employee’s
breach or threatened breach of any provision of this Paragraph, Employer shall be entitled to a preliminary restraining order and
an injunction restraining and enjoining Employee from disclosing or making use of all or any part of the Employer’s trade
secrets or confidential information, from rendering any services to any person, firm, corporation, association, or other entity
to or with which all or any part of such information has been, or is threatened to be, disclosed or made use of, and/or from directly
or indirectly soliciting, calling upon, diverting, taking away, or attempting to do so, any clients, employees, or customers of
Employer. In addition to, or in lieu of the above, the Employer may pursue all other remedies available to the Employer at law
or in equity for such break or threatened breach, including recovery of damages from the Employee.



 


		(b)	Competition. In addition, as part of the consideration hereof,
except as specifically set forth hereafter, Employee agrees during the term hereof and for the period set forth in Section A.6
of Exhibit A attached hereto after the termination of his employment, within a radius as set forth in Section a.6 of Exhibit A
attached hereto from the place of Employer’s business, or from the place of business of any division or subsidiary of Employer
engaged in Employer’s business, not to directly or indirectly, in whole or in part, own, manage, operate, control, be employed
by, participate in, be a partner, engage in, sponsor, promote, or be connected in any manner with the ownership, management, operation,
or control of any business or entity similar to or competitive with the type of business conducted by Employer or any division
or subsidiary of Employer which shall have succeeded to or is engaged in the business of Employer at the time his employment terminates.
In the event of Employee’s actual or threatened breach of this Subparagraph 6 (b). Employer shall be entitled to a preliminary
restraining order and injunction restraining Employee from violating these provisions. The provision of this Subparagraph 6 (b)
shall not apply in the event of termination of Employee’s employment hereunder due to: the material breach of Employer, including
failure to pay employee the compensation hereunder; the Employer’s insolvency or bankruptcy; the sale by Employer of substantially
all its assets or stock; the liquidation of Employer or the termination of its business; the termination of Employee by Employer
without cause; or the non-renewal of this Agreement by Employer after its expiration or the offer by Employer to renew this Agreement
on materially different terms adverse to Employee. The provision of this Subparagraph 6 (b) shall expressly apply, without limitation,
in the event that renewal is offered by Employer on at least substantially the same terms as contained herein, but such offer of
renewal is declined by Employee.



 


Nothing in this Paragraph or Agreement
shall be construed to prohibit Employee from pursuing any other remedies which may be available to Employer at law or in equity
including the recovery of damages from the Employee. The provision of this Paragraph 6 shall survive the termination of this Agreement
and Employee’s employment hereunder.






    	(3)



    	 



    

 


		7.	Advisory and Consultation Services



 


Upon termination of his employment under
this Agreement, upon Employer’s reasonable request, Employee shall advise and consult with Employer as reasonably necessary
regarding any projects with respect to which Employee played a material role. Employee shall make himself available for advice
and consultation at his place of residence and shall not be required to travel or incur any expenses in performing his duties under
this Paragraph. If Employer requests Employee to render services at a place other than his place of residence and he elects to
do so, he shall be reimbursed for any expenses he may reasonably incur in rendering such services, including a daily consulting
fee based upon the most recent rate of compensation in effect.


 


		8.	Death



 


If Employee dies during the term of his
employment, Employer shall pay the estate of Employee compensation which would otherwise be payable to Employee up to the end of
the month in which his death occurs.


 


 


		9.	Vacation



 


Employee shall be entitled to an annual
vacation as set forth in Section A.9 of Exhibit A attached hereto, at full Base Compensation, at a time mutually satisfactory to
Employer and Employee.


 


		10.	Termination by Employer for Cause



 


In the event that Employee fails to perform
its duties hereunder and such failure continues for 30 days after written notice from Employer to Employee, or otherwise materially
breaches this Agreement, or in the event that Employer becomes insolvent or bankrupt, sells substantially all of its assets or
stock or elects to terminate its business or liquidate its assets, Employer may terminate this Agreement upon thirty (30) days
written notice to Employee. In such event, Employee’s employment and activities under this Agreement shall cease immediately
upon notice, however Employee shall be paid his regular Base Compensation through the end of the thirty (30) day period.


 


Employer shall have the right to terminate
Employee immediately for misappropriation of funds, fraud, gross negligence, reckless, wanton or intentional misconduct, or similarly
serious misfeasance, upon which termination, Employer’s obligations to Employee with respect to this Agreement shall cease
and terminate. In such event, Employee shall immediately cease employment and activities under this Agreement and shall be paid
his regular Compensation up to the date of termination.


 


		11.	Termination by Employee for Cause



In the event Employer fails to
keep, observe or perform any material covenant, agreement, term or provision of this Agreement to be kept, observed or performed
by Employer and such default continues for a period of thirty (30) days after written notice by Employee to Employer, which notice
shall include, among other things, a reference to this Paragraph, then Employee, at its sole option, may terminate this Agreement
immediately upon the expiration of such thirty (30) day period.



    	(4)



    	 



    

 


		12.	Remedy for Breach or Termination by Employer Without Cause



In the event of a material breach
by Employer as set forth above or termination of Employee by Employer without cause, Employee shall be entitled to payment of the
greater of: a) regular Base Compensation remaining to be paid under this Agreement for the remaining term of the Agreement, on
the same payment schedule and terms as if the Agreement had not been terminated; or b) twelve (12) months of regular Base Compensation
on the same payment schedule and terms as if the Agreement had not been terminated. Both parties acknowledge and agree that, because
of the nature of the services to be rendered by Employee, the amount of damages in the event of a termination without cause by
Employer would be impossible to measure or determine. Both parties agree that the amount specified in this Paragraph shall be deemed
to be liquidated damages, is a fair and reasonable estimate of the compensation payable to Employee, and is not a penalty. The
provisions of this Paragraph shall not apply in the event of termination by Employer upon sixty (60) days notice to Employee prior
to the end of any term, as set forth in Paragraph 2 hereof.


		13.	Remedy for Breach or Termination by Employee Without Cause



In the event of a breach by Employee
as set forth above, or termination without cause by Employee, Employer shall have the right to exercise any and all rights and
remedies to which it may be entitled, at law or in equity. Both parties recognize that the services to be performed by Employee
are special and unique, and that Employer may suffer damages if Employee breaches the terms and conditions of this Agreement or
voluntarily leaves his employment. The provisions of this Paragraph shall not apply in the event of termination by Employee upon
sixty (60) days notice to Employer prior to the end of any term, as set forth in Paragraph 2 hereof.


		14.	Removal of Employee as Director



In the event that Employee is a
director of Employer, and a) Employer terminates this Agreement in accordance with Sections 10 or 12 above, or b) Employee terminates
this Agreement in accordance with Section 13 above, then the Employee shall cease to be a director as of the date of termination.


		15.	Agreement is Personal



This Agreement is a personal Agreement
and the rights and interests hereunder (except that of Employer) may not be sold, transferred, assigned, pledged or hypothecated.
This Agreement shall be binding on the heirs, executors, and administrators of Employee and on the successors and assigns of Employer.
During the Employee’s lifetime, the parties hereto, by mutual written agreement, may amend, modify or rescind this Agreement
without the consent of any other person. This Agreement supersedes any and all employment or service negotiations, understandings
or agreements between the parties prior to the date hereof.



    	(5)



    	 



    




		16.	Severability of Provisions



If any of the provisions of this
Agreement shall be held invalid, the remainder of this Agreement shall not be affected thereby.


		17.	Governing Law



This instrument contains the entire
agreement between the parties and shall be governed by the laws of the State of Florida. As part of the mutual consideration for
the execution of this Agreement, Employer and Employee agree that all actions or proceedings arising directly or indirectly from
this Agreement shall be litigated only in courts having suits within the State of Florida, County of Duval, and Employer and Employee
hereby consent to the venue and jurisdiction of any local, state or federal court located within the State of Florida, County of
Duval.


		18.	Modification; Waiver



No amendment, change or modification
of this Agreement shall be valid unless the same is in writing and signed by the parties hereto. Either parties’ waiver of
a breach of any provision of this Agreement by the other party hereto shall not operate or be construed as a waiver of any subsequent
breach by the waiving party.


		19.	Notice



Any notice required or permitted
to be given under this Agreement shall be sufficient if in writing and sent postage prepaid by certified or registered mail, return
receipt requested, in the case of Employer and Employee to the addresses set forth in Section A.19 of Exhibit A attached hereto.
Either party may designate a new address by written notice to the other.


		20.	Miscellaneous



The use of the singular shall include
the use of the plural; where the context so requires and vice versa. All personal pronouns used in this Agreement, whether used
in the masculine, feminine or neuter gender, shall include all other genders as the context requires. Paragraph headings are for
convenience and reference only and shall have no effect nor imply any meaning to the language hereunder.


IN WITNESS
WHEREOF, the parties have executed this Agreement this day and year first above written.


Signed, sealed, and delivered in
the presence of:


	 	 	By:/s/ Mark P. Hepp
	
         

        /s/ Connie Weeks
	 	Title: President
	Witness	 	“EMPLOYER”
	
         

        /s/ Jean Martin
	 	By:  /s/ Gianni B. Arcaini
	Witness	 	“EMPLOYEE”


 


EXHIBIT A


 


	A.1(a)	
        Initial Capacity of Employee:

         

        Specific Duties of Employee (without limitation):
	
        Chairman of the Board and Chief Executive Officer

         

        Responsible for coordinating the overall strategic direction
        of the Employer, coordinating the overall management of the Employer with the President and Chief Financial Officer, and if appointed,
        presiding over the Executive Committee of the Board of Directors.

	 	 	 
	A.1(b)	Principal Location:	Employee shall principally perform his duties in Jacksonville, Florida, and Employee shall not be required to reside in any other place in order to perform said duties.
	 	 	 
	A.2	
        Term of Employment:

        Commencement of Term:

         

        Expiration of Term:
	
         

        May 1, 2003

         

        April 30, 2006

	 	 	 
	A.3(a)	Base Compensation of Employee:	$281, 183 per year.
	 	 	 
	A.3(b)	Automobile Allowance:	$15,000 per year.
	 	 	 
	A.6	
        Non-Competition Agreement:

        Time Period after termination of

        Employment:

         

        Radius:
	
         

         

        One (1) year.

         

        750 miles.

	 	 	 
	A.9	Vacation Time:	Four (4) weeks per year.
	 	 	 
	A.10	Employer Sponsored Club Memberships:	
        University Club.

        The Lodge at Ponte Vedra.

        Deerwood Club.

	 	 	 
	A.18	Address of Employer:	
        Duos Technologies, Inc.

        6622 Southpoint Dr. South, Suite 310

        Jacksonville, FL 32216

	 	 	 
	 	Address of Employee:	
        Gianni B. Arcaini

        7889 Hunters Grove Road

        Jacksonville, FL 32256







    	(6)



    	 



    







EXHIBIT “B” to


Employment Agreement


 


 


Additional Corporate Authorities
and Responsibilities


 


 


In accordance with the Bylaws of
Duos Technologies, Inc.