EXECUTIVE
EMPLOYMENT AGREEMENT


 


THIS
EMPLOYMENT AGREEMENT (the “Agreement”), made this 23 day of September, 2019 (the “Effective Date”), is
entered into by and between DSS Asia Limited and Document Security Systems, Inc. (collectively the “Company”) and Chan
Heng Fai (the “Executive”).


 


1.
Term of Employment. The Company agrees to employ Executive, and Executive agrees to work for the Company, upon the terms
set forth in this Agreement, for the period commencing on July 15, 2019 (the “Commencement Date”) and ending on July
15, 2020 (the “Term”). This Agreement shall terminate in accordance with the provisions of Section 4, below.


 


2.
Title; Capacity. The Company will employ Executive, and Executive agrees to work for the Company, as its Chief Executive
Officer of DSS Cyber Security Pte. Ltd. to perform the duties and responsibilities inherent in such position and such
other duties and responsibilities consistent with such position (including travel, as required) as DSS’s Chief Executive
Officer and Company’s Board of Directors (the “Board”) shall from time to time assign to him. Executive shall
report directly to the Board and shall be subject to the supervision of and shall have such authority as is delegated to him by,
the Board, which authority shall be sufficient to perform his duties hereunder. Executive shall be a full time employee and shall
devote his best efforts in the performance of the foregoing, provided (i) that he may accept board memberships or participate
in charitable and similar organizations which are not in conflict with his primary obligations to the Company, further provided
that such activities shall be approved by the Board, which approval shall not be unreasonably withheld; and (ii) that he may perform
related services as described in Section 6.6 below.


 


3.
Compensation, Benefits and Equity.


 


3.1
Salary. The Company shall pay Executive an annual base salary of Two-Hundred Fifty Thousand and no/100 dollars ($250,000.00)
less applicable payroll withholdings, which shall be payable in accordance with the Company’s customary payroll practices
(the “Base Salary”).


 


3.2
Performance Bonus. The Executive is eligible for a performance bonus with an aggregate potential annual bonus of up to
Two-Hundred Fifty Thousand and no/100 dollars ($250,000.00) (the “Bonus”). The Bonus will be calculated based upon
the sum of 3% of Gross Revenue Growth and 5% of Net Revenue Change, capped at 100% of annualized Base Salary.


 






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The
calculation, administration and payment of the bonus will be determined on a semi-annual basis and shall be payable semi-annually.
The bonus payment shall be paid within a forty-five (45) days after the year-end, (e.g. December 31, 2019) and the Effective
anniversary date of the Agreement (e.g. July 15, 2020). It is intended that the Bonus calculation shall not include any
M&A changes or any IP Monetization revenue or expense impact. It is intended to be a bonus program related to growing the
core businesses and improving the net operating profits of the 3 core business units.


 


3.3
Definitions.


 


(a)
Gross Revenue Growth. “Gross Revenue Growth” shall mean the increase or decrease in the actual sales revenue
of Premier Packaging Corporation, Plastic Printing Professionals, and DSS Digital as if the 3 entities were standalone entities,
year over year, (in accordance with generally accepted accounting principles, or GAAP) for the two 6-month ending periods of 12/31/2019
and 6/30/2020. The revenue growth calculation shall not include any growth increases or decreases resulting from any new line
of business, acquisition or merger of a new business, or the IP Monetization line of business.


 


For
the sake of clarity in the bonus calculation and for example only,


 


If
the gross revenues of the 3 lines of business totaled, as of:


 


Period
1: July 1, 2018 through December 31, 2018 = $30,400,000


 


Period
2: January 1, 2019 through June 30, 2019 = $20,000,000


 


Period
3: July 1, 2019 through December 31, 2019 = $32,000,000


 


Period
4: January 1, 2020 through June 30, 2020 = $24,000,000


 


Calculation:



 


·
(Period 3 minus Period 1) x .03, or ($32,000,000 - $30,400,000) x.03 = $48,000.


 


·
(Period 4 minus Period 2) x .03, or ($24,000,000 - $20,000,000) x.03 = $120,000.


 


Therefore,
total bonus associated with Gross Revenue Growth = $168,000.


 


(b)
Net Income Change. “Net Revenue Change” shall mean 5% of the change in Net Income before income taxes (plus
intangible asset amortization) of Premier Packaging Corporation, Plastic Printing Professionals, and DSS Digital as if the 3 entities
were standalone entities, year over year, (in accordance with generally accepted accounting principles, or GAAP) for the two 6-month
ending periods of 12/31/2019 and 6/30/2020. The net income change calculation shall not include any net income change resulting
from any new line of business, acquisition or merger of a new business, or the IP Monetization line of business.


 






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For
the sake of clarity in the bonus calculation and for example only,


 


If
the net revenues of the 3 lines of business totaled, as of:


 


Period
1: July 1, 2018 through December 31, 2018 = $1,000,000


 


Period
2: January 1, 2019 through June 30, 2019 = $1,600,000


 


Period
3: July 1, 2019 through December 31, 2019 = $1,200,000


 


Period
4: January 1, 2020 through June 30, 2020 = $2,000,000


 


Calculation:



 


● (Period
3 minus Period 1) x .05, or ($1,200,000 - $1,000,000) x.05 = $10,000.


 


● (Period
4 minus Period 2) x .05, or ($2,000,000 - $1,600,000) x.05 = $20,000.


 


Therefore,
total bonus associated with Gross Revenue Growth = $30,000.


 


By
adding the two components of the bonus calculation will comprise the total bonus calculation.


 


In
this example, the total bonus calculation is $198,000 [$168,000+$30,000] with maximum payable to be capped at 100% annual salary
of $250,000; Therefore $198,000.


 


3.5
Base Salary and Performance Bonus Payment Option. Subject to the Company having available shares under its Employee, Director
and Consultant Equity Incentive Plan or equivalent plan (the “Plan”), the Executive shall have the option to be paid
his annual Base Salary and/or his Semi-annual Performance Bonus, if any, less any applicable payroll withholdings, in either cash
or in equivalent unrestricted registered DSS common stock via the Plan.


 


If
the Executive elects to have either the Base Salary and/or the Performance Bonus paid in DSS common stock via the Plan, the Executive
must make the request in writing to Company’s CEO or CFO. The conversion rate from cash to DSS stock shall be the NYSE 10-day
average closing price for the DSS stock immediately before the earned period. Further, the Executive can elect to have the payment
of the DSS common stock paid to him monthly or quarterly. Such payment can be made by physical DSS stock certificate or by electronic
deposit to his designated stock brokerage account.


 


3.6
Benefits. Executive shall be entitled to participate in all benefit programs and allowances that the Company establishes
and makes available to its executive employees, including eligibility for all company benefit plans, including but not limited
to, health care coverage and 40(k) plan, profit sharing, car allowance, cell phone and data usage payment or reimbursement, home
and office internet and computer support equipment. The Executive understands that, except when prohibited by applicable law,
the Company’s benefit plans and fringe benefits may be amended by the Company from time to time in its sole discretion.


 


The
Executive shall be entitled to four (4) weeks of paid vacation time per year during the terms of this Agreement commencing immediately
with the execution of this Agreement. All other terms of the Executive’s vacation shall be subject to the Company’s
vacation policy, as it exists or is subsequently modified.


 


3.7
Expenses. The Company shall reimburse Executive for reasonable travel, entertainment, mileage, and other business expenses
incurred by Executive in the performance of his duties hereunder in accordance with the Company’s general policies, as amended
from time to time. If a business expense reimbursement is not exempt from Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), any reimbursement in one calendar year shall not affect the amount that may be reimbursed in
any other calendar year, and a reimbursement (or right thereto) may not be exchanged or liquidated for another benefit or payment.
Any business expense reimbursements subject to Section 409A of the Code shall be made no later than the end of the calendar year
following the calendar year in which such business expense is incurred by Executive.


 


3.8
Equity Grants. The Company shall issue a one-time stock grant of 74,770 shares of the Company’s common stock to Executive
with a non-trading restriction of 2 years (the “Stock Grant”), from the Company’s existing Employee, Director
and Consultant Equity Incentive Plan (the “Plan”), to be issued upon the earlier of September 19, 2019 or the execution
of this Agreement.


 






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4.
Termination of Agreement. Upon the expiration of the original terms of this Agreement or any renewal term of this Employment
Agreement, the Executive’s employment shall be automatically renewed for a one (1) year period unless, at least sixty (60)
days prior to the scheduled termination date, either party gives the other party written notice of its intent not to continue
the employment relationship. During any renewal term of employment, the terms, conditions, and provisions set forth in this Agreement
shall remain in effect unless modified in accordance with section 9, except the dates of bonuses shall be modified to reflect
the extension period.


 


5.
Termination of Executive’s Employment. 


 


 


	 	a)	By
    the Company. The Company may terminate the Executive’s employment at any time, with or without “Cause,”
    upon written notice by the Company to the Executive, and the Executive’s employment will terminate on the day specified
    in such notice. For the purposes of this Agreement, “Cause” means: (i) the Executive’s conviction of (or
    Executive pleads nolo contendere to) a felony or misdemeanor involving dishonesty, fraud, breach of trust, moral turpitude,
    or a crime leading to incarceration of more than sixty (60) days; (ii) the Executive’s material breach of this Agreement;
    (iii) Executive’s continued failure in any material respects with the performance of his/her employment duties for more
    than 10 business days (other than due to illness, disability, and vacation) after having received written notice specifying
    the nature of the failure; (iv) commission by the Executive of any act of fraud, dishonesty, or embezzlement against the Company,
    any of its subsidiaries, or any of its customers; (v) the Executive reporting to work while impaired under the influence of
    alcohol or drugs, or the Executive’s use or distribution of illegal narcotics; (vi) the Executive’s commission
    of any illegal act of violence against an employee, customer, or vendor of the Company; (vii) willful disregard of any reasonable
    instruction of the Board relating to a material matter of the Company; and (viii) Executive’s violation of any material
    law, statue, or regulation relating to the Company’s business.
	 	 	 
	 	b)	By
    the Executive. The Executive may terminate his/her employment with the Company at any time with or without “Good
    Reason” upon written notice by the Executive to the Company, and the Executive’s employment will terminate on
    the date specified in the notice. “Good Reason” means: (i) a material reduction in the Executive’s compensation
    or benefits; (ii) a material breach by the Company of this Agreement; or (iii) a material reduction or material change in
    the Executive’s original duties, responsibilities or authority.
	 	 	 
	 	c)	Death.
    Executive’s employment with the Company shall be terminated immediately upon death of the Executive.
	 	 	 
	 	d)	Disability
    of Executive. This Agreement may be terminated immediately upon the disability of the Executive. For purposes of this
    Agreement, “Disability” shall mean if Executive has a mental or physical condition that prevents Executive from
    carrying out the essential duties of his/her employment position for a period greater than 3 months, notwithstanding Company’s
     reasonable accommodations (to the extent required by law.)
	 	 	 
	 	e)	Mutual
    Agreement of Parties.  Upon the mutual agreement of the parties, this Agreement will terminate.
	 	 	 







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	 	f)	Effects
    of Termination. In the event that Executive’s employment is terminated by the Company without “Cause”
    or by similar premise, or by the Executive for “Good Reason”, then the Executive shall be entitled to payment
    for: (i) unpaid base salary, prorated to the date of termination or resignation; (ii) accrued and unused vacation pay, (iii)
    any benefits accruing to Executive under the terms and conditions of any then-existing employee benefit plan; (iv) four (4)
    months of prorated annual base salary; (v) four (4) months of paid health insurance benefits, (vi) reimbursement of expenses
    incurred prior to termination in accordance with Section 3.6.; and (vii) benefits as required by the Consolidated Omnibus
    Budget Reconciliation Act of 1985 or any other applicable federal or state statute.
	 	 	 
	 	g)	Termination
    “For Cause” or due to the Executive’s resignation “Without Good Reason”. In the event of
    the Executive’s employment is terminated: (i) by the Company for “Cause”, or (ii) if the Executive resigns
    without “Good Reason”, then the Executive shall be entitled to payment for: (i) unpaid base salary, prorated to
    the date of termination or resignation; (ii) accrued and unused vacation pay, (iii) any benefits accruing to Executive under
    the terms and conditions of any then-existing employee benefit plan; (iv) reimbursement of expenses incurred prior to termination
    in accordance with Section 3.6.; and (vii) benefits as required by the Consolidated Omnibus Budget Reconciliation Act of 1985
    or any other applicable federal or state statute.
	 	 	 
	 	h)	Termination
    “Without Cause” or due to the Executive’s Death, Disability, or resignation for Good Reason”. In
    the event that Company terminates Executive’s employment prior to expiration of the Term without “Cause”,
    or due to the Executive’s Death, Disability, or resignation for “Good Reason”, then Executive shall be entitled
    to any earned and unvested portion of his equity grant pursuant to Section 3.5 and 3.6, and to any remaining compensation
    he would have been entitled to receive had he remained until expiration of the Term of this Agreement.


 






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6.
Nondisclosure and Proprietary Information.


 


6.1
Proprietary Information.


 


	 	 	 
	 	(a)	Executive
    agrees that all information and know-how, whether or not in writing, of a private, secret or confidential nature concerning
    the Company’s business or financial affairs (collectively, “Proprietary Information”) is and shall be the
    exclusive property of the Company. By way of illustration, but not limitation, Proprietary Information may include inventions,
    products, processes, methods, techniques, formulas, designs, drawings, slogans, tests, logos, ideas, practices, projects,
    developments, plans, research data, financial data, personnel data, computer programs, and customer and supplier data, or
    other materials or information relating to the Company’s business and activities and the manner in which the Company
    does business. Executive will not disclose any Proprietary Information to others outside the Company except in the performance
    of his duties or use the same for any unauthorized purposes without written approval by an officer of the Company, either
    during or after his employment, unless and until such Proprietary Information has become public knowledge or generally known
    within the industry without fault by Executive, or unless otherwise required by law.
	 	 	 
	 	(b)	Executive
    agrees that all files, letters, memoranda, reports, records, data, sketches, drawings, laboratory notebooks, program listings,
    or other written, photographic, electronic or other material containing Proprietary Information, whether created by Executive
    or others, which shall come into his custody or possession, shall be and are the exclusive property of the Company to be used
    by Executive only in the performance of his duties for the Company.
	 	(c)	Executive
    agrees that his obligation not to disclose or use information, know-how and records of the types set forth in paragraphs (a)
    and (b) above, also extends to such types of information, know-how, records and tangible property of subsidiaries and joint
    ventures of the Company, customers of the Company or suppliers to the Company or other third parties who may have disclosed
    or entrusted the same to the Company or to Executive in the course of the Company’s business.
	 	 	 
	 	(d)	Nothing in this Agreement prohibits Executive from reporting possible violations of federal law or regulation to any governmental
agency or enforcement entity, or from making other disclosures that are protected under applicable whistleblower provisions of
federal law and regulation.





 






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6.2
Noncompetition and Non-solicitation


 


	 	a)	During
    Executive’s employment and for a period of twelve months (12) months after the termination of Executive’s employment
    with the Company, Executive will not directly or indirectly, absent the Company’s prior written approval, render services
    of a business, professional or commercial nature to any other person or entity that competes with the Company in the same
    geographical area where the Company does business at the time this covenant is in effect (or where the Company has made, as
    of the effective date of termination, active plans to do business), whether such services are for compensation or otherwise,
    whether alone or in conjunction with others, as an employee, as a partner, or as a shareholder (other than as the holder of
    not more than 1% of the combined voting power of the outstanding stock of a public company), officer or director of any corporation
    or other business entity, or as a trustee, fiduciary or in any other similar representative capacity. The restrictions set
    forth in this Section 6.2 shall be applicable only as to the following lines of business: printing, packaging, plastic printing,
    anti-counterfeiting and blockchain technology, and brand protection.
	 	 	 
	 	(b)	During
    Executive’s employment and for a period of twelve (12) months after the termination of Executive’s employment
    with the Company, Executive will not, directly or indirectly, recruit, solicit or induce, or attempt to recruit, solicit or
    induce any employee or employees of the Company to terminate their employment with, or otherwise cease their relationship
    with, the Company.
	 	 	 
	 	(c)	During
    Executive’s employment and for a period of twelve (12) months after the termination of Executive’s employment
    with the Company, Executive will not, directly or indirectly, solicit, divert or take away, or attempt to solicit, divert
    or take away, the business or patronage of any of the Serviced Clients of the Company or the Marketed Prospective Clients
    of the Company, as defined in Section 6.2(d).
	 	 	 
	 	(d)	As
    used above, a “Serviced Client” shall be considered any client, customers or accounts of the Company with whom
    Executive had business dealings or contacts on behalf of the Company in the course of Employee’s employment with the
    Company or about which Executive had access to Proprietary Information. As used above, the “Marketed Prospective Clients”
    shall be considered any prospective clients, customers or accounts of the Company with whom Executive had business dealings
    or contacts on behalf of the Company in the course of Executive’s employment with the Company or about which Executive
    had access to Proprietary Information.


 


6.3
Invalidity. If any restriction set forth in this Section 6 is found by any court of competent jurisdiction to be unenforceable
because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it
shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may
be enforceable.


 






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6.4
Reasonableness of Restrictions. The restrictions contained in this Section 6 are necessary for the protection of the business,
trade secrets, proprietary and confidential information, and goodwill of the Company, especially in light of the unique services
rendered on behalf of the Company by Executive in his position as Chief Executive Officer. These restrictions are entered in to
in conjunction with the Company’s offer to Executive of continued employment and eligibility for the Performance Bonuses
described herein. Executive has had the opportunity to consult with counsel regarding these restrictions, which are considered
by Executive to be reasonable for such purpose and substantial new consideration. Executive agrees that any breach of this Section
6 will cause the Company substantial and irrevocable damage and therefore, in the event of any such breach, in addition to such
other remedies which may be available, the Company shall have the right to seek specific performance and injunctive relief.


 


6.5
Other Agreements. Executive represents that his performance of all the terms of this Agreement as an employee of the Company
does not and will not breach any (i) agreement to keep in confidence proprietary information, knowledge or data acquired by him
in confidence or in trust prior to his employment with the Company or (ii) agreement to refrain from competing, directly or indirectly,
with the business of any previous employer or any other party. Executive represents that all information Executive provided to
the Company regarding Executive’s education, work background, experience and lack of post-employment restrictions are all
true and accurate and the Company is entitled to rely on such representations.


 


6.6
Other Business Exception. The Company acknowledges that the Executive is also involved in the management of personal and
family investments, banking and finance, and has multiple investments around the world, and is a board member and even Chairman
of many publicly traded companies and non-publicly traded companies. It is expressly understood by the Company that that the Executive
is allowed to continue to be involved in these activities. Accordingly, the restrictions set forth in Section 6.2 above shall
not apply with respect to any services Executive provides regarding any business identified in this section.


 


7.
Notices. All notices required or permitted under this Agreement shall be in writing and shall be deemed effective upon
(a) the date of receipt, if sent by personal delivery (including delivery by reputable overnight courier), or (b) the date of
receipt or refusal, if deposited in the United States Post Office, by registered or certified mail, postage prepaid and return
receipt requested, or (c) the date of receipt if sent by e-mail PDF or facsimile transmission to the e-mail address or facsimile
number of record of Executive or the Company, or at such other place as may from time to time be designated by either party in
writing.


 






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8.
Entire Agreement. This Agreement, and those documents referenced herein, constitute the entire agreement between the parties
and supersede all prior agreements and understandings, including prior employment agreements, whether written or oral relating
to the subject matter of this Agreement. Signatures affixed to this Agreement may be delivered in e-mail PDF form and any such
signatures shall be deemed original signatures for purposes of the validity and enforceability of this Agreement.


 


9.
Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and Executive.


 


10.
Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the State of
New York, applied without giving effect to any conflicts-of-law principles. Any action or proceeding relating to this Agreement
or Executive’s employment shall be venued exclusively in the state or federal courts located in Western New York.


 


11.
Assumption by Successors. Any successor of the Company shall succeed to all of the Company’s duties, obligations,
rights and benefits hereunder. The obligations of Executive are personal and shall not be assigned by him.


 


12.
No Waiver. No delay or omission by a party in exercising any right under this Agreement shall operate as a waiver of that
or any other right. A waiver or consent given by a party on any one occasion shall be effective only in that instance and shall
not be construed as a bar or waiver of any right on any other occasion.


 


13.
Severability. In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity,
legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby.


 


14.
Survival. Upon the termination of the Term and any termination of this Agreement, the obligations of the parties under
Sections 5 and 6 shall survive and continue in effect in accordance with their terms.


 



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IN
WITNESS WHEREOF, the undersigned parties have executed this Agreement effective on the date and year first above written.





 


	 	 	 






 


DOCUMENT
SECURITY SYSTEMS, INC.


 





	By:	Frank
    D. Heuszel	 
	Title:	Chief
    Executive Officer	 
	Date:	September
    5, 2019	 


 






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