EMPLOYMENT AGREEMENT
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AGREEMENT made as of the 1st day of January, 1998, by
and between COVER-ALL TECHNOLOGIES INC., a Delaware corporation
(hereinafter referred to as the "Company"), having an office at
00-00 Xxxxxxx Xxxxx, Xxxx Xxxx, XX 00000 and XXXXX XXXXX residing
at 00 Xxxxxxx Xxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000 (hereinafter
referred to as the "Executive").
W I T N E S S E T H :
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WHEREAS, the Executive has served as a valuable
executive employee of the Company, and the Company desires to
continue to employ the services of the Executive, and the
Executive desires to render such services all upon the terms and
conditions herein contained;
NOW, THEREFORE, in consideration of the premises, the
parties agree as follows:
1. Employment. The Company hereby employs the
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Executive as Chief Technology Officer, and the Executive hereby
accepts such employment, subject to the terms and conditions
hereinafter set forth.
2. Term. The term of the Executive's employment
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hereunder shall be for a period commencing January 1, 1998 and
terminating on December 31, 2000. This Agreement may be extended
thereafter for successive one (1) year terms upon the mutual
consent in writing of the parties hereto at least thirty (30)
days prior to the applicable anniversary of such date.
3. Duties. The Executive agrees that she will serve
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the Company on a full-time basis faithfully and to the best of
her ability as the Chief Technology Officer of the Company,
subject to the direction of the President and/or Chief Executive
Officer and the general supervision of the Board of Directors of
the Company. The Executive agrees that she will not, during the
term of this Agreement, engage in any other business activity
which interferes with the performance of her obligations under
this Agreement. The Executive further agrees to serve as a
director of the Company and/or of any parent, subsidiary or
affiliate of the Company if she is elected to such directorship.
4. Compensation.
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(a) (i) Salary. In consideration of the services
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to be rendered by the Executive, in the aforesaid position or in
any other position to which the Executive may be assigned,
including, without limitation, any services rendered by her as
director of the Company or of any parent, subsidiary or affiliate
of the Company, the Company agrees to pay the Executive, and she
agrees to accept fixed compensation at the rate of One Hundred
and Eighty Thousand Dollars ($180,000.00) per annum as base
salary ("Base Salary") commencing on the date hereof, together
with such increases as may be authorized from time to time by the
Board of Directors of the Company. The Base Salary shall also be
increased commencing on January 1 of each year of the term
hereof, by an amount equal to the annual percentage increase in
the Consumer Price Index for Urban Wage Earners and Clerical
Workers, all items (U.S. city average), published by the Bureau
of Labor Statistics of the United States, Department of Labor,
multiplied by the annual Base Salary effective immediately prior
to such increase.
(ii) Bonus. In addition to the payment of the Base
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Salary, as provided for hereunder, the Company shall pay the
Executive a bonus for the year ended December 31, 1998, such
bonus to be paid on the conditions hereinafter set forth:
a) $40,000 upon successful delivery of the
Accident Fund deliverables;
b) $20,000 upon successful delivery of the
Cornhill 1998 deliverables;
c) $10,000 upon the Company achieving 1998
earnings before income taxes ("EBIT") of at least $.04 per share.
The determination as to whether the Company achieves EBIT of $.04
per share shall be made in accordance with generally accepted
accounting principles consistently applied (except that any
income or loss attributable to the repurchase of the Care
Software rights by Care Corporation Limited ("Care") shall be
excluded for purposes of such calculation), shall be based upon
the audited financial statements to be filed by the Company in
its Form 10-K Annual Report with the Securities and Exchange
Commission, and such bonus, if any, shall be paid no later than
10 days from the date of such filing; and
d) to the extent the Company's 1998 revenue
exceeds $18.453 million and its 1998 EBIT exceeds $2,000,000, as
further described below, an additional bonus (the "Super Bonus")
paid pursuant to the terms of a plan (the "Super Bonus Plan") to
be prepared by the Company's chief executive officer and approved
by the Company's Board of Directors, as evidenced by a Board
resolution. The Super Bonus Plan shall entitle each of the
Company's senior management, as identified in the Super Bonus
Plan and including the Executive, who shall participate to the
extent of 20%, in a bonus pool equal to 20% of the Company's 1998
EBIT in excess of $2,000,000, provided the Company's 1998 revenue
exceeds $18.453 million (which, pursuant to the Super Bonus Plan,
$2,000,000 shall be calculated after the deduction of a $6,000
bonus per each employee of the Company who is not eligible for
the Super Bonus for fiscal year ended December 31, 1998). The
determination as to whether the Company achieves EBIT above
$2,000,000 and revenue above $18.453 million shall be made in
accordance with generally accepted accounting principles
consistently applied (except that any income or loss attributable
to the repurchase of the Care Software rights by Care shall be
excluded for purposes of such calculation) and shall be based
upon the audited financial statements to be filed by the Company
in its Form 10-K Annual Report with the Securities and Exchange
Commission and such Super Bonus, if any, shall be paid no later
than 10 days from the date of such filing.
e) The terms for the performance bonus for
each year of the term after December 31, 1998, including any
renewal term, shall be agreed to by January 15th of the
subsequent year by the parties.
(b) The Executive shall also be entitled to
vacations, sick leave and fringe benefits in accordance with
Company policies and plans from time to time in effect for
executive officers of the Company.
(c) The Executive shall be granted 150,000
incentive stock options to purchase shares of common stock, $.01
par value per share, of the Company at a purchase price of $4.00
per share, (the "Options"), pursuant to the Company's 1995
Employee Stock Option Plan, as amended, such options to vest as
follows:
(i) as to 75,000 Options vesting on January
1, 1998; and
(ii) as to 75,000 Options vesting on
September 1, 1998.
The 150,000 Options shall be granted pursuant to an
Incentive Stock Option Agreement to be entered into between the
Executive and the Company reflecting the terms as described in
this subsection.
(d) Except as hereinafter provided in Section 5
(a), the Company shall pay the Executive, for any period during
which she is unable fully to perform her duties because of
physical or mental disability or incapacity, an amount equal to
the fixed Base Salary due her for such period less the aggregate
amount of all income disability benefits which she may receive or
to which she may be entitled under or by reason of (i) any group
health and/or disability insurance plan; (ii) any applicable
state disability law; (iii) the Federal Social Security Act; (iv)
any applicable worker's compensation law or similar law; and (v)
any plan towards which the Company or any parent, subsidiary or
affiliate of the Company has contributed or for which it has made
payroll deductions, such as group accident, health and/or
disability policies.
5. Termination on Disability or Death.
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(a) If the Executive, due to physical or mental
disability or incapacity, is unable fully to perform her duties
hereunder for three (3) consecutive months, then the Company may
terminate this Agreement and the Executive's employment hereunder
by written notice to the Executive. This provision shall not
preclude the Executive from claiming or obtaining such disability
benefits to which she may be entitled for disability incurred
during the period of her employment by the Company.
(b) If the Executive shall die during the term of
this Agreement, this Agreement and the Executive's employment
hereunder shall terminate immediately upon the Executive's death,
except that the Company shall be required to continue paying to
the Executive's husband (or estate, if there shall be no
surviving husband) the compensation payable pursuant to Section 4
consisting of a pro rata portion of the Base Salary payable in
accordance with the Company's payroll policies for a period of
three (3) months following such death.
(c) Upon the Executive's disability or death the
Company shall pay the Executive or, in the event of death, her
husband (or estate if there is no surviving husband), (x) the
bonus payments set forth in subsections a) and b) of Section
4(a)(ii) hereof, to the extent such bonuses have been earned by
the Executive and not yet paid, (y) the pro rata portion of the
bonus payment set forth in subsections c) and d) of Section
4(a)(ii) hereof, and (z) the pro rata portion of any new bonus
plan adopted pursuant to subsection e) of Section 4(a)(ii)
hereof, based upon the number of days the Executive worked during
the Company's fiscal year for which such bonus is computed, to
the extent the numerical requirements are actually met for the
fiscal year in question, which shall be payable at the time of
the determination of such bonus.
6. Termination for Cause. Notwithstanding anything
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to the contrary in this Agreement, the Company, upon notice to
the Executive, may terminate this Agreement and the employment of
the Executive hereunder for cause, which, for purposes of this
Agreement, shall mean (i) the continued and repeated failure or
refusal by the Executive to perform specific directives, relating
to the performance by the Executive of her duties as Chief
Technology Officer of the Company, of the Chief Executive
Officer, President or the Board of Directors of the Company, (ii)
embezzlement or any offense involving misuse or misappropriation
of money or other property of the Company, (iii) indictment for a
crime, (iv) any act of dishonesty, disloyalty or other conduct
that is materially injurious to the Company, or (v) material
breach by the Executive of any of the terms of this Agreement.
Any controversy, claim or dispute arising out of or relating to
this Section 6 of the interpretation thereof shall be determined
by arbitration to be conducted in Bergen County, New Jersey by
the American Arbitration Association in accordance with the then
prevailing rules of such Association, and judgments upon the
award of the arbitrators may be entered in any court having
jurisdiction thereof.
7. Severance Compensation. In the event the
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Executive's employment hereunder is not renewed by reason of the
expiration of the employment term without renewal thereof by the
Company, and other than for cause, death or disability, the
Company shall pay to the Executive as severance compensation an
amount equal to six (6) months' Base Salary. Severance
compensation shall be paid biweekly in accordance with the
Company's usual practices. In the event that the Company
terminates the employment of the Executive hereunder without
cause the Company shall be obligated to honor the balance of this
Agreement in accordance with applicable law. In addition, in the
event the Executive's employment hereunder is terminated by the
Company for any reason, including the expiration of the
employment term without renewal thereof by the Company, and other
than for cause, death or disability, the Company shall pay to the
Executive (x) the bonus payments set forth in subsections a) and
b) of Section 4(a)(ii) hereof, to the extent such bonuses have
been earned by the Executive and not yet paid, (y) the pro rata
portion of the bonus payment set forth in subsections c) and d)
of Section 4(a)(ii) hereof, and (z) the pro rata portion of any
new bonus plan adopted pursuant to subsection e) of Section
4(a)(ii) hereof, based upon the number of days the Executive
worked during the Company's fiscal year for which such bonus is
computed, to the extent the numerical requirements are actually
met for the fiscal year in question, which shall be payable at
the time of the determination of such bonus.
In the event the Executive receives severance
compensation under this Section 7, the Executive shall not be
entitled to receive any other compensation or benefits under this
Agreement after the termination of the Executive's employment
hereunder and, as a condition to receiving such severance
compensation, the Executive hereby agrees that she shall have no
other claim against the Company by reason of this Agreement.
8. Disclosure and Assignment of Discoveries.
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(a) The Executive shall (without any additional
compensation) promptly disclose in writing to the Board of
Directors of the Company all ideas, processes, devices, and
business concepts (hereinafter referred to collectively as
"discoveries"), whether or not patentable or copyrightable, which
she, while employed by the Company, conceives, develops, acquires
or reduces to practice, whether alone or with others and whether
during or after usual working hours, and which are related to the
Company's business or interests, or arise out of or in connection
with the duties performed by her hereunder; and the Executive
hereby transfers and assigns to the Company all right, title and
interest in and to such discoveries. Upon the request of the
Company, the Executive shall (without any additional
compensation), from time to time during or after the expiration
or termination of her employment, execute such further
instruments and do all such other acts and things as may be
deemed necessary or desirable by the Company to protect and/or
enforce its rights in respect of such discoveries.
(b) For purposes of this Section 8 and the
following Section 9, the term "Company" shall mean and include
any and all subsidiaries, parent, and affiliated corporations of
the company in existence from time to time.
9. Non-Disclosure of Confidential Information and
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Non-Competition.
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(a) The Executive acknowledges that she has been
informed that it is the policy of the Company to maintain as
secret and confidential all information (i) relating to the
products, processes, designs and/or systems used by the Company
and (ii) relating to the customers and employees of the Company
(all such information hereafter referred to as "confidential
information"), and the Executive further acknowledges that such
confidential information is of great value to the Company. The
parties recognize that the services to be performed by the
Executive are special and unique, and that by reason of her
employment by the Company, she has and will acquire confidential
information as aforesaid. The parties confirm that it is
reasonably necessary to protect the Company's goodwill, and
accordingly the Executive does agree that she will not directly
or indirectly (except where authorized by the Board of Directors
of the Company for the benefit of the Company):
(1) at any time during her employment by the
Company or after she ceases to be employed by the
Company, divulge to any persons, firms or corporations,
other than the Company (hereinafter referred to
collectively as "third parties"), or use or allow or
cause or authorize any third parties to use, any such
confidential information, or any other information
regarded as confidential and valuable by the Company
which she knows or should know is regarded as
confidential and valuable by the Company (whether or
not any of the foregoing information is actually novel
or unique or is actually known to others); and
(2) at any time during her employment by the
Company and for a period of one year after she ceases
to be employed by the Company, solicit or cause or
authorize directly or indirectly to be solicited, for
or on behalf of herself or third parties any business
from persons, firms, corporations or other entities who
were at any time within one year prior to the cessation
of her employment hereunder, customers of the Company
or potential customers whose business had been
solicited by the Company during the term of Executive's
employment; and
(3) at any time during her employment by the
Company and for a period of one year after she ceases
to be employed by the Company, accept or cause or
authorize directly or indirectly to be accepted, for or
on behalf of herself or third parties, any business
from any such customers of the Company; and
(4) at any time during her employment by the
Company and for a period of one year after she ceases
to be employed by the Company, solicit or cause or
authorize directly or indirectly to be solicited for
employment, for or on behalf of herself or third
parties, any persons who were at any time within one
year prior to the cessation of her employment
hereunder, employees of the Company, except that in the
event the Company does not renew this Agreement at the
expiration of any term, then the period referred to in
this subsection (4) shall be reduced to six (6) months;
and
(5) at any time during her employment by the
Company and for a period of one year after she ceases
to be employed by the Company, employ or cause or
authorize directly or indirectly to be employed, for or
on behalf of herself or third parties, any such
employees of the Company, except that in the event the
Company does not renew this Agreement at the expiration
of any term, then the period referred to in this
subsection (5) shall be reduced to six (6) months.
(b) In the event the Company does not renew this
Agreement at the expiration of any term or the Company terminates
this Agreement for other than for cause, the Executive shall not
be constrained from working for, advising, consulting or being an
officer, director, agent or employee of or otherwise associate
with in any way any person, firm, corporation or other entity in
the information technology field and/or the insurance software
and services industry. Notwithstanding the immediately preceding
sentence, in the event the Company does not renew this Agreement
at the expiration of any term, the Executive shall remain subject
to the provisions of subsections (a)(1), (a)(4), and (a)(5) of
this Section 9.
(c) The Executive agrees that, upon the
expiration of her employment by the Company for any reason, she
shall forthwith deliver up to the Company any and all records,
drawings, notebooks, keys and other documents and material, and
copies thereof in her possession or under her control which is
the property of the Company or which relate to any confidential
information or any discoveries of the Company.
(d) The Executive agrees that any breach or
threatened breach by her of any provision of this Section 9 shall
entitle the Company, in addition to any other legal remedies
available to it, to enjoin such breach or threatened breach
through any court of competent jurisdiction. The parties
understand and intend that each restriction agreed to by the
Executive hereinabove shall be construed as separable and
divisible from every other restriction, and that the
unenforceability, in whole or in part, of any restriction will
not affect the enforceability of the remaining restrictions, and
that one or more or all of such restrictions may be enforced in
whole or in part as the circumstances warrant.
10. Entire Agreement. This Agreement contains the
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entire understanding of the parties with respect to the subject
matter hereof, supersedes any prior agreement between the
parties, and may not be changed or terminated orally. No change,
termination or attempted waiver of any of the provisions hereof
shall be binding unless in writing and signed by the party to be
bound; provided, however, that the Executive's compensation may
be increased at any time by the Company without in any way
affecting any of the other terms and conditions of this
Agreement, which in all other respects shall remain in full force
and effect.
11. Negotiated Agreement. This Agreement has been
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negotiated and shall not be construed against the party
responsible for drafting all or parts of this Agreement.
12. Notices. All notices to be given pursuant to this
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Agreement shall be in writing hand-delivered to the other party,
or mailed by certified mail, return receipt requested, postage
prepaid, or by commercial overnight courier, addressed to the
President or Chief Executive Officer of the Company at the
company's principal place of business or addressed to the
Executive at the last known residence of the Executive. Notice
shall be deemed given upon receipt or on the first business day
after mailing, whichever comes first. The address for notice may
be changed by notice given in the same manner.
13. Successors and Assigns. This Agreement shall be
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binding upon and shall inure to the benefit of the respective
heirs, legal representatives, successors and assigns of the
parties hereto.
14. Partial Invalidity. If any provision contained
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herein or part thereof shall be deemed invalid, it shall be
deemed severed or modified to conform to law, and the remaining
provisions shall continue in full force and effect.
15. Governing Law. All matters concerning the
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validity and interpretation of and performance under this
Agreement shall be governed by the laws of the State of New York
whose courts shall have exclusive jurisdiction over the parties
to which they hereby consent.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
COVER-ALL TECHNOLOGIES INC.
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
Chief Executive Officer
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
