Employment Agreement
with Xx. Xxxxx
10.7
EMPLOYMENT AGREEMENT
(and Agreement to serve as a Director)
THIS EMPLOYMENT AGREEMENT, made as of ' this 18th day of April, 1996,
by and between:
FIDELITY HOLDINGS, INC., a newly organized Nevada corporation having
its executive office at 000-00 Xxxxx Xxxxxxxx, Xxx Xxxxxxx Xxxxx, XX 00000
(hereinafter referred to as "EMPLOYER")
AND
XXX XXXXX, Ph.D, an adult individual residing at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx X0X 0X0 (hereinafter referred to as "EMPLOYEE")
WITNESSETH THAT:
WHEREAS, EMPLOYEE has certain education, experience, background and
contacts which would be useful and helpful to EMPLOYER in its business and
EMPLOYER is desirous of employing EMPLOYEE in order to obtain the benefits of
such education, experience, background and contacts;
WHEREAS, EMPLOYEE is the inventor and developer of TALKIE, TALKIE-GLOBE
and BCS, certain software and systems which EMPLOYER has acquired and desires
that EMPLOYEE establish and manage a research and development facility for
EMPLOYER, dedicated to improving the products purchased and developing new
products, either associated with the acquired products or newly developed
products;
WHEREAS, EMPLOYER desires that EMPLOYEE provide product support for the
products acquired;
WHEREAS, EMPLOYEE is agreeable to being hired by EMPLOYER as an
employee and providing the benefits of his education, experience, background and
contacts to EMPLOYER;
WHEREAS, the parties have agreed upon the terms of such employment and
desire a written, formal contract to evidence their agreements;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
forbearances contained herein, and intending to be legally bound, the parties
have agreed as follows:
1. EMPLOYMENT. For the term provided in Paragraph 2, EMPLOYER hereby
employs EMPLOYEE, and EMPLOYEE hereby accepts that employment, upon the terms
and conditions hereinafter set forth.
2. TERM.
(a) This Agreement shall become effective as of April 18, 1996.
(b) This Agreement, subject to the provisions of Paragraphs 14 and
15 below, shall continue and exist for an initial period from April 18, 1996 to
April 30, 2001.
(c) EMPLOYER shall have the option to extend the term of
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this Agreement for an additional one (1) year period, i.e., to April 30, 2002.
Such option shall be exercised by EMPLOYER mailing notice to EMPLOYEE on or
before February 28, 2001, of its intention to so extend the Agreement. If
EMPLOYER shall not exercise its extension option by March 1, 2001, this
Agreement shall terminate on April 30, 2001.
(d) Notwithstanding the foregoing, the term of this Agreement is
otherwise subject to the termination provisions contained hereafter.
3. COMPENSATION-BASE
(a) For all services rendered under this Agreement, EMPLOYEE shall
be paid, as base compensation, such annual fee as shall be determined by the
President/CEO and Management of EMPLOYER, from time to time, but in no event
shall such compensation be at rate of less than $150,000 per year. In the event
of any extension of this Agreement, such compensation shaall be at a rate of no
less than $150,000 per year during each extension year. All such compensation
shall be subject to a Cost-of-Living Adjustment (COLA) annually based upon the
percentage increase in the Cost-of-Living Index, All Commodities, for the New
York City area. Subject to sub-paragraph (b) below, such compensation is to be
payable in equal installments at intervals no longer than semi-monthly, and
shall be paid as and where directed by EMPLOYEE, EMPLOYER acting reasonably to
accommodate EMPLOYEE's claim of permitted tax exemptions. Such base compensation
shall be in addition to such fringe benefits and bonuses as provided elsewhere
herein. (b) In addition to the COLA adjustment, the adjusted base compensation
for each year of this Agreement, including any extensions to this Agreement,
shall be subject to a retroactive increase, based upon an earnings per share
formula (actual common shares issued and outstanding at December 31 of each
year, and not fully diluted) as follows:
Profits per Increase as a
Common Share Percent of Base Compensation
$.00 - $.10 5%
$.11 - $.20 10%
$.21 - $.30 20%
$.31 - $.40 30%
$.41 - $.50 40%
$.51 - $.60 50%
$.61 - $.70 70%
$.71 - $.80 90%
$.81 - $.90 110%
$.91 - $1.00 130%
over $1.00 150%
This retroactive increase, if any should occur, is not a bonus but a
merit adjustment to the base compensation, and shall be based on the
COLA-adjusted base compensation in effect for the prior year. The calculation
shall be made based upon the annual audit of EMPLOYER's financial statements and
shall be paid in equal amounts for the balance of the then current year on the
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regular paydays, commencing with the first payday following release of the
audit. Any retroactive increase shall not affect the baseline for subsequent
calculations. It is a separate adjustment from any other adjustment under any
other plan.
(c) For compensation purposes, EMPLOYER may assign EMPLOYEE to one or
more of its subsidiaries and/or affiliates, to perform services consistent with
EMPLOYEEIS duties hereunder. In such event, EMPLOYEE may be separately
compensated by each such subsidiary and/or affiliate. All such compensation
shall be deducted from the compensation payable under sub-paragraph (a) above
and EMPLOYER shall pay EMPLOYEE only the difference between (i) the total of all
such compensations from subsidiaries and/or affiliates and (ii) the base
compensation. No assignment hereunder for compensation purposes shall require
that EMPLOYEE physically relocate.
(d) At the end of each calendar year, the President/CEO and Management
of EMPLOYER shall review the performance of EMPLOYEE for such year and, based
upon such evaluation, establish any increase in the base compensation payable to
EMPLOYEE for the succeeding calendar year, as COLA adjusted by sub-paragraph (a)
above. EMPLOYER shall not be obligated to provide any increase, in excess of the
increase in the Cost-of-Living Index, All Commodities, for the New York City
area during the prior calendar year.
4. COMPENSATION-FRINGE BENEFITS. EMPLOYEE shall receive at least the
following additional benefits, which may be extended or increased, but not
reduced, by EMPLOYER:
(a) Vacation - During each year of this Agreement, EMPLOYEE shall be entitled to
paid vacation during the first year of this Agreement of three (3) weeks and
thereafter of four (4) weeks, which shall not be accumulated from year to year
if unused. EMPLOYEE shall not be compensated for any unused vacation time.
(b) Personal Leave - During each year of this Agreement, EMPLOYEE shall receive
five days paid personal leave, which shall not be accumulated from year to year
if unused. EMPLOYEE shall not be compensated for any unused personal leave.
"Personal leave" shall include sick leave and all other personal time off not
otherwise provided for.
(c) Statutory/Religious Holidays - During each year of this Agreement, EMPLOYEE
shall be entitled to paid days off for all statutory and religious holidays as
specified in the Jewish calendar.
(d) Bereavement - In the event of a death of person f or which EMPLOYEE observes
shiva, EMPLOYEE shall be entitled to paid days off for all such observance.
(e) Military Service - If, during the term of this Agreement, EMPLOYEE shall be
called into military service, EMPLOYER shall continue EMPLOYEE's compensation
for a period of up to fourteen (14)working days. The calculation of working days
shall exclude the Sabbath and non-working religious holidays. Any military
service period over 14 working days shall either not be compensated by EMPLOYER
or EMPLOYEE may utilize vacation or
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personal leave for such purpose.
(f) Disability/Life Insurance - EMPLOYEE shall receive an allowance of Five
Thousand Dollars ($5, 000) f or the payment of premiums for disability insurance
and/or life insurance. EMPLOYEE may select such coverage, from such companies,
for either or both disability and life insurance, and EMPLOYER shall pay $5,000
toward the premiums, with EMPLOYEE responsible for the overage. The $5,000
allowance shall be subject to the COLA adjustment provided above with respect to
the base compensation.
(g) Automobile - During the term of this Agreement, (i) if the Israeli R&D
facility is turned into a profit center, or (ii) if EMPLOYEE leaves Israel, or
(iii) if EMPLOYEE becomes subject to Israeliincome taxes exceeding $18,000, then
in any such event EMPLOYER shall provide EMPLOYEE with a car allowance of the
lesser of (i) $18,000 per year of employment or (ii) the total costs for vehicle
purchase or lease, garaging, repairs, maintenance, insurance, fuel, oil and
supplies. EMPLOYEE shall be responsible for all purchase or lease costs in
excess of $18,000 per year and all costs for garaging, repairs, maintenance,
insurance, fuel, oil, and supplies.
(h) Other - EMPLOYEE shall receive such other medical, surgical, hospital,
dental or legal insurance and fringe benefits as are available to any other
officers/employees/consultants, consistent with EMPLOYERIS past practices and
such life/disability insurance, incentive or deferred compensation or bonuses,
pension/profit sharing plan and qualified and non-qualified stock option plans
as the Board of Directors of EMPLOYER shall establish. Nothing contained in this
Agreement shall be in lieu of any rights, benefits and privileges to which
EMPLOYEE may be entitled under any retirement, pension, profit-sharing,
insurance, hospital or other plans which may now be in effect or which may
hereafter be adopted. EMPLOYEE shall have the same rights and privileges to
participate in such plans and benefits as any other employee during his period
of employment.
5. COMPENSATION-BONUS. (a) After the end of each calendar year, the
President/CEO and Management of EMPLOYER shall determine the net profits before
taxes of EMPLOYER for such prior year and shall determine any bonus for such
year payable to EMPLOYEE. EMPLOYER shall not be obligated to provide any bonus.
Any bonus awarded shall be paid at such time or times, in such amounts or
installments, as the President/CEO and Management may determine.
(b) As incentive compensation for EMPLOYEE, EMPLOYER shall pay EMPLOYEE a
royalty of two percent (2%) on gross revenues received by EMPLOYER from sales of
all "new products" developed by the R&D facility under EMPLOYEE's direction, as
determined under subparagraph 7(c) below. The royalty shall be paid annually, in
arrears, on or before April 30th, for all sales of all new products during the
preceding calendar year. The royalty shall be calculated on a sales base
consisting of the new product and the hardware sold with it. This royalty
incentive compensation shall continue during the term of this contract and for
the balance of the year in which termination occurs and for the two
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full succeeding calendar years. In the event that EMPLOYEE moves, as permitted
under subparagraph 7 (c) below, the royalty incentive compensation for new
products developed at the facility in Israel'shall continue to the extent of new
products developed during EMPLOYEE's management tenure. As used herein:
(i) the term "new product" shall mean any software, program or
application which requires more than one (1) standard man-month (172 working
hours) to develop and which either: (A) is new software or a program which
performs one or more applications different from the applications of the current
software or programs, including the current Talkie and BCS modules; or (B) is
sufficiently distinguishable that it provides a new source of revenue (income)
for EMPLOYER. Adaptation of the current software, programs and applications to
Windows/Windows 95 shall not be deemed a new product; and
(ii) the term "sales of all new products" shall mean the revenues (net
of returns and allowances) from all transactions including a "new product",
whether denominated as a " sale" , "lease",, "service contract",, "license
agreement", anycombination thereof, or otherwise. (c) In the event that an
incentive program is developed by EMPLOYER as an alternative to the 2% royalty
provided in (b) above, which could provide EMPLOYEE with greater income,
EMPLOYER shall offer such program to EMPLOYEE.
6. DUTIES. (a) EMPLOYEE is engaged as the EMPLOYER's "Director of
Research & Development" and, subject to the direction and approval of EMPLOYER's
President/CEO and Management,, shall establish, supervise and manage a research
& Development facility to (i) provide product support to existing products,
including TALKIE, TALKIE-GLOBE and BCS, which after the first six months shall
mean high-level support advising assigned service and support engineers of
786710, FIDELITY, and/or FIDELITY's subsidiary, Computer Business Sciences,
Inc., (ii) improve and enhance such existing products so as to keep them at the
most current state-of-the-art level, and (iii) develop new products to increase
the EMPLOYER's product line. EMPLOYEE shall provide product advice and
assistance to EMPLOYER's officers,, directors and key management. In cooperation
with, and subject to, EMPLOYER's President/CEO and Management, EMPLOYEE shall
develop a schedule of work, including the scope and content of the R&D work
being performed, and shall develop, for approval'by EMPLOYER's President/CEO and
Management, an annual budget for the R&D within that scope of work. EMPLOYEEIS
performance shall be subject to the supervision of EMPLOYERIS President/CEO and
Management. The precise consulting scope and the specific services to be
rendered by EMPLOYEE may be defined, interpreted, curtailed, or extended, from
time to time, by determination of the Presideht/CEO of EMPLOYER, provided,
however, that any definition, interpretation, curtailment, or extension is
consistent with the status of, and/or educational experience required for, the
responsibilities for which EMPLOYEE has been initially engaged hereunder. It is
the intent of this provision
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to provide EMPLOYER with flexibility in assigning responsibilities to EMPLOYEE
and this provision shall not be used to discipline, embarrass, humiliate or
harass EMPLOYEE.
(b) In addition, at the option of EMPLOYER I s management, and subject to the
approval of the EMPLOYER's shareholders, during the term of this Agreement
EMPLOYEE shall, from time to time, serve as a director of the EMPLOYER if so
elected. The parties acknowledge that EMPLOYEE is presently a director elected
to serve until his successor is elected and qualified. If elected to serve as a
director, EMPLOYEE shall be indemnified by EMPLOYER and shall receive the
benefits of any O&D insurance. Removal and/or failure to elect or reelect
EMPLOYEE as a director shall not be a breach of this Employment Agreement or the
contemporaneously executed Master Agreement.
(c) The parties intend that EMPLOYEE's duties shall not require regular travel
or prolonged trips. Accordingly, other than required appearances for legal
proceedings, attendance at meetings of the Board of Directors, high level
conferences with potential and existing customers, attendance at job-related
technology conferences, and similar types of travel necessitated by EMPLOYEE's
position, duties and know-how, EMPLOYER shall not require that EMPLOYEE travel.
All business travel shall be at the expense of EMPLOYER which shall, in
addition, provide excess medical/health insurance coverage applicable to
EMPLOYEE at all locations outside Israel.
7. EXTENT AND PLACE OF SERVICES. (a)
EMPLOYER is establishing an R&Dfacility in Israel to accommodate EMPLOYEE, who
desires to emigrate to Israel. EMPLOYEE's move to Israel shall be at EMPLOYEE's
sole expense. EMPLOYER and EMPLOYEE shall mutually develop a plan for the
location, outfitting and staffing of such R&D facility and a budget for the
operation of such facility. In general, the facility shall include EMPLOYEE, a
secretary, and a programmer assistant. Final decisions with respect to the
outfitting and staffing of the R&D facility in excess of the minimum level and
the establishment of the budget for such facility, shall rest with EMPLOYERIS
President/CEO and management.
(b) EMPLOYEE agrees that this employment constitutes his exclusive employment
and understands that his primary loyalty and responsibility is to EMPLOYER.
Accordingly, EMPLOYEE shall devote such adequate, reasonable, and proper time,
attention, and energies to the business of EMPLOYER as shall be necessary or
consistent with such understanding and EMPLOYEE shall not, during the term of
this Agreement be engaged in any other business activity (whether or not such
business activity is pursued for gain, profit, or other pecuniary advantage),
which conflicts with EMPLOYEEIS employment responsibilities hereunder, without
prior, written authorization of EMPLOYERIS President/CEO and Management. Nothing
contained herein shall be construed as preventing EMPLOYEE from investing his
assets in such form or manner as will not require any services on EMPLOYEEIS
part in the operation of the affairs of the companies in which such investments
are made.
(c) EMPLOYER and EMPLOYEE have discussed the possibility that
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EMPLOYEE subsequently decides to leave Israel. In such event, EMPLOYEE in his
discretion may move, at his expense, to a new location, and such a further move
shall not be a breach of this Agreement. At such new place of residence,
EMPLOYER shall establish an R&D facility for the purpose of permitting EMPLOYEE
to continue his required services hereunder. EMPLOYER in its sole discretion may
retain the R&D facility in Israel and either continue EMPLOYEE's supervision of
such facility or employ a substitute.
8. WORKING FACILITIES. (a) EMPLOYEE shall be furnished with all
necessary working facilities, including but not limited to
telephone/facsimile/copying services, suitable to his position and adequate for
the performance of his duties. (b) In the event that EMPLOYEE elects to leave
Israel, as provided in Paragraph 7(c) above, EMPLOYER shall furnish EMPLOYEE
with all necessary working facilities at the new location.
9. EXPENSES. EMPLOYEE is not authorized to incur expenses on behalf of,
or chargeable to, EMPLOYER, with respect to his business travel, including
transportation, lodging, food, entertainment, etc. except within such guidelines
as may be established from time to time by the President/CEO and Management of
EMPLOYER. EMPLOYER shall reimburse EMPLOYEE for authorized expenses within such
guidelines upon presentation by EMPLOYEE, from time to time, of an itemized
account of such expenditures-in such form as EMPLOYER may require, together with
receipts or other proofs of the expenditures as may be required.
10. OWNERSHIP OF INVENTIONS AND DEVELOPMENTS. (a) For purposes of this
Agreement, the following definitions shall apply:
(i) "Inventions" shall mean:
(A) All inventions, improvements, modifications, and enhancements,
whether or not patentable, made by EMPLOYEE during EMPLOYEE's employment by
EMPLOYER; and
(B) All inventions, improvements, modifications and enhancements
made by EMPLOYEE, during a period of one (1) year after any suspension or
termination of EMPLOYEE's employment by EMPLOYER, which relate, directly or
indirectly, to the past, present or then current business of the EMPLOYER.
(ii) "Work Product" shall mean all documentation, software, creative
works, programs,, systems, source codes, Hardware Signatures, know-how and
information created, in whole or in part, by EMPLOYEE during EMPLOYEE's
employment by EMPLOYER, whether or not copyrightable or otherwise protectable,
excluding Inventions.
(iii) "Trade Secrets" shall mean all documentation, software, know-how
and information relating to the past, present and then current business of the
EMPLOYER, any intended business of EMPLOYER of which EMPLOYEE has knowledge, or
any plans therefor, or relating to the past, present or then current business of
a third party or plans therefor that are disclosed to
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an equipped office, clerical help, and the EMPLOYER, which the EMPLOYER does not
disclose to third parties without restrictions on use or further disclosure.
(b) To provide a benchmark, EMPLOYEE represents and warrants that as of the
execution of 'this Agreement there are no Inventions or Work Products developed
by EMPLOYEE which the EMPLOYEE asserts are to be excluded from the provisions of
this Paragraph 10.
(c) EMPLOYEE shall promptly disclose to EMPLOYER all Inventions and keep
accurate records relating to the conception and reduction to practice of all
Inventions. Such records shall be the sole and exclusive property of EMPLOYER,
and the EMPLOYEE shall surrender possession of such records to the EMPLOYER upon
any suspension or termination of EMPLOYEE's employment with the EMPLOYER.
(d) EMPLOYEE hereby assigns to the EMPLOYER, without further consideration to
the EMPLOYEE, the entire right title and interest in and to the Inventions and
Work Product and in and to all proprietary rights therein or based thereon.
EMPLOYEE agrees that the Work Product shall be deemed to be a "work made f or
hire". EMPLOYEE shall execute all such assignments, oaths, declarations and
other documents as may be prepared by EMPLOYER to effect the foregoing.
(e) EMPLOYEE shall provide EMPLOYER with all reasonable inf ormation,
documentation, and assistance EMPLOYER may request to perfect, enforce, or
defend the proprietary rights in or based on the Inventions, Work Product or
Trade Secrets. EMPLOYER, in its sole discretion, shall determine the exact
extent of the proprietary rights, if any, to be protected in or based on the
Inventions and Work Product. All such information, documentation and assistance
shall be provided at no additional expense or cost to the EMPLOYER, except for
out-of-pocket expenses which the EMPLOYEE incurs at the EMPLOYER's request. (f)
In the event of termination of this Employment Agreement, EMPLOYER shall be
entitled to advise any new employer of EMPLOYEE of his rights and obligations
hereunder for a period of one year following termination of this Employment
Agreement.
11. NON-DISCLOSURE OF INFORMATION. (a) EMPLOYEE recognizes and
acknowledges that, during the course of his proprietary information, including,
but not limited to Inventions, Work Product and/or Trade Secrets, contractual
arrangements and compensation arrangements with sub-contractors and customers of
EMPLOYER; compensation arrangements with sub contractors, vendors, and outside
personnel; costing, pricing and bidding methods, procedures, and amounts;
management and operating procedures and sof tware; management inf ormation
systems, etc. ; marketing plans and strategy; personnel policies and contractual
arrangements, including job assignments and compensation; customer leads;
customer lists; and that such information constitutes unique assets of the
business of EMPLOYER and of which EMPLOYER is the sole and exclusive owner.
EMPLOYEE will treat such proprietary information on a confidential basis and
will not, during or after his employment, personally use, or employment, he will
have access to valuable
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disclose all, or any part of, such proprietary information to any person, firm,
corporation, association, agency, or other entity except as properly required in
the conduct of the business of EMPLOYER, or except as authorized in writing by
EMPLOYER,, publish, disclose or authorize anyone else to publish or disclose,
any secret or confidential matter relating to any aspect of the business of
EMPLOYER with which EMPLOYEEIS service may in any way acquaint EMPLOYEE.
EMPLOYEE shall surrender possession of all proprietary information, including
especially all Trade Secrets, to EMPLOYER upon any suspension or termination of
EMPLOYEE's employment with the EMPLOYER. In the event of a breach, or threatened
breach, by EMPLOYEE, of the provisions of this Paragraph, EMPLOYER shall be
entitled to a preliminary, temporary and permanent injunction restraining
EMPLOYEE from disclosing in whole or in part, any such proprietary information
and/or form rendering any services to any person, firm, corporation,
association, agency, or other entity to whom such information, in whole or in
part, has been disclosed or is threatened to be disclosed. Furthermore, nothing
herein shall'be construed as prohibiting EMPLOYER from pursuing any other
equitable or legal remedies available to it for such breach or threatened
breach, including the recovery or damages from EMPLOYEE.
(b) EMPLOYER recognizes that the EMPLOYEE may possess proprietary information of
third parties and that EMPLOYEE may have ongoing obligations to third parties
with respect thereto. EMPLOYER expressly requires that EMPLOYEE shall honor such
ongoing obligations to such third parties and that the EMPLOYEE shall not use,
for the benefit of EMPLOYER, or disclose to EMPLOYER, any such proprietary
information.
12. RESTRICTIVE COVENANT. (a) During the term of this Agreement and for
a period of twelve (12) months after the termination of this Agreement and any
extension thereof, EMPLOYEE will not, within the United States or any other area
of the world in which EMPLOYER is then operating, directly or indirectly,
compete with, own, manage,, operate, control, be employed by, consult for,
participate in, perform services for, or be connected in any manner with the
ownership, management, operation or control of any business similar to the type
of business conducted by EMPLOYER at the time of the termination of this
Agreement. EMPLOYEE shall not, directly or indirectly, compete with any products
or services marketed or offered by EMPLOYER at the time of termination, or
engage in any activities which could be deemed a conflict of interest.
(b) EMPLOYEE agrees that the "time", "geographic area", and "Scope of Business"
provisions of this restrictive covenant are reasonable and proper and have been
negotiated in connection with the sale of his stock in 786710 as well as in
connection with his employment hereunder.
(c) EMPLOYER and EMPLOYEE agree, that if any court of competent jurisdiction
shall, for anyreason, conclude that any portion of this covenant shall be too
restrictive, the court shall determine and apply lesser restrictions, it being
the intent of the parties
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that some such restrictions shall be applicable for the protection of EMPLOYER
and its shareholders.
(d) Notwithstanding the restriction provided in sub-paragraphs (a) above, in the
event of a foreclosure by EMPLOYEE pursuant to the Pledge & Security Agreement
provided in Paragraph 4 of the separate Agreement being contemporaneously
executed, the restriction shall not apply to the extent necessary to permit
EMPLOYEE to realize the value of the collateral, including the right to operate
the businesses and utilize the assets obtained as a result of such foreclosure.
13. NONSOLICITATION COVENANT. (a) For a period of twelve (12) months
after the termination of this Agreement (including any extension thereof) (the
"Post Termination Period") EMPLOYEE shall not, solicit, directly or indirectly,
by any means, any of the clients, accounts, employees or "leads" of EMPLOYER
during the Post Termination Period.
(b) EMPLOYER and EMPLOYEE agree, that if any court of competent jurisdiction
shall, for any reason conclude that any portion of this covenant shall be too
restrictive, the court shall determine and apply lesser restrictions, it being
the intent of the parties that some such restrictions shall be applicable for
the protection of EMPLOYER and its shareholders.
(c) This covenant has been given to induce EMPLOYER to enter into this Agreement
and provide EMPLOYEE'S job responsibilities and compensation.
14. DISABILITY. (a) If the EMPLOYEE is unable to perform his services
by reason of illness or incapacity for a period of more than twenty-one (21)
consecutive work days, or more than four (4) weeks in any two-month period, the
compensation otherwise payable to him thereafter during the continued period of
such illness or incapacity may, at the option of EMPLOYER be reduced by 40%. If
such illness or incapacity shall continue for a period of more than six (6)
consecutive weeks, or more than 50% of the time in any one year, such
compensation may, at the option of EMPLOYER, be stopped altogether. The
EMPLOYEEIS full compensation shall be reinstated upon his return to employment
and the discharge of his full duties hereunder. Notwithstanding anything herein
to the contrary, EMPLOYER may, at its option, terminate this Agreement at any
time after the EMPLOYEE shall be absent from his employment, for whatever cause,
for a continuous period of more than six (6) months, and all obligations of
EMPLOYER hereunder shall cease upon any such termination.
(b) At any time, and from time to time, EMPLOYER may purchase disability
insurance to compensate EMPLOYEE during periods of disability, either pursuant
to sub-paragraph 4(d) or otherwise. In the event that such insurance is
purchased, during any period for which benefits are being paid by such insurance
sub-paragraph (a) above shall be inapplicable. In lieu thereof, EMPLOYER shall
compensate EMPLOYEE at the agreed base compensation rate less the benefits paid
by such insurance.
15. SUSPENSION. As used in this Agreement, the term
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"suspension" shall mean:
(a) uncompensated military leave;
(b) uncompensated extended personal leave, authorized by EMPLOYER;
(c) temporary discontinuance of compensation due to disability, whether
or not compensated; and
(d) temporary discontinuance of employment, without termination, for
the convenience of either of the parties.
16. TERMINATION. (a) EMPLOYER can terminate EMPLOYEE's employment at
any time for good cause. Without intending to limit the definition of good cause
hereby, good cause will include:
(1) the EMPLOYEE'S death;
(2) the occurrence of one of the following events:
(i) EMPLOYEE commits, is arrested, or is officially charged with a felony or any
crime involving moral turpitude or unethical conduct which in the good faith
opinion of the EMPLOYER could impair his ability to perform his duties; and
(ii) in the good faith opinion of the President/CEO and Management, the EMPLOYEE
fails to fully and faithfully perform his obligations under this Employment
Agreement, and does not cure such failure within ten (10) working days after
receipt of notice of any failure.
(b) The termination of EMPLOYEEIS services shall not constitute a termination of
the restrictive obligations and duties under Paragraphs 10, 11, 12 and 13,
except as otherwise provided in this Employment Agreement.
(c) In the event of the bankruptcy (Chapter 7), reorganization (Chapter 11) or
other termination of the business of the EMPLOYER or of any subsidiary on which
EMPLOYEEIS continued employment and compensation is dependent, the provisions of
subparagraph 10(i) (B) and Paragraphs 12 and 13 shall continue in full force and
effect only so long as full base compensation by EMPLOYER shall continue.
(d) In the event of EMPLOYER's termination of EMPLOYEE's employment for any
reason other than for good cause as a result of , or in connection with, or as
the outcome of , a change of control of EMPLOYER, the provisions of subparagraph
10(i)(B) and Paragraphs 12 and 13 shall not remain in effect following
termination.
(e) In the event of a seizure of collateral security under the Pledge & Security
Agreement by EMPLOYEE as the result of a default by EMPLOYER under the Master
Agreement or otherwise, EMPLOYEE may terminate this Employment Agreement. In
such event, the provisions of subparagraph 10(i)(B) and Paragraphs 12 and 13
shall not remain in effect, while the provisions of Paragraph 11 shall remain in
effect, except that EMPLOYEE shall be entitled to use the proprietary
information to the extent required to utilize and market the seized collateral
security.
17. RELATIONSHIP OF EMPLOYMENT AGREEMENT TO MASTER AGREEMENT. (a) A
breach by EMPLOYER of this Employment
11
Agreement shall not constitute a breach of the contemporaneously-executed Master
Agreement, and a breach by EMPLOYER of the Master Agreement shall not constitute
a breach of this Employment Agreement.
(b) To EMPLOYER, the employment of EMPLOYEE is integral to the purchase of the
assets under the Purchase Agreement. Accordingly, (i) until April 18, 1998, a
voluntary termination (thereby excluding death and disability sufficient to
permit termination) by EMPLOYEE of this Employment Agreement or (ii) until April
18, 1997, a termination of EMPLOYEE's employment for a reasonrelated directly to
EMPLOYEE's ability to perform his required duties (thereby excluding conviction
of a felony or commission of an act of moral turpitude or unethical conduct)
shall be a breach of the Master Agreement. EMPLOYER's termination of EMPLOYEE's
employment for any reason other than those set forth above shall not be a breach
of the Master Agreement. Furthermore, a breach by EMPLOYEE of the terms of the
Master Agreement, other than those relating to this employment, shall not be a
breach of this Employment Agreement.
18. ARBITRATION. Any controversy or claim arising out of, or relating
to this Agreement, or the breach thereof, shall be settled by arbitration in New
York City, New York in accordance with the rules then pertaining of the American
Arbitration Association, but with all rights of discovery provided by the New
York Rules of Civil Procedure, and judgment upon the award rendered may be
entered in any court having jurisdiction thereof. The losing party shall pay all
costs and fees, including reimbursement of the attorney's fees of the winning
party.
19. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be construed
as a waiver of any subsequent breach by such other party. The failure of a party
to exercise any rights or privileges under this Agreement shall not be deemed to
be a waiver or extinguishment of such rights or privileges, all of which shall
continue to be exercisable.
20. BENEFIT. The rights and obligations of EMPLOYER under this
Agreement shall inure to the benefit of, and shall be binding upon it, its
successors and assigns. The protection of Paragraphs 10, 11 and 12 shall inure
to the benefit of EMPLOYER and any successors and assigns. The rights and
obligations of EMPLOYEE under this Agreement shall inure to the benefit of, and
shall be binding upon, his heirs, administrators, executors, successors and
assigns.
21. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by certified mail to
his residence in the case of EMPLOYEE, or to its principal office in the case of
EMPLOYER.
22. LIFE INSURANCE. EMPLOYER and/or one or more of its subsidiaries
may, in its discretion at any time after the
12
execution of this Agreement, apply for and procure, as owner and f or its own
benef it, insurance on the life of EMPLOYEE, in such amounts and in such forms
as EMPLOYER may choose. EMPLOYER shall not be required to give EMPLOYEE any
interest whatsoever in any such policy or policies, (although nothing contained
herein shall be deemed to prohibit any such arrangement) but EMPLOYEE shall, at
the request of EMPLOYER, subject himself to such medical examination, supply
such information, and execute such inf ormation releases and documents as may be
required by the insurance company or companies to whom EMPLOYER has applied for
such insurance.
23. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and may be modified only by agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
24. APPLICABLE LAW. This Agreement shall be governed for all purposes
by the laws of the State of New York. If any provision of this Agreement is
declared void, such provision shall be deemed severed from this Agreement, which
shall otherwise remain in full force and effect.
25. U.S. CURRENCY. All currency amounts stated in this Agreement are in
United States Dollars.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto set their hands and seals as of the day and year herein above
written.
FIDELITY HOLDINGS, INC.
ATTEST:
By:________________________________
Xxxxx Xxxxx, President
By:________________________________
Xxxxxxx Xxx, Secretary
WITNESS:
___________________________________
___________________________________ (L.S.)
Xxx Xxxxx, L.S.
