EMPLOYMENT AGREEMENT, dated May 10, 2001 by and between DCAP GROUP, INC., a
Delaware corporation (the "Company"), and XXXXX XXXXXXXXX (the "Employee").
RECITALS
WHEREAS, the Company and the Employee desire to enter into an employment
agreement which will set forth the terms and conditions upon which the Employee
shall be employed by the Company and upon which the Company shall compensate the
Employee.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
hereinafter set forth, the parties hereto have agreed, and do hereby agree, as
follows:
1. EMPLOYMENT; TERM
1.1 The Company will employ the Employee in its business, and the Employee
will work for the Company therein, as its President, Chairman of the Board of
Directors and Chief Executive Officer for a term commencing as of April 1, 2001
(the "Effective Date") and terminating on the fourth anniversary of the
Effective Date (the "Expiration Date"), subject to earlier termination for
"cause" as hereinafter provided (the employment period, as earlier terminated,
being referred to as the "Term").
1.2 Upon the expiration of the Term or the termination of the Employee's
employment with the Company for any reason whatsoever, he shall be deemed to
have resigned all of his positions as an employee, officer and director of the
Company and of each and every subsidiary thereof.
2. DUTIES
2.1 During the Term, the Employee shall serve as the Company's President,
Chairman of the Board of Directors and Chief Executive Officer and shall perform
duties of an executive character consisting of administrative and managerial
responsibilities on behalf of the Company of the type and nature heretofore
assigned to the Employee and such further duties of an executive character as
shall, from time to time, be delegated or assigned to him by the Board of
Directors of the Company consistent with the Employee's position.
3. DEVOTION OF TIME
3.1 During the Term, the Employee shall expend all of his working time for
the Company; shall devote his best efforts, energy and skill to the services of
the Company and the promotion of its interests; and shall not take part in
activities detrimental to the best interests of the Company.
4. COMPENSATION
4.1 For all services to be rendered by the Employee during the Term, and in
consideration of the Employee's representations and covenants set forth in this
Agreement, the Employee shall be entitled to receive from the Company
compensation as set forth in Paragraph 4.2.
4.2 During the Term, the Employee shall be entitled to receive a salary at
the rate of two hundred thousand dollars ($200,000) per annum. The Employee
shall be entitled to such additional compensation as may be determined from time
to time by the Board of Directors of the Company in its sole discretion. All
amounts due hereunder shall be payable in accordance with the Company's standard
payroll practices.
5. REIMBURSEMENT OF EXPENSES
5.1 The Company shall pay directly, or reimburse the Employee for, all
reasonable and necessary expenses and disbursements incurred by the Employee for
and on behalf of the Company in the performance of his duties during the Term.
5.2 The Employee shall submit to the Company, not less than once in each
calendar month, reports of such expenses and disbursements in form normally used
by the Company and receipts with respect thereto and the Company's obligations
under Paragraph 5.1 hereof shall be subject to compliance therewith.
6. DISABILITY; INSURANCE
6.1 If, during the Term, the Employee, in the opinion of a majority of all
of the members of the Board of Directors of the Company (excluding the
Employee), as confirmed by competent medical evidence, shall become physically
or mentally incapacitated to perform his duties for the Company hereunder
("Disabled") for a continuous period, then for the first six (6) months of such
period he shall receive his full salary. In no event, however, shall the
Employee be entitled to receive any payments under this Paragraph 6.1 beyond the
expiration or termination date of this Agreement. Effective with the date of his
resumption of full employment, the Employee shall be re-entitled to receive his
full salary. If such illness or other incapacity shall endure for a continuous
period of at least nine (9) months or for at least two hundred fifty (250)
business days during any eighteen (18) month period, the Company shall have the
right, by written notice, to terminate the Employee's employment hereunder as of
a date (not less than thirty (30) days after the date of the sending of such
notice) to be specified in such notice. The Employee agrees to submit himself
for appropriate medical examination to a physician of the Company's designation
as necessary for purposes of this Paragraph 6.1.
6.2 The obligations of the Company under this Paragraph 6 may be satisfied,
in whole or in part, by payments to the Employee under disability insurance
provided by the Company.
6.3 Notwithstanding the foregoing, in the event, at the time of any
apparent incapacity, the Company has in effect a disability policy with respect
to the Employee, the Employee
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shall be considered Disabled for purposes of Paragraph 6.1 only if he is
considered disabled for purposes of the policy.
6.4 The Company agrees to obtain a disability insurance policy on behalf of
the Employee (subject to the Employee's satisfying any requirements therefor)
and maintain such policy in effect during the Term. In no event shall the
Company be liable for premiums in excess of $6,500 per annum with respect
thereto.
7. RESTRICTIVE COVENANTS
7.1 The services of the Employee are unique and extraordinary and essential
to the business of the Company, especially since the Employee shall have access
to the Company's customer lists, trade secrets and other privileged and
confidential information essential to the Company's business. Therefore, the
Employee agrees that, if the term of his employment hereunder shall expire or
his employment shall at any time terminate for any reason whatsoever, with or
without cause, the Employee will not at any time prior to the second annual
anniversary of the Expiration Date (the "Restrictive Covenant Period"), without
the prior written consent of the Company, directly or indirectly, anywhere
within five (5) miles of the location of any office of the Company or any
franchisee thereof at the date of expiration or termination, whether
individually or as a principal, officer, employee, partner, shareholder, member,
manager, director, agent of, or consultant or independent contractor to, any
entity, (i) engage or participate in a business which, as of such expiration or
termination date, is similar to or competitive with, directly or indirectly,
that of the Company and shall not make any investments in any such similar or
competitive entity, except that the foregoing shall not restrict the Employee
from having an ownership interest in the insurance brokerage locations
identified on Schedule 3.1 attached hereto or acquiring up to one percent (1%)
of the outstanding voting stock of any entity whose securities are listed on a
stock exchange or Nasdaq; (ii) cause or seek to persuade any director, officer,
employee, customer, client, account, agent or supplier of, or consultant or
independent contractor to, the Company, or others with whom the Company has a
business relationship (collectively "Business Associates"), to discontinue or
materially modify the status, employment or relationship of such person or
entity with the Company, or to become employed in any activity similar to or
competitive with the activities of the Company; (iii) cause or seek to persuade
any prospective customer, client, account or other Business Associate of the
Company (which at or about the date of cessation of the Employee's employment
with the Company was then actively being solicited by the Company) to determine
not to enter into a business relationship with the Company or to materially
modify its contemplated business relationship; (iv) hire, retain or associate in
a business relationship with, directly or indirectly, any director, officer or
employee of the Company; or (v) solicit or cause or authorize to be solicited,
or accept, for or on behalf of him or any third party, any business from, or the
entering into of a business relationship with, (a) others who are, or were
within one (l) year prior to the cessation of his employment with the Company, a
customer, client, account or other Business Associate of the Company, or (b) any
prospective customer, client, account or other Business Associate of the Company
which at or about the date of such cessation was then actively being solicited
by the Company. The foregoing restrictions set forth in this Paragraph 7.1 shall
apply likewise during the Term.
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7.2 The Employee agrees to disclose promptly in writing to the Board of
Directors of the Company all ideas, processes, methods, devices, business
concepts, inventions, improvements, discoveries, know-how and other creative
achievements (hereinafter referred to collectively as "discoveries"), whether or
not the same or any part thereof is capable of being patented, trademarked,
copyrighted, or otherwise protected, which the Employee, while employed by the
Company, conceives, makes, develops, acquires or reduces to practice, whether
acting alone or with others and whether during or after usual working hours, and
which are related to the Company's business or interests, or are used or usable
by the Company, or arise out of or in connection with the duties performed by
the Employee. The Employee hereby transfers and assigns to the Company all
right, title and interest in and to such discoveries (whether conceived, made,
developed, acquired or reduced to practice on or prior to the date hereof or
hereafter during his employment with the Company), including any and all
domestic and foreign copyrights and patent and trademark rights therein and any
renewals thereof. On request of the Company, the Employee will, without any
additional compensation, from time to time during, and after the expiration or
termination of, the Term, execute such further instruments (including, without
limitation, applications for copyrights, patents, trademarks and assignments
thereof) and do all such other acts and things as may be deemed necessary or
desirable by the Company to protect and/or enforce its right in respect of such
discoveries. All expenses of filing or prosecuting any patent, trademark or
copyright application shall be borne by the Company, but the Employee shall
cooperate in filing and/or prosecuting any such application.
7.3 (a) The Employee represents that he has been informed that it is the
policy of the Company to maintain as secret all confidential information
relating to the Company, including, without limitation, any and all knowledge or
information with respect to secret or confidential methods, processes, plans,
materials, customer lists or data, or with respect to any other confidential or
secret aspect of the Company's activities, and further acknowledges that such
confidential information is of great value to the Company. The Employee
recognizes that, by reason of his employment with the Company, he will acquire
confidential information as aforesaid. The Employee confirms that it is
reasonably necessary to protect the Company's goodwill, and, accordingly, hereby
agrees that he will not, directly or indirectly (except where authorized by the
Board of Directors of the Company), at any time during the term of this
Agreement or thereafter divulge to any person, firm or other entity, or use, or
cause or authorize any person, firm or other entity to use, any such
confidential information.
(b) The Employee agrees that he will not, at any time, remove from the
Company's premises any drawings, notebooks, software, data or other confidential
information relating to the business and procedures heretofore or hereafter
acquired, developed and/or used by the Company, except where necessary in the
fulfillment of his duties hereunder.
(c) The Employee agrees that, upon the expiration or termination of this
Agreement or the termination of his employment with the Company for any reason
whatsoever, he shall promptly deliver to the Company any and all drawings,
notebooks, software, data and other documents and material, including all copies
thereof, in his possession or under his control relating to any confidential
information or discoveries, or which is otherwise the property of the Company.
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(d) For purposes hereof, the term "confidential information" shall mean all
information given to the Employee, directly or indirectly, by the Company and
all other information relating to the Company otherwise acquired by the Employee
during the course of his employment with the Company (whether on or prior to the
date hereof or hereafter), other than information which (i) was in the public
domain at the time furnished to, or acquired by, the Employee, or (ii)
thereafter enters the public domain other than through disclosure, directly or
indirectly, by the Employee or others in violation of an agreement of
confidentiality or nondisclosure.
7.4 For purposes of this Paragraph 7, the term "Company" shall mean and
include any and all subsidiaries and affiliates entities of the Company in
existence from time to time.
8. VACATIONS; LEAVE
8.1 The Employee shall be entitled to an aggregate of four (4) weeks
vacation time for each twelve (12) month period during the Term commencing on
the date hereof, the time and duration thereof to be determined by mutual
agreement between the Employee and the Board of Directors of the Company. Any
vacation time not used by the end of the Term shall be forfeited without
compensation. In addition, the Employee shall not be entitled to carry over or
use any vacation time and/or sick or personal days that are unused as of the
date hereof.
9. PARTICIPATION IN EMPLOYEE BENEFIT PLANS; STOCK OPTIONS
9.1 The Employee shall be accorded the right to participate in and receive
benefits under and in accordance with the provisions of any pension, profit
sharing, insurance, medical and dental insurance or reimbursement (with family
coverage) or other plan or program of the Company either in existence as of the
date hereof or hereafter adopted for the benefit generally of its executive
employees.
9.2 Concurrently with the execution hereof, pursuant to the Company's 1998
Stock Option Plan and a Stock Option Agreement of even date, the Company is
granting to the Employee the right and option to purchase up to 1,000,000 Common
Shares of the Company upon the terms set forth in the Stock Option Agreement.
10. SERVICE AS OFFICER AND DIRECTOR
10.1 During the Term, the Employee shall, if elected or appointed, serve as
(a) an officer of the Company, and/or any subsidiaries of the Company in
existence or hereafter created or acquired and (b) a director of the Company
and/or any such subsidiaries of the Company in existence or hereafter created or
acquired, in each case without any additional compensation for such services.
11. EARLIER TERMINATION
11.1 The Employee's employment hereunder shall automatically terminate upon
his death and may terminate at the option of the Company in the event of "cause"
(as hereinafter provided).
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11.2 The Employee's employment may be terminated by the Company at any time
during the Term upon written notice for "cause". As used in this Agreement,
"cause" shall mean the Employee's commission of any act in the performance of
his duties constituting common law fraud, a felony or other gross malfeasance of
duty, the Employee's commission of any act involving moral turpitude, any
material misrepresentation by the Employee (including, without limitation, a
breach of any representation set forth in Paragraph 13.1 hereof, any breach of
any material covenant on the Employee's part herein set forth, or the Employee's
engagement in misconduct which is materially injurious to the Company or any of
subsidiaries.
11.3 Upon termination of the Employee's employment with the Company for
cause, the Company shall have no further obligations to the Employee and the
Employee shall be entitled to no further compensation from the Company, except
for any pro-rata amounts due to the Employee at such date of termination, as
provided for in Paragraph 4.2. In the event of the termination of the Employee's
employment with the Company for cause, the amount to be paid to the Employee
pursuant to this Paragraph 11.3 shall constitute the sole and exclusive remedy
of the Employee, and the Employee shall not be entitled to any other or further
compensation, rights or benefits hereunder or otherwise.
11.4 In the event of the termination of the Employee's employment by the
Company during the Term without "cause," as liquidated damages, the Employee
shall be entitled to receive the compensation to which he would have been
entitled until the expiration of the Term pursuant to Paragraph 4.2 hereof. Such
compensation shall be payable to the Employee in accordance with the Company's
standard payroll practices as if his employment had continued. The amount to be
paid to the Employee pursuant to this Paragraph 11.4 shall constitute the sole
and exclusive remedy of the Employee, and the Employee shall not be entitled to
any other or further compensation, rights or benefits hereunder or otherwise.
12. INJUNCTIVE RELIEF; REMEDIES
12.1 The Employee acknowledges and agrees that, in the event he shall
violate or threaten to violate any of the restrictions of Paragraph 3 or 7
hereof, the Company will be without an adequate remedy at law and will therefore
be entitled to enforce such restrictions by temporary or permanent injunctive or
mandatory relief in any court of competent jurisdiction without the necessity of
proving damages.
12.2 The Employee agrees further that the Company shall have the following
additional rights and remedies:
(i) The right and remedy to require the Employee to account for and
pay over to the Company all profits derived or received by him as the
result of any transactions constituting a breach of any of the provisions
of Paragraph 7.1, and the Employee hereby agrees to account for and pay
over such profits to the Company; and
(ii) The right to recover attorneys' fees incurred in any action or
proceeding in which it seeks to enforce its rights under Paragraph 7 hereof
and is successful on any grounds.
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12.3 Each of the rights and remedies enumerated above shall be independent
of the other, and shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.
12.4 The parties hereto intend to and hereby confer jurisdiction to enforce
the covenants contained in Paragraph 7.1 upon the courts of any jurisdiction
within the geographical scope of such covenants (a "Jurisdiction"). In the event
that the courts of any one or more of such Jurisdictions shall hold such
covenants unenforceable by reason of the breadth of their scope or otherwise, it
is the intention of the parties hereto that such determination not bar or in any
way affect the Company's right to the relief provided above in the courts of any
other Jurisdiction, as to breaches of such covenants in such other respective
Jurisdictions, the above covenants as they relate to each Jurisdiction being,
for this purpose, severable into diverse and independent covenants.
13. NO RESTRICTIONS
13.l The Employee hereby represents that neither the execution of this
Agreement nor his performance hereunder will (a) violate, conflict with or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under
the terms, conditions or provisions of any contract, agreement or other
instrument or obligation to which the Employee is a party, or by which he may be
bound, or (b) violate any order, judgment, writ, injunction or decree applicable
to the Employee. In the event of a breach hereof, in addition to the Company's
right to terminate this Agreement, the Employee shall indemnify the Company and
hold it harmless from and against any and all claims, losses, liabilities, costs
and expenses (including reasonable attorneys' fees) incurred or suffered in
connection with or as a result of the Company's entering into this Agreement or
employing the Employee hereunder.
14. ARBITRATION
14.1 Except with regard to Paragraph 12.1 hereof and any other matters that
are not a proper subject of arbitration, all disputes between the parties hereto
concerning the performance, breach, construction or interpretation of this
Agreement or any portion thereof, or in any manner arising out of this Agreement
or the performance thereof, shall be submitted to binding arbitration, in
accordance with the rules of the American Arbitration Association. The
arbitration proceeding shall take place at a mutually agreeable location in
Nassau County, New York or such other location as agreed to by the parties.
14.2 The award rendered by the arbitrator shall be final, binding and
conclusive, shall be specifically enforceable, and judgment may be entered upon
it in accordance with applicable law in the appropriate court in the State of
New York, with no right of appeal therefrom.
14.3 Each party shall pay its or his own expenses of arbitration, and the
expenses of the arbitrator and the arbitration proceeding shall be equally
shared; provided, however, that, if, in the opinion of the arbitrator (or a
majority of the arbitrators if more than one), any claim or defense was
unreasonable, the arbitrator(s) may assess, as part of their award, all or any
part of the arbitration expenses of the other party (including reasonable
attorneys' fees) and of the arbitrator(s)
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and the arbitration proceeding against the party raising such unreasonable claim
or defense; provided, further, that, if the arbitration proceeding relates to
the issue of "cause" for termination of employment, (a) if, in the opinion of a
majority of the arbitrators, "cause" existed, the arbitrator(s) shall assess, as
part of their award, all of the arbitration expenses of the Company (including
reasonable attorneys' fees) and of the arbitrator(s) and the arbitration
proceeding against the Employee or (b) if, in the opinion of a majority of the
arbitrator(s), "cause" did not exist, the arbitrator(s) shall assess, as part of
their award, all of the arbitration expenses of the Employee (including
reasonable attorneys' fees) and of the arbitrator(s) and the arbitration
proceeding against the Company.
15. ASSIGNMENT
15.1 This Agreement, as it relates to the employment of the Employee, is a
personal contract and the rights and interests of the Employee hereunder may not
be sold, transferred, assigned, pledged or hypothecated.
16. NOTICES
16.1 Any notice required or permitted to be given pursuant to this
Agreement shall be deemed to have been duly given when delivered by hand or sent
by certified or registered mail, return receipt requested and postage prepaid,
overnight mail or courier or telecopier as follows:
If to the Employee:
X.X. Xxx 000
Xxxxxxx, Xxx Xxxx 00000
Telecopier Number: (000) 000-0000
with a copy to:
Lazer, Aptheker, Xxxxxxx, Xxxxxxx & Xxxxx, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx, Esq.
Telecopier Number: (000) 000-0000
If to the Company:
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attention: Secretary
Telecopier Number: (000) 000-0000
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with a copy to:
Certilman Balin Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Telecopier Number: (000) 000-0000
or at such other address as any party shall designate by notice to the other
party given in accordance with this Paragraph 16.1.
17. GOVERNING LAW
17.1 This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely in New York.
18. WAIVER OF BREACH; PARTIAL INVALIDITY
18.1 The waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent
breach. If any provision, or part thereof, of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall attach only
to such provision and not in any way affect or render invalid or unenforceable
any other provisions of this Agreement, and this Agreement shall be carried out
as if such invalid or unenforceable provision, or part thereof, had been
reformed, and any court of competent jurisdiction or arbitrators, as the case
may be, are authorized to so reform such invalid or unenforceable provision, or
part thereof, so that it would be valid, legal and enforceable to the fullest
extent permitted by applicable law.
19. ENTIRE AGREEMENT
19.1 This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and there are no representations,
warranties or commitments except as set forth herein. This Agreement supersedes
all prior agreements, understandings, negotiations and discussions, whether
written or oral, of the parties hereto relating to the subject matter hereof.
This Agreement may be amended, and any provision hereof waived, only by a
writing executed by the party sought to be charged. No amendment or waiver on
the part of the Company shall be valid unless approved by its Board of
Directors.
20. COUNTERPARTS
20.1 This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.
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21. FACSIMILE SIGNATURES
21.1 Signatures hereon which are transmitted via facsimile shall be deemed
original signatures.
22. REPRESENTATION BY COUNSEL; INTERPRETATION
22.1 The Employee acknowledges that he has been represented by counsel in
connection with this Agreement. Accordingly, any rule or law or any legal
decision that would require the interpretation of any claimed ambiguities in
this Agreement against the party that drafted it has no application and is
expressly waived by the Employee. The provisions of this Agreement shall be
interpreted in a reasonable manner to give effect to the intent of the parties
hereto.
23. HEADINGS
23.1 The headings and captions under sections and paragraphs of this
Agreement are for convenience of reference only and do not in any way modify,
interpret or construe the intent of the parties or affect any of the provisions
of this Agreement.
[Remainder of page intentionally left blank; Signature page follows]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year above written.
DCAP GROUP, INC.
By: /s/Xxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxx, Secretary
/s/ Xxxxx Xxxxxxxxx
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Xxxxx Xxxxxxxxx
