Contract
EMPLOYMENT
AGREEMENT, dated October 16, 2007, by and between DCAP GROUP,
INC., a Delaware corporation (the “Company”), and
XXXXX X. 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 and Chief Executive
Officer for a term commencing as of the date hereof (the “Effective Date”) and
terminating on June 30, 2009 (the “Expiration Date”), subject to earlier
termination as hereinafter provided (the employment period, as earlier
terminated or as extended as provided for herein, being referred to as the
“Term”).
1.2 This
Agreement will automatically renew for a one-year term upon its initial
expiration unless (a) the Employee has voluntarily terminated his employment,
(b) the Employee's employment has been earlier terminated as provided in this
Agreement, (c) the Company provides to the Employee, on or before July 1, 2008,
written notice that this Agreement is not to be renewed or (d) the Employee
provides to the Company, on or before July 1, 2008, written notice that this
Agreement is not to be renewed.
1.3 Upon
the
expiration of the Term or the termination of the Employee’s employment with the
Company for any reason whatsoever, whether during or following the Term, 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.
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2.
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DUTIES
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2.1 During
the Term, the Employee shall serve as the Company’s President, Chairman of the
Board 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 (the
“Board”) consistent with the Employee’s position.
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3.
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DEVOTION
OF TIME
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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.
3.2 The
Employee shall be permitted to engage in the following activities: (a) charity,
social or civic work, (b) tend to personal financial and legal affairs, and
(c)
subject to the prior written consent of the Company (following Board approval),
serve on the Board of Directors of, or advisor to, other business organizations,
and engage in any other business or business-related activity, in each case
(i.e., (a) through (c) above), provided that such activities do not interfere
with his full-time services to the Company.
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4.
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COMPENSATION
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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 Paragraphs 4.2, 4.3 and 4.4 below.
4.2 During
the Term, the Employee shall be entitled to receive a salary at the rate of
three hundred fifty thousand dollars ($350,000) per annum (the “Base
Salary”). The Employee shall be entitled to increases in the Base
Salary and other potential additional compensation as may be determined from
time to time by the Board in its sole discretion. All amounts due
hereunder shall be payable in accordance with the Company’s standard payroll
practices.
4.3 (a) Subject
to the terms hereof, the Employee shall also be entitled to receive from the
Company for each fiscal year during the Term a bonus (the “Bonus”) equal to the
following percentage of the Company’s Net Income (as hereinafter defined) for
such fiscal year (the “Bonus Payments”):
Net
Income Percentage
Less
than
$500,00 -0-
$500,000
-
$999,999 3%
$1,000,000
-
$1,499,999 4.5%
$1,500,000
or
more 6%
As
an illustration of the foregoing,
subject to the provisions hereof, in the event that the Company’s Net Income for
a particular fiscal year is $1,200,000, the Bonus would be $54,000 (assuming
that the Employee remained in the employ of the Company for the entire fiscal
year).
(b) For
purposes hereof, the term “Net Income” for any particular fiscal year shall mean
the Company's consolidated net income for such year determined in accordance
with generally accepted accounting principles consistently applied, as audited
and reported upon by the independent auditors of the Company, adjusted as
follows: (i) the after-tax effect of any extraordinary, exceptional
or nonrecurring gain or loss, or any gain or loss arising from the sale of
capital assets, including from the sale of stores, or arising out of any
transaction in capital stock of the Company or any of its subsidiaries shall
be
excluded; and (ii) the Bonus (and any other bonus) paid, or accrued with the
regard, to the Employee, but only the Employee, shall be excluded.
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(c) For
purposes hereof, with respect to the fiscal year ending December 31, 2007,
the
Company’s Net Income shall be determined for the entire fiscal year
(notwithstanding that the Effective Date falls within the fiscal
year).
(d) For
purposes hereof, with respect to the fiscal year in which this Agreement shall
expire or terminate (the “Termination Year”) and for which, pursuant to the
terms of this Agreement, the Employee is entitled to receive a Bonus, and
subject to the provisions of Paragraph 6 hereof, the Company’s Net Income shall
be determined for the period from the first day of the Termination Year until
such expiration or termination date (the “Termination Date”) by multiplying the
Company’s Net Income for the period from the first day of the Termination Year
until the end of the fiscal quarter in which the Termination Date falls (the
“Termination Quarter”) by a fraction, the numerator of which shall be the number
of days from the first day of the Termination Year until the Termination Date
(the “Number of Termination Year Days”) and the denominator of which shall be
the total number of days from the first day of the Termination Year until the
end of the Termination Quarter. In the event the Termination Quarter
shall be other than the last fiscal quarter of the Termination Year,
notwithstanding that the term “Net Income” shall have the meaning ascribed to it
by paragraph (b) hereof (as adjusted by the provisions of this paragraph (d)),
the application of such term to this paragraph (d) shall not be subject to
any
adjustment based upon an audit or report of the Company’s independent auditors
with respect to the Termination Year.
(e) In
determining the amount of the Bonus for the Termination Year, the threshold
dollar amounts set forth in paragraph (a) hereof shall be multiplied by a
fraction, the numerator of which shall be the Number of Termination Year Days
and the denominator of which shall be three hundred sixty-five
(365).
(f) The
Bonus shall be payable on an annual basis within thirty (30) days following
the receipt by the Company of the report of its independent auditors, with
regard to the Company’s Net Income for the particular fiscal year, calculated in
accordance with paragraph (b) hereof and otherwise consistent with the
consolidated financial statements of the Company for the fiscal year as set
forth on any Form 10-K or 10-KSB filed with the Securities and Exchange
Commission (the “SEC”), except that, with respect to any Termination Year in
which the Termination Quarter is other than the last fiscal quarter of the
Termination Year, the Bonus shall be payable within thirty (30) days following
the determination by the Company’s chief financial officer of the Company’s Net
Income through the end of the Termination Quarter, if any, calculated in
accordance with paragraph (b) hereof and otherwise consistent with the
consolidated financial statements of the Company for the period ended with
the
end of the Termination Quarter as set forth in any Form 10-Q or 10-QSB filed
with the SEC.
4.4 In
the
event that the Board adopts an executive bonus plan (the “Bonus Plan”) that
provides for the payment of a bonus to the Chief Executive Officer of the
Company, the Company will send to the Employee a written notice to such effect
(the “Bonus Plan Notice”) and will offer therein to replace prospectively the
provisions of Paragraph 4.3 hereof with those set forth in the Bonus Plan
effective with the date set forth in the Bonus Plan Notice (the “Bonus Plan
Effective Date”). In the event the Employee desires to accept such
offer, he shall do so by giving written notice thereof to the Chairman of the
Compensation Committee of the Board (the “Committee Chairman”) within ten (10)
days following his receipt of the Bonus Plan Notice. In the event
that the Employee timely notifies the Committee Chairman in writing of his
acceptance of the offer, the provisions of Paragraph 4.3 hereof shall thereupon
terminate, the day immediately preceding the Bonus Plan Effective Date shall
be
deemed to be the Termination Date for purposes of Paragraph 4.3 hereof and
the
Employee shall be entitled to receive a Bonus, if any, for the period ended
with
the Termination Date in accordance with the provisions of Paragraph 4.3
hereof.
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5.
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REIMBURSEMENT
OF EXPENSES
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5.1 Subject
to Paragraph 5.3 hereof, 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. Without limiting the generality of the
foregoing, the Company shall pay directly, or reimburse the Employee for, fees
payable for continuing education classes that are related to the Company’s
business; provided, however, that, without the prior written consent of the
Company (following Board approval), the maximum amount for which the Company
shall be responsible with respect to such classes shall be three thousand
dollars ($3,000) per annum.
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.
5.3 During
the Term, the Employee shall be entitled to receive a monthly automobile
allowance of one thousand dollars ($1,000) for any and all expenses related
to
the Employee’s automobile (i.e., lease payments, insurance, gas, tolls, parking,
etc.). Except for reimbursement of directly related automobile
expenses (i.e. parking and tolls) incurred by the Employee while fulfilling
his
duties and responsibilities to the Company, but which are outside of the
Employee’s normal day to day usage of his automobile, the Employee will not be
entitled to any additional or alternative reimbursement for any other automobile
related expenses.
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6.
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DISABILITY;
INSURANCE
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6.1 If,
during the Term, the Employee, in the opinion of a majority of all of the
members of the Board (excluding the Employee if he is a member), 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 (subject to the following sentence, the “Salary Continuation
Period”). 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.
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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 a disability insurance policy
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
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.
6.5 In
the event of the termination of the Employee’s employment based upon him
becoming Disabled, as liquidated damages, the Employee shall be entitled to
receive the compensation to which he is entitled until the expiration of the
Salary Continuation Period pursuant to Paragraph 4.3 hereof (i.e., the
Termination Date shall be considered the last day of the Salary Continuation
Period). The
amount to be paid to the Employee pursuant to this Paragraph 6.5 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.
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7.
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RESTRICTIVE
COVENANTS
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7.1 (a) 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 (as hereinafter defined) and with or without Good Reason (as
hereinafter defined), the Employee will not at any time during the eighteen
(18)
month period commencing with the date on which the Employee ceases to be
employed by the Company (the “Cessation Date”) (the “Restrictive Covenant
Period”), without the prior written consent of the Company, directly or
indirectly, whether individually or as a principal, officer, employee, partner,
shareholder, member, manager, director, agent of, or consultant or independent
contractor to, any entity,
(i) (A)
anywhere within five (5) miles of the location of any office of the Company
or
any franchisee thereof or (B) with respect to the Company’s premium finance
business and any other business with respect to which the Company requires
a
license to operate, within any state in which the Company has a license to
operate, in each case at the Cessation Date, engage or participate in a business
which, as of the Cessation 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 acquiring up to one percent (1%) of the outstanding voting stock
of any entity whose securities are listed on a stock exchange or
Nasdaq;
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(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 Cessation Date 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 Date, 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 Cessation Date was then actively
being solicited by the Company.
The
foregoing restrictions set forth in this Paragraph 7.1(a) shall apply likewise
during the Term.
7.2 The
Employee agrees to disclose promptly in writing to the Board 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 Effective Date or 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, at the Company’s
expense, in filing and/or prosecuting any such application.
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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
has
acquired and 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 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.
(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
Effective Date 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 the
Company and any and all subsidiaries and affiliates entities of the Company
in
existence from time to time.
7.5 In
connection with his agreement to the restrictions set forth in this Paragraph
7,
the Employee acknowledges the benefits accorded to him pursuant to the
provisions of this Agreement, including, without limitation, the agreement
on
the part of the Company to employ the Employee during the Term (subject to
the
terms and conditions hereof). The Employee also acknowledges and agrees that
the
covenants set forth in this Paragraph 7 are reasonable and necessary in order
to
protect and maintain the proprietary and other legitimate business interests
of
the Company and that the enforcement thereof would not prevent the Employee
from
earning a livelihood.
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8.
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VACATIONS;
LEAVE
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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 as of January 1, 2007
(i.e., January 1 through December 31), the time and duration thereof to be
determined by mutual agreement between the Employee and the Board of Directors
of the Company. The parties acknowledge and agree that, as of the
date hereof, the Employee has taken seven (7) days vacation time during
2007. 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 that is unused as of the
end
of any twelve (12) month period during the Term. Further, the
Employee shall be entitled to the number of sick, personal, family, etc. days
off during each twelve (12) month period of the Term as set forth in the
Company’s employee handbook.
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9.
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PARTICIPATION
IN EMPLOYEE BENEFIT PLANS; STOCK
OPTIONS
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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 Effective
Date or thereafter adopted for the benefit generally of its executive
employees.
9.2 On
the
Effective Date, pursuant to the Company’s 2005 Equity Participation Plan and a
Stock Option Agreement in, or substantially in, the form attached hereto as
Exhibit A, the Company will grant to the Employee the right and option to
purchase up to one hundred thirty thousand (130,000) shares of common stock
of
the Company upon the terms set forth in the Stock Option Agreement.
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10.
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SERVICE
AS OFFICER AND
DIRECTOR
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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. In
the event the Company has in effect during the Term a director and officer
liability insurance policy, the Company will include the Employee therein as
a
named insured.
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11.
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EARLIER
TERMINATION
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11.1 The
Employee’s employment hereunder shall automatically terminate upon his death,
may terminate at the option of the Company in the event of Cause, and may
terminate at the option of the Employee for Good Reason.
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 (which breach, if
curable, is not cured by the Employee within ten (10) days of the Employee’s
receipt of written notice thereof from the Company), or the Employee’s
engagement in misconduct which is materially injurious to the Company or any
of
subsidiaries.
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11.3 The
Employee’s employment may be terminated by the Employee at any time during the
Term for Good Reason. As used in this Agreement, “Good Reason” shall
mean (a) any breach of any material covenant on the Company’s part (which
breach, if curable, is not cured by the Company within ten (10) days of the
Company’s receipt of written notice thereof from the Employee), or (b) a
material dimunition in the Employee’s duties and responsibilities (other than
following an event constituting Cause) in his capacity as President, Chairman
of
the Board and Chief Executive Officer of the Company.
11.4 Upon
termination of the Employee’s employment by the Company for Cause or by the
Employee without Good Reason, 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 hereof, and except, in the case
of
a termination of employment by the Employee without Good Reason, for any Bonus
amount for the completed fiscal year immediately preceding the date of
termination, as provided in Paragraph 4.3 hereof. As an illustration
of the foregoing, in the event of a termination of employment by the Employee
without Good Reason on March 1, the Employee would be entitled to receive the
amount payable to him pursuant to Paragraph 4.2 hereof to March 1 and the
amount, if any, payable to him pursuant to Paragraph 4.3 hereof for the
immediately preceding fiscal year ended December 31. In the event of
the termination of the Employee’s employment by the Company for Cause or by the
Employee without Good Reason, 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.
11.5 In
the
event of the termination of the Employee’s employment by the Company during the
Term without Cause or by the Employee for Good Reason, as liquidated damages,
the Employee shall be entitled to receive (a) the compensation to which he
would
have been entitled until the expiration of the Term pursuant to Paragraph 4.2
hereof and (b) the compensation to which he is entitled to receive until the
Termination Date pursuant to Paragraph 4.3 hereof. The compensation
payable pursuant to (a) above 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 11.5 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.
11.6 In
order
to protect the Employee against the possible consequences and uncertainties
of a
Change of Control of the Company (as hereinafter defined) and thereby induce
the
Employee to remain in the employ of the Company, the Company agrees
that:
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(a) If,
during the Term, the Employee’s employment is terminated by the Company within
eighteen (18) months subsequent to a Change of Control other than for Cause,
the
Company shall pay to the Employee an amount in cash equal to one and one-half
(1.5) times the Employee’s annual salary in effect at the time of the
termination of employment (the “Change of Control Payment”). The
Change of Control Payment shall be payable in two (2) equal installments, with
the initial payment being due and payable on the tenth day following
the date of termination of employment and the remaining payment being due and
payable on the one year anniversary of the date of termination of
employment. In addition, in such event, the Company shall continue to
pay for the Employee’s health insurance premiums for the remainder of the
Term. The Change of Control Payment shall be in lieu of the amount
payable to the Employee pursuant to Paragraph 11.5 hereof; provided, however,
that, in the event that the termination of employment occurs more than eighteen
(18) months prior to the Expiration Date, the Employee may elect to receive
the
amount payable pursuant to Paragraph 11.5 hereof in lieu of the amount payable
pursuant to this Paragraph 11.6. The amount to be paid to the
Employee pursuant to this Paragraph 11.6 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.
(b) As
used in this Paragraph 11.6, a “Change of Control” shall be deemed to have
occurred if
(i) any
“person” or “group of persons” (as such terms are used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the “1934
Act”), becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated
under the 1934 Act), directly or indirectly, of securities of the Company
representing more than thirty-three and one-third percent (33-1/3%) of the
Company’s then outstanding securities having the right to vote on the election
of directors (“Voting Securities”), except that there shall be excluded any
Voting Securities acquired from the Company with respect to which the Employee
gave his approval as a member of the Board;
(ii) when
individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or
consents by or on behalf of a person or entity other than the Board;
or
(iii) the
Company consummates (A) a reorganization, merger or consolidation of the
Company, with respect to which in each case all or substantially all of the
individuals and entities who were the beneficial owners of the Voting Securities
of the Company immediately prior to such reorganization, merger or consolidation
do not, following such reorganization, merger or consolidation, beneficially
own, directly and indirectly, more than 50% of the then combined voting power
of
the then outstanding voting securities entitled to vote generally in the
election of directors of the corporation or other entity resulting from such
reorganization, merger of consolidation, or (B) the sale or other disposition
of
all or substantially all of the assets of the Company.
10
11.7 The
termination or expiration of this Agreement shall not affect the continuing
operation and effect of Paragraph 7 hereof, which shall continue in full force
and effect according to its terms. In addition, the termination or
expiration of this Agreement will not result in a termination or waiver of
any
rights and remedies that the Company may have under this Agreement and
applicable law.
|
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 monies and other consideration 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
monies and other consideration 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.
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
|
13.1 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.
11
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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) 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:
12
If
to the
Employee:
X.X.
Xxx
000
Xxxxxxx,
Xxx Xxxx 00000
Telecopier
Number: (000) 000-0000
If
to the
Company:
c/o
Xxxx
Xxxxxxx
Chairman,
Compensation Committee
0000
Xxxxxxxx Xxxxxx
Xxxxx
000
Xxxxxx
Xxxx, Xxx Xxxx 00000
Telecopier
Number: (000) 000-0000
with
a
copy to:
Certilman
Balin Xxxxx & Xxxxx, LLP
00
Xxxxxxx Xxxxxx
Xxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Xxxx
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.
13
|
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.
|
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.
|
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.]
14
IN
WITNESS WHEREOF,
the undersigned have executed this Agreement as of the day and year above
written.
|
DCAP
GROUP, INC.
|
|||
|
|
By:
|
||
| Xxxxx X. Xxxxxxxxx | |||
