SERVICES AGREEMENT
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AGREEMENT made as of the 1st day of March, 1998, by and
between COVER-ALL TECHNOLOGIES INC., a Delaware corporation (the
"Company") (formerly Warner Insurance Services, Inc., a Delaware
corporation), having its principal office at 00-00 Xxxxxxx Xxxxx,
Xxxx Xxxx, Xxx Xxxxxx 00000 and TURNBURY ASSOCIATES, Xxx 000,
0000 Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxx 00000 (the
"Consultant").
W I T N E S S E T H:
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WHEREAS, the Consultant has been furnishing the
services of Xxxxx Xxxxxxx ("Xxxxxxx") to the Company and Xxxxxxx
has been serving as Chief Executive Officer of the Company, and
the Company and the Consultant wish to continue this arrangement
pursuant to the terms hereof.
NOW, THEREFORE, in consideration of the
representations, warranties and mutual covenants set forth
herein, the parties agree as follows:
1. Services. The Company, effective as of January 1,
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1998, hereby agrees to continue to retain the Consultant to
provide the services of Xxxxxxx as Chief Executive Officer of the
Company and the Consultant hereby accepts such retention, all
upon and subject to the terms and conditions hereinafter set
forth.
2. Term. The term of retention under this Agreement
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(the "Services Agreement") shall commence as of January 1, 1998
and shall continue in full force and effect until December 31,
1998 (the "Retention Term"), subject to earlier termination as
described in Section 7 herein.
3. Duties.
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The Consultant will provide Xxxxxxx to perform the
duties as Chief Executive Officer of the Company and such other
duties and services of those offices or positions or of such
other office or position as may be assigned to him from time to
time by the Board of Directors of the Company. In addition, the
Consultant will furnish to the Company the services of Xxxxxxx to
hold, without additional compensation therefor, the position of
Chairman of the Board of Directors of the Company and such other
offices and directorships in the Company or any parent or
subsidiary of the Company to which, from time to time, he may be
appointed or elected.
4. Fees
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(a) (i) Fees. In consideration of the services to be
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furnished by the Consultant hereunder, including, without
limitation, any services rendered by Xxxxxxx as an officer or
director of the Company or any parent, subsidiary or affiliate of
the Company, the Company agrees to pay to the Consultant, and the
Consultant agrees to accept as a retention fee, an annual fee of
$150,000.00 (the "Fee"), payable in equal monthly installments,
retroactive to January 1, 1998. The Company, by action of the
Board of Directors may, in its sole discretion, increase the Fee
at any time.
(ii) Bonus. In addition to the payment of the
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Fee, as provided for hereunder, the Company shall pay the
Consultant a bonus based upon the financial results of the
Company, such bonus to be paid on the conditions hereinafter set
forth:
A. $50,000 upon the Company achieving 1998
earnings before income taxes ("EBIT") of at least $.04 per share
so long as the Company has reported a positive net income for
each three-month period ending on March 31, June 30, and
September 30, 1998. The determination as to whether the Company
achieves EBIT of $.04 per share shall be made in accordance with
generally accepted accounting principles consistently applied
(except that any income or loss attributable to the repurchase of
the Care Software rights shall be excluded for purposes of such
calculation) and shall be based upon the audited financial
statements to be filed by the Company in its Form 10-K Annual
Report with the Securities and Exchange Commission and such
bonus, if any, shall be paid no later than 10 days from the date
of such filing; and
B. an additional bonus (the "Super Bonus")
paid pursuant to the terms of a plan to be prepared by Xxxxxxx
and agreed to by the Board of Directors of the Company and
submitted to the Board of Directors of the Company for
consideration and agreement, as evidenced by a Board resolution
(the "Super Bonus Plan"). The Super Bonus Plan shall be
determined by Xxxxxxx and the participants in the Super Bonus
Plan shall be limited to the Chief Executive Officer (Xxxxxxx),
the President (Xxxxx Xxxxx) and the Chief Technology Officer
(Xxxxx Xxxxx) and the Super Bonus shall be distributed 60% to the
Chief Executive Officer (Xxxxxxx), 20% to the President (Xxxxx)
and 20% to the Chief Technology Officer (Ophir). The bonus pool
to be distributed under the Super Bonus Plan shall be equal to
20% of the Company's 1998 EBIT in excess of $2,000,000, provided
the Company's 1998 revenue exceeds $18.453 million (which,
pursuant to the Super Bonus Plan, $2,000,000 shall be calculated
after the deduction of a $6,000 bonus per each employee of the
Company who is not eligible for the Super Bonus for fiscal year
ended December 31, 1998). The determination as to whether the
Company achieves EBIT above $2,000,000 and revenue above $18.453
million shall be made in accordance with generally accepted
accounting principles consistently applied (except that any
income or loss attributable to the repurchase of the Care
Software rights by Care shall be excluded for purposes of such
calculation) and shall be based upon the audited financial
statements to be filed by the Company in its Form 10-K Annual
Report with the Securities and Exchange Commission and such Super
Bonus, if any, shall be paid no later than 10 days from the date
of such filing.
(b) Reimbursement of Expenses. The Consultant shall
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be reimbursed for all reasonable and necessary expenses incurred
by the Consultant and/or Xxxxxxx in performing services
hereunder, provided such expenses are adequately documented in
accordance with the Company's policies.
(c) Indemnification. To the extent and under the
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conditions provided in the Company's bylaws, the Consultant and
Xxxxxxx shall be indemnified by the Company for judgments, costs,
and expenses for acts performed hereunder and as an officer and
employee of the Company (subject to Delaware law).
5. Termination for Cause.
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(a) Notwithstanding anything to the contrary in this
Services Agreement, the Company, upon written notice to the
Consultant, may terminate this Services Agreement for Cause,
which, for purposes of this Services Agreement, shall be defined
to mean (i) the continued and repeated failure or refusal by the
Consultant or its employees to perform specific written
directives of the Board of Directors of the Company, (ii)
embezzlement or any offense involving misuse or misappropriation
of money or other property of the Company, (iii) indictment for a
crime, (iv) any act of dishonesty, disloyalty or other conduct
that is materially injurious to the Company, or (v) material
breach by the Consultant of any of the terms of this Services
Agreement other than those contained in this Section 5.
(b) In the event the Consultant hereunder is
terminated by the Company pursuant to subsection (a) of this
Section 5 during the Retention Term, the Company shall pay to the
Consultant a pro rata monthly fee through the date of its
termination, and the Consultant shall not be entitled to any
bonus with respect to such year of termination.
6. Change in Control.
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(a) A "Change in Control" of the Company shall be
deemed to have occurred if (i) any person (including any
individual, firm, partnership or other entity other than Software
Investments Limited, Care Corporation Limited, the CIGNA
Companies and The Xxxxxx Plan Corporation) becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 51% or more of the combined voting power of the
Company's then outstanding common stock, $.01 par value; (ii) the
stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or
consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 80% of
the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation, or (iii) the stockholders or the Company
approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(b) If, at any time during the Retention Term, there
occurs a Change in Control of the Company, (i) the Consultant
shall cause Xxxxxxx to resign from his positions as Chief
Executive Officer, Chairman of the Board of Directors and a
director of the Company, and (ii) all outstanding stock options
held by Xxxxxxx upon a Change in Control shall automatically vest
in full, and such options may be exercised by Xxxxxxx in
accordance with the terms of the non-qualified stock option
agreement between Xxxxxxx and the Company dated as of April 29,
1997.
7. Severance Compensation.
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(a) In the event the services of the Consultant are
terminated by the Company prior to the expiration of the
Retention Term for any reason other than for Cause, and so long
as the Company has reported a positive net income for each three
month period ending on March 31, June 30 or September 30 of 1998
(each period hereinafter referred to as a "1998 Fiscal Quarter")
in the Company's quarterly financial statements for such 1998
Fiscal Quarter, in the respective amounts projected in the
Company's 1998 business plan, dated February 20, 1998 (and any
amendments thereto as presented by Xxxxxxx and agreed to by the
Board of Directors of the Company, as evidenced by a Board
resolution) (the "Income Statement"), such net income to be
determined in accordance with generally accepted accounting
principles consistently applied, (i) the Company shall pay to the
Consultant as severance fees an amount equal to three times the
monthly fee, (ii) the Company shall pay to the Consultant a pro
rata share of the bonuses through the date of termination payable
as and when finally calculated and (iii) all outstanding stock
options held by Xxxxxxx shall automatically vest in full, and
such options may be exercised by Xxxxxxx in accordance with the
terms of the non-qualified stock option agreement between Xxxxxxx
and the Company dated as of April 29, 1997.
(b) In the event the Consultant's services hereunder
are terminated by the Company prior to the expiration of the
Retention Term for any reason and the Consultant does not qualify
for severance fees under the provisions of subsection (a) of this
Section 7, the Company shall pay to the Consultant as severance
fees an amount equal to one (1) times the monthly fee and no
bonus shall be payable.
8. Non-Disclosure of Confidential Information.
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(a) The Consultant represents that it has been
informed that it is the policy of the Company to maintain as
secret and confidential all information relating to (i) the
products, processes and/or business concepts used by the Company
and (ii) the customers and employees of the Company
("Confidential Information"), and the Consultant further
acknowledges that such Confidential Information is of great value
to the Company and is the property of the Company. The parties
recognize that the services to be performed by the Consultant are
special and unique, and that by reason of its engagement by the
Company, he will acquire Confidential Information as aforesaid.
The parties confirm that to protect the Company's goodwill, it is
reasonably necessary that the Consultant agree, and accordingly
the Consultant does hereby agree, that it will not directly or
indirectly (except where authorized by the Board of Directors of
the Company for the benefit of the Company):
at any time during his its engagement hereunder or
after it ceases to be engaged by the Company, divulge
to any persons, firms or corporations other than the
Company (hereinafter referred to collectively as "Third
Parties"), or use, or cause to authorize any Third
Parties to use, any such Confidential Information, or
any other information regarded as confidential and
valuable by the Company which it knows or should know
is regarded as confidential and valuable by the Company
(whether or not any of the foregoing information is
actually novel or unique or is actually known to
others).
(b) The Consultant agrees that any breach or
threatened breach or alleged breach or alleged threatened breach
by it of any provision of this Section 8 shall entitle the
Company, in addition to any other legal remedies available to it,
to apply to any court of competent jurisdiction to enjoin such
breach or threatened breach or alleged breach or alleged
threatened breach. The parties understand and intend that each
restriction agreed to by the Consultant hereinabove shall be
construed as separable and divisible from every other
restriction, and that the unenforceability, in whole or in part,
of any other restriction, will not effect the enforceability of
the remaining restrictions and that one or more or all of such
restrictions may be enforced in whole or in part as the
circumstances warrant. No waiver of any one breach of the
restrictions contained in this Section 8 shall be deemed a waiver
of any future breach.
(c) The Consultant hereby acknowledges that it is
fully cognizant of the restrictions put upon it by this Section
8, and that the provisions of this Section 8 shall survive the
termination of this Services Agreement and its engagement with
the Company.
(d) Where disclosure of the Confidential Information
is required by (1) law, or by a court of competent jurisdiction,
or by an order or directive having the force of law, (2) a
request for production, including, but not limited to, discovery
of documents, issued pursuant to criminal, civil or
administrative proceedings, provided always that the receiving
party is advised by outside counsel with respect to its
obligation to comply with any such request for production, or (3)
a governmental or regulatory authority the disclosing party shall
(x) use all reasonable endeavors to ensure that the entity or
person to which/whom such Confidential Information is disclosed
is informed of its confidential nature and that it should not be
disclosed or made available to Third Parties, and (y) any such
disclosure shall be made only to the extent ordered or requested.
The party receiving any such request for disclosure acknowledges
and agrees that upon receipt of any such order or request for
disclosure it shall promptly notify the other party of such order
or request so that the other party may have the opportunity to
intervene in response to any such order or request.
(e) The provisions of this Section 8 shall not apply
to any Confidential Information which:
(i) is in or enters the public domain other than
by breach of this Section 8;
(ii) is rightfully in the possession of the
Consultant without restriction in relation to disclosure before
the date of receipt from the Company;
(iii) is independently developed by the Consultant
without reference or access to the Confidential Information;
(iv) is authorized for release by the prior
written consent of the Company; or
(v) is obtained by the Consultant from a Third
Party who is lawfully entitled to disclose such Confidential
Information.
9. Notices. All notices, requests, demands or other
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communications hereunder shall be deemed to have been given if
delivered in writing personally or by certified mail to each
party at the address set forth below, or at such other address as
each party may designate in writing to the other:
If to the Company:
Cover-All Technologies Inc.
00-00 Xxxxxxx Xxxxx
Xxxx Xxxx, Xxx Xxxxxx 00000
Attention: Chief Executive Officer
with a copy to:
Xxxx & Priest
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, Esq.
If to the Consultant:
Turnbury Associates
Box 427, 0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
10. Entire Agreement. This Services Agreement and the
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Exhibits annexed hereto contain the entire understanding of the
parties with respect to the subject matter hereof, supersedes any
prior agreement between the parties, and may not be changed or
terminated orally. No change, termination or attempted waiver of
any of the provisions hereof or thereof shall be binding unless
in writing and signed by the party against whom the same is
sought to be enforced. No provision hereof shall be construed
against a party because that provision or any other provision was
drafted by or at the direction of such party.
11. Successors and Assigns. This Services Agreement
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shall be binding upon and shall inure to the benefit of the
respective heirs, legal representatives, successors and assigns
of the parties hereto.
12. Severability. In the event that any one or more
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of the provisions of this Services Agreement shall be declared to
be illegal or unenforceable under any law, rule or regulation of
any government having jurisdiction over the parties hereto, such
illegality or unenforceability shall not affect the validity and
enforceability of the other provisions of this Services
Agreement.
13. Counterparts. This Services Agreement may be
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executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument.
14. Governing Law. All matters concerning the
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validity and interpretation of and performance under this
Services Agreement shall be governed by the laws of the state of
New York, whose courts or the federal courts located in the
Southern District of New York shall have exclusive jurisdiction
over the parties to which they consent.
IN WITNESS WHEREOF, the parties hereto have executed
this Services Agreement as of the date first above written.
COVER-ALL TECHNOLOGIES INC.
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: President
TURNBURY ASSOCIATES
By: /s/ Xxxxx Xxxxxxx
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