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EMPLOYMENT AGREEMENT , dated October 16, 2007, by and
between DCAP GROUP, INC. ,
a Delaware corporation (the “Company”), and
BARRY B. GOLDSTEIN (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.
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.
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.
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.
(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.
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.
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.
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;
(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 ent
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