Amendment to Employment Agreement dated
January 1, 1995 between Allied Digital Inc.
(formerly Hauppauge Record Mfg. Ltd.) and
Xxxxx X. Xxxxxx
The parties hereby agree to extend the terms of the aforementioned employment
agreement with the following modifications:
1. The term will be for three years commencing January 1, 1998 and
expiring on December 31, 2001.
2. Effective January 1, 1998, Xxxxx X. Xxxxxx'x current annual salary
will be increased by 2.1% to $ 241,002., and thereafter will be
adjusted to reflect the cost of living as prescribed in the current
employment agreement.
3. On Xx. Xxxxxx'x behalf, the company will lease, at its sole expense,
a BMW 740IL or equivalent automobile, and will pay and/or reimburse
all associated expenses, including but not limited to insurance,
maintenance, and gasoline.
4. All other terms and conditions remain in full force and effect.
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Allied Digital Inc. Xxxxx X. Xxxxxx
Agreed to and Accepted Agreed to and Accepted
--------------------------------
Date
EMPLOYMENT AGREEMENT
THIS IS AN EMPLOYMENT AGREEMENT, effective as of January 11, 1995
between Hauppauge Record Manufacturing Ltd, a New York corporation (the
"Company"), and Xxxxx Xxxxxx ("Employee").
In consideration of the premises and of the mutual covenants
herein contained, the parties agree as follows:
1. Position. During the term of his employment with the Company
hereunder, Employee shall continue to serve as Vice President - Marketing of
the Company with substantially the same functions, duties and responsibilities
as Employee currently discharges on behalf of the Company.
Employee shall devote substantially all of his business skill,
time and effort to his employment hereunder; provided, however, that he shall
be entitled annually to such vacation and sick leave in accordance with the
Company's policy for executive officers.
Employee shall not be required to perform his services for the
Company primarily at a location other than Employee's present work location
unless a change in location is mutually agreed upon between the Company and
Employee.
2. Term of Employment. Employee's term of employment by the
Company under this Agreement (the "Employment Term") shall begin on the date
hereof and shall continue for the period ending December 31, 1997 unless
sooner terminated as hereinafter provided.
3. Compensation. As compensation for the services contemplated
hereby, Employee shall receive during the Employment Term an annual base
salary, to be paid monthly, equal to $154,500, as increased by the percentage
rate of inflation during the year ended December 31, 1994 as measured by the
consumer price index for urban wage earners published by the U.S. Department
of Labor, Bureau of Labor Statistics, for the New York - Northern New Jersey
area (the "CPI"). On each January 1 during the Employment Term, the base
salary shall be increased by a percentage equal to the percentage rate of
inflation during the previous calendar year, as measured by the CPI; provided,
however , that such increase shall be retroactively effective on January 1 in
the event such percentage rate of inflation is not published on January 1. In
addition, Employee's base salary may be increased annually in accordance with
any compensation plan for employees of Allied Digital Technologies Corp., a
Delaware corporation and the indirect parent company of the Company ("Allied
Digital"), and its subsidiaries (with Allied Digital collectively, the "Allied
Companies") as administered by the Compensation Committee of the Board of
Directors of Allied Digital.
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In addition to his base salary, Employee shall be entitled to
participate in any incentive bonus compensation plan for employees of the
Company existing on the date hereof and any incentive bonus compensation plan
for employees of the Allied Companies that is approved and adopted by the
Board of Directors of Allied Digital in the future to replace any plan of the
Company.
4. Employee Benefits. Employee shall be entitled to participate
in any (a) pension plans and profit sharing plans, (b) medical benefit plans,
group life insurance plans, hospitalization plans or other employee welfare
benefit plans the Allied Companies may adopt or have in effect from time to
time during the Employment Term. The Allied Companies shall allow Employee to
continue, at his sole cost and expense, his participation in any medical
benefit plan after his termination of employment hereunder for such period of
time as may be required by applicable law.
5. Expenses. The Company shall pay or reimburse Employee for any
expenses reasonably incurred by him in furtherance of his duties hereunder,
including, but not limited to, expenses for traveling, meals and hotel
accommodations, upon submission by him of vouchers therefor or itemized lists
thereof prepared in compliance with such rules and policies relating thereto
as the Company may from time to time adopt and as may be required in order to
permit such payments as proper deductions to the Company under the Internal
Revenue Code and the rules and regulations adopted pursuant thereto now or
hereafter in effect.
6. Termination.
(a) Termination for Cause. The Company may terminate this
Agreement, and (except as provided below) all of the Company's obligations
hereunder, either for cause or without cause. Such termination shall be
effected by notice thereof delivered by the Company to Employee, and shall be
effective as of the date of such notice. In the event of termination for
cause, Employee shall be entitled to receive all salary earned to the date of
termination, but all other rights of Employee hereunder, including any right
to receive any incentive bonus, shall terminate as of the effective date of
Employee's termination.
In the event of termination without cause, Employee shall be
entitled to receive (i) all base salary earned to the date of termination,
which shall be payable upon such termination, (ii) any accrued and unpaid
incentive bonus to the date of termination (including a pro rata portion of
the bonus payable for the year of termination), which shall be payable to
Employee when incentive bonuses are paid to all other employees participating
in such incentive bonus plan, and (iii) an amount equal to the base salary
that would have been payable to Employee hereunder had this Agreement not been
so terminated, which shall be payable on the dates on which such base salary
would have been payable, but all other rights of Employee hereunder shall
terminate as of the effective date of Employee's termination.
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As used herein, "cause" shall mean: (i) Employee's conviction of
a felony which involves moral turpitude; or (ii) Employee's repeated failure
to discharge his assignments from the Board of Directors of the Company
consistent with the responsibilities of his position and the failure by
Employee to correct such failure within 30 days after written notice thereof
from the Company; or (iii) Employee's gross negligence or willful misconduct
in the performance of his duties which has a material adverse effect on the
Company's operations, profits or business.
(b) Resignation of Employee. In the event that Employee resigns
(except in the case of resignation or termination due to disability), Employee
shall be entitled to receive (i) all base salary earned to the effective date
of resignation, which shall be payable upon such resignation (including any
accrued and unused vacation time), and (ii) any accrued and unpaid incentive
bonus to the date of resignation (including a pro rata portion of the bonus
payable for the year of resignation), which shall be payable to Employee when
incentive bonuses are paid to all other employees participating in such
incentive bonus plan (provided that Employee provides to the Company at least
one month's notice of such resignation), but all other rights of Employee
hereunder shall terminate as of the effective date of Employee's resignation.
Provided Employee shall not have breached the provisions of paragraph 7 or
paragraph 8 hereof, the Company shall have no rights hereunder after such
resignation.
(c) Employee's Total Disability. In the event that Employee is
terminated by the Company, or Employee resigns, due to Employee's total
disability, Employee shall be entitled to receive (i) all base salary earned
to the date of termination, which shall be payable upon such termination or
resignation (including any accrued and unused vacation time), (ii) any accrued
and unpaid incentive bonus to the date of termination or resignation
(including a pro rata portion of the bonus payable for the year of termination
or resignation), which shall be payable to Employee when incentive bonuses are
paid to all other employees participation in such incentive bonus plan, and
(iii) any benefits payable under the Company's then current disability policy,
but all other rights of Employee hereunder shall terminate as of the date of
Employee's termination or resignation. As used herein, "total disability"
shall mean any physical or mental ailment which prevents Employee from
performing the duties incident to Employee's employment with the Company which
has continued for a period of ninety (90) consecutive days and which is
expected, based upon the results of an examination by a physician mutually
acceptable to Employee and the Company, to be of permanent duration.
(d) Death. In the event that Employee dies during the Employment
Term, Employee's estate shall be entitled to receive (i) all base salary
earned to the date of death (including any accrued and unused vacation time),
which shall be payable upon the date of death, (ii) any accrued and unpaid
incentive bonus to the date of death (including a pro rata portion of the
bonus payable for the year of termination), which shall be payable to Employee
when incentive bonuses are paid to all other employees participating in such
incentive bonus plan, and (iii) any benefits payable under any then current
life insurance policy provided to Employee pursuant to paragraph 4 hereof, but
all other rights of Employee hereunder shall terminate.
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7. Protection of Confidential Information.
(a) Covenant. Employee acknowledges that his employment by the
Company will, throughout the term of this Agreement, bring his into close
contact with many confidential affairs of the Company, including information
about markets, key personnel, operational methods and other business affairs
and methods, computer software and other proprietary intellectual property,
other information not readily available to the public, and plans for future
developments relating thereto. Employee further acknowledges that the services
to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character. In recognition of the foregoing, the
Employee covenants and agrees that, both during and after the Employment Term:
(i) he will keep secret all material confidential matters
of the Company known to him which are not otherwise in the public
domain and will not intentionally disclose them to anyone outside of
the Company, wherever located, either during or after the Employment
Term, except with the Company's prior written consent;
(ii) he will promptly disclose to the Company, and that the
Company will own all right, title and interest in, all inventions,
computer software and other intellectual property (the "Intellectual
Property") which he conceives or develops during the course of his
employment (excluding that which he conceives or develops without the
use of the Company's time, resources or facilities and which does not
relate to the Company's past, present or planned future activities),
will affix appropriate legends and copyright notices indicating the
Company's ownership of all Intellectual Property and all underlying
documentation, and will execute such further assignments and other
documents as the Company consider necessary to vest, perfect,
maintain or defend the Company's right, title and interest in the
Intellectual Property; and
(iii) he will deliver promptly to the Company on
termination of his employment by the Company, or at any other time
the Company may so request, all memoranda, notes, records, reports
and other documents (and all copies thereof) relating to the business
of the Company which he obtained while employed by, or otherwise
serving or acting on behalf of, the Company and which he may then
possess or have under his control or relating to the Intellectual
Property.
(b) Specific Remedy. If Employee commits a material breach of any
of the provisions of paragraph 7(a), the Company shall have the right and
remedy to have such provisions specifically enforced by any court having
equity jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company.
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8. Noncompetition.
(a) Covenant. Employee shall not during the Restrictive Period
(as hereinafter defined) , directly or indirectly, and whether or not Employee
is then receiving any compensation or other payments from the Company:
(i) engage in competition with the Allied Digital Business
(as hereinafter defined) within any state in which such business is
conducted;
(ii) acquire a direct or indirect interest or an option to
acquire such interest in any entity engaged in competition with the
Allied Digital Business (other than in interest of not more than 5%
of the outstanding stock of any publicly traded company); or
(iii) serve as a director or officer of any entity engaged
in competition with the Allied Digital Business; or
(iv) solicit, employ, interfere with or attempt to entice
away from the Company or any Affiliate of the Company (A) any
customer of any of them or (B) any individual who was employed by any
of them in an executive capacity within six months prior to such
solicitation, employment, interference or enticement.
For purposes of this Section 8, the term: (A) "Restrictive
Period" means that period of time which commences on the date hereof and ends
(i) 36 months after the termination of the Employment Term if such termination
shall occur on or before the first anniversary of the date hereof and (ii) 18
months after such termination if such termination shall occur after the first
anniversary of the date hereof, and (B) "Allied Digital Business" means the
business of duplicating/replicating videocassettes, audio cassettes, D.A.T.
cassettes, compact discs and motion picture products and providing post
production services including fulfillment services as currently provided by
the [PAGE 7 OF MASTER WAS NOT SUBMITTED]
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11. Notices. All notices hereunder shall be given in writing by
personal delivery or by registered or certified mail addressed to the Company
at its principal place of business and to Employee at his residence address as
then listed in the Company's records.
12. General.
(a) Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without giving effect to conflicts of laws principles thereof which might
refer such interpretations to the laws of a different state or jurisdiction.
(b) Captions. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(c) Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and understandings,
written or oral, between the parties, including, without limitation, the
Amended and Restated Employment Agreement between Employee and the Company
effective as of November 1, 1990 (as restated and amended as of March 15,
1993) which is hereby terminated.
(d) No Other Representations. No representation, promise or
inducement has been made by any party hereto that is not embodied in this
Agreement, and no party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and shall be binding upon the Company and Employee and, subject to
the provisions of paragraph 10, their respective heirs, executors, personal
representatives, successors and assigns.
(f) Amendments; Waivers. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants hereof
may be waived, only by a written instrument executed by all of the parties
hereto, or in the case of a waiver, by the party waiving compliance. The
failure of any party at any time or times to require performance of any
provision hereof shall in no manner affect the right of such party at a later
time to enforce the same. No waiver by any party of the breach of any term or
covenant contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed Employment
Agreement as of the date first above written.
HAUPPAUGE RECORD MANUFACTURING LTD.
By:
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Name:
Title:
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XXXXX XXXXXX
Guaranty
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The undersigned hereby unconditionally and absolutely guarantees
the prompt and due payment and performance of all obligations of the Company
under this Agreement.
ALLIED DIGITAL TECHNOLOGIES CORP.
By:
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Name:
Title:
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