Amendment to Employment Agreement Dated
January 1, 1995 Between Allied Digital Inc.
(formerly Hauppauge Record Mfg. Ltd.) and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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 on January 1, 1998 and
expiring on December 31, 2001.
2. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇'▇ current annual salary will be increased 10%
effective January 1, 1998 and thereafter will be adjusted to reflect
the cost of living as prescribed in the current employment agreement.
3. All other terms and conditions will remain in full force and effect.
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Allied Digital Inc. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Agreed to and accepted Agreed to and accepted
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Date
EMPLOYMENT AGREEMENT
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THIS IS AN EMPLOYMENT AGREEMENT, effective as of January 11, 1995
between Hauppauge Record Manufacturing Ltd., a New York corporation (the
"Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("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 President of the Company with
substantially the same functions, duties and responsibilities as Employee
currently discharges on behalf of the Company and also shall serve as
President - National Marketing Division of Allied Digital Technologies Corp.,
a Delaware corporation and the indirect parent company of the Company ("Allied
Digital" and with its subsidiaries, collectively, the "Allied Companies").
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 $298,700, 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 the Allied Companies as administered by
the Compensation Committee of the Board of Directors of Allied Digital.
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 (including any accrued and unused vacation time) ,
which shall be payable upon such termination or resignation, (ii) any accrued
and unpaid incentive bonus to the date of termination or resignation
(including a pro rata portion of the bonus payable f or 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 him 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
and 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 Tern if such termination
shall occur on or before the first anniversary of the date hereof and (ii) the
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 company, and/or selling the aforementioned services and products.
(b) Specific Remedy. If Employee commits a material breach
of any of the provisions of paragraph 8(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.
9. Independence, Severability and Non-Exclusivity. All of the
rights and remedies enumerated in paragraph 7(b) and paragraph 8(b) shall be
in addition to and not in lieu of any other rights and remedies available to
the Company under the law or in equity and shall survive termination of the
Employment Term. If any of the provisions contained in paragraph
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7(a) or paragraph 8(a) or if any of the rights or remedies enumerated in
paragraph 7(b) or paragraph 8(b) are hereafter construed to be invalid or
unenforceable, the same shall not affect the remainder of the covenant or
covenants, or rights or remedies, which shall be given full effect without
regard to the invalid portions. If the courts of any one or more jurisdictions
shall hold all of or any part of such provisions wholly unenforceable by
reason of the breadth of such scope or otherwise, it is the intention of the
parties that such determination shall not bar or in any way affect the
Company's right to relief in the court of any other jurisdiction as to
failures to observe such provisions in such other jurisdictions, the above
provisions as they relate to each jurisdiction, being, for this purpose,
severable into diverse and independent provisions. If any of the provisions
contained inn paragraph 7(a) or paragraph 8(a) is held to be unenforceable
because of the duration of such provision, the parties agree that the court
making such determination shall have the power to reduce the duration of such
provision and in its reduced form said provision shall then be enforceable.
10. Assignment of Employee Benefits. Absent the prior written
consent of the Company, and subject to transfer by will and the laws of
descent and distribution, Employee shall have no right to exchange, convert,
encumber or dispose of the rights of Employee to receive benefits and payments
under this Agreement, which payments, benefits and rights thereto are
non-assignable and non-transferable.
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 Nev 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
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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 wavier 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.
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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▇▇▇▇▇▇ ▇▇▇▇▇▇
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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