Document:

Exhibit 10.20

 

October 6, 2003

 

Jack M. Zackin

Sills Cummis Radin Tischman
Epstein & Gross

One Riverfront Plaza

Newark, NJ 07102

 

 

Re:          Global Offer for CD
World

 

Dear Jack:

 

This letter
(this “Letter Agreement”) is submitted to you in your capacity as counsel for
CD World, as debtor in possession (the “Debtor”) in a chapter 11 case (the
“Case”), pending before the United States Bankruptcy Court for the District of
New Jersey (the “Court”).

 

On behalf of
Trans World Entertainment Corporation (“TWEC”) (or one of its subsidiaries),
this letter constitutes an offer to dispose of certain assets, conduct certain
sales and assume specified liabilities of the Debtor on and subject to the
terms and conditions set forth below (including all exhibits and other attachments
to this Letter Agreement, which are incorporated herein by reference).

 

1.             (a)           Guaranteed Amount.  TWEC will guarantee that the Debtor will
receive the sum of $1.8 million as consideration for the disposition of the
Assets (hereinafter defined), exclusive of those costs and expenses to be borne
by the Debtor, as specified in this Letter Agreement (the “Guaranteed Amount”);
provided, however, that the Cost Value (hereinafter defined) of the Debtor’s
inventory to be sold in accordance with this Letter Agreement shall be no less
than $5.4 million.  In the event that
the Cost Value of the Inventory (hereinafter defined) is less than $5.4
million, then the Guaranteed Amount will be reduced in an amount equal to
one-third of the difference between the Cost Value of the Inventory and $5.4
million.  “Cost Value” shall mean, with
respect to inventory (the “Inventory”) physically located at the Debtor’s
retail stores set forth on Exhibit A attached hereto (the “Stores”) or the
Debtors distribution center that is salable in the ordinary course, the cost
previously represented to TWEC by Debtor in the cost file submitted by item,
except for damaged, defective, display, or rental Inventory where TWEC shall
mutually agree upon Cost Value.  Prior
to the date on which the transactions contemplated hereby are consummated (the
“Closing Date”), a physical inventory (the “Physical Inventory”) shall be taken
by an independent inventory service jointly designated by the Debtor and TWEC,
and the costs of the Physical Inventory shall be paid equally by the Debtor and
TWEC; provided, however, that in no event shall Debtor be required to pay in
excess of $7,500 in respect of the Physical Inventory.  If, in the course of taking the Physical Inventory,
any items of Inventory are determined to be non-saleable, such items will be
assigned no Cost Value for purposes of calculating the aggregate dollar value
of the Inventory.  In addition, to the
extent that Debtor and TWEC

 

 

are unable to agree on a Cost
Value for damaged, defective, display, or rental Inventory, the Cost Value of
such shall be zero.  To the extent that
the Debtor, with the prior Agreement of TWEC, receives additional Inventory on
or before ten days after the Closing Date, such additional Inventory shall be
valued in the same manner as the Inventory that was in the Debtor’s possession
as of the Closing Date.

 

In addition,
TWEC shall post an irrevocable letter of credit in the face amount equal to
$139,900.00.  In the event that TWEC
does not pay amounts due under a Lease as specified herein, Debtor shall be
entitled to draw upon such letter of credit to satisfy Debtor’s obligations
under such Lease.  Upon payment by TWEC
of all amounts due under the Leases as provided herein, Debtor shall cooperate
with TWEC in order to terminate the letter of credit required to be posted
under this paragraph.

 

(b)           Payment of the
Guaranteed Amount.  No later than
two (2) business days following the Closing Date, TWEC shall (i) pay 75% of the
Guaranteed Amount in cash and (ii) deliver to Debtor an irrevocable standby
letter of credit in the original face amount of 25% of the Guaranteed
Amount.  Subject to the adjustments of
the Guaranteed Amount described in paragraph 1(a) above, TWEC shall pay the unpaid
and undisputed balance of the Guaranteed Amount in cash to Debtor no later than
ten (10) business days following the reconciliation by TWEC and Debtor of the
Inventory Taking.  Upon payment of the
Guaranteed Amount, Debtor shall cooperate with TWEC in order to terminate the
letter of credit required to be posted under this paragraph.  To the extent that the amount paid pursuant
to clause (i) above is in excess of the Guaranteed Amount (after adjustment as
described herein), Debtor shall pay to TWEC such excess within two (2) business
days following the reconciliation by Debtor and TWEC of the Inventory Taking.

 

2.             TWEC Return.  From and after the Closing Date, TWEC shall
be entitled to all proceeds (the “Proceeds”) of the sale of the Assets.

 

3.             (a)           Assets .  The assets to be disposed of by TWEC shall consist of all of the
Debtor’s right, title and interest in and to the assets set forth below
(collectively, the “Assets”), which shall be conveyed by TWEC to third parties
or affiliated designees free and clear of all liens, claims and encumbrances
(except specifically assumed liabilities):

 

i.              The
Inventory, signage, supplies, parts, machinery, equipment, vehicles and goods
located at any of the Stores, the Debtor’s headquarters office and its
warehouses (including any third-party warehouses that the Debtor leases or
rents), as well as in transit thereto or therefrom;

 

ii.             The leases for the
Stores (the “Leases”), including, without limitation, any deposits or other
security given or made in respect of the Leases, which shall be assumed and
assigned or rejected at the direction of TWEC pursuant to section 365 of
the Bankruptcy Code in accordance with paragraph 4 hereof.  Any amounts received by the Debtor as
consideration for the assignment of any Leases assigned after

 

2

 

the date hereof and without the
involvement of TWEC (in each case net of expenses incurred in connection with
such Lease assignment) shall be credited against the Guaranteed Amount;

 

iii.            All
furniture, store fixtures and improvements located at or related to the Stores,
store warehouses, distribution centers and headquarters office, as well as all
other fixtures;

 

iv.            All
other personal property, tangible or intangible, wherever located, including
all intellectual property;

 

v.             All
guarantees, warranties, licenses and other governmental permits, approvals and
permissions;

 

vi.            All
contracts that are to be assumed and assigned at the direction of TWEC pursuant
to section 365 of the Bankruptcy Code; and

 

vii.           All
prepaid expenses, deposits (other than security deposits posted pursuant to the
Leases), credits, notes, utility deposits and insurance refunds relating to the
Stores, Leases or Owned Property.

 

(b).          Excluded Assets.  Accounts receivable (inclusive of tax
refunds), cash (other than deposits defined as Assets pursuant to
section 3.a.vii), Debtor’s 2002 Ford E-150 Van, and causes of action shall
be deemed “Excluded Assets,” and TWEC shall not acquire any rights thereto.

 

4.             Contracts and
Leases.

 

(a)           Until January 31,
2004, TWEC shall have the right, which right may be exercised at any time and
from time to time in its sole and absolute discretion, to request that Debtor,
under section 365 of the Bankruptcy Code, assume and assign to a third
party designated by TWEC, including TWEC, or an affiliate thereof (a “Lease
Assignee”) any or all of the Leases at no additional cost or expense to
TWEC.  Promptly following receipt of a
written notice (the “Assignment Notice”) delivered by TWEC to Debtor, at any
time and from time to time prior to January 31, 2004, directing the
assumption and assignment of any Lease to a Lease Assignee, Debtor shall use
its best efforts to obtain the entry of an order of the Bankruptcy Court
approving the assumption of the Lease(s) identified in the Assignment Notice
and the assignment of such Lease(s) to the Lease Assignee.(1)  It is understood and agreed that the term
“reasonable commercial efforts,” as used in this subparagraph 4(a), shall
require the Debtor to pay any and all cure amounts required under section 365(b)(1)
of the Bankruptcy Code and expend or incur reasonable fees, costs and expenses
for the payment of attorneys and other professionals whose services may
reasonably be required in connection with the prosecution of any 

 

(1)           The Motion (the “Approval
Motion”) filed by the Debtor upon receipt of an Assignment Notice shall comply
in all respects with the requirements set forth in Exhibit B hereto.

 

3

 

motion seeking the entry of any
such order.  The Lease Assignee shall
provide adequate assurance of future performance with respect to any Lease
assigned to it.  TWEC shall not be
required to pay any cure amounts under section 365(b)(1) of the Bankruptcy
Code in respect of any of the Leases TWEC elects to require the Debtor to
assume and assign to a Lease Assignee. 
The applicable Lease Assignee shall pay all amounts, liabilities, or
other obligations due and owing under a Lease assigned to it from and after the
date that the court order approving the assumption and assignment is entered
(or otherwise allocable to the period on and after such date, including,
without limitation, base rent, taxes, and percentage rent).  Notwithstanding anything contained herein, Debtor
covenants and agrees to pay to the lessors under the Leases when due all
amounts payable under the Leases through and including the earlier of
January 31, 2004 and the date TWEC provides the designation of rejection
for any such Lease, including, without limitation, base rent, taxes, and percentage
rent, subject to TWEC’s reimbursement obligations hereunder.  The Debtor shall promptly reject, pursuant
to section 365 of the Bankruptcy Code, any Leases so designated by TWEC,
and all obligations of TWEC related to a Lease that TWEC has designated to be
rejected shall terminate on the fifth business day following notification
(each, a “Rejection Notification”) by TWEC that a particular Lease is
designated to be rejected.

 

(b) (x)      From and after the Closing
Date, as consideration for TWEC’s right to use and occupy the premises covered
by the Leases and designate the assumption or rejection of such Leases until
January 31, 2004, TWEC shall pay when due, on behalf of Debtor, all
amounts for the payment of rent, CAM, taxes, maintenance and repairs (as
limited pursuant to subparagraph 4(c) below), all other amounts due and owing
by Debtor under the Leases, and utilities and all other usual and customary
operating costs incurred in connection with the Leases and consistent with
Debtor’s prior practices (in all respects limited to the amounts set forth in
the Occupancy Expenses attached as Exhibit C hereto); and (y) from and after
the date hereof, Debtor shall not extend, reject or otherwise terminate (or
assume and assign to a third party, without TWEC’s prior written consent) any
of the Leases. TWEC’s obligations under clause (x) above, and the limitations
on the Debtor under clause (y) above shall expire upon the earlier to occur of
(i) five (5) business days following the delivery by TWEC to Debtor of written
notice indicating that TWEC waives its right to require Debtor to assume and
assign to it or a third party (and, if applicable, directing Debtor to obtain
the entry of an order rejecting) any one or more of the Leases specified in
such notice (provided that the terms of clauses (x) and (y) above shall then
terminate only with respect to the specified Leases), provided that, such
notice is received by the Debtor at least six (6) days prior to the date on
which the next installment of rent becomes due with respect to such Lease and
(ii) January 31, 2004.  Upon the
occurrence of either of the events specified in clauses (i) or (ii) of the
preceding sentences, (A) TWEC shall have no further obligation or liability of
any nature for any amounts payable to the lessor under the applicable Lease(s),
or for any costs associated with the Store(s) to which such Lease(s) relate;
and (B) Debtor shall be solely responsible for all amounts payable or other
obligations or liabilities that may be owed to the lessor under or in
connection with such applicable Lease(s), including without limitation any
damages resulting from the rejection of such Lease(s) under section 365 of
the Bankruptcy Code or otherwise. 
Notwithstanding any other provision of this Letter

 

4

 

Agreement, TWEC may not seek to
terminate its liability in respect of a Lease (pursuant to this paragraph 4)
that relates to a Store for as long as TWEC is continuing to conduct a Store
Closing Sale in such Store (and until TWEC can deliver such Store’s premises in
the condition contemplated by paragraph 6 below).  If TWEC fails to pay, on a timely basis, any of the amounts set
forth in clause (x) of this subparagraph 4(b) (as limited pursuant to
subparagraph 4(c) below) with respect to any Lease, then following the
expiration of a five day cure period after receipt by TWEC of written notice
from the Debtor or the landlord of such failure to pay, Debtor shall be
entitled to revoke TWEC’s right to use and occupy the premises covered by such
Lease and to reject such Lease.  This
right of revocation shall be in addition to, and not in lieu of, any rights or
remedies that may be available to the Debtor at law or in equity.  Regardless of whether TWEC directs Debtor to
reject any one or more Leases at any time, the cost and expenses of the
rejection at any time of any one or more Leases, including the filing and
prosecuting of any motions or other papers with respect to the same, shall be
borne solely by Debtor and its chapter 11 estate and paid for solely by Debtor
and its chapter 11 estate.  The Debtor
agrees to pay all amounts in respect of the Leases not payable by TWEC pursuant
to this Letter Agreement.

 

(c)           Notwithstanding
anything contained in subparagraph 4(b) or elsewhere in this Letter Agreement,
TWEC shall have no obligation to pay for extraordinary or structural
maintenance and repairs.  The definitive
agreement between the parties shall define specifically what constitutes an
“extraordinary” repair.  By signing below,
Debtor represents that it is not aware of any existing repair or maintenance
problems with respect to any of the premises covered by the Leases or any of
the furniture, fixtures, equipment and other personal property covered by the
Leases.

 

5.             Transfer of Assets.  The transfer and sale of any of the Assets
by TWEC shall be effected by delivery by the Debtor to the designee of TWEC at
any time TWEC so directs of such agreements, general warranty deeds, bills of
sale, endorsements, assignments, and other good and sufficient instruments of
sale, transfer, assignment, conveyance, and warrant and all consents of third
parties necessary thereto as shall be, in the judgment of TWEC, reasonable and
necessary to effectively vest in the designee of TWEC good, marketable and
insurable title to the Assets, free and clear of all liens, claims,
encumbrances and security interests of any nature or kind whatsoever (except
for specifically assumed liabilities), pursuant to Court order under sections
363 and 365 of the Bankruptcy Code and other applicable bankruptcy law.  The Debtor will, to the extent required
after the Closing Date, upon the request of TWEC, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, all such
additional documents as may reasonably be required by TWEC to effectuate the
sale, conveyance, transfer, assignment and delivery by the Debtor of the Assets
and the ownership by the members of TWEC of the Assets.

 

6.             Cost of Store
Closing Sales.  TWEC may, in its discretion,
conduct “going-out-of business” sales of the Inventory at a portion of the
Stores (the “Store Closing Sales”). 
From the date the Store Closing Sales begin through the date the Store
Closing Sales conclude at each Store, TWEC shall bear all direct costs and
expenses

 

5

 

incurred in connection with the
Store Closing Sales on a per diem, per store basis, limited to payroll costs
and benefits actually accruing during the term of the Store Closing Sale,
insurance, supervision costs (inclusive of fees, travel and bonuses) armored
car services, mutually agreed upon central office costs, bank fees and
chargebacks, telephone expenses, trash collection, security costs, advertising
and promotional expenses and TWEC’s payroll expenses and costs.  TWEC’s obligations under this paragraph are
Store specific and cease at each Store on a per  diem basis upon
vacation of the Store premises in broom clean condition.  Notwithstanding the foregoing, nothing
herein shall prohibit TWEC from operating the Stores as going concerns.

 

7.             Debtor’s Employees.  On the Closing Date, Debtor shall terminate
those employees (“TWEC Store Employees”) employed at the Stores.  TWEC, in its sole and complete discretion,
shall offer employment to such employees on terms and conditions substantially
similar to those that existed as of the Closing Date.  Nothing herein shall obligate TWEC to hire any employee employed
at a location other than a Store.

 

8.             Entry of the Order.  The Closing Date shall occur as soon as
practicable after the entry of a final order of the Court in the Case (i.e.,
an order that has not been reversed, stayed, modified or amended and as to
which (a) the time to appeal or seek review, reargument or rehearing has
expired and as to which no appeal or petition for certiorari, review or
rehearing is pending, or (b) if appeal, review, reargument, rehearing or
certiorari of such order has been sought, such order has been affirmed and the
request for further review, reargument, rehearing or certiorari has expired, as
a result of which such order has become final and nonappealable in accordance
with applicable law), in form and substance satisfactory to TWEC, (i) approving
this Letter Agreement, (ii) extending, if necessary, the time within which the
Debtor may assume or reject those executory contracts or unexpired leases of
real property that are Assets hereunder no earlier than January 31, 2004,
and (iii) authorizing the Debtor to consummate the transactions contemplated hereby
(the “Order”).  Notwithstanding the
foregoing sentence, TWEC, in its sole discretion, may close the transactions
contemplated herein prior to the Order becoming final; provided that the Court
enters an order in form and substance satisfactory to TWEC approving this
Letter Agreement and authorizing the Debtor to consummate the transactions
contemplated hereby, in which order the Court finds that the transactions
contemplated by this Letter Agreement were negotiated at arms-length and in
good faith and TWEC acted in good faith in all respects, and such order is not
stayed pending appeal.

 

9.             Termination.  If the Order approving the transactions
contemplated by this Letter Agreement is not entered by September 29,
2003, or the Closing Date has not occurred by October 7, 2003, TWEC may
terminate this Letter Agreement or any agreements based upon this Letter
Agreement.  Neither party shall have any
obligation or liability to the other in respect of any withdrawal or termination
of this Letter Agreement or any agreement based on this Letter Agreement
pursuant to this paragraph 11.

 

6

 

10.           Debtor’s
Obligations.  The Debtor shall use
its reasonable commercial efforts to obtain the entry of the Order and the
consummation of the transactions contemplated hereby.

 

11.           Material
Adverse Change.  From the date
hereof and through the Closing Date, the Debtor’s business shall be conducted
in the ordinary course consistent with past practices, including, without
limitation, with ordinary and customary mark-down policies; provided, however,
that the Debtor shall not be permitted to enter into real estate
contracts, renew Leases, enter into leases, terminate Leases, reject Leases,
amend Leases, consent to the assignment of Leases or grant or terminate any
other interests in the Stores without TWEC’s prior written consent.  If there has been, occurred or arisen (a)
any damage or destruction in the nature of a casualty loss, whether covered by
insurance or not, in an amount in excess of $100,000 affecting any of the
Assets, or (b) (i) any material adverse change in the overall sale or
liquidation prospects of the Debtor’s businesses or Store Closing Sales, or
(ii) any event that has materially impaired or would reasonably be expected to materially
impair the ability of TWEC to carry on the sale or liquidation of the Assets
(including, without limitation, the Store Closing Sales), then, and in such
event, TWEC may withdraw or terminate this Letter Agreement or any agreement
based on this Letter Agreement.  In such
event, neither party shall have any liability or obligation to the other in
respect of the withdrawal or termination of this Letter Agreement and any
agreement based on this Letter Agreement.

 

12.           Conditions
Precedent.  In addition to the usual
and customary conditions precedent to be contained in the Agency Agreement, it
shall be a condition precedent to any and all obligations of TWEC and the
Debtor to consummate the transactions contemplated by this Letter Agreement
that:

 

a.             the
Court shall have entered the Order;

 

b.             the
Order shall specifically authorize the Store Closing Sales contemplated hereby
in a manner satisfactory to TWEC in its sole discretion; and

 

c.             the
Physical Inventory is performed by a recognized inventory service and the Cost
Value of the Inventory shall have been agreed to by the parties.

 

13.           Other
Conditions.  The obligations of TWEC
hereunder are subject to and conditioned upon TWEC’s satisfaction, in its sole
discretion, that (a) there exist no material and adverse environmental
conditions with respect to the Owned Property or the real property subject to
the Leases, (b) there exist no violations of federal, state, or local laws,
statutes, regulations or codes of any kind or nature whatsoever that, individually
or in the aggregate, would constitute a Material Adverse Change pursuant to
paragraph 11 above, (c) the Assets and the Inventory are in condition and the
mix and balance of the Inventory is consistent with historical levels and (d)
the Debtor has obtained an extension of its deadline to assume or reject all
executory contracts and unexpired leases that to no

 

7

 

earlier than January 31,
2004.  If TWEC, in its sole discretion,
is not so satisfied, then, and in such event, TWEC may withdraw or terminate
this Letter Agreement, and in such event neither party shall have any further
liability or obligation to the other.

 

13.           Liabilities of TWEC.  TWEC shall not assume any debt, liability or
obligation of the Debtor, including claims for unpaid taxes, except the
obligations TWEC agrees to pay pursuant to the terms of this Letter
Agreement.  Without limiting the
foregoing, TWEC shall not have any obligation to employ (except those TWEC
agrees specifically to employ), or in any manner be responsible for any
compensation, pension or retirement, severance, termination or other benefit
plan liability or other obligation relating to, any employee of the Debtor or
to any labor organization under any labor or collective bargaining agreement.

 

*     *     *

 

If this Letter
Agreements meets with your approval, kindly indicate such acceptance by having
the enclosed copy of this letter executed and returned to the undersigned.

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  TRANS WORLD
  ENTERTAINMENT CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  

 

 

AGREED, ACKNOWLEDGED, ACCEPTED

AND CONSENTED:

 

CD WORLD

 

	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  

 

8

 

Exhibit A

 

Stores

 

	
  Store Number

  	
   

  	
  City, State

  	
   

  
	
  12

  	
   

  	
  Paramus, NJ

  	
   

  
	
  13

  	
   

  	
  Union, NJ

  	
   

  
	
  14

  	
   

  	
  Totowa, NJ

  	
   

  
	
  15

  	
   

  	
  Cherry Hill, NJ

  	
   

  
	
  16

  	
   

  	
  Menlo Park, NJ

  	
   

  
	
  17

  	
   

  	
  Princeton, NJ

  	
   

  
	
  18

  	
   

  	
  E. Hanover, NJ

  	
   

  
	
  19

  	
   

  	
  Eatontown, NJ

  	
   

  
	
  26

  	
   

  	
  Crestwood, MO

  	
   

  
	
  28

  	
   

  	
  Kansas City, MO

  	
   

  
	
  31

  	
   

  	
  University City, MO

  	
   

  
	
  32

  	
   

  	
  Ferguson, MO

  	
   

  
	
  35

  	
   

  	
  Columbia, MO

  	
   

  
	
  Warehouse

  	
   

  	
  Plainfield, NJ

  	
   

  

 

9

 

Exhibit B

 

Approval Motion Standards

 

An “Approval
Motion” shall mean a motion served upon all affected parties (including,
without limitation, landlords under Leases and any parties to reciprocal
easement agreements or other similar agreements (each, an “REA”)
affecting the applicable Property) for an order of the Bankruptcy Court (an “Approval
Order”) (i) approving of the sale of the applicable Owned Property or the
assumption and assignment of the applicable Lease to the proposed designee,
(ii) confirming that the assumption and assignment of the Lease or transfer of
the Owned Property to the proposed designee shall be free and clear of any
claims of defaults and that Merchant shall be responsible for curing any and
all monetary defaults accruing prior to the applicable Property Closing Date,
and which may exist at the time of the assignment or transfer (as applicable),
to the extent such cure is required pursuant to Section 365 of the Bankruptcy
Code; (iii) ruling that, in accordance with the provisions of Section 363
of the Bankruptcy Code, the Owned Property or Lease, as applicable, shall be
transferred and assigned to the proposed designee free and clear of all liens,
claims, mortgages and encumbrances (with same to attach to the proceeds of the
sale, transfer and assignment); (iv) permitting the proposed designee to
perform alterations and remodeling to the extent necessary to operate its
retail operations, and to replace and modify existing signage notwithstanding
any provision in the Lease, any REA or local law to the contrary, (v) ordering
that any extension or renewal option in the Lease or in any REA which purports
to be “personal” only to Merchant or to be exercisable only by Merchant is an
unenforceable restriction on assignment and, in fact, may be freely exercised
by the proposed designee to its full extent, (vi) allowing Agent’s proposed
designee to remain “dark” with respect to properties for up to an additional
twelve (12) months after assignment despite any Lease restriction, REA
restriction or local law to the contrary, (vii) ordering that if no objection
to the assumption and assignment of a Lease or to the transfer of an Owned
Property is timely made and filed with the Bankruptcy Court prior to the
expiration of the applicable objection period, or such objection involves a
“cure issue” (with it being deemed that any such objection regarding a “cure
issue” will not affect the assumption and assignment), the assumption and
assignment or transfer (as applicable) shall be deemed effective and binding
upon the applicable affected parties and shall require no further order of the
Bankruptcy Court to take place, (viii) ordering that any provisions contained
in the Lease or any REAs which are, or would have the effect of being,
provisions which restrict “going dark”, recapture provisions, provisions which
impose a fee or a penalty or a profit sharing upon assignment, provisions which
seek to increase the rent or impose a penalty or to modify or terminate a Lease
or a REA as a result of going dark or upon assignment, provisions which
directly or indirectly limit or condition or prohibit assignment, continuous
operating covenants, and similar provisions contained in the Leases or REAs
shall not restrict, limit or prohibit the sale and assumption and assignment of
the Owned Property or Lease the proposed designee and are deemed and are found
to be unenforceable anti-assignment provisions within the meaning of Sections
365(f) and (l) of the Bankruptcy Code,  (ix)
approving the proposed designee’s contemplated use of the Store governed by the
Lease irrespective of whether such use is prohibited by the Lease,

 

10

 

including, without limitation,
in the case of any Lease transferred to TWEC, the use clause attached hereto as
Appendix 1, and (x) approving the tradename(s) that the proposed
designee intends to utilize at the Store covered by such Lease, including,
without limitation, in the case of any Lease transferred to TWEC, the following
tradenames: Coconuts, Strawberries, Second Spin, FYE (For Your Entertainment),
Planet Music, and Spec’s.

 

11

 

Appendix A

 

Permitted Use:
Only for the retail sale or rental of new and used:

 

(a)   pre-recorded
entertainment products, now known or hereafter developed, including, but not
limited to pre-recorded music, video and sound, records, pre-recorded and blank
audio and video tapes and video discs, compact discs, cassettes, music-related
CD ROMs, music-related digital software and digital downloads and other forms
of recorded music, video and sound, compact disc and record care products, and
video recordings; and

 

(b)   the
display and sale at retail of audio/video equipment and devices, now known or
hereafter developed for the display, transmission, interception and
reproduction of visual images and/or sound, accessories and/or component parts
such as headphones, jacks and wires; video and computer game hardware and
software; musical instruments and synthesizers; sheet music and music books;
tickets for entertainment events; and other entertainment and related products
sold in substantially all of Tenant’s stores operated under the same trade name
used by Tenant for its business operations in the Leased Premises.  In addition, Tenant shall be permitted to
display and sell, at retail, audio/video equipment including but not limited to
tape players, compact disc players and stereos provided, that, said audio/video
equipment is sold in substantially all of Tenant’s other stores operated under
the same trade name used by Tenant for its business operations in the Leased
Premises; and

 

(c)   the
display and sale at retail of related products including, but not limited to,
computer hardware, software, wireless phones, soft drink coolers, posters,
pictures, buttons, stickers, books, magazines, stationary, cards, games, note
pads, stuffed animals, decorated wearing apparel, costume jewelry, sunglasses,
key rings and lighters provided that the related products are associated with
the records, tapes, discs and video recordings sold or rented from the Leased
Premises; and any legal use not prohibited.

 

12Prepared and filed by St Ives Burrups

Exhibit 10.8

EMPLOYMENT AGREEMENT

This
    Employment Agreement (this “Agreement” )
  is made as of October 31, 2003, by and between DDS Technologies USA, INC.,
  a Nevada corporation (the “Employer” ), and Spencer L. Sterling
  (the “Executive” ).

RECITALS

WHEREAS, the Employer considers it essential and
  in the best interests of its stockholders to foster the employment of key management
  personnel and desires to engage the services of the Executive on the terms
  and conditions hereinafter set forth; and
  WHEREAS, Executive desires
        to render services to the Employer and its subsidiaries on the terms
        and conditions provided in this Agreement; 

    NOW, THEREFORE, in consideration
        of the mutual covenants and agreements herein contained, the parties
        hereto, intending to be legally bound, hereby agree as follows:

    The parties, intending to be
        legally bound, agree as follows:

    1.      DEFINITIONS

    For the purposes of this Agreement,
        the following terms have the meanings specified or referred to in this
        Section 1:

    “Agreement” means
        this Employment Agreement, as amended from time to time. 

    “Basic Compensation” shall
        include base salary, bonuses that have been declared and are payable
        and benefits provided for in Section 3.1(c) of this Agreement.

    “Benefits” is defined
        in Section 3.1(b).

    “Board of Directors” means
        the board of directors of Employer.

    “Code” means the
        Internal Revenue Code of 1986, as amended.

     

  

  
  -2-

“Disability” shall mean once the Executive
  is unable for the “Disability Period” (as hereafter defined) to
  perform the essential functions of the Executive’s duties with reasonable accommodation.
  The disability of the Executive will be determined by a medical doctor selected
  by written agreement of the Employer and the Executive upon the request of
  either party by notice to the other. If the Employer and the Executive cannot
  agree on the selection of a medical doctor, each of them will select a medical
  doctor and the two medical doctors will attempt to make a determination of
  disability. If they cannot agree, they will select a third medical doctor who
  will determine whether the Executive has a disability. The determination of
  the third medical doctor selected under this provision will be binding on both
  parties. The Executive must submit to a reasonable number of examinations by
  the medical doctor making the determination of disability under this provision,
  and the Executive hereby authorizes the disclosure and release to the Employer
  of such determination and all supporting medical records. If the Executive
  is not legally competent, the Executive’s legal guardian or duly authorized
  attorney-in-fact will act in the Executive’s stead for the purposes of submitting
  the Executive to the examinations, and providing the authorization of disclosure,
  required under this provision.

  “Disability Period” shall
        mean 180 consecutive days or 180 days during any twelve (12) month period;
        or such lesser number of days as elapse until disability insurance benefits
        commence under any disability insurance coverage furnished by Employer
        to Executive, if any.

    “Effective Date” means
        October 31, 2003.

    “Employer’s Business” means
        the development and sale of separation, disaggregation, and extraction
        technology.

    “Employment Period” means
        the term of the Executive’s employment under this Agreement as defined
        in Section 2.2.

    “For Cause” shall
        mean: (a) any violation of a law, rule or regulation other than minor
        traffic violations, including without limitation, any violation of the
        Sarbanes Oxley Act of 2002 or the Foreign Corrupt Practices Act; (b)
        a breach of fiduciary duty for personal profit; (c) fraud, dishonesty
        or other acts of misconduct in the rendering of services on behalf of
        the Employer or relating to the Executive’s employment; (d) misconduct
        by the Executive which would cause the Employer to violate any state
        or federal law relating to sexual harassment or age, sex or other prohibited
        discrimination or any violation of written policy of the Employer or
        any successor entity adopted in respect to such law; (e) failure to follow
        Employer work rules or the lawful instructions (written or otherwise)
        of the Board of Directors of the Employer or a responsible executive
        to whom the employee directly or indirectly reports, provided compliance
        with such directive was reasonably within the scope of the Executive’s
        duties and the Executive was given notice that his conduct could give
        rise to termination and such conduct is not, or could not be cured, within
        thirty (30) days thereafter or; (f) any violation by the Executive of
        the terms of this Agreement.

    “Good Reason” shall
        mean, unless Executive shall have consented in writing thereto, any of
        the following: (i) a reduction in Executive’s title, duties, responsibilities
        or status which are inconsistent with Executive’s position with
        Employer; (ii) a reduction by Employer in Executive’s base salary or
        material reduction in fringe benefits; (iii) the breach by Employer of
        any material agreement or obligation under this Agreement after notice
        and a thirty (30) day right to cure; or (iv) a requirement that Executive
relocate from the Employer’s location in Boca Raton, Florida.

-3-

“Person” means
    any individual, corporation (including any non-profit corporation), general
    or limited partnership, limited
  liability company, joint venture, estate, trust, association, organization,
  or governmental body. 
  2.      EMPLOYMENT
        TERMS AND DUTIES

    2.1      EMPLOYMENT

    The Employer agrees to, and hereby
        does, continue to employ the Executive for the term of this Agreement
        upon the terms and conditions set forth in this Agreement. 

    2.2      TERM

    Subject to the provisions of
        Section 6, the Employment Period for the Executive’s employment under
        this Agreement will be five (5) years, beginning on the Effective Date,
        and expiring on the earlier of the fifth anniversary of this Agreement
        or as earlier permitted under this Agreement. 

    2.3      DUTIES

    The Executive will serve as the
        President and Chief Executive Officer of Employer and will use his best
        efforts to perform all duties required in furtherance of his position,
        including without limitation, all such duties as are customarily associated
        with such position or such duties as are assigned or delegated to the
        Executive by the Board of Directors, including the supervision of all
        business and financial operations. The Executive agrees to perform in
        good faith and to the best of his ability all services which may be required
        of him hereunder and will devote sufficient efforts and business time,
        skill, attention and energies as are reasonably necessary to perform
        his duties and responsibilities under this Agreement and to promote the
        success of the Employer’s Business. 

    3.      COMPENSATION

    3.1      BASIC
        COMPENSATION

  (a)      Base
        Salary. The Executive will be paid an initial annual base salary
        of $150,000, subject to adjustment as provided below (the “Salary” ),
        which will be payable in equal periodic installments according to the Employer’s
        customary payroll practices, but no less frequently than monthly. The Executive’s
        Salary will be reviewed by Employer’s Board of Directors not less frequently
        than annually, and may be adjusted upward by Employer, but in no event
        will the Base Salary be less than One Hundred Fifty Thousand Dollars ($150,000)
        per year. In addition, Employer agrees to adjust Executive’s Salary
        upward by Twenty-Five Thousand Dollars ($25,000) per year for every increase
        in company revenue of Fifty Million Dollars ($50,000,000) per year, based
        on the preceding twelve (12) months revenue, up to a maximum of Three
        Hundred Thousand ($300,000) per year.

-4-

(b)      Bonus.
  Executive shall be eligible to receive annual bonus compensation at the discretion
  of Employer’s Board of Directors and in accordance with Employer’s executive
  bonus or incentive compensation plan that may be in effect from time to time.
(c)      Benefits.

  The Executive will,
      during the Employment Period, be permitted to participate in such pension,
      profit sharing, bonus (subject to the provisions of Section 3.1 (b)), life
      insurance, hospitalization, major medical, and other employee benefit plans
      of the Employer that may be in effect from time to time, to the extent
      the Executive is eligible under the terms of those plans (collectively,
      the “Benefits” ).
      The Executive shall also be entitled to such other fringe benefits as are
      now or may become available to any of Employer’s other executive officers.

3.2      OPTIONS
  Employer hereby grants to Executive
        options to purchase up to four hundred thousand (400,000) shares of its
        common stock at an exercise price of $7.00 per share (the “Options” ).
        The Options shall be granted under and subject to the terms and conditions
        of the Stock Option Agreement as of the date hereof. The Options shall
        not be one hundred percent (100%) vested until three years from the date
        of the grant.

  4.        RELOCATION
      ALLOWANCE; EXPENSE REIMBURSEMENT

4.1      In recognition
  of the fact that Executive will be relocated from South Africa to the United
  States of America, the Executive will be granted a one time allowance of Twenty-Five
  Thousand Dollars ($25,000) to cover the costs of relocation, such as packing
  and shipping of personal effects, temporary accommodations, air fare and the
  like (the “Relocation Allowance”), in accordance with the Employer’s
  policies.
  4.2      The
        Employer will pay all reasonable, out-of-pocket expenses incurred by
        the Executive in the performance of the Executive’s duties pursuant to
        this Agreement, including without limitation, reasonable expenses incurred
        by the Executive in attending conventions, other business meetings and
        for promotional expenses, provided that any such activities must be related
        to Employer’s business and all individual expenses (or those aggregated
        for a single convention, seminar or other business trip) greater than
        Five Thousand Dollars ($5,000) must be approved by either Employer’s
        Chief Financial Officer or Employer’s Compensation Committee (or if Employer
        has no Compensation Committee, its Board of Directors). The Executive
        must file expense reports with respect to such expenses in accordance
with the Employer’s policies.

-5-

5.      VACATIONS
    AND HOLIDAYS
  The Executive will be entitled
        to three (3) weeks paid vacation each calendar year in accordance with
        the vacation policies of the Employer in effect for its executive officers
        from time to time. The Executive will also be entitled to the paid holidays
        and other paid leave set forth in the Employer’s policies. Vacation days
        during any calendar year that are not used by the Executive during such
        calendar year will be forfeited.

    6.      TERMINATION

    6.1      EVENTS
        OF TERMINATION

    The Executive’s employment pursuant
        to this Agreement may be terminated by Employer on the following grounds:

(a)      upon
        the death of the Executive;

    (b)      upon
        the disability of the Executive immediately upon notice from either party
        to the other; 

    (c)      For
        Cause (following the expiration of any applicable notice period from
        Employer to Executive); 

    (d)      at
        the discretion of Employer other than For Cause.

    The Executive may terminate his
        employment on the following grounds:

    (e)      without
        Good Reason, provided that Executive gives Employer at least thirty (30)
        days prior written notice of his termination of employment; or

    (f)      for
        Good Reason (following the expiration of any applicable notice period
        from Executive to Employer).

    6.2      TERMINATION
        PAY

    Effective upon the termination
        of this Agreement, the Employer will be obligated to pay the Executive
        (or, in the event of his death, his designated beneficiary as defined
        below) the compensation provided in this Section 6.2:

-6-

(a)      Termination
    by the Employer For Cause or Termination by Executive Without Good Reason.
    If the Employer terminates this Agreement For Cause or Executive resigns
    or terminates his employment for other than Good Reason, the Executive will
    be entitled to receive his Basic Compensation through the date such termination
    is effective.

  (b)      Termination
          upon Disability. If this Agreement is terminated by either party
          as a result of the Executive’s Disability, the Employer will pay
          the Executive his Basic Compensation through the remainder of the calendar
          quarter during which such termination is effective and for the lesser
          of (i) six consecutive months thereafter, or (ii) the period until
          disability insurance benefits commence under any disability insurance
          coverage furnished by the Employer to the Executive. 

    (c)      Termination
          upon Death. If this Agreement is terminated because of the Executive’s
          death, the Executive’s estate will be entitled to receive his
          Basic Compensation through the end of the calendar month in which his
          death occurs.

    (d)      Termination
          by Executive For Good Reason or Termination by Employer Without Cause.
          If this Agreement is terminated by Executive for Good Reason, or if
          this Agreement is terminated by Employer other than For Cause, then
          as severance under this Agreement Employer shall pay to Executive,
          in one lump sum, an amount equal to his Basic Compensation for the
          greater of eighteen (18) months or until October __, 2008 (the “Severance
          Period”) as if Executive had continued to remain employed during
          the Severance Period; provided, however, as a condition to receiving
          such severance payment, Executive shall provide Employer with a general
          release in form and substance satisfactory to Employer and Executive.
          Employer shall make the lump sum payment to Executive on or before
the tenth (10th) day following the effective date of his Termination.

  7.      CHARACTER
      OF TERMINATION PAYMENTS; MITIGATION

  The amounts payable
      to Executive upon any termination of this Agreement shall be considered severance
      pay in consideration of past services rendered on behalf of the Employer
      and his continued service from the date hereof to the date he becomes entitled
      to such payments. Executive shall have no duty to mitigate his damages by
      seeking other employment and, should Executive actually receive compensation
      from any such other employment, the payments required hereunder shall not
      be reduced or offset by any such other compensation.

-7-

CONFIDENTIALITY AND RELATED MATTERS.
  8.1      NON-DISCLOSURE
        COVENANT

    Employer and the Executive acknowledge
        that the services to be performed by the Executive under this Agreement
        are unique and valuable and that, as a result of the Executive’s
        employment, the Executive will be in a relationship of confidence and
        trust with Employer and will come into possession of “Confidential
        Information” (i) owned or controlled by Employer and its subsidiaries
        and affiliates; (ii) in the possession of Employer and its subsidiaries
        and affiliates and belonging to third parties; or (iii) conceived, originated,
        discovered or developed, in whole or in part, by the Executive. As used
        herein “Confidential Information” means trade secrets and
        other confidential or proprietary business, technical, personnel or financial
        information of Employer, whether or not the Executive’s work product,
        in written, graphic, oral or other tangible or intangible forms, including
        but not limited to specifications, samples, records, data, computer programs,
        drawings, diagrams, models, consumer names, ID’s or e-mail addresses,
        business or marketing plans, studies, analyses, projections and reports,
        communications by or to attorneys (including attorney-client privileged
        communications), memoranda and other materials prepared by attorneys
        or under their direction (including attorney work product), and software
        systems and processes that are not readily available to the public, even
        it is not specifically marked as a trade secret or confidential, unless
        Employer advises the Executive otherwise in writing or unless the information
        has been shared by Employer with entities not bound by non-disclosure
        agreements. In consideration of the compensation and benefits to be paid
        or provided to the Executive by the Employer under this Agreement, the
        Executive agrees not to directly or indirectly use or disclose to anyone,
        either during the Employment Period or after the termination of this
        Agreement, except in the performance of his duties of his employment
        with Employer or with Employer’s prior written consent, any Confidential
        Information of Employer. This non-disclosure covenant does not apply
        to information that is disclosed or becomes public through another source
        that is not bound by a confidentiality agreement with Employer; which
        Executive is required to disclose pursuant to court order, subpoena or
        applicable law (provided that Executive will use reasonable efforts to
        provide Employer with prompt notice of any such requests or requirement
        so that Employer may seek an appropriate protective order); or which
        is disclosed in any proceeding to enforce or interpret this Agreement.
        The Executive agrees that in the event of the termination of the Executive’s
        employment for any reason, the Executive will deliver to Employer, upon
        request, all property belonging to Employer, including all documents
        and materials of any nature pertaining to the Executive’s work with
        Employer and will not take with him any documents or materials of any
        description, or any reproduction thereof of any description, containing
        or pertaining to any Confidential Information.

    8.2      WORK
        MADE FOR HIRE

    Executive recognizes and understands
        that Executive’s duties at the Employer may include the preparation
        of materials, including without limitation written or graphic materials,
        and that any such materials conceived or written by Executive shall be
        done as “work made for hire” as defined and used in the Copyright
        Act of 1976, 17 U.S.C. §§ 1 et seq. In the
        event of publication of such materials, Executive understands that since
        the work is a “work made for hire”, the Employer will solely
        retain and own all rights in said materials, including right of copyright.

-8-

8.3       DISCLOSURE
    OF WORKS AND INVENTIONS/ASSIGNMENT OF PATENTS
  In consideration of the promises
        set forth herein, Executive agrees to disclose promptly to the Employer,
        or to such person whom the Employer may expressly designate for this
        specific purpose (its “Designee” ), any and all works, inventions,
        discoveries and improvements authored, conceived or made by Executive
        during the period of employment and related to the Employer’s Business,
        and Executive hereby assigns and agrees to assign all of Executive’s
        interest in the foregoing to the Employer or to its Designee. Executive
        agrees that, whenever he is requested to do so by the Employer, Executive
        shall execute any and all applications, assignments or other instruments
        which the Company shall deem necessary to apply for and obtain Letters
        Patent or Copyrights of the United States or any foreign country or to
        otherwise protect the Company’s interest therein. Such obligations
        shall continue beyond the termination or nonrenewal of Executive’s
        employment with respect to any works, inventions, discoveries and/or
        improvements that are authored, conceived of, or made by Executive during
        the period of Executive’s employment, and shall be binding upon
        Executive’s successors, assigns, executors, heirs, administrators
        or other legal representatives.

    9.      NON-COMPETITION
        AND NON-SOLICITATION MATTERS

  9.1      NON-COMPETITION

  During the term of this
      Agreement (the “Non-Compete Period”) the Executive agrees that
      he shall not work for or be interested in any business which provides services
      or products which are directly competitive with the Employer’s Business
      within the territory of the license of the DDS System from High Speed Fragmentation
      N.V. (“Restricted Territory”). In the event the Executive is
      terminated For Cause or Executive terminates for other than Good Reason,
      the Non-Compete Period shall be extended until the earlier of (i) one year;
      or (ii) the then scheduled expiration of the term of the Agreement. For the
      further purposes of this Agreement, the term “work for or be interested
      in any business” means that the Executive is a stockholder, director,
      officer, employee, partner, individual proprietor, lender or consultant
      with that business, but not if (i) his interest is limited solely to the
      passive
      ownership of five percent (5%) or less of any class of the equity or debt
      securities of a corporation whose shares are listed for trading on a national
      securities exchange or traded in the over-the-counter market. In the event
      that any part of this Section 10 is adjudged invalid or unenforceable by
      any court of record, board of arbitration or judicial or quasi judicial
      entity having jurisdiction thereof by reason of length of time, geographical
      coverage,
      activities covered, or for any other reason, then the invalid or unenforceable
      provisions of this covenant shall be deemed reformed and amended to the
      maximum extent permissible under applicable law and shall be enforced and
      enforceable
      as so amended in accordance with the intention of the parties as expressed
      herein.

  9.2      NON-SOLICITATION

  During the Non-Compete
      Period, the Executive also agrees that he will not directly or indirectly:
      (i) solicit the trade of, or trade with, any past, present or prospective
      customer of the Employer for any business purpose that directly or indirectly
      competes with the Employer’s Business; or (ii) solicit or induce,
      or attempt to solicit or induce, any employee of Employer to leave Employer
      for any reason whatsoever, or assist or participate in the hiring of any
      employee of Employer to work for another entity.

-9-

  10.      REPRESENTATIONS
      OF EXECUTIVE 

  As a material inducement
      to Employer to execute this Agreement and consummate the transactions contemplated
      thereby, the Executive hereby makes the following representations to Employer,
      each of which are true and correct in all material respects as of the date
      hereof.

  10.1     QUESTIONNAIRE

  On or before the date
      hereof Executive has completed and returned to Employer a Directors and
      Officers Questionnaire (the “Questionnaire”) which is true
      and correct in all material respects.

  10.2      NO
      PRIOR AGREEMENTS

  Executive represents
      and warrants that Executive is not a party to or otherwise subject to or
      bound by the terms of any contract, agreement or understanding which in
      any manner would limit or otherwise affect Executive's ability to perform
      his
      obligations hereunder, including without limitation any contract, agreement
      or understanding containing terms and provisions similar in any manner
      to those contained in Sections 8 and 9 of this Agreement. Executive further
      represents and warrants that his employment with the Employer will not
      under
      any circumstances require him to disclose or use any confidential information
      belonging to prior employers or other persons or entities, or to engage
      in any conduct which may potentially interfere with the contractual, statutory
      or common-law rights of such other employers, persons or entities. In the
      event that Executive knows or learns of any facts whatsoever which suggest
      that such interference might arguably occur as the result of any proposed
      actions by either Executive or the Employer, Executive expressly promises
      that he will immediately bring such facts to the Employer’s attention.      

  10.3      REVIEW
      BY COUNSEL

  Executive expressly
      acknowledges and represents that Executive has been given a full and fair
      opportunity to review this Agreement with an attorney of Executive’s
      choice, and that Executive has satisfied himself, with or without consulting
      with counsel, that the terms and provisions of this Agreement, specifically
      including, but not limited to, the restrictive covenant and related provisions
      of Section 9 hereof, are reasonable and enforceable.

-10-

   10.4      NO
      CONFLICTS OF INTEREST

  Other than as disclosed
      in Section 9.1, Executive covenants that, as of the date hereof, he is
      not involved in any venture or activity that could compete with Employer’s
      Business or which could potentially interfere with his ability to perform
      under this Agreement. During the Term, he will disclose to the Company, in
      writing, any and all interests he may have, whether for profit or compensation
      or not, in any venture or activity which could potentially interfere with
      his ability to perform under this Agreement or create a conflict of interest
      for him with the Company. For purposes of this Section 10.4 only, “conflict
      of interest” shall mean ownership of greater than one percent (1%)
      of, or $25,000 worth of equity in, another company which conducts business
      similar to Employer’s Business.

  10.5      EXECUTIVE’S
      ABILITY

  Executive represents
      that Executive’s experience and capabilities, and the limited provisions
      of Section 9, are such that he will not be prevented from earning his livelihood
      in businesses similar to that of Employer’s Business. Executive acknowledges
      that there are a significant number of businesses for which his qualifications
      and experience would render him qualified for employment that do not constitute
      competing businesses such that his ability to become employed after the
      termination or nonrenewal of this Agreement would not be impaired.

  11.      GENERAL
      PROVISIONS

  11.1      INJUNCTIVE
      RELIEF AND ADDITIONAL REMEDY

  The Executive acknowledges
      that the injury that would be suffered by the Employer as a result of a breach
      of the provisions of any provision of Sections 8 and 9 of this Agreement
      would be irreparable and that an award of monetary damages to the Employer
      for such a breach would be an inadequate remedy. Consequently Employer will
      have the right, in addition to any other rights it may have, to obtain injunctive
      relief to restrain any breach or threatened breach or otherwise to specifically
      enforce any provisions of Sections 8 and 9 of this Agreement, and the Employer
      will not be obligated to post bond or other security in seeking such relief.

  11.2      WAIVER

  The rights and remedies
      of the parties to this Agreement are cumulative and not alternative. Neither
      the failure nor any delay by either party in exercising any right, power,
      or privilege under this Agreement will operate as a waiver of such right,
      power, or privilege, and no single or partial exercise of any such right,
      power, or privilege will preclude any other or further exercise of such right,
      power, or privilege or the exercise of any other right, power, or privilege.

  11.3      TOLLING
      PERIOD

The non-competition,
    non-disclosure and non-solicitation obligations contained in Sections 8 and
    9 of this Agreement shall be extended by the length of time during which
    Executive shall have been in breach of any of the provisions of such Sections
    8 and 9.

 

-11-

  11.4      NOTICES

  All notices, consents,
      waivers, and other communications under this Agreement must be in writing
      and will be deemed to have been duly given when (a) delivered by hand, (b)
      sent by facsimile (with written confirmation of receipt), provided that a
      copy is mailed by registered mail, return receipt requested, or (c) when
      received by the addressee, if sent by a nationally recognized overnight delivery
      service (receipt requested), in each case to the appropriate addresses and
      facsimile numbers set forth below (or to such other addresses and facsimile
      numbers as a party may designate by notice to the other parties):

  	If to Employer:	 	DDS TECHNOLOGIES USA, INC

        150 East Palmetto Park Road, Suite 510 

        Boca Raton, Florida 33432
	 	 	Telephone No.:

        Facsimile No.: 	 (561) 750-4450

        (561) 750-4310 
	 	 	 	 
	 If to Executive: 	 	Spencer L. Sterling

      To the address specified by Employee, or if none is specified, 

      To Employer’s Address
	 	 	 

12.5      ENTIRE
    AGREEMENT; AMENDMENTS
  This Agreement and the documents
        referenced herein, contain the entire agreement between the parties with
        respect to the subject matter hereof and supersede all prior agreements
        and understandings, oral or written, between the parties hereto with
        respect to the subject matter hereof. This Agreement may not be amended
        orally, but only by an agreement in writing signed by the parties hereto.

    12.6      GOVERNING
        LAW

    This Agreement will be governed
        by the laws of the State of Florida without regard to conflicts of laws
        principles.

    12.7      ARBITRATION,
        OTHER DISPUTES.

    In the event of any dispute or
        controversy arising under or in connection with this Agreement, the parties
        shall first promptly try in good faith to settle such dispute or controversy
        by mediation under the applicable rules of the American Arbitration Association
        before resorting to arbitration. In the event such dispute or controversy
        remains unresolved in whole or in part for a period of thirty (30) days
        after it arises, the parties will settle any remaining dispute or controversy
        exclusively by arbitration in Boca Raton, Florida in accordance with
        the commercial arbitration rules of the American Arbitration Association
        then in effect. Judgment may be entered on the arbitrator’s award
        in any court having jurisdiction. All administration fees and arbitration
        fees shall be paid solely by Employer. Notwithstanding the above, Employer
        shall be entitled to seek a restraining order or injunction in any court
        of competent jurisdiction to prevent any continuation of any violation
        of section 8 or 9 hereof. The prevailing party may recover attorneys’ fees
        in any dispute or controversy arising under or in connection with this
        Agreement.

-12-

12.8      ASSIGNABILITY,
  BINDING NATURE
  This Agreement shall be binding
        upon and inure to the benefit of the parties and their respective successors,
        heirs (in the case of the Executive) and assigns. No rights or obligations
        of the Executive under this Agreement may be assigned or transferred
        by the Executive other than his rights to compensation and benefits,
        which may be transferred only by will or operation of law.

    12.9      SURVIVAL

    The respective rights and obligations
        of the parties hereunder shall survive any termination of the Executive’s
        employment to the extent necessary to the intended preservation of such
        rights and obligations.

    12.10      SECTION
        HEADINGS, CONSTRUCTION

    The headings of Sections in this
        Agreement are provided for convenience only and will not affect its construction
        or interpretation. All references to “Section” or “Sections” refer
        to the corresponding Section or Sections of this Agreement unless otherwise
        specified. All words used in this Agreement will be construed to be of
        such gender or number as the circumstances require. Unless otherwise
        expressly provided, the word “including” does not limit the
        preceding words or terms.

    12.11      SEVERABILITY

    If any provision of this Agreement
        is held invalid or unenforceable by any court of competent jurisdiction,
        the other provisions of this Agreement will remain in full force and
        effect. Any provision of this Agreement held invalid or unenforceable
        only in part or degree will remain in full force and effect to the extent
        not held invalid or unenforceable.

    12.12      COUNTERPARTS

    This Agreement may be executed
        in one or more counterparts, each of which will be deemed to be an original
        copy of this Agreement and all of which, when taken together, will be
        deemed to constitute one and the same agreement. This Agreement (and
        all other agreements, documents, instruments and certificates executed
        and/or delivered in connection herewith) may be executed by facsimile
        signatures, each of which shall be deemed an original copy of this Agreement
        (or other such agreement, document, instrument and certificate).

-13-

  	IMPORTANT NOTICE:
            THIS AGREEMENT RESTRICTS EXECUTIVE’S RIGHTS TO OBTAIN OTHER
            EMPLOYMENT FOLLOWING HIS EMPLOYMENT WITH THE EMPLOYER. BY SIGNING
            IT, EXECUTIVE ACKNOWLEDGES THIS FACT, AND FURTHER ACKNOWLEDGES THAT
            HE HAS BEEN ADVISED BY THE EMPLOYER TO READ THE AGREEMENT CAREFULLY,
            AND/OR TO CONSULT WITH COUNSEL OF HIS CHOICE CONCERNING THE LEGAL
            EFFECTS OF SIGNING THE AGREEMENT, PRIOR TO SIGNING IT.
	 

  

  IN WITNESS WHEREOF,
      the parties have executed and delivered this Agreement as of the date first
      written above.

	WITNESS:

  _________________________________

      Signature

  _________________________________

      Print Name

  _________________________________

      Address

  _________________________________

    Address
	EMPLOYER:

  DDS TECHNOLOGIES USA, INC.

  By:____________________________

        Authorized Executive Officer

	 	 
	 	EXECUTIVE:

  __________________________________

        Spencer L. Sterling

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}]]