EMPLOYMENT AGREEMENT
AGREEMENT dated March 29, 1999, between Questron
Technology, Inc., a Delaware corporation (referred to herein as
"Employer" or "Questron"), and Xxxxxxx X. Xxxxxxxx ("Executive").
W I T N E S S E T H
WHEREAS, the Employer desires to retain the services of
Executive and Executive desires to be employed by Employer upon the
terms and conditions hereinafter set forth; and
WHEREAS, Employer and Executive have each discussed,
considered and approved of the material terms of employment set forth
herein and each has been operating pursuant to such agreed upon terms
since July 1, 1998.
NOW, THEREFORE, in consideration of the premises and the
mutual undertakings and agreements contained herein, Employer and
Executive agree as follows:
1. EMPLOYMENT. Employer hereby employs Executive, and
Executive hereby agrees to serve as Chairman, President and Chief
Executive Officer of Employer, or in such other senior executive
positions as shall be assigned to Executive by Employer's board of
directors with Executive's consent during the Term of Employment (as
hereinafter defined). Executive further agrees to use his best
efforts to promote the interests of Employer and to devote all his
business time and energies to the business and affairs of Employer
during the Term of Employment.
2. TERM OF EMPLOYMENT. Unless earlier terminated pursuant
to Paragraph 7 hereof, the employment hereunder shall commence as of
July 1, 1998 and shall end on June 30, 2003 (the "Term of
Employment").
3. COMPENSATION. As compensation for services hereunder and
in consideration of the covenants set forth in Paragraph 4 hereof,
during the Term of Employment Executive shall be compensated as
follows:
(a) Base Salary. Effective July 1, 1998 and during the
Term of Employment, Employer shall pay Executive a base salary at the
rate of Two Hundred and Fifty Thousand Dollars ($250,000) per annum.
Such salary shall be payable in appropriate installments to conform
to the regular payroll dates for salaried personnel of Employer. The
base salary of the Executive shall be reviewed annually by the
Employer's board of directors or compensation committee of the board
who may, in their sole discretion, approve an increase to the
Executive's base salary.
(b) Stock Options. Employer shall grant to the
Executive as of March 29, 1999, options to purchase 1,100,000 shares
of Questron's common stock at $4.50 per share; such options shall be
immediately exercisable, as to any and all such shares, and will
expire, unless sooner exercised, on March 29, 2009.
(c) Bonuses. Employer shall pay Executive annual
bonuses as follows (i) a discretionary bonus of up to Fifty Thousand
Dollars ($50,000), to be determined by the board of directors or
compensation committee of the board in their sole discretion; and
(ii) an additional bonus of up to $50,000 based upon attaining
targeted increases in diluted earnings per share as mutually agreed
upon at the beginning of each year by the Executive and the board of
directors or compensation committee of the board.
(d) Expenses. Employer shall provide Executive with a
car allowance of $1,300 per month. Employer shall also reimburse
Executive for all reasonable out-of-pocket expenses incurred in
connection with rendering services hereunder in accordance with
Employer's customary policies, including without limitation,
reimbursement of travel expenses for business purposes and
reimbursement of Executive's cellular telephone expenses.
(e) Fringe Benefits. Executive shall be eligible to
participate in and to receive benefits under any pension plan,
profit-sharing plan, savings plan, stock option/savings plan, ESOP,
life insurance, health and accident plan or arrangement made
available by Employer to its senior executives and key management
employees generally, subject to and on a basis consistent with the
terms, conditions and overall administration of each such plan or
arrangement; provided, however, that with respect to any plan or
arrangement under which participation is at the discretion of a
committee or other body administering such plan or arrangement,
nothing contained herein shall entitle Executive to participate in
such plan or arrangement to be paid for by the Employer. Nothing paid
to Executive under any plan or arrangement presently in effect or
made available in the future shall be deemed to be in lieu of
compensation to Executive hereunder, and nothing paid to Executive
hereunder shall be deemed to be in lieu of any payment to which
Executive may be entitled under any such plan or arrangement.
(f) Vacation. Executive shall be entitled to four (4)
weeks of paid vacation days in each calendar year during the Term of
Employment. In the event that Executive is employed hereunder during
a calendar year for less than all of that year, he shall be entitled
in that year to a number of paid vacation days which shall be
prorated in accordance with the number of days on which he is so
employed in that year. Executive shall also be entitled to all paid
holidays given by Employer to its senior executive officers during
the Term of Employment.
4. COVENANT NOT TO COMPETE; INTELLECTUAL PROPERTY;
CONFIDENTIALITY.
(a) Covenant Not To Compete. Executive acknowledges
that in consideration of the Employer entering into this Agreement,
Executive is simultaneously executing and delivering to Employer the
attached letter (the "Restrictive Letter") containing certain
covenants relating to his conduct during and after the Term of
Employment. Notwithstanding the provisions of the Restrictive Letter,
during the Term of Employment Executive will not manage, operate,
control, be employed by or participate in the ownership, management
operation or control of, or be connected in any manner with, any
business of the type and character engaged in and competitive with
that to be conducted by Employer. The decision of Employer's Board of
Directors as to what constitutes a competing business shall be final
and binding upon Executive. For these purposes, Executive's service
as a director of or his ownership of 1% or less of any class of
securities of a public company shall not be considered to be
competition with Employer.
(b) Intellectual Property. Executive agrees that all
ideas, sketches, designs, prototypes, samples, patterns, and related
work product developed by him during the Term of Employment which
relate directly or indirectly to the business of Employer or any of
its subsidiaries or affiliates are work-for-hire and will be the
property of Employer and that he will, at Employer's request and
cost, do whatever is reasonably necessary to secure the rights
thereto to Employer.
(c) Confidentiality. Except as required pursuant to a
court order or applicable law, Executive agrees that he will not
divulge to anyone (other than Employer or any persons employed or
designated by Employer) any knowledge or information of any type
whatsoever of a confidential nature relating to the business of
Employer or any of its subsidiaries or affiliates, including, without
limitation, all types of trade secrets. Executive further agrees not
to disclose, publish or make use of any such knowledge or information
of a confidential nature without the prior written consent of
Employer.
5. BREACH BY EXECUTIVE. Both parties hereto recognize that
the services to be rendered under this Agreement by Executive are
special, unique and extraordinary in character, and that in the event
of the breach by Executive of the terms and conditions of this
Agreement or the Restrictive Letter to be performed by him, then
Employer shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction, either
in law or in equity, to obtain damages for any breach of this
Agreement or of the Restrictive Letter, or to enforce the specific
performance thereof by Executive, or to enjoin Executive from
performing services for another person, firm or corporation in
violation of this Agreement or the Restrictive Letter. If any of the
restrictive covenants set forth in this Agreement or in the
Restrictive Letter are held to be unenforceable because of the
duration or scope of any such covenant, the parties hereto agree that
the duration or scope of such provision shall be reduced to the
maximum scope permitted by law, and, in its reduced form, shall be
enforceable.
6. INDEMNIFICATION. The Employer agrees to indemnify the
Executive to the fullest extent permitted by Delaware law for any and
all liabilities to which he may be subject as a result of his
employment hereunder (and as a result of his services as an officer
or director of the Employer, or as an officer or director of any of
its subsidiaries or affiliates), as well as the costs of any legal
action brought
or threatened against him as a result of such employment, to the
fullest extent permitted by law.
7. TERMINATION.
(a) General. The employment of Executive hereunder
shall terminate as provided in Paragraph 2 hereof and may be sooner
terminated in accordance with the provisions of this Paragraph 7.
(b) Death or Disability of Executive. The employment of
Executive hereunder shall terminate upon (i) the death of Executive;
and (ii) at the option of Employer, upon not less than thirty (30)
days' prior written notice to Executive or his legal representative,
in the event that Executive becomes disabled. Executive shall be
deemed to be disabled if by reason of physical or mental incapacity
or disability, he is unable to render the services to be rendered by
him pursuant to this Agreement for a continuous period of ninety (90)
successive days or for shorter periods aggregating one hundred twenty
(120) days or more during any twelve (12) successive months (the
advice of a reputable physician mutually acceptable to Employer and
Executive as to the existence of any such incapacity or disability to
be final and binding upon the parties).
(c) Termination for Cause. The employment of the
Executive under this Agreement shall terminate for cause upon
delivery to the Executive of notice in writing from Employer of
termination of the Executive's employment for cause. Cause shall mean
(i) any willful or grossly negligent act or failure to act by the
Executive that causes material harm to Employer; any fraud by
Executive upon the Employer; the conviction by the Executive or the
plea of nolo contendere by the Executive, with respect to any felony;
(ii) the Executive's habitual absenteeism, chronic alcoholism or
other form of
chemical addiction; or (iii) any material breach by the Executive of
the Executive's obligations under this Agreement which remain uncured
thirty (30) days after receipt of notice from Employer of such
breach.
(d) Effect of Termination on Salary and Benefits. If
Executive's employment is terminated under this Paragraph 7(a), (b)
or (c) hereof, Employer shall have no further obligation to Executive
hereunder other than as provided by this subparagraph (d) but the
restrictions on the Executive's activities contained in Paragraph 4
and the obligations of Executive contained in the Restrictive Letter
shall continue in effect as provided therein. In the event that the
Executive's employment hereunder is terminated by Employer other than
pursuant to Paragraph 7(a), (b) or (c) hereof, prior to the end of
the Term of Employment, then Employer shall be obligated to pay
Executive all salary and benefits (excluding any unpaid bonuses for
this purpose) in installments through the remainder of the Term of
Employment; provided, however, if Executive is in breach of the
Restrictive Letter at any time, the Employer shall have no further
obligation to pay salary to Executive. For purposes of the
immediately preceding sentence, Executive will also be treated as
having been terminated by Employer other than pursuant to Paragraph
7(a), (b) or (c) hereof if, after a Change in Control of Employer,
(as that term is defined in Paragraph 7(e), occurs, Executive is
assigned duties materially inconsistent with Executive's positions as
described in Paragraph 1 hereof or there is any significant
diminution in Executive's duties or responsibilities, other than in
connection with the termination of Executive's employment for Cause
or disability. In the event of a termination of Executive's
employment for any reason other than termination by Employer for
Cause, as set forth in this Paragraph 7, whether before or after
termination
of employment, Executive's entitlement to salary and benefits shall
cease as of the effective date of termination and Executive shall be
entitled to all salary and benefits (excluding any unpaid bonuses)
accrued but unpaid as of the date of termination.
(e) Change in Control. For purposes of this Agreement,
the term "Change of Control" shall mean the occurrence of any of the
following events: (i) any "person" as such term is used in Sections
13(d) and 14(d) of the Securities Exchange of 1934, as amended (the
"Exchange Act"), other than a trustee or other fiduciary holding
securities under an employee benefit plan of Employer or any
subsidiary or affiliate of Employer or any stockholder (and such
stockholder's affiliates) as of the date hereof and direct
transferees thereof, becomes, after the date hereof, the "beneficial
owner" (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of the securities of Employer representing 50.1% or more
of the total voting power represented by Employer's then outstanding
securities that vote generally in the election of directors ("Voting
Securities") (excluding any current stockholder of Employer owning
15% or more of such Voting Securities on the date hereof); or (ii)
the merger or consolidation of Employer with any other corporation,
other than a merger or consolidation in which the Voting Securities
of Employer outstanding immediately prior thereto continue to
represent (either by remaining outstanding or by being converted into
Voting Securities of the surviving entity) at least a majority of the
total voting power of the surviving entity, or the sale (in one
transaction) of all or substantially all of the assets of Employer,
other than to a subsidiary or affiliate of Employer.
8. ASSIGNMENT. This Agreement is a personal contract, and
except as specifically set forth herein, the rights and interests of
Employer and Executive herein
may not be sold, transferred, assigned, pledged or hypothecated. The
rights and obligations of Employer hereunder shall be binding upon
and run in favor of the successors of Employer as a result of the
sale, merger or reorganization of Employer or Employer's present
corporation, subject to Executive's rights set forth in Paragraph
7(d).
9. GOVERNING LAW: CAPTIONS: CONSENT TO JURISDICTION.
(a) This Agreement contains the entire agreement
between the parties hereto, supersedes any prior agreements relating
to the employment of the Executive and shall be governed by the laws
of the State of Florida. It may not be changed orally, but only by
agreement in writing signed by the party against whom enforcement of
any waiver, change, modification or discharge is sought. Section
headings are for convenience of reference only and shall not be
considered a part of this Agreement.
(b) Each of the parties hereby irrevocably and
unconditionally consent to the exclusive jurisdiction of the courts
of the State of Florida and the United States District Court for the
District of Florida for any action, suit or proceeding arising out of
or relating to this Agreement, or the transactions contemplated
hereby, and agrees not to commence any action, suit or proceeding
related thereto except in such courts. Each of the parties further
hereby irrevocably and unconditionally waive any objection to laying
of venue of any lawsuit, claim or other proceeding arising out of or
related to this Agreement in the courts of the State of Florida or
the United States district Court for the District of Florida, hereby
further irrevocably and unconditionally waive and agree not to plead
or claim an inconvenient forum, and further covenant and agree not to
institute any action or proceeding in any jurisdiction other than
Florida. Each of the parties further agree that service of any
process, summons, notice or document by U.S. registered mail to its
address set forth below shall be effective service of process for any
action, suit or proceeding brought against it in any such court. The
prevailing party of any action, suit or proceeding arising out of or
relating to this Agreement shall be entitled to receive its
attorney's fees and court costs from the other party hereto.
10. NOTICES. Any notices or other communications required
or permitted hereunder shall be in writing and shall be deemed to be
duly given if personally delivered, or, if mailed (by certified or
registered mail, return receipt requested) or if delivered by a
nationally recognized-overnight mail or courier service, to the party
at its address set forth below: If to Executive: Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxx Xxxx Xxxxxx Xxxx Xxxxx, XX 00000
If to Employer:
Questron Technology, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000X
Xxxx Xxxxx, XX 00000
With a copy to:
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxx, III, Esq.
11. RIGHT TO WITHHOLD/REPORT. Employer shall have the right
to withhold from Executive's salary and other compensation hereunder
and to report to appropriate federal, state and local taxing
authorities all amounts required to be withheld or reported,
including such amounts in respect of any compensation deemed paid to
Executive under federal, state and local tax laws.
IN WITNESS WHEREOF, Employer has by its duly authorized
officer signed this Agreement and Executive has signed this
Agreement, as of the day and year first above written.
EXECUTIVE QUESTRON TECHNOLOGY, INC.
/s/Xxxxxxx X. Xxxxxxxx
----------------------------- By: /s/ Xxxxxx X. Xxxxx
XXXXXXX X. XXXXXXXX ------------------------
Name:
Title:
RESTRICTIVE COVENANT
March 29, 1999
Questron Technology, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000X
Xxxx Xxxxx, XX 00000
Gentlemen:
This will confirm my agreement with Questron Technology, Inc. (the
"Company", which term for purposes of this letter shall include all of the
Company's successor, subsidiary and affiliated companies).
1. In consideration of my employment, I agree that while I am in the
Company's employ, and for two years thereafter (provided that the Company elects
to pay me a consulting and non-competition fee of $100,000 per year in equal
quarterly installments in arrears, which Executive cannot waive, I will not,
directly or indirectly: (a) Persuade or attempt to persuade any customer of the
Company to cease doing business with the Company, or to reduce the amount of
business it does with the Company; (b) Persuade or attempt to persuade any
potential customer to which the Company has made a sales presentation, not to
purchase the Company's products; (c) Solicit for myself or any person other than
the Company the business of any person or entity which is a customer of the
Company, or was its customer within two years prior to the termination of my
employment; (d) Persuade or attempt to persuade any employees of the Company, or
any individual who was its employee during the two years prior to my termination
of employment, to leave the Company's employ, or to become employed by any
person other than the Company; (e) Perform any service for any person other than
the Company in connection with the design or development of any product, which
competes, with a product of the Company; and (f) Work for any other firm,
corporation, partnership or other entity, which compete with the Company. 2. I
also agree that during my employment by the Company, or at any time thereafter,
I will not disclose or use any confidential or secret information relating to
the Company or any of its products, designs, processes or operations. 3. If I
violate any of the terms outlined above, I agree that the Company, in addition
to any other rights it may have, shall be entitled to injunctive relief.
Very truly yours,
Xxxxxxx X. Xxxxxxxx
