EXHIBIT 10.11
AMENDMENT TO
EMPLOYMENT AGREEMENT
AMENDMENT TO EMPLOYMENT AGREEMENT dated February 1, 1996, by
and between Surge Components, Inc., a New York corporation, with its principal
place of business at 0000 Xxxxx Xxxxxxxxx, Xxxx Xxxx, Xxx Xxxx 00000 (the
"Company") and Xxxxxx X. Xxxxxx residing at 00 Xxxxxx Xxxxxx, Xxx Xxxxx, Xxx
Xxxx 00000 (the "Executive").
W I T N E S S E T H :
WHEREAS, the Company and the Executive entered into an
employment agreement dated February 1, 1996 (the "Agreement"), and
WHEREAS, the Company, GDIS Acquisition Corp. ("GDIS") and
Global Datatel, Inc. ("GDI") have entered into an Asset Purchase Agreement,
dated December 8, 1999, pursuant to which GDIS will acquire substantially all of
the assets of GDI (the "GDI Acquisition"), and
WHEREAS, under Section 3(d)(2) of the Asset Purchase Agreement
the Company agreed to amend the Agreement in accordance with a letter agreement
with the Executive, dated October 8, 1999, and
WHEREAS, the Company, Mail Acquisition Corporation, and
XxxxXxxxxxx.xxx, Inc., have entered into a Merger Agreement and Plan of
Reorganization, dated February 11, 2000 (the "Merger Agreement"), whereby
XxxxXxxxxxx.xxx, Inc. will be merged with and into Mail Acquisition Corporation
with Mail Acquisition Corporation as the surviving corporation (the "Mail
Merger"), and
WHEREAS, a merger agreement between Surge and Superus provides
for the reorganization (the "Reorganization") of the Company whereby the Company
will be merged with and into a newly formed Delaware corporation ("Superus
Holdings, Inc.") which shall be the successor (hereinafter, the "Company") to
the Company and the assets of the Company will be held by a wholly-owned
subsidiary of Superus Holdings, Inc. ("New Surge"), and
WHEREAS, under Section 1.5(b)(iii) of the Merger Agreement,
New Surge is required to amend the Agreement.
NOW, THEREFORE, in consideration of the mutual premises and
agreements contained herein and for other good and valuable consideration by
each of the parties, the parties hereby agree as follows:
Section 1(b) of the Agreement will be amended to add the
following sentences at the end of the Section:
"Commencing upon the execution of the Merger Agreement,
Executive shall continue to serve as Vice-President, and Secretary of the
Company and maintain day-to-day operational and managerial control over the
Company's electronic components business.
"Subsequent to the Reorganization, the Executive will not be a
member of the Board of Directors of Superus Holdings, Inc. and will be the
Vice-President and Secretary and a director of New Surge, a wholly owned
subsidiary of Superus Holdings, Inc., or such other name as the parties may
agree."
Section 4 of the Agreement is amended to add Subsection (e) as
follows:
"(e) Increases to Base Salary. In the event that any other
employee of New Surge or any of its subsidiaries receives a
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base salary in excess of $200,000.00, the Executive's Base Salary shall be
increased commensurately so that his Base Salary remains at all times as high or
higher than that received by any other employee of New Surge or its
subsidiaries. In addition, promptly following each anniversary of the Effective
Time (as defined in the Merger Agreement), provided that Executive has elected
to continue his employment for the succeeding year, the compensation committee
of New Surge's Board of Directors shall review Executive's Base Salary and
implement such increase, if any, as it shall determine is reasonable and
appropriate; provided, however, that in the event any other employee of New
Surge or any of its subsidiaries has received an increase to his or her base
salary during the 12-month period preceding such review of Executive's Base
Salary, the amount of the increase to Executive's Base Salary shall equal or
exceed the amount of the greatest salary increase received by any such other
person."
Section 12 of the Agreement is amended to read as follows:
"(a) If, at any time during the term of this Agreement: (i) a
consolidation or merger of New Surge (other than in a consolidation or merger
where New Surge is the surviving company); (ii) the sale, lease, conveyance or
transfer of all or substantially all of the assets of New Surge; (iii) the
liquidation or dissolution of New Surge; or (iv) a "change of control" as
defined below, other than the GDI Acquisition and the Mail Merger, is proposed,
or if (v) the nature of New Surge's business materially changes, including, but
not limited to, if New Surge has insufficient funds to carry on its business;
then New Surge will give Executive written notice of the proposed transaction or
change, which notice shall contain the terms of the proposed transaction and the
identities of the parties, at least thirty (30) days before the proposed
transaction or change is to become effective (the "Notice Period").
(b) Within the Notice Period, Executive may exercise a right
of first refusal to purchase, alone or in conjunction with Xxxxxx Xxxxxx, all of
the outstanding common stock of New Surge. That exercise may be effected by
giving the Company notice of the Executive's exercise during the Notice period.
Executive will pay a purchase price equal to: (x) in a proposed transaction as
described in clauses (i), (ii) and (iv) in paragraph (a) above, the price that
would have been paid under the proposed transaction by the third party; and, (y)
in the event of a change as described in clause (iii) or (v) in paragraph (a)
above, the fair market value of the stock. In the exercise of his right of first
refusal pursuant to clause (y), Executive will provide the Company with an
independent appraisal from a recognized commercial broker or appraisal firm and
a fairness opinion stating that the proposed acquisition of New Surge, pursuant
to the right of first refusal, is fair to the Company's shareholders.
(c) If at any time during the term of this Agreement, the
Company proposes to make, or receives a firm commitment of an underwriter
regarding, a public offering of its Class A Common Stock, Executive will receive
a warrant to purchase, at a nominal value, up to 9.5% of the Class A Common
Stock of the Company.
(d) Notwithstanding the foregoing, in the event that Executive
voluntarily leaves the employment of New Surge at any time prior to a proposed
transaction in subparagraph (a) becoming effective, the provisions of
subparagraphs (b) and (c) above and subparagraph (e) below shall no longer be in
effect and shall be null and void.
(e) In the event that a "change in control" occurs, as such
term is defined below, at any time during the term of this Agreement, the
Executive may, by written notice to the Company within sixty (60) days after the
date of such change of control, elect to terminate his employment with the
Company within sixty (60) days after such notice (the "Termination Date"). If
the Executive elects to terminate his employment pursuant to this Section 12
(d), the Company shall pay the Executive, in addition to the remainder of his
annual compensation, a "parachute payment," as such term is defined in Section
280G of the Internal Revenue Code of 1986, as amended, (the "Code") in an amount
equal to 2.99 times the Executive's annual compensation and other remuneration
and fringe benefits, if any. This amount shall be payable by the Company to the
Executive in one lump sum payment within sixty (60) days of the Termination
Date. The Executive shall be responsible for the payment of all income or excise
taxes which may become due as a result of the Company's payment to him of any
"excess parachute payments," as such phrase is defined in Section 280G of the
Code. A "change in control" shall be deemed to occur when the Executive is not
elected to the Board of Directors of New Surge and/or is not elected as an
officer of New Surge. A change of control shall also result when there has been
a change in the ownership following the Company's 1996 public offering, other
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than the GDI Acquisition and the Mail Merger, of at least twenty five percent
(25%) of the issued and outstanding stock of the Company if such 25% is owned by
a single person or a "group" as defined in Section 13 of the Securities Exchange
Act of 1934, as amended, or such other persons who become such a group or
otherwise act in concert, provided that any change of control set forth in this
sentence shall only be considered a change of control if such person(s) or such
group is acting in concert for purposes of changing or affecting the control and
the direction of Company, and such issuance was not approved by the executive,
and/or would result in a material change in the nature of New Surge's business."
Section 5(d) of the Agreement is hereby amended to read as
follows:
"(d) New Surge shall continue to maintain on behalf of the Executive, the two
existing life insurance policies: (i) a one million dollar ($1,000,000)
key man life insurance policy, which names New Surge as the beneficiary,
and (ii) a one million dollar ($1,000,000) split dollar key man life
insurance policy, which names New Surge as the beneficiary of seven
hundred thousand dollars ($700,000) and the Executive's choice of
beneficiary as the beneficiary of three hundred thousand ($300,000)
dollars."
Except as set forth herein, the Agreement, as amended, remains
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the day of April 2000.
"EXECUTIVE" "COMPANY"
SURGE COMPONENTS, INC.
/s/Xxxxxx X.Xxxxxx By: /s/Xxxx Xxxxxxx
---------------------- -----------------------------------
Xxxxxx X. Xxxxxx Xxxx Xxxxxxx, Chairman of the Board
ACCEPTED AND AGREED TO:
GLOBAL DATATEL, INC.
By: /s/Xxxxxxx Xxxxx
------------------------
Xxxxxxx Xxxxx, President
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