EXHIBIT 10.6
EXECUTIVE
EMPLOYMENT AGREEMENT
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This Employment Agreement is made this 5th day of January 1999 by and
between Reptron Electronics, Inc., a Florida corporation whose corporate office
address is 00000 XxXxxxxxx Xxxxx, Xxxxx, XX 00000 (hereinafter "Company") (for
purposes of Paragraphs 8, 9, and 10 "Company" shall additionally include the
Company's subsidiaries and Affiliates, as defined below), and Xxxx Xxxxxx whose
address is 0000 Xxxxx Xxxxxx, Xxxxx, XX 00000 (hereinafter "Executive").
IN CONSIDERATION of the mutual covenants hereinafter contained, the Company
and the Executive agree as follows:
1. This Agreement shall continue until terminated as herein provided.
This Agreement supersedes all prior employment agreements or
arrangements existing as between the Company and the Executive.
2. The Company engages the Executive and the Executive accepts the
engagement to provide the services hereinafter described for the
period and upon the terms and conditions hereinafter described.
3. At the execution hereof, the Executive shall be employed as Chief
Operating Officer. The Executive shall perform the duties
commensurate with such position and such other duties as are assigned
to him and as directed and specified by the Chief Executive Officer or
the Board of Directors. The Executive agrees that his title and
responsibilities are subject to change from time to time as directed
by the Chief Executive Officer of the Company or the Board of
Directors. The Executive agrees that he shall serve the Company to
the best of his abilities and devote his full time and effort in
completing and fulfilling his duties and responsibilities.
4. During the term of this Agreement, the Executive shall be compensated
as follows:
(a)(i) The Company shall pay to the Executive base salary ("Annual
Base Salary") of $300,000, payable in bi-weekly
installments.
(ii) The Annual Base Salary shall be increased on January 1 of
each year commencing with January 1, 2000 by an amount equal
to the product of (i) the Annual Base Salary or the Adjusted
Annual Base Salary, defined below, as the case may be, and
(ii) the greater of (x) 3% and (y) CPI Increase, defined
below, (as increased, the "Adjusted Annual Base Salary").
For purposes of this Agreement, the term "CPI Increase"
shall mean the amount of the percentage increase, if any, in
the Consumer
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Price Index (as defined below) for the twelve-month period
ending on the last day of the calendar year immediately
preceding each January 1st adjustment date during the term
of this Agreement. The Consumer Price Index as used herein
shall mean the Consumer Price Index for the U.S. city
average for all urban consumers, unadjusted, all items, as
promulgated by the Bureau of Labor Statistics of the U.S.
Department of Labor, using the base years 1982-84=100. In
the event that the Consumer Price Index referred to herein
ceases to incorporate a significant number of the items as
currently set forth therein, or if a substantial change is
made in the method of establishing the Consumer Price Index,
then the Consumer Price Index shall be adjusted to the
figure that would have resulted had no change occurred in
the manner of computing the Consumer Price Index. In the
event that the Consumer Price Index (or successor or
substitute index) is not available, then the Company shall
use, subject to Employee's reasonable approval, another
governmental or nonpartisan publication evaluating the
information previously used in determining the Consumer
Price Index in lieu of the Consumer Price Index.
(iii) In the event of the death of the Executive, the Annual Base
Salary or Adjusted Annual Base Salary, as the case may be,
shall be paid to the end of the then bi-weekly installment
period. In the event of the permanent disability of the
Executive, the Annual Base Salary or Adjusted Annual Base
Salary, as the case may be, shall be payable through the
date benefits under the disability policy maintained by the
Company becomes first payable, but in no event for a period
longer than 90 days following the onset of the illness or
injury causing such disability,
(b) The Executive shall receive an annual cash bonus payable by
March 31 following the calendar year in which earned
determined as a factor of the Company's earning per share
(EPS) as at the December 31st of the calendar year for which
the bonus is calculated.
Cash Bonus As A
% of Annual Base Or Annual
Adjusted Base Salary,
EPS As the Case May Be
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less than $.80 0
$.80 to $ 1.00 20%
$1.01 to $1.20 40%
$1.21 to $1.40 60%
$1.41 to $1.60 80%
$1.60 to $1.80 100%
(i) If the Executive's employment is terminated: (x) by
reason of death or permanent disability, (y) if
following a Change of Control (as defined in Paragraph
5) the Executive's employment is terminated for his
refusal to perform his duties and responsibilities
other than on
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an occasional basis consistent with past practice in a
location other than Tampa, Florida, or (z) the
Executive's employment is terminated without cause as
hereinafter defined, the bonus amount shall be
calculated to the end of the calendar year in which the
termination occurs and paid to the Executive, or his
written designated beneficiary or estate, as the case
may be, not later than the next following March 31.
Notwithstanding the foregoing, the bonus amount shall
be prorated to the date of termination if such
termination results in the payment of the Severance
Payment, as defined below.
(ii) In addition to holidays or days off provided generally
to all employees, the Executive shall be entitled to
four (4) weeks vacation (20 working days). Any vacation
days in a calendar year so provided and not taken by
the Executive shall be waived.
(iii) The Executive shall participate in and receive
comparable benefits as are provided generally by the
Company to its senior management personnel as a group
from time to time except as modified or amplified by
this Agreement.
(c) The Company shall provide the Executive with an automobile
allowance of $1,000 per month and shall further pay the
Executive's expenses related thereto, including all costs of
fuel, maintenance, repairs and comprehensive automobile insurance
insuring the Executive as a named insured on the vehicle and all
other drivers of that vehicle providing for liability insurance
of not less than $3,000,000 combined single limit.
5. For purposes hereof, Change of Control shall mean:
(a) Any replacement of more than 50% of the directors of the Company
which follows, and is directly or indirectly a result of, any one
or more of the following:
(i) A cash tender offer or exchange offer for the Company's
common stock other than by Executive, Xxxxxxx X. Xxxxx
("Musto"), an Affiliate of Executive or Musto, or a
"group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934 ("Group"), of which
Executive, Musto or an Affiliate of Executive or Musto
is a member;
(ii) A solicitation of proxies other than by Executive or
Musto, an Affiliate of Executive or Musto, a Group of
which Executive, Musto or an Affiliate of Executive or
Musto is a member, the Company's management (inclusive
of the Executive or Musto) or its board of directors;
--
(iii) Acquisition of beneficial ownership of shares having
50% or more of the total number of votes that may be
cast for the election of
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directors of the Company by a third party or a Group
for the purpose of changing control of the Company,
other than by Executive, Musto, an Affiliate of
Executive or Musto, or a Group of which Executive,
Musto or an Affiliate of Executive or Musto is a
member; or
(iv) Any merger, business combination, sale of assets or
other extraordinary corporate transaction undertaken
for the purpose of changing control of the Company,
other than by Executive, Musto, an Affiliate of
Executive or Musto, or a Group of which Executive,
Musto or an Affiliate of Executive or Musto is a
member. For purposes hereof, the proposed merger
between All American and a subsidiary of the Company
shall in no event be deemed to be a Change of Control
of the Company.
For purposes of this Agreement "Affiliate" means, with respect to
another individual or entity (a "person"), (a) any person directly or
indirectly owing, controlling or holding with power to vote 5% or more
of the outstanding voting securities of such other person; (b) any
person 5% or more of whose outstanding securities are directly or
indirectly owned, controlled or held with power to vote by such other
person; (c) any person directly or indirectly controlling, controlled
by or under common control with such other person; (d) if such other
person is an officer, director, employee or partner, any company or
other entity for which such person acts in any such capacity; and (e)
any close relative or spouse of the specified person.
6. With the exception of those provisions which survive termination as
herein specifically provided, this Agreement and the Executive's
employment shall terminate upon any of the following:
(a) the voluntary termination of employment by the Executive,
(b) the death, or permanent disability of the Executive during the
term of this Agreement (permanent disability being determined at
such time when disability insurance coverage maintained by the
Company for the Executive becomes payable), or, if no such
insurance is then in existence, the date by which three medical
doctors or psychiatrists (as applicable), at least one of whom
shall be selected by Executive or his legal representative, have
examined Executive and concluded (as set forth in a letter
delivered to the Company) that Executive has a permanent
disability which has rendered him incapable of substantially
performing his customary duties for at least six consecutive
months, with such determination effective retroactively as of the
end of such six-month disability period), or
(c) discharge of the Executive by the Company with or without cause
or prior notice.
Upon any such termination, except as otherwise provided herein, all
compensation and benefits other than those required by law to
continue, shall thereafter likewise
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concurrently terminate.
7. As additional consideration of the services to be performed by the
Executive and the undertakings hereby assumed by the Executive, the
Company shall make a "Severance Payment" subject to the following
conditions as follows:
(a) The amount of the Severance Payment shall equal 2.99 times the
average annual base compensation as defined and determined under
Section 28OG of the Internal Revenue Code of 1986, as amended.
(b) The Severance Payment shall be payable upon:
(i) a termination of employment by the Company (or its
successors) for whatever or no reason (other than as
described in subparagraph (b)(iii)(x) below) within 180
days prior to, or within one year following, a Change of
Control, or a termination of employment within one year
following a Change of Control for the reason stated in
sub-paragraph 6(b), or
(ii) failure of the Executive and the Company (or its
successor) to execute an employment agreement prior to
the first annual anniversary of a Change of Control,
which addresses the Executive's employment beyond said
anniversary date, and the employee quits within 30 days
of said anniversary, or
(iii) A termination of employment by the Company without
cause. If the Executive's employment is terminated by
the Company for reasons other than the following, such
termination for the purposes hereof shall be one without
cause:
(x) Employee is convicted (by a jury verdict, guilty
plea or plea of nolo contenders, any of which are not
reversed on appeal) of a felony under state or federal
law; or
(y) Executive's failure, after thirty (30) days written
notice (which notice shall be given only after approval
or authorization thereof by the Company's Board of
Directors), to cure a material default of any of the
provisions of this Agreement or the Executive wilfully
violates a written Company policy or procedure that is
material to the business of the Company and has failed
to cure such violation after thirty (30) days written
notice, (which notice shall be given only after approval
or authorization thereof by the Company's Board of
Directors). In order to be effective said notice must
clearly specify the material default or violation and
must notify Executive of the Company's intention to
terminate this Agreement in the event the described
material default or violation is not cured within said
thirty (30) days; provided, however, no notice shall be
required when the Company has been materially damaged as
a result of such default or
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violation and, by its nature, the default or violation
cannot be cured. A termination of the Executive with
cause shall be effected only upon the vote of a
majority of the Board of Directors.
(c) The Severance Payment shall be paid in 36 monthly
installments, each equal to 1/36th of the Severance Payment,
commencing on the first day of the calendar month next
following such termination of this Agreement.
(d) The Severance Payment shall be forfeited by the Executive if
he shall breach any provision of paragraphs 8, 9, or 10
hereof. Any installments made prior to such breach shall be
immediately returned to the Company by the Executive.
(e) If the Executive shall die prior to all of the installments
having been paid, the remaining installments of the Severance
Payment shall be payable to the estate of the Executive or to
such designee as the Executive shall have directed in writing
to the Company.
(f) Receipt of the Severance Payment, to the extent payable,
shall act as a full release by the Executive of all claims
the Executive may have against the Company except for unpaid
wages, benefits or sums to be paid to the Executive post-
termination of this Agreement as herein provided.
8.(a) Executive acknowledges that during the course of his past employment
with the Company, and as his employment continues, he has and will
have direct access to and knowledge of the Company's trade secrets
and other confidential and proprietary information and documents,
including but not limited to the Company's customer list, customer
requirements and information, price lists, all training materials,
product information, operating procedures, marketing information,
selling strategies, and supplier information (collectively
"Confidential Information"). Notwithstanding the foregoing,
Confidential Information shall not include:
(i) Information which, at the time of disclosure is in the public
domain or which, after disclosure, becomes part of the public
domain by publication or otherwise through no action or fault
of Employee;
(ii) Information which is in Employee's possession at the time of
disclosure and was not acquired from the Company or an
Affiliate;
(iii) Information which was received by Employee from a third party
having the legal right to transmit that information; or
(iv) Information that is independently developed by Employee
without the use of Confidential Information.
(b) The Executive agrees that all Confidential Information shall remain
the property of the Company, shall be kept in the strictest of
confidence, used solely for the benefit of the Company and shall not
be disclosed, either directly or indirectly, to any other
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person or entity except as is required in the furtherance of the
Company's business and for its benefit. Executive further agrees that
all such Confidential Information (and any copies thereof regardless
of how maintained, including that which has been reduced to
electronic memory) shall be returned to the Company upon termination
of this Agreement for whatever reason. The terms of this paragraph
are in addition to, and not in lieu of, any common law, statutory or
other contractual obligations that Executive may have relating to the
Company's Confidential Information. Further, the terms of this
paragraph shall survive indefinitely the termination of this
Agreement.
9. The Executive acknowledges that the Company has made a significant
investment in developing and training a competent work force and
customer base and that the scope of the abilities of, and
compensation paid to, the Company's various employees is valuable and
confidential information. Further, the Executive acknowledges that
the Company's continued viability and success is in large part
contingent upon maintaining a stable, trained and competent work
force and its customer base. Consequently, during the course of his
employment, and for a period of one year thereafter, regardless of
the reason for termination thereof, the Executive will not directly
or indirectly solicit, entice, encourage, or cause, any salaried
employee of the Company to leave the employment of the Company.
Further during said one year period, the Executive will not directly
or indirectly hire, or cause another person or entity to hire, any
salaried employee of the Company. Additionally, the Executive will
not, directly or indirectly, for the one year period following his
termination of Employment, regardless of the reason for termination
thereof, solicit or submit a quotation for the electronic component
distribution business of, or offer to sell or sell any product or
service offered by the electronic component distribution business of
the Company to, any customer of the Company existing at the time of
such termination or within one year prior thereto or, for a period of
two years following said termination of employment, regardless of the
reason for termination thereof, solicit or submit a quotation for, or
offer to sell or sell any product or service offered by, the contract
manufacturing business of the Company, to any customer of the Company
existing at the time of such termination or within one year prior
thereto.
10. Executive acknowledges and agrees that the covenants set forth in
Paragraphs 8 and 9 are necessary and reasonable to protect the
Company's Confidential Information, its intangible business assets,
its legitimate business interests and goodwill, and that the breadth,
time and geographic scope of the limitations set forth therein are
reasonable and necessary to protect the same. The Executive expressly
acknowledges and agrees that the Company would not have an adequate
remedy at law in the event of his breach, and or threatened breach of
the covenants set forth in Paragraphs 8 or 9 of this Agreement.
Consequently, in addition to such other remedies as the Company may
have, the Company, shall be entitled to obtain, and Executive agrees
not to oppose a request for, equitable relief in the form of specific
performance, ex parte temporary or preliminary injunctive relief,
other temporary or permanent injunctive relief, or other equitable
remedy fashioned by a court of competent jurisdiction enjoining the
Executive from any such threatened or actual breach.
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11. If during the term of this Agreement, the Company is a participant in
a consolidation or merger, or the Company should sell substantially
all of its assets, the Company agrees that as a condition of closing
any such transaction, the surviving entity to such consolidation or
merger, or the purchaser of such assets, shall in writing assume this
Agreement and become obligated to perform all of the terms and
provisions hereof applicable to the Company. Without limiting the
generality of the foregoing, the covenants contained in Paragraphs 8,
9 and 10 may be enforced by the assignee or successor of the Company.
12. If any of the consideration paid or made available to the Executive
under this Agreement, or other benefit or consideration provided to
the Executive as an employee of the Company, is accelerated as a
consequence of a change of control as provided under Section 280(G) of
the Internal Revenue Code of 1986, as amended, or such other provision
of law of similar effect ("Code") results in the imposition of an
excise tax under Section 4999 of the Code, the Company shall pay to
the Executive an amount ("Grossed-Up Excise Tax Payment") be computed
by dividing the excise tax so imposed by a number equal to one minus
the sum of (i) the highest combined marginal U.S. federal, state and
local individual income, social security, medicare and unemployment
tax rate (or such other combined tax rate that is similar to or
replaces such combined tax rate) applicable to Employee (taking into
account the deductibility of any such federal, state and local taxes)
that is in effect at the time the excise tax is imposed and (ii) the
excise tax rate applicable to Executive. For example, if the excise
tax is $100, the highest combined marginal tax rate applicable to
Employee at such time is 45% and the Excise Tax rate is 20%, the
Grossed-Up Excise Tax Payment would be $285.71. The Company shall pay
the Grossed-Up Excise Tax Payment to the Executive less any Excise Tax
withheld and remitted by the Company not later than March 31st
following the calendar year in which the consideration or benefit is
received by the Executive for which the excise tax is payable.
13. Any notice to be given to the Company hereunder shall be deemed
sufficient if addressed to the Board of Directors in writing and
delivered or mailed by certified or registered mail to 00000 XxXxxxxxx
Xxxxx, Xxxxx, Xxxxxxx 00000, or such other primary business address of
the Company. Any notice to be given to Executive hereunder shall be
delivered or mailed by certified or registered mail to him at 0000
Xxxxx Xxxxxx, Xxxxx, XX 00000, or such other address as he may
hereafter designate.
14. This Agreement shall be binding upon and inure to the benefit of the
successors and assigns of the Company, including without limitation,
the purchaser of substantially all of the operating assets of the
Company. Unless clearly inapplicable, reference herein to the Company
shall be deemed to include any such successor. In addition, this
Agreement shall be binding upon and inure to the benefit of the
Executive and his heirs, executors, legal representatives and assigns;
provided, however, that the obligations of Executive hereunder may not
be delegated without the prior written approval of the Board of
Directors of the Company. The provisions of Paragraphs 7, 8, 9, 10, 11
and 12 shall survive the termination of this Agreement.
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15. This Agreement may not be altered, modified or amended except by a
written instrument signed by each of the parties hereto.
16. This instrument (including attachments and exhibits thereto and
documents and agreements referred to therein) embodies the whole
agreement of the parties. All previous negotiations or agreements
between the parties, either verbal or written with respect to the
subject matter hereof not herein contained are hereby withdrawn and
annulled. This contract shall supersede all previous communications,
representations, or agreements, either verbal or written, between the
parties hereto with respect to the subject matter hereof.
17. The failure of either party at any time to require performance by the
other party of any provision of this Agreement shall not be deemed a
continuing waiver of that provision or a waiver of any other provision
of this Agreement and shall in no way affect the full right to require
such performance from the other party at any time thereafter.
18. The invalidity or unenforceability of any Paragraph or Paragraphs, or
subparagraphs of this Agreement, shall not affect the validity or
enforceability of the remainder of this Agreement, or the remainder of
any Paragraph or sub-paragraph. If as provided by law, a court of
competent jurisdiction is unable to modify any such violative
Paragraph or sub-paragraph to result in the same not being invalid or
unenforceable, this Agreement shall then be construed in all respects
as if any invalid or unenforceable Paragraph or subparagraph(s) were
omitted.
19. The Executive represents to the Company as follows:
(a) That the Executive has been advised by the Company to have this
Agreement reviewed by an attorney representing the Executive, and
the Executive has either had this Agreement reviewed by such
attorney or has chosen not to have this Agreement reviewed
because the Executive, after reading the entire Agreement, fully
and completely understands each provision and has determined not
to obtain the services of an attorney.
(b) The Executive, either on his own or with the assistance and
advice of his attorney, has in particular reviewed Paragraphs 8,
9 and 10, understands and accepts the restrictions thereby
imposed and agrees the same are reasonable in all respects and
necessary for the protection of the property rights, goodwill and
the intangible business assets of the Company.
(c) That no force, threats of discharge, or other threats or duress
have been used by the Company, directly, indirectly or by
innuendo, in connection with the Executive's execution of this
Agreement.
20. This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Florida without regard to
conflicts of laws. Further, the Executive agrees that any action
relating to the terms of this Agreement shall be
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commenced and only commenced in a state or federal court sitting in
Tampa, Florida.
21. If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and necessary disbursements and
travel expenses in addition to any other relief to which he or it may
be entitled, before and at trial, whether or not trial on the merits
occurs, and at all tribunal levels.
22. Subject to and limited by Paragraph 10 hereof, all disputes which may
arise under this Agreement shall be settled by arbitration pursuant to
the rules of the American Arbitration Association by a single
arbitrator that the Company and Employee agree upon. Such arbitration
shall take place in Tampa, Florida. If the Company and Employee do not
so agree on a single arbitrator, the arbitration shall be by a board
of three members, to be composed of one person appointed by the
Company, one person by Employee and the third person selected by said
two appointees. The Company and Employee shall each designate in
writing to the other party its respective appointee within 30 days
after the determination, by written notice by either party, that they
cannot agree as to a single arbitrator. If the two appointees fail to
select a third person within 30 days after the designation of the two
appointees, the third person shall be designated by the American
Arbitration Association upon application by the Company or Employee.
The decision of the single arbitrator, or of any two of a three person
board of arbitrators, shall be binding on the parties to the
controversy and their representatives. Such decision shall be enforced
with the same force and effect as a decree of a court having
jurisdiction over the matter. The fees and expenses including
attorneys' fees which may be incurred in connection with any such
arbitration shall be paid by the party whose contention is rejected by
the decision of the arbitration, or if only partially rejected, as
allocated by the decision of the arbitrator or board of arbitrators.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date opposite their signatures.
REPTRON ELECTRONICS, INC.
Date:_______________ By: /s/ Xxxxxxx X. Xxxxx
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Name: XXXXXXX X. XXXXX
Title: Chief Executive Officer
Date: 1/5/99 /s/ Xxxx X Xxxxxx
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XXXX X XXXXXX
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