Exhibit 10(f)
EXECUTIVE SERVICES AGREEMENT
THIS EXECUTIVE SERVICES AGREEMENT (the "Agreement"), effective as of August
1, 1999, by and between QMS, Inc., a Delaware corporation, and XXXXXX X. XXXXXXX
("Xxxxxxx"), an individual. QMS and Xxxxxxx are collectively referred to in
this Agreement as the "Parties".
In consideration of the mutual covenants and promises of the parties to
this Agreement, the sufficiency of which is hereby acknowledged, the Parties
agree as follows:
1. Employment. QMS agrees to continue the employment of Xxxxxxx as
president and chief executive officer, and Xxxxxxx agrees to continue to serve
in such employment, subject to the terms and conditions of this Agreement.
Xxxxxxx will serve QMS faithfully and to the best of his ability under the
direction of the Board of Directors of QMS (the "Board"), and Xxxxxxx will
devote all of his time, energy, and skill during regular business hours to such
employment.
2. Term of Employment. This Agreement and the employment under this
Agreement shall commence on the effective date stated above, and continue
through March 31, 2003 (or, at Xxxxxxx'x option, exercisable by notice in
writing given by Xxxxxxx to QMS no later than March 1, 2003, through March 31,
2004).
3. Directorships. Xxxxxxx hereby consents to continue to serve as
director of QMS pursuant to his election and re-election as such in accordance
with the By-Laws of QMS, for the term he is employed hereunder.
4. Compensation.
(a) Xxxxxxx'x initial base salary hereunder shall be at a rate of $350,000
per year and will be reviewed at least annually by the Compensation Committee of
the Board. QMS shall pay Xxxxxxx'x base salary on a pro rata basis every two
weeks pursuant to QMS' normal payroll practices.
(b) Xxxxxxx shall be eligible, beginning as of July 1, 1999, for annual
incentive bonus compensation in the amount of $550,000 per year, payable
quarterly on such basis and criteria and at such times as the QMS' Compensation
Committee may determine.
(c) Subject to the approval of the Board's Compensation Committee and
contingent upon the approval of the QMS stockholders to amend the 1997 Stock
Incentive Plan to increase the number of shares issuable under the Plan by at
least 500,000 shares, Xxxxxxx shall be granted non-qualified stock options for
the purchase of 500,000 total shares of QMS common stock on August 10, 1999
("Grant Date") at an exercise price representing the fair market value of QMS'
common stock on the Grant Date.
(d) Xxxxxxx shall be paid a monthly automobile allowance in the amount of
$1,250, payable on the first day of each month beginning as of August 1, 1999.
(e) During the term of this Agreement, Xxxxxxx shall be reimbursed for any
fees, bonds, membership dues, and other expenses, including meals, drinks, and
golf expenses incurred by him for his membership in and use of the Mobile
Country Club (Mobile, Alabama) and the Sanctuary Country Club (Sanibel Island,
Florida).
(f) Xxxxxxx shall be furnished or provided at QMS' expense, or reimbursed
for, such reasonable financial and estate planning services, tax return
preparation services, and tax counseling services as he may need or as may be
appropriate for a person with his income and assets.
(g) Xxxxxxx shall be entitled to all legal and religious holidays, sick
days and vacation in accordance with the Company's policy generally applicable
to senior executives.
(h) Xxxxxxx shall continue to be eligible for participation in any
pension, profit sharing, incentive, savings and retirement plans, as adopted
from time to time by the Board, that are tax-qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and all plans that
are supplemental to any such tax-qualified plans, in each case to the extent
that such plans are applicable generally to other senior executives of QMS.
Xxxxxxx shall also be eligible to participate in any health, life, disability or
other group insurance plan which is now or may be established by QMS or which
QMS is required to maintain by law.
5. Additional Compensation and "Rabbi" Trust.
(a) In addition to the foregoing, Xxxxxxx shall become entitled to
additional compensation in the sum of $1,800,000 (plus all interest earned on
the trust provided for in Subparagraph 5(c) below) at the earliest to occur of
the following:
(i) August 1, 2002,
(ii) Xxxxxxx'x death,
(iii) his involuntary termination other than for Cause (as defined in
Paragraph 6 below), or
(iv) a substantial diminishment of his working conditions,
authority, compensation, benefits, "perks", or status to which
he has not previously consented, including, without limitation,
a substantial reduction in the scope of his duties or
authority, his removal from the Board of Directors of QMS (the
"Board") or his failure to be re-elected as Chairman of the
Board and/or as a member of the Board, his removal as president
or chief executive officer or his failure to be re-elected as
such, or an unreasonable and continuing refusal by the Board to
support him on a material and/or strategic issue confronting
QMS.
(b) The $1,800,000 additional compensation provided in Subparagraph 5(a)
above shall be paid in four equal annual installments of $450,000 each, the
first of which installments
shall be due and payable upon Xxxxxxx becoming entitled to said additional
compensation under said Subparagraph 5(a) and subsequent installments being due
and payable on the first, second, and third annual anniversaries of the said
first installment. In addition, an amount equal to one-fourth of the interest
then on hand in the trust provided for in Subparagraph 5(c) shall be paid with
the first of such installments, an amount equal to one-third of the interest on
hand in such trust at the payment of such second installment shall be paid with
such second installment, an amount equal to one-half of the interest on hand in
such trust at the payment of such third installment shall be paid with such
third installment, and all interest on hand in such trust at the payment of the
fourth of such installments shall be paid with such fourth installment.
(c) QMS shall fund its obligations under this Paragraph 5 by creating a
"rabbi" trust with South Alabama Trust Company or a bank acceptable to Xxxxxxx
(which shall not be useable or reachable by QMS for any purpose other than the
payment of its obligations under this Paragraph 5 as long as any such
obligations remain and are unpaid, but which trust shall be subject to judicial
levy by creditors of QMS) and depositing therein the sum of $50,000 on the first
day of September, 1999, and a like amount on the first day of each of the next
thirty-five months thereafter. QMS shall pay all expenses of establishing and
maintaining such trust. Xxxxxxx shall have no right to reach the assets in such
trust except to the extent QMS fails to pay him the amounts due hereunder. The
assets in the trust shall be invested in United States Treasury obligations due
in not more than one year from the date of investment or in other interest
bearing investments suitable to Xxxxxxx.
(d) Any payments due under this Agreement to Xxxxxxx shall be paid to
Xxxxxxx if he is then living; or if not, to his then living widow, if any; or if
none, to the executors or administrators of his estate.
(e) If Xxxxxxx quits or voluntarily ceases to be employed, he shall be
entitled to an amount equal to the then assets of the trust provided for in
Paragraph 5(c) above, plus the income thereafter earned by said trust, paid out
in four annual installments, the first of which shall be due upon such quitting
or ceasing to be employed, and the balance being payable on the first, second,
and third annual anniversaries thereof.
(f) Anything in this Agreement to the contrary notwithstanding, Xxxxxxx
shall forfeit all rights hereunder to any amounts not then yet due and payable
if he is discharged by the Board for "Cause", as defined in Paragraph 6 below.
6. Termination.
(a) QMS, by vote of the majority of the Board of Directors then in office
(excluding Xxxxxxx), shall have the right, on written notice to Xxxxxxx, to
discharge him and terminate his employment at any time for "Cause" (subject to
Xxxxxxx'x right of cure and right to dispute as provided hereinbelow). The term
"Cause" shall mean (i) theft, embezzlement, or other criminal act directed
against QMS; (ii) the repeated willful breach of Xxxxxxx'x material obligations
under this Agreement to the serious and demonstrable detriment of QMS, after QMS
has given Xxxxxxx written notice of such breach and Xxxxxxx has had a reasonable
opportunity and period of time to cure and a right to dispute such breach, which
period shall be not less than 45 days after (A) Xxxxxxx'x receipt of such notice
and (B) an opportunity to be heard on such matter (with his counsel present and
participating) at a meeting of the Board of Directors; or (iii) Xxxxxxx'x
continued disability, as provided for in Paragraph 6(c).
(b) The term "involuntary termination" shall mean any termination of
Xxxxxxx'x employment by QMS, other than for "Cause", as defined herein.
(c) If Xxxxxxx shall fail or be unable to perform the services required
under this Agreement because of any physical or mental infirmity, and such
failure or inability shall continue for three (3) consecutive months, or for six
(6) months during any consecutive twelve-month period, QMS shall have the right
to terminate this Agreement 90 days after delivering written notice of such
termination to Xxxxxxx; provided, however, that Xxxxxxx shall continue to
receive his full compensation under this Agreement earned or accrued to the date
of termination, in spite of any such infirmity. The noncompetition provisions
of Sections 7 and 8 shall continue in effect in spite of such termination of
this Agreement, but if, after recovery from such infirmity as evidenced by a
medical certificate of a physician retained by QMS, QMS does not choose to
retain Xxxxxxx in some executive capacity, the noncompetition provisions of
Sections 7 or 8, if still in effect, shall cease to be operative.
7. Noncompetition. Xxxxxxx agrees that, in addition to any other
limitation, for a period of two (2) years after the termination of his
employment under this Agreement, except for a termination caused by QMS in
violation of the terms of this Agreement, Xxxxxxx will not directly or
indirectly engage in, or in any manner be connected with or employed by any
person, firm, corporation, or other entity in competition with QMS or engaged in
the development, manufacture or sale of document imaging solutions or related
technologies in the United States, provided that this provision shall be
effective only to the extent allowed by law.
8. Solicitation After Termination. Xxxxxxx agrees that, in addition to
any other limitation, for a period of two (2) years after the termination of
this Agreement, except for a termination caused by QMS in violation of this
Agreement, Xxxxxxx will not, on behalf of himself or any other person, firm,
corporation, or other entity, solicit, recruit, or divert any employee of QMS,
or any candidate for employment by QMS, for employment elsewhere.
9. Use of Confidential Information. Xxxxxxx agrees that, in addition to
any other limitation contained in this Agreement, regardless of the
circumstances of the termination of employment, he will not communicate to any
person, firm, corporation, or other
entity any information relating to customers lists, unpublished costs and
prices, designs, and proprietary technology, or any other confidential knowledge
or secrets that Xxxxxxx might from time to time acquire with respect to the
business of QMS, or any of its subsidiaries.
10. Injunctive Relief. Xxxxxxx hereby acknowledges that the services to
be rendered under this Agreement are of a unique, special and extraordinary
character that would be difficult or impossible for QMS to replace, and by
reason of such difficulty, Xxxxxxx hereby agrees that for a violation of any of
the provisions of this Agreement, QMS shall, in addition to any other rights and
remedies available under this Agreement, at law or otherwise, be entitled to an
injunction to be issued by any court of competent jurisdiction enjoining and
restraining Xxxxxxx from committing any violation of this Agreement, and Xxxxxxx
hereby consents to the issuance of such injunction.
11. Termination by Xxxxxxx. If QMS shall cease conducting its business,
take any action looking toward its dissolution or liquidation, admit in writing
its inability to pay its debts as they become due, file a voluntary or be the
subject of an involuntary petition in bankruptcy, or be the subject of any state
or federal insolvency proceeding of any kind, then Xxxxxxx may, in his sole
discretion, by written notice to QMS, terminate his employment and QMS hereby
consents to the release of Xxxxxxx under such circumstances and agrees if QMS
ceases to operate or to exist as a result of such event, the provisions of
Sections 7 and 8 shall terminate.
12. Binding Effect. This Agreement shall be binding on and shall inure to
the benefit of any successor or successors of QMS and the personal
representatives of Xxxxxxx.
13. Governing Law. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Alabama.
14. Entire Agreement. This Agreement shall constitute the entire
agreement between the Parties and any prior understanding or representation of
any kind preceding the effective date of this Agreement shall not be binding
upon either party except to the extent incorporated in this Agreement.
15. Other Agreements Replaced. The "Executive Services Agreement" dated
as of January 5, 1998, between QMS and Xxxxxxx, as amended, and the "Executive
Agreement" dated as of January 5, 1998, between QMS and Xxxxxxx, together with
any other specific agreements between said two parties, are superceded and
replaced by this Agreement and shall be of no further force or effect.
16. Modification of Agreement. Any modification of this Agreement or
additional obligation assumed by either party in connection with this Agreement
shall be binding only if evidenced in writing by each party or an authorized
representative of each party.
17. No Waiver. The failure of either party to this Agreement to insist
upon the performance of any of the terms and conditions of this Agreement, or
the waiver of any breach of any of the terms of this Agreement, shall not be
construed as thereafter waiving any such
terms and conditions, but the same shall continue and remain in full force and
effect as if no such forbearance or waiver had occurred.
18. Attorney Fees. In the event any action is filed in relation to this
Agreement, the unsuccessful party in the action shall pay to the successful
party, in addition to all sums that either party may be called on to pay, a
reasonable sum for the successful party's attorney's fees.
19. Notices. Any notice provided for or concerning this Agreement shall
be in writing and shall be deemed sufficiently given when given in person, by
telecopy or when sent by certified or registered mail, postage prepaid, if sent
to the respective address of each party as set forth below:
If to QMS: With a simultaneous copy to:
Secretary Xxxxxxx X. Xxxxx, Esq.
QMS, Inc. Hand Xxxxxxxx, L.L.C.
Xxx Xxxxxx Xxxx Xxxxx 0000
Xxxxxx, Xxxxxxx 00000 AmSouth Bank Xxxxxxxx
Xxxx Xxxxxx Xxx 000
Xxxxxx, Xxxxxxx 00000
If to Xxxxxxx: Xx. Xxxxxx X. Xxxxxxx
c/o QMS, Inc.
Xxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
(Or such other address as Xxxxxxx may designate
in writing to the addressees set forth above)
IN WITNESS WHEREOF, the Parties have executed and delivered this Executive
Services Agreement as of the day and year indicated above.
QMS, Inc. Xxxxxx X. Xxxxxxx
By: /s/ Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxxx
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Its CFO
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ATTEST: /s/ Xxxxxx X.XxXxxxxx
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Its VP/HR
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