Exhibit 10.4
EMPLOYMENT AGREEMENT
AGREEMENT dated as of October 1, 1999, between Questron
Technology, Inc., a Delaware corporation (referred to herein as "Employer" or
"Questron"), and Xxxxxx 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.
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 President and Chief Financial 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 October 1,
1999 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 October 1, 1999 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) 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.
(c) 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.
(d) 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.
(e) 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,
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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
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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 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,
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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), after a Change in Control of Employer (as
that term is defined in Paragraph 7(e)), occurs, and 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 by the Company
pursuant to Paragraph 7(a), (b) or (c) or by Executive, 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"); 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.
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(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:
Xxxxxx X. Xxxxxxxx
00000 Xxxx Xxxx Xxxxx
Xxxx Xxxxx, XX 00000
If to Employer:
Questron Technology, Inc.
0000 Xxxxxxxx Xxxxxx
0
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.
[SIGNATURE PAGE TO IMMEDIATELY FOLLOW]
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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.
________________________ By:_____________________________
XXXXXX X. XXXXXXXX Title:__________________________
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RESTRICTIVE COVENANT
October 1, 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,
Xxxxxx X. Xxxxxxxx
