Exhibit 99.1
AGREEMENT OF EMPLOYMENT
AGREEMENT made this 5 day of May 2003, by and between Electrograph Systems,
Inc., a domestic Corporation maintaining its principal place of business at 40
Marcus Boulevard, Hauppauge, New York, 11788 [hereinafter known as the
"Employer"], Sam Taylor, residing at 311 Chapelwood Lane, Timonium, Maryland
21093 [hereinafter known as the "Employee"], and Manchester Technologies, Inc.,
a domestic Corporation maintaining its principal place of business at 160 Oser
Avenue, Hauppauge, New York 11788 [hereinafter known as "Manchester"].
Whereas, the Employee is presently employed by one, Electrograph Systems,
Inc., as its President, and
Whereas, the Employer is presently a wholly owned subsidiary of Manchester,
and
Whereas, the Employer and the Employee are mutually desirous of continuing
the Employer/Employee relationship and are desirous of more particularly
defining their rights and obligations each to the other.
Now, Therefore, in consideration of the mutual covenants and conditions
contained herein, and of the sum of Ten and 00/100 [$10.00] Dollars, to each in
hand paid by the other, it is agreed as follows:
1. Employment.
The Employer hereby hires the Employee to perform such services as
hereinafter set forth in Paragraph "2.", and the Employee does hereby accept
such employment and agrees to perform the duties required of him to the best of
his ability.
2. Duties.
The duties of the Employee for the Employer, pursuant to the within
Agreement, shall consist of the following: President - Supervisor of Sales-
Supervisor of Product Purchasing and Inventory - Supervisor of Advertising and
Marketing.
[a] In addition to the foregoing duties, the Employee shall do such other
work as may be required of him from time to time by the Employer, on, under and
subject to the instructions, directions and control of the Employer. It is
specifically understood and agreed that no additional compensation shall be paid
to the Employee in the event of such change or amendment of the duties to be
performed by the Employee.
3. Place of Employment.
At the commencement of this Contract, the Employee shall perform his duties
at such place or places as may be directed by the Employer, and as required for
the fulfillment of his duties hereunder; Provided, However, the Employee
acknowledges that his duties may require that he engage in a reasonable amount
of travel to the locations of customers, suppliers, trade shows and the like.
4. Term.
The Employer hereby engages the Employee to perform the duties as set forth
in the within Agreement for a period of three [3] years commencing on May 1,
2003 and terminating on April 30, 2006.
5. Best Efforts and sole Employment.
That during the term of this Agreement, the Employee shall devote his
entire time and energy, and give his best endeavors to the discharge of his
duties hereunder, and he shall not, during the term hereof, enter into the
services of, or be employed in any capacity, or for any purpose whatsoever, by
any person, partnership, firm or corporation, other than the Employer, and that
he will not, during the said period of time, be engaged in any business,
enterprises or undertaking, other than his employment hereunder. Subject to the
specific prior approval of Barry R. Steinberg (the Chief Executive Officer of
Manchester and the Employer), the service by the Employee as a member of the
Board of Directors of DDP (a United Kingdom Corporation), shall not be deemed a
violation of the provisions of the within Paragraph.
[a] The Employee specifically acknowledges that he will receive no overtime
or other additional compensation, at such time or times during the term hereof,
as his duties hereunder may require additional work time beyond the so-called
normal work day or days.
6. Compensation.
A. As compensation for his services as aforesaid, and as salary in
connection with the duties to be performed by him. the Employer shall pay to the
Employee the salary as hereinafter set forth, such sums to be paid in equal
weekly installments each:
Year One - $115,000.00 per annum payable $2,211.54 per week.
Year Two - $125,000.00 per annum payable $2,403.85 per week.
Year Three - $135,000.00 per annum payable $2,596,16 per week.
B. In addition to the salary as set forth in "6. A." above, the Employee
shall receive "Commissions" as follows:
1. As to sales personally produced by the Employee: Ten [10%] percent of
the "Gross Profit" as to such sales, and
C. As additional compensation for the performance of his duties hereunder,
the Employee shall receive certain "Bonus" situations as follows:
1. Quarter Annual Bonus of Three Thousand and 00/100 [$3,000.00] Dollars,
in the event the then current Quarterly Gross Sales of the Employer exceed the
Quarterly Gross Sales for the identical Quarter in the prior year by ten [10%]
percent or greater; Provided, However, the within "Bonus" is expressly
conditioned upon: a) the Employer achieving a "Net Profit" for the subject
Quarter which "Net Profit" must exceed the "Net Profit" for the identical
Quarter in the prior year, and b) the current Quarter Gross Sales exceed 11
Million Dollars.
2. Additional Quarter Annual Bonus of Three Thousand and 00/100 [$3,000.00]
Dollars, in the event: a) the "Net Profit" of the Employer for the then current
Quarter exceeds the "Net Profit" for the identical Quarter in the prior year by
ten [10%] percent or greater, and b) the "Net Profit" for the then current
Quarter is in excess of Six Hundred Thousand and 00/100 ($600,000.00) Dollars
3. Additional bonus for each year of this Agreement, to consist of five
(5%) percent of the. Employer's "Gross Profit" per month; Provided, However,
that the Gross Profit derived from sales to so-called "House Accounts" (being
those Customer Accounts whose identification numbers commence with the number
"5") shall not be included in the Gross Profit calculation for purposes of the
within sub-paragraph "6.C.3.". Payments due the Employee herein will be paid
on a monthly basis, and within thirty [30] days after the conclusion of each
month. For definition purposes, Gross Profit" is herein defined as Sales Revenue
less Product Invoice Cost, Freight, if any, and the total of those accounts
receivable that are open and uncollected in excess of one hundred twenty [120]
days, and/or are deemed not collectable by either the Chief Financial Officer of
the Employer or its General Counsel (see following Example).
Example: At the conclusion of Month One of the within
Agreement, monthly "Gross Profit" is the sum of $400,000.00.
Receivables in excess of one hundred twenty [120] days are
the sum of $100,000.00. The Bonus due the Employee for Month
One will be the sum of $15,000.00.
4. a) In the event Gross Sales Revenue (annual) increase for the twelve
[12] months ending April 30, 2004, the Employee will receive a Year-End Bonus as
per the following Schedule:
Gross Sales Revenue Gross Profit Bonus
- ------------------- ------------ -----
$125,000,000-149,000,000 7.5%-9.9% $50,000.00
10%-12.4% $75,000.00
12.5% + $100,000.00
$150,000,000-199,000.000 7.5%-9.9% $75,000.00
10%-12.4% $100,000.00
12.5% + $125,000.00
$200,000,000+ 7.5% + $200,000.00
b) In the event Gross Sales Revenue (annual) increase for the twelve [12]
months ending April 30, 2005, the Employee will receive a Year-End Bonus as per
the following Schedule:
Gross Sales Revenue Gross Profit Bonus
- ------------------- ------------ -----
$145,000,000-169,000,000 7.5%-9.9% $50,000.00
10%-12.4% $75,000.00
12.5% + $100,000.00
$170,000,000-199,000,000 7.5%-9.9% $75,000.00
10%-12.4% $100,000.00
12.5% + $125,000.00
$200,000,000+ 7.5% + $200,000.00
c) In the event Gross Sales Revenue (annual) increase for the twelve [12]
months ending April 30, 2006, the Employee will receive a Year-End Bonus as per
the following Schedule:
Gross Sales Revenue Gross Profit Bonus
- ------------------- ------------ -----
$165,000,000-189,000,000 7.5%-9.9% $50,000.00
10%-12.4% $75,000.00
12.5% + $100,000.00
$190,000,000-219,000,000 7.5%-9.9% $75,000.00
10%-12.4% $100,000.00
12.5% + $125,000.00
$220,000,000+ 7.5% + $200,000.00
Payments due the Employee, if any, pursuant to the provisions of the
within sub paragraph "4. a), b) and c)", will be paid on or before May 31st of
the subject twelve [12] month period.
For definition purposes, Gross Profit" is herein defined as Sales Revenue
less Product Invoice Cost, Freight, if any, and the total of those accounts
receivable that are open and uncollected in excess of one hundred twenty [120]
days, and/or are deemed not collectable by either the Chief Financial Officer of
the Employer or its General Counsel.
Reference is herein made to the foregoing Sections of the within Paragraph
("A., B., and C.", all parts) setting forth various items of compensation
payable to the Employee. It is specifically understood and agreed that the total
of employee compensation earned by the Employee pursuant to such Sections, shall
not exceed the sum of Six Hundred Forty-nine Thousand and 00/100 ($649,000.00)
Dollars (for each twelve [12] month period of this Agreement, May 1st - April
30th), notwithstanding that such total compensation earned by the Employee, when
calculated, should exceed Six Hundred Forty-nine Thousand and 00/100
($649,000.00) Dollars), unless mutually agreed by both parties.
Example: Employee earns the sum of Seven Hundred Twenty-five
Thousand and 00/100 ($725,000.00) Dollars, as calculated
pursuant to Sections of the foregoing Paragraph ("A., B.,
and C.", all parts). The Employee compensation shall be
limited to the maximum of Six Hundred Forty-nine and 00/100
($649,000.00) Dollars.
D. As additional compensation for the performance of his duties hereunder,
the Employee will be a participant in the "Manchester Employee Stock Option
Program", as follows:
A One Hundred Thousand (100,000) share option to be granted at the end of
each year of employment hereunder, which options shall be at a per share price
equaling the Market Closing Price on either April 30' of each year during the
term of the within Agreement, or such date that is the closest Market business
day to April 306.
Such options shall be deemed as "Incentive Stock Options", to the extent
permissible pursuant to the appropriate Internal Revenue Service regulations.
This option grant shall vest at the rate of 25% thereof (25,000 shares) on
an annual basis, i.e. at the end of each year of employment.
This option grant shall be subject to the rules and regulations of the
Manchester Employee Stock Option Program as presently existing, or as same may
be hereinafter amended.
E. As additional compensation for the performance of his duties hereunder,
the Employee will have the use of an automobile supplied by the Employer, which
vehicle will be similar in class to the automobile presently furnished to the
Employee at the time of the execution of this agreement.
F. The Employer shall pay the Employee, on the last day of each month, all
expenses actually incurred by him for the entertainment of customers, traveling
expenses and other necessary expenses of the business. The Employee shall
furnish to the Employer an itemized list of all expenses so incurred by him
during that month, setting forth the dates, the purpose for which incurred, and
the amounts thereof, together with such receipts showing such payments as the
Employee has reasonably been able to obtain.
G. As additional compensation for the performance of his duties hereunder,
the Employee shall participate in the medical and health program presently
maintained by Manchester and the Employer, to the same extent as other Employees
of the Employer.
H. As additional compensation for the performance of his duties hereunder,
the Employee shall be a participant in the "Paid Annual Leave" program presently
maintained by the Employer, to the same extent as other Employees of the
Employer.
I. The Employee shall be entitled to participate in the "401K Profit
Sharing Plan" presently maintained by Manchester, or a plan equivalent thereto,
which participation shall be subject to the rules, regulations and requirements
of ERISA and the Manchester 401K Profit Sharing Plan itself.
J. All "Base Salary", "Bonuses", or other compensation of benefits of any
nature, in cash or in kind, paid to the Employee hereunder, shall be subject to
normal and usual withholding taxes and other deductions imposed by any one or
more local, state, and federal governments.
7. Termination of Agreement.
This Agreement may be canceled by either party hereto, upon sixty [60] days
prior notice in writing, certified mail, return receipt requested, given to the
other party, without any reason whatsoever, and without giving any reason
therefor.
[a] In the event such termination shall be at the request of the Employee,
the Employer shall be under no obligation or liability to the Employee, except
to pay him the compensation to which he may be entitled under this Agreement
solely up to the time of such termination date.
[b] In the event such termination shall be at the request of the Employer,
the Employee shall receive such compensation to which he may be entitled under
this Agreement for a period of three [3] months after the effective termination
date. Such compensation is herein defined as "Salary" only. All additional
compensation to the Employee as set forth in Paragraph "6." all parts, shall
cease and terminate on the effective termination date.
8. Employee Restrictions.
The Employee makes the following agreements as part and parcel of the
consideration required of the Employee pursuant to the terms of the within
Agreement, and in exchange for the consideration to be received by the Employee
pursuant to the terms of the within Agreement.
For definition purposes, EMPLOYER, as used in the within Paragraph, all
parts, shall be deemed to refer to Manchester., Employer, and all other
subsidiary Corporations of Manchester.
[a] The Employee agrees that he will not at any time, either during the
term of this Agreement or thereafter, divulge to any person, firm, partnership
or corporation, any information received by the Employee during the course of
his employment, with regard to the personal, financial or any other business
affairs of the Employer, and all such information of any nature shall be kept
confidential, and shall not in any manner be revealed whatsoever.
[b] The Employee further agrees that he will not divulge, publish or
otherwise in any manner reveal, either directly or indirectly, or through
another, to any person, firm or corporation, partnership or business entity,
either during the term of his employment or thereafter, any knowledge or
information whatsoever or any facts concerning any formulas, business methods,
inventions, devices, accounting systems, financial software packages or systems,
or other items of similar nature, used by the Employer during the term of this
Agreement, which have been disclosed to the Employee by the reason of his
employment, and the Employee shall retain all such knowledge and information
which he shall acquire during his said employment respecting said items and the
business of the Employer in trust and in a fiduciary capacity, for the sole
benefit of the Employer.
[c] The Employee further agrees that he will not, during his employment or
after the end thereof, irrespective of the time, manner or cause of the
termination of his said employment, directly or indirectly, disclose to any
person, firm, partnership, corporation or other business entity, the name,
address or business requirements of any customer of the Employer, whether same
is a present customer of the Employer or a future customer acquired during the
term of the within Agreement, and further, the Employee will not divulge any
other information that he has, or will have acquired during his period of
employment.
[i] All persons, firms, corporations and partnerships. or other
business entities, and each and every one thereof, for whom the Employer
performs services, or engages in any transactions of whatsoever nature, in
the course of the Employer's business, are and shall be deemed the
customers of the Employer, during the employment of the Employee as well as
after the termination of the employment of the Employee, notwithstanding
that some or all of said business entities may have been induced to give
their patronage and business to the Employer by the solicitation of the
Employee. The Employee herein specifically acknowledges that the
"Customers" of the Employer are proprietary to the Employer and are deemed
the sole property of the Employer.
[d] The Employee further agrees that upon the termination of his
employment, irrespectful of the time, manner or cause of such termination, the
Employee will surrender to the Employer all lists, books and records of any
nature, or in connection with the Employer's customers and business, and all
other property belonging to the Employer.
[e] The Employee covenants and agrees with the Employer that during his
employment with the Employer, and at all times after the date of termination of
such employment, the Employee will not solicit any of the Employer's
then-current employees to terminate their employment with the Employer, or to
become employed by any firm, company, or other business enterprise with which
the Employee may then be connected in any manner or nature.
[f] The Employee restrictions set forth in the prior sub-divisions of the
within Paragraph, shall not apply as to matters pertaining to the Employer that
are either public knowledge, or have been disclosed to the public by the
Employer.
9. Restrictive Covenants.
The Employee makes the following agreements as part and parcel of the
consideration required of the Employee pursuant to the terms of the within
Agreement, and in exchange for the consideration to be received by the Employee
pursuant to the terms of the within Agreement.
For definition purposes, EMPLOYER, as used in the within Paragraph, all
parts, shall be deemed to refer to Manchester. the Employer, and all other
subsidiary Corporations of Manchester.
[a] The Employee specifically acknowledges that the services to be rendered
by him pursuant to this Agreement, are special, unique and of extraordinary
character. The Employee therefore agrees that for a period of two [2] years from
the date of termination of the employment of the Employee including the
expiration of the within Agreement, the Employee will not, within the area and
territory as hereinafter designated, directly or indirectly, own, manage,
operate, join, control, be employed or participate in the management, operation
or control of, or be connected in any manner whatsoever, with any business of
the type and character of the business engaged in by the Employer at the time of
such termination.
Territory and Area Restriction
Any City or Metropolitan area within which either the Employer, Manchester,
or any other subsidiary Corporation of Manchester should maintain an office
or other business facility at the time of the termination of employment.
[i] In the event of termination of the within Agreement, by the
Employer, pursuant to the terms of the within Agreement, and such
termination by the Employer is for any reason other than "cause", the
provisions of this Paragraph "9." and Paragraph "8." of the within
Agreement, shall continue to apply, and the Employee shall be subject
to the restrictions thereof; Provided, However, that in the event the
termination of this Agreement by the Employer is for any reason other
than for "cause", the Metropolitan areas of Baltimore, Maryland and
Washington, D.C., shall be deemed excepted from the above territorial
restriction.
10. Prior Agreement.
The Employee specifically acknowledges the following:
[a] The prior Agreement of Employment ending April 30, 2003, as between
Manchester and the Employee, and
[b] The complete compliance by Manchester as to all of the terms,
conditions and requirements to be performed by the Employer pursuant to such
Agreement of Employment.
11. Non-Assignment.
The Employee herein agrees that he will not assign, transfer, convey,
pledge or encumber in any manner, the within Contract or his right, title and
interest therein, or his power to execute the same or any renewals thereof, or
any monies or other consideration due, or to become due hereunder, without the
specific consent in writing of the Employer; it being understood and agreed that
the within Agreement is intended to secure the personal services of the
Employee.
12. Injunction.
The Employee agrees that a violation on his part of any covenant, condition
or provision of the within Agreement, will cause such damage to the Employer as
will be irreparable and the exact amount of which will be impossible to
ascertain and for that reason further agrees that the Employer shall be
entitled, as a matter of right, to an injunction in any Court of competent
jurisdiction, restraining any further violation of the said covenants and
conditions and provisions of the within Agreement by the Employee. This right to
injunctive relief shall be cumulative, and in addition to whatever other
remedies the Employer may have, including actions for damages.
13. Non-Binding effect of Contract.
The Employee shall not, at any time, enter into any contract with any
person, firm, corporation, or business entity, that shall purport to bind the
Employer in any manner whatsoever, without the express written authority from
the Employer, and any such contract entered into by the Employee shall not be
binding upon the Employer.
14. Arbitration.
Should any disagreement, dispute, claim or controversy arise as between the
parties hereto, or between any party and the legal representatives of a deceased
party, or between any part and any escrow agent hereunder, with respect to this
Agreement or any of the provisions thereof, or as to the interpretation or
effect thereof, or as to a breach claimed to have been committed, or as to any
other matter, cause or thing whatsoever, relating to this Agreement, and should
the same fail to be amicably adjusted by mutual agreement by the parties
concerned therein, then the matter shall be submitted to and determined by, and
before the American Arbitration Association in Suffolk County, State of New
York, in accordance with its prescribed rules, regulations and procedures, and
its decision, findings or award in the matter shall be final and conclusive upon
all parties concerned and may be entered as a judgment of the Supreme Court.
Suffolk County, State of New York, or any other Court of Competent jurisdiction.
The legal fees and expenses of the prevailing party in such arbitration, shall
be paid by the non-prevailing party.
15. Notices.
For purposes of this Agreement, notices and other communications provided
for in this Agreement shall be in writing, shall be delivered personally and
sent by United States mail, certified, return receipt requested, postage
pre-paid, addressed as follows:
To the Employee: Mr. Sam Taylor
311 Chapelwood Lane
Timonium, MD 21093
To the Employer: Electrograph Systems, Inc.
40 Marcus Boulevard
Hauppauge, NY 11788
To Manchester: Manchester Technologies, Inc.
160 Oser Avenue
Hauppauge, NY 11788
or to such other address, or the attention of such other person, as a recipient
party has previously furnished to the other parties, in writing, in accordance
with this Paragraph. Such notices or other communications shall be effective
upon delivery, or, if earlier, three (3) days after they have been mailed
pursuant to the Certified Mailing as herein above provided.
16. Governing Law-Consent to Personal Jurisdiction_
This Agreement shall be construed and governed in all respects by the
applicable laws of the State of New York. The Employee hereby expressly consents
to the personal jurisdiction of the State and Federal Courts located in the
County of Suffolk, State of New York for any lawsuit filed there against him by
the Employer arising from or relating to this Agreement; Provided, However, that
such consent is conditioned upon the Employee receiving service of process in
accordance with the rules of the Court in which such lawsuit is filed.
17. Venue-Choice of Law.
Should any disagreement, dispute, claim or controversy arise as between the
parties hereto, or between any party and the legal representatives of a deceased
party, with respect to this Agreement or any of the provisions thereof, or as to
the interpretation or effect thereof, or as to a breach claimed to have been
committed, or as to any other matter, cause or thing whatsoever, relating to
this Agreement, and should the same fail to be amicably adjusted by mutual
agreement by the parties concerned therein, then each party agrees that the
matter in dispute shall be determined by an action brought in the Supreme Court
of the State of New York, situated in Suffolk County, State of New York, in
accordance with its prescribed rules, regulations and procedures, and each party
agrees to be bound by a determination thereof. The legal fees and expenses of
the prevailing party in such action, shall be paid by the non-prevailing party.
18. Advice of Counsel.
The Employee acknowledges that he has consulted with Counsel and is fully
aware of his rights and obligations pursuant to this Agreement.
19. Waiver.
Failure or delay on the part of either party hereto to enforce any right,
power, or privilege hereunder shall not be deemed to constitute a waiver
thereof. A waiver by either party or a breach of any promise hereof by the other
party shall not operate as or be construed to constitute a waiver of any
subsequent breach by such other party.
20. Severability.
Whenever possible, each provision of this Agreement will be interpreted in
such a manner as to be effective and valid under applicable law. In the event
any provision of this Agreement is held to be invalid, illegal, or unenforceable
in any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, and this Agreement will be reformed, construed and
enforced as if such invalid, illegal, or unenforceable provision had never been
contained herein.
21. Entire Agreement.
The foregoing contains the entire Agreement of the parties hereto, and no
modification thereof shall be binding upon the parties unless the same is in
writing, duly executed by the respective parties hereto.
22. Survival.
This Agreement shall bind, inure and benefit the parties hereto, and their
respective legal representatives, executives, administrators, successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have set their hands and seats the
day and year first above written.
In the Presence of: Electrograph Systems, Inc.
By: /s/ Barry R. Steinberg
- --------------------------------- ---------------------------------
Barry R. Steinberg, CEO
/s/ Carl Mandelbaum /s/ Sam Taylor
- --------------------------------- ---------------------------------
Carl Mandelbaum Sam Taylor
Manchester Technologies, Inc.
/s/ Kathy Koziol By: /s/ Barry R. Steinberg
- --------------------------------- ---------------------------------
Barry R. Steinberg, President