Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (the “Agreement”) is dated and is effective as of
February 18, 2016 (the “Effective Date”) by and between Surge Components, Inc.,
a company organized under the laws of the State of Nevada (the “Company”), and
Steven Lubman, an individual residing at 24 Wagon Wheel Lane, Dix Hills New York
11746 (the “Executive”).

WHEREAS, the Company and the Executive are parties to an employment agreement
dated February 1, 1996 which specifies certain terms and conditions pursuant to
which Executive shall serve the Company as its Vice President, Secretary and
Treasurer;

 

WHEREAS, the Company, in order to benefit from the continuity and predictability
of Executive’s services, wishes to supersede the previous employment agreement
and enter into this new employment agreement pursuant to which the Executive
will continue to be employed as Vice President, Secretary and Treasurer of the
Company;

 

WHEREAS, the Executive is desirous of continuing employment with the Company and
is willing to accept such employment for the inducements and upon the terms and
conditions contained herein; and

 

WHEREAS, the Company has bargained for a covenant by the Employee not to compete
with the Company’s business.

 

NOW, THEREFORE, in consideration of the foregoing premises and mutual covenants
and agreements herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

 

1.       Term of Employment. The Executive shall be employed by the Company for
a period commencing on the Effective Date and ending upon termination of this
Agreement in accordance and subject to the provisions of Section 5 of this
Agreement (the “Term”).

 

2.      Duties.

 

(a)                   During the Term, the principal duties of the Executive
shall be to serve in the position of Vice President, Secretary and Treasurer.
The Executive shall serve the Company in an executive capacity and shall perform
such duties as are determined from time to time by the President, CEO and the
Board of Directors of the Company (the “Board”). Unless prevented by death or
disability, the Executive shall devote his full business time, allowing for
vacations, national holidays, and illnesses, exclusively to the business and
affairs of the Company, and shall uses his best efforts, skill and abilities to
promote its interests. Nothing herein contained shall be construed as preventing
the Executive from purchasing securities in any publicly held entity, if such
purchases shall not result in his owning beneficially 2% or more of the equity
securities of such company, provided such investment is not made in a company in
competition with the Company.

 

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(b)                It is hereby acknowledged that the Board has elected the
Executive to serve as Vice President, Secretary and Treasurer, and hereby agrees
to use its best efforts to have the Executive continue to serve as Vice
President, Secretary and Treasurer during the Term.

 

3.      Compensation.

 

(a)                Base Salary. As of the Effective Date, the Executive shall be
paid a base salary of not less than $225,000 (the “Base Salary”) which Base
Salary shall be earned and shall be payable at such intervals not less
frequently than monthly, in equal installments, and otherwise in such a manner
as is consistent with the Company’s normal practice for remuneration of
executives. The Board shall review the Executive’s base salary on each of the
anniversary dates of the execution of this agreement in order to determine
whether the Executive’s salary should receive an upward adjustment.

 

(b)               Additional Compensation. The Executive shall have an annual
bonus for each calendar year during the Term (the “Annual Bonus”). The Annual
Bonus shall be determined by consideration of the Board or Compensation
Committee, as applicable, in its sole discretion, based upon criteria to be
established in their sole discretion. The Annual Bonus shall be paid to the
Executive on or prior to the March 15 following the end of the year for which
such Annual Bonus was earned. The Executive also shall be entitled to receive
additional cash, equity or other compensation or benefits in consideration for
his services provided to the Company, at such times and in such amounts as shall
be determined in the sole discretion of the Board or Compensation Committee, as
applicable, which determines such compensation. The Board and/or the
Compensation Committee, as applicable, shall conduct a review not less than once
each year in the month of December, and such additional compensation, if any,
shall be based on, among other things, the Executive’s and the Company’s
performance; provided, that any such additional compensation shall be structured
and/or paid in a manner that avoids or complies with the requirements of Section
409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (“Code”).

 

(c)               Equity Awards, etc. In addition to the other compensation
payable to the Executive hereunder, the Executive shall be entitled to receive
grants of stock options, stock and/or any other equity incentive awards
available to senior executives of the Company, under the Company’s equity
incentive plans, at such times and in such amounts as shall be determined in the
sole discretion of the Board or the Compensation Committee of the Board, as
applicable, which determines such equity grants.

 

(d) Tax Gross-Up Payment. Upon the occurrence of a Change of Control (as defined
below) of the Company, if all or any portion of the payments provided under this
Agreement, and/or any other payments and benefits that the Executive receives or
is entitled to receive from the Company or an affiliate thereof, constitute an
“excess parachute payment” within the meaning of Section 280G(b)(1) of the Code
(each such payment, a “Parachute Payment”), and would result in the imposition
on the Executive of an excise tax under Section 4999 of the Code (“Excise Tax”),
then in addition to any other benefits to which the Executive is entitled under
this Agreement, the Company shall pay the Executive an additional amount in cash
(the “Gross-Up Payment”) such that the net amount received by the Executive in
connection with the Change of Control, after payment of (i) any Excise Tax and
(ii) any Federal, state and local income and employment taxes on the Gross-Up
Payment by Executive, shall be equal to the aggregate Parachute Payments payable
to the Executive. For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay Federal income tax at the highest
marginal rate of Federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state or locality of the Executive’s residence
in the calendar year in which the Gross-Up Payment is to be made, net of the
maximum reduction in Federal income taxes which could be obtained from deduction
of such state and local taxes. Any Gross-Up Payment due to the Executive under
this Section 3(d) shall be paid to the Executive no later than the end of the
year following the year in which the Executive paid the related taxes.

 

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(e) Withholding. All salaries, bonuses and other benefits payable to the
Executive shall be subject to payroll and withholding taxes as may be required
by law.

 

4.      Employee Benefits; Business Expenses.

 

(a)                 Employee Benefits. During the Term, the Executive and his
dependents shall be entitled to participate in the Company’s healthcare plans,
welfare benefit plans, fringe benefit plans, profit sharing plans, and any
qualified or non-qualified retirement plans as in effect from time to time
(collectively, the “Employee Benefits”), on the same basis as those benefits are
made available to the other senior executives of the Company, in accordance with
the Company policy as in effect from time to time and in accordance with the
terms of the applicable plan documents (if any).

 

(b)               Directors and Officers Liability Insurance/Indemnity. During
the Term and for a period of six years thereafter, the Company, or any successor
to the Company resulting from a change in control, shall maintain a directors
and officers liability insurance policy (or policies) in a minimum amount of
$3,000,000 which shall provide comprehensive coverage to Executive. The Company
hereby indemnifies and hold Executive harmless from any and all expenses
(including legal fees) or loses incurred by him in connection with the
performance of his duties under this Agreement.

 

(c)                Vacation. During the Term, Executive shall be entitled to a
minimum of four (4) weeks of paid vacation per calendar year, in accordance with
the Company’s policy from time to time in effect as determined by the Board.

 

(d)               Corporate Credit Card. The Company shall issue to the
Executive a corporate credit card to be utilized by the Executive during the
Term in connection with any out-of-pocket expenses which he may incur in
connection with the performance of his duties. During the Term, the Company
shall, upon the presentation of proper vouchers, also reimburse the Executive
for all reasonable expenses incurred by him directly in connection with his
performance of services as an officer and executive of the Company.

 

(e)                Key Man Life Insurance. During the Term, The Company shall
maintain on behalf of the Executive, a five hundred thousand dollar ($500,000)
key man life insurance policy, which shall name the Company as beneficiary.

 

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(f)                Long Term Care Disability Insurance. During the Term, if
requested by the Executive, the Company shall pay the premiums, or a portion
thereof, in an amount not to exceed $6,000 annually, on a long-term care
insurance policy with a monthly benefit of $7,500.

 

(g)               Holidays. The Executive shall receive as paid days off all
national holidays that the Company, pursuant to established policy, recognizes
and observes.

 

(h)               Perquisites. The Executive shall be entitled to receive such
perquisites as are made available to other senior executives of the Company in
accordance with Company policies as in effect from time to time.

 

(i)                  Expenses. The Executive shall be entitled to reimbursement
for reasonable and necessary business expenses incurred by him in the
performance of his duties and responsibilities hereunder, in accordance with the
Company’s reimbursement and expenses policies, as in effect from time to time.

 

5.     Termination.

 

(a)               Definitions. For purposes of this Agreement:

“Cause” means Executive’s (i) willful and reckless disregard to perform his
duties, (ii) willful misfeasance for which the Company is directly and adversely
affected, or (iii) any act of dishonesty by the Executive bearing directly upon
the Company. In event of Cause, the Board or the CEO shall deliver to the
Executive written notice which shall contain sworn affidavits from at least two
non-interested members of the Board each of which must set forth with
specificity the exact nature of the Cause of which the Executive is accused
(“Notice of Cause”). The Board may serve a Notice of Termination upon the
Executive between the 30th and 60th day following the delivery of the Notice of
Cause, provided that the Executive did not cure the alleged Cause in the 30 day
period following his receipt of the Notice of Cause.

“Change of Control” means the occurrence of any one or more of the following
events (it being agreed that, with respect to paragraphs (i) and (iii) of this
definition below, a “Change of Control” shall not be deemed to have occurred if
the applicable third party acquiring party is an “affiliate” of the Company
within the meaning of Rule 405 promulgated under the Securities Act of 1933, as
amended (an “Affiliate”)):

(i) An acquisition (whether directly from the Company or otherwise) of any
voting securities of the Company (the “Voting Securities”) by any “Person” (as
the term person is used for purposes of Section 13(d) or 14(d) of the Securities
and Exchange Act of 1934, as amended (the “1934 Act”)), immediately after which
such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of forty percent (40%) or more of the combined
voting power of the Company’s then outstanding Voting Securities; provided, that
for purposes of this subsection, the term “Person” excludes the Executive and
all Affiliates and immediate family members of the Executive; or

 

(ii) the consummation, in one or a series of related transactions, of:

 

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(A) a merger, consolidation or reorganization involving the Company, where
either or both of the events described in clauses (i) or (ii) above would be the
result; or

(B) an agreement for the sale or other disposition of all or substantially all
of the assets of the Company to any Person (other than a transfer to a
subsidiary of the Company).

 

“Date of Termination” shall mean the date the Notice of Termination is given to
the respective party; provided, however, that with respect to a termination for
Cause or Good Reason, the Date of Termination shall not occur prior to the
expiration of any applicable cure period.

“Disability” shall mean the Executive has become physically or mentally
incapacitated and is therefore unable for a period of four (4) consecutive
months or more to perform any of the material elements of his duties hereunder.
Any question as to whether the Executive has a Disability as to which he (or his
legal representative) and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to the
Executive (or his legal representative) and the Company. If the Executive (or
his legal representative) and the Company cannot agree as to a qualified
independent physician, each shall appoint such a physician and those two
physicians shall select a third who shall make such determination in writing.
The determination of whether the Executive has a Disability, as made in writing
to the Company and the Executive by such physician(s), shall be final and
conclusive for all purposes of this Agreement.

“Good Reason” shall mean one of the following circumstances or conditions, in
each case without the consent of the Executive, after which the Executive
resigns within six months following the initial existence of the circumstance or
condition: (i) any action or inaction that constitutes a material breach by the
Company of this Agreement; (ii) a material reduction of the duties,
responsibilities or authority of the Executive; (iii) the Executive is not
elected to be the Vice President, Secretary and Treasurer; (iv) a material
diminution in the budget over which the Executive retains authority; (v) a
material change in the geographic location at which the Executive must perform
his services; or (vi) a Change of Control, but only if the Executive's
resignation occurs within twelve (12) months after the occurrence of such Change
of Control; provided, that with respect to (i) – (v), above, the Company shall
have a thirty (30) day cure period following notice thereof from Executive to
the Company provided within ninety (90) days of the initial existence of the
circumstance or condition.

“Notice of Termination” shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of employment under the provision so indicated, and shall be
communicated, in writing, to the other party hereto in accordance with the
provisions of Section 10(f) hereof.

(b)              By the Company for Cause or by the Executive Without Good
Reason.

(i) The Term and the Executive’s employment hereunder may be terminated by the
Company for Cause, immediately upon the delivery of a Notice of Termination by
the Company to the Executive and shall terminate automatically upon the
Executive’s resignation (other than for Good Reason or due to the Executive’s
death or Disability).

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(ii) If the Executive’s employment is terminated by the Company for Cause, or if
the Executive resigns other than for Good Reason, the Executive shall be
entitled to receive from the Company:

(A)            any earned but unpaid Base Salary and/or accrued but unused
vacation, all vested equity, and any earned but unpaid bonus awards through the
Date of Termination (with any unpaid Base Salary and/or accrued but unused
vacation, and any earned but unpaid bonus awards being paid on the Date of
Termination); and

(B)             reimbursement for any unreimbursed business expenses incurred by
the Executive in accordance with the Company’s policy prior to the Date of
Termination (with such reimbursements to be paid promptly after the Executive
provides the Company with the necessary documentation of such expenses to the
extent required by such policy but in no event later than the end of the second
calendar month following the Date of Termination).

Following the Executive’s termination of employment by the Company for Cause or
if he resigns other than for Good Reason, except as set forth above or as
required by applicable law or the terms of the Plan, the Executive shall have no
further rights to any compensation or any other benefits or perquisites under
this Agreement and all unvested options or restricted stock grant awards or any
other equity awards shall immediately be cancelled without the need for any
action by the Company.

(c)               By the Company Other Than for Cause or by the Executive for
Good Reason.

(i) The Term and the Executive’s employment hereunder may be terminated by the
Company other than for Cause, immediately upon the delivery of a Notice of
Termination by the Company to the Executive, and shall terminate automatically
and immediately upon the Executive’s resignation for Good Reason at the end of
any applicable cure period if the circumstances giving rise to Good Reason are
not cured.

(ii) If the Executive’s employment is terminated by the Company other than for
Cause or if the Executive resigns for Good Reason, the Executive shall be
entitled to receive from the Company:

(A)            any earned but unpaid Base Salary and/or accrued but unused
vacation, all vested equity, and any earned but unpaid bonus awards through the
Date of Termination (with any unpaid Base Salary and/or accrued but unused
vacation, and any earned but unpaid bonus awards being paid on the Date of
Termination);

(B)             thirty-six (36) months of Annual Compensation (the “Severance
Payment”). For the purposes of determining the Severance Payment, Annual
Compensation shall be the average of the Base Salary plus the Annual Bonus over
the last three calendar years prior to the Date of Termination. The Severance
Payment will be paid to the Executive ratably in accordance with the Company’s
regular payroll practice over a 52-week period;

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(C)             acceleration of any then unvested stock options, restricted
stock grants or other equity incentive awards; and,

(D)            reimbursement for any unreimbursed business expenses incurred by
the Executive in accordance with the Company’s policy prior to the Date of
Termination (with such reimbursements to be paid promptly after the Executive
provides the Company with the necessary documentation of such expenses to the
extent required by such policy but in no event later than the end of the second
calendar month following the Date of Termination).

Notwithstanding anything herein to the contrary, Executive shall not be entitled
to the Severance Payment or earned but unpaid cash bonuses in the event such
termination or resignation is due solely to the Company’s inability to pay its
debts as they generally come due. Following the Executive’s termination of
employment by the Company other than for Cause or if he resigns for Good Reason,
except as set forth above or as required by applicable law, the Executive shall
have no further rights to any compensation or any other benefits under this
Agreement. Notwithstanding anything contained herein to the contrary, in order
to be eligible to receive the Severance Payment and other benefits under this
Section 5(c), the Executive must execute and deliver to the Company a general
release in a form reasonably satisfactory to the Board. Any of the payments to
be made under this Section 5(c) that are subject to Section 409A shall be made,
or commence to be made, on the first pay period following the date that is
thirty (30) days after the Date of Termination. Any of the payments not subject
to Section 409A shall be made, or commence to be made, on the first business day
after the release becomes effective. The initial payment shall include any
unpaid amounts from the Date of Termination, subject to the Executive’s
executing and delivering the release on the terms as set forth above.

(d)              Death or Disability. The Executive’s employment hereunder shall
terminate upon the Executive’s death and may be terminated by the Company,
within ten (10) days after the delivery of a Notice of Termination by the
Company to the Executive (or his legal representative) in the event of the
Executive’s Disability. Upon termination of the Executive’s employment hereunder
for either Disability or death, the Company shall pay to the Executive or his
estate the Executive’s Salary then in effect along with all other fringe
benefits (including, without limitation, family medical benefits) for a period
of one (1) year following the date of such termination. The Company shall
purchase temporary and permanent disability insurance on the Executive to offset
said costs. Payments made hereunder shall not affect any other payments made to
the Executive. Moreover, Executive (in case of Disability) or the estate (in the
event of death) shall have the right to exercise any unexercised and vested
options for a period of 90 days, and, in addition, to receive payment for
accrued but unpaid vacation time, if any. Following the Executive’s termination
of employment due to death or Disability, except as set forth herein or as
required by applicable law, the Executive (nor his estate) shall have no further
rights to any compensation or any other benefits under this Agreement.

(e)               Payment of Amounts Owed upon Termination of Employment. Unless
otherwise provided herein, any amounts payable to the Executive for earned but
unpaid Base Salary and cash, equity or other bonus awards through the Date of
Termination shall be paid within ten (10) business days after the Date of
Termination.

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6.     Restrictive Covenants.

(a) Definitions. For purposes of this Agreement:

 

(i) “Competitive Activity” means any business activity which competes, directly
or indirectly, with the Company Business, or any business activity which, other
than for the benefit of the Company, carries on the Company Business, or any
business activity substantially similar to the Company Business, in each case as
the Company Business is constituted from time to time.

 

(ii) “Confidential Information” means all confidential and/or proprietary
information of, about, or relating to the Company and the Company Business,
including, without limitation, any and all documents received or generated by
Executive, existing and potential customer lists, trade secrets (as defined
under applicable state law), pricing, financial, corporate, and personnel
information, customer data, methods of operation, business plans, techniques,
prototypes, sketches, drawings, models, inventions, know-how, processes,
apparatus, software programs, computer codes, source codes, equipment,
algorithms, source documents, formulae, methods, data, descriptions relating to
current, future, and proposed products and services, information concerning
research, experimental work, development, specifications, engineering,
procurement requirements, purchasing, agents and suppliers, business forecasts,
marketing plans and information received from third parties (including
customers) that is subject to a duty on Executive’s part to maintain its
confidentiality. Confidential Information does not include information that is
generally known to the public, provided it is generally known to the public
other than as a result of disclosure of such information by Executive in
violation of this Agreement.

 

(iii) “Commercial Partner” means each third party person or entity with whom
Executive interacts on behalf of the Company during the term of his employment
with the Company, whether pursuant to this Agreement or otherwise, including,
without limitation, licensors, licensees, contract research organizations,
contract manufacturing organizations, contract sales organizations, contract
distribution organizations and joint venture partners; provided that, on the
date of the termination of Executive’s employment with the Company, Commercial
Partner shall mean those third party persons and entities with whom Executive
interacted on behalf of the Company during the Lookback Period.

 

(iv) “Company Business” means the business(es) engaged in by the Company, from
time to time during the term of Executive’s employment with the Company, whether
pursuant to this Agreement or otherwise; provided that, on the date of the
termination of Executive’s employment with the Company, the Company Business
shall be the business(es) engaged in by the Company during the Lookback Period. 

 

(v) “Former Employee” means any person who has been employed or engaged as an
independent contractor by the Company during the Lookback Period.

 

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(vi) “Former Commercial Partner” means each third party person or entity who is
not currently a Commercial Partner but was a Commercial Partner during the
Lookback Period.

 

(vii) “Lookback Period” means the one (1) year period immediately preceding the
earlier of: (1) the date on which the definition in question is being
determined; or (2) the date when Executive is no longer employed by the Company,
whether pursuant to this Agreement or otherwise.

 

(viii) “Prospect” means each person or entity who is not a Commercial Partner,
and for whom, at any time during the Lookback Period, the Company, whether
through its employees, contractors or vendors, expended directed marketing
efforts or undertook other business development efforts which resulted in at
least an indication of interest from such person or entity of becoming a
Commercial Partner.

(b) Non-Competition, Non-Solicitation and Non-Piracy.  For the term of
Executive’s employment, whether under this Agreement or otherwise, and for a
period of one (1) year after the termination of Executive’s employment with the
Company (the “Restriction Period”), by whatever means and for whatever reason,
Executive shall not, directly or indirectly, individually, or jointly with
others, for the benefit of Executive or any third party:

 

(i) engage in any Competitive Activity;

(ii) have any equity or other ownership interest in, or become a director or
manager of, or be otherwise associated with, or engaged or employed by, any
Commercial Partner, Prospect or Former Commercial Partner or their subsidiary or
parent entities or affiliates in any job or career that relates to or concerns
any activity substantially similar, in whole or in part, to the Company
Business;

 

(iii) solicit, render services to, or accept business from any Commercial
Partner, Prospect or Former Commercial Partner or any of their subsidiary or
parent entities or affiliates for any business activity that relates to or
concerns any activity substantially similar, in whole or in part, to the Company
Business; provided, however, if this Agreement is terminated pursuant to Section
5(c), the restrictive covenant contained in this subsection shall only apply if
Employee had ever received the Base Salary and then only provided Employee
receives payments under Section 5(c) in a timely manner; and

 

(iv) solicit, hire, compensate or engage as an employee, agent, contractor,
shareholder, member, joint venturer or consultant, whether or not for
consideration, any of the Company’s employees or otherwise induce any of the
Company’s employees, subcontractors or vendors to change their relationship with
the Company. 

(c)               Confidentiality.  Executive shall never: (i) disclose any
Confidential Information; or (ii) directly or indirectly give or permit any
person or entity to have access to any Confidential Information; or (iii) make
any use, commercial or otherwise, of any Confidential Information, except,
solely as reasonably required to perform Executive’s employment duties with the
Company and solely for the benefit of the Company. 

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(d)               Restrictive Covenants Scope. The parties acknowledge that the
provisions of this section are necessary and reasonable to protect the
legitimate business interest of the Company and any violation of the provisions
of this section will result in irreparable injury to the Company, the exact
amount of which will be difficult to ascertain, and that the remedies at law for
any such violation would not be reasonable or adequate compensation to the
Company for such violation.  Accordingly, Executive agrees that if the
provisions of this section are violated, in addition to any other remedy which
may be available in equity or at law, the Company shall be entitled to specific
performance and injunctive relief, without the necessity of proving actual
damages, and without being required to post a bond.

(e)                Tolling of Restriction Period. In the event of Executive’s
breach of one or more of the provisions of this section, the running of the
Restriction Period shall be tolled during the continuation of such breach(es)
and recommence only upon Executive’s full and complete compliance with the
provisions of this Section 6.

(f)                Judicial Modification.  In the event a court of competent
jurisdiction holds one or more of the provisions of the restrictive covenants
invalid as to length of time or geographic scope, then this Section 6 shall be
amended to reflect a reasonable length of time and/or reasonable geographic
scope. 

7.     Works for Hire and Intellectual Property. Executive acknowledges and
agrees that: (a) all Work Product (as defined below) shall be deemed a work for
hire; and (b) he hereby assigns all of his intellectual property and other
rights in all Work Product to the Company.  All right, title and interest in and
to, and the right to pursue protection for, Work Product shall vest solely with
the Company.  Upon request by the Company, Executive shall use reasonable
efforts, at no additional expense, to assist the Company in securing any
intellectual property protection for Work Product and shall execute all
documents reasonably necessary to effect an assignment as contemplated herein. 
No license is granted to Executive in, to or under any Work Product or other
intellectual property (including, but not limited to, patents, trade secrets,
copyrighted materials and trademarks) owned, licensed or otherwise assertable by
Executive by express or implied grant, estoppel or otherwise, except for a
limited right to use any such intellectual property solely in the performance of
Executive’s employment duties and solely for the benefit of the Company.  All
benefits from the use of any such intellectual property, including Work Product,
shall inure solely to the Company.  “Work Product” means all tangible or
intangible works: (X) (1) created, produced or modified during or in connection
with Executive’s employment by the Company; or (2) which are related to, or that
can be utilized in, the Company Business; and (Y) that could qualify as the
subject matter of a copyright, patent, trade secret or any other form of
intellectual property; and shall include, without limitation, all work produced
by or for the benefit of the Company, any Company Affiliate, Commercial
Partners, Former Commercial Partners and Prospects.

8.     Company Property.  Executive agrees that all Company Property (as defined
below) is the property solely of the Company, and Executive waives and
relinquishes any and all interests or property rights he or she may have therein
in favor of the Company.  Executive shall immediately return all of the Company
Property to the Company at the Company’s address for notices or such other
location as may be directed by the Company upon: (A) the Company’s request at
any time; and (B) upon the termination of Executive’s employment.  “Company
Property” includes, but is not limited to: (X) records relating to Commercial
Partners, Former Commercial Partners, Prospects and Confidential Information in
whatever form they exist, and by whomever prepared, including, but not limited
to, notes of Executive; (Y) tangible embodiments of or containing Work Product
or Confidential Information; and (Z) tangible and intangible property pertaining
to the Company Business or arising out of or used by Executive in the
performance of his duties for the Company.

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9.     Independent Covenant.  Executive acknowledges and agrees that the
provisions of sections 6, 7 and 8 hereof are independent covenants and no actual
or alleged breach by the Company of any provision of this Agreement or the
employment relationship shall be grounds for relieving Executive from his or her
obligations thereunder.

10.   Miscellaneous.

 

(a)                Arbitration of Claims. In the event of any dispute, claim,
question or disagreement arising from or relating to this Agreement or the
breach thereof, the Company and Executive agree to settle the dispute, claim,
question or disagreement by arbitration before a single arbitrator in New York,
New York under the auspices of the American Arbitration Association (“AAA”) in
accordance with its rules for arbitration of employment disputes, and judgment
on the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Each of the Company and Executive hereby agrees and
acknowledges that all disputes between or among them are subject to the
alternative dispute resolution procedures of this Section 10(a). Each of the
Company and Executive agrees that any aspect of alternative dispute resolution
not specifically covered in this Agreement shall be covered, without limitation,
by the applicable AAA rules and procedures. Each of the Company and Executive
further agree that any determination by the arbitrator regarding any dispute,
claim, question or disagreement arising from or relating to this Agreement shall
be final and binding upon the parties hereto and shall not be subject to further
appeal. Each of the Company and Executive shall bear its own costs and expenses
and an equal share of the arbitrator’s fees and administrative fees of
arbitration.

(b)                Entire Agreement; Amendments. This Agreement sets forth the
entire understanding of the parties concerning the subject matter of this
Agreement and incorporates all prior negotiations and understandings.  There are
no covenants, promises, agreements, conditions or understandings, either oral or
written, between them relating to the subject matter of this Agreement other
than those set forth herein.  The publication, amendment, supplementation or
replacement of an employee handbook by the Company shall not be deemed to alter,
amend or modify the terms and conditions of this Agreement. No alteration,
amendment, change or addition to this Agreement shall be binding upon any party
unless in writing and signed by the party to be charged.  No purported waiver by
any party of any default by another party of any term or provision contained
herein shall be deemed to be a waiver of such term or provision unless the
waiver is in writing and signed by the waiving party. No such waiver shall in
any event be deemed a waiver of any subsequent default under the same or any
other term or provision contained herein. This Agreement may not be altered,
modified, or amended except by written instrument signed by the parties hereto.

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(c)                No Waiver. No waiver of any of the provisions of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed or be construed as a further, continuing or subsequent waiver of any
such provision or as a waiver of any other provision of this Agreement. No
failure to exercise and no delay in exercising any right, remedy or power
hereunder will preclude any other or further exercise of any other right, remedy
or power provided herein or by law or in equity.

(d)               Severability. If any term or provisions of this Agreement, or
the application thereof to any person or circumstance, shall be invalid or
unenforceable, the remainder of this Agreement, or the application of such term
or provision to persons or circumstances, other than those as to which it is
held invalid, shall both be unaffected thereby and each term or provision of
this Agreement shall be valid and be enforced to the fullest extent permitted by
law.

(e)                Assignment. This Agreement, and all of the Executive’s rights
and duties hereunder, shall not be assignable or delegable by the Executive;
provided, however, that if the Executive shall die, all amounts then payable to
the Executive hereunder shall be paid in accordance with the terms of this
Agreement to the Executive’s devisee, legatee or other designee or, if there be
no such devisee, legatee or designee, to his estate. The Company and its
successors and assigns may, at any time and from time to time, assign its rights
and obligations under this Agreement, including, without limitation, the rights
arising pursuant to sections 6, 7 and 8, without Executive’s consent to a buyer
of all or substantially all of the assets, or a majority of the voting stock, of
the Company. Upon such assignment, the rights and obligations of the Company
hereunder shall become the rights and obligations of such assignee or successor
person or entity.

(f)                Notices. For the purpose of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and shall
be deemed to have been duly given when delivered by hand or nationally
recognized courier service addressed to the respective addresses set forth below
in this Agreement or to such other address as either party may have furnished to
the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.

If to the Company:

Surge Components, Inc.

E. Jefryn Blvd.

Deer Park, NY 11729

 

If to the Executive:

 

Steven Lubman

24 Wagon Wheel Lane

Dix Hills, New York 11746

 

(g)               Prior Agreements. This Agreement supersedes all prior
agreements and understandings (including oral agreements) between the Executive
and the Company regarding the terms and conditions of the Executive’s employment
with the Company.

 

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(h)               Cooperation. The Executive shall provide his reasonable
cooperation in connection with any action or proceeding (or any appeal from any
action or proceeding) which relates to events occurring during the Executive’s
employment hereunder, but only to the extent the Company requests such
cooperation with reasonable advance notice to the Executive and in respect of
such periods of time as shall not unreasonably interfere with the Executive’s
ability to perform his duties with any subsequent employer; provided, however,
the Company shall pay any reasonable travel, lodging and related expenses that
the Executive may incur in connection with providing all such cooperation, to
the extent approved by the Company prior to incurring such expenses.

 

(i)                  Execution and Counterparts. This Agreement may be executed
in two or more counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it
being understood that the parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission or by e-mail
delivery of a “.pdf” format data file, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.

 

(j)                 Survival. Sections 6, 7, 8 and 10 shall survive the
termination, cancellation or expiration of this Agreement by whatever means for
whatever reason.

 

(k)               Fees and Expenses. In the event the Company shall fail or
refuse to make or authorize any payment of any amount otherwise due to the
Executive hereunder within the appropriate period of time, then the Company
shall reimburse the Executive for all reasonable expenses (including reasonable
counsel fees and expenses) incurred by him in enforcing the terms hereof, within
five (5) business days after demand accompanied by evidence of fees and expenses
incurred. With regard to any dispute pursuant to this Agreement, the Company and
Executive agree that the non-prevailing party shall promptly reimburse any and
all reasonable attorneys’ fees to the prevailing party in connection therewith.
Any reimbursement hereunder shall be paid promptly and in no event later than
the end of the Executive’s taxable year next following the taxable year in which
the expense was incurred.

 

(l)                 Section 409A.

 

(i) The parties intend that the payments and benefits provided for in this
Agreement either be exempt from Section 409A, or be provided in a manner that
complies with Section 409A and any ambiguity herein shall be interpreted so as
to be consistent with the intent of this paragraph. In no event whatsoever shall
the Company be liable for any additional tax, interest or penalty that may be
imposed on the Executive by Section 409A or damages for failing to comply with
Section 409A. Notwithstanding anything contained herein to the contrary, all
payments and benefits which are payable upon a termination of employment
hereunder shall be paid or provided only upon those terminations of employment
that constitute a “separation from service” from the Company within the meaning
of Section 409A (determined after applying the presumptions set forth in Treas.
Reg. Section 1.409A-1(h)(1)). Further, if the Executive is a “specified
employee” as such term is defined under Section 409A at the time of a
termination of employment and the deferral of the commencement of any payments
or benefits otherwise payable hereunder as a result of such termination of
employment is necessary in order to prevent any accelerated recognition of
income or additional tax under Section 409A, then the Company will defer the
commencement of the payment of any such payments or benefits hereunder (without
any reduction in payments or benefits ultimately paid or provided to the
Executive) until the date that is at least six (6) months following the
Executive’s termination of employment with the Company (or the earliest date
permitted under Section 409A, e.g., immediately upon the Executive’s death),
whereupon the Company will promptly pay the Executive a lump-sum amount equal to
the cumulative amounts that would have otherwise been previously paid to the
Executive under this Agreement during the period in which such payments or
benefits were deferred. Thereafter, payments will resume in accordance with this
Agreement.

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(ii) Notwithstanding anything to the contrary in this Agreement, in-kind
benefits and reimbursements provided hereunder during any calendar year shall
not affect in-kind benefits or reimbursements to be provided in any other
calendar year, other than an arrangement providing for the reimbursement of
medical expenses referred to in Section 105(b) of the Code, and are not subject
to liquidation or exchange for another benefit. Notwithstanding anything to the
contrary in this Agreement, reimbursement requests must be timely submitted by
the Executive and, if timely submitted, reimbursement payments shall be promptly
made to the Executive following such submission, but in no event later than
December 31st of the calendar year following the calendar year in which the
expense was incurred. In no event shall the Executive be entitled to any
reimbursement payments after December 31st of the calendar year following the
calendar year in which the expense was incurred. This paragraph shall only apply
to in-kind benefits and reimbursements that would result in taxable compensation
income to the Executive.

(iii) Additionally, in the event that following the date hereof the Company or
the Executive reasonably determines that any compensation or benefits payable
under this Agreement may be subject to Section 409A, the Company and the
Executive shall work together to adopt such amendments to this Agreement or
adopt other policies or procedures (including amendments, policies and
procedures with retroactive effect), or take any other commercially reasonable
actions necessary or appropriate to (x) exempt the compensation and benefits
payable under this Agreement from Section 409A and/or preserve the intended tax
treatment of the compensation and benefits provided with respect to this
Agreement or (y) comply with the requirements of Section 409A.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement to be
effective as of the day and year first above written.

 

  SURGE COMPONENTS, INC.         By: /s/ Ira Levy   Name:  

Ira Levy

  Title: President         Date: February 18, 2016         EXECUTIVE         /s/
Steven Lubman  

Steven Lubman

        Date: February 18, 2016

 

 

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