Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is made and entered into on this 27th
day of January, 2005 effective as of February 1, 2005, by and between DEVCON
INTERNATIONAL CORP., a Florida corporation (the “Company”), and RON G. LAKEY
(hereinafter called the “Executive”).

 

RECITALS

 

A. The Company desires to employ the Executive and the Executive desires to be
employed by the Company in accordance with the terms and conditions of this
Agreement.

 

B. The Board of Directors or the Compensation Committee of the Company (the
“Compensation Committee”) has approved the execution by the Company of this
Agreement.

 

C. The Board, CEO and President have determined that this Agreement will
reinforce and assure the Executive’s continued employment with the Company and
encourage the Executive’s continued attention and dedication to the Company.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the parties agree as follows:

 

1. Employment.

 

1.1 Employment and Term. The Company hereby agrees to employ the Executive and
the Executive hereby agrees to serve the Company and its subsidiaries (the
“Subsidiaries”) on the terms and conditions set forth herein.

 

1.2 Duties of Executive. During the Term of Employment under this Agreement, the
Executive shall serve as Chief Financial Officer of the Company (“CFO”) and
under the direction of the CEO and President of the Company and subject to the
parameters developed by the CEO and President of the Company, shall diligently
perform all services as may be assigned to him by the CEO and President of the
Company (provided that, such services shall be consistent with services
typically performed by officers of companies similar to the Company), including
the services set forth on Exhibit A hereto (which services are deemed to be
consistent with services typically performed by officers of companies similar to
the Company), and shall exercise such power and authority as may from time to
time be delegated to him by the CEO and President of the Company. The Executive
shall devote his full time and attention to the business and affairs of the
Company and the Subsidiaries, render such services to the best of his ability,
and use his best efforts to promote the interests of the Company and the
Subsidiaries. The Executive shall also serve as CFO or Treasurer or other
officer of such of the Subsidiaries as directed by the Board of Directors, CEO
or President. It shall not be a violation of this Agreement for the Executive to
(i) serve on corporate, civic or charitable boards or committees, (ii) deliver
lectures or fulfill speaking engagements, or (iii) manage personal investments,
so long as such activities do not significantly interfere with the performance
of the Executive’s responsibilities to the Company and the Subsidiaries in
accordance with this Agreement.

 

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2. Term.

 

2.1 Initial Term. The initial Term of Employment under this Agreement, and the
employment of the Executive hereunder, shall commence on February 1, 2005 (the
“Commencement Date”) and shall expire on January 31, 2007, unless sooner
terminated in accordance with Section 5 hereof (the “Initial Term”).

 

2.2 Renewal Terms. At the end of the Initial Term, the Term of Employment
automatically shall renew for successive one year terms (subject to earlier
termination as provided in Section 5 hereof), unless the Company or the
Executive delivers written notice to the other at least 3 months prior to the
Expiration Date of its or his election not to renew the Term of Employment.

 

2.3 Term of Employment and Expiration Date. The period during which the
Executive shall be employed by the Company pursuant to the terms of this
Agreement is sometimes referred to in this Agreement as the “Term of
Employment”, and the date on which the Term of Employment shall expire
(including the date on which any renewal term shall expire), is sometimes
referred to in this Agreement as the “Expiration Date.”

 

3. Compensation.

 

3.1 Base Salary. The Executive shall receive a base salary at the annual rate of
$200,000 (the “Base Salary”) during the Term of Employment, with such Base
Salary payable in installments consistent with the Company’s normal payroll
schedule, subject to applicable withholding and other taxes. The Base Salary
shall be reviewed, periodically, for merit increases and may, by action and in
the discretion of the Compensation Committee, be increased at any time or from
time to time.

 

3.2 Bonuses.

 

The Executive shall receive such bonuses, if any, as the Compensation Committee
shall determine.

 

4. Expense Reimbursement and Other Benefits.

 

4.1 Reimbursement of Expenses. Upon the submission of proper substantiation by
the Executive, and subject to such rules and guidelines as the Company may from
time to time adopt, the Company shall reimburse the Executive for all reasonable
expenses actually paid or incurred by the Executive during the Term of
Employment in the course of and pursuant to the business of the Company. The
Executive shall account to the Company in writing for all expenses for which
reimbursement is sought and shall supply to the Company copies of all relevant
invoices, receipts or other evidence reasonably requested by the Company.

 

4.2 Compensation/Benefit Programs. During the term of Employment, the Executive
shall be entitled to participate in all medical, dental, hospitalization,
accidental death

 

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and dismemberment, disability, travel and life insurance plans, and any and all
other plans as are presently and hereinafter offered by the Company to its
executives, including savings, pension, profit-sharing and deferred compensation
plans, subject to the general eligibility and participation provisions set forth
in such plans.

 

4.3 Working Facilities. During the Term of Employment, the Company shall furnish
the Executive with an office, secretarial help and such other facilities and
services suitable to his position and adequate for the performance of his duties
hereunder.

 

4.4 Automobile. During the Term of Employment, the Company shall provide the
Executive with an automobile allowance equal to the most recently approved
executive automobile expense allowance policy for executives of the Company,
together with reimbursement of the reasonable operating expenses thereof.

 

4.5 Stock Options. During the Term of Employment, the Executive shall be
eligible to be granted options (the “Stock Options”) to purchase common stock
(the “Common Stock”) of the Company under (and therefore subject to all terms
and conditions of) the Company’s 1999 Stock Option Plan as amended, and any
successor plan thereto (the “Stock Option Plan”) and all rules of regulation of
the Securities and Exchange Commission applicable to stock option plans then in
effect. The number of Stock Options and terms and conditions of the Stock
Options shall be determined by the Compensation Committee, or by the Board of
Directors of the Company, in its discretion and pursuant to the Stock Option
Plan.

 

4.6 Other Benefits. The Executive shall be entitled to four weeks of vacation
each calendar year during the Term of Employment, at such times as the Executive
and the Company shall mutually determine and provided that no vacation time
shall interfere with the duties required to be rendered by the Executive
hereunder. Any vacation time not taken by Executive during any calendar year may
not be carried forward into any succeeding calendar year. The Executive shall
receive such additional benefits, if any, as the Compensation Committee of the
Company shall from time to time determine.

 

5. Termination.

 

5.1 Termination for Cause. The Company shall at all times have the right, upon
written notice to the Executive, to terminate the Term of Employment, for Cause.
For purposes of this Agreement, the term “Cause” shall mean (i) an action or
omission of the Executive which constitutes a willful and material breach of, or
failure or refusal (other than by reason of his disability) to perform his
duties under, this Agreement which is not cured within fifteen (15) days after
receipt by the Executive of written notice of same, (ii) fraud, embezzlement,
misappropriation of funds or breach of trust in connection with his services
hereunder, (iii) conviction of any crime which involves dishonesty or a breach
of trust, or (iv) gross negligence in connection with the performance of the
Executive’s duties hereunder, which is not cured within fifteen (15) days after
written receipt by the Executive of written notice of same. Any termination for
Cause shall be made in writing to the Executive, which notice shall set forth
the reasons upon which the Company is relying for such termination. The
Executive shall have the right to address the Board regarding the acts set forth
in the notice of termination. Upon any termination pursuant to this Section 5.1,
the Company shall pay to the Executive his

 

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Base Salary to the date of termination. The Company shall have no further
liability hereunder other than for reimbursement for reasonable business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 4.1.

 

5.2 Disability. The Company shall at all times have the right, upon written
notice to the Executive, to terminate the Term of Employment, if the Executive
shall become entitled to benefits under the Company’s disability insurance as
then in effect, or, if the Executive shall as the result of mental or physical
incapacity, illness or disability, become unable to perform his obligations
hereunder for a period of 180 days in any 12-month period. The Company shall
have sole discretion based upon competent medical advice to determine whether
the Executive continues to be disabled. Upon any termination pursuant to this
Section 5.2, the Company shall pay to the Executive any unpaid Base Salary
through the effective date of termination specified in such notice, (ii) pay to
the Executive a severance payment equal to 12 months of the Executive’s Base
Salary at the time of the termination of the Executive’s employment with the
Company. The Company shall have no further liability hereunder other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the provisions of Section 4.1.

 

5.3 Death. Upon the death of the Executive during the Term of Employment, the
Company shall pay to the estate of the deceased Executive any unpaid Base Salary
through the Executive’s date of death. The Company shall have no further
liability hereunder other than for reimbursement for reasonable business
expenses incurred prior to the date of termination, subject, however, to the
provisions of Section 4.1.

 

5.4 Termination Without Cause. At any time the Company shall have the right upon
ninety (90) days written notice to the Executive to terminate the Term of
Employment. Upon any termination pursuant to this Section 5.4 (that is not a
termination under any of Sections 5.1, 5.2, 5.3, 5.5, 5.6 or in the event that
the Company does not renew the Executive’s Term of Employment under the terms of
section 2.2, the Company shall (i) pay to the Executive any unpaid Base Salary
through the effective date of termination specified in such notice, (ii)
continue to pay the Executive’s Base Salary for a period (the “ Continuation
Period”) of 12 months following the termination of the Executive’s employment
with the Company, in the manner and at such time as the Base Salary otherwise
would have been payable to the Executive, (iii) continue to provide the
Executive with the benefits he was receiving under Sections 4.2 and 4.4 hereof
(the “Benefits”) through the end of the Continuation Period in the manner as
Benefits otherwise would have been provided to the Executive, and (iv) pay to
the Executive as a single lump sum payment, within 30 days of the Expiration
Date, a lump sum benefit equal to the value of the portion of his benefits under
any savings, pension, profit sharing or deferred compensation plans that are
forfeited under such plans by reason of the termination of his employment
hereunder prior to the end of the Continuation Period. The Company’s good faith
determination of the amount that would have been contributed or the value of any
Benefits that would have accrued under any plan shall be binding and conclusive
on the Executive. For this purpose, the Company may use as the value of any
Benefit the cost to the Company of providing that Benefit to the Executive.
Further, the Executive shall become immediately vested in his Stock Options. The
Company shall have no further liability hereunder other than for reimbursement
for reasonable business expenses incurred prior to the date of termination,
subject, however, to the provisions of Section 4.1.

 

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5.5 Termination by Executive.

 

a. The Executive shall at all times have the right, upon ninety (90) days
written notice to the Company, to terminate the Term of Employment.

 

b. Upon termination of the Term of Employment pursuant to this Section 5.5 (that
is not a termination under Section 5.6) by the Executive without Good Reason,
the Company shall pay to the Executive any unpaid Base Salary through the
effective date of termination specified in such notice. The Company shall have
no further liability hereunder other than for reimbursement for reasonable
business expenses incurred prior to the date of termination, subject, however,
to the provisions of Section 4.1.

 

c. Upon termination of the Term of Employment pursuant to this Section 5.5 (that
is not a termination under Section 5.6) by the Executive for Good Reason, the
Company shall pay to the Executive the same amounts that would have been payable
by the Company to the Executive under Section 5.4 of this Agreement if the Term
of Employment had been terminated by the Company without Cause. The Company
shall have no further liability hereunder other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however, to the provisions of Section 4.1.

 

d. For purposes of this Agreement, “Good Reason” shall mean (i) the assignment
to the Executive of any material duties inconsistent in any material respect
with the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as set forth in Section 1.2
of this Agreement, or any other action by the Company intended to and which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company within 15 days after
receipt of written notice thereof given by the Executive; (ii) any failure by
the Company to comply with any of the provisions of Section 3.1 of this
Agreement, other than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company within 15 days after
receipt of written notice thereof given by the Executive; (iii) any termination
by the Company of the Executive’s employment otherwise than for Cause pursuant
to Section 5.1 of this Agreement, or by reason of the Executive’s disability or
death pursuant to Sections 5.2 and 5.3 of this Agreement, respectively, prior to
the Expiration Date.

 

5.6 Change in Control of the Company.

 

a. Unless otherwise provided in Section 5.7 hereof, in the event that (i) a
Change in Control (as defined in paragraph (b) of this Section 5.6) in the
Company shall occur during the Term of Employment, and (ii) prior to the earlier
of the Expiration Date and one year after the date of the Change in Control,
either the Executive’s Term of Employment is terminated by the Company without
cause, as defined in Section 5.4 hereof, or (y) the Executive terminates the
Term of Employment pursuant to Section 5.5(b) hereof, then the Company shall (1)
pay to the Executive any unpaid Base Salary through the effective date of
termination, (2) pay to the Executive as a single lump sum payment, within 30
days of the termination of his employment hereunder, a lump sum payment equal to
the sum of (x) one times the sum of Executive’s (i) annual Base Salary, (ii)
average bonus for the last two years, (iii) except as set

 

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forth in (iv), other average compensation, if any, for the last two years and
(v) the value of the annual fringe benefits (based upon their cost to the
Company) required to be provided to the Executive under Sections 4.2 and 4.4
hereof, for the year immediately preceding the year in which his employment
terminates, plus (y) the value of the portion of his benefits under any savings,
pension, profit sharing or deferred compensation plans that are forfeited under
those plans by reason of the termination of his employment hereunder. Further,
upon the Change in Control, the Executive’s Stock Options shall immediately
vest. The Company shall have no further liability hereunder other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the provisions of Section 4.1.

 

b. For the purposes of this Agreement, the term “Change in Control” shall mean
(a) any sale, lease, exchange or other transfer (in one transaction or a series
of transactions) of all or substantially all of the assets of the Company; or
(b) any consolidation or merger or other business combination of the Company
with any other entity where the shareholders of the Company, immediately prior
to the consolidation or merger or other business combination would not,
immediately after the consolidation or merger or other business combination,
beneficially own, directly or indirectly, shares representing fifty percent
(50%) of the combined voting power of all of the outstanding securities of the
entity issuing cash or securities in the consolidation or merger or other
business combination (or its ultimate parent corporation, if any).
Notwithstanding the foregoing, no transaction shall be deemed to constitute a
“Change in Control” for purposes of this Agreement if such transaction involves
the electronic security services industry or is procured, directly or
indirectly, by the Employee or any affiliate of the Employee.

 

5.7 Certain Additional Payments by the Company.

 

a. Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment, distribution or other action by the
Company to or for the benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, (including any additional payments required under this Section 5.7)
(a “Payment”) would be subject to an excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”), or any interest or
penalties are incurred by the Executive with respect to any such excise tax
(such excise tax, together with any such interest and penalties, are hereafter
collectively referred to as the “Excise Tax”), the Company shall make a payment
to the Executive (a “Gross-Up Payment”) in an amount such that after payment by
the Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up
Payment, the Executive retains (or has had paid to the Internal Revenue Service
on his behalf) an amount of the Gross-Up Payment equal to the sum of (x) the
Excise Tax imposed upon the Payments and (y) the product of any deductions
disallowed because of the inclusion of the Gross-Up Payment in the Executive’s
adjusted gross income and the highest applicable marginal rate of federal income
taxation for the calendar year in which the Gross-Up Payment is to be made. For
purposes of determining the amount of the Gross-Up Payment, the Executive shall
be deemed to (i) pay federal income taxes at the highest marginal rates of
federal income taxation for the calendar year in which the Gross-Up Payment is
to be made, and (ii) pay applicable state and local income taxes at the highest
marginal rate of taxation for 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.

 

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b. Subject to the provisions of paragraph (c) of this Section 5.7, all
determinations required to be made under this Section 5.7, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the Company’s tax advisor, which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that both of the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, the Executive shall have the option to
appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 5.7, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm’s determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive’s applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 5.7 and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

 

c. The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which it gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:

 

(i) give the Company any information reasonably requested by the Company
relating to such claim,

 

(ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,

 

(iii) cooperate with the Company in good faith in order effectively to contest
such claim, and

 

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(iv) permit the Company to participate in any proceedings relating to such
claim;

 

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 5.7(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.

 

d. If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 5.7(c), the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company’s
complying with the requirements of Section 5.7(c)) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 5.7(c), a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

 

5.8 Resignation. Upon any termination of employment pursuant to this Article 5,
the Executive shall be deemed to have resigned as an officer, and if he or she
was then serving as a director of the Company, as a director, and if required by
the Board, the Executive hereby agrees to immediately execute a resignation
letter to the Board.

 

5.9 Survival. The provisions of this Article 5 shall survive the termination of
this Agreement, as applicable.

 

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6. Restrictive Covenants.

 

6.1 Non-competition. At all times while the Executive is employed by the Company
and for a two (2) year period after the termination of the Executive’s
employment with the Company for any reason other than by the Company without
Cause (as defined in Section 5.1 hereof) or by the Executive for Good Reason (as
defined in Section 5.5(d) hereof), the Executive shall not, directly or
indirectly, engage in or have any interest in any sole proprietorship,
partnership, corporation or business or any other person or entity (whether as
an employee, officer, director, partner, agent, security holder, creditor,
consultant or otherwise) that directly or indirectly (or through any affiliated
entity) engages in competition with the Company (for this purpose, any business
that engages in the electronic security services business in the United States
or other locations that the Company engages in such business or any business
that engages in the aggregate industry, ready-mix concrete industry, land
development construction industry or the water desalination and sewage treatment
business on any of the islands of the Bahamas, Puerto Rico, US Virgin Islands,
St. Maarten, St Martin or Antigua or any other islands that the Company engages
in such business, shall be deemed to be in competition with the Company);
provided that such provision shall not apply to the Executive’s ownership of
Common Stock of the Company or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the National Association of Securities Dealers Automated
Quotations System, or any similar system or automated dissemination of
quotations of securities prices in common use, so long as the Executive does not
control, acquire a controlling interest in or become a member of a group which
exercises direct or indirect control or, more than five percent of any class of
capital stock of such corporation.

 

6.2 Nondisclosure. The Executive shall not at any time divulge, communicate, use
to the detriment of the Company or for the benefit of any other person or
persons, or misuse in any way, any Confidential Information (as hereinafter
defined) pertaining to the business of the Company. Any Confidential Information
or data now or hereafter acquired by the Executive with respect to the business
of the Company (which shall include, but not be limited to, information
concerning the Company’s financial condition, prospects, technology, customers,
suppliers, sources of leads and methods of doing business) shall be deemed a
valuable, special and unique asset of the Company that is received by the
Executive in confidence and as a fiduciary, and Executive shall remain a
fiduciary to the Company with respect to all of such information. For purposes
of this Agreement, “Confidential Information” means information disclosed to the
Executive or known by the Executive as a consequence of or through his
employment by the Company (including information conceived, originated,
discovered or developed by the Executive) prior to or after the date hereof, and
not generally known, about the Company or its business. Notwithstanding the
foregoing, nothing herein shall be deemed to restrict the Executive from
disclosing Confidential Information to the extent required by law.

 

6.3 Non-solicitation of Employees and Clients. At all times while the Executive
is employed by the Company and for a two (2) year period after the termination
of the Executive’s employment with the Company for any reason, for the Executive
shall not, directly or indirectly, for himself or for any other person, firm,
corporation, partnership, association or

 

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other entity (a) employ or attempt to employ or enter into any contractual
arrangement with any employee or former employee of the Company, unless such
employee or former employee has not been employed by the Company for a period in
excess of six months, and/or (b) call on or solicit any of the actual or
targeted prospective clients of the Company on behalf of any person or entity in
connection with any business competitive with the business of the Company, nor
shall the Executive make known the names and addresses of such clients or any
information relating in any manner to the Company’s trade or business
relationships with such customers, other than in connection with the performance
of Executive’s duties under this Agreement.

 

6.4 Books and Records. All books, records, and accounts relating in any manner
to the customers or clients of the Company, whether prepared by the Executive or
otherwise coming into the Executive’s possession, shall be the exclusive
property of the Company and shall be returned immediately to the Company on
termination of the Executive’s employment hereunder or on the Company’s request
at any time.

 

6.5 Definition of Company. For purposes of this Article 6, the term “Company”
also shall include the Subsidiaries, any existing or future subsidiaries of the
Company that are operating during the time periods described herein and any
other entities that directly or indirectly, through one or more intermediaries,
control, are controlled by or are under common control with the Company during
the periods described herein.

 

6.6 Acknowledgment by Executive. The Executive acknowledges and confirms that
(a) the restrictive covenants contained in this Article 6 are reasonably
necessary to protect the legitimate business interests of the Company, and (b)
the restrictions contained in this Article 6 (including without limitation the
length of the term of the provisions of this Article 6) are not overbroad,
overlong, or unfair and are not the result of overreaching, duress or coercion
of any kind. The Executive further acknowledges and confirms that his full,
uninhibited and faithful observance of each of the covenants contained in this
Article 6 will not cause him any undue hardship, financial or otherwise, and
that enforcement of each of the covenants contained herein will not impair his
ability to obtain employment commensurate with his abilities and on terms fully
acceptable to him or otherwise to obtain income required for the comfortable
support of him and his family and the satisfaction of the needs of his
creditors. The Executive acknowledges and confirms that his special knowledge of
the business of the Company is such as would cause the Company serious injury or
loss if he were to use such ability and knowledge to the benefit of a competitor
or were to compete with the Company in violation of the terms of this Article 6.
The Executive further acknowledges that the restrictions contained in this
Article 6 are intended to be, and shall be, for the benefit of and shall be
enforceable by, the Company’s successors and assigns.

 

6.7 Reformation by Court. In the event that a court of competent jurisdiction
shall determine that any provision of this Article 6 is invalid or more
restrictive than permitted under the governing law of such jurisdiction, then
only as to enforcement of this Article 6 within the jurisdiction of such court,
such provision shall be interpreted and enforced as if it provided for the
maximum restriction permitted under such governing law.

 

6.8 Extension of Time. If the Executive shall be in violation of any provision
of this Article 6, then each time limitation set forth in this Article 6 shall
be extended for a period

 

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of time equal to the period of time during which such violation or violations
occur. If the Company seeks injunctive relief from such violation in any court,
then the covenants set forth in this Article 6 shall be extended for a period of
time equal to the pendency of such proceeding including all appeals by the
Executive.

 

6.9 Survival. The provisions of this Article 6 shall survive the termination of
this Agreement, as applicable.

 

7. Injunction. It is recognized and hereby acknowledged by the parties hereto
that a breach by the Executive of any of the covenants contained in Article 6 of
this Agreement will cause irreparable harm and damage to the Company and
Subsidiaries, the monetary amount of which may be virtually impossible to
ascertain. As a result, the Executive recognizes and hereby acknowledges that
the Company and Subsidiaries shall be entitled to an injunction from any court
of competent jurisdiction enjoining and restraining any violation of any or all
of the covenants contained in Article 6 of this Agreement by the Executive or
any of his affiliates, associates, partners or agents, either directly or
indirectly, and that such right to injunction shall be cumulative and in
addition to whatever other remedies the Company or the Subsidiaries may possess.

 

8. Mediation. Except to the extent the Company has the right to seek an
injunction under Section 7 hereof, in the event a dispute arises out of or
relates to this Agreement, or the breach thereof, and if the dispute cannot be
settled through negotiation, the parties hereby agree first to attempt in good
faith to settle the dispute by mediation administered by the American
Arbitration Association under its Employment Mediation Rules before resorting to
arbitration hereunder.

 

9. Arbitration. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in Broward or Palm
Beach Counties, Florida, in accordance with the Rules of the American
Arbitration Association then in effect (except to the extent that the procedures
outlined below differ from such rules). Within thirty (30) days after written
notice by either party has been given that a dispute exists and that arbitration
is required, each party must select an arbitrator and those two arbitrators
shall promptly, but in no event later than thirty (30) days after their
selection, select a third arbitrator. The parties agree to act as expeditiously
as possible to select arbitrators and conclude the dispute. The selected
arbitrators must render their decision in writing. The cost and expenses of the
arbitration and of enforcement of any award in any court shall be borne by the
non-prevailing party. If advances are required, each party will advance one-half
of the estimated fees and expenses of the arbitrators. Judgment may be entered
on the arbitrators’ award in any court having jurisdiction. Although arbitration
is contemplated to resolve disputes hereunder, either party may proceed to court
to obtain an injunction to protect its rights hereunder, the parties agreeing
that either could suffer irreparable harm by reason of any breach of this
Agreement. Pursuit of an injunction shall not impair arbitration on all
remaining issues.

 

10. Section 162(m) Limits. Notwithstanding any other provision of this Agreement
to the contrary, if and to the extent that any remuneration payable by the
Company to the Executive for any year would exceed the maximum amount of
remuneration that the Company may deduct for that year under Section 162(m)
(“Section 162(m)”) of the Internal Revenue Code of 1986, as

 

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amended (the “Code”), payment of the portion of the remuneration for that year
that would not be so deductible under Section 162(m) shall, in the sole
discretion of the Board, be deferred and become payable at such time or times as
the Board determines that it first would be deductible by the Company under
Section 162(m), with interest at the “short-term applicable rate” as such term
is defined in Section 1274(d) of the Code. The limitation set forth under this
Section 10 shall not apply with respect to any amounts payable to the Executive
pursuant to Article 5 hereof.

 

11. Assignment. Neither party shall have the right to assign or delegate his
rights or obligations hereunder, or any portion thereof, to any other person.

 

12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.

 

13. Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and, upon its
effectiveness, shall supersede all prior agreements, understandings and
arrangements, both oral and written, between the Executive and the Company (or
any of its affiliates) with respect to such subject matter. This Agreement may
not be modified in any way unless by a written instrument signed by both the
Company and the Executive.

 

14. Notices: All notices required or permitted to be given hereunder shall be in
writing and shall be personally delivered by courier, sent by registered or
certified mail, return receipt requested or sent by confirmed facsimile
transmission addressed as set forth herein. Notices personally delivered, sent
by facsimile or sent by overnight courier shall be deemed given on the date of
delivery and notices mailed in accordance with the foregoing shall be deemed
given upon the earlier of receipt by the addressee, as evidenced by the return
receipt thereof, or three (3) days after deposit in the U.S. mail. Notice shall
be sent (i) if to the Company, addressed to Devcon International Corp., 1350 E.
Newport Center Drive, Suite 201, Deerfield Beach, Florida 33442, Attention:
Secretary of the Board, and (ii) if to the Executive, to his address as
reflected on the payroll records of the Company, or to such other address as
either party hereto may from time to time give notice of to the other.

 

15. Benefits; Binding Effect. This Agreement shall be for the benefit of and
binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise.

 

16. Severability. The invalidity of any one or more of the words, phrases,
sentences, clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law, and, in the
event that any one or more of the words, phrases, sentences, clauses or sections
contained in this Agreement shall be declared invalid, this Agreement shall be
construed as if such invalid word or words, phrase or phrases, sentence or
sentences, clause or clauses, or section or sections had not been inserted. If
such invalidity is caused by length of time or size of area, or both, the
otherwise invalid provision will be considered to be reduced to a period or area
which would cure such invalidity.

 

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17. Waivers. The waiver by either party hereto of a breach or violation of any
term or provision of this Agreement shall not operate nor be construed as a
waiver of any subsequent breach or violation.

 

18. Damages. Nothing contained herein shall be construed to prevent the Company
or the Executive from seeking and recovering from the other damages sustained by
either or both of them as a result of its or his breach of any term or provision
of this Agreement. In the event that either party hereto brings suit for the
collection of any damages resulting from, or the injunction of any action
constituting, a breach of any of the terms or provisions of this Agreement, then
the party found to be at fault shall pay all reasonable court costs and
attorneys’ fees of the other.

 

19. Section Headings. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

 

20. No Third Party Beneficiary. Nothing expressed or implied in this Agreement
is intended, or shall be construed, to confer upon or give any person other than
the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.

 

21. Indemnification.

 

a. Subject to limitations imposed by law, the Company shall indemnify and hold
harmless the Executive to the fullest extent permitted by law from and against
any and all claims, damages, expenses (including attorneys’ fees), judgments,
penalties, fines, settlements, and all other liabilities incurred or paid by him
in connection with the investigation, defense, prosecution, settlement or appeal
of any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative and to which the Executive was
or is a party or is threatened to be made a party by reason of the fact that the
Executive is or was an officer, employee or agent of the Company, or by reason
of anything done or not done by the Executive in any such capacity or
capacities, provided that the Executive acted in good faith, in a manner that
was not grossly negligent or constituted willful misconduct and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Company also shall pay
any and all expenses (including attorney’s fees) incurred by the Executive as a
result of the Executive being called as a witness in connection with any matter
involving the Company and/or any of its officers or directors.

 

b. The Company shall pay any expenses (including attorneys’ fees), judgments,
penalties, fines, settlements, and other liabilities incurred by the Executive
in investigating, defending, settling or appealing any action, suit or
proceeding described in this Section 21 in advance of the final disposition of
such action, suit or proceeding. The Company shall promptly pay the amount of
such expenses to the Executive, but in no event later than 10 days following the
Executive’s delivery to the Company of a written request for an advance pursuant
to this Section 21, together with a reasonable accounting of such expenses.

 

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c. The Executive hereby undertakes and agrees to repay to the Company any
advances made pursuant to this Section 21 if and to the extent that it shall
ultimately be found that the Executive is not entitled to be indemnified by the
Company for such amounts.

 

d. The Company shall make the advances contemplated by this Section 21
regardless of the Executive’s financial ability to make repayment, and
regardless whether indemnification of the Indemnitee by the Company will
ultimately be required. Any advances and undertakings to repay pursuant to this
Section 21 shall be unsecured and interest-free.

 

e. The provisions of this Section 21 shall survive the termination of this
Agreement.

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

 

COMPANY:

DEVCON INTERNATIONAL CORP., a Florida

corporation

By:

 

/s/ Donald L. Smith, Jr.

--------------------------------------------------------------------------------

Name:

 

Donald L. Smith, Jr.

Title:

 

Chairman of the Board and CEO

EXECUTIVE:

RON G. LAKEY

   

/s/ Ron G. Lakey

--------------------------------------------------------------------------------

Name:

 

Ron G. Lakey

 

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EXHIBIT A

 

REQUIRED CFO SERVICES

 

  •   Work closely with the CEO and President and all levels of senior
management to develop short and long term strategic plans to meet the growth and
profitability objectives of the organization.

 

  •   Review existing business operations and identify ways to enhance
profitability and improve business processes to increase productivity.

 

  •   Review historical reporting practices and identify areas to enhance
financial controls, policies and procedures to ensure timely and accurate
financial statements are prepared to measure the business’s performance.

 

  •   Oversee the areas of taxes, audit, and financial reporting, treasury,
cash-management and information technology and ensure that the Company is in
compliance with Sarbanes-Oxley.

 

  •   Conduct due diligence on prospective acquisition targets and provide
strategic advice and direct negotiations for acquisitions, joint ventures and
other alliances in order to grow the business.

 

  •   Work closely with institutional investors to raise capital and deal with
banks to structure syndicated debt deals in order to fund expansion.

 

  •   Work with the President, investors and investment banks to spearhead any
equity offerings, including any secondary public offering following successful
completion of a targeted acquisition to grow the security services business.

 

  •   Facilitate effective managerial decisions by providing timely and accurate
financial and operations information to senior management.

 

  •   Ensure optimal utilization of financial resources and working capital
through sound forecasting and cash management disciplines.

 

  •   Minimize tax liabilities through effective tax planning and research and
executing those tax strategies in compliance with United States GAAP.

 

  •   Interact with external constituencies, including lending institutions,
investors in accordance with applicable laws, public accountants, legal counsel
and Wall Street analysts to keep them informed of the Company’s present and
projected financial condition to manage earnings guidance reporting and enhance
credibility to raise capital for planned business expansion.

 

  •   Ensure continuing departmental effectiveness through hiring, training,
developing and motivating a competent, proactive financial staff.

 

  •   Present financial information to the Board of Directors and senior
management that is clear, insightful and offers appropriate plans of action.

 

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