XXXXXXX COMPUTER RESOURCES, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 26th day of June, 1997, by and
between XXXXXXX COMPUTER RESOURCES, INC., a Delaware corporation
("Company"), and XXXXXX XXXXX ("Employee").
W I T N E S S E T H :
WHEREAS, Company has entered into an Asset Purchase Agreement
("Purchase Agreement") of even date herewith pursuant to which it
bought substantially all the assets of MAGIC BOX, INC. ( "MAGIC
BOX" ); and
WHEREAS, Employee owns forty percent (40%) of the outstanding
stock of MAGIC BOX; and
WHEREAS, as an inducement for and in consideration of Company
entering into the Purchase Agreement with MAGIC BOX and
purchasing substantially all its assets, Employee has agreed to
enter into and execute this Employment Agreement pursuant to
Section 5 thereof; and
WHEREAS, Company desires to engage the services of Employee,
pursuant to the terms, conditions and provisions as hereinafter
set forth.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein set forth, the parties hereby
covenant and agree as follows:
1. Employment. The Company agrees to employ the Employee, and
the Employee agrees to be employed by the Company, upon the
following terms and conditions.
2. Term. The initial term of Employee's employment pursuant to
this Agreement shall begin on the 26th day of June, 1997, and
shall continue for a period of three (3) years and nine (9) days
ending July 5, 2000 unless terminated earlier pursuant to the
provisions of Section 10, provided that Sections 8, 9, 10(b) ,
10(c), if applicable, and 11, if applicable, shall survive the
termination of such employment and shall expire in accordance
with the terms set forth therein.
3. Renewal Term. The term of Employee's employment shall
automatically renew for additional consecutive renewal terms of
one (1) year unless either party gives written notice of his/its
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intent not to renew the terms of this Agreement ninety (90) days
prior to expiration of the then expiring term. Employee's base
salary for each renewal term shall be determined by Company,
provided, however, Employee's annual base salary for any renewal
term shall not be less than the base salary in effect for the
prior year.
4. Duties. Employee shall serve as Executive Vice-President
for the Company's Southern Florida division. Employee shall be
responsible to and report directly to the corporate officers of
Company. Employee shall devote his reasonable best efforts and
substantially all his time during normal business hours to the
diligent, faithful and loyal discharge of the duties of his
employment and towards the proper, efficient and successful
conduct of the Company's affairs. Employee shall perform such
duties in Dade or Broward Counties, Florida. The duties assigned
to Employee shall not be inconsistent with those typically
assigned to a person holding the position set forth above and
Employee shall at all times have such powers and authority as
shall be reasonably required to discharge such duties in an
efficient manner, together with such facilities and services as
are appropriate to his position. Employee shall have veto power
over the dismissal of employees of Company's South Florida
division, except for employees dismissed for cause. For purposes
of this Section, " for cause " shall be defined in Section
10(a)(iv), except the cure period set forth therein shall not be
applicable. Company agrees to offer employment agreements to all
key employees of Company's South Florida division within sixty
(60) days of closing. Employee further agrees to refrain during
the term of this Agreement from making any sales of competing
services or products which Company or its subsidiaries provide or
from profiting from any transaction involving computer services
or products for his account without the express written consent
of Company, other than any investment that Employee may own in
Ace Education, Inc., a computer training business.
5. Compensation. For all services rendered by the Employee
under this Agreement (in addition to other monetary or other
benefits referred to herein), compensation shall be paid to
Employee as follows:
(a) Base Salary:
(i) During the period June 26, 1997 through July 5,
1997, Employee shall be paid the sum of Two Thousand Nine Hundred
Forty-Two and 30/100 Dollars ($2,942.30) per week. Compensation
due for a period of less than one (1) week shall be prorated for
such period on the basis of a seven-day week.
(ii) Employee shall be paid an annual base salary
of One Hundred Fifty-Three Thousand Dollars ($153,000.00) during
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the first full year (July 6, 1997 through July 5, 1998) of this
Agreement.
(iii) Employee shall be paid an annual base salary
of One Hundred Sixty Thousand Six Hundred Fifty Dollars
($160,650.00) during the second full year (July 6, 1998 through
July 5, 1999) of this Agreement.
(iv) Employee shall be paid an annual base salary
of One Hundred Sixty-Eight Thousand Six Hundred Eighty-Two and
50/100 Dollars ($168,682.50) during the third full year (July 6,
1999 through July 5, 2000) of this Agreement.
(v) Said annual base salary shall be payable in
accordance with the historical payroll practices of the Company.
(b) In addition to Employee's base salary as set forth in
Section 5(a) above, Employee shall be entitled to a bonus and
incentive stock option award in the event Employee satisfies
certain economic criteria pertaining to Company's Southern
Florida division, as follows:
(i) gross sales of Company's Southern Florida division
greater than $9,000,000.00 but less than or equal to
$9,500,000.00 with NPBT greater than 6% = $7,500.00 cash bonus
plus 750 incentive stock options;
(ii) gross sales of Company's Southern Florida
division greater than $9,500,000.00 but less than or equal to
$10,000,000.00 with NPBT greater than 5.5% = $10,000.00 cash
bonus plus 1,000 incentive stock options;
(iii) gross sales of Company's Southern Florida
division greater than $10,000,000.00 but less than or equal to
$12,000,000.00 with NPBT greater than 5% = $12,000.00 cash bonus
plus 1,500 incentive stock options;
(iv) gross sales of Company's Southern Florida
division greater than $12,000,000.00 but less than or equal to
$15,000,000.00 with NPBT greater than 4.5% = $15,000.00 cash
bonus plus 2,500 incentive stock options; and
(v) gross sales of Company's Southern Florida division
greater than $15,000,000.00 with NPBT greater than 4% =
$25,000.00 cash bonus plus 3,500 incentive stock options.
(vi) For purposes of this Section, the term
"gross sales" shall mean the gross sales of equipment, software
and services by Company's Southern Florida division. In making
said gross sales determination, all gains and losses realized on
the sale or other disposition of Company's Southern Florida
division's assets not in the ordinary course of business shall be
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excluded. All refunds or returns which are made during such
period shall be subtracted along with all accounts receivable
derived from sales which are written off during such period in
accordance with Company's accounting system. Such gross sales
and net pre-tax profit margin of Company's Southern Florida
division shall be determined by the independent accountant
regularly retained by the Company in accordance with generally
accepted accounting principles and the determination by the
accountant shall be final, binding and conclusive upon all
parties hereto. Commencing with the earlier of thirty (30) days
after the installation of the Astea accounting system or January
6, 1998, in making said determination of the applicable pre-tax
margin for the Company's Southern Florida division, a 1.5% MAS
royalty fee on gross sales shall be paid to the Company incident
to said determination. For each subsequent year, during the
initial term of this Agreement, the parties shall, in good faith,
agree upon a MAS royalty fee to be charged hereunder based on the
level of services and support being provided by the Company to
its Southern Florida division. Provided, however, such royalty
fee shall be 1.5% if the parties are unable to come to an
agreement for each subsequent year. Fifty percent (50%) of any
amount earned under Section 5(b) above shall be payable to
Employee within thirty (30) days of the determination by the
accountant as a bonus and the remaining fifty percent (50%) will
constitute incentive deferred compensation and will be payable to
Employee according to the terms of Incentive Deferred
Compensation Agreement attached hereto as Exhibit A. Any
incentive deferred compensation shall be fully vested over a
five-year period, vesting 20% percent per year from the effective
date of this Agreement.
(vii) For the year 1997, the economic criteria and
the pay out amount and stock option award set forth in Section
5(b) above shall be prorated to reflect the closing date of the
transaction with Magic Box.
(viii) Any award of an incentive stock option to
acquire common stock of the Company earned hereunder shall be the
fair market value of such stock as of January 5, 1998 and shall
be subject to all conditions contained in the Company's Non-
Qualified and Incentive Stock Option Plan.
(ix) The parties agree that in January of 1998,
1999 and 2000 (for the remaining portion of the initial term of
this Agreement), they will negotiate in good faith the
implementation of an annual bonus and incentive deferred
compensation plan for Employee for the remaining fiscal years of
this Agreement which will be predicated upon the attainment by
Company's Southern Florida division of certain economic criteria
established at the outset of such calendar year. Such bonus and
incentive deferred compensation plan for the remaining term of
this Agreement shall be consistent with other of Company's
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management personnel holding positions similar to that of
Employee.
(x) For purposes of this Agreement, the term
Company's Southern Florida division shall mean the business
generated and emanating out of the acquisition of substantially
all the assets of Magic Box, Inc.
6. Fringe Benefits. During the term of this Agreement,
Employee shall be entitled to the following benefits:
(a) Health Insurance - Employee shall be provided with
the standard family medical health and insurance coverage
maintained by Company on its employees. Company and Employee
shall each pay fifty percent (50%) of the cost of such coverage.
(b) Vacation - Employee shall be entitled each year to a
vacation of three (3) weeks during any time of the year which
Employee selects, during which time his compensation will be paid
in full. Provided, however, such weeks may not be taken
consecutively without the written consent of Company.
(c) Retirement Plan - Employee shall be entitled to
participate, after meeting eligibility requirements, in any
qualified retirement plans and/or welfare plans maintained by the
Company during the term of this Agreement.
(d) Other Company Programs - Employee shall be eligible
to participate in any other plans or programs implemented by the
Company for all of its employees with duties and responsibilities
similar to Employee.
(e) Automobile Allowance - Company shall provide Employee
with an automobile allowance of $700.00 per month during the term
of this Agreement. Employee shall be responsible for all
insurance premiums, maintenance and repair to any vehicle owned
or leased by him and for all expenses for gasoline or other items
related to the upkeep of such vehicle.
(f) Cellular Telephone - Company shall reimburse Employee
for all reasonable business expenses related to Employee's use of
his cellular telephone in the furtherance of Company's business.
Such expenses shall be accounted for in accordance with the
reasonable policies and procedures established by the Company.
(g) Employee shall be responsible for any and all taxes
owed, if any, on the fringe benefits provided to him pursuant to
this Section 6.
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7. Expenses. During the term of Employee's employment
hereunder, Employee shall be entitled to receive prompt
reimbursement for all reasonable and customary travel and
entertainment expenses or other out-of-pocket business expenses
incurred by Employee in fulfilling the Employee's duties and
responsibilities hereunder, including, all expenses of travel and
living expenses while away from home on business or at the
request of and in the service of the Company, provided that such
expenses are incurred and accounted for in accordance with the
reasonable policies and procedures established by the Company.
8. Non-Competition. Employee expressly acknowledges the
provisions of Section 8 of the Purchase Agreement relating to
Employee's Covenant Not to Compete with Company. Accordingly,
such provisions of Section 8 are incorporated herein by reference
to the extent as if restated in full herein. In addition to the
consideration received under this Agreement, Employee
acknowledges that as a shareholder of MAGIC BOX, he has received
substantial consideration pursuant to such Purchase Agreement and
that as an inducement for, and in consideration of Company
entering into this Agreement, Employee has agreed to be bound by
such provisions of Section 8 of the Purchase Agreement.
Accordingly, such provisions of Section 8 and Exhibit B-1 and the
restrictions on Employee thereby imposed shall apply as stated
therein.
9. Non-Disclosure and Assignment of Confidential Information
The Employee acknowledges that the Company's trade secrets and
confidential and proprietary information, including without
limitation:
(a) unpublished information concerning the Company's:
(i) research activities and plans,
(ii) marketing or sales plans,
(iii) pricing or pricing strategies,
(iv) operational techniques,
(v) customer and supplier lists, and
(vi) strategic plans;
(b) unpublished financial information, including
unpublished information concerning revenues, profits and profit
margins;
(c) internal confidential manuals; and
(d) any "material inside information" as such phrase is
used for purposes of the Securities Exchange Act of 1934, as
amended;
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all constitute valuable, special and unique proprietary and trade
secret information of the Company. In recognition of this fact,
the Employee agrees that the Employee will not disclose any such
trade secrets or confidential or proprietary information (except
(i) information which becomes publicly available without
violation of this Employment Agreement or is known by Employee
other than by reason of employment by Company, (ii) information
of which the Employee did not know and should not have known was
disclosed to the Employee in violation of any other person's
confidentiality obligation, and (iii) disclosure required in
connection with any legal process), nor shall the Employee make
use of any such information for the benefit of any person, firm,
operation or other entity except the Company and its subsidiaries
or affiliates. The Employee's obligation to keep all of such
information confidential shall be in effect during and for a
period of three (3) years after the termination of his employment
in those states where Company has business offices; provided,
however, that the Employee will keep confidential and will not
disclose any trade secret or similar information protected under
law as intangible property (subject to the same exceptions set
forth in the parenthetical clause above) for so long as such
protection under law is extended.
10. Termination
(a) The Employee's employment with the Company may be
terminated at any time as follows:
(i) By the Employee at his discretion, upon sixty (60)
days written notice to Company;
(ii) By Employee's death;
(iii) By Employee's physical or mental disability which
renders Employee unable to perform his duties hereunder for a
consecutive period of one hundred twenty (120) days or for an
aggregate of one hundred fifty (150) days or more during any
twelve-month period.
(iv) By the Company, for cause upon fifteen (15) day's
written notice to Employee. For purposes of this paragraph
10(a)(iv), the term "cause" shall mean termination upon: (i) the
continuous failure by Employee to substantially perform his
material duties with the Company (other than any such failure
resulting from his incapacity due to physical or mental illness),
after a written demand for substantial performance is delivered
to him by the Company, which demand specifically identifies the
manner in which the Company believes that he has not continuously
substantially performed his duties and setting forth a detailed
mechanism for curing such conduct; (ii) the engaging by Employee
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in conduct which is demonstrably and materially injurious to the
Company, monetarily or otherwise, including but not limited to
any material misrepresentation related to the performance of his
duties; (iii) the conviction of Employee of a felony (other than
driving related) or other crime involving theft or fraud, (iv)
Employee's gross neglect or gross misconduct in carrying out his
duties hereunder resulting, in either case, in material harm to
the Company; or (v) any material breach by Employee of any
material provision of this Agreement. Notwithstanding the
foregoing, Employee shall not be deemed to have been terminated
for cause unless and until there shall have been delivered to him
a copy of a resolution of the Board of Directors of the Company
or any appropriately designated committee of the Board, finding
that he has engaged in the conduct set forth above in this
Section 10(a)(iv), specifying the particulars thereof in detail,
and setting forth a detailed mechanism for curing such conduct
and Employee shall not have cured such conduct to the reasonable
satisfaction of the Board within thirty (30) days of receipt of
such resolution.
(v) Commencing January 6, 1998, by the Company at its
discretion, without cause, upon thirty (30) days written notice
to Employee; provided that Company complies with the provisions
of Section 10(c).
(vi) By the Employee for Good Reason. For purposes of
this Agreement, Good Reason shall mean, without Employee's
express consent, the occurrence of any of the following
circumstances:
(A) a substantial diminution in Employee's
duties, responsibilities or authority after written demand has
been made upon Company by Employee and Company has had a thirty-
day period to correct such matter (except during any period when
the Employee is unable to perform all or substantially all of the
Employee's duties and/or responsibilities as a result of the
Employee's illness (either physical or mental) or other
incapacity);
(B) the relocation of Employee's place of
employment to outside Dade or Broward Counties, Florida;
(C) any material breach by Company of the
Agreement but only after written demand has been made upon
Company by Employee setting forth such material breach and
setting forth a detailed mechanism for curing such conduct and
Company has failed to cure such breach within thirty (30) days;
or
(D) a change in control as hereinafter defined,
unless Employee has accepted employment with the successor entity
and such successor entity has assumed this Employment Agreement
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pursuant to the provisions of Section 17. For purposes of this
Agreement, a ``change in control shall occur: (i) upon the
sale or other disposition to a person, entity or group (as such
term is used in Rule 13 d-5 promulgated under the Securities
Exchange Act of 1934, as amended), such person, entity or group
being referred to as an ``outside party'' of fifty percent (50%)
or more of the consolidated assets of the Company taken as a
whole, or (ii) in the event shares representing a majority of the
voting power of Company are acquired by a person or group (as
such term is used in Rule 13 d-5) of persons other than the
holders of the common stock of Company on June 26, 1997.
(b)Compensation upon Termination: In the event of
termination of employment, the Employee or his estate, in the
event of death, shall be entitled to his annual base salary and
other benefits provided hereunder to the date of his termination.
In addition, Employee shall be entitled to receive any bonus
accrued to the date of his termination of employment as provided
in Sections 5(b) and (c). In addition, Employee shall be
entitled to any vested incentive deferred compensation that may
be due Employee pursuant to the provisions of Exhibit A, which
shall be payable (if applicable) pursuant to the terms thereof.
(c)In the event that Company would terminate Employee's
employment hereunder without cause pursuant to Section 10(a)(v)
or Employee would terminate his employment for Good Reason
pursuant to Section 10(a)(vi), Company shall be obligated to pay
Employee, as severance pay, Employee's annual base salary for the
remaining term, including the current renewal term, if
applicable, of the Agreement (as set forth in Section 2) as due.
11. Disability. In the event that Employee becomes temporarily
disabled and/or totally and permanently disabled, physically or
mentally, which renders him unable to perform his duties
hereunder, Employee shall receive one hundred percent (100%) of
his base annual salary (in effect at the time of such disability)
for a period of one (1) year following the initial date of such
disability (offset by any payments to the Employee received
pursuant to disability benefit plans, if any, maintained by the
Company.) Such payments shall be payable in twelve consecutive
equal monthly installments and shall commence thirty (30) days
after the determination by the physicians of such disability as
set forth below.
For purposes of this Agreement, Employee shall be deemed to
be temporarily disabled and/or totally and permanently disabled
if attested to by two qualified physicians, (one to be selected
by Company and the other by Employee) competent to give opinions
in the area of the disabled Employee's physical and/or mental
condition. If the two physicians disagree, they shall select a
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third physician, whose opinion shall control. Employee shall be
deemed to be temporarily disabled and/or totally and permanently
disabled if he shall become disabled as a result of any medically
determinable impairment of mind or body which renders it
impossible for such Employee to perform satisfactorily his duties
hereunder, and the qualified physician(s) referred to above
certify that such disability does, in fact, exist. The opinion
of the qualified physician(s) shall be given by such
physician(s), in writing directed to the Company and to Employee.
The physician(s) decision shall include the date that disability
began, if possible, and the 12th month of such disability, if
possible. The decision of such physician(s) shall be final and
conclusive and the cost of such examination shall be paid by
Employer.
12. Severability. In case any one (1) or more of the provisions
or part of a provision contained in this Agreement shall be held
to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any
other provision or part of a provision of this Agreement. In
such a situation, this Agreement shall be reformed and construed
as if such invalid, illegal or unenforceable provision, or part
of a provision, had never been contained herein, and such
provision or part shall be reformed so that it will be valid,
legal and enforceable to the maximum extent possible.
13. Governing Law. This Agreement shall be governed and
construed under the laws of the State of Florida and shall not be
modified, waived or discharged, in whole or in part, except by an
agreement in writing signed by the parties.
14. Notices. All notices, requests, demands and other
communications relating to this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally
or three days after mailing if mailed by certified or registered
mail, return receipt requested, postage prepaid:
If to Company, to: Pomeroy Computer Resources, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
With a copy to: Xxxxx X. Xxxxx III
Xxxxxxxxx & Dreidame Co., L.P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000
If to Employee, to: the Employee's residential address, as
set forth in the Company's records
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With a copy to: Xxxxx X. Xxxxx, Esq.
XxXxxxxxx, Will & Xxxxx
000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000-0000
15. Enforcement of Rights. The parties expressly recognize that
any breach of this Agreement by either party is likely to result
in irrevocable injury to the other party and agree that such
other party shall be entitled, if it so elects, to institute and
prosecute proceedings in any court of competent jurisdiction in
Dade County, Florida, either at law or in equity, to obtain
damages for any breach of this Agreement, or to enforce the
specific performance of this Agreement by each party or to enjoin
any party from activities in violation of this Agreement. Should
either party engage in any activities prohibited by this
Agreement, such party agrees to pay over to the other party all
compensation, remuneration, monies or property of any sort
received in connection with such activities. Such payment shall
not impair any rights or remedies of any non-breaching party or
obligations or liabilities of any breaching party pursuant to
this Agreement or any applicable law.
16. Entire Agreement . This Agreement and the Exhibits hereto
and the Purchase Agreement referred to herein contain the entire
understanding of the parties with respect to the subject matter
contained herein and may be altered, amended or superseded only
by an agreement in writing, signed by the party against whom
enforcement of any waiver, change, modification, extension or
discharge is sought.
17. Parties in Interest
(a) This Agreement is personal to each of the parties
hereto. No party may assign or delegate any rights or
obligations hereunder without first obtaining the written consent
of the other party hereto; provided, however, that nothing in
this Section 17 shall preclude (i) Employee from designating a
beneficiary to receive any benefit payable hereunder upon his
death, or (ii) executors, administrators, or legal
representatives of Employee or his estate from assigning any
rights hereunder to person or persons entitled thereto.
Notwithstanding the foregoing, this Agreement shall be binding
upon and inure to the benefit of any successor corporation of
Company
(b) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the assets of the Company or the
business with respect to which the duties and responsibilities of
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Employee are principally related, to expressly assume and agree
to perform this Agreement in the same manner and to the same
extent that Company would have been required to perform it if no
such succession had taken place. As used in this Agreement
"Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which
executes and delivers the assumption agreement provided for in
this Section 17 or which otherwise becomes bound by all the terms
and provisions of this Agreement by operation of law.
18. Representations of Employee. Employee represents and
warrants that he is not party to or bound by any agreement or
contract or subject to any restrictions including without
limitation any restriction imposed in connection with previous
employment which prevents Employee from entering into and
performing his obligations under this Agreement.
19. Counterparts. This Agreement may be executed simultaneously
in several counterparts, each of which shall be deemed an
original part, which together shall constitute one and the same
instrument.
20. Attorneys' Fees. In the event of any dispute arising
between Employee and Company, whether pursuant to this Agreement
or otherwise, the prevailing party shall be entitled to recover
from the non-prevailing party, the prevailing party's reasonable
attorneys' fees and costs.
IN WITNESS WHEREOF, this Agreement has been executed effective as
of the day and year first above written.
WITNESSES: XXXXXXX COMPUTER RESOURCES, INC.
__________________________
__________________________
By:_________________________________
__________________________
__________________________
____________________________________
XXXXXX XXXXX
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