AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of October 16,1996, by and between Computer
Marketplace, Inc. a Delaware corporation (the "Company"), having its principal
executive offices at 0000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000, and L.
XXXXX XXXXX, an individual residing at 0000 Xxxxxxx Xxxxxxxx, Xxxxxx, XX 00000
("Employee").
WHEREAS, the Company and the Employee entered into that certain employment
agreement dated as of October 16, 1992 (the Original Agreement"); and
WHEREAS, the Company and the Employee wish to amend certain terms of the
Original Agreement, including the term of employment thereunder; and
NOW, THEREFORE, in consideration of the provisions and covenants contained
herein, the parties hereto agree as follows:
1. TERM
The term of this Agreement shall be for a period of three (3) years
commencing on the date hereof (the "Employment Term"), and shall be renewed at
the end of the Employment Term for an additional one (1) year period upon mutual
agreement by the parties, in writing, at least sixty (60) days prior to the end
of the term of this Agreement.
2. COMPENSATION
(a) The Company shall pay to Employee an annual salary of $302,500 per
annum, payable biweekly or at such other intervals as the Company makes payment
of its payroll in the regular
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course of business (the "Base Amount"). The Base Amount shall be increased by
six percent (6%) during each year of the Employment Term.
(b) Employee may participate in the Company's group health insurance,
long-term disability and life insurance coverage that the Company makes
available to its employees generally. The respective carriers shall make all
determinations as to insurability and coverage.
(c) The Company and Employee contemplate that the Company will pay to
Employee bonuses, on an annual basis, based upon the operating performance of
the Company or other reasonable criteria. The Company and Employee will
negotiate in good faith to achieve a reasonable and fair bonus arrangement to
incentive and reward Employee for services performed and to be performed for the
Company hereunder.
(d) The Company shall provide the Employee with an automobile for his use.
(e) If the Company has certain pre-tax earnings during a fiscal year,
during the Employment Term, then Employee shall be granted an option exercisable
for a period of four (4) years to purchase from the Company shares of the
Company's common stock at an exercise price equal to seventy five percent (75%)
of the closing bid price of the Company's shares of Common Stock on the date of
grant, subject to customary anti-dilution adjustments. If the Company has
earnings before the payment of interest and taxes ("EBIT") of at least six
hundred twenty five thousand dollars ($625,000) during any fiscal year during
the Employment Term, then Employee shall have the right to purchase a number of
shares of common stock equal to two and one-half percent (2.5%) of the shares of
common stock outstanding on the date of grant of such option to Employee. If the
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Company has EBIT of at least eight hundred seventy five thousand dollars
($875,000) during any fiscal year during the Employment Term then Employee shall
have the right to purchase a number of shares of common stock equal to three
percent (3%) of the shares of common stock outstanding on the date of grant of
such option to Employee. If the Company has EBIT of at least one million dollars
($1,000,000) during any fiscal year during the Employment Term, Employee shall
have the right to purchase a number of shares of common stock equal to three and
one-half percent (3.5%) of the shares of common stock outstanding on the date of
exercise of such option by the Employee. In no event shall Employee be entitled
to receive options for the Company's satisfaction of a financial target
described above on more than one occasion.
(f) In addition to other compensation hereunder, the Company shall pay for
and maintain a policy of disability income insurance to provide Employee with
income in the amount of seventy-five percent (75%) of Employee's salary if
Employee becomes disabled.
(g) In the event that Employee shall become permanently disabled,
(Employee's inability, by reason of physical or mental illness, or other cause,
to perform the majority of his usual duties in a normal and professional manner
on a full-time basis which continues for a period beyond six (6) months) then,
at Employer's option, Employer's obligation to said Employee to pay any part of
his salary shall cease and Employee shall assign its interest in Employee's
disability policy to Employee and Employee shall thereafter be responsible for
paying all subsequent premiums required to maintain and keep said policy in full
force and effect.
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(h) The Company will promptly reimburse the Employee for all reasonable
business expenses incurred by the Employee in promoting the business of the
Company, including expenditures for entertainment, gifts, and travel, provided
that:
(i) each such expenditure is of a nature qualifying it as a proper
deduction on the Federal and State income tax return of the Company;
and
(ii) the Employee furnishes to the Company adequate records and other
documentary evidence required by Federal and State statutes and
regulations issued by the appropriate taxing authorities for the
substantiation of each such expenditure as an income tax deduction.
(i) The Company shall maintain a life insurance policy on the life of the
Employee providing Employee's spouse or other heirs with two million dollars
($2,000,000) in the event Employee becomes deceased prior to the end of the
Employment Term; provided however, that Employee's spouse or other heirs must
deliver to the Company for cancellation all of the shares of Common Stock of the
Company beneficially owned by Employee prior to his death. In addition, the
Company shall also maintain a $1,000,000 split dollar life insurance policy on
the life of the Employee, the policy amount to be paid to the Employee's
beneficiary and to the Company for reimbursement of premium amounts previously
paid.
(j) In the event that during the Term the Company sells assets outside the
ordinary course of business, the Employee shall be entitled to a cash bonus
equal to five percent (5%) of the amount
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by which the sale price exceeds the book value for such asset(s) as reflected on
the Company's balance sheet for the quarter ending just prior to the date of
such sale.
3. SCOPE OF EMPLOYMENT
The Company agrees to employ Employee on the terms and conditions contained
herein during the Employment Term, and Employee agrees to be so employed.
Employee shall serve as President and Chief Executive Officer of the Company
during the Employment Term. Employee will serve the Company faithfully,
industriously, and to the best of Employee's ability, experience and talents.
Employee shall be responsible to carry out all corporate and administrative
duties, functions and responsibilities customarily incumbent upon chief
executive officers of companies such as the Company.
4. TERMINATION FOR CAUSE
The Company may terminate this Agreement, upon thirty (30) days prior
written notice, for cause prior to the end of its term because any of the
following have occurred: (i) Employee has materially breached this Agreement,
including without limitation the material breach of any of his duties hereunder;
(ii) Employee has misrepresented or failed to fully disclose facts to the
Company or has otherwise been dishonest to or with respect to the Company; (iii)
Employee has not worked for a period of 100 consecutive days or any 180 days
(other than vacation days) within any 12-month period; or (iv) death of
Employee; provided however, that the Company shall continue to pay Employee's
estate. If Employee has cured any of the foregoing reasons for termination of
this
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Agreement by the Company within thirty (30) days following receipt by him of
notice thereof, then the Company may not terminate this Agreement therefor.
5. CONFIDENTIALITY AND NON-COMPETITION COVENANTS
All information concerning customers that Employee shall gain knowledge of,
all records concerning customers that shall come into Employee's possession, and
all other information pertaining to the Company's operations, are confidential
and shall not at any time be communicated by Employee to any person, firm,
corporation or entity not affiliated with the Company, other than in the
ordinary course of business. At the end of the Employment Period, Employee shall
surrender all copies of all such records, regardless of whether made by him or
otherwise created. During the Employment Term and for a period of two (2) years
after termination of the Employment Term, Employee shall not directly or
indirectly compete with the Company, solicit or otherwise communicate with any
customer of the Company, or otherwise interfere with the carrying on by the
Company of its business including without limitation by soliciting, directly or
indirectly, any other employee at the Company to leave his employment. Employee
recognizes that a breach of these provisions concerning confidentiality and
non-solicitation of customers of the Company will cause irreparable damage to
the Company. Employee therefore agrees, notwithstanding the provisions in
Section 7 herein for the resolution of all disputes by way of arbitration, that
the Company shall be entitled to the entry of a preliminary injunction by a
court of competent jurisdiction in California or elsewhere, restraining Employee
in accordance with the foregoing provisions concerning
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confidentiality and non-solicitation in the event of any breach or threatened
breach of any such provision, and submits to the jurisdiction of such court in
any such action.
If any of the restrictions contained in this Section 6 are deemed to be
unenforceable by reason of the extent, duration or geographical scope thereof,
or otherwise, then the Court making such determination shall have the right to
reduce such extent, duration, geographical scope or other provisions hereof and
in its reduced form this Section shall then be enforceable in the manner
contemplated hereby.
6. MISCELLANEOUS
Any dispute which the parties hereto are unable amicably to resolve shall
be submitted to binding arbitration in California in accordance with the Rules
and Constitution of the American Arbitration Association. Either party hereto
may request that any decision of the arbitrators set forth the findings of fact
and conclusions of law upon which their award is based. Judgment upon any such
arbitration award may be entered in any court of competent jurisdiction, and
Employee submits to the jurisdiction of any such court.
In the event any suit or other action is commenced with respect to the
interpretation or enforcement of any provision of this agreement, the prevailing
party shall be entitled, in addition to any other sums to which such party may
be entitled, to recover from the other party the reasonable fees and
disbursements of counsel retained to investigate and pursue such matter.
7. NOTICES
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Any notice required or permitted to be delivered hereunder shall be deemed
effective five (5) days after mailing when sent by United States mail, postage
prepaid, certified mail, return receipt requested, addressed to the Company or
Employee, as the case may be, at the addresses set forth below:
If to the Company:
Computer Marketplace
0000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President
With a copy to:
Xxxxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxx & Xxxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
If to Employee:
Mr. L. Xxxxx Xxxxx
0000 Xxxxxxx Xxxxxxxx
Xxxxxx, XX 00000
With a copy to:
Xxxxxx Xxxxxxx, Esq.
00000 Xxxxxxxxx Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
(000) 000-0000
8. SURVIVAL
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The representations, warranties and agreements herein made shall survive
the expiration or termination of the Employment Term hereof.
9. SEVERABILITY
The invalidity of any section, paragraph, sentence or clause ("provision")
set forth in this Agreement shall not affect the validity of any other
provision. All provisions of this Agreement shall be enforced to the fullest
extent permitted by law.
10. ASSIGNMENT
Employee acknowledges that the services to be rendered by him are unique
and personal. Employee may not assign any of his rights or delegate any of his
duties or obligations under this Agreement. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Company.
11. GOVERNING LAW
This Agreement is executed and delivered in the State of California and
shall be construed, governed and enforced in accordance with the laws and
decisions of the State of California without regard to its conflict of laws
doctrine. Each of the parties hereto irrevocably consents to the jurisdiction of
the Federal and State Courts located in the State of California.
12. WAIVER OF BREACH
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The waiver by either party of a breach of any of the provisions of this
Agreement shall not operate as or be construed as a waiver of any subsequent
breach thereof.
13. INDEMNIFICATION
The Company agrees to and shall indemnify, defend, and hold harmless
Employee, both during and following the term of this Agreement, from and against
any and all losses, claims, damages, liabilities, judgments, fines, penalties,
assessments, and costs and expenses as incurred (including attorneys' fees and
costs) which may arise from or be based upon: (i) Employee performance of
services pursuant to this Agreement; and (ii) any actions or alleged actions or
omissions or alleged omissions by Employee in his performance under this
Agreement, so long as Employee acted in good faith and in a manner which he
believes to be in the best interest of the Company. The foregoing
indemnification and hold harmless shall not apply if Employee is found by a
court of competent jurisdiction to be guilty of wanton or willful misconduct or
gross negligence with respect to the matter upon which a claim of
indemnification or hold harmless is made by Employee. In addition, the Company
agrees to use its best efforts to obtain, at a reasonable cost to the Company,
officers and directors liabilities insurance.
14. ENTIRE AGREEMENT
This Agreement contains the entire understanding of the parties. It may not
be changed orally but only by an agreement in writing signed by the party
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
COMPUTER MARKETPLACE, INC.
By: /s/ L. Xxxxx Xxxxx
--------------------------
L. XXXXX XXXXX
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