XXXXXXX COMPUTER RESOURCES, INC.
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This First Amendment to Employment Agreement ("First Amendment") is made as
of the ____ day of ____________________, 2002, by and between XXXXXXX COMPUTER
RESOURCES, INC., a Delaware corporation ("Company"), and XXXXXXX X. XXXXXX
("Employee").
WHEREAS, on the 31st day of May, 2001, the Company and Employee executed an
Employment Agreement ("Agreement") whereunder Employee agreed to serve as the
Company's Executive Vice President of Sales and Operations pursuant to the terms
thereof; and
WHEREAS, Company and Employee now desire to enter into this First
Amendment to Employment Agreement to provide Employee with continued employment
with the Company and additional responsibilities, duties, benefits and
compensation incident thereto.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants hereinafter set forth, the parties hereby agree as follows:
1. Section 2 of the Agreement shall be amended as follows:
2. Term. The term of Employee's employment pursuant to this First Amendment
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shall begin on the date first written above and shall continue for a period
of three (3) years thereafter, unless terminated earlier pursuant to the
provisions of Section 10 of the Agreement, provided that Sections 8, 9,
10(b), 11, if applicable, and 12, if applicable, of the Agreement shall
survive the termination of such employment and shall expire in accordance
with the terms set forth therein.
3. Section 5 shall be amended by deleting Sections 5(a), 5(d)(ii), 5(e), and
5(g) of the Agreement in their entirety and replacing them with the
following:
5. Compensation. For all services rendered by the Employee, compensation
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shall be paid to Employee as follows:
(a) Base Salary. Effective March 1, 2002, Employee's base annual
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salary shall be $225,000.00. Employee shall be entitled to an
increase in his annual base salary, in the event the Company
meets or exceeds the following net profit before taxes
thresholds: (1) if Company's net profit before taxes for fiscal
year 2002 is greater than 4.5% during that period, Employee's
annual base salary for the second year of this First Amendment
shall be automatically increased by $25,000.00; and (2) if
Company's net profit before taxes for fiscal year 2003 is greater
than 5.0% during that period, Employee's annual base salary for
the final year of the initial term of this three (3) year First
Amendment shall be automatically increased by $25,000.00.
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(d) Quarterly Bonus based on NPBT.
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(ii) Employee shall also be eligible to receive a
quarterly bonus if Company's net profit before taxes ("NPBT")
meet or exceed certain thresholds, which are more particularly
set forth herein below. If Company's NPBT for the applicable
quarter is greater than 4.0%, Employee shall be entitled to
receive a cash bonus of $15,000.00 for the quarter; if Company's
NPBT for the applicable quarter is greater than 4.50%, Employee
shall be entitled to receive a cash bonus of $25,000.00; or, if
Company's NPBT is greater than 5.0%, Employee shall be entitled
to receive a cash bonus of $35,000.00. In the event Company fails
to attain the NPBT thresholds referenced hereinabove for the
applicable quarter, Employee shall not be eligible for or
entitled to any bonus hereunder. The quarterly bonus schedule
provided in this Section shall be in effect for fiscal year 2002
only. For each subsequent year of this First Amendment, the
parties shall, in good faith, negotiate and agree upon criteria
for any such quarterly NPBT related bonuses.
(e) Year End Bonus based on Company's Performance/Results.
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Employee shall be eligible to receive a year end bonus in
accordance with the following schedule so long as (1) Company
achieves a net profit before taxes ("NPBT") greater than 4.25%
for fiscal year 2002; (2) the Company's Core Services, excluding
extended warranties and cabling, are equal to or greater than
$107,000,000.00; and (3) Company's gross sales are in excess of
the following thresholds: If Company generates gross sales in
excess of $870,000,000.00 for fiscal year 2002, Employee shall be
entitled to receive $100,000.00 in cash or stock and 25,000 stock
options; if Company generates gross sales in excess of
$900,000,000.00 for fiscal year 2002, Employee shall be entitled
to receive $125,000.00 in cash or stock and 35,000 stock options;
or if Company generates gross sales in excess of $930,000,000.00
for fiscal year 2002, Employee shall be entitled to receive
$150,000.00 in cash or stock and 50,000 stock options. Employee
understands and acknowledges that payment of fifty percent (50%)
of any cash bonus deemed earned by Employee hereunder shall be
deferred and subject to a five (5) year vesting schedule.
Employee further understands and acknowledges that any stock
options awarded hereunder shall be subject to a three (3) year
vesting schedule. Any such stock option awards made pursuant to
this Section 5(e) shall be made subject to any and all terms and
conditions contained in the Company's 1992 Non-Qualified and
Incentive Stock Option Plan and the Award Agreement incident
thereto. Any such award shall grant Employee the option to
acquire a certain amount of common stock of the Company at the
fair market value of such common stock as of the applicable date.
For the purposes of this First Amendment, the fair market value
as of the applicable date shall mean with respect to the common
shares, the average between the high and low bid and ask prices
for such shares on the over-the-counter market on the last
business day prior to the date on which the value is to be
determined (or the next preceding date on which sales occurred if
there were no sales on such date). The year-end bonus schedule
provided in this Section shall be in effect for fiscal year 2002
only. For each subsequent year of this First Amendment, the
parties shall, in good faith, negotiate and agree upon year-end
criteria for any such year-end bonuses.
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(g) Signing Bonus.
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(i) The Company hereby agrees to provide Employee with a
signing bonus, in the form of 25,000 stock options, as
additional consideration for his execution of and agreement
to the terms of this First Amendment to Employment
Agreement. Employee understands that the Company's award of
such stock options is contingent upon his execution of this
First Amendment with the Company and that the award shall be
made subsequent to the execution hereof as follows: Employee
shall be awarded the right to acquire 25,000.00 shares of
common stock, .01 par value, of Xxxxxxx Computer Resources,
Inc., subject to a three (3) year vesting schedule and any
other conditions contained in the Xxxxxxx Computer
Resources, Inc., Non-Qualified and Incentive Stock Option
Plan and the Award Agreement. Such award of the stock
options to acquire the common stock of Xxxxxxx Computer
Resources, Inc., shall be at the fair market value of such
common stock as of the applicable date. For purposes of this
First Amendment, the fair market value as of the applicable
date shall mean with respect to the common shares, the
average between the high and low bid and ask prices for such
shares on the over-the-counter market on the last business
day prior to the date on which the value is to be determined
(or the next preceding date on which sales occurred if there
were no sales on such date).
(ii) Furthermore, so long as Employee remains employed by
the Company during the term of this First Amendment, he
shall be awarded (a) the right to acquire 25,000 shares of
common stock, $.01 par value, of Xxxxxxx Computer Resources,
Inc., at the end of the second year of the initial term of
this First Amendment; and (b) the right to acquire 25,000
shares of common stock, $.01 par value, of Xxxxxxx Computer
Resources, Inc., at the end of the third year of the initial
term of this First Amendment. Employee acknowledges and
understands that any such stock options awarded to him
hereunder at the end of the second and third year of the
initial term of this First Amendment shall be subject to a
three (3) year vesting schedule and any other conditions
contained in the Xxxxxxx Computer Resources, Inc.,
Non-Qualified and Incentive Stock Option Plan and the Award
Agreement. Such award of the stock options to acquire the
common stock of Xxxxxxx Computer Resources, Inc., shall be
at the fair market value of such common stock as of the
applicable date. For purposes of this First Amendment, the
fair market value as of the applicable date shall mean with
respect to the common shares, the average between the high
and low bid and ask prices for such shares on the
over-the-counter market on the last business day prior to
the date on which the value is to be determined (or the next
preceding date on which sales occurred if there were no
sales on such date).
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4. Section 5 of the Agreement shall be amended by adding the following new
subsection (d)(iv) as provided below:
5(d)(iv) Quarterly Bonus based on Core Services Revenues.
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During fiscal year 2002, Employee shall be eligible to receive a
quarterly bonus based upon the gross sales of the Company's Core
Service offerings, which shall not include the sale of manufacturer
extended warranties and/or cabling revenues, as follows: if the
Company's gross sales for Core Services are equal to or greater than
$26,000,000.00 for the applicable quarter, Employee shall be entitled
to receive a cash bonus of $15,000.00; if the Company's gross sales
for Core Services are equal to or greater than $28,000,000.00 for the
applicable quarter, Employee shall be entitled to receive a cash bonus
of $25,000.00; or, if the Company's gross sales for Core Services are
equal to or greater than $30,000,000.00, Employee shall be entitled to
receive a cash bonus of $35,000.00. The quarterly bonus schedule
provided in this Section shall be in effect for fiscal year 2002 only.
For each subsequent year of this First Amendment, the parties shall,
in good faith, negotiate and agree upon criteria for any such
quarterly bonuses related to Core Services Revenues.
5. Section 5 of the Agreement shall be amended by adding the following new
subsection (d)(v) as provided below:
5(d)(v). Quarterly Bonus - Management Based Objective ("MBO").
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Employee shall be eligible to receive a quarterly bonus as stated
below for each quarter of fiscal 2002 if the cumulative dollar amount
of the Company's total outstanding Account Receivables, as such term
is more particularly defined herein below, is less than the following
thresholds: If the Company's total outstanding Account Receivables are
less than $35,000,000.00 for the applicable quarter, Employee shall be
entitled to receive a cash bonus of $7,500.00; or, if the Company's
total outstanding Account Receivables are less than $30,000,000.00 for
the applicable quarter, Employee shall be entitled to receive a cash
bonus of $10,000.00; or, if the Company's total outstanding Account
Receivables are less than $25,000,000.00 for the applicable quarter,
Employee shall be entitled to receive a cash bonus of $15,000.00. For
purposes of this MBO bonus provision, the capitalized term "Account
Receivables" shall be defined as all receivables related to the
following Company accounts, without regard to and excluding any
reserves established on the Company's books for such accounts: rebate
receivables, receivables related to product returns, price protection
receivables, NSN receivables, deposits, warranty/cross-ship
reimbursement receivables, employee receivables, receivables related
to leases and tax related receivables arising thereunder, marketing
receivables, and other miscellaneous account receivables. In no event
shall the term "Account Receivables," as defined hereinabove, include
receivables related to the Company's customer trade accounts. This MBO
bonus, as provided for hereinabove, shall be in effect for fiscal year
2002 only.
6. Section 6(g) of the Agreement shall be amended as follows:
6(g) Club Membership Dues. Effective March 1, 2002, Employee
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acknowledges, agrees and understands that the Company shall suspend
this
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Section 6(g) of the Agreement and the Company shall not provide or be
required to provide any further payment for Employee's membership dues
at Traditions Golf Club during the term of this First Amendment.
Except as modified by this First Amendment to Employment Agreement, the
parties affirm and ratify the terms and conditions of the Agreement.
IN WITNESS WHEREOF, this First Amendment to Employment Agreement has been
executed as of the day and year first above written.
Witnesses:
___________________________________ XXXXXXX COMPUTER
RESOURCES, INC.
___________________________________ By:________________________________
___________________________________ ___________________________________
XXXXXXX X. XXXXXX
____________________________________
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