XXXXXXX IT SOLUTIONS, INC.
THIRD AMENDMENT TO EMPLOYMENT AGREEMENT
This Third Amendment to Employment Agreement ("Second Amendment") is made
as of the 7th day of March, 2005, by and between XXXXXXX IT SOLUTIONS, INC., a
Delaware corporation ("Company"), and XXXXXXX XXXXXXXXXX ("Employee").
WHEREAS, on the 28TH day of May, 2001, the Company and Employee entered
into an Employment Agreement ("Agreement");
WHEREAS, thereafter, on March 2, 2002, and March 11, 2003, the Company and
Employee entered into a First Amendment to Employment Agreement and Second
Amendment to Employment Agreement, respectively; and
WHEREAS, Company and Employee desire to enter into this Third 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 5 shall be amended by deleting Sections 5(a), 5(d)(i) and
(ii), 5(e) and 5(h) of the First Amendment in their entirety and replacing
them with the following:
5. Compensation. For all services rendered by the Employee,
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compensation shall be paid to Employee as follows:
(a) Base Salary. Employee's base annual salary shall be $225,000.00.
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Employee's base annual salary shall be increased to $250,000.00
in the event the Company meets or exceeds the second benchmark
established herein below in order for Employee to be eligible for a
fiscal 2005 Year End Company Bonus. Such benchmark is as follows: The
Company's Gross Sales must be greater than $950,000,000.00, with a
minimum of 3.5% net profit before taxes (NPBT).
(b) Quarterly Bonuses.
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(i) 2005 DSO Bonus. Employee shall be eligible to receive a
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quarterly bonus based upon the average "days sales are
outstanding" ("DSO"), as reflected on the financial statements
for the consolidated company for the respective quarterly period
as follows: in the event the average DSO's are less than 52 days
for the applicable quarter, Employee shall be entitled to receive
a cash bonus of $10,000.00; if the average DSO's are less than 50
for the applicable quarter, Employee shall be entitled to receive
a cash bonus of $15,000.00; or if the average DSO's are less than
48 days for the applicable quarter, Employee shall be entitled to
receive a cash bonus of $20,000.00.
(ii) 2005 NPBT Bonus. Employee shall also be eligible to
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receive a
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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 3.0%, Employee shall be entitled to
receive a cash bonus of $10,000.00 for the quarter; if Company's
NPBT for the applicable quarter is greater than 3.5%, Employee
shall be entitled to receive a cash bonus of $15,000.00; or, if
Company's NPBT is greater than 4.0%, Employee shall be entitled
to receive a cash bonus of $20,000.00. 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.
(iii) The quarterly bonus schedules provided above are in
effect for fiscal year 2005, commencing on January 6, 2005
and ending on January 5, 2006. For each subsequent year of this
Agreement, the parties agree that they shall, in good faith,
negotiate and agree upon the performance criteria for any such
quarterly bonuses.
(c) Year End Bonus based on Company's 2005 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 (i) the Company achieves a net
profit before taxes ("NPBT") greater than 3.5% for fiscal year 2005;
and (ii) Company's gross sales are in excess of the following
thresholds: If Company generates gross sales in excess of
$925,000,000.00 for fiscal year 2005 Employee shall be entitled to
receive $50,000.00 in cash or stock and 5,000 stock options; if
Company generates gross sales in excess of $950,000,000.00 for fiscal
year 2005, Employee shall be entitled to receive $75,000.00 in cash or
stock and 10,000 stock options; or if Company generates gross sales in
excess of $975,000,000.00 for fiscal year 2005, Employee shall be
entitled to receive $100,000.00 in cash or stock and 15,000 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 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 Third 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 2005 only. For each subsequent year, the
parties agree that they shall, in good faith, negotiate and agree upon
performance criteria for any such year-end bonuses.
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2. Signing Bonus. The Company hereby agrees to provide Employee with a
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signing bonus, in the form of 20,000 fully vested stock options, as
additional consideration for his execution of and agreement to the terms of
this Third Amendment. Employee understands that the Company's award of such
stock options is contingent upon his execution of this Agreement 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 20,000 shares of
common stock, .01 par value, of Xxxxxxx IT Solutions, Inc., which shall be
fully vested and subject to a five (5) year vesting schedule and any other
conditions contained in the Xxxxxxx IT Solutions, 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 IT Solutions, Inc.,
shall be at the fair market value of such common stock as of the applicable
date. For purposes of this Agreement, 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).
Except as modified by this Third Amendment to Employment Agreement, the
parties affirm and ratify the terms and conditions of the Agreement and First
Amendment thereto.
IN WITNESS WHEREOF, this Third Amendment to Employment Agreement has been
executed as of the day and year first above written.
Witnesses:
___________________________________ XXXXXXX IT SOLUTIONS, INC.
___________________________________ By:________________________________
XXXXXXX X. XXXXXXX
___________________________________ ___________________________________
XXXXXXX XXXXXXXXXX
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