XXXXXXX COMPUTER RESOURCES OF SOUTH CAROLINA, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of this ____ day of _________,
1997, by and between XXXXXXX COMPUTER RESOURCES OF SOUTH
CAROLINA, INC., a South Carolina corporation ("Company"),
and XXXXXX X. XXXXXXXX ("Employee").
W I T N E S S E T H:
WHEREAS, Employee has exchanged 7,500 shares of the
common capital stock of The Computer Store, Inc., a South
Carolina corporation ("CSI") pursuant to an Agreement and
Plan of Reorganization ("Plan") of even date pursuant to
Section 368(a)(2)(D) of the Internal Revenue Code whereby
CSI was acquired by a merger into Company in exchange for
certain stock of Xxxxxxx Computer Resources, Inc., a
Delaware corporation, ("PCR"), the parent corporation of
Company, and other consideration as set forth in the Plan;
and
WHEREAS, Employee, as inducement for and in
consideration of Company entering into the Plan, has agreed
to enter into and execute this Employment Agreement pursuant
to Section 4 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
17th day of October, 1997, and shall continue for a period
of three (3) years (October 17, 1997 to October 16, 2000)
unless terminated earlier pursuant to the provisions of
Section 10, provided that Sections 8, 9, 10(b), 10(c) if
applicable, 11 if applicable, and 20 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 intent not to renew the terms of the
Agreement thirty (30) days prior to the expiration of the
then expiring term. Employee's base salary for each renewal
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term shall be determined by the Board of Directors of
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 Business
Services Manager of the Company. Employee shall be
responsible to and report directly to the Vice President of
the Company. 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 devote his 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 further agrees to refrain during the term of this
Agreement from making any sales of competing services or
products or from profiting from any transaction involving
computer services or products for his account without the
express written consent of Company.
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: During the term of this
Agreement, Employee shall be paid an annual base salary of
Seventy Two Thousand Dollars ($72,000.00) per year. Said
annual base salary shall be payable semi-monthly.
(b) Bonus: In addition to Employee's base salary
commencing on January 6, 1998 for the first full year of the
initial term of this Agreement (January 6, 1998 through
January 5, 1999), Employee shall be entitled to a cash bonus
and an incentive stock option award in the event Employee
satisfies certain economic criteria pertaining to Company's
performance as set forth as follows:
(i) Gross sales of Company greater than
$10,000,000 but less than or equal to $12,000,000 with NPBT
greater than three percent (3%) equals $5,000 cash bonus
plus 300 incentive stock options of PCR Stock; or
(ii) Gross sales of Company greater than
$12,000,000 but less than or equal to $13,000,000 with NPBT
greater than three percent (3%) equals $7,500 cash bonus
plus 600 incentive stock options of PCR Stock; or
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(iii) Gross sales of Company greater than
$13,000,000 with NPBT greater than three percent (3%) equals
$10,000 cash bonus plus 1,000 incentive stock options of PCR
Stock.
For purposes of this section, the term
"gross sales" shall mean gross sales of equipment, software
and services by Company. For purposes of this section, the
term "net profits before taxes" shall mean the net pre-tax
profits of Company during the applicable period set forth
above. In making said gross sales determination and net
pre-tax profits determinations, all gains and losses
realized on the sale or other disposition of Company assets
not in the ordinary course of business shall be 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 as bad debt during
such period in accordance with Company's accounting system.
Such gross sales and net pre-tax margin of Company shall be
determined by the independent accountant regularly retained
by Company within ninety (90) days after the end of each
year in accordance with generally accepted accounting
principles and the determination by the accountant shall be
final, binding and conclusive upon all parties hereto.
Commencing January 6, 1998, in making said determination of
the applicable pre-tax margin for Company, a 1.5 MAS royalty
fee on gross sales shall be paid to PCR incident to said
determination. For each subsequent year, during the initial
term of this Agreement the parties shall, in good faith,
agree upon an MAS royalty fee to be charged hereunder based
on the level of services and support being provided to the
Company by PCR; provided, however, such royalty fee shall be
1.5% if the parties are unable to come to an amount for each
subsequent year. Any cash bonus earned hereunder shall be
payable to Employee within thirty (30) days of the
determination by the accountant. Incident to the
determination of Company's net profit before taxes, no
compensation of any executive or other employee of PCR or
its affiliates shall be allocated to Company. Except as set
forth above, no other administrative, overhead or any other
expense of PCR shall be allocated to Company. It being the
intent of the parties that Company shall exercise the utmost
good faith with respect to the implementation of this
provision.
(iv) Any award of an incentive stock option
to acquire stock of the Company shall be the fair market
value of such stock as of January 5, 1999 and shall be
subject to all conditions contained in the PCR's Non-
Qualified Incentive Stock Option Plan. For purposes of this
Agreement, the fair market value as of the applicable date
shall mean with respect to the common shares, the average
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between the high and low bid and asked prices for such
shares on the NASDAQ Exchange 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).
(v) The parties agree that in January of
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 an incentive stock
option award for the remaining fiscal years of this
Agreement which will be predicated upon the attainment by
Company of certain economic criteria established at the
outset of such calendar year. Such bonus plan for the
remaining term of this Agreement shall be consistent with
other of PCR management personnel holding a position similar
to that of Employee.
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 medical health and insurance coverage
maintained by or for the benefit of the 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 two (2) weeks 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) Automobile Use - Company shall provide
Employee with an automobile allowance of Two Hundred Fifty
Dollars ($250.00) per month during the term of this
Agreement. Employee shall be responsible for all
maintenance and repair to such vehicle and for the insurance
coverage thereof.
(d) Retirement Plan - Employee shall participate,
after meeting eligibility requirements, in any qualified
retirement plans and/or welfare plans maintained by or for
the benefit of the Company during the term of this
Agreement. For purposes of eligibility in any qualified
retirement plans, Employee shall be given credit for prior
years of service with CSI.
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 other reasonable and customary
expenses incurred by Employee in fulfilling Employee's
duties and responsibilities hereunder, provided that such
expenses are incurred and accounted for in accordance with
the policies and procedures reasonably established by
Company.
8. Non-Competition. Employee expressly acknowledges
the provisions of Section 3 of the Plan relating to
Employee's covenant not to compete with Company.
Accordingly, such provisions of Section 3 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 one of three
owners of the common stock of CSI, he has received
substantial consideration pursuant to such Plan and that as
an inducement for, and in consideration of, Company and PCR
entering into the Plan and Company entering into this
Agreement, Employee has agreed to be bound by such
provisions of Section 3 of the Plan. Accordingly, such
provisions of Section 3 and Exhibit D-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 non-public information" as such
phase is used for purposes of the Securities Exchange Act of
1934, as amended;
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
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disclose any such trade secrets or confidential or
proprietary information (except (i) information which
becomes publicly available without violation of this
Employment Agreement, (ii) information 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 or by governmental agency), 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 five (5) years
after the termination of his employment; 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.
(e) For purposes of this provision, the term
"Company's trade secrets" and "confidential information"
shall include such information of Company's parent company,
PCR, and any of their respective subsidiaries.
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;
(iv) By the Company, for cause upon three (3)
day's written notice to Employee. For purposes of this
Agreement, the term "cause" shall mean termination upon:
(i) the failure by Employee to substantially perform his
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 substantially performed his duties;
(ii) the engaging by Employee in wrongful 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 or
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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 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 in
good faith that he has engaged in the conduct set forth
above in this Section 10(a)(iv) and specifying the
particulars thereof in detail, and Employee shall not have
cured such conduct to the reasonable satisfaction of the
Board within ten (10) days of receipt of such resolution.
(v) 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).
(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 Section 5(b).
(c) Severance. In the event that Company would
terminate Employee's employment hereunder without cause
pursuant to Section 10(a)(v), 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
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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 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 South Carolina
and shall not be modified 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 mailed by certified or registered
mail, return receipt requested, postage prepaid:
If to Company, to: Pomeroy Computer Resources of South
Carolina, Inc.
c/o 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
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If to Employee, to the Employee's residential address,
as set forth in the Company's records.
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, either in 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 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 disability, 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 the 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 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
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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, pursuant to this
Agreement, the prevailing party shall be entitled to recover
from the non-prevailing party, the prevailing party's
reasonable attorney's fees and costs.
IN WITNESS WHEREOF, this Agreement has been executed
effective as of the day and year first above written.
WITNESSES: COMPANY:
XXXXXXX COMPUTER RESOURCES OF
SOUTH CAROLINA, INC.
_________________________
By:______________________________
_________________________
EMPLOYEE:
_________________________
_________________________________
XXXXXX X. XXXXXXXX
_________________________
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