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 XXXXXXXXXX
("Employee").
WHEREAS, on the 28TH day of May, 2001, the Company and Employee executed an
Employment Agreement ("Agreement") whereunder Employee agreed to serve as Vice
President of Finance and Administration of the Company;
WHEREAS, thereafter, on or about August 10, 2001, Employee was promoted to
the position of Chief Financial Officer of the Company and he has continued to
serve in such capacity since that time; and
WHEREAS, Company and Employee 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 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.
2. The first sentence of Section 4 shall be amended as follows:
4. Duties. Employee shall serve as Chief Financial Officer of the Company
------
and shall report directly to the President of the Company.
3. Section 5 shall be amended by deleting Sections 5(a), 5(d)(ii), 5(e), and
5(f) of the Agreement in their entirety and replacing them with the
following:
5. Compensation. For all services rendered by the Employee, compensation
------------
shall be paid to Employee as follows:
(a) Base Salary. Effective June 1, 2002, Employee's base annual
------------
salary shall be $200,000.00. 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
1
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.
(d) Quarterly Bonus.
-----------------
(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 $10,000.00 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 $15,000.00; or, if
Company's NPBT is greater than 5.0%, 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.
(e) Year End Bonus based on Company's Performance/Results.
-----------------------------------------------------------
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 $25,000.00 in cash or stock and 5,000 stock
options; if Company generates gross sales in excess of
$900,000,000.00 for fiscal year 2002, Employee shall be entitled
to receive $50,000.00 in cash or stock and 10,000 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
$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 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.
2
(f) Signing Bonus.
---------------
(i) The Company hereby agrees to provide Employee with a
signing bonus, in the form of 15,000 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 15,000.00 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 15,000 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 15,000
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).
4. Section 5 of the Agreement shall be amended by adding the following new
subsection (h) as provided below:
5(h) Management Based Objective. Employee shall be eligible to
----------------------------
receive a quarterly bonus as stated below for each quarter of
fiscal 2002 if the
3
Company's total outstanding vendor receivables (also known as
"rebated dollars") are less than the following thresholds: If the
Company's total outstanding vendor 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; If the Company's
total outstanding vendor 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 vendor 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. This Management Based Objective bonus,
as provided for hereinabove, shall be in effect for fiscal year
2002 only.
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 XXXXXXXXXX
____________________________________
4
