XXXXXXX COMPUTER RESOURCES, INC.
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This Second Amendment to Employment Agreement ("Second Amendment") is made
as of the 5th day of March, 2003, 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 entered
into an Employment Agreement ("Agreement");
WHEREAS, thereafter, on March 2, 2002, the Company and Employee entered
into a First Amendment to Employment Agreement; and
WHEREAS, Company and Employee desire to enter into this Second 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, compensation
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shall be paid to Employee as follows:
(a) Base Salary. Employee's base annual salary shall be $200,000.00.
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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: if Company's net profit before taxes for
fiscal year 2003 is greater than 5.0% for such fiscal period,
Employee's annual base salary for the final year of the three (3) year
term provided under the First Amendment shall be automatically
increased by $25,000.00.
(d) Quarterly Bonus.
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(i) DSO Bonus. Employee shall be eligible to receive a 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 50 days for
the applicable quarter, Employee shall be entitled to receive a
cash bonus of $12,500.00; if the average DSO's are less than 48
for the applicable quarter, Employee shall be entitled to receive
a cash bonus of $17,500.00; or if the average DSO's are less than
46 days for the applicable quarter, Employee shall be entitled to
receive a cash bonus of $25,000.00. The parties mutually agree
that the thresholds set forth herein above shall be subject to
further review after the close of the company's second fiscal
quarter of 2003. Any modification of the quarterly bonus
provision set forth in this Section shall be done in writing and
signed by both parties.
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(ii) NPBT Bonus. 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 $7,500.00 for the quarter; if Company's
NPBT for the applicable quarter is greater than 4.5%, Employee
shall be entitled to receive a cash bonus of $12,500.00; or, if
Company's NPBT is greater than 5.0%, Employee shall be entitled
to receive a cash bonus of $15,000.00. 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 parties mutually agree that
the thresholds set forth herein above shall be subject to further
review after the close of the company's second fiscal quarter of
2003. Any modification of the quarterly bonus provision set forth
in this Section shall be done in writing and signed by both
parties.
(e) Year End Bonus based on Company's Performance/Results. Employee
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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 4.0% for fiscal year 2003; and (ii)
Company's gross sales are in excess of the following thresholds: If
Company generates gross sales in excess of $750,000,000.00 for fiscal
year 2003, 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 $775,000,000.00 for fiscal year 2003, 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
$800,000,000.00 for fiscal year 2003, 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 2002 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 Second 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 2003 only.
(h) Management Based Objective ("MBO"). Employee shall be eligible to
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receive a one-time, lump sum bonus up to $20,000.00 at the end of the
Company's fiscal 2003 if the Company's total outstanding vendor
receivables are reduced from $2,800,000.00 to zero by the end of
fiscal 2003. The President of the Company shall retain the sole and
complete discretion to determine the dollar amount of the bonus, if
any, which shall be paid to Employee under this MBO. For purposes of
this section, "vendor 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 accounts.
In no event shall the term "vendor receivables," as defined herein
above, include receivables related to the Company's customer trade
accounts. This Management Based Objective bonus, as provided for
hereinabove, shall be in effect for fiscal year 2003 only.
2. Section 6(f) of the Agreement shall be amended by replacing any and all
references therein to $300,000.00 to $500,000.00. Accordingly, the Company
shall increase the term life insurance policy that it maintains on the life of
Employee, pursuant to Section 6(f) of the Agreement, from $300,000.00 to
$500,000.00.
Except as modified by this Second Amendment to Employment Agreement, the
parties affirm and ratify the terms and conditions of the Agreement and First
Amendment thereto.
IN WITNESS WHEREOF, this Second Amendment to Employment Agreement has been
executed as of the day and year first above written.
Witnesses:
___________________________________ XXXXXXX COMPUTER
RESOURCES, INC.
___________________________________ By:______________________________
___________________________________ ________________________________
XXXXXXX XXXXXXXXXX
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