Employment Agreement - Computer Products & Services Inc. and Edward G. Newman
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into effective the 1st day of
January, 1996, by and between COMPUTER PRODUCTS & SERVICES, INC., a
corporation organized under the laws of the Commonwealth of Virginia
(hereinafter referred to as "EMPLOYER"), and EDWARD G. NEWMAN (hereinafter
referred to as "EMPLOYEE").
INTRODUCTION
A. EMPLOYER is engaged in the business of developing, manufacturing and
marketing computer products including hardware, software and services.
B. EMPLOYEE has served as the President and Chief Executive Officer of
EMPLOYER since 1992.
C. EMPLOYER believes it essential to obtain during the term of this
Agreement the ongoing services of EMPLOYEE and EMPLOYEE has agreed to
continue his employment services during the term of this Agreement for
the benefit of the EMPLOYER.
D. By entering into the Agreement hereinafter set forth, the parties
hereto desire to memorialize their full agreement with respect to the
terms and conditions of the management services to be provided by
EMPLOYEE.
AGREEMENT
NOW, THEREFORE, for good and lawful consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. Employment. EMPLOYER hereby employs EMPLOYEE and EMPLOYEE hereby
accepts such employment, to serve as and in the capacity of President
and Chief Executive Officer of EMPLOYER upon and subject to the terms
and conditions set forth herein.
2. Term. The term of EMPLOYEE's engagement shall be for a period of three
(3) years from the date hereof commencing January 1, 1996 and
terminating December 31, 1998, unless sooner terminated in the manner
provided herein. The term of this Agreement and of the employment of
EMPLOYEE hereunder shall be automatically renewed for an additional
three (3)-year period on terms no less favorable to EMPLOYEE than those
set forth in this Agreement, unless either party gives the other party
written notice of termination of this Agreement at least sixty (60)
days prior to the termination of the initial term of this Agreement.
3. During the term of this Agreement, EMPLOYEE, shall devote his best
efforts, time, attention and energy to the business and affairs of
EMPLOYER. When he is acting as President and Chief Executive Officer,
EMPLOYEE shall perform all duties normally and properly incident to the
office or positions held by him and such further duties as may from time
to time be assigned to him by the Board of Directors of EMPLOYER. During
the term of this Agreement, EMPLOYEE shall not engage, directly or
indirectly, in any activities competitive with any business which is now
or which
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hereafter may be conducted by EMPLOYER. It is expressly agreed
that EMPLOYEE's position with Tech International of Virginia, Inc.
does not violate the terms of this Agreement.
4. Consideration.
a. The sum of One Hundred Fifty Thousand Dollars ($l50,000)
annually commencing January 1, 1996 and continuing
thereafter until January 1, 1997 when the annual base
compensation will be increased to One Hundred Ninety eight
Thousand Dollars ($198,000) payable in accordance with
EMPLOYER's customary payroll practice in effect for its
officers. The annual base compensation hereunder shall be
increased each year during the term of this Agreement by at
least the U.S. Consumer Price Index plus two percent (2%).
b. As additional consideration for EMPLOYEE's services,
EMPLOYER agrees to pay EMPLOYEE an annual cash bonus in an
amount equal to one and one half percent (1.5%) of
EMPLOYER's pretax income for each calendar year. Pretax
income, for purposes of the initial term of this Agreement,
shall mean the consolidated income before taxes as presented
in the EMPLOYER's audited financial statements for each
fiscal year, increased by research and development expenses
and payments required by this or other bonus or incentive
plans including non-cash charges related to warrants, stock
options and the like. For purposes of any additional term of
this Agreement, pretax income shall mean the consolidated
income before taxes as presented in EMPLOYER's audited
financial statements for each fiscal year, increased by
expenses related to this or other bonus or incentive plans,
including non-cash charges related to warrants, stock
options and the like. The total cash bonus paid hereunder
will be supplemented by the grant of a fully vested option
with a ten (10) year life to purchase shares of EMPLOYERS
common stock at a price per share equal to the average
equivalent sales price per share of EMPLOYER's common stock
during the ninety (90) day period immediately preceding the
effective date of this Agreement. The number of EMPLOYER's
shares of common stock granted to EMPLOYEE as part of this
option shall be determined by dividing the cash bonus earned
by the EMPLOYEE by the per share stock option price. In this
regard, in the event of a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger,
consolidation, rights offering or any other change in the
corporate structure or shares of EMPLOYER, or any of its
subsidiaries, the number and kind of shares subject to this
bonus and the price thereof shall be proportionately
adjusted so as to give EMPLOYEE the benefit of his agreement
to receive the stock at the stock sales price as set forth
above.
5. Expenses. EMPLOYER shall reimburse EMPLOYEE for all expenses reasonably
and necessarily incurred by him in the performance of his duties
hereunder consistent with EMPLOYER's policies covering expense
reimbursement for senior executives of the EMPLOYER, as such policies
may be modified from time to time.
6. Employment Benefits. During the term of this Agreement, EMPLOYEE shall
receive and be entitled to participate in all benefits customarily
offered to or conferred upon other executive officers and employees of
EMPLOYER also agrees to obtain a term life insurance policy on the life
of EMPLOYEE in the face amount of Two Million Dollars ($2,000,000)
which is to be made payable to the beneficiary or beneficiaries
designated by EMPLOYEE. EMPLOYER further agrees to pay all premiums on
the policy during the term of the employment provided herein.
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7. Termination of Employment. Upon the occurrence of any of the following
events and expiration of the period, if any, specified, this Agreement
and the employment of EMPLOYEE hereunder shall terminate:
a. Death of EMPLOYEE.
b. By mutual agreement of EMPLOYER and EMPLOYEE.
c. The failure of EMPLOYEE to cure a material default under this
Agreement within thirty (30) days after receiving written notice
of default from EMPLOYER.
d. The "disability" of EMPLOYEE. The term "disability" as used
herein, shall mean the inability or failure of EMPLOYEE, by
reason of any medically demonstrable physical or mental
condition, to perform his duties hereunder. The disability of
EMPLOYEE shall be deemed to have occurred if; (1) the issuer of
any disability income policy insuring EMPLOYEE shall have
determined that EMPLOYEE is disabled, whether partially or
totally, within the meaning of the provisions of such policy; (2)
EMPLOYEE shall be absent from work for a period of one hundred
twenty (120) consecutive business days all of which in the
aggregate shall be of more than one hundred fifty (150) business
days for any reason without the written consent of EMPLOYER, and
(3) EMPLOYER shall have received written opinions from two duly
licensed physicians that EMPLOYEE, by reason of any medically
demonstrable physical or mental condition, is unable to perform
his duties hereunder and will continue to be unable to perform
his duties for the foreseeable future or that the continued
performance of his duties will endanger his life.
8. Change in Control. Should a change in control of the EMPLOYER take
place, this Agreement shall remain binding on EMPLOYER or its successor
in interest. A "Change in Control" of EMPLOYER for purposes of this
Agreement shall mean someone other than EMPLOYEE serving as EMPLOYER's
Chairman of the Board of Directors, President or Chief Executive
Officer. However, in the event of a change in control, EMPLOYEE in his
sole discretion, shall have the right to terminate this Agreement and
shall be entitled to severance pay equal to the greater of the amount
received by EMPLOYEE during the previous two (2) calendar years of the
term of this Agreement, pursuant to Section 4 above, or two (2) times
the compensation due to EMPLOYEE pursuant to Section 4, above, at the
end of the then-current fiscal year.
9. Notices. All notices, requests and other communications hereunder shall
be in writing and shall be deemed to have been given only if mailed,
certified return receipt requested, or if sent by Federal Express or
other well recognized private courier ("Courier") or if personally
delivered to, or if sent by fax with the original thereof sent by
Courier to:
If to EMPLOYER at: Computer Products & Services, Inc.
12701 Fair Lakes Circle,
Suite 550
Fairfax, VA 22033
Fax:(703) 631-7070
If to EMPLOYEE at: 9541 Fostern Lane
Manassas,VA 22111
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All notices, requests and other communications shall be deemed received
on the date of acknowledgment or other evidence of actual receipt in
the ease of certified mail, Courier delivery or personal delivery or,
in the case of fax delivery, upon the date of fax receipt provided that
the original is delivered within two (2) business days. Any party
hereto may designate different or additional parties for the receipt of
notice, pursuant to notice given in accordance with the foregoing.
10. Attorneys' Fees. In the event of default hereunder, the defaulting
party shall be liable to the non-defaulting party for all expenses and
costs incurred by the non-defaulting party in protecting or enforcing
its right hereunder including but not limited to reasonable attorneys'
fees and costs.
11. Subject Headings. The subject headings of the paragraphs of this
Agreement are included solely for the purposes of convenience and
reference only, and shall not be deemed to explain, modify, limit,
amplify or aid the meaning, construction or interpretation of any of
the provisions of this Agreement.
12. Amendments. No supplement, modification or amendment of this Agreement
shall be binding or enforceable unless executed in writing by the
parties hereto.
13. Entire Agreement and Waiver. This Agreement contains the entire
agreement between the parties hereto concerning the subject matter
hereof and supersedes all prior and contemporaneous agreements,
arrangements, negotiations and understandings between the parties
hereto relating to the subject matter hereof. There are no other
understandings, statements, promises or inducements, oral or otherwise,
contrary to the terms of this Agreement. No representations,
warranties, covenants or conditions, express or implied, whether by
statute or otherwise, other than as set forth herein, have been made by
any party hereto. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or shall constitute, a waiver of any
other provision hereof, whether or not similar, nor shall such waiver
constitute a continuing waiver, and no waiver shall be binding unless
executed in writing by the party making the waiver.
14. Parties In Interest. Nothing in this Agreement, whether express or
implied, is intended to confer upon any person other than the parties
hereto and their respective heirs, representatives, successors and
permitted assigns, any rights or remedies under or by reason of this
Agreement.
15. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and permitted assigns.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
17. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with and shall be subject to the laws of the
Commonwealth of Virginia.
18. Further Documents. Each party agrees to execute and deliver, at any
time and from time to time, upon the request of the other parry, such
further instruments or documents as may be necessary or
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appropriate to carry out the provisions contained herein, and to take
such other action as the party may reasonably request to effectuate the
provisions of this Agreement.
19. Severability. Should any part, term or provision of this Agreement be
declared by a court of competent jurisdiction to be invalid, void or
unenforceable at law or in equity, it is the express intention of the
parties hereto that such part, term or provision shall be construed in
such manner as to provide for the enforcement thereof to the maximum
extent and in the broadest scope permitted under law and all remaining
parts, terms and provisions hereof shall remain in full force and
effect and shall in no way be invalidated, impaired or affected
thereby.
20. Interpretations and Definitions. The parties agree that each party and
its counsel have reviewed and revised this Agreement and that any rule
of construction to the effect that ambiguities are to be resolved
against the drafting party shall not apply in the interpretation of
this agreement
21. Miscellaneous. Time is hereby declared to be of the essence of each
provision of this Agreement. This Agreement sets forth the entire
understanding between the parties hereto with respect to all matters
referred to herein and the provisions hereof may not be changed,
modified or supplemented either wholly or in part except by written
instrument signed by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date set forth at the beginning.
EMPLOYER: COMPUTER PRODUCTS & SERVICES, INC.,
a Virginia Corporation
By:
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EMPLOYEE:
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EDWARD G. NEWMAN
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