**EMPLOYMENT AGREEMENT**

This Employment Agreement ("Agreement") is made and enteredinto by and between Robert Newton ("Employee") and PC Mall, Inc. ("PC Mall" orthe "Company"), effective June 8, 2004 (the "Effective Date"). 

**RECITALS**

A.                    PC Mall is a rapid response directmarketer of computer hardware, software, peripheral, and electronics products. The Company engages in the highly competitive market of offering hardware,software, peripherals, components, and accessories for users of computerproducts, as well as electronic equipment.

B.                     The Company has spent significanttime, effort, and money to acquire and develop certain goodwill and ProprietaryInformation (as defined below) that it considers vital to its business, andwhich has become of great value to PC Mall in amassing its clientele andmaintaining its operations.  

C.                    The Company also has developed asubstantial body of Proprietary Information regarding the methods and systems ofoperation, which is used by the Company for the acquisition and management ofclient accounts.  PC Mall has also acquired, at great expense and time,Proprietary Information regarding the particularized needs of its clientele,including information regarding its client's finances, marketing, operations,and product needs.  The Company has, at all times, kept its ProprietaryInformation secret, and such information has given the Company a competitiveadvantage over others engaged in the same type of business.

D.                    The Company desires to employEmployee as General Counsel of PC Mall, Inc.  Employee desires to accept suchemployment with the Company on the terms and conditions set forth in thisAgreement.

**TERMS OF EMPLOYMENT**

NOW, THEREFORE, in consideration of the benefits to bederived from the mutual observance of the agreements and covenants hereinaftercontained, the parties agree, covenant, and represent as follows:

1.         Position And Responsibilities.

1.1       Employment.  The Company hereby employsEmployee as the General Counsel of PC Mall, Inc.  Employee will work at theCompany's headquarters in Torrance, California, or at such other location as PCMall may from time to time direct.  Employee shall perform all servicesappropriate to his position as General Counsel, as well as such other servicesas may be assigned from time to time by the Company.  The Company shall retainfull discretion and control over the means and methods by which Employeeperforms the above services, and of the places that Employee renders suchservices.

1.2       Devotion Of Time To The Business. Employee shall devote his entire professional time to his employment with PCMall, and shall expend his best efforts on behalf of the Company.  Employeeagrees to abide by all policies, rules, regulations, and decisions adopted bythe Company during the Employee's employment with the Company.  Except uponprior written consent by the Company, Employee will not, during any time he isemployed by the Company:  (i) accept any other employment; or (ii) engage,directly or indirectly, in any other business activity (whether or not pursuedfor pecuniary advantage) that might interfere with Employee's duties andresponsibilities under this Agreement or create a conflict of interest with theCompany. 

2.         Warranties And Conditions Of Employment.

2.1       Employee represents and warrants that he will notuse for the benefit of, disclose to the Company, or induce the Company to useany confidential or proprietary information belonging to any former employer orany other entity unless he has the advance, written permission from the employeror entity to do so, or unless the Company has been granted such permission.

2.2       Employee represents and warrants that he has notentered into any agreements or understandings with any former employer or entitythat would affect his ability to work for, or devote his full and best effortsto his employment with the Company.

3.         Compensation And Benefits.

3.1       Base Salary.  As compensation forEmployee's services, the Company will pay to Employee an annual base salary inthe gross amount of $250,000 (the "Base Salary"), payable in accordance with theCompany's regularly established payroll practices.

3.2       Annual Bonus:  Employee will be eligibleto earn an annual bonus in the total amount of $50,000, which will be paidquarterly in accordance with the Company's existing, or to be established,annual bonus plan or program.  The Company's annual bonus plan or program issubject to change from time to time by the Company in its sole discretion.  TheCompany guarantees that Employee will receive the full amount of $12,500 (gross)for the first full quarter in which he is employed by the Company.  Thereafter,no bonus quarterly bonus installment will be guaranteed to Employee.

   3.3       Payment of State Bar Dues and EducationExpenses Related to License.  PC Mall shall pay for Employee's licenserenewal fees for the State Bar of California.  PC Mall shall also reimburseEmployee for all education expenses associated with Employee's efforts tomaintain his license to practice law in the State of California.

3.4       Stock Options.  Subject to approval by theCompany's Board of Directors, Employee will be granted an option to purchase anaggregate of 50,000 shares of the Company's common stock (the "Option") at anexercise price equal to the closing price (i.e. the last sale price) of theCompany's common stock on June 8, 2004.  The Option shall vest in equalquarterly installments over a period of three years.  The option agreement willprovide for partial acceleration of vesting in the event of a Change in Controlinvolving the Company (as defined in the Stock Incentive Plan) as follows: theOption will vest as to the next four unvested quarterly installments, if any,together with a prorated portion of the remaining unvested quarterlyinstallment.  Vesting of Employee's option will be subject to Employee'scontinued employment by the Company.  The Option shall expire 90 days afterEmployee's termination of employment by the Company.  Employee's entitlement tothe Option is conditioned upon the execution by Employee and the Company of astock option agreement and shall be subject to its terms and the terms of theStock Incentive Plan.

3.5       Benefits.  Employee shall be eligible toparticipate in the Company's benefit plans made generally available to similarlysituated employees of the Company, including group medical, life and disabilityinsurance, and retirement programs.  Employee's eligibility to participate inthe Company's benefit plans shall be in accordance with the terms of the benefitplans established by the Company or the governing plan documents, which may beamended from time to time in the Company's sole discretion.

  3.6       Vacation.  Employee shall be entitled totake paid vacation pursuant to the Company's existing policies regarding paidvacations.  Employee will accrue four weeks of paid vacation per year. Employee's vacation time will accrue on a monthly basis at a rate of 1.66 daysper month.  Vacation time that is not used may be carried over to the nextcalendar year, but Employee will cease to accrue vacation time beyond his annualentitlement (i.e., 20 days).  Vacation accruals will recommence after Employeehas taken vacation and his accrued vacation time has dropped below the maximumannual entitlement. 

3.7       Withholdings.  The Company shall have theright to deduct and withhold amounts from all payments as required underapplicable law.  Additional amounts may be withheld from payments to the extentsuch withholding is authorized in writing by Employee.

4.         Employment At Will. 

4.1       At any time, the Company or Employee mayterminate Employee's employment for any reason, or no reason at all, with orwithout cause, and without prior notice.  The Company will pay Employee allcompensation then due and owing.  Thereafter, all of the Company's obligationsunder this Agreement shall cease.  The Company may discipline, demote, ordismiss Employee as provided in this Section notwithstanding anything to thecontrary contained in or arising from any statements, policies, or practices ofthe Company relating to the employment, discipline, or termination of itsemployees.

4.2       If, however, the Company terminates Employee'semployee without Cause (as defined below in Section 4.4) at any point, uponexecution of a severance and release agreement that is acceptable to theCompany's Board of Directors and that contains, among other things, a releaseprovision, PC Mall shall pay Employee the equivalent of three months of BaseSalary.  This severance payment will be paid in equal installment over a periodof three months.  After the Company has satisfied its severance paymentobligations under this Section, all obligations of the Company under thisAgreement shall immediately cease.

4.3       Notwithstanding Section 4.2, the Company mayterminate Employee's employment for Cause at any time, without prior notice, andwithout any obligation to pay any severance.  If Employee is terminated forCause, the Company shall pay Employee all compensation to which he is entitledup through the date of termination and thereafter, all obligations of theCompany shall immediately cease.

4.4       For purposes of this Agreement, the term "Cause"shall mean: (i) a material breach of any term set forth in this Agreement; (ii)Employee's failure to follow the reasonable instructions of the Company; (iii)misconduct on Employee's part that is materially injurious to the Company,monetarily or otherwise, including misappropriation of trade secrets, fraud, orembezzlement; (iv) Employee's conviction for fraud or any other felony; or  (v)if Employee exhibits in regard to his employment unavailability for service,misconduct, dishonesty, or habitual neglect. 

5.         Termination Obligations.

  5.1       Resignation From All Offices And Directorships. In the event Employee's employment is terminated for any reason, Employee shallbe deemed to have resigned voluntarily from all offices, directorships, andother positions held with the Company, if he was serving in any such capacitiesat the time of termination.

5.2       Cooperation With The Company.  In theevent that Employee's employment is terminated for any reason, Employee willcooperate with the Company in the winding up or transferring to other employeesany pending work or projects.  Employee will also cooperate with the Company inthe defense of any action brought by any third party against the Company thatrelates to Employee's employment with the Company.

5.3       Return Of Documents And Other Information. Employee agrees that all property, including, without limitation, all equipment,tangible Proprietary Information, documents, books, records, reports, notes,contracts, lists, computer disks (and other computer-generated files and data),and copies thereof, created on any medium and furnished to, obtained by, orprepared by Employee in the course of, or incident to his employment, belongs tothe Company and shall be returned promptly to the Company upon termination ofEmployee's employment for any reason.

5.4       Termination Of Benefits.  All benefits to whichEmployee is otherwise entitled shall cease upon Employee's termination, unlessexplicitly continued either under this Agreement or under any specific writtenpolicy or benefit plan of the Company.

6.         Proprietary Information; Non-Disclosure; andNon-Solicitation.

  6.1       Proprietary Information:  For purposes ofthis Agreement, "Proprietary Information" means all information and any idea inwhatever form, tangible or intangible, whether disclosed to or learned ordeveloped by Employee, pertaining in any manner to the business of the Companyor to the Company's affiliates (including subsidiaries), consultants, customers,and business associates, unless:  (i) the information is or becomes publiclyknown through lawful means; (ii) the information was rightfully in Employee'spossession or part of my general knowledge prior to his employment by theCompany; or (iii) the information is disclosed to Employee without confidentialor proprietary restriction by a third party who rightfully possesses theinformation and did not learn of it, directly or indirectly, from the Company. Employee further understands that the Company considers the followinginformation to be included, without limitation, in the definition of ProprietaryInformation:  (a) techniques, development tools and processes, computerprintouts, computer programs, design manuals; (b) information about costs,profits, revenues, margins and markets; (c) plans for future development and newproduct concepts; (d) customer names, addresses, telephone numbers, facsimilenumbers, credit card numbers, contact persons and customer preferences; (e)vendor names, addresses, telephone numbers, facsimile numbers, contact persons,vendor preferences and pricing; (f) marketing plans, bidding information, costsof product, services and other items, proposal information, proposal methods andpolicies, price schedules, product profit margins, price setting methods andpolicies, customer service methods and policies and service plans and policies;(g) product plans, product development plans, product specifications, sources ofsupply, methods of operation and related materials conceived, created or reducedto practice in the performance of services for the Company; (h) the Company'sbusiness plans, accounting records, computer records, computer systems,networking and telecommunication systems, management information systems andprograms, audits and other financial data related to products and servicesprovided by the Company; (i) labor rates, commission rates and plans, commissionschedules, employee lists, employee performance evaluations and relatedinformation, employee titles, outside contracting sources and rates, benefitcosts and research reports; and (j) all documents, books, papers, and other dataof any kind and description, including electronic data recorded or retrieved byany means, that have been or will be given to Employee by the Company (or anyaffiliate of it), as well as written or verbal instructions or comments.

  6.2       Non-Disclosure.  Employee agrees that hiswork with the Company will involve access to and creation of ProprietaryInformation.  Employee further agrees to hold all Proprietary Information instrict confidence and never to use or disclose any Proprietary Information toanyone at any time, including after the termination of his employment, except tothe extent necessary to carry out his responsibilities as an employee of theCompany, or as specifically authorized in writing by an authorized officer ofthe Company, other than Employee.

6.3       Location And Reproduction.  Employee shallmaintain at his work station and any other place under his control only suchProprietary Information as he has a current "need to know."  Employee shallreturn to the appropriate person or location or otherwise properly dispose ofProprietary Information once that need to know no longer exists.

  6.4       Return Of Third Party Information:Employee represents and warrants that he has returned all property, information,and trade secrets belonging to all prior employers, if any.

  6.5       Non-Solicitation: Employee understands andagrees that, because of his responsibilities at the Company, he will help todevelop, and will be exposed to the Company's business strategies, informationon customers and clients, and other valuable Proprietary Information, and thatuse or disclosure of such Proprietary Information in breach of this 

 Agreement would be extremely difficult to detect orprove.  Employee acknowledges that the Company's relationships with itsemployees, customers, clients, vendors, and other persons are valuable businessassets.  Therefore, Employee agrees as follows:

                                                (a)   Employee shall not, for a period of two years after he is no longer employed bythe Company, directly or indirectly solicit, induce, recruit, or encourage anyofficer, director, or employee of the Company, or any of the Company'saffiliates, to leave the Company or terminate his or her employment with theCompany;

                                               (b)    Employee shall not, for a period of one year after he isno longer employed by the Company:  (i) divert or attempt to divert any businessfrom the Company or any of the Company's affiliates; (ii) interfere with anybusiness relationship or contract between the Company, including the Company'saffiliates, and any of its customers, clients, members, vendors, businesspartners, or suppliers; or (iii) for the purpose of selling products or servicescompetitive with the Company's or the Company's affiliates, solicit any person,firm, corporation or entity of any kind, that was a customer, client orprospective client of the Company at any time during the one year periodpreceding the termination date of Employee's employment.

6.6       Injunctions.  Employee acknowledges thatthe restrictions contained in Section 6 are reasonable and necessary in view ofthe nature of Company's businesses, in order to protect the legitimate interestsof Company, and that any violation thereof would result in irreparable injury toCompany.  Therefore, Employee agrees that, in the event of a breach orthreatened breach by Employee of the provisions of the paragraphs above, theCompany shall be entitled to obtain from any court of competent jurisdiction,preliminary and permanent injunctive relief restraining Employee from anyviolation of the foregoing.  

7.         Arbitration.

7.1       The Company and Employee hereby agree that, tothe fullest extent permitted by law, any and all claims or controversies betweenthem (or between Employee and any present or former officer, director, agent, oremployee of the Company or any parent, subsidiary, or other entity affiliatedwith the Company) shall be resolved by final and binding arbitration.

  7.2       Claims subject to arbitration shall include,without limitation, contract claims, tort claims, claims relating tocompensation and stock options, as well as claims based on any federal, state,or local law, statute, or regulation, including but not limited to any claimsarising under Title VII of the Civil Rights Act of 1964, the Age Discriminationin Employment Act, the Americans with Disabilities Act, and the California FairEmployment and Housing Act.  However, claims for unemployment benefits, workers'compensation claims, and claims under the National Labor Relations Act shall notbe subject to arbitration.

  7.3       Any arbitration proceeding shall be conducted inaccordance with the National Rules for the Resolution of Employment Disputes ofthe American Arbitration Association ("the AAA Rules").  The arbitrator shallapply the same substantive law, with the same statutes of limitations and sameremedies that would apply if the claims were brought in a court of law. 

7.4       Either the Company or Employee may bring anaction in court to compel arbitration under this Agreement and to enforce anarbitration award.  Otherwise, neither party shall initiate or prosecute anylawsuit or claim in any way related to any arbitrable claim, including withoutlimitation any claim as to the making, existence, validity, or enforceability ofthe agreement to arbitrate.  Nothing in this Agreement, however, precludes aparty from filing an administrative charge before an agency that hasjurisdiction over an arbitrable claim.  Moreover, nothing in this Agreementprohibits either party from seeking provisional relief pursuant to Section1281.8 of the California Code of Civil Procedure

.7.5       All arbitration hearings under this Agreementshall be conducted in Los Angeles, California, unless otherwise agreed by theparties.  The arbitration provisions of this  Agreement shall be governed by theFederal Arbitration Act ("FAA"), unless the FAA does not apply, in which casethe California Arbitration Act shall apply.  In all other respects, thisAgreement shall be construed in accordance with the laws of the State ofCalifornia, without reference to conflicts of law principles.

7.6       Each party shall pay its own costs and attorney'sfees, unless a party prevails on a statutory claim, and the statute providesthat the prevailing party is entitled to payment of its attorneys' fees.  Inthat case, the arbitrator may award reasonable attorneys' fees and costs to theprevailing party as provided by law. The Company agrees to pay the costs andfees of the arbitrator to the extent required by law.

7.7       The parties also understand and agree that thisagreement  constitutes a waiver of their right to a trial by jury of any claimsor controversies covered by this agreement.  the parties agree that none ofthose claims or controversies shall be resolved by a jury trial.

   8.         Severability.

8.1       Severability Of Unenforceable Provisions. The provisions of this Agreement are severable.  In the event that any one ormore of the provisions contained in this Agreement, or the application thereofin any circumstances is held invalid, illegal, or unenforceable in any respectfor any reason, the validity and enforceability of any such provision in everyother respect and of the remaining provisions of this Agreement shall not be inany way impaired or affected, it being intended that all of the rights andprivileges contained in this Agreement shall be enforceable to the fullestextent permitted by law.

8.2       Scope.  To the extent that any provisionhereof is deemed unenforceable by virtue of its scope, but could be enforceableby reducing the scope, Employee and the Company agree that same shall beenforced to the fullest extent permissible under the laws and public policiesapplied in the jurisdiction in which enforcement is sought, and that the Companyshall have the right, in its sole discretion, to modify such invalid orunenforceable provision to the extent required to be valid and enforceable.  

9.         Successors.

            This Agreement and the rights and obligationsof the parties hereto shall be binding upon and inure to the benefit of anysuccessor or successors of the Company by way of reorganization, merger,acquisition or consolidation, and any assignee of all or substantially all ofthe Company's business and properties.  

10.       Amendments; Waivers.

            This Agreement may not be orally modified oramended.  It may only be modified or amended by an instrument in writing signedby Employee and by a duly authorized representative of the Company, other thanEmployee.  No failure to exercise and no delay in exercising any right, remedy,or power under this Agreement shall operate as a waiver thereof or as a waiverof any other right, remedy, or power, nor shall any single or partial exerciseof any right, remedy, or power hereunder preclude any other or further exerciseof any other right, remedy, or other power provided herein or by law or inequity.

11.       Notices.

            All notices, requests, demands, and othercommunications hereunder shall be in writing, and shall be delivered in person,by facsimile, or by certified or registered mail with return receipt requested. Each such notice, request, demand, or other communication shall be effective: (a) if delivered by hand, when delivered at the address specified in thisSection; (b) if given by facsimile, when such facsimile is transmitted to thetelefacsimile number specified in this Section and confirmation is received; or(c) if given by certified or registered mail, three days after the mailingthereof.  Notices shall be delivered as follows: 

> 
If to the Company:

PC Mall, Inc.

Care of: PC Mall, Inc.

2555 W. 190th Street

Torrance, CA  90504

Attention: Frank Khulusi

Fax: (310) 353-7411

 

With a copy to:

Morrison & Foerster LLP

19900 MacArthur Boulevard,                12th Floor

Irvine, California 92612

Attention:  Robert M.                Mattson, Esq.

Fax:  (949) 251-0900

> 
If to the Employee:

 

Robert Newton

2803 Corte Esmeralda

San Clemente, California 92673

Any party may change its address by notice giving notice tothe other party of a new address in accordance with the foregoing provisions.

12.       Assignment.  

            No benefit hereunder shall be subject toanticipation, alienation, sale, transfer, assignment, pledge, encumbrance orcharge, and any attempt to do so shall be void.  The Company shall be permittedto assign this Agreement to any affiliate or any successor.

13.       Integration.  

            This Agreement is intended to be the final,complete, and exclusive statement of the terms of Employee's employment by theCompany.  This Agreement supersedes all other prior and contemporaneousagreements and statements, whether written or oral, express or implied,pertaining in any manner to the employment of Employee, and it may not becontradicted by evidence of any prior or contemporaneous statements oragreements.  To the extent that the practices, policies, or procedures of theCompany, now or in the future, apply to Employee and are inconsistent with theterms of this Agreement or the offer letter, the provisions of this Agreementshall control.

14.       Interpretation.  

           The language in all parts of this Agreementshall be in all cases construed simply according to its fair meaning and notstrictly for or against any party.  Whenever the context requires, all wordsused in the singular will be construed to have been used in the plural, and viceversa.  The descriptive headings of the sections and subsections of thisAgreement are inserted for convenience only and shall not control, limit, oraffect the interpretation or construction of any of the provisions herein.

15.       Governing Law.  

            This Agreement has been negotiated and executedin the State of California and shall in all respects be governed by andinterpreted in accordance with the laws of the State of California withoutgiving effect to principles of conflict of laws.  

 

***** SIGNATURES ON NEXT PAGE *****

 

EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT ANDUNDERSTANDS ITS CONTENTS.  EMPLOYEE FURTHER ACKNOWLEDGES THAT THE COMPANY HASADVISED HIM OF HIS RIGHT TO CONSULT WITH LEGAL COUNSEL OF HIS OWN CHOICECONCERNING THIS AGREEMENT.  BY SIGNING THIS AGREEMENT, EMPLOYEE AND THE COMPANYAGREE TO BE BOUND BY ALL OF THE TERMS AND CONDITIONS OF THIS AGREEMENT.

The parties have executed this Agreement on the dates notedbelow.

 

 

 

| Dated: June 8, 2004________ |   | /s/ Frank Khulusi_____________                                                                                                                                                                                                                              |
|-----------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                        |   | PC MALL, INC.     By: Frank Khulusi____________     Title: President_____________   Dated: June 8, 2004________ /s/ Robert Newton___________  
ROBERT NEWTON
 

  |