Document:

Exhibit 10.2

                                ESCROW AGREEMENT

      ESCROW AGREEMENT (the "Escrow Agreement") made as of the 12th day of
January, 2005, by and among Vertex Interactive, Inc., a New Jersey corporation
(the "Company"), the Sellers listed on Schedule A attached hereto (each a
"Seller" and collectively, the "Sellers") and the Law Office of Jeffrey D.
Marks, P.C. (the "Escrow Agent").

                              W I T N E S S E T H:

      WHEREAS, the Company has entered into that certain Stock Purchase
Agreement dated as of September -, 2004 (the "Purchase Agreement") with the
Sellers;

      WHEREAS, the parties have agreed pursuant to section 1.2 (b) of the
Purchase Agreement that the sum of two hundred thousand ($200,000.00) dollars
shall be paid into escrow and the Escrow Agent has agreed to receive, hold and
pay such funds, upon the terms and subject to the conditions hereinafter set
forth.

      NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and for other good and valuable consideration, the receipt and legal sufficiency
of which is hereby acknowledged, the parties to this Escrow Agreement hereby
agree as follows:

      1. Defined Terms. Capitalized terms used and not otherwise defined herein
shall have the meanings respectively assigned to them in the Purchase Agreement.

      2. Escrow of Funds. On the date hereof, the following shall occur: the
Sellers shall instruct the Company to remit by wire transfer $200,000 to the
Escrow Agent pursuant to this Escrow Agreement (the "Escrow Amount"). The Escrow
Agent shall hold the Escrow Amount for a period of fifteen (15) months in
accordance with the terms and conditions of this Escrow Agreement (the "Escrow
Period"). At the end of the Escrow Period, upon written instruction provided by
the Company and the Sellers, and subject to the terms and conditions of this
Escrow Agreement, the Escrow Agent shall disburse the balance of the Escrow
Amount to the Sellers.

      3. Investment of Funds. The Escrow Agent shall invest the monies in the
Escrow Amount in an interest bearing bank account with, or certificates of
deposit or time deposits with, maturities of no more than thirty (30) days
issued by, a domestic commercial bank or such other bank or other financial
institution as normally holds such funds.

      4. Release of Funds.

            (a) The purpose of the escrow is to provide a fund against which
indemnity claims, pursuant the terms of the Purchase Agreement, may be made.
Upon written notice and instruction provided by the Company and the Sellers, the
Escrow Agent shall disburse the Escrow Amount, or any portion thereof, in
accordance with such instructions, subject to the terms of this Escrow
Agreement.

            (b) If conflicting or adverse claims or demands are made or notices
served upon the Escrow Agent with respect to the escrow provided for herein, the
Company and the Sellers agree that the Escrow Agent shall refuse to comply with
<PAGE>

any such claim or demand and withhold and stop all further performance of this
escrow so long as such disagreement shall continue. In so doing, the Escrow
Agent shall not be or become liable for damages, losses, costs, expenses or
interest to any or any other person for its failure to comply with such
conflicting or adverse demands. The Escrow Agent shall be entitled to continue
to so refrain and refuse to so act until such conflicting claims or demands
shall have been finally determined by a court or arbitrator of competent
jurisdiction or shall have been settled by agreement of the parties to such
controversy, in which case the Escrow Agent shall be notified thereof in a
notice signed by such parties. The Escrow Agent may also elect to commence an
interpleader or other action for declaratory judgment for the purpose of having
the respective rights of the claimants adjudicated, and may deposit with the
court all funds held hereunder pursuant to this Escrow Agreement; and if it so
commences and deposits, the Escrow Agent shall be relieved and discharged from
any further duties and obligations under this Escrow Agreement.

      5. Further Assurances. The Company and the Sellers agree to do such
further acts and to execute and deliver such statements, assignments,
agreements, instruments and other documents as the Escrow Agent from time to
time reasonably may request in connection with the administration, maintenance,
enforcement or adjudication of this Escrow Agreement in order (a) to give the
Escrow Agent confirmation and assurance of the Escrow Agent's rights, powers,
privileges, remedies and interests under this Escrow Agreement and applicable
law, (b) to better enable the Escrow Agent to exercise any such right, power,
privilege, remedy or interest, or (c) to otherwise effectuate the purpose and
the terms and provisions of this Escrow Agreement, each in such form and
substance as may be reasonably acceptable to the Escrow Agent.

      6. Disputes. Each of the parties hereto hereby covenants and agrees that
the state courts located in the State of New Jersey shall have exclusive
jurisdiction over any dispute relating to this Escrow Agreement.

      7. Compensation and Expenses of the Escrow Agent. The Company agrees to
pay the Escrow Agent the sum of $1.00 on the date hereof as compensation for
acting as Escrow Agent herein. The Company agrees to pay any and all
out-of-pocket costs and expenses incurred by the Escrow Agent in connection with
all waivers, releases, discharges, satisfactions, modifications and amendments
of this Escrow Agreement, the administration and holding of the Escrow Amount
and the investment of such funds, and the enforcement, protection and
adjudication of the Escrow Agent's rights hereunder by the Escrow Agent,
including, without limitation, the out-of-pocket disbursements of the Escrow
Agent itself and expenses and costs of other attorneys it may retain, if any.
The Company shall be liable to the Escrow Agent for any expenses payable by the
Escrow Agent.

      8. Reliance on Documents and Experts. The Escrow Agent shall be entitled
to rely upon any notice, consent, certificate, affidavit, statement, paper,
document, writing or communication (collectively, the "Certificate") (which to
the extent permitted hereunder may be by telegram, cable, telex, telecopier, or
telephone) reasonably believed by it to be genuine and to have been signed, sent
or made by the proper person or persons, and upon opinions and advice of legal
counsel (including itself or counsel for any party hereto), independent public
accountants and other experts selected by the Escrow Agent and mutually
acceptable to each of the Company and the Sellers. The Escrow Agent shall not be
responsible to review the Certificate other than to confirm that it has been
signed or to determine the clearance of checks received for the Escrow Amount.

                                      -2-
<PAGE>

      9. Status of the Escrow Agent, Etc. The Escrow Agent is acting under this
Escrow Agreement as a stakeholder only. No term or provision of this Escrow
Agreement is intended to create, nor shall any such term or provision be deemed
to have created, any joint venture, partnership or attorney-client relationship
between or among the Escrow Agent and the Company or the Sellers. This Escrow
Agreement shall not be deemed to prohibit or in any way restrict the Escrow
Agent's representation of the Company, who may be advised by the Escrow Agent on
any and all matters pertaining to this Escrow Agreement. To the extent the
Sellers have been represented by the Escrow Agent, the Sellers hereby waive any
conflict of interest and irrevocably authorize and direct the Escrow Agent to
carry out the terms and provisions of this Escrow Agreement fairly as to all
parties, without regard to any such representation and irrespective of the
impact upon the Sellers. The Escrow Agent's only duties are those expressly set
forth in this Escrow Agreement, and each of the Sellers authorize the Escrow
Agent to perform those duties in accordance with its usual practices in holding
funds of its own or those of other escrows. The Escrow Agent may exercise or
otherwise enforce any of its rights, powers, privileges, remedies and interests
under this Escrow Agreement and applicable law or perform any of its duties
under this Escrow Agreement by or through its partners, employees, attorneys,
agents or designees.

      10. Exculpation. The Escrow Agent and its designees, and their respective
partners, employees, attorneys and agents, shall not incur any liability
whatsoever for the investment or disposition of funds or the taking of any other
action in accordance with the terms and provisions of this Escrow Agreement, for
any mistake or error in judgment, for compliance with any applicable law or any
attachment, order or other directive of any court or other authority
(irrespective of any conflicting term or provision of this Escrow Agreement), or
for any act or omission of any other person selected with reasonable care and
engaged by the Escrow Agent in connection with this Escrow Agreement (other than
for such Escrow Agent's or such person's own acts or omissions breaching a duty
owed to the claimant under this Escrow Agreement and amounting to willful
misconduct as finally determined pursuant to applicable law by a governmental
authority having jurisdiction); and each of the Company and the Sellers hereby
waive any and all claims and actions whatsoever against the Escrow Agent and its
designees, and their respective partners, employees, attorneys and agents,
arising out of or related directly or indirectly to any and all of the foregoing
acts, omissions and circumstances. Furthermore, the Escrow Agent and its
designees, and their respective partners, employees, attorneys and agents, shall
not incur any liability (other than for a person's own acts or omissions
breaching a duty owed to the claimant under this Escrow Agreement and amounting
to willful misconduct as finally determined pursuant to applicable law by a
governmental authority having jurisdiction) for other acts and omissions arising
out of or related directly or indirectly to this Escrow Agreement or the Escrow
Amount; and each of the Company and the Sellers hereby expressly waive any and
all claims and actions (other than those attributable to a person's own acts or
omissions breaching a duty owed to the claimant and amounting to willful
misconduct as finally determined pursuant to applicable law by a governmental
authority having jurisdiction) against the Escrow Agent and its designees, and
their respective partners, employees, attorneys and agents, arising out of or
related directly or indirectly to any and all of the foregoing acts, omissions
and circumstances.

      11. Indemnification. The Escrow Agent and its designees, and their
respective partners, employees, attorneys and agents, shall be indemnified,
reimbursed, held harmless and, at the request of the Escrow Agent, defended, by
the Company from and against any and all claims, liabilities, losses and
expenses (including, without limitation, the reasonable disbursements, expenses

                                      -3-
<PAGE>

and fees of their respective attorneys) that may be imposed upon, incurred by,
or asserted against any of them, arising out of or related directly or
indirectly to this Escrow Agreement or the Escrow Amount, except such as are
occasioned by the indemnified person's own acts and omissions breaching a duty
owed to the claimant under this Escrow Agreement and amounting to willful
misconduct as finally determined pursuant to applicable law by a governmental
authority having jurisdiction.

      12. Notices. Any notice, request, demand or other communication permitted
or required to be given hereunder shall be in writing, shall be sent by one of
the following means to the addressee at the address set forth below (or at such
other address as shall be designated hereunder by notice to the other parties
and persons receiving copies, effective upon actual receipt) and shall be deemed
conclusively to have been given: (a) on the first business day following the day
timely deposited with Federal Express (or other equivalent national overnight
courier) or United States Express Mail, with the cost of delivery prepaid; (b)
on the fifth business day following the day duly sent by certified or registered
United States mail, postage prepaid and return receipt requested; or (c) when
otherwise actually delivered to the addressee.

             If to the Company:           Vertex Interactive, Inc.
                                          3619 Kennedy Road
                                          South Plainfield, NJ  07080
                                          Attention:  Chief Executive Officer
                                          Telephone:  (908) 756-2000
                                          Facsimile:   (908) 756-2332

             If                           to any Sellers: At
                                          the address of such
                                          Seller set forth on
                                          Schedule A to the
                                          Escrow Agreement.

             If to the Escrow Agent:      Law Office of Jeffrey D. Marks, P.C.
                                          PO Box 2665
                                          415 Clifton Avenue
                                          Clifton, NJ 07011
                                          Telephone:  (973) 253-8855
                                          Facsimile:   (973) 253-8858

      13. Section and Other Headings. The section and other headings contained
in this Escrow Agreement are for convenience only, shall not be deemed a part of
this Escrow Agreement and shall not affect the meaning or interpretation of this
Escrow Agreement.

      14. Governing Law. This Escrow Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New Jersey
without regard to principles of conflicts of law. Each of the Company and the
Sellers (i) hereby irrevocably submit to the jurisdiction of the Courts of the
State of New Jersey for the purposes of any suit, action or proceeding arising
out of or relating to this Agreement or the Purchase Agreement and (ii) hereby
waive, and agree not to assert in any such suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of such court, that the
suit, action or proceeding is brought in an inconvenient forum or that the venue
of the suit, action or proceeding is improper. Each of the Company and the

                                      -4-
<PAGE>

Sellers consent to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this Section 14
shall affect or limit any right to serve process in any other manner permitted
by law.

      15. Counterparts. This Escrow Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original but all such counterparts shall together constitute one and
the same agreement.

      16. Resignation of Escrow Agent. The Escrow Agent may, at any time, at its
option, elect to resign its duties as Escrow Agent under this Escrow Agreement
by providing notice thereof to each of the Company and the Sellers. In such
event, the Escrow Agent shall deposit the Escrow Amount with a successor
independent escrow agent to be appointed by (a) the Company and the Sellers
within thirty (30) days following the receipt of notice of resignation from the
Escrow Agent, or (b) the Escrow Agent if the Company and the Sellers shall have
not agreed on a successor escrow agent within the aforesaid 30-day period, upon
which appointment and delivery of the Escrow Amount the Escrow Agent shall be
released of and from all liability under this Escrow Agreement.

      17. Successors and Assigns; Assignment. Whenever in this Escrow Agreement
reference is made to any party, such reference shall be deemed to include the
successors, assigns and legal representatives of such party, and, without
limiting the generality of the foregoing, all representations, warranties,
covenants and other agreements made by or on behalf of each of the Company and
the Sellers in this Escrow Agreement shall inure to the benefit of any successor
escrow agent hereunder; provided, however, that nothing herein shall be deemed
to authorize or permit the Company or the Sellers to assign any of its rights or
obligations hereunder to any other person (whether or not an affiliate of the
Company or the Sellers) without the written consent of each of the other parties
nor to authorize or permit the Escrow Agent to assign any of its duties or
obligations hereunder except as provided in Section 16 hereof.

      18. No Third Party Rights. The representations, warranties and other terms
and provisions of this Escrow Agreement are for the exclusive benefit of the
parties hereto, and no other person, including the creditors of the Company or
the Sellers, shall have any right or claim against any party by reason of any of
those terms and provisions or be entitled to enforce any of those terms and
provisions against any party.

      19. No Waiver by Action, Etc. Any waiver or consent respecting any
representation, warranty, covenant or other term or provision of this Escrow
Agreement shall be effective only in the specific instance and for the specific
purpose for which given and shall not be deemed, regardless of frequency given,
to be a further or continuing waiver or consent. The failure or delay of a party
at any time or times to require performance of, or to exercise its rights with
respect to, any representation, warranty, covenant or other term or provision of
this Escrow Agreement in no manner (except as otherwise expressly provided
herein) shall affect its right at a later time to enforce any such term or
provision. No notice to or demand on either the Company or the Sellers in any
case shall entitle such party to any other or further notice or demand in the
same, similar or other circumstances. All rights, powers, privileges, remedies
and interests of the parties under this Escrow Agreement are cumulative and not
alternatives, and they are in addition to and shall not limit (except as
otherwise expressly provided herein) any other right, power, privilege, remedy
or interest of the parties under this Escrow Agreement or applicable law.

                                      -5-
<PAGE>

      20. Modification, Amendment, Etc. Each and every modification and
amendment of this Escrow Agreement shall be in writing and signed by all of the
parties hereto, and each and every waiver of, or consent to any departure from,
any covenant, representation, warranty or other provision of this Escrow
Agreement shall be in writing and signed by the party granting such waiver or
consent.

      21. Entire Agreement. This Escrow Agreement contains the entire agreement
of the parties with respect to the matters contained herein and supersedes all
prior representations, agreements and understandings, oral or otherwise, among
the parties with respect to the matters contained herein.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -6-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the date first written above.

                                              VERTEX INTERACTIVE, INC. (Company)

                                              By:  /s/ NICHOLAS R. H. TOMS
                                                   -----------------------
                                                   Nicholas R.H. Toms
                                                   Chief Executive Officer

                                      -7-
<PAGE>

                              LAW OFFICE OF JEFFREY D. MARKS P.C. (ESCROW AGENT)

                              By:  /s/ JEFFREY D. MARKS
                                   ----------------------------
                                   Jeffrey D. Marks
                                   President

                              /s/ PETER B. AYLING
                              ---------------------------------
                                    Peter B. Ayling (Seller)

                              /s/ ELIZABETH M. AYLING
                              ---------------------------------
                                   Elizabeth M. Ayling (Seller)

                              /s/ BRAD L. LEONARD
                              ---------------------------------
                                   Brad L. Leonard (Seller)

                              /s/ MICHAEL C. MOORE
                              ---------------------------------
                                  Michael C. Moore (Seller)

                                     -8-Exhibit 10.3

                              EMPLOYMENT AGREEMENT

      THIS AGREEMENT (the "Agreement") is made and entered into as of the 12th
day of January 20045 by and between VERTEX INTERACTIVE, INC., a New Jersey
corporation (the "Employer") and Brad L. Leonard, residing at 1801 Millwood Lane
Allen, Texas 75002 (the "Employee").

                              W I T N E S S E T H:

      WHEREAS, the Employer desires to obtain the services of the Employee, and
the Employee desires to be employed by the Employer upon the terms and
conditions hereinafter set forth;

      NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

      1. Employment: Employer hereby employs Employee and Employee hereby
accepts employment with Employer upon the terms and conditions hereinafter set
forth.

      2. Duties: Employee shall perform such duties as Vice President General
Manager- Sales, Cape Group, which shall include 1) managing the smooth
integration of Cape Systems and Consulting Services Ltd, and Cape Systems, Inc.
(together the "Cape Group") into the businesses of Employer and Employer's
subsidiaries 2) providing general management and leadership of the Cape Group in
London, England and Dallas Texas 3) providing management of Cape Group sales and
4) providing other duties as reasonably requested from time to time by the Board
of Directors of Employer (the "Board of Directors"), and/or the Executive
Officers of Employer, provided, however, that all duties assigned to Employee
hereunder shall be commensurate with the skill and experience of Employee.
Employee agrees to devote 100% of his professional time, attention, skills,
benefits and best efforts to the performance of his duties hereunder and to the
promotion of the business and interests of Employer.

      3. Term: The employment of Employee shall commence on January 12, 2005 and
shall continue, unless earlier terminated pursuant to Section 7 below (the
"Term").

      4. Compensation: As compensation for his services rendered under this
Agreement, Employee shall be entitled to receive the following:

      (a)   Salary: During the Term, Employee shall be paid an annual base
            salary of One Hundred Ten Thousand ($110,000.00) Dollars payable in
            twenty four (24) equal installments each year. (the "base salary").
      (b)   Expenses: Employer shall reimburse Employee for all reasonable and
            necessary out-of-pocket travel and other expenses incurred by
            Employee in rendering services required under the terms of this
            Agreement, promptly, and in no event more than thirty (30) business
            days after submission, on a monthly basis, of a detailed statement
            of such expenses and reasonable documentation.

<PAGE>

      (c)   Benefits: During the Term, Employee shall continue to receive the
            same benefits which Cape Systems, Inc. provided to Employee prior to
            Employer's acquisition of the Cape Group and such additional group
            benefits as Employer may provide to its other employees at
            comparable salaries and responsibilities to those of Employee.
      (d)   Vacation: Employee shall be entitled to four weeks (20 business
            days) paid vacation for each year of this Agreement.
      (e)   Stock Options: (i) Employer grants Employee the right, privilege and
            option to purchase up to 1,000,000 shares of Employer's common stock
            under Employer's Stock Incentive Plan, subject to approval of the
            grant of said options by Employer's Board of Directors, at an
            exercise price determined at the close of business on the date of
            Board of Director approval in accordance with the Plan. Two hundred
            thousand (200,000) options shall vest immediately upon Board of
            Director approval. The remaining eight hundred thousand (800,000)
            shall vest 160,000 for each year of employment for a period of 5
            years commencing January 12, 2006.
      (f)   Bonus: Employee shall be entitled to a bonus per annum equal to 25%
            of the "Income from Operations" of the Cape Group, as that phrase or
            substantially similar language is defined in the fiscal year Profit
            and Loss Statement of Employer, utilizing Generally Accepted
            Accounting Principles.

            In the event of termination pursuant to Section 7 herein, other than
for just cause, Employee shall be entitled to such Compensation [as defined in
Section 4(a) through 4(f)] as is accrued through the date of termination plus
three (3) months base salary. Additionally, in such event, all of Employee's
options granted pursuant to this Agreement shall be deemed fully vested and
exercisable subject to the terms of Employer's Stock Incentive Plan. The
compensation set forth in this Section 4 will be the sole compensation payable
to Employee and no additional compensation or fee will be payable by Employer to
Employee by reason of any benefit gained by the Employer directly or indirectly
through Employee's efforts on Employer's behalf, nor shall Employer be liable in
any way for any additional compensation or fee unless Employer shall have
expressly agreed thereto in writing.

      5. Confidentiality ; Covenants Not To Compete:

      (a)   Acknowledgement of Proprietary Interest: Employee recognizes the
            proprietary interest of Employer in any Trade Secrets (as
            hereinafter defined) of Employer. Employee acknowledges and agrees
            that any and all Trade Secrets of Employer, learned by Employee
            during the course of his employment by Employer or otherwise,
            whether developed by Employee alone or in conjunction with others or
            otherwise, shall be and is the property of Employer. Employee
            further acknowledges and understands that his disclosure of any
            Trade Secrets of Employer will result in irreparable injury and
            damage to Employer. As used herein, "Trade Secrets" means all
            non-public confidential and proprietary information of Employer,
            including, without limitation, information derived from reports,
            investigations, experiments, research, work in progress, drawings,
            designs, plans, proposals, codes, software, source codes, databases,
            marketing and sales programs, client lists, vendor lists, client
            mailing lists, financial projections, cost summaries, pricing
<PAGE>

            formula, and all other materials, or information prepared or
            performed for or by Employer. "Trade Secrets" also includes
            confidential information related to the business, products or sales
            of Employer or Employer's customers.

      (b)   Covenants Not to Divulge Trade Secrets: Employee acknowledges and
            agrees that Employer is entitled to prevent the disclosure of Trade
            Secrets of Employer. As a portion of the consideration for the
            employment of Employee and for the compensation being paid to
            Employee by Employer, Employee agrees at all times during the term
            of this Agreement and for five (5) years thereafter to hold in
            strictest confidence and not to disclose or allow to be disclosed to
            any person, firm, or corporation, other than to persons engaged by
            Employer to further the business of Employer, Trade Secrets of
            Employer, without the prior written consent of Employer, including
            Trade Secrets developed by Employee. Notwithstanding the foregoing,
            Employee shall not be obligated to keep secret and not to disclose
            or allow to be disclosed knowledge or information (a) which has
            become generally known to the public through no wrongful act of
            Employee; (b) which has been rightfully received by Employee from a
            third party which to Employee's knowledge was received without
            restriction on disclosure and not in violation of any
            confidentiality obligation of said third party; (c) which has been
            approved for release without restriction as to use or disclosure by
            written authorization of Employer; or (d) which has been disclosed
            pursuant to a requirement of a governmental agency or of law without
            similar restrictions or other protections against public disclosure,
            or which disclosure is required by operation of law. Without
            limiting the generality of the foregoing, Employee agrees to
            affirmatively take such precautions as Employer may reasonably
            request or Employee reasonably believes are appropriate to prevent
            the disclosure, copying or use of any of the computer software
            programs, data bases or other such information now existing or
            hereafter developed to any person or for any purpose not
            specifically authorized by Employer.
      (c)   Return of Materials at Termination: In the event of any termination
            of this Agreement for any reason whatsoever, Employee will promptly
            deliver to Employer all documents, data and other information
            pertaining to Trade Secrets. Employee shall not take any documents
            or other information, or any reproduction or excerpt thereof,
            containing or pertaining to any Trade Secrets.
      (d)   Competition During the Term of this Agreement: Employee agrees that
            during the term of this Agreement, neither he, nor any company
            controlled by Employee (an "Affiliate"), will directly or indirectly
            compete with Employer in any way, and that he will not act as an
            officer, director, employee, consultant, shareholder, lender or
            agent of any entity which is engaged in any business of the same
            nature as, or in competition with, the business in which Employer is
            now engaged or other related business in which Employer becomes
            engaged during the term of this Agreement; provided, however, that
            this Section 5(d) shall not prohibit Employee or any Affiliate from
            purchasing or holding an aggregate equity interest of up to 1% in
            any business in competition with Employer. Furthermore, Employee
            agrees that during the term of this Agreement, he will undertake no
<PAGE>

            planning for the organization of any business activity competitive
            with the work he performs as an employee of Employer and Employee
            will not combine or conspire with any employees of Employer for the
            purpose of organization of any such competitive business activity.
      (e)   Competition Following Termination of this Agreement: Employee
            undertakes that for a period terminating on the later of i) two
            years from the date of termination of Employee's employment with
            Employer or ii) three years from the date of Closing of the Stock
            Purchase transaction between Employer, the Cape Group, Employee and
            Michael C. Moore, without the prior written consent of Purchaser,
            directly or indirectly, whether alone or in conjunction with, or on
            behalf of any other business, concern or person and whether as a
            principal, shareholder, director, employee, agent, consultant,
            partner or otherwise:

            (i) canvass, solicit, or approach or cause to be canvassed,
solicited or approached, any person or entity who was a customer of Employer or
the Cape Group for the supply of goods and/or services which are competitive
with those supplied by Employer or the Cape Group;

            (ii) deal or contract with any person or entity who was a customer
or proposed customer of Employer or the Cape Group for the purpose of supplying
goods and/or services which are competitive with those supplied by Employer or
the Cape Group; (ii) solicit or entice away any supplier to Employer or the Cape
Group who has supplied goods and/or services to Employer or the Cape Group, if
such solicitation or enticement causes or could reasonably be expected to cause
such supplier to cease supplying, reduce its supply of, or alter the terms upon
which it is supplying those goods and/or services to Employer or the Cape Group;

            (iii) if terminated by Employer for other than just cause, work for
or be engaged, concerned, or (save as the holder of shares or other securities
in any Companies which is quoted, listed or otherwise dealt with on a recognized
stock exchange or other securities market and which confers not more than 5% of
the votes which could be cast at a general meeting of the Companies concerned)
have an interest in any trade or business which competes with any trade or
business carried on, or proposed to be carried on, by Employer or the Cape Group
as of the date of this Agreement;

            (iv) solicit or entice away from Employer or the Cape Group any
employee of the Employer or the Cape Group employed in a senior or key
managerial, supervisory, technical, sales, marketing or administrative post; or

            (v) use in connection with any trade or business any name which
includes the name of Employer or the Cape Group or any colorable imitation of
them; or

            (vi) attempt to knowingly assist or procure any other person to do
any of the foregoing things.
<PAGE>

                  Employer and Employee agree that each of the undertakings set
                  out in each of the preceding sections are separate and
                  severable and enforceable accordingly, and if any one or more
                  of such undertakings or part of an undertaking is held to be
                  against the public interest or unlawful or in any way an
                  unreasonable restraint on trade, the remaining undertakings or
                  remaining part of the undertaking shall continue in full force
                  and effect and shall bind Employee.

      6. Prohibition of Disparaging Remarks: Employee shall, during the terms of
this Agreement, refrain from making disparaging, negative or other similar
remarks concerning Employer, any of its subsidiaries or other affiliated
companies, to any third party that causes substantial harm to Employer, except
to the extent that Employee is required to make such remarks (a) by applicable
law or regulation or judicial or regulatory process, or (b) in or in connection
with any pending or threatened litigation relating to this Agreement or any
transaction contemplated hereby or thereby. In view of the difficulty of
determining the amount of damages that may result to the parties hereto from the
breach of this Section 6, it is the intent of the parties hereto that, in
addition to monetary damages, any non-breaching party shall have the right to
prevent any such breach in equity or otherwise, including, without limitation,
prevent by means of injunctive relief

      7. Termination: This Agreement and the employment relationship created
hereby shall terminate upon the occurrence of any of the following events:

            (a)   thirty days written notice from Employer to Employee;
            (b)   The death of Employee;
            (c)   the "disability" (as hereinafter defined) of Employee;
            (d)   written notice to Employee from Employer of termination for
                  "just cause" (as hereinafter defined).

      For purposes of Section 7(c) above, the "disability" of Employee shall
mean his inability because of mental or physical illness or capacity, to perform
his duties under this Agreement for a continuous period of 120 days or for 120
days out of any 150-day period. For purposes of Section 7(d) above, "just cause"
shall mean (a) the failure of Employee to diligently or effectively perform his
duties under this Agreement, (b) the commission by Employee of any act involving
moral turpitude or the commission by Employee of any act or the suffering by
Employee of any occurrence or state of facts which renders Employee incapable of
performing his duties under this Agreement, or adversely affects or could
reasonably be expected to adversely affect Employer's business reputation, or
(c) the violation by Employee of material instructions or material policies
established by Employer with respect to the operation of its business and
affairs or Employee's failure, in a material respect, to carry out the
reasonable instructions of the Board of Directors of Employer.

      Notwithstanding anything to the contrary in this Agreement, the provisions
of Sections 5 and 6 shall survive any termination, for whatever reason, of
Employee's employment under this Agreement.

      8. Remedies: Each party recognizes and acknowledges that in the event of
any default in, or breach of any of, the terms, conditions and provisions of
this Agreement (either actual or threatened) by the other party, then the
non-defaulting party's remedies at law shall be inadequate. Accordingly, each
party agrees that in such event, the non-defaulting party shall have the right
of specific performance and/or injunctive relief in addition to any and all
other remedies and rights at law or in equity, and such rights and remedies
shall be cumulative.
<PAGE>

      9. Acknowledgments: Employee acknowledges and recognizes that the
enforcement of any of the non-competition provisions set forth in Section 5
above by Employer will not interfere with Employee's ability to pursue a proper
livelihood. Employee further represents that he is capable of pursuing a career
in other industries to earn a proper livelihood. Employee recognizes and agrees
that the enforcement of this Agreement is necessary to ensure the preservation
and continuity of the business and good will of Employer. Employee agrees that
due to the nature of Employer's business, the non-competition restrictions set
forth in this Agreement are reasonable as to time and geographic area. Employee
acknowledges that the term "Employer" as used in Sections 5 and 6 to this
Agreement shall be defined to include Vertex Interactive, Inc. and its
subsidiaries.

      10. Notices: Any notices, consents, demands, requests, approvals and other
communications to be given under this Agreement by either party to the other
shall be deemed to have been duly given in writing personally delivered, by
facsimile or sent by mail, registered or certified, postage prepaid with return
receipt requested, as follows:

         If to Employer:                     VERTEX INTERACTIVE, INC.
                                             3619 Kennedy Road
                                             South Plainfield, New Jersey 07080
                                             Attn: Nicholas R.H. Toms
                                             Chief Executive Officer

         If to Employee:                     Brad L. Leonard
                                             1801 Millwood Lane Allen
                                             Texas 75002

      Notices delivered personally shall be deemed communicated as of actual
receipt or receipt of facsimile. Mailed notices shall be deemed communicated as
of five (5) days after mailing.

      11. Entire Agreement: This Agreement contains the entire agreement of the
parties hereto and supersedes all prior agreements and understandings, oral or
written, between the parties hereto. No modification or amendment of any of the
terms, conditions or provisions herein may be made otherwise than by written
agreement signed by the parties hereto.

      12. Governing Law and Forum: This Agreement and the rights and obligations
of the parties hereto shall be governed, construed and enforced in accordance
with the laws of the State of New Jersey and the parties agree to the courts of
the State of New Jersey having exclusive jurisdiction over any dispute arising
out of or relating to this Agreement.

      13. Parties Bound: This Agreement and the rights and obligations hereunder
shall be binding upon and inure to the benefit of Employer and Employee and
their respective heirs, personal representatives, successors and assigns.
Employer shall have the right to assign this Agreement to its successors,
provided that such successors agree to be bound by the terms hereof. The term
"successors" shall include any person, corporation, partnership or other entity
that buys all or substantially all of Employer's assets or all of its stock, or
with which Employer merges or consolidates. The rights, duties or benefits to
Employee hereunder are personal to him, and no such right or benefit may be
assigned by him. It is specifically agreed that this Agreement shall survive any
change in capitalization, organization or control of Employer.
<PAGE>

      14. Estate: If Employee dies prior to the payment of all compensation
owed, or to be owed, to Employee pursuant to Section 4 above, whether pro-rata
or otherwise, then such compensation, as it becomes due, shall be paid to
Employee's estate.

      15. Enforceability: If, for any reason, any provision contained in this
Agreement should be held invalid in part by a court of competent jurisdiction,
then it is the intent of each of the parties hereto that the balance of this
Agreement be enforced to the fullest extent permitted by applicable law. It is
the intent of each of the parties that the covenants not-to-compete contained in
Section 5 above be enforced to the fullest extent permitted by applicable law.
Accordingly, should a court of competent jurisdiction determine that the scope
of any covenant is too broad to be enforced as written, it is the intent of each
of the parties that the court should reform such covenant to such narrower scope
as it determines enforceable.

      16. Waiver of Breach: The waiver by any party hereto of a breach of any
provisions of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by any party.

      17. Captions: The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.

      18. Other Obligations: For purposes of Section 5 above, and elsewhere
herein where appropriate, the term "Employer" shall also mean affiliates,
including subsidiaries, of Employer.

      19. Counterparts: This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same instrument, but only one of which need be provided.

      IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.

EMPLOYER:                                                     EMPLOYEE:

VERTEX INTERACTIVE, INC.

/s/ NICHOLAS R. H. TOMS                              /s/ BRAD L. LEONARD
-----------------------                              -------------------
NICHOLAS R.H. TOMS                                   BRAD L. LEONARD
CHIEF EXECUTIVE OFFICER

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