October 23, 1996
Xx. Xxxxx X. Xxxxxx
000 Xxxxxx Xxxx
Xxxxx Xxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
This letter sets forth the agreement between Continental
Information Systems Corporation (the "Company") and Xxxxx X. Xxxxxx ("Xxxxxx")
with respect to certain severance and compensation matters.
In partial consideration of Xxxxxx'x serving in the office of
Vice President and Controller in addition to and aside from whatever salary,
bonuses, participations or other benefits the Board or the Compensation
Committee may decide on, the Company agrees as follows:
1. Severance.
(a) Xxxxxx shall be entitled to receive the following severance
benefits upon the occurrence of a Severance Event (as defined in Exhibit A): (1)
a severance payment equal to six (6) months base salary as in effect on the date
of the Severance Event, payable, at Xxxxxx'x option in a lump sum or in twelve
(6) equal monthly installments; (2) Continued Benefits (as defined in Exhibit A)
until the earlier of six (6) months from the date of the Severance Event or the
commencement by Xxxxxx of full time employment by another employer;
(b) Xxxxxx shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment, nor, except
as provided in Section 1(a)(2) above, shall the amount or term of any payment or
benefits provided for in this Agreement be reduced by any compensation or
benefits earned by Xxxxxx as the result of employment by another employer after
the Date of Termination (as defined in Exhibit A), or otherwise.
2. General Provisions.
(a) Binding Effect. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto, any successors to or assigns of the
Company and Xxxxxx'x heirs and the personal representatives of Xxxxxx'x estate.
(b) Arbitration. Any disputes, controversies, or claims arising
out of or related to this Agreement ("Disputes") shall be resolved by binding
arbitration in accordance with the provisions of Exhibit B.
(c) Amendment; Waiver. This Agreement may not be modified,
amended or waived in any manner except by an instrument in writing signed by
both parties hereto; provided, however, that any such modification, amendment or
waiver on the part of the Company shall have been previously approved by the
Board. The waiver by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other provision of this Agreement or of any subsequent breach by such party
of a provision of this Agreement.
(d) Tax Withholding. Payments to Xxxxxx of all compensation
contemplated under this Agreement shall be subject to all applicable legal
requirements with respect to the withholding of taxes and social security
contributions.
(e) Governing Law. All matters affecting this Agreement,
including the validity thereof, are to be governed by, and interpreted and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State.
(f) Notices. Any notice hereunder by either party to the other
shall be given in writing by personal delivery or certified mail, return receipt
requested. If addressed to Xxxxxx, the notice shall be delivered or mailed to
Xxxxxx at the address first set forth above, or if addressed to the Company, the
notice shall be delivered or mailed to Continental Information Systems
Corporation, Xxx Xxxxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxx, Xxx Xxxx 00000, Attention:
Secretary, or such other address as the Company or Xxxxxx may designate by
written notice at any time or from time to time to the other party. A notice
shall be deemed given, if by personal delivery, on the date of such delivery or,
if by certified mail, on the date shown on the applicable return receipt.
(g) Effect on Previous Agreements. This agreement supersedes the
"change-in-control" agreement dated January 4, 1995, between Xxxxxx and the
Company, all prior oral or written employment agreements between Xxxxxx and the
Company, and all prior or contemporaneous negotiations, commitments, agreements,
and writings with respect to the subject matter hereof; all such other
negotiations, commitments, agreements, and writings will have no further force
or effect; and the parties to any such other negotiation, commitment, agreement,
or writing will have no further rights or obligations thereunder.
(h) Counterparts. Either of the parties hereto may execute this
Agreement in counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same instrument.
(i) Headings. The headings of sections herein are included solely
for convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
(j) Term. This agreement will expire one year from the date
hereto, unless extended in writing by both parties hereto.
If you are in agreement with the foregoing, please execute in the
space provided below for your signature, whereupon this Agreement shall
constitute a binding Agreement between Xxxxxx and the Company.
CONTINENTAL INFORMATION SYSTEMS CORPORATION
By: /s/ XXXXX X. XXXXXXX
---------------------
Name: Xxxxx X. Xxxxxxx
Authorized Signatory
ACCEPTED AND AGREED:
/s/ XXXXX X. XXXXXX
---------------
Xxxxx X. Xxxxxx
Date: 11/4/96
EXHIBIT A
Definitions of Terms Relating to Severance
1. Severance Event: Termination by the Company of Xxxxxx'x
employment other than for Cause, or resignation by Xxxxxx from the Company for
Good Reason.
2. Cause: Termination by the Company of Xxxxxx'x employment upon
(a) Xxxxxx'x willful and continued failure to substantially perform his duties
with the Company (other than any such failure resulting from his incapacity due
to physical or mental illness), or (b) Xxxxxx'x willfully engaging in misconduct
that is materially injurious to the Company, monetarily or otherwise. For
purposes of this paragraph, no act, or failure to act, on Xxxxxx'x part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the best
interest of the Company. Notwithstanding the foregoing, Xxxxxx shall not be
deemed to have been terminated for Cause unless and until there shall have been
delivered to Xxxxxx a copy of a Notice of Termination from the Board, after
reasonable notice to Xxxxxx and an opportunity for him and his counsel to be
heard before the Board, finding that in the good faith opinion of the Board he
has engaged in conduct warranting termination for cause under clauses (a) and
(b) above.
3. Good Reason: Xxxxxx'x resignation of his employment with the
Company within 120 days following the occurrence of any of the following events:
(a) Reduction of Xxxxxx'x annual base salary below
$95,000;
(b) Without Xxxxxx'x written consent and measured
against his status as of July 11, 1996, the
assignment to him of any duties at a level below his
positions, duties, responsibilities, and status, or
a reduction in his reporting responsibilities,
titles, or offices, or any removal of him from or
any failure to re-elect him to any such positions,
except in connection with the termination of his
employment for Cause, disability, or retirement or
as a result of his death, or by him other than for
Good Reason; or
(c) The Company (i) does not allow Xxxxxx to participate
in any employee benefit plan on the same terms and
conditions made available to other senior executive
personnel, or (ii) unilaterally makes a materially
adverse change in the economic terms of any
incentive or bonus plan in which Xxxxxx is entitled
to participate; provided, that the foregoing shall
not restrict the Board's discretion to award
bonuses, stock options, or other incentive
compensation in such amounts as it determines;
In the event that Xxxxxx does not resign within 120 days of the occurrence of
any of the foregoing events, his rights with respect to such Good Reason shall
be deemed waived by Xxxxxx.
4. Notice of Termination: A written notice which shall indicate
the specific termination provision in this Agreement that is relied upon by the
party terminating Xxxxxx'x employment and which shall summarize the basis for
termination of Xxxxxx'x employment. Any purported termination by the Company for
Cause, or Xxxxxx'x resignation for Good Reason shall be communicated by Notice
of Termination to the other party hereto.
5. Date of Termination: (a) if Xxxxxx'x employment is terminated
for Cause, the date specified by the Company in the Notice of Termination, and
(b) if Xxxxxx'x employment is terminated by Xxxxxx for Good Reason, the date on
which the Notice of Termination is given.
6. Continued Benefits: The following benefits, which shall be
maintained in full force and effect by the Company for the benefit of Xxxxxx and
his surviving dependents for the applicable period: all life insurance, medical,
health and accident, and disability plans, programs or arrangements in which
Xxxxxx was entitled to participate immediately prior to the Severance Event,
provided that Xxxxxx'x continued participation is possible under the general
terms and provisions of such plans and programs. In the event that Xxxxxx'x
participation in any such plan or program is barred, the Company shall make
reasonable efforts to obtain insurance for Xxxxxx that would provide him with
benefits substantially similar to those which Xxxxxx is entitled to receive
under such plans and programs, but the Company shall not provide those benefits
directly if they cannot be obtained through insurance and shall not be obligated
to pay premiums in excess of two (2) times the group rate previously paid on his
behalf. Xxxxxx agrees that any such coverage will reduce the applicable period
for which coverage might have to be offered under applicable federal or state
laws. Nothing in this provision shall provide eligibility for bonuses, vacation,
or pension or profit-sharing programs after the Severance Event, except as
otherwise required by the generally-applicable terms of those programs.
EXHIBIT B
Arbitration Provisions
1. Any arbitration required under Section 2(b) of this Agreement
shall be administered by the American Arbitration Association ("AAA"), and shall
be conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "Rules"), as such Rules may be amended from time to
time, with the hearing locale to be Syracuse, New York, unless some other
location and/or arbitrator are chosen by mutual consent of the Company and
Xxxxxx.
2. A single neutral arbitrator shall preside over the arbitration
and decide the Dispute (the "Decision"). The AAA shall use its normal procedures
pursuant to the Rules for selection of an arbitrator.
3. The Decision shall be binding, and the prevailing party may
enforce such decision in any court of competent jurisdiction.
4. The parties shall cooperate with each other in causing the
arbitration to be held in as efficient and expeditious a manner as practicable
and in this connection to furnish such documents and make available such persons
as the Arbitrator may request.
5. The parties have selected arbitration in order to expedite the
resolution of Disputes and to reduce the costs and burdens associated with
litigation. The parties agree that the Arbitrator should take these concerns
into account when determining whether to authorize discovery and, if so, the
scope of permissible discovery and other hearing and pre-hearing procedures.
6. Without limiting any other remedies that may be available
under applicable law, the Arbitrator shall have no authority to award punitive
damages.
7. The Arbitrator shall render a Decision within ninety (90) days
after accepting an appointment to serve as Arbitrator unless the parties
otherwise agree or the Arbitrator makes a finding that a party has carried the
burden of showing good cause for a longer period.
8. All proceedings and decisions of the Arbitrator shall be
maintained in confidence, to the extent legally permissible, and shall not be
made public by any party or any Arbitrator without the prior written consent of
all parties to the arbitration, except as may be required by law.
9. Each party shall bear its own costs and attorneys' fees, and
the parties shall equally bear the fees, costs, and expenses of the Arbitrator
and the arbitration proceedings; provided, however, that the Arbitrator may
exercise discretion to award costs, but not attorneys' fees, to the prevailing
party.
