Contract
Exhibit
10.1
This
Employment Agreement (the “Agreement”) made this 12th day of
October,
2007 and effective as of the 15th day of
October,
2007 (the “Effective Date”) between XXXXXXX IT SOLUTIONS, INC.,
a Delaware Corporation (the “Company”) and XXXXX X. XXXXXX (the
“Executive”).
W
I T N E S S E T H:
WHEREAS,
the Company desires to employ the Executive as President and Chief Executive
Officer of the Company;
WHEREAS,
the Company and the Executive desire to enter into the Agreement as to the
terms
of his employment by the Company;
NOW
THEREFORE, in consideration of the foregoing, of the mutual promises
contained herein and of other good and valuable consideration, the receipt
and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as
follows:
1.
Position/Duties.
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(a)
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Executive
shall serve as the President and Chief Executive Officer of the
Company. In this capacity, Executive shall have such duties,
authorities and responsibilities commensurate with the duties,
authorities
and responsibilities of persons in similar capacities in similar
size
companies and such other duties and responsibilities as the Board
of
Directors of the Company (“Board”) shall from time to time assign to him
consistent with the Executive’s position as President and Chief Executive
Officer of the Company.
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(b)
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During
the Employment Term (as defined in Section 2), the Executive shall
devote
substantially all his business time and efforts to the business
and
affairs of the Company and the performance of his duties
hereunder. The Executive, who currently serves as a
member of the Board of Directors of Titanium Metals Corporation
and Kronos
Worldwide Inc., shall not accept any other outside directorships
of
business enterprises during the Employment Term without the consent
of the
Board. In addition, Executive shall not render services of a
business, professional or commercial nature to any other person,
firm or
corporation, whether for compensation or otherwise, during the
Employment
Term.
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(c)
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Executive’s
primary workplace shall be the Company’s offices in Hebron, Kentucky,
except for usual and customary travel on the Company’s
business. Pursuant to the provisions of Section 7(d), Executive
will lease temporary housing in the Greater Cincinnati/Northern
Kentucky
area during the Employment Term. Company acknowledges that
Executive will be commuting to Company’s headquarters from Plano, Texas
during the term of this Agreement. Executive shall be permitted
to work in Plano, Texas, for such periods of time as may be
agreed upon by Executive and the Board, but in no event less than
one day
each week.
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(d)
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Upon
the Effective Date, Executive shall be appointed a member of the
Company’s
Board of Directors to serve without compensation until the next
Annual
Shareholders Meeting of the Company. Thereafter, during the
remaining Employment Term, the Board or, if applicable, a committee
thereof, shall nominate the Executive for re-election as a member
of the
Board at the expiration of each then-current
term.
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(e)
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Executive
further agrees to serve without additional compensation as an Officer
and
Director of any direct or indirect subsidiaries and affiliates
of the
Company as the Company, acting through the Board, may request from
time to
time. In addition, it is agreed that the Company may deem the
Executive to be an employee of one of its subsidiaries for payroll
purposes but said arrangement shall not relieve the Company of
its
obligations hereunder.
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2.
Term of Employment.
This
Agreement shall be in effect beginning on the Effective Date and terminating
upon the earlier of (a) three years, two months and twenty-one days (October
15,
2007 – January 5, 2011) (the “Initial Term”) or (b) the Date of Termination as
defined in Section 8(g). The period of time from the Effective Date
through the Initial Term and any Renewal Term, as defined in Section 3, or
the
Date of Termination, as applicable, is referred to as the “Employment
Term”.
3.
Renewal Term.
The
term
of Executive’s employment and this Agreement shall automatically renew for
additional consecutive renewal terms of one (1) year unless either party
gives
written notice of his/its intent not to renew the terms of the Agreement
ninety
(90) days prior to the expiration of the then expiring
term. Executive’s Base Salary for each Renewal Term shall be
negotiated and mutually agreed upon by and between the Company and Executive;
however, in no event shall Executive’s Base Salary for any Renewal Term be less
than the Base Salary in effect for the prior year.
4.
Base Salary.
During
each fiscal year of the Company during the Initial Term of this Agreement,
the
Company agrees to pay Executive a base salary (“Base Salary”) at an annual rate
of Four Hundred Eighty Thousand Dollars ($480,000.00). For the period
commencing October 15, 2007 and ending January 5, 2008, Executive shall be
paid
the sum of Forty Thousand Dollars ($40,000.00) per month, which amount shall
be
prorated for any partial month. Said Base Salary shall be payable in
accordance with the regular payroll practices of the Company, but not less
frequently than monthly. Executive’s Base Salary shall be subject to
an annual review by the Board or a committee thereof (and may be increased,
but
not decreased, from time to time by the Board).
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5.
Bonuses.
For
the
period October 15, 2007 through January 5, 2008, Executive shall be paid
a bonus
of Ninety-Two Thousand Five Hundred Dollars ($92,500.00), payable on or after
January 5, 2008 but not later than January 15, 2008. The Compensation
Committee will begin work with Executive in December 2007 (and each ensuing
December thereafter) to implement a bonus plan for Executive with the Company
for the next ensuing fiscal year of the Company. The Executive shall
have the opportunity to earn both a quarterly and annual targeted bonus measured
against financial criteria consisting primarily of NPBT (as defined below)
(as
determined by the Board or a committee thereof), of at least Three Hundred
Seventy Thousand Dollars ($370,000.00), with a potential bonus in excess
of such
amount for achievement above target and a reduced bonus for achievement below
target, all in accordance with the applicable bonus plan. Two-thirds
(2/3) of the potential targeted bonus shall be based on achievement of quarterly
criteria and one-third (1/3) shall be allocated to annual
attainment. The bonus plan shall provide that under-performance in
one quarter can be made up in subsequent quarters on a year-to-date
basis. The quarterly and annual bonuses payable to Executive during
the Employment Term shall be fully paid in cash.
For
purposes of this Agreement, the Net Profit Before Taxes (“NPBT”) shall be
determined on a consolidated basis computed without regard to the bonus payable
to Executive pursuant to this Section 5, shall exclude any gains or losses
realized by Company on the sale or other disposition of its assets other
than in
the ordinary course of business and shall exclude any extraordinary one-time
charges taken by the Company. NPBT shall be determined by the
independent accountant regularly retained by the Company, subject to the
foregoing provisions of this subparagraph and in accordance with generally
accepted accounting principles. Said determination and payment of
such bonus shall be made no later than the fifteenth (15th) day
of the third
(3rd) month
following the end of the Company’s taxable year, and the determination by the
accountant shall be final, binding and conclusive on all parties
hereto. In the event the audited financial statements are not issued
before the fifteenth (15th) day
of the third
(3rd) month
following the end of the Company’s taxable year, Company shall make the payment
due hereunder, if any, based on its best reasonable estimate of any liability
hereunder, which amount shall be recorded and shall be reconciled by both
parties once the audited financial statements are issued but in no event
later
than the end of the calendar year in which the Company’s taxable year
ends. Any quarterly bonus determination shall be determined on a
consolidated basis by the independent accountant regularly retained by the
Company subject to the foregoing provisions of this paragraph and in accordance
with generally accepted accounting principles. Any amount due
hereunder shall be paid within fifteen (15) days of the filing of Form 10-Q
by
the Company for the respective quarter, but in no event later than the fifteenth
(15th) day
of
the third (3rd)
month following the end of the Company’s taxable year.
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In
the
event that Company acquires during any applicable fiscal year a company that
had
gross revenues in excess of Twenty-Five Million Dollars ($25,000,000.00)
for its
most recently concluded fiscal year, Company and Executive shall in good
faith
determine whether any adjustments to the NPBT criteria, whether upward or
downward, shall be made in order to reflect the effect of such acquisition
on
the operations of the Company.
6.
Equity Awards.
(a) Stock
Options.
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(i)
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Upon
the Effective Date of this Agreement, Executive shall be awarded
an option
to acquire Two Hundred Forty (240,000) shares of the common stock
of the
Company under the Company’s Amended and Restated 2002 Stock Incentive Plan
(“Plan”) at the fair market value of such common shares as of the date
of
the award. For purposes of this Agreement, the fair market
value as of the applicable date shall mean, with respect to the
common
shares, the closing sales price of a share of the Company’s common stock
on the over-the-counter market on the last market trading day prior
to the
date on which the value is to be determined (or the next preceding
date on
which sales occurred, if there were no sales on such
date). Seventy-Five Thousand (75,000) shares shall vest upon
the Effective Date of Executive’s employment and Fifty-Five Thousand
(55,000) shares shall vest on each of the first three annual anniversaries
of the Effective Date. The term of the award set forth above shall
be for
a period of five (5) years from the date of such award. A copy
of the Award Agreement is attached hereto as Exhibit A. The
options to be granted incident hereto shall be non-qualified stock
options
and shall not be treated by the Company or the Executive as an
incentive
stock option for federal income tax
purposes.
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(ii)
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In
the event a Change In Control (as defined in Section 10) occurs
after the
six month anniversary of the Effective Date but before the first
annual
anniversary of the Effective Date, an additional Forty-Five Thousand
(45,000) shares shall vest immediately prior to the Change In
Control. In the event a Change In Control occurs on or after
the first annual anniversary of the Effective Date, but before
the third
(3rd)
annual anniversary of the Effective Date, then all Two Hundred
Forty
Thousand (240,000) shares shall be fully vested immediately prior
to the
Change In Control.
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(iii)
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In
addition, on each annual anniversary of the Effective Date, Executive
shall be awarded an option to acquire Seventy-Five Thousand (75,000)
shares of the common stock of the Company at the fair market value
of such
common shares as of the date of the award. Eighteen Thousand
Seven Hundred and Fifty (18,750) of such shares shall vest at the
time of
the award of such option and Eighteen Thousand Seven Hundred and
Fifty
(18,750) shares shall vest on each of the first three annual anniversaries
of such grant. The term of such award shall be for a period of
five (5) years from the date of grant of each such award. In
the event a Change In Control occurs before the third (3rd)
annual
anniversary of the date of such grant, then all Seventy-Five Thousand
(75,000) shares shall be fully vested immediately prior to the
Change In
Control. Any subsequent annual award shall be subject to these
terms.
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(b) Restricted
Stock.
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(i)
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Upon
the Effective Date of this Agreement, the Company shall grant Executive
an
equity award of Eighty Thousand (80,000) shares of restricted stock
under
the Plan. Said restricted stock shall vest and the restrictions
thereon shall lapse in full on the third (3rd)
annual
anniversary of the Effective Date. In the event a Change In Control
occurs
after the six month anniversary of the Effective Date, but before
the
first annual anniversary of the Effective Date, Fifty Percent (50%)
of
said restricted stock shall vest and the restrictions thereon shall
lapse
immediately prior to the Change In Control. In the event a
Change In Control occurs on or after the first annual anniversary
of the
Effective Date, but before the third (3rd)
annual
anniversary of the Effective Date, One Hundred Percent (100%) of
such
restricted stock shall fully vest and the restrictions thereon
shall lapse
immediately prior to the Change In Control. A copy of the
Restricted Stock Award Agreement is attached hereto as Exhibit
B.
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(ii)
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In
addition, Executive shall receive on the second annual anniversary
of the
Effective Date (the “Grant Date”), a grant of restricted shares that shall
be based on the increase in the per share value of the Company’s common
stock from the Effective Date to the Grant Date based on the following
formula: Executive shall be entitled to One Thousand (1,000)
restricted shares for each ten (10) cent per share increase in
the fair
market value of the Company’s common stock from the Effective Date to the
Grant Date. For purposes of this Agreement, the fair market
value of the common stock as of the Effective Date shall be the
fair
market value utilized for the strike price for the stock option
award made
to Executive under Section 6(a)(i). For purposes of this
Agreement, the fair market value as of the Grant Date shall be
determined
by taking the average of the closing sales prices of a share of
the
Company’s common stock as reported for each of the market trading days
within the ninety (90) day period (ending on the first market trading
date
prior to the Grant Date) preceding the Grant
Date.
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For
example, if the fair market value of the common stock of Company on the
Effective Date was Eight Dollars ($8.00) per share and the fair market value
on
the Grant Date was Eleven Dollars ($11.00) per share, Executive would be
entitled to a grant of Thirty Thousand (30,000) restricted shares ($11.00
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$8.00 = $3.00 ÷ .10 x 1,000 = 30,000 shares of restricted stock), which
restricted shares shall be fully vested and shall not be subject to any risk
of
forfeiture on or after such second annual anniversary of the Effective
Date.
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(iii)
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Notwithstanding
anything herein to the contrary, in the event of the death, Disability,
termination by the Company with Cause or resignation by the Executive
without Good Reason or in the event of a Change In Control as defined
in
Section 10 occurring prior to the second annual anniversary of
the
Effective Date, Executive shall not be entitled to a grant of performance
restricted shares pursuant to Section 6(b)(ii), it being the intent
of the
parties that Executive must be employed by the Company on the second
annual anniversary of the Effective Date in order for any performance
restricted shares to be issued under Section
6(b)(ii). Notwithstanding anything contained herein, if
Executive’s employment is terminated by the Company without Cause or by
Executive for Good Reason prior to the second annual anniversary
of the
Effective Date, Executive shall be granted the performance restricted
shares described in Section 6(b)(ii) on the second annual anniversary
of
the Effective Date; provided that in lieu of issuing such restricted
shares, the Company shall have the option to pay Executive an amount
in
cash equal to the fair market value of such restricted shares as
of the
second annual anniversary of the Effective Date. Any payment in
lieu of issuing restricted shares shall be made on the second annual
anniversary of the Effective Date.
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(iv)
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Executive
acknowledges that the grants of restricted shares made or to be
made
hereunder shall be in lieu of any other grant of restricted shares
that
may be made to senior management as part of their pay
plan.
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(c)
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Adjustments
to Number of Shares. The provisions of this Section 6 shall
be appropriately adjusted for any stock splits, reverse splits,
stock
dividends, combinations or reclassifications of the Company’s common
stock, or any other similar increases or decreases in the number
of issued
shares of such common stock effected without receipt of consideration
by
the Company.
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(d)
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Representations
and Warranties of the Company. The Company represents and
warrants to Executive that (i) the shares he acquires pursuant to
options and restricted stock awards as provided for in this Agreement
will
be issued under the Plan; (ii) the Plan and the options and
restricted stock awards to be made hereunder are covered under
a Form S-8
registration statement (the effectiveness of which shall continue
to be
maintained so that Executive can resell the shares he receives
pursuant to
options and restricted stock awards pursuant to this Agreement
on a
current basis once exercised or vested, as applicable), (iii) there
are currently, and will continue to be, adequate shares available
under
the Plan for the issuance of stock pursuant to all options and
the
restricted stock awards provided for in this Agreement; and (iv) the
Plan permits the contemplated provisions of such
grants.
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7.
Fringe Benefits.
During
the Employment Term, Executive shall be entitled to the following
benefits:
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(a)
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Insurance. Executive
shall be provided with standard medical, health, and other insurance
coverage in accordance with the plans from time to time maintained
by the
Company for its senior management
employees.
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(b)
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Vacation. Executive
shall be entitled each year to four (4) weeks of vacation, during
which
his compensation will be paid in full; provided, however, Executive
shall
not take more than two weeks of vacation consecutively without
the prior
written consent of the Board.
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(c)
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Insurance
During the Term of Employment Agreement. Company shall
maintain on the life of the Executive, provided he is insurable
at
standard rates, a term life insurance policy in the amount of One
Million
Dollars ($1,000,000.00). Executive shall have the right to
designate the beneficiary of such policy. Executive agrees to
take any and all physicals that are necessary incident to the issuance
and/or renewal of said policy. In addition, Executive agrees to
take any and all physicals necessary incident to the procurement
of Key
Man insurance upon his life by Company. In the event that
Executive is not insurable at standard rates during the term of
this
Agreement, but Executive is able to procure rated coverage, Executive
has
the right to procure coverage at a lower amount of insurance, the
cost of
which is equivalent to the standard term rate cost of One Million
Dollars
($1,000,000.00) in coverage. In the event Executive is not
insurable, then Company shall, within thirty (30) days following
the date
that Executive is determined to be uninsurable, pay Executive an
amount
equal to the projected cost of the contemplated term insurance
of One
Million Dollars ($1,000.000.00) at standard rates. In the event
that Executive should die prior to the insurance being obtained
hereunder
or in the event insurance cannot be obtained for medical reasons,
Company
shall have no obligation to Executive or his beneficiary for payment
of
any of the death benefit amount upon Executive’s death. Company
and Executive agree to use diligent efforts after the Effective
Date to
obtain the coverage upon Executive’s life
hereunder.
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(d)
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Housing
Allowance. Company shall provide Executive with a housing
allowance of up to Two Thousand Five Hundred Dollars ($2,500.00)
per month
to be paid on the first of every month. The Executive shall
enter into a lease agreement that shall provide housing for Executive
near
the Company’s headquarters during the Employment Term, provided that the
term of such lease shall not exceed six months at any time. In
the event the Executive terminates his employment with the Company
following a Change In Control or with Good Reason, or the Company
terminates his employment with the Company without Cause, and he
thereafter vacates the leased premises, the Company shall reimburse
the
Executive for any lease termination expense or for all remaining
obligations under the lease within ten (10) days after the date
Executive
submits such expenses to the
Company.
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(e)
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Automobile
Allowance. Company shall provide Executive with an
automobile allowance of Nine Hundred Dollars ($900.00) per month
to be
paid on the first of every month.
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(f)
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Travel
Allowance. Company shall provide Executive with a travel
allowance of Four Thousand Five Hundred Dollars ($4,500.00) per
month to
be paid on the first of every
month.
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(g)
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Expenses. During
the Employment Term, Executive shall be entitled to receive prompt
reimbursement for all reasonable and customary travel and entertainment
expenses or other out-of-pocket business expenses incurred by Executive
in
preparing for and fulfilling the Executive’s duties and responsibilities
hereunder, including all expenses for (i) travel while away from home
on business or at the request or in the service of the Company
(but
excluding any commuting expenses covered by Section 7(f)), (ii)
mobile
phone service, (iii) email, fax and long distance communications
expenses in respect of the Executive’s home office in Plano, Texas, and
(iv) legal fees and expenses related to the negotiation and
preparation of this Agreement and the documents referred to herein
in an
amount not to exceed Twenty Thousand Dollars ($20,000.00); provided
that
such expenses are incurred and accounted for in accordance with
the
policies and procedures established by the Company. Executive
shall use reasonable best efforts to take advantage of advance
purchase
pricing for airplane tickets. Amounts reimbursable pursuant to
this subparagraph (g) shall be paid upon the earlier of (i) thirty
(30)
days after Executive’s submission of a request for reimbursement and (ii)
the fifteenth (15th)
day of the
third (3rd)
month of
the Company’s fiscal year following the year in which the expense was
incurred.
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(h)
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Benefit
Plans. Executive shall participate, after meeting
eligibility requirements, in any qualified retirement plans and/or
welfare
plans maintained by the Company during the Employment
Term.
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8.
Termination.
Executive’s
employment hereunder and the Employment Term shall be terminated under the
first
of the following to occur:
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(a)
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Death. The
Executive’s employment hereunder shall automatically terminate upon the
death of the Executive.
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(b)
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Disability. The
Executive’s employment hereunder shall terminate upon written notice by
the Company to the Executive, of termination due to
Disability. For purposes of this Agreement, “Disability” or
“Disabled” shall mean the Executive’s incapacity due to physical or mental
illness to substantially perform his duties and the essential functions
of
his position, with or without reasonable accommodation on a full-time
basis for One Hundred Eighty (180) days (including weekends and
holidays)
in any Three Hundred Sixty-Five (365) day period. The existence
or non-existence of a physical or mental injury, infirmity or incapacity
shall be determined by an independent physician mutually agreed
to by the
Company and the Executive (provided that neither party shall unreasonably
withhold their consent).
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(c)
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Cause.
The Company may terminate the Executive’s employment hereunder for
Cause. For purposes of this Agreement, the Company shall have
“Cause” to terminate the Executive’s employment hereunder
upon:
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(i)
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The
conviction of Executive of a felony or other crime involving theft,
misappropriation of funds, fraud or moral
turpitude;
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(ii)
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The
engaging by Executive in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise, including but
not
limited to any material misrepresentation related to the performance
of
his duties, misappropriation, fraud, including with respect to
the
Company’s accounting and financial statements, embezzlement or conversion
by Executive of the Company’s or any of its subsidiaries’ property in
connection with Executive’s duties or in the course of the Executive’s
employment with the Company;
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(iii)
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Executive’s
gross negligence or gross misconduct in carrying out his duties
hereunder
resulting, in either case, in material harm to the Company;
or
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(iv)
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Any
act or omission constituting a material breach by the Executive
of any
material provision of this
Agreement.
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Notwithstanding
the foregoing, in the event the basis for a termination for Cause is under
subsections 8(c)(iii) or (iv) above, Executive shall not be deemed to have
been
terminated for Cause unless and until there shall have been delivered to
him a
copy of a resolution of the Board asserting that he has engaged in the conduct
set forth above in Sections 8(c)(iii) or (iv) (as interpreted and enforced
consistently with the Company’s treatment of all other executives and senior
management) and specifying the particulars thereof in detail, and Executive
shall not have cured such conduct to the reasonable satisfaction of the Board
within thirty (30) days after receipt of such resolution.
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(d)
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Without
Cause. Upon written notice by the Company to the Executive
of an involuntary termination without Cause, other than for death
or
Disability.
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(e)
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Good
Reason. Upon written notice by the Executive to the Company
of the termination of his employment hereunder for Good
Reason. “Good Reason” shall mean Executive’s resignation from
employment within ninety (90) days after the occurrence of one
of the
events hereinafter enumerated; provided, however, that Executive
must
provide written notice to the Company within thirty (30) days after
the
occurrence of the event allegedly constituting Good Reason and
the Company
shall have thirty (30) days after such notice is given to
cure: (i) a material diminution in Executive’s authority,
duties or responsibilities without Executive’s written consent; (ii) a
material diminution in Executive’s Base Salary or targeted
annual bonus at any time during the Employment Term without Executive’s
written consent; (iii) a requirement that Executive report to an
officer
or employee of the Company instead of reporting directly to the
Board and
(iv) any other action or inaction that constitutes a material breach
by
Company of this Agreement.
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(f)
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Voluntary
Termination. If Executive terminates employment with
Company without Good Reason, Executive agrees to provide the Company
with
thirty (30) days prior written notice. Company, in its sole
discretion, following its receipt of such written notice from Executive
may accelerate the termination of Executive’s employment and the right to
any further compensation to a date prior to the thirtieth (30th)
day after
such written notice is given.
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(g)
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Date
of Termination. For purposes of this Agreement, “Date of
Termination” shall mean (i) if Executive is terminated as Chief Executive
Officer/President by the Company for Disability, thirty (30) days
after
written notice of such determination is given to Executive (provided
that
Executive shall not have returned to perform his duties on a full
time
basis during such thirty (30) day period); (ii) if Executive’s employment
is terminated by the Company for any other reason, the date on
which a
written notice of termination is given, provided that, in the case
of the
termination for Cause under Sections 8(c)(iii) or (iv), Executive
shall
not have cured the matter or matters stated in the Notice of Termination
within the thirty (30) day period provided in Section 8(c)(iii)
or (iv);
(iii) if Executive terminates his employment for Good Reason, the
date of
Executive’s resignation, provided that the notice and cure provisions in
Section 8(e) have been complied with; (iv) if Executive terminates
employment for other than Good Reason, the date specified in Executive’s
notice in compliance with Section 8(f) or, (v) in the event of
Executive’s
death, the date of death.
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(h)
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Notice
of Termination. Any termination of Executive’s employment
by the Company or by Executive under this Section 8 (other than
in the
case of death) shall be communicated by a written notice (“Notice of
Termination”) to the other party hereto, indicating the specific
termination provision in this Agreement relied upon. If the termination
provision relied upon requires notice and an opportunity to cure,
then the
Notice of Termination shall set forth in reasonable detail any
facts and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provisions so indicated. The Notice
of Termination shall specify a date of termination and shall be
delivered
within the time period set forth in the various paragraphs of this
Section
8, as applicable (the “Notice
Period”).
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(i)
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Compliance
with 409A. To the extent any payment under Section 9 is
subject to Section 409A of the Internal Revenue Code of 1986, as
amended
(the “Code”) or exempt therefrom solely by virtue of the separation pay
plan exceptions under Treasury Regulations Section 1.409A-1(b)(9),
a
termination of Executive’s employment will not be deemed to occur unless
such termination constitutes a separation from service under Section
409A
of the Code and the regulations promulgated
thereunder.
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9.
Compensation Upon Termination.
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(a)
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Disability. In
the event the Employment Term ends on account of Executive’s Disability,
the Company shall pay or provide Executive (i) any unpaid Base
Salary
through the date of termination and any accrued vacation in accordance
with Company policy; (ii) any unpaid bonus earned with respect
to any
fiscal year or any fiscal quarter ending on or preceding the date
of
termination; and (iii) reimbursements for any unreimbursed expenses
incurred through the date of termination (collectively “Accrued
Amounts”). In addition, Executive shall receive any Prorata
Bonus as hereinafter defined. For purposes hereof, a “Prorata
Bonus” shall be determined by calculating a prorata portion of the
Executive’s targeted bonus for the performance year in which the
Executive’s termination occurs (determined by multiplying the amount the
Executive would have received had his employment continued through
the end
of the performance year, assuming 100% achievement of the targeted
amount,
by a fraction, the number of which is the number of days during
the
performance year of termination that the Executive is employed
by the
Company and the denominator of which is Three Hundred Sixty-Five
(365)). The Accrued Amounts and Prorata Bonus shall be paid
within ten (10) days after the Date of Termination. In
addition, Executive shall be entitled to the
following:
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(i)
|
an
amount equal to his then-applicable full Base Salary minus Eighty-Four
Thousand Dollars ($84,000) (or such other amount as may be available
to
Executive pursuant to any salary continuation benefits under an
accident
and health benefit plan sponsored by the Company) to be paid within
ten
(10) days after the Date of Termination;
and
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(ii)
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Executive
shall be entitled to any rights he may have under the Consolidated
Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”). Company shall
reimburse Executive for any premium for COBRA health, dental, and
vision
coverage paid by Executive (including coverage for Executive’s family) for
a period of one (1) year after the Date of Termination. To the
extent permitted by the terms of any other welfare benefit program
sponsored by the Company and to the extent such coverage can be
provided
in a manner that will not result in a violation of Code Section
409A
(based upon applicable regulations and other published guidance
thereunder), Executive shall continue to be eligible to participate
in any
other welfare benefit program sponsored by the Company for a period
of one
(1) year following the Date of
Termination.
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(b)
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Death. In
the event of Executive’s death, the Executive’s estate (or to the extent a
beneficiary has been designated in accordance with a program, the
beneficiary under such program) shall be entitled to any Accrued
Amounts
and a Prorata Bonus (as defined in Section 9(a). Such Accrued
Amounts and Prorata Bonus shall be paid within ten (10) days after
the
date of Executive’s death.
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11
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(c)
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Termination
for Cause or Without Good Reason. If the Executive’s
employment should be terminated (i) by the Company for Cause, or
(ii) by
the Executive without Good Reason, Company shall pay to the Executive
any
Accrued Amounts within ten (10) days after the Date of
Termination.
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(d)
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Termination
Without Cause or For Good Reason. If Executive’s employment
is terminated by the Company without Cause or the Executive terminates
his
employment for Good Reason, Executive shall be entitled to receive
from
the Company all Accrued Amounts through the Date of Termination
and a
Prorata Bonus (as defined in Section 9(a). Such Accrued Amounts
and Prorata Bonus shall be paid within ten (10) days after the
Date of
Termination. Contingent upon Executive delivering to the
Company a release in the form attached hereto as Exhibit C, and
the
expiration of all revocation periods related thereto, Executive
shall be
entitled to the following:
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(i)
|
within
ten (10) days following the Date of Termination, the Company shall
pay
Executive an amount equal to the Executive’s then-applicable full Base
Salary, the targeted bonus amount for the year in which the Termination
without Cause or for Good Reason occurs minus the amount of the
Prorata
Bonus determined under Section 9(d), and the targeted bonus amounts
for
the remaining balance of the Initial Term or any Renewal Term;
provided
that if Executive’s targeted bonus amount has not been determined for any
period of the remainder of the Initial Term or any Renewal Term
as of the
Date of Termination, it shall be deemed for the remainder of the
Initial
Term or any Renewal Term to be on the terms most recently determined,
based upon 100% achievement of the targeted amount, and all applicable
criteria shall be deemed to have been satisfied for the remainder
of the
Initial Term or any Renewal Term (including the year in which the
Date of
Termination occurs) to achieve the targeted bonus amounts; and
provided
further that in no event shall the payment of Base Salary be for
a period
of less than one year, even if less than one year remains in the
Initial
Term or any Renewal Term as of the Date of Termination;
and
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(ii)
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Executive
shall be entitled to his COBRA rights under the Company’s group health
plans and Company shall reimburse Executive for any premiums paid
by
Executive for COBRA health, dental, and vision coverage (including
coverage for Executive’s family) for the balance of the Initial Term or
any Renewal Term or the period that Executive is eligible for coverage
pursuant to COBRA, whichever is less. If the period of COBRA
coverage expires prior to the expiration of the Initial Term or
any
Renewal Term, the Company shall provide Executive with an insurance
policy
or policies that provide benefits comparable to the health, dental,
and
vision coverage provided to Executive and his family immediately
prior to
the expiration of the period of COBRA coverage, provided he and
his family
are insurable at standard or reasonably standard rates. The Company
will
provide such policies through the remainder of the Initial Term
or any
Renewal Term or, if earlier, the last day of the second calendar
year
following the calendar year of the Date of Termination or until
Executive
obtains employment that offers similar or improved benefits. The
Executive shall notify the Company within thirty (30) days after
becoming
eligible for coverage of any such benefits. To the extent
permitted by the terms of any other welfare benefit program sponsored
by
the Company and to the extent such coverage can be provided in
a manner
that will not result in a violation of Code Section 409A (based
upon
applicable regulations and other published guidance thereunder),
Executive
shall continue to be eligible to participate in any other welfare
benefit
program sponsored by the Company for the remainder of the Initial
Term or
any Renewal Term; and
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12
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(iii)
|
all
of Executive’s options to purchase stock of the Company and all restricted
stock that has been granted to him shall be fully vested, effective
as of
the date of the termination of his
employment.
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No
amounts paid under this Section 9 will be reduced by any earnings that Executive
may receive from any other source.
10. Change
In Control Benefits.
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(a)
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For
purposes of this Agreement, “Change In Control”
shall mean the first to occur of any of the following
events:
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(i)
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any
“person” (as defined in Section 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”),
excluding for this purpose, (A) the Company or any subsidiary
of
the Company, or (B) any employee benefit plan of the Company or
any
subsidiary of the Company, or any person or entity organized, appointed
or
established by the Company for or pursuant to the terms of any
such plan,
which acquires beneficial ownership of voting securities of the
Company,
is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly of securities of the Company
representing more than fifty percent (50%) of the combined voting
power of
the Company’s then outstanding securities; provided, however, that no
Change In Control will be deemed to have occurred as a result of
a change
in ownership percentage resulting solely from an acquisition of
securities
by the Company; or
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(ii)
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persons
who, as of the Effective Date constitute the Board (the “Incumbent
Directors”) cease for any reason, including
without limitation, as a result of a tender offer, proxy contest,
merger
or similar transaction, to constitute at least a majority thereof,
provided that any person becoming a director of the Company subsequent
to
the Effective Date shall be considered an Incumbent Director if
such
person’s election or nomination for election was approved by a vote of
at
least fifty percent (50%) of the Incumbent Directors; but provided
further, that any such person whose initial assumption of office
is in
connection with an actual or threatened election contest relating
to the
election of members of the Board or other actual or threatened
solicitation of proxies or consents by or on behalf of a “person” (as
defined in Section 13(d) and 14(d) of the Exchange Act) other than
the
Board, including by reason of agreement intended to avoid or settle
any
such actual or threatened contest or solicitation, shall not be
considered
an Incumbent Director; or
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13
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(iii)
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consummation
of a reorganization, merger or consolidation or sale or other disposition
of at least eighty percent (80%) of the assets of the Company (a
“Business Combination”), unless, in each case, following
such Business Combination, all or substantially all of the individuals
and
entities who were the beneficial owners of outstanding voting securities
of the Company immediately prior to such Business Combination beneficially
own, directly or indirectly, more than fifty percent (50%) of the
combined
voting power of the then outstanding voting securities entitled
to vote
generally in the election of directors of the company resulting
from such
Business Combination (including, without limitation, a company
which, as a
result of such transaction, owns the Company or all or substantially
all
of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the outstanding
voting
securities of the Company; or
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(iv)
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approval
by the stockholders of the Company of a complete liquidation or
dissolution of the Company.
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(b)
|
Upon
a Change In Control of the Company, the Executive shall be entitled
to
receive the following:
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(i)
|
The
Company shall pay or provide to the Executive the Accrued Amounts
within
ten (10) days after the Change In
Control.
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(ii)
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In
addition, all of Executive’s stock options and restricted shares shall
vest according to the terms contained in the respective award agreement(s)
executed incident to the grant of such options or restricted
shares.
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(iii)
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Within
ten (10) days following the Change In Control, the Company shall
pay
Executive an amount equal to the Executive’s full Base Salary, the
targeted bonus amount for the year in which the Change In Control
occurs,
and the targeted bonus amounts for the remaining balance of the
Initial
Term or any Renewal Term; provided that if Executive’s targeted bonus
amount has not been determined for any period of the remainder
of the
Initial Term or any Renewal Term as of the Change In Control, it
shall be
deemed for the remainder of the Initial Term or any Renewal Term
to be on
the terms most recently determined, based upon 100% achievement
of the
targeted amount, and all applicable criteria shall be deemed to
have been
satisfied for the remainder of the Initial Term or any Renewal
Term
(including the year in which the Change In Control occurs) to achieve
the
targeted bonus amounts; and provided further that in no event shall
the
payment of Base Salary be for a period of less than one year, even
if less
than one year remains in the Initial Term or any Renewal Term as
of the
Change In Control.
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14
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(iv)
|
If
Executive’s employment is terminated by the Company without Cause or the
Executive terminates his employment for Good Reason upon the Change
In
Control, Executive shall be entitled to the benefits set forth
in Section
9(d)(ii).
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(v)
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Anything
in this Agreement to the contrary notwithstanding, in the event
that it is
determined that any payment (other than the Gross-Up payments provided
for
in this subsection) or distribution by the Company or any of its
affiliates to or for the benefit of the Executive, whether paid
or payable
or distributed or distributable pursuant to the terms of this Agreement
or
otherwise pursuant to or by reason of any other agreement, policy,
plan,
program or arrangement, including without limitation any stock
option or
similar right, or the lapse or termination of any restriction on
or the
vesting or exercisability of any of the foregoing (a “Payment”), would be
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”) (or any successor provision
thereto) by reason of being considered “contingent on a change in
ownership or control” of Company or any of its affiliates, within the
meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or
any
interest or penalties with respect to such tax (such tax
or taxes, together with any such interest and penalties, being
hereafter collectively referred to as the “Excise Tax”), then the
Executive will be entitled to receive an additional payment or
payments
(collectively, a “Gross-Up Payment”). The Gross-Up Payment will
be in an amount such that, after payment by the Executive of all
taxes
(including any interest or penalties imposed with respect to such
taxes),
including any Excise Tax imposed upon the Gross-Up Payment, the
Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed
upon the Payment. For purposes of determining the amount of the
Gross-Up Payment, the Executive will be considered to pay (1) federal
income taxes at the highest rate in effect in the year in which
the
Gross-Up Payment will be made and (2) state and local income taxes at
the highest rate in effect in the state or locality in which the
Gross-Up
Payment would be subject to state or local tax, net of the maximum
reduction in federal income tax that could be obtained from deduction
of
such state and local taxes. The Gross-Up Payment shall be made
to Executive on or as soon as practicable following the date of
the
closing of the transaction resulting in such change in control,
and in no
event later than the end of the calendar year next following the
calendar
year in which Executive pays the Excise
Taxes.
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15
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The
determination of whether an Excise Tax would be imposed, the amount of such
Excise Tax, and the calculation of the amounts referred to above will be
made by
the Company’s regular independent accounting firm (as in effect immediately
prior to the transaction that gives rise to the Excise Tax) at the expense
of
the Company or, at the election of Executive, another nationally recognized
independent accounting firm, which shall provide detailed supporting
calculations.
11. Confidentiality,
Competition, etc.
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(a)
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Confidentiality. The
Executive agrees that he shall not, directly or indirectly, make
available, sell, disclose or otherwise communicate to any person,
other
than in the course of the Executive’s employment and for the benefit of
the Company (as determined by the Executive in good faith), either
during
the period of the Executive’s employment or at any time thereafter, any
nonpublic, proprietary or confidential information, knowledge or
data
relating to the Company, any of its subsidiaries, affiliated companies
or
businesses, which shall have been obtained by the Executive during
the
Executive’s employment by the Company. The foregoing shall not apply to
information that (i) was known to the public prior to its disclosure
to
the Executive; (ii) becomes known to the public subsequent to disclosure
to the Executive through no wrongful act of the Executive or any
representative of the Executive; or (iii) the Executive is required
to
disclose by applicable law, regulation or legal process (provided
that the
Executive provides the Company with prior notice of the contemplated
disclosure and reasonably cooperates with the Company at its expense
in
seeking a protective order or other appropriate protection of such
information). Notwithstanding clauses (i) and (ii) of the preceding
sentence, the Executive’s obligation to maintain such disclosed
information in confidence shall not terminate where only portions
of the
information are in the public
domain.
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(b)
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Nonsolicitation.
During the Executive’s employment with the Company and for the one (1)
year period thereafter, the Executive agrees that he will not,
directly or
indirectly, individually or on behalf of any other person, firm,
corporation or other entity, knowingly solicit, aid or induce (i)
any
managerial level employee of the Company or any of its subsidiaries
or
affiliates to leave such employment in order to accept employment
with or
render services to or with any other person, firm, corporation
or other
entity unaffiliated with the Company or knowingly take any action
to
materially assist or aid any other person, firm, corporation or
other
entity in hiring any such employee (provided, that the foregoing
shall not
be violated by general advertising not targeted at Company employees
nor
by serving as a reference for an employee with regard to an entity
with
which the Executive is not affiliated), or (ii) any customer of
the
Company or any of its subsidiaries or affiliates to purchase goods
or
services then sold by the Company or any of its subsidiaries or
affiliates
from another person, firm, corporation or other entity or assist
or aid
any other persons or entity in identifying or soliciting any such
customer
(provided, that the foregoing shall not apply to any product or
service
which is not covered by the noncompetition provision set forth
In Section
11(c), below).
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16
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(c)
|
Noncompetition. The
Executive acknowledges that he performs services of a unique nature
for
the Company that are irreplaceable, and that his performance of
such
services to a competing entity that (i) is a value added reseller
of
computer hardware or software or (ii) provides product services,
consulting services and professional services, including but not
limited
to advisory services, deployment services, staffing services and
information technology outsourcing services (collectively, “Infrastructure
Solutions Services”) will result in irreparable harm to the Company.
Accordingly, during the Executive’s employment hereunder, and, except as
provided in Section 11(h), for the one (1) year period thereafter,
the
Executive agrees that the Executive will not, directly or indirectly,
own,
manage, operate, control, be employed by (whether as an employee,
consultant, independent contractor or otherwise, and whether or
not for
compensation), or render services to, any person, firm, corporation
or
other entity, in whatever form, that is (i) a value added reseller of
computer hardware or software or (ii) an Infrastructure Solution
Services provider, and, in either case, provides goods or services
primarily to customers in North America. This Section 11(c)
shall not prevent the Executive from (i) owning not more than one
percent
(1%) of the total shares of all classes of stock outstanding of
any
publicly traded entity that is a value added reseller of computer
hardware
or software, (ii) rendering services to charitable organizations,
as such
term is defined in Section 501(c) of the Code, or (iii) directly
or
indirectly owning, managing, operating, controlling, or being employed
by
(whether as an employee, consultant, independent contractor or
otherwise,
and whether or not for compensation), or rendering services to,
any
person, firm, corporation or other entity, in whatever form, that
is in
any of the following businesses: (A) developing computer software
(but not such a developer that sells software directly to end users),
(B)
selling computer hardware or software to persons or entities other
than
end users, and (C) providing consulting services to clients in
industries
to which the Company has not provided Infrastructure Solution Services
during the year preceding termination of the Executive’s employment with
the Company.
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(d)
|
Nondisparagement. Each
of the Executive and the Company (for purposes hereof, “the Company” shall
mean only (i) the Company by press release or other formally released
announcement and (ii) the executive officers and directors thereof
and not
any other employees) agrees that during the Employment Term and
for five
(5) years thereafter not to make any public statements that disparage
the
other party, or in the case of the Company, its respective affiliates,
employees, officers, directors, products or
services. Notwithstanding the foregoing, statements made in the
course of sworn testimony in administrative, judicial or arbitral
proceedings (including, without limitation, depositions in connection
with
such proceedings) shall not be subject to this Section 11(d). This
provision shall also not cover normal competitive statements which
do not
cite the Executive’s employment by the
Company.
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17
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(e)
|
Equitable
Relief and Other Remedies. The parties acknowledge and agree that the
other party’s remedies at law for a breach or threatened breach of any of
the provisions of this Section would be inadequate and, in recognition
of
this fact, the parties agree that, in the event of such a breach
or
threatened breach, in addition to any remedies at law, the other
party,
without posting any bond, shall be entitled to obtain equitable
relief in
the form of specific performance, temporary restraining order,
a temporary
or permanent injunction or any other equitable remedy which may
then be
available.
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(f)
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Reformation.
If it is determined by a court of competent jurisdiction in any
state that
any restriction in this Section 11 is excessive in duration or
scope or is
unreasonable or unenforceable under the laws of that state, it
is the
intention of the parties that such restriction may be modified
or amended
by the court to render it enforceable to the maximum extent permitted
by
the law of that state.
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(g)
|
Survival
of Provisions. The obligations contained in this Section 11 shall
survive the termination or expiration of the Executive’s employment with
the Company and shall be fully enforceable
thereafter.
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(h)
|
Non-Competition
Not Applicable. The one (1) year non-competition provision
set forth in Section 11(c) commencing on the date of Executive’s
termination of employment shall not be applicable if the Executive’s
employment with the Company is terminated without Cause pursuant
to
Section 8(d), by the Executive for Good Reason pursuant to Section
8(e), or if Company does not renew this Agreement upon the
expiration of the Initial Term of this Agreement or any Renewal
Term;
provided, however, such one (1) year non-competition provision
shall be
applicable in any such instance if the Company elects in writing
to
compensate Executive pursuant to Section 11(i) of this
Agreement.
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(i)
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Optional
Payment for Non-Competition. In the event that (i) the
Company does not renew this Agreement upon the expiration of the
Initial
Term of this Agreement or any Renewal Term with notice to Executive
of
such nonrenewal at least thirty (30) days prior to the expiration
of the
Initial Term or any Renewal Term, (ii) if Company terminates Executive’s
employment with the Company without Cause, or (iii) Executive terminates
his employment for Good Reason, and Company provides Executive
notice of
its intent to exercise its option under this Section 11(i) on or
before
the Date of Termination, Company shall have the option to pay Executive
an
amount equal to his Base Salary that was in effect prior to such
non-renewal or other termination as set forth above within ten
(10) days
after the Date of Termination in consideration for Executive not
competing
with Company for a period of twelve (12) months from the Date of
Termination for any of the reasons set forth
above.
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18
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12. Continued
Availability and Cooperation.
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(a)
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Following
termination of the Executive’s employment with the Company, the Executive
shall cooperate fully with the Company and with the Company’s counsel in
connection with any present and future actual or threatened litigation,
administrative proceeding or investigation involving the Company
that
relates to events, occurrences or conduct occurring (or claimed
to have
occurred) during the period of the Executive’s employment by the Company.
Cooperation will include, but is not limited
to:
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(i)
|
making
himself reasonably available for interviews and discussions with
the
Company’s counsel as well as for depositions and trial
testimony;
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(ii)
|
if
depositions or trial testimony are to occur, making himself reasonably
available and cooperating in the preparation therefore, as and
to the
extent that the Company or the Company’s counsel reasonably
requests;
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(iii)
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refraining
from impeding in any way the Company’s prosecution or defense of such
litigation or administrative proceeding;
and
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(iv)
|
cooperating
fully in the development and presentation of the Company’s prosecution or
defense of such litigation or administrative
proceeding.
|
The
Company will reimburse the Executive for reasonable travel, lodging, telephone
and similar expenses, as well as reasonable attorneys’ fees (if independent
legal counsel is necessary), incurred in connection with any cooperation,
consultation and advice rendered under this Agreement after the Executive’s
termination of employment; provided that (i) Executive shall not be required
to
make himself available for such purposes for more than three days in any
calendar month, (ii) the Company and the Executive must mutually agree on
which
days the Executive will make himself available, and (iii) the Company shall
pay
in advance to the Executive (a) all reasonably anticipated travel and other
expenses, subject to subsequent submission of supporting documentation and,
if
applicable, the refund by the Executive of any remaining balance of the advance
after he has been reimbursed fully for the actual expenses incurred, and
(b) a
per diem, not accountable, of $2,500 per day.
13. Dispute
Resolution.
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(a)
|
In
the event that the parties are unable to resolve any controversy
or claim
arising out of or in connection with this Agreement or breach thereof,
either Party shall refer the dispute to binding arbitration, which
shall
be the exclusive forum for resolving such claims. Such arbitration
will be
administered by Judicial Arbitration and Mediation Services, Inc.
(“JAMS”)
pursuant to its Employment Arbitration Rules and Procedures and
governed
by Kentucky law. The arbitration shall be conducted by a single
arbitrator
selected by the parties according to the rules of JAMS. In the
event that
the parties fail to agree on the selection of the arbitrator within
thirty
(30) days after either party’s request for arbitration, the arbitrator
will be chosen by JAMS. The arbitration proceeding shall commence
on a
mutually agreeable date within ninety (90) days after the request
for
arbitration, unless otherwise agreed by the parties, and shall
be
conducted in the Commonwealth of
Kentucky.
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(b)
|
The
parties agree that each will bear their own costs and attorneys’ fees. The
arbitrator shall not have authority to award attorneys’ fees or costs to
any party.
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(c)
|
The
arbitrator shall have no power or authority to make awards or orders
granting relief that would not be available to a party in a court
of law.
The arbitrator’s award is limited by and must comply with this Agreement
and applicable federal, state, and local laws. The decision of
the
arbitrator shall be final and binding on the
parties.
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(d)
|
Notwithstanding
the foregoing, no claim or controversy for injunctive or equitable
relief
contemplated by or allowed under applicable law pursuant to Section
11 of
this Agreement will be subject to arbitration under this Section
13, but
will instead be subject to determination in a court of competent
jurisdiction in the state of the place of performance, which court
shall
apply Kentucky law consistent with Section 13 of this Agreement,
where
either party may seek injunctive or equitable
relief.
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14.
Other Agreements.
No
agreements (other than the exhibits hereto and agreements evidencing any
grants
of equity awards) or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party
which
are not expressly set forth in this Agreement. Each party to this Agreement
acknowledges that no representations, inducements, promises, or other
agreements, orally or otherwise, have been made by any party, or anyone acting
on behalf of any party, pertaining to the subject matter hereof, which are
not
embodied herein, and that no prior and/or contemporaneous agreement, statement
or promise pertaining to the subject matter hereof that is not contained
in this
Agreement shall be valid or binding on either party.
15. Withholding
of Taxes.
The
Company will withhold from any amounts payable under this Agreement all federal,
state, city or other taxes as the Company is required to withhold pursuant
to
any law or government regulation or ruling.
16. Successors
and Binding Agreement.
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(a)
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The
Company will require any successor (whether direct or indirect,
by
purchase of assets or stock, merger, consolidation, reorganization
or
otherwise) to all or substantially all of the business or assets
of the
Company expressly to assume and agree to perform this Agreement
in the
same manner and to the same extent the Company would be required
to
perform if no such succession had taken place. This Agreement will
be
binding upon and inure to the benefit of the Company and any successor
to
the Company, including without limitation any persons acquiring
directly
or indirectly all or substantially all of the business or assets
of the
Company whether by purchase, merger, consolidation, reorganization
or
otherwise (and such successor shall thereafter be deemed the “Company” for
the purposes of this Agreement), but will not otherwise be assignable,
transferable or delegable by the Company, except that the Company
may
assign and transfer this Agreement and delegate its duties thereunder
to a
wholly owned Subsidiary; provided that following any such assignment
the
Company shall remain fully liable with respect to all of its obligations
under this Agreement.
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(b)
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This
Agreement will inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees and
legatees.
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(c)
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This
Agreement is personal in nature and neither of the parties hereto
shall,
without the consent of the other, assign, transfer or delegate
this
Agreement or any rights or obligations hereunder except as expressly
provided in Sections 16(a) and 16(b). Without limiting the generality
or
effect of the foregoing, the Executive’s right to receive payments
hereunder will not be assignable, transferable or delegable, whether
by
pledge, creation of a security interest, or otherwise, other than
by a
transfer by the Executive’s will or by the laws of descent and
distribution and, in the event of any attempted assignment or transfer
contrary to this Section 16(c), the Company shall have no liability
to pay
any amount so attempted to be assigned, transferred or
delegated.
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17. Notices.
All
communications, including without limitation notices, consents, requests
or
approvals, required or permitted to be given hereunder will be in writing
and
will be duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof confirmed), or five (5) business days
after
having been mailed by United States registered or certified mail, return
receipt
requested, postage prepaid, or three (3) business days after having been
sent by
a nationally recognized overnight courier service such as Federal Express
or
UPS, addressed to the Company (to the attention of the General Counsel of
the
Company) at its principal executive offices and to the Executive at his
principal residence, or to such other address as any party may have furnished
to
the other in writing and in accordance herewith, except that notices of changes
of address shall be effective only upon receipt.
18. Governing
Law and Choice of Forum.
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(a)
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This
Agreement will be construed and enforced according to the laws
of the
Commonwealth of Kentucky, without giving effect to the conflict
of laws
principles thereof.
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(b)
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To
the extent not otherwise provided for by Section 13 of this Agreement,
the
Executive and the Company consent to the jurisdiction of all state
and
federal courts located in Xxxxx County, Kentucky, as well as to
the
jurisdiction of all courts of which an appeal may be taken from
such
courts, for the purpose of any suit, action, or other proceeding
arising
out of, or in connection with, this Agreement or that otherwise
arises out
of the employment relationship. Each party hereby expressly waives
any and
all rights to bring any suit, action, or other proceeding in or
before any
court or tribunal other than the courts described above and covenants
that
it shall not seek in any manner to resolve any dispute other than
as set
forth in this paragraph and Section 13 of this Agreement. Further,
the
Executive and the Company hereby expressly waive any and all objections
either may have to venue, including, without limitation, the inconvenience
of such forum, in any of such courts. In addition, each of the
parties
consents to the service of process by personal service or any manner
in
which notices may be delivered hereunder in accordance with this
Agreement.
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19. Validity/Severability.
If
any provision of this Agreement or the application of any provision is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement
and
the application of such provision will not be affected, and the provision
so
held to be invalid, unenforceable or otherwise illegal will be reformed to
the
extent (and only to the extent) necessary to make it enforceable, valid or
legal. To the extent any provisions held to be invalid, unenforceable or
otherwise illegal cannot be reformed, such provisions are to be stricken
herefrom and the remainder of this Agreement will be binding on the parties
and
their successors and assigns as if such invalid or illegal provisions were
never
included in this Agreement from the first instance.
20. Survival
of Provisions.
Notwithstanding
any other provision of this Agreement, the parties’ respective rights and
obligations under Sections 8, 9, 10, 11, 12, 13, 17, 18, 20, and 21 will
survive
any termination or expiration of this Agreement or the termination of the
Executive’s employment with the Company.
21. Liability
Insurance.
The
Company shall cover the Executive under directors and officers liability
insurance both during and, while potential liability exists, after the term
of
this Agreement in the same amount and to the same extent as the Company covers
its other officers and directors. The Company shall provide a
certificate of insurance confirming this coverage promptly upon receipt of
a
request for same from Executive.
22. Public
Announcements.
The
Company shall give the Executive a reasonable opportunity to review and comment
in advance on any public announcement (including any filing with a governmental
agency or stock exchange) relating to this Agreement or the Executive’s
employment by the Company.
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23. Compliance
with Code Section 409A.
This
Agreement is intended to comply with the requirements of Code Section 409A
and
the regulations and guidance issued thereunder and shall be interpreted and
administered in a manner consistent with that intent. Any provision
of this Agreement to the contrary notwithstanding, if Executive is a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code as of the
date of his separation from service with the Company, no distribution that
is
subject to and not otherwise exempt from Code Section 409A shall be made
or
commence under this Agreement sooner than six months from the date of
Executive’s separation from service (or, if earlier, the date of the Executive’s
death). In such case, any payments that were otherwise required to be
made within such six-month period shall be accumulated and paid in a single
lump
sum on the first day of the month immediately following the end of such
six-month period.
The
remainder of this page is intentionally blank.
Signature
page to follow.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first above written.
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XXXXXXX
IT SOLUTIONS, INC.
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By: /s/ Xxxxx
X. Xxxxxxx
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Xxxxx
Xxxxxxx
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Its:
Chief
Executive Officer
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/s/ Xxxxx
X. Xxxxxx
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