EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of June 20, 2002 (the "Effective Date"), is
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entered into between Continental Information Systems Corporation, a New York
corporation (hereinafter the "Company"), and Xxxxx Xxxx (hereinafter the
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"Executive").
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WHEREAS, the Executive is currently employed by the Company and serves
as a director on the Company's Board of Directors, and
WHEREAS, by continuing employment with the Company, the Executive has
agreed to forego seeking other executive employment, and to assist the Company
in winding down its operations, liquidating its assets and settling its
liabilities involving difficult and contentious outstanding litigation, and
WHEREAS, Executive would not have agreed to continue employment with
the Company in a winding down period with the attendant difficulties, including
litigation, in the absence of this Agreement, and
WHEREAS, understanding the foregoing, the Company wishes to continue to
employ the Executive due to his long experience with the Company, expertise in
winding down operations and success in resolving past difficult and contentious
litigation, and the Executive will agree to accept such continued employment
upon the following terms and conditions.
NOW THEREFORE, in consideration of the mutual promises set forth herein
and other good and valuable consideration, it is mutually agreed as follows:
1. Employment; Duties; Term; Extent of Services
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(a) Employment. The Company hereby employs the Executive,
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and the Executive agrees to serve the Company as its Chief Executive Officer and
Chief Financial Officer, subject to the terms and conditions hereinafter set
forth.
(b) Duties. In his capacities as Chief Executive Officer and
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Chief Financial Officer, the Executive will perform such duties on behalf of the
Company consistent with those currently being performed by Executive and
consistent with the positions of Chief Executive Officer and Chief Financial
Officer (including without limitation, managing the Company's operations and
personnel, and authorizing all payroll and other compensation payments). The
Executive will continue as a member of the Board of Directors of the Company and
agrees to abide by the rules, regulations, instructions, personnel practices and
policies of the Company and any changes therein which may be adopted and
delivered to the Executive from time to time by the Board of Directors of the
Company.
(c) Term. The term of employment of the Executive shall be
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from the Effective Date until the third anniversary thereof, subject to earlier
termination upon the terms and conditions hereinafter set forth (such period, as
it may be extended, is referred to in this Agreement as the "Employment
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Period"). Unless notice of non-renewal is given in writing by either party at
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least ninety (90) days prior to the end of such period, the Employment Period
will continue thereafter for successive twelve (12) month periods.
(d) Extent of Services. During the Employment Period, the
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Executive will devote such amount of his time and attention (which may be less
than his full time) to the performance of his duties under this Agreement, as
Executive deems necessary or appropriate. Nothing herein shall prevent the
Executive from holding other positions, serving charities, making personal
investments and pursuing similar interests of a personal nature, so long as it
does not materially interfere with his services to the Company.
2. Compensation. The Company agrees to compensate the Executive
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for the services rendered by him during his employment as follows:
(a) The Company shall pay the Executive an annual salary of
$200,000, payable in accordance with the standard payroll practices of the
Company ("Annual Salary"). The Annual Salary may be increased from time to time
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by the Board of Directors, in its sole discretion.
(b) The Executive shall participate in such incentive
compensation plan of the Company as adopted or to the extent maintained by the
Board of Directors of the Company from time to time, in its sole discretion.
(c) The Executive shall be permitted to participate in a
manner as heretofore in all medical, dental, life and disability insurance
benefit plans applicable to officers of the Company.
(d) The Executive shall be permitted to participate in a
manner as heretofore in all employee retirement benefit plans (401(k)/Profit
Sharing) applicable to the officers of the Company.
(e) The Executive shall be permitted to take paid vacation
in accordance with the Company's vacation policy as in effect during the year
prior to the date of this Agreement. Paid holidays may be taken in accordance
with the holiday policy and schedule of the Company.
(f) The Company will continue to reimburse the Executive for
all meals, travel and other business expenses incurred by the Executive in
connection with the Company's business affairs in accordance with past practice.
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(g) All payments made to the Executive pursuant to this
Agreement shall be net of all required federal, state and local withholdings for
taxes and similar charges and by all contributions or payments, if any, required
to be made by the Executive in connection with any Company employment benefit
plan in which he participates.
3. Termination by the Company.
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(a) For Cause. The Company may terminate the Executive's
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employment at any time upon written notice to the Execution for "Cause", which
shall be defined as occurrence of any of the following:
(i) the Executive's conviction or entrance of a plea
of guilty or no contest to a felony; or
(ii) the Executive's commission of any willful
misconduct with respect to the Company's business or material properties, which
constitutes an act of material fraud, embezzlement, misappropriation or theft.
(b) Upon Death or Disability. This Agreement shall
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automatically terminate upon the death of Executive and may be terminated by the
Company upon the disability of Executive the result of which prevents Executive
from carrying out his assigned duties for any cumulative period of more than one
hundred and eighty (180) days during any three hundred sixty-five (365) day
period ("Disability"). Termination by reason of Executive's Disability shall be
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effective upon notice to the Executive from the Company.
4. Termination by the Executive.
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(a) Resignation. Notwithstanding any other provisions of
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this Agreement, the Executive shall have the right to resign at any time upon
sixty (60) days' prior written notice to the Company.
(b) For Good Reason. The Executive may terminate this
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Agreement by written notice to the Company upon the occurrence of any of the
following (each constituting "Good Reason"):
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(i) a transfer of the Company's offices, or a transfer
of Executive to a location, which would increase Executive's daily commute (by
the most direct route) from his permanent residence by more than twenty-five
(25) miles in each direction, in either case without Executive's consent;
(ii) a material breach of this Agreement by the
Company;
(iii) a diminution of the responsibilities, or reporting
hierarchy, or scope of authority of Executive, or a failure of the Company's
shareholders to re-elect Executive to the Board of Directors to successive terms
during the term of this Agreement; or
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(iv) the Company shall attempt to terminate this
Agreement for any reason other than for Cause, non-renewal or the death or
Disability of the Executive.
(c) Change of Control. The Executive shall have the right to
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terminate this Agreement upon the occurrence of a "Change of Control" of the
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Company, which shall include the occurrence of any of the following events:
(i) the sale, lease, transfer or other disposition, in
one or a series of transactions, of all or substantially all of the assets of
the Company to any "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended),
(ii) any such "person" or "group" shall become the
"beneficial owner(s)" (as defined in said Rule 13d-3) of shares of Stock of the
Company or of any parent corporation of the Company that, directly or
indirectly, entitles the holder thereof to control more than ten percent (10%)
of all voting rights with respect to all shares of Stock of the Company;
(iii) the approval by the stockholders of the Company
of, or consummation of, a merger, reorganization, consolidation, exchange of
shares, recapitalization, restructuring or other business combination in which
the Company is not the surviving entity;
(iv) any entity or person or two or more entities or
persons acting in concert shall acquire beneficial ownership, directly or
indirectly, of, or shall acquire by contract or otherwise, or shall have entered
into a contract or arrangement that, upon consummation, will result in its or
their acquisition of the right to elect a majority of the Board of Directors of
the Company, or the current Board of Directors of the Company shall no longer
constitute a majority of the Board of Directors (unless the Executive shall
consent thereto); or
(v) any transaction that results in the stock of the
Company no longer being required to be registered under Section 12 of the
Exchange Act.
5. Effect of Termination on Compensation.
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(a) Termination for Cause; Resignation; Non-Renewal by
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Executive. In the event that Executive's employment with the Company is
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terminated by the Company for Cause, or by the Executive upon his resignation or
non-renewal, the Executive shall be entitled to receive his salary and benefits
(including any incentive compensation) accrued through the date of termination
or resignation.
(b) Death. In the event that the Executive's employment with
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the Company terminates upon his death, the Executive's Annual Salary and
benefits (including any incentive compensation accrued through the date of his
death), shall continue to be paid to his estate for twenty-four (24) months
after the date of death.
(c) Disability. In the event that the Executive's employment
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with the Company terminates upon his Disability, the Executive will continue to
be paid his Annual Salary (and any accrued incentive compensation
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accrued through the termination date) for twenty-four (24) months after the
effective date of termination, after which time the Executive shall be entitled
to receive benefits for so long as permitted under the Company's long-term
disability insurance policy. The Executive shall continue to participate in the
Company's health insurance plans as prior to the Disability, or may elect to
receive such insurance benefits under COBRA, (in which case the Company shall
reimburse the Executive for an amount equal to the premiums payable for such
health insurance by the Executive under COBRA minus any amount that the
Executive may have contributed for such health insurance immediately prior to
such Disability).
(d) Company's Non-Renewal. In the event the Executive's
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employment with the Company is terminated by the Company for reason of
non-renewal of the employment term, the Executive shall be entitled to continue
to receive his Annual Salary (and any incentive compensation accrued through the
termination date) for a period of twenty-four (24) months from the effective
termination date.
(e) Good Reason or Change of Control. In the event the
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Executive's employment with the Company is terminated by the Executive for Good
Reason or by reason of a Change of Control, the Executive shall be entitled to
receive, in one payment made on or prior to the effective termination date, a
sum equal to the greater of (i) his Annual Salary multiplied by two (2), or (ii)
the aggregate balance of his Annual Salary payments that would have been made
through the end of the then-current term of this Agreement. The Company agrees
that the payment to be made to the Executive under this Section 5(e) shall not
preclude the Executive from asserting any other claims, or exercising any other
rights he may have hereunder, at law or in equity, relating to the circumstances
of such termination of employment.
(f) No Mitigation. The Company agrees that no payments to be
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made to the Executive under this Section 5 shall be reduced as a result of any
compensation the Executive may receive through employment with a third party or
any other source, and the Executive shall have no obligation to mitigate any
payment amount due hereunder by seeking other employment or otherwise.
(g) Conflicts. In the event of any conflict between the
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terms of the policies and programs of the Company as at any time in effect and
this Agreement, the provisions of this Agreement shall control.
6. Dispute Resolution.
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(a) Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
before a single arbitrator in New York, New York in accordance with the rules of
the American Arbitration Association then in effect. The Company shall pay all
costs arising out of or relating to such proceeding. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
the Executive shall be entitled to specific performance of his right to be paid
pursuant to the terms hereof during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
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(b) In addition to any rights that Executive may have as an
officer and director of the Company under the Company's certificate of
incorporation or under any directors and officers liability insurance policy
maintained by the Company, (i) the Company shall indemnify the Executive and
hold him harmless from any cost, expense or liability arising out of or relating
to any acts or decisions made by him, or in the course of performing services
hereunder, within the scope of his employment hereunder, (ii) the Company shall
bear, or reimburse the Executive for, all legal fees incurred by him in
connection with entering into this Agreement, and shall pay all legal fees and
other fees and expenses which the Executive may incur with respect to claims
arising under or in connection with this Agreement, whether the Company or the
Executive initiates an action with respect to this Agreement (regardless of the
outcome thereof) and Executive shall not be obligated to return any such amounts
regardless of the outcome of such proceeding and (iii) in the event any suit,
claim, action or investigation shall be brought by any person or entity
(including without limitation, the Company) against Executive in connection with
this Agreement the Company shall pay and advance to the Executive (on a monthly
basis), upon his request therefor, all his costs and expenses of defending
against such suit, claim, action or investigation, including all attorneys' fees
and expenses.
(c) THE EXECUTIVE SHALL NOT BE LIABLE TO THE COMPANY FOR,
AND THE COMPANY HEREBY WAIVES ANY RIGHT TO CONSEQUENTIAL, INCIDENTAL OR PUNITIVE
DAMAGES ON ACCOUNT OF ANY BREACH OR TERMINATION OF THIS AGREEMENT OR ACCOUNT OF
ANY OTHER ACTION OR OMISSION OF EXECUTIVE. IN THE EVENT AN ACTION IS BROUGHT BY
EITHER PARTY TO ENFORCE THIS AGREEMENT, THE COMPANY SHALL PAY ALL OF THE
ATTORNEYS' FEES AND OTHER EXPENSES INCURRED BY THE EXECUTIVE IN THE LITIGATION,
IRRESPECTIVE OF THE OUTCOME OF SUCH LITIGATION.
7. Binding Effect; Assignment. Except as hereinafter set forth,
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this Agreement shall be binding upon and inure to the benefit of the Executive
and the Company and their respective permitted successors and assigns. Neither
this Agreement nor any of the rights or benefits hereunder may be assigned by
the Executive. In the event the Company merges or consolidates with or into any
other corporation or sells or otherwise transfers substantially all of its
assets to another corporation, the provisions of this Agreement shall be binding
upon and inure to the benefit of the corporation surviving or resulting from the
merger or consolidation or to which such assets are sold or transferred.
8. Notices and Demands. All notices, demands and communications
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provided for in this Agreement or made under this Agreement shall be in writing
and deemed given when actually delivered personally, by facsimile, by overnight
courier, or by registered or certified mail, return receipt requested, with
postage prepaid, addressed in each case as follows:
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(a) To the Company:
Continental Information Systems Corporation
00 Xxxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, XX 00000
Fax No. (000) 000-0000
Attention: Chief Executive Officer
(b) To the Executive:
Xx. Xxxxx Xxxx
X.X. Xxx 000
Xxx Xxxx, XX 00000
Fax No. (000) 000-0000
or such other address or fax number as may, after the date of this Agreement, be
designated by the Executive or the Company by notice given to the other party as
the address to which communications under this Agreement shall thereafter be
delivered or mailed.
Notices, demands and communications shall be deemed to have been given
or made (a) on the date delivered, if delivered personally or by facsimile; (b)
on the next business day, if delivered by overnight courier, or (c) three (3)
business days after being sent, if sent by registered or certified mail, return
receipt requested.
9. Governing Law. This agreement has been executed and delivered
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in the State of New York and its validity, interpretation, performance and
enforcement shall be governed by the laws of said State without regard to
principles of conflict of laws.
10. Entire Agreement; Amendment; Waivers. This Agreement,
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including its Schedules, contains the entire agreement between the parties
relating to the subject matter hereof and supersedes any prior or other
understandings, agreements or representations relating thereto. This Agreement
may not be amended, modified or supplemented except by an agreement in writing
signed by the parties hereto. Waiver by any party or any breach of this
Agreement shall not operate or be construed as a continuing waiver or as a
waiver of any subsequent breach.
11. Severability. The invalidity or unenforceability of any
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particular provision of this Agreement shall not affect the other provisions of
this Agreement, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provision were omitted.
12. Headings; Construction. The section and other headings
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contained in this Agreement are for reference purposes only and shall not affect
the interpretation of this Agreement. Whenever required by the context,
references to the singular shall include the plural, and the masculine gender
shall include the feminine gender.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement to be
effective as of the date first above written.
CONTINENTAL INFORMATION SYSTEMS
CORPORATION
By:
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Name:
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Title:
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EXECUTIVE
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Name: Xxxxx Xxxx
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