October 23, 1996
Xx. Xxxxxx X. Xxxxxxxx
0000 Xxxxxxxx Xxx
Xxxxxxx, XX 00000
Dear Xx. Xxxxxxxx:
This letter updates, revises, and supersedes the letter agreement
between Continental Information Systems Corporation (the "Company") and Xxxxxx
X. Xxxxxxxx ("Xxxxxxxx") dated December 6, 1995, and sets forth the current
agreement between the same parties with respect to certain severance and
compensation matters.
In consideration of Xxxxxxxx'x serving in the office of President
and Chief Executive Officer ("CEO"), the Company agrees as follows:
1. Base Salary.
Effective December 14, 1995, and for so long as Xxxxxxxx serves
as CEO, Xxxxxxxx shall receive a base salary of $225,000 per year, or such
greater amount as is approved by the Board of Directors.
2. Severance.
(a) Xxxxxxxx shall be entitled to receive the following severance
benefits upon the occurrence of a Severance Event (as defined in Exhibit A): (1)
a severance payment equal to eighteen (18) months base salary as in effect on
the date of the Severance Event, payable, at Xxxxxxxx'x option in a lump sum or
in 18 equal monthly installments; (2) Continued Benefits (as defined in Exhibit
A) until the earlier of eighteen (18) months from the date of the Severance
Event or the commencement by Xxxxxxxx of full time employment by another
employer;
(b) Xxxxxxxx shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment, nor, except
as provided in Section 2(a) above, shall the amount or term of any payment or
benefits provided for in this Agreement be reduced by any compensation or
benefits earned by Xxxxxxxx as the result of employment by another employer
after the Date of Termination (as defined in Exhibit A), or otherwise.
3. General Provisions.
(a) Binding Effect. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto, any successors to or assigns of the
Company and Xxxxxxxx'x heirs and the personal representatives of Xxxxxxxx'x
estate.
(b) Arbitration. Any disputes, controversies, or claims arising
out of or related to this Agreement ("Disputes") shall be resolved by binding
arbitration in accordance with the provisions of Exhibit B.
(c) Amendment; Waiver. This Agreement may not be modified,
amended or waived in any manner except by an instrument in writing signed by
both parties hereto; provided, however, that any such modification, amendment or
waiver on the part of the Company shall have been previously approved by the
Board. The waiver by either party of compliance with any provision of this
Agreement by the other party shall not operate or be construed as a waiver of
any other provision of this Agreement or of any subsequent breach by such party
of a provision of this Agreement.
(d) Tax Withholding. Payments to Xxxxxxxx of all compensation
contemplated under this Agreement shall be subject to all applicable legal
requirements with respect to the withholding of taxes and social security
contributions.
(e) Governing Law. All matters affecting this Agreement,
including the validity thereof, are to be governed by, and interpreted and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State.
(f) Notices. Any notice hereunder by either party to the other
shall be given in writing by personal delivery or certified mail, return receipt
requested. If addressed to Xxxxxxxx, the notice shall be delivered or mailed to
Xxxxxxxx at the address first set forth above, or if addressed to the Company,
the notice shall be delivered or mailed to Continental Information Systems
Corporation, Xxx Xxxxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxx, Xxx Xxxx 00000, Attention:
Secretary, or such other address as the Company or Xxxxxxxx may designate by
written notice at any time or from time to time to the other party. A notice
shall be deemed given, if by personal delivery, on the date of such delivery or,
if by certified mail, on the date shown on the applicable return receipt.
(g) Effect on Previous Agreements. This agreement supersedes the
"change-in-control" agreement dated January 4, 1995, between Xxxxxxxx and the
Company, all prior oral or written employment agreements between Xxxxxxxx and
the Company, and all prior or contemporaneous negotiations, commitments,
agreements, and writings with respect to the subject matter hereof; all such
other negotiations, commitments, agreements, and writings will have no further
force or effect; and the parties to any such other negotiation, commitment,
agreement, or writing will have no further rights or obligations thereunder.
(h) Counterparts. Either of the parties hereto may execute this
Agreement in counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same instrument.
(i) Headings. The headings of sections herein are included solely
for convenience of reference and shall not control the meaning or interpretation
of any of the provisions of this Agreement.
(j) Term. This agreement will expire one year from the date
hereof, unless extended in writing by both parties hereto.
If you are in agreement with the foregoing, please execute in the
space provided below for your signature, whereupon this Agreement shall
constitute a binding Agreement between Xxxxxxxx and the Company.
CONTINENTAL INFORMATION SYSTEMS CORPORATION
By: /s/ XXXXX X. XXXXXXX
---------------------
Name: Xxxxx X. Xxxxxxx
Authorized Signatory
ACCEPTED AND AGREED:
/s/ XXXXXX X. XXXXXXXX
------------------
Xxxxxx X. Xxxxxxxx
Date: November 1, 1996
EXHIBIT A
Definitions of Terms Relating to Severance
1. Severance Event: Termination by the Company of Xxxxxxxx'x
employment other than for Cause, or resignation by Xxxxxxxx from the Company for
Good Reason.
2. Cause: Termination by the Company of Xxxxxxxx'x employment
upon (a) Xxxxxxxx'x willful and continued failure to substantially perform his
duties with the Company (other than any such failure resulting from his
incapacity due to physical or mental illness), or (b) Xxxxxxxx'x willfully
engaging in misconduct that is materially injurious to the Company, monetarily
or otherwise. For purposes of this paragraph, no act, or failure to act, on
Xxxxxxxx'x part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interest of the Company. Notwithstanding the foregoing,
Xxxxxxxx shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to Xxxxxxxx a copy of a Notice of Termination
from the Board, after reasonable notice to Xxxxxxxx and an opportunity for him
and his counsel to be heard before the Board, finding that in the good faith
opinion of the Board he has engaged in conduct warranting termination for cause
under clauses (a) and (b) above.
3. Good Reason: Xxxxxxxx'x resignation of his employment with the
Company within 120 days following the occurrence of any of the following events:
(a) Reduction of Xxxxxxxx'x annual base salary below
$225,000;
(b) Without Xxxxxxxx'x written consent and measured
against his status as of December 14, 1995, the
assignment to him of any duties at a level below his
positions, duties, responsibilities, and status, or
a reduction in his reporting responsibilities,
titles, or offices, or any removal of him from or
any failure to re-elect him to any such positions,
except in connection with the termination of his
employment for Cause, disability, or retirement or
as a result of his death, or by him other than for
Good Reason; or
(c) The Company (i) does not allow Xxxxxxxx to
participate in any employee benefit plan on the same
terms and conditions made available to other senior
executive personnel, or (ii) unilaterally makes a
materially adverse change in the economic terms of
any incentive or bonus plan in which Xxxxxxxx is
entitled to participate; provided, that the
foregoing shall not restrict the Board's discretion
to award bonuses, stock options, or other incentive
compensation in such amounts as it determines;
In the event that Xxxxxxxx does not resign within 120 days of the occurrence of
any of the foregoing events, his rights with respect to such Good Reason shall
be deemed waived by Xxxxxxxx.
4. Notice of Termination: A written notice which shall indicate
the specific termination provision in this Agreement that is relied upon by the
party terminating Xxxxxxxx'x employment and which shall summarize the basis for
termination of Xxxxxxxx'x employment. Any purported termination by the Company
for Cause, or Xxxxxxxx'x resignation for Good Reason shall be communicated by
Notice of Termination to the other party hereto.
5. Date of Termination: (a) if Xxxxxxxx'x employment is
terminated for Cause, the date specified by the Company in the Notice of
Termination, and (b) if Xxxxxxxx'x employment is terminated by Xxxxxxxx for Good
Reason, the date on which the Notice of Termination is given.
6. Continued Benefits: The following benefits, which shall be
maintained in full force and effect by the Company for the benefit of Xxxxxxxx
and his surviving dependents for the applicable period: all life insurance,
medical, health and accident, and disability plans, programs or arrangements in
which Xxxxxxxx was entitled to participate immediately prior to the Severance
Event, provided that Xxxxxxxx'x continued participation is possible under the
general terms and provisions of such plans and programs. In the event that
Xxxxxxxx'x participation in any such plan or program is barred, the Company
shall make reasonable efforts to obtain insurance for Xxxxxxxx that would
provide him with benefits substantially similar to those which Xxxxxxxx is
entitled to receive under such plans and programs, but the Company shall not
provide those benefits directly if they cannot be obtained through insurance and
shall not be obligated to pay premiums in excess of two (2) times the group rate
previously paid on his behalf. Xxxxxxxx agrees that any such coverage will
reduce the applicable period for which coverage might have to be offered under
applicable federal or state laws. Nothing in this provision shall provide
eligibility for bonuses, vacation, or pension or profit-sharing programs after
the Severance Event, except as otherwise required by the generally-applicable
terms of those programs.
EXHIBIT B
Arbitration Provisions
1. Any arbitration required under Section 3(b) of this Agreement
shall be administered by the American Arbitration Association ("AAA"), and shall
be conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "Rules"), as such Rules may be amended from time to
time, with the hearing locale to be Syracuse, New York, unless some other
location and/or arbitrator are chosen by mutual consent of the Company and
Xxxxxxxx.
2. A single neutral arbitrator shall preside over the arbitration
and decide the Dispute (the "Decision"). The AAA shall use its normal procedures
pursuant to the Rules for selection of an arbitrator.
3. The Decision shall be binding, and the prevailing party may
enforce such decision in any court of competent jurisdiction.
4. The parties shall cooperate with each other in causing the
arbitration to be held in as efficient and expeditious a manner as practicable
and in this connection to furnish such documents and make available such persons
as the Arbitrator may request.
5. The parties have selected arbitration in order to expedite the
resolution of Disputes and to reduce the costs and burdens associated with
litigation. The parties agree that the Arbitrator should take these concerns
into account when determining whether to authorize discovery and, if so, the
scope of permissible discovery and other hearing and pre-hearing procedures.
6. Without limiting any other remedies that may be available
under applicable law, the Arbitrator shall have no authority to award punitive
damages.
7. The Arbitrator shall render a Decision within ninety (90) days
after accepting an appointment to serve as Arbitrator unless the parties
otherwise agree or the Arbitrator makes a finding that a party has carried the
burden of showing good cause for a longer period.
8. All proceedings and decisions of the Arbitrator shall be
maintained in confidence, to the extent legally permissible, and shall not be
made public by any party or any Arbitrator without the prior written consent of
all parties to the arbitration, except as may be required by law.
9. Each party shall bear its own costs and attorneys' fees, and
the parties shall equally bear the fees, costs, and expenses of the Arbitrator
and the arbitration proceedings; provided, however, that the Arbitrator may
exercise discretion to award costs, but not attorneys' fees, to the prevailing
party.
