EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") by and between Pentacon,
Inc., a Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxx ("Executive")
is hereby entered into and effective as of the th day of January, 1998. This
Agreement hereby supersedes any other employment agreements or understandings,
written or oral, between the Company and Executive.
RECITALS
The following statements are true and correct:
As of the date of this Agreement, the Company is engaged primarily in
the acquisition and operation of companies engaged in the distribution of
fasteners and provision of related inventory services.
Executive is employed hereunder by the Company in a confidential
relationship wherein Executive, in the course of his employment with the
Company, has and will continue to become familiar with and aware of confidential
and proprietary information as to the Company's customers and specific manner of
doing business, including the processes, techniques and trade secrets utilized
by the Company, and future plans with respect thereto, all of which has been and
will be established and maintained at great expense to the Company. This
confidential and proprietary information is a trade secret and constitutes the
valuable goodwill of the Company.
Therefore, in consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, it is hereby agreed as
follows:
AGREEMENTS
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Executive as Vice President-Corporate
Controller of the Company. As such, Executive shall have responsibilities,
duties and authority reasonably accorded to, expected of and consistent with
Executive's position as Vice President-Corporate Controller of the Company and
will report directly to the Chief Financial Officer of the Company (the "CFO").
Executive hereby accepts this employment upon the terms and conditions herein
contained and, subject to paragraph 1(c), agrees to devote substantially all of
his business-related time, attention and efforts to promote and further the
business and interests of the Company and its affiliates.
(b) Executive shall faithfully adhere to all lawful policies established
by the Company.
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(c) Executive shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes in any material respect with
Executive's duties and responsibilities hereunder. The foregoing limitations
shall not be construed as prohibiting Executive from (i) making personal
investments in such form or manner as will neither require his services in the
operation or affairs of the companies or enterprises in which such investments
are made nor violate the terms of paragraph 3 hereof; (ii) participating in
professional development activities; or (iii) acting as a director of not more
than one other corporation which does not compete with the Company provided such
representation does not adversely impact the Executive's duties hereunder.
(d) Executive cannot be required by the Company to relocate unless the
Executive consents to such relocation. The Executive's refusal to relocate shall
not be considered "cause" for termination. Furthermore, Executive shall not be
required to commute to another location or travel extensively in lieu of
relocation.
2. COMPENSATION. For all services rendered by Executive, the Company
shall compensate Executive beginning upon the consummation of the initial public
offering of the common stock of Pentacon (the "IPO") as follows:
(a) BASE SALARY. The base salary payable to Executive shall be $100,000
per year commencing upon the consummation of the IPO, and payable on a regular
basis in accordance with the Company's standard payroll procedures but not less
than monthly. Such base salary may be increased (but not decreased) from time to
time, at the discretion of the Board of Directors of Pentacon ("the Board"), in
light of Executive's annual review, position, responsibilities and performance.
(b) STOCK GRANT. The Company agrees to grant Executive 65,000 shares of
Restricted Common Stock of the Company upon the date of the IPO. Such shares
will vest over three years, one third on each of the first, second and third
anniversaries of the IPO date, respectively.
(c) STOCK OPTION GRANT. Executive shall receive 50,000 options to
purchase shares of stock of the Company, exercisable at the price the stock is
issued in the IPO. Such options shall vest as follows: 30% shall vest at the end
of the second anniversary hereof and 100% shall vest at the end of the third
anniversary hereof.
(d) BONUS. Executive shall receive an annual bonus to be determined by
the Board. Such bonus shall be targeted at 30% of Executive's base salary,
subject to yet to-be-determined performance criteria.
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(e) EXECUTIVE PERQUISITES, BENEFITS AND OTHER COMPENSATION. Executive
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Executive and his
dependent family members under health, hospitalization, disability,
dental, life and other insurance plans that the Company may have in
effect from time to time (all in an amount not less than such benefits
provided to other Company executives).
(ii) Reimbursement for all business travel and other
out-of-pocket expenses and professional dues and fees reasonably
incurred by Executive in the performance of his services pursuant to
this Agreement. All reimbursable expenses shall be appropriately
documented in reasonable detail by Executive upon submission of any
request for reimbursement, and in a format and manner consistent with
the Company's expense reporting policy.
(iii) The Company shall provide Executive with other executive
perquisites as may be available to or deemed appropriate for Executive
by the Board and Executive shall be eligible for participation in all
other Company-wide employee benefits as are available from time to time.
(iv) The Executive shall be entitled to three (3) weeks paid
vacation per year.
3. NON-COMPETITION AGREEMENT.
(a) Executive recognizes that the Company's willingness to enter into
this Agreement is based in material part on Executive's agreement to the
provisions of this paragraph 3 and that Executive's breach of the provisions of
this paragraph 3 could materially damage the Company. Subject to and so long as
the Company is not in violation of its obligations under this Agreement,
Executive will not, during the period of his employment by or with the Company,
and for a period of one (1) year immediately following the termination of his
employment under this Agreement, for any reason whatsoever (other than a
termination by the Company without cause, or a termination by Executive with
Good Reason (as hereinafter defined)), directly or indirectly, for himself or on
behalf of or in conjunction with any other person, company, partnership,
corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any business in direct competition with the Company
or its subsidiaries, within one hundred (100) miles of where the Company
or any of its
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subsidiaries conduct business, including any territory serviced by the
Company or any of its subsidiaries (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company or its subsidiaries (including the
respective subsidiaries thereof) in a managerial capacity for the
purpose or with the intent of enticing such employee away from or out of
the employ of the Company or its subsidiaries;
(iii) call upon any person or entity which is, at that time, or
which has been, within one (1) year prior to that time, a customer of
the Company or its subsidiaries within the Territory for the purpose of
soliciting or selling products or services in direct competition with
the Company or its subsidiaries within the Territory; or
(iv) call upon any prospective acquisition candidate, on
Executive's own behalf or on behalf of any competitor, which candidate
was, to Executive's knowledge after due inquiry, either called upon by
the Company or its subsidiaries or for which the Company or its
subsidiaries made an acquisition analysis, for the purpose of acquiring
such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Executive from acquiring as an investment not more than two percent
(2%) of the capital stock of a competing business, whose stock is traded on a
national securities exchange or on an over-the-counter or similar market.
(b) Because of the difficulty of measuring economic losses to the
Company and its subsidiaries as a result of a breach of the foregoing covenant,
and because of the immediate and irreparable damage that could be caused to the
Company and its subsidiaries for which they would have no other adequate remedy,
Executive agrees that the foregoing covenant may be enforced by the Company or
its subsidiaries, in the event of breach by him, by injunctions and restraining
orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Executive in light of the
activities and business of the Company or its subsidiaries, as the case may be,
on the date of the execution of this Agreement and the current plans of the
Company and its subsidiaries; but it is also the intent of the Company and
Executive that such covenants be construed and enforced in accordance with the
changing activities, business and locations of the Company and its subsidiaries,
as the case may be, throughout the term of this covenant, whether before or
after the date of termination of the employment of Executive. For example, if,
during the term of this Agreement, the Company or its subsidiaries, as the case
may be, engage in new and different activities, enter a new business or
establish new locations for their current activities or business in addition to
or other than the activities or business enumerated under the Recitals above or
the locations currently established therefor, then Executive will be precluded
from soliciting the customers or employees of such new activities or business or
from such new
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location and from directly competing with such new business within 100 miles of
its then-established operating location(s) through the term of this covenant.
It is further agreed by the parties hereto that, in the event that
Executive shall cease to be employed hereunder, and shall enter into a business
or pursue other activities not in competition with the Company or its
subsidiaries, or similar activities or business in locations the operation of
which, under such circumstances, does not violate clause (a) of this paragraph
3, and in any event such new business, activities or location are not in
violation of this paragraph 3 or of Executive's obligations under this paragraph
3, if any, Executive shall not be chargeable with a violation of this paragraph
3 if the Company or its subsidiaries shall thereafter enter the same, similar or
a competitive (i) business, (ii) course of activities or (iii) location, as
applicable.
(d) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall thereby be reformed.
(e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Executive against the Company or
its subsidiaries, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the Company or its subsidiaries of
such covenants. It is specifically agreed that the period of one (1) year
following termination of employment stated at the beginning of this paragraph 3,
during which the agreements and covenants of Executive made in this paragraph 3
shall be effective, shall be computed by excluding from such computation any
time during which Executive is in violation of any provision of this paragraph
3.
4. TERM; TERMINATION; RIGHTS ON TERMINATION. (a) The term of this
Agreement shall begin on the consummation of the IPO and continue for one (1)
year (the "Term"), and, unless terminated sooner as herein provided, shall
continue thereafter on a year-to-year basis on the same terms and conditions
contained herein in effect as of the time of renewal. This Agreement and
Executive's employment may be terminated in any one of the following ways:
(i) DEATH. The death of Executive shall immediately terminate this
Agreement with no severance compensation due to Executive's estate.
(ii) DISABILITY. If, as a result of incapacity due to physical or mental
illness or injury, Executive shall have been absent from his full-time duties
hereunder for four (4) consecutive months, then thirty (30) days after receiving
written notice (which notice may occur before or after the end of such four (4)
month period, but which shall not be effective earlier than the last day of
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such four (4) month period), the Company may terminate Executive's employment
hereunder, provided that Executive is unable to resume his full-time duties at
the conclusion of such notice period. Also, Executive may terminate his
employment hereunder if his health should become impaired to an extent that
makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Executive shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Executive shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Executive or Executive's doctor and such doctor shall have concurred in the
conclusion of Executive's doctor. In the event this Agreement is terminated as a
result of Executive's disability, Executive shall receive from the Company, in a
lump sum payment due within ten (10) days of the effective date of termination,
the base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement, or for nine (9) months, whichever is greater.
(iii) GOOD CAUSE. The Company may terminate the Agreement ten (10) days
after written notice to Executive for good cause, which shall be: (i)
Executive's breach of any material provision of this Agreement (continuing for
ten (10) days after receipt of notice of need to cure); (ii) Executive's gross
negligence in the performance or intentional nonperformance (continuing for ten
(10) days after receipt of written notice of need to cure) of any of Executive's
material duties and responsibilities hereunder which is harmful or injurious to
the Company; (iii) Executive's dishonesty, fraud or misconduct with respect to
the business or affairs of the Company or its subsidiaries which materially and
adversely affects the operations or reputation of the Company or its
subsidiaries; (iv) Executive's conviction of a felony crime; or (v) alcohol
abuse or a confirmed positive illegal drug test result. In the event of a
termination for good cause, as enumerated above, Executive shall have no right
to any severance compensation but shall receive all compensation due and payable
through the date of termination.
(iv) WITHOUT CAUSE. At any time after the commencement of employment,
Executive may, without cause, and without Good Reason terminate this Agreement
and Executive's employment, effective thirty (30) days after written notice is
provided to the Company. Should Executive be terminated without cause during the
Term, or should Executive terminate with Good Reason, Executive shall receive
from the Company, in a lump sum payment due on the effective date of
termination, the base salary at the rate then in effect equivalent to nine (9)
months salary. If Executive resigns or otherwise terminates his employment
without cause and without Good Reason, Executive shall receive no severance
compensation.
Executive shall have "Good Reason" to terminate this Agreement and his
employment hereunder upon the occurrence of any of the following events: (a)
Executive experiences a reduction in authority, responsibilities or duties to a
position of less stature or importance within the Company than the position
described in paragraph 1 hereof (b) a material breach of this Agreement by the
Company which continues for thirty (30) days after receipt of written notice of
breach is received
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by the Company from the Employee or (c) Executive is required to support (by
action or silence) conduct which constitutes dishonesty, fraud or willful
misconduct with respect to the business or affairs of the Company or its
subsidiaries.
Upon termination of this Agreement for any reason provided above,
Executive shall be entitled to receive all compensation earned and/or accrued
and all benefits and reimbursements due and/or accrued through the effective
date of termination. Additional compensation subsequent to termination, if any,
will be due and payable to Executive only to the extent and in the manner
expressly provided above. All other rights and obligations of the Company and
Executive under this Agreement shall cease as of the effective date of
termination, except that the Executive's obligations under paragraphs 3, 5, 6,
7, 8 and 9 herein and the Company's obligations with respect to stock grants,
stock options, and severance shall survive such termination in accordance with
their terms.
(b) TREATMENT OF STOCK OPTIONS AND STOCK GRANTS. Any unvested portion of
any awards of stock options or stock grants pursuant to this Agreement in
connection with Executive's employment shall be treated in the following manner
in the event of a termination of Executive's employment.
(i) If Executive's employment is terminated by the Company for
cause or if Executive resigns or terminates his employment other than
for Good Reason, then any unvested portion of any awards of stock
options or stock grants shall lapse or shall be forfeited.
(ii) If Executive's employment is terminated by the Company
without cause or if Executive terminates his employment for Good Reason,
then any unvested portion of any awards of stock options or stock grants
shall immediately vest to their fullest extent (notwithstanding any
vesting provisions to the contrary) and Executive shall be entitled to
all rights and privileges associated with such awards (subject to
applicable securities laws and regulations).
5. RETURN OF COMPANY PROPERTY. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Executive by or on behalf of the Company, its
subsidiaries or their representatives, vendors or customers which pertain to the
business of the Company or its subsidiaries shall be and remain the property of
the Company or its subsidiaries, as the case may be, and be subject at all times
to their discretion and control. Likewise, all correspondence, reports, records,
charts, advertising materials and other similar data pertaining to the business,
activities or future plans of the Company or its subsidiaries which is collected
by Executive shall be delivered promptly to the Company without request by it
upon termination of Executive's employment.
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6. INVENTIONS. Executive shall disclose promptly to the Company any and
all significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by
Executive, solely or jointly with another, during the period of employment, and
which are directly related to the business or activities of the Company and
which Executive conceives as a result of his employment by the Company.
Executive hereby assigns and agrees to assign all his interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Executive
shall execute any and all applications, assignments or other instruments that
the Company shall deem necessary to apply for and obtain Letters Patent of the
United States or any foreign country or to otherwise protect the Company's
interest therein.
7. TRADE SECRETS. Executive agrees that he will not, during or after the
Term of this Agreement with the Company, disclose the specific terms of the
Company's or its subsidiaries' relationships or agreements with their respective
significant vendors or customers or any other significant and material trade
secret of the Company or its subsidiaries, whether in existence or proposed, to
any person, firm, partnership, corporation or business for any reason or purpose
whatsoever, except in connection with (a) any legal proceeding of the Company in
which such disclosure is required to be made by the Company (b) obtaining the
advice of outside consultants engaged by the Company (c) discussions with the
Company's outside auditors (d) obtaining or maintenance of the Company's credit
facility or (e) otherwise with the consent of the Company's CEO or the Board of
Directors.
8. CONFIDENTIALITY.
(a) Executive acknowledges and agrees that all Confidential Information
(as defined below) of the Company is confidential and a valuable, special and
unique asset of the Company that gives the Company an advantage over its actual
and potential, current and future competitors. Executive further acknowledges
and agrees that Executive owes the Company a fiduciary duty to preserve and
protect all Confidential Information from unauthorized disclosure or
unauthorized use, that certain Confidential Information constitutes "trade
secrets" under applicable laws, and that unauthorized disclosure or unauthorized
use of the Company's Confidential Information would irreparably injure the
Company.
(b) Both during the term of Executive's employment and after the
termination of Executive's employment for any reason (including wrongful
termination), Executive shall hold all Confidential Information in strict
confidence, and shall not use any Confidential Information except for the
benefit of the Company, in accordance with the duties assigned to Executive.
Executive shall not, at any time (either during or after the term of Executive's
employment), disclose any Confidential Information to any person or entity
(except other employees of the Company who have a need to know the information
in connection with the performance of their employment duties), or copy,
reproduce, modify, decompile or reverse engineer any Confidential Information,
or remove any Confidential Information from the Company's premises, without the
prior consent of the CEO
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of the Company or the Board of Directors of the Company, or permit any other
person to do so. In the event Executive is requested or required (by oral
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or other process) to disclose any Confidential
Information, Executive will provide the Company with immediate written notice of
any such request or requirement so that the Company may seek an appropriate
protective order and/or seek with Executive's cooperation to narrow the request
or demand or waive Executive's compliance with the provisions of this Agreement.
If, failing the entry of a protective order or the receipt of a waiver
hereunder, Executive is, in the opinion of his counsel, compelled to disclose
Confidential Information, Executive may disclose only that portion of the
Confidential Information which Executive's counsel advises Executive in writing
that Executive is compelled to disclose and Executive will exercise his best
efforts to obtain assurance that confidential treatment will be accorded such
Confidential Information. In any event, Executive will not oppose action by the
Company to obtain an appropriate protective order or other reliable assurance
that confidential treatment will be accorded the Confidential Information.
Executive shall take reasonable precautions to protect the physical security of
all documents and other material containing Confidential Information (regardless
of the medium on which the Confidential Information is stored). This Agreement
applies to all Confidential Information, whether now known or later to become
known to Executive.
(c) Upon the termination of Executive's employment with the Company for
any reason, and upon request of the Company at any other time, Executive shall
promptly surrender and deliver to the Company all documents and other written
material of any nature containing or pertaining to any Confidential Information
and shall not retain any such document or other material. Within five days of
any such request, Executive shall certify to the Company in writing that all
such materials have been returned.
(d) As used in this Agreement, the term "Confidential Information" shall
mean any information or material known to or used by or for the Company (whether
or not owned or developed by the Company and whether or not developed by
Executive) that is not generally known to the public. Confidential information
includes, but is not limited to, the following: all trade secrets of the
Company; all information that the Company has marked as confidential or has
otherwise described to Executive (either in writing or orally) as confidential;
all nonpublic information concerning the Company's products, services,
prospective products or services, research, product designs, prices, discounts,
costs, marketing plans, marketing techniques, market studies, test data,
customers, customer lists and records, suppliers and contracts; all Company
business records and plans; all Company personnel files; all financial
information of or concerning the Company; all information relating to operating
system software, application software, software and system methodology, hardware
platforms, technical information, inventions, computer programs and listings,
source codes, object codes, copyrights and other intellectual property; all
technical specifications; any proprietary information belonging to the Company;
all computer hardware or
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software manual; all training or instruction manuals; and all data and all
computer system passwords and user codes.
9. NO PRIOR AGREEMENTS. Executive hereby represents and warrants to the
Company that the execution of this Agreement by Executive and his employment by
the Company and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former employer, client or any other person or
entity. Further, Executive agrees to indemnify the Company for any claim,
including, but not limited to, attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against the Company based upon or arising out of any non-competition
agreement, invention or secrecy agreement between Executive and such third party
which was in existence as of the date of this Agreement.
10. ASSIGNMENT; BINDING EFFECT. Executive understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Executive agrees, therefore, that he
cannot assign all or any portion of his performance under this Agreement.
Subject to the preceding two (2) sentences and the express provisions of
paragraph 11 below, this Agreement shall be binding upon, inure to the benefit
of and be enforceable by the parties hereto and their respective heirs, legal
representatives, successors and assigns.
11. CHANGE IN CONTROL.
(a) Unless he elects to terminate this Agreement pursuant to subsections
b, c or d below, Executive understands and acknowledges that the Company may be
merged or consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder or
that the Company may undergo another type of Change in Control. In the event
such a merger or consolidation or other Change in Control is initiated prior to
the end of the Term or any extension or renewal thereof, then the provisions of
this paragraph 11 shall be applicable.
(b) In the event of a Change in Control wherein the Company and
Executive have not received written notice at least five (5) business days prior
to the date of the event giving rise to the Change in Control from the successor
to all or a substantial portion of the Company's business and/or assets that
such successor is willing as of the closing to assume and agrees to perform the
Company's obligations under this Agreement in the same manner and to the same
extent that the Company is hereby required to perform, then Executive may, at
Executive's sole discretion, elect to terminate Executive's employment on such
Change in Control by providing written notice to the Company prior to the
closing of the transaction giving rise to the Change in Control. In such case,
the applicable provisions of paragraph 4(a)(iv) will apply as though the Company
had terminated Executive without cause during the Term.
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(c) In any Change in Control situation, Executive may, at Executive's
sole discretion, elect to terminate Executive's employment upon the effective
date of such Change in Control by providing written notice to the Company at
least ten (10) business days prior to the closing of the transaction (or ten
(10) business days after receipt of notice of such transaction, whichever is
later) giving rise to the Change in Control. In such case, the applicable
provisions of paragraph 4(a)(iv) will apply as though the Company had terminated
Executive without cause during the Term.
(d) If, on or within one year following the effective date of a Change
in Control the Company terminates Executive's employment other than for cause or
if Executive's employment with the Company is terminated by the Company within
three months before the effective date of a Change in Control other than for
cause and it is reasonably demonstrated that such termination (i) was at the
request of a third party that has taken steps reasonably calculated to effect a
Change in Control, or (ii) otherwise arose in connection with or anticipation of
a Change in Control, then Executive shall receive from Company, in a lump sum
payment due on the effective date of termination, the same amount which
Executive would have received pursuant to a termination under paragraph 11(b)
above.
(e) Solely for purposes of applying paragraph 4 under the circumstances
described in (b) above, the effective date of termination will be the closing
date of the transaction giving rise to the Change in Control and all
compensation, reimbursements and lump-sum payments due Executive must be paid in
full by the Company at or prior to such closing.
(f) A "Change in Control" shall be deemed to have occurred if:
(i) any person, other than the Company or benefit plan of the
Company, acquires, directly or indirectly, the beneficial ownership (as
defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended) of any voting security of the Company and immediately after
such acquisition such person is, directly or indirectly, the beneficial
owner of voting securities representing thirty (30%) or more of the
total voting power of all of the then outstanding voting securities of
the Company;
(ii) the stockholders of the Company shall approve a merger,
consolidation, recapitalization or reorganization of the Company, or a
reverse stock split of outstanding voting securities, or consummation of
any such transaction if stockholder approval is not obtained, other than
any such transaction which would result in at least seventy-five (75%)
of the total voting power represented by the voting securities of the
surviving entity outstanding immediately after such transaction being
beneficially owned by at least seventy-five (75%) of the holders of
outstanding voting securities of the Company immediately prior to the
transactions with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in
the transaction; or
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(iii) the stockholders of the Company shall approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or a substantial portion of the
Company's assets (i.e., fifty (50%) or more of the total assets of the
Company).
(g) Executive shall be fully "grossed up" by the Company or its
successor for any excise taxes that Executive incurs under Section 4999 of the
Internal Revenue Code of 1986 (as well as for income tax on the "gross up"
amount, as a result of any Change in Control. Such amount will be due and
payable by the Company on the date of the Change of Control.
(h) Upon the occurrence of a Change of Control, any unvested portion of
any awards of stock options or stock grants pursuant to this Agreement or
otherwise shall immediately vest and become exercisable to their fullest extent
(notwithstanding any vesting periods specified elsewhere) and Executive shall be
entitled to all rights and privileges associated with such awards (subject to
applicable securities laws and regulations). With respect to option awards which
vest pursuant to this paragraph, Executive shall have a period of twelve (12)
months from the date of vesting in which to exercise such options.
12. COMPLETE AGREEMENT. This Agreement is not a promise of future
employment. Executive has no oral representations, understandings or agreements
with the Company or any of its officers, directors or representatives covering
the same subject matter as this Agreement. This written Agreement is the final,
complete and exclusive statement and expression of the agreement between the
Company and Executive and of all the terms of this Agreement, and it cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
oral or written agreements. This written Agreement may not be later modified
except by a further writing signed by a duly authorized officer of the Company
and Executive, and no term of this Agreement may be waived except by a writing
signed by the party waiving the benefit of such Term.
13. NOTICE. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To the Company: c/o Pentacon, Inc.
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
To Executive: Xxxxx X. Xxxxxxx
00000 Xxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
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Notice shall be deemed given and effective on the earlier of three (3) days
after the deposit in the U.S. mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually
received. Either party may change the address for notice by notifying the other
party of such change in accordance with this paragraph 12.
14. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
15. ARBITRATION. With the exception of paragraphs 3, 7 and 8, any
unresolved dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three (3) arbitrators in Houston, Texas, in accordance with the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association ("AAA") then in effect, provided that the parties may agree to use
arbitrators other than those provided by the AAA. The arbitrators shall not have
the authority to add to, detract from or modify any provision hereof nor to
award punitive damages to any injured party. The arbitrators shall have the
authority to order back pay, severance compensation, vesting of options and
grants (or cash compensation in lieu of vesting of options), reimbursement of
legal fees and costs, including those incurred to enforce this Agreement, and
interest thereon in the event the arbitrators determine that Executive was
terminated without disability or good cause, as described in paragraphs 4(a)(ii)
and 4(a)(iii), respectively, or that the Company has otherwise materially
breached this Agreement. A decision by a majority of the arbitration panel shall
be final and binding. Judgment may be entered on the arbitrators' award in any
court having jurisdiction. The direct expense of any arbitration proceeding
shall be borne by the Company.
16. GOVERNING LAW. This Agreement shall in all respects be construed
according to the laws of the State of Texas.
17. COUNTERPARTS. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"EXECUTIVE"
/s/ Xxxxx X. Xxxxxxx
___________________________________________
Xxxxx X. Xxxxxxx
"COMPANY:"
PENTACON, INC.
By:/s/ XXXX X. XXXXXXX
___________________________________________
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
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