XXXXXXX COMPUTER RESOURCES, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of the 6th day of July,
1997, by and between XXXXXXX COMPUTER RESOURCES, INC., a Delaware
corporation ("Company"), and XXX XXXXX ("Employee").
W I T N E S S E T H:
WHEREAS, the parties desire to provide for Employee's
employment by the Company and its subsidiary, Xxxxxxx Computer
Leasing Company, Inc. and to provide him compensation incident
thereto;
NOW, THEREFORE, in consideration of the foregoing premise
and the mutual covenants herein set forth, the parties hereby
covenant and agree as follows:
1. Employment. The Company agrees to employ the
Employee, and the Employee agrees to be employed by the Company,
upon the following terms and conditions.
2. Term. The initial term of Employee's employment
pursuant to this Agreement shall begin on the 6th day of July,
1997, and shall continue for a period of three (3) years, to July
5, 2000 unless terminated earlier pursuant to the provisions of
Section 11, provided that Sections 9, 10, 11(b), 11(c), if
applicable, 12, if applicable, and 13, if applicable, shall
survive the termination of such employment and shall expire in
accordance with the terms set forth therein.
3. Renewal Term. The term of Employee's employment 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 thirty (30) days
prior to the expiration of the then expiring term. Employee's
base salary for each renewal term shall be determined by the
Board of Directors of Company or by the Compensation Committee of
the Board of Directors, if any, provided, however, Employee's
annual base salary for any renewal term shall not be less than
Employee's base annual salary for the previous year.
4. Duties. Employee shall serve as President of the
Company's wholly-owned subsidiary, Xxxxxxx Computer Leasing
Company, Inc., a Kentucky corporation (``Leasing Company''
), upon
execution hereof and appropriate action by the Board of
Directors. Employee shall be responsible to and report directly
to the Chief Executive Officer of the Company. The duties
assigned to Employee shall not be inconsistent with those
typically assigned to the president of a corporation, and
E-170
Employee shall at all times have such executive powers and
authorities as shall reasonably be required to discharge such
duties in an efficient manner, together with such facilities and
services as are appropriate to his position. Employee shall
devote his best efforts and substantially all his time during
normal business hours to the diligent, faithful and loyal
discharge of the duties of his employment and towards the proper,
efficient and successful conduct of the Company's affairs.
Employee further agrees to refrain during the term of this
Agreement from making any sales and/or leases of competing
services or products or from profiting from any transaction
involving computer services or products for his account without
the express written consent of Company.
5. Compensation. For all services rendered by the
Employee under this Agreement (in addition to other monetary or
other benefits referred to herein), compensation shall be paid to
Employee as follows:
(a) _____________ Signing Bonus.
On July 6, 1997, the effective date of this
Agreement, Company shall pay Employee the sum of Fifty Thousand
Dollars ($50,000.00) as a signing bonus. In addition, on January
6, 1998, Company shall pay Employee the sum of Fifty Thousand
Dollars ($50,000.00) as a signing bonus. In the event that
Employee terminates employment with the Company prior to the
expiration of the first year of the initial three-year term of
this Agreement (other than because of the death or disability of
Employee or the termination of Employee by Company without cause
pursuant to paragraph 11(a)(v) or the termination by Employee for
Good Reason pursuant to paragraph 11(a)(vi)). Employee shall
repay Company an amount to be determined by multiplying said
signing bonus received by a fraction, the numerator of which
shall be the number of days that Employee was employed by Company
during the first year of the initial term of the Agreement and
the denominator which shall be 365.
For example, if Employee terminated his employment
at the expiration of nine months of the initial term of this
Agreement, Employee would repay Company the sum of $25,000.00
($100,000.00 X 274 , 365 = $75,000.00. $100,000.00 - $75,000.00
= $25,000.00).
In the event that Employee would fail to reimburse
Company for any amount due hereunder, Employee grants Company the
right to offset Employee's obligations hereunder against any
other amounts that may, if any, be owed to Employee pursuant to
the terms of this Agreement.
(b) ___________
Base Salary:
E-171
(i) During the period July 6, 1997 through
January 5, 1998, Employee shall be paid the sum of Ten Thousand
Four Hundred Dollars ($10,400.00) per pay period (12 pay periods)
paid semi-monthly.
(ii) During the period January 6, 1998 through
January 5, 1999, Employee shall be paid an annual base salary of
Two Hundred Ninety-Five Thousand Dollars ($295,000.00), payable
in 24 equal semi-monthly installments.
(iii) During the period January 6, 1999
through January 5, 2000, Employee shall be paid an annual base
salary of Three Hundred Fifty Thousand Dollars ($350,000.00),
payable in 24 equal semi-monthly installments.
(iv) During the period January 6, 2000
through July 5, 2000, Employee shall be paid the sum of Fourteen
Thousand Five Hundred Eighty-Three Dollars (14,583.00) per pay
period (12 pay periods) paid semi-monthly.
Award of Stock Options
(c) : On July 6, 1997, Employee
shall be awarded (pursuant to an Award Agreement, a copy of which
is attached hereto as Exhibit A) the right to acquire 10,000
shares of the common stock, .01 par value, of the Company subject
to any conditions contained in the Xxxxxxx Computer Resources,
Inc. Non-Qualified and Incentive Stock Option Plan and Award
Agreement. Such award of the stock options to acquire the common
stock of the Company shall be at the fair market value of such
common stock as of the applicable date. On July 6, 1998,
Employee (provided he is employed by Company at such time) shall
be awarded the right to acquire 10,000 shares of the common
stock, .01 par value, of the Company subject to any conditions
contained in the Xxxxxxx Computer Resources, Inc. Non-Qualified
and Incentive Stock Option Plan and Award Agreement, attached
hereto as Exhibit A. Such award of the stock options to acquire
the common stock of Company shall be at the fair market value of
such common stock as of the applicable date. For purposes of
this Agreement, the fair market value as of the applicable date
shall mean with respect to the common shares, the average between
the high and low bid and ask prices for such shares on the over-
the-counter market on the last business 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).
Annual Bonus Based on Company's
Performance/Incentive Deferred Compensation. In addition to
Employee's base salary as set forth in Section 5(b), for the
periods beginning January 6, 1998 and ending January 5, 1999 and
January 6, 1999 and ending January 5, 2000, Employee shall be
entitled to incentive deferred compensation and a stock option
E-172
award (for the 1/6/99 - 1/5/2000 period) in the event Employee
satisfies certain economic criteria pertaining to the Company's
performance during such year, as follows:
_________________________________
January 6, 1998 - January 5, 1999
(i) Gross sales of Company greater than
$470,000,000.00 but less than or equal to $520,000,000.00 with
NPBT greater than 6% equals $50,000.00 bonus; or
(ii) Gross sales of Company greater than
$520,000,000.00 with NPBT greater than 6% equals $100,000.00
bonus.
_________________________________
January 6, 1999 - January 5, 2000
(i) Gross sales of Company greater than
$600,000,000.00 but less than or equal to $650,000,000.00 with
NPBT greater than 6% equals $100,000.00 bonus plus 10,000
incentive stock options; or
(ii) Gross sales of Company greater than
$650,000,000.00 with NPBT greater than 6% equals $150,000.00
bonus plus 10,000 incentive stock options.
Any award of an incentive stock option to
acquire common stock of the Company hereunder shall be the fair
market value of such common stock as of the applicable date as
such term is defined in Section 5(c) above.
(e) For purposes of this Section, the term ``gross
sales shall mean the gross sales of equipment and software and
services by Company during the applicable period on a
consolidated basis. In making said gross sales determinations,
all gains and losses realized on the sale or other disposition of
Company's assets not in the ordinary course shall be excluded.
Such gross sales and net pre-tax profit margin of Company shall
be based on the audited financial statements contained in the
Company's annual report or form 10-k and shall be determined by
the independent accountant regularly retained by the Company in
accordance with generally accepted accounting principles and the
other factors set forth herein and the determination by the
accountant shall be final, binding and conclusive upon all
parties hereto. One hundred percent (100%) of any amount earned
under Section 5(d) above will constitute incentive deferred
compensation which will be payable to Employee according to the
terms of the Incentive Deferred Compensation Agreement attached
hereto as Exhibit B. Any incentive deferred compensation shall
be fully vested over a five year period, vesting twenty percent
(20%) per year from the effective date of this Agreement.
E-173
(f) The parties agree that in January, 2000, they will
negotiate in good faith the implementation of an incentive
deferred compensation plan and stock option award for Employee
for the final six months of this Agreement which will be
predicated upon the attainment of Company's goals, projections
and budgets established at the outset of such calendar year.
Such incentive deferred compensation plan and stock option awards
for the last six months of this Agreement shall be consistent
with Employee's prior plans.
(g) __________________________________________________
Annual Bonus based on Leasing Company's
__________________________________
Performance/Incentive Stock Option. In addition to Employee's
base salary as set forth in Section 5(b), and any incentive
deferred compensation that Employee may be entitled to as set
forth in Section 5(d) above based on the Company's performance,
for the periods beginning January 6, 1998 and ending January 5,
1999 and January 6, 1999 and ending January 5, 2000, Employee
shall be entitled to an annual cash bonus in the event Employee
satisfies the following economic criteria pertaining to the
Leasing Company's performance during such year, as follows:
_________________________________
January 6, 1998 - January 5, 1999
(i) NPBT of Leasing Company greater than
$1,500,000.00 but less than or equal to $2,000,000.00 equals
$100,000.00 cash bonus;
(ii) NPBT of Leasing Company greater than
$2,000,000.00 equals $150,000.00 cash bonus.
_________________________________
January 6, 1999 - January 5, 2000
(i) NPBT of Leasing Company greater than
$3,000,000.00 but less than or equal to $4,000,000.00 equals
$125,000.00 cash bonus;
(ii) NPBT of Leasing Company greater than
$4,000,000.00 equals $175,000.00 cash bonus.
For purposes of this Section, the term
(h) net profits before taxes shall mean the net pre-tax
profits of Leasing Company during the applicable period set forth
above. In
making said net profits before taxes determination, all gains and
losses realized on the sale or other disposition of Leasing
Company's assets in Leasing Company not in the ordinary course
shall be excluded. Employee's base compensation shall be
deducted in determining the net pre-tax income of Leasing
Company. The annual net profits before taxes of Leasing Company
shall be based on the audited financial statements contained in
E-174
the Company's annual report or form 10-k and shall be determined
by the independent accountant regularly retained by the Company
in accordance with generally accepted accounting principles and
the other factors set forth herein and the determination by the
accountant shall be final, binding and conclusive upon all
parties hereto. Any amount due Employee hereunder shall be paid
within thirty (30) days after the determination by the
accountant.
(i) The parties agree that in January, 2000, they will
negotiate in good faith the implementation of a cash bonus for
Employee for the last six months of this Agreement which will be
predicated upon the attainment of the Leasing Company goals,
projections and budgets established at the outset of such
calendar year and consistent with Employee's prior plans.
6.
Benefits Fringe . During the term of this Agreement,
Employee shall be entitled to the following benefits:
(a) Health Insurance - During the term of this
Agreement, Employee shall be provided with the standard medical
health and insurance coverage maintained by Company on its
employees. Company and Employee shall each pay fifty percent
(50%) of the cost of such coverage.
(b) Vacation - Employee shall be entitled each year to
a vacation of three (3) weeks during which time his compensation
will be paid in full. Provided, however, such weeks may not be
taken consecutively without the written consent of Company.
(c) Retirement Plan - Employee shall participate,
after meeting eligibility requirements, in any qualified
retirement plans and/or welfare plans maintained by the Company
during the term of this Agreement.
(d) Automobile - Company shall provide Employee with
an automobile allowance for the applicable periods and for the
respective amounts set forth below during the term of this
Agreement. Company shall also reimburse Employee for all
standard car insurance premiums paid during such term. Employee
shall be responsible for all maintenance and repairs to such
vehicle and for any deductible under such insurance coverage.
(i) 7/5/97 through 1/5/98 - $500.00 per month
auto allowance;
(ii) 1/6/98 through 1/5/99 - $650.00 per month
auto allowance;
(iii) 1/6/99 through 1/5/2000 - $650.00 per
month auto allowance;
E-175
(iv) 1/6/2000 through 7/5/2000 - $750.00 per month
auto allowance.
(e) Other Company Programs. Employee shall be
eligible to participate in any other plans or programs
implemented by the Company for all of its employees with duties
and responsibilities similar to Employee.
Employee shall be responsible for any and all taxes,
owed, if any, on the fringe benefits provided to him pursuant to
this Section 6.
7. Key Man Insurance. Company shall maintain on the
life of Employee, provided he is insurable at standard rates,
key-man term insurance in the following respective amounts:
(i) 1/6/98 through 1/5/99 - $500,000.00
(iii) 1/6/99 through 1/5/2000 - $1,000,000.00
(iv) 1/6/2000 through 7/5/2000 - $1,000,000.00
Company shall be the owner and sole beneficiary of such
policy. In the event that Employee is not insurable at standard
rates during the term of this Agreement, but Company is able to
procure rated coverage, Company shall have the right to procure
coverage for a lower amount of insurance, the cost of which
equivalent to the standard term rates of the respective amounts
set forth above. In the event Employee is not insurable, then
Company shall not be required to obtain any key-person life
insurance upon Employee's life.
8. Expenses. During the term of Employee's employment
hereunder, Employee shall be entitled to receive prompt
reimbursement for all other reasonable and customary expenses
incurred by Employee in fulfilling Employee's duties and
responsibilities hereunder, provided that such expenses are
incurred and accounted for in accordance with the policies and
procedures established by Company.
9. Non-Competition. In connection with the diligent,
faithful and loyal discharge of the duties of Employee's
employment under this Agreement, Employee agrees that so long as
he is employed by the Company (whether or not pursuant to the
provisions of this Agreement) he will not, directly or
indirectly, be employed by, or otherwise give assistance to or be
affiliated with (as an employee, consultant, independent
contractor of any type, director or otherwise) any person, firm,
corporation or entity which is directly or indirectly engaged in
E-176
a competitive business with that carried on by the Company or any
of its subsidiaries. Employee agrees that so long as he is
employed by the Company, he will not own, engage in, conduct,
manage, operate, participate in, be employed by or be connected
in any manner whatsoever with any competitive business with that
carried on by Company or any of its subsidiaries or become
associated with, in any capacity, or solicit or sell to,
customers of the Company or any its subsidiaries or induce any
employee of the Company or of any of its subsidiaries to leave
its employ.
In addition, as an inducement for and as additional
consideration for the Company entering into this Agreement (and
by virtue of Employee's unique and sensitive position and special
background, and in recognition that the employment of the
Employee by a competitor of the Company represents a serious
competitive danger to the Company, and the use of Employee's
talent and knowledge and information about the Company's
business, strategies and plans can and would constitute a
valuable competitive advantage over the Company), Employee agrees
that for a period of one (1) year commencing on the termination
of employment, he will not with any other person, corporation or
entity, directly or indirectly, by stock or other ownership,
investment, employment, or otherwise, or in any relation
whatsoever:
(1) solicit, divert or take away or attempt to
solicit, divert or take away any of the business, customers or
patronage of the Company or of any of its subsidiaries;
(2) attempt to seek or cause any customers of the
Company or any of its subsidiaries thereof, to refrain from
continuing their patronage;
(3) engage in any competitive business with that
carried on by the Company or any of its subsidiaries on the date
of Employee's termination in any state in which Company or its
subsidiaries have an office.
(4) knowingly employ or attempt to employ in any
capacity any employee or agent of Company, or any of its
subsidiaries;
(5) be employed by, attempt to seek employment with,
or act as a consultant to, a customer of the Company for whom
Employee, at any time during the six-month period prior to the
termination of Employee's employment with Company, was providing
direct services on behalf of Company;
(6) perform services for, either as an employee or as
a consultant, any of the companies listed on Exhibit C which is
attached hereto and incorporated herein by reference within any
of the states set forth in Section 9(3) above.
E-177
For purposes of this Section 9, a competitive business shall
mean any person, corporation, partnership or other legal entity
engaged, directly or indirectly, through subsidiaries or
affiliates, in any of the following business activities:
(i) distributing of computer hardware, software,
peripheral devices, and related products and services;
(ii) sale or servicing, whether at the wholesale or
retail level, or leasing or renting, of computer hardware,
software, peripheral devices or related products;
(iii) the leasing of computer hardware, software,
peripheral devices, and any other type of equipment leased by
Leasing Company during Employee's employment; and
(iv) any other business activity which can reasonably
be determined to be competitive with the principal business
activity being engaged in by the Company or any of its
subsidiaries.
This one-year non-competition provision commencing on the
date of Employee's termination of employment shall not be
applicable if the Employee is terminated by the Company without
cause pursuant to Section 11(a)(v), or Employee terminates
employment for Good Reason pursuant to Section 11(a)(vi), or if
Company does not renew this Agreement after the expiration of the
initial term of this Agreement or any renewal term. Provided,
however, such twelve-month non-competition provision shall be
applicable in any of such instances in the event Company elects
in writing to compensate Employee pursuant to Section 12 of this
Agreement.
Employee has carefully read and has given careful considera-
tion to all the terms and conditions of this Agreement and agrees
that they are necessary for the reasonable and proper protection
of the Company's business. The Employee acknowledges that the
Company has entered into this Agreement because of Employee's
promise that he will abide by and be bound by each of the terms
contained in Sections 9 and 10. The Employee agrees that Company
shall be entitled to injunctive relief to enforce these terms in
addition to all other legal remedies. Employee acknowledges that
each and every one of the terms of this provision is reasonable
in all respects including their subject matter, duration, scope
and the geographical area embraced herein and waives any and all
right to compensation and/or benefits herein mentioned or
referred to if Employee violates the provisions of Sections 9 or
10.
Provided, however, that nothing in this Section 9 shall
prohibit Employee from owning or purchasing less than five
percent (5%) of the outstanding common stock of any publicly-
traded corporation.
E-178
10. Non-Disclosure and Assignment of Confidential
Information. The Employee acknowledges that the Company's trade
secrets and confidential and proprietary information, including
without limitation:
unpublished information concerning the Company's:
(a)
(i) research activities and plans,
(ii) marketing or sales plans,
(iii) pricing or pricing strategies,
(iv) operational techniques,
(v) customer and supplier lists, and
(vi) strategic plans;
unpublished financial information, including
(b)
unpublished information concerning revenues, profits and profit
margins;
(c) internal confidential manuals; and
any "material inside information" as such phrase
(d)
is used for purposes of the Securities Exchange Act of 1934, as
amended;
all constitute valuable, special and unique proprietary and trade
secret information of the Company. In recognition of this fact,
the Employee agrees that the Employee will not disclose any such
trade secrets or confidential or proprietary information (except
(i) information which becomes publicly available without
violation of this Employment Agreement, (ii) information of which
the Employee did not know and was disclosed to the Employee in
violation of any other person's confidentiality obligation, and
(iii) disclosure required in connection with any legal or
regulatory process), nor shall the Employee make use of any such
information for the benefit of any person, firm, operation or
other entity except the Company and its subsidiaries or
affiliates. The Employee's obligation to keep all of such
information confidential shall be in effect during and for a
period of five (5) years after the termination of his employment;
provided, however, that the Employee will keep confidential and
will not disclose any trade secret or similar information
protected under law as intangible property (subject to the same
exceptions set forth in the parenthetical clause above) for so
long as such protection under law is extended.
11. ___________ Termination.
The Employee's employment with the Company may be
(a)
terminated at any time as follows:
E-178
(i) By the Employee at his discretion, upon sixty
(60) days written notice to Company;
(ii) By Employee's death;
(iii) By Employee's physical or mental
disability which renders Employee unable to perform his duties
hereunder.
(iv) By the Company, for cause upon fifteen (15)
day's written notice to Employee. For purposes of this
Agreement, the term "cause" shall mean termination upon: (i) the
continuous failure by Employee to substantially perform his
duties with the Company (other than any such failure resulting
from his incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to his by
the Company, which demand specifically identifies the manner in
which the Company believes that he has not continuously
substantially performed his duties; (ii) the engaging by Employee
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; (iii) the conviction of Employee of a felony or other
crime involving theft or fraud, (iv) Employee's gross neglect or
gross misconduct in carrying out his duties hereunder resulting,
in either case, in material harm to the Company; or (v) any
material breach by Employee of this Agreement. Notwithstanding
the foregoing, Employee shall not be deemed to have been
terminated for cause unless and until there shall have been
delivered to his a copy of a resolution of the Board of Directors
of the Company or any appropriately designated committee of the
Board, finding that he has engaged in the conduct set forth above
in this Section 10(a)(iv) and specifying the particulars thereof
in detail, and Employee shall not have cured such conduct to the
reasonable satisfaction of the Board within thirty (30) days of
receipt of such resolution.
(v) By the Company at its discretion, without
cause, upon thirty (30) days written notice to Employee; provided
that Company complies with the provisions of Section 11 (c).
(vi) By the Employee for Good Reason. For
purposes of this Agreement,'' Good Reason '' shall mean, without
Employee's express consent, the occurrence of any of the
following circumstances:
(A) a substantial diminution in Employee's
duties, responsibilities or authority after written demand has
been made upon Company by Employee and Company has had a thirty
(30) day period to correct such matter (except during period when
the Employee is unable to perform all or substantially all of the
Employee's duties and/or responsibilities as a result of the
E-179
Employee's illness (either physical or mental) or other
incapacity;
(B) the relocation of Employee's place of
employment to outside the Greater Cincinnati/Northern Kentucky
area without Employee's consent; or
Xxxxx X. Xxxxxxx XX, the current Chief
(C)
Executive Officer of Company, would terminate employment with the
Company.
(D) Any material breach by Company of the
Agreement but only after written demand has been made upon
Company by Employee setting forth such material breach and
Company has a thirty-day period to correct such matter.
(E) A change in control as hereinafter
defined, unless Employee has accepted employment with the
successor entity and such successor entity has assumed this
Employment Agreement pursuant to the provisions of Section 19.
For purposes of this Agreement, a change in control
shall occur:
(i) upon the sale or other disposition to a person,
entity or group (as such term is used in Rule 13 d-5 promulgated
under the Securities Exchange Act of 1934, as amended), such a
person, entity or group being referred to as an ``outside party''
of fifty percent (50%) or more of the consolidated assets of the
Company taken as a whole, or (ii) in the event shares
representing a majority of the voting power of Company are
acquired by a person or group (as such term is used in Rule 13 d-
5) of persons other than the holders of the common stock of
Company on July 6, 1997.
(b) Compensation upon Termination: In the event of
termination of employment, the Employee or his estate, in the
event of death, shall be entitled to his annual base salary and
other benefits provided hereunder to the date of his termination.
In addition, Employee shall be entitled to receive any bonuses
accrued to the date of his termination of employment as provided
in Section 5(g), and any vested incentive compensation that may
be due Employee pursuant to the provisions of Exhibit B, which
shall be payable (if applicable) pursuant to the terms thereof.
In the event that Company would terminate
(c)
Employee's employment hereunder without cause pursuant to Section
11(a)(v) or Employee would terminate his employment for Good
Reason pursuant to Sections 11(a)(vi)(A), (B), (D) or (E),
Company shall be obligated to pay Employee, as severance pay,
Employee's annual base salary in effect prior to such termination
for the remaining term of the Agreement (as originally set forth
in Section 2, as due) all bonus and incentive deferred
compensation set forth in Section 5(d) and/or 5(g), as due, and
an annual amount of Ten Thousand Dollars ($10,000.00) in lieu of
all fringe benefits under this Agreement. In the event Employee
E-180
would terminate his employment for Good Reason pursuant to
Section 11(a)(vi)(C), Company shall be obligated to pay Employee,
as severance pay, Employee's annual base salary in effect prior
to such termination for the remaining term of this Agreement (as
originally set forth in Section 2, as due). Provided further,
that in the event Employee's employment is terminated by the
Company without cause or by Employee for Good Reason, Employee
shall not be obligated to mitigate his damages and shall be
entitled to the amounts and benefits described above, whether or
not he accepts or seeks alternative employment.
12. ______________________________________________________
Payments to Extend Covenant Not to Compete of Employee.
In the event Company does not renew this Agreement upon the
expiration of the initial term of this Agreement or any renewal
term, Company shall have the option to pay Employee an amount
equal to his base annual salary that was in effect prior to such
non-renewal of his Employment Agreement in twelve (12)
consecutive equal monthly installments commencing thirty (30)
days after the date of termination of employment in consideration
of Employee not competing with Company for a period of twelve
(12) months from the date of the termination of his employment
for any of the reasons set forth above, as applicable.
13. Disability. In the event that Employee becomes
temporarily disabled and/or totally and permanently disabled,
physically or mentally, which renders him unable to perform the
essential functions of his position with or without reasonable
accommodation, Employee shall receive one hundred percent (100%)
of his base annual salary (in effect at the time of such
disability) for a period of one (1) year following the initial
date of such disability (offset by any payments to the Employee
received pursuant to disability benefit plans, if any, maintained
by the Company.) Such payments shall be payable in twelve
consecutive equal monthly installments and shall commence thirty
(30) days after the determination by the physicians of such
disability as set forth below.
For purposes of this Agreement, Employee shall be deemed to
be temporarily disabled and/or totally and permanently disabled
if attested to by two qualified physicians, (one to be selected
by Company and the other by Employee) competent to give opinions
in the area of the disabled Employee's physical and/or mental
condition. If the two physicians disagree, they shall select a
third physician, whose opinion shall control. Employee shall be
deemed to be temporarily disabled and/or totally and permanently
disabled if he shall become disabled as a result of any medically
determinable impairment of mind or body which renders it
impossible for such Employee to perform satisfactorily his duties
hereunder, and the qualified physician(s) referred to above
certify that such disability does, in fact, exist. The opinion
of the qualified physician(s) shall be given by such
E-181
physician(s), in writing directed to the Company and to Employee.
The physician(s) decision shall include the date that disability
began, if possible, and the 12th month of such disability, if
possible. The decision of such physician(s) shall be final and
conclusive and the cost of such examination shall be paid by
Company.
14. Severability. In case any one (1) or more of the
provisions or part of a provision contained in this Agreement
shall be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall
not affect any other provision or part of a provision of this
Agreement. In such a situation, this Agreement shall be reformed
and construed as if such invalid, illegal or unenforceable
provision, or part of a provision, had never been contained
herein, and such provision or part shall be reformed so that it
will be valid, legal and enforceable to the maximum extent
possible.
15. Law
Governing . This Agreement shall be governed and
construed under the laws of the Commonwealth of Kentucky and
shall not be modified or discharged, in whole or in part, except
by an agreement in writing signed by the parties.
16.Notices. All notices, requests, demands and other
communications relating to this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally
or mailed by certified or registered mail, return receipt
requested, postage prepaid:
If to Company, to: Pomeroy Computer Resources, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
With a copy to: Xxxxx X. Xxxxx III
Xxxxxxxxx & Dreidame Co., L.P.A.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxx 00000
If to Employee, to the Employee's residential address, as
set forth in the Company's records.
17. Enforcement of Rights. The parties expressly recognize
that any breach of this Agreement by either party is likely to
result in irrevocable injury to the other party and agree that
such other party shall be entitled, if it so elects, to institute
and prosecute proceedings in any court of competent jurisdiction,
either in law or in equity, to obtain damages for any breach of
this Agreement, or to enforce the specific performance of this
E-182
Agreement by each party or to enjoin any party from activities in
violation of this Agreement. Should either party engage in any
activities prohibited by this Agreement, such party agrees to pay
over to the other party all compensation, remuneration, monies or
property of any sort received in connection with such activities.
Such payment shall not impair any rights or remedies of any non-
breaching party or obligations or liabilities of any breaching
party pursuant to this Agreement or any applicable law.
18. Entire Agreement. This Agreement and the Exhibits
hereto and the Performance Share Right Agreement executed of even
date contain the entire understanding of the parties with respect
to the subject matter contained herein and may be altered,
amended or superseded only by an agreement in writing, signed by
the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought.
19. Parties in Interest.
This Agreement is personal to each of the parties
hereto. No party may assign or delegate any rights or
obligations hereunder without first obtaining the written consent
of the other party hereto; provided, however, that nothing in
this Section 19 shall preclude (i) Employee from designating a
beneficiary to receive any benefit payable hereunder upon his
death, or (ii) executors, administrators, or legal
representatives of Employee or his estate from assigning any
rights hereunder to person or persons entitled thereto.
Notwithstanding the foregoing, this Agreement shall be binding
upon and inure to the benefit of any successor corporation of the
Company.
(b) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the assets of the
Company or the business with respect to which the duties and
responsibilities of Employee are principally related, to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that Company would have been
required to perform it if no such succession had taken place. As
used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or
assets as aforesaid which executes and delivers the assumption
agreement provided for in this Section 19 or which otherwise
becomes bound by all the terms and provisions of this Agreement
by operation of law.
20. Prior Agreement. Employee represents and warrants that
he is not party to or bound by any agreement or contract or
subject to any restrictions including without limitation, any
E-183
restriction imposed in connection with previous employment which
prevents Employee from entering into and performing his
obligations under this Agreement. Company acknowledges that
Employee is subject to a restrictive agreement with his former
employer which precludes him from contacting any customers of
Employee's former employer for a period of one year.
21. Attorneys' Fees. In the event of any dispute arising
between Employee and Company, whether pursuant to this Agreement
or otherwise, the prevailing party shall be entitled to recover
from the non-prevailing party, the prevailing party's reasonable
attorneys' fees and costs.
IN WITNESS WHEREOF, this Agreement has been executed
effective as of the day and year first above written.
WITNESSES: XXXXXXX COMPUTER RESOURCES, INC.
_________________________
By:____________________________________
Xxxxx X. Xxxxxxxxx, Vice
President of Finance
_________________________
_________________________
_________________________________
XXX XXXXX, Employee
_________________________
E-184
_________________________________________
INCENTIVE DEFERRED COMPENSATION AGREEMENT
This Incentive Deferred Compensation Agreement is made effective
as of the sixth day of July, 1997, by and between XXXXXXX
COMPUTER RESOURCES, INC., a Delaware corporation (the "Company")
and XXX XXXXX ("Eilau").
W I T N E S S E T H:
WHEREAS, simultaneously with the execution of this Agreement, the
Company and Eilau have entered into an Employment Agreement for
the employment of Eilau by Xxxxxxx Computer Leasing Company,
Inc., a wholly-owned subsidiary of Company;
WHEREAS, pursuant to Section 5(d) of said Employment Agreement,
Eilau is entitled to incentive deferred compensation in the
event certain economic criteria are satisfied;
WHEREAS, the parties wish to define the terms governing the
incentive deferred compensation in the event the economic
criteria are satisfied.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein set forth, the parties hereby
covenant and agree as follows:
1. In the event Eilau satisfies the economic criteria set
forth in the Employment Agreement for such year and is entitled
to incentive deferred compensation, the incentive deferred
compensation shall be governed by the terms of this Agreement.
2. In the event Eilau should die or become disabled during
the term of the Employment Agreement or any renewal thereof, or
if the Employment Agreement is not renewed at the expiration of
the initial term or any renewal term, or in the event Company
would terminate the Employment Agreement without cause pursuant
to Section 11(a)(v) or Eilau would terminate the Employment
Agreement for Good Reason pursuant to Section 11(a)(vi), all
incentive deferred compensation shall be vested in full and shall
be payable to Eilau and/or his designated beneficiary at that
time.
3. In the event Eilau discontinues employment with the
Company at the expiration of the initial term, or any renewal
thereof, or if Eilau discontinues employment with the Company
during the term of the Employment Agreement, the vested portion
of his deferred compensation account will be paid to him at said
time and all non-vested amounts will be forfeited. The incentive
deferred compensation shall vest according to the following
schedule:
E-185
Years of Service With Company or its _______________
Percentage of
Vested
Subsidiaries from the Effective Date Interest
of This Agreement
Less than 1 year 0%
One year 20%
Two years 40%
Three years 60%
Four years 80%
Five years or more 100%
This vesting schedule shall apply separately to each year that
incentive deferred compensation is earned by Eilau upon the
satisfaction of the economic criteria set forth in the Employment
Agreement.
By way of illustration, if Eilau satisfied the economic criteria
for years 1 and 2, at the end of year 2, Eilau would be 40%
vested as to the incentive deferred compensation credited in year
1 and 20% vested as to the incentive deferred compensation
credited in year 2.
4. Notwithstanding anything contained herein to the
contrary, Company may, if its stock is publicly traded at the
time of payment, deliver, in lieu of cash to Eilau, common stock
of Company that is either registered or freely tradable and
having a fair market value equal to one hundred percent (100)% of
the amount due Eilau hereunder. For purposes of this Section,
the fair market value of the stock shall be deemed to be the
average of its bid and asked prices on the date of distribution.
If Company's stock is not publicly traded at the time of
such payment, such payment shall be in cash.
5. No deferred compensation shall be paid under the terms
of this Agreement in the event Eilau is discharged from the
service of the Company for cause pursuant to Section
11(a)(iv)(iii) of the Employment Agreement. In the event Eilau
is discharged from the service of Company for cause pursuant to
any other provision of Section 11(a)(iv) of the Employment
Agreement, the vested portion of his deferred compensation will
be paid to him at said time and all non-vested amounts will be
forfeited.
E-186
6. Eilau shall not have the right to commute, sell,
transfer, assign or otherwise convey the right to receive any
payments under the terms of this Agreement. Any such attempted
assignment or transfer shall be null and void.
7. It is the intention of the parties that the incentive
deferred compensation to be payable to Eilau hereunder (if
applicable) shall be includable for Federal Income Tax purposes
in his, or such beneficiary's gross income only in the taxable
year in which he or the beneficiary actually receives the payment
and Company shall be entitled to deduct such incentive deferred
compensation as a business expense in its Federal Income Tax
return in the taxable year in which such payment is made to Eilau
or his beneficiary.
8. Nothing contained in this Agreement shall in any way
affect or interfere with the right of Eilau to share or
participate in a retirement plan of the Company or any profit
sharing, bonus or similar plan in which he may be entitled to
share or participate as an employee of the Company.
9. This Agreement shall be binding upon the heirs,
administrators, executors, successors and assigns of Eilau. This
Agreement shall not be modified or amended except in writing
signed by both parties.
10. This Agreement shall be subject to and construed under
the laws of the Commonwealth of Kentucky.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement effective as of the day and year first above written.
XXXXXXX COMPUTER RESOURCES, INC.
By:________________________________
Xxxxx X. Xxxxxxxxx, Vice
President of
Finance
___________________________________
XXX XXXXX
E-187
AWARD AGREEMENT
_______________
(Non-Qualified Stock Option)
This Award Agreement is made effective July 6, 1997, between
XXXXXXX COMPUTER RESOURCES, INC., a Delaware corporation
(hereinafter called the "Company"), and XXX XXXXX, an employee of
Pomeroy Computer Leasing Company, Inc., a wholly-owned subsidiary
of the Company (hereinafter called the "Employee").
WHEREAS, the Company has heretofore adopted the 1992 Non-
Qualified and Incentive Stock Option Plan (the "Plan");
WHEREAS, per an Employment Agreement between Company and
Employee effective July 6, 1997, Employee is to be awarded 10,000
stock options under the Plan as of July 6, 1997;
WHEREAS, it is a requirement of the Plan that an Award
Agreement be executed to evidence the Non-Qualified Stock Option
(the "Award") granted to the Employee;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for other good and valuable
consideration, the parties hereto have agreed, and do hereby
agree, as follows:
1. Grant of Award. The Company hereby grants to the
Employee the right and option (hereinafter called the "Option")
to purchase all or any part of an aggregate of Ten Thousand
(10,000) shares of the Common Stock, $.01 par value, of the
Company ("Shares") (such number being subject to adjustment as
set forth herein and in the Plan) on the terms and conditions set
forth herein and in the Plan.
Page 1 of 5 Pages
E-188
2. Type of Award. The Option granted under this Award
Agreement is a Non-Qualified Stock Option and shall not be
treated by the Company or the Employee as an Incentive Stock
Option for Federal income tax purposes.
3. Purchase Price. The option price of the Shares covered
by the Option is $_____ per Share.
4 Term of Award.
The Term of the Award shall be for a period of
(a)
five (5) years from the effective date hereof, subject to earlier
termination as hereinafter provided; and
(b) prior to its expiration or termination the Award
may be exercised as to any part or all of the Shares originally
subject to the Option.
5. Exercise of Award.
(a) In order to exercise the Award, the person or
persons entitled to exercise it shall deliver to the Treasurer
of the Company written notice of the number of full Shares with
respect to which the Award is to be exercised. The notice shall
be accompanied by payment in full for any Shares being purchased,
which payment will be in cash, or, with the Committee's (as
defined in the Plan) approval, in Shares (as defined in the Plan)
held by the Employee for at least six months valued at Fair
Market Value (as defined in the Plan) at the time of exercise, or
a combination thereof. No fractional Shares will be issued.
Page 2 of 5 Pages
E-189
(b) No Shares shall be issued until full payment
therefor has been made, and the Employee will have none of the
rights of a stockholder in respect of such Shares until they are
issued.
6. Nontransferability. The Award shall not be
transferable otherwise than: (a) by will or the laws of descent
and distribution, and the Award may be exercised, during the
lifetime of the holder of the Award, only by him or the event of
death, his Successor, as defined in the Plan, or in the event of
disability, his personal representative, or (b) pursuant to a
qualified domestic relations order, as defined in the Code or the
Employee Retirement Income Security Act (ERISA) or the Rules
thereunder.
7.Termination of Employment. In the event that the
employment of the Employee is terminated (otherwise than by
reason of death, disability or retirement), the Award may be
exercised by the Employee (to the extent that he was entitled to
do so at the termination of his employment) at any time within
three (3) months after such termination, but not beyond the
original Term thereof. So long as the Employee shall continue to
be an employee of the Company or one or more of its subsidiaries,
the Award shall not be affected by any change of duties or
position. Nothing in this Award Agreement is intended to confer
upon Employee any right to continue in the employ of the Company
or any of its subsidiaries or interfere in any way with the right
Page of 5 Pages
E-190
of the Company or any such subsidiary to terminate his employment
at any time. Anything herein contained to the contrary
notwithstanding, in the event of any termination of the
Employee's employment for cause or as set forth in Section
11(a)(iv) of the Employment Agreement or if the Employee
voluntarily terminates his employment without cause pursuant to
Section 11(a)(i) of the Employment Agreement, the Award, to the
extent not theretofore exercised, shall forthwith terminate.
8. Death of Employee. If the Employee dies while he is
employed by the Company or one or more of its subsidiaries or
within three (3) months after the termination of his employment,
the Award may be exercised (to the extent that Employee was
entitled to do so at the time of his death) by a legatee or
legatees of the Employee under his last will, or by his personal
representatives or distributees, at any time within six (6)
months after his death, but not beyond the original Term of the
Award.
9. Disability of Employee. If the employment of the
Employee terminates on account of his having become "disabled,"
as defined in Section 22(e)(3) of the Code, the Award may be
exercised by the Employee (to the extent that he was entitled to
do so at the termination of his employment on account of his
becoming disabled) at any time within six (6) months after the
date on which his employment terminated, but not beyond the
original Term of the Award.
Page 4 of 5 Pages
E-191
10. Retirement of Employee. If the employment of the
Employee terminates by reason of retirement entitling the
Employee to benefits under the provisions of any retirement plan
of the Company or a subsidiary in which the Employee participates
(or, if no such plans exist, at or after age sixty-five (65)),
the Award may be exercised by the Employee (to the extent that he
was entitled to do so at the time of his retirement) at any time
within ninety (90) days after the date on which his employment
terminated, but not beyond the original Term of the Award.
11 Taxes. The Company shall have the right to require a
person entitled to receive Shares pursuant to the exercise of
this Award under the Plan to pay the Company the amount of any
taxes which the Company is or will be required to withhold with
respect to such Shares before the certificate for such Shares is
delivered pursuant to the Award. Furthermore, the Company may
elect to deduct such taxes from any amounts payable in cash or in
Shares at the time of exercise or from any other amounts payable
any time thereafter in cash to the Employee. If the Employee
disposes of Shares acquired pursuant to an Incentive Stock Option
in any transaction considered to be a disqualifying transaction
under Sections 421 and 422 of the Code, the Employee shall notify
the Company of such transfer and the Company shall have the right
to deduct any taxes required by law to be withheld from any
amounts otherwise payable in cash then or at any time thereafter
to the Employee.
E-192
Subject to Committee approval, an Employee may satisfy his
tax liability with respect to the exercise of an Option by having
the Company withhold Shares otherwise issuable upon exercise of
the Option; provided, however, if the Employee is subject to
Section 16b of the Securities Exchange Act of 1934, as amended,
he may so elect only if such Employee makes an election to do so
which satisfies the requirements of Rule 16b-3.
12. Changes in Capital Structure. In the event of changes
in all of the outstanding Shares by reason of stock dividends,
stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of Shares, separations, reorganizations
or liquidations, or similar events or, in the event of
extraordinary cash dividends being declared with respect to the
Shares, or similar transactions, the number and class of Shares
available under the Plan in the aggregate, the number and class
of Shares subject to Awards theretofore granted, applicable
purchase prices and all other applicable provisions, shall,
subject to the provisions of the Plan, be equitably adjusted by
the Committee (which adjustment may, but need not, include
payment in cash or in Shares in an amount equal to the difference
between the price at which such Award may be exercised and the
then current Fair Market Value of the Shares subject to such
Award as equitably determined by the Committee). The foregoing
adjustment and the manner of application of the foregoing
provisions shall be determined by the Committee in its sole
discretion. Any such adjustment may provide for the elimination
E-193
of any fractional share which might otherwise become subject to
an Award.
13. Securities Law Compliance, The Award may not be
exercised and the Company shall not be required to issue any
Shares hereunder if such issuance would, in the judgment of the
Board or the Committee, constitute a violation of any state or
federal law, or of the rules or regulations of any governmental
regulatory body, or any securities exchange. The Company may, in
its sole discretion, require the Employee to furnish the Company
with appropriate representations and a written investment
agreement prior to the exercise of the Award and the delivery of
any Shares pursuant to the Award.
14. Incorporation of Provisions of the Plan. All of the
provisions of the Plan, pursuant to which this Award is granted,
are hereby incorporated by reference and made as part hereof as
if specifically set forth herein, and to the extent of any
conflict between this Award Agreement and the terms contained in
the aforesaid Plan, the Plan shall control. To the extent any
capitalized terms are not otherwise defined herein, they will
have the meaning set forth in paragraph 2 of the Plan.
IN WITNESS WHEREOF, the Company has caused this Award
Agreement to be duly executed by its officer thereunto duly
authorized, and the Employee has hereunto set his hand, all on
the day and year first above written.
XXXXXXX COMPUTER RESOURCES, INC.,
By
__________________________________
Xxxxx X. Xxxxxxxxx, Vice
President of
Finance
_____________________________________
XXX XXXXX, Employee
E-194
