Document:

a51280953ex10_1.htm

Exhibit 10.1

 

NIC Inc.

Amended and Restated Employee Stock Purchase Plan

 

	
1.  

	
PURPOSE.

 

NIC Inc., a Delaware corporation, (the "Company") originally adopted in 1999 the NIC Inc. Employee Stock Purchase Plan (the "Plan") to provide a means by which an employee of the Company, and any affiliate of the Company ("Affiliate") may be given an opportunity to purchase stock of the Company. The Company has previously amended the Plan and hereby amends and restates the Plan effective as of October 24, 2011. With the Plan, the Company seeks to attract and retain the services of persons of ability as employees and motivate such employees to exert their best efforts on behalf of the Company, any Affiliate or other shareholder of the Company. For the purposes of the Plan, the term "Affiliate" means with respect to the Company either a parent corporation as defined in Section 424(e) of the Internal Revenue Code of 1986, as amended ("Code"), or a subsidiary corporation as defined in Code Section 424(f). The Plan is intended to qualify as an employee stock purchase plan under Code Section 423.

 

	
2.  

	
SHARES SUBJECT TO THE PLAN.

 

Subject to the provisions of Plan Section 12, 2,321,688 shares of the common voting stock of the Company ("Common Stock") are reserved and may be sold pursuant to stock purchase rights granted under the Plan. The reserved shares are such authorized and unissued shares of the Company as determined by the Company's Board of Directors ("Board"). If any right to purchase Common Stock granted under the Plan terminates for any reason without having been exercised, the Common Stock which was not purchased pursuant to such right will again be available under the Plan.

	
3.  

	
ADMINISTRATION OF THE PLAN.

 

The Plan is administered by the Board or a committee thereof consisting of three or more Board members, who may or may not be employees of the Company or an Affiliate, ("Committee"). The members of the Committee are appointed by and will serve at the pleasure of the Board. Any vacancies in the membership of the Committee are filled by an appointment by the Board. If the Board administers the Plan, the term "Committee" includes the Board.

 

The Committee will keep minutes of its meetings. All actions of the Committee will be taken by a majority of its members at a meeting duly called and held and at which a quorum is present. Any act approved in writing by all of the Committee members are fully effective as if taken by a vote of a majority of the members at a meeting duly called and held and at which a quorum is present.

 

Subject to and not inconsistent with the provisions of the Plan, the Committee has complete authority in its sole discretion to determine the employees to whom stock purchase rights are granted and the provisions for each offering of stock purchase rights (which need not be identical); to construe and interpret the Plan, including disputed and doubtful terms and provisions; to  establish,  amend  and rescind rules and guidelines for administering the Plan; and to make all determinations necessary or advisable for the administration of the Plan.

 

All  decisions,  determinations  and  interpretations  of  the  Committee  are  to  be  consistently  and uniformly applied and conclusive and binding on all parties.

 

  

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4.  

	
GRANT OF STOCK PURCHASE RIGHTS.

 

The Committee may from time to time grant to eligible employees the right to purchase Common Stock under the Plan ("Offering") on a date ("Offering Date") designated by the Committee. Each Offering will be in such form and will contain such terms and conditions as the Committee deems appropriate, which will comply with the requirements of Code Section 423(b)(5) so that all eligible employees granted rights to purchase stock under the Plan will have the same rights and privileges. The terms and conditions of an Offering will be incorporated by reference into the Plan and treated as part of the Plan. The provisions of an Offering need not be identical to the terms and conditions of any other Offering. Each Offering, however, will include (through incorporation of the provisions of this Plan by reference in the document comprising the Offering) the period during which the Offering will be effective, which period will not exceed twenty-seven months beginning with the Offering Date, and the substance of the provisions contained in Plan Sections 5 through 8, inclusive.

 

	
5.  

	
ELIGIBILITY FOR STOCK PURCHASE RIGHTS.

 

(a)  Subject to the provisions of this Section 5, any employee of the Company is eligible to be granted a stock purchase right under the Plan. Any employee of an Affiliate which adopts the Plan with the approval of the Board also is eligible to be granted a stock purchase right under the Plan, subject to the provisions of this Section 5. For the purposes of the Plan, the term "employee" means a common law employee as determined in accordance with the rules of Code Section 3401(c) and the related Treasury regulations. The term "employee" does not include a member of the Board or of the board of directors of an Affiliate who is not also an employee of the Company or an Affiliate, or a leased employee within the meaning of Code Section 414(n). Additionally, the term employee does not include a person  who provides services to the Company or an Affiliate under an agreement, contract or other arrangement pursuant to which he is classified initially as an independent contractor or whose remuneration for services to the Company or an Affiliate is treated initially as not subject to federal income tax withholding under Code Section 3402, unless he is subsequently reclassified as a common law employee as a result of a final decree of a court of competent jurisdiction or the settlement of an administrative or judicial proceeding.

 

(b)  Except as provided in Plan Section 5(c), an employee of the Company or any Affiliate will not be eligible to be granted a stock purchase right under the Plan in an Offering, unless on the Offering Date, such employee has been in the employ of the Company or any Affiliate for such continuous period preceding such grant as the Committee may require. Any period of continuous employment required by the Committee with respect to a particular Offering will not exceed two years and will be set forth in the terms of that Offering. In addition, unless otherwise determined by the Committee and set forth in the terms of the particular Offering, no employee of the Company or of any Affiliate will be eligible to be granted a stock purchase right under the Plan, unless on the Offering Date, such employee's customary employment with the Company or such Affiliate is for at least twenty hours per week and at least five months in any calendar year.

 

(c)  The Committee may provide that each person who, within a prescribed period during the course of an Offering and after the Offering Date, first becomes eligible to be granted a stock purchase right under the Plan will, on a date specified in the Offering which coincides with or follows the date when such person becomes an eligible employee, receive under the Offering a stock purchase right which will be deemed to be a part of that Offering. Such right will have the same characteristics as any right originally granted under that Offering, except that:

 

  

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(i)  The date on which such right is granted will be the "Offering Date" of such right for all purposes, including determination of the exercise price for the right; and

 

(ii)  The period of the Offering with respect to the right will begin on its Offering Date and end coincident with the end of such Offering.

 

(d)  No employee will be eligible for the grant of any stock purchase right in an Offering under the Plan if, immediately after the right is granted, such employee owns or would own stock possessing five percent or more of the total combined voting power or value of all classes of stock of the Company or any Affiliate. For purposes of this Section 5(d), the rules of Code Section 424(d) of the Code will apply in determining the stock ownership of any employee, and stock which such employee may purchase under all outstanding rights and options will be treated as stock owned by such employee.

 

(e)      In no event shall an employee be entitled to purchase, for any Offering, more than the lesser of (i) the number of shares obtained by dividing $25,000 by the fair market value of a share of Common Stock on the Offering Date for such Offering, or (ii) the maximum number of shares permitted to be purchased under Section 5(f) below.

 

(f) An eligible employee may be granted a stock purchase right under the Plan only to the extent that the right, together with all other stock purchase rights granted to him under any "employee stock purchase plan" of the Company and any Affiliates, as specified by Code Section 423(b)(8), does not permit the eligible employee's rights to purchase stock of the Company or any Affiliate under all such plans to accrue at a rate which exceeds twenty five thousand dollars of Fair Market Value of such stock (as defined in Section 6(c) and determined at the time such rights are granted) for each calendar year in which such rights are outstanding at any time.

 

	
6.  

	
PURCHASE PRICE.

 

(a)  Subject to the limitations set forth in Sections 5(e) and (f), on each Offering Date, each eligible employee will be granted the right to purchase up to the number of shares of Common Stock of the Company purchasable with a maximum percentage designated by the Committee not exceeding fifteen percent of such eligible employee's Compensation (as defined in Plan Section 7(a)) during the period which begins on the Offering Date (or such later date as the Committee determines for a particular Offering) and ends on the date stated in the Offering, which date will be no later than the end of the Offering. The Committee will establish one or more dates during an Offering ("Purchase Date") on which stock purchase rights granted under the Plan will be exercised and Common Stock will be purchased pursuant to the Offering.

 

(b)  In connection with each Offering made under the Plan and subject to the Plan terms, the Committee may specify a maximum number of Common Stock shares that may be purchased by each eligible employee and a maximum aggregate number of Common Stock shares that may be purchased by all eligible employees pursuant to such Offering. In addition, in connection with each Offering that contains more than one Purchase Date, the Committee may specify a maximum aggregate number of Common Stock shares which may be purchased by all eligible employees on any given Purchase Date under the Offering. If the aggregate purchase of Common Stock shares upon exercise of rights granted under the Offering would exceed any such maximum aggregate number, the Committee will make a pro rata allocation of the Common Stock shares available in as nearly a uniform manner as will be practicable and as it will deem to be equitable.

  

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(c)  The purchase price of Common Stock acquired pursuant to rights granted under the Plan will be not less than the lesser of:

 

(i)  An amount equal to eighty-five percent (85%) of the Fair Market Value of the Common Stock on the Offering Date; or

 

(ii)  An amount equal to eighty-five percent (85%) of the Fair Market Value of the Common Stock on the Purchase Date.

 

For the purposes of the Plan, unless otherwise defined by the Committee for any particular Offering, the "Fair Market Value" of the Common Stock on any date means the closing price on that date on the NASDAQ Stock Market, the principal stock exchange on which the Common Stock is traded. If the Common Stock is not traded on a particular date, the Fair Market Value of this stock will be determined from the closing price on the immediately preceding date when the stock is traded. If the Common Stock price is not reported on any securities exchange or national market system, the "Fair Market Value" of the stock for the purposes of the Plan will be the value determined by the Committee.

 

	
7.  

	
PARTICIPATION IN THE PLAN.

 

(a)  An eligible employee may become a Plan participant pursuant to an Offering by enrolling in the Plan in the manner required by the Company within the time specified by the Offering. In connection with such enrollment, a Plan participant will authorize payroll deductions of up to the maximum percentage specified by the Committee of such eligible employee's Compensation during the Offering. A participant may prospectively reduce (including to zero) or increase his authorized payroll deductions for any Offering. The payroll deductions made for any participant will be credited to a nominal account for such participant under the Plan, will be deposited with the general funds of the Company, and will not accrue interest for the benefit of the participant.

 

For the purposes of the Plan, "Compensation" is defined as an employee's regular salary or wages. "Compensation" does not include overtime, bonuses, commissions, severance pay, incentive pay, shift premium differentials, pay in lieu of vacation, imputed income for income tax purposes, patent fees, awards and prizes, back pay awards, reimbursement of expenses and living allowances, educational allowances, expense allowances, disability benefits, fringe benefits, deferred compensation, compensation under any stock plan maintained by the Company or an Affiliate, amounts paid for services as an independent contractor, or such other inclusions or exclusions as may be determined by the Committee, in its sole discretion, in a uniform and nondiscriminatory manner. Notwithstanding the preceding sentence, "Compensation" will be determined for any participant before giving effect to any salary reduction or cash or deferred arrangement under Code Section 401(k) or to a salary reduction arrangement pursuant to Code Section 125.

 

(b)  At any time during an Offering, a participant may completely terminate his payroll deductions under the Plan and withdraw from the Offering by delivering to the Company a notice of withdrawal in such form as the Committee provides. Such a withdrawal may be made at any time prior to the end of the Offering, except as provided by the Committee in the Offering. Upon a participant's withdrawal from the Offering, the Company will distribute to the participant without interest all of his accumulated payroll deductions (to the extent they have not been used to acquire Common Stock for the participant) under the Offering. Immediately upon such distribution, the participant's interest in the Offering will automatically terminate. A participant's withdrawal from an Offering will have no effect upon his eligibility to participate in any subsequent Offering under the Plan; provided, however, that any such participant will be required to deliver a new participation agreement in order to participate in a subsequent Offering.

 

  

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(c)  If the Fair Market Value of the Common Stock on any Purchase Date is lower than the Fair Market Value of the Common Stock on the Offering Date for the Offering in which such Purchase Date occurs, then all participants in such Offering will be automatically withdrawn from such Offering immediately after the exercise of their right to purchase Common Stock on such Purchase Date and automatically re-enrolled in the next Offering, which Offering will commence on the day immediately following such Purchase Date.

 

(d)  Any stock purchase right granted pursuant to any Offering under the Plan to an eligible employee will terminate immediately upon his separation from service with the Company and any Affiliate, for any reason. Within an administratively practicable time thereafter, the Company will distribute to a terminated employee who is a participant all of his accumulated payroll deductions without interest (to the extent they have not been used to acquire Common Stock for the participant) under the Offering. All whole shares previously purchased by the terminated employee and credited to the Participant's account under the Plan will be automatically issued to the Participant as soon as administratively practicable after the terminated employee's separation from service.

 

(e)  Rights granted under the Plan will not be transferable by a participant other than by will or the laws of descent and distribution, or by a beneficiary designation as provided in Plan Section 14. During his lifetime, a stock purchase right under the Plan will be exercisable only by the participant to whom it is granted.

 

	
8. 

	
 
EXERCISE OF STOCK PURCHASE RIGHTS.

(a)  On each Purchase Date specified in the relevant Offering, each participant's accumulated payroll deductions and other additional payments specifically permitted in the Offering (without any increase for interest) will be applied to the purchase of whole shares of Common Stock, up to the maximum number of shares permitted pursuant to the terms of the Plan and the applicable Offering, at the purchase price specified in the Offering. No fractional shares will be issued upon the exercise of a stock purchase right granted under the Plan. The amount, if any, of accumulated payroll deductions remaining in each participant's nominal account after the purchase of shares which is less than the amount required to purchase one share of Common Stock on the final Purchase Date of an Offering will be held in each such participant's nominal account for the purchase of shares under the next Offering under the Plan, unless such participant withdraws from such next Offering, as provided in Plan Section 7(b), or is no longer eligible to be granted a stock purchase right under the Plan, as provided in Plan Section 5, in which case such amount will be distributed without interest to the participant after such final Purchase Date. The amount, if any, of accumulated payroll deductions remaining in any participant's nominal account after the purchase of shares which is equal to the amount required to purchase whole shares of Common Stock on the final Purchase Date of an Offering will be distributed in full without interest to the participant after such Purchase Date.

 

(b)  On each Purchase Date during an Offering, the Plan custodian designated by the Committee will receive from the Company at the price provided in Plan Section 6(c), as many whole shares of Common Stock as may be purchased with the funds withheld from participants since the immediately preceding Purchase Date, or the Offering Date as the case may be, plus any excess funds accumulated as provided in Section 8(a). Upon the receipt of the Common Stock so purchased, the Plan custodian will allocate to the credit of each participant the number of whole shares of Common Stock to which he is entitled under the Offering. Subject to any restriction imposed by the Committee as provided in this Section 8, and any other restriction imposed by the Committee, the number of whole shares of Common Stock  purchased  by  a  participant  under  this  Plan  will  be  issued  to  the participant as soon as administratively practicable following the Purchase Date for such shares. Unless otherwise requested by the participant, and if permitted by this Section 8, Common Stock shares purchased under the Plan will be held in the name of, or in the name of a nominee of, the Plan custodian for the benefit of each participant, who will thereafter be a beneficial shareholder of the Company.

 

  

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(c)  A participant will have no right to sell, encumber, or otherwise transfer a Common Stock share purchased under the Plan until after the last day of the sixth calendar month following the month when the share was purchased, unless the Committee in its sole discretion waives or modifies this restriction. Any attempt to sell, encumber or otherwise transfer a Common Stock share in violation of this Section 8(c) will be null and void. The Committee will enforce the restriction provided in this Section 8(c) by requiring that the Company or the Plan custodian hold the certificate for any share of Common Stock while the restriction is in effect for that share. The Committee in its sole discretion may enforce this restriction through different or additional means as it deems necessary or appropriate.

 

(d)  No stock purchase right granted under the Plan may be exercised to any extent unless the Common Stock shares to be issued upon such exercise under the Plan (including rights granted thereunder) are covered by an effective registration statement pursuant to the Securities Act of 1933, as amended ("Securities Act") and the Plan is in material compliance with all applicable state, foreign and other securities and other laws applicable to the Plan. If on a Purchase Date in any Offering hereunder the Plan is not so registered or in such compliance, no stock purchase right granted under the Plan or any Offering will be exercised on such Purchase Date, and the Purchase Date will be delayed until the Plan is subject to such an effective registration statement and such compliance, except that the Purchase Date will not be delayed more than twelve months and the Purchase Date will in no event be more than twenty-seven months from the Offering Date. If on the Purchase Date of any Offering hereunder, as delayed to the maximum extent permissible, the Plan is not registered and in such compliance, no stock purchase right granted under the Plan or any Offering will be exercised and all payroll deductions accumulated during the Offering (to the extent they have not been used to acquire Common Stock for participants) will be distributed without interest to the participants.

 

	
9.  

	
COVENANTS OF THE COMPANY.

 

(a)  During the terms of the stock purchase rights granted under the Plan, the Company will keep available at all times the number of shares of  Common Stock required to satisfy such rights.

 

(b)  The Company will seek to obtain from each federal, state, foreign or other regulatory commission or agency having jurisdiction over the Plan such authority as may be required to issue and sell shares of Common Stock upon exercise of the rights granted under the Plan. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful issuance and sale of Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell stock upon exercise of such rights unless and until such authority is obtained.

 

	
10.

	
 
USE OF PROCEEDS FROM STOCK.

 

Proceeds from the sale of stock pursuant to rights granted under the Plan will constitute general funds of the Company.

 

  

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11.

	
 
 
RIGHTS AS A SHAREHOLDER.

 

A participant will not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any Common Stock share subject to any right granted under the Plan unless and until the participant's shareholdings acquired upon exercise of rights under the Plan are recorded in the books of the Company. Subject to the provisions of Plan Section 8(c), a share of Common Stock issued to a participant under the Plan will be transferable in accordance with the applicable securities laws.

 

	
12.

	
 
 
 
ADJUSTMENTS UPON CHANGES IN STOCK.

 

(a)  If any change is made in the Common Stock subject to the Plan, or subject to any right granted under the Plan (through merger, consolidation, reorganization, recapitalization, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), the Plan and any outstanding rights will be appropriately adjusted in the class and maximum number of shares subject to the Plan and in the class, number of shares, and price per share of stock subject to outstanding rights. Such adjustments will be made by the Board, the determination of which will be final, binding and conclusive. (The conversion of any convertible securities of the Company will not be treated as an above-described "transaction not involving the receipt of consideration by the Company.")

 

(b)  In the event of (1) a dissolution or liquidation of the Company; (2) a merger or consolidation in which the Company is not the surviving corporation; (3) a reverse merger in which the Company is the surviving corporation but the shares of the Company's Common Stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise; or (4) the acquisition by any person, entity or group within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act") or any comparable successor provisions (excluding any employee benefit plan, or related trust, sponsored or maintained by the Company or any Affiliate of the Company) of the beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or comparable successor rule) of securities of the Company representing at least fifty percent of the combined voting power entitled to vote in the election of directors, then, as determined by the Board in its sole discretion (1) any surviving or acquiring corporation may assume outstanding rights or substitute similar rights for those under the Plan, (2) such rights may continue in full force and effect, or (3) the participants' accumulated payroll deductions may be used to purchase Common Stock immediately prior to the transaction described above and all participants' rights under the ongoing Offering terminated.

 

	
13.

	
 
 
 
 
AMENDMENT OF THE PLAN.

 

(a)  The Board at any time, and from time to time, may amend the Plan; provided, that, except as provided in Plan Section 12 relating to adjustments upon changes in stock, no amendment will be effective unless approved by the shareholders of the Company within twelve months before or after the adoption of the amendment by the Board, where the amendment will:

 

(i)  Increase the number of shares reserved for rights under the Plan;

 

(ii)  Modify the provisions as to eligibility for participation in the Plan (to the extent such modification requires shareholder approval in order for the Plan to obtain employee stock purchase plan treatment under Code Section 423, and the related Treasury regulations, or to comply with the requirements of Rule 16b-3 under the Exchange Act, as amended ("Rule  16b-3")); or

 

  

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(iii)  Modify the Plan in any other way if such modification requires shareholder approval in order for the Plan to obtain employee stock purchase plan treatment under Code Section 423 of the Code, and the related Treasury regulations, or to comply with the requirements of Rule 16b-3. It is expressly contemplated that the Board may amend the Plan in any respect that the Board deems necessary or advisable to bring the Plan and any stock purchase right granted under the Plan into compliance with the Code and the related Treasury regulations.

 

(b)  Rights and obligations under any stock purchase right granted before a Plan amendment will not be impaired by any amendment of the Plan, except with the consent of the eligible employee or participant to whom such rights were granted, or as necessary to comply with any laws or governmental regulations, or as necessary to ensure that the Plan and any stock purchase right granted under the Plan comply with the requirements of Code Section 423 and the related Treasury regulations.

 

	
14.

	
 
 
 
 
 
DESIGNATION OF BENEFICIARY.

 

(a)  A participant may file a written designation of a beneficiary who is to receive any Common Stock shares and cash, if any, from the participant's nominal account under the Plan in the event of such participant's death during or after the end of an Offering but prior to issuance to the participant of such shares and cash.

 

(b)  Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant's death, the Company will deliver such Common Stock shares and cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its sole discretion, may deliver such shares and cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

 

	
15.

	
 
 
 
 
 
 
TERMINATION OR SUSPENSION OF THE PLAN.

 

(a)  The Board in its discretion, may suspend or terminate the Plan at any time. No right may be granted under the Plan while the Plan is suspended or after it is terminated.

 

(b)  Rights and obligations under any stock purchase right granted while the Plan is in effect will not be impaired by suspension or termination of the Plan, except as expressly provided in the Plan or with the consent of the person to whom such right was granted, or except as necessary to comply with any laws or governmental regulation, or except as necessary to ensure that the Plan and rights granted under the Plan comply with the requirements of Code Section 423 and the related Treasury regulations.

 

	
16.

	
 
 
 
 
 
 
 
EMPLOYMENT RIGHTS.

The Plan and any stock purchase right granted under the Plan will neither confer on any employee any right with respect to continuation of employment by the Company or any Affiliate, nor will it interfere in any way with the right of the Company or any Affiliate to terminate such employment at any time.

 

  

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17.

	
 
 
 
 
 
 
 
 
MISCELLANEOUS.

 

(a)  As used in this Plan the term "and" means "and/or", the singular includes the plural, and the masculine  includes  the  feminine  and  neuter. Headings of articles are not to be considered in the construction of the Plan.

 

(b)  In the event that any provision of this Plan is held to be contrary to any statute or law, or otherwise unenforceable, the remaining provisions of this Plan will be enforced to the fullest extent practicable.

 

(c)  The expenses of administering the Plan, including any expense incurred to purchase Common Stock to be issued under the Plan will be paid by the Company. Except as provided in Plan Section 7(d), a participant will be responsible for any expense incurred to certify or sell shares purchased by him under the Plan.

 

(d)  All rights and obligations under the Plan will be construed and interpreted in accordance with the laws of the State of Delaware, without giving effect to the conflict of laws principles of such laws.

 

	
18.

	
 
 
 
 
 
 
 
 
EFFECTIVE DATE.

 

This amended and restated version of the Plan became effective as of October 24, 2011.

 

 

9a51280953ex10_7.htm

Exhibit 10.7

 

NIC INC.

KEY EMPLOYEE AGREEMENT

for

JAYNE FRIEDLAND HOLLAND

 

THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 5th day of May, 2015 (the "Effective Date"), by and between Jayne Friedland Holland ("Executive") and NIC Inc., a Delaware corporation (the "Company").  This Agreement amends and restates all prior agreements between Executive and the Company with respect to the subject matter hereof.

 

WHEREAS, the Company desires to continue to employ Executive to provide personal services to the Company and to the Company's subsidiaries, and wishes to continue to provide Executive with certain compensation and benefits in return for Executive's services; and

 

WHEREAS, Executive desires to continue to be employed by the Company and provide personal services to the Company and to the Company's subsidiaries in return for certain compensation and benefits;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1.             EMPLOYMENT BY THE COMPANY.

 

1.1  Acceptance.  Effective as of the Effective Date, the Company agrees to continue to employ Executive in the position of Chief Security Officer, and Executive agrees to continue to be employed upon the terms and conditions set forth in this Agreement for the period beginning on the Effective Date and ending as provided in Section 4 (the "Employment Period").

 

1.2  Duties.  During the Employment Period, Executive will serve in an executive capacity and shall perform such duties as are customarily associated with her then current title, consistent with the Bylaws of the Company and as reasonably required by the Company's Board of Directors (the "Board").  During the Employment Period, Executive will report to the Chief Executive Officer and the Board, or as the Chief Executive Officer, with the concurrence of a majority of the Board of Directors, directs.  Executive will devote her best efforts and substantially all of her business time and attention (except for vacation periods and reasonable periods of illness or other reason for leave permitted by the Company's general employment policies and for volunteer services to charitable organizations that do not materially detract from her ability to perform her duties to the Company) to the business of the Company.

 

1.3  Employment Policies.  The employment relationship between the parties shall also be governed by the general employment policies and practices of the Company, including those relating to protection of confidential information and assignment of inventions, except that when the terms of this Agreement differ from or are in conflict with the Company's general employment policies or practices, this Agreement shall control.

 

2.             COMPENSATION.

 

2.1  Base Salary.  The Company agrees to pay Executive a base salary during Executive's employment in equal installments (prorated for portions of a pay period) on the Company's regular pay days and the Company will withhold from such compensation all applicable federal and state income, social security and disability and other taxes as required by applicable laws.  Executive's initial salary as of the date hereof shall be at the rate of Three Hundred Six Thousand and no/100 Dollars ($306,000) per year (the "Base Salary").  Executive's Base Salary will be subject to review by the Board, or an authorized committee of the Board, from time to time and may be increased (but not decreased, except for across-the-board reductions that may be generally applicable to all of the Company's senior executives) in the Board's sole discretion.

 

  

  

  

 

2.2  Incentive Compensation.  Executive shall be entitled to participate, at a level commensurate with her position, in an annual performance-based cash bonus plan of the Company (the "Annual Cash Incentive Bonus"), any long-term incentive plan (which may include grants of stock options, restricted stock or other equity-based awards under the Company's equity plan as determined by the Board in its sole discretion) and in such additional incentive bonus opportunities, if any, as may be determined by the Board, with recommendations made by the Compensation Committee of the Board, subject to the terms and conditions of any underlying bonus plans, equity plans or equity agreements:

 

(a)  Executive’s minimum Annual Cash Incentive Bonus target will be twenty-five percent (25%) of her base salary.

 

(b)  The minimum service-based component of Executive’s annual long-term, equity-based incentive grant will be targeted at thirty-five percent (35%) of her base salary.

 

2.3  Standard Company Benefits.  Executive shall be entitled to participate in, and to receive all rights and benefits under the terms and conditions of, the standard Company benefits and compensation practices which may be in effect from time to time and provided by the Company to its employees generally.

 

2.4  Vacation.  In addition to such holidays, sick leave, personal leave and other paid leave as are allowed under the Company’s policies applicable to senior executives generally, Executive shall be entitled to one hundred sixty (160) hours per year (calculated at the rate of forty (40) hours worked per week) of vacation per calendar year and subject to the terms and conditions of the Company’s vacation policy applicable to senior executives; plus ten working days per year of personal time, accruing at the rate of six point seven (6.7) hours per month (calculated at the rate of forty (40) hours worked per week) provided that Executive’s unused vacation will not exceed one hundred sixty (160) hours per year.  If the Executive has not taken all of the available vacation time in a year, the unused time can be carried over to the next year, provided, however, that no additional accrual of time will occur when the unused total equals one hundred sixty (160) hours.  Personal time does not carry over from year to year. The value of any unused and accumulated vacation time will be paid to the Executive upon any termination of her employment based upon the per day value of her then base salary divided by 250.  The duration of such vacations and the time or times when they shall be taken will be determined by Executive in consultation with the Company.

 

2.5  Expenses.  The Company shall pay or reimburse Executive for reasonable and necessary business expenses incurred by Executive in connection with her duties on behalf of the Company in accordance with the Company’s expense reimbursement policy, as may be amended from time to time, or any successor policy, plan, program or arrangement thereto, and any other of its expense policies applicable to senior executives of the Company, following submission by Executive of reimbursement expense forms in accordance with such expense policies.  Any reimbursement or provision of in-kind benefits for expenses incurred or benefits received during the Executive's employment pursuant to the terms of this Section 2.5 shall be made pursuant to the Company’s standard policies and time lines, but not later than December 31st of the year following the year in which Executive incurs the expense; provided, however, that in no event will the amount of expenses so reimbursed, or in-kind benefits provided, by the Company in one year affect the amount of expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.  Each provision of reimbursement of expenses or in-kind benefit pursuant to this Section 2.5 shall be considered a separate payment and not one of a series of payments for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code").

 

  

2

  

 

2.6  Executive Death and Disability Benefits.  Executive shall be entitled to participate in and receive all rights and benefits under the terms and conditions of an executive life and disability policy or policies, with limits, features, benefits and coverages substantially similar to those reflected in Attachment I to this Agreement. 

 

3.             PROPRIETARY INFORMATION OBLIGATIONS.

 

3.1  Agreement.  Executive agrees to execute and abide by the Proprietary Information and Inventions Agreement attached hereto as Exhibit A.

 

4.             EMPLOYMENT PERIOD.

 

4.1  Except as hereinafter provided, the Employment Period shall commence as of the Effective Date and shall terminate upon the earlier of (a) the third (3rd) anniversary of the Effective Date (the "Initial Termination Date"), or (b) the date on which this Agreement is terminated in accordance with Section 4.2 of this Agreement; provided, however, that unless terminated in accordance with Section 4.2, this Agreement shall be automatically renewed for an additional Employment Period of three years on the Initial Termination Date and any subsequent three-year Employment Period's termination date, unless either Executive or the Company, as directed by its Board, elects, by written notice to the other party not less than six (6) months prior to the Initial Termination Date or any subsequent three-year Employment Period's termination date, (i) to terminate this Agreement, or (ii) to negotiate new terms of employment.  If negotiations regarding any revised employment agreement extend beyond a specific termination date while the parties are actively negotiating, the Agreement shall continue in full force and effect during such period of negotiation; provided, however, that if the parties, acting in good faith, are unable to negotiate new terms of employment, either party may terminate this Agreement by providing not less than thirty (30) days' prior written notice to the other party.

 

4.2  The Employment Period shall end upon the first to occur of any of the following events:

 

(a)  Executive’s death or termination of employment due to disability;

 

(b)  a termination by the Company for Cause;

 

(c)  a termination by the Company without Cause;

 

(d)  a Termination for Good Reason; or

 

(e)  a voluntary termination, which shall occur in the event of Executive’s termination of her employment with the Company for any reason, other than a Termination for Good Reason, by at least thirty (30) days prior written notice to the Company of such termination.

 

  

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5.             POST- EMPLOYMENT PAYMENT.

 

5.1  General.  At the end of Executive’s employment for any reason, Executive shall cease to have any rights to salary, future equity awards, expense reimbursements or other benefits, except (i) as may be provided in Sections 2.4, 5.2 and 5.5, and (ii) that Executive shall be entitled to receive:

 

(a)  payment of any Base Salary which has accrued but is unpaid through the date of termination;

 

(b)  any earned but unpaid annual bonus for a previously completed fiscal year (or other applicable previously completed bonus period), which shall be paid in accordance with the payment terms and conditions of the applicable plan or program;

 

(c)  reimbursement of any reimbursable expenses which have been incurred but are unpaid as of the date of termination; provided, however, that Executive must submit any claims for reimbursable expenses within sixty days following the date of her termination and such reimbursement shall be paid to Executive in accordance with Section 2.5;

 

(d)  any continuation coverage benefits to which Executive is entitled under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), provided that Executive completes all necessary election forms and complies with all terms and regulations pertaining to COBRA;

 

(e)  any other amounts and benefits the Executive is entitled to receive under any Company employee benefit plan or program in accordance with the terms and provisions of such plan or program, except to the extent such amounts and benefits are determined pursuant to this Agreement rather than such plan or program pursuant to Sections 5.2 and 5.5; and

 

(f)  such other compensation, if any, which the Board of Directors, in its sole discretion, may elect to pay or grant.

 

5.2  Termination Without Cause or for Good Reason.

 

(a)  The Company shall have the right to terminate Executive's employment with the Company at any time without Cause (as defined in Section 5.3(b)) upon sixty (60) days prior written notice.  In such event and subject to Section 5.2(c) and Section 8.11, the Company shall make all of the payments and provide all of the benefits as set forth in Section 5.5(a)(i)-(iv), payable at the time(s) provided for in Section 5.5(b).

 

(b)  Executive may terminate her employment at any time for Good Reason.  Subject to Section 5.2(c) and Section 8.11, upon any termination for Good Reason (as defined in Section 5.5.(c)(ii)), the Executive shall be entitled to receive the payments and benefits as set forth in Section 5.5(a)(i)-(iv), payable at the time(s) provided for in Section 5.5(b).

 

  

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(c)  Except where Executive's employment is terminated without Cause or due to termination for Good Reason within the Change of Control Period (as defined in Section 5.5), any amount or portion of an incentive award bonus or equity or equity-based award that is intended to qualify as "performance-based compensation" under Section 162(m) of the Code (except stock options and stock appreciation rights) shall only become payable or vest based on the actual level of performance (disregarding any requirements for Executive's continued employment).  Such compensation shall be paid, vested or issued, as the case may be, in accordance with Section 162(m) of the Code within 30 days following the Compensation Committee of the Board's determination of the achievement level of the applicable performance goals for the year of the Executive's termination of employment, or later if required by applicable law, including Section 7.2.

 

5.3  Termination for Cause.

 

(a)  The Company shall have the right to terminate Executive's employment with the Company at any time for Cause.  Written notification of termination, including in reasonable detail the facts and circumstances claimed to provide the basis for the Cause, shall be provided to Executive at the time of termination.

 

(b)  "Cause" for termination shall mean Executive's conviction of a felony or the willful and deliberate failure of Executive to perform her customary duties, in a manner consistent with the manner reasonably prescribed by the Board (other than any failure resulting from her incapacity due to physical or mental illness, disability or death).  For purposes of this section only, if the Company experiences a Change of Control, the term "Board" shall include the board of directors (or similar governing body) of any successor to the Company.

 

(c)  In the event Executive is notified in writing her employment is to be terminated for Cause and the Cause is curable, Executive shall be given sixty (60) days from date of notification to effect reasonable cure of the specific cause(s) set forth in the notification.

 

(d)  In the event Executive's employment is terminated at any time for Cause, the Company shall provide Executive within thirty (30) days of Executive's termination of employment all benefits specified in Section 5.1; provided, however, Executive shall not be entitled to receive any additional severance pay, pay in lieu of notice or any other such compensation, including any severance benefits provided under a Company's severance benefit plan as described above in Section 5.1(e), if any, in effect on Executive's termination date.

 

5.4  Voluntary Termination without Good Reason.

 

Executive may voluntarily terminate her employment in writing with the Company at any time without Good Reason (as defined in section 5.5(c)(ii)) after which no further compensation will be paid to Executive, except that the Company shall provide Executive within thirty (30) days of Executive's termination those amounts and benefits specified in Section 5.1; provided, however, Executive shall not be entitled to receive any additional severance pay, pay in lieu of notice or any other such compensation, including any severance benefits provided under a Company's severance benefit plan as described above in Section 5.1(e), if any, in effect on the termination date.

 

  

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5.5  Termination In Connection With a Change of Control.

 

(a)  If a "Change of Control" of the Company (as defined in Section 5.5(c)) occurs, and within either the six-month period ending on the Change of Control or the 18-month period beginning on the Change of Control (the "Change of Control Period"), Executive's employment is terminated without Cause or there is a Termination for Good Reason,  the Company shall, subject to the provisions of Section 5.5(d) and Section 8.11 below, and in accordance with Section 5.5(b):

 

	
(i)      

	
provide the benefits specified in Section 5.1;

 

	
(ii)     

	
pay Executive a lump sum severance payment equal to the sum of (A) two (2) times Executive's Base Salary in effect on the date of Executive's termination, (B) two (2) times the largest of the Annual Cash Incentive Bonuses paid by the Company to Executive during the immediately preceding three annual incentive periods, and (C) the amount of any award for the year of such termination as if target performance for such plan year had been achieved;

 

	
(iii)    

	
notwithstanding any contrary provisions of any stock option agreement, restricted stock agreement or other equity or equity-based award agreement held by Executive at the time of Executive's termination (and provided that any change of control provisions in such agreements, whether entered into before or after the date of this Agreement, shall be of no force and effect), (A) for any equity or equity-based award that is subject to time-based or service-based exercise, vesting or payment conditions, accelerate the exercisability, vesting, and lapse of restrictions, as the case may be, for such equity or equity-based awards, and (B) for any equity or equity-based award that is subject to performance-based exercise, vesting or payment conditions, accelerate the exercisability, vesting, and lapse of restrictions, as the case may be, for such equity or equity-based awards as if target performance for such award had been achieved; and

 

	
(iv)     

	
pay Executive a lump sum payment equal to one hundred fifty percent (150%) of Company's portion of the annual costs (determined based on such costs as of the Executive's termination date) associated with (A) providing Executive with medical and health benefits coverage under the Company's group health plans, and (B) providing Executive's eligible family members who are also receiving medical and health benefits coverage under the Company's group health plan on the date of Executive's termination of employment.

 

  

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(b)  That portion of any severance benefits described in this Section 5.5 which satisfies the "separation pay plan," or any other exemption from Section 409A of the Code ("Section 409A), as described in U.S. Department of Treasury Regulation Section 1.409A-1(b)(9), shall be paid no later than thirty (30) days after the end of the revocation period described in Section 8.11 of this Agreement.  That portion, if any, of the severance benefits described in this Section 5.5 that is subject to Section 409A shall be paid on the sixtieth (60th) day following the effective date of Executive's termination of employment, except that, if Executive is subject to Section 7.2 due to Executive's status as a "specified employee" under Section 409A, such portion shall be paid on the first day of the seventh month following Executive's termination of employment.

 

(c)  For purposes of this Section 5.5 and as referenced elsewhere in this document:

 

	
(i)      

	
A "Change of Control" of the Company shall be deemed to have occurred if:

 

	
(1)    

	
any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of capital stock of the Company representing thirty (30) percent or more of the total voting power represented by the Company's then outstanding capital stock;

 

	
(2)    

	
the consummation of a merger or consolidation of the Company with any other company, other than a merger or consolidation in which the shareholders, at the date of announcement, of the Company would own 50% or more of the voting stock of the surviving corporation;

 

	
(3)    

	
Continuing Directors (as defined below) no longer constitute at least a majority of the Board or a similar body of any successor to Company.  For purposes of this Agreement, "Continuing Director" means any individual who either (i) is a member of Company’s Board of Directors on the Effective Date, or (ii) becomes a member of Company’s Board of Directors after the Effective Date and whose election or nomination for election was approved by a vote of at least a majority of the then Continuing Directors (either by a specific vote or by approval of the proxy statement of Company in which such person is named as nominee for director, without objection to such nomination);

 

	
(4)    

	
the sale of all or substantially all of the assets of the Company; or

 

	
(5)    

	
the liquidation or dissolution of the Company.

 

  

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(ii)     

	
Termination for Good Reason means Executive’s termination of her employment as a result of the occurrence of any of the following without Executive’s written consent, unless within thirty (30) days following the Company’s receipt of Executive’s written notice of termination of employment for Good Reason, in accordance with Section 8.1, specifying in reasonable detail any facts and circumstances claimed to provide a basis for Executive’s termination for Good Reason, the Company cures any such occurrence:

 

	
(1)    

	
any material reduction by the Company in Executive’s Base Salary, Annual Cash Incentive Bonus opportunity, long-term incentive opportunity, or standard Company benefits (except for across-the-board reductions generally applicable to all senior executives of the Company);

 

	
(2)    

	
a relocation of Executive’s principal office to a location that is in excess of sixty (60) miles from its location as of the date of this Agreement; or

 

	
(3)    

	
without limiting the generality or effect of any of the foregoing, any material breach of this Agreement by the Company.

 

Any occurrence of Good Reason shall be deemed to be waived by Executive unless both (x) Executive provides the Company written notice of termination of employment for Good Reason within ninety (90) days after the date Executive becomes aware of the event giving rise to Good Reason, and (y) Executive terminates her employment before February 10 of the year following the taxable year of Executive during which the Company’s thirty (30) day cure period expired.

 

(d)  Anything in this Agreement to the contrary notwithstanding, prior to the payment of any compensation or benefits payable under paragraph (a) of this Section 5.5 hereof, the certified public accountants of the Company immediately prior to a Change of Control (the "Certified Public Accountants") shall determine as promptly as practical and in any event within twenty (20) business days following the Change in Control whether any payment or distribution by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, any other agreements or otherwise) (a "Payment") would more likely than not be nondeductible by the Company for Federal income tax purposes because of Section 280G of the Code ("Section 280G") and if it is, then the aggregate present value of amounts payable or distributable to or for the benefit of the Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement referred to as "Contract Payments") shall be reduced (but not below zero) to the Reduced Amount.  For purposes of this Section, the "Reduced Amount" shall be an amount expressed as a present value which maximizes the aggregate present value of Contract Payments without causing any Contract Payment to be nondeductible by the Company under Section 280G.

 

  

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If under this paragraph (d) the certified Public Accountants determine that any payment would more likely than not be nondeductible by the Company because of Section 280G, the Company shall promptly give Executive notice to that effect and a copy of the detailed calculation thereof and of the Reduced Amount, and Executive may then elect (subject to the restrictions set forth below), in her sole discretion, which and how much of the Contract Payments or any other payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Contract Payments or any other payments equals the Reduced Amount), and shall advise the Company in writing of her election within twenty (20) business days of her receipt of notice.  If no such election is made by Executive within such 20-day period, the Company may elect which and how much of the Contract Payments or any other payments shall be eliminated or reduced (as long as after such election the aggregate present value of the Contract Payments equals the Reduced Amount) and shall notify Executive promptly of such election.  Notwithstanding anything to the contrary, any Contract Payments or other payments that are subject to Section 409A (a "409A Payment") shall not be eliminated or reduced unless and until all other Contract Payments and other payments have been eliminated or reduced and any 409A Payment that is to be reduced or eliminated shall be reduced or eliminated in order of due date from earliest to latest.  For purposes of this paragraph, present value shall be determined in accordance with Section 280G(d)(4) of the Code.  All determinations made by the Certified Public Accountants shall be binding upon the Company and Executive and the payment to Executive shall be made within twenty (20) days of the later of the Change of Control or the Executive's termination of employment.  The Company may suspend for a period of up to thirty (30) days the Payment and any other payments or benefits due to Executive until the Certified Public Accountants finish the determination and Executive (or the Company, as the case may be) elects how to reduce the Contract Payments or any other payments, if necessary; provided, however, under no circumstance shall Executive or the Company be permitted to delay or accelerate any payment in a manner that would result in an impermissible deferral or acceleration under Section 409A.  As promptly as practicable following such determination and the elections hereunder, the Company shall pay to or distribute to or for the benefit of Executive such amounts as are then due to Executive under this Agreement.

 

5.6  Termination in the Event of Death or Disability.

 

(a)       If Executive dies, her designated beneficiaries, or if none, her estate, shall be entitled to the proceeds from Executive’s life insurance coverage described in Section 2.6 and all benefits specified in Section 5.1.

 

(b)      If Executive becomes disabled (as defined in the disability policy or policies described in Section 2.6), the Company may terminate Executive’s employment.  In such event, Executive would receive (i) all benefits specified in Section 5.1 and (ii) for a period of one year following the date Executive becomes disabled (“Disability Period”),  her Base Salary at the rate in effect at the beginning of the period reduced by any payments made to Executive during the Disability Period under the disability benefit plans of the Company described in Section 2.6 or under the Social Security disability insurance program, as well as other payments and benefits set forth in Section 2.3 that may be provided to Executive under the terms of the plans, programs and practices covered by Section 2.3.

 

  

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6.             NON-INTERFERENCE; NON-COMPETITION.

 

6.1  Agreement.  Executive agrees to execute and abide by the Noncompetition Agreement attached hereto as Exhibit B.

 

7.             SECTION 409A.

 

7.1  Compliance with Section 409A.  It is the intent of the parties that the provisions of this Agreement comply with Section 409A and the Treasury regulations and guidance issued thereunder and that this Agreement be interpreted and operated consistent with such requirements of Section 409A in order to avoid the application of additional taxes, interest or penalties due to Section 409A ("409A Penalties"). To the extent that a payment, or the settlement or deferral thereof, is subject to Section 409A, except as Executive and Company otherwise determines in writing, the payment shall be paid, settled or deferred in a manner that will meet the requirements of Section 409A, such that the payment, settlement or deferral shall not be subject to the 409A Penalties.  Any reimbursement will be interpreted and administered to comply with Treasury Regulation Section 1.409A-3(i)(1)(iv).

 

7.2  Delay for Specified Employee.  To the extent that (a) Company's common stock is publicly traded on an "established securities market" as defined in Treasury Regulations § 1.897-1(m), and (b) Executive would otherwise be entitled to any payment or benefit under this Agreement or any plan or arrangement of Company or its affiliates, that constitutes "deferred compensation" subject to Section 409A and that if paid during the six months beginning on the date of Executive's termination of employment would be subject the 409A Penalties because Executive  is a "specified employee" (within the meaning of Section 409A and as determined from time to time by Company), the payment will be paid to Executive on the earliest of the six-month anniversary of the termination of employment, a change in ownership or effective control of Company (within the meaning of Section 409A) or Executive's death.

 

7.3  Full Section 409A Compliance.  Notwithstanding any provision of this Agreement, (a) this Agreement shall not be amended in any manner that would cause (i) the imposition of any 409A Penalty, (ii) this Agreement or any amounts or benefits payable hereunder to fail to comply with the requirements of Section 409A, to the extent applicable, or (iii) any amounts or benefits payable hereunder that are not subject to Section 409A to become subject thereto (unless they also are in compliance therewith), and the provisions of any purported amendment that may reasonably be expected to result in such non-compliance shall be of no force or effect with respect to this Agreement and (b) if any provision of this Agreement would, in the reasonable, good faith judgment of Company, result or likely result in the imposition on Executive or any other person of any adverse consequences under Section 409A, Company may reform this Agreement, or any provision thereof, without Executive’s consent, in the manner that Company reasonably and in good faith determines to be necessary or advisable to avoid the imposition of such adverse consequence; provided, however, that any such reformation shall, to the maximum extent Company reasonably and in good faith determines to be possible, retain the economic and tax benefits to Executive hereunder, while not materially increasing the cost to Company of providing such benefits to Executive.  Company shall promptly notify Executive in writing of any such reformation and provide a detailed explanation of the reason for the reformation.  For the avoidance of doubt, the phrase "termination of employment" and similar phrases shall mean and be interpreted in the same manner as, a "separation from service" from the Company within the meaning of Section 409A of the Code.

 

  

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8.             GENERAL PROVISION.

 

8.1  Notices.  Any notices provided hereunder must be in writing and shall be deemed effective upon the earlier of personal delivery (including personal delivery by facsimile) or the third day after mailing by first class mail, to the Company at its primary office location and to Executive at the address listed on the Company payroll.

 

8.2  Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained herein.

 

8.3  Waiver.  If either party should waive any breach of any provisions of this Agreement, they or it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

 

8.4  Complete Agreement.  This Agreement and its Exhibits, constitute the entire agreement between Executive and the Company and it is the complete, final, and exclusive embodiment of her agreement with regard to the material terms of executive employment, compensation, and duration.  It is entered into without reliance on any promise or representation other than those expressly contained herein, and it cannot be modified or amended except in a writing signed by Executive and an officer of the Company.

 

8.5  Counterparts.  This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

 

8.6  Headings.  The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

 

8.7  Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and her respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any of her duties hereunder and they may not assign any of her rights hereunder without the written consent of the Company, which shall not be withheld unreasonably.

 

  

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8.8  Attorneys' Fees.  If either party hereto brings any action to enforce her or its rights hereunder, Executive shall be reimbursed by Company for her reasonable attorneys' fees and costs incurred in connection with such action, unless all of Executive's positions in such action are determined by the court to be frivolous.

 

8.9  Choice of Law.  All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of Kansas.

 

8.10  No Duty to Mitigate.  Executive shall have no duty to attempt to mitigate the level of benefits payable by the Company to him hereunder and the Company shall not be entitled to set off against the amounts payable hereunder any amounts received by the Executive from any other source, including any subsequent employer.

 

8.11  Release.  Payment of the amounts provided for in Section 5.5(a)(i)-(iv) shall be subject to the parties' signing (and not revoking by the end of any applicable revocation period) a general release of claims in a form reasonably acceptable to the parties, within twenty-one (21) days or forty-five (45) days, whichever period is required under applicable law, which shall contain a mutual non-disparagement clause, and which shall exempt from release the matters set forth in Section 8.12 and any continuing obligations under this Agreement pursuant to Sections 3.1 and/or 6.1.

 

8.12  Claw-Back.  If, pursuant to Section 10D of the Securities Exchange Act of 1934, as amended (the "Act"), the Company would not be eligible for continued listing, if applicable, under Section 10D(a) of the Act if it did not adopt policies consistent with Section 10D(b) of the Act, then, in accordance with those policies that are so required, any incentive-based compensation payable to Executive under this Agreement or otherwise shall be subject to claw-back in the circumstances, to the extent, and in the manner, required by Section 10D(b)(2) of the Act, as interpreted by rules of the Securities Exchange Commission, including but not limited to circumstances involving fraud or significant misrepresentation by the Executive that caused harm to the Company.

 

  

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above written.

 

	EXECUTIVE	 	NIC INC.
	 	 	 	 
	 	 	 	 
	
/s/ Jayne Friedland Holland

	 	By:	
/s/ Harry Herington

	
Name: Jayne Friedland Holland

	 	 	Name: Harry Herington
	 	 	 	Title: Chief Executive Officer

 

  

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Exhibit A

 

NIC INC.

 

EMPLOYEE PROPRIETARY INFORMATION

AND INVENTIONS AGREEMENT

 

In consideration of my employment or continued employment by NIC, Inc., a Delaware corporation (the "Company"), and the compensation now and hereafter paid to me, I hereby agree as follows:

 

1.           NONDISCLOSURE.

 

1.1 Recognition of Company's Rights; Nondisclosure. At all times during my employment and thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon or publish any of the Company's Proprietary Information (defined below), except as such disclosure, use or publication may be required in connection with my work for the Company, or unless an officer of the Company expressly authorizes such in writing. I will obtain Company's written approval before publishing or submitting for publication any material (written, verbal, or otherwise) that relates to my work at Company and/or incorporates any Proprietary Information. I hereby assign to the Company any rights I may have or acquire in such Proprietary Information and recognize that all Proprietary Information shall be the sole property of the Company and its assigns.

 

1.2 Proprietary Information. The term "Proprietary Information" shall mean any and all confidential and/or proprietary knowledge, data or information of the Company. By way of illustration but not limitation, "Proprietary Information" includes (a) trade secrets, inventions, ideas, processes, formulas, source and object codes, data, programs, other works of authorship, know-how, improvements, discoveries, developments, designs and techniques (hereinafter collectively referred to as "Inventions"); and (b) information regarding plans for research, development, new products, marketing and selling, business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers and customers; and (c) information regarding the skills and compensation of other employees of the Company. Notwithstanding the foregoing, it is understood that (i) the Company's Proprietary Information hereunder shall not include information to the extent that it is or becomes generally known in the trade or industry other than as a result of a breach of this Agreement, and (ii) I shall be free to use my own skill, knowledge and experience to whatever extent and in whichever way I wish, provided that I do so without the use or disclosure of Proprietary Information.

 

1.3 Third Party Information. I understand, in addition, that the Company has received and in the future will receive from third parties confidential or proprietary information ("Third Party Information") subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes. During the term of my employment and thereafter, I will hold Third Party Information in the strictest confidence and will not disclose to anyone (other than Company personnel who need to know such information in connection with their work for the Company) or use, except in connection with my work for the Company, Third Party Information unless expressly authorized by an officer of the Company in writing.

 

1.4 No Improper Use of Information of Prior Employers and Others. During my employment by the Company I will not improperly use or disclose any confidential information or trade secrets, if any, of any former employer or any other person to whom I have an obligation of confidentiality, and I will not bring onto the premises of the Company any unpublished documents or any property belonging to any former employer or any other person to whom I have an obligation of confidentiality unless consented to in writing by that former employer or person. I will use in the performance of my duties only information which is generally known and used by persons with training and experience comparable to my own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company.

 

  

A-1

  

 

2.           ASSIGNMENT OF INVENTIONS.

 

2.1 Proprietary Rights. The term "Proprietary Rights" shall mean all trade secret, patent, trademark, copyright, and other intellectual property rights throughout the world.

 

2.2 Prior Inventions. Inventions, if any, patented or unpatented, which I made prior to the commencement of my employment with the Company are excluded from the scope of this Agreement. To preclude any possible uncertainty, I have set forth on Exhibit A (Previous Inventions) attached hereto a complete list of all Inventions that I have, alone or jointly with others, conceived, developed or reduced to practice or caused to be conceived, developed or reduced to practice prior to the commencement of my employment with the Company, that I consider to be my property or the property of third parties and that I wish to have excluded from the scope of this Agreement (collectively referred to as "Prior Inventions"). If disclosure of any such Prior Invention would cause me to violate any prior confidentiality agreement, I understand that I am not to list such Prior Inventions in Exhibit A but am only to disclose a cursory name for each such invention, a listing of the party(ies) to whom it belongs and the fact that full disclosure as to such inventions has not been made for that reason. A space is provided on Exhibit A for such purpose. If no such disclosure is attached, I represent that there are no Prior Inventions. If, in the course of my employment with the Company, I incorporate a Prior Invention into a Company product, process or machine, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license (with rights to sublicense through multiple tiers of sublicensees) to make, have made, modify, use and sell such Prior Invention, Notwithstanding the foregoing, I agree that I will not incorporate, or permit to be incorporated, Prior Inventions in any Company Inventions without the Company's prior written consent.

 

2.3 Assignment of Inventions. Subject to Sections 2.4, and 2.6, I hereby assign and agree to assign in the future (when any such Inventions or Proprietary Rights are first conceived or first fixed in a tangible medium, as applicable) to the Company all my right, title and interest in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not patentable or registrable under copyright or similar statutes, made, conceived, fixed in a tangible medium or learned by me, either alone or jointly with others, during the period of my employment with the Company. Inventions assigned to the Company, or to a third party as directed by the Company pursuant to this Section 2, are hereinafter referred to as "Company Inventions."

 

2.4 Nonassignable Inventions. This Agreement will not be deemed to require assignment of and "Company Inventions" shall not be discerned to include any invention which was developed entirely on my own time without using the Company's equipment, supplies, facilities, or trade secrets and is neither related to the Company's actual or anticipated business, research or development, nor resulted from work performed by me for the Company.

 

2.5 Obligation to Keep Company Informed. During the period of my employment and for six (6) months after termination of my employment with the Company, I will promptly disclose to the Company fully and in writing all Inventions authored, conceived or fixed in a tangible medium by me, either alone or jointly with others. In addition, I will promptly disclose to the Company all patent applications filed by me or on my behalf within a year after termination of employment. At the time of each such disclosure, I will advise the Company in writing of any Inventions that I believe fully qualify for protection "as non-Company Inventions" and I will at that time provide to the Company in writing all evidence necessary to substantiate that belief. The Company will keep in confidence and will not use for any purpose or disclose to third parties without my consent any confidential information disclosed in writing to the Company pursuant to this Agreement relating to Inventions that are not Company Inventions. I will preserve the confidentiality of any Invention which is a Company Invention.

 

2.6 Government or Third Party. I also agree to assign all my right, title and interest in and to any particular Company Invention to a third party, including without limitation the United States, as directed by the Company.

 

  

A-2

  

 

2.7 Works for Hire. I acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of my employment and which are protectable by copyright are "works made for hire," pursuant to United States Copyright Act (17 U.S.C., Section 101) the copyright in which is owned by the Company.  If, for any reason, such original works are not deemed "works made for hire" under such statute, I hereby assign and agree to assign all of my right, title, and interest in the works to the Company and agree to execute such further documents as are reasonably required to perfect and record this assignment.

 

2.8 Enforcement of Proprietary Rights. I will assist the Company in every proper way to obtain, and from time to time enforce, United States and foreign Proprietary Rights relating to Company Inventions in any and all countries. To that end I will execute, verify and deliver such documents and perform such other acts (including appearances as a witness) as the Company may reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such Proprietary Rights and the assignment thereof. In addition, I will execute, verify and deliver assignments of such "Company Inventions" to the Company or its designee. My obligation to assist the Company with respect to Proprietary Rights relating to such Company Inventions in any and all countries shall continue beyond the termination of my employment, but the Company shall compensate me at a reasonable rate after my termination for the time actually spent by me at the Company's request on such assistance.

 

In the event the Company is unable for any reason, after reasonable effort, to secure my signature on any document needed in connection with the actions specified in the preceding paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, which appointment is coupled with an interest, to act for and in my behalf to execute, verify and file any such documents and to do all other lawfully permitted acts to further the purposes of the preceding paragraph with the same legal force and effect as if executed by me. I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, which I now or may hereafter have for infringement of any Proprietary Rights or Company Inventions assigned hereunder to the Company.

 

3.            RECORDS. I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all Proprietary Information developed by me and all Inventions made by me during the period of my employment at the Company, which records shall be available to and remain the sole property of the Company at all times.

 

4.            ADDITIONAL ACTIVITIES. I agree that for the period of my employment by the Company and for three (3) years after the date of termination of my employment by the Company I will not induce any employee of the Company to leave the employ of the Company.

 

5.            NO CONFLICTING OBLIGATION. I represent that my performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence information acquired by me in confidence or in trust prior to my employment by the Company. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict herewith.

 

  

A-3

  

 

6.            RETURN OF COMPANY DOCUMENTS.  When I leave the employ of the Company, I will deliver to the Company any and all original drawings, notes, memoranda, specifications, devices, formulas, files, emails and documents, and any other material containing or disclosing any Company Inventions, Third Party Information or Proprietary Information of the Company, whether in paper, electronic or other intangible form. I further agree that any property situated on the Company's premises and owned by the Company, including disks and other storage media, filing cabinets or other work areas, is subject to inspection by Company personnel at any time with or without notice. Prior to leaving, I will cooperate with the Company in completing and signing the Company's termination statement.  I further agree not to retain any Proprietary Information of the Company on any electronic or online storage media including, but not limited to, USB drives, magnetic or optical discs, online storage services, online email services, or any personal computer under my control, subsequent to my termination.

 

7.            LEGAL AND EQUITABLE REMEDIES. Because my services are personal and unique and because I may have access to and become acquainted with the Proprietary Information of the Company, the Company shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief, without bond and without prejudice to any other rights and remedies that the Company may have for a breach of this Agreement.

 

8.            NOTICES. Any notices required or permitted hereunder shall be given to the appropriate party at the address specified below or at such other address as the party shall specify in writing. Such notice shall be deemed given upon personal delivery to the appropriate address or if sent by certified or registered mail, three (3) days after the date of mailing.

 

9.            NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of the Company, I hereby consent to the notification of my new employer of my rights and obligations under this Agreement.

 

10.          GENERAL PROVISIONS.

 

10.1 Governing Law; Consent to Personal Jurisdiction. This Agreement will be governed by and construed according to the laws of the State of Kansas, as such laws are applied to agreements entered into and to be performed entirely within Kansas between Kansas residents. I hereby expressly consent to the personal jurisdiction of the state and federal courts located in Johnson County, Kansas for any lawsuit filed there against me by Company arising from or related to this Agreement.

 

10.2 Severability. In case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein so long as the central purpose and intent of the Agreement can still be achieved. If moreover, any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent compatible with the applicable law as it shall then appear.

 

10.3 Successors and Assigns. This Agreement will be binding upon my heirs, executors, administrators and other legal representatives and will be for the benefit of the Company, its successors, and its assigns.

 

10.4 Survival. The provisions of this Agreement shall survive the termination of my employment and the assignment of this Agreement by the Company to any successor in interest or other assignee.

 

  

A-4

  

 

10.5 Employment. I agree and understand that nothing in this Agreement shall confer any right with respect to continuation of employment by the Company, nor shall it interfere in any way with my right or the Company's right to terminate my employment at any time, with or without cause.

 

10.6 Waiver. No waiver by the Company of any breach of this Agreement shall be a waiver of any preceding or succeeding breach. No waiver by the Company of any right under this Agreement shall be construed as a waiver of my other right. The Company shall not be required to give notice to enforce strict adherence to all terms of this Agreement.

 

10.7 Entire Agreement. The obligations pursuant to Sections 1 and 2 of this Agreement shall apply to any time during which I was previously employed, or am in the future employed, by the Company as a consultant if no other agreement governs nondisclosure and assignment of inventions during such period. This Agreement is the final, complete and exclusive agreement of the parties with respect to the subject matter hereof and supersedes and merges all prior discussions between us. If I have an existing Employee Proprietary Information and Inventions Agreement in place with the Company, then this Agreement supersedes and replaces that agreement effective as of the date this agreement is signed below, otherwise, this Agreement shall be effective as of the first day of my employment with the Company. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing and signed by the party to be charged. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement.

 

[Remainder of Page Intentionally Blank]

 

 

 

 

  

A-5

  

I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETELY FILLED OUT EXHIBIT A TO THIS AGREEMENT.

 

	/s/ Jayne Friedland Holland	 
	Jayne Friedland Holland	 
	Address:	 

 

 

Date:  May 5, 2015

 

ACCEPTED AND AGREED TO:

 

NIC INC.

 

	By:	/s/ Harry Herington	 
	 	Name:	Harry Herington	 
	 	Title:	Chief Executive Officer	 
	 	 	 	 
	 	Date:	May 5, 2015	 

 

  

A-6

  

 

EXHIBIT A

 

PREVIOUS INVENTIONS

 

 

	TO:	NIC Inc.	 
	 	 	 
	FROM:	 	 
	 	 	 
	DATE:	 	 
	 	 	 
	SUBJECT: Previous Inventions	 

 

1.           Except as listed in Section 2 below, the following is a complete list of all inventions or improvements relevant to the subject matter of my employment by _______________ (the "Company"), a wholly-owned subsidiary of NIC Inc., that have been made or conceived or first reduced to practice by me alone or jointly with others prior to my engagement by the Company:

 

	 	o	No inventions or improvements.
	 	 	 
	 	o	See below:
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	o	Additional sheets attached.

 

2.             Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1 above with respect to inventions or improvements generally listed below, the proprietary rights and duty of confidentiality with respect to which I owe to the following party(ies):

 

	  	
Invention or Improvement

	  	
Party(ies)

	  	
Relationship

	
1.

	  	  	  	  	  
	 	 	 	 	 	 
	
2.

	  	  	  	  	  
	 	 	 	 	 	 
	
3.

	  	  	  	  	  
	 	 	 	 	 	 
	o	Additional sheets attached.	 	 	 	 

  

A-7

  

 

Exhibit B

 

 

NICUSA, INC.

 

Non-Competition Agreement

 

In consideration of the employment/promotion of Jayne Friedland Holland, currently residing at _________________________________________________(“Employee”), by NICUSA, Inc. (“Employer”) and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by Employee, Employer and Employee hereby agree to the terms outlined in this Agreement.

 

Recitals

 

	
A.

	
Employer is in the business generally of designing, building, and furnishing to government clients and private entities, egovernment applications and services online, including but not limited to Software As A Service, stand-alone online applications, system management and hosting, e-payment processing, database management, and enterprise wide management of such services and payment streams.

 

	
B.

	
The parties recognize that, in the course of employment with Employer, Employee will learn Employer’s techniques, procedures, and development, management, and marketing strategies and will be exposed to the Employer’s clients and prospects, all of which Employer has a legitimate business interest in protecting. Employee is expected to work diligently and to develop good will with clients and prospects and other of Employer’s employees for the benefit of the Employer. Employee agrees that it would be unfair and improper to disclose or use Employer’s Confidential Information, training, or relationships to solicit Employer’s clients, prospects, or employees either during the Employee’s employment with Employer or for a limited period thereafter.

 

	
C.

	
The parties desire to enter into this Agreement in order to induce the Employer to share or continue to share its information and resources with Employee during the course of employment and to insure that the Employer’s business will not be harmed during or after Employee’s employment.

 

	
D.

	
Employee acknowledges and agrees that the promises in this Agreement are of material importance to Employer and the promises are a material inducement for Employer to employ and continue to employ the Employee.

 

Agreement

       

	
1. 

	
Definitions

 

As used herein:

 

(a)       “Confidential Information” means any oral or written information disclosed to Employee or known by Employee as a consequence of or through Employee’s employment by Employer which relates to Employer’s business, products, processes, or services, including, but not limited to, information relating to research, development, Inventions, computer program designs, programming techniques, flow charts, source code, object code, products under development, manufacturing, purchasing, accounting, engineering, marketing, selling, customer lists, customer requirements, and any documentation thereof. It will be presumed that information supplied to Employee from outside sources while in the course of his or her work for Employer is Confidential Information unless and until it is designated otherwise.

 

  

  

  

 

(b)  “Inventions” means discoveries, concepts, and ideas, whether patentable or not, including, but not limited to, apparatuses, processes, methods, compositions of matter, techniques, and formulae, as well as improvements or know-how related to any of those, in connection with and relating to any activities of Employer.

 

(c)       “Work Product” means all documents, reports, memoranda, drawings, specifications, computer programs, works of authorship fixed in a tangible medium of expression, flow charts and computer source code and object code regardless of the medium in which it is fixed, notes, correspondence, records, notebooks, and other tangible or intangible property and any and all plans, discoveries, creations, compositions, innovations, processes, technical data, patents and patent applications, know-how, trade secrets, trademarks, copyrights and copyright registration applications, and other materials and designs (whether tangible or intangible) developed or conceived by the Employee or provided by the Employer or any of its related entities, affiliates, or business units to the Employee during the course of the Employee’s performance of service for Employer.

 

(d)       “Conflicting Organization” means any competitor of Employer, including any organization which is engaged in the development, marketing, or selling of a Conflicting Product. An “affiliate” of Employer is an entity that is owned by, or under common control with, Employer, including direct and indirect parent entities.  An affiliate of Employer is not considered a Conflicting Organization.

 

(e)        “Conflicting Product” means any product, process, or service of any person or organization other than Employer which competes with a product, process, or service of Employer upon or with which Employee works or about which Employee acquires Confidential Information.

 

	
2.  

	
Services to Conflicting Organizations

 

For as long as Employee is employed by Employer and for a period of two (2) years after termination of Employee’s employment by Employer, whether or not said termination is voluntary or involuntary and whether or not said termination is initiated by Employee or Employer, Employee will not own, in whole or in part, aid, or render services to, directly or indirectly, (collectively, “aid”) any Conflicting Organization; provided, however, that, upon termination of Employee’s employment by Employer, Employee shall have the right to aid a Conflicting Organization whose business is diversified and which, as to that part of its business Employee aids, considered as a discrete business unit, is not a Conflicting Organization if, prior to aiding or rendering services, Employee furnishes separate written assurances satisfactory to Employer (in its sole discretion) from such Conflicting Organization and from Employee that Employee will not aid or render services directly or indirectly in connection with any Conflicting Product.  For purposes of this provision, ownership means either: 1) owning more than 5% of the total outstanding shares of stock in a Conflicting Organization; or 2) having a controlling interest in a Conflicting Organization. The preceding restriction applies to the Employee in the following territory:

 

  

  

  

 

For Management Level Employees: Because Employer is a subsidiary of NICUSA, Inc., which uses subsidiaries such as Employer to operate egovernment portals across the entire United States of America, such as the one that Employer operates  for Kansas; and because Employee’s position with Employer is considered to be management level or management-trainee; and because a condition of being employed at management level or as a management trainee is that the Employee be willing to relocate to another subsidiary in another state to lead or assist in leading the operations of a new or existing portal such as Employer operates for Kansas, such aid or services to a Conflicting Organization is prohibited anywhere in the United States of America.

 

For Non-Management Level Employees: Because Employee is not considered to be a management level or management-trainee, such aid or services to a Conflicting Organization is prohibited anywhere in Kansas or its adjoining states.

 

	
3.  

	
Confidentiality

 

(a)  During employment with the Employer, and from and after termination of employment, Employee will hold in confidence the Confidential Information and will not use it or disclose it to any person or entity except with the specific prior written consent of the Employer or except as otherwise expressly permitted by this Agreement.

 

(b)  Any trade secrets of the Employer or the business and affairs of the Employer will be entitled to all of the protections and benefits under the Kansas Trade Secrets Act and any other applicable law.  If any information that the Employer deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret for purposes of this Agreement, such information will, nevertheless, be considered Confidential Information for purposes of this Agreement.  Employee hereby waives any requirement that the Employer submit proof of the economic value of any trade secret or post a bond or other security.

 

(c)  None of the foregoing obligations and restrictions apply to any part of the Confidential Information that Employee demonstrates (i) was or became generally available to the public other than as a result of an improper disclosure by Employee or by another individual or entity; or (ii) was available to Employee on a non-confidential basis prior to its disclosure to Employee by the Employer.  If Employee is requested or becomes legally compelled by any means or is required by a regulatory body to make any disclosure that is prohibited or otherwise constrained by this Agreement, Employee will provide the Employer with prompt notice of such request so that it may seek an appropriate protective order or other appropriate remedy.

 

	
4.  

	
Non-Solicitation of Employees

 

Employee shall not, during the period of Employee’s employment with the Employer and for a period of two (2) years after termination of Employee’s employment with the Employer, whether or not said termination is voluntary or involuntary, and whether or not said termination is initiated by Employee or Employer, either on his or her own account or for any person, partnership, corporation, or other entity (a) solicit, contact, or endeavor to cause any employee of the Employer to leave his or her employment, (b) induce or attempt to induce any such employee to breach her or his employment agreement with the Employer, (c) otherwise interfere with the Employer’s relationships with its employees, or (d) hire, employ, or supervise any of the Employer’s employees.

 

  

  

  

 

	
5.  

	
Non-Solicitation of Clients or Prospects

 

Employee shall not, during the period of Employee’s employment with the Employer and for a period of two (2) years after termination of Employee’s employment with the Employer, whether or not said termination is voluntary or involuntary, and whether or not said termination is initiated by Employee or Employer, solicit, induce, or attempt to induce, any past or current client of Employer, or any prospective client of Employer with whom Employee had contact as a result of Employee’s employment by Employer, (a) to cease doing business in whole or in part with or through the Employer, or (b) to do business with any Conflicting Organization.

 

	
6.  

	
Work Product and Inventions

 

(a)  Employer shall own, without restrictions or limits of any kind, all right, title, and interest in and to any and all Work Product and Inventions.

 

(b)  Employee acknowledges and agrees that the Employee shall not acquire any right whatsoever in any Work Product or Inventions and that any and all Work Product or Inventions, and any other property of Employer shall be returned or provided to the Employer at any time upon the Employer’s demand, and, at the latest, upon termination of Employee’s employment for any reason.

 

(c)  Employee acknowledges and confirms that it is the Employee’s intention that any and all rights, including any copyright or other intellectual property rights, in any Work Product or Inventions created by the Employee for the Employer shall solely and exclusively vest in the Employer, and that any such Work Product or Inventions shall be considered within the scope of the Employee’s employment.  The parties agree that the Employer is entitled, as author, to the copyright in any copyrightable Work Product and any Inventions and any other rights therein including the right to seek or not seek statutory registration of any copyright and the right to make such changes therein and uses thereof as the Employer in its sole discretion determines. If, for any reason, any such Work Product is not considered a work made for hire under the copyright laws, then the Employee hereby grants and assigns to the Employer all of the Employee’s right, title, and interest in and to such Work Product.

 

(d)  Employee agrees to execute such assignments, releases, transfer documents, and other instruments as the Employer may reasonably require in order to vest in the Employer complete and absolute title to the Work Product and any Inventions, including all intellectual property rights therein and thereto.  For this limited purpose, the Employee hereby appoints the Employer as its attorney in fact to execute and deliver to the Employer, on behalf of the Employee, any and all such documents or instruments.  This appointment shall be deemed to be a power coupled with an interest and shall be irrevocable.  The Employee agrees to cooperate fully with the Employer in any and all acts or actions deemed appropriate by the Employer in order to perfect, retain, enforce, and maintain sole and exclusive title in and to the Work Product and any Inventions and all intellectual property rights therein and thereto.

 

  

  

  

 

(e)  This Agreement does not apply to an Invention for which no equipment, supplies, facility, or trade secret information of the Employer was used and which was developed entirely on the Employee’s own time, unless (a) the Invention relates (i) directly to the business of the Employer, or (ii) actual or demonstrably anticipated research or development or (b) the Invention results from any work performed by the Employee for the Employer.

 

	
7.  

	
Tolling of Period of Restriction

 

In the event of a breach of any of the covenants included above, then the post-employment time periods during which such prohibitions apply shall not be reduced by any period of time during which Employee is in violation or breach of any such covenant, including any period of time required to obtain injunctive relief from a court requiring Employee to cease and desist such breach.

 

	
8.  

	
Enforcement

 

Employee acknowledges that the legal remedy available to Employer for any breach of covenants in this Agreement on the part of Employee may be inadequate, and therefore, in the event of any threatened or actual breach of any term of this Agreement and in addition to any other right or remedy which Employer may have, Employer shall be entitled to specific enforcement of this Agreement through injunctive or other equitable relief in a court with appropriate jurisdiction, without the necessity of posting a bond.

 

	
9.  

	
Attorneys’ Fees and Costs

 

The Employee shall reimburse the Employer for all costs and expenses, including reasonable attorneys’ fees, expert fees, and costs incurred by the Employer in connection with enforcing any provision of this Agreement.

 

	
10.  

	
Obligations Survive Termination of Employment

 

Termination of Employee’s employment, whether voluntary or involuntary, shall not impair or relieve Employee of any obligations under this Agreement. Employee acknowledges that his/her employment is at will and that nothing in this Agreement shall be considered a contract of employment or in any way alter Employee’s at-will status in any manner or respect.

 

	
11.  

	
Non-Waiver

 

No failure on the part of either party to require the performance by the other party of any term of this Agreement shall be taken or held to be a waiver of such term or in any way affecting such party’s right to enforce such term, and no waiver on the part of either party of any term in this Agreement shall be taken or held to be a waiver of any other term hereof or the breach thereof.

 

  

  

  

 

	
12.  

	
Binding Effect

 

This Agreement may be assigned by Employer without the prior written consent of Employee.

 

	
13.  

	
Severability

 

Should any term of this Agreement be found invalid or unenforceable, it shall not affect the validity or enforceability of any other term of this Agreement.  If necessary for enforcement of any of the covenants in the Agreement by a court with appropriate jurisdiction, Employee and Employer agree the court is authorized to reduce or modify the covenant as necessary for the maximum enforcement permitted by law.

 

	
14.  

	
Term of Employment

 

This Agreement involves no obligations on the part of Employer to employ Employee or upon Employee to accept employment for any definite period of time.

 

	
15.  

	
Merger

 

This Agreement supersedes all prior conversations, correspondence, representations, warranties, agreements, and other communications regarding the subject matter hereof. The Recitals are considered a part of this Agreement.

 

	
16.  

	
Applicable Law

 

(a)  This Agreement shall be in all respects interpreted and construed in accordance with and be governed by the laws of the state of Kansas.

 

(b)  The parties agree that any action at law or in equity relating to this Agreement shall be brought in the federal or state courts within the city of Olathe, KS and the parties consent to and hereby waive any objections to jurisdiction and venue at that location.

 

Employee hereby acknowledges receipt of a copy of this Agreement.

 

Employee hereby acknowledges receipt of a copy of this Agreement.

IN WITNESS to Employee’s agreement to all of the above, Employee has executed this Agreement as of the 1st day of November, 2014.

 

Employee:  /s/ Jayne Friedland Holland                                                                                                                                                                                                         

                        Jayne Friedland Holland

Position: Chief Security Officer

 

  

  

  

 

Accepted for Employer:

Signed:  /s/ Harry Herington                                                                                                                                                                                                                          

                               Name:  Harry Herington

                               Title:    Chief Executive Officer

 

 

 

  

  

  

Attachment I to Employment Agreement

Name:                      Jayne Holland

Position:                 Chief Security Officer

Additional benefits provided to Executive as part of Key Employee Agreement dated May 5, 2015.

Life Insurance

20 year term policy

2x annual salary benefit.

Life-insurance policy premiums will be paid by the Company.

Long Term Disability Coverage

Standard Monthly Benefit                           $10,000 (guaranteed for life)

Rider No. 1                                                      $  5,000 (guaranteed for life)

Rider No. 2                                                      $  2,669 (guaranteed for 3 years, then must reapply)

Total Monthly Benefit                                  $17,669

In the event the participant is disabled for more than 365 days, Lloyds of London will issue a one-time lump sum payment of $1,000,000.

Long-term disability policy premiums (for both standard coverage and riders) will be paid by the Company.

Signature of Participant: _/s/ Jayne Friedland Holland________________________

Date: __May 5, 2015_______________________________________

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