Document:

Exhibit 10.1

    
      
        

      

    

     

    Exhibit
      10.1

     

    

      NOTICE

      

      This
        Restricted Stock Award Agreement (“Agreement”) will be valid only if the Grantee
        executes and delivers this Agreement and the attached Stock Power of Attorney
        to
        Vail Banks, Inc., Attn: Lisa M. Dillon on or before November
        1, 2005.

       

      

      RESTRICTED
        STOCK AWARD AGREEMENT

      under
        the

      VAIL
        BANKS, INC. 

      AMENDED
        AND RESTATED STOCK INCENTIVE PLAN

      

       

      THIS
        AGREEMENT, made and entered into as of the 24th day of October 2005, by and
        between Vail Banks, Inc. (“the “Company”) and Dan E. Godec (“Grantee”).

       

      WITNESSETH
        THAT:

       

      WHEREAS,
        the Company maintains the Vail Banks, Inc. Amended and Restated Stock Incentive
        Plan (the “Plan”), and the Grantee has been selected by the Committee to receive
        a Restricted Stock Award under the Plan; 

       

      NOW,
        THEREFORE, IT IS AGREED, by and between the Company and the Grantee, as follows:
        

       

      

      
        	 	
                1.

              	
                Award
                  of Restricted Stock

              

      

       

      1.1   The
        Company hereby grants to the Grantee an award of 2,000 Shares of restricted
        stock (“Restricted Stock”), subject to, and in accordance with, the
        restrictions, terms and conditions set forth in this Agreement. The grant
        date
        of this award of Restricted Stock is October 24, 2005(“Grant Date”).

       

      1.2   This
        Agreement shall be construed in accordance and consistent with, and subject
        to,
        the provisions of the Plan (the provisions of which are incorporated herein
        by
        reference) and, except as otherwise expressly set forth herein, the capitalized
        terms used in this Agreement shall have the same definitions as set forth
        in the
        Plan. 

       

      
        	 	
                2.

              	
                Restrictions

              

      

       

      2.1    Subject
        to Sections 2.2, 2.3, and 2.4 below, if the Grantee remains employed by the
        Company, the Grantee shall become vested in the Restricted Stock as follows:
        10%
        of the Shares of Restricted Stock (rounded down to the next whole share)
        shall
        vest on each anniversary (each such date shall be a “Vesting Date”) of the Grant
        Date, such that on October 25, 2015 (“Final Vesting Date”) all of the Shares of
        Restricted Stock shall be fully vested. On each Vesting Date, Grantee shall
        own
        the Vested Shares of Restricted Stock free and clear of all restrictions
        imposed
        by this Agreement (except those imposed by Section 3.4 below). For purposes
        of
        this Agreement, employment with any Subsidiary of the Company, or service
        as a
        Director of the Company or any Subsidiary of the Company, shall be considered
        employment with the Company.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      2.2    In
        the
        event, prior to the Final Vesting Date, (i) Grantee dies while actively employed
        by the Company, (ii) Grantee’s employment is terminated by reason of Disability,
        (iii) Grantee’s employment is terminated by the Company other than for Cause (as
        defined in Section 2(e) of the Plan),or (iv) Grantee terminates Grantee’s
        employment for Good Reason (as defined in Section 2.5 below), the Restricted
        Stock shall become fully vested and nonforfeitable as of the date of Grantee’s
        death, Disability or termination of employment. The Company shall deliver
        certificate(s) for the Restricted Stock, free and clear of any restrictions
        imposed by this Agreement (except for Section 3.4) to Grantee (or, in the
        event
        of death, his surviving spouse or, if none, to his estate) as soon as practical
        after Grantee’s date of death or termination for Disability, termination without
        Cause, or termination for Good Reason. If Grantee terminates Grantee’s
        employment without Good Reason or if the Company terminates Grantee for Cause,
        the Restricted Stock shall cease to vest further and Grantee shall only be
        entitled to the Restricted Stock that is vested as of his date of
        termination.

       

      2.3    Notwithstanding
        the other provisions of this Agreement, in the event of a Change in Control
        prior to Grantee’s Final Vesting Date, the Restricted Stock shall become fully
        vested and nonforfeitable as of the date of the Change in Control. On the
        date
        of the Change in Control, the Company shall deliver to Grantee a certificate(s)
        for the Restricted Stock, free and clear of any restrictions imposed by this
        Agreement. 

       

      2.4    The
        Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
        encumbered prior to the date Grantee becomes vested in the Restricted Stock.
        

       

      2.5    For
        purposes of this Section 2, “Good Reason” shall mean 

       

      (i)    the
        assignment to Grantee of any duties inconsistent with Grantee’s positions,
        duties, responsibilities and status with the Company, its subsidiaries and
        affiliates as of the date hereof, or a change in Grantee’s reporting
        responsibilities, titles or offices which were in effect as of the date hereof,
        or any removal of Grantee from, or any failure to re-elect Grantee to, any
        of
        such positions, except in connection with the termination of Grantee’s
        employment by the Company for Cause or as a result of Grantee’s death or
        Disability or termination by Grantee other than for Good Reason;

       

      (ii)    a
        reduction by the Company in Grantee’s base salary as in effect on the date
        hereof or as the same may be increased from time to time, or failure to give
        Grantee annual salary increases consistent with performance review ratings
        as
        compared with other employees of the same or similar rank;

       

      (iii)    a
        failure
        by the Company to continue to cover Grantee under an annual bonus program
        comparable to the annual bonus program provided to Grantee as of the date
        hereof;

       

      (iv)    the
        Company’s requiring that Grantee be based anywhere other than the Company’s
        offices in the Telluride, Colorado area, except for required travel on Company
        business to an extent substantially consistent with Grantee’s present business
        travel obligations, or in the event that Grantee consents to any such
        relocations, the failure by the Company to pay (or reimburse Grantee for)
        all
        reasonable moving expenses incurred by Grantee; or

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

       

      

        (v)    the
          failure by the Company to continue in full force and effect any benefit,
          retirement, savings or compensation plan or any employee life, accident,
          disability, medical, dental, vision or other employee welfare benefit plan
          in
          which Grantee is participating at the date hereof, the taking of any action
          by
          the Company which would adversely affect Grantee’s participation in or
          materially reduce Grantee’s benefits under any of such plans or deprive Grantee
          of any material fringe benefit or perquisite enjoyed by Grantee at the
          date
          hereof, or the failure by the Company to provide Grantee with the number
          of paid
          personal days to which Grantee is then entitled in accordance with the
          policies
          in effect on the date hereof. 

        

      

      
        	 	
                3.

              	
                Stock;
                  Dividends; Voting

              

      

       

      3.1    Upon
        delivery to the Company of the executed Stock Powers attached hereto, the
        Company shall register on the Company books stock certificate(s) evidencing
        the
        shares of Restricted Stock in the name of the Grantee. Physical possession
        or
        custody of such stock certificate(s) shall be retained by the Company until
        such
        time as the shares of Restricted Stock are fully vested in accordance with
        Section 2. While in its possession, the Company reserves the right to place
        a
        legend on the stock certificate(s) restricting the transferability of such
        certificates and referring to the terms and conditions (including forfeiture)
        of
        this Agreement and the Plan. Upon forfeiture of all or a portion of the shares
        of Restricted Stock, the stock certificate(s) held on behalf of the Grantee
        shall be transferred to the Company pursuant to the executed Stock Power
        described above.

       

      3.2    During
        the period the Restricted Stock is not vested, the Grantee shall be entitled
        to
        receive dividends and/or other distributions declared on such Restricted
        Stock
        and Grantee shall be entitled to vote such Restricted Stock. 

       

      3.3    In
        the
        event of a change in capitalization, the number and class of shares of
        Restricted Stock or other securities that Grantee shall be entitled to, and
        shall hold, pursuant to this Agreement shall be appropriately adjusted or
        changed to reflect the change in capitalization, provided that any such
        additional shares of Restricted Stock or additional or different shares or
        securities shall remain subject to the restrictions in this Agreement. If
        additional shares of common stock of the Company or another corporation,
        or
        other consideration is issued in connection with the Restricted Stock at
        a time
        at which the restrictions specified in this Agreement have not lapsed, the
        Grantee shall execute and deliver to the Committee additional Stock Power(s)
        of
        Attorney with respect to any such shares of stock, deliver to the Committee
        the
        stock certificates representing such shares, and forward to the Committee
        any
        such other consideration. Such stock certificates and/or other consideration
        shall be retained by the Company and shall be credited to the account of
        the
        Grantee and shall be distributed to the Grantee, subject to forfeiture and
        the
        other terms and conditions of this Agreement and the Plan, at the same time
        as
        the shares of Restricted Stock are to be distributed free of all
        restrictions.

       

      3.4    The
        Grantee represents and warrants that Grantee is acquiring the Restricted
        Stock
        for investment purposes only, and not with a view to distribution thereof.
        The
        Grantee is aware that the Restricted Stock may not be registered under the
        federal or any state securities laws and that, in addition to the other
        restrictions on the Restricted Stock, the shares will not be able to be
        transferred unless an exemption from registration is available. By making
        this
        award of Restricted Stock, the Company is not undertaking any obligation
        to
        register the Restricted Stock under any federal or state securities
        laws.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

      
        	
              	4.	
                No
                  Right to Continued
                  Employment

              

      

       

      Nothing
        in this Agreement or the Plan shall be interpreted or construed to confer
        upon
        the Grantee any right with respect to continuance of employment by the Company
        or a subsidiary, nor shall this Agreement or the Plan interfere in any way
        with
        the right of the Company or a Subsidiary to terminate the Grantee’s employment
        at any time, subject to Grantee’s rights under this Agreement. 

       

      
        	 	
                5.

              	
                Taxes
                  and Withholding

              

      

       

      The
        Grantee shall be responsible for all federal, state and local income taxes
        payable with respect to this award of Restricted Stock and any employment
        taxes
        payable by Grantee as an employee. The Grantee shall have the right to make
        such
        elections under the Internal Revenue Code of 1986, as amended, as are available
        in connection with this award of Restricted Stock, including a Section 83(b)
        election. The Company and Grantee agree to report the value of the Restricted
        Stock in a consistent manner for federal income tax purposes. The Company
        shall
        have the right to retain and withhold from any payment of Restricted Stock
        the
        amount of taxes required by any government to be withheld or otherwise deducted
        and paid with respect to such payment. At its discretion, the Company may
        require Grantee to reimburse the Company for any such taxes required to be
        withheld and may withhold any distribution in whole or in part until the
        Company
        is so reimbursed. In lieu thereof, the Company shall have the right to withhold
        from any other cash amounts due to Grantee an amount equal to such taxes
        required to be withheld or withhold and cancel (in whole or in part) a number
        of
        shares of Restricted Stock having a market value not less than the amount
        of
        such taxes. 

       

      
        	 	
                6.

              	
                Grantee
                  Bound By The Plan

              

      

       

      The
        Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be
        bound
        by all the terms and provisions thereof. 

       

      
        	 	
                7.

              	
                Modification
                  of Agreement

              

      

       

      This
        Agreement may be modified, amended, suspended or terminated, and any terms
        or
        conditions may be waived, but only by a written instrument executed by the
        parties hereto. 

       

      
        	 	
                8.

              	
                Severability

              

      

       

      Should
        any provision of this Agreement be held by a court of competent jurisdiction
        to
        be unenforceable or invalid for any reason, the remaining provisions of this
        Agreement shall not be affected by such holding and shall continue in full
        force
        in accordance with their terms. 

       

      
        	 	
                9.

              	
                Governing
                  Law 

              

      

       

      The
        validity, interpretation, construction and performance of this Agreement
        shall
        be governed by the laws of the State of Colorado without giving effect to
        the
        conflicts of laws principles thereof. 

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

      
        	
              	10.	
                Successors
                  in Interest

              

      

       

      This
        Agreement shall inure to the benefit of, and be binding upon, the Company
        and
        its successors and assigns, and upon any person acquiring, whether by merger,
        consolidation, reorganization, purchase of stock or assets, or otherwise,
        all or
        substantially all of the Company’s assets and business. This Agreement shall
        inure to the benefit of the Grantee’s legal representatives. All obligations
        imposed upon the Grantee and all rights granted to the Company under this
        Agreement shall be final, binding and conclusive upon the Grantee’s heirs,
        executors, administrators and successors. 

       

      
        	 	
                11.

              	
                Resolution
                  of Disputes 

              

      

       

      Any
        dispute or disagreement which may arise under, or as a result of, or in any
        way
        relate to the interpretation, construction or application of this Agreement
        shall be determined by the Committee. Any determination made hereunder shall
        be
        final, binding and conclusive on the Grantee and the Company for all
        purposes.

       

      IN
        WITNESS WHEREOF, the parties have executed this Agreement as of the date
        first
        above written. 

       

      
        	 	
                VAIL
                  BANKS, INC. 

                 

                 

                 

                By:   
                  /s/ Gary S.
                  Judd                                  
                  

                      
                  Gary S. Judd, President

                 

              
	 	
                GRANTEE:

                 

                 

                 

                 /s/
                  Dan
                  E.Godec                                           
                  

                Dan
                  E. Godec

              

      

      

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

      STOCK
        POWER

      

      FOR
        VALUE
        RECEIVED, the undersigned does hereby assign and transfer to
        ____________________________________ _______________________________ (_____)
        shares of the common stock of Vail Banks, Inc. (the “Company”) registered on the
        books of the Company in the name of the undersigned (whether a certificate
        has
        been issued or not), and does hereby irrevocably constitute and appoint
        _________________________________ attorney to transfer said stock on the
        books
        of the Company, with full power of substitution in the premises.

      

      

      DATED:
        ______________________

       

      

       

       

      
        	 	
                  /s/ Dan E.
                  Godec                                             
                  

                Name: Dan E.
                  Godec

              

      

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      -6-EXECUTIVE EMPLOYMENT AGREEMENT

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT 

 

This Amended and Restated Executive Employment Agreement (the "Agreement") is made as of October 20, 2005 (the "Effective Date"), and amends and restates in its entirety the Executive Employment Agreement dated May 9, 2005 (the "Original Date"), between Staktek Holdings, Inc., a Delaware corporation (the "Company"), and Wayne R. Lieberman ("Executive"). 

 

WHEREAS, the Company desires to retain the services of Executive as President and Chief Executive Officer; 

 

WHEREAS, the Parties desire to enter into this Agreement to set forth the terms and conditions of Executive's employment by the Company and to address certain matters related to Executive's employment with the Company; 

 

NOW, THEREFORE, in consideration of the foregoing and the mutual provisions contained herein, and for other good and valuable consideration, the Parties hereto agree as follows: 

 

1. Employment. Effective on the Effective Date and subject to the terms and conditions of this Agreement, the Company agrees to employ Executive as its President and Chief Executive Officer, and Executive agrees to perform the duties associated with that position diligently and to the reasonable satisfaction of the Company's Board of Directors. From the Effective Date until termination of this Agreement, Executive will devote Executive's full business time, attention and energies to the business of the Company. Executive will report to the Board of Directors of the Company, and will comply with the reasonable directives, policies, and guidelines established by the Company's Board of Directors from time to time. 

 

2. Term and Termination. 

 
(a) Term. Executive will be employed under this Agreement for an initial term of three (3) years (the "Initial Term"), beginning on the Effective Date. This Agreement shall renew for successive one (1) year periods after the completion of the Initial Term unless either party gives written notice of termination at least forty-five (45) days prior to the expiration of the Initial Term, or any renewal term.  As set forth in Section 3(d), upon termination by the Company without Cause, Executive shall be entitled to Severance Benefits. In the event the Initial Term or any subsequent renewal term expires and the Agreement is no longer in effect, the only provision that shall survive is Section 8 and Section 3 to the extent that there are any amounts payable to Executive.  

 
(b) Termination. Notwithstanding the foregoing, either party may terminate this Agreement at any time, with or without Cause (defined below), by giving written notice of termination to the other party. Upon termination, neither party will have any continuing obligation to the other party, except that the provisions of Sections 3(c), 3(d), 5, 7 and 8 and, to the extent not theretofore paid or provided in respect of services rendered prior to the date of termination, the provisions of Section 4, will survive any termination of this Agreement and will remain in effect in accordance with their terms. 

 
(c) Cause. For purposes of this Agreement, a termination of employment is for "Cause" if the termination occurs because of Executive's: (i) unauthorized use or disclosure of the confidential information or trade secrets of the Company, which use or disclosure causes, or could reasonably be expected to cause, material harm to the Company; however, Company confidential information or trade secrets does not include any information that has become publicly known and made generally available through no wrongful act of Executive, or information already known to Executive prior to entering into this Agreement.  Further, disclosure of confidential information or trade secrets made in the ordinary course of the Company's business under a non-disclosure agreement and in the best interest of the Company shall not be deemed an unauthorized use or disclosure; (ii) conviction of, or plea of "guilty" or "no contest" to, a felony or any crime involving moral turpitude; (iii) willful misfeasance or gross misconduct in the performance of Executive's duties; (iv) substance abuse that in any manner materially interferes with the performance of Executive's duties; (v) chronic absence from work for reasons other than illness; or (vi) failure to perform Executive's assigned duties, after receiving written notice from the Company, which shall be based on reasonable grounds relating to failure to perform,  and an opportunity of at least thirty (30) days or whatever additional time may be reasonably necessary, not to exceed ninety (90) days, to correct any such failure and/or dispute the original notice.  Although the foregoing are an exclusive list of the grounds for terminating Executive's employment for "Cause," it is expressly understood that the Company, or any acquirer or successor of the Company, may terminate Executive's at-will employment for reasons that do not constitute "Cause."  A termination without "Cause" includes not only involuntary terminations by the Company, but also voluntary terminations by Executive resulting from either:  (a) a reduction in employment status, duties, compensation or benefits; or (b) a change in location of employment outside of a fifty (50)-mile radius of the Company's current principal office, without Executive's consent. 

 

3. Compensation. 

 
(a) Beginning on the Effective Date, and thereafter during the term of Executive's employment, the Company will pay Executive a base salary at the rate of $25,000 per month ($300,000 annualized) (the "Base Salary"), payable in accordance with the standard payroll practices of the Company in effect from time to time. All of Executive's compensation under this Agreement will be subject to deduction and withholding authorized by Executive or required by applicable law. Salary adjustments will be determined by the Board of Directors, in its sole and absolute discretion, on at least an annual basis; however, under no circumstances may Executive's salary be reduced below the Base Salary without his consent. 

 
(b) Beginning on the Effective Date, Executive will be eligible to participate in the Company's Bonus Incentive Plan on substantially the same terms as other executives of the Company.  Executive's maximum potential payout under the program is 120% of Executive's annual base salary.  Executive is entitled to a minimum bonus payment of $25,000 per quarter for each quarter beginning with the second quarter of 2005 and ending with the first quarter of 2006.  After March 31, 2006, Executive is not entitled to any minimum bonus payment. 

 
(c) Executive has been granted (i) an option to purchase up to Five Hundred Seven Thousand Five Hundred Seven (507,507) shares of the Company's common stock, and (ii) an option to purchase an additional Five Hundred Thousand  (500,000) shares of the Company's common stock (both grants, collectively the "Option Shares"), at an exercise price equal to $2.70 per share. Consistent with the terms of the Company's 2003 Stock Option Plan, 25% will vest on the first anniversary of the Original Date of this Agreement, with the remaining Shares vesting in equal monthly installments over the following thirty-six (36) months of Executive's employment with the Company.  Except as otherwise provided in this Agreement, vesting of Option Shares shall cease upon the termination of Executive's employment with the Company. The Option Shares will be structured as incentive stock options to the extent permitted by IRS regulations. Upon  a "Change in Control" (as defined in the 2003 Option Plan), the Option Shares will vest in full.  

 
(d) In the event of a termination without Cause, the Company agrees: (A) to continue to pay Executive his then-current Base Salary for an additional twelve (12) months following the termination date, with the payments to be made in accordance with the Company's standard payroll practices, and on the Company's normal paydays; and (B) to accelerate vesting of the Option Shares that would have vested over the twelve (12) months following the termination date; however, if required by Section 409A of the Internal Revenue Code, these payments and acceleration may not begin until the first day of the seventh month following Executive's termination of employment. The payments and the accelerated vesting of Option Shares set forth in this section shall be referred to collectively as the "Severance Benefits." Executive's right to the Severance Benefits is expressly conditioned on Executive's execution of a customary general release of claims in favor of the Company, its affiliates and their respective directors, officers, employees, shareholders and partners, and his compliance with the surviving provisions of this Agreement and the Company's Confidentiality Agreement. 

 

4. Executive Benefits. During the term of this Agreement, the Company will provide to Executive such fringe benefits and perquisites that the Company provides to other executives of the Company, including twenty seven (27) days of paid time off and participation in all Company health, dental and other employee benefit plans. In addition, the Company will reimburse Executive for reasonable out-of-pocket business expenses incurred and documented in accordance with the policies of the Company in effect from time to time.   The Company will reimburse Executive for up to $120,000 in relocation expenses, as well as one house-hunting trip to Austin, Texas for Executive and his immediate family in accordance with Staktek's Travel Policy, subject to the terms and conditions of the relocation agreement attached as Exhibit B.  In addition, for a period of one (1) year from the Original Date, Executive is entitled to purchase up to $1.5 million of treasury shares of the Company's common stock directly from the Company as a private placement, at a price per share equal to the closing price on Nasdaq on the date of purchase.  This stock will not be subject to vesting but will be subject to Rule 144 promulgated under the Securities Act of 1933, other applicable state and federal securities laws and the Company's policy on insider trading, including the Company's restricted trading periods.  The Company agrees to reimburse Executive to up to $5,000 for Executive's current life insurance policy, as long as Executive provides copies of receipts.

 

5. Restrictive Covenants. 

 
(a) Consideration For Promise To Refrain From Competing. Executive agrees that his services to the Company are special and unique; that the Company's disclosure of confidential and proprietary information, trade secrets, and specialized training and knowledge to Executive and Executive's level of compensation, Severance Benefits and other benefits are in consideration of and conditioned upon Executive's covenant not to compete with Company following his termination as provided for in this Section 5. Executive further acknowledges and agrees that the benefits received by Executive pursuant to this Agreement constitute adequate consideration for Executive's agreement to this Section 5. Executive acknowledges that this consideration is adequate for Executive's promises contained within this Section 5 and gives rise to the Company's interest in ensuring that he refrains from post-termination competition as provided for herein. 

 
(b) Covenant Not to Compete. The "Noncompetition Period" began on the Original Date and will end twelve (12) months after the date on which Executive's employment with the Company terminates for any reason (the "Termination Date"). During the Noncompetition Period, Executive will not, directly or indirectly, on Executive's own behalf or as an officer, director, employee, consultant or other agent of, or as a stockholder, partner or other investor in, any person or entity (other than the Company or its affiliates): 

 
(i) Engage in (i) the development, design, manufacture or sale of memory module stacking technology,  (ii) the development, design, manufacture or sale of DIMM manufacturing technology, or (iii) any other business of the Company (the "Competing Business"), in each case for any competing business within any geographic area in which the Company or its subsidiaries conducts any business (including the United States) (the "Territory").   Executive shall not be precluded from working for any company so long as he does not engage in the specific prohibited activities described herein this section. 

 
 (ii) Directly or indirectly influence or attempt to influence any customer, potential customer, supplier or accounts of the Company or its subsidiaries located within the Territory to purchase, sell or lease goods or services relating to a Competing Business other than from or to the Company; or 

 
(iii) Solicit, encourage, or take any other action which is intended, directly or indirectly, to induce any other employee of the Company to terminate such employee's employment with the Company, or interfere in any manner with the contractual or employment relationship between the Company and any other employee of the Company, or hire or attempt to hire any former employee of the Company whose termination from employment has been effective for ninety (90) days or less. 

 

Provided, however, that the foregoing restrictions will not apply to any investment in publicly traded securities constituting not more than 5% of the outstanding securities in any class of such securities. For purposes of this Agreement, the term "affiliate" means with respect to any person or entity any other person or entity controlling, controlled by or under common control with such person or entity. For purposes of this Section 5, the definition of "Business" will be the business of the Company as of the date of Executive's termination and the business of the Company actually proposed to be entered into as evidenced by written and adopted business plans of the Company. 

6.  Directors' and Officers' Insurance.  Company shall maintain a minimum of Ten Million Dollars ($10,000,000) of Directors' and Officers' ("D&O") Insurance while Executive is employed.  The D&O policy shall be a third-party product.  The Company's failure to maintain uninterrupted D&O insurance coverage shall be deemed a material breach of this Agreement, which shall entitle Executive to the Severance Benefits, as defined and described above in Section 3(d).

7. Enforcement 

 
(a) Executive represents to the Company that Executive is willing and able to engage in businesses other than a Competing Business within the Territory and that enforcement of the restrictions set forth in Section 5 would not be unduly burdensome to Executive. The Company and Executive acknowledge and agree that the restrictions set forth in Section 5 are reasonable as to time, geographic area and scope of activity and do not impose a greater restraint than is necessary to protect the goodwill and other business interests of the Company, and Executive agrees that that the Company is justified in believing the foregoing. 

 
(b) If the provisions of Section 5 are found by a court of competent jurisdiction to contain unreasonable or unnecessary limitations as to time, geographical area or scope of activity, then such court is hereby directed to reform such provisions to the minimum extent necessary to cause the limitations contained therein as to time, geographical area and scope of activity to be reasonable and enforceable. 

 
(c) Executive acknowledges and agrees that the Company would be irreparably harmed by any violation of Executive's obligations under Section 5 hereof and that, in addition to all other rights or remedies available at law or in equity, the Company will be entitled to injunctive and other equitable relief to prevent or enjoin any such violation. If Executive violates Section 5, the period of time during which the provisions thereof are applicable will automatically be extended for a period of time equal to the time that Executive began such violation until such violation permanently ceases. 

 

8. Confidentiality and Proprietary Rights. Executive has read, signed and agrees to abide by a Confidentiality Agreement, which is incorporated herein by reference. 

 

9. Mediation. In the event that any disputes arise between the Parties with respect to this Agreement, the Parties acknowledge and agree that prior to initiating any litigation regarding such dispute, they shall submit their dispute to a mutually agreeable mediator for purposes of conducting non-binding mediation in an effort to resolve the dispute without the necessity of litigation. 

 

10. No Obligation to Third Party. Executive represents and warrants that Executive is not under any obligation to any person or other third party and does not have any other interest which is inconsistent or in conflict with this Agreement, or which would prevent, limit, or impair Executive's performance of any of the covenants hereunder or Executive's duties as an employee of the Company. 

 

11. Entire Agreement. This Agreement, along with the agreements and documents that make up the 2003 Stock Option Plan and the Company's Employee Innovations and Proprietary Rights Assignment Agreement (which are incorporated herein by reference), embodies the complete agreement of the parties with respect to the subject matter hereof and supersedes any prior written, or prior or contemporaneous oral, understandings or agreements between the parties that relate in any way to the subject matter hereof. This Agreement may be amended only in writing executed by the Company and Executive. 

 

12. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the respective heirs, executors, administrators, legal representatives and successors of the Company and Executive. 

 

13. Notice. Any notice required or permitted under this Agreement must be in writing and will be deemed to have been given when delivered personally, by telecopy or by overnight courier service or three days after being sent by mail, postage prepaid, to (a) if to the Company, to the Company's principal place of business, or (b) if to Executive, to Executive's residence or to Executive's latest address then contained in the Company's records (or to such changed address as such person may subsequently give notice of in accordance herewith). 

 

14. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH SUBSTANTIVE LAWS OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW, RULE OR PRINCIPLE THAT MIGHT REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. 

 

15. Counterparts. This Agreement may be executed in counterparts and by different parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. 

 

 

IN WITNESS WHEREOF, the Company and Executive have executed and delivered this Agreement as of the date first above written. 

 

	

STAKTEK HOLDINGS, INC.

	
	

	By:

	

 
	

/

	Name:

	

 
	

Stephanie Lucie

	Title:

	

 
	

Senior Vice President, General Counsel and Secretary

	

	

EXECUTIVE

	

	

 

	WAYNE R. LIEBERMAN

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