Document:

ex10_14.htm

Exhibit 10.14

 

LIVEDEAL, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

This NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into as of November 10, 2008, by and between LiveDeal, Inc., a Nevada corporation (the “Company”) and Michael Edelhart (“Optionee”).

RECITALS

A.             The Company granted options to Optionee pursuant to the employment agreement dated June 1, 2008 (“Grant Date”) by and among the Company and the Optionee to provide an incentive to Optionee to
focus on the long-term growth of the Company.

B.             The parties wish to memorialize the prior grant and in consideration of the mutual covenants hereinafter set forth, and for other good and valuable consideration, the parties agree as follows:

AGREEMENT

1.             Grant of Option.  The Company hereby grants to Optionee the right and option (the “Option”) to purchase
an aggregate of 5,000 shares of the common stock of the Company (the “Stock”)(such number being subject to adjustment as set forth herein) on the terms and conditions herein set forth.  This Option may be exercised in whole or in part and from time to time as hereinafter provided.  The Option granted under this Agreement is not intended to be an “incentive stock option” as set forth in Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”).

2.             Vesting of Option.  Subject to the provisions set forth in this Agreement, the Option shall vest and become exercisable
in accordance with the following schedule:  (i) one-third of the Option on the one-month anniversary of the Grant Date; (ii) one-third of the Option on the second-month anniversary of the Grant Date; and (iii) one-third of the Option on the third-month anniversary of the Grant Date.  Notwithstanding the foregoing, the Option will immediately vest and become exercisable upon the occurrence of a “Change of Control” (as defined herein) or in the event Optionee is asked to resign from
the Board of Directors of the Company (the “Board”) and does in fact resign.  For purposes of this paragraph, “Change of Control” means (i) any merger of the Company in which the Company is not the continuing or surviving entity, or pursuant to which the Stock would be converted into cash, securities, or other property other than a merger of the Company in which the holders of the Company’s Stock immediately prior to the merger have the same proportionate ownership of beneficial
interest of Stock or other voting securities of the surviving entity immediately after the merger; (ii) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of assets or earning power aggregating more than 50% of the assets or earning power of the Company or any major subsidiary, other than pursuant to a sale-leaseback, structured finance or other form of financing transaction; (iii) the shareholders of the Company approve any plan or proposal for liquidation or
dissolution of the Company; or (iv) any person (as such term is used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended from time to time (the “Exchange Act”)), other than (A) any current shareholder of the Company or affiliate thereof, or (B) an employee benefit plan of the Company or any subsidiary or any entity holding shares of capital stock of the Company for or pursuant to the terms of any such employee benefit plan in its role as an agent or trustee for such plan,
or (C) any affiliate of the Company becomes the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of the Company’s outstanding Stock.

  

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3.             Purchase Price.  The price at which Optionee shall be entitled to purchase the Stock covered by the Option shall
be $2.78 per share, which the Board has determined to be the Fair Market Value (as defined herein) as of the Grant Date.  “Fair Market Value” means, as of any given date, the fair market value of Stock determined as follows:  (i) where there exists a public market for the Stock, the Fair Market Value shall be (A) the closing price for the Stock for the last market trading day prior to the time of the determination (or, if no closing price was reported on that date, on the last trading
date on which a closing price was reported) on the stock exchange determined by the Board to be the primary market for the Stock or the Nasdaq National Market, whichever is applicable, or (B) if the Stock is not traded on any such exchange or national market system, the average of the closing bid and asked prices of the Stock on the Nasdaq Small Cap Market for the day prior to the time of the determination (or, if no such prices were reported on that date, on the last date on which such prices were reported),
in each case, as reported in The Wall Street Journal or such other source as the Board deems reliable; or (ii) in the absence of an established market for the Stock of the type described in (i) above, the Fair Market Value shall be determined by the Board in accordance with the requirements set forth in Treasury Regulation Section 1.409A-1(b)(5)(iv)(B) or any successor provision thereof.

4.             Term of Option.  The Option granted under this Agreement shall expire, unless otherwise exercised, ten years from
the Grant Date (“Expiration Date”), subject to earlier termination as provided in paragraph 8 hereof.

5.             Exercise of Option.  The Option may be exercised by Optionee as to all or any part of the Stock then vested by delivery
to the Company of written notice of exercise in the form attached hereto as Exhibit A (“Exercise Notice”) and payment of the purchase price as provided in paragraphs 6 and 7 hereof.

6.             Method of Exercising Option.  Subject to the terms and conditions of this Agreement, the Option may be exercised
by timely delivery of written notice to the Company or such other person as the Board shall designate, which notice shall be effective on the date received by the Company or such other person (“Effective Date”).  The notice shall state Optionee’s election to exercise the Option, the number of shares in respect of which an election to exercise has been made, the method of payment elected (see paragraph 7 hereof), the exact name or names in which the shares will be registered and the Social
Security number of Optionee.  Such notice shall be signed by Optionee and shall be accompanied by payment of the purchase price of such shares.  In the event the Option shall be exercised by a person or persons other than Optionee pursuant to paragraph 8 and 14 hereof, such notice shall be signed by such other person or persons and shall be accompanied by proof acceptable to the Company of the legal right of such person or persons to exercise the Option.  All shares delivered by
the Company upon exercise of the Option shall be fully paid and nonassessable upon delivery.  In the event the Stock purchasable pursuant to the exercise of the Option has not been registered under the Securities Act of 1933, as amended, at the time the Option is exercised, the Optionee shall, if requested by the Company, concurrently with the exercise of all or any portion of the Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit
B.

  

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7.             Method of Payment for Options.  Payment for shares purchased upon the exercise of the Option shall be made by Optionee
in cash, previously-acquired Stock held for more than six months, promissory note net issuance, property (including broker-assisted arrangements) or other forms of payment permitted by the Board and communicated to Optionee in writing prior to the date Optionee exercises all or any portion of the Option.

8.             Termination of Employment or Service.

8.1           General.  If the Optionee’s employment or service as a member of the Board is terminated for any reason other than Cause (as defined below), death or Disability (as defined below), then the Optionee
may at any time within 90 days after the effective date of termination of employment or service exercise the vested portion of the Option to the extent that the Optionee was entitled to exercise the Option at the date of termination.  Upon the Optionee’s termination of employment or service with the Company for any reason, the non-vested portion of the Option will lapse upon the date of such termination.  In no event shall the Option be exercisable after the Expiration Date.  If
the Company terminates the Optionee’s employment or service for Cause, any and all Options then held by the Optionee (both exercisable and not exercisable) shall lapse.

8.2           Death or Disability of Optionee.  In the event of the death or Disability of Optionee within a period during which the Option, or any part thereof, could have been exercised by Optionee, including 90 days
after termination of employment or service (the “Option Period”), the Option shall lapse unless it is exercised within the Option Period and in no event later than one year after the date of Optionee’s death or Disability by Optionee or Optionee’s legal representative or representatives in the case of a Disability or, in the case of death, by the person or persons entitled to do so under Optionee’s last will and testament or if Optionee fails to make a testamentary disposition of such
Option or shall die intestate, by the person or persons entitled to receive such Option under the applicable laws of descent and distribution.  An Option may be exercised following the death or Disability of Optionee only if the Option was exercisable by Optionee immediately prior to his death or Disability.  In no event shall the Option be exercisable after the Expiration Date.  The Board shall have the right to require evidence satisfactory to it of the rights of any person or
persons seeking to exercise the Option under this paragraph 8 to exercise the Option.

8.3           Definition of Disability.  “Disability” or “Disabled” means Optionee is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.  Optionee will be considered Disabled only when he or she furnishes proof acceptable to the Board of the existence of such Disability.

  

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8.4           Definition of Cause.  “Cause” means termination of employment or service as a result of any of the following events:  (1) the
commission of an act of dishonesty, fraud, embezzlement, theft or other similar acts of misconduct by Optionee, whether within or outside the scope of the Optionee’s employment or service with the Company, (ii) the breach of duty by the Optionee in the course of employment or service, unless waived in writing by the Company, (iii) the neglect by the Optionee of the Optionee’s duties with the Company, unless waived in writing by the Company, (iv) the Optionee’s disobedience or refusal or failure
to discharge the Optionee’s duties to the Company under any employment agreement or otherwise, (v) the breach of obligations of the Optionee to the Company under this Agreement or any employment or other agreement with the Company, unless waived in writing by the Company, (vi) the breach by the Optionee of any fiduciary duty to the Company involving personal gain or profit, including acceptance of gifts, gratuities, honorarium, lodging, and other items of direct economic value in excess of One Hundred Dollars
($100.00) from any one source, provided that this paragraph does not apply to gifts or items received from family members or other non-business or professional persons, (vii) the violation by Optionee of any law, rule, regulation, court order (other than a law, rule, or regulation relating to a traffic violation or similar offense) or a final cease and desist order, or (viii) Optionee economically committing the Company beyond the Optionee’s expressly approved authority as communicated to the Optionee by
the Company from time to time.

9.             Prohibited Activity

9.1           General.  If the Optionee engages in any “Prohibited Activity,” this Agreement will terminate effective as of the date on which the Optionee first engages in such activity, unless sooner terminated
under this Agreement.  In addition, if the Optionee has exercised all or any portion of the Option within the period beginning 365 days prior to the Optionee first engaging in the Prohibited Activity, any “Option Gain” shall be paid by the Optionee to the Company.

9.2           Defined.  For purposes of this provision, the term Prohibited Activity shall include:

(a)            conduct related to the Optionee’s employment or services for which either civil or criminal penalties against the Optionee may be sought;

(b)            violation of Company policies, including, without limitation, the Company’s insider trading policy;

(c)            accepting employment with or serving as a consultant, advisor, or in any other capacity to an employer that is in competition with or acting against the interests of the Company, including employing or recruiting any present, former, or future employee of the Company;
or

(d)            disclosing or misusing any confidential information or material concerning the Company.

9.3           Option Gain.  For purposes of this provision, the term Option Gain shall mean any gain represented by the closing market price per share of Stock on the date of such exercise(s) over the exercise price
per share, multiplied by the number of shares of Stock subject to the Option exercise, without regard to any subsequent market price decrease or increase.

  

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9.4           Consent.  By accepting this Option, the Optionee consents to a deduction from any amounts the Company owes the Optionee from time to time (including amounts owed to the Optionee as wages or other compensation,
fringe benefits, or vacation pay, as well as any other amounts owed to the Optionee by the Company), to the extent of any amounts the Optionee is obligated to pay the Company under paragraph 9.1 above.  Whether or not the Company elects to make any set-off in whole or in part, if the Company does not recover by means of set-off the full amounts the Optionee owes it, calculated as set forth above, the Optionee agrees to pay immediately the unpaid balance to the Company.

9.5           Release.  The Optionee may be released from the Optionee’s obligations under paragraph 1 above only if the Board determines that, in its sole discretion, such action is in the best interests of the
Company.

10.           Nontransferability.  The Option granted by this Agreement shall be exercisable only during the term of the Option provided
in paragraph 4 hereof and, except as provided in paragraph 8 and 14, only by Optionee during his lifetime and while in the employment or service of the Company.  Except as otherwise provided by the Board, this Option shall not be transferable by Optionee or any other person claiming through Optionee, either voluntarily or involuntarily, except by will or the laws of descent and distribution or such other circumstances as the Board deems acceptable.

11.           Adjustments in Number of Shares and Option Price.  In the event of a stock dividend or in the event the Stock shall be
changed into or exchanged for a different number or class of shares of stock of the Company or of another corporation, whether through reorganization, recapitalization, stock split-up, combination of shares, merger or consolidation, the Board has the authority to substitute for each such remaining share of Stock then subject to this Option the number and class of shares of stock into which each outstanding share of Stock shall be so exchanged, all without any change in the aggregate purchase price for the shares
then subject to the Option.  Any substitution made pursuant to this paragraph shall be made in such a manner that is consistent with the requirements of Section 409A of the Code.

12.           Delivery of Shares.  No shares of Stock shall be delivered upon exercise of the Option until (i) the purchase price shall
have been paid in full in the manner herein provided (unless a net issuance strategy is implemented); (ii) applicable taxes required to be withheld have been paid or withheld in full; and (iii) approval of any governmental authority required in connection with the Option, or the issuance of shares thereunder, has been received by the Company.

13.           Administration.  The Board shall have the sole and complete discretion with respect to all matters reserved to it by this
Agreement, and decisions of the Board with respect to this Agreement shall be final and binding upon Optionee and the Company.  Notwithstanding any other provision of this Agreement, the Board shall administer this Agreement, and exercise all authority and discretion under this Agreement, to satisfy the requirement of Code Section 409A or any exemption thereto.

  

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14.           Beneficiaries.  Notwithstanding paragraph 10, Optionee may, in the manner determined by the Board, designate a beneficiary
to exercise the rights of Optionee and to receive any distribution with respect to the Option upon the Optionee’s death.  A beneficiary, legal guardian, legal representative, or other person claiming any rights under this Agreement is subject to all terms and conditions of the Agreement, except to as otherwise provided herein, and to any additional restrictions deemed necessary or appropriate by the Board.  If the Optionee is married, a designation of a person other than the Optionee’s
spouse as his beneficiary with respect to more than 50 percent of the Optionee’s interest in the Option shall not be effective without the written consent of the Optionee’s spouse.  If no beneficiary has been designated or survives the Optionee, payment shall be made to the person entitled thereto under the Optionee’s will or the laws of descent and distribution.  Subject to the foregoing, a beneficiary designation may be changed or revoked by the Optionee at any time provided
the change or revocation is filed with the Board.

15.           Stock Certificates.  All Stock certificates delivered pursuant to this Agreement are subject to any stop-transfer orders
and other restrictions as the Board deems necessary or advisable to comply with Federal or state securities laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Stock is listed, quoted, or traded.  The Board may place legends on any Stock certificate to reference restrictions applicable to the Stock.

16.           Continuation of Employment or Service.  THE OPTIONEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF OPTIONEE’S CONTINUOUS SERVICE OR EMPLOYMENT, AS APPLICABLE, (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER).  THE OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT SHALL CONFER UPON THE OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF OPTIONEE’S CONTINUOUS SERVICE OR EMPLOYMENT, NOR SHALL IT INTERFERE IN ANY WAY WITH THE OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE
OPTIONEE’S CONTINUOUS SERVICE OR EMPLOYMENT, WITH OR WITHOUT CAUSE.

17.           Obligation to Exercise.  Optionee shall have no obligation to exercise any option granted by this Agreement.

18.           Governing Law.  This Agreement shall be interpreted and administered under the laws of the State of Nevada.

19.           Amendments.  This Agreement may be amended only by a written agreement executed by the Company and Optionee.  In
addition, except as otherwise provided in paragraph 11, the terms of this Agreement may not be amended to reduce the exercise price of the Option or to cancel the Option in exchange for cash, other Options with an exercise price that is less than the exercise price of the original Option without stockholder approval.

  

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IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized representative and Optionee has signed this Agreement as of the date first written above.

	  	
LIVEDEAL, INC.
	  
	  	  	  
	  	  	  
	  	  	  
	  	
/s/ Rajesh Navar
	  
	  	
Rajesh Navar
	  
	  	
Chairman of the Board
	  
	  	  	  
	  	  	  
	  	
ACCEPTED AND AGREED TO:
	  
	  	  	  
	  	  	  
	  	
/s/ Michael Edelhart
	  
	  	
Michael Edelhart
	  

  

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EXHIBIT A

LIVEDEAL, INC.

EXERCISE NOTICE

LiveDeal, Inc.

___________________________

___________________________

Attention:  Secretary

Effective as of today, ______________, ___ the undersigned (the “Optionee”) hereby elects to exercise the Optionee’s option to purchase ___________ shares of the Common Stock (the “Shares”) of LiveDeal, Inc. (the “Company”) under and pursuant to the Non-Qualified Stock Option Award Agreement (the
“Option Agreement”) dated November, ___, 2008.

Representations of the Optionee.  The Optionee acknowledges that the Optionee has received, read and understood the Option Agreement and agrees to abide by and be bound by their terms and conditions.

Rights as Stockholder.  Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other
rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option.  The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in the Option Agreement.

 Delivery of Payment.  The Optionee herewith delivers to the Company the full Exercise Price for the Shares in the form(s) provided for in the Option Agreement.

Tax Consultation.  The Optionee understands that the Optionee may suffer adverse tax consequences as a result of the Optionee’s purchase or disposition of the Shares.  The Optionee represents that the Optionee has consulted with any tax consultants
the Optionee deems advisable in connection with the purchase or disposition of the Shares and that the Optionee is not relying on the Company for any tax advice.

Taxes.  The Optionee agrees to satisfy all applicable foreign, federal, state and local income and employment tax withholding obligations and herewith delivers to the Company the full amount of such obligations or has made arrangements acceptable to the Company
to satisfy such obligations.

Restrictive Legends.  The Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends
that may be required by the Company or by state or federal securities laws:

  

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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

Successors and Assigns.  The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this agreement shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on
transfer herein set forth, this Exercise Notice shall be binding upon the Optionee and his or her heirs, executors, administrators, successors and assigns.

Headings.  The captions used in this Exercise Notice are inserted for convenience and shall not be deemed a part of this agreement for construction or interpretation.

Interpretation.  Any dispute regarding the interpretation of this Exercise Notice shall be submitted by the Optionee or by the Company forthwith to the Board, which shall review such dispute at its next regular meeting.  The resolution of such a dispute
by the Board shall be final and binding on all persons.

Governing Law; Severability.  This Exercise Notice is to be construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction
other than the internal laws of the State of Nevada to the rights and duties of the parties.  Should any provision of this Exercise Notice be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.

Notices.  Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to the other party
at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party.

Further Instruments.  The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this agreement.

Entire Agreement.  The Option Agreement is incorporated herein by reference and together with this Exercise Notice constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes in their entirety all prior undertakings
and agreements of the Company and the Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and the Optionee.

  

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Submitted by:
	 	
Accepted by:

	  	 	  	  	  
	
OPTIONEE:
	 	
LIVEDEAL, INC.

	  	 	  	  	  
	  	 	
By:
	  	  
	  	 	  	  	  
	  	 	
Title:
	  	  
	
(Signature)
	 	  	  	  
	  	 	  	  	  
	
Address:
	 	
Address:
	  
	  	 	  	  	  
	  	 	
LiveDeal, Inc.
	  
	  	 	  	 	  	  
	  	 	  	 	  

  

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EXHIBIT B

LIVEDEAL, INC.

INVESTMENT REPRESENTATION STATEMENT

	
OPTIONEE:
	  	  
	  	  	  
	
COMPANY:
	
LIVEDEAL, INC.
	  
	  	  	  
	
SECURITY:
	
COMMON STOCK
	  
	  	  	  
	
AMOUNT:
	  	  
	  	  	  
	
DATE:
	  	  

In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following:

Optionee is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities.  Optionee is acquiring these Securities for investment for Optionee’s own account only and not with a view to,
or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

Optionee acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon among other things, the bona fide nature of Optionee’s investment intent
as expressed herein.  Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available.  Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered
or such registration is not required in the opinion of counsel satisfactory to the Company.

Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.  Rule
701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act.  In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain
of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable.

  

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In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date
the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.

Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the
Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.  Optionee understands that no assurances can be given that
any such other registration exemption will be available in such event.

Optionee represents that he or she is a resident of the state of _________________.

	  	
Optionee:
	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	  	  	  
	  	
Date:
	  	  

 

 

12ex10_1.htm

    
      

    

    Exhibit
10.1

    

    AMENDED & RESTATED
EMPLOYMENT AGREEMENT

    

    This
Amended and Restated Employment Agreement (the “Agreement”) made this 23rd day of
December, 2008 and effective as of the 6th day of November, 2008 (the “Effective
Date”) between POMEROY IT
SOLUTIONS, INC., a Delaware Corporation (the “Company”) and CRAIG J. PROPST (the
“Executive”).

    

    W
I T N E S S E T H:

    

    WHEREAS, the Company and
Executive entered into an Employment Agreement, dated and made effective on
March 17, 2008;

    

    WHEREAS, the Company and the
Executive desire to amend and restate the Employment Agreement in its entirety
to reflect certain changes agreed upon by Company and Executive regarding his
promotion to the position of Senior Vice President, Treasurer and Chief
Financial Officer and compensation incident thereto;

    

    NOW THEREFORE, in
consideration of the continued employment of the Executive by the Company and
the benefits to be derived by the Executive hereunder, and of the Executive’s
agreement to continued employment by the Company as provided herein, the parties
hereto hereby agree as follows:

    

    
      	
               
      

            	
              1.

            	
              Position/Duties.

            

    

    

    
      	
               
      

            	
              (a)

            	
              Executive
      shall serve as the Senior Vice President, Treasurer and Chief Financial
      Officer of the Company and shall report to the President and Chief
      Executive Officer of the Company. In this capacity, Executive shall have
      such duties, authorities and responsibilities commensurate with the
      duties, authorities and responsibilities of persons in similar capacities
      in similar size companies and such other duties and responsibilities as
      the President and Chief Executive Officer of the Company or the Board of
      Directors of the Company (“Board”) shall from time to time assign to him
      consistent with the Executive’s position as  Senior Vice
      President, Treasurer and Chief Financial Officer of the
      Company.

            

    

    

    
      	
               
      

            	
              (b)

            	
              During
      the Employment Term (as defined in Section 2), the Executive shall devote
      substantially all his business time and efforts to the business and
      affairs of the Company and the performance of his duties
      hereunder.  In addition, Executive shall not render services of
      a business, professional or commercial nature to any other person, firm or
      corporation, whether for compensation or otherwise, during the Employment
      Term.

            

    

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              (c)

            	
              Executive’s
      primary workplace shall be the Company’s offices in Hebron, Kentucky,
      except for usual and customary travel on the Company’s
      business.

            

    

    

    
      	
               
      

            	
              2.

            	
              Term of
      Employment.

            

    

    

    This
Agreement shall be in effect beginning on the Effective Date and terminating
upon the earlier of (a) March 17, 2011 (the “Initial Term”) or (b) the Date of
Termination as defined in Section 8(g).  The period of time from the
Effective Date through the Initial Term and any Renewal Term, as defined in
Section 3, or the Date of Termination, as applicable, is referred to as the
“Employment Term”.

    

    
      	
               
      

            	
              3.

            	
              Renewal
      Term.

            

    

    

    The term
of Executive’s employment and this Agreement shall automatically renew for
additional consecutive renewal terms of one (1) year unless either party gives
written notice of his/its intent not to renew the terms of the Agreement ninety
(90) days prior to the expiration of the then expiring
term.  Executive’s Base Salary for each Renewal Term shall be
negotiated and mutually agreed upon by and between the Company and Executive;
however, in no event shall Executive’s Base Salary for any Renewal Term be less
than the Base Salary in effect for the prior year.

    

    
      	
               
      

            	
              4.

            	
              Base
      Salary.

            

    

    

    During
each fiscal year of the Company during the Initial Term of this Agreement, the
Company agrees to pay Executive a base salary (“Base Salary”) at an annual rate
of Two Hundred Twenty Five Thousand Dollars ($225,000.00). Said Base Salary
shall be payable in accordance with the regular payroll practices of the
Company, but not less frequently than monthly.  Executive’s Base
Salary shall be subject to an annual review by the President and Chief Executive
Officer of the Company in conjunction with the Compensation Committee of the
Board (and may be increased, but not decreased, from time to time incident
thereto ).

    

    
      	
               
      

            	
              5.

            	
              Bonuses.

            

    

    

    Each year
during the Initial Term, Executive shall have the opportunity to earn both a
quarterly and annual targeted bonus measured against financial criteria
consisting primarily of NPBT (as defined below) (as determined by the President
and Chief Executive Officer of the Company in conjunction with the Compensation
Committee of the Board)), of at least One Hundred Twenty Five Thousand Dollars
($125,000.00), with a potential bonus in excess of such amount for achievement
above target and a reduced bonus for achievement below target, all in accordance
with the applicable bonus plan.   The President and Chief
Executive Officer, in conjunction with the Compensation Committee of the Board
will determine the amount of bonus potential to be based on achievement of
quarterly criteria and the amount that shall be allocated to annual attainment.
The bonus plan shall provide that under-performance in one quarter can be made
up in subsequent quarters on a year-to-date basis.  The quarterly and
annual bonuses payable to Executive during the Employment Term shall be fully
paid in cash.  For purposes of this Agreement, the Net Profit Before
Taxes (“NPBT”) shall be determined on a consolidated basis computed without
regard to the bonus payable to Executive pursuant to this Section 5, shall
exclude any gains or losses realized by Company on the sale or other disposition
of its assets other than in the ordinary course of business and shall exclude
any extraordinary one-time charges taken by the Company.  NPBT shall
be determined by the independent accountant regularly retained by the Company,
subject to the foregoing provisions of this subparagraph and in accordance with
generally accepted accounting principles.  Said determinations and
payment of any bonus shall be made no later than the fifteenth (15th) day of
the third (3rd) month
following the end of the Company’s taxable year, and the determinations by the
accountant shall be final, binding and conclusive on all parties
hereto.  In the event the audited financial statements are not issued
before the fifteenth (15th) day of
the third (3rd) month
following the end of the Company’s taxable year, Company shall make any payment
due hereunder, if any, based on its best reasonable estimate of any liability
hereunder, which amount shall be recorded and shall be reconciled by both
parties once the audited financial statements are issued but in no event later
than the end of the calendar year in which the Company’s taxable year
ends.  Any quarterly bonus determinations shall be determined on a
consolidated basis by the independent accountant regularly retained by the
Company subject to the foregoing provisions of this paragraph and in accordance
with generally accepted accounting principles.  Any amount due
hereunder shall be paid within fifteen (15) days of the filing of Form 10-Q by
the Company for the respective quarter, but in no event later than the fifteenth
(15th) day of
the third (3rd) month
following the end of the Company’s taxable year.

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    

    In the
event that Company acquires during any applicable fiscal year a company that had
gross revenues in excess of Twenty-Five Million Dollars ($25,000,000.00) for its
most recently concluded fiscal year, Company and Executive shall in good faith
determine whether any adjustments to the NPBT criteria, whether upward or
downward, shall be made in order to reflect the effect of such acquisition on
the operations of the Company.

    

    
      	
            	
              6. 

            	
              Equity
      Awards.

            

    

    

    
      	
               
      

            	
              (a)

            	
              Stock
      Options.

            

    

     

    
      	
               
      

            	
              (i)

            	
              Upon
      the date that this Agreement is made and entered into, Executive shall be
      awarded an option to acquire Seventeen Thousand Five Hundred (17,500)
      shares of the common stock of the Company under the Company’s Amended and
      Restated 2002 Stock Incentive Plan (“Plan”) at the fair market value of
      such common shares as of the date of the award.  For purposes of
      this Agreement, the fair market value as of the applicable date shall
      mean, with respect to the common shares, the closing sales price of a
      share of the Company’s common stock on the over-the-counter market on the
      last market trading day prior to the date on which the value is to be
      determined (or the next preceding date on which sales occurred, if there
      were no sales on such date).  Four Thousand Three Hundred
      Seventy-Five (4,375) shares shall vest immediately upon the issuance of
      the stock option award under this Section 6(a)(i) of the Agreement and,
      thereafter, Four Thousand Three Hundred Seventy-Five (4,375) shares shall
      vest on each of the first three annual anniversaries of the stock option
      Award Agreement.  In the event that the Company does not renew
      this Agreement at the expiration of the Initial Term of this Agreement
      pursuant to the provisions of Section 3, 100% of any such options awarded
      to Executive under this Section 6(a)(i) shall fully vest immediately upon
      the expiration of the Initial Term of this Agreement. The term of the
      award set forth above shall be for a period of five (5) years from the
      date of such award.  A copy of the Award Agreement is attached
      hereto as Exhibit A.  The options to be granted incident hereto
      shall be non-qualified stock options and shall not be treated by the
      Company or the Executive as an incentive stock option for federal income
      tax purposes.

            

    

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (ii)

            	
              In
      the event a Change In Control (as defined in Section 10) occurs during the
      Initial Term of this Agreement, then all Seventeen Thousand Five Hundred
      shares shall be fully vested immediately prior to the Change In
      Control.

            

    

    

    
      	
               
      

            	
              (iii)

            	
              In
      addition, on each annual anniversary of the Effective Date, Executive
      shall be eligible for an additional stock option grant at the sole
      discretion of the President and Chief Executive Officer of the Company in
      conjunction with the Compensation Committee of the
  Board.

            

    

    

    
      	
               
      

            	
              (b)

            	
              Restricted
      Stock.

            

    

    

    
      	
               
      

            	
              (i)

            	
              Upon
      the date that this Agreement is made and entered into, the Company shall
      grant Executive an equity award of Twelve Thousand Five Hundred shares of
      restricted stock under the Plan.  Said restricted stock shall
      vest and the restrictions thereon shall lapse in full on the fourth
      (4th)
      annual anniversary of the Grant Date, as defined in the Restricted Stock
      Award Agreement. In the event a Change In Control occurs during the
      Initial Term of this Agreement, One Hundred Percent (100%) of such
      restricted stock shall fully vest and the restrictions thereon shall lapse
      immediately prior to the Change In Control.  In the event that
      Company does not renew this Agreement at the expiration of the Initial
      Term of this Agreement pursuant to the provisions of Section 3, 100% of
      such restricted stock shall fully vest and the restrictions thereon shall
      lapse immediately upon the expiration of the Initial Term of this
      Agreement.   A copy of the Restricted Stock Award Agreement
      is attached hereto as Exhibit
B. 

            

    

    

    
      	
               
      

            	
              (ii)

            	
              In
      addition, on each annual anniversary of the Effective Date, Executive
      shall be eligible for an additional award of restricted stock under the
      Plan at the sole discretion of the President and Chief Executive Officer
      of the Company in conjunction with the Compensation Committee of the
      Board.

            

    

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (c)

            	
              Adjustments to Number
      of Shares.  The provisions of this Section 6 shall be
      appropriately adjusted for any stock splits, reverse splits, stock
      dividends, combinations or reclassifications of the Company’s common
      stock, or any other similar increases or decreases in the number of issued
      shares of such common stock affected without receipt of consideration by
      the Company.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Representations and
      Warranties of the Company.  The Company represents and
      warrants to Executive that (i) the shares he acquires pursuant to
      options and restricted stock awards as provided for in this Agreement will
      be issued under the Plan; (ii) the Plan and the options and
      restricted stock awards to be made hereunder are covered under a Form S-8
      registration statement (the effectiveness of which shall continue to be
      maintained so that Executive can resell the shares he receives pursuant to
      options and restricted stock awards pursuant to this Agreement on a
      current basis once exercised or vested, as applicable), (iii) there
      are currently, and will continue to be, adequate shares available under
      the Plan for the issuance of stock pursuant to all options and the
      restricted stock awards provided for in this Agreement; and (iv) the
      Plan permits the contemplated provisions of such
  grants.

            

    

    

    
      	
               
      

            	
              7.

            	
              Fringe
      Benefits.

            

    

    

    During
the Employment Term (, Executive shall be entitled to the following
benefits:

    

    
      	
               
      

            	
              (a)

            	
              Insurance.  Executive
      shall be provided with standard medical, health, and other insurance
      coverage in accordance with the plans from time to time maintained by the
      Company for its senior management
employees.

            

    

    

    
      	
               
      

            	
              (b)

            	
              Vacation.  Executive
      shall be entitled each year to three (3) weeks of vacation, during which
      his compensation will be paid in full; provided, however, Executive shall
      not take more than two weeks of vacation consecutively without the prior
      written consent of the President and Chief Executive
    Officer.

            

    

    

    
      	
               
      

            	
              (c)

            	
              Automobile
      Allowance.  Company shall provide Executive with an
      automobile allowance of Five Hundred and 00/100 Dollars ($500.00) per
      month, which shall be paid each month on a date determined by the
      Company.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Expenses.    During
      the Employment Term, Executive shall be entitled to receive prompt
      reimbursement for all reasonable and customary travel and entertainment
      expenses or other out-of-pocket business expenses incurred by Executive in
      preparing for and fulfilling the Executive’s duties and responsibilities
      hereunder, including all expenses for (i) travel while away from home
      on business or at the request or in the service of the Company, (ii)
      mobile phone service, (iii) email, fax and long distance
      communications expenses in respect of the Executive’s home office,
      provided that such expenses are incurred and accounted for in accordance
      with the policies and procedures established by the
      Company.  Executive shall use reasonable best efforts to take
      advantage of advance purchase pricing for airplane
      tickets.  Amounts reimbursable pursuant to this subparagraph (d)
      that are taxable to Executive shall be paid within thirty (30) days
      following Executive's written request for reimbursement in accordance with
      policies maintained by Company; provided that Executive provides written
      request no later than sixty (60) days prior to the last day of the
      calendar year following the calendar year in which the expense was
      incurred.  In order to comply with Section 409A of the Code, the
      amount of expenses eligible for reimbursement during any calendar year
      shall not affect the amount of expenses eligible for reimbursement during
      any other calendar year, and the right to reimbursement shall not be
      subject to liquidation or exchange for another
  benefit.

            

    

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              (e)

            	
              Benefit
      Plans.  Executive shall participate, after meeting
      eligibility requirements, in any qualified retirement plans and/or welfare
      plans maintained by the Company during the Employment
  Term.

            

    

    

    
      	
               
      

            	
              (f)

            	
              Insurance.  During
      the Term of Employment Agreement, Company shall maintain on the life of
      the Executive, provided he is insurable at standard rates, a term life
      insurance policy in the amount of Five Hundred Thousand Dollars
      ($500,000.00).  Executive shall have the right to designate the
      beneficiary of such policy.  Executive agrees to take any and
      all physicals that are necessary incident to the issuance and/or renewal
      of said policy.  In addition, Executive agrees to take any and
      all physicals necessary incident to the procurement of Key Man insurance
      upon his life by Company.  In the event that Executive is not
      insurable at standard rates during the term of this Agreement, but
      Executive is able to procure rated coverage, Executive has the right to
      procure coverage at a lower amount of insurance, the cost of which is
      equivalent to the standard term rate cost of Five Hundred Thousand Dollars
      ($500,000.00) in coverage.  In the event Executive is not
      insurable, which determination must be made no later than the first
      anniversary of the Effective Date then Company shall, within thirty (30)
      days after the first anniversary of the Effective Date, pay Executive an
      amount equal to the projected cost of the contemplated term insurance of
      Five Hundred Thousand Dollars ($500,000.00) at standard rates in a single
      lump sum.  In the event that Executive should die prior to the
      insurance being obtained hereunder or in the event insurance cannot be
      obtained for medical reasons, Company shall have no obligation to
      Executive or his beneficiary for payment of any of the death benefit
      amount upon Executive’s death.  Company and Executive agree to
      use diligent efforts after the Effective Date to obtain the coverage upon
      Executive’s life hereunder.

            

    

    

    
      	
               
      

            	
              (g)

            	
              Executive
      shall be responsible for all taxes owed, if any, on the fringe benefits
      provided to him pursuant to this Section 7.  Furthermore,
      certain of the fringe benefits provided under this Section 7, shall be
      subject to ordinary income tax withholding incident to the payment thereof
      by Company.

            

    

    

    
      	
               
      

            	
              8.

            	
              Termination.

            

    

    

    Executive’s
employment hereunder and the Employment Term shall be terminated under the first
of the following to occur:

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    
      	
               
      

            	
              (a)

            	
              Death.  The
      Executive’s employment hereunder shall automatically terminate upon the
      death of the Executive.

            

    

    

    
      	
               
      

            	
              (b)

            	
              Disability.  The
      Executive’s employment hereunder shall terminate upon written notice by
      the Company to the Executive, of termination due to
      Disability.  For purposes of this Agreement, “Disability” or
      “Disabled” shall mean the Executive’s incapacity due to physical or mental
      illness to substantially perform his duties and the essential functions of
      his position, with or without reasonable accommodation on a full-time
      basis for One Hundred Eighty (180) days (including weekends and holidays)
      in any Three Hundred Sixty-Five (365) day period.  The existence
      or non-existence of a physical or mental injury, infirmity or incapacity
      shall be determined by an independent physician mutually agreed to by the
      Company and the Executive (provided that neither party shall unreasonably
      withhold their consent).

            

    

    

    
      	
               
      

            	
              (c)

            	
              Cause. The
      Company may terminate the Executive’s employment hereunder for
      Cause.  For purposes of this Agreement, the Company shall have
      “Cause” to terminate the Executive’s employment hereunder
      upon:

            

    

    

    
      	
               
      

            	
              (i)

            	
              The
      conviction of Executive of a felony or other crime involving theft,
      misappropriation of funds, fraud or moral
  turpitude;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              The
      engaging by Executive in conduct which is demonstrably and materially
      injurious to the Company, monetarily or otherwise, including but not
      limited to any material misrepresentation related to the performance of
      his duties, misappropriation, fraud, including with respect to the
      Company’s accounting and financial statements, embezzlement or conversion
      by Executive of the Company’s or any of its subsidiaries’ property in
      connection with Executive’s duties or in the course of the Executive’s
      employment with the Company;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              Executive’s
      gross negligence or gross misconduct in carrying out his duties hereunder
      resulting, in either case, in material harm to the Company;
    or

            

    

    

    
      	
               
      

            	
              (iv)

            	
              Any
      act or omission constituting a material breach by the Executive of any
      material provision of this
Agreement.

            

    

    

    Notwithstanding
the foregoing, in the event the basis for a termination for Cause is under
subsections 8(c)(iii) or (iv) above, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
written notice from the President and Chief Executive Officer asserting that he
has engaged in the conduct set forth above in Sections 8(c)(iii) or (iv) (as
interpreted and enforced consistently with the Company’s treatment of all other
executives and senior management) and specifying the particulars thereof in
detail, and Executive shall not have cured such conduct to the reasonable
satisfaction of the Board within thirty (30) days after receipt of such
resolution.

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              (d)

            	
              Without
      Cause.  Upon written notice by the Company to the
      Executive of an involuntary termination without Cause, other than for
      death or Disability.

            

    

    

    
      	
               
      

            	
              (e)

            	
              Good
      Reason.  Upon written notice by the Executive to the
      Company of the termination of his employment hereunder for Good
      Reason.  “Good Reason” shall mean Executive’s resignation from
      employment within thirty (30) days after the occurrence of one of the
      events hereinafter enumerated; provided, however, that Executive must
      provide written notice to the Company within thirty (30) days after the
      occurrence of the event allegedly constituting Good Reason and the Company
      shall have thirty (30) days after such notice is given to
      cure:  (i) a material diminution in Executive’s authority,
      duties or responsibilities without Executive’s written consent; (ii) a
      material diminution in Executive’s  Base Salary or targeted
      annual bonus at any time during the Employment Term without Executive’s
      written consent; (iii) the relocation of Executive to an area that is
      greater than thirty (30) miles from the Greater Cincinnati/Northern
      Kentucky metropolitan area without the consent of Executive; and (iv) any
      other action or inaction that constitutes a material breach by Company of
      this Agreement

            

    

    

    
      	
               
      

            	
              (f)

            	
              Voluntary
      Termination.  If Executive terminates employment with
      Company without Good Reason, Executive agrees to provide the Company with
      thirty (30) days prior written notice.  The Company, in its sole
      discretion, following its receipt of such written notice from Executive
      may accelerate the termination of Executive’s employment and the right to
      any further compensation to a date prior to the Thirtieth (30th)
      day after such written notice is
given.

            

    

    

    
      	
               
      

            	
              (g)

            	
              Date of
      Termination.  For purposes of this Agreement, “Date of
      Termination” shall mean (i) if Executive is terminated as Senior Vice
      President, Treasurer and Chief Financial Officer by the Company for
      Disability, thirty (30) days after written notice of such determination is
      given to Executive (provided that Executive shall not have returned to
      perform his duties on a full time basis during such thirty (30) day
      period); (ii) if Executive’s employment is terminated by the Company for
      any other reason, the date on which a written notice of termination is
      given, provided that, in the case of the termination for Cause under
      Sections 8(c)(iii) or (iv), Executive shall not have cured the matter or
      matters stated in the Notice of Termination within the thirty (30) day
      period provided in Section 8(c)(iii) or (iv); (iii) if Executive
      terminates his employment for Good Reason, the date of Executive’s
      resignation, provided that the notice and cure provisions in Section 8(e)
      have been complied with; (iv) if Executive terminates employment for other
      than Good Reason, the date specified in Executive’s notice in compliance
      with Section 8(f) or, (v) in the event of Executive’s death, the date of
      death.

            

    

    

    
      	
               
      

            	
              (h)

            	
              Notice of
      Termination.  Any termination of Executive’s employment
      by the Company or by Executive under this Section 8 (other than in the
      case of death) shall be communicated by a written notice (“Notice of
      Termination”) to the other party hereto, indicating the specific
      termination provision in this Agreement relied upon. If the termination
      provision relied upon requires notice and an opportunity to cure, then the
      Notice of Termination shall set forth in reasonable detail any facts and
      circumstances claimed to provide a basis for termination of Executive’s
      employment under the provisions so indicated.   The Notice
      of Termination shall specify a date of termination and shall be delivered
      within the time period set forth in the various paragraphs of this Section
      8, as applicable (the “Notice
Period”).

            

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              (i)

            	
              Compliance with
      409A.  To the extent any payment under Section 9 is
      subject to Section 409A of the Internal Revenue Code of 1986, as amended
      (the “Code”) or exempt therefrom solely by virtue of the separation pay
      plan exceptions under Treasury Regulations Section 1.409A-1(b)(9), a
      termination of Executive’s employment will not be deemed to occur unless
      such termination constitutes a separation from service under Section 409A
      of the Code and the regulations promulgated
  thereunder.

            

    

    

    
      	
               
      

            	
              9.

            	
              Compensation Upon
      Termination.

            

    

    

    
      	
               
      

            	
              (a)

            	
              Disability.  In
      the event the Employment Term ends on account of Executive’s Disability,
      the Company shall pay or provide Executive (i) any unpaid Base Salary
      through the date of termination and any accrued vacation in accordance
      with Company policy; (ii) any unpaid bonus earned with respect to any
      fiscal year or any fiscal quarter ending on or preceding the date of
      termination; and (iii) reimbursements for any unreimbursed expenses
      incurred through the date of termination (collectively “Accrued
      Amounts”).  In addition, Executive shall receive any Prorata
      Bonus as hereinafter defined.  For purposes hereof, a “Prorata
      Bonus” shall be determined by calculating a prorata portion of the
      Executive’s targeted bonus for the performance year in which the
      Executive’s termination occurs, payable at the time the annual bonuses are
      paid to the other senior executives, (determined by multiplying the amount
      the Executive would have received based upon actual performance had his
      employment continued through the end of the performance year, by a
      fraction, the numerator of which is the number of days during the
      performance year of termination that the Executive is employed by the
      Company and the denominator of which is Three Hundred Sixty-Five
      (365)).  The Accrued Amounts shall be paid within ten (10) days
      after the Date of Termination.  Any Pro Rata Bonus shall be paid
      at the same time other bonuses are paid with respect to the applicable
      performance year.   In addition,
      Executive shall be entitled to the
following:

            

    

    

    
      	
               
      

            	
              (i)

            	
              an
      amount equal to his then-applicable full Base Salary minus Eighty-Four
      Thousand Dollars ($84,000) (or such other amount as may be available to
      Executive pursuant to any salary continuation benefits under an accident
      and health benefit plan sponsored by the Company) to be paid within ten
      (10) days after the Date of Termination;
and

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Executive
      shall be entitled to any rights he may have under the Consolidated Omnibus
      Budget Reconciliation Act of 1985, as amended
      (“COBRA”).  Company shall reimburse Executive for any premium
      for COBRA health, dental, and vision coverage paid by Executive (including
      coverage for Executive’s family) for a period of one (1) year after the
      Date of Termination.

            

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              (b)

            	
              Death.  In
      the event of Executive’s death, the Executive’s estate (or to the extent a
      beneficiary has been designated in accordance with a program, the
      beneficiary under such program) shall be entitled to any Accrued Amounts
      and a Prorata Bonus (as defined in Section 9(a).  Such Accrued
      Amounts shall be paid within ten (10) days after the date of Executive’s
      death.   In addition, Executive’s beneficiary shall receive
      any Prorata Bonus as defined in Section 9(a) payable in the manner set
      forth in Section 9(a).

            

    

    

    
      	
               
      

            	
              (c)

            	
              Termination for Cause
      or Without Good Reason.  If the Executive’s employment
      should be terminated (i) by the Company for Cause, or (ii) by the
      Executive without Good Reason, Company shall pay to the Executive any
      Accrued Amounts within ten (10) days after the Date of
      Termination.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Termination Without
      Cause or For Good Reason.  If Executive’s employment is
      terminated by the Company without Cause or the Executive terminates his
      employment for Good Reason, Executive shall be entitled to receive from
      the Company all Accrued Amounts through the Date of Termination and a
      Prorata Bonus (as defined in Section 9(a).  Such Accrued Amounts
      shall be paid within ten (10) days after the Date of
      Termination.  Any Prorata Bonus shall be payable in the manner
      set forth in Section 9(a).  Contingent upon Executive delivering
      to the Company a release in the form attached hereto as Exhibit C within
      45 days after the Date of Termination, and the release becoming effective
      and irrevocable in accordance with its terms, Executive shall be entitled
      to the following:

            

    

    

    
      	
               
      

            	
              (i)

            	
              Provided
      that Executive is not, at the time of payment, employed by a competitor or
      otherwise in breach of this Agreement, the Company shall pay Executive an
      amount equal to Executive's then-applicable full Base Salary (the
      "Severance Benefit").  The Severance Benefit shall be paid in a
      single lump sum during the first payroll cycle immediately following the
      date that the release becomes effective and irrevocable in accordance with
      its terms, but in no event later than sixty (60) days after the Date of
      Termination.

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Executive
      shall be entitled to his COBRA rights under the Company’s group health
      plans.  Company shall reimburse Executive for any premium for
      COBRA health, dental, and vision coverage paid by Executive (including
      coverage for Executive’s family) for a period of one (1) year after the
      Date of Termination.

            

    

    

    No
amounts paid under this Section 9 will be reduced by any earnings that Executive
may receive from any other source.

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              10.

            	
              Change In Control
      Benefits.

            

    

    

    
      	
               
      

            	
              (a)

            	
              For
      purposes of this Agreement, “Change In Control” shall mean
      the first to occur of any of the following
  events:

            

    

    

    
      	
               
      

            	
              (i)

            	
              any
      “person” (as defined in Section 13(d) and 14(d) of the Securities Exchange
      Act of 1934, as amended (the “Exchange Act”), excluding for this
      purpose, (A) the Company or any subsidiary of the Company, or (B) any
      employee benefit plan of the Company or any subsidiary of the Company, or
      any person or entity organized, appointed or established by the Company
      for or pursuant to the terms of any such plan, which acquires beneficial
      ownership of voting securities of the Company, is or becomes the
      “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
      directly or indirectly of securities of the Company representing more than
      fifty percent (50%) of the combined voting power of the Company’s then
      outstanding securities; provided, however, that no Change In Control will
      be deemed to have occurred as a result of a change in ownership percentage
      resulting solely from an acquisition of securities by the Company;
      or

            

    

    

    
      	
               
      

            	
              (ii)

            	
              persons
      who, as of the Effective Date constitute the Board (the “Incumbent
      Directors”) cease for any
      reason, including without limitation, as a result of a tender offer, proxy
      contest, merger or similar transaction, to constitute at least a majority
      thereof, provided that any person becoming a director of the Company
      subsequent to the Effective Date shall be considered an Incumbent Director
      if such person’s election or nomination for election was approved by a
      vote of at least fifty percent (50%) of the Incumbent Directors; but
      provided further, that any such person whose initial assumption of office
      is in connection with an actual or threatened election contest relating to
      the election of members of the Board or other actual or threatened
      solicitation of proxies or consents by or on behalf of a “person” (as
      defined in Section 13(d) and 14(d) of the Exchange Act) other than the
      Board, including by reason of agreement intended to avoid or settle any
      such actual or threatened contest or solicitation, shall not be considered
      an Incumbent Director; or

            

    

    

    
      	
               
      

            	
              (iii)

            	
              consummation
      of a reorganization, merger or consolidation or sale or other disposition
      of at least eighty percent (80%) of the assets of the Company (a “Business Combination”),
      unless, in each case, following such Business Combination, all or
      substantially all of the individuals and entities who were the beneficial
      owners of outstanding voting securities of the Company immediately prior
      to such Business Combination beneficially own, directly or indirectly,
      more than fifty percent (50%) of the combined voting power of the then
      outstanding voting securities entitled to vote generally in the election
      of directors of the Company resulting from such Business Combination
      (including, without limitation, a company which, as a result of such
      transaction, owns the Company or all or substantially all of the Company’s
      assets either directly or through one or more subsidiaries) in
      substantially the same proportions as their ownership, immediately prior
      to such Business Combination, of the outstanding voting securities of the
      Company; or

            

    

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              (iv)

            	
              approval
      by the stockholders of the Company of a complete liquidation or
      dissolution of the Company.

            

    

    

    
      	
               
      

            	
              (b)

            	
              Upon
      a Change In Control of the Company, the Executive shall be entitled to
      receive the following:

            

    

    

    
      	
               
      

            	
              (i)

            	
              All
      of Executive’ stock options and restricted shares shall vest according to
      terms contained in the respective award agreements (executed incident to
      the grant of such options or restricted
shares).

            

    

    

    
      	
               
      

            	
              (ii)

            	
              Executive
      shall be entitled to the benefits set forth in Section 9(d) if his
      employment is terminated Without Cause or For Good Reason after such
      Change in Control.  For purposes of clarity, a failure by
      Company to have the acquiring company assume this Agreement in accordance
      with Section 16(a) shall constitute a material breach of this Agreement
      within the meaning of Section 8(e)(iv) (relating to the definition of Good
      Reason).

            

    

    

    
      	
               
      

            	
              (iii)

            	
              Anything
      in this Agreement to the contrary notwithstanding, in the event that it is
      determined that any payment (other than the Gross-Up payments provided for
      in this subsection) or distribution by the Company or any of its
      affiliates to or for the benefit of the Executive, whether paid or payable
      or distributed or distributable pursuant to the terms of this Agreement or
      otherwise pursuant to or by reason of any other agreement, policy, plan,
      program or arrangement, including without limitation any stock option or
      similar right, or the lapse or termination of any restriction on or the
      vesting or exercisability of any of the foregoing (a “Payment”), would be
      subject to the excise tax imposed by Section 4999 of the Internal
      Revenue Code of 1986, as amended (the “Code”) (or any successor provision
      thereto) by reason of being considered “contingent on a change in
      ownership or control” of Company or any of its affiliates, within the
      meaning of Section 280G of the Code (or any successor provision
      thereto) or to any similar tax imposed by state or local law, or any
      interest or penalties with respect to such tax (such tax
      or  taxes, together with any such interest and penalties, being
      hereafter collectively referred to as the “Excise Tax”), then the
      Executive will be entitled to receive an additional payment or payments
      (collectively, a “Gross-Up Payment”).  The Gross-Up Payment will
      be in an amount such that, after payment by the Executive of all taxes
      (including any interest or penalties imposed with respect to such taxes),
      including any Excise Tax imposed upon the Gross-Up Payment, the Executive
      retains an amount of the Gross-Up Payment equal to the Excise Tax imposed
      upon the Payment.  The Gross-Up Payment shall be made to
      Executive on or as soon as practicable following the date of the closing
      of the transaction resulting in such change in control, and in no event
      later than the end of the calendar year next following the calendar year
      in which Executive pays the Excise
Taxes.

            

    

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    

    The
determination of whether an Excise Tax would be imposed, the amount of such
Excise Tax, and the calculation of the amounts referred to above will be made by
the Company’s regular independent accounting firm (as in effect immediately
prior to the transaction that gives rise to the Excise Tax) at the expense of
the Company or, at the election of Executive, another nationally recognized
independent accounting firm, which shall provide detailed supporting
calculations.

    

    
      	
               
      

            	
              11.

            	
              Confidentiality,
      Competition, etc.

            

    

    

    
      	
               
      

            	
              (a)

            	
              Confidentiality.  The
      Executive agrees that he shall not, directly or indirectly, make
      available, sell, disclose or otherwise communicate to any person, other
      than in the course of the Executive’s employment and for the benefit of
      the Company (as determined by the Executive in good faith), either during
      the period of the Executive’s employment or at any time thereafter, any
      nonpublic, proprietary or confidential information, knowledge or data
      relating to the Company, any of its subsidiaries, affiliated companies or
      businesses, which shall have been obtained by the Executive during the
      Executive’s employment by the Company. The foregoing shall not apply to
      information that (i) was known to the public prior to its disclosure to
      the Executive; (ii) becomes known to the public subsequent to disclosure
      to the Executive through no wrongful act of the Executive or any
      representative of the Executive; or (iii) the Executive is required to
      disclose by applicable law, regulation or legal process (provided that the
      Executive provides the Company with prior notice of the contemplated
      disclosure and reasonably cooperates with the Company at its expense in
      seeking a protective order or other appropriate protection of such
      information). Notwithstanding clauses (i) and (ii) of the preceding
      sentence, the Executive’s obligation to maintain such disclosed
      information in confidence shall not terminate where only portions of the
      information are in the public
domain.

            

    

    

    
      	
               
      

            	
              (b)

            	
              Nonsolicitation.
      During the Executive’s employment with the Company and for the one (1)
      year period thereafter, the Executive agrees that he will not, directly or
      indirectly, individually or on behalf of any other person, firm,
      corporation or other entity, knowingly solicit, aid or induce (i) any
      managerial level employee of the Company or any of its subsidiaries or
      affiliates to leave such employment in order to accept employment with or
      render services to or with any other person, firm, corporation or other
      entity unaffiliated with the Company or knowingly take any action to
      materially assist or aid any other person, firm, corporation or other
      entity in hiring any such employee (provided, that the foregoing shall not
      be violated by general advertising not targeted at Company employees nor
      by serving as a reference for an employee with regard to an entity with
      which the Executive is not affiliated), or (ii) any customer of the
      Company or any of its subsidiaries or affiliates to purchase goods or
      services then sold by the Company or any of its subsidiaries or affiliates
      from another person, firm, corporation or other entity or assist or aid
      any other persons or entity in identifying or soliciting any such customer
      (provided, that the foregoing shall not apply to any product or service
      which is not covered by the noncompetition provision set forth In Section
      11(c), below).

            

    

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              (c)

            	
              Noncompetition. The Executive
      acknowledges that he performs services of a unique nature for the Company
      that are irreplaceable, and that his performance of such services to a
      competing entity that (i) is a value added reseller of computer hardware
      or software or (ii) provides product services, consulting services
      and professional services, including but not limited to advisory services,
      deployment services, staffing services and information technology
      outsourcing services (collectively, “Infrastructure Solutions Services”)
      will result in irreparable harm to the Company. Accordingly, during the
      Executive’s employment hereunder, and, except as provided in Section
      11(h), and for the one (1) year period thereafter, the Executive agrees
      that the Executive will not, directly or indirectly, own, manage, operate,
      control, be employed by (whether as an employee, consultant, independent
      contractor or otherwise, and whether or not for compensation), or render
      services to, any person, firm, corporation or other entity, in whatever
      form, that is (i) a value added reseller of computer hardware or
      software or (ii) an Infrastructure Solution Services provider, and,
      in either case, provides goods or services primarily to customers in North
      America.  This Section 11(c) shall not prevent the Executive
      from (i) owning not more than one percent (1%) of the total shares of all
      classes of stock outstanding of any publicly traded entity that is a value
      added reseller of computer hardware or software, (ii) rendering services
      to charitable organizations, as such term is defined in Section 501(c) of
      the Code, or (iii) directly or indirectly owning, managing, operating,
      controlling, or being employed by (whether as an employee, consultant,
      independent contractor or otherwise, and whether or not for compensation),
      or rendering services to, any person, firm, corporation or other entity,
      in whatever form, that is in any of the following businesses:
      (A) developing computer software (but not such a developer that sells
      software directly to end users), (B) selling computer hardware or software
      to persons or entities other than end users, and (C) providing consulting
      services to clients in industries to which the Company has not provided
      Infrastructure Solution Services during the year preceding termination of
      the Executive’s employment with the
Company.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Nondisparagement. Each of the
      Executive and the Company (for purposes hereof, “the Company” shall mean
      only (i) the Company by press release or other formally released
      announcement and (ii) the executive officers and directors thereof and not
      any other employees) agrees that during the Employment Term and for five
      (5) years thereafter not to make any public statements that disparage the
      other party, or in the case of the Company, its respective affiliates,
      employees, officers, directors, products or
      services.  Notwithstanding the foregoing, statements made in the
      course of sworn testimony in administrative, judicial or arbitral
      proceedings (including, without limitation, depositions in connection with
      such proceedings) shall not be subject to this Section 11(d). This
      provision shall also not cover normal competitive statements which do not
      cite the Executive’s employment by the
Company.

            

    

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              (e)

            	
              Equitable Relief and
      Other Remedies. The parties acknowledge and agree that the other
      party’s remedies at law for a breach or threatened breach of any of the
      provisions of this Section would be inadequate and, in recognition of this
      fact, the parties agree that, in the event of such a breach or threatened
      breach, in addition to any remedies at law, the other party, without
      posting any bond, shall be entitled to obtain equitable relief in the form
      of specific performance, temporary restraining order, a temporary or
      permanent injunction or any other equitable remedy which may then be
      available.

            

    

    

    
      	
               
      

            	
              (f)

            	
              Reformation. If
      it is determined by a court of competent jurisdiction in any state that
      any restriction in this Section 11 is excessive in duration or scope or is
      unreasonable or unenforceable under the laws of that state, it is the
      intention of the parties that such restriction may be modified or amended
      by the court to render it enforceable to the maximum extent permitted by
      the law of that state.

            

    

    

    
      	
               
      

            	
              (g)

            	
              Survival of
      Provisions. The obligations contained in this Section 11 shall
      survive the termination or expiration of the Executive’s employment with
      the Company and shall be fully enforceable
  thereafter.

            

    

    

    
      	
               
      

            	
              (h)

            	
              Non-Competition Not
      Applicable.  The one (1) year non-competition provision
      set forth in Section 11(c) commencing on the date of Executive’s
      termination of employment shall not be applicable if Company does not
      renew this Agreement upon the expiration of the Initial Term of this
      Agreement or any Renewal Term; provided, however, such one (1) year
      non-competition provision shall be applicable in any such instance if the
      Company elects in writing to compensate Executive pursuant to Section
      11(i) of this Agreement.

            

    

    

    
      	
               
      

            	
              (i)

            	
              Optional Payment for
      Non-Competition.  In the event that (i) the Company does
      not renew this Agreement upon the expiration of the Initial Term of this
      Agreement or any Renewal Term with notice to Executive of such nonrenewal
      at least  ninety (90) days prior to the expiration of the
      Initial Term or any Renewal Term,  Company shall have the option
      to pay Executive an amount equal to his Base Salary that was in effect
      prior to such non-renewal in consideration for Executive not competing
      with Company for a period of twelve (12) months from the date of the
      expiration of this Agreement.   Such payment shall be made
      within ten (10) days after the Date of
  Termination.

            

    

    

    
      	
               
      

            	
              12.

            	
              Continued Availability
      and Cooperation.

            

    

    

    
      	
               
      

            	
              (a)

            	
              Following
      termination of the Executive’s employment with the Company, the Executive
      shall cooperate fully with the Company and with the Company’s counsel in
      connection with any present and future actual or threatened litigation,
      administrative proceeding or investigation involving the Company that
      relates to events, occurrences or conduct occurring (or claimed to have
      occurred) during the period of the Executive’s employment by the Company.
      Cooperation will include, but is not limited
to:

            

    

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              (i)

            	
              making
      himself reasonably available for interviews and discussions with the
      Company’s counsel as well as for depositions and trial
      testimony;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              if
      depositions or trial testimony are to occur, making himself reasonably
      available and cooperating in the preparation therefore, as and to the
      extent that the Company or the Company’s counsel reasonably
      requests;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              refraining
      from impeding in any way the Company’s prosecution or defense of such
      litigation or administrative proceeding;
and

            

    

    

    
      	
               
      

            	
              (iv)

            	
              cooperating
      fully in the development and presentation of the Company’s prosecution or
      defense of such litigation or administrative
  proceeding.

            

    

    

    The
Company will reimburse the Executive for reasonable travel, lodging, telephone
and similar expenses, as well as reasonable attorneys’ fees (if independent
legal counsel is necessary), incurred in connection with any cooperation,
consultation and advice rendered under this Agreement after the Executive’s
termination of employment; provided that (i) Executive shall not be required to
make himself available for such purposes for more than three days in any
calendar month, (ii) the Company and the Executive must mutually agree on which
days the Executive will make himself available, and (iii) the Company shall pay
in advance to the Executive (a) all reasonably anticipated travel and other
expenses, subject to subsequent submission of supporting documentation and, if
applicable, the refund by the Executive of any remaining balance of the advance
after he has been reimbursed fully for the actual expenses incurred, and (b) a
per diem, not accountable, of One Thousand Five Hundred Dollars ($1,500.00) per
day.

    

    This
Section 12(a) shall apply during the period commencing on the Date of
Termination and ending on Executive's death. Any payments shall be made no later
than thirty (30) days after the Company's request for services under this
Section 12(a) and in no event later than the last day of the calendar year
following the calendar year in which the expense was incurred.  In
order to comply with Section 409A of the Code, the amount of expenses eligible
for reimbursement during any calendar year shall not affect the amount of
expenses eligible for reimbursement during any other calendar year, and the
right to reimbursement shall not be subject to liquidation or exchange for
another benefit.

    

    
      	
               
      

            	
              13.

            	
              Dispute
      Resolution.

            

    

    

    
      	
               
      

            	
              (a)

            	
              In
      the event that the parties are unable to resolve any controversy or claim
      arising out of or in connection with this Agreement or breach thereof,
      either Party shall refer the dispute to binding arbitration, which shall
      be the exclusive forum for resolving such claims. Such arbitration will be
      administered by Judicial Arbitration and Mediation Services, Inc. (“JAMS”)
      pursuant to its Employment Arbitration Rules and Procedures and governed
      by Kentucky law. The arbitration shall be conducted by a single arbitrator
      selected by the parties according to the rules of JAMS. In the event that
      the parties fail to agree on the selection of the arbitrator within thirty
      (30) days after either party’s request for arbitration, the arbitrator
      will be chosen by JAMS. The arbitration proceeding shall commence on a
      mutually agreeable date within ninety (90) days after the request for
      arbitration, unless otherwise agreed by the parties, and shall be
      conducted in the Commonwealth of
Kentucky.

            

    

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              (b)

            	
              The
      parties agree that each will bear their own costs and attorneys’ fees. The
      arbitrator shall not have authority to award attorneys’ fees or costs to
      any party.

            

    

    

    
      	
               
      

            	
              (c)

            	
              The
      arbitrator shall have no power or authority to make awards or orders
      granting relief that would not be available to a party in a court of law.
      The arbitrator’s award is limited by and must comply with this Agreement
      and applicable federal, state, and local laws. The decision of the
      arbitrator shall be final and binding on the
  parties.

            

    

    

    
      	
               
      

            	
              (d)

            	
              Notwithstanding
      the foregoing, no claim or controversy for injunctive or equitable relief
      contemplated by or allowed under applicable law pursuant to Section 11 of
      this Agreement will be subject to arbitration under this Section 13, but
      will instead be subject to determination in a court of competent
      jurisdiction in the state of the place of performance, which court shall
      apply Kentucky law consistent with Section 13 of this Agreement, where
      either party may seek injunctive or equitable
  relief.

            

    

    

    
      	
               
      

            	
              14.

            	
              Other
      Agreements.

            

    

    

    No
agreements (other than the exhibits hereto and agreements evidencing any grants
of equity awards or the Special Change In Control Bonus Agreement) or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement. Each party to this Agreement acknowledges that no
representations, inducements, promises, or other agreements, orally or
otherwise, have been made by any party, or anyone acting on behalf of any party,
pertaining to the subject matter hereof, which are not embodied herein, and that
no prior and/or contemporaneous agreement, statement or promise pertaining to
the subject matter hereof that is not contained in this Agreement shall be valid
or binding on either party.

    

    
      	
               
      

            	
              15.

            	
              Withholding of
      Taxes.

            

    

    

    The
Company will withhold from any amounts payable under this Agreement all federal,
state, city or other taxes as the Company is required to withhold pursuant to
any law or government regulation or ruling.

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    

    
      	
            	
              16. 

            	
              Successors and Binding
      Agreement.

            

    

    

    
      	
               
      

            	
              (a)

            	
              The
      Company will require any successor (whether direct or indirect, by
      purchase of assets or stock, merger, consolidation, reorganization or
      otherwise) to all or substantially all of the business or assets of the
      Company expressly to assume and agree to perform this Agreement in the
      same manner and to the same extent the Company would be required to
      perform if no such succession had taken place. This Agreement will be
      binding upon and inure to the benefit of the Company and any successor to
      the Company, including without limitation any persons acquiring directly
      or indirectly all or substantially all of the business or assets of the
      Company whether by purchase, merger, consolidation, reorganization or
      otherwise (and such successor shall thereafter be deemed the “Company” for
      the purposes of this Agreement), but will not otherwise be assignable,
      transferable or delegable by the Company, except that the Company may
      assign and transfer this Agreement and delegate its duties thereunder to a
      wholly owned Subsidiary; provided that following any such assignment the
      Company shall remain fully liable with respect to all of its obligations
      under this Agreement.

            

    

    

    
      	
               
      

            	
              (b)

            	
              This
      Agreement will inure to the benefit of and be enforceable by the
      Executive’s personal or legal representatives, executors, administrators,
      successors, heirs, distributees and
legatees.

            

    

    

    
      	
               
      

            	
              (c)

            	
              This
      Agreement is personal in nature and neither of the parties hereto shall,
      without the consent of the other, assign, transfer or delegate this
      Agreement or any rights or obligations hereunder except as expressly
      provided in Sections 16(a) and 16(b). Without limiting the generality or
      effect of the foregoing, the Executive’s right to receive payments
      hereunder will not be assignable, transferable or delegable, whether by
      pledge, creation of a security interest, or otherwise, other than by a
      transfer by the Executive’s will or by the laws of descent and
      distribution and, in the event of any attempted assignment or transfer
      contrary to this Section 16(c), the Company shall have no liability to pay
      any amount so attempted to be assigned, transferred or
      delegated.

            

    

    

    
      	
               
      

            	
              17.

            	
              Notices.

            

    

    

    All
communications, including without limitation notices, consents, requests or
approvals, required or permitted to be given hereunder will be in writing and
will be duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof confirmed), or five (5) business days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or three (3) business days after having been sent by
a nationally recognized overnight courier service such as Federal Express or
UPS, addressed to the Company (to the attention of the General Counsel of the
Company) at its principal executive offices and to the Executive at his
principal residence, or to such other address as any party may have furnished to
the other in writing and in accordance herewith, except that notices of changes
of address shall be effective only upon receipt.

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              18.

            	
              Governing Law and
      Choice of Forum.

            

    

    

    
      	
               
      

            	
              (a)

            	
              This
      Agreement will be construed and enforced according to the laws of the
      Commonwealth of Kentucky, without giving effect to the conflict of laws
      principles thereof.

            

    

    

    
      	
               
      

            	
              (b)

            	
              To
      the extent not otherwise provided for by Section 13 of this Agreement, the
      Executive and the Company consent to the jurisdiction of all state and
      federal courts located in Boone County, Kentucky, as well as to the
      jurisdiction of all courts of which an appeal may be taken from such
      courts, for the purpose of any suit, action, or other proceeding arising
      out of, or in connection with, this Agreement or that otherwise arises out
      of the employment relationship. Each party hereby expressly waives any and
      all rights to bring any suit, action, or other proceeding in or before any
      court or tribunal other than the courts described above and covenants that
      it shall not seek in any manner to resolve any dispute other than as set
      forth in this paragraph and Section 13 of this Agreement. Further, the
      Executive and the Company hereby expressly waive any and all objections
      either may have to venue, including, without limitation, the inconvenience
      of such forum, in any of such courts. In addition, each of the parties
      consents to the service of process by personal service or any manner in
      which notices may be delivered hereunder in accordance with this
      Agreement.

            

    

    

    
      	
               
      

            	
              19.

            	
              Validity/Severability.

            

    

    

     If
any provision of this Agreement or the application of any provision is held
invalid, unenforceable or otherwise illegal, the remainder of this Agreement and
the application of such provision will not be affected, and the provision so
held to be invalid, unenforceable or otherwise illegal will be reformed to the
extent (and only to the extent) necessary to make it enforceable, valid or
legal. To the extent any provisions held to be invalid, unenforceable or
otherwise illegal cannot be reformed, such provisions are to be stricken
herefrom and the remainder of this Agreement will be binding on the parties and
their successors and assigns as if such invalid or illegal provisions were never
included in this Agreement from the first instance.

    

    
      	
               
      

            	
              20.

            	
              Survival of
      Provisions.

            

    

    

    Notwithstanding
any other provision of this Agreement, the parties’ respective rights and
obligations under Sections 8, 9, 10, 11, 12, 13, 17, 18, 20, and 21, will
survive any termination or expiration of this Agreement or the termination of
the Executive’s employment with the Company.

    

    
      	
               
      

            	
              21.

            	
              Liability
      Insurance.

            

    

    

    The
Company shall cover the Executive under directors and officers liability
insurance both during and, while potential liability exists, after the term of
this Agreement in the same amount and to the same extent as the Company covers
its other officers and directors.  The Company shall provide a
certificate of insurance confirming this coverage promptly upon receipt of a
request for same from Executive.

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

    

    

    
      	
               
      

            	
              22.

            	
              Public
      Announcements.

            

    

    

    The
Company shall give the Executive a reasonable opportunity to review and comment
in advance on any public announcement (including any filing with a governmental
agency or stock exchange) relating to this Agreement or the Executive’s
employment by the Company.

    

    
      	
               
      

            	
              23.

            	
              Compliance with Code
      Section 409A.

            

    

    

    This
Agreement is intended to comply with the requirements of Code Section 409A and
the regulations and guidance issued thereunder and shall be interpreted and
administered in a manner consistent with that intent.  Any provision
of this Agreement to the contrary notwithstanding, if Executive is a “specified
employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code as of the
date of his separation from service with the Company, no distribution that is
subject to and not otherwise exempt from Code Section 409A shall be made or
commence under this Agreement sooner than six months from the date of
Executive’s separation from service (or, if earlier, the date of the Executive’s
death).  In such case, any payments that were otherwise required to be
made within such six-month period shall be accumulated and paid in a single lump
sum on the first day of the month immediately following the end of such
six-month period.

    

    IN
WITNESS WHEREOF, the parties have made and entered into this Agreement as of the
day and year first above written.

    

    
      
        	 
      	
                POMEROY
      IT SOLUTIONS, INC.

              
	 
      	 
      
	 
      	 
      	 
      
	 
      	
                By:

              	 
      
	 
      	 
      	
                Keith
      R. Coogan

              
	 
      	
                Its:

              	
                President
      and Chief Executive Officer

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                Craig
      J. Propst

              

      

    

     

     

    -20-

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