EMPLOYMENT AGREEMENT
AGREEMENT by and between ePlus inc., a Delaware corporation (the "Company") and
Kleyton L. Parkhurst ("Executive"), dated as of the 31st day of October 2003.
The Board of Directors of the Company (the "Board"), has determined that it is
in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication of Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined below) of
the Company and to allow the Executive to execute his position as Senior Vice
President, Assistant Secretary, and Treasurer, and President of ePlus Capital,
Inc. without duress. The Board believes it is imperative to diminish the
inevitable distraction of Executive by virtue of the personal uncertainties and
risks created by a pending or threatened Change of Control and to encourage
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide Executive
with compensation and benefits arrangements upon a Change of Control or to
execute his position without duress as deemed proper by Executive which ensure
that the compensation and benefits expectations of Executive will be satisfied
and which are competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions.
(a) The "Effective Date" regarding Change of Control shall mean the first date
during the Change of Control Period (as defined in Section l(b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if
Executive's employment with the Company is terminated prior to the date on which
the Change of Control occurs, and if it is reasonably demonstrated by Executive
that such termination of employment (i) was at the request of a third party who
has taken steps reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of Control, then
for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment. Effective date
for any other reason shall mean October 31, 2003.
(b) The "Change of Control Period" shall mean the period commencing on the date
hereof and ending on the second anniversary of the date hereof; provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), unless previously
terminated, the Change of Control Period shall be automatically extended so as
to terminate two years from such Renewal Date, unless at least 60 days prior to
the Renewal Date the Company shall give notice to Executive that the Change of
Control Period shall not be so extended.
2. Change of Control. For the purposes of this Agreement, a "Change of Control"
shall mean the occurrence of any of the following events:
(a) The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
30% or more of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Corporation Voting Securities"); provided, however,
that for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition by a Person who is on the
Effective Date the beneficial owner of 15% or more of the Outstanding
Corporation Voting Securities, or
(b) Individuals who, as of the Effective Date, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the Effective Date whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners of the Outstanding Corporation Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 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 corporation 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 Corporation
Voting Securities, and (ii) no Person (excluding any corporation resulting from
such Business Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 25% or more of the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination, and
(iii) at least a majority of the members of the board of directors of the
Company resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination; or
(d) Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.
3. Employment Period. The Company hereby agrees to continue Executive in its
employ, and Executive hereby agrees to remain in the employ of the Company
subject to the terms and conditions of this Agreement, for the period commencing
on the Effective Date and ending on the second anniversary of such date (the
"Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) Executive's position (including status,
offices, titles and reporting requirements), authority, duties and
responsibilities shall, considered in their entirety and as a whole, be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding the Effective Date, however this provision is not triggered by
reorganizations so long as Executive's position, authority, duties and
responsibilities are not in their entirety diminished by such a reorganization
and (B) Executive's services shall be performed at the location where Executive
was employed immediately preceding the Effective Date or any office or location
less than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods of vacation and
sick leave to which Executive is entitled, Executive agrees to devote reasonable
attention and time during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the responsibilities
assigned to Executive hereunder, to use Executive's reasonable best efforts to
perform faithfully and efficiently such responsibilities. During the Employment
Period it shall not be a violation of this Agreement for Executive to (A) serve
on corporate, civic or charitable boards or committees subject to pre-approval
by the Chief Executive Officer, said approval not to be unreasonably withheld,
or (B) manage personal investments, so long as such activities do not
significantly interfere with the performance of Executive's responsibilities as
an employee of the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities have been
conducted by Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of Executive's responsibilities to the Company.
(b) Compensation.
(i) Base Salary. During the Employment Period, Executive shall receive an annual
base salary ("Annual Base Salary") at a rate at least equal to the rate of base
salary in effect on the date of this Agreement or, if greater, on the Effective
Date, paid or payable (including any base salary which has been earned but
deferred) to Executive by the Company and its affiliated companies. During the
Employment Period, the Annual Base Salary shall be reviewed no more than 12
months after the last salary increase awarded to Executive prior to the
Effective Date and thereafter at least annually. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to Executive
under this Agreement. Annual Base Salary shall not be reduced after any such
increase and the term Annual Base Salary as used in this Agreement shall refer
to Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated companies" shall include any company controlled by, controlling or
under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, Executive may be awarded,
for each fiscal year ending during the Employment Period, an annual bonus (the
"Annual Bonus") in cash under the Company's annual incentive bonus plan or
plans, which may be paid pro-rata on a quarterly basis at the discretion of the
Company.
(iii) Incentive, Savings and Retirement Plans. During the Employment Period,
Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies, but in no event
shall such plans, practices, policies and programs provide Executive with
incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for Executive under such
plans, practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Effective Date or if more favorable to
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, Executive and/or
Executive's eligible dependents, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable generally to other peer
executives of the Company and its affiliated companies, but in no event shall
such plans, practices, policies and programs provide Executive with benefits
which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to Executive, those provided generally at any time after the Effective
Date to other peer executives of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, Executive shall be entitled to
receive prompt reimbursement for all reasonable expenses incurred by Executive
in accordance with the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for Executive at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, Executive shall be entitled
to fringe benefits in accordance with the most favorable plans, practices,
programs and policies of the Company and its affiliated companies in effect for
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vii) Vacation. During the Employment Period, Executive shall be entitled to
paid vacation in accordance with the most favorable plans, policies, programs
and practices of the Company and its affiliated companies as in effect for
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its
affiliated companies. Regardless, Employee shall not have fewer than 20 days of
paid vacation per year.
5. Termination of Employment.
(a) Death or Disability. Executive's employment shall terminate automatically
upon Executive's death during the Employment Period. If the Company determines
in good faith that the Disability of Executive has occurred during the
Employment Period (pursuant to the definition of Disability set forth below), it
may give to Executive written notice in accordance with Section 13(b) of this
Agreement of its intention to terminate Executive's employment. In such event,
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, Executive shall not have
returned to full-time performance of Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of Executive from Executive's
duties with the Company on a full-time basis for 90 consecutive business days as
a result of incapacity due to mental or physical illness which is determined to
be total and permanent by a physician selected by the Company or its insurers
and acceptable to Executive or Executive's legal representative.
(b) Cause. The Company may terminate Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean:
(i) The willful and continued failure of Executive to perform substantially
Executive's reasonably assigned duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness or from the assignment to Executive of duties that would constitute Good
Reason under Section 5(c)(i), and specifically excluding any failure by
Executive, after reasonable efforts, to meet performance expectations), which
failure continues for a period of at least 30 days after a written demand for
substantial performance, signed by a duly authorized officer of the Company, has
been delivered to Executive which specifically identifies the manner in which
Executive has failed to substantially performed his duties; provided, however,
that no failure to perform by Executive after a Notice of Termination is given
to the Company by Executive shall constitute Cause for purposes of this
Agreement, or
(ii) The willful engaging by Executive in illegal conduct or gross misconduct
which is materially and demonstrably injurious to the Company.
For purposes of this provision, no act or failure to act, on the part of
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by Executive in bad faith or without reasonable belief that Executive's
action or omission was in the best interests of the Company. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of a senior officer of the Company or based upon
the advice of counsel for the Company shall be conclusively presumed to be done,
or omitted to be done, by Executive in good faith and in the best interests of
the Company. The cessation of employment of Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to Executive a copy
of a resolution duly adopted by an affirmative vote of not less than three
quarters of the entire membership of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice is provided to Executive and
Executive is given an opportunity, together with counsel, to be heard before the
Board).
(c) Good Reason. Executive's employment may be terminated by Executive for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean:
(i) The assignment to Executive of any duties inconsistent in any respect with
Executive's position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company which results in a
diminution in such position, authority, duties or responsibilities, including
specifically and without limitation, Executive's failure to continue reporting
directly to the CEO and/or the COO, but excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof given by
Executive;
(ii) Any failure by the Company to comply with any of the provisions of Section
4(b) of this Agreement, other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied by the Company within
30 days after receipt of notice thereof given by Executive;
(iii) The Company's requiring Executive to be based at any office or location
other than as provided in Section 4(a)(i)(B) hereof;
(iv) Any purported termination by the Company of Executive's employment
otherwise than as expressly permitted by this Agreement;
(v) Any failure by the Company to comply with and satisfy Section 13(c) of this
Agreement;
(vi) Any other material breach by the Company of any provision of this
Agreement; or
(vii) A termination of employment by the Executive for any reason during the
90-day period immediately following a Change of Control provided that for
purposes of transition he provides 180 days' notice to the Company. In this
event Executive shall receive one years salary and paid benefits only.
Good Reason shall not include Executive's death or Disability. Executive's
continued employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason hereunder. For purposes of
this Section 5(c), any good faith determination of "Good Reason" made by
Executive shall be conclusive.
(d) Notice of Termination. Any termination for any reason by the Company or
Executive shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 14(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement relied upon, (ii)
to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated, and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date. If a dispute exists concerning the provisions of
this Agreement that apply to Executive's termination of employment, the parties
shall pursue the resolution of such dispute with reasonable diligence. Within
fifteen (15) days of such a resolution, any party owing any payments pursuant to
the provisions of this Agreement shall make all such payments together with
interest accrued thereon at the rate provided in Section 1274(b)(2)(B) of the
Internal Revenue Code of 1986, as amended (the "Code"). The failure by Executive
or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause shall not
waive any right of Executive or the Company, respectively, hereunder or preclude
Executive or the Company, respectively, from asserting such fact or circumstance
in enforcing Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if Executive's
employment is terminated other than by reason of death or Disability, the date
of receipt of the Notice of Termination or any later date specified therein, as
the case may be, or (ii) if Executive's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of
Executive or the Disability Effective Date, as the case may be.
(f) Voluntary Termination. Executive's employment may be terminated voluntarily
by Executive for any reason.
6. Obligations of the Company upon Termination.
(a) Termination by the Company Other Than for Cause or Disability; Termination
by Executive for Good Reason. If, during the Employment Period, the Company
shall terminate Executive's employment other than for Cause or Disability, or
Executive shall terminate employment for Good Reason:
(i) The Company shall pay to Executive in a lump sum in cash within 30 days
after the Date of Termination the aggregate of the following amounts:
A. The sum of (1) Executive's Annual Base Salary through the Date of Termination
to the extent not theretofore paid, (2) the product of (x) the higher of (I) the
Recent Annual Bonus or (II) the Annual Bonus paid or payable, including any
bonus or portion thereof which has been earned but deferred (and annualized for
any fiscal year consisting of less than twelve full months or during which
Executive was employed for less than twelve full months), for the most recently
completed fiscal year during the Employment Period, if any (such higher amount
being referred to as the "Highest Annual Bonus") and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365, (3) any accrued
vacation pay to the extent not theretofore paid, and (4) unless Executive has
elected a different payout date in a prior deferral election, any compensation
previously deferred by Executive (together with any accrued interest or earnings
thereon) to the extent not theretofore paid (the sum of the amounts described in
clauses (1), (2), (3) and (4) shall be hereinafter referred to as the "Accrued
Obligations"); and
B. The amount equal to two (2) times the sum of (x) Executive's Annual Base
Salary (ii) For two years after the Date of Termination, or such longer period
as may be provided by the terms of the appropriate plan, program, practice or
policy, the Company shall continue benefits to Executive and/or Executive's
eligible dependents at least equal to those which would have been provided to
them in accordance with the plans, programs, practices and policies described in
Section 4(b)(iv) of this Agreement if Executive's employment had not been
terminated or, if more favorable to Executive, as in effect generally at any
time thereafter with respect to other peer executives of the Company and its
affiliated companies and their families, provided, however, that if Executive
becomes re-employed with another employer and is eligible to receive medical or
other welfare benefits under another employer provided plan, the medical and
other welfare benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility; and
(iii) All grants of restricted stock of the Company ("Restricted Stock") if any,
held by Executive as of the Date of Termination will become immediately vested
as of the Date of Termination; and
(iv) All of Executive's options to acquire Common Stock of the Company
("Options") held by Executive as of the Date of Termination will become
immediately vested and exercisable as of the Date of Termination, and
notwithstanding the provisions of the applicable Option agreement, all of such
Options shall remain exercisable through the earlier of (A) the original
expiration date of the Option, or (B) the second anniversary of the Date of
Termination; and
(v) To the extent not theretofore paid or provided, the Company shall timely pay
or provide to Executive any other amounts or benefits required to be paid or
provided or which Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company and its affiliated
companies (such other amounts and benefits shall be hereinafter referred to as
the "Other Benefits").
(b) Death. If Executive's employment is terminated by reason of Executive's
death during the Employment Period, this Agreement shall terminate without
further obligations to Executive's legal representatives under this Agreement,
other than for payment of Accrued Obligations and the timely payment or
provision of Other Benefits. Accrued Obligations shall be paid to Executive's
estate or beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination. With respect to the provision of Other Benefits, the
term Other Benefits as used in this Section 6(b) shall include, without
limitation, and Executive's estate and/or beneficiaries shall be entitled to
receive, benefits under such plans, programs, practices and policies relating to
death benefits, if any, as are applicable to Executive on the date of his death.
(c) Disability. If Executive's employment is terminated by reason of Executive's
Disability during the Employment Period, this Agreement shall terminate without
further obligations to Executive, other than for payment of his current salary
for a total of six months in one lump sum amount and the continuation of
whatever current benefits that are provided such as family health insurance,
disability insurance and life insurance and others as they may be provided. All
stock options will vest immediately and be exercisable for up to two years
subsequent to the date of disability.
(d) Termination for Cause; Resignation Other than for Good Reason. If
Executive's employment shall be terminated for Cause during the Employment
Period, or if Executive voluntarily terminates his employment for any reason
other than a Good Reason or other than his death or Disability, this Agreement
shall terminate without further obligations to Executive other than the
obligation to pay to Executive (x) his Annual Base Salary through the Date of
Termination and his Annual Base Salary for the subsequent six months prorated in
equal monthly amounts (to be reduced at the time of and by any salary amounts
earned from any subsequent employment from his new employer during that six
month period), (y) the amount of any compensation previously deferred by
Executive, (z) Other Benefits, in each case to the extent theretofore unpaid and
continued health insurance for up to one year as needed by the Executive. All
Accrued Obligations shall be paid to Executive in a lump sum in cash within 30
days of the Date of Termination.
(e) Expiration of Employment Period. If Executive's employment shall be
terminated as of October 31, 2005 due to the normal expiration of the Employment
Period as defined in Section 3 of this agreement, the Company will notify
Executive no less than 180 days in advance of October 31, 2005. Subsequent to
the 180-day notice period, the Executive retains the contractual right to resign
for any reason and the benefits provided in Section 6(d) of this agreement. If
notice of termination is not provided and the Executive is retained subsequent
to October 31, 2005, all terms and conditions in this agreement will remain and
the employment period will extend on an annual basis from November 1. Subsequent
to November 1, if the Company elects to terminate the employment of the
Executive for any reason, at least 180 days advanced notice of the date of
termination will be required and within this notice period the Executive retains
the contractual right to resign for any reason and the retain the benefits
provided in Section 6(d) of this agreement.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which Executive may qualify, nor, subject to Section 14(f), shall anything
herein limit or otherwise affect such rights as Executive may have under any
contract or agreement with the Company or any of its affiliated companies.
Amounts which are vested benefits or which Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company or any of its affiliated companies at or subsequent
to the Date of Termination shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. Full Settlement; No Mitigation. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against
Executive or others. In no event shall Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not Executive obtains other employment.
9. Costs of Enforcement. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expenses which Executive may
reasonably incur as a result of any contest (if the Executive is successful) by
the Company, Executive or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by Executive about the amount of
any payment pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code. Executive shall also be entitled to be paid all
reasonable legal fees and expenses, if any, incurred in connection with any tax
audit or proceeding to the extent attributable to the application of Section
4999 of the Code to any payment or benefit hereunder. Such payments shall be
made within five (5) business days after delivery of Executive's respective
written requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require.
10. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and except as set
forth below, in the event it shall be determined that any payment or
distribution by the Company to or for the benefit of Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this Section 10) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then Executive shall be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that after payment by Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 10(c), all determinations required to
be made under this Section 10, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be used
in arriving at such determination, shall be made by the Company's regular
independent accounting firm at the expense of the Company or, at the election
and expense of Executive, another nationally recognized independent accounting
firm (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and Executive within 15 business days of the
receipt of notice from Executive that there has been a Payment, or such earlier
time as is requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 10, shall-be paid by
the Company to Executive within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 10(c) and Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of
Executive.
(c) Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than ten business days after Executive is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which
it gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the Company
notifies Executive in writing prior to the expiration of such period that it
desires to contest such claim, Executive shall:
(i) Give the Company any information reasonably requested by the Company
relating to such claim,
(ii) Take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) Cooperate with the Company in good faith in order effectively to contest
such claim, and
(iv) Permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation of the foregoing provisions of
this Section 10(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by the Company
pursuant to Section 10(c), Executive becomes entitled to receive any refund with
respect to such claim, Executive shall (subject to the Company's complying with
the requirements of Section 10(c)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Executive of an amount advanced by
the Company pursuant to Section 10(c), a determination is made that- Executive
shall not be entitled to any refund with respect to such claim and the Company
does not notify Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then such
advance shall-be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
11. Confidential Information. Executive shall hold in a fiduciary capacity for
the benefit of the Company all secret or confidential information, knowledge or
data relating to the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by Executive during
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by Executive
or representatives of Executive in violation of this Agreement). After
termination of Executive's employment with the Company, Executive shall not,
without the prior written consent of the Company or as may otherwise be required
by law or legal process, communicate or divulge any such information, knowledge
or data to anyone other than the Company and those designated by it. In no event
shall an asserted violation of the provisions of this Section 11 constitute a
basis for deferring or withholding any amounts otherwise payable to Executive
under this Agreement.
12. Other Responsibilities of Executive. For a period of one year following
termination of employment with the Company the Executive agrees not to
personally solicit or hire any of the Company's employees however Executive's
subsequent employer (if any) shall not be so restricted from hiring any person
who responds to a general solicitation. Executive also agrees that at no time
following termination of employment with the Company to make in either written
or oral form any comments which may be viewed as disparaging about the Company,
except that nothing contained herein shall prevent Employee from testifying in a
truthful manner if so compelled by law, court order, regulation or statute.
13. Successors.
(a) This Agreement is personal to Executive and without the prior written
consent of the Company shall not be assignable by Executive otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company
and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Virginia. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. This Agreement
may not be amended or modified otherwise than-by a written agreement executed by
the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall
be given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If to Executive: Kleyton L. Parkhurst
1348 Lancia Drive
McLean, VA 22102
If to the Company: ePlus inc.
400 Herndon Parkway
Herndon, VA 20170
Attention: Chairman of the Board
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Company may withhold from any amounts payable under this Agreement such
Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(e) Executive's or the Company's failure to insist upon strict compliance with
any provision of this Agreement or the failure to assert any right Executive or
the Company may have hereunder, including, without limitation, the right of
Executive to terminate employment for Good Reason pursuant to Section
5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement.
(f) Executive and the Company are parties to that certain Employment Agreement
dated as of September 1, 1996 (the "Current Employment Agreement"). The Current
Employment Agreement, or any successor employment agreement between Executive
and the Company, shall continue to govern the terms of Executive's employment
with the Company prior to the Effective Date of this Agreement. Executive and
the Company acknowledge that, subject to Section 1(a) hereof, Executive's
employment and/or this Agreement may be terminated by either Executive or the
Company at any time prior to the Effective Date, in which case Executive shall
have no further rights under this Agreement. From and after the Effective Date,
this Agreement shall supersede any other agreement between the parties with
respect to the subject matter hereof, including without limitation the Current
Employment Agreement.
IN WITNESS WHEREOF, Executive has hereunto set Executive's hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.
/s/ Kleyton L. Parkhurst
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[Executive]Kleyton L. Parkhurst
ePlus, inc.
By: /s/ Bruce M. Bowen
-------------------------------