Chief Information Officer Employment Agreement

EXHIBIT 10.1



EMPLOYMENT AGREEMENT



This Employment Agreement (the "Agreement") made this 24 th day of April, 2008 and effective as of the 24th day of April, 2008 (the " Effective Date") between POMEROY IT SOLUTIONS, INC. , a Delaware Corporation (the "Company") and KEITH BLACHOWIAK (the "Executive").





W I T N E S S E T H:





WHEREAS, Executive has been employed by Company pursuant to the terms and conditions of an Employment Agreement made effective on February 20, 2006; and



WHEREAS, Company and Executive now desire to enter into this Employment Agreement to provide Executive with continued employment as the Company's Senior Vice President and Chief Information Officer and additional responsibilities, duties, benefits and compensation incident thereto.



NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby covenant and agree as follows:



1. Position/Duties.




(a) Executive shall serve as the Senior Vice President and Chief Information 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/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 and Chief Information 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) three (3) years (April 24, 2008 ? April 24, 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 Forty Six Thousand Seven Hundred Fifty Dollars ($246,750.00). 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/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 Chief Executive Officer of the Company in conjunction with the Compensation Committee of the Board)), of at least Two Hundred Seventy Five Thousand Dollars ($275,000.00), 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. Generally, two-thirds (2/3) of the potential targeted bonus shall be based on achievement of quarterly criteria and one-third (1/3) 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.







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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 (15 th ) day of the third (3 rd ) 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 (15 th ) day of the third (3 rd ) 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 (15 th ) day of the third (3 rd ) month following the end of the Company's taxable year.



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.




On each annual anniversary of the Effective Date, Executive shall be eligible for a stock option grant at the sole discretion of the President/Chief Executive Officer of the Company in conjunction with the Compensation Committee of the Board.







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(b) Restricted Stock.




(i) Upon the Effective Date the Company granted Executive an equity award of Eleven Thousand Two Hundred Fifty (11,250) shares of restricted stock under the Plan. Thereafter, so long as Executive is gainfully employed as the Company's Senior Vice President and Chief Information Office on the first anniversary of the Effective Date hereof, Company shall also grant Executive an equity award of Five Thousand (5,000) shares of restricted stock under the Plan. Said restricted stock shall vest and the restrictions thereon shall lapse in full on the fourth (4 th ) annual anniversary grant date. 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. For purposes of the foregoing shares of restricted stock only , it is agreed by the parties hereto that in the event the Company terminates this Agreement without cause in accordance with Section 8(d) below, 100% of such restricted stock awarded to Executive under this Section 6(b)(i) shall fully vest and the restrictions thereon shall lapse immediately on the date upon which this Agreement is effectively terminated. 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/Chief Executive Officer of the Company in conjunction with the Compensation Committee of the Board.




(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.





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(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/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 to be paid on the first of every month.




(d) Travel Allowance. The Company shall provide Executive with a travel allowance of Three Thousand Four Hundred Dollars ($3,400.00) per month to be paid on the first of every month; provided that such Travel Allowance shall be subject to review and modification on a quarterly basis depending on actual travel expenses incurred by Executive.




(e) Housing Allowance. The Company shall provide Executive with a housing allowance of up to Two Thousand Five Hundred Dollars ($2,500.00) per month to be paid on the first of every month. The Executive shall enter into a lease agreement that shall provide housing for Executive near the Company's headquarters during the Employment Term, provided that the term of such lease shall not exceed six months at any time.




(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, then Company shall, within thirty (30) days following the date that Executive is determined to be uninsurable, 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 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.





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(g) 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 travel while away from home on business (other than expenses related Executive's travel to and from his home and the Company's corporate headquarters as such are intended to be paid for by Executive incident to the Travel Allowance he is entitled to receive on a monthly basis under subsection (d) above) or at the request or in the service of the Company, 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 (g) shall be paid upon the earlier of (i) thirty (30) days after Executive's submission of a request for reimbursement and (ii) the fifteenth (15 th ) day of the third (3 rd ) month of the Company's fiscal year following the year in which the expense was incurred.




(h) Communications Allowance . Company shall provide Executive with a Communications Allowance in the amount of Two Hundred Fifty Dollars ($250.00) per month to be paid in accordance with normal payroll practices for allowances.


(h) 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.




(i) 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, including those allowances set forth under subsections (c), (d), and (e) above, 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:



(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).





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(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 Chief Executive Officer asserting that he has engag ...