1
EXHIBIT 10.47
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT ("Agreement") is entered into by and between XXXXXXX
X. XXXXX ("Associate") and XXXXXX MICRO INC., a Delaware corporation ("IMI"), in
order to establish the basis for certain payments and benefits to be provided to
Associate in connection with the termination of Associate's employment with IMI.
In consideration of the mutual promises and agreements contained in this
document, intending to be legally bound, Associate and IMI contract and agree as
follows:
1. Resignation. Associate has resigned as an officer and employee of IMI
effective as of October 11, 1999 (the "Resignation Date"). Associate
acknowledges that after the Resignation Date he no longer will be an
agent of IMI or any entity affiliated with IMI, and will have no
authority to bind IMI or any such affiliate or act on behalf of IMI or
any such affiliate as an officer or employee.
2. Salary Continuation. In consideration of Associate's continuing
obligations under this Agreement, IMI will continue to pay Associate
his current base salary for a period of 24 months from the Resignation
Date (the "Salary Continuation Period"). Such payments will be made
through IMI's normal payroll procedures and will be subject to
applicable withholding requirements.
3. IMI Benefits/COBRA Coverage. Associate acknowledges that on the
Resignation Date, he will cease to be qualified for the employee
benefit plans to which he was entitled as an associate or employee of
IMI. Associate will, however, have the rights of a terminated employee
to convert and/or continue certain benefit coverages as provided in the
respective benefit plans, including COBRA continuation rights for
medical, dental and vision coverages. IMI will provide under separate
cover further information to Associate regarding COBRA continuation
coverage and other conversion and/or continuation rights.
Notwithstanding the foregoing, IMI will pay directly or reimburse
Associate for the cost of Associate's COBRA continuation coverage for a
period of 18 months from the Resignation Date. However, coverage for
long-term and short-term disability, and other benefits, including,
without limitation, basic life insurance, AD&D insurance, supplemental
life insurance, spouse/dependent insurance, dependent care spending
account, employee stock purchase plan(s) and the IMI Thrift Plan, will
end on the Resignation Date.
4. Key Employee Stock Purchase Plan.
a. Notwithstanding the provisions of Section 6(b)(i) of the Acquisition
Agreement dated June 29, 1996 between IMI and Associate relating to
Associate's purchase of shares of IMI Class B Common Stock under the
IMI Key Employee Stock Purchase Plan (the "Purchased Shares Acquisition
Agreement"), IMI shall not exercise its right to repurchase any of the
Shares (as such term is defined in the Purchased Shares Acquisition
Agreement) and will be permitted to exercise its repurchase rights only
with respect to the Restricted Shares (as such
1
2
term is defined in the Purchased Shares Acquisition Agreement) owned by
Associate, if any, as of the date of the any failure by Associate to
perform such obligations. Except as modified hereby, the Purchased
Shares Acquisition Agreement shall continue in full force and effect in
accordance with its terms.
b. Notwithstanding the provisions of Section 5(b)(i) of the Acquisition
Agreement dated July 15, 1996 between IMI and Associate relating to the
award by IMI to Associate of shares of IMI Class B Common Stock under
the IMI Key Employee Stock Purchase Plan (the "Restricted Shares
Acquisition Agreement"), the Restricted Stock (as such term is defined
in the Restricted Shares Acquisition Agreement) shall not be forfeited
to IMI for so long as Associate performs his obligations under this
Agreement. Only such shares as constitute Restricted Stock as of the
date of any failure by Associate to perform such obligations shall be
forfeited. Except as modified hereby, the Restricted Shares Acquisition
Agreement shall continue in full force and effect in accordance with
its terms.
5. Stock Options. Notwithstanding the termination of Associate's
employment with IMI or any contrary provisions in any plan or relevant
agreement, Associate's currently existing unvested stock options and
grants which are scheduled to vest at any time on or after the
Resignation Date and prior to April 2, 2000, shall be deemed vested as
of the Resignation Date. Associate shall have the right to exercise all
such stock options and grants, as well as all of his presently vested
stock options and grants, through the end of the Salary Continuation
Period or such earlier date as any such options or grants would have
expired per the terms of the underlying agreements for such options and
grants if Associate had continued to be an employee of IMI throughout
such period.
6. Non-disclosure. Associate acknowledges his obligation not to disclose,
during or after employment, any trade secrets or proprietary and/or
confidential data or records of IMI or its affiliates or to utilize any
such information for private profit. Each of the parties hereto agrees
that such party will not release, publish, announce or otherwise make
available to the public in any manner whatsoever any information or
announcement regarding this Agreement or the transactions contemplated
hereby without the prior written consent of the other party hereto,
except as required by law or legal process, including, in the case of
IMI, filings with the Securities and Exchange Commission. Associate
agrees not to communicate with, including responding to questions or
inquiries presented by, the media, employees or investors of IMI, its
affiliates or any third party relating to the terms of this Agreement,
without first obtaining the prior written consent of IMI.
Notwithstanding the foregoing, Associate may make disclosure to his
attorneys and financial advisors of the existence and terms of this
Agreement provided that they agree to be bound by the provisions of
this Paragraph 6. Each party agrees not to make statements or take any
action to disparage, dissipate or negatively affect the reputation of
the other with employees, customers, suppliers, competitors, vendors,
stockholders or lenders of IMI, its affiliates or any third party.
2
3
7. Financial Planning/Tax Preparation. Through the Resignation Date,
Associate shall continue to be eligible to receive the benefits of the
financial planning program offered to IMI's senior executives. IMI
shall also provide Associate with federal and state income tax return
preparation assistance for the calendar year 1999 on the same terms as
offered to IMI's other senior executives. The costs associated with
both the financial planning program and the tax preparation assistance
shall be considered as imputed income in a manner consistent with the
treatment for other IMI senior executives.
8. Return of Property/Internet Access/Mail Forwarding. Associate
acknowledges his obligation to promptly return to IMI all property of
IMI in his possession including, without limitation, keys, SECUREID
card, credit cards, cell phones, pagers, computers, office equipment,
documents and files and instruction manuals on or before the
Resignation Date, or earlier if so requested by IMI. Notwithstanding
the foregoing, Associate shall be entitled to keep the following items
and their related accessories: Toshiba laptop computer, Palm Pilot
organizer, mobile phone, laser printer (home) and a Compaq personal
computer (home). The fair value of all such equipment shall be
considered imputed income to Associate. Such imputed income shall be
"grossed up" assuming a combined federal and state tax rate of 48.2%.
IMI shall maintain Associate's Internet access for a period of 30 days
after the Resignation Date. After the Resignation Date, IMI shall
forward all mail addressed to Associate to the most recent address
provided by Associate to IMI pursuant to Paragraph 20.
9. Associate's Obligation's. In consideration of the payments, benefits
and stock ownership rights to be received by Associate hereunder,
Associate and IMI have further agreed as follows:
a. Associate will not (i) directly or indirectly make known to any
person, firm, corporation, partnership or other entity, any list,
listing or other compilation or document, whether prepared or
maintained by Associate, IMI or any of IMI's affiliates, which contains
information that is confidential to IMI or any of its affiliates about
their customers ("IMI Customers"), including but not limited to names
and addresses, or (ii) at any time through the end of the Salary
Continuation Period, call on or solicit, or attempt to call on or
solicit, in either case with the intent to divert business or potential
business from IMI or any of its affiliates, any of the IMI Customers
with whom he has become acquainted during his employment with IMI or
any of its affiliates, either for his own benefit or for the benefit of
any other person, firm, corporation, partnership or other entity;
provided, however, that the provisions of this Paragraph 9.a shall not
apply to any activities by Associate in pursuit of business
opportunities in the third party fulfillment business that do not
violate Paragraph 9.c.
b. Through the end of the Salary Continuation Period, Associate will
not, and will use his best efforts not to permit any person, firm,
corporation, partnership or other entity of which he is an officer or
control person to, (i) knowingly solicit, entice, or persuade any
individual who is an associate of IMI or any of its affiliates
3
4
at any time during the Salary Continuation Period (each such
individual, an "IMI Associate") to leave the services of IMI or any of
its affiliates for any reason, or (ii) solicit for employment, hire, or
engage any present or future IMI Associate as an employee, independent
contractor or consultant; provided, however, that Associate shall not
be prohibited hereby from hiring, either himself or on behalf of his
employer, Xxxxx Xxxxxx and Xxxx Xxxxxxx or any associate approved in
advance by the Corporation's Chief Executive Officer, Worldwide Chief
Financial Officer or General Counsel.
c. Associate acknowledges that he has unique knowledge of IMI and its
affiliates and unique knowledge of the computer and software sales and
distribution industry. Based on his unique status, he agrees that
through the end of the Salary Continuation Period, he will not be
employed or hired as an employee or consultant by, or otherwise
directly or indirectly provide services for, any of Tech Data, Merisel,
Inacom, Pinacor, Globelle, Gates Arrow, CHS Electronics, Hallmark,
Xxxxxxxx Avnet, Daisytek, Azerti, Azlan, Northamber, Tech Pacific,
Synnex, Xxxx Micro, DSS and/or GE Capital Information Technology
Solutions-North America, Inc., and any subsidiary or affiliate of these
entities in a business or line of business conducted by any such entity
which competes with any line of business conducted by IMI or any of its
affiliates. Notwithstanding the foregoing, should Associate be employed
by an entity that is not a subsidiary or affiliate of one of these
entities at the time he commences such employment, but subsequently
becomes a subsidiary or affiliate of, or becomes merged into, one of
these entities on or before the end of the Salary Continuation Period,
he shall not be deemed to be in breach of the provisions of this
Paragraph 9.c due to such employment, provided that at the time he
commenced his employment there had been no public announcement of an
agreement pursuant to which his employer would become a subsidiary or
affiliate of, or merged into, one of these entities or discussions that
could lead to such an agreement and Associate had no knowledge of the
existence of any such agreement or discussions. Associate further
agrees that he will not own any interest in, provide financing to, be
connected with, or be a principal, partner or agent of any such
competitive distributor or aggregator; provided, he may own less than
1% of the outstanding shares of any such entity whose shares are traded
in the public market.
d. Provided that IMI is not in breach of its obligations under
Paragraphs 2, 3, 4, or 5 of this Agreement, and subject to Associate's
other commitments, upon request of IMI or any of its affiliates during
the Salary Continuation Period, Associate will make himself available
to provide reasonable assistance to IMI or any such affiliate and will
use reasonable efforts to arrange his commitments so as to make himself
available for such assistance on a basis which is consistent with the
requests of IMI or any affiliates. Such assistance may include
telephone conversations, correspondence, attendance and participation
in meetings, transfer of knowledge or information regarding operational
or other issues, litigation preparation and trials. During such period,
IMI shall reimburse Associate for any our-of-pocket expense he may
incur in connection with such assistance in accordance with IMI's
reimbursement policies. After the end of the Salary Continuation
Period, Associate shall use reasonable efforts, subject to his other
4
5
commitments, to continue to provide such assistance as requested by IMI
and, in such event, shall be compensated at a rate per day (minimum
charge, one-half day) commensurate with the daily rate he was earning
based on his current base salary immediately prior to the Resignation
Date.
The running of the periods prescribed in this Paragraph 9 shall be
tolled and suspended by the length of time Associate works in
circumstances that a court of competent jurisdiction subsequently finds
to violate the terms of this Agreement.
10. Rights in Event of Breach. In the event of Associate's breach of this
Agreement (excluding breach of this Agreement due to death or total
disability and provided that in the event of a breach of Paragraph 9.c
or 9.d, such breach shall have continued for 15 days after the sooner
of Associate's discovery thereof or receipt of notice from IMI
thereof), in addition to all other rights and remedies to which IMI may
be entitled by law or in equity, IMI shall have no obligation to make
any further payments hereunder or permit any vested stock options to be
exercised, and may purchase any remaining Restricted Shares under the
Purchased Shares Acquisition Agreement and cause any remaining
Restricted Stock under the Restricted Stock Acquisition Agreement to be
forfeited. If Ingram exercises such right, Associate's obligations
under Paragraph 9.c and 9.d shall terminate..
11. Injunctive Relief. Irreparable harm will be presumed if Associate
breaches any covenant in this Agreement and damages may be very
difficult to ascertain. In light of these facts, Associate agrees that
any court of competent jurisdiction should immediately enjoin any
breach of this Agreement upon the request of IMI, and Associate
specifically releases IMI from the requirement of posting any bond in
connection with temporary or interlocutory injunctive relief, to the
extent permitted by law. The granting of injunctive relief by any court
shall not limit IMI's right to recover any amounts previously paid to
Associate under this Agreement or any damages incurred by it due to a
breach of this Agreement by Associate.
12. Release by Associate. Effective immediately, Associate hereby fully,
finally and irrevocably discharges IMI and each of its affiliates, and
each present, former and future director, officer and employee of IMI
and its affiliates and any parent, subsidiary, affiliate or shareholder
thereof (the "IMI Released Parties") from all manner of claims,
actions, causes of action or suits, in law or in equity, which
Associate has or may have, known or unknown, against the IMI Released
Parties, or any of them, by reason of any matter, cause or thing
whatsoever, including any action arising from or during his employment
with IMI and any of its affiliates, resulting from or relating to his
employment or the termination thereof, or relating to his status as an
officer, director, employee or participant in any employee benefit plan
of IMI or any of its affiliates; provided, however, that the foregoing
(a) is not intended to be, and shall not constitute, a release of any
right of Associate to obtain indemnification and reimbursement of
expenses from IMI or any of its affiliates with respect to claims based
upon or arising from alleged or actual acts or omissions of Associate
as an officer, director or employee of IMI or any of its affiliates to
the fullest extent provided by law or in any applicable
5
6
certificate of incorporation, bylaw or contract, and (b) shall not
release IMI from liability for violations of this Agreement after the
date hereof. From and after the date hereof, Associate agrees and
covenants not to xxx, or threaten suit against, or make any claim
against, any IMI Released Party for or alleging any of the claims,
actions, causes of action or suits described above. Associate
acknowledges that this release includes, but is not limited to, all
claims arising under federal, state, local or foreign laws prohibiting
employer discrimination and all claims growing out of any legal
restrictions on the right of IMI or any of its affiliates to terminate
its employees. Associate also specifically waives and releases all
claims of employment discrimination and all rights available to him
under Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act (ADEA), as well as all claims or
rights under the California Fair Employment and Housing Act, or any
similar law of any jurisdiction. Associate specifically agrees that he
will not institute litigation in any forum, including any filing with
any regulatory commission or agency, against any IMI Released Party
based on any allegations or circumstances that are in any way connected
with his employment or the termination of his employment with Ingram
and its affiliates.
13. Release by Ingram. Effective immediately, IMI, on behalf of itself and
its affiliates, releases and discharges Associate, his heirs, personal
representatives, successors and assigns from all manner of claims,
actions, causes of action or suits, in law or in equity, which any of
them has or may have against Associate by reason of any matter, cause
or thing whatsoever, including any action arising from or during his
employment with IMI or any of its affiliates, resulting from the
termination from such employment, or related to his status as an
optionholder, officer, director, employee or participant in any
employee benefit plan of IMI or any of its affiliates; provided,
however, that the foregoing shall not include a release of Associate
from liability to IMI or any of its affiliates for any claims based
upon or arising from his violations of law, this Agreement, or his
fiduciary duty of loyalty, as determined under Delaware law, to IMI and
its affiliates. From and after the date hereof, IMI agrees and
covenants not to xxx, or threaten suit against, or make any claim
against Associate for or alleging any of the claims, actions, causes of
action or suits as discussed above. From and after the date hereof, IMI
shall not take any action to limit the coverage to which Associate
would otherwise be entitled under any directors or officers liability
insurance policy which Ingram shall elect to maintain; provided,
however, that nothing herein shall require IMI to maintain any such
policy.
14. Waiver. Each of IMI and Associate hereby expressly waives and
relinquishes all rights and benefits under Section 1542 of the
California Civil Code which provides:
"Section 1542. General Release--Claim extinguished. A general
release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially
affected his settlement with the debtor."
6
7
Each of IMI and Associate understands and acknowledges that the
significance and consequences of this waiver of Section 1542 of the
Civil Code is that even if IMI or Associate, as the case may be, should
eventually suffer damages arising out of Associate's employment
relationship with IMI and its affiliates, or termination of such
employment, such party will not be permitted to make any claim for
those damages except as expressly permitted by this Agreement.
Furthermore, each of IMI and Associate acknowledges that such party
intends these consequences even as to claims for injuries and/or
damages that may exist as of the date of this Agreement but which
Associate or IMI, as the case may be, does not know exist, and which,
if known, would materially affect such party's decision to execute this
Agreement.
15. Sole Remedy. Associate agrees that, in the event IMI breaches any
provision of this Agreement, his sole remedy for such breach shall be
enforcement of the terms of this Agreement, or in the case of a breach
of Paragraph 4, 5 or 6 hereof, at Associate's election, recovery of any
provable damages as a result of such breach.
16. Right to Revoke. Associate acknowledges that he has the right to seek
legal counsel, and was advised to seek such counsel, before entering
into this Agreement. Associate shall have 45 days in which to execute
and return this Agreement to IMI. Associate further understands he has
the right to revoke this Agreement at any time within seven days of
execution of this Agreement by written notice sent by certified mail
and received by IMI prior to expiration of the seventh day, whereupon
this Agreement shall be null and void as of its inception. In the event
that Associate does not execute and return this Agreement within such
45 day period, the offer contained in this Agreement shall be revoked
and IMI shall not be bound by any terms or conditions contained herein.
IMI shall not be obligated to perform any of its obligations hereunder
until such time as this Agreement has been finally accepted by
Associate and his right to revoke his acceptance has lapsed.
17. Attorneys' Fees. In the event that either party hereto files suit to
enforce or interpret the provisions of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees and costs
incurred therewith.
18. Definition of Affiliate. An "affiliate" of IMI for purposes of this
Agreement shall include any corporation or business entity in which IMI
owns, directly or indirectly, at least 15% of the outstanding equity
interest.
19. Enforceability. If any provision of this Agreement shall be held
invalid or unenforceable, the remainder of this Agreement shall
nevertheless remain in full force and effect. If any provision is held
invalid or unenforceable with respect to a particular circumstance, it
shall nevertheless remain in full force and effect in all other
circumstances.
20. Notices. Any notices, requests, demands and other communications
required or permitted to be given or made hereunder shall be in writing
and shall be deemed to have been duly given (a) on the date delivered
if personally delivered, (b) on
7
8
the third day after deposit in the U.S. mail or with a reputable air
courier service, properly addressed with postage or charges prepaid, or
(c) on the date transmitted by telefax if the sender receives
electronic confirmation of receipt of such telefax, to the address or
telefax number of IMI or Associate, as the case may be, set forth on
the signature page of this Agreement, or such other superseding address
as provided by one party to the other in the manner provided in this
Paragraph 20.
21. Governing Law/Venue. This Agreement shall be governed by California law
and applicable Federal law, without regard to the choice or conflict of
law provisions thereof. The venue for any lawsuit arising as a result
of this Agreement shall be Santa Ana, California.
22. No Admission. Associate understands and agrees that the making of the
promises contained in this Agreement is in no way an admission that IMI
violated any Federal or state laws or regulations, or violated any
other obligation it has or may have had to Associate. Rather, IMI is
making these promises solely in exchange for Associate's promises to
IMI.
23. Paragraph Titles. The paragraph titles used in this Agreement are for
convenience only and do not define or limit the contents of any
paragraph.
24. Successors and Assigns. This Agreement shall be binding upon, and shall
inure to the benefit of, the heirs of Associate and the successors and
assigns of IMI.
25. Entire Agreement. Except as specifically referenced herein, this
instrument contains and accurately recites the complete and entire
agreement among the parties, and it expressly terminates, cancels, and
supersedes any and all prior agreements or understandings, if any,
among the parties. This Agreement may not be modified except in writing
signed by the parties.
8
9
Executed and delivered to Associate by IMI on October ____, 1999, and
executed by Associate on the date set below.
"Associate"
Date:
-------------------------- -----------------------------------
Xxxxxxx X. Xxxxx
18 Sunpeak
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
"IMI"
XXXXXX MICRO INC.
a Delaware corporation
Date:
-------------------------- -----------------------------------
Xxxxx X. Xxxxx, Chairman and CEO
Xxxxxx Micro Inc.
0000 X. Xx. Xxxxxx Xxxxx
Xxxxx Xxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
9
