January 20, 1997
Xx. Xxxxxx X. Xxxxxx
0 Xxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
Dear Xxx:
This agreement will serve to confirm the terms and conditions under which
we will be accepting your resignation as Executive Vice President and Chief
Operating Officer.
1. Resignations. Effective June 30, 1997 or such earlier date as shall be
mutually agreed (hereinafter the "Termination Date") you will be resigning as
Executive Vice President and Chief Operating Officer and member of the Board and
any other officerships or directorships of Micro Warehouse, Inc. or any of its
affiliates, sister companies or subsidiaries (hereinafter "the Company").
2. Employment Agreement. Your Employment Agreement dated as of January 1,
1995 will be deemed terminated as of the Termination Date. You shall be eligible
to receive any 1996 or, on a pro-rata basis through the Termination Date, any
1997 bonus available to you pursuant to your Employment Agreement or otherwise.
Through the Termination Date you shall be paid your current salary and receive
all benefits provided by your Employment Agreement. All of the Company's
employment policies will be applicable to you. We acknowledge that you are an
employee of Micro Warehouse, Inc. of Ohio and we shall continue through the
Termination Date to reimburse you for the difference between the taxes withheld
from your salary and the amount which would have been withheld had you been paid
as an employee of Micro Warehouse, Inc.
3. Benefits. For a period of twelve (12) months subsequent to the
Termination Date you shall continue to receive
all benefits provided to you as of said date including but not limited to
payment of the premiums attributable to the cost of your current life and
disability insurance policies. Subsequent to the Termination Date you shall not
be reimbursed for any Blue Cross/Blue Shield premiums currently being paid by
the Company.
4. Duties. In addition to your regular duties as Executive Vice President
and Chief Operating Officer you shall also assist in the transition arising out
of the Company's hiring of any person to assume all or any portion of your
responsibilities. You shall continue to report to Xxxx Xxxx, President and Chief
Executive Officer.
5. Stock Options. Schedule B-1 sets forth, inter alia, stock options
already granted to you which may be exercised by you on or prior to December 31,
1998. Schedule B-1 also sets forth stock options granted to you which as of the
date of this agreement have not yet vested. We confirm that we will not forfeit
these options and deem these options vested as of the date indicated on Schedule
B-1 and that they may be exercised by you on or prior to December 31, 1998. Said
Schedule B-1 also sets forth other stock options granted to you which are deemed
forfeited and of no further force and effect. You will not be eligible to
receive any further stock options or otherwise participate in any deferred
compensation programs notwithstanding the possibility that the Company might
provide the same participation to other comparably compensated employees.
6. Repayment of Incentive Compensation. You acknowledge that you have
received incentive compensation attributable to the 1995 year in the gross
amount of $612,000.00. You shall be required to repay to us the amount of
$398,535.68 (representing the net amount paid to you after withholding of
requisite taxes from the same) on or prior to December 31, 1996. It is agreed
that you shall be permitted to repay the same by delivering to the Company a
full recourse promissory note in the form of Exhibit A.
7. Indemnification. We confirm that the Indemnification
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Agreement between you and the Company dated as of January 25, 1994 is in full
force and effect.
8. Release.
(a) As consideration for the Company to enter into this agreement
and as consideration for the covenants contained herein, subject to the
immediately following sentence, you irrevocably and unconditionally release,
remit, acquit and forever discharge the Company, its officers, directors,
shareholders, agents, employees, representatives, attorneys, parents, divisions,
subsidiaries, affiliates, related companies or entities, successors and assigns
and the officers, executives, directors, shareholders, agents and employees of
any and all of the Company's parents, divisions, subsidiaries, affiliates,
related companies or entities, successors or entities (separately or
collectively, the "Released Parties"), jointly and individually, from any and
all claims, charges, complaints, expenses and causes of action of any nature or
kind whatsoever, known or unknown, which you, your heirs, successors or assigns
have or may have against the Released Parties based upon, related to or arising
out of your employment with the Company through the date hereof, including, but
not limited to, claims, charges, complaints, liabilities, losses, obligations,
demands, damages, costs, expenses and causes of action relating to the terms,
conditions, commencement, duration or termination of your employment, or claims
of discrimination under any federal, state or local law, rule, regulation or
common law, whether such claims are past or present, whether they arise from
equity, common law or statute, and whether they arise from labor laws or
discrimination laws, such as the Age Discrimination in Employment Act, as
amended, Title VII of the Civil Rights Act of 1964, 42 U.S.C. ss.1981, the Equal
Pay Act, as amended, the Americans with Disabilities Act, or any other federal,
state or local law, rule or regulation. This release is intended to cover all
possible relief, including, but not limited to, reinstatement, wages, back pay,
front pay, vacation pay, bonuses or incentive compensation, supplemental or
other retirement benefits, perquisites, compensatory damages, punitive damages,
damages for
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pain or suffering, and attorneys' fees, provided, however, that nothing in this
agreement will limit or otherwise affect any right you may have to
indemnification under the Company's Articles of Incorporation, By Laws or any
insurance policy in effect as of the termination of your employment with the
Company or pursuant to Article 6 hereof. In addition, if the Company complies
with its obligations hereunder, you agree you will not be entitled to any
benefit from any claim or proceeding filed by you or on your behalf with any
agency or court which is within the scope of this agreement or which goes to the
validity of any provision of this agreement.
(b) Effective as of the Termination Date, the releases provided for
in Paragraph 8(a) will, without further action, be automatically extended to the
Termination Date (except the same will not cover any breach of this agreement by
the Company).
(c) The releases under this Paragraph 8 are intended to cover all
possible rights, obligations and liabilities, including any such rights,
obligations or liabilities based upon, relating to or arising from any claim
which goes to the validity of any provision of this agreement, other than a
claim for any breach of this agreement. (d) You acknowledge that you have been
given a period of at least 21 days to review and consider this agreement before
signing it, and that you understand that you may use as much of the 21-day
period as you wish prior to signing.
9. Covenant Not to Compete.
(a) In consideration for the Company's undertakings described in
this agreement and the payments set forth in sub-paragraph (b) hereinbelow, you
hereby covenant and agree that for a period of eighteen (18) months subsequent
to the Termination Date (the "Non-Compete Period"), you shall not, directly or
indirectly, own, operate, manage, join, control, participate in the ownership,
management, operation or control of, or be paid or employed by, or acquire any
securities of, or otherwise become
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associated with or provide assistance to, as an employee, consultant, director,
officer, shareholder, partner, agent, associate, principal, representative or in
any other capacity, any business entity or activity which is directly or
indirectly a "Competitive Business" (as hereinafter defined); provided, however,
that the foregoing shall not prevent you from (i) performing services for a
Competitive Business if such Competitive Business is also engaged in other lines
of business and if your services are restricted to employment in such other
lines of business; or (ii) acquiring the securities of or an interest in any
Competitive Business, provided such ownership of securities or interests
represents at the time of such acquisition, but including any previously held
ownership interests, less than one percent (1%) of any class or type of
securities of, or interest in, such Business. The term "Competitive Business"
shall mean and include any business or activity that is substantially the same
as, or related to any business or activity conducted by the Company, regardless
of where such Competitive Business is located.
(b) In partial consideration for the Covenant not to Compete in
sub-paragraph 9(a) hereinabove the Company shall pay you the gross amount of
Twenty Thousand Dollars ($20,000) per month for eighteen (18) months (less any
taxes required to be withheld), which amount shall be paid on or about the
fifteenth (15th) of each month.
10. Confidential Information. You acknowledge that the Company would be
damaged if your knowledge with respect to the business of the Company was
disclosed to or utilized by parties other than the Company. Accordingly, you
covenant and agree that you will not disclose any presently known or hereafter
acquired confidential or proprietary information of the Company or its business
to any person, firm, corporation or other entity. For the purposes of this
paragraph, the term "confidential or proprietary information" shall mean all
information which is currently known to or hereafter acquired by you and relates
to such matters as budget and forecasts, customer mailing lists, data base
management techniques, pricing and credit techniques,
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marketing techniques, research and development activities, sources of product,
and other confidential or restricted information which is not in the public
domain. Confidential or proprietary information shall not be deemed to include
information released generally to the public by the Company or others,
information required by law to be disclosed or information learned by you from
third parties without restrictions on disclosure provided the same would not, if
released, damage the Company.
11. Covenant Not to Solicit. Unless you receive the prior written consent of
the Company you hereby covenant and agree that, from the date hereof until the
expiration on the Non-Compete Period, you shall not, for or on behalf of a
Competitive Business, directly or indirectly, as owner, officer, director,
stockholder, partner, associate, consultant, manager, advisor, representative,
employee, agent, creditor or otherwise, attempt to solicit or in any other way
disturb or service any person, firm or corporation that has been a customer
account of the Company at any time or times prior to the termination of the
Period of Employment, whether or not you at any time had any direct or indirect
account responsibility for, or contact with, such customer account.
12. Assignment. This agreement is not assignable, except that the Company
may assign it to any successor of substantially all of the Company's business or
assets. This agreement will be binding upon, and inure to the benefit of, the
parties and their successors and assigns.
13. Partial Invalidity. If any provision of this agreement is held to be
invalid, void or unenforceable, the remaining provisions shall continue in full
force without being impaired or invalidated in any way.
14. Governing Law. This agreement will be governed by the laws of the
State of Connecticut, without giving effect to the conflict of laws principles
thereof.
15. Entire Agreement. This agreement reflects the complete
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agreement between the parties with respect to the subject matter hereof, and
there are no written or oral understandings, promises or agreements directly or
indirectly related to this letter agreement or the subject matter hereof that
are not incorporated herein.
16. Revocation Period. For a period of seven (7) calendar days following
your execution of this agreement, you may revoke this agreement. This agreement
will not become effective or enforceable to release any claims or rights which
you may have under the Age Discrimination in Employment Act until this
revocation period has expired. This agreement also will not become effective or
enforceable with respect to any obligations that the Company may have hereunder
until this revocation period has expired. You acknowledge and agree that if the
Company satisfies any obligations hereunder that otherwise would have arisen
during this revocation period as soon as practicable after the revocation period
has expired, such action will constitute timely satisfaction of such obligations
hereunder. You also acknowledge and agree that the benefits to you of the
covenants contained herein, including, but not limited to, payments hereunder,
are provided to you in exchange for the promises in this agreement, are not
normally available under Company policy or practice to employees whose
employment is terminated and provide for the payments of amounts to which you
would not otherwise be entitled.
17. Confidentiality and Intent to be Bound. The terms and conditions of
this agreement are confidential and must not be disclosed to any person other
than those who must perform tasks to effect the agreement. Notwithstanding the
foregoing, the Company and you may disclose any term of this agreement to comply
with applicable law. In addition, nothing contained herein shall be construed to
prohibit either party from disclosing the terms and conditions of this agreement
to its attorneys, accountants or bookkeepers or to any other person with whom a
fiduciary relationship has been established. Both parties have read this
agreement, have had the opportunity to consult with counsel, fully
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understand the agreement's terms and conditions, and enter this agreement
freely, voluntarily and intending to be legally bound hereby.
18. Enforcement of Agreement; Liquidated Damages. You hereby acknowledge
and agree that your obligations under Paragraphs 9, 10 and 11 are a material
part of the consideration for this agreement and for the payments from the
Company to you under Paragraph 9(b), that your failure to satisfy any of such
obligations could cause irreparable harm to the Company and that the damages
caused by such failure would be uncertain and difficult to measure. You further
acknowledge and agree that the Company may seek injunctive relief to prevent
your failure or further failure to satisfy any of such obligations, in addition
to all other rights, remedies and claims that it may have under this agreement,
at law or in equity. You also acknowledge and agree that, if you fail to satisfy
any of your obligations under Paragraphs 9, 10 and 11, the Company will be
entitled to receive as liquidated damages for such failure recovery of any
amounts paid to you under this agreement after such failure, any amounts that
you may have earned or received as a result of or in connection with such
failure, and all costs and expenses, including fees and disbursements of counsel
and other costs thereof, incurred by the Company in connection with the
enforcement of such obligations.
18. No Waiver. No failure on the part of either party at any time to
require the performance by the other party of any term hereof shall be taken or
held to be a waiver of such term or in any way affect such party's right to
enforce such term, and no waiver on the part of either party of any term hereof
shall be taken or held to be a waiver of any other term hereof or the breach
thereof.
19. COBRA Benefits. You acknowledge that the Company will have no
obligation to pay directly or reimburse you for any COBRA payments due after 12
months subsequent to the Termination Date.
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If you agree to and accept the terms and conditions of this agreement,
please sign both copies hereof in the space provided below, retain one copy for
your records and return the other copy to the undersigned.
Very truly yours,
MICRO WAREHOUSE, INC.
By: ________________________________
Name: Xxxxxxx X. Xxxx, Xx.
Title: President & Chief Executive
Officer
Agreed to and accepted on
the date first above written:
______________________________
Xxxxxx X. Xxxxxx
Date Signed: January 20, 1997
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SCHEDULE B-1 TO
LETTER AGREEMENT WITH XXXXXX X. XXXXXX
DATED AS OF JANUARY 20, 1997
Stock options already granted to you and already vested which may be exercised
pursuant to Paragraph 5 on or prior to December 31, 1998:
1. 18,000 options @ $11.38 granted on 6/21/93 per agreement dated November
12, 1993 (copy attached).
2. 10,729 options @ $30.125 granted on 1/19/95 per agreement dated February
6, 1995 (copy attached).
Stock options already granted to you, not vested as of 12/13/96, which shall be
deemed vested as of the dates indicated and available for exercise pursuant to
Paragraph 5 on or prior to December 31, 1998:
1. 17,500 options @ $32.00 granted 1/19/96 per agreement dated February 8,
1996 vesting January 19, 1997 (copy attached).
2. 10,000 options @ $11.38 granted on 6/21/93 per agreement dated November
12, 1993 vesting June 21, 1997.
Stock Options deemed forfeited pursuant to Paragraph 5:
1. 17,500 options @ $32.000 granted 1/19/96 per agreement dated February 8,
1996 vesting January 19, 1998.
2. 12,000 options @ $11.38 granted on 6/21/93 per agreement dated November
12, 1993 vesting June 21, 1998.
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