January 28, 1998
Xx. Xxxx Xxxxxx
00 Xxxxx Xxxxx Xxxx
Xxxxxx, XX 00000
Dear Xxxx:
This agreement will serve to confirm the terms and conditions under which
we will accept your resignation as Executive Vice President and General Manager
of the U.S. Business Unit.
1. Resignations. Effective April 30, 1998 or such earlier date as shall be
mutually agreed (hereinafter the "Resignation Date") you will resign from
employment as Executive Vice President and General Manager of the U.S. Business
Unit 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. Any employment agreement with the Company, whether
written or oral, except for the agreement set forth herein is terminated as of
the Resignation Date. Through the Resignation Date you shall be paid your
current salary and receive all benefits generally provided to all employees of
the Company and all of the Company's employment practices will be applicable to
you. You shall be entitled to receive your guaranteed bonus of Fifty Thousand
Dollars ($50,000.00) for fiscal year 1997. You shall also be entitled to receive
any other 1997 bonus (less the guaranteed amount) if the total 1997 bonus amount
to which you would be entitled exceeds the guaranteed amount. It is confirmed
that your entitlement to 1997 bonus compensation, except for the guaranteed
bonus which will be paid in any event, will be based on the achievement of
defined goals by the Company's U.S. (and not worldwide) operations. Your 1997
bonus will be paid on or about February 28, 1998. You shall also be entitled to
receive an agreed bonus of Fifty Thousand Dollars ($50,000.00) for the period
from January 1, 1998 through the Resignation Date which will be paid on or about
April 30, 1998. Except as described herein, you shall not be eligible to receive
any other 1997 or 1998 bonus notwithstanding the possibility that other
comparably compensated employees might receive bonuses attributable to said
years. As of the Resignation Date you will be entitled to a lump sum payment
equal to the sum of your base salary for nine months of One Hundred and Eighty
Seven Thousand Five Hundred Dollars ($187,500.00) and salary for 10 days of
accrued unused vacation time of Nine Thousand Six Hundred and Fifteen Dollars
and Thirty Eight Cents ($9,615.38). You shall also be entitled to reimbursement
of (i) reasonable relocation expenses of up to Forty Thousand Dollars
($40,000.00) if you accept a new position out of the area and such expenses are
not covered by your new employer; and (ii) actual legal fees incurred by you in
connection with this agreement of up to Five Hundred Dollars ($500.00). Payments
described in this paragraph shall be reduced by deducting all required
withholding amounts.
3. COBRA Benefits. For a period of nine (9) months subsequent to the Resignation
Date the Company agrees to pay directly or reimburse you for COBRA payments
required to maintain your current health insurance coverage through the Company.
You acknowledge that the Company will have no obligation to pay directly or
reimburse you for any COBRA payments attributable to any period of time after
you are eligible to receive health insurance benefits with any new employer nor,
in any event, for any payments due more than nine (9) months subsequent to the
Resignation Date.
4. Stock Options. Schedule A sets forth stock options granted to you which as of
the date of this agreement have not yet vested. We confirm that 20,000 of the
stock options will vest on April 7, 1998. We further confirm that an additional
20,000 options, of the total 60,000 options which would have vested on April 7,
1999, will not be caused to be forfeited and deem these options vested as of the
Resignation Date. The total of said 40,000 options which will have vested by the
Resignation Date as described on Schedule A may be exercised by you on or prior
to April 30, 1999. Schedule A 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.
You also agree that any such stock options that you retain pursuant to this
agreement will continue to be subject to the terms and conditions of the
agreement under which the applicable stock options were granted to you unless
the terms of such agreement conflicts with this agreement in which case this
agreement shall prevail.
5. Indemnification. We confirm that the Indemnification Agreement between you
and the Company dated as of April 7, 1997 is in full force and effect.
6. 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 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 5 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 Resignation Date, the releases provided for in
Paragraph 6(a) will, without further action, be automatically extended to the
Resignation Date (except the same will not cover any breach of this agreement by
the Company).
(c) The releases under this Paragraph 6 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 may use as
much of the 21-day period as you wish prior to signing it.
7. Covenant Not to Compete. You hereby covenant and agree that until the
Resignation Date 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
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 (a) 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 (b) 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 two percent (2%) 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 any business or activity conducted by the Company as of the date of cessation
of your employment with the Company, regardless of where such Competitive
Business is located.
8. Covenant Not to Solicit Employees. Unless you have obtained the prior written
consent of the Company, you hereby covenant and agree that until the expiration
of two years from the Resignation Date, you shall not, for or on behalf of any
party, directly or indirectly, as owner, officer, director, stockholder,
partner, associate, consultant, manager, advisor, representative, employee,
agent creditor or otherwise, attempt to solicit for employment any person who
has been an employee of the Company at any time or times during your employment
by Company.
9. 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, 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.
10. Continued Services. Through the Resignation Date you will continue to have
user access to the Company's voice mail system and you shall be entitled to
receive up to 2 hours per month of administrative support from an administrative
assistant employed by the Company.
11. 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, heirs and assigns. Any payments due to you under
this agreement shall be paid to your estate in the event that you should die
before said payments are made.
12. 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.
13. 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.
14. Entire Agreement. This agreement reflects the complete 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.
15. 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.
16. 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, after
prior written notice to the other party that disclosure is about to take place,
(i) to any governing authority if disclosure is required to comply with
applicable law; or (ii) to either party's attorneys, accountants or advisors
with whom a fiduciary relationship has been established. In addition, the
Company shall be under no obligation to give you notice of disclosure if the
disclosure is required in connection with reporting requirements imposed on the
Company as a public company. Both parties have read this agreement, have had the
opportunity to consult with counsel, fully understand the agreement's terms and
conditions, and enter this agreement freely, voluntarily and intending to be
legally bound hereby.
17. Enforcement of Agreement; Liquidated Damages. You hereby acknowledge and
agree that your obligations under Paragraphs 7, 8 and 9 are a material part of
the consideration for this agreement and for the payments from the Company to
you under Paragraph 2; 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 7, 8 and 9, the Company will be entitled to receive
as liquidated damages for such failure recovery of any amounts paid to you under
this agreement, 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. Non-Binding Mediation. The parties agree to submit any and all disputes and
or claims under this agreement to non-binding mediation before a mutually
agreeable mediator at Mediation Consultants in New Haven, Connecticut.
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: /s/ Xxxxx Xxxxxxx
-------------------------
Name: Xxxxx Xxxxxxx
Title: President and Chief Executive Officer
Agreed to and accepted on the date first above written:
/s/ Xxxx Xxxxxx
-------------------------
Xxxx Xxxxxx
Date Signed: January 30, 1998
SCHEDULE A TO
LETTER AGREEMENT WITH XXXX XXXXXX
DATED AS OF JANUARY 8, 1998
Stock options already granted to you which shall vest on April 7, 1998 and be
available for exercise pursuant to Paragraph 4 on or prior to April 30, 1999.
20,000 options at an exercise price of $10.75 per share granted January 10, 1997
per agreement dated as of January 10, 1997.
Stock options already granted to you, not vested as of the date hereof, which
shall be deemed vested as of April 30, 1998 and available for exercise pursuant
to Paragraph 4 on or prior to April 30, 1999.
20,000 options at an exercise price of $10.75 per share granted January 10, 1997
per agreement dated as of January 10, 1997 which options would have vested as of
April 7, 1999.
Stock options deemed forfeited and of no further force or effect pursuant to
Paragraph 4.
40,000 options at an exercise price of $10.75 per share granted January 10, 1997
per agreement dated as of January 10, 1997 which options would have vested as of
April 7, 1999.
40,000 options at an exercise price of $10.75 per share granted January 10, 1997
per agreement dated as of January 10, 1997 which options would have vested as of
April 7, 2000.
40,000 options at an exercise price of $10.75 per share granted January 10, 1997
per agreement dated as of January 10, 1997 which options would have vested as of
April 7, 2001.
40,000 options at an exercise price of $10.75 per share granted January 10, 1997
per agreement dated as of January 10, 1997 which options would have vested as of
April 7, 2002.
