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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
BY AND BETWEEN
MICROAGE, INC.
AND
XXXX X. XXXXXXX
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TABLE OF CONTENTS
ARTICLE I--DUTIES AND TERM............................................................. 1
1.1 Employment........................................................... 1
1.2 Position and Responsibilities........................................ 1
1.3 Term................................................................. 1
1.4 Location............................................................. 1
ARTICLE II--COMPENSATION............................................................... 2
2.1 Base Salary.......................................................... 2
2.2 Bonus Payments....................................................... 2
2.3 Stock Options........................................................ 2
2.4 Additional Benefits.................................................. 2
ARTICLE III--TERMINATION OF EMPLOYMENT................................................. 4
3.1 Death or Retirement of Executive..................................... 4
3.2 By Executive......................................................... 4
3.3 By Company........................................................... 4
ARTICLE IV--COMPENSATION UPON TERMINATION OF EMPLOYMENT................................ 4
4.1 Upon Termination for Death or Disability............................. 4
4.2 Upon Termination by Company for Cause or by Executive Without
Good Reason.......................................................... 5
4.3 Upon Termination by the Company Without Cause or by Executive
for Good Reason...................................................... 6
ARTICLE V--RESTRICTIVE COVENANTS....................................................... 7
5.1 Confidentiality...................................................... 7
5.2 Competition.......................................................... 8
5.3 Non-Disparagement.................................................... 9
5.4 Remedies............................................................. 9
ARTICLE VI--MISCELLANEOUS.............................................................. 10
6.1 Definitions.......................................................... 10
6.2 Key Man Insurance.................................................... 12
6.3 Mitigation of Damages; No Set-Off; Dispute Resolution ............... 12
6.4 Successors; Binding Agreement........................................ 13
6.5 Modification; No Waiver.............................................. 13
6.6 Severability......................................................... 13
6.7 Notices.............................................................. 14
6.8 Assignment........................................................... 14
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6.9 Entire Understanding................................................. 14
6.10 Executive's Representations.......................................... 14
6.11 Liability of Company with Respect to Insurance Policy ............... 14
6.12 Governing Law........................................................ 15
EXHIBIT A--DISPUTE RESOLUTION PROCEDURES
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") made and entered into as of
July 1, 1994, by and between MICROAGE, INC., a Delaware corporation (the
"Company"), and XXXX X. XXXXXXX ("Executive").
ARTICLE I
DUTIES AND TERM
1.1 Employment. In consideration of their mutual covenants and other
good and valuable consideration, the receipt, adequacy and sufficiency of which
is hereby acknowledged, the Company agrees to hire Executive, and Executive
agrees to remain in the employ of the Company, upon the terms and conditions
herein provided.
1.2 Position and Responsibilities.
(a) Executive shall serve as Vice President of Operations and
President of MicroAge Product Services (or in a capacity and with a title of at
least substantially equivalent quality). Executive agrees to perform services
not inconsistent with his position as shall from time to time be assigned to him
by the Chief Executive Officer or President of the Company.
(b) Executive further agrees to serve, if elected, as a director
of the Company and as an officer or director of any subsidiary or affiliate of
the Company.
(c) During the period of his employment hereunder, Executive
shall devote substantially all of his business time, attention, skill and
efforts to the faithful performance of his duties hereunder.
1.3 Term. The term of Executive's employment under this Agreement
shall commence on the date first above written and shall continue, unless sooner
terminated, until June 30, 1996.
1.4 Location. During the period of his employment under this
Agreement, Executive shall not be required, except with his prior written
consent, to relocate his principal place of employment outside Maricopa County,
Arizona. Required travel on the Company's business shall not be deemed a
relocation so long as Executive is not required to provide his services
hereunder outside of Maricopa County, Arizona, for more than fifty (50%) percent
of his working days during any consecutive six (6) month period.
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ARTICLE II
COMPENSATION
For all services rendered by Executive in any capacity during his
employment under this Agreement, including, without limitation, services as a
director, officer or member of any committee of the Board of the Company or of
the board of directors of any subsidiary or affiliate of the Company, the
Company shall compensate Executive as follows:
2.1 Base Salary. The Company shall pay to Executive an annual base
salary of not less that $165,000 (the "Base Salary") during the term hereof;
provided, however, that in the event the Company institutes a salary reduction
program which affects all exempt employees (as defined by standard Company
policies in compliance with the Fair Labor Standards Act) by the same
percentage, then Executive's Base Salary may be reduced by such percentage (and
the term "Base Salary" as used in this Agreement shall refer to Base Salary as
so adjusted). Executive's Base Salary shall be paid in equal semi-monthly
installments. The Base Salary shall be reviewed annually by the Board or a
committee designated by the Board and the Board or such committee may, in its
discretion, increase the Base Salary.
2.2 Bonus Payment. During the period of Executive's employment under
this Agreement, Executive shall be entitled to bonus payments, if any shall be
due, pursuant to the Executive Bonus Plan which has been established by
resolution of the Board for fiscal year 1994 (the "1994 Executive Bonus Plan").
The Company shall use all reasonable efforts to cause the Board or a committee
thereof to establish in each fiscal year during the term hereof an executive
bonus plan that is similar to the 1994 Executive Bonus Plan in providing for
incentive compensation to Executive based on a formula related to the Company's
profits during such fiscal year. Any bonus under the 1994 Executive Bonus Plan
or any such subsequent plan is referred to herein as the "Annual Incentive
Bonus".
2.3 Stock Options. The Company shall use all reasonable efforts to
establish and maintain one or more stock option plans in which Executive shall
be entitled to participate to the same extent as other Designated Members of the
Executive Council (as such term is defined in Section 6.1 hereof). The terms and
conditions of such plan(s) shall be determined and administered by the Board or
a committee thereof.
2.4 Additional Benefits. Executive shall be entitled to participate
in all employee benefit and welfare programs, plans and arrangements (including,
without limitation, pension, profit-sharing, supplemental pension and other
retirement plans, insurance, hospitalization, medical and group disability
benefits, travel or accident insurance plans) and to receive fringe benefits,
such as dues and fees of professional organizations and associations, which are
from time to time available to the Company's
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executive personnel; provided, however, there shall be no duplication of
termination or severance benefits, and to the extent that such benefits are
specifically provided by the Company to Executive under other provisions of this
Agreement, the benefits available under the foregoing plans and programs shall
be reduced by any benefit amounts paid under such other provisions. Executive
shall during the period of his employment hereunder continue to be provided with
benefits at a level which shall in no event be less in any material respect than
the benefits made available to Executive by the Company as of the date of this
Agreement. Notwithstanding the foregoing, the Company may terminate or reduce
benefits under any benefit plans and programs to the extent such reductions
apply uniformly to Designated Members of the Executive Council entitled to
participate therein, and Executive's benefits shall be reduced or terminated
accordingly. Specifically, without limitation, Executive shall receive the
following benefits:
(a) Death Benefit. Within 30 days of the date of execution of
this Agreement, the Company shall acquire a $500,000 term insurance policy on
Executive's life. Executive shall designate the beneficiary of such policy.
(b) Short-Term Disability Benefits. In the event of Executive's
failure substantially to perform his duties hereunder on a full-time basis for a
period not exceeding 180 consecutive days or for periods aggregating not more
than 180 days during any twelve-month period as a result of incapacity due to
physical or mental illness, the Company shall continue to pay the Base Salary to
Executive during the period of such incapacity, but only in the amounts and to
the extent that disability benefits payable to Executive under Company-sponsored
insurance policies are less than Executive's Base Salary.
(c) Relocation Expenses. In the event Executive's principal
place of employment is relocated by mutual consent of the parties outside
Maricopa County, Arizona, the Company shall reimburse Executive for all usual
relocation expenses incurred by Executive and his household in moving to the new
location, including, without limitation, moving expenses and rental payments for
temporary living quarters in the area of relocation for a period not to exceed
six months.
(d) Reimbursement of Business Expenses. The Company shall, in
accordance with standard Company policies, pay, or reimburse Executive for, all
reasonable travel and other expenses incurred by Executive in performing his
obligations under this Agreement.
(e) Vacations. Executive shall be entitled to 20 business days,
excluding Company holidays, of paid vacation during each year of employment
hereunder which he shall earn in arrears (i.e., Executive shall be entitled to
no vacation days during his first year of employment). Executive may accrue and
carry forward no
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more than five unused vacation days from any particular year of his employment
under this Agreement to the next.
ARTICLE III
TERMINATION OF EMPLOYMENT
3.1 Death or Retirement of Executive. Executive's employment under
this Agreement shall automatically terminate upon the death or Retirement (as
defined in Section 6.1) of Executive.
3.2 By Executive. Executive shall be entitled to terminate his
employment under this Agreement by giving Notice of Termination (as defined in
Section 6.1) to the Company:
(a) for Good Reason (as defined in Section 6.1);
(b) at any time without Good Reason.
3.3 By Company. The Company shall be entitled to terminate
Executive's employment under this Agreement by giving Notice of Termination to
Executive:
(a) in the event of Executive's Total Disability (as defined in
Section 6.1);
(b) for Cause (as defined in Section 6.1); and
(c) at any time without Cause.
ARTICLE IV
COMPENSATION UPON TERMINATION OF EMPLOYMENT
If Executive's employment hereunder is terminated in accordance with
the provisions of Article III hereof, except for any other rights or benefits
specifically provided for herein following his period of employment, the Company
shall be obligated to provide compensation and benefits to Executive only as
follows, subject to the provisions of Section 5.4 hereof:
4.1 Upon Termination for Death or Disability. If Executive's
employment hereunder is terminated by reason of his death or Total Disability,
the Company shall:
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(a) pay Executive (or his estate) or beneficiaries any Base
Salary which has accrued but not been paid as of the termination date (the
"Accrued Base Salary");
(b) pay Executive (or his estate) or beneficiaries for unused
vacation days accrued as of the termination date in an amount equal to his Base
Salary multiplied by a fraction the numerator of which is the number of accrued
unused vacation days and the denominator of which is 360 (the "Accrued Vacation
Payment");
(c) reimburse Executive (or his estate) or beneficiaries for
expenses incurred by him prior to the date of termination which are subject to
reimbursement pursuant to this Agreement (the "Accrued Reimbursable Expenses");
(d) provide to Executive (or his estate) or beneficiaries any
accrued and vested benefits required to be provided by the terms of any
Company-sponsored benefit plans or programs (the "Accrued Benefits"), together
with any benefits required to be paid or provided in the event of Executive's
death or Total Disability under applicable law;
(e) pay Executive (or his estate) or beneficiaries any Annual
Incentive Bonus with respect to a prior fiscal year which has accrued but has
not been paid; and in addition,
(f) Executive (or his estate) or beneficiaries shall have the
right to exercise all vested unexercised stock options and warrants outstanding
at the termination date in accordance with terms of the plans and agreements
pursuant to which such options or warrants were issued.
4.2 Upon Termination by Company for Cause or by Executive Without
Good Reason. If Executive's employment is terminated by the Company for Cause,
or if Executive terminates his employment with the Company other than (x) upon
Executive's death or Total Disability or (y) for Good Reason, the Company shall:
(a) pay Executive the Accrued Base Salary;
(b) pay Executive the Accrued Vacation Payment;
(c) pay Executive the Accrued Reimbursable Expenses;
(d) pay Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law;
(e) pay Executive any accrued Annual Incentive Bonus with
respect to a prior year which has accrued but has not been paid; and in addition
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(f) Executive shall have the right to exercise vested options
and warrants in accordance with Section 4.1(f).
4.3 Upon Termination by the Company Without Cause or by Executive for
Good Reason. If Executive's employment is terminated by the Company without
Cause or by Executive for Good Reason, the Company shall:
(a) pay Executive the Accrued Base Salary;
(b) pay Executive the Accrued Vacation Payment;
(c) pay Executive the Accrued Reimbursable Expenses;
(d) pay Executive the Accrued Benefits, together with any
benefits required to be paid or provided under applicable law;
(e) pay Executive the accrued Annual Incentive Bonus payments,
if any;
(f) pay Executive commencing on the thirtieth day following the
termination date twelve monthly payments equal to one-twelfth of the Executive's
Base Salary in effect immediately prior to the time such termination occurs;
provided, however, should Executive attain alternative employment during the
twelve (12) month payment period, the Company's obligations under this Section
4.3(f) will be reduced by the amount of Executive's compensation from his new
employer. For example, if Executive were entitled to receive $13,750 per month
for twelve (12) months under this Section 4.3(f), and if, at the beginning of
the seventh (7th) month following his termination date, he finds alternative
employment that pays him $7,000 per month, the Company would be obligated to pay
Executive six (6) monthly payments of $13,750, and six (6) monthly payments of
$6,750 under this Section 4.3(f);
(g) maintain in full force and effect, for Executive's and his
eligible beneficiaries' continued benefit, until the first to occur of (x) his
attainment of alternative employment or (y) 12 months following the termination
date of his employment hereunder the employee benefits provided pursuant to
Company-sponsored benefit plans, programs or other arrangements in which
Executive was entitled to participate as a full-time employee immediately prior
to such termination in accordance with Section 2.4 hereof, subject to the terms
and conditions of such plans and programs (the "Continued Benefits"). If
Executive's continued participation is not permitted under the general terms and
provisions of such plans, programs and arrangements, the Company shall arrange
to provide Executive with Continued Benefits substantially similar to those
which Executive would have been entitled to receive under such plans, programs
and arrangements; and in addition
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(h) Executive shall have the right to exercise all vested
unexercised stock options and warrants in accordance with Section 4.1(f).
ARTICLE V
RESTRICTIVE COVENANTS
5.1 Confidentiality.
(a) Executive covenants and agrees to hold in strictest
confidence, and not disclose to any person without the express written consent
of the Company, any and all of the Company's Proprietary Information, as defined
in subparagraph (c) below, except as such disclosure may be required in
connection with his employment hereunder. This covenant and agreement shall
survive this Agreement and continue to be binding upon Executive after the
expiration or termination of this Agreement, whether by passage of time or
otherwise, so long as such information and data shall remain proprietary
information.
(b) Upon expiration or termination of this Agreement for any
reason, Executive shall immediately turn over to the Company any "Proprietary
Information." Executive shall have no right to retain any copies of any material
qualifying as Proprietary Information for any reason whatsoever after expiration
or termination of his employment hereunder without the express written consent
of the Company.
(c) For purposes of this Agreement, "Proprietary Information"
means and includes the following: the identity of clients or customers or
potential clients or customers of the Company or its affiliates; any written,
typed or printed lists, or other materials identifying the clients or customers
of the Company or its affiliates; any financial or other information supplied by
clients or customers of the Company or its affiliates; any and all data or
information involving the Company, its affiliates, programs, methods, or
contacts employed by the Company or its affiliates in the conduct of their
business; any lists, documents, manuals, records, forms, or other materials used
by the Company or its affiliates in the conduct of their business; any
descriptive materials describing the methods and procedures employed by the
Company or its affiliates in the conduct of their business; and any other secret
or confidential information concerning the Company's or its affiliates' business
or affairs. The terms "list," "document" or their equivalents, as used in this
subparagraph (c), are not limited to a physical writing or compilation but also
include any and all information whatsoever regarding the subject matter of the
"list" or "document," whether or not such compilation has been reduced to
writing. "Proprietary Information" shall not include any information which: (i)
is or becomes publicly available through no act or failure of Executive; (ii)
was or is rightfully learned by Executive from a source other than the Company
before being received from the Company; or (iii) becomes independently available
to Executive as a matter of right from a third party. If only a portion of the
Proprietary Information
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is or becomes publicly available, then only that portion shall not be
Proprietary Information hereunder.
(d) Executive acknowledges that he is Vice President of
Operations and President of MicroAge Product Services and in such capacity he
will be a representative of the Company with respect to clients and potential
clients of the Company. Executive also acknowledges that he has had and will
continue to have access to confidential information about the Company, its
affiliates, and their clients and that "Proprietary Information" acquired by him
at the expense of the Company is for use in its business. Executive has
substantial experience in the information technology products and services
marketing and distribution industry and possesses special, unique, extraordinary
skills, and knowledge in this field. Executive's management and financial
services to the Company are special, unique, and extraordinary and the success
or failure of the Company is dependent upon his discharge of his duties and
obligations. Accordingly, by execution of this Agreement, and subject to
subparagraph (c) hereof, Executive agrees that during his employment with the
Company and for a period of twelve (12) months following the date of expiration
or termination of his employment hereunder (the "Non-Competition Period") for
any reason (whether such termination shall be voluntary or involuntary), he
shall not violate the provisions of Section 5.2. Executive agrees that the
twelve (12) month period referred to in the preceding sentence shall be extended
by the number of days included in any period of time during which he is or was
engaged in activities constituting a breach of Section 5.2.
5.2 Competition.
(a) During the Non-Competition Period specified in Section
5.1(d), Executive shall not:
(i) except as a passive investor in publicly-held
companies, and except for investments held as of the date hereof,
directly or indirectly own, operate, manage, consult with, control,
participate in the management or control of, be employed by, maintain
or continue any interest whatsoever in any company that directly
competes with the Company in the United States; or
(ii) directly or indirectly solicit any business of a
nature that is directly competitive with the business of the Company
from any individual or entity that obtained such products or services
from the Company or its affiliates at any time during his employment
with the Company; or
(iii) directly or indirectly solicit any business of a
nature that is directly competitive with the business of the Company
from any individual or entity solicited by him on behalf of the Company
or its affiliates; or
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(iv) employ, or directly or indirectly solicit, or cause
the solicitation of, any employees of the Company who are in the employ
of the Company on the termination date of his employment hereunder for
employment by others.
(b) Executive expressly agrees and acknowledges that:
(i) it will require at least twelve (12) months for the
Company to locate, hire and train an appropriate individual to perform
the functions and duties that Executive is performing hereunder;
(ii) the Company has protected business interests
throughout the United States of America and that competition with and
against such business interests would be harmful to the Company;
(iii) this covenant not to compete is reasonable as to time
and geographical area and does not place any unreasonable burden upon
him;
(iv) the general public will not be harmed as a result of
enforcement of this covenant not to compete;
(v) his personal legal counsel has reviewed this covenant
not to compete; and
(vi) he understands and hereby agrees to each and every term
and condition of this covenant not to compete (including, without
limitation, the provisions of Section 5.4).
5.3 Non-Disparagement. During the term of this Agreement and the
Non-Competition Period, neither Executive nor the Company shall disparage the
other, and neither shall disclose to any third party the conditions of
Executive's employment with the Company except as may be required (i) pursuant
to applicable law or regulations, including the rules and regulations of the
Securities and Exchange Commission, (ii) to effectuate the provisions of
employee plans or programs and insurance policies, or (iii) as may be otherwise
contemplated herein or unless such information becomes publicly available
without fault of the party making such disclosure.
5.4 Remedies. Executive expressly agrees and acknowledges that this
covenant not to compete is necessary for the protection of the Company and its
affiliates because of the nature and scope of their business and his position
with the Company. Further, Executive acknowledges that any breach of this
covenant not to compete would result in irreparable damage to the Company, and
in the event of his breach of this covenant not to compete, money damages will
not sufficiently compensate the Company for its injury caused thereby, and that
the remedy at law for
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any breach or threatened breach of Sections 5.1, 5.2 and 5.3 will be inadequate
and, accordingly agrees, that the Company shall, in addition to all other
available remedies (including without limitation, seeking such damages as it can
show it has sustained by reason of such breach), be entitled to injunctive
relief or specific performance and that in addition to such money damages he may
be restrained and enjoined from any continuing breach of this covenant not to
compete without any bond or other security being required of any court.
Executive further acknowledges and agrees that if the covenant not to compete
herein is deemed to be unenforceable and/or the Executive fails to comply with
this Article V, the Company has no obligation to provide any compensation or
other benefits described in Article IV hereof.
ARTICLE VI
MISCELLANEOUS
6.1 Definitions. For purposes of this Agreement, the following terms
shall have the following meanings:
(c) "Accrued Base Salary" - as defined in Section 4.1(a);
(d) "Accrued Benefits" - as defined in Section 4.1(d);
(e) "Accrued Annual Bonus Payment" - as defined in Section
4.2(e);
(f) "Accrued Reimbursable Expenses" - as defined in Section
4.1(c);
(g) "Accrued Vacation Payment" - as defined in Section 4.1(b);
(h) "Annual Incentive Bonus" - as defined in Section 2.2(b);
(i) "Base Salary" - as defined in Section 2.1;
(j) "Board" - shall mean the Board of Directors of the Company;
(k) "Cause" shall mean the occurrence of any of the following:
(i) Executive's gross and willful misconduct which is
injurious to the Company;
(ii) Executive's engaging in fraudulent conduct with
respect to the Company's business or in conduct of a criminal nature
that may have an adverse impact on the Company's standing and
reputation;
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(iii) the continued and unjustified failure or refusal by
Executive to perform the duties required of him by this Agreement which
failure or refusal shall not be cured within fifteen (15) days
following (A) receipt by Executive of written notice from the Board
specifying the factors or events constituting such failure or refusal,
and (B) a reasonable opportunity for Executive to correct such
deficiencies;
(iv) Executive's use of drugs and/or alcohol in violation
of then current Company policy; or
(v) Executive's breach of his obligation under Section
1.2(c) hereof which shall not be cured within fifteen (15) days after
written notice thereof to Executive.
(l) "Code" - as defined in Section 4.4(b);
(m) "Continued Benefits" - as defined in Section 4.3(g);
(n) "Designated Members of the Executive Council" - shall mean
the members of the Company's Executive Council other than the Chief Executive
Officer, President, Vice Chairman of the Board and the Chief Financial Officer;
(o) "Expiration" shall mean the expiration of Executive's
employment hereunder in accordance with Section 1.3;
(p) "Good Reason" shall mean the occurrence of any of the
following:
(i) Material change by the Company in Executive's
function, duties or responsibilities which would cause Executive's
position with the Company to become of less dignity, responsibility and
importance than those associated with his functions, duties or
responsibilities as of July 1, 1994;
(ii) Executive's Base Salary is reduced by the Company
(unless such reduction is pursuant to a salary reduction program as
described in Section 2.1 hereof) or there is a material reduction in
the benefits that are in effect for the Executive on July 1, 1994 in
accordance with Section 2.4 (unless such reduction is pursuant to a
uniform reduction in benefits for all Designated Members of the
Executive Council);
(iii) Except with Executive's prior written consent,
relocation of Executive's principal place of employment to a location
outside of Maricopa County, Arizona, or requiring Executive to travel
on the Company's business more than is required by Section 1.4 hereof;
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(iv) Other material breach of this Agreement by the
Company, which breach is not cured within fifteen (15) days after
written notice thereof is received by the Company.
(q) "1994 Executive Bonus Plan" - as defined in Section 2.2.
(r) "Non-Competition Period" - as defined in Section 5.1(d);
(s) "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision of this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated. Each Notice of Termination shall be delivered at least 30 days prior
to the effective date of termination;
(t) "Proprietary Information" - as defined in Section 5.1(c);
(u) "Retirement" shall mean normal retirement at age 65;
(v) "Termination" shall mean the termination of Executive's
employment hereunder other than upon expiration of the term of such employment
in accordance with Section 1.3;
(w) "Total Disability" shall mean Executive's failure
substantially to perform his duties hereunder on a full-time basis for a period
exceeding 180 consecutive days or for periods aggregating more than 180 days
during any twelve-month period as a result of incapacity due to physical or
mental illness. If there is a dispute as to whether Executive is or was
physically or mentally unable to perform his duties under this Agreement, such
dispute shall be submitted for resolution to a licensed physician agreed upon by
the Board and Executive, or if an agreement cannot be promptly reached, the
Board and Executive shall promptly select a physician, and if these physicians
cannot agree, the physicians shall promptly select a third physician whose
decision shall be binding on all parties. If such a dispute arises, Executive
shall submit to such examinations and shall provide such information as such
physician(s) may request, and the determination of the physician(s) as to
Executive's physical or mental condition shall be binding and conclusive.
Notwithstanding the foregoing, if Executive participates in any group disability
plan provided by the Company which offers long-term disability benefits, "Total
Disability" shall mean total disability as defined therein.
6.2 Key Man Insurance. The Company shall have the right, in its sole
discretion, to purchase "key man" insurance on the life of Executive. The
Company shall be the owner and beneficiary of any such policy. If the Company
elects to purchase such a policy, Executive shall take such physical
examinations and supply such information as may be reasonably requested by the
insurer.
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6.3 Mitigation of Damages; No Set-Off; Dispute Resolution.
(a) Executive shall be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment.
(b) If there shall be any dispute between the Company and
Executive (i) in the event of any termination of Executive's employment by the
Company, whether such termination was for Cause, or (ii) in the event of any
termination of employment by Executive, whether Good Reason existed, or (iii)
otherwise, the dispute shall be resolved in accordance with the dispute
resolution procedures set forth in Exhibit A hereto, the provisions of which are
incorporated as a part hereof, and the parties hereto hereby agree that such
dispute resolution procedures shall be the exclusive method for resolution of
disputes under this Agreement. In the event of a dispute hereunder as to whether
a termination by the Company was for Cause or by the Executive for Good Reason,
until there is a resolution and award as provided in Exhibit A, the Company
shall pay all amounts, and provide all benefits, to Executive and/or Executive's
family or other beneficiaries, as the case may be, that the Company would be
required to pay or provide hereunder as though such termination were by the
Company without Cause or by Executive for Good Reason and shall pay the
reasonable legal fees and expenses of counsel for Executive in connection with
such dispute resolution; provided, however, that the Company shall not be
required to pay any disputed amounts or any legal fees and expenses pursuant to
this subparagraph (b) except upon receipt of a written undertaking by or on
behalf of Executive (and/or Executive's family or other beneficiaries, as the
case may be) to repay, without interest or penalty, as soon as practicable after
completion of the dispute resolution (A) all such amounts to which Executive (or
Executive's family or other beneficiaries, as the case may be) is ultimately
adjudged not be entitled with respect to the payment of such disputed amount(s)
and (B) in addition, in the case of legal fees and expenses, a proportionate
amount of legal fees and expenses attributable to any of Executive's claim(s)
(or any of Executive's defenses or counter-claims(s)), if any, which shall have
been found by the dispute resolver to have been frivolous or without merit.
6.4 Successors; Binding Agreement. This Agreement shall be binding
upon any successor to the Company and shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, beneficiaries,
designees, executors, administrators, heirs, distributees, devisees and
legatees.
6.5 Modification; No Waiver. This Agreement may not be modified or
amended except by an instrument in writing signed by the parties hereto. No term
or condition of this Agreement shall be deemed to have been waived, nor shall
there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument by the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not
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constitute a waiver of such term or condition for the future or as to any other
term or condition.
6.6 Severability. The covenants and agreements contained herein are
separate and severable and the invalidity or unenforceability of any one or more
of such covenants or agreements, if not material to the employment arrangement
that is the basis for this Agreement, shall not affect the validity or
enforceability of any other covenant or agreement contained herein. If, in any
judicial proceeding, a court shall refuse to enforce one or more of the
covenants or agreements contained herein because the duration thereof is too
long, or the scope thereof is too broad, it is expressly agreed between the
parties hereto that such duration or scope shall be deemed reduced to the extent
necessary to permit the enforcement of such covenants or agreements.
6.7 Notices. All the notices and other communications required or
permitted hereunder shall be in writing and shall be delivered personally or
sent by registered or certified mail, return receipt requested, to the parties
hereto at the following addresses:
If to the Company, to it at:
MicroAge, Inc.
0000 Xxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Chief Executive Officer
If Executive, to him at:
Xxxx X. Xxxxxxx
0000 Xxxx Xxxxx Xxx
Xxxxx, Xxxxxxx 00000
6.8 Assignment. This Agreement and any rights hereunder shall not be
assignable by either party without the prior written consent of the other party
except as otherwise specifically provided for herein.
6.9 Entire Understanding. This Agreement (together with the Exhibit
incorporated as a part hereof) constitutes the entire understanding between the
parties hereto and no agreement, representation, warranty or covenant has been
made by either party except as expressly set forth herein.
6.10 Executive's Representations. Executive represents and warrants
that neither the execution and delivery of this Agreement nor the performance of
his duties hereunder violates the provisions of any other agreement to which he
is a party or by which he is bound.
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6.11 Liability of Company with Respect to Insurance Policy. Executive
has selected the insurer and policy referred to in Section 2.4(a) hereof, and
the Company shall not have any liability to Executive (or his beneficiaries)
should the insurance company which issues the policy referred to therein fail or
refuse to pay (whether voluntarily or by reason of any order, injunction or
otherwise) thereunder or if any rights or elections otherwise available to
Executive thereunder are restricted or eliminated.
6.12 Governing Law. This Agreement shall be construed in accordance
with and governed for all purposes by the laws of the State of Arizona
applicable to contracts executed and wholly performed within such state.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
Company:
MICROAGE, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Executive:
XXXX X. XXXXXXX
------------------------------------
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EXHIBIT A
DISPUTE RESOLUTION PROCEDURES
A. If a controversy should arise which is covered by Section 6.3 of
Article VI, then not later than twelve (12) months from the date of the event
which is the subject of dispute either party may serve on the other a written
notice specifying the existence of such controversy and setting forth in
reasonably specific detail the grounds thereof ("Notice of Controversy");
provided that, in any event, the other party shall have at least thirty (30)
days from and after the date of the Notice of Controversy to serve a written
notice of any counterclaim ("Notice of Counterclaim"). The Notice of
Counterclaim shall specify the claim or claims in reasonably specific detail. If
the Notice of Controversy or the Notice of Counterclaim, as the case may be, is
not served within the applicable period, the claim set forth therein will be
deemed to have been waived, abandoned and rendered unenforceable.
B. Following receipt of the Notice of Controversy (or the Notice of
Counterclaim, as the case may be), there shall be a three week period during
which the parties will make a good faith effort to resolve the dispute through
negotiation ("Period of Negotiation"). Neither party shall take any action
during the Period of Negotiation to initiate arbitration proceedings.
C. If the parties should agree during the Period of Negotiation to
mediate the dispute, then the Period of Negotiation shall be extended by an
amount of time to be agreed upon by the parties to permit such mediation. In no
event, however, may the Period of Negotiation be extended by more than five
weeks or, stated differently, in no event may the Period of Negotiation be
extended to encompass more than a total of eight weeks.
D. If the parties agree to mediate the dispute but are thereafter
unable to agree within a week on the format and procedures for the mediation,
then the effort to mediate shall cease, and the Period of Negotiation shall
terminate four weeks from the Notice of Controversy (or the Notice of
Counterclaim, as the case may be).
E. Following the termination of the Period of Negotiation, the
dispute (including the main claim and counterclaim, if any) shall be settled by
arbitration, and judgment upon the award may be entered in any court having
jurisdiction thereof. The format and procedures of the arbitration are set forth
below (referred to below as the "Arbitration Agreement").
F. A notice of intention to arbitrate ("Notice of Arbitration")
shall be served within 45 days of the termination of the Period of Negotiation.
If the Notice of Arbitration is not served within this period, the claim set
forth in the Notice of Controversy (or the Notice of Counterclaim, as the case
may be) will be deemed to have been waived, abandoned and rendered
unenforceable.
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G. The arbitration, including the Notice of Arbitration, will be
governed by the Commercial Rules of the American Arbitration Association except
that the terms of this Arbitration Agreement shall control in the event of any
difference or conflict between such Rules and the terms of this Arbitration
Agreement.
H. The dispute revolver shall reach a decision on the merits on the
basis of applicable legal principles as embodied in the law of the State of
Arizona.
I. There shall be one dispute resolver, regardless of the amount in
controversy. The dispute resolver will be empowered to render an award and
interim decisions and shall be a member of the bar of any of the fifty States of
the United States or of the District of Columbia. The dispute resolver shall be
promptly appointed pursuant to Rule 13 of the Commercial Rules of the American
Arbitration Association ("AAA"). If the dispute resolver has not been appointed
within forty-five days of the AAA's initial transmission of lists of potential
arbitrators, then the AAA shall unilaterally designate the dispute resolver.
J. At the time of appointment and as a condition thereto, the
dispute resolver will be apprised of the time limitations and other provisions
of this Arbitration Agreement and shall indicate such dispute resolver's
agreement to the Tribunal Administrator to comply with such provisions and time
limitations.
K. During the 30-day period following appointment of the dispute
resolver, either party may serve on the other a request for limited numbers of
documents directly related to the dispute. Such documents will be produced
within seven days of the request.
L. Following the thirty-day period of document production, there
will be a forty-five day period during which limited depositions will be
permissible. Neither party will take more than five depositions, and no
deposition will exceed three hours of direct testimony.
M. Disputes as to discovery or prehearing matters of a procedural
nature shall be promptly submitted to the dispute resolver pursuant to telephone
conference call or otherwise. The dispute resolver shall make every effort to
render a ruling on such interim matters at the time of the hearing (or
conference call) or within five business days thereafter.
N. Following the period of depositions, the arbitration hearing
shall promptly commence. The dispute resolver will make every effort to commence
the hearing within thirty days of the conclusion of the deposition period and,
in addition, will make every effort to conduct the hearing on consecutive
business days to conclusion.
O. An award will be rendered, at the latest, within nine months of
the date of the Notice of Arbitration and within thirty days of the close of the
arbitration hearing. The award shall set forth the grounds for the decision in
reasonably specific detail and
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shall also specify whether any claim (or defense or counter-claim) of Executive
is found to be frivolous or without merit and what proportion, if any, of his
legal fees and expenses which have been paid by the Company Executive shall be
required to repay to the Company in accordance with Section 6.3(b). The award
shall be final and nonappealable except as provided in Arizona Revised Statutes
Sections 12-1512 and 00-0000-00.
