Exhibit 10.1
RETENTION AGREEMENT
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This RETENTION AGREEMENT ("Agreement") is made as of February 2, 1997 by
and between Xxxxxxx X. Xxxx, (hereinafter "Xxxx") an individual who resides
at _____________________________________________________, as well as each
and every dependent, heir executor, legal representative and assign of Xxxx,
and INTELLIGENT ELECTRONICS, INC. ("hereinafter "IE"), a business corporation
existing under the laws of the Commonwealth of Pennsylvania, having its
corporate headquarters at Exton, Pennsylvania.
WHEREAS, IE is examining various strategic alternatives including but
not limited to the potential disposition of its indirect reseller business
and IE desires that Xxxx commit to remain in IE's employ at least through the
earlier of a possible "sale" (defined below) of IE's indirect reseller
business or July 31, 1997 (the "Retention Period"), provided, however, that
the Retention Period can be extended at the election of IE to a date or dates
not later than September 15, 1997 if, on July 31, 1997, IE has entered into a
definitive agreement for the possible "sale" and continues thereafter to use
its best efforts to complete the closing thereunder.
WHEREAS, Xxxx is willing to commit to remain in IE's employ as Chief
Operating Officer, Reseller Network Division for the Retention Period.
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth, Xxxx and IE, acting of their own free will and intending to be legally
and irrevocably bound, hereby agree as follows:
1. RETENTION PERIOD. Xxxx agrees to remain in the employ of IE as Chief
Operating Officer, Reseller Network Division (hereinafter "RND") for the
Retention Period. Unless otherwise mutually agreed to between IE and Xxxx, at
the end of the Retention Period Xxxx agrees to resign from all positions with
IE and his employment with IE shall be terminated. During the Retention
Period, and through any extension of this Agreement, unless Xxxx is
terminated for cause (defined below) or a possible sale (defined below) is
concluded, IE will pay Xxxx an annual base salary of $300,000 in equal semi-
monthly installments in the same manner and subject to the appropriate
federal, state and local tax withholdings. l E agrees that the base salary
will not be reduced during his continued employment in his present job.
2. RETENTION BONUS. In addition to the base salary, and provided that Xxxx
remains as an employee through the Retention Period, unless terminated for
cause (defined below) Xxxx shall be entitled to receive a "Retention Bonus"
of $150,000,("Minimum Bonus") in semi-monthly installments of $25,000 per
month, beginning February 2, 1997 and continuing through July 31, 1997. The
Retention Bonus will be paid in part and accrued in part on a monthly basis
based on the following schedule:
Month Paid Accrued
February $6,250 $ 18,750
March 8,750 16,250
April 11,250 13,750
May 13,750 11,250
June 16,250 8,750
July 18,750 6,250
TOTALS 75,000 75,000
The accrued Retention Bonus will be paid in a single lump sum on September
15, 1997, subject to appropriate withholding and provided Xxxx is still
employed on the expiration of the Retention Period. In the event of a
possible sale (defined below) of RND prior to the expiration of the Retention
Period, then the total Retention Bonus of $150,000 less amounts previously
paid in cash, will be paid within two weeks of the closing date of the
transaction.
3. SALE BONUS. In recognition of his efforts to assist in the possible sale
(defined below) of RND, IE will pay Xxxx a "Sale Bonus" of $100,000, minus
applicable tax withholdings, if a definitive agreement for the sale is
executed on or before the expiration of the Retention period. In addition, in
the event a "Sale Bonus" is payable, IE agrees to pay Xxxx an additional
$100,000 if IE closes or completes a possible sale of RND prior to October
31, 1997; this amount will be paid within 30 days after the closing of the
sale. Xxxx acknowledges that there is no assurance that a sale will take
place.
4. TITLE AND RESPONSIBILITIES. IE agrees to retain Xxxx'x title as Chief
Operating Officer, Reseller Network Division, reporting to the President,
during the Retention Period. IE and Xxxx agree that the basic
responsibilities of Xxxx'x job will not change during the Retention Period,
however, IE reserves the right to assign additional responsibilities as
necessary to maintain business operations.
5. SALARY CONTINUATION. Upon the termination of Xxxx'x employment and
provided Xxxx has met and continues to meet the conditions and obligations
set out in this Agreement, IE agrees to pay Xxxx as "Salary Continuation" a
sum equal to his annual base salary of $300,000, payable in equal semimonthly
installments and subject to appropriate tax withholdings, for a twelve-month
period ("Severance Period") following termination of his employment with IE,
unless IE ceases to operate or Xxxx voluntarily accepts employment with the
acquiring company during the Severance Period. If IE ceases to operate during
the Severance Period, IE will pay Xxxx the remaining balance of his Salary
Continuation in a lump sum, payable upon the cessation of operations. In the
event that Xxxx accepts employment with an acquiring company, then this
Salary Continuation will cease on April 30, 1998. If IE and Xxxx agree to
extend his employment past the Retention Period, this Salary Continuation
will begin after his eventual termination of employment with IE. IE will have
no obligation to pay a Salary Continuation if Xxxx is terminated for cause as
defined in Paragraph 10, below.
6. MEDICAL BENEFIT CONTINUATION. During the Severance Period, IE agrees to
provide Xxxx full coverage under the Company's comprehensive group medical
benefits program, subject to the terms of the plan. Any required employee
contribution to the medical plan will be deducted from Xxxx'x Salary
Continuation payments. In addition, IE agrees that all of the benefits that
are to be provided to Xxxx pursuant to this Agreement will be provided to his
heirs in the event of his death during the period in which such benefits are
being provided. Xxxx'x statutory rights under COBRA to continue participation
in IE's group medical coverage for a period of up to eighteen (18) months,
at his own cost, shall begin at the termination of such twelve month period.
IE's obligation to continue medical coverage will cease if Xxxx becomes
eligible to participate in a comparable medical plan with a new employer. In
this case, Xxxx agrees immediately to notify IE by written notice to W.
Xxxxxx Xxxxxx, Vice President of Human Resources, or her successor.
7. HEALTH CLUB CONTINUATION. During the Severance Period, IE agrees to pay
the Company's portion of fees related to Health Club Membership in the
Greenwood Athletic Club for Xxxx. Any required employee deduction will be
deducted from Xxxx'x Salary Continuation payments. If Xxxx ceases his
membership in the Greenwood Athletic Club, then IE has no further obligation
to continue the Company's portion of membership payments on his behalf.
8. STOCK OPTIONS. IE agrees that Xxxx will, for the period during which Xxxx
is receiving Salary Continuation payments, continue to vest in his IE stock
options in accordance with the terms of his stock option agreements. Xxxx'x
rights under the terms of his stock options shall remain exercisable up to
and including thirty (30) days after his last Salary Continuation payment.
9. PRECONDITION. It is specifically agreed that Xxxx shall only be entitled
to the remainder of the cash payments and the total accrued portion of the
Retention Bonus; Sale Bonus; Salary; Salary Continuation; Medical Benefit or
Health Club Continuation; option vesting; and the other benefits provided in
this Agreement if he remains employed by IE until the end of the Retention
Period. However, if Xxxx'x employment is terminated before the end of the
Retention Period by IE for any reason other than for cause or in the event of
a possible sale, as defined in Paragraph 10 below, Xxxx shall be entitled to
the Retention Bonus; Sale Bonus; Salary; Salary Continuation; Medical and
Health Club Continuation; option vesting; and other benefits of the Agreement
and shall also be bound by the full terms of this Agreement.
10. DEFINITION OF TERMS. For the purpose of this Agreement, "cause" shall
mean Xxxx'x commission of a felony, gross negligence, fraud or material
failure to use his best efforts to perform his duties to the Company, which
material failure continues for a period of 30 days after written notice
thereof from the Company to Xxxx. As used herein, the term "sale" shall mean
the closing of a transaction(s) that transfers ownership of all or
substantially all of the assets or revenue-based operations of RND to a
successor company.
11. CONFIDENTIALITY.
(a) Xxxx agrees that he will not disclose or use for his direct or
indirect benefit or the direct or indirect benefit of any third party, any
Confidential Information (as hereinafter defined) of IE. In general
"Confidential Information" means any and all proprietary information of IE,
whether any information relating to computer codes or instructions (including
source and object code listings, logic algorithms, subroutines, modules or
other subparts of computer programs and related documentation, including
program notation); computer processing systems and techniques; concepts;
layouts; flowcharts; specifications; know-how; any associated programmer,
user, or other manuals or other like textual materials (including any other
data and materials use din performing Xxxx'x duties); all computer inputs and
outputs (regardless of the media on which stored or located); hardware and
software configurations; designs; interfaces; research; processes;
inventions; products; methods; marketing, sales and distribution data,
methods, plans and efforts; IE's relationship with actual and prospective
customers, contractors and suppliers; any other materials prepared by Xxxx or
other employees in the course of relating to or arising out of their
employment, or prepared by any other contractor for IE or its customers; and
any other materials that have not been made available to the general public.
(b) Xxxx agrees that he will, effective the date of his employment
termination: (i) discontinue all use of Confidential Information; (ii) return
to IE all material furnished by IE that contains Confidential Information;
(iii) erase or destroy any Confidential Information contained in computer
memory or data storage apparatus under the ownership or control of Xxxx; and
(iv) remove Confidential Information from any software under the ownership or
control of Xxxx that incorporates or uses Confidential Information in whole
or in part.
(c) Xxxx agrees to return to IE on the effective date of his
employment termination, any documents, records, notebooks, files,
correspondence, reports, memorandum, personal property owned by IE, or any
other documents and material whatsoever relating to the business of the
Company. He also agrees that he will not make, retain, remove or distribute
any copies of any of the foregoing.
12. CONFIDENTIALITY OF TERMS. Xxxx agrees that the terms of this Agreement
shall remain completely confidential, and he will not hereafter disclose any
information concerning this Agreement to anyone except: (a) his family; (b)
his personal attorney, if any; (c) his personal financial and/or tax
advisors; (d) taxing authorities and (e) as otherwise may be required by law
or court order. Xxxx further understand that such information may be
disclosed to the aforementioned individuals only on the condition that such
individuals in turn agree to keep such information completely confidential,
and not disclose it to others, except as may otherwise be required by law or
court order.
13. WAIVER AND RELEASE OF CLAIMS. Xxxx completely releases, relinquishes,
waives and discharges IE, its predecessors, successors (by merger or
otherwise), parents, subsidiaries, affiliates, divisions, officers,
directors, employees and agents, whether present or former, from all claims,
liabilities, demands and causes of action, known or unknown, filed or
contingent, which he may have or claim to have against IE as of the date of
the signing of this Release arising out of or in any way related to his
employment with the Company or the termination of that employment. Xxxx
agrees that he has executed this Release on his own behalf, and also on
behalf of his heirs, agents, representatives, successors and assigns. This
release includes, but is not limited to, a release of any rights or claims he
may have under:
(a) the Age Discrimination in Employment Act (ADEA), which
prohibits age discrimination in employment.
(b) Title VII of the Civil Rights Act of 1964, as emended by the
Civil Rights Act of 1991, which prohibits discrimination in employment based
on race, color, national origin, religion or sex;
(c) the Americans with Disabilities Act (ADA, which prohibits
discrimination on the basis of a covered disability;
(d) the Employer Retirement and Income Security Act (ERISA), which
prohibits discrimination on the basis of entitlement to certain benefits;
(e) any other federal, state or local laws or regulations
prohibiting employment discrimination; (f) breach of any express or implied
contract claims;
(g) wrongful termination or any other ton claims, including claims
for attorney's fees, whether based on common law, or otherwise.
Xxxx understands, however, that by signing this release, he does not waive
rights to: (a) claims arising under any applicable worker's compensation
laws; (b) any claims which the law states may not be waived; and (c) his
vested rights under the regular employment benefit plans of the Company, in
effect as of the date of this Agreement.
14. COOPERATION IN DEFENDING LEGAL ACTIONS. Xxxx understands that he will not
in the future voluntarily assist any individual or entity in preparing,
commencing or prosecuting any action or proceeding against IE, its directors,
officers, employees, or affiliates, including but not limited to, any
administrative agency claims, charges or complaints and/or lawsuits against
IE, its directors, officers, employees, or affiliates, or to voluntarily
participate or cooperate in any such action or proceeding, except as such
agreement is specifically prohibited by statute. Xxxx also agrees that he
will cooperate with and assist IE in its defense of any such action or
proceeding, subject to reimbursement of reasonable out-of pocket expenses.
This Agreement shall not preclude Xxxx from testifying in such an action or
proceeding if he is compelled to do so pursuant to a subpoena or other court
order. However, Xxxx expressly agrees that he will provide written notice
addressed to the attention of Xxxxx X. Xxxxxxx, Esquire, Pepper, Xxxxxxxx &
Xxxxxxx, LLP, 0000 Xxx Xxxxx Xxxxxx, Xxxxxxxxxxxx XX 00000 (Fax No: 215-981-
4750) if he should receive, by service or otherwise, a notice, subpoena or
other court order or any other written request seeking or requiring him to
testify or otherwise participate in or assist in any action or proceeding
against IE, such notice to be so provided within 48 hours of each such
receipt by Xxxx or anyone acting on his behalf.
15. ARBITRATION OF DISPUTES UNDER THIS AGREEMENT The parties agree that any
and all disputes arising out of the performance or breach of this Agreement
or any promise or covenant herein shall be resolved by submission to
arbitration in Denver, Colorado under, and in accordance with, the rules and
procedures of the American Arbitration Association. In any such arbitration
proceeding, the prevailing party shall be entitled to an award of reasonable
attorney's fees.
16. ENFORCEMENT. All remedies at law and equity shall be available for the
enforcement of this Agreement. This Agreement may be pleaded as a full bar to
the enforcement of any claim in any way related to or arising out of Xxxx'x
employment with IE and/or the termination thereof.
17. OPPORTUNITY TO REVIEW. Xxxx hereby acknowledges that he is acting of his
own free will, that he has been afforded sufficient time to review the terms
of this Agreement, that he has had an opportunity to seek the advise of
counsel, and that he is voluntarily entering into this Agreement with full
knowledge of its respective provisions and effects.
18. INDEMNIFICATION: To the extent permitted by law, IE agrees to defend,
indemnify and hold Xxxx harmless against any threatened or pending action or
proceedings, whether brought by a third party or as a derivative action, by
reason of the fact that Xxxx was an officer or representative of IE.
19. DISPARAGING REMARKS. Each party agrees to refrain from making disparaging
remarks concerning the other.
20. CONTRACTUAL EFFECT. The parties understand and acknowledge that the terms
of this Agreement are contractual and not a mere recital. Consequently, they
expressly consent that this Agreement shall be given full force and effect
according to each and all of its express terms and provisions, and that it
shall be binding upon the respective parties as well as their heirs,
executors, successors, administrators and assigns. The parties further
acknowledge that this Agreement, including the recitals, sets forth the
entire agreement and understanding of the parties relating to its subject
matter, and supersedes and merges all prior and contemporaneous agreements,
negotiations and understandings between the parties, both oral and written.
No change or modification to the Agreement will be binding unless it is in
writing and signed by both IE and Xxxx.
IN WITNESS WHEREOF, Xxxx and IE each acknowledge that they are
acting on their own free will, that they have had a sufficient opportunity to
read and review the terms of this Agreement, they have each received the
advice of their respective counsel with respect hereto, and that they have
voluntarily caused the execution of this Agreement and by reference herein as
of the day and year set forth below.
/s/ Xxxxxxx X. Xxxxxx Date 4/3/97
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Xxxxxxx X. Xxxxxx, President, Intelligent Electronics
/s/ Xxxxxxx X. Xxxx Date 4/3/97
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Xxxxxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxxxx Date 4/3/97
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Witness
