EXHIBIT 10.9
September 30, 2001
Xxxx X. Xxxxxxxx
XxXxxxxxx, Xxxxxxxx & Company, Inc.
0000 Xxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Dear Xxxx:
This Letter Agreement (this "Agreement") will describe the modifications to
the compensation arrangement for your services as the nonemployee Chairman of
the Board of Directors of Pentacon, Inc. (the "Company") pursuant to the
agreement dated May 9, 2001, which was effective beginning April 24, 2001. It is
anticipated that these modifications will take effect as of October 1, 2001;
however, this Agreement and its terms are subject to the approval of the
Company's Committee on Director Affairs and the Board of Directors.
1. Effective October 1, 2001, your role as nonemployee Chairman of the
Company's Board of Directors is expected to involve significant
additional time on your part in connection with the Corporation's
analysis of various issues and alternatives related to corporate
financial planning; financing arrangements, and other strategic
alternatives. Accordingly, you agree that you will spend at least
eighty percent (80%) of your work-related time in connection with your
duties as Chairman.
2. In order to reflect the additional time commitment on your part, your
monthly cash Chairman's fee will be increased from $6,500 to $17,000,
payable semimonthly. This amount is intended to encompass all fees
which you be entitled to receive as a director, and accordingly, no
separate meeting or committee fees will be payable to you.
3. As additional compensation, you will receive a fee for any financing,
merger, or acquisition completed by the Company which has been or is
initiated since May 9, 2001,and is completed during or within six
months after this Agreement is terminated. The fee will be determined
as follows: (1) For a financing, 1% of any new capital received by the
Company in exchange for the issue of preferred or common stock, .75%
of any new capital received by the Company in the form of subordinated
debt, and .25% of any new capital received in the form of senior debt
(computed by reference to the amount available to be drawn under the
facility at the time of its initial funding), and (2) For a sale of
the Company, merger, or acquisition by the Company, .25% of the value
of the transaction. The transaction value will include cash,
securities, payments for non-compete agreements (not associated with
any employment agreement), promissory notes, and all other
consideration (including, without limitation, earn-outs and other
contingent payments) exchanged in the transaction and upon which the
value was established. The foregoing notwithstanding, the maximum fee
to be earned pursuant to this provision is $250,000.
4. You agree to resign from the Company's Audit Committee, effective
immediately.
5. At the Company's sole discretion, it may upon three months advance
written notice to you, (a) terminate the relationship and compensation
arrangement described in this letter, or (b) revert back to the
relationship and compensation arrangement described in the letter
agreement dated May 9, 2001; provided, however, that any fee which
would be owing to you pursuant to the fee arrangement described in
paragraph 3 of this Agreement will survive any such termination in
accordance with the terms of paragraph 3.
All other terms and conditions of the agreement dated May 9, 2001 remain
the same.
If you are in agreement with the foregoing, please execute and return a
copy of this Agreement to the Company.
PENTACON, INC.
By: /s/ XXXXXX X. XXXX
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Name: Xxxxxx X. Xxxx
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Title: CEO
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Agreed and Accepted
This 3rd day of October, 2001
/s/ XXXX X. XXXXXXXX
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Xxxx X. Xxxxxxxx
