EXHIBIT 10
SEVERANCE AGREEMENT FOR XXXXXX X. XXXXXXX
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SEVERANCE AGREEMENT
This Severance Agreement ("Agreement") dated this 23rd day of December 1997
between Miami Computer Supply Corporation (the "Corporation"), an Ohio
corporation, and Xxxxxx X. Xxxxxxx (the "Executive"). The Corporation is
sometimes referred to herein as the "Employer."
WITNESSETH
WHEREAS, the Executive is currently serving as the President of the
Corporation pursuant to the terms of an Employment Contract ("Contract"), dated
May 30, 1996, and
WHEREAS, the Executive is also serving as a director of the Corporation,
and
WHEREAS, the Executive is currently being compensated for his services as
the President and a director of the Employer as set forth in the Contract, and
WHEREAS, the Boards of Directors of the Employer and the Executive have
mutually determined that it is in the best interests of the Employer to
terminate the Executive's employment with the Employer pursuant to the terms of
the Contract and for the Executive to voluntarily resign as an officer and a
director of the Corporation as of January 1, 1998, and
WHEREAS, effective January 1, 1998, the parties hereto desire that this
Agreement will supersede the terms of the Contract, which shall, on January 1,
1998, become null and void and of no effect, and serve as the full and final
settlement of all obligations of the Employer to the Executive relating to all
matters pertaining to the Executive's employment by the Employer.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
of the parties hereto, it is mutually understood, stipulated, covenanted and
agreed by and between the Employer and the Executive as follows:
1. TERMINATION OF EMPLOYMENT CONTRACT AND RESIGNATION AS A DIRECTOR
The Executive's employment with the Employer and service as a director of
the Employer will terminate as of January 1, 1998, and, by execution of this
Agreement, the Contract and all rights thereunder are voluntarily terminated
effective as of January 1, 1998 and shall thereupon become null and void and of
no effect. The Employer and the Executive hereby mutually understand and agree
that the Contract and all rights inuring thereunder, shall be terminated as of
January 1, 1998, it being agreed that any provisions regarding notice therein
are hereby waived by the parties hereto. All rights and obligations of both the
Employer and the Executive at and subsequent to January 1, 1998 set forth in the
Contract as well as the Split Dollar Agreement entered into between the
Executive and the Employer dated December 1, 1995 (the "Split Dollar Agreement")
and the Stock Option Agreement ("Stock Option Agreement") between the Executive
and the Employer (which represent all agreements relating to the employment of
the Executive), shall terminate and shall thereupon become null and void and of
no effect. Subsequent to January 1, 1998, the Employer and the Executive shall
have only those rights and obligations as set forth in this Agreement.
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2. CLAIMS
The Executive, for himself, his heirs, estate, personal representatives,
and assigns, hereby expressly and unconditionally releases and forever
discharges the Employer, its successors, assigns, subsidiaries, and affiliates
or other related companies, members of its boards of directors, and its
officers, employees, servants, and agents (the "Employer Group"), from: (a) any
and all claims, issues, or causes of action arising out of, or in any way
related to, the Executive's employment with, or separation from, the Employer,
and the Contract; and (b) any and all claims which the Executive had, has or may
have, whether known or unknown, and of whatever kind or nature, against any or
all of them, to the extent such claims arose on or before the date of this
Agreement, and the Executive consents and agrees not to xxx the Employer Group
or any member thereof with respect to the matter set forth in Sections 2(a) and
2(b). The provisions of this Section 2 shall survive the termination of this
Agreement.
3. SEVERANCE PAYMENT; BENEFITS
(a) From the January 1, 1998 until and including December 31, 1999, the
Executive shall be paid by check mailed to his home address, at such time each
month as payment was heretofore made (the "Payment Date"), the amount of
$20,000.00 per month, less applicable withholding taxes, if any. If the
Executive dies during the term hereof, this Agreement shall terminate and become
null and void and of no effect upon the date of Executive's death, except that
the Employer shall pay to the Executive's personal representative or estate any
cash amounts payable to the Executive which had accrued but had not been paid
prior to such date, it being understood that no payment hereunder is due until
the Payment Date, and upon the date of the Executive's death all other unpaid
amounts as of such date shall be cancelled, terminated and become null and void.
(b) Upon execution of this Agreement, the Employer agrees to accelerate
the vesting of a portion of the Stock Option Award granted to the Executive
under the Employer's 1996 Stock Option Plan (the "Plan"), but which remains
unvested as of December 5, 1997, to the extent it will provide the Executive
with the vested right to purchase 8,500 shares of common stock of the Employer
under the original terms of such Stock Option Award. All remaining unvested
Stock Option Award granted to the Executive under the Plan shall be cancelled as
of such date.
(c) In addition to the foregoing payments, the Employer also agrees to use
its best efforts to continue in full force and effect the health insurance
benefits received by the Executive immediately prior to the execution of this
Agreement or health insurance benefits substantially similar thereto, through
the Executive's current provider or a reasonably equivalent other third party
provider (the "Health Insurance Benefits"), which benefits will include coverage
for the Executive's spouse from the date hereof until the Executive attains age
65 (the "Health Benefit Period"). The Health Insurance Benefits shall be
maintained by the Employer at its expense and shall not exceed the premium
amounts paid on behalf of the Executive immediately prior to the date hereof
(the "Health Benefit Payment"). If there is any increase in the premium payable
to maintain the Executive's Health Insurance Benefits during the Health Benefit
Period from that in effect immediately prior to the date hereof, the increased
premium portion shall be the Executive's responsibility. In the event that the
Employer shall, at any time during the Health Benefit Period, become unable to
provide the Health Insurance Benefits to the Executive, the Employer shall pay
the Health Benefit Payment directly to the Executive. This is a promise to pay
only the Health Benefit Payment, defined above, by the Employer, not a promise
of coverage. After the Executive
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attains age 65, the Executive will be granted the right to continue his (and his
spouse's) health insurance benefits through the Employer's plan (or such other
plan) at his expense. In the event of the Executive's death prior to attaining
age 65, the Employer will provide Executive's spouse with health insurance
benefits consistent with foregoing terms until such time that Executive would
have attained age 65; thereafter the Executive's spouse shall be granted the
right to continue her health insurance benefits through the Employer's plan (or
such other plan) at her own expense. The provisions of this Section 3(c) shall
survive the termination of this Agreement only for the period set forth in this
Section 3(c).
(d) In addition to the foregoing, the Executive or his designee shall have
the right to purchase any split dollar life insurance contracts insuring the
life of the Executive, which are owned by the Employer, upon tendering to the
Employer an amount equal to the cash surrender value of such policy or policies
as determined upon the date such payment is made. This right shall terminate on
January 31, 1998. If the foregoing right is not exercised, the Employer in its
sole discretion shall have the right to terminate such split dollar life
insurance contracts without notice to the Executive and the Executive shall
thereupon have no further rights to any interests under said contracts.
4. ONGOING COOPERATION
The Executive agrees that he will remain reasonably available to the
Employer as needed to assist in the smooth transition of his duties to one or
more other employees of the Employer and without additional compensation to the
Executive and to assist in the defense of the Employer's interests in litigation
and any other administrative and regulatory proceedings which exist as of the
date of this Agreement or which may arise in the future and involve the conduct
of the Employer's business activities during the period of the Executive's
employment with the Employer. Executive's obligations with respect to
transition duties under this Section 4 shall terminate on December 31, 1999;
however, Executive's obligations under this Section 4 with respect to the
defense of the Employer's interests, described above, shall survive the
termination of this Agreement.
5. CHANGE IN CONTROL
The Employer agrees that, if a Change of Control of the Employer occurs
prior to December 31, 1999, the Employer shall provide written notice of such
Change in Control in advance, if possible, but in no event later than 15 days
after learning thereof. Upon the occurrence of a Change of Control of the
Employer, the Executive shall have the option, during the one year period
following receipt of such notice, to demand that the Employer pay a lump sum
amount to him, within 30 days of such demand, equal to the present value of the
payments which would be made to him pursuant to this Agreement and upon the
payment of such lump sum to the Executive, this Agreement shall thereupon
terminate. Such present value calculations shall be based upon the interest
rate discount factor which is then in use with respect to present value
calculations under the Employer's tax-qualified defined benefit pension plan or
as otherwise agreed in writing by the Employer and the Executive. For the
purposes of this Section 5, a "Change of Control" of the Employer shall mean (i)
that the Corporation shall cease to be a publicly owned corporation, or (ii) any
merger or consolidation of the Corporation with or into another entity shall
occur as a result of which the stockholders of the Corporation do not retain or
acquire fifty percent (50%) or more of the voting capital stock of the resulting
party, or (iii) any sale of more than 50% of the total assets of the Corporation
in a transaction not in the Corporation's ordinary course of business.
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The Employer shall require any successor or successors (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Employer by agreement to
expressly assume and agree to perform this Agreement, or any remaining portion
thereof, in its entirety. As used in this Section 5, "Employer" shall mean the
Employer as hereinbefore defined and any successors to its respective business
and/or assets as aforesaid which become bound by all the terms and provisions of
this Agreement by operation of law.
6. INDEMNIFICATION AND RELEASE
(a) Subsequent to January 1, 1998, if the Executive is made a party to or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil or criminal, administrative or investigative (a
"Proceeding"), by reason of the fact that he was a director and/or officer of
the Employer, or is or was serving (during his tenure as director and/or
officer) at the request of the Employer, any other corporation, partnership,
joint venture, trust or other enterprise in any capacity, whether the basis of
such Proceeding is an alleged action in an official capacity as a director or
officer, or in any other capacity while serving as a director or officer, the
Executive shall be indemnified and held harmless by the Employer to the fullest
extent permitted or authorized by the Corporation's Amended and Restated
Articles of Incorporation and Amended and Restated Rules of Regulations.
Expenses incurred by the Executive shall be paid by the Employer in advance of
the final disposition of any such Proceeding upon receipt by the Employer of a
written undertaking by or on behalf of the Executive to repay all amounts so
advanced if it should be determined ultimately that the Executive is not
entitled to be indemnified under this Agreement or otherwise. This Section 6(a)
shall survive the termination of this Agreement. The provisions of this Section
6 shall be null and void to the extent any Proceeding is based on any acts of
the Executive, which acts are determined to be acts of misconduct, which are
beyond the scope of the Executive's employment, or which constitute violations
of law or regulations. To the best knowledge of the Executive, there are no
claims threatened or which are likely to be threatened or prosecuted against the
Employer or the Executive for acts or omissions of the Executive during the
period of time the Executive was an officer or director of the Employer.
(b) The Employer hereby expressly and unconditionally releases and forever
discharges the Executive, his heirs, estate or personal representative (the
"Executive Group") from any and all claims which the Employer had, has or may
have, whether known or unknown, and of whatever kind or nature, to the extent
such claims arose on or before the date of this Agreement and the Employer
agrees not to xxx the Executive Group with respect to the matter set forth in
this Section 6(b), provided that this provision shall be effective if and only
if the Executive substantially and reasonably, based on the Executive's then
current health condition, cooperates with the Employer in the investigation,
defense or appeal of any claim against the Executive or the Employer. This
conditional Section 6(b), together with Section 2, hereof are intended to effect
a mutual release of the parties and shall be construed to release the respective
parties to the same extent and effect. The provisions of this Section 6(b)
shall survive the termination of this Agreement.
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7. NON-COMPETITION AND NON-INTERFERENCE
(a) The Employer has disclosed to the Executive its confidential business
plans, marketing strategies, advertising copy, funding sources, wholesale and
retail customer lists, equipment sources, financial projections and results and
other information in the course of Executive's occupation as an officer of the
Employer. This information is generally unknown to the pubic and gives the
Employer a competitive advantage over those who do not have access to this
information. The Employer has taken and will take care to protect this
information from becoming generally known. The Employer has revealed this
information to the Executive on the condition that he keep it confidential and
will require confidentiality from the Executive and all other persons with
access to the information in the future. The information described above,
therefore, constitutes valuable trade secrets of the Employer and is referred to
below as "Proprietary Information."
(b) The Employer has and shall retain all exclusive rights in the
Proprietary Information. During the term of this Agreement and any extension
hereof and for so long after its termination or expiration as permitted by law,
the Executive shall not disclose Proprietary Information to any third party or
make any commercial or academic use of the Proprietary Information without the
express written consent of the Employer which consent may be withheld for any or
no reason in the Employer's sole discretion. The Executive's obligation to
protect and not to disclose the Proprietary Information under this Section 7
shall not apply to information that was (i) actually known by Executive before
being obtained from the Employer; (ii) generally available to the public prior
to its disclosure by the Executive, or that becomes generally available to the
public through no fault of the Executive; (iii) obtained or acquired by the
Executive from a third party in possession of such information which third party
is not under an obligation of confidentiality to the Employer; or (iv) ordered
by a court of competent jurisdiction to be produced by the Executive, provided,
however, that upon the receipt of any such order, the Executive shall
immediately notify the Employer in writing of such order and cooperate with the
Employer, if so requested, so that an appropriate protective agreement or order
may be sought.
(c) These restrictions on the use and disclosure of Proprietary
Information shall survive the expiration or termination of this Agreement,
regardless of the grounds or lack of grounds therefor. The parties recognize
and agree that, in the event of a threatened or actual breach of this Section 7,
the Employer's remedy at law will be inadequate to fully compensate the Employer
for its losses. Therefore, the Employer may enforce its rights hereunder by
equitable remedies, including without limiting the generality of the foregoing,
injunctive relief and specific performance.
(d) During the term of this Agreement and for twelve (12) months after the
termination of this Agreement, the Executive hereby covenants and agrees that,
the Executive (and any person or entity controlled by, under common control with
or controlling the Executive) will not sell or distribute, directly or
indirectly, or be financially or otherwise associated with anyone that sells or
distributes computer supplies in an area within a one hundred (100) mile radius
of any existing office of the Employer. For purposes of this Section 7(d),
"control" (including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any person or entity,
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the activities, affairs, management or policies of such
person or entity, whether through personal relationship, the ownership of voting
securities or by contract or otherwise.
(e) The Executive agrees that in the event that the Executive commits a
breach or
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threatens to commit a breach of any of the provisions of this Section 7, the
Employer shall have the right and remedy to have the provisions of this Section
7 specifically enforced by any court having jurisdiction, it being acknowledged
and agreed that any such breach or threatened breach will cause immediate
irreparable injury to the Employer and that money damages will not provide an
adequate remedy at law for any such breach or threatened breach. Such right and
remedy shall be in addition to, and not in lieu of, any other rights and
remedies available to the Employer at law or in equity. In addition, if the
Executive commits a breach of any of the provisions of this Section 7 the
Employer shall have the right to suspend and terminate any of the benefits to
the Executive and/or his spouse provided herein.
(f) If any of the provisions of or covenants contained in this Section 7
are hereafter construed to be invalid or unenforceable in any jurisdiction, the
same shall not affect the remainder of the provisions or the enforceability
thereof in any other jurisdiction, which shall be given full effect, without
regard to the invalid portions or the unenforceability in such other
jurisdiction because of the duration or geographic scope thereof, the parties
agree that the court making such determination shall have the power to reduce
the duration and/or geographic scope of such provision or covenants and, in its
reduced form, said provision or covenant shall be enforceable; provided,
however, that the determination of such court shall not affect the
enforceability of this Section 7 in any other jurisdiction.
(g) The Executive hereby acknowledges and recognizes the highly
competitive nature of the business of the Employer and accordingly agrees that,
during the term of this Agreement and, in consideration of the receipt of any
payment pursuant to this Agreement, for a period of one year following the date
of termination of this Agreement, unless otherwise agreed to in writing by the
Employer, the Executive shall not, either directly or indirectly, in any manner
or capacity, whether as principal, agent, partner, officer, director, employee,
joint venturer, salesman, or corporate shareholder or otherwise for the benefit
of any Person (as defined below), (i) solicit the rendering of services to any
Person of any kind whatsoever who is then or has been at any time during a
period of one year prior to the date of the termination of this Agreement (the
"Termination Date") a Customer (as defined below), employee, salesperson, agent
or representative of the Employer in any manner which interferes or might
interfere with the relationship of the Employer with such Person, or in an
effort to obtain such Person as a customer, supplier, employee, salesperson,
agent or representative of any business in competition with the Employer, or
(ii) for a period of one year following the Termination Date, hire or
participate in the hiring by any Person of an employee of the Employee.
(i) "Person" means any individual, trust, partnership, corporation,
limited liability company, association, or other legal entity.
(ii) "Customer" means any Person with whom the Employer or any
subsidiary is currently engaged to provide goods or services, has been engaged
to provide goods or services within six (6) months prior to the Termination
Date, or actively marketed, discussed a project with, negotiated with, provided
a bid to or otherwise communicated with in an effort to obtain an engagement to
provide goods or services sold by the Employer or any subsidiary within six (6)
months prior to the Termination Date.
(h) It is expressly understood and agreed that although the Executive and
the Employer consider the restrictions contained in Section 7 of this Agreement
reasonable for the purpose of preserving for the Employer its good will and
other proprietary rights, if a final judicial
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determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in Section 7 of this Agreement is an
unreasonable or otherwise unenforceable restriction against the Executive, the
provisions of Section 7 of this Agreement shall not be rendered void but shall
be deemed amended to apply as to such maximum time and territory and to such
other extent as such court may judicially determine or indicate to be
reasonable.
8. REPRESENTATION
The Employer and the Executive represent that they have reviewed this
Agreement, and that each of them is fully aware of the contents of this
Agreement and of its legal effect, and acknowledge that this is a legally valid
and binding obligation of the parties. The Executive represents and
acknowledges that the Employer has advised him to consult his personal legal and
tax representatives prior to executing this Agreement. The Executive has
obtained and utilized his own counsel in negotiating this Agreement.
9. ENTIRE AGREEMENT
This Agreement incorporates the entire understanding among the parties
relating to the subject matter hereof, recites the sole consideration for the
promises exchanged and supersedes any prior agreements between the Employer and
the Executive with respect to the subject matter hereof, including without
limitation, as of the date hereof, the Contract, the Split Dollar Agreement and
the Stock Option Agreement, and no understandings, arrangements or discussions,
written or oral, shall have any effect hereon and shall not be used to determine
or interpret the meaning of this Agreement. In reaching this Agreement, no
party has relied upon any representation or promise except those set forth
herein.
10. SEVERABILITY
Should any term or provision or portion of such provision of this Agreement
be invalid or unenforceable because of the scope thereof or the period covered
thereby or otherwise, such term, provision or portion of such provision shall be
deemed to be reduced and limited to enable the Employer to enforce it to the
maximum extent permissible under the laws and public policies applied under the
jurisdiction in which enforcement is sought. If any term or provision of this
Agreement is held or deemed to be invalid or unenforceable, in whole or in part,
by a court of competent jurisdiction, such term or provision shall be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement which shall be construed to preserve to the maximum permissible extent
the intent and purposes of this Agreement. Any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such terms or provisions in any other jurisdiction.
11. AMENDMENT
No modification of this Agreement shall be valid unless made in writing and
signed by the parties hereto.
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12. SUCCESSORS
This Agreement shall be binding upon and inure to the benefit of the
Executive and, to the extent provided for herein, of the Executive's heirs,
estate, executors, administrators and personal representatives and shall also be
binding upon and inure to the benefit of the successors, assigns, subsidiaries
and affiliates of the Employer. This Agreement is personal to the Executive and
may not be assigned by him except as otherwise specified herein.
13. GOVERNING LAW
This Agreement shall be governed and construed in accordance with the laws
of the State of Ohio.
IN WITNESS WHEREOF, the Corporation have caused this Agreement to be
executed by its duly authorized officers, and the Executive has hereunto set his
hand as of the date first above written.
MIAMI COMPUTER SUPPLY CORPORATION
Attest:
By:
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Xxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxxxxx
Secretary Chairman of the Board
EXECUTIVE
By:
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Xxxxxx X. Xxxxxxx
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