Exhibit 10.2
SEPARATION AND CONFIDENTIALITY AGREEMENT
THIS SETTLEMENT AGREEMENT ("Agreement") is made by and between Xxxxxx
X. Xxxxxx ("Xxxxxx"), an individual who resides at ______________________
______________, as well as each and every dependent, heir, executor,
legal representative and assign of Xxxxxx, and INTELLIGENT ELECTRONICS,
INC. ("IE"), a business corporation existing under the laws of the
Commonwealth of Pennsylvania, having its corporate headquarters at Exton,
Pennsylvania, together with each and every of its predecessors, successors
(by merger or otherwise), parent, subsidiaries, affiliates, divisions,
directors, officers, employees and agents, whether present or former.
WHEREAS, the parties intend that Xxxxxx'x employment as Senior Vice
President and Chief Financial Officer with IE will terminate on May
15, 1997, or the date when IE files its Form 10-K for the fiscal year ended
on February 1, 1997 with the Securities and Exchange Commission, whichever
is earlier ("Separation Date").
WHEREAS, Xxxxxx and IE desire to part on an amicable basis.
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth, Xxxxxx and IE acting of their own free will and intending to be
legally and irrevocably bound, hereby agree as follows:
1. Employment Termination. Xxxxxx agrees that his employment with IE
will terminate on May 15, 1997, or upon the filing of IE's Form 10-K for
the fiscal year ended on February 1, 1997 with the Securities and Exchange
Commission, whichever occurs first. Upon the Separation Date of his
employment, Xxxxxx agrees to resign from all positions with IE. IE and
Xxxxxx may mutually agree to have Xxxxxx remain as an employee of IE beyond
the Separation Date. If Xxxxxx elects to remain as an IE employee beyond
the Separation Date, he may, in his sole and absolute discretion, elect at
any time after the Separation Date to terminate his employment with IE by
providing IE with at least two (2) weeks written notice. Upon such
subsequent termination of his employment with IE, Xxxxxx shall be entitled
to receive all of the benefits set forth in this Agreement as if the
Separation Date were the date of Xxxxxx'x actual termination of his
employment with IE.
2. Salary Continuation. On the Separation Date and provided Xxxxxx
has met and continues to meet the conditions and obligations set out in
this Agreement, IE agrees to pay Xxxxxx, as salary continuation, a sum
equal to his current base salary of Five Hundred Twenty Five Thousand
Dollars ($525,000) for eighteen (18) months following Xxxxxx'x Separation
Date ("Severance Period"). This salary continuation will be paid in equal
bi-weekly installments in the same manner and with the same federal, state
and local tax withholdings as Xxxxxx'x current salary.
3. Medical Benefit Continuation. For an eighteen (18) month period
following Xxxxxx'x Separation Date ("Severance Period"), IE will provide
Xxxxxx and his family full coverage under the IE group medical program
subject to the terms of the medical plan. Any required employee
contribution to the medical plan premium will be deducted from Xxxxxx'x
monthly salary continuation payments during Severance Period. Xxxxxx'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 immediately following the termination of Xxxxxx'x
Severance Period. IE's obligation to continue medical coverage will cease
if Xxxxxx becomes eligible to participate in a comparable medical plan with
a new employer. In this case, Xxxxxx agrees to immediately notify IE by
written notice to W. Xxxxxx Xxxxxx, Vice President of Human Resources. Upon
notification of becoming eligible to participate in a comparable medical
plan, any deductions then being made from Xxxxxx'x salary continuation
payments will cease immediately.
4. Stock Options. IE agrees that Xxxxxx will, up to and including
Separation Date and during the Severance Period, continue to vest in his
stock options in accordance with the terms of his stock option agreements.
Xxxxxx' s rights under the terms of his stock options shall remain
exercisable up to and including 30 days after the end of the Severance
Period. Xxxxxx agrees that he no longer has any rights to options he may
have had with XLConnect, Inc.
5. Other Benefits. IE agrees to extend to Xxxxxx the following
additional benefits:
a. IE will provide executive outplacement services to Xxxxxx for a
maximum of six (6) months following his Separation Date, with a maximum
payment to an outplacement firm of Thirteen Thousand Five Hundred Dollars
($13,500).
b. IE will provide a maximum reimbursement of $7,500 to Xxxxxx for
reasonable expenses incurred by Xxxxxx to seek legal counsel regarding this
Agreement.
6. Precondition. It is specifically agreed that Xxxxxx shall only be
entitled to salary continuation, medical coverage, option vesting, and the
other benefits provided in this Agreement if he remains employed by IE until
at least the earlier of either May 15, 1997, or the filing of IE's Form 10-K
for the fiscal year ended on February 1, 1997 with the Securities and Exchange
Commission. However, if Xxxxxx'x employment is terminated by IE before the
agreed Separation Date for any reason other than for Cause as defined in
Paragraph 7 below, Xxxxxx shall be entitled to the salary continuation and
other benefits of this Agreement and shall also be bound by the full terms of
this Agreement.
7. Termination for Cause. In the event Xxxxxx is terminated for cause as
defined in this paragraph before the agreed Separation Date, IE shall not be
obligated to provide the salary continuation or other benefits set out in
this Agreement. "Cause" shall include each of the commission of a crime
willful misconduct, material neglect of duties and gross negligence.
8. Resignation for Good Reason. Xxxxxx shall be entitled to terminate
his employment with IE at any time prior to Separation Date upon prior
written notice to IE for good reason. For purposes of this Agreement, "Good
Reason" shall mean (a) any material reduction in the scope of Xxxxxx'x
responsibilities or creation by IE of intolerable working conditions for
Xxxxxx (Xxxxxx acknowledges that his current working conditions are not
intolerable); (b) any material breach by IE of the terms of this Agreement;
or (c) any Change of Control in IE. In the event of Xxxxxx'x resignation for
Good Reason Xxxxxx shall be entitled to payment of base compensation and
accrued benefits through the date of termination of employment, plus all of
the other benefits set forth in this Agreement as if Xxxxxx had terminated
his employment on the Separation Date in accordance with the terms of this
Agreement. For purposes of this Agreement, a Change of Control of IE shall be
deemed to have occurred upon the earliest of the following events:
(1) Any "person," as such term is defined under Section 3(a)(9) and
13(d) of the Exchange Act, who is not an affiliate of IE on the date hereof,
becomes a "beneficial owner," as such term is used in Rule 13D-3 under the
Exchange Act, of more than 50% of IE's Voting Stock.
(2) Upon the distribution by IE of all or substantially all of its
assets pursuant to a plan of liquidation; or
(3) IE consummates a merger, consolidation, other form of business
combination or a sale of all or substantially all of its assets, unless the
business of IE is continued following any such transaction by a resulting
entity (which may be, but need not be, IE) and the shareholders of IE
immediately prior to such transaction (the "Prior Shareholders") hold,
directly or indirectly, a majority of the voting power of the resulting
entity.
9. Acceleration of Salary Continuation Payments. In the event of a
Change of Control in IE (as defined in paragraph 8 above) at any time before
or after the Separation Date or as a result of which IE has neither
significant assets (defined as total assets of less than $100 million at any
time) nor significant operations (defined as revenues during any quarterly
reporting period of less than $100 million) or tangible net worth (total
shareholders' equity less goodwill) of less than $20 million, the salary
continuation payments due to Xxxxxx pursuant to the terms of this Agreement
shall be accelerated so that Xxxxxx shall receive within fifteen (15)
business days of either such event a lump sum payment equal to the balance of
salary continuation payments Xxxxxx would have received over the remaining
Severance Period.
10. Confidentiality:
x. Xxxxxx 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 used in performing Xxxxxx'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; IE's relationship with actual financial
and banking institutions, creditors, or vendors; any other materials prepared
by Xxxxxx 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.
x. Xxxxxx agrees that he will, effective on Separation Date or earlier
termination of employment: (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 Xxxxxx; and (iv) remove Confidential Information from any software
under the ownership or control of Xxxxxx that incorporates or uses
Confidential Information in whole or in part.
x. Xxxxxx agrees to return to IE on the Separation Date, or earlier
termination of employment, 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 the foregoing. IE agrees that Xxxxxx can purchase at agreed
upon prices IE's equipment being used by him including the laptop computer,
the facsimile machine and printer at his residence.
11. Confidentiality of Terms. Xxxxxx agrees that the terms of this
Separation and Confidentiality Agreement shall remain completely
confidential, and he will not hereafter disclose any information concerning
this Agreement and the General Release to anyone except: (a) his spouse and
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. Xxxxxx further understands 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. Xxxxxx agrees not to disclose his intent to resign to any
persons other than executive officers and member of the Board of Directors of
IE prior to May 15, 1997, or upon the filing of IE's Form 10-K for the fiscal
year ended on February 1, 1997 with the Securities and Exchange Commission,
whichever occurs first. After his Separation Date, or earlier termination of
employment, and in response to any inquiries by employees of IE or third
parties concerning any of the terms of this Agreement, his employment or the
termination thereof, Xxxxxx agrees to state only that he resigned his
employment to pursue other interests. IE and Xxxxxx will agree on any press
release or other public disclosures relative to his departure including
wording in IE's Proxy statement.
12. Waiver and Release of Claims. Xxxxxx completely releases,
relinquishes, waives and forever discharges IE, its officers, directors,
employees, agents, successors and assigns from all manner of actions, causes
of action, suits, debts, dues, accounts, bonds, covenants, contracts,
agreements, judgments, claims, and demands whatsoever, in law or equity,
known or unknown, in tort, contract, by statute, negligence (whether by
contribution or indemnification) or any other basis for relief, compensatory,
punitive, or other damages, expenses (including attorney' s fees),
reimbursement or costs of any kind which Xxxxxx every had, now has or may
have, for or by reason of any cause, matter or thing whatsoever, arising out
of or in any way related to Xxxxxx'x employment with IE and its subsidiaries
and affiliates, his membership of any of IE's Boards of Directors or the
termination of employment and membership; provided however, that nothing
contained herein shall release IE from its obligations under this Agreement.
Xxxxxx 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 amended 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 tort claims, including claims for
attorney's fees whether based on common law, or otherwise.
Xxxxxx 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 IE, in effect as of the
date of this Agreement.
IE hereby completely remises, releases, relinquishes, waives and forever
discharges Xxxxxx and his dependents, heirs, executors, agents, legal
representatives, successors and assigns, of and from all manner of actions,
causes of action, suits, debts, dues, accounts, bonds, covenants, contracts,
agreements, judgments, claims and demands whatsoever, in law or equity, known
or unknown, in tort, contract, by statute, negligence (whether by
contribution or indemnification) or any other basis for relief, compensatory,
punitive or other damages, expenses (including attorney' s fees),
reimbursements or costs of any kind which IE ever had, now has or may have,
for or by reason of any cause, matter or thing whatsoever, arising out of or
in any way related to his employment with IE and its subsidiaries and
affiliates, his membership on any of their Boards of Directors or the
termination of that employment and membership; provided however, that nothing
contained herein shall release Xxxxxx from his obligations under this
Agreement. IE agrees that it has executed this Release on its own behalf, and
also on behalf of its subsidiaries, affiliates, divisions, successors (by
merger or otherwise) and assigns.
13. Indemnification. To the extent permitted by law, IE agrees to
defend, indemnify and hold Xxxxxx harmless against any threatened or pending
actions or proceedings, whether brought by a third party or as a derivative
action, by reason of the fact that Xxxxxx was an officer or representative of
IE acting within the scope of his employment.
14. Cooperation in Defending Legal Actions. Xxxxxx 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. Xxxxxx also agrees
that he will cooperate with and assist IE in its defense of any such action
or proceeding. This Agreement shall not preclude Xxxxxx from testifying in
such an action or proceeding if he is compelled to do so pursuant to a
subpoena or other court order. However, Xxxxxx expressly agrees that he will
provide written notice addressed to the attention of Xxxxx X. Xxxxxxx
Esquire, Xxxxxx Xxxxxxxx & Xxxxxx, LLP, 0000 Xxx Xxxxx Xxxxxx, Xxxxxxxxxxxx,
XX 00000 (Fax No. 000-000-0000) 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 24 hours of each such receipt by Xxxxxx or anyone acting on his
behalf.
15. Announcements and Non-Disagreement. The parties hereby agree that
all public disclosure regarding the reasons for the termination of Xxxxxx'x
employment and other positions with the Company shall be agreed upon between
the parties in advance, which agreement will not be unreasonably withheld and
shall be consistent with Paragraph 11. Each party agrees not to make any
comments inconsistent with any agreed upon language. Each party further
agrees not to disparage the other with respect to matters arising prior to
the date of the execution of this Agreement or to disclose or otherwise
identify any matters which may be detrimental to the other which occurred
prior to the date of the execution of this Agreement. It is further agreed
that inquiries for references by prospective employers shall be directed to
Xxxxxxx Xxxxxx, whose comments shall be positive in nature and not
inconsistent with the provisions of this paragraph.
16. 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 Philadelphia, PA under, and in accordance with, the rules
and procedures of the American Arbitration Association. In any such
proceeding, the prevailing party shall be entitled to an award of reasonable
attorney's fees, costs and expenses. It is expressly agreed that no amounts
will be withheld from any amounts due during the Severance Period unless an
appropriate court order has been obtained.
17. Governing Law; Enforcement. This agreement shall be governed by and
construed and enforced under the laws of the Commonwealth of Pennsylvania.
All remedies at law and equity shall be available for the enforcement of this
Agreement incorporated by reference herein. This Agreement may be pleaded as
a full bar to the enforcement of any claim in any way related to or arising
out of Xxxxxx'x employment with IE and/or the termination thereof.
18. Opportunity to Review and Right to Revoke. Xxxxxx hereby
acknowledges that he is acting on his own free will, that he has been
afforded ample opportunity to read and review the terms of this Agreement,
that he has had an opportunity to seek the advice of counsel, and that he is
voluntarily entering into this Agreement with full knowledge of its
respective provisions and effects. Xxxxxx also acknowledge that he has seven
(7) days following his signing of this Agreement to revoke this Agreement in
which case IE will have no obligation to make any payment to him.
19. 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 agreement,
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 Xxxxxx.
IN WITNESS WHEREOF, Xxxxxx and IE each acknowledge that they are acting
of 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/ Xxxxxx X. Xxxxxx /s/ W. E. Xxxxxx
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Xxxxxx X. Xxxxxx Witness
Dated: 4/16/97
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On behalf of INTELLIGENT ELECTRONICS, INC.:
By: /s/ Xxxxxxx X. Xxxxxxx /s/ W. E. Xxxxxx
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Witness
Title: CEO
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Date: 4/16/97
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