Exhibit 10.1
SEPARATION, CONSULTING AND NONCOMPETITION AGREEMENT
AGREEMENT, dated October 8, 1998, between INACOM CORP. ("Parent") and
XXXXXXX X. XXXXXXXX ("Xxxxxxxx").
RECITALS:
(a) The Parent has entered into an Agreement and Plan of Merger (the
"Merger Agreement"), pursuant to which the Parent or its subsidiary
will merge with Bulldog, Inc. ("the Company").
(b) Xxxxxxxx is a shareholder and long time employee of the Company and
has been instrumental in the successful establishment, growth and
development of the Company.
(c) The Parent desires to retain the services of Xxxxxxxx to assist the
Company in the transition and integration of the Company following the
closing of the merger.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereto agree as follows:
1. TERMINATION OF EMPLOYMENT. Effective on the Closing Date under the
Merger Agreement (the "Closing Date"), Xxxxxxxx hereby resigns as an officer
and/or director of Company and its subsidiaries and affiliates. Notwithstanding
such resignation, Xxxxxxxx shall remain an employee of the Company for the term
of this Agreement performing the services set forth herein. During such time,
the parties agree that Xxxxxxxx shall be treated as an employee for purposes of
his outstanding stock options. At Xxxxxxxx'x option, Xxxxxxxx, at any time, may
elect to resign as an employee and upon such resignation become a consultant as
set forth in Section 2.
2. XXXXXXXX. Effective upon Xxxxxxxx'x resignation as an employee, Parent
shall retain Xxxxxxxx as a consultant and Xxxxxxxx shall act as a consultant to
Parent upon the terms and conditions herein. At such time, Xxxxxxxx'x services
shall be those of an independent contractor, not an employee, and, as such,
Xxxxxxxx shall not be nor hold himself out as an officer, partner, employee, or
agent of the Parent or any of its subsidiaries or affiliates.
3. SERVICES. Effective as of the Closing Date Xxxxxxxx shall be a general
advisor and consultant to the Company and Parent in connection with the
transition and integration that will occur after closing. Xxxxxxxx shall report
solely to the Chief Executive Officer of Parent ("CEO"). These services will
include assisting Parent in its efforts to retain key personnel and customer
accounts, and achievement of post closing synergies. The time spent by Xxxxxxxx
performing duties hereunder shall be reasonably determined by Xxxxxxxx in good
faith in consultation with CEO. Xxxxxxxx shall be provided secretarial and
office services as reasonably necessary to provide the services contemplated by
this Agreement at a location designated in good faith by Xxxxxxxx.
4. FEES. Effective as of the Closing Date, in consideration for his
services to be rendered under this Agreement and for agreement to and compliance
with the terms of this Agreement, Parent shall, regardless of Xxxxxxxx'x
inability to perform services as a result of sickness or disability, pay a Base
Fee to Xxxxxxxx of $1,000,000 per year payable bi-weekly. Xxxxxxxx shall also be
eligible to receive an incentive bonus ("Incentive Bonus") of up to $3,000,000
in accordance with the provisions set forth on Addendum A, attached hereto and
incorporated herein by this reference. In the event of Xxxxxxxx'x death prior to
one year from the Closing Date, Xxxxxxxx'x estate (or beneficiary designated in
writing to the Parent) shall be paid the Base Fee less any portions of the Base
Fee previously paid and the Incentive Bonus to the extent the objectives are met
in accordance with Addendum A. Upon presenting receipts and other necessary
documentation to the Parent, the Parent shall also reimburse Xxxxxxxx for all
reasonable travel and business expenses incurred by Xxxxxxxx in providing
services to the Parent or the Company in accordance with Parent's normal expense
reimbursement practices. Xxxxxxxx shall be allowed to travel airline first class
on Parent duties and during the term hereof, shall be provided continued use of
the automobile he currently has with the Company in accordance with the same
terms and conditions as provided by the Company.
5. TERM. The term of Xxxxxxxx'x services hereunder shall be for the period
commencing on the Closing Date and ending upon the earliest of the following
events:
(a) One year following the Closing Date; and
(b) Death of Xxxxxxxx.
6. CONFIDENTIAL INFORMATION AND TRADE SECRETS. Xxxxxxxx recognizes and
acknowledges that Parent and its affiliates have developed and continue to
develop and use commercially valuable proprietary technical and nontechnical
information which is vital to the success of Parent's business, and furthermore,
that Parent utilizes trade secrets in formulating, promoting, financing and
selling its products which are entitled to protection from disclosure. Xxxxxxxx
shall hold in strict confidence and shall not disclose to any third party,
except as required by law and except to authorized persons in the course of his
consulting with Parent, any information of a confidential nature not generally
available to the public which has become known to Xxxxxxxx during his employment
with the Company, or which becomes known to Xxxxxxxx in his course of consulting
with Parent, relating to the business operations of Parent, or its affiliates or
their customers.
7. NONCOMPETITION. Xxxxxxxx agrees that, from and after the Closing Date,
he shall not, in the United States of America, associate in any capacity
whatsoever, whether as a promoter, owner, officer, director, employee, partner,
lessee, lessor, lender, agent, consultant, broker, commission salesman or
otherwise, in any business engaged in the business conducted by the Parent or
its affiliates a type competitive, directly or indirectly, with the business of
the Parent or its
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affiliates for a period of time commencing on the Closing Date hereof and
continuing thereafter for one year, other than passive ownership of up to 5% of
the outstanding shares of a publicly traded company. If Xxxxxxxx fails to keep
and perform every covenant of Paragraphs 6 and 7 hereof, the Parent shall be
entitled to specifically enforce the same by injunction in equity in addition to
any other remedies which the Parent may have. If any portion of this Paragraph 7
shall be invalid or unenforceable, such invalidity or unenforceability shall in
no way be deemed or construed to affect in any way the enforceability of any
other portion of this Paragraph. If any court in which the Parent seeks to have
the provision of this Paragraph specifically enforced determines that the
activities, time or geographic area hereinabove specified are too broad, such
court may determine a reasonable activity, time or geographic area. The
covenants on the part of Xxxxxxxx under this Paragraph shall be construed as a
agreement independent of any other provision of this Agreement, and the
existence of any claim or cause of action by Xxxxxxxx against the Parent,
whether predicted on this Agreement or otherwise, shall not constitute a defense
to the enforcement by the Parent of said covenants.
8. NON-INTERFERENCE AGREEMENT. Xxxxxxxx covenants and agrees that for a
period of one year following the Closing Date, he will not, directly or
indirectly, for whatever reason, whether for his own account or for the account
of any other person, firm, corporation or other organization: (i) solicit, take
away, hire, employ or endeavor to employ any person who is an employee of the
Parent, the Company or any of their subsidiaries or affiliates, and shall
further refrain from providing, directly or indirectly, assistance to any third
party who seeks to solicit, take away, hire, employ or endeavor to employ any
such person, (ii) interfere with the continuance of inventory and supplies to
the Parent or the Company (or terms relating thereto), from any suppliers who
have been supplying goods, materials or services to the Parent or the Company at
any time during the one year preceding the date of this Agreement; (iii)
interfere with any of the Parent's or the Company's existing or potential
contracts or relationships with any independent contractor, customer, client or
consultant thereof; or (iv) interfere with any existing or proposed contract
between the Parent or the Company and any other party whatsoever.
Notwithstanding the preceding, the parties acknowledge that certain employees
("Transition Employees") of the Company will be retained by the Company for only
a short period following the Closing Date. Xxxxxxxx is free to contact and hire
the Transition Employees after their termination of employment with the Company.
9. RETURN OF INFORMATION/PROPERTY. Xxxxxxxx agrees that he will return to
the Company, not later than thirty days from the Closing Date, all copies of all
documents, computer disks, tapes or other tangible media of any sort which he
has in his possession or under his custody or control, whether developed by him
or others, that are property of the Company or that contain the confidential or
proprietary information of the Company or that relate in any manner to his
duties of the Company or his positions with the Company other than media
containing information otherwise available to the public, that relate to
Xxxxxxxx'x contractual rights arising from his employment or that Xxxxxxxx must
retain in order to provide the services hereunder. Any media retained by
Xxxxxxxx as being necessary to perform the services hereunder together with all
copies thereof and any excerpts therefrom or analysis thereof, in whatever media
maintained, shall be returned to the Company within thirty days following the
termination of Xxxxxxxx'x consulting period.
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10. COMMUNICATIONS. Xxxxxxxx agrees not to disparage or make any
disparaging remarks or send any disparaging communications concerning the
Parent, the Company, or any of their affiliates, or with respect to any existing
or future products, the business, the financial condition or the prospects of
the Parent, the Company, or any of their affiliates, or with respect to any
officer, director or employee of the Parent, the Company or any of their
affiliates, unless Xxxxxxxx is required to make such disclosure pursuant to
applicable law. Parent and the Company agree not to disparage or make any
disparaging remark or send any disparaging communications concerning Xxxxxxxx or
Xxxxxxxx'x services on behalf of Parent or the Company or Xxxxxxxx'x termination
of employment with the Parent or the Company, unless the Parent or Company is
required to make such disclosure pursuant to applicable law. Xxxxxxxx and the
Parent shall consult with each other in good faith before issuing any press
release or otherwise making any public statement with respect to this Agreement,
and neither party shall issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or by
obligations pursuant to any listing agreement with any National Securities
Exchange or by the National Association of Security Dealers, Inc.
11. COOPERATION. Xxxxxxxx agrees to cooperate fully with the Parent and the
Company as reasonably directed by the Parent or the Company by responding to
questions, attending meetings, depositions, administrative proceedings and court
hearings, executing documents, and cooperating with the Parent, the Company and
their accountants and legal counsel with respect to business issues and/or
claims and litigation of which he has personal or corporate knowledge, provided
that Xxxxxxxx shall not be required to take any action that unreasonably
interferes with Xxxxxxxx'x other activities. Xxxxxxxx further agrees to maintain
in strict confidence any information with respect to which he has knowledge
regarding current and/or future claims, administrating proceedings and
litigation. Xxxxxxxx agrees to communicate with any parties, their legal counsel
or other person, firm or entity adverse to the Parent or the Company in any such
claims, administrating proceedings or litigation solely through the Parent's
designated legal counsel. Xxxxxxxx shall be entitled to reimbursement (or
payment in advance) for reasonable out-of-pocket expenses for travel, meals and
lodging in connection with any cooperation services provided at the Parent's or
the Company's request pursuant to this paragraph.
12. ENFORCEMENT OF COVENANTS. The parties agree that violation of any
obligation imposed by this Agreement shall cause irreparable damage, and, if so,
that the injured party shall be entitled to obtain an injunction or decree of
specific performance from any court of competent jurisdiction restraining the
other from such violation, and directing performance according to the terms of
this Agreement. Such remedies shall be cumulative and nonexclusive of any other
remedies either party may have including, but not limited to, the recovery of
actual damages. The parties further agree that the injured party will be
entitled to indemnification in full for all costs and expenses, including
reasonable attorney fees, which may be incurred by any such party as a result of
the breach of any term, condition or covenant of this Agreement by the other.
Any amount payable hereunder that is not paid when due shall bear interest from
the date due until paid at an annual rate of 12%.
13. INTERIM PERIOD. During the period from the date hereof through the
earlier of the Closing Date, or the termination of the Merger Agreement,
Xxxxxxxx shall use his reasonable best
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efforts to (i) assist the Company and Parent to consummate the Merger, subject,
however, to the provisions of the Merger Agreement, (ii) preserve intact the
Company's present business organization, (iii) keep available to the Company the
services of its present officers and key employees, (iv) preserve the Company's
business relationships and preserve its relationships with customers, suppliers,
distributors, licensors, licensees and others having business dealings with the
Company or its subsidiaries, all to the end that the Company and its
subsidiaries' goodwill and ongoing business shall be unimpaired at the Closing
Date. Without limiting the foregoing, during such time Xxxxxxxx shall use his
reasonable best efforts to not take any action that interferes with, or impedes,
the Company's ongoing relationships with the Company's employees, customers or
suppliers.
14. EMPLOYEE BENEFITS. Xxxxxxxx shall not be entitled to any fringe
benefits provided by Parent or its affiliates other than medical benefits which
shall be provided.
15. TAXES. Except as provided hereafter, the Parent shall not be obligated
to reimburse Xxxxxxxx for Xxxxxxxx'x liability to pay any applicable Federal,
state or local income or employment taxes which result from any payments made
pursuant to this Agreement. Notwithstanding the forgoing, in the event that any
payment by the Parent to or for the benefit of Xxxxxxxx (whether paid or
payable) pursuant to the terms of this Agreement, but determined without regard
to any additional payments required by this Paragraph 15 ("Payment") is subject
to the excise tax imposed by Section 4999 of the Code or any interest or
penalties are incurred by Xxxxxxxx with respect to such excise tax, or any
similar excise tax levyed by any state or local government (such excise tax and
any such interest and penalties are hereinafter collectively referred to as the
"Excise Tax"), then Xxxxxxxx shall receive an additional payment ("Gross-up
Payment") in an amount such that after payment by Xxxxxxxx of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and the Excise Tax imposed on the Gross-up
Payment, Xxxxxxxx retains an amount of the Gross-up Payment equal to the Excise
Tax imposed upon the Payments. The determination of the amount of the Gross-up
Payment, if any, and the assumptions to be utilized in arriving at such
determination, shall be made by the Parent's outside auditors and shall be
reasonable and based upon the actual circumstances of Xxxxxxxx and the Parent.
16. APPOINTMENT. At or immediately following the Closing Date, Parent shall
take such action as may be necessary to cause Xxxxxxxx to be elected to the
Parent's Board of Directors. Thereafter, the Parent shall nominate and solicit
proxies in good faith to elect Xxxxxxxx as a Director of the Parent at each
annual meeting of the Parent's stockholders, at which Xxxxxxxx'x term expires,
held after the Closing Date and during the term of this Agreement. Xxxxxxxx
agrees that at the end of the term of this Agreement, Xxxxxxxx shall resign as a
Director of the Parent.
17. KNOWING AND VOLUNTARY. Xxxxxxxx acknowledges that he has carefully read
this Agreement, understands its meaning and intent, has had an opportunity to
discuss this Agreement with legal counsel and other advisors in its entirety to
the extent necessary to evaluate the benefits and the terms of this Agreement
and that he has signed this Agreement freely and voluntarily and without undue
influence.
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18. NON-WAIVER. The failure of either party to insist in any one or more
instances upon performance of any of the terms or conditions of this Agreement
shall not be construed as a waiver or a relinquishment of any right granted
hereunder, or of the future performance of any such term, covenant or condition,
but the obligations of either party with respect thereto shall continue in full
force and effect.
19. ASSIGNMENT. This Agreement and all rights hereunder are personal to
Xxxxxxxx and shall not be assignable and any purported assignment thereof shall
not be valid and binding on Parent. Parent may assign this Agreement and all of
its rights hereunder to any person, firm or corporation succeeding to
substantially all of the business of Parent.
20. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings between the parties with
respect to the subject matter hereof.
21. APPLICABLE LAW. This Agreement and the legal relations between the
parties hereto shall be governed by and construed in accordance with the laws of
the State of Delaware.
22. ARBITRATION. Any controversy or claim arising out of, or relating to,
this Agreement, or its breach, shall be settled by arbitration in either
Atlanta, Washington D.C. or San Francisco (as determined by Xxxxxxxx) in
accordance with the then governing rules of the American Arbitration
Association. Judgement upon the award rendered may be entered in and enforced in
any court of competent jurisdiction.
23. ATTORNEY FEES. Parent shall pay up to $3,000 of Xxxxxxxx'x documented
attorneys fees incurred in connection with the negotiation and execution of this
Agreement.
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IN WITNESS WHEREOF, this Separation, Consulting and Noncompetition
Agreement has been executed by the parties hereto on the date first forth above.
INACOM CORP.
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxx X. Xxxxxxxxx
______________________________ By:____________________________________
XXXXXXX X. XXXXXXXX Its: President and Chief Executive Officer
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ADDENDUM A
CONSULTING AND NONCOMPETITION AGREEMENT
INACOM CORP. AND XXXXXXX X. XXXXXXXX
DATED OCTOBER 8, 1998
The potential incentive bonus of $3,000,000 shall be based upon the
following three objectives (i) retention of the employees listed herein
following the Closing Date ("Employee Objective"), (ii) retention of the clients
listed herein following the Closing Date ("Client Objective"), and (iii)
accomplishment of the synergies listed herein ("Synergies Objective"). The
portion of the incentive bonus for each objective shall be $1,000,000 for the
Employee Objective, $1,000,000 for the Client Objective and $1,000,000 for the
Synergies Objective. The objectives and payment terms are set forth on the Bonus
Schedule attached hereto.
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