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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0001095811-00-000869.txt : 20000403
<SEC-HEADER>0001095811-00-000869.hdr.sgml : 20000403
ACCESSION NUMBER: 0001095811-00-000869
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 25
CONFORMED PERIOD OF REPORT: 20000101
FILED AS OF DATE: 20000331
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: INGRAM MICRO INC
CENTRAL INDEX KEY: 0001018003
STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045]
IRS NUMBER: 621644402
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-12203
FILM NUMBER: 591697
BUSINESS ADDRESS:
STREET 1: 1600 E ST ANDREW PLACE
CITY: SANTA ANA
STATE: CA
ZIP: 92705
BUSINESS PHONE: 7145661000
MAIL ADDRESS:
STREET 1: 1600 E ST ANDREW PLACE
CITY: SANTA ANA
STATE: CA
ZIP: 92705
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<DESCRIPTION>FORM 10-K
<TEXT>
<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
------------------------
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 1, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .
COMMISSION FILE NUMBER: 1-12203
INGRAM MICRO INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 62-1644402
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
1600 E. ST. ANDREW PLACE, SANTA ANA, CALIFORNIA 92799-5125
(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)
(714) 566-1000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant at March 27, 2000 was $687,098,684 based on the closing sale
price on such date of $14.6875 per share.
The Registrant had 71,597,655 shares of Class A Common Stock, par value
$.01 per share, and 73,142,787 shares of Class B Common Stock, par value $.01
per share, outstanding at March 27, 2000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareowners for the fiscal year ended
January 1, 2000 are incorporated by reference into Parts I and II of this Annual
Report on Form 10-K. Portions of the Proxy Statement for the Registrant's Annual
Meeting of Shareowners to be held May 17, 2000 are incorporated by reference
into Part III of this Annual Report on Form 10-K.
================================================================================
<PAGE> 2
PART I
ITEM 1. BUSINESS
In evaluating the business of Ingram Micro Inc., readers should carefully
consider the important factors discussed under Exhibit 99.01 hereto and under
"-- Safe Harbor for Forward-Looking Statements."
OVERVIEW
Ingram Micro Inc. ("Ingram Micro" or the "Company") is the leading
distributor of information technology products and services worldwide. The
Company markets computer hardware, networking equipment, and software products
to more than 175,000 reseller customers in more than 100 countries. The company
also provides logistics and fulfillment services to vendor and reseller
customers. As a distributor, the Company markets its products and services to
resellers and vendors as opposed to marketing directly to end-user customers.
Ingram Micro offers one-stop shopping to its customers by providing a
comprehensive inventory which, on a global basis, consists of more than 280,000
products (as measured by distinct part numbers assigned by manufacturers and
suppliers) from over 1,700 suppliers, including most of the computer industry's
leading hardware manufacturers, networking equipment suppliers, and software
publishers. The Company's broad product offerings include: desktop and notebook
personal computers, servers, and workstations; mass storage devices; CD-ROM
drives; monitors; printers; scanners; modems; networking hubs, routers, and
switches; network interface cards; business application software; entertainment
software; and computer supplies. In addition, to enhance sales and to support
its suppliers and reseller customers, the Company provides a wide range of
outsourcing and value-added programs, such as order fulfillment, tailored
financing programs, channel assembly, systems configuration and marketing
programs. The Company also provides outsourced warehouse and distribution
services for a number of resellers, including Internet-based resellers.
The Company is focused on providing a broad range of products and services,
quick and efficient order fulfillment, and consistent on-time and accurate
delivery to its customers around the world. The Company believes that IMpulse,
the Company's on-line information system, provides a competitive advantage
through real-time worldwide information access and processing capabilities.
IMpulse is a single, standardized, real-time information system and operating
environment, used across substantially all of the Company's worldwide
operations. These on-line information systems, coupled with the Company's
exacting operating procedures in telesales, credit support, customer service,
purchasing, technical support, and warehouse operations, enable the Company to
provide its customers with superior service in an efficient and low cost manner.
The Company's earliest predecessor began business in 1979 as a California
corporation named Micro D, Inc. This company and its parent, Ingram Micro
Holdings Inc. ("Holdings"), grew through a series of acquisitions, mergers, and
internal growth to encompass the Company's current operations. Ingram Micro Inc.
was incorporated in Delaware on April 29, 1996, in order to effect the
reincorporation of the Company in Delaware. Holdings and the successor to Micro
D, Inc. were merged into Ingram Micro Inc. in October 1996.
The Company completed an initial public offering and was split-off, in a
tax-free reorganization (the "Split-Off"), from its former parent, Ingram
Industries Inc.("Ingram Industries"), in November 1996.
THE INDUSTRY
The worldwide information technology products and services distribution
industry generally consists of suppliers and manufacturers ("suppliers"), which
sell directly to distributors, resellers, and end-users; distributors, which
sell to resellers; and resellers, which sell to other resellers and directly to
end-users. A variety of reseller categories exists, including corporate
resellers, value-added resellers or "VARs," systems integrators, original
equipment manufacturers, direct marketers, independent dealers, owner-operated
chains, franchise chains, and computer retailers. Relatively new to this list
are Internet resellers, whose virtual storefronts offer a wide variety of
products and services. Many of these companies are heavily dependent on
distribution partners with the necessary systems and infrastructure in place to
provide fulfillment and other
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services. Different types of resellers are defined and distinguished by the
end-user market they serve, such as large corporate accounts, small and
medium-sized businesses, or home users, and by the level of value they add to
the basic products they sell. Distributors generally sell only to resellers and
purchase a wide range of products in bulk directly from manufacturers.
Characteristics of the local reseller environment, as well as other factors
specific to a particular country or region, have shaped the evolution of
distribution models in different countries.
Based on a June 1999 report by market researcher International Data Corp.,
the growth of the information technology products and services distribution
industry continues to exceed the growth of the computer industry as a whole.
Suppliers are seeking to outsource an increasing portion of certain functions
such as distribution, service, and technical support to the distribution channel
to minimize costs and focus on their core capabilities in manufacturing, product
development, and marketing. Resellers are depending on distributors for more of
their product, marketing, and technical support needs. This is due to growing
product complexity, shorter product life cycles and an increasing number of
information technology products fueled by the emergence of open systems
architecture and the recognition of certain industry standards. In addition,
resellers are relying to an increasing extent on distributors for inventory
management and credit to avoid stocking large inventories and to reduce credit
lines necessary to finance their working capital needs.
Markets outside the United States, which represent over half of the
information technology industry's sales, are characterized by a more fragmented
distribution channel. Increasingly, suppliers and resellers pursuing global
growth are seeking distributors with international sales and support
capabilities.
A number of emerging industry trends provide new opportunities and
challenges for distributors of information technology products and services. For
example, the continued growth of the Internet provides distributors with an
additional means to serve both suppliers and reseller customers through the
development and use of effective electronic commerce tools. The growing presence
and importance of such electronic commerce capabilities also provides
distributors with new business opportunities as new categories of products,
customers, and suppliers develop.
Another example involves a reevaluation of the traditional roles played by
supply chain partners. The Company believes that the chain of relationships
between suppliers, distributors, resellers and end-users is transforming from a
manufacturer-push business model to one that is governed by end-user demand. In
the traditional industry model, distributors simply move product from
manufacturers to resellers who in turn service end-user businesses or customers.
In contrast, the "demand chain" management model would reverse these steps as
follows: (1) the reseller would start by listening to the needs of the end-user
business or consumer, (2) with a clear understanding of these needs, the
reseller would work with a distribution partner to design, sell and support
solutions that address the needs of the end-user business or consumer, and (3)
the distribution partner would then work closely with suppliers and
manufacturers to ensure that these solutions can be delivered through or on
behalf of the resellers in a cost effective and timely manner.
The challenges for this model include the speed and extent to which
distributors and their reseller and supplier partners embrace the model and make
changes to their traditional way of doing business. The benefits of the demand
chain model are increased efficiency and a reduced cost of doing business
resulting from reduced channel inventory and associated costs, shortened channel
response time, and improved value for each channel partner.
The drive to increase efficiency in the delivery of products and services
has resulted in consolidation pressure within the information technology
products distribution industry. This industry trend is evidenced by Compaq's
Distributor Alliance Program announced in May 1999, which decreased the number
of Compaq distribution partners in the U.S. from 39 to 4. Ingram Micro was
selected as one of those partners. The Company believes that it has the largest
global distribution network for information technology products and services and
that for the long term it is well positioned to assume a leadership role for
other manufacturing partners, should this consolidation trend continue.
Another industry trend is manufacturer-direct sales initiatives, developed
in an effort to duplicate the success of the direct sales business model.
Although this model removes distributors from their traditional
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role, the Company believes that this direct sales model presents new partnership
opportunities, such as providing logistics and fulfillment services to suppliers
and reseller customers.
The Company further believes that the dynamics of the information
technology products and services distribution business favor the largest
distributors, which have access to financing and are able to achieve economies
of scale, breadth of geographic coverage, and have the strongest vendor
relationships. Consequently, the distributors with these characteristics tend to
take share from smaller distributors as the industry undergoes a process of
consolidation. However, smaller, high value-added niche distributors may
continue to compete successfully in the consolidated market. The Company also
believes that distributors need to implement high volume/low cost operations on
a worldwide basis as ongoing price competition grows and the demand for
value-added services, the utilization of electronic commerce, as well as the
globalization of the information technology products and services industry
increases. In summary, the information technology products and services
distribution industry is growing rapidly while simultaneously consolidating,
creating an industry environment in which market share leadership and cost
efficiency are of paramount importance.
BUSINESS STRATEGY
The Company's strategic decisions and activities are guided by the
following Vision and Mission statements:
OUR VISION. We will always exceed expectations . . . with every partner,
every day.
OUR MISSION. To maximize shareowner value by being the best provider of
technology products and services for the world.
In addition, the Company's values encourage teamwork, respect,
accountability, integrity, and innovation.
The Company believes that it is the leading worldwide distributor of
information technology products and services and that it has developed the
capabilities and scale of operations critical for long-term success in the
information technology products and services distribution industry.
The Company's strategy of offering a broad line of products and services
provides customers with one-stop shopping. The Company generally is able to
purchase products in large quantities and to avail itself of special purchase
opportunities from a broad range of suppliers. This allows the Company to take
advantage of various discounts from its suppliers, which in turn enables the
Company to provide competitive pricing to its customers. The Company's global
market presence provides suppliers with access to a broad base of geographically
dispersed resellers, serviced by the Company's extensive network of systems,
distribution centers and support offices. Also, the Company benefits from being
able to make large investments in information systems, warehousing systems, and
infrastructure. Further, the Company is able to spread the costs of these
investments across its worldwide operations.
The Company is pursuing a number of strategies to further enhance its
leadership position within the information technology products and services
marketplace, including the following:
EXPAND WORLDWIDE MARKET AND PRODUCT COVERAGE. Ingram Micro is committed to
expanding its already extensive worldwide market coverage through internal
growth in all markets in which it currently participates. In addition, the
Company intends to pursue acquisitions, joint ventures, and strategic
relationships in order to take advantage of growth opportunities and to leverage
its strong systems, infrastructure, and global management skills.
By providing greater worldwide market coverage, Ingram Micro increases the
scale of its business, which results in greater cost economies. In addition, as
it increases its global reach, the Company can better diversify its business
across different markets, reducing its exposure to individual market downturns.
In 1999, the Company continued expansion of its global presence. For example,
the Company increased its reach in Europe, establishing IMICRO Lda., its
Portugal subsidiary, and increased its interest in Walton Networking KFT in
Hungary, giving Ingram Micro its first majority-owned subsidiary in Eastern
Europe. In Asia, the Company increased its ownership of Electronic Resources
Ltd. ("ERL"), a leading distributor of electronic
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components and computer peripherals, from 21% in 1998 to 100% in 1999. ERL was
renamed Ingram Micro Asia Ltd.
The Company has grown its operations outside the United States principally
through acquisitions, and currently has subsidiaries or offices in 30 countries
and sales representatives in another four countries, including Argentina,
Australia, Brazil, Canada, China, Colombia, Costa Rica, Chile, Ecuador, Hungary,
India, Indonesia, Malaysia, Mexico, New Zealand, Norway, Panama, Peru,
Singapore, Switzerland, Thailand, Venezuela, and 12 countries of the European
Union: Austria, Belgium, Denmark, Finland, France, Germany, Italy, The
Netherlands, Portugal, Spain, Sweden and The United Kingdom. The Company
believes that it is the market share leader in the United States, Canada,
Mexico, Brazil, Chile, Germany, and a number of other countries in Europe and
Asia. Ingram Micro believes it is the largest full-line distributor in Europe,
the largest distributor in Asia (excluding Japan), and the largest Pan-Latin
America distributor, based on publicly available data and management's knowledge
of the industry.
The Company continues to pursue initiatives to expand its global product
and service offerings in various categories, such as high-end storage, computer
telephony integration ("CTI"), and networking products. The recently formed
High-End Storage Group provides a dedicated and focused approach to the growing
storage area networks and network attached storage markets. The Company
continues to expand its CTI offering with solutions and products made possible
by the convergence of voice and data applications through its Converging
Technologies Group. Examples of such products include PC-based phone systems,
unified messaging applications, and a variety of Internet telephony and
voice-over Internet protocol products. Expansion areas for networking include
Internet appliances, wide area networking, and wireless networking solutions.
LEAD IN STREAMLINING THE DEMAND CHAIN. The information technology products
and services distribution industry is changing at a rapid pace. The chain of
relationships that spans across component suppliers, manufacturers,
distributors, resellers and end-users is transforming from a manufacturer-push
business model to one that is governed by end-user demand. The Company uses the
term "demand chain" to describe the build-to-demand model to which the channel
is evolving. In this industry model, the role of distributors is expanded from
the traditional movement of products from manufacturers to resellers, to one
that encompasses assembly, configuration, inventory management, order
management, and end-user fulfillment. Ingram Micro believes that as a
distributor with strong execution and broad product offerings, it will be best
able to lead the movement to the demand chain model.
The Company's commitment to streamlining the demand chain is evident in its
investment in infrastructure and programs that enable the most efficient flow of
products, services, and information up and down the demand chain. Frameworks(TM)
Total Integration Services(TM) ("Frameworks") is the Company's vehicle to
deliver world-class channel assembly, reconfiguration, contract manufacturing,
and the procurement of private label/unbranded solutions. Ingram Micro
management within each region is responsible for their respective region's
Frameworks program, allowing regional customer buying patterns to determine the
most appropriate mix among the four services. Another example of demand chain
streamlining in the U.S. is vendor co-location, where the distributor
establishes a site adjacent to the OEM assembly operation. Systems
reconfiguration and customer shipping occur at the vendor site, resulting in
cost and time-to-market efficiencies.
The Company's demand chain focus is also evident in two divisions that
support its business partners: Affiniti(TM) ("Affiniti") for resellers and
Global Partner Services ("GPS") for suppliers, each offer comprehensive suites
of value-added services matched to each partner's individual needs. Affiniti and
GPS are discussed further under the sections entitled "Deliver World-Class
Outsourcing And Value-Added Programs To Suppliers And Resellers" and "Services."
Equally important to streamlining the demand chain is better information
management through the development of industry-wide performance metrics and
standards that enable close collaboration among demand chain partners. Ingram
Micro has spearheaded this effort through its key role in the formation and
continuous support of RosettaNet(TM), an independent, self-funded, non-profit
organization dedicated to promoting an industry-wide initiative to adopt common
electronic business interfaces worldwide. As a next step, Ingram Micro was
instrumental in the formation of Viacore, Inc. Viacore
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is developing an e-commerce hub that can translate RosettaNet information for
member top-tier demand chain companies. This will allow business partners to
exchange critical business information such as real-time inventory,
transportation schedules, and resource planning opportunities, which can lower
costs and reduce cycle times. In addition, Ingram Micro is rapidly enhancing and
expanding electronic commerce tools that facilitate reseller to end-user
commerce.
EXPLOIT INFORMATION SYSTEMS LEADERSHIP AND ENHANCE ELECTRONIC COMMERCE
CAPABILITIES. Ingram Micro continually invests in its information systems, which
are crucial in supporting the Company's growth and its ability to maintain high
service and performance levels. The Company has a scalable, full-featured
information system, IMpulse, which it believes is critical to its ability to
deliver worldwide, real-time information to both suppliers and reseller
customers. IMpulse is an industry-leading information system and is used across
substantially all of the Company's markets worldwide, customized to suit local
market requirements. The Company believes that it is the only full-line
distributor of information technology products and services in the world with
such a centralized global system that is capable of supporting future growth and
new business ventures.
The Company's information systems provide the infrastructure that allows
the implementation of a demand chain, customer-centric channel model. It
provides the information necessary for Ingram Micro to act as the agent of
commerce among suppliers, resellers, and end-users. In 1999, the Company added
significant enhancements to its Web site, www.ingrammicro.com, creating a
prominent business-to-business tool for the technology solutions industry. The
Web site serves as a Business Center for resellers, providing them access to a
myriad of information, including vendor solutions and technical information.
Many other special features currently available in the U.S. and Canada include
real-time pricing and availability, on-line ordering, order status, and an
extensive product catalog. Plans for 2000 include extending this functionality
to nearly every other country in which Ingram Micro operates. The Company's
seamless, easy-to-use, electronic commerce offering provides resellers the
ability to more easily do business with Ingram Micro and end-users at a lower
cost. The Company's electronic commerce capabilities include: SpeedSource(TM), a
Java-based electronic commerce ordering tool that gives resellers in the U.S.
and Canada quick access to real-time ordering, product allocation, order status,
product search, pricing and availability; and InsideLine(TM), a direct
communication link that furnishes resellers with real-time access to the
Company's mainframe inventory systems. InsideLine is the commerce and
information engine behind many of today's successful Internet retailers. This
tool is currently available in the U.S., Canada, Europe, and Latin America, and
is expected to be available in the Asia Pacific region in 2000.
In 2000, Ingram Micro's e-commerce capabilities in the U.S. will support
the Company's individual programs for specialized resellers. These include
VentureTech Network(TM), which specializes in solutions for small-to-medium
sized businesses, and Partnership America(TM), which is focused on the
government and education market. www.venturetechnetwork.com enables
communication between solutions integrators, manufacturers and small-to-medium
business customers. The site, developed and maintained by Ingram Micro, provides
information and facilitates communication with tools such as electronic
storefronts to customers. The electronic storefront tools allow end-users to buy
product online with the order transparently sent to Ingram Micro for fulfillment
on behalf of the solutions integrator. www.partnershipamerica.com will bring
independent buyers in the public sector together with independent resellers of
technology. Partnershipamerica.com will also contain price-comparison tools,
decision-making content such as product reviews, news, events, on-line
presentations, and interactive communication tools for the entire demand chain.
The success of the Company's online capability is demonstrated by the
November 1999 Inter@ctive Week magazine ranking of the "Internet 500" (the
publication's first ranking of the 500 largest companies by Internet revenue).
The magazine's research placed Ingram Micro's online revenue at number 8
overall, the highest ranking among distributors in all industries. Information
Week published the "E-commerce 100" in its December 13, 1999 issue, identifying
"the most innovative practitioners of electronic applications and solutions" in
the U.S. Ingram Micro, the only broadline information technology products and
services distributor listed, ranked number 33 overall.
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PROVIDE SUPERIOR EXECUTION FOR RESELLER CUSTOMERS. Consistent with its
overall emphasis on "winning customers for life," Ingram Micro continually
refines and integrates its systems and business processes to provide superior
execution and service to resellers. The Company's electronic commerce tools
enable resellers to do business with their end-user customers quickly, easily,
and at a lower cost. To ensure efficient product delivery, the Company continues
to expand and upgrade its distribution network. For example, in 1999 the Company
completed the construction of new distribution centers in Toronto, Canada
(501,000 square feet), Straubing, Germany (400,000 square feet), Lomme, France
(200,000 square feet), and Barcelona, Spain (110,000 square feet). In 2000, the
Company plans to complete the construction of a new distribution center in
Lickdale, Pennsylvania (600,000 square feet) and convert the existing
Harrisburg, Pennsylvania distribution center (200,000 square feet) to a major
eastern returns processing center. Due to a change in business strategy, the
distribution center in Tilburg, The Netherlands, originally anticipated to be a
600,000 square foot facility serving the pan-European market is now planned as a
270,000 square foot facility primarily to serve the Dutch market. European
product flow will continue to be allocated primarily to individual in-country
distribution centers.
In 2000, the Company will begin the implementation of the next generation
of operations and logistics systems, built around a client-server warehouse
management system, allowing all of its North American distribution centers to
increase operating capacity from 20 hours a day to 24 hours a day. In the area
of process improvement, the Company works continuously to advance its formal
systems for evaluating and tracking key performance metrics such as
responsiveness to customers, processing accuracy, and order fill rate. Ingram
Micro uses these metrics as well as customer satisfaction surveys to measure
improvements on all key elements believed to be important to the customer. This
information, when used in conjunction with Ingram Micro's core values, allows
the Company's associates to provide a high level of customer satisfaction. The
Company's commitment to superior service has been widely recognized throughout
the industry. For example, in their 15th annual Preferred Distributor Study,
Computer Reseller News rated Ingram Micro a preferred distributor in more
categories than any other distributor in 1999.
Ingram Micro strives to maximize order fill rates by maintaining optimum
quantities of product in its 70 distribution centers worldwide. The Company's
advanced control systems and processes enable Ingram Micro to provide same-day
shipping for any order in the United States received by 5:00 p.m., with highly
accurate shipping performance. Another indication of the quality of Ingram
Micro's processes is the ISO 9002 certification of all U.S. business units
including customer service, returns, consolidation, operations, configuration,
distribution center, sales and purchasing, as well as a number of comparable
business units located outside the U.S. In addition, the Company has implemented
a number of programs that significantly reduce the time required for resellers
to obtain product. For example, the Company offers co-location services in which
Ingram Micro sets up a permanent location either on site or adjacent to a
supplier's manufacturing facility. Ingram Micro takes possession of product at
the supplier's location and then ships it to the reseller or end-user, depending
on the reseller's specification, cutting out a large portion of costs from the
supply chain.
DELIVER WORLD-CLASS OUTSOURCING AND VALUE-ADDED PROGRAMS TO SUPPLIERS AND
RESELLERS. As a global service-focused organization, Ingram Micro strives to
compete on the basis of total value rather than solely on price. By
understanding and anticipating customer needs, the Company continually develops
innovative business solutions to provide full back-room outsourcing services to
suppliers and resellers. Ingram Micro's GPS division assists suppliers in
outsourcing standard business functions, such as logistics and end-user
fulfillment. The Affiniti division aims to transform the Company's relationships
with its reseller customers from pure transactional relationships to
consultative partnerships where Ingram Micro satisfies not only the customers'
product needs but also their service requirements. Such relationships are
designed to enable the Company to transition from a product-centric commodity
business to a full solution and services provider, with expected benefits in
revenue and margin generation. Under the GPS and Affiniti initiatives, the
Company identifies and deploys value-added services to its supplier and reseller
partners such as warehousing, distribution, order management, product
fulfillment, product reconfiguration, channel assembly, and e-commerce credit
management. Ingram Micro, in conjunction with various strategic partners,
provides additional services in areas such as e-commerce, telemarketing,
transportation and marketing services. Together, these services are intended to
link reseller customers and suppliers to Ingram Micro as a one-stop
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provider of information technology products and related services, while meeting
demand by suppliers and resellers to outsource their non-core business
activities and thereby lower their operating costs.
MAINTAIN LOW COST LEADERSHIP THROUGH CONTINUOUS IMPROVEMENTS IN SYSTEMS AND
PROCESSES. Intense competition and narrow margins characterize the information
technology products and services distribution industry. As a result, achieving
economies of scale and controlling operating expenses are critical to achieving
and maintaining profitable growth. Over the past five years, the Company has
been successful in reducing SG&A expenses (including expenses allocated from
Ingram Industries prior to the Split-Off) as a percentage of net sales, to 4.0%
in 1999 from 4.9% in 1995.
Work is in progress on a number of programs designed to continue reducing
operating expenses as a percentage of net sales. Many U.S.-developed programs
are slated for implementation in the Company's international operations, while
other programs are region-specific. Current productivity improvement programs
include: (i) system enhancements to automatically route orders to the most
cost-efficient warehouse based on customer needs and warehouse capacity; (ii)
increased utilization of most of the Company's existing warehouse locations
resulting from the expansion of operating hours from 20 to 24 hours per day;
(iii) automated proof-of-delivery notifications to improve collection on past
due invoices; (iv) creation of "co-location" programs with key vendors to ship
product directly from the vendor to the end-user; (v) enhancements that allow a
close integration of major systems -- such as logistics and material handling
platforms -- resulting in increased efficiencies, product traceability, and
service offerings; and (vi) the expansion of the Company's electronic commerce
tools, including deployment of Internet ordering capabilities in 17 countries to
date, to increase the number of orders placed without the assistance of a
telesales representative. See "-- Information Systems."
The Company will, on an ongoing basis, examine its business processes and
systems to determine how it can continue to improve, while simultaneously
lowering costs.
DEVELOP HUMAN RESOURCES FOR EXCELLENCE AND TO SUPPORT FUTURE GROWTH. Ingram
Micro's growth to date is a result of the talent, dedication, and teamwork of
its associates. Future growth and success will be substantially dependent upon
the retention and development of existing associates, as well as the recruitment
of additional associates with superior talent.
Transferring functional skills and implementing cross-training programs
across all Ingram Micro locations have proven to be important factors in the
Company's growth and global expansion. A rigorous and systematic process is
being implemented for defining, developing and delivering the highest quality
training solutions in the most cost-effective way. In conjunction with these
training programs, the Company is expanding its human resources systems
worldwide to provide enhanced applicant tracking, hiring screens, career and
succession planning, education assistance, stock ownership participation, and
benefits administration. Also, the Company continues to seek top quality
associates worldwide through local, professional, and college recruiting
programs. Recognizing that hiring and retaining associates hinges, in part, on
providing a competitive salary and benefits package, the Company has developed a
global salary structure based on a comprehensive review of competitive salaries
and benefits by region. Based on feedback from the Company's annual associate
surveys and leadership behavior questionnaires, Ingram Micro has modified many
aspects of its programs and processes.
CUSTOMERS
Ingram Micro sells to more than 175,000 reseller customers in more than 100
countries worldwide. No single customer accounted for more than 4% of Ingram
Micro's net sales in 1999, 1998, or 1997.
The Company conducts business with most of the leading resellers of
information technology products and services around the world including, in the
United States, Best Buy, Buy.com, CDW Computer Centers, CompUSA, Dell Computer,
Insight, MicroAge, Micro Warehouse, Office Max, PC Connection and Staples. The
Company's reseller customers outside the United States include Club Compu Price,
DGS Retail Limited, EDS Innovations, Future Shop, GE Capital, Laboratorios
Magneticos, Micro Warehouse, Nueva Wal Mart and Telenor. In most cases, the
Company has resale contracts with its reseller customers which are generally
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<PAGE> 9
terminable at will after a short notice period, and have no minimum purchase
requirements. The Company's business is not substantially dependent on any such
contracts.
Ingram Micro is well positioned to provide fulfillment and value-added
services to the Internet reseller marketplace. As of January 1, 2000, Ingram
Micro supported 34 Internet resellers (defined as those resellers whose primary
point of sale to their end-users is via the reseller's web site). Ingram Micro's
sales organization has specific resources dedicated to the recruitment,
development and sales support of the Internet reseller.
The Company's GPS Division provides a number of information technology
product manufacturers with supply chain optimization services including: call
center management, customer service, credit management, financial services,
invoicing, technical service, order management, warehouse management, kitting,
customized shipping labels, and reverse logistics services. The Company's
agreements with these manufacturers are generally for a number of years,
although either party may terminate the agreement after a relatively short
notice period.
The Company has specific agreements in place with its Affiniti customers to
provide order management, logistics management, configuration management and
procurement management services. Customers include CompUSA, SARCOM, Software
Spectrum and Unisys in the United States, ABM and Mobile Direct in Canada, and
GE Capital, IMS and Telenor in Europe. These agreements generally have longer
terms than the Company's resale agreements, but, in most cases, can be
terminated on relatively short notice by either party without cause.
SALES AND MARKETING
As of the end of fiscal 1999, Ingram Micro's sales department employed
approximately 3,600 sales representatives worldwide. Of these, approximately
1,300 representatives are located in the United States, 1,350 in Europe, and 900
in other regions. These individuals assist resellers with product
specifications, system configuration, new product/service introductions,
pricing, and availability.
The sales organization is structured to focus on resellers, who comprise
the following market sectors:
- VAR (value-added resellers): Internet service providers, corporate
resellers, direct marketers, independent dealers and owner-operated
chains;
- Consumers: Internet storefronts, consumer electronics stores, computer
superstores, mass merchants, office product superstores, and warehouse
clubs; and
- Telecommunications: telephone companies, telecommunications contractors
and interconnect value-added resellers.
The Company's product management and marketing groups also promote Ingram
Micro's sales growth and facilitate customer contact. For example, Ingram
Micro's marketing programs are tailored to meet specific supplier and reseller
customer needs. These needs are met through a wide offering of services by the
Company's in-house marketing organization, including advertising, direct mail
campaigns, market research, on-line marketing, retail programs, sales
promotions, training, and assistance with trade shows and other events.
SELLING ARRANGEMENTS. The Company offers various credit terms to qualifying
customers as well as prepay, credit card, and cash on delivery terms. The
Company also offers "end-user" financing based upon the end-user's
creditworthiness and collects outstanding accounts receivable on behalf of the
reseller. The Company closely monitors reseller customers' creditworthiness
through IMpulse, which contains detailed information on each customer's payment
history as well as other relevant information. In addition, the Company
participates in a U.S. credit association whose members exchange customer credit
rating information. In most markets, the Company utilizes various levels of
credit insurance to allow sales expansion and control credit risks; for example,
in Europe, approximately 90% of the Company's sales are covered by credit
insurance. The Company establishes reserves for estimated credit losses in the
normal course of business. If the Company's receivables were to experience a
substantial deterioration in their collectibility or if the
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<PAGE> 10
Company cannot obtain credit insurance at reasonable rates, the Company's
financial condition and results of operations may be adversely impacted.
The Company also sells to certain customers in the United States through
arrangements that involve higher volume sales on limited lines of product. These
sales are generally funded by floor plan financing companies whose fees are
subsidized by the Company's suppliers. Historically, the Company received
payment from these financing institutions within three business days from the
date of the sale, allowing the Company's master reseller business to operate at
much lower relative working capital levels than the Company's distribution
business. Starting in the second half of 1998, certain of the industry's leading
hardware manufacturers reduced their flooring fee subsidies. As a result,
payments from institutions that finance master reseller sales with these reduced
subsidies are now received within 15 days. This delay in payment has increased
the Company's average borrowing levels and interest costs.
PRODUCTS AND SUPPLIERS
Ingram Micro believes that it has the largest inventory of products in the
industry, based on a review of its major competitors' publicly available data.
The Company distributes and markets more than 280,000 products (as measured by
distinct part numbers assigned by manufacturers and other suppliers) from the
industry's premier computer hardware manufacturers, networking equipment
suppliers, and software publishers worldwide. Product assortments vary by
market, and the manufacturers' relative importance to Ingram Micro also varies
from country to country. On a worldwide basis, the Company's sales mix is more
heavily weighted toward hardware products than software products. Net sales of
software products have decreased as a percentage of total net sales in recent
years due to a number of factors, including bundling of software with
microcomputers, increased prevalence of software licensing as compared to sales
of individual software titles and declines in software prices. The Company
believes that this is a trend that applies to the information technology
products distribution industry as a whole, and the Company expects it to
continue.
Ingram Micro's worldwide suppliers include leading computer hardware
manufacturers, networking equipment manufacturers, and software publishers such
as 3Com, Apple Computer, Cisco Systems, Compaq Computer, Corel, Epson,
Hewlett-Packard, IBM, Intel, Iomega, Microsoft, NEC Technologies, Novell,
Quantum, Seagate, Sun Microsystems, Symantec, Toshiba, Viewsonic, and Western
Digital.
The Company's suppliers generally warrant the products distributed by the
Company and allow returns of defective products, including those that have been
returned to the Company by its customers. The Company does not independently
warrant the products it distributes; however, the Company does warrant the
following: (i) its services with regard to products which it configures for its
customers, and (ii) products which it builds to order from components purchased
from other sources.
The Company has written distribution agreements with many of its suppliers;
however, these agreements usually provide for nonexclusive distribution rights
and often include territorial restrictions that limit the countries in which
Ingram Micro is permitted to distribute the products. The agreements are also
generally short term, subject to periodic renewal, and often contain provisions
permitting termination by either party without cause upon relatively short
notice. A supplier who elects to terminate a distribution agreement generally
will repurchase its product carried in the distributor's inventory. The Company
does not believe that its business is substantially dependent on the terms of
any such agreements.
The Company's business, like that of other distributors, is subject to the
risk that the value of its inventory will be affected adversely by suppliers'
price reductions or by technological changes affecting the usefulness or
desirability of the products comprising the inventory. It is the policy of most
technology product suppliers to protect distributors, such as the Company, from
the loss in value of inventory due to technological change or the supplier's
price reductions. Under many such agreements, the distributor has a designated
period of time within which to return for credit or exchange for other products
a portion of those inventory items purchased. In addition, under the terms of
many distribution agreements and if the distributor complies with certain
conditions, suppliers will credit the distributor for declines in inventory
value resulting from the supplier's price reductions. In the last year, however,
major PC suppliers have decreased the availability of price protection for
distributors. It is now more difficult for the Company to match its inventory
levels with
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price protection periods. The time periods within which distributors may receive
rebates or credit from manufacturers for decreases in prices on unsold inventory
are shorter. Consequently, the Company's risk of loss has increased due to
declines in the value of inventory held by the Company after such price
protection periods have passed. The Company is taking various actions, including
closer monitoring of its inventory levels and decreased purchases, to lessen
such risk.
While the industry practices discussed above are sometimes not embodied in
written agreements and do not protect the Company in all cases from declines in
inventory value, management believes that these practices provide a level of
protection from such declines. No assurance can be given, however, that such
practices will continue or that they will adequately protect the Company against
declines in inventory value.
SERVICES
Ingram Micro offers a variety of services to resellers and manufacturers.
The Company's Frameworks offering features reconfiguration to OEMs, and includes
other services in the U.S. and Europe. Through its GPS division, the Company
provides outsourcing services to manufacturers and through its Affiniti
division, it provides outsourcing services to its large reseller customers.
FRAMEWORKS. Ingram Micro introduced Frameworks, a channel assembly and
configuration initiative, in 1997 to improve efficiency and assist in reducing
manufacturers' inventory overhead. Frameworks, currently provides
reconfiguration services within each region Ingram Micro operates.
Reconfiguration consists of opening brand named finished product and upgrading
it with features such as memory, components, accessories, and third party
software. Reconfiguration is provided in the U.S. at two dedicated Frameworks
facilities and under co-location arrangements established adjacent to OEM
assembly operations in Houston, Texas; Raleigh, North Carolina; and Richmond,
Virginia. Outside the U.S., reconfiguration is performed at several of the
Company's distribution facilities around the world. Within the U.S. and European
regions, Frameworks services also include channel assembly (bringing together
individual OEM components into a manufacturer-authorized computer),
manufacturing of private label and unbranded systems, as well as other
manufacturing services.
GLOBAL PARTNER SERVICES. Ingram Micro established the GPS division in 1999
to provide outsourcing services to manufacturers. GPS, currently a U.S. and
Canadian initiative, helps manufacturers seamlessly provide end-users with
product selection, purchasing, delivery and customer service.
Ingram Micro provides a complete logistics and outsourcing solution to
manufacturers through its GPS division. The Company's service offerings include
warehousing, distribution, order management, product fulfillment, and credit
management, among others. Various strategic partners, working with Ingram Micro,
provide services in areas such as e-commerce, telemarketing, transportation, and
marketing services. These relationships include joint engagement with key
customers, as well as the development of value-added solutions to increase
customer satisfaction and expand opportunities.
The Company's agreements with these manufacturers are generally for a
number of years, although either party may terminate the agreement after a
relatively short notice period.
AFFINITI. In order to take advantage of the Company's scale and service
offerings, Ingram Micro also established Affiniti in 1999 within its U.S.,
Canadian, and European operations. Affiniti provides the Company's large
reseller customers with outsourcing and supply chain management services. This
service offering includes order management, product procurement, configuration,
fulfillment, marketing services and certain other outsourcing services.
Resellers benefit by reducing their fixed investments while at the same time
having access to the latest technology and logistics services through Ingram
Micro.
The Company has specific agreements in place with its Affiniti customers to
provide order management, procurement management, configuration management and
logistics management services. Customers include CompUSA, SARCOM, Software
Spectrum and Unisys in the United States, ABM and Mobile Direct in Canada, and
GE Capital, IMS and Telenor in Europe. These agreements generally have longer
terms than the Company's resale agreements, but, in most cases, can be
terminated on relatively short notice by either party without cause.
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INFORMATION SYSTEMS
Ingram Micro's systems are primarily mainframe-based and provide the high
level of scalability and performance required to manage such a large and complex
business operation. IMpulse, Ingram Micro's enterprise wide system, is a single,
standardized, real-time information system and operating environment, used
across substantially all of the Company's worldwide operations. It has been
customized as necessary for use in all countries in which the Company operates
and has the capability to handle multiple languages and currencies. On a daily
basis, the Company's systems typically handle 60 million on-line transactions,
compared to 12 million on-line transactions handled on a daily basis by IMpulse
in 1996. The Company has designed IMpulse as a scalable system that has the
capability to support increased transaction volume. The overall internal
response time for the Company's IMpulse system consisting of over 47,000
terminal sessions (terminals, printers, personal computers, and radio frequency
hand held terminals) is less than one second.
Worldwide, Ingram Micro's centralized processing system supports more than
40 operational functions including customer management, inventory management,
order management, warehouse management, and accounting. At the core of the
IMpulse system is on-line, real-time distribution software to which considerable
enhancements and modifications have been made to support the Company's low cost
business model and its growth. The Company makes extensive use of advanced
telecommunications technologies with customer service-enhancing features, such
as Automatic Call Distribution to route customer calls to the telesales
representatives. The Telesales Department uses its Sales Wizard system for
on-line, real-time tracking of all customer calls, for proactive outbound
calling, and for status reports on sales statistics such as number of customer
calls, customer call intentions, and total sales generated. IMpulse allows the
Company's telesales representatives to deliver real-time information on product
pricing, inventory availability, and order status to reseller customers. The
Sales Adjusted Gross Profit pricing system enables telesales representatives to
make informed pricing decisions through access to specific product and order and
fulfillment-related costs for each sales opportunity.
In the United States, the Company has implemented CTI technology, which
provides the telesales representatives with Automatic Number Identification
capability and advanced telecommunications features such as on-screen call
waiting and automatic call return, thereby reducing the time required to process
customer orders.
In order for Ingram Micro to act as the agent of commerce among suppliers,
resellers, and end-users, the Company greatly improved its web site,
www.ingrammicro.com during 1999. The Company is rapidly enhancing and deploying
seamless, easy-to-use electronic commerce solutions that provide resellers with
the ability to do business with Ingram Micro and with end-users at lower cost.
The Company's electronic commerce capabilities have expanded during 1999 through
two major enhancements to the Ingram Micro web site. The first enhancement
provided 24 hours a day/7 days a week ordering capability, along with a major
re-design of the user interface and product search functionality. The second
enhancement added end-user quote generation and financing options. These
enhancements, bundled with InsideLine, a direct communication link that
furnishes resellers with real-time access to the Company's mainframe inventory
systems, create a strong base from which to roll out additional customer-focused
solutions. VentureTech Network uses these developments to provide customers an
end-user web storefront targeted specifically to the small-to-medium sized
business market segment. The site provides targeted content and promotional
offerings to end-users, and allows Ingram Micro customers to conduct business
transactions via the Internet with their end-users.
To complement Ingram Micro's telesales, customer service, and technical
support capabilities, IMpulse offers a number of different electronic products
and services through which customers can conduct business with the Company.
These products and services include the Customer Automated Purchasing System,
Electronic Data Interchange, the Bulletin Board Service, internet-based
Electronic Catalog, TechNotes, and Auction Block. The Electronic Catalog
provides reseller customers with access to product pricing and availability,
with the capability to search by product category, name, or manufacturer.
TechNotes is a comprehensive multi-manufacturer database which customers can
deploy on their own web sites and contains timely and accurate product, sales,
and technical information. TechNotes information is updated regularly by the
manufacturers. Auction Block is a real-time, on-line bidding service that allows
reseller customers to
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competitively bid on unopened products that are not returnable to suppliers
(e.g., discontinued products, products with cosmetic damage to their packaging,
returned products not conforming to the supplier's return policies).
The Company's warehouse operations use extensive bar-coding technology and
radio frequency technology for receiving and shipping, and real-time links to
United Parcel Service and Federal Express for freight processing and shipment
tracking. The customer service department uses the POWER System for on-line
documentation and faster processing of customer product returns. To ensure that
adequate inventory levels are maintained, the Company's buyers depend on the
purchasing system to track inventory on a continual basis. Many other features
of IMpulse help to expedite the order processing cycle and reduce operating
costs for the Company as well as its reseller customers and suppliers.
The Company employs various security measures and backup systems designed
to protect against unauthorized use or failure of its information systems.
Access to the Company's information systems is controlled through the use of
passwords and additional security measures are taken with respect to sensitive
information. The Company has a contract with Sungard Recovery Services for
disaster recovery. In addition, the Company has backup power sources for
emergency power. The Company has not in the past experienced significant
failures or downtime of IMpulse or any of its other information systems, but any
such failure or significant downtime could prevent it from taking customer
orders, printing product pick-lists and/or shipping product, and could also
prevent the Company's customers from accessing price and product availability
information.
The Company believes that in order to remain competitive, it will be
necessary to continuously upgrade its information systems. The Company's
mainframe computer systems were upgraded during 1999 to allow for continued
growth and to allow further and faster integration of new web-based technology
with the legacy systems. The Company has also begun to migrate its IMpulse
system from a mainframe-based system using Cobol language to a client-server
based system using Oracle database management systems. The Company believes that
this new information system architecture will address the Company's need for a
distributed computing environment. Doing so will provide for improved and
simpler connectivity to vendors and customers 24 hours a day/7 days a week and
will increase system scalability and fault tolerance.
EURO CONVERSION
On January 1, 1999, a single currency called the euro was introduced in
Europe. Eleven of the 15 member countries of the European Union adopted the euro
as their common legal currency on that date. Fixed conversion rates between
these participating countries' existing currencies (the "legacy currencies") and
the euro were established as of that date. The legacy currencies are scheduled
to remain legal tender as denominations of the euro until at least January 1,
2002 (but not later than July 1, 2002). During this transition period, parties
may settle transactions using either the euro or a participating country's
legacy currency. Beginning in January 2002, new euro-denominated bills and coins
will be issued and legacy currencies will be withdrawn from circulation. The
Company has implemented plans to address the issues raised by the euro currency
conversion. These plans include, among others, the need to adapt computer
information systems and business processes and equipment to accommodate
euro-denominated transactions; the need to analyze the legal and contractual
implications on contracts; and the ability of the Company's customers and
vendors to accommodate euro-denominated transactions on a timely basis. Since
the implementation of the euro on January 1, 1999, the Company has experienced
improved efficiencies in its cash management program in Europe as all
intra-company transactions within participating countries are conducted in
euros. In addition, the Company has reduced hedging activities in Europe for
transactions conducted between euro participating countries. Since the Company's
information systems and processes generally accommodate multiple currencies, the
Company anticipates that modifications to its information systems, equipment and
processes will be made on a timely basis and does not expect any failures which
would have a material adverse effect on the Company's financial position or
results of operations or that the costs of such modifications will have a
material effect on the Company's financial position or results of operations.
The Company has not experienced any material adverse effects on its financial
position or results of operations in connection with the January 1, 1999 first
stage conversion.
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NON-U.S. OPERATIONS AND EXPORT SALES
OPERATIONS OUTSIDE THE UNITED STATES. The Company has subsidiaries or
offices outside the U.S. in 30 countries and sales representatives in another
four countries, including Argentina, Australia, Brazil, Canada, China, Colombia,
Costa Rica, Chile, Ecuador, Hungary, India, Indonesia, Malaysia, Mexico, New
Zealand, Norway, Panama, Peru, Singapore, Switzerland, Thailand, Venezuela, and
12 countries of the European Union: Austria, Belgium, Denmark, Finland, France,
Germany, Italy, The Netherlands, Portugal, Spain, Sweden and The United Kingdom.
In 1999, 1998, and 1997, 40.1%, 34.7%, and 30.4%, respectively, of the Company's
net sales were derived from operations outside of the United States. The Company
expects its net sales from operations outside the United States to increase as a
percentage of total net sales in the future due primarily to organic growth and,
to a lesser extent, acquisitions.
The Company's net sales from operations outside the United States are
primarily denominated in currencies other than the U.S. dollar. Accordingly, the
Company's operations outside the United States impose risks upon its business as
a result of exchange rate fluctuations. Additionally, the Company's net sales
from operations outside the United States expose the business to financial risks
from interest rate fluctuations in foreign markets. The Company mitigates most
of this risk primarily through matching the currencies of its non-U.S. costs and
revenues, borrowing in foreign currencies, and utilizing derivative financial
instruments such as forward exchange contracts and interest rate swaps. See
"Item 7. -- Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Item 7A. -- Quantitative and Qualitative Disclosures
About Market Risk."
EXPORT MARKETS. The Company continues to serve markets where it does not
have a stand-alone, in-country presence through its general telesales operations
in Santa Ana, California and Buffalo, New York and in Export offices in Miami,
Florida; and Heerlen, The Netherlands. In addition, the Export branch in Latin
America has field sales representatives based in Bogota, Colombia; San Jose,
Costa Rica; Caracas, Venezuela; Quito, Ecuador; San Juan, Puerto Rico; and Sao
Paulo, Brazil.
For segment information regarding the Company's United States and non-U.S.
operations, see Note 10 of Notes to Consolidated Financial Statements.
COMPETITION
The Company operates in a highly competitive environment, both in the
United States and internationally. The information technology products and
services distribution industry is characterized by intense competition, based
primarily on price, product availability, speed and accuracy of delivery,
effectiveness of sales and marketing programs, credit availability, ability to
tailor specific solutions to customer needs, quality and breadth of product
lines and service, and availability of technical and product information. The
Company believes it competes favorably with respect to each of these factors.
Ingram Micro competes in the U.S. against full-line distributors such as
Tech Data, Merisel and Pinacor (MicroAge's distribution arm), as well as
specialty distributors such as Gates/Arrow (desktop and enterprise products),
Daisytek (consumables), Access Graphics (enterprise products) and Avnet
(industrial and enterprise products). Ingram Micro competes internationally with
a variety of national and regional distributors. In the European market,
competitors include international distributors such as Tech Data (which acquired
Computer 2000, a European competitor). During 1999, CHS Electronics, a large
international competitor, began divesting the majority of its operations in
Europe and in Latin America to the respective management groups. European
regional and local competitors include the divested European operations of CHS,
Actebis, Raab Karcher and Scribona. In Canada, Ingram Micro competes with
Merisel, Beamscope and Tech Data (which acquired Globelle in 1999). In Latin
America, Ingram Micro competes with international distributors such as Tech
Data, and several regional and local distributors including the divested Latin
American operations of CHS, MPS Mayorista, Alvimer and Sonda-Beamscope S.A. In
the Asia Pacific market, Ingram Micro faces both regional and local competitors,
of whom the largest are Tech Pacific, a broadline distributor and SiS
Distribution Ltd., a Hong Kong-based distributor of microcomputer products.
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The Company is constantly seeking to expand its business into areas closely
related to its core information technology products and services distribution
business. As the Company enters new business areas, including value-added
services, it may encounter increased competition from current competitors and/or
from new competitors, some of which may be current customers of the Company. As
electronic purchases of software become more prevalent in the industry,
electronic software distributors may become significant competitors of the
Company. In addition, the Company will continue to seek new opportunities to
provide warehousing and distribution support to Internet storefronts. Electronic
commerce companies could potentially compete with the Company by purchasing
product directly from manufacturers and selling to reseller or end-user
customers.
The Company believes that as customers move their back-room operations to
distribution partners, outsourcing and value-added capabilities will become more
important competitive factors. Examples of value-added capabilities include
channel assembly, configuration, innovative financing programs, and order
fulfillment programs. Many of the Company's manufacturers and reseller customers
are looking to outsourcing partners to perform back-room operations. There are
many potential competitors that provide outsourcing services including other
distributors, freight companies such as United Parcel Service and Federal
Express, and logistics outsourcing companies such as Excel Logistics.
Ingram Micro also competes with hardware manufacturers and software
publishers that sell directly to reseller customers and end-users.
ASSET MANAGEMENT
The Company seeks to maintain sufficient quantities of product inventories
to achieve high order fill rates. The Company believes that the risks associated
with slow moving and obsolete inventory are mitigated by price protection and
stock return privileges provided by suppliers and also by establishing and
continuing to accrue for excess and obsolete inventory reserves based upon
current requirements. In the event of a supplier price reduction, the Company
generally receives a credit for products based upon the terms and conditions
with that supplier. In addition, the Company has the right to return a certain
percentage of purchases, subject to certain limitations.
Historically, price protection, stock return privileges, and inventory
management procedures have helped to reduce the risk of decline in the value of
inventory. However, major PC suppliers have stated that it is their intention to
control the amount of inventory in the channel, particularly in light of the
growth of vendor direct and channel assembly strategies. In the last year, many
suppliers have changed the terms and conditions of their price protection plans
from "full coverage" to "past shipment coverage." This results in an exposure
for the distribution partner. The shorter time periods during which distributors
may receive credit for decreases in manufacturer prices on unsold inventory have
made it more difficult for the Company to match its inventory levels with the
price protection periods. Consequently, the Company's risk of loss due to
declines in value of inventory held by the Company after such price protection
periods have passed has increased.
Inventory levels may vary from period to period, due in part to the
addition of new suppliers or new lines with current suppliers and large cash
purchases of inventory due to advantageous terms offered by suppliers. In
addition, payment terms with inventory suppliers may vary from time to time, and
could result in less inventory being financed by vendors and a greater amount of
inventory being financed by the Company's capital.
EMPLOYEES
As of January 1, 2000, the Company employed 15,363 associates located in
the following regions: United States -- 8,003, Europe -- 4,466, and all other
regions -- 2,894. Ingram Micro's success depends on the skill and dedication of
its associates. The Company strives to attract, develop, and retain outstanding
personnel. Certain of the Company's operations in Europe, Latin America and
Canada are subject to collective bargaining or similar arrangements. The Company
has a process for continuously measuring the status of associate relations and
responding to associate priorities.
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In February 1999, the Company initiated a plan principally in the United
States, but also in Europe, to streamline operations and reorganize resources to
increase flexibility and service and maximize cost savings and operational
efficiencies. This reorganization plan included several organizational and
structural changes, including the closing of the Company's California-based
consolidation center and certain other redundant locations, realignment of the
Company's sales force and the creation of a product management organization that
integrates purchasing, vendor services, and product marketing functions, as well
as a realignment of administrative functions and processes. Outside the U.S.,
the Company increased its cost effectiveness with process improvement efforts
directed at increasing productivity in its distribution centers. In addition,
during the fourth quarter of 1999, further organizational and strategic changes
were implemented in the Company's Frameworks organization including the
selection of an outsource partner to produce unbranded systems and the
reallocation of resources to the Company's custom-configuration services
capabilities.
On March 6, 2000, the Company named Kent B. Foster chief executive officer
and president. He was also elected to Ingram Micro's board of directors. Jerre
L. Stead will remain chairman of the board until his retirement at the Company's
annual meeting of shareowners in May 2000, at which time Mr. Foster will succeed
him as chairman.
EXECUTIVE OFFICERS AND/OR REGIONAL PRESIDENTS OF THE COMPANY
The following table sets forth certain information with respect to each
person who is an executive officer and/or regional president of the Company as
of March 6, 2000:
<TABLE>
<CAPTION>
PRESENT AND PRIOR POSITIONS HELD WITHIN
NAME AGE THE PAST FIVE YEARS(1) YEARS POSITIONS HELD
---- --- --------------------------------------- --------------------
<S> <C> <C> <C>
Kent B. Foster(2)...... 56 Chief Executive Officer and President 03/00 to current
President, GTE, a telecommunications services 06/95 to 12/99
company
Vice Chairman and President, GTE Telephone 01/93 to 06/95
Operations
Michael J. Grainger.... 47 Executive Vice President and Worldwide Chief 10/96 to current
Financial Officer
Chief Financial Officer 05/96 to 10/96
Vice President and Controller, Ingram 07/90 to 10/96
Industries
Kevin M. Murai......... 36 Executive Vice President and President, 03/00 to current
Ingram Micro U.S.
Senior Vice President, Chief Operating 01/00 to 03/00
Officer and Acting President, Ingram
Micro U.S.
Senior Vice President and President, Ingram 12/97 to 01/00
Micro Canada
Vice President, Operations, Ingram Micro 01/93 to 12/97
Canada
Gregory M.E. 43 Executive Vice President and President, 06/99 to current
Spierkel............. Ingram Micro Europe
Senior Vice President and President, Ingram 07/97 to 06/99
Micro Asia-Pacific
Vice President, Global Sales & Marketing, 03/96 to 06/97
Mitel Inc., a manufacturer of
telecommunications and semiconductor
products
President, North America, Mitel Inc. 04/92 to 03/96
</TABLE>
16
<PAGE> 17
<TABLE>
<CAPTION>
PRESENT AND PRIOR POSITIONS HELD WITHIN
NAME AGE THE PAST FIVE YEARS(1) YEARS POSITIONS HELD
---- --- --------------------------------------- --------------------
<S> <C> <C> <C>
Guy P. Abramo.......... 38 Senior Vice President and Chief Information 01/00 to current
Officer
Senior Vice President and Acting Chief 11/99 to 01/00
Information Officer
Senior Vice President, Marketing, Worldwide 09/98 to 11/99
Partner, Yankelovich Partners, a marketing 05/98 to 10/98
professional services company
Managing Director, Marketing Intelligence, 02/95 to 05/98
Peat Marwick, LLP, an accounting and
professional services company
Manager, Marketing, Mobil Corporation, an 06/87 to 02/95
international oil company
James E. Anderson, Jr.. 52 Senior Vice President, Secretary and General 01/96 to current
Counsel
Vice President, Secretary and General 09/91 to 11/96
Counsel, Ingram Industries
Asger Falstrup......... 50 Senior Vice President and President Ingram 01/00 to current
Micro Canada
Vice President Northern Europe 11/96 to 01/00
Managing Director, Denmark 08/94 to 11/96
David M. Finley........ 59 Senior Vice President, Human Resources, 07/96 to current
Worldwide
Senior Vice President, Human Resources, 05/95 to 07/96
Budget Rent a Car, a car rental company
Vice President, Human Resources, The 01/77 to 05/95
Southland Corporation, a convenience
retail company
Henri T. Koppen........ 57 Senior Vice President and President, Ingram 03/00 to current
Micro Asia-Pacific
Senior Vice President and President, Ingram 01/98 to 02/00
Micro Latin America
President, Latin America, General Electric 07/96 to 12/97
Capital Information Technology Solutions,
a systems integrator/reseller company
Vice President, Latin America, Ameridata 05/95 to 07/96
Global Inc., a systems integrator/reseller
company
General Manager, Mexico, Control Data 05/94 to 05/95
Systems, a systems manufacturer and
integrator
Donald R. Lyman........ 54 Senior Vice President and President, Ingram 03/00 to current
Micro Latin America
Senior Director, Latin America Export 08/99 to 02/00
Channel Sales Manager, Latin America, 01/99 to 07/99
IBM Personal Systems Group, a systems
manufacturer
Netfinitiy Business Unit Manager, IBM 02/98 to 12/98
Personal Systems Group
Channel Manager, IBM Personal Systems Group 10/95 to 01/98
Brand Manager, Commercial Desktop, 09/92 to 10/95
IBM Personal Systems Group
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
PRESENT AND PRIOR POSITIONS HELD WITHIN
NAME AGE THE PAST FIVE YEARS(1) YEARS POSITIONS HELD
---- --- --------------------------------------- --------------------
<S> <C> <C> <C>
James F. Ricketts...... 53 Corporate Vice President and Worldwide 04/99 to current
Treasurer
Vice President and Worldwide Treasurer 09/96 to 04/99
Treasurer, Sundstrand Corporation, a 02/92 to 09/96
manufacturer of aerospace and related
technology
</TABLE>
- ---------------
(1) The first position and any other positions not given a separate corporate
identification are with the Company.
(2) Mr. Foster is a director of Campbell Soup Co., J.C. Penney Co. Inc., and New
York Life Insurance Co.
TRADEMARKS AND SERVICE MARKS
The Company owns or is the licensee of various trademarks and service
marks, including, among others, "Ingram Micro," "IMpulse," the Ingram Micro
logo, "Partnership America," "Leading the Way in Worldwide Distribution,"
"Frameworks Total Integration Services," "Affiniti," "VentureTech Network" and
"eSolutions." Certain of these marks are registered, or are in the process of
being registered, in the United States and various other countries. Even though
the Company's marks may not be registered in every country where the Company
conducts business, in many cases the Company has acquired rights in those marks
because of its continued use of them. Management believes that the value of the
Company's marks is increasing with the development of its business, but that the
business of the Company as a whole is not materially dependent on such marks.
SAFE HARBOR FOR FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for "forward-looking statements" to encourage companies to provide
prospective information, so long as such information is identified as
forward-looking and is accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those discussed in the statement. Except for historical
information, certain statements contained in this Annual Report on Form 10-K may
be "forward-looking statements" within the meaning of the Act. In order to take
advantage of the "safe harbor" provisions of the Act, the Company identifies the
following important factors which could affect the Company's actual results and
cause such results to differ materially from those projected, forecasted,
estimated, budgeted or otherwise expressed by the Company in forward-looking
statements made by or on behalf of the Company:
(1) Intense competition may lead to reduced prices, lower sales or
reduced sales growth, and lower gross margins. This includes competition
from alternative business models, such as direct manufacturer to end-user
selling.
(2) The Company's narrow margins magnify the impact on operating
results of variations in operating costs. A number of factors may reduce
the Company's margins. For example, if PC manufacturers substantially
reduce or terminate price protection programs, if PC manufacturers
substantially raise the threshold on sales volume before distributors may
qualify for discounts and/or rebates or reduce the overall amount of
incentives available, if the Company's receivables experience a substantial
deterioration in their collectibility or if the Company cannot obtain
credit insurance at reasonable rates, the Company's financial condition and
results of operations may be adversely impacted.
(3) Seasonal variations in the demand for products and services, as
well as the introduction of new products, may cause variations in the
Company's quarterly results.
(4) The availability (or lack thereof) of capital on acceptable terms
may hamper the Company in its efforts to fund its increasing working
capital needs.
(5) The failure of the Company to adequately manage its growth may
adversely impact the Company's results of operations.
18
<PAGE> 19
(6) A failure of the Company's information systems may adversely
impact the Company's results of operations.
(7) Devaluation of a foreign currency, or other disruption of a
foreign market, may adversely impact the Company's operations in that
country or globally.
(8) The loss of a key executive officer or other key employee may
adversely impact the Company's operations.
(9) The inability of the Company to obtain products on favorable terms
may adversely impact the Company's results of operations.
(10) The Company's operations may be adversely impacted by an
acquisition that (i) is not suited for the Company, (ii) is improperly
executed, or (iii) substantially increases the Company's debt.
(11) The Company's financial condition may be adversely impacted by a
decline in value of a portion of the Company's inventory.
(12) The Company may experience an increased risk of credit loss as a
result of reseller customers' businesses being negatively impacted by
dramatic changes in the information technology products and services
industry as well as intense competition among resellers.
(13) The failure of certain shipping companies to deliver product to
the Company, or from the Company to its customers, may adversely impact the
Company's results of operations.
(14) If the Company's inventory suppliers terminate or substantially
reduce the subsidies relating to floor planning financing for the Company's
master reseller business, such change in policy may adversely impact the
Company's financial condition and results of operations.
Reference is made to Exhibit 99.01 hereto for additional discussion of the
foregoing factors, as well as additional factors which may affect the Company's
actual results and cause such results to differ materially from those projected,
forecasted, estimated, budgeted or otherwise expressed in forward-looking
statements.
ITEM 2. PROPERTIES
Ingram Micro's worldwide executive headquarters, as well as its West Coast
sales and support offices, are located in a three-building office complex in
Santa Ana, California. The Company also maintains an East Coast operations
center in Williamsville (Buffalo), New York. In October, 1999, the Company
established an office site in Mississauga (Toronto), Ontario, Canada.
As of March 6, 2000, the Company operates seven distribution centers
throughout the continental United States. The Company also operates 63
distribution centers outside of the U.S. -- in Argentina, Australia, Brazil,
Canada, Chile, China, India, Indonesia, Hong Kong, Malaysia, Mexico, New
Zealand, Norway, Peru, Singapore, Switzerland, Thailand, and most countries of
the European Union.
As of March 6, 2000, the Company operates two integration centers located
in Memphis, Tennessee and 's-Hertogenbosch, The Netherlands. As of the same
date, the Company operates three returns centers, two in Santa Ana, California
and one in Toronto, Canada.
As of March 6, 2000, all of the Company's facilities are leased, with the
exception of the office in Buenos Aires, Argentina and the combination office
and distribution facility in Santiago, Chile. These leases have varying terms.
The Company does not anticipate any material difficulty in renewing any of its
leases as they expire or securing replacement facilities, in each case on
commercially reasonable terms. In addition, the Company owns two undeveloped
properties in Santa Ana, California totaling approximately 16.27 acres, and has
options on approximately 60 acres in Millington, Tennessee.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which the Company is a
party or to which any of its property is subject.
19
<PAGE> 20
As a result of an internal review by the Company of export shipments made
from its United States distribution facilities, the Company has determined that
certain of these shipments and related documentation were not in compliance with
U.S. export regulations. The Company has notified the appropriate federal
government agencies pursuant to applicable voluntary self-disclosure procedures
(the "Disclosure"). The reported shipments consisted of modems and other
telecommunications products and shrink-wrapped, commercial software readily
available through normal retail outlets that contained encryption features
controlled under export regulations. These shipments had a total value of
approximately $673,240. Violations of export laws and regulations are subject to
both civil and criminal penalties, including in appropriate circumstances
suspension or loss of export privileges. Since the Disclosure, a representative
of the Department of Commerce has requested additional documents relating to the
Disclosure, which the Company provided in January 1999. The Department has not
communicated with the Company since then. The Company does not know what
position the Department will take upon further review of the Disclosure. The
Company is not able to estimate at this time the amount or nature of penalties,
if any, that might be sought against the Company as a result of the reported
violations; however, penalties to which the Company potentially may be subject
could be material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report, through the solicitation of
proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
As of March 27, 2000, there were 636 holders of record of the Class A
Common Stock and 134 holders of record of the Class B Common Stock. The Company
believes that there are approximately 35,000 beneficial holders of the Class A
Common Stock.
Information as to the Company's quarterly stock prices is included on the
inside back cover of the Company's 1999 Annual Report to Shareowners, which is
included as part of Exhibit 13.01 and is incorporated in this Annual Report on
Form 10-K.
Information as to the principal market on which the Class A Common Stock is
traded is included on the inside back cover of the Company's 1999 Annual Report
to Shareowners, which is included as part of Exhibit 13.01 and is incorporated
in this Annual Report on Form 10-K.
DIVIDEND POLICY. The Company has not declared or paid any dividends on its
Class A or Class B Common Stock in the preceding two fiscal years. The Company
currently intends to retain its future earnings to finance the growth and
development of its business and, therefore, does not anticipate declaring or
paying cash dividends on its Class A or Class B Common Stock for the foreseeable
future. Any future decision to declare or pay dividends will be at the
discretion of the Board of Directors and will be dependent upon the Company's
financial condition, results of operations, capital requirements, and such other
factors as the Board of Directors deems relevant. In addition, certain of the
Company's debt facilities contain restrictions on the declaration and payment of
dividends.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial information of Ingram Micro for the five year period
ended January 1, 2000 is included on page 18 of the Company's 1999 Annual Report
to Shareowners, which is included as part of Exhibit 13.01 and is incorporated
in this Annual Report on Form 10-K. It should be read in conjunction with the
consolidated financial statements included on pages 30 through 50 of the
Company's 1999 Annual Report to Shareowners which are also included as part of
Exhibit 13.01 and incorporated in this Annual Report on Form 10-K and the
financial statement schedule below in Item 14 of this Annual Report on Form
10-K.
20
<PAGE> 21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations is included on pages 19 through 29 of the Company's 1999 Annual
Report to Shareowners, which are also included as part of Exhibit 13.01 and are
incorporated in this Annual Report on Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The required disclosure is included on pages 28 through 29 of the Company's
1999 Annual Report to Shareowners, which is also included as part of Exhibit
13.01 and incorporated in this Annual Report on Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's consolidated financial statements are included on pages 30
through 50 of the Company's 1999 Annual Report to Shareowners, which are also
included as part of Exhibit 13.01 and incorporated in this Annual Report on Form
10-K. Reference is made to the Index to the Financial Statements in Item 14
below.
A financial statement schedule for the Company, and report thereon, are
included on pages 27 and 28, respectively, of this Annual Report on Form 10-K.
Reference is made to the Index to Financial Statements in Item 14 below.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in the Company's independent accountants or
disagreements with such accountants on accounting principles or practices or
financial statement disclosures.
PART III
Information regarding executive officers required by Item 401 of Regulation
S-K is furnished in a separate disclosure in Part I of this report because the
Company will not furnish such information in its definitive Proxy Statement
prepared in accordance with Schedule 14A.
The Notice and Proxy Statement for the 2000 Annual Meeting of Shareowners,
to be filed pursuant to Regulation 14A under the Securities Exchange Act of
1934, as amended, which is incorporated by reference in this Annual Report on
Form 10-K pursuant to General Instruction G(3) of Form 10-K, will provide the
remaining information required under Part III (Items 10, 11, 12, and 13).
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS:
The consolidated financial statements, together with the report thereon of
PricewaterhouseCoopers LLP dated February 17, 2000, except as to the second
paragraph of Note 5, which is as of March 8, 2000, all appearing on pages 30
through 51 in the 1999 Annual Report to Shareowners, are incorporated in this
Annual Report on Form 10-K. With the exception of the aforementioned information
and the information incorpo-
21
<PAGE> 22
rated in Items 5, 6, 7, 7A and 8, the 1999 Annual Report to Shareowners is not
deemed filed as part of this Annual Report on Form 10-K.
<TABLE>
<CAPTION>
PAGE NO. IN
ANNUAL REPORT
TO SHAREOWNERS
--------------
<S> <C>
Index to Financial Information.............................. 17
Consolidated Balance Sheet at January 1, 2000 and January 2,
1999...................................................... 30
Consolidated Statement of Income for the years ended January
1, 2000, January 2, 1999, and January 3, 1998............. 31
Consolidated Statement of Stockholders' Equity for the years
ended January 1, 2000, January 2, 1999, and January 3,
1998...................................................... 32
Consolidated Statement of Cash Flows for the years ended
January 1, 2000, January 2, 1999, and January 3, 1998..... 33
Notes to Consolidated Financial Statements.................. 34
Report of Independent Accountants........................... 51
</TABLE>
Pages 18 through 52 and the inside back cover page of the 1999 Annual
Report to Shareowners of Ingram Micro Inc. include the Selected Financial Data,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, the Consolidated Financial Statements and related notes thereto, the
Independent Accountants' Report, Shareholder Information and Quarterly Stock
Prices. These pages are filed with the Securities and Exchange Commission as
Exhibit 13.01 to this Annual Report on Form 10-K.
2. FINANCIAL STATEMENT SCHEDULES:
Schedule II -- Valuation and Qualifying Accounts.
3. LIST OF EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
3.01 Form of Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.01 to the Company's
Registration Statement on Form S-1 (File No. 333-08453) (the
"IPO S-1"))
3.02 Amended and Restated Bylaws of the Registrant (incorporated
by reference to Exhibit 3.02 to the Company's Annual Report
on Form 10-K for the fiscal year ended January 3, 1998)
10.01 Ingram Micro Inc. 2000 Executive Incentive Bonus Plan
10.02 Reserved
10.03 Reserved
10.04 Reserved
10.05 Reserved
10.06 Amendment No. 1 to the Ingram Micro Inc. Amended and
Restated 1996 Equity Incentive Plan (incorporated by
reference to Exhibit 10.06 to the Company's Annual Report on
Form 10-K for the fiscal year ended January 3, 1998)
10.07 Ingram Micro Inc. Rollover Stock Option Plan (incorporated
by reference to Exhibit 10.07 to the IPO S-1)
10.08 Ingram Micro Inc. Key Employee Stock Purchase Plan
(incorporated by reference to Exhibit 10.08 to the IPO S-1)
10.09 Ingram Micro Inc. 1996 Equity Incentive Plan (incorporated
by reference to Exhibit 10.09 to the IPO S-1)
10.10 Ingram Micro Inc. Amended and Restated 1996 Equity Incentive
Plan (incorporated by reference to Exhibit 10.10 to the IPO
S-1)
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.11 Reserved
10.12 Credit Agreement dated as of October 30, 1996 among the
Company and Ingram European Coordination Center N.V., Ingram
Micro Singapore Pte Ltd., and Ingram Micro Inc., as
Borrowers and Guarantors, certain financial institutions, as
the Lenders, NationsBank of Texas, N.A., as Administrative
Agent for the Lenders and The Bank of Nova Scotia as
Documentation Agent for the Lenders (incorporated by
reference to Exhibit 10.12 to the Company's Registration
Statement on Form S-1 (File No. 333-16667) (the "Thrift Plan
S-1"))
10.13 Amended and Restated Reorganization Agreement dated as of
October 17, 1996 among the Company, Ingram Industries, and
Ingram Entertainment (incorporated by reference to Exhibit
10.13 to the Thrift Plan S-1)
10.14 Registration Rights Agreement dated as of November 6, 1996
among the Company and the persons listed on the signature
pages thereof (incorporated by reference to Exhibit 10.14 to
the Thrift Plan S-1)
10.15 Board Representation Agreement dated as of November 6, 1996
(incorporated by reference to Exhibit 10.15 to the Thrift
Plan S-1)
10.16 Thrift Plan Liquidity Agreement dated as of November 6, 1996
among the Company and the Ingram Thrift Plan (incorporated
by reference to Exhibit 10.16 to the Thrift Plan S-1)
10.17 Tax Sharing and Tax Services Agreement dated as of November
6, 1996 among the Company, Ingram Industries, and Ingram
Entertainment (incorporated by reference to Exhibit 10.17 to
The Thrift Plan S-1)
10.18 Reserved
10.19 Employee Benefits Transfer and Assumption Agreement dated as
of November 6, 1996 among the Company, Ingram Industries,
and Ingram Entertainment (incorporated by reference to
Exhibit 10.19 to the Thrift Plan S-1)
10.20 Reserved
10.21 Amended and Restated Exchange Agreement dated as of November
6, 1996 among the Company, Ingram Industries, Ingram
Entertainment and the other parties thereto (incorporated by
reference to Exhibit 10.21 to the Thrift Plan S-1)
10.22 Agreement dated as of August 26, 1996 between the Company
and Jerre L. Stead (incorporated by reference to Exhibit
10.22 to the IPO S-1)
10.23 Definitions for Ingram Funding Master Trust Agreements
(incorporated by reference to Exhibit 10.23 to the IPO S-1)
10.24 Asset Purchase and Sale Agreement dated as of February 10,
1993 between Ingram Industries and Ingram Funding Inc.
(incorporated by reference to Exhibit 10.24 to the IPO S-1)
10.25 Pooling and Servicing Agreement dated as of February 10,
1993 among Ingram Funding, Ingram Industries and Chemical
Bank (incorporated by reference to Exhibit 10.25 to the IPO
S-1)
10.26 Amendment No. 1 to the Pooling and Servicing Agreement dated
as of February 12, 1993, the Asset Purchase and Sale
Agreement dated as of February 12, 1993, and the Liquidity
Agreement dated as of February 12, 1993 (incorporated by
reference to Exhibit 10.26 to the IPO S-1)
10.27 Certificate Purchase Agreement dated as of July 23, 1993
(incorporated by reference to Exhibit 10.27 to the IPO S-1)
</TABLE>
23
<PAGE> 24
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.28 Schedule of Certificate Purchase Agreements (incorporated by
reference to Exhibit 10.28 to the IPO S-1)
10.29 Series 1993-1 Supplement to Ingram Funding Master Trust
Pooling and Servicing Agreement dated as of July 23, 1993
(incorporated by reference to Exhibit 10.29 to the IPO S-1)
10.30 Schedule of Supplements to Ingram Funding Master Trust
Pooling and Servicing Agreement dated as of July 23, 1993
(incorporated by reference to Exhibit 10.30 to the IPO S-1)
10.31 Letter of Credit Reimbursement Agreement dated as of
February 10, 1993 (incorporated by reference to Exhibit
10.31 to the IPO S-1)
10.32 Liquidity Agreement dated as of February 10, 1993
(incorporated by reference to Exhibit 10.32 to the IPO S-1)
10.33 Amendment No. 2 to the Pooling and Servicing Agreement dated
as of February 12, 1993, the Asset Purchase and Sale
Agreement dated as of February 12, 1993, and the Liquidity
Agreement dated as of February 12, 1993 (incorporated by
reference to Exhibit 10.33 to the IPO S-1)
10.34 Reserved
10.35 Form of Repurchase Agreement (incorporated by reference to
Exhibit 10.35 to the IPO S-1)
10.36 First Amendment to the Credit Agreement dated as of October
28, 1997 (incorporated by reference to Exhibit 10.36 to the
Company's Registration Statement on Form S-3 (File No.
333-39457) (the "Rollover/Thrift Plan S-3"))
10.37 European Credit Agreement dated as of October 28, 1997 among
the Company and Ingram European Coordination Center N.V., as
Borrowers and Guarantors, certain financial institutions, as
the Lenders, The Bank of Nova Scotia, as Administrative
Agent for the Lenders and NationsBank of Texas, N.A. as
Documentation Agent for the Lenders, as arranged by The Bank
of Nova Scotia and NationsBanc Capital Markets, Inc., as the
Arrangers (incorporated by reference to Exhibit 10.37 to the
Rollover/Thrift Plan S-3)
10.38 Canadian Credit Agreement dated as of October 28, 1997 among
the Company and Ingram Micro Inc. (Canada), as Borrowers and
Guarantors, certain financial institutions, as the Lenders,
The Bank of Nova Scotia., as Administrative Agent for the
Lenders, Royal Bank of Canada as the Syndication Agent for
the Lenders, and Bank of Tokyo-Mitsubishi (Canada) as the
Co-Agent (incorporated by reference to Exhibit 10.38 to the
Rollover/ Thrift Plan S-3)
10.39 Reserved
10.40 Second Amendment to Credit Agreement dated as of September
25, 1998, among the Company, Ingram European Coordination
Center N.V. ("IECC"), and Ingram Micro Inc. (Canada), as
Borrowers and Guarantors, and certain financial institutions
as the Relevant Required Lenders, amending the
US$1,000,000,000 Credit Agreement dated as of October 30,
1996, also among certain financial institutions, as the
Lenders, NationsBank, N.A (successor in interest by merger
with NationsBank of Texas, N.A.), as Administrative Agent
for the Lenders, and The Bank of Nova Scotia, as
Documentation Agent for the Lenders and certain named
Co-Agents (incorporated by reference to Exhibit 10.40 to the
Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended October 3, 1998 ("the Q3 98 10-Q"))
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.41 First Amendment to European Credit Agreement dated as of
September 25, 1998, among the Company and IECC as the
Primary Borrowers and Guarantors, and certain financial
institutions as the Relevant Required Lenders, amending the
US$500,000,000 European Credit Agreement dated as of October
28, 1997, also among the Company and IECC, as the Primary
Borrowers and Guarantors, certain financial institutions as
the Lenders, The Bank of Nova Scotia, as Administrative
Agent for the Lenders and NationsBank, N.A. (successor in
interest by merger to NationsBank of Texas, N.A.), as
Documentation Agent for the Lenders, as arranged by The Bank
of Nova Scotia and NationsBanc Capital Markets, Inc., as the
Arrangers (incorporated by reference to Exhibit 10.41 to the
Q3 98 10-Q)
10.42 First Amendment to Canadian Credit Agreement dated as of
September 25, 1998, among the Company and Ingram Micro Inc.
(Canada) as the Borrowers and Guarantors, and certain
financial institutions as the Relevant Required Lenders,
amending the US$150,000,000 Canadian Credit Agreement dated
as of October 28, 1997, also among the Company, Ingram Micro
Inc. (Canada) as the Borrowers and Guarantors, certain
financial institutions as the Lenders, The Bank of Nova
Scotia, as Administrative Agent for the Lenders, Royal Bank
of Canada, as Syndication Agent for the Lenders, and Bank of
Tokyo-Mitsubishi (Canada) as the Co-Agent (incorporated by
reference to Exhibit 10.42 to the Q3 98 10-Q)
10.43 Ingram Micro Supplemental Investment Savings Plan
(incorporated by reference to Exhibit 10.45 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
July 3, 1999)
10.44 Ingram Micro Inc. 1998 Equity Incentive Plan (incorporated
by reference to Exhibit 10.43 to the 1998 10K)
10.45 Registration Agreement dated as of December 3, 1999 between
the Company and Softbank Corp. (incorporated by reference to
Exhibit 4.01 to the Company's Registration Statement on Form
S-3 (File No. 333-93783) (the "1999 S-3"))
10.46 Warrant Agreement dated as of December 3, 1999 between the
Company and Softbank Corp. (incorporated by reference to
Exhibit 4.02 to the 1999 S-3)
10.47 Agreement with Jeffrey R. Rodek, dated October 31, 1999
10.48 Executive Retention Agreement with Michael J. Grainger,
dated January 31, 2000
10.49 Executive Retention Agreement with Kevin M. Murai, dated
January 31, 2000
10.50 Executive Retention Agreement with Gregory M.E. Spierkel,
dated January 31, 2000
10.51 Executive Retention Agreement with Henri T. Koppen, dated
January 31, 2000
10.52 Executive Retention Agreement with Guy P. Abramo, dated
January 31, 2000
10.53 Executive Retention Agreement with James E. Anderson, Jr.,
dated January 31, 2000
10.54 Executive Retention Agreement with David M. Finley, dated
January 31, 2000
10.55 Employment Agreement with Kent B. Foster, dated March 6,
2000
10.56 Amended and Restated Pooling Agreement dated as of March 8,
2000 among Ingram Funding Inc. ("Funding"), the Company and
The Chase Manhattan Bank ("Chase"), as trustee (the "Amended
Pooling Agreement")
10.57 Amended and Restated Receivables Sale Agreement dated as of
March 8, 2000 between Funding, as Purchaser, and the
Company, as Seller and Servicer
10.58 Amended and Restated Servicing Agreement dated as of March
8, 2000 among Funding, the Company as Master Servicer and
Servicer, and Chase
</TABLE>
25
<PAGE> 26
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.59 Series 2000-1 Supplement to the Amended Pooling Agreement
dated as of March 8, 2000 among Funding, the Company and
Chase
10.60 Series 1994-2 Supplement to the Amended Pooling Agreement
dated as of March 8, 2000 among Funding, the Company and
Chase
10.61 Series 1994-3 Supplement to the Amended Pooling Agreement
dated as of March 8, 2000 among Funding, the Company and
Chase
10.62 Series 1993-2 Supplement to the Amended Pooling Agreement
dated as of March 8, 2000 among Funding, the Company and
Chase
10.63 Agreement dated March 8, 2000 among the Company, Funding and
General Electric Capital Corporation
13.01 Portions of Annual Report to Shareowners for the year ended
January 1, 2000
21.01 Subsidiaries of the Registrant
23.01 Consent of Independent Accountants regarding certain
Registration Statements on Form S-8
23.02 Consent of Independent Accountants regarding Registration
Statements on Form S-3
27.01 Financial Data Schedule (included in electronic version
only)
99.01 Cautionary Statements for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995
</TABLE>
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fiscal quarter ended January
1, 2000.
26
<PAGE> 27
INGRAM MICRO INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO
BEGINNING COSTS AND BALANCE AT
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS OTHER(*) END OF YEAR
----------- ---------- ---------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
RECEIVABLE AND SALES RETURNS:
1999............................... $55,904 $75,835 $(42,788) $11,803 $100,754
1998............................... 48,541 32,534 (31,200) 6,029 55,904
1997............................... 38,622 31,652 (27,102) 5,369 48,541
INVENTORY OBSOLESCENCE:
1999............................... $18,394 $94,756 $(54,370) $ 6,493 $ 65,273
1998............................... 18,886 26,129 (27,554) 933 18,394
1997............................... 13,326 21,524 (20,201) 4,237 18,886
</TABLE>
- ---------------
* Other includes recoveries, acquisitions and the effect of fluctuation in
foreign currency.
27
<PAGE> 28
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Ingram Micro Inc.
Our audits of the consolidated financial statements referred to in our report
dated February 17, 2000, except as to the second paragraph of Note 5, which is
as of March 8, 2000, appearing in the 1999 Annual Report to Shareowners of
Ingram Micro Inc. (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Costa Mesa, California
February 17, 2000, except as to
the second paragraph of Note 5,
which is as of March 8, 2000
28
<PAGE> 29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
INGRAM MICRO INC.
By: /s/ JAMES E. ANDERSON, JR.
------------------------------------
James E. Anderson, Jr.,
Senior Vice President,
Secretary and General Counsel
March 31, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ KENT B. FOSTER Chief Executive Officer and March 31, 2000
- ----------------------------------------------------- President (Principal Executive
Kent B. Foster Officer) and Director
/s/ MICHAEL J. GRAINGER Executive Vice President and March 31, 2000
- ----------------------------------------------------- Worldwide Chief Financial
Michael J. Grainger Officer (Principal Financial
Officer and Principal
Accounting Officer)
/s/ JERRE L. STEAD Chairman of the Board March 31, 2000
- -----------------------------------------------------
Jerre L. Stead
/s/ DON H. DAVIS, JR. Director March 31, 2000
- -----------------------------------------------------
Don H. Davis, Jr.
/s/ JOHN R. INGRAM Director March 31, 2000
- -----------------------------------------------------
John R. Ingram
/s/ MARTHA R. INGRAM Director March 31, 2000
- -----------------------------------------------------
Martha R. Ingram
/s/ ORRIN H. INGRAM II Director March 31, 2000
- -----------------------------------------------------
Orrin H. Ingram II
/s/ PHILIP M. PFEFFER Director March 31, 2000
- -----------------------------------------------------
Philip M. Pfeffer
/s/ GERHARD SCHULMEYER Director March 31, 2000
- -----------------------------------------------------
Gerhard Schulmeyer
/s/ JOE B. WYATT Director March 31, 2000
- -----------------------------------------------------
Joe B. Wyatt
</TABLE>
29
<PAGE> 30
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
3.01 Form of Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.01 to the Company's
Registration Statement on Form S-1 (File No. 333-08453) (the
"IPO S-1"))
3.02 Amended and Restated Bylaws of the Registrant (incorporated
by reference to Exhibit 3.02 to the Company's Annual Report
on Form 10-K for the fiscal year ended January 3, 1998)
10.01 Ingram Micro Inc. 2000 Executive Incentive Bonus Plan
10.02 Reserved
10.03 Reserved
10.04 Reserved
10.05 Reserved
10.06 Amendment No. 1 to the Ingram Micro Inc. Amended and
Restated 1996 Equity Incentive Plan (incorporated by
reference to Exhibit 10.06 to the Company's Annual Report on
Form 10-K for the fiscal year ended January 3, 1998)
10.07 Ingram Micro Inc. Rollover Stock Option Plan (incorporated
by reference to Exhibit 10.07 to the IPO S-1)
10.08 Ingram Micro Inc. Key Employee Stock Purchase Plan
(incorporated by reference to Exhibit 10.08 to the IPO S-1)
10.09 Ingram Micro Inc. 1996 Equity Incentive Plan (incorporated
by reference to Exhibit 10.09 to the IPO S-1)
10.10 Ingram Micro Inc. Amended and Restated 1996 Equity Incentive
Plan (incorporated by reference to Exhibit 10.10 to the IPO
S-1)
10.11 Reserved
10.12 Credit Agreement dated as of October 30, 1996 among the
Company and Ingram European Coordination Center N.V., Ingram
Micro Singapore Pte Ltd., and Ingram Micro Inc., as
Borrowers and Guarantors, certain financial institutions, as
the Lenders, NationsBank of Texas, N.A., as Administrative
Agent for the Lenders and The Bank of Nova Scotia as
Documentation Agent for the Lenders (incorporated by
reference to Exhibit 10.12 to the Company's Registration
Statement on Form S-1 (File No. 333-16667) (the "Thrift Plan
S-1"))
10.13 Amended and Restated Reorganization Agreement dated as of
October 17, 1996 among the Company, Ingram Industries, and
Ingram Entertainment (incorporated by reference to Exhibit
10.13 to the Thrift Plan S-1)
10.14 Registration Rights Agreement dated as of November 6, 1996
among the Company and the persons listed on the signature
pages thereof (incorporated by reference to Exhibit 10.14 to
the Thrift Plan S-1)
10.15 Board Representation Agreement dated as of November 6, 1996
(incorporated by reference to Exhibit 10.15 to the Thrift
Plan S-1)
10.16 Thrift Plan Liquidity Agreement dated as of November 6, 1996
among the Company and the Ingram Thrift Plan (incorporated
by reference to Exhibit 10.16 to the Thrift Plan S-1)
10.17 Tax Sharing and Tax Services Agreement dated as of November
6, 1996 among the Company, Ingram Industries, and Ingram
Entertainment (incorporated by reference to Exhibit 10.17 to
The Thrift Plan S-1)
10.18 Reserved
</TABLE>
30
<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.19 Employee Benefits Transfer and Assumption Agreement dated as
of November 6, 1996 among the Company, Ingram Industries,
and Ingram Entertainment (incorporated by reference to
Exhibit 10.19 to the Thrift Plan S-1)
10.20 Reserved
10.21 Amended and Restated Exchange Agreement dated as of November
6, 1996 among the Company, Ingram Industries, Ingram
Entertainment and the other parties thereto (incorporated by
reference to Exhibit 10.21 to the Thrift Plan S-1)
10.22 Agreement dated as of August 26, 1996 between the Company
and Jerre L. Stead (incorporated by reference to Exhibit
10.22 to the IPO S-1)
10.23 Definitions for Ingram Funding Master Trust Agreements
(incorporated by reference to Exhibit 10.23 to the IPO S-1)
10.24 Asset Purchase and Sale Agreement dated as of February 10,
1993 between Ingram Industries and Ingram Funding Inc.
(incorporated by reference to Exhibit 10.24 to the IPO S-1)
10.25 Pooling and Servicing Agreement dated as of February 10,
1993 among Ingram Funding, Ingram Industries and Chemical
Bank (incorporated by reference to Exhibit 10.25 to the IPO
S-1)
10.26 Amendment No. 1 to the Pooling and Servicing Agreement dated
as of February 12, 1993, the Asset Purchase and Sale
Agreement dated as of February 12, 1993, and the Liquidity
Agreement dated as of February 12, 1993 (incorporated by
reference to Exhibit 10.26 to the IPO S-1)
10.27 Certificate Purchase Agreement dated as of July 23, 1993
(incorporated by reference to Exhibit 10.27 to the IPO S-1)
10.28 Schedule of Certificate Purchase Agreements (incorporated by
reference to Exhibit 10.28 to the IPO S-1)
10.29 Series 1993-1 Supplement to Ingram Funding Master Trust
Pooling and Servicing Agreement dated as of July 23, 1993
(incorporated by reference to Exhibit 10.29 to the IPO S-1)
10.30 Schedule of Supplements to Ingram Funding Master Trust
Pooling and Servicing Agreement dated as of July 23, 1993
(incorporated by reference to Exhibit 10.30 to the IPO S-1)
10.31 Letter of Credit Reimbursement Agreement dated as of
February 10, 1993 (incorporated by reference to Exhibit
10.31 to the IPO S-1)
10.32 Liquidity Agreement dated as of February 10, 1993
(incorporated by reference to Exhibit 10.32 to the IPO S-1)
10.33 Amendment No. 2 to the Pooling and Servicing Agreement dated
as of February 12, 1993, the Asset Purchase and Sale
Agreement dated as of February 12, 1993, and the Liquidity
Agreement dated as of February 12, 1993 (incorporated by
reference to Exhibit 10.33 to the IPO S-1)
10.34 Reserved
10.35 Form of Repurchase Agreement (incorporated by reference to
Exhibit 10.35 to the IPO S-1)
10.36 First Amendment to the Credit Agreement dated as of
October28, 1997 (incorporated by reference to Exhibit 10.36
to the Company's Registration Statement on Form S-3 (File
No. 333-39457) (the "Rollover/Thrift Plan S-3"))
</TABLE>
31
<PAGE> 32
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.37 European Credit Agreement dated as of October 28, 1997 among
the Company and Ingram European Coordination Center N.V., as
Borrowers and Guarantors, certain financial institutions, as
the Lenders, The Bank of Nova Scotia, as Administrative
Agent for the Lenders and NationsBank of Texas, N.A. as
Documentation Agent for the Lenders, as arranged by The Bank
of Nova Scotia and NationsBanc Capital Markets, Inc., as the
Arrangers (incorporated by reference to Exhibit 10.37 to the
Rollover/Thrift Plan S-3)
10.38 Canadian Credit Agreement dated as of October 28, 1997 among
the Company and Ingram Micro Inc. (Canada), as Borrowers and
Guarantors, certain financial institutions, as the Lenders,
The Bank of Nova Scotia., as Administrative Agent for the
Lenders, Royal Bank of Canada as the Syndication Agent for
the Lenders, and Bank of Tokyo-Mitsubishi (Canada) as the
Co-Agent (incorporated by reference to Exhibit 10.38 to the
Rollover/ Thrift Plan S-3)
10.39 Reserved
10.40 Second Amendment to Credit Agreement dated as of September
25, 1998, among the Company, Ingram European Coordination
Center N.V. ("IECC"), and Ingram Micro Inc. (Canada), as
Borrowers and Guarantors, and certain financial institutions
as the Relevant Required Lenders, amending the
US$1,000,000,000 Credit Agreement dated as of October 30,
1996, also among certain financial institutions, as the
Lenders, NationsBank, N.A (successor in interest by merger
with NationsBank of Texas, N.A.), as Administrative Agent
for the Lenders, and The Bank of Nova Scotia, as
Documentation Agent for the Lenders and certain named
Co-Agents (incorporated by reference to Exhibit 10.40 to the
Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended October 3, 1998 ("the Q3 98 10-Q"))
10.41 First Amendment to European Credit Agreement dated as of
September 25, 1998, among the Company and IECC as the
Primary Borrowers and Guarantors, and certain financial
institutions as the Relevant Required Lenders, amending the
US$500,000,000 European Credit Agreement dated as of October
28, 1997, also among the Company and IECC, as the Primary
Borrowers and Guarantors, certain financial institutions as
the Lenders, The Bank of Nova Scotia, as Administrative
Agent for the Lenders and NationsBank, N.A. (successor in
interest by merger to NationsBank of Texas, N.A.), as
Documentation Agent for the Lenders, as arranged by The Bank
of Nova Scotia and NationsBanc Capital Markets, Inc., as the
Arrangers (incorporated by reference to Exhibit 10.41 to the
Q3 98 10-Q)
10.42 First Amendment to Canadian Credit Agreement dated as of
September 25, 1998, among the Company and Ingram Micro Inc.
(Canada) as the Borrowers and Guarantors, and certain
financial institutions as the Relevant Required Lenders,
amending the US$150,000,000 Canadian Credit Agreement dated
as of October 28, 1997, also among the Company, Ingram Micro
Inc. (Canada) as the Borrowers and Guarantors, certain
financial institutions as the Lenders, The Bank of Nova
Scotia, as Administrative Agent for the Lenders, Royal Bank
of Canada, as Syndication Agent for the Lenders, and Bank of
Tokyo-Mitsubishi (Canada) as the Co-Agent (incorporated by
reference to Exhibit 10.42 to the Q3 98 10-Q)
10.43 Ingram Micro Supplemental Investment Savings Plan
(incorporated by reference to Exhibit 10.45 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
July 3, 1999)
10.44 Ingram Micro Inc. 1998 Equity Incentive Plan (incorporated
by reference to Exhibit 10.43 to the 1998 10K)
</TABLE>
32
<PAGE> 33
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
------- -------
<C> <S>
10.45 Registration Agreement dated as of December 3, 1999 between
the Company and Softbank Corp. (incorporated by reference to
Exhibit 4.01 to the Company's Registration Statement on Form
S-3 (File No. 333-93783) (the "1999 S-3"))
10.46 Warrant Agreement dated as of December 3, 1999 between the
Company and Softbank Corp. (incorporated by reference to
Exhibit 4.02 to the 1999 S-3)
10.47 Agreement with Jeffrey R. Rodek, dated October 31, 1999
10.48 Executive Retention Agreement with Michael J. Grainger,
dated January 31, 2000
10.49 Executive Retention Agreement with Kevin M. Murai, dated
January 31, 2000
10.50 Executive Retention Agreement with Gregory M.E. Spierkel,
dated January 31, 2000
10.51 Executive Retention Agreement with Henri T. Koppen, dated
January 31, 2000
10.52 Executive Retention Agreement with Guy P. Abramo, dated
January 31, 2000
10.53 Executive Retention Agreement with James E. Anderson, Jr.,
dated January 31, 2000
10.54 Executive Retention Agreement with David M. Finley, dated
January 31, 2000
10.55 Employment Agreement with Kent B. Foster, dated March 6,
2000
10.56 Amended and Restated Pooling Agreement dated as of March 8,
2000 among Ingram Funding Inc. ("Funding"), the Company and
The Chase Manhattan Bank ("Chase"), as trustee (the "Amended
Pooling Agreement")
10.57 Amended and Restated Receivables Sale Agreement dated as of
March 8, 2000 between Funding, as Purchaser, and the
Company, as Seller and Servicer
10.58 Amended and Restated Servicing Agreement dated as of March
8, 2000 among Funding, the Company as Master Servicer and
Servicer, and Chase, as trustee
10.59 Series 2000-1 Supplement to the Amended Pooling Agreement
dated as of March 8, 2000 among Funding, the Company and
Chase
10.60 Series 1994-2 Supplement to the Amended Pooling Agreement
dated as of March 8, 2000 among Funding, the Company and
Chase
10.61 Series 1994-3 Supplement to the Amended Pooling Agreement
dated as of March 8, 2000 among Funding, the Company and
Chase
10.62 Series 1993-2 Supplement to the Amended Pooling Agreement
dated as of March 8, 2000 among Funding, the Company and
Chase
10.63 Agreement dated March 8, 2000 among the Company, Funding and
General Electric Capital Corporation
13.01 Portions of Annual Report to Shareowners for the year ended
January 1, 2000
21.01 Subsidiaries of the Registrant
23.01 Consent of Independent Accountants regarding certain
Registration Statements on Form S-8
23.02 Consent of Independent Accountants regarding Registration
Statements on Form S-3
27.01 Financial Data Schedule (included in electronic version
only)
99.01 Cautionary Statements for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995
</TABLE>
33
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<DESCRIPTION>EXHIBIT 10-1
<TEXT>
<PAGE> 1
EXHIBIT 10.01
YEAR 2000
EXECUTIVE INCENTIVE AWARD PLAN
OVERVIEW
o The year 2000 Plan is an evolution of prior year plans.
o Eligible executives may earn from 50% to 150% of their "target" incentive
award based on their operating unit's (Worldwide, Region, sub-region or
country) pre-tax, pre-bonus profit (PTPB) and their performance against
personal goals and objectives.
o Based on the operating unit's profit achievement for the year, 70% of the
earned incentive award is paid to the eligible executives. The remaining
30% is earned by achieving pre-determined personal business related
objectives.
o The operating unit's profit achievement may be negatively adjusted by
up to -100% for ROIC results below Plan
o There will be three personal business objectives, each weighted 10%.
The three personal business objectives will be developed around:
1. Associate Satisfaction/Success (ASI)
2. Customer Satisfaction/Value Add (CSI/CVA)
3. Specific business objective related to key functional
responsibilities*
*With the approval of the Chairman & CEO, the entire 30% could be
assigned to a critical business objective, as noted in #3 above.
o Regional Presidents have the authority to use either a six-month or a
twelve-month target plan.
o If Worldwide PTPB profits exceed the 150% Award level, 80% of the
profits above this level will be retained by the corporation and 20%
will be distributed to all eligible participants.
<PAGE> 2
YEAR 2000
EXECUTIVE INCENTIVE AWARD PLAN
Seventy percent (70%) of your Award will be based upon the Corporation's PTPB
profit performance against the Year 2000 "Plan", subject to achieving Planned
Return on Invested Capital (ROIC) based upon the Year 2000 Plan. Thirty percent
(30%) will be based on the attainment of three personal business objectives
(subject to PTPB and ROIC achievement).
FINANCIAL OBJECTIVES: (70%)
ROIC achievement below the planned level will result in a percentage reduction
in the Target Award. For example, if your Operating Unit achieves its PTPB
Profit Target, but ROIC achievement is 10% below the Target ROIC, then the
Target Award will be reduced by 10%. Following is an example of the bonus
calculation:
Assumptions:
o Total salary paid in 2000 is $100,000.
o Target Award percentage is 40% of base salary paid in 2000.
Based upon the following PTPB profit and ROIC assumptions, your bonus
would be calculated as follows (subject to your performance against
your personal objectives):
Target Actual Variance
------ ------ --------
PTPB Profit $1,000,000 $1,000,000 -0-%
ROIC 10% 9% (10%)
Target Award Percentage 40% 36% (10%)
Bonus $40,000 $36,000 ($4,000) or (10%)
The Target ROIC remains fixed at the Planned amount for bonus calculations
regardless of whether PTPB profit exceeds or falls short of its target. This
methodology helps drive PTPB profits in a capital effective manner. The goal is
to maximize PTPB profit while maintaining acceptable capital management. This
will provide Operating Unit flexibility to invest additional capital to drive
PTPB profits above the Target. For example, if the PTPB profit exceeds the PTPB
profit target by 10%, the Operating Unit doesn't need to meet a higher Target
ROIC.
Listed below are additional examples for further clarification:
o If your Operating Unit achieves the 120% PTPB Award level and meets or
exceeds the ROIC Target, then your bonus would be $48,000, ($40,000 X
120%)*
<PAGE> 3
o If your Operating Unit achieves the 120% PTPB Award level but realizes
a 10% shortfall in ROIC, then your bonus would be $43,200, ($40,000 X
120%=$48,000 less $4,800 (10% ROIC reduction))*
o If your Operating Unit achieves the 90% PTPB Award level and realizes a
10% shortfall in ROIC, then your bonus would be $32,400, ($40,000 X
90%=$36,000 less $3,600 (10% ROIC reduction))*
o subject to your performance against your personal objectives.
PERSONAL OBJECTIVES: (30%)
Participants will develop personal business objectives around the following (3)
themes, each weighted 10%.
1. Associate Satisfaction/Success (ASI)
2. Customer Satisfaction/Value Add (CSI/CVA)
3. Specific business objective related to key functional
responsibilities
* With the approval of the Chairman & CEO, theme #3 may receive the
full 30% weighting for achievement of a critical business objective.
WORLDWIDE PROFIT AWARD POOL
If the Worldwide PTPB profits exceed the 150% Incentive Award level, then PTPB
profits above this point will be shared with participants on a four to one ratio
(i.e., 80% retained by the Corporation and 20% distributed to eligible
participants).
The 20% of Worldwide PTPB profits above the 150% Award level will fund a bonus
pool that will be shared proportionately by all eligible participants regardless
of the participants' achievement against their financial or personal objectives.
The Award pool will be allocated proportionately by all participants based upon
each participant's original Target Award (calculated at 100% PTPB profit and
attainment of 100% on personal objectives) with no modification for ROIC
results.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.47
<SEQUENCE>3
<DESCRIPTION>EXHIBIT 10.47
<TEXT>
<PAGE> 1
EXHIBIT 10.47
SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT ("Agreement") is entered into by and between JEFFREY
R. RODEK ("Associate") and INGRAM MICRO INC., a Delaware corporation ("IMI"), in
order to establish the basis for certain payments and benefits to be provided to
Associate in connection with the termination of Associate's employment with IMI.
In consideration of the mutual promises and agreements contained in this
document, intending to be legally bound, Associate and IMI contract and agree as
follows:
1. Resignation. Associate has resigned as an officer and employee of IMI
effective as of October 11, 1999 (the "Resignation Date"). Associate
acknowledges that after the Resignation Date he no longer will be an
agent of IMI or any entity affiliated with IMI, and will have no
authority to bind IMI or any such affiliate or act on behalf of IMI or
any such affiliate as an officer or employee.
2. Salary Continuation. In consideration of Associate's continuing
obligations under this Agreement, IMI will continue to pay Associate
his current base salary for a period of 24 months from the Resignation
Date (the "Salary Continuation Period"). Such payments will be made
through IMI's normal payroll procedures and will be subject to
applicable withholding requirements.
3. IMI Benefits/COBRA Coverage. Associate acknowledges that on the
Resignation Date, he will cease to be qualified for the employee
benefit plans to which he was entitled as an associate or employee of
IMI. Associate will, however, have the rights of a terminated employee
to convert and/or continue certain benefit coverages as provided in the
respective benefit plans, including COBRA continuation rights for
medical, dental and vision coverages. IMI will provide under separate
cover further information to Associate regarding COBRA continuation
coverage and other conversion and/or continuation rights.
Notwithstanding the foregoing, IMI will pay directly or reimburse
Associate for the cost of Associate's COBRA continuation coverage for a
period of 18 months from the Resignation Date. However, coverage for
long-term and short-term disability, and other benefits, including,
without limitation, basic life insurance, AD&D insurance, supplemental
life insurance, spouse/dependent insurance, dependent care spending
account, employee stock purchase plan(s) and the IMI Thrift Plan, will
end on the Resignation Date.
4. Key Employee Stock Purchase Plan.
a. Notwithstanding the provisions of Section 6(b)(i) of the Acquisition
Agreement dated June 29, 1996 between IMI and Associate relating to
Associate's purchase of shares of IMI Class B Common Stock under the
IMI Key Employee Stock Purchase Plan (the "Purchased Shares Acquisition
Agreement"), IMI shall not exercise its right to repurchase any of the
Shares (as such term is defined in the Purchased Shares Acquisition
Agreement) and will be permitted to exercise its repurchase rights only
with respect to the Restricted Shares (as such
1
<PAGE> 2
term is defined in the Purchased Shares Acquisition Agreement) owned by
Associate, if any, as of the date of the any failure by Associate to
perform such obligations. Except as modified hereby, the Purchased
Shares Acquisition Agreement shall continue in full force and effect in
accordance with its terms.
b. Notwithstanding the provisions of Section 5(b)(i) of the Acquisition
Agreement dated July 15, 1996 between IMI and Associate relating to the
award by IMI to Associate of shares of IMI Class B Common Stock under
the IMI Key Employee Stock Purchase Plan (the "Restricted Shares
Acquisition Agreement"), the Restricted Stock (as such term is defined
in the Restricted Shares Acquisition Agreement) shall not be forfeited
to IMI for so long as Associate performs his obligations under this
Agreement. Only such shares as constitute Restricted Stock as of the
date of any failure by Associate to perform such obligations shall be
forfeited. Except as modified hereby, the Restricted Shares Acquisition
Agreement shall continue in full force and effect in accordance with
its terms.
5. Stock Options. Notwithstanding the termination of Associate's
employment with IMI or any contrary provisions in any plan or relevant
agreement, Associate's currently existing unvested stock options and
grants which are scheduled to vest at any time on or after the
Resignation Date and prior to April 2, 2000, shall be deemed vested as
of the Resignation Date. Associate shall have the right to exercise all
such stock options and grants, as well as all of his presently vested
stock options and grants, through the end of the Salary Continuation
Period or such earlier date as any such options or grants would have
expired per the terms of the underlying agreements for such options and
grants if Associate had continued to be an employee of IMI throughout
such period.
6. Non-disclosure. Associate acknowledges his obligation not to disclose,
during or after employment, any trade secrets or proprietary and/or
confidential data or records of IMI or its affiliates or to utilize any
such information for private profit. Each of the parties hereto agrees
that such party will not release, publish, announce or otherwise make
available to the public in any manner whatsoever any information or
announcement regarding this Agreement or the transactions contemplated
hereby without the prior written consent of the other party hereto,
except as required by law or legal process, including, in the case of
IMI, filings with the Securities and Exchange Commission. Associate
agrees not to communicate with, including responding to questions or
inquiries presented by, the media, employees or investors of IMI, its
affiliates or any third party relating to the terms of this Agreement,
without first obtaining the prior written consent of IMI.
Notwithstanding the foregoing, Associate may make disclosure to his
attorneys and financial advisors of the existence and terms of this
Agreement provided that they agree to be bound by the provisions of
this Paragraph 6. Each party agrees not to make statements or take any
action to disparage, dissipate or negatively affect the reputation of
the other with employees, customers, suppliers, competitors, vendors,
stockholders or lenders of IMI, its affiliates or any third party.
2
<PAGE> 3
7. Financial Planning/Tax Preparation. Through the Resignation Date,
Associate shall continue to be eligible to receive the benefits of the
financial planning program offered to IMI's senior executives. IMI
shall also provide Associate with federal and state income tax return
preparation assistance for the calendar year 1999 on the same terms as
offered to IMI's other senior executives. The costs associated with
both the financial planning program and the tax preparation assistance
shall be considered as imputed income in a manner consistent with the
treatment for other IMI senior executives.
8. Return of Property/Internet Access/Mail Forwarding. Associate
acknowledges his obligation to promptly return to IMI all property of
IMI in his possession including, without limitation, keys, SECUREID
card, credit cards, cell phones, pagers, computers, office equipment,
documents and files and instruction manuals on or before the
Resignation Date, or earlier if so requested by IMI. Notwithstanding
the foregoing, Associate shall be entitled to keep the following items
and their related accessories: Toshiba laptop computer, Palm Pilot
organizer, mobile phone, laser printer (home) and a Compaq personal
computer (home). The fair value of all such equipment shall be
considered imputed income to Associate. Such imputed income shall be
"grossed up" assuming a combined federal and state tax rate of 48.2%.
IMI shall maintain Associate's Internet access for a period of 30 days
after the Resignation Date. After the Resignation Date, IMI shall
forward all mail addressed to Associate to the most recent address
provided by Associate to IMI pursuant to Paragraph 20.
9. Associate's Obligation's. In consideration of the payments, benefits
and stock ownership rights to be received by Associate hereunder,
Associate and IMI have further agreed as follows:
a. Associate will not (i) directly or indirectly make known to any
person, firm, corporation, partnership or other entity, any list,
listing or other compilation or document, whether prepared or
maintained by Associate, IMI or any of IMI's affiliates, which contains
information that is confidential to IMI or any of its affiliates about
their customers ("IMI Customers"), including but not limited to names
and addresses, or (ii) at any time through the end of the Salary
Continuation Period, call on or solicit, or attempt to call on or
solicit, in either case with the intent to divert business or potential
business from IMI or any of its affiliates, any of the IMI Customers
with whom he has become acquainted during his employment with IMI or
any of its affiliates, either for his own benefit or for the benefit of
any other person, firm, corporation, partnership or other entity;
provided, however, that the provisions of this Paragraph 9.a shall not
apply to any activities by Associate in pursuit of business
opportunities in the third party fulfillment business that do not
violate Paragraph 9.c.
b. Through the end of the Salary Continuation Period, Associate will
not, and will use his best efforts not to permit any person, firm,
corporation, partnership or other entity of which he is an officer or
control person to, (i) knowingly solicit, entice, or persuade any
individual who is an associate of IMI or any of its affiliates
3
<PAGE> 4
at any time during the Salary Continuation Period (each such
individual, an "IMI Associate") to leave the services of IMI or any of
its affiliates for any reason, or (ii) solicit for employment, hire, or
engage any present or future IMI Associate as an employee, independent
contractor or consultant; provided, however, that Associate shall not
be prohibited hereby from hiring, either himself or on behalf of his
employer, Carol Curtis and Mike Sternad or any associate approved in
advance by the Corporation's Chief Executive Officer, Worldwide Chief
Financial Officer or General Counsel.
c. Associate acknowledges that he has unique knowledge of IMI and its
affiliates and unique knowledge of the computer and software sales and
distribution industry. Based on his unique status, he agrees that
through the end of the Salary Continuation Period, he will not be
employed or hired as an employee or consultant by, or otherwise
directly or indirectly provide services for, any of Tech Data, Merisel,
Inacom, Pinacor, Globelle, Gates Arrow, CHS Electronics, Hallmark,
Hamilton Avnet, Daisytek, Azerti, Azlan, Northamber, Tech Pacific,
Synnex, Bell Micro, DSS and/or GE Capital Information Technology
Solutions-North America, Inc., and any subsidiary or affiliate of these
entities in a business or line of business conducted by any such entity
which competes with any line of business conducted by IMI or any of its
affiliates. Notwithstanding the foregoing, should Associate be employed
by an entity that is not a subsidiary or affiliate of one of these
entities at the time he commences such employment, but subsequently
becomes a subsidiary or affiliate of, or becomes merged into, one of
these entities on or before the end of the Salary Continuation Period,
he shall not be deemed to be in breach of the provisions of this
Paragraph 9.c due to such employment, provided that at the time he
commenced his employment there had been no public announcement of an
agreement pursuant to which his employer would become a subsidiary or
affiliate of, or merged into, one of these entities or discussions that
could lead to such an agreement and Associate had no knowledge of the
existence of any such agreement or discussions. Associate further
agrees that he will not own any interest in, provide financing to, be
connected with, or be a principal, partner or agent of any such
competitive distributor or aggregator; provided, he may own less than
1% of the outstanding shares of any such entity whose shares are traded
in the public market.
d. Provided that IMI is not in breach of its obligations under
Paragraphs 2, 3, 4, or 5 of this Agreement, and subject to Associate's
other commitments, upon request of IMI or any of its affiliates during
the Salary Continuation Period, Associate will make himself available
to provide reasonable assistance to IMI or any such affiliate and will
use reasonable efforts to arrange his commitments so as to make himself
available for such assistance on a basis which is consistent with the
requests of IMI or any affiliates. Such assistance may include
telephone conversations, correspondence, attendance and participation
in meetings, transfer of knowledge or information regarding operational
or other issues, litigation preparation and trials. During such period,
IMI shall reimburse Associate for any our-of-pocket expense he may
incur in connection with such assistance in accordance with IMI's
reimbursement policies. After the end of the Salary Continuation
Period, Associate shall use reasonable efforts, subject to his other
4
<PAGE> 5
commitments, to continue to provide such assistance as requested by IMI
and, in such event, shall be compensated at a rate per day (minimum
charge, one-half day) commensurate with the daily rate he was earning
based on his current base salary immediately prior to the Resignation
Date.
The running of the periods prescribed in this Paragraph 9 shall be
tolled and suspended by the length of time Associate works in
circumstances that a court of competent jurisdiction subsequently finds
to violate the terms of this Agreement.
10. Rights in Event of Breach. In the event of Associate's breach of this
Agreement (excluding breach of this Agreement due to death or total
disability and provided that in the event of a breach of Paragraph 9.c
or 9.d, such breach shall have continued for 15 days after the sooner
of Associate's discovery thereof or receipt of notice from IMI
thereof), in addition to all other rights and remedies to which IMI may
be entitled by law or in equity, IMI shall have no obligation to make
any further payments hereunder or permit any vested stock options to be
exercised, and may purchase any remaining Restricted Shares under the
Purchased Shares Acquisition Agreement and cause any remaining
Restricted Stock under the Restricted Stock Acquisition Agreement to be
forfeited. If Ingram exercises such right, Associate's obligations
under Paragraph 9.c and 9.d shall terminate..
11. Injunctive Relief. Irreparable harm will be presumed if Associate
breaches any covenant in this Agreement and damages may be very
difficult to ascertain. In light of these facts, Associate agrees that
any court of competent jurisdiction should immediately enjoin any
breach of this Agreement upon the request of IMI, and Associate
specifically releases IMI from the requirement of posting any bond in
connection with temporary or interlocutory injunctive relief, to the
extent permitted by law. The granting of injunctive relief by any court
shall not limit IMI's right to recover any amounts previously paid to
Associate under this Agreement or any damages incurred by it due to a
breach of this Agreement by Associate.
12. Release by Associate. Effective immediately, Associate hereby fully,
finally and irrevocably discharges IMI and each of its affiliates, and
each present, former and future director, officer and employee of IMI
and its affiliates and any parent, subsidiary, affiliate or shareholder
thereof (the "IMI Released Parties") from all manner of claims,
actions, causes of action or suits, in law or in equity, which
Associate has or may have, known or unknown, against the IMI Released
Parties, or any of them, by reason of any matter, cause or thing
whatsoever, including any action arising from or during his employment
with IMI and any of its affiliates, resulting from or relating to his
employment or the termination thereof, or relating to his status as an
officer, director, employee or participant in any employee benefit plan
of IMI or any of its affiliates; provided, however, that the foregoing
(a) is not intended to be, and shall not constitute, a release of any
right of Associate to obtain indemnification and reimbursement of
expenses from IMI or any of its affiliates with respect to claims based
upon or arising from alleged or actual acts or omissions of Associate
as an officer, director or employee of IMI or any of its affiliates to
the fullest extent provided by law or in any applicable
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<PAGE> 6
certificate of incorporation, bylaw or contract, and (b) shall not
release IMI from liability for violations of this Agreement after the
date hereof. From and after the date hereof, Associate agrees and
covenants not to sue, or threaten suit against, or make any claim
against, any IMI Released Party for or alleging any of the claims,
actions, causes of action or suits described above. Associate
acknowledges that this release includes, but is not limited to, all
claims arising under federal, state, local or foreign laws prohibiting
employer discrimination and all claims growing out of any legal
restrictions on the right of IMI or any of its affiliates to terminate
its employees. Associate also specifically waives and releases all
claims of employment discrimination and all rights available to him
under Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act (ADEA), as well as all claims or
rights under the California Fair Employment and Housing Act, or any
similar law of any jurisdiction. Associate specifically agrees that he
will not institute litigation in any forum, including any filing with
any regulatory commission or agency, against any IMI Released Party
based on any allegations or circumstances that are in any way connected
with his employment or the termination of his employment with Ingram
and its affiliates.
13. Release by Ingram. Effective immediately, IMI, on behalf of itself and
its affiliates, releases and discharges Associate, his heirs, personal
representatives, successors and assigns from all manner of claims,
actions, causes of action or suits, in law or in equity, which any of
them has or may have against Associate by reason of any matter, cause
or thing whatsoever, including any action arising from or during his
employment with IMI or any of its affiliates, resulting from the
termination from such employment, or related to his status as an
optionholder, officer, director, employee or participant in any
employee benefit plan of IMI or any of its affiliates; provided,
however, that the foregoing shall not include a release of Associate
from liability to IMI or any of its affiliates for any claims based
upon or arising from his violations of law, this Agreement, or his
fiduciary duty of loyalty, as determined under Delaware law, to IMI and
its affiliates. From and after the date hereof, IMI agrees and
covenants not to sue, or threaten suit against, or make any claim
against Associate for or alleging any of the claims, actions, causes of
action or suits as discussed above. From and after the date hereof, IMI
shall not take any action to limit the coverage to which Associate
would otherwise be entitled under any directors or officers liability
insurance policy which Ingram shall elect to maintain; provided,
however, that nothing herein shall require IMI to maintain any such
policy.
14. Waiver. Each of IMI and Associate hereby expressly waives and
relinquishes all rights and benefits under Section 1542 of the
California Civil Code which provides:
"Section 1542. General Release--Claim extinguished. A general
release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially
affected his settlement with the debtor."
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<PAGE> 7
Each of IMI and Associate understands and acknowledges that the
significance and consequences of this waiver of Section 1542 of the
Civil Code is that even if IMI or Associate, as the case may be, should
eventually suffer damages arising out of Associate's employment
relationship with IMI and its affiliates, or termination of such
employment, such party will not be permitted to make any claim for
those damages except as expressly permitted by this Agreement.
Furthermore, each of IMI and Associate acknowledges that such party
intends these consequences even as to claims for injuries and/or
damages that may exist as of the date of this Agreement but which
Associate or IMI, as the case may be, does not know exist, and which,
if known, would materially affect such party's decision to execute this
Agreement.
15. Sole Remedy. Associate agrees that, in the event IMI breaches any
provision of this Agreement, his sole remedy for such breach shall be
enforcement of the terms of this Agreement, or in the case of a breach
of Paragraph 4, 5 or 6 hereof, at Associate's election, recovery of any
provable damages as a result of such breach.
16. Right to Revoke. Associate acknowledges that he has the right to seek
legal counsel, and was advised to seek such counsel, before entering
into this Agreement. Associate shall have 45 days in which to execute
and return this Agreement to IMI. Associate further understands he has
the right to revoke this Agreement at any time within seven days of
execution of this Agreement by written notice sent by certified mail
and received by IMI prior to expiration of the seventh day, whereupon
this Agreement shall be null and void as of its inception. In the event
that Associate does not execute and return this Agreement within such
45 day period, the offer contained in this Agreement shall be revoked
and IMI shall not be bound by any terms or conditions contained herein.
IMI shall not be obligated to perform any of its obligations hereunder
until such time as this Agreement has been finally accepted by
Associate and his right to revoke his acceptance has lapsed.
17. Attorneys' Fees. In the event that either party hereto files suit to
enforce or interpret the provisions of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees and costs
incurred therewith.
18. Definition of Affiliate. An "affiliate" of IMI for purposes of this
Agreement shall include any corporation or business entity in which IMI
owns, directly or indirectly, at least 15% of the outstanding equity
interest.
19. Enforceability. If any provision of this Agreement shall be held
invalid or unenforceable, the remainder of this Agreement shall
nevertheless remain in full force and effect. If any provision is held
invalid or unenforceable with respect to a particular circumstance, it
shall nevertheless remain in full force and effect in all other
circumstances.
20. Notices. Any notices, requests, demands and other communications
required or permitted to be given or made hereunder shall be in writing
and shall be deemed to have been duly given (a) on the date delivered
if personally delivered, (b) on
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<PAGE> 8
the third day after deposit in the U.S. mail or with a reputable air
courier service, properly addressed with postage or charges prepaid, or
(c) on the date transmitted by telefax if the sender receives
electronic confirmation of receipt of such telefax, to the address or
telefax number of IMI or Associate, as the case may be, set forth on
the signature page of this Agreement, or such other superseding address
as provided by one party to the other in the manner provided in this
Paragraph 20.
21. Governing Law/Venue. This Agreement shall be governed by California law
and applicable Federal law, without regard to the choice or conflict of
law provisions thereof. The venue for any lawsuit arising as a result
of this Agreement shall be Santa Ana, California.
22. No Admission. Associate understands and agrees that the making of the
promises contained in this Agreement is in no way an admission that IMI
violated any Federal or state laws or regulations, or violated any
other obligation it has or may have had to Associate. Rather, IMI is
making these promises solely in exchange for Associate's promises to
IMI.
23. Paragraph Titles. The paragraph titles used in this Agreement are for
convenience only and do not define or limit the contents of any
paragraph.
24. Successors and Assigns. This Agreement shall be binding upon, and shall
inure to the benefit of, the heirs of Associate and the successors and
assigns of IMI.
25. Entire Agreement. Except as specifically referenced herein, this
instrument contains and accurately recites the complete and entire
agreement among the parties, and it expressly terminates, cancels, and
supersedes any and all prior agreements or understandings, if any,
among the parties. This Agreement may not be modified except in writing
signed by the parties.
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<PAGE> 9
Executed and delivered to Associate by IMI on October ____, 1999, and
executed by Associate on the date set below.
"Associate"
Date:
-------------------------- -----------------------------------
Jeffrey R. Rodek
18 Sunpeak
Irvine, CA 92612
Telephone: (949) 509-1544
Facsimile: (949) 854-6211
"IMI"
INGRAM MICRO INC.
a Delaware corporation
Date:
-------------------------- -----------------------------------
Jerre L. Stead, Chairman and CEO
Ingram Micro Inc.
1600 E. St. Andrew Place
Santa Ana, CA 92705
Telephone: (714) 566-1000
Facsimile: (714) 566-7604
9
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.48
<SEQUENCE>4
<DESCRIPTION>EXHIBIT 10.48
<TEXT>
<PAGE> 1
Exhibit 10.48
EXECUTIVE RETENTION AGREEMENT
EXECUTIVE RETENTION AGREEMENT ("Agreement") dated as of January 31, 2000
(the "Effective Date") by and between Ingram Micro Inc., a Delaware corporation
(the "Company"), and MICHAEL J. GRAINGER ("Executive").
WHEREAS, Executive is presently employed by the Company in a key
management capacity; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
that appropriate steps be taken to reinforce and encourage the continued
attention of key management personnel, including Executive, to their assigned
duties without the distraction that may arise from personal uncertainties
associated with any potential change in employment status, with any change in
the Company's Chief Executive Officer or with any pending or threatened change
in control of the Company; and
WHEREAS, the Board has also determined that it is in the best interests
of the Company and its stockholders to encourage Executive's continued
availability to the Company in the event of a change in the Company's Chief
Executive Officer or a change in control of the Company.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration including, but not limited to, Executive's
continuing employment with the Company, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
TERM OF AGREEMENT
SECTION 1.01. Initial Term. The term of this Agreement shall commence on
the Effective Date and shall expire December 31, 2001 (the "Initial Term"),
subject to Sections 1.02 and 1.03.
SECTION 1.02. Extensions. As of each December 31 beginning in 2000 and
each later date which is one year prior to the scheduled expiration date of this
Agreement as it may be extended from time to time pursuant to Sections 1.02 and
1.03 (any such date a "Renewal Date"), provided Executive is actively employed
<PAGE> 2
by the Company on each such scheduled expiration date, the remaining term of
this Agreement shall automatically be extended by one year (each such additional
one-year period following the Initial Term or any Extended Term, as the case may
be, a "Successive Period") unless, at least sixty days prior to any such Renewal
Date, the Company has provided Executive with written notice of the Company's
intent that the term of this Agreement not be so extended; provided, however,
that Executive's rights under Section 2.05 shall be unaffected by any
termination of this Agreement prior to January 2, 2003.
SECTION 1.03. Automatic Extension Upon Change in Control or Change in
CEO. In the event that any Change in Control or a Change in CEO occurs during
the Initial Term or any Successive Period, upon the effective date of such
Change in Control or Change in CEO the term of this Agreement shall
automatically be extended for a period of 24 months from the effective date of
such Change in Control or Change in CEO, as the case may be (an "Extended
Term"). The 24-month extension described in this Section 1.03 shall take effect
regardless of whether, before or after the effective date of a Change in Control
or Change in CEO, Executive or the Company has given written notice of intent
not to extend the term of the Agreement pursuant to Section 1.02 or there has
occurred a termination of Executive's employment, provided the term of the
Agreement has not yet expired as of such effective date.
ARTICLE 2
CERTAIN BENEFITS
SECTION 2.01. Certain Events. (a) A "Qualifying Event" means any of the
following events:
(i) The involuntary termination of Executive's employment by the
Company during the 24-month period following either any Change in
Control or a Change in CEO, other than (x) for Cause, or (y) by reason
of Executive's death or Disability; or
(ii) Executive's voluntary termination of employment for Good
Reason during the 24-month period following either any Change in Control
or a Change in CEO, provided that Executive's termination occurs within
(x) six months after a Qualifying Nonrenewal or (y) 90 days after the
occurrence of any other event constituting Good Reason.
(b) A "Nonqualifying Event" means the involuntary termination of
Executive's employment by the Company other than during the 24-month period
following either any Change in Control or a Change in CEO, other than (x) for
Cause, or (y) by reason of Executive's death or Disability.
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<PAGE> 3
(c) A "Constructive Event" means, other than during the 24-month period
following either any Change in Control or a Change in CEO, Executive's voluntary
termination of employment for Good Reason within 90 days after the occurrence of
an event constituting Good Reason.
SECTION 2.02. Right to Certain Benefits. (a) In the event that a
Qualifying Event, a Nonqualifying Event, a Constructive Event or other
termination of employment occurs during the term of this Agreement, Executive
shall be entitled to receive from the Company the Severance Benefits as
described in Section 2.03 or the relevant Separation Benefits as described in
Section 2.04, as the case may be.
(b) (i) In the event that a Change in Control occurs during the term of
this Agreement all stock options, stock appreciation rights, restricted stock,
or other awards (collectively, "Awards") then held by Executive pursuant to the
provisions of any of the Company's stock or option plans or any successor plans
(each, a "Stock Plan") shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control and remain exercisable until
the earlier of (x) the expiration date of such Award, any termination of
employment notwithstanding, and (y) if applicable, the first anniversary of the
last day of the Continuation Period (such earlier date, the "Termination Date").
Subject to the provisions above upon a subsequent Change in Control, all Awards
granted after a Change in Control to Executive shall vest pursuant to the terms
of each such Award and its related Stock Plan; provided, however, that each such
Award shall continue to vest through any Continuation Period, and shall
terminate on the Termination Date.
(ii) In the event that a Change in CEO occurs during the term of
this Agreement all Awards held by Executive, whether granted before or after
such Change in CEO, shall vest pursuant to the terms of each such Award and its
related Stock Plan; provided, however, that each such Award shall continue to
vest through any Continuation Period, and shall terminate on the Termination
Date.
(iii) In the event that a Constructive Event or a Nonqualifying
Event occurs during the term of this Agreement all Awards held by Executive
shall continue to vest through the Payment Period, and shall terminate on the
earlier of (x) the expiration date of such Award, any termination of employment
notwithstanding, and (y) the first anniversary of the last day of the Payment
Period.
SECTION 2.03. Benefits upon a Qualifying Event. Subject to Executive's
execution of an agreement in substantially the form set forth as Exhibit A
hereto, with such changes in the Competitor Companies named therein as the Board
shall reasonably determine (the "Release") and except to the extent provided in
Section
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<PAGE> 4
5.07 and Section 5.09, Executive shall be entitled to the following benefits
(the "Severance Benefits") upon a Qualifying Event:
(a) The Company shall pay Executive a lump sum, in cash, equal to
Executive's earned but unpaid Base Salary and other earned but unpaid cash
entitlements for the period through and including the date of termination of
Executive's employment, including unused earned and accrued vacation pay and
unreimbursed documented business expenses (collectively, "Accrued
Compensation"). In addition, Executive shall be entitled to any other benefits
earned or accrued by Executive for the period through and including the date of
termination of Executive's employment under any other employee benefit plans and
arrangements maintained by the Company, in accordance with the terms of such
plans and arrangements, except as modified herein (collectively, "Accrued
Benefits").
(b) The Company, through the second anniversary of the Qualifying Event
(the "Continuation Period"), shall pay Executive cash compensation in equal
installments over 24 months at the times and in accordance with the applicable
Company payroll system, in an amount equal to two (2) times the sum of the
amounts set forth in Clauses (i) and (ii) below:
(i) Executive's Base Salary at its highest annual rate in effect
during the period beginning on the date of the Change in Control or
Change in CEO, as the case may be, to which such Qualifying Event
relates, and ending on the date of such Qualifying Event; and
(ii) the Executive's annual target bonus opportunity for the
year in which Executive's employment terminates (the "Bonus Amount").
(c) The Company shall also pay Executive, at the times and in the manner
provided above, an amount in cash equal to Executive's target bonus opportunity
for the year in which Executive's employment terminates times a fraction, the
numerator of which is the number of days in such year ending on the date of such
Qualifying Event and the denominator of which is 365 (the "Basic Bonus Amount").
(d) In addition, Executive shall be entitled to the benefits set forth
below (collectively, the "Additional Benefits") through and in respect of the
Continuation Period:
(i) Continue to receive Executive's automobile allowance, if
any, as in effect immediately prior to the Qualifying Event;
(ii) Continue to participate in the Company's Medical Plans,
provided that the Company shall reimburse Executive for Executive's
total
4
<PAGE> 5
actual premium costs incurred for such period including, without
limitation, 102% of such total premium costs as are incurred by
Executive for "Continuation Coverage" (within the meaning of Section
4980B(f)(2) of the Code) for the last 18 months of such Period;
(iii) Reimbursement for the documented costs, including
laboratory and test fees, of an annual physical examination in an amount
not to exceed $1,500;
(iv) Reimbursement for the documented costs of annual gift and
income tax preparation services and advice in an amount not to exceed
$2,000 (the "Tax Preparation Benefits"); and
(v) Participation in the Company's Supplemental Executive
Deferred Compensation Plan up to the full amount of employee
contributions permitted; provided, however, that the Company will not be
required to make any matching contributions with respect to Executive's
contributions during the Continuation Period.
SECTION 2.04. Separation Payments. Subject to Executive's execution of a
Release and except to the extent provided under Section 5.07 and Section 5.09,
Executive shall be entitled to the benefits set forth below (the "Separation
Benefits") upon termination of employment under the following circumstances:
(a) Upon a Nonqualifying Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount equal to the greater of (x) Executive's Base
Salary at its highest annual rate during the one year period prior to
such Nonqualifying Event and (y) the sum of (A) 50% of such Base Salary
plus (B) the product of 1/12 of such Base Salary times Executive's full
and partial years of employment with the Company ("Years of Service")
(such greater amount, the "Basic Termination Benefit"), which such
Benefit shall be payable in cash in equal installments at the times and
in accordance with the applicable Company payroll system over a period
of months equal to the greater of (C) 12 and (D) the sum of 6 plus
Executive's Years of Service (the greater of (C) and (D), the "Payment
Period");
(iv) An amount, in cash, payable in equal installments over the
Payment Period and at the times and in accordance with the applicable
Company payroll system, equal to the Basic Bonus Amount; and
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<PAGE> 6
(v) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(b) Upon a Constructive Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount, in cash, equal to the sum of (x) the Basic
Termination Benefit, (y) the Bonus Amount, and (z) the Basic Bonus
Amount, payable in equal installments at the times and in the manner
provided in Section 2.04(a)(iv); and
(iv) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(c) Upon Executive's voluntary termination of employment other than for
Good Reason or Retirement, Executive shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
(d) Upon termination of Executive's employment by reason of Retirement,
Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits; and
(iii) The Tax Preparation Benefit through and in respect of the
year in which Retirement occurs.
(e) Upon termination of Executive's employment by reason of death or
Disability, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) The Basic Bonus Amount; and
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<PAGE> 7
(iv) The Tax Preparation Benefit through and in respect of the
year in which death or Disability occur.
(f) Upon termination of the Executive's employment for Cause, Executive
shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
SECTION 2.05. Retention Payments. (a) In the event that Executive is
employed by the Company on January 1, 2002, Executive shall be entitled to a
lump sum cash retention payment equal to 150% of the sum of (i) Executive's Base
Salary and (ii) Executive's target annual bonus, each as in effect for the 2001
fiscal year (such sum, the "2002 Retention Bonus").
(b) In the event that Executive is employed by the Company on January 1,
2003, Executive shall be entitled to a lump sum cash retention payment equal to
50% of the sum of (i) Executive's Base Salary and (ii) Executive's target annual
bonus, each as in effect for the 2002 fiscal year (such sum, the "2003 Retention
Bonus").
(c) In the event Executive's employment is terminated prior to January
1, 2002 by the Company other than for Cause or by the Executive for Good Reason
or due to Executive's death or Disability, Executive shall be entitled to an
amount equal to the 2002 Retention Bonus multiplied by the greater of (a) a
fraction, the numerator of which is the number of days elapsed from and
including January 1, 2000 and ending on the date of such termination and the
denominator of which is 731, or (b) two-thirds (2/3).
(d) In the event Executive's employment is terminated in 2002 by the
Company other than for Cause or by the Executive for Good Reason or due to
Executive's death or Disability, Executive shall be entitled to an amount equal
to the 2003 Retention Bonus multiplied by a fraction, the numerator of which is
the number of days in 2002 ending on the date of such termination and the
denominator of which is 365.
(e) The payments to be made pursuant to the provisions of this Section
2.05 shall be in addition to any amount payable to Executive with respect to
Executive's target bonus opportunity for such year or any right to receive the
Basic Bonus Amount, as the case may be.
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<PAGE> 8
ARTICLE 3
CERTAIN TAX REIMBURSEMENT PAYMENTS
SECTION 3.01. Gross-Up Payment. If any portion of the Severance Benefits
or any other payment under this Agreement, or under any other agreement with, or
plan of the Company, including but not limited to stock options and other
long-term incentives (in the aggregate "Total Payments") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled under this paragraph to an additional amount (the
"Gross-Up Payment") such that after payment by Executive of all of Executive's
applicable Federal, state and local taxes, including any Excise Tax, imposed
upon such additional amount, Executive will retain an amount equal to the Excise
Tax imposed on the Total Payments.
For purposes of this Section 3.01, Executive's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt of
the Gross-Up Payment.
SECTION 3.02. Determinations. All determinations required to be made
under this Article 4, including whether a Gross-Up Payment is required under
Section 3.01, and the assumptions to be used in determining the Gross-Up
Payment, shall be made by PricewaterhouseCoopers LLP, or such other firm as the
Company may designate in writing prior to a Change in Control (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the Company
and Executive within twenty business days of the receipt of notice from
Executive that there has been a Qualifying Event, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the Person effecting the Change in Control or is
otherwise unavailable, Executive may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company.
SECTION 3.03. Subsequent Redeterminations. Executive agrees (unless
requested otherwise by the Company) to use reasonable efforts to contest in good
faith any subsequent determination by the Internal Revenue Service that
Executive owes an amount of Excise Tax greater than the amount determined
pursuant to Section 3.02; provided, that Executive shall be entitled to
reimbursement by the Company of all fees and expenses reasonably incurred by
Executive in contesting such determination. In the event the Internal Revenue
Service or any court of competent jurisdiction determines that Executive owes an
amount of Excise Tax that is either greater or less than the amount previously
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taken into account and paid under this Article 3, the Company shall promptly pay
to Executive, or Executive shall promptly repay to the Company, as the case may
be, the amount of such excess or shortfall. In the case of any payment that the
Company is required to make to Executive pursuant to the preceding sentence (a
"Later Payment"), the Company shall also pay to Executive an additional amount
such that after payment by Executive of all of Executive's applicable Federal,
state and local taxes, including any interest and penalties assessed by any
taxing authority, on such additional amount, Executive will retain an amount
equal to the total of Executive's applicable Federal, state and local taxes,
including any interest and penalties assessed by any taxing authority, arising
due to the Later Payment. In the case of any repayment of Excise Tax that
Executive is required to make to the Company pursuant to the second sentence of
this Section 3.03, Executive shall also repay to the Company the amount of any
additional payment received by Executive from the Company in respect of
applicable Federal, state and local taxes on such repaid Excise Tax, to the
extent Executive is entitled to a refund of (or has not yet paid) such Federal,
state or local taxes.
ARTICLE 4
SUCCESSORS AND ASSIGNMENTS
SECTION 4.01. Successors. The Company will require any successor
(whether by reason of a Change in Control, direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform the
obligations under this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place.
SECTION 4.02. Assignment by Executive. This Agreement shall inure to the
benefit of and be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If Executive should die or become disabled while any amount is owed
but unpaid to Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid to Executive's devisee, legatee, legal guardian or other
designee, or if there is no such designee, to Executive's estate. Executive's
rights hereunder shall not otherwise be assignable.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Notices. Any notice required to be delivered hereunder
shall be in writing and shall be addressed
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if to the Company, to:
Ingram Micro Inc.
1600 East St. Andrew Place
Santa Ana, California 92705
Attn: General Counsel;
if to Executive, to Executive's last known address as reflected on the
books and records of the Company
or such other address as such party may hereafter specify for the purpose by
written notice to the other party hereto. Any such notice shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 5.02. Legal Fees and Expenses. The Company shall pay all legal
fees, costs of litigation, prejudgment interest, and other expenses which are
reasonably incurred by Executive as a result of (i) the Company's refusal to
provide Severance Benefits or other amounts payable in accordance herewith upon
a Nonqualifying Event or a Constructive Event, (ii) the Company's (or any third
party's) contesting the validity, enforceability, or interpretation of the
Agreement, (iii) any conflict between the parties pertaining to this Agreement,
(iv) Executive's contesting any determination by the Internal Revenue Service
pursuant to Section 3.03, or (v) Executive's pursuing any claim under Section
5.15 hereof.
SECTION 5.03. Arbitration. Executive shall have the right and option to
elect (in lieu of litigation) to have any dispute or controversy arising under
or in connection with this Agreement settled by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by Executive within 50
miles from the location of Executive's principal place of employment with the
Company, in accordance with the rules of the American Arbitration Association
then in effect. Executive's election to arbitrate, as herein provided, and the
decision of the arbitrators in that proceeding, shall be binding on the Company
and Executive. Judgment may be entered on the award of the arbitrator in any
court having jurisdiction. All expenses of such arbitration, including the fees
and expenses reasonably incurred by Executive, shall be borne by the Company.
SECTION 5.04. Unfunded Agreement. The obligations of the Company under
this Agreement represent an unsecured, unfunded promise to pay benefits to
Executive and/or Executive's beneficiaries, and shall not entitle Executive or
such beneficiaries to a preferential claim to any asset of the Company.
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SECTION 5.05. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company (i.e., including, but not limited to, vested benefits under any
qualified or nonqualified retirement plan), at or subsequent to the date of
termination of Executive's employment shall be payable in accordance with such
plan, policy, practice, or program except as expressly modified by this
Agreement.
SECTION 5.06. Employment Status. Nothing herein contained shall
interfere with the Company's right to terminate Executive's employment with the
Company at any time, with or without Cause, subject to the Company's obligation
to provide such Severance Benefits or Separation Benefits, as the case may be,
and other amounts as may be required hereunder.
SECTION 5.07. Mitigation. (a) In no event shall Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement, nor
except as provided below, shall the amount of any payment hereunder be reduced
by any compensation earned by Executive as a result of employment by another
employer.
(b) Notwithstanding any other provision of this Agreement to the
contrary, including, without limitation, Section 5.07(a), in the event that
either (i) the Qualifying Event entitling Executive to the payments described in
Section 2.03 of this Agreement is the result of (A) an involuntary termination
of Executive's employment by the Company during the 24-month period following a
Change in CEO or (B) Executive's voluntary termination of employment for Good
Reason during the 24-month period following a Change in CEO, or (ii) Executive
becomes entitled to receive the Separation Benefits described in Section 2.04 of
this Agreement, and if Executive is subsequently employed by any party or
becomes self-employed following such termination of employment, where, in either
case, Executive becomes eligible to receive Base Salary and an annual bonus
opportunity comparable in the aggregate to such compensation Executive received
from the Company immediately prior to such termination, then all cash payments
pursuant to Section 2.03(b), Section 2.04(a)(iii) or Section 2.04(b)(iii)(x) and
(y), as the case may be, shall automatically cease on the first of the month
immediately following the month in which Executive becomes entitled to such
compensation; provided, however, that no other Severance Benefits or Separation
Benefits (including the right to receive any remaining unpaid portion of the
Basic Bonus Amount) shall be affected or reduced nor shall the period of
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time during which any of Executive's Awards may vest or be exercised as provided
in Section 2.02(b) be affected or reduced.
SECTION 5.08. No Set-Off. The Company's obligations to make all payments
and honor all commitments under this Agreement shall be absolute and
unconditional and, except as provided in Section 5.09, shall not be affected by
any circumstances including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company may have against Executive.
SECTION 5.09. Entire Agreement. This Agreement represents the entire
agreement between the Executive and the Company and its affiliates with respect
to Executive's employment and/or severance rights, and supersedes all prior
discussions, negotiations, and agreements concerning such rights, including, but
not limited to, any prior severance agreement made between Executive and the
Company; provided, however, that any amounts payable to Executive hereunder
shall be reduced by any amounts paid to Executive as required by any applicable
local law in connection with any termination of Executive's employment.
SECTION 5.10. Tax Withholding. Notwithstanding anything in this
Agreement to the contrary, the Company shall withhold from any amounts payable
under this Agreement all federal, state, city, or other taxes as are legally
required to be withheld.
SECTION 5.11. Waiver of Rights. The waiver by either party of a breach
of any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.
SECTION 5.12. Severability. In the event any provision of the Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Agreement, and the Agreement shall
be construed and enforced as if the illegal or invalid provision had not been
included.
SECTION 5.13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to principles of conflict of laws.
SECTION 5.14. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.
SECTION 5.15. Claim Review Procedure. If Executive is denied benefits
under this Agreement, Executive may request, in writing, a review of the denial
by the Company or its designee within 60 days of receiving written notice of the
denial. The Company shall respond in writing to a written request for review
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within 90 days of receipt of such request. Neither the claim procedure set forth
in this Section 5.15 nor Executive's failure to adhere to such procedure shall
derogate from Executive's right to enforce this Agreement through legal action,
including arbitration as provided in Section 5.03.
SECTION 5.16. Indemnification. The Company shall indemnify Executive
(and Executive's legal representatives or other successors) to the fullest
extent permitted by the Certificate of Incorporation and By-Laws of the Company,
as in effect at such time or on the Effective Date, or by the terms of any
indemnification agreement between the Company and Executive, whichever affords
or afforded greater protection to Executive, and Executive shall be entitled to
the protection of any insurance policies the Company may elect to maintain
generally for the benefit of its directors and officers (and to the extent the
Company maintains such an insurance policy or policies, Executive shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any Company officer or
director), against all costs, charges and expenses whatsoever incurred or
sustained by Executive or Executive's legal representatives at the time such
costs, charges and expenses are incurred or sustained, in connection with any
action, suit or proceeding to which Executive (or Executive's legal
representatives or other successors) may be made a party by reason of
Executive's being or having been a director, officer or employee of the Company,
or any Subsidiary or Executive's serving or having served any other enterprise
as a director, officer, employee or fiduciary at the request of the Company.
ARTICLE 6
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below.
"Accounting Firm" has the meaning accorded such term in Section
3.02.
"Accrued Benefits" has the meaning accorded such term in Section
2.03.
"Accrued Compensation" has the meaning accorded such term in
Section 2.03.
"Additional Benefits" has the meaning accorded such term in
Section 2.03.
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"Affiliate" and "Associate" have the respective meanings
accorded to such terms in Rule 12b-2 under the Exchange Act as in effect
on the Effective Date.
"Awards" has the meaning accorded such term in Section 2.02.
"Base Salary" means, at any time, the then-regular annual rate
of pay which Executive is receiving as annual salary.
"Basic Bonus Amount" has the meaning accorded such term in
Section 2.03.
"Basic Termination Benefit" has the meaning accorded such term
in Section 2.04.
"Beneficial Ownership." A Person shall be deemed the "Beneficial
Owner"of, and shall be deemed to "beneficially own," securities pursuant
to Rule 13d-3 under the Exchange Act as in effect on the Effective Date.
"Board" has the meaning accorded such term in the second
"Whereas" clause of this Agreement.
"Bonus Amount" has the meaning accorded such term in Section
2.03.
"Cause" means the occurrence of any one or more of the
following:
(a) A demonstrably willful and deliberate material act or failure to act
by Executive (other than as a result of incapacity due to physical or mental
illness) which is committed in bad faith, without reasonable belief that such
action or inaction is in the best interests of the Company, and which act or
inaction is not remedied within fifteen business days of written notice from the
Company;
(b) Executive's gross negligence in the performance of Executive's
duties hereunder; or
(c) Executive's conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for the reasons set forth in clause (a) or (b) of this
definition unless and until there shall have been delivered to Executive a copy
of a resolution duly adopted by the affirmative vote (which cannot be delegated)
of not
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less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (and after reasonable notice to
Executive an opportunity for Executive, together with Executive's counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
Executive is guilty of conduct set forth above in such clauses (a) or (b) of
this definition and specifying the particulars thereof in detail.
"Change in CEO" means the first appointment or election after
the Effective Date of a Chief Executive Officer of the Company not
serving in such position immediately prior to such appointment or
election.
"Change in Control" means, and shall be deemed to have occurred
upon any occurrence of any of the following events:
(a) Any Person (other than an Excluded Person) acquires,
together with all Affiliates and Associates of such Person,
Beneficial Ownership of securities representing 25% or more of
the combined voting power of the Voting Stock then outstanding,
unless such Person acquires Beneficial Ownership of 25% or more
of the combined voting power of the Voting Stock then
outstanding solely as a result of an acquisition of Voting Stock
by the Company which, by reducing the Voting Stock outstanding,
increases the proportionate Voting Stock beneficially owned by
such Person (together with all Affiliates and Associates of such
Person) to 25% or more of the combined voting power of the
Voting Stock then outstanding; provided, that if a Person shall
become the Beneficial Owner of 25% or more of the combined
voting power of the Voting Stock then outstanding by reason of
such Voting Stock acquisition by the Company and shall
thereafter become the Beneficial Owner of any additional Voting
Stock which causes the proportionate voting power of Voting
Stock beneficially owned by such Person to increase to 25% or
more of the combined voting power of the Voting Stock then
outstanding, such Person shall, upon becoming the Beneficial
Owner of such additional Voting Stock, be deemed to have become
the Beneficial Owner of 25% or more of the combined voting power
of the Voting Stock then outstanding other than solely as a
result of such Voting Stock acquisition by the Company;
(b) During any period of 24 consecutive months (not
including any period prior to the Effective Date), individuals
who at the beginning of such period constitute the Board (and
any new Director, whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of
at least two-thirds of the Directors then still in office who
either were
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Directors at the beginning of the period or whose election or
nomination for election was so approved), cease for any reason
to constitute a majority of Directors then constituting the
Board;
(c) A reorganization, merger or consolidation of the
Company is consummated, in each case, unless, immediately
following such reorganization, merger or consolidation, (i) more
than 50% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners of the Voting Stock outstanding immediately
prior to such reorganization, merger or consolidation, (ii) no
Person (but excluding for this purpose any Excluded Person and
any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly,
25% or more of the voting power of the outstanding Voting Stock)
beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation were members of the Board at the time of the
execution of the initial agreement providing for such
reorganization, merger or consolidation;
(d) The shareholders of the Company approve (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to any corporation with
respect to which, immediately following such sale or other
disposition, (A) more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities who
were the beneficial owners of the Voting Stock outstanding
immediately prior to such sale or other disposition of assets,
(B) no Person (but excluding for this purpose any Excluded
Person and any Person beneficially owning, immediately prior to
such sale or other disposition, directly or
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indirectly, 25% or more of the voting power of the outstanding
Voting Stock) beneficially owns, directly or indirectly, 25% or
more of, respectively, the then outstanding shares of common
stock of such corporation or the combined voting power of the
then outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (C) at least
a majority of the members of the board of directors of such
corporation were members of the Board at the time of the
execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the
Company; or
(e) The occurrence of any transaction or event that the
Board, in its sole discretion, designates a "Change in Control".
Notwithstanding the foregoing, in no event shall a "Change in Control"
be deemed to have occurred (i) as a result of the formation of a Holding
Company, or (ii) with respect to Executive, if Executive is part of a
"group," within the meaning of Section 13(d)(3) of the Exchange Act as
in effect on the Effective Date, which consummates the Change in Control
transaction. In addition, for purposes of the definition of "Change in
Control" a Person engaged in business as an underwriter of securities
shall not be deemed to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such Person's participation in
good faith in a firm commitment underwriting until the expiration of
forty days after the date of such acquisition.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning accorded such term in the introductory
paragraph of this Agreement.
"Constructive Event" has the meaning accorded such term in
Section 2.01.
"Continuation Period" has the meaning accorded to such term in
Section 2.03.
"Disability" means Long-Term Disability, as such term is defined
in the Disability Plan.
"Disability Plan" means the long-term disability plan (or any
successor disability and/or survivorship plan adopted by the Company) in
which Executive participates, as in effect immediately prior to the
relevant event (subject to changes in coverage levels applicable to all
employees generally covered by such Plan).
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"Effective Date" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excise Tax" has the meaning accorded such term in Section 3.01.
"Excluded Person" means (i) the Company; (ii) any of the
Company's Subsidiaries; (iii) any Holding Company; (iv) any employee
benefit plan of the Company, any of its Subsidiaries or a Holding
Company; (v) any Person organized, appointed or established by the
Company, any of its Subsidiaries or a Holding Company for or pursuant to
the terms of any plan described in clause (iv) or (vi) any Family
Stockholder as such term is defined in the Company's amended and
restated by-laws.
"Executive" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Extended Term" has the meaning accorded such term in Section
1.03.
"Good Reason" means, without Executive's express written
consent, the occurrence of any one or more of the following:
(a) Any change in Executive's reporting
responsibilities, the assignment to Executive of duties
inconsistent with Executive's authorities, duties,
responsibilities and status as an officer of the Company, or a
reduction or alteration in the nature thereof, in each case
excluding any designated acting or temporary authorities,
responsibilities and status, from those in effect as of the
Reference Date; provided, however, that any insubstantial and
inadvertent act that is remedied by the Company promptly after
receipt of notice thereof given by Executive shall not
constitute Good Reason;
(b) The Company's requiring Executive to be based at a
location in excess of 35 miles from Executive's principal job
location or office immediately prior to the Reference Date;
except for required travel on the Company's business to an
extent consistent with Executive's business travel obligations
immediately prior to the Reference Date;
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(c) A reduction by the Company of Executive's Base
Salary or total annual target compensation from the highest
level at any time in the year prior to such reduction by more
than 10%;
(d) The failure by the Company to keep in effect
compensation, retirement, health and welfare benefits, or
perquisite programs under which Executive receives benefits
substantially similar, in the aggregate, to the benefits under
such programs as exist immediately prior to the Reference Date
(other than pursuant to an equivalent reduction in such benefits
of all full-time domestic employees of the Company who are not
subject to a collective bargaining agreement); or the failure of
the Company to meet the funding requirements, if any, of any of
such programs;
(e) Any material breach by the Company of its
obligations under this Agreement or any failure of a successor
of the Company to assume and agree to perform the Company's
entire obligations under this Agreement, as required by Section
4.01 herein, provided that such successor has received at least
ten days written notice from the Company or Executive of the
requirements of Section 4.01; or
(f) The Executive's receipt from the Company at any time
during an Extended Term of written notice pursuant to Section
1.02 to the effect that the term of this Agreement will not be
extended (a "Qualifying Nonrenewal").
"Gross-Up Payment" has the meaning accorded such term in Section
3.01.
"Holding Company" means an entity that becomes a holding company
for the Company or its businesses as a part of any reorganization,
merger, consolidation or other transaction, provided that the
outstanding shares of common stock of such entity and the combined
voting power of the then outstanding voting securities of such entity
entitled to vote generally in the election of directors is, immediately
after such reorganization, merger, consolidation or other transaction,
beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Voting Stock outstanding immediately prior to such
reorganization, merger, consolidation or other transaction in
substantially the same proportions as their ownership, immediately prior
to such reorganization, merger, consolidation or other transaction, of
such outstanding Voting Stock.
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"Initial Term" has the meaning accorded such term in Section
1.01.
"Later Payment" has the meaning accorded such term in Section
3.03.
"Medical Plans" means the medical care plans (or any successor
medical plans adopted by the Company) in which Executive participates,
as in effect immediately prior to the relevant event (subject to changes
in coverage levels applicable to all employees generally covered by such
Plans).
"Nonqualifying Event" has the meaning accorded such term in
Section 2.01.
"Payment Period" has the meaning accorded such term in Section
2.04.
"Person" means an individual, corporation, partnership,
association, trust or any other entity or organization.
"Qualifying Event" has the meaning accorded such term in Section
2.01.
"Qualifying Nonrenewal" has the meaning accorded such term in
clause (f) of the definition of Good Reason in this Article 6.
"Reference Date" means the later of the (x) the Effective Date
or (y) the date 60 days prior to the date of the relevant event, if any,
set forth in the definition of Good Reason.
"Release" has the meaning accorded such term in Section 2.02.
"Release" has the meaning accorded such term in Section 2.03.
"Retirement" shall be determined under guidelines established
from time to time by the Human Resources Committee of the Board.
"Separation Benefits" has the meaning accorded such term in
Section 2.04.
"Severance Benefits" has the meaning accorded such term in
Section 2.03.
"Stock Plan" has the meaning accorded such term in Section 2.02.
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"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having voting power to elect a
majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Successive Period" has the meaning accorded such term in
Section 1.02.
"Tax Preparation Benefits" has the meaning accorded such term in
Section 2.03.
"Termination Date" has the meaning accorded such term in Section
2.02.
"Total Payments" has the meaning accorded such term in Section
3.01.
"2002 Retention Bonus" has the meaning set forth in Section
2.05.
"2003 Retention Bonus" has the meaning set forth in Section
2.05.
"Voting Stock" means securities of the Company entitled to vote
generally in the election of members of the Board.
"Years of Service" has the meaning accorded such term in Section
2.04.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, to be effective as of the day and year first written above.
EXECUTIVE Ingram Micro Inc.
/s/ MICHAEL J. GRAINGER By: /s/ JERRE L. STEAD
- ----------------------------------- -----------------------------------
Michael J. Grainger Title: Chairman of the Board
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EXHIBIT A
RELEASE AND COVENANT
This letter sets forth the agreement of Ingram Micro Inc. (the
"Company") and MICHAEL J. GRAINGER ("Executive") relating to the termination of
Executive's employment with Company. Subject to the execution of this Agreement,
the parties hereto agree as follows:
Termination of Employment.
(A). Executive agrees and acknowledges that the termination of his
employment with Company shall be effective as of __________,____ (the
"TERMINATION DATE").
(B). Executive acknowledges Executive's obligation to promptly return to
the Company all property of the Company in Executive's possession including,
without limitation, keys, SECUREID card, credit cards, cell phones, pagers,
computers, office equipment, documents and files and instruction manuals on or
before the Termination Date, or earlier if so requested by the Company. After
the Termination Date, the Company shall forward all mail addressed to Executive
to the most recent address provided by Executive to the Company pursuant to
Section 5.01 of the Executive Retention Agreement between the Executive and the
Company dated as of January __, 2000 to which this Agreement is Exhibit A (the
"Retention Agreement").
Mutual Releases.
1. In consideration of the foregoing and the benefits paid and payable
to Executive under the Retention Agreement, Executive hereby waives all claims
against Company, its affiliates and their respective officers, directors and
executives (hereinafter the "RELEASEES"), and releases and discharges the
Releasees from liability for any and all claims and damages that Executive may
have against them as of the date of this Agreement, whether known or unknown,
including, but not limited to, any claims arising out of his employment
relationship with Company or its affiliates or the termination of such
employment, or any violation of any federal, state or local fair employment
practice law, including Title VII of the Civil Rights Act, the Civil Rights Act
of 1991, the Age Discrimination in Employment Act as amended by the Older
Workers' Benefit Protection Act, or any other employee relations statute, rule,
executive order, law or ordinance, tort, express or implied contract, public
policy or other obligations; provided, however, that nothing herein shall be
deemed a waiver or release of Executive's right to enforce the obligations of
Company under this Agreement or
<PAGE> 23
the Retention Agreement or Executive's rights to indemnification to the fullest
extent provided by law or in any applicable certificate of incorporation,
charter or similar document, by-laws or contract.
Executive acknowledges that Executive has had up to 21 days to consider
the terms of this Agreement and is hereby advised by Company to discuss the
terms of this Agreement with an attorney unrelated to Company prior to signing
this Agreement. Executive further acknowledges that Executive is entering into
this Agreement freely, knowingly, and voluntarily, with a full understanding of
its terms. Executive also acknowledges that Executive will have 7 days from the
date he signs this Agreement to revoke the Agreement by notifying the General
Counsel of the Company in writing.
2. In consideration of the performance by Executive of the covenants and
undertakings made herein by Executive, Company on behalf of itself and its
affiliates hereby waives all claims against Executive and releases and
discharges Executive from liability for any and all claims and damages that any
of them may have against Executive as of the date of this Agreement, whether
known or unknown, including Executive's employment relationship with Company or
its affiliates or the termination of such employment; provided, however, that
nothing herein shall be deemed a waiver or release of the right of Company or
its affiliates to enforce the obligations of Executive under this Agreement or
for any claims arising from a breach of Executive's fiduciary duty of loyalty to
the Company or its affiliates.
Waiver. Each of the Company and Executive hereby expressly waives and
relinquishes all rights and benefits under Section 1542 of the California Civil
Code which provides:
"Section 1542. General Release - Claim extinguished. A general release
does not extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor."
Each of the Company and Executive understands and acknowledges that the
significance and consequences of this waiver of Section 1542 of the Civil Code
is that even if the Company and Executive, as the case may be, should eventually
suffer damages arising out of Executive's employment relationship with the
Company and its affiliates, or termination of such employment, such party will
not be permitted to make any claim for those damages except as expressly
permitted by this Agreement. Furthermore, each of the Company and Executive
acknowledges that such party intends these consequences even as to claims for
injuries and/or damages that may exist as of the date of this Agreement but
which
A-2
<PAGE> 24
Executive or the Company, as the case may be, does not know exist, and which, if
known, would materially affect such party's decision to execute this Agreement.
Cooperation. Executive agrees to cooperate fully with Company and to
provide such information as Company may reasonably request with respect to any
Company-related transaction, investment or other matter in which Executive was
involved in any way while employed by Company.
Confidentiality. Executive acknowledges Executive's obligation not to
disclose, during or after employment, any trade secrets or proprietary and/or
confidential data or records of the Company or its affiliates or to utilize any
such information for private profit. Each of the parties hereto agrees that such
party will not release, publish, announce or otherwise make available to the
public in any manner whatsoever any information or announcement regarding this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party hereto, except as required by law or legal process,
including, in the case of the Company, filings with the Securities and Exchange
Commission. Executive agrees not to communicate with, including responding to
questions or inquiries presented by, the media, employees or investors of the
Company, its affiliates or any third party relating to the terms of this
Agreement, without first obtaining the prior written consent of the Company.
Notwithstanding the foregoing, Executive may make disclosure to his spouse,
attorneys and financial advisors of the existence and terms of this Agreement
provided that they agree to be bound by the provisions of this paragraph.
No Disparagement. Executive and Company agree that no party hereto shall
make disparaging statements or representations, or otherwise communicate
disparagingly, directly or indirectly, in writing, orally, or otherwise, about
either of the parties hereto or the other Releasees or the employees, customers,
suppliers, competitors, vendors, stockholders or lenders of the Company or its
affiliates or any third party, nor take any action which may, directly or
indirectly, disparage or be damaging to either of the parties hereto or the
other Releasees, their businesses, or their reputations.
No Solicitation. Executive will not (i) directly or indirectly make
known to any person, firm, corporation, partnership or other entity, any list,
listing or other compilation or document, whether prepared or maintained by
Executive, the Company or any of the Company's affiliates, which contains
information that is confidential to the Company or any of its affiliates about
their customers ("the Company's Customers"), including but not limited to names
and addresses, or (ii) at any time through the end of the "Continuation Period"
(as defined in the Retention Agreement), call on or solicit, or attempt to call
on or solicit, in either case with the intent to divert business or potential
business from the Company or any of its affiliates, any of the Company's
Customers with whom Executive has become acquainted during his employment with
the Company or any of its
A-3
<PAGE> 25
affiliates, either for Executive's own benefit or for the benefit of any other
person, firm, corporation, partnership or other entity.
No Raid. Through the end of the Continuation Period, Executive will not,
and will use Executive's best efforts not to permit any person, firm,
corporation, partnership or other entity of which Executive is an officer or
control person to, (i) knowingly solicit, entice, or persuade any individual who
is an associate of the Company or any of its affiliates at any time during the
Continuation Period (each such individual, a "Company Associate") to leave the
services of the Company or any of its affiliates for any reason, or (ii) solicit
for employment, hire, or engage any present or future Company Associate as an
employee, independent contractor or consultant.
Noncompetition. Executive acknowledges that Executive has unique
knowledge of the Company and its affiliates and unique knowledge of the computer
and software sales and distribution industry. Based on his unique status,
Executive agrees that through the end of the Continuation Period, Executive will
not be employed or hired as an employee or consultant by, or otherwise directly
or indirectly provide services for, any of Tech Data, Merisel, Inacom, Pinacor,
Globelle, Gates Arrow, CHS Electronics, Hallmark, Hamilton Avnet, Daisytek,
Azerti, Azlan, Northamber, Tech Pacific, Synnex, Bell Micro, DSS and/or GE
Capital Information Technology Solutions-North America, Inc., and any subsidiary
or affiliate of these entities in a business or line of business conducted by
any such entity which competes with any line of business conducted by the
Company or any of its affiliates. Notwithstanding the foregoing, should
Executive be employed by an entity that is not a subsidiary or affiliate of one
of these entities at the time Executive commences such employment, but
subsequently becomes a subsidiary or affiliate of, or becomes merged into, one
of these entities on or before the end of the Continuation Period, he shall not
be deemed to be in breach of the provisions of this paragraph due to such
employment, provided that at the time Executive commenced his employment there
had been no public announcement of an agreement pursuant to which Executive's
employer would become a subsidiary or affiliate of, or merged into, one of these
entities or discussions that could lead to such an agreement and Executive had
no knowledge of the existence of any such agreement or discussions. Executive
further agrees that Executive will not own any interest in, provide financing
to, be connected with, or be a principal, partner or agent of any such
competitive distributor or aggregator; provided, Executive may own less than 1%
of the outstanding shares of any such entity whose shares are traded in the
public market.
Availability. Provided that the Company is not in breach of its
obligations under this Agreement, and subject to Executive's other commitments,
upon request of the Company or any of its affiliates during the Continuation
Period, Executive will make himself available for up to 15 hours in any calendar
month to
A-4
<PAGE> 26
provide reasonable assistance to the Company or any such affiliate and will use
reasonable efforts to arrange his commitments so as to make Executive available
for such assistance on a basis which is consistent with the requests of the
Company or any affiliates. Such assistance may include telephone conversations,
correspondence, attendance and participation in meetings, transfer of knowledge
or information regarding operational or other issues, litigation preparation and
trials. During such period, the Company shall reimburse Executive for any
out-of-pocket expense Executive may incur in connection with such assistance in
accordance with the Company's reimbursement policies. After the end of the
Continuation Period, Executive shall use reasonable efforts, subject to his
other commitments, to continue to provide such assistance as may be requested by
the Company and, in such event, shall be compensated at a rate per day (minimum
charge, one-half day) commensurate with the daily rate he was earning based on
his base salary immediately prior to the Termination Date.
The running of the periods prescribed in this Agreement shall be tolled
and suspended by the length of time Executive works in circumstances that a
court of competent jurisdiction subsequently finds to violate the terms of this
Agreement.
No Reliance. The parties hereto represent and acknowledge that, in
executing this Agreement, they do not rely and have not relied upon any
representation or statement, written or oral, made by either of the parties or
by either of the parties' agents, attorneys, or representatives with regard to
the subject matter, basis, or effect of this Agreement or otherwise, other than
those specifically stated in this written Agreement.
Assignment. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, administrators,
representatives, executors, successors, and assigns. This Agreement shall also
inure to the benefit of all the Releasees and their respective heirs,
administrators, representatives, executors, successors, and assigns. This
Agreement shall not be assignable by Executive.
No Waiver. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed as a waiver of any
subsequent breach hereof, or as a waiver of a breach of any other provision.
Interpretation: Choice of Law. This Agreement shall be interpreted in
accordance with the plain meaning of its terms and not strictly for or against
any of the parties hereto. This Agreement and all provisions hereof shall be
governed by and construed under the laws of the State of California without
regard to the choice of law rules thereof.
A-5
<PAGE> 27
Acknowledgment. Executive acknowledges that Executive has carefully read
this Agreement, fully understands and accepts all of its provisions, and signs
it voluntarily of Executive's own free will. Executive further acknowledges that
Executive has been provided a full opportunity to review and reflect on the
terms of this Agreement and to seek the advice of legal counsel of Executive's
choice.
INGRAM MICRO INC.
by
-----------------------------------------
Agreed and Accepted Name:
Title:
- -------------------------------------
MICHAEL J. GRAINGER
A-6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.49
<SEQUENCE>5
<DESCRIPTION>EXHIBIT 10.49
<TEXT>
<PAGE> 1
Exhibit 10.49
EXECUTIVE RETENTION AGREEMENT
EXECUTIVE RETENTION AGREEMENT ("Agreement") dated as of January 31, 2000
(the "Effective Date") by and between Ingram Micro Inc., a Delaware corporation
(the "Company"), and KEVIN MURAI ("Executive").
WHEREAS, Executive is presently employed by the Company in a key
management capacity; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
that appropriate steps be taken to reinforce and encourage the continued
attention of key management personnel, including Executive, to their assigned
duties without the distraction that may arise from personal uncertainties
associated with any potential change in employment status, with any change in
the Company's Chief Executive Officer or with any pending or threatened change
in control of the Company; and
WHEREAS, the Board has also determined that it is in the best interests
of the Company and its stockholders to encourage Executive's continued
availability to the Company in the event of a change in the Company's Chief
Executive Officer or a change in control of the Company.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration including, but not limited to, Executive's
continuing employment with the Company, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
TERM OF AGREEMENT
SECTION 1.01. Initial Term. The term of this Agreement shall commence on
the Effective Date and shall expire December 31, 2001 (the "Initial Term"),
subject to Sections 1.02 and 1.03.
SECTION 1.02. Extensions. As of each December 31 beginning in 2000 and
each later date which is one year prior to the scheduled expiration date of this
Agreement as it may be extended from time to time pursuant to Sections 1.02 and
1.03 (any such date a "Renewal Date"), provided Executive is actively employed
by the Company on each such scheduled expiration date, the remaining term of
<PAGE> 2
this Agreement shall automatically be extended by one year (each such additional
one-year period following the Initial Term or any Extended Term, as the case may
be, a "Successive Period") unless, at least sixty days prior to any such Renewal
Date, the Company has provided Executive with written notice of the Company's
intent that the term of this Agreement not be so extended; provided, however,
that Executive's rights under Section 2.05 shall be unaffected by any
termination of this Agreement prior to January 2, 2003.
SECTION 1.03. Automatic Extension Upon Change in Control or Change in
CEO. In the event that any Change in Control or a Change in CEO occurs during
the Initial Term or any Successive Period, upon the effective date of such
Change in Control or Change in CEO the term of this Agreement shall
automatically be extended for a period of 24 months from the effective date of
such Change in Control or Change in CEO, as the case may be (an "Extended
Term"). The 24-month extension described in this Section 1.03 shall take effect
regardless of whether, before or after the effective date of a Change in Control
or Change in CEO, Executive or the Company has given written notice of intent
not to extend the term of the Agreement pursuant to Section 1.02 or there has
occurred a termination of Executive's employment, provided the term of the
Agreement has not yet expired as of such effective date.
ARTICLE 2
CERTAIN BENEFITS
SECTION 2.01. Certain Events. (a) A "Qualifying Event" means any of the
following events:
(i) The involuntary termination of Executive's employment by the
Company during the 24-month period following either any Change in
Control or a Change in CEO, other than (x) for Cause, or (y) by reason
of Executive's death or Disability; or
(ii) Executive's voluntary termination of employment for Good
Reason during the 24-month period following either any Change in Control
or a Change in CEO, provided that Executive's termination occurs within
(x) six months after a Qualifying Nonrenewal or (y) 90 days after the
occurrence of any other event constituting Good Reason.
(b) A "Nonqualifying Event" means the involuntary termination of
Executive's employment by the Company other than during the 24-month period
following either any Change in Control or a Change in CEO, other than (x) for
Cause, or (y) by reason of Executive's death or Disability.
(c) A "Constructive Event" means, other than during the 24-month period
following either any Change in Control or a Change in CEO, Executive's
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<PAGE> 3
voluntary termination of employment for Good Reason within 90 days after the
occurrence of an event constituting Good Reason.
SECTION 2.02. Right to Certain Benefits. (a) In the event that a
Qualifying Event, a Nonqualifying Event, a Constructive Event or other
termination of employment occurs during the term of this Agreement, Executive
shall be entitled to receive from the Company the Severance Benefits as
described in Section 2.03 or the relevant Separation Benefits as described in
Section 2.04, as the case may be.
(b) (i) In the event that a Change in Control occurs during the term of
this Agreement all stock options, stock appreciation rights, restricted stock,
or other awards (collectively, "Awards") then held by Executive pursuant to the
provisions of any of the Company's stock or option plans or any successor plans
(each, a "Stock Plan") shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control and remain exercisable until
the earlier of (x) the expiration date of such Award, any termination of
employment notwithstanding, and (y) if applicable, the first anniversary of the
last day of the Continuation Period (such earlier date, the "Termination Date").
Subject to the provisions above upon a subsequent Change in Control, all Awards
granted after a Change in Control to Executive shall vest pursuant to the terms
of each such Award and its related Stock Plan; provided, however, that each such
Award shall continue to vest through any Continuation Period, and shall
terminate on the Termination Date.
(ii) In the event that a Change in CEO occurs during the term of
this Agreement all Awards held by Executive, whether granted before or after
such Change in CEO, shall vest pursuant to the terms of each such Award and its
related Stock Plan; provided, however, that each such Award shall continue to
vest through any Continuation Period, and shall terminate on the Termination
Date.
(iii) In the event that a Constructive Event or a Nonqualifying
Event occurs during the term of this Agreement all Awards held by Executive
shall continue to vest through the Payment Period, and shall terminate on the
earlier of (x) the expiration date of such Award, any termination of employment
notwithstanding, and (y) the first anniversary of the last day of the Payment
Period.
SECTION 2.03. Benefits upon a Qualifying Event. Subject to Executive's
execution of an agreement in substantially the form set forth as Exhibit A
hereto, with such changes in the Competitor Companies named therein as the Board
shall reasonably determine (the "Release") and except to the extent provided in
Section 5.07 and Section 5.09, Executive shall be entitled to the following
benefits (the "Severance Benefits") upon a Qualifying Event:
3
<PAGE> 4
(a) The Company shall pay Executive a lump sum, in cash, equal to
Executive's earned but unpaid Base Salary and other earned but unpaid cash
entitlements for the period through and including the date of termination of
Executive's employment, including unused earned and accrued vacation pay and
unreimbursed documented business expenses (collectively, "Accrued
Compensation"). In addition, Executive shall be entitled to any other benefits
earned or accrued by Executive for the period through and including the date of
termination of Executive's employment under any other employee benefit plans and
arrangements maintained by the Company, in accordance with the terms of such
plans and arrangements, except as modified herein (collectively, "Accrued
Benefits").
(b) The Company, through the second anniversary of the Qualifying Event
(the "Continuation Period"), shall pay Executive cash compensation in equal
installments over 24 months at the times and in accordance with the applicable
Company payroll system, in an amount equal to two (2) times the sum of the
amounts set forth in Clauses (i) and (ii) below:
(i) Executive's Base Salary at its highest annual rate in effect
during the period beginning on the date of the Change in Control or
Change in CEO, as the case may be, to which such Qualifying Event
relates, and ending on the date of such Qualifying Event; and
(ii) the Executive's annual target bonus opportunity for the
year in which Executive's employment terminates (the "Bonus Amount").
(c) The Company shall also pay Executive, at the times and in the manner
provided above, an amount in cash equal to Executive's target bonus opportunity
for the year in which Executive's employment terminates times a fraction, the
numerator of which is the number of days in such year ending on the date of such
Qualifying Event and the denominator of which is 365 (the "Basic Bonus Amount").
(d) In addition, Executive shall be entitled to the benefits set forth
below (collectively, the "Additional Benefits") through and in respect of the
Continuation Period:
(i) Continue to receive Executive's automobile allowance, if
any, as in effect immediately prior to the Qualifying Event;
(ii) Continue to participate in the Company's Medical Plans,
provided that the Company shall reimburse Executive for Executive's
total actual premium costs incurred for such period including, without
limitation, 102% of such total premium costs as are incurred by
Executive
4
<PAGE> 5
for "Continuation Coverage" (within the meaning of Section 4980B(f)(2)
of the Code) for the last 18 months of such Period;
(iii) Reimbursement for the documented costs, including
laboratory and test fees, of an annual physical examination in an amount
not to exceed $1,500;
(iv) Reimbursement for the documented costs of annual gift and
income tax preparation services and advice in an amount not to exceed
$2,000 (the "Tax Preparation Benefits"); and
(v) Participation in the Company's Supplemental Executive
Deferred Compensation Plan up to the full amount of employee
contributions permitted; provided, however, that the Company will not be
required to make any matching contributions with respect to Executive's
contributions during the Continuation Period.
SECTION 2.04. Separation Payments. Subject to Executive's execution of a
Release and except to the extent provided under Section 5.07 and Section 5.09,
Executive shall be entitled to the benefits set forth below (the "Separation
Benefits") upon termination of employment under the following circumstances:
(a) Upon a Nonqualifying Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount equal to the greater of (x) Executive's Base
Salary at its highest annual rate during the one year period prior to
such Nonqualifying Event and (y) the sum of (A) 50% of such Base Salary
plus (B) the product of 1/12 of such Base Salary times Executive's full
and partial years of employment with the Company ("Years of Service")
(such greater amount, the "Basic Termination Benefit"), which such
Benefit shall be payable in cash in equal installments at the times and
in accordance with the applicable Company payroll system over a period
of months equal to the greater of (C) 12 and (D) the sum of 6 plus
Executive's Years of Service (the greater of (C) and (D), the "Payment
Period");
(iv) An amount, in cash, payable in equal installments over the
Payment Period and at the times and in accordance with the applicable
Company payroll system, equal to the Basic Bonus Amount; and
5
<PAGE> 6
(v) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(b) Upon a Constructive Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount, in cash, equal to the sum of (x) the Basic
Termination Benefit, (y) the Bonus Amount, and (z) the Basic Bonus
Amount, payable in equal installments at the times and in the manner
provided in Section 2.04(a)(iv); and
(iv) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(c) Upon Executive's voluntary termination of employment other than for
Good Reason or Retirement, Executive shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
(d) Upon termination of Executive's employment by reason of Retirement,
Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits; and
(iii) The Tax Preparation Benefit through and in respect of the
year in which Retirement occurs.
(e) Upon termination of Executive's employment by reason of death or
Disability, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) The Basic Bonus Amount; and
(iv) The Tax Preparation Benefit through and in respect of the
year in which death or Disability occur.
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<PAGE> 7
(f) Upon termination of the Executive's employment for Cause, Executive
shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
SECTION 2.05. Retention Payments. (a) In the event that Executive is
employed by the Company on January 1, 2002, Executive shall be entitled to a
lump sum cash retention payment equal to 150% of the sum of (i) Executive's Base
Salary and (ii) Executive's target annual bonus, each as in effect for the 2001
fiscal year (such sum, the "2002 Retention Bonus").
(b) In the event that Executive is employed by the Company on January 1,
2003, Executive shall be entitled to a lump sum cash retention payment equal to
50% of the sum of (i) Executive's Base Salary and (ii) Executive's target annual
bonus, each as in effect for the 2002 fiscal year (such sum, the "2003 Retention
Bonus").
(c) In the event Executive's employment is terminated prior to January
1, 2002 by the Company other than for Cause or by the Executive for Good Reason
or due to Executive's death or Disability, Executive shall be entitled to an
amount equal to the 2002 Retention Bonus multiplied by a fraction, the numerator
of which is the number of days elapsed from and including January 1, 2000 and
ending on the date of such termination and the denominator of which is 731.
(d) In the event Executive's employment is terminated in 2002 by the
Company other than for Cause or by the Executive for Good Reason or due to
Executive's death or Disability, Executive shall be entitled to an amount equal
to the 2003 Retention Bonus multiplied by a fraction, the numerator of which is
the number of days in 2002 ending on the date of such termination and the
denominator of which is 365.
(e) The payments to be made pursuant to the provisions of this Section
2.05 shall be in addition to any amount payable to Executive with respect to
Executive's target bonus opportunity for such year or any right to receive the
Basic Bonus Amount, as the case may be.
7
<PAGE> 8
ARTICLE 3
CERTAIN TAX REIMBURSEMENT PAYMENTS
SECTION 3.01. Gross-Up Payment. If any portion of the Severance Benefits
or any other payment under this Agreement, or under any other agreement with, or
plan of the Company, including but not limited to stock options and other
long-term incentives (in the aggregate "Total Payments") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled under this paragraph to an additional amount (the
"Gross-Up Payment") such that after payment by Executive of all of Executive's
applicable Federal, state and local taxes, including any Excise Tax, imposed
upon such additional amount, Executive will retain an amount equal to the Excise
Tax imposed on the Total Payments.
For purposes of this Section 3.01, Executive's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt of
the Gross-Up Payment.
SECTION 3.02. Determinations. All determinations required to be made
under this Article 4, including whether a Gross-Up Payment is required under
Section 3.01, and the assumptions to be used in determining the Gross-Up
Payment, shall be made by PricewaterhouseCoopers LLP, or such other firm as the
Company may designate in writing prior to a Change in Control (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the Company
and Executive within twenty business days of the receipt of notice from
Executive that there has been a Qualifying Event, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the Person effecting the Change in Control or is
otherwise unavailable, Executive may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company.
SECTION 3.03. Subsequent Redeterminations. Executive agrees (unless
requested otherwise by the Company) to use reasonable efforts to contest in good
faith any subsequent determination by the Internal Revenue Service that
Executive owes an amount of Excise Tax greater than the amount determined
pursuant to Section 3.02; provided, that Executive shall be entitled to
reimbursement by the Company of all fees and expenses reasonably incurred by
Executive in contesting such determination. In the event the Internal Revenue
Service or any court of competent jurisdiction determines that Executive owes an
amount of Excise Tax that is either greater or less than the amount previously
8
<PAGE> 9
taken into account and paid under this Article 3, the Company shall promptly pay
to Executive, or Executive shall promptly repay to the Company, as the case may
be, the amount of such excess or shortfall. In the case of any payment that the
Company is required to make to Executive pursuant to the preceding sentence (a
"Later Payment"), the Company shall also pay to Executive an additional amount
such that after payment by Executive of all of Executive's applicable Federal,
state and local taxes, including any interest and penalties assessed by any
taxing authority, on such additional amount, Executive will retain an amount
equal to the total of Executive's applicable Federal, state and local taxes,
including any interest and penalties assessed by any taxing authority, arising
due to the Later Payment. In the case of any repayment of Excise Tax that
Executive is required to make to the Company pursuant to the second sentence of
this Section 3.03, Executive shall also repay to the Company the amount of any
additional payment received by Executive from the Company in respect of
applicable Federal, state and local taxes on such repaid Excise Tax, to the
extent Executive is entitled to a refund of (or has not yet paid) such Federal,
state or local taxes.
ARTICLE 4
SUCCESSORS AND ASSIGNMENTS
SECTION 4.01. Successors. The Company will require any successor
(whether by reason of a Change in Control, direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform the
obligations under this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place.
SECTION 4.02. Assignment by Executive. This Agreement shall inure to the
benefit of and be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If Executive should die or become disabled while any amount is owed
but unpaid to Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid to Executive's devisee, legatee, legal guardian or other
designee, or if there is no such designee, to Executive's estate. Executive's
rights hereunder shall not otherwise be assignable.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Notices. Any notice required to be delivered hereunder
shall be in writing and shall be addressed
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<PAGE> 10
if to the Company, to:
Ingram Micro Inc.
1600 East St. Andrew Place
Santa Ana, California 92705
Attn: General Counsel;
if to Executive, to Executive's last known address as reflected on the
books and records of the Company
or such other address as such party may hereafter specify for the purpose by
written notice to the other party hereto. Any such notice shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 5.02. Legal Fees and Expenses. The Company shall pay all legal
fees, costs of litigation, prejudgment interest, and other expenses which are
reasonably incurred by Executive as a result of (i) the Company's refusal to
provide Severance Benefits or other amounts payable in accordance herewith upon
a Nonqualifying Event or a Constructive Event, (ii) the Company's (or any third
party's) contesting the validity, enforceability, or interpretation of the
Agreement, (iii) any conflict between the parties pertaining to this Agreement,
(iv) Executive's contesting any determination by the Internal Revenue Service
pursuant to Section 3.03, or (v) Executive's pursuing any claim under Section
5.15 hereof.
SECTION 5.03. Arbitration. Executive shall have the right and option to
elect (in lieu of litigation) to have any dispute or controversy arising under
or in connection with this Agreement settled by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by Executive within 50
miles from the location of Executive's principal place of employment with the
Company, in accordance with the rules of the American Arbitration Association
then in effect. Executive's election to arbitrate, as herein provided, and the
decision of the arbitrators in that proceeding, shall be binding on the Company
and Executive. Judgment may be entered on the award of the arbitrator in any
court having jurisdiction. All expenses of such arbitration, including the fees
and expenses reasonably incurred by Executive, shall be borne by the Company.
SECTION 5.04. Unfunded Agreement. The obligations of the Company under
this Agreement represent an unsecured, unfunded promise to pay benefits to
Executive and/or Executive's beneficiaries, and shall not entitle Executive or
such beneficiaries to a preferential claim to any asset of the Company.
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SECTION 5.05. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company (i.e., including, but not limited to, vested benefits under any
qualified or nonqualified retirement plan), at or subsequent to the date of
termination of Executive's employment shall be payable in accordance with such
plan, policy, practice, or program except as expressly modified by this
Agreement.
SECTION 5.06. Employment Status. Nothing herein contained shall
interfere with the Company's right to terminate Executive's employment with the
Company at any time, with or without Cause, subject to the Company's obligation
to provide such Severance Benefits or Separation Benefits, as the case may be,
and other amounts as may be required hereunder.
SECTION 5.07. Mitigation. (a) In no event shall Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement, nor
except as provided below, shall the amount of any payment hereunder be reduced
by any compensation earned by Executive as a result of employment by another
employer.
(b) Notwithstanding any other provision of this Agreement to the
contrary, including, without limitation, Section 5.07(a), in the event that
either (i) the Qualifying Event entitling Executive to the payments described in
Section 2.03 of this Agreement is the result of (A) an involuntary termination
of Executive's employment by the Company during the 24-month period following a
Change in CEO or (B) Executive's voluntary termination of employment for Good
Reason during the 24-month period following a Change in CEO, or (ii) Executive
becomes entitled to receive the Separation Benefits described in Section 2.04 of
this Agreement, and if Executive is subsequently employed by any party or
becomes self-employed following such termination of employment, where, in either
case, Executive becomes eligible to receive Base Salary and an annual bonus
opportunity comparable in the aggregate to such compensation Executive received
from the Company immediately prior to such termination, then all cash payments
pursuant to Section 2.03(b), Section 2.04(a)(iii) or Section 2.04(b)(iii)(x) and
(y), as the case may be, shall automatically cease on the first of the month
immediately following the month in which Executive becomes entitled to such
compensation; provided, however, that no other Severance Benefits or Separation
Benefits (including the right to receive any remaining unpaid portion of the
Basic Bonus Amount) shall be affected or reduced nor shall the period of
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time during which any of Executive's Awards may vest or be exercised as provided
in Section 2.02(b) be affected or reduced.
SECTION 5.08. No Set-Off. The Company's obligations to make all payments
and honor all commitments under this Agreement shall be absolute and
unconditional and, except as provided in Section 5.09, shall not be affected by
any circumstances including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company may have against Executive.
SECTION 5.09. Entire Agreement. This Agreement represents the entire
agreement between the Executive and the Company and its affiliates with respect
to Executive's employment and/or severance rights, and supersedes all prior
discussions, negotiations, and agreements concerning such rights, including, but
not limited to, any prior severance agreement made between Executive and the
Company; provided, however, that any amounts payable to Executive hereunder
shall be reduced by any amounts paid to Executive as required by any applicable
local law in connection with any termination of Executive's employment.
SECTION 5.10. Tax Withholding. Notwithstanding anything in this
Agreement to the contrary, the Company shall withhold from any amounts payable
under this Agreement all federal, state, city, or other taxes as are legally
required to be withheld.
SECTION 5.11. Waiver of Rights. The waiver by either party of a breach
of any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.
SECTION 5.12. Severability. In the event any provision of the Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Agreement, and the Agreement shall
be construed and enforced as if the illegal or invalid provision had not been
included.
SECTION 5.13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to principles of conflict of laws.
SECTION 5.14. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.
SECTION 5.15. Claim Review Procedure. If Executive is denied benefits
under this Agreement, Executive may request, in writing, a review of the denial
by the Company or its designee within 60 days of receiving written notice of the
denial. The Company shall respond in writing to a written request for review
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within 90 days of receipt of such request. Neither the claim procedure set forth
in this Section 5.15 nor Executive's failure to adhere to such procedure shall
derogate from Executive's right to enforce this Agreement through legal action,
including arbitration as provided in Section 5.03.
SECTION 5.16. Indemnification. The Company shall indemnify Executive
(and Executive's legal representatives or other successors) to the fullest
extent permitted by the Certificate of Incorporation and By-Laws of the Company,
as in effect at such time or on the Effective Date, or by the terms of any
indemnification agreement between the Company and Executive, whichever affords
or afforded greater protection to Executive, and Executive shall be entitled to
the protection of any insurance policies the Company may elect to maintain
generally for the benefit of its directors and officers (and to the extent the
Company maintains such an insurance policy or policies, Executive shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any Company officer or
director), against all costs, charges and expenses whatsoever incurred or
sustained by Executive or Executive's legal representatives at the time such
costs, charges and expenses are incurred or sustained, in connection with any
action, suit or proceeding to which Executive (or Executive's legal
representatives or other successors) may be made a party by reason of
Executive's being or having been a director, officer or employee of the Company,
or any Subsidiary or Executive's serving or having served any other enterprise
as a director, officer, employee or fiduciary at the request of the Company.
ARTICLE 6
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below.
"Accounting Firm" has the meaning accorded such term in Section
3.02.
"Accrued Benefits" has the meaning accorded such term in Section
2.03.
"Accrued Compensation" has the meaning accorded such term in
Section 2.03.
"Additional Benefits" has the meaning accorded such term in
Section 2.03.
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"Affiliate" and "Associate" have the respective meanings
accorded to such terms in Rule 12b-2 under the Exchange Act as in effect
on the Effective Date.
"Awards" has the meaning accorded such term in Section 2.02.
"Base Salary" means, at any time, the then-regular annual rate
of pay which Executive is receiving as annual salary.
"Basic Bonus Amount" has the meaning accorded such term in
Section 2.03.
"Basic Termination Benefit" has the meaning accorded such term
in Section 2.04.
"Beneficial Ownership." A Person shall be deemed the "Beneficial
Owner"of, and shall be deemed to "beneficially own," securities pursuant
to Rule 13d-3 under the Exchange Act as in effect on the Effective Date.
"Board" has the meaning accorded such term in the second
"Whereas" clause of this Agreement.
"Bonus Amount" has the meaning accorded such term in Section
2.03.
"Cause" means the occurrence of any one or more of the
following:
(a) A demonstrably willful and deliberate material act or failure to act
by Executive (other than as a result of incapacity due to physical or mental
illness) which is committed in bad faith, without reasonable belief that such
action or inaction is in the best interests of the Company, and which act or
inaction is not remedied within fifteen business days of written notice from the
Company;
(b) Executive's gross negligence in the performance of Executive's
duties hereunder; or
(c) Executive's conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for the reasons set forth in clause (a) or (b) of this
definition unless and until there shall have been delivered to Executive a copy
of a resolution duly adopted by the affirmative vote (which cannot be delegated)
of not
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<PAGE> 15
less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (and after reasonable notice to
Executive an opportunity for Executive, together with Executive's counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
Executive is guilty of conduct set forth above in such clauses (a) or (b) of
this definition and specifying the particulars thereof in detail.
"Change in CEO" means the first appointment or election after
the Effective Date of a Chief Executive Officer of the Company not
serving in such position immediately prior to such appointment or
election.
"Change in Control" means, and shall be deemed to have occurred
upon any occurrence of any of the following events:
(a) Any Person (other than an Excluded Person) acquires,
together with all Affiliates and Associates of such Person,
Beneficial Ownership of securities representing 25% or more of
the combined voting power of the Voting Stock then outstanding,
unless such Person acquires Beneficial Ownership of 25% or more
of the combined voting power of the Voting Stock then
outstanding solely as a result of an acquisition of Voting Stock
by the Company which, by reducing the Voting Stock outstanding,
increases the proportionate Voting Stock beneficially owned by
such Person (together with all Affiliates and Associates of such
Person) to 25% or more of the combined voting power of the
Voting Stock then outstanding; provided, that if a Person shall
become the Beneficial Owner of 25% or more of the combined
voting power of the Voting Stock then outstanding by reason of
such Voting Stock acquisition by the Company and shall
thereafter become the Beneficial Owner of any additional Voting
Stock which causes the proportionate voting power of Voting
Stock beneficially owned by such Person to increase to 25% or
more of the combined voting power of the Voting Stock then
outstanding, such Person shall, upon becoming the Beneficial
Owner of such additional Voting Stock, be deemed to have become
the Beneficial Owner of 25% or more of the combined voting power
of the Voting Stock then outstanding other than solely as a
result of such Voting Stock acquisition by the Company;
(b) During any period of 24 consecutive months (not
including any period prior to the Effective Date), individuals
who at the beginning of such period constitute the Board (and
any new Director, whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of
at least two-thirds of the Directors then still in office who
either were
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Directors at the beginning of the period or whose election or
nomination for election was so approved), cease for any reason
to constitute a majority of Directors then constituting the
Board;
(c) A reorganization, merger or consolidation of the Company
is consummated, in each case, unless, immediately following such
reorganization, merger or consolidation, (i) more than 50% of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners of
the Voting Stock outstanding immediately prior to such
reorganization, merger or consolidation, (ii) no Person (but
excluding for this purpose any Excluded Person and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 25% or more of
the voting power of the outstanding Voting Stock) beneficially
owns, directly or indirectly, 25% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors and (iii) at least a majority of the
members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members
of the Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation;
(d) The shareholders of the Company approve (i) a complete
liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of
the Company, other than to any corporation with respect to
which, immediately following such sale or other disposition, (A)
more than 50% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or
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<PAGE> 17
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners of the Voting Stock
outstanding immediately prior to such sale or other disposition
of assets, (B) no Person (but excluding for this purpose any
Excluded Person and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly,
25% or more of the voting power of the outstanding Voting Stock)
beneficially owns, directly or indirectly, 25% or more of,
respectively, the then outstanding shares of common stock of
such corporation or the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors and (C) at least a
majority of the members of the board of directors of such
corporation were members of the Board at the time of the
execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the
Company; or
(e) The occurrence of any transaction or event that the
Board, in its sole discretion, designates a "Change in Control".
Notwithstanding the foregoing, in no event shall a "Change in Control"
be deemed to have occurred (i) as a result of the formation of a Holding
Company, or (ii) with respect to Executive, if Executive is part of a
"group," within the meaning of Section 13(d)(3) of the Exchange Act as
in effect on the Effective Date, which consummates the Change in Control
transaction. In addition, for purposes of the definition of "Change in
Control" a Person engaged in business as an underwriter of securities
shall not be deemed to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such Person's participation in
good faith in a firm commitment underwriting until the expiration of
forty days after the date of such acquisition.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning accorded such term in the introductory
paragraph of this Agreement.
"Constructive Event" has the meaning accorded such term in
Section 2.01.
"Continuation Period" has the meaning accorded to such term in
Section 2.03.
"Disability" means Long-Term Disability, as such term is defined
in the Disability Plan.
"Disability Plan" means the long-term disability plan (or any
successor disability and/or survivorship plan adopted by the Company) in
which Executive participates, as in effect immediately prior to the
relevant event (subject to changes in coverage levels applicable to all
employees generally covered by such Plan).
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"Effective Date" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excise Tax" has the meaning accorded such term in Section 3.01.
"Excluded Person" means (i) the Company; (ii) any of the
Company's Subsidiaries; (iii) any Holding Company; (iv) any employee
benefit plan of the Company, any of its Subsidiaries or a Holding
Company; (v) any Person organized, appointed or established by the
Company, any of its Subsidiaries or a Holding Company for or pursuant to
the terms of any plan described in clause (iv) or (vi) any Family
Stockholder as such term is defined in the Company's amended and
restated by-laws.
"Executive" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Extended Term" has the meaning accorded such term in Section
1.03.
"Good Reason" means, without Executive's express written
consent, the occurrence of any one or more of the following:
(a) The assignment to Executive of duties inconsistent with
Executive's authorities, duties, responsibilities and status as
an officer of the Company, or a reduction or alteration thereof,
in each case excluding any designated acting or temporary
authorities, responsibilities and status, from those in effect
as of the Reference Date; provided, however, the appointment of
a Chief Operating Officer of the Company or an insubstantial and
inadvertent act that is remedied by the Company promptly after
receipt of notice thereof given by Executive shall not
constitute Good Reason;
(b) The Company's requiring Executive to be based at a
location in excess of 35 miles from Executive's principal job
location or office immediately prior to the Reference Date;
except for required travel on the Company's business to an
extent consistent with Executive's business travel obligations
immediately prior to the Reference Date;
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(c) A reduction by the Company of Executive's Base Salary or
total annual target compensation from the highest level at any
time in the year prior to such reduction by more than 10%;
(d) The failure by the Company to keep in effect
compensation, retirement, health and welfare benefits, or
perquisite programs under which Executive receives benefits
substantially similar, in the aggregate, to the benefits under
such programs as exist immediately prior to the Reference Date
(other than pursuant to an equivalent reduction in such benefits
of all full-time domestic employees of the Company who are not
subject to a collective bargaining agreement); or the failure of
the Company to meet the funding requirements, if any, of any of
such programs;
(e) Any material breach by the Company of its obligations
under this Agreement or any failure of a successor of the
Company to assume and agree to perform the Company's entire
obligations under this Agreement, as required by Section 4.01
herein, provided that such successor has received at least ten
days written notice from the Company or Executive of the
requirements of Section 4.01; or
(f) The Executive's receipt from the Company at any time
during an Extended Term of written notice pursuant to Section
1.02 to the effect that the term of this Agreement will not be
extended (a "Qualifying Nonrenewal").
"Gross-Up Payment" has the meaning accorded such term in Section
3.01.
"Holding Company" means an entity that becomes a holding company
for the Company or its businesses as a part of any reorganization,
merger, consolidation or other transaction, provided that the
outstanding shares of common stock of such entity and the combined
voting power of the then outstanding voting securities of such entity
entitled to vote generally in the election of directors is, immediately
after such reorganization, merger, consolidation or other transaction,
beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Voting Stock outstanding immediately prior to such
reorganization, merger, consolidation or other transaction in
substantially the same proportions as their ownership, immediately prior
to such reorganization, merger, consolidation or other transaction, of
such outstanding Voting Stock.
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"Initial Term" has the meaning accorded such term in Section
1.01.
"Later Payment" has the meaning accorded such term in Section
3.03.
"Medical Plans" means the medical care plans (or any successor
medical plans adopted by the Company) in which Executive participates,
as in effect immediately prior to the relevant event (subject to changes
in coverage levels applicable to all employees generally covered by such
Plans).
"Nonqualifying Event" has the meaning accorded such term in
Section 2.01.
"Payment Period" has the meaning accorded such term in Section
2.04.
"Person" means an individual, corporation, partnership,
association, trust or any other entity or organization.
"Qualifying Event" has the meaning accorded such term in Section
2.01.
"Qualifying Nonrenewal" has the meaning accorded such term in
clause (f) of the definition of Good Reason in this Article 6.
"Reference Date" means the later of (x) the Effective Date or
(y) the date 60 days prior to the date of the relevant event, if any,
set forth in the definition of Good Reason.
"Release" has the meaning accorded such term in Section 2.02.
"Release" has the meaning accorded such term in Section 2.03.
"Retirement" shall be determined under guidelines established
from time to time by the Human Resources Committee of the Board.
"Separation Benefits" has the meaning accorded such term in
Section 2.04.
"Severance Benefits" has the meaning accorded such term in
Section 2.03.
"Stock Plan" has the meaning accorded such term in Section 2.02.
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"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having voting power to elect a
majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Successive Period" has the meaning accorded such term in
Section 1.02.
"Tax Preparation Benefits" has the meaning accorded such term in
Section 2.03.
"Termination Date" has the meaning accorded such term in Section
2.02.
"Total Payments" has the meaning accorded such term in Section
3.01.
"2002 Retention Bonus" has the meaning set forth in Section
2.05.
"2003 Retention Bonus" has the meaning set forth in Section
2.05.
"Voting Stock" means securities of the Company entitled to vote
generally in the election of members of the Board.
"Years of Service" has the meaning accorded such term in Section
2.04.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, to be effective as of the day and year first written above.
EXECUTIVE Ingram Micro Inc.
/s/ KEVIN MURAI
- ---------------------------------- By: /s/ JERRE L. STEAD
Kevin Murai ---------------------------------
Title: Chairman of the Board
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EXHIBIT A
RELEASE AND COVENANT
This letter sets forth the agreement of Ingram Micro Inc. (the
"Company") and KEVIN MURAI ("Executive") relating to the termination of
Executive's employment with Company. Subject to the execution of this Agreement,
the parties hereto agree as follows:
Termination of Employment.
(A). Executive agrees and acknowledges that the termination of his
employment with Company shall be effective as of __________,____ (the
"TERMINATION DATE").
(B). Executive acknowledges Executive's obligation to promptly return to
the Company all property of the Company in Executive's possession including,
without limitation, keys, SECUREID card, credit cards, cell phones, pagers,
computers, office equipment, documents and files and instruction manuals on or
before the Termination Date, or earlier if so requested by the Company. After
the Termination Date, the Company shall forward all mail addressed to Executive
to the most recent address provided by Executive to the Company pursuant to
Section 5.01 of the Executive Retention Agreement between the Executive and the
Company dated as of January __, 2000 to which this Agreement is Exhibit A (the
"Retention Agreement").
Mutual Releases.
1. In consideration of the foregoing and the benefits paid and payable
to Executive under the Retention Agreement, Executive hereby waives all claims
against Company, its affiliates and their respective officers, directors and
executives (hereinafter the "RELEASEES"), and releases and discharges the
Releasees from liability for any and all claims and damages that Executive may
have against them as of the date of this Agreement, whether known or unknown,
including, but not limited to, any claims arising out of his employment
relationship with Company or its affiliates or the termination of such
employment, or any violation of any federal, state or local fair employment
practice law, including Title VII of the Civil Rights Act, the Civil Rights Act
of 1991, the Age Discrimination in Employment Act as amended by the Older
Workers' Benefit Protection Act, or any other employee relations statute, rule,
executive order, law or ordinance, tort, express or implied contract, public
policy or other obligations; provided, however, that nothing herein shall be
deemed a waiver or release of Executive's right to enforce the obligations of
Company under this Agreement or
<PAGE> 23
the Retention Agreement or Executive's rights to indemnification to the fullest
extent provided by law or in any applicable certificate of incorporation,
charter or similar document, by-laws or contract.
Executive acknowledges that Executive has had up to 21 days to consider
the terms of this Agreement and is hereby advised by Company to discuss the
terms of this Agreement with an attorney unrelated to Company prior to signing
this Agreement. Executive further acknowledges that Executive is entering into
this Agreement freely, knowingly, and voluntarily, with a full understanding of
its terms. Executive also acknowledges that Executive will have 7 days from the
date he signs this Agreement to revoke the Agreement by notifying the General
Counsel of the Company in writing.
2. In consideration of the performance by Executive of the covenants and
undertakings made herein by Executive, Company on behalf of itself and its
affiliates hereby waives all claims against Executive and releases and
discharges Executive from liability for any and all claims and damages that any
of them may have against Executive as of the date of this Agreement, whether
known or unknown, including Executive's employment relationship with Company or
its affiliates or the termination of such employment; provided, however, that
nothing herein shall be deemed a waiver or release of the right of Company or
its affiliates to enforce the obligations of Executive under this Agreement or
for any claims arising from a breach of Executive's fiduciary duty of loyalty to
the Company or its affiliates.
Waiver. Each of the Company and Executive hereby expressly waives and
relinquishes all rights and benefits under Section 1542 of the California Civil
Code which provides:
"Section 1542. General Release - Claim extinguished. A general release
does not extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor."
Each of the Company and Executive understands and acknowledges that the
significance and consequences of this waiver of Section 1542 of the Civil Code
is that even if the Company and Executive, as the case may be, should eventually
suffer damages arising out of Executive's employment relationship with the
Company and its affiliates, or termination of such employment, such party will
not be permitted to make any claim for those damages except as expressly
permitted by this Agreement. Furthermore, each of the Company and Executive
acknowledges that such party intends these consequences even as to claims for
injuries and/or damages that may exist as of the date of this Agreement but
which
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Executive or the Company, as the case may be, does not know exist, and which, if
known, would materially affect such party's decision to execute this Agreement.
Cooperation. Executive agrees to cooperate fully with Company and to
provide such information as Company may reasonably request with respect to any
Company-related transaction, investment or other matter in which Executive was
involved in any way while employed by Company.
Confidentiality. Executive acknowledges Executive's obligation not to
disclose, during or after employment, any trade secrets or proprietary and/or
confidential data or records of the Company or its affiliates or to utilize any
such information for private profit. Each of the parties hereto agrees that such
party will not release, publish, announce or otherwise make available to the
public in any manner whatsoever any information or announcement regarding this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party hereto, except as required by law or legal process,
including, in the case of the Company, filings with the Securities and Exchange
Commission. Executive agrees not to communicate with, including responding to
questions or inquiries presented by, the media, employees or investors of the
Company, its affiliates or any third party relating to the terms of this
Agreement, without first obtaining the prior written consent of the Company.
Notwithstanding the foregoing, Executive may make disclosure to his spouse,
attorneys and financial advisors of the existence and terms of this Agreement
provided that they agree to be bound by the provisions of this paragraph.
No Disparagement. Executive and Company agree that no party hereto shall
make disparaging statements or representations, or otherwise communicate
disparagingly, directly or indirectly, in writing, orally, or otherwise, about
either of the parties hereto or the other Releasees or the employees, customers,
suppliers, competitors, vendors, stockholders or lenders of the Company or its
affiliates or any third party, nor take any action which may, directly or
indirectly, disparage or be damaging to either of the parties hereto or the
other Releasees, their businesses, or their reputations.
No Solicitation. Executive will not (i) directly or indirectly make
known to any person, firm, corporation, partnership or other entity, any list,
listing or other compilation or document, whether prepared or maintained by
Executive, the Company or any of the Company's affiliates, which contains
information that is confidential to the Company or any of its affiliates about
their customers ("the Company's Customers"), including but not limited to names
and addresses, or (ii) at any time through the end of the "Continuation Period"
(as defined in the Retention Agreement), call on or solicit, or attempt to call
on or solicit, in either case with the intent to divert business or potential
business from the Company or any of its affiliates, any of the Company's
Customers with whom Executive has become acquainted during his employment with
the Company or any of its
A-3
<PAGE> 25
affiliates, either for Executive's own benefit or for the benefit of any other
person, firm, corporation, partnership or other entity.
No Raid. Through the end of the Continuation Period, Executive will not,
and will use Executive's best efforts not to permit any person, firm,
corporation, partnership or other entity of which Executive is an officer or
control person to, (i) knowingly solicit, entice, or persuade any individual who
is an associate of the Company or any of its affiliates at any time during the
Continuation Period (each such individual, a "Company Associate") to leave the
services of the Company or any of its affiliates for any reason, or (ii) solicit
for employment, hire, or engage any present or future Company Associate as an
employee, independent contractor or consultant.
Noncompetition. Executive acknowledges that Executive has unique
knowledge of the Company and its affiliates and unique knowledge of the computer
and software sales and distribution industry. Based on his unique status,
Executive agrees that through the end of the Continuation Period, Executive will
not be employed or hired as an employee or consultant by, or otherwise directly
or indirectly provide services for, any of Tech Data, Merisel, Inacom, Pinacor,
Globelle, Gates Arrow, CHS Electronics, Hallmark, Hamilton Avnet, Daisytek,
Azerti, Azlan, Northamber, Tech Pacific, Synnex, Bell Micro, DSS and/or GE
Capital Information Technology Solutions-North America, Inc., and any subsidiary
or affiliate of these entities in a business or line of business conducted by
any such entity which competes with any line of business conducted by the
Company or any of its affiliates. Notwithstanding the foregoing, should
Executive be employed by an entity that is not a subsidiary or affiliate of one
of these entities at the time Executive commences such employment, but
subsequently becomes a subsidiary or affiliate of, or becomes merged into, one
of these entities on or before the end of the Continuation Period, he shall not
be deemed to be in breach of the provisions of this paragraph due to such
employment, provided that at the time Executive commenced his employment there
had been no public announcement of an agreement pursuant to which Executive's
employer would become a subsidiary or affiliate of, or merged into, one of these
entities or discussions that could lead to such an agreement and Executive had
no knowledge of the existence of any such agreement or discussions. Executive
further agrees that Executive will not own any interest in, provide financing
to, be connected with, or be a principal, partner or agent of any such
competitive distributor or aggregator; provided, Executive may own less than 1%
of the outstanding shares of any such entity whose shares are traded in the
public market.
Availability. Provided that the Company is not in breach of its
obligations under this Agreement, and subject to Executive's other commitments,
upon request of the Company or any of its affiliates during the Continuation
Period, Executive will make himself available for up to 15 hours in any calendar
month to
A-4
<PAGE> 26
provide reasonable assistance to the Company or any such affiliate and will use
reasonable efforts to arrange his commitments so as to make Executive available
for such assistance on a basis which is consistent with the requests of the
Company or any affiliates. Such assistance may include telephone conversations,
correspondence, attendance and participation in meetings, transfer of knowledge
or information regarding operational or other issues, litigation preparation and
trials. During such period, the Company shall reimburse Executive for any
out-of-pocket expense Executive may incur in connection with such assistance in
accordance with the Company's reimbursement policies. After the end of the
Continuation Period, Executive shall use reasonable efforts, subject to his
other commitments, to continue to provide such assistance as may be requested by
the Company and, in such event, shall be compensated at a rate per day (minimum
charge, one-half day) commensurate with the daily rate he was earning based on
his base salary immediately prior to the Termination Date.
The running of the periods prescribed in this Agreement shall be tolled
and suspended by the length of time Executive works in circumstances that a
court of competent jurisdiction subsequently finds to violate the terms of this
Agreement.
No Reliance. The parties hereto represent and acknowledge that, in
executing this Agreement, they do not rely and have not relied upon any
representation or statement, written or oral, made by either of the parties or
by either of the parties' agents, attorneys, or representatives with regard to
the subject matter, basis, or effect of this Agreement or otherwise, other than
those specifically stated in this written Agreement.
Assignment. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, administrators,
representatives, executors, successors, and assigns. This Agreement shall also
inure to the benefit of all the Releasees and their respective heirs,
administrators, representatives, executors, successors, and assigns. This
Agreement shall not be assignable by Executive.
No Waiver. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed as a waiver of any
subsequent breach hereof, or as a waiver of a breach of any other provision.
Interpretation: Choice of Law. This Agreement shall be interpreted in
accordance with the plain meaning of its terms and not strictly for or against
any of the parties hereto. This Agreement and all provisions hereof shall be
governed by and construed under the laws of the State of California without
regard to the choice of law rules thereof.
A-5
<PAGE> 27
Acknowledgment. Executive acknowledges that Executive has carefully read
this Agreement, fully understands and accepts all of its provisions, and signs
it voluntarily of Executive's own free will. Executive further acknowledges that
Executive has been provided a full opportunity to review and reflect on the
terms of this Agreement and to seek the advice of legal counsel of Executive's
choice.
INGRAM MICRO INC.
by
-------------------------------
Agreed and Accepted Name:
Title:
- -------------------------------
KEVIN MURAI
A-6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.50
<SEQUENCE>6
<DESCRIPTION>EXHIBIT 10.50
<TEXT>
<PAGE> 1
EXHIBIT 10.50
EXECUTIVE RETENTION AGREEMENT
EXECUTIVE RETENTION AGREEMENT ("Agreement") dated as of January 31, 2000
(the "Effective Date") by and between Ingram Micro Inc., a Delaware corporation
(the "Company"), and GREGORY M. SPIERKEL ("Executive").
WHEREAS, Executive is presently employed by the Company in a key
management capacity; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
that appropriate steps be taken to reinforce and encourage the continued
attention of key management personnel, including Executive, to their assigned
duties without the distraction that may arise from personal uncertainties
associated with any potential change in employment status, with any change in
the Company's Chief Executive Officer or with any pending or threatened change
in control of the Company; and
WHEREAS, the Board has also determined that it is in the best interests
of the Company and its stockholders to encourage Executive's continued
availability to the Company in the event of a change in the Company's Chief
Executive Officer or a change in control of the Company.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration including, but not limited to, Executive's
continuing employment with the Company, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
TERM OF AGREEMENT
SECTION 1.01. Initial Term. The term of this Agreement shall commence on
the Effective Date and shall expire December 31, 2001 (the "Initial Term"),
subject to Sections 1.02 and 1.03.
SECTION 1.02. Extensions. As of each December 31 beginning in 2000 and
each later date which is one year prior to the scheduled expiration date of this
Agreement as it may be extended from time to time pursuant to Sections 1.02 and
1.03 (any such date a "Renewal Date"), provided Executive is actively employed
<PAGE> 2
by the Company on each such scheduled expiration date, the remaining term of
this Agreement shall automatically be extended by one year (each such additional
one-year period following the Initial Term or any Extended Term, as the case may
be, a "Successive Period") unless, at least sixty days prior to any such Renewal
Date, the Company has provided Executive with written notice of the Company's
intent that the term of this Agreement not be so extended; provided, however,
that Executive's rights under Section 2.05 shall be unaffected by any
termination of this Agreement prior to January 2, 2003.
SECTION 1.03. Automatic Extension Upon Change in Control or Change in
CEO. In the event that any Change in Control or a Change in CEO occurs during
the Initial Term or any Successive Period, upon the effective date of such
Change in Control or Change in CEO the term of this Agreement shall
automatically be extended for a period of 24 months from the effective date of
such Change in Control or Change in CEO, as the case may be (an "Extended
Term"). The 24-month extension described in this Section 1.03 shall take effect
regardless of whether, before or after the effective date of a Change in Control
or Change in CEO, Executive or the Company has given written notice of intent
not to extend the term of the Agreement pursuant to Section 1.02 or there has
occurred a termination of Executive's employment, provided the term of the
Agreement has not yet expired as of such effective date.
ARTICLE 2
CERTAIN BENEFITS
SECTION 2.01. Certain Events. (a) A "Qualifying Event" means any of the
following events:
(i) The involuntary termination of Executive's employment by the
Company during the 24-month period following either any Change in
Control or a Change in CEO, other than (x) for Cause, or (y) by reason
of Executive's death or Disability; or
(ii) Executive's voluntary termination of employment for Good
Reason during the 24-month period following either any Change in Control
or a Change in CEO, provided that Executive's termination occurs within
(x) six months after a Qualifying Nonrenewal or (y) 90 days after the
occurrence of any other event constituting Good Reason.
(b) A "Nonqualifying Event" means the involuntary termination of
Executive's employment by the Company other than during the 24-month period
following either any Change in Control or a Change in CEO, other than (x) for
Cause, or (y) by reason of Executive's death or Disability.
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<PAGE> 3
(c) A "Constructive Event" means, other than during the 24-month period
following either any Change in Control or a Change in CEO, Executive's voluntary
termination of employment for Good Reason within 90 days after the occurrence of
an event constituting Good Reason.
SECTION 2.02. Right to Certain Benefits. (a) In the event that a
Qualifying Event, a Nonqualifying Event, a Constructive Event or other
termination of employment occurs during the term of this Agreement, Executive
shall be entitled to receive from the Company the Severance Benefits as
described in Section 2.03 or the relevant Separation Benefits as described in
Section 2.04, as the case may be.
(b) (i) In the event that a Change in Control occurs during the term of
this Agreement all stock options, stock appreciation rights, restricted stock,
or other awards (collectively, "Awards") then held by Executive pursuant to the
provisions of any of the Company's stock or option plans or any successor plans
(each, a "Stock Plan") shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control and remain exercisable until
the earlier of (x) the expiration date of such Award, any termination of
employment notwithstanding, and (y) if applicable, the first anniversary of the
last day of the Continuation Period (such earlier date, the "Termination Date").
Subject to the provisions above upon a subsequent Change in Control, all Awards
granted after a Change in Control to Executive shall vest pursuant to the terms
of each such Award and its related Stock Plan; provided, however, that each such
Award shall continue to vest through any Continuation Period, and shall
terminate on the Termination Date.
(ii) In the event that a Change in CEO occurs during the term of
this Agreement all Awards held by Executive, whether granted before or after
such Change in CEO, shall vest pursuant to the terms of each such Award and its
related Stock Plan; provided, however, that each such Award shall continue to
vest through any Continuation Period, and shall terminate on the Termination
Date.
(iii) In the event that a Constructive Event or a Nonqualifying
Event occurs during the term of this Agreement all Awards held by Executive
shall continue to vest through the Payment Period, and shall terminate on the
earlier of (x) the expiration date of such Award, any termination of employment
notwithstanding, and (y) the first anniversary of the last day of the Payment
Period.
SECTION 2.03. Benefits upon a Qualifying Event. Subject to Executive's
execution of an agreement in substantially the form set forth as Exhibit A
hereto, with such changes in the Competitor Companies named therein as the Board
shall reasonably determine (the "Release") and except to the extent provided in
Section
3
<PAGE> 4
5.07 and Section 5.09, Executive shall be entitled to the following benefits
(the "Severance Benefits") upon a Qualifying Event:
(a) The Company shall pay Executive a lump sum, in cash, equal to
Executive's earned but unpaid Base Salary and other earned but unpaid cash
entitlements for the period through and including the date of termination of
Executive's employment, including unused earned and accrued vacation pay and
unreimbursed documented business expenses (collectively, "Accrued
Compensation"). In addition, Executive shall be entitled to any other benefits
earned or accrued by Executive for the period through and including the date of
termination of Executive's employment under any other employee benefit plans and
arrangements maintained by the Company, in accordance with the terms of such
plans and arrangements, except as modified herein (collectively, "Accrued
Benefits").
(b) The Company, through the second anniversary of the Qualifying Event
(the "Continuation Period"), shall pay Executive cash compensation in equal
installments over 24 months at the times and in accordance with the applicable
Company payroll system, in an amount equal to two (2) times the sum of the
amounts set forth in Clauses (i) and (ii) below:
(i) Executive's Base Salary at its highest annual rate in effect
during the period beginning on the date of the Change in Control or
Change in CEO, as the case may be, to which such Qualifying Event
relates, and ending on the date of such Qualifying Event; and
(ii) the Executive's annual target bonus opportunity for the
year in which Executive's employment terminates (the "Bonus Amount").
(c) The Company shall also pay Executive, at the times and in the manner
provided above, an amount in cash equal to Executive's target bonus opportunity
for the year in which Executive's employment terminates times a fraction, the
numerator of which is the number of days in such year ending on the date of such
Qualifying Event and the denominator of which is 365 (the "Basic Bonus Amount").
(d) In addition, Executive shall be entitled to the benefits set forth
below (collectively, the "Additional Benefits") through and in respect of the
Continuation Period:
(i) Continue to receive Executive's automobile allowance, if
any, as in effect immediately prior to the Qualifying Event;
(ii) Continue to participate in the Company's Medical Plans,
provided that the Company shall reimburse Executive for Executive's
total
4
<PAGE> 5
actual premium costs incurred for such period including, without
limitation, 102% of such total premium costs as are incurred by
Executive for "Continuation Coverage" (within the meaning of Section
4980B(f)(2) of the Code) for the last 18 months of such Period;
(iii) Reimbursement for the documented costs, including
laboratory and test fees, of an annual physical examination in an amount
not to exceed $1,500;
(iv) Reimbursement for the documented costs of annual gift and
income tax preparation services and advice in an amount not to exceed
$2,000 (the "Tax Preparation Benefits"); and
(v) Participation in the Company's Supplemental Executive
Deferred Compensation Plan up to the full amount of employee
contributions permitted; provided, however, that the Company will not be
required to make any matching contributions with respect to Executive's
contributions during the Continuation Period.
SECTION 2.04. Separation Payments. Subject to Executive's execution of a
Release and except to the extent provided under Section 5.07 and Section 5.09,
Executive shall be entitled to the benefits set forth below (the "Separation
Benefits") upon termination of employment under the following circumstances:
(a) Upon a Nonqualifying Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount equal to the greater of (x) Executive's Base
Salary at its highest annual rate during the one year period prior to
such Nonqualifying Event and (y) the sum of (A) 50% of such Base Salary
plus (B) the product of 1/12 of such Base Salary times Executive's full
and partial years of employment with the Company ("Years of Service")
(such greater amount, the "Basic Termination Benefit"), which such
Benefit shall be payable in cash in equal installments at the times and
in accordance with the applicable Company payroll system over a period
of months equal to the greater of (C) 12 and (D) the sum of 6 plus
Executive's Years of Service (the greater of (C) and (D), the "Payment
Period");
(iv) An amount, in cash, payable in equal installments over the
Payment Period and at the times and in accordance with the applicable
Company payroll system, equal to the Basic Bonus Amount; and
5
<PAGE> 6
(v) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(b) Upon a Constructive Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount, in cash, equal to the sum of (x) the Basic
Termination Benefit, (y) the Bonus Amount, and (z) the Basic Bonus
Amount, payable in equal installments at the times and in the manner
provided in Section 2.04(a)(iv); and
(iv) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(c) Upon Executive's voluntary termination of employment other than for
Good Reason or Retirement, Executive shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
(d) Upon termination of Executive's employment by reason of Retirement,
Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits; and
(iii) The Tax Preparation Benefit through and in respect of the
year in which Retirement occurs.
(e) Upon termination of Executive's employment by reason of death or
Disability, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) The Basic Bonus Amount; and
6
<PAGE> 7
(iv) The Tax Preparation Benefit through and in respect of the
year in which death or Disability occur.
(f) Upon termination of the Executive's employment for Cause, Executive
shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
SECTION 2.05. Retention Payments. (a) In the event that Executive is
employed by the Company on January 1, 2002, Executive shall be entitled to a
lump sum cash retention payment equal to 150% of the sum of (i) Executive's Base
Salary and (ii) Executive's target annual bonus, each as in effect for the 2001
fiscal year (such sum, the "2002 Retention Bonus").
(b) In the event that Executive is employed by the Company on January 1,
2003, Executive shall be entitled to a lump sum cash retention payment equal to
50% of the sum of (i) Executive's Base Salary and (ii) Executive's target annual
bonus, each as in effect for the 2002 fiscal year (such sum, the "2003 Retention
Bonus").
(c) In the event Executive's employment is terminated prior to January
1, 2002 by the Company other than for Cause or by the Executive for Good Reason
or due to Executive's death or Disability, Executive shall be entitled to an
amount equal to the 2002 Retention Bonus multiplied by a fraction, the numerator
of which is the number of days elapsed from and including January 1, 2000 and
ending on the date of such termination and the denominator of which is 731.
(d) In the event Executive's employment is terminated in 2002 by the
Company other than for Cause or by the Executive for Good Reason or due to
Executive's death or Disability, Executive shall be entitled to an amount equal
to the 2003 Retention Bonus multiplied by a fraction, the numerator of which is
the number of days in 2002 ending on the date of such termination and the
denominator of which is 365.
(e) The payments to be made pursuant to the provisions of this Section
2.05 shall be in addition to any amount payable to Executive with respect to
Executive's target bonus opportunity for such year or any right to receive the
Basic Bonus Amount, as the case may be.
7
<PAGE> 8
ARTICLE 3
CERTAIN TAX REIMBURSEMENT PAYMENTS
SECTION 3.01. Gross-Up Payment. If any portion of the Severance Benefits
or any other payment under this Agreement, or under any other agreement with, or
plan of the Company, including but not limited to stock options and other
long-term incentives (in the aggregate "Total Payments") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled under this paragraph to an additional amount (the
"Gross-Up Payment") such that after payment by Executive of all of Executive's
applicable Federal, state and local taxes, including any Excise Tax, imposed
upon such additional amount, Executive will retain an amount equal to the Excise
Tax imposed on the Total Payments.
For purposes of this Section 3.01, Executive's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt of
the Gross-Up Payment.
SECTION 3.02. Determinations. All determinations required to be made
under this Article 4, including whether a Gross-Up Payment is required under
Section 3.01, and the assumptions to be used in determining the Gross-Up
Payment, shall be made by PricewaterhouseCoopers LLP, or such other firm as the
Company may designate in writing prior to a Change in Control (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the Company
and Executive within twenty business days of the receipt of notice from
Executive that there has been a Qualifying Event, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the Person effecting the Change in Control or is
otherwise unavailable, Executive may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company.
SECTION 3.03. Subsequent Redeterminations. Executive agrees (unless
requested otherwise by the Company) to use reasonable efforts to contest in good
faith any subsequent determination by the Internal Revenue Service that
Executive owes an amount of Excise Tax greater than the amount determined
pursuant to Section 3.02; provided, that Executive shall be entitled to
reimbursement by the Company of all fees and expenses reasonably incurred by
Executive in contesting such determination. In the event the Internal Revenue
Service or any court of competent jurisdiction determines that Executive owes an
amount of Excise Tax that is either greater or less than the amount previously
8
<PAGE> 9
taken into account and paid under this Article 3, the Company shall promptly pay
to Executive, or Executive shall promptly repay to the Company, as the case may
be, the amount of such excess or shortfall. In the case of any payment that the
Company is required to make to Executive pursuant to the preceding sentence (a
"Later Payment"), the Company shall also pay to Executive an additional amount
such that after payment by Executive of all of Executive's applicable Federal,
state and local taxes, including any interest and penalties assessed by any
taxing authority, on such additional amount, Executive will retain an amount
equal to the total of Executive's applicable Federal, state and local taxes,
including any interest and penalties assessed by any taxing authority, arising
due to the Later Payment. In the case of any repayment of Excise Tax that
Executive is required to make to the Company pursuant to the second sentence of
this Section 3.03, Executive shall also repay to the Company the amount of any
additional payment received by Executive from the Company in respect of
applicable Federal, state and local taxes on such repaid Excise Tax, to the
extent Executive is entitled to a refund of (or has not yet paid) such Federal,
state or local taxes.
ARTICLE 4
SUCCESSORS AND ASSIGNMENTS
SECTION 4.01. Successors. The Company will require any successor
(whether by reason of a Change in Control, direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform the
obligations under this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place.
SECTION 4.02. Assignment by Executive. This Agreement shall inure to the
benefit of and be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If Executive should die or become disabled while any amount is owed
but unpaid to Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid to Executive's devisee, legatee, legal guardian or other
designee, or if there is no such designee, to Executive's estate. Executive's
rights hereunder shall not otherwise be assignable.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Notices. Any notice required to be delivered hereunder
shall be in writing and shall be addressed
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<PAGE> 10
if to the Company, to:
Ingram Micro Inc.
1600 East St. Andrew Place
Santa Ana, California 92705
Attn: General Counsel;
if to Executive, to Executive's last known address as reflected on the
books and records of the Company
or such other address as such party may hereafter specify for the purpose by
written notice to the other party hereto. Any such notice shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 5.02. Legal Fees and Expenses. The Company shall pay all legal
fees, costs of litigation, prejudgment interest, and other expenses which are
reasonably incurred by Executive as a result of (i) the Company's refusal to
provide Severance Benefits or other amounts payable in accordance herewith upon
a Nonqualifying Event or a Constructive Event, (ii) the Company's (or any third
party's) contesting the validity, enforceability, or interpretation of the
Agreement, (iii) any conflict between the parties pertaining to this Agreement,
(iv) Executive's contesting any determination by the Internal Revenue Service
pursuant to Section 3.03, or (v) Executive's pursuing any claim under Section
5.15 hereof.
SECTION 5.03. Arbitration. Executive shall have the right and option to
elect (in lieu of litigation) to have any dispute or controversy arising under
or in connection with this Agreement settled by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by Executive within 50
miles from the location of Executive's principal place of employment with the
Company, in accordance with the rules of the American Arbitration Association
then in effect. Executive's election to arbitrate, as herein provided, and the
decision of the arbitrators in that proceeding, shall be binding on the Company
and Executive. Judgment may be entered on the award of the arbitrator in any
court having jurisdiction. All expenses of such arbitration, including the fees
and expenses reasonably incurred by Executive, shall be borne by the Company.
SECTION 5.04. Unfunded Agreement. The obligations of the Company under
this Agreement represent an unsecured, unfunded promise to pay benefits to
Executive and/or Executive's beneficiaries, and shall not entitle Executive or
such beneficiaries to a preferential claim to any asset of the Company.
10
<PAGE> 11
SECTION 5.05. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company (i.e., including, but not limited to, vested benefits under any
qualified or nonqualified retirement plan), at or subsequent to the date of
termination of Executive's employment shall be payable in accordance with such
plan, policy, practice, or program except as expressly modified by this
Agreement.
SECTION 5.06. Employment Status. Nothing herein contained shall
interfere with the Company's right to terminate Executive's employment with the
Company at any time, with or without Cause, subject to the Company's obligation
to provide such Severance Benefits or Separation Benefits, as the case may be,
and other amounts as may be required hereunder.
SECTION 5.07. Mitigation. (a) In no event shall Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement, nor
except as provided below, shall the amount of any payment hereunder be reduced
by any compensation earned by Executive as a result of employment by another
employer.
(b) Notwithstanding any other provision of this Agreement to the
contrary, including, without limitation, Section 5.07(a), in the event that
either (i) the Qualifying Event entitling Executive to the payments described in
Section 2.03 of this Agreement is the result of (A) an involuntary termination
of Executive's employment by the Company during the 24-month period following a
Change in CEO or (B) Executive's voluntary termination of employment for Good
Reason during the 24-month period following a Change in CEO, or (ii) Executive
becomes entitled to receive the Separation Benefits described in Section 2.04 of
this Agreement, and if Executive is subsequently employed by any party or
becomes self-employed following such termination of employment, where, in either
case, Executive becomes eligible to receive Base Salary and an annual bonus
opportunity comparable in the aggregate to such compensation Executive received
from the Company immediately prior to such termination, then all cash payments
pursuant to Section 2.03(b), Section 2.04(a)(iii) or Section 2.04(b)(iii)(x) and
(y), as the case may be, shall automatically cease on the first of the month
immediately following the month in which Executive becomes entitled to such
compensation; provided, however, that no other Severance Benefits or Separation
Benefits (including the right to receive any remaining unpaid portion of the
Basic Bonus Amount) shall be affected or reduced nor shall the period of
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<PAGE> 12
time during which any of Executive's Awards may vest or be exercised as provided
in Section 2.02(b) be affected or reduced.
SECTION 5.08. No Set-Off. The Company's obligations to make all payments
and honor all commitments under this Agreement shall be absolute and
unconditional and, except as provided in Section 5.09, shall not be affected by
any circumstances including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company may have against Executive.
SECTION 5.09. Entire Agreement. This Agreement represents the entire
agreement between the Executive and the Company and its affiliates with respect
to Executive's employment and/or severance rights, and supersedes all prior
discussions, negotiations, and agreements concerning such rights, including, but
not limited to, any prior severance agreement made between Executive and the
Company; provided, however, that any amounts payable to Executive hereunder
shall be reduced by any amounts paid to Executive as required by any applicable
local law in connection with any termination of Executive's employment.
SECTION 5.10. Tax Withholding. Notwithstanding anything in this
Agreement to the contrary, the Company shall withhold from any amounts payable
under this Agreement all federal, state, city, or other taxes as are legally
required to be withheld.
SECTION 5.11. Waiver of Rights. The waiver by either party of a breach
of any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.
SECTION 5.12. Severability. In the event any provision of the Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Agreement, and the Agreement shall
be construed and enforced as if the illegal or invalid provision had not been
included.
SECTION 5.13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to principles of conflict of laws.
SECTION 5.14. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.
SECTION 5.15. Claim Review Procedure. If Executive is denied benefits
under this Agreement, Executive may request, in writing, a review of the denial
by the Company or its designee within 60 days of receiving written notice of the
denial. The Company shall respond in writing to a written request for review
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within 90 days of receipt of such request. Neither the claim procedure set forth
in this Section 5.15 nor Executive's failure to adhere to such procedure shall
derogate from Executive's right to enforce this Agreement through legal action,
including arbitration as provided in Section 5.03.
SECTION 5.16. Indemnification. The Company shall indemnify Executive
(and Executive's legal representatives or other successors) to the fullest
extent permitted by the Certificate of Incorporation and By-Laws of the Company,
as in effect at such time or on the Effective Date, or by the terms of any
indemnification agreement between the Company and Executive, whichever affords
or afforded greater protection to Executive, and Executive shall be entitled to
the protection of any insurance policies the Company may elect to maintain
generally for the benefit of its directors and officers (and to the extent the
Company maintains such an insurance policy or policies, Executive shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any Company officer or
director), against all costs, charges and expenses whatsoever incurred or
sustained by Executive or Executive's legal representatives at the time such
costs, charges and expenses are incurred or sustained, in connection with any
action, suit or proceeding to which Executive (or Executive's legal
representatives or other successors) may be made a party by reason of
Executive's being or having been a director, officer or employee of the Company,
or any Subsidiary or Executive's serving or having served any other enterprise
as a director, officer, employee or fiduciary at the request of the Company.
ARTICLE 6
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below.
"Accounting Firm" has the meaning accorded such term in Section
3.02.
"Accrued Benefits" has the meaning accorded such term in Section
2.03.
"Accrued Compensation" has the meaning accorded such term in
Section 2.03.
"Additional Benefits" has the meaning accorded such term in
Section 2.03.
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"Affiliate" and "Associate" have the respective meanings
accorded to such terms in Rule 12b-2 under the Exchange Act as in effect
on the Effective Date.
"Awards" has the meaning accorded such term in Section 2.02.
"Base Salary" means, at any time, the then-regular annual rate
of pay which Executive is receiving as annual salary.
"Basic Bonus Amount" has the meaning accorded such term in
Section 2.03.
"Basic Termination Benefit" has the meaning accorded such term
in Section 2.04.
"Beneficial Ownership." A Person shall be deemed the "Beneficial
Owner"of, and shall be deemed to "beneficially own," securities pursuant
to Rule 13d-3 under the Exchange Act as in effect on the Effective Date.
"Board" has the meaning accorded such term in the second
"Whereas" clause of this Agreement.
"Bonus Amount" has the meaning accorded such term in Section
2.03.
"Cause" means the occurrence of any one or more of the
following:
(a) A demonstrably willful and deliberate material act or failure to act
by Executive (other than as a result of incapacity due to physical or mental
illness) which is committed in bad faith, without reasonable belief that such
action or inaction is in the best interests of the Company, and which act or
inaction is not remedied within fifteen business days of written notice from the
Company;
(b) Executive's gross negligence in the performance of Executive's
duties hereunder; or
(c) Executive's conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for the reasons set forth in clause (a) or (b) of this
definition unless and until there shall have been delivered to Executive a copy
of a resolution duly adopted by the affirmative vote (which cannot be delegated)
of not
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<PAGE> 15
less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (and after reasonable notice to
Executive an opportunity for Executive, together with Executive's counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
Executive is guilty of conduct set forth above in such clauses (a) or (b) of
this definition and specifying the particulars thereof in detail.
"Change in CEO" means the first appointment or election after
the Effective Date of a Chief Executive Officer of the Company not
serving in such position immediately prior to such appointment or
election.
"Change in Control" means, and shall be deemed to have occurred
upon any occurrence of any of the following events:
(a) Any Person (other than an Excluded Person) acquires,
together with all Affiliates and Associates of such Person,
Beneficial Ownership of securities representing 25% or more of
the combined voting power of the Voting Stock then outstanding,
unless such Person acquires Beneficial Ownership of 25% or more
of the combined voting power of the Voting Stock then
outstanding solely as a result of an acquisition of Voting Stock
by the Company which, by reducing the Voting Stock outstanding,
increases the proportionate Voting Stock beneficially owned by
such Person (together with all Affiliates and Associates of such
Person) to 25% or more of the combined voting power of the
Voting Stock then outstanding; provided, that if a Person shall
become the Beneficial Owner of 25% or more of the combined
voting power of the Voting Stock then outstanding by reason of
such Voting Stock acquisition by the Company and shall
thereafter become the Beneficial Owner of any additional Voting
Stock which causes the proportionate voting power of Voting
Stock beneficially owned by such Person to increase to 25% or
more of the combined voting power of the Voting Stock then
outstanding, such Person shall, upon becoming the Beneficial
Owner of such additional Voting Stock, be deemed to have become
the Beneficial Owner of 25% or more of the combined voting power
of the Voting Stock then outstanding other than solely as a
result of such Voting Stock acquisition by the Company;
(b) During any period of 24 consecutive months (not
including any period prior to the Effective Date), individuals
who at the beginning of such period constitute the Board (and
any new Director, whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of
at least two-thirds of the Directors then still in office who
either were
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<PAGE> 16
Directors at the beginning of the period or whose election or
nomination for election was so approved), cease for any reason
to constitute a majority of Directors then constituting the
Board;
(c) A reorganization, merger or consolidation of the Company
is consummated, in each case, unless, immediately following such
reorganization, merger or consolidation, (i) more than 50% of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners of
the Voting Stock outstanding immediately prior to such
reorganization, merger or consolidation, (ii) no Person (but
excluding for this purpose any Excluded Person and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 25% or more of
the voting power of the outstanding Voting Stock) beneficially
owns, directly or indirectly, 25% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors and (iii) at least a majority of the
members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members
of the Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation;
(d) The shareholders of the Company approve (i) a complete
liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of
the Company, other than to any corporation with respect to
which, immediately following such sale or other disposition, (A)
more than 50% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power
of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners of the Voting Stock outstanding immediately
prior to such sale or other disposition of assets, (B) no Person
(but excluding for this purpose any Excluded Person and any
Person beneficially owning, immediately prior to such sale or
other disposition, directly or
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<PAGE> 17
indirectly, 25% or more of the voting power of the outstanding
Voting Stock) beneficially owns, directly or indirectly, 25% or
more of, respectively, the then outstanding shares of common
stock of such corporation or the combined voting power of the
then outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (C) at least
a majority of the members of the board of directors of such
corporation were members of the Board at the time of the
execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the
Company; or
(e) The occurrence of any transaction or event that the
Board, in its sole discretion, designates a "Change in Control".
Notwithstanding the foregoing, in no event shall a "Change in Control"
be deemed to have occurred (i) as a result of the formation of a Holding
Company, or (ii) with respect to Executive, if Executive is part of a
"group," within the meaning of Section 13(d)(3) of the Exchange Act as
in effect on the Effective Date, which consummates the Change in Control
transaction. In addition, for purposes of the definition of "Change in
Control" a Person engaged in business as an underwriter of securities
shall not be deemed to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such Person's participation in
good faith in a firm commitment underwriting until the expiration of
forty days after the date of such acquisition.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning accorded such term in the introductory
paragraph of this Agreement.
"Constructive Event" has the meaning accorded such term in
Section 2.01.
"Continuation Period" has the meaning accorded to such term in
Section 2.03.
"Disability" means Long-Term Disability, as such term is defined
in the Disability Plan.
"Disability Plan" means the long-term disability plan (or any
successor disability and/or survivorship plan adopted by the Company) in
which Executive participates, as in effect immediately prior to the
relevant event (subject to changes in coverage levels applicable to all
employees generally covered by such Plan).
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"Effective Date" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excise Tax" has the meaning accorded such term in Section 3.01.
"Excluded Person" means (i) the Company; (ii) any of the
Company's Subsidiaries; (iii) any Holding Company; (iv) any employee
benefit plan of the Company, any of its Subsidiaries or a Holding
Company; (v) any Person organized, appointed or established by the
Company, any of its Subsidiaries or a Holding Company for or pursuant to
the terms of any plan described in clause (iv) or (vi) any Family
Stockholder as such term is defined in the Company's amended and
restated by-laws.
"Executive" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Extended Term" has the meaning accorded such term in Section
1.03.
"Good Reason" means, without Executive's express written
consent, the occurrence of any one or more of the following:
(a) The assignment to Executive of duties inconsistent with
Executive's authorities, duties, responsibilities and status as
an officer of the Company, or a reduction or alteration thereof,
in each case excluding any designated acting or temporary
authorities, responsibilities and status, from those in effect
as of the Reference Date; provided, however, the appointment of
a Chief Operating Officer of the Company or an insubstantial and
inadvertent act that is remedied by the Company promptly after
receipt of notice thereof given by Executive shall not
constitute Good Reason;
(b) The Company's requiring Executive to be based at a
location in excess of 35 miles from Executive's principal job
location or office immediately prior to the Reference Date;
except for required travel on the Company's business to an
extent consistent with Executive's business travel obligations
immediately prior to the Reference Date;
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<PAGE> 19
(c) A reduction by the Company of Executive's Base Salary or
total annual target compensation from the highest level at any
time in the year prior to such reduction by more than 10%;
(d) The failure by the Company to keep in effect
compensation, retirement, health and welfare benefits, or
perquisite programs under which Executive receives benefits
substantially similar, in the aggregate, to the benefits under
such programs as exist immediately prior to the Reference Date
(other than pursuant to an equivalent reduction in such benefits
of all full-time domestic employees of the Company who are not
subject to a collective bargaining agreement); or the failure of
the Company to meet the funding requirements, if any, of any of
such programs;
(e) Any material breach by the Company of its obligations
under this Agreement or any failure of a successor of the
Company to assume and agree to perform the Company's entire
obligations under this Agreement, as required by Section 4.01
herein, provided that such successor has received at least ten
days written notice from the Company or Executive of the
requirements of Section 4.01; or
(f) The Executive's receipt from the Company at any time
during an Extended Term of written notice pursuant to Section
1.02 to the effect that the term of this Agreement will not be
extended (a "Qualifying Nonrenewal").
"Gross-Up Payment" has the meaning accorded such term in Section
3.01.
"Holding Company" means an entity that becomes a holding company
for the Company or its businesses as a part of any reorganization,
merger, consolidation or other transaction, provided that the
outstanding shares of common stock of such entity and the combined
voting power of the then outstanding voting securities of such entity
entitled to vote generally in the election of directors is, immediately
after such reorganization, merger, consolidation or other transaction,
beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Voting Stock outstanding immediately prior to such
reorganization, merger, consolidation or other transaction in
substantially the same proportions as their ownership, immediately prior
to such reorganization, merger, consolidation or other transaction, of
such outstanding Voting Stock.
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<PAGE> 20
"Initial Term" has the meaning accorded such term in Section
1.01.
"Later Payment" has the meaning accorded such term in Section
3.03.
"Medical Plans" means the medical care plans (or any successor
medical plans adopted by the Company) in which Executive participates,
as in effect immediately prior to the relevant event (subject to changes
in coverage levels applicable to all employees generally covered by such
Plans).
"Nonqualifying Event" has the meaning accorded such term in
Section 2.01.
"Payment Period" has the meaning accorded such term in Section
2.04.
"Person" means an individual, corporation, partnership,
association, trust or any other entity or organization.
"Qualifying Event" has the meaning accorded such term in Section
2.01.
"Qualifying Nonrenewal" has the meaning accorded such term in
clause (f) of the definition of Good Reason in this Article 6.
"Reference Date" means the later of (x) the Effective Date or
(y) the date 60 days prior to the date of the relevant event, if any,
set forth in the definition of Good Reason.
"Release" has the meaning accorded such term in Section 2.02.
"Release" has the meaning accorded such term in Section 2.03.
"Retirement" shall be determined under guidelines established
from time to time by the Human Resources Committee of the Board.
"Separation Benefits" has the meaning accorded such term in
Section 2.04.
"Severance Benefits" has the meaning accorded such term in
Section 2.03.
"Stock Plan" has the meaning accorded such term in Section 2.02.
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"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having voting power to elect a
majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Successive Period" has the meaning accorded such term in
Section 1.02.
"Tax Preparation Benefits" has the meaning accorded such term in
Section 2.03.
"Termination Date" has the meaning accorded such term in Section
2.02.
"Total Payments" has the meaning accorded such term in Section
3.01.
"2002 Retention Bonus" has the meaning set forth in Section
2.05.
"2003 Retention Bonus" has the meaning set forth in Section
2.05.
"Voting Stock" means securities of the Company entitled to vote
generally in the election of members of the Board.
"Years of Service" has the meaning accorded such term in Section
2.04.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, to be effective as of the day and year first written above.
EXECUTIVE Ingram Micro Inc.
/s/ GREGORY M. SPIERKEL
- ---------------------------- By: /s/ JERRE L. STEAD
Gregory M. Spierkel ---------------------------------
Title: Chairman of the Board
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EXHIBIT A
RELEASE AND COVENANT
This letter sets forth the agreement of Ingram Micro Inc. (the
"Company") and GREGORY M. SPIERKEL ("Executive") relating to the termination of
Executive's employment with Company. Subject to the execution of this Agreement,
the parties hereto agree as follows:
Termination of Employment.
(A). Executive agrees and acknowledges that the termination of his
employment with Company shall be effective as of __________, ____ (the
"TERMINATION DATE").
(B). Executive acknowledges Executive's obligation to promptly return to
the Company all property of the Company in Executive's possession including,
without limitation, keys, SECUREID card, credit cards, cell phones, pagers,
computers, office equipment, documents and files and instruction manuals on or
before the Termination Date, or earlier if so requested by the Company. After
the Termination Date, the Company shall forward all mail addressed to Executive
to the most recent address provided by Executive to the Company pursuant to
Section 5.01 of the Executive Retention Agreement between the Executive and the
Company dated as of January __, 2000 to which this Agreement is Exhibit A (the
"Retention Agreement").
Mutual Releases.
1. In consideration of the foregoing and the benefits paid and payable
to Executive under the Retention Agreement, Executive hereby waives all claims
against Company, its affiliates and their respective officers, directors and
executives (hereinafter the "RELEASEES"), and releases and discharges the
Releasees from liability for any and all claims and damages that Executive may
have against them as of the date of this Agreement, whether known or unknown,
including, but not limited to, any claims arising out of his employment
relationship with Company or its affiliates or the termination of such
employment, or any violation of any federal, state or local fair employment
practice law, including Title VII of the Civil Rights Act, the Civil Rights Act
of 1991, the Age Discrimination in Employment Act as amended by the Older
Workers' Benefit Protection Act, or any other employee relations statute, rule,
executive order, law or ordinance, tort, express or implied contract, public
policy or other obligations; provided, however, that nothing herein shall be
deemed a waiver or release of Executive's right to enforce the obligations of
Company under this Agreement or
<PAGE> 23
the Retention Agreement or Executive's rights to indemnification to the fullest
extent provided by law or in any applicable certificate of incorporation,
charter or similar document, by-laws or contract.
Executive acknowledges that Executive has had up to 21 days to consider
the terms of this Agreement and is hereby advised by Company to discuss the
terms of this Agreement with an attorney unrelated to Company prior to signing
this Agreement. Executive further acknowledges that Executive is entering into
this Agreement freely, knowingly, and voluntarily, with a full understanding of
its terms. Executive also acknowledges that Executive will have 7 days from the
date he signs this Agreement to revoke the Agreement by notifying the General
Counsel of the Company in writing.
2. In consideration of the performance by Executive of the covenants and
undertakings made herein by Executive, Company on behalf of itself and its
affiliates hereby waives all claims against Executive and releases and
discharges Executive from liability for any and all claims and damages that any
of them may have against Executive as of the date of this Agreement, whether
known or unknown, including Executive's employment relationship with Company or
its affiliates or the termination of such employment; provided, however, that
nothing herein shall be deemed a waiver or release of the right of Company or
its affiliates to enforce the obligations of Executive under this Agreement or
for any claims arising from a breach of Executive's fiduciary duty of loyalty to
the Company or its affiliates.
Waiver. Each of the Company and Executive hereby expressly waives and
relinquishes all rights and benefits under Section 1542 of the California Civil
Code which provides:
"Section 1542. General Release - Claim extinguished. A general release
does not extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor."
Each of the Company and Executive understands and acknowledges that the
significance and consequences of this waiver of Section 1542 of the Civil Code
is that even if the Company and Executive, as the case may be, should eventually
suffer damages arising out of Executive's employment relationship with the
Company and its affiliates, or termination of such employment, such party will
not be permitted to make any claim for those damages except as expressly
permitted by this Agreement. Furthermore, each of the Company and Executive
acknowledges that such party intends these consequences even as to claims for
injuries and/or damages that may exist as of the date of this Agreement but
which
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Executive or the Company, as the case may be, does not know exist, and which, if
known, would materially affect such party's decision to execute this Agreement.
Cooperation. Executive agrees to cooperate fully with Company and to
provide such information as Company may reasonably request with respect to any
Company-related transaction, investment or other matter in which Executive was
involved in any way while employed by Company.
Confidentiality. Executive acknowledges Executive's obligation not to
disclose, during or after employment, any trade secrets or proprietary and/or
confidential data or records of the Company or its affiliates or to utilize any
such information for private profit. Each of the parties hereto agrees that such
party will not release, publish, announce or otherwise make available to the
public in any manner whatsoever any information or announcement regarding this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party hereto, except as required by law or legal process,
including, in the case of the Company, filings with the Securities and Exchange
Commission. Executive agrees not to communicate with, including responding to
questions or inquiries presented by, the media, employees or investors of the
Company, its affiliates or any third party relating to the terms of this
Agreement, without first obtaining the prior written consent of the Company.
Notwithstanding the foregoing, Executive may make disclosure to his spouse,
attorneys and financial advisors of the existence and terms of this Agreement
provided that they agree to be bound by the provisions of this paragraph.
No Disparagement. Executive and Company agree that no party hereto shall
make disparaging statements or representations, or otherwise communicate
disparagingly, directly or indirectly, in writing, orally, or otherwise, about
either of the parties hereto or the other Releasees or the employees, customers,
suppliers, competitors, vendors, stockholders or lenders of the Company or its
affiliates or any third party, nor take any action which may, directly or
indirectly, disparage or be damaging to either of the parties hereto or the
other Releasees, their businesses, or their reputations.
No Solicitation. Executive will not (i) directly or indirectly make
known to any person, firm, corporation, partnership or other entity, any list,
listing or other compilation or document, whether prepared or maintained by
Executive, the Company or any of the Company's affiliates, which contains
information that is confidential to the Company or any of its affiliates about
their customers ("the Company's Customers"), including but not limited to names
and addresses, or (ii) at any time through the end of the "Continuation Period"
(as defined in the Retention Agreement), call on or solicit, or attempt to call
on or solicit, in either case with the intent to divert business or potential
business from the Company or any of its affiliates, any of the Company's
Customers with whom Executive has become acquainted during his employment with
the Company or any of its
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affiliates, either for Executive's own benefit or for the benefit of any other
person, firm, corporation, partnership or other entity.
No Raid. Through the end of the Continuation Period, Executive will not,
and will use Executive's best efforts not to permit any person, firm,
corporation, partnership or other entity of which Executive is an officer or
control person to, (i) knowingly solicit, entice, or persuade any individual who
is an associate of the Company or any of its affiliates at any time during the
Continuation Period (each such individual, a "Company Associate") to leave the
services of the Company or any of its affiliates for any reason, or (ii) solicit
for employment, hire, or engage any present or future Company Associate as an
employee, independent contractor or consultant.
Noncompetition. Executive acknowledges that Executive has unique
knowledge of the Company and its affiliates and unique knowledge of the computer
and software sales and distribution industry. Based on his unique status,
Executive agrees that through the end of the Continuation Period, Executive will
not be employed or hired as an employee or consultant by, or otherwise directly
or indirectly provide services for, any of Tech Data, Merisel, Inacom, Pinacor,
Globelle, Gates Arrow, CHS Electronics, Hallmark, Hamilton Avnet, Daisytek,
Azerti, Azlan, Northamber, Tech Pacific, Synnex, Bell Micro, DSS and/or GE
Capital Information Technology Solutions-North America, Inc., and any subsidiary
or affiliate of these entities in a business or line of business conducted by
any such entity which competes with any line of business conducted by the
Company or any of its affiliates. Notwithstanding the foregoing, should
Executive be employed by an entity that is not a subsidiary or affiliate of one
of these entities at the time Executive commences such employment, but
subsequently becomes a subsidiary or affiliate of, or becomes merged into, one
of these entities on or before the end of the Continuation Period, he shall not
be deemed to be in breach of the provisions of this paragraph due to such
employment, provided that at the time Executive commenced his employment there
had been no public announcement of an agreement pursuant to which Executive's
employer would become a subsidiary or affiliate of, or merged into, one of these
entities or discussions that could lead to such an agreement and Executive had
no knowledge of the existence of any such agreement or discussions. Executive
further agrees that Executive will not own any interest in, provide financing
to, be connected with, or be a principal, partner or agent of any such
competitive distributor or aggregator; provided, Executive may own less than 1%
of the outstanding shares of any such entity whose shares are traded in the
public market.
Availability. Provided that the Company is not in breach of its
obligations under this Agreement, and subject to Executive's other commitments,
upon request of the Company or any of its affiliates during the Continuation
Period, Executive will make himself available for up to 15 hours in any calendar
month to
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provide reasonable assistance to the Company or any such affiliate and will use
reasonable efforts to arrange his commitments so as to make Executive available
for such assistance on a basis which is consistent with the requests of the
Company or any affiliates. Such assistance may include telephone conversations,
correspondence, attendance and participation in meetings, transfer of knowledge
or information regarding operational or other issues, litigation preparation and
trials. During such period, the Company shall reimburse Executive for any
out-of-pocket expense Executive may incur in connection with such assistance in
accordance with the Company's reimbursement policies. After the end of the
Continuation Period, Executive shall use reasonable efforts, subject to his
other commitments, to continue to provide such assistance as may be requested by
the Company and, in such event, shall be compensated at a rate per day (minimum
charge, one-half day) commensurate with the daily rate he was earning based on
his base salary immediately prior to the Termination Date.
The running of the periods prescribed in this Agreement shall be tolled
and suspended by the length of time Executive works in circumstances that a
court of competent jurisdiction subsequently finds to violate the terms of this
Agreement.
No Reliance. The parties hereto represent and acknowledge that, in
executing this Agreement, they do not rely and have not relied upon any
representation or statement, written or oral, made by either of the parties or
by either of the parties' agents, attorneys, or representatives with regard to
the subject matter, basis, or effect of this Agreement or otherwise, other than
those specifically stated in this written Agreement.
Assignment. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, administrators,
representatives, executors, successors, and assigns. This Agreement shall also
inure to the benefit of all the Releasees and their respective heirs,
administrators, representatives, executors, successors, and assigns. This
Agreement shall not be assignable by Executive.
No Waiver. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed as a waiver of any
subsequent breach hereof, or as a waiver of a breach of any other provision.
Interpretation: Choice of Law. This Agreement shall be interpreted in
accordance with the plain meaning of its terms and not strictly for or against
any of the parties hereto. This Agreement and all provisions hereof shall be
governed by and construed under the laws of the State of California without
regard to the choice of law rules thereof.
A-5
<PAGE> 27
Acknowledgment. Executive acknowledges that Executive has carefully read
this Agreement, fully understands and accepts all of its provisions, and signs
it voluntarily of Executive's own free will. Executive further acknowledges that
Executive has been provided a full opportunity to review and reflect on the
terms of this Agreement and to seek the advice of legal counsel of Executive's
choice.
INGRAM MICRO INC.
by
-------------------------------
Agreed and Accepted Name:
Title:
- -------------------------------
GREGORY M. SPIERKEL
A-6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.51
<SEQUENCE>7
<DESCRIPTION>EXHIBIT 10.51
<TEXT>
<PAGE> 1
Exhibit 10.51
EXECUTIVE RETENTION AGREEMENT
EXECUTIVE RETENTION AGREEMENT ("Agreement") dated as of January 31, 2000
(the "Effective Date") by and between Ingram Micro Inc., a Delaware corporation
(the "Company"), and HENRI T. KOPPEN ("Executive").
WHEREAS, Executive is presently employed by the Company in a key
management capacity; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
that appropriate steps be taken to reinforce and encourage the continued
attention of key management personnel, including Executive, to their assigned
duties without the distraction that may arise from personal uncertainties
associated with any potential change in employment status, with any change in
the Company's Chief Executive Officer or with any pending or threatened change
in control of the Company; and
WHEREAS, the Board has also determined that it is in the best interests
of the Company and its stockholders to encourage Executive's continued
availability to the Company in the event of a change in the Company's Chief
Executive Officer or a change in control of the Company.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration including, but not limited to, Executive's
continuing employment with the Company, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
TERM OF AGREEMENT
SECTION 1.01. Initial Term. The term of this Agreement shall commence on
the Effective Date and shall expire December 31, 2001 (the "Initial Term"),
subject to Sections 1.02 and 1.03.
SECTION 1.02. Extensions. As of each December 31 beginning in 2000 and
each later date which is one year prior to the scheduled expiration date of this
Agreement as it may be extended from time to time pursuant to Sections 1.02 and
1.03 (any such date a "Renewal Date"), provided Executive is actively employed
by the Company on each such scheduled expiration date, the remaining term of
<PAGE> 2
this Agreement shall automatically be extended by one year (each such additional
one-year period following the Initial Term or any Extended Term, as the case may
be, a "Successive Period") unless, at least sixty days prior to any such Renewal
Date, the Company has provided Executive with written notice of the Company's
intent that the term of this Agreement not be so extended; provided, however,
that Executive's rights under Section 2.05 shall be unaffected by any
termination of this Agreement prior to January 2, 2003.
SECTION 1.03. Automatic Extension Upon Change in Control or Change in
CEO. In the event that any Change in Control or a Change in CEO occurs during
the Initial Term or any Successive Period, upon the effective date of such
Change in Control or Change in CEO the term of this Agreement shall
automatically be extended for a period of 24 months from the effective date of
such Change in Control or Change in CEO, as the case may be (an "Extended
Term"). The 24-month extension described in this Section 1.03 shall take effect
regardless of whether, before or after the effective date of a Change in Control
or Change in CEO, Executive or the Company has given written notice of intent
not to extend the term of the Agreement pursuant to Section 1.02 or there has
occurred a termination of Executive's employment, provided the term of the
Agreement has not yet expired as of such effective date.
ARTICLE 2
CERTAIN BENEFITS
SECTION 2.01. Certain Events. (a) A "Qualifying Event" means any of the
following events:
(i) The involuntary termination of Executive's employment by the
Company during the 24-month period following either any Change in
Control or a Change in CEO, other than (x) for Cause, or (y) by reason
of Executive's death or Disability; or
(ii) Executive's voluntary termination of employment for Good
Reason during the 24-month period following either any Change in Control
or a Change in CEO, provided that Executive's termination occurs within
(x) six months after a Qualifying Nonrenewal or (y) 90 days after the
occurrence of any other event constituting Good Reason.
(b) A "Nonqualifying Event" means the involuntary termination of
Executive's employment by the Company other than during the 24-month period
following either any Change in Control or a Change in CEO, other than (x) for
Cause, or (y) by reason of Executive's death or Disability.
(c) A "Constructive Event" means, other than during the 24-month period
following either any Change in Control or a Change in CEO, Executive's
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<PAGE> 3
voluntary termination of employment for Good Reason within 90 days after the
occurrence of an event constituting Good Reason.
SECTION 2.02. Right to Certain Benefits. (a) In the event that a
Qualifying Event, a Nonqualifying Event, a Constructive Event or other
termination of employment occurs during the term of this Agreement, Executive
shall be entitled to receive from the Company the Severance Benefits as
described in Section 2.03 or the relevant Separation Benefits as described in
Section 2.04, as the case may be.
(b) (i) In the event that a Change in Control occurs during the term of
this Agreement all stock options, stock appreciation rights, restricted stock,
or other awards (collectively, "Awards") then held by Executive pursuant to the
provisions of any of the Company's stock or option plans or any successor plans
(each, a "Stock Plan") shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control and remain exercisable until
the earlier of (x) the expiration date of such Award, any termination of
employment notwithstanding, and (y) if applicable, the first anniversary of the
last day of the Continuation Period (such earlier date, the "Termination Date").
Subject to the provisions above upon a subsequent Change in Control, all Awards
granted after a Change in Control to Executive shall vest pursuant to the terms
of each such Award and its related Stock Plan; provided, however, that each such
Award shall continue to vest through any Continuation Period, and shall
terminate on the Termination Date.
(ii) In the event that a Change in CEO occurs during the term of
this Agreement all Awards held by Executive, whether granted before or after
such Change in CEO, shall vest pursuant to the terms of each such Award and its
related Stock Plan; provided, however, that each such Award shall continue to
vest through any Continuation Period, and shall terminate on the Termination
Date.
(iii) In the event that a Constructive Event or a Nonqualifying
Event occurs during the term of this Agreement all Awards held by Executive
shall continue to vest through the Payment Period, and shall terminate on the
earlier of (x) the expiration date of such Award, any termination of employment
notwithstanding, and (y) the first anniversary of the last day of the Payment
Period.
SECTION 2.03. Benefits upon a Qualifying Event. Subject to Executive's
execution of an agreement in substantially the form set forth as Exhibit A
hereto, with such changes in the Competitor Companies named therein as the Board
shall reasonably determine (the "Release") and except to the extent provided in
Section 5.07 and Section 5.09, Executive shall be entitled to the following
benefits (the "Severance Benefits") upon a Qualifying Event:
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<PAGE> 4
(a) The Company shall pay Executive a lump sum, in cash, equal to
Executive's earned but unpaid Base Salary and other earned but unpaid cash
entitlements for the period through and including the date of termination of
Executive's employment, including unused earned and accrued vacation pay and
unreimbursed documented business expenses (collectively, "Accrued
Compensation"). In addition, Executive shall be entitled to any other benefits
earned or accrued by Executive for the period through and including the date of
termination of Executive's employment under any other employee benefit plans and
arrangements maintained by the Company, in accordance with the terms of such
plans and arrangements, except as modified herein (collectively, "Accrued
Benefits").
(b) The Company, through the second anniversary of the Qualifying Event
(the "Continuation Period"), shall pay Executive cash compensation in equal
installments over 24 months at the times and in accordance with the applicable
Company payroll system, in an amount equal to two (2) times the sum of the
amounts set forth in Clauses (i) and (ii) below:
(i) Executive's Base Salary at its highest annual rate in effect
during the period beginning on the date of the Change in Control or
Change in CEO, as the case may be, to which such Qualifying Event
relates, and ending on the date of such Qualifying Event; and
(ii) the Executive's annual target bonus opportunity for the year
in which Executive's employment terminates (the "Bonus Amount").
(c) The Company shall also pay Executive, at the times and in the manner
provided above, an amount in cash equal to Executive's target bonus opportunity
for the year in which Executive's employment terminates times a fraction, the
numerator of which is the number of days in such year ending on the date of such
Qualifying Event and the denominator of which is 365 (the "Basic Bonus Amount").
(d) In addition, Executive shall be entitled to the benefits set forth
below (collectively, the "Additional Benefits") through and in respect of the
Continuation Period:
(i) Continue to receive Executive's automobile allowance, if any,
as in effect immediately prior to the Qualifying Event;
(ii) Continue to participate in the Company's Medical Plans,
provided that the Company shall reimburse Executive for Executive's
total actual premium costs incurred for such period including, without
limitation, 102% of such total premium costs as are incurred by
Executive
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<PAGE> 5
for "Continuation Coverage" (within the meaning of Section 4980B(f)(2)
of the Code) for the last 18 months of such Period;
(iii) Reimbursement for the documented costs, including
laboratory and test fees, of an annual physical examination in an amount
not to exceed $1,500;
(iv) Reimbursement for the documented costs of annual gift and
income tax preparation services and advice in an amount not to exceed
$2,000 (the "Tax Preparation Benefits"); and
(v) Participation in the Company's Supplemental Executive
Deferred Compensation Plan up to the full amount of employee
contributions permitted; provided, however, that the Company will not be
required to make any matching contributions with respect to Executive's
contributions during the Continuation Period.
SECTION 2.04. Separation Payments. Subject to Executive's execution of a
Release and except to the extent provided under Section 5.07 and Section 5.09,
Executive shall be entitled to the benefits set forth below (the "Separation
Benefits") upon termination of employment under the following circumstances:
(a) Upon a Nonqualifying Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount equal to the greater of (x) Executive's Base
Salary at its highest annual rate during the one year period prior to
such Nonqualifying Event and (y) the sum of (A) 50% of such Base Salary
plus (B) the product of 1/12 of such Base Salary times Executive's full
and partial years of employment with the Company ("Years of Service")
(such greater amount, the "Basic Termination Benefit"), which such
Benefit shall be payable in cash in equal installments at the times and
in accordance with the applicable Company payroll system over a period
of months equal to the greater of (C) 12 and (D) the sum of 6 plus
Executive's Years of Service (the greater of (C) and (D), the "Payment
Period");
(iv) An amount, in cash, payable in equal installments over the
Payment Period and at the times and in accordance with the applicable
Company payroll system, equal to the Basic Bonus Amount; and
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<PAGE> 6
(v) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(b) Upon a Constructive Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount, in cash, equal to the sum of (x) the Basic
Termination Benefit, (y) the Bonus Amount, and (z) the Basic Bonus
Amount, payable in equal installments at the times and in the manner
provided in Section 2.04(a)(iv); and
(iv) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(c) Upon Executive's voluntary termination of employment other than for
Good Reason or Retirement, Executive shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
(d) Upon termination of Executive's employment by reason of Retirement,
Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits; and
(iii) The Tax Preparation Benefit through and in respect of the
year in which Retirement occurs.
(e) Upon termination of Executive's employment by reason of death or
Disability, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) The Basic Bonus Amount; and
(iv) The Tax Preparation Benefit through and in respect of the
year in which death or Disability occur.
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<PAGE> 7
(f) Upon termination of the Executive's employment for Cause, Executive
shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
SECTION 2.05. Retention Payments. (a) In the event that Executive is
employed by the Company on January 1, 2002, Executive shall be entitled to a
lump sum cash retention payment equal to 150% of the sum of (i) Executive's Base
Salary and (ii) Executive's target annual bonus, each as in effect for the 2001
fiscal year (such sum, the "2002 Retention Bonus").
(b) In the event that Executive is employed by the Company on January 1,
2003, Executive shall be entitled to a lump sum cash retention payment equal to
50% of the sum of (i) Executive's Base Salary and (ii) Executive's target annual
bonus, each as in effect for the 2002 fiscal year (such sum, the "2003 Retention
Bonus").
(c) In the event Executive's employment is terminated prior to January 1,
2002 by the Company other than for Cause or by the Executive for Good Reason or
due to Executive's death or Disability, Executive shall be entitled to an amount
equal to the 2002 Retention Bonus multiplied by a fraction, the numerator of
which is the number of days elapsed from and including January 1, 2000 and
ending on the date of such termination and the denominator of which is 731.
(d) In the event Executive's employment is terminated in 2002 by the
Company other than for Cause or by the Executive for Good Reason or due to
Executive's death or Disability, Executive shall be entitled to an amount equal
to the 2003 Retention Bonus multiplied by a fraction, the numerator of which is
the number of days in 2002 ending on the date of such termination and the
denominator of which is 365.
(e) The payments to be made pursuant to the provisions of this Section
2.05 shall be in addition to any amount payable to Executive with respect to
Executive's target bonus opportunity for such year or any right to receive the
Basic Bonus Amount, as the case may be.
7
<PAGE> 8
ARTICLE 3
CERTAIN TAX REIMBURSEMENT PAYMENTS
SECTION 3.01. Gross-Up Payment. If any portion of the Severance Benefits
or any other payment under this Agreement, or under any other agreement with, or
plan of the Company, including but not limited to stock options and other
long-term incentives (in the aggregate "Total Payments") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled under this paragraph to an additional amount (the
"Gross-Up Payment") such that after payment by Executive of all of Executive's
applicable Federal, state and local taxes, including any Excise Tax, imposed
upon such additional amount, Executive will retain an amount equal to the Excise
Tax imposed on the Total Payments.
For purposes of this Section 3.01, Executive's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt of
the Gross-Up Payment.
SECTION 3.02. Determinations. All determinations required to be made
under this Article 4, including whether a Gross-Up Payment is required under
Section 3.01, and the assumptions to be used in determining the Gross-Up
Payment, shall be made by PricewaterhouseCoopers LLP, or such other firm as the
Company may designate in writing prior to a Change in Control (the "Accounting
Firm"), which shall provide detailed supporting calculations both to the Company
and Executive within twenty business days of the receipt of notice from
Executive that there has been a Qualifying Event, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the Person effecting the Change in Control or is
otherwise unavailable, Executive may appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting
firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by the Company.
SECTION 3.03. Subsequent Redeterminations. Executive agrees (unless
requested otherwise by the Company) to use reasonable efforts to contest in good
faith any subsequent determination by the Internal Revenue Service that
Executive owes an amount of Excise Tax greater than the amount determined
pursuant to Section 3.02; provided, that Executive shall be entitled to
reimbursement by the Company of all fees and expenses reasonably incurred by
Executive in contesting such determination. In the event the Internal Revenue
Service or any court of competent jurisdiction determines that Executive owes an
amount of Excise Tax that is either greater or less than the amount previously
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<PAGE> 9
taken into account and paid under this Article 3, the Company shall promptly pay
to Executive, or Executive shall promptly repay to the Company, as the case may
be, the amount of such excess or shortfall. In the case of any payment that the
Company is required to make to Executive pursuant to the preceding sentence (a
"Later Payment"), the Company shall also pay to Executive an additional amount
such that after payment by Executive of all of Executive's applicable Federal,
state and local taxes, including any interest and penalties assessed by any
taxing authority, on such additional amount, Executive will retain an amount
equal to the total of Executive's applicable Federal, state and local taxes,
including any interest and penalties assessed by any taxing authority, arising
due to the Later Payment. In the case of any repayment of Excise Tax that
Executive is required to make to the Company pursuant to the second sentence of
this Section 3.03, Executive shall also repay to the Company the amount of any
additional payment received by Executive from the Company in respect of
applicable Federal, state and local taxes on such repaid Excise Tax, to the
extent Executive is entitled to a refund of (or has not yet paid) such Federal,
state or local taxes.
ARTICLE 4
SUCCESSORS AND ASSIGNMENTS
SECTION 4.01. Successors. The Company will require any successor
(whether by reason of a Change in Control, direct or indirect, by purchase,
merger, consolidation, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform the
obligations under this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place.
SECTION 4.02. Assignment by Executive. This Agreement shall inure to the
benefit of and be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If Executive should die or become disabled while any amount is owed
but unpaid to Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid to Executive's devisee, legatee, legal guardian or other
designee, or if there is no such designee, to Executive's estate. Executive's
rights hereunder shall not otherwise be assignable.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Notices. Any notice required to be delivered hereunder
shall be in writing and shall be addressed
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<PAGE> 10
if to the Company, to:
Ingram Micro Inc.
1600 East St. Andrew Place
Santa Ana, California 92705
Attn: General Counsel;
if to Executive, to Executive's last known address as reflected on the
books and records of the Company
or such other address as such party may hereafter specify for the purpose by
written notice to the other party hereto. Any such notice shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 5.02. Legal Fees and Expenses. The Company shall pay all legal
fees, costs of litigation, prejudgment interest, and other expenses which are
reasonably incurred by Executive as a result of (i) the Company's refusal to
provide Severance Benefits or other amounts payable in accordance herewith upon
a Nonqualifying Event or a Constructive Event, (ii) the Company's (or any third
party's) contesting the validity, enforceability, or interpretation of the
Agreement, (iii) any conflict between the parties pertaining to this Agreement,
(iv) Executive's contesting any determination by the Internal Revenue Service
pursuant to Section 3.03, or (v) Executive's pursuing any claim under Section
5.15 hereof.
SECTION 5.03. Arbitration. Executive shall have the right and option to
elect (in lieu of litigation) to have any dispute or controversy arising under
or in connection with this Agreement settled by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by Executive within 50
miles from the location of Executive's principal place of employment with the
Company, in accordance with the rules of the American Arbitration Association
then in effect. Executive's election to arbitrate, as herein provided, and the
decision of the arbitrators in that proceeding, shall be binding on the Company
and Executive. Judgment may be entered on the award of the arbitrator in any
court having jurisdiction. All expenses of such arbitration, including the fees
and expenses reasonably incurred by Executive, shall be borne by the Company.
SECTION 5.04. Unfunded Agreement. The obligations of the Company under
this Agreement represent an unsecured, unfunded promise to pay benefits to
Executive and/or Executive's beneficiaries, and shall not entitle Executive or
such beneficiaries to a preferential claim to any asset of the Company.
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<PAGE> 11
SECTION 5.05. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company (i.e., including, but not limited to, vested benefits under any
qualified or nonqualified retirement plan), at or subsequent to the date of
termination of Executive's employment shall be payable in accordance with such
plan, policy, practice, or program except as expressly modified by this
Agreement.
SECTION 5.06. Employment Status. Nothing herein contained shall
interfere with the Company's right to terminate Executive's employment with the
Company at any time, with or without Cause, subject to the Company's obligation
to provide such Severance Benefits or Separation Benefits, as the case may be,
and other amounts as may be required hereunder.
SECTION 5.07. Mitigation. (a) In no event shall Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement, nor
except as provided below, shall the amount of any payment hereunder be reduced
by any compensation earned by Executive as a result of employment by another
employer.
(b) Notwithstanding any other provision of this Agreement to the
contrary, including, without limitation, Section 5.07(a), in the event that
either (i) the Qualifying Event entitling Executive to the payments described in
Section 2.03 of this Agreement is the result of (A) an involuntary termination
of Executive's employment by the Company during the 24-month period following a
Change in CEO or (B) Executive's voluntary termination of employment for Good
Reason during the 24-month period following a Change in CEO, or (ii) Executive
becomes entitled to receive the Separation Benefits described in Section 2.04 of
this Agreement, and if Executive is subsequently employed by any party or
becomes self-employed following such termination of employment, where, in either
case, Executive becomes eligible to receive Base Salary and an annual bonus
opportunity comparable in the aggregate to such compensation Executive received
from the Company immediately prior to such termination, then all cash payments
pursuant to Section 2.03(b), Section 2.04(a)(iii) or Section 2.04(b)(iii)(x) and
(y), as the case may be, shall automatically cease on the first of the month
immediately following the month in which Executive becomes entitled to such
compensation; provided, however, that no other Severance Benefits or Separation
Benefits (including the right to receive any remaining unpaid portion of the
Basic Bonus Amount) shall be affected or reduced nor shall the period of
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<PAGE> 12
time during which any of Executive's Awards may vest or be exercised as provided
in Section 2.02(b) be affected or reduced.
SECTION 5.08. No Set-Off. The Company's obligations to make all payments
and honor all commitments under this Agreement shall be absolute and
unconditional and, except as provided in Section 5.09, shall not be affected by
any circumstances including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company may have against Executive.
SECTION 5.09. Entire Agreement. This Agreement represents the entire
agreement between the Executive and the Company and its affiliates with respect
to Executive's employment and/or severance rights, and supersedes all prior
discussions, negotiations, and agreements concerning such rights, including, but
not limited to, any prior severance agreement made between Executive and the
Company; provided, however, that any amounts payable to Executive hereunder
shall be reduced by any amounts paid to Executive as required by any applicable
local law in connection with any termination of Executive's employment.
SECTION 5.10. Tax Withholding. Notwithstanding anything in this
Agreement to the contrary, the Company shall withhold from any amounts payable
under this Agreement all federal, state, city, or other taxes as are legally
required to be withheld.
SECTION 5.11. Waiver of Rights. The waiver by either party of a breach
of any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.
SECTION 5.12. Severability. In the event any provision of the Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Agreement, and the Agreement shall
be construed and enforced as if the illegal or invalid provision had not been
included.
SECTION 5.13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to principles of conflict of laws.
SECTION 5.14. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.
SECTION 5.15. Claim Review Procedure. If Executive is denied benefits
under this Agreement, Executive may request, in writing, a review of the denial
by the Company or its designee within 60 days of receiving written notice of the
denial. The Company shall respond in writing to a written request for review
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<PAGE> 13
within 90 days of receipt of such request. Neither the claim procedure set forth
in this Section 5.15 nor Executive's failure to adhere to such procedure shall
derogate from Executive's right to enforce this Agreement through legal action,
including arbitration as provided in Section 5.03.
SECTION 5.16. Indemnification. The Company shall indemnify Executive
(and Executive's legal representatives or other successors) to the fullest
extent permitted by the Certificate of Incorporation and By-Laws of the Company,
as in effect at such time or on the Effective Date, or by the terms of any
indemnification agreement between the Company and Executive, whichever affords
or afforded greater protection to Executive, and Executive shall be entitled to
the protection of any insurance policies the Company may elect to maintain
generally for the benefit of its directors and officers (and to the extent the
Company maintains such an insurance policy or policies, Executive shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any Company officer or
director), against all costs, charges and expenses whatsoever incurred or
sustained by Executive or Executive's legal representatives at the time such
costs, charges and expenses are incurred or sustained, in connection with any
action, suit or proceeding to which Executive (or Executive's legal
representatives or other successors) may be made a party by reason of
Executive's being or having been a director, officer or employee of the Company,
or any Subsidiary or Executive's serving or having served any other enterprise
as a director, officer, employee or fiduciary at the request of the Company.
ARTICLE 6
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below.
"Accounting Firm" has the meaning accorded such term in Section
3.02.
"Accrued Benefits" has the meaning accorded such term in Section
2.03.
"Accrued Compensation" has the meaning accorded such term in
Section 2.03.
"Additional Benefits" has the meaning accorded such term in
Section 2.03.
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"Affiliate" and "Associate" have the respective meanings accorded
to such terms in Rule 12b-2 under the Exchange Act as in effect on the
Effective Date.
"Awards" has the meaning accorded such term in Section 2.02.
"Base Salary" means, at any time, the then-regular annual rate of
pay which Executive is receiving as annual salary.
"Basic Bonus Amount" has the meaning accorded such term in
Section 2.03.
"Basic Termination Benefit" has the meaning accorded such term in
Section 2.04.
"Beneficial Ownership." A Person shall be deemed the "Beneficial
Owner"of, and shall be deemed to "beneficially own," securities pursuant
to Rule 13d-3 under the Exchange Act as in effect on the Effective Date.
"Board" has the meaning accorded such term in the second
"Whereas" clause of this Agreement.
"Bonus Amount" has the meaning accorded such term in Section
2.03.
"Cause" means the occurrence of any one or more of the following:
(a) A demonstrably willful and deliberate material act or failure to act
by Executive (other than as a result of incapacity due to physical or mental
illness) which is committed in bad faith, without reasonable belief that such
action or inaction is in the best interests of the Company, and which act or
inaction is not remedied within fifteen business days of written notice from the
Company;
(b) Executive's gross negligence in the performance of Executive's
duties hereunder; or
(c) Executive's conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for the reasons set forth in clause (a) or (b) of this
definition unless and until there shall have been delivered to Executive a copy
of a resolution duly adopted by the affirmative vote (which cannot be delegated)
of not
14
<PAGE> 15
less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (and after reasonable notice to
Executive an opportunity for Executive, together with Executive's counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
Executive is guilty of conduct set forth above in such clauses (a) or (b) of
this definition and specifying the particulars thereof in detail.
"Change in CEO" means the first appointment or election after the
Effective Date of a Chief Executive Officer of the Company not serving
in such position immediately prior to such appointment or election.
"Change in Control" means, and shall be deemed to have occurred
upon any occurrence of any of the following events:
(a) Any Person (other than an Excluded Person) acquires,
together with all Affiliates and Associates of such Person,
Beneficial Ownership of securities representing 25% or more of
the combined voting power of the Voting Stock then outstanding,
unless such Person acquires Beneficial Ownership of 25% or more
of the combined voting power of the Voting Stock then outstanding
solely as a result of an acquisition of Voting Stock by the
Company which, by reducing the Voting Stock outstanding,
increases the proportionate Voting Stock beneficially owned by
such Person (together with all Affiliates and Associates of such
Person) to 25% or more of the combined voting power of the Voting
Stock then outstanding; provided, that if a Person shall become
the Beneficial Owner of 25% or more of the combined voting power
of the Voting Stock then outstanding by reason of such Voting
Stock acquisition by the Company and shall thereafter become the
Beneficial Owner of any additional Voting Stock which causes the
proportionate voting power of Voting Stock beneficially owned by
such Person to increase to 25% or more of the combined voting
power of the Voting Stock then outstanding, such Person shall,
upon becoming the Beneficial Owner of such additional Voting
Stock, be deemed to have become the Beneficial Owner of 25% or
more of the combined voting power of the Voting Stock then
outstanding other than solely as a result of such Voting Stock
acquisition by the Company;
(b) During any period of 24 consecutive months (not
including any period prior to the Effective Date), individuals
who at the beginning of such period constitute the Board (and any
new Director, whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of
at least two-thirds of the Directors then still in office who
either were
15
<PAGE> 16
Directors at the beginning of the period or whose election or
nomination for election was so approved), cease for any reason to
constitute a majority of Directors then constituting the Board;
(c) A reorganization, merger or consolidation of the
Company is consummated, in each case, unless, immediately
following such reorganization, merger or consolidation, (i) more
than 50% of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization,
merger or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled to
vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of the
Voting Stock outstanding immediately prior to such
reorganization, merger or consolidation, (ii) no Person (but
excluding for this purpose any Excluded Person and any Person
beneficially owning, immediately prior to such reorganization,
merger or consolidation, directly or indirectly, 25% or more of
the voting power of the outstanding Voting Stock) beneficially
owns, directly or indirectly, 25% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the
election of directors and (iii) at least a majority of the
members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of
the Board at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation;
(d) The shareholders of the Company approve (i) a complete
liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of
the Company, other than to any corporation with respect to which,
immediately following such sale or other disposition, (A) more
than 50% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners of the Voting Stock outstanding immediately
prior to such sale or other disposition of assets, (B) no Person
(but excluding for this purpose any Excluded Person and any
Person beneficially owning, immediately prior to such sale or
other disposition, directly or indirectly, 25% or more of the
voting power of the outstanding Voting Stock) beneficially owns,
directly or
16
<PAGE> 17
indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of such corporation or the combined voting
power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and (C) at least a majority of the members of the board
of directors of such corporation were members of the Board at the
time of the execution of the initial agreement or action of the
Board providing for such sale or other disposition of assets of
the Company; or
(e) The occurrence of any transaction or event that the
Board, in its sole discretion, designates a "Change in Control".
Notwithstanding the foregoing, in no event shall a "Change in Control"
be deemed to have occurred (i) as a result of the formation of a Holding
Company, or (ii) with respect to Executive, if Executive is part of a
"group," within the meaning of Section 13(d)(3) of the Exchange Act as
in effect on the Effective Date, which consummates the Change in Control
transaction. In addition, for purposes of the definition of "Change in
Control" a Person engaged in business as an underwriter of securities
shall not be deemed to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such Person's participation in
good faith in a firm commitment underwriting until the expiration of
forty days after the date of such acquisition.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning accorded such term in the introductory
paragraph of this Agreement.
"Constructive Event" has the meaning accorded such term in
Section 2.01.
"Continuation Period" has the meaning accorded to such term in
Section 2.03.
"Disability" means Long-Term Disability, as such term is defined
in the Disability Plan.
"Disability Plan" means the long-term disability plan (or any
successor disability and/or survivorship plan adopted by the Company) in
which Executive participates, as in effect immediately prior to the
relevant event (subject to changes in coverage levels applicable to all
employees generally covered by such Plan).
17
<PAGE> 18
"Effective Date" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excise Tax" has the meaning accorded such term in Section 3.01.
"Excluded Person" means (i) the Company; (ii) any of the
Company's Subsidiaries; (iii) any Holding Company; (iv) any employee
benefit plan of the Company, any of its Subsidiaries or a Holding
Company; (v) any Person organized, appointed or established by the
Company, any of its Subsidiaries or a Holding Company for or pursuant to
the terms of any plan described in clause (iv) or (vi) any Family
Stockholder as such term is defined in the Company's amended and
restated by-laws.
"Executive" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Extended Term" has the meaning accorded such term in Section
1.03.
"Good Reason" means, without Executive's express written consent,
the occurrence of any one or more of the following:
(a) The assignment to Executive of duties inconsistent
with Executive's authorities, duties, responsibilities and status
as an officer of the Company, or a reduction or alteration
thereof, in each case excluding any designated acting or
temporary authorities, responsibilities and status, from those in
effect as of the Reference Date; provided, however, the
appointment of a Chief Operating Officer of the Company or an
insubstantial and inadvertent act that is remedied by the Company
promptly after receipt of notice thereof given by Executive shall
not constitute Good Reason;
(b) The Company's requiring Executive to be based at a
location in excess of 35 miles from Executive's principal job
location or office immediately prior to the Reference Date;
except for required travel on the Company's business to an extent
consistent with Executive's business travel obligations
immediately prior to the Reference Date;
18
<PAGE> 19
(c) A reduction by the Company of Executive's Base Salary
or total annual target compensation from the highest level at any
time in the year prior to such reduction by more than 10%;
(d) The failure by the Company to keep in effect
compensation, retirement, health and welfare benefits, or
perquisite programs under which Executive receives benefits
substantially similar, in the aggregate, to the benefits under
such programs as exist immediately prior to the Reference Date
(other than pursuant to an equivalent reduction in such benefits
of all full-time domestic employees of the Company who are not
subject to a collective bargaining agreement); or the failure of
the Company to meet the funding requirements, if any, of any of
such programs;
(e) Any material breach by the Company of its obligations
under this Agreement or any failure of a successor of the Company
to assume and agree to perform the Company's entire obligations
under this Agreement, as required by Section 4.01 herein,
provided that such successor has received at least ten days
written notice from the Company or Executive of the requirements
of Section 4.01; or
(f) The Executive's receipt from the Company at any time
during an Extended Term of written notice pursuant to Section
1.02 to the effect that the term of this Agreement will not be
extended (a "Qualifying Nonrenewal").
"Gross-Up Payment" has the meaning accorded such term in Section
3.01.
"Holding Company" means an entity that becomes a holding company
for the Company or its businesses as a part of any reorganization,
merger, consolidation or other transaction, provided that the
outstanding shares of common stock of such entity and the combined
voting power of the then outstanding voting securities of such entity
entitled to vote generally in the election of directors is, immediately
after such reorganization, merger, consolidation or other transaction,
beneficially owned, directly or indirectly, by all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Voting Stock outstanding immediately prior to such
reorganization, merger, consolidation or other transaction in
substantially the same proportions as their ownership, immediately prior
to such reorganization, merger, consolidation or other transaction, of
such outstanding Voting Stock.
19
<PAGE> 20
"Initial Term" has the meaning accorded such term in Section
1.01.
"Later Payment" has the meaning accorded such term in Section
3.03.
"Medical Plans" means the medical care plans (or any successor
medical plans adopted by the Company) in which Executive participates,
as in effect immediately prior to the relevant event (subject to changes
in coverage levels applicable to all employees generally covered by such
Plans).
"Nonqualifying Event" has the meaning accorded such term in
Section 2.01.
"Payment Period" has the meaning accorded such term in Section
2.04.
"Person" means an individual, corporation, partnership,
association, trust or any other entity or organization.
"Qualifying Event" has the meaning accorded such term in Section
2.01.
"Qualifying Nonrenewal" has the meaning accorded such term in
clause (f) of the definition of Good Reason in this Article 6.
"Reference Date" means the later of (x) the Effective Date or (y)
the date 60 days prior to the date of the relevant event, if any, set
forth in the definition of Good Reason.
"Release" has the meaning accorded such term in Section 2.02.
"Release" has the meaning accorded such term in Section 2.03.
"Retirement" shall be determined under guidelines established
from time to time by the Human Resources Committee of the Board.
"Separation Benefits" has the meaning accorded such term in
Section 2.04.
"Severance Benefits" has the meaning accorded such term in
Section 2.03.
"Stock Plan" has the meaning accorded such term in Section 2.02.
20
<PAGE> 21
"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having voting power to elect a
majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Successive Period" has the meaning accorded such term in Section
1.02.
"Tax Preparation Benefits" has the meaning accorded such term in
Section 2.03.
"Termination Date" has the meaning accorded such term in Section
2.02.
"Total Payments" has the meaning accorded such term in Section
3.01.
"2002 Retention Bonus" has the meaning set forth in Section 2.05.
"2003 Retention Bonus" has the meaning set forth in Section 2.05.
"Voting Stock" means securities of the Company entitled to vote
generally in the election of members of the Board.
"Years of Service" has the meaning accorded such term in Section
2.04.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, to be effective as of the day and year first written above.
EXECUTIVE Ingram Micro Inc.
/s/ HENRI T. KOPPEN By: /s/ JERRE L. STEAD
- -------------------------------- -------------------------------
Henri T. Koppen Title: Chairman of the Board
21
<PAGE> 22
EXHIBIT A
RELEASE AND COVENANT
This letter sets forth the agreement of Ingram Micro Inc. (the
"Company") and HENRI T. KOPPEN ("Executive") relating to the termination of
Executive's employment with Company. Subject to the execution of this Agreement,
the parties hereto agree as follows:
Termination of Employment.
(A). Executive agrees and acknowledges that the termination of his
employment with Company shall be effective as of __________, ____ (the
"TERMINATION DATE").
(B). Executive acknowledges Executive's obligation to promptly return to
the Company all property of the Company in Executive's possession including,
without limitation, keys, SECUREID card, credit cards, cell phones, pagers,
computers, office equipment, documents and files and instruction manuals on or
before the Termination Date, or earlier if so requested by the Company. After
the Termination Date, the Company shall forward all mail addressed to Executive
to the most recent address provided by Executive to the Company pursuant to
Section 5.01 of the Executive Retention Agreement between the Executive and the
Company dated as of January __, 2000 to which this Agreement is Exhibit A (the
"Retention Agreement").
Mutual Releases.
1. In consideration of the foregoing and the benefits paid and payable
to Executive under the Retention Agreement, Executive hereby waives all claims
against Company, its affiliates and their respective officers, directors and
executives (hereinafter the "RELEASEES"), and releases and discharges the
Releasees from liability for any and all claims and damages that Executive may
have against them as of the date of this Agreement, whether known or unknown,
including, but not limited to, any claims arising out of his employment
relationship with Company or its affiliates or the termination of such
employment, or any violation of any federal, state or local fair employment
practice law, including Title VII of the Civil Rights Act, the Civil Rights Act
of 1991, the Age Discrimination in Employment Act as amended by the Older
Workers' Benefit Protection Act, or any other employee relations statute, rule,
executive order, law or ordinance, tort, express or implied contract, public
policy or other obligations; provided, however, that nothing herein shall be
deemed a waiver or release of Executive's right to enforce the obligations of
Company under this Agreement or
<PAGE> 23
the Retention Agreement or Executive's rights to indemnification to the fullest
extent provided by law or in any applicable certificate of incorporation,
charter or similar document, by-laws or contract.
Executive acknowledges that Executive has had up to 21 days to consider
the terms of this Agreement and is hereby advised by Company to discuss the
terms of this Agreement with an attorney unrelated to Company prior to signing
this Agreement. Executive further acknowledges that Executive is entering into
this Agreement freely, knowingly, and voluntarily, with a full understanding of
its terms. Executive also acknowledges that Executive will have 7 days from the
date he signs this Agreement to revoke the Agreement by notifying the General
Counsel of the Company in writing.
2. In consideration of the performance by Executive of the covenants and
undertakings made herein by Executive, Company on behalf of itself and its
affiliates hereby waives all claims against Executive and releases and
discharges Executive from liability for any and all claims and damages that any
of them may have against Executive as of the date of this Agreement, whether
known or unknown, including Executive's employment relationship with Company or
its affiliates or the termination of such employment; provided, however, that
nothing herein shall be deemed a waiver or release of the right of Company or
its affiliates to enforce the obligations of Executive under this Agreement or
for any claims arising from a breach of Executive's fiduciary duty of loyalty to
the Company or its affiliates.
Waiver. Each of the Company and Executive hereby expressly waives and
relinquishes all rights and benefits under Section 1542 of the California Civil
Code which provides:
"Section 1542. General Release - Claim extinguished. A general release
does not extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor."
Each of the Company and Executive understands and acknowledges that the
significance and consequences of this waiver of Section 1542 of the Civil Code
is that even if the Company and Executive, as the case may be, should eventually
suffer damages arising out of Executive's employment relationship with the
Company and its affiliates, or termination of such employment, such party will
not be permitted to make any claim for those damages except as expressly
permitted by this Agreement. Furthermore, each of the Company and Executive
acknowledges that such party intends these consequences even as to claims for
injuries and/or damages that may exist as of the date of this Agreement but
which
A-2
<PAGE> 24
Executive or the Company, as the case may be, does not know exist, and which, if
known, would materially affect such party's decision to execute this Agreement.
Cooperation. Executive agrees to cooperate fully with Company and to
provide such information as Company may reasonably request with respect to any
Company-related transaction, investment or other matter in which Executive was
involved in any way while employed by Company.
Confidentiality. Executive acknowledges Executive's obligation not to
disclose, during or after employment, any trade secrets or proprietary and/or
confidential data or records of the Company or its affiliates or to utilize any
such information for private profit. Each of the parties hereto agrees that such
party will not release, publish, announce or otherwise make available to the
public in any manner whatsoever any information or announcement regarding this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party hereto, except as required by law or legal process,
including, in the case of the Company, filings with the Securities and Exchange
Commission. Executive agrees not to communicate with, including responding to
questions or inquiries presented by, the media, employees or investors of the
Company, its affiliates or any third party relating to the terms of this
Agreement, without first obtaining the prior written consent of the Company.
Notwithstanding the foregoing, Executive may make disclosure to his spouse,
attorneys and financial advisors of the existence and terms of this Agreement
provided that they agree to be bound by the provisions of this paragraph.
No Disparagement. Executive and Company agree that no party hereto shall
make disparaging statements or representations, or otherwise communicate
disparagingly, directly or indirectly, in writing, orally, or otherwise, about
either of the parties hereto or the other Releasees or the employees, customers,
suppliers, competitors, vendors, stockholders or lenders of the Company or its
affiliates or any third party, nor take any action which may, directly or
indirectly, disparage or be damaging to either of the parties hereto or the
other Releasees, their businesses, or their reputations.
No Solicitation. Executive will not (i) directly or indirectly make
known to any person, firm, corporation, partnership or other entity, any list,
listing or other compilation or document, whether prepared or maintained by
Executive, the Company or any of the Company's affiliates, which contains
information that is confidential to the Company or any of its affiliates about
their customers ("the Company's Customers"), including but not limited to names
and addresses, or (ii) at any time through the end of the "Continuation Period"
(as defined in the Retention Agreement), call on or solicit, or attempt to call
on or solicit, in either case with the intent to divert business or potential
business from the Company or any of its affiliates, any of the Company's
Customers with whom Executive has become acquainted during his employment with
the Company or any of its
A-3
<PAGE> 25
affiliates, either for Executive's own benefit or for the benefit of any other
person, firm, corporation, partnership or other entity.
No Raid. Through the end of the Continuation Period, Executive will not,
and will use Executive's best efforts not to permit any person, firm,
corporation, partnership or other entity of which Executive is an officer or
control person to, (i) knowingly solicit, entice, or persuade any individual who
is an associate of the Company or any of its affiliates at any time during the
Continuation Period (each such individual, a "Company Associate") to leave the
services of the Company or any of its affiliates for any reason, or (ii) solicit
for employment, hire, or engage any present or future Company Associate as an
employee, independent contractor or consultant.
Noncompetition. Executive acknowledges that Executive has unique
knowledge of the Company and its affiliates and unique knowledge of the computer
and software sales and distribution industry. Based on his unique status,
Executive agrees that through the end of the Continuation Period, Executive will
not be employed or hired as an employee or consultant by, or otherwise directly
or indirectly provide services for, any of Tech Data, Merisel, Inacom, Pinacor,
Globelle, Gates Arrow, CHS Electronics, Hallmark, Hamilton Avnet, Daisytek,
Azerti, Azlan, Northamber, Tech Pacific, Synnex, Bell Micro, DSS and/or GE
Capital Information Technology Solutions-North America, Inc., and any subsidiary
or affiliate of these entities in a business or line of business conducted by
any such entity which competes with any line of business conducted by the
Company or any of its affiliates. Notwithstanding the foregoing, should
Executive be employed by an entity that is not a subsidiary or affiliate of one
of these entities at the time Executive commences such employment, but
subsequently becomes a subsidiary or affiliate of, or becomes merged into, one
of these entities on or before the end of the Continuation Period, he shall not
be deemed to be in breach of the provisions of this paragraph due to such
employment, provided that at the time Executive commenced his employment there
had been no public announcement of an agreement pursuant to which Executive's
employer would become a subsidiary or affiliate of, or merged into, one of these
entities or discussions that could lead to such an agreement and Executive had
no knowledge of the existence of any such agreement or discussions. Executive
further agrees that Executive will not own any interest in, provide financing
to, be connected with, or be a principal, partner or agent of any such
competitive distributor or aggregator; provided, Executive may own less than 1%
of the outstanding shares of any such entity whose shares are traded in the
public market.
Availability. Provided that the Company is not in breach of its
obligations under this Agreement, and subject to Executive's other commitments,
upon request of the Company or any of its affiliates during the Continuation
Period, Executive will make himself available for up to 15 hours in any calendar
month to
A-4
<PAGE> 26
provide reasonable assistance to the Company or any such affiliate and will use
reasonable efforts to arrange his commitments so as to make Executive available
for such assistance on a basis which is consistent with the requests of the
Company or any affiliates. Such assistance may include telephone conversations,
correspondence, attendance and participation in meetings, transfer of knowledge
or information regarding operational or other issues, litigation preparation and
trials. During such period, the Company shall reimburse Executive for any
out-of- pocket expense Executive may incur in connection with such assistance in
accordance with the Company's reimbursement policies. After the end of the
Continuation Period, Executive shall use reasonable efforts, subject to his
other commitments, to continue to provide such assistance as may be requested by
the Company and, in such event, shall be compensated at a rate per day (minimum
charge, one-half day) commensurate with the daily rate he was earning based on
his base salary immediately prior to the Termination Date.
The running of the periods prescribed in this Agreement shall be tolled
and suspended by the length of time Executive works in circumstances that a
court of competent jurisdiction subsequently finds to violate the terms of this
Agreement.
No Reliance. The parties hereto represent and acknowledge that, in
executing this Agreement, they do not rely and have not relied upon any
representation or statement, written or oral, made by either of the parties or
by either of the parties' agents, attorneys, or representatives with regard to
the subject matter, basis, or effect of this Agreement or otherwise, other than
those specifically stated in this written Agreement.
Assignment. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, administrators,
representatives, executors, successors, and assigns. This Agreement shall also
inure to the benefit of all the Releasees and their respective heirs,
administrators, representatives, executors, successors, and assigns. This
Agreement shall not be assignable by Executive.
No Waiver. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed as a waiver of any
subsequent breach hereof, or as a waiver of a breach of any other provision.
Interpretation: Choice of Law. This Agreement shall be interpreted in
accordance with the plain meaning of its terms and not strictly for or against
any of the parties hereto. This Agreement and all provisions hereof shall be
governed by and construed under the laws of the State of California without
regard to the choice of law rules thereof.
A-5
<PAGE> 27
Acknowledgment. Executive acknowledges that Executive has carefully read
this Agreement, fully understands and accepts all of its provisions, and signs
it voluntarily of Executive's own free will. Executive further acknowledges that
Executive has been provided a full opportunity to review and reflect on the
terms of this Agreement and to seek the advice of legal counsel of Executive's
choice.
INGRAM MICRO INC.
by
--------------------------------------
Agreed and Accepted Name:
Title:
- ----------------------------------
HENRI T. KOPPEN
A-6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.52
<SEQUENCE>8
<DESCRIPTION>EXHIBIT 10.52
<TEXT>
<PAGE> 1
EXHIBIT 10.52
EXECUTIVE RETENTION AGREEMENT
EXECUTIVE RETENTION AGREEMENT ("Agreement") dated as of January 31, 2000
(the "Effective Date") by and between Ingram Micro Inc., a Delaware corporation
(the "Company"), and GUY P. ABRAMO ("Executive").
WHEREAS, Executive is presently employed by the Company in a key
management capacity; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
that appropriate steps be taken to reinforce and encourage the continued
attention of key management personnel, including Executive, to their assigned
duties without the distraction that may arise from personal uncertainties
associated with any potential change in employment status, with any change in
the Company's Chief Executive Officer or with any pending or threatened change
in control of the Company; and
WHEREAS, the Board has also determined that it is in the best interests of
the Company and its stockholders to encourage Executive's continued availability
to the Company in the event of a change in the Company's Chief Executive Officer
or a change in control of the Company.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration including, but not limited to, Executive's
continuing employment with the Company, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1
TERM OF AGREEMENT
SECTION 1.01. Initial Term. The term of this Agreement shall commence on
the Effective Date and shall expire December 31, 2001 (the "Initial Term"),
subject to Sections 1.02 and 1.03.
SECTION 1.02. Extensions. As of each December 31 beginning in 2000 and
each later date which is one year prior to the scheduled expiration date of this
Agreement as it may be extended from time to time pursuant to Sections 1.02 and
1.03 (any such date a "Renewal Date"), provided Executive is actively employed
by the Company on each such scheduled expiration date, the remaining term of
<PAGE> 2
this Agreement shall automatically be extended by one year (each such additional
one-year period following the Initial Term or any Extended Term, as the case may
be, a "Successive Period") unless, at least sixty days prior to any such Renewal
Date, the Company has provided Executive with written notice of the Company's
intent that the term of this Agreement not be so extended; provided, however,
that Executive's rights under Section 2.05 shall be unaffected by any
termination of this Agreement prior to January 2, 2003.
SECTION 1.03. Automatic Extension Upon Change in Control or Change in CEO.
In the event that any Change in Control or a Change in CEO occurs during the
Initial Term or any Successive Period, upon the effective date of such Change in
Control or Change in CEO the term of this Agreement shall automatically be
extended for a period of 24 months from the effective date of such Change in
Control or Change in CEO, as the case may be (an "Extended Term"). The 24-month
extension described in this Section 1.03 shall take effect regardless of
whether, before or after the effective date of a Change in Control or Change in
CEO, Executive or the Company has given written notice of intent not to extend
the term of the Agreement pursuant to Section 1.02 or there has occurred a
termination of Executive's employment, provided the term of the Agreement has
not yet expired as of such effective date.
ARTICLE 2
CERTAIN BENEFITS
SECTION 2.01. Certain Events. (a) A "Qualifying Event" means any of the
following events:
(i) The involuntary termination of Executive's employment by the
Company during the 24-month period following either any Change in Control
or a Change in CEO, other than (x) for Cause, or (y) by reason of
Executive's death or Disability; or
(ii) Executive's voluntary termination of employment for Good Reason
during the 24-month period following either any Change in Control or a
Change in CEO, provided that Executive's termination occurs within (x) six
months after a Qualifying Nonrenewal or (y) 90 days after the occurrence
of any other event constituting Good Reason.
(b) A "Nonqualifying Event" means the involuntary termination of
Executive's employment by the Company other than during the 24-month period
following either any Change in Control or a Change in CEO, other than (x) for
Cause, or (y) by reason of Executive's death or Disability.
(c) A "Constructive Event" means, other than during the 24-month period
following either any Change in Control or a Change in CEO, Executive's
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voluntary termination of employment for Good Reason within 90 days after the
occurrence of an event constituting Good Reason.
SECTION 2.02. Right to Certain Benefits. (a) In the event that a
Qualifying Event, a Nonqualifying Event, a Constructive Event or other
termination of employment occurs during the term of this Agreement, Executive
shall be entitled to receive from the Company the Severance Benefits as
described in Section 2.03 or the relevant Separation Benefits as described in
Section 2.04, as the case may be.
(b) (i) In the event that a Change in Control occurs during the term of
this Agreement all stock options, stock appreciation rights, restricted stock,
or other awards (collectively, "Awards") then held by Executive pursuant to the
provisions of any of the Company's stock or option plans or any successor plans
(each, a "Stock Plan") shall become immediately vested, nonforfeitable and
exercisable as of the date of the Change in Control and remain exercisable until
the earlier of (x) the expiration date of such Award, any termination of
employment notwithstanding, and (y) if applicable, the first anniversary of the
last day of the Continuation Period (such earlier date, the "Termination Date").
Subject to the provisions above upon a subsequent Change in Control, all Awards
granted after a Change in Control to Executive shall vest pursuant to the terms
of each such Award and its related Stock Plan; provided, however, that each such
Award shall continue to vest through any Continuation Period, and shall
terminate on the Termination Date.
(ii) In the event that a Change in CEO occurs during the term of
this Agreement all Awards held by Executive, whether granted before or after
such Change in CEO, shall vest pursuant to the terms of each such Award and its
related Stock Plan; provided, however, that each such Award shall continue to
vest through any Continuation Period, and shall terminate on the Termination
Date.
(iii) In the event that a Constructive Event or a Nonqualifying
Event occurs during the term of this Agreement all Awards held by Executive
shall continue to vest through the Payment Period, and shall terminate on the
earlier of (x) the expiration date of such Award, any termination of employment
notwithstanding, and (y) the first anniversary of the last day of the Payment
Period.
SECTION 2.03. Benefits upon a Qualifying Event. Subject to Executive's
execution of an agreement in substantially the form set forth as Exhibit A
hereto, with such changes in the Competitor Companies named therein as the Board
shall reasonably determine (the "Release") and except to the extent provided in
Section 5.07 and Section 5.09, Executive shall be entitled to the following
benefits (the "Severance Benefits") upon a Qualifying Event:
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(a) The Company shall pay Executive a lump sum, in cash, equal to
Executive's earned but unpaid Base Salary and other earned but unpaid cash
entitlements for the period through and including the date of termination of
Executive's employment, including unused earned and accrued vacation pay and
unreimbursed documented business expenses (collectively, "Accrued
Compensation"). In addition, Executive shall be entitled to any other benefits
earned or accrued by Executive for the period through and including the date of
termination of Executive's employment under any other employee benefit plans and
arrangements maintained by the Company, in accordance with the terms of such
plans and arrangements, except as modified herein (collectively, "Accrued
Benefits").
(b) The Company, through the second anniversary of the Qualifying Event
(the "Continuation Period"), shall pay Executive cash compensation in equal
installments over 24 months at the times and in accordance with the applicable
Company payroll system, in an amount equal to two (2) times the sum of the
amounts set forth in Clauses (i) and (ii) below:
(i) Executive's Base Salary at its highest annual rate in effect
during the period beginning on the date of the Change in Control or Change
in CEO, as the case may be, to which such Qualifying Event relates, and
ending on the date of such Qualifying Event; and
(ii) the Executive's annual target bonus opportunity for the year in
which Executive's employment terminates (the "Bonus Amount").
(c) The Company shall also pay Executive, at the times and in the manner
provided above, an amount in cash equal to Executive's target bonus opportunity
for the year in which Executive's employment terminates times a fraction, the
numerator of which is the number of days in such year ending on the date of such
Qualifying Event and the denominator of which is 365 (the "Basic Bonus Amount").
(d) In addition, Executive shall be entitled to the benefits set forth
below (collectively, the "Additional Benefits") through and in respect of the
Continuation Period:
(i) Continue to receive Executive's automobile allowance, if any, as
in effect immediately prior to the Qualifying Event;
(ii) Continue to participate in the Company's Medical Plans,
provided that the Company shall reimburse Executive for Executive's total
actual premium costs incurred for such period including, without
limitation, 102% of such total premium costs as are incurred by Executive
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for "Continuation Coverage" (within the meaning of Section 4980B(f)(2) of
the Code) for the last 18 months of such Period;
(iii) Reimbursement for the documented costs, including laboratory
and test fees, of an annual physical examination in an amount not to
exceed $1,500;
(iv) Reimbursement for the documented costs of annual gift and
income tax preparation services and advice in an amount not to exceed
$2,000 (the "Tax Preparation Benefits"); and
(v) Participation in the Company's Supplemental Executive Deferred
Compensation Plan up to the full amount of employee contributions
permitted; provided, however, that the Company will not be required to
make any matching contributions with respect to Executive's contributions
during the Continuation Period.
SECTION 2.04. Separation Payments. Subject to Executive's execution of a
Release and except to the extent provided under Section 5.07 and Section 5.09,
Executive shall be entitled to the benefits set forth below (the "Separation
Benefits") upon termination of employment under the following circumstances:
(a) Upon a Nonqualifying Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount equal to the greater of (x) Executive's Base Salary
at its highest annual rate during the one year period prior to such
Nonqualifying Event and (y) the sum of (A) 50% of such Base Salary plus
(B) the product of 1/12 of such Base Salary times Executive's full and
partial years of employment with the Company ("Years of Service") (such
greater amount, the "Basic Termination Benefit"), which such Benefit shall
be payable in cash in equal installments at the times and in accordance
with the applicable Company payroll system over a period of months equal
to the greater of (C) 12 and (D) the sum of 6 plus Executive's Years of
Service (the greater of (C) and (D), the "Payment Period");
(iv) An amount, in cash, payable in equal installments over the
Payment Period and at the times and in accordance with the applicable
Company payroll system, equal to the Basic Bonus Amount; and
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(v) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(b) Upon a Constructive Event, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) An amount, in cash, equal to the sum of (x) the Basic
Termination Benefit, (y) the Bonus Amount, and (z) the Basic Bonus Amount,
payable in equal installments at the times and in the manner provided in
Section 2.04(a)(iv); and
(iv) The Additional Benefits, paid over, or in respect of, the
Payment Period, as appropriate.
(c) Upon Executive's voluntary termination of employment other than for
Good Reason or Retirement, Executive shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
(d) Upon termination of Executive's employment by reason of Retirement,
Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits; and
(iii) The Tax Preparation Benefit through and in respect of the year
in which Retirement occurs.
(e) Upon termination of Executive's employment by reason of death or
Disability, Executive shall be entitled to:
(i) The Accrued Compensation;
(ii) The Accrued Benefits;
(iii) The Basic Bonus Amount; and
(iv) The Tax Preparation Benefit through and in respect of the year
in which death or Disability occur.
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(f) Upon termination of the Executive's employment for Cause, Executive
shall be entitled to:
(i) The Accrued Compensation; and
(ii) The Accrued Benefits.
SECTION 2.05. Retention Payments. (a) In the event that Executive is
employed by the Company on January 1, 2002, Executive shall be entitled to a
lump sum cash retention payment equal to 150% of the sum of (i) Executive's Base
Salary and (ii) Executive's target annual bonus, each as in effect for the 2001
fiscal year (such sum, the "2002 Retention Bonus").
(b) In the event that Executive is employed by the Company on January 1,
2003, Executive shall be entitled to a lump sum cash retention payment equal to
50% of the sum of (i) Executive's Base Salary and (ii) Executive's target annual
bonus, each as in effect for the 2002 fiscal year (such sum, the "2003 Retention
Bonus").
(c) In the event Executive's employment is terminated prior to January 1,
2002 by the Company other than for Cause or by the Executive for Good Reason or
due to Executive's death or Disability, Executive shall be entitled to an amount
equal to the 2002 Retention Bonus multiplied by a fraction, the numerator of
which is the number of days elapsed from and including January 1, 2000 and
ending on the date of such termination and the denominator of which is 731.
(d) In the event Executive's employment is terminated in 2002 by the
Company other than for Cause or by the Executive for Good Reason or due to
Executive's death or Disability, Executive shall be entitled to an amount equal
to the 2003 Retention Bonus multiplied by a fraction, the numerator of which is
the number of days in 2002 ending on the date of such termination and the
denominator of which is 365.
(e) The payments to be made pursuant to the provisions of this Section 2.05
shall be in addition to any amount payable to Executive with respect to
Executive's target bonus opportunity for such year or any right to receive the
Basic Bonus Amount, as the case may be.
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ARTICLE 3
CERTAIN TAX REIMBURSEMENT PAYMENTS
SECTION 3.01. Gross-Up Payment. If any portion of the Severance Benefits
or any other payment under this Agreement, or under any other agreement with, or
plan of the Company, including but not limited to stock options and other
long-term incentives (in the aggregate "Total Payments") would be subject to the
excise tax imposed by Section 4999 of the Code or any interest or penalties with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
Executive shall be entitled under this paragraph to an additional amount (the
"Gross-Up Payment") such that after payment by Executive of all of Executive's
applicable Federal, state and local taxes, including any Excise Tax, imposed
upon such additional amount, Executive will retain an amount equal to the Excise
Tax imposed on the Total Payments.
For purposes of this Section 3.01, Executive's applicable Federal, state
and local taxes shall be computed at the maximum marginal rates, taking into
account the effect of any loss of personal exemptions resulting from receipt of
the Gross-Up Payment.
SECTION 3.02. Determinations. All determinations required to be made under
this Article 4, including whether a Gross-Up Payment is required under Section
3.01, and the assumptions to be used in determining the Gross-Up Payment, shall
be made by PricewaterhouseCoopers LLP, or such other firm as the Company may
designate in writing prior to a Change in Control (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the Company and Executive
within twenty business days of the receipt of notice from Executive that there
has been a Qualifying Event, or such earlier time as is requested by the
Company. In the event that the Accounting Firm is serving as accountant or
auditor for the Person effecting the Change in Control or is otherwise
unavailable, Executive may appoint another nationally recognized accounting firm
to make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company.
SECTION 3.03. Subsequent Redeterminations. Executive agrees (unless
requested otherwise by the Company) to use reasonable efforts to contest in good
faith any subsequent determination by the Internal Revenue Service that
Executive owes an amount of Excise Tax greater than the amount determined
pursuant to Section 3.02; provided, that Executive shall be entitled to
reimbursement by the Company of all fees and expenses reasonably incurred by
Executive in contesting such determination. In the event the Internal Revenue
Service or any court of competent jurisdiction determines that Executive owes an
amount of Excise Tax that is either greater or less than the amount previously
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taken into account and paid under this Article 3, the Company shall promptly pay
to Executive, or Executive shall promptly repay to the Company, as the case may
be, the amount of such excess or shortfall. In the case of any payment that the
Company is required to make to Executive pursuant to the preceding sentence (a
"Later Payment"), the Company shall also pay to Executive an additional amount
such that after payment by Executive of all of Executive's applicable Federal,
state and local taxes, including any interest and penalties assessed by any
taxing authority, on such additional amount, Executive will retain an amount
equal to the total of Executive's applicable Federal, state and local taxes,
including any interest and penalties assessed by any taxing authority, arising
due to the Later Payment. In the case of any repayment of Excise Tax that
Executive is required to make to the Company pursuant to the second sentence of
this Section 3.03, Executive shall also repay to the Company the amount of any
additional payment received by Executive from the Company in respect of
applicable Federal, state and local taxes on such repaid Excise Tax, to the
extent Executive is entitled to a refund of (or has not yet paid) such Federal,
state or local taxes.
ARTICLE 4
SUCCESSORS AND ASSIGNMENTS
SECTION 4.01. Successors. The Company will require any successor (whether
by reason of a Change in Control, direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree to perform the obligations
under this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession had taken place.
SECTION 4.02. Assignment by Executive. This Agreement shall inure to the
benefit of and be enforceable by Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If Executive should die or become disabled while any amount is owed
but unpaid to Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid to Executive's devisee, legatee, legal guardian or other
designee, or if there is no such designee, to Executive's estate. Executive's
rights hereunder shall not otherwise be assignable.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. Notices. Any notice required to be delivered hereunder shall
be in writing and shall be addressed
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if to the Company, to:
Ingram Micro Inc.
1600 East St. Andrew Place
Santa Ana, California 92705
Attn: General Counsel;
if to Executive, to Executive's last known address as reflected on the
books and records of the Company
or such other address as such party may hereafter specify for the purpose by
written notice to the other party hereto. Any such notice shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a business day in the place of
receipt. Otherwise, any such notice shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 5.02. Legal Fees and Expenses. The Company shall pay all legal
fees, costs of litigation, prejudgment interest, and other expenses which are
reasonably incurred by Executive as a result of (i) the Company's refusal to
provide Severance Benefits or other amounts payable in accordance herewith upon
a Nonqualifying Event or a Constructive Event, (ii) the Company's (or any third
party's) contesting the validity, enforceability, or interpretation of the
Agreement, (iii) any conflict between the parties pertaining to this Agreement,
(iv) Executive's contesting any determination by the Internal Revenue Service
pursuant to Section 3.03, or (v) Executive's pursuing any claim under Section
5.15 hereof.
SECTION 5.03. Arbitration. Executive shall have the right and option to
elect (in lieu of litigation) to have any dispute or controversy arising under
or in connection with this Agreement settled by arbitration, conducted before a
panel of three arbitrators sitting in a location selected by Executive within 50
miles from the location of Executive's principal place of employment with the
Company, in accordance with the rules of the American Arbitration Association
then in effect. Executive's election to arbitrate, as herein provided, and the
decision of the arbitrators in that proceeding, shall be binding on the Company
and Executive. Judgment may be entered on the award of the arbitrator in any
court having jurisdiction. All expenses of such arbitration, including the fees
and expenses reasonably incurred by Executive, shall be borne by the Company.
SECTION 5.04. Unfunded Agreement. The obligations of the Company under
this Agreement represent an unsecured, unfunded promise to pay benefits to
Executive and/or Executive's beneficiaries, and shall not entitle Executive or
such beneficiaries to a preferential claim to any asset of the Company.
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SECTION 5.05. Non-Exclusivity of Benefits. Unless specifically provided
herein, neither the provisions of this Agreement nor the benefits provided
hereunder shall reduce any amounts otherwise payable, or in any way diminish
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans (qualified or
nonqualified), programs, policies, or practices provided by the Company, for
which Executive may qualify. Vested benefits or other amounts which Executive is
otherwise entitled to receive under any plan, policy, practice, or program of
the Company (i.e., including, but not limited to, vested benefits under any
qualified or nonqualified retirement plan), at or subsequent to the date of
termination of Executive's employment shall be payable in accordance with such
plan, policy, practice, or program except as expressly modified by this
Agreement.
SECTION 5.06. Employment Status. Nothing herein contained shall interfere
with the Company's right to terminate Executive's employment with the Company at
any time, with or without Cause, subject to the Company's obligation to provide
such Severance Benefits or Separation Benefits, as the case may be, and other
amounts as may be required hereunder.
SECTION 5.07. Mitigation. (a) In no event shall Executive be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to Executive under any of the provisions of this Agreement, nor
except as provided below, shall the amount of any payment hereunder be reduced
by any compensation earned by Executive as a result of employment by another
employer.
(b) Notwithstanding any other provision of this Agreement to the contrary,
including, without limitation, Section 5.07(a), in the event that either (i) the
Qualifying Event entitling Executive to the payments described in Section 2.03
of this Agreement is the result of (A) an involuntary termination of Executive's
employment by the Company during the 24-month period following a Change in CEO
or (B) Executive's voluntary termination of employment for Good Reason during
the 24-month period following a Change in CEO, or (ii) Executive becomes
entitled to receive the Separation Benefits described in Section 2.04 of this
Agreement, and if Executive is subsequently employed by any party or becomes
self-employed following such termination of employment, where, in either case,
Executive becomes eligible to receive Base Salary and an annual bonus
opportunity comparable in the aggregate to such compensation Executive received
from the Company immediately prior to such termination, then all cash payments
pursuant to Section 2.03(b), Section 2.04(a)(iii) or Section 2.04(b)(iii)(x) and
(y), as the case may be, shall automatically cease on the first of the month
immediately following the month in which Executive becomes entitled to such
compensation; provided, however, that no other Severance Benefits or Separation
Benefits (including the right to receive any remaining unpaid portion of the
Basic Bonus Amount) shall be affected or reduced nor shall the period of
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time during which any of Executive's Awards may vest or be exercised as provided
in Section 2.02(b) be affected or reduced.
SECTION 5.08. No Set-Off. The Company's obligations to make all payments
and honor all commitments under this Agreement shall be absolute and
unconditional and, except as provided in Section 5.09, shall not be affected by
any circumstances including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company may have against Executive.
SECTION 5.09. Entire Agreement. This Agreement represents the entire
agreement between the Executive and the Company and its affiliates with respect
to Executive's employment and/or severance rights, and supersedes all prior
discussions, negotiations, and agreements concerning such rights, including, but
not limited to, any prior severance agreement made between Executive and the
Company; provided, however, that any amounts payable to Executive hereunder
shall be reduced by any amounts paid to Executive as required by any applicable
local law in connection with any termination of Executive's employment.
SECTION 5.10. Tax Withholding. Notwithstanding anything in this Agreement
to the contrary, the Company shall withhold from any amounts payable under this
Agreement all federal, state, city, or other taxes as are legally required to be
withheld.
SECTION 5.11. Waiver of Rights. The waiver by either party of a breach of
any provision of this Agreement shall not operate or be construed as a
continuing waiver or as a consent to or waiver of any subsequent breach hereof.
SECTION 5.12. Severability. In the event any provision of the Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Agreement, and the Agreement shall
be construed and enforced as if the illegal or invalid provision had not been
included.
SECTION 5.13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California without
reference to principles of conflict of laws.
SECTION 5.14. Counterparts. This Agreement may be signed in several
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were on the same instrument.
SECTION 5.15. Claim Review Procedure. If Executive is denied benefits
under this Agreement, Executive may request, in writing, a review of the denial
by the Company or its designee within 60 days of receiving written notice of the
denial. The Company shall respond in writing to a written request for review
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within 90 days of receipt of such request. Neither the claim procedure set forth
in this Section 5.15 nor Executive's failure to adhere to such procedure shall
derogate from Executive's right to enforce this Agreement through legal action,
including arbitration as provided in Section 5.03.
SECTION 5.16. Indemnification. The Company shall indemnify Executive (and
Executive's legal representatives or other successors) to the fullest extent
permitted by the Certificate of Incorporation and By-Laws of the Company, as in
effect at such time or on the Effective Date, or by the terms of any
indemnification agreement between the Company and Executive, whichever affords
or afforded greater protection to Executive, and Executive shall be entitled to
the protection of any insurance policies the Company may elect to maintain
generally for the benefit of its directors and officers (and to the extent the
Company maintains such an insurance policy or policies, Executive shall be
covered by such policy or policies, in accordance with its or their terms, to
the maximum extent of the coverage available for any Company officer or
director), against all costs, charges and expenses whatsoever incurred or
sustained by Executive or Executive's legal representatives at the time such
costs, charges and expenses are incurred or sustained, in connection with any
action, suit or proceeding to which Executive (or Executive's legal
representatives or other successors) may be made a party by reason of
Executive's being or having been a director, officer or employee of the Company,
or any Subsidiary or Executive's serving or having served any other enterprise
as a director, officer, employee or fiduciary at the request of the Company.
ARTICLE 6
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below.
"Accounting Firm" has the meaning accorded such term in Section
3.02.
"Accrued Benefits" has the meaning accorded such term in Section
2.03.
"Accrued Compensation" has the meaning accorded such term in Section
2.03.
"Additional Benefits" has the meaning accorded such term in Section
2.03.
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"Affiliate" and "Associate" have the respective meanings accorded to
such terms in Rule 12b-2 under the Exchange Act as in effect on the
Effective Date.
"Awards" has the meaning accorded such term in Section 2.02.
"Base Salary" means, at any time, the then-regular annual rate of
pay which Executive is receiving as annual salary.
"Basic Bonus Amount" has the meaning accorded such term in Section
2.03.
"Basic Termination Benefit" has the meaning accorded such term in
Section 2.04.
"Beneficial Ownership." A Person shall be deemed the "Beneficial
Owner"of, and shall be deemed to "beneficially own," securities pursuant
to Rule 13d-3 under the Exchange Act as in effect on the Effective Date.
"Board" has the meaning accorded such term in the second "Whereas"
clause of this Agreement.
"Bonus Amount" has the meaning accorded such term in Section 2.03.
"Cause" means the occurrence of any one or more of the following:
(a) A demonstrably willful and deliberate material act or failure to act
by Executive (other than as a result of incapacity due to physical or mental
illness) which is committed in bad faith, without reasonable belief that such
action or inaction is in the best interests of the Company, and which act or
inaction is not remedied within fifteen business days of written notice from the
Company;
(b) Executive's gross negligence in the performance of Executive's duties
hereunder; or
(c) Executive's conviction for committing an act of fraud, embezzlement,
theft, or any other act constituting a felony involving moral turpitude.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for the reasons set forth in clause (a) or (b) of this definition
unless and until there shall have been delivered to Executive a copy of a
resolution duly adopted by the affirmative vote (which cannot be delegated) of
not
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less than three-quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (and after reasonable notice to
Executive an opportunity for Executive, together with Executive's counsel, to be
heard before the Board), finding that, in the good faith opinion of the Board,
Executive is guilty of conduct set forth above in such clauses (a) or (b) of
this definition and specifying the particulars thereof in detail.
"Change in CEO" means the first appointment or election after the
Effective Date of a Chief Executive Officer of the Company not serving in
such position immediately prior to such appointment or election.
"Change in Control" means, and shall be deemed to have occurred upon
any occurrence of any of the following events:
(a) Any Person (other than an Excluded Person) acquires,
together with all Affiliates and Associates of such Person,
Beneficial Ownership of securities representing 25% or more of the
combined voting power of the Voting Stock then outstanding, unless
such Person acquires Beneficial Ownership of 25% or more of the
combined voting power of the Voting Stock then outstanding solely as
a result of an acquisition of Voting Stock by the Company which, by
reducing the Voting Stock outstanding, increases the proportionate
Voting Stock beneficially owned by such Person (together with all
Affiliates and Associates of such Person) to 25% or more of the
combined voting power of the Voting Stock then outstanding;
provided, that if a Person shall become the Beneficial Owner of 25%
or more of the combined voting power of the Voting Stock then
outstanding by reason of such Voting Stock acquisition by the
Company and shall thereafter become the Beneficial Owner of any
additional Voting Stock which causes the proportionate voting power
of Voting Stock beneficially owned by such Person to increase to 25%
or more of the combined voting power of the Voting Stock then
outstanding, such Person shall, upon becoming the Beneficial Owner
of such additional Voting Stock, be deemed to have become the
Beneficial Owner of 25% or more of the combined voting power of the
Voting Stock then outstanding other than solely as a result of such
Voting Stock acquisition by the Company;
(b) During any period of 24 consecutive months (not including
any period prior to the Effective Date), individuals who at the
beginning of such period constitute the Board (and any new Director,
whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds
of the Directors then still in office who either were
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Directors at the beginning of the period or whose election or
nomination for election was so approved), cease for any reason to
constitute a majority of Directors then constituting the Board;
(c) A reorganization, merger or consolidation of the Company
is consummated, in each case, unless, immediately following such
reorganization, merger or consolidation, (i) more than 50% of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners of the Voting Stock
outstanding immediately prior to such reorganization, merger or
consolidation, (ii) no Person (but excluding for this purpose any
Excluded Person and any Person beneficially owning, immediately
prior to such reorganization, merger or consolidation, directly or
indirectly, 25% or more of the voting power of the outstanding
Voting Stock) beneficially owns, directly or indirectly, 25% or more
of, respectively, the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors and (iii) at least a majority of the
members of the board of directors of the corporation resulting from
such reorganization, merger or consolidation were members of the
Board at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation;
(d) The shareholders of the Company approve (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the
Company, other than to any corporation with respect to which,
immediately following such sale or other disposition, (A) more than
50% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners of the
Voting Stock outstanding immediately prior to such sale or other
disposition of assets, (B) no Person (but excluding for this purpose
any Excluded Person and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or
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indirectly, 25% or more of the voting power of the outstanding
Voting Stock) beneficially owns, directly or indirectly, 25% or more
of, respectively, the then outstanding shares of common stock of
such corporation or the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors and (C) at least a majority
of the members of the board of directors of such corporation were
members of the Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other
disposition of assets of the Company; or
(e) The occurrence of any transaction or event that the Board,
in its sole discretion, designates a "Change in Control".
Notwithstanding the foregoing, in no event shall a "Change in Control" be
deemed to have occurred (i) as a result of the formation of a Holding
Company, or (ii) with respect to Executive, if Executive is part of a
"group," within the meaning of Section 13(d)(3) of the Exchange Act as in
effect on the Effective Date, which consummates the Change in Control
transaction. In addition, for purposes of the definition of "Change in
Control" a Person engaged in business as an underwriter of securities
shall not be deemed to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such Person's participation in good
faith in a firm commitment underwriting until the expiration of forty days
after the date of such acquisition.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning accorded such term in the introductory
paragraph of this Agreement.
"Constructive Event" has the meaning accorded such term in Section
2.01.
"Continuation Period" has the meaning accorded to such term in
Section 2.03.
"Disability" means Long-Term Disability, as such term is defined in
the Disability Plan.
"Disability Plan" means the long-term disability plan (or any
successor disability and/or survivorship plan adopted by the Company) in
which Executive participates, as in effect immediately prior to the
relevant event (subject to changes in coverage levels applicable to all
employees generally covered by such Plan).
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"Effective Date" has the meaning accorded such term in the
introductory paragraph of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excise Tax" has the meaning accorded such term in Section 3.01.
"Excluded Person" means (i) the Company; (ii) any of the Company's
Subsidiaries; (iii) any Holding Company; (iv) any employee benefit plan of
the Company, any of its Subsidiaries or a Holding Company; (v) any Person
organized, appointed or established by the Company, any of its
Subsidiaries or a Holding Company for or pursuant to the terms of any plan
described in clause (iv) or (vi) any Family Stockholder as such term is
defined in the Company's amended and restated by-laws.
"Executive" has the meaning accorded such term in the introductory
paragraph of this Agreement.
"Extended Term" has the meaning accorded such term in Section 1.03.
"Good Reason" means, without Executive's express written consent,
the occurrence of any one or more of the following:
(a) The assignment to Executive of duties inconsistent with
Executive's authorities, duties, responsibilities and status as an
officer of the Company, or a reduction or alteration thereof, in
each case excluding any designated acting or temporary authorities,
responsibilities and status, from those in effect as of the
Reference Date; provided, however, the appointment of a Chief
Operating Officer of the Company or an insubstantial and inadvertent
act that is remedied by the Company promptly after receipt of notice
thereof given by Executive shall not constitute Good Reason;
(b) The Company's requiring Executive to be based at a
location in excess of 35 miles from Executive's principal job
location or office immediately prior to the Reference Date; except
for required travel on the Company's business to an extent
consistent with Executive's business travel obligations immediately
prior to the Reference Date;
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(c) A reduction by the Company of Executive's Base Salary or
total annual target compensation from the highest level at any time
in the year prior to such reduction by more than 10%;
(d) The failure by the Company to keep in effect compensation,
retirement, health and welfare benefits, or perquisite programs
under which Executive receives benefits substantially similar, in
the aggregate, to the benefits under such programs as exist
immediately prior to the Reference Date (other than pursuant to an
equivalent reduction in such benefits of all full-time domestic
employees of the Company who are not subject to a collective
bargaining agreement); or the failure of the Company to meet the
funding requirements, if any, of any of such programs;
(e) Any material breach by the Company of its obligations
under this Agreement or any failure of a successor of the Company to
assume and agree to perform the Company's entire obligations under
this Agreement, as required by Section 4.01 herein, provided that
such successor has received at least ten days written notice from
the Company or Executive of the requirements of Section 4.01; or
(f) The Executive's receipt from the Company at any time
during an Extended Term of written notice pursuant to Section 1.02
to the effect that the term of this Agreement will not be extended
(a "Qualifying Nonrenewal").
"Gross-Up Payment" has the meaning accorded such term in Section
3.01.
"Holding Company" means an entity that becomes a holding company for
the Company or its businesses as a part of any reorganization, merger,
consolidation or other transaction, provided that the outstanding shares
of common stock of such entity and the combined voting power of the then
outstanding voting securities of such entity entitled to vote generally in
the election of directors is, immediately after such reorganization,
merger, consolidation or other transaction, beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Voting Stock
outstanding immediately prior to such reorganization, merger,
consolidation or other transaction in substantially the same proportions
as their ownership, immediately prior to such reorganization, merger,
consolidation or other transaction, of such outstanding Voting Stock.
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"Initial Term" has the meaning accorded such term in Section 1.01.
"Later Payment" has the meaning accorded such term in Section 3.03.
"Medical Plans" means the medical care plans (or any successor
medical plans adopted by the Company) in which Executive participates, as
in effect immediately prior to the relevant event (subject to changes in
coverage levels applicable to all employees generally covered by such
Plans).
"Nonqualifying Event" has the meaning accorded such term in Section
2.01.
"Payment Period" has the meaning accorded such term in Section 2.04.
"Person" means an individual, corporation, partnership, association,
trust or any other entity or organization.
"Qualifying Event" has the meaning accorded such term in Section
2.01.
"Qualifying Nonrenewal" has the meaning accorded such term in clause
(f) of the definition of Good Reason in this Article 6.
"Reference Date" means the later of (x) the Effective Date or (y)
the date 60 days prior to the date of the relevant event, if any, set
forth in the definition of Good Reason.
"Release" has the meaning accorded such term in Section 2.02.
"Release" has the meaning accorded such term in Section 2.03.
"Retirement" shall be determined under guidelines established from
time to time by the Human Resources Committee of the Board.
"Separation Benefits" has the meaning accorded such term in Section
2.04.
"Severance Benefits" has the meaning accorded such term in Section
2.03.
"Stock Plan" has the meaning accorded such term in Section 2.02.
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"Subsidiary" of any Person means any other Person of which
securities or other ownership interests having voting power to elect a
majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Successive Period" has the meaning accorded such term in Section
1.02.
"Tax Preparation Benefits" has the meaning accorded such term in
Section 2.03.
"Termination Date" has the meaning accorded such term in Section
2.02.
"Total Payments" has the meaning accorded such term in Section 3.01.
"2002 Retention Bonus" has the meaning set forth in Section 2.05.
"2003 Retention Bonus" has the meaning set forth in Section 2.05.
"Voting Stock" means securities of the Company entitled to vote
generally in the election of members of the Board.
"Years of Service" has the meaning accorded such term in Section
2.04.
IN WITNESS WHEREOF, the Company and Executive have executed this
Agreement, to be effective as of the day and year first written above.
EXECUTIVE Ingram Micro Inc.
/s/ GUY P. ABRAMO
- ------------------------------- By: /s/ Jerre L. Stead
Guy P. Abramo ------------------------------------
Title: Chairman of the Board
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<PAGE> 22
EXHIBIT A
RELEASE AND COVENANT
This letter sets forth the agreement of Ingram Micro Inc. (the "Company")
and GUY P. ABRAMO ("Executive") relating to the termination of Executive's
employment with Company. Subject to the execution of this Agreement, the parties
hereto agree as follows:
Termination of Employment.
(A). Executive agrees and acknowledges that the termination of his
employment with Company shall be effective as of ___________________, __________
(the "TERMINATION DATE").
(B). Executive acknowledges Executive's obligation to promptly return to
the Company all property of the Company in Executive's possession including,
without limitation, keys, SECUREID card, credit cards, cell phones, pagers,
computers, office equipment, documents and files and instruction manuals on or
before the Termination Date, or earlier if so requested by the Company. After
the Termination Date, the Company shall forward all mail addressed to Executive
to the most recent address provided by Executive to the Company pursuant to
Section 5.01 of the Executive Retention Agreement between the Executive and the
Company dated as of January __, 2000 to which this Agreement is Exhibit A (the
"Retention Agreement").
Mutual Releases.
1. In consideration of the foregoing and the benefits paid and payable to
Executive under the Retention Agreement, Executive hereby waives all claims
against Company, its affiliates and their respective officers, directors and
executives (hereinafter the "RELEASEES"), and releases and discharges the
Releasees from liability for any and all claims and damages that Executive may
have against them as of the date of this Agreement, whether known or unknown,
including, but not limited to, any claims arising out of his employment
relationship with Company or its affiliates or the termination of such
employment, or any violation of any federal, state or local fair employment
practice law, including Title VII of the Civil Rights Act, the Civil Rights Act
of 1991, the Age Discrimination in Employment Act as amended by the Older
Workers' Benefit Protection Act, or any other employee relations statute, rule,
executive order, law or ordinance, tort, express or implied contract, public
policy or other obligations; provided, however, that nothing herein shall be
deemed a waiver or release of Executive's right to enforce the obligations of
Company under this Agreement or
<PAGE> 23
the Retention Agreement or Executive's rights to indemnification to the fullest
extent provided by law or in any applicable certificate of incorporation,
charter or similar document, by-laws or contract.
Executive acknowledges that Executive has had up to 21 days to consider
the terms of this Agreement and is hereby advised by Company to discuss the
terms of this Agreement with an attorney unrelated to Company prior to signing
this Agreement. Executive further acknowledges that Executive is entering into
this Agreement freely, knowingly, and voluntarily, with a full understanding of
its terms. Executive also acknowledges that Executive will have 7 days from the
date he signs this Agreement to revoke the Agreement by notifying the General
Counsel of the Company in writing.
2. In consideration of the performance by Executive of the covenants and
undertakings made herein by Executive, Company on behalf of itself and its
affiliates hereby waives all claims against Executive and releases and
discharges Executive from liability for any and all claims and damages that any
of them may have against Executive as of the date of this Agreement, whether
known or unknown, including Executive's employment relationship with Company or
its affiliates or the termination of such employment; provided, however, that
nothing herein shall be deemed a waiver or release of the right of Company or
its affiliates to enforce the obligations of Executive under this Agreement or
for any claims arising from a breach of Executive's fiduciary duty of loyalty to
the Company or its affiliates.
Waiver. Each of the Company and Executive hereby expressly waives and
relinquishes all rights and benefits under Section 1542 of the California Civil
Code which provides:
"Section 1542. General Release - Claim extinguished. A general release
does not extend to claims which the creditor does not know or suspect to
exist in his favor at the time of executing the release, which if known by
him must have materially affected his settlement with the debtor."
Each of the Company and Executive understands and acknowledges that the
significance and consequences of this waiver of Section 1542 of the Civil Code
is that even if the Company and Executive, as the case may be, should eventually
suffer damages arising out of Executive's employment relationship with the
Company and its affiliates, or termination of such employment, such party will
not be permitted to make any claim for those damages except as expressly
permitted by this Agreement. Furthermore, each of the Company and Executive
acknowledges that such party intends these consequences even as to claims for
injuries and/or damages that may exist as of the date of this Agreement but
which
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Executive or the Company, as the case may be, does not know exist, and which, if
known, would materially affect such party's decision to execute this Agreement.
Cooperation. Executive agrees to cooperate fully with Company and to
provide such information as Company may reasonably request with respect to any
Company-related transaction, investment or other matter in which Executive was
involved in any way while employed by Company.
Confidentiality. Executive acknowledges Executive's obligation not to
disclose, during or after employment, any trade secrets or proprietary and/or
confidential data or records of the Company or its affiliates or to utilize any
such information for priva