MICROAGE
RETENTION AND SEVERANCE PLAN
SECTION 1. GENERAL
Pursuant to order of the United States Bankruptcy Court for the
District of Arizona (the "Court"), MicroAge, Inc. ("MicroAge"), MicroAge
Computer Centers, Inc., MicroAge L&D, L.L.C., MTS Holding Company, MCCI Holding
Company, EC Advantage, Inc., Pinacor, Inc., MicroAge of California, Inc.,
MicroAge Technology Services, L.L.C., Quality Integration Services, L.L.C.,
Complete Distribution, Inc., and Pinacor Logistics Services, Inc. (collectively,
the "Companies" and, individually, the "Company"), hereby establish the MicroAge
Retention and Severance Plan (the "Plan"), effective May 23, 2000 (the "Plan
Date"), to provide retention and severance benefits to eligible employees of the
Companies.
The Plan is intended to constitute a severance pay plan within the
meaning of U.S. Department of Labor Regulation Section 2510.3-2(b).
SECTION 2. DEFINITIONS
For purposes of this Plan, the following terms shall have the meanings
set forth herein:
(a) "BASE SALARY" shall equal the employee's standard scheduled weekly
rate of pay for the employee's position (not to exceed forty (40) hours per week
for hourly employees). Overtime, bonuses, premium pay, incentive pay, and
amounts paid by the Companies or contributed on behalf of a Participant to
pension, welfare and other employee benefit and fringe benefit plans shall not
be taken into account. The Companies' determination of base pay shall be binding
and conclusive.
(b) "CAUSE" shall mean the occurrence of any of the following:
(i) Employee's gross and willful misconduct which is injurious to
the Company;
(ii) Employee's engaging in fraudulent conduct with respect to
the Company's business or in conduct of a criminal nature that may
have an adverse impact on the Company's standing and reputation;
(iii) The continued and unjustified failure or refusal by
employee to perform the duties required of him which failure or
refusal shall not be cured within fifteen (15) days following (A)
receipt by employee of written notice from MicroAge specifying the
factors or events constituting such failure or refusal, and (B) a
reasonable opportunity for employee to correct such deficiencies; or
(iv) Employee's use of drugs and/or alcohol in violation of then
current Company policy.
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(c) "ESSP" shall mean the MicroAge, Inc. Executive Supplemental Savings
Plan or the Pinacor Inc. Executive Supplemental Savings Plan.
(d) "GOOD REASON" shall mean the occurrence of any of the following:
(i) The Company's failure to elect or reelect or to appoint or
reappoint the employee to offices, titles or positions carrying
comparable or better authority, responsibilities, dignity and
importance to that of employee's offices and positions as of the Plan
Date (provided that the failure to appoint. reappoint, elect or
reelect employee as a director of the Company or to any position on
the Company's board of directors, shall not constitute "Good Reason");
(ii) Material change by the Company in employees' function,
duties or responsibilities (including reporting responsibilities)
which would cause employee's position with the Company to become of
less dignity, responsibility and importance than those associated with
his functions, duties or responsibilities as of the Plan Date;
(iii) Employee's Base Salary is reduced by the Company (unless
such reduction is pursuant to a uniform reduction in salary for all
employees in the same Tier) or there is a material reduction in the
benefits that are in effect for the employee on the Plan Date (unless
such reduction is pursuant to a uniform reduction in benefits for all
employees in the same Tier);
(iv) Except with employee's prior written consent, relocation of
employee's principal place of employment to a location outside of
Maricopa County, Arizona, or requiring employee to travel on the
Company's business materially more often than was required prior to
the Plan Date; or
(v) The failure by the Company to obtain the assumption by
operation of law or otherwise of this Plan by any entity which is the
surviving entity in any merger or other form of corporate
reorganization involving the Company or by any entity which acquires
all or substantially all of the Company's assets.
(e) "PARTICIPANT" shall mean those employees of the Companies who are
eligible to be covered by the Plan pursuant to Section 3.
(f) "YEAR OF SERVICE" shall mean each completed consecutive twelve (12)
month period measured from the employee's date of hire and the anniversaries
thereof. No credit shall be given for partial years of service. The Companies'
determination of an employee's years of service shall be binding and conclusive.
SECTION 3. ELIGIBILITY
(a) COVERED EMPLOYEES. Except as provided in Section 3(b), all
full-time employees of any of the Companies shall be covered by the Plan.
(b) EXCLUSIONS. The following employees shall not be covered by the
Plan:
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(i) An employee in a temporary job classification;
(ii) A part-time employee (i.e., those employees who are
regularly scheduled to work less than forty (40) hours per week);
(iii) An employee whose employment terminated before the Plan
Date; and
(iv) Any person who is classified by the Company as (i) a
consultant, (ii) an employee leased from any organization other than
one of the Companies, (iii) an independent contractor or an employee
of an independent contractor, or (iv) employed pursuant to a written
contract for a fixed term (irrespective of extensions or renewals). If
the Company modifies its classification or treatment of such an
individual, the modification shall be applied prospectively only, in
which case the modification will be effective as of the date specified
by the Company. If an individual is characterized as a common law
employee of a Company by a governmental agency or court but not by the
Company, such individual shall be treated as an employee who has not
been designated for participation in this Plan.
(v) Any employee for whom the Company has accepted, with Court
approval, his existing employment contract.
(c) CLASSIFICATIONS. For purposes of this Plan, employees of the
Companies shall be grouped according to their job classification levels in the
following Tiers:
Tier 1: Executives
Tier 2: Officers (other than Executives)
Tier 3: Directors
Tier 4: Managers
Tier 5: Associates
All determinations of an employee's Tier level and job classification shall be
determined by MicroAge in its discretion and according to the Companies'
organizational charts, standard policies, and procedures.
SECTION 4. RETENTION AND SEVERANCE BENEFITS
(a) ENTITLEMENT TO RETENTION BENEFITS. Only those Participants who
commenced employment with the Company prior to April 13, 2000, shall be eligible
for Retention Benefits. Any eligible Participant who is in Tier 3, 4, or 5 shall
become entitled to Retention Benefits as described in Section 4(b) if he is
actively employed by the Company on the six (6) month anniversary of the Plan
Date. Any eligible Participant shall also become entitled to Retention Benefits
as described in Section 4(b) if he is actively employed by the Company on the
twelve (12) month anniversary of the Plan Date. Alternatively, any eligible
Participant shall be entitled to the six (6) and twelve (12) month Retention
Benefits as described in the preceding sentences if the Participant is actively
employed by the Company on the earlier of (i) the effective date of a plan of
reorganization as confirmed by the Court, or (ii) the date on which the pending
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bankruptcy action for the Company is converted to Chapter 7 of the United States
Bankruptcy Code. Retention Benefits that accrue pursuant to this Section 4 shall
be paid as described in Section 6.
(b) AMOUNT OF RETENTION BENEFITS. The following schedule shall apply
for purposes of determining an eligible Participant's Retention Benefit:
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EMPLOYEE TIER RETENTION BENEFIT RETENTION BENEFIT AT
AT THE 6 MONTH THE 12 MONTH
ANNIVERSARY OF ANNIVERSARY OF PLAN DATE
PLAN DATE
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Tier 1 $0 75% of one year's Base
Salary
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Tier 2 $0 25% of one year's Base
Salary
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Tier 3 6% of one year's Base 9% of one year's Base
Salary Salary
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Tier 4 3% of one year's Base 7% of one year's Base
Salary Salary
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Tier 5 3% of one year's Base 7% of one year's Base
Salary Salary
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Notwithstanding anything to the contrary in this Plan, Participants who
are subject to Section 5 shall have the amount of their Retention Benefit
determined in accordance with Section 5(b).
(c) ENTITLEMENT TO SEVERANCE BENEFITS. A Participant will be entitled
to Severance Benefits under this Section 4 if all of the following are
satisfied:
(i) The Participant's employment is terminated, such that the
Participant is no longer employed by any of the Companies;
(ii) The Participant executes a waiver and release agreement in
such form and containing such terms and conditions, including but not
limited to, the waiver and release of all claims related to employment
separation, as may be acceptable to MicroAge (the "Waiver and
Release"); and
(iii) The Participant's termination is such as to make the
Participant eligible for Severance Benefits in accordance with the
following schedule:
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EMPLOYEE TIER MANNER OF ELIGIBLE FOR SEVERANCE
TERMINATION BENEFITS?
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Tiers 1 - 5 Terminated by the Yes
Company
without Cause
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Tiers 1 - 5 Terminated by the No
Company
with Cause
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Tier 1 Employment Yes
Terminated by
the Participant
with Good Reason
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Tiers 1 Employment Terminated No
by the
Participant without
Good Reason
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Tiers 2 - 5 Employment Terminated by No
the Participant with or
without Good Reason
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Tiers 1 - 5 Employment Terminated by No
reason of death
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Notwithstanding anything to the contrary in this Plan, any
Participant who fails to execute a Waiver and Release shall be
ineligible for Severance Benefits under this Plan. Severance Benefits
payable pursuant to this Section 4 shall be paid as described in
Section 6.
(d) AMOUNT OF SEVERANCE BENEFITS. Subject to Section 4(g), each
Participant who satisfies the requirements for eligibility for Severance
Benefits pursuant to Section 4(c) shall receive an amount determined as follows:
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EMPLOYEE TIER SEVERANCE BENEFIT
--------------------------------------------------------------
Tier 1 One month Base Salary per Year of Service,
minimum of three months
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Tier 2 Three months Base Salary
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Tier 3 Four weeks Base Salary plus one week Base
Salary per Year of Service, minimum of four
and maximum of eight weeks Base Salary
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Tier 4 and 5 One week Base Salary per Year of Service,
minimum of three weeks Base Salary and
maximum of eight weeks Base Salary
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(e) MEDICAL AND DENTAL BENEFITS. Each Participant who satisfies the
eligibility requirements of Section 4(c) shall remain eligible for coverage
under any medical plan and dental plan maintained by the Company which cover
that Participant and his dependents. The Company shall continue to pay the
employer premium contribution for such coverage in accordance with the following
schedule:
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EMPLOYEE TIER PREMIUM CONTINUATION PERIOD
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Tier 1 One month of benefit plan contribution per
Year of Service, minimum of three months
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Tier 2 Three months of benefit plan contribution
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Tier 3 Four weeks benefit plan contribution plus
one additional week per Year of Service,
minimum of four and maximum of eight of
contributions
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Tier 4 and 5 One week of benefit plan contribution per
Year of Service, minimum of three weeks and
maximum of eight weeks of contributions
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The Participant and his dependents shall be responsible for paying the
full employee contribution for coverage under the Company's medical plan and
dental plan. Any period of coverage during which the Company continues to pay
the employer premium contribution shall count towards the Company's obligation
to provide COBRA continuation coverage. The Participant and his dependents shall
be responsible for paying the full cost of any additional continued coverage
under the Company's medical plan and dental plan elected under COBRA.
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(f) OUTPLACEMENT BENEFITS. Each Participant who satisfies the
eligibility requirements of Section 4(c) shall be entitled to outplacement
services as described in this Section 4(f), which shall be provided by an
outplacement company designated by MicroAge. The cost of twelve (12) months of
outplacement services provided to Participants in Tier 1 shall be borne by the
Company. The cost of three (3) to six (6) months (at the Company's discretion)
of outplacement services provided to Participants in Tier 2 shall be borne by
the Company. The cost of two (2) months of outplacement services for
Participants in Tier 3 shall be borne by the Company. The cost of one month of
outplacement services for Participants in Tier 4 shall be borne by the Company.
Participants in Tier 5 shall be entitled to attend an outplacement seminar paid
for by the Company and provided by an outplacement company designated by
MicroAge.
(g) OFFSET FOR OTHER PAYMENTS. Notwithstanding any other provision of
this Plan to the contrary, any Severance Benefits payable to any employee
pursuant to Section 4(d) of this Plan shall be reduced by the amount of any
severance-type payments paid to the Participant by any of the Companies pursuant
to any other Plan or arrangement or any agreement between the Participant and
the Company.
(h) VACATION PAY. Each Participant who satisfies the eligibility
requirements of Section 4(c), also shall receive payment from the Company (as
described in Section 6) for any accrued but unused vacation time, in accordance
with the Company's standard policies and procedures.
SECTION 5. PROVISIONS FOR ESSP PARTICIPANTS
Notwithstanding anything to the contrary herein, Participants who were
also participants in the ESSP may elect to receive the benefits described in
this Section 5; provided that an election to receive benefits pursuant to this
Section 5 shall be deemed to satisfy any and all obligations the Company may
have to the Participant under the ESSP.
(a) ADDITIONAL SEVERANCE BENEFIT. Subject to Section 5(e), if the
Participant became eligible for and received a Severance Benefit pursuant to
Sections 4(c) and (d), but is not entitled to a Retention Benefit pursuant to
Section 4(a), then the Participant may elect to receive an additional severance
benefit equal to:
(i) The "final value" of the Participant's accounts in the ESSP;
MINUS
(ii) The Severance Benefit actually received by the Participant
pursuant to Section 4(d).
(b) ALTERNATIVE RETENTION BENEFIT. Subject to Section 5(e), if the
Participant is entitled to a Retention Benefit pursuant to Section 4(a), then
the Participant may elect to receive an alternative retention benefit in lieu of
the total Retention Benefits called for by Section 4(b). The alternative
retention benefit shall be equal to the greater of:
(i) The final value of the Participant's accounts in the ESSP; or
(ii) The total amount of the Retention Benefits to which the
Participant is entitled pursuant to Section 4(b).
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(c) NO ENTITLEMENT TO BENEFITS. If the Participant is entitled to
neither Rentention Benefits nor Severance Benefits pursuant to Section 4, then
the Participant shall not be entitled to any benefits pursuant to this Section
5.
(d) FINAL VALUE OF ESSP ACCOUNT. The "final value" of a Participant's
account in the ESSP shall be the value of the account, determined in accordance
with the provisions of the ESSP, as of the earlier of (i) the Participant's
termination of employment, or (ii) the date on which the value of the
Participant's account in the ESSP is "frozen" due to the termination and/or
liquidation of the ESSP or an amendment to the ESSP which provides for the
freezing of the accounts. In any case, the "final value" of a Participant's
account in the ESSP shall include any principal amount actually distributed to
the Participant if such amount is recoverable by the ESSP pursuant to Section
5.2(d) of the ESSP.
(e) DISTRIBUTIONS OF FINAL VALUE OF ESSP ACCOUNT. If a Participant is
entitled to and elects to receive an additional severance benefit pursuant to
Section 5(a) or the alternative retention benefit pursuant to Section 5(b), and
an amount is recoverable from the Participant pursuant to Section 5.2(d) of the
ESSP, the Participant will not be required to return the amount that is
recoverable. Instead, such amount shall be deemed to be "repaid" to the ESSP by
the Participant and then deemed to be paid by the Company to the Participant
pursuant to Sections 5(a) or (b).
(f) TIME FOR PAYMENT. Any benefit payable pursuant to this Section 5
shall be payable at such time as Retention Benefits are payable pursuant to
Section 6(c).
(g) TIME FOR ELECTION. An election to receive benefits under this
Section 5 must be submitted in writing to the Company by the Participant no
later than thirty (30) days after the date on which the Participant first
becomes entitled to Retention Benefits or Severance Benefits pursuant to
Sections 4(a) or 4(c).
SECTION 6. PAYMENT
(a) FORM OF PAYMENT. The Retention Benefits payable to a Participant
under Section 4 shall be paid to him in lump sums, at such times as are
described in Section 6(c). The Severance Benefit payable to a Participant under
Section 5 shall be paid to him in a lump sum or, for Participants in Tiers 1 or
2, may be paid in substantially equal increments during the six (6) month period
immediately following the Participant's separation from employment, in the
Company's sole and absolute discretion. No actuarial adjustment, including an
adjustment for actual or imputed earnings, shall be required in the event the
Company elects to pay Severance Benefits in a lump sum or in installments.
Notwithstanding the foregoing, the Company may, in its discretion,
apply amounts payable under this Plan to any debts owed to the Company by the
Participant at the time of employment separation. In addition, the Company shall
have the right to refuse to pay and/or recover amounts previously paid to the
Participant under the Plan if the Participant breaches his Waiver and Release.
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(b) TIME FOR PAYMENT FOR SEVERANCE BENEFITS. Payment of Severance
Benefits and vacation pay due to a Participant pursuant to Sections 4(d) and (h)
of the Plan shall commence within an administratively feasible time after a
Participant's termination.
(c) TIME FOR PAYMENT OF RETENTION BENEFITS. Payment of Retention
Benefits due to a Participant pursuant to Section 4(b) of the Plan shall be paid
as soon as administratively feasible after the first to occur of (i) the
effective date of a plan of reorganization as confirmed by the Court, (ii) the
date on which the pending bankruptcy action for the Company is converted to
Chapter 7 of the United States Bankruptcy Code, or (iii) according to the
following schedule:
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EMPLOYEE TIER RETENTION PAYMENT
----------------------------- ----------------------------------------
Tier 1 1/4 of the amount of the Retention
Benefit that accrues on the 12 month
anniversary of Plan Date is payable as
soon as administratively feasible after
the 12 month anniversary of the Plan
Date
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Tiers 2-5 1/2 of the amount of the Retention
Benefit that accrues on the 12 month
anniversary of Plan Date is payable as
soon as administratively feasible after
the 12 month anniversary of the Plan
Date
----------------------------- ----------------------------------------
Tiers 3-5 1/2 of the amount of the Retention
Benefit that accrues on the 6 month
anniversary of Plan Date is payable as
soon as administratively feasible after
the 6 month anniversary of the Plan Date
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Any Retention Benefits that are not paid pursuant to the above schedule
shall be paid in accordance with clauses (i) and (ii) of the first sentence of
this Section 6(c).
Participants who are entitled to Retention Benefits pursuant to Section
4(a) but whose employment with the Company has terminated prior to the plan
confirmation or conversion to Chapter 7 will be paid in the same manner as the
active employee-participants.
(d) METHOD OF PAYMENT. All benefits under this Plan shall be paid by
direct deposit or Company check mailed to the Participant at the last known
address of the Participant in the possession of the Company. The Company shall
withhold from any payments hereunder any taxes required to be withheld under
Federal or state law.
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SECTION 7. PAYMENT IN THE EVENT OF DEATH
Upon the death of a Participant prior to receipt of the total Severance
Benefit payable to him under Section 4(d), any remaining payments to the
deceased Participant shall be paid to the spouse to whom the Participant was
married on the date of his death. If the Participant was not married at the time
of his death, such benefits shall be paid to the Participant's estate. Medical
and/or dental coverage for the deceased Participant's dependents under Section
4(e) shall not be affected by the Participant's death and shall continue to be
provided to Participant's dependents in accordance with Section 4(e).
Outplacement benefits provided or made available to a Participant under Section
4(f) shall terminate upon the Participant's death.
No Retention Benefits shall be payable if a Participant dies prior to
the date on which he would become entitled to Retention Benefits. If a
Participant dies after such date, but prior to receipt of the total amount
payable to him under Sections 4(b), any remaining Retention Benefits payable to
the deceased Participant shall be paid in accordance with the preceding
paragraph.
SECTION 8. CLAIMS
Any employee, Participant, beneficiary or any other person claiming
benefits, eligibility, participation or any other right or interest under the
Plan (but not with respect any right to employment with the Company) shall be
entitled to file a written claim of a disputed, denied or unpaid benefit with
the Plan Administrator, or designee. A written notice of the disposition of any
such claim shall be furnished to the claimant within thirty (30) days after the
claim is filed with the Plan Administrator, or designee, provided that the
Director or designee shall be entitled to additional time to decide the claim if
he notifies the claimant in writing of the need for additional time and advises
the claimant of when he expects to make his determination. The notice of
disposition shall refer, if appropriate, to pertinent provisions of the Plan,
shall set forth in writing the reasons for denial of the claim if the claim is
denied in whole or in part, and, where appropriate, shall explain how the
claimant can perfect the claim.
If the claim is denied, the claimant shall also be notified in writing
that a further review procedure is available. Thereafter, within sixty (60) days
after receiving written notice of the Director's or designee's disposition of
the claim, the claimant may submit a written request for review of that decision
to the Plan Administrator. In connection therewith, the claimant may submit a
written statement of his claim and the reasons for granting the claim to the
Plan Administrator. If the claimant does not submit a written request for review
within sixty (60) days after receiving written notice of the Director's
disposition of the claim, the claimant shall be deemed to have accepted his
written disposition, unless the claimant shall have been physically
incapacitated so as to be unable to request review within the sixty (60) day
period. A decision on review shall be rendered in writing by the Plan
Administrator not later than forty-five (45) days after review, and a written
copy of such decision shall be delivered to the claimant. If special
circumstances require an extension of the normal review period, the Plan
Administrator shall so notify the claimant. In any event, if an appeal is not
determined within ninety (90) days after submission for review, it shall be
deemed to be denied. The Plan Administrator shall have the right to request and
receive from a claimant such additional information, documents or other evidence
as he may reasonably require.
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To the extent permitted by law, a decision on review by the Plan
Administrator shall be binding and conclusive upon all persons whomsoever and
completion of the claims procedures described in this Section 8 shall be a
mandatory precondition that must be complied with prior to commencement of a
legal or equitable action in connection with the Plan by a person claiming
rights under the Plan, or by another person claiming rights through such a
person. The Plan Administrator may, in its sole discretion, waive compliance
with these procedures as a mandatory precondition to such an action.
SECTION 9. ASSIGNMENT OF BENEFITS
No Participant or beneficiary of a Participant shall have any right to
assign, pledge, hypothecate, anticipate or in any way create a lien upon any
amounts payable hereunder. No amounts payable hereunder shall be subject to
assignment or a transfer or otherwise be alienable, either by voluntary or
involuntary act or by operation of law, except as may be otherwise required by
law in connection with marital, dissolution or child support obligations, or be
subject to attachment, execution, garnishment, sequestration or other seizure
under any legal, equitable or other process. Notwithstanding anything in this
Plan or this Section 9 to the contrary, the Company may apply any amounts
payable under this Plan to any debts owed to the Company by the Participant at
the time of the Participant's separation, unless the Participant makes other
arrangements satisfactory to the Company to pay such debts.
SECTION 10. NO RIGHT TO EMPLOYMENT OR REEMPLOYMENT
Nothing in this Plan shall be deemed to give any person the right to be
retained in the service of the Company or interfere with the right of the
Company to discharge any person for any or no reason. Reemployment of a
Participant is not guaranteed as a result of that person's participation in this
Plan, and any reemployment shall be in accordance with and subject to the
Company's employment policies and procedures.
SECTION 11. PRIOR ARRANGEMENTS
This instrument, which sets forth all of the provisions of the Plan,
shall supersede any and all prior oral or written contracts, negotiations,
commitments, understandings and writings, including, but not limited to, the
Company's severance policies in effect as of the Plan Date, with respect to
severance benefits for Participants; provided that (i) any employment agreements
accepted by the Company (with the approval of the Court), shall survive, and
(ii) the Plan shall not be construed to limit, replace or supersede any
agreement or policy regarding non-competition, non-solicitation or
non-disclosure.
SECTION 12. PLAN ADMINISTRATION
MicroAge, or its designee shall be the "Plan Administrator" for the
Plan. The Plan Administrator shall have power and authority to take such actions
it determines, in its discretion, to be necessary or appropriate for the
administration of the Plan, including, but not limited to, the power and
discretion to construe and interpret the Plan, to decide eligibility to
participate, to decide the amount and form of payment of severance payments
payable to any Participant and to decide claims in accordance with Section 8.
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SECTION 13. MISCELLANEOUS
(a) GOVERNING LAW. This program shall be interpreted and construed
under the laws of the State of Arizona unless otherwise required by the Employee
Retirement Income Security Act of 1974, as amended.
(b) SUCCESSORS AND ASSIGNS. This Plan shall be binding upon the Company
and any and all of its successors, assigns and transferees.
(c) FUNDING. Benefits payable under the Plan shall constitute an
unfunded general obligation of the Company payable from its general assets, and
the Company shall not be required to establish any special fund or trust for
purposes of paying benefits under the Plan. No Participant shall have any vested
right to any particular assets of the Company as a result of participation in
the Plan, and each Participant shall be a general creditor of the Company.
(d) NO DUTY TO MITIGATE. A Participant shall not be required to
mitigate the amount of his Severance Benefit by securing other employment or
otherwise. Severance Benefits shall not be reduced by reason of the Participant
securing other employment or for any other reason.
(e) CONSTRUCTION. The masculine gender, where appearing in this Plan,
shall include the feminine gender (and vice versa), and the singular shall
include the plural, unless the context clearly indicates to the contrary. As
used herein, "Company" shall generally refer to MicroAge, unless context
indicates that "Company" refers to the entity employing the Participant.
Headings and subheadings are for the purpose of reference only and are not to be
considered in construction of this Plan. If any provision of this Plan is deemed
to be for any reason invalid or unenforceable, the remaining provisions of this
Plan shall continue in full force and effect.
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