SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended February 3, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to Commission file number 0-15991
INTELLIGENT ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2208404
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
411 Eagleview Boulevard, Exton, PA 19341
(Address of principal executive offices, including zip code)
(610)458-5500
(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:
Common Stock, $.01 Par Value
[Title of Class]
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
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of April 8, 1996:
Common Stock, $.01 Par Value - $190,632,930
The number of shares outstanding of the issuer's common stock as of
April 8, 1996:
Common Stock, $.01 Par Value - 34,536,731
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 the 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. [X]
<PAGE>
The following items were to be incorporated by reference from the
Company's Proxy Statement for the 1996 Annual Shareholders' Meeting and are
now filed by this Amendment on Form 10-K/A to the Company's Annual Report on
Form 10-K.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The following table sets forth certain information regarding the
directors of the Company. Information regarding the executive officers of
the Company can be found in Item 1 of the Company's Form 10-K filed on May 3,
1996.
Term Expires at
Name Age Annual Meeting in
---------------------------- ----- -----------------
Christopher T.G. Fish 53 1996
Gregory A. Pratt 47 1996
Richard D. Sanford 52 1996
Roger J. Fritz 67 1997
Arnold S. Hoffman 60 1997
John A. Porter 52 1997
Alex A.C. Wilson 59 1997
Barry M. Abelson 50 1998
William E. Johnson 54 1998
William L. Rulon-Miller 47 1998
Christopher T.G. Fish has been a director of the Company since its
incorporation in 1982. For more than five years, Mr. Fish has been a
principal of Sprint Investments, S.A., an investor company which is a holder
of the Company's Common Stock. Mr. Fish resides in the Channel Islands, U.K.
and is a citizen of the United Kingdom.
Gregory A. Pratt has been a director of the Company since May 1994.
Mr. Pratt joined the Company in March 1992 as Executive Vice President and
was appointed to the position of President and Chief Operating Officer
shortly thereafter. Mr. Pratt resigned as President and Chief Operating
Officer and was elected Executive Vice President in April 1996. Prior to
joining the Company, Mr. Pratt served as President of Atari Computer
Corporation and Vice President of Finance and Chief Financial Officer of
Atari Corporation. He also served on the Board of Directors of Atari
Corporation and was a member of that Board's Executive Committee.
Richard D. Sanford has been the Company's Chairman and Chief Executive
Officer since he founded the Company in May 1982. Mr. Sanford was named
President of the Company in April 1996.
Roger J. Fritz has been a director of the Company since its
incorporation in 1982. For more than five years, Mr. Fritz has been
President of Organization Development Consultants of Naperville, Illinois, an
organizational development/management consulting firm.
Arnold S. Hoffman has been a director of the Company since August
1985. In January 1992, Mr. Hoffman became Senior Managing Director of Legg
Mason Wood Walker Incorporated, an investment banking firm. Prior to that,
since September 1990, Mr. Hoffman was Chairman of the Middle Market Group,
L.P., an investment banking firm. Mr. Hoffman also serves on the Board of
Directors of SunSource L.P.
John A. Porter has been a director of the Company since May 1994. Mr.
Porter has been Vice Chairman of LDDS/Metro Media Communications, a long-
distance carrier, since the fall of 1993. From 1988 until its merger with
Metro Media Communications in 1993, he served as Chairman of LDDS. Mr. Porter
is the president and sole shareholder of PM Restaurant Group, Inc., which filed
a petition under Chapter 11 of the U.S. Bankruptcy Code in March 1995. Mr.
Porter also serves on the Board of Directors of Uniroyal Technology
Corporation.
Alex A.C. Wilson has been a director of the Company since May 1994.
Mr. Wilson has served as Senior Vice President of SCI Systems, a worldwide
contract manufacturing company in the electronics industry, since November
1993, and is General Manager for the European operations. Prior thereto, he
worked for IBM Corporation as Director of Manufacturing and Distribution. In
his 27-year career with IBM Corporation, Mr. Wilson worked in various
capacities. Mr. Wilson resides in Scotland and is a citizen of the United
Kingdom.
Barry M. Abelson has been a director of the Company since January
1989. In May 1992, he joined the law firm of Pepper, Hamilton & Scheetz,
Philadelphia, Pennsylvania, as a partner. Prior thereto, Mr. Abelson had
been a partner of the law firm of Braemer Abelson & Hitchner, Philadelphia,
Pennsylvania (and its predecessor firms). During the fiscal year ended
February 3, 1996 ("fiscal year 1995"), Pepper, Hamilton & Scheetz provided
legal services to the Company. See "Certain Relationships and Related
Transactions." Mr. Abelson also serves on the Board of Directors of
Covenant Bank for Savings.
William E. Johnson has been a director of the Company since November
1994. He has been President of William E. Johnson Associates, a private
investment company, since 1993. From 1986 to 1992, Mr. Johnson served as
Chairman and CEO of Scientific Atlanta, a telecommunications company.
William L. Rulon-Miller serves as Senior Vice President and
Co-Director of Corporate Finance for Janney Montgomery Scott Inc., an invest-
ment banking firm with which he has held several positions since 1979. Mr.
Rulon-Miller was a director of the Company from April 1983 until December 1986,
and was re-elected to the Board in November 1987. Mr. Rulon-Miller also serves
on the Board of Directors of Mothers Work, Inc.
The Company's Board of Directors held eleven meetings and acted by
written consent three times during fiscal year 1995. During fiscal year
1995, each member of the Board attended at least 75% of the aggregate
meetings of the Board and its Committees for which he is a member, except
Messrs. Porter and Wilson and James M. Ciccarelli, a former director of the
Company who resigned on March 31, 1996.
The Board of Directors has established Audit, Compensation and Stock
Option, Investment and Finance, and Executive Committees to devote attention
to specific subjects and to assist in the discharge of its responsibilities.
The functions of those committees, their current members and the number of
meetings held during fiscal year 1995 are described below. The Board of
Directors has not established a Nominating Committee.
Audit Committee. The Audit Committee is currently composed of
Messrs. Fish, Fritz, Hoffman and Rulon-Miller. The functions of the Audit
Committee include the recommendation and selection of independent accountants,
the review of audit results and the evaluation of internal accounting
procedures of the Company. There were two meetings of the Audit Committee
during fiscal year 1995.
Compensation and Stock Option Committee. The Compensation and Stock
Option Committee is currently composed of Messrs. Abelson, Fritz, Hoffman and
Rulon-Miller. The Compensation and Stock Option Committee is responsible for
determining the annual salary, bonus and incentive compensation of the
Company's executive officers and, on the basis of recommendations received
from executive officers, awarding incentive compensation in the form of stock
options to the Company's employees generally. The Report of the Compensation
and Stock Option Committee is included later in this Form 10-K/A. The
Compensation and Stock Option Committee acted by written consent seven times
during fiscal year 1995.
Investment and Finance Committee. The Investment and Finance
Committee is currently composed of Messrs. Abelson, Fish, Hoffman, Rulon-Miller
and Pratt. The functions of the Investment and Finance Committee, which did
not meet formally during fiscal year 1995, is to review and make recommendations
to the Board of Directors as to available investment opportunities to the
Company as well as reviewing the Company's investment policies generally.
Executive Committee. The Executive Committee is currently composed of
Messrs. Abelson, Fish, Fritz, Hoffman, Johnson, Porter, Rulon-Miller, Sanford
and Wilson, and has the authority of the Board of Directors in the management
of the business and affairs of the Company, subject to applicable legal
limitations. The Executive Committee held two meetings and acted by written
consent two times during fiscal year 1995.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports
of ownership and reports of changes in ownership with the Securities and
Exchange Commission (the "SEC"). Such persons are required by SEC regulation
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it with
respect to fiscal year 1995, or written representations from certain
reporting persons, the Company believes that all filing requirements
applicable to its directors, officers and persons who own more than 10% of a
registered class of the Company's equity securities have been met and were
filed on a timely basis.
Item 11. EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation paid during the years ended February 3, 1996, January 28, 1995,
and January 29, 1994, to the Company's Chief Executive Officer and each of
the Company's four other most highly compensated executive officers based on
salary and bonus earned during fiscal year 1995 (the "named executive
officers").<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-term
Compensation
Awards
--------------
Securities
Name and Principal Fiscal Annual Compensation Underlying All Other
Position Year Salary($) Bonus($) Options (#)(1) Compensation ($)(2)
- --------------------------- ------ --------- -------- -------------- -------------------
<S> <C> <C> <C> <C> <C>
Richard D. Sanford (3) 1995 $850,000 $ 0 500,000 $ 453,879
Chairman of the 1994 850,000 0 None 496,945
Board, President and 1993 850,000 569,160 450,000 457,205
Chief Executive Officer
Gregory A. Pratt (4) 1995 500,000 0 200,000 8,024
Executive Vice President 1994 500,000 30,000 None 3,178
1993 272,500 410,000 150,000 73,757
Mark R. Briggs (5) 1995 325,000 0 140,000 4,500
Assistant to 1994 325,000 38,500 50,000 3,792
the Chairman 1993 210,000 221,900 10,000 4,513
Timothy D. Cook 1995 250,000 67,500 100,000 1,251
Senior Vice 1994 76,923(6) 90,000 100,000 0
President 1993 -- -- -- --
Thomas J. Coffey 1995 177,846(7) 100,000 100,000 0
Senior Vice President, 1994 -- -- -- --
Chief Financial Officer 1993 -- -- -- --
and Treasurer
______________________________________________________________
(1) The amounts included in this column for fiscal year 1995 includes stock options repriced on February 25, 1995 (Mr. Sanford,
450,000; Mr. Pratt, 150,000; Mr. Briggs, 90,000; and Mr. Cook, 100,000).
(2) Except as indicated below, the amount included in this column for fiscal year 1995 represent the matching contributions under
the Company's 401(k) Plan (Mr. Sanford, $4,620; Mr. Pratt, $2,024; Mr. Briggs, $4,500; and Mr. Cook, $1,251) and directors' fees
(Mr. Sanford $7,000; and Mr. Pratt $6,000). The Company is a party to "split dollar" life insurance agreements with a trust
established by Mr. Sanford (of which Mr. Abelson, a member of the Board of Directors, is the trustee) under which the trust pays
the portion of the premiums attributable to the death benefit under permanent life insurance policies insuring the life of Mr.
Sanford and owned by the trust, and the Company pays the balance of the premiums. Upon the termination of the agreements
or Mr. Sanford's death, all premiums previously advanced by the Company under the policies are required to be repaid by the
trust. The Company retains an interest in the policies' cash values and excess death benefits to secure the trust's repayment
obligation. Included in the amounts shown for Mr. Sanford in fiscal years 1995, 1994 and 1993, are amounts representing the value
of the premium payments by the Company in such years, projected on an actuarial basis assuming that Mr. Sanford retires at age
65 and the agreements are then terminated. In addition, in fiscal year 1994, the Company entered into a deferred compensation
agreement with Mr. Sanford which provides for the Company to credit $716,715 annually for Mr. Sanford's account for five years
commencing in fiscal year 1994, together with interest at an annual rate of 7%, compounded annually. All credited amounts will
be paid to Mr. Sanford in five equal annual installments commencing in fiscal year 1999. In the event of his death, disability,
termination by the Company without cause or a change of control of the Company, all amounts not yet credited for future periods
will be credited and all credited amounts will be paid to Mr. Sanford.
(3) Mr. Sanford was appointed President in April 1996.
(4) Mr. Pratt resigned as President and Chief Operating Officer in April 1996 and was named Executive Vice President.
(5) Mr. Briggs resigned as Senior Vice President and was named Assistant to the Chairman in April 1996.
(6) Mr. Cook began his employment with the Company on October 10, 1994.
(7) Mr. Coffey began his employment with the Company on July 3, 1995.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Option Grants During Fiscal Year 1995
The following table provides information related to options to purchase Common Stock which were granted to the named
executive officers during fiscal year 1995.
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (1)
- ---------------------------------------------------------------------------------------- ---------------------------
Number of % of Total
Securities Under- Options Granted Exercise or
lying Options to Employees Base Price Expiration
Name Granted (#) in Fiscal Year ($/Sh) Date 5%($) 10%($)
- ------------------- ----------------- ---------------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Sanford 450,000(2) 11.85% $13.25 11/19/03 $755,371 $4,121,612
50,000(3) 1.32% 9.25 05/05/05 290,864 737,106
Gregory A. Pratt 50,000(4) 1.32% 13.25 03/10/03 59,012 386,053
100,000(5) 2.63% 13.25 12/22/03 174,460 935,307
50,000(3) 1.32% 9.25 05/05/05 290,864 737,106
Mark R. Briggs 30,000(6) 0.79% 13.25 12/05/01 9,590 160,425
10,000(4) 0.26% 13.25 03/10/03 11,802 77,211
50,000(7) 1.32% 13.25 02/25/04 93,773 487,000
50,000(3) 1.32% 9.25 05/05/05 290,864 737,106
Timothy D. Cook 100,000(8) 2.63% 13.25 10/10/04 234,353 1,115,029
Thomas J. Coffey 100,000(9) 2.63% 13.375 07/03/05 841,147 2,131,631
(1) The potential realizable value portion of the foregoing table illustrates value that might be realized upon exercise of the
options immediately prior to the expiration of their term, assuming the specified compounded rates of appreciation of the
Company's Common Stock over the term of the options.
(2) The options were originally granted on November 19, 1993, and were repriced on February 25, 1995. The original vesting
schedule was retained and is as follows: 103,334 on November 19, 1994; 103,333 on November 19, 1995; and 243,333 on November
19, 1996.
(3) The options are exercisable in five equal annual installments beginning May 5, 1996.
(4) The options were originally granted on March 10, 1993, and were repriced on February 25, 1995. The original vesting schedule
was retained and the options are exercisable in five equal annual installments beginning March 10, 1994.
(5) The options were originally granted on December 22, 1993, and were repriced on February 25, 1995. The original vesting
schedule was retained and the options are exercisable in three equal annual installments beginning December 22, 1994.
(6) The options were originally granted on December 5, 1991, and were repriced on February 25, 1995. The original vesting
schedule was retained and the options are exercisable in five equal annual installments beginning December 5, 1992.
(7) The options were originally granted on February 25, 1994, and were repriced on February 25, 1995. The original vesting
schedule was retained and the options are exercisable in five equal annual installments beginning February 25, 1995.
(8) The options were originally granted on October 10, 1994, and were repriced on February 25, 1995. The original vesting
schedule was retained and the options are exercisable in five equal annual installments beginning October 10, 1995.
(9) The options are exercisable in five equal installments beginning July 3, 1996.
On March 4, 1996, the Board of Directors of the Company authorized the repricing of all outstanding options with
exercise prices in excess of $8.00 per share to $8.00 per share, held by currently-active employees, except Mr. Sanford, Mr. Pratt
and Mr. Briggs. As of that date, 1,767,447 options were repriced, of which 412,998 were exercisable at February 3, 1996.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises During Fiscal Year 1995 and Option Values at February 3, 1996
The following table provides information related to options to purchase Common Stock which were exercised by the
named executive officers during fiscal year 1995 and the number and value of options held on February 3, 1996.
Value of Unexercised
Number of Unexercised In-the-Money
Options/SARs Options/SARs
Shares Acquired Value at FY-End (#) at FY-End ($)(2)
Name on Exercise(#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------- ---------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Sanford 20,000 $113,750 266,667 293,333 0 0
Gregory A. Pratt 0 0 146,667 203,333 0 0
Mark R. Briggs 0 0 74,000 106,000 0 0
Timothy D. Cook 0 0 20,000 80,000 0 0
Thomas J. Coffey 0 0 0 100,000 0 0
(1) Represents the difference between the exercise price and the market value on the date of exercise.
(2) Value based on the closing price of $4.50 per share on February 2, 1996.
</TABLE>
<TABLE>
<CAPTION>
Ten Year Option Repricing
The following table provides information related to options to purchase Common Stock which were repriced for executive
officers during fiscal year 1995.
Number of
Securities Market Value Exercise Length of
Underlying of Stock Price at New Original Option
Options at Time of Time of Exercise Term at Time
Name Date Repriced(#) Repricing($) Repricing($) Price($) of Repricing
- ---------------------- -------- ------------ ------------- ------------ -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Sanford 02/25/95 450,000 $9.75 $22.875 $13.25 8 years 267 days
Gregory A. Pratt 02/25/95 50,000 9.75 15.00 13.25 8 years 13 days
02/25/95 100,000 9.75 24.875 13.25 8 years 300 days
Mark R. Briggs 02/25/95 30,000 9.75 15.50 13.25 6 years 283 days
02/25/95 10,000 9.75 15.00 13.25 8 years 13 days
02/25/95 50,000 9.75 24.00 13.25 9 years 0 days
Timothy D. Cook 02/25/95 100,000 9.75 16.25 13.25 9 years 228 days
Stephanie D. Cohen 02/25/95 20,000 9.75 14.125 13.25 5 years 335 days
02/25/95 60,000 9.75 15.50 13.25 6 years 283 days
02/25/95 5,000 9.75 15.00 13.25 8 years 13 days
</TABLE>
Director Compensation
Directors received $500 for each Board meeting attended during fiscal
year 1995. Directors are also reimbursed for expenses in attending Board
meetings. There was no additional compensation for participation in or
attendance at Committee meetings.
Employment and Severance Agreements
In connection with Mr. Pratt's assumption of the position of Executive Vice
President of the Company, in May 1996, Mr. Pratt entered into an employment
agreement with the Company. The agreement provides for Mr. Pratt to receive
a base annual salary of $300,000, together with an annual bonus of at least
$200,000 if certain performance objectives are achieved. Mr. Pratt is also
entitled to receive options to purchase 50,000 (subject to adjustment) shares
of common stock of XLConnect Solutions, Inc. ("XLC"), a wholly-owned
subsidiary of the Company, upon the effective date of an initial public
offering of XLC's common stock during Mr. Pratt's employment with the
Company. The agreement provides that if Mr. Pratt's employment is terminated
by the Company without cause (as defined in the agreement), the Company will
be required to pay Mr. Pratt either (i) $500,000, if termination occurs on or
before December 13, 1996, or (ii) his base annual salary as in effect at the
time of termination, if termination occurs thereafter, in either case payable
in twelve monthly installments during the year following termination.
Pursuant to the agreement, Mr. Pratt will be prohibited from competing with
the Company and from soliciting the Company's employees during the one-year
period following the termination of his employment by the Company without
cause.
In March 1996, Mr. Briggs entered into an agreement with the Company
providing for the termination of his employment effective September 30, 1996
and for certain payments and other benefits to be provided by the Company to
Mr. Briggs following the termination of his employment. The agreement
provides that for a period of 18 months following the termination of his
employment, Mr. Briggs will continue to receive payments of his current base
annual salary of $325,000, participate in the Company's medical program, and
vest in his stock options, so long as Mr. Briggs' employment with the Company
is not terminated by the Company for cause on or before September 30, 1996.
During such 18-month period, Mr. Briggs will be prohibited from working for
certain of the Company's competitors, soliciting the Company's customers and
suppliers, or employing or retaining the Company's employees.
In May 1996, Mr. Cook entered into an employment agreement with the Company.
The agreement provides for Mr. Cook to receive a base annual salary of
$300,000 and reflects the grant to Mr. Cook of options to purchase 50,000
shares of Common Stock on April 24, 1996. The agreement provides that if Mr.
Cook's employment is terminated by the Company without cause (as defined in
the agreement), the Company will be required to pay Mr. Cook his base annual
salary as in effect at the time of termination in twelve monthly installments
during the year following termination. Pursuant to the agreement, Mr. Cook
will be prohibited from working for certain of the Company's competitors and
from soliciting the Company's employees during the one-year period following
the termination of his employment by the Company without cause. For purposes
of this agreement, Mr. Cook's employment will be considered to have been
terminated by the Company without cause if, following a change in control (as
defined in the agreement) of the Company, Mr. Cook voluntarily terminates his
employment as a result of a reduction in his base salary or a material
reduction in his duties or responsibilities.
In March 1996, Mr. Coffey entered into an employment agreement with the
Company. The agreement provides for Mr. Coffey to receive a base annual
salary of $350,000, with a minimum bonus of $100,000 for fiscal 1996. The
agreement also provides that if the Company terminates Mr. Coffey's
employment without cause on or before April 1, 1999, the Company will be
obligated to continue to pay Mr. Coffey's base annual salary plus all
benefits then in effect until April 1, 1999, provided that in the event such
termination occurs before April 1, 1998, the amount of total compensation in
excess of $350,000 included in such severance payments will be reduced by all
compensation earned by Mr. Coffey from all sources from the date of such
termination until March 31, 1999. The agreement also provides that if Mr.
Coffey's base annual compensation for fiscal 1997 is less than $450,000 and
he voluntarily terminates his employment after the Company files its Annual
Report on Form 10-K for that fiscal year, then the Company will be obligated
to continue to pay Mr. Coffey's base annual salary plus all benefits then in
effect until April 1, 1999.
Compensation Committee Interlocks and Insider Participation
Mr. Abelson, a member of the Compensation and Stock Option Committee, is a
partner in the law firm of Pepper, Hamilton & Scheetz, which provides legal
services to the Company. See "Certain Relationships and Related Transactions".
Stock Performance Chart
The following chart compares the yearly percentage change in the cumulative
total shareholder return of the Company's Common Stock during the five fiscal
years ended February 3, 1996, with the cumulative total return on the S&P Mid
Cap 400 Index and a peer index comprised of eight companies (1). The
comparison assumes $100 was invested on January 31, 1991, in the Company's
Common Stock and in each of the foregoing indices and assumes reinvestment of
dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, S&P MID-CAP 400, AND PEER GROUP
MEASUREMENT PERIOD INTELLIGENT
FISCAL YEAR ENDED: PEER GROUP MID-CAP 400 ELECTRONICS
JANUARY 1991 $100.00 $100.00 $100.00
JANUARY 1992 187.39 141.57 149.11
JANUARY 1993 233.97 157.63 103.57
JANUARY 1994 363.86 181.53 221.12
JANUARY 1995 193.62 172.82 79.83
JANUARY 1996 205.46 227.21 41.73
(1) Assumes $100 invested on January 31, 1991 in the Company's Common Stock,
the S&P Mid Cap 400 Index and a composite index, weighted by market
capitalization, of the following eight companies: Ameridata Technologies,
Inc., Compucom Systems, Inc., Dataflex Corporation, Government Technology
Services, Inc., Inacom Corp., Merisel, Inc., MicroAge, Inc. and Tech Data
Corporation.
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Committee") for
fiscal year 1995 consisted of four non-employee directors. The Committee is
responsible for determining the annual salary, bonus and incentive compen-
sation of the Company's executive officers and, on the basis of recommendations
received from executive officers, awarding incentive compensation in the form
of stock options to the Company's employees generally. This report describes
the policies of the Committee in establishing the principal components of
executive compensation for fiscal year 1995.
The Committee's compensation policies for executive officers reflect a
commitment to attract and retain quality executives, to provide incentives to
the executives to achieve performance objectives that enhance shareholder
value and to reward executives for operational excellence. The Committee
believes that its policies are best served by a compensation program that
provides executives a competitive base salary, annual incentive bonuses in
amounts that reflect achievement of prescribed financial targets and
long-term incentives in the form of stock options.
In establishing compensation for executive officers, the Committee
considers industry data generally, the Company's financial performance and
industry position and the recommendations of the Chairman of the Board and
Chief Executive Officer. The Committee exercises judgment and discretion in
the information and analyses it reviews and considers.
In 1995, the Committee determined to continue the base salary of
Richard D. Sanford, the Chairman and Chief Executive Officer, at the same
level as in fiscal year 1994. In contrast with the prior two fiscal years,
Mr. Sanford's fiscal year 1995 compensation package did not include any bonus
component. In May 1995, the Committee determined to grant options to purchase
50,000 shares of Common Stock to the Chief Executive Officer as well as to two
other named executive officers, as described in the table captioned "Option
Grants During Fiscal Year 1995" set forth above. The stock options were
granted in order to reinforce the importance of improving shareholder value
over the long-term, and to encourage and facilitate the executives' Common
Stock ownership. The options were granted at 100% of the fair market value of
the Common Stock on the date of grant, have 10-year terms and vest in five
equal installments beginning on the first anniversary of the date of grant,
which is consistent with the terms of the stock options granted to employees
generally.
In fiscal year 1995, the Committee approved the reduction of the
exercise price, to $13.25 per share, of all outstanding stock options having
exercise prices in excess of $13.25 per share. The Committee concluded that
the decline in the market price of the Company's Common Stock had frustrated
the purpose of these options (i.e., to attract and retain the employees'
services and to provide incentives for them to exert maximum efforts for the
Company's success), and that it was important to reduce the exercise price of
these options so as to reinstitute the incentive originally intended to be
afforded by the options. The terms of the repricings with respect to options
held by the Chief Executive Officer and certain other named executive
officers are described in the table captioned "Ten-Year Option Repricing" set
forth above. The Company had not repriced any stock options during the ten
fiscal years prior to fiscal year 1995.
Section 162(m) of the Internal Revenue Code imposes a $1 million
limit on the allowable tax deduction of compensation paid by a publicly-held
corporation to its chief executive officer and its other four most highly
compensated officers employed at year-end, subject to certain pre-established
objective performance-based exceptions. The Committee intends to take
Section 162(m) into account when formulating its compensation policies for
the Company's executive officers and to comply with Section 162(m), if and
where the Committee determines compliance to be practicable and in the best
interests of the Company and its shareholders.
William L. Rulon-Miller
Barry M. Abelson
Roger J. Fritz
Arnold S. Hoffman
<PAGE>
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 1, 1996, the number and
percentage of shares of Common Stock which, according to information supplied
to the Company, are beneficially owned by (i) each person who is the beneficial
owner of more than 5% of the Common Stock; (ii) each of the directors of the
Company individually; (iii) the Company's Chief Executive Officer and each of
the Company's four other most highly compensated executive officers for fiscal
year 1995; and (iv) all current directors and officers of the Company as a
group. Under rules adopted by the Securities and Exchange Commission, a person
is deemed to be a beneficial owner of Common Stock with respect to which he has
or shares voting power (which includes the power to vote or to direct the voting
of the security), or investment power (which includes the power to dispose of,
or to direct the disposition of, the security). A person is also deemed to be
the beneficial owner of shares with respect to which he has the right to obtain
voting or investment power within 60 days, such as upon the exercise of options
or warrants.
<TABLE>
<CAPTION>
Percentage
Amount and Nature of Shares
of Beneficial Outstanding
Name of Beneficial Owner Ownership(a) (if 1% or greater)
- ----------------------------- ----------------- ------------------
<S> <C> <C>
Barry M. Abelson 487,879(b) 1.4%
Mark R. Briggs 56,100 --
Thomas J. Coffey 100 --
Timothy D. Cook 22,000 --
Christopher T. G. Fish 1,228,020(c) 3.6%
Roger J. Fritz 160,004 --
Arnold S. Hoffman 46,000 --
William E. Johnson 10,000 --
John A. Porter 40,000 --
Gregory A. Pratt 211,667 --
William L. Rulon-Miller 74,136 --
Richard D. Sanford 4,013,433(d) 11.5%
Alex A.C. Wilson 20,000 --
Wellington Management Company 1,943,742(e) 5.6%
Montag & Caldwell 3,538,219(f) 10.2%
Lazard Freres & Co. LLC 1,899,430(g) 5.5%
All directors and officers
as a group (14 persons) 6,206,922 17.5%
(a) Includes the following number of shares purchasable upon the exercise of stock options: Mr. Abelson, 40,000; Mr. Briggs,
56,000; Mr. Cook, 20,000; Mr. Fish, 60,000; Mr. Fritz, 100,000; Mr. Hoffman, 40,000; Mr. Johnson, 10,000; Mr. Porter, 20,000; Mr.
Pratt, 211,667; Mr. Rulon-Miller, 60,000; Mr. Sanford, 276,667; Mr. Wilson, 20,000, and all directors and officers as a group,
1,003,334.
(b) Includes 71,710 shares held in a trust (the beneficiary of which is a child of Mr. Sanford) of which Mr. Abelson and Mr. Fish
are co-trustees; 128,262 shares held by Mr. Abelson as custodian for the benefit of two children of Mr. Sanford; and 205,007 shares
held by two charities established by Mr. Sanford, of which Mr. Abelson is a director or trustee. Mr. Abelson disclaims beneficial
ownership as to the shares held by the trust and charities and as custodian.
(c) Includes 1,062,310 shares owned by Sprint Investments, S.A. The sole shareholder of Sprint Investments, S.A. is a trust, the
beneficiaries of which are the wife and children of Mr. Fish. Also includes 71,710 shares held in a trust (the beneficiary of which
is a child of Mr. Sanford) of which Mr. Fish and Mr. Abelson are co-trustees (as to which shares Mr. Fish disclaims beneficial
ownership) and 4,000 shares held as custodian and in the name of Mr. Fish's daughter.
(d) Includes 205,007 shares held by two charities established by Mr. Sanford, of which Mr. Sanford is a director or trustee. Mr.
Sanford disclaims beneficial ownership as to the shares held by the charities.
(e) The information with respect to Wellington Management Company was reported on a Schedule 13-G filed by Wellington
Management Company with the Securities and Exchange Commission on January 30, 1996, a copy of which was received by the
Company and relied upon in making this disclosure. The address of Wellington Management Company is 75 State Street, Boston,
Massachusetts, 02109.
(f) The information with respect to Montag & Caldwell was reported on a Schedule 13-G filed by Montag & Caldwell with the
Securities and Exchange Commission on January 12, 1996, a copy of which was received by the Company and relied upon in
making this disclosure. The address of Montag & Caldwell is 1100 Atlanta Financial Center, 3343 Peachtree Road, NE, Atlanta,
Georgia, 30326.
(g) The information with respect to Lazard Freres & Co. LLC was reported on a Schedule 13-G filed by Lazard Freres & Co.
LLC with the Securities and Exchange Commission on February 14, 1996, a copy of which was received by the Company and relied
upon in making this disclosure. The address of Lazard Freres & Co. LLC is 30 Rockefeller Plaza, New York, New York, 10020.
</TABLE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Barry M. Abelson is a partner in the law firm of Pepper, Hamilton &
Scheetz, which provided legal services to the Company in fiscal year 1995.
The Company believes that the fees charged by Pepper, Hamilton & Scheetz are
comparable to those charged by other law firms for comparable services.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTELLIGENT ELECTRONICS, INC.
Date: June 3, 1996 /s/ Thomas J. Coffey
-------------------------------------
Thomas J. Coffey, Chief Financial
Officer, Senior Vice President,
Principal Accounting Officer
<PAGE>
Exhibit Index
10.1 Letter Agreement between the Company and Gregory A. Pratt
dated May 9, 1996.
10.2 Separation and Confidentially Agreement between the Company
and Mark Briggs dated March 13, 1996.
10.3 Letter Agreement between the Company and Timothy Cook dated
May 13, 1996.
10.4 Letter Agreement between the Company and Thomas J. Coffey
dated March 25, 1996.
Exhibit 10.1
INTELLIGENT ELECTRONICS, INC.
411 EAGLEVIEW BOULEVARD
EXTON, PENNSYLVANIA 19401
May 9, 1996
Gregory A. Pratt
c/o Intelligent Electronics, Inc.
411 Eagleview Blvd.
Exton, PA 19341
Dear Mr. Pratt:
This letter when signed by you will serve as the Agreement between
Intelligent Electronics, Inc. (the Company) and you regarding your new
position and responsibilities at the Company.
1. Effective April 19, 1996, you resigned as President and Chief
Operating Officer of the Company, and assumed the title of executive vice
president, subject to the formality of Board approval. In that capacity
you will be responsible for oversight of The Future Now, Inc., a wholly
owned subsidiary of the Company, or have such other responsibilities
consistent with those of a senior executive officer as are assigned to you
by the Company's Board or chief executive officer. You will report to the
chief executive officer of the Company or at his discretion the President
of the Company.
2. On that effective date your base annual salary will become
$300,000, and you will continue to be covered by all employee benefits to
which you have been entitled. You also will continue to be eligible for
awards under the 1995 Long-Term Incentive Plan of the Company and any
successor thereto.
3. As soon as practicable, you and I will use our best efforts to
agree on quantified objectives for your position for the remainder of 1996
and calendar 1997, the achievement of which will entitle you to receive a
cash bonus at the annual rate at least equal to $200,000. A partial
achievement may result in a partial bonus.
4. Upon the effective date of a public offering of shares of XL
Connect Solutions, Inc. ("XLC"), the Company's wholly-owned subsidiary,
while you are an employee of the Company, you shall be granted options to
purchase 50,000 shares of common stock of XLC, at the initial public
offering price, assuming that the total outstanding shares of XLC
immediately prior to the public offering are 30 million shares of common
stock, fully diluted and assuming full exercise. If the number of fully-
diluted outstanding shares is more or less, the number of options you shall
receive shall be proportionately adjusted. The options will be on the same
terms as are generally applicable to the other options then outstanding or
granted to purchase XLC common stock.
5. You remain an employee at will of the Company or of any
subsidiary, and the Company may terminate you at any time with or without
Cause (defined below). If, however, the Company terminates you without
Cause, you shall receive the following as your sole and exclusive
remuneration and remedy:
(a) For one year following termination (the Severance Period), you
shall receive either (1) $500,000, if termination occurs on or prior to
December 31, 1996, or (2) an amount equal to your annual base salary on
termination, if termination occurs thereafter; such amount to be paid in
twelve equal monthly payments, less applicable withholding.
(b) During the Severance Period you shall be deemed to be an employee
of the Company for purposes of all medical, dental and insurnace benefit
plans. Also, for all purposes under the Company's stock option plans,
"termination" shall be deemed to be the date of expiry of the Severance
Period.
"Cause" for this purpose shall mean your commission of a felony, gross
negligence, fraud or material failure to perform your duties to the
Company, which material failure continues for a period of 30 days after
written notice thereof from the Company to you.
6. During the Severance Period, and as a condition of your severance
benefits, you will not, directly or indirectly, engage in any manner in any
business activity which competes with the business of the Company or its
affiliates, and you will not solicit any employees of the Company or its
affiliates for any other employment or other business purpose.
If you agree with the provisions of this letter, please sign and
return one copy to me.
Yours sincerely,
/s/ Richard D. Sanford
--------------------------------
Richard D. Sanford, President
Accepted and agreed:
/s/ Gregory A. Pratt
- -------------------------
Gregory A. Pratt
Exhibit 10.2
__________________________________________________________________________
SEPARATION AND CONFIDENTIALITY AGREEMENT
___________________________________________________________________________
THIS SETTLEMENT AGREEMENT is made by and between Mark Briggs
("Briggs"), an individual who resides at ____________________________________
________________, as well as each and every dependent, heir, executor, legal
representative, and assign of Mark Briggs, and INTELLIGENT ELECTRONICS,
INC. (hereinafter "IE"), a business corporation existing under the laws of
the Commonwealth of Pennsylvania, having its corporate headquarters at
Exton, Pennsylvania, together with each and every of its predecessors,
successors (by merger or otherwise), parents, subsidiaries, affiliates,
divisions, directors, officers, employees and agents, whether present or
former.
WHEREAS, the parties intend that Briggs' employment with IE will
terminate on September 30, 1996.
WHEREAS, Briggs and IE desire to part on an amicable basis.
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth, Briggs and IE acting of their own free will and
intending to be legally and irrevocably bound hereby, agree as follows:
1. Employment Termination. Briggs agrees that his employment
with IE will terminate on September 30, 1996. Upon the termination of his
employment, Briggs agrees to resign from all positions with IE.
2. Salary Continuation. Upon the termination of Briggs'
employment and provided Briggs has met and continues to meet the conditions
and obligations set out in this Agreement, IE agrees to pay Briggs, as
salary continuation, a sum equal to his current base salary of Three
Hundred Twenty-Five Thousand Dollars ($325,000.00) for the period October
1, 1996 to March 31, 1998. This salary continuation will be paid in equal
monthly installments in the same manner and with the same federal, state
and local tax withholdings as Briggs' current salary.
3. Medical Benefit Continuation. For the period October 1,
1996 to March 31, 1998, IE will provide Briggs and his family full coverage
under the Company group medical program subject to the terms of the medical
plan. Any required employee contribution to the medical plan premium will
be deducted from Briggs' monthly salary continuation payments. Briggs'
statutory rights under COBRA to continue participation in IE's group
medical coverage for a period of up to eighteen (18) months, at his own
cost, shall begin on April 30, 1998. IE's obligation to continue medical
coverage will cease if Briggs becomes eligible to participate in a
comparable medical plan with a new employer. In this case, Briggs agrees
immediately to notify IE by written notice to Evelyn Walker, Vice President
of Human Resources.
4. Stock Option. IE agrees that Briggs will, for the period
October 1, 1996 to March 31, 1998, continue to vest in his stock options in
accordance with the terms of his stock option agreements. Briggs' rights
under the terms of his stock option shall remain exercisable up to and
including April 30, 1998 or such earlier date or dates as may be set forth
in any such option agreements.
5. Other Benefits. IE agrees to extend to Briggs the following
additional benefits:
a. IE will continue to reimburse Briggs for the cost, not
to exceed $250 per month, of one cellular phone to be used by Briggs for
the period October 1, 1996 to March 31, 1998. Briggs shall submit his
monthly statements for reimbursement to Evelyn Walker, Vice-President of
Human Resources;
b. IE will provide Briggs reasonable access, as determined
by IE, to administrative support services for the period October 1, 1996 to
March 31, 1998.
6. Precondition. It is specifically agreed that Briggs shall
not be entitled to salary continuation, medical coverage and the other
benefits provided in this Agreement unless he remains employed by IE until
at least September 30, 1996. However, if Briggs' employment is terminated
before September 30, 1996 by IE for any reason other than for cause as
defined in Paragraph 7 below, Briggs shall be entitled to the salary
continuation and other benefits of this Agreement and shall also be bound
by the full terms of this Agreement.
7. Termination for Cause. In the event Briggs is terminated
for cause as defined in this paragraph before September 30, 1996, IE shall
not be obligated to provide the salary continuation or other benefits set
out in this Agreement. "Cause" shall include the commission of a crime,
willful misconduct or neglect of duties, and gross negligence.
8. Confidentiality.
(a) Briggs agrees that he will not disclose or use for his
direct or indirect benefit or the direct or indirect benefit of any third
party, any Confidential Information (as hereinafter defined) of IE. In
general, "Confidential Information" means any and all proprietary
information of IE, whether any information relating to computer codes or
instructions (including source and object code listings, logic algorithms,
subroutines, modules or other subparts of computer programs and related
documentation, including program notation); computer processing systems and
techniques; concepts; layouts; flowcharts; specifications; know-how; any
associated programmer, user or other manuals or other like textual
materials (including any other data and materials used in performing
Briggs' duties); all computer inputs and outputs (regardless of the media
on which stored or located); hardware and software configurations; designs;
interfaces; research; processes; inventions; products; methods; marketing
sales and distribution data, methods, plans and efforts; IE's relationship
with actual and prospective customers, contractors and suppliers; any other
materials prepared by Briggs or other employees in the course of, relating
to or arising out of their employment, or prepared by any other contractor
for IE or its customers; and any other materials that have not been made
available to the general public.
(b) Briggs agrees that he will, effective the date of his
employment termination: (i) discontinue all use of Confidential
Information; (ii) return to IE all material furnished by IE that contains
Confidential Information; (iii) erase or destroy any Confidential
Information contained in computer memory or data storage apparatus under
the ownership or control of Briggs; and (iv) remove Confidential
Information from any software under the ownership or control of Briggs that
incorporates or uses Confidential Information in whole or in part.
(c) Briggs agrees to return to IE on the effective date of
his employment termination, any documents, records, notebooks, files,
correspondence, reports, memorandum, personal property owned by IE, or any
other documents and material whatsoever relating to the business of the
Company. He also agrees that he will not make, retain, remove or
distribute any copies of any of the foregoing.
9. Covenant Not to Compete.
(a) For a period of 18 months from September 30, 1996,
Briggs shall not, whether directly or through any subsidiary or affiliate,
engage or become interested in (as owner, stockholder, partner, co-
venturer, director, officer, executive, agent, lender, consultant, or
otherwise) any of the following companies or related entities (including
parent, subsidiary, affiliate, division, and successor): (1) Merisel Inc.;
(2) Tech Data Corp.; (3) Microage Inc.; (4) Ingram Micro, Inc.; (5) Inacom
Corp.; (6) CompuCom Systems, Inc.; (7) Vanstar; and (8) Entex Information
Services, Inc.
(b) For a period of 18 months from September 30, 1996,
Briggs shall not, directly or indirectly, influence or attempt to influence
any supplier, customer or potential customer of IE or any of its
subsidiaries or affiliates to terminate or modify any written or oral
agreement or course of dealing with IE or any of its subsidiaries or
affiliates.
(c) For a period of 18 months from September 30, 1996,
Briggs shall not, directly or indirectly, employ or retain, or arrange to
have any other person or entity employ or retain, any person employed or
retained by IE or any of its subsidiaries or affiliates as an executive,
employee, consultant or agent. In addition, for a period of 18 months from
September 30, 1996, Briggs shall not, directly or indirectly, influence or
attempt to influence any such person to terminate or modify his or her
employment or agency arrangement with the Company or any of its
subsidiaries or affiliates.
10. Confidentiality of Terms. Briggs agrees that the terms of
this Separation and Confidentiality Agreement shall remain completely
confidential, and he will not hereafter disclose any information concerning
this Agreement and the General Release to anyone except: (a) his spouse
and family; (b) his personal attorney, if any; (c) his personal financial
and/or tax advisors; (d) taxing authorities and (e) as otherwise may be
required by law or court order. Briggs further understands that such
information may be disclosed to the aforementioned individuals only on the
condition that such individuals in turn agree to keep such information
completely confidential, and not disclose it to others, except as may
otherwise be required by law or court order. Before the date of his
resignation, Briggs agrees not to disclose his intent to resign to
employees of IE or third parties. After his resignation and in response to
any inquiries by employees of IE or third parties concerning any of the
terms of this Agreement, Briggs agrees to state only that he resigned his
employment.
11. Waiver and Release of Claims. Briggs completely releases,
relinquishes, waives and discharges IE, its officers, directors, employees,
agents, successors and assigns from all claims, liabilities, demands and
causes of action, known or unknown, filed or contingent, which he may have
or claim to have against IE as of the date of the signing of this Release
arising out of or in any way related to his employment with the Company or
the termination of that employment. Briggs agrees that he has executed
this Release on his own behalf, and also on behalf of his heirs, agents,
representatives, successors and assigns. This release includes, but is not
limited to, a release of any rights or claims he may have under:
(a) the Age Discrimination in Employment Act, which
prohibits age discrimination in employment;
(b) Title VII of the Civil Rights Act of 1964, as amended
by the Civil Rights Act of 1991, which prohibits
discrimination in employment based on race, color,
national origin, religion or sex;
(c) the Americans with Disabilities Act which prohibits
discrimination on the basis of a covered disability;
(d) the Employer Retirement and Income Security Act, which
prohibits discrimination on the basis of entitlement to
certain benefits;
(e) any other federal, state or local laws or regulations
prohibiting employment discrimination;
(f) breach of any express or implied contract claims;
(g) wrongful termination or any other tort claims,
including claims for attorney's fees, whether based on
common law, or otherwise.
Briggs understands, however, that by signing this release, he does not
waive rights to: (a) claims arising under any applicable worker's
compensation laws; (b) any claims which the law states may not be waived;
and (c) his vested rights under the regular employment benefit plans of the
Company, in effect as of the date this Agreement.
12. Indemnification. To the extent permitted by law, IE agrees
to defend, indemnify and hold Briggs harmless against any threatened or
pending actions or proceedings, whether brought by a third party or as a
derivative action, by reason of the fact that Briggs was an officer or
representative of IE acting within the scope of his employment.
13. Cooperation in Defending Legal Actions. Briggs understands
that he will not in the future voluntarily assist any individual or entity
in preparing, commencing or prosecuting any action or proceeding against
IE, its directors, officers, employees, or affiliates, including but not
limited to, any administrative agency claims, charges or complaints and/or
lawsuits against IE, its directors, officers, employees or affiliates, or
to voluntarily participate or cooperate in any such action or proceeding,
except as such waiver is specifically prohibited by statute. Briggs also
agrees that he will cooperate with and assist IE in its defense of any such
action or proceeding. This Agreement shall not preclude Briggs from
testifying in such an action or proceeding if he is compelled to do so
pursuant to a subpoena or other court order. However, Briggs expressly agrees
that he will provide written notice addressed to the attention of Barry M.
Abelson, Esquire, Pepper, Hamilton & Scheetz, 3000 Two Logan Square, Phila-
delphia, PA 19103 (Fax No. 215-981-4750) if he should receive, by service or
otherwise, a notice, subpoena or other court order or any other written
request seeking or requiring him to testify or otherwise participate in or
assist in any action or proceeding against IE, such notice to be so provided
within 24 hours of each such receipt by Briggs or anyone acting on his behalf.
14. Essential Terms. Briggs acknowledges and agrees that the
covenants set forth in Paragraphs four (4) through eleven (11), hereof are
essential terms of this Settlement Agreement. In the event of breach of
these terms, IE shall be entitled to recover a sum equivalent to that paid
pursuant to paragraph 2, as well as any other damages resulting from the
breach.
15. Arbitration of Disputes Under this Agreement. The parties
agree that any and all disputes arising out of the performance or breach of
this Agreement or any promise or covenant herein shall be resolved by
submission to arbitration in Denver, Colorado under, and in accordance
with, the rules and procedures of the American Arbitration Association. In
any such proceeding, the prevailing party shall be entitled to an award of
reasonable attorneys' fees.
16. Enforcement. All remedies at law and equity shall be
available for the enforcement of this Agreement incorporated by reference
herein. This Agreement may be pleaded as a full bar to the enforcement of
any claim in any way related to or arising out of Briggs' employment with
IE and/or the termination thereof.
17. Opportunity to Review and Right to Revoke.
Briggs hereby acknowledges that he is acting of his own free will, that he
has been afforded twenty-one (21) days to read and review the terms of this
Agreement, that he has had an opportunity to seek the advice of counsel,
and that he is voluntarily entering into this Agreement with full knowledge
of its respective provisions and effects. Briggs also acknowledges that he
has seven (7) days following his signing of this Agreement to revoke this
Agreement in which case IE will have no objection to make any payment to
him.
18. Contractual Effect. The parties understand and acknowledge
that the terms of this Agreement are contractual and not a mere recital.
Consequently, they expressly consent that this Agreement shall be given
full force and effect according to each and all of its express terms and
provisions, and that it shall be binding upon the respective parties as
well as their heirs, executors, successors, administrators and assigns.
IN WITNESS WHEREOF, Briggs and IE each acknowledge that they are
acting of their own free will, that they have had a sufficient opportunity
to read and review the terms of this Agreement, they have each received the
advice of their respective counsel with respect hereto, and that they have
voluntarily caused the execution of this Agreement and by reference herein
as of the day and year set forth below.
/s/ Mark Briggs
- ------------------------
Mark Briggs Witness: /s/ Carey Kiley
--------------------------
Date: March 13, 1996
On behalf of INTELLIGENT ELECTRONICS, INC.:
By: /s/ Richard D. Sanford Witness: /s/ Carey Kiley
--------------------------- --------------------------
Title: CEO
Date: March 13, 1996
Exhibit 10.3
INTELLIGENT ELECTRONICS, INC.
411 EAGLEVIEW BOULEVARD
EXTON, PENNSYLVANIA 19341
May 13, 1996
Mr. Timothy Cook
Intelligent Electronics, Inc.
5700 S. Quebec Street
Englewood, CO 80111
Dear Tim:
This confirms that I have recommended to the Compensation and
Stock Option Committee of the Board of Directors of Intelligent
Electronics, Inc. the following:
1. Your base annual salary will be increased to $300,000,
effective April 1, 1996.
2. You will be granted non-qualified stock options under the
Company's 1995 Long-Term Incentive Plan to purchase 50,000 shares of the
Company's common stock at the closing price on April 24, 1996, such options
to vest in five installments as generally applicable to such options.
3. Although you remain an employee at the will of the Company,
and the Company may terminate your employment at any time with or without
Cause (as defined below), if the Company terminates you without Cause, you
will receive the following as your sole and exclusive remuneration and
remedy:
(a) For one year following the date of termination (the
"Severance Period"), you will receive your annual base salary at
termination, paid in 12 equal monthly payments, and less applicable
withholding. Such payments will be made to your heirs in the event of your
death during the Severance Period.
(b) During the Severance Period, you will be deemed to be
an employee of the Company for purposes of all medical, dental and
insurance benefit plans. Moreover, for all purposes under the Company's
1995 Long-Term Incentive Plan, "termination" shall be deemed to be the date
of expiration of the Severance Period.
"Cause" for this purpose shall mean your commission of a felony,
gross negligence, fraud.
During the Severance Period, and as a condition of your
severance benefits, you will not, directly or indirectly, be employed by,
consult with or perform any services for Ingram Micro, Tech Data, MicroAge,
Inacom or any of their successors, and you will not solicit any employees
of the Company or its affiliates for any other employment or other business
purpose.
4. The provisions of paragraph 3 of this letter agreement
applicable to salary, benefits and restrictions during the Severance Period
shall also be applicable in the event that: (a) a third party acquires, by
purchase, merger or otherwise, more than a majority of the Company's issued
and outstanding capital stock ("Change of Control"); (b) after the Change
of Control, either (i) your base annual salary is reduced from the amount
in effect immediately prior to the Change of Control or (ii) your duties
and responsibilities are materially reduced from their levels immediately
prior to the Change of Control; and (c) you terminate your employment as a
result of either of the events set forth in 4(b) above.
This agreement is between you and IE and its successor companies.
I am confident that the Committee will promptly approve these
recommendations, to which I would appreciate your agreement by executing
the letter in the space provided below.
Sincerely,
INTELLIGENT ELECTRONICS, INC.
BY: /s/ Richard D. Sanford
---------------------------------
RICHARD D. SANFORD
ACCEPTED AND AGREED:
/s/ Timothy Cook
- -----------------------
TIMOTHY COOK
Exhibit 10.4
INTELLIGENT ELECTRONICS, INC.
411 EAGLEVIEW BOULEVARD
EXTON, PENNSYLVANIA 19401
March 25, 1996
Mr. Thomas J. Coffey
c/o Intelligent Electronics, Inc.
411 Eagleview Boulevard
Exton, PA 19341
Dear Tom:
Reference is made to Greg Pratt's letter to you of April 17, 1995
(the "Offer Letter"), which we have agreed to amend as set forth in this
letter:
1. Effective April 1, 1996, your annual base compensation will
be $350,000, which will not be reduced without your consent before April 1,
1999.
2. Your minimum bonus for fiscal 1996 (ending February 1, 1997)
will be $100,000.
3. All accounting and financial personnel of IE and, while they
are wholly-owned subsidiaries of IE, of TFN, XL Connect and other IE
affiliates, will report to you in your capacity as IE Senior Vice President
and Chief Financial Officer, directly or indirectly as determined by the
Chief Executive Officer of IE. You will continue to report directly to the
Chief Executive Officer of IE.
4. The principal place at which you will perform your services
will be in the Philadelphia-Exton, Pennsylvania area.
5. You will be entitled to serve on the Board of Directors of
two public companies, provided that such companies do not compete with IE
and that such service does not interfere with the performance of your
services for IE.
6. We will seek mutually to increase your experience in and
responsibility for operations of TFN and XL Connect while they are wholly-
owned subsidiaries of IE.
7. Should IE terminate your employment for any reason except
cause, including but not limited to moral turpitude, on or before April 1,
1999, then you will have the right to continue to receive your base
compensation plus all benefits then in effect, including the continuation
in the vesting of any previously- granted IE stock options, until April 1,
1999; provided, however, that if such termination occurs before April 1,
1998, the amount of base compensation in excess of $350,000 included within
your severance will be reduced by all compensation earned by you from all
sources from the date of such termination until March 31, 1999.
8. If your compensation from IE and its affiliates during
fiscal 1997 (ending January/February 1998) is less than $450,000, and you
voluntarily terminate your employment after IE files its Form 10-K with the
SEC for that year, then you will have the right to continue to receive your
base compensation plus all benefits then in effect, including the
continuation in the vesting of any previously-granted IE stock options,
until April 1, 1999.
9. You will be considered for the grant of XL Connect stock
options if and when IE employees are so considered.
10. As amended by this letter, the Offer Letter continues in
effect in accordance with its terms. Please signify your acceptance of
this letter by executing in the space provided below.
Sincerely,
INTELLIGENT ELECTRONICS, INC.
/s/ Richard D. Sanford
Richard D. Sanford, Chairman
and Chief Executive Officer
ACCEPTED:
/s/ Thomas J. Coffey
- -------------------------
Thomas J. Coffey
Date: March 25, 1996
