-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GGma3O5X6RVVhDa5ZcLqgm7inQ+Wes9K2i1VaolOYbc9foxDuj2lo30qGwYDQ2eY Y5jl6uUdz3kXlA68Xklfmg== 0000814430-96-000017.txt : 19960604 0000814430-96-000017.hdr.sgml : 19960604 ACCESSION NUMBER: 0000814430-96-000017 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960203 FILED AS OF DATE: 19960603 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTELLIGENT ELECTRONICS INC CENTRAL INDEX KEY: 0000814430 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 232208404 STATE OF INCORPORATION: PA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11673 FILM NUMBER: 96575892 BUSINESS ADDRESS: STREET 1: 411 EAGLEVIEW BLVD CITY: EXTON STATE: PA ZIP: 19341 BUSINESS PHONE: 6104585500 MAIL ADDRESS: STREET 1: 411 EAGLEVIEW BLVD CITY: EXTON STATE: PA ZIP: 19341 10-K/A 1 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] 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").
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) - --------------------------- ------ --------- -------- -------------- ------------------- 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 $716,715 annually for Mr. Sanford's account for five years commencing in fiscal year 1994, together with interest at an annual rate of 7%, compounded annually. All credited amounts will be paid to Mr. Sanford in five equal annual installments commencing in fiscal year 1999. In the event of his death, disability, termination by the Company without cause or a change of control of the Company, all amounts not yet credited for future periods will be credited and all credited amounts will be paid to Mr. Sanford. (3) Mr. Sanford was appointed President in April 1996. (4) Mr. Pratt resigned as President and Chief Operating Officer in April 1996 and was named Executive Vice President. (5) Mr. Briggs resigned as Senior Vice President and was named Assistant to the Chairman in April 1996. (6) Mr. Cook began his employment with the Company on October 10, 1994. (7) Mr. Coffey began his employment with the Company on July 3, 1995.
Option Grants During Fiscal Year 1995 The following table provides information related to options to purchase Common Stock which were granted to the named executive officers during fiscal year 1995. Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation Individual Grants for Option Term (1) - ---------------------------------------------------------------------------------------- --------------------------- Number of % of Total Securities Under- Options Granted Exercise or lying Options to Employees Base Price Expiration Name Granted (#) in Fiscal Year ($/Sh) Date 5%($) 10%($) - ------------------- ----------------- ---------------- ----------- ---------- -------- --------- 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 $8.00 per share, held by currently-active employees, except Mr. Sanford, Mr. Pratt and Mr. Briggs. As of that date, 1,767,447 options were repriced, of which 412,998 were exercisable at February 3, 1996.
Aggregated Option Exercises During Fiscal Year 1995 and Option Values at February 3, 1996 The following table provides information related to options to purchase Common Stock which were exercised by the named executive officers during fiscal year 1995 and the number and value of options held on February 3, 1996. Value of Unexercised Number of Unexercised In-the-Money Options/SARs Options/SARs Shares Acquired Value at FY-End (#) at FY-End ($)(2) Name on Exercise(#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable - --------------------------- ---------------- --------------- ----------- ------------- ----------- ------------- 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 $4.50 per share on February 2, 1996.
Ten Year Option Repricing The following table provides information related to options to purchase Common Stock which were repriced for executive officers during fiscal year 1995. Number of Securities Market Value Exercise Length of Underlying of Stock Price at New Original Option Options at Time of Time of Exercise Term at Time Name Date Repriced(#) Repricing($) Repricing($) Price($) of Repricing - ---------------------- -------- ------------ ------------- ------------ -------- ----------------- 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
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. 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 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.
Percentage Amount and Nature of Shares of Beneficial Outstanding Name of Beneficial Owner Ownership(a) (if 1% or greater) - ----------------------------- ----------------- ------------------ 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.
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 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. EX-10 2 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 EX-10 3 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 EX-10 4 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 EX-10 5 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 -----END PRIVACY-ENHANCED MESSAGE-----