MICROAGE, INC.
1997 MANAGEMENT EQUITY PROGRAM
AWARD AGREEMENT
(XXXXXX X. X'XXXXXX)
October 11, 1996
Dear Xxx:
Pursuant to the action taken by the Board of Directors of MicroAge,
Inc. (the "Company") and the Compensation Committee of the Board of Directors,
you are hereby offered participation in the 1997 Management Equity Program (the
"1997 MEP") under the MicroAge, Inc. Long-Term Incentive Plan (the "Plan").
Under the 1997 MEP, you have the opportunity to receive options to restructure
your compensation package to some extent. Essentially, you may elect to purchase
shares of the common stock of the Company if you irrevocably elect to waive all
or a portion of your base salary and any bonuses you may receive for the 1997,
1998, and 1999 fiscal years, and later years if necessary, under the following
terms and conditions.
BEFORE YOU ELECT TO PARTICIPATE IN THE 1997 MEP, READ THIS AWARD AGREEMENT. YOU
WILL BE REQUIRED TO SIGN THIS AWARD AGREEMENT, AND YOUR SIGNATURE WILL EVIDENCE
THAT YOU HAVE READ THIS AWARD AGREEMENT, UNDERSTAND IT, AND AGREE WITH ITS TERMS
AND CONDITIONS.
TO PARTICIPATE IN THE 1997 MEP, YOU MUST COMPLETE AND SIGN THIS AWARD
AGREEMENT AND RETURN IT TO XX XXXXX BY 12:00 P.M. NOON ON FRIDAY, OCTOBER
25, 1996.
1. EFFECTIVE DATE. The effective date of your participation in the 1997
MEP is November 4, 1996.
2. 0000-0000 XXXXXX. You hereby elect to waive a portion of your salary
and bonuses received for the Company's 1997, 1998, and 1999 fiscal years in the
amounts specified in the tables below (please understand that bonuses for later
years may be automatically waived, as may be necessary to make up any deficit
(see footnote 2 and Example A attached to this Award Agreement)):
1997-1999 WAIVER TABLE
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============================= ============================= =========================== ===============================
Fiscal Year Salary1 Bonus2 Total
----------------------------- ----------------------------- --------------------------- -------------------------------
1997 $40,000 $70,000 $110,000
(11/4/96 - 11/2/97)
----------------------------- ----------------------------- --------------------------- -------------------------------
1998 $40,000 $70,000 $110,000
(11/3/97 - 11/1/98)
----------------------------- ----------------------------- --------------------------- -------------------------------
1999 $40,000 $80,000 $120,000
(11/2/98 - 10/31/99)
----------------------------- ----------------------------- --------------------------- -------------------------------
1997-1999 $120,000 $220,000 $340,000 3
============================= ============================= =========================== ===============================
1. NUMBER OF OPTIONS GRANTED. In exchange for electing to waive the
amount of compensation specified in the 1997-1999 Waiver Table in Paragraph 2,
above, you are hereby granted an option to purchase the number of shares of
MicroAge, Inc. Common Stock calculated pursuant to the formula below (to be
completed by MicroAge):
(1) Total Compensation Waived (1997-1999 fiscal years): $ 340,000
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(2) $ 340,000 (Total Compensation Waived)
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Multiplied by Seven (7) (the Leverage Factor"): $ 2,380,000
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(3) Common Stock Closing Price on Effective Date
(October 25, 1996) (the "Common Stock Price"): $ 17.625
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(4) Total Options Granted (2) , (3) (rounded up):
(See Example B attached to this Award Agreement) $ 135,035
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1. VESTING OF OPTIONS. Your options will vest in one-third (1/3)
increments beginning on the first day of the fiscal year which is three years
following the first day of the fiscal year for each year you elect to waive base
salary and/or bonus amounts. HOWEVER, your options will not fully vest until you
have actually waived all of the compensation you agreed to waive.
-------------------
(1) The minimum annual salary waiver amount is $17,000 (5% of your
Current Base Salary). The maximum annual salary waiver amount is $51,000 (15% of
your Current Base Salary).
(2) There is no minimum annual bonus waiver amount. The maximum annual
bonus waiver amount is $85,000 (25% of your Current Base Salary). If the bonus
amount you elect to waive in any year is more than the bonus actually paid to
you for that year, the deficit amount will be added to your bonus waiver amount
for the following year. Deficit amounts will continue to be carried forward
until made up or until October 25, 2005. See Example A attached to this Award
Agreement. Note: The bonus waiver amounts are for bonuses relating to a given
fiscal year, whether or not the bonus is paid during such fiscal year. For
example, if a bonus for fiscal year 1997 is paid in December 1997 (during fiscal
year 1998), any 1997 bonus waiver amount you have included in the Waiver Table
would be deducted from your December 1997 bonus.
(3) The minimum waiver amount (salary and bonuses combined) for the
three-year period (1997-1999) is $170,000 (50% of your Current Base Salary). The
maximum waiver amount (salary and bonuses combined) for the three-year period
(1997-1999) is $340,000 (100% of your Current Base Salary).
FOR EXAMPLE, the options to be purchased with the compensation
you receive for fiscal year 1997 will vest in 1/3 increments beginning on
November 1, 1999 (the first day of fiscal year 2000) and will be 100% vested on
October 29, 2001 (the first day of fiscal year 2002). Correspondingly, the
options to be purchased with the waived compensation you receive for fiscal year
1998 will vest in 1/3 increments beginning on October 30, 2000 (the first day of
fiscal year 2001) and will be 100% vested on November 4, 2002 (the first day of
fiscal year 2002), and so on.
If you elect to waive a specific amount of your bonuses for
the next three fiscal years, but do not receive bonuses for the next three
fiscal years sufficient to cover the amount you agreed to waive, the bonuses you
may be otherwise entitled to receive in later years (up through October 25,
2005) will be used to make up any shortfall on a "first-in, first-out" theory.
See Examples C and D attached to this Award Agreement.
Notwithstanding the above, your options will become fully
vested and exercisable as of October 25, 2005, unless you otherwise terminate
employment before such date.
1. EXPIRATION OF OPTIONS. Subject to Section 6 and 7 of this Award
Agreement, your options will expire, unless sooner exercised, on October 25,
2006.
1. TERMINATION OF EMPLOYMENT.
Death. Upon your death, your beneficiary will be entitled to
receive the number of options determined by multiplying the sum of your
compensation actually waived up to the date of your death by the Leverage Factor
and dividing the product by the Common Stock Price; provided, however, that only
the total compensation waived by you up to the date of your death will be
considered. All options received by your beneficiary will be fully vested and
immediately exercisable. Your beneficiary will have up to one year from the date
of your death to exercise the options. After that one year period, the options
will be cancelled. Under no circumstances will you or your beneficiary be
entitled to receive cash equal to all or any portion of the compensation you
elected to waive under the 1997 MEP.
Disability. Upon your termination of employment due to a
"Disability" (as that term is defined in the Plan) you will be entitled to
receive the number of options determined by multiplying the sum of your
compensation actually waived up to the date of your termination by the Leverage
Factor and dividing the product by the Common Stock Price; provided, however,
that only the total compensation waived by you up to the date of your
termination will be considered. All options received will be fully vested and
immediately exercisable. You will have up to one year from the date of
termination of employment to exercise the options. After that one year period,
the options will be cancelled. Under no circumstances will you be entitled to
receive cash equal to all or any portion of the compensation you elected to
waive under the 1997 MEP.
Voluntary or Involuntary. Upon your voluntary or involuntary
termination of employment, you will be entitled to receive the number of options
determined by multiplying the sum of your compensation actually waived up to the
date of your termination by the Leverage Factor and dividing the product by the
Common Stock Price; provided, however, that only the total compensation waived
by you up to the date of termination of employment will be considered. Your
options will continue to vest under the above vesting schedule as if you
continued to be employed by the Company and continued participating in the 1997
MEP. Under no circumstances will you be entitled to receive cash equal to all or
any portion of the compensation you elected to waive under the 1997 MEP.
1. TERMINATION OF 1997 MEP. If the Committee decides to terminate the
1997 MEP, you will be entitled to receive a number of options determined by
multiplying the sum of your compensation actually waived up to the date of your
termination by the Leverage Factor and dividing the product by the Common Stock
Price; provided, however, that only the total compensation waived by you up to
the date of termination will be considered. All options received will be fully
vested and immediately exercisable. You will have up to thirty days from the
date of such termination to exercise the options. After
such thirty day period, the options will be cancelled. Under no circumstances
will you be entitled to receive cash equal to all or any portion of the
compensation you elected to waive under the 1997 MEP.
1. CHANGE OF CONTROL. Upon a "Change of Control" (as that term is
defined in the Plan), the terms of Section 13.10 and 14.2 of the Plan will apply
to all options issued under the 1997 MEP. Upon a Change of Control, you will be
entitled to receive the number of options determined by multiplying the sum of
your compensation actually waived up to the date of the Change of Control by the
Leverage Factor and dividing the product by the Common Stock Price; provided,
however, that only the total compensation waived by you up to the date of Change
of Control will be considered. All options will be fully vested and immediately
exercisable. In the event of a dissolution or liquidation of the Company or a
merger or consolidation in which the Company would not be the surviving or
resulting corporation, you will be entitled to receive the number of options
determined by multiplying the sum of your compensation actually waived up to the
date of exercise by the Leverage Factor and dividing the product by the Common
Stock Price; provided, however, that only the total compensation waived by you
up to the date of exercise will be considered. All options will be fully vested
and exercisable (a) in the case of a dissolution or liquidation, at anytime
after the Company's Board of Directors takes action authorizing the dissolution
or liquidation of the Company or (b) in the case of a merger or consolidation in
which the Company would not be the resulting or surviving corporation, upon the
Company's public announcement that a definitive agreement regarding such a
merger or consolidation has been reached. Under no circumstances will you be
entitled to receive cash equal to all or any portion of the compensation you
elected to waive under the 1997 MEP.
1. COMPANY INFORMATION. By signing this Award Agreement, you
acknowledge that you have been given, or were offered, a copy of the Company's
(i) Annual Report on Form 10-K for the fiscal year ended October 29, 1995, and
(ii) Quarterly Reports on Form 10-Q for the fiscal quarters ended January 28,
April 28, and July 28, 1996 (the "SEC Reports"), and that you were given an
opportunity to ask questions of any of the Company's executive officers
regarding the SEC Reports or any other matter regarding the Company.
1. RISK OF INVESTMENT. By signing this Award Agreement, you recognize
that your participation in the 1997 MEP is a speculative investment in that the
success or failure of your investment depends on the market value of the
Company's Common Stock over a several year period. You further recognize that
all or a portion of your investment (i.e., your salary and bonus waiver) may be
lost. You also acknowledge that you were given the opportunity to consult with
your personal advisor(s) regarding the 1997 MEP.
I hereby elect to participate in the 1997 MEP under the terms and
conditions set forth above and acknowledge that I have read and understood the
terms and conditions of the 1997 MEP.
ACCEPTED:
MICROAGE, INC.
SIGNATURE /s/ X. X. X'Xxxxxx BY /s/Xxxxxxx X. XxXxxxxx
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DATE 10/24/96 ITS Chairman and CEO
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