EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made and entered into on
October 12, 2004 but effective as of June 1, 2004 by and among SYSTEMAX INC., a
Delaware corporation (the "Parent" or the "Company") and XXXXXXX XXXXXXXXXX (the
"Executive").
R E C I T A L S
A. Tiger Direct, Inc., a Florida corporation (the "Subsidiary"), is a
wholly owned subsidiary of the Parent.
B. The Executive is currently employed as the Chief Executive Officer of
the Subsidiary.
C. The Executive possesses intimate knowledge of the business and affairs
of both the Parent and the Subsidiary, their respective policies, methods and
personnel.
D. The Company recognizes that the Executive has contributed to the growth
and success of both the Company and the Subsidiary, and desires to assure the
Executive's continued employment and to compensate him therefor.
E. The Company has determined that this Agreement will reinforce and
encourage the Executive's continued attention and dedication to both the Company
and the Subsidiary.
F. The Executive is willing to make his services available to both the
Company, if so requested by the Company, and the Subsidiary and, if the
Executive and the Company agree, other subsidiaries of the Parent on the terms
and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties agree as follows:
1. EMPLOYMENT.
1.1 EMPLOYMENT AND TERM. The Company hereby agrees to employ, or to
cause the Subsidiary to employ, the Executive and the Executive hereby agrees to
serve the Company and/or the Subsidiary as set forth in this Agreement on the
terms and conditions set forth herein.
1.2 DUTIES OF EXECUTIVE. During the Term of Employment under this
Agreement, the Executive shall continue to serve as the Chief Executive Officer
("CEO") of the Subsidiary, and shall in that capacity, report exclusively to the
CEO of the Company (if someone other than the Executive) and the Executive
Committee of the Board of Directors of the Company (the "Executive Committee"),
shall faithfully and diligently perform all services as may be assigned to him
by the Executive Committee or the Subsidiary's board of directors (the
"Subsidiary's Board"), and shall exercise such power and authority as may from
time to time be delegated to him by the Executive Committee. If and when so
appointed by the Board of Directors of the Company, the Executive shall serve as
the CEO of the Company (or in similar positions of like status) and, if elected
by other subsidiaries of the Parent, shall serve as the CEO of such
subsidiaries, and shall in that capacity, report exclusively to the Executive
Committee, shall faithfully and diligently perform all services as may be
assigned to him by the Executive Committee or such subsidiaries' boards of
directors consistent with this Agreement, and shall exercise such power and
authority as may from time to time be delegated to him by the Executive
Committee or such subsidiaries' boards of directors consistent with this
Agreement. The Executive shall devote his full business time and attention to
the business and affairs of the Company or the subsidiaries of the Company to
which he is then serving as CEO, render such services to the best of his
ability, and use his reasonable best efforts to promote the interests of the
Company or such subsidiaries with respect to which he is then serving as the
CEO. Notwithstanding the foregoing or any other provision of this Agreement, it
shall not be a breach or violation of this Agreement for the Executive to (i)
serve on corporate, civic or charitable boards or committees (PROVIDED, HOWEVER,
that service on other corporate boards shall first be approved by the Board of
Directors or Executive Committee of the Parent) (ii) deliver lectures, fulfill
speaking engagements or teach at educational institutions, or (iii) manage
personal investments, so long as any of such activities do not materially
interfere with or materially detract from the performance of the Executive's
responsibilities to the Company or its subsidiaries in accordance with this
Agreement.
2. TERM.
2.1 TERM. The Term of Employment under this Agreement, and the
employment of the Executive hereunder, shall commence as of June 1, 2004 (the
"Commencement Date") and shall expire on December 31, 2013, unless sooner
terminated in accordance with Section 5 hereof (the "Term").
2.2 TERM OF EMPLOYMENT AND EXPIRATION DATE. The period during which
the Executive shall be employed pursuant to the terms of this Agreement is
sometimes referred to in this Agreement as the "Term of Employment", and the
date on which the Term shall expire (December 31, 2013), unless sooner
terminated in accordance with Section 5 hereof, is sometimes referred to in this
Agreement as the "Expiration Date."
3. COMPENSATION.
3.1 BASE SALARY. The Executive shall receive a base salary initially
at the annual rate of $400,000 (the "Base Salary") during the Term of Employment
through December 31, 2005, which such Base Salary as it may be increased shall
be payable in installments consistent with the normal payroll schedule of the
Company, subject to applicable withholding and other taxes. Effective as of
April 1, 2006 (the "Salary Increase Date"), and on each anniversary of the
Salary Increase Date during the Term of Employment (an "Anniversary Date"), the
Base Salary shall be increased, but shall not be decreased, by five percent (5%)
provided however if in the fiscal year immediately prior to any Anniversary Date
the net profits of the Company are less than the previous fiscal year's net
profits, the Base Salary shall not be increased by five percent (5%) on such
Anniversary Date.
3.2 BONUSES.
(a) PERFORMANCE BONUSES.
(i) The Company shall pay to the Executive a bonus (a
"Bonus") for each fiscal year ending during the Term of Employment, commencing
with the fiscal year ending December 31, 2004 (the "Fiscal Year 2004"), in an
amount equal to $250,000, to be increased (but not decreased) in the same manner
and at the same times as the Base Salary payable to the Executive is increased
pursuant to Section 3.1(b) hereof, PROVIDED that the Executive meets certain
performance criteria previously established, from time to time, by the Executive
Committee, in its sole discretion (the "Performance Criteria"). The bonus for
each such fiscal year shall be payable within 90 days after the end of the
fiscal year for which it is earned. In the event that the Executive does not
meet the Performance Criteria for any such fiscal year, then any Bonus
previously paid the Executive with respect to such fiscal year shall be repaid
by the Executive to the Company and the Company shall have a right of offset
against any other compensation otherwise payable to the Executive under this
Agreement if such Bonus is not repaid to the Company within 90 days following
the end of the applicable fiscal year.
(ii) For the fiscal year in which the Executive's employment
is terminated by the Company for disability under Section 5.2, death under
Section 5.3, without Cause under Section 5.4 or by the Executive for Good Reason
under Section 5.5(c) hereof, if the applicable Performance Criteria are met for
such fiscal year the Company shall pay the Executive, within 30 days after the
end of the Company's fiscal year in which the Term of Employment ends, a PRO
RATA portion (based upon a fraction, the numerator of which shall be the number
of days that the Executive was employed by the Company during that fiscal year,
and the denominator of which shall be 365) of the Bonus otherwise payable to the
Executive for such fiscal year (the "Termination Bonus").
(b) DISCRETIONARY BONUSES. During the Term of Employment, the
Executive may be entitled to receive additional bonuses, if any, as may be
determined by the Board of the Company or Companies with respect to which the
Executive then is serving as CEO, in its or their sole discretion.
(c) SPECIAL BONUSES.
(i) The Company shall pay to the Executive a special bonus
(the "Special Bonus") upon the occurrence of the first Qualifying Change in
Control (as defined below) in an amount equal to eighty five one hundreds of one
percent (0.85%) of the Qualifying Value (as defined below).
(ii) The Company shall pay to the Executive the Special
Bonus, if any, in a lump sum on the date on which the Qualifying Change in
Control occurs; PROVIDED, HOWEVER, that in the case of a Qualifying Change in
Control as set forth in clause (y)(1) below while the right to the bonus shall
accrue upon the shareholder approval of such action (subject to defeasance if
such event is abandoned), such payment shall only be due upon the completion of
the reorganization, merger, consolidation, sale or other transaction noted
therein rather than the shareholder approval of such action.
(iii) For purposes of this Section 3.2(c):
(x) A transaction shall be deemed to be a "Qualifying
Change in Control" if it constitutes a Change in Control and any of the
following requirements are met:
(1) if the Change in Control is as a result of a
sale or exchange of more than 50% of the outstanding shares of common stock of
the Parent for cash, notes, securities or other property, or a combination
thereof, and the fair market value of the total proceeds received by those
shareholders (the "Qualifying Value") equals or exceeds $15 per share (subject
to adjustments pursuant to clause (5) below);
(2) if the Change in Control is as a result of a
liquidation of the Parent, and the fair market value of the amounts
distributable by the Parent to its shareholders with respect to their shares of
common stock of the Parent pursuant to the liquidation (the "Qualifying Value")
equals or exceeds $15 per share (subject to adjustments as per clause (5)
below);
(3) if the Change in Control is as a result of a
sale by the Parent of substantially all of its assets and the fair market value
of the amount that would have been distributable with respect to each share of
common stock of the Parent if the Parent thereafter were immediately liquidated
(the "Qualifying Value") would equal or exceed $15 per share (subject to
adjustments pursuant to clause (5) below); or
(4) if the Change in Control is as a result of a
sale or exchange by the Parent of substantially all of its shares of common
stock of the Subsidiary or of substantially all of the assets of the Subsidiary,
and the total proceeds received by the Parent or the Subsidiary (the "Qualifying
Value") equals or exceeds $500,000,000.
(5) The $15 per share amount in clauses (1)
through (3) above shall be subject to appropriate adjustment if there shall be
any increase or decrease in the number of issued and outstanding shares of
common stock of the Parent through the declaration of a stock dividend or
through any recapitalization resulting in a stock split or reverse stock split.
(y) "Change in Control" shall mean:
(1) approval by the shareholders of the Parent of
(I) a reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect to which the
Present Stockholders (as defined below) cease to own, directly or indirectly, in
the aggregate at least forty percent (40%) of the then outstanding shares of the
Parent's common stock or the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or consolidated company's
then outstanding voting securities, in substantially the same proportions as
their ownership immediately prior to such reorganization, merger, consolidation
or other transaction, or (II) the sale of all or substantially all of the assets
of the Parent or Subsidiary (unless such reorganization, merger, consolidation
or other corporate transaction, or sale is subsequently abandoned);
(2) the acquisition by any person, entity or
"group", within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, of beneficial ownership within the meaning of Rule 13-d
promulgated under the Securities Exchange Act which would result in the Present
Stockholders ceasing to own, directly or indirectly, in the aggregate, at least
forty percent (40%) of the then outstanding shares of the Parent's common stock,
excluding, for this purpose, any acquisitions by (I) the Parent or its
subsidiaries, or (II) any employee benefit plan of the Parent or its
subsidiaries;
(3) the sale or exchange by the Parent of more
than fifty (50%) percent of the common stock of the Subsidiary, or the sale by
the Subsidiary of substantially all of its assets, in each case if the Parent
does not own, directly or indirectly, more than fifty (50%) percent of
outstanding shares of the acquiring entity's common stock or the combined voting
power entitled to vote generally in the election of directors of the acquiring
entity's voting securities; or
(4) the approval by the shareholders of the Parent
of the complete liquidation or dissolution of the Parent.
For purposes of this Agreement, the Present Stockholders shall mean
the stockholders of the Parent as registered on the books and records of the
Parent's transfer agent as of the Commencement Date of this Agreement.
(z) "Qualifying Value" means the Qualifying Value as
defined in Sections 3.2(c)(iii)(x)(l) through (4), whichever is applicable to
the Qualifying Change in Control, as adjusted pursuant to Section
3.2(c)(iii)(x)(5).
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS
4.1 REIMBURSEMENT OF EXPENSES. Upon the submission of proper
substantiation by the Executive, and subject to such rules and guidelines as the
Company may from time to time adopt with respect to the reimbursement of
expenses of executive personnel, the Company shall reimburse the Executive for
all reasonable expenses actually paid or incurred by the Executive during the
Term of Employment in the course of and pursuant to the business of the Company.
The Executive shall account to the Company in writing for all expenses for which
reimbursement is sought and shall supply to the Company copies of all relevant
invoices, receipts or other evidence reasonably requested by the Company.
4.2 COMPENSATION/BENEFIT PROGRAMS During the Term of Employment, the
Executive shall be entitled to participate in all medical, dental,
hospitalization, accidental death and dismemberment, disability, travel and life
insurance plans, and any and all other plans as are presently or hereinafter
offered by the Company to its executive personnel, including savings, pension,
profit-sharing and deferred compensation plans, subject to the general
eligibility and participation provisions set forth in such plans. In addition,
at all times during the Term of Employment, the Company shall maintain, at its
own expense, life insurance coverage on the life of the Executive in an amount
not less than $2,000,000, (or, if such policy is only available to the Executive
on a below standard rate basis, such lesser amount of coverage as could be
purchased for the premium that would be payable if the Executive was rated
standard) which amount shall be payable to the beneficiary or beneficiaries
designated by the Executive upon the death of the Executive. The Executive shall
cooperate in taking such physicals and completing such forms and taking such
other action as shall be necessary or appropriate to ascertain his insurability
for purposes of such insurance or any other insurance which the Company may wish
to obtain. Notwithstanding anything in this Agreement to the contrary, the
Company may modify or terminate its benefit plans in its sole discretion at any
time and the Executive is entitled to benefits that are in effect from time to
time; PROVIDED, HOWEVER, that nothing in this sentence shall relieve the Company
of its obligation to provide the life insurance required under this Section 4.2.
4.3 WORKING FACILITIES. During the Term of Employment, the Company
shall furnish the Executive at the facilities of the Company or the Subsidiary
with an office, secretarial help and such other facilities and services suitable
to his position and adequate for the performance of his duties hereunder.
4.4 AUTOMOBILE. During the Term of Employment, the Company shall
continue to provide the Executive with an automobile comparable to the existing
automobile provided by the Company to Executive, together with reimbursement of
all reasonable costs of gasoline, oil, repairs, maintenance, insurance and other
expenses incurred by the Executive in connection with the Executive's use of the
automobile for business purposes.
4.5 STOCK OPTIONS.
(a) As a condition and subject to the Executive's entering into
this Agreement, the Compensation Committee of the Parent Board hereby agrees to
accelerate the vesting schedule of the non-qualified options to purchase 350,000
shares of Common Stock of the Parent granted to the Executive on February 28,
2003 at an exercise price of $1.76 per share, and of the option to purchase
50,000 shares of Common Stock of the Parent granted to the Executive on April 1,
2003 at an exercise price of $1.95 per share, to 20% per year over a five year
period, in each case with the first 20% vesting upon execution of this Agreement
and an additional 20% vesting on each of the four immediately succeeding
anniversaries of the execution of this Agreement.
(b)
(i) At a meeting of the Compensation Committee of the Parent
Board that occurred on October 12, 2004 the Parent granted to the Executive
additional non-qualified options to purchase 166,667 shares of Common Stock of
the Parent at an exercise price of $5.65 per share (the "2004 Option"). The 2004
Option shall vest at a rate of 20% per year, beginning on December 31, 2004 and
shall be subject to the terms and conditions set forth in the Stock Option
Agreement to be entered into by and between the Parent and the Executive.
(ii) At a meeting of the Compensation Committee of the
Parent Board that occurs in each of August of 2005 and August of 2006, the
Parent shall grant to the Executive additional options to purchase 166,667
shares of Common Stock of the Parent, the exercise price per share of which
shall be the fair market value of a share of the Common Stock of the Company as
of the date of each grant (the "Annual Options"). Each Annual Option shall vest
at a rate of 20% per year, beginning on the December 31 of the year in which the
Annual Option is granted, and shall be subject to the terms and conditions set
forth in Stock Option Agreements to be entered into by and between the Parent
and the Executive.
(iii) Notwithstanding anything to the contrary herein, the
number of shares subject to each of the Options (as defined below) shall be
adjusted in accordance with Section 4(b) of the Plan as reasonably determined by
the Committee of the Plan to be appropriate in order to prevent dilution in the
event of a corporate transaction referred to in that Section 4(b).
(c) The stock options granted to the Executive by the Company,
including any options granted pursuant to this Section 4.5, shall be
collectively referred to hereinafter as the "Options."
(d) Notwithstanding anything to the contrary in this Agreement,
in any Stock Option Agreement, or in the Plan, upon the termination of the
Executive's employment with the Company (i) by the Company without Cause
(pursuant to Section 5.4 hereof), (ii) as a result of the Executive's Disability
(pursuant to Section 5.2 hereof), (iii) as a result of the Executive's death
(pursuant to Section 5.3 hereof), or (iv) by the Executive for Good Reason
(pursuant to Section 5.5 hereof), then if and to the extent that any Options are
not then at least 50% exercisable, then 50% of each such Option shall become
exercisable immediately.
(e) Notwithstanding anything to the contrary in this Agreement,
in any Stock Option Agreement, or in the Plan, upon the occurrence of a
Qualified Change in Control, all of the Options shall become immediately
exercisable.
(f) A committee of the Company's Board of Directors consisting
entirely of non-employee directors has approved the provisions of this Section
4.5.
4.6 RESTRICTED STOCK UNITS. At its meeting on October October 12,
2004, a committee of the Parent Board consisting of only non-employee directors
granted to the Executive the right to receive 1,000,000 restricted stock units
(the "Restricted Stock Units"), subject to and conditioned upon the Executive's
entering into this Agreement. This Restricted Stock Unit grant shall be subject
to the terms, conditions and provisions set forth in the Restricted Stock Unit
Agreement (the "Restricted Stock Unit Agreement") attached hereto as Exhibit A
and made a part hereof.
4.7 VACATION; OTHER BENEFITS. The Executive shall be entitled to four
weeks of paid vacation each calendar year during the Term of Employment, to be
taken at such times as the Executive and the Company shall mutually determine
and provided that no vacation time shall significantly interfere with the duties
required to be rendered by the Executive hereunder. Any vacation time not taken
by Executive during any calendar year shall be paid to the Executive in January
of the following calendar year. For purposes of this Agreement personal days and
sick days taken by the Executive will be treated as vacation days taken by the
Executive. Upon the termination of the Executive's employment with Company for
any reason pursuant to Article 5 hereof, the Company shall pay to the Executive
an amount equal to the Executive's Base Salary as in effect as of the Date of
Termination (as defined in Section 5.6 hereof), multiplied by a fraction the
numerator of which shall be that number of vacation days that have accrued but
not yet been taken by the Executive as of the Date of Termination (unless such
accrued but unused vacation time was previously paid to the Executive by the
Company), and the denominator of which shall be 365 (the "Accrued Vacation
Payment"), and shall cause to be paid or otherwise provided to the Executive any
benefits accrued through the Date of Termination (as defined in Section 5.7(b)
below) that the Executive is entitled to receive under any employee benefit
plan, policy, practice or program maintained by the Company or any of its
subsidiaries (including, without limitation any rights to continuation of
medical coverage after the Date of Termination to the extent required by law).
The Executive shall receive such additional benefits, if any, as the Board of
the Company shall from time to time determine.
4.8 WITHHOLDING. Anything in this Agreement to the contrary
notwithstanding, all payments (including issuances of shares of stock) required
to be made by the Company under this Agreement and agreements referred to in
this Agreement to the Executive or his estate or beneficiaries shall be subject
to the withholding of such amounts relating to taxes as the Company may
reasonably determine it should withhold pursuant to any applicable law or
regulation. In lieu of withholding such amounts, in whole or in part, the
Company may, in its sole discretion, accept other provisions for payment of
taxes and withholding as required by law, provided it is satisfied that all
requirements of law affecting its responsibilities to withhold have been
satisfied.
5. TERMINATION.
5.1 TERMINATION FOR CAUSE.
(a) The Company shall at all times have the right, upon providing
a Notice of Termination (as defined in Section 5.7 of this Agreement) to the
Executive, to terminate the Term of Employment for Cause (as defined below).
(b) For purposes of this Agreement, the term "Cause" shall mean
(i) an action or omission of the Executive which constitutes a willful and
material breach of, or a willful and material failure or refusal (other than by
reason of his incapacity due to disability) to perform his duties under, this
Agreement which is not cured within 15 days after receipt by the Executive of
written notice of same from the Executive Committee, (ii) an action or omission
of the Executive which constitutes a willful and material failure or refusal
(other than by reason of his incapacity due to disability) to comply with any
direction by the Executive Committee consistent with his required duties under
this Agreement which is not cured within 15 days after receipt by the Executive
of written notice of same from the Executive Committee, (iii) the conviction of
the Executive of a felony or any crime which involves dishonesty or a breach of
trust (or a plea of NOLO CONTENDERE with respect thereto); (iv) the Executive's
gross negligence or willful misconduct in connection with the performance of his
duties under this Agreement which is not cured within 15 days after receipt by
the Executive of written notice of same from the Executive Committee; (v) a
material fraud, theft, embezzlement or misappropriation of funds or material
self dealing not previously approved by the Executive Committee, or material
dishonesty or breach of fiduciary duty, by the Executive in connection with his
services hereunder; and (vi) the Executive making any false, or malicious
statement (whether oral or written) about the Company and/or the Subsidiary or
any other material subsidiary of the Company, or any of their respective
directors, officers or executives which may reasonably be expected to result in
material harm to the business, relations with customers or suppliers and/or good
will of the Company and/or Subsidiary or any other material subsidiary of the
Company.
(c) The Company's determination as to whether or not it wishes to
terminate the Executive's employment for Cause shall be made by the Executive
Committee at one of the Executive Committee's regularly scheduled or duly called
special meetings (the "Executive Committee Meeting"), to be held at least 15
days after the Company or the Executive Committee shall have provided written
notice (the "Cause Notice") of the Executive Committee Meeting to the Executive.
The Cause Notice shall (i) set forth in reasonable detail acts or omissions or
other grounds upon which the Company is relying for the termination of the
Executive's employment for Cause, and (ii) indicate that the Executive and his
legal counsel shall have the right to attend the Executive Committee Meeting and
address the Executive Committee in order to respond to the issues and/or acts
set forth in the Cause Notice. If, during or after the Executive Committee
Meeting, the Executive Committee decides to terminate the Executive's employment
for Cause, then the Executive Committee shall provide a Notice of Termination to
the Executive, which shall include the factual basis for the termination.
(d) Upon any termination pursuant to this Section 5.1 the Company
shall, on or before the first regular pay date after the Date of Termination (as
defined in Section 5.7 hereof), (i) pay to the Executive any accrued but unpaid
Base Salary through the Date of Termination, (ii) pay to the Executive his
accrued but unpaid Bonuses, if any, for any fiscal year ending on or before the
Date of Termination (if determined as of the Date of Termination; if not so
determined as of such date, to be paid promptly after such Bonuses are
determined), (iii) if a Qualifying Change in Control has occurred on or before
the Date of Termination, pay to the Executive the Special Bonus if to the extent
not previously paid, (iv) pay to the Executive his Accrued Vacation Payment, if
any.
Upon any termination effected and compensated pursuant to this Section 5.1,
the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the Date of
Termination, subject, however, to the provisions of Section 5.1 and the
provision of any benefits pursuant to Section 4.7 hereof).
5.2 DISABILITY.
(a) If the Executive shall as the result of mental or physical
incapacity, illness or disability, become unable, with or without accommodation,
to perform his obligations hereunder (i) for a period of four consecutive
months, or (ii) for an aggregate of 120 days within any period of twelve
consecutive months, the Company shall have the option, in accordance with
applicable law, to terminate this Agreement upon providing a Notice of
Termination (as defined in Section 5.7 of this Agreement) to the Executive.
(b) Upon a termination pursuant to this Section 5.2:
(i) the Company shall pay to the Executive, on or before the
first regular pay date after the Date of Termination (as defined in Section 5.7
hereof), (v) any accrued but unpaid Base Salary through the Date of Termination;
(x) any accrued but unpaid Bonuses for any fiscal year ending on or before the
Date of Termination (if determined as of the Date of Termination; if not so
determined as of such date, to be paid promptly after such Bonuses are
determined); (y) if a Qualifying Change in Control has occurred on or before the
Date of Termination, the Special Bonus if to the extent not previously paid; and
(z) his Accrued Vacation Payment, if any;
(ii) the Company shall continue to pay the Executive's Base
Salary for a period (the "Disability Continuation Period") of 12 months
following the Date of Termination, in the manner and at such times as the Base
Salary otherwise would have been payable to the Executive, minus any payments
being received by the Executive pursuant to any short-term or long-term
disability insurance;
(iii) the Company shall continue to provide the Executive
with the benefits he was receiving under Section 4.2 hereof (the "Benefits"),
through the end of the Disability Continuation Period, in the manner and at such
times as the Bonuses or Benefits otherwise would have been payable or provided
to the Executive;
(iv) the Company shall pay to the Executive his Termination
Bonus, if any, at the time specified in Section 3.2(a)(ii);
(v) if the Date of Termination occurs either after the
Performance Condition (as that term is defined in the Restricted Stock Unit
Agreement) has been satisfied or before December 31, 2005 and the Performance
Condition is thereafter satisfied, then as of the Date of Termination, the
Executive shall become immediately vested in the greater of (1) the then-vested
portion of the Restricted Stock Units, or (2) 50% of the Restricted Stock Units
(the "Vested Units"), and shall become immediately entitled to a distribution of
that number of shares of Common Stock of the Parent that is represented by those
Vested Units; PROVIDED, HOWEVER, that the Company shall have the right (but not
the obligation) to redeem the Vested Units at the Fair Market Value thereof (as
defined below) as of the Date of Termination. If the Company wishes to exercise
such right, it shall provide written notice thereof to the Executive within 30
days after the Date of Termination and the closing on such transaction shall
occur within 20 days after such notice; and
(vi) if and to the extent that any Options are not then at
least 50% exercisable, then 50% of each such Option shall become exercisable
immediately.
"Fair Market Value" means, as of any date, the value of Stock
determined as follows:
(x) If the stock issuable upon surrender of the Vested Units is listed
on any established stock exchange or a national market system, including without
limitation the Nasdaq National Market, its Fair Market Value shall be the
average of the closing sales price for such stock for the 61 day period that
begins 30 days before and ends 30 days after the time of determination, as
quoted on such system or exchange and as reported in the Wall Street Journal or
such other source as the Company's Board of Directors deems reliable; or
(y) If such stock is quoted on Nasdaq (but not on the National Market
System thereof) or regularly quoted by a recognized securities dealer but
selling prices are not reported, its Fair Market Value shall be the average of
the means between the high and low asked prices for the stock for each of the 61
days during the period that begins 30 days before and ends 30 days after the
time of determination, as reported in the Wall Street Journal or such other
source as the Company's Board of Directors deems reliable; or
(z) In the absence of an established market for such stock, the Fair
Market Value thereof shall be determined in good faith by a single appraiser
selected by the Company and the Executive or his estate; provided, that, if they
cannot agree on a single appraiser, each of the Company and the Executive or his
estate shall select an appraiser (collectively, the "Appointed Appraisers") and
if the total number of Appointed Appraisers is an even number, such Appointed
Appraisers shall select an additional Appraiser (the "Additional Appraiser");
and provided further, that the Appointed Appraisers and the Additional
Appraiser, if any, shall then determine by a majority thereof the Fair Market
Value.
(c) The Benefits to be provided to the Executive under clause
(iii) of Section 5.2(b) shall not be less than (in the aggregate) the Benefits
provided to the Executive during the calendar year in which the Executive's
employment hereunder terminates. In the event that the Company is unable to
provide the Executive with any of the Benefits required hereunder by reason of
the termination of the Executive's employment pursuant to this Section 5.2 or is
no longer providing such benefits to its other employees, then the Company shall
either pay directly, or reimburse the Executive for his payment of, the cost to
the Executive to acquire those Benefits as and when payment of such costs are
due, for the period during which such Benefits could not be provided under the
plans. Upon any termination effected and compensated pursuant to this Section
5.2, the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the Date of
Termination, subject, however to the provisions of Section 4.1 and the
provisions of any benefits pursuant to Section 4.7 hereof).
5.3 DEATH. Upon the death of the Executive during the Term of
Employment:
(a) the Company shall pay to the estate of the deceased
Executive, on or before the first regular pay date after the Company becomes
aware of the Executive's death (i) any accrued but unpaid Base Salary through
the date of the Executive's death; (ii) any accrued but unpaid Bonuses for any
fiscal year ending on or before the date of the Executive's death (if determined
as of the Date of Termination; if not so determined as of such date, to be paid
promptly after such Bonuses are determined); (iii) if a Qualifying Change in
Control has occurred on or before the date of the Executive's death, the Special
Bonus if to the extent not previously paid; and (iv) the Executive's Accrued
Vacation Payment, if any;
(b) the Company shall pay to the estate of the deceased Executive
the Executive's Termination Bonus, if any, at the time specified in Section
3.2(a)(ii);
(c) the beneficiary or beneficiaries previously designated by the
Executive, and if no designation had been made, then the Executive's estate,
shall be entitled to receive the proceeds of the life insurance policy that the
Company is required to pay for pursuant to Section 4.2 hereof;
(d) if the date of Executive's death occurs either after the
Performance Condition (as that term is defined in the Restricted Stock Unit
Agreement) has been satisfied or before December 31, 2005, then as of the date
of Executive's death, the estate of the deceased Executive shall become
immediately vested in the greater of (x) the then-vested portion of the
Restricted Stock Units, or (y) 50% of the Restricted Stock Units (the "Vested
Units"), and shall become entitled to a distribution of that number of shares of
Common Stock of the Parent that is represented by the Vested Units promptly
after providing to the Company appropriate evidence of the appointment of legal
representatives for the estate; PROVIDED, HOWEVER, that the Company shall have
the right to redeem the Vested Units at the Fair Market Value thereof as set
forth in Section 5.2 (b). If the Company wishes to exercise such right it shall
provide written notice thereof to the named representative of the estate within
30 days after being advised in writing of the name of such person and the
closing on such transaction shall occur within20 days after such notice; and
(e) if and to the extent that any Options are not then at least
50% exercisable, then 50% of each such Option shall become exercisable
immediately.
Upon any termination effected and compensated pursuant to this Section 5.3,
the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of the
Executive's death, subject, however to the provisions of Section 4.1 and the
provision of any benefits pursuant to Section 4.7 hereof).
5.4 TERMINATION WITHOUT CAUSE.
(a) The Company shall have the right to terminate the Term of
Employment at any time by providing to the Executive a Notice of Termination (as
defined in Section 5.7 hereof) not less than 30 days prior to the Date of
Termination (as defined in Section 5.7 hereof).
(b) Upon any termination pursuant to this Section 5.4 (that is
not a termination under any of Sections 5.1, 5.2, 5.3 or 5.5):
(i) the Company shall pay to the Executive, on or before the
first regular pay date after the Date of Termination (w) any accrued but unpaid
Base Salary through the Date of Termination, (v) any accrued but unpaid Bonuses
for any fiscal year ending on or before the Date of Termination (if determined
as of the Date of Termination; if not so determined as of such date, to be paid
promptly after such Bonuses are determined), (x) if a Qualifying Change in
Control has occurred on or before the Date of Termination, the Special Bonus if
to the extent not previously paid; and (y) his Accrued Vacation Payment, if any;
(ii) the Company shall pay to the Executive the Termination
Bonus, if any, at the time specified in Section 3.2(a)(ii);
(iii) the Company shall continue to pay the Executive's Base
Salary for the duration of the Non-Compete Period as defined in Section 6.1
hereof, in the manner and at such times as the Base Salary otherwise would have
been payable to the Executive;
(iv) the Company shall continue to provide the Executive
with the Benefits he was receiving under Sections 4.2 hereof, through the end of
the Noncompete Period, in the manner and at such times as the Benefits otherwise
would have been payable or provided to the Executive;
(v) if the Date of Termination occurs either after the
Performance Condition (as that term is defined in the Restricted Stock Unit
Agreement) has been satisfied or before December 31, 2005, then as of the Date
of Termination, the Executive shall become immediately vested in the greater of
(1) the portion of the Restricted Stock Units in which the Executive would have
been vested had his employment not terminated until the first anniversary of the
Date of Termination, or (2) 50% of the Restricted Stock Units (the "Vested
Units") and shall be entitled to an immediate distribution of that number of
shares of Common Stock of the Parent that is represented by those Vested Units;
PROVIDED, HOWEVER, that the Company shall have the right to redeem the Vested
Units at the Fair Market Value thereof as set forth in Section 5.2 (b). If the
Company wishes to exercise such rights, it shall provide written notice thereof
to the Executive within 30 days after the Date of Termination and the closing on
such transaction shall occur within 20 days after such notice;
(vi) if and to the extent that any Options are not then at
least 50% exercisable, then 50% of each such Option shall become exercisable
immediately; and
(vii) in the event that a Change in Control occurs after the
Performance Condition (as that terms is defined in the Restricted Stock Unit
Agreement) has been satisfied or before December 31, 2005, and on or before the
first anniversary of the Date of Termination, then: (x) the Executive shall
become immediately vested in any Restricted Stock Units that were not vested as
of the Date of Termination (the "Additional Vested Units") and shall be entitled
as of that first anniversary to an immediate distribution of that number of
shares of Common Stock of the Parent that is represented by those Additional
Vested Units; provided, however, that the Company shall have the right to redeem
the Additional Vested Units at the Fair Market Value thereof as set forth in
Section 5.2(b); and (y) if the Change in Control is a Qualifying Change in
Control, the Company shall immediately pay to the Executive the Special Bonus
under Section 3.2(c) hereof.
If the Company wishes to exercise the right to redeem any Vested
Units or Additional Vested Units pursuant to the foregoing provisions, it shall
provide written notice thereof to the Executive within 30 days after the Date of
Termination and the closing on such transaction shall occur within 20 days after
such notice..
(c) In the event that the Company is unable to provide the
Executive with any of the Benefits required hereunder by reason of the
termination of the Executive's employment pursuant to this Section 5.4, then the
Company shall either pay directly, or reimburse the Executive for his payment
of, the cost to the Executive to acquire those Benefits as and when payment of
such costs are due, for the period during which such Benefits could not be
provided under the plans.
Upon any termination effected and compensated pursuant to this Section 5.4,
the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the Date of
Termination, subject, however, to the provisions of Section 4.1 and the
provision of any benefits pursuant to Section 4.7 hereof).
5.5 TERMINATION BY EXECUTIVE.
(a) The Executive shall at all times have the right, by providing
a Notice of Termination to the Company not less than 90 days prior to the Date
of Termination (as defined in Section 5.7 hereof), to terminate the Term of
Employment.
(b) Upon termination of the Term of Employment pursuant to this
Section 5.5 by the Executive without Good Reason (as defined below):
(x) the Company shall pay to the Executive, on or before the
first regular pay date after the Date of Termination (i) any accrued but unpaid
Base Salary through the Date of Termination, (ii) any accrued but unpaid Bonuses
for any fiscal year ending on or before the Date of Termination (if determined
as of the Date of Termination; if not so determined as of such date, to be paid
promptly after such Bonuses are determined); (iii) if a Qualifying Change in
Control has occurred on or before the Date of Termination, the Special Bonus if
and to the extent not previously paid, and (iv) his Accrued Vacation Payment, if
any;
(y) the Company shall pay to the Executive the Termination
Bonus, if any, at the time specified in Section 3.2(a)(ii); and
(z) if the Performance Condition (as that term is defined in
the Restricted Stock Unit Agreement), is satisfied, then on or before the first
regular pay date after the Date of Termination (as defined in Section 5.6
hereof), the Company shall immediately distribute to the Executive a number of
shares of Common Stock of the Parent that is represented by the percentage of
the Restricted Stock Units that are vested (the "Vested Units"); PROVIDED,
HOWEVER, that the Company shall have the right to redeem the Vested Units at the
Fair Market Value thereof as set forth in Section 5.2(b). If the Company wishes
to exercise such right, it shall provide written notice thereof to the Executive
within 30 days after the Date of Termination and the closing on such transaction
shall occur within 20 days after such notice.
Upon any termination effected and compensated pursuant to this Section
5.5(b), the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the Date of
Termination, subject, however, to the provisions of Section 4.1 and the
provision of any benefits pursuant to Section 4.7 hereof).
(c) Upon termination of the Term of Employment pursuant to this
Section 5.5 by the Executive for Good Reason, the Company shall pay to the
Executive the same amounts, and shall continue or compensate for Benefits in the
same amounts, and the Executive shall become vested in the same Restricted Stock
Units and Options, that would have been payable or provided by the Company to
the Executive, or would have become vested, under Section 5.4 of this Agreement
if the Term of Employment had been terminated by the Company without Cause. Upon
any termination effected and compensated pursuant to this Section 5.5(c), the
Company shall have no further liability hereunder (other than for reimbursement
for reasonable business expenses incurred prior to the Date of Termination,
subject, however, to the provisions of Section 4.1 and the provision of any
benefits pursuant to Section 4.7 hereof).
(d) For purposes of this Agreement, "Good Reason" shall mean (i)
the assignment to the Executive of substantial duties inconsistent in any
material respect with the Executive's position (including titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
1.2 of this Agreement (except as may otherwise be required by law or applicable
regulation of any self-regulatory organization such as The New York Stock
Exchange), or any other intentional action by the Company which results in a
material diminution in the Executive's position (including titles and reporting
requirements), authority, duties or responsibilities as CEO of the Subsidiary,
or, if so elected, the Company (except as may otherwise be required by law or
applicable regulation of any self-regulatory organization such as The New York
Stock Exchange), excluding for this purpose any action not taken in bad faith
and which is remedied (to the extent remediable) by the Company promptly after
receipt of notice thereof given by the Executive; (ii) any failure by the
Company to comply with any of the provisions of Article 3 of this Agreement in
any material respects; (iii) the Company's requiring the Executive to be based
at any office or location outside of Miami-Dade or Broward Counties, Florida,
except for travel reasonably required in the performance of the Executive's
responsibilities, unless the Company requests that the Executive be relocated to
the Company's corporate offices on Long Island, New York, and the Company
compensates the Executive for any reasonable expenses incurred by the Executive
on account of the relocation to such offices including, without limitation,
moving expenses, temporary housing, storage, additional maintenance costs for
his boat, return travel during the transition period, and additional costs of
schools for primary or secondary education (i.e. grade K through 12) for his
children; or (iv) any purported termination by the Company of the Executive's
employment otherwise than for Cause pursuant to Section 5.1 or by reason of the
Executive's disability pursuant to Section 5.2 of this Agreement, prior to the
Expiration Date. A termination by the Executive shall not be deemed for Good
Reason unless the Executive has notified the Company in writing of his intention
to terminate for Good Reason pursuant to Section 5.6 within 30 days of the date
on which the Executive learns that the event causing the alleged Good Reason has
occurred and the Company fails to remedy such Good Reason within 30 days
following the receipt of such notice. Any termination by the Executive for Good
Reason has to be made promptly (and in any case within one month) after the end
of the 30 day period within which the Company may remedy the events giving rise
to the right to terminate for Good Reason.
5.6 EXPIRATION OF AGREEMENT.
(a) If the Term of Employment terminates on the Expiration Date:
(i) the Company shall pay to the Executive, on or before the
first regular pay date after the Date of Termination (w) any accrued but unpaid
Base Salary through the Date of Termination, (v) any accrued but unpaid Bonuses
for any fiscal year ending on or before the Date of Termination (if determined
as of the Date of Termination; if not so determined as of such date, to be paid
promptly after such Bonuses are determined), (x) if a Qualifying Change in
Control has occurred on or before the Date of Termination, the Special Bonus if
and to the extent not previously paid; and (y) his Accrued Vacation Payment, if
any;
(ii) the Company shall pay to the Executive the Termination
Bonus, if any, at the time specified in Section 3.2(a)(ii);
(iii) the Company shall continue to pay the Executive's Base
Salary for the duration of the Non-Compete Period as defined in Section 6.1
hereof, in the manner and at such times as the Base Salary otherwise would have
been payable to the Executive; and
(iv) the Company shall continue to provide the Executive
with the Benefits he was receiving under Sections 4.2 hereof, through the end of
the Non-Compete Period, in the manner and at such times as the Benefits
otherwise would have been payable or provided to the Executive.
(b) In the event that the Company is unable to provide the
Executive with any of the Benefits required hereunder by reason of the
termination of the Executive's employment pursuant to this Section 5.6, then the
Company shall either pay directly, or reimburse the Executive for his payment
of, the cost to the Executive to acquire those Benefits as and when payment of
such costs are due, for the period during which such Benefits could not be
provided under the plans.
Upon any termination effected and compensated pursuant to this Section 5.6,
the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the Date of
Termination, subject, however, to the provisions of Section 4.1 and the
provision of any benefits pursuant to Section 4.7 hereof).
5.7 GENERAL TERMINATION DEFINITIONS
(a) NOTICE OF TERMINATION. Any termination of the Executive's
employment with the Company pursuant to this Article 5, shall be communicated by
a Notice of Termination to the other party hereto given in accordance with
Section 10 of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific termination
or non-renewal provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the basis for the termination of the Executive's employment
under the provision so indicated, and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than thirty (30) days after the
giving of such notice).
(b) DATE OF TERMINATION. For purposes of this Agreement, "Date of
Termination" means the date of receipt of the Notice of Termination or any later
date specified therein, as the case may be; PROVIDED, HOWEVER, that if the
Executive's employment is terminated by reason of his death, the Date of
Termination shall be the date of death of the Executive. In the event that the
Term of Employment terminates on the Expiration Date, the Date of Termination
shall be the Expiration Date.
5.8 SET-OFF OR MITIGATION. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of this
Agreement but if he is employed during any period following the Date of
Termination for so long as the Company has an obligation to provide compensation
or benefits to the Executive the Executive shall advise the Company of such
employment and the obligation to provide any insurance coverage (other than the
life insurance coverage required to be provided under Section 4.2 hereof) shall
terminate at such time as comparable insurance coverage is available from the
new employer. Nothing in this Agreement shall limit the right of any party under
applicable law to offset payments.
5.9 RESIGNATION. Upon any termination of employment pursuant to this
Article 5, the Executive shall be deemed to have resigned his positions as any
officer of the Company and/or the Subsidiary and/or other subsidiaries of the
Company, and any positions that he may have then held on the Parent Board and/or
the Subsidiary Board and/or the Boards of Directors of any other subsidiaries of
the Company. If requested by the Company, the Executive shall upon such
termination execute a resignation letter to the applicable Board.
5.10 SURVIVAL. The provisions of this Article 5 shall survive the
termination or expiration of this Agreement, as applicable.
5.11 CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY IN THE EVENT OF A
CHANGE IN CONTROL.
(a) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment, distribution or other
action by the Company to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, including any additional payments required under this Section
5.11) (a "Payment") would be subject to an excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code") (such excise tax is
hereinafter referred to as the "Excise Tax"), the Company shall make a payment
to the Executive (a "Gross-Up Payment") in an amount such that after payment by
the Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up
Payment, the Executive retains (or has had paid to the Internal Revenue Service
on his behalf) an amount of the Gross-Up Payment equal to the sum of the Excise
Tax and income tax imposed upon the Payments; PROVIDED, HOWEVER that any and all
payments to the Executive pursuant to this Section 5.11 shall be no more than
$6,000,000 in the aggregate.
(b) Subject to the provisions of paragraph (c) of this Section
5.11, all determinations required to be made under this Section 5.11, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by an accounting firm mutually agreeable to the parties] (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
of Control, the Executive shall appoint another nationally recognized accounting
firm to make the determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All fees and expenses of
the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment,
as determined pursuant to this Section 5.11, shall be paid by the Company to the
Executive within five days of the receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal income
tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 5.11 and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim and shall apprise the Company of the nature
of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 5.11(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; PROVIDED, HOWEVER, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and FURTHER PROVIDED that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority. The reimbursement for the Excise Tax and income tax (but not the
reimbursement, on an after tax basis, for costs and expenses payable by the
Company pursuant to this paragraph (c), shall be subject to the $6,000,000
limitation on Gross-Up Payments set forth in paragraph (a) of this Section 5.11.
(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 5.11(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
the Company's complying with the requirements of Section 5.11(c)) promptly pay
to the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by the
Executive of an amount advanced by the Company pursuant to Section 5.11(c), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.
6. RESTRICTIVE COVENANTS.
6.1 NON-COMPETITION.
(a) Except as provided in this Section 6.1, at all times during
the Non-Compete Period (as defined in Section 6.1(b)(i) below) the Executive
shall not, directly or indirectly, engage in any competition with, or have any
interest in any sole proprietorship, corporation, company, partnership,
association, venture or business or any other person or entity (whether as an
Executive, officer, director, partner, agent, security holder, creditor,
consultant or otherwise) that directly or indirectly (or through any affiliated
entity) competes with, the Company's Business (as defined in Section 6.1(b)(ii)
below) in North America or Europe.
(b) For purposes of this Article 6:
(i) the term "Non-Compete Period" shall mean at all times
while the Executive is employed by the Company and the two year period
immediately following the Date of Termination; PROVIDED HOWEVER that solely in
the event of a Termination Without Cause pursuant to Section 5.4 hereof, the
Company may, in its sole discretion, designate by written notice to the
Executive on or before the Date of Termination that in lieu of the foregoing 2
year period, the Non-Compete Period shall be the 1 year or 3 year period
immediately following the Date of Termination, but contingent upon the Company
paying the Executive the Base Salary and Benefits through such designated Non-
Compete Period in accordance with Section 5.4 hereof;
(ii) "the Company" and "the Companies" shall be deemed to
include the Company and any existing or future subsidiaries of the Company that
are operating during the time periods described herein and any other entities
that directly or indirectly, through one or more intermediaries, control, are
controlled by or are under common control with the Company during the periods
described herein including but not limited to the Subsidiary; and
(iii) the "Company's Business" shall be deemed to be any
business in which the Company is now or may hereafter become engaged while the
Executive is employed by the Company or the Subsidiary including, but not
limited to, the advertising, marketing, distribution, sale and/or manufacture of
personal computers, computer related products, industrial products and/or
consumer electronic products by means of any medium including, but not limited
to, broadcast, cable or satellite television, radio, print or the Internet.
(c) This Section 6.1 shall not apply to the Executive's ownership
of Common Stock of the Parent or the acquisition by the Executive, solely as an
investment, of securities of any issuer that is registered under Section 12(b)
or 12(g) of the Securities Exchange Act of 1934, as amended, and that are listed
or admitted for trading on any United States national securities exchange or
that are quoted on the Nasdaq Stock Market, or any similar system or automated
dissemination of quotations of securities prices in common use, so long as the
Executive does not control, acquire a controlling interest in or become a member
of a group which exercises direct or indirect control of, more than two percent
(2%) of any class of capital stock of such corporation.
6.2 CONFIDENTIAL INFORMATION. The Executive shall not at any time
divulge, communicate, use to the detriment of the Companies or for the benefit
of any other person or persons, or misuse in any way, any Confidential
Information (as hereinafter defined) pertaining to the business of the
Companies. Any Confidential Information or data now or hereafter acquired by the
Executive with respect to the business of the Companies (which shall include,
but not be limited to, information concerning the Companies' financial
condition, prospects, technology, customers, suppliers, sources of leads and
methods of doing business) shall be deemed a valuable, special and unique asset
of the Companies that is received by the Executive in confidence and as a
fiduciary, and Executive shall remain a fiduciary to the Companies with respect
to all of such information. For purposes of this Agreement, "Confidential
Information" means all trade secrets and information disclosed to the Executive
or known by the Executive as a consequence of or through the unique position of
his employment with the Companies (including information conceived, originated,
discovered or developed by the Executive and information acquired by the
Companies from others) prior to or after the date hereof, and not generally or
publicly known (other than as a result of unauthorized disclosure by the
Executive), about the Companies or their businesses. Notwithstanding the
foregoing, nothing herein shall be deemed to restrict the Executive from
disclosing Confidential Information as required to perform his duties under this
Agreement or to the extent required by law. Upon request by the Company, the
Executive shall deliver promptly to the Company upon termination of his services
for the Company, or at any time thereafter as the Company may request, all
Company memoranda, notes, records, reports, manuals, drawings, designs, computer
files in any media and other documents (and all copies thereof) containing such
Confidential Information and all property of the Company or any other Company
affiliate, which he may then possess or have under his control.
6.3 NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS. At all times while
the Executive is employed by the Companies and for the Non-Compete Period
thereafter, the Executive shall not, directly or indirectly, for himself or for
any other person, firm, corporation, partnership, association or other entity
(a) employ or attempt to employ or enter into any contractual arrangement with
any employee or former employee of the Companies, unless such employee or former
employee has not been employed by the Companies for a period in excess of six
months, and/or (b) call on or solicit any of the actual or targeted prospective
customers or clients of the Companies on behalf of any person or entity in
connection with any business that competes with the Business of the Companies
nor shall the Executive make known the names and addresses of such clients or
any information relating in any manner to the Companies trade or business
relationships with such customers, other than in connection with the performance
of Executive's duties under this Agreement.
6.4 OWNERSHIP OF DEVELOPMENTS. All processes, concepts, techniques,
inventions and works of authorship, including new contributions, improvements,
formats, packages, programs, systems, machines, compositions of matter
manufactured, developments, applications and discoveries, and all copyrights,
patents, trade secrets, or other intellectual property rights associated
therewith conceived, invented, made, developed or created by the Executive
during the Term of Employment either during the course of performing work for
the Companies or their clients or which are related in any manner to the
business (commercial or experimental) of the Companies or their clients
(collectively, the "Work Product") shall belong exclusively to the Companies and
shall, to the extent possible, be considered a work made by the Executive for
hire for the Companies within the meaning of Title 17 of the United States Code.
To the extent the Work Product may not be considered work made by the Executive
for hire for the Companies, the Executive agrees to assign, and automatically
assign at the time of creation of the Work Product, without any requirement of
further consideration, any right, title, or interest the Executive may have in
such Work Product. Upon the request of the Companies, the Executive shall take
such further actions, including execution and delivery of instruments of
conveyance, as may be appropriate to give full and proper effect to such
assignment. The Executive shall further: (a) promptly disclose the Work Product
to the Company; (b) assign to the Company, without additional compensation, all
patent or other rights to such Work Product for the United States and foreign
countries; (c) sign all papers necessary to carry out the foregoing; and (d)
give testimony in support of his inventions, all at the sole cost and expense of
the Company.
6.5 BOOKS AND RECORDS. All books, records, and accounts relating in
any manner to the customers or clients of the Companies, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall be the
exclusive property of the Companies and shall be returned immediately to the
Companies on the Date of Termination or on the Companies' request at any time.
6.6 ACKNOWLEDGMENT BY EXECUTIVE. The Executive acknowledges and
confirms that the restrictive covenants contained in this Article 6 (including
without limitation the length of the term of the provisions of this Article 6)
are reasonably necessary to protect the legitimate business interests of the
Companies, and are not overbroad, overlong, or unfair and are not the result of
overreaching, duress or coercion of any kind. The Executive further acknowledges
and confirms that the compensation payable to the Executive under this Agreement
is in consideration for the duties and obligations of the Executive hereunder,
including the restrictive covenants contained in this Article 6, and that such
compensation is sufficient, fair and reasonable. The Executive further
acknowledges and confirms that his full, uninhibited and faithful observance of
each of the covenants contained in this Article 6 will not cause him any undue
hardship, financial or otherwise, and that enforcement of each of the covenants
contained herein will not impair his ability to obtain employment commensurate
with his abilities and on terms fully acceptable to him or otherwise to obtain
income required for the comfortable support of him and his family and the
satisfaction of the needs of his creditors. The Executive acknowledges and
confirms that his special knowledge of the business of the Companies is such as
would cause the Companies serious injury or loss if he were to use such ability
and knowledge to the benefit of a competitor or were to compete with the
Companies in violation of the terms of this Article 6. The Executive further
acknowledges that the restrictions contained in this Article 6 are intended to
be, and shall be, for the benefit of and shall be enforceable by, the Companies'
successors and assigns. The Executive expressly agrees that upon any breach or
violation of the provisions of this Article 6, the Companies shall be entitled,
as a matter of right, in addition to any other rights or remedies it may have,
to (a) temporary and/or permanent injunctive relief in any court of competent
jurisdiction, (b) the recovery of any bonuses paid or payable to the Executive
under Section 3.2(a) or (b) hereof for the two years ending on the Date of
Termination, and (c) such damages as are provided at law or in equity. The
existence of any claim or cause of action against the Companies or their
affiliates, whether predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement of the restrictions contained in this
Article 6.
6.7 REFORMATION BY COURT. In the event that a court of competent
jurisdiction shall determine that any provision of this Article 6 is invalid or
more restrictive than permitted under the governing law of such jurisdiction,
then only as to enforcement of this Article 6 within the jurisdiction of such
court, such provision shall be interpreted or reformed and enforced as if it
provided for the maximum restriction permitted under such governing law.
6.8 SURVIVAL. The provisions of this Article 6 shall survive the
termination or expiration of this Agreement, as applicable.
6.9 INJUNCTION. It is recognized and hereby acknowledged by the
parties hereto that a breach by the Executive of any of the covenants contained
in Article 6 of this Agreement will cause irreparable harm and damage to the
Companies, the monetary amount of which may be virtually impossible to
ascertain. As a result, the Executive recognizes and hereby acknowledges that
the Companies shall be entitled to an injunction from any court of competent
jurisdiction enjoining and restraining any violation of any or all of the
covenants contained in Article 6 of this Agreement by the Executive or any of
his affiliates, associates, partners or agents, either directly or indirectly,
and that such right to injunction shall be cumulative and in addition to
whatever other remedies the Companies may possess.
7. ASSIGNMENT. Neither party shall have the right to assign or delegate his
rights or obligations hereunder, or any portion thereof, to any other person
without the consent of the other parties.
8. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Florida and the
exclusive venue for any action relating to this Agreement shall be the state or
federal courts located within Miami-Dade County, Florida, but if the Executive
has moved his office to the Company's location in New York, the applicable law
shall be the internal laws of the State of New York and the exclusive venue
shall be the state and federal courts located in Nassau County, New York.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and, upon
its effectiveness, shall supersede all prior agreements, understandings and
arrangements, both oral and written, between the Executive and the Company (or
any of its affiliates) with respect to such subject matter. This Agreement may
not be modified in any way unless by a written instrument signed by both the
Company and the Executive.
10. NOTICES. All notices required or permitted to be given hereunder shall
be in writing and shall be personally delivered by courier, sent by registered
or certified mail, return receipt requested or sent by confirmed facsimile
transmission addressed as set forth herein. Notices personally delivered, sent
by facsimile or sent by overnight courier shall be deemed given on the date of
delivery and notices mailed in accordance with the foregoing shall be deemed
given upon the earlier of receipt by the addressee, as evidenced by the return
receipt thereof, or three (3) days after deposit in the U.S. mail. Notice shall
be sent (i) if to the Company, addressed to Systemax Inc., 00 Xxxxxx Xxxx Xxxxx,
Xxxx Xxxxxxxxxx, XX 00000 Attention: Xxxxxxx Xxxxx, Chairman and (ii) if to the
Executive, to his address as reflected on the payroll records of the Company or
Subsidiary, or to such other address as either party shall request by notice to
the other in accordance with this provision.
11. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit of
and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where permitted and
applicable, assigns, including, without limitation, any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.
12. SEVERABILITY. The invalidity of any one or more of the words, phrases,
sentences, clauses, provisions, sections or articles contained in this Agreement
shall not affect the enforceability of the remaining portions of this Agreement
or any part thereof, all of which are inserted conditionally on their being
valid in law, and, in the event that any one or more of the words, phrases,
sentences, clauses, provisions, sections or articles contained in this Agreement
shall be declared invalid, this Agreement shall be construed as if such invalid
word or words, phrase or phrases, sentence or sentences, clause or clauses,
provisions or provisions, section or sections or article or articles had not
been inserted. If such invalidity is caused by length of time or size of area,
or both, the otherwise invalid provision will be considered to be reduced to a
period or area which would cure such invalidity.
13. WAIVERS. The waiver by either party hereto of a breach or violation of
any term or provision of this Agreement shall not operate nor be construed as a
waiver of any subsequent breach or violation.
14. DAMAGES; ATTORNEYS FEES. Nothing contained herein shall be construed to
prevent the Company or the Executive from seeking and recovering from the other
damages sustained by either or both of them as a result of its or his breach of
any term or provision of this Agreement. In the event that either party hereto
brings suit for the collection of any damages resulting from, or the injunction
of any action constituting, a breach of any of the terms or provisions of this
Agreement, then the party found to be at fault shall pay all reasonable court
costs and attorneys' fees of the other.
15. SECTION HEADINGS. The article, section and paragraph headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
16. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the Company, the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument and agreement.
18. INDEMNIFICATION.
(a) Subject to limitations imposed by law, the Company shall
indemnify and hold harmless the Executive to the fullest extent permitted by law
from and against any and all claims, damages, expenses (including attorneys'
fees), judgments, penalties, fines, settlements, and all other liabilities
incurred or paid by him in connection with the investigation, defense,
prosecution, settlement or appeal of any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative and to which the Executive was or is a party or is threatened to
be made a party by reason of the fact that the Executive is or was an officer,
employee, director or agent of the Company, or by reason of anything done or not
done by the Executive in any such capacity or capacities, provided that the
Executive acted in good faith, in a manner that was not grossly negligent or
constituted willful misconduct and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The Company also shall pay any and all expenses (including
attorney's fees) incurred by the Executive as a result of the Executive being
called as a witness in connection with any matter involving the Company or any
of its subsidiary and/or any of their respective officers or directors.
(b) The Company shall pay any expenses (including attorneys'
fees), judgments, penalties, fines, settlements, and other liabilities incurred
by the Executive in investigating, defending, settling or appealing any action,
suit or proceeding described in this Section 18 in advance of the final
disposition of such action, suit or proceeding. The Company shall promptly pay
the amount of such expenses to the Executive, but in no event later than 10 days
following the Executive's delivery to the Company of a written request for an
advance pursuant to this Article 18, together with a reasonable accounting of
such expenses.
(c) The Executive hereby undertakes and agrees to repay to the
Company any advances made pursuant to this Article 18 if and to the extent that
it shall ultimately be found that the Executive is not entitled to be
indemnified by the Company for such amounts.
(d) The Company shall make the advances contemplated by this
Article 18 regardless of the Executive's financial ability to make repayment,
and regardless of whether indemnification of the Indemnitee by the Company will
ultimately be required. Any advances and undertakings to repay pursuant to this
Article 18 shall be unsecured and interest-free.
(e) The provisions of this Article 18 shall survive the
termination or expiration of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
THE COMPANY:
SYSTEMAX INC., a Delaware corporation
By: /S/ XXXXX XXXXX
Name: Xxxxx Xxxxx
Title: Vice Chairman
EXECUTIVE:
/S/ XXXXXXX XXXXXXXXXX
XXXXXXX XXXXXXXXXX
EXHIBIT A
SYSTEMAX INC.
RESTRICTED STOCK UNIT AGREEMENT
THIS RESTRICTED STOCK UNIT AGREEMENT (the "AGREEMENT") is made and entered
into on October 12, 2004 but effective as of June 1, 2004, by and between
SYSTEMAX INC., a Delaware corporation (the "COMPANY"), and XXXXXXX XXXXXXXXXX
(the "RECIPIENT").
WHEREAS, effective as of June 1, 2004, the Company, and the Recipient
entered into an Employment Agreement (the "Employment Agreement") whereby the
Recipient performs services as the Chief Executive Officer of Tiger Direct, Inc.
(the "Subsidiary") and may, if so appointed by the Board of Directors of the
Company, perform services as the Chief Executive Officer of the Company; and
HEREAS, in accordance with Section 4.6 of the Employment Agreement, the
Executive is entitled to be granted restricted stock units from the Company,
subject to the terms and conditions specified herein.
NOW, THEREFORE, the Company and the Recipient hereby agree as follows:
7. GRANT PURSUANT TO PLAN. This Agreement and the grant of Restricted Stock
Units are made pursuant to the Company's 1999 Long-Term Stock Incentive Plan
(the "Plan"), the terms of which are incorporated herein for all purposes. The
Recipient hereby acknowledges receipt of a copy of the Plan and agrees to be
bound by all of the terms and conditions of this Agreement and the Plan. Unless
otherwise provided herein, terms used in this Agreement that are defined in the
Plan and not defined herein shall have the meanings attributable thereto in the
Plan.
8. AWARD OF RESTRICTED STOCK UNITS. At its meeting on October 12, 2004, the
Compensation Committee of the Company's Board of Directors granted to the
Recipient one million (1,000,000) Restricted Stock Units (collectively the
"Restricted Stock Units"), subject to and conditioned upon the Recipient's
execution of the Employment Agreement, approval by the holders of a majority of
the Company's common stock at the Company's next annual stockholders meeting,
and satisfaction of the conditions (the "Performance Condition") specified in
EITHER subparagraph (a) or (b) of this Section 2:
(a) the provisions of this subparagraph (a) shall be satisfied
if:
(i) the Company has positive earnings before interest,
taxes, depreciation and amortization ("EBITDA") for the three months ending
December 31, 2004, and
(ii) the EBITDA of all computer divisions in North America
of the Company and its subsidiaries (including without limitation Systemax
Manufacturing) for the three months ending December 31, 2004 is not less than
105% of the EBITDA of all of the computer divisions in North America of the
Company and its subsidiaries (including without limitation Systemax
Manufacturing) for the three months ended December 31, 2003, and
(b) the provisions of this subparagraph (b) shall be satisfied
if:
(i) the Company has positive EBITDA for the calendar year
ending December 31, 2005; and
(ii) the EBITDA of all computer divisions in North America
of the Companies and its subsidiary (including without limitation Systemax
Manufacturing) for the calendar year ending December 31, 2005 is not less than
105% of the EBITDA of all of the computer divisions in North America of the
Company and its subsidiaries (including without limitation Systemax
Manufacturing) for the calendar year ending December 31, 2004.
For purposes of the foregoing clauses (a) and (b), EBITDA shall be
determined in accordance with generally accepted accounting principles. The
parties hereto acknowledge that the terms of this Agreement have been approved
by a committee of the Board of Directors of the Company consisting entirely of
at least two non-employee directors. In the event this Agreement is not approved
by the holders of a majority of the Company's common stock at the Company's next
annual stockholders meeting this Agreement is void and the Recipient forfeits
the right to receive any Restricted Stock Units and Restricted Stock hereunder.
9. VESTING OF RESTRICTED STOCK UNITS.
(a) Except as otherwise provided in Sections 3(b) or (c) of this
Agreement, or in the Plan, the Restricted Stock Units shall vest in installments
as provided below, which shall be cumulative. The following table indicates each
date (a "Vesting Date") upon which the Recipient shall be vested with respect to
the percentage of Restricted Stock Units granted as indicated beside the date,
provided that the Recipient continues to be employed with the Company, the
Subsidiary or any of their subsidiaries through and on the applicable Vesting
Date and that the Performance Condition is satisfied:
PERCENTAGE OF RESTRICTED STOCK UNITS VESTING DATE
20% The later of May 31, 2005
or the date on which the
Performance Condition
is satisfied.
10% April 1, 2006
10% April 1, 2007
10% April 1, 2008
10% April 1, 2009
10% April 1, 2010
10% April 1, 2011
10% April 1, 2012
10% April 1, 2013
Except as otherwise specifically provided herein, there shall be
no proportionate or partial vesting in the periods prior to each Vesting Date,
and all vesting shall occur only on the appropriate Vesting Date. Except as
otherwise provided in Section 3(c)(i)(y), upon the termination of the
Recipient's employment with the Company, the Subsidiary and their subsidiaries,
any unvested portion of the Restricted Stock Units that does not become vested
pursuant to the provisions hereof as a result of such termination shall
terminate and be null and void. Any portion of the Restricted Stock Units
subject to this Agreement that is and has become vested pursuant to this Section
3 shall be referred to as "Vested Units", and any portion of the Restricted
Stock Units that is and has not yet become vested shall be referred to as the
"Non-Vested Units."
(b) Notwithstanding any other term or provision of this
Agreement, in the event a Qualified Change in Control (as defined in the
Employment Agreement) occurs after the Performance Condition has been satisfied,
or before December 31, 2005, the Recipient shall become immediately vested in
all of the Restricted Stock Units as of the date of the Qualified Change in
Control; PROVIDED, HOWEVER, that in the circumstances of a Change in Control as
set forth in clause (y)(1) of Section 3.2(c)(iii) of the Employment Agreement,
the date of the consummation of the reorganization, merger, consolidation or
corporate transaction or series of transactions (rather than the date of the
stockholder approval) shall be deemed to be the date of the Change in Control
for purposes of this Section 3(b).
(c) Notwithstanding any other term or provision of this
Agreement:
(i) if the Recipient's employment with the Company or the
Subsidiary is terminated by the Company or the Subsidiary, whichever is
applicable, without Cause or by the Recipient for Good Reason either after the
Performance Condition has been satisfied, or before December 31, 2005, then:
(x) as of the Date of Termination, the Recipient shall
become immediately vested in the greater of (1) the portion of the Restricted
Stock Units in which the Recipient would have been vested had his employment not
terminated until the first anniversary of the Date of Termination, or (2) 50% of
the Restricted Stock Units (the "Vested Units"), and shall entitled to an
immediate distribution of that number of shares of Common Stock of the Company
that is represented by those Vested Units; PROVIDED, HOWEVER, that the Company
shall have the right to redeem the Vested Units at the Fair Market Value thereof
as set forth in Section 5.2(b) of the Employment Agreement, and
(y) in the event that a Change in Control occurs on or
before the first anniversary of the Date of Termination, then the Recipient
shall become immediately vested in any Restricted Stock Units that were not
vested as of the Date of Termination (the "Additional Vested Units") and shall
be entitled as of that first anniversary to an immediate distribution of that
number of shares of Common Stock of the Company that is represented by those
Additional Vested Units; PROVIDED, HOWEVER, that the Company shall have the
right to redeem the Additional Vested Units at the Fair Market Value thereof as
set forth in Section 5.2(b) of the Employment Agreement.
(ii) if the Recipient's employment with the Company or the
Subsidiary, whichever is applicable, is terminated due to the Recipient's
disability or death either after the Performance Condition is satisfied, or
before December 31, 2005, the Recipient or the Recipient's estate or designated
beneficiary(ies), whichever is applicable, shall become immediately vested in
50% of the Restricted Stock Units unless more than 50% of the Restricted Stock
Units have previously vested (the "Additional Vested Units"); and shall be
entitled to an immediate distribution of that number of shares of Common Stock
of the Company that is represented by those Vested Units PROVIDED, HOWEVER, that
the Company shall have the right to redeem the Additional Vested Units at the
Fair Market Value thereof as set forth in Section 5.2(b) of the Employment
Agreement;
(iii) if the Recipient's employment with the Company or the
Subsidiary is terminated by the Company or the Subsidiary, whichever is
applicable, for Cause, after the Performance Condition has been satisfied, then
on or before the first regular pay date after the Date of Termination the
Recipient shall become immediately entitled to a distribution of that number of
shares of Common Stock of the Company that is represented by the percentage of
the Restricted Stock Units that are Vested; PROVIDED, HOWEVER, that the Company
shall have the right to redeem the Additional Vested Units at the Fair Market
Value thereof as set forth in Section 5.2(b) of the Employment Agreement.
For purposes of this Agreement, the terms "Cause", "Good Reason", "Fair
Market Value," "Date of Termination," and "Qualified Change in Control" shall
have the same meanings as set forth in the Employment Agreement. If the Company
wishes to exercise its right under the foregoing provisions to redeem any Vested
Units or Additional Vested Units, it shall provide written notice thereof to the
Executive within 30 days after the Date of Termination and the closing on such
transaction shall occur within 20 days after such notice.
10. DELIVERY OF SHARES REPRESENTED BY THE RESTRICTED STOCK UNITS
(a) Except as otherwise set forth in the Employment Agreement,
the Company shall deliver to the Recipient, within 30 days after the occurrence
of the Distribution Event, the shares of Common Stock of the Company that are
represented by the Vested Units under this Agreement. For this purpose, a
"Distribution Event" shall occur on the earliest of (i) the date on which the
Recipient is no longer an employee of either the Company or the Subsidiary for
any reason, (ii) the date on which a Qualified Change of Control (as defined in
the Employment Agreement) occurs; or (iii) the Trigger Date (as defined in
Section 4(b) hereof); PROVIDED, HOWEVER, that in the circumstances of a Change
in Control as set forth in clause (y)(1) of Section 3.2(c)(iii) of the
Employment Agreement, the date of the consummation of the reorganization,
merger, consolidation or corporate transaction or series of transactions (rather
than the date of the stockholder approval) shall be deemed to be the date of the
Change in Control for purposes of this Section 4(a).
(b) For purposes of Section 4(a) hereof, the "Trigger Date" shall
mean the following:
(i) with respect to the Restricted Stock Units that vest on
the later of May 31, 2005 or the date on which the Performance Condition is
satisfied in accordance with Section 3(a) hereof, January 1, 2006, or if the
Performance Condition under Section 2(a) is not satisfied but the Performance
Condition under Section 2(b) is satisfied, April 1, 2006; and
(ii) with respect to the Restricted Stock Units that vest on
April 1, 2006 in accordance with Section 3(a) hereof, or on any succeeding April
1, the date on which the Restricted Stock Units become vested. Notwithstanding
the foregoing, the Recipient may elect, in a writing received by the Company at
least twelve (12) months prior to the applicable Trigger Date, to defer the
Trigger Date specified in the applicable clause of this Section 4(b) until any
later date, subject to such limitations as may be necessary to comply with the
tax laws in order that the Recipient not be required to recognize income as a
result of such deferral.
(c) All of the stock certificates evidencing any shares of Common
Stock that are represented by the Restricted Stock Units pursuant to this
Agreement shall bear appropriate legends restricting the sale or other transfer
of the shares of Common Stock in accordance with applicable state and federal
securities laws, this Agreement and the Plan.
11. RIGHTS WITH RESPECT TO SHARES OF COMMON STOCK REPRESENTED BY RESTRICTED
STOCK UNITS.
(a) Except as otherwise provided in this Section 5, the Recipient
shall not have any rights, benefits or entitlements with respect to any shares
of Common Stock that are represented by the Restricted Stock Units subject to
this Agreement unless and until a Distribution Event has occurred.
(b) Notwithstanding Section 5(a) hereof, during the term of this
Agreement, the Recipient shall have the right to receive distributions (the
"Dividend Equivalent Payments") from the Company equal to any dividends or other
distributions that would have been distributed to the Recipient if each of the
Restricted Stock Units instead were an issued and outstanding share of Common
Stock owned by the Recipient. The Dividend Equivalent Payments, reduced by any
applicable withholding taxes, shall be made at the same time, in the same form
and in the same manner as dividends or other distributions are paid to the
holders of Common Stock of the Company; PROVIDED, HOWEVER, that (i) there shall
be no Dividend Equivalent Payments with respect to any dividend distribution of
shares in the Company's subsidiary, Profit Center Software Inc. ("PCS"), unless
all of the computer divisions of the Company in North America have implemented
PCS software on or before June 30, 2005; and (ii) that if the dividend declared
is a dividend of shares of Common Stock, then any shares of Common Stock issued
to the Recipient with respect to the Restricted Stock Units subject to this
Agreement shall have the same status and bear the same legend as the Restricted
Stock Units and shall be held by the Company (and the Recipient shall provide a
duly executed stock power therefore) until a Distribution Event, unless
otherwise determined by the Committee.
(c) In the event that the number of shares of Common Stock of the
Company, as a result of a combination of the Common Stock or any other change or
exchange for other securities, by reclassification, reorganization or otherwise,
is increased or decreased or changed into or exchanged for a different number or
kind of shares of Common Stock or other securities of the Company or of another
entity, the number of Restricted Stock Units subject to this Agreement shall be
appropriately adjusted to reflect that change. If any adjustment shall result in
a fractional share, the fraction shall be disregarded.
6. TAX WITHHOLDING. On or before a Distribution Event or the date on which
the Recipient becomes entitled to receive a Dividend Equivalent Payment, as a
condition to the Company's obligations with respect to the Restricted Stock
Units (including, without limitation, any obligation to deliver any shares of
Common Stock or make any Dividend Equivalent Payments hereunder), the Recipient
shall make arrangements satisfactory to the Company to pay to the Company any
federal, state or local taxes of any kind required to be withheld with respect
to its delivery of the shares of Common Stock and Dividend Equivalent Payments.
If the Recipient shall fail to make the tax payments as are required, the
Company shall, to the extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to the Recipient any federal, state or local
taxes of any kind required by law to be withheld with respect to the shares of
the Common Stock or any Dividend Equivalent Payments.
7. REGISTRATION OF RESTRICTED STOCK UNITS AND SHARES OF COMMON STOCK. If
and to the extent it has not already done so, the Company shall register with
the Securities and Exchange Commission ("SEC"), on a Form S-8 or such other
required form, both the Restricted Stock Units and the shares of Common Stock
that are represented by the Restricted Stock Units under this Agreement.
8. AMENDMENT, MODIFICATION AND ASSIGNMENT. No provision of this Agreement
may be modified, waived or discharged unless that waiver, modification or
discharge is agreed to in writing signed by the Recipient and the Company. No
waiver by either party of any breach by the other party to this Agreement of any
condition or provision of this Agreement shall be deemed a waiver of any other
conditions or provisions of this Agreement. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. Unless otherwise consented to by the Committee, this Agreement shall
not be assigned by the Recipient in whole or in part. The rights and obligations
created under this Agreement shall be binding on the Recipient and his heirs and
legal representatives and on the successors and assigns of the Company.
9. TRANSFERABILITY. The Restricted Stock Units granted under this Agreement
are not transferable otherwise than by will or under the applicable laws of
descent and distribution. In addition, the Restricted Stock Units shall not be
assigned, negotiated, pledged or hypothecated in any way (whether by operation
of law or otherwise), and the Restricted Stock Units shall not be subject to
execution, attachment or similar process.
10. BENEFICIARY DESIGNATION. The Recipient shall have the right to
designate, on a beneficiary designation form satisfactory to the Committee which
shall be filed with the Company, a beneficiary or beneficiaries to receive any
unissued shares of Common Stock and/or Dividend Equivalent Payments under this
Agreement in the event of the death of the Recipient. In the event that the
Recipient shall not file a beneficiary designation form with the Company, or if
none of the designated beneficiaries survive the Recipient, then any unpaid
shares of Common Stock and/or Dividend Equivalent Payments under this Agreement
shall be paid to the estate of the Recipient.
11. MISCELLANEOUS.
(a) NO RIGHT TO EMPLOYMENT OR SERVICE. The grant of this
Restricted Stock Unit award shall not confer, or be construed to confer, upon
the Recipient any right to be employed by or perform services for the Company,
the Subsidiaries or their subsidiaries.
(b) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing
contained in this Agreement shall preclude the Company or the Subsidiary from
adopting or continuing in effect other or additional compensation arrangements,
and those arrangements may be either generally applicable or applicable only in
specific cases.
(c) SEVERABILITY. If any provision of this Agreement is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify this Agreement or the award of Restricted Stock Units under
any applicable law, that provision shall be construed or deemed amended to
conform to applicable law (or if that provision cannot be so construed or deemed
amended without materially altering the purpose or intent of this Agreement and
the award of Restricted Stock Units, that provision shall be stricken as to that
jurisdiction and the remainder of this Agreement and the award shall remain in
full force and effect).
(d) NO TRUST OR FUND CREATED. Neither this Agreement nor the
grant of the award of Restricted Stock Units shall create or be construed to
create a trust or separate fund of any kind or a fiduciary relationship between
the Company and the Recipient or any other person. The Restricted Stock Units
subject to this Agreement represent only the Company's unfunded and unsecured
promise to issue shares of Common Stock to the Recipient in the future. To the
extent that the Recipient or any other person acquires a right to receive
payments from the Company pursuant to this Agreement, that right shall be no
greater than the right of any unsecured general creditor of the Company.
(e) GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Delaware.
(f) INTERPRETATION. The Recipient accepts this award of
Restricted Stock Units subject to all the terms and provisions of this Agreement
and the terms and conditions of the Plan.
(g) HEADINGS. Headings are given to the Paragraphs and
Subparagraphs of this Agreement solely as a convenience to facilitate reference.
The headings shall not be deemed in any way material or relevant to the
construction or interpretation of this Agreement or any provision thereof.
12. COMPLETE AGREEMENT. This Agreement and those agreements and documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter of this Agreement in any way.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
SYSTEMAX INC., a Delaware corporation
By: /S/ XXXXX XXXXX
---------------------------
Name: Xxxxx Xxxxx
Title: Vice Chairman
Agreed and Accepted:
By: /S/ XXXXXXX XXXXXXXXXX
----------------------
XXXXXXX XXXXXXXXXX
