EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into February 27, 2001 (the "Effective
Date"), by and between Xxxxxx X. Xxxxx, Xx. (the "Executive") and Comdisco, Inc.
(the "Company");
WITNESSETH THAT:
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WHEREAS, the parties desire to enter into this Agreement pertaining to the
employment of the Executive by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, it is hereby covenanted and agreed by the Executive and the Company
as follows:
1. Performance of Services. The Executive's employment with the Company shall
be subject to the following:
(a) Subject to the terms of this Agreement, the Company hereby agrees to
employ the Executive as its Chairman, President, and Chief Executive
Officer during the Agreement Term (as defined below), and the
Executive hereby agrees to remain in the employ of the Company during
the Agreement Term.
(b) Not later than the Employment Commencement Date, the Executive shall
be elected to the Board of Directors of the Company (the "Board") and
to the position of its Chairman and, for the duration of the Agreement
Term, while the Executive is employed by the Company, he shall
continue to serve as Chairman of the Board, and shall be a member of
the Executive Committee of the Board. The Executive shall provide a
list of acceptable candidates for nomination to the Board, and the
committees of the Board. The Board shall give full consideration to
such list of candidates. A similar procedure will apply for filling
vacancies. The Company's by-laws shall be amended to reflect this
procedure to the extent that such amendment is necessary to require
such procedure.
(c) During the Agreement Term, while the Executive is employed by the
Company, the Executive shall devote his full time, energies and
talents to serving as its Chairman, President, and Chief Executive
Officer.
(d) The Executive agrees that he shall perform his duties faithfully and
efficiently subject to the directions of the Board. The Executive's
duties may include providing services for both the Company and the
Subsidiaries (as defined below), as determined by the Board; provided
that the Executive shall not, without his consent, be assigned tasks
that would be inconsistent with those of Chairman, President, and
Chief Executive Officer. The Executive shall report to the Board and
shall have such authority, power, responsibilities and duties as are
inherent in his positions (and the undertakings applicable to his
positions) and necessary to carry out his responsibilities and the
duties required of him hereunder. The Executive will also be subject
to the Company policies that are applicable to the Company's other
senior management employees. Notwithstanding the foregoing provisions
of this paragraph 1, during the Agreement Term, the Executive may
devote reasonable time to activities other than those required under
this Agreement, including the supervision of his personal investments,
and activities involving professional, charitable, community,
educational, religious and similar types of organizations, speaking
engagements, membership on the boards of directors of other
organizations, and similar types of activities, to the extent that
such other activities do not, in the judgment of the Board, inhibit or
prohibit the performance of the Executive's duties under this
Agreement, or conflict in any material way with the business of the
Company or any Subsidiary; provided, however, that the Executive shall
not serve on the board of any business, render to others services of
any kind for compensation, or hold any other position with any
business, without the consent of the Board. For purposes of the
preceding sentence, Board approval is deemed to be granted to the
Executive to serve on the board of directors of Xxxxx-Xxxxxxx
Corporation and Enron Corporation.
(e) Subject to the terms of this Agreement, the Executive shall not be
required to perform services under this Agreement during any period
that he is Disabled. The Executive shall be considered "Disabled"
during any period in which he has a physical or mental disability
which renders him incapable, after reasonable accommodation, of
performing his duties under this Agreement. In the event of a dispute
as to whether the Executive is Disabled, the Company may refer the
same to a licensed practicing physician of the Company's choice, and
the Executive agrees to submit to such tests and examinations as such
physician shall deem appropriate. During the period in which the
Executive is Disabled, the Company may appoint a temporary replacement
to assume the Executive's responsibilities.
(f) The "Agreement Term" shall be the period beginning on the February 27,
2001 (the "Employment Commencement Date") and ending on the three-year
anniversary of the Employment Commencement Date. Thereafter, the
Agreement Term will be automatically extended for twelve-month
periods, unless one party to this Agreement provides notice of
non-renewal to the other at least 60 days before the last day of the
Agreement Term.
(g) For purposes of this Agreement, the term "Subsidiary" shall mean any
corporation, partnership, joint venture or other entity during any
period in which at least a fifty percent interest in such entity is
owned, directly or indirectly, by the Company (or a successor to the
Company).
2. Compensation. Subject to the terms of this Agreement, during the Agreement
Term, while the Executive is employed by the Company, the Company shall
compensate him for his services as follows:
(a) Salary. The Executive shall receive, for each 12-consecutive month
period beginning on the Employment Commencement Date and each
anniversary thereof, in substantially equal monthly or more frequent
installments, an annual base salary of not less than $700,000 (the
"Salary"). The Executive's Salary rate shall be reviewed by the Board
on or about October 1 of each year during the Agreement Term, while
the Executive is employed by the Company, to determine whether an
increase in the amount of Salary is appropriate. The salary rate of
the Executive shall not be reduced.
(b) Annual Bonus. The Executive shall participate in an annual bonus
program. The bonus program shall provide for a maximum bonus amount of
200% of the Executive's annual salary. The performance goals shall be
established by the Board after consultation with the Executive.
Notwithstanding the foregoing provisions of this paragraph (b), for
the performance period beginning on the Employment Commencement Date
and ending September 30, 2001, the Executive's bonus shall not be less
than $700,000.
(c) Options. The Executive shall be granted non-statutory stock options
covering shares of common stock of the Company ("Stock"), subject to
the following:
(i) As of the Employment Commencement Date, the Executive shall be
granted a stock option covering 600,000 shares of Stock. Such
option shall be granted under the Company's Amended and Restated
1998 Long-Term Stock Ownership Incentive Plan (the "Stock Plan"),
and shall have an exercise price of $11.72 per share of Stock.
The terms of such option for 600,000 shares shall be reflected in
the Notice of Grant of Stock Options and Award Agreement set
forth as Supplement 1A to this Agreement, which is attached to
and forms a part of this Agreement. As of the Employment
Commencement Date, the Executive shall be granted an additional
option covering 406,500 shares of Stock, subject to substantially
the same terms as the terms applicable to the option granted
under the Stock Plan for the 600,000 share option described in
the preceding sentence, and shall have an exercise price of
$10.90 per share of Stock. The terms of such option for 406,500
shares shall be reflected in the Notice of Grant of Stock Options
and Award Agreement set forth as Supplement 1B to this Agreement,
which is attached to and forms a part of this Agreement.
(ii) As of the one-year anniversary of the Employment Commencement
Date, the Executive shall be granted an option covering 500,000
shares of Stock. As of the two-year anniversary of the Employment
Commencement Date, the Executive shall be granted an option
covering an additional 500,000 shares of Stock. The options
granted pursuant to this paragraph (ii) shall be granted under
the Stock Plan or a successor to that plan (or, to the extent
that no such plan is available for such grants, such grants shall
be made outside of any plan). The terms of each such option shall
be reflected in the Notice of Grant of Stock Options and Award
Agreement set forth as Supplement 1C to this Agreement, which is
attached to and forms a part of this Agreement. If a Change in
Control occurs prior to the two-year anniversary of the
Employment Commencement Date, then, as of the date immediately
prior to the Change in Control, the Executive shall be granted an
option covering the excess of 1,000,000 shares of Stock over the
number of shares covered by options previously granted under this
paragraph (ii) (which shall be in lieu of any additional grants
under this paragraph (ii)). The exercise price for each such
option granted under this paragraph (ii) shall be the fair market
value of the Stock as of the date of grant for the option. The
obligation under this paragraph (ii) to grant an option covering
500,000 shares of Stock on each of the first and second
anniversaries of the Employment Commencement Date, and to grant
an option on a Change in Control, shall be adjusted in the same
manner as is required under section 24 of the Stock Plan.
(iii)Subject to the provisions of paragraph 4, the options shall
become vested and exercisable as to one-third of the covered
shares on the one-year anniversary of the Employment Commencement
Date, and the options shall become vested and exercisable as to
an additional 1/36th of the covered shares on the last day of
each calendar month following the one-year anniversary of the
Employment Commencement Date, provided that the Executive's Date
of Termination has not then occurred. It is recited here, for
purposes of avoiding ambiguity, that by reason of this paragraph
(iii), the options granted under paragraph (ii) above shall be
partially vested on the date of grant. In the event of a Change
in Control, all options granted under the foregoing provisions of
this paragraph (c) shall become fully vested.
(iv) Subject to the provisions of paragraph 4, the options shall have
a ten-year term beginning on the respective grant date for each
option.
(v) The options shall be registered on a Form S-8 registration
statement which shall remain effective for the term of the
options.
The options granted under the foregoing provisions of this
paragraph (c) shall be treated as a hiring bonus, and are an
inducement essential to the Executive's entering into this
Agreement. In addition to the Options granted as a hiring bonus
in accordance with paragraphs (i) and (ii) above, the Company
will make annual grants of Stock options to the Executive based
on performance and consistent with the Company's regular
compensation practices for executive officers, taking into
account the Executive's position relative to other executives. In
determining the amount of the annual option grant to the
Executive in any year, the Company will not consider the hiring
bonus options granted to the Executive under paragraphs (i) and
(ii) above. Except as otherwise provided by this paragraph (c),
the Stock options shall be subject to such terms as are
comparable to the terms of options granted to other senior
executive officers.
(d) Physical Examination. The Company will reimburse the Executive for an
annual physical examination for the Executive and for his wife. The
Executive shall be entitled to a Tax Gross-Up with respect to such
reimbursement.
(e) Automobile. The Executive shall be provided, at the Company's expense,
with the use of an automobile in the location around the Company's
headquarters, and shall be entitled to a Tax Gross-Up with respect to
the provision of such vehicle.
(f) Location. The Executive's office shall be in the Company's
headquarters. As of the Effective Date, such headquarters is in
Rosemont, Illinois. Thereafter, the headquarters shall be at Rosemont
or such other location as is determined by the Board after
consultation with the Executive. During the Agreement Term, the
Executive may reside in Carmel, Indiana. The Executive will be
provided with the use of Company jet or helicopter (as determined by
the Executive) for commuting to Carmel, Indiana. The Executive shall
be entitled to a Tax Gross-Up with respect to the provision of such
transportation.
(g) Apartment. The Company will provide the Executive with a furnished
apartment in the vicinity of the Company's headquarters. The Executive
shall be entitled to a Tax Gross-Up with respect to the provision of
such apartment.
(h) Spousal Travel. The Executive's wife will be permitted to accompany
him on any business-related travel, and the Executive will be
reimbursed by the Company for the expenses of such travel. The
Executive shall be entitled to a Tax Gross-Up with respect to such
reimbursement of his wife's travel expenses.
(i) Financial Planning. The Executive shall be reimbursed for up to
$15,000 per year for personal financial and tax planning expenses
while the Executive is employed by the Company. The Executive shall be
entitled to a Tax Gross-Up with respect to such reimbursement.
(j) Relocation. The Company will purchase the Executive's house in
Colorado Springs, Colorado, if he is unsuccessful in selling the house
within 90 days after date of listing of the house with a broker for
sale. The purchase price paid by the Company shall be the greater of
(i) the Executive's cost for the house plus the cost of improvements
made by the Executive or (ii) the appraised value of the house.
Subject to the foregoing provisions of this paragraph (j), the
Executive shall be entitled to relocation-related benefits in
accordance with the relocation policies of the Company applicable to
its senior executive officers.
(k) Expenses. The Executive is authorized to incur reasonable expenses for
entertainment, traveling, meals, lodging and similar items in
promoting the Company's business. The Company will reimburse the
Executive for all reasonable expenses so incurred, provided that such
expenses are incurred and accounted for in accordance with the
reasonable policies and procedures established by the Company.
(l) Vacation. The Executive shall be eligible for four weeks vacation per
year.
(m) Change in Control. Following a Change in Control, the Company shall to
provide compensation (including bonus opportunities) and benefits to
the Executive which, on an aggregate basis, equal or exceed the
compensation (including bonus opportunities) and benefits in effect
immediately before the Change in Control.
(n) Fringe Benefits. Except as otherwise specifically provided to the
contrary in this Agreement, the Executive shall be provided with the
welfare benefits and other fringe benefits to the same extent and on
the same terms as those benefits are provided by the Company from time
to time to the Company's other senior management employees; provided,
however, that if any such benefits are adjusted to reflect an
executive's position, the Executive's benefits shall be adjusted in a
manner commensurate with his position. The Executive shall also be
entitled to the perquisites that are customarily provided in
connection with his position. Nothing in this paragraph (m) shall be
construed to prevent the Company from revising the benefits or
perquisites generally provided to executives from time to time.
However, the Company shall not be required to provide a benefit under
this paragraph (n) if such benefit would duplicate (or otherwise be of
the same type as) a benefit specifically required to be provided under
another provision of this Agreement. The Executive shall complete all
forms and physical examinations, and otherwise take all other similar
actions to secure coverage and benefits described in this paragraph 2,
to the extent determined to be necessary or appropriate by the
Company.
(o) Tax Gross-Up. The term "Tax Gross-Up" with respect to any benefit
means a payment in an amount equal to the aggregate amount of
additional Federal, state and local income taxes and payroll taxes
payable by the Executive from time to time by reason of the receipt of
that benefit, and by reason of his receipt of the gross-up payment.
3. Termination. The Executive's employment with the Company during the
Agreement Term may be terminated by the Company or the Executive without
any breach of this Agreement only under the circumstances described in
paragraphs 3(a) through 3(f):
(a) Death. The Executive's employment hereunder will terminate upon his
death.
(b) Permanent Disability. The Company may terminate the Executive's
employment during any period in which he is Permanently Disabled. The
Executive shall be considered "Permanently Disabled" during any period
in which he is Disabled; provided, however, that the Executive shall
not be considered to be "Permanently Disabled" unless (i) the
Executive, as a result of a physical or mental disability, is
incapable, after reasonable accommodation, of performing any
substantial portion of the Executive's duties under this Agreement on
a permanent, full-time basis; and (ii) such disability is determined
by the Board to be of a long-term nature. In the event of a dispute as
to whether the Executive is Permanently Disabled, the Company may
refer the same to a mutually acceptable licensed practicing physician,
and the Executive agrees to submit to such tests and examination as
such physician shall deem appropriate.
(c) Cause. The Company may terminate the Executive's employment hereunder
at any time for Cause. For purposes of this Agreement, the term
"Cause" shall mean:
(i) the willful and continued failure by the Executive to
substantially perform his material duties with the Company (other
than any such failure resulting from the Executive's being
Disabled), within a reasonable period of time after a written
demand for substantial performance is delivered to the Executive
by the Board, which demand specifically identifies the manner in
which the Board believes that the Executive has not substantially
performed his duties;
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company, monetarily
or otherwise; or
(iii)the engaging by the Executive in egregious misconduct involving
serious moral turpitude and the Company's Board, in the exercise
of reasonable judgment, determines that the Executive's
credibility and reputation no longer conform to the standard of
the Company's executives. For purposes of this Agreement, no act,
or failure to act, on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that the
Executive's action or omission was in the best interest of the
Company. "Cause" shall not include (i) bad judgment, (ii) failure
of the Company to meet financial performance objectives, or (iii)
any act or omission of which any member of the Board who is not a
party to such act or omission has had actual knowledge for at
least twelve months.
(d) Constructive Discharge. If (I) the Executive provides written notice
to the Company of the occurrence of Good Reason (as defined below)
within a reasonable time after the Executive has knowledge of the
circumstances constituting Good Reason, which notice shall
specifically identifies the circumstances which the Executive believes
constitute Good Reason; (II) the Company fails to correct the
circumstances within 30 days after receiving such notice; and (III)
the Executive resigns within a reasonable time after the Company fails
to correct such circumstances; then the Executive shall be considered
to have been subject to a Constructive Discharge by the Company. For
purposes of this Agreement, "Good Reason" shall mean, without the
Executive's express written consent (and except in consequence of a
prior termination of the Executive's employment), the occurrence of
any of the following circumstances:
(i) A material adverse change in the status, title, authority,
responsibilities or perquisites of the Executive. Following a
material transaction involving the Company, "Good Reason" shall
be deemed to exist under this paragraph (i) if the Executive is
not the Chief Executive Officer and Chairman of the parent
company of the surviving entity.
(ii) The failure to nominate or elect the Executive as Chairman of the
Board or as a member of the Executive Committee of the Board in
accordance with paragraph 1, or his removal from any such
position.
(iii)A change in Executive's reporting relationship from the
reporting relationship required in accordance with paragraph 1.
(iv) Assignment of duties materially inconsistent with the Executive's
position as President and Chief Executive Officer.
(v) The failure to comply with the procedures set forth in paragraph
1(b) with respect to nomination and appointment of Board members
or failure to amend the by-laws of the Company to reflect those
procedures.
(vi) The failure of the Board to give consideration to the list of
candidates recommended by the Executive for Board nomination as
required by the provisions of paragraph 1(b).
(vii)A reduction by the Company in the Executive's salary or benefits
to an amount that is less than required under paragraph 2.
(viii) Following a Change in Control, failure of to provide
compensation and benefits to the Executive as required under
paragraph 2(l).
(ix) The failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement.
(x) Any purported termination of the Executive's employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of paragraph (g) below (and, if applicable, the
requirements of paragraph (b) above), and for purposes of this
Agreement, no such purported termination shall be effective.
(xi) Any material breach of this Agreement by the Company not
described in paragraphs (i) through (x) next above.
The Executive's right to terminate his employment pursuant to
this paragraph (d) shall not be affected by his incapacity due to
physical or mental illness.
(e) Termination by Executive. The Executive may terminate his
employment hereunder at any time for any reason by giving the
Company prior written Notice of Termination (as defined in
paragraph 3(g)), which Notice of Termination shall be effective
not less than 60 days after it is given to the Company, provided
that nothing in this Agreement shall require the Executive to
specify a reason for any such termination. However, to the extent
that the procedures specified in paragraph 3(d) are required, the
procedures of this paragraph 3(e) may not be used in lieu of the
procedures required under paragraph 3(d).
(f) Termination by Company. The Company may terminate the Executive's
employment hereunder at any time for any reason, by giving the
Executive prior written Notice of Termination, which Notice of
Termination shall be effective immediately, or such later time as
is specified in such notice. The Company shall not be required to
specify a reason for the termination under this paragraph (f),
provided that termination of the Executive's employment by the
Company shall be deemed to have occurred under this paragraph (f)
only if it is not for reasons described in paragraph 3(b), 3(c),
3(d), or 3(e).
(g) Notice of Termination. Any termination of the Executive's
employment by the Company or the Executive (other than a
termination pursuant to paragraph 3(a)) must be communicated by a
written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" means a
dated notice which indicates the Date of Termination (not earlier
than the date on which the notice is provided), and which
indicates the specific termination provision in this Agreement
relied on and which sets forth in reasonable detail the facts and
circumstances, if any, claimed to provide a basis for termination
of the Executive's employment under the provision so indicated.
(h) Date of Termination. "Date of Termination" means the last day the
Executive is employed by the Company, provided that the
Executive's employment is terminated in accordance with the
foregoing provisions of this paragraph 3.
(i) Effect of Termination. If, on the Date of Termination, the
Executive is a member of the Board of Directors of the Company or
any of the Subsidiaries, or holds any other position with the
Company and the Subsidiaries (other than the position described
in paragraph 1(a)), the Executive shall resign from all such
positions as of the Date of Termination.
4. Rights Upon Termination. The Executive's right to payment and benefits
under this Agreement for periods after his Date of Termination shall be
determined in accordance with the following provisions of this paragraph 4:
(a) General. If the Executive's Date of Termination occurs during the
Agreement Term for any reason, the Company shall pay to the Executive:
(i) The Executive's Salary for the period ending on the Date of
Termination.
(ii) Payment for unused vacation days, as determined in accordance
with Company policy as in effect from time to time.
(iii)If the Date of Termination occurs after the end of a performance
period for the annual bonus, and prior to the payment of the
annual bonus (as described in paragraph 2(b)) for the year, the
Executive shall be paid such bonus amount at the regularly
scheduled time.
(iv) The Executive and any of his dependents shall be eligible for
medical continuation coverage under the provisions of section
4980B of the Internal Revenue Code or section 601 of the Employee
Retirement Income Security Act (sometimes called "COBRA
coverage") to the extent required by applicable law.
(v) Any other payments or benefits to be provided to the Executive by
the Company pursuant to any employee benefit plans or
arrangements adopted by the Company, to the extent such amounts
are due from the Company.
Except as may otherwise be expressly provided to the contrary in
this Agreement, nothing in this Agreement shall be construed as
requiring the Executive to be treated as employed by the Company
for purposes of any employee benefit plan or arrangement
following the date of the Executive's Date of Termination.
(b) Death. If the Executive's Date of Termination occurs during the
Agreement Term by reason of the Executive's death, then, in addition
to the amounts payable in accordance with paragraph 4(a):
(i) The Executive's estate shall receive payment of the bonus for the
performance period in which his Date of Termination occurs, based
on actual performance for the entire period, and payable at the
same time as it is payable for other participants in the bonus
plan; provided, however, that it shall be subject to a pro-rata
reduction for the portion of the performance period following the
Date of Termination.
(ii) If the Date of Termination occurs prior to the two-year
anniversary of the Employment Commencement Date, then, as of the
date immediately prior to the Date of Termination, the Executive
shall be granted an option covering the excess of 1,000,000
shares of Stock over the number of shares covered by options
granted under paragraph 2(c)(ii). The exercise price for each
such option granted under this paragraph (ii) shall be the fair
market value of the Stock as of the date of grant for the option.
The vesting of such option shall be determined under the vesting
provisions of paragraph 2(c)(iii) based on the Executive's
service to the Date of Termination. The term of such option shall
be determined under paragraph 2(c)(iv). The obligation under this
paragraph (ii) to grant an option shall be adjusted in the same
manner as is required under section 24 of the Stock Plan.
(iii)To the extent that any outstanding Stock options previously
granted to the Executive (including, without limitation, any
option been granted immediately prior to the Date of Termination
in accordance with paragraph (ii) above) are vested and
exercisable immediately prior to the Date of Termination, each
such option shall remain exercisable until the date fixed for
expiration of the option (determined without regard to
Executive's termination of employment), and to the extent that
any such Stock option is not vested and exercisable immediately
prior to the Date of Termination, it shall terminate immediately
on the Date of Termination.
(c) Disability. If the Executive's Date of Termination occurs during the
Agreement Term under circumstances described in paragraph 3(b)
(relating to Executive's being Permanently Disabled) then, in addition
to the amounts payable in accordance with paragraph 4(a):
(i) The Executive shall receive payment of the bonus for the
performance period in which his Date of Termination occurs, based
on actual performance for the entire period, and payable at the
same time as it is payable for other participants in the bonus
plan; provided, however, that it shall be subject to a pro-rata
reduction for the portion of the performance period following the
Date of Termination.
(ii) If the Date of Termination occurs prior to the two-year
anniversary of the Employment Commencement Date, then, as of the
date immediately prior to the Date of Termination, the Executive
shall be granted an option covering the excess of 1,000,000
shares of Stock over the number of shares covered by options
granted under paragraph 2(c)(ii). The exercise price for each
such option granted under this paragraph (ii) shall be the fair
market value of the Stock as of the date of grant for the option.
The vesting of such option shall be determined under the vesting
provisions of paragraph 2(c)(iii) based on the Executive's
service to the Date of Termination. The term of such option shall
be determined under paragraph 2(c)(iv). The obligation under this
paragraph (ii) to grant an option shall be adjusted in the same
manner as is required under section 24 of the Stock Plan.
(iii)To the extent that any outstanding Stock options previously
granted to the Executive (including, without limitation, any
option been granted immediately prior to the Date of Termination
in accordance with paragraph (ii) above) are vested and
exercisable immediately prior to the Date of Termination, each
such option shall remain exercisable until the date fixed for
expiration of the option (determined without regard to
Executive's termination of employment), and to the extent that
any such Stock option is not vested and exercisable immediately
prior to the Date of Termination, it shall terminate immediately
on the Date of Termination. If, at the Date of Termination under
circumstances described in paragraph 3(b), the Executive is not
eligible for income replacement benefits under the Company's
long-term disability plan or another arrangement providing
substantially similar benefits, then, in lieu of receiving any
benefits under such plan or arrangement, the Executive, for a
period of two years after the Date of Termination, shall continue
to receive monthly or more frequent payments at his salary rate
in effect immediately prior to the Date of Termination.
(d) Cause. If the Executive's Date of Termination occurs during the
Agreement Term under circumstances described in paragraph 3(c)
(relating to the Executive's termination for Cause) then, except as
otherwise expressly provided in this Agreement, the Company shall have
no obligation to make payments under the Agreement for periods after
the Executive's Date of Termination, and any outstanding Stock option
shall terminate immediately upon the Date of Termination regardless of
the vested status of the option.
(e) Resignation. If the Executive's Date of Termination occurs during the
Agreement Term under circumstances described in paragraph 3(e)
(relating to the Executive's resignation), then, except as otherwise
expressly provided in this Agreement, the Company shall otherwise have
no obligation to make payments under the Agreement for periods after
the Executive's Date of Termination; provided that to the extent that
any outstanding Stock option previously granted to the Executive is
vested and exercisable immediately prior to the Date of Termination,
it shall remain exercisable until the earlier of the ten-year
anniversary of the Employment Commencement Date or the eighteen-month
anniversary of the Date of Termination, and to the extent that any
such Stock option is not vested and exercisable immediately prior to
the Date of Termination, it shall terminate immediately on the Date of
Termination.
(f) Termination without Cause and Constructive Discharge. If the
Executive's Date of Termination occurs during the Agreement Term under
circumstances described in paragraph 3(d) (relating to Constructive
Discharge) or paragraph 3(f) (relating to termination by the Company
without Cause) then, in addition to the amounts payable in accordance
with paragraph 4(a):
(i) The Executive shall receive, in a lump sum payment, the sum of:
(A) All of the salary that would be payable to the Executive if
he continued in the employ of the Company until the End of
the Severance Period and received the rate of salary in
effective immediately prior to his Date of Termination.
plus
(B) The total bonus payments he would have received if he
remained in the employ of the Company until the End of the
Severance Period, with the rate of bonus payment to be not
less than the greater of $700,000 per year or the highest
annual bonus payment received by the Executive from the
Company for his period of employment; provided that if the
End of the Severance Period occurs on a date other than the
last day of a performance period, the bonus deemed to be
earned under this paragraph (B) for the performance period
in which the End of the Severance Period occurs shall be the
amount determined in accordance with this paragraph (B) for
the period, but subject to a pro rata reduction to reflect
the portion of the performance period following the End of
the Severance Period.
The "End of the Severance Period" shall be the date that is
the later of the three-year anniversary of the Employment
Commencement Date or the two-year anniversary of the Date of
Termination.
(ii) The Company will provide the Executive with medical and dental
benefits with respect to the Executive and his dependents to the
extent that such benefits would have been provided to the
Executive (with respect to the Executive and his dependents)
under the Company's medical and dental plans applicable to the
Company's senior executives (as those plans may be amended from
time to time in accordance with their terms) as though the
Executive remained employed by the Company until the end of the
Agreement Term. The period of coverage under the foregoing
provisions of this paragraph (ii) shall be counted toward the
Company's obligation to provide COBRA coverage. The period of
coverage required under this paragraph (ii) shall cease as of the
first day on which the Executive has medical benefit coverage
from his employer (including a new employer or a prior employer)
after the Date of Termination. The Executive agrees that during
any period after the Date of Termination during which he is
eligible to obtain medical benefit coverage (with respect to the
Executive or his dependents) from the Executive's employer, or
other person to whom the Executive provides service, the
Executive will file such an application, and take such other
steps as may be necessary to obtain such coverage (including the
payment of premiums). The Executive shall receive a Tax Gross-Up
with respect to the coverage provided by the Company under this
paragraph (ii).
(iii)If the Date of Termination occurs prior to the two-year
anniversary of the Employment Commencement Date, then, as of the
date immediately prior to the Date of Termination, the Executive
shall be granted an option covering the excess of 1,000,000
shares of Stock over the number of shares covered by options
granted under paragraph 2(c)(ii). The exercise price for each
such option granted under this paragraph (iii) shall be the fair
market value of the Stock as of the date of grant for the option.
The term of such option shall be determined under paragraph
2(c)(iv). The obligation under this paragraph (iii) to grant an
option shall be adjusted in the same manner as is required under
section 24 of the Stock Plan.
(iv) The exercise restrictions with respect to outstanding Stock
options previously granted to the Executive (and those granted in
accordance with paragraph (ii) above) shall lapse, and the
options shall become vested and exercisable as of the Date of
Termination. Such Stock options shall remain exercisable until
the date fixed for expiration of the option (determined without
regard to Executive's termination of employment).
In no event, however, shall the Executive be entitled to receive
any amounts, rights, or benefits under this paragraph (f) unless
he executes a release of claims against the Company in a form
prepared by the Company.
(g) Change in Control. If the Executive's Date of Termination occurs
during the Agreement Term under circumstances described paragraph 3(f)
(relating to termination by the Company without Cause) prior to a
Change in Control and such termination is by the Company in
anticipation of a Change in Control (as defined in Supplement 2 to
this Agreement, which is attached to and forms a part of this
Agreement), or if the Executive's Date of Termination occurs during
the Agreement Term on or after a Change in Control, and prior to the
18-month anniversary of the Change in Control, under circumstances
described in paragraph 3(d) (relating to Constructive Discharge) or
paragraph 3(f) (relating to termination by the Company without Cause),
then paragraph (f) next above shall apply to the Executive, except
that (in consideration of the Executive signing the Employee Agreement
and the other covenants and agreements set forth in this Agreement):
(i) The "End of the Severance Period" shall be the three-year
anniversary of the Date of Termination.
(ii) In the event it shall be determined that any payment, benefit or
distribution (or combination thereof) from the Company, any
affiliate, or trusts established by the Company or by any
affiliate, for the benefit of its employees, to the Executive or
for the Executive's benefit (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, and with a "payment" including, without
limitation, the vesting of an option or other non-cash benefit or
property) (any of which are referred to as a "Payment") would be
subject to the excise tax imposed by section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any interest or
penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and
penalties, hereinafter collectively referred to as the "Excise
Tax"), the Executive shall be entitled to receive an additional
payment (a "Parachute Gross-Up Payment") in an amount such that,
after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes and payroll taxes
(and any interest and penalties imposed with respect thereto) and
the Excise Tax imposed upon the Parachute Gross-Up Payment, the
Employee retains an amount of the Parachute Gross-Up Payment
equal to the sum of: (i) the Excise Tax imposed upon the
Payments; plus (ii) an amount equal to the product of any
deductions disallowed for federal, state, or local income tax
purposes because of the inclusion of the Parachute Gross-Up
Payment in the Executive's adjusted gross income multiplied by
the highest applicable marginal rate of federal, state, or local
income taxation, respectively, for the calendar year in which the
Parachute Gross-Up Payment is to be made.
(h) Non-Renewal by Company. If the Executive's Date of Termination does
not occur during the Agreement Term, and the Agreement Term is not
extended by reason of the Company providing notice to the Executive of
non-renewal in accordance with paragraph 1(f), then the exercise
restrictions with respect to outstanding Stock options previously
granted to the Executive shall lapse as of the last day of the
Agreement Term. Such Stock options shall remain exercisable until the
date fixed for expiration of the option (determined without regard to
Executive's termination of employment). In addition, if the
Executive's Date of Termination does not occur during the Agreement
Term, and the Agreement Term is not extended by reason of either the
Company or the Executive providing notice to the other of non-renewal
in accordance with paragraph 1(f), then, following the Executive's
termination of employment with the Company, he shall receive payment
of the bonus for the performance period in which such termination
occurs, based on actual performance for the entire period, and payable
at the same time as it is payable for other participants in the bonus
plan; provided, however, that it shall be subject to a pro-rata
reduction for the portion of the performance period following the
termination.
(i) Other Benefits. Except as may be otherwise specifically provided in an
amendment of this paragraph (i) adopted in accordance with paragraph
10, the Executive's rights under this paragraph 4 shall be in lieu of
any benefits that may be otherwise payable to or on behalf of the
Executive pursuant to the terms of any severance pay arrangement of
the Company or any Subsidiary or any other, similar arrangement of the
Company or any Subsidiary providing benefits upon involuntary
termination of employment.
5. Duties on Termination. Subject to the terms and conditions of this
Agreement, during the period beginning on the date of delivery of a Notice
of Termination, and ending on the Date of Termination, the Executive shall
continue to perform his duties as set forth in this Agreement, and shall
also perform such services for the Company as are necessary and appropriate
for a smooth transition to the Executive's successor, if any.
Notwithstanding the foregoing provisions of this paragraph 5, the Company
may suspend the Executive from performing his duties under this Agreement
following the delivery of a Notice of Termination providing for the
Executive's resignation, or delivery by the Company of a Notice of
Termination providing for the Executive's termination of employment for any
reason; provided, however, that during the period of suspension (which
shall end on the Date of Termination), the Executive shall continue to be
treated as employed by the Company for other purposes, and his rights to
compensation or benefits shall not be reduced by reason of the suspension.
6. Mitigation and Set-Off. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise. The Company shall be entitled to set off against
amounts payable to the Executive any amounts owed to the Company by the
Executive, but the Company shall not be entitled to set off against the
amounts payable to the Executive under this Agreement any amounts earned by
the Executive in other employment after termination of his employment with
the Company, or any amounts which might have been earned by the Executive
in other employment had he sought such other employment.
7. Employee Agreement. As of the Employment Commencement Date, the Executive
shall enter into the "Employee Agreement," in the form set forth as
Supplement 3 to this Agreement, which is attached to and forms a part of
this Agreement.
8. Assistance with Claims. The Executive agrees that, for the period beginning
on the Employment Commencement Date, and continuing for a reasonable period
after the Executive's Date of Termination, the Executive will assist the
Company and the Subsidiaries in defense of any claims that may be made
against the Company and the Subsidiaries, and will assist the Company and
the Subsidiaries in the prosecution of any claims that may be made by the
Company or the Subsidiaries, to the extent that such claims may relate to
services performed by the Executive for the Company and the Subsidiaries.
The Executive agrees to promptly inform the Company if he becomes aware of
any lawsuits involving such claims that may be filed against the Company or
any Subsidiary. The Company agrees to provide legal counsel to the
Executive in connection with such assistance (to the extent legally
permitted), and to reimburse the Executive for all of the Executive's
reasonable out-of-pocket expenses associated with such assistance,
including travel expenses. For periods after the Executive's employment
with the Company terminates, the Company agrees to provide reasonable
compensation to the Executive for such assistance. The Executive also
agrees to promptly inform the Company if he is asked to assist in any
investigation of the Company or the Subsidiaries (or their actions) that
may relate to services performed by the Executive for the Company or the
Subsidiaries, regardless of whether a lawsuit has then been filed against
the Company or the Subsidiaries with respect to such investigation.
9. Nonalienation. The interests of the Executive under this Agreement are not
subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by creditors of
the Executive or the Executive's beneficiary.
10. Amendment. This Agreement may be amended or cancelled only by mutual
agreement of the parties in writing without the consent of any other
person. So long as the Executive lives, no person, other than the parties
hereto, shall have any rights under or interest in this Agreement or the
subject matter hereof.
11. Applicable Law. The provisions of this Agreement shall be construed in
accordance with the laws of the State of Illinois, without regard to the
conflict of law provisions of any state. All disputes shall be arbitrated
or litigated (whichever is applicable) in Chicago, Illinois.
12. Severability. The invalidity or unenforceability of any provision of this
Agreement will not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement will be construed as if
such invalid or unenforceable provision were omitted (but only to the
extent that such provision cannot be appropriately reformed or modified).
13. Waiver of Breach. No waiver by any party hereto of a breach of any
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other
party, will operate or be construed as a waiver of any subsequent breach by
such other party of any similar or dissimilar provisions and conditions at
the same or any prior or subsequent time. The failure of any party hereto
to take any action by reason of such breach will not deprive such party of
the right to take action at any time while such breach continues.
14. Successors, Assumption of Contract. This Agreement is personal to the
Executive and may not be assigned by the Executive without the written
consent of the Company. However, to the extent that rights or benefits
under this Agreement otherwise survive the Executive's death, the
Executive's heirs and estate shall succeed to such rights and benefits
pursuant to the Executive's will or the laws of descent and distribution;
provided that the Executive shall have the right at any time and from time
to time, by notice delivered to the Company, to designate or to change the
beneficiary or beneficiaries with respect to such benefits. This Agreement
shall be binding upon and inure to the benefit of the Company and any
successor of the Company, subject to the following:
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially
all of the business or assets of the Company to expressly assume and
agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession had taken place.
(b) After a successor assumes this Agreement in accordance with this
paragraph 14, only such successor shall be liable for amounts payable
after such assumption, and no other companies (including, without
limitation, Comdisco, Inc. and any other predecessors) shall have
liability for amounts payable after such assumption.
(c) Notwithstanding the foregoing provisions of this paragraph 14, if the
successor is required to assume the obligations of this Agreement
under paragraph 14(a), and fails to execute and deliver to the
Executive a written acknowledgment of the assumption at the time of
the assumption or, if later, promptly following demand by the
Executive for execution and deliver of such an acknowledgment, then
the successor shall not be substituted as the Company, the Executive
shall be entitled to payments and benefits as provided under paragraph
4(f) or 4(g), whichever is applicable, and if the Executive is then
employed by the Company (or successor), the Executive's employment
shall be deemed to have been terminated by the Company under
circumstances described in clause 3(d)(ix), and the Executive shall
not be required to perform services under this Agreement after such
deemed termination.
15. Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid
(provided that international mail shall be sent via overnight or two-day
delivery), or sent by facsimile or prepaid overnight courier to the parties
at the addresses set forth below (or such other addresses as shall be
specified by the parties by like notice). Such notices, demands, claims and
other communications shall be deemed given:
(a) in the case of delivery by overnight service with guaranteed next day
delivery, the next day or the day designated for delivery;
(b) in the case of certified or registered U.S. mail, five days after
deposit in the U.S. mail; or
(c) in the case of facsimile, the date upon which the transmitting party
received confirmation of receipt by facsimile, telephone or otherwise;
provided, however, that in no event shall any such communications be deemed
to be given later than the date they are actually received. Communications
that are to be delivered by the U.S. mail or by overnight service or
two-day delivery service are to be delivered to the addresses set forth
below:
to the Company:
Comdisco, Inc.
0000 X. Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
or to the Executive:
Xxxxxx X. Xxxxx, Xx.
00000 Xxxxxxxx Xxx
Xxxxxx, Xxxxxxx 00000
All notices to the Company shall be directed to the attention of the
General Counsel of the Company, with a copy to the Secretary of the
Company. A copy of all notices to the Executive shall be sent to Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxx Xxxxxxx & Xxxxx, 0000 Xxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000. Each party, by written notice furnished to the other party,
may modify the applicable delivery address, except that notice of change of
address shall be effective only upon receipt.
16. Arbitration of All Disputes. Any controversy or claim arising out of or
relating to this Agreement (or the breach thereof) shall be settled by
final, binding and non-appealable arbitration in Chicago, Illinois by three
arbitrators. Except as otherwise expressly provided in this paragraph 16,
the arbitration shall be conducted in accordance with the rules of the
American Arbitration Association (the "Association") then in effect. One of
the arbitrators shall be appointed by the Company, one shall be appointed
by the Executive, and the third shall be appointed by the first two
arbitrators. If the first two arbitrators cannot agree on the third
arbitrator within 30 days of the appointment of the second arbitrator, then
the third arbitrator shall be appointed by the Association. This paragraph
16 shall not be construed to limit the Company's right to obtain equitable
relief under the Employee Agreement with respect to any matter or
controversy subject to the Employee Agreement, and, pending a final
determination by the arbitrator with respect to any such matter or
controversy, the Company shall be entitled to obtain any such relief by
direct application to state, federal, or other applicable court, without
being required to first arbitrate such matter or controversy.
17. Legal Costs. The Company will reimburse the Executive for the reasonable
attorney fees incurred in connection with the negotiation of this
Agreement.
18. Survival of Agreement. Except as otherwise expressly provided in this
Agreement, the rights and obligations of the parties to this Agreement
shall survive the termination of the Executive's employment with the
Company.
19. Entire Agreement. Except as otherwise noted herein, this Agreement
(including any Supplement(s) attached hereto) constitutes the entire
agreement between the parties concerning the subject matter hereof and
supersedes all prior and contemporaneous agreements, if any, between the
parties relating to the subject matter hereof.
20. Acknowledgment by Executive. The Executive represents and warrants that (i)
he is not, and will not become a party to any agreement, contract,
arrangement or understanding, whether of employment or otherwise, that
would in any way restrict to prohibit him from undertaking or performing
his duties in accordance with this Agreement or that restricts his ability
to be employed by the Company in accordance with this Agreement; (ii) his
employment by the Company will not violate the terms of any policy of any
prior employer of the Executive regarding competition; and (iii) his
position with the Company, as described in this Agreement, will not require
him to improperly use any trade secrets or confidential information of any
prior employer, or any other person or entity for whom he has performed
services.
IN WITNESS THEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
all as of the Effective Date.
-----------------------------------
Xxxxxx X. Xxxxx, Xx.
Comdisco, Inc.
By: ____________________________________
Its: ____________________________________
Supplement 1A
Grant under Plan
Notice of Grant of Stock Options and Award Agreement
This Supplement 1A is attached to and forms a part of the employment
agreement (the "Agreement") between Xxxxxx X. Xxxxx, Xx. (the "Executive") and
Comdisco, Inc. (the "Company"). The purpose of this Supplement 1A is to set
forth the Notice of Grant of Stock Options and Award Agreement applicable to a
certain stock option award to be granted pursuant to paragraph 2(c)(i) of the
Agreement.
NOTICE OF GRANT OF STOCK OPTIONS AND AWARD AGREEMENT
Option Number:
Plan:
ID:
This grant of stock options is subject to the provisions of the Comdisco, Inc.
1998 Long-Term Stock Ownership Incentive Plan (as Amended and Restated Effective
September 29, 2000) (the "Plan") and the following additional terms and
conditions.
Effective 2/27/01, and pursuant to the terms of paragraph 2(c)(i) of your
employment agreement with Comdisco, Inc. (the "Company") dated February 27, 2001
(the "Agreement"), you have been granted a Non-Qualified Stock Option to buy
600,000.00 shares of Company stock at $11.72 per share.
The total option price of the shares granted is $7,032,000.
The option will become vested and remain exercisable in accordance with the
terms of the Agreement.
Tax Treatment: This option is a "non-qualified option." You are not subject to
Federal income taxation at the time of grant. Upon exercise of a non-qualified
option, the difference between the option exercise price and the fair market
value of the common stock on the date of exercise will be considered ordinary
income.
Registration Resale: The Plan is presently the subject of an effective
Registration Statement. While the Plan does not place restrictions on resales of
shares acquired thereunder, shares acquired by "affiliates" of Comdisco may be
subject to restrictions on resale imposed by the Securities Exchange Act of 1934
("Act"). Shares acquired by non-affiliates will generally not be subject to
restrictions on resale under the Act.
By your signature and Comdisco's signature below, you and Comdisco agree that
these options are granted under and governed by the terms and conditions of the
Plan and the Award Agreement, all of which are attached and made a part of this
document.
-------------------------------------- ---------------------------------
Comdisco, Inc. Date
-------------------------------------- ---------------------------------
Supplement 1B
Grant Outside Plan
Notice of Grant of Stock Options and Award Agreement
This Supplement 1B is attached to and forms a part of the employment
agreement (the "Agreement") between Xxxxxx X. Xxxxx, Xx. (the "Executive") and
Comdisco, Inc. (the "Company"). The purpose of this Supplement 1B is to set
forth the Notice of Grant of Stock Options and Award Agreement applicable to a
certain stock option award to be granted pursuant to paragraph 2(c)(i) of the
Agreement.
NOTICE OF GRANT OF STOCK OPTIONS AND AWARD AGREEMENT
Option Number:
ID:
Effective 2/27/01, and pursuant to the terms of paragraph 2(c)(i) of your
employment agreement with Comdisco, Inc. (the "Company") dated February 27, 2001
(the "Agreement"), you have been granted a Non-Qualified Stock Option to buy
406,500.00 shares of Company stock at $10.90 per share.
This grant of stock options is not made under the Comdisco, Inc. 1998 Long-Term
Stock Ownership Incentive Plan (as Amended and Restated Effective September 29,
2000) (the "Plan"), but is subject to the same terms and conditions as though it
had been made under the Plan (provided, however, that this grant shall not be
counted against the total set forth in Section 3(a) of the Plan, and shall not
be subject to the provisions of Section 3(b) of the Plan), and the grant shall
be subject to the following additional terms and conditions.
The total option price of the shares granted is $4,430,850.
The option will become vested and remain exercisable in accordance with the
terms of the Agreement.
Tax Treatment: This option is a "non-qualified option." You are not subject to
Federal income taxation at the time of grant. Upon exercise of a non-qualified
option, the difference between the option exercise price and the fair market
value of the common stock on the date of exercise will be considered ordinary
income.
By your signature and Comdisco's signature below, you and Comdisco agree that
these options are granted under and governed by the terms and conditions of the
Plan and the Award Agreement, all of which are attached and made a part of this
document.
-------------------------------------- ---------------------------------
Comdisco, Inc. Date
-------------------------------------- ---------------------------------
Supplement 1C
Future Grants under Plan
Notice of Grant of Stock Options and Award Agreement
This Supplement 1C is attached to and forms a part of the employment
agreement (the "Agreement") between Xxxxxx X. Xxxxx, Xx. (the "Executive") and
Comdisco, Inc. (the "Company"). The purpose of this Supplement 1C is to set
forth the Notice of Grant of Stock Options and Award Agreement applicable to a
certain stock option award to be granted pursuant to paragraph 2(c)(ii) of the
Agreement.
NOTICE OF GRANT OF STOCK OPTIONS AND AWARD AGREEMENT
Option Number:
Plan:
ID:
This grant of stock options is subject to the provisions of the [Comdisco, Inc.
1998 Long-Term Stock Ownership Incentive Plan (as Amended and Restated Effective
September 29, 2000) - or insert name of successor plan] (the "Plan") [if option
granted outside of a plan, it shall be subject to terms substantially comparable
to those under the plan] and the following additional terms and conditions.
Effective __/__/__, and pursuant to the terms of paragraph 2(c)(ii) of your
employment agreement with Comdisco, Inc. (the "Company") dated February 27, 2001
(the "Agreement"), you have been granted a Non-Qualified Stock Option to buy
__________ shares of Company stock at $__________ per share.
The total option price of the shares granted is $____________.
The option will become vested and remain exercisable in accordance with the
terms of the Agreement.
Tax Treatment: This option is a "non-qualified option." You are not subject to
Federal income taxation at the time of grant. Upon exercise of a non-qualified
option, the difference between the option exercise price and the fair market
value of the common stock on the date of exercise will be considered ordinary
income.
Registration Resale: The Plan is presently the subject of an effective
Registration Statement. While the Plan does not place restrictions on resales of
shares acquired thereunder, shares acquired by "affiliates" of Comdisco may be
subject to restrictions on resale imposed by the Securities Exchange Act of 1934
("Act"). Shares acquired by non-affiliates will generally not be subject to
restrictions on resale under the Act.
By your signature and Comdisco's signature below, you and Comdisco agree that
these options are granted under and governed by the terms and conditions of the
Plan and the Award Agreement, all of which are attached and made a part of this
document.
-------------------------------------- ---------------------------------
Comdisco, Inc. Date
-------------------------------------- ---------------------------------
Supplement 2
Change in Control
This Supplement 2 is attached to and forms a part of the employment
agreement (the "Agreement") between Xxxxxx X. Xxxxx, Xx. (the "Executive") and
Comdisco, Inc. (the "Company") dated February 27, 2001. The purpose of this
Supplement 2 is to set forth the definition of the term "Change in Control." A
"Change in Control" shall be deemed to have occurred if the conditions set forth
in any one of the following paragraphs (i), (ii), (iii) or (iv) shall have been
satisfied:
(i) any person (as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the "1934 Act"), as such term is modified in Sections
13(d) and 14(d) of the 1934 Act), other than (1) any employee plan established
by the Company, any Affiliate, or any Subsidiary (2) the Company, an Affiliate
or Subsidiary, (3) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (4) a corporation owned, directly or indirectly,
by stockholders of the Company in substantially the same proportions as their
ownership of the Company, is or becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of
securities of the Company (not including in the securities beneficially owned by
such person any securities acquired directly from the Company, its Subsidiaries
or its Affiliates) representing 35% or more of either the then outstanding
shares of Stock or the combined voting power of the Company's then outstanding
voting securities;
(ii) a majority of the members of the Board shall cease to be
Continuing Members. For this purpose, "Continuing Member" means a member of the
Board who either (i) was a member of the Board on the Employment Commencement
Date, and has been such continuously thereafter or (ii) became a member of such
Board after the Employment Commencement Date and whose election or nomination
for election was approved by a vote of at least two-thirds of the Continuing
Members then members of the Company's Board (other than a nomination of an
individual whose initial membership on the Board is in connection with an actual
or threatened election contest relating to the election of the members of the
Board, as such terms are used in Rule 14a-11 of Regulation 14A under the 1934
Act as in effect immediately prior to January 24, 2000);
(iii) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity or, if the surviving entity has a parent, the parent), in
combination with the ownership of any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any Affiliate or
Subsidiary, at least 75% of the combined voting power of the voting securities
of the Company or such surviving entity or parent outstanding immediately after
such merger or consolidation, or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
person (determined pursuant to clause (i) above) is or becomes the beneficial
owner, directly or indirectly, of securities of the Company (not including in
the securities beneficially owned by such person any securities acquired
directly from the Company, its Subsidiaries or its Affiliates) representing 35%
or more of either the then outstanding shares of Stock or the combined voting
power of the Company's then outstanding voting securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company's assets.
Notwithstanding the foregoing, no Change in Control shall be deemed to have
occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of Stock immediately
prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which owns
substantially all of the assets of the Company immediately prior to such
transaction or series of transactions. The Committee administering the Company's
stock option plan may also determine, in its discretion, that a sale of a
substantial portion of the Company's assets or one of its businesses constitutes
a "Change of Control."
Supplement 3
Employee Agreement
This Supplement 3 is attached to and forms a part of the employment
agreement (the "Agreement") between Xxxxxx X. Xxxxx, Xx. (the "Executive") and
Comdisco, Inc. (the "Company") dated February 27, 2001. The purpose of this
Supplement 3 is to set forth the following "Employee Agreement."
EMPLOYEE AGREEMENT
I am entering into an employment agreement with Comdisco dated February
27, 2001 (the "Employment Agreement"). As a condition of entering into such
Employment Agreement, I have agreed to enter into this Employee Agreement, and
therefore I agree as follows:
1. Background. I acknowledge that Comdisco's Business (as defined
herein) is highly competitive, is marketed primarily to large and medium sized
companies nationally and internationally, involves long "lead times" often
exceeding one year to secure initial contracts, and requires ongoing,
comprehensive customer support.
2. Definitions. I understand that for purposes of this Agreement, the
following definitions will apply:
2.1 "Comdisco" will mean Comdisco, Inc. or the Comdisco, Inc.
subsidiary, division or affiliate by whom I am employed, now or in the future.
2.2 "Comdisco's Business" shall mean (1) while I am employed
by Comdisco, any business in which Comdisco was engaged during the two year
period immediately preceding that date (including, without limitation, any
business if Comdisco devoted material resources to entering into such business
during such two-year period), and (2) following the termination of my Comdisco
employment, any business in which Comdisco was engaged during the two-year
period immediately preceding the termination of my Comdisco employment
(including, without limitation, any business if Comdisco devoted material
resources to entering into such business during such two-year period).
2.3 "Confidential Information" will mean all trade secrets,
know-how or other confidential information not known to the public at large that
I obtained from Comdisco, or that I learned, discovered, developed, conceived,
originated or prepared in the scope of my Comdisco employment. Confidential
Information includes, but is not limited to, information and materials
developed, collected or used by Comdisco personnel, and information disclosed to
Comdisco by Customers, potential Customers or third parties in the course of a
business relationship or proposed business relationship. Confidential
Information includes, but is not limited to, the following general categories:
(1) information concerning Comdisco's operations, organizational structure,
methods, technology, procedures, finances, accounting and legal matters;
(2) information concerning Comdisco's sales activities and strategies, marketing
activities and strategies, servicing activities and strategies, bidding
activities and strategies, product development activities and strategies,
expansion/acquisition or contraction/divestiture plans, reorganization plans,
and strategic business activities;
(3) information concerning Comdisco's past, present and potential Customers,
including the names, addresses, telephone numbers and e-mail addresses of these
customers; the identities of individuals responsible for buying products and
services on behalf of these Customers; the needs and buying tendencies of these
Customers; contract negotiations between Comdisco and these Customers; the
contents and duration of contracts and agreement between Comdisco and these
Customers; financial and credit information concerning these Customers' business
operations; the identity, quantity and prices of products and services purchased
from Comdisco by these Customers; and any confidential information regarding a
Customer that I have learned in the course of providing services to and/or for
the Customer;
(4) vendor and supplier information, including the names, addresses, telephone
numbers and e-mail addresses of Comdisco's vendors and suppliers; information
regarding Comdisco's relationship with its vendors and suppliers; contract
negotiations between Comdisco and its vendors and suppliers; the contents and
duration of contracts and agreements between Comdisco and its vendors and
suppliers; financial and credit information concerning its vendors and
suppliers; and the identity, quantity and prices of products and services
purchased by Comdisco from its vendors and suppliers;
(5) information regarding Comdisco's pricing of its products and services,
including price lists, pricing policies and pricing strategies;
(6) employment and payroll data, including recruiting and succession plans; and
(7) other information that Comdisco tells me is to be kept confidential, or that
I should reasonably deem to be kept confidential, or that is designated as
Confidential Information on an Attachment hereto.
Confidential Information may be contained on paper records, computer printouts
or disks, or other forms of documentation or media, but it need not necessarily
be reduced to a tangible form. Confidential Information does not include
information that, now or in the future, is available to the public (other than
through improper disclosure by me or another person) or information rightfully
acquired from a third party.
2.4 "Customer" will mean any person, firm or other business
entity which, during the two year period immediately preceding the termination
of my Comdisco employment, (1) has contracted for any type of services or
equipment from or through Comdisco or (2) has contacted Comdisco or been
contacted by Comdisco with respect to the availability or offering of Comdisco's
services or equipment and has requested or received a detailed proposal or offer
from Comdisco, or (3) was assigned to me, either directly or indirectly, for
account servicing or supervisory responsibilities (including, without
limitation, accounts where I participated in sales calls or conference calls,
and accounts for which I participated in sales strategy sessions regarding the
account, whether or not such sessions were conducted in conjunction with
representatives of the account).
3. Covenant Not to Disclose or Use Confidential Information. I
acknowledge that I have access to Confidential Information that must be
maintained in strict confidence in order for Comdisco to protect its business
and its competitive position in the marketplace. I acknowledge that it is
difficult to ascertain how long Confidential Information would remain useful to
Comdisco's competitors and potential competitors during my Comdisco employment
and thereafter, and that some Confidential Information may remain useful to
Comdisco's competitors for periods of indefinite duration. Therefore, during my
Comdisco employment and thereafter, except as required in the performance of my
duties to Comdisco, I will not directly or indirectly publish or disclose any
Confidential Information to any competitor or other person outside Comdisco, and
I will not remove from Comdisco premises or use for my own benefit or otherwise
appropriate or copy any Confidential Information. This will apply whether or not
I developed the Confidential Information.
4. Covenant Not to Work for a Major Competitor.
4.1 Given the nature of Comdisco's Business, I recognize that
engaging in employment or other work for a major competitor would necessarily
and inevitably lead to my unauthorized use or disclosure of confidential
information. Accordingly, if I resign, or if Comdisco terminates my employment
due to poor job performance (as determined by Comdisco) or due to my criminal,
dishonest or improper behavior, then I will not directly or indirectly work for
any major Comdisco competitor in the Comdisco Business for a period of one year
after the termination of my Comdisco employment. This will include work as an
employee, officer, director, owner, shareholder, partner, associate, consultant,
advisor, contractor, joint venturer, manager, agent, representative or
salesperson. This will not apply to subsidiaries, divisions or other units of a
major Comdisco competitor which are not involved in the Comdisco Business.
4.2 Upon termination of my Comdisco employment, at my request,
Comdisco will give me a list of its major competitors in the Comdisco Business.
I acknowledge that the major competitors of Comdisco in the Comdisco Business
currently include (without limitation) those listed on the Attachment(s) hereto.
4.3 I understand that Comdisco may, in its discretion,
consider waiving this restriction completely or in part in unusual termination
situations. I recognize that any waiver would be based on the facts and
circumstances of the termination, and will not serve as a precedent for other
situations.
4.4 During my Comdisco employment, I will comply with
Comdisco's Conflicts of Interest Policy, as published in the Comdisco Code of
Conduct, and I will not engage in any business activity that is competitive with
Comdisco (unless agreed to by Comdisco in writing), and I will not take part in
any activities which would be detrimental to Comdisco's interests.
5. Covenant Regarding Customers.
5.1 During my Comdisco employment and for a period of one year
after the termination of my Comdisco employment for whatever reason, I will not
compete or attempt to compete with Comdisco for the sale or procurement of
services or equipment by or to any of the Comdisco Customers (or any person or
entity affiliated with them) with whom I had contact during the two year period
preceding the termination of my Comdisco employment. "Competing" includes, but
is not limited to, accepting orders from a Customer, diverting a Customer's
business from Comdisco, disparaging Comdisco or its employees with a Customer,
or otherwise interfering with Comdisco's business with a Customer, even if a
Customer initiates contact with me.
5.2 During my Comdisco employment and for a period of one year
after the termination of my Comdisco employment for whatever reason, I will not
solicit or contact, directly or through other persons or entities, for the
purpose of competing with Comdisco's Business, any of the Comdisco Customers (or
any person or entity affiliated with them) with whom I had contact during the
two year period preceding the termination of my Comdisco employment.
5.3 I acknowledge that Comdisco has a protectible business
interest in its relationships with its Customers, and in the continued loyalty
of its Customers. I acknowledge that Comdisco seeks to maintain and/or promote
its business with its Customers for an indefinite time period, even though there
are a number of competitors with which they could do business. I acknowledge
that I have had, and will have, contact with Comdisco's Customers (and have
developed my knowledge regarding their on-going business needs) primarily, if
not exclusively, as a result of my employment with Comdisco.
6. Covenant Not to Solicit Employees. During my Comdisco employment and
for a period of one year after the termination of my Comdisco employment for
whatever reason, I will not (either directly or indirectly) employ, solicit or
endeavor to entice away from Comdisco (whether for my own business or on behalf
of another person or entity) any persons who are either employees in the
Comdisco Business or who have been employed by Comdisco within a six month
period prior to my action.
7. Developments.
7.1 I agree that I will have no proprietary interest in any
idea, invention, design, technical or business innovation, computer program and
related documentation, or any other work product developed, conceived, or used
by me, in whole or in part, that arises out of my employment with Comdisco, or
that are otherwise made through the use of Comdisco's time, facilities or
materials (all collectively called "Developments"). I acknowledge that all
Developments are and will be the sole property of Comdisco, and that Comdisco is
not required to designate me as the author thereof. I will promptly disclose all
Developments to my manager, and will at Comdisco's request and expense, do all
things that may be necessary and appropriate to establish or document Comdisco's
ownership of the Developments (including, but not limited to, the execution of
the appropriate copyright or patent applications or assignments).
7.2 I have identified at the end of this Agreement all
inventions and other intellectual property in which I claim any right, title or
interest and which were made or conceived solely or jointly by me, or written
wholly or in part by me, but that have been neither published nor filed in any
patent or copyright office. If none are indicated, then I agree that I do not
have any to identify. (Note: It is in your interest to establish that any of the
above were made, conceived or written before the commencement of your employment
by Comdisco. You should not disclose them in detail, but identify them only by
titles and dates of documents describing them. If you wish to interest Comdisco
in any of them, you may contact your department head, who will provide you with
instructions for submitting them to Comdisco.)
8. Remedies
8.1 I acknowledge that Comdisco has expended and continues to
expend substantial time, money and effort to: (1) develop proprietary and
commercially valuable Confidential Information and Developments; (2) locate
Customers and to establish and maintain long term and near permanent business
relationships with them; and (3) recruit, train and compensate its work force. I
understand that it would be extremely difficult to measure the damages that
might result from any breach by me of this Agreement, and that a breach may
cause irreparable injury to Comdisco that could not be compensated by money
damages. I agree that my commitments in this Agreement are supported by adequate
consideration from Comdisco. Accordingly, Comdisco will be entitled, in addition
to any other rights and remedies it may have, to specific performance and to a
court order (without the posting of any bond) prohibiting me (and any others
involved) from breaching this Agreement. I consent to the jurisdiction and venue
of any state or federal court located in Illinois for any suit involving this
Agreement.
8.2 If a court decides that I have violated any provision of
this Agreement, then I agree to pay any reasonable court costs, attorneys' fees
or litigation expenses incurred by Comdisco in enforcing this Agreement. If I
violate paragraphs 4, 5 or 6 of this Agreement, then the violated paragraph(s)
will remain in force for one year after the violation ends. I understand that
this Agreement will be construed and enforced in accordance with Illinois law,
without regard to its conflicts of law rules. If a court decides that any part
of this Agreement is not enforceable, then the rest of this Agreement will not
be affected. If a court decides that any part of this Agreement is too broad,
then the court may limit that part and enforce it as limited.
9. Business Opportunities. I acknowledge that the foregoing
restrictions will not unreasonably prevent me from obtaining gainful employment
in my occupation or field of expertise, or otherwise cause me undue hardship. I
agree that there are numerous other employment and business opportunities
available to me in the geographic area reasonably near my place of residence
that are not affected by these restrictions. I acknowledge that these
restrictions do not disproportionately benefit Comdisco, and are reasonable and
necessary in order to protect Comdisco's legitimate interests. I acknowledge
that Comdisco will rely on these restrictions now and in the future in assigning
duties and responsibilities to me. I agree to make this Agreement known to any
prospective employers before accepting new employment, and I understand that
Comdisco may make this Agreement known to such prospective employers or other
persons.
10. Confidential Information of Third Parties.
10.1 I confirm that I will not disclose to Comdisco, or use in
Comdisco's Business, or cause or induce others to use in Comdisco's Business,
any information or materials that are confidential to any third party (including
any of my prior employers and/or their customers) and that Comdisco does not
otherwise have the right to use. Without limiting the foregoing, I have signed
an agreement with _________________________________________ (a current or prior
employer) relating to confidential information. I (can/cannot) furnish Comdisco
with a copy of this agreement.
10.2 I will comply, and do all things necessary to permit
Comdisco to comply, with the laws and regulations of all governments under which
Comdisco does business, and with the provisions of contracts between Comdisco
and any such government or its contractors, or between Comdisco and any private
contractors, that relate to intellectual property or the safeguarding of
information, including the signing of any confidentiality agreements required in
connection with the performance of my duties during my employment with Comdisco.
11. Non-Violation of Other Restrictive Covenants. I confirm that my
employment with Comdisco does not and will not violate any restrictive covenant
or similar contractual provision (including, but not limited to, non-competition
or non-solicitation obligations) that I may have agreed to or am bound by with
any prior employer or other third party. I confirm that I have never been
employed by or worked for SunGard Data Systems Inc. or any related entity.
12. Duties Upon Termination of Employment.
12.1 I acknowledge that my termination of employment with
Comdisco shall be governed by the provisions of the Employment Agreement.
12.2 Upon the termination of my Comdisco employment (or at any
other time if so requested), I agree to promptly deliver to Comdisco all
"Comdisco Materials", which include all assets, files, documents, business
records, notes, designs, data, software, manuals, equipment, keys, credit cards,
passwords, lists of Customers, and any other Comdisco-owned items of any nature
(regardless of the medium in which they are contained and regardless of how they
entered my possession or control) that are in my possession or control,
including materials that contain or are derived from Confidential Information or
Developments. I will retain no copies, excerpts or summaries of any Comdisco
Materials, nor will I make arrangements to place any Comdisco Materials in the
possession or control of another person or entity in advance of my termination.
12.3 I understand that my responsibilities regarding Comdisco
Materials include an obligation to avoid undertaking or causing any "clean-up"
activities that might result in the loss of information of value to Comdisco. I
agree that I will not, in connection with or anticipation of the termination of
my Comdisco employment, throw out any documents or other Comdisco Materials, nor
will I attempt to delete, purge or clean out software files, e-mails or any
other intangible items on computer that I utilize in connection with my work for
Comdisco.
13. Miscellaneous. (13.1) By signing this Agreement and performing
services for Comdisco, I will not, to the best of my knowledge, be violating any
other contract, agreement or understanding to which I am a party. (13.2) Nothing
in this Agreement will be deemed to create, either expressly or by implication,
a contract of employment for a specific period of time. (13.3) This Agreement,
together with the Employment Agreement (including the supplements thereto)
represents my entire understanding with Comdisco on the subjects covered herein,
and supersedes any prior understandings or agreements. This Agreement may be
changed only by a written agreement signed by an authorized Comdisco
representative and me in accordance with the amendment procedures under the
Employment Agreement. (13.4) This Agreement will benefit any successors or
assigns of Comdisco, and will bind my heirs, estate and personal and legal
representatives. This Agreement is personal to me and I may not assign it.
(13.5) If Comdisco waives my breach of this Agreement, this will not constitute
a waiver of any subsequent breaches. Any Comdisco waiver must be in writing and
signed by an authorized Comdisco representative.
I ACKNOWLEDGE THAT I HAVE READ THIS AGREEMENT IN ITS ENTIRETY.
I UNDERSTAND THAT THIS AGREEMENT IS LEGALLY ENFORCEABLE. I ACKNOWLEDGE THAT I
HAVE HAD THE OPPORTUNITY TO CONFER WITH ANYONE OF MY CHOICE CONCERNING THIS
AGREEMENT. BY SIGNING BELOW, I ACKNOWLEDGE THAT I AM ENTERING THIS AGREEMENT
VOLUNTARILY AND INTEND TO BE BOUND BY IT.
EMPLOYEE'S SIGNATURE:______________________________________________
EMPLOYEE'S NAME: Xxxxxx X. Xxxxx, Xx.
DATE SIGNED: February 27, 2001
