EXHIBIT 10.20
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), dated as of ______________,
1998 is between CompUSA Inc., a Delaware corporation, and [Name of employee]
("Employee").
R E C I T A L S:
A. Employee has been employed by Employer, and Employer and Employee
have entered into a written agreement dated as of ______________, 199__ and
an amendment thereto dated as of ______________, 199__ (collectively, the
"Prior Agreement"), to specify the terms and conditions of Employee's
employment with Employer.
B. Employer and Employee desire to replace the Prior Agreement with
this Agreement.
C. Employer considers the maintenance of a sound management team,
including Employee, essential to protecting and enhancing its best interests
and those of its stockholders.
D. Employer recognizes that the possibility of a change in control of
Employer may result in the departure or distraction of management to the
detriment of Employer and its stockholders.
E. Employee is a key executive of Employer and an integral member of
its management team.
F. Employer has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of selected
members of Employer's management team to their assigned duties without the
distraction arising from the possibility of a change in control of Employer.
NOW, THEREFORE, in consideration of Employee's past and future
employment with Employer and other good and valuable consideration including
the mutual release of Employer and Employee of their respective obligations
under the Prior Agreement, the parties agree as follows:
SECTION 1. EMPLOYMENT. Employer hereby employs Employee, and Employee
hereby accepts employment, upon the terms and subject to the conditions
hereinafter set forth.
SECTION 2. DUTIES. Employee shall be employed as __________________ of
the Company, or such other position to which he may be appointed by the Board
of Directors. Employee agrees to devote his full time and best efforts to
the performance of the duties attendant to his executive position with
Employer.
SECTION 3. TERM. The term of employment of Employee hereunder shall
commence on the date of this Agreement (the "Commencement Date") and continue
until May 1, 2000, unless earlier terminated pursuant to Section 6 or Section
10.
SECTION 4. COMPENSATION AND BENEFITS. In consideration for the
services of Employee hereunder, Employer shall compensate Employee as follows:
(a) BASE SALARY. Until the termination of Employee's employment
hereunder, Employer shall pay Employee, bi-weekly in arrears, a base salary
at an annual rate of not less than $__________ (as it may be increased from
time to time, the "Base Salary"). The Base Salary as then in effect may not
be decreased at any time during the term of Employee's employment hereunder
and shall be reviewed by Employer each October. Any increase in the Base
Salary shall be in the sole discretion of the Compensation Committee of the
Board of Directors of the Company.
(b) MANAGEMENT INCENTIVE BONUS. Employee shall be eligible to receive
from Employer such annual management incentive bonuses as may be provided in
management incentive bonus plans adopted from time to time by Employer.
(c) VACATION. Employee shall be entitled to 120 hours of paid vacation
per year at the reasonable and mutual convenience of Employer and Employee.
Unless otherwise approved by the Compensation Committee of the Board of
Directors of the Company, accrued vacation not taken in any applicable period
shall not be carried forward or used in any subsequent period.
(d) INSURANCE BENEFITS. Employer shall provide accident, health,
dental, disability and life insurance for Employee under the group accident,
health, dental, disability and life insurance plans maintained by Employer
for its full-time, salaried employees.
(e) CAR ALLOWANCE. As a condition of Employee's employment, Employee
shall from time to time be required to travel by automobile on Employer's
business. Accordingly, during the term of Employee's employment hereunder,
Employer shall provide Employee with an annual car allowance of $12,000,
payable in equal bi-weekly installments, to cover Employee's costs of
obtaining, maintaining and insuring a suitable automobile. Such amount shall
be payable to Employee whether his actual costs in any particular month are
less than, equal to or greater than $12,000.
(f) HEALTH CLUB MEMBERSHIP. For the duration of Employee's employment
with Employer hereunder, Employer shall pay up to $250 per month for a health
club membership in a health club selected by Employee.
SECTION 5. EXPENSES. The parties anticipate that in connection with
the services to be performed by Employee pursuant to the terms of this
Agreement, Employee will be required to make payments for travel,
entertainment of business associates and similar expenses. Employer shall
reimburse Employee for all reasonable expenses of types authorized by
Employer and
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incurred by Employee in the performance of his duties hereunder. Employee
shall comply with such budget limitations and approval and reporting
requirements with respect to expenses as Employer may establish from time to
time.
SECTION 6. TERMINATION.
(a) GENERAL. Employee's employment hereunder shall commence on the
Commencement Date and continue until the end of the term specified in Section
3, except that the employment of Employee hereunder shall terminate prior to
such time in accordance with the following:
(i) DEATH OR DISABILITY. Upon the death of Employee during the
term of his employment hereunder or, at the option of Employer, in the
event of Employee's Disability, upon 30 days' notice to Employee.
(ii) FOR CAUSE. For "Cause" immediately upon written notice by
Employer to Employee. A termination shall be for Cause if
(1) Employee commits a criminal act involving moral
turpitude; or
(2) Employee commits a material breach of any of the
covenants, terms and provisions hereof or fails to obey lawful and
proper written directions delivered to Employee by the Company's
Chairman of the Board, President, Chief Executive Officer or its
Board of Directors.
(iii) WITHOUT CAUSE. Without Cause upon notice by Employer to
Employee. Without limiting the foregoing, for purposes of Section
6(b)(ii) the termination of Employee's employment hereunder upon the
expiration of the term of his employment specified in Section 3 shall be
treated as a termination by Employer without Cause pursuant to this
Section 6(a)(iii).
(b) SEVERANCE PAY AND BONUSES.
(i) TERMINATION UPON DEATH OR DISABILITY. Employee shall not be
entitled to Separation Payments or any other severance pay or other
compensation upon termination of his employment hereunder pursuant to
Section 6(a)(i) except for the following (which shall be paid promptly
after termination, except as specified in subsection (4) below):
(1) This Base Salary accrued but unpaid as of the date of
termination;
(2) unpaid expense reimbursements under Section 5 for
expenses incurred in accordance with the terms hereof prior to
termination;
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(3) compensation for accrued, unused vacation as of the
date of termination, determined in accordance with Employer's
policies and procedures then in effect; and
(4) any bonus to which Employee would have been entitled
for the Bonus Period if he were still employed hereunder on the
last day of the Bonus Period. Any such bonus shall be paid to
Employee at the same time bonuses are paid in respect of the Bonus
Period to other employees of Employer entitled to receive bonuses
for the Bonus Period. In the event the determination of Employee's
bonus in respect of the Bonus Period involves any subjective
assessment, such assessment shall be made in a manner most
favorable to Employee. For purposes of this Section 6(b)(i)(4),
the term "Bonus Period" means the full fiscal year or other
applicable bonus period during which Employee's employment
hereunder was terminated (or during which Employee became Disabled,
in the event of a termination for Disability).
(ii) TERMINATION WITHOUT CAUSE; SEPARATION PAYMENTS. In the
event Employee's employment hereunder is terminated pursuant to Section
6(a)(iii), Employer shall pay Employee Separation Payments as Employee's
sole remedy in connection with such termination. "Separation Payments"
are payments made at the bi-weekly rate of Employee's Base Salary in
effect immediately preceding the date of termination. Separation
Payments shall be made for ______ months after the date of termination
(the "Separation Payment Period") and shall be paid by Employer in equal
bi-weekly payments in arrears. Separation Payments shall be reduced by
the amount of any personal services income earned by Employee during the
Separation Payment Period. Separation Payments shall be made for the
number of months specified above without regard to the number of months
remaining in the term of this Agreement. Notwithstanding the foregoing,
Employer's obligation to make, and Employee's right to receive,
Separation Payments shall terminate immediately upon any violation by
Employee of any covenant contained in Section 8 or 9 hereof. Employer
shall also promptly pay Employee the following:
(1) his Base Salary accrued but unpaid as of the date of
termination;
(2) unpaid expense reimbursements under Section 5 for
expenses incurred in accordance with the terms hereof prior to
termination; and
(3) compensation for accrued, unused vacation as of the
date of termination, determined in accordance with Employer's
policies and procedures then in effect.
This Section 6(b)(ii) is subject to the provisions of Section 10(k)
dealing with the coordination of payments in the event of a Change In
Control.
(iii) TERMINATION FOR CAUSE; VOLUNTARY TERMINATION. Employee
shall not be entitled to Separation Payments or any other severance pay
or other compensation upon
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termination of his employment hereunder pursuant to Section 6(a)(ii), or
upon Employee's voluntary termination of his employment hereunder,
except for the following (which shall be paid promptly after
termination):
(1) his Base Salary accrued but unpaid as of the date of
termination;
(2) unpaid expense reimbursements under Section 5 for
expenses incurred in accordance with the terms hereof prior to
termination; and
(3) compensation for accrued, unused vacation as of the
date of termination, determined in accordance with Employer's
policies and procedures then in effect.
(c) TRANSFERS OF EMPLOYMENT. Employee's employment hereunder shall
continue until the earlier of the following:
(i) Employee's employment with all Employers terminates; or
(ii) the last Employer (other than the Company) by which Employee
is employed under this Agreement ceases to be a subsidiary or affiliate
of the Company. For purposes of Section 6(b)(ii), the termination of
Employee's employment hereunder pursuant to this Section 6(c)(ii) shall
be treated as a termination by Employer without Cause pursuant to
Section 6(a)(iii).
SECTION 7. INVENTIONS; ASSIGNMENT.
(a) INVENTIONS DEFINED. All rights to discoveries, inventions,
improvements, designs, work product and innovations (including without
limitation all data and records pertaining thereto) that relate to the
business of Employer, whether or not specifically within Employee's duties or
responsibilities and whether or not patentable, copyrightable or reduced to
writing, that Employee may discover, invent, create or originate during the
term of his employment hereunder or otherwise, and for a period of six months
thereafter, either alone or with others and whether or not during working
hours or by the use of the facilities of Employer ("Inventions"), shall be
the exclusive property of Employer. Employee shall promptly disclose all
Inventions to Employer, shall execute at the request of Employer any
assignments or other documents Employer may deem necessary to protect or
perfect its rights therein, and shall assist Employer, at Employer's expense,
in obtaining, defending and enforcing Employer's rights therein. Employee
hereby appoints Employer as his attorney-in-fact to execute on his behalf any
assignments or other documents deemed necessary by Employer to protect or
perfect its rights to any Inventions.
(b) COVENANT TO ASSIGN AND COOPERATE. Without limiting the generality
of the foregoing, Employee shall assign and transfer, and does hereby assign
and transfer, to Employer the world-wide right, title and interest of
Employee in the Inventions. Employee agrees that Employer may file copyright
registrations and apply for and receive patents (including without limitation
Letters Patent in the United States) for the Inventions in Employer's name in
such
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countries as may be determined solely by Employer. Employee shall
communicate to Employer all facts known to Employee relating to the
Inventions and shall cooperate with Employer's reasonable requests in
connection with vesting title to the Inventions and related copyrights and
patents exclusively in Employer and in connection with obtaining,
maintaining, protecting and enforcing Employer's exclusive copyrights and
patent rights in the Inventions.
(c) SUCCESSORS AND ASSIGNS. Employee's obligations under this Section
7 shall inure to the benefit of Employer and its successors and assigns and
shall survive the expiration of the term of this Agreement for such time as
may be necessary to protect the proprietary rights of Employer in the
Inventions.
(d) CONSIDERATION AND EXPENSES. Employee shall perform his obligations
under this Section 7 at Employer's expense, but without any additional or
special compensation therefor.
SECTION 8. CONFIDENTIAL INFORMATION.
(a) ACKNOWLEDGMENT OF PROPRIETARY INTEREST. Employee acknowledges that
all Confidential Information is a valuable, special and unique asset of
Employer's business, access to and knowledge of which are essential to the
performance of Employee's duties hereunder. Employee acknowledges the
proprietary interest of Employer in all Confidential Information. Employee
agrees that all Confidential Information learned by Employee during his
employment with Employer or otherwise, whether developed by Employee alone or
in conjunction with others or otherwise, is and shall remain the exclusive
property of Employer. Employee further acknowledges and agrees that his
disclosure of any Confidential Information will result in irreparable injury
and damage to Employer.
(b) CONFIDENTIAL INFORMATION DEFINED. "Confidential Information" means
all confidential and proprietary information of Employer, written, oral or
computerized, as it may exist from time to time, including without limitation
(i) information derived from reports, investigations, experiments, research
and work in progress, (ii) methods of operation, (iii) market data, (iv)
proprietary computer programs and codes, (v) drawings, designs, plans and
proposals, (vi) marketing and sales programs, (vii) client and supplier lists
and any other information about Employer's relationships with others, (viii)
historical financial information and financial projections, (ix) pricing,
product rotation, product return and similar formulae and policies, (x) all
other concepts, ideas, materials and information prepared or performed for or
by Employer and (xi) all information related to the business, products,
purchases or sales of Employer or any of its suppliers and customers, other
than information that is publicly available.
(c) COVENANT NOT TO DIVULGE CONFIDENTIAL INFORMATION. Employer is
entitled to prevent the disclosure of Confidential Information. As a portion
of the consideration for the employment of Employee and for the compensation
being paid to Employee by Employer, Employee agrees at all times during the
term of his employment hereunder and thereafter to hold in strict confidence
and not to disclose or allow to be disclosed to any person, firm or
corporation, other than to persons engaged by Employer to further the
business of Employer, and not to use except in the pursuit of the business of
Employer, the Confidential Information, without the prior written
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consent of Employer. This Section 8 shall survive and continue in full force
and effect in accordance with its terms after, and will not be deemed to be
terminated by, any termination of this Agreement or of Employee's employment
with Employer for any reason.
(d) RETURN OF MATERIALS AT TERMINATION. In the event of any
termination or cessation of his employment with Employer for any reason,
Employee shall promptly deliver to Employer all property of Employer,
including without limitation all documents, data and other information
containing, derived from or otherwise pertaining to Confidential Information.
Employee shall not take or retain any property of Employer, including
without limitation any documents, data or other information, or any
reproduction or excerpt thereof, containing, derived from or pertaining to
any Confidential Information. The obligation of confidentiality set forth in
this Section 8 shall continue notwithstanding Employee's delivery of such
documents, data and information to Employer.
SECTION 9. NONCOMPETITION.
(a) COVENANT NOT TO COMPETE. Employee acknowledges that during the
term of his employment Employer has agreed to provide to him, and he shall
receive from Employer, special training and knowledge, including without
limitation the Confidential Information. Employee acknowledges that the
Confidential Information is valuable to Employer and, therefore, its
protection and maintenance constitutes a legitimate interest to be protected
by Employer by the enforcement of the covenant not to compete contained in
this Section 9. Employee also acknowledges that such covenant not to compete
is ancillary to other enforceable agreements of the parties, including
without limitation the agreements regarding Confidential Information in
Section 8 and the agreements regarding the payment of Separation Payments and
other severance pay and of the Termination Payment in Section 6 and Section
10, respectively. Therefore, for a period of two years after termination of
Employee's employment hereunder (unless extended pursuant to the terms of
this Section 9), Employee shall not directly or indirectly
(i) engage, alone or as a shareholder, partner, member, manager,
director, officer, employee of or consultant to any other business
organization that engages or is planning to engage, anywhere in North
America or in any other geographic area in or with respect to which
Employee has any duties or responsibilities during the term of his
employment with Employer, in any business activities that
(1) relate to the wholesale, direct or retail sale of
computer hardware, software, peripherals, training or other
computer related services (the "Designated Industry"); or
(2) were either conducted by Employer prior to the
termination of Employee's employment hereunder or proposed to be
conducted by Employer at any time prior to the time of such
termination;
(ii) divert to any competitor of Employer any customer of
Employer; or
(iii) solicit or encourage any director, officer, employee of or
consultant to
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Employer to end his relationship with Employer or commence any such
relationship with any competitor of Employer.
Notwithstanding the foregoing, (i) the entities listed on Exhibit A
shall be deemed to be engaged in the Designated Industry and to be
competitors of Employer and (ii) Employee's noncompetition obligations
hereunder shall not preclude Employee from owning less than five percent of
the voting power or economic interest in any publicly traded corporation
conducting business activities in the Designated Industry.
(b) NO OFFSET. The representations and covenants contained in this
Section 9 on the part of Employee shall be construed as ancillary to and
independent of any other provision of this Agreement, and the existence of
any claim (monetary or otherwise) or cause of action of Employee against
Employer or any officer, director or shareholder of Employer, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by Employer of the covenants of Employee contained in this
Section 9.
(c) EXTENSION OF DURATION; SURVIVAL. If Employee violates any covenant
contained in this Section 9, Employer shall not, as a result of such
violation or the time involved in obtaining legal or equitable relief
therefor, be deprived of the benefit of the full period of any such covenant.
Accordingly, the covenants of Employee contained in this Section 9 shall be
deemed to have the duration specified in Section 9(a), which period shall be
extended by a number of days equal to the sum of (i) the total number of days
Employee is in violation of any of the covenants contained in this Section 9
prior to the commencement of any litigation relating thereto and (ii) the
total number of days the parties are involved in such litigation, through the
date of entry by a court of competent jurisdiction of a final judgment
enforcing the covenants of Employee in this Section 9. This Section 9 shall
survive and continue in full force and effect in accordance with its terms
after, and will not be deemed to be terminated by, any termination of this
Agreement or of Employee's employment with Employer for any reason.
(d) SEVERABILITY. If at any time the provisions of this Section 9 are
determined to be invalid or unenforceable by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 9 shall
be considered divisible and shall be immediately amended to only such area,
duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter,
and Employee agrees that this Section 9 as so amended shall be valid and
binding as though any invalid or unenforceable provision had not been
included herein.
SECTION 10. TERMINATION OF EMPLOYMENT IN CONNECTION WITH A CHANGE IN
CONTROL.
(a) APPLICABILITY. The provisions of this Section 10 shall apply in
lieu of all conflicting provisions in this Agreement in the event Employee's
employment with Employer is terminated in a Triggering Termination. Each of
the following events constitutes a "Triggering Termination" when Employee's
employment with Employer is:
(i) terminated by Employer or Employee for any reason other than
death, or
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for no reason, or terminated upon the expiration of Employee's term of
employment specified in Section 3, within the 12-month period following
a Change In Control;
(ii) terminated by Employer for any reason other than the
commission of a felony by Employee, or terminated upon the expiration of
Employee's term of employment specified in Section 3, during an
Applicable Period;
(iii) Constructively Terminated by Employer during an Applicable
Period;
(iv) terminated pursuant to Section 6(c)(ii) during an Applicable
Period or within 12 months following a Change In Control; or
(v) terminated in an Agreement Termination pursuant to this
Section 10(a)(v).
(1) An "Agreement Termination" shall occur when Employee's
employment hereunder is terminated by Employee in anticipation of a
Change In Control to the extent that his continued employment with
Employer is not pursuant to the terms of this Agreement (other than
as provided herein with respect to an Agreement Termination) and
thereafter is only on an at-will basis. Employee's determination
to effect an Agreement Termination must be based on a good faith
judgment of Employee and any two or more Concurring Persons, in
light of the circumstances as then known or understood by them,
that a Change In Control is going to occur within 24 hours, but it
is not required as a condition to such good faith judgment that
(I) Employee or any Concurring Person conduct any
investigation or consult with any other person or group
(except only for Employee's requirement to obtain the
concurrence or approval of Concurring Persons);
(II) no condition remains to be satisfied before the
Change In Control can occur; or
(III) the Board of Directors of Employer has taken any
action to approve or facilitate the Change In Control.
(2) The concurrence or approval of the Concurring Persons
is limited to the occurrence and timing of the Change In Control
and is not made regarding the propriety of Employee's effecting an
Agreement Termination.
(3) In consideration of the right to effect an Agreement
Termination and receive a Termination Payment and Gross Up Payment
prior to a Change In Control, Employee agrees that, upon (and
notwithstanding) his exercise of such right and the payment to him
of the Termination Payment and Gross Up Payment, he shall continue,
without interruption until such Change In Control occurs (unless
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his at-will employment with Employer is sooner terminated or
Constructively Terminated by Employer, as described in Sections
10(a)(ii), (iii) and (iv), or Employee dies or his employment with
Employer is terminated due to Disability), to devote his full time
and best efforts as an at-will employee of Employer to the
performance of the same duties that he performed for Employer,
holding the same office or position with Employer as he held
before the Agreement Termination, but without the right to any
compensation from Employer for such continued performance (except
as provided below in Section 10(a)(v)(4)(I)). Employee's
obligation set forth in the preceding sentence is referred to
herein as the "Continued Performance Obligation."
(4) Employee shall have no obligation to comply with Section
8(d) until he has no further Continued Performance Obligation. If
the anticipated Change In Control does not occur within five
business days after Employee's receipt of a Termination Payment
and Gross Up Payment following the exercise of his right to effect
an Agreement Termination, then
(I) such Agreement Termination shall be void and
ineffective, and Employee's employment under all the terms of
this Agreement (including without limitation his compensation
and benefits, duties, position and rights regarding any other
actual or expected Change In Control) shall be deemed to have
continued without interruption; and
(II) Employee shall, and Employee hereby agrees to,
repay to Employer within two business days the full
Termination Payment and Gross Up Payment received by Employee
(together with interest, if any, actually earned on the funds
while in Employee's control).
(5) If Employee fails to satisfy his Continued Performance
Obligation, and such failure continues for more than one business day
after receipt by Employee of written notice from Employer of such
failure, then
(I) such Agreement Termination shall be void and
ineffective, and Employee shall be deemed to have voluntarily
terminated his employment hereunder before a Change In
Control; and
(II) Employee shall repay to Employer within one
business day after his receipt of such notice the full
Termination Payment and Gross Up Payment received by Employee
(together with interest, if any, actually earned on the funds
while in Employee's control).
(b) TERMINATION PAYMENT.
(i) AMOUNT.
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(1) Upon the occurrence of a Triggering Termination, Employer
shall pay Employee a lump sum payment in cash equal to 2.99 times
the sum of the following items:
(I) Employee's annualized base compensation determined
by using the highest annual base compensation rate in effect
at any time during Employee's employment with Employer;
(II) two times the Target Bonus that would be payable
to Employee by Employer for the bonus period in which the
Change In Control occurred; provided that the amount
determined under this Section 10(b)(i)(1)(II) shall not be
less than 60% of the amount determined under Section
10(b)(i)(1)(I); and
(III) Employee's annualized car allowance determined by
using the highest car allowance rate in effect at any time
during Employee's employment with Employer.
(2) The term "Termination Payment" shall include the amounts
described above in Section 10(b)(i)(1) plus the following amounts
described in this Section 10(b)(i)(2):
(I) Employee's Base Salary accrued but unpaid as of
the date of the Triggering Termination;
(II) reimbursement under Section 5 for unpaid expenses
incurred in the performance of his duties hereunder prior to
the date of the Triggering Termination;
(III) any other benefit accrued but unpaid as of the
date of the Triggering Termination; and
(IV) $18,000, which represents the estimated cost to
Employee of obtaining accident, health, dental, disability
and life insurance coverage for the 18 month period following
the expiration of his continuation (COBRA) rights; provided
that this Section 10(b)(i)(2)(IV) shall be applied without
regard to, and the amount payable under this Section
10(b)(i)(2)(IV) is in addition to, any continuation (COBRA)
rights or conversion rights under any plan provided by
Employer, which rights are not affected by any provision
hereof.
(ii) TIME FOR PAYMENT; INTEREST. Employer shall pay the
Termination Payment to Employee concurrently with the Triggering
Termination or, if the Triggering Termination occurs before the Change
In Control, concurrently with the Change In Control. Employer's
obligation to pay to Employee any amounts under this Section 10,
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including without limitation the Termination Payment and any Gross Up
Payment due under Section 10(d), shall bear interest at the rate of 18%
per annum or, if different, the maximum rate allowed by law until paid
by Employer, and all accrued and unpaid interest shall bear interest at
the same rate, all of which interest shall be compounded daily.
(iii) PAYMENT AUTHORITY. Any officer of Employer (other than
Employee) is authorized to issue and execute a check, initiate a wire
transfer or otherwise effect payment on behalf of Employer to satisfy
Employer's obligations to pay all amounts due to Employee under this
Section 10.
(iv) TERMINATION. Employer's obligation to pay the Termination
Payment shall not be affected by the manner in which Employee's
employment hereunder is terminated. Without limiting the generality of
the foregoing, Employer shall be obligated to pay the Termination
Payment and any Gross Up Payment regardless of whether Employee's
termination of employment is voluntary, involuntary, for cause, without
cause, in violation of any employment agreement or other agreement in
effect at the time of the Change In Control (except as provided in
Section 10(a)(v)(5)(I) with respect to Employee's failure to satisfy his
Continued Performance Obligation in the event of an Agreement
Termination) or due to Employee's retirement or Disability. Employee's
notice of his termination of employment hereunder in connection with a
Change In Control may be made by any means and to any officer of
Employer (other than Employee).
(c) CHANGE IN CONTROL. A Change In Control shall be deemed to have
occurred for purposes hereof when any Person meets the requirements for
becoming an Acquiring Person, whether or not a Distribution Date occurs or
the Rights are redeemed by Employer, as those terms are defined in the Rights
Agreement between the Company and Bank One, Texas, N.A. as Rights Agent
(American Stock Transfer & Trust Company became successor Rights Agent as of
August 19, 1996), dated as of April 29, 1994 (the "Rights Agreement");
provided that a Change In Control shall not be deemed to have occurred for
purposes hereof with respect to any Person meeting the requirements of
clauses (i) and (ii) of Rule 13d-1(b)(1) promulgated under the Securities
Exchange Act of 1934, as amended.
(d) GROSS UP PAYMENT.
(i) EXCESS PARACHUTE PAYMENT. If Employee incurs the tax
(the "Excise Tax") imposed by Section 4999 of the Code on "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code
as the result of any payments or distributions by Employer to or for the
benefit of Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) or
as a result of the acceleration of vesting of Options, Restricted Stock
or other rights (collectively, the "Payments"), or if Employee would
incur the Excise Tax if the Change In Control satisfied the requirements
of Section 280G(b)(2)(A)(i) of the Code, then without regard to whether
the Change In Control in fact satisfies the requirements of Section
280G(b)(2)(A)(i) of the Code, Employer shall pay to Employee an amount
(the "Gross Up Payment") such that the net amount retained by Employee,
after deduction of (1) any
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Excise Tax owed, or that would be owed if the Change In Control
satisfied the requirements of Section 280G(b)(2)(A)(i) of the Code, upon
any Payments (other than payments provided by this Section 10(d)(i)) and
(2) any federal, state and local income and employment taxes owed
(together with penalties and interest) and Excise Tax owed, or that
would be owed if the Change In Control satisfied the requirements of
Section 280G(b)(2)(A)(i) of the Code, upon the payments provided by this
Section 10(d)(i), shall be equal to the amount of the Payments (other
than payments provided by this Section 10(d)(i)).
(ii) APPLICABLE RATES. For purposes of determining the Gross Up
Payment amount, Employee shall be deemed:
(1) to pay federal income taxes at the highest marginal rate
of federal income taxation applicable to individual taxpayers in
the calendar year in which the Gross Up Payment is made (which rate
shall be adjusted as necessary to take into account the effect of
any reduction in deductions, exemptions or credits otherwise
available to Employee had the Gross Up Payment not been received);
(2) to pay additional employment taxes as a result of the
receipt of the Gross Up Payment in an amount equal to the highest
marginal rate of employment taxes applicable to wages; provided
that if any employment tax is applied only up to a specified
maximum amount of wages, such limit shall be taken into account for
purposes of such calculation; and
(3) to pay state and local income taxes at the highest
marginal rates of taxation in the state and locality of Employee's
residence on the date of the Triggering Termination, net of the
maximum reduction in federal income taxes that could be obtained
from deduction of such state and local taxes.
(iii) DETERMINATION OF GROSS UP PAYMENT AMOUNT. The determination
of the Gross Up Payment amount shall be made, at Employer's expense, by
Ernst & Young LLP or another nationally recognized public accounting
firm selected by Employee (in either case, the "Accountants"). If the
Excise Tax amount payable by Employee, based upon a "Determination," is
different from the Excise Tax amount computed by the Accountants for
purposes of determining the Gross Up Payment amount, then appropriate
adjustments to the Gross Up Payment amount shall be made in the manner
provided in Section 10(d)(iv). For purposes of determining the Gross Up
Payment amount prior to any Determination of the Excise Tax amount, the
following assumptions shall be utilized:
(1) that portion of the Termination Payment that is attributable
to the items described in Sections 10(b)(i)(1)(I), (II), (III) and
Section 10(b)(i)(2)(IV), and the Gross Up Payment, shall be treated as
Parachute Payments;
(2) no portion of any payment made pursuant to Sections
10(b)(i)(2)(I), (II) or (III) or Section 11(c) shall be treated as a
Parachute Payment;
13
(3) the amount payable to Employee pursuant to Section 10(l)
shall be
(I) deemed to be equal to 15% of the amount determined
under Section 10(b)(i)(1)(I);
(II) deemed to have been paid immediately following the
Change In Control;
(III) deemed to include the additional amount payable
under Section 10(l), if any, for additional taxes payable by
Employee as a result of the receipt of the payment described
in Section 10(l); and
(IV) treated 100% as a Parachute Payment;
(4) it shall be assumed that all of the payments that could
potentially be made to Employee pursuant to the Consulting
Agreement shall be made, and all of such payments shall be treated
as Parachute Payments; provided that nothing in this Section
10(d)(iii)(4) shall limit or reduce the payment of any amount
similar to the Gross Up Payment under the Consulting Agreement;
(5) the "ascertainable fair market value" (as set forth in
Prop. Treas. Reg. Section 1.280G-1, Q&A 13) of the Options, the
vesting of which was accelerated by the Change In Control as
provided in the Incentive Plan and as further provided in Section
10(j), shall be equal to the product of (I) and (II) as set forth
below:
(I) the number of shares covered by such Options; and
(II) the difference between:
a. the fair market value per share of the underlying
common stock as of the date of the Change In Control; and
b. the exercise price per share of stock subject to
such Options; and
(6) for purposes of applying the rules set forth in Prop.
Treas. Reg. Section 1.280G-1, Q&A 24(c) to a payment described in
Prop. Treas. Reg. Section 1.280G-1, Q&A 24(b), the amount
reflecting the lapse of the obligation to continue performing
services shall be equal to the minimum amount allowed for such
payment as set forth in Prop. Treas. Reg. Section 1.280G-1, Q&A
24(c)(2) (or if Prop. Treas. Reg. Section 1.280G-1 has been
superseded by temporary or final regulations, the minimum amount
provided for in any temporary or final regulations that supersede
Prop. Treas. Reg. Section 1.280G-1 and that are applicable to the
Termination Payment, Gross Up Payment, or both).
14
(iv) TIME FOR PAYMENT. Employer shall pay the estimated Gross Up
Payment amount in cash to Employee concurrent with the payment of the
Termination Payment. Employee and Employer agree to reasonably
cooperate in the determination of the actual Gross Up Payment amount.
Further, Employee and Employer agree to make such adjustments to the
estimated Gross Up Payment amount as may be necessary to equal the
actual Gross Up Payment amount based upon a Determination, which in the
case of Employee shall refer to refunds of prior overpayments and in the
case of Employer shall refer to makeup of prior underpayments.
(e) TERM. Notwithstanding the provisions of Section 3, if a Change In
Control occurs prior to April 30, 2000, Sections 10, 11 and 12 shall continue
in effect for a period of 12 months after the date of the Change In Control.
(f) CONSULTING AGREEMENT. To preserve a sound and vital management
team for the Company during the period immediately following a Change In
Control, Employee agrees that, in the event of a Triggering Termination,
Employee shall enter into a Consulting Agreement (the "Consulting Agreement")
in the form attached hereto if requested by the Board of Directors of the
Company within 30 days after the Change In Control. If Employee breaches his
obligation under the preceding sentence by declining to enter into a
Consulting Agreement, as liquidated damages for such breach and not as a
penalty, Employee shall pay to Employer the amount that Employee otherwise
would have received as compensation from Employer under the Consulting
Agreement assuming Employee fully performed his obligations thereunder.
(g) NO DUTY TO MITIGATE DAMAGES. Employee's rights and privileges
under this Section 10 shall be considered severance pay in consideration of
his past service and his continued service to Employer from the Commencement
Date, and his entitlement thereto shall neither be governed by any duty to
mitigate his damages by seeking further employment nor offset by any
compensation that he may receive from future employment.
(h) ARBITRATION. Except as provided in Section 10(j), and in Section
11(d) with respect to Section 10(m), any controversy or claim arising out of
or relating to this Section 10, or the breach thereof, shall be settled
exclusively by arbitration in Dallas, Texas, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect. Judgment upon the award rendered by the arbitrator may be entered
in, and enforced by, any court having jurisdiction thereof.
(i) NO RIGHT TO CONTINUED EMPLOYMENT. This Section 10 shall not give
Employee any right of continued employment or any right to compensation or
benefits from Employer except the rights specifically stated herein.
(j) RESTRICTED STOCK AND EXERCISE OF STOCK OPTIONS. Employee may hold
options ("Options") issued under the Incentive Plan that become immediately
exercisable upon a Change In Control. In addition, Employee may hold
restricted stock ("Restricted Stock") issued under the Incentive Plan
pursuant to which applicable restrictions will lapse upon a Change In
Control. Employer shall take no action to facilitate a transaction involving
a Change In Control, including
15
without limitation redemption of the Rights issued pursuant to the Rights
Agreement, unless it has taken such action as may be necessary to ensure that
Employee has the opportunity to exercise all Options he may then hold, and
obtain certificates containing no restrictive legends in respect of any
Restricted Stock he may then hold, at a time and in a manner that shall give
Employee the opportunity to sell or exchange the securities of Employer
acquired upon exercise of his Options and upon receipt of unrestricted
certificates for shares of Common Stock in respect of his Restricted Stock,
if any (collectively, the "Acquired Securities"), at the earliest time and in
the most advantageous manner any holder of the same class of securities as
the Acquired Securities is able to sell or exchange such securities in
connection with such Change In Control. Employer acknowledges that its
covenants in the preceding sentence (the "Covenants") are reasonable and
necessary in order to protect the legitimate interests of Employer in
maintaining Employee as one of its employees and that any violation of the
Covenants by Employer would result in irreparable injuries to Employee, and
Employer therefore acknowledges that in the event of any violation of the
Covenants by Employer or its directors, officers or employees, or any of
their respective agents, Employee shall be entitled to obtain from any court
of competent jurisdiction temporary, preliminary and permanent injunctive
relief in order to (i) obtain specific performance of the Covenants, (ii)
obtain specific performance of the exercise of his Options, delivery of
certificates containing no restrictive legends in respect of his Restricted
Stock and the sale or exchange of the Acquired Securities in the advantageous
manner contemplated above or (iii) prevent violation of the Covenants;
provided that nothing in this Agreement shall be deemed to prejudice
Employee's rights to damages for violation of the Covenants.
(k) COORDINATION WITH OTHER PAYMENTS.
(i) After the termination of Employee's employment hereunder:
(1) if Employee is entitled to receive Separation Payments; and
(2) Employee subsequently becomes entitled to receive a
Termination Payment, Gross Up Payment or both, then
(ii) prior to the disbursement of the Termination Payment and Gross
Up Payment:
(1) the payment date of all unpaid Separation Payments shall
be accelerated to the payment date of the Termination Payment and
such Separation Payments shall be made (in this event, Employer
waives any requirement that Employee reduce the Separation Payments
by the amount of any income earned by Employee thereafter); and
(2) the Termination Payment shall be reduced by the amount of
the Separation Payments so accelerated and made.
(l) OUTPLACEMENT SERVICES. If Employee becomes entitled to receive a
Termination Payment under this Section 10, Employer agrees to reimburse
Employee for any outplacement
16
consulting fees and expenses incurred by Employee during any Applicable
Period and during the two-year period following the Change In Control;
provided that the aggregate amount reimbursed by Employer shall not exceed
15% of Employee's Base Salary in effect immediately prior to the Triggering
Termination. In addition and as to each reimbursement payment, to the extent
that any reimbursement under this Section 10(l) is subject to federal, state
or local income taxes, Employer shall pay Employee an additional amount such
that the net amount retained by Employee, after deduction of any federal,
state and local income tax on the reimbursement and such additional amount,
shall be equal to the reimbursement payment. All amounts under this Section
10(l) shall be paid by Employer within 15 days after Employee's presentation
to Employer of any statements of such amounts and thereafter shall bear
interest at the rate of 18% per annum or, if different, the maximum rate
allowed by law until paid by Employer, and all accrued and unpaid interest
shall bear interest at the same rate, all of which interest shall be
compounded daily.
(m) NONCOMPETITION.
(i) Employee acknowledges that during the term of his employment
Employer has agreed to provide to him, and he shall receive from
Employer, special training and knowledge, including without limitation
the Confidential Information. Employee acknowledges that the
Confidential Information is valuable to Employer and, therefore, its
protection and maintenance constitutes a legitimate interest to be
protected by Employer by the enforcement of the covenant not to compete
contained in this Section 10(m). Employee also acknowledges that such
covenant not to compete is ancillary to other enforceable agreements of
the parties, including without limitation the agreements regarding
Confidential Information in Section 8 and the agreements regarding the
payment of the Termination Payment in this Section 10. Therefore,
following the occurrence of a Triggering Termination, Employee shall
not directly or indirectly
(1) for a period of two years following the date of the
Triggering Termination (unless extended pursuant to the terms of
this Section 10(m)) engage, alone or as a shareholder, partner,
member, manager, director, officer, employee of or consultant to,
any entity other than Employer that is in existence on the date of
the Triggering Termination and is at that time engaged directly, or
indirectly through any subsidiary, division or other business unit
(individually, an "Entity"), anywhere in North America or in any
other geographic area in or with respect to which Employee has any
duties or responsibilities during the term of his employment with
Employer, in retail or direct sales of computer hardware, software,
peripherals, training or other computer related services to end
users (the "Change In Control Designated Industry"); or
(2) for a period of one year following the date of the
Triggering Termination (unless extended pursuant to the terms of
this Section 10(m)) solicit or encourage any director, officer,
employee of or consultant to Employer to end his relationship with
Employer and commence any such relationship with any competitor of
Employer in the Change In Control Designated Industry.
17
(ii) Notwithstanding the foregoing, an Entity shall not be deemed
to be engaged in the Change In Control Designated Industry if retail and
direct sales of computer hardware, software, peripherals, training or
other computer related services to end users are incidental to such
Entity's business. Retail and direct sales of computer hardware,
software, peripherals, training or other computer related services shall
be deemed incidental to an Entity's business so long as
(1) the aggregate of such sales by such Entity is 40% or less of
the total sales of such Entity for the full fiscal quarter of such
Entity immediately preceding the date of the Triggering Termination
or any of the eight immediately subsequent fiscal quarters of such
Entity; and
(2) such Entity is not a member of a group of Entities under
common control that includes one or more Computer Sales Entities;
provided that the foregoing restriction shall be deemed not to have
been violated if Employee terminates his employment or other
prohibited relationship with an Entity promptly after his discovery
that the Entity first became a Computer Sales Entity (during the
term of his relationship) during the preceding fiscal quarter of
such Entity. A "Computer Sales Entity" is defined as an Entity
whose retail and direct sales of computer hardware, software,
peripherals, training and other computer related services to end
users, in the aggregate, are more than 40% of the total sales of
such Entity, measured over any fiscal quarter.
(iii) The representations and covenants contained in this Section
10(m) on the part of Employee shall be construed as ancillary to and
independent of any other provision of this Agreement, and the existence
of any claim (monetary or otherwise) or cause of action of Employee
against Employer or any officer, director or shareholder of Employer,
whether predicated on this Agreement or otherwise, shall not constitute
a defense to the enforcement by Employer of the covenants of Employee
contained in this Section 10(m).
(iv) If Employee violates any covenant contained in this Section
10(m), Employer shall not, as a result of such violation or the time
involved in obtaining legal or equitable relief therefor, be deprived of
the benefit of the full period of any such covenant. Accordingly, the
covenants of Employee contained in this Section 10(m) shall be deemed to
have durations as specified in Section 10(m)(i)(1) and (2), which
periods shall be extended by a number of days equal to the sum of (i)
the total number of days Employee is in violation of any of the
covenants contained in this Section 10(m) prior to the commencement of
any litigation relating thereto and (ii) the total number of days the
parties are involved in such litigation, through the date of entry by a
court of competent jurisdiction of a final judgment enforcing the
covenants of Employee in this Section 10(m). This Section 10(m) shall
survive and continue in full force and effect in accordance with its
terms after, and will not be deemed to be terminated by, any termination
of this Agreement.
(v) If at any time the provisions of this Section 10(m) are
determined to be
18
invalid or unenforceable by reason of being vague or unreasonable
as to area, duration or scope of activity, this Section 10(m) shall
be considered divisible and shall be immediately amended to only
such area, duration or scope of activity as shall be determined to
be reasonable and enforceable by the court or other body having
jurisdiction over the matter; and Employee agrees that this Section
10(m) as so amended shall be valid and binding as though any
invalid or unenforceable provision had not been included herein.
Notwithstanding the foregoing, Employee's noncompetition
obligations hereunder shall not preclude Employee from owning stock
with less than five percent of the voting power or economic
interest in any publicly traded corporation conducting business
activities in the Change In Control Designated Industry.
SECTION 11. GENERAL.
(a) NOTICES. Except as provided in Section 10(b)(iv), all notices and
other communications hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if delivered
personally or if mailed by certified mail, return receipt requested or by
written telecommunication, to the relevant address set forth below, or to
such other address as the recipient of such notice or communication shall
have specified to the other party in accordance with this Section 11(a):
If to Employer, to: with a copy to:
CompUSA Inc. Xxxxxxxx & Xxxxxx, P.C.
00000 Xxxxx Xxxxxx Xxxxxxx 0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
Attention: Chairman of the Board Attention: Xxxx X. Xxxxxx
Facsimile Number: (000) 000-0000 Facsimile Number: (000) 000-0000
If to Employee, to:
_____________________________
_____________________________
(b) WITHHOLDING; NO OFFSET. All payments required to be made to
Employee by Employer shall be subject to the withholding of such amounts, if
any, relating to federal, state and local taxes as may be required by law.
No payments under Section 10 shall be subject to offset or reduction
attributable to any amount Employee may owe to Employer or any other person.
(c) LEGAL AND ACCOUNTING COSTS. Employer shall pay all attorneys' and
accountants' fees and costs incurred by Employee as a result of any breach by
Employer of its obligations under this Agreement, including without
limitation all such costs incurred in contesting or disputing any
determination made by Employer under Section 10 or in connection with any tax
audit or proceeding to the extent attributable to the application of Section
4999 of the Code to any payment under Section 10. Reimbursements of such
costs shall be made by Employer within 15 days after
19
Employee's presentation to Employer of any statements of such costs and
thereafter shall bear interest at the rate of 18% per annum or, if different,
the maximum rate allowed by law until paid by Employer, and all accrued and
unpaid interest shall bear interest at the same rate, all of which interest
shall be compounded daily.
(d) EQUITABLE REMEDIES. Each of the parties hereto acknowledges and
agrees that upon any breach by Employee of his obligations under any of
Sections 7, 8, 9 and 10(m), Employer shall have no adequate remedy at law and
accordingly shall be entitled to specific performance and other appropriate
injunctive and equitable relief.
(e) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable,
and this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision never comprised a part hereof, and the
remaining provisions hereof shall remain in full force and effect and shall
not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable.
(f) WAIVERS. No delay or omission by either party in exercising any
right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any single or partial exercise of any such right, power
or privilege preclude any further exercise thereof or the exercise of any
other right, power or privilege.
(g) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
(h) CAPTIONS. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
(i) REFERENCE TO AGREEMENT. Use of the words "herein," "hereof,"
"hereto," "hereunder" and the like in this Agreement refer to this Agreement
only as a whole and not to any particular section or subsection of this
Agreement, unless otherwise noted.
(j) BINDING AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of the parties and shall be enforceable by the personal
representatives and heirs of Employee and the successors and assigns of
Employer. This Agreement may be assigned by the Company or any Employer to
any Employer; provided that in the event of any such assignment, the Company
shall remain liable for all of its obligations hereunder and shall be liable
for all obligations of all such assignees hereunder. If Employee dies while
any amounts would still be payable to him hereunder, such amounts shall be
paid to Employee's estate. This Agreement is not otherwise assignable by
Employee.
(k) ENTIRE AGREEMENT; EFFECT ON PRIOR AGREEMENT. This Agreement
contains the entire
20
understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof (including without
limitation the Prior Agreement, which is hereby terminated) and may not be
amended except by a written instrument hereafter signed by each of the
parties hereto. Employee and the Company hereby agree that, if any other
employment agreement between Employee and the Company (or any other Employer)
is in existence on the Commencement Date, then this Agreement shall supersede
such other employment agreement in its entirety, and such other employment
agreement shall no longer be of any force and effect after the date hereof.
(l) GOVERNING LAW. This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the State of Texas,
without regard to its choice of law principles.
(m) GENDER AND NUMBER. The masculine gender shall be deemed to denote
the feminine or neuter genders, the singular to denote the plural, and the
plural to denote the singular, where the context so permits.
(n) ASSISTANCE IN LITIGATION. During the term of this Agreement and
for a period of two years thereafter, Employee shall, upon reasonable notice,
furnish such information and proper assistance to Employer as may reasonably
be required by Employer in connection with any litigation in which Employer
is, or may become, a party and with respect to which Employee's particular
knowledge or experience would be useful. Employer shall reimburse Employee
for all reasonable out-of-pocket expenses incurred by Employee in rendering
such assistance. The provisions of this Section 11(n) shall continue in
effect notwithstanding termination of Employee's employment hereunder for any
reason.
SECTION 12. DEFINITIONS. As used in this Agreement, the following terms
will have the following meanings:
(a) ACCOUNTANTS has the meaning ascribed to it in Section 10(d)(iii).
(b) ACQUIRED SECURITIES has the meaning ascribed to it in Section 10(j).
(c) AGREEMENT has the meaning ascribed to it in the heading of this
document.
(d) AGREEMENT TERMINATION has the meaning ascribed to it in Section
10(a)(v)(1). References in this Agreement to termination of Employee's
employment with Employer, in any form, shall be deemed to include (whether or
not so expressed) an Agreement Termination.
(e) APPLICABLE PERIOD means, with respect to any Change In Control, the
period of 90 days immediately preceding the Change In Control.
(f) BASE SALARY has the meaning ascribed to it in Section 4(a).
(g) CAUSE has the meaning ascribed to it in Section 6(a)(ii).
21
(h) CHANGE IN CONTROL has the meaning ascribed to it in Section 10(c).
(i) CHANGE IN CONTROL DESIGNATED INDUSTRY has the meaning ascribed to
it in Section 10(m)(i)(1).
(j) CODE means the Internal Revenue Code of 1986, as amended.
(k) COMMENCEMENT DATE has the meaning ascribed to it in Section 3.
(l) COMPANY means CompUSA Inc., a Delaware corporation.
(m) COMPUTER SALES ENTITY has the meaning ascribed to it in Section
10(m)(ii)(2).
(n) A CONCURRING PERSON is an individual who is the Chairman of the
Board of Directors of the Company or a member of the Compensation Committee
of the Board of Directors of the Company (or, if no Compensation Committee
exists, or there are fewer than two members of the Compensation Committee, a
nonemployee member of the Board of Directors of the Company) at the time in
question.
(o) CONFIDENTIAL INFORMATION has the meaning ascribed to it in Section
8(b).
(p) CONSTRUCTIVELY TERMINATED with respect to an Employee's employment
with Employer will be deemed to have occurred if Employer
(i) demotes Employee to a lesser position, either in title or
responsibility, than the highest position held by Employee with Employer at
any time during Employee's employment with Employer;
(ii) decreases Employee's compensation below the highest level in
effect at any time during Employee's employment with Employer or reduces
Employee's benefits and perquisites below the highest levels in effect at
any time during Employee's employment with Employer (other than as a result
of any amendment or termination of any employee or group or other executive
benefit plan, which amendment or termination is applicable to all
executives of Employer); or
(iii) requires Employee to relocate to a principal place of business
more than 25 miles from the principal place of business occupied by
Employer on the first day of an Applicable Period.
(q) CONSULTING AGREEMENT has the meaning ascribed to it in Section
10(f).
(r) CONTINUED PERFORMANCE OBLIGATION has the meaning ascribed to it in
Section 10(a)(v)(3).
(s) COVENANTS has the meaning ascribed to it in Section 10(j).
22
(t) DESIGNATED INDUSTRY has the meaning ascribed to it in Section
9(a)(i)(1).
(u) DETERMINATION has the meaning ascribed to such term in Section
1313(a) of the Code.
(v) DISABILITY with respect to Employee shall be deemed to have
occurred whenever Employee is rendered unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or that has lasted or can
be expected to last for a continuing period of not less than 12 months. In
the case of any dispute, the determination of Disability will be made by a
licensed physician selected by Employer, which physician's decision will be
final and binding.
(w) EMPLOYEE has the meaning ascribed to it in the heading of this
Agreement.
(x) EMPLOYER refers collectively to the Company and its subsidiaries
and other affiliates. In Section 10, the term "Employer" shall be deemed to
refer to the Company, and for purposes of Section 10, Employee shall be
deemed to be employed by the Company and all compensation and benefits paid
or provided to Employee by any Employer under this Agreement at any time
shall be deemed to have been paid or provided to Employee by the Company.
(y) ENTITY has the meaning ascribed to it in Section 10(m)(i)(1).
(z) EXCISE TAX has the meaning ascribed to it in Section 10(d)(i).
(aa) GROSS UP PAYMENT has the meaning ascribed to it in Section 10(d)(i).
(bb) INCENTIVE PLAN means the CompUSA Inc. Long-Term Incentive Plan, as
amended from time to time.
(cc) INVENTIONS has the meaning ascribed to it in Section 7(a).
(dd) OPTIONS has the meaning ascribed to it in Section 10(j).
(ee) PARACHUTE PAYMENTS has the meaning ascribed to it in Section
280G(b)(2) of the Code.
(ff) PAYMENTS has the meaning ascribed to it in Section 10(d)(i).
(gg) PRIOR AGREEMENT has the meaning ascribed to it in the opening
recital of this Agreement.
(hh) RESTRICTED STOCK has the meaning ascribed to it in Section 10(j).
(ii) RIGHTS AGREEMENT has the meaning ascribed to it in Section 10(c).
23
(jj) SEPARATION PAYMENT PERIOD has the meaning ascribed to it in Section
6(b)(ii).
(kk) SEPARATION PAYMENTS has the meaning ascribed to it in Section
6(b)(ii).
(ll) TARGET BONUS means, with respect to each Employee, the dollar
amount that is equal to the established percentage of such Employee's Base
Salary that would be paid to Employee under the management incentive bonus
plan of Employer assuming the measurement criteria contained in such plan
with respect to Employee were achieved for the bonus period in which the
Change In Control occurred.
(mm) TERMINATION PAYMENT has the meaning ascribed to it in Section
10(b)(i)(2).
(nn) TRIGGERING TERMINATION has the meaning ascribed to it in Section
10(a).
EXECUTED as of the date and year first above written.
CompUSA Inc.
By___________________________________________
Xxxxx X. Xxxxxx, President and
Chief Executive Officer
_____________________________________________
[Name of Employee]
24
CONSULTING AGREEMENT
This Consulting Agreement ("Agreement"), dated as of_________________, 19__
("Effective Date"), is between CompUSA Inc., a Delaware corporation ("Company"),
and [Name of Employee] ("Consultant").
R E C I T A L S:
A. Consultant was formerly employed by the Company (or one of its
subsidiaries or affiliates) as an executive officer.
B. Consultant and the Company previously entered into an Employment
Agreement, dated as of ______________, 1998 ("Employment Agreement"), under
which Consultant is obligated to enter into this Agreement at the request of
the Board of Directors of the Company under certain circumstances.
C. The Board of Directors of the Company has requested that Consultant
enter into this Agreement and Consultant is willing to do so.
NOW, THEREFORE, for and in consideration of the mutual promises
contained in this Agreement, and on the terms and subject to the conditions
set forth in this Agreement, the parties agree as follows:
SECTION 1. DUTIES. The Company retains Consultant to provide, and
Consultant agrees to render, such consulting and advisory services as may be
requested from time to time by the Company's Board of Directors. Consultant
agrees to devote his attention, skills and best efforts to the performance of
his duties under this Agreement. Consultant shall not be obligated, however,
to devote more than 30 hours per month to the discharge of his
responsibilities under this Agreement. Consultant shall be an independent
contractor, not an employee of the Company, during the term of this Agreement.
SECTION 2. TERM. The term for providing consulting services under this
Agreement commences on the Effective Date and continues, unless earlier
terminated pursuant to Section 5, until 180 days after the date of the Change
In Control, as defined in the Employment Agreement.
SECTION 3. COMPENSATION. In consideration for the services provided by
Consultant, the Company shall pay to Consultant an amount equal to one-half
of his annual base compensation considered for purposes of Section
10(b)(i)(1)(I) of the Employment Agreement, which amount shall be paid in six
equal monthly installments, with the first installment due and payable on the
Effective Date.
SECTION 4. EXPENSES. The parties anticipate that Consultant, in
connection with the services to be performed by him under this Agreement,
will incur expenses for travel, lodging and
similar items. The Company shall advance the estimated amount of such
expenses to Consultant and shall, within 15 days after Consultant's
presentation to the Company of reasonable documentation of the actual
expenses, reimburse Consultant for all expenses incurred by Consultant in the
performance of his duties under this Agreement that have not been so advanced.
SECTION 5. EARLY TERMINATION.
(a) EVENTS OF EARLY TERMINATION. This Agreement may terminate prior to
the expiration of the term specified in Section 2 as follows:
(i) DEATH. Upon the death of Consultant during the term hereof.
(ii) FOR CAUSE. For "Cause" immediately upon written notice by the
Company to Consultant. For purposes of this Agreement, a termination
shall be for Cause if:
(I) Consultant commits an unlawful or criminal act involving
moral turpitude; or
(II) Consultant (A) fails to obey lawful and proper written
directions delivered to Consultant by the Company's Board of
Directors; or (B) commits a material breach of any of the
covenants, terms and provisions of this Agreement and such
failure or breach continues uncured for more than 30 days
after receipt by Consultant of written notice from the Company
of such failure or breach.
(b) PAYMENTS UPON EARLY TERMINATION. Consultant shall not be entitled
to any compensation upon termination of this Agreement pursuant to this
Section 5 except for his compensation accrued but unpaid as of the date of
such termination and unpaid expense reimbursements under Section 4 for
expenses incurred in accordance with the terms hereof prior to such
termination.
SECTION 6. GENERAL.
(a) NOTICES. All notices and other communications hereunder shall be
in writing or by written telecommunication and shall be deemed to have been
duly given if delivered personally or if mailed by certified mail, return
receipt requested or by written telecommunication, to the relevant address
set forth below, or to such other address as the recipient of such notice or
communication shall have specified to the other party hereto in accordance
with this Section 6(a):
If to the Company, to: with a copy to:
CompUSA Inc. Xxxxxxxx & Knight, P.C.
00000 Xxxxx Xxxxxx Xxxxxxx 0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
Attention: Chairman of the Board Attention: Xxxx X. Xxxxxx
Facsimile Number: (000) 000-0000 Facsimile Number: (000) 000-0000
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If to Consultant, to:
___________________________
___________________________
(b) SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable,
and this Agreement shall be construed and enforced as if such illegal,
invalid or unenforceable provision never comprised a part hereof, and the
remaining provisions hereof shall remain in full force and effect and shall
not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable.
(c) WAIVERS. No delay or omission by either party hereto in exercising
any right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any single or partial exercise of any such right, power
or privilege preclude any further exercise thereof or the exercise of any
other right, power or privilege.
(d) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
(e) CAPTIONS. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
(f) REFERENCE TO AGREEMENT. Use of the words "hereof," "hereto,"
"hereunder" and the like in this Agreement refer to this Agreement as a whole
and not to any particular section or subsection of this Agreement, unless
otherwise noted.
(g) BINDING AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of the parties and shall be enforceable by the personal
representatives and heirs of Consultant and the successors of the Company.
If Consultant dies while any amounts would still be payable to him hereunder,
such amounts shall be paid to Consultant's estate. This Agreement is not
otherwise assignable by Consultant or by the Company.
(h) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings relating
to the subject matter hereof and may not be amended except by a written
instrument hereafter signed by each of the parties hereto.
(i) GOVERNING LAW. This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the State of Texas,
without regard to its choice of law principles.
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(j) GENDER AND NUMBER. The masculine gender shall be deemed to denote
the feminine or neuter genders, the singular to denote the plural, and the
plural to denote the singular, where the context so permits.
EXECUTED as of the date and year first above written.
If to Consultant, to:
CompUSA Inc.
By___________________________________________
_____________________________________________
[Name of Employee]
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