SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
|X| Preliminary information statement
|_| Confidential, For Use of the Commission only (as permitted by Rule
14c-5(d)(2))
|_| Definitive information statement
AEROBIC CREATIONS, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PAYMENT OF FILING FEE (Check the appropriate box):
|X| No fee required.
|_| Fee computed on the table below per Exchange Act Rules 14c-5(g) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
AEROBIC CREATIONS, INC.
547 Boulevard in Kenilworth
New Jersey 07033
December 1, 2006
INFORMATION STATEMENT
On November 8, 2006, the holders of more than a majority of the issued
and outstanding common stock of Aerobic Creations, Inc., a Delaware Corporation
(the "Company"), acted by written consent in lieu of a special meeting of
stockholders (i) to approve an amendment and restatement of the Company's
Certificate of Incorporation to, among other things, effect a one for
11.2261585365 reverse split of the Company's common stock, change the name of
the Company to Summit Global Logistics, Inc, provide for a classified board of
directors and provide that stockholders cannot take action by written consent;
(ii) to adopt the Company's 2006 Equity Incentive Plan; (iii) to adopt the
Company's 2007 Management Incentive Plan; (iv) to adopt the Company's 2007
Supplemental Executive Retirement Plan; (v) to adopt the Company's Severance
Benefit Plan and Summary Plan; (vi) to approve employment agreements for, and
certain option and stock appreciation right grants to, the Company's executive
officers and directors; and (vii) to provide that stock issuances to the
Company's executive officers and directors be exempt from Section 16 of the
Securities Exchange Act of 1934, as amended, pursuant to Rule 16b-3(d)
thereunder.
The Company's board of directors fixed November 8, 2006 as the record
date for determining the holders of common stock entitled to consent to these
actions. The written consent was executed after the merger, but prior to the
financings and the acquisitions, all as described below in this Information
Statement.
This Information Statement is first being mailed on or about December
10, 2006. The actions to be taken pursuant to the written consent of the
Company's stockholders shall be taken on or about December 30, 2006, i.e. twenty
(20) days after the mailing of this Information Statement. You are urged to read
this Information Statement in its entirety for a full description of the actions
approved by the holders of more than a majority of the Company's outstanding
common stock.
By Order of the Board of Directors
RAYMER MCQUISTON, SECRETARY
THIS IS NOT A NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS AND NO
STOCKHOLDER MEETING WILL BE HELD TO CONSIDER ANY MATTER WHICH IS
DESCRIBED HEREIN. YOU ARE NOT BEING ASKED TO VOTE ON ANY OF
THE MATTERS DESCRIBED HEREIN. THE COMPANY IS NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND A PROXY TO THE COMPANY.
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INFORMATION STATEMENT
PURSUANT TO SECTION 14
OF THE SECURITIES EXCHANGE ACT OF 1934
AND REGULATION 14C AND SCHEDULE 14C THEREUNDER
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NOTICE OF ACTIONS TO BE TAKEN PURSUANT
TO THE WRITTEN CONSENT OF STOCKHOLDERS
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To Stockholders of Aerobic Creations, Inc.:
NOTICE IS HEREBY GIVEN that the board of directors of Aerobic
Creations, Inc. has received stockholder approval evidenced by the written
consent in lieu of a special meeting of stockholders holding more than a
majority of the outstanding shares of common stock of the Company, effective
November 8, 2006 (referred to herein as the written consent) of the following
actions:
1. to amend and restate our Certificate of Incorporation to:
a. effect a one for 11.2261585365 reverse split of our common stock;
b. change our name to Summit Global Logistics, Inc.;
c. provide for a classified board of directors; and
d. provide that action by stockholders may not be taken by written
consent.
2. to adopt our 2006 Equity Incentive Plan;
3. to adopt our 2007 Management Incentive Plan;
4. to adopt our 2007 Supplemental Executive Retirement Plan;
5. to adopt our Severance Benefit Plan and Summary Plan;
6. to approve employment agreements for, and certain option and stock
appreciation right grants to, our executive officers and directors; and
7. to provide that stock issuances to our executive officers and directors be
exempt from Section 16 of the Securities and Exchange Act of 1934 as amended.
This Information Statement is being sent to you by our board of
directors to inform you of certain actions that have been approved by written
consent in lieu of a special meeting of stockholders. This Information Statement
is being mailed on or about December 10, 2006. The actions listed above will be
effective on or about December 30, 2006, i.e. twenty (20) days after the mailing
of this Information Statement.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND A PROXY TO US
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DISSENTERS' RIGHTS OF APPRAISAL
No action was taken in connection with the proposals by our board of
directors or the consenting stockholders for which Delaware law, our Certificate
of Incorporation or our Bylaws provide a right of a stockholder to dissent and
obtain appraisal of or payment for such stockholder's shares.
VOTING SECURITIES AND PRINCIPAL HOLDER THEREOF
As of the November 8, 2006, which was the record date for the actions
taken pursuant to the written consent, our authorized capital stock consisted of
(i) one million shares of preferred stock, none of which is designated, issued
or outstanding and (ii) 99,000,000 shares of common stock, of which 19,050,791
shares (prior to giving effect to the reverse split) were issued and
outstanding, after the effectiveness to the merger but before consummation of
the financings and acquisitions, all as described below.
In connection with the written consent, the holders of our common stock
voted to approve (i) an amendment and restatement of our Certificate of
Incorporation (ii) our 2007 Equity Incentive Plan; (iii) our 2007 Management
Incentive Plan; (iv) our 2007 Supplemental Executive Retirement Plan; (v) our
Severance Benefit Plan and Summary Plan; (vi) employment agreements for, and
certain option and stock appreciation right grants to our executive officers and
directors; and (vii) that stock issuances to our executive officers and
directors be exempt from Section 16 of the Securities Exchange Act of 1934, as
amended, pursuant to Rule 16b-3(d) thereunder. Each holder of the common stock
was entitled to one vote per share of common stock.
The above referenced actions were approved by the holders of
approximately 85.5% of our common stock that was outstanding when the written
consent was executed.
Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as
amended, actions approved pursuant to the written consent will not be effective
until a date at least twenty (20) days after the date on which this Information
Statement has been mailed to our Stockholders.
This Information Statement will also serve as written notice to our
stockholders pursuant to Section 228(e) of the General Corporation Law of the
State of Delaware.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information (i) as to each person who is
known to us as of November 8, 2006 (after the effectiveness of the merger, but
before the consummation of the financings and the acquisitions) to be the
beneficial owner of more than 5% of our outstanding common stock and (ii) as to
the security ownership of each of our executive officers and directors and all
our executive officers and directors as a group.
Beneficial ownership is determined in accordance with the rules of the
SEC. In computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock issuable upon the
exercise of stock options or warrants or the conversion of other securities held
by that person that are exercisable or convertible within 60 days of November 8,
2006, are deemed to be issued and outstanding. These shares, however, are not
deemed outstanding for the purposes of computing percentage ownership of any
other stockholder. The information below does not give effect to the reverse
split.
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SECURITIES BENEFICIALLY OWNED
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NAME AND ADDRESS AMOUNT AND NATURE OF PERCENTAGE
BENEFICIAL OWNERSHIP
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PRINCIPAL SECURITY HOLDERS:
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R&R Biotech Partners LLC 2,081,308 10.93%
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OFFICERS & DIRECTORS
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Robert A. Agresti 3,033,156 15.92%
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Paul Shahbazian 1,364,917 7.16%
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Peter Klaver 1,440,743 7.56%
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Christopher Dombalis 2,388,609 12.54%
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William Knight 2,388,609 12.54%
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James Madden 1,971,542 10.35%
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Peter Stone 1,123,398 5.9%
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Raymer McQuiston 2,578,183 13.53%
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Officers and Directors as a group 16,289,156 85.5%
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Unless otherwise indicated, beneficial ownership is determined in accordance
with Rule 13d-3 promulgated under the Exchange Act and generally includes voting
and/or investment power with respect to securities.
NOTE REGARDING SHARE NUMBERS AND PER SHARE PRICES
Except as otherwise indicated all of the share numbers and per share
prices in the remainder of this Information Statement give effect to the reverse
stock split. The reverse split is described below.
CHANGE IN CONTROL
As a result of the merger, the financings and the acquisitions
described below, all of which were consummated on November 8, 2006, and the
related change in the composition of our board of directors, a change in control
occurred.
MERGER: On November 8, 2006, Maritime Logistics US Holdings Inc.
(referred to herein as Maritime Logistics) entered into an agreement and plan of
merger with our wholly-owned subsidiary and we closed the merger the same day.
In connection with this merger, the former stockholders of Maritime Holdings
received an aggregate of 1,451,000 shares of our common stock.
FINANCINGS: Following the merger, to raise working capital, to fund the
acquisitions and to satisfy certain existing obligations, we issued the
following securities solely to accredited investors.
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CONVERTIBLE NOTES AND WARRANTS. In exchange for $65 million, we issued
$65 million in aggregate principal amount of secured convertible notes and
warrants to purchase 2,363,636 shares of common stock, at an exercise price of
$11 per share. The senior notes are secured by a second lien on substantially
all of our assets and, based on the current conversion price of $11.00 per
share, are convertible into 5,907,097 million shares of our common stock subject
to adjustment as provided in the notes. We refer to this financing as the note
financing.
COMMON STOCK AND WARRANTS. In exchange for approximately $33.5 million,
we issued 3,346,950 shares of common stock and warrants to purchase 2,510,213
shares of common stock, at an exercise price of $10.00 per share. We refer to
this financing as the common stock financing.
WARRANTS ISSUED TO PLACEMENT AGENT. In connection with the note
financing, we issued our placement agent, Rodman & Renshaw LLC, a warrant to
purchase 354,545 shares of our common stock, on the same terms as the warrants
issued in the note financing. Additionally, in connection with the common stock
financing, we issued Rodman & Renshaw LLC a warrant to purchase 171,000 shares
of our common stock, on the same terms as the warrants issued in the common
stock financing.
COMMON STOCK TO OUR FORMER STOCKHOLDERS. We issued approximately 62,500
shares of common stock for no additional consideration in satisfaction of
certain of our pre-merger contractual obligations to certain of our
stockholders.
ACQUISITIONS. Following the merger, the written consent was executed,
following which the note financing and common stock financings were consummated.
We then acquired through our subsidiaries (i) all of the equity interests of FMI
Holdco I, LLC (referred to as FMI) and its parent company, FMI Blocker, Inc.;
and, then (ii) substantially all of the assets of the TUG Logistics group of
companies, including TUG Logistics, Inc., TUG Logistics (Miami), Inc. and Glare
Logistics, Inc. (collectively, referred to as the TUG Assets) and all of the
equity interests of Clare Freight, Los Angeles, Inc. and TUG New York, Inc.
(referred to as the TUG companies, and together with the TUG Assets, referred to
as TUG). FMI and TUG are together referred to herein as the acquired companies.
FMI is a full-service United States logistics company specializing in the
apparel and footwear industries. TUG is a full-service, asset-light, ocean
transportation intermediary, logistics provider and customs clearance broker
with operations in the United States and agency relationships in China. In
addition, prior to the merger, Maritime Logistics acquired SeaMaster Logistics
(Holdings) Limited or SeaMaster. SeaMaster is a Hong Kong based asset-light,
ocean transportation intermediary and logistics provider with offices in Hong
Kong and an exclusive agency network in China.
The purchase price of FMI was approximately $130 million, of which $115
million was paid in cash and the remainder was paid by issuance of approximately
1.55 million shares of our common stock. The purchase price for TUG was
approximately $10 million in cash, of which $4 million was paid in cash on the
closing date and an estimated $6 million may be paid pursuant to an earn-out
based, on the performance of TUG, in accordance with the terms of the TUG
Acquisition Agreement. Additionally, selling stockholders of TUG received
550,000 shares of our common stock and options to purchase 50,000 shares of our
common stock. The purchase price of SeaMaster, consisting of up to $15 million
in cash, is to be paid over five years as an "earn-out", based on the
performance of SeaMaster. In addition, as consideration for SeaMaster, we
granted employees of SeaMaster stock options exercisable for 50,000 shares our
of common stock.
CHANGE IN THE COMPOSITION OF OUR BOARD OF DIRECTORS.
Prior to the merger of our subsidiary with Maritime Logistics, Arnold
P. Kling was the sole director of Aerobic Creations, Inc. Prior to the merger,
Mr. Kling appointed Mr. Agresti, then a director
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of Maritime Logistics, as a member of our board of directors effective
immediately upon the consummation of the merger. Mr. Kling resigned effective
immediately upon the consummation of the merger and, as a result, Mr. Agresti
became our sole director. Mr. Agresti then appointed Messrs. Windfield,
MacAvery, DeSaye, McQuiston and Coogan to our board of directors.
VOTING AGREEMENT
Mr. Agresti, our Chairman and Chief Executive Officer, Mr. Dombalis,
our Senior Vice President, and Mr. Stone, President of SeaMaster, as well as
seven of our stockholders have entered into a voting agreement pursuant to
which, among other things, each such party has agreed that any amendment to our
certificate of incorporation or bylaws must be approved by at least the holders
of at least 75% of such common stock, which approval shall not be unreasonably
withheld. The stockholders that are a party to the voting agreement shall cause
us to nominate and shall vote for election as a director: Messrs. Agresti,
McQuiston, DeSaye and MacAvery, provided, however, Mr. O'Neill shall be entitled
to observer rights on our board unless otherwise determined by holders of 75% of
such common stock.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the compensation on an annualized basis
for the fiscal year ending December 31, 2006 that would be earned by our chief
executive officer and the four other most highly compensated executive officers
employed by us or our subsidiaries, if they were employed for a full year. We
have identified our four most highly compensated executive officers based on
their annualized salary for the year ending December 31, 2006, assuming that
they were employed for a full year. We have disclosed the base salary and
related compensation set forth in the employment agreements entered into with
our chief executive officer and four most highly compensated officers on
November 8, 2006. In addition, we have described the annual incentive bonus and
grant of options and SARS under our equity incentive plan, each as approved by
our board on November 8, 2006. None of our officers were executive officers of
Aerobic Creations, Inc. prior to the merger. We have omitted disclosure of any
historic compensation paid to the officers of Aerobic Creations, Inc. because we
do not believe that such disclosure would be meaningful.
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SUMMARY COMPENSATION TABLE
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ANNUAL COMPENSATION LONG TERM COMPENSATION
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AWARDS PAYOUTS
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SHARES OF SHARES OF
ANNUAL OTHER COMMON STOCK COMMON
NON-COMPETE INCENTIVE ANNUAL UNDERLYING STOCK LTIP ALL OTHER
NAME AND SALARY PAYMENT BONUS COMPENSATION ISO AWARDS UNDERLYING PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($)(2) ($)(3) ($)(4) (#) (5) SARS (#)(5) ($)(6) ($)(7)
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Robert Agresti, 2006 350,000 115,000 --- 21,000 160,000 120,000 --- TBD
President and CEO
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Paul Shahbazian, 2006 250,000 45,000 --- 21,000 72,000 54,000 --- TBD
CFO
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Robert O'Neill, 2006 300,000 0 --- 21,000 0 0 --- TBD
Division President
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Christopher 2006 250,000 80,000 --- 21,000 126,000 94,500 --- TBD
Dombalis, Senior
Vice President
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William Knight, 2006 250,000 80,000 --- 21,000 126,000 94,500 --- TBD
Senior Vice
President
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(1) Annualized base salary (calculated as if the executive were employed for a
full year). None of the executives worked for us prior to November 8, 2006.
(2) One time payment in consideration of such person's execution of a
non-competition agreement.
(3) No annual incentive bonus will be paid in 2006. See "Management Incentive
Plan" below.
(4) $15,000 represents a monthly car allowance of $1,250 (excluding annual
inflation adjustments); $1,000 for annual medical examination; and $5,000 toward
annual club membership dues.
(5) Our CEO and executive officers were granted options and stock appreciation
rights under our Equity Incentive Plan.
(6) LTIP payouts are determined in accordance with terms of 2007 Management
Incentive Plan described below.
(7) To be determined. Each person is eligible to receive discretionary
contributions under terms of our SERP and Company contributions under our 401(k)
Plan, although no contributions have been made as of this time. (Mr. O'Neill is
not eligible to participate in the SERP.)
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COMPENSATION PLANS
2006 EQUITY INCENTIVE PLAN
Pursuant to the terms of the 2006 Equity Incentive Plan, we may grant
incentive stock options, non-qualified stock options, restricted stock,
restricted stock units, performance shares, stock appreciation rights ("SARS")
and other common stock-based awards to our executive officers. A total of
1,633,500 (taking the reverse split into effect) shares of our common stock were
originally available for issuance under the plan. As of November 8, 2006, awards
aggregating 1,438,500 shares of our common stock had been made, leaving 195,000
shares available for future issuance. Each option and SAR is required to have an
exercise price equal to the fair market value of our common stock on the grant
date. Each option and SAR that has been issued through the date of this filing
has a term of 5 years. All unvested options and SARS that have been issued to
our executive officers through the date of this filing are subject to forfeiture
in full upon the executive officer's termination by us for cause or termination
by the executive officer other than for good reason. The options and SARS
granted to our CEO and our executive officers on November 8, 2006 will be 50%
vested on November 8, 2007 and 100% vested on November 8, 2008 at a price of $10
per share (taking the Reverse Split into effect), which the Board of Directors
has determined to be the fair value of our common stock of the date of the
grant. Further, in the event of the executive officer's death, disability,
retirement, termination by the executive for good reason, termination without
cause or a change in control, all unvested options and SARs that have been
issued to our executive officers through November 8, 2006 shall be immediately
vested.
Awards covering no more than 1,633,500 shares may be granted to any
person during any fiscal year. If any award expires, or is terminated,
surrendered or forfeited, then shares of common stock covered by the award will
again be available for grant under the Equity Incentive Plan. The terms and
conditions of stock options or other awards granted under the Equity Incentive
Plan will be set forth in a separate agreement between us and the recipient of
the award. On November 8, 2006, we granted (i) options to purchase a total of
1,205,000 shares of our common stock under our Equity Incentive Plan, (ii) a
total of 233,500 shares of restricted stock, and (iii) 667,000 SARs under our
Equity Incentive Plan.
The essential features of the Equity Incentive Plan are summarized
below. This summary is qualified in its entirety by reference to the full text
of the Equity Incentive Plan, which is included as Exhibit B to this Information
Statement.
The purpose of the Equity Incentive Plan is to attract and retain and
provide incentives to employees, officers, directors and consultants of the
Company and its subsidiaries.
GENERAL. Our Compensation Committee administers the Equity Incentive
Plan and has full power and authority to take any and all actions deemed
necessary or desirable for the proper administration of the Plan and the
effectuation of its purposes. The Compensation Committee has authority to select
those employees, officers, directors and consultants whose performance it
determines significantly promotes our success to receive awards under the Equity
Incentive Plan, grant the awards, interpret and determine all questions of
policy with respect thereto and adopt rules, regulations, agreements and
instruments deemed necessary for its proper administration.
AWARDS. NON-QUALIFIED AND INCENTIVE STOCK OPTIONS. Awards granted under
the Equity Incentive Plan may be incentive stock options ("ISOs") or
non-qualified options ("NSOs"). The exercise price of options granted under the
Equity Incentive Plan is be set by the Compensation Committee and stated in an
option agreement. The exercise price may be paid (i) in U.S. Dollars, (ii) by
delivery of our common stock, (iii) by a combination of the preceding methods or
(iv) by such other methods as the Compensation Committee may deem appropriate.
Options may also contain SARs permitting the recipient to receive the
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difference between the exercise price per share and the market value of such
share on the date of surrender.
RESTRICTED STOCK. Awards of common stock granted under the Equity
Incentive Plan may be subject to forfeiture upon terms and conditions as the
Compensation Committee may determine.
OTHER STOCK AND STOCK BASED AWARDS. The Compensation Committee may
grant common stock or other common stock based awards that are related to or
similar to the awards described above.
AMENDMENT AND TERMINATION. The Equity Incentive Plan may from time to
time be terminated, modified or amended by the affirmative vote of the holders
of a majority of the outstanding shares of our capital stock present or
represented and entitled to vote at a duly held stockholders meeting.
The board of directors may at any time terminate the Equity Incentive
Plan or from time to time amend or modify the Equity Incentive Plan; provided
however, that the Board cannot make any material amendments to the Equity
Incentive Plan without the approval of at least the affirmative vote of the
holders of a majority of the outstanding shares of the our capital stock.
The Equity Incentive Plan will terminate on November 8, 2016, unless
sooner terminated by the board of directors.
U.S. FEDERAL INCOME TAX CONSEQUENCES. The following summary generally
describes the principal federal (and not state and local) income tax
consequences of awards granted under the Equity Incentive Plan. It is general in
nature and is not intended to cover all tax consequences that may apply to a
particular person or to us. The provisions of the Code and the regulations
thereunder relating to these matters are complicated and their impact in any one
case may depend upon the particular circumstances. This discussion is based on
the Code as currently in effect.
The Equity Incentive Plan is not subject to any of the requirements of
ERISA, nor is it qualified under Section 401(a) of the Code.
NON-QUALIFIED STOCK OPTIONS. If a NSO is granted in accordance with the
terms of the Equity Incentive Plan, no income will be recognized by the
recipient at the time the option is granted. On exercise of a NSO, the amount by
which the fair market value of the common stock on the date of exercise exceeds
the purchase price of such shares will generally be taxable to the holder as
ordinary income, and will be deductible for tax purposes by us (or one of our
subsidiaries) in the year in which the holder recognizes the ordinary income.
The disposition of shares acquired upon exercise of a NSO will ordinarily result
in long-term or short-term capital gain or loss (depending on the applicable
holding period) in an amount equal to the difference between the amount realized
on such disposition and the sum of the purchase price and the amount of ordinary
income recognized in connection with the exercise of the stock option.
INCENTIVE STOCK OPTIONS. If an ISO is granted in accordance with the
terms of the Equity Incentive Plan, no income will be recognized by the
recipient at the time the ISO is granted. On exercise of an ISO, the holder will
generally not recognize any income and we (or one of our subsidiaries) will
generally not be entitled to a deduction for tax purposes. However, the
difference between the purchase price and the fair market value of the shares
received on the date of exercise will be treated as a positive adjustment in
determining alternative minimum taxable income, which may subject the holder to
the alternative minimum tax or to an increase in such tax. The disposition of
shares acquired upon exercise of an ISO will ordinarily result in long-term
capital gain or loss. However, if the holder disposes of shares acquired upon
exercise of an ISO within two years after the date of grant or within one year
after the date
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of exercise (a "disqualifying disposition"), the holder will generally recognize
ordinary income and we (or one of our subsidiaries) will generally be entitled
to a deduction for tax purposes, in the amount of the excess of the fair market
value of the common stock on the date the ISO is so exercised over the purchase
price (or the gain on sale, if less). Any excess of the amount realized by the
holder on the disqualifying disposition over the fair market value of the shares
on the date of exercise of the ISO will ordinarily constitute long-term or
short-term capital gain (depending on the applicable holding period).
STOCK APPRECIATION RIGHTS. The amount of any cash (or the fair market
value of any common stock) received upon the exercise of SARs under the Equity
Incentive Plan will be includable in the holder's ordinary income and we (or one
of our subsidiaries) will be entitled to a deduction for such amount.
RESTRICTED SHARES. If restricted shares are awarded in accordance with
the terms of the Equity Incentive Plan, no income will be recognized by such
holder at the time such award is made unless the holder makes the 83b election
referred to below. A holder who is awarded restricted shares and does not make
an 83b election will be required to include in his ordinary income, as
compensation, the fair market value of such restricted shares upon the lapse of
the forfeiture provisions applicable thereto, plus the amount of any dividend
equivalents on such restricted shares, less any amount paid therefor. At the
time the restricted shares are first issued, the holder may elect (an "83b
election") to include in his ordinary income, as compensation, the fair market
value of such restricted shares at the time of receipt, less any amount paid
therefor. A holder who makes an 83b election will not recognize income at the
time of the lapse of the forfeiture provisions. Absent the making of the 83b
election, any cash dividends or other distributions paid with respect to
restricted shares prior to the lapse of the applicable restriction will be
includable in the holder's ordinary income as compensation at the time of
receipt. In each case, the Company (or one of its subsidiaries) will be entitled
to a deduction in the same amount as the holder realizes compensation income.
REQUIREMENTS REGARDING "DEFERRED COMPENSATION" Certain of the awards
under the Equity Incentive Plan may constitute "deferred compensation" within
the meaning of Section 409A of the Code, a recently enacted provision of the tax
code governing "nonqualified deferred compensation plans." Failure to comply
with the requirements of the provisions of the Code regarding participant
elections and the timing of payment distributions could result in the affected
participants being required to recognize ordinary income for tax purposes
earlier than the times otherwise applicable as described in the above discussion
and to pay substantial penalties.
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NEW EQUITY INCENTIVE PLAN BENEFITS.
As of November 8, 2006, the following grants have been made under our
Equity Incentive Plan:
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NAME AND POSITION NUMBER OF OPTIONS NUMBER OF SARS NUMBER OF RESTRICTED SHARES
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Robert Agresti, Chairman and 160,000 120,000 --
Chief Executive Officer
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Paul Shahbazian, CFO 72,000 54,000 --
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Christopher Dombalis, Senior Vice 126,000 94,500 --
President
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William Knight, Senior Vice 126,000 94,500 --
President
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Executive Officers as a Group 704,000 565,000 --
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Non-Executive Directors as a Group 136,000 - --
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Non-Executive Officer Employee 365,000 37,500 232,500
Group
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INTEREST OF DIRECTORS AND OFFICERS. Messrs. Agresti, Shahbazian, Knight
and Dombalis each received grants under the Equity Incentive Plan as listed
above. In addition, our Senior Vice Presidents, Messrs. Klaver, Madden, and
Stone, as well as one of our directors, Mr. McQuiston received grants as
indicated below:
Options SARs
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Peter Klaver 76,000 57,000
James Madden 104,000 78,000
Peter Stone 40,000 30,000
Ray McQuiston 136,000 102,000
Thus, each such executive officer and director can be deemed to have an
interest in adopting the Equity Incentive Plan.
VOTE REQUIRED. The affirmative vote of a majority of the outstanding
shares of our common stock is required for the adoption of the Equity Incentive
Plan. The Equity Incentive Plan was adopted on November 8, 2006, by the written
consent of our stockholders holding 85.5% of the outstanding shares of our
common stock.
ADOPTION OF OUR 2007 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Our board of directors and stockholders holding 85.5% of the
outstanding shares of our common stock approved our 2007 Supplemental Executive
Retirement Plan ("SERP") on November 8, 2008.
DESCRIPTION OF THE SERP. The essential features of the SERP are
summarized below. This summary is qualified in its entirety by reference to the
full text of the SERP, which is included as Exhibit C to this Information
Statement.
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Our CEO and executive officers, other than Mr. O'Neill, are eligible to
participate in our SERP. Participation in the SERP is restricted to a select
group of our management and highly compensated employees. The SERP is a
nonqualified retirement plan that permits us to make annual discretionary
contributions to an account established for the benefit of each participant. Our
discretionary contributions to the SERP vest in three equal annual installments
beginning on the last day of the year following the year to which the
contribution is attributable. In the event we undergo a change in control, then
the discretionary contribution account shall be immediately vested and
distributed to the officer within 45 days of the change in control. In addition,
the officer may elect to defer a portion of his salary and bonus to the SERP.
Executive deferrals to the SERP shall be fully vested. SERP benefits will be
paid to the officer in a lump sum or in installments, depending upon the
distributable event. Contributions to the SERP are not subject to tax code
limitations that apply to qualified plans such as our 401(k) plan. The assets of
the SERP are subject to the claims of our creditors in the event of insolvency.
This SERP is effective as of January 1, 2007.
INTEREST OF DIRECTORS AND OFFICERS. Since Robert A. Agresti, our Chief
Executive Officer, Paul Shahbazian, our Chief Financial Officer, and our Senior
Vice Presidents, Christopher Dombalis and William Knight, are receiving grants
under the SERP, they may be deemed to have an interest in adopting the SERP.
VOTE RECEIVED. The SERP was approved on November 8, 2006, by
stockholders holding 85.5% of the issued and outstanding shares of our common
stock.
ADOPTION OF THE COMPANY'S 2007 MANAGEMENT INCENTIVE PLAN
The board of directors and stockholders of the Company have approved
our 2007 Management Incentive Plan ("Management Incentive Plan") on November 8,
2006.
DESCRIPTION OF THE MANAGEMENT INCENTIVE PLAN. The essential features of
the Management Incentive Plan are summarized below. This summary is qualified in
its entirety by reference to the full text of the Management Incentive Plan,
which is included as Exhibit D to this Information Statement.
Pursuant to the terms of their employment agreements our CEO and four
most highly compensated officers are eligible, under the 2007 Management
Incentive Plan adopted by our compensation committee and stockholders, to
receive an annual performance-based bonus for each fiscal year during the term
of their employment agreements (see Employment Agreements, below). The bonus is
tied to achievement of annual EBITDA targets (the "EBITDA Target") set by the
compensation committee. The minimum bonus requires achievement of 80% of the
applicable fiscal year's EBITDA Target. Bonuses range from 35% of salary to 100%
of salary, for achievement of 80% to 100% of the applicable fiscal year's EBITDA
Target, with additional bonus opportunities available if the applicable fiscal
year's EBITDA Target is exceeded. In the case of Mr. O'Neill only, the
applicable target for each fiscal year is based upon FMI EBITDA (the "FMI EBITDA
Target"). The FMI EBITDA Target for each fiscal year will be determined by the
compensation committee. EBITDA and FMI EBITDA shall be calculated without regard
to extraordinary or other nonrecurring or unusual items or changes in
accounting. The management incentive bonus provides each executive officer with
an opportunity to earn an annual bonus in the following amounts: if at least 80%
of the EBITDA Target or FMI EBITDA Target, as applicable, for a fiscal year is
achieved, then each executive officer shall receive a bonus equal to between 35%
and 50% of his base salary for such year; if at least 90% of the EBITDA Target
or FMI EBITDA Target, as applicable, for a fiscal year is achieved, then each
officer shall receive a bonus equal to between 52.5% and 75% of his base salary
for such year; if at least 100% of the EBITDA Target or FMI EBITDA Target, as
applicable, for a fiscal year is achieved, then each officer shall receive a
bonus
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equal to between 70% and 100% of his base salary for such year; for each
percentage point by which the EBITDA Target or FMI EBITDA Target, as applicable,
for a fiscal year is exceeded, up to a maximum of 50 percentage points, each
officer shall receive an additional bonus equal to between 2.1% and 3% (varies
by officer) of his base salary for such year; and for each percentage point over
50 percentage points by which the EBITDA Target or FMI EBITDA Target for a
fiscal year is exceeded, up to a maximum of 50 additional percentage points,
each executive officer shall receive an additional bonus equal to between 2.8%
and 4% (varies by officer) of his base salary for such year. In the event of the
officer's termination with good reason, disability or termination by us without
cause, or retirement on or after attaining age 65, the officer will be entitled
to a pro-rata annual bonus equal to the full amount payable under the annual
bonus for the applicable fiscal year, as determined by the compensation
committee as of the end of such fiscal year, multiplied by a fraction, the
numerator of which is equal to the number of full months worked during the year
and the denominator of which is 12. In the event the officer is terminated for
cause, or resigns without good reason or dies, he will forfeit his annual bonus
for that year.
INTEREST OF DIRECTORS AND OFFICERS. Since each of Robert A. Agresti,
our Chief Executive Officer, Paul Shahbazian, our Chief Financial Officer, our
Senior Vice Presidents, Christopher Dombalis and William Knight, and Robert
O'Neill, one of our officers are receiving grants under the Management Incentive
Plan, they may be deemed to have an interest in adopting the Management
Incentive Plan.
VOTE RECEIVED. The Management Incentive Plan was approved on November
8, 2006, by stockholders holding 85.5% of the issued and outstanding shares of
our issued and outstanding shares of our common stock.
ADOPTION OF OUR 2007 SEVERANCE BENEFIT PLAN AND SUMMARY PLAN
Our board of directors and stockholders have approved our 2007
Severance Benefit Plan and Summary Plan ("Severance Plan").
DESCRIPTION OF THE SEVERANCE PLAN. The essential features of the
Severance Plan are summarized below. This summary is qualified in its entirety
by reference to the full text of the Severance Plan, which is included as
Exhibit E to this Information Statement.
Under the terms of our severance benefit plan, adopted by the our
compensation committee and approved by the written consent of stockholders
holding 85.5% of the outstanding shares of our common stock, our CEO and four
most highly compensated officers (other than Mr. O'Neill) are entitled to
severance in the form of base salary continuation for 24 months, if they are
terminated without cause or resign for good reason. Under the severance plan, we
are also required to pay premiums for COBRA continuation coverage under our
group health plan (individual, individual plus one or family coverage, as
applicable) for 18 months. Upon expiration of the 18 month period, we are
required to pay the officers a lump sum equal to the cost of 6 additional months
of premium payments for the type of coverage elected under COBRA, under a
substantially similar health plan. The total amount for the lump sum may not
exceed $25,000. In the event termination is in connection with a change in
control, then the 24 months of base salary continuation shall be made in lump
sum and outplacement services shall be provided to the officers in an amount not
to exceed $10,500. In addition, we are obligated to maintain the officer's
perquisites and benefits for a period of 2 years. A termination shall be deemed
to be in connection with a change in control if it occurs on the date of the
change in control or within the 2 years following the change in control. Mr.
O'Neill shall receive the greater of the benefit described under the Severance
Benefit Plan or 2 times his base salary for 24 months. Our CEO and four most
highly compensated officers are entitled, if eligible for severance benefits, to
$7,500, per year of employment, in lieu of any amounts forfeited under our
401(k) plan. As of the date of this filing, we expect to institute changes to
our 401(k) plan that will substantially reduce the likelihood of this provision
being triggered.
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The Severance Plan will terminate when terminated by the board of
directors or the Compensation Committee.
INTEREST OF DIRECTORS AND OFFICERS. Since Robert A. Agresti, our Chief
Executive Officer, Paul Shahbazian, our Chief Financial Officer, our Senior Vice
Presidents, William Knight and Christopher Dombalis, and Robert O'Neill, one of
our officers, are receiving grants under the Severance Plan, they may be deemed
to have an interest in adopting the Severance Plan.
VOTE RECEIVED. The Severance Plan was approved on November 8, 2006, by
stockholders holding 85.5% of the issued and outstanding shares of our common
stock.
APPROVAL OF EMPLOYMENT AGREEMENT OF OUR EXECUTIVE OFFICERS
Our board of directors and stockholders holding 85.5% of the
outstanding shares of our common stock (by written consent) approved employment
agreements with each of our executive officers, including Robert Agresti, Paul
Shahbazian, Gregory DeSaye, Peter Klaver, Christopher Dombalis, William Knight,
James Madden and Peter Stone. The term of each employment agreement is five (5)
years and is renewed automatically for one-year periods after expiration of the
initial five (5) year term, up to a maximum of five (5) additional years, unless
either party gives notice of nonrenewal to the other at least sixty (60) days
prior to the beginning of the applicable one-year period. Each Employment
Agreement contains non-competition and non-solicitation provisions. The
non-competition and non-solicitation provisions prohibit the officer from
directly or indirectly competing with us or soliciting our employees or
customers during the employment term and generally for one year thereafter.
INTEREST OF DIRECTORS AND OFFICERS. The employment agreements approved
included employment agreements for Robert Agresti, our Chief Executive Officer,
Paul Shahbazian, our Chief Financial Officer, Gregory DeSaye, one of our
directors, and our Senior Vice Presidents, Peter Klaver, Christopher Dombalis,
William Knight, James Madden, and Peter Stone. Such executive officers may thus
be deemed to have an interest in the approval of the agreements.
VOTE RECEIVED. The employment agreements were approved on November 8,
2006, by Stockholders holding 85.5% of the issued and outstanding shares of our
common stock.
In addition, our stockholders holding 85.5% of our outstanding shares
of common stock ratified the acquisition of shares of our common stock in the
merger by each of our executive officers and Raymer McQuiston, one of our
directors. The ratification was granted for purposes of exempting the
acquisitions from Section 16 of the Securities and Exchange Act of 1934 as
amended.
AMENDMENT AND RESTATEMENT OF THE CERTIFICATE OF INCORPORATION
TO CHANGE OUR NAME TO SUMMIT GLOBAL LOGISTICS, INC.
The amendment and restatement of our Certificate of Incorporation which
our board of directors and stockholders holding 85.5% of the outstanding shares
of our common stock approved on November 8, 2006, provides for a change of the
name of the Company from Aerobic Creations, Inc. to Summit Global Logistics,
Inc. Our board of directors believes that the name change is in the best
interest of our shareholders as the new name more accurately reflects the nature
of our business and our planned growth.
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TO EFFECT A ONE FOR 11.2261585365 REVERSE SPLIT
Our board of directors and stockholders holding 85.5% of the
outstanding shares of our common stock approved on November 8, 2006 a one for
11.2261585365 reverse split of our outstanding common stock, by means of an
amendment and restatement of the our Certificate of Incorporation.
The Amended and Restated Certificate of Incorporation, the filing of
which will effectuate the reverse split, is attached hereto as Exhibit A. The
reverse split will become effective upon the filing of the Amended and Restated
Certificate of Incorporation with the Secretary of State of the State of
Delaware, which is expected to occur as soon as is reasonably practicable after
the twentieth (20th) day following the mailing of this Information Statement to
our stockholders.
REASON FOR REVERSE SPLIT. Our board of directors believes that a
decrease in the number of outstanding shares of common stock, without any
material alteration to each stockholder's proportionate economic interest in the
Company, may increase the trading price of the outstanding shares. An increase
in the price of the common stock may, in turn, generate greater investor
interest in our common stock, thereby enhancing the marketability of the common
stock to the financial community. In addition, the resulting reduction in the
number of issued and outstanding shares of common stock will provide us with
additional authorized but unissued shares, which could be utilized for future
transactions or to otherwise carry out our business objectives.
In addition, our board of directors and stockholders have approved the
reverse stock split in order to have a certain number of shares of common stock
outstanding (and corresponding level of market capitalization) after giving
effect to the merger, the equity issuances, the financings and acquisitions, our
board of directors and stockholders approved the reverse stock split.
EFFECT OF REVERSE SPLIT. The immediate effect of the reverse split will
be to reduce the number of currently issued and outstanding shares of common
stock from 84,822,148 to 7,555,759 shares. Each of the convertible notes sold in
the note financing were issued assuming the effectiveness of the reverse split;
therefore, the number of shares into which the convertible notes are convertible
into will not change. Also, the warrants issued in the note financing and common
stock financing were issued assuming the effectiveness of the reverse split;
therefore, the number of shares for which such warrants are exercisable and the
exercise price of such warrants will not change.
Although the reverse split may also increase the market price of the
common stock, the actual effect of the reverse split on the market price cannot
be predicted. The market price of the common stock may not rise in proportion to
the reduction in the number of shares outstanding as a result of the reverse
split. Further, there is no assurance that the reverse split will lead to a
sustained increase in the market price of the common stock. The market price of
the common stock may also change as a result of other unrelated factors,
including our operating performance and other factors related to our business,
as well as general market conditions. The shares of our common stock are
currently quoted on the OTC Bulletin Board under the symbol "ARBC."
Our common stock is highly illiquid and any liquidity of the common
stock may be adversely affected by the reduced number of unrestricted shares of
common stock outstanding after the reverse split. The reverse split will cause
the number of "odd-lot" holders to go up and cause the number of "round-lot"
holders of the common stock to go down. An odd-lot is fewer than 100 shares. The
number of round-lot holders is a common measure of a stock's distribution, and a
lower number may reflect more negatively on our stock. In addition, the new
odd-lot holders may become reluctant to trade their shares because of any stigma
or higher commissions associated with odd-lot trading. Stockholders who hold
odd-lots may experience an increase in the cost of selling their shares and may
have greater difficulty in making sales. This may negatively impact the average
trading volume and thereby diminish interest in the common stock by some
investors and advisors.
The reverse split will affect all of the holders of our common stock
uniformly and will not affect any stockholder's percentage ownership interest or
proportion voting power, except for insignificant changes that will result from
the rounding of fractional shares. The board of directors is not aware of any
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present efforts by anyone to accumulate the common stock and the reverse split
is not intended to be an anti-takeover device.
Without any further action on our part or the holders of the common
stock, the shares of common stock held by stockholders of record as of the date
the reverse split is effected ("old common stock") will be converted into the
right to receive an amount of whole shares of new common stock equal to the
number of their shares of common stock divided by 11.2261585365, subject to the
treatment of fractional share interests as described below ("new common stock").
No certificates or cash representing fractional share interests in the new
common stock will be issued, and any resulting fractional shares shall be
rounded up to the nearest whole number. The shares of common stock to be issued
upon the reverse split will be fully paid and non-assessable.
EXCHANGE OF STOCK CERTIFICATES. We are not requiring a mandatory
exchange of stock certificates. Stockholders may transmit the certificates
representing shares of pre-reverse split common stock to our transfer agent in
exchange for certificates representing the appropriate number of shares of
post-reverse split common stock after giving effect to the reverse split. Until
the old certificates are surrendered, each current certificate representing
shares of common stock will evidence ownership of common stock in the
appropriately reduced whole number of shares.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion generally
describes certain federal income tax consequences of the reverse split to our
stockholders. The following does not address any foreign, state, local tax or
alternative minimum income, or other federal tax consequences of the proposed
reverse split. The actual consequences for each stockholder will be governed by
the specific facts and circumstances pertaining to such stockholder's
acquisition and ownership of the common stock. Each stockholder should consult
his or her accountants for more information in this regard.
We believe that the reverse split will qualify as a "recapitalization"
under Section 368(a)(1)(E) of the Code or as a stock-for-stock exchange under
Section 1036(a) of the Code. As a result, no gain or loss should be recognized
by us or our stockholders in connection with the reverse split. A stockholder's
aggregate tax basis in his or her shares of post-reverse split common stock
received from us will be the same as his or her aggregate tax basis in the
pre-reverse split common stock exchanged therefor. The holding period of the
post-reverse split common stock surrendered in exchange therefor will include
the period for which the shares of pre-reverse split common stock were held,
provided all such common stock was held as a capital asset on the date of the
exchange.
This summary is provided for general information only and does not
purport to address all aspects of the possible federal income tax consequences
of the reverse split and is not intended as tax advice to any person. In
particular, and without limiting the foregoing, this summary does not consider
the federal income tax consequences to our stockholders in light of their
individual investment circumstances or to the holders subject to special
treatment under the federal income tax laws (such as life insurance companies,
regulated investment companies and foreign taxpayers).
No ruling from the Internal Revenue Service or opinion of counsel has
been or will be obtained regarding the federal income tax consequences to our
stockholders as a result of the reverse split. ACCORDINGLY, EACH STOCKHOLDER IS
ENCOURAGED TO CONSULT HIS OR HER TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES OF THE PROPOSED TRANSACTION TO SUCH STOCKHOLDER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
INTEREST OF DIRECTORS AND OFFICERS. None of our directors or officers
have an interest in the reverse split different from that of any other
stockholder.
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ANTI-TAKEOVER EFFECTS OF DELAWARE LAW, OUR AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION AND OUR AMENDED AND RESTATED BY-LAWS
Our board of directors and stockholders have approved certain
provisions (by means of an amendment and restatement of our Certificate of
Incorporation) which may discourage attempts to take us over that some
stockholders may consider to be in their best interest. Provisions of our bylaws
and Delaware Corporation Law may further discourage such takeover attempts. The
effect of such provisions could delay or frustrate a merger, tender offer or
proxy contest, the removal of incumbent directors, or the assumption of control
by stockholders, even if such proposed actions would be beneficial to our
stockholders.
REVERSE SPLIT. Because the reverse split results in an increased number
of authorized but unissued shares of our common stock, it may be construed as
having an anti-takeover effect. Although the reverse split is not being
undertaken by the board of directors for this purpose, in the future the board
of directors could, subject to its fiduciary duties and applicable law, use the
increased number of authorized but unissued shares to frustrate persons seeking
to take over or otherwise gain control of our company by, for example, privately
placing shares with purchasers who might side with the board of directors in
opposing a hostile takeover bid. Shares of common stock could also be issued to
a holder that would thereafter have sufficient voting power to assure that any
proposal to amend or repeal our Bylaws or certain provisions of our Certificate
of Incorporation would not receive the requisite vote. Such uses of our common
stock could render more difficult, or discourage, an attempt to acquire control
of our company if such transactions were opposed by the board of directors.
However, it is also possible that an indirect result of the anti-takeover effect
of the reverse split could be that shareholders will be denied the opportunity
to obtain any advantages of a hostile takeover, including, but not limited to,
receiving a premium to the then current market price of our common stock, if the
same was so offered by a party attempting a hostile takeover of our company. We
are not aware of any party's interest in or efforts to engage in a hostile
takeover attempt as of the date of this Information Statement.
PREFERRED STOCK. Our certificate of incorporation provides (and our
amended and restated certificate of incorporation will continue to provide) that
we may from time to time issue up to 1,000,000 shares of preferred stock in one
or more series, the terms of which will be determined by our board of directors.
This could enable our board of directors to issue shares to persons friendly to
current management which would protect the continuity of our management and
render more difficult or discourage an attempt to obtain control of our company
by means of a merger, tender offer, proxy contest or otherwise. These additional
shares also could be used to dilute the stock ownership of persons seeking to
obtain control of our company.
CLASSIFIED BOARD. Our amended and restated certificate of incorporation
and Bylaws will provide for a "classified board" (sometimes called a "staggered
board"). Our board of directors will be divided into three classes, and the
members of each class are elected to serve staggered three-year terms. The
three-year staggered board terms are designed to provide stability, enhance
long-term planning and ensure that a majority of our directors at any given time
have prior experience as our directors. The staggered board structure ensures
that our board of directors retains continuity of knowledge of our complex
business, as well as its business strategy. Directors who have experience with
and knowledge about our business and affairs are a valuable resource and are
better positioned to make fundamental decisions that benefit our stockholders. A
classified board is designed to safeguard a corporation against the efforts of a
third party intent on quickly taking control of, and not paying fair value for,
the corporation's business and assets. If a corporation has a classified board
and a hostile bidder stages and wins a proxy contest at the corporation's annual
meeting, the bidder can only replace approximately one-third of the existing
directors. To obtain control of the board, the bidder must win a second proxy
contest at the next annual
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meeting. By preventing an immediate change in control of our board of directors,
the classified board structure enhances the ability of our board of directors to
act in the best interests of our stockholders.
REMOVAL OF DIRECTORS. Our amended and restated certificate of
incorporation provides that members of our board of directors may be removed
only for cause and only by the affirmative vote of the holders of 75% of the
outstanding shares of our capital stock entitled to vote in the election of our
board of directors. This provision may discourage a third party from making a
tender offer or otherwise attempting to obtain control of us because it makes it
more difficult for stockholders to replace a majority of our directors.
NO STOCKHOLDER ACTION BY WRITTEN CONSENT/SPECIAL MEETING. Our amended
and restated certificate of incorporation will provide that stockholders may
only act at annual or special meetings of stockholders and may not act by
written consent. This provision makes it more difficult for stockholders to
amend our certificate of incorporation and Bylaws or to take other corporate
actions such as removing directors as these actions may only be taken at a duly
called and noticed special meeting, which may only be called by the president or
the board of directors, or at our annual meeting of Stockholders.
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DELAWARE ANTI-TAKEOVER STATUTE. We are subject to Section 203 of the
Delaware General Corporation Law ("DGCL"). In general, Section 203 of the DGCL
prohibits a publicly-held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction through which the person became an interested
stockholder, unless:
o if prior to the date of the transaction, the board of directors of the
corporation approved either the business combination or the transaction
that resulted in the stockholder becoming an interested stockholder;
o upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation at the time such
transaction commenced, subject to certain exclusions; or
o on or subsequent to the date of the transaction, the business combination
is approved by the board of directors of the corporation and authorized
at an annual or special meeting of stockholders by the affirmative vote
of at least two thirds of the outstanding voting stock that is not owned
by the interested stockholder.
"Business combination" means a merger, asset sale and other transactions
resulting in a financial benefit to the interested stockholder. "Interested
stockholder" means a person who, together with his or her affiliates and
associates, owns, or at any time within the three-year period prior to the date
on which it is sought to be determined whether such person is an interested
stockholder owned, 15% or more of the corporation's outstanding voting stock.
INTEREST OF DIRECTORS AND OFFICERS.
The above described provisions of our amended and restated certificate
of incorporation may discourage takeover attempts amendment. Stockholders should
be aware that approval of the amended and restated certificate of incorporation
could facilitate our ability to deter or prevent changes of control in the
future, including transactions in which the stockholders might otherwise receive
a premium for their shares over then-current market prices or benefit in some
other manner. Our board of directors and executive officers could be deemed to
have an interest in deterring changes of control and thus in approving the
provisions having an anti-takeover effect.
VOTE REQUIRED.
The affirmative vote of a majority of the outstanding shares of common
stock is required for the approval of our Amended and Restated Certificate of
Incorporation. The Amended and Restated Certificate of Incorporation was
approved on November 8, 2006, by our board of directors and by written consent
of stockholders holding approximately 85.5% of the shares of our common stock
that was outstanding when the written consent was executed.
DELIVERY OF DOCUMENTS TO MULTIPLE STOCKHOLDERS
SHARING AN ADDRESS
One Information Statement will be delivered to multiple stockholders
sharing an address unless we receive contrary instructions from such
stockholders. Upon receipt of such notice, we will undertake to promptly deliver
a separate copy of the Information Statement to the stockholder at the shared
address to which a single copy of the Information Statement was delivered. In
the event you desire to provide
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such notice to us with respect to this Information Statement or any future
Annual Report, Proxy Statement or Information Statement, such notice may be
given verbally by phoning the Company's head office at (908)497-0280 or by mail
to Paul Shahbazian, Chief Financial Officer, 547 Boulevard Kenilworth, New
Jersey 07003.
ADDITIONAL INFORMATION
Additional information concerning us, including our annual report on
Form 10-KSB, quarterly reports on Form 10-QSB, and current reports on Form 8-K,
which have been filed with the Securities and Exchange Commission, may be
accessed through the EDGAR archives at www.sec.gov.
AEROBIC CREATIONS, INC.
ROBERT AGRESTI, CHIEF EXECUTIVE OFFICER
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INDEX OF EXHIBITS
EXHIBIT A Amended and Restated Certificate of Incorporation
EXHIBIT B 2006 Equity Incentive Plan
EXHIBIT C 2007 Supplemental Executive Retirement Plan
EXHIBIT D 2007 Management Incentive Plan
EXHIBIT E Severance Benefit Plan and Summary Plan Description
EXHIBIT F Employment agreement Robert Agresti
EXHIBIT G Employment agreement with Paul Shahbazian
EXHIBIT H Employment agreement with Gregory DeSaye
EXHIBIT I Employment agreement with Peter Klaver
EXHIBIT J Employment agreement with Christopher Dombalis
EXHIBIT K Employment agreement with William Knight
EXHIBIT L Employment agreement with James Madden
EXHIBIT M Employment agreement with Peter Stone
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Exhibit A
[FORM OF]
FIRST AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF AEROBIC CREATIONS, INC.
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation")
is Aerobic Creations, Inc. and the date the Corporation's original Certificate
of Incorporation was filed with the Secretary of State of Delaware was July 13,
2006.
2. The amendment and restatement of the Certificate of Incorporation
herein certified has been duly adopted by the directors and the stockholders in
accordance with the provisions of Sections 141, 228, 242 and 245 of the General
Corporation Law of the State of Delaware.
3. The Certificate of Incorporation of the Corporation, as amended and
restated to date, shall upon the effective date of this First Amended and
Restated Certificate of Incorporation, read as follows:
1
[FORM OF]
FIRST AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF SUMMIT GLOBAL LOGISTICS, INC.
FIRST: The name of the corporation (hereinafter called the
"Corporation") is Summit Global Logistics, Inc.
SECOND: The address, including street, number, city, and county; of the
registered office of the Corporation in the State of Delaware is 2711
Centerville Road, Suite 400, Wilmington, Delaware 19808; County of New Castle,
and the name of the registered agent of the Corporation in the State of Delaware
at such address is Corporation Service Company.
THIRD: The nature of the business and the purposes to be conducted and
promoted by the Corporation, shall be to engage in any lawful business, to
promote any lawful purpose, and to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 99,000,000 shares of Common Stock,
$.001 par value per share ("Common Stock") and 1,000,000 shares of Preferred
Stock, $.001 par value per share (the "Preferred Stock"). Any and all such
shares issued for which the full consideration has been paid or delivered shall
be deemed fully paid shares of capital stock, and the holder of such shares
shall not be liable for any further call or assessment or any other payment
thereon.
A. COMMON STOCK.
1. GENERAL. The voting, dividend and liquidation rights of the holders
of Common Stock are subject to and qualified by the rights of the holders of
Preferred Stock.
2. VOTING. The holders of Common Stock are entitled to one vote for
each share held at all meetings of stockholders. There shall be no cumulative
voting.
3. DIVIDENDS. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor if, as and when determined by the board
of directors of the Corporation (the "Board") and subject to any preferential
dividend rights of any then outstanding shares of Preferred Stock.
4. LIQUIDATION. Upon the dissolution or liquidation of the Corporation,
whether voluntary or involuntary, holders of Common Stock will be entitled to
receive all assets of the Corporation available for distribution to its
stockholders, subject to any preferential rights of any then outstanding shares
of Preferred Stock.
B. PREFERRED STOCK. Preferred Stock may be issued from time to time in
one or more series with such designations preferences and relative
participating, optional or other
2
special rights and qualifications, limitations or restrictions thereof, as shall
be stated in the resolutions adopted by the Corporation's Board providing for
the issuance of such Preferred Stock or series thereof; and the Board is hereby
vested with authority to fix such designations, preferences and relative
participating, optional or other special rights or qualifications, limitations,
or restrictions for each series, including, but not by way of limitation, the
power to fix the redemption and liquidation preferences, the rates of dividends
payable and the time for and the priority of payment thereof and to determine
whether such dividends shall be cumulative or not and to provide for and fix the
terms of conversion of such Preferred Stock or any series thereof into Common
Stock of the Corporation and fix the voting power, if any, of shares of
Preferred Stock or any series thereof.
C. REVERSE STOCK SPLIT. Upon the effective date of this First Amended
and Restated Certificate of Incorporation, a reverse stock split ("Reverse Stock
Split") shall immediately and automatically occur whereby each 11.2261585365
shares of the Corporation's Common Stock outstanding immediately prior to the
Reverse Stock Split shall be combined into one (1) share of the Corporation's
Common Stock without any action on the part of the holder thereof. As a result
of the Reverse Stock Split, each holder of Common Stock shall thereupon
automatically be and become the holder of one share of new Common Stock for
every 11.2261585365 shares of Common Stock held by such holder immediately prior
to the Reverse Stock Split.
Upon the Reverse Stock Split, each certificate formerly representing a
stated number of shares of Common Stock shall be deemed for all corporate
purposes to evidence ownership of one share of Common Stock for each
11.2261585365 shares of previously existing Common Stock. Share numbers will be
rounded up to the nearest whole number and no fractional shares will be issued
by the Corporation in connection with the Reverse Stock Split. Upon the delivery
by the stockholders of their certificates evidencing securities of the
Corporation that were issued prior to the Reverse Stock Split, such holders will
receive stock certificates representing their Common Stock of the Corporation
following the Reverse Stock Split.
FIFTH: No holder of any of the shares of this Corporation shall, as
such holder, have any right to purchase or subscribe for any shares of any class
which the Corporation may issue or sell, whether or not such shares are
exchangeable for any shares of the Corporation of any other class or classes,
and whether such shares are issued out of the number of shares authorized by
this First Amended and Restated Certificate of Incorporation of the Corporation,
or by any amendment thereof, or out of shares of the Corporation acquired by it
after the issue thereof; nor shall any holder of any shares of the Corporation,
as such holder, have any right to purchase or subscribe for any obligations
which the Corporation may issue or sell that shall be convertible into, or
exchangeable for, any shares of the Corporation of any class or classes, or to
which shall be attached or shall appertain to any warrant or warrants or any
other instrument or instruments that shall confer upon the holder thereof the
right to subscribe for, or purchase from the Corporation any shares of any class
or classes.
SIXTH: The Corporation shall have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
3
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agrees to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and regulation
of the powers of the Corporation and of its directors and of its stockholders or
any class thereof, as the case may be, it is further provided that:
(a) The business of the Corporation shall be conducted by the officers
of the Corporation under the supervision of the Board.
(b) The number of directors which shall constitute the whole Board
shall be fixed by, or in the manner provided in, the By-Laws. No election of
Directors need be by written ballot.
(c) Cumulative voting with respect to the election of directors is not
permitted.
(d) The Board shall consist of a classified board, divided into three
classes, and the members of each class shall be elected to serve staggered
three-year terms.
(e) A member of the Board may be removed from office only for cause by
vote of the holders of seventy-five percent (75%) of the outstanding shares of
the capital stock of the Corporation, and only after reasonable notice and
opportunity to be heard before the stockholders proposing to remove him.
(f) A majority vote by the Board or a vote by the holders of at least
seventy-five percent (75%) of the outstanding shares of capital of the
Corporation is required to adopt, amend or repeal the By-Laws of the Corporation
at any time after the date of this First Amended and Restated Certificate of
Incorporation.
4
NINTH: (a) The corporation may, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the
expenses, liabilities or other matters referred to in or covered by said
election, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which a person indemnified may be entitled
under any By-Law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(b) No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law (i) for breach of the
Director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) pursuant to Section 174 of the General
Corporation Law of the State of Delaware or (iv) for any transaction from which
the director derived an improper personal benefit. No amendment to or repeal of
this paragraph (b) of this Article Tenth shall apply to or have any effect on
the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such Director occurring prior to such
amendment.
TENTH: Any action required or permitted to be taken by the stockholders
of the Corporation may be taken only at a duly called annual or special meeting
of the stockholders, and not by written consent in lieu of such a meeting, in
which such action is properly brought before such meeting. Special meetings of
stockholders may be called only by the President, or a majority of the Board.
ELEVENTH: From time to time, subject to the provisions of this First
Amended and Restated Certificate of Incorporation, any of the provisions of this
Amended and Restated Certificate of Incorporation may be amended, altered or
repealed, and other provisions authorized by the laws of the State of Delaware
at the time in force may be added or inserted in the manner and at the time
prescribed by said laws, and all rights at any time conferred upon the
stockholders of the Corporation by this Amended and Restated Certificate of
incorporation are granted subject to the provisions of this Article Eleventh,
provided that the affirmative vote of the holders of at least seventy-five
percent (75%) of the outstanding voting stock of the Corporation shall be
required to amend or repeal the provisions of Articles EIGHT, TENTH, or ELEVENTH
of this First Amended and Restated Certificate of Incorporation.
Signed on the 8th day of November, 2006.
-------------------------------------------------
Robert Agresti, President and Chief Executive Officer
5
Exhibit B
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
1. PURPOSE AND ELIGIBILITY. The purpose of this 2006 Equity Incentive Plan
(the "Plan") of Summit Global Logistics, Inc., a Delaware corporation (the
"COMPANY") is to provide stock options, stock issuances and other equity
interests in the Company (each, an "AWARD") to (a) Employees, officers,
Directors, consultants, independent contractors, and advisors of the Company or
any Parent or Subsidiary thereof, and (b) any other Person who is determined by
the Committee of the Board of Directors of the Company (the "BOARD") to have
made (or is expected to make) contributions to the Company or any Parent or
Subsidiary thereof. Any person to whom an Award has been granted under the Plan
is called a "PARTICIPANT." Additional definitions are contained in Section 2 and
certain other Sections of the Plan.
2. CERTAIN DEFINITIONS.
a. "AFFILIATE" shall mean
i. any Person which directly or indirectly beneficially
owns (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) securities or other equity
interests possessing more than 50% of the aggregate
voting power in the election of directors (or similar
governing body) represented by all outstanding
securities of the Company; or
ii. any Person with respect to which the Company
beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) securities or
other equity interests possessing more than 50% of
the aggregate voting power in the election of
directors (or similar governing body) represented by,
or more than 5% of the aggregate value of, all
outstanding securities or other equity interests of
such Person.
b. "BASE SALARY" shall mean a Participant's "Base Salary" as such term
is defined in the Employment Agreement.
c. "BUSINESS ENTITY" shall mean (i) the Company or (ii) any Parent or
Subsidiary thereof.
d. "BUSINESS ENTITY LOCATION" means a Business Entity office consisting
of one or more buildings within 25 miles of each other.
e. "CAUSE" shall mean, "Cause," as defined in the Participant's
Employment Agreement or Director's Agreement, and in the absence of such
definition, Cause shall mean, as determined by the Committee in its sole
discretion, the Participant's
i. material act of dishonesty with respect to the
Business Entity that employs
the Participant;
ii. conviction for a felony, gross misconduct that is
likely to have a material adverse effect on the
business and affairs of the Business Entity that
employs the Participant; or
iii. other misconduct, such as excessive absenteeism or
failure to comply with the rules of the Business
Entity that employs the Participant.
f. "CHANGE IN CONTROL" shall mean the occurrence of the first step,
including, but not limited to, commencement of negotiations, in a process that
results in any one of the following events:
i. the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended)
(the "Act") of beneficial ownership (within the
meaning of Rule 13d-3 of the Act) of 20% or more of
the (A) then outstanding voting stock of the Company;
or (B) the combined voting power of the then
outstanding securities of the Company entitled to
vote;
ii. an ownership change in which the shareholders of the
Company before such ownership change do not retain,
directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the
Company after such transaction, or in which the
Company is not the surviving company;
iii. the direct or indirect sale or exchange by the
beneficial owners (directly or indirectly) of the
Company of all or substantially all of the stock of
the Company;
iv. a majority of the directors comprising the entire
Board as of the Effective Date changes during any
12-month period (other than a Qualified Successor);
v. a reorganization, merger, or consolidation in which
the Company is a party;
vi. the sale, exchange, or transfer of all or
substantially all of the assets of the Company;
vii. the bankruptcy, liquidation or dissolution of the
Company; or
viii. any transaction including the Company in which the
Company acquires an ownership interest of any
percentage in, enters into a joint venture,
partnership, alliance or similar arrangement with, or
becomes owned in any percentage by, any other entity
that is engaged in a business similar to the business
engaged in by the Company and that has operations in
North America immediately before such transaction or
within one year
2
thereafter.
g. "CODE" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
h. "COMMITTEE" shall mean the Compensation Committee of the Board or
such other committee designated by the Board that satisfies any then applicable
requirements of the New York Stock Exchange, Nasdaq, or such other principal
national stock exchange on which the Common Stock is then traded, and which
consists of two or more members of the Board, each of whom shall be an outside
director within the meaning of Section 162(m) of the Code. Notwithstanding the
foregoing, in the case of any Award granted to any Participant who is a "covered
employee" within the meaning of Section 162(m), the Committee shall consist of
two or more members of the Board who are "outside directors" within the meaning
of such Section.
i. "COMMON STOCK" shall mean the common stock of the Company, par value
of $.001 per share.
j. "COMPANY" shall mean Summit Global Logistics, Inc., and any
successor thereto, and, for purposes of Awards other than Incentive Stock
Options, shall include any other business venture in which the Company has a
direct or indirect significant interest, as determined by the Committee in its
sole discretion.
k. "CONTROL" (including the terms "Controlled by" and "under common
Control with") shall mean the possession, directly or indirectly, or as a
trustee or executor, of the power to direct or cause the direction of the
management of a Person, whether through the ownership of stock, as a trustee or
executor, by contract or credit agreement or otherwise.
l. "DESIGNATED BENEFICIARY" shall mean the beneficiary designated by a
Participant, in accordance with Section 15h hereof, to receive amounts due or
exercise rights of the Participant in the event of the Participant's death. In
the absence of an effective designation by a Participant, Designated Beneficiary
shall mean the Participant's estate.
m. "DETERMINATION PERIOD" shall mean, with respect to any Performance
Period, a period commencing on or before the first day of the Performance Period
and ending not later than the earlier of (i) 90 days after the commencement of
the Performance Period and (ii) the date on which twenty-five percent (25%) of
the Performance Period has been completed. Any action required to be taken
within a Determination Period may be taken at a later date if permissible under
Section 162(m) of the Code or regulations promulgated thereunder, as they may be
amended from time to time.
n. "DIRECTOR" shall mean a member of the Board or the board of
directors of a Parent or Subsidiary who is not an Employee.
o. "DIRECTOR'S AGREEMENT" shall mean the Participant's agreement with
the Company or any Parent or Subsidiary thereof to serve as a non-Employee
director of such Business Entity.
3
p. "DISABILITY" shall mean any physical or mental condition which
renders the Participant incapable of performing his or her essential functions
and duties as an Employee for a continuous period of at least 180 days, as
determined in good faith by a physician appointed by the Business Entity that
employs the Participant.
q. "EFFECTIVE DATE" shall mean the date specified in Section 15c
hereof.
r. "EMPLOYEE" shall mean an employee of the Company or any Parent or
Subsidiary thereof, but only if the employee is reported as such on the payroll
records of such entity.
s. "EMPLOYMENT AGREEMENT" shall mean the Participant's employment
agreement with the Business Entity that employs him or her as in effect as of
the Effective Date.
t. "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
u. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
v. "GOOD REASON" shall mean "Good Reason," as defined in the
Participant's Employment Agreement or Director's Agreement, and in the absence
of such definition, shall mean:
i. without the Participant's prior written consent, any
material diminution in the Participant's authority,
duties or responsibilities, including those
pertaining to his or her status as a director, if
applicable, provided, however, that prior to any
termination pursuant to this Section 2ui., the
applicable Business Entity must be given notice by
the Participant of his/her objection to such material
diminution and no less than 20 days to cure the same;
ii. any failure by the Business Entity to pay the
Participant any portion of the Base Salary to which
the Participant is entitled under Section 2b or any
payments to which the Participant is entitled under
his or her employment agreement, if applicable,
provided, however, that prior to any termination on
account of the non-payment of Base Salary, the
Business Entity must be given no less than 30 days to
cure the same;
iii. without the Participant's prior written consent, the
relocation of the principal place of the
Participant's employment to a location more than 30
miles from the Business Entity Location where the
individual was working immediately prior to the
relocation; or
iv. a material breach by the Company of any of the
material provisions of this Plan, provided, however,
that prior to any termination pursuant to this
Section 2uiv., the applicable Business Entity must be
given notice by the Participant of such acts or
omissions and no less than 20 days to cure the same.
4
w. "PARENT" shall mean, in the case of an Incentive Stock Option, a
"parent corporation," within the meaning of Section 424(e) of the Code, with
respect to the Company, and in all other instances, an entity, directly or
indirectly, in Control of the Company.
x. "PERFORMANCE PERIOD" shall mean a one (1), two (2), three (3), four
(4) or five (5) fiscal or calendar year or other 12 consecutive month period for
which performance goals are established pursuant to Article IV.
y. "PERSON" shall mean a person within the meaning of Section 3(a)(9)
of the Exchange Act.
z. "PLAN" shall mean the Summit Global Logistics, Inc., 2006 Equity
Incentive Plan, as set forth herein, as it may be amended from time to time.
aa. "QUALIFIED SUCCESSOR" shall mean have the meaning ascribed thereto
in the Employment Agreement or Director's Agreement, as applicable. If such
terms does not appear in the Employment Agreement or Director's Agreement, all
Plan provisions in respect of a Qualified Successor shall be null and void with
respect to the affected Participant.
bb. "RETIREMENT" shall mean the voluntary termination of the
Participant at any time on or after attaining age 65.
cc. "SUBSIDIARY" shall mean, in the case of an Incentive Stock Option,
a "subsidiary corporation," within the meaning of Section 424(f) of the Code,
with respect to the Company, and in all other instances, an entity, directly or
indirectly, Controlled by the Company.
dd. "VESTING PERIOD" shall mean a continuous period of time pursuant to
which an Award is partially or fully forfeitable to the Company.
3. ADMINISTRATION.
a. GENERAL. The Plan shall be administered by the Committee. The
Committee, in its sole discretion, shall have the authority to grant and amend
Awards, to adopt, amend and repeal rules relating to the Plan and to interpret
and correct the provisions of the Plan and any Award.
b. POWERS AND RESPONSIBILITIES. Subject to the express limitations of
the Plan, the Committee shall have the following discretionary powers, rights
and responsibilities, in addition to those described in Section 3a.:
i. to construe and determine the respective Stock Option
Agreements, other Agreements, Awards and the Plan;
ii. to prescribe, amend and rescind rules and regulations
relating to the Plan and any Awards;
iii. to determine the extent to which Award vesting
schedules shall be
5
accelerated or Award payments made to, or forfeited
by, a Participant in the event of (A) the
Participant's termination of employment with the
Company or any Parent or Subsidiary thereof due to
Disability, Retirement, death, Good Reason, Cause or
other reason, or (B) a Change in Control of the
Company;
iv. to determine the terms and provisions of the
respective Stock Option Agreements, other Agreements
and Awards, which need not be identical;
v. to grant Awards to Participants based upon the
attainment of performance goals that do not
constitute "objective performance goals" within the
meaning of Section 162(m);
vi. to grant Awards that are Options or Stock
Appreciation Rights based solely upon a Vesting
Schedule; and
vii. to make all other determinations in the judgment of
the Committee necessary or desirable for the
administration and interpretation of the Plan.
The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Stock Option
Agreement, other Agreement or Award in the manner and to the
extent it shall deem expedient to carry the Plan, any Stock
Option Agreement, other Agreement or Award into effect and it
shall be the sole and final judge of such expediency. All
decisions by the Committee shall be final and binding on all
interested persons. Neither the Company nor any member of the
Committee shall be liable for any action or determination
relating to the Plan.
c. DELEGATION OF POWER. The Committee may delegate some or all of its
power and authority hereunder to the President and Chief Executive Officer of
the Company or other executive officer of the Company or, with respect to a
Subsidiary, the shareholders of such Subsidiary, as the Committee deems
appropriate. Notwithstanding the foregoing, with respect to any person who is a
"covered employee" within the meaning of Section 162(m) of the Code or who, in
the Committee's judgment, is likely to be a covered employee at any time during
the applicable Performance Period, only the Committee shall be permitted to (i)
designate such person to participate in the Plan for such Performance Period,
(ii) establish performance goals and Awards for such person, and (iii) certify
the achievement of such performance goals. For purposes of the immediately
preceding sentence, "Committee" shall mean two or more members of the Board who
are "outside directors" within the meaning of Section 162(m) of the Code. No
member of the Committee may make any decisions under this Plan whatsoever in
respect of an Award to be granted to such member.
4. PERFORMANCE GOALS AND OTHER CRITERIA.
a. ROLE OF COMMITTEE. The Committee shall establish within the
Determination Period of each Performance Period (i) one or more objective
performance goals for each Participant or for any group of Participants (or
both), provided that the outcome of each goal is
6
substantially uncertain at the time the Committee establishes such goal and/or
(ii) other criteria, including, but not limited to, performance criteria that do
not satisfy the requirements of Treasury Regulation Section 1.162-27(e)(2) or
time vesting criteria, the satisfaction of which is required for the payment of
an Award. Notwithstanding any provision of this Plan to the contrary, Awards
that are Options or Stock Appreciation Rights may be granted solely on the basis
of a Vesting Schedule, and without regard to performance or any other criteria.
b. PERFORMANCE FACTORS. Performance goals shall be based exclusively on
one or more of the following objective Company (including any division or
operating unit thereof) or individual measures, stated in either absolute terms
or relative terms, such as rates of growth or improvement, the attainment by a
share of Common Stock of a specified fair market value for a specified period of
time, earnings per share, earnings per share excluding non-recurring, special or
extraordinary items, return to stockholders (including dividends), return on
capital, return on total capital deployed, return on assets, return on equity,
earnings of the Company before or after taxes and/or interest, revenues, revenue
increase, new business development or acquisition, repeat purchase rate,
recurring revenue, recurring revenue increase, market share, cash flow or cost
reduction goals, cash flow provided by operations, net cash flow, short-term or
long-term cash flow return on investment, interest expense after taxes, return
on investment, return on investment capital, economic value created, operating
margin, gross profit margin, net profit margin, pre-tax income margin, net
income margin, net income before or after taxes, pretax earnings before
interest, depreciation and amortization, pre-tax operating earnings after
interest expense and before incentives, and/or extraordinary or special items,
operating earnings, net cash provided by operations, and strategic business
criteria, consisting of one or more objectives based on meeting specified market
penetration, geographic business expansion goals, cost targets, customer
satisfaction, reductions in errors and omissions, reductions in lost business,
management of employment practices and employee benefits, supervision of
litigation and information technology, quality and quality audit scores,
productivity, efficiency, and goals relating to acquisitions or divestitures, or
any combination of the foregoing.
c. PARTICIPANTS WHO ARE COVERED EMPLOYEES. With respect to Participants
who are "covered employees" within the meaning of Section 162(m) of the Code or
who, in the Committee's judgment, are likely to be covered employees at any time
during the applicable Performance Period, an Award other than an Option or a
Stock Appreciation Right may be based only on performance factors that are
compliant with the requirements of Treasury Regulation Section 1.162-27(e)(2).
For this purpose, the factors listed in Section 4.1b shall be deemed to be
compliant with the requirements of such Treasury Regulation.
d. PARTICIPANTS WHO ARE NOT COVERED EMPLOYEES. Notwithstanding any
provision of this Plan to the contrary, with respect to Participants who are not
"covered employees" within the meaning of Section 162(m) of the Code and who, in
the Committee's judgment, are not likely to be covered employees at any time
during the applicable Performance Period, the performance goals established for
the Performance Period may consist of any objective Company (including any
division or operating unit thereof) or individual measures, whether or not
listed in (b) above or whether or not compliant with the requirements of
Treasury Regulation Section 1.162-27(e)(2), and the Committee may grant Awards
without regard to the need for satisfaction of any performance goals whatsoever
and/or without reference to any particular Performance Period.
7
Without in any way limiting the generality of the foregoing, such performance
goals may include subjective goals, the satisfaction of which shall be
determined by the Committee, in its sole and absolute discretion, and the
Committee may grant Awards subject only to the requirement of satisfying the
applicable Vesting Period. Performance goals shall be subject to such other
special rules and conditions as the Committee may establish at any time within
the Determination Period.
e. APPLICABILITY OF SECTION RULE 16B-3. Notwithstanding anything to the
contrary in the foregoing if, or at such time as, the Common Stock is or becomes
registered under Section 12 of the Securities and Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), or any successor statute, the Plan shall be
administered in a manner consistent with Rule 16b-3 promulgated thereunder, as
it may be amended from time to time, or any successor rules ("RULE 16B-3"), such
that all subsequent grants of Awards hereunder to Reporting Persons, as
hereinafter defined, shall be exempt under such rule. Those provisions of the
Plan which make express reference to Rule 16b-3 or which are required in order
for certain option transactions to qualify for exemption under Rule 16b-3 shall
apply only to such persons as are required to file reports under Section 16 (a)
of the Exchange Act (a "REPORTING PERSON").
5. STOCK AVAILABLE FOR AWARDS.
a. NUMBER OF SHARES. Subject to adjustment under Section 5c, the
aggregate number of shares of Common Stock of the Company that may be issued
pursuant to the Plan is the Available Shares (as defined on the last page). If
any Award expires, or is terminated, surrendered or forfeited, in whole or in
part, the unissued Common Stock covered by such Award shall again be available
for the grant of Awards under the Plan. If an Award granted under the Plan shall
expire or terminate for any reason without having been exercised in full, the
unpurchased shares subject to such Award shall again be available for subsequent
Awards under the Plan. Shares issued under the Plan may consist in whole or in
part of authorized but unissued shares or treasury shares.
b. PER-PARTICIPANT LIMIT. Subject to adjustment under SECTION 5C, no
Participant may be granted Awards during any one fiscal year to purchase more
than 250,000 shares of Common Stock.
c. ADJUSTMENT TO COMMON STOCK. Subject to Section 13, in the event of
any stock split, reverse stock split, stock dividend, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, combination,
exchange of shares, liquidation, spin-off, split-up, or other similar change in
capitalization or similar event, (i) the number and class of securities
available for Awards under the Plan and the per-Participant share limit and (ii)
the number and class of securities, vesting schedule and exercise price per
share subject to each outstanding Option and Stock Appreciation Right shall be
adjusted by the Company (or substituted Awards may be made if applicable) to the
extent the Committee shall determine, in good faith, that such an adjustment (or
substitution) is appropriate.
8
6. STOCK OPTION AWARDS.
a. GENERAL. The Committee may grant options to purchase Common Stock
(each, an "OPTION") and determine the number of shares of Common Stock to be
covered by each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option and the shares of Common
Stock issued upon the exercise of each Option, including, but not limited to,
vesting provisions and restrictions relating to applicable federal or state
securities laws. Each Option will be evidenced by a Stock Option Agreement,
consisting of a Notice of Stock Option Award and a Stock Option Award Agreement
(collectively, a "STOCK OPTION AGREEMENT").
b. INCENTIVE STOCK OPTIONS. An Option that the Committee intends to be
an incentive stock option (an "INCENTIVE STOCK OPTION") as defined in Section
422 of the Code, as amended, or any successor statute ("SECTION 422"), shall be
granted only to an Employee and shall be subject to and shall be construed
consistently with the requirements of Section 422 and regulations thereunder.
The Committee, the Board and the Company shall have no liability if an Option or
any part thereof that is intended to be an Incentive Stock Option does not
qualify as such. An Option or any part thereof that does not qualify as an
Incentive Stock Option is referred to herein as a "NONSTATUTORY STOCK OPTION" or
"NONQUALIFIED STOCK OPTION."
c. DOLLAR LIMITATION. For so long as the Code shall so provide, Options
granted to any Employee under the Plan (and any other incentive stock option
plans of the Company) which are intended to qualify as Incentive Stock Options
shall not qualify as Incentive Stock Options to the extent that such Options, in
the aggregate, become exercisable for the first time in any one calendar year
for shares of Common Stock with an aggregate Fair Market Value (as defined below
and determined as of the respective date or dates of grant) of more than
$100,000. The amount of Incentive Stock Options which exceed such $100,000
limitation shall be deemed to be Nonqualified Stock Options. For the purpose of
this limitation, unless otherwise required by the Code or regulations of the
Internal Revenue Service or determined by the Committee, Options shall be taken
into account in the order granted, and the Committee may designate that portion
of any Incentive Stock Option that shall be treated as Nonqualified Option in
the event that the provisions of this paragraph apply to a portion of any
Option. The designation described in the preceding sentence may be made at such
time as the Committee considers appropriate, including after the issuance of the
Option or at the time of its exercise.
d. EXERCISE PRICE. The Committee shall establish the exercise price (or
determine the method by which the exercise price shall be determined) at the
time each Option is granted and specify the exercise price in the applicable
Stock Option Agreement; provided, however, in no event may the per share
exercise price be less than the Fair Market Value (as defined below) of the
Common Stock on the date of grant; and provided, further, however, that, except
as may be required under SECTION 5C, the Committee may not reduce, directly or
indirectly, at any time following the grant of the Option, the exercise price
per share of Common Stock underlying the Option to a level below the Fair Market
Value per share of Common Stock on the date of grant. In the case of an
Incentive Stock Option granted to a Participant who, at the time of grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes
9
of stock of the Company or any Parent or Subsidiary, then the exercise price
shall be no less than 110% of the Fair Market Value of the Common Stock on the
date of grant. In the case of a grant of an Incentive Stock Option to any other
Participant, the exercise price shall be no less than 100% of the Fair Market
Value of the Common Stock on the date of grant.
e. TERM OF OPTIONS. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may specify in the
applicable Stock Option Agreement; provided, that the term of any Incentive
Stock Option may not be more than ten (10) years from the date of grant. In the
case of an Incentive Stock Option granted to a Participant who, at the time of
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be no longer than five (5) years from the date of
grant. The term of any Nonqualified Stock Option may not be more than ten (10)
years from the date of grant.
f. EXERCISE OF OPTION. Options may be exercised only by delivery to the
Company of a written notice of exercise signed by the proper person together
with payment in full as specified in Section 6g and the Stock Option Agreement
for the number of shares for which the Option is exercised.
g. PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of
an Option shall be paid for by delivery of an irrevocable and unconditional
undertaking by a creditworthy broker (selected by the Participant and otherwise
without the financial involvement of the Company) to deliver promptly to the
Company sufficient funds to pay the exercise price, or delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price (each, a "CASHLESS EXERCISE").
Settlement of an Option shall be made solely in cash.
h. ACCELERATION, EXTENSION, ETC. The Committee may, in its sole
discretion, and in all instances subject to any relevant tax and accounting
considerations which may adversely impact or impair the Company, (i) accelerate
the date or dates on which all or any particular Options or Awards granted under
the Plan may be exercised, or (ii) extend the dates during which all or any
particular Options or Awards granted under the Plan may be exercised or vest.
i. DETERMINATION OF FAIR MARKET VALUE. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded under the
Exchange Act, "FAIR MARKET VALUE" shall mean (i) if the Common Stock is listed
on any established stock exchange or a national market system, including without
limitation the Nasdaq National Market or The Nasdaq Small Cap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the last reported sales
price for such stock (on that date) or the closing bid, if no sales were
reported as quoted on such exchange or system as reported in The Wall Street
Journal or such other source as the Committee deems reliable; or (ii) the
average of the closing bid and asked prices last quoted (on that date) by an
established quotation service for over-the-counter securities, if the Common
Stock is not reported on a national market system. In the absence of an
established market for the Common Stock, the Fair Market Value thereof shall be
determined in good faith by the Committee after taking into consideration all
factors which it deems appropriate.
10
7. RESTRICTED COMPENSATION SHARE AWARDS.
a. GRANTS. The Committee may grant Awards entitling recipients to
acquire shares of Common Stock, subject to (i) restrictions on transfer as set
forth in the applicable Award instrument and (ii) forfeiture unless and until
all specified employment, vesting and/or performance conditions, as set forth in
the applicable Award instrument, are met (such shares of Common Stock,
"RESTRICTED COMPENSATION SHARES," and each such Award, a "RESTRICTED
COMPENSATION SHARE AWARD").
b. TERMS AND CONDITIONS. The Committee shall determine the terms and
conditions of any such Restricted Compensation Share Award. Any stock
certificates issued in respect of a Restricted Compensation Share Award shall be
registered in the name of the Participant and, unless otherwise determined by
the Committee, deposited by the Participant, together with a stock power
endorsed in blank, with the Company (or its designee). Restricted Compensation
Share Awards shall be issued for no cash consideration or such minimum
consideration as may be required by law. After the expiration of the applicable
restriction periods, the Company (or such designee) shall deliver the
certificates no longer subject to such restrictions to the Participant or, if
the Participant has died, to the Designated Beneficiary.
8. RESTRICTED COMPENSATION SHARE UNIT AWARDS.
a. GRANT. The Committee may grant Awards entitling recipients to the
right to acquire, at some time in the future, Restricted Compensation Shares,
subject to such other conditions as the Committee may prescribe in the
applicable Award Agreement (each such Award, a "RESTRICTED COMPENSATION SHARE
UNIT AWARD"). Restricted Compensation Share Unit Awards are subject to
forfeiture unless and until all specified Award conditions are met, as
determined by the Committee and set forth in the particular Agreements
applicable to such Awards.
b. TERMS AND CONDITIONS. The Committee shall determine the terms and
conditions of any such Restricted Compensation Share Unit Award. No stock
certificates shall be issued in respect of a Restricted Compensation Share Unit
Award at the time of grant. However, upon exercise, the Company (or the
Company's counsel as its designee) shall deliver stock certificates to the
Participant or, if the Participant has died, to the Designated Beneficiary.
9. STOCK APPRECIATION RIGHT AWARDS.
a. GRANT. The Committee may grant Awards entitling recipients to the
right to acquire, at some time in the future, upon exercise, one or more shares
of Common Stock, in an amount equal to the product of (i) the excess of (A) the
Fair Market Value of a share of Common Stock on the date of exercise over (B)
the exercise price per share set forth in the applicable Award Agreement and
(ii) the number of shares of Common Stock with respect to which the right is
exercised, subject to such other conditions as the Committee may prescribe in
the applicable Award Agreement (each, a "STOCK APPRECIATION RIGHT AWARD"). Stock
Appreciation Right Awards are subject to forfeiture unless and until all
specified Award
11
conditions are met, as determined by the Committee and set forth in the
particular Agreements applicable to such Awards.
b. TERMS. The Committee shall determine the terms and conditions of any
such Stock Appreciation Right Award. A Stock Appreciation Right Award may be
issued either in tandem with, or by reference to, an Option (each such Award, a
"TANDEM SAR") or not so issued (each such Award, a "FREE-STANDING SAR"). It is
the intention of the Committee that the exercise of Tandem SARs assist the
recipient of an Option with the ability to pay applicable taxes with respect to
the exercise of an Option and the SARs themselves. The exercise price of a
Tandem SAR shall be the exercise price per share of the related Option. The
exercise price of a Free-Standing SAR shall be determined by the Committee in
its sole discretion; provided, however, that exercise price shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the date of
grant; and provided, further, however, that, except as may be required under
SECTION 5C, the Committee may not reduce, at any time following the grant of the
Free-Standing SAR, the exercise price per share of Common Stock underlying such
Free-Standing SAR to a level below the Fair Market Value per share of Common
Stock on the date of grant. No stock certificates shall be issued in respect of
a Stock Appreciation Right Award, and such Award shall be reflected merely in
book entry form on the Company's books and records. A Stock Appreciation Right
Award may be settled only in cash.
10. PERFORMANCE SHARE AWARDS
a. GRANTS. The Committee may grant Awards entitling recipients to
acquire shares of Common Stock upon the attainment of specified performance
goals within a specified Performance Period, which shares may or may not be
Restricted Compensation Shares, subject to such other conditions as the
Committee may prescribe in the applicable Award (each such share of Common
Stock, a "PERFORMANCE SHARE," and each such Award, a "PERFORMANCE SHARE AWARD").
Performance Share Awards are subject to forfeiture unless and until all
specified Award conditions are met, as determined by the Committee and set forth
in the particular Agreements applicable to such Awards.
b. TERMS AND CONDITIONS. The Committee shall determine the terms and
conditions of any such Performance Share Award. Unless otherwise determined by
the Committee, the payment value of the Performance Share Awards shall be based
upon the Fair Market Value of the Common Stock underlying such Award on the date
the Performance Shares are earned or on the date the Committee determines that
the Performance Shares have been earned. The Committee shall establish
performance goals for each Performance Period for the purpose of determining the
extent to which Performance Shares awarded for such cycle are earned. As soon as
administratively practicable after the end of a performance cycle, the Committee
shall determine the number of Performance Shares which have been earned in
relation to the established performance goals. No stock certificates shall be
issued in respect of a Performance Share Award at the time of grant unless the
Performance Shares are Restricted Compensation Shares, in which case the rules
of Section 9b with respect to the issuance of certificates shall apply. However,
upon the lapse of all applicable restrictions, the Company (or the Company's
counsel as its designee) shall deliver stock certificates to the Participant or,
if the Participant has died, to the Designated Beneficiary.
12
11. AWARD SHARES
a. GRANTS. The Committee may grant Awards entitling recipients to
acquire shares of Common Stock, subject to such terms, restrictions, conditions,
performance criteria, vesting requirements and payment needs, if any, as the
Committee shall determine in the applicable Award Agreement (each such Award, an
"AWARD SHARE.") Award Shares are subject to forfeiture unless and until all
specified Award conditions are met, as determined by the Committee and set forth
in the particular Agreements applicable to such Awards.
b. TERMS AND CONDITIONS. The Committee shall determine the terms and
conditions of any such Award Share. Award Shares shall be issued for no cash
consideration or such minimum consideration as may be required by law. When
paid, the Company (or the Company's counsel as its designee) shall deliver stock
certificates for the Award Shares to the Participant or, if the Participant has
died, to the Designated Beneficiary.
12. OTHER STOCK-BASED AWARDS. The Committee shall have the right to grant
other Awards based upon the Common Stock having such terms and conditions as the
Committee may determine, including, without limitation, the grant of securities
convertible into Common Stock and the grant of phantom stock awards or stock
units.
13. GENERAL PROVISIONS APPLICABLE TO AWARDS.
a. TRANSFERABILITY OF AWARDS. Except as the Committee may otherwise
determine or provide in an Award, Awards shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they are
granted, either voluntarily or by operation of law, except by will or the laws
of descent and distribution, and, during the life of the Participant, shall be
exercisable only by the Participant; provided, however, except as the Committee
may otherwise determine or provide in an Award, that Nonstatutory Options and
Restricted Compensation Share Awards may be transferred pursuant to a qualified
domestic relations order (as defined in ERISA) or to a grantor-retained annuity
trust or a similar estate-planning vehicle in which the trust is bound by all
provisions of the Stock Option Agreement and Restricted Compensation Share
Award, which are applicable to the Participant. References to a Participant, to
the extent relevant in the context, shall include references to authorized
transferees.
b. DOCUMENTATION. Each Award under the Plan shall be evidenced by a
written instrument (each, an "AGREEMENT") in such form as the Committee shall
determine or as executed by an officer of the Company pursuant to authority
delegated by the Committee or Board. Each Award Agreement may contain terms and
conditions in addition to those set forth in the Plan, provided that such terms
and conditions do not contravene the provisions of the Plan or applicable law.
c. COMMITTEE DISCRETION. The terms of each type of Award need not be
identical, and the Committee need not treat Participants uniformly.
d. ADDITIONAL AWARD PROVISIONS. The Committee may, in its sole
discretion, include
13
additional provisions in any Stock Option Agreement, Restricted Compensation
Share Award or other Award granted under the Plan, including without limitation
restrictions on transfer, commitments to pay cash bonuses, to make, arrange for
or guaranty loans (subject to compliance with SECTION 13M) or to transfer other
property to Participants upon exercise of Awards, or transfer other property to
Participants upon exercise of Awards, or such other provisions as shall be
determined by the Committee; provided that such additional provisions shall not
be inconsistent with any other term or condition of the Plan or applicable law.
e. TERMINATION OF STATUS. The Committee shall determine the effect on
an Award of the Disability, death, Retirement, authorized leave of absence or
other change in the employment or other status of a Participant and the extent
to which, and the period during which, the Participant, or the Participant's
legal representative, conservator, guardian or Designated Beneficiary, may
exercise rights under the Award, subject to applicable law and the provisions of
the Code related to Incentive Stock Options. Such determination shall be
reflected in the applicable Award Agreement.
f. CHANGE IN CONTROL OF THE COMPANY.
i. Unless otherwise expressly provided in the applicable
Agreement, in connection with the occurrence of a
Change in Control, the Committee shall, in its sole
discretion as to any outstanding Award (including any
portion thereof; on the same basis or on different
bases, as the Committee shall specify), take one or
any combination of the following actions:
A. make appropriate provision for the
continuation of such Award by the Company or
the assumption of such Award by the
surviving or acquiring entity and by
substituting on an equitable basis for the
shares then subject to such Award either (x)
the consideration payable with respect to
the outstanding shares of Common Stock in
connection with the Change in Control, (y)
shares of stock of the surviving or
acquiring corporation or (z) such other
securities as the Committee deems
appropriate, the fair market value of which
(as determined by the Committee in its sole
discretion) shall not materially differ from
the fair market value of the shares of
Common Stock subject to such Award
immediately preceding the Change in Control;
B. accelerate the date of exercise or vesting
of such Award;
C. permit the exchange of such Award for the
right to participate in any stock option or
other employee benefit plan of any successor
corporation;
D. provide for the repurchase of the Award for
an amount equal to the difference of (x) the
consideration received per share for the
securities underlying the Award in the
Change in Control minus (y) the per share
exercise price of such securities. Such
amount
14
shall be payable in cash or the property
payable in respect of such securities in
connection with the Change in Control. The
value of any such property shall be
determined by the Committee in its
discretion; or
E. provide for the termination of such Award
immediately prior to the consummation of the
Change in Control; provided that no such
termination will be effective if the Change
in Control is not consummated.
g. DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution
or liquidation of the Company, the Committee shall notify each Participant as
soon as practicable prior to the effective date of such proposed transaction.
The Committee in its sole discretion may provide for a Participant to have the
right to exercise his or her Award until fifteen (15) days prior to such
transaction as to all of the shares of Common Stock covered by the Option or
Award, including shares as to which the Option or Award would not otherwise be
exercisable, which exercise may in the sole discretion of the Committee, be made
subject to and conditioned upon the consummation of such proposed transaction.
To the extent it has not been previously exercised, an Award will terminate upon
the consummation of such proposed action.
h. ASSUMPTION OF AWARDS UPON CERTAIN EVENTS. In connection with a
merger or consolidation of an entity with the Company or the acquisition by the
Company of property or stock of an entity, the Committee may grant Awards under
the Plan in substitution for stock and stock-based awards issued by such entity
or an affiliate thereof. The substitute Awards shall be granted on such terms
and conditions as the Committee considers appropriate in the circumstances.
i. PARACHUTE PAYMENTS AND PARACHUTE AWARDS. Notwithstanding the
provisions of SECTION 13F, but subject to any contrary provisions in a
Participant's employment agreement with the Company or any Parent or Subsidiary
thereof, if, in connection with a Change in Control, a tax under Section 4999 of
the Code would be imposed on the Participant (after taking into account the
exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code), then
the Company shall pay the Participant an amount equal to the tax under Section
4999.
j. AMENDMENT OF AWARDS. The Committee may amend, modify or terminate
any outstanding Award including, but not limited to, substituting therefor
another Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Committee determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
k. CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated
to deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been
15
satisfied, including any applicable securities laws and any applicable stock
exchange or stock market rules and regulations, and (iii) the Participant has
executed and delivered to the Company such representations or agreements as the
Company may consider appropriate to satisfy the requirements of any applicable
laws, rules or regulations. Notwithstanding any provision of the Plan to the
contrary, in no event may an Option or Stock Appreciation Right be settled in a
form other than cash.
l. ACCELERATION. The Committee may at any time provide that any Options
shall become immediately exercisable in full or in part, that any Restricted
Compensation Share Awards shall be free of some or all restrictions, or that any
other stock-based Awards may become exercisable in full or in part or free of
some or all restrictions or conditions, or otherwise realizable in full or in
part, as the case may be, despite the fact that the foregoing actions may (i)
cause the application of Sections 280G and 4999 of the Code if a change in
control of the Company occurs, or (ii) disqualify all or part of the Option as
an Incentive Stock Option.
m. SARBANES-OXLEY ACT COMPLIANCE. Notwithstanding any provision of the
Plan to the contrary, the Committee, in accordance with any applicable rules or
regulations promulgated by the Securities and Exchange Commission (the "SEC")
and/or the United States Department of Labor, shall (i) notify in a timely
manner each Participant who is a Reporting Person of any transaction occurring
under the Plan that requires reporting by the Reporting Person on SEC Form 4 or
5 as applicable, each as revised pursuant to changes to Exchange Act Rule 16a-3,
16a-6 or 16a-8, as applicable, made by Sarbanes-Oxley Act of 2002, P.L. No.
107-204 (the "ACT"); (ii) otherwise comply with all notice, disclosure and
reporting requirements applicable to the Program pursuant to such Act; and (iii)
prohibit the making or guaranteeing of loans under Section 8c of this Program to
the extent necessary to comply with Section 402 of the Act.
14. TAXES/CODE 409A. The Company shall have the right to deduct from
payments of any kind otherwise due to the optionee or recipient of an Award any
federal, state or local taxes of any kind required by law to be withheld with
respect to any shares issued upon exercise of Options or other Awards under the
Plan, the purchase of shares subject to the Award or the grant of Common Stock
free and clear of any restrictions thereon. Notwithstanding anything herein to
the contrary, to the extent a delay in payment or other modification to this
Plan or an Agreement is required as determined in the opinion of Company's tax
advisors to prevent the imposition of an additional tax to the recipient under
Section 409A of the Code, then such payment shall not be made until the first
date on which such payment is permitted or other modifications shall be made to
comply with Section 409A and interpretive guidance issued thereunder.
15. MISCELLANEOUS.
a. NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any
claim or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan.
b. NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no
16
Participant or Designated Beneficiary shall have any rights as a stockholder
with respect to any shares of Common Stock to be distributed with respect to an
Award until becoming the record holder thereof.
c. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on
the later of the date on which it is adopted by the Committee or the date on
which it is approved by the Company's shareholders (the "Effective Date). No
Awards shall be granted under the Plan after the completion of ten years from
the Effective Date, but Awards previously granted may extend beyond that date.
Notwithstanding any provision of this Plan to the contrary, if the Company has
executed a definitive acquisition or similar agreement pursuant to which a
Change in Control will occur upon the closing of the transaction(s) contemplated
thereby, the Committee, in its sole discretion, may treat the execution of such
agreement itself as triggering a Change in Control.
d. AMENDMENT OF PLAN. The Committee may amend, suspend or terminate the
Plan or any portion thereof at any time; provided, however, that no amendment
shall be made without stockholder approval if such approval is necessary to
comply with any applicable law, rules or regulations.
e. NO TRUST FUND OR ERISA PLAN CREATED. Neither the Plan nor any Award
granted thereunder shall create or be construed as creating a trust or separate
fund of any kind or a fiduciary relationship between the Company and a
Participant, Designated Beneficiary or any other person. To the extent that any
Participant, Designated Beneficiary or any other person acquires any Award under
the Plan, his or her rights with respect thereto shall be not greater than the
rights of any unsecured general creditor of the Company. The Plan is not
intended to constitute any type of plan, fund or program providing retirement
income or resulting in the deferral of income for periods extending to the
termination of employment of beyond, and ERISA shall not apply to the Plan. No
provision of this Plan shall be construed as subjecting any portion of the Plan
to any requirements of ERISA.
f. ARBITRATION OF DISPUTES. Both parties agree that all controversies
or claims that may arise between the Participant and the Company in connection
with this Plan shall be settled by arbitration. The parties further agree that
the arbitration shall be held in the State of New Jersey, and administered by
the American Arbitration Association under its Commercial Arbitration Rules,
applying New Jersey law, except to the extent such law is preempted by ERISA.
i. QUALIFICATIONS OF ARBITRATOR. The arbitration shall be
submitted to a single arbitrator chosen in the manner provided under
the rules of the American Arbitration Association. The arbitrator shall
be disinterested and shall not have any significant business
relationship with either party, and shall not have served as an
arbitrator for any disputes involving the Company or any of its
Affiliates more than twice in the thirty-six (36) month period
immediately preceding his or her date of appointment. The arbitrator
shall be a person who is experienced and knowledgeable in employment
and executive compensation law and shall be an attorney duly licensed
to practice law in one or more states.
17
ii. POWERS OF ARBITRATOR. The arbitrator shall not have the
authority to grant any remedy which contravenes or changes any term of
this Plan and shall not have the authority to award punitive or
exemplary or damages under any circumstances. The parties shall equally
share the expense of the arbitrator selected and of any stenographer
present at the arbitration. The remaining costs of the arbitrator
proceedings shall be allocated by the arbitrator, except that the
arbitrator shall not have the power to award attorney's fees.
iii. EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall
render its decision within thirty (30) days after termination of the
arbitration proceeding, which decision shall be in writing, stating the
reasons therefor and including a brief description of each element of
any damages awarded. The decision of the arbitrator shall be final and
binding. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
g. GOVERNING LAW. The provisions of the Plan and all Awards made
hereunder shall be governed by and interpreted in accordance with the laws of
the state of New Jersey, without regard to any applicable conflicts of law.
h. DESIGNATION OF BENEFICIARY. A Participant may file with the
Committee a written designation of one or more persons as such Participant's
Designated Beneficiary or Designated Beneficiaries. Each beneficiary designation
shall become effective only when filed in writing with the Committee during the
Participant's lifetime on a form prescribed by the Committee. The spouse of a
married Participant domiciled in a community property jurisdiction shall join in
any designation of a beneficiary other than such spouse. The filing with the
Committee of a new beneficiary designation shall cancel all previously filed
beneficiary designations. If a Participant fails to designate a beneficiary, or
if all designated beneficiaries of a Participant predecease the Participant,
then each outstanding award shall be payable to the Participant's estate.
APPROVALS
2006 EQUITY INCENTIVE PLAN:
Available Shares:
(1) Incentive Stock Options 851,000
----------
(2) Non-Qualified Stock Options 548,500
----------
(3) Total for Options 1,400,000
(4) Restricted Compensation Shares 233,500
----------
Total 1,633,500
Adopted by the Compensation Committee of the Board of
Directors on: November 8, 2006
Approved by the Stockholders on: November 8, 2006
18
Exhibit C
SUMMIT GLOBAL LOGISTICS, INC.
2007 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I - PURPOSE; EFFECTIVE DATE
1.1 PURPOSE. The purpose of this SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(hereinafter, the "Plan") is to permit a select group of management or highly
compensated employees of Summit Global Logistics, Inc. (and its selected
subsidiaries and/or affiliates) to defer the receipt of income which otherwise
would become payable to them. It is intended that this Plan, by providing these
eligible employees an opportunity to defer the receipt of income, will assist
the Company (as hereinafter defined) in retaining and attracting individuals of
exceptional ability by providing them with an additional opportunity to save for
retirement beyond Code (as hereinafter defined) limitations imposed on qualified
retirement plans. This Plan is intended to be "unfunded" for purposes of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").
1.2 EFFECTIVE DATE. This Plan shall be effective as of January 1, 2007.
It is the intent that all of the amounts deferred and benefits provided under
this Plan will comply with the terms of Section 409A of the Code and
interpretive guidance issued thereunder.
1.3 UNFUNDED PLAN. This plan is an unfunded top-hat plan maintained
primarily to provide deferred compensation benefits for a "select group of
management or highly-compensated employees" within the meaning of Sections 201,
301, and 401 of ERISA, and therefore is exempt from the provisions of Parts 2, 3
and 4 of Title I of ERISA.
ARTICLE II - DEFINITIONS
For the purpose of this Plan, the following terms shall have the
meanings indicated, unless the context clearly indicates otherwise:
2.1 ACCOUNT(S). "Account(s)" means the notional account or accounts
maintained on the books of the Company used solely to calculate the amount
payable to each Participant under this Plan and shall not constitute a separate
fund of assets. Account(s) shall be deemed to exist from the time amounts are
first credited to such Account(s) until such time that the entire Account
balance has been distributed in accordance with this Plan. The Accounts
available for each Participant shall be identified as:
(a) DEFERRAL ACCOUNT;
(b) IN-SERVICE ACCOUNT; AND,
(c) RETENTION ACCOUNT.
2.2 BENEFICIARY. "Beneficiary" means the person, persons or entity as
designated by the Participant, entitled under Article VI to receive any Plan
benefits payable after the Participant's death.
2.3 BOARD. "Board" means the Board of Directors of the Company.
2.4 CHANGE OF CONTROL. "Change of Control" means:
(a) a change in the ownership or effective control of the
Company, or in the ownership of a substantial portion of the assets of the
Company, as defined and determined under Section 409A(a)(2)(A)(v) of the Code
(or its successor provisions), Treasury Notice 2005-1 and Proposed Treasury
Regulation 1.409A-1 and any further interpretive guidance issued thereunder.
Without in any way limiting the scope of the preceding sentence, a Change of
Control shall be deemed to occur on the date upon which one of the following
events occurs:
i. any one person (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), or more than one person acting as a group (as determined under
applicable Treasury regulations), acquires ownership of stock of the Company
that, together with stock held by such person or group, constitutes more than
50% of either the total fair market value or total voting power of the stock of
the Company (except that the acquisition of additional control of the Company by
the same person or persons during such 12-month period is not considered to
cause a change in control of the Company); or
ii. any one person (as such term is used in the
Exchange Act), or more than one person acting as a group (as determined under
applicable Treasury regulations), acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or
persons) ownership of stock of the Company possessing 35% or more of the total
voting power of the Company (except that the acquisition of additional control
of the Company by the same person or persons during such 12-month period is not
considered to cause a change in control of the Company); or
iii. a majority of members of the Board is replaced
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board prior to the date of the
appointment or election; or
iv. any one person (as such term is used in the
Exchange Act), or more than one person acting as a group (as determined under
applicable Treasury regulations), acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such person or
persons) assets from the Company that have a total gross fair market value equal
to or more than 40% of the total gross fair market value of all of the assets of
the Company immediately prior to such acquisition or acquisitions.
2.5 CODE. "Code" means the Internal Revenue Code of 1986, as amended,
and any successor thereto.
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2.6 COMMITTEE. "Compensation Committee" means the Compensation
Committee appointed by the Board to administer the Plan pursuant to Article VII.
2.7 COMPANY. "Company" means Summit Global Logistics, Inc., a New
Jersey corporation or any successor to the business thereof; provided, however,
that for purposes of eligibility to participate in the Plan and employment
status, Company shall include any directly or indirectly affiliated subsidiary
corporations, any other affiliate designated by the Board.
2.8 COMPENSATION. "Compensation" means the base salary payable to
Participant and bonus or incentive compensation earned by a Participant with
respect to employment services performed for the Company by the Participant and
considered to be "wages" for purposes of federal income tax withholding. For
purposes of this Plan only, Compensation shall be calculated before reduction
for any amounts deferred by the Participant pursuant to the Company's tax
qualified plans which may be maintained under Section 401(k) or Section 125 of
the Code but shall exclude "wages" associated with the exercise of stock options
by the Participant or income arising from other equity instruments (e.g., stock
units, restricted stock units or restricted stock) awarded to a Participant.
Inclusion of any other forms of compensation, including commissions payable, is
subject to Committee approval.
2.9 DEFERRAL ELECTION. "Deferral Election" means an irrevocable written
commitment made by a Participant to defer a portion of his/her Compensation as
set forth in Article III, and as permitted by the Committee in its sole
discretion. The Deferral Election shall apply to each payment of salary and/or
bonus payable to a Participant, and shall specify the Account or Accounts to
which the Compensation deferred shall be credited. Such designation shall be
made in the form of a whole percentage or an exact stated dollar amount. Such
Deferral Election shall be made on an Election Form and at a time deemed
acceptable to the Committee. A Deferral Election with respect to any bonus or
incentive compensation which is based on services performed over a period of at
least twelve (12) months shall be made no later than six (6) months prior to the
end of such performance period.
2.10 DEFERRAL PERIOD. "Deferral Period" means each calendar year,
except that if a Participant first becomes eligible after the beginning of a
calendar year, the initial Deferral Period shall be the date the Participant
first becomes eligible to participate in this Plan through and including
December 31st of that calendar year. For purposes of deferrals related to
Participant's annual bonus or other incentive based compensation, "Deferral
Period" shall mean the Company's Fiscal Year.
2.11 DETERMINATION DATE. "Determination Date" means each business day.
2.12 DISABILITY. "Disability" means the Participant is: (i) unable to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, or (ii) by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income replacement
or other disability benefits for a period of not less than 3 months under an
accident and health plan covering employees of the participant's employer.
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2.13 DISTRIBUTION ELECTION. "Distribution Election" means the form of
payment for benefits payable from each Account under this Plan, as elected by
the Participant on an Enrollment Form prescribed by the Committee.
2.14 FINANCIAL HARDSHIP. "Financial Hardship" means a severe financial
hardship to the Participant resulting from an illness or accident of the
Participant, the Participant's spouse, or a dependent (as defined in Section
152(a) of the Code) of the Participant, loss of the Participant's property due
to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the participant, provided,
that such financial hardship may not be relieved through reimbursement or
compensation from insurance or otherwise, by liquidation of the Participant's
assets, to the extent the liquidation of such assets would not cause severe
financial hardship, or by cessation of deferrals under the Plan. The
determination of whether a Financial Hardship exists shall be subject to and
determined in accordance with relevant tax guidance issued under Section 409A of
the Code.
2.15 INTEREST. "Interest" means the amount credited to or charged
against a Participant's Account(s) on each Determination Date, which shall be
based on the Valuation Funds chosen by the Participant as provided in Section
2.21, below and in a manner consistent with Section 4.3, below. Such credits or
charges to a Participant's Account may be either positive or negative to reflect
the increase or decrease in value of the Account in accordance with the
provisions of this Plan.
2.16 PARTICIPANT. "Participant" means any individual who is eligible,
pursuant to Section 3.1, below, to participate in this Plan, and who either, has
elected to defer Compensation under this Plan in accordance with Article III,
below, or who is determined by the Committee in its sole discretion as being
eligible to receive a Retention Contribution under this Plan. Such its
individual shall remain a Participant in this Plan for the period of deferral,
or credit, and until such time as all benefits payable under this Plan have been
paid in accordance with the provisions hereof.
2.17 PLAN. "Plan" means this Supplemental Executive Retirement Plan as
amended from time to time.
2.18 QUALIFIED PLAN. "Qualified Plan" means the defined contribution or
401(k) plan in which the Participant participates.
2.19 RETENTION CONTRIBUTION. "Retention Contribution" means the annual
discretionary contribution, if any, made by the Company to the Participant's
Retention Account under Section 4.5, below.
2.20 RETIREMENT. "Retirement" means the termination of a Participant's
employment with the Company, for reasons other than death or Disability, on or
after the earlier of: (a) attainment of age 55 with at least ten (10) years of
continuous service with the Company; or (b) attainment of age sixty-five (65).
2.21 SPECIFIED EMPLOYEES. "Specified Employees" means key employees, as
defined in Section 416(i) of the Code without regard to paragraph (5) thereof,
of the Company.
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2.22 VALUATION FUNDS. "Valuation Funds" means one or more of the
hypothetical investment funds or indices managed by an investment manager that
are selected by the Committee. These Valuation Funds are used solely to
calculate the Interest that is credited to each Participant's Account(s) in
accordance with Article IV, below, and not represent, nor should they be
interpreted to convey any beneficial interest or ownership on the part of the
Participant in any asset or other property of the Company. Participants may
allocate their Account(s) between Valuation Funds. Exhibit A attached hereto
sets forth the available Valuation Funds which may be amended from time to time
in the sole and absolute discretion of the Committee.
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY AND PARTICIPATION.
(a) ELIGIBILITY. Eligibility to participate in the Plan shall
be limited to those senior management employees of the Company who have annual
compensation equal to or in excess of $220,000 or who are designated as eligible
to participate by the Committee from time to time.
(b) PARTICIPATION. An individual's participation in the Plan
shall be effective upon notification to the individual by the Committee or its
designee of his/her eligibility to participate, and the earlier of a
contribution under this Plan being made on behalf of the Participant by the
Company or the completion and submission of an Enrollment Form, Allocation Form,
and a Distribution Election to the Committee no later than fifteen (15) days
prior to the beginning of the Deferral Period.
(c) FIRST-YEAR PARTICIPATION. When an individual first becomes
eligible to participate in this Plan, a Deferral Election may be submitted to
the Committee within thirty (30) days after the Committee notifies the
individual of eligibility to participate. Such Deferral Election will be
effective only with regard to Compensation earned and payable following
submission of the Deferral Election to the Committee.
3.2 FORM OF DEFERRAL ELECTION. A Participant may irrevocably elect to
make a Deferral Election no later than fifteen (15) days prior to the beginning
of the Deferral Period by submitting the Enrollment Form permitted by the
Committee. The Deferral Election shall specify the following:
(a) DEFERRAL AMOUNTS; ACCOUNTS. A Deferral Election shall be
made with respect to each payment of Compensation payable by the Company to a
Participant during the Deferral Period, and shall designate the portion of each
deferral that shall be allocated among either the Deferral or In-Service
Accounts. In addition, no amounts shall be deferred into an In-Service Account
once payments have commenced under the terms of this Plan and until such time as
the entire Account Balance has been completely distributed. The Participant
shall set forth the amount of his salary to be deferred as a whole percentage
amount of Compensation, and with respect to the deferral of bonus Compensation,
a stated dollar amount or a whole percentage amount above a stated dollar
amount.
5
(b) ALLOCATION TO VALUATION FUNDS. The Participant shall
specify in a separate form (known as the "Allocation Form") filed with the
Committee, the Participant's initial allocation of the amounts deferred into
each Account among the various available Valuation Funds.
(c) MAXIMUM DEFERRAL. The maximum amount of Compensation that
may be deferred shall be no more than seventy-five percent (75%) of base salary
and one hundred percent (100%) of annual bonus or incentive compensation.
3.3 PERIOD OF COMMITMENT. Any Deferral Election made by a Participant
with respect to Compensation shall remain in effect for the next succeeding
Deferral Period, and shall remain in effect for all future Deferral Periods
unless revoked or amended in writing by the Participant and delivered to the
Committee no later than fifteen (15) days prior to the beginning of a subsequent
Deferral Period, except that if a Participant suffers a Disability or terminates
employment with Company prior to the end of the Deferral Period, the Deferral
Period shall end as of the date of Disability or termination.
3.4 MODIFICATION OF DEFERRAL ELECTION. Except as provided in Sections
3.3, above, and 5.5 below, a Deferral Election shall be irrevocable by the
Participant during a Deferral Period.
3.5 CHANGE IN STATUS. If the Committee determines that a Participant's
employment performance is no longer at a level that warrants reward through
participation in this Plan, but does not terminate the Participant's employment
with Company, the Participant's existing Deferral Election shall terminate at
the end of the Deferral Period, and no new Deferral Election may be made by such
Participant after notice of such determination is given by the Committee, unless
the Participant later satisfies the requirements of Section 3.1. If the
Committee, in its sole discretion, determines that the Participant no longer
qualifies as a member of a select group of management or highly compensated
employees, as determined in accordance with the ERISA, and interpretive guidance
issued thereunder the Committee may, in its sole discretion terminate any
Deferral Election for that year, and prohibit the Participant from making any
future Deferral Elections.
3.6 DEFAULTS IN EVENT OF INCOMPLETE OR INACCURATE DEFERRAL ELECTIONS.
In the event that a Participant submits a Deferral Election to the Committee
that contains information necessary to the efficient operation of this Plan
which, in the sole discretion of the Committee, is incomplete or inaccurate, the
Committee shall be authorized to treat the incomplete or inaccurate Deferral
Election as if the following elections had been made by the Participant, and
such information shall be communicated to the Participant:
(a) If no Account is listed - treat as if the Deferral Account
was elected;
(b) If Accounts listed equal less than 100% - treat as if the
balance was deferred into Deferral Account;
(c) If Accounts listed equal more than 100% -proportionately
reduce each Account to equal 100%;
6
(d) If In-Service Account is listed, but no deferrals can be
made into that Account due to the fact that benefits are being paid from that
In-Service Account, then the amounts elected to be deferred shall be credited to
the Deferral Account during such period of payment, after which time the balance
of the amounts elected to be deferred shall be credited to a subsequent
In-Service Account with a distribution date as elected or as provided in sub-
section (i), below;
(e) If no Valuation Fund is selected - treat as if the Money
Market Fund was elected;
(f) If Valuation Fund(s) selected equal less than 100% - treat
as if the Money Market Fund was elected for remaining balance;
(g) If Valuation Fund(s) selected equal more than 100% -
proportionately reduce each Valuation Fund to equal 100%;
(h) If no Distribution Election is chosen -treat as if lump
sum was elected for In-Service Account and treat as if three (3) year was
elected for Deferral Account; and,
(i) If no time of payment is chosen for In-Service Account
- -treat as if the earliest possible date available under the provisions of
Section 5.3, below was elected.
ARTICLE IV - DEFERRED COMPENSATION ACCOUNT
4.1 ACCOUNTS. The Compensation deferred by a Participant under the
Plan, and Interest shall be credited to the Participant's Account(s) as selected
by the Participant; any Retention Contributions and Interest thereon shall be
credited to the Participant's Retention Account. Separate accounts may be
maintained on the books of the Company to reflect the different Accounts chosen
by the Participant, and the Participant shall designate the portion of each
deferral that will be credited to each Account as set forth in Section 3.2(a),
above. These Accounts shall be used solely to calculate the amount payable to
each Participant under this Plan and shall not constitute a separate fund of
assets.
4.2 TIMING OF CREDITS; WITHHOLDING. A Participant's deferred
Compensation shall be credited to each Account designated by the Participant as
soon as administratively practical after the date the Compensation deferred
would have otherwise been payable to the Participant. Any Retention
Contributions shall be credited to the Retention Account as set forth in Section
4.5, below. Any withholding of taxes or other amounts with respect to deferred
Compensation or other amounts credited under this Plan that is required by
local, state or federal law shall be withheld from the Participant's
corresponding non-deferred portion of the Compensation to the maximum extent
possible, and any remaining amount shall reduce the amount credited to the
Participant's Account in a manner specified by the Committee.
4.3 VALUATION FUNDS. A Participant shall designate, at a time and in a
manner acceptable to the Committee, one or more Valuation Funds for each Account
for the sole purpose of determining the amount of Interest to be credited or
debited to such Account. Such election shall designate the portion
7
of each deferral of Compensation made into each Account that shall be allocated
among the available Valuation Fund(s), and such election shall apply to each
succeeding deferral of Compensation until such time as the Participant shall
file a new election with the Committee. Upon notice to the Committee,
Participants shall also be permitted to reallocate the balance in each Valuation
Fund among the other available Valuation Funds as determined by the Committee.
The manner in which such elections shall be made and the frequency with which
such elections may be changed and the manner in which such elections shall
become effective shall be determined in accordance with the procedures to be
adopted by the Committee or its delegates from time to time. As of the Effective
Date, such elections may be made on a daily basis electronically, and such
elections shall become effective on the date made or the next available
Determination Date.
4.4 RETENTION CONTRIBUTIONS. Company may make a discretionary
contribution to each eligible Participant's Retention Account as soon as is
practical after the close of the Company's fiscal year, but in no event later
than sixty (60) days following the close of such fiscal year. The amount of the
credit shall be determined by the Committee in its sole discretion, and each
year, the Committee shall have the discretion to increase or decrease the
Retention Contribution from prior years, or to eliminate the contribution
totally for any given year.
4.5 DETERMINATION OF ACCOUNTS. Each Participant's Account as of each
Determination Date shall consist of the balance of the Account as of the
immediately preceding Determination Date, adjusted as follows:
(a) NEW DEFERRALS. Each Account shall be increased by any
deferred Compensation credited since such prior Determination Date in the
proportion chosen by the Participant, except that no amount of new deferrals
shall be credited to an Account at the same time that a distribution is to be
made from that Account.
(b) COMPANY CONTRIBUTIONS. Each Account shall be increased by
any Retention Contributions credited since such prior Determination as set forth
above in sections 4.4 or as otherwise directed by the Committee.
(c) DISTRIBUTIONS. Each Account shall be reduced by the amount
of each benefit payment made from that Account since the prior Determination
Date. Distributions shall be deemed to have been made proportionally from each
of the Valuation Funds maintained within such Account based on the proportion
that such Valuation Fund bears to the sum of all Valuation Funds maintained
within such Account for that Participant as of the Determination Date
immediately preceding the date of payment.
(d) INTEREST. Each Account shall be increased or decreased by
the Interest credited to such Account since such Determination Date as though
the balance of that Account as of the beginning of the current month had been
invested in the applicable Valuation Funds chosen by the Participant.
4.6 VESTING OF ACCOUNTS. Each Participant shall be vested in the
amounts credited to such Participant's Account and Interest thereon as follows:
8
(a) AMOUNTS DEFERRED. A Participant shall be one hundred
percent (100%) vested at all times in the amount of Compensation elected to be
deferred under this Plan to the Deferral Account and In-Service Account, if any,
including any Interest thereon.
(b) RETENTION CONTRIBUTIONS. Each separate Retention
Contribution, if any, to a Participant's Retention Account, including any
Interest thereon, shall be 33.33% vested on the last day of the fiscal year
immediately following the fiscal year to which the Retention Contribution is
attributable, provided, that the Participant remains employed by the Company on
such date, and vested in an additional 33.33% of such Retention Contribution on
the last day of the second and third fiscal years, respectively, following the
fiscal year to which the Retention Contribution is attributable, provided, that
the Participant remains employed by the Company on each such date. If the
Participant fails to remain employed with the Company through the vesting dates
and the Retention Contribution is not otherwise vested as providing in the
following sentence, then the unvested portion of the Retention Contribution and
any Interest thereon shall be forfeited and returned to the Company.
Notwithstanding the previous sentence or anything else herein to the contrary, a
Participant's Retention Account shall (i) be one hundred percent (100%) vested
upon the death or Disability of the Participant or a Change of Control or (ii)
be one hundred percent (100%) vested as otherwise provided by the Committee in
its sole discretion.
(c) STATEMENT OF ACCOUNTS. The Committee shall direct the
Plan's third-party administrator to provide to each Participant a statement
showing the balances in the Participant's Account on a quarterly basis.
ARTICLE V - PLAN BENEFITS
5.1 DEFERRAL ACCOUNT. The vested portion of a Participant's Deferral
Account shall be distributed to the Participant upon the termination of
employment with the Company.
(a) TIMING OF PAYMENT. Subject to Section 5.7, benefits
payable from the Deferral Account shall commence on or about the January 15th
immediately following the date of the Participant's termination of employment,
or if later forty-five (45) days following the Participant's termination of
employment, and subsequent payments, if the form of payment selected provides
for subsequent payments, shall be made on or about each succeeding January 15th.
(b) FORM OF PAYMENT. The form of benefit payment from the
Deferral Account shall be that form selected by the Participant in the first
Deferral Election which designated a portion of the Compensation deferred be
allocated to the Deferral Account, and as permitted pursuant to Section 5.8
below, except that if the Participant terminates employment prior to Retirement,
in which event, the Deferral Account shall be paid in the form of a lump sum
payment.
5.2 RETENTION ACCOUNT. The vested portion of the Participant's
Retention Account shall be distributed to the Participant upon the termination
of employment with the Company.
9
(a) TIMING OF PAYMENT. Subject to Section 5.7, benefits
payable from the Retention Account shall commence on or about the January 15th
immediately following the date of the Participant's termination, or if later
forty-five (45) days following the Participant's termination, and subsequent
payments, if the Form of Payment selected provides for subsequent payments,
shall be made on or about each succeeding January 15th .
(b) FORM OF PAYMENT. The form of benefit payment from the
Retention Account shall be made in that form selected by the Participant in the
Distribution Election set forth in the Enrollment Form filed with the Committee
coincident with the initial crediting of amounts to the Retention Account, and
as permitted pursuant to Section 5.8 below, except that if the Participant
terminates employment prior to Retirement, in which event, the Retention Account
shall be paid in the form of a lump sum payment.
5.3 IN-SERVICE ACCOUNT. The vested portion of a Participant's
In-Service Account shall generally be distributed to the Participant upon the
date chosen by the Participant.
(a) TIMING OF PAYMENT. Subject to Section 5.7, benefits under
this section shall be payable on or about January 15th of the year specified in
the first Deferral Election which designated a portion of the Compensation
deferred be allocated to the In-Service Account and subsequent payments. In no
event shall the date selected be earlier than the first day of the sixth
calendar year following the initial filing of the Deferral Election with respect
to that In-Service Account. In the event that the Participant terminates
employment with the Company prior to the date so specified, the benefits under
this section shall commence as soon as administratively practical after
termination of employment.
(b) FORM OF PAYMENT. The form of benefit payment from the
In-Service Account shall be that form selected by the Participant pursuant to
Section 5.8, below, except that if the Participant terminates employment with
the Company prior to the date so specified, then the In-Service Account shall be
paid in the form of a lump sum payment. If the Form of Payment selected provides
for subsequent payments, subsequent payments shall be made on or about each
succeeding January 15th.
(c) CHANGE OF TIME AND/OR FORM OF PAYMENT. The Participant
may, subsequently amend the form of payment or the intended date of payment to a
date later than that date initially chosen, by filing such amendment with the
Committee no later than twelve (12) months prior to the current date of payment.
The Participant may file this amendment, provided that each amendment must
provide for a payout under this paragraph at a date no earlier than five (5)
years after the date of payment in force immediately prior to the filing of such
request, and the amendment may not take effect for twelve (12) months after the
request is made.
5.4 DEATH BENEFIT. Upon the death of a Participant prior to the
commencement of benefits under this Plan from any particular Account, the
Company shall pay to the Participant's Beneficiary an amount equal to the vested
Account balance in that Account in the form of a lump sum payment. In the event
of the death of the Participant after the commencement of benefits under this
Plan from any
10
Account, the benefits from that Account(s) shall be paid to the Participant's
designated Beneficiary from that Account at the same time and in the same manner
as if the Participant had survived.
5.5 HARDSHIP DISTRIBUTIONS. Upon a finding that a Participant has
suffered a Financial Hardship, the Committee shall terminate the existing
Deferral Election, and/or make distributions from any or all of the
Participant's Accounts. The amount of such distribution shall be limited to the
amount reasonably necessary to meet the Participant's needs resulting from the
Financial Hardship plus amounts necessary to pay taxes reasonably anticipated as
a result of the distribution, after taking into account the extent to which such
Financial Hardship is or may be relieved through the reimbursement or
compensation by insurance, or otherwise or by liquidation of the Participant's
assets (to the extent that liquidation of such assets would not itself cause
severe financial hardship). The amount of such distribution will not exceed the
Participant's vested Account balances. If payment is made due to Financial
Hardship, the Participant's deferrals under this Plan shall cease for the period
of the Financial Hardship and for twelve (12) months thereafter. If the
Participant is again eligible to participate, any resumption of the
Participant's deferrals under the Plan after such twelve (12) month period shall
be made only at the election of the Participant in accordance with Article III
herein.
5.6 CHANGE OF CONTROL DISTRIBUTIONS. Upon the occurrence of a Change of
Control, Benefits payable from the Deferral and Retention Accounts shall be
distributed to the Participant within forty-five (45) days following the Change
of Control.
5.7 DISABILITY DISTRIBUTIONS. Upon a finding that a Participant has
suffered a Disability, the Committee may make distributions from any or all of
the Participant's Accounts. The amount of such distribution shall be limited to
the amount reasonably necessary to meet the Participant's needs resulting from
the Disability.
5.8 PAYMENT TO SPECIFIED EMPLOYEES. Payments of benefits from the
Deferral Account, Retention Account and benefits payable from an In-Service
Account caused by the termination of employment of a Participant who is
determined to meet the definition of Specified Employee shall be payable as
otherwise provided, except that the initial payment shall be made no earlier
than the six (6) months following the termination of employment with the
Company.
5.9 FORM OF PAYMENT. Unless otherwise specified in this Article, the
benefits payable from any Account under this Plan shall be paid in the form of
benefit as provided below, and specified by the Participant in the Distribution
Election applicable to that Account at the time of the initial deferral or
credit to that Account. The permitted forms of benefit payments are:
(a) A lump sum amount which is equal to the vested Account
balance; and
(b) Annual installments for a period of up to fifteen (15)
years (or in the event of payment of the In-Service Account, a maximum of five
(5) years) where the annual payment shall be equal to the balance of the Account
immediately prior to the payment, multiplied by a fraction, the numerator of
which is one (1) and the denominator of which commences at the number of annual
payment initially chosen and is reduced by one (1) in each succeeding year.
Interest on the
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unpaid balance shall be based on the most recent allocation among the available
Valuation Funds chosen by the Participant, made in accordance with Section 4.3,
above.
5.10 SMALL ACCOUNT. If the total of a Participant's vested, unpaid
Account balance as of the time the payments are to commence from the
Participant's Account is less than the minimum prescribed, the remaining unpaid,
vested Account shall be paid in a lump sum, notwithstanding any election by the
Participant to the contrary. Such minimums shall be $5,000 for any In-Service
Account and $10,000 for any Deferral or Retention Account.
5.11 WITHHOLDING; PAYROLL TAXES. Company shall withhold from any
payment made pursuant to this Plan any taxes required to be withheld from such
payments under local, state or federal law. A Beneficiary, however, may elect
not to have withholding of federal income tax pursuant to Section 3405(a)(2) of
the Code, or any successor provision thereto.
5.12 PAYMENT TO GUARDIAN. If a Plan benefit is payable to a minor or a
person declared incompetent or to a person incapable of handling the disposition
of the property, the Committee may direct payment to the guardian, legal
representative or person having the care and custody of such minor, incompetent
or person. The Committee may require proof of incompetency, minority, incapacity
or guardianship as it may deem appropriate prior to distribution. Such
distribution shall completely discharge the Committee and Company from all
liability with respect to such benefit.
5.13 EFFECT OF PAYMENT. The full payment of the applicable benefit
under this Article V shall completely discharge all obligations on the part of
the Company to the Participant (and the Participant's Beneficiary) with respect
to the operation of this Plan, and the Participant's (and Participant's
Beneficiary's) rights under this Plan shall terminate.
5.14 FORFEITURE. In the event a Participant is terminated for "cause",
then his Retention Account shall be immediately forfeited without regard to
whether or not he is vested or unvested in such Retention Account. For purposes
of this Plan, "cause" shall mean (i) the Participant's material dishonesty
including, without limitation, theft, fraud, embezzlement, financial
misrepresentation or other similar behavior or action, in his dealings with or
with respect to the Company or any affiliate thereof or entity with which the
Company, or any parent or subsidiary of the Company, shall be engaged in or
attempting to engage in commerce; (ii) the conviction of the Participant for, or
the Participant's entry of a plea of guilty or nolo contendere to, the
commission of a felony other than driving while intoxicated by, or driving while
under the influence of, alcohol; or (iii) the material breach of any provision
of this Agreement which is not cured to the extent possible, by the Participant
within thirty (30) calendar days after written notice thereof from the Company
to the Participant setting forth with reasonable specificity the nature of such
breach. Notwithstanding anything in the Plan to the contrary, forfeiture for
cause may not occur following a Change of Control.
ARTICLE VI - BENEFICIARY DESIGNATION
6.1 BENEFICIARY DESIGNATION. Each Participant shall have the right, at
any time, to designate one (1) or more persons or entity as Beneficiary (both
primary as well as secondary) to
12
whom benefits under this Plan shall be paid in the event of Participant's death
prior to complete distribution of the Participant's vested Account balance. Each
Beneficiary designation shall be in a written form prescribed by the Committee
and shall be effective only when filed with the Committee during the
Participant's lifetime.
6.2 CHANGING BENEFICIARY. Any Beneficiary designation may be changed by
a Participant without the consent of the previously named Beneficiary by the
filing of a new Beneficiary designation with the Committee.
6.3 NO BENEFICIARY DESIGNATION. If any Participant fails to designate a
Beneficiary in the manner provided above, if the designation is void, or if the
Beneficiary designated by a deceased Participant dies before the Participant or
before complete distribution of the Participant's benefits, the Participant's
Beneficiary shall be the person in the first of the following classes in which
there is a survivor:
(a) The Participant's surviving spouse;
(b) The Participant's children in equal shares, except that if
any of the children predeceases the Participant but leaves surviving issue, then
such issue shall take by right of representation the share the deceased child
would have taken if living; or
(c) The Participant's estate.
6.4 EFFECT OF PAYMENT. Payment to the Beneficiary shall completely
discharge the Company's obligations under this Plan.
ARTICLE VII - ADMINISTRATION
7.1 COMMITTEE; DUTIES. This Plan shall be administered by the
Compensation Committee, or the Senior Vice President of Human Resources acting
as the Plan Administrator. References to the "Compensation Committee" in the
Plan shall include the Senior Vice President of Human Resources acting in his
capacity as Plan Administrator. The Committee or its designee shall have the
authority to make, amend, interpret and enforce all appropriate rules and
regulations for the administration of the Plan and decide or resolve any and all
questions, including interpretations of the Plan, as they may arise in such
administration. A majority vote of the Committee members shall control any
decision.
7.2 AGENTS. The Committee may, from time to time, employ agents and
delegate to them such administrative duties as it sees fit, and may from time to
time consult with counsel who may be counsel to the Company.
7.3 BINDING EFFECT OF DECISIONS. The decision or action of the
Committee with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final, conclusive and binding upon
all persons having any interest in the Plan.
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7.4 INDEMNITY OF COMMITTEE. To the fullest extent permitted by the
Company's Articles of Incorporation and By-Laws, the Company shall indemnify and
hold harmless the members of the Compensation Committee or the Senior Vice
President of Human Resources acting as the Plan Administrator against any and
all claims, loss, damage, expense or liability arising from any action or
failure to act with respect to this Plan on account of such member's service on
the Committee, except in the case of gross negligence or willful misconduct.
ARTICLE VIII - CLAIMS PROCEDURE
8.1 CLAIM. Any person or entity claiming a benefit, requesting an
interpretation or ruling under the Plan (hereinafter referred to as "Claimant"),
or requesting information under the Plan shall present the request in writing to
the Committee, which shall respond in writing as soon as practical, but in no
event later than ninety (90) days after receiving the initial claim (or no later
than forty-five (45) days after receiving the initial claim regarding a
Disability under this Plan).
8.2 DENIAL OF CLAIM. If the claim or request is denied, the written
notice of denial shall state:
(a) The reasons for denial, with specific reference to the
Plan provisions on which the denial is based;
(b) A description of any additional material or information
required and an explanation of why it is necessary, in which event the time
frames listed in section 8.1 shall be one hundred and eighty (180) and
seventy-five (75) days from the date of the initial claim respectively; and
(c) An explanation of the Plan's claim review procedure.
8.3 REVIEW OF CLAIM. Any Claimant whose claim or request is denied or
who has not received a response within sixty (60) days (or one hundred and
eighty (180) days in the event of a claim regarding a Disability) may request a
review by notice given in writing to the Committee. Such request must be made
within sixty (60) days (or one hundred and eighty (180) days in the event of a
claim regarding a Disability) after receipt by the Claimant of the written
notice of denial, or in the event Claimant has not received a response sixty
(60) days (or one hundred and eighty (180) days in the event of a claim
regarding a Disability) after receipt by the Committee of Claimant's claim or
request. The claim or request shall be reviewed by the Committee which may, but
shall not be required to, grant the Claimant a hearing. On review, the claimant
may have representation, examine pertinent documents, and submit issues and
comments in writing.
8.4 FINAL DECISION. The decision on review shall normally be made
within sixty (60) days (or forty-five (45) days in the event of a claim
regarding a Disability) after the Committee's receipt of claimant's claim or
request. If an extension of time is required for a hearing or other special
circumstances, the Claimant shall be notified and the time limit shall be one
hundred twenty (120) days (or ninety (90) days in the event of a claim regarding
a Disability). The decision shall be in writing and
14
shall state the reasons and the relevant Plan provisions. All decisions on
review shall be final and bind all parties concerned.
ARTICLE IX - AMENDMENT AND TERMINATION OF PLAN
9.1 AMENDMENT. The Board may at any time amend the Plan by written
instrument, notice of which is given to all Participants and to Beneficiary
receiving installment payments, except that no amendment shall reduce or
otherwise adversely affect the amount accrued in any Account as of the date the
amendment is adopted.
9.2 COMPANY'S RIGHT TO TERMINATE. The Board may at any time terminate
the Plan provided that such termination of the Plan is not treated as an
"acceleration of benefits" as described in Section 409A(a)(3) of the Code and
appropriate Treasury regulations or other guidance issued by the Internal
Revenue Service or Treasury. Upon a permitted partial or complete termination,
the Board may cease all future Deferral Elections, all current Deferral
Elections, and or, in its sole discretion, pay out Accounts over a period of up
to five (5) years, provided such action is not treated as an "acceleration of
benefits" as described in Section 409A(a)(3) of the Code and appropriate
Treasury regulations or other guidance issued by the Internal Revenue Service or
Treasury without the action.
ARTICLE X - MISCELLANEOUS
10.1 UNSECURED GENERAL CREDITOR. Notwithstanding any other provision of
this Plan, Participants and Participants' Beneficiary shall be unsecured general
creditors, with no secured or preferential rights to any assets of Company or
any other party for payment of benefits under this Plan. Any property held by
Company for the purpose of generating the cash flow for benefit payments shall
remain its general, unpledged and unrestricted assets. Company's obligation
under the Plan shall be an unfunded and unsecured promise to pay money in the
future.
10.2 TRUST FUND. Company shall be responsible for the payment of all
benefits provided under the Plan. At its discretion, Company may establish one
(1) or more rabbi trusts, with such trustees as the Board may approve, for the
purpose of assisting in the payment of such benefits. The assets of any such
trust shall be held for payment of all Company's general creditors in the event
of insolvency. To the extent any benefits provided under the Plan are paid from
any such trust, Company shall have no further obligation to pay them. If not
paid from the trust, such benefits shall remain the obligation of Company.
10.3 NONASSIGNABILITY. Neither a Participant nor any other person shall
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, transfer, hypothecate or convey in advance of actual
receipt the amounts, if any, payable hereunder, or any part thereof, which are,
and all rights to which are, expressly declared to be unassignable and
non-transferable. No part of the amounts payable shall, prior to actual payment,
be subject to seizure or sequestration for the payment of any debts, judgments,
alimony or separate maintenance owed by a
15
Participant or any other person, nor be transferable by operation of law in the
event of a Participant's or any other person's bankruptcy or insolvency.
10.4 NOT A CONTRACT OF EMPLOYMENT. This Plan shall not constitute an
employment contract or a contract for services of any kind between the Company
and the Participant. Nothing in this Plan shall confer on the Participant the
right to be retained by Company or otherwise be retained in the service of the
Company or to interfere with the right of the Company to terminate its
relationship with a Participant at any time.
10.5 PROTECTIVE PROVISIONS. A Participant will cooperate with Company
by furnishing any and all information requested by Company, in order to
facilitate the payment of benefits hereunder, and by taking such physical
examinations as Company may deem necessary and taking such other action as may
be requested by Company.
10.6 ARBITRATION OF DISPUTES. All controversies or claims that may
arise between the Executive and the Company in connection with this Agreement
shall be settled by arbitration. The parties further agree that the arbitration
shall be held in the State of New Jersey, and administered by the American
Arbitration Association under its Commercial Arbitration Rules, applying New
Jersey law, except to the extent such law is preempted by ERISA.
(a) QUALIFICATIONS OF ARBITRATOR. The arbitration shall be
submitted to a single arbitrator chosen in the manner provided under the rules
of the American Arbitration Association. The arbitrator shall be disinterested
and shall not have any significant business relationship with either party, and
shall not have served as an arbitrator for any disputes involving the Company or
any of its Affiliates more than twice in the thirty-six (36) month period
immediately preceding his or her date of appointment. The arbitrator shall be a
person who is experienced and knowledgeable in employment and executive
compensation law and shall be an attorney duly licensed to practice law in one
or more states.
(b) POWERS OF ARBITRATOR. The arbitrator shall not have the
authority to grant any remedy which contravenes or changes any term of this Plan
and shall not have the authority to award punitive or exemplary or damages under
any circumstances. The parties shall equally share the expense of the arbitrator
selected and of any stenographer present at the arbitration. The remaining costs
of the arbitrator proceedings shall be allocated by the arbitrator, except that
the arbitrator shall not have the power to award attorney's fees.
(c) EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall
render its decision within thirty (30) days after termination of the arbitration
proceeding, which decision shall be in writing, stating the reasons therefor and
including a brief description of each element of any damages awarded. The
decision of the arbitrator shall be final and binding. Judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.
10.7 GOVERNING LAW. The provisions of this Plan shall be construed and
interpreted according to the laws of the State of New Jersey, except to the
extent as preempted by federal law.
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10.8 VALIDITY. If any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.
10.9 NOTICE. Any notice required or permitted under the Plan shall be
sufficient if in writing and hand delivered or sent by registered or certified
mail. Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification. Mailed notice to the Committee shall be
directed to the company's address. Mailed notice to a Participant or Beneficiary
shall be directed to the individual's last known address in company's records.
10.10 SUCCESSORS. The provisions of this Plan shall bind and inure to
the benefit of Company and its successors and assigns. The term successors as
used herein shall include any corporate or other business entity which shall,
whether by merger, consolidation, purchase or otherwise acquire all or
substantially all of the business and assets of Company, and successors of any
such corporation or other business entity.
10.11 409A. Notwithstanding anything herein to the contrary, in the
event that the Company, upon the advice of its counsel, determines in its sole
and absolute discretion that a delay in payment of a benefit hereunder or other
modification is necessary to comply with Section 409A of the Code and
interpretive guidance thereunder, then such delay in payment or other
modification shall be made.
APPROVALS
2007 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Adopted by the Compensation Committee of
the Board of Directors on: November 8, 2006
Approved by the Stockholders on: November 8, 2006
17
Exhibit D
SUMMIT GLOBAL LOGISTICS, INC.
2007 MANAGEMENT INCENTIVE PLAN
I. PURPOSES
1.1 GENERAL. The purposes of the Summit Global Logistics, Inc. 2007
Management Incentive Plan (the "PLAN") are to retain and motivate the Eligible
Employees and Directors of Summit Global Logistics, Inc. (the "COMPANY") or any
Parent or Subsidiary thereof who have been designated by the Committee to
participate in the Plan for a specified Performance Period by providing them
with the opportunity to earn incentive payments based upon the extent to which
specified performance or other goals have been achieved or exceeded for an
applicable Performance Period. Additional definitions are contained in Article
II and certain other Sections of the Plan.
1.2 STATUS OF COMPENSATION FOR "COVERED EMPLOYEES" AS QUALIFIED
PERFORMANCE-BASED COMPENSATION. It is intended that all amounts payable to
Participants who are "covered employees" within the meaning of Section 162(m) of
the Code will constitute "qualified performance-based compensation" within the
meaning of U.S. Treasury regulations promulgated thereunder, and the Plan and
the terms of any awards hereunder to such Participants shall be so interpreted
and construed to the maximum extent possible. Notwithstanding any provision of
the Plan to the contrary, however, an individual Award Agreement, as defined in
Section 4.1(f) hereof, may contain terms that do not comply with the "qualified
performance-based compensation" exception to the applicability of Section 162(m)
of the Code to the Individual Award Opportunity(ies) granted thereunder, in
which case the provisions of the individual Award Agreement shall take
precedence over the provisions of the Plan with respect to compliance with such
exception.
II. CERTAIN DEFINITIONS
2.1 "AFFILIATE" shall mean
(a) any Person which directly or indirectly beneficially
owns (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) securities or other equity
interests possessing more than 50% of the aggregate
voting power in the election of directors (or similar
governing body) represented by all outstanding
securities of the Company; or
(b) any Person with respect to which the Company
beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) securities or
other equity interests possessing more than 50% of
the aggregate voting power in the election of
directors (or similar governing body) represented by,
or more than 5% of the aggregate value of, all
outstanding securities or other equity interests of
such Person.
2.2 "BASE SALARY" shall mean a Participant's "Base Salary" as such
term is defined in the Employment Agreement.
2.3 "BOARD" shall mean the Board of Directors of the Company.
2.4 "BUSINESS ENTITY" shall mean (i) the Company or (ii) any
Parent or Subsidiary thereof.
2.5 "BUSINESS ENTITY LOCATION" means a Business Entity office
consisting of one or more buildings within 25 miles of each other.
2.6 "CAUSE" shall mean "Cause," as defined in the Participant's
Employment Agreement or Director's Agreement, and in the absence of such
definition, Cause shall mean, as determined by the Committee in its sole
discretion, the Participant's
(a) material act of dishonesty with respect to the
Business Entity that employs the Participant;
(b) conviction for a felony, gross misconduct that is
likely to have a material adverse effect on the
business and affairs of the Business Entity that
employs the Participant; or
(c) other misconduct, such as excessive absenteeism or
failure to comply with the rules of the Business
Entity that employs the Participant.
2.7 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
2.8 "COMMITTEE" shall mean the Compensation Committee of the Board
or such other committee designated by the Board that satisfies any then
applicable requirements of the New York Stock Exchange, NASDAQ, or such other
principal national stock exchange on which the Common Stock is then traded, to
constitute a compensation committee, and which consists of two or more members
of the Board, each of whom may be an "outside director" within the meaning of
Section 162(m) of the Code. Notwithstanding the foregoing, in the case of any
Individual Award Opportunity granted to any Participant who is a "covered
employee" within the meaning of Section 162(m) of the Code, the Committee shall
consist solely of two or more members of the Board who are "outside directors"
within the meaning of such Section.
2.9 "COMMON STOCK" shall mean common stock of the Company, par
value of $.001 per share.
2.10 "COMPANY" shall mean Summit Global Logistics, Inc., and
any successor thereto, and shall include any other business venture in which the
Company has a direct or indirect significant interest, as determined by the
Committee in its sole discretion.
2.11 "CONTROL" (including the terms "Controlled by" and "under
common Control with") means the possession, directly or indirectly or as a
trustee or executor, of the power to
2
direct or cause the direction of the management of a Person, whether through the
ownership of stock, as a trustee or executor, by contract or credit agreement or
otherwise.
2.12 "DETERMINATION PERIOD" shall mean, with respect to any
Performance Period, a period commencing on or before the first day of the
Performance Period and ending not later than the earlier of (i) 90 days after
the commencement of the Performance Period and (ii) the date on which
twenty-five percent (25%) of the Performance Period has been completed. Any
action required to be taken within a Determination Period may be taken at a
later date if permissible under Section 162(m) of the Code or regulations
promulgated thereunder, as they may be amended from time to time.
2.13 "DIRECTOR" shall mean a member of the Board or the board of
directors of a Parent or Subsidiary who is not an Employee.
2.14 "DIRECTOR'S AGREEMENT" shall mean the Participant's agreement
with the Company or any Parent or Subsidiary thereof to serve as a non-Employee
director of the Business Entity.
2.15 "DISABILITY" shall mean any physical or mental condition which
renders the Participant incapable of performing his or her essential functions
and duties as an Employee for a continuous period of at least 180 days, as
determined in good faith by a physician appointed by the Business Entity that
employs the Participant.
2.16 "EFFECTIVE DATE" shall mean January 1, 2007.
2.17 "ELIGIBLE EMPLOYEE" shall mean an employee of the Company or
any Parent or Subsidiary thereof, but only if the employee is reported as such
in the payroll records of such Business Entity.
2.18 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974 as currently in effect, and as it may be amended from time to time.
2.19 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
2.20 "FISCAL YEAR" shall mean the calendar year.
2.21 "FUNDAMENTAL TRANSACTION" shall mean that the Company shall,
directly or indirectly, in one or more related transactions effected after the
Effective Date:
3
(a) consolidate or merge with or into (whether or not the
Company is the surviving corporation) another Person;
(b) sell, assign, transfer, convey or otherwise dispose
of all or substantially all of the properties or
assets of the Company to another Person;
(c) be the subject of a purchase, tender or exchange
offer by another Person that is accepted by the
holders of more than 50% of the outstanding shares of
voting stock of the Company; or
(d) consummate a stock purchase agreement or other
business combination (including, without limitation,
a reorganization, recapitalization, spin-off or
scheme or arrangement) with another Person whereby
such other Person acquires more than the 50% of the
outstanding shares of Common Stock.
In addition, a "Fundamental Transaction" shall occur if, after the
Effective Date, any "person" or "group" (as these terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act) shall become the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% of the aggregate ordinary voting power represented by issued
and outstanding Common Stock.
2.22 "GOOD REASON" shall mean "Good Reason," as defined in the
Participant's Employment Agreement or Director's Agreement, and in the absence
of such definition, shall mean:
(a) without the Participant's prior written consent, any
material diminution in the Participant's authority,
duties or responsibilities, including those
pertaining to his or her status as a director, if
applicable, provided, however, that prior to any
termination pursuant to this Section 2.22(a), the
applicable Business Entity must be given notice by
the Participant of his/her objection to such material
diminution and no less than 20 days to cure the same;
(b) any failure by the Business Entity to pay the
Participant any portion of the Base Salary to which
the Participant is entitled under Section 2.2 or any
payments to which the Participant is entitled under
his or her Employment Agreement, if applicable,
provided, however, that prior to any termination on
account of the non-payment of Base Salary, the
Business Entity must be given notice by the
Participant of such acts or omissions and no less
than 30 days to cure the same;
(c) without the Participant's prior written consent, the
relocation of the principal place of the
Participant's employment to a location a further
distance than the Business Entity Location where the
individual was working immediately prior to the
relocation; or
4
(d) a material breach by the Business Entity of any of
the material provisions of this Plan, provided,
however, that prior to any termination pursuant to
this Section 2.22(d), the applicable Business Entity
must be given notice by the Participant of such acts
or omissions and no less than 20 days to cure the
same.
2.23 "INDIVIDUAL AWARD OPPORTUNITY" shall mean the potential of a
Participant to receive an incentive payment based on the extent to which the
applicable performance or other goals for a Performance Period shall have been
satisfied. An Individual Award Opportunity may be expressed in U.S. dollars or
pursuant to a formula that is consistent with the provisions of the Plan.
2.24 "PARENT" shall mean a "parent corporation," within the meaning of
Section 424(e) of the Code, with respect to the Company or an entity, directly
or indirectly, in Control of the Company.
2.25 "PARTICIPANT" shall mean an Eligible Employee who is designated by
the Company to participate in the Plan for a Performance Period, in accordance
with Article III.
2.26 "PERFORMANCE PERIOD" shall mean a one (1), two (2), three (3),
four (4) or five (5) Fiscal Year period for which performance or other goals are
established pursuant to Article IV.
2.27 "PERSON" shall mean a person within the meaning of Section 3(a)(9)
of the Exchange Act.
2.28 "PLAN" shall mean the Summit Global Logistics, Inc. 2007
Management Incentive Plan, as set forth herein, as it may be amended from time
to time.
2.29 "QUALIFIED SUCCESSOR" shall have the meaning ascribed thereto in
the Employment Agreement or Director's Agreement, as applicable. If such term
does not appear in the Employment Agreement or Director's Agreement, all Plan
provisions in respect of a Qualified Successor shall be null and void with
respect to the affected Participant.
2.30 "RETIREMENT" shall mean the voluntary termination of the
Participant at any time on or after attaining age 65.
2.31 "SUBSIDIARY" shall mean a "subsidiary corporation," within the
meaning of Section 424(f) of the Code, with respect to the Company, or an
entity, directly or indirectly, Controlled by the Company.
III. ADMINISTRATION
3.1 GENERAL. The Plan shall be administered by the Committee, which
shall have the full power and authority to interpret, construe and administer
the Plan and any Individual Award Opportunity granted hereunder (including
reconciling any inconsistencies, correcting any defects and addressing any
omissions).
3.2 POWERS AND RESPONSIBILITIES. The Committee shall have the following
5
discretionary powers, rights and responsibilities in addition to those described
in Section 3.1.
(a) to designate within the Determination Period the
Participants for a Performance Period;
(b) to establish within the Determination Period the
performance goals and other terms and conditions that
are to apply to each Participant's Individual Award
Opportunity;
(c) to determine in writing prior to the payment under
any Individual Award Opportunity that the performance
goals for a Performance Period and other material
terms applicable to the Individual Award Opportunity
have been satisfied;
(d) to grant Individual Award Opportunities for
Participants who are not "covered employees" within
the meaning of Section 162(m) of the Code based upon
the attainment of performance goals that do not
constitute "objective performance goals" within the
meaning of Section 162(m) of the Code;
(e) to adopt, revise, suspend, waive or repeal, when and
as appropriate, in its sole and absolute discretion,
such administrative rules, guidelines and procedures
for the Plan as it deems necessary or advisable to
implement the terms and conditions of the Plan.
3.3 DELEGATION OF POWER. The Committee may delegate some or all of its
power and authority hereunder to the President and Chief Executive Officer of
the Company or other executive officer of the Company or, with respect to a
Subsidiary, the shareholders of such Subsidiary, as the Committee deems
appropriate. Notwithstanding the foregoing, with respect to any person who is a
"covered employee" within the meaning of Section 162(m) of the Code or who, in
the Committee's judgment, is likely to be a covered employee at any time during
the applicable Performance Period, only the Committee shall be permitted to (i)
designate such person to participate in the Plan for such Performance Period,
(ii) establish performance goals and Individual Award Opportunities for such
person, and (iii) certify the achievement of such performance goals. For
purposes of the immediately preceding sentence, "Committee" shall mean two or
more members of the Board who are "outside directors" within the meaning of
Section 162(m) of the Code.
IV. PERFORMANCE GOALS AND OTHER CRITERIA
4.1 ESTABLISHING PERFORMANCE GOALS AND OTHER CRITERIA.
(a) ROLE OF COMMITTEE. The Committee shall establish
within the Determination Period of each Performance
Period (i) one or more objective performance goals
for each Participant or for any group of Participants
(or both), provided that the outcome of each goal is
substantially uncertain at the time the Committee
establishes such goal and/or (ii) other criteria,
including, but not limited to, performance criteria
6
that do not satisfy the requirements of Treasury
Regulation Section 1.162-27(e)(2) or time vesting
criteria, the satisfaction of which is required for
the payment of an Individual Award Opportunity.
(b) PERFORMANCE FACTORS. Performance goals shall be based
exclusively on one or more of the following objective
Company (including any division or operating unit
thereof) or individual measures, stated in either
absolute terms or relative terms, such as rates of
growth or improvement, the attainment by a share of
Common Stock of a specified fair market value for a
specified period of time, earnings per share,
earnings per share excluding non-recurring, special
or extraordinary items, return to stockholders
(including dividends), return on capital, return on
total capital deployed, return on assets, return on
equity, earnings of the Company before or after taxes
and/or interest, revenues, revenue increase, repeat
purchase rate, recurring revenue, recurring revenue
increase, market share, cash flow or cost reduction
goals, cash flow provided by operations, net cash
flow, short-term or long-term cash flow return on
investment, interest expense after taxes, return on
investment, return on investment capital, economic
value created, operating margin, gross profit margin,
net profit margin, pre-tax income margin, net income
margin, net income before or after taxes, pretax
earnings before interest, depreciation and
amortization, pre-tax operating earnings after
interest expense and before incentives, and/or
extraordinary or special items, operating earnings,
net cash provided by operations, and strategic
business criteria, consisting of one or more
objectives based on meeting specified market
penetration, geographic business expansion goals,
cost targets, customer satisfaction, reductions in
errors and omissions, reductions in lost business,
management of employment practices and employee
benefits, supervision of litigation and information
technology, quality and quality audit scores,
productivity, efficiency, and goals relating to
acquisitions or divestitures, or any combination of
the foregoing.
(c) PARTICIPANTS WHO ARE COVERED EMPLOYEES. Subject to
Section 1.2 hereof, with respect to Participants who
are "covered employees" within the meaning of Section
162(m) of the Code or who, in the Committee's
judgment, are likely to be covered employees at any
time during the applicable Performance Period, an
Individual Award Opportunity may be based only on
performance factors that are compliant with the
requirements of Treasury Regulation Section
1.127-27(e)(2). For this purpose, the factors listed
in Section 4.1(b) shall be deemed to be compliant
with the requirements of such Treasury Regulation.
(d) PARTICIPANTS WHO ARE NOT COVERED EMPLOYEES. With
respect to Participants who are not "covered
employees" within the meaning of Section 162(m) of
the Code and who, in the Committee's judgment, are
not likely to be covered employees at any time during
the applicable Performance Period, the performance
goals established for the
7
Performance Period may consist of any objective
Company (including any division or operating unit
thereof) or individual measures, whether or not
listed in (b) above or whether or not compliant with
the requirements of Treasury Regulation Section
1.162-27(e)(2). Without in any way limiting the
generality of the foregoing, such performance goals
may include subjective goals, the satisfaction of
which shall be determined by the Committee, in its
sole and absolute discretion. Performance goals shall
be subject to such other special rules and conditions
as the Committee may establish at any time within the
Determination Period.
(e) SPECIFIC LEVELS OF PERFORMANCE. Each Individual Award
Opportunity that is based upon performance shall set
forth specific levels of performance required during
the applicable Performance Period in order for the
Participant to be eligible for payment of such
amounts.
(f) AWARD AGREEMENTS. Each grant of an Individual Award
Opportunity hereunder shall be made pursuant to an
award grant agreement ("Award Agreement").
4.2 IMPACT OF EXTRAORDINARY ITEMS OR CHANGES IN ACCOUNTING. The
measures utilized in establishing performance goals under the Plan for any given
Performance Period shall be determined in accordance with generally accepted
accounting principles ( "GAAP") and in a manner consistent with the methods used
in the Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or restructuring or
impairment charges, as determined by the Company's independent public
accountants in accordance with GAAP or (ii) changes in accounting, unless, in
each case, the Committee decides otherwise within the Determination Period.
V. INDIVIDUAL AWARD OPPORTUNITIES
5.1 TERMS. At the time performance goals are established for a
Performance Period, the Committee also shall establish an Individual Award
Opportunity for each Participant or group of Participants, which shall be based
on the achievement of one or more specified targets of performance goals. The
targets shall be expressed in terms of an objective formula or standard which
may, at the discretion of the Committee, be based upon the Participant's Base
Salary or a multiple thereof. Unless otherwise provided in the applicable Award
Agreement, to the extent that any such award is made to a Covered Employee
within the meaning of Section 162(m) of the Code, such formula or formulas shall
be fixed by the Committee not later than the later of (x) ninety (90) days after
the commencement of the performance period; or (y) the expiration of one-quarter
(1/4) of the performance period.
5.2 INCENTIVE PAYMENTS. Payments under Individual Award Opportunities
shall be in cash and at the time determined by the Committee after the end of
the Performance Period for which the Individual Award Opportunities are payable,
except that, to the extent that such Individual Award Opportunities are based
upon performance criteria that refer to or are dependent upon the Company's
financial statements, no such payment shall be due, and Participants have no
right to payments, unless and until the Committee, based (to the extent
8
applicable) on the Company's audited financial statements for the Company's
taxable year in which such Performance Period ends (as prepared and reviewed by
the Company's independent public accountants), has certified in writing the
extent to which the applicable performance goals for such Performance Period
have been satisfied. Subject to Sections 5.3 and 5.4 hereof, once this
certification is made by the Committee, the Participant's rights to payment
under any and all Individual Award Opportunities with respect to the Performance
Period to which the certification applies shall be fully vested and
non-forfeitable for any reason. Notwithstanding any provision of this Plan to
the contrary, all payments to a Participant under an Individual Award
Opportunity for a given Performance Period must be made to the Participant no
later than (i) the 15th day of the third month following the Participant's first
taxable year in which the Individual Award Opportunity is no longer subject to a
"substantial risk for forfeiture " (within the meaning of Section 409A of the
Code) or (ii) the 15th day of the third month following the end of the Company's
fiscal year in which the Incentive Award Opportunity is no longer subject to a
"substantial risk of forfeiture" (within the meaning of Section 409A of the
Code).
5.3 PAYMENTS OF ANNUAL INDIVIDUAL AWARD OPPORTUNITIES IN THE EVENT OF
DEATH, DISABILITY, TERMINATION FOR CAUSE, TERMINATION OTHER THAN FOR CAUSE,
TERMINATION FOR GOOD REASON, TERMINATION OTHER THAN FOR GOOD REASON OR
RETIREMENT. Notwithstanding any provision of this Plan to the contrary, payments
in the event of the occurrence of any of the following events during an
applicable one-Fiscal Year Performance Period shall be made as follows:
(a) DEATH. In the event of a Participant's death during
an applicable one-Fiscal Year Performance Period, the
Individual Award Opportunity payable to the
Participant with respect to such one-Fiscal Year
Performance Period shall be forfeited in full.
(b) DISABILITY. In the event of a Participant's
Disability during an applicable one-Fiscal Year
Performance Period, the Individual Award Opportunity
payable to the Participant with respect to such
one-Fiscal Year Performance Period shall be the
maximum amount payable under the Incentive Award
Opportunity for that one-Fiscal Year Performance
Period, as determined by the Committee as of the end
of the one-Fiscal Year Performance Period, multiplied
by a fraction, the numerator of which is the number
of full consecutive months of the Participant's
employment during the one-Fiscal Year Performance
Period prior to his or her Disability, and the
denominator of which is 12. Whether the Participant
has sustained a Disability shall be determined by the
Committee in its sole discretion, but in good faith.
For this purpose, the Committee may require the
Participant to submit medical evidence of Disability;
provided, however, that any such requirement shall
comply with the applicable requirements of the Health
Insurance Portability and Accountability Act of 1996,
as amended. Payment of any Individual Award
Opportunity on account of the Participant's
Disability shall be made in a single lump sum.
(c) TERMINATION FOR CAUSE. In the event of the
Participant's termination of employment by a Business
Entity for Cause during an applicable one-
9
Fiscal Year Performance Period, the Individual Award
Opportunity granted to the Participant with respect
to such one-Fiscal Year Performance Period shall be
immediately forfeited in full. Whether a Participant
has committed an act or omitted an action that
constitutes grounds for a termination for Cause shall
be determined by the Committee in its sole
discretion, but in good faith.
(d) TERMINATION OTHER THAN FOR CAUSE. In the event of the
Participant's termination of employment by a Business
Entity other than for Cause during an applicable
one-Fiscal Year Performance Period, the Individual
Award Opportunity payable to the Participant with
respect to such one-Fiscal Year Performance Period
shall be the maximum amount payable under the
Individual Award Opportunity for that one-Fiscal Year
Performance Period, as determined by the Committee as
of the end of the one-Fiscal Year Performance Period,
multiplied by a fraction, the numerator of which is
the number of full consecutive months of the
Participant's employment during the one-Fiscal Year
Performance Period prior to his or her termination
other than for Cause, and the denominator of which is
12. Any Individual Award Opportunity that becomes
payable on account of the termination of a Business
Entity's termination of the Participant's employment
other than for Cause shall be payable only after the
Committee certifies that the applicable performance
objective(s) or other criteria with respect to the
Individual Award Opportunity have been satisfied.
Payment of any Individual Award Opportunity on
account of the Participant's termination of
employment by a Business Entity other than for Cause
shall be made in a single lump sum.
(e) TERMINATION BY PARTICIPANT FOR GOOD REASON. In the
event of the Participant's termination of employment
for Good Reason during an applicable one-Fiscal Year
Performance Period, the Individual Award Opportunity
payable to the Participant with respect to such
one-Fiscal Year Performance Period shall be the
maximum amount payable under the Individual Award
Opportunity for that one-Fiscal Year Performance
Period, as determined by the Committee as of the end
of the one-Fiscal Year Performance Period, multiplied
by a fraction, the numerator of which is the number
of full consecutive months of the Participant's
employment during the one-Fiscal Year Performance
Period prior to his or her termination for Good
Reason, and the denominator of which is 12. Whether
the Participant has sustained a Good Reason event
shall be determined by the Committee in its sole
discretion, but in good faith. Any Individual Award
Opportunity that becomes payable on account of the
termination of employment for Good Reason shall be
payable only after the Committee certifies that the
applicable performance objective(s) or other criteria
with respect to the Individual Award Opportunity have
been satisfied. Payment of any Individual Award
Opportunity on account of the Participant's
termination of employment for Good Reason shall be
made in a single lump sum.
10
(f) TERMINATION BY PARTICIPANT OTHER THAN FOR GOOD
REASON. Subject to Section 5.3(g) of the Plan, in the
event of the Participant's voluntary termination of
employment other than for Good Reason during an
applicable one-Fiscal Year Performance Period, the
Individual Award Opportunity granted to the
Participant with respect to such one-Fiscal Year
Performance Period shall be immediately forfeited in
full.
(g) RETIREMENT. If the event of a Participant's
Retirement during an applicable Performance Period,
the Individual Award Opportunity payable to the
Participant with respect to such Performance Period
shall be the maximum amount payable for that
Performance Period, as determined by the Committee as
of the end of the Performance Period, multiplied by a
fraction, the numerator of which is the number of
full consecutive months of the Participant's
employment during the Performance Period prior to his
or her termination on account of Retirement, and the
denominator of which is 12. Any Individual Award
Opportunity that becomes payable on account of the
Participant's Retirement shall be payable only after
the Committee certifies that the applicable
performance objective(s) or other criteria with
respect to the Individual Award Opportunity have been
satisfied. Payment of any Individual Award
Opportunity on account of the Participant's
Retirement shall be made in a single lump sum.
5.4 SPECIAL MULTI-YEAR PERFORMANCE PERIOD PAYMENT RULES.
(a) IN GENERAL. Except as provided in Section 5.4 (b) or
(c) hereof, if the Participant's employment
terminates for any reason whatsoever during a
Performance Period equaling or exceeding two (2)
years and prior to the time payment with respect to
the applicable Individual Award Opportunity otherwise
would be made, the Individual Award Opportunity
payable to the Participant with respect to such
multi-year Performance Period shall be forfeited in
full.
(b) DISABILITY. Section 5.4(a) shall not apply if the
Participant's termination of employment occurs on
account of his or her Disability on or after October
1 of the last Fiscal Year comprising a Performance
Period equaling or exceeding two (2) years.
(c) OCCURRENCE OF FUNDAMENTAL TRANSACTION. In the event
of a Fundamental Transaction, the - Individual Award
Opportunity payable to the Participant with respect
to the Performance Period within which the
Fundamental Transaction occurs shall fully vest and
be payable to the Participant in accordance with the
terms of the applicable Award Agreement; provided,
however, that the payment shall be made in
immediately available funds, from the proceeds of the
sale giving rise to the Fundamental Transaction (by
the Company in the case of a Fundamental Transaction
occurring )in a single lump sum, no later than ten
(10) days following the consummation of all events
contemplated by the Fundamental Transaction.
11
5.5 PAYMENTS AND PARACHUTE AWARDS. Notwithstanding any provision of
this Plan to the contrary, but subject to any conflicting provisions in any
Participant's Employment Agreement, if, in connection with a Fundamental
Transaction, a tax under Section 4999 of the Code would be imposed on the
Participant (after taking into account the exceptions set forth in Sections
280G(b)(4) and 280G(b)(5) of the Code), then the Company shall pay the
Participant an amount equal to the tax under Section 4999.
VI. GENERAL
6.1 EFFECTIVE DATE AND TERM OF PLAN. The Plan shall be effective for
Performance Periods beginning on or after the later of the date it is adopted by
the Committee or the date it is approved by the Company's stockholders of the
Company (the "Effective Date"). This Plan shall terminate as of the tenth
anniversary of the Effective Date, unless terminated earlier by the Committee.
In the event that this Plan is not approved by the stockholders of the Company,
this Plan shall be null and void.
6.2 AMENDMENT OR TERMINATION OF PLAN. The Committee may amend or
terminate this Plan as it shall deem advisable, subject to any requirement of
stockholder approval required by applicable law, rule or regulation, including
Section 162(m) of the Code. Notwithstanding any provision of this Plan to the
contrary, if a Business Entity has executed a definitive acquisition or similar
agreement pursuant to which a Fundamental Transaction will occur upon the
closing of the transaction(s) contemplated thereby, the Committee, in its sole
discretion, may treat the execution of such agreement itself as triggering a
Fundamental Transaction.
6.3 NON-TRANSFERABILITY OF AWARDS. No award under the Plan shall be
transferable other than by will, the laws of descent and distribution or
pursuant to beneficiary designation procedures approved by the Company. Except
to the extent permitted by the foregoing sentence, no award may be sold,
transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to execution,
attachment or similar process. Upon any attempt to sell, transfer, assign,
pledge, hypothecate, encumber or otherwise dispose of any such award, such award
and all rights thereunder shall immediately become null and void.
6.4 TAX WITHHOLDING AND DEDUCTIONS. The Company shall have the right to
require, prior to the payment of any amount pursuant to an award made hereunder,
payment by the Participant of any Federal, state, local, foreign or other taxes
which may be required to be withheld or paid in connection with such award. It
is intended that the Company's contributions under the Plan will be deductible
to the Company when benefits are received by the Participant under Section
404(a)(5) of the Code, and the Participant shall be taxed on the benefits upon
actual receipt of payments under Section 61 of the Code.
6.5 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall have any
right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment by the
Company or any Parent or Subsidiary thereof Company, or affect in any manner the
right of the Company, or any Parent or Subsidiary thereof to terminate the
employment of any person at any time without liability hereunder.
12
6.6 ARBITRATION OF DISPUTES. Both parties agree that all controversies
or claims that may arise between the Participant and the Company in connection
with this Plan shall be settled by arbitration. The parties further agree that
the arbitration shall be held in the State of New Jersey, and administered by
the American Arbitration Association under its Commercial Arbitration Rules,
applying New Jersey law, except to the extent such law is preempted by ERISA.
(a) QUALIFICATIONS OF ARBITRATOR. The arbitration shall be
submitted to a single arbitrator chosen in the manner provided under
the rules of the American Arbitration Association. The arbitrator shall
be disinterested and shall not have any significant business
relationship with either party, and shall not have served as an
arbitrator for any disputes involving the Company or any of its
Affiliates more than twice in the thirty-six (36) month period
immediately preceding his or her date of appointment. The arbitrator
shall be a person who is experienced and knowledgeable in employment
and executive compensation law and shall be an attorney duly licensed
to practice law in one or more states.
(b) POWERS OF ARBITRATOR. The arbitrator shall not have the
authority to grant any remedy which contravenes or changes any term of
this Plan and shall not have the authority to award punitive or
exemplary or damages under any circumstances. The parties shall equally
share the expense of the arbitrator selected and of any stenographer
present at the arbitration. The remaining costs of the arbitrator
proceedings shall be allocated by the arbitrator, except that the
arbitrator shall not have the power to award attorney's fees.
(c) EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall
render its decision within thirty (30) days after termination of the
arbitration proceeding, which decision shall be in writing, stating the
reasons therefor and including a brief description of each element of
any damages awarded. The decision of the arbitrator shall be final and
binding. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
6.7 GOVERNING LAW. This Plan and each award hereunder, and all
determinations made and actions taken pursuant thereto, to the extent not
otherwise governed by the laws of the United States, shall be governed by the
laws of the State of New Jersey and construed in accordance therewith without
giving effect to principles of conflicts of laws.
6.8 OTHER PLANS. Neither the adoption of the Plan nor the submission of
the Plan to the Company's stockholders for their approval shall be construed as
limiting the power of the Board or the Committee to adopt such other incentive
arrangements as it may otherwise deem appropriate.
6.9 BINDING EFFECT. The Plan shall be binding upon the Company and its
successors and assigns and the Participants and their Beneficiaries, personal
representatives and heirs. If the Company becomes a party to any merger,
consolidation or reorganization, then the Plan shall remain in full force and
effect as an obligation of the Company or its successors in interest, unless the
Plan is amended or terminated pursuant to Section 6.2.
13
6.10 NO TRUST OR ERISA PLAN CREATED. Nothing contained herein shall be
deemed to create a trust of any kind or create any fiduciary relationship. Funds
invested hereunder shall continue for all purposes to be a part of the general
funds of the Company and no person, other than the Company, shall by virtue of
the provisions of this Plan, have any interest in such funds. To the extent that
any person acquires a right to receive payments from the Company under this
Plan, such right shall be no greater than the right of any unsecured general
creditor of the Company. Further, no provision of this Plan shall be construed
as subjecting the Plan, or any portion thereof, to any provisions of ERISA, it
being the express intention of the Company that this Plan be so construed.
APPROVALS
2007 MANAGEMENT INCENTIVE PLAN:
Adopted by the Compensation Committee of the Board of November 8, 2006
Directors on:
Approved by the Stockholders on: November 8, 2006
14
Exhibit E
SUMMIT GLOBAL LOGISTICS, INC.
SEVERANCE BENEFIT PLAN
AND
SUMMARY PLAN DESCRIPTION
EFFECTIVE AS OF DECEMBER 1, 2006
I. INTRODUCTION
1.1 PURPOSE
The purpose of this severance plan, to be known as the Summit Global Logistics,
Inc. Severance Benefit Plan (the "Plan"), effective as of the "Effective Date,"
as defined herein, is to assist Eligible Employees of Summit Global Logistics,
Inc. ("Summit") and its subsidiaries (the "Company"), whose employment is
involuntarily terminated due to circumstances that (i) are described in Section
2.1.b of this Plan, and (ii) are anticipated to result in such individuals
experiencing a period of unemployment. This Plan supersedes and replaces any
previous plan, program, policy, practice or arrangement by which Company may
have provided severance benefits. All prior Company severance plans, practices
or programs, whether informal or formal, are hereby terminated. This document
constitutes both the Plan text and the Summary Plan Description for the Plan.
The Company is pleased to provide this Plan to Eligible Employees, and wants
you, as a potentially Eligible Employee, to know about and understand it. This
description of the Plan has been prepared to let you know how the Plan works and
how it may benefit you. You should read all parts of this description carefully
so that you will understand not only the ways in which the Plan may benefit you,
but also certain exclusions from coverage and limitations on payments which may
apply to you. If you have any questions about the Plan, you should contact the
Administrator.
THE SUMMIT GLOBAL LOGISTICS, INC. SEVERANCE BENEFIT PLAN ("PLAN") IS AN EMPLOYEE
WELFARE PLAN AS DEFINED IN SECTION 3(1) OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974 ("ERISA"). IT IS NOT A FUNDED PLAN; ANY BENEFITS OWED UNDER
THE PLAN WILL BE PAID FROM THE GENERAL ASSETS OF THE COMPANY IF AND WHEN SUCH
BENEFITS ARE OWED. EMPLOYEES HAVE NO RIGHTS TO OR INTEREST IN ANY SPECIFIC
ASSETS OR ACCOUNTS OF THE COMPANY EVEN IF AMOUNTS ARE CREDITED TO ACCOUNTS
DESIGNATED TO BE USED FOR THE PAYMENT OF PLAN BENEFITS.
II. YOUR PARTICIPATION IN THE PLAN
2.1 HOW DO I BECOME ELIGIBLE TO RECEIVE BENEFITS UNDER THE PLAN?
Only Eligible Employees (also referred to herein as "Participants") are eligible
to receive benefits under this Plan. An Eligible Employee for these purposes is
an Employee (i) who is NOT ineligible for benefits under Section 2.2 of the
Plan, and (ii) who first satisfies each of the following three requirements:
a. The Employee is a full-time employee of the Company as of the
Effective Date or is hired by the Company within six months
following as of the Effective Date, and if neither is the case,
has worked as a full-time employee of the Company for at least one
(1) year; AND
b. The Employee's employment with the Company is terminated because
of:
(i) A permanent reduction in force by the Company;
(ii) The Employee declining a transfer to another Company, as
defined in Plan Section 7.6, that is deemed suitable by
the Company that employs the Employee;
(iii) The elimination of a job or employment classification by
the Company;
(iv) A Change in Control of Summit;
(v) The consolidation of certain administrative and
operational functions of Summit;
(vi) The permanent or temporary shutdown of a portion of
Summit's operations that includes the Employee's position;
and/or
(vii) The sale of a business unit by the Company or other
corporate divestiture with respect to Summit; AND
c. The Employee has executed no earlier than the Employee's
Termination Date and on or before the sixtieth (60th) day
immediately following the Employee's Termination Date, a
settlement agreement and release ("Release"). If the Employee
fails to execute the Release within the prescribed time period,
the Employee shall fail to qualify as a Participant under the
Plan. The Employee shall be deemed to have executed the Release
within the prescribed time period if the Company fails to provide
the Employee with the Release for execution within thirty (30)
days after the Employee's Termination Date.
2.2 IN WHAT CIRCUMSTANCES WILL I BE INELIGIBLE FOR BENEFITS UNDER THE PLAN?
Subject to Section 4.2, an Employee shall be ineligible for benefits under this
Plan if the individual:
2
a. Is terminated for "Good Cause," as defined in this Section 2.2;
b. Voluntarily quits;
c. Fails to work through his or her Termination Date, or such earlier
date specified by the Company;
d. Is receiving long-term disability benefits;
e. After the Termination Date, performs services (i) for a division,
subdivision, branch, location, or other identifiable part of the
Company's business that is sold or otherwise transferred to an
owner other than the Company, regardless of whether the new owner
offers continued or comparable employment to the Employee, or (ii)
for any entity with which the Company has a continuing
relationship, and in which the Company is or has been a
significant contributor or investor, regardless of whether such
entity offers continued or comparable employment to the employee;
f. Dies prior to his or her Termination Date; or
g. Is on any leave of absence, short-term layoff, or absent for any
reason (other than approved vacation, approved family medical
leave, or medically certified sick leave) immediately prior to the
Participant's Termination Date.
For purposes of this Section 2.2, "Good Cause" for termination shall include,
but is not limited to, poor performance, dishonesty or other misconduct, such as
excessive absenteeism or failure to comply with the business rules of the
Company.
3
III. SEVERANCE PLAN BENEFITS
3.1 WHAT BENEFITS DO PARTICIPANTS RECEIVE?
An Eligible Employee of the Company who remains employed through his or her
Termination Date, or such earlier date selected by Company in writing, and who
executes, prior to any payment, the Release, will receive a severance benefit
under this Plan in an amount determined pursuant to the formula set forth on
Exhibit A hereto.
This Plan is designed to provide different benefits for separate categories of
Employees, which have been established by Company solely for purposes of this
Plan. Each Employee covered by this Plan will receive an Exhibit A bearing that
Employee's name, which describes the benefits for that Employee's category. An
Exhibit A is valid for purposes of this Plan only if it bears the name of the
Employee claiming benefits hereunder. Employees who have not received, or have
misplaced, their Exhibit A may obtain a replacement Exhibit A from the
Administrator. The Company may amend Exhibit A with respect to an Employee at
any time prior to the earlier of the date it notifies such Employee that it is
terminating his or her employment or a Change in Control.
For purposes of this Section 3.1 and Exhibit A hereto:
a. A Year of Service means a completed 12-consecutive month period
commencing with the Employee's date of hire or an anniversary
thereof. Partial years of service will be credited as one (1) Year
of Service if an Employee has worked at least 1,000 hours during a
year, calculated from an anniversary of the date of hire. No
credit for partial years of service will be given to Employees who
work less than one year in total. In computing months or years of
service for purposes of this Plan, only continuous service accrued
as a regular, full-time Company Employee will count. Service
earned as a temporary Employee, independent contractor, or
consultant to Company shall not be counted for purposes of
determining length of service under this Plan, even if all or a
portion of such service subsequently is determined by the Internal
Revenue Service or any other governmental agency to have
constituted employment.
b. A Week's Base Salary is calculated by dividing the Employee's rate
of Annual Base Salary as of the Termination Date by 52 weeks; a
Month's Base Salary is calculated by dividing the Employee's rate
of Annual Base Salary as of the Termination Date by 12. Annual
Base Salary, for these purposes, shall mean total compensation
(and, in the case of salespersons, total compensation for the
immediately prior month multiplied by 12), but shall not include
any bonus pay, commissions (other than sales commissions),
incentives, overtime, awards, employee benefits, shift
differentials, or other incidental compensation.
3.2 HOW WILL MY SEVERANCE BENEFITS UNDER THIS PLAN BE PAID?
Severance Plan Benefits will be paid as salary continuation on the Company's
regular paydays.
4
3.3 WHAT BENEFITS DO EMPLOYEES RECEIVE IF THEY CHOOSE NOT TO EXECUTE A
RELEASE?
If an Employee chooses not to execute a Release, the Employee shall NOT receive
any Severance Plan Benefits.
3.4 WHAT IS THE PURPOSE OF THE RELEASE?
An Employee who executes a Release agrees not to assert a claim concerning his
or her employment with the Company.
3.5 WILL I RECEIVE ANY ADDITIONAL "PLANT CLOSING" TYPE BENEFITS?
No. The Severance Plan Benefits provided in this Plan are the maximum benefits
that Company will pay. To the extent that any federal, state or local law,
including, without limitation, any so-called "plant closing" law, requires the
Company to give advance notice or make a payment of any kind to an Eligible
Employee because of that Employee's involuntary termination due to a layoff,
reduction in force, plant or facility closing, sale of business, change in
control, or any other similar event or reason, the benefits provided under this
Plan shall either be reduced or eliminated. The benefits provided under this
Plan are intended to satisfy and exceed any and all statutory obligations that
may arise out of an Eligible Employee's involuntary termination for the
foregoing reasons and the Administrator shall so construe and implement the
terms of the Plan.
3.6 WHAT EFFECT WILL SEVERANCE PLAN BENEFITS HAVE ON OTHER COMPANY BENEFITS?
Benefits payable under this Plan are independent of any benefits to which an
Employee might be entitled under any other employee benefit plan maintained by
Company. You should carefully review the terms of any such other benefit plans
to determine whether your rights thereunder are affected by a termination of
your employment with Company.
5
IV. GENERAL PROVISIONS
4.1 ADMINISTRATOR.
The Plan shall be administered by the Compensation Committee of Summit's Board
of Directors. In such capacity, the Compensation Committee shall oversee the
operation of the Plan shall serve as the Administrator. Subject to Section
4.2.b, the Administrator will have full power and right to administer the Plan
and in all of its details. For this purpose, the Administrator's power and
rights include, but will not be limited to the following:
a. to make and enforce such rules and regulations as it deems
necessary or proper for the efficient administration of the Plan
or required to comply with applicable law;
b. to interpret the Plan, its interpretation thereof in good faith to
be final and conclusive on any Employee, former Employee,
Participant, former Participant and Beneficiary;
c. to decide all questions concerning the Plan and the eligibility of
any person to participate in the Plan and to make all factual
determinations;
d. to compute the amount of benefits which will be payable to any
Participant, former Participant or Beneficiary in accordance with
the provisions of the Plan, and to determine the person or persons
to whom such benefits will be paid;
e. to authorize the payment of benefits;
f. to keep such records and submit such filings, elections,
applications, returns or other documents or forms as may be
required under the Code and applicable regulations, or under state
or local law and regulations;
g. to appoint such agents, counsel, accountants and consultants as
may be required to assist in administering the Plan; and
h. by written instrument, to allocate and delegate its fiduciary
responsibilities in accordance with Section 405 of ERISA.
4.2 RIGHT TO AMEND OR TERMINATE.
a. Subject to Section 4.2.b, the Compensation Committee reserves the
power and right to modify, amend, or terminate (in whole or in
part) any or all of the provisions of the Plan at any time for any
reason. Any Plan amendment shall be adopted by action of the
Company's Compensation Committee and executed by a Corporate
Officer authorized to act on behalf of the Company.
b. Notwithstanding anything herein to the contrary, in the event of a
Change in Control, this Plan shall no longer be subject to
amendment or termination with respect to Affected Individuals who
are Employees of the Company as of the date of the Change in
Control, but, as applied to such Affected Individuals with respect
6
to all rights hereby conferred as a result of that Change in
Control, (i) the terms and conditions hereof shall become fixed,
(ii) the benefits promised hereunder shall become fully vested
contract rights, (iii) the Annual Base Salary used to determine an
Affected Individual's benefits hereunder shall be such
individual's highest rate of Annual Base Salary (in the case of a
salesperson, highest earning month multiplied by 12) during the
period commencing on the first day of the Plan Year prior to the
Plan Year in which the Change in Control occurs and ending on the
date of the Affected Individual's Termination Date and (iv) the
requirements of Section 2.1.b shall be deemed satisfied.
c. For purposes of this Plan, a Change in Control shall occur when
the first step is taken (E.G., commencement of negotiations) in a
process that results in any one of the following events:
i. The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) (the "Act")
of beneficial ownership (within the meaning of Rule 13d-3
of the Act) of 20% or more of the (A) then outstanding
voting stock of Summit; or (B) the combined voting power
of the then outstanding securities of Summit entitled to
vote; or
ii. An ownership change in which the shareholders of Summit
before such ownership change do not retain, directly or
indirectly, at least a majority of the beneficial interest
in the voting stock of Summit after such transaction, or
in which Summit is not the surviving company; or
iii. The direct or indirect sale or exchange by the beneficial
owners (directly or indirectly) of Summit of all or
substantially all of the stock of Summit; or
iv. The composition of the Board changes so that the Board is
not under the control of the current shareholders or their
representatives; or
v. A reorganization, merger or consolidation in which Summit
is a party;
vi. The sale, exchange, or transfer of all or substantially
all of the assets of Summit; or
vii. The bankruptcy, liquidation or dissolution of Summit; or
viii. Any transaction involving Summit whereby Summit acquires
an ownership interest of any percentage in, enters into a
joint venture, partnership, alliance or similar
arrangement with, or becomes owned in any percentage by,
any other entity that is engaged in a business similar to
the business engaged in by the Company and that has
operations in North America immediately before such
transaction or within one year thereafter.
7
d. For purposes of this Plan, an Affected Individual is an individual
who satisfies at least one of the following criteria:
(i) The individual's employment with the Company is terminated
by the Company for any reason other than the individual's
long term disability within the period commencing on the
date of the Change in Control and ending on last day of
the second Plan Year ending after the closing date for the
transaction effecting the Change in Control (the "Change
in Control Period"), or
(ii) The individual terminates employment with the Company
during the Change in Control Period for Good Reason. For
these purposes, the term "Good Reason" shall mean:
A. Without the individual's prior written consent, any
material diminution in the individual's authority,
duties or responsibilities; or
B. Any failure by the Company to pay the individual an
Annual Base Salary which is equal to or greater than
the annual rate in effect during the immediately
preceding Plan Year; or
C. Without the individual's prior written consent, the
relocation of the principal place of the individual's
employment to a location more than 30 miles from the
Company. Location where the individual was working
immediately prior to the relocation; or
D. A material breach by the Company of any of the
material provisions of its Employment Agreement with
the individual (if any), provided, however, that prior
to any such termination pursuant to this subparagraph
D, the Company's Compensation Committee must be given
notice by the individual of such acts or omissions and
no less than 20 days to cure the same.
4.3 EFFECT OF AMENDMENT OR TERMINATION.
Any amendment, discontinuance, or termination of the Plan shall be effective as
of such date as the Compensation Committee shall determine.
4.4 ARBITRATION OF DISPUTES.
All controversies or claims that may arise between the Employee and the Company
in connection with this Agreement shall be settled by arbitration. The parties
(Summit, on behalf of the Company) further agree that the arbitration shall be
held in the State of New Jersey, and administered by the American Arbitration
Association under its Commercial Arbitration Rules, applying New Jersey law,
except to the extent such law is preempted by ERISA.
a. QUALIFICATIONS OF ARBITRATOR. The arbitration shall be submitted
to a single arbitrator chosen in the manner provided under the
rules of the American
8
Arbitration Association. The arbitrator shall be disinterested and
shall not have any significant business relationship with either
party, and shall not have served as an arbitrator for any disputes
involving the Company or any of its Affiliates more than twice in
the thirty-six (36) month period immediately preceding his or her
date of appointment. The arbitrator shall be a person who is
experienced and knowledgeable in employment and executive
compensation law and shall be an attorney duly licensed to
practice law in one or more states.
b. POWERS OF ARBITRATOR. The arbitrator shall not have the
authority to grant any remedy which contravenes or changes any
term of this Plan and shall not have the authority to award
punitive or exemplary or damages under any circumstances. The
parties shall equally share the expense of the arbitrator selected
and of any stenographer present at the arbitration. The remaining
costs of the arbitrator proceedings shall be allocated by the
arbitrator, except that the arbitrator shall not have the power to
award attorney's fees.
c. EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall render its
decision within thirty (30) days after termination of the
arbitration proceeding, which decision shall be in writing,
stating the reasons therefor and including a brief description of
each element of any damages awarded. The decision of the
arbitrator shall be final and binding. Judgment on the award
rendered by the arbitrator may be entered in any court having
jurisdiction thereof.
4.5 GOVERNING LAW.
Except as may be otherwise provided in the contracts incorporated by reference
into the Plan, the provisions of the Plan shall be construed, administered and
enforced according to ERISA and, to the extent not preempted, by the laws of the
State of New Jersey.
4.6 ADDRESSES, NOTICE, WAIVER OF NOTICE.
Each Participant must file with the Administrator, in writing, his or her
current mailing address. Any communications, statement or notice addressed to
such a person at his or her last mailing address as filed with the Administrator
will be binding upon such person for all purposes of the Plan.
4.7 SEVERABILITY.
If any provision of the Plan shall be held illegal or invalid for any reason,
such illegality or invalidity shall not affect the remaining provisions of the
Plan, and the Plan shall be construed and enforced as if such illegal and
invalid provisions had never been set forth in the Plan.
4.8 SECTION 409A COMPLIANCE.
Notwithstanding anything herein to the contrary, to the extent a delay or
acceleration of the payments called for under any provision of this Plan is
determined to be necessary in the opinion of Company's tax advisors to prevent
imposition of an additional tax to a Participant under Section 409A(a)(1)(B) of
the Internal Revenue Code of 1986, as amended (the "Code"), then the timing of
such payment shall be accelerated to the extent necessary to comply with the
"short-term deferral" rule or shall not be made, as applicable, until the first
date on which such
9
payment is permitted in compliance with Section 409A and the Treasury
Regulations or other interpretative guidance issued thereunder.
10
V. CLAIMS PROCEDURE
5.1 INITIAL CLAIM FOR BENEFITS.
a. MAKING A CLAIM. You may claim a specific benefit under the Plan or
request a specific interpretation or ruling under the Plan
regarding entitlement to future benefits by submitting a written
claim for benefits to the Administrator.
b. DENIAL OF CLAIM. If your claim is denied, in whole or in part, the
Administrator shall provide you with written notification of such
adverse benefit determination within 90 days after the receipt of
the claim. Such 90-day period may be extended by the Administrator
for a period of up to 90 days, but only if the Administrator
determines that special circumstances require such an extension.
If the Administrator determines that such an extension is
required, you will receive written notice of the reasons for such
extension and the date on which the Administrator expects to
render a benefit determination on your claim. The Administrator
will send you this notice prior to the expiration of the initial
90-day period.
c. CONTENT OF INITIAL NOTICE OF ADVERSE BENEFIT DETERMINATION. Any
written notice of adverse benefit determination will include the
following: (i) the reasons for denial, with specific reference to
the Plan provisions on which the denial is based; (ii) a
description of any additional material or information required and
an explanation of why it is necessary; (iii) an explanation of the
Plan's claim review procedure; (iv) a statement that any appeal
must be made by giving the Administrator, within 60 days of the
notice of adverse benefit determination, unless extended by the
Administrator for good cause shown, written notice of such appeal,
which shall include a full description of the pertinent issues and
the basis for the claim; and (v) a statement of your right to
bring a civil action under Section 501(a) of ERISA following an
adverse benefit determination on review.
d. EFFECT OF FAILURE OF ADMINISTRATOR TO RENDER TIMELY DECISION. If
the decision of the Administrator is not rendered within the
initial 90-day or extended 90-day period, as applicable, you
should consider your claim to have been denied.
5.2 APPEAL OF DENIED CLAIM.
a. REQUEST FOR REVIEW. If your claim is denied or you have not
received a response within the initial or extended 90-day
determination period, you may request a review by notice given in
writing to the Administrator. Such request must be made within 60
days after your receipt of the written notice of adverse benefit
determination, or in the event that you have not received a
response with the initial 90-day or extended 90-day period, within
60 days after the expiration of the applicable 90-day period,
unless extended by the Administrator for good cause shown.
11
b. REVIEW OF APPEAL. The claim or request will be reviewed by the
Administrator, which may, but shall not be required to, convene a
hearing. On review, you may have representation, examine relevant
documents (free of charge), and submit issues and comments in
writing.
5.3 FINAL DECISION.
a. TIME FRAME. The Administrator normally will make the decision on
review of an appealed claim within 60 days after receiving a
claimant's request for review. If an extension of time is required
for a hearing or because of other special circumstances, the
Administrator will send you a written notice of extension,
explaining the reason for the extension, and the expected date of
its decision before the expiration of the initial 60 day period.
In no event will the extension exceed an additional 60 days.
b. EXPLANATION OF DECISION. The final decision of the Administrator
will be delivered to you in written form and, if adverse, contain
the following information: (i) the reasons for the adverse
determination; (ii) specific references to the relevant Plan
provisions upon with the determination is based; (iii) a statement
that you are entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and
other information relevant to your claim for benefits; and (iv) a
statement of your right to bring action under Section 501(a) of
ERISA.
c. EFFECT OF FAILURE OF ADMINISTRATOR TO RENDER TIMELY DECISION. If
the decision of the Administrator is not rendered within the
initial 60-day or extended 60-day period, you should consider your
claim on review to have been denied. Subject to your right to
bring action under Section 501(a) of ERISA, all decisions on
review shall be final and bind all parties concerned.
12
VI. STATEMENT OF ERISA RIGHTS
As a Participant in the Plan you are entitled to certain rights and protections
under ERISA. ERISA provides that all Plan Participants shall be entitled to:
RECEIVE INFORMATION ABOUT YOUR PLAN AND BENEFITS
a. Examine, without charge, at the Administrator's office, all Plan
documents, including this document, and a copy of the latest
annual report (Form 5500 Series) filed by the Plan with the U.S.
Department of Labor and available at the Public Disclosure Room of
the Employee Benefits Security Administration.
b. Obtain copies of these documents and other Plan information upon
written request to the Administrator. The Administrator may make a
reasonable charge for the copies.
PRUDENT ACTIONS BY PLAN FIDUCIARIES
In addition to creating rights for Plan Participants, ERISA imposes duties upon
the people who are responsible for the operation of the Plan. The people who
operate the Plan, called "fiduciaries," have a duty to do so prudently and in
the interest of you and other Plan Participants and Beneficiaries.
Neither the Company nor any other person may fire you or otherwise discriminate
against you in any way to prevent you from obtaining benefits under the Plan or
exercising your rights under ERISA.
ENFORCE YOUR RIGHTS
If a claim for benefits under the Plan is denied or ignored, in whole or in
part, you have a right to know why this was done, to obtain copies of documents
relating to the decision without charge, and to appeal any denial, all within
certain time schedules.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request a copy of Plan documents or the latest annual report
from the Plan and do not receive them within 30 days, you may file suit in a
Federal Court. In such a case, the Court may require the Administrator to
provide the materials and pay you up to $110 a day until you receive them,
unless they were not sent because of reasons beyond the Administrator's control.
If you have a claim for benefits which is denied or not processed, in whole or
in part, you may file suit in a State or Federal Court. If it should happen that
the Plan's fiduciaries misuse the Plan's money (if any), or you are
discriminated against for asserting your rights, you may seek assistance from
the U.S. Department of Labor, or you may file suit in a Federal Court. The Court
will decide who should pay the court costs and legal fees. If you are
successful, the Court may order the person you have sued to pay these costs and
fees. If you lose, the Court may order you to pay these costs and fees if, for
example, it finds your claim to be frivolous.
13
ASSISTANCE WITH YOUR QUESTIONS
If you have any questions about your Plan. Your should contact the
Administrator. If you have any questions about this Statement or about your
rights under ERISA, or if you need assistance in obtaining documents from the
Administrator, you should contact the nearest office of the Employee Benefits
Security Administration, U.S. Department of Labor, listed in your telephone
directory or the Division of Technical Assistance Inquiries, Employee Benefits
Security Administration, U.S. Department of Labor, 200 Constitution Avenue,
N.W., Washington, D.C. 20210. You may also obtain certain publications about
your rights and responsibilities under ERISA by calling the publications hotline
of the Employee Benefits Security Administration.
ADDITIONAL INFORMATION.
If there are any provisions of this Plan and/or Summary Plan Description which
are not entirely clear to you, please ask for a clarification from the
Administrator. If you submit a written request for information or for a more
detailed explanation of any provision of the Plan, the Administrator will
respond to you in writing. Only the Administrator is authorized to interpret the
Plan and you should not rely upon interpretations of the Plan from any other
source.
14
VII. DEFINITIONS
The following words and phrases are used quite frequently in this Summary Plan
Description and have special meanings of which you should take note.
7.1 The ADMINISTRATOR is the person or persons designated by the Company's
Compensation Committee to administer and oversee the operation of the
Plan.
7.2 An AFFILIATE is any Person (i) which, with respect to the Company,
directly or indirectly beneficially owns (within the meaning of Rule
13d-3 promulgated under the Act) securities or other equity interests
possessing more than 50% of the aggregate voting power in the election
of directors (or similar governing body) represented by all outstanding
securities of the Company or (ii) with respect to which the Company
beneficially owns (within the meaning of Rule 13d-3 promulgated under
the Act securities or other equity interests possessing more than 50%
of the aggregate voting power in the election of directors (or similar
governing body) represented by, or more than 5% of the aggregate value
of, all outstanding securities or other equity interests of such
Person.
7.3 A BENEFICIARY is a person or persons entitled to receive benefits under
the Plan upon the death of a Participant.
7.4 The BOARD OF DIRECTORS means the Board of Directors of Summit.
7.5 The COMPANY is Summit Global Logistics, Inc. and its subsidiaries.
7.6 The COMPANY LOCATION means a Company office consisting of one or more
buildings within 30 miles of each other.
7.7 CORPORATE OFFICER means any person who has been duly appointed a
corporate officer of the Company.
7.8 The EFFECTIVE DATE for purposes of this Plan is December 1, 2006.
7.9 An ELIGIBLE EMPLOYEE is an Employee of the Company who meets the
eligibility requirements set forth in Article II.
7.10 An EMPLOYEE is an individual who (i) contracts directly with the
Company (rather than through a third party, such as an employee-leasing
firm), (ii) performs services for the Company and (iii) is treated as
an employee of the Company for federal employment-tax purposes.
7.11 An EMPLOYMENT AGREEMENT is a written agreement by and between the
Employee and the Company setting forth the terms and conditions of the
Employee's employment with the Company.
7.12 ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and includes regulations promulgated thereunder by the
Secretary of Labor.
15
7.13 The COMPENSATION COMMITTEE means a Committee established by the Board
of Directors that is authorized to, among other things, establish and
maintain the Plan.
7.14 A FIDUCIARY means any person who exercises any discretionary authority
or responsibility in the management or administration of the Plan or
the disposition of Plan assets; or who renders investment advice for a
fee or other compensation with respect to any property of the Plan.
7.15 The NAMED FIDUCIARY for the Plan is Summit.
7.16 PARTICIPANTS are Eligible Employees, as defined in Section 7.9.
7.17 PERQUISITEs means the following employee benefits to the extent an
Employee is a participant in a Company plan or program providing such
benefits: (i) life insurance, (ii) accidental death and dismemberment
insurance, (iii) long term disability insurance and (iv) travel and
accident insurance.
7.18 PERSON means a person within the meaning of Section 3(a)(9) of the Act.
7.19 The PLAN is the Summit Global Logistics, Inc., Severance Benefit Plan
described in this booklet.
7.20 The PLAN YEAR is the 12-month period commencing on December 1 and
ending on the immediately following November 30.
7.21 SEPARATION DATE OR TERMINATION DATE means a Participant's last day of
active service with the Company as designated by the Company.
7.22 SEVERANCE PLAN BENEFIT means amounts payable under the Plan to a
Participant on account of termination of his or her employment under
the conditions described in Article III.
16
VIII. PLAN IDENTIFICATION DATA
Under this heading, the names and addresses of certain individuals who have
various responsibilities with respect to this Plan are shown. Also, certain
identification information with respect to the Plan itself is set out in case
that information would be of use to you.
_
|_| EMPLOYER: Summit Global Logistics, Inc.
_
|_| IDENTIFICATION NUMBER: The Employer's IRS identification number is _______.
_
|_| PLAN IDENTIFICATION NUMBER: ______
_
|_| NAMED FIDUCIARY AND ADMINISTRATOR: Summit is Summit Global Logistics, Inc.
547 Boulevard, Kennilworth, NJ 07033.
_
|_| BASIS ON WHICH PLAN RECORDS ARE KEPT: Plan Year
_
|_| TYPE OF PLAN: Unfunded welfare benefit plan providing severance benefits.
_
|_| AGENT FOR SERVICE OF LEGAL PROCESS Summit is Summit Global Logistics, Inc.
547 Boulevard, Kennilworth, NJ 07033.
APPROVALS
SEVERANCE BENEFIT PLAN
Adopted by the Compensation Committee
of the Board of Directors on: November 8, 2006
Approved by the Stockholders on: November 8, 2006
17
APPENDIX A
(HIGH LEVEL EXECUTIVES)
Twenty-four (24) Months' Base Salary. Payments shall be made on a monthly basis.
In addition, the Company shall pay the individual's premiums for COBRA
continuation coverage (individual, individual plus one or group coverage) for a
period of eighteen (18) months following termination of employment. At the
expiration of this eighteen (18)-month period, the Company will pay the
individual, in a single lump sum, the cash value of six (6) additional months of
premium payments for the type of coverage elected under COBRA under a
substantially similar health plan. The amount to be paid under the immediately
preceding sentence shall not exceed $25,000.
If the individual's employment is terminated in connection with a Change in
Control, as such term is defined in Plan Section 4.2.b, the twenty-four (24)
Months' Base Salary described above shall be paid to the individual in a single
lump sum, the COBRA and health care benefits shall be provided as described
above, and the Company also will provide the individual with outplacement
benefits of an amount commensurate with the individual's position with the
Company, the value of such benefits not to exceed $10,500. The Company will also
continue to maintain the identical level of Perquisites and benefits enjoyed by
the individual prior to the Change in Control for a period of two (2) years
following his or her last day of employment. For these purposes, a termination
of the individual's employment shall conclusively be deemed to be in connection
with a Change in Control if such termination occurs during the time period
commencing on the date of the Change in Control and ending on the second
anniversary of the closing date for the transaction effecting the Change in
Control.
This Exhibit A confirms that, solely for purposes of the Summit Global
Logistics, Inc. Severance Benefit Plan, Robert Agresti is within category
described above.
18
APPENDIX A
(VICE PRESIDENTS)
Twelve (12) Months' Base Salary. Payments shall be made on a monthly basis.
In addition, the Company shall pay the individual's premiums for COBRA
continuation coverage (individual, individual plus one or family coverage, as
applicable) for a period of twelve (12) months following termination of
employment.
If the individual's employment is terminated in connection with a Change in
Control, as such term is defined in Plan Section 4.2.b, the remaining balance of
the Months' Base Salary owed to the individual shall be paid to him or her in a
single lump sum, the COBRA benefits shall be provided as described above, and
the Company also will provide the individual with outplacement benefits of an
amount commensurate with the individual's position with the Company, the value
of such benefits not to exceed $7,500. The Company will also continue to
maintain the identical level of Perquisites and benefits enjoyed by the
individual prior to the Change in Control for a period of one (1) year following
his or her last day of employment. For these purposes, a termination of the
individual's employment shall conclusively be deemed to be in connection with a
Change in Control if such termination occurs during the time period commencing
on the date of the Change in Control and ending on the second anniversary of the
closing date for the transaction effecting the Change in Control.
This Exhibit A confirms that, solely for purposes of the Summit Global
Logistics, Inc. Severance Benefit Plan, ______________________ is within
category described above.
19
APPENDIX A
(ASSISTANT VICE PRESIDENTS)
Nine (9) Months' Base Salary. Payments shall be made on a monthly basis.
In addition, the Company shall pay the individual's premiums for COBRA
continuation coverage (individual, individual plus one or family coverage, as
applicable) for a period of nine (9) months following termination of employment.
If the individual's employment is terminated in connection with a Change in
Control, as such term is defined in Plan Section 4.2.b, the remaining balance of
the Months' Base Salary owed to the individual shall be paid to him or her in a
single lump sum, the COBRA benefits will be provided as described above and the
Company also will provide the individual with outplacement benefits of an amount
commensurate with the individual's position with the Company, the value of such
benefits not to exceed $7,500. The Company will also continue to maintain the
identical level of Perquisites and benefits enjoyed by the individual prior to
the Change in Control for a period of nine (9) months following his or her last
day of employment. For these purposes, a termination of the individual's
employment shall conclusively be deemed to be in connection with a Change in
Control if such termination occurs during the time period commencing on the date
of the Change in Control and ending on the second anniversary of the closing
date for the transaction effecting the Change in Control.
This Exhibit A confirms that, solely for purposes of the Summit Global
Logistics, Inc. Severance Benefit Plan, ______________________ is within
category described above.
20
APPENDIX A
(REGULAR SALARIED EMPLOYEES)
Two (2) Weeks' Base Salary for each Year of Service. Minimum of six (6) weeks
and a maximum of twenty-six (26) weeks.
This Exhibit A confirms that, solely for purposes of the Summit Global
Logistics, Inc. Severance Benefit Plan, ______________________ is within
category described above.
21
APPENDIX A
(HOURLY EMPLOYEES)
One Week Base Salary for each Year of Service. Minimum of six (6) weeks and a
maximum of twenty-six (26) weeks.
This Exhibit A confirms that, solely for purposes of the Summit Global
Logistics, Inc. Severance Benefit Plan, ______________________ is within
category described above.
22
Exhibit F
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
this 8th day of November, 2006, by and between Robert Agresti, residing at 12
Hedden Place, New Providence, NJ 07974 (the "Executive"), and Summit Global
Logistics, Inc., a Delaware corporation (the "Company").
BACKGROUND
WHEREAS, the Executive is expected to make a major contribution to
the growth, profitability and financial strength of the Company; and
WHEREAS, the Company desires to retain the services of the
Executive, and the Executive desires to be retained by the Company, on the terms
and conditions set forth below.
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in this Agreement, the receipt
and sufficiency of which are hereby acknowledged, the Company and Executive
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following terms, when used in this Agreement, shall
have the following meanings, unless the context clearly requires otherwise (such
definitions to be equally applicable to both the singular and plural of the
defined terms):
1.1.1 "AFFILIATE" means, (a) with respect to the Executive, any
other Person directly or indirectly Controlling, Controlled by, or under
common Control with the Executive and (b) with respect to the Company, (i)
any Person which directly or indirectly beneficially owns (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) securities or
other equity interests possessing more than 50% of the aggregate voting
power in the election of directors (or similar governing body) represented
by all outstanding securities of the Company or (ii) any Person with
respect to which the Company beneficially owns (within the meaning of Rule
13d-3 promulgated under the Exchange Act) securities or other equity
interests possessing more than 50% of the aggregate voting power in the
election of directors (or similar governing body) represented by, or more
than 5% of the aggregate value of, all outstanding securities or other
equity interests of such Person.
1.1.2 "BASE SALARY" shall have the meaning set forth in section
3.1.
1.1.3 "BOARD" means the Board of Directors of the Company.
1
1.1.4 "CHANGE IN CONTROL" means the occurrence of the first step
(E.G., commencement of negotiations) in a process that results in any one
of the following events:
1.1.4.1 the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934,
as amended) (the "Act") of beneficial ownership
(within the meaning of Rule 13d-3 of the Act) of
more than 20% of the (A) then outstanding voting
stock of a Company; or (B) the combined voting
power of the then outstanding securities of the
Company entitled to vote;
1.1.4.2 an ownership change in which the shareholders of
the Company before such ownership change do not
retain, directly or indirectly, at least a
majority of the beneficial interest in the voting
stock of the Company after such transaction, or in
which the Company is not the surviving company;
1.1.4.3 the direct or indirect sale or exchange by the
beneficial owners (directly or indirectly) of the
Company of all or substantially all of the stock
of the Company;
1.1.4.4 a majority of the directors comprising the entire
Board as of the Effective Date changes during any
12-month period (other than a Qualified
Successor);
1.1.4.5 a reorganization, merger or consolidation in which
the Company is a party;
1.1.4.6 the sale, exchange, or transfer of all or
substantially all of the assets of the Company;
1.1.4.7 the bankruptcy, liquidation or dissolution of the
Company; or
1.1.4.8 any transaction including the Company in which the
Company acquires an ownership interest of any
percentage in, enters into a joint venture,
partnership, alliance or similar arrangement with,
or becomes owned in any percentage by, any other
entity that is engaged in a business similar to
the business engaged in by the Company and that
has operations in North America immediately before
such transaction or within one year thereafter.
1.1.5 "CAUSE" means, as determined by the Company in its sole
discretion, the Executive's
1.1.5.1 material act of dishonesty with respect to the
Company;
2
1.1.5.2 conviction for a felony, gross misconduct that is
likely to have a material adverse effect on the
Company's business and affairs; or
1.1.5.3 other misconduct, such as excessive absenteeism,
or material failure to comply with Company rules.
1.1.6 "CODE" means the Internal Revenue Code of 1986, as amended.
1.1.7 "COMMON STOCK" means the common stock of the Company, par
value of $.001 per share.
1.1.8 "COMPANY LOCATION" means a Company office consisting of one
or more buildings within 25 miles of each other.
1.1.9 "COMPENSATION COMMITTEE" means the Compensation Committee
of the Board or such other committee designated by the Board that
satisfies any then applicable requirements of the New York Stock Exchange,
Nasdaq, or such other principal national stock exchange on which the
Common Stock is then traded, and which consists of two or more members of
the Board, each of whom shall be an outside director within the meaning of
Section 162(m) of the Code.
1.1.10 "CONFIDENTIAL INFORMATION" means:
1.1.10.4 proprietary information, trade secrets and
know-how of the Company and/or its Affiliates;
1.1.10.5 confidential information relating to the business,
operations, systems, networks, services, data bases, customer lists,
pricing policies, business plans, marketing plans, product
development plans, strategies, inventions and research of the
Company and/or its Affiliates; and
1.1.10.6 confidential information relating to the financial
affairs and results of operations and forecasts or projections of
the Company and/or its Affiliates;
provided that information shall not constitute Confidential
Information if such information: (i) is generally known or
reasonably knowable by Persons other than the Company or its
Affiliates or Persons employed by, in control of or otherwise
affiliated with the Company or its Affiliates, (ii) is known or
reasonably knowable by Persons other than the Company or its
Affiliates or Persons employed by, in control of or otherwise
affiliated with the Company or its Affiliates, by reason of the
action of such Person or Persons other than the Executive or any
Person acting at the Executive's direction or with the Executive's
prior consent, (iii) was known or reasonably knowable by the
Executive, by lawful means, prior to the date of the Executive's
employment with the Company or (iv) is compelled to be disclosed by
law, regulation or legal process.
3
1.1.11 "CONTROL" (including the terms "Controlled by" and "under
common Control with") means the possession, directly or indirectly or as a
trustee or executor, of the power to direct or cause the direction of the
management of a Person (including the direction of any Person related to
the Executive), whether through the ownership of stock, as a trustee or
executor, by contract or credit agreement or otherwise.
1.1.12 "DISABILITY" means any physical or mental condition which
renders Executive incapable of performing his essential functions and
duties hereunder for a period of at least 180 days, as determined in good
faith by a physician appointed by the Company.
1.1.13 "EFFECTIVE DATE" means the date of Closing as defined in
that certain Equity Purchase Agreement by and between Maritime Logistics
US Holdings Inc., FMI Holdco I, LLC, FMI Blocker, Inc. and each of the
Sellers set forth in Schedule A thereto, dated as of October 23, 2006.
1.1.14 "EMPLOYMENT TERM" shall have the meaning set forth in
section 2.2.
1.1.15 "EQUITY INCENTIVE PLAN" means the Summit Global Logistics,
Inc. 2006 Equity Incentive Plan, attached as Exhibit A hereto.
1.1.16 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
1.1.17 "FISCAL YEAR" means the calendar year.
1.1.18 "GOOD REASON" means the occurrence of any of the following:
1.1.18.7 without the Executive's prior written consent, any
material diminution in the Executive's authority,
duties or responsibilities, including those
pertaining to his status as a director of the
Board, if applicable; provided, however, that
prior to any termination pursuant to this Section
1.1.18.1, the Company must be given notice by the
Executive of his/her objection to such material
diminution and no less than 20 days to cure the
same;
1.1.18.8 any failure by the Company to pay the Executive
any portion of the Base Salary or other payments
to which the Executive is entitled under Sections
3.1 through 3.5 hereof, provided, however, that
prior to any termination pursuant to this Section
1.1.18.2 on account of the non-payment of Base
Salary, the Company must be given notice by the
Executive of such acts or omissions and no less
than 30 days to cure the same;
1.1.18.9 without the Executive's prior written consent, the
relocation of the principal place of the
Executive's employment to a location a further
distance than the Company Location where the
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individual was working immediately prior to the
relocation;
1.1.18.10 a material breach by the Company of any of the
material provisions of this Agreement, provided,
however, that prior to any such termination
pursuant to this Section 1.1.18.4, the Company
must be given notice by the Executive of such
acts or omissions and no less than 20 days to
cure the same; or
1.1.18.11 an event described in Section 1.1.4.4 hereof
occurs.
1.1.19 "MANAGEMENT INCENTIVE PLAN" means the Summit Global
Logistics, Inc. 2007 Management Incentive Plan, attached as Exhibit B
hereto.
1.1.20 "PERSON" means an individual, corporation, partnership,
association, limited liability company or partnership, trust, government,
governmental agency or body, or any other group or entity, no matter how
organized and whether or not for profit.
1.1.21 "QUALIFIED SUCCESSOR" means in the event there is a vacancy
in the Board occurring between annual meetings as a result of death,
incapacity or resignation, or if one or more of the Directors shall
decline to stand for election to the Board or, if he is unable or
unwilling to so serve, then the shareholders that are party to that
certain voting agreement ("Voting Agreement") dated on or about the date
hereof between the Company and the parties thereto to elect Messrs.
Agresti, DeSaye, MacAvery and McQuiston (the "Shareholders") shall
designate one or more individuals of standing within the business world
reasonably comparable to that of such Director (each a "Qualified
Successor") as one or more successor Directors in the following manner.
The Shareholders shall select an individual to serve as the Qualified
Successor, which individual shall be independent both of the Company
(except through proposed service as a member of the Board or a subsidiary
of the Company) and of the Shareholders. The selected individual shall be
subject to the prior approval of a super-majority of the Shareholders,
which consent shall not unreasonably be withheld. A Shareholder's approval
of a designated Director shall be deemed given if such Shareholder has not
responded to a notice by the Chairman of the Board of the Company within
30 days of notice to the Shareholder of the identity of the selected
individual. Upon selection and approval hereunder, such Qualified
Successor shall for all purposes be deemed a Director of the Company and
shall be subject to the Voting Agreement in the event of his/her death,
incapacity, resignation or decision not to be a Director.
1.1.22 "TERMINATION DATE" means the date on which the Executive's
employment with the Company terminates for any reason.
1.1.23 "YEAR OF SERVICE" means the completion by the Executive of
Year One, Year Two, Year Three, Year Four , Year Five, or any additional
one-year period under Section 2.2 hereof, as applicable. For purposes of
Section 3.5 hereof, and only for such purposes, partial years of service
will be credited as one (1) Year of Service if the Executive has worked at
least 1,000 hours during the applicable year.
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1.1.24 "YEAR ONE" means the 12-consecutive-month period beginning
on the Effective Date and ending on the day immediately prior to the first
day of Year Two.
1.1.25 "YEAR TWO" means the 12-consecutive-month period beginning
on the first anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Three.
1.1.26 "YEAR THREE" means the 12-consecutive-month period
beginning on the second anniversary of the Effective Date and ending on
the day immediately prior to the first day of Year Four.
1.1.27 "YEAR FOUR" means the 12-consecutive-month period beginning
on the third anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Five.
1.1.28 "YEAR FIVE" means the 12-consecutive-month period beginning
on the fourth anniversary of the Effective Date and ending on the day
immediately prior to the fifth anniversary of the Effective Date.
ARTICLE 2
EMPLOYMENT AND TERM
2.1 EMPLOYMENT. The Company employs Executive and the Executive hereby
agrees to such employment by the Company during the Employment Term to serve as
President and Chief Executive Officer of Summit Global Logistics, Inc., with the
customary duties, authorities and responsibilities of an officer of a
corporation and such other duties, authorities and responsibilities relative to
the Company or its Affiliates that have been agreed upon in writing by the
Company and Executive. This Agreement supersedes any and all prior agreements
between Executive and the Company or the Company's predecessors in interest with
respect to Executive's employment, and any such prior agreements shall be void
and of no further force and effect as of the Effective Date.
2.2 EMPLOYMENT TERM. The "Employment Term" of this Agreement shall
commence on the Effective Date, and unless sooner terminated as provided in
Article 4, shall terminate upon the fifth (5th) anniversary of such date.
Thereafter, and unless sooner terminated as provided in Article 4, the
Employment Term shall automatically be renewed on each anniversary date of the
expiration of the initial Employment Term for a period of one (1) year, unless
and until either the Company or the Executive terminates such automatic renewal
upon sixty (60) days' advance written notice to the other of an intention not to
renew (that is, upon written notice of an intention not to renew delivered to
the other at least sixty (60) days prior to the beginning of the next one-year
period); provided, however, that in no event shall the Employment Term exceed a
period of ten (10) continuous years beginning with the Effective Date.
2.3 FULL WORKING TIME. During the Employment Term, the Executive shall
devote substantially all of his ability and attention, all of his skill and
experience and efforts during
6
normal business hours and at such other times as reasonably required for the
proper performance of his duties hereunder and to the business and affairs of
the Company. During the Employment Term, the Executive shall not, either
directly or indirectly, actively participate in any other business or accept any
employment or business office whatsoever from any other Person; provided,
however, that the foregoing shall not preclude the Executive, subject to Article
5, from: (i) serving as a director of any non-profit or charitable organization,
or any company not in competition with the Company, or (ii) making an investment
in any other business, so long as in any such case, the Executive does not
actively participate in such other business or organization and such activity
does not interfere with the Executive's ability to perform his duties hereunder
and does not constitute a conflict of interest with the Company.
ARTICLE 3
COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the Employment Term, as compensation for
services hereunder and in consideration for the protective covenants set forth
in Article 5 of this Agreement, the Executive shall be paid a base salary of
Three Hundred Fifty Thousand United States Dollars (US$350,000) for Year One,
with an annual cost of living increase of 3% for each of Year Two, Year Three,
Year Four and Year Five, and, if applicable under Section 2.2 hereof, for each
additional one-year period of the Employment Term thereafter, or such greater
amount as may from time to time be approved by the Compensation Committee (the
"Base Salary"). Cost-of-living increases shall be effective as of the first day
of Year Two, Year Three, Year Four and Year Five, respectively, and, if
applicable under Section 2.2 hereof, as of the first day of each additional
one-year period of the Employment Term thereafter, and shall be cumulative. Base
Salary shall be paid to the Executive in accordance with the Company's normal
payroll practices.
3.2 BONUSES. Such bonuses shall include the following:
3.2.1 NON-COMPETE BONUS. As consideration for the Executive
entering into this Agreement, the Company shall pay the Executive a bonus
in the amount of One Hundred Fifteen Thousand United States Dollars
(US$115,000) upon the condition that the executive agrees to be bound by
the terms of Section 5.2 of this Agreement, as set forth in Article 5
hereof, hereinafter referred to as the "Non-Compete Bonus". The
Non-Compete Bonus shall be payable in cash no later the thirtieth (30th)
day following the date of this Agreement.
3.2.2 MANAGEMENT INCENTIVE BONUSES. The Executive shall receive
an annual bonus in accordance with the terms of a grant agreement made
pursuant to the terms of the Management Incentive Plan (the "Annual Bonus
Grant Agreement"). The Executive also shall receive a multi-year bonus,
pursuant to the terms of the Management Incentive Plan, if certain
performance targets are met (the "Multi-Year Bonus Grant Agreement"). The
Annual Bonus Grant Agreement and Multi-Year Bonus Grant Agreement are
attached as Exhibits C and D, respectively, hereto. If the Management
Incentive Plan is terminated for any reason whatsoever, whether by the
Company or any other Person, the Executive shall be paid the annual bonus
and multi-year bonus that otherwise would be payable to him with respect
to the Performance Period within which the termination of
7
such Plan occurs, notwithstanding the termination of such Plan. For
purposes of the immediately preceding sentence, the Executive's annual
bonus and multi-year bonus that otherwise would be payable to him with
respect to the Performance Period within which the termination of the
Management Incentive Plan occurs shall be identical to that set forth in
Exhibits C and D, respectively, hereto, and shall be fully vested, subject
to the satisfaction of the conditions set forth in Section 5.2 of such
Plan.
3.3 EQUITY COMPENSATION. On or about the Effective Date, or as soon as
administratively practicable thereafter, the Executive shall receive grants
under the Equity Incentive Plan as follows:
3.3.1 INCENTIVE STOCK OPTIONS. A grant of an Incentive Stock
Option, as defined in the Equity Incentive Plan, in respect of 160,000
shares of Common Stock, pursuant to an option grant agreement annexed as
Exhibit E hereto.
3.3.2 STOCK APPRECIATION RIGHTS. A grant of 120,000 Stock
Appreciation Rights, as defined in the Equity Incentive Plan, each in
respect of one share of Common Stock, pursuant to a Stock Appreciation
Rights grant agreement annexed as Exhibit F hereto. The parties intend
that such grant cover the approximate combined federal and state income
tax liability associated with both (i) the number of shares of Common
Stock with respect to which the Incentive Stock Option is exercised and
(ii) the number of shares of Common Stock underlying the exercise of the
Stock Appreciation Rights used to pay for the tax liability under clause
(i).
All such grants and/or awards shall conform to the terms and conditions of the
Equity Incentive Plan and the annexed grant agreements between the Company and
the Executive. In its discretion, the Compensation Committee may make additional
grants or awards to the Executive from time to time. If the Equity Incentive
Plan is terminated for any reason whatsoever, whether by the Company or any
other Person, the Executive shall be entitled to the benefits due to him under
Exhibits E and F, respectively, hereto, notwithstanding the termination of such
Plan. For purposes of the immediately preceding sentence, the termination of the
Equity Incentive Plan shall result in all unvested Incentive Stock Options and
Stock Appreciation Rights granted to the Participant under Exhibits E and F,
respectively, to be fully vested and exercisable.
3.4 SERP BENEFITS. During the Employment Term, the Executive shall be
entitled to participate in the Summit Global Logistics, Inc. Supplemental
Executive Retirement Plan (the "SERP") in accordance with the terms thereof.
Such eligibility to participate in the SERP shall commence effective as of the
later of the Effective Date or the effective date of the SERP. The SERP is
attached as Exhibit G hereto.
3.5 RETIREMENT, WELFARE AND FRINGE BENEFITS. To the maximum extent that
he is eligible under the terms of the applicable plan or program, the Executive
shall participate in the current or future plans or programs maintained by the
Company for its employees and/or senior executives that provide insurance,
medical benefits, retirement benefits, or similar fringe benefits as set forth
in SCHEDULE A attached hereto, as well as any additional plans or programs that
may be adopted that are generally applicable to senior executives; provided,
however, that if within the Employment Term, the Executive leaves the employment
of the Company and is eligible for severance benefits, then $7,500 per Year of
Service shall be added to the severance amount in
8
lieu of any forfeited (non-vested) qualified plan amount. In addition, the
Executive shall be entitled to a minimum of twenty (20) vacation days for each
calendar year beginning with or within a Year of Service, which must be taken in
accordance with the Company's vacation policy then in effect. The Executive
shall also be entitled at least six (6) days of sick day leave, seven (7)
personal days leave and seven (7) fixed holidays for each calendar year
beginning with or within a Year of Service, which must be taken in accordance
with the Company's applicable policies then in effect. Unused vacation days,
sick days or personal days shall not carry forward into the subsequent year. In
the event that the Company establishes a more favorable vacation, sick leave or
personal day policy generally applicable to senior executives, the Executive
shall be entitled to any such additional benefits. During the Employment Term,
the Company shall pay the Executive an automobile allowance, which shall not
exceed $1,250 per month, plus an annual inflation adjustment reflecting market
conditions. The Executive is responsible for the tax consequences of the
personal usage of the automobile. The Executive shall be entitled to a $5,000
per year golf, health, country and/or other recreational club membership
allowance for each Year of Service, to be allocated among the foregoing as the
Executive sees fit. The Executive is responsible for the tax consequences of the
personal usage of the golf, health, country and/or other recreational club
membership. In addition, or in lieu of the Company policy for executives with
respect to annual physical examinations, during each Year of Service, the
Executive shall be reimbursed up to $1000 for an annual physical examination
conducted by a physician designated by the Executive.
3.6 INDEMNIFICATION AND INSURANCE.
3.6.1 D&O INSURANCE. During the entirety of the Employment Term,
the Company shall cause the Executive to be covered by and named as an
insured or as a member of a class of insured under any policy or contract
of insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as an
officer or director of the Company or service in other capacities at its
request ("D&O Insurance Coverage"). The D&O Insurance Coverage provided to
the Executive pursuant to this Section 3.6.1 shall be of the same scope
and on the same terms and conditions as the coverage (if any) provided to
other officers or directors of the Company and shall continue for so long
as the Executive shall be subject to personal liability relating to such
service.
3.6.2 EPLI INSURANCE. During the entirety of the Employment Term,
the Company shall cause the Executive to be covered by and named as an
insured or as a member of a class of insured under any policy or contract
of insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as a
director or officer of the Company, where such personal liability could
arise under or in connection with, or be attributable to, the Company's
employment practices and procedures "EPLI Insurance Coverage"). The EPLI
Insurance Coverage provided to the Executive pursuant to this Section
3.6.2 shall be of the same scope and on the same terms and conditions as
the coverage (if any) provided to other officers or directors of the
Company and shall continue for so long as the Executive shall be subject
to personal liability relating to such service.
3.6.3 INDEMNIFICATION. To the maximum extent permitted under
applicable law, and provided that the Executive has acted within the scope
of his authority hereunder, the
9
Company shall indemnify the Executive against and hold him harmless from
any costs, liabilities, losses and exposures (each, a "Cost," and
collectively, "Costs") to the fullest extent and on the most favorable
terms and conditions that similar indemnification is offered to any
director or officer of the Company or any subsidiary or Affiliate thereof
and shall survive the termination of this Agreement and continue for so
long as the Executive shall be subject to personal liability relating to
such service; provided, however, that the Company shall not indemnify and
hold harmless the Executive from a Cost to the extent that such Cost is
attributable to the Executive's (i) willful misconduct or gross negligence
in the performance of his duties or exercise of his authority hereunder or
(ii) material breach of any of the provisions of this Agreement.
3.7 EXPENSES. The Company shall pay or reimburse the Executive for
reasonable business expenses actually incurred or paid by the Executive during
the Employment Term, in the performance of his services hereunder; provided,
however, that such expenses are consistent with the Company's policy. Such
payment or reimbursement is expressly conditioned upon presentation of expense
statements or vouchers or other supporting documentation by the Executive in a
manner that is acceptable to the Company and otherwise in accordance with the
Company's policy then in effect.
3.8 DEDUCTIONS. The Company shall deduct from all compensation or
benefits payable pursuant to this Agreement such payroll, withholding and other
taxes and medical, pension and other benefits in accordance with the Company's
benefit programs and the Executive's selections and as may in the reasonable
opinion of the Company be required by law and any such additional amounts
requested in writing by the Executive.
ARTICLE 4
TERMINATION
4.1 GENERAL. The Company shall have the right to terminate the
employment of the Executive at any time with or without Cause and the Executive
shall be paid the Standard Termination Entitlements (as defined in Section
4.3.1).
4.2 TERMINATION UNDER CERTAIN CIRCUMSTANCES.
4.2.1 TERMINATION WITHOUT SEVERANCE BENEFITS. In the event the
Executive's employment with the Company is terminated prior to the
expiration of the Employment Term by reason of (i) the Executive's
resignation without Good Reason, (ii) the Executive's death or (iii) the
Executive's discharge by the Company for Cause prior to the occurrence of
a Change in Control, this Agreement shall terminate including, without
limitation, the Company's obligations to provide any compensation,
benefits or severance to the Executive under Article 3 of this Agreement
or otherwise, other than the Standard Termination Entitlements (as defined
in section 4.3.1).
4.2.2 DISABILITY. The Company may terminate the Executive's
employment upon the Executive's Disability. In such event, in addition to
the Standard Termination
10
Entitlements (as defined in section 4.3.1), the Company shall continue to
pay the Executive his Base Salary in accordance with the Company's normal
payroll practices, at the annual rate in effect for him immediately prior
to the termination of his employment, during a period ending on the
earliest of: (a) the date on which long-term disability insurance benefits
are first payable to him under any long-term disability insurance plan
covering employees of the Company; and (b) the date of his death. A
termination of employment due to Disability under this Section 4.2.2 shall
be effected by notice of termination given to the Executive by the Company
and shall take effect on the later of the effective date of termination
specified in such notice or the date on which the notice of termination is
deemed given to the Executive.
4.2.3 TERMINATION WITH SEVERANCE BENEFITS. In the event that the
Executive's employment with the Company is terminated by the Executive
prior to the expiration of the Employment Term for Good Reason or by the
Company prior to the expiration of the Employment Term other than for
Cause or Disability, the Company shall pay the Standard Termination
Entitlements (as defined in section 4.3.1) and the Severance Benefits (as
defined in section 4.3.2); provided, however, that any payment required by
this section 4.2.3 is expressly conditioned upon:
4.2.3.1 The Executive's continued material compliance with
the terms of this Agreement, including, without
limitation, Article 5; and
4.2.3.2 The Executive's resignation from any and all
positions which he holds as an officer, director
or committee member with respect to the Company or
any Affiliate thereof.
4.3 Standard Termination Entitlements; Severance Benefits.
4.3.1 STANDARD TERMINATION ENTITLEMENTS. For all purposes of this
Agreement, the Executive's "Standard Termination Entitlements" shall mean
and include:
4.3.1.1 the Executive's earned but unpaid compensation
(including, without limitation, Base Salary, and
all other items which constitute wages under
applicable law, interpreting the term "wages" in
the broadest possible sense) as of the date of his
termination of employment. This payment shall be
made at the time and in the manner prescribed by
law applicable to the payment of wages including,
specifically, payment for accrued, but unused
vacation days;
4.3.1.2 reimbursement for reasonable business expenses and
authorized travel expenses incurred but still
outstanding; and
4.3.1.3 the benefits, if any, due to the Executive, and
the Executive's estate, surviving dependents or
his designated beneficiaries under the employee
benefit plans and programs and compensation plans
and programs maintained for the benefit of, or
covering, the officers, executives and employees
of the
11
Company, including, but not limited to, all plans
or arrangements listed on SCHEDULE A, the Equity
Incentive Plan and the Management Incentive Plan.
The time and manner of payment or other delivery
of these benefits and the recipients of such
benefits shall be determined according to the
terms and conditions of the applicable plans and
programs.
4.3.2 SEVERANCE BENEFITS. For all purposes of this Agreement, the
Executive's "Severance Benefits" shall mean the benefits set forth in
Exhibit H. If the Summit Global Logistics, Inc. Severance Benefit Plan, as
set forth in Exhibit H, is terminated for any reason whatsover, whether by
the Company or any other Person, the Executive shall be paid severance
benefits identical to those set forth in Appendix A of such Plan,
notwithstanding the termination of such Plan.
ARTICLE 5
RESTRICTIVE COVENANTS
5.1 PROPRIETARY INFORMATION.
5.1.1 DISCLOSURE DURING THE EMPLOYMENT TERM. Subject to Section
5.5 hereof, the Executive shall promptly disclose to the Company in such
form and manner as the Company may reasonably require (a) all operations,
systems, services, methods, developments, inventions, improvements and
other information or data pertaining to the business or activities of the
Company and its Affiliates as are conceived, originated, discovered or
developed by the Executive during the Employment Term and (b) such
information and data pertaining to the business, operations, personnel,
activities, financial affairs, and other information relating to the
Company and its Affiliates and their respective customers, suppliers,
employees and other persons having business dealings with the Company and
its Affiliates as may be reasonably required for the Company to operate
its business. It is understood that such information is proprietary in
nature and shall (as between the Company and Executive) be for the
exclusive use and benefit of the Company and shall be and remain the
property of the Company both during the Employment Term and thereafter.
5.1.2 DISCLOSURE AFTER EMPLOYMENT. In the event that the
Executive leaves the employ of the Company for any reason, including,
without limitation, the expiration of the Employment Term, the Executive
shall deliver to the Company any and all devices (including any lap top,
personal hand-held devices or mobile telephone), records, data, notes,
reports, proposals, lists, correspondence, specifications, drawings,
blueprints, sketches, materials, equipment, other documents or property
belonging to the Company or any Affiliate thereof or any of their
respective successors or assigns.
5.2 NON-COMPETITION. During the Employment Term and for twelve months
after the date employment with the Company has ended, the Executive agrees, and
shall cause each Person Controlled by him to agree, that he shall not, directly
or indirectly, or through any Person Controlled by the Executive: (a) engage in
any logistic activities competitive with the business of the Company and its
Affiliates for his or their own account or for the account of any other
12
Person, or (b) become interested in any Person engaged in logistic activities
competitive with the business of the Company and its Affiliates as a partner,
shareholder, member, principal, agent, employee, trustee, consultant or in any
other relationship or capacity.
5.3 NON-SOLICITATION. During the Employment Term and for a period of
twelve months after the date employment with the Company has ended, the
Executive will not, directly or indirectly, use proprietary knowledge or
information relating to the Company or its Affiliates obtained during the course
of the Executive's employment with the Company for his own benefit or the
benefit of any third party with the intention to, or which a reasonable person
would construe to, (a) interfere with or disrupt any present relationship,
contractual or otherwise, between the Company or its Affiliates and any
customer, supplier, employee, consultant or other person having business
dealings with the Company or its Affiliates, or (b) employ or solicit the
employment or engagement by others of any employee or consultant of the Company
or its Affiliates who was such an employee or consultant at the time of
termination of the Executive's employment hereunder. Upon leaving the employment
of the Company, the Executive shall notify his new employer of his obligations
under this Agreement and grants consent to notification by the Company to the
Executive's new employer concerning Executive's rights and obligations under
this Agreement.
5.4 NON-DISCLOSURE. Except with the prior written consent of the Company
in each instance or as may be reasonably necessary to perform the Executive's
services hereunder, the Executive shall not disclose, use, publish, or in any
other manner reveal, directly or indirectly, at any time during or after the
Employment Term, any Confidential Information relating to the Company or any
Affiliate thereof acquired by him prior to, during the course of, or incident
to, his employment hereunder; provided, however, that necessary or appropriate
disclosures may be made to the Executive's legal counsel.
5.5 OWNERSHIP OF INTELLECTUAL PROPERTY. Subject to applicable law, the
Executive acknowledges and agrees that all work performed, and all ideas,
concepts, materials, products, software; documentation, designs, architectures,
specifications, flow charts, test data, programmer's notes, deliverables,
improvements, discoveries, methods, processes, or inventions, trade secrets or
other subject matter related to the Company's business (collectively,
"Materials") conceived, developed or prepared by the Executive alone, or with
others, during the period of Executive's employment by the Company in written,
oral, electronic, photographic, optical or any other form are the property of
the Company and its successors or assigns, and all rights, title and interest
therein shall vest in the Company and its successors or assigns, and all
Materials shall be deemed to be works made for hire and made in the course of
the Executive's employment by the Company. To the extent that title to any
Materials has not or may not, by operation of law, vest in the Company and its
successors or assigns, or such Materials may not be considered works made for
hire. Notwithstanding the foregoing, the parties acknowledge and understand that
Executive may previously have developed and may continue to develop certain
ideas, concepts and designs which are unrelated to the business of the Company
and may continue to do so provided that such activities do not interfere with
his duties under this Agreement.
5.6 REASONABLE LIMITATIONS. Executive acknowledges that given the nature
of the Company's business, the covenants contained in this Article 5 contain
reasonable limitations as to time, geographical area and scope of activity to be
restrained, and do not impose a greater
13
restraint than is necessary to protect and preserve the Company's business and
to protect the Company's legitimate business interests. If, however, this
Article 5 is determined by any arbitrator to be unenforceable by reason of its
extending for too long a period of time or over too large a geographic area or
by reason of its being too extensive in any other respect, or for any other
reason, it will be interpreted to extend only over the longest period of time
for which it may be enforceable and/or over the largest geographical area as to
which it may be enforceable and/or to the maximum extent in all other aspects as
to which it may be enforceable, all as determined by such court or arbitrator in
such action.
5.7 SURVIVAL OF PROTECTIVE COVENANTS. Each covenant on the part of
Executive contained in this Article 5 shall be construed as an agreement
independent of any other provision of this Agreement, unless otherwise indicated
herein, and shall survive the termination of Executive's employment under this
Agreement.
ARTICLE 6
DISPUTE RESOLUTION
6.1 ARBITRATION OF DISPUTES. Both parties agree that all controversies
or claims that may arise between the Executive and the Company in connection
with this Agreement shall be settled by arbitration. The parties further agree
that the arbitration shall be held in the State of New Jersey, and administered
by the American Arbitration Association under its Commercial Arbitration Rules,
applying New Jersey law.
6.1.1 QUALIFICATIONS OF ARBITRATOR. The arbitration shall be
submitted to a single arbitrator chosen in the manner provided under the
rules of the American Arbitration Association. The arbitrator shall be
disinterested and shall not have any significant business relationship
with either party, and shall not have served as an arbitrator for any
disputes involving the Company or any of its Affiliates more than twice in
the thirty-six (36) month period immediately preceding his or her date of
appointment. The arbitrator shall be a person who is experienced and
knowledgeable in employment and executive compensation law and shall be an
attorney duly licensed to practice law in one or more states.
6.1.2 POWERS OF ARBITRATOR. The arbitrator shall not have the
authority to grant any remedy which contravenes or changes any term of
this Agreement and shall not have the authority to award punitive or
exemplary or damages under any circumstances. The parties shall equally
share the expense of the arbitrator selected and of any stenographer
present at the arbitration. The remaining costs of the arbitrator
proceedings shall be allocated by the arbitrator, except that the
arbitrator shall not have the power to award attorney's fees.
6.1.3 EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall
render its decision within thirty (30) days after termination of the
arbitration proceeding, which decision shall be in writing, stating the
reasons therefor and including a brief description of each element of any
damages awarded. The decision of the arbitrator shall be final and
14
binding. Judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof.
6.2 SERVICE OF PROCESS. The parties agree that service of process may be
made on it by personal service of a copy of the summons and complaint or other
legal process in any such suit, action or proceeding, or by registered or
certified mail (postage prepaid) to its address specified in Section 7.1 (or
applicable forwarding address), or by any other method of service provided for
under the applicable laws in effect in the applicable jurisdiction.
ARTICLE 7
GENERAL PROVISIONS
7.1 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Executive: Robert Agresti
12 Hedden Place
New Providence, NJ 07974
If to the Company: Summit Global Logistics, Inc.
547 Boulevard
Kenilworth, NJ 07033
with a copy to: David D. Gammell, Esq.
Brown Rudnick Berlack Israels LLP
One Financial Center
Boston, MA 02111
or to such other address as the party to whom notice is given may have
previously furnished to the other parties hereto in writing in the manner set
forth above.
7.2 ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement between the Executive and the Company with respect to the Company's
employment of the Executive and supersedes any and all prior agreements and
understandings, written or oral, with respect thereto.
7.3 AMENDMENTS AND WAIVERS. Any term of this Agreement or any Schedule,
Exhibit or attachment hereto may be amended only by (a) an instrument in writing
and signed by the party against whom such amendment is sought to be enforced,
and (b) in the case of the Company, such amendment also must be duly authorized
by an appropriate resolution of the Company. In addition, any term of this
Agreement or any Schedule, Exhibit or attachment
15
hereto may be waived by the party against whom the obligation runs to by an
instrument in writing signed by such party and delivered to the Company as
reasonable time prior to the effective date of the waiver.
7.4 SUCCESSORS AND ASSIGNS. The Company shall have the right to assign
this Agreement, subject to the Executive's consent which shall not be
unreasonably withheld and subject to. This Agreement shall inure to the benefit
of, and be binding upon (a) the parties hereto, (b) the heirs, administrators,
executors and personal representatives of the Executive and (c) the successors
and assigns of the Company as provided herein.
7.5 GOVERNING LAW. This Agreement, including the validity hereof and the
rights and obligations of the parties hereunder, and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the laws of the State of New Jersey without
giving effect to any conflicts of law provisions or rule, that would cause the
application of the laws of any other jurisdiction.
7.6 SEVERABILITY. If any provisions of this Agreement as applied to any
part or to any circumstance shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement.
7.7 NO CONFLICTS. The Executive represents to the Company that the
execution, delivery and performance by the Executive of this Agreement does not
and will not conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under any contract,
agreement or understanding, whether oral or written, to which the Executive is
or was a party or of which the Executive is or should be aware.
7.8 SURVIVAL. The rights and obligations of the Company and Executive
pursuant to Articles 4, 5 and 6 shall survive the termination of the Executive's
employment with the Company and the expiration of the Employment Term.
7.9 CAPTIONS. The headings and captions used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.
7.10 COUNTERPARTS. This Agreement be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
_____________________________
Robert Agresti
SUMMIT GLOBAL LOGISTICS, INC.
By: _________________________
Name
Title:
17
SCHEDULE A
EMPLOYEE BENEFIT SUMMARY TERM SHEET
As of January 1, 2007, the Executive shall be eligible to participate in
all of the retirement and welfare benefit plans sponsored, maintained or
contributed to by FMI International, LLC and/or its affiliates or subsidiaries,
which plans shall be amended accordingly. Without in any way limiting the
generality of the foregoing, the Executive shall be entitled to participate in
the following plans:
o FMI International, LLC 401(k) Profit Sharing Plan;
o FMI International West Health Plan;
o FMI International, LLC PPO Health Insurance Plan;
o FMI International, LLC Dental Plan; and the
o FMI International, LLC Life Insurance Plan.
18
EXHIBIT C
ANNUAL BONUS GRANT AGREEMENT
THIS ANNUAL BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between Robert
Agresti (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the 8th day of November, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make annual bonus payments to the Executive for each Year of Service, as defined
in the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in the Employment Agreement,
the receipt and sufficiency of which are hereby acknowledged, the Executive and
the Company agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement,
shall have the following meanings, unless the context clearly requires otherwise
(such definitions to be equally applicable to both the singular and plural of
the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto in
the Management Incentive Plan.
1.2 "BONUS" means the annual incentive bonus to be paid
hereunder with respect to a given Fiscal Year.
1.3 "EBITDA" means the Company's earnings before income tax,
plus depreciation and amortization, as computed in accordance with
United States GAAP and in a manner consistent with the methods used
in the Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or
restructuring or impairment charges, as determined by the Company's
independent public accountants in accordance with GAAP or (ii)
changes in accounting, unless, in each case, the Committee, as
defined in the Management Incentive Plan, decides otherwise within
the Determination Period, as defined in the Management Incentive
Plan.
1.4 "EBITDA TARGET" means the Company's EBITDA for Fiscal
Year 2007, 2008, 2009 or 2010, as applicable.
1.5 "FISCAL YEAR" means the calendar year.
1.6 "GAAP" means generally accepted accounting principles.
1.7 "PERFORMANCE PERIOD" shall have the meaning ascribed
thereto in the Management Incentive Plan.
2. EBITDA TARGETS.
2.1 The EBITDA Target for Fiscal Year 2007 shall be
$__________.
2.2 The EBITDA Target for Fiscal Year 2008 shall be
$__________.
2.3 The EBITDA Target for Fiscal Year 2009 shall be
$__________.
2.4 The EBITDA Target for Fiscal Year 2010 shall be
$__________.
3. ANNUAL INCENTIVE BONUSES.
3.1 The Bonus for each of Fiscal Year 2007, Fiscal Year
2008, Fiscal Year 2009 and Fiscal Year 2010 shall be as follows:
3.1.1 If at least 80% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive shall
receive a Bonus for such Fiscal Year equal to 50% of his
Base Salary for the Performance Period beginning with or
within such Fiscal Year.
3.1.1.2 If at least 90% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive shall
receive a Bonus for such Fiscal Year equal to 75% of his
Base Salary for the Performance Period beginning with or
within such Fiscal Year.
3.1.1.3 If at least 100% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive shall
receive a Bonus for such Fiscal Year equal to 100% of
his Base Salary for the Performance Period beginning
with or within such Fiscal Year.
3.1.1.4 For each percentage point, up to 50 percentage
points by which the EBITDA Target for the applicable
Fiscal Year is exceeded, the Executive shall receive an
additional Bonus equal to 3% of his Base Salary.
3.1.1.5 For each percentage point over 50 percentage
points, up to 50 additional points, by which the EBITDA
Target for the applicable Fiscal Year is exceeded, the
Executive shall receive an additional Bonus equal to 4%
of his Base Salary.
3.2 Except as otherwise provided herein, bonus amounts shall
be payable to the Executive in accordance with the terms and
conditions of the Management Incentive Plan.
4. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and
the Company shall comply with all of the terms thereof applicable to annual
incentive awards. In the event of any conflict between the terms of this
Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
5. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
__________________________________
SUMMIT GLOBAL LOGISTICS, INC.
By: _______________________________
Name
Title:
EXHIBIT D
MULTI-YEAR BONUS GRANT AGREEMENT
THIS MULTI-YEAR BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between Robert
Agresti (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the __ day of __________, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make a multi-year bonus payment to the Executive if certain performance targets
of the Company are satisfied as of the end of the Employment Term, as defined in
the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in the Employment Agreement,
the receipt and sufficiency of which are hereby acknowledged, the Executive and
the Company agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement,
shall have the following meanings, unless the context clearly requires otherwise
(such definitions to be equally applicable to both the singular and plural of
the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto
in the Management Incentive Plan.
1.2 "BONUS" means the multi-year incentive bonus to be paid
hereunder with respect to the Employment Term.
1.3 "DELTA ONE" means the excess, if any, of EBITDA for
Fiscal Year 2009 over the EBITDA Target for Fiscal Year 2007.
1.4 "DELTA TWO" means the excess, if any, of EBITDA for
Fiscal Year 2010 over the EBITDA Target for Fiscal Year 2008.
1.5 "EBITDA" means the Company's earnings before income tax,
plus depreciation and amortization, as computed in accordance with
United States GAAP and in a manner consistent with the methods used
in the Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or
restructuring or impairment charges, as determined by the Company's
independent public accountants in accordance with GAAP or (ii)
changes in accounting, unless, in each case, the Committee, as
defined in the Management Incentive Plan, decides otherwise within
the Determination Period, as defined in the Management Incentive
Plan.
1.6 "EBITDA TARGET" means
1.6.1 For Fiscal Year 2007, $__________.
1.6.2 For Fiscal Year 2008, $__________.
1.7 "FIRST PERFORMANCE PERIOD" means the three-consecutive
Fiscal Year period beginning on the first day of Fiscal Year 2007
and ending on the last day of Fiscal Year 2009.
1.8 "FISCAL YEAR" means the calendar year.
1.9 "FUNDAMENTAL TRANSACTION" has the meaning as defined in
the Management Incentive Plan.
1.10 "GAAP" means generally accepted accounting principles.
1.11 "PERFORMANCE PERIOD" means the First Performance Period
or the Second Performance Period, as applicable.
1.12 "SECOND PERFORMANCE PERIOD" means the three-consecutive
Fiscal Year period beginning on the first day of Fiscal Year 2008
and ending on the last day of Fiscal Year 2010.
2. MULTI-YEAR BONUS.
2.1 FIRST PERFORMANCE PERIOD. If, with respect to the First
Performance Period, Delta One, expressed as a percentage of the
EBITDA Target for Fiscal Year 2007, equals or exceeds 33%, the
Executive shall be paid a Bonus in Fiscal Year 2010 equal to one and
one half (1.5) times his Base Salary for Fiscal Year 2007.
2.2 SECOND PERFORMANCE PERIOD. If, with respect to the
Second Performance Period, Delta Two, expressed as a percentage of
the EBITDA Target for Fiscal Year 2008, equals or exceeds 33%, the
Executive shall be paid a Bonus in Fiscal Year 2011 equal to one and
one half (1.5) times his Base Salary for Fiscal Year 2008.
3. PAYMENT UPON OCCURRENCE OF FUNDAMENTAL TRANSACTION. If a
Fundamental Transaction occurs at any time both (i) prior to the payment of any
amount pursuant to Section 2 hereof and (ii) on or prior to December 31, 2010,
then, in lieu of making any payment to the Executive pursuant to Section 2
hereof, the Company shall pay to the Executive, promptly following the
occurrence of the Fundamental Transaction, an amount in immediately available
funds, equal to one and one half (1.5) times his Base Salary. For this purpose,
Base Salary shall mean Base Salary for Fiscal Year 2007, if the Fundamental
Transaction occurs on or prior to the last day of Fiscal Year 2009, and Base
Salary for 2008, if the Fundamental Transaction occurs during Fiscal Year 2010.
Payment shall be made in the form of a single lump sum from the sales proceeds
received by the Company pursuant to the terms of the Fundamental Transaction.
4. PAYMENT OF BONUS AMOUNTS. Except as otherwise provided herein,
bonus amounts shall be payable to the Executive in accordance with the terms and
conditions of the Management Incentive Plan.
5. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and the Company shall comply with all of the terms thereof applicable
to annual incentive awards. In the event of any conflict between the terms of
this Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
6. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
_____________________________________
SUMMIT GLOBAL LOGISTICS, INC.
By: _________________________________
Name
Title:
EXHIBIT E
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
Unless otherwise defined herein, the terms defined in the 2006 Equity
Incentive Plan (the "Plan") shall have the same defined meanings in this Notice
of Stock Option Award and the attached Stock Option Award Terms, which are
incorporated herein by reference (together, the "AWARD AGREEMENT"). Terms not
defined herein shall have their respective meanings under the Plan.
PARTICIPANT (the "PARTICIPANT")
Robert Agresti
GRANT
The undersigned Participant has been granted an Option to purchase Common Stock
of Summit Global Logistics, Inc. (the "COMPANY"), subject to the terms and
conditions of the Plan and this Award Agreement, as follows:
DATE OF GRANT November 8, 2006 TOTAL NUMBER OF
SHARES GRANTED 160,000
VESTING COMMENCEMENT DATE November 8, 2006 TYPE OF OPTION [X] Incentive Stock Option
EXERCISE PRICE PER SHARE $10.00 Non-Statutory Stock Option
TOTAL EXERCISE PRICE $1,600,000 TERM/EXPIRATION DATE 5 years from Date of Grant
VESTING SCHEDULE:
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
ANNIVERSARY OF GRANT DATE % OF GRANT (OR # OF SHARES) VESTED
One-Year Anniversary of Grant Date 50%
Two-Year Anniversary of Grant Date 100%
The Option shall vest in full upon the earliest to occur of a Change in Control,
the Participant's death, the Participant's Disability, the Participant's
Retirement, the Company's (or any parent's or subsidiary's thereof) termination
of the Participant's employment without Cause or the Participant's termination
of his employment with the Company (or any parent or subsidiary thereof) for
Good Reason.
Upon the execution by the Company of a definitive acquisition, merger or similar
agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing, a Change in
Control would occur, the Committee, in its sole discretion, and notwithstanding
any provision of the Transaction Agreement or the Plan, including, but not
limited to, Section 13f.i. thereof, to the contrary, shall (i) require the
acquiring or surviving entity (if not the Company) to assume this Option in
accordance with its terms or (ii) pay the Participant, for each Share not
previously exercised, the greater of (A) the transaction consideration per Share
or (B) the Exercise Price per Share. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of this Option shall cease, and unvested Option Shares shall be
forfeited, upon the Company's (or any parent's or subsidiary's thereof)
termination of the Participant's employment for Cause or the Participant's
termination of his employment with the Company (or any parent or subsidiary
thereof) other than for Good Reason.
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
_________________________________ _________________________________
Signature By
________________________________ _________________________________
Robert Agresti Title
12 Hedden Place
New Providence, NJ 07974
2
SUMMIT GLOBAL LOGISTICS, INC.
STOCK OPTION
AWARD TERMS
1. GRANT OF OPTION. The Committee hereby grants to the Participant
named in the Notice of Stock Option Grant an option (the "OPTION")
to purchase the number of Shares set forth in the Notice of Stock
Option Award, at the exercise price per Share set forth in the
Notice of Stock Option Grant (the "EXERCISE PRICE"), and subject to
the terms and conditions of the 2006 Equity Incentive Plan (the
"PLAN"), which is incorporated herein by reference. In the event of
a conflict between the terms and conditions of the Plan and this
Stock Option Award Agreement, the terms and conditions of the Plan
shall prevail.
If designated in the Notice of Stock Option Grant as an Incentive
Stock Option ("ISO"), this Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the extent that it exceeds the $100,000 limitation
rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION.
i RIGHT TO EXERCISE. This Option may be exercised during its
term in accordance with the Vesting Schedule set out in the
Notice of Stock Option Award and with the applicable
provisions of the Plan and this Award Agreement.
ii METHOD OF EXERCISE. This Option shall be exercisable by
delivery of an exercise notice in the form attached as EXHIBIT
A (the "EXERCISE NOTICE") which shall state the election to
exercise the Option, the number of Shares with respect to
which the Option is being exercised (the "EXERCISED SHARES")
and the Participant's agreement to be subject to such other
representations and agreements as may be required by the
Company. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice
accompanied by payment of the aggregate Exercise Price in
accordance with the cashless exercise provisions of Section 6g
of the Plan.
3. TERMINATION. This Option shall be exercisable for three months after
the Participant ceases to be an Employee; provided, however, if the
relationship is terminated by the Company for Cause, or voluntarily
by the Participant other than for Good Reason, the Option shall
terminate immediately. Upon the Participant's death or Disability,
this Option may be exercised for twelve (12) months after the
termination of employment. In no event may Participant exercise this
Option after the Term/Expiration Date as provided above.
4. RESTRICTIONS ON EXERCISE. This Option may not be exercised until
such time as the Plan has been approved by the stockholders of the
Company, or if the method of payment of consideration for such
shares would constitute a violation of any applicable law.
5. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Participant
only by Participant. The terms of the Plan and this Award Agreement
shall be binding upon the executors, Committees, heirs, successors
and assigns of the Participant.
6. TERM OF OPTION. This Option may be exercised only within the Term
set out in the Notice of Stock Option Award which Term may not
exceed ten (10) years from the Date of Grant, and may be exercised
during such Term only in accordance with the Plan and the terms of
this Award Agreement.
7. UNITED STATES TAX CONSEQUENCES. Set forth below is a brief summary
as of the date of this Option of some of the United States federal
tax consequences of exercise of this Option and disposition of the
Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
i EXERCISE OF ISO. If this Option qualifies as an Incentive
Stock Option, there will be no regular federal income tax
liability upon the exercise of the Option, although the
excess, if any, of the Fair Market Value of the Shares on the
date of exercise over the Exercise Price will be treated as an
adjustment to the alternative minimum tax for federal tax
purposes and may subject the Participant to the alternative
minimum tax in the year of exercise.
ii EXERCISE OF NONSTATUTORY STOCK OPTION. There may be a regular
federal income tax liability upon the exercise of a
Nonstatutory Stock Option. The Participant will be treated as
having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the
Exercise Price. If the Participant is an Employee or a former
Employee, the Company will be required to withhold from the
Participant's compensation or collect from the Participant and
pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time
of exercise, and may refuse to honor the exercise if such
withholding amounts are not delivered at the time of exercise.
iii NOTICE OF DISQUALIFYING DISPOSITION OF INCENTIVE STOCK OPTION
SHARES. If this Option is an Incentive Stock Option, and if
the Participant sells or otherwise disposes of any of the
Shares acquired pursuant to the Incentive Stock Option,
including through a cashless exercise, on or before the later
of (1) the date two
2
years after the Date of Grant, or (2) the date one year after
the date of exercise, the Participant shall immediately notify
the Company in writing of such disposition. The Participant
agrees that the Participant may be subject to income tax
withholding by the Company on the compensation income
recognized by the Participant.
iv WITHHOLDING. Pursuant to applicable federal, state, local or
foreign laws, the Company may be required to collect income or
other taxes on the grant of this Option, the exercise of this
Option, the lapse of a restriction placed on this Option, or
at other times. The Company may require, at such time as it
considers appropriate, that the Participant pay the Company
the amount of any taxes which the Company may determine is
required to be withheld or collected, and the Participant
shall comply with the requirement or demand of the Company. In
its discretion, the Company may withhold Shares to be received
upon exercise of this Option or offset against any amount owed
by the Company to the Participant, including compensation
amounts, if in its sole discretion it deems this to be an
appropriate method for withholding or collecting taxes.
Currently, neither federal income nor federal employment tax
withholding is required with respect to an Incentive Stock
Option.
8. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Award Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and
agreements of the Company and Participant with respect to the
subject matter hereof, and may not be modified (except as provided
herein and in the Plan) adversely to the Participant's interest
except by means of a writing signed by the Company and Participant.
This agreement is governed by the internal substantive laws but not
the choice of law rules of the State of New Jersey.
9. NO GUARANTEE OF CONTINUED SERVICE. PARTICIPANT ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE
HEREOF IS EARNED ONLY BY CONTINUING IN THE EMPLOYMENT AT THE WILL OF
THE COMPANY (NOT THROUGH THE ACT OF BEING ENGAGED, BEING GRANTED
THIS OPTION OR ACQUIRING SHARES HEREUNDER). PARTICIPANT FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE IN ANY WAY WITH PARTICIPANT'S RIGHT OR THE COMPANY'S RIGHT
TO TERMINATE THE RELATIONSHIP AT ANY TIME.
Participant acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof.
Participant has reviewed the Plan and this Option in
3
their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Option and fully understands all provisions of the
Option. Participant hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Committee upon any questions
arising under the Plan or this Option. Participant further agrees to
notify the Company upon any change in the residence address indicated
below.
4
EXHIBIT A
2006 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Company Name
Address
City, State, Zip Code
Attention: President
1. EXERCISE OF OPTION. Effective as of today, ______________, 200__,
the undersigned ("PARTICIPANT") hereby elects to exercise
Participant's option to purchase _________ shares of the Common
Stock (the "SHARES") of_________ (the "COMPANY") under and pursuant
to the 2006 Equity Incentive Plan (the "PLAN") and the Stock Option
Award Agreement dated ____________, 200__ (the "AWARD AGREEMENT").
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Award
Agreement, and pursuant to the cashless exercise provisions of
Section 6g of the Plan.
3. REPRESENTATIONS OF PARTICIPANT. Participant acknowledges that
Participant has received, read and understood the Plan and the Award
Agreement and agrees to abide by and be bound by their terms and
conditions.
4. RIGHTS AS STOCKHOLDER. The Participant shall not have any rights of
a stockholder upon exercise of the Option, which shall be settled
solely in cash.
5. TAX CONSULTATION. Participant understands that Participant may
suffer adverse tax consequences as a result of Participant's
purchase or disposition of the Shares. Participant represents that
Participant has consulted with any tax consultants Participant deems
advisable in connection with the purchase or disposition of the
Shares and that Participant is not relying on the Company for any
tax advice.
6. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns
of the Company. Subject to the restrictions on transfer herein set
forth, this Agreement shall be binding upon Participant and his or
her heirs, executors, Committees, successors and assigns.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or by the Company
forthwith to the Committee which shall review such dispute at its
next regular meeting. The resolution of such a dispute by the
Committee shall be final and binding on all parties.
8. GOVERNING LAW. This Exercise Notice is governed by the internal
substantive laws but not the choice of law rules of the State of New
Jersey.
5
9. ENTIRE AGREEMENT. The Plan and Award Agreement are incorporated
herein by reference. This Agreement, the Plan, the Award Agreement
(including all exhibits) and the Investment Representation Statement
constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Participant with
respect to the subject matter hereof, and may not be modified
adversely to the Participant's interest except by means of a writing
signed by the Company and Participant.
Submitted by: Accepted by:
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
______________________________________ _____________________________________
Signature By
______________________________________ _____________________________________
Print Name Title
ADDRESS: ADDRESS:
______________________________________
Type in address
______________________________________ City, State, Zip code
_____________________________________
Date Received
6
EXHIBIT F
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
Name of SAR Holder: Robert Agresti
Address of SAR Holder: 12 Hedden Place, New Providence, NJ 07974
Number of SARs: 120,000, each representing a share of Common Stock
Initial SAR Value: $1,200,000
Grant Date: November 8, 2006
Pursuant to and in accordance with the Summit Global Logistics, Inc. 2006
Equity Incentive Plan, as amended from time to time (the "Plan"), this Stock
Appreciation Rights Agreement (the "SAR Agreement") evidences the issuance to
the person named above (the "SAR Holder") by Summit Global Logistics, Inc. (the
"Company"), effective as of the date set forth above (the "Grant Date"), of a
number of stock appreciation rights set forth above (the "SARs"). The SARs will
be valued in accordance with, and are subject to the terms, definitions and
provisions of, the Plan, which are incorporated herein by reference. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Plan.
Subject to the terms and conditions of the Plan, and subject to the
determination of the Compensation Committee in its sole discretion to accelerate
the vesting schedule hereunder, the SARs issued hereunder shall vest and become
vested SARs on the respective dates indicated below:
Incremental (Aggregate Number)
of SARs to be Vested SARs Vesting Date/Percent
60,000 (60,000) FIRST ANNIVERSARY OF GRANT
DATE -- 50%
60,000 (120,000) SECOND ANNIVERSARY OF GRANT
DATE -- 100%
All SARs granted hereunder shall be vested in full upon the earliest to
occur of a Change in Control or the death, Disability, Retirement or voluntary
termination for Good Reason of the SAR Holder. Vested SARs may be exercised at
any time within five (5) years following the Grant Date.
Upon the execution by the Company of a definitive acquisition, merger or
similar agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing, a
Change in Control
7
would occur, the Committee, in its sole discretion, and notwithstanding any
provision of the Transaction Agreement or the Plan, including, but not limited
to, Section 13.f.i. thereof, to the contrary, shall (i) require the acquiring or
surviving entity (if not the Company) to assume the SARs in accordance with
their terms or (ii) pay the Participant, for each share of Common Stock
underlying each SAR not previously exercised, the greater of (A) the transaction
consideration per share of Common Stock underlying each SAR or (B) the Initial
SAR Value per share of Common Stock. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of the SARs shall cease, and unvested SARs shall be terminated,
upon termination of employment of the SAR Holder with the Business Entity that
employs him or her for Cause or other than for Good Reason.
The SAR Holder shall have no rights as a stockholder of the Company by
virtue of having been issued the SARs and shall have only the rights
specifically provided in the Plan.
By executing this SAR Agreement, the SAR Holder acknowledges receipt of
the Plan (a copy of which is attached hereto) and represents that he or she has
read and the terms and provisions of the Plan and accepts the issuance of the
SARs subject to all of such terms and provisions.
SUMMIT GLOBAL LOGISTICS, INC.
By: ___________________________________
Name:
Title: ____________________________
ACKNOWLEDGED AND AGREED BY SAR
HOLDER:
Name:
Signature: ________________________
8
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHT
EXERCISE NOTICE
Pursuant to the provisions of the Summit Global Logistics, Inc. 2006
Equity Incentive Plan (the "Plan") and that certain Stock Appreciation Rights
Agreement by and between Summit Global Logistics, Inc. (the "Company") and
____________ (the "Grantee") as of _______________ __, 20__, I, the Grantee,
hereby exercise the Stock Appreciation Rights granted under the terms of the
Plan to the extent of __________ shares of the Common Stock of the Company (the
"SARs"). If applicable, I deliver to the Company herewith payment for tax
withholding with respect to the exercise of the SARs in the amount of
$__________.
TO BE COMPLETED BY THE GRANTEE
A. Number of SARs: ______________
B. Initial SAR Value $_____________
C. Total Initial SAR Value of
Shares (A x B): $_____________
TO BE COMPLETED BY THE COMPANY
D. Value per share of Common Stock, as of
__________, times the number of shares
being exercised (A): $_____________
E. TOTAL PAYMENT
DUE (D - C): $_____________
Date: ____________________ ____________________________________
Grantee
____________________________________
Address
____________________________________
Social Security Number
9
Exhibit G
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
this 8th day of November, 2006, by and between Paul Shahbazian, residing at 1038
Koelle Boulevard, Secaucus, NJ 07094 (the "Executive"), and Summit Global
Logistics, Inc., a Delaware corporation (the "Company").
BACKGROUND
WHEREAS, the Executive is expected to make a major contribution to
the growth, profitability and financial strength of the Company; and
WHEREAS, the Company desires to retain the services of the
Executive, and the Executive desires to be retained by the Company, on the terms
and conditions set forth below.
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in this Agreement, the receipt
and sufficiency of which are hereby acknowledged, the Company and Executive
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following terms, when used in this Agreement, shall
have the following meanings, unless the context clearly requires otherwise (such
definitions to be equally applicable to both the singular and plural of the
defined terms):
1.1.1 "AFFILIATE" means, (a) with respect to the Executive, any
other Person directly or indirectly Controlling, Controlled by, or under
common Control with the Executive and (b) with respect to the Company, (i)
any Person which directly or indirectly beneficially owns (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) securities or
other equity interests possessing more than 50% of the aggregate voting
power in the election of directors (or similar governing body) represented
by all outstanding securities of the Company or (ii) any Person with
respect to which the Company beneficially owns (within the meaning of Rule
13d-3 promulgated under the Exchange Act) securities or other equity
interests possessing more than 50% of the aggregate voting power in the
election of directors (or similar governing body) represented by, or more
than 5% of the aggregate value of, all outstanding securities or other
equity interests of such Person.
1.1.2 "BASE SALARY" shall have the meaning set forth in section
3.1.
1.1.3 "BOARD" means the Board of Directors of the Company.
1
1.1.4 "CHANGE IN CONTROL" means the occurrence of the first step
(e.g., commencement of negotiations) in a process that results in any one
of the following events:
1.1.4.1 the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934,
as amended) (the "Act") of beneficial ownership
(within the meaning of Rule 13d-3 of the Act) of
more than 20% of the (A) then outstanding voting
stock of a Company; or (B) the combined voting
power of the then outstanding securities of the
Company entitled to vote;
1.1.4.2 an ownership change in which the shareholders of
the Company before such ownership change do not
retain, directly or indirectly, at least a
majority of the beneficial interest in the voting
stock of the Company after such transaction, or in
which the Company is not the surviving company;
1.1.4.3 the direct or indirect sale or exchange by the
beneficial owners (directly or indirectly) of the
Company of all or substantially all of the stock
of the Company;
1.1.4.4 a majority of the directors comprising the entire
Board as of the Effective Date changes during any
12-month period (other than a Qualified
Successor);
1.1.4.5 a reorganization, merger or consolidation in which
the Company is a party;
1.1.4.6 the sale, exchange, or transfer of all or
substantially all of the assets of the Company;
1.1.4.7 the bankruptcy, liquidation or dissolution of the
Company; or
1.1.4.8 any transaction including the Company in which the
Company acquires an ownership interest of any
percentage in, enters into a joint venture,
partnership, alliance or similar arrangement with,
or becomes owned in any percentage by, any other
entity that is engaged in a business similar to
the business engaged in by the Company and that
has operations in North America immediately before
such transaction or within one year thereafter.
1.1.5 "CAUSE" means, as determined by the Company in its sole
discretion, the Executive's
1.1.5.1 material act of dishonesty with respect to the
Company;
1.1.5.2 conviction for a felony, gross misconduct that is
likely to have a
2
material adverse effect on the Company's business
and affairs; or
1.1.5.3 other misconduct, such as excessive absenteeism,
or material failure to comply with Company rules.
1.1.6 "CODE" means the Internal Revenue Code of 1986, as amended.
1.1.7 "COMMON STOCK" means the common stock of the Company, par
value of $.001 per share.
1.1.8 "COMPANY LOCATION" means a Company office consisting of one
or more buildings within 25 miles of each other.
1.1.9 "COMPENSATION COMMITTEE" means the Compensation Committee
of the Board or such other committee designated by the Board that
satisfies any then applicable requirements of the New York Stock Exchange,
Nasdaq, or such other principal national stock exchange on which the
Common Stock is then traded, and which consists of two or more members of
the Board, each of whom shall be an outside director within the meaning of
Section 162(m) of the Code.
1.1.10 "CONFIDENTIAL INFORMATION" means:
1.1.10.1 proprietary information, trade secrets and
know-how of the Company and/or its Affiliates;
1.1.10.2 confidential information relating to the business,
operations, systems, networks, services, data
bases, customer lists, pricing policies, business
plans, marketing plans, product development plans,
strategies, inventions and research of the Company
and/or its Affiliates; and
1.1.10.3 confidential information relating to the financial
affairs and results of operations and forecasts or
projections of the Company and/or its Affiliates;
provided that information shall not constitute Confidential
Information if such information: (i) is generally known or
reasonably knowable by Persons other than the Company or
its Affiliates or Persons employed by, in control of or
otherwise affiliated with the Company or its Affiliates,
(ii) is known or reasonably knowable by Persons other than
the Company or its Affiliates or Persons employed by, in
control of or otherwise affiliated with the Company or its
Affiliates, by reason of the action of such Person or
Persons other than the Executive or any Person acting at
the Executive's direction or with the Executive's prior
consent, (iii) was known or reasonably knowable by the
Executive, by lawful means, prior to the date of the
Executive's employment with the Company or (iv) is
compelled to be disclosed by law, regulation or legal
process.
3
1.1.11 "CONTROL" (including the terms "Controlled by" and "under
common Control with") means the possession, directly or indirectly or as a
trustee or executor, of the power to direct or cause the direction of the
management of a Person (including the direction of any Person related to
the Executive), whether through the ownership of stock, as a trustee or
executor, by contract or credit agreement or otherwise.
1.1.12 "DISABILITY" means any physical or mental condition which
renders Executive incapable of performing his essential functions and
duties hereunder for a period of at least 180 days, as determined in good
faith by a physician appointed by the Company.
1.1.13 "EFFECTIVE DATE" means the date of Closing as defined in
that certain Equity Purchase Agreement by and between Maritime Logistics
US Holdings Inc., FMI Holdco I, LLC, FMI Blocker, Inc. and each of the
Sellers set forth in Schedule A thereto, dated as of October 23, 2006.
1.1.14 "EMPLOYMENT TERM" shall have the meaning set forth in
section 2.2.
1.1.15 "EQUITY INCENTIVE PLAN" means the Summit Global Logistics,
Inc. 2006 Equity Incentive Plan, attached as Exhibit A hereto.
1.1.16 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
1.1.17 "FISCAL YEAR" means the calendar year.
1.1.18 "GOOD REASON" means the occurrence of any of the following:
1.1.18.1 without the Executive's prior written consent, any
material diminution in the Executive's authority,
duties or responsibilities, including those
pertaining to his status as a director of the
Board, if applicable; provided, however, that
prior to any termination pursuant to this Section
1.1.18.1, the Company must be given notice by the
Executive of his/her objection to such material
diminution and no less than 20 days to cure the
same;
1.1.18.2 any failure by the Company to pay the Executive
any portion of the Base Salary or other payments
to which the Executive is entitled under Sections
3.1 through 3.5 hereof, provided, however, that
prior to any termination pursuant to this Section
1.1.18.2 on account of the non-payment of Base
Salary, the Company must be given notice by the
Executive of such acts or omissions and no less
than 30 days to cure the same;
1.1.18.3 without the Executive's prior written consent, the
relocation of the principal place of the
Executive's employment to a location a further
distance than the Company Location where the
4
individual was working immediately prior to the
relocation;
1.1.18.4 a material breach by the Company of any of the
material provisions of this Agreement, provided,
however, that prior to any such termination
pursuant to this Section 1.1.18.4, the Company
must be given notice by the Executive of such acts
or omissions and no less than 20 days to cure the
same; or
1.1.18.5 an event described in Section 1.1.4.4 hereof
occurs.
1.1.19 "MANAGEMENT INCENTIVE PLAN" means the Summit Global
Logistics, Inc. 2007 Management Incentive Plan, attached as Exhibit B
hereto.
1.1.20 "PERSON" means an individual, corporation, partnership,
association, limited liability company or partnership, trust, government,
governmental agency or body, or any other group or entity, no matter how
organized and whether or not for profit.
1.1.21 "QUALIFIED SUCCESSOR" means in the event there is a vacancy
in the Board occurring between annual meetings as a result of death,
incapacity or resignation, or if one or more of the Directors shall
decline to stand for election to the Board or, if he is unable or
unwilling to so serve, then the shareholders that are party to that
certain voting agreement ("Voting Agreement") dated on or about the date
hereof between the Company and the parties thereto to elect Messrs.
Agresti, DeSaye, MacAvery and McQuiston (the "Shareholders") shall
designate one or more individuals of standing within the business world
reasonably comparable to that of such Director (each a "Qualified
Successor") as one or more successor Directors in the following manner.
The Shareholders shall select an individual to serve as the Qualified
Successor, which individual shall be independent both of the Company
(except through proposed service as a member of the Board or a subsidiary
of the Company) and of the Shareholders. The selected individual shall be
subject to the prior approval of a super-majority of the Shareholders,
which consent shall not unreasonably be withheld. A Shareholder's approval
of a designated Director shall be deemed given if such Shareholder has not
responded to a notice by the Chairman of the Board of the Company within
30 days of notice to the Shareholder of the identity of the selected
individual. Upon selection and approval hereunder, such Qualified
Successor shall for all purposes be deemed a Director of the Company and
shall be subject to the Voting Agreement in the event of his/her death,
incapacity, resignation or decision not to be a Director.
1.1.22 "TERMINATION DATE" means the date on which the Executive's
employment with the Company terminates for any reason.
1.1.23 "YEAR OF SERVICE" means the completion by the Executive of
Year One, Year Two, Year Three, Year Four , Year Five, or any additional
one-year period under Section 2.2 hereof, as applicable. For purposes of
Section 3.5 hereof, and only for such purposes, partial years of service
will be credited as one (1) Year of Service if the Executive has worked at
least 1,000 hours during the applicable year.
5
1.1.24 "YEAR ONE" means the 12-consecutive-month period beginning
on the Effective Date and ending on the day immediately prior to the first
day of Year Two.
1.1.25 "YEAR TWO" means the 12-consecutive-month period beginning
on the first anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Three.
1.1.26 "YEAR THREE" means the 12-consecutive-month period
beginning on the second anniversary of the Effective Date and ending on
the day immediately prior to the first day of Year Four.
1.1.27 "YEAR FOUR" means the 12-consecutive-month period beginning
on the third anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Five.
1.1.28 "YEAR FIVE" means the 12-consecutive-month period beginning
on the fourth anniversary of the Effective Date and ending on the day
immediately prior to the fifth anniversary of the Effective Date.
ARTICLE 2
EMPLOYMENT AND TERM
2.1 EMPLOYMENT. The Company employs Executive and the Executive hereby
agrees to such employment by the Company during the Employment Term to serve as
Chief Financial Officer of Summit Global Logistics, Inc., with the customary
duties, authorities and responsibilities of an officer of a corporation and such
other duties, authorities and responsibilities relative to the Company or its
Affiliates that have been agreed upon in writing by the Company and Executive.
This Agreement supersedes any and all prior agreements between Executive and the
Company or the Company's predecessors in interest with respect to Executive's
employment, and any such prior agreements shall be void and of no further force
and effect as of the Effective Date.
2.2 EMPLOYMENT TERM. The "Employment Term" of this Agreement shall
commence on the Effective Date, and unless sooner terminated as provided in
Article 4, shall terminate upon the fifth (5th) anniversary of such date.
Thereafter, and unless sooner terminated as provided in Article 4, the
Employment Term shall automatically be renewed on each anniversary date of the
expiration of the initial Employment Term for a period of one (1) year, unless
and until either the Company or the Executive terminates such automatic renewal
upon sixty (60) days' advance written notice to the other of an intention not to
renew (that is, upon written notice of an intention not to renew delivered to
the other at least sixty (60) days prior to the beginning of the next one-year
period); provided, however, that in no event shall the Employment Term exceed a
period of ten (10) continuous years beginning with the Effective Date.
2.3 FULL WORKING TIME. During the Employment Term, the Executive shall
devote substantially all of his ability and attention, all of his skill and
experience and efforts during normal business hours and at such other times as
reasonably required for the proper performance
6
of his duties hereunder and to the business and affairs of the Company. During
the Employment Term, the Executive shall not, either directly or indirectly,
actively participate in any other business or accept any employment or business
office whatsoever from any other Person; provided, however, that the foregoing
shall not preclude the Executive, subject to Article 5, from: (i) serving as a
director of any non-profit or charitable organization, or any company not in
competition with the Company, or (ii) making an investment in any other
business, so long as in any such case, the Executive does not actively
participate in such other business or organization and such activity does not
interfere with the Executive's ability to perform his duties hereunder and does
not constitute a conflict of interest with the Company.
ARTICLE 3
COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the Employment Term, as compensation for
services hereunder and in consideration for the protective covenants set forth
in Article 5 of this Agreement, the Executive shall be paid a base salary of Two
Hundred Fifty Thousand United States Dollars (US$250,000) for Year One, with an
annual cost of living increase of 3% for each of Year Two, Year Three, Year Four
and Year Five, and, if applicable under Section 2.2 hereof, for each additional
one-year period of the Employment Term thereafter, or such greater amount as may
from time to time be approved by the Compensation Committee (the "Base Salary").
Cost-of-living increases shall be effective as of the first day of Year Two,
Year Three, Year Four and Year Five, respectively, and, if applicable under
Section 2.2 hereof, as of the first day of each additional one-year period of
the Employment Term thereafter, and shall be cumulative. Base Salary shall be
paid to the Executive in accordance with the Company's normal payroll practices.
3.2 BONUSES. Such bonuses shall include the following:
3.2.1 NON-COMPETE BONUS. As consideration for the Executive
entering into this Agreement, the Company shall pay the Executive a bonus
in the amount of Forty-Five Thousand United States Dollars (US$45,000)
upon the condition that the executive agrees to be bound by the terms of
Section 5.2 of this Agreement, as set forth in Article 5 hereof,
hereinafter referred to as the "Non-Compete Bonus". The Non-Compete Bonus
shall be payable in cash no later the thirtieth (30th) day following the
date of this Agreement.
3.2.2 MANAGEMENT INCENTIVE BONUSES. The Executive shall receive
an annual bonus in accordance with the terms of a grant agreement made
pursuant to the terms of the Management Incentive Plan (the "Annual Bonus
Grant Agreement"). The Executive also shall receive a multi-year bonus,
pursuant to the terms of the Management Incentive Plan, if certain
performance targets are met (the "Multi-Year Bonus Grant Agreement"). The
Annual Bonus Grant Agreement and Multi-Year Bonus Grant Agreement are
attached as Exhibits C and D, respectively, hereto. If the Management
Incentive Plan is terminated for any reason whatsoever, whether by the
Company or any other Person, the Executive shall be paid the annual bonus
and multi-year bonus that otherwise would be payable to him with respect
to the Performance Period within which the termination of such Plan
occurs, notwithstanding the termination of such Plan. For purposes of the
7
immediately preceding sentence, the Executive's annual bonus and
multi-year bonus that otherwise would be payable to him with respect to
the Performance Period within which the termination of the Management
Incentive Plan occurs shall be identical to that set forth in Exhibits C
and D, respectively, hereto, and shall be fully vested, subject to the
satisfaction of the conditions set forth in Section 5.2 of such Plan.
3.3 EQUITY COMPENSATION. On or about the Effective Date, or as soon as
administratively practicable thereafter, the Executive shall receive grants
under the Equity Incentive Plan as follows:
3.3.1 INCENTIVE STOCK OPTIONS. A grant of an Incentive Stock
Option, as defined in the Equity Incentive Plan, in respect of 72,000
shares of Common Stock, pursuant to an option grant agreement annexed as
Exhibit E hereto.
3.3.2 STOCK APPRECIATION RIGHTS. A grant of 54,000 Stock
Appreciation Rights, as defined in the Equity Incentive Plan, each in
respect of one share of Common Stock, pursuant to a Stock Appreciation
Rights grant agreement annexed as Exhibit F hereto. The parties intend
that such grant cover the approximate combined federal and state income
tax liability associated with both (i) the number of shares of Common
Stock with respect to which the Incentive Stock Option is exercised and
(ii) the number of shares of Common Stock underlying the exercise of the
Stock Appreciation Rights used to pay for the tax liability under clause
(i).
All such grants and/or awards shall conform to the terms and conditions of the
Equity Incentive Plan and the annexed grant agreements between the Company and
the Executive. In its discretion, the Compensation Committee may make additional
grants or awards to the Executive from time to time. If the Equity Incentive
Plan is terminated for any reason whatsoever, whether by the Company or any
other Person, the Executive shall be entitled to the benefits due to him under
Exhibits E and F, respectively, hereto, notwithstanding the termination of such
Plan. For purposes of the immediately preceding sentence, the termination of the
Equity Incentive Plan shall result in all unvested Incentive Stock Options and
Stock Appreciation Rights granted to the Participant under Exhibits E and F,
respectively, to be fully vested and exercisable.
3.4 SERP BENEFITS. During the Employment Term, the Executive shall be
entitled to participate in the Summit Global Logistics, Inc. Supplemental
Executive Retirement Plan (the "SERP") in accordance with the terms thereof.
Such eligibility to participate in the SERP shall commence effective as of the
later of the Effective Date or the effective date of the SERP. The SERP is
attached as Exhibit G hereto.
3.5 RETIREMENT, WELFARE AND FRINGE BENEFITS. To the maximum extent that
he is eligible under the terms of the applicable plan or program, the Executive
shall participate in the current or future plans or programs maintained by the
Company for its employees and/or senior executives that provide insurance,
medical benefits, retirement benefits, or similar fringe benefits as set forth
in SCHEDULE A attached hereto, as well as any additional plans or programs that
may be adopted that are generally applicable to senior executives; provided,
however, that if within the Employment Term, the Executive leaves the employment
of the Company and is eligible for severance benefits, then $7,500 per Year of
Service shall be added to the severance amount in lieu of any forfeited
(non-vested) qualified plan amount. In addition, the Executive shall be
8
entitled to a minimum of twenty (20) vacation days for each calendar year
beginning with or within a Year of Service, which must be taken in accordance
with the Company's vacation policy then in effect. The Executive shall also be
entitled at least six (6) days of sick day leave, seven (7) personal days leave
and seven (7) fixed holidays for each calendar year beginning with or within a
Year of Service, which must be taken in accordance with the Company's applicable
policies then in effect. Unused vacation days, sick days or personal days shall
not carry forward into the subsequent year. In the event that the Company
establishes a more favorable vacation, sick leave or personal day policy
generally applicable to senior executives, the Executive shall be entitled to
any such additional benefits. During the Employment Term, the Company shall pay
the Executive an automobile allowance, which shall not exceed $1,250 per month,
plus an annual inflation adjustment reflecting market conditions. The Executive
is responsible for the tax consequences of the personal usage of the automobile.
The Executive shall be entitled to a $5,000 per year golf, health, country
and/or other recreational club membership allowance for each Year of Service, to
be allocated among the foregoing as the Executive sees fit. The Executive is
responsible for the tax consequences of the personal usage of the golf, health,
country and/or other recreational club membership. In addition, or in lieu of
the Company policy for executives with respect to annual physical examinations,
during each Year of Service, the Executive shall be reimbursed up to $1000 for
an annual physical examination conducted by a physician designated by the
Executive.
3.6 INDEMNIFICATION AND INSURANCE.
3.6.1 D&O INSURANCE. During the entirety of the Employment Term,
the Company shall cause the Executive to be covered by and named as an
insured or as a member of a class of insured under any policy or contract
of insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as an
officer or director of the Company or service in other capacities at its
request ("D&O Insurance Coverage"). The D&O Insurance Coverage provided to
the Executive pursuant to this Section 3.6.1 shall be of the same scope
and on the same terms and conditions as the coverage (if any) provided to
other officers or directors of the Company and shall continue for so long
as the Executive shall be subject to personal liability relating to such
service.
3.6.2 EPLI INSURANCE. During the entirety of the Employment Term,
the Company shall cause the Executive to be covered by and named as an
insured or as a member of a class of insured under any policy or contract
of insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as a
director or officer of the Company, where such personal liability could
arise under or in connection with, or be attributable to, the Company's
employment practices and procedures "EPLI Insurance Coverage"). The EPLI
Insurance Coverage provided to the Executive pursuant to this Section
3.6.2 shall be of the same scope and on the same terms and conditions as
the coverage (if any) provided to other officers or directors of the
Company and shall continue for so long as the Executive shall be subject
to personal liability relating to such service.
3.6.3 INDEMNIFICATION. To the maximum extent permitted under
applicable law, and provided that the Executive has acted within the scope
of his authority hereunder, the
9
Company shall indemnify the Executive against and hold him harmless from
any costs, liabilities, losses and exposures (each, a "Cost," and
collectively, "Costs") to the fullest extent and on the most favorable
terms and conditions that similar indemnification is offered to any
director or officer of the Company or any subsidiary or Affiliate thereof
and shall survive the termination of this Agreement and continue for so
long as the Executive shall be subject to personal liability relating to
such service; provided, however, that the Company shall not indemnify and
hold harmless the Executive from a Cost to the extent that such Cost is
attributable to the Executive's (i) willful misconduct or gross negligence
in the performance of his duties or exercise of his authority hereunder or
(ii) material breach of any of the provisions of this Agreement.
3.7 EXPENSES. The Company shall pay or reimburse the Executive for
reasonable business expenses actually incurred or paid by the Executive during
the Employment Term, in the performance of his services hereunder; provided,
however, that such expenses are consistent with the Company's policy. Such
payment or reimbursement is expressly conditioned upon presentation of expense
statements or vouchers or other supporting documentation by the Executive in a
manner that is acceptable to the Company and otherwise in accordance with the
Company's policy then in effect.
3.8 DEDUCTIONS. The Company shall deduct from all compensation or
benefits payable pursuant to this Agreement such payroll, withholding and other
taxes and medical, pension and other benefits in accordance with the Company's
benefit programs and the Executive's selections and as may in the reasonable
opinion of the Company be required by law and any such additional amounts
requested in writing by the Executive.
ARTICLE 4
TERMINATION
4.1 GENERAL. The Company shall have the right to terminate the
employment of the Executive at any time with or without Cause and the Executive
shall be paid the Standard Termination Entitlements (as defined in Section
4.3.1).
4.2 TERMINATION UNDER CERTAIN CIRCUMSTANCES.
4.2.1 TERMINATION WITHOUT SEVERANCE BENEFITS. In the event the
Executive's employment with the Company is terminated prior to the
expiration of the Employment Term by reason of (i) the Executive's
resignation without Good Reason, (ii) the Executive's death or (iii) the
Executive's discharge by the Company for Cause prior to the occurrence of
a Change in Control, this Agreement shall terminate including, without
limitation, the Company's obligations to provide any compensation,
benefits or severance to the Executive under Article 3 of this Agreement
or otherwise, other than the Standard Termination Entitlements (as defined
in section 4.3.1).
4.2.2 DISABILITY. The Company may terminate the Executive's
employment upon the Executive's Disability. In such event, in addition to
the Standard Termination
10
Entitlements (as defined in section 4.3.1), the Company shall continue to
pay the Executive his Base Salary in accordance with the Company's normal
payroll practices, at the annual rate in effect for him immediately prior
to the termination of his employment, during a period ending on the
earliest of: (a) the date on which long-term disability insurance benefits
are first payable to him under any long-term disability insurance plan
covering employees of the Company; and (b) the date of his death. A
termination of employment due to Disability under this Section 4.2.2 shall
be effected by notice of termination given to the Executive by the Company
and shall take effect on the later of the effective date of termination
specified in such notice or the date on which the notice of termination is
deemed given to the Executive.
4.2.3 TERMINATION WITH SEVERANCE BENEFITS. In the event that the
Executive's employment with the Company is terminated by the Executive
prior to the expiration of the Employment Term for Good Reason or by the
Company prior to the expiration of the Employment Term other than for
Cause or Disability, the Company shall pay the Standard Termination
Entitlements (as defined in section 4.3.1) and the Severance Benefits (as
defined in section 4.3.2); provided, however, that any payment required by
this section 4.2.3 is expressly conditioned upon:
4.2.3.1 The Executive's continued material compliance with
the terms of this Agreement, including, without
limitation, Article 5; and
4.2.3.2 The Executive's resignation from any and all
positions which he holds as an officer, director
or committee member with respect to the Company or
any Affiliate thereof.
4.3 STANDARD TERMINATION ENTITLEMENTS; SEVERANCE BENEFITS.
4.3.1 STANDARD TERMINATION ENTITLEMENTS. For all purposes of this
Agreement, the Executive's "Standard Termination
Entitlements" shall mean and include:
4.3.1.1 the Executive's earned but unpaid compensation
(including, without limitation, Base Salary, and all other
items which constitute wages under applicable law,
interpreting the term "wages" in the broadest possible
sense) as of the date of his termination of employment.
This payment shall be made at the time and in the manner
prescribed by law applicable to the payment of wages
including, specifically, payment for accrued, but unused
vacation days;
4.3.1.2 reimbursement for reasonable business expenses and
authorized travel expenses incurred but still outstanding;
and
4.3.1.3 the benefits, if any, due to the Executive, and
the Executive's estate, surviving dependents or his designated
beneficiaries under the employee benefit plans and programs and
compensation plans and programs maintained for the benefit of, or
covering, the officers, executives and employees of the Company,
including, but not limited to, all plans or arrangements listed on
SCHEDULE A, the Equity Incentive Plan and the Management Incentive
Plan. The time and manner
11
of payment or other delivery of these benefits and the recipients of
such benefits shall be determined according to the terms and
conditions of the applicable plans and programs.
4.3.2 SEVERANCE BENEFITS. For all purposes of this Agreement, the
Executive's "Severance Benefits" shall mean the benefits set forth in
Exhibit H. If the Summit Global Logistics, Inc. Severance Benefit Plan, as
set forth in Exhibit H, is terminated for any reason whatsover, whether by
the Company or any other Person, the Executive shall be paid severance
benefits identical to those set forth in Appendix A of such Plan,
notwithstanding the termination of such Plan.
ARTICLE 5
RESTRICTIVE COVENANTS
5.1 PROPRIETARY INFORMATION.
5.1.1 DISCLOSURE DURING THE EMPLOYMENT TERM. Subject to Section
5.5 hereof, the Executive shall promptly disclose to the Company in such
form and manner as the Company may reasonably require (a) all operations,
systems, services, methods, developments, inventions, improvements and
other information or data pertaining to the business or activities of the
Company and its Affiliates as are conceived, originated, discovered or
developed by the Executive during the Employment Term and (b) such
information and data pertaining to the business, operations, personnel,
activities, financial affairs, and other information relating to the
Company and its Affiliates and their respective customers, suppliers,
employees and other persons having business dealings with the Company and
its Affiliates as may be reasonably required for the Company to operate
its business. It is understood that such information is proprietary in
nature and shall (as between the Company and Executive) be for the
exclusive use and benefit of the Company and shall be and remain the
property of the Company both during the Employment Term and thereafter.
5.1.2 DISCLOSURE AFTER EMPLOYMENT. In the event that the
Executive leaves the employ of the Company for any reason, including,
without limitation, the expiration of the Employment Term, the Executive
shall deliver to the Company any and all devices (including any lap top,
personal hand-held devices or mobile telephone), records, data, notes,
reports, proposals, lists, correspondence, specifications, drawings,
blueprints, sketches, materials, equipment, other documents or property
belonging to the Company or any Affiliate thereof or any of their
respective successors or assigns.
5.2 NON-COMPETITION. During the Employment Term and for twelve months
after the date employment with the Company has ended, the Executive agrees, and
shall cause each Person Controlled by him to agree, that he shall not, directly
or indirectly, or through any Person Controlled by the Executive: (a) engage in
any logistic activities competitive with the business of the Company and its
Affiliates for his or their own account or for the account of any other Person,
or (b) become interested in any Person engaged in logistic activities
competitive with the
12
business of the Company and its Affiliates as a partner, shareholder, member,
principal, agent, employee, trustee, consultant or in any other relationship or
capacity.
5.3 NON-SOLICITATION. During the Employment Term and for a period of
twelve months after the date employment with the Company has ended, the
Executive will not, directly or indirectly, use proprietary knowledge or
information relating to the Company or its Affiliates obtained during the course
of the Executive's employment with the Company for his own benefit or the
benefit of any third party with the intention to, or which a reasonable person
would construe to, (a) interfere with or disrupt any present relationship,
contractual or otherwise, between the Company or its Affiliates and any
customer, supplier, employee, consultant or other person having business
dealings with the Company or its Affiliates, or (b) employ or solicit the
employment or engagement by others of any employee or consultant of the Company
or its Affiliates who was such an employee or consultant at the time of
termination of the Executive's employment hereunder. Upon leaving the employment
of the Company, the Executive shall notify his new employer of his obligations
under this Agreement and grants consent to notification by the Company to the
Executive's new employer concerning Executive's rights and obligations under
this Agreement.
5.4 NON-DISCLOSURE. Except with the prior written consent of the Company
in each instance or as may be reasonably necessary to perform the Executive's
services hereunder, the Executive shall not disclose, use, publish, or in any
other manner reveal, directly or indirectly, at any time during or after the
Employment Term, any Confidential Information relating to the Company or any
Affiliate thereof acquired by him prior to, during the course of, or incident
to, his employment hereunder; provided, however, that necessary or appropriate
disclosures may be made to the Executive's legal counsel.
5.5 OWNERSHIP OF INTELLECTUAL PROPERTY. Subject to applicable law, the
Executive acknowledges and agrees that all work performed, and all ideas,
concepts, materials, products, software; documentation, designs, architectures,
specifications, flow charts, test data, programmer's notes, deliverables,
improvements, discoveries, methods, processes, or inventions, trade secrets or
other subject matter related to the Company's business (collectively,
"Materials") conceived, developed or prepared by the Executive alone, or with
others, during the period of Executive's employment by the Company in written,
oral, electronic, photographic, optical or any other form are the property of
the Company and its successors or assigns, and all rights, title and interest
therein shall vest in the Company and its successors or assigns, and all
Materials shall be deemed to be works made for hire and made in the course of
the Executive's employment by the Company. To the extent that title to any
Materials has not or may not, by operation of law, vest in the Company and its
successors or assigns, or such Materials may not be considered works made for
hire. Notwithstanding the foregoing, the parties acknowledge and understand that
Executive may previously have developed and may continue to develop certain
ideas, concepts and designs which are unrelated to the business of the Company
and may continue to do so provided that such activities do not interfere with
his duties under this Agreement.
5.6 REASONABLE LIMITATIONS. Executive acknowledges that given the nature
of the Company's business, the covenants contained in this Article 5 contain
reasonable limitations as to time, geographical area and scope of activity to be
restrained, and do not impose a greater restraint than is necessary to protect
and preserve the Company's business and to protect the
13
Company's legitimate business interests. If, however, this Article 5 is
determined by any arbitrator to be unenforceable by reason of its extending for
too long a period of time or over too large a geographic area or by reason of
its being too extensive in any other respect, or for any other reason, it will
be interpreted to extend only over the longest period of time for which it may
be enforceable and/or over the largest geographical area as to which it may be
enforceable and/or to the maximum extent in all other aspects as to which it may
be enforceable, all as determined by such court or arbitrator in such action.
5.7 SURVIVAL OF PROTECTIVE COVENANTS. Each covenant on the part of
Executive contained in this Article 5 shall be construed as an agreement
independent of any other provision of this Agreement, unless otherwise indicated
herein, and shall survive the termination of Executive's employment under this
Agreement.
ARTICLE 6
DISPUTE RESOLUTION
6.1 ARBITRATION OF DISPUTES. Both parties agree that all controversies
or claims that may arise between the Executive and the Company in connection
with this Agreement shall be settled by arbitration. The parties further agree
that the arbitration shall be held in the State of New Jersey, and administered
by the American Arbitration Association under its Commercial Arbitration Rules,
applying New Jersey law.
6.1.1 QUALIFICATIONS OF ARBITRATOR. The arbitration shall be
submitted to a single arbitrator chosen in the manner provided under the
rules of the American Arbitration Association. The arbitrator shall be
disinterested and shall not have any significant business relationship
with either party, and shall not have served as an arbitrator for any
disputes involving the Company or any of its Affiliates more than twice in
the thirty-six (36) month period immediately preceding his or her date of
appointment. The arbitrator shall be a person who is experienced and
knowledgeable in employment and executive compensation law and shall be an
attorney duly licensed to practice law in one or more states.
6.1.2 POWERS OF ARBITRATOR. The arbitrator shall not have the
authority to grant any remedy which contravenes or changes any term of
this Agreement and shall not have the authority to award punitive or
exemplary or damages under any circumstances. The parties shall equally
share the expense of the arbitrator selected and of any stenographer
present at the arbitration. The remaining costs of the arbitrator
proceedings shall be allocated by the arbitrator, except that the
arbitrator shall not have the power to award attorney's fees.
6.1.3 EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall
render its decision within thirty (30) days after termination of the
arbitration proceeding, which decision shall be in writing, stating the
reasons therefor and including a brief description of each element of any
damages awarded. The decision of the arbitrator shall be final and
binding. Judgment on the award rendered by the arbitrator may be entered
in any court
14
having jurisdiction thereof.
6.2 SERVICE OF PROCESS. The parties agree that service of process may be
made on it by personal service of a copy of the summons and complaint or other
legal process in any such suit, action or proceeding, or by registered or
certified mail (postage prepaid) to its address specified in Section 7.1 (or
applicable forwarding address), or by any other method of service provided for
under the applicable laws in effect in the applicable jurisdiction.
ARTICLE 7
GENERAL PROVISIONS
7.1 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Executive: Paul Shahbazian
1038 Koelle Boulevard
Secaucus, NJ 07094
If to the Company: Summit Global Logistics, Inc.
547 Boulevard
Kenilworth, NJ 07033
With a copy to: David D. Gammell, Esq.
Brown Rudnick Berlack Israels LLP
One Financial Center
Boston, MA 02111
or to such other address as the party to whom notice is given may have
previously furnished to the other parties hereto in writing in the manner set
forth above.
7.2 ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement between the Executive and the Company with respect to the Company's
employment of the Executive and supersedes any and all prior agreements and
understandings, written or oral, with respect thereto.
7.3 AMENDMENTS AND WAIVERS. Any term of this Agreement or any Schedule,
Exhibit or attachment hereto may be amended only by (a) an instrument in writing
and signed by the party against whom such amendment is sought to be enforced,
and (b) in the case of the Company, such amendment also must be duly authorized
by an appropriate resolution of the Company. In addition, any term of this
Agreement or any Schedule, Exhibit or attachment hereto
15
may be waived by the party against whom the obligation runs to by an instrument
in writing signed by such party and delivered to the Company as reasonable time
prior to the effective date of the waiver.
7.4 SUCCESSORS AND ASSIGNS. The Company shall have the right to assign
this Agreement, subject to the Executive's consent which shall not be
unreasonably withheld and subject to. This Agreement shall inure to the benefit
of, and be binding upon (a) the parties hereto, (b) the heirs, administrators,
executors and personal representatives of the Executive and (c) the successors
and assigns of the Company as provided herein.
7.5 GOVERNING LAW. This Agreement, including the validity hereof and the
rights and obligations of the parties hereunder, and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the laws of the State of New Jersey without
giving effect to any conflicts of law provisions or rule, that would cause the
application of the laws of any other jurisdiction.
7.6 SEVERABILITY. If any provisions of this Agreement as applied to any
part or to any circumstance shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement.
7.7 NO CONFLICTS. The Executive represents to the Company that the
execution, delivery and performance by the Executive of this Agreement does not
and will not conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under any contract,
agreement or understanding, whether oral or written, to which the Executive is
or was a party or of which the Executive is or should be aware.
7.8 SURVIVAL. The rights and obligations of the Company and Executive
pursuant to Articles 4, 5 and 6 shall survive the termination of the Executive's
employment with the Company and the expiration of the Employment Term.
7.9 CAPTIONS. The headings and captions used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.
7.10 COUNTERPARTS. This Agreement be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16
7.11 IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
EXECUTIVE
__________________________________
Paul Shahbazian
SUMMIT GLOBAL LOGISTICS, INC.
By: ______________________________
Name
Title:
17
SCHEDULE A
EMPLOYEE BENEFIT SUMMARY TERM SHEET
As of January 1, 2007, the Executive shall be eligible to participate in
all of the retirement and welfare benefit plans sponsored, maintained or
contributed to by FMI International, LLC and/or its affiliates or subsidiaries,
which plans shall be amended accordingly. Without in any way limiting the
generality of the foregoing, the Executive shall be entitled to participate in
the following plans:
o FMI International, LLC 401(k) Profit Sharing Plan;
o FMI International West Health Plan;
o FMI International, LLC PPO Health Insurance Plan;
o FMI International, LLC Dental Plan; and the
o FMI International, LLC Life Insurance Plan.
18
EXHIBIT C
ANNUAL BONUS GRANT AGREEMENT
THIS ANNUAL BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between Paul
Shahbazian (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the 8th day of November, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make annual bonus payments to the Executive for each Year of Service, as defined
in the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in the Employment Agreement,
the receipt and sufficiency of which are hereby acknowledged, the Executive and
the Company agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement,
shall have the following meanings, unless the context clearly requires otherwise
(such definitions to be equally applicable to both the singular and plural of
the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto in
the Management Incentive Plan.
1.2 "BONUS" means the annual incentive bonus to be paid
hereunder with respect to a given Fiscal Year.
1.3 "EBITDA" means the Company's earnings before income tax,
plus depreciation and amortization, as computed in accordance with
United States GAAP and in a manner consistent with the methods used
in the Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or
restructuring or impairment charges, as determined by the Company's
independent public accountants in accordance with GAAP or (ii)
changes in accounting, unless, in each case, the Committee, as
defined in the Management Incentive Plan, decides otherwise within
the Determination Period, as defined in the Management Incentive
Plan.
1.4 "EBITDA TARGET" means the Company's EBITDA for Fiscal
Year 2007, 2008, 2009 or 2010, as applicable.
1.5 "FISCAL YEAR" means the calendar year.
1.6 "GAAP" means generally accepted accounting principles.
1.7 "PERFORMANCE PERIOD" shall have the meaning ascribed
thereto in the Management Incentive Plan.
2. EBITDA TARGETS.
2.1 The EBITDA Target for Fiscal Year 2007 shall be
$__________.
2.2 The EBITDA Target for Fiscal Year 2008 shall be
$__________.
2.3 The EBITDA Target for Fiscal Year 2009 shall be
$__________.
2.4 The EBITDA Target for Fiscal Year 2010 shall be
$__________.
3. ANNUAL INCENTIVE BONUSES.
3.1 The Bonus for each of Fiscal Year 2007, Fiscal Year
2008, Fiscal Year 2009 and Fiscal Year 2010 shall be as follows:
3.1.1 If at least 80% of the EBITDA Target for
the applicable Fiscal Year is achieved, the Executive
shall receive a Bonus for such Fiscal Year equal to 45%
of his Base Salary for the Performance Period beginning
with or within such Fiscal Year.
3.1.1.2 If at least 90% of the EBITDA Target for
the applicable Fiscal Year is achieved, the Executive
shall receive a Bonus for such Fiscal Year equal to
67.50% of his Base Salary for the Performance Period
beginning with or within such Fiscal Year.
3.1.1.3 If at least 100% of the EBITDA Target for
the applicable Fiscal Year is achieved, the Executive
shall receive a Bonus for such Fiscal Year equal to 100%
of his Base Salary for the Performance Period beginning
with or within such Fiscal Year.
3.1.1.4 For each percentage point, up to 50
percentage points by which the EBITDA Target for the
applicable Fiscal Year is exceeded, the Executive shall
receive an additional Bonus equal to 2.70% of his Base
Salary.
3.1.1.5 For each percentage point over 50
percentage points, up to 50 additional points, by which
the EBITDA Target for the applicable Fiscal Year is
exceeded, the Executive shall receive an additional
Bonus equal to 3.60% of his Base Salary.
3.2 Except as otherwise provided herein, bonus amounts shall
be payable to the Executive in accordance with the terms and
conditions of the Management Incentive Plan.
4. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and
the Company shall comply with all of the terms thereof applicable to annual
incentive awards. In the event of any conflict between the terms of this
Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
5. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
__________________________________
Paul Shahbazian
SUMMIT GLOBAL LOGISTICS, INC.
By: _______________________________
Name
Title:
EXHIBIT D
MULTI-YEAR BONUS GRANT AGREEMENT
THIS MULTI-YEAR BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between Paul
Shahbazian (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the __ day of __________, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make a multi-year bonus payment to the Executive if certain performance targets
of the Company are satisfied as of the end of the Employment Term, as defined in
the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in the Employment Agreement,
the receipt and sufficiency of which are hereby acknowledged, the Executive and
the Company agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement,
shall have the following meanings, unless the context clearly requires otherwise
(such definitions to be equally applicable to both the singular and plural of
the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto in
the Management Incentive Plan.
1.2 "BONUS" means the multi-year incentive bonus to be paid
hereunder with respect to the Employment Term.
1.3 "DELTA ONE" means the excess, if any, of EBITDA for
Fiscal Year 2009 over the EBITDA Target for Fiscal Year 2007.
1.4 "DELTA TWO" means the excess, if any, of EBITDA for
Fiscal Year 2010 over the EBITDA Target for Fiscal Year 2008.
1.5 "EBITDA" means the Company's earnings before income tax,
plus depreciation and amortization, as computed in accordance with
United States GAAP and in a manner consistent with the methods used
in the Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or
restructuring or impairment charges, as determined by the Company's
independent public accountants in accordance with GAAP or (ii)
changes in accounting, unless, in each case, the Committee, as
defined in the Management Incentive Plan, decides otherwise within
the Determination Period, as defined in the Management Incentive
Plan.
1.6 "EBITDA TARGET" means
1.6.1 For Fiscal Year 2007, $__________.
1.6.2 For Fiscal Year 2008, $__________.
1.7 "FIRST PERFORMANCE PERIOD" means the three-consecutive
Fiscal Year period beginning on the first day of Fiscal Year 2007
and ending on the last day of Fiscal Year 2009.
1.8 "FISCAL YEAR" means the calendar year.
1.9 "FUNDAMENTAL TRANSACTION" has the meaning as defined in
the Management Incentive Plan.
1.10 "GAAP" means generally accepted accounting principles.
1.11 "PERFORMANCE PERIOD" means the First Performance Period
or the Second Performance Period, as applicable.
1.12 "SECOND PERFORMANCE PERIOD" means the three-consecutive
Fiscal Year period beginning on the first day of Fiscal Year 2008
and ending on the last day of Fiscal Year 2010.
2. MULTI-YEAR BONUS.
2.1 FIRST PERFORMANCE PERIOD. If, with respect to the First
Performance Period, Delta One, expressed as a percentage of the
EBITDA Target for Fiscal Year 2007, equals or exceeds 33%, the
Executive shall be paid a Bonus in Fiscal Year 2010 equal to one and
one half (1.5) times his Base Salary for Fiscal Year 2007.
2.2 SECOND PERFORMANCE PERIOD. If, with respect to the
Second Performance Period, Delta Two, expressed as a percentage of
the EBITDA Target for Fiscal Year 2008, equals or exceeds 33%, the
Executive shall be paid a Bonus in Fiscal Year 2011 equal to one and
one half (1.5) times his Base Salary for Fiscal Year 2008.
3. PAYMENT UPON OCCURRENCE OF FUNDAMENTAL TRANSACTION. If a
Fundamental Transaction occurs at any time both (i) prior to the payment of any
amount pursuant to Section 2 hereof and (ii) on or prior to December 31, 2010,
then, in lieu of making any payment to the Executive pursuant to Section 2
hereof, the Company shall pay to the Executive, promptly following the
occurrence of the Fundamental Transaction, an amount in immediately available
funds, equal to one and one half (1.5) times his Base Salary. For this purpose,
Base Salary shall mean Base Salary for Fiscal Year 2007, if the Fundamental
Transaction occurs on or prior to the last day of Fiscal Year 2009, and Base
Salary for 2008, if the Fundamental Transaction occurs during Fiscal Year 2010.
Payment shall be made in the form of a single lump sum from the sales proceeds
received by the Company pursuant to the terms of the Fundamental Transaction.
4. PAYMENT OF BONUS AMOUNTS. Except as otherwise provided herein,
bonus amounts shall be payable to the Executive in accordance with the terms and
conditions of the Management Incentive Plan.
5. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and the Company shall comply with all of the terms thereof applicable
to annual incentive awards. In the event of any conflict between the terms of
this Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
6. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
__________________________________
Paul Shahbazian
SUMMIT GLOBAL LOGISTICS, INC.
By: _______________________________
Name
Title:
EXHIBIT E
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
Unless otherwise defined herein, the terms defined in the 2006 Equity
Incentive Plan (the "Plan") shall have the same defined meanings in this Notice
of Stock Option Award and the attached Stock Option Award Terms, which are
incorporated herein by reference (together, the "AWARD AGREEMENT"). Terms not
defined herein shall have their respective meanings under the Plan.
PARTICIPANT (the "PARTICIPANT")
Paul Shahbazian
GRANT
The undersigned Participant has been granted an Option to purchase Common Stock
of Summit Global Logistics, Inc. (the "COMPANY"), subject to the terms and
conditions of the Plan and this Award Agreement, as follows:
DATE OF GRANT November 8, 2006 TOTAL NUMBER OF SHARES
GRANTED 72,000
VESTING COMMENCEMENT DATE November 8, 2006 TYPE OF OPTION [X] Incentive Stock Option
EXERCISE PRICE PER SHARE $10.00 Non-Statutory Stock
Option
TOTAL EXERCISE PRICE $720,000 TERM/EXPIRATION DATE 5 years from Date of Grant
VESTING SCHEDULE:
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
ANNIVERSARY OF GRANT DATE % OF GRANT (OR # OF SHARES) VESTED
One-Year Anniversary of Grant Date 50%
Two-Year Anniversary of Grant Date 100%
The Option shall vest in full upon the earliest to occur of a Change in Control,
the Participant's death, the Participant's Disability, the Participant's
Retirement, the Company's (or any parent's or subsidiary's thereof) termination
of the Participant's employment without Cause or the Participant's termination
of his employment with the Company (or any parent or subsidiary thereof) for
Good Reason.
Upon the execution by the Company of a definitive acquisition, merger or similar
agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing, a Change in
Control would occur, the Committee, in its sole discretion, and notwithstanding
any provision of the Transaction Agreement or the Plan, including, but not
limited to, Section 13f.i. thereof, to the contrary, shall (i) require the
acquiring or surviving entity (if not the Company) to assume this Option in
accordance with its terms or (ii) pay the Participant, for each Share not
previously exercised, the greater of (A) the transaction consideration per Share
or (B) the Exercise Price per Share. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of this Option shall cease, and unvested Option Shares shall be
forfeited, upon the Company's (or any parent's or subsidiary's thereof)
termination of the Participant's employment for Cause or the Participant's
termination of his employment with the Company (or any parent or subsidiary
thereof) other than for Good Reason.
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
________________________________________ _____________________________________
Signature By
________________________________________ _____________________________________
Paul Shahbazian Title
1038 Koelle Boulevard
Secaucus, NJ 07094
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SUMMIT GLOBAL LOGISTICS, INC.
STOCK OPTION
AWARD TERMS
1. GRANT OF OPTION. The Committee hereby grants to the Participant
named in the Notice of Stock Option Grant an option (the "OPTION")
to purchase the number of Shares set forth in the Notice of Stock
Option Award, at the exercise price per Share set forth in the
Notice of Stock Option Grant (the "EXERCISE PRICE"), and subject to
the terms and conditions of the 2006 Equity Incentive Plan (the
"PLAN"), which is incorporated herein by reference. In the event of
a conflict between the terms and conditions of the Plan and this
Stock Option Award Agreement, the terms and conditions of the Plan
shall prevail.
If designated in the Notice of Stock Option Grant as an Incentive
Stock Option ("ISO"), this Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the extent that it exceeds the $100,000 limitation
rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION.
i RIGHT TO EXERCISE. This Option may be exercised during its
term in accordance with the Vesting Schedule set out in the
Notice of Stock Option Award and with the applicable
provisions of the Plan and this Award Agreement.
ii METHOD OF EXERCISE. This Option shall be exercisable by
delivery of an exercise notice in the form attached as EXHIBIT
A (the "EXERCISE NOTICE") which shall state the election to
exercise the Option, the number of Shares with respect to
which the Option is being exercised (the "EXERCISED SHARES")
and the Participant's agreement to be subject to such other
representations and agreements as may be required by the
Company. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice
accompanied by payment of the aggregate Exercise Price in
accordance with the cashless exercise provisions of Section 6g
of the Plan.
3. TERMINATION. This Option shall be exercisable for three months after
the Participant ceases to be an Employee; provided, however, if the
relationship is terminated by the Company for Cause, or voluntarily
by the Participant other than for Good Reason, the Option shall
terminate immediately. Upon the Participant's death or Disability,
this Option may be exercised for twelve (12) months after the
termination of employment.
In no event may Participant exercise this Option after the
Term/Expiration Date as provided above.
4. RESTRICTIONS ON EXERCISE. This Option may not be exercised until
such time as the Plan has been approved by the stockholders of the
Company, or if the method of payment of consideration for such
shares would constitute a violation of any applicable law.
5. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Participant
only by Participant. The terms of the Plan and this Award Agreement
shall be binding upon the executors, Committees, heirs, successors
and assigns of the Participant.
6. TERM OF OPTION. This Option may be exercised only within the Term
set out in the Notice of Stock Option Award which Term may not
exceed ten (10) years from the Date of Grant, and may be exercised
during such Term only in accordance with the Plan and the terms of
this Award Agreement.
7. UNITED STATES TAX CONSEQUENCES. Set forth below is a brief summary
as of the date of this Option of some of the United States federal
tax consequences of exercise of this Option and disposition of the
Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
i EXERCISE OF ISO. If this Option qualifies as an Incentive
Stock Option, there will be no regular federal income tax
liability upon the exercise of the Option, although the
excess, if any, of the Fair Market Value of the Shares on the
date of exercise over the Exercise Price will be treated as an
adjustment to the alternative minimum tax for federal tax
purposes and may subject the Participant to the alternative
minimum tax in the year of exercise.
ii EXERCISE OF NONSTATUTORY STOCK OPTION. There may be a regular
federal income tax liability upon the exercise of a
Nonstatutory Stock Option. The Participant will be treated as
having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the
Exercise Price. If the Participant is an Employee or a former
Employee, the Company will be required to withhold from the
Participant's compensation or collect from the Participant and
pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time
of exercise, and may refuse to honor the exercise if such
withholding amounts are not delivered at the time of exercise.
2
iii NOTICE OF DISQUALIFYING DISPOSITION OF INCENTIVE STOCK OPTION
SHARES. If this Option is an Incentive Stock Option, and if
the Participant sells or otherwise disposes of any of the
Shares acquired pursuant to the Incentive Stock Option,
including through a cashless exercise, on or before the later
of (1) the date two years after the Date of Grant, or (2) the
date one year after the date of exercise, the Participant
shall immediately notify the Company in writing of such
disposition. The Participant agrees that the Participant may
be subject to income tax withholding by the Company on the
compensation income recognized by the Participant.
iv WITHHOLDING. Pursuant to applicable federal, state, local or
foreign laws, the Company may be required to collect income or
other taxes on the grant of this Option, the exercise of this
Option, the lapse of a restriction placed on this Option, or
at other times. The Company may require, at such time as it
considers appropriate, that the Participant pay the Company
the amount of any taxes which the Company may determine is
required to be withheld or collected, and the Participant
shall comply with the requirement or demand of the Company. In
its discretion, the Company may withhold Shares to be received
upon exercise of this Option or offset against any amount owed
by the Company to the Participant, including compensation
amounts, if in its sole discretion it deems this to be an
appropriate method for withholding or collecting taxes.
Currently, neither federal income nor federal employment tax
withholding is required with respect to an Incentive Stock
Option.
8. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Award Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and
agreements of the Company and Participant with respect to the
subject matter hereof, and may not be modified (except as provided
herein and in the Plan) adversely to the Participant's interest
except by means of a writing signed by the Company and Participant.
This agreement is governed by the internal substantive laws but not
the choice of law rules of the State of New Jersey.
9. NO GUARANTEE OF CONTINUED SERVICE. PARTICIPANT ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE
HEREOF IS EARNED ONLY BY CONTINUING IN THE EMPLOYMENT AT THE WILL OF
THE COMPANY (NOT THROUGH THE ACT OF BEING ENGAGED, BEING GRANTED
THIS OPTION OR ACQUIRING SHARES HEREUNDER). PARTICIPANT FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE IN ANY WAY WITH PARTICIPANT'S RIGHT
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OR THE COMPANY'S RIGHT TO TERMINATE THE RELATIONSHIP AT ANY TIME.
Participant acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof.
Participant has reviewed the Plan and this Option in their entirety, has
had an opportunity to obtain the advice of counsel prior to executing this
Option and fully understands all provisions of the Option. Participant
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions arising under the Plan
or this Option. Participant further agrees to notify the Company upon any
change in the residence address indicated below.
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EXHIBIT A
2006 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Company Name
Address
City, State, Zip Code
Attention: President
1. EXERCISE OF OPTION. Effective as of today, ______________, 200__,
the undersigned ("PARTICIPANT") hereby elects to exercise
Participant's option to purchase _________ shares of the Common
Stock (the "SHARES") of_________ (the "COMPANY") under and pursuant
to the 2006 Equity Incentive Plan (the "PLAN") and the Stock Option
Award Agreement dated ____________, 200__ (the "AWARD AGREEMENT").
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Award
Agreement, and pursuant to the cashless exercise provisions of
Section 6g of the Plan.
3. REPRESENTATIONS OF PARTICIPANT. Participant acknowledges that
Participant has received, read and understood the Plan and the Award
Agreement and agrees to abide by and be bound by their terms and
conditions.
4. RIGHTS AS STOCKHOLDER. The Participant shall not have any rights of
a stockholder upon exercise of the Option, which shall be settled
solely in cash.
5. TAX CONSULTATION. Participant understands that Participant may
suffer adverse tax consequences as a result of Participant's
purchase or disposition of the Shares. Participant represents that
Participant has consulted with any tax consultants Participant deems
advisable in connection with the purchase or disposition of the
Shares and that Participant is not relying on the Company for any
tax advice.
6. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns
of the Company. Subject to the restrictions on transfer herein set
forth, this Agreement shall be binding upon Participant and his or
her heirs, executors, Committees, successors and assigns.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or by the Company
forthwith to the Committee which shall review such dispute at its
next regular meeting. The resolution of such a dispute by the
Committee shall be final and binding on all parties.
8. GOVERNING LAW. This Exercise Notice is governed by the internal
substantive laws but not the choice of law rules of the State of New
Jersey.
5
9. ENTIRE AGREEMENT. The Plan and Award Agreement are incorporated
herein by reference. This Agreement, the Plan, the Award Agreement
(including all exhibits) and the Investment Representation Statement
constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Participant with
respect to the subject matter hereof, and may not be modified
adversely to the Participant's interest except by means of a writing
signed by the Company and Participant.
6
Submitted by: Accepted by:
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
_______________________________________ ______________________________________
Signature By
_______________________________________ ______________________________________
Print Name Title
ADDRESS: ADDRESS:
Type in address
_______________________________________
City, State, Zip code
_______________________________________
______________________________________
Date Received
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EXHIBIT F
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
Name of SAR Holder: Paul Shahbazian
Address of SAR Holder: 1038 Koelle Boulevard, Secaucus, NJ 07094
Number of SARs: 54,000, each representing a share of Common Stock
Initial SAR Value: $540,000
Grant Date: November 8, 2006
Pursuant to and in accordance with the Summit Global Logistics, Inc. 2006
Equity Incentive Plan, as amended from time to time (the "Plan"), this Stock
Appreciation Rights Agreement (the "SAR Agreement") evidences the issuance to
the person named above (the "SAR Holder") by Summit Global Logistics, Inc. (the
"Company"), effective as of the date set forth above (the "Grant Date"), of a
number of stock appreciation rights set forth above (the "SARs"). The SARs will
be valued in accordance with, and are subject to the terms, definitions and
provisions of, the Plan, which are incorporated herein by reference. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Plan.
Subject to the terms and conditions of the Plan, and subject to the
determination of the Compensation Committee in its sole discretion to accelerate
the vesting schedule hereunder, the SARs issued hereunder shall vest and become
vested SARs on the respective dates indicated below:
Incremental (Aggregate Number)
of SARs to be Vested SARs Vesting Date/Percent
27,000 (27,000) FIRST ANNIVERSARY OF GRANT
DATE -- 50%
27,000 (54,000) SECOND ANNIVERSARY OF GRANT
DATE -- 100%
All SARs granted hereunder shall be vested in full upon the earliest to
occur of a Change in Control or the death, Disability, Retirement or voluntary
termination for Good Reason of the SAR Holder. Vested SARs may be exercised at
any time within five (5) years following the Grant Date.
Upon the execution by the Company of a definitive acquisition, merger or
similar agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing, a
Change in Control
8
would occur, the Committee, in its sole discretion, and notwithstanding any
provision of the Transaction Agreement or the Plan, including, but not limited
to, Section 13.f.i. thereof, to the contrary, shall (i) require the acquiring or
surviving entity (if not the Company) to assume the SARs in accordance with
their terms or (ii) pay the Participant, for each share of Common Stock
underlying each SAR not previously exercised, the greater of (A) the transaction
consideration per share of Common Stock underlying each SAR or (B) the Initial
SAR Value per share of Common Stock. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of the SARs shall cease, and unvested SARs shall be terminated,
upon termination of employment of the SAR Holder with the Business Entity that
employs him or her for Cause or other than for Good Reason.
The SAR Holder shall have no rights as a stockholder of the Company by
virtue of having been issued the SARs and shall have only the rights
specifically provided in the Plan.
By executing this SAR Agreement, the SAR Holder acknowledges receipt of
the Plan (a copy of which is attached hereto) and represents that he or she has
read and the terms and provisions of the Plan and accepts the issuance of the
SARs subject to all of such terms and provisions.
9
SUMMIT GLOBAL LOGISTICS, INC.
By: ___________________________________
Name:
Title: _____________________________
ACKNOWLEDGED AND AGREED BY SAR HOLDER:
Name:
Signature: _________________________
10
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHT
EXERCISE NOTICE
Pursuant to the provisions of the Summit Global Logistics, Inc. 2006
Equity Incentive Plan (the "Plan") and that certain Stock Appreciation Rights
Agreement by and between Summit Global Logistics, Inc. (the "Company") and
____________ (the "Grantee") as of _______________ __, 20__, I, the Grantee,
hereby exercise the Stock Appreciation Rights granted under the terms of the
Plan to the extent of __________ shares of the Common Stock of the Company (the
"SARs"). If applicable, I deliver to the Company herewith payment for tax
withholding with respect to the exercise of the SARs in the amount of
$__________.
TO BE COMPLETED BY THE GRANTEE
A. Number of SARs: _______________
B. Initial SAR Value $ _____________
C. Total Initial SAR Value of
Shares (A x B): $ _____________
TO BE COMPLETED BY THE COMPANY
D. Value per share of Common Stock, as of
__________, times the
number of shares being
exercised (A): $ _____________
E. TOTAL PAYMENT
DUE (D - C): $ _____________
Date: __________________ ____________________________________
Grantee
____________________________________
Address
____________________________________
Social Security Number
11
Exhibit H
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into this 8th day of November, 2006 by and between Gregory DeSaye, residing at
13 Driftwood Lane, Colts Neck, NJ 07722 (the "Executive"), and Summit Global
Logistics, Inc., a Delaware corporation, and its subsidiaries (the "Company").
BACKGROUND
WHEREAS, the Executive is expected to make a major contribution
to the growth, profitability and financial strength of the Company; and
WHEREAS, the Company desires to retain the services of the
Executive, and the Executive desires to be retained by the Company, on the terms
and conditions set forth below.
NOW, THEREFORE, intending to be legally bound, and in
consideration of the premises and the mutual promises set forth in this
Agreement, the receipt and sufficiency of which are hereby acknowledged, the
Company and Executive agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following terms, when used in this Agreement, shall
have the following meanings, unless the context clearly requires otherwise (such
definitions to be equally applicable to both the singular and plural of the
defined terms):
1.1.1 "AFFILIATE" means, (a) with respect to the Executive, any other
Person directly or indirectly Controlling, Controlled by, or under common
Control with the Executive and (b) with respect to the Company, (i) any
Person which directly or indirectly beneficially owns (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) securities or other
equity interests possessing more than 50% of the aggregate voting power in
the election of directors (or similar governing body) represented by all
outstanding securities of the Company or (ii) any Person with respect to
which the Company beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) securities or other equity interests
possessing more than 50% of the aggregate voting power in the election of
directors (or similar governing body) represented by, or more than 5% of
the aggregate value of, all outstanding securities or other equity
interests of such Person.
1.1.2 "BASE SALARY" shall have the meaning set forth in section 3.1.
1.1.3 "BOARD" means the Board of Directors of Summit.
1.1.4 "CHANGE IN CONTROL" means the occurrence of any of the
following:
1.1.4.1 the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended)
(the "Act") of beneficial ownership (within the
meaning of Rule 13d-3 of the Act) of more than 50%
of the (A) then outstanding voting stock of Summit;
or (B) the combined voting power of the then
outstanding securities of Summit entitled to vote;
1.1.4.2 an ownership change in which the shareholders of
Summit before such ownership change do not retain,
directly or indirectly, at least a majority of the
beneficial or legal interest in the voting stock of
Summit after such transaction, or in which Summit is
not the surviving company;
1.1.4.3 the direct or indirect sale or exchange by the
beneficial owners (directly or indirectly) of Summit
of all or substantially all of the assets of Summit;
or
1.1.4.4 the bankruptcy of Summit.
1.1.5 "CAUSE" means, as determined by the Company in its sole
discretion, the Executive's
1.1.5.1 material act of dishonesty with respect to the
Company;
1.1.5.2 conviction for a felony, gross misconduct that is
likely to have a material adverse effect on the
Company's business and affairs; or
1.1.5.3 other misconduct, such as excessive absenteeism or
material failure to comply with Company rules.
1.1.6 "CODE" means the Internal Revenue Code of 1986, as amended.
1.1.7 "COMMON STOCK" means the common stock of Summit.
1.1.8 "COMPANY LOCATION" means a Company office consisting of one or
more buildings within 25 miles of each other.
1.1.9 "COMPENSATION COMMITTEE" means the Compensation Committee of the
Board or such other committee designated by the Board that satisfies any
then applicable requirements of the New York Stock Exchange, Nasdaq, or
such other principal national stock exchange on which the Common Stock is
then traded, and which consists of two or more members of the Board, each
of whom shall be an outside director within the meaning of Section 162(m)
of the Code.
2
1.1.10 "CONFIDENTIAL INFORMATION" means:
1.1.10.1 proprietary information, trade secrets and know-how
of the Company and/or its Affiliates;
1.1.10.2 confidential information relating to the business,
operations, systems, networks, services, data bases,
customer lists, pricing policies, business plans,
marketing plans, product development plans,
strategies, inventions and research of the Company
and/or its Affiliates; and
1.1.10.3 confidential information relating to the financial
affairs and results of operations and forecasts or
projections of the Company and/or its Affiliates;
provided that information shall not constitute Confidential
Information if such information: (i) is generally known or reasonably
knowable by Persons other than the Company or its Affiliates or
Persons employed by, in control of or otherwise affiliated with the
Company or its Affiliates, (ii) is known or reasonably knowable by
Persons other than the Company or its Affiliates or Persons employed
by, in control of or otherwise affiliated with the Company or its
Affiliates, by reason of the action of such Person or Persons other
than the Executive or any Person acting at the Executive's direction
or with the Executive's prior consent, (iii) was known or reasonably
knowable by the Executive, by lawful means, prior to the date of the
Executive's employment with the Company or (iv) is compelled to be
disclosed by law, regulation or legal process.
1.1.11 "CONTROL" (including the terms "Controlled by" and "under
common Control with") means the possession, directly or indirectly or as a
trustee or executor, of the power to direct or cause the direction of the
management of a Person (including the direction of any Person related to
the Executive), whether through the ownership of stock, as a trustee or
executor, by contract or credit agreement or otherwise.
1.1.12 "DISABILITY" means any physical or mental condition which
renders Executive incapable of performing his essential functions and
duties hereunder for a continuous period of at least 180 days, as
determined in good faith by a physician appointed by the Company.
1.1.13 "EFFECTIVE DATE" means the date of the Closing as defined in
the Purchase Agreement.
1.1.14 "EMPLOYMENT TERM" shall have the meaning set forth in section
2.2.
1.1.15 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
1.1.16 "FISCAL YEAR" means the calendar year.
3
1.1.17 "GOOD REASON" means the occurrence of any of the following:
1.1.17.1 without the Executive's prior written consent, any
material diminution in the Executive's authority,
duties or responsibilities, including those
pertaining to his status as a director of the Board,
if applicable; provided, however, that prior to any
termination pursuant to this Section 1.1.17.1, the
Company must be given notice by the Executive of
his/her objection to such material diminution and no
less than 20 days to cure the same;
1.1.17.2 any failure by the Company to pay the Executive any
portion of the Base Salary or other payments to
which the Executive is entitled, provided, however,
that prior to any termination pursuant to this
Section 1.1.17.2 on account of the non-payment of
Base Salary, the Company must be given notice by the
Executive of such acts and omissions and no less
than 30 days to cure the same;
1.1.17.3 without the Executive's prior written consent, the
relocation of the principal place of the Executive's
employment to a location a further distance than the
Company Location where the individual was working
immediately prior to the relocation; or
1.1.17.4 a material breach by the Company of any of the
material provisions of this Agreement, provided,
however, that prior to any such termination pursuant
to this Section 1.1.17.4, the Company must be given
notice by the Executive of such acts or omissions
and no less than 20 days to cure the same.
1.1.18 "MANAGEMENT INCENTIVE PLAN" means the Summit Global Logistics,
Inc. 2007 Management Incentive Plan, attached as Exhibit A hereto.
1.1.19 "PERSON" means an individual, corporation, partnership,
association, limited liability company or partnership, trust, government,
governmental agency or body, or any other group or entity, no matter how
organized and whether or not for profit.
1.1.20 "PURCHASE AGREEMENT" means that certain Equity Purchase
Agreement by and between Maritime Logistics US Holdings Inc., FMI Holdco I,
LLC, FMI Blocker, Inc. and each of the Sellers set forth in Schedule A
thereto, dated as of October 23, 2006.
1.1.21 "TERMINATION DATE" means the date on which the Executive's
employment with the Company terminates for any reason.
1.1.22 "YEAR OF SERVICE" means the completion by the Executive of Year
One, Year Two, Year Three, Year Four or Year Five, or any additional
one-year period under Section 2.2 hereof, as applicable. For purposes of
Section 3.3 hereof, and only for such
4
purposes, partial years of service will be credited as one (1) Year of
Service if the Executive has worked at least 1,000 hours during the
applicable year.
1.1.23 "YEAR ONE" means the 12-consecutive-month period beginning on
the Effective Date and ending on the day immediately prior to the first day
of Year Two.
1.1.24 "YEAR TWO" means the 12-consecutive-month period beginning on
the first anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Three.
1.1.25 "YEAR THREE" means the 12-consecutive-month period beginning on
the second anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Four.
1.1.26 "YEAR FOUR" means the 12-consecutive-month period beginning on
the third anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Five.
1.1.27 "YEAR FIVE" means the 12-consecutive-month period beginning on
the fourth anniversary of the Effective Date and ending on the day
immediately prior to the fifth anniversary of the Effective Date.
ARTICLE 2
EMPLOYMENT AND TERM
2.1 EMPLOYMENT. The Company employs Executive and the Executive hereby
agrees to such employment by the Company during the Employment Term to serve as
Division Chairman of FMI Holdco I, LLC, with the customary duties, authorities
and responsibilities of an officer of a corporation and such other duties,
authorities and responsibilities relative to the Company or its Affiliates that
have been agreed upon in writing by the Company and Executive. This Agreement
supersedes any and all prior agreements between the Executive and the Company or
the Company's predecessors in interest with respect to the Executive's
employment, and any such prior agreements shall be void and of no further force
and effect as of the Effective Date.
2.2 EMPLOYMENT TERM. The "Employment Term" of this Agreement shall commence
on the Effective Date, and unless sooner terminated as provided in Article 4,
shall terminate upon the eighteen (18) month anniversary of such date.
Thereafter, and unless sooner terminated as provided in Article 4, the
Employment Term shall automatically be renewed on each anniversary date of the
expiration of the initial Employment Term for a period of one (1) year, unless
and until either the Company or the Executive terminates such automatic renewal
upon sixty (60) days' advance written notice to the other of an intention not to
renew (that is, upon written notice of an intention not to renew delivered to
the other at least sixty (60) days prior to the beginning of the next one-year
period); provided, however, that in no event shall the Employment Term exceed a
period of five (5) continuous years beginning with the Effective Date.
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2.3 FULL WORKING TIME. During the Employment Term, the Executive shall
devote substantially all of his ability and attention, all of his skill and
experience and efforts during normal business hours and at such other times as
reasonably required for the proper performance of his duties hereunder and to
the business and affairs of the Company. During the Employment Term, the
Executive shall not, either directly or indirectly, actively participate in any
other business or accept any employment or business office whatsoever from any
other Person; provided, however, that the foregoing shall not preclude the
Executive, subject to Article 5, from: (i) serving as a director of any
non-profit or charitable organization, or any company not in competition with
the Company, or (ii) making an investment in any other business, so long as in
any such case, the Executive does not actively participate in such other
business or organization and such activity does not interfere with the
Executive's ability to perform his duties hereunder and does not constitute a
conflict of interest with the Company.
ARTICLE 3
COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the Employment Term, as compensation for services
hereunder and in consideration for the protective covenants set forth in Article
5 of this Agreement, the Executive shall be paid a base salary of One Hundred
Eighty Thousand United Stated Dollars (U.S. $180,000) for Year One, with an
annual cost of living increase of 3% for each of Year Two, and, if applicable,
Year Three, Year Four and Year Five, or such greater amount as may from time to
time be approved by the Compensation Committee (the "Base Salary").
Cost-of-living increases shall be effective as of the commencement of Year Two,
Year Three, Year Four and Year Five, respectively, and shall be cumulative. Base
Salary shall be paid to the Executive in accordance with the Company's normal
payroll practices.
3.2 BONUSES. The Executive shall receive an annual bonus in accordance with
the terms of a grant agreement made pursuant to the terms of the Management
Incentive Plan (the "Annual Bonus Grant Agreement"). The Annual Bonus Grant
Agreement is attached as Exhibit B hereto.
3.3 RETIREMENT, WELFARE AND FRINGE BENEFITS. To the maximum extent that he
is eligible under the terms of the applicable plan or program, the Executive
shall participate in the current or future plans or programs maintained by the
Company for its employees and/or senior executives that provide insurance,
medical benefits, retirement benefits, or similar fringe benefits, as well as
any additional plans or programs that may be adopted that are generally
applicable to senior executives; provided, however, that if within the
Employment Term, the Executive leaves the employment of the Company and is
eligible for severance benefits, then $7,500 per Year of Service shall be added
to the severance amount in lieu of any forfeited (non-vested) qualified plan
amount. In addition, the Executive shall be entitled to a minimum of twenty (20)
vacation days for each calendar year beginning with or within a Year of Service,
which must be taken in accordance with the Company's vacation policy then in
effect. The Executive shall also be entitled at least six (6) days of sick day
leave, seven (7) personal days leave and seven (7) fixed holidays for each
calendar year beginning with or within a Year of Service, which must be taken in
accordance with the Company's applicable policies then in effect. Unused
vacation days, sick days or personal days shall not carry forward into the
subsequent year. In the event that the Company establishes a more favorable
vacation, sick leave
6
or personal day policy generally applicable to senior executives, the Executive
shall be entitled to any such additional benefits. During the Employment Term,
the Company shall pay the Executive an automobile allowance, which shall not
exceed $1,250 per month, plus an annual inflation adjustment reflecting market
conditions. The Executive is responsible for the tax consequences of the
personal usage of the automobile. The Executive shall be entitled to a $5,000
per year golf, health, country and/or other recreational club membership
allowance for each Year of Service, to be allocated among the foregoing as the
Executive sees fit. The Executive is responsible for the tax consequences of the
personal usage of the golf, health, country and/or other recreational club
membership. In addition, or in lieu of the Company policy for executives with
respect to annual physical examinations, during each Year of Service, the
Executive shall be reimbursed up to $1000 for an annual physical examination
conducted by a physician designated by the Executive.
3.4 INDEMNIFICATION AND INSURANCE.
3.4.1 D&O INSURANCE. During the entirety of the Employment Term,
the Company shall cause the Executive to be covered by and named as an
insured or as a member of a class of insured under any policy or contract
of insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as an
officer or director of the Company or service in other capacities at its
request ("D&O Insurance Coverage"). The D&O Insurance Coverage provided to
the Executive pursuant to this Section 3.4.1 shall be of the same scope and
on the same terms and conditions as the coverage (if any) provided to other
officers or directors of the Company and shall continue for so long as the
Executive shall be subject to personal liability relating to such service.
3.4.2 EPLI INSURANCE. During the entirety of the Employment Term,
the Company shall cause the Executive to be covered by and named as an
insured or as a member of a class of insured under any policy or contract
of insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as a
director or officer of the Company, where such personal liability could
arise under or in connection with, or be attributable to, the Company's
employment practices and procedures "EPLI Insurance Coverage"). The EPLI
Insurance Coverage provided to the Executive pursuant to this Section 3.4.2
shall be of the same scope and on the same terms and conditions as the
coverage (if any) provided to other officers or directors of the Company
and shall continue for so long as the Executive shall be subject to
personal liability relating to such service.
3.4.3 INDEMNIFICATION. To the maximum extent permitted under
applicable law, and provided that the Executive has acted within the scope
of his authority hereunder, the Company shall indemnify the Executive
against and hold him harmless from any costs, liabilities, losses and
exposures (each, a "Cost," and collectively, "Costs") to the fullest extent
and on the most favorable terms and conditions that similar indemnification
is offered to any director or officer of the Company or any subsidiary or
Affiliate thereof and shall survive the termination of this Agreement and
continue for so long as the Executive shall be subject to personal
liability relating to such service; provided, however, that the Company
shall not indemnify and hold harmless the Executive from a Cost to the
extent that such Cost is attributable to the Executive's (i) willful
misconduct
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or gross negligence in the performance of his duties or exercise of his
authority hereunder or (ii) material breach of any of the provisions of
this Agreement.
3.5 EXPENSES. The Company shall pay or reimburse the Executive for
reasonable business expenses actually incurred or paid by the Executive during
the Employment Term, in the performance of his services hereunder; provided,
however, that such expenses are consistent with the Company's policy. Such
payment or reimbursement is expressly conditioned upon presentation of expense
statements or vouchers or other supporting documentation by the Executive in a
manner that is acceptable to the Company and otherwise in accordance with the
Company's policy then in effect.
3.6 DEDUCTIONS. The Company shall deduct from all compensation or benefits
payable pursuant to this Agreement such payroll, withholding and other taxes and
medical, pension and other benefits in accordance with the Company's benefit
programs and the Executive's selections and as may in the reasonable opinion of
the Company be required by law and any such additional amounts requested in
writing by the Executive.
ARTICLE 4
TERMINATION
4.1 GENERAL. The Company shall have the right to terminate the employment
of the Executive at any time with or without Cause and the Executive shall be
paid the Standard Termination Entitlements (as defined in Section 4.3.1).
4.2 TERMINATION UNDER CERTAIN CIRCUMSTANCES.
4.2.1 TERMINATION WITHOUT SEVERANCE BENEFITS. In the event the
Executive's employment with the Company is terminated prior to the
expiration of the Employment Term by reason of (i) the Executive's
resignation without Good Reason, (ii) the Executive's death or (iii) the
Executive's discharge by the Company for Cause prior to the occurrence of a
Change in Control, this Agreement shall terminate including, without
limitation, the Company's obligations to provide any compensation, benefits
or severance to the Executive under Article 3 of this Agreement or
otherwise, other than the Standard Termination Entitlements (as defined in
section 4.3.1).
4.2.2 DISABILITY. The Company may terminate the Executive's employment
upon the Executive's Disability. In such event, in addition to the Standard
Termination Entitlements (as defined in section 4.3.1), the Company shall
continue to pay the Executive his Base Salary in accordance with the
Company's normal payroll practices, at the annual rate in effect for him
immediately prior to the termination of his employment, during a period
ending on the earliest of: (a) the date on which long-term disability
insurance benefits are first payable to him under any long-term disability
insurance plan covering employees of the Company; and (b) the date of his
death. A termination of employment due to Disability under this Section
4.2.2 shall be effected by notice of termination given to the Executive by
the Company and shall take effect on the later of
8
the effective date of termination specified in such notice or the date on
which the notice of termination is deemed given to the Executive.
4.2.3 TERMINATION WITH SEVERANCE BENEFITS. In the event that the
Executive's employment with the Company is terminated by the Executive
prior to the expiration of the Employment Term for Good Reason or by the
Company prior to the expiration of the Employment Term other than for Cause
or Disability, the Company shall pay the Standard Termination Entitlements
(as defined in section 4.3.1) and the Severance Benefits (as defined in
section 4.3.2); provided, however, that any payment required by this
section 4.2.3 is expressly conditioned upon:
4.2.3.1 The Executive's continued material compliance with
the terms of this Agreement, including, without
limitation, Article 5; and
4.2.3.2 The Executive's resignation from any and all
positions which he holds as an officer, director or
committee member with respect to the Company or any
Affiliate thereof.
4.3 Standard Termination Entitlements; Severance Benefits.
4.3.1 STANDARD TERMINATION ENTITLEMENTS. For all purposes of this
Agreement, the Executive's "Standard Termination Entitlements" shall mean
and include:
4.3.1.1 the Executive's earned but unpaid compensation as of
the date of his termination of employment. This
payment shall be made at the time and in the manner
prescribed by law applicable to the payment of wages
including, specifically, payment for accrued, but
unused vacation days;
4.3.1.2 reimbursement for reasonable business expenses and
authorized travel expenses incurred but still
outstanding; and
4.3.1.3 the benefits, if any, due to the Executive, and the
Executive's estate, surviving dependents or his
designated beneficiaries under the employee benefit
plans and programs and compensation plans and
programs maintained for the benefit of, or covering,
the officers, executives and employees of the
Company, including, but not limited to, the
Management Incentive Plan. The time and manner of
payment or other delivery of these benefits and the
recipients of such benefits shall be determined
according to the terms and conditions of the
applicable plans and programs.
4.3.2 SEVERANCE BENEFIT. For all purposes of this Agreement, the
Executive's "Severance Benefit" shall mean the benefit set forth in
Schedule A attached hereto.
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ARTICLE 5
RESTRICTIVE COVENANTS
5.1 PROPRIETARY INFORMATION.
5.1.1 DISCLOSURE DURING THE EMPLOYMENT TERM. Subject to Section 5.4
hereof, the Executive shall promptly disclose to the Company in such form
and manner as the Company may reasonably require (a) all operations,
systems, services, methods, developments, inventions, improvements and
other information or data pertaining to the business or activities of the
Company and its Affiliates as are conceived, originated, discovered or
developed by the Executive during the Employment Term and (b) such
information and data pertaining to the business, operations, personnel,
activities, financial affairs, and other information relating to the
Company and its Affiliates and their respective customers, suppliers,
employees and other persons having business dealings with the Company and
its Affiliates as may be reasonably required for the Company to operate its
business. It is understood that such information is proprietary in nature
and shall (as between the Company and Executive) be for the exclusive use
and benefit of the Company and shall be and remain the property of the
Company both during the Employment Term and thereafter.
5.1.2 DISCLOSURE AFTER EMPLOYMENT. In the event that the Executive
leaves the employ of the Company for any reason, including, without
limitation, the expiration of the Employment Term, the Executive shall
deliver to the Company any and all devices (including any lap top, personal
hand-held devices or mobile telephone), records, data, notes, reports,
proposals, lists, correspondence, specifications, drawings, blueprints,
sketches, materials, equipment, other documents or property belonging to
the Company or any Affiliate thereof or any of their respective successors
or assigns.
5.2 NON-COMPETITION.
5.2.1 PROHIBITION AGAINST COMPETITION. The Executive acknowledges that
during the Employment Term he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and
that his services have been and will be of special, unique and
extraordinary value to the Company. The Executive agrees that, in
consideration of the payments made to the Executive hereunder, during the
Employment Term and for one year following the Employment Term and/or for
two years following the early termination of the Employment Period for any
reason provided for by Section 4.2 (the "Noncompete Period"), he shall not
directly or indirectly own, manage, control, participate in, consult with,
render services for, or in any manner engage in the provision of logistics
services, including, but not limited to, (a) air and ocean freight
forwarding worldwide, and (b) transloading, warehousing, distribution,
value-added and local and long distance trucking services (the "Business")
throughout North America, anywhere in the United States or, in the case of
the freight forwarding portion of the Business, anywhere in the world.
Nothing herein shall prohibit the Executive from being a passive owner of
not more than 5% of the stock of a publicly held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market.
In the event of a breach of this Section 5.2, the term of the Noncompete
10
Period shall be extended by a period equal to the length of such breach.
The Executive agrees that these provisions are necessary for the protection
of the Company from unfair competition and that the national and/or world
wide scope of these restrictions is appropriate given the nature of the
Company's business and the position held by the Executive.
5.2.2 NON-SOLICITATION OF BUSINESS. During the Noncompete Period, the
Executive shall not directly or indirectly solicit or attempt to solicit
business from any person or entity who was a customer of the Company during
the Employment Term. The Executive also agrees that, during the Noncompete
Period, she shall not induce or attempt to induce any person or entity who
was a customer of the Company during the Executive's Employment Term to end
its relationship or cease doing business with the Company.
5.2.3 NON-SOLICITATION OF EMPLOYEES, OFFICERS, ETC. During the
Noncompete Period, the Executive shall not directly or indirectly induce or
attempt to induce any officer, employee or consultant of the Company or any
Affiliate or subsidiary of the Company to leave the employ of the Company
or such Affiliate or subsidiary, or in any way interfere with the
relationship between the Company or any such Affiliate or subsidiary and
any employee thereof.
5.3 NON-DISCLOSURE. Except with the prior written consent of the Company in
each instance or as may be reasonably necessary to perform the Executive's
services hereunder, the Executive shall not disclose, use, publish, or in any
other manner reveal, directly or indirectly, at any time during or after the
Employment Term, any Confidential Information relating to the Company or any
Affiliate thereof acquired by him prior to, during the course of, or incident
to, his employment hereunder; provided, however, that necessary or appropriate
disclosures may be made to the Executive's legal counsel.
5.4 OWNERSHIP OF INTELLECTUAL PROPERTY. Subject to applicable law, the
Executive acknowledges and agrees that all work performed, and all ideas,
concepts, materials, products, software; documentation, designs, architectures,
specifications, flow charts, test data, programmer's notes, deliverables,
improvements, discoveries, methods, processes, or inventions, trade secrets or
other subject matter related to the Company's business (collectively,
"Materials") conceived, developed or prepared by the Executive alone, or with
others, during the period of Executive's employment by the Company in written,
oral, electronic, photographic, optical or any other form are the property of
the Company and its successors or assigns, and all rights, title and interest
therein shall vest in the Company and its successors or assigns, and all
Materials shall be deemed to be works made for hire and made in the course of
the Executive's employment by the Company. To the extent that title to any
Materials has not or may not, by operation of law, vest in the Company and its
successors or assigns, or such Materials may not be considered works made for
hire. Notwithstanding the foregoing, the parties acknowledge and understand that
Executive may previously have developed and may continue to develop certain
ideas, concepts and designs which are unrelated to the business of the Company
and may continue to do so provided that such activities do not interfere with
his duties under this Agreement.
11
5.5 REASONABLE LIMITATIONS. Executive acknowledges that given the nature of
the Company's business, the covenants contained in this Article 5 contain
reasonable limitations as to time, geographical area and scope of activity to be
restrained, and do not impose a greater restraint than is necessary to protect
and preserve the Company's business and to protect the Company's legitimate
business interests. If, however, this Article 5 is determined by any arbitrator
to be unenforceable by reason of its extending for too long a period of time or
over too large a geographic area or by reason of its being too extensive in any
other respect, or for any other reason, it will be interpreted to extend only
over the longest period of time for which it may be enforceable and/or over the
largest geographical area as to which it may be enforceable and/or to the
maximum extent in all other aspects as to which it may be enforceable, all as
determined by such court or arbitrator in such action.
5.6 SURVIVAL OF PROTECTIVE COVENANTS. Each covenant on the part of
Executive contained in this Article 5 shall be construed as an agreement
independent of any other provision of this Agreement, unless otherwise indicated
herein, and shall survive the termination of Executive's employment under this
Agreement.
ARTICLE 6
DISPUTE RESOLUTION
6.1 ARBITRATION OF DISPUTES. Both parties agree that all controversies or
claims that may arise between the Executive and the Company in connection with
this Agreement shall be settled by arbitration. The parties further agree that
the arbitration shall be held in the State of New Jersey, and administered by
the American Arbitration Association under its Commercial Arbitration Rules,
applying New Jersey law.
6.1.1 QUALIFICATIONS OF ARBITRATOR. The arbitration shall be submitted
to a single arbitrator chosen in the manner provided under the rules of the
American Arbitration Association. The arbitrator shall be disinterested and
shall not have any significant business relationship with either party, and
shall not have served as an arbitrator for any disputes involving the
Company or any of its Affiliates more than twice in the thirty-six (36)
month period immediately preceding his or her date of appointment. The
arbitrator shall be a person who is experienced and knowledgeable in
employment and executive compensation law and shall be an attorney duly
licensed to practice law in one or more states.
6.1.2 POWERS OF ARBITRATOR. The arbitrator shall not have the
authority to grant any remedy which contravenes or changes any term of this
Agreement and shall not have the authority to award punitive or exemplary
or damages under any circumstances. The parties shall equally share the
expense of the arbitrator selected and of any stenographer present at the
arbitration. The remaining costs of the arbitrator proceedings shall be
allocated by the arbitrator, except that the arbitrator shall not have the
power to award attorney's fees.
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6.1.3 EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall render its
decision within thirty (30) days after termination of the arbitration
proceeding, which decision shall be in writing, stating the reasons
therefor and including a brief description of each element of any damages
awarded. The decision of the arbitrator shall be final and binding.
Judgment on the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof.
6.2 SERVICE OF PROCESS. The parties agree that service of process may be
made on it by personal service of a copy of the summons and complaint or other
legal process in any such suit, action or proceeding, or by registered or
certified mail (postage prepaid) to its address specified in Section 7.1 (or
applicable forwarding address), or by any other method of service provided for
under the applicable laws in effect in the applicable jurisdiction.
ARTICLE 7
GENERAL PROVISIONS
7.1 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Executive: Gregory DeSaye
13 Driftwood Lane
Colts Neck, NJ 07722
If to the Company: Summit Global Logistics, Inc. and its Subsidiaries
547 Boulevard
Kenilworth, NJ 07730
Attn: Peter Klaver
with a copy to: David D. Gammell, Esq.
Brown Rudnick Berlack Israels LLP
One Financial Center
Boston, MA 02111
or to such other address as the party to whom notice is given may have
previously furnished to the other parties hereto in writing in the manner set
forth above.
7.2 ENTIRE AGREEMENT. This Agreement shall constitute the entire agreement
between the Executive and the Company with respect to the Company's employment
of the Executive and supersedes any and all prior agreements and understandings,
written or oral, with respect thereto.
13
7.3 AMENDMENTS AND WAIVERS. Any term of this Agreement or any Schedule,
Exhibit or attachment hereto may be amended only by (a) an instrument in writing
and signed by the party against whom such amendment is sought to be enforced,
and (b) in the case of the Company, such amendment also must be duly authorized
by an appropriate resolution of the Company. In addition, any obligation of this
Agreement or any Schedule, Exhibit or attachment hereto may be waived by the
party against whom the obligation runs by an instrument in writing signed by
that party and delivered to the Company as reasonable time prior to the
effective date of the waiver.
7.4 SUCCESSORS AND ASSIGNS. The Company shall have the right to assign this
Agreement, subject to the Executive's consent which shall not be unreasonably
withheld and subject to. This Agreement shall inure to the benefit of, and be
binding upon (a) the parties hereto, (b) the heirs, administrators, executors
and personal representatives of the Executive and (c) the successors and assigns
of the Company as provided herein.
7.5 GOVERNING LAW. This Agreement, including the validity hereof and the
rights and obligations of the parties hereunder, and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the laws of the State of New Jersey without
giving effect to any conflicts of law provisions or rule, that would cause the
application of the laws of any other jurisdiction.
7.6 SEVERABILITY. If any provisions of this Agreement as applied to any
part or to any circumstance shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement.
7.7 NO CONFLICTS. The Executive represents to the Company that the
execution, delivery and performance by the Executive of this Agreement does not
and will not conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under any contract,
agreement or understanding, whether oral or written, to which the Executive is
or was a party or of which the Executive is or should be aware.
7.8 SURVIVAL. The rights and obligations of the Company and Executive
pursuant to Articles 4, 5 and 6 shall survive the termination of the Executive's
employment with the Company and the expiration of the Employment Term.
7.9 CAPTIONS. The headings and captions used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
7.10 COUNTERPARTS. This Agreement be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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7.11 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EXECUTIVE
----------------------------------
SUMMIT GLOBAL LOGISTICS, INC.
AND ITS SUBSIDIARIES
By:_______________________________
Name
Title:
15
SCHEDULE A
SEVERANCE BENEFIT
The Executive shall be entitled to a severance benefit equal to the
greater of the following two amounts:
o two (2) times his Base Salary as in effect as of the
Termination Date, paid in equal installments on a biweekly
basis for two (2)-year period commencing on the day
immediately following the Termination Date; or
o the benefit payable to him under the Summit Global Logistics,
Inc. Severance Benefit Plan, attached as Exhibit C hereto
(each, a "Severance Benefit"), in accordance with the terms if
such Plan.
The Severance Benefit shall be paid in cash, net any and all applicable
withholdings for taxes or otherwise. Payment of any portion of the Severance
Benefit shall be conditioned upon the Executive's execution of a general release
of claims he may have against the Company.
16
EXHIBIT B
ANNUAL BONUS GRANT AGREEMENT
THIS ANNUAL BONUS GRANT AGREEMENT ("Agreement") is made and entered
into this __ day of __________, 2007, (the "Effective Date") by and between
Gregory DeSaye (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation, and its subsidiaries (the "Company").
BACKGROUND
WHEREAS, Section 3.2 of that certain Employment Agreement made
and entered into the 8th day of November, 2006 by and between the Executive and
the Company (the "Employment Agreement") requires the Company, pursuant to the
terms of the Management Incentive Plan, as defined in the Employment Agreement,
to make annual bonus payments to the Executive for each Year of Service, as
defined in the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in
consideration of the premises and the mutual promises set forth in the
Employment Agreement, the receipt and sufficiency of which are hereby
acknowledged, the Executive and the Company agree as follows:
1. DEFINITIONS. The following terms, when used in this
Agreement, shall have the following meanings, unless the context clearly
requires otherwise (such definitions to be equally applicable to both the
singular and plural of the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed
thereto in the Management Incentive Plan.
1.2 "BONUS" means the annual incentive bonus to be
paid hereunder with respect to a given Fiscal Year.
1.3 "EBITDA" means FMI's earnings before income tax,
plus depreciation and amortization, as computed in accordance
with United States GAAP and in a manner consistent with the
methods used in FMI's audited financial statements, without
regard to (i) extraordinary or other nonrecurring or unusual
items, or restructuring or impairment charges, as determined by
FMI's independent public accountants in accordance with GAAP or
(ii) changes in accounting, unless, in each case, the
Committee, as defined in the Management Incentive Plan, decides
otherwise within the Determination Period, as defined in the
Management Incentive Plan.
1.4 "EBITDA TARGET" means FMI's EBITDA for Fiscal
Year 2007, 2008, 2009 or 2010, as applicable.
1.5 "FISCAL YEAR" means the calendar year.
1.6 "FMI" means FMI Holdco I, LLC.
1.7 "GAAP" means generally accepted accounting
principles.
1.8 "PERFORMANCE PERIOD" shall have the meaning
ascribed thereto in the Management Incentive Plan.
2. EBITDA TARGETS.
2.1 The EBITDA Target for Fiscal Year 2007 shall be
$__________.
2.2 The EBITDA Target for Fiscal Year 2008 shall be
$__________.
2.3 The EBITDA Target for Fiscal Year 2009 shall be
$__________.
2.4 The EBITDA Target for Fiscal Year 2010 shall be
$__________.
3. ANNUAL INCENTIVE BONUSES.
3.1 The Bonus for each of Fiscal Year 2007, Fiscal
Year 2008, Fiscal Year 2009 and Fiscal Year 2010 shall be as
follows:
3.1.1 If at least 80% of the EBITDA Target
for the applicable Fiscal Year is achieved,
the Executive shall receive a Bonus for such
Fiscal Year equal to 35% of his Base Salary
for the Performance Period beginning with or
within such Fiscal Year.
3.1.1.2 If at least 90% of the EBITDA Target
for the applicable Fiscal Year is achieved,
the Executive shall receive a Bonus for such
Fiscal Year equal to 52.5% of his Base
Salary for the Performance Period beginning
with or within such Fiscal Year.
3.1.1.3 If at least 100% of the EBITDA
Target for the applicable Fiscal Year is
achieved, the Executive shall receive a
Bonus for such Fiscal Year equal to 70% of
his Base Salary for the Performance Period
beginning with or within such Fiscal Year.
3.1.1.4 For each percentage point, up to 50
percentage points by which the EBITDA Target
for the applicable Fiscal Year is exceeded,
the Executive shall receive an additional
Bonus equal to 2.1% of his Base Salary.
3.1.1.5 For each percentage point over 50
percentage points, up to 50 additional
points, by which the EBITDA Target for the
applicable Fiscal Year is exceeded, the
Executive shall receive an additional Bonus
equal to 2.8% of his Base Salary.
3.2 Except as otherwise provided herein, bonus
amounts shall be payable to the Executive in accordance with
the terms and conditions of the Management Incentive Plan.
4. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and the Company shall comply with all of the terms thereof applicable
to annual incentive awards. In the event of any conflict between the terms of
this Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
5. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EXECUTIVE
----------------------------------
SUMMIT GLOBAL LOGISTICS, INC.
AND ITS SUBSIDIARIES
By:_______________________________
Name
Title:
APPENDIX A
(HIGH LEVEL EXECUTIVES)
Twenty-four (24) Months' Base Salary. Payments shall be made on a monthly basis.
In addition, the Company shall pay the individual's premiums for COBRA
continuation coverage (individual, individual plus one or family coverage, as
applicable) for a period of eighteen (18) months following termination of
employment. At the expiration of this eighteen (18)-month period, the Company
will pay the individual, in a single lump sum, the cash value of six (6)
additional months of premium payments for the type of coverage elected under
COBRA under a substantially similar health plan. The amount to be paid under the
immediately preceding sentence shall not exceed $25,000.
If the individual's employment is terminated in connection with a Change in
Control, as such term is defined in Plan Section 4.2.b, the twenty-four (24)
Months' Base Salary described above shall be paid to the individual in a single
lump sum, the COBRA and health care benefits shall be provided as described
above, and the Company also will provide the individual with outplacement
benefits of an amount commensurate with the individual's position with the
Company, the value of such benefits not to exceed $10,500. The Company will also
continue to maintain the identical level of Perquisites and benefits enjoyed by
the individual prior to the Change in Control for a period of two (2) years
following his or her last day of employment. For these purposes, a termination
of the individual's employment shall conclusively be deemed to be in connection
with a Change in Control if such termination occurs during the time period
commencing on the date of the Change in Control and ending on the second
anniversary of the closing date for the transaction effecting the Change in
Control
This Exhibit A confirms that, solely for purposes of the Summit Global
Logistics, Inc. Severance Benefit Plan, Gregory DeSaye is within category
described above.
18
Exhibit I
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into this 8th day of November, 2006, by and between Peter Klaver, residing at
2606 River Road, Manasquan, NJ 08736 (the "Executive"), and Summit Global
Logistics, Inc., a Delaware corporation (the "Company").
BACKGROUND
WHEREAS, the Executive is expected to make a major
contribution to the growth, profitability and financial strength of the Company;
and
WHEREAS, the Company desires to retain the services of the
Executive, and the Executive desires to be retained by the Company, on the terms
and conditions set forth below.
NOW, THEREFORE, intending to be legally bound, and in
consideration of the premises and the mutual promises set forth in this
Agreement, the receipt and sufficiency of which are hereby acknowledged, the
Company and Executive agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following terms, when used in this Agreement,
shall have the following meanings, unless the context clearly requires otherwise
(such definitions to be equally applicable to both the singular and plural of
the defined terms):
1.1.1 "AFFILIATE" means, (a) with respect to the Executive, any
other Person directly or indirectly Controlling, Controlled by, or
under common Control with the Executive and (b) with respect to the
Company, (i) any Person which directly or indirectly beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
securities or other equity interests possessing more than 50% of the
aggregate voting power in the election of directors (or similar
governing body) represented by all outstanding securities of the
Company or (ii) any Person with respect to which the Company
beneficially owns (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) securities or other equity interests possessing more
than 50% of the aggregate voting power in the election of directors (or
similar governing body) represented by, or more than 5% of the
aggregate value of, all outstanding securities or other equity
interests of such Person.
1.1.2 "BASE SALARY" shall have the meaning set forth in section
3.1.
1.1.3 "BOARD" means the Board of Directors of the Company.
1
1.1.4 "CHANGE IN CONTROL" means the occurrence of the first step
(E.G., commencement of negotiations) in a process that results in any
one of the following events:
1.1.4.1 the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended)
(the "Act") of beneficial ownership (within the
meaning of Rule 13d-3 of the Act) of more than 20%
of the (A) then outstanding voting stock of a
Company; or (B) the combined voting power of the
then outstanding securities of the Company entitled
to vote;
1.1.4.2 an ownership change in which the shareholders of the
Company before such ownership change do not retain,
directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the
Company after such transaction, or in which the
Company is not the surviving company;
1.1.4.3 the direct or indirect sale or exchange by the
beneficial owners (directly or indirectly) of the
Company of all or substantially all of the stock of
the Company;
1.1.4.4 a majority of the directors comprising the entire
Board as of the Effective Date changes during any
12-month period (other than a Qualified Successor);
1.1.4.5 a reorganization, merger or consolidation in which
the Company is a party;
1.1.4.6 the sale, exchange, or transfer of all or
substantially all of the assets of the Company;
1.1.4.7 the bankruptcy, liquidation or dissolution of the
Company; or
1.1.4.8 any transaction including the Company in which the
Company acquires an ownership interest of any
percentage in, enters into a joint venture,
partnership, alliance or similar arrangement with,
or becomes owned in any percentage by, any other
entity that is engaged in a business similar to the
business engaged in by the Company and that has
operations in North America immediately before such
transaction or within one year thereafter.
1.1.5 "CAUSE" means, as determined by the Company in its sole
discretion, the Executive's
1.1.5.1 material act of dishonesty with respect to the
Company;
2
1.1.5.2 conviction for a felony, gross misconduct that is
likely to have a material adverse effect on the
Company's business and affairs; or
1.1.5.3 other misconduct, such as excessive absenteeism, or
material failure to comply with Company rules.
1.1.6 "CODE" means the Internal Revenue Code of 1986, as amended.
1.1.7 "COMMON STOCK" means the common stock of the Company, par
value of $.001 per share.
1.1.8 "COMPANY LOCATION" means a Company office consisting of one
or more buildings within 25 miles of each other.
1.1.9 "COMPENSATION COMMITTEE" means the Compensation Committee
of the Board or such other committee designated by the Board that
satisfies any then applicable requirements of the New York Stock
Exchange, Nasdaq, or such other principal national stock exchange on
which the Common Stock is then traded, and which consists of two or
more members of the Board, each of whom shall be an outside director
within the meaning of Section 162(m) of the Code.
1.1.10 "CONFIDENTIAL INFORMATION" means:
1.1.10.1 proprietary information, trade secrets and know-how
of the Company and/or its Affiliates;
1.1.10.2 confidential information relating to the business,
operations, systems, networks, services, data bases,
customer lists, pricing policies, business plans,
marketing plans, product development plans,
strategies, inventions and research of the Company
and/or its Affiliates; and
1.1.10.3 confidential information relating to the financial
affairs and results of operations and forecasts or
projections of the Company and/or its Affiliates;
provided that information shall not constitute Confidential
Information if such information: (i) is generally known or
reasonably knowable by Persons other than the Company or its
Affiliates or Persons employed by, in control of or otherwise
affiliated with the Company or its Affiliates, (ii) is known
or reasonably knowable by Persons other than the Company or
its Affiliates or Persons employed by, in control of or
otherwise affiliated with the Company or its Affiliates, by
reason of the action of such Person or Persons other than the
Executive or any Person acting at the Executive's direction or
with the Executive's prior consent, (iii) was known or
reasonably knowable by the Executive, by lawful means, prior
to the date
3
of the Executive's employment with the Company or (iv) is
compelled to be disclosed by law, regulation or legal process.
1.1.11 "CONTROL" (including the terms "Controlled by" and "under
common Control with") means the possession, directly or indirectly or
as a trustee or executor, of the power to direct or cause the direction
of the management of a Person (including the direction of any Person
related to the Executive), whether through the ownership of stock, as a
trustee or executor, by contract or credit agreement or otherwise.
1.1.12 "DISABILITY" means any physical or mental condition which
renders Executive incapable of performing his essential functions and
duties hereunder for a period of at least 180 days, as determined in
good faith by a physician appointed by the Company.
1.1.13 "EFFECTIVE DATE" means the date of Closing as defined in
that certain Equity Purchase Agreement by and between Maritime
Logistics US Holdings Inc., FMI Holdco I, LLC, FMI Blocker, Inc. and
each of the Sellers set forth in Schedule A thereto, dated as of
October 23, 2006.
1.1.14 "EMPLOYMENT TERM" shall have the meaning set forth in
section 2.2.
1.1.15 "EQUITY INCENTIVE PLAN" means the Summit Global Logistics,
Inc. 2006 Equity Incentive Plan, attached as Exhibit A hereto.
1.1.16 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
1.1.17 "FISCAL YEAR" means the calendar year.
1.1.18 "GOOD REASON" means the occurrence of any of the
following:
1.1.18.1 without the Executive's prior written consent, any
material diminution in the Executive's authority,
duties or responsibilities, including those
pertaining to his status as a director of the Board,
if applicable; provided, however, that prior to any
termination pursuant to this Section 1.1.18.1, the
Company must be given notice by the Executive of
his/her objection to such material diminution and no
less than 20 days to cure the same;
1.1.18.2 any failure by the Company to pay the Executive any
portion of the Base Salary or other payments to
which the Executive is entitled under Sections 3.1
through 3.5 hereof, provided, however, that prior to
any termination pursuant to this Section 1.1.18.2 on
account of the non-payment of Base Salary, the
Company must be given notice by the Executive of
such acts or omissions and no less than 30 days to
cure the same;
4
1.1.18.3 without the Executive's prior written consent, the
relocation of the principal place of the Executive's
employment to a location a further distance than the
Company Location where the individual was working
immediately prior to the relocation;
1.1.18.4 a material breach by the Company of any of the
material provisions of this Agreement, provided,
however, that prior to any such termination pursuant
to this Section 1.1.18.4, the Company must be given
notice by the Executive of such acts or omissions
and no less than 20 days to cure the same; or
1.1.18.5 an event described in Section 1.1.4.4 hereof occurs.
1.1.19 "MANAGEMENT INCENTIVE PLAN" means the Summit Global
Logistics, Inc. 2007 Management Incentive Plan, attached as Exhibit B
hereto.
1.1.20 "PERSON" means an individual, corporation, partnership,
association, limited liability company or partnership, trust,
government, governmental agency or body, or any other group or entity,
no matter how organized and whether or not for profit.
1.1.21 "QUALIFIED SUCCESSOR" means in the event there is a
vacancy in the Board occurring between annual meetings as a result of
death, incapacity or resignation, or if one or more of the Directors
shall decline to stand for election to the Board or, if he is unable or
unwilling to so serve, then the shareholders that are party to that
certain voting agreement ("Voting Agreement") dated on or about the
date hereof between the Company and the parties thereto to elect
Messrs. Agresti, DeSaye, MacAvery and McQuiston (the "Shareholders")
shall designate one or more individuals of standing within the business
world reasonably comparable to that of such Director (each a "Qualified
Successor") as one or more successor Directors in the following manner.
The Shareholders shall select an individual to serve as the Qualified
Successor, which individual shall be independent both of the Company
(except through proposed service as a member of the Board or a
subsidiary of the Company) and of the Shareholders. The selected
individual shall be subject to the prior approval of a super-majority
of the Shareholders, which consent shall not unreasonably be withheld.
A Shareholder's approval of a designated Director shall be deemed given
if such Shareholder has not responded to a notice by the Chairman of
the Board of the Company within 30 days of notice to the Shareholder of
the identity of the selected individual. Upon selection and approval
hereunder, such Qualified Successor shall for all purposes be deemed a
Director of the Company and shall be subject to the Voting Agreement in
the event of his/her death, incapacity, resignation or decision not to
be a Director.
1.1.22 "TERMINATION DATE" means the date on which the Executive's
employment with the Company terminates for any reason.
1.1.23 "YEAR OF SERVICE" means the completion by the Executive of
Year One, Year Two, Year Three, Year Four , Year Five, or any
additional one-year period under Section 2.2 hereof, as applicable. For
purposes of Section 3.5 hereof, and only for such
5
purposes, partial years of service will be credited as one (1) Year of
Service if the Executive has worked at least 1,000 hours during the
applicable year.
1.1.24 "YEAR ONE" means the 12-consecutive-month period beginning
on the Effective Date and ending on the day immediately prior to the
first day of Year Two.
1.1.25 "YEAR TWO" means the 12-consecutive-month period beginning
on the first anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Three.
1.1.26 "YEAR THREE" means the 12-consecutive-month period
beginning on the second anniversary of the Effective Date and ending on
the day immediately prior to the first day of Year Four.
1.1.27 "YEAR FOUR" means the 12-consecutive-month period
beginning on the third anniversary of the Effective Date and ending on
the day immediately prior to the first day of Year Five.
1.1.28 "YEAR FIVE" means the 12-consecutive-month period
beginning on the fourth anniversary of the Effective Date and ending on
the day immediately prior to the fifth anniversary of the Effective
Date.
ARTICLE 2
EMPLOYMENT AND TERM
2.1 EMPLOYMENT. The Company employs Executive and the Executive hereby
agrees to such employment by the Company during the Employment Term to serve as
Senior Vice President of Summit Global Logistics, Inc., with the customary
duties, authorities and responsibilities of an officer of a corporation and such
other duties, authorities and responsibilities relative to the Company or its
Affiliates that have been agreed upon in writing by the Company and Executive.
This Agreement supersedes any and all prior agreements between Executive and the
Company or the Company's predecessors in interest with respect to Executive's
employment, and any such prior agreements shall be void and of no further force
and effect as of the Effective Date.
2.2 EMPLOYMENT TERM. The "Employment Term" of this Agreement shall
commence on the Effective Date, and unless sooner terminated as provided in
Article 4, shall terminate upon the fifth (5th) anniversary of such date.
Thereafter, and unless sooner terminated as provided in Article 4, the
Employment Term shall automatically be renewed on each anniversary date of the
expiration of the initial Employment Term for a period of one (1) year, unless
and until either the Company or the Executive terminates such automatic renewal
upon sixty (60) days' advance written notice to the other of an intention not to
renew (that is, upon written notice of an intention not to renew delivered to
the other at least sixty (60) days prior to the beginning of the next one-year
period); provided, however, that in no event shall the Employment Term exceed a
period of ten (10) continuous years beginning with the Effective Date.
6
2.3 FULL WORKING TIME. During the Employment Term, the Executive shall
devote substantially all of his ability and attention, all of his skill and
experience and efforts during normal business hours and at such other times as
reasonably required for the proper performance of his duties hereunder and to
the business and affairs of the Company. During the Employment Term, the
Executive shall not, either directly or indirectly, actively participate in any
other business or accept any employment or business office whatsoever from any
other Person; provided, however, that the foregoing shall not preclude the
Executive, subject to Article 5, from: (i) serving as a director of any
non-profit or charitable organization, or any company not in competition with
the Company, or (ii) making an investment in any other business, so long as in
any such case, the Executive does not actively participate in such other
business or organization and such activity does not interfere with the
Executive's ability to perform his duties hereunder and does not constitute a
conflict of interest with the Company.
ARTICLE 3
COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the Employment Term, as compensation for
services hereunder and in consideration for the protective covenants set forth
in Article 5 of this Agreement, the Executive shall be paid a base salary of Two
Hundred Fifteen Thousand United States Dollars (US$215,000) for Year One, with
an annual cost of living increase of 3% for each of Year Two, Year Three, Year
Four and Year Five, and, if applicable under Section 2.2 hereof, for each
additional one-year period of the Employment Term thereafter, or such greater
amount as may from time to time be approved by the Compensation Committee (the
"Base Salary"). Cost-of-living increases shall be effective as of the first day
of Year Two, Year Three, Year Four and Year Five, respectively, and, if
applicable under Section 2.2 hereof, as of the first day of each additional
one-year period of the Employment Term thereafter, and shall be cumulative. Base
Salary shall be paid to the Executive in accordance with the Company's normal
payroll practices.
3.2 BONUSES. Such bonuses shall include the following:
3.2.1 NON-COMPETE BONUS. As consideration for the Executive
entering into this Agreement, the Company shall pay the Executive a
bonus in the amount of Seventy Thousand United States Dollars
(US$70,000) upon the condition that the executive agrees to be bound by
the terms of Section 5.2 of this Agreement, as set forth in Article 5
hereof, hereinafter referred to as the "Non-Compete Bonus". The
Non-Compete Bonus shall be payable in cash no later the thirtieth
(30th) day following the date of this Agreement.
3.2.2 MANAGEMENT INCENTIVE BONUSES. The Executive shall
receive an annual bonus in accordance with the terms of a grant
agreement made pursuant to the terms of the Management Incentive Plan
(the "Annual Bonus Grant Agreement"). The Executive also shall receive
a multi-year bonus, pursuant to the terms of the Management Incentive
Plan, if certain performance targets are met (the "Multi-Year Bonus
Grant Agreement"). The Annual Bonus Grant Agreement and Multi-Year
Bonus Grant Agreement are attached as Exhibits C and D, respectively,
hereto. If the Management Incentive Plan is terminated for any reason
whatsoever, whether by the Company or any other Person, the
7
Executive shall be paid the annual bonus and multi-year bonus that
otherwise would be payable to him with respect to the Performance
Period within which the termination of such Plan occurs,
notwithstanding the termination of such Plan. For purposes of the
immediately preceding sentence, the Executive's annual bonus and
multi-year bonus that otherwise would be payable to him with respect to
the Performance Period within which the termination of the Management
Incentive Plan occurs shall be identical to that set forth in Exhibits
C and D, respectively, hereto, and shall be fully vested, subject to
the satisfaction of the conditions set forth in Section 5.2 of such
Plan.
3.3 EQUITY COMPENSATION. On or about the Effective Date, or as soon as
administratively practicable thereafter, the Executive shall receive grants
under the Equity Incentive Plan as follows:
3.3.1 INCENTIVE STOCK OPTIONS. A grant of an Incentive Stock
Option, as defined in the Equity Incentive Plan, in respect of 76,000
shares of Common Stock, pursuant to an option grant agreement annexed
as Exhibit E hereto.
3.3.2 STOCK APPRECIATION RIGHTS. A grant of 57,000 Stock
Appreciation Rights, as defined in the Equity Incentive Plan, each in
respect of one share of Common Stock, pursuant to a Stock Appreciation
Rights grant agreement annexed as Exhibit F hereto. The parties intend
that such grant cover the approximate combined federal and state income
tax liability associated with both (i) the number of shares of Common
Stock with respect to which the Incentive Stock Option is exercised and
(ii) the number of shares of Common Stock underlying the exercise of
the Stock Appreciation Rights used to pay for the tax liability under
clause (i).
All such grants and/or awards shall conform to the terms and conditions of the
Equity Incentive Plan and the annexed grant agreements between the Company and
the Executive. In its discretion, the Compensation Committee may make additional
grants or awards to the Executive from time to time. If the Equity Incentive
Plan is terminated for any reason whatsoever, whether by the Company or any
other Person, the Executive shall be entitled to the benefits due to him under
Exhibits E and F, respectively, hereto, notwithstanding the termination of such
Plan. For purposes of the immediately preceding sentence, the termination of the
Equity Incentive Plan shall result in all unvested Incentive Stock Options and
Stock Appreciation Rights granted to the Participant under Exhibits E and F,
respectively, to be fully vested and exercisable.
3.4 SERP BENEFITS. During the Employment Term, the Executive shall be
entitled to participate in the Summit Global Logistics, Inc. Supplemental
Executive Retirement Plan (the "SERP") in accordance with the terms thereof.
Such eligibility to participate in the SERP shall commence effective as of the
later of the Effective Date or the effective date of the SERP. The SERP is
attached as Exhibit G hereto.
3.5 RETIREMENT, WELFARE AND FRINGE BENEFITS. To the maximum extent that
he is eligible under the terms of the applicable plan or program, the Executive
shall participate in the current or future plans or programs maintained by the
Company for its employees and/or senior executives that provide insurance,
medical benefits, retirement benefits, or similar fringe benefits as set forth
in SCHEDULE A attached hereto, as well as any additional plans or programs that
may be adopted that are generally applicable to senior executives; provided,
however, that if within
8
the Employment Term, the Executive leaves the employment of the Company and is
eligible for severance benefits, then $7,500 per Year of Service shall be added
to the severance amount in lieu of any forfeited (non-vested) qualified plan
amount. In addition, the Executive shall be entitled to a minimum of twenty (20)
vacation days for each calendar year beginning with or within a Year of Service,
which must be taken in accordance with the Company's vacation policy then in
effect. The Executive shall also be entitled at least six (6) days of sick day
leave, seven (7) personal days leave and seven (7) fixed holidays for each
calendar year beginning with or within a Year of Service, which must be taken in
accordance with the Company's applicable policies then in effect. Unused
vacation days, sick days or personal days shall not carry forward into the
subsequent year. In the event that the Company establishes a more favorable
vacation, sick leave or personal day policy generally applicable to senior
executives, the Executive shall be entitled to any such additional benefits.
During the Employment Term, the Company shall pay the Executive an automobile
allowance, which shall not exceed $1,250 per month, plus an annual inflation
adjustment reflecting market conditions. The Executive is responsible for the
tax consequences of the personal usage of the automobile. The Executive shall be
entitled to a $5,000 per year golf, health, country and/or other recreational
club membership allowance for each Year of Service, to be allocated among the
foregoing as the Executive sees fit. The Executive is responsible for the tax
consequences of the personal usage of the golf, health, country and/or other
recreational club membership. In addition, or in lieu of the Company policy for
executives with respect to annual physical examinations, during each Year of
Service, the Executive shall be reimbursed up to $1000 for an annual physical
examination conducted by a physician designated by the Executive.
3.6 INDEMNIFICATION AND INSURANCE.
3.6.1 D&O INSURANCE. During the entirety of the Employment
Term, the Company shall cause the Executive to be covered by and named
as an insured or as a member of a class of insured under any policy or
contract of insurance obtained by it to insure its directors and
officers against personal liability for acts or omissions in connection
with service as an officer or director of the Company or service in
other capacities at its request ("D&O Insurance Coverage"). The D&O
Insurance Coverage provided to the Executive pursuant to this Section
3.6.1 shall be of the same scope and on the same terms and conditions
as the coverage (if any) provided to other officers or directors of the
Company and shall continue for so long as the Executive shall be
subject to personal liability relating to such service.
3.6.2 EPLI INSURANCE. During the entirety of the Employment
Term, the Company shall cause the Executive to be covered by and named
as an insured or as a member of a class of insured under any policy or
contract of insurance obtained by it to insure its directors and
officers against personal liability for acts or omissions in connection
with service as a director or officer of the Company, where such
personal liability could arise under or in connection with, or be
attributable to, the Company's employment practices and procedures
"EPLI Insurance Coverage"). The EPLI Insurance Coverage provided to the
Executive pursuant to this Section 3.6.2 shall be of the same scope and
on the same terms and conditions as the coverage (if any) provided to
other officers or directors of the Company and shall continue for so
long as the Executive shall be subject to personal liability relating
to such service.
9
3.6.3 INDEMNIFICATION. To the maximum extent permitted under
applicable law, and provided that the Executive has acted within the
scope of his authority hereunder, the Company shall indemnify the
Executive against and hold him harmless from any costs, liabilities,
losses and exposures (each, a "Cost," and collectively, "Costs") to the
fullest extent and on the most favorable terms and conditions that
similar indemnification is offered to any director or officer of the
Company or any subsidiary or Affiliate thereof and shall survive the
termination of this Agreement and continue for so long as the Executive
shall be subject to personal liability relating to such service;
provided, however, that the Company shall not indemnify and hold
harmless the Executive from a Cost to the extent that such Cost is
attributable to the Executive's (i) willful misconduct or gross
negligence in the performance of his duties or exercise of his
authority hereunder or (ii) material breach of any of the provisions of
this Agreement.
3.7 EXPENSES. The Company shall pay or reimburse the Executive for
reasonable business expenses actually incurred or paid by the Executive during
the Employment Term, in the performance of his services hereunder; provided,
however, that such expenses are consistent with the Company's policy. Such
payment or reimbursement is expressly conditioned upon presentation of expense
statements or vouchers or other supporting documentation by the Executive in a
manner that is acceptable to the Company and otherwise in accordance with the
Company's policy then in effect.
3.8 DEDUCTIONS. The Company shall deduct from all compensation or
benefits payable pursuant to this Agreement such payroll, withholding and other
taxes and medical, pension and other benefits in accordance with the Company's
benefit programs and the Executive's selections and as may in the reasonable
opinion of the Company be required by law and any such additional amounts
requested in writing by the Executive.
ARTICLE 4
TERMINATION
4.1 GENERAL. The Company shall have the right to terminate the
employment of the Executive at any time with or without Cause and the Executive
shall be paid the Standard Termination Entitlements (as defined in Section
4.3.1).
4.2 TERMINATION UNDER CERTAIN CIRCUMSTANCES.
4.2.1 TERMINATION WITHOUT SEVERANCE BENEFITS. In the event the
Executive's employment with the Company is terminated prior to the
expiration of the Employment Term by reason of (i) the Executive's
resignation without Good Reason, (ii) the Executive's death or (iii)
the Executive's discharge by the Company for Cause prior to the
occurrence of a Change in Control, this Agreement shall terminate
including, without limitation, the Company's obligations to provide any
compensation, benefits or severance to the Executive under Article 3 of
this Agreement or otherwise, other than the Standard Termination
Entitlements (as defined in section 4.3.1).
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4.2.2 DISABILITY. The Company may terminate the Executive's
employment upon the Executive's Disability. In such event, in addition
to the Standard Termination Entitlements (as defined in section 4.3.1),
the Company shall continue to pay the Executive his Base Salary in
accordance with the Company's normal payroll practices, at the annual
rate in effect for him immediately prior to the termination of his
employment, during a period ending on the earliest of: (a) the date on
which long-term disability insurance benefits are first payable to him
under any long-term disability insurance plan covering employees of the
Company; and (b) the date of his death. A termination of employment due
to Disability under this Section 4.2.2 shall be effected by notice of
termination given to the Executive by the Company and shall take effect
on the later of the effective date of termination specified in such
notice or the date on which the notice of termination is deemed given
to the Executive.
4.2.3 TERMINATION WITH SEVERANCE BENEFITS. In the event that
the Executive's employment with the Company is terminated by the
Executive prior to the expiration of the Employment Term for Good
Reason or by the Company prior to the expiration of the Employment Term
other than for Cause or Disability, the Company shall pay the Standard
Termination Entitlements (as defined in section 4.3.1) and the
Severance Benefits (as defined in section 4.3.2); provided, however,
that any payment required by this section 4.2.3 is expressly
conditioned upon:
4.2.3.1 The Executive's continued material compliance with
the terms of this Agreement, including, without
limitation, Article 5; and
4.2.3.2 The Executive's resignation from any and all
positions which he holds as an officer, director or
committee member with respect to the Company or any
Affiliate thereof.
4.3 STANDARD TERMINATION ENTITLEMENTS; SEVERANCE BENEFITS.
4.3.1 STANDARD TERMINATION ENTITLEMENTS. For all purposes of
this Agreement, the Executive's "Standard Termination Entitlements"
shall mean and include:
4.3.1.1 the Executive's earned but unpaid compensation
(including, without limitation, Base Salary, and all
other items which constitute wages under applicable
law, interpreting the term "wages" in the broadest
possible sense) as of the date of his termination of
employment. This payment shall be made at the time
and in the manner prescribed by law applicable to
the payment of wages including, specifically,
payment for accrued, but unused vacation days;
4.3.1.2 reimbursement for reasonable business expenses and
authorized travel expenses incurred but still
outstanding; and
4.3.1.3 the benefits, if any, due to the Executive, and the
Executive's estate, surviving dependents or his
designated beneficiaries under the employee benefit
plans and programs and
11
compensation plans and programs maintained for the benefit of,
or covering, the officers, executives and employees of the
Company, including, but not limited to, all plans or
arrangements listed on SCHEDULE A, the Equity Incentive Plan
and the Management Incentive Plan. The time and manner of
payment or other delivery of these benefits and the recipients
of such benefits shall be determined according to the terms
and conditions of the applicable plans and programs.
4.3.2 SEVERANCE BENEFITS. For all purposes of this Agreement,
the Executive's "Severance Benefits" shall mean the benefits set forth
in Exhibit H. If the Summit Global Logistics, Inc. Severance Benefit
Plan, as set forth in Exhibit H, is terminated for any reason
whatsover, whether by the Company or any other Person, the Executive
shall be paid severance benefits identical to those set forth in
Appendix A of such Plan, notwithstanding the termination of such Plan.
ARTICLE 5
RESTRICTIVE COVENANTS
5.1 PROPRIETARY INFORMATION.
5.1.1 DISCLOSURE DURING THE EMPLOYMENT TERM. Subject to
Section 5.5 hereof, the Executive shall promptly disclose to the
Company in such form and manner as the Company may reasonably require
(a) all operations, systems, services, methods, developments,
inventions, improvements and other information or data pertaining to
the business or activities of the Company and its Affiliates as are
conceived, originated, discovered or developed by the Executive during
the Employment Term and (b) such information and data pertaining to the
business, operations, personnel, activities, financial affairs, and
other information relating to the Company and its Affiliates and their
respective customers, suppliers, employees and other persons having
business dealings with the Company and its Affiliates as may be
reasonably required for the Company to operate its business. It is
understood that such information is proprietary in nature and shall (as
between the Company and Executive) be for the exclusive use and benefit
of the Company and shall be and remain the property of the Company both
during the Employment Term and thereafter.
5.1.2 DISCLOSURE AFTER EMPLOYMENT. In the event that the
Executive leaves the employ of the Company for any reason, including,
without limitation, the expiration of the Employment Term, the
Executive shall deliver to the Company any and all devices (including
any lap top, personal hand-held devices or mobile telephone), records,
data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, other documents
or property belonging to the Company or any Affiliate thereof or any of
their respective successors or assigns.
5.2 NON-COMPETITION. During the Employment Term and for twelve months
after the date employment with the Company has ended, the Executive agrees, and
shall cause each Person Controlled by him to agree, that he shall not, directly
or indirectly, or through any Person
12
Controlled by the Executive: (a) engage in any logistic activities competitive
with the business of the Company and its Affiliates for his or their own account
or for the account of any other Person, or (b) become interested in any Person
engaged in logistic activities competitive with the business of the Company and
its Affiliates as a partner, shareholder, member, principal, agent, employee,
trustee, consultant or in any other relationship or capacity.
5.3 NON-SOLICITATION. During the Employment Term and for a period of
twelve months after the date employment with the Company has ended, the
Executive will not, directly or indirectly, use proprietary knowledge or
information relating to the Company or its Affiliates obtained during the course
of the Executive's employment with the Company for his own benefit or the
benefit of any third party with the intention to, or which a reasonable person
would construe to, (a) interfere with or disrupt any present relationship,
contractual or otherwise, between the Company or its Affiliates and any
customer, supplier, employee, consultant or other person having business
dealings with the Company or its Affiliates, or (b) employ or solicit the
employment or engagement by others of any employee or consultant of the Company
or its Affiliates who was such an employee or consultant at the time of
termination of the Executive's employment hereunder. Upon leaving the employment
of the Company, the Executive shall notify his new employer of his obligations
under this Agreement and grants consent to notification by the Company to the
Executive's new employer concerning Executive's rights and obligations under
this Agreement.
5.4 NON-DISCLOSURE. Except with the prior written consent of the
Company in each instance or as may be reasonably necessary to perform the
Executive's services hereunder, the Executive shall not disclose, use, publish,
or in any other manner reveal, directly or indirectly, at any time during or
after the Employment Term, any Confidential Information relating to the Company
or any Affiliate thereof acquired by him prior to, during the course of, or
incident to, his employment hereunder; provided, however, that necessary or
appropriate disclosures may be made to the Executive's legal counsel.
5.5 OWNERSHIP OF INTELLECTUAL PROPERTY. Subject to applicable law, the
Executive acknowledges and agrees that all work performed, and all ideas,
concepts, materials, products, software; documentation, designs, architectures,
specifications, flow charts, test data, programmer's notes, deliverables,
improvements, discoveries, methods, processes, or inventions, trade secrets or
other subject matter related to the Company's business (collectively,
"Materials") conceived, developed or prepared by the Executive alone, or with
others, during the period of Executive's employment by the Company in written,
oral, electronic, photographic, optical or any other form are the property of
the Company and its successors or assigns, and all rights, title and interest
therein shall vest in the Company and its successors or assigns, and all
Materials shall be deemed to be works made for hire and made in the course of
the Executive's employment by the Company. To the extent that title to any
Materials has not or may not, by operation of law, vest in the Company and its
successors or assigns, or such Materials may not be considered works made for
hire. Notwithstanding the foregoing, the parties acknowledge and understand that
Executive may previously have developed and may continue to develop certain
ideas, concepts and designs which are unrelated to the business of the Company
and may continue to do so provided that such activities do not interfere with
his duties under this Agreement.
13
5.6 REASONABLE LIMITATIONS. Executive acknowledges that given the
nature of the Company's business, the covenants contained in this Article 5
contain reasonable limitations as to time, geographical area and scope of
activity to be restrained, and do not impose a greater restraint than is
necessary to protect and preserve the Company's business and to protect the
Company's legitimate business interests. If, however, this Article 5 is
determined by any arbitrator to be unenforceable by reason of its extending for
too long a period of time or over too large a geographic area or by reason of
its being too extensive in any other respect, or for any other reason, it will
be interpreted to extend only over the longest period of time for which it may
be enforceable and/or over the largest geographical area as to which it may be
enforceable and/or to the maximum extent in all other aspects as to which it may
be enforceable, all as determined by such court or arbitrator in such action.
5.7 SURVIVAL OF PROTECTIVE COVENANTS. Each covenant on the part of
Executive contained in this Article 5 shall be construed as an agreement
independent of any other provision of this Agreement, unless otherwise indicated
herein, and shall survive the termination of Executive's employment under this
Agreement.
ARTICLE 6
DISPUTE RESOLUTION
6.1 ARBITRATION OF DISPUTES. Both parties agree that all controversies
or claims that may arise between the Executive and the Company in connection
with this Agreement shall be settled by arbitration. The parties further agree
that the arbitration shall be held in the State of New Jersey, and administered
by the American Arbitration Association under its Commercial Arbitration Rules,
applying New Jersey law.
6.1.1 QUALIFICATIONS OF ARBITRATOR. The arbitration shall be
submitted to a single arbitrator chosen in the manner provided under
the rules of the American Arbitration Association. The arbitrator shall
be disinterested and shall not have any significant business
relationship with either party, and shall not have served as an
arbitrator for any disputes involving the Company or any of its
Affiliates more than twice in the thirty-six (36) month period
immediately preceding his or her date of appointment. The arbitrator
shall be a person who is experienced and knowledgeable in employment
and executive compensation law and shall be an attorney duly licensed
to practice law in one or more states.
6.1.2 POWERS OF ARBITRATOR. The arbitrator shall not have the
authority to grant any remedy which contravenes or changes any term of
this Agreement and shall not have the authority to award punitive or
exemplary or damages under any circumstances. The parties shall equally
share the expense of the arbitrator selected and of any stenographer
present at the arbitration. The remaining costs of the arbitrator
proceedings shall be allocated by the arbitrator, except that the
arbitrator shall not have the power to award attorney's fees.
6.1.3 EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall
render its decision within thirty (30) days after termination of the
arbitration proceeding, which decision shall be in writing, stating the
reasons therefor and including a brief description of each
14
element of any damages awarded. The decision of the arbitrator shall be
final and binding. Judgment on the award rendered by the arbitrator may
be entered in any court having jurisdiction thereof.
6.2 SERVICE OF PROCESS. The parties agree that service of process may
be made on it by personal service of a copy of the summons and complaint or
other legal process in any such suit, action or proceeding, or by registered or
certified mail (postage prepaid) to its address specified in Section 7.1 (or
applicable forwarding address), or by any other method of service provided for
under the applicable laws in effect in the applicable jurisdiction.
ARTICLE 7
GENERAL PROVISIONS
7.1 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Executive: Peter Klaver
2602 River Road
Manasquan, NJ 08736
If to the Company: Summit Global Logistics, Inc.
547 Boulevard
Kenilworth, NJ 07033
with a copy to: David D. Gammell, Esq.
Brown Rudnick Berlack Israels LLP
One Financial Center
Boston, MA 02111
or to such other address as the party to whom notice is given may have
previously furnished to the other parties hereto in writing in the manner set
forth above.
7.2 ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement between the Executive and the Company with respect to the Company's
employment of the Executive and supersedes any and all prior agreements and
understandings, written or oral, with respect thereto.
7.3 AMENDMENTS AND WAIVERS. Any term of this Agreement or any Schedule,
Exhibit or attachment hereto may be amended only by (a) an instrument in writing
and signed by the party against whom such amendment is sought to be enforced,
and (b) in the case of the Company, such amendment also must be duly authorized
by an appropriate resolution of the
15
Company. In addition, any term of this Agreement or any Schedule, Exhibit or
attachment hereto may be waived by the party against whom the obligation runs to
by an instrument in writing signed by such party and delivered to the Company as
reasonable time prior to the effective date of the waiver.
7.4 SUCCESSORS AND ASSIGNS. The Company shall have the right to assign
this Agreement, subject to the Executive's consent which shall not be
unreasonably withheld and subject to. This Agreement shall inure to the benefit
of, and be binding upon (a) the parties hereto, (b) the heirs, administrators,
executors and personal representatives of the Executive and (c) the successors
and assigns of the Company as provided herein.
7.5 GOVERNING LAW. This Agreement, including the validity hereof and
the rights and obligations of the parties hereunder, and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the laws of the State of New Jersey without
giving effect to any conflicts of law provisions or rule, that would cause the
application of the laws of any other jurisdiction.
7.6 SEVERABILITY. If any provisions of this Agreement as applied to any
part or to any circumstance shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement.
7.7 NO CONFLICTS. The Executive represents to the Company that the
execution, delivery and performance by the Executive of this Agreement does not
and will not conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under any contract,
agreement or understanding, whether oral or written, to which the Executive is
or was a party or of which the Executive is or should be aware.
7.8 SURVIVAL. The rights and obligations of the Company and Executive
pursuant to Articles 4, 5 and 6 shall survive the termination of the Executive's
employment with the Company and the expiration of the Employment Term.
7.9 CAPTIONS. The headings and captions used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.
7.10 COUNTERPARTS. This Agreement be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.11 DEPARTURE OF ROBERT AGRESTI. If , at any point during the
Employment Term, Robert Agresti ceases to serve as both President and Chief
Executive Officer of the Company, the Executive immediately shall be entitled to
the maximum benefits and the compensation that he could receive pursuant to this
Agreement, assuming for this purpose, the hypothetical occurrence of a Change in
Control or Fundamental Transaction (with a Sale Price Per Share of Thirty United
States Dollars (US$30), if applicable. As a condition precedent to the provision
of benefits and compensation under this Section 7.11, the Executive shall be
required to terminate employment with the Company.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EXECUTIVE
----------------------------------
Peter Klaver
SUMMIT GLOBAL LOGISTICS, INC.
By:_______________________________
Name
Title:
17
SCHEDULE A
EMPLOYEE BENEFIT SUMMARY TERM SHEET
As of January 1, 2007, the Executive shall be eligible to participate
in all of the retirement and welfare benefit plans sponsored, maintained or
contributed to by FMI International, LLC and/or its affiliates or subsidiaries,
which plans shall be amended accordingly. Without in any way limiting the
generality of the foregoing, the Executive shall be entitled to participate in
the following plans:
o FMI International, LLC 401(k) Profit Sharing Plan;
o FMI International West Health Plan;
o FMI International, LLC PPO Health Insurance Plan;
o FMI International, LLC Dental Plan; and the
o FMI International, LLC Life Insurance Plan.
18
EXHIBIT C
ANNUAL BONUS GRANT AGREEMENT
THIS ANNUAL BONUS GRANT AGREEMENT ("Agreement") is made and entered
into this __ day of __________, 2007, (the "Effective Date") by and between
Peter Klaver (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement
made and entered into the 8th day of November, 2006 by and between the Executive
and the Company (the "Employment Agreement") requires the Company, pursuant to
the terms of the Management Incentive Plan, as defined in the Employment
Agreement, to make annual bonus payments to the Executive for each Year of
Service, as defined in the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in
consideration of the premises and the mutual promises set forth in the
Employment Agreement, the receipt and sufficiency of which are hereby
acknowledged, the Executive and the Company agree as follows:
1. DEFINITIONS. The following terms, when used in this
Agreement, shall have the following meanings, unless the context clearly
requires otherwise (such definitions to be equally applicable to both the
singular and plural of the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed
thereto in the Management Incentive Plan.
1.2 "BONUS" means the annual incentive bonus to be
paid hereunder with respect to a given Fiscal Year.
1.3 "EBITDA" means the Company's earnings before
income tax, plus depreciation and amortization, as computed in
accordance with United States GAAP and in a manner consistent
with the methods used in the Company's audited financial
statements, without regard to (i) extraordinary or other
nonrecurring or unusual items, or restructuring or impairment
charges, as determined by the Company's independent public
accountants in accordance with GAAP or (ii) changes in
accounting, unless, in each case, the Committee, as defined in
the Management Incentive Plan, decides otherwise within the
Determination Period, as defined in the Management Incentive
Plan.
1.4 "EBITDA TARGET" means the Company's EBITDA for
Fiscal Year 2007, 2008, 2009 or 2010, as applicable.
1.5 "FISCAL YEAR" means the calendar year.
1.6 "GAAP" means generally accepted accounting
principles.
1.7 "PERFORMANCE PERIOD" shall have the meaning
ascribed thereto in the Management Incentive Plan.
2. EBITDA TARGETS.
2.1 The EBITDA Target for Fiscal Year 2007 shall be
$__________.
2.2 The EBITDA Target for Fiscal Year 2008 shall be
$__________.
2.3 The EBITDA Target for Fiscal Year 2009 shall be
$__________.
2.4 The EBITDA Target for Fiscal Year 2010 shall be
$__________.
3. ANNUAL INCENTIVE BONUSES.
3.1 The Bonus for each of Fiscal Year 2007, Fiscal
Year 2008, Fiscal Year 2009 and Fiscal Year 2010 shall be as
follows:
3.1.1 If at least 80% of the EBITDA Target
for the applicable Fiscal Year is achieved,
the Executive shall receive a Bonus for such
Fiscal Year equal to 35% of his Base Salary
for the Performance Period beginning with or
within such Fiscal Year.
3.1.1.2 If at least 90% of the EBITDA Target
for the applicable Fiscal Year is achieved,
the Executive shall receive a Bonus for such
Fiscal Year equal to 52.50% of his Base
Salary for the Performance Period beginning
with or within such Fiscal Year.
3.1.1.3 If at least 100% of the EBITDA
Target for the applicable Fiscal Year is
achieved, the Executive shall receive a
Bonus for such Fiscal Year equal to 70% of
his Base Salary for the Performance Period
beginning with or within such Fiscal Year.
3.1.1.4 For each percentage point, up to 50
percentage points by which the EBITDA Target
for the applicable Fiscal Year is exceeded,
the Executive shall receive an additional
Bonus equal to 2.10% of his Base Salary.
3.1.1.5 For each percentage point over 50
percentage points, up to 50 additional
points, by which the EBITDA Target for the
applicable Fiscal Year is exceeded, the
Executive shall receive an additional Bonus
equal to 2.80% of his Base Salary.
3.2 Except as otherwise provided herein, bonus
amounts shall be payable to the Executive in accordance with
the terms and conditions of the Management Incentive Plan.
4. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and
the Company shall comply with all of the terms thereof applicable to annual
incentive awards. In the event of any conflict between the terms of this
Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
5. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EXECUTIVE
----------------------------------
Peter Klaver
SUMMIT GLOBAL LOGISTICS, INC.
By:_______________________________
Name
Title:
EXHIBIT D
MULTI-YEAR BONUS GRANT AGREEMENT
THIS MULTI-YEAR BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between Peter
Klaver (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement
made and entered into the 8th day of November, 2006 by and between the Executive
and the Company (the "Employment Agreement") requires the Company, pursuant to
the terms of the Management Incentive Plan, as defined in the Employment
Agreement, to make a multi-year bonus payment to the Executive if certain
performance targets of the Company are satisfied as of the end of the Employment
Term, as defined in the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in
consideration of the premises and the mutual promises set forth in the
Employment Agreement, the receipt and sufficiency of which are hereby
acknowledged, the Executive and the Company agree as follows:
1. DEFINITIONS. The following terms, when used in this
Agreement, shall have the following meanings, unless the context clearly
requires otherwise (such definitions to be equally applicable to both the
singular and plural of the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed
thereto in the Management Incentive Plan.
1.2 "BONUS" means the multi-year incentive bonus to be
paid hereunder with respect to the Employment Term.
1.3 "DELTA ONE" means the excess, if any, of EBITDA
for Fiscal Year 2009 over the EBITDA Target for Fiscal Year
2007.
1.4 "DELTA TWO" means the excess, if any, of EBITDA
for Fiscal Year 2010 over the EBITDA Target for Fiscal Year
2008.
1.5 "EBITDA" means the Company's earnings before
income tax, plus depreciation and amortization, as computed in
accordance with United States GAAP and in a manner consistent
with the methods used in the Company's audited financial
statements, without regard to (i) extraordinary or other
nonrecurring or unusual items, or restructuring or impairment
charges, as determined by the Company's independent public
accountants in accordance with GAAP or (ii) changes in
accounting, unless, in each case, the Committee, as defined in
the Management Incentive Plan, decides otherwise within the
Determination Period, as defined in the Management Incentive
Plan.
1.6 "EBITDA TARGET" means
1.6.1 For Fiscal Year 2007, $__________.
1.6.2 For Fiscal Year 2008, $__________.
1.7 "FIRST PERFORMANCE PERIOD" means the
three-consecutive Fiscal Year period beginning on the first
day of Fiscal Year 2007 and ending on the last day of Fiscal
Year 2009.
1.8 "FISCAL YEAR" means the calendar year.
1.9 "FUNDAMENTAL TRANSACTION" has the meaning as
defined in the Management Incentive Plan.
1.10 "GAAP" means generally accepted accounting
principles.
1.11 "PERFORMANCE PERIOD" means the First Performance
Period or the Second Performance Period, as applicable.
1.12 "SECOND PERFORMANCE PERIOD" means the
three-consecutive Fiscal Year period beginning on the first
day of Fiscal Year 2008 and ending on the last day of Fiscal
Year 2010.
2. MULTI-YEAR BONUS.
2.1 FIRST PERFORMANCE PERIOD. If, with respect to the
First Performance Period, Delta One, expressed as a percentage
of the EBITDA Target for Fiscal Year 2007, equals or exceeds
33%, the Executive shall be paid a Bonus in Fiscal Year 2010
equal to one and one half (1.5) times his Base Salary for
Fiscal Year 2007.
2.2 SECOND PERFORMANCE PERIOD. If, with respect to
the Second Performance Period, Delta Two, expressed as a
percentage of the EBITDA Target for Fiscal Year 2008, equals
or exceeds 33%, the Executive shall be paid a Bonus in Fiscal
Year 2011 equal to one and one half (1.5) times his Base
Salary for Fiscal Year 2008.
3. PAYMENT UPON OCCURRENCE OF FUNDAMENTAL TRANSACTION. If a
Fundamental Transaction occurs at any time both (i) prior to the payment of any
amount pursuant to Section 2 hereof and (ii) on or prior to December 31, 2010,
then, in lieu of making any payment to the Executive pursuant to Section 2
hereof, the Company shall pay to the Executive, promptly following the
occurrence of the Fundamental Transaction, an amount in immediately available
funds, equal to one and one half (1.5) times his Base Salary. For this purpose,
Base Salary shall mean Base Salary for Fiscal Year 2007, if the Fundamental
Transaction occurs on or prior to the last day of Fiscal Year 2009, and Base
Salary for 2008, if the Fundamental Transaction occurs during Fiscal Year 2010.
Payment shall be made in the form of a single lump sum from the sales proceeds
received by the Company pursuant to the terms of the Fundamental Transaction.
4. PAYMENT OF BONUS AMOUNTS. Except as otherwise provided
herein, bonus amounts shall be payable to the Executive in accordance with the
terms and conditions of the Management Incentive Plan.
5. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and the Company shall comply with all of the terms thereof applicable
to annual incentive awards. In the event of any conflict between the terms of
this Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
6. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EXECUTIVE
----------------------------------
Peter Klaver
SUMMIT GLOBAL LOGISTICS, INC.
By:_______________________________
Name
Title:
EXHIBIT E
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
Unless otherwise defined herein, the terms defined in the 2006 Equity
Incentive Plan (the "Plan") shall have the same defined meanings in this Notice
of Stock Option Award and the attached Stock Option Award Terms, which are
incorporated herein by reference (together, the "AWARD AGREEMENT"). Terms not
defined herein shall have their respective meanings under the Plan.
PARTICIPANT (the "PARTICIPANT")
Peter Klaver
GRANT
The undersigned Participant has been granted an Option to purchase Common Stock
of Summit Global Logistics, Inc. (the "COMPANY"), subject to the terms and
conditions of the Plan and this Award Agreement, as follows:
DATE OF GRANT November 8, 2006 TOTAL NUMBER OF 76,000
SHARES GRANTED
VESTING November 8, 2006 TYPE OF OPTION [X] Incentive Stock
COMMENCEMENT DATE Option
EXERCISE PRICE PER SHARE $10.00 Non-Statutory Stock
SHARE Option
TOTAL EXERCISE PRICE $760,000 TERM/EXPIRATION DATE 5 years from Date of
Grant
VESTING SCHEDULE:
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
ANNIVERSARY OF GRANT DATE % OF GRANT (OR # OF SHARES) VESTED
One-Year Anniversary of Grant Date 50%
Two-Year Anniversary of Grant Date 100%
The Option shall vest in full upon the earliest to occur of a Change in Control,
the Participant's death, the Participant's Disability, the Participant's
Retirement, the Company's (or any parent's or subsidiary's thereof) termination
of the Participant's employment without Cause or the Participant's termination
of his employment with the Company (or any parent or subsidiary thereof) for
Good Reason.
Upon the execution by the Company of a definitive acquisition, merger or similar
agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing, a Change in
Control would occur, the Committee, in its sole discretion, and notwithstanding
any provision of the Transaction Agreement or the Plan, including, but not
limited to, Section 13f.i. thereof, to the contrary, shall (i) require the
acquiring or surviving entity (if not the Company) to assume this Option in
accordance with its terms or (ii) pay the Participant, for each Share not
previously exercised, the greater of (A) the transaction consideration per Share
or (B) the Exercise Price per Share. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of this Option shall cease, and unvested Option Shares shall be
forfeited, upon the Company's (or any parent's or subsidiary's thereof)
termination of the Participant's employment for Cause or the Participant's
termination of his employment with the Company (or any parent or subsidiary
thereof) other than for Good Reason.
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
- ------------------------------------ -----------------------------
Signature By
- ------------------------------------ -----------------------------
Peter Klaver Title
2602 River Road
Manasquan, NJ 08736
2
SUMMIT GLOBAL LOGISTICS, INC.
STOCK OPTION
AWARD TERMS
1. GRANT OF OPTION. The Committee hereby grants to the Participant named in
the Notice of Stock Option Grant an option (the "OPTION") to purchase the
number of Shares set forth in the Notice of Stock Option Award, at the
exercise price per Share set forth in the Notice of Stock Option Grant (the
"EXERCISE PRICE"), and subject to the terms and conditions of the 2006
Equity Incentive Plan (the "PLAN"), which is incorporated herein by
reference. In the event of a conflict between the terms and conditions of
the Plan and this Stock Option Award Agreement, the terms and conditions of
the Plan shall prevail.
If designated in the Notice of Stock Option Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive Stock
Option as defined in Section 422 of the Code. Nevertheless, to the extent
that it exceeds the $100,000 limitation rule of Code Section 422(d), this
Option shall be treated as a Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION.
i RIGHT TO EXERCISE. This Option may be exercised during its term in
accordance with the Vesting Schedule set out in the Notice of Stock
Option Award and with the applicable provisions of the Plan and this
Award Agreement.
ii METHOD OF EXERCISE. This Option shall be exercisable by delivery of an
exercise notice in the form attached as EXHIBIT A (the "EXERCISE
NOTICE") which shall state the election to exercise the Option, the
number of Shares with respect to which the Option is being exercised
(the "EXERCISED SHARES") and the Participant's agreement to be subject
to such other representations and agreements as may be required by the
Company. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by
payment of the aggregate Exercise Price in accordance with the
cashless exercise provisions of Section 6g of the Plan.
3. TERMINATION. This Option shall be exercisable for three months after the
Participant ceases to be an Employee; provided, however, if the
relationship is terminated by the Company for Cause, or voluntarily by the
Participant other than for Good Reason, the Option shall terminate
immediately. Upon the Participant's death or Disability, this Option may be
exercised for twelve (12) months after the termination of employment. In no
event may Participant exercise this Option after the Term/Expiration Date
as provided above.
4. RESTRICTIONS ON EXERCISE. This Option may not be exercised until such time
as the Plan has been approved by the stockholders of the Company, or if the
method of payment of consideration for such shares would constitute a
violation of any applicable law.
5. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Participant only by Participant.
The terms of the Plan and this Award Agreement shall be binding upon the
executors, Committees, heirs, successors and assigns of the Participant.
6. TERM OF OPTION. This Option may be exercised only within the Term set out
in the Notice of Stock Option Award which Term may not exceed ten (10)
years from the Date of Grant, and may be exercised during such Term only in
accordance with the Plan and the terms of this Award Agreement.
7. UNITED STATES TAX CONSEQUENCES. Set forth below is a brief summary as of
the date of this Option of some of the United States federal tax
consequences of exercise of this Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
i EXERCISE OF ISO. If this Option qualifies as an Incentive Stock
Option, there will be no regular federal income tax liability upon the
exercise of the Option, although the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the Exercise
Price will be treated as an adjustment to the alternative minimum tax
for federal tax purposes and may subject the Participant to the
alternative minimum tax in the year of exercise.
ii EXERCISE OF NONSTATUTORY STOCK OPTION. There may be a regular federal
income tax liability upon the exercise of a Nonstatutory Stock Option.
The Participant will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of
the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If the Participant is an Employee or a former
Employee, the Company will be required to withhold from the
Participant's compensation or collect from the Participant and pay to
the applicable taxing authorities an amount in cash equal to a
percentage of this compensation income at the time of exercise, and
may refuse to honor the exercise if such withholding amounts are not
delivered at the time of exercise.
iii NOTICE OF DISQUALIFYING DISPOSITION OF INCENTIVE STOCK OPTION SHARES.
If this Option is an Incentive Stock Option, and if the Participant
sells or otherwise disposes of any of the Shares acquired pursuant to
the Incentive Stock Option, including through a cashless exercise, on
or before the later of (1) the date two
2
years after the Date of Grant, or (2) the date one year after the date
of exercise, the Participant shall immediately notify the Company in
writing of such disposition. The Participant agrees that the
Participant may be subject to income tax withholding by the Company on
the compensation income recognized by the Participant.
iv WITHHOLDING. Pursuant to applicable federal, state, local or foreign
laws, the Company may be required to collect income or other taxes on
the grant of this Option, the exercise of this Option, the lapse of a
restriction placed on this Option, or at other times. The Company may
require, at such time as it considers appropriate, that the
Participant pay the Company the amount of any taxes which the Company
may determine is required to be withheld or collected, and the
Participant shall comply with the requirement or demand of the
Company. In its discretion, the Company may withhold Shares to be
received upon exercise of this Option or offset against any amount
owed by the Company to the Participant, including compensation
amounts, if in its sole discretion it deems this to be an appropriate
method for withholding or collecting taxes. Currently, neither federal
income nor federal employment tax withholding is required with respect
to an Incentive Stock Option.
8. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Award Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Company and Participant with respect to the subject matter hereof, and may
not be modified (except as provided herein and in the Plan) adversely to
the Participant's interest except by means of a writing signed by the
Company and Participant. This agreement is governed by the internal
substantive laws but not the choice of law rules of the State of New
Jersey.
9. NO GUARANTEE OF CONTINUED SERVICE. PARTICIPANT ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING IN THE EMPLOYMENT AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING ENGAGED, BEING GRANTED THIS OPTION OR ACQUIRING
SHARES HEREUNDER). PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS
AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF
CONTINUED ENGAGEMENT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT'S RIGHT OR THE COMPANY'S
RIGHT TO TERMINATE THE RELATIONSHIP AT ANY TIME.
Participant acknowledges receipt of a copy of the Plan and represents that he or
she is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Participant has
reviewed the Plan and this Option in
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their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option.
Participant hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Plan or this Option. Participant further agrees to notify the Company upon
any change in the residence address indicated below.
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EXHIBIT A
2006 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Company Name
Address
City, State, Zip Code
Attention: President
1. EXERCISE OF OPTION. Effective as of today, ______________, 200__, the
undersigned ("PARTICIPANT") hereby elects to exercise Participant's
option to purchase _________ shares of the Common Stock (the "SHARES")
of_________ (the "COMPANY") under and pursuant to the 2006 Equity
Incentive Plan (the "PLAN") and the Stock Option Award Agreement dated
____________, 200__ (the "AWARD AGREEMENT").
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Award
Agreement, and pursuant to the cashless exercise provisions of Section
6g of the Plan.
3. REPRESENTATIONS OF PARTICIPANT. Participant acknowledges that
Participant has received, read and understood the Plan and the Award
Agreement and agrees to abide by and be bound by their terms and
conditions.
4. RIGHTS AS STOCKHOLDER. The Participant shall not have any rights of a
stockholder upon exercise of the Option, which shall be settled solely
in cash.
5. TAX CONSULTATION. Participant understands that Participant may suffer
adverse tax consequences as a result of Participant's purchase or
disposition of the Shares. Participant represents that Participant has
consulted with any tax consultants Participant deems advisable in
connection with the purchase or disposition of the Shares and that
Participant is not relying on the Company for any tax advice.
6. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth,
this Agreement shall be binding upon Participant and his or her heirs,
executors, Committees, successors and assigns.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or by the Company
forthwith to the Committee which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the Committee
shall be final and binding on all parties.
8. GOVERNING LAW. This Exercise Notice is governed by the internal
substantive laws but not the choice of law rules of the State of New
Jersey.
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9. ENTIRE AGREEMENT. The Plan and Award Agreement are incorporated herein
by reference. This Agreement, the Plan, the Award Agreement (including
all exhibits) and the Investment Representation Statement constitute
the entire agreement of the parties with respect to the subject matter
hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Participant with respect to the subject
matter hereof, and may not be modified adversely to the Participant's
interest except by means of a writing signed by the Company and
Participant.
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Submitted by: Accepted by:
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
- ------------------------------------ ----------------------------------
Signature By
- ------------------------------------ ----------------------------------
Print Name Title
ADDRESS: ADDRESS:
- ------- -------
- ------------------------------------ Type in address
- ------------------------------------ City, State, Zip code
----------------------------------
Date Received
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EXHIBIT F
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
Name of SAR Holder: Peter Klaver
Address of SAR Holder: 2602 River Road, Manasquan, NJ 08736
Number of SARs: 57,000, each representing a share of Common Stock
Initial SAR Value: $570,000
Grant Date: November 8, 2006
Pursuant to and in accordance with the Summit Global Logistics, Inc.
2006 Equity Incentive Plan, as amended from time to time (the "Plan"), this
Stock Appreciation Rights Agreement (the "SAR Agreement") evidences the issuance
to the person named above (the "SAR Holder") by Summit Global Logistics, Inc.
(the "Company"), effective as of the date set forth above (the "Grant Date"), of
a number of stock appreciation rights set forth above (the "SARs"). The SARs
will be valued in accordance with, and are subject to the terms, definitions and
provisions of, the Plan, which are incorporated herein by reference. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Plan.
Subject to the terms and conditions of the Plan, and subject to the
determination of the Compensation Committee in its sole discretion to accelerate
the vesting schedule hereunder, the SARs issued hereunder shall vest and become
vested SARs on the respective dates indicated below:
Incremental (Aggregate Number)
of SARs to be Vested SARs Vesting Date/Percent
28,500 (28,500) FIRST ANNIVERSARY OF
----------------------------
GRANT DATE -- 50%
----------------------------
28,500 (57,000) SECOND ANNIVERSARY OF
----------------------------
GRANT DATE -- 100%
----------------------------
All SARs granted hereunder shall be vested in full upon the earliest to
occur of a Change in Control or the death, Disability, Retirement or voluntary
termination for Good Reason of the SAR Holder. Vested SARs may be exercised at
any time within five (5) years following the Grant Date.
Upon the execution by the Company of a definitive acquisition, merger
or similar agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing,
a Change in Control
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would occur, the Committee, in its sole discretion, and notwithstanding any
provision of the Transaction Agreement or the Plan, including, but not limited
to, Section 13.f.i. thereof, to the contrary, shall (i) require the acquiring or
surviving entity (if not the Company) to assume the SARs in accordance with
their terms or (ii) pay the Participant, for each share of Common Stock
underlying each SAR not previously exercised, the greater of (A) the transaction
consideration per share of Common Stock underlying each SAR or (B) the Initial
SAR Value per share of Common Stock. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of the SARs shall cease, and unvested SARs shall be terminated,
upon termination of employment of the SAR Holder with the Business Entity that
employs him or her for Cause or other than for Good Reason.
The SAR Holder shall have no rights as a stockholder of the Company by
virtue of having been issued the SARs and shall have only the rights
specifically provided in the Plan.
By executing this SAR Agreement, the SAR Holder acknowledges receipt of
the Plan (a copy of which is attached hereto) and represents that he or she has
read and the terms and provisions of the Plan and accepts the issuance of the
SARs subject to all of such terms and provisions.
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SUMMIT GLOBAL LOGISTICS, INC.
By:
----------------------------------
Name:
Title:
----------------------------
ACKNOWLEDGED AND AGREED BY SAR HOLDER:
Name:
Signature:
------------------------
10
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHT
EXERCISE NOTICE
Pursuant to the provisions of the Summit Global Logistics,
Inc. 2006 Equity Incentive Plan (the "Plan") and that certain Stock Appreciation
Rights Agreement by and between Summit Global Logistics, Inc. (the "Company")
and ____________ (the "Grantee") as of _______________ __, 20__, I, the Grantee,
hereby exercise the Stock Appreciation Rights granted under the terms of the
Plan to the extent of __________ shares of the Common Stock of the Company (the
"SARs"). If applicable, I deliver to the Company herewith payment for tax
withholding with respect to the exercise of the SARs in the amount of
$__________.
TO BE COMPLETED BY THE GRANTEE
A. Number of SARs: ____________
B. Initial SAR Value $___________
C. Total Initial SAR Value of
Shares (A x B): $ $___________
TO BE COMPLETED BY THE COMPANY
D. Value per share of Common Stock, as of
__________, times the
number of shares being
exercised (A): $___________
E. TOTAL PAYMENT
DUE (D - C): $___________
Date: ____________________ _________________________________
Grantee
_________________________________
Address
_________________________________
Social Security Number
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APPENDIX A
(HIGH LEVEL EXECUTIVES)
Twenty-four (24) Months' Base Salary. Payments shall be made on a monthly basis.
In addition, the Company shall pay the individual's premiums for COBRA
continuation coverage (individual, individual plus one or family coverage, as
applicable) for a period of eighteen (18) months following termination of
employment. At the expiration of this eighteen (18)-month period, the Company
will pay the individual, in a single lump sum, the cash value of six (6)
additional months of premium payments for the type of coverage elected under
COBRA under a substantially similar health plan. The amount to be paid under the
immediately preceding sentence shall not exceed $25,000.
If the individual's employment is terminated in connection with a Change in
Control, as such term is defined in Plan Section 4.2.b, the twenty-four (24)
Months' Base Salary described above shall be paid to the individual in a single
lump sum, the COBRA and health care benefits shall be provided as described
above, and the Company also will provide the individual with outplacement
benefits of an amount commensurate with the individual's position with the
Company, the value of such benefits not to exceed $10,500. The Company will also
continue to maintain the identical level of Perquisites and benefits enjoyed by
the individual prior to the Change in Control for a period of two (2) years
following his or her last day of employment. For these purposes, a termination
of the individual's employment shall conclusively be deemed to be in connection
with a Change in Control if such termination occurs during the time period
commencing on the date of the Change in Control and ending on the second
anniversary of the closing date for the transaction effecting the Change in
Control
This Exhibit A confirms that, solely for purposes of the Summit Global
Logistics, Inc. Severance Benefit Plan, Peter Klaver is within category
described above.
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Exhibit J
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
this 8th day of November, 2006, by and between Christopher Dombalis, residing at
425 Wychwood Road, Westfield, NJ 07090 (the "Executive"), and Summit Global
Logistics, Inc., a Delaware corporation (the "Company").
BACKGROUND
WHEREAS, the Executive is expected to make a major contribution to
the growth, profitability and financial strength of the Company; and
WHEREAS, the Company desires to retain the services of the
Executive, and the Executive desires to be retained by the Company, on the terms
and conditions set forth below.
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in this Agreement, the receipt
and sufficiency of which are hereby acknowledged, the Company and Executive
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following terms, when used in this Agreement, shall
have the following meanings, unless the context clearly requires otherwise (such
definitions to be equally applicable to both the singular and plural of the
defined terms):
1.1.1 "AFFILIATE" means, (a) with respect to the Executive, any
other Person directly or indirectly Controlling, Controlled by, or under
common Control with the Executive and (b) with respect to the Company, (i)
any Person which directly or indirectly beneficially owns (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) securities or
other equity interests possessing more than 50% of the aggregate voting
power in the election of directors (or similar governing body) represented
by all outstanding securities of the Company or (ii) any Person with
respect to which the Company beneficially owns (within the meaning of Rule
13d-3 promulgated under the Exchange Act) securities or other equity
interests possessing more than 50% of the aggregate voting power in the
election of directors (or similar governing body) represented by, or more
than 5% of the aggregate value of, all outstanding securities or other
equity interests of such Person.
1.1.2 "BASE SALARY" shall have the meaning set forth in section
3.1.
1.1.3 "BOARD" means the Board of Directors of the Company.
1
1.1.4 "CHANGE IN CONTROL" means the occurrence of the first step
(e.g., commencement of negotiations) in a process that results in any one
of the following events:
1.1.4.1 the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934,
as amended) (the "Act") of beneficial ownership
(within the meaning of Rule 13d-3 of the Act) of
more than 20% of the (A) then outstanding voting
stock of a Company; or (B) the combined voting
power of the then outstanding securities of the
Company entitled to vote;
1.1.4.2 an ownership change in which the shareholders of
the Company before such ownership change do not
retain, directly or indirectly, at least a
majority of the beneficial interest in the voting
stock of the Company after such transaction, or in
which the Company is not the surviving company;
1.1.4.3 the direct or indirect sale or exchange by the
beneficial owners (directly or indirectly) of the
Company of all or substantially all of the stock
of the Company;
1.1.4.4 a majority of the directors comprising the entire
Board as of the Effective Date changes during any
12-month period (other than a Qualified
Successor);
1.1.4.5 a reorganization, merger or consolidation in which
the Company is a party;
1.1.4.6 the sale, exchange, or transfer of all or
substantially all of the assets of the Company;
1.1.4.7 the bankruptcy, liquidation or dissolution of the
Company; or
1.1.4.8 any transaction including the Company in which the
Company acquires an ownership interest of any
percentage in, enters into a joint venture,
partnership, alliance or similar arrangement with,
or becomes owned in any percentage by, any other
entity that is engaged in a business similar to
the business engaged in by the Company and that
has operations in North America immediately before
such transaction or within one year thereafter.
1.1.5 "CAUSE" means, as determined by the Company in its sole
discretion, the Executive's
1.1.5.1 material act of dishonesty with respect to the
Company;
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1.1.5.2 conviction for a felony, gross misconduct that is
likely to have a material adverse effect on the
Company's business and affairs; or
1.1.5.3 other misconduct, such as excessive absenteeism,
or material failure to comply with Company rules.
1.1.6 "CODE" means the Internal Revenue Code of 1986, as amended.
1.1.7 "COMMON STOCK" means the common stock of the Company, par
value of $.001 per share.
1.1.8 "COMPANY LOCATION" means a Company office consisting of one
or more buildings within 25 miles of each other.
1.1.9 "COMPENSATION COMMITTEE" means the Compensation Committee
of the Board or such other committee designated by the Board that
satisfies any then applicable requirements of the New York Stock Exchange,
Nasdaq, or such other principal national stock exchange on which the
Common Stock is then traded, and which consists of two or more members of
the Board, each of whom shall be an outside director within the meaning of
Section 162(m) of the Code.
1.1.10 "CONFIDENTIAL INFORMATION" means:
1.1.10.1 proprietary information, trade secrets and
know-how of the Company and/or its Affiliates;
1.1.10.2 confidential information relating to the business,
operations, systems, networks, services, data
bases, customer lists, pricing policies, business
plans, marketing plans, product development plans,
strategies, inventions and research of the Company
and/or its Affiliates; and
1.1.10.3 confidential information relating to the financial
affairs and results of operations and forecasts or
projections of the Company and/or its Affiliates;
provided that information shall not constitute Confidential
Information if such information: (i) is generally known or
reasonably knowable by Persons other than the Company or its
Affiliates or Persons employed by, in control of or otherwise
affiliated with the Company or its Affiliates, (ii) is known or
reasonably knowable by Persons other than the Company or its
Affiliates or Persons employed by, in control of or otherwise
affiliated with the Company or its Affiliates, by reason of the
action of such Person or Persons other than the Executive or any
Person acting at the Executive's direction or with the Executive's
prior consent, (iii) was known or reasonably knowable by the
Executive, by lawful means, prior to the date of the Executive's
employment with the Company or (iv) is compelled to be disclosed by
law, regulation or legal process.
3
1.1.11 "CONTROL" (including the terms "Controlled by" and "under
common Control with") means the possession, directly or indirectly or as a
trustee or executor, of the power to direct or cause the direction of the
management of a Person (including the direction of any Person related to
the Executive), whether through the ownership of stock, as a trustee or
executor, by contract or credit agreement or otherwise.
1.1.12 "DISABILITY" means any physical or mental condition which
renders Executive incapable of performing his essential functions and
duties hereunder for a period of at least 180 days, as determined in good
faith by a physician appointed by the Company.
1.1.13 "EFFECTIVE DATE" "EFFECTIVE DATE" means the date of Closing
as defined in that certain Equity Purchase Agreement by and between
Maritime Logistics US Holdings Inc., FMI Holdco I, LLC, FMI Blocker, Inc.
and each of the Sellers set forth in Schedule A thereto, dated as of
October 23, 2006.
1.1.14 "EMPLOYMENT TERM" shall have the meaning set forth in
section 2.2.
1.1.15 "EQUITY INCENTIVE PLAN" means the Summit Global Logistics,
Inc. 2006 Equity Incentive Plan, attached as Exhibit A hereto.
1.1.16 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
1.1.17 "FISCAL YEAR" means the calendar year.
1.1.18 "GOOD REASON" means the occurrence of any of the following:
1.1.18.1 without the Executive's prior written consent, any
material diminution in the Executive's authority,
duties or responsibilities, including those
pertaining to his status as a director of the
Board, if applicable; provided, however, that
prior to any termination pursuant to this Section
1.1.18.1, the Company must be given notice by the
Executive of his/her objection to such material
diminution and no less than 20 days to cure the
same;
1.1.18.2 any failure by the Company to pay the Executive
any portion of the Base Salary or other payments
to which the Executive is entitled under Sections
3.1 through 3.5 hereof, provided, however, that
prior to any termination pursuant to this Section
1.1.18.2 on account of the non-payment of Base
Salary, the Company must be given notice by the
Executive of such acts or omissions and no less
than 30 days to cure the same;
1.1.18.3 without the Executive's prior written consent, the
relocation of the principal place of the
Executive's employment to a location a further
distance than the Company Location where the
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individual was working immediately prior to the
relocation;
1.1.18.4 a material breach by the Company of any of the
material provisions of this Agreement, provided,
however, that prior to any such termination
pursuant to this Section 1.1.18.4, the Company
must be given notice by the Executive of such acts
or omissions and no less than 20 days to cure the
same; or
1.1.18.5 an event described in Section 1.1.4.4 hereof
occurs.
1.1.19 "MANAGEMENT INCENTIVE PLAN" means the Summit Global
Logistics, Inc. 2007 Management Incentive Plan, attached as Exhibit B
hereto.
1.1.20 "PERSON" means an individual, corporation, partnership,
association, limited liability company or partnership, trust, government,
governmental agency or body, or any other group or entity, no matter how
organized and whether or not for profit.
1.1.21 "QUALIFIED SUCCESSOR" means in the event there is a vacancy
in the Board occurring between annual meetings as a result of death,
incapacity or resignation, or if one or more of the Directors shall
decline to stand for election to the Board or, if he is unable or
unwilling to so serve, then the shareholders that are party to that
certain voting agreement ("Voting Agreement") dated on or about the date
hereof between the Company and the parties thereto to elect Messrs.
Agresti, DeSaye, MacAvery and McQuiston (the "Shareholders") shall
designate one or more individuals of standing within the business world
reasonably comparable to that of such Director (each a "Qualified
Successor") as one or more successor Directors in the following manner.
The Shareholders shall select an individual to serve as the Qualified
Successor, which individual shall be independent both of the Company
(except through proposed service as a member of the Board or a subsidiary
of the Company) and of the Shareholders. The selected individual shall be
subject to the prior approval of a super-majority of the Shareholders,
which consent shall not unreasonably be withheld. A Shareholder's approval
of a designated Director shall be deemed given if such Shareholder has not
responded to a notice by the Chairman of the Board of the Company within
30 days of notice to the Shareholder of the identity of the selected
individual. Upon selection and approval hereunder, such Qualified
Successor shall for all purposes be deemed a Director of the Company and
shall be subject to the Voting Agreement in the event of his/her death,
incapacity, resignation or decision not to be a Director.
1.1.22 "TERMINATION DATE" means the date on which the Executive's
employment with the Company terminates for any reason.
1.1.23 "YEAR OF SERVICE" means the completion by the Executive of
Year One, Year Two, Year Three, Year Four , Year Five, or any additional
one-year period under Section 2.2 hereof, as applicable. For purposes of
Section 3.5 hereof, and only for such purposes, partial years of service
will be credited as one (1) Year of Service if the Executive has worked at
least 1,000 hours during the applicable year.
5
1.1.24 "YEAR ONE" means the 12-consecutive-month period beginning
on the Effective Date and ending on the day immediately prior to the first
day of Year Two.
1.1.25 "YEAR TWO" means the 12-consecutive-month period beginning
on the first anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Three.
1.1.26 "YEAR THREE" means the 12-consecutive-month period
beginning on the second anniversary of the Effective Date and ending on
the day immediately prior to the first day of Year Four.
1.1.27 "YEAR FOUR" means the 12-consecutive-month period beginning
on the third anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Five.
1.1.28 "YEAR FIVE" means the 12-consecutive-month period beginning
on the fourth anniversary of the Effective Date and ending on the day
immediately prior to the fifth anniversary of the Effective Date.
ARTICLE 2
EMPLOYMENT AND TERM
2.1 EMPLOYMENT. The Company employs Executive and the Executive hereby
agrees to such employment by the Company during the Employment Term to serve as
Senior Vice President of Summit Global Logistics, Inc., with the customary
duties, authorities and responsibilities of an officer of a corporation and such
other duties, authorities and responsibilities relative to the Company or its
Affiliates that have been agreed upon in writing by the Company and Executive.
This Agreement supersedes any and all prior agreements between Executive and the
Company or the Company's predecessors in interest with respect to Executive's
employment, and any such prior agreements shall be void and of no further force
and effect as of the Effective Date.
2.2 EMPLOYMENT TERM. The "Employment Term" of this Agreement shall
commence on the Effective Date, and unless sooner terminated as provided in
Article 4, shall terminate upon the fifth (5th) anniversary of such date.
Thereafter, and unless sooner terminated as provided in Article 4, the
Employment Term shall automatically be renewed on each anniversary date of the
expiration of the initial Employment Term for a period of one (1) year, unless
and until either the Company or the Executive terminates such automatic renewal
upon sixty (60) days' advance written notice to the other of an intention not to
renew (that is, upon written notice of an intention not to renew delivered to
the other at least sixty (60) days prior to the beginning of the next one-year
period); provided, however, that in no event shall the Employment Term exceed a
period of ten (10) continuous years beginning with the Effective Date.
2.3 FULL WORKING TIME. During the Employment Term, the Executive shall
devote substantially all of his ability and attention, all of his skill and
experience and efforts during
6
normal business hours and at such other times as reasonably required for the
proper performance of his duties hereunder and to the business and affairs of
the Company. During the Employment Term, the Executive shall not, either
directly or indirectly, actively participate in any other business or accept any
employment or business office whatsoever from any other Person; provided,
however, that the foregoing shall not preclude the Executive, subject to Article
5, from: (i) serving as a director of any non-profit or charitable organization,
or any company not in competition with the Company, or (ii) making an investment
in any other business, so long as in any such case, the Executive does not
actively participate in such other business or organization and such activity
does not interfere with the Executive's ability to perform his duties hereunder
and does not constitute a conflict of interest with the Company.
ARTICLE 3
COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the Employment Term, as compensation for
services hereunder and in consideration for the protective covenants set forth
in Article 5 of this Agreement, the Executive shall be paid a base salary of Two
Hundred Fifty Thousand United States Dollars (US$250,000) for Year One, with an
annual cost of living increase of 3% for each of Year Two, Year Three, Year Four
and Year Five, and, if applicable under Section 2.2 hereof, for each additional
one-year period of the Employment Term thereafter, or such greater amount as may
from time to time be approved by the Compensation Committee (the "Base Salary").
Cost-of-living increases shall be effective as of the first day of Year Two,
Year Three, Year Four and Year Five, respectively, and, if applicable under
Section 2.2 hereof, as of the first day of each additional one-year period of
the Employment Term thereafter, and shall be cumulative. Base Salary shall be
paid to the Executive in accordance with the Company's normal payroll practices.
3.2 BONUSES. Such bonuses shall include the following:
3.2.1 NON-COMPETE BONUS. As consideration for the Executive
entering into this Agreement, the Company shall pay the Executive a bonus
in the amount of Eighty Thousand United States Dollars (US$80,000) upon
the condition that the executive agrees to be bound by the terms of
Section 5.2 of this Agreement, as set forth in Article 5 hereof,
hereinafter referred to as the "Non-Compete Bonus". The Non-Compete Bonus
shall be payable in cash no later the thirtieth (30th) day following the
date of this Agreement.
3.2.2 MANAGEMENT INCENTIVE BONUSES. The Executive shall receive
an annual bonus in accordance with the terms of a grant agreement made
pursuant to the terms of the Management Incentive Plan (the "Annual Bonus
Grant Agreement"). The Executive also shall receive a multi-year bonus,
pursuant to the terms of the Management Incentive Plan, if certain
performance targets are met (the "Multi-Year Bonus Grant Agreement"). The
Annual Bonus Grant Agreement and Multi-Year Bonus Grant Agreement are
attached as Exhibits C and D, respectively, hereto. If the Management
Incentive Plan is terminated for any reason whatsoever, whether by the
Company or any other Person, the Executive shall be paid the annual bonus
and multi-year bonus that otherwise would be payable to him with respect
to the Performance Period within which the termination of
7
such Plan occurs, notwithstanding the termination of such Plan. For
purposes of the immediately preceding sentence, the Executive's annual
bonus and multi-year bonus that otherwise would be payable to him with
respect to the Performance Period within which the termination of the
Management Incentive Plan occurs shall be identical to that set forth in
Exhibits C and D, respectively, hereto, and shall be fully vested, subject
to the satisfaction of the conditions set forth in Section 5.2 of such
Plan.
3.3 EQUITY COMPENSATION. On or about the Effective Date, or as soon as
administratively practicable thereafter, the Executive shall receive grants
under the Equity Incentive Plan as follows:
3.3.1 INCENTIVE STOCK OPTIONS. A grant of an Incentive Stock
Option, as defined in the Equity Incentive Plan, in respect of 126,000
shares of Common Stock, pursuant to an option grant agreement annexed as
Exhibit E hereto.
3.3.2 STOCK APPRECIATION RIGHTS. A grant of 94,500 Stock
Appreciation Rights, as defined in the Equity Incentive Plan, each in
respect of one share of Common Stock, pursuant to a Stock Appreciation
Rights grant agreement annexed as Exhibit F hereto. The parties intend
that such grant cover the approximate combined federal and state income
tax liability associated with both (i) the number of shares of Common
Stock with respect to which the Incentive Stock Option is exercised and
(ii) the number of shares of Common Stock underlying the exercise of the
Stock Appreciation Rights used to pay for the tax liability under clause
(i).
All such grants and/or awards shall conform to the terms and conditions of the
Equity Incentive Plan and the annexed grant agreements between the Company and
the Executive. In its discretion, the Compensation Committee may make additional
grants or awards to the Executive from time to time. If the Equity Incentive
Plan is terminated for any reason whatsoever, whether by the Company or any
other Person, the Executive shall be entitled to the benefits due to him under
Exhibits E and F, respectively, hereto, notwithstanding the termination of such
Plan. For purposes of the immediately preceding sentence, the termination of the
Equity Incentive Plan shall result in all unvested Incentive Stock Options and
Stock Appreciation Rights granted to the Participant under Exhibits E and F,
respectively, to be fully vested and exercisable.
3.4 SERP BENEFITS. During the Employment Term, the Executive shall be
entitled to participate in the Summit Global Logistics, Inc. Supplemental
Executive Retirement Plan (the "SERP") in accordance with the terms thereof.
Such eligibility to participate in the SERP shall commence effective as of the
later of the Effective Date or the effective date of the SERP. The SERP is
attached as Exhibit G hereto.
3.5 RETIREMENT, WELFARE AND FRINGE BENEFITS. To the maximum extent that
he is eligible under the terms of the applicable plan or program, the Executive
shall participate in the current or future plans or programs maintained by the
Company for its employees and/or senior executives that provide insurance,
medical benefits, retirement benefits, or similar fringe benefits as set forth
in SCHEDULE A attached hereto, as well as any additional plans or programs that
may be adopted that are generally applicable to senior executives; provided,
however, that if within the Employment Term, the Executive leaves the employment
of the Company and is eligible for severance benefits, then $7,500 per Year of
Service shall be added to the severance amount in
8
lieu of any forfeited (non-vested) qualified plan amount. In addition, the
Executive shall be entitled to a minimum of twenty (20) vacation days for each
calendar year beginning with or within a Year of Service, which must be taken in
accordance with the Company's vacation policy then in effect. The Executive
shall also be entitled at least six (6) days of sick day leave, seven (7)
personal days leave and seven (7) fixed holidays for each calendar year
beginning with or within a Year of Service, which must be taken in accordance
with the Company's applicable policies then in effect. Unused vacation days,
sick days or personal days shall not carry forward into the subsequent year. In
the event that the Company establishes a more favorable vacation, sick leave or
personal day policy generally applicable to senior executives, the Executive
shall be entitled to any such additional benefits. During the Employment Term,
the Company shall pay the Executive an automobile allowance, which shall not
exceed $1,250 per month, plus an annual inflation adjustment reflecting market
conditions. The Executive is responsible for the tax consequences of the
personal usage of the automobile. The Executive shall be entitled to a $5,000
per year golf, health, country and/or other recreational club membership
allowance for each Year of Service, to be allocated among the foregoing as the
Executive sees fit. The Executive is responsible for the tax consequences of the
personal usage of the golf, health, country and/or other recreational club
membership. In addition, or in lieu of the Company policy for executives with
respect to annual physical examinations, during each Year of Service, the
Executive shall be reimbursed up to $1000 for an annual physical examination
conducted by a physician designated by the Executive.
3.6 INDEMNIFICATION AND INSURANCE.
3.6.1 D&O INSURANCE. During the entirety of the Employment Term,
the Company shall cause the Executive to be covered by and named as an
insured or as a member of a class of insured under any policy or contract
of insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as an
officer or director of the Company or service in other capacities at its
request ("D&O Insurance Coverage"). The D&O Insurance Coverage provided to
the Executive pursuant to this Section 3.6.1 shall be of the same scope
and on the same terms and conditions as the coverage (if any) provided to
other officers or directors of the Company and shall continue for so long
as the Executive shall be subject to personal liability relating to such
service.
3.6.2 EPLI INSURANCE. During the entirety of the Employment Term,
the Company shall cause the Executive to be covered by and named as an
insured or as a member of a class of insured under any policy or contract
of insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as a
director or officer of the Company, where such personal liability could
arise under or in connection with, or be attributable to, the Company's
employment practices and procedures "EPLI Insurance Coverage"). The EPLI
Insurance Coverage provided to the Executive pursuant to this Section
3.6.2 shall be of the same scope and on the same terms and conditions as
the coverage (if any) provided to other officers or directors of the
Company and shall continue for so long as the Executive shall be subject
to personal liability relating to such service.
3.6.3 INDEMNIFICATION. To the maximum extent permitted under
applicable law, and provided that the Executive has acted within the scope
of his authority hereunder, the
9
Company shall indemnify the Executive against and hold him harmless from
any costs, liabilities, losses and exposures (each, a "Cost," and
collectively, "Costs") to the fullest extent and on the most favorable
terms and conditions that similar indemnification is offered to any
director or officer of the Company or any subsidiary or Affiliate thereof
and shall survive the termination of this Agreement and continue for so
long as the Executive shall be subject to personal liability relating to
such service; provided, however, that the Company shall not indemnify and
hold harmless the Executive from a Cost to the extent that such Cost is
attributable to the Executive's (i) willful misconduct or gross negligence
in the performance of his duties or exercise of his authority hereunder or
(ii) material breach of any of the provisions of this Agreement.
3.7 EXPENSES. The Company shall pay or reimburse the Executive for
reasonable business expenses actually incurred or paid by the Executive during
the Employment Term, in the performance of his services hereunder; provided,
however, that such expenses are consistent with the Company's policy. Such
payment or reimbursement is expressly conditioned upon presentation of expense
statements or vouchers or other supporting documentation by the Executive in a
manner that is acceptable to the Company and otherwise in accordance with the
Company's policy then in effect.
3.8 DEDUCTIONS. The Company shall deduct from all compensation or
benefits payable pursuant to this Agreement such payroll, withholding and other
taxes and medical, pension and other benefits in accordance with the Company's
benefit programs and the Executive's selections and as may in the reasonable
opinion of the Company be required by law and any such additional amounts
requested in writing by the Executive.
ARTICLE 4
TERMINATION
4.1 GENERAL. The Company shall have the right to terminate the
employment of the Executive at any time with or without Cause and the Executive
shall be paid the Standard Termination Entitlements (as defined in Section
4.3.1).
4.2 TERMINATION UNDER CERTAIN CIRCUMSTANCES.
4.2.1 TERMINATION WITHOUT SEVERANCE BENEFITS. In the event the
Executive's employment with the Company is terminated prior to the
expiration of the Employment Term by reason of (i) the Executive's
resignation without Good Reason, (ii) the Executive's death or (iii) the
Executive's discharge by the Company for Cause prior to the occurrence of
a Change in Control, this Agreement shall terminate including, without
limitation, the Company's obligations to provide any compensation,
benefits or severance to the Executive under Article 3 of this Agreement
or otherwise, other than the Standard Termination Entitlements (as defined
in section 4.3.1).
4.2.2 DISABILITY. The Company may terminate the Executive's
employment upon the Executive's Disability. In such event, in addition to
the Standard Termination
10
Entitlements (as defined in section 4.3.1), the Company shall continue to
pay the Executive his Base Salary in accordance with the Company's normal
payroll practices, at the annual rate in effect for him immediately prior
to the termination of his employment, during a period ending on the
earliest of: (a) the date on which long-term disability insurance benefits
are first payable to him under any long-term disability insurance plan
covering employees of the Company; and (b) the date of his death. A
termination of employment due to Disability under this Section 4.2.2 shall
be effected by notice of termination given to the Executive by the Company
and shall take effect on the later of the effective date of termination
specified in such notice or the date on which the notice of termination is
deemed given to the Executive.
4.2.3 TERMINATION WITH SEVERANCE BENEFITS. In the event that the
Executive's employment with the Company is terminated by the Executive
prior to the expiration of the Employment Term for Good Reason or by the
Company prior to the expiration of the Employment Term other than for
Cause or Disability, the Company shall pay the Standard Termination
Entitlements (as defined in section 4.3.1) and the Severance Benefits (as
defined in section 4.3.2); provided, however, that any payment required by
this section 4.2.3 is expressly conditioned upon:
4.2.3.1 The Executive's continued material compliance with
the terms of this Agreement, including, without
limitation, Article 5; and
4.2.3.2 The Executive's resignation from any and all
positions which he holds as an officer, director
or committee member with respect to the Company or
any Affiliate thereof.
4.3 STANDARD TERMINATION ENTITLEMENTS; SEVERANCE BENEFITS.
4.3.1 STANDARD TERMINATION ENTITLEMENTS. For all purposes of this
Agreement, the Executive's "Standard Termination Entitlements" shall mean
and include:
4.3.1.1 the Executive's earned but unpaid compensation
(including, without limitation, Base Salary, and
all other items which constitute wages under
applicable law, interpreting the term "wages" in
the broadest possible sense) as of the date of his
termination of employment. This payment shall be
made at the time and in the manner prescribed by
law applicable to the payment of wages including,
specifically, payment for accrued, but unused
vacation days;
4.3.1.2 reimbursement for reasonable business expenses and
authorized travel expenses incurred but still
outstanding; and
4.3.1.3 the benefits, if any, due to the Executive, and
the Executive's estate, surviving dependents or
his designated beneficiaries under the employee
benefit plans and programs and compensation plans
and programs maintained for the benefit of, or
covering, the officers, executives and employees
of the
11
Company, including, but not limited to, all plans
or arrangements listed on SCHEDULE A, the Equity
Incentive Plan and the Management Incentive Plan.
The time and manner of payment or other delivery
of these benefits and the recipients of such
benefits shall be determined according to the
terms and conditions of the applicable plans and
programs.
4.3.2 SEVERANCE BENEFITS. For all purposes of this Agreement, the
Executive's "Severance Benefits" shall mean the benefits set forth in
Exhibit H. If the Summit Global Logistics, Inc. Severance Benefit Plan, as
set forth in Exhibit H, is terminated for any reason whatsover, whether by
the Company or any other Person, the Executive shall be paid severance
benefits identical to those set forth in Appendix A of such Plan,
notwithstanding the termination of such Plan.
ARTICLE 5
RESTRICTIVE COVENANTS
5.1 PROPRIETARY INFORMATION.
5.1.1 DISCLOSURE DURING THE EMPLOYMENT TERM. Subject to Section
5.5 hereof, the Executive shall promptly disclose to the Company in such
form and manner as the Company may reasonably require (a) all operations,
systems, services, methods, developments, inventions, improvements and
other information or data pertaining to the business or activities of the
Company and its Affiliates as are conceived, originated, discovered or
developed by the Executive during the Employment Term and (b) such
information and data pertaining to the business, operations, personnel,
activities, financial affairs, and other information relating to the
Company and its Affiliates and their respective customers, suppliers,
employees and other persons having business dealings with the Company and
its Affiliates as may be reasonably required for the Company to operate
its business. It is understood that such information is proprietary in
nature and shall (as between the Company and Executive) be for the
exclusive use and benefit of the Company and shall be and remain the
property of the Company both during the Employment Term and thereafter.
5.1.2 DISCLOSURE AFTER EMPLOYMENT. In the event that the
Executive leaves the employ of the Company for any reason, including,
without limitation, the expiration of the Employment Term, the Executive
shall deliver to the Company any and all devices (including any lap top,
personal hand-held devices or mobile telephone), records, data, notes,
reports, proposals, lists, correspondence, specifications, drawings,
blueprints, sketches, materials, equipment, other documents or property
belonging to the Company or any Affiliate thereof or any of their
respective successors or assigns.
5.2 NON-COMPETITION. During the Employment Term and for twelve months
after the date employment with the Company has ended, the Executive agrees, and
shall cause each Person Controlled by him to agree, that he shall not, directly
or indirectly, or through any Person Controlled by the Executive: (a) engage in
any logistic activities competitive with the business of the Company and its
Affiliates for his or their own account or for the account of any other
12
Person, or (b) become interested in any Person engaged in logistic activities
competitive with the business of the Company and its Affiliates as a partner,
shareholder, member, principal, agent, employee, trustee, consultant or in any
other relationship or capacity.
5.3 NON-SOLICITATION. During the Employment Term and for a period of
twelve months after the date employment with the Company has ended, the
Executive will not, directly or indirectly, use proprietary knowledge or
information relating to the Company or its Affiliates obtained during the course
of the Executive's employment with the Company for his own benefit or the
benefit of any third party with the intention to, or which a reasonable person
would construe to, (a) interfere with or disrupt any present relationship,
contractual or otherwise, between the Company or its Affiliates and any
customer, supplier, employee, consultant or other person having business
dealings with the Company or its Affiliates, or (b) employ or solicit the
employment or engagement by others of any employee or consultant of the Company
or its Affiliates who was such an employee or consultant at the time of
termination of the Executive's employment hereunder. Upon leaving the employment
of the Company, the Executive shall notify his new employer of his obligations
under this Agreement and grants consent to notification by the Company to the
Executive's new employer concerning Executive's rights and obligations under
this Agreement.
5.4 NON-DISCLOSURE. Except with the prior written consent of the Company
in each instance or as may be reasonably necessary to perform the Executive's
services hereunder, the Executive shall not disclose, use, publish, or in any
other manner reveal, directly or indirectly, at any time during or after the
Employment Term, any Confidential Information relating to the Company or any
Affiliate thereof acquired by him prior to, during the course of, or incident
to, his employment hereunder; provided, however, that necessary or appropriate
disclosures may be made to the Executive's legal counsel.
5.5 OWNERSHIP OF INTELLECTUAL PROPERTY. Subject to applicable law, the
Executive acknowledges and agrees that all work performed, and all ideas,
concepts, materials, products, software; documentation, designs, architectures,
specifications, flow charts, test data, programmer's notes, deliverables,
improvements, discoveries, methods, processes, or inventions, trade secrets or
other subject matter related to the Company's business (collectively,
"Materials") conceived, developed or prepared by the Executive alone, or with
others, during the period of Executive's employment by the Company in written,
oral, electronic, photographic, optical or any other form are the property of
the Company and its successors or assigns, and all rights, title and interest
therein shall vest in the Company and its successors or assigns, and all
Materials shall be deemed to be works made for hire and made in the course of
the Executive's employment by the Company. To the extent that title to any
Materials has not or may not, by operation of law, vest in the Company and its
successors or assigns, or such Materials may not be considered works made for
hire. Notwithstanding the foregoing, the parties acknowledge and understand that
Executive may previously have developed and may continue to develop certain
ideas, concepts and designs which are unrelated to the business of the Company
and may continue to do so provided that such activities do not interfere with
his duties under this Agreement.
5.6 REASONABLE LIMITATIONS. Executive acknowledges that given the nature
of the Company's business, the covenants contained in this Article 5 contain
reasonable limitations as to time, geographical area and scope of activity to be
restrained, and do not impose a greater
13
restraint than is necessary to protect and preserve the Company's business and
to protect the Company's legitimate business interests. If, however, this
Article 5 is determined by any arbitrator to be unenforceable by reason of its
extending for too long a period of time or over too large a geographic area or
by reason of its being too extensive in any other respect, or for any other
reason, it will be interpreted to extend only over the longest period of time
for which it may be enforceable and/or over the largest geographical area as to
which it may be enforceable and/or to the maximum extent in all other aspects as
to which it may be enforceable, all as determined by such court or arbitrator in
such action.
5.7 SURVIVAL OF PROTECTIVE COVENANTS. Each covenant on the part of
Executive contained in this Article 5 shall be construed as an agreement
independent of any other provision of this Agreement, unless otherwise indicated
herein, and shall survive the termination of Executive's employment under this
Agreement.
ARTICLE 6
DISPUTE RESOLUTION
6.1 ARBITRATION OF DISPUTES. Both parties agree that all controversies
or claims that may arise between the Executive and the Company in connection
with this Agreement shall be settled by arbitration. The parties further agree
that the arbitration shall be held in the State of New Jersey, and administered
by the American Arbitration Association under its Commercial Arbitration Rules,
applying New Jersey law.
6.1.1 QUALIFICATIONS OF ARBITRATOR. The arbitration shall be
submitted to a single arbitrator chosen in the manner provided under the
rules of the American Arbitration Association. The arbitrator shall be
disinterested and shall not have any significant business relationship
with either party, and shall not have served as an arbitrator for any
disputes involving the Company or any of its Affiliates more than twice in
the thirty-six (36) month period immediately preceding his or her date of
appointment. The arbitrator shall be a person who is experienced and
knowledgeable in employment and executive compensation law and shall be an
attorney duly licensed to practice law in one or more states.
6.1.2 POWERS OF ARBITRATOR. The arbitrator shall not have the
authority to grant any remedy which contravenes or changes any term of
this Agreement and shall not have the authority to award punitive or
exemplary or damages under any circumstances. The parties shall equally
share the expense of the arbitrator selected and of any stenographer
present at the arbitration. The remaining costs of the arbitrator
proceedings shall be allocated by the arbitrator, except that the
arbitrator shall not have the power to award attorney's fees.
6.1.3 EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall
render its decision within thirty (30) days after termination of the
arbitration proceeding, which decision shall be in writing, stating the
reasons therefor and including a brief description of each element of any
damages awarded. The decision of the arbitrator shall be final and
14
binding. Judgment on the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof.
6.2 SERVICE OF PROCESS. The parties agree that service of process may be
made on it by personal service of a copy of the summons and complaint or other
legal process in any such suit, action or proceeding, or by registered or
certified mail (postage prepaid) to its address specified in Section 7.1 (or
applicable forwarding address), or by any other method of service provided for
under the applicable laws in effect in the applicable jurisdiction.
ARTICLE 7
GENERAL PROVISIONS
7.1 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Executive: Christopher Dombalis
425 Wychwood Road
Westfield, NJ 07090
If to the Company: Summit Global Logistics, Inc.
547 Boulevard
Kenilworth, NJ 07033
with a copy to: David D. Gammell, Esq.
Brown Rudnick Berlack Israels LLP
One Financial Center
Boston, MA 02111
or to such other address as the party to whom notice is given may have
previously furnished to the other parties hereto in writing in the manner set
forth above.
7.2 ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement between the Executive and the Company with respect to the Company's
employment of the Executive and supersedes any and all prior agreements and
understandings, written or oral, with respect thereto.
7.3 AMENDMENTS AND WAIVERS. Any term of this Agreement or any Schedule,
Exhibit or attachment hereto may be amended only by (a) an instrument in writing
and signed by the party against whom such amendment is sought to be enforced,
and (b) in the case of the Company, such amendment also must be duly authorized
by an appropriate resolution of the Company. In addition, any term of this
Agreement or any Schedule, Exhibit or attachment
15
hereto may be waived by the party against whom the obligation runs to by an
instrument in writing signed by such party and delivered to the Company as
reasonable time prior to the effective date of the waiver.
7.4 SUCCESSORS AND ASSIGNS. The Company shall have the right to assign
this Agreement, subject to the Executive's consent which shall not be
unreasonably withheld and subject to. This Agreement shall inure to the benefit
of, and be binding upon (a) the parties hereto, (b) the heirs, administrators,
executors and personal representatives of the Executive and (c) the successors
and assigns of the Company as provided herein.
7.5 GOVERNING LAW. This Agreement, including the validity hereof and the
rights and obligations of the parties hereunder, and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the laws of the State of New Jersey without
giving effect to any conflicts of law provisions or rule, that would cause the
application of the laws of any other jurisdiction.
7.6 SEVERABILITY. If any provisions of this Agreement as applied to any
part or to any circumstance shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement.
7.7 NO CONFLICTS. The Executive represents to the Company that the
execution, delivery and performance by the Executive of this Agreement does not
and will not conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under any contract,
agreement or understanding, whether oral or written, to which the Executive is
or was a party or of which the Executive is or should be aware.
7.8 SURVIVAL. The rights and obligations of the Company and Executive
pursuant to Articles 4, 5 and 6 shall survive the termination of the Executive's
employment with the Company and the expiration of the Employment Term.
7.9 CAPTIONS. The headings and captions used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.
7.10 COUNTERPARTS. This Agreement be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
__________________________________
Christopher Dombalis
SUMMIT GLOBAL LOGISTICS, INC.
By: _______________________________
Name
Title:
17
SCHEDULE A
EMPLOYEE BENEFIT SUMMARY TERM SHEET
As of January 1, 2007, the Executive shall be eligible to participate in
all of the retirement and welfare benefit plans sponsored, maintained or
contributed to by FMI International, LLC and/or its affiliates or subsidiaries,
which plans shall be amended accordingly. Without in any way limiting the
generality of the foregoing, the Executive shall be entitled to participate in
the following plans:
o FMI International, LLC 401(k) Profit Sharing Plan;
o FMI International West Health Plan;
o FMI International, LLC PPO Health Insurance Plan;
o FMI International, LLC Dental Plan; and the
o FMI International, LLC Life Insurance Plan.
18
EXHIBIT C
ANNUAL BONUS GRANT AGREEMENT
THIS ANNUAL BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between
Christopher Dombalis (the "Executive") and Summit Global Logistics, Inc., a
Delaware corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the 8th day of November, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make annual bonus payments to the Executive for each Year of Service, as defined
in the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in the Employment Agreement,
the receipt and sufficiency of which are hereby acknowledged, the Executive and
the Company agree as follows:
1. DEFINITIONS. The following terms, when used in this
Agreement, shall have the following meanings, unless the context clearly
requires otherwise (such definitions to be equally applicable to both the
singular and plural of the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto
in the Management Incentive Plan.
1.2 "BONUS" means the annual incentive bonus to be paid
hereunder with respect to a given Fiscal Year.
1.3 "EBITDA" means the Company's earnings before income
tax, plus depreciation and amortization, as computed in accordance
with United States GAAP and in a manner consistent with the methods
used in the Company's audited financial statements, without regard
to (i) extraordinary or other nonrecurring or unusual items, or
restructuring or impairment charges, as determined by the Company's
independent public accountants in accordance with GAAP or (ii)
changes in accounting, unless, in each case, the Committee, as
defined in the Management Incentive Plan, decides otherwise within
the Determination Period, as defined in the Management Incentive
Plan.
1.4 "EBITDA TARGET" means the Company's EBITDA for Fiscal
Year 2007, 2008, 2009 or 2010, as applicable.
1.5 "FISCAL YEAR" means the calendar year.
1.6 "GAAP" means generally accepted accounting
principles.
1.7 "PERFORMANCE PERIOD" shall have the meaning ascribed
thereto in the Management Incentive Plan.
2. EBITDA TARGETS.
2.1 The EBITDA Target for Fiscal Year 2007 shall be
$__________.
2.2 The EBITDA Target for Fiscal Year 2008 shall be
$__________.
2.3 The EBITDA Target for Fiscal Year 2009 shall be
$__________.
2.4 The EBITDA Target for Fiscal Year 2010 shall be
$__________.
3. ANNUAL INCENTIVE BONUSES.
3.1 The Bonus for each of Fiscal Year 2007, Fiscal Year
2008, Fiscal Year 2009 and Fiscal Year 2010 shall be as follows:
3.1.1 If at least 80% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive
shall receive a Bonus for such Fiscal Year equal
to 35% of his Base Salary for the Performance
Period beginning with or within such Fiscal Year.
3.1.1.2 If at least 90% of the EBITDA Target for
the applicable Fiscal Year is achieved, the
Executive shall receive a Bonus for such Fiscal
Year equal to 52.50% of his Base Salary for the
Performance Period beginning with or within such
Fiscal Year.
3.1.1.3 If at least 100% of the EBITDA Target for
the applicable Fiscal Year is achieved, the
Executive shall receive a Bonus for such Fiscal
Year equal to 70% of his Base Salary for the
Performance Period beginning with or within such
Fiscal Year.
3.1.1.4 For each percentage point, up to 50
percentage points by which the EBITDA Target for
the applicable Fiscal Year is exceeded, the
Executive shall receive an additional Bonus equal
to 2.10% of his Base Salary.
3.1.1.5 For each percentage point over 50
percentage points, up to 50 additional points, by
which the EBITDA Target for the applicable Fiscal
Year is exceeded, the Executive shall receive an
additional Bonus equal to 2.80% of his Base
Salary.
3.2 Except as otherwise provided herein, bonus amounts
shall be payable to the Executive in accordance with the terms and
conditions of the Management Incentive Plan.
4. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and
the Company shall comply with all of the terms thereof applicable to annual
incentive awards. In the event of any conflict between the terms of this
Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
5. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
___________________________________
Christopher Dombalis
SUMMIT GLOBAL LOGISTICS, INC.
By: _______________________________
Name
Title:
EXHIBIT D
MULTI-YEAR BONUS GRANT AGREEMENT
THIS MULTI-YEAR BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between
Christopher Dombalis (the "Executive") and Summit Global Logistics, Inc., a
Delaware corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the 8th day of Novmebr, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make a multi-year bonus payment to the Executive if certain performance targets
of the Company are satisfied as of the end of the Employment Term, as defined in
the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in the Employment Agreement,
the receipt and sufficiency of which are hereby acknowledged, the Executive and
the Company agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement,
shall have the following meanings, unless the context clearly requires otherwise
(such definitions to be equally applicable to both the singular and plural of
the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto in
the Management Incentive Plan.
1.2 "BONUS" means the multi-year incentive bonus to be paid
hereunder with respect to the Employment Term.
1.3 "DELTA ONE" means the excess, if any, of EBITDA for
Fiscal Year 2009 over the EBITDA Target for Fiscal Year 2007.
1.4 "DELTA TWO" means the excess, if any, of EBITDA for
Fiscal Year 2010 over the EBITDA Target for Fiscal Year 2008.
1.5 "EBITDA" means the Company's earnings before income tax,
plus depreciation and amortization, as computed in accordance with
United States GAAP and in a manner consistent with the methods used
in the Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or
restructuring or impairment charges, as determined by the Company's
independent public accountants in accordance with GAAP or (ii)
changes in accounting, unless, in each case, the Committee, as
defined in the Management Incentive Plan, decides otherwise within
the Determination Period, as defined in the Management Incentive
Plan.
1.6 "EBITDA TARGET" means
1.6.1 For Fiscal Year 2007, $__________.
1.6.2 For Fiscal Year 2008, $__________.
1.7 "FIRST PERFORMANCE PERIOD" means the three-consecutive
Fiscal Year period beginning on the first day of Fiscal Year 2007
and ending on the last day of Fiscal Year 2009.
1.8 "FISCAL YEAR" means the calendar year.
1.9 "FUNDAMENTAL TRANSACTION" has the meaning as defined in
the Management Incentive Plan.
1.10 "GAAP" means generally accepted accounting principles.
1.11 "PERFORMANCE PERIOD" means the First Performance Period
or the Second Performance Period, as applicable.
1.12 "SECOND PERFORMANCE PERIOD" means the three-consecutive
Fiscal Year period beginning on the first day of Fiscal Year 2008
and ending on the last day of Fiscal Year 2010.
2. MULTI-YEAR BONUS.
2.1 FIRST PERFORMANCE PERIOD. If, with respect to the First
Performance Period, Delta One, expressed as a percentage of the
EBITDA Target for Fiscal Year 2007, equals or exceeds 33%, the
Executive shall be paid a Bonus in Fiscal Year 2010 equal to one and
one half (1.5) times his Base Salary for Fiscal Year 2007.
2.2 SECOND PERFORMANCE PERIOD. If, with respect to the
Second Performance Period, Delta Two, expressed as a percentage of
the EBITDA Target for Fiscal Year 2008, equals or exceeds 33%, the
Executive shall be paid a Bonus in Fiscal Year 2011 equal to one and
one half (1.5) times his Base Salary for Fiscal Year 2008.
3. PAYMENT UPON OCCURRENCE OF FUNDAMENTAL TRANSACTION. If a
Fundamental Transaction occurs at any time both (i) prior to the payment of any
amount pursuant to Section 2 hereof and (ii) on or prior to December 31, 2010,
then, in lieu of making any payment to the Executive pursuant to Section 2
hereof, the Company shall pay to the Executive, promptly following the
occurrence of the Fundamental Transaction, an amount in immediately available
funds, equal to one and one half (1.5) times his Base Salary. For this purpose,
Base Salary shall mean Base Salary for Fiscal Year 2007, if the Fundamental
Transaction occurs on or prior to the last day of Fiscal Year 2009, and Base
Salary for 2008, if the Fundamental Transaction occurs during Fiscal Year 2010.
Payment shall be made in the form of a single lump sum from the sales proceeds
received by the Company pursuant to the terms of the Fundamental Transaction.
4. PAYMENT OF BONUS AMOUNTS. Except as otherwise provided herein,
bonus amounts shall be payable to the Executive in accordance with the terms and
conditions of the Management Incentive Plan.
5. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and the Company shall comply with all of the terms thereof applicable
to annual incentive awards. In the event of any conflict between the terms of
this Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
6. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
______________________________________
Christopher Dombalis
SUMMIT GLOBAL LOGISTICS, INC.
By: __________________________________
Name
Title:
EXHIBIT E
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
Unless otherwise defined herein, the terms defined in the 2006 Equity
Incentive Plan (the "Plan") shall have the same defined meanings in this Notice
of Stock Option Award and the attached Stock Option Award Terms, which are
incorporated herein by reference (together, the "AWARD AGREEMENT"). Terms not
defined herein shall have their respective meanings under the Plan.
PARTICIPANT (the "PARTICIPANT")
Christopher Dombalis
GRANT
The undersigned Participant has been granted an Option to purchase Common Stock
of Summit Global Logistics, Inc. (the "COMPANY"), subject to the terms and
conditions of the Plan and this Award Agreement, as follows:
DATE OF GRANT November 8, 2006 TOTAL NUMBER OF SHARES GRANTED 126,000
VESTING COMMENCEMENT DATE November 8, 2006 TYPE OF OPTION [X] Incentive Stock Option
EXERCISE PRICE PER SHARE $10.00 Non-Statutory Stock Option
TOTAL EXERCISE PRICE $1,260,000 TERM/EXPIRATION DATE 5 years from Date of Grant
VESTING SCHEDULE:
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
ANNIVERSARY OF GRANT DATE % OF GRANT (OR # OF SHARES) VESTED
One-Year Anniversary of Grant Date 50%
Two-Year Anniversary of Grant Date 100%
The Option shall vest in full upon the earliest to occur of a Change in Control,
the Participant's death, the Participant's Disability, the Participant's
Retirement, the Company's (or any parent's or subsidiary's thereof) termination
of the Participant's employment without Cause or the Participant's termination
of his employment with the Company (or any parent or subsidiary thereof) for
Good Reason.
Upon the execution by the Company of a definitive acquisition, merger or similar
agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing, a Change in
Control would occur, the Committee, in its sole discretion, and notwithstanding
any provision of the Transaction Agreement or the Plan, including, but not
limited to, Section 13f.i. thereof, to the contrary, shall (i) require the
acquiring or surviving entity (if not the Company) to assume this Option in
accordance with its terms or (ii) pay the Participant, for each Share not
previously exercised, the greater of (A) the transaction consideration per Share
or (B) the Exercise Price per Share. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of this Option shall cease, and unvested Option Shares shall be
forfeited, upon the Company's (or any parent's or subsidiary's thereof)
termination of the Participant's employment for Cause or the Participant's
termination of his employment with the Company (or any parent or subsidiary
thereof) other than for Good Reason.
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
______________________________________ ______________________________________
Signature By
______________________________________ ______________________________________
Christopher Dombalis Title
425 Wychwood Road
Westfield, NJ 07090
2
SUMMIT GLOBAL LOGISTICS, INC.
STOCK OPTION
AWARD TERMS
1. GRANT OF OPTION. The Committee hereby grants to the Participant
named in the Notice of Stock Option Grant an option (the "OPTION")
to purchase the number of Shares set forth in the Notice of Stock
Option Award, at the exercise price per Share set forth in the
Notice of Stock Option Grant (the "EXERCISE PRICE"), and subject to
the terms and conditions of the 2006 Equity Incentive Plan (the
"PLAN"), which is incorporated herein by reference. In the event of
a conflict between the terms and conditions of the Plan and this
Stock Option Award Agreement, the terms and conditions of the Plan
shall prevail.
If designated in the Notice of Stock Option Grant as an Incentive
Stock Option ("ISO"), this Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the extent that it exceeds the $100,000 limitation
rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION.
i RIGHT TO EXERCISE. This Option may be exercised during its
term in accordance with the Vesting Schedule set out in the
Notice of Stock Option Award and with the applicable
provisions of the Plan and this Award Agreement.
ii METHOD OF EXERCISE. This Option shall be exercisable by
delivery of an exercise notice in the form attached as EXHIBIT
A (the "EXERCISE NOTICE") which shall state the election to
exercise the Option, the number of Shares with respect to
which the Option is being exercised (the "EXERCISED SHARES")
and the Participant's agreement to be subject to such other
representations and agreements as may be required by the
Company. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice
accompanied by payment of the aggregate Exercise Price in
accordance with the cashless exercise provisions of Section 6g
of the Plan.
3. TERMINATION. This Option shall be exercisable for three months after
the Participant ceases to be an Employee; provided, however, if the
relationship is terminated by the Company for Cause, or voluntarily
by the Participant other than for Good Reason, the Option shall
terminate immediately. Upon the Participant's death or Disability,
this Option may be exercised for twelve (12) months after the
termination of employment. In no event may Participant exercise this
Option after the Term/Expiration Date as provided above.
4. RESTRICTIONS ON EXERCISE. This Option may not be exercised until
such time as the Plan has been approved by the stockholders of the
Company, or if the method of payment of consideration for such
shares would constitute a violation of any applicable law.
5. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Participant
only by Participant. The terms of the Plan and this Award Agreement
shall be binding upon the executors, Committees, heirs, successors
and assigns of the Participant.
6. TERM OF OPTION. This Option may be exercised only within the Term
set out in the Notice of Stock Option Award which Term may not
exceed ten (10) years from the Date of Grant, and may be exercised
during such Term only in accordance with the Plan and the terms of
this Award Agreement.
7. UNITED STATES TAX CONSEQUENCES. Set forth below is a brief summary
as of the date of this Option of some of the United States federal
tax consequences of exercise of this Option and disposition of the
Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
i EXERCISE OF ISO. If this Option qualifies as an Incentive
Stock Option, there will be no regular federal income tax
liability upon the exercise of the Option, although the
excess, if any, of the Fair Market Value of the Shares on the
date of exercise over the Exercise Price will be treated as an
adjustment to the alternative minimum tax for federal tax
purposes and may subject the Participant to the alternative
minimum tax in the year of exercise.
ii EXERCISE OF NONSTATUTORY STOCK OPTION. There may be a regular
federal income tax liability upon the exercise of a
Nonstatutory Stock Option. The Participant will be treated as
having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the
Exercise Price. If the Participant is an Employee or a former
Employee, the Company will be required to withhold from the
Participant's compensation or collect from the Participant and
pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time
of exercise, and may refuse to honor the exercise if such
withholding amounts are not delivered at the time of exercise.
iii NOTICE OF DISQUALIFYING DISPOSITION OF INCENTIVE STOCK OPTION
SHARES. If this Option is an Incentive Stock Option, and if
the Participant sells or otherwise disposes of any of the
Shares acquired pursuant to the Incentive Stock Option,
including through a cashless exercise, on or before the later
of (1) the date two
2
years after the Date of Grant, or (2) the date one year after
the date of exercise, the Participant shall immediately notify
the Company in writing of such disposition. The Participant
agrees that the Participant may be subject to income tax
withholding by the Company on the compensation income
recognized by the Participant.
iv WITHHOLDING. Pursuant to applicable federal, state, local or
foreign laws, the Company may be required to collect income or
other taxes on the grant of this Option, the exercise of this
Option, the lapse of a restriction placed on this Option, or
at other times. The Company may require, at such time as it
considers appropriate, that the Participant pay the Company
the amount of any taxes which the Company may determine is
required to be withheld or collected, and the Participant
shall comply with the requirement or demand of the Company. In
its discretion, the Company may withhold Shares to be received
upon exercise of this Option or offset against any amount owed
by the Company to the Participant, including compensation
amounts, if in its sole discretion it deems this to be an
appropriate method for withholding or collecting taxes.
Currently, neither federal income nor federal employment tax
withholding is required with respect to an Incentive Stock
Option.
8. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Award Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and
agreements of the Company and Participant with respect to the
subject matter hereof, and may not be modified (except as provided
herein and in the Plan) adversely to the Participant's interest
except by means of a writing signed by the Company and Participant.
This agreement is governed by the internal substantive laws but not
the choice of law rules of the State of New Jersey.
9. NO GUARANTEE OF CONTINUED SERVICE. PARTICIPANT ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE
HEREOF IS EARNED ONLY BY CONTINUING IN THE EMPLOYMENT AT THE WILL OF
THE COMPANY (NOT THROUGH THE ACT OF BEING ENGAGED, BEING GRANTED
THIS OPTION OR ACQUIRING SHARES HEREUNDER). PARTICIPANT FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE IN ANY WAY WITH PARTICIPANT'S RIGHT OR THE COMPANY'S RIGHT
TO TERMINATE THE RELATIONSHIP AT ANY TIME.
Participant acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof.
Participant has reviewed the Plan and this Option in
3
their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Option and fully understands all provisions of the
Option. Participant hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Committee upon any questions
arising under the Plan or this Option. Participant further agrees to
notify the Company upon any change in the residence address indicated
below.
4
EXHIBIT A
2006 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Company Name
Address
City, State, Zip Code
Attention: President
1. EXERCISE OF OPTION. Effective as of today, ______________, 200__,
the undersigned ("PARTICIPANT") hereby elects to exercise
Participant's option to purchase _________ shares of the Common
Stock (the "SHARES") of_________ (the "COMPANY") under and pursuant
to the 2006 Equity Incentive Plan (the "PLAN") and the Stock Option
Award Agreement dated ____________, 200__ (the "AWARD AGREEMENT").
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Award
Agreement, and pursuant to the cashless exercise provisions of
Section 6g of the Plan.
3. REPRESENTATIONS OF PARTICIPANT. Participant acknowledges that
Participant has received, read and understood the Plan and the Award
Agreement and agrees to abide by and be bound by their terms and
conditions.
4. RIGHTS AS STOCKHOLDER. The Participant shall not have any rights of
a stockholder upon exercise of the Option, which shall be settled
solely in cash.
5. TAX CONSULTATION. Participant understands that Participant may
suffer adverse tax consequences as a result of Participant's
purchase or disposition of the Shares. Participant represents that
Participant has consulted with any tax consultants Participant deems
advisable in connection with the purchase or disposition of the
Shares and that Participant is not relying on the Company for any
tax advice.
6. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns
of the Company. Subject to the restrictions on transfer herein set
forth, this Agreement shall be binding upon Participant and his or
her heirs, executors, Committees, successors and assigns.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or by the Company
forthwith to the Committee which shall review such dispute at its
next regular meeting. The resolution of such a dispute by the
Committee shall be final and binding on all parties.
8. GOVERNING LAW. This Exercise Notice is governed by the internal
substantive laws but not the choice of law rules of the State of New
Jersey.
5
9. ENTIRE AGREEMENT. The Plan and Award Agreement are incorporated
herein by reference. This Agreement, the Plan, the Award Agreement
(including all exhibits) and the Investment Representation Statement
constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Participant with
respect to the subject matter hereof, and may not be modified
adversely to the Participant's interest except by means of a writing
signed by the Company and Participant.
6
Submitted by: Accepted by:
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
______________________________________ ______________________________________
Signature By
______________________________________ ______________________________________
Print Name Title
ADDRESS: ADDRESS:
______________________________________ Type in address
______________________________________ City, State, Zip code
______________________________________
Date Received
7
EXHIBIT F
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
Name of SAR Holder: Christopher Dombalis
Address of SAR Holder: 425 Wychwood Road, Westfield, NJ 07090
Number of SARs: 94,500, each representing a share of Common Stock
Initial SAR Value: $945,000
Grant Date: November 8, 2006
Pursuant to and in accordance with the Summit Global Logistics, Inc. 2006
Equity Incentive Plan, as amended from time to time (the "Plan"), this Stock
Appreciation Rights Agreement (the "SAR Agreement") evidences the issuance to
the person named above (the "SAR Holder") by Summit Global Logistics, Inc. (the
"Company"), effective as of the date set forth above (the "Grant Date"), of a
number of stock appreciation rights set forth above (the "SARs"). The SARs will
be valued in accordance with, and are subject to the terms, definitions and
provisions of, the Plan, which are incorporated herein by reference. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Plan.
Subject to the terms and conditions of the Plan, and subject to the
determination of the Compensation Committee in its sole discretion to accelerate
the vesting schedule hereunder, the SARs issued hereunder shall vest and become
vested SARs on the respective dates indicated below:
Incremental (Aggregate Number)
of SARs to be Vested SARs Vesting Date/Percent
47,250 (47,250) FIRST ANNIVERSARY OF GRANT
DATE -- 50%
47,250 (94,500) SECOND ANNIVERSARY OF GRANT
DATE -- 100%
All SARs granted hereunder shall be vested in full upon the earliest to
occur of a Change in Control or the death, Disability, Retirement or voluntary
termination for Good Reason of the SAR Holder. Vested SARs may be exercised at
any time within five (5) years following the Grant Date.
Upon the execution by the Company of a definitive acquisition, merger or
similar agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing, a
Change in Control
8
would occur, the Committee, in its sole discretion, and notwithstanding any
provision of the Transaction Agreement or the Plan, including, but not limited
to, Section 13.f.i. thereof, to the contrary, shall (i) require the acquiring or
surviving entity (if not the Company) to assume the SARs in accordance with
their terms or (ii) pay the Participant, for each share of Common Stock
underlying each SAR not previously exercised, the greater of (A) the transaction
consideration per share of Common Stock underlying each SAR or (B) the Initial
SAR Value per share of Common Stock. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of the SARs shall cease, and unvested SARs shall be terminated,
upon termination of employment of the SAR Holder with the Business Entity that
employs him or her for Cause or other than for Good Reason.
The SAR Holder shall have no rights as a stockholder of the Company by
virtue of having been issued the SARs and shall have only the rights
specifically provided in the Plan.
By executing this SAR Agreement, the SAR Holder acknowledges receipt of
the Plan (a copy of which is attached hereto) and represents that he or she has
read and the terms and provisions of the Plan and accepts the issuance of the
SARs subject to all of such terms and provisions.
9
SUMMIT GLOBAL LOGISTICS, INC.
By: __________________________________
Name:
Title: ___________________________
ACKNOWLEDGED AND AGREED BY SAR HOLDER:
Name:
Signature: _______________________
10
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHT
EXERCISE NOTICE
Pursuant to the provisions of the Summit Global Logistics, Inc. 2006
Equity Incentive Plan (the "Plan") and that certain Stock Appreciation Rights
Agreement by and between Summit Global Logistics, Inc. (the "Company") and
____________ (the "Grantee") as of _______________ __, 20__, I, the Grantee,
hereby exercise the Stock Appreciation Rights granted under the terms of the
Plan to the extent of __________ shares of the Common Stock of the Company (the
"SARs"). If applicable, I deliver to the Company herewith payment for tax
withholding with respect to the exercise of the SARs in the amount of
$__________.
TO BE COMPLETED BY THE GRANTEE
A. Number of SARs: ____________
B. Initial SAR Value $___________
C. Total Initial SAR Value
of Shares (A x B): $___________
TO BE COMPLETED BY THE COMPANY
D. Value per share of Common Stock, as of
__________, times the
number of shares being
exercised (A): $___________
E. TOTAL PAYMENT
DUE (D - C): $___________
Date: ____________________ ______________________________________
Grantee
______________________________________
Address
______________________________________
Social Security Number
11
APPENDIX A
(HIGH LEVEL EXECUTIVES)
Twenty-four (24) Months' Base Salary. Payments shall be made on a monthly basis.
In addition, the Company shall pay the individual's premiums for COBRA
continuation coverage (individual, individual plus one or family coverage, as
applicable) for a period of eighteen (18) months following termination of
employment. At the expiration of this eighteen (18)-month period, the Company
will pay the individual, in a single lump sum, the cash value of six (6)
additional months of premium payments for the type of coverage elected under
COBRA under a substantially similar health plan. The amount to be paid under the
immediately preceding sentence shall not exceed $25,000.
If the individual's employment is terminated in connection with a Change in
Control, as such term is defined in Plan Section 4.2.b, the twenty-four (24)
Months' Base Salary described above shall be paid to the individual in a single
lump sum, the COBRA and health care benefits shall be provided as described
above, and the Company also will provide the individual with outplacement
benefits of an amount commensurate with the individual's position with the
Company, the value of such benefits not to exceed $10,500. The Company will also
continue to maintain the identical level of Perquisites and benefits enjoyed by
the individual prior to the Change in Control for a period of two (2) years
following his or her last day of employment. For these purposes, a termination
of the individual's employment shall conclusively be deemed to be in connection
with a Change in Control if such termination occurs during the time period
commencing on the date of the Change in Control and ending on the second
anniversary of the closing date for the transaction effecting the Change in
Control
This Exhibit A confirms that, solely for purposes of the Summit Global
Logistics, Inc. Severance Benefit Plan, Christopher Dombalis is within category
described above.
19
Exhibit K
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into
this 8th day of November, 2006, by and between William Knight, residing at 224
Battery Circle, Savannah, GA 31410 (the "Executive"), and Summit Global
Logistics, Inc., a Delaware corporation (the "Company").
BACKGROUND
WHEREAS, the Executive is expected to make a major contribution to
the growth, profitability and financial strength of the Company; and
WHEREAS, the Company desires to retain the services of the
Executive, and the Executive desires to be retained by the Company, on the terms
and conditions set forth below.
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in this Agreement, the receipt
and sufficiency of which are hereby acknowledged, the Company and Executive
agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following terms, when used in this Agreement, shall
have the following meanings, unless the context clearly requires otherwise (such
definitions to be equally applicable to both the singular and plural of the
defined terms):
1.1.1 "AFFILIATE" means, (a) with respect to the Executive, any
other Person directly or indirectly Controlling, Controlled by, or under
common Control with the Executive and (b) with respect to the Company, (i)
any Person which directly or indirectly beneficially owns (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) securities or
other equity interests possessing more than 50% of the aggregate voting
power in the election of directors (or similar governing body) represented
by all outstanding securities of the Company or (ii) any Person with
respect to which the Company beneficially owns (within the meaning of Rule
13d-3 promulgated under the Exchange Act) securities or other equity
interests possessing more than 50% of the aggregate voting power in the
election of directors (or similar governing body) represented by, or more
than 5% of the aggregate value of, all outstanding securities or other
equity interests of such Person.
1.1.2 "BASE SALARY" shall have the meaning set forth in section
3.1.
1.1.3 "BOARD" means the Board of Directors of the Company.
1
1.1.4 "CHANGE IN CONTROL" means the occurrence of the first step
(e.g., commencement of negotiations) in a process that results in any one
of the following events:
1.1.4.1 the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934,
as amended) (the "Act") of beneficial ownership
(within the meaning of Rule 13d-3 of the Act) of
more than 20% of the (A) then outstanding voting
stock of a Company; or (B) the combined voting
power of the then outstanding securities of the
Company entitled to vote;
1.1.4.2 an ownership change in which the shareholders of
the Company before such ownership change do not
retain, directly or indirectly, at least a
majority of the beneficial interest in the voting
stock of the Company after such transaction, or in
which the Company is not the surviving company;
1.1.4.3 the direct or indirect sale or exchange by the
beneficial owners (directly or indirectly) of the
Company of all or substantially all of the stock
of the Company;
1.1.4.4 a majority of the directors comprising the entire
Board as of the Effective Date changes during any
12-month period (other than a Qualified
Successor);
1.1.4.5 a reorganization, merger or consolidation in which
the Company is a party;
1.1.4.6 the sale, exchange, or transfer of all or
substantially all of the assets of the Company;
1.1.4.7 the bankruptcy, liquidation or dissolution of the
Company; or
1.1.4.8 any transaction including the Company in which the
Company acquires an ownership interest of any
percentage in, enters into a joint venture,
partnership, alliance or similar arrangement with,
or becomes owned in any percentage by, any other
entity that is engaged in a business similar to
the business engaged in by the Company and that
has operations in North America immediately before
such transaction or within one year thereafter.
1.1.5 "CAUSE" means, as determined by the Company in its sole
discretion, the Executive's
1.1.5.1 material act of dishonesty with respect to the
Company;
2
1.1.5.2 conviction for a felony, gross misconduct that is
likely to have a material adverse effect on the
Company's business and affairs; or
1.1.5.3 other misconduct, such as excessive absenteeism,
or material failure to comply with Company rules.
1.1.6 "CODE" means the Internal Revenue Code of 1986, as amended.
1.1.7 "COMMON STOCK" means the common stock of the Company, par
value of $.001 per share.
1.1.8 "COMPANY LOCATION" means a Company office consisting of one
or more buildings within 25 miles of each other.
1.1.9 "COMPENSATION COMMITTEE" means the Compensation Committee
of the Board or such other committee designated by the Board that
satisfies any then applicable requirements of the New York Stock Exchange,
Nasdaq, or such other principal national stock exchange on which the
Common Stock is then traded, and which consists of two or more members of
the Board, each of whom shall be an outside director within the meaning of
Section 162(m) of the Code.
1.1.10 "CONFIDENTIAL INFORMATION" means:
1.1.10.1 proprietary information, trade secrets and
know-how of the Company and/or its Affiliates;
1.1.10.2 confidential information relating to the business,
operations, systems, networks, services, data
bases, customer lists, pricing policies, business
plans, marketing plans, product development plans,
strategies, inventions and research of the Company
and/or its Affiliates; and
1.1.10.3 confidential information relating to the financial
affairs and results of operations and forecasts or
projections of the Company and/or its Affiliates;
provided that information shall not constitute Confidential
Information if such information: (i) is generally known or
reasonably knowable by Persons other than the Company or
its Affiliates or Persons employed by, in control of or
otherwise affiliated with the Company or its Affiliates,
(ii) is known or reasonably knowable by Persons other than
the Company or its Affiliates or Persons employed by, in
control of or otherwise affiliated with the Company or its
Affiliates, by reason of the action of such Person or
Persons other than the Executive or any Person acting at
the Executive's direction or with the Executive's prior
consent, (iii) was known or reasonably knowable by the
Executive, by lawful means, prior to the date
3
of the Executive's employment with the Company or (iv) is
compelled to be disclosed by law, regulation or legal
process.
1.1.11 "CONTROL" (including the terms "Controlled by" and "under
common Control with") means the possession, directly or indirectly or as a
trustee or executor, of the power to direct or cause the direction of the
management of a Person (including the direction of any Person related to
the Executive), whether through the ownership of stock, as a trustee or
executor, by contract or credit agreement or otherwise.
1.1.12 "DISABILITY" means any physical or mental condition which
renders Executive incapable of performing his essential functions and
duties hereunder for a period of at least 180 days, as determined in good
faith by a physician appointed by the Company.
1.1.13 "EFFECTIVE DATE" means the date of Closing as defined in
that certain Equity Purchase Agreement by and between Maritime Logistics
US Holdings Inc., FMI Holdco I, LLC, FMI Blocker, Inc. and each of the
Sellers set forth in Schedule A thereto, dated as of October 23, 2006.
1.1.14 "EMPLOYMENT TERM" shall have the meaning set forth in
section 2.2.
1.1.15 "EQUITY INCENTIVE PLAN" means the Summit Global Logistics,
Inc. 2006 Equity Incentive Plan, attached as Exhibit A hereto.
1.1.16 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
1.1.17 "FISCAL YEAR" means the calendar year.
1.1.18 "GOOD REASON" means the occurrence of any of the following:
1.1.18.1 without the Executive's prior written consent, any
material diminution in the Executive's authority,
duties or responsibilities, including those
pertaining to his status as a director of the
Board, if applicable; provided, however, that
prior to any termination pursuant to this Section
1.1.18.1, the Company must be given notice by the
Executive of his/her objection to such material
diminution and no less than 20 days to cure the
same;
1.1.18.2 any failure by the Company to pay the Executive
any portion of the Base Salary or other payments
to which the Executive is entitled under Sections
3.1 through 3.5 hereof, provided, however, that
prior to any termination pursuant to this Section
1.1.18.2 on account of the non-payment of Base
Salary, the Company must be given notice by the
Executive of such acts or omissions and no less
than 30 days to cure the same;
4
1.1.18.3 without the Executive's prior written consent, the
relocation of the principal place of the
Executive's employment to a location a further
distance than the Company Location where the
individual was working immediately prior to the
relocation;
1.1.18.4 a material breach by the Company of any of the
material provisions of this Agreement, provided,
however, that prior to any such termination
pursuant to this Section 1.1.18.4, the Company
must be given notice by the Executive of such acts
or omissions and no less than 20 days to cure the
same; or
1.1.18.5 an event described in Section 1.1.4.4 hereof
occurs.
1.1.19 "MANAGEMENT INCENTIVE PLAN" means the Summit Global
Logistics, Inc. 2007 Management Incentive Plan, attached as Exhibit B
hereto.
1.1.20 "PERSON" means an individual, corporation, partnership,
association, limited liability company or partnership, trust, government,
governmental agency or body, or any other group or entity, no matter how
organized and whether or not for profit.
1.1.21 "QUALIFIED SUCCESSOR" means in the event there is a vacancy
in the Board occurring between annual meetings as a result of death,
incapacity or resignation, or if one or more of the Directors shall
decline to stand for election to the Board or, if he is unable or
unwilling to so serve, then the shareholders that are party to that
certain voting agreement ("Voting Agreement") dated on or about the date
hereof between the Company and the parties thereto to elect Messrs.
Agresti, DeSaye, MacAvery and McQuiston (the "Shareholders") shall
designate one or more individuals of standing within the business world
reasonably comparable to that of such Director (each a "Qualified
Successor") as one or more successor Directors in the following manner.
The Shareholders shall select an individual to serve as the Qualified
Successor, which individual shall be independent both of the Company
(except through proposed service as a member of the Board or a subsidiary
of the Company) and of the Shareholders. The selected individual shall be
subject to the prior approval of a super-majority of the Shareholders,
which consent shall not unreasonably be withheld. A Shareholder's approval
of a designated Director shall be deemed given if such Shareholder has not
responded to a notice by the Chairman of the Board of the Company within
30 days of notice to the Shareholder of the identity of the selected
individual. Upon selection and approval hereunder, such Qualified
Successor shall for all purposes be deemed a Director of the Company and
shall be subject to the Voting Agreement in the event of his/her death,
incapacity, resignation or decision not to be a Director.
1.1.22 "TERMINATION DATE" means the date on which the Executive's
employment with the Company terminates for any reason.
1.1.23 "YEAR OF SERVICE" means the completion by the Executive of
Year One, Year Two, Year Three, Year Four , Year Five, or any additional
one-year period under Section 2.2 hereof, as applicable. For purposes of
Section 3.5 hereof, and only for such purposes, partial years of service
will be credited as one (1) Year of Service if the
5
Executive has worked at least 1,000 hours during the applicable year.
1.1.24 "Year One" means the 12-consecutive-month period beginning
on the Effective Date and ending on the day immediately prior to the first
day of Year Two.
1.1.25 "Year Two" means the 12-consecutive-month period beginning
on the first anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Three.
1.1.26 "Year Three" means the 12-consecutive-month period
beginning on the second anniversary of the Effective Date and ending on
the day immediately prior to the first day of Year Four.
1.1.27 "Year Four" means the 12-consecutive-month period beginning
on the third anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Five.
1.1.28 "Year Five" means the 12-consecutive-month period beginning
on the fourth anniversary of the Effective Date and ending on the day
immediately prior to the fifth anniversary of the Effective Date.
ARTICLE 2
EMPLOYMENT AND TERM
2.1 EMPLOYMENT. The Company employs Executive and the Executive hereby
agrees to such employment by the Company during the Employment Term to serve as
Senior Vice President of Summit Global Logistics, Inc., with the customary
duties, authorities and responsibilities of an officer of a corporation and such
other duties, authorities and responsibilities relative to the Company or its
Affiliates that have been agreed upon in writing by the Company and Executive.
This Agreement supersedes any and all prior agreements between Executive and the
Company or the Company's predecessors in interest with respect to Executive's
employment, and any such prior agreements shall be void and of no further force
and effect as of the Effective Date.
2.2 EMPLOYMENT TERM. The "Employment Term" of this Agreement shall
commence on the Effective Date, and unless sooner terminated as provided in
Article 4, shall terminate upon the fifth (5th) anniversary of such date.
Thereafter, and unless sooner terminated as provided in Article 4, the
Employment Term shall automatically be renewed on each anniversary date of the
expiration of the initial Employment Term for a period of one (1) year, unless
and until either the Company or the Executive terminates such automatic renewal
upon sixty (60) days' advance written notice to the other of an intention not to
renew (that is, upon written notice of an intention not to renew delivered to
the other at least sixty (60) days prior to the beginning of the next one-year
period); provided, however, that in no event shall the Employment Term exceed a
period of ten (10) continuous years beginning with the Effective Date.
6
2.3 FULL WORKING TIME. During the Employment Term, the Executive shall
devote substantially all of his ability and attention, all of his skill and
experience and efforts during normal business hours and at such other times as
reasonably required for the proper performance of his duties hereunder and to
the business and affairs of the Company. During the Employment Term, the
Executive shall not, either directly or indirectly, actively participate in any
other business or accept any employment or business office whatsoever from any
other Person; provided, however, that the foregoing shall not preclude the
Executive, subject to Article 5, from: (i) serving as a director of any
non-profit or charitable organization, or any company not in competition with
the Company, or (ii) making an investment in any other business, so long as in
any such case, the Executive does not actively participate in such other
business or organization and such activity does not interfere with the
Executive's ability to perform his duties hereunder and does not constitute a
conflict of interest with the Company.
ARTICLE 3
COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the Employment Term, as compensation for
services hereunder and in consideration for the protective covenants set forth
in Article 5 of this Agreement, the Executive shall be paid a base salary of Two
Hundred Fifty Thousand United States Dollars (US$250,000) for Year One, with an
annual cost of living increase of 3% for each of Year Two, Year Three, Year Four
and Year Five, and, if applicable under Section 2.2 hereof, for each additional
one-year period of the Employment Term thereafter, or such greater amount as may
from time to time be approved by the Compensation Committee (the "Base Salary").
Cost-of-living increases shall be effective as of the first day of Year Two,
Year Three, Year Four and Year Five, respectively, and, if applicable under
Section 2.2 hereof, as of the first day of each additional one-year period of
the Employment Term thereafter, and shall be cumulative. Base Salary shall be
paid to the Executive in accordance with the Company's normal payroll practices.
3.2 BONUSES. Such bonuses shall include the following:
3.2.1 NON-COMPETE BONUS. As consideration for the Executive
entering into this Agreement, the Company shall pay the Executive a bonus
in the amount of Eighty Thousand United States Dollars (US$80,000) upon
the condition that the executive agrees to be bound by the terms of
Section 5.2 of this Agreement, as set forth in Article 5 hereof,
hereinafter referred to as the "Non-Compete Bonus". The Non-Compete Bonus
shall be payable in cash no later the thirtieth (30th) day following the
date of this Agreement.
3.2.2 MANAGEMENT INCENTIVE BONUSES. The Executive shall receive
an annual bonus in accordance with the terms of a grant agreement made
pursuant to the terms of the Management Incentive Plan (the "Annual Bonus
Grant Agreement"). The Executive also shall receive a multi-year bonus,
pursuant to the terms of the Management Incentive Plan, if certain
performance targets are met (the "Multi-Year Bonus Grant Agreement"). The
Annual Bonus Grant Agreement and Multi-Year Bonus Grant Agreement are
attached as Exhibits C and D, respectively, hereto. If the Management
Incentive Plan is terminated for any reason whatsoever, whether by the
Company or any other Person, the
7
Executive shall be paid the annual bonus and multi-year bonus that
otherwise would be payable to him with respect to the Performance Period
within which the termination of such Plan occurs, notwithstanding the
termination of such Plan. For purposes of the immediately preceding
sentence, the Executive's annual bonus and multi-year bonus that otherwise
would be payable to him with respect to the Performance Period within
which the termination of the Management Incentive Plan occurs shall be
identical to that set forth in Exhibits C and D, respectively, hereto, and
shall be fully vested, subject to the satisfaction of the conditions set
forth in Section 5.2 of such Plan.
3.3 EQUITY COMPENSATION. On or about the Effective Date, or as soon as
administratively practicable thereafter, the Executive shall receive grants
under the Equity Incentive Plan as follows:
3.3.1 INCENTIVE STOCK OPTIONS. A grant of an Incentive Stock
Option, as defined in the Equity Incentive Plan, in respect of 126,000
shares of Common Stock, pursuant to an option grant agreement annexed as
Exhibit E hereto.
3.3.2 STOCK APPRECIATION RIGHTS. A grant of 94,500 Stock
Appreciation Rights, as defined in the Equity Incentive Plan, each in
respect of one share of Common Stock, pursuant to a Stock Appreciation
Rights grant agreement annexed as Exhibit F hereto. The parties intend
that such grant cover the approximate combined federal and state income
tax liability associated with both (i) the number of shares of Common
Stock with respect to which the Incentive Stock Option is exercised and
(ii) the number of shares of Common Stock underlying the exercise of the
Stock Appreciation Rights used to pay for the tax liability under clause
(i).
All such grants and/or awards shall conform to the terms and conditions of the
Equity Incentive Plan and the annexed grant agreements between the Company and
the Executive. In its discretion, the Compensation Committee may make additional
grants or awards to the Executive from time to time. If the Equity Incentive
Plan is terminated for any reason whatsoever, whether by the Company or any
other Person, the Executive shall be entitled to the benefits due to him under
Exhibits E and F, respectively, hereto, notwithstanding the termination of such
Plan. For purposes of the immediately preceding sentence, the termination of the
Equity Incentive Plan shall result in all unvested Incentive Stock Options and
Stock Appreciation Rights granted to the Participant under Exhibits E and F,
respectively, to be fully vested and exercisable.
3.4 SERP BENEFITS. During the Employment Term, the Executive shall be
entitled to participate in the Summit Global Logistics, Inc. Supplemental
Executive Retirement Plan (the "SERP") in accordance with the terms thereof.
Such eligibility to participate in the SERP shall commence effective as of the
later of the Effective Date or the effective date of the SERP. The SERP is
attached as Exhibit G hereto.
3.5 RETIREMENT, WELFARE AND FRINGE BENEFITS. To the maximum extent that
he is eligible under the terms of the applicable plan or program, the Executive
shall participate in the current or future plans or programs maintained by the
Company for its employees and/or senior executives that provide insurance,
medical benefits, retirement benefits, or similar fringe benefits as set forth
in SCHEDULE A attached hereto, as well as any additional plans or programs that
may be adopted that are generally applicable to senior executives; provided,
however, that if within
8
the Employment Term, the Executive leaves the employment of the Company and is
eligible for severance benefits, then $7,500 per Year of Service shall be added
to the severance amount in lieu of any forfeited (non-vested) qualified plan
amount. In addition, the Executive shall be entitled to a minimum of twenty (20)
vacation days for each calendar year beginning with or within a Year of Service,
which must be taken in accordance with the Company's vacation policy then in
effect. The Executive shall also be entitled at least six (6) days of sick day
leave, seven (7) personal days leave and seven (7) fixed holidays for each
calendar year beginning with or within a Year of Service, which must be taken in
accordance with the Company's applicable policies then in effect. Unused
vacation days, sick days or personal days shall not carry forward into the
subsequent year. In the event that the Company establishes a more favorable
vacation, sick leave or personal day policy generally applicable to senior
executives, the Executive shall be entitled to any such additional benefits.
During the Employment Term, the Company shall pay the Executive an automobile
allowance, which shall not exceed $1,250 per month, plus an annual inflation
adjustment reflecting market conditions. The Executive is responsible for the
tax consequences of the personal usage of the automobile. The Executive shall be
entitled to a $5,000 per year golf, health, country and/or other recreational
club membership allowance for each Year of Service, to be allocated among the
foregoing as the Executive sees fit. The Executive is responsible for the tax
consequences of the personal usage of the golf, health, country and/or other
recreational club membership. In addition, or in lieu of the Company policy for
executives with respect to annual physical examinations, during each Year of
Service, the Executive shall be reimbursed up to $1000 for an annual physical
examination conducted by a physician designated by the Executive.
3.6 INDEMNIFICATION AND INSURANCE.
3.6.1 D&O INSURANCE. During the entirety of the Employment Term,
the Company shall cause the Executive to be covered by and named as an
insured or as a member of a class of insured under any policy or contract
of insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as an
officer or director of the Company or service in other capacities at its
request ("D&O Insurance Coverage"). The D&O Insurance Coverage provided to
the Executive pursuant to this Section 3.6.1 shall be of the same scope
and on the same terms and conditions as the coverage (if any) provided to
other officers or directors of the Company and shall continue for so long
as the Executive shall be subject to personal liability relating to such
service.
3.6.2 EPLI INSURANCE. During the entirety of the Employment Term,
the Company shall cause the Executive to be covered by and named as an
insured or as a member of a class of insured under any policy or contract
of insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as a
director or officer of the Company, where such personal liability could
arise under or in connection with, or be attributable to, the Company's
employment practices and procedures "EPLI Insurance Coverage"). The EPLI
Insurance Coverage provided to the Executive pursuant to this Section
3.6.2 shall be of the same scope and on the same terms and conditions as
the coverage (if any) provided to other officers or directors of the
Company and shall continue for so long as the Executive shall be subject
to personal liability relating to such service.
9
3.6.3 INDEMNIFICATION. To the maximum extent permitted under
applicable law, and provided that the Executive has acted within the scope
of his authority hereunder, the Company shall indemnify the Executive
against and hold him harmless from any costs, liabilities, losses and
exposures (each, a "Cost," and collectively, "Costs") to the fullest
extent and on the most favorable terms and conditions that similar
indemnification is offered to any director or officer of the Company or
any subsidiary or Affiliate thereof and shall survive the termination of
this Agreement and continue for so long as the Executive shall be subject
to personal liability relating to such service; provided, however, that
the Company shall not indemnify and hold harmless the Executive from a
Cost to the extent that such Cost is attributable to the Executive's (i)
willful misconduct or gross negligence in the performance of his duties or
exercise of his authority hereunder or (ii) material breach of any of the
provisions of this Agreement.
3.7 EXPENSES. The Company shall pay or reimburse the Executive for
reasonable business expenses actually incurred or paid by the Executive during
the Employment Term, in the performance of his services hereunder; provided,
however, that such expenses are consistent with the Company's policy. Such
payment or reimbursement is expressly conditioned upon presentation of expense
statements or vouchers or other supporting documentation by the Executive in a
manner that is acceptable to the Company and otherwise in accordance with the
Company's policy then in effect.
3.8 DEDUCTIONS. The Company shall deduct from all compensation or
benefits payable pursuant to this Agreement such payroll, withholding and other
taxes and medical, pension and other benefits in accordance with the Company's
benefit programs and the Executive's selections and as may in the reasonable
opinion of the Company be required by law and any such additional amounts
requested in writing by the Executive.
ARTICLE 4
TERMINATION
4.1 GENERAL. The Company shall have the right to terminate the
employment of the Executive at any time with or without Cause and the Executive
shall be paid the Standard Termination Entitlements (as defined in Section
4.3.1).
4.2 TERMINATION UNDER CERTAIN CIRCUMSTANCES.
4.2.1 TERMINATION WITHOUT SEVERANCE BENEFITS. In the event the
Executive's employment with the Company is terminated prior to the
expiration of the Employment Term by reason of (i) the Executive's
resignation without Good Reason, (ii) the Executive's death or (iii) the
Executive's discharge by the Company for Cause prior to the occurrence of
a Change in Control, this Agreement shall terminate including, without
limitation, the Company's obligations to provide any compensation,
benefits or severance to the Executive under Article 3 of this Agreement
or otherwise, other than the Standard Termination Entitlements (as defined
in section 4.3.1).
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4.2.2 DISABILITY. The Company may terminate the Executive's
employment upon the Executive's Disability. In such event, in addition to
the Standard Termination Entitlements (as defined in section 4.3.1), the
Company shall continue to pay the Executive his Base Salary in accordance
with the Company's normal payroll practices, at the annual rate in effect
for him immediately prior to the termination of his employment, during a
period ending on the earliest of: (a) the date on which long-term
disability insurance benefits are first payable to him under any long-term
disability insurance plan covering employees of the Company; and (b) the
date of his death. A termination of employment due to Disability under
this Section 4.2.2 shall be effected by notice of termination given to the
Executive by the Company and shall take effect on the later of the
effective date of termination specified in such notice or the date on
which the notice of termination is deemed given to the Executive.
4.2.3 TERMINATION WITH SEVERANCE BENEFITS. In the event that the
Executive's employment with the Company is terminated by the Executive
prior to the expiration of the Employment Term for Good Reason or by the
Company prior to the expiration of the Employment Term other than for
Cause or Disability, the Company shall pay the Standard Termination
Entitlements (as defined in section 4.3.1) and the Severance Benefits (as
defined in section 4.3.2); provided, however, that any payment required by
this section 4.2.3 is expressly conditioned upon:
4.2.3.1 The Executive's continued material compliance with
the terms of this Agreement, including, without
limitation, Article 5; and
4.2.3.2 The Executive's resignation from any and all
positions which he holds as an officer, director
or committee member with respect to the Company or
any Affiliate thereof.
4.3 Standard Termination Entitlements; Severance Benefits.
4.3.1 STANDARD TERMINATION ENTITLEMENTS. For all purposes of this
Agreement, the Executive's "Standard Termination Entitlements" shall mean
and include:
4.3.1.1 the Executive's earned but unpaid compensation
(including, without limitation, Base Salary, and
all other items which constitute wages under
applicable law, interpreting the term "wages" in
the broadest possible sense) as of the date of his
termination of employment. This payment shall be
made at the time and in the manner prescribed by
law applicable to the payment of wages including,
specifically, payment for accrued, but unused
vacation days;
4.3.1.2 reimbursement for reasonable business expenses and
authorized travel expenses incurred but still
outstanding; and
4.3.1.3 the benefits, if any, due to the Executive, and
the Executive's estate, surviving dependents or
his designated beneficiaries under the employee
benefit plans and programs and
11
compensation plans and programs maintained for the
benefit of, or covering, the officers, executives
and employees of the Company, including, but not
limited to, all plans or arrangements listed on
SCHEDULE A, the Equity Incentive Plan and the
Management Incentive Plan. The time and manner of
payment or other delivery of these benefits and
the recipients of such benefits shall be
determined according to the terms and conditions
of the applicable plans and programs.
4.3.2 SEVERANCE BENEFITS. For all purposes of this Agreement, the
Executive's "Severance Benefits" shall mean the benefits set forth in
Exhibit H. If the Summit Global Logistics, Inc. Severance Benefit Plan, as
set forth in Exhibit H, is terminated for any reason whatsover, whether by
the Company or any other Person, the Executive shall be paid severance
benefits identical to those set forth in Appendix A of such Plan,
notwithstanding the termination of such Plan.
ARTICLE 5
RESTRICTIVE COVENANTS
5.1 PROPRIETARY INFORMATION.
5.1.1 DISCLOSURE DURING THE EMPLOYMENT TERM. Subject to Section
5.5 hereof, the Executive shall promptly disclose to the Company in such
form and manner as the Company may reasonably require (a) all operations,
systems, services, methods, developments, inventions, improvements and
other information or data pertaining to the business or activities of the
Company and its Affiliates as are conceived, originated, discovered or
developed by the Executive during the Employment Term and (b) such
information and data pertaining to the business, operations, personnel,
activities, financial affairs, and other information relating to the
Company and its Affiliates and their respective customers, suppliers,
employees and other persons having business dealings with the Company and
its Affiliates as may be reasonably required for the Company to operate
its business. It is understood that such information is proprietary in
nature and shall (as between the Company and Executive) be for the
exclusive use and benefit of the Company and shall be and remain the
property of the Company both during the Employment Term and thereafter.
5.1.2 DISCLOSURE AFTER EMPLOYMENT. In the event that the
Executive leaves the employ of the Company for any reason, including,
without limitation, the expiration of the Employment Term, the Executive
shall deliver to the Company any and all devices (including any lap top,
personal hand-held devices or mobile telephone), records, data, notes,
reports, proposals, lists, correspondence, specifications, drawings,
blueprints, sketches, materials, equipment, other documents or property
belonging to the Company or any Affiliate thereof or any of their
respective successors or assigns.
5.2 NON-COMPETITION. During the Employment Term and for twelve months
after the date employment with the Company has ended, the Executive agrees, and
shall cause each Person Controlled by him to agree, that he shall not, directly
or indirectly, or through any Person
12
Controlled by the Executive: (a) engage in any logistic activities competitive
with the business of the Company and its Affiliates for his or their own account
or for the account of any other Person, or (b) become interested in any Person
engaged in logistic activities competitive with the business of the Company and
its Affiliates as a partner, shareholder, member, principal, agent, employee,
trustee, consultant or in any other relationship or capacity.
5.3 NON-SOLICITATION. During the Employment Term and for a period of
twelve months after the date employment with the Company has ended, the
Executive will not, directly or indirectly, use proprietary knowledge or
information relating to the Company or its Affiliates obtained during the course
of the Executive's employment with the Company for his own benefit or the
benefit of any third party with the intention to, or which a reasonable person
would construe to, (a) interfere with or disrupt any present relationship,
contractual or otherwise, between the Company or its Affiliates and any
customer, supplier, employee, consultant or other person having business
dealings with the Company or its Affiliates, or (b) employ or solicit the
employment or engagement by others of any employee or consultant of the Company
or its Affiliates who was such an employee or consultant at the time of
termination of the Executive's employment hereunder. Upon leaving the employment
of the Company, the Executive shall notify his new employer of his obligations
under this Agreement and grants consent to notification by the Company to the
Executive's new employer concerning Executive's rights and obligations under
this Agreement.
5.4 NON-DISCLOSURE. Except with the prior written consent of the Company
in each instance or as may be reasonably necessary to perform the Executive's
services hereunder, the Executive shall not disclose, use, publish, or in any
other manner reveal, directly or indirectly, at any time during or after the
Employment Term, any Confidential Information relating to the Company or any
Affiliate thereof acquired by him prior to, during the course of, or incident
to, his employment hereunder; provided, however, that necessary or appropriate
disclosures may be made to the Executive's legal counsel.
5.5 OWNERSHIP OF INTELLECTUAL PROPERTY. Subject to applicable law, the
Executive acknowledges and agrees that all work performed, and all ideas,
concepts, materials, products, software; documentation, designs, architectures,
specifications, flow charts, test data, programmer's notes, deliverables,
improvements, discoveries, methods, processes, or inventions, trade secrets or
other subject matter related to the Company's business (collectively,
"Materials") conceived, developed or prepared by the Executive alone, or with
others, during the period of Executive's employment by the Company in written,
oral, electronic, photographic, optical or any other form are the property of
the Company and its successors or assigns, and all rights, title and interest
therein shall vest in the Company and its successors or assigns, and all
Materials shall be deemed to be works made for hire and made in the course of
the Executive's employment by the Company. To the extent that title to any
Materials has not or may not, by operation of law, vest in the Company and its
successors or assigns, or such Materials may not be considered works made for
hire. Notwithstanding the foregoing, the parties acknowledge and understand that
Executive may previously have developed and may continue to develop certain
ideas, concepts and designs which are unrelated to the business of the Company
and may continue to do so provided that such activities do not interfere with
his duties under this Agreement.
13
5.6 REASONABLE LIMITATIONS. Executive acknowledges that given the nature
of the Company's business, the covenants contained in this Article 5 contain
reasonable limitations as to time, geographical area and scope of activity to be
restrained, and do not impose a greater restraint than is necessary to protect
and preserve the Company's business and to protect the Company's legitimate
business interests. If, however, this Article 5 is determined by any arbitrator
to be unenforceable by reason of its extending for too long a period of time or
over too large a geographic area or by reason of its being too extensive in any
other respect, or for any other reason, it will be interpreted to extend only
over the longest period of time for which it may be enforceable and/or over the
largest geographical area as to which it may be enforceable and/or to the
maximum extent in all other aspects as to which it may be enforceable, all as
determined by such court or arbitrator in such action.
5.7 SURVIVAL OF PROTECTIVE COVENANTS. Each covenant on the part of
Executive contained in this Article 5 shall be construed as an agreement
independent of any other provision of this Agreement, unless otherwise indicated
herein, and shall survive the termination of Executive's employment under this
Agreement.
ARTICLE 6
DISPUTE RESOLUTION
6.1 ARBITRATION OF DISPUTES. Both parties agree that all controversies
or claims that may arise between the Executive and the Company in connection
with this Agreement shall be settled by arbitration. The parties further agree
that the arbitration shall be held in the State of New Jersey, and administered
by the American Arbitration Association under its Commercial Arbitration Rules,
applying New Jersey law.
6.1.1 QUALIFICATIONS OF ARBITRATOR. The arbitration shall be
submitted to a single arbitrator chosen in the manner provided under the
rules of the American Arbitration Association. The arbitrator shall be
disinterested and shall not have any significant business relationship
with either party, and shall not have served as an arbitrator for any
disputes involving the Company or any of its Affiliates more than twice in
the thirty-six (36) month period immediately preceding his or her date of
appointment. The arbitrator shall be a person who is experienced and
knowledgeable in employment and executive compensation law and shall be an
attorney duly licensed to practice law in one or more states.
6.1.2 POWERS OF ARBITRATOR. The arbitrator shall not have the
authority to grant any remedy which contravenes or changes any term of
this Agreement and shall not have the authority to award punitive or
exemplary or damages under any circumstances. The parties shall equally
share the expense of the arbitrator selected and of any stenographer
present at the arbitration. The remaining costs of the arbitrator
proceedings shall be allocated by the arbitrator, except that the
arbitrator shall not have the power to award attorney's fees.
6.1.3 EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall
render its decision within thirty (30) days after termination of the
arbitration proceeding, which decision
14
shall be in writing, stating the reasons therefor and including a brief
description of each element of any damages awarded. The decision of the
arbitrator shall be final and binding. Judgment on the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof.
6.2 SERVICE OF PROCESS. The parties agree that service of process may be
made on it by personal service of a copy of the summons and complaint or other
legal process in any such suit, action or proceeding, or by registered or
certified mail (postage prepaid) to its address specified in Section 7.1 (or
applicable forwarding address), or by any other method of service provided for
under the applicable laws in effect in the applicable jurisdiction.
ARTICLE 7
GENERAL PROVISIONS
7.1 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Executive: William Knight
224 Battery Circle
Savannah, GA 31410
If to the Company: Summit Global Logistics, Inc.
547 Boulevard
Kenilworth, NJ 07033
with a copy to: David D. Gammell, Esq.
Brown Rudnick Berlack Israels LLP
One Financial Center
Boston, MA 02111
or to such other address as the party to whom notice is given may have
previously furnished to the other parties hereto in writing in the manner set
forth above.
7.2 ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement between the Executive and the Company with respect to the Company's
employment of the Executive and supersedes any and all prior agreements and
understandings, written or oral, with respect thereto
7.3 AMENDMENTS AND WAIVERS. Any term of this Agreement or any Schedule,
Exhibit or attachment hereto may be amended only by (a) an instrument in writing
and signed by
15
the party against whom such amendment is sought to be enforced, and (b) in the
case of the Company, such amendment also must be duly authorized by an
appropriate resolution of the Company. In addition, any term of this Agreement
or any Schedule, Exhibit or attachment hereto may be waived by the party against
whom the obligation runs to by an instrument in writing signed by such party and
delivered to the Company as reasonable time prior to the effective date of the
waiver
7.4 SUCCESSORS AND ASSIGNS. The Company shall have the right to assign
this Agreement, subject to the Executive's consent which shall not be
unreasonably withheld and subject to. This Agreement shall inure to the benefit
of, and be binding upon (a) the parties hereto, (b) the heirs, administrators,
executors and personal representatives of the Executive and (c) the successors
and assigns of the Company as provided herein.
7.5 GOVERNING LAW. This Agreement, including the validity hereof and the
rights and obligations of the parties hereunder, and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the laws of the State of New Jersey without
giving effect to any conflicts of law provisions or rule, that would cause the
application of the laws of any other jurisdiction.
7.6 SEVERABILITY. If any provisions of this Agreement as applied to any
part or to any circumstance shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement.
7.7 NO CONFLICTS. The Executive represents to the Company that the
execution, delivery and performance by the Executive of this Agreement does not
and will not conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under any contract,
agreement or understanding, whether oral or written, to which the Executive is
or was a party or of which the Executive is or should be aware.
7.8 SURVIVAL. The rights and obligations of the Company and Executive
pursuant to Articles 4, 5 and 6 shall survive the termination of the Executive's
employment with the Company and the expiration of the Employment Term.
7.9 CAPTIONS. The headings and captions used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.
7.10 COUNTERPARTS. This Agreement be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
_________________________________
William Knight
SUMMIT GLOBAL LOGISTICS, INC.
By: _____________________________
Name
Title:
17
SCHEDULE A
EMPLOYEE BENEFIT SUMMARY TERM SHEET
As of January 1, 2007, the Executive shall be eligible to participate in
all of the retirement and welfare benefit plans sponsored, maintained or
contributed to by FMI International, LLC and/or its affiliates or subsidiaries,
which plans shall be amended accordingly. Without in any way limiting the
generality of the foregoing, the Executive shall be entitled to participate in
the following plans:
o FMI International, LLC 401(k) Profit Sharing Plan;
o FMI International West Health Plan;
o FMI International, LLC PPO Health Insurance Plan;
o FMI International, LLC Dental Plan; and the
o FMI International, LLC Life Insurance Plan.
18
EXHIBIT C
ANNUAL BONUS GRANT AGREEMENT
THIS ANNUAL BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between William
Knight (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the 8th day of November, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make annual bonus payments to the Executive for each Year of Service, as defined
in the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in the Employment Agreement,
the receipt and sufficiency of which are hereby acknowledged, the Executive and
the Company agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement,
shall have the following meanings, unless the context clearly requires otherwise
(such definitions to be equally applicable to both the singular and plural of
the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto in
the Management Incentive Plan.
1.2 "BONUS" means the annual incentive bonus to be paid
hereunder with respect to a given Fiscal Year.
1.3 "EBITDA" means the Company's earnings before income tax,
plus depreciation and amortization, as computed in accordance with
United States GAAP and in a manner consistent with the methods used
in the Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or
restructuring or impairment charges, as determined by the Company's
independent public accountants in accordance with GAAP or (ii)
changes in accounting, unless, in each case, the Committee, as
defined in the Management Incentive Plan, decides otherwise within
the Determination Period, as defined in the Management Incentive
Plan.
1.4 "EBITDA TARGET" means the Company's EBITDA for Fiscal
Year 2007, 2008, 2009 or 2010, as applicable.
1.5 "FISCAL YEAR" means the calendar year.
1.6 "GAAP" means generally accepted accounting principles.
1.7 "PERFORMANCE PERIOD" shall have the meaning ascribed
thereto in the Management Incentive Plan.
2. EBITDA TARGETS.
2.1 The EBITDA Target for Fiscal Year 2007 shall be
$__________.
2.2 The EBITDA Target for Fiscal Year 2008 shall be
$__________.
2.3 The EBITDA Target for Fiscal Year 2009 shall be
$__________.
2.4 The EBITDA Target for Fiscal Year 2010 shall be
$__________.
3. ANNUAL INCENTIVE BONUSES.
3.1 The Bonus for each of Fiscal Year 2007, Fiscal Year
2008, Fiscal Year 2009 and Fiscal Year 2010 shall be as follows:
3.1.1 If at least 80% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive shall
receive a Bonus for such Fiscal Year equal to 35% of his
Base Salary for the Performance Period beginning with or
within such Fiscal Year.
3.1.1.2 If at least 90% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive shall
receive a Bonus for such Fiscal Year equal to 52.50% of
his Base Salary for the Performance Period beginning
with or within such Fiscal Year.
3.1.1.3 If at least 100% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive shall
receive a Bonus for such Fiscal Year equal to 70% of his
Base Salary for the Performance Period beginning with or
within such Fiscal Year.
3.1.1.4 For each percentage point, up to 50 percentage
points by which the EBITDA Target for the applicable
Fiscal Year is exceeded, the Executive shall receive an
additional Bonus equal to 2.10% of his Base Salary.
3.1.1.5 For each percentage point over 50 percentage
points, up to 50 additional points, by which the EBITDA
Target for the applicable Fiscal Year is exceeded, the
Executive shall receive an additional Bonus equal to
2.80% of his Base Salary.
3.2 Except as otherwise provided herein, bonus amounts shall
be payable to the Executive in accordance with the terms and
conditions of the Management Incentive Plan.
4. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and
the Company shall comply with all of the terms thereof applicable to annual
incentive awards. In the event of any conflict between the terms of this
Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
5. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
__________________________________
William Knight
SUMMIT GLOBAL LOGISTICS, INC.
By: ______________________________
Name
Title:
EXHIBIT D
MULTI-YEAR BONUS GRANT AGREEMENT
THIS MULTI-YEAR BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between William
Knight (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the 8th day of November, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make a multi-year bonus payment to the Executive if certain performance targets
of the Company are satisfied as of the end of the Employment Term, as defined in
the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration
of the premises and the mutual promises set forth in the Employment Agreement,
the receipt and sufficiency of which are hereby acknowledged, the Executive and
the Company agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement,
shall have the following meanings, unless the context clearly requires otherwise
(such definitions to be equally applicable to both the singular and plural of
the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto in
the Management Incentive Plan.
1.2 "BONUS" means the multi-year incentive bonus to be paid
hereunder with respect to the Employment Term.
1.3 "DELTA ONE" means the excess, if any, of EBITDA for
Fiscal Year 2009 over the EBITDA Target for Fiscal Year 2007.
1.4 "DELTA TWO" means the excess, if any, of EBITDA for
Fiscal Year 2010 over the EBITDA Target for Fiscal Year 2008.
1.5 "EBITDA" means the Company's earnings before income tax,
plus depreciation and amortization, as computed in accordance with
United States GAAP and in a manner consistent with the methods used
in the Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or
restructuring or impairment charges, as determined by the Company's
independent public accountants in accordance with GAAP or (ii)
changes in accounting, unless, in each case, the Committee, as
defined in the Management Incentive Plan, decides otherwise within
the Determination Period, as defined in the Management Incentive
Plan.
1.6 "EBITDA TARGET" means
1.6.1 For Fiscal Year 2007, $__________.
1.6.2 For Fiscal Year 2008, $__________.
1.7 "FIRST PERFORMANCE PERIOD" means the three-consecutive
Fiscal Year period beginning on the first day of Fiscal Year 2007
and ending on the last day of Fiscal Year 2009.
1.8 "FISCAL YEAR" means the calendar year.
1.9 "FUNDAMENTAL TRANSACTION" has the meaning as defined in
the Management Incentive Plan.
1.10 "GAAP" means generally accepted accounting principles.
1.11 "PERFORMANCE PERIOD" means the First Performance Period
or the Second Performance Period, as applicable.
1.12 "SECOND PERFORMANCE PERIOD" means the three-consecutive
Fiscal Year period beginning on the first day of Fiscal Year 2008
and ending on the last day of Fiscal Year 2010.
2. MULTI-YEAR BONUS.
2.1 FIRST PERFORMANCE PERIOD. If, with respect to the First
Performance Period, Delta One, expressed as a percentage of the
EBITDA Target for Fiscal Year 2007, equals or exceeds 33%, the
Executive shall be paid a Bonus in Fiscal Year 2010 equal to one and
one half (1.5) times his Base Salary for Fiscal Year 2007.
2.2 SECOND PERFORMANCE PERIOD. If, with respect to the
Second Performance Period, Delta Two, expressed as a percentage of
the EBITDA Target for Fiscal Year 2008, equals or exceeds 33%, the
Executive shall be paid a Bonus in Fiscal Year 2011 equal to one and
one half (1.5) times his Base Salary for Fiscal Year 2008.
3. PAYMENT UPON OCCURRENCE OF FUNDAMENTAL TRANSACTION. If a
Fundamental Transaction occurs at any time both (i) prior to the payment of any
amount pursuant to Section 2 hereof and (ii) on or prior to December 31, 2010,
then, in lieu of making any payment to the Executive pursuant to Section 2
hereof, the Company shall pay to the Executive, promptly following the
occurrence of the Fundamental Transaction, an amount in immediately available
funds, equal to one and one half (1.5) times his Base Salary. For this purpose,
Base Salary shall mean Base Salary for Fiscal Year 2007, if the Fundamental
Transaction occurs on or prior to the last day of Fiscal Year 2009, and Base
Salary for 2008, if the Fundamental Transaction occurs during Fiscal Year 2010.
Payment shall be made in the form of a single lump sum from the sales proceeds
received by the Company pursuant to the terms of the Fundamental Transaction.
4. PAYMENT OF BONUS AMOUNTS. Except as otherwise provided herein,
bonus amounts shall be payable to the Executive in accordance with the terms and
conditions of the Management Incentive Plan.
5. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and the Company shall comply with all of the terms thereof applicable
to annual incentive awards. In the event of any conflict between the terms of
this Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
6. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
__________________________________
William Knight
SUMMIT GLOBAL LOGISTICS, INC.
By: ______________________________
Name
Title:
EXHIBIT E
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
Unless otherwise defined herein, the terms defined in the 2006 Equity
Incentive Plan (the "Plan") shall have the same defined meanings in this Notice
of Stock Option Award and the attached Stock Option Award Terms, which are
incorporated herein by reference (together, the "AWARD AGREEMENT"). Terms not
defined herein shall have their respective meanings under the Plan.
PARTICIPANT (the "PARTICIPANT")
William Knight
GRANT
The undersigned Participant has been granted an Option to purchase Common Stock
of Summit Global Logistics, Inc. (the "COMPANY"), subject to the terms and
conditions of the Plan and this Award Agreement, as follows:
DATE OF GRANT November 8, 2006 TOTAL NUMBER OF SHARES
GRANTED 126,000
VESTING COMMENCEMENT DATE November 8, 2006 TYPE OF OPTION [X] Incentive Stock Option
EXERCISE PRICE PER SHARE $10.00 Non-Statutory Stock Option
TOTAL EXERCISE PRICE $1,260,000 TERM/EXPIRATION DATE 5 years from Date of Grant
VESTING SCHEDULE:
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
ANNIVERSARY OF GRANT DATE % OF GRANT (OR # OF SHARES) VESTED
One-Year Anniversary of Grant Date 50%
Two-Year Anniversary of Grant Date 100%
The Option shall vest in full upon the earliest to occur of a Change in Control,
the Participant's death, the Participant's Disability, the Participant's
Retirement, the Company's (or any parent's or subsidiary's thereof) termination
of the Participant's employment without Cause or the Participant's termination
of his employment with the Company (or any parent or subsidiary thereof) for
Good Reason.
Upon the execution by the Company of a definitive acquisition, merger or similar
agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing, a Change in
Control would occur, the Committee, in its sole discretion, and notwithstanding
any provision of the Transaction Agreement or the Plan, including, but not
limited to, Section 13f.i. thereof, to the contrary, shall (i) require the
acquiring or surviving entity (if not the Company) to assume this Option in
accordance with its terms or (ii) pay the Participant, for each Share not
previously exercised, the greater of (A) the transaction consideration per Share
or (B) the Exercise Price per Share. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of this Option shall cease, and unvested Option Shares shall be
forfeited, upon the Company's (or any parent's or subsidiary's thereof)
termination of the Participant's employment for Cause or the Participant's
termination of his employment with the Company (or any parent or subsidiary
thereof) other than for Good Reason.
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
_________________________________ __________________________________
Signature By
________________________________ __________________________________
William Knight Title
224224Battery Circle
Savannah, GA 31410
2
SUMMIT GLOBAL LOGISTICS, INC.
STOCK OPTION
AWARD TERMS
1. GRANT OF OPTION. The Committee hereby grants to the Participant
named in the Notice of Stock Option Grant an option (the "OPTION")
to purchase the number of Shares set forth in the Notice of Stock
Option Award, at the exercise price per Share set forth in the
Notice of Stock Option Grant (the "EXERCISE PRICE"), and subject to
the terms and conditions of the 2006 Equity Incentive Plan (the
"PLAN"), which is incorporated herein by reference. In the event of
a conflict between the terms and conditions of the Plan and this
Stock Option Award Agreement, the terms and conditions of the Plan
shall prevail.
If designated in the Notice of Stock Option Grant as an Incentive
Stock Option ("ISO"), this Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the extent that it exceeds the $100,000 limitation
rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION.
i. RIGHT TO EXERCISE. This Option may be exercised during its
term in accordance with the Vesting Schedule set out in the
Notice of Stock Option Award and with the applicable
provisions of the Plan and this Award Agreement.
ii. METHOD OF EXERCISE. This Option shall be exercisable by
delivery of an exercise notice in the form attached as Exhibit
A (the "EXERCISE NOTICE") which shall state the election to
exercise the Option, the number of Shares with respect to
which the Option is being exercised (the "EXERCISED SHARES")
and the Participant's agreement to be subject to such other
representations and agreements as may be required by the
Company. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice
accompanied by payment of the aggregate Exercise Price in
accordance with the cashless exercise provisions of Section 6g
of the Plan.
3. TERMINATION. This Option shall be exercisable for three months after
the Participant ceases to be an Employee; provided, however, if the
relationship is terminated by the Company for Cause, or voluntarily
by the Participant other than for Good Reason, the Option shall
terminate immediately. Upon the Participant's death or Disability,
this Option may be exercised for twelve (12) months after the
termination of employment. In no event may Participant exercise this
Option after the Term/Expiration Date as provided above.
4. RESTRICTIONS ON EXERCISE. This Option may not be exercised until
such time as the Plan has been approved by the stockholders of the
Company, or if the method of payment of consideration for such
shares would constitute a violation of any applicable law.
5. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Participant
only by Participant. The terms of the Plan and this Award Agreement
shall be binding upon the executors, Committees, heirs, successors
and assigns of the Participant.
6. TERM OF OPTION. This Option may be exercised only within the Term
set out in the Notice of Stock Option Award which Term may not
exceed ten (10) years from the Date of Grant, and may be exercised
during such Term only in accordance with the Plan and the terms of
this Award Agreement.
7. UNITED STATES TAX CONSEQUENCES. Set forth below is a brief summary
as of the date of this Option of some of the United States federal
tax consequences of exercise of this Option and disposition of the
Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
i. EXERCISE OF ISO. If this Option qualifies as an Incentive
Stock Option, there will be no regular federal income tax
liability upon the exercise of the Option, although the
excess, if any, of the Fair Market Value of the Shares on the
date of exercise over the Exercise Price will be treated as an
adjustment to the alternative minimum tax for federal tax
purposes and may subject the Participant to the alternative
minimum tax in the year of exercise.
ii. EXERCISE OF NONSTATUTORY STOCK OPTION. There may be a regular
federal income tax liability upon the exercise of a
Nonstatutory Stock Option. The Participant will be treated as
having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the
Exercise Price. If the Participant is an Employee or a former
Employee, the Company will be required to withhold from the
Participant's compensation or collect from the Participant and
pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time
of exercise, and may refuse to honor the exercise if such
withholding amounts are not delivered at the time of exercise.
iii. NOTICE OF DISQUALIFYING DISPOSITION OF INCENTIVE STOCK OPTION
SHARES. If this Option is an Incentive Stock Option, and if
the Participant sells or otherwise disposes of any of the
Shares acquired pursuant to the Incentive
2
Stock Option, including through a cashless exercise, on or
before the later of (1) the date two years after the Date of
Grant, or (2) the date one year after the date of exercise,
the Participant shall immediately notify the Company in
writing of such disposition. The Participant agrees that the
Participant may be subject to income tax withholding by the
Company on the compensation income recognized by the
Participant.
iv. WITHHOLDING. Pursuant to applicable federal, state, local or
foreign laws, the Company may be required to collect income or
other taxes on the grant of this Option, the exercise of this
Option, the lapse of a restriction placed on this Option, or
at other times. The Company may require, at such time as it
considers appropriate, that the Participant pay the Company
the amount of any taxes which the Company may determine is
required to be withheld or collected, and the Participant
shall comply with the requirement or demand of the Company. In
its discretion, the Company may withhold Shares to be received
upon exercise of this Option or offset against any amount owed
by the Company to the Participant, including compensation
amounts, if in its sole discretion it deems this to be an
appropriate method for withholding or collecting taxes.
Currently, neither federal income nor federal employment tax
withholding is required with respect to an Incentive Stock
Option.
8. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Award Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and
agreements of the Company and Participant with respect to the
subject matter hereof, and may not be modified (except as provided
herein and in the Plan) adversely to the Participant's interest
except by means of a writing signed by the Company and Participant.
This agreement is governed by the internal substantive laws but not
the choice of law rules of the State of New Jersey.
9. NO GUARANTEE OF CONTINUED SERVICE. PARTICIPANT ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE
HEREOF IS EARNED ONLY BY CONTINUING IN THE EMPLOYMENT AT THE WILL OF
THE COMPANY (NOT THROUGH THE ACT OF BEING ENGAGED, BEING GRANTED
THIS OPTION OR ACQUIRING SHARES HEREUNDER). PARTICIPANT FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE IN ANY WAY WITH PARTICIPANT'S RIGHT OR THE COMPANY'S RIGHT
TO TERMINATE THE RELATIONSHIP AT ANY TIME.
Participant acknowledges receipt of a copy of the Plan and represents that he or
she is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and
3
provisions thereof. Participant has reviewed the Plan and this Option in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option.
Participant hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Plan or this Option. Participant further agrees to notify the Company upon
any change in the residence address indicated below
4
EXHIBIT A
2006 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Company Name
Address
City, State, Zip Code
Attention: President
1. EXERCISE OF OPTION. Effective as of today, ______________, 200__,
the undersigned ("PARTICIPANT") hereby elects to exercise
Participant's option to purchase _________ shares of the Common
Stock (the "SHARES") of_________ (the "COMPANY") under and pursuant
to the 2006 Equity Incentive Plan (the "PLAN") and the Stock Option
Award Agreement dated ____________, 200__ (the "AWARD AGREEMENT").
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Award
Agreement, and pursuant to the cashless exercise provisions of
Section 6g of the Plan.
3. REPRESENTATIONS OF PARTICIPANT. Participant acknowledges that
Participant has received, read and understood the Plan and the Award
Agreement and agrees to abide by and be bound by their terms and
conditions.
4. RIGHTS AS STOCKHOLDER. The Participant shall not have any rights of
a stockholder upon exercise of the Option, which shall be settled
solely in cash.
5. TAX CONSULTATION. Participant understands that Participant may
suffer adverse tax consequences as a result of Participant's
purchase or disposition of the Shares. Participant represents that
Participant has consulted with any tax consultants Participant deems
advisable in connection with the purchase or disposition of the
Shares and that Participant is not relying on the Company for any
tax advice.
6. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns
of the Company. Subject to the restrictions on transfer herein set
forth, this Agreement shall be binding upon Participant and his or
her heirs, executors, Committees, successors and assigns.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or by the Company
forthwith to the Committee which shall review such dispute at its
next regular meeting. The resolution of such a dispute by the
Committee shall be final and binding on all parties.
5
8. GOVERNING LAW. This Exercise Notice is governed by the internal
substantive laws but not the choice of law rules of the State of New
Jersey.
9. ENTIRE AGREEMENT. The Plan and Award Agreement are incorporated
herein by reference. This Agreement, the Plan, the Award Agreement
(including all exhibits) and the Investment Representation Statement
constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Participant with
respect to the subject matter hereof, and may not be modified
adversely to the Participant's interest except by means of a writing
signed by the Company and Participant.
Submitted by: Accepted by:
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
______________________________________ ______________________________________
Signature By
______________________________________ ______________________________________
Print Name Title
ADDRESS: ADDRESS:
Type in address
______________________________________
City, State, Zip code
______________________________________
______________________________________
Date Received
6
EXHIBIT F
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
Name of SAR Holder: William Knight
Address of SAR Holder: 224 Battery Circle, Savannah, GA 31410
Number of SARs: 94,500, each representing a share of Common Stock
Initial SAR Value: $945,000
Grant Date: November 8, 2006
Pursuant to and in accordance with the Summit Global Logistics, Inc. 2006
Equity Incentive Plan, as amended from time to time (the "Plan"), this Stock
Appreciation Rights Agreement (the "SAR Agreement") evidences the issuance to
the person named above (the "SAR Holder") by Summit Global Logistics, Inc. (the
"Company"), effective as of the date set forth above (the "Grant Date"), of a
number of stock appreciation rights set forth above (the "SARs"). The SARs will
be valued in accordance with, and are subject to the terms, definitions and
provisions of, the Plan, which are incorporated herein by reference. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Plan.
Subject to the terms and conditions of the Plan, and subject to the
determination of the Compensation Committee in its sole discretion to accelerate
the vesting schedule hereunder, the SARs issued hereunder shall vest and become
vested SARs on the respective dates indicated below:
Incremental (Aggregate Number)
of SARs to be Vested SARs Vesting Date/Percent
47,250 (47,250) FIRST ANNIVERSARY OF GRANT
DATE -- 50%
47,250 (94,500) SECOND ANNIVERSARY OF GRANT
DATE -- 100%
All SARs granted hereunder shall be vested in full upon the earliest to
occur of a Change in Control or the death, Disability, Retirement or voluntary
termination for Good Reason of the SAR Holder. Vested SARs may be exercised at
any time within five (5) years following the Grant Date.
Upon the execution by the Company of a definitive acquisition, merger or
similar agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing, a
Change in Control
7
would occur, the Committee, in its sole discretion, and notwithstanding any
provision of the Transaction Agreement or the Plan, including, but not limited
to, Section 13.f.i. thereof, to the contrary, shall (i) require the acquiring or
surviving entity (if not the Company) to assume the SARs in accordance with
their terms or (ii) pay the Participant, for each share of Common Stock
underlying each SAR not previously exercised, the greater of (A) the transaction
consideration per share of Common Stock underlying each SAR or (B) the Initial
SAR Value per share of Common Stock. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of the SARs shall cease, and unvested SARs shall be terminated,
upon termination of employment of the SAR Holder with the Business Entity that
employs him or her for Cause or other than for Good Reason.
The SAR Holder shall have no rights as a stockholder of the Company by
virtue of having been issued the SARs and shall have only the rights
specifically provided in the Plan.
By executing this SAR Agreement, the SAR Holder acknowledges receipt of
the Plan (a copy of which is attached hereto) and represents that he or she has
read and the terms and provisions of the Plan and accepts the issuance of the
SARs subject to all of such terms and provisions.
8
SUMMIT GLOBAL LOGISTICS, INC.
By: __________________________________
Name:
Title: ___________________________
ACKNOWLEDGED AND AGREED BY SAR HOLDER:
Name:
Signature: _______________________
9
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHT
EXERCISE NOTICE
Pursuant to the provisions of the Summit Global Logistics, Inc. 2006
Equity Incentive Plan (the "Plan") and that certain Stock Appreciation Rights
Agreement by and between Summit Global Logistics, Inc. (the "Company") and
____________ (the "Grantee") as of _______________ __, 20__, I, the Grantee,
hereby exercise the Stock Appreciation Rights granted under the terms of the
Plan to the extent of __________ shares of the Common Stock of the Company (the
"SARs"). If applicable, I deliver to the Company herewith payment for tax
withholding with respect to the exercise of the SARs in the amount of
$__________.
TO BE COMPLETED BY THE GRANTEE
A. Number of SARs: ______________
B. Initial SAR Value $_____________
C. Total Initial SAR Value of
Shares (A x B): $_____________
TO BE COMPLETED BY THE COMPANY
D. Value per share of Common
Stock, as of __________,
times the number of shares
being exercised (A): $_____________
E. TOTAL PAYMENT
DUE (D - C): $_____________
Date: __________________________________ ______________________________________
Grantee
______________________________________
Address
______________________________________
Social Security Number
10
APPENDIX A
(HIGH LEVEL EXECUTIVES)
Twenty-four (24) Months' Base Salary. Payments shall be made on a monthly basis.
In addition, the Company shall pay the individual's premiums for COBRA
continuation coverage (individual, individual plus one or family coverage, as
applicable) for a period of eighteen (18) months following termination of
employment. At the expiration of this eighteen (18)-month period, the Company
will pay the individual, in a single lump sum, the cash value of six (6)
additional months of premium payments for the type of coverage elected under
COBRA under a substantially similar health plan. The amount to be paid under the
immediately preceding sentence shall not exceed $25,000.
If the individual's employment is terminated in connection with a Change in
Control, as such term is defined in Plan Section 4.2.b, the twenty-four (24)
Months' Base Salary described above shall be paid to the individual in a single
lump sum, the COBRA and health care benefits shall be provided as described
above, and the Company also will provide the individual with outplacement
benefits of an amount commensurate with the individual's position with the
Company, the value of such benefits not to exceed $10,500. The Company will also
continue to maintain the identical level of Perquisites and benefits enjoyed by
the individual prior to the Change in Control for a period of two (2) years
following his or her last day of employment. For these purposes, a termination
of the individual's employment shall conclusively be deemed to be in connection
with a Change in Control if such termination occurs during the time period
commencing on the date of the Change in Control and ending on the second
anniversary of the closing date for the transaction effecting the Change in
Control
This Exhibit A confirms that, solely for purposes of the Summit Global
Logistics, Inc. Severance Benefit Plan, William Knight is within category
described above.
19
Exhibit L
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into this 8th day of November, 2006, by and between James Madden, residing at 5
Deerfield Road, New Providence, NJ 07974 (the "Executive"), and Summit Global
Logistics, Inc., a Delaware corporation (the "Company").
BACKGROUND
WHEREAS, the Executive is expected to make a major contribution
to the growth, profitability and financial strength of the Company; and
WHEREAS, the Company desires to retain the services of the
Executive, and the Executive desires to be retained by the Company, on the terms
and conditions set forth below.
NOW, THEREFORE, intending to be legally bound, and in
consideration of the premises and the mutual promises set forth in this
Agreement, the receipt and sufficiency of which are hereby acknowledged, the
Company and Executive agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following terms, when used in this Agreement, shall
have the following meanings, unless the context clearly requires otherwise (such
definitions to be equally applicable to both the singular and plural of the
defined terms):
1.1.1 "AFFILIATE" means, (a) with respect to the Executive, any other
Person directly or indirectly Controlling, Controlled by, or under common
Control with the Executive and (b) with respect to the Company, (i) any
Person which directly or indirectly beneficially owns (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) securities or other
equity interests possessing more than 50% of the aggregate voting power in
the election of directors (or similar governing body) represented by all
outstanding securities of the Company or (ii) any Person with respect to
which the Company beneficially owns (within the meaning of Rule 13d-3
promulgated under the Exchange Act) securities or other equity interests
possessing more than 50% of the aggregate voting power in the election of
directors (or similar governing body) represented by, or more than 5% of
the aggregate value of, all outstanding securities or other equity
interests of such Person.
1.1.2 "BASE SALARY" shall have the meaning set forth in section 3.1.
1.1.3 "BOARD" means the Board of Directors of the Company.
1
1.1.4 "CHANGE IN CONTROL" means the occurrence of the first step (E.G.,
commencement of negotiations) in a process that results in any one of the
following events:
1.1.4.1 the acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) (the "Act")
of beneficial ownership (within the meaning of Rule 13d-3
of the Act) of more than 20% of the (A) then outstanding
voting stock of a Company; or (B) the combined voting
power of the then outstanding securities of the Company
entitled to vote;
1.1.4.2 an ownership change in which the shareholders of the
Company before such ownership change do not retain,
directly or indirectly, at least a majority of the
beneficial interest in the voting stock of the Company
after such transaction, or in which the Company is not the
surviving company;
1.1.4.3 the direct or indirect sale or exchange by the beneficial
owners (directly or indirectly) of the Company of all or
substantially all of the stock of the Company;
1.1.4.4 a majority of the directors comprising the entire Board as
of the Effective Date changes during any 12-month period
(other than a Qualified Successor);
1.1.4.5 a reorganization, merger or consolidation in which the
Company is a party;
1.1.4.6 the sale, exchange, or transfer of all or substantially
all of the assets of the Company;
1.1.4.7 the bankruptcy, liquidation or dissolution of the Company;
or
1.1.4.8 any transaction including the Company in which the Company
acquires an ownership interest of any percentage in,
enters into a joint venture, partnership, alliance or
similar arrangement with, or becomes owned in any
percentage by, any other entity that is engaged in a
business similar to the business engaged in by the Company
and that has operations in North America immediately
before such transaction or within one year thereafter.
1.1.5 "CAUSE" means, as determined by the Company in its sole
discretion, the Executive's
1.1.5.1 material act of dishonesty with respect to the Company;
2
1.1.5.2 conviction for a felony, gross misconduct that is likely
to have a material adverse effect on the Company's
business and affairs; or
1.1.5.3 other misconduct, such as excessive absenteeism, or
material failure to comply with Company rules.
1.1.6 "CODE" means the Internal Revenue Code of 1986, as amended.
1.1.7 "COMMON STOCK" means the common stock of the Company, par value
of $.001 per share.
1.1.8 "COMPANY LOCATION" means a Company office consisting of one or
more buildings within 25 miles of each other.
1.1.9 "COMPENSATION COMMITTEE" means the Compensation Committee of the
Board or such other committee designated by the Board that satisfies any
then applicable requirements of the New York Stock Exchange, Nasdaq, or
such other principal national stock exchange on which the Common Stock is
then traded, and which consists of two or more members of the Board, each
of whom shall be an outside director within the meaning of Section 162(m)
of the Code.
1.1.10 "CONFIDENTIAL INFORMATION" means:
1.1.10.1 proprietary information, trade secrets and know-how of the
Company and/or its Affiliates;
1.1.10.2 confidential information relating to the business,
operations, systems, networks, services, data bases,
customer lists, pricing policies, business plans,
marketing plans, product development plans, strategies,
inventions and research of the Company and/or its
Affiliates; and
1.1.10.3 confidential information relating to the financial affairs
and results of operations and forecasts or projections of
the Company and/or its Affiliates;
provided that information shall not constitute Confidential Information
if such information: (i) is generally known or reasonably knowable by
Persons other than the Company or its Affiliates or Persons employed
by, in control of or otherwise affiliated with the Company or its
Affiliates, (ii) is known or reasonably knowable by Persons other than
the Company or its Affiliates or Persons employed by, in control of or
otherwise affiliated with the Company or its Affiliates, by reason of
the action of such Person or Persons other than the Executive or any
Person acting at the Executive's direction or with the Executive's
prior consent, (iii) was known or reasonably knowable by the Executive,
by lawful means, prior to the date of the Executive's employment with
the Company or (iv) is compelled to be disclosed by law, regulation or
legal process.
3
1.1.11 "CONTROL" (including the terms "Controlled by" and "under common
Control with") means the possession, directly or indirectly or as a trustee
or executor, of the power to direct or cause the direction of the
management of a Person (including the direction of any Person related to
the Executive), whether through the ownership of stock, as a trustee or
executor, by contract or credit agreement or otherwise.
1.1.12 "DISABILITY" means any physical or mental condition which
renders Executive incapable of performing his essential functions and
duties hereunder for a period of at least 180 days, as determined in good
faith by a physician appointed by the Company.
1.1.13 "EFFECTIVE DATE" means the date of Closing as defined in that
certain Equity Purchase Agreement by and between Maritime Logistics US
Holdings Inc., FMI Holdco I, LLC, FMI Blocker, Inc. and each of the Sellers
set forth in Schedule A thereto, dated as of October 23, 2006.
1.1.14 "EMPLOYMENT TERM" shall have the meaning set forth in section
2.2.
1.1.15 "EQUITY INCENTIVE PLAN" means the Summit Global Logistics, Inc.
2006 Equity Incentive Plan, attached as Exhibit A hereto.
1.1.16 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
1.1.17 "FISCAL YEAR" means the calendar year.
1.1.18 "GOOD REASON" means the occurrence of any of the following:
1.1.18.1 without the Executive's prior written consent, any
material diminution in the Executive's authority, duties
or responsibilities, including those pertaining to his
status as a director of the Board, if applicable;
provided, however, that prior to any termination pursuant
to this Section 1.1.18.1, the Company must be given notice
by the Executive of his/her objection to such material
diminution and no less than 20 days to cure the same;
1.1.18.2 any failure by the Company to pay the Executive any
portion of the Base Salary or other payments to which the
Executive is entitled under Sections 3.1 through 3.5
hereof, provided, however, that prior to any termination
pursuant to this Section 1.1.18.2 on account of the
non-payment of Base Salary, the Company must be given
notice by the Executive of such acts or omissions and no
less than 30 days to cure the same;
1.1.18.3 without the Executive's prior written consent, the
relocation of the principal place of the Executive's
employment to a location
4
a further distance than the Company Location where the
individual was working immediately prior to the
relocation;
1.1.18.4 a material breach by the Company of any of the material
provisions of this Agreement, provided, however, that
prior to any such termination pursuant to this Section
1.1.18.4, the Company must be given notice by the
Executive of such acts or omissions and no less than 20
days to cure the same; or
1.1.18.5 an event described in Section 1.1.4.4 hereof occurs.
1.1.19 "MANAGEMENT INCENTIVE PLAN" means the Summit Global Logistics,
Inc. 2007 Management Incentive Plan, attached as Exhibit B hereto.
1.1.20 "PERSON" means an individual, corporation, partnership,
association, limited liability company or partnership, trust, government,
governmental agency or body, or any other group or entity, no matter how
organized and whether or not for profit.
1.1.21 "QUALIFIED SUCCESSOR" means in the event there is a vacancy in
the Board occurring between annual meetings as a result of death,
incapacity or resignation, or if one or more of the Directors shall decline
to stand for election to the Board or, if he is unable or unwilling to so
serve, then the shareholders that are party to that certain voting
agreement ("Voting Agreement") dated on or about the date hereof between
the Company and the parties thereto to elect Messrs. Agresti, DeSaye,
MacAvery and McQuiston (the "Shareholders") shall designate one or more
individuals of standing within the business world reasonably comparable to
that of such Director (each a "Qualified Successor") as one or more
successor Directors in the following manner. The Shareholders shall select
an individual to serve as the Qualified Successor, which individual shall
be independent both of the Company (except through proposed service as a
member of the Board or a subsidiary of the Company) and of the
Shareholders. The selected individual shall be subject to the prior
approval of a super-majority of the Shareholders, which consent shall not
unreasonably be withheld. A Shareholder's approval of a designated Director
shall be deemed given if such Shareholder has not responded to a notice by
the Chairman of the Board of the Company within 30 days of notice to the
Shareholder of the identity of the selected individual. Upon selection and
approval hereunder, such Qualified Successor shall for all purposes be
deemed a Director of the Company and shall be subject to the Voting
Agreement in the event of his/her death, incapacity, resignation or
decision not to be a Director.
1.1.22 "TERMINATION DATE" means the date on which the Executive's
employment with the Company terminates for any reason.
1.1.23 "YEAR OF SERVICE" means the completion by the Executive of Year
One, Year Two, Year Three, Year Four , Year Five, or any additional
one-year period under Section 2.2 hereof, as applicable. For purposes of
Section 3.5 hereof, and only for such purposes, partial years of service
will be credited as one (1) Year of Service if the Executive has worked at
least 1,000 hours during the applicable year.
5
1.1.24 "YEAR ONE" means the 12-consecutive-month period beginning on
the Effective Date and ending on the day immediately prior to the first day
of Year Two.
1.1.25 "YEAR TWO" means the 12-consecutive-month period beginning on
the first anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Three.
1.1.26 "YEAR THREE" means the 12-consecutive-month period beginning on
the second anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Four.
1.1.27 "YEAR FOUR" means the 12-consecutive-month period beginning on
the third anniversary of the Effective Date and ending on the day
immediately prior to the first day of Year Five.
1.1.28 "YEAR FIVE" means the 12-consecutive-month period beginning on
the fourth anniversary of the Effective Date and ending on the day
immediately prior to the fifth anniversary of the Effective Date.
ARTICLE 2
EMPLOYMENT AND TERM
2.1 EMPLOYMENT. The Company employs Executive and the Executive hereby
agrees to such employment by the Company during the Employment Term to serve as
Senior Vice President of Summit Global Logistics, Inc., with the customary
duties, authorities and responsibilities of an officer of a corporation and such
other duties, authorities and responsibilities relative to the Company or its
Affiliates that have been agreed upon in writing by the Company and Executive.
This Agreement supersedes any and all prior agreements between Executive and the
Company or the Company's predecessors in interest with respect to Executive's
employment, and any such prior agreements shall be void and of no further force
and effect as of the Effective Date.
2.2 EMPLOYMENT TERM. The "Employment Term" of this Agreement shall commence
on the Effective Date, and unless sooner terminated as provided in Article 4,
shall terminate upon the fifth (5th) anniversary of such date. Thereafter, and
unless sooner terminated as provided in Article 4, the Employment Term shall
automatically be renewed on each anniversary date of the expiration of the
initial Employment Term for a period of one (1) year, unless and until either
the Company or the Executive terminates such automatic renewal upon sixty (60)
days' advance written notice to the other of an intention not to renew (that is,
upon written notice of an intention not to renew delivered to the other at least
sixty (60) days prior to the beginning of the next one-year period); provided,
however, that in no event shall the Employment Term exceed a period of ten (10)
continuous years beginning with the Effective Date.
2.3 FULL WORKING TIME. During the Employment Term, the Executive shall
devote substantially all of his ability and attention, all of his skill and
experience and efforts during
6
normal business hours and at such other times as reasonably required for the
proper performance of his duties hereunder and to the business and affairs of
the Company. During the Employment Term, the Executive shall not, either
directly or indirectly, actively participate in any other business or accept any
employment or business office whatsoever from any other Person; provided,
however, that the foregoing shall not preclude the Executive, subject to Article
5, from: (i) serving as a director of any non-profit or charitable organization,
or any company not in competition with the Company, or (ii) making an investment
in any other business, so long as in any such case, the Executive does not
actively participate in such other business or organization and such activity
does not interfere with the Executive's ability to perform his duties hereunder
and does not constitute a conflict of interest with the Company.
ARTICLE 3
COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the Employment Term, as compensation for services
hereunder and in consideration for the protective covenants set forth in Article
5 of this Agreement, the Executive shall be paid a base salary of Two Hundred
Twenty-Five Thousand United States Dollars (US$225,000) for Year One, with an
annual cost of living increase of 3% for each of Year Two, Year Three, Year Four
and Year Five, and, if applicable under Section 2.2 hereof, for each additional
one-year period of the Employment Term thereafter, or such greater amount as may
from time to time be approved by the Compensation Committee (the "Base Salary").
Cost-of-living increases shall be effective as of the first day of Year Two,
Year Three, Year Four and Year Five, respectively, and, if applicable under
Section 2.2 hereof, as of the first day of each additional one-year period of
the Employment Term thereafter, and shall be cumulative. Base Salary shall be
paid to the Executive in accordance with the Company's normal payroll practices.
3.2 BONUSES. Such bonuses shall include the following:
3.2.1 NON-COMPETE BONUS. As consideration for the Executive entering
into this Agreement, the Company shall pay the Executive a bonus in the
amount of Seventy Thousand United States Dollars (US$70,000) upon the
condition that the executive agrees to be bound by the terms of Section 5.2
of this Agreement, as set forth in Article 5 hereof, hereinafter referred
to as the "Non-Compete Bonus". The Non-Compete Bonus shall be payable in
cash no later the thirtieth (30th) day following the date of this
Agreement.
3.2.2 MANAGEMENT INCENTIVE BONUSES. The Executive shall receive an
annual bonus in accordance with the terms of a grant agreement made
pursuant to the terms of the Management Incentive Plan (the "Annual Bonus
Grant Agreement"). The Executive also shall receive a multi-year bonus,
pursuant to the terms of the Management Incentive Plan, if certain
performance targets are met (the "Multi-Year Bonus Grant Agreement"). The
Annual Bonus Grant Agreement and Multi-Year Bonus Grant Agreement are
attached as Exhibits C and D, respectively, hereto. If the Management
Incentive Plan is terminated for any reason whatsoever, whether by the
Company or any other Person, the Executive shall be paid the annual bonus
and multi-year bonus that otherwise would be payable to him with respect to
the Performance Period within which the termination of
7
such Plan occurs, notwithstanding the termination of such Plan. For
purposes of the immediately preceding sentence, the Executive's annual
bonus and multi-year bonus that otherwise would be payable to him with
respect to the Performance Period within which the termination of the
Management Incentive Plan occurs shall be identical to that set forth in
Exhibits C and D, respectively, hereto, and shall be fully vested, subject
to the satisfaction of the conditions set forth in Section 5.2 of such
Plan.
3.3 EQUITY COMPENSATION. On or about the Effective Date, or as soon as
administratively practicable thereafter, the Executive shall receive grants
under the Equity Incentive Plan as follows:
3.3.1 INCENTIVE STOCK OPTIONS. A grant of an Incentive Stock Option, as
defined in the Equity Incentive Plan, in respect of 104,000 shares of
Common Stock, pursuant to an option grant agreement annexed as Exhibit E
hereto.
3.3.2 STOCK APPRECIATION RIGHTS. A grant of 78,000 Stock Appreciation
Rights, as defined in the Equity Incentive Plan, each in respect of one
share of Common Stock, pursuant to a Stock Appreciation Rights grant
agreement annexed as Exhibit F hereto. The parties intend that such grant
cover the approximate combined federal and state income tax liability
associated with both (i) the number of shares of Common Stock with respect
to which the Incentive Stock Option is exercised and (ii) the number of
shares of Common Stock underlying the exercise of the Stock Appreciation
Rights used to pay for the tax liability under clause (i).
All such grants and/or awards shall conform to the terms and conditions of the
Equity Incentive Plan and the annexed grant agreements between the Company and
the Executive. In its discretion, the Compensation Committee may make additional
grants or awards to the Executive from time to time. If the Equity Incentive
Plan is terminated for any reason whatsoever, whether by the Company or any
other Person, the Executive shall be entitled to the benefits due to him under
Exhibits E and F, respectively, hereto, notwithstanding the termination of such
Plan. For purposes of the immediately preceding sentence, the termination of the
Equity Incentive Plan shall result in all unvested Incentive Stock Options and
Stock Appreciation Rights granted to the Participant under Exhibits E and F,
respectively, to be fully vested and exercisable.
3.4 SERP BENEFITS. During the Employment Term, the Executive shall be
entitled to participate in the Summit Global Logistics, Inc. Supplemental
Executive Retirement Plan (the "SERP") in accordance with the terms thereof.
Such eligibility to participate in the SERP shall commence effective as of the
later of the Effective Date or the effective date of the SERP. The SERP is
attached as Exhibit G hereto.
3.5 RETIREMENT, WELFARE AND FRINGE BENEFITS. To the maximum extent that he
is eligible under the terms of the applicable plan or program, the Executive
shall participate in the current or future plans or programs maintained by the
Company for its employees and/or senior executives that provide insurance,
medical benefits, retirement benefits, or similar fringe benefits as set forth
in SCHEDULE A attached hereto, as well as any additional plans or programs that
may be adopted that are generally applicable to senior executives; provided,
however, that if within the Employment Term, the Executive leaves the employment
of the Company and is eligible for severance benefits, then $7,500 per Year of
Service shall be added to the severance amount in
8
lieu of any forfeited (non-vested) qualified plan amount. In addition, the
Executive shall be entitled to a minimum of twenty (20) vacation days for each
calendar year beginning with or within a Year of Service, which must be taken in
accordance with the Company's vacation policy then in effect. The Executive
shall also be entitled at least six (6) days of sick day leave, seven (7)
personal days leave and seven (7) fixed holidays for each calendar year
beginning with or within a Year of Service, which must be taken in accordance
with the Company's applicable policies then in effect. Unused vacation days,
sick days or personal days shall not carry forward into the subsequent year. In
the event that the Company establishes a more favorable vacation, sick leave or
personal day policy generally applicable to senior executives, the Executive
shall be entitled to any such additional benefits. During the Employment Term,
the Company shall pay the Executive an automobile allowance, which shall not
exceed $1,250 per month, plus an annual inflation adjustment reflecting market
conditions. The Executive is responsible for the tax consequences of the
personal usage of the automobile. The Executive shall be entitled to a $5,000
per year golf, health, country and/or other recreational club membership
allowance for each Year of Service, to be allocated among the foregoing as the
Executive sees fit. The Executive is responsible for the tax consequences of the
personal usage of the golf, health, country and/or other recreational club
membership. In addition, or in lieu of the Company policy for executives with
respect to annual physical examinations, during each Year of Service, the
Executive shall be reimbursed up to $1000 for an annual physical examination
conducted by a physician designated by the Executive.
3.6 INDEMNIFICATION AND INSURANCE.
3.6.1 D&O INSURANCE. During the entirety of the Employment Term, the
Company shall cause the Executive to be covered by and named as an insured
or as a member of a class of insured under any policy or contract of
insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as an
officer or director of the Company or service in other capacities at its
request ("D&O Insurance Coverage"). The D&O Insurance Coverage provided to
the Executive pursuant to this Section 3.6.1 shall be of the same scope and
on the same terms and conditions as the coverage (if any) provided to other
officers or directors of the Company and shall continue for so long as the
Executive shall be subject to personal liability relating to such service.
3.6.2 EPLI INSURANCE. During the entirety of the Employment Term, the
Company shall cause the Executive to be covered by and named as an insured
or as a member of a class of insured under any policy or contract of
insurance obtained by it to insure its directors and officers against
personal liability for acts or omissions in connection with service as a
director or officer of the Company, where such personal liability could
arise under or in connection with, or be attributable to, the Company's
employment practices and procedures "EPLI Insurance Coverage"). The EPLI
Insurance Coverage provided to the Executive pursuant to this Section 3.6.2
shall be of the same scope and on the same terms and conditions as the
coverage (if any) provided to other officers or directors of the Company
and shall continue for so long as the Executive shall be subject to
personal liability relating to such service.
3.6.3 INDEMNIFICATION. To the maximum extent permitted under applicable
law, and provided that the Executive has acted within the scope of his
authority hereunder, the
9
Company shall indemnify the Executive against and hold him harmless from
any costs, liabilities, losses and exposures (each, a "Cost," and
collectively, "Costs") to the fullest extent and on the most favorable
terms and conditions that similar indemnification is offered to any
director or officer of the Company or any subsidiary or Affiliate thereof
and shall survive the termination of this Agreement and continue for so
long as the Executive shall be subject to personal liability relating to
such service; provided, however, that the Company shall not indemnify and
hold harmless the Executive from a Cost to the extent that such Cost is
attributable to the Executive's (i) willful misconduct or gross negligence
in the performance of his duties or exercise of his authority hereunder or
(ii) material breach of any of the provisions of this Agreement.
3.7 EXPENSES. The Company shall pay or reimburse the Executive for
reasonable business expenses actually incurred or paid by the Executive during
the Employment Term, in the performance of his services hereunder; provided,
however, that such expenses are consistent with the Company's policy. Such
payment or reimbursement is expressly conditioned upon presentation of expense
statements or vouchers or other supporting documentation by the Executive in a
manner that is acceptable to the Company and otherwise in accordance with the
Company's policy then in effect.
3.8 DEDUCTIONS. The Company shall deduct from all compensation or benefits
payable pursuant to this Agreement such payroll, withholding and other taxes and
medical, pension and other benefits in accordance with the Company's benefit
programs and the Executive's selections and as may in the reasonable opinion of
the Company be required by law and any such additional amounts requested in
writing by the Executive.
ARTICLE 4
TERMINATION
4.1 GENERAL. The Company shall have the right to terminate the employment
of the Executive at any time with or without Cause and the Executive shall be
paid the Standard Termination Entitlements (as defined in Section 4.3.1).
4.2 TERMINATION UNDER CERTAIN CIRCUMSTANCES.
4.2.1 TERMINATION WITHOUT SEVERANCE BENEFITS. In the event the
Executive's employment with the Company is terminated prior to the
expiration of the Employment Term by reason of (i) the Executive's
resignation without Good Reason, (ii) the Executive's death or (iii) the
Executive's discharge by the Company for Cause prior to the occurrence of a
Change in Control, this Agreement shall terminate including, without
limitation, the Company's obligations to provide any compensation, benefits
or severance to the Executive under Article 3 of this Agreement or
otherwise, other than the Standard Termination Entitlements (as defined in
section 4.3.1).
4.2.2 DISABILITY. The Company may terminate the Executive's employment
upon the Executive's Disability. In such event, in addition to the Standard
Termination
10
Entitlements (as defined in section 4.3.1), the Company shall continue to
pay the Executive his Base Salary in accordance with the Company's normal
payroll practices, at the annual rate in effect for him immediately prior
to the termination of his employment, during a period ending on the
earliest of: (a) the date on which long-term disability insurance benefits
are first payable to him under any long-term disability insurance plan
covering employees of the Company; and (b) the date of his death. A
termination of employment due to Disability under this Section 4.2.2 shall
be effected by notice of termination given to the Executive by the Company
and shall take effect on the later of the effective date of termination
specified in such notice or the date on which the notice of termination is
deemed given to the Executive.
4.2.3 TERMINATION WITH SEVERANCE BENEFITS. In the event that the
Executive's employment with the Company is terminated by the Executive
prior to the expiration of the Employment Term for Good Reason or by the
Company prior to the expiration of the Employment Term other than for Cause
or Disability, the Company shall pay the Standard Termination Entitlements
(as defined in section 4.3.1) and the Severance Benefits (as defined in
section 4.3.2); provided, however, that any payment required by this
section 4.2.3 is expressly conditioned upon:
4.2.3.1 The Executive's continued material compliance with the
terms of this Agreement, including, without limitation,
Article 5; and
4.2.3.2 The Executive's resignation from any and all positions
which he holds as an officer, director or committee member
with respect to the Company or any Affiliate thereof.
4.3 STANDARD TERMINATION ENTITLEMENTS; SEVERANCE BENEFITS.
4.3.1 STANDARD TERMINATION ENTITLEMENTS. For all purposes of this
Agreement, the Executive's "Standard Termination Entitlements" shall mean
and include:
4.3.1.1 the Executive's earned but unpaid compensation (including,
without limitation, Base Salary, and all other items which
constitute wages under applicable law, interpreting the
term "wages" in the broadest possible sense) as of the
date of his termination of employment. This payment shall
be made at the time and in the manner prescribed by law
applicable to the payment of wages including,
specifically, payment for accrued, but unused vacation
days;
4.3.1.2 reimbursement for reasonable business expenses and
authorized travel expenses incurred but still outstanding;
and
4.3.1.3 the benefits, if any, due to the Executive, and the
Executive's estate, surviving dependents or his designated
beneficiaries under the employee benefit plans and
programs and compensation plans and programs maintained
for the benefit of, or covering, the officers, executives
and employees of the
11
Company, including, but not limited to, all plans or
arrangements listed on SCHEDULE A, the Equity Incentive
Plan and the Management Incentive Plan. The time and
manner of payment or other delivery of these benefits and
the recipients of such benefits shall be determined
according to the terms and conditions of the applicable
plans and programs
4.3.2 SEVERANCE BENEFITS. For all purposes of this Agreement, the
Executive's "Severance Benefits" shall mean the benefits set forth in
Exhibit H. If the Summit Global Logistics, Inc. Severance Benefit Plan, as
set forth in Exhibit H, is terminated for any reason whatsover, whether by
the Company or any other Person, the Executive shall be paid severance
benefits identical to those set forth in Appendix A of such Plan,
notwithstanding the termination of such Plan.
ARTICLE 5
RESTRICTIVE COVENANTS
5.1 PROPRIETARY INFORMATION.
5.1.1 DISCLOSURE DURING THE EMPLOYMENT TERM. Subject to Section 5.5
hereof, the Executive shall promptly disclose to the Company in such form
and manner as the Company may reasonably require (a) all operations,
systems, services, methods, developments, inventions, improvements and
other information or data pertaining to the business or activities of the
Company and its Affiliates as are conceived, originated, discovered or
developed by the Executive during the Employment Term and (b) such
information and data pertaining to the business, operations, personnel,
activities, financial affairs, and other information relating to the
Company and its Affiliates and their respective customers, suppliers,
employees and other persons having business dealings with the Company and
its Affiliates as may be reasonably required for the Company to operate its
business. It is understood that such information is proprietary in nature
and shall (as between the Company and Executive) be for the exclusive use
and benefit of the Company and shall be and remain the property of the
Company both during the Employment Term and thereafter.
5.1.2 DISCLOSURE AFTER EMPLOYMENT. In the event that the Executive
leaves the employ of the Company for any reason, including, without
limitation, the expiration of the Employment Term, the Executive shall
deliver to the Company any and all devices (including any lap top, personal
hand-held devices or mobile telephone), records, data, notes, reports,
proposals, lists, correspondence, specifications, drawings, blueprints,
sketches, materials, equipment, other documents or property belonging to
the Company or any Affiliate thereof or any of their respective successors
or assigns.
5.2 NON-COMPETITION. During the Employment Term and for twelve months after
the date employment with the Company has ended, the Executive agrees, and shall
cause each Person Controlled by him to agree, that he shall not, directly or
indirectly, or through any Person Controlled by the Executive: (a) engage in any
logistic activities competitive with the business of the Company and its
Affiliates for his or their own account or for the account of any other
12
Person, or (b) become interested in any Person engaged in logistic activities
competitive with the business of the Company and its Affiliates as a partner,
shareholder, member, principal, agent, employee, trustee, consultant or in any
other relationship or capacity.
5.3 NON-SOLICITATION. During the Employment Term and for a period of twelve
months after the date employment with the Company has ended, the Executive will
not, directly or indirectly, use proprietary knowledge or information relating
to the Company or its Affiliates obtained during the course of the Executive's
employment with the Company for his own benefit or the benefit of any third
party with the intention to, or which a reasonable person would construe to, (a)
interfere with or disrupt any present relationship, contractual or otherwise,
between the Company or its Affiliates and any customer, supplier, employee,
consultant or other person having business dealings with the Company or its
Affiliates, or (b) employ or solicit the employment or engagement by others of
any employee or consultant of the Company or its Affiliates who was such an
employee or consultant at the time of termination of the Executive's employment
hereunder. Upon leaving the employment of the Company, the Executive shall
notify his new employer of his obligations under this Agreement and grants
consent to notification by the Company to the Executive's new employer
concerning Executive's rights and obligations under this Agreement.
5.4 NON-DISCLOSURE. Except with the prior written consent of the Company in
each instance or as may be reasonably necessary to perform the Executive's
services hereunder, the Executive shall not disclose, use, publish, or in any
other manner reveal, directly or indirectly, at any time during or after the
Employment Term, any Confidential Information relating to the Company or any
Affiliate thereof acquired by him prior to, during the course of, or incident
to, his employment hereunder; provided, however, that necessary or appropriate
disclosures may be made to the Executive's legal counsel.
5.5 OWNERSHIP OF INTELLECTUAL PROPERTY. Subject to applicable law, the
Executive acknowledges and agrees that all work performed, and all ideas,
concepts, materials, products, software; documentation, designs, architectures,
specifications, flow charts, test data, programmer's notes, deliverables,
improvements, discoveries, methods, processes, or inventions, trade secrets or
other subject matter related to the Company's business (collectively,
"Materials") conceived, developed or prepared by the Executive alone, or with
others, during the period of Executive's employment by the Company in written,
oral, electronic, photographic, optical or any other form are the property of
the Company and its successors or assigns, and all rights, title and interest
therein shall vest in the Company and its successors or assigns, and all
Materials shall be deemed to be works made for hire and made in the course of
the Executive's employment by the Company. To the extent that title to any
Materials has not or may not, by operation of law, vest in the Company and its
successors or assigns, or such Materials may not be considered works made for
hire. Notwithstanding the foregoing, the parties acknowledge and understand that
Executive may previously have developed and may continue to develop certain
ideas, concepts and designs which are unrelated to the business of the Company
and may continue to do so provided that such activities do not interfere with
his duties under this Agreement.
5.6 REASONABLE LIMITATIONS. Executive acknowledges that given the nature of
the Company's business, the covenants contained in this Article 5 contain
reasonable limitations as to time, geographical area and scope of activity to be
restrained, and do not impose a greater
13
restraint than is necessary to protect and preserve the Company's business and
to protect the Company's legitimate business interests. If, however, this
Article 5 is determined by any arbitrator to be unenforceable by reason of its
extending for too long a period of time or over too large a geographic area or
by reason of its being too extensive in any other respect, or for any other
reason, it will be interpreted to extend only over the longest period of time
for which it may be enforceable and/or over the largest geographical area as to
which it may be enforceable and/or to the maximum extent in all other aspects as
to which it may be enforceable, all as determined by such court or arbitrator in
such action.
5.7 SURVIVAL OF PROTECTIVE COVENANTS. Each covenant on the part of
Executive contained in this Article 5 shall be construed as an agreement
independent of any other provision of this Agreement, unless otherwise indicated
herein, and shall survive the termination of Executive's employment under this
Agreement.
ARTICLE 6
DISPUTE RESOLUTION
6.1 ARBITRATION OF DISPUTES. Both parties agree that all controversies or
claims that may arise between the Executive and the Company in connection with
this Agreement shall be settled by arbitration. The parties further agree that
the arbitration shall be held in the State of New Jersey, and administered by
the American Arbitration Association under its Commercial Arbitration Rules,
applying New Jersey law.
6.1.1 QUALIFICATIONS OF ARBITRATOR. The arbitration shall be submitted
to a single arbitrator chosen in the manner provided under the rules of the
American Arbitration Association. The arbitrator shall be disinterested and
shall not have any significant business relationship with either party, and
shall not have served as an arbitrator for any disputes involving the
Company or any of its Affiliates more than twice in the thirty-six (36)
month period immediately preceding his or her date of appointment. The
arbitrator shall be a person who is experienced and knowledgeable in
employment and executive compensation law and shall be an attorney duly
licensed to practice law in one or more states.
6.1.2 POWERS OF ARBITRATOR. The arbitrator shall not have the authority
to grant any remedy which contravenes or changes any term of this Agreement
and shall not have the authority to award punitive or exemplary or damages
under any circumstances. The parties shall equally share the expense of the
arbitrator selected and of any stenographer present at the arbitration. The
remaining costs of the arbitrator proceedings shall be allocated by the
arbitrator, except that the arbitrator shall not have the power to award
attorney's fees.
6.1.3 EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall render its
decision within thirty (30) days after termination of the arbitration
proceeding, which decision shall be in writing, stating the reasons
therefor and including a brief description of each element of any damages
awarded. The decision of the arbitrator shall be final and
14
binding. Judgment on the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof.
6.2 SERVICE OF PROCESS. The parties agree that service of process may be
made on it by personal service of a copy of the summons and complaint or other
legal process in any such suit, action or proceeding, or by registered or
certified mail (postage prepaid) to its address specified in Section 7.1 (or
applicable forwarding address), or by any other method of service provided for
under the applicable laws in effect in the applicable jurisdiction.
ARTICLE 7
GENERAL PROVISIONS
7.1 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Executive: James Madden
5 Deerfield Road
New Providence, NJ 07974
If to the Company: Summit Global Logistics, Inc.
547 Boulevard
Kenilworth, NJ 07033
with a copy to: David D. Gammell, Esq.
Brown Rudnick Berlack Israels LLP
One Financial Center
Boston, MA 02111
or to such other address as the party to whom notice is given may have
previously furnished to the other parties hereto in writing in the manner set
forth above.
7.2 ENTIRE AGREEMENT. This Agreement shall constitute the entire agreement
between the Executive and the Company with respect to the Company's employment
of the Executive and supersedes any and all prior agreements and understandings,
written or oral, with respect thereto.
7.3 AMENDMENTS AND WAIVERS. Any term of this Agreement or any Schedule,
Exhibit or attachment hereto may be amended only by (a) an instrument in writing
and signed by the party against whom such amendment is sought to be enforced,
and (b) in the case of the Company, such amendment also must be duly authorized
by an appropriate resolution of the
15
Company. In addition, any term of this Agreement or any Schedule, Exhibit or
attachment hereto may be waived by the party against whom the obligation runs to
by an instrument in writing signed by such party and delivered to the Company as
reasonable time prior to the effective date of the waiver.
7.4 SUCCESSORS AND ASSIGNS. The Company shall have the right to assign this
Agreement, subject to the Executive's consent which shall not be unreasonably
withheld and subject to. This Agreement shall inure to the benefit of, and be
binding upon (a) the parties hereto, (b) the heirs, administrators, executors
and personal representatives of the Executive and (c) the successors and assigns
of the Company as provided herein.
7.5 GOVERNING LAW. This Agreement, including the validity hereof and the
rights and obligations of the parties hereunder, and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the laws of the State of New Jersey without
giving effect to any conflicts of law provisions or rule, that would cause the
application of the laws of any other jurisdiction.
7.6 SEVERABILITY. If any provisions of this Agreement as applied to any
part or to any circumstance shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement.
7.7 NO CONFLICTS. The Executive represents to the Company that the
execution, delivery and performance by the Executive of this Agreement does not
and will not conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under any contract,
agreement or understanding, whether oral or written, to which the Executive is
or was a party or of which the Executive is or should be aware.
7.8 SURVIVAL. The rights and obligations of the Company and Executive
pursuant to Articles 4, 5 and 6 shall survive the termination of the Executive's
employment with the Company and the expiration of the Employment Term.
7.9 CAPTIONS. The headings and captions used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
7.10 COUNTERPARTS. This Agreement be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
EXECUTIVE
-------------------------------------
James Madden
SUMMIT GLOBAL LOGISTICS, INC.
By:
---------------------------------
Name
Title:
17
SCHEDULE A
EMPLOYEE BENEFIT SUMMARY TERM SHEET
As of January 1, 2007, the Executive shall be eligible to participate in
all of the retirement and welfare benefit plans sponsored, maintained or
contributed to by FMI International, LLC and/or its affiliates or subsidiaries,
which plans shall be amended accordingly. Without in any way limiting the
generality of the foregoing, the Executive shall be entitled to participate in
the following plans:
o FMI International, LLC 401(k) Profit Sharing Plan;
o FMI International West Health Plan;
o FMI International, LLC PPO Health Insurance Plan;
o FMI International, LLC Dental Plan; and the
o FMI International, LLC Life Insurance Plan.
18
EXHIBIT C
ANNUAL BONUS GRANT AGREEMENT
THIS ANNUAL BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between James
Madden (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the 8th day of November, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make annual bonus payments to the Executive for each Year of Service, as defined
in the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration of
the premises and the mutual promises set forth in the Employment Agreement, the
receipt and sufficiency of which are hereby acknowledged, the Executive and the
Company agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement, shall
have the following meanings, unless the context clearly requires otherwise (such
definitions to be equally applicable to both the singular and plural of the
defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto in the
Management Incentive Plan.
1.2 "BONUS" means the annual incentive bonus to be paid hereunder
with respect to a given Fiscal Year.
1.3 "EBITDA" means the Company's earnings before income tax, plus
depreciation and amortization, as computed in accordance with United
States GAAP and in a manner consistent with the methods used in the
Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or restructuring
or impairment charges, as determined by the Company's independent
public accountants in accordance with GAAP or (ii) changes in
accounting, unless, in each case, the Committee, as defined in the
Management Incentive Plan, decides otherwise within the Determination
Period, as defined in the Management Incentive Plan.
1.4 "EBITDA TARGET" means the Company's EBITDA for Fiscal Year
2007, 2008, 2009 or 2010, as applicable.
1.5 "FISCAL YEAR" means the calendar year.
1.6 "GAAP" means generally accepted accounting principles.
1.7 "PERFORMANCE PERIOD" shall have the meaning ascribed thereto
in the Management Incentive Plan.
2. EBITDA TARGETS.
2.1 The EBITDA Target for Fiscal Year 2007 shall be $__________.
2.2 The EBITDA Target for Fiscal Year 2008 shall be $__________.
2.3 The EBITDA Target for Fiscal Year 2009 shall be $__________.
2.4 The EBITDA Target for Fiscal Year 2010 shall be $__________.
3. ANNUAL INCENTIVE BONUSES.
3.1 The Bonus for each of Fiscal Year 2007, Fiscal Year 2008,
Fiscal Year 2009 and Fiscal Year 2010 shall be as follows:
3.1.1 If at least 80% of the EBITDA Target for the applicable
Fiscal Year is achieved, the Executive shall receive a Bonus
for such Fiscal Year equal to 35% of his Base Salary for the
Performance Period beginning with or within such Fiscal Year.
3.1.1.2 If at least 90% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive shall
receive a Bonus for such Fiscal Year equal to 52.50% of his
Base Salary for the Performance Period beginning with or
within such Fiscal Year.
3.1.1.3 If at least 100% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive shall
receive a Bonus for such Fiscal Year equal to 70% of his Base
Salary for the Performance Period beginning with or within
such Fiscal Year.
3.1.1.4 For each percentage point, up to 50 percentage points
by which the EBITDA Target for the applicable Fiscal Year is
exceeded, the Executive shall receive an additional Bonus
equal to 2.10% of his Base Salary.
3.1.1.5 For each percentage point over 50 percentage points,
up to 50 additional points, by which the EBITDA Target for
the applicable Fiscal Year is exceeded, the Executive shall
receive an additional Bonus equal to 2.80% of his Base
Salary.
3.2 Except as otherwise provided herein, bonus amounts shall be
payable to the Executive in accordance with the terms and conditions of
the Management Incentive Plan.
4. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and
the Company shall comply with all of the terms thereof applicable to annual
incentive awards. In the event of any conflict between the terms of this
Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
5. AMENDMENT AND TERMINATION. The Company may not amend or terminate
this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
-------------------------------------
James Madden
SUMMIT GLOBAL LOGISTICS, INC.
By:
---------------------------------
Name
Title:
EXHIBIT D
MULTI-YEAR BONUS GRANT AGREEMENT
THIS MULTI-YEAR BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between James
Madden (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the 8th day of November, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make a multi-year bonus payment to the Executive if certain performance targets
of the Company are satisfied as of the end of the Employment Term, as defined in
the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration of
the premises and the mutual promises set forth in the Employment Agreement, the
receipt and sufficiency of which are hereby acknowledged, the Executive and the
Company agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement, shall
have the following meanings, unless the context clearly requires otherwise (such
definitions to be equally applicable to both the singular and plural of the
defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto in the
Management Incentive Plan.
1.2 "BONUS" means the multi-year incentive bonus to be paid
hereunder with respect to the Employment Term.
1.3 "DELTA ONE" means the excess, if any, of EBITDA for Fiscal
Year 2009 over the EBITDA Target for Fiscal Year 2007.
1.4 "DELTA TWO" means the excess, if any, of EBITDA for Fiscal
Year 2010 over the EBITDA Target for Fiscal Year 2008.
1.5 "EBITDA" means the Company's earnings before income tax, plus
depreciation and amortization, as computed in accordance with United
States GAAP and in a manner consistent with the methods used in the
Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or restructuring
or impairment charges, as determined by the Company's independent
public accountants in accordance with GAAP or (ii) changes in
accounting, unless, in each case, the Committee, as defined in the
Management Incentive Plan, decides otherwise within the Determination
Period, as defined in the Management Incentive Plan.
1.6 "EBITDA TARGET" means
1.6.1 For Fiscal Year 2007, $__________.
1.6.2 For Fiscal Year 2008, $__________.
1.7 "FIRST PERFORMANCE PERIOD" means the three-consecutive Fiscal
Year period beginning on the first day of Fiscal Year 2007 and ending
on the last day of Fiscal Year 2009.
1.8 "FISCAL YEAR" means the calendar year.
1.9 "FUNDAMENTAL TRANSACTION" has the meaning as defined in the
Management Incentive Plan.
1.10 "GAAP" means generally accepted accounting principles.
1.11 "PERFORMANCE PERIOD" means the First Performance Period or
the Second Performance Period, as applicable.
1.12 "SECOND PERFORMANCE PERIOD" means the three-consecutive
Fiscal Year period beginning on the first day of Fiscal Year 2008 and
ending on the last day of Fiscal Year 2010.
2. MULTI-YEAR BONUS.
2.1 FIRST PERFORMANCE PERIOD. If, with respect to the First
Performance Period, Delta One, expressed as a percentage of the EBITDA
Target for Fiscal Year 2007, equals or exceeds 33%, the Executive shall
be paid a Bonus in Fiscal Year 2010 equal to one and one half (1.5)
times his Base Salary for Fiscal Year 2007.
2.2 SECOND PERFORMANCE PERIOD. If, with respect to the Second
Performance Period, Delta Two, expressed as a percentage of the EBITDA
Target for Fiscal Year 2008, equals or exceeds 33%, the Executive shall
be paid a Bonus in Fiscal Year 2011 equal to one and one half (1.5)
times his Base Salary for Fiscal Year 2008.
3. PAYMENT UPON OCCURRENCE OF FUNDAMENTAL TRANSACTION. If a Fundamental
Transaction occurs at any time both (i) prior to the payment of any amount
pursuant to Section 2 hereof and (ii) on or prior to December 31, 2010, then, in
lieu of making any payment to the Executive pursuant to Section 2 hereof, the
Company shall pay to the Executive, promptly following the occurrence of the
Fundamental Transaction, an amount in immediately available funds, equal to one
and one half (1.5) times his Base Salary. For this purpose, Base Salary shall
mean Base Salary for Fiscal Year 2007, if the Fundamental Transaction occurs on
or prior to the last day of Fiscal Year 2009, and Base Salary for 2008, if the
Fundamental Transaction occurs during Fiscal Year 2010. Payment shall be made in
the form of a single lump sum from the sales proceeds received by the Company
pursuant to the terms of the Fundamental Transaction.
4. PAYMENT OF BONUS AMOUNTS. Except as otherwise provided herein, bonus
amounts shall be payable to the Executive in accordance with the terms and
conditions of the Management Incentive Plan.
5. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and the Company shall comply with all of the terms thereof applicable
to annual incentive awards. In the event of any conflict between the terms of
this Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
6. AMENDMENT AND TERMINATION. The Company may not amend or terminate
this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
EXECUTIVE
-------------------------------------
James Madden
SUMMIT GLOBAL LOGISTICS, INC.
By:
---------------------------------
Name
Title:
EXHIBIT E
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
Unless otherwise defined herein, the terms defined in the 2006 Equity
Incentive Plan (the "Plan") shall have the same defined meanings in this Notice
of Stock Option Award and the attached Stock Option Award Terms, which are
incorporated herein by reference (together, the "AWARD AGREEMENT"). Terms not
defined herein shall have their respective meanings under the Plan.
PARTICIPANT (the "PARTICIPANT")
James Madden
GRANT
The undersigned Participant has been granted an Option to purchase Common Stock
of Summit Global Logistics, Inc. (the "COMPANY"), subject to the terms and
conditions of the Plan and this Award Agreement, as follows:
DATE OF GRANT November 8, 2006 TOTAL NUMBER OF 104,000
SHARES GRANTED
VESTING November 8, 2006 TYPE OF OPTION [X] Incentive Stock
COMMENCEMENT DATE Option
EXERCISE PRICE PER SHARE $10.00 Non-Statutory Stock
Option
TOTAL EXERCISE PRICE $1,040,000 TERM/EXPIRATION DATE 5 years from Date of Grant
VESTING SCHEDULE:
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
ANNIVERSARY OF GRANT DATE % OF GRANT (OR # OF SHARES) VESTED
One-Year Anniversary of Grant Date 50%
Two-Year Anniversary of Grant Date 100%
The Option shall vest in full upon the earliest to occur of a Change in Control,
the Participant's death, the Participant's Disability, the Participant's
Retirement, the Company's (or any parent's or subsidiary's thereof) termination
of the Participant's employment without Cause or the Participant's termination
of his employment with the Company (or any parent or subsidiary thereof) for
Good Reason.
Upon the execution by the Company of a definitive acquisition, merger or similar
agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing, a Change in
Control would occur, the Committee, in its sole discretion, and notwithstanding
any provision of the Transaction Agreement or the Plan, including, but not
limited to, Section 13f.i. thereof, to the contrary, shall (i) require the
acquiring or surviving entity (if not the Company) to assume this Option in
accordance with its terms or (ii) pay the Participant, for each Share not
previously exercised, the greater of (A) the transaction consideration per Share
or (B) the Exercise Price per Share. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of this Option shall cease, and unvested Option Shares shall be
forfeited, upon the Company's (or any parent's or subsidiary's thereof)
termination of the Participant's employment for Cause or the Participant's
termination of his employment with the Company (or any parent or subsidiary
thereof) other than for Good Reason.
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
- --------------------------------------- -------------------------------------
Signature By
- --------------------------------------- -------------------------------------
James Madden Title
5 Deerfield Road
New Providence, NJ 07974
2
SUMMIT GLOBAL LOGISTICS, INC.
STOCK OPTION
AWARD TERMS
1. GRANT OF OPTION. The Committee hereby grants to the Participant named
in the Notice of Stock Option Grant an option (the "OPTION") to
purchase the number of Shares set forth in the Notice of Stock Option
Award, at the exercise price per Share set forth in the Notice of Stock
Option Grant (the "EXERCISE PRICE"), and subject to the terms and
conditions of the 2006 Equity Incentive Plan (the "PLAN"), which is
incorporated herein by reference. In the event of a conflict between
the terms and conditions of the Plan and this Stock Option Award
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Stock Option Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive
Stock Option as defined in Section 422 of the Code. Nevertheless, to
the extent that it exceeds the $100,000 limitation rule of Code Section
422(d), this Option shall be treated as a Nonstatutory Stock Option
("NSO").
2. EXERCISE OF OPTION.
i RIGHT TO EXERCISE. This Option may be exercised during its term
in accordance with the Vesting Schedule set out in the Notice of
Stock Option Award and with the applicable provisions of the Plan
and this Award Agreement.
ii METHOD OF EXERCISE. This Option shall be exercisable by delivery
of an exercise notice in the form attached as EXHIBIT A (the
"EXERCISE NOTICE") which shall state the election to exercise the
Option, the number of Shares with respect to which the Option is
being exercised (the "EXERCISED SHARES") and the Participant's
agreement to be subject to such other representations and
agreements as may be required by the Company. This Option shall
be deemed to be exercised upon receipt by the Company of such
fully executed Exercise Notice accompanied by payment of the
aggregate Exercise Price in accordance with the cashless exercise
provisions of Section 6g of the Plan.
3. TERMINATION. This Option shall be exercisable for three months after
the Participant ceases to be an Employee; provided, however, if the
relationship is terminated by the Company for Cause, or voluntarily by
the Participant other than for Good Reason, the Option shall terminate
immediately. Upon the Participant's death or Disability, this Option
may be exercised for twelve (12) months after the termination of
employment. In no event may Participant exercise this Option after the
Term/Expiration Date as provided above.
4. RESTRICTIONS ON EXERCISE. This Option may not be exercised until such
time as the Plan has been approved by the stockholders of the Company,
or if the method of payment of consideration for such shares would
constitute a violation of any applicable law.
5. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Participant
only by Participant. The terms of the Plan and this Award Agreement
shall be binding upon the executors, Committees, heirs, successors and
assigns of the Participant.
6. TERM OF OPTION. This Option may be exercised only within the Term set
out in the Notice of Stock Option Award which Term may not exceed ten
(10) years from the Date of Grant, and may be exercised during such
Term only in accordance with the Plan and the terms of this Award
Agreement.
7. UNITED STATES TAX CONSEQUENCES. Set forth below is a brief summary as
of the date of this Option of some of the United States federal tax
consequences of exercise of this Option and disposition of the Shares.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
i EXERCISE OF ISO. If this Option qualifies as an Incentive Stock
Option, there will be no regular federal income tax liability
upon the exercise of the Option, although the excess, if any, of
the Fair Market Value of the Shares on the date of exercise over
the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject
the Participant to the alternative minimum tax in the year of
exercise.
ii EXERCISE OF NONSTATUTORY STOCK OPTION. There may be a regular
federal income tax liability upon the exercise of a Nonstatutory
Stock Option. The Participant will be treated as having received
compensation income (taxable at ordinary income tax rates) equal
to the excess, if any, of the Fair Market Value of the Shares on
the date of exercise over the Exercise Price. If the Participant
is an Employee or a former Employee, the Company will be required
to withhold from the Participant's compensation or collect from
the Participant and pay to the applicable taxing authorities an
amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise if
such withholding amounts are not delivered at the time of
exercise.
iii NOTICE OF DISQUALIFYING DISPOSITION OF INCENTIVE STOCK OPTION
SHARES. If this Option is an Incentive Stock Option, and if the
Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the Incentive Stock Option, including
through a cashless exercise, on or before the later of (1) the
date two
2
years after the Date of Grant, or (2) the date one year after the
date of exercise, the Participant shall immediately notify the
Company in writing of such disposition. The Participant agrees
that the Participant may be subject to income tax withholding by
the Company on the compensation income recognized by the
Participant.
iv WITHHOLDING. Pursuant to applicable federal, state, local or
foreign laws, the Company may be required to collect income or
other taxes on the grant of this Option, the exercise of this
Option, the lapse of a restriction placed on this Option, or at
other times. The Company may require, at such time as it
considers appropriate, that the Participant pay the Company the
amount of any taxes which the Company may determine is required
to be withheld or collected, and the Participant shall comply
with the requirement or demand of the Company. In its discretion,
the Company may withhold Shares to be received upon exercise of
this Option or offset against any amount owed by the Company to
the Participant, including compensation amounts, if in its sole
discretion it deems this to be an appropriate method for
withholding or collecting taxes. Currently, neither federal
income nor federal employment tax withholding is required with
respect to an Incentive Stock Option.
8. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Award Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of
the Company and Participant with respect to the subject matter hereof,
and may not be modified (except as provided herein and in the Plan)
adversely to the Participant's interest except by means of a writing
signed by the Company and Participant. This agreement is governed by
the internal substantive laws but not the choice of law rules of the
State of New Jersey.
9. NO GUARANTEE OF CONTINUED SERVICE. PARTICIPANT ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING IN THE EMPLOYMENT AT THE WILL OF THE COMPANY
(NOT THROUGH THE ACT OF BEING ENGAGED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). PARTICIPANT FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND
THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR
IMPLIED PROMISE OF CONTINUED ENGAGEMENT FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH
PARTICIPANT'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE THE
RELATIONSHIP AT ANY TIME.
Participant acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof.
Participant has reviewed the Plan and this Option in
3
their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Option and fully understands all provisions of the
Option. Participant hereby agrees to accept as binding, conclusive and
final all decisions or interpretations of the Committee upon any questions
arising under the Plan or this Option. Participant further agrees to notify
the Company upon any change in the residence address indicated below.
4
EXHIBIT A
2006 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Company Name
Address
City, State, Zip Code
Attention: President
1. EXERCISE OF OPTION. Effective as of today, ______________, 200__, the
undersigned ("PARTICIPANT") hereby elects to exercise Participant's
option to purchase _________ shares of the Common Stock (the "SHARES")
of_________ (the "COMPANY") under and pursuant to the 2006 Equity
Incentive Plan (the "PLAN") and the Stock Option Award Agreement dated
____________, 200__ (the "AWARD AGREEMENT").
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Award Agreement,
and pursuant to the cashless exercise provisions of Section 6g of the
Plan.
3. REPRESENTATIONS OF PARTICIPANT. Participant acknowledges that
Participant has received, read and understood the Plan and the Award
Agreement and agrees to abide by and be bound by their terms and
conditions.
4. RIGHTS AS STOCKHOLDER. The Participant shall not have any rights of a
stockholder upon exercise of the Option, which shall be settled solely
in cash.
5. TAX CONSULTATION. Participant understands that Participant may suffer
adverse tax consequences as a result of Participant's purchase or
disposition of the Shares. Participant represents that Participant has
consulted with any tax consultants Participant deems advisable in
connection with the purchase or disposition of the Shares and that
Participant is not relying on the Company for any tax advice.
6. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this
Agreement shall be binding upon Participant and his or her heirs,
executors, Committees, successors and assigns.
7. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or by the Company forthwith
to the Committee which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be
final and binding on all parties.
8. GOVERNING LAW. This Exercise Notice is governed by the internal
substantive laws but not the choice of law rules of the State of New
Jersey.
5
9. ENTIRE AGREEMENT. The Plan and Award Agreement are incorporated herein
by reference. This Agreement, the Plan, the Award Agreement (including
all exhibits) and the Investment Representation Statement constitute
the entire agreement of the parties with respect to the subject matter
hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Participant with respect to the subject
matter hereof, and may not be modified adversely to the Participant's
interest except by means of a writing signed by the Company and
Participant.
6
Submitted by: Accepted by:
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
- --------------------------------------- -------------------------------------
Signature By
- --------------------------------------- -------------------------------------
Print Name Title
ADDRESS: ADDRESS:
- ------- -------
Type in address
- ---------------------------------------
City, State, Zip code
- ---------------------------------------
-------------------------------------
Date Received
7
EXHIBIT F
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
Name of SAR Holder: James Madden
Address of SAR Holder: 5 Deerfield Road, New Providence, NJ 07974
Number of SARs: 78,000, each representing a share of Common Stock
Initial SAR Value: $780,000
Grant Date: November 8, 2006
Pursuant to and in accordance with the Summit Global Logistics, Inc.
2006 Equity Incentive Plan, as amended from time to time (the "Plan"), this
Stock Appreciation Rights Agreement (the "SAR Agreement") evidences the issuance
to the person named above (the "SAR Holder") by Summit Global Logistics, Inc.
(the "Company"), effective as of the date set forth above (the "Grant Date"), of
a number of stock appreciation rights set forth above (the "SARs"). The SARs
will be valued in accordance with, and are subject to the terms, definitions and
provisions of, the Plan, which are incorporated herein by reference. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Plan.
Subject to the terms and conditions of the Plan, and subject to the
determination of the Compensation Committee in its sole discretion to accelerate
the vesting schedule hereunder, the SARs issued hereunder shall vest and become
vested SARs on the respective dates indicated below:
Incremental (Aggregate Number)
of SARs to be Vested SARs Vesting Date/Percent
39,000 (39,000) FIRST ANNIVERSARY
OF GRANT DATE -- 50%
39,000 (78,000) SECOND ANNIVERSARY
OF GRANT DATE -- 100%
All SARs granted hereunder shall be vested in full upon the earliest to
occur of a Change in Control or the death, Disability, Retirement or voluntary
termination for Good Reason of the SAR Holder. Vested SARs may be exercised at
any time within five (5) years following the Grant Date.
Upon the execution by the Company of a definitive acquisition, merger
or similar agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing,
a Change in Control
8
would occur, the Committee, in its sole discretion, and notwithstanding any
provision of the Transaction Agreement or the Plan, including, but not limited
to, Section 13.f.i. thereof, to the contrary, shall (i) require the acquiring or
surviving entity (if not the Company) to assume the SARs in accordance with
their terms or (ii) pay the Participant, for each share of Common Stock
underlying each SAR not previously exercised, the greater of (A) the transaction
consideration per share of Common Stock underlying each SAR or (B) the Initial
SAR Value per share of Common Stock. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of the SARs shall cease, and unvested SARs shall be terminated,
upon termination of employment of the SAR Holder with the Business Entity that
employs him or her for Cause or other than for Good Reason.
The SAR Holder shall have no rights as a stockholder of the Company by
virtue of having been issued the SARs and shall have only the rights
specifically provided in the Plan.
By executing this SAR Agreement, the SAR Holder acknowledges receipt of
the Plan (a copy of which is attached hereto) and represents that he or she has
read and the terms and provisions of the Plan and accepts the issuance of the
SARs subject to all of such terms and provisions.
9
SUMMIT GLOBAL LOGISTICS, INC.
By:
-------------------------------------
Name:
Title:
-------------------------------
ACKNOWLEDGED AND AGREED BY SAR HOLDER:
Name:
Signature:
---------------------------
10
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHT
EXERCISE NOTICE
Pursuant to the provisions of the Summit Global Logistics, Inc. 2006
Equity Incentive Plan (the "Plan") and that certain Stock Appreciation Rights
Agreement by and between Summit Global Logistics, Inc. (the "Company") and
____________ (the "Grantee") as of _______________ __, 20__, I, the Grantee,
hereby exercise the Stock Appreciation Rights granted under the terms of the
Plan to the extent of __________ shares of the Common Stock of the Company (the
"SARs"). If applicable, I deliver to the Company herewith payment for tax
withholding with respect to the exercise of the SARs in the amount of
$__________.
TO BE COMPLETED BY THE GRANTEE
A. Number of SARs: ____________
B. Initial SAR Value $___________
C. Total Initial SAR Value of
Shares (A x B): $___________
TO BE COMPLETED BY THE COMPANY
D. Value per share of Common Stock,
as of __________, times the number
of shares being exercised (A): $___________
E. TOTAL PAYMENT
DUE (D - C): $___________
Date: ____________________ ____________________________________________
Grantee
____________________________________________
Address
____________________________________________
Social Security Number
11
APPENDIX A
(HIGH LEVEL EXECUTIVES)
Twenty-four (24) Months' Base Salary. Payments shall be made on a monthly basis.
In addition, the Company shall pay the individual's premiums for COBRA
continuation coverage (individual, individual plus one or family coverage, as
applicable) for a period of eighteen (18) months following termination of
employment. At the expiration of this eighteen (18)-month period, the Company
will pay the individual, in a single lump sum, the cash value of six (6)
additional months of premium payments for the type of coverage elected under
COBRA under a substantially similar health plan. The amount to be paid under the
immediately preceding sentence shall not exceed $25,000.
If the individual's employment is terminated in connection with a Change in
Control, as such term is defined in Plan Section 4.2.b, the twenty-four (24)
Months' Base Salary described above shall be paid to the individual in a single
lump sum, the COBRA and health care benefits shall be provided as described
above, and the Company also will provide the individual with outplacement
benefits of an amount commensurate with the individual's position with the
Company, the value of such benefits not to exceed $10,500. The Company will also
continue to maintain the identical level of Perquisites and benefits enjoyed by
the individual prior to the Change in Control for a period of two (2) years
following his or her last day of employment. For these purposes, a termination
of the individual's employment shall conclusively be deemed to be in connection
with a Change in Control if such termination occurs during the time period
commencing on the date of the Change in Control and ending on the second
anniversary of the closing date for the transaction effecting the Change in
Control
This Exhibit A confirms that, solely for purposes of the Summit Global
Logistics, Inc. Severance Benefit Plan, James Madden is within category
described above.
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EXHIBIT M
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into this 8th day of November, 2006, by and between Peter Stone, residing at
2235 Beach Street, San Francisco, CA 94123 (the "Executive"), and Summit Global
Logistics, Inc., a Delaware corporation (the "Company").
BACKGROUND
WHEREAS, the Executive is expected to make a major
contribution to the growth, profitability and financial strength of the Company;
and
WHEREAS, the Company desires to retain the services of the
Executive, and the Executive desires to be retained by the Company, on the terms
and conditions set forth below.
NOW, THEREFORE, intending to be legally bound, and in
consideration of the premises and the mutual promises set forth in this
Agreement, the receipt and sufficiency of which are hereby acknowledged, the
Company and Executive agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. The following terms, when used in this Agreement,
shall have the following meanings, unless the context clearly requires otherwise
(such definitions to be equally applicable to both the singular and plural of
the defined terms):
1.1.1 "AFFILIATE" means, (a) with respect to the Executive,
any other Person directly or indirectly Controlling, Controlled by, or
under common Control with the Executive and (b) with respect to the
Company, (i) any Person which directly or indirectly beneficially owns
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
securities or other equity interests possessing more than 50% of the
aggregate voting power in the election of directors (or similar
governing body) represented by all outstanding securities of the
Company or (ii) any Person with respect to which the Company
beneficially owns (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) securities or other equity interests possessing more
than 50% of the aggregate voting power in the election of directors (or
similar governing body) represented by, or more than 5% of the
aggregate value of, all outstanding securities or other equity
interests of such Person.
1.1.2 "BASE SALARY" shall have the meaning set forth in
section 3.1.
1.1.3 "BOARD" means the Board of Directors of the Company.
1
1.1.4 "CHANGE IN CONTROL" means the occurrence of the first
step (E.G., commencement of negotiations) in a process that results in
any one of the following events:
1.1.4.1 the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934,
as amended) (the "Act") of beneficial ownership
(within the meaning of Rule 13d-3 of the Act) of
more than 20% of the (A) then outstanding voting
stock of a Company; or (B) the combined voting
power of the then outstanding securities of the
Company entitled to vote;
1.1.4.2 an ownership change in which the shareholders of
the Company before such ownership change do not
retain, directly or indirectly, at least a
majority of the beneficial interest in the
voting stock of the Company after such
transaction, or in which the Company is not the
surviving company;
1.1.4.3 the direct or indirect sale or exchange by the
beneficial owners (directly or indirectly) of
the Company of all or substantially all of the
stock of the Company;
1.1.4.4 a majority of the directors comprising the
entire Board as of the Effective Date changes
during any 12-month period (other than a
Qualified Successor);
1.1.4.5 a reorganization, merger or consolidation in
which the Company is a party;
1.1.4.6 the sale, exchange, or transfer of all or
substantially all of the assets of the Company;
1.1.4.7 the bankruptcy, liquidation or dissolution of
the Company; or
1.1.4.8 any transaction including the Company in which
the Company acquires an ownership interest of
any percentage in, enters into a joint venture,
partnership, alliance or similar arrangement
with, or becomes owned in any percentage by, any
other entity that is engaged in a business
similar to the business engaged in by the
Company and that has operations in North America
immediately before such transaction or within
one year thereafter.
1.1.5 "CAUSE" means, as determined by the Company in its sole
discretion, the Executive's
1.1.5.1 material act of dishonesty with respect to the
Company;
2
1.1.5.2 conviction for a felony, gross misconduct that
is likely to have a material adverse effect on
the Company's business and affairs; or
1.1.5.3 other misconduct, such as excessive absenteeism,
or material failure to comply with Company
rules.
1.1.6 "CODE" means the Internal Revenue Code of 1986, as
amended.
1.1.7 "COMMON STOCK" means the common stock of the Company,
par value of $.001 per share.
1.1.8 "COMPANY LOCATION" means a Company office consisting of
one or more buildings within 25 miles of each other.
1.1.9 "COMPENSATION COMMITTEE" means the Compensation
Committee of the Board or such other committee designated by the Board
that satisfies any then applicable requirements of the New York Stock
Exchange, Nasdaq, or such other principal national stock exchange on
which the Common Stock is then traded, and which consists of two or
more members of the Board, each of whom shall be an outside director
within the meaning of Section 162(m) of the Code.
1.1.10 "CONFIDENTIAL INFORMATION" means:
1.1.10.1 proprietary information, trade secrets and
know-how of the Company and/or its Affiliates;
1.1.10.2 confidential information relating to the
business, operations, systems, networks,
services, data bases, customer lists, pricing
policies, business plans, marketing plans,
product development plans, strategies,
inventions and research of the Company and/or
its Affiliates; and
1.1.10.3 confidential information relating to the
financial affairs and results of operations and
forecasts or projections of the Company and/or
its Affiliates;
provided that information shall not constitute
Confidential Information if such information: (i) is
generally known or reasonably knowable by Persons other
than the Company or its Affiliates or Persons employed by,
in control of or otherwise affiliated with the Company or
its Affiliates, (ii) is known or reasonably knowable by
Persons other than the Company or its Affiliates or
Persons employed by, in control of or otherwise affiliated
with the Company or its Affiliates, by reason of the
action of such Person or Persons other than the Executive
or any Person acting at the Executive's direction or with
the Executive's prior consent, (iii) was known or
reasonably knowable by the Executive, by lawful means,
prior to the date
3
of the Executive's employment with the Company or (iv) is
compelled to be disclosed by law, regulation or legal
process.
1.1.11 "CONTROL" (including the terms "Controlled by" and
"under common Control with") means the possession, directly or
indirectly or as a trustee or executor, of the power to direct or cause
the direction of the management of a Person (including the direction of
any Person related to the Executive), whether through the ownership of
stock, as a trustee or executor, by contract or credit agreement or
otherwise.
1.1.12 "DISABILITY" means any physical or mental condition
which renders Executive incapable of performing his essential functions
and duties hereunder for a period of at least 180 days, as determined
in good faith by a physician appointed by the Company.
1.1.13 "EFFECTIVE DATE" means the date of Closing as defined
in that certain Equity Purchase Agreement by and between Maritime
Logistics US Holdings Inc., FMI Holdco I, LLC, FMI Blocker, Inc. and
each of the Sellers set forth in Schedule A thereto, dated as of
October 23, 2006.
1.1.14 "EMPLOYMENT TERM" shall have the meaning set forth in
section 2.2.
1.1.15 "EQUITY INCENTIVE PLAN" means the Summit Global
Logistics, Inc. 2006 Equity Incentive Plan, attached as Exhibit A
hereto.
1.1.16 "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
1.1.17 "FISCAL YEAR" means the calendar year.
1.1.18 "GOOD REASON" means the occurrence of any of the
following:
1.1.18.1 without the Executive's prior written consent,
any material diminution in the Executive's
authority, duties or responsibilities, including
those pertaining to his status as a director of
the Board, if applicable; provided, however,
that prior to any termination pursuant to this
Section 1.1.18.1, the Company must be given
notice by the Executive of his/her objection to
such material diminution and no less than 20
days to cure the same;
1.1.18.2 any failure by the Company to pay the Executive
any portion of the Base Salary or other payments
to which the Executive is entitled under
Sections 3.1 through 3.5 hereof, provided,
however, that prior to any termination pursuant
to this Section 1.1.18.2 on account of the
non-payment of Base Salary, the Company must be
given notice by the Executive of such acts or
omissions and no less than 30 days to cure the
same;
4
1.1.18.3 without the Executive's prior written consent,
the relocation of the principal place of the
Executive's employment to a location a further
distance than the Company Location where the
individual was working immediately prior to the
relocation;
1.1.18.4 a material breach by the Company of any of the
material provisions of this Agreement, provided,
however, that prior to any such termination
pursuant to this Section 1.1.18.4, the Company
must be given notice by the Executive of such
acts or omissions and no less than 20 days to
cure the same; or
1.1.18.5 an event described in Section 1.1.4.4 hereof
occurs.
1.1.19 "MANAGEMENT INCENTIVE PLAN" means the Summit Global
Logistics, Inc. 2007 Management Incentive Plan, attached as Exhibit B
hereto.
1.1.20 "PERSON" means an individual, corporation, partnership,
association, limited liability company or partnership, trust,
government, governmental agency or body, or any other group or entity,
no matter how organized and whether or not for profit.
1.1.21 "QUALIFIED SUCCESSOR" means in the event there is a
vacancy in the Board occurring between annual meetings as a result of
death, incapacity or resignation, or if one or more of the Directors
shall decline to stand for election to the Board or, if he is unable or
unwilling to so serve, then the shareholders that are party to that
certain voting agreement ("Voting Agreement") dated on or about the
date hereof between the Company and the parties thereto to elect
Messrs. Agresti, DeSaye, MacAvery and McQuiston (the "Shareholders")
shall designate one or more individuals of standing within the business
world reasonably comparable to that of such Director (each a "Qualified
Successor") as one or more successor Directors in the following manner.
The Shareholders shall select an individual to serve as the Qualified
Successor, which individual shall be independent both of the Company
(except through proposed service as a member of the Board or a
subsidiary of the Company) and of the Shareholders. The selected
individual shall be subject to the prior approval of a super-majority
of the Shareholders, which consent shall not unreasonably be withheld.
A Shareholder's approval of a designated Director shall be deemed given
if such Shareholder has not responded to a notice by the Chairman of
the Board of the Company within 30 days of notice to the Shareholder of
the identity of the selected individual. Upon selection and approval
hereunder, such Qualified Successor shall for all purposes be deemed a
Director of the Company and shall be subject to the Voting Agreement in
the event of his/her death, incapacity, resignation or decision not to
be a Director.
1.1.22 "TERMINATION DATE" means the date on which the
Executive's employment with the Company terminates for any reason.
1.1.23 "YEAR OF SERVICE" means the completion by the Executive
of Year One, Year Two, Year Three, Year Four , Year Five, or any
additional one-year period under Section 2.2 hereof, as applicable. For
purposes of Section 3.5 hereof, and only for such
5
purposes, partial years of service will be credited as one (1) Year of
Service if the Executive has worked at least 1,000 hours during the
applicable year.
1.1.24 "YEAR ONE" means the 12-consecutive-month period
beginning on the Effective Date and ending on the day immediately prior
to the first day of Year Two.
1.1.25 "YEAR TWO" means the 12-consecutive-month period
beginning on the first anniversary of the Effective Date and ending on
the day immediately prior to the first day of Year Three.
1.1.26 "YEAR THREE" means the 12-consecutive-month period
beginning on the second anniversary of the Effective Date and ending on
the day immediately prior to the first day of Year Four.
1.1.27 "YEAR FOUR" means the 12-consecutive-month period
beginning on the third anniversary of the Effective Date and ending on
the day immediately prior to the first day of Year Five.
1.1.28 "YEAR FIVE" means the 12-consecutive-month period
beginning on the fourth anniversary of the Effective Date and ending on
the day immediately prior to the fifth anniversary of the Effective
Date.
ARTICLE 2
EMPLOYMENT AND TERM
2.1 EMPLOYMENT. The Company employs Executive and the Executive hereby
agrees to such employment by the Company during the Employment Term to serve as
Senior Vice President of Summit Global Logistics, Inc., with the customary
duties, authorities and responsibilities of an officer of a corporation and such
other duties, authorities and responsibilities relative to the Company or its
Affiliates that have been agreed upon in writing by the Company and Executive.
This Agreement supersedes any and all prior agreements between Executive and the
Company or the Company's predecessors in interest with respect to Executive's
employment, and any such prior agreements shall be void and of no further force
and effect as of the Effective Date.
2.2 EMPLOYMENT TERM. The "Employment Term" of this Agreement shall
commence on the Effective Date, and unless sooner terminated as provided in
Article 4, shall terminate upon the fifth (5th) anniversary of such date.
Thereafter, and unless sooner terminated as provided in Article 4, the
Employment Term shall automatically be renewed on each anniversary date of the
expiration of the initial Employment Term for a period of one (1) year, unless
and until either the Company or the Executive terminates such automatic renewal
upon sixty (60) days' advance written notice to the other of an intention not to
renew (that is, upon written notice of an intention not to renew delivered to
the other at least sixty (60) days prior to the beginning of the next one-year
period); provided, however, that in no event shall the Employment Term exceed a
period of ten (10) continuous years beginning with the Effective Date.
6
2.3 FULL WORKING TIME. During the Employment Term, the Executive shall
devote substantially all of his ability and attention, all of his skill and
experience and efforts during normal business hours and at such other times as
reasonably required for the proper performance of his duties hereunder and to
the business and affairs of the Company. During the Employment Term, the
Executive shall not, either directly or indirectly, actively participate in any
other business or accept any employment or business office whatsoever from any
other Person; provided, however, that the foregoing shall not preclude the
Executive, subject to Article 5, from: (i) serving as a director of any
non-profit or charitable organization, or any company not in competition with
the Company, or (ii) making an investment in any other business, so long as in
any such case, the Executive does not actively participate in such other
business or organization and such activity does not interfere with the
Executive's ability to perform his duties hereunder and does not constitute a
conflict of interest with the Company.
ARTICLE 3
COMPENSATION AND BENEFITS
3.1 BASE SALARY. During the Employment Term, as compensation for
services hereunder and in consideration for the protective covenants set forth
in Article 5 of this Agreement, the Executive shall be paid a base salary of Two
Hundred Thousand United States Dollars (US$200,000) for Year One, with an annual
cost of living increase of 3% for each of Year Two, Year Three, Year Four and
Year Five, and, if applicable under Section 2.2 hereof, for each additional
one-year period of the Employment Term thereafter, or such greater amount as may
from time to time be approved by the Compensation Committee (the "Base Salary").
Cost-of-living increases shall be effective as of the first day of Year Two,
Year Three, Year Four and Year Five, respectively, and, if applicable under
Section 2.2 hereof, as of the first day of each additional one-year period of
the Employment Term thereafter, and shall be cumulative. Base Salary shall be
paid to the Executive in accordance with the Company's normal payroll practices.
3.2 BONUSES. Such bonuses shall include the following:
3.2.1 NON-COMPETE BONUS. As consideration for the Executive
entering into this Agreement, the Company shall pay the Executive a
bonus in the amount of Forty Thousand United States Dollars (US$40,000)
upon the condition that the executive agrees to be bound by the terms
of Section 5.2 of this Agreement, as set forth in Article 5 hereof,
hereinafter referred to as the "Non-Compete Bonus". The Non-Compete
Bonus shall be payable in cash no later the thirtieth (30th) day
following the date of this Agreement.
3.2.2 MANAGEMENT INCENTIVE BONUSES. The Executive shall
receive an annual bonus in accordance with the terms of a grant
agreement made pursuant to the terms of the Management Incentive Plan
(the "Annual Bonus Grant Agreement"). The Executive also shall receive
a multi-year bonus, pursuant to the terms of the Management Incentive
Plan, if certain performance targets are met (the "Multi-Year Bonus
Grant Agreement"). The Annual Bonus Grant Agreement and Multi-Year
Bonus Grant Agreement are attached as Exhibits C and D, respectively,
hereto. If the Management Incentive Plan is terminated for any reason
whatsoever, whether by the Company or any other Person, the Executive
shall be paid the annual bonus and multi-year bonus that otherwise
would be
7
payable to him with respect to the Performance Period within which the
termination of such Plan occurs, notwithstanding the termination of
such Plan. For purposes of the immediately preceding sentence, the
Executive's annual bonus and multi-year bonus that otherwise would be
payable to him with respect to the Performance Period within which the
termination of the Management Incentive Plan occurs shall be identical
to that set forth in Exhibits C and D, respectively, hereto, and shall
be fully vested, subject to the satisfaction of the conditions set
forth in Section 5.2 of such Plan.
3.3 EQUITY COMPENSATION. On or about the Effective Date, or as soon as
administratively practicable thereafter, the Executive shall receive grants
under the Equity Incentive Plan as follows:
3.3.1 INCENTIVE STOCK OPTIONS. A grant of an Incentive Stock
Option, as defined in the Equity Incentive Plan, in respect of 40,000
shares of Common Stock, pursuant to an option grant agreement annexed
as Exhibit E hereto.
3.3.2 STOCK APPRECIATION RIGHTS. A grant of 30,000 Stock
Appreciation Rights, as defined in the Equity Incentive Plan, each in
respect of one share of Common Stock, pursuant to a Stock Appreciation
Rights grant agreement annexed as Exhibit F hereto. The parties intend
that such grant cover the approximate combined federal and state income
tax liability associated with both (i) the number of shares of Common
Stock with respect to which the Incentive Stock Option is exercised and
(ii) the number of shares of Common Stock underlying the exercise of
the Stock Appreciation Rights used to pay for the tax liability under
clause (i).
All such grants and/or awards shall conform to the terms and conditions of the
Equity Incentive Plan and the annexed grant agreements between the Company and
the Executive. In its discretion, the Compensation Committee may make additional
grants or awards to the Executive from time to time. If the Equity Incentive
Plan is terminated for any reason whatsoever, whether by the Company or any
other Person, the Executive shall be entitled to the benefits due to him under
Exhibits E and F, respectively, hereto, notwithstanding the termination of such
Plan. For purposes of the immediately preceding sentence, the termination of the
Equity Incentive Plan shall result in all unvested Incentive Stock Options and
Stock Appreciation Rights granted to the Participant under Exhibits E and F,
respectively, to be fully vested and exercisable.
3.4 SERP BENEFITS. During the Employment Term, the Executive shall be
entitled to participate in the Summit Global Logistics, Inc. Supplemental
Executive Retirement Plan (the "SERP") in accordance with the terms thereof.
Such eligibility to participate in the SERP shall commence effective as of the
later of the Effective Date or the effective date of the SERP. The SERP is
attached as Exhibit G hereto.
3.5 RETIREMENT, WELFARE AND FRINGE BENEFITS. To the maximum extent that
he is eligible under the terms of the applicable plan or program, the Executive
shall participate in the current or future plans or programs maintained by the
Company for its employees and/or senior executives that provide insurance,
medical benefits, retirement benefits, or similar fringe benefits as set forth
in SCHEDULE A attached hereto, as well as any additional plans or programs that
may be adopted that are generally applicable to senior executives; provided,
however, that if within the Employment Term, the Executive leaves the employment
of the Company and is eligible for
8
severance benefits, then $7,500 per Year of Service shall be added to the
severance amount in lieu of any forfeited (non-vested) qualified plan amount. In
addition, the Executive shall be entitled to a minimum of twenty (20) vacation
days for each calendar year beginning with or within a Year of Service, which
must be taken in accordance with the Company's vacation policy then in effect.
The Executive shall also be entitled at least six (6) days of sick day leave,
seven (7) personal days leave and seven (7) fixed holidays for each calendar
year beginning with or within a Year of Service, which must be taken in
accordance with the Company's applicable policies then in effect. Unused
vacation days, sick days or personal days shall not carry forward into the
subsequent year. In the event that the Company establishes a more favorable
vacation, sick leave or personal day policy generally applicable to senior
executives, the Executive shall be entitled to any such additional benefits.
During the Employment Term, the Company shall pay the Executive an automobile
allowance, which shall not exceed $1,250 per month, plus an annual inflation
adjustment reflecting market conditions. The Executive is responsible for the
tax consequences of the personal usage of the automobile. The Executive shall be
entitled to a $5,000 per year golf, health, country and/or other recreational
club membership allowance for each Year of Service, to be allocated among the
foregoing as the Executive sees fit. The Executive is responsible for the tax
consequences of the personal usage of the golf, health, country and/or other
recreational club membership. In addition, or in lieu of the Company policy for
executives with respect to annual physical examinations, during each Year of
Service, the Executive shall be reimbursed up to $1000 for an annual physical
examination conducted by a physician designated by the Executive.
3.6 INDEMNIFICATION AND INSURANCE.
3.6.1 D&O INSURANCE. During the entirety of the Employment
Term, the Company shall cause the Executive to be covered by and named
as an insured or as a member of a class of insured under any policy or
contract of insurance obtained by it to insure its directors and
officers against personal liability for acts or omissions in connection
with service as an officer or director of the Company or service in
other capacities at its request ("D&O Insurance Coverage"). The D&O
Insurance Coverage provided to the Executive pursuant to this Section
3.6.1 shall be of the same scope and on the same terms and conditions
as the coverage (if any) provided to other officers or directors of the
Company and shall continue for so long as the Executive shall be
subject to personal liability relating to such service.
3.6.2 EPLI INSURANCE. During the entirety of the Employment
Term, the Company shall cause the Executive to be covered by and named
as an insured or as a member of a class of insured under any policy or
contract of insurance obtained by it to insure its directors and
officers against personal liability for acts or omissions in connection
with service as a director or officer of the Company, where such
personal liability could arise under or in connection with, or be
attributable to, the Company's employment practices and procedures
"EPLI Insurance Coverage"). The EPLI Insurance Coverage provided to the
Executive pursuant to this Section 3.6.2 shall be of the same scope and
on the same terms and conditions as the coverage (if any) provided to
other officers or directors of the Company and shall continue for so
long as the Executive shall be subject to personal liability relating
to such service.
9
3.6.3 INDEMNIFICATION. To the maximum extent permitted under
applicable law, and provided that the Executive has acted within the
scope of his authority hereunder, the Company shall indemnify the
Executive against and hold him harmless from any costs, liabilities,
losses and exposures (each, a "Cost," and collectively, "Costs") to the
fullest extent and on the most favorable terms and conditions that
similar indemnification is offered to any director or officer of the
Company or any subsidiary or Affiliate thereof and shall survive the
termination of this Agreement and continue for so long as the Executive
shall be subject to personal liability relating to such service;
provided, however, that the Company shall not indemnify and hold
harmless the Executive from a Cost to the extent that such Cost is
attributable to the Executive's (i) willful misconduct or gross
negligence in the performance of his duties or exercise of his
authority hereunder or (ii) material breach of any of the provisions of
this Agreement.
3.7 EXPENSES. The Company shall pay or reimburse the Executive for
reasonable business expenses actually incurred or paid by the Executive during
the Employment Term, in the performance of his services hereunder; provided,
however, that such expenses are consistent with the Company's policy. Such
payment or reimbursement is expressly conditioned upon presentation of expense
statements or vouchers or other supporting documentation by the Executive in a
manner that is acceptable to the Company and otherwise in accordance with the
Company's policy then in effect.
3.8 DEDUCTIONS. The Company shall deduct from all compensation or
benefits payable pursuant to this Agreement such payroll, withholding and other
taxes and medical, pension and other benefits in accordance with the Company's
benefit programs and the Executive's selections and as may in the reasonable
opinion of the Company be required by law and any such additional amounts
requested in writing by the Executive.
ARTICLE 4
TERMINATION
4.1 GENERAL. The Company shall have the right to terminate the
employment of the Executive at any time with or without Cause and the Executive
shall be paid the Standard Termination Entitlements (as defined in Section
4.3.1).
4.2 TERMINATION UNDER CERTAIN CIRCUMSTANCES.
4.2.1 TERMINATION WITHOUT SEVERANCE BENEFITS. In the event the
Executive's employment with the Company is terminated prior to the
expiration of the Employment Term by reason of (i) the Executive's
resignation without Good Reason, (ii) the Executive's death or (iii)
the Executive's discharge by the Company for Cause prior to the
occurrence of a Change in Control, this Agreement shall terminate
including, without limitation, the Company's obligations to provide any
compensation, benefits or severance to the Executive under Article 3 of
this Agreement or otherwise, other than the Standard Termination
Entitlements (as defined in section 4.3.1).
10
4.2.2 DISABILITY. The Company may terminate the Executive's
employment upon the Executive's Disability. In such event, in addition
to the Standard Termination Entitlements (as defined in section 4.3.1),
the Company shall continue to pay the Executive his Base Salary in
accordance with the Company's normal payroll practices, at the annual
rate in effect for him immediately prior to the termination of his
employment, during a period ending on the earliest of: (a) the date on
which long-term disability insurance benefits are first payable to him
under any long-term disability insurance plan covering employees of the
Company; and (b) the date of his death. A termination of employment due
to Disability under this Section 4.2.2 shall be effected by notice of
termination given to the Executive by the Company and shall take effect
on the later of the effective date of termination specified in such
notice or the date on which the notice of termination is deemed given
to the Executive.
4.2.3 TERMINATION WITH SEVERANCE BENEFITS. In the event that
the Executive's employment with the Company is terminated by the
Executive prior to the expiration of the Employment Term for Good
Reason or by the Company prior to the expiration of the Employment Term
other than for Cause or Disability, the Company shall pay the Standard
Termination Entitlements (as defined in section 4.3.1) and the
Severance Benefits (as defined in section 4.3.2); provided, however,
that any payment required by this section 4.2.3 is expressly
conditioned upon:
4.2.3.1 The Executive's continued material compliance
with the terms of this Agreement, including,
without limitation, Article 5; and
4.2.3.2 The Executive's resignation from any and all
positions which he holds as an officer, director
or committee member with respect to the Company
or any Affiliate thereof.
4.3 Standard Termination Entitlements; Severance Benefits.
4.3.1 STANDARD TERMINATION ENTITLEMENTS. For all purposes of
this Agreement, the Executive's "Standard Termination Entitlements"
shall mean and include:
4.3.1.1 the Executive's earned but unpaid compensation
(including, without limitation, Base Salary, and
all other items which constitute wages under
applicable law, interpreting the term "wages" in
the broadest possible sense) as of the date of
his termination of employment. This payment
shall be made at the time and in the manner
prescribed by law applicable to the payment of
wages including, specifically, payment for
accrued, but unused vacation days;
4.3.1.2 reimbursement for reasonable business expenses
and authorized travel expenses incurred but
still outstanding; and
4.3.1.3 the benefits, if any, due to the Executive, and
the Executive's estate, surviving dependents or
his designated beneficiaries under the employee
benefit plans and programs and
11
compensation plans and programs maintained for the benefit
of, or covering, the officers, executives and employees of
the Company, including, but not limited to, all plans or
arrangements listed on SCHEDULE A, the Equity Incentive
Plan and the Management Incentive Plan. The time and
manner of payment or other delivery of these benefits and
the recipients of such benefits shall be determined
according to the terms and conditions of the applicable
plans and programs.
4.3.2 SEVERANCE BENEFITS. For all purposes of this Agreement,
the Executive's "Severance Benefits" shall mean the benefits set forth
in Exhibit H. If the Summit Global Logistics, Inc. Severance Benefit
Plan, as set forth in Exhibit H, is terminated for any reason
whatsover, whether by the Company or any other Person, the Executive
shall be paid severance benefits identical to those set forth in
Appendix A of such Plan, notwithstanding the termination of such Plan.
ARTICLE 5
RESTRICTIVE COVENANTS
5.1 PROPRIETARY INFORMATION.
5.1.1 DISCLOSURE DURING THE EMPLOYMENT TERM. Subject to
Section 5.5 hereof, the Executive shall promptly disclose to the
Company in such form and manner as the Company may reasonably require
(a) all operations, systems, services, methods, developments,
inventions, improvements and other information or data pertaining to
the business or activities of the Company and its Affiliates as are
conceived, originated, discovered or developed by the Executive during
the Employment Term and (b) such information and data pertaining to the
business, operations, personnel, activities, financial affairs, and
other information relating to the Company and its Affiliates and their
respective customers, suppliers, employees and other persons having
business dealings with the Company and its Affiliates as may be
reasonably required for the Company to operate its business. It is
understood that such information is proprietary in nature and shall (as
between the Company and Executive) be for the exclusive use and benefit
of the Company and shall be and remain the property of the Company both
during the Employment Term and thereafter.
5.1.2 DISCLOSURE AFTER EMPLOYMENT. In the event that the
Executive leaves the employ of the Company for any reason, including,
without limitation, the expiration of the Employment Term, the
Executive shall deliver to the Company any and all devices (including
any lap top, personal hand-held devices or mobile telephone), records,
data, notes, reports, proposals, lists, correspondence, specifications,
drawings, blueprints, sketches, materials, equipment, other documents
or property belonging to the Company or any Affiliate thereof or any of
their respective successors or assigns.
5.2 NON-COMPETITION. During the Employment Term and for twelve months
after the date employment with the Company has ended, the Executive agrees, and
shall cause each
12
Person Controlled by him to agree, that he shall not, directly or 0indirectly,
or through any Person Controlled by the Executive: (a) engage in any logistic
activities competitive with the business of the Company and its Affiliates for
his or their own account or for the account of any other Person, or (b) become
interested in any Person engaged in logistic activities competitive with the
business of the Company and its Affiliates as a partner, shareholder, member,
principal, agent, employee, trustee, consultant or in any other relationship or
capacity.
5.3 NON-SOLICITATION. During the Employment Term and for a period of
twelve months after the date employment with the Company has ended, the
Executive will not, directly or indirectly, use proprietary knowledge or
information relating to the Company or its Affiliates obtained during the course
of the Executive's employment with the Company for his own benefit or the
benefit of any third party with the intention to, or which a reasonable person
would construe to, (a) interfere with or disrupt any present relationship,
contractual or otherwise, between the Company or its Affiliates and any
customer, supplier, employee, consultant or other person having business
dealings with the Company or its Affiliates, or (b) employ or solicit the
employment or engagement by others of any employee or consultant of the Company
or its Affiliates who was such an employee or consultant at the time of
termination of the Executive's employment hereunder. Upon leaving the employment
of the Company, the Executive shall notify his new employer of his obligations
under this Agreement and grants consent to notification by the Company to the
Executive's new employer concerning Executive's rights and obligations under
this Agreement.
5.4 NON-DISCLOSURE. Except with the prior written consent of the
Company in each instance or as may be reasonably necessary to perform the
Executive's services hereunder, the Executive shall not disclose, use, publish,
or in any other manner reveal, directly or indirectly, at any time during or
after the Employment Term, any Confidential Information relating to the Company
or any Affiliate thereof acquired by him prior to, during the course of, or
incident to, his employment hereunder; provided, however, that necessary or
appropriate disclosures may be made to the Executive's legal counsel.
5.5 OWNERSHIP OF INTELLECTUAL PROPERTY. Subject to applicable law, the
Executive acknowledges and agrees that all work performed, and all ideas,
concepts, materials, products, software; documentation, designs, architectures,
specifications, flow charts, test data, programmer's notes, deliverables,
improvements, discoveries, methods, processes, or inventions, trade secrets or
other subject matter related to the Company's business (collectively,
"Materials") conceived, developed or prepared by the Executive alone, or with
others, during the period of Executive's employment by the Company in written,
oral, electronic, photographic, optical or any other form are the property of
the Company and its successors or assigns, and all rights, title and interest
therein shall vest in the Company and its successors or assigns, and all
Materials shall be deemed to be works made for hire and made in the course of
the Executive's employment by the Company. To the extent that title to any
Materials has not or may not, by operation of law, vest in the Company and its
successors or assigns, or such Materials may not be considered works made for
hire. Notwithstanding the foregoing, the parties acknowledge and understand that
Executive may previously have developed and may continue to develop certain
ideas, concepts and designs which are unrelated to the business of the Company
and may continue to do so provided that such activities do not interfere with
his duties under this Agreement.
13
5.6 REASONABLE LIMITATIONS. Executive acknowledges that given the
nature of the Company's business, the covenants contained in this Article 5
contain reasonable limitations as to time, geographical area and scope of
activity to be restrained, and do not impose a greater restraint than is
necessary to protect and preserve the Company's business and to protect the
Company's legitimate business interests. If, however, this Article 5 is
determined by any arbitrator to be unenforceable by reason of its extending for
too long a period of time or over too large a geographic area or by reason of
its being too extensive in any other respect, or for any other reason, it will
be interpreted to extend only over the longest period of time for which it may
be enforceable and/or over the largest geographical area as to which it may be
enforceable and/or to the maximum extent in all other aspects as to which it may
be enforceable, all as determined by such court or arbitrator in such action.
5.7 SURVIVAL OF PROTECTIVE COVENANTS. Each covenant on the part of
Executive contained in this Article 5 shall be construed as an agreement
independent of any other provision of this Agreement, unless otherwise indicated
herein, and shall survive the termination of Executive's employment under this
Agreement.
ARTICLE 6
DISPUTE RESOLUTION
6.1 ARBITRATION OF DISPUTES. Both parties agree that all controversies
or claims that may arise between the Executive and the Company in connection
with this Agreement shall be settled by arbitration. The parties further agree
that the arbitration shall be held in the State of New Jersey, and administered
by the American Arbitration Association under its Commercial Arbitration Rules,
applying New Jersey law.
6.1.1 QUALIFICATIONS OF ARBITRATOR. The arbitration shall be
submitted to a single arbitrator chosen in the manner provided under
the rules of the American Arbitration Association. The arbitrator shall
be disinterested and shall not have any significant business
relationship with either party, and shall not have served as an
arbitrator for any disputes involving the Company or any of its
Affiliates more than twice in the thirty-six (36) month period
immediately preceding his or her date of appointment. The arbitrator
shall be a person who is experienced and knowledgeable in employment
and executive compensation law and shall be an attorney duly licensed
to practice law in one or more states.
6.1.2 POWERS OF ARBITRATOR. The arbitrator shall not have the
authority to grant any remedy which contravenes or changes any term of
this Agreement and shall not have the authority to award punitive or
exemplary or damages under any circumstances. The parties shall equally
share the expense of the arbitrator selected and of any stenographer
present at the arbitration. The remaining costs of the arbitrator
proceedings shall be allocated by the arbitrator, except that the
arbitrator shall not have the power to award attorney's fees.
6.1.3 EFFECT OF ARBITRATOR'S DECISION. The arbitrator shall
render its decision within thirty (30) days after termination of the
arbitration proceeding, which decision
14
shall be in writing, stating the reasons therefor and including a brief
description of each element of any damages awarded. The decision of the
arbitrator shall be final and binding. Judgment on the award rendered
by the arbitrator may be entered in any court having jurisdiction
thereof.
6.2 SERVICE OF PROCESS. The parties agree that service of process may
be made on it by personal service of a copy of the summons and complaint or
other legal process in any such suit, action or proceeding, or by registered or
certified mail (postage prepaid) to its address specified in Section 7.1 (or
applicable forwarding address), or by any other method of service provided for
under the applicable laws in effect in the applicable jurisdiction.
ARTICLE 7
GENERAL PROVISIONS
7.1 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, providing proof of delivery. All
communications hereunder shall be delivered to the respective parties at the
following addresses:
If to the Executive: Peter Stone
2235 Beach Street
San Francisco, CA 94123
If to the Company: Summit Global Logistics, Inc.
547 Boulevard
Kenilworth, NJ 07033
with a copy to: David D. Gammell, Esq.
Brown Rudnick Berlack Israels LLP
One Financial Center
Boston, MA 02111
or to such other address as the party to whom notice is given may have
previously furnished to the other parties hereto in writing in the manner set
forth above.
7.2 ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement between the Executive and the Company with respect to the Company's
employment of the Executive and supersedes any and all prior agreements and
understandings, written or oral, with respect thereto.
7.3 AMENDMENTS AND WAIVERS. Any term of this Agreement or any Schedule,
Exhibit or attachment hereto may be amended only by (a) an instrument in writing
and signed by
15
the party against whom such amendment is sought to be enforced, and (b) in the
case of the Company, such amendment also must be duly authorized by an
appropriate resolution of the Company. In addition, any term of this Agreement
or any Schedule, Exhibit or attachment hereto may be waived by the party against
whom the obligation runs to by an instrument in writing signed by such party and
delivered to the Company as reasonable time prior to the effective date of the
waiver.
7.4 SUCCESSORS AND ASSIGNS. The Company shall have the right to assign
this Agreement, subject to the Executive's consent which shall not be
unreasonably withheld and subject to. This Agreement shall inure to the benefit
of, and be binding upon (a) the parties hereto, (b) the heirs, administrators,
executors and personal representatives of the Executive and (c) the successors
and assigns of the Company as provided herein.
7.5 GOVERNING LAW. This Agreement, including the validity hereof and
the rights and obligations of the parties hereunder, and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the laws of the State of New Jersey without
giving effect to any conflicts of law provisions or rule, that would cause the
application of the laws of any other jurisdiction.
7.6 SEVERABILITY. If any provisions of this Agreement as applied to any
part or to any circumstance shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, the application of such provision in any other circumstances or the
validity or enforceability of this Agreement.
7.7 NO CONFLICTS. The Executive represents to the Company that the
execution, delivery and performance by the Executive of this Agreement does not
and will not conflict with or result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default under any contract,
agreement or understanding, whether oral or written, to which the Executive is
or was a party or of which the Executive is or should be aware.
7.8 SURVIVAL. The rights and obligations of the Company and Executive
pursuant to Articles 4, 5 and 6 shall survive the termination of the Executive's
employment with the Company and the expiration of the Employment Term.
7.9 CAPTIONS. The headings and captions used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting
this Agreement.
7.10 COUNTERPARTS. This Agreement be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EXECUTIVE
----------------------------------
Peter Stone
SUMMIT GLOBAL LOGISTICS, INC.
By:_______________________________
Name
Title:
17
SCHEDULE A
EMPLOYEE BENEFIT SUMMARY TERM SHEET
As of January 1, 2007, the Executive shall be eligible to participate
in all of the retirement and welfare benefit plans sponsored, maintained or
contributed to by FMI International, LLC and/or its affiliates or subsidiaries,
which plans shall be amended accordingly. Without in any way limiting the
generality of the foregoing, the Executive shall be entitled to participate in
the following plans:
o FMI International, LLC 401(k) Profit Sharing Plan;
o FMI International West Health Plan;
o FMI International, LLC PPO Health Insurance Plan;
o FMI International, LLC Dental Plan; and the
o FMI International, LLC Life Insurance Plan.
18
EXHIBIT C
ANNUAL BONUS GRANT AGREEMENT
THIS ANNUAL BONUS GRANT AGREEMENT ("Agreement") is made and entered
into this __ day of __________, 2007, (the "Effective Date") by and between
Peter Stone (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the 8th day of November, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make annual bonus payments to the Executive for each Year of Service, as defined
in the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration of
the premises and the mutual promises set forth in the Employment Agreement, the
receipt and sufficiency of which are hereby acknowledged, the Executive and the
Company agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement,
shall have the following meanings, unless the context clearly requires otherwise
(such definitions to be equally applicable to both the singular and plural of
the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto
in the Management Incentive Plan.
1.2 "BONUS" means the annual incentive bonus to be paid
hereunder with respect to a given Fiscal Year.
1.3 "EBITDA" means the Company's earnings before income
tax, plus depreciation and amortization, as computed in accordance with
United States GAAP and in a manner consistent with the methods used in
the Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or restructuring
or impairment charges, as determined by the Company's independent
public accountants in accordance with GAAP or (ii) changes in
accounting, unless, in each case, the Committee, as defined in the
Management Incentive Plan, decides otherwise within the Determination
Period, as defined in the Management Incentive Plan.
1.4 "EBITDA TARGET" means the Company's EBITDA for Fiscal
Year 2007, 2008, 2009 or 2010, as applicable.
1.5 "FISCAL YEAR" means the calendar year.
1.6 "GAAP" means generally accepted accounting
principles.
1.7 "PERFORMANCE PERIOD" shall have the meaning ascribed
thereto in the Management Incentive Plan.
2. EBITDA TARGETS.
2.1 The EBITDA Target for Fiscal Year 2007 shall be
$__________.
2.2 The EBITDA Target for Fiscal Year 2008 shall be
$__________.
2.3 The EBITDA Target for Fiscal Year 2009 shall be
$__________.
2.4 The EBITDA Target for Fiscal Year 2010 shall be
$__________.
3. ANNUAL INCENTIVE BONUSES.
3.1 The Bonus for each of Fiscal Year 2007, Fiscal Year
2008, Fiscal Year 2009 and Fiscal Year 2010 shall be as follows:
3.1.1 If at least 80% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive
shall receive a Bonus for such Fiscal Year equal to
35% of his Base Salary for the Performance Period
beginning with or within such Fiscal Year.
3.1.1.2 If at least 90% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive
shall receive a Bonus for such Fiscal Year equal to
52.50% of his Base Salary for the Performance Period
beginning with or within such Fiscal Year.
3.1.1.3 If at least 100% of the EBITDA Target for the
applicable Fiscal Year is achieved, the Executive
shall receive a Bonus for such Fiscal Year equal to
70% of his Base Salary for the Performance Period
beginning with or within such Fiscal Year.
3.1.1.4 For each percentage point, up to 50
percentage points by which the EBITDA Target for the
applicable Fiscal Year is exceeded, the Executive
shall receive an additional Bonus equal to 2.10% of
his Base Salary.
3.1.1.5 For each percentage point over 50 percentage
points, up to 50 additional points, by which the
EBITDA Target for the applicable Fiscal Year is
exceeded, the Executive shall receive an additional
Bonus equal to 2.80% of his Base Salary.
3.2 Except as otherwise provided herein, bonus amounts
shall be payable to the Executive in accordance with the terms and
conditions of the Management Incentive Plan.
4. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and
the Company shall comply with all of the terms thereof applicable to annual
incentive awards. In the event of any conflict between the terms of this
Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
5. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EXECUTIVE
_________________________________
Peter Stone
SUMMIT GLOBAL LOGISTICS, INC.
By:______________________________
Name
Title:
EXHIBIT D
MULTI-YEAR BONUS GRANT AGREEMENT
THIS MULTI-YEAR BONUS GRANT AGREEMENT ("Agreement") is made and entered into
this __ day of __________, 2007, (the "Effective Date") by and between Peter
Stone (the "Executive") and Summit Global Logistics, Inc., a Delaware
corporation (the "Company").
BACKGROUND
WHEREAS, Section 3.2.2 of that certain Employment Agreement made and
entered into the 8th day of November, 2006 by and between the Executive and the
Company (the "Employment Agreement") requires the Company, pursuant to the terms
of the Management Incentive Plan, as defined in the Employment Agreement, to
make a multi-year bonus payment to the Executive if certain performance targets
of the Company are satisfied as of the end of the Employment Term, as defined in
the Employment Agreement;
NOW, THEREFORE, intending to be legally bound, and in consideration of
the premises and the mutual promises set forth in the Employment Agreement, the
receipt and sufficiency of which are hereby acknowledged, the Executive and the
Company agree as follows:
1. DEFINITIONS. The following terms, when used in this Agreement,
shall have the following meanings, unless the context clearly requires otherwise
(such definitions to be equally applicable to both the singular and plural of
the defined terms):
1.1 "BASE SALARY" shall have the meaning ascribed thereto
in the Management Incentive Plan.
1.2 "BONUS" means the multi-year incentive bonus to be
paid hereunder with respect to the Employment Term.
1.3 "DELTA ONE" means the excess, if any, of EBITDA for
Fiscal Year 2009 over the EBITDA Target for Fiscal Year 2007.
1.4 "DELTA TWO" means the excess, if any, of EBITDA for
Fiscal Year 2010 over the EBITDA Target for Fiscal Year 2008.
1.5 "EBITDA" means the Company's earnings before income
tax, plus depreciation and amortization, as computed in accordance with
United States GAAP and in a manner consistent with the methods used in
the Company's audited financial statements, without regard to (i)
extraordinary or other nonrecurring or unusual items, or restructuring
or impairment charges, as determined by the Company's independent
public accountants in accordance with GAAP or (ii) changes in
accounting, unless, in each case, the Committee, as defined in the
Management Incentive Plan, decides otherwise within the Determination
Period, as defined in the Management Incentive Plan.
1.6 "EBITDA TARGET" means
1.6.1 For Fiscal Year 2007, $__________.
1.6.2 For Fiscal Year 2008, $__________.
1.7 "FIRST PERFORMANCE PERIOD" means the
three-consecutive Fiscal Year period beginning on the first day of
Fiscal Year 2007 and ending on the last day of Fiscal Year 2009.
1.8 "FISCAL YEAR" means the calendar year.
1.9 "FUNDAMENTAL TRANSACTION" has the meaning as defined
in the Management Incentive Plan.
1.10 "GAAP" means generally accepted accounting
principles.
1.11 "PERFORMANCE PERIOD" means the First Performance
Period or the Second Performance Period, as applicable.
1.12 "SECOND PERFORMANCE PERIOD" means the
three-consecutive Fiscal Year period beginning on the first day of
Fiscal Year 2008 and ending on the last day of Fiscal Year 2010.
2. MULTI-YEAR BONUS.
2.1 FIRST PERFORMANCE PERIOD. If, with respect to the
First Performance Period, Delta One, expressed as a percentage of the
EBITDA Target for Fiscal Year 2007, equals or exceeds 33%, the
Executive shall be paid a Bonus in Fiscal Year 2010 equal to one and
one half (1.5) times his Base Salary for Fiscal Year 2007.
2.2 SECOND PERFORMANCE PERIOD. If, with respect to the
Second Performance Period, Delta Two, expressed as a percentage of the
EBITDA Target for Fiscal Year 2008, equals or exceeds 33%, the
Executive shall be paid a Bonus in Fiscal Year 2011 equal to one and
one half (1.5) times his Base Salary for Fiscal Year 2008.
3. PAYMENT UPON OCCURRENCE OF FUNDAMENTAL TRANSACTION. If a
Fundamental Transaction occurs at any time both (i) prior to the payment of any
amount pursuant to Section 2 hereof and (ii) on or prior to December 31, 2010,
then, in lieu of making any payment to the Executive pursuant to Section 2
hereof, the Company shall pay to the Executive, promptly following the
occurrence of the Fundamental Transaction, an amount in immediately available
funds, equal to one and one half (1.5) times his Base Salary. For this purpose,
Base Salary shall mean Base Salary for Fiscal Year 2007, if the Fundamental
Transaction occurs on or prior to the last day of Fiscal Year 2009, and Base
Salary for 2008, if the Fundamental Transaction occurs during Fiscal Year 2010.
Payment shall be made in the form of a single lump sum from the sales proceeds
received by the Company pursuant to the terms of the Fundamental Transaction.
4. PAYMENT OF BONUS AMOUNTS. Except as otherwise provided herein,
bonus amounts shall be payable to the Executive in accordance with the terms and
conditions of the Management Incentive Plan.
5. MANAGEMENT INCENTIVE PLAN. The terms and conditions of the
Management Incentive Plan are hereby incorporated herein by reference, and the
Executive and the Company shall comply with all of the terms thereof applicable
to annual incentive awards. In the event of any conflict between the terms of
this Agreement and the terms of the Management Incentive Plan, the terms of the
Management Incentive Plan shall govern.
6. AMENDMENT AND TERMINATION. The Company may not amend or
terminate this Agreement without the written consent of the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EXECUTIVE
__________________________________
Peter Stone
SUMMIT GLOBAL LOGISTICS, INC.
By:_______________________________
Name
Title:
EXHIBIT E
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
Unless otherwise defined herein, the terms defined in the 2006 Equity
Incentive Plan (the "Plan") shall have the same defined meanings in this Notice
of Stock Option Award and the attached Stock Option Award Terms, which are
incorporated herein by reference (together, the "AWARD AGREEMENT"). Terms not
defined herein shall have their respective meanings under the Plan.
PARTICIPANT (the "PARTICIPANT")
Peter Stone
GRANT
The undersigned Participant has been granted an Option to purchase Common Stock
of Summit Global Logistics, Inc. (the "COMPANY"), subject to the terms and
conditions of the Plan and this Award Agreement, as follows:
DATE OF GRANT November 8, 2006 TOTAL NUMBER OF 40,000
SHARES GRANTED
VESTING November 8, 2006 TYPE OF OPTION |X| Incentive Stock
COMMENCEMENT DATE Option
EXERCISE PRICE PER $10.00 Non-Statutory Stock
SHARE Option
TOTAL EXERCISE PRICE $400,000 TERM/EXPIRATION DATE 5 years from Date of Grant
VESTING SCHEDULE:
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
ANNIVERSARY OF GRANT DATE % OF GRANT (OR # OF SHARES) VESTED
One-Year Anniversary of Grant Date 50%
Two-Year Anniversary of Grant Date 100%
The Option shall vest in full upon the earliest to occur of a Change in Control,
the Participant's death, the Participant's Disability, the Participant's
Retirement, the Company's (or any parent's or subsidiary's thereof) termination
of the Participant's employment without Cause or the Participant's termination
of his employment with the Company (or any parent or subsidiary thereof) for
Good Reason.
Upon the execution by the Company of a definitive acquisition, merger or similar
agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing, a Change in
Control would occur, the Committee, in its sole discretion, and notwithstanding
any provision of the Transaction Agreement or the Plan, including, but not
limited to, Section 13f.i. thereof, to the contrary, shall (i) require the
acquiring or surviving entity (if not the Company) to assume this Option in
accordance with its terms or (ii) pay the Participant, for each Share not
previously exercised, the greater of (A) the transaction consideration per Share
or (B) the Exercise Price per Share. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of this Option shall cease, and unvested Option Shares shall be
forfeited, upon the Company's (or any parent's or subsidiary's thereof)
termination of the Participant's employment for Cause or the Participant's
termination of his employment with the Company (or any parent or subsidiary
thereof) other than for Good Reason.
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
_________________________________ _________________________________
Signature By
_________________________________ _________________________________
Peter Stone Title
2235 Beach Street
San Francisco, CA 94123
2
SUMMIT GLOBAL LOGISTICS, INC.
STOCK OPTION
AWARD TERMS
1. GRANT OF OPTION. The Committee hereby grants to the Participant named
in the Notice of Stock Option Grant an option (the "OPTION") to
purchase the number of Shares set forth in the Notice of Stock Option
Award, at the exercise price per Share set forth in the Notice of Stock
Option Grant (the "EXERCISE PRICE"), and subject to the terms and
conditions of the 2006 Equity Incentive Plan (the "PLAN"), which is
incorporated herein by reference. In the event of a conflict between
the terms and conditions of the Plan and this Stock Option Award
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Stock Option Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive
Stock Option as defined in Section 422 of the Code. Nevertheless, to
the extent that it exceeds the $100,000 limitation rule of Code Section
422(d), this Option shall be treated as a Nonstatutory Stock Option
("NSO").
2. EXERCISE OF OPTION.
i RIGHT TO EXERCISE. This Option may be exercised during its
term in accordance with the Vesting Schedule set out in the
Notice of Stock Option Award and with the applicable
provisions of the Plan and this Award Agreement.
ii METHOD OF EXERCISE. This Option shall be exercisable by
delivery of an exercise notice in the form attached as EXHIBIT
A (the "EXERCISE NOTICE") which shall state the election to
exercise the Option, the number of Shares with respect to
which the Option is being exercised (the "EXERCISED SHARES")
and the Participant's agreement to be subject to such other
representations and agreements as may be required by the
Company. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice
accompanied by payment of the aggregate Exercise Price in
accordance with the cashless exercise provisions of Section 6g
of the Plan.
3. TERMINATION. This Option shall be exercisable for three months after
the Participant ceases to be an Employee; provided, however, if the
relationship is terminated by the Company for Cause, or voluntarily by
the Participant other than for Good Reason, the Option shall terminate
immediately. Upon the Participant's death or Disability, this Option
may be exercised for twelve (12) months after the termination of
employment. In no event may Participant exercise this Option after the
Term/Expiration Date as provided above.
4. RESTRICTIONS ON EXERCISE. This Option may not be exercised until such
time as the Plan has been approved by the stockholders of the Company,
or if the method of payment of consideration for such shares would
constitute a violation of any applicable law.
5. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Participant
only by Participant. The terms of the Plan and this Award Agreement
shall be binding upon the executors, Committees, heirs, successors and
assigns of the Participant.
6. TERM OF OPTION. This Option may be exercised only within the Term set
out in the Notice of Stock Option Award which Term may not exceed ten
(10) years from the Date of Grant, and may be exercised during such
Term only in accordance with the Plan and the terms of this Award
Agreement.
7. UNITED STATES TAX CONSEQUENCES. Set forth below is a brief summary as
of the date of this Option of some of the United States federal tax
consequences of exercise of this Option and disposition of the Shares.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE PARTICIPANT SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
i EXERCISE OF ISO. If this Option qualifies as an Incentive
Stock Option, there will be no regular federal income tax
liability upon the exercise of the Option, although the
excess, if any, of the Fair Market Value of the Shares on the
date of exercise over the Exercise Price will be treated as an
adjustment to the alternative minimum tax for federal tax
purposes and may subject the Participant to the alternative
minimum tax in the year of exercise.
ii EXERCISE OF NONSTATUTORY STOCK OPTION. There may be a regular
federal income tax liability upon the exercise of a
Nonstatutory Stock Option. The Participant will be treated as
having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the
Exercise Price. If the Participant is an Employee or a former
Employee, the Company will be required to withhold from the
Participant's compensation or collect from the Participant and
pay to the applicable taxing authorities an amount in cash
equal to a percentage of this compensation income at the time
of exercise, and may refuse to honor the exercise if such
withholding amounts are not delivered at the time of exercise.
iii NOTICE OF DISQUALIFYING DISPOSITION OF INCENTIVE STOCK OPTION
SHARES. If this Option is an Incentive Stock Option, and if
the Participant sells or otherwise disposes of any of the
Shares acquired pursuant to the Incentive Stock Option,
including through a cashless exercise, on or before the later
of (1) the date two
2
years after the Date of Grant, or (2) the date one year after
the date of exercise, the Participant shall immediately notify
the Company in writing of such disposition. The Participant
agrees that the Participant may be subject to income tax
withholding by the Company on the compensation income
recognized by the Participant.
iv WITHHOLDING. Pursuant to applicable federal, state, local or
foreign laws, the Company may be required to collect income or
other taxes on the grant of this Option, the exercise of this
Option, the lapse of a restriction placed on this Option, or
at other times. The Company may require, at such time as it
considers appropriate, that the Participant pay the Company
the amount of any taxes which the Company may determine is
required to be withheld or collected, and the Participant
shall comply with the requirement or demand of the Company. In
its discretion, the Company may withhold Shares to be received
upon exercise of this Option or offset against any amount owed
by the Company to the Participant, including compensation
amounts, if in its sole discretion it deems this to be an
appropriate method for withholding or collecting taxes.
Currently, neither federal income nor federal employment tax
withholding is required with respect to an Incentive Stock
Option.
8. ENTIRE AGREEMENT; GOVERNING LAW. The Plan is incorporated herein by
reference. The Plan and this Award Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of
the Company and Participant with respect to the subject matter hereof,
and may not be modified (except as provided herein and in the Plan)
adversely to the Participant's interest except by means of a writing
signed by the Company and Participant. This agreement is governed by
the internal substantive laws but not the choice of law rules of the
State of New Jersey.
9. NO GUARANTEE OF CONTINUED SERVICE. PARTICIPANT ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING IN THE EMPLOYMENT AT THE WILL OF THE COMPANY
(NOT THROUGH THE ACT OF BEING ENGAGED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). PARTICIPANT FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND
THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR
IMPLIED PROMISE OF CONTINUED ENGAGEMENT FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH
PARTICIPANT'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE THE
RELATIONSHIP AT ANY TIME.
Participant acknowledges receipt of a copy of the Plan and represents that he or
she is familiar with the terms and provisions thereof, and hereby accepts this
Option subject to all of the terms and provisions thereof. Participant has
reviewed the Plan and this Option in
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their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option.
Participant hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising under
the Plan or this Option. Participant further agrees to notify the Company upon
any change in the residence address indicated below.
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EXHIBIT A
2006 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Company Name
Address
City, State, Zip Code
Attention: President
1. EXERCISE OF OPTION. Effective as of today, ______________,
200__, the undersigned ("PARTICIPANT") hereby elects to
exercise Participant's option to purchase _________ shares of
the Common Stock (the "SHARES") of_________ (the "COMPANY")
under and pursuant to the 2006 Equity Incentive Plan (the
"PLAN") and the Stock Option Award Agreement dated
____________, 200__ (the "AWARD AGREEMENT").
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the
Company the full purchase price of the Shares, as set forth in
the Award Agreement, and pursuant to the cashless exercise
provisions of Section 6g of the Plan.
3. REPRESENTATIONS OF PARTICIPANT. Participant acknowledges that
Participant has received, read and understood the Plan and the
Award Agreement and agrees to abide by and be bound by their
terms and conditions.
4. RIGHTS AS STOCKHOLDER. The Participant shall not have any
rights of a stockholder upon exercise of the Option, which
shall be settled solely in cash.
5. TAX CONSULTATION. Participant understands that Participant may
suffer adverse tax consequences as a result of Participant's
purchase or disposition of the Shares. Participant represents
that Participant has consulted with any tax consultants
Participant deems advisable in connection with the purchase or
disposition of the Shares and that Participant is not relying
on the Company for any tax advice.
6. SUCCESSORS AND ASSIGNS. The Company may assign any of its
rights under this Agreement to single or multiple assignees,
and this Agreement shall inure to the benefit of the
successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement
shall be binding upon Participant and his or her heirs,
executors, Committees, successors and assigns.
7. INTERPRETATION. Any dispute regarding the interpretation of
this Agreement shall be submitted by Participant or by the
Company forthwith to the Committee which shall review such
dispute at its next regular meeting. The resolution of such a
dispute by the Committee shall be final and binding on all
parties.
8. GOVERNING LAW. This Exercise Notice is governed by the
internal substantive laws but not the choice of law rules of
the State of New Jersey.
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9. ENTIRE AGREEMENT. The Plan and Award Agreement are
incorporated herein by reference. This Agreement, the Plan,
the Award Agreement (including all exhibits) and the
Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter
hereof and supersede in their entirety all prior undertakings
and agreements of the Company and Participant with respect to
the subject matter hereof, and may not be modified adversely
to the Participant's interest except by means of a writing
signed by the Company and Participant.
6
Submitted by: Accepted by:
PARTICIPANT SUMMIT GLOBAL LOGISTICS, INC.
_______________________________ _______________________________
Signature By
_______________________________ _______________________________
Print Name Title
Address: Address:
- ------- -------
Type in address
_______________________________
City, State, Zip code
_______________________________
_______________________________
Date Received
7
EXHIBIT F
SUMMIT GLOBAL LOGISTICS, INC.
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
Name of SAR Holder: Peter Stone
Address of SAR Holder: 2235 Beach Street, San Francisco, CA 94123
Number of SARs: 30,000, each representing a share of Common Stock
Initial SAR Value: $300,000
Grant Date: November 8, 2006
Pursuant to and in accordance with the Summit Global Logistics, Inc.
2006 Equity Incentive Plan, as amended from time to time (the "Plan"), this
Stock Appreciation Rights Agreement (the "SAR Agreement") evidences the issuance
to the person named above (the "SAR Holder") by Summit Global Logistics, Inc.
(the "Company"), effective as of the date set forth above (the "Grant Date"), of
a number of stock appreciation rights set forth above (the "SARs"). The SARs
will be valued in accordance with, and are subject to the terms, definitions and
provisions of, the Plan, which are incorporated herein by reference. Capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Plan.
Subject to the terms and conditions of the Plan, and subject to the
determination of the Compensation Committee in its sole discretion to accelerate
the vesting schedule hereunder, the SARs issued hereunder shall vest and become
vested SARs on the respective dates indicated below:
Incremental (Aggregate Number)
of SARs to be Vested SARs Vesting Date/Percent
15,000 (15,000) FIRST ANNIVERSARY OF
GRANT DATE -- 50%
15,000 (30,000) SECOND ANNIVERSARY OF
GRANT DATE -- 100%
All SARs granted hereunder shall be vested in full upon the earliest to
occur of a Change in Control or the death, Disability, Retirement or voluntary
termination for Good Reason of the SAR Holder. Vested SARs may be exercised at
any time within five (5) years following the Grant Date.
Upon the execution by the Company of a definitive acquisition, merger
or similar agreement ("TRANSACTION AGREEMENT") pursuant to which, upon closing,
a Change in Control
8
would occur, the Committee, in its sole discretion, and notwithstanding any
provision of the Transaction Agreement or the Plan, including, but not limited
to, Section 13.f.i. thereof, to the contrary, shall (i) require the acquiring or
surviving entity (if not the Company) to assume the SARs in accordance with
their terms or (ii) pay the Participant, for each share of Common Stock
underlying each SAR not previously exercised, the greater of (A) the transaction
consideration per share of Common Stock underlying each SAR or (B) the Initial
SAR Value per share of Common Stock. Such assumption or payment shall take
effect or be made, as applicable, as of the closing date of the transaction(s)
contemplated by the Transaction Agreement. In the event that the closing does
not occur, this paragraph shall be null and void.
Vesting of the SARs shall cease, and unvested SARs shall be terminated,
upon termination of employment of the SAR Holder with the Business Entity that
employs him or her for Cause or other than for Good Reason.
The SAR Holder shall have no rights as a stockholder of the Company by
virtue of having been issued the SARs and shall have only the rights
specifically provided in the Plan.
By executing this SAR Agreement, the SAR Holder acknowledges receipt of
the Plan (a copy of which is attached hereto) and represents that he or she has
read and the terms and provisions of the Plan and accepts the issuance of the
SARs subject to all of such terms and provisions.
9
SUMMIT GLOBAL LOGISTICS, INC.
By:______________________________
Name:
Title:________________________
ACKNOWLEDGED AND AGREED BY SAR
HOLDER:
Name:
Signature:____________________
10
2006 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHT
EXERCISE NOTICE
Pursuant to the provisions of the Summit Global Logistics,
Inc. 2006 Equity Incentive Plan (the "Plan") and that certain Stock Appreciation
Rights Agreement by and between Summit Global Logistics, Inc. (the "Company")
and ____________ (the "Grantee") as of _______________ __, 20__, I, the Grantee,
hereby exercise the Stock Appreciation Rights granted under the terms of the
Plan to the extent of __________ shares of the Common Stock of the Company (the
"SARs"). If applicable, I deliver to the Company herewith payment for tax
withholding with respect to the exercise of the SARs in the amount of
$__________.
TO BE COMPLETED BY THE GRANTEE
A. Number of SARs: ____________
B. Initial SAR Value $___________
C. Total Initial SAR Value of
Shares (A x B): $___________
TO BE COMPLETED BY THE COMPANY
D. Value per share of Common Stock, as of
__________, times the
number of shares being
exercised (A): $___________
E. TOTAL PAYMENT
DUE (D - C): $___________
Date: ____________________ ________________________________
Grantee
________________________________
Address
________________________________
Social Security Number
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APPENDIX A
(HIGH LEVEL EXECUTIVES)
Twenty-four (24) Months' Base Salary. Payments shall be made on a monthly basis.
In addition, the Company shall pay the individual's premiums for COBRA
continuation coverage (individual, individual plus one or family coverage, as
applicable) for a period of eighteen (18) months following termination of
employment. At the expiration of this eighteen (18)-month period, the Company
will pay the individual, in a single lump sum, the cash value of six (6)
additional months of premium payments for the type of coverage elected under
COBRA under a substantially similar health plan. The amount to be paid under the
immediately preceding sentence shall not exceed $25,000.
If the individual's employment is terminated in connection with a Change in
Control, as such term is defined in Plan Section 4.2.b, the twenty-four (24)
Months' Base Salary described above shall be paid to the individual in a single
lump sum, the COBRA and health care benefits shall be provided as described
above, and the Company also will provide the individual with outplacement
benefits of an amount commensurate with the individual's position with the
Company, the value of such benefits not to exceed $10,500. The Company will also
continue to maintain the identical level of Perquisites and benefits enjoyed by
the individual prior to the Change in Control for a period of two (2) years
following his or her last day of employment. For these purposes, a termination
of the individual's employment shall conclusively be deemed to be in connection
with a Change in Control if such termination occurs during the time period
commencing on the date of the Change in Control and ending on the second
anniversary of the closing date for the transaction effecting the Change in
Control
This Exhibit A confirms that, solely for purposes of the Summit Global
Logistics, Inc. Severance Benefit Plan, Peter Stone is within category described
above.
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