Systemax Inc.
22 Harbor Park Drive
Port Washington, New York April 25, 2000
SYSTEMAX INC.
22 HARBOR PARK DRIVE
PORT WASHINGTON, NEW YORK 11050
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PROXY STATEMENT
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INTRODUCTION
Introduction
This proxy statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Systemax Inc., a Delaware corporation (the "Company"“Company”), for the 20002001 Annual Meeting of the stockholdersStockholders of the Company on May 25, 2000.15, 2001. The Notice of Annual Meeting, this proxy statement and the accompanying proxy are first being mailed on or about April 25, 200016, 2001 to stockholders of record as of the close of business on April 7, 2000.9, 2001. You can ensure that your shares are voted at the meeting by signing, dating and promptly returning the enclosed proxy in the envelope provided. Sending in a signed proxy will not affect your right to attend the meeting and vote in person. You may revoke your proxy at any time before it is voted by notifying the Company'sCompany’s Transfer Agent, The Bank of New York, 101 Barclay Street, New York, NY 10286 in writing, or by executing a subsequent proxy, which revokes your previously executed proxy.
The Company'sCompany’s principal executive offices are located at 22 Harbor Park Drive, Port Washington, New York 11050.
VOTING OF PROXIES
Voting of Proxies
Proxies will be voted as specified by the stockholders. Where specific choices are not indicated, proxies will be voted for proposals 1 2 and 3.2. Under the Delaware General Corporation Law and the Company'sCompany’s Amended and Restated Certificate of Incorporation and the Company'sCompany’s By-Laws, (1) the affirmative vote of a plurality of the outstanding shares of Common Stock entitled to vote and present, in person or by properly executed proxy, at a meeting at which a quorum is present will be required to elect or reelect a nominated director, and (2) the affirmative vote of the holders of at least a majority of the outstanding shares of Common Stock entitled to vote and present, in person or by properly executed proxy, at a meeting at which a quorum is present will be required in order to approve the Company's 1999 Long-Term Stock Incentive Plan and to ratify the appointment of Deloitte & Touche.Touche LLP as the Company’s independent auditors for fiscal 2001.
A quorum is representation in person or by proxy at the Annual Meeting of at least a majority of the outstanding shares of common stock of the Company. Abstentions will be treated as votes cast on particular matters as well as shares present and represented for purposes of establishing a quorum, with the result that an abstention has the same effect as a negative vote. Where nominee record holders do not vote on specific issues because they did not receive specific instructions on such issues from the beneficial owners, such broker nonvotesnon-votes will not be treated as votes cast on a particular matter, and will therefore have no effect on the vote, but will be treated as shares present or represented for purposes of establishing a quorum.
A list of stockholders of the Company satisfying the requirements of Section 219 of the Delaware General Corporation Law shall be available for inspection for any purpose germane to the meeting during normal business hours at the offices of the Company at least ten days prior to the Annual Meeting.
On April 7, 2000,9, 2001, the record date for the 20002001 Annual Meeting, there were outstanding and entitled to vote 34,246,59034,104,290 shares of Common Stock of the Company entitled to one vote per share.
Stockholders will not be entitled to appraisal rights in connection with any of the matters to be voted on at the Annual Meeting.
1. ELECTION OF DIRECTORSElection of Directors
At the meeting, six directors are to be elected to serve until their successors have been elected and qualified. Information regarding such nominees is set forth below.
The accompanying proxy will be voted for the election of the Board's nominees unless contrary instructions are given. If any Board nominee is unable to serve, which is not anticipated, the persons named as proxies intend to vote for the other Board nominees and, unless the number of nominees is reduced by the Board of Directors, for such other person or persons as the Board of Directors may designate.
NOMINEES
Nominees
Richard Leeds was appointed a Director and Chairman of the Board and Chief Executive Officer of the Company in April 1995. From April 1995 to February 1996, Mr. Leeds also served as Chief Financial Officer of the Company. From 1984 to April 1995, Mr. Leeds served as Co-President and Chief Financial Officer of certain predecessor corporations of the Company (the "Predecessor Companies"). Mr. Leeds joined the Company in 1982. Mr. Leeds graduated from New York University in 1982 with a B.S. in Finance. Richard Leeds is the brother of Bruce and Robert Leeds.
Bruce Leeds was appointed a Director and Vice Chairman of the Board in April 1995. Mr. Leeds has served as President of International Operations since 1990. In addition, he served as Director of Corporate Development of the Predecessor Companies from 1982 through June of 1995, Secretary of the Company from April 1995 to October 1996 and Chief Financial Officer from March 31, 1997 to December 31, 1997. Mr. Leeds joined the Company in 1977 after graduating from Tufts University with a B.A. in Economics.
Robert Leeds was appointed a Director and Vice Chairman and President of Domestic Operations in April 1995. Prior to such time, Mr. Leeds served as Co-President and head of domestic operations of the Predecessor Companies since 1982. Mr. Leeds graduated from Tufts University in 1977 with a B.S. in Computer Applications Engineering and joined the Company in the same year.
Robert Dooley was appointed as a Director of the Company in April 1995. Mr. Dooley has been a Senior Vice President, Worldwide Computer Sales and Marketing, of the Company or the Predecessor Companies since 1990. Mr. Dooley joined the Company in 1982, and since 1983 he has worked as Senior Marketing Executive for computer related products. Mr. Dooley graduated from Rensselaer Polytechnic Institute in 1976 with a B.S. in Physics.
Robert D. Rosenthal was appointed as a Director of the Company in July 1995. Mr. Rosenthal is PresidentChairman and Chief Executive Officer of First Long Island Investors, Inc., which he co-founded in 1983. From July 1971 until September 1983, Mr. Rosenthal held increasingly responsible positions at Entenmann's Inc., eventually becoming Executive Vice President and Chief Operating Officer. Mr. Rosenthal is a 1971 CUM LAUDEcum laude graduate of Boston University and a 1974 graduate of Hofstra University Law School.
Stacy S. Dick was appointed as a Director of the Company in November 1995. SinceIn March 2001 Mr. Dick became Chief Executive Officer of Continuation Investments. From August 1998 to March 2001 Mr. Dick has beenwas a principal of Evercore Partners, an investment banking firm. From 1992 until July 1998 Mr. Dick held increasingly responsible positions at Tenneco Inc., eventually becoming Executive Vice President of Tenneco Inc. Prior to joining Tenneco Inc. he was a Managing Director of The First Boston Corporation, a position he held beginning in 1989. Mr. Dick graduated from Harvard University with an AB degree MAGNA CUM LAUDEmagna cum laude in 1978 and received a Ph.D. in Business Economics from Harvard in 1983.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE DIRECTOR NOMINEES, WHICH IS DESIGNATED AS PROPOSAL NO. 1 ON THE ENCLOSED PROXY CARD.
BOARD MEETINGS; COMMITTEES OF THE BOARD
Board Meetings; Committees of the Board
During 1999,the year 2000, the Board of Directors held foureight meetings and acted by written consent two times,one time, the Audit Committee held twofive meetings and the Compensation Committee held two meetings.one meeting. All of the Directors attended all of the meetings of the Board and the respective committees of the Board of which they are members.
The Board of Directors has the following standing committees:
AUDIT COMMITTEE
Audit Committee
The Audit Committee recommendsis appointed by the annual engagementBoard of auditors,Directors to assist the Board in monitoring (1) the integrity of the financial statements of the Company, (2) the compliance by the Company with whomlegal and regulatory requirements and (3) the independence and performance of the Company's internal and external auditors. As part of its activities the Audit Committee willmeets with the Company's independent accountants at least annually to review the scope and results of the annual audit and non-audit assignments,
related fees,quarterly to discuss the review of the quarterly financial results, recommends to the Board the independent accountants to be retained by the Company, and receives and considers the accountants' comments as to internal controls, accounting principles usedstaff, management performance and auditing procedures. The Board of Directors adopted an Audit Committee Charter in financial reporting, internal
financial auditing proceduresthe year 2000. A copy of the Audit Committee Charter is attached as Annex A to this proxy statement. The rules of the Securities and Exchange Commission require that the adequacyCompany attach a copy of internal control procedures.such Charter to the proxy statement at least once every three years. The members of the Audit Committee are Mr. Robert D. Rosenthal and Mr. Stacy S. Dick. COMPENSATION COMMITTEEEach of the members of this committee meets the standards for independence and experience required by the New York Stock Exchange.
Compensation Committee
The Compensation Committee reviews and approves the remuneration arrangements for the officers and directors of the Company and reviews and recommends new executive compensation or stock plans in which the officers and/or directors are eligible to participate, including the granting of stock options. Stock option grants to officers and directors must also be approved by the Board of Directors. The members of the Compensation Committee are Messrs. Robert Leeds, Robert D. Rosenthal and Stacy S. Dick.
COMPENSATION OF DIRECTORS
Compensation of Directors
The Company'sCompany’s policy is not to pay compensation to Directors who are also employees of the Company. Each Director who is not an employee of the Company is paid a fee of $7,500 per year and $2,000 for each meeting of the Board of Directors in which the Director participates. During 1999,2000, both non-employee Directors received options to purchase 2,000 shares of Common Stock pursuant to the Company'sCompany’s 1995 Stock Option Plan for Non-Employee Directors.
EXECUTIVE OFFICERS
REPORT OF THE AUDIT COMMITTEE *
The Audit Committee of the Board of Directors of the Company operates under its charter, as adopted by the Board of Directors in 2000. Management is responsible for the Company’s internal accounting and financial controls, the financial reporting process, the internal audit function and compliance with the Company’s policies and legal requirements. The Company’s independent auditors are responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and for issuance of a report thereon; they also perform unaudited reviews of the Company’s quarterly financial statements. The Audit Committee’s responsibility is to monitor and oversee these processes and report its findings to the full board.
The Committee has reviewed and discussed the audited financial statements of the Company for the year ended December 31, 2000 with representatives of management, who represented that the Company’s consolidated financial statements for fiscal 2000 were prepared in accordance with generally accepted accounting principles. It has also discussed with Deloitte & Touche LLP, the Company’s independent auditors, those matters required to be reviewed pursuant to Statement of Accounting Standards No. 61 (“Communication with Audit Committees”). The Committee has also received from Deloitte & Touche LLP written independence disclosures and the letter required by Independence Standards Board Standard No. 1 (“Independence Discussions with Audit Committees”) and has had a discussion with them regarding their independence.
Based on the review of the representations of management, the discussions with management and the independent accountants and the review of the report of the independent auditors to the committee, the Audit Committee recommended to the Board of Directors that the financial statements of the Company for the year ended December 31, 2000 as audited by Deloitte & Touche LLP be included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”).
| AUDIT COMMITTEE Stacy S. Dick Robert D. Rosenthal |
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| * | This section shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this information by reference, and shall not otherwise be deemed “soliciting material” or filed under such Acts. |
Executive Officers
The following table sets forth certain information with respect to the executive officers of the Company as of April 7, 2000.
NAME AGE OFFICE
---- --- -------
Richard Leeds 40 Chairman and Chief Executive Officer
Bruce Leeds 44 Vice Chairman and President of International
Operations
Robert Leeds 44 Vice Chairman and President of Domestic
Operations
Robert Dooley 45 6, 2001.
| Name | Age | Office |
| Richard Leeds | 41 | Chairman and Chief Executive Officer |
| Bruce Leeds | 45 | Vice Chairman and President of International Operations |
| Robert Leeds | 45 | Vice Chairman and President of Domestic Operations |
| Robert Dooley | 45 | Director and Senior Vice President - Worldwide Computer Sales and Marketing |
| Steven M. Goldschein | 55 | Senior Vice President and Chief Financial Officer |
| Michael J. Speiller | 47 | Vice President and Controller |
| Curt S. Rush | 47 | General Counsel and Secretary |
| Leslie Biggs | 57 | Vice President |
For information on Richard Leeds, Bruce Leeds, Robert Leeds and Robert Dooley, see page 2.
Steven M. Goldschein joined the Company in December 1997 and was appointed Senior Vice President and Chief Financial Officer of the Company in January, 1998. From 1982 through December 1997 Mr. Goldschein was Vice President-Administration and Chief Financial Officer of Lambda Electronics Inc. From 1980 through 1982 he was that company'scompany’s Corporate Controller. Prior to that time he was a Senior Manager with the accounting firm of Ernst & Young. Mr. Goldschein is a 1968 graduate of Michigan State University and a Certified Public Accountant in New York.
Michael J. Speiller has been Vice President and Controller since October 1998. From December 1997 through September 1998 Mr. Speiller was Vice President and Chief Financial Officer of Lambda Electronics Inc. From 1982 through 1997 he was Vice President and Controller of Lambda Electronics Inc. From 1980 through 1982 he was a divisional controller for that company. Prior to that he was an auditor with the accounting firm of Ernst & Young. Mr. Speiller graduated in 1976 with a B.S. degree in Public Accounting from the State University of New York at Albany and is a Certified Public Accountant in New York.
Curt S. Rush has been General Counsel to the Company since September 1996 and was appointed Secretary of the Company in October 1996. Prior to joining the Company, Mr. Rush was employed from 1993 to 1996 as Corporate Counsel to Globe Communications Corp. and from 1990 to 1993 as Corporate Counsel to the Image Bank, Inc. Mr. Rush graduated from Hunter College in 1981 with a B.A. degree in Philosophy and graduated CUM LAUDEcum laude from Brooklyn Law School in 1984 where he was editor of the Law Review. He was admitted to the Bar of the State of New York in 1985.
Leslie Biggs has been Commercial and Financial Director of European Operations since March 1992, when the Company acquired Misco. Mr. Biggs joined Misco in April 1990 as Financial Director. Prior to such time, Mr. Biggs was Group Financial Controller of Electrocomponents plc, a large United Kingdom public company and was a director of several of their domestic and overseas operations. Mr. Biggs graduated from Kilburn Polytechnic and qualified as a Chartered Secretary in 1967.
Stock Ownership of Certain Beneficial Owners and Management
The following table provides certain information regarding the beneficial ownership of the Company'sCompany’s Common Stock as of April 7, 20006, 2001 by (i) each of the Company'sCompany’s directors and officers listed in the summary compensation table, (ii) all directors and executive officers as a group and (iii) each person known to the Company to be the beneficial owner of 5% or more of any class of the Company'sCompany’s voting securities.
| (1) | As used in this table "beneficial ownership" means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. A person is deemed as of any date to have "beneficial ownership" of any security that such person has a right to acquire within 60 days after such date. Any security that any person named above has the right to acquire within 60 days is deemed to be outstanding for purposes of calculating the ownership percentage of such person, but is not deemed to be outstanding for purposes of calculating the ownership percentage of any other person. Unless otherwise stated, each person owns the reported shares directly and has the sole right to vote and determine whether to dispose of such shares. |
| (2) | Includes 1,844,083 shares owned by a limited partnership of which Richard Leeds is the general partner. Also includes |
| (3) | Includes |
| (4) | Includes |
| (5) | Includes options to acquire |
| (6) | Includes for each person options to acquire a total of |
| (7) | Includes options to acquire |
| * | less than 1% |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors and persons who own more than ten percent of a registered class of the Company's equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission ("SEC")SEC and any exchange on which the Company's securities may be traded. Officers, directors and ten-percent stockholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that no Form 5 were required for those persons, the Company believes that all such filing requirements for the year ended December 31, 19992000 were complied with.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LEASES AND RELATED GUARANTEES
Certain Relationships and Related Transactions
Leases and Related Guarantees
The Company currently has leases for facilities in Port Washington, NY, with 2RB Associates Co. ("2RB") and Addwin Realty Associates ("Addwin"), entities owned by Richard Leeds, Bruce Leeds and Robert Leeds, directors of the Company and the Company's three senior executive officers and principal stockholders. The Company has also guaranteed rental payments under its lease
with 2RB for the Port Washington, NY facility to the mortgagor of such facility.
Rent expense under all such leases aggregated $1.584$ 1.3 million for the year ended December 31, 1999.
STOCKHOLDERS AGREEMENT2000.
Stockholders Agreement
Certain members of the Leeds family (including Richard Leeds, Bruce Leeds and Robert Leeds) and Leeds' family trusts entered into a Stockholders Agreement pursuant to which the parties to such agreement agreed to vote in favor of the nominees of the Board of Directors designated by the holders of a majority of the shares of Common Stock held by such stockholders. In addition, such agreement prohibits the sale of shares of Common Stock held by such stockholders without the consent of the holders of a majority of the shares held by all parties to such agreement, subject to certain exceptions, including sales pursuant to an effective registration statement and sales made in accordance with Rule 144. Such agreement also grants certain drag-along rights in the event of the sale of all or a portion of the Common Stock held by holders of a majority of the shares held by such stockholders. As of December 31, 1999,2000, the parties to the Stockholders Agreement beneficially owned 24,909,72525,060,199 shares of Common Stock subject to such agreement (constituting approximately 70.7%73% of the Common Stock outstanding).
Pursuant to the Stockholders Agreement, the Company granted to the then existing stockholders party to such agreement demand and incidental, or "piggy-back," registration rights with respect to the Common Stock. The demand registration rights generally provide that the holders of a majority of the shares held by such stockholders may require, subject to certain restrictions regarding timing and number of shares, that the Company register under the Securities Act all or part of the Common Stock held by such stockholders. Pursuant to the incidental registration rights, the Company is required to notify such stockholders of any proposed registration of the Common Stock under the Securities Act and if requested by any such stockholder to include in such registration any number of shares of Common Stock held by it subject to certain restrictions. The Company has agreed to pay all expenses and indemnify any selling stockholders against certain liabilities, including under the Securities Act, in connection with registrations of Common Stock pursuant to such agreement.
RELATED SUPPLIER
Related Supplier
One of the Company's suppliers is 50% owned by Richard Leeds, Bruce Leeds, Robert Leeds and other members of their immediate family. Purchases from this supplier were approximately $9.9$11.7 million for the year ended December 31, 19992000 and the Company believes that those purchases were made at arms-length.
COMPENSATION OF EXECUTIVE OFFICERS
Compensation of Executive Officers
The following table sets forth the compensation earned by the Chief Executive Officer ("CEO") and the four most highly compensated executive officers other than the CEO for the years ended December 31, 1997, 1998, 1999 and 1999.
2000.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
_________________________________________________ Securities
Other Annual Underlying
Name and Principal Position Year Salary Bonus Compensation(1) Options (#)
Richard Leeds 2000 $443,173 -- $2,335 none
Chairman and Chief Executive Officer 1999 350,000 $ 75,000 1,637 none
1998 300,000 75,000 2,261 none
Bruce Leeds 2000 $443,173 -- $1,673 none
Vice Chairman and President of 1999 350,000 $ 75,000 1,673 none
International Operations 1998 350,000 75,000 2,519 none
Robert Leeds 2000 $443,173 -- $ 1,598 none
Vice Chairman and President of 1999 350,000 $ 75,000 1,598 none
Domestic Operations 1998 350,000 75,000 2,444 none
Robert Dooley 2000 $419,762 $ 75,000 $ 4,499 none
Director and Senior Vice President - 1999 303,940 100,000 4,770 100,000
Worldwide Computer Sales and Marketing 1998 289,380 100,000 4,594 20,000
Steven M. Goldschein 2000 $417,422 $ 56,250 $3,356 none
Senior Vice President and Chief 1999 325,520 75,000 3,162 40,000
Financial Officer 1998 310,000 75,000 864 none
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(1) Includes the Company’s pension and profit sharing plan contributions, automobile and gasoline allowance and excess life insurance coverage over $50,000.
Option Grants in Last Fiscal Year
Individual Grants
________________________________________________________
Percent of Potential Realizable
Total Value at
Number of Options Assumed Annual
Securities Granted to Exercise or Rates of Stock
Name Underlying Employees Base Price Expiration Price Appreciation
Options In Fiscal ($/Share) Date For Option Term
Granted(#) Year 5%($) 10%($)
Richard Leeds -- -- -- -- -- --
Bruce Leeds -- -- -- -- -- --
Robert Leeds -- -- -- -- -- --
Robert Dooley -- -- -- -- -- --
Steven M. -- -- -- -- -- --
Goldschein
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options Options
Shares at December 31, at December 31,
Acquired 2000(#) 2000
on Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
Richard Leeds - - - -
Bruce Leeds - - - -
Robert Leeds - - - -
Robert Dooley - - 185,000/115,000 -/-
Steven M. Goldschein - - 30,000/85,000 -/-
Compensation Committee Report to Stockholders
The report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
The Compensation Committee of the Board of Directors is responsible for administering the executive compensation plans and programs of the Company and for making recommendations to the Board of Directors regarding the compensation of and benefits provided to the Chief Executive Officer and the other executive officers.
In establishing compensation and benefit levels for executive officers, the Committee seeks to (1) attract and retain individuals of superior ability and managerial talent, (2) motivate executive officers to increase Company performance primarily for the benefit of its stockholders but also for the benefit of its customers and other constituencies and (3) reward executives for superior individual contributions to the achievement of the Company'sCompany’s business objectives. To these ends, the Company'sCompany’s executive compensation package may consist of a base salary, annual cash bonus compensation and stock-based long-term incentive awards.
Salary levels generally are determined based on the Committee'sCommittee’s subjective assessment of prevailing levels among the Company'sCompany’s competitors. At higher levels, however, individual and Company performance will be given greater weight, along with competitive considerations.
In establishing annual bonuses, the Committee considers such factors relating to the Company'sCompany’s overall performance as it, in its discretion, considers to be appropriate and assigns such weight to each such factor as it considers to be appropriate. The Committee may also consider its assessment of each individual'sindividual’s contribution to the improvement of operating results, growth, profitability and efficient operation of the Company.
Stock-based incentives, at the present time consisting of stock options granted at 100% or more of the stock'sstock’s fair market value on the grant date, constitute the long-term portion of the Company'sCompany’s executive compensation package. Stock options provide an incentive for executives to increase the Company'sCompany’s stock price and therefore, the return to the Company'sCompany’s stockholders. The vesting of certain executive stock options may be accelerated based upon the achievement of certain financial objectives by certain divisions of the Company. The number and timing of stock option grants are decided by the Committee based on its subjective assessment, with the advice of independent consultants, of prevailing levels of similar compensation among the Company'sCompany’s competitors. Stock option grants to officers and directors must be approved by the Board of Directors.
Robert Leeds
Robert D. Rosenthal
Stacy S. Dick
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
| Robert Leeds Robert D. Rosenthal Stacy S. Dick |
Compensation Committee Interlocks and Insider Participation
No members of the Company'sCompany’s Compensation Committee other than Robert Leeds are employed by the Company. No director of the Company served during the last completed fiscal year as an executive officer of any entity whose compensation committee (or other comparable committee, or the Board, as appropriate) included an executive officer of the Company. There are no "interlocks"“interlocks” as defined by the Securities and Exchange Commission.
STOCK PRICE PERFORMANCE GRAPH
Stock Price Performance Graph
The Stock Price Performance Graph below shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
The graph below compares cumulative total return of the Company, the S & P 500 and the S & P 500 Retail Trade Index for the period beginning June 29, 1995 through December 31, 1999.2000. The stock price performance shown on the graph below is not necessarily indicative of future price performance. The graph and chart assumes that the value of the investment in the Company's Common Stock and for each index was $100 on June 29, 1995 and reflects reinvestment of dividends and market capitalization weighing.
2. PROPOSAL TO APPROVE THE COMPANY'S 1999 LONG-TERM STOCK INCENTIVE PLANRatification of Independent Auditors
Action is to be taken at the Annual Meeting to ratify the selection of Deloitte & Touche LLP as independent auditors of the Company for the fiscal year ended December 31, 2001.
Representatives of Deloitte & Touche LLP, which began serving as the Company’s independent auditors in 1993, are expected to be present at the Annual Meeting and to be available to respond to appropriate questions. They will have an opportunity to make a statement if they so desire.
Fees Billed to the Company by Deloitte & Touche LLP for Services During Fiscal 2000
Audit Fees: Fees billed to the Company by Deloitte & Touche LLP for auditing the Company’s annual financial statements for the Company’s 2000 fiscal year and reviewing those financial statements included in the Company’s quarterly reports on Form 10-Q for such year totaled $ 610,000.
Information Systems Design and Implementation Fees: Fees billed to the Company by Deloitte & Touche LLP for advice to the Company during the fiscal year ended December 31, 2000 regarding information systems design and implementation totaled $ 30,000.
All Other Fees: Fees billed to the Company by Deloitte & Touche LLP for all other non-audit services rendered to the Company totaled $137,000, including $77,000 for tax related services and $60,000 related to the Company’s investigation of financial irregularities at its manufacturing subsidiary, during the Company’s 2000 fiscal year.
The Company'sAudit Committee of the Board of Directors has unanimously approved a proposalreviewed the services provided to adopt the Company's 1999 Long Term Stock Incentive Plan (the "Plan"). The
Plan was effective upon adoptionCompany by Deloitte & Touche LLP and believes that the non-audit/review services which it has provided are compatible with maintaining the auditor’s independence.
Shareholder ratification of the selection of Deloitte & Touche LLP as the Company’s independent public accountants is not required by the Company’s By-Laws or other applicable legal requirement. However, the Board on October 25, 1999. A copyis submitting the selection of Deloitte & Touche LLP to the Planstockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee and the Board will reconsider whether or not to retain that firm. Even if the selection is attached as Exhibit A to this proxy statement. Shareholder approval is
being soughtratified, the Board at its discretion may direct the appointment of a different independent accounting firm at any time during the year if it determines that such a change would be in order to qualify options granted under the plan for incentive
compensation treatment under Section 162(m) of the Internal Revenue Code (the
"Code"), as discussed below.
The following is a summary of the principal provisions of the Plan.
PURPOSES
The purposes of the Plan are to promote thebest interests of the Company and its stockholders by (i) attracting and retaining exceptional executive
personnel and other key employees, including consultants and advisors to the
Company and its affiliates; (ii) motivating such employees, consultants and
advisors by means of performance-related incentives to achieve longer-ranger
performance goals; and (iii) enabling such employees, consultants and advisors
to participate in the long-term growth and financial success of the Company.
TYPES OF AWARDS TO BE GRANTED
The committee which administers the Plan (the "Committee") may grant
non-qualified stock options, stock appreciation rights, restricted stock awards,
performance awards or other stock-based awards.
ELIGIBILITY AND CONDITIONS OF GRANT
Any employee of the Company or of any affiliate, including any officer
or director, and any individual providing consulting or advisory services to the
Company, shall be eligible to be a participant of the Plan. The Committee shall
determine, in its sole discretion, the terms and conditions of any stock option
or other award to any Plan participant, including the exercise price (which may
be less than fair market value) and term.
No award shall be granted under the Plan after December 31, 2005,
except that "restoration options" may be granted after that date. Restoration
options are options issued to optionees who surrender then-owned shares in
exercise of an option. Such options are issued with an exercise price equal to
the fair market value at the date of grant and a term equal to the remaining
term of the then-exercised options and for no more than the number of shares
delivered in exercise of such options.
SHARES AVAILABLE UNDER THE PLAN
Subject to adjustment as provided in Section 4(b) of the Plan, the
aggregate number of shares of Common Stock with respect to which awards may be
granted under the Plan is 2,000,000. Currently, stock options for 424,700 shares
have been granted. No other awards have been made under the Plan. The maximum
number of shares which may be the subject of stock options and stock
appreciation rights granted to any individual during any calendar year shall not
exceed 200,000 shares.
Shares subject to stock options have been granted under the Plan to
date as follows:
NAME AND POSITION NUMBER OF UNITS
----------------- ---------------
Richard Leeds, Chairman and CEO 0
Bruce Leeds, Vice Chm. and Pres. 0
Robert Leeds, Vice Chm. and Pres. 0
Robert Dooley, Director, Exec. V.P. 100,000
Steven Goldschein, Senior V.P., CFO 0
Executive Group 100,000
Non-Executive Director Group 0
Non-Executive Officer Employee Group 324,700
On April 7, 2000 the New York Stock Exchange closing price of a share
of Common Stock of the Company, as reported by the Wall Street Journal, was
$9.00.
ADMINISTRATION
The Plan is administered by a committee which is designated by the
Company's Board of Directors to administer the Plan and consists of not less
than two directors, each of whom, to the extent necessary to comply with Rule
16b-3 promulgated by the SEC under the Securities Exchange Act ("Rule 16b-3"),
and to the extent such persons are available, is a "Non-Employee Director"
within the meaning of Rule 16b-3 and, to the extent such persons are available,
each of whom is an "outside director" within the meaning of Section 162(m) of
the Internal Revenue Code of 1986 (the "Code"). The Committee has full power and
discretion, subject to the terms of the Plan and applicable law to designate the
Plan's participants and determine the type or types of awards granted and the
terms and conditions of such awards.
ADJUSTMENTS
In the event that the Committee determines that any dividend or other
distribution (whether in the form of cash, shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase or exchange
of shares or other securities of the Company, issuance of warrants or other
rights to purchase shares or other securities of the Company, or other similar
corporate transaction or event affects the shares such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of (i) the number of shares or other securities of
the Company (or number and kinds of other securities of the property) with
respect to which awards may be granted, (ii) the number of shares of other
securities of the Company (or number and kinds of other securities or property)
subject to outstanding awards, and (iii) the grant or exercise price with
respect to any award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding award.
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend, alter, suspend, discontinue, or terminate the
Plan or any portion thereof at any time; provided that no such amendment,
alteration, suspension, discontinuation or termination shall be made without
shareholder approval if such approval is necessary to comply with any tax or
regulatory requirement, including for these purposes any approval requirement
which is a prerequisite for exemptive relief from Section 16(b) of the
Securities Exchange Act. Notwithstanding anything to the contrary herein, the
Committee may amend the Plan in such manner as may be necessary so as to have
the Plan conform with the local rules and regulations in any jurisdiction
outside the United States.
FEDERAL INCOME TAX CONSEQUENCES OF OPTION GRANTS
The following is a summary of certain Federal income tax consequences
of options granted under in the Plan:
NON-QUALIFIED OPTIONS
An individual will not recognize any income at the time a
non-qualified stock option is granted. Generally, individuals will recognize
ordinary income at the time of the exercise of a non-qualified option in a total
amount equal to: (1) in the case of options which the individual exercises by
payment in cash, the excess of the then fair market value of the shares acquired
over the exercise price and (2) in the case of options which an individual
exercises by tendering previously owned shares, the then fair market value of
the number of shares issued in excess of the number of shares surrendered upon
such exercise.
If a director, officer or ten-percent shareholder receives shares
pursuant to the exercise of a non-qualified option, pursuant to Section 83(c) of
the Code such individual does not recognize any income until the date on which
such individual can sell such shares at a profit without being subject to
liability under Section 16(b) of the Securities Exchange Act. Alternatively, a
director, officer or principal shareholder who would not otherwise be subject to
tax on the value of such individual 's shares as of the date the shares are
transferred to him or her can file, within 30 days after the shares are acquired
by such individual, a written election pursuant to Section 83(b) of the Code to
be taxed as of the date of acquisition.
All income realized upon the exercise of any non-qualified stock
option will be taxed as ordinary income. The Company may claim an income tax
deduction for the amount taxable to an employee in the same year as those
amounts are taxable to the individual. Shares issued upon the exercise of a
non-qualified option are generally eligible for capital gain or loss treatment
upon any subsequent disposition. Generally, an individual 's holding period will
commence from the date such shares are issued and such individual 's basis in
such shares will equal their fair market value as of that date. (The holding
period of a director, officer or principal shareholder begins on the date on
which such person recognizes income with respect to such shares, and such
individual's basis in the shares will be equal to the greater of the then fair
market value of the shares or the amount paid for such shares.) If an individual
uses Common Shares that such individual owns to exercise a non-qualified option,
(a) the individual's holding period for the newly-issued shares equal in number
to the exchanged shares shall include the period during which the surrendered
shares were held, (b) the individual's basis in such exchanged shares will be
the same as such individual's basis in the surrendered shares, and (c) no gain
or loss will be recognized by the individual on the exchange of the surrendered
shares for the exchanged shares.
GENERAL
An employee will be subject to wage withholding on the amount of
ordinary income realized by such employee, as described above. The Company may
require that the employee make funds available to the Company to satisfy the
withholding requirements.
SECTION 280G OF THE CODE
Section 280G of the Code provides that if an officer, shareholder or
highly compensated individual receives a payment which is in the nature of
compensation, and which is contingent upon a change in control of the employer,
and such payment equals or exceeds three times his "base salary" (as hereinafter
defined), then any amount received in excess of base salary shall be considered
an "excess parachute payment." An individual's "base salary" is equal to such
person's average annual compensation over the five-year period (or period of
employment, if shorter) ending with the close of the individual's taxable year
immediately preceding the taxable year in which the change in control occurs. If
the taxpayer establishes, by clear and convincing evidence, that an amount
received is reasonable compensation for past or future services, all or a
portion of such amount may be deemed not to be an excess parachute payment.
Under certain circumstances, options under the Plan could give rise to excess
parachute payments. In any such case, in addition to any income tax which would
otherwise be owed on such payment, the individual will be subject to an excise
tax equal to 20% of such excess payment and the Company will not be entitled to
any tax deduction to which it otherwise would have been entitled with respect to
such payment.
SECTION 162(M) OF THE CODE
Under Section 162(m) of the Code, publicly held companies generally
may not deduct compensation that exceeds $1 million to any proxy-named executive
officer with respect to the taxable year. Compensation which is
performance-based (as defined in Section 162(m) and regulations thereunder),
however, is not counted as subject to the deductibility limitations of Section
162(m). Options granted under the Plan are intended to qualify as
performance-based under Section 162(m) and related regulations if they obtain
shareholder approval.
VOTE REQUIRED FOR APPROVAL
Shareholder approval is required in order for options granted under
the Plan to be a performance-based within the meaning of Section 162(m) of the
Code. Approval of the Plan will require the affirmative vote of the holders of a
majority of the votes cast on this issue. There are no rights of appraisal or
dissenter's rights as a result of a vote on this issue.
stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE TO APPROVEFOR THE COMPANY'S 1999 LONG-TERM
STOCK INCENTIVE PLAN,RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT AUDITORS FOR FISCAL 2001, WHICH IS DESIGNATED AS PROPOSAL NO. 2 ON THE ENCLOSED PROXY CARD.
3. INDEPENDENT PUBLIC ACCOUNTANTS
On the recommendation
Solicitation of the Audit Committee of the Board of
Directors, the Board has appointed Deloitte & Touche LLP as auditors for the
fiscal year 2000, subject to ratification by the stockholders. Deloitte & Touche
LLP has audited the financial statements of the Company since the fiscal year
1993.
Representatives of Deloitte & Touche LLP are expected to attend the
2000 Annual Meeting, where they will have the opportunity to make a statement if
they wish to do so and will be available to answer appropriate questions from
the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF AUDITORS, WHICH IS DESIGNATED AS PROPOSAL NO. 3 ON THE ENCLOSED PROXY CARD.
SOLICITATION OF PROXIESProxies
The cost of soliciting proxies for the 20002001 Annual Meeting will be borne by the Company. In addition to solicitation by mail, solicitations may also be made by personal interview, fax and telephone. Arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy material to their principals, and the Company will reimburse them for expenses in so doing. Consistent with the Company's confidential voting procedure, directors, officers and other regular employees of the Company, as yet undesignated, may also request the return of proxies by telephone or fax, or in person.
ANNUAL REPORT
Annual Report
The Annual Report of the Company for the year ended December 31, 19992000 was first mailed to all stockholders with this proxy statement.
STOCKHOLDER PROPOSALS
Stockholder Proposals
The Company's By-Laws require that stockholder proposals intended to be presented at an Annual Meeting, including proposals for the nomination of directors, must be received by the Company 60 days in advance of the anniversary date of the immediately preceding annual meeting, or by March 27, 2001,17, 2002, to be considered for the 20012002 Annual Meeting. The requirements for submitting such proposals are set forth in the Company's By-Laws.
Stockholder proposals intended to be considered for inclusion in the Company's proxy statement for presentation at the 20012002 Annual Meeting must be received by the Company by December 31, 2000.
OTHER MATTERS2001.
Other Matters
The Board of Directors does not know of any matter other than those described in this proxy statement that will be presented for action at the meeting. If other matters properly come before the meeting, the persons named as proxies intend to vote the shares they represent in accordance with their judgment.
FINANCIAL STATEMENTS
Financial Statements
Reference is made to the Consolidated Financial Statements of the Company (including the independent auditors' report thereon and the notes thereto) and Management's Discussion and Analysis of Financial Condition and Results of Operations which are hereby incorporated by reference from the 19992000 Annual Report enclosed with this Proxy Statement.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 19992000 IS INCLUDED AS PART OF THE COMPANY'S ANNUAL REPORT ACCOMPANYING THIS PROXY STATEMENT. AN ADDITIONAL COPY MAY BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST. SUCH
REQUEST SHOULD BE SENT TO:Such request should be sent to: SYSTEMAX INC., 22 HARBOR PARK DRIVE, PORT WASHINGTON,
NEW YORKHarbor Park Drive, Port Washington, New York 11050 ATTENTION: JENNIFER SACCONE, INVESTOR RELATIONS DIRECTOR.
Attention: Investor Relations or via email to investinfo@systemax.com.
Annex A
SYSTEMAX INC.
1999 Long-Term Stock Incentive Plan
SECTION 1. PURPOSE.
AUDIT COMMITTEE CHARTER
The purposes of this Systemax Inc. 1999 Long Term
Stock Incentive Plan are to promote the interests of Systemax Inc. and its
stockholdersAudit Committee is appointed by (i) attracting and retaining exceptional executive personnel and
other key employees, including consultants and advisors to the Company and its
Affiliates, as defined below; (ii) motivating such employees, consultants and
advisors by means of performance-related incentives to achieve longer-ranger
performance goals; and (iii) enabling such employees, consultants and advisors
to participate in the long-term growth and financial success of the Company.
SECTION 2. DEFINITIONS. As used in the plan, the following terms shall
have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or indirectly, is
controlled by the Company and (ii) any entity in which the Company has
significant equity interest, in either case as determined by the Committee.
"Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock Award, Performance Award, Performance Award or other Stock-Based Award.
"Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors to assist the Board in monitoring (1) the integrity of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" shall mean a committee of the Board designated by the
Board to administer the Plan and composed of not less than two directors, each
of whom, to the extent necessary to comply with Rule 16b-3 and to the extent
that such persons are available, is a "Non-Employee Director" within the meaning
of Rule 16b-3 and, to the extent that such persons are available, each of whom
is an "outside director" within the meaning of Section 162 (m) of the Code.
"Company" shall mean Systemax Inc., together with any successor
thereto.
"Employee" shall mean (i) an employeefinancial statements of the Company, or of any
affiliate and (ii) an individual providing consulting or advisory services to(2) the Company or any Affiliate as an independent contractor.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean the fair market value of the property
or other item being valued, as determined by the Committee in its sole
discretion.
"Incentive Stock Option" shall mean a right to purchase Shares that is
intended to meet the requirements of Section 422 of the Code or any successor
provision thereto.
"Non-Qualified Stock Option" shall mean a right to purchase Shares
from the Company that is granted under Section 6 of the Plan and that is not
intended to be an Incentive Stock Option.
"Option" shall mean a Non-Qualified Stock Option and shall include a
Restoration Option.
"Other Stock-Based Award" shall mean any right granted under Section
10 of the Plan.
"Participant" shall mean any Employee selected by the Committee to
receive an Award under the Plan.
"Performance Award" shall mean any right granted under Section 9 of
the Plan.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, government
or political subdivision thereof or other entity.
"Plan" shall mean this Systemax 1999 Long-Term Stock Incentive Plan.
"Restoration Option" shall mean an Option granted pursuant to Section
6(e) of the Plan.
"Restricted Stock" shall mean any Share granted under Section 8 of the
Plan.
"Restricted Stock Unit" shall mean any united granted under Section 8
of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 as promulgated and interpreted by
the SEC under the Exchange Act, or any successor rule or regulation thereto as
in effect from time to time.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto and shall include the Staff thereof.
"Shares" shall mean the common stock of the Company, $0.01 par value,
or such other securities of the Company as may be designated by the Committee
from time to time.
"Stock Appreciation Right" shall mean any right granted under Section
7 of the Plan.
"Substitute Awards" shall mean Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquiredcompliance by the Company or with whichlegal and regulatory requirements and (3) the Company combines.
SECTION 3. ADMINISTRATION. (a) The Plan shall be administered by the
Committee. Subject to the termsindependence and performance of the PlanCompany's internal and applicable law, and in addition
to other express powers and authorizations conferred onexternal auditors.
The members of the Committee by the
Plan, theAudit Committee shall have full powermeet the independence and authority to (i) designate
Participants; (ii) determine the type or types of Awards to be granted to an
eligible Employee; (iii) determine the number of Shares to be covered by, or
with respect to which payments, rights, or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, Shares, other securities, other Awards or other
property, or cancelled, forfeited, or suspended and the method or methods by
which Awards may be settled, exercised, cancelled, forfeited, or suspended; (vi)
determine whether, to what extent, and under what circumstances cash, Shares,
other securities, other Awards, other property, and other amounts payable with
respect to an Award shall be deferred either automatically or at the electionexperience requirements of the holder thereof or of the Committee; (vii) interpret and administer the Plan
and any instrument or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend or waive rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (ix) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
(b) Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Award shall be within the sole discretion of the Committee, may
be made at any time and shall be final, conclusive, and binding upon all
Persons, including the Company, and Affiliate, and Participant, any holder or
beneficiary of any Award, any shareholder and any Employee.
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section
4(b), the number of Shares with respect to which Awards maybe granted under the
Plan shall be 2,000,000.New York Stock Exchange.
The maximum number of Shares which may be the subject
of Options and Stock Appreciation Rights granted to any individual during any
calendar year shall not exceed 200,000 Shares. If, after the effective date of
the Plan any Shares covered by an Award granted under the Plan, or to which such
an Award relates, are forfeited, or if an Award is settled for cash or otherwise
terminates or is cancelled without the delivery of Shares, the Shares covered by
such Award, or to which such Award relates, or the number of Shares otherwise
counted against the aggregate number of Shares with respect to which Awards may
be granted, to the extent of any such settlement, forfeiture, termination or
cancellation, shall again be, or shall become, Shares with respect to which
Awards granted; PROVIDED, HOWEVER, that with respect to any Options or Stock
Appreciation Rights granted to any individual who is a "covered employee" as
defined in Section 162(m) of the Code and the regulations thereunder that is
canceled or as to which the exercise price or grant price is reduced, the number
of Shares subject to such Options or Stock Appreciation Rights shall continue to
count against the maximum number of Shares which may be the subject of Options
and Stock Appreciation Rights granted to such covered employee and such maximum
number of Shares shall be determined in accordance with Section 162(m) of the
Code and regulations promulgated thereunder. In the event that any Option or
other Award granted hereunder is exercised through the delivery of Shares, the
number of Shares available for Awards under the Plan shall be increased by the
number of Shares surrendered, to the extent permissible under Rule 16b-3.
Notwithstanding the foregoing and subject to adjustment as provided in Section
4(b), no more than 800,000 Shares shall be available for Awards of Restricted
Stock and Restricted Stock units.
(b) ADJUSTMENTS. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company,
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number of Shares or other
securities of the Company (or number and kinds of other securities of the
property) with respect to which Awards may be granted, (ii) the number of Shares
of other securities of the Company (or number and kinds of other securities or
property) subject to outstanding awards, and (iii) the grant or exercise price
with respect to any Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award.
(c) SUBSTITUTE AWARDS. Any Shares underlying Substitute Awards shall
not, except in the case of Shares with respect to which substitute are granted
to Employees who are officers or directors of the Company for purposes of
Section 16 of the Exchange Act or any successor section thereto, be counted
against the Shares available for Awards under the Plan.
(d) SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued and unissued Shares or of treasury Shares.
SECTION 5. ELIGIBILITY. Any Employee, including any officer or
director of the Company, shall be eligible to be designated a participant.
SECTION 6. STOCK OPTIONS.
(a) GRANT. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees to whom Options
shall be granted, the number of Shares to be covered by each Option. The option
price therefor and the conditions and limitations applicable to the exercise of
the Option. TheAudit Committee shall have the authority to grant Non-Qualified Stock
Options.retain special legal, accounting or other consultants to advise the Committee. The Committee shall not have the authority to grant Incentive Stock
Options under the Plan.
(b) EXERCISE PRICE. The Committee in it sole discretion shall
establish the exercise price at the time each option is granted.
(c) EXERCISE. Each Option shall be exercisable at such times and
subject to such terms and conditions as theAudit Committee may in its sole
discretion, specify in the applicable Award Agreementrequest any officer or thereafter. The
Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of federal or
state securities laws, as it may deem necessary or advisable.
(d) PAYMENT. No Shares shall be delivered pursuant to any exercise of
an Option until full payment in full of the Option price thereof is received by
the Company. Such payment may be made in cash, or its equivalent, or, if and to
what extent permitted by the Committee, by exchanging Shares owner by the
optionee (which are not the subject of any pledge or other security interest),
or by a combination of the foregoing, provided that the combined value of all
cash and cash equivalents and the Fair Market Value of any such Shares so
tendered to the Company as of the date of such tender is at least equal to such
Option price.
(e) RESTORATION OPTIONS. In the event that any Participant delivers
Shares in payment of the exercise price of any Option granted hereunder in
accordance with Section 6(d), the Committee shall have the authority to grant or
provide for the automatic grant of a Restoration Option to such Participant. The
Grant of a Restoration Option shall be subject to the satisfaction of such
conditions or criteria as the Committee in its sole discretion shall establish
from time to time. A Restoration Option shall entitle the holder therof to
purchase a number of Shares equal to the number of such Shares so delivered upon
exercise of the original Option. A Restoration Option shall have a per share
exercise price of not less than 100% of the per Share Market Value on the date
of grant of such Restoration Option, a term no longer than the remaining term of
the original option at the time of exercise thereof, and such other terms and
conditions as the Committee in its sole discretion shall determine.
Section 7. STOCK APPRECIATION RIGHTS.
(a) GRANT. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees to whom Stock
Appreciation Rights shall be granted, the number of Shares to be covered by each
Stock Appreciation Right Award, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Stock Appreciation Rights may be
granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to another Award. Stock Appreciation Rights granted
in tandem with or in addition to an Award may be granted either at the same time
as the Award or at a later time. Stock Appreciation Rights shall not be
exercisable earlier than six months after grant.
(b) EXERCISE AND PAYMENT. A Stock Appreciation Right shall entitle the
Participant to receive an amount equal to the excess of the Fair Market Value of
a Share on the date of exercise of the Stock Appreciation Right over the grant
price thereof. The Committee shall determine whether a Stock Appreciation Right
shall be settled in cash, Shares or a combination of cash and Shares.
(c) OTHER TERMS AND CONDITIONS. Subject to the terms of the Plan and
any applicable Award Agreement, the Committee shall determine, at or after the
grant of a Stock Appreciation Right, the term, methods of exercise, methods and
form of settlement, and any other terms and conditions of any Stock Appreciation
Right. Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights
granted or exercised thereafter. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as it shall deem
appropriate.
SECTION 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS.
(a) GRANT. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees to whom Shares of
Restricted Stock and Restricted Stock Units shall be granted, the number of
Shares of Restricted Stock and/or the number of Restricted Stock units to be
granted to each Participant, the duration of the period during which, and the
conditions under which, the Restricted Stock and Restricted Stock Units may be
forfeited to the Company, and the other terms and conditions of such Awards.
(b) TRANSFER RESTRICTIONS. Shares of Restricted Stock and Restricted
Stock Units may not be sold, assigned, transferred, pledged or otherwise
encumbered, except, in the Case of Restricted Stock, as provided in the plan or
the applicable Award agreements. Certificates issues in respect of Shares of
Restricted Stock shall be registered in the name of the Participant and
deposited by such Participant, together with a stock power endorsed in the blank
with the company. Upon the lapse of the restrictions applicable to such Shares
of Restricted Stock, the Company shall deliver such certificates to the
Participant or the Participant's legal representative.
(c) PAYMENT. Each Restricted Stock Unit shall have a value equal to
the Fair Market Value of a Share. Restricted Stock Units shall be paid in cash,
other securities or other property, as determined in the sole discretion of the
Committee. Dividends paid on any Shares of Restricted Stock may be directly to
the Participant, or may be reinvested in additional Shares of Restricted Stock
or in additional Restricted Stock Units, as determined by the Committee in its
sole discretion.
Section 9. PERFORMANCE AWARDS.
(a) GRANT. The Committee shall have sole and complete authority to
determine Employees who shall receive a "Performance Award", which shall consist
of a right which is (i) denominated in cash or Shares, (ii) valued, as
determined by the Committee, in accordance with the achievement of such
performance goals during such performance periods as the Committee shall
establish, and (iii) payable at such time and in such form as the Committee
shall determine.
(b) TERMS AND CONDITIONS. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the performance goals
to be achieved during any performance period, the length of any performance
period, the amount of any Performance Award and the amount and kind of any
payment of transfer to be made pursuant to any Performance Award.
(c) PAYMENT OF PERFORMANCE AWARDS. Performance Awards may be paid in a
lump sum or in installments following the close of the performance period or, in
accordance with procedures established by the Committee, on a deferred basis.
SECTION 10. OTHER STOCK-BASED AWARDS.
(a) GENERAL. The Committee shall have authority to grant to eligible
Employees an "Other Stock-Based Award", which shall consist of any right which
is (i) not an Award described in Sections 6 through 9 above and (ii) an Award of
Shares or an Award denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares (including, without
limitation, securities convertible into Shares), as deemed by the Committee to
be consistent with the purposes of the Plan; provided that any such rights must
comply, to the extent deemed desirable by the Committee, with Rule 16b-3 and
applicable law. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of any such
Other Stock-Based Award. Except in the case of an Other Stock-Based Award that
is a Substitute Award, the price at which securities may be purchased pursuant
to any Other Stock Based Award granted under this plan or the provision, if any,
of any such Award that is analogous to the purchase of exercise price, shall not
be less than 100% of the Fair Market Value of the securities which such an Award
relates on the date of grant.
(b) DIVIDEND EQUIVALENTS. In the sole and complete discretion of the
Committee, an Award, whether made as an Other Stock-Based Award under this
Section 10 or as an Award granted pursuant to Sections 6 through 9 hereof, may
provide the Participant with dividend equivalents, payable in cash, Shares,
other securities or other property on a current or deferred basis.
Section 11. AMENDMENT AND TERMINATION.
(a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without shareholder approval if such approval is necessary to
comply with any mandatory tax or regulatory requirement, including for these
purposes any approval requirement which is a prerequisite for exemptive relief
from Section 16(b) of the Exchange Act. Notwithstanding anything to the contrary
herein, the Committee may amend the Plan in such manner as may be necessary so
as to have the Plan conform with the local rules and regulations in any
jurisdiction outside the United States.
(b)AMENDMENTS TO AWARDS. The Committee may waive any conditions or
rights under, amend any terms of, or alter, suspend discontinue, cancel or
terminate, any Award theretofore granted, prospectively or retroactively;
provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would impair the rights of any
Participant or any holder or beneficiary of an Award theretofore granted shall
not to that extent be effective with the consent of the affected Participant,
holder or beneficiary.
(c) ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(b) hereof) affecting the Company, any Affiliate, or the
financial statementsemployee of the Company or any Affiliate,the Company’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
The Audit Committee shall:
| 1. | Review and reassess the adequacy of this Charter annually and recommend any proposed changes to the Board for approval. |
| 2. | Review the annual audited financial statements with management, including major issues regarding accounting and auditing principles and practices as well as the adequacy of internal controls that could significantly affect the Company’s financial statements. |
| 3. | Review any analysis prepared by management and the independent auditor of significant financial reporting issues and judgements made in connection with the preparation of the Company’s financial statements. |
| 4. | Review with management and the independent auditor the Company's quarterly financial statements prior to the filing of its Form 10-Q. |
| 5. | Meet periodically with management to review the Company’s major financial risk exposures and the steps management has taken or proposes to take monitor and control such exposures. |
| 6. | Review major changes to the Company's auditing and accounting principles and practices as suggested by the independent auditor, internal auditors or management. |
| 7. | Recommend to the Board the appointment of the independent auditor, which firm is ultimately accountable to the Audit Committee and the Board. |
| 8. | Approve the fees to be paid to the independent auditor. |
| 9. | Receive periodic reports from the independent auditor regarding the auditor’s independence, discuss such reports with the auditor and, if so determined by the Audit Committee, recommend that the Board take appropriate action to satisfy itself of the independence of the auditor. |
| 10. | Evaluate together with the Board the performance of the independent auditor and, if so determined by the Audit Committee, recommend that the Board replace the independent auditor. |
| 11. | Review the appointment and replacement of the senior internal auditing executive. |
| 12. | Review the significant reports to management prepared by the internal auditing department and management's responses. |
| 13. | Meet with the independent auditor prior to the audit to review the planning and staffing of the audit. |
| 14. | Obtain from the independent auditor assurance that Section10A of the Securities Exchange Act of 1934 has not been implicated. |
| 15. | Obtain reports from management, the Company’s senior internal auditing executive and the independent auditor that the Company’s subsidiaries and foreign affiliated entities are in conformity with applicable legal requirements. |
| 16. | Discuss with the independent auditor the matters required to be discussed by the Statement on Auditing Standards No. 61 relating to the conduct of the audit. |
| 17. | Review with the independent auditor any problems or difficulties the auditor may have encountered and any management letter provided by the auditor and the Company’s response to that letter. Such review should include: |
| (a) | Any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information. |
| (b) | Any changes required in the planned scope of the audit. |
| 18. | Prepare the report of the Audit Committee required by the rules of the Securities and Exchange Commission to be included in the Company's annual proxy statement. |
| 19. | Advise the Board with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and accepted business practices and ethics. |
| 20. | Review with the Company’s General Counsel legal matters that may have a material impact on the financial statements, the Company’s compliance policies and any material reports or inquires received from regulators or governmental agencies. |
| 21. | Meet at least annually with the chief financial officer, the senior internal auditing executive and the independent auditor in separate executive sessions. |
While the Audit Committee has the responsibilities and powers set forth in applicable laws, regulations, or accounting principles, wheneverthis Charter, it is not the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargementduty of the benefitsAudit Committee to plan or potential benefits intendedconduct audits or to be made available
under the Plan.
(d) CANCELLATION. Any provision of this Plan or any Award Agreement to
the contrary notwithstanding, the Committee may cause an Award granted hereunder
to be cancelled in consideration of a cash payment or alternative Award made to
the holder of such cancelled Award equal in value to the Fair Market Value of
such cancelled Award.
Section 12. GENERAL PROVISIONS.
(a) NONTRANSFERABILITY.
(i) Each Award, and each right under any Award, shall be exercisable
only by the Participant during a Participant's lifetime, if permissible under
applicable law, by the Participant's guardian or legal representative or by a
transferee receiving such Award pursuant to a qualified domestic relations order
("QDRO"), as determined by the Committee.
(ii) No Award that constitutes a "derivative security", for purposes
of Section 16 of the Exchange Act may be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by a Participant otherwise than by
will or by the laws of descent and distribution or pursuant to QDRO, and any
such purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or an Affiliate;
provideddetermine that the designation of a beneficiary shall not constitute an
assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
(b) NO RIGHTS TO AWARDS. No Employee, Participant, or other Person
shall have any claim to be granted any Award,Company’s financial statements are complete and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or beneficiaries
of Awards. The termsaccurate and conditions of Awards need not be same with respect to
each recipient.
(c) SHARE CERTIFICATES. All certificates for Shares or other
securities of the Company or any Affiliate delivered under the Plan pursuant to
any Award or the exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the plan or the
rules, regulations, and other requirements of the Securities and Exchange
Commission, and stock exchange upon which such Shares or other securities are
then listed, and any applicable Federal or state laws, and the Committee may
cause a legend or legends to be put on any certificates to make appropriate
references to such restrictions.
(d) DELEGATION. Subject to the terms of the Plan and applicable law,
the Committee may delegate to one or more officers or managers of the Company or
any Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant
Awards to, or to cancel, modify or waive rights with respect to, or to alter,
discontinue, suspend, or terminate Awards held by, Employees who are not
officers or directors of the Company for purposes of section 16 of the Exchange
Act, or any successor section thereto, or who are otherwise not subject to such
section and who are not "covered employees" under Section 162(m) of the Code or
would become covered under such Section.
(e) WITHHOLDING. Any participant may be required to pay the Company or
any Affiliate and the Company or any Affiliate shall have the right and is
hereby authorized to withhold from any Award, from any payment due or transfer
made under any Award or under the Plan or from any compensation or other amount
owing to a Participant the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding taxes in respect of an
Award, its exercise, or any payment or transfer under an Award or under the Plan
and to take such other action as may be necessary in the opinion of the company
to satisfy all obligations for the payment of such taxes. The Committee may
provide for additional cash payments to holders of Awards to help defray or
offset any tax arising from the grant, vesting, exercise or payments of any
Award.
(f) AWARD AGREEMENTS. Each Award hereunder shall be evidenced by an
Award Agreement which shall be delivered to the Participant and shall specify
the terms and conditions of the Award and any rules applicable thereto,
including but not limited to the effect on such Award of the death, retirement
or other termination of employment of a Participant and the effect, if any, of a
change in control of the Company.
(g) NO LIMIT IN OTHER COMPENSATION ARRANGEMENTS. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
on effect other compensation arrangements, which may, but need not, provide for
the grant of options, Restricted Stocks, Shares and other types of Awards
provided for hereunder (subject to shareholder approval if such approval is
required), and such arrangements may either be generally applicable or
applicable only in specific cases.
(h) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the company or Affiliate may at any time
dismiss a Participant from employment, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.
(i) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or holder or beneficiary of any Award shall
have any rights as a stockholder with respect to any Shares to be distributed
under the Plan until he or she has become the holder of such Shares.
Notwithstanding the foregoing, in connection with each grant of Restricted Stock
hereunder, the applicable Award shall specify if and to what extent the
Participant shall not be entitled to the rights of a stockholder in respect of
Restricted Stock.
(j) GOVERNING LAW. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan and any Award Agreement shall
be determined in accordance with generally accepted accounting principles. This is the lawsresponsibility of management and the independent auditor. It is also not the duty of the State of Delaware.
(k) SEVERABILITY. IfAudit Committee to conduct investigations, to resolve disagreements, if any, provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under and law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or Award, such provision shall be
stricken as to such jurisdiction, Person or Awardbetween management and the remainder of the Plan
and any such Award shall remain in full force and effect.
(l) OTHER LAWS. The Committee may refuseindependent auditor or to issue or transfer any
Shares or other consideration under an Award if, acting in its sole discretion,
it determines that the issuance or transfer of such Shares or such consideration
might violate any applicable law or regulation or entitle the Company to recover
the same under Section 16(b) of the Exchange Act, and any payment tendered to
the Company by a Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant,
holder or beneficiary. Without limiting the generality of the foregoing, no
Award granted hereunder shall be construed as an offer to sell securities of the
Company, and no such offer shall be outstanding, unless and until the Committee
in its sole discretion has determined that any such offer, if made, would be inassure compliance with all applicable requirements of the U.S. federal securities laws.
(m) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliatelaws and a Participant or
any other Person. To the extent that any person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(n) NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be cancelled, terminated, or otherwise eliminated.
(o) HEADINGS. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 13. TERM OF THE PLAN.
(a) EFFECTIVE DATE. The Plan shall be effective as of the date of its
approval by the directors of the Company.
(b) EXPIRATION DATE. No Award shall be granted under the Plan after
December 31, 2005; provided that the authority for grant of Restoration Options
hereunder in accordance with Section 6(e) shall continue, subject to the
provisions of Section 4, as long as any option granted hereunder remains
outstanding. Unless otherwise expressly provided in the Plan or an applicable
Award Agreement, any Award granted hereunder may, and the authorityregulations.
Appendix
P R O X Y
This Proxy is Solicited on Behalf of the Board
The undersigned hereby appoints Curt Rush and Michael J. Speiller and each of them with power of substitution, attorneys and proxies to represent and to vote all shares of Common Stock of Systemax Inc. (the "Company") which the undersigned is entitled to vote at the Annual Meeting of Stockholders of Systemax Inc. to be held on May 25, 200015, 2001 at 2:00 p.m. local time, asand at any adjournment or postponments thereof.
Under the Company's By-Laws, business transacted at the Annual meetingMeeting of Stockholders is confined to the purposes stated in the Notice of the Meeting. This Proxy will, however, convey discretionary authority to the persons named herein as proxies to vote on matters incident to the conduct of the Meeting.
This Proxy when propertyproperly executed will be voted in the manner directed herein by the undersigned stockholder. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTEDIf no direction is made, this Proxy will be voted FOR THE ELECTION OF THE NOMINEES ANDthe election of the nominees and FOR PROPOSALS 2 and 3.
(ContainedProposal 2.
(Continued and to be dated and signed on the reverse side.)
SYSTEMAX INC.
P.O. BOX 11243
NEW YORK, N.Y. 10203-0243
SYSTEMAX INC. |
1. Election of Directors | FOR all nominees | WITHHOLD AUTHORITY to vote | *EXCEPTIONS /X/ |
Nominees: Richard Leeds, Bruce Leeds, Robert Dooley, Robert Rosenthal, Stacy S. Dick
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions ____________________________________________________________________
2.
2. | To consider and vote upon a proposal to ratify the appointment of Deloitte & Touche LLP as the Company's independent auditors for fiscal 2001. | 3. | To transact such other business as may properly come before the meeting and any and all adjournments or postponments thereof. |
FOR /X/ | AGAINST /X/ | ABSTAIN /X/ |
Change of Address and |
| The signature on this Proxy should correspond exactly with stockholder's name as printed to the left. In the case of joint tenancies, co-executors, or co-trustees, both should sign. Persons signing as Attorney, Executor, Administrator, Trustee or Guardian should give their full title. Dated: , 2001 Signature Signature Votes must be indicated (x) in Black or Blue Ink. /X/ |
(Please sign, date and vote upon a proposal to approvereturn this proxy in the Company's 1999
Long-Term Stock Incentive Plan.
FOR / / AGAINST / / ABSTAIN / /
3. To consider and vote upon a proposal to ratify the appointment of Deloitte
& Touche LLP as the Company's independent auditors for fiscal 2000.
FOR / / AGAINST / / ABSTAIN / /
4. To transact such other business as may properly come before the meeting and
any all adjournments or postponments thereof.
CHANGE OF ADDRESS AND
OR COMMENTS MARK HERE
THE SIGNATURE ON THIS PROXY SHOULD
CORRESPOND EXACTLY WITH STOCKHOLDER'S
NAME AS PRINTED TO THE LEFT. IN THE CASE
OF JOINT TENANCIES, CO-EXECUTORS, OR
CO-TRUSTEES, BOTH SHOULD SIGN. PERSONS
SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN
SHOULD GIVE THEIR FULL TITLE.
Dated: _____________________, 2000
__________________________________
(Signature)
___________________________________
(Signature)
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. /X/
(PLEASE SIGN, DATE AND RETURN THIS PROXY
IN THE ENCLOSED POSTAGE PREPAID ENVELOPE.enclosed postage prepaid envelope.)