THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO S.C. CODE ANN. 15-48-10, et seq., THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
Exhibit 10.1
THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO S.C. CODE
ANN. § 15-48-10, et seq., THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
Mr. Gerald Lyons
August 23, 2017
Dear Gerry:
The Compensation Committee (the Compensation Committee) of the Board of Directors (the Board) of ScanSource, Inc. (the Company) has determined that it would be appropriate to formalize certain terms and conditions of your employment with the Company through the terms and conditions of this employment letter agreement (the Letter Agreement), which Letter Agreement will be effective as of the date stated above (the Effective Date). As the Chairman of the Compensation Committee, I am pleased to extend to you the offer to continue your employment with the Company on the terms and conditions stated in this Letter Agreement.
1. Certain Employment Terms. You will be our Chief Financial Officer and Executive Vice President of the Company and may serve as an officer and/or director of one or more of the Companys subsidiaries or other affiliates if and as directed by the Board. Your position is a full-time position and you will be expected to continue to devote your full business time and attention to the performance of your duties and responsibilities in the position(s) described above. You will report to the Chief Executive Officer, and/or the Board. Your employment will be for no set duration. You will be an at-will employee, which means that either the Company or you may terminate the employment relationship at any time, for any reason or no reason, with or without cause, subject to the severance plan benefit opportunities referenced in Section 5 of this Letter Agreement. Although your position will require travel, your principal place of employment will be at the Companys headquarters in Greenville, South Carolina, and you will be expected to continue to reside in the Greenville, South Carolina area. You are authorized to join up to a total of two non-competing public and/or private corporation boards of directors, subject to prior notice to and approval by the Board.
2. Base Salary. Your annual base salary as of the Effective Date in your role as Chief Financial Officer and Executive Vice President will be $350,000, paid in accordance with the Companys payroll practices (every two weeks by direct deposit) pro-rated for any partial year, and less applicable taxes and withholdings. Your salary will be subject to annual review by the Compensation Committee but shall not be subject to decrease without your consent.
3. Variable Cash Incentive Awards. You will be eligible to participate in the Companys cash-based variable compensation incentive plan (the Bonus Plan). Your target annual bonus opportunity for fiscal 2018 shall be equal to 70% of base salary, and your maximum annual bonus opportunity shall not exceed 140% of your base salary (2 times target). Thereafter, your target and maximum short-term incentive opportunities shall be subject to periodic review by the Compensation Committee, provided that you will be eligible to participate in the Bonus Plan at a level commensurate with the level of participation of other senior executive officers of the Company. Bonuses, if any, may be pro rated for any partial years, based on actual performance. The performance measures and goals applicable to your annual bonus opportunity (for any year) shall be established by the Compensation Committee, and the Compensation Committee shall have the discretion to determine if, and the extent to which, any such measures and goals have been met and the bonus has been earned. While it is generally anticipated that your annual short-term incentive opportunities will be maintained, your participation in the Bonus Plan does not constitute a promise of payment. Your actual incentive payout, if any, will depend on the Companys financial and business performance and/or the Compensation Committees assessment of your individual performance, and will be subject to the terms and conditions of the Bonus Plan. Any bonus payment made to you under the Bonus Plan will be paid to you in accordance with Treasury Reg. Section 1.409A-1(b)(4) or shall otherwise be made in a manner intended to be exempt from, or to comply with, Section 409A of the Internal Revenue Code of 1986, as amended (the Code).
4. Long-Term Incentive Awards. You will be eligible to participate in and receive awards under any long-term incentive plan or program of the Company that is in place from time to time in which other senior executive officers of the Company participate. The amount, form and vesting and other terms and conditions of such awards will be reviewed and established periodically by the Compensation Committee, but it is expected that you will be granted equity awards in the normal course of business at a level commensurate with the level of equity awards granted to other senior executive officers of the Company. Your long-term incentive awards shall be of a type(s) determined by the Compensation Committee (e.g., restricted stock units, options, performance awards, other equity awards or any combination of the foregoing) and shall be subject to the terms of the Companys 2013 Long-Term Incentive Plan (as it may be amended, and any successor plan thereto, the Stock Plan) and award agreement(s) in form(s) established by the Compensation Committee.
5. Severance Benefits; Restrictive Covenants. You will be designated to participate in the ScanSource, Inc. Executive Severance Plan (the Severance Plan), such designation to occur on or as soon as practicable following the Effective Date, which Severance Plan shall include such terms and conditions as may be established by the Compensation Committee and/or the Board. Subject to the terms of the Severance Plan, it is currently anticipated that you will be eligible for severance benefits equal to 1.5 times your three-year average annual (a) base salary and (b) variable compensation (as defined in the Severance Plan) upon termination by the Company without cause or by you for good reason (as such terms are defined in the Severance Plan), or 2.0 times your three-year average annual base salary and variable compensation in the event of a non-cause termination by the Company or your termination for good reason within 12 months after or prior to and otherwise in contemplation of a change in control (as defined in the Severance Plan). Without limiting the effect of the foregoing, the treatment of any equity awards upon such a qualifying termination will be subject to the terms of the Stock Plan and related award agreements. In addition, you will be subject to certain non-competition, non-solicitation, confidentiality and other restrictive covenants (collectively, the Restrictive Covenants), as provided in the Severance Plan or other applicable plan or arrangement (with such Restrictive Covenants to apply during employment and for such period(s) following termination of employment as may be provided in the Severance Plan or other applicable plan or arrangement), and your entitlement to benefits under the Severance Plan and the Letter Agreement shall be subject to your compliance with such Restrictive Covenants. Notwithstanding the foregoing, (i) nothing in this Letter Agreement or other agreement prohibits you from reporting possible violations of law or regulation to any federal, state or local governmental agency or entity, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress and any agency Inspector General (the Government Agencies), or communicating with Government Agencies or otherwise participating in any investigation or proceeding that may be conducted by Government Agencies, including providing documents or other information, (ii) you do not need the prior authorization of the Company to take any action described in (i), and you are not required to notify the Company that you have taken any action described in (i); and (iii) the Letter Agreement does not limit your right to receive an award for providing information relating to a possible securities law violation to the Securities and Exchange Commission. Further, notwithstanding the foregoing, you will not be held criminally or civilly liable under any federal, state or local trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and (B) solely for the purpose of reporting or investigating a suspected violation or law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Additionally, an individual suing an employer for retaliation based on the reporting of a suspected violation of law may disclose a trade secret to his or her attorney and use the trade secret information in the court proceeding, so long as any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order.
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6. Health and Welfare Benefits. The Company provides a comprehensive package of benefits, including medical and prescription drug coverage, dental coverage, vision coverage, life insurance, short- and long-term disability insurance and other offerings. Provided you remain an eligible employee as defined under each of the Companys health and welfare benefits plan(s), you will continue to be eligible to participate in such plan(s), subject to the applicable terms of such plan(s) and the Companys right to modify or terminate such plans.
7. 401(k) Savings Plan. You will continue to be eligible to participate in the Company-sponsored 401(k) savings plan, subject to the terms of such plan and the Companys right to modify or terminate such plan. The Company may in its discretion match a portion of your contributions in accordance with the applicable plan provisions. Eligibility requirements and conditions of enrollment and coverage are subject to change and are set forth in the applicable plan documents.
8. Deferred Compensation. You will continue to be eligible to participate in the Companys Nonqualified Deferred Compensation Plan, subject to the plans terms and conditions and the Companys right to modify or terminate such plan.
9. Vacation. You will be entitled to no less than twenty (20) vacation days. The Company also offers eight (8) paid holidays.
10. Business Travel; Reimbursements. You will be expected to travel in connection with your employment. The Company will reimburse you for reasonable business expenses incurred in connection with your employment, upon presentation of documentation in accordance with the Companys applicable expense reimbursement policies for senior management. All expenses eligible for reimbursements in connection with your employment with the Company must be incurred by you during the term of your employment or service to the Company. The amount of reimbursable expenses incurred in one taxable year shall not affect the expenses eligible for reimbursement in any other taxable year. In no event shall any reimbursement be paid after the last day of your taxable year following the taxable year during which the expense was incurred. No right to reimbursement is subject to liquidation or exchange for other benefits.
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11. Withholding and Taxes. All amounts payable or that become payable under this Letter Agreement will be subject to any deductions and withholdings previously authorized by you or required by law. You will be responsible for any and all taxes resulting from the benefits provided under the Letter Agreement. The Company makes no undertakings regarding, and has no obligation to achieve, any certain tax results for you related to the benefits provided herein.
12. Waiver and Release. You acknowledge and agree that the Company may at any time require, as a condition to receipt of certain benefits payable under this Letter Agreement, the Severance Plan or other plan, agreement or arrangement, that you (or a representative of your estate) execute a waiver and release discharging the Company and its subsidiaries, and their respective affiliates, and its and their officers, directors, managers, employees, agents and representatives and the heirs, predecessors, successors and assigns of all of the foregoing, from any and all claims, actions, causes of action or other liability, whether known or unknown, contingent or fixed, arising out of or in any way related to your employment, or the ending of your employment with the Company or the benefits thereunder, including, without limitation, any claims under this Letter Agreement or other related instruments. The waiver and release will be in a form determined by the Company and shall be executed prior to the expiration of the time period provided for payment of such benefits.
13. Amendment and Termination; Entire Agreement; Consideration. This Letter Agreement may be amended or terminated by a written agreement between you and the Company, with the Chairman of the Compensation Committee (or another designee of the Compensation Committee) acting on behalf of the Company. Except for the Executive Severance Plan and Stock Plan (and related participation and award agreements), this Letter Agreement contains the entire agreement of you and the Company related to the subject matter hereof and supersedes all prior verbal or written discussion, agreements and understandings with respect to such subject matter, and you and the Company have made no agreements, representations or warranties related to the subject matter of this Letter Agreement that are not set forth herein. Without in any way limiting the effect of the foregoing, you and the Company hereby acknowledge and agree that that certain Employment Agreement dated as of July 1, 2014, as amended pursuant to that First Amendment to Amended and Restated Employment Agreement effective as of June 15, 2017 (such agreement, as amended and/or restated to date, the 2014 Employment Agreement), between you and the Company shall be terminated as of the Effective Date and that you shall have no further rights or benefits under such 2014 Employment Agreement as of the Effective Date. Your entering into this Letter Agreement does not violate any other agreements or obligations. As a condition to the effectiveness of this Letter Agreement, you will be required to sign a mutual agreement to arbitrate claims in form acceptable to the Company. You further acknowledge that you are receiving valuable consideration in exchange for agreeing to the terms of this Letter Agreement.
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14. Compliance with Code Section 409A; Recoupment, Ownership and Other Policies or Agreements. You and the Company agree that you both will cooperate in good faith so that no compensation paid to you by the Company under this Letter Agreement will violate Code Section 409A and the regulations promulgated thereunder. In case any one or more provisions of this Letter Agreement fail to comply with the provisions of Code Section 409A, the remaining provisions of this Letter Agreement shall remain in effect, and this Letter Agreement shall be administered and applied as if the non-complying provisions were not part of this Letter Agreement. The parties in that event shall endeavor to agree upon a reasonable substitute for the non-complying provisions, to the extent that a substituted provision would not cause this Letter Agreement to fail to comply with Code Section 409A, and, upon so agreeing, shall incorporate such substituted provisions into this Letter Agreement. A termination of your employment hereunder shall not be deemed to have occurred for purposes of any provision of this Letter Agreement providing for the payment of any amount or benefit constituting deferred compensation under Code Section 409A upon or following a termination of employment unless such termination is also a separation from service within the meaning of Code Section 409A and, for purposes of any such provision of this Letter Agreement, references to a termination, termination of employment or like terms shall mean separation from service. In the event that any payment or benefit made hereunder or under any compensation plan, program or arrangement of the Company would constitute payments or benefits pursuant to a non-qualified deferred compensation plan within the meaning of Code Section 409A and, at the time of your separation from service you are a specified employee within the meaning of Code Section 409A, then any such payments or benefits that are provided to you on account of your separation from service shall be delayed until the six-month anniversary of the date of your separation from service (such six month anniversary being the Specified Employee Payment Date). The aggregate amount of any payments that would otherwise have been made during such six-month period shall be paid in a lump sum on the Specified Employee Payment Date with interest and, thereafter, any remaining payments shall be paid without delay in accordance with their original schedule. If you die before the Specified Employee Payment Date, any delayed payments shall be paid to your estate in a lump sum within 30 days of your death. Each payment made under this Letter Agreement shall be designated as a separate payment within the meaning of Code Section 409A. You acknowledge and agree that in the event that this Letter Agreement or any benefit described herein shall be deemed not to comply with Code Section 409A, then neither the Company, the Board, the Compensation Committee nor its or their designees or agents shall be liable to you or other persons for actions, decisions or determinations made in good faith. Further, as a condition to entering into this Letter Agreement, you agree that you will abide by all provisions of any compensation recovery (clawback) policy, stock ownership guidelines, equity retention policy and/or other similar policies maintained by the Company, each as in effect from time to time and to the extent applicable to you from time to time. In addition, you will be subject to such compensation recovery, recoupment, forfeiture or other similar provisions as may apply at any time to you under applicable law.
15. Compensation and Benefit Plans Control. The Companys benefit offerings and other terms and conditions of employment are subject to change or termination, with or without notice. In the event of differences between any documents relating to compensation and benefits, the terms of the applicable plan or other document will control.
16. Governing Law; Successors and Assigns. This Letter Agreement will be governed by and construed in accordance with the laws of the State of South Carolina, without regard to the principles of conflict of laws, and in accordance with applicable U.S. federal law. The provisions, obligations and rights of this Letter Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
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On behalf of the Compensation Committee, the Board and the Company, we thank you for your service and look forward to your continued service. If the terms of this Letter Agreement are acceptable to you, please sign the letter below and return it to the Companys Vice President Worldwide Human Resources, at your earliest opportunity.
Sincerely,
/s/ Peter Browning
Peter Browning
Chairman of the Compensation Committee,
Board of Directors of ScanSource, Inc.
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I acknowledge receipt and acceptance of the continued offer of employment in this Letter Agreement, as such terms are modified by this Letter Agreement. By my signature below, I accept all terms and conditions set forth above. In addition, I acknowledge and agree that, I will be employed on an at-will basis and that any change to that status may only be made through an agreement in writing signed by the Company. In addition, my continued employment is contingent on the condition that I execute a mutual agreement to arbitrate claims in form acceptable to the Company, which should be executed in conjunction with your acceptance of the offer of continued employment as described in this Letter Agreement.
Accepted: | /s/ Gerald Lyons | |||||||
Gerald Lyons |
Date: August 23, 2017
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