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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 5, 2018

Systemax Inc.
(Exact Name of Registrant as Specified in its Charter)

Delaware
 
1-13792
 
11-3262067
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
 
 
11 Harbor Park Drive, Port Washington, New York
 
11050
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (516) 608-7000

N.A.
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions ( see General Instruction A.2 below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CRF 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company          ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.          ☐
 







Item 5.02 (b), (c) and (e)
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.


On October 8, 2018, Systemax Inc. (the “Company”) announced a CEO succession plan under which Barry Litwin, a member of the Company’s Board of Directors and currently the Chief Executive Officer of Adorama, Inc., will join the Company as Chief Executive Officer on January 7, 2019. Larry Reinhold, President and Chief Executive Officer and a member of the Company’s Board of Directors, will step down from his management roles at the Company on that date and will assist Mr. Litwin in his transition to his new responsibilities over the next several months. Mr. Litwin and Mr. Reinhold will remain on the Board of Directors.

Barry Litwin

Mr. Litwin has served as Chief Executive Officer of Adorama since 2015. His business experience is described in the Company’s Proxy Statement for the 2018 Annual Meeting of Stockholders at page 6, and is hereby incorporated by reference. During the Employment Period, the Company will cause Mr. Litwin to be favorably recommended as a nominee to be elected as a member of the Board of Directors of the Company.

The Company entered into an employment agreement with Mr. Litwin to employ him as Chief Executive Officer of the Company (the “Agreement”), commencing January 7, 2019 and until terminated (the “Employment Period”) due to death, by the Company for “total disability (as defined), for “cause” (as defined) or without “cause”, or by Mr. Litwin voluntarily for any reason or for “good reason” (as defined) (each shall be referred to as the “Date of Termination”).

The Agreement provides for a minimum annual base salary of $825,000 and an annual cash bonus (the “Bonus”) in an amount to be determined by the Company under its Named Executive Officer Plan, which Bonus generally will range from 0%-150% of Mr. Litwin’s annual base salary, with an on-target performance payout of 135% of annual base salary, assuming Mr. Litwin meets the performance objectives (including the Company’s financial and other performance objectives) established for him by the Company. In addition, Mr. Litwin is entitled to four weeks’ vacation and a car allowance of up to $2,500 per month.

At the commencement of the Employment Period, Mr. Litwin will receive a one-time cash sign-on bonus of $614,000; the sign on bonus is subject to repayment (all if terminated in year one, and half if terminated before the end of year two, of the Employment Period) if Mr. Litwin’s employment terminates due to his voluntary resignation without “good reason” (as defined) or is terminated by the Company for “cause” (as defined) during the first two years of the Employment Period.

At the commencement of the Employment Period, Mr. Litwin will also receive options to purchase 100,000 shares of common stock pursuant to the Company’s 2010 Long Term Stock Incentive Plan. The stock options will have a ten year term, and 20% of the stock options will vest on the first anniversary of the grant date, 20% will vest on the second anniversary of the grant date and 10% will vest on each subsequent anniversary of the grant date. In the event of termination without “cause” or by Mr. Litwin for “good reason”, the next immediate tranche of granted options that would otherwise have vested if employment had not been so terminated shall accelerate and be vested as of the Date of Termination.

In addition, on January 7, 2019 and on each subsequent anniversary date of the commencement of the Employment Period, Mr. Litwin shall receive a grant of shares of restricted stock under the Company 2010 Long Term Incentive Plan, such number of shares to be determined as the quotient of $700,000 divided by the then per share fair market value of the Company’s shares as quoted on the NYSE at the close of business on the day prior to each such anniversary date of commencement of Employment Period. Each annual grant of the restricted stock will vest in equal 20% installments on the one year anniversary date of each such annual grant and on each subsequent anniversary date of each such grant. In the event of termination without “cause” (as defined) or by Mr. Litwin for “good reason” (as defined), the next immediate tranche of granted restricted stock that would otherwise have vested if employment had not been so terminated shall accelerate and be vested as of the Date of Termination.

The stock option agreement and restricted stock agreement with Mr. Litwin shall provide that if his employment is terminated by the Company without “cause” or by Mr. Litwin for “good reason” within twelve months following a “Change in Control” (as defined), all of his outstanding unvested stock options and unvested restricted stock shall immediately vest and all of Mr. Litwin's outstanding options shall remain exercisable in accordance with their terms.

In the event of termination for death, “total disability”, “cause” or voluntary termination by Mr. Litwin, Mr. Litwin would receive any unpaid salary, and the pro rata portion of any Bonus which would otherwise be paid to him if such termination had not occurred. If Mr. Litwin resigns for “good reason” or if the Company terminates him without “cause”, Mr. Litwin shall receive, 12 months’ base salary, payable over a period of twelve months (the “Severance Period”), the target Bonus which would otherwise be paid





for the year in which termination occurred, ), up to four weeks unused accrued vacation, and reimbursement during the Severance Period for COBRA insurance coverage.

The Agreement includes customary nondisclosure and non-compete/non-solicit provisions effective for one year following termination.

During the Employment Period, Mr. Litwin will no longer receive the standard cash and equity compensation normally paid to its non-employee directors, as the Company’s policy is not to pay compensation to directors who are also employees of the Company. The Company’s direct compensation policy is described in the Company’s Proxy Statement for the 2018 Annual Meeting of Stockholders at page 46, and is hereby incorporated by reference.

Additional information regarding our executive officers can be found in the Company’s Proxy Statement for the 2018 Annual Meeting of Stockholders at page 21, and is hereby incorporated by reference.

Lawrence Reinhold

Mr. Reinhold entered into a separation agreement with the Company pursuant to which following his separation on January 7, 2019, he will receive cash separation payments as follows: (i) an amount equal to one year’s base salary and the average of Mr. Reinhold’s bonus for fiscal years 2016 and 2017; and (ii) an amount equal to Mr. Reinhold’s annual auto allowance and reimbursement of up to 12 months COBRA medical benefits payments. In addition, all of his unvested restricted stock units will accelerate and vest on the separation date.

On the separation date, Mr. Reinhold will enter into a two year consulting agreement with the Company, and pursuant to which certain option awards previously granted to Mr. Reinhold will continue to vest, terminate or remain exercisable in accordance with their terms during the ongoing consultancy period. Mr. Reinhold shall remain a director of the Company, and he shall receive the standard cash and equity compensation paid to its non-employee directors as described in the Proxy Statement for the 2018 Annual Meeting of Stockholders at page 46, and which information is hereby incorporated by reference.

A press release regarding the management succession plan was issued by the Company on October 8, 2018, a copy of which is filed as an exhibit hereto.


Item 9.01.
Financial Statements and Exhibits.

Exhibit
Number
 
Description
99.1
 
Press Release of Systemax Inc., dated October 8, 2018.






Exhibit Index

Press Release of Systemax Inc., dated October 8, 2018.

 







SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
SYSTEMAX INC.
 
 
 
Date: October 11, 2018
 
 
 
 
 
 
By: 
/s/ Eric Lerner
 
 
Name: Eric Lerner
 
 
Title: Senior Vice President



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

Exhibit 99.1
 
395322278_systemaxlogoa02.jpg

Systemax Announces Chief Executive Officer Succession Plan


-Barry Litwin to Join as Chief Executive Officer on January 7, 2019-
-Larry Reinhold to Remain on Board of Directors-




PORT WASHINGTON, NY, October 8, 2018 - Systemax Inc. (NYSE:SYX) today announced a CEO succession plan under which Barry Litwin, a member of the Systemax Board of Directors and currently the Chief Executive Officer of Adorama, Inc., will join the Company as Chief Executive Officer on January 7, 2019. Larry Reinhold, President and Chief Executive Officer and a member of the Systemax Board of Directors, will step down from his management roles at the Company on that date and will assist Mr. Litwin in his transition to his new responsibilities over the next several months. Mr. Litwin and Mr. Reinhold will remain on the Board of Directors.

Richard Leeds, Executive Chairman, said, “Barry Litwin has been a valued member of our Board of Directors and during the past year we have seen firsthand his management abilities and expertise. We look forward to continuing to benefit from his acumen in sales growth and operational excellence, which will be critical in the continued execution of our ongoing business initiatives. Barry is already very familiar with the Company through his board membership and we expect the transition will be seamless.”

Barry Litwin said, “Systemax is well-positioned for its next stage of growth, as we build and execute a clear and differentiated strategy to provide customers with exceptional value. We will strive to enhance our leading end-to-end customer experience, our integrated digital and high-touch sales and service capability and, our position as a single source for premier branded and innovative products and services. I am excited to lead Systemax and our associates to the next level of growth.”

Mr. Leeds continued, “Larry has been with Systemax for nearly 12 years and ascended to the CEO role three years ago, and working closely with the Board, has successfully led the Company through numerous planned restructuring and business improvement initiatives. Larry has done an exceptional job leading the Company, and shareholder value has grown significantly through this process. With these initiatives complete, we determined with Larry that the time is right for him to move on to new challenges, and for us to further leverage the platform Larry helped us build.”

Larry Reinhold said, “With a singular focus on the MRO and industrial equipment market, Systemax is well positioned to capitalize on its future growth opportunities and this marks an ideal time for me to pursue other interests. I wish to thank all of our associates for their efforts and support over the years and look forward to working with Barry during the transition. I will remain a significant shareholder and I’m excited to continue to serve as a consultant and a Board member to the company.”

Barry Litwin has served as Chief Executive Officer of Adorama since 2015. His previous executive roles included overseeing the e-commerce businesses and digital strategy for Sears Holdings, Inc., Office Depot, and Newark Electronics, Inc., in addition to serving as an advisor to several early stage technology companies. Barry graduated from Indiana University with a BS degree, and an MBA in Operations from Loyola University, Quinlan School of Business in 1992.
About Systemax Inc.
Systemax Inc. (www.systemax.com), through its operating subsidiaries, is a provider of industrial products in North America, going to market through a system of branded e-Commerce websites and relationship marketers.  The Company’s primary brand is Global Industrial (www.globalindustrial.com).




Forward-Looking Statements
This press release contains forward looking statements within the meaning of that term in the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).  Additional written or oral forward looking statements may be made by the Company from time to time in filings with the Securities and Exchange Commission or otherwise.  Statements contained in this press release that are not historical facts are forward looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are based on management's estimates, assumptions and projections and are not guarantees of future performance.  The Company assumes no obligation to update these statements. Forward looking statements may include, but are not limited to, projections or estimates of revenue, income or loss, exit costs, cash flow needs and capital expenditures, statements regarding future operations, expansion or restructuring plans, including our exit from and winding down of our sold NATG operations, financing needs, compliance with financial covenants in loan agreements, plans relating to products or services of the Company, assessments of materiality, predictions of future events and the effects of pending and possible litigation, as well as assumptions relating to the foregoing. In addition, when used in this release, the words "anticipates," "believes," "estimates," "expects," "intends," and "plans" and variations thereof and similar expressions are intended to identify forward looking statements.
Other factors that may affect our future results of operations and financial condition include, but are not limited to, unanticipated developments in any one or more of the following areas, as well as other factors which may be detailed from time to time in our Securities and Exchange Commission filings: risks involved with e-commerce, including possible loss of business and customer dissatisfaction if outages or other computer-related problems should preclude customer access to our products and services; the Company's management information systems and other technology platforms supporting our sales, procurement and other operations are critical to our operations and disruptions or delays have occurred and could occur in the future, and if not timely addressed would have a material adverse effect on us; we could suffer a data security breach due to our e-commerce and data storage systems being hacked by those seeking to steal Company information, vendor, employee or customer personal information, or due to employee error, resulting in disruption to our operations, loss of information and privacy, legal claims and adverse material impact on our reputation and business; meeting credit card industry compliance standards in order to maintain our ability to accept credit cards; technological change has had and can continue to have a material effect on our product mix and results of operations; general economic conditions will continue to impact our business; extreme weather conditions could disrupt our product supply chain and our ability to ship or receive products, which would adversely impact sales; our international operations are subject to risks such as fluctuations in currency rates and foreign regulatory requirements, and our operations are subject to the impact of newly enacted US and foreign tariffs, and political uncertainty; and managing various inventory risks, such as being unable to profitably resell excess or obsolete inventory and/or the loss of product return rights and price protection from our vendors.
Investor/Media Contacts:
Mike Smargiassi
The Plunkett Group
212-739-6729
mike@theplunkettgroup.com
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