Exhibit 10.2

GSI Commerce, Inc.

2005 Equity Incentive Plan

Performance Restricted Stock Unit Award Agreement

 

PARTICIPANT:   MICHAEL G. RUBIN GRANT DATE:   August     , 2006

TARGET NUMBER OF PERFORMANCE

RESTRICTED STOCK UNITS:

                                                    units PERFORMANCE PERIOD:  
July 31, 2006 - December 31, 2006

THIS AGREEMENT, effective as of the Grant Date set forth above, is between GSI
Commerce, Inc., a Delaware corporation (the “Company”, “we”, “our” or “us”) and
the Participant named above (“you” or “yours”), pursuant to the provisions of
the Company’s 2005 Equity Incentive Plan (the “Plan”) with respect to the award
of the number of performance restricted stock units (“PRSUs”) specified above.
Capitalized terms used and not defined in this Performance Restricted Stock Unit
Award Agreement (this “Agreement”) shall have the meanings given to them in the
Plan.

By accepting this Agreement, you irrevocably agree, on your own behalf and on
behalf of your heirs and any other person claiming rights under this Agreement,
to all of the terms and conditions of the PRSUs as set forth in or pursuant to
this Agreement and the Plan (as such may be amended from time to time). You and
the Company agree as follows:

 

1.      Application of Plan; Administration

   This Agreement and your rights under this Agreement are subject to all the
terms and conditions of the Plan, as it may be amended from time to time, as
well as to such rules and regulations as the Board (or an appropriate committee
thereof) may adopt. It is expressly understood that the Board (or an appropriate
committee thereof) that administers the Plan is authorized to administer,
construe and make all determinations necessary or appropriate to the
administration of the Plan and this Agreement, all of which shall be binding
upon you to the extent permitted by the Plan.

2.      Performance Goal

   The number of PRSUs issued to you under this Agreement shall depend upon the
extent to which the Company’s earnings before interest, taxes and depreciation
and/or amortization equals, exceeds or falls short of $[                    ]
(“EBITDA Target”) for the Performance Period. If actual EBITDA for the
Performance Period does not equal or exceed the 90% EBITDA Target threshold, as
set forth in the table below, the right to receive any PRSUs pursuant to this
Agreement shall expire without consideration. Subject to the foregoing, and
provided that you have remained in Continuous Service with the Company from the
Grant Date set forth above, the number of PRSUs issued to you following
completion of the Performance Period (such PRSUs, the “Granted PRSUs”) shall be
determined in accordance with the following schedule:

--------------------------------------------------------------------------------

Percentage

EBITDA Target

   EBITDA
Required to
Achieve
Percentage
EBITDA Target   

Number of Granted

PRSUs If Percentage EBITDA Goal Achieved

90% EBITDA Target    $                 0.50 times Target Number of PRSUs 95%
EBITDA Target    $                 0.75 times Target Number of PRSUs 100% EBITDA
Target    $                 1 times Target Number of PRSUs 105% EBITDA Target   
$                 1.25 times Target Number of PRSUs 110% EBITDA Target   
$                 1.5 times Target Number of PRSUs

 

  In the event that the Company’s EBITDA for the Performance Period falls
between two of the Percentage EBITDA Targets listed in the table above, the
number of Granted PRSUs shall be determined by linear interpolation.
Notwithstanding anything herein to the contrary, in no event shall more than 1.5
times the Target Number of PRSUs be issued under this Agreement.   Following the
end of the Performance Period and the collection of relevant data necessary to
determine the extent to which the EBITDA Target set forth in this Section 2 has
been satisfied, the Board (or an appropriate committee thereof) will determine:
(a) the EBITDA achieved by the Company for the Performance Period and (b) the
multiple of the Target Number of PRSUs to be issued as Granted PRSUs. The Board
(or an appropriate committee thereof) shall make these determinations in its
sole discretion. The class and number of securities subject to or issued under
this Agreement shall be subject to adjustment as provided for in Section 12(a)
of the Plan. The Board’s (or an appropriate committee thereof) determination
pursuant to this paragraph shall be evidenced by a written certification.

3.      Vesting

  50% of the Granted PRSUs will vest (becoming “Vested Performance Units”) on
the first anniversary of the issuance of such Granted PRSUs and the remaining
Granted PRSUs will vest on the second anniversary of the issuance of such
Granted PRSUs (each such anniversary, a “Vesting Date”), provided that you have
remained in Continuous Service with the Company from the Grant Date set forth
above until the respective Vesting Date, and provided further that in no case
shall any Granted PRSUs vest before the date of the Board’s (or an appropriate
committee thereof) written certification pursuant to Section 2 hereof.
Notwithstanding the foregoing, the terms and provisions of that certain
Employment Agreement between you and the Company, effective as of July 1, 2006
(your “Employment Agreement”), may provide that any restrictions contained in
this Section 3 will lapse in certain circumstances.

--------------------------------------------------------------------------------

4.      Termination of Continuous Service

  Except as otherwise provided in your Employment Agreement and Section 7 of
this Agreement, your right to the issuance of PRSUs and your rights under any
Granted PRSUs that have not become Vested Performance Units will be forfeited
without consideration as of the date of termination of your Continuous Service
with the Company for any reason.

5.      Settlement of Vested Performance Units and Issuance of Shares

 

Subject to any deferral pursuant to this Section 5, each Vested Performance Unit
will be settled by the delivery of one share of Common Stock (subject to
adjustment under Section 12(a) of the Plan, a “Share”) to you or, in the event
of your death, to your designated beneficiary, promptly following the Vesting
Date, subject to your satisfaction of any tax withholding obligations as
described in Section 9 of this Agreement.

 

Notwithstanding any other provision of this Agreement or the Plan, the Company
will not be obligated to issue or deliver any Shares pursuant to this Agreement
(i) until all conditions to this Agreement have been satisfied or removed, (ii)
until, in the opinion of counsel to the Company, all applicable Federal and
state laws and regulations have been complied with, (iii) if the outstanding
Common Stock is at the time listed on any stock exchange or included for
quotation on an inter-dealer system, until the Shares have been listed or
included or authorized to be listed or included on such exchange or system upon
official notice of issuance, (iv) until the issuance or delivery of the Shares
would not cause the Company to issue or sell more shares of Common Stock than
the Company is then legally entitled to issue or sell, and (v) until all other
legal matters in connection with the issuance and delivery of such Shares have
been approved by counsel to the Company.

 

You hereby authorize any brokerage service provider determined acceptable to the
Company to open a securities account for you to be used for the settlement of
Vested Performance Units. The date on which Shares are issued may include a
delay in order to provide the Company such time as it determines appropriate to
address tax withholding and other administrative matters.

 

Subject to the satisfaction of all of the tax withholding obligations described
in Section 9 below, you may elect to defer the settlement of your Vested
Performance Units and the receipt of any Shares issuable pursuant to such
settlement by submitting to the Company a Deferral Election Form, which form is
attached hereto as Exhibit A (the “Deferral Election Form”), subject to such
modifications as the Board (or an appropriate committee thereof) may deem
necessary in order to comply with the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”). In the event you intend
to defer the receipt of any Shares, you must submit to the Company the Deferral
Election Form within 30 days following the Grant Date. You hereby represent that
you understand the effect of any such deferral under relevant Federal, state and
local tax laws.

6.      Rights as Stockholder

  Except as otherwise provided in this Agreement, you will not be entitled to
any privileges of ownership of the shares of Common Stock underlying your PRSUs,
including voting, receipt of dividends or any other rights as a stockholder of
the Company, unless and until shares of Common Stock are actually delivered to
you under this Agreement.

--------------------------------------------------------------------------------

7.      Change in Control

   Notwithstanding anything to the contrary in this Agreement, the Granted PRSUs
shall be subject to such acceleration of vesting upon a Change in Control as may
be provided for in your Employment Agreement.

8.      Transferability

   Except as provided in Section 10(k) hereof, your right to receive PRSUs under
this Agreement, your Granted PRSUs and any Vested Performance Units that you
hold pursuant to this Agreement are not transferable, whether voluntarily or
involuntarily, by operation of law or otherwise, other than by will or the laws
of descent and distribution. Any voluntary or involuntary assignment, pledge,
transfer, or other disposition of, or any attachment, execution, garnishment, or
lien issued against or placed upon your right to receive PRSUs under this
Agreement, your Granted PRSUs and any Vested Performance Units that you hold
pursuant to this Agreement in violation of the terms of this Agreement shall be
void. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, will thereafter be entitled to receive any
distribution of Shares pursuant to this Agreement.

9.      Taxes

   (a)    General. You are ultimately liable and responsible for all taxes owed
by you in connection with your PRSUs, regardless of any action the Company takes
or any transaction pursuant to this Section 9 with respect to any tax
withholding obligations that arise in connection with the PRSUs. The Company
makes no representation or undertaking regarding the treatment of any tax
withholding in connection with the grant, issuance, vesting or settlement of the
PRSUs, the Granted PRSUs or the Vested Performance Units, and the subsequent
sale of any of the Shares underlying the Granted PRSUs that may vest. Except as
otherwise provided in the Employment Agreement, the Company does not commit and
is under no obligation to structure this Agreement to reduce or eliminate your
tax liability.    (b)    Withholding. On or before the date upon which your
Granted PRSUs are issued, any Vesting Date, the date your Vested Performance
Units are settled and Shares are issued to you pursuant to the terms of Section
5, and any other date upon which tax withholding obligations of the Company may
arise, or at any time thereafter as requested by the Company, you hereby
authorize withholding from, at the Company’s election, the Shares, payroll and
any other amounts payable to you and you otherwise agree to make adequate
provision for, as determined by the Company, any sums required to satisfy the
Federal, state, local and foreign tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with any of the above events or
otherwise. Unless the tax withholding obligations of the Company or any
Affiliate are satisfied, the Company will have no obligation to issue a
certificate for Shares.

--------------------------------------------------------------------------------

10.    Miscellaneous

   (a)    YOU ACKNOWLEDGE AND AGREE THAT THE VESTING OF PRSUS PURSUANT TO
SECTION 3 HEREOF IS EARNED ONLY BY YOUR CONTINUOUS SERVICE WITH THE COMPANY (AND
NOT THROUGH THE ACT OF BEING HIRED OR ACQUIRING GRANTED PRSUS HEREUNDER). YOU
FURTHER ACKNOWLEDGE AND AGREE THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE, DIRECTOR, OR
CONSULTANT OF THE COMPANY FOR THE VESTING PERIOD, FOR THE PERFORMANCE PERIOD,
FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH YOUR RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE YOUR RELATIONSHIP (I) AS AN EMPLOYEE AT ANY TIME,
FOR ANY REASON OR NO REASON, WITH OR WITHOUT CAUSE; (II) AS A CONSULTANT
PURSUANT TO THE TERMS OF YOUR AGREEMENT WITH THE COMPANY OR AN AFFILIATE; OR
(III) AS A DIRECTOR PURSUANT TO THE BYLAWS OF THE COMPANY AND ANY APPLICABLE
PROVISIONS OF THE CORPORATE LAW OF THE STATE OR OTHER JURISDICTION IN WHICH THE
COMPANY IS DOMICILED, AS THE CASE MAY BE.    (b)    Your PRSUs are unfunded and
as a holder of Vested Performance Units you will be considered an unsecured
creditor of the Company with respect to the Company’s obligation, if any, to
issue Shares pursuant to this Agreement. Upon such issuance, you will obtain
full voting and other rights as a stockholder of the Company. Nothing contained
in this Agreement, and no action taken pursuant to its provisions, will create
or be construed to create a trust of any kind or a fiduciary relationship
between you and the Company or any other person.    (c)    This Agreement will
be subject to all applicable laws, rules, and regulations, and to such approvals
by any governmental agencies or stock exchanges as may be required. The Company
may impose such restrictions, conditions or limitations as it determines
appropriate as to the timing and manner of any resales by you or other
subsequent transfers by you of any Shares issued as a result of or under this
Agreement, including without limitation (i) restrictions under an insider
trading policy, (ii) restrictions that may be necessary in the absence of an
effective registration statement under the Securities Act of 1933, as amended,
covering the PRSUs and (iii) restrictions as to the use of a specified brokerage
firm or other agent for such resales or other transfers. Any sale of Shares
issued pursuant to this Agreement must also comply with other applicable laws
and regulations governing the sale of such Shares.    (d)    Notwithstanding
anything in the Plan or this Agreement to the contrary, the Board (or an
appropriate committee thereof) may, without your consent, amend this Agreement
to comply with all of the requirements of Section 409A of the Code and any
corresponding guidance and regulations issued under Section 409A of the Code to
the extent it is determined, in the sole discretion of the Board (or an
appropriate committee thereof), that such amendment is necessary to comply with
the requirements of Section 409A of the Code.    (e)    The interpretation,
performance and enforcement of this Agreement will be governed by the law of the
state of Delaware without regard to such state’s conflicts of laws rules.

--------------------------------------------------------------------------------

   (f)    Any question concerning the interpretation of this Agreement or the
Plan, any adjustments required to be made under the Plan and any controversy
that may arise under the Plan or this Agreement shall be determined by the Board
(or an appropriate committee thereof) (including any person(s) to whom the Board
has delegated its authority) in its sole and absolute discretion. Such decision
by the Board (or an appropriate committee thereof) shall be final and binding.
   (g)    This Agreement, the Plan and the Employment Agreement represent the
entire agreement between the parties with respect to the PRSUs. In the event of
a conflict between the terms and conditions of the Plan and the terms and
conditions of this Agreement or the Employment Agreement, the terms and
conditions of the Plan shall prevail. In the event of a conflict between the
terms and conditions of this Agreement and the terms and conditions of the
Employment Agreement, the terms and conditions of the Employment Agreement shall
prevail.    (h)    If all or any part of this Agreement or the Plan is declared
by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity will not invalidate any portion of this Agreement or
the Plan not declared to be unlawful or invalid. Any Section of this Agreement
(or part of such a Section) so declared to be unlawful or invalid will, if
possible, be construed in a manner which will give effect to the terms of such
Section or part of such Section to the fullest extent possible while remaining
lawful and valid.    (i)    Either party’s failure to enforce any provision of
this Agreement shall not in any way be construed as a waiver of any such
provision, nor prevent that party from thereafter enforcing any other provision
of this Agreement. The rights granted both parties hereunder are cumulative and
shall not constitute a waiver of either party’s right to assert any other legal
remedy available to it.    (j)    This Agreement may be amended only by a
writing executed by you and the Company which specifically states that it is
amending this Agreement. Notwithstanding the foregoing and subject to
Section 13(e) of the Plan, this Agreement may be amended solely by the Board (or
an appropriate committee thereof) by a writing which specifically states that it
is amending this Agreement, so long as a copy of such amendment is delivered to
you. Without limiting the foregoing, the Board (or an appropriate committee
thereof) reserves the right to change, by written notice to you, the provisions
of this Agreement in any way it may deem necessary or advisable to carry out the
purpose of the grant as a result of any change in applicable laws or regulations
or any future law, regulation, ruling or judicial decision, provided that any
such change will be applicable only to rights relating to that portion of the
PRSUs which are then subject to restrictions as provided herein.    (k)    The
rights and obligations of the Company under this Agreement will be transferable
by the Company to any one or more persons or entities, and all covenants and
agreements hereunder will inure to the benefit of, and be enforceable by the
Company’s successors and assigns. You may not assign, transfer or pledge the
PRSUs, the Granted PRSUs, the Vested Performance Units or any right or interest
therein or thereunder to anyone other than by will or the laws of descent and
distribution except with the prior written consent of the Company. The Company
may cancel your rights hereunder if you attempt to assign or transfer them in a
manner inconsistent with this Agreement.

--------------------------------------------------------------------------------

   (l)    All notices with respect to this Agreement shall be in writing and
shall be hand delivered or sent by first class mail or reputable overnight
delivery service, expenses prepaid. Notice may also be given by electronic mail
or facsimile and shall be effective on the date transmitted if confirmed within
24 hours thereafter by a signed original sent in a manner provided in the
preceding sentence. Notices to the Company or the Board (or an appropriate
committee thereof) shall be delivered or sent to the Company’s headquarters, 935
First Avenue, King of Prussia, PA 19406, to the attention of its Chief Financial
Officer and its General Counsel. Notices to the Participant or holder of Shares
issued pursuant to this Agreement shall be sufficient if delivered or sent to
such person’s address as it appears in the regular records of the Company or its
transfer agent.    (m)    The headings of the Sections in this Agreement are
inserted for convenience only and will not be deemed to constitute a part of
this Agreement or to affect the meaning of this Agreement.    (n)    You agree
upon request to execute any further documents or instruments necessary or
desirable in the sole determination of the Company to carry out the purposes or
intent of this Agreement.

[Remainder of page intentionally left blank]

--------------------------------------------------------------------------------

By the signatures below, you and the authorized representative of the Company
acknowledge your agreement to this Performance Restricted Stock Unit Award
Agreement as of the Grant Date specified above.

 

 

   

 

Michael G. Rubin     Date Accepted by:     GSI COMMERCE, INC.    

 

   

 

By     Date

 

    Name    

 

    Title    

--------------------------------------------------------------------------------

EXHIBIT A

GSI Commerce, Inc.

Deferral Election Form

Effective as of                     , the undersigned hereby irrevocably elects
(the “Election”) to defer receipt of certain shares of common stock (the
“Shares”) of GSI Commerce, Inc., (the “Company”) related to the performance
restricted stock units (the “PRSUs”) awarded under and pursuant to the
Performance Restricted Stock Unit Award Agreement (the “Award Agreement”) dated
                         , 2006 and the Company’s 2005 Equity Incentive Plan
(the “Plan”), each as amended from time to time. This deferral shall be made in
accordance with the terms and provisions outlined in this Election in the manner
and amount set forth below.

In making this election, the following rules apply:

 

  •   You may elect to defer the settlement of all or a portion of your PRSUs.
Your deferral must be expressed as a percentage of the PRSUs.

 

  •   If you elect to defer the settlement of all or a portion of your PRSUs,
you will receive the Shares subject to your Vested Performance Units (as such
term is defined in the Award Agreement) upon the termination of your Continuous
Service (as such term is defined in the Plan) with the Company for any reason.

 

  •   If you elect to defer the settlement of all or a portion of your PRSUs,
you may also elect to receive the Shares subject to your Vested Performance
Units on a date specified in this Election, if such date occurs prior to the
termination of your Continuous Service with the Company.

Manner of Transfer

In general, all deferrals pursuant to this election will be paid out in Shares.
Subject to the terms and conditions of the Award Agreement and the Plan and
additional delays described in Paragraph 3 of the Terms and Conditions set forth
below, all of the Shares you are entitled to receive on the Settlement Date (as
defined below) in this Election will be transferred to you on such Settlement
Date.

Amount of the Deferral

 

¨ I hereby irrevocably elect to defer settlement of     % of the performance
restricted stock units subject to the PRSUs. [Note: Deferrals may only be made
in 10% increments.]

Duration of the Deferral

Settlement of that portion of the PRSUs specified above shall be deferred until
the date (the “Settlement Date”) indicated below:

 

¨                     , 20     [enter any date on or following the fourth
anniversary of the date the PRSUs were granted], but in no event later than the
termination of my Continuous Service with the Company

 

¨ termination of my Continuous Service with the Company

Terms and Conditions

By signing this form, you acknowledge your understanding and acceptance of the
following:

 

  1. Submission of Election to the Company. You understand that this Deferral
Election Form must be submitted to the Company within 30 days following the date
the PRSUs were granted.

--------------------------------------------------------------------------------

  2. Tax Withholding Obligation. No Shares will be issued to you unless on the
Settlement Date the tax withholding obligations set forth in Section 9(b) of the
Award Agreement are satisfied.

 

  3. Automatic Delay for Specified Employees. If the Company determines that as
of the Settlement Date you are a “specified employee” (as such term is defined
under Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”)), any Shares to be issued to you on a Settlement Date that occurs by
reason of your termination of Continuous Service with the Company other than by
reason of your death or disability (as such term is defined under Section 409A
of the Code) will not be issued to you until the date that is six months
following the Settlement Date (or such earlier time permitted under Section 409A
of the Code without the imposition of any accelerated or additional taxes under
Section 409A).

 

  4. ERISA Status. This Election comprises a portion of a plan that is intended
to be an unfunded plan that is maintained primarily to provide deferred
compensation to a select group of “management or highly compensated employees”
within the meaning of Sections 201, 301, and 401 of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), and therefore to be exempt
from the provisions of Parts 2, 3, and 4 of Title I of ERISA.

 

  5. Administration. This Election is administered and interpreted by the Board
(or an appropriate committee thereof). The Board (or an appropriate committee
thereof) has full and exclusive discretion to interpret and administer this
Election. All actions, interpretations and decisions of the Board (or an
appropriate committee thereof) are conclusive and binding on all persons, and
will be given the maximum possible deference allowed by law.

 

Submitted by:     

 

    

 

Michael G. Rubin      Date Accepted by:      GSI COMMERCE, INC.     

 

    

 

By      Date

 

     Name     

 

     Title