<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT
Under Section 13 or 15(d) of the Securities Exchange Act of 1934
For Quarter Ended Commission file number
August 31, 1996 1-8798
- --------------------- -----------------------
Nu Horizons Electronics Corp.
--------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 11-2621097
- -------------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6000 New Horizons Blvd., Amityville, New York 11701
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(516) 226-6000
----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X
---
NO ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the period covered by this report.
Common Stock - Par Value $.0066 8,732,299
------------------------------- -------------------
Class Outstanding Shares
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
INDEX
-----
Page(s)
PART I. Financial Information:
ITEM 1. Financial Statements
Consolidated Condensed Balance Sheets - August 31, 1996
(unaudited) and February 29, 1996 3.
Consolidated Condensed Statements of Income (unaudited)
- Six Months and Three Months Ended August 31, 1996
and 1995 4.
Consolidated Condensed Statements of Cash Flows (unaudited)
- Six Months Ended August 31, 1996 and 1995 5. - 6.
Notes to Interim Consolidated Condensed Financial
Statements (unaudited) 7. - 8.
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9. - 12.
PART II. Other Information
ITEM 4. Submission of Matters to a Vote of Security Holders 13.
ITEM 6. Exhibits and Reports on Form 8-K 14.
SIGNATURES 15.
INDEX TO EXHIBITS 16.
Exhibit 10.15 - Employment and Change of Control Agreements dated
September 13, 1996, between the Company and Irving Lubman
Exhibit 10.16 - Employment and Change of Control Agreements dated
September 13, 1996, between the Company and Arthur Nadata
Exhibit 10.17 - Employment and Change of Control Agreements dated
September 13, 1996, between the Company and Richard Schuster
Exhibit 11 - Statement re: Computation of Per Share Earnings
(See Notes to Consolidated Financial Statements - Note 5)
Exhibit 27 - Financial Data Schedule
2
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
-ASSETS-
--------
AUGUST FEBRUARY
31, 1996 29, 1996
----------- ----------
(Unaudited)
CURRENT ASSETS:
Cash (including time deposits) $ 2,561,058 $ 874,267
Accounts receivable-net of allowance for doubtful
accounts of $1,811,619 and $1,509,802 for August
31, 1996 and February 29, 1996, respectively 29,170,975 30,005,182
Inventories 39,697,232 36,808,915
Prepaid expenses and other current assets 2,509,020 1,013,923
----------- -----------
TOTAL CURRENT ASSETS 73,938,285 68,702,287
PROPERTY, PLANT AND EQUIPMENT - NET (Note 2) 3,188,667 3,439,804
OTHER ASSETS
Cost in excess of net assets acquired-net 1,987,718 2,066,180
Other assets 1,336,798 1,251,315
----------- -----------
$80,451,468 $75,459,586
=========== ===========
-LIABILITIES AND SHAREHOLDERS' EQUITY-
--------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 7,379,722 $ 7,898,757
Accrued expenses 3,887,664 2,254,878
Current portion of long-term debt 327,799 373,930
Income taxes 446,420 220,288
Other current liabilities 70,722 -
----------- -----------
TOTAL CURRENT LIABILITIES 12,112,327 10,747,853
----------- -----------
LONG TERM LIABILITIES:
Deferred income taxes 205,479 115,577
Revolving credit line (Note 3) 16,900,000 17,300,000
Long-term debt 561,298 678,453
Subordinated convertible notes (Note 4) 7,059,000 9,000,000
----------- -----------
24,725,777 27,094,030
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, 1,000,000 shares
authorized; none issued or outstanding; - -
Common stock, $.0066 par value, 20,000,000 shares
authorized; 8,732,299 and 8,423,137 shares
issued and outstanding for August 31, 1996
and February 29, 1996, respectively 57,633 55,593
Additional paid-in capital 18,938,984 16,821,502
Retained earnings 24,966,622 21,160,458
----------- -----------
43,963,239 38,037,553
Less: loan to ESOP 349,875 419,850
----------- -----------
43,613,364 37,617,703
----------- ----------
$80,451,468 $75,459,586
=========== ===========
See notes to interim consolidated condensed financial statements
3
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
-------------------------------------------
(Unaudited)
FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED
------------------------ --------------------------
AUGUST AUGUST AUGUST AUGUST
31, 1996 31, 1995 31, 1996 31, 1995
------------ ----------- ----------- ----------
NET SALES $108,455,584 $94,807,858 $50,783,044 $50,091,805
------------ ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of sales 84,158,299 72,600,251 39,411,875 38,192,979
Operating expenses 17,109,122 14,487,541 8,735,173 7,360,793
Interest expense 809,292 934,661 376,163 481,277
Interest income (8,053) (2,534) (8,053) (424)
------------ ----------- ----------- -----------
102,068,660 88,019,919 48,515,158 46,034,625
------------ ----------- ----------- -----------
INCOME BEFORE PRO-
VISION FOR INCOME
TAXES 6,386,924 6,787,939 2,267,886 4,057,180
Provision
for income taxes 2,580,760 2,750,934 916,658 1,651,272
------------ ----------- ----------- -----------
NET INCOME $ 3,806,164 $ 4,037,005 $ 1,351,228 $ 2,405,908
============= =========== =========== ===========
NET INCOME
PER SHARE (Note 5):
Primary $.42 $.51 $.15 $.30
==== ==== ==== ====
Fully diluted $.38 $.43 $.14 $.25
==== ==== ==== ====
See notes to interim consolidated condensed financial statements
4
<PAGE>
Page 1 of 2
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
-----------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
---------------------------------------------
AUGUST 31, 1996 AUGUST 31, 1995
---------------------- -------------------
<S> <C> <C>
(Unaudited)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS:
Cash flows from operating activities:
Cash received from customers $ 109,050,291 $ 88,638,864
Cash paid to suppliers and employees (101,974,282) (89,527,433)
Interest received 8,053 2,534
Interest paid (809,292) (934,661)
Income taxes paid (4,067,073) (1,859,826)
------------- ------------
Net cash provided by (used in)
operating activities 2,207,697 (3,680,522)
------------- ------------
Cash flows from investing activities:
Capital expenditures (136,142) (609,605)
Purchase of stock for ESOP - (559,800)
------------- ------------
Net cash (used in) investing
activities (136,142) (1,169,405)
------------- ------------
Cash flows from financing activities:
Borrowings under revolving credit line 18,600,000 25,800,000
Repayments under revolving credit line (19,000,000) (18,950,000)
Principal payments of long-term debt (163,286) (169,535)
Proceeds from exercise of stock options 178,522 17,850
------------- ------------
Net cash (used in) provided by
financing activities (384,764) 6,698,315
------------- ------------
Net increase in cash and cash equivalents 1,686,791 1,848,388
Cash and cash equivalents, beginning
of year 874,267 498,919
------------- ------------
Cash and cash equivalents, end of period $ 2,561,058 $ 2,347,307
============= ============
</TABLE>
See notes to interim consolidated condensed financial statements
5
<PAGE>
Page 2 of 2
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
-----------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
---------------------------------------------
AUGUST 31, 1996 AUGUST 31, 1995
---------------------- -------------------
<S> <C> <C>
(Unaudited)
RECONCILIATION OF NET INCOME TO NET
CASH FROM OPERATING ACTIVITIES:
Net income $ 3,806,164 $ 4,037,005
----------- ------------
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 593,783 555,169
Contribution to ESOP 69,975 69,975
Bad debt provision 239,500 523,750
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 594,707 (6,168,994)
(Increase) in inventories (2,888,317) (6,884,083)
(Increase) decrease in prepaid expenses
and other current assets (1,495,097) 378,830
(Increase) in other assets (213,525) (209,226)
Increase in accounts payable and
accrued expenses 1,184,473 3,485,126
Increase in income taxes 226,132 140,711
Increase in deferred income
taxes 89,902 391,215
----------- ------------
Total adjustments (1,598,467) ( 7,717,527)
----------- ------------
Net cash provided by (used in) operating
activities $ 2,207,697 $ (3,680,522)
============ ============
</TABLE>
See notes to interim consolidated condensed financial statements
6
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
------------------------------------------------
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
------------------------------------------------------------
(unaudited)
1. In the opinion of management, the accompanying unaudited interim
consolidated condensed financial statements of Nu Horizons Electronics
Corp. (the "Company") and its subsidiaries (Nu Horizons/Merit Electronics
Corp., NIC Components Corp., Nu Horizons International Corp. and Nu Visions
Manufacturing, Inc.) contain all adjustments necessary to present fairly the
Company's financial position as of August 31, 1996 and February 29, 1996 and
the results of its operations for the six and three month periods ended
August 31, 1996 and 1995 and cash flows for the six month periods ended
August 31, 1996 and 1995.
The accounting policies followed by the Company are set forth in Note 2 to
the Company's consolidated financial statements included in its Annual
Report on Form 10-K for the year ended February 29, 1996, which is
incorporated herein by reference. Specific reference is made to this report
for a description of the Company's securities and the notes to consolidated
financial statements included therein.
The results of operations for the six and three month periods ended August
31, 1996 are not necessarily indicative of the results to be expected for
the full year.
2. PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment consists of the following:
AUGUST FEBRUARY
31, 1996 29, 1996
---------- ----------
Land $ 266,301 $ 266,301
Building and improvements 1,756,762 1,747,930
Furniture, fixtures and office
equipment 2,082,409 2,037,183
Computer equipment 2,360,666 2,278,582
Assets held under capitalized
leases 919,834 919,834
---------- ----------
7,385,972 7,249,830
Less: accumulated depreciation
and amortization 4,197,305 3,810,026
---------- ----------
$3,188,667 $3,439,804
========== ==========
3. BANK LINE OF CREDIT:
In February, 1988 the Company entered into a revolving credit agreement,
as amended, with its bank which provides for a $25,000,000 unsecured
revolving line of credit at the bank's prime rate with payments of
interest only through April 8, 2000. Direct borrowings under the line of
credit were $16,900,000 at August 31, 1996 and $17,300,000 at February
29, 1996.
7
<PAGE>
NU HORIZONS ELECTRONICS CORP. AND SUBSIDIARIES
----------------------------------------------
NOTES TO INTERIM CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
------------------------------------------------------------
(unaudited)
4. SUBORDINATED CONVERTIBLE NOTES:
In a private placement completed on August 31, 1994, the Company issued $15
million principal amount of Subordinated Convertible Notes, which are due
in $5,000,000 increments on August 31, 2000, 2001 and 2002. The notes are
subordinate in right of payment to all existing and future senior
indebtedness of the Company. The notes bear interest at 8.25%, payable
quarterly on November 15, February 15, May 15 and August 15. The notes are
convertible into shares of common stock at a conversion price of $9.00 per
share. The cost of issuing these notes was $521,565 and is being amortized
over the life of the notes. As of August 31, 1996, $7,941,000 of the notes
have been converted into 882,333 shares of common stock and $7,059,000
principal amount of subordinated convertible notes remained outstanding.
5. NET INCOME PER SHARE:
Net income per share has been computed on the basis of the weighted
average number of common shares and common equivalent shares outstanding
during each period presented. Fully diluted earnings per share has been
computed assuming conversion of all dilutive stock options.
The following average shares were used in the computation of primary and
fully diluted earnings per share:
Six Months Ended Three Months Ended
August 31, August 31,
---------------- ------------------
1996 1995 1996 1995
---- ---- ---- ----
Primary 9,060,321 7,950,562 8,974,574 8,009,707
Fully diluted 10,428,359 10,323,729 10,428,359 10,339,609
All per share amounts have been retroactively restated as a result of stock
dividends and a three for two stock split.
A detailed computation of earnings per common share appears in Exhibit 11
of this Form 10-Q.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS:
--------------------------
Introduction:
-------------
Nu Horizons Electronics Corp. (the "Company") and its wholly-owned
subsidiaries, Nu Horizons/Merit Electronics Corp. ("Merit"), NIC
Components Corp. ("NIC") and Nu Horizons International Corp.
("International"), are engaged in the distribution of high technology
active and passive electronic components to a wide variety of original
equipment manufacturers ("OEM's") of electronic products. Active
components distributed by the Company include semiconductor products
such as memory chips, microprocessors, digital and linear circuits,
microwave/RF and fiberoptic components, transistors and diodes. Passive
components distributed by NIC, principally to OEM's and other
distributors nationally, consist of a high technology line of chip and
leaded components including capacitors, resistors and related networks.
Nu Visions Manufacturing, Inc. ("NUV") located in Springfield,
Massachusetts, another subsidiary of the Company, is a contract
assembler of circuit boards, harnesses and related electromechanical
devices for various OEM's.
The financial information presented herein includes: (i) Consolidated
condensed balance sheets as of August 31, 1996 and February 29, 1996;
(ii) Consolidated condensed statements of income for the six and three
month periods ended August 31, 1996 and 1995 and (iii) Consolidated
condensed statements of cash flows for the six month periods ended
August 31, 1996 and 1995.
Results of Operations:
----------------------
Sales for the six month period ended August 31, 1996 were $108,455,584
as compared to $94,807,858 for the comparable period of the prior year,
an increase of approximately $13,648,000 or 14%. However, approximately
$12,956,000 or 95% of the six month increase relates to the first fiscal
quarter of 1997, ended May 31, 1996, as compared to the first fiscal
quarter of 1996, ended May 31, 1995. Sales for the three month period
ended May 31, 1996 were a record $57,672,540 as compared to $44,716,053
for the comparable period of the prior year, an increase of
approximately 29%. Management attributes the increase in sales for that
period to the following sales categories: Approximately $2,006,000 or
16% of the overall increase resulted from incremental sales generated by
the West Coast distribution group which consists of the San Jose,
Irvine, Los Angeles and San Diego branches. Approximately $934,000 or 7%
of the increase was generated by the Nu Visions Manufacturing
subsidiary. The balance of the increase, approximately $10,016,000 or
77% resulted from incremental sales generated by the core distribution
business through greater market penetration and overall strength in the
electronic industry at that time.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (Continued):
--------------------------------------
Results of Operations (Continued):
----------------------------------
Sales for the three month period ended August 31, 1996 were $50,783,044
as compared to $50,091,805 for the comparable period of the prior year, a
nominal increase of approximately $691,000. Sales for the three month
period ended August 31, 1996 were $6,889,496 less than for the
immediately preceding quarter ended May 31, 1996. Management attributes
this reduction in sales entirely to the core semiconductor distribution
business which experienced excess inventory levels at the semiconductor
manufacturing (supplier) level which resulted in reduced unit pricing and
lower overall sales volume. Management believes that this situation is
temporary and is now in the process of correction; however, no assurance
can be given in this regard.
Gross profit margins for the three and six months ended August 31, 1996
were 22.4% and 22.4% as compared to 23.8% and 23.4% for the comparable
periods of the prior year. Management attributes this lower profit margin
primarily to a general downward correction of selling prices in the
marketplace, for both semiconductors and passive components, during the
periods ended August 31, 1996 and a greater volume of larger orders at
lower gross profit margins.
Operating expenses have increased from approximately $14,488,000 for the
six months ended August 31, 1995 to approximately $17,109,000 for the six
months ended August 31, 1996, an increase of 18% or approximately
$2,621,000. For the three months ended August 31, 1995 as compared to the
three months ended August 31, 1996 operating expenses increased from
approximately $7,361,000 to $8,735,000, an increase of 19%, or
approximately $1,374,000. The dollar increases in operating expenses were
due to increases in the following expense categories: Approximately
$2,525,000 or 96% of the increase for the six month period and
approximately $994,000 or 72% of the increase for the three month period,
were for personnel related costs - commissions, salaries, travel, fringe
benefits. These increases were required to produce the increased sales in
the first quarter and planned increased sales levels in the second
quarter which did not materialize as discussed above. The remaining
increases of approximately $96,000 and $380,000 for the six and three
month periods respectively are a result of increases in various other
operating expenses.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (Continued):
--------------------------------------
Results of Operations (Continued):
----------------------------------
Interest expense decreased from approximately $935,000 for the six
months ended August 31, 1995 to approximately 809,000 for the six months
ended August 31, 1996 as the interest on higher levels of bank debt was
more than offset by the lower amount of outstanding subordinated
convertible debt (see Note 4 of the Consolidated Financial Statements).
The increase in bank debt was primarily due to an increase in
borrowings, resulting from an increase in the Company's accounts
receivable and inventory levels, required to support the increased sales
volume in the current six month period.
INTEREST EXPENSE
----------------
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------- ------------------------
AUGUST AUGUST AUGUST AUGUST
31, 1996 31, 1995 31, 1996 31, 1995
--------- --------- --------- ---------
Revolving Bank Credit $ 230,571 $ 171,902 $ 491,514 $ 315,905
Sub. Convert. Notes 145,592 309,375 317,778 618,756
--------- --------- --------- ---------
Total Interest Expense $ 376,163 $ 481,277 $ 809,292 $ 934,661
========= ========= ========= =========
Net income for the six month period ended August 31, 1996 was $3,806,164
or $.38 per share fully diluted as compared to $4,037,005 or $.43 per
share fully diluted for the six month period ended August 31, 1995. Net
income for the three month period ended August 31, 1996 was $1,351,228
or $.14 per share fully diluted as compared to $2,405,908 or $.25 per
share fully diluted for the corresponding period of the prior year. The
decreases in earnings is primarily due to lower gross profit margins and
higher expenses net of lower interest expense for the periods.
Liquidity and Capital Resources:
--------------------------------
At August 31, 1996 the Company's current ratio was 6.1:1 as compared to
6.4:1 at the fiscal year ended February 29, 1996. Working capital
increased from approximately $57,954,000 as of February 29, 1996 to
approximately $61,826,000 at August 31, 1996 while cash increased from
February 29, 1996 to August 31, 1996 by approximately $1,687,000. The
primary reasons for the increase in both working capital and the current
ratio was the increase in cash and an increase in inventories financed
primarily through long term debt during the current period. These
increases were required to support the increased sales activity over the
six month period.
In February 1988, the Company entered into an unsecured revolving line
of credit agreement, as amended, which provides for maximum borrowings
of $25,000,000 at the bank's prime rate with payments of interest only
through April 8, 2000. At August 31, 1996 $16,900,000 was outstanding
under this line of credit as compared to $17,300,000 at February 29,
1996.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS (Continued):
--------------------------------------
Liquidity and Capital Resources:
--------------------------------
In a private placement completed on August 31, 1994, the Company issued
$15 million principal amount of Subordinated Convertible Notes, which
are due in $5,000,000 increments on August 31, 2000, 2001 and 2002. The
notes are subordinate in right of payment to all existing and future
senior indebtedness of the Company. The notes bear interest at 8.25%,
payable quarterly on November 15, February 15, May 15 and August 15. The
notes are convertible into shares of common stock at a conversion price
of $9.00 per share. The cost of issuing these notes was $521,565 and is
being amortized over the life of the notes. The Company has registered,
under the Securities Act of 1933, for the resale by the holders thereof,
117,666 shares of common stock, representing the number of shares of
common stock obtainable by such holders upon conversion of 15% of the
outstanding principal amount of such notes. As of August 31, 1996,
$7,941,000 of the notes have been converted into 882,333 shares of
common stock and $7,059,000 principal amount of subordinated convertible
notes remained outstanding. No assurance can be given that the notes
will be converted or that the shares of common stock underlying the
notes will be sold by the holders thereof.
The Company has experienced an overall shortfall in operating cash flow
in six of its last eight fiscal quarters primarily due to the
approximately fifty-six percent increase in sales for the last fiscal
year and the forty-one percent increase in sales in fiscal 1995. As a
result of this sales growth the Company has been required to finance
increased levels of accounts receivable and inventory which exceed the
amounts that can be supported by operating cash flows. The shortfall in
operating cash flow has been supplemented through the issuance of the
subordinated convertible notes and the utilization of the unsecured bank
credit line as described above.
The Company anticipates that its capital resources provided by its bank
line of credit will be sufficient to meet its financing requirements
during that period .
Inflationary Impact:
--------------------
Since the inception of operations, inflation has not significantly
affected the operating results of the Company. However, inflation and
changing interest rates have had a significant effect on the economy in
general and therefore could affect the operating results of the Company
in the future.
Except for historical information contained herein, the matters set
forth above are forward-looking statements that involve certain risks
and uncertainties that could cause actual results to differ from those
in the forward-looking statements. Potential risks and uncertainties
include such factors as the level of business and consumer spending for
electronic products, the amount of sales of the Company's products, the
competitive environment within the electronics industry, the ability of
the Company to continue to expand its operations, the level of costs
incurred in connection with the Company's expansion efforts and the
financial strength of the Company's customers and suppliers. Investors
are also directed to consider other risks and uncertainties discussed in
documents filed by the Company with the Securities and Exchange
Commission.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
There are no material legal proceedings against the Company or in which
any of their property is subject.
ITEM 2. Changes in Securities
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) The Registrant held its Annual Meeting of Stockholders on
September 13, 1996. The following proposals were adopted by
the votes indicated.
(b)(c)(1) Two directors were elected at the Annual Meeting to serve
until the Annual Meeting of Stockholders in 1999, in addition
to the five other Directors, Herbert Gardner, Paul Durando,
David Siegel, Richard Schuster and Harvey Blau, whose term of
office continued after the meeting. The names of these
Directors and votes cast in favor of their election and shares
withheld are as follows:
NAME VOTES FOR VOTES WITHHELD
---- --------- --------------
Irving Lubman 7,110,334 350,631
Arthur Nadata 7,110,634 350,331
VOTED VOTED
FOR AGAINST ABSTAINED
----- ------- ---------
(2) Approval to amend the
Company's 1994 Stock Option
Plan to increase the authorized
shares of Common Stock of
the Company available thereunder
from 600,0000 to 1,100,000 3,270,193 557,470 63,060
(3) Approval of the Employment
Agreement between the Company
and Irving Lubman, the Company's
Chairman of the Board and Chief
Executive Officer 3,763,182 240,957 139,981
(4) Approval of the Employment
Agreement between the Company
and Arthur Nadata, the Company's
President and Treasurer 3,771,107 232,844 140,169
(5) Approval of the Employment
Agreement between the Company
and Richard Schuster, the
Company's Vice President and
Secretary 3,785,066 218,530 140,524
13
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports:
(a) Exhibits:
10.15 Employment and Change of Control Agreements dated September
13, 1996, between the Company and Irving Lubman
10.16 Employment and Change of Control Agreements dated September
13, 1996, between the Company and Arthur Nadata
10.17 Employment and Change of Control Agreements dated September
13, 1996, between the Company and Richard Schuster
11. See Exhibit 11 and Notes to Financial Statements, Note 5,
regarding computation of per share earnings
27. Financial Data Schedule
(b) Reports on Form 8-K
None
14
<PAGE>
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 thereunto duly authorized.
Nu Horizons Electronics Corp.
-----------------------------
Registrant
/s/ Arthur Nadata
----------------------------------------
Date: October 14, 1996 Arthur Nadata, President and
Chief Executive Officer
/s/ Paul Durando
----------------------------------------
Date: October 14, 1996 Paul Durando, Vice President-Finance
and Chief Financial Officer
15
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
EXHIBIT INDEX
to
FORM 10-Q
FOR THE FISCAL QUARTER ENDED AUGUST 31, 1996
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------
NU HORIZONS ELECTRONICS CORP.
(Exact Name of Registrant as Specified in Its Charter)
EXHIBIT
NUMBER DESCRIPTION
----------------------------------------------------------------------
10.15 Employment and Change of Control Agreements
Dated September 13, 1996, Between the Company
and Irving Lubman
10.16 Employment and Change of Control Agreements
Dated September 13, 1996, Between the Company
and Arthur Nadata
10.17 Employment and Change of Control Agreements
Dated September 13, 1996, Between the Company
and Richard Schuster
11 Computation of Per Share Earnings
27 Financial Data Schedule
<PAGE>
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT made as of the 13th day of September, 1996 by and
between NU HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter the
"Company") and IRVING LUBMAN, residing at 329 Pepperidge Road, Hewlett Harbor,
New York 11557 (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to enter into an Employment Agreement with
Employee to supersede the Employee's current Employment Agreement between the
Company and the Employee; and
WHEREAS, Employee desires to enter into an Employment Agreement with the
Company. NOW, THEREFORE, it is agreed as follows:
1. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any employment
---------------------------
or consulting agreements, oral or written, entered into between Employee and the
Company prior to the date of this Agreement.
2. RETENTION OF SERVICES. The Company hereby retains the services of
---------------------
Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.
3. TERM. Subject to earlier termination on the terms and conditions
----
hereinafter provided, the term of this Agreement shall be for a continually
renewing five (5) year term so that Employee's unexpired term of employment
shall always be at least five (5) years from any notice of termination of his
employment without cause from the Company.
<PAGE>
4. DUTIES AND EXTENT OF SERVICES DURING PERIOD OF EMPLOYMENT.
---------------------------------------------------------
During the term of employment, Employee shall be employed as Chairman of
the Board of Directors of the Company. In such capacity, Employee agrees that
he shall serve the Company under the direction of the Board of Directors of the
Company to the best of his ability, shall perform all duties incident to his
offices on behalf of the Company and shall perform such other duties as may from
time to time be assigned to him by the Board of Directors of the Company.
Employee shall also serve in similar capacities of such of the subsidiary
corporations of the Company as may be selected by the Board of Directors and
shall be entitled to such additional compensation therefor as may be determined
by the Board of Directors of the Company. Notwithstanding the foregoing, it is
understood and agreed that the duties of Employee during the period of
employment shall not be inconsistent with (i) his position and title as a Senior
Executive of the Company; or (ii) with those duties ordinarily performed by a
comparable executive officer. The Company shall not require Employee to be
employed in any location other than New York City and Long Island, New York,
unless he consents in writing to such location.
5. REMUNERATION. (a) During the period of employment, Employee shall be
-------------
entitled to receive the following compensation for his services:
(i) The Company shall pay to Employee a salary at the rate of $226,545
per annum, payable in weekly installments, or in such other manner as shall be
agreeable to the Company and Employee.
(ii) In addition to his salary, Employee shall receive an increment in
an amount equal to the cumulative cost of living on $226,545 as reported in the
"Consumer Price Index, New
2
<PAGE>
York Northeastern New Jersey, all items" published by the United States
Department of Labor, Bureau of Labor Statistics (using January 1996 as the base
date for computation). Such cost of living increment with respect to the
aforesaid salary of Employee shall be made semi- annually as follows:
A. With respect to the first six months of each fiscal year of the
Company during the period of employment, such increment shall be calculated
and payable cumulatively on or before the first day of the eighth month of
such fiscal year; and
B. With respect to the last six months of each fiscal year of the
Company during the period of employment, such increment shall be calculated
and payable cumulatively on or before the first day of the second month of
the following fiscal year of the Company.
The first calculation shall be made on or before September 15, 1997 with
respect to the period September 13, 1996 through September 15, 1997. If
Employee's employment shall terminate during any six-month period referred to in
this subparagraph 5(ii), then the cost of living increment provided for herein
shall be prorated accordingly.
(iii) Not later than one hundred twenty (120) days after the end of the
fiscal year of the Company and each subsequent fiscal year of the Company ending
during the period of employment, the Company shall pay to Employee, as incentive
compensation, an amount equal to THREE AND ONE-THIRD (3-1/3%) PERCENT of the
Consolidated Pretax Earnings of the Company. For purposes hereof, the term
"Consolidated Pretax Earnings" of the Company shall mean, with respect to any
fiscal year, the consolidated income, if any, of the Company for such fiscal
year as set forth in the audited, consolidated financial statements
3
<PAGE>
of the Company and its subsidiaries included in its Annual Report to
Stockholders for such fiscal year, before deduction of taxes based on income or
of the incentive compensation to be paid to Employee for such fiscal year under
this Agreement.
6. EMPLOYEE BENEFITS; EXPENSES. (a) During the period of employment,
---------------------------
the Company shall continue to provide at its expense, life insurance to Employee
in the face amount of $1,000,000.
(b) During the period of employment, Employee shall be eligible to
participate in the Company's stock option and stock purchase plans to the extent
determined in the sole discretion of the Board of Directors of the Company or a
committee thereof.
(c) During the period of employment, Employee shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of a Senior Executive of the Company; and he shall
be entitled to regular vacations during each year of not less than four weeks in
the aggregate. Any such vacation time not used by Employee in any one year
shall accumulate to his benefit in the succeeding years and, to the extent not
previously used as of the termination of the period of employment, Employee
shall be paid in cash in lieu of such unused vacation.
(d) It is contemplated that during the period of employment, Employee
may be required to incur out-of-pocket expenses in connection with the
performance of his services hereunder, including expenses incurred for travel
and business entertainment. Accordingly, the Company shall pay, or reimburse
Employee for all out-of-pocket expenses reasonably incurred by Employee in the
performance of his duties hereunder in accordance with the usual procedures of
the
4
<PAGE>
Company. Notwithstanding the foregoing, in recognition that Employee will be
required during the term of this Agreement to do a considerable amount of local
driving in connection with his services hereunder, the Company shall provide
Employee with the use of a suitable automobile and all expenses incidental
throughout the term of this Agreement.
(e) All benefits to Employee specifically provided for herein shall
be in addition to, and shall not diminish, (i) such other benefits and/or
compensation as may hereafter be granted to or afforded to Employee by the Board
of Directors of the Company, (ii) any rights which Employee may have or may
acquire under any hospitalization, life insurance, pension, profit sharing,
incentive compensation or other present or future employee benefit plan or plans
of the Company; and (iii) all medical reimbursement up to $5,000 per annum for
all medical expenses not covered by Company plans.
(f) In the event of the death of Employee during the course of his
employment hereunder, the Company shall continue to pay to Employee's widow, or
to such other person or persons as may be designated by Employee in his Will, or
to his Estate in the event of Employee's intestacy, one-half (1/2) of the
compensation to which Employee is entitled pursuant to paragraph 5 hereunder for
the balance of the period covered by this Agreement.
7. DISABILITY. If Employee, during the period of employment, becomes
----------
unable for nine consecutive months or more, due to ill health or other
incapacity, to perform his services hereunder, the Company may thereafter, upon
at least 90 days' written notice to Employee, place him on disability status.
After such action by the Company, Employee shall continue to receive one-half
(1/2) of the sum of the last salary paid to Employee under paragraph 5(a)(i) and
(ii) hereof and any
5
<PAGE>
increment thereto payable under paragraph 5(a)(iii) hereof until the end of the
period of employment or until his disability ends.
8. CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that
------------------------
confidential information of various kinds, including marketing analysis and
product development information are valuable, special and unique assets of its
business. Accordingly, Employee will not, during the term of this Agreement,
except in the performance of his services hereunder, disclose any such
confidential information to any individual or entity for any reason or purpose
whatsoever and will not use any such confidential information for his own
benefit. The provisions of this paragraph 8 will not apply to information
available in trade or other publications, information known to Employee at the
time he entered the employ of the Company, and information which presently is or
shall become available without committing a tortious act.
9. NON-COMPETITION. Employee agrees that, during the term of this
---------------
Agreement, he will not, without the prior written approval of the Board of
Directors of the Company, directly or indirectly, through any other individual
or entity, (a) become an officer or employee of, or render any services,
including consulting services, to, any competitor of the Company, (b) solicit,
raid, entice or induce any customer of the Company to cease purchasing goods or
services from the Company or to become a customer of any competitor of the
Company, and Employee will not approach any customer for any such purpose or
authorize the taking of any such actions by any other individual or entity, or
(c) solicit, raid, entice or induce any employee of the Company, and Employee
will not approach any such employee for any such purpose or authorize the taking
of any such action by any other individual or entity. However, nothing
contained in this paragraph 9 shall be construed as preventing Employee from
investing his assets in such form or manner as will not
6
<PAGE>
require him to become an officer or employee of, or render any services (in-
cluding consulting services) to, any competitor of the Company.
10. TERMINATION FOR CAUSE. (a) The Company recognizes that, for a
---------------------
period of several years during which Employee has been employed and/or
associated with the Company, the Company has been intimately familiar with the
ability, competence and judgment of Employee, which are acknowledged to be of
the highest caliber. Accordingly, the Company and Employee agree that
Employee's services hereunder may be terminated by the Company for an act of
moral turpitude materially adversely affecting the financial interest of the
Company.
(b) If the Company terminates Employee's employment hereunder for any
reason other than as set forth in paragraph 10(a) hereof, Employee's
compensation shall continue to be paid to him as provided in paragraph 5
hereunder for the remainder of the term of this Agreement. Employee shall have
no duty to mitigate the Company's damages hereunder. Therefore, no deduction
shall be made by the Company for any compensation earned by Employee from other
employment or for monies or property otherwise received by Employee subsequent
to such termination of his employment hereunder. Employee and the Company
acknowledge that the foregoing provisions of this paragraph 10(b) are reasonable
and are based upon the facts and circumstances of the parties at the time of
entering into this Agreement, and with due regard to future expectations.
11. CONSOLIDATION OR MERGER. In the event of any consolidation or
-----------------------
merger of the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation during the term of this Agreement, such successor
corporation shall assume this Agreement and become obligated to
7
<PAGE>
perform all of the terms and provisions hereof applicable to the Company, and
Employee's obligations hereunder shall continue in favor of such successor
corporation.
12. NOTICES. Any notice to be given to the Company hereunder shall
-------
be deemed sufficient if addressed to the Company in writing and delivered or
mailed by certified or registered mail to its offices at 6000 New Horizons
Blvd., Amityville, New York 11701, or such other address as the Company may
hereafter designate. Any notice to be given to Employee hereunder shall be
delivered or mailed by certified or registered mail to him at: 329 Pepperidge
Road, Hewlett Harbor, New York 11557, or such other address as he may hereafter
designate.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
----------------------
and inure to the benefit of the successors and assigns of the Company, unless
clearly inapplicable, reference herein to the Company shall be deemed to include
any such successor. In addition, this Agreement shall be binding upon and inure
to the benefit of the Employee and his heirs, executors, legal repre-sentatives
and assigns; provided, however, that the obligations of Employee hereunder may
not be delegated without the prior written approval of the Board of Directors
of the Company.
14. AMENDMENTS. This Agreement may not be altered, modified,
----------
amended or terminated except by a written instrument signed by each of the
parties hereto.
15. APPLICABLE LAW. This Agreement shall be governed by, construed
--------------
and enforced in accordance with the laws of the State of New York, without
regard to conflicts of laws.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NU HORIZONS ELECTRONICS CORP.
By:
-----------------------------
Name
Title:
--------------------------------
IRVING LUBMAN,EMPLOYEE
9
<PAGE>
AGREEMENT
---------
AGREEMENT made as of the 13th day of September, 1996 by and between NU
HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter called the
"Company") and IRVING LUBMAN, residing at 329 Pepperidge Road, Hewlett Harbor,
New York 11557 (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to continue to employ the Employee, and the
Company acknowledges that its entering into this agreement is a condition to the
Employee's willingness to continue such employment; and
WHEREAS, Employee desires to continue to be employed by the Company, and
the Employee acknowledges that his entering into this agreement is a condition
to the Company's willingness to continue such employment;
NOW, THEREFORE, it is agreed as follows:
1. CHANGE OF CONTROL. (a) In the event there shall be a change in the
-----------------
present control of the Company as hereinafter defined, or in any person directly
or indirectly presently controlling the Company, as hereinafter defined,
Employee shall have the option, exercisable within six (6) months of his
becoming aware of such event, to terminate his employment by the Company
pursuant to the Employment Agreement dated September 13, 1996 between the
Company and the Employee forthwith. Upon such termination, Employee shall have
the right to immediately receive as a lump sum payment an amount equal to,
subject to Section 1(b) below, three (3) times the average of the total annual
compensation paid by the Company to Employee, with respect to the five fiscal
years of the Company prior to the change of control, minus $100.00.
(b) The payment to be made pursuant to Section 1(a) above shall be made by
the Company to the Employee in an amount (net of the Federal and State income
tax thereon computed at the marginal regular Federal and State income tax rates
of the Employee in the tax year in which this payment is made and also net of
any excise, penalty or other similar tax) which shall cause the net after tax
amount (calculated as provided in the foregoing parenthetical clause) received
by the Employee with respect to the payment made under Section 1(a) to be equal
to the amount set forth in Section 1(a) above, at the time of such payment and
without consideration for the time value of money.
(c) For purposes of this Agreement, a change in control of the Company, or
in any person directly or indirectly controlling the Company, shall mean:
10
<PAGE>
(i) A change in control as such term is presently defined in
Regulation 240.12b-2 under the Securities Exchange Act of 1934 ("Exchange
Act); or
(ii) if any "person" (as such term is used in Sectiom 13(d) and 14(d)
of the Exchange Act) other than the Company or any "person" who on the
date of this Agreement is a director or officer of the Company, becomes
the "beneficial owner" (as defined in Rule 13(d)-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
fifteen (15%) percent of the voting power of the Company's then
outstanding securities; or
(iii) if during any period of two (2) consecutive years during the
term of this Agreement, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute at
least a majority thereof.
2. CONSOLIDATION OR MERGER. In the event of any consolidation or merger
-----------------------
of the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation, person or entity during the term of this Agreement, such
successor corporation shall assume this Agreement and become obligated to
perform all of the terms and provisions hereof applicable to the Company, and
Employee's obligations hereunder shall continue in favor of such successor
corporation.
3. NOTICES. Any notice to be given to the Company hereunder shall be
-------
deemed sufficient if addressed to the Company in writing and delivered or mailed
by certified or registered mail to its offices at 6000 New Horizons Boulevard,
Amityville, New York 11701, or such other address as the Company may hereafter
designate. Any notice to be given to Employee hereunder shall be delivered or
mailed by certified or registered mail to him at: 11 Clearmeadow Court,
Woodbury, New York 11797 or such other address as he may hereafter designate.
4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
----------------------
inure to the benefit of the successors and assigns of the Company, and unless
clearly inapplicable, all references herein to the Company shall be deemed to
include any such successor. In addition, this Agreement shall be binding upon
and inure to the benefit of the Employee and his heirs, executors, legal
representatives and assigns; provided, however, that the obligations of Employee
hereunder may not be delegated without the prior written approval of the Board
of Directors of the Company.
5. AMENDMENTS. This Agreement may not be altered, modified, amended or
----------
terminated except by a written instrument signed by each of the parties hereto.
6. APPLICABLE LAW. This Agreement shall be governed by, construed and
--------------
enforced in accordance with the laws of the State of New York, without regard to
conflicts of laws.
11
<PAGE>
7. NO RIGHT TO EMPLOYMENT. This Agreement shall not be construed to
-----------------------
grant to the Employee any right to continue to be employed by the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NU HORIZONS ELECTRONICS CORP.
By:
---------------------------
Arthur Nadata
President
---------------------------
Irving Lubman
12
<PAGE>
EXHIBIT 10.16
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT made as of the 13th day of September, 1996 by and
between NU HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter the
"Company") and ARTHUR NADATA, residing at 25 Northcote Drive, Melville, New York
11747 (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to enter into an Employment Agreement with
Employee to supersede the Employee's current Employment Agreement between the
Company and the Employee; and
WHEREAS, Employee desires to enter into an Employment Agreement with the
Company.
NOW, THEREFORE, it is agreed as follows:
1. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any employment
---------------------------
or consulting agreements, oral or written, entered into between Employee and the
Company prior to the date of this Agreement.
2. RETENTION OF SERVICES. The Company hereby retains the services of
---------------------
Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.
3. TERM. Subject to earlier termination on the terms and conditions
----
hereinafter provided, the term of this Agreement shall be for a continually
renewing five (5) year term so that Employee's unexpired term of employment
shall always be at least five (5) years from any notice of termination of his
employment without cause from the Company.
<PAGE>
4. DUTIES AND EXTENT OF SERVICES DURING PERIOD OF
----------------------------------------------
EMPLOYMENT.
----------
During the term of employment, Employee shall be employed as President of
the Company. In such capacity, Employee agrees that he shall serve the Company
under the direction of the Board of Directors of the Company to the best of his
ability, shall perform all duties incident to his offices on behalf of the
Company and shall perform such other duties as may from time to time be assigned
to him by the Board of Directors of the Company. Employee shall also serve in
similar capacities of such of the subsidiary corporations of the Company as may
be selected by the Board of Directors and shall be entitled to such additional
compensation therefor as may be determined by the Board of Directors of the
Company. Notwithstanding the foregoing, it is understood and agreed that the
duties of Employee during the period of employment shall not be inconsistent
with (i) his position and title as a Senior Executive of the Company; or (ii)
with those duties ordinarily performed by a comparable executive officer. The
Company shall not require Employee to be employed in any location other than New
York City and Long Island, New York, unless he consents in writing to such
location.
5. REMUNERATION. (a) During the period of employment, Employee shall be
-------------
entitled to receive the following compensation for his services:
(i) The Company shall pay to Employee a salary at the rate of $226,545 per
annum, payable in weekly installments, or in such other manner as shall be
agreeable to the Company and Employee.
(ii) In addition to his salary, Employee shall receive an increment in an
amount equal to the cumulative cost of living on $226,545 as reported in the
"Consumer Price Index, New
2
<PAGE>
York Northeastern New Jersey, all items" published by the United States
Department of Labor, Bureau of Labor Statistics (using January 1996 as the base
date for computation). Such cost of living increment with respect to the
aforesaid salary of Employee shall be made semi- annually as follows:
A. With respect to the first six months of each fiscal year of the
Company during the period of employment, such increment shall be calculated and
payable cumulatively on or before the first day of the eighth month of such
fiscal year; and
B. With respect to the last six months of each fiscal year of the
Company during the period of employment, such increment shall be calculated and
payable cumulatively on or before the first day of the second month of the
following fiscal year of the Company.
The first calculation shall be made on or before September 15, 1997 with
respect to the period September 13, 1996 through September 15, 1997. If
Employee's employment shall terminate during any six-month period referred to in
this sub- paragraph 5(ii), then the cost of living increment provided for herein
shall be prorated accordingly.
(iii) Not later than one hundred twenty (120) days after the end of the
fiscal year of the Company and each subsequent fiscal year of the Company ending
during the period of employment, the Company shall pay to Employee, as incentive
compensation, an amount equal to THREE AND ONE-THIRD (3-1/3%) PERCENT of the
Consolidated Pretax Earnings of the Company. For purposes hereof, the term
"Consolidated Pretax Earnings" of the Company shall mean, with respect to any
fiscal year, the consolidated income, if any, of the Company for such fiscal
year as set forth in the audited, consolidated financial statements
3
<PAGE>
of the Company and its subsidiaries included in its Annual Report to
Stockholders for such fiscal year, before deduction of taxes based on
income or of the incentive compensation to be paid to Employee for such
fiscal year under this Agreement.
6. EMPLOYEE BENEFITS; EXPENSES. (a) During the period of employment,
---------------------------
the Company shall continue to provide at its expense, life insurance to Employee
in the face amount of $1,000,000.
(b) During the period of employment, Employee shall be eligible to
participate in the Company's stock option and stock purchase plans to the extent
determined in the sole discretion of the Board of Directors of the Company or a
committee thereof.
(c) During the period of employment, Employee shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of a Senior Executive of the Company; and he shall
be entitled to regular vacations during each year of not less than four weeks in
the aggregate. Any such vacation time not used by Employee in any one year
shall accumulate to his benefit in the succeeding years and, to the extent not
previously used as of the termination of the period of employment, Employee
shall be paid in cash in lieu of such unused vacation.
(d) It is contemplated that during the period of employment, Employee
may be required to incur out-of-pocket expenses in connection with the
performance of his services hereunder, including expenses incurred for travel
and business entertainment. Accordingly, the Company shall pay, or reimburse
Employee for all out-of-pocket expenses reasonably incurred by Employee in the
performance of his duties hereunder in accordance with the usual procedures of
the
4
<PAGE>
Company. Notwithstanding the foregoing, in recognition that Employee will be
required during the term of this Agreement to do a considerable amount of local
driving in connection with his services hereunder, the Company shall provide
Employee with the use of a suitable automobile and all expenses incidental
throughout the term of this Agreement.
(e) All benefits to Employee specifically provided for herein shall
be in addition to, and shall not diminish, (i) such other benefits and/or
compensation as may hereafter be granted to or afforded to Employee by the Board
of Directors of the Company, (ii) any rights which Employee may have or may
acquire under any hospitalization, life insurance, pension, profit sharing,
incentive compensation or other present or future employee benefit plan or plans
of the Company; and (iii) all medical reimbursement up to $5,000 per annum for
all medical expenses not covered by Company plans.
(f) In the event of the death of Employee during the course of his
employment hereunder, the Company shall continue to pay to Employee's widow, or
to such other person or persons as may be designated by Employee in his Will, or
to his Estate in the event of Employee's intestacy, one-half (1/2) of the
compensation to which Employee is entitled pursuant to paragraph 5 hereunder for
the balance of the period covered by this Agreement.
7. DISABILITY. If Employee, during the period of employment, becomes
----------
unable for nine consecutive months or more, due to ill health or other
incapacity, to perform his services hereunder, the Company may thereafter, upon
at least 90 days' written notice to Employee, place him on disability status.
After such action by the Company, Employee shall continue to receive one-half
(1/2) of the sum of the last salary paid to Employee under paragraph 5(a)(i) and
(ii) hereof and any
5
<PAGE>
increment thereto payable under paragraph 5(a)(iii) hereof until the end of the
period of employment or until his disability ends.
8. CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that
------------------------
confidential information of various kinds, including marketing analysis and
product development information are valuable, special and unique assets of its
business. Accordingly, Employee will not, during the term of this Agreement,
except in the performance of his services hereunder, disclose any such
confidential information to any individual or entity for any reason or purpose
whatsoever and will not use any such confidential information for his own
benefit. The provisions of this paragraph 8 will not apply to information
available in trade or other publications, information known to Employee at the
time he entered the employ of the Company, and information which presently is or
shall become available without committing a tortious act.
9. NON-COMPETITION. Employee agrees that, during the term of this
---------------
Agreement, he will not, without the prior written approval of the Board of
Directors of the Company, directly or indirectly, through any other individual
or entity, (a) become an officer or employee of, or render any services,
including consulting services, to, any competitor of the Company, (b) solicit,
raid, entice or induce any customer of the Company to cease purchasing goods or
services from the Company or to become a customer of any competitor of the
Company, and Employee will not approach any customer for any such purpose or
authorize the taking of any such actions by any other individual or entity, or
(c) solicit, raid, entice or induce any employee of the Company, and Employee
will not approach any such employee for any such purpose or authorize the taking
of any such action by any other individual or entity. However, nothing
contained in this paragraph 9 shall be construed as preventing Employee from
investing his assets in such form or manner as will not
6
<PAGE>
require him to become an officer or employee of, or render any services (in-
cluding consulting services) to, any competitor of the Company.
10. TERMINATION FOR CAUSE. (a) The Company recognizes that, for a
---------------------
period of several years during which Employee has been employed and/or
associated with the Company, the Company has been intimately familiar with the
ability, competence and judgment of Employee, which are acknowledged to be of
the highest caliber. Accordingly, the Company and Employee agree that
Employee's services hereunder may be terminated by the Company for an act of
moral turpitude materially adversely affecting the financial interest of the
Company.
(b) If the Company terminates Employee's employment hereunder for any
reason other than as set forth in paragraph 10(a) hereof, Employee's
compensation shall continue to be paid to him as provided in paragraph 5
hereunder for the remainder of the term of this Agreement. Employee shall have
no duty to mitigate the Company's damages hereunder. Therefore, no deduction
shall be made by the Company for any compensation earned by Employee from other
employment or for monies or property otherwise received by Employee subsequent
to such termination of his employment hereunder. Employee and the Company
acknowledge that the foregoing provisions of this paragraph 10(b) are reasonable
and are based upon the facts and circumstances of the parties at the time of
entering into this Agreement, and with due regard to future expectations.
11. CONSOLIDATION OR MERGER. In the event of any consolidation or
-----------------------
merger of the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation during the term of this Agreement, such successor
corporation shall assume this Agreement and become obligated to
7
<PAGE>
perform all of the terms and provisions hereof applicable to the Company, and
Employee's obligations hereunder shall continue in favor of such successor
corporation.
12. NOTICES. Any notice to be given to the Company hereunder shall
-------
be deemed sufficient if addressed to the Company in writing and delivered or
mailed by certified or registered mail to its offices at 6000 New Horizons
Blvd., Amityville, New York 11701, or such other address as the Company may
hereafter designate. Any notice to be given to Employee hereunder shall be
delivered or mailed by certified or registered mail to him at: 25 Northcote
Drive, Melville, New York 11747, or such other address as he may hereafter
designate.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
----------------------
and inure to the benefit of the successors and assigns of the Company, unless
clearly inapplicable, reference herein to the Company shall be deemed to include
any such successor. In addition, this Agreement shall be binding upon and inure
to the benefit of the Employee and his heirs, executors, legal repre-sentatives
and assigns; provided, however, that the obligations of Employee hereunder may
not be delegated without the prior written approval of the Board of Directors
of the Company.
14. AMENDMENTS. This Agreement may not be altered, modified,
----------
amended or terminated except by a written instrument signed by each of the
parties hereto.
15. APPLICABLE LAW. This Agreement shall be governed by, construed
--------------
and enforced in accordance with the laws of the State of New York, without
regard to conflicts of laws.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NU HORIZONS ELECTRONICS CORP.
By:
___________________________
Name:
Title:
-------------------------------
ARTHUR NADATA, EMPLOYEE
9
<PAGE>
AGREEMENT
---------
AGREEMENT made as of the 13th day of September, 1996 by and between NU
HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter called the
"Company") and ARTHUR NADATA, residing at 25 Northcote Drive, Melville, New York
11747 (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to continue to employ the Employee, and the
Company acknowledges that its entering into this agreement is a condition to the
Employee's willingness to continue such employment; and
WHEREAS, Employee desires to continue to be employed by the Company, and
the Employee acknowledges that his entering into this agreement is a condition
to the Company's willingness to continue such employment;
NOW, THEREFORE, it is agreed as follows:
1. CHANGE OF CONTROL. (a) In the event there shall be a change in the
-----------------
present control of the Company as hereinafter defined, or in any person directly
or indirectly presently controlling the Company, as hereinafter defined,
Employee shall have the option, exercisable within six (6) months of his
becoming aware of such event, to terminate his employment by the Company
pursuant to the Employment Agreement dated September 13, 1996 between the
Company and the Employee forthwith. Upon such termination, Employee shall have
the right to immediately receive as a lump sum payment an amount equal to,
subject to Section 1(b) below, three (3) times the average of the total annual
compensation paid by the Company to Employee, with respect to the five fiscal
years of the Company prior to the change of control, minus $100.00.
(b) The payment to be made pursuant to Section 1(a) above shall be made
by the Company to the Employee in an amount (net of the Federal and State income
tax thereon computed at the marginal regular Federal and State income tax rates
of the Employee in the tax year in which this payment is made and also net of
any excise, penalty or other similar tax) which shall cause the net after tax
amount (calculated as provided in the foregoing parenthetical clause) received
by the Employee with respect to the payment made under Section 1(a) to be equal
to the amount set forth in Section 1(a) above, at the time of such payment and
without consideration for the time value of money.
(c) For purposes of this Agreement, a change in control of the Company,
or in any person directly or indirectly controlling the Company, shall mean:
10
<PAGE>
(i) A change in control as such term is presently defined in
Regulation 240.12b-2 under the Securities Exchange Act of 1934 ("Exchange Act);
or
(ii) if any "person" (as such term is used in Sectiom 13(d) and 14(d)
of the Exchange Act) other than the Company or any "person" who on the date of
this Agreement is a director or officer of the Company, becomes the "beneficial
owner" (as defined in Rule 13(d)-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifteen (15%) percent of
the voting power of the Company's then outstanding securities; or
(iii) if during any period of two (2) consecutive years during the
term of this Agreement, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute at least a
majority thereof.
2. CONSOLIDATION OR MERGER. In the event of any consolidation or merger
-----------------------
of the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation, person or entity during the term of this Agreement, such
successor corporation shall assume this Agreement and become obligated to
perform all of the terms and provisions hereof applicable to the Company, and
Employee's obligations hereunder shall continue in favor of such successor
corporation.
3. NOTICES. Any notice to be given to the Company hereunder shall be
-------
deemed sufficient if addressed to the Company in writing and delivered or mailed
by certified or registered mail to its offices at 6000 New Horizons Boulevard,
Amityville, New York 11701, or such other address as the Company may hereafter
designate. Any notice to be given to Employee hereunder shall be delivered or
mailed by certified or registered mail to him at: 11 Clearmeadow Court,
Woodbury, New York 11797 or such other address as he may hereafter designate.
4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
----------------------
inure to the benefit of the successors and assigns of the Company, and unless
clearly inapplicable, all references herein to the Company shall be deemed to
include any such successor. In addition, this Agreement shall be binding upon
and inure to the benefit of the Employee and his heirs, executors, legal
representatives and assigns; provided, however, that the obligations of Employee
hereunder may not be delegated without the prior written approval of the Board
of Directors of the Company.
5. AMENDMENTS. This Agreement may not be altered, modified, amended or
----------
terminated except by a written instrument signed by each of the parties hereto.
6. APPLICABLE LAW. This Agreement shall be governed by, construed and
--------------
enforced in accordance with the laws of the State of New York, without regard to
conflicts of laws.
11
<PAGE>
7. NO RIGHT TO EMPLOYMENT. This Agreement shall not be construed to
-----------------------
grant to the Employee any right to continue to be employed by the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NU HORIZONS ELECTRONICS CORP.
By:
--------------------------------
Richard Schuster
Vice President
------------------------------------
Arthur Nadata
12
<PAGE>
EXHIBIT 10.17
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT made as of the 13th day of September, 1996 by and
between NU HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter the
"Company") and RICHARD SCHUSTER, residing at 11 Clearmeadow Court, Woodbury, New
York 11797 (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to enter into an Employment Agreement with
Employee to supersede the Employee's current Employment Agreement between the
Company and the Employee; and
WHEREAS, Employee desires to enter into an Employment Agreement with the
Company.
NOW, THEREFORE, it is agreed as follows:
1. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any employment
---------------------------
or consulting agreements, oral or written, entered into between Employee and the
Company prior to the date of this Agreement.
2. RETENTION OF SERVICES. The Company hereby retains the services of
---------------------
Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.
3. TERM. Subject to earlier termination on the terms and conditions
----
hereinafter provided, the term of this Agreement shall be for a continually
renewing five (5) year term so that Employee's unexpired term of employment
shall always be at least five (5) years from any notice of termination of his
employment without cause from the Company.
<PAGE>
4. DUTIES AND EXTENT OF SERVICES DURING PERIOD OF
----------------------------------------------
EMPLOYMENT.
----------
During the term of employment, Employee shall be employed as Vice
President of the Company. In such capacity, Employee agrees that he shall serve
the Company under the direction of the Board of Directors of the Company to the
best of his ability, shall perform all duties incident to his offices on behalf
of the Company and shall perform such other duties as may from time to time be
assigned to him by the Board of Directors of the Company. Employee shall also
serve in similar capacities of such of the subsidiary corporations of the
Company as may be selected by the Board of Directors and shall be entitled to
such additional compensation therefor as may be determined by the Board of
Directors of the Company. Notwithstanding the foregoing, it is understood and
agreed that the duties of Employee during the period of employment shall not be
inconsistent with (i) his position and title as a Senior Executive of the
Company; or (ii) with those duties ordinarily performed by a comparable
executive officer. The Company shall not require Employee to be employed in any
location other than New York City and Long Island, New York, unless he consents
in writing to such location.
5. REMUNERATION. (a) During the period of employment, Employee shall be
-------------
entitled to receive the following compensation for his services:
(i) The Company shall pay to Employee a salary at the rate of $226,545
per annum, payable in weekly installments, or in such other manner as shall be
agreeable to the Company and Employee.
(ii) In addition to his salary, Employee shall receive an increment in
an amount equal to the cumulative cost of living on $226,545 as reported in the
"Consumer Price Index, New
2
<PAGE>
York Northeastern New Jersey, all items" published by the United States
Department of Labor, Bureau of Labor Statistics (using January 1996 as the base
date for computation). Such cost of living increment with respect to the
aforesaid salary of Employee shall be made semi- annually as follows:
A. With respect to the first six months of each fiscal year of the
Company during the period of employment, such increment shall be calculated and
payable cumulatively on or before the first day of the eighth month of such
fiscal year; and
B. With respect to the last six months of each fiscal year of the
Company during the period of employment, such increment shall be calculated and
payable cumulatively on or before the first day of the second month of the
following fiscal year of the Company.
The first calculation shall be made on or before September 15, 1997 with
respect to the period September 13, 1996 through September 15, 1997. If
Employee's employment shall terminate during any six-month period referred to in
this sub- paragraph 5(ii), then the cost of living increment provided for herein
shall be prorated accordingly.
(iii) Not later than one hundred twenty (120) days after the end of the
fiscal year of the Company and each subsequent fiscal year of the Company ending
during the period of employment, the Company shall pay to Employee, as incentive
compensation, an amount equal to THREE AND ONE-THIRD (3-1/3%) PERCENT of the
Consolidated Pretax Earnings of the Company. For purposes hereof, the term
"Consolidated Pretax Earnings" of the Company shall mean, with respect to any
fiscal year, the consolidated income, if any, of the Company for such fiscal
year as set forth in the audited, consolidated financial statements
3
<PAGE>
of the Company and its subsidiaries included in its Annual Report to
Stockholders for such fiscal year, before deduction of taxes based on
income or of the incentive compensation to be paid to Employee for such
fiscal year under this Agreement.
6. EMPLOYEE BENEFITS; EXPENSES. (a) During the period of employment,
---------------------------
the Company shall continue to provide at its expense, life insurance to Employee
in the face amount of $1,000,000.
(b) During the period of employment, Employee shall be eligible to
participate in the Company's stock option and stock purchase plans to the extent
determined in the sole discretion of the Board of Directors of the Company or a
committee thereof.
(c) During the period of employment, Employee shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of a Senior Executive of the Company; and he shall
be entitled to regular vacations during each year of not less than four weeks in
the aggregate. Any such vacation time not used by Employee in any one year
shall accumulate to his benefit in the succeeding years and, to the extent not
previously used as of the termination of the period of employment, Employee
shall be paid in cash in lieu of such unused vacation.
(d) It is contemplated that during the period of employment, Employee
may be required to incur out-of-pocket expenses in connection with the
performance of his services hereunder, including expenses incurred for travel
and business entertainment. Accordingly, the Company shall pay, or reimburse
Employee for all out-of-pocket expenses reasonably incurred by Employee in the
performance of his duties hereunder in accordance with the usual procedures of
the
4
<PAGE>
Company. Notwithstanding the foregoing, in recognition that Employee will be
required during the term of this Agreement to do a considerable amount of local
driving in connection with his services hereunder, the Company shall provide
Employee with the use of a suitable automobile and all expenses incidental
throughout the term of this Agreement.
(e) All benefits to Employee specifically provided for herein shall
be in addition to, and shall not diminish, (i) such other benefits and/or
compensation as may hereafter be granted to or afforded to Employee by the Board
of Directors of the Company, (ii) any rights which Employee may have or may
acquire under any hospitalization, life insurance, pension, profit sharing,
incentive compensation or other present or future employee benefit plan or plans
of the Company; and (iii) all medical reimbursement up to $5,000 per annum for
all medical expenses not covered by Company plans.
(f) In the event of the death of Employee during the course of his
employment hereunder, the Company shall continue to pay to Employee's widow, or
to such other person or persons as may be designated by Employee in his Will, or
to his Estate in the event of Employee's intestacy, one-half (1/2) of the
compensation to which Employee is entitled pursuant to paragraph 5 hereunder for
the balance of the period covered by this Agreement.
7. DISABILITY. If Employee, during the period of employment, becomes
----------
unable for nine consecutive months or more, due to ill health or other
incapacity, to perform his services hereunder, the Company may thereafter, upon
at least 90 days' written notice to Employee, place him on disability status.
After such action by the Company, Employee shall continue to receive one-half
(1/2) of the sum of the last salary paid to Employee under paragraph 5(a)(i) and
(ii) hereof and any
5
<PAGE>
increment thereto payable under paragraph 5(a)(iii) hereof until the end of the
period of employment or until his disability ends.
8. CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that
------------------------
confidential information of various kinds, including marketing analysis and
product development information are valuable, special and unique assets of its
business. Accordingly, Employee will not, during the term of this Agreement,
except in the performance of his services hereunder, disclose any such
confidential information to any individual or entity for any reason or purpose
whatsoever and will not use any such confidential information for his own
benefit. The provisions of this paragraph 8 will not apply to information
available in trade or other publications, information known to Employee at the
time he entered the employ of the Company, and information which presently is or
shall become available without committing a tortious act.
9. NON-COMPETITION. Employee agrees that, during the term of this
---------------
Agreement, he will not, without the prior written approval of the Board of
Directors of the Company, directly or indirectly, through any other individual
or entity, (a) become an officer or employee of, or render any services,
including consulting services, to, any competitor of the Company, (b) solicit,
raid, entice or induce any customer of the Company to cease purchasing goods or
services from the Company or to become a customer of any competitor of the
Company, and Employee will not approach any customer for any such purpose or
authorize the taking of any such actions by any other individual or entity, or
(c) solicit, raid, entice or induce any employee of the Company, and Employee
will not approach any such employee for any such purpose or authorize the taking
of any such action by any other individual or entity. However, nothing
contained in this paragraph 9 shall be construed as preventing Employee from
investing his assets in such form or manner as will not
6
<PAGE>
require him to become an officer or employee of, or render any services (in-
cluding consulting services) to, any competitor of the Company.
10. TERMINATION FOR CAUSE. (a) The Company recognizes that, for a
---------------------
period of several years during which Employee has been employed and/or
associated with the Company, the Company has been intimately familiar with the
ability, competence and judgment of Employee, which are acknowledged to be of
the highest caliber. Accordingly, the Company and Employee agree that
Employee's services hereunder may be terminated by the Company for an act of
moral turpitude materially adversely affecting the financial interest of the
Company.
(b) If the Company terminates Employee's employment hereunder for
any reason other than as set forth in paragraph 10(a) hereof, Employee's
compensation shall continue to be paid to him as provided in paragraph 5
hereunder for the remainder of the term of this Agreement. Employee shall have
no duty to mitigate the Company's damages hereunder. Therefore, no deduction
shall be made by the Company for any compensation earned by Employee from other
employment or for monies or property otherwise received by Employee subsequent
to such termination of his employment hereunder. Employee and the Company
acknowledge that the foregoing provisions of this paragraph 10(b) are reasonable
and are based upon the facts and circumstances of the parties at the time of
entering into this Agreement, and with due regard to future expectations.
11. CONSOLIDATION OR MERGER. In the event of any consolidation or merger
-----------------------
of the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation during the term of this Agreement, such successor
corporation shall assume this Agreement and become obligated to
7
<PAGE>
perform all of the terms and provisions hereof applicable to the Company, and
Employee's obligations hereunder shall continue in favor of such successor
corporation.
12. NOTICES. Any notice to be given to the Company hereunder shall
-------
be deemed sufficient if addressed to the Company in writing and delivered or
mailed by certified or registered mail to its offices at 6000 New Horizons
Blvd., Amityville, New York 11701, or such other address as the Company may
hereafter designate. Any notice to be given to Employee hereunder shall be
delivered or mailed by certified or registered mail to him at: 11 Clear Meadow
Court, Woodbury, New York 11797, or such other address as he may hereafter
designate.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
----------------------
and inure to the benefit of the successors and assigns of the Company, unless
clearly inapplicable, reference herein to the Company shall be deemed to include
any such successor. In addition, this Agreement shall be binding upon and inure
to the benefit of the Employee and his heirs, executors, legal repre-sentatives
and assigns; provided, however, that the obligations of Employee hereunder may
not be delegated without the prior written approval of the Board of Directors
of the Company.
14. AMENDMENTS. This Agreement may not be altered, modified, amended or
----------
terminated except by a written instrument signed by each of the parties hereto.
15. APPLICABLE LAW. This Agreement shall be governed by, construed
--------------
and enforced in accordance with the laws of the State of New York, without
regard to conflicts of laws.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NU HORIZONS ELECTRONICS CORP.
By:
------------------------------
Name:
Title:
----------------------------------
RICHARD SCHUSTER, EMPLOYEE
9
<PAGE>
AGREEMENT
---------
AGREEMENT made as of the 13th day of September, 1996 by and between NU
HORIZONS ELECTRONICS CORP., a Delaware corporation (hereinafter called the
"Company") and RICHARD SCHUSTER, residing at 11 Clearmeadow Court, Woodbury, New
York 11797 (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to continue to employ the Employee, and the
Company acknowledges that its entering into this agreement is a condition to the
Employee's willingness to continue such employment; and
WHEREAS, Employee desires to continue to be employed by the Company, and
the Employee acknowledges that his entering into this agreement is a condition
to the Company's willingness to continue such employment;
NOW, THEREFORE, it is agreed as follows:
1. CHANGE OF CONTROL. (a) In the event there shall be a change in the
-----------------
present control of the Company as hereinafter defined, or in any person directly
or indirectly presently controlling the Company, as hereinafter defined,
Employee shall have the option, exercisable within six (6) months of his
becoming aware of such event, to terminate his employment by the Company
pursuant to the Employment Agreement dated September 13, 1996 between the
Company and the Employee forthwith. Upon such termination, Employee shall have
the right to immediately receive as a lump sum payment an amount equal to,
subject to Section 1(b) below, three (3) times the average of the total annual
compensation paid by the Company to Employee, with respect to the five fiscal
years of the Company prior to the change of control, minus $100.00.
(b) The payment to be made pursuant to Section 1(a) above shall be made by
the Company to the Employee in an amount (net of the Federal and State income
tax thereon computed at the marginal regular Federal and State income tax rates
of the Employee in the tax year in which this payment is made and also net of
any excise, penalty or other similar tax) which shall cause the net after tax
amount (calculated as provided in the foregoing parenthetical clause) received
by the Employee with respect to the payment made under Section 1(a) to be equal
to the amount set forth in Section 1(a) above, at the time of such payment and
without consideration for the time value of money.
(c) For purposes of this Agreement, a change in control of the Company, or
in any person directly or indirectly controlling the Company, shall mean:
10
<PAGE>
(i) A change in control as such term is presently defined in
Regulation 240.12b-2 under the Securities Exchange Act of 1934 ("Exchange Act);
or
(ii) if any "person" (as such term is used in Sectiom 13(d) and 14(d)
of the Exchange Act) other than the Company or any "person" who on the date of
this Agreement is a director or officer of the Company, becomes the "beneficial
owner" (as defined in Rule 13(d)-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing fifteen (15%) percent of
the voting power of the Company's then outstanding securities; or
(iii) if during any period of two (2) consecutive years during the
term of this Agreement, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute at least a
majority thereof.
2. CONSOLIDATION OR MERGER. In the event of any consolidation or merger
-----------------------
of the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation, person or entity during the term of this Agreement, such
successor corporation shall assume this Agreement and become obligated to
perform all of the terms and provisions hereof applicable to the Company, and
Employee's obligations hereunder shall continue in favor of such successor
corporation.
3. NOTICES. Any notice to be given to the Company hereunder shall be
-------
deemed sufficient if addressed to the Company in writing and delivered or mailed
by certified or registered mail to its offices at 6000 New Horizons Boulevard,
Amityville, New York 11701, or such other address as the Company may hereafter
designate. Any notice to be given to Employee hereunder shall be delivered or
mailed by certified or registered mail to him at: 11 Clearmeadow Court,
Woodbury, New York 11797 or such other address as he may hereafter designate.
4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
----------------------
inure to the benefit of the successors and assigns of the Company, and unless
clearly inapplicable, all references herein to the Company shall be deemed to
include any such successor. In addition, this Agreement shall be binding upon
and inure to the benefit of the Employee and his heirs, executors, legal
representatives and assigns; provided, however, that the obligations of Employee
hereunder may not be delegated without the prior written approval of the Board
of Directors of the Company.
5. AMENDMENTS. This Agreement may not be altered, modified, amended or
----------
terminated except by a written instrument signed by each of the parties hereto.
6. APPLICABLE LAW. This Agreement shall be governed by, construed and
--------------
enforced in accordance with the laws of the State of New York, without regard to
conflicts of laws.
11
<PAGE>
7. NO RIGHT TO EMPLOYMENT. This Agreement shall not be construed to
-----------------------
grant to the Employee any right to continue to be employed by the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NU HORIZONS ELECTRONICS CORP.
By:
____________________________
Arthur Nadat
President
____________________________
Richard Schuster
12
<PAGE>
EXHIBIT 11
NU HORIZONS ELECTRONICS CORP.
COMPUTATION OF EARNINGS PER COMMON SHARE
----------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED
------------------------ --------------------------
AUGUST 31, AUGUST 31, AUGUST 31, AUGUST 31,
1996 1995 1996 1995
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
PRIMARY EARNINGS:
- -----------------
NET INCOME $ 3,806,164 $ 4,037,005 $ 1,351,228 $ 2,405,908
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES:
Common shares outstanding 8,732,299 7,739,631 8,732,299 7,740,511
Common share equivalents 328,022 210,931 242,275 269,196
----------- ----------- ----------- -----------
Weighted average number of
common shares and common
share equivalents
outstanding 9,060,321 7,950,562 8,974,574 8,009,707
=========== =========== =========== ===========
PRIMARY EARNINGS PER
COMMON SHARE $.42 $.51 $.15 $.30
=========== =========== =========== ===========
FULLY DILUTED EARNINGS:
- ---------------------
Net Income $ 3,806,164 $ 4,037,005 $ 1,351,228 $ 2,405,908
Net (after tax)
interest expense
related to
convertible debt 187,489 365,062 85,900 182,531
---------- ----------- ----------- -----------
NET INCOME AS ADJUSTED $ 3,993,653 $ 4,402,067 $ 1,437,128 $ 2,588,439
=========== =========== =========== ===========
SHARES:
Weighted average
number of common
shares and common
share equivalents
outstanding 9,060,321 7,950,562 8,974,574 8,009,707
Additional options
not included above 583,705 706,501 669,452 663,236
Assuming conversion
of convertible debt 784,333 1,666,666 784,333 1,666,666
---------- ----------- ----------- -----------
Weighted average
number of common
shares outstanding
as adjusted 10,428,359 10,323,729 10,428,359 10,339,609
=========== ============ =========== ===========
FULLY DILUTED EARNINGS
PER COMMON SHARE $.38 $.43 $.14 $.25
==== ==== ==== ====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS FOR THE SECOND QUARTER ENDED AUGUST 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 2,561,058
<SECURITIES> 0
<RECEIVABLES> 30,982,594
<ALLOWANCES> 1,811,619
<INVENTORY> 39,697,232
<CURRENT-ASSETS> 73,938,285
<PP&E> 7,385,972
<DEPRECIATION> 4,197,305
<TOTAL-ASSETS> 80,451,468
<CURRENT-LIABILITIES> 12,112,327
<BONDS> 0
<COMMON> 57,633
0
0
<OTHER-SE> 43,555,731
<TOTAL-LIABILITY-AND-EQUITY> 80,451,468
<SALES> 108,455,584
<TOTAL-REVENUES> 108,455,584
<CGS> 84,158,299
<TOTAL-COSTS> 84,158,299
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 239,500
<INTEREST-EXPENSE> 809,292
<INCOME-PRETAX> 6,386,924
<INCOME-TAX> 2,580,760
<INCOME-CONTINUING> 3,806,164
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,806,164
<EPS-PRIMARY> .42
<EPS-DILUTED> .38
</TABLE>
